The paragraph is from Abbott's Third Quarter 2024 Earnings Conference Call. The operator introduces the call, which is recorded and copyrighted by Abbott. Mike Comilla, Vice President of Investor Relations, introduces Robert Ford, CEO, and Phil Boudreau, CFO, who will give opening remarks before a question-and-answer session. Participants are reminded that forward-looking statements made during the call are subject to risks, and actual results may differ from projections. Abbott notes these risks in their 2023 annual report and does not commit to updating these statements unless required by law. The call will include non-GAAP financial measures for better insight into Abbott's performance.

The paragraph details Abbott's financial performance, highlighting over 8% organic sales growth and adjusted earnings per share of $1.21, excluding COVID testing sales. Robert Ford mentions the company’s strategic achievements, including new partnerships, product launches, and advancements in the R&D pipeline. Nutrition sales rose by 3.5%, with notable growth in U.S. Pediatric and Adult Nutrition due to market share gains and strong performance of brands like Ensure and Glucerna. Core Laboratory Diagnostics sales also increased by 4.5%, excluding COVID testing sales.

The paragraph highlights significant growth and developments across various sectors of the company's operations. The Core Lab experienced growth due to increased global demand for diagnostic testing and the adoption of their systems, supported by recent large account wins. The rapid and point-of-care diagnostics businesses saw expansion in test menus and rising demand for respiratory tests. A new partnership with the Big Ten conference aims to boost the U.S. blood supply through a donation competition, promoting a new generation of donors. The EPE segment achieved 7% sales growth, with strong performance in Latin America, Southeast Asia, and the Middle East, and across key therapeutic areas such as gastroenterology and cardiometabolic. The company advanced its biosimilar portfolio, aiming for a late 2025 launch in emerging markets, while the med tech portfolio grew by over 13%.

The paragraph discusses Abbott's advancements in diabetes care and electrophysiology. In diabetes care, their continuous glucose monitor sales reached over $1.6 billion, a 21% growth, and they formed a global partnership with Medtronic to integrate the FreeStyle Libre sensor with insulin delivery systems. Abbott also launched Lingo, a non-prescription glucose monitoring sensor. In electrophysiology, there was a 14% growth driven by increased sales in catheters and cardiac mapping products. Abbott completed enrollment in the VOLT-AF U.S. IDE trial ahead of schedule and started a focal FLEX clinical trial for the TactiFlex DUO catheter. They also received FDA approval for the adviser HD Grid X mapping catheter.

The paragraph reports strong growth across several medical device sectors. Structural Heart saw over 16% growth due to increased market share in TAVR and the adoption of new products like Amulet and TriClip, which is under evaluation for broader U.S. coverage. Rhythm Management experienced 7% growth driven by products like Aveir and Assert. Heart Failure grew 14% with heart assist devices, and Vascular grew 5% with innovations in vessel closure and coronary imaging. Neuromodulation sales increased by 5% due to international demand for a spinal cord stimulation device. Overall, the company achieved over 8% sales growth, improved its gross margin profile, and reached several product milestones, indicating strong momentum for the future.

The paragraph discusses a company's financial performance in the third quarter and its outlook for the fourth quarter. Sales increased by 7.6% organically and 8.2% excluding COVID testing sales, with a negative impact of 2.5% from foreign exchange. Adjusted gross margin was 56.3% of sales, with adjusted R&D at 6.5% and SG&A at 27.2%. The adjusted tax rate was 15%. For the fourth quarter, the company expects adjusted earnings per share of $1.31 to $1.37 and exchange rate impacts of less than 1% on reported sales. During a Q&A session, Travis Steed from BofA Securities asks about Q3 performances in devices, Nutrition, and Diagnostics, noting they missed expectations but full-year guidance remains. Robert Ford explains that with many business units, some may fall short but doesn't see it as a long-term issue.

The paragraph discusses the benefits of having a diversified portfolio, highlighting how other businesses can compensate when one underperforms. The success in devices significantly contributed to the quarter's performance, and the company remains confident in its Q4 outlook, raising guidance for the third time this year. Despite challenges in the international pediatric nutrition segment due to commercial execution issues, the team responded rapidly with personnel changes and adjustments in demand generation. Although some inventory reductions were needed, initial signs indicate that these corrective measures were effective, and the company is optimistic about its growth prospects.

The paragraph discusses the performance and expectations for the international pediatric and overall nutrition segment, noting anticