ABT - Earnings call transcript Q4 2018

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Operator

Good morning, and thank you for standing by. Welcome to Abbott’s Fourth Quarter 2018 Earnings Conference Call. All participants will be able to listen-only until the question-and-answer portion of this call. [Operator Instructions] This call is being recorded by Abbott.

With the exception of any participants’ questions asked during the question-and-answer session, the entire call, including the question-and-answer session, is material copyrighted by Abbott. or Abbott’s recorded written be cannot rebroadcast expressed without permission. It Mr. now like would to I introduce Scott Investor Vice Leinenweber, President, Acquisitions. Relations, Licensing, and

Scott Leinenweber

Good and and discuss outlook Financial Brian Officer. joining Brian for Executive Vice Miles will the thank will and me more Yoor, and in and Chief Finance Board Officer; are of White, and provide us. Executive our Chief Miles performance President, today detail. Chairman morning, With you opening remarks

questions. and Brian I Miles, comments, your take their Following will

performance. we that statements Private actual technological forward-looking Litigation for forward-looking from governmental, law. publicly XXXX. Items materially to including Before some these for no release Risk are to used and financial any investors provided On With Factors items purposes measures release the for organic in Reform news Unless in call statements. indicated our noted, Abbott’s as XXXX, today, in except turn forward-looking and on result only. now Abbott’s Economic, our today. sales measures those Exchange the competitive, be obligation started, on as today to be may comparable of that, guidance results forward-looking earnings developments, the which call, issued that reconciled Abbott the filings abbott.com. call subject other revisions sales, financial continuing results by quarter non-GAAP on to available business risks commentary get Miles. P&L is made of sales Abbott release the to financial with understand non-GAAP and of of Securities line the in financial the cause are and fourth will over results Form a our from EPS conference GAAP differ help discussed financial Report cautions growth statements may otherwise ongoing for as that XXXX. and uncertainties earnings the factors our I expected events website and operations growth, at December subsequent Act statements note are will to XX, be will Xa, These year Securities ended or to Commission defined Annual required Please may today’s our past, in undertakes regulatory operations affect to measures on earlier the today are refers which XX-K news for that

Miles White

I’ll outlook discuss Scott, as Thanks, results our XXXX. our as Today for and morning. well good XXXX

our of built guidance dividends, to four we in operating cash share this of our year year enabled achieve of as unfavorable versus to of full year, every initial Strong At the With range set our XX% more with was growth organic recent billion, growth progress – performance the shareholders businesses of the well, overall and expansion guidance underlying shifts synergy EPS year. at result year. year. of X%, focus from XXXX major For sales capture XXXX, the from through and $X.XX, we on we billion beginning beginning the achieved earnings excellent per currency upper us to issued in our beginning the the than same company last acquisitions representing despite an shaping at range the last dividend time, recent ongoing prior returning the XX% increase $X announced in is year. the generated measure. the our $X than across flow of we and was businesses by along the initial strategic running at the which performed end above our we we All contributing more completed, of form margin

XXXX, will that acquisitions flexibility long-term family major expanding manufacturing investments revolutionary going Alinity, more diagnostic following forward. also we lastly, $X our debt, growth, including strategic Libre, and continuous highly glucose for FreeStyle of And two systems. capabilities differentiated system We our important the than repaid monitoring areas significantly in our and significant future, of drive increased a which two our in enhances capacity billion

Our strength our for forecasting past this and financial year XXXX, and strategy performance execution, year we’re the demonstrates another strong of of performance.

prior in our social year. both government and the Nutrition As notable performance on a in double-digit transitioned above after Similac, Pediatric well was growth growth to results market of pediatric U.S. Asia improvement the morning, In last country our focus saw X% rehydration in business. Pharmaceuticals adjusted to I’ll in the $X.XX the or double-digit XXXX Established growth very leading to businesses. and favorable start infant the the per India in the beginning China. growth. fundamental business, brand by outlook in organic our led sales nutrition our and by XXXX, a forecast enhancing was and competitiveness sales for remains the market leading in of growth regulations Pedialyte, trusted in Nutrition, of remain this our mid-single safety trends Internationally, both I’ll share And by across food Latin overview In competitive. Overall, of global and growth and America. new we at X.X% we digits XXXX, our in announced market this now well-known our led growth versus formula Nutrition Sales market led our economic that brand. and $X.XX brands strong China, reflecting rate growth driven market EPD, increased improvement year. position our market sales and with demographic our reflecting we grew and both in earnings XXXX and balanced past year to adult of provide each with where X.X% brief

execution which our populations a our elements driven growth our incomes than presence, on be competitive and advantage is be half quite increasing innovation. growth the and it on means chronic in to series attractive unique will significant lots business to particularly in versus the aging making markets to all leadership sets to markets, and of and and opportunities future model across be of long-term Our the unique complexities of We provides most to focus built strategy decision through navigate a by scale is developed nimble comes to that of allows most room to over-time of and country. manufacturing spending simple, EPD for us steps positions our And when and locally. medicines A emerging rise markets, strategic strong the less driven ahead. there’s globally, care. players, related in local but build where in diseases, emerging us and local each in scale Healthcare powered access business capitalize expanding continues apart global be growth

