Abbott's Vice President of Investor Relations, Mike Comilla, welcomed listeners to Abbott's Second Quarter 2023 Earnings Conference Call. Robert Ford, Chairman and Chief Executive Officer, and Bob Funck, Executive Vice President, Finance and Chief Financial Officer, will provide opening remarks before taking questions. Abbott cautioned that forward-looking statements are subject to risks and uncertainties, and non-GAAP financial measures will be used to help investors understand the company's performance. The non-GAAP financial measures are reconciled with GAAP financial measures in the earnings news release and regulatory filings, which are available on the company's website.

In the second quarter of 2020, Abbott reported adjusted earnings per share of $1.08, which was a result of an acceleration in the contribution from the underlying base business. Organic sales, excluding COVID testing, increased low double-digits, with mid-teens growth in medical devices, double-digit growth in Established Pharmaceuticals and Nutrition, and more than 20% growth in pediatric nutrition in the U.S. These strengthening trends were seen in both institutional and consumer-facing businesses.

In the quarter, the company has made good progress in increasing manufacturing production and has recovered 75% of the market share in the infant formula business that was lost last year due to a recall. Sales across several markets and therapeutic areas grew, with Established Pharmaceuticals increasing 12.5% and Diagnostics growing 7% excluding COVID testing. Medical Devices sales grew 14%, with Freestyle Libre sales exceeding $1.3 billion and increasing 25% on an organic basis. The product has been nationally reimbursed in France for all people with diabetes who use insulin.

Abbott has been expanding coverage for continuous glucose monitors and has seen double-digit growth in electrophysiology and structural heart. They have also received FDA approval for their TactiFlex ablation catheter and TriClip minimally invasive tricuspid valve repair device. In Ribbon Management, growth was driven by their recently launched leadless pacemaker, Aveir. They have also received FDA approval for their dual chamber leadless pacemaker, a first of its kind technology.

In the second quarter of 2021, sales decreased by 9.2% due to a decline in COVID testing-related sales. Excluding COVID testing-related sales, underlying base business organic sales growth was 11.5%. Foreign exchange had an unfavorable year-over-year impact of 2.5% on second quarter sales, due to the U.S. dollar strengthening against several currencies.

The adjusted gross margin ratio for the second quarter was 55.4% of sales, while adjusted R&D and SG&A were 6.4% and 27.2%, respectively. The full year underlying base business organic sales growth is expected to be in the low double-digits, with COVID testing-related sales of around $1.3 billion. The exchange rate is expected to have an unfavorable impact of 1.5% on reported sales. The full year adjusted earnings per share guidance is unchanged, but the contribution from COVID testing sales is lower than initially forecasted. The third quarter is expected to show strong growth in underlying base business earnings per share of around $1.10.

Robert Ford of the company discussed the strong growth they have seen in the last couple of quarters, driven by a strong base business and investments. He noted that all four sectors, excluding the COVID testing piece, saw very strong growth, with an acceleration from Q1 to Q2 growth versus Q2 of last year. He expressed optimism for continued growth going into 2024.

EPD has sustained high single-digit to low double-digit growth for the last two years, and is one of the best positioned large healthcare companies in emerging markets. The Nutrition sector has seen double-digit growth, and the pediatric business is recovering their market share. The COVID numbers have been brought down due to the end of the public health emergency. The business is doing well in all geographies, with China reopening being particularly positive.

The company is pleased with its top line growth rate, which it has increased from high single to low double-digit growth rate. The strong base business has contributed $4.10 of earnings for the full year this year, which is $0.15 higher than originally expected. The company is also seeing good momentum in gross margin, with three out of the four major businesses showing improved gross margin profiles. All of this has resulted in top and bottom line growth, new product contributions, and potential gross margin expansion.

Robert Ford explains that the med-tech Fab 5 products grew 40% in the quarter, and that Aveir has seen positive developments with the FDA approval of the single chamber and the dual chamber, which makes up 80% of the $3 billion PACE market. He believes that this is a huge opportunity to change the paradigm of pacemakers, as it is the first technology to have two implanted devices communicating with each other.

Amulet grew 25% this quarter and TAVR with Navitor has had roughly doubled sales in the last 18 months. The company is focusing on real-world clinical results, strong implant technique, and training physicians. Additionally, TriClip is gaining physician enthusiasm and the publishing of TRILUMINATE data earlier this year has given a boost to international markets.

