The operator introduces the Abbott Fourth Quarter 2023 Earnings Conference Call and reminds participants that the call is being recorded and copyrighted 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's non-GAAP financial measures are reconciled with GAAP measures in their earnings news release and regulatory filings. The company has not provided a GAAP measure for organic sales growth due to the unpredictability of foreign exchange rates. CEO Robert Ford reflects on the challenging environment of the past few years and how the company's actions have positioned them to be even stronger. Despite the pandemic disrupting their growth trajectory, Abbott's diversified business has proven to be resilient with their branded generics pharmaceutical business staying the course and their nutrition business accelerating.

During the pandemic, we successfully created a multi-billion dollar COVID testing business that contributed to 20% of our sales. We strategically planned for the eventual decline in demand and invested in other areas of the company, such as R&D, which has resulted in over 25 new growth opportunities. We have also made significant investments in EPD, nutrition, and diagnostics, leading to new product approvals and agreements for emerging markets.

In the medical devices sector, 10 new product approvals were announced, along with new opportunities to improve the existing portfolio. This led to an acceleration in growth, with sales and earnings exceeding expectations. For 2024, sales growth is forecasted to be 8-10% and adjusted earnings per share is expected to be $4.50-$4.70. In the nutrition sector, sales increased by 14% due to double-digit growth in the U.S. infant formula business.

In the fourth quarter, Abbott saw international growth of 18% driven by strong sales in infant formula and PediaSure toddler products. Sales in adult nutrition surpassed $4 billion and grew 13.5%, while established pharmaceuticals saw a 9% increase in sales. Diagnostics experienced lower sales due to delayed flu season, but core laboratory diagnostics grew by 10% thanks to the success of the Alinity system. In medical devices, sales grew by 15%, with Freestyle Libre continuous glucose monitoring system leading the way with a 24% increase in sales.

Libre has become the most successful medical device in history, with strong sales growth in electrophysiology, rhythm management, structural heart, heart failure, and neuromodulation. The company outperformed expectations in 2023 and is forecasting continued growth in 2024. In the fourth quarter, sales increased by 2.1% on an organic basis, despite a decline in COVID testing-related sales.

Abbott's underlying base business organic sales growth was 11% in the fourth quarter, excluding COVID testing sales. The company's adjusted gross margin ratio was 55.9% of sales, adjusted R&D was 6.1% of sales, and adjusted SG&A was 26.3% of sales. For 2024, Abbott is forecasting adjusted earnings per share of $4.50 to $4.70 and total underlying base business organic sales growth of 8% to 10%. The company expects non-operating income of $130 million and an adjusted tax rate of 15%. The company's pre-COVID growth rate was 7% to 8%, but they are now guiding for 8% to 10% growth for 2024 due to the impact of their strategy to reinvest some COVID revenue into the base business.

The company's four business segments are in a better and stronger position now than before the pandemic, with EPD experiencing double-digit organic sales growth and expanding their margin profile. The addition of a new growth vertical in Biosimilars in emerging markets is expected to further strengthen this segment. The Nutrition segment has regained its leadership position in the US and has seen significant growth in its adult business, which is now worth $4 billion and growing at a high single-digit rate. This strong performance could potentially lead to a higher valuation for the company in the medtech industry.

The company is making investments in their diagnostics channel, which has a strong track record and has recently won large accounts. They have a formula for growth and have been successful in placing new instruments for decentralized testing. In the medical devices segment, they have made strategic investments to accelerate growth in historically slow-growing areas. This has resulted in double-digit growth for the overall segment. The company has seen double-digit growth in all four of their attractive segments and has strengthened them for future growth opportunities. Despite this, there has been some concern about sales not translating into earnings.

In this paragraph, the speaker discusses the impact of COVID on their business and how they were able to maintain strong earnings per share growth despite the challenges. They mention the volatility in the world and their resilience to it. The speaker also mentions the potential for further earnings growth and the company's unique position compared to their peers in terms of operating margin.

The company has been strategically managing their spending and are now focused on expanding their gross margin. They have a strong track record of executing internal margin improvement programs and are seeing some headwinds turn into tailwinds. The growth of higher margin businesses in their portfolio is also contributing to their gross margin expansion. The company expects to return to their pre-pandemic gross margin profile in the future.