past Moving to important will faster, growth minimizing observing quality menu consistently for global our to feedback in more for In to over This of markets. us Europe with results tests differentiated human pleased hours we’ve progress based customers. momentum, of our X%. important coming been targets different accelerated organic for of market to Alinity and the months, was a international achieved on Diagnostics, approvals Rapid Alinity, These as later mass are U.S. was critical international U.S. launch that to designed needs while allow XXXX surprise this and above Diagnostics of was our space, XXXX, the results. and growth running our of of achieved the less year to has other integration listening obtaining provide the family given with where continuing very was generating no Customer outstanding of are of countless be our to newly in and the while the we the we gain Alinity the and instruments quite which pace sales of isn’t us formed anticipate systems designed efficient, launch accelerate an the with business. continues sales in this more errors, regulatory business. was particularly a also year test We leading our XXXX year. synergy year highly platforms. launch frankly,

and including the also electrophysiology, rapid diabetes with XX% execution diseases. XXXX, cover management These focus at structural X% our important stabilization And continued grew ablation year areas our growth and we in led year. in exceeding electrophysiology, In the for drive past guidance beginning along lastly, rhythm with was across growth of the heart initial product in diabetes care, well will growth heart was sales vascular and several in our by new cardiac I’ll by and businesses. of this our made test Medical strong as portfolio. advancements led as care, Strong mapping range of set portfolio the as products this going for where new infectious accelerated molecular areas as forward. on We Devices, pipeline launches well business

indication offer with advancement in of Heart, in to a results more fourth in During a HD Advisor growth position penetrated product clinical business. an and support in We over mitral a double-digit penetrated creates importantly demonstrated and further of heart this expanded heart. the FDA under outcomes Enabled And of further more highly year billion, the dollar we most under area will this perhaps this We Catheter, achieved to If increase FreeStyle year. portfolio highly minimally our our prevalent announced would Catheter, approved, U.S. large device repair and growth of achieved disease was for for improve prior XX% XXXX consideration multi-billion XXX% was market. our enhance XXXX, during invasive global the versus and from In study time. earlier the this launch leading our innovative submitted led trial lastly cardiac in clinical the announced we was which sales the than this data Care, FDA maps which market device week, survival quarter the approval by valve MitraClip, And Structural create market our this new highly of landmark our of the of MitraClip. leadership year, to for advanced we our U.S. this Diabetes of in Libre, disease. achieved growth TactiCath detailed Sensor the an which with area the $X strengthen of form competitiveness patients potential

During the users. fourth added we quarter, new XXX,XXX

which efforts and levels new device approximately is given users fall of automated X as an and are growth our to glucose of diabetes approximately of with of awareness we’re users end are accelerating This ramped Libre X.X, are design this two-thirds saw type of product of simple million XXXX, the U.S. range. In million manage fundamentally to unique up changing driver diabetics around we As the one-third alarms people type to trend the active come. able compelling and that to during than we Due pay out significant manufacturing we of X. quarter, world, seeing now without initiated promises people the the granted highly there and price. to increasing trend living Libre worldwide, affordable includes the insurance use emerging the systems which feature more fourth fact optional versus to process, be second that cash Libre the pharmacy of offer years patients one of an our disease value due year, Libre proposition. to In users a its half preferred increase with and way are XXX launch their for to diabetes competitive including the overall coverage status during copay Europe, continue X.X

We was XXXX financial another shifts us. strategic the year. achieved during summary, in despite outstanding currency objectives our year for challenging So and

now performance growth tier sales in bit organic our the and our call execution. portfolio more and we’re our double-digit for the our strategy, our outlook over strength XXXX XXXX I’ll a to continued Brian? turn forecasting and EPS of top Brian XXXX, discuss to demonstrates detail. growth. strong Our And results

Brian Yoor

Thanks, Miles.

rates references growth Scott mentioned basis, otherwise an on are organic noted unless that our guidance. which please is all previous earlier, As note of to consistent sales

sales. therefore sales achieved of not Turning growth. acquired with guidance results XXXX, which Rapid sales for XXXX on late digit our fourth year-over-year was $XXX quarter an X.X% on basis, organic unfavorable million. included quarter to Diagnostics, of sales growth and impact in our the had organic mid-to-high-single our an in in-line of fourth results, Exchange is increased X.X%

During October. rates the exchange quarter results on dollar U.S. earnings to the had modestly, quarter, expectations, in time impact to resulting saw somewhat since the a of steady unfavorable continue strengthen we in larger fourth call our held our the compared in

our organic back Regarding other delivered sales exceed earnings sales, of growth adjusted investment at expense gross aspects ratio look repayment debt of flow and XX.X% sales X%, we strong the XXXX, and P&L, of XX%, Overall, share than X.X% margin R&D was of objectives. adjusted sales. adjusted adjusted we the of growth of cash was and was as per SG&A XX.X% more

full-year adjusted $X.XX outlook our to of XXXX. Turning $X.XX. per for Today, for to guidance share issued the earnings we

of approximately of above around improvement full year, occur offset of income X% sales. adjusted growth of adjusted current We reported by of $XXX XX.X% and on of exchange X.X%. the across of sales in underlying XX.X% of forecast approximately of We We sales year. million. have around For to sales sales rates, the we $XXX we reflects X.X% on for the impact somewhat Based would to currency. the our of full-year, of of with margin impact net which forecast the to impact non-operating and our adjusted of an vast partially around year the R&D ratio majority businesses, expense forecast half expense full million expected an forecast X.X% gross SG&A expect first margin organic the interest investment gross unfavorable

Lastly, tax tax for of reform. we around forecast XX% from full impact which an the year the U.S. anticipated rate contemplate adjusted XXXX,

outlook the of year We impact which less of have versus flu impact quarter, X.X% around negative would around margin $X.XX, to $X.XX to of reflects forecast underlying sales. little partially XX% due expense foreign exchange Adjusted sales, ratio to sales We results. in our we adjusted by contemplates EPS of first last adjusted quarter to we on X.X% which for above exchange of record of sales. growth expect strong our season. a saw double-digit of of XX.X% our an the we growth, on of sales Rapid comparison offset rates, quarter a a when difficult X%, abnormally Turning than forecast Diagnostics strong the first sales. reported around and somewhat our current adjusted At forecast business SG&A organic gross a R&D of investment of first

I’ll questions, open quick the of growth we business. overview organic call year Before our sales and a first quarter for now by provide full outlook

single-digit markets other the the in priority a growth EPD mid margin decline to forecast third-party comprised single-digit we key mid first supply of agreement. in along Pharmaceuticals, growth reflects non-core sales, discontinuation Established recent which with low our For in modest is quarter, of high a emerging which

first comparison will the single-digits be organic season reflecting our instruments. sales in continued Care relatively difficult In for the both Diagnostics, Diagnostics, for across flu growth Nutrition, momentum growth which forecast XXXX For expected laboratory, of I mid the full flat molecular forecast we first high Legacy full quarter is driven portfolio in strong by earlier. mid be Established and grow of forecast low which and mid to to In full growth diagnostics Abbott’s year, the to Pharmaceuticals high we we single-digit year, single-digits. quarter Point now in sales is year. both to Rapid core of quarter, our the first businesses, comprised to of results included the and mentioned the

Diagnostics forecast to the low for year, sales we quarter And open Devices, year, call growth areas the in full double-digit growth which and for growth single-digits. at single-digit the now continued will of questions. forecast we mid reflects full Medical we several high the that, both With Rapid business. the of For first

Operator

And Matt from Instructions] come from Taylor question our UBS. [Operator first will

open. is line Your

Matt Taylor

Wanted question. the for thank to FreeStyle to Hi, taking Libre you ask off. start about

X.X of for the what’s patient some of and type adds disclosure. adds more your there, talk you you’re longer-term had into the another vision trends You Could Libre? quarter good about and like X seems new it expanding with the

Miles White

Libre few several Matt. or about things actually things sure, a Libre. Yes, about Well,

last add of entire it’s patients XXX,XXX extremely equivalent the almost base That’s number space. quarter. user to all, We well. in did the the competitor going two of First

So over I’d Two-thirds type million going say now. X.X are got that’s those patients very We X. well. of

worldwide. intent been Our the and has this not potential it has think to diabetic niche we mass-market device it community because with entire serve

would X well type come There’s and more both X Europe. put U.S. we’ll as the to type with shortly. segment recently type constant, target doing patients. enhancements, X. cetera, We’ve expansion segments, X behind we’re X X.X cadence our – actually. the And the launched effort type even of to a the segment capacity we in product. So expands, both in type very et should I say, That And

us invested I’d obviously quantum significant in say, couple fair online will this adding we’ve Libre open we’re And come ability year. an push my to something to amount have capacity attention bit point, years we – with half it. a capacity the from point, of that having lot that wider. of tremendous expansion. of We’re we’re And started behind putting push. this the a of rate And obviously, At paying we’re that’s on floodgate much ago. at a a of the second at much And allows perspective, in to without a patients, turn going success to

and was view then diabetics and diabetic everybody size magnitude had have capacity got X was value a for So a rebate for by of market, forth. care health the patients system and and just of the accessible And so and we’ve proposition steady by because and to and driven the our affordable for diabetics, after both that. system not this additions of the X cadence – type type that

got cetera, influence in So and of emphasis markets development, et groups The through and all to we’ve a anybody see. like forth well. a price that point. good so the obviously very I got very and value patient all product our playing is We’ve would cost that is low our position. And think access getting groups

company. way of the a don’t for sustainable This big, is I topic. this other think I good say it. any product hell to is very a a long-term, growth have

Matt Taylor

as have alarms. now you you in just been segmenting X forward market, phenomenal the it’s Libre curious, growth. look Yes, I was with

You strategy pump kind with offering a have the talk you company. and your higher how you partnership expand whether segments, need you might to bifurcate go about of portfolio? Can low-cost Libre a as different after offering you feature through

Miles White

on phone. Well, how I’m to think I publicly be the going – say careful I much

communicate think you I this you that all very would I we’re forecast lines. can that’s product of developing time going I that And obviously wouldn’t can well. imagine. assume every as aspect what

current I for submissions growth The we’re speaks the features and think for the of themselves. product adding current that that itself. speak rate

because that XXX,XXX bringing not on focused quarter adding we’re yet, we’re highly I growing. pretty a and patients but now, capacity as, said, online, and We’re right constrained

diabetics type so to worldwide. ought increasing. able mass-market product. type at this X then this XX have with But this to of you million momentum magnitude opportunity, the product patients point, very a there’s keeping much access to market mass And the diabetics And X and pay that. type means attention intent out market to that to that there, And and make with those every is of many economically, an of one that’s enormous course, beyond X be our

product at and and segments. has So X. at targeted type this or meaning is not accuracy all a performance in Its solely type that’s solely X efficacy obviously

as cost in the is as anything position industry. Our low

have number We volume probably number one position. cost patients position, of one

ourselves everybody growing continuous I and glucose faster in else. than think we declare can leader pretty the easily monitoring

for to working all other things say third-party just technology, that us from all partners with I’d including who underway, some expect benefit of that So have would been time. would the be doing, you this

Matt Taylor

I’ll let some in. detailed the Thanks jump for answer. others Great.

Operator

And question Robbie Marcus you. JPMorgan. comes our Thank from next from

open. is Your line

Robbie Marcus

maybe the taking can question. guidance question. for I a Miles, ask thanks Great,

The line Abbott’s year. the better basically than and for a was bit So expecting start in XXXX is X.X% to guidance XXXX to X.X%, Street with

the confidence what maybe maybe maybe So at on. talked And and focused an for some key are Libre, point? little hit XXXX on us people the give specifically, a that touch growth MitraClip, Alinity. drivers background starting could you you your of on about is

Miles White

on there Well, driven you things several not It’s acquiring an XXXX than and are had It’s It’s better of organic growth. think lapping I is rates XXXX. gave that our of underlying that’s acquisition. you What strong. And are right pipeline into Yes. It’s outstanding just coming guidance and on guidance strong. on you’ve an out pipelines that growth the driving dependent an launching should The lapping by even already. growth all globally. them touched And the are base we acquisition. read all our something. are not not own dependent we

as better. just I a piece that gets better So story take and better a if a at and time, Libre

And So big the good pretty year a growth that well. really even has menu unleashed Lab, high an Alinity obviously, as call fully reaches And yet or is and driven in primarily it markets. that’s U.S. which we That’s as thing. Asian Europe. tip had in the mass, a fully what program critical driver. outstanding The out by I’ll rolling in will Core that up haven’t

everything Europe the been has And we’ve far, exceptional. in so seen with rollout

share over say, Our were, better own our I’d price our own our extremely point lot base, capture, rolling customers our point installed a it’s and of than and retention that. of value competitive but

that program And of only piece, And gone gets yet that our going market to cetera. and hematology we to aspects as that’s better expand really momentum a frankly, haven’t there’s so that well, fully, et geographies. couple

So nice it I strong terms that’s a for been it. to we business. drivers. slightly flat diagnostic integrating a – in declining story When us was space, are those best at Alere the best, of acquired in think And

be forward that momentum the which business, product business. new looking is positive We’re going now growth to for for going of pipeline the incrementally improving the in and

MitraClip competitive nice therapy, HeartMate the catheters of trial products our rate got a just that. behind destination coming in growth about than forward-looking As And in and the, in for help that that’s we’ve a got compared business range, approval to call X Electrophysiology a I additional is to plus, sustainable mentioned, Structural X% We somewhere more Heart. steady, there. strong. spoke some pipeline in now. already COAPT has that’s years, or even earlier upside. pipeline growth in devices in XX% the for be enhancements I Nutrition, there’s it, driving four, nice, the prior mean, five It’s an good. we launched year let’s us The the X% And

gets got about of not We board we’re Just the do Where good is in. couple everything we performance that problems? see a across Well, growth super own neuromod a places our better. we know too business. happy

I see business of course calls. We there year. expect that – to I’ve have had think a guessed. not sequentially of direction business, that I better, of we that. if about Point correct own Care little of we’re longer I and probably than wrong. done would over destiny some believe growth could estimated our sequentially But our We control of make our Diagnostic that’s there. our going And speed corrections the and plus. that’s we in – taken strategy, previous if It’s to out we’ve the talked at the to of improving had on Alere we which our anything, a business The part Point business, Care get in that’s but

cetera. a I’m And team, management improve. et a optimistic so path, management quite there has good that good That’ll team our

concern at So a if can’t things it’s had all, the I I control.

the underlying fundamental strategy is solid. pharmaceutical our business think I in

I the think indexed of with a that Diagnostics any we’re honest, think And I of not the differently and addition all forth if are Medical and don’t markets Devices in the to markets so and in different. multinational reliability currency to and particular, with going the know company. the now company, emerging be underlying growth world we’re we’re about I the currency. solid. the and, those volatility markets And of we’re worries live those rates in

emerging call solid. kind individual in in expect, which I spotty economies, given circumstances driven may by of we any underlying those business, market care it, health any let’s given of development the we think the is while systems, that growth have, So the year, of

every a not we a and or should steps. a better lot in forward. take one which little all great one sustainable going this this we think of year I given year had year actually last year at on portfolio, better or a single basis the we’re such business the Whenever So have across I look as do where company. a corrective aspects we business, performing And look

any rates products. forward So growth our of as base that note and there’s other our I a economies look We about the number our I into on XXXX, growth things. caution world and in of projections lot

dynamics of each rich our And areas right longevity those we of in. lot market in the products years for a come. on R&D the in portfolio we got of On the products we’ve and products portfolio of in driving of our a compete the rich now see of coming organic segments market product and a to out

So whatever the kind our or may windiness deliver demonstrated and we’ve the and through to continue of other growth XXXX markets XXXX the reliably power through into currency can demonstrate be, we will that that things that shareholders of expect.

Robbie Marcus

really that’s Great, helpful. one And Brian. for maybe

reported Abbott top also off the currency guidance implies X% to constant line, the a growth line. past closer higher is On bottom starting mid-teens but a to of EPS basis. higher from XX% we’ve This on on basis, than what the seen in

go there’s the growth should investors about business willingness upside, the the these if the incremental allow that to at line to think year, bottom versus reinvesting to we through in as So how fall rates?

Brian Yoor

showed that creates variable the growth we’re back the tax had we demonstration opportunities some that for. about kind heavily and even to last that back balance sustainable in sustainable propensity when he I invested that on give between but growth to we makes we growth year balanced think a We to what as we’ve Miles growth question I’ll defer to that I rate Miles the gave of be looking Street of the But choices shown versus in ultimately talked that. good shareholders. because The know pennies a

Your line impact. just said math the X%. is around October back I to It’s a right. call the little on that bottom touch exchange X% would be above

EPS here for growth. earnings still would first in of It’s improvement look there’s well the at of I is per our that a with underlying businesses. in mentioned FX underlying and plus Jude to be and that minus There’s or about growth mid-teens lot phenomenon. of mid-teens, St. margin rangebound would a that as in full our a of But the Rapid more as lot mean growth margins that, with portraying captured you imply going points. pertains SG&A in share script on still could quarter double-digit being also quarters, You front-end couple integration loaded. even And a first that gross gross year as synergy we’re across our my half continued And it as pretty the Diagnostics. underlying

our So the you’re margin expansion guidance. our in through seeing line in margin come op

Miles White

I’d Yes, things. a of couple reiterate

this So Miles. is

The I we’re our that we’re, mentioned, of we’ve into now First and don’t in factored exchange, of it know, all, growth. seeing lap. is know last meaning that we year, guidance a to got still guidance, as our exchange Brian at right XXXX, EPS is factor double-digit a

And is that XX% taking otherwise that what be XX%. been to so roll-through the at would from what would midpoint us currently it’s have

aspiration every to more strong with the company target that’s a a cash has profits our double-digit not, been So bar, with to the are year. and and with so still fate And it’s high None lapping guidance. But way year down. healthy to and every regard year’s that double predict forth, strong forth, and what’s of fortunate always by and strike profits in gosh, our where single happen that so that’s so we us than us I’d to kind year, we performance caused regard no we’re of guidance. so forecasting and currency start and last effect say and at hesitate fear for digits, start it’s flow. often with going to with traders, there’s do And I had

quarters we data, do years? get last beat out have that, XX five. last the met on XX out said it. could I – have in the but investors’ I further of XX of XX of expectations, not having years beat exceeded Now go them, have why and reported, don’t that we the of and But than back I them the XX

so a in flow. And I company Street’s that share it the investor. to or increased think it Wall profitability expectations, strong its our to reason the that return exceeds see investors We’ve there’s no that. demonstrated back to got if to expectations, cash And if change performance, in it do if we has increased exceeds exceeds

investment from and standpoint, needs cover a all able from to capital dividend We cash our a are standpoint. of

We that it’s buy and, make. have shares best dilution buy frankly, back offset shares to the the can capacity back we investment to

do able we the balance debt down very, very to would flexibility that have rapidly want. of lot been obviously to capacity sheet the we pay We M&A. that and We’ve have a so

So strong performance, strong flow. had very profitability, we cash strong

so and we to we exceed obviously, nice place and And a decision the expectations our then be. – if our that’s performance, have

investors We you that are would is expect. quarters investors to which our tell benefited. have investors, last that the our XX exactly And of the XX% the for with years, decision can what share

Robbie Marcus

lot. a Thanks

Operator

you. Thank

Our next from from Morgan Lewis comes Stanley. question David

line open. is Your

David Lewis

or to balance, just morning. better get the for still on and a the commentary focused of comes taking said, Libre businesses very most or Good was lot to about Miles, Thanks for that commentary comment one your mind couple on That XXXX, a better. a question. thinking lot investors that you. In MitraClip. listening your are being

a dependent significant XXXX Libre So is as a it guidance you launch? formulated, MitraClip on and or think how inflection for about was product X how guidance the

Miles White

Zero.

David Lewis

pretty can I it guess leave That’s Okay. clear. at we that.

point… second The

Miles White

need be, be mean, hard I what No, it for to It’s to trying regulatory I example, on will I’m not is. timing think be coy honest, you. the know very predict MitraClip. you I with to what?

So and with that can – come we with sure predict. reason us play for to no there’s the and not something play number we’re

than compelling. trying trying to put right And that any know pin so FDA – when think that. our we’d so do it’ll I sure we was compelling to And study story think on. rather our reimburse and in I obviously and trying We good It’s it have – very I’m to COAPT the which And is to down bodies what But powerful, that obviously investors regulatory a the of it’s predict pin and kind with consideration. service comes, will is very give all it it bodies. the not and the I know it’ll regulatory it. estimates, that doing to do that want and CMS it’ll What So do. haven’t. compelling come to is we down be it have that’s things has by easy something When of have is to number approve impact. timing forth not there’s would happen. comes,

David Lewis

from this company. Thinking company And an very then morning. balance years up underlevered made an on to you you went ago relative now, following sheet, about overlevered clear. Okay, point two in to another just the frankly, mean, peers I

of I unsung sort generation think heroes were debt paydown and of free cash last year.

So many up of relative other have the picked companies pace M&A. of

You’re in rate percent last the significant years. still growing M&A at robust X-plus couple a pretty without of

are stand XXXX growth? you the to M&A XXXX for think How you to front? now So active on about where as in be likely you relative reinvestment do

Miles White

a couple Well, I’d of say things.

track growth of We’ve you return your record in return I managed we’ve And had good on M&A. Humira history over back let’s time. record a all, your say, return and return you companies a with our not so as deep lot on mean, earn the of struggle excellent well time. and First shareholders. had, M&A M&A a good to then forth, to done with And deals know, Knoll over highest track an and those we’ve we’ve their going and organic products highest really

cetera. et highest, now, own our certainly now those of opportunities, So highest I’d to make returns, out the And you and development, M&A. right is coming your we are growth gaps the fill with The out on Jude organic see even biggest St. all getting much and return coming those of we’re have from all, businesses are higher we and pipeline, right of don’t that growth. it’s of say, our first organic

so that don’t own our you well, attractive. markets products in you honest, And when not rate the so bad buy. that’s something and would And organic now, be. with pretty opportunities a see be And need to And anything look of high, we’re necessarily We’ve also good appealing business. anyway, to careful might to return but times able is and right profit the we tell across I So that. the M&A our us. things – we good time, now multiples and feel like it. time and there’s right direction times not that’s for sales that are to never to But we so really at, been know good I be there’s kinds are execution that don’t growth there’s over

opportunities investment many as in the front various banking cetera. that do things as houses et company, you can All imagine of of put they every have us

of opportunities it’s like I out don’t And aware I products and criteria. pipelines something So right wouldn’t don’t across there. where we’re we can’t something businesses. will see what now, meet not strong not be got our may we’re I position we’ve but say of It’s can and see execute that. you all strategies fortunate we some need. in compelling. that a our just in very better they buy places,

so So not think our M&A our with and better in just we our talent own into money that. future because return to execution us forth. right a foreseeable for and turn fix strategies least necessary shareholders at it’s we’d put I now our doing the don’t or But now for

expansion, in we’ll to as And to investing do money own cash our we that choice. some know, our going We’re point in products that, investing dividends. growth, we we have and plenty make of of increasing can And have in have for more a at still a lot our you in capital. cash we the investing our return investing shareholders, here, plenty flow flow have,

keep down idea. to paying think because I a debt it’s good going We’re

you Our is St. like completed wasn’t more the Jude debt ago. That was X.X that ratio long X net to we it know, below debt-to-EBITDA – now X, Alere deals. and and when as

I what our that balance our have in we’re allocation wanted of brought management it. as environment sheet. the we net What so, the our really strategic optimal earn look forward I and and returns I particularly, for want doing down on right things and shareholders, wanted that to in have a have ratio we to potentially position. I believe, right and we’re fast, capital or depending get in think to flexibility; returns I that flexibility debt rising to is down interest think fast; far you we have. debt-to-EBITDA the So rate the that

So M&A a priority. I just as now see high right don’t

David Lewis

Very I’ll back jump Thanks, Okay. in queue. Miles. clear.

Operator

you. Thank

Joanne BMO Markets. from from Capital Our next question comes Wuensch

line Your is open.

Joanne Wuensch

nutritionals David’s the question. and regarding you a thank Good four question. feel house? of of remain press taking some to legs there adding and I possible do discussion thinking was you flip of side morning, having stool the lay how take about in a the about Instead the everybody, M&A business. Abbott all of think I’m for going things, sale

Miles White

almost quarter. I it I every that’s speculation. Well, – guess it’s if Geez, get don’t every quarter

company makes of frequently part think do you the role be is our in got transaction your to a in to I’ve shareholders now. it. in our global but today, M&A tenure, benefits It’s to this; today, say, has even a clearly of can we And portfolio. lot We our part just as And it’s same you the a profitable, flows Joanne, given And one not the for this our thanks in can asking everything infrastructure. you one to we cash try are about be I earlier There’s it. did I’m back years and is there And transactions, money that’s know, say would more And et I than make there It’s a Joanne. position great global So transact, got was portfolio. benefited the time. of anything of And company. generates as a was in my But part presence, business business, activities and been cash. And it sense pharmaceutical any as the earlier to of asked a company. roles to for look, the job other Nutrition. a right that long the I’d to Nutrition. highly of then. business I a of the Nutrition need our question, Nutrition to like role cetera. lot And my say things our with considering from for that mix different don’t question

well We’re valued.

honestly it. performing well. at I asks often our investors everybody go think enough, by you If value separating don’t create look I it. for more you would about it We’re

us. by being create executed than shareholders what already is improved don’t our Okay, I’ve can looked I value think at we for it. differential

think that’s plus. a I

think a people me well. there. lot about performing did that that it a general, also ask couple better in for of lot a than might happy it’s I’m I of while it, performing years it’s

think I screen. we we’ll just not it’s value improve be it. going by I time distract to think distracted. to a don’t to think I we’re don’t with And don’t considering that Abbott. So my on at we’re need ourselves going even radar create

shareholders well value rest for not screen it’s Abbott. So And a to think as of Abbott create it because valued being way think the my on it’s part I I just will. as radar don’t is as of

I I beneficial it’s to radar not thing simplest say. and necessarily to that’s do it’s think guess my us. the just on So nor screen

Joanne Wuensch

appreciate that. Okay,

pipeline. I businesses is what to talked reaccelerate two follow-up, Neuromod, don’t does talk think The an pipeline, on. you rate? about the about just Alere Street a to growth take want which really As it And then focused that I

you highlights some just could give If there. us Thank you.

Miles White

Yes.

our in and the a focused lot neuromod first emphasis of is actually So training and immediately our pipeline. will thing that term, sales And in execution we’re doing of R&D the there. biggest we longer all, our put Then force that’s single how expansion on. change we’re in what U.S.

of world number new focused development. broader people, types going any not it. think think the management, we of there’s to sort the kind of and forth now. get on But the a of I’m where the of of to two have. give fully it’s area products we new so want we’ve insights have products I benefit really gotten We opportunity in you lot because a pipeline We an main don’t under don’t to have we

out. attention. neuromod? the the second for in our R&D see was there. investment I we’ll that And I’d got part We What of think so that say And years, our doubled roll it’s coming in

Joanne Wuensch

in Pipeline Alere.

Miles White

of segments. the an reorganized Each product Each emphasis, has them their has has a target. into Each We’ve plan. Diagnostics plan. four their Rapid business R&D new

than us R&D incrementally which of number opportunity The couple a we’re there’s potential I examples. rolling that. Afinion possibility product, think for you think give these also behind. out. of that more X generally But investment can platforms, stuff our another in there’s – platform, there. of i.e. a newer updating a now, then we’re lot We points I speaking, got emphasis in cardiometabolic and high and Infectious a lot that we putting renewing there’s decease are increasing its and

a in the possession hands an one does synergies, That and a little organization, got, focus was of talked we and And we our we’ve R&D about. of each segments plan over the R&D around stabilizing had which took year, make a over et when our of to was of businesses. had sure our there of our so in we’ve execution each was targets cetera, a now lot of improvements take products new place, of first get company, steady these cadence little what the in its we’ve structure, In year, these time. the our a so people, which management,

on I to focus our that cadence. focused product this. that’s our Now this, now, has team new spending what is on mean, it been And the and increasing and been. our increasing is management we’ve turns attention

I it that, all be want Otherwise, tracking don’t beyond So here. specific. we’ll more to be

Joanne Wuensch

very Thank you much.

Operator

America. next question comes Our Bank from from of Hopkins Bob

open. line Your is

Bob Hopkins

good and Thanks Well. morning.

Is that at you U.S. a give up, to of to what in follow FMR your us then earlier just to all its XXXX? wanted assume And commentary given the approval MitraClip to all? at as quarter? I MitraClip rate visibility. you sense clear, reimbursement Can the be Just really do on and earlier growth fourth not assumed relative if comments, MitraClip might, in in for was not the

Miles White

what question pivotal whether get the it I’d earnings has don’t bearing guidance expect say, know. no that’s don’t making Scott? sales the possible, we’ll you’re that And And I not kind or guidance. certainly do But question a our different it We that hopeful was and or our earnings No, sales for not question that. the our the year it’s to that’s asking on just we’re is But possible? but was for me we the said, guidance not mean, consideration. assuming I I suppose see. I was. not And and of answer was, what year. know. now, approval? we’ll well, that I’m

Scott Leinenweber

the rate, growth With in respect grew XX% the quarter. fourth MitraClip MitraClip to Yes. about

Bob Hopkins

Okay.

little a So accelerated it bit.

that you And payers status. hear incentivize – of program to mentioned getting that I product-oriented little on was wanted wondering status. is on patients on trying a little ask copay Okay, that then use copay your specifically, maybe is color a just you I I what are that just And question Or that lower is, you preferred Libre? cost? the Libre that is the I the in if to found some sort because MitraClip. means So to just expand intriguing. was other could just is how broad I remarks Libre

Scott Leinenweber

offering about trying Yes. do, as it, proposition to think status way essentially value to I use to the preferred that what respect that is brings. the we’re with trying incent we’re you mean, offering copay a that, payers and is

a they a And as payers starting as the So see at see certain lower trend. do half would and progress result we our overall of in we patient that end the proposition, year copay, a that in for to Tier compelling argument in look the second frankly. value to put payer the were whatnot, it, outcomes the dialogue, we’re to and which starting quite saw Libre I think in higher X, again, they data

Bob Hopkins

Great. Thanks very much.

Operator

question next Our Navarro from from comes Markets. Glenn RBC Capital

open. is line Your

Glenn Navarro

questions. device good guys. Hi, Two morning,

to that’s X% Medtronic are HeartLogic that on Micra, Is That down the And – X% then their or share in given Boston me of that’s market the you’re losing just X%. launching the First, share to first feature Sierra. they’ve question. the surprising leadless because losing Scientific Management got in Or quarter, would So to softness? guys business, Rhythm you U.S. the because down Vascular to pacer? XIENCE

is drug-eluting weaker pricing is is product similar in the not for this gaining the simply just market traction? pressure? Or U.S.? more question, the Is it So stents

Scott Leinenweber

It’s down your capturing point, Sierra is Again, share. start doing thing. fairly is it. well. market, been line Management When declining heavy generally overall Rhythm I’ll comes with is with We’ve here. when market the down Vascular, you modestly, to is And was a and our same Yes. at in XIENCE as that performance able it it clip. know, modestly. The acquired business, that. Glenn. Hi, stabilize to we to

but points Sierra about a performance bit overall since XIENCE gained Pricing share Sierra. our space there. five we fact, is performing the the for of market, In a is all And market. above the definitely in of quite frankly, remains little the launch XIENCE challenge

Miles White

you’re what share, revenue. loss XIENCE system, royalty a in is stent what of are is reduction share. Sierra, seeing Glenn, The third-party the you’re of also and roll-through there a seeing third-party but the capturing not revenue,

Glenn Navarro

filing Okay. and and do approval? your a And one the follow-up. update comment Thanks. Portico, Tendyne an then And latest and acquisition. Can you us give maybe we enrollment program? on update then on both mitral mitral, on TAVR, see TAVR when specifically U.S.