Robert discussed the strong clinical data for the TRILUMINATE implant and the opportunity for it in the U.S. He also mentioned the innovations in the cardioneuro business and the potential for it to become a billion dollar segment. Danielle Antalffy asked about the deceleration of Libre in the U.S. and the ramping of basal coverage for Medicare, as well as the MitraClip.

Robert Ford discussed the positive growth of Libre in the U.S. and internationally. He mentioned that they have a 70% share in the French market and that coverage began in April in the U.S. He also discussed the upcoming launch activity and pipeline activity in the second half of the year, such as integration with pumps and L3 approval with a 15-day claim.

In the second half of this year, Abbott will be launching a 15-day sensor in the U.S. and initiating a glucose ketone dual sense trial in Q4. The most exciting launch for the second half is the conversion of their entire Libre 2 base to streaming through an app update, which was mostly successful with 90% of the user base converted at the end of Monday. MitraClip had a 10% growth in the U.S. and 20% growth internationally, though the U.S. referral funnel was impacted by the pandemic.

Robert Ford of Medtronic discusses the success of the company's international market and the potential for growth in the US through improving the patient referral funnel. He also mentions the launch of the Lingo platform, which was part of the company's strategy to expand beyond diabetes. Lastly, he asks Bob to provide information on gross margin expansion for the back half of the year.

During the COVID pandemic, a dedicated team of scientists, engineers, data experts, and marketing professionals was assembled to create a product to target a healthy population and help them stay healthy. This product, Lingo Coach, is designed to help users understand their body’s reaction to food, sleep, and exercise, and to minimize glucose spikes throughout the day. The product assigns users a daily target, known as a “Lingo count”, which tracks progress and behavior modification.

Abbott has launched a subscription-based app called Lingo Count in the UK and plans to roll it out to other markets, including the U.S., by the end of the year. The app uses AI to personalize user experience. Abbott expects the app to contribute to their financial growth in the long-term, though not significantly in the short-term. Abbott's gross margin profile for the year is in line with their January forecast, though they are seeing lower gross margin on their COVID tests due to decreased volumes.

The electrophysiology growth rate was 17%, with U.S. growth at 9% and international growth at 24%, with 8-9 points of that being attributed to China recovery. Europe was up just under 20% and the TactiFlex catheter is doing well and getting positive feedback.

Robert Ford and his team are working hard to get back to their pre-recall market share in the WIC segment by the end of the year. They have reopened manufacturing processes for specialty and non-specialty products, and have focused on Q3 and Q4 in the WIC segment. They are expecting to get back to their pre-recall market share in nutrition by the end of the year.

Core Lab had a strong quarter due to the recovery of routine testing in the U.S., Europe, Asia (excluding China), and Latin America. The Alinity rollout is a multi-year cycle with 15% of contracts up for renewal each year. Core Lab is balancing top line growth and gross margin expansion, and the blood bank market has also recovered nicely.

Robert Ford discussed the company's focus on the development of assays and tests, particularly with regards to molecular and point of care diagnostics. He highlighted a rapid test for traumatic brain injury as an example of a point of care assay, noting that it could have applications around the world. He also congratulated the company on a great quarter.

Robert Ford discussed the Lingo product which was launched the day before. It starts with glucose only, but the team is looking into adding ketones, lactates, and other analytes in the future. He believes that the dual sensor with ketones and glucose will be strong for both diabetes and non-diabetes populations.

Robert Ford discussed the acquisition of CSI, which closed in this quarter, and how it will have a strong impact on Abbott's vascular business. He also highlighted the IVL product, which is receiving a disproportionate amount of attention and resources as part of the integration exercise. He concluded by stating that the IVL product is high on his priority list as they go through the integration process.

Robert Ford discussed the improved operating margin profile of the company, which is back to pre-pandemic levels. This is a result of investments made during the pandemic, as well as an increase in infant nutrition and device business. The biggest opportunity for the company to maintain their growth rate is to look at areas to improve their gross margins.

The company is focusing on inventory in order to capitalize on opportunities in the top line. The first half of the year has seen double-digit organic sales growth and that growth has been broad-based and across the portfolio. The pipeline has been highly productive and the company has raised its organic sales growth and EPS guidance. Momentum is building.

Abbott's conference call has concluded, and a webcast replay will be available on Abbott's Investor Relations website. Mike Comilla thanked everyone for their questions and for joining the call, and the operator thanked everyone for participating and wished them a wonderful day.

This summary was generated with AI and may contain some inaccuracies.