The speaker discusses the strong growth in their electrophysiology business, attributing it to a robust portfolio and successful launches of new products such as InsighTX and TactiFlex. The growth has been seen across all regions, including Europe, the US, and China, despite some price challenges in the market. The speaker believes that the strong performance is due to the strength of their products and their ability to provide positive outcomes for patients and shorten procedure times.

Robert was asked about the growth of the Libre device at a recent conference and he mentioned that there are robust growth rates expected in the future. He also addressed the discrepancy between Libre prescriptions and sales, mentioning that the discrepancy may be due to the Medicare DME business and the growth from Basel.

Robert Ford, the CEO of Abbott Laboratories, reports strong growth in the fourth quarter of under $1.5 billion, with a 32% increase in the US market. He also mentions that the company has not yet launched L3, a competitive new system, in the US market, but plans to do so in 2024. Ford believes that the company's position, scale, and brand have contributed to this growth. He also mentions that there are many opportunities for growth, including the Basel segment, which he believes will continue to grow for the next two or more years. The company's product, Libre, is dominating in the pharmacy channel and is also contributing to growth in Japan and France, where it has exclusive reimbursement. Ford believes that there is still great potential for growth in the US market, as the majority of the population is now covered by Medicare or private commercial insurance. The company's focus is on building awareness and establishing relationships with primary care providers to continue this growth.

The speaker believes that there is a great opportunity for the company to enter the market of pump connectivity, which has not been targeted before. With the recent regulatory clearings and ability to connect with different pump manufacturers, this presents a market conversion opportunity for the company. The speaker also mentions a recent independent study that showed their product, Libre-3, to be superior to a competitor's product. This could be a significant factor for pump companies looking to provide the best solution for their users. The speaker sees this, along with other growth verticals, as potential drivers for the company in the future. In regards to IQVIA, the speaker notes that this data does not capture the entire market and there are other segments that drive adoption that are not reflected in IQVIA's data.

Danielle Antalffy asks about the "Fab 5" products, which are expected to contribute to Abbott's growth. Robert Ford confirms that they are still considered important products and will contribute to the company's growth in the long term. He also mentions that they have already added to the company's growth this year and will continue to do so in the future. Some of these products, like Tricuspid and CardioMEMS, require additional work for market expansion and development.

The speaker discusses the company's focus on targeting attractive and growing segments in the medical technology market, specifically mentioning Navitor and Aveir as products with strong value propositions. They also mention upcoming line extensions and new products in development, including Lingo, a TBI test, a nutritional drink for GLP-1 users, and a new Alinity system. The speaker emphasizes the importance of having a robust pipeline to sustain growth beyond 2024 and 2025.

The speaker, Robert Ford, is responding to a question about the company's nutrition segment. He praises the team for their efforts in returning to normalcy and achieving market leadership. He expects the company to surpass its pre-recall share and anticipates growth in the adult segment due to an aging population focusing on healthcare and nutrition. He believes this will allow the company to exceed its pre-pandemic growth range.

The speaker discusses the impact of the company's share in the US and the potential impact of upcoming product launches on their financial performance. They also mention their strong balance sheet and the flexibility it provides for potential M&A opportunities, but emphasize the importance of strategic fit and profitability rather than just boosting top-line growth.

Robert Ford, CEO of the company, is discussing the success of the St. Jude deal and how it has positively impacted the company. He mentions the importance of looking at financial metrics beyond just top-line growth and how any future deals would be strategic and not just to fill a top-line gap. In terms of market growth, Ford believes that there is no catch-up or pent-up demand, but rather an increase in adoption of technologies and some disruption due to labor shortages.

The speaker does not believe there was a sudden increase in testing due to pent-up demand, but rather a return to normal procedures. They credit the success of the company to their ability to manage the impact of COVID and their strong performance across all areas of the company. They also mention a promising pipeline and forecasted growth for the upcoming year.

The speaker is discussing the company's EPS guide and mentions that there is more potential for upside than downside. They are pleased with their progress so far and are looking forward to executing their plans for the year. The call concludes with information on where to find a replay of the call.

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