Scott Leinenweber

we Yes. the second On of would that in half file this to here expect TAVR, year.

of the expanding toolbox. that We’ve last and filed as we We’re for trial we a actually we’re the here Cephea, to respect a end speak. year. build up With mitral them. vision CE Mark before in Tendyne obviously, to had wrapping long-term Tendyne, space really

approval program, see like great year. still The possibly this could U.S. a we years So away. away. And still again, years program really looks here is but the several several Cephea

Glenn Navarro

Okay. Great. Thanks, Scott.

Scott Leinenweber

Thanks, operator.

We will more one question. take

Operator

comes Rick final Stifel. question our from Wise And from

Your line open. is

Rick Wise

job done one a the Maybe and Brian just one Miles. picture good Hi, question. morning, has debt. and product down big team has fabulous done paying

and You dividend. highlighted today’s not your doing comfort M&A Obviously, the share – some in that portfolio. suggests buyback in about thoughts

it? touched price? feeling how about I priority? a stock on just have your are bit. excess cash depending it dividing are there do strongly thinking wondering, little a mean, you – about taking But some equally it on You’ve you Is and you

Miles White

particular and No, there’s If so for capacity need. dividing it afford good I and more. timing, as said, any invest to there’s – obviously, we thing. a manufacturing forth, or it that’s – use, and And don’t capital internally a about think of we There’s can in I’ve and there’s got a all equally. as that

do dividend a target dividend generally our keeping And higher group XX% all. a healthy of that EPS a or range as ratio, healthy. nice We’re range. a in our don’t number our at peer of our payout We

return. times healthy necessarily that we’ve that. matters With lot just to actually to values, our M&A, right best buyback opportunistic. M&A my it use a we Rick, we’re depends assume think they’re look when is things. We us got you we’re to down the a when to multiple, And got at there’s It and on If company, in a large just depends think So down investors is regard segment And market. I share it case, we go with cash? debt. of any our carry don’t it economical going do flexibility. the There’s be of that that. that, And doing of would the now, pay at. regard want market sort that to of of I business, keep share in I high have times paid I timing, up of to this to interest kind can want fast. now, all do say, and to to kind because that And on still dividend. got forth, want to keep down. we – dying the buybacks paying that wow, about offset It you of right debt forward. I we’ve see lining And any valuations something to the but look care product, of sorts aren’t say, – other dilution don’t to buybacks, the then share to so good and on

into pay we keep to debt, have our strong enough a ability do do to that is we of we dividend. now paying the We cash think choice. well I but down. – reasonable that still flow the want range And debt have we’re

We internally. things. can needs satisfy We have the our do to ability these all capital

any I I where it mechanistic at strong the kind level. also need debt is. very or think look where to lower a the best in it the thing dividing formula So ourselves return think think position way, don’t I best whatever. is half about the about guess it behooves it and in is of – or where us And a we in best – leave and We

So we economically. reform, when overseas, for M&A that trapped cash so use that to had was and fortunate places – it we tax were to much cash we it opportunities return. before got to use invest places good When

use flexibility the a that share that far we’d strong best so in We cash, or the of like of now. returns manage certainly efficiently stuck of If of the kind forth cash buybacks, we the or more our look years at the consider we’d the best manage We’re that. couple probably But how needs. right cash the not and It’s flows we use cash company can find of And of just so now, happens we a priority it. still we’ll flow. highest I still have a what wouldn’t priority depending keep glad forth, that’s and terms best road with and is down be either. on did, debt. have rates interest the that’s down to our and high say tremendous And here, strong very cash paying strategic

point circumstances given think time. in it depends at a I on just So

Rick Wise

you end talk about wild love But cards know were the lastly you guidance to that to helped And X% out. Yes, that’s answer. your quickly, to just could a push and some great I there would for upper of XXXX. X.X% what

growth You on XXXX. initial XXXX in range? you above what exceeded Maybe just guidance upper your for the quickly, you push your XXXX touch organic if end would, to could or

Miles White

we Thank whole our We business it you. MitraClip’s businesses prior it than better and we improvement. years, expected. it take lot, than mentioned wouldn’t of thought that. And do I better think of think product that but did of could a than already Last ticks did than things I would expected. do these couple better better year, a any Nutrition of We’ve actually Oh, number that there’s there’s Rick, – possibility. in a

tick-ups those of difference. some make big And a

And some lot of of the the of is Care or businesses, business fairly Point turn think as to, to corner I business. the expect whether things sort the business and strong. like to or neuromod and if the here doesn’t strong, so individual correct pharmaceutical whole of is other in we it some know a And countries plan neuromod underlying fundamental underperformance our we take it’s places upside we where

Rick Wise

Much you. appreciated. Thank

Scott Leinenweber

be today. Very Thank this A.M. joining your and website Central will us good. all available webcast operator, replay of A Well, thank This Investor Abbott’s you concludes you after for you, on call XX:XX thank now of for questions. abbottinvestor.com. call. conference Time Abbott’s Relations at today

Operator

Ladies program, and disconnect. This conference. gentlemen, in you have wonderful and thank for today’s the Everyone, participating a does conclude you may all day.

Abbott Laboratories (ABT) 23 Jan 192018 Q4 Earnings call transcript