The operator introduces the participants of the conference call and reminds them that the call is being recorded by Abbott. Mike Comilla, Vice President of Investor Relations, introduces the speakers and mentions that some statements may be forward-looking. He also mentions that non-GAAP financial measures will be used during the call.

Abbott reported third quarter adjusted earnings per share of $1.14 and raised the midpoint of their full year guidance to $4.42 to $4.46. Organic sales growth on the base business increased double digits for the third consecutive quarter and all four major businesses saw double-digit growth. This was a result of strong position in growth markets and additional investments made during the pandemic. Nutrition sales increased 18% in the quarter.

In the pediatric nutrition segment, Abbott has seen a 25% growth due to increased market share in the U.S. and strong demand for their PediaSure brand internationally. The adult nutrition segment has also seen a 12% growth driven by high demand for their Ensure and Glucerna brands. In established pharmaceuticals, sales have increased by 11% with double-digit growth in multiple markets and therapeutic areas. Abbott has also announced a collaboration to introduce new medicines in emerging markets. In diagnostics, excluding COVID testing, organic sales grew by 10% with strong performance in core lab diagnostics and a recovery in blood transfusion testing. In rapid diagnostics, there was a double-digit growth in demand for respiratory tests due to an early flu season. Medical devices also saw a growth of 15%, with strong sales in both the U.S. and international markets, particularly in their diabetes care segment with a 28% growth in FreeStyle Libre sales.

The global Libre user base has exceeded 5 million people, with a significant increase in the U.S. due to a growing number of users combining Libre with GLP-1 medications for diabetes management. This complementary relationship has resulted in higher usage rates for both products. In cardiovascular devices, sales grew 10%, with double-digit growth in electrophysiology and structural heart. The growth was driven by new product launches and strong performance in pacemaker and neuromodulation sales.

The third quarter results for the company were strong, with all four major businesses experiencing double-digit organic sales growth. Excluding COVID testing-related sales, the base business saw a 13.8% increase in organic sales. Foreign exchange had a small negative impact on sales. The adjusted gross margin ratio was 55% of sales, slightly below the original full year guidance. This was due to lower gross margins on COVID tests and higher inventory obsolescence. Adjusted R&D and SG&A were 6.2% and 26.4% of sales, respectively.

The company had a strong third quarter with a 14% adjusted tax rate. They forecast an ongoing earning per share of $4.42 to $4.46 for the full year and anticipate low double-digit organic sales growth in the fourth quarter. They are confident in their ability to sustain this momentum and deliver high-single digit organic revenue growth and solid margin expansion in 2024, despite potential macroeconomic challenges. The company has also strengthened its portfolio through investments made during the pandemic.

In the fourth quarter, the base business is expected to contribute $4.10 of EPS, which has been raised twice this year due to strong top line growth and increased contributions from growth drivers. This momentum is expected to continue into 2024, with the company forecasting accelerated top line growth. The street model predicts double digit EPS for the base business, and the company is confident in their ability to deliver. Gross margin expansion is also a focus, with momentum expected to continue into 2024. More details will be provided in the January call.

The speaker discusses the company's growth model and plans for sustained momentum in the coming year. They also mention the importance of the Chinese market and address potential impacts of anti-corruption initiatives and Value-Based Purchasing (VBP) in China. However, they did not see any significant impact in the third quarter and remain committed to compliance and following applicable laws.

The implementation of a new market process in China has been ongoing since April and is expected to be completed by the end of the year. This has had a positive impact on the company's EP business in China, as they were able to gain share and volume. A value-based pricing (VBP) has also been announced for diagnostics, which will involve about 20% of the core lab business. The rollout of this VBP will be phased and may take a few quarters to implement. China remains a big opportunity for growth in devices, diagnostics, adult nutrition, and pharma. The company's team is doing well in operating in this market. The discussion about GLP-1s and their potential impact on the future medtech market growth has been a major topic of conversation in recent months.

Robert Ford, an experienced diabetes expert, believes that the recent introduction of GLP-1s in the market will have a positive impact on the treatment of diabetes. However, he acknowledges that there is investor concern about the potential impact of these drugs on different industries and companies. He believes that this fear is driven by those with less knowledge in medtech and is largely based on emotions rather than facts and data. Ford also notes that there is a mismatch between revenue forecasts and the potential impact on patients.

The author discusses the consensus forecast for a class of drugs and its potential impact on the market. They note that while the forecasted revenue is significant, it only represents a small fraction of the overall patient pool compared to other medical device markets. They also raise concerns about the cost of the drugs and how it will be covered by payers, specifically mentioning employers and companies. These factors may have an impact on the long-term success of the drugs.

The speaker believes that the recent analysis showing a significant number of Libre users also taking GLP-1 medication is a positive impact on the diabetes business. This is because those using both products tend to have higher therapy compliance, leading to improved health outcomes. The use of multiple tools in combination is common in diabetes, and the speaker believes that more treatment options, such as these drugs, are beneficial for patients. The speaker also mentions that they are exploring other areas of interest related to this topic and have a robust glucose data set from Libre users, making it a perfect platform for evaluating effectiveness in a real-world setting.

Robert discusses the importance of looking at data to compare the effectiveness of different drugs and their side effects. He also mentions the potential for Abbott to develop products to address side effects, specifically muscle mass loss. He believes that the concerns over GLP-1 drugs are overblown and that there are still many questions to be answered in the long term. Robbie brings up the topic of continuous glucose monitoring (CGM) and notes that Abbott has recently received coverage for it in France and already has coverage in the US and Japan.

In the paragraph, Robert Ford discusses the growth of Abbott, with a 28% increase in the last quarter. He highlights the impact of Type II Basel coverage in international markets, particularly in France and Japan, where they have seen a significant increase in users. He also mentions the surprise at the speed of coverage in the US, with 90% of commercial payers now offering some level of basal coverage. Ford sees this as a great opportunity for growth, supported by data showing the benefits for patients.

The company has been focused on generating clinical evidence, building sales forces, and investing in direct-to-consumer advertising to reach their goal of $10 billion by 2028. They have good momentum and a lot of growth drivers, but competition, tough comps, and the impact of COVID may affect their growth forecast for 2024. They aim to sustain high single-digit growth and double-digit growth in the bottom line.

The company has been investing in forward growth, resulting in double-digit bottom line growth. The growth model has been successful even during the pandemic. The company is confident in delivering high single-digit growth and double-digit EPS growth in 2024, despite potential competition and comps. They have seen growth in MitraClip and electrophysiology, both internationally and in the US. Overall, the company is optimistic about their growth forecast and believes they have a strong foundation to work with.

The speaker discusses the company's position in the nutrition market, stating that they have regained their leadership position but are not yet at 100% of their pre-recall market share. They mention sustained growth and a focus on underserved populations. The speaker also briefly mentions the company's M&A plans.

The company is seeing continuous gains in market share in the non-WIC channel and is confident in its demand generation strategies. They have completed three acquisitions in the past six months and are actively looking for more opportunities, taking advantage of the pullback in valuations. They have a strategic framework for M&A and are focused on adding value to assets in areas of growth. The company has the capacity to engage in further acquisitions if the right opportunity arises.

Vijay Kumar from Evercore ISI asks about the impact of China's value-based pricing (VBP) for diagnostics on Core Lab's sales in China. Robert Ford explains that the VBP will start in late Q1 or Q2 and will initially affect about 20% of the market, which equates to $1 billion in annual sales. The focus is currently on infectious disease and fertility assays, but there could be potential for volume gains in other areas. Price impact will depend on market share in each segment.

The speaker believes that the transition to value-based pricing in China will not be difficult for the company, as they have experience with it in other areas of their business. They have a good formula for managing it and will adjust their cost structure accordingly. In regards to PFA, the speaker is not concerned about share loss in the medium-term, as they have robust growth and upcoming innovations in their EP business. They also have a strong position in mapping and diagnostics, which will be less impacted by the transition to PFA.

The speaker discusses the opportunities for growth in the AP portfolio in 2024, with a focus on the UK launch of Lingo and plans to file for approval in the US. They also mention the expected pathway for commercialization of TRILUMINATE and TriClip in the US, as well as the potential for growth in the diabetes market with the integration of their products with Tandem's pump.

The company has submitted TriClip for FDA review and expects it to go through an advisory panel process in January. They are confident in the product's potential for reducing TR and see it as a $1 billion-plus opportunity. The company also plans to launch a closed-loop integration with Tandem by the end of the year.

The company has launched an AID system in Europe and has seen positive results, with a pump company experiencing significant growth. They aim to be a leader in the market and are currently working on a dual analyte glucose ketone sensor. The company expects to see gross margin expansion in 2024, driven by factors such as lower commodity costs. They have a plan in place to return to pre-COVID gross margin levels, but it may not happen until the first half of 2024.

The company faced challenges in 2022 and 2023 due to commodity costs, but these costs are starting to decrease. They have implemented strategies to improve gross margin and are seeing growth in their higher-margin businesses and new products. COVID testing sales for 2023 are forecasted to be $1.5 billion. Overall, the company is experiencing strong growth across all sectors.

The speaker discusses the company's recent success in delivering double-digit organic sales growth for the past three quarters and exceeding expectations for the year. They also mention the potential for growth in 2024 through new product approvals, indications, and geographic expansions. The speaker concludes by thanking the participants and directing them to a webcast replay of the call on the company's Investor Relations website.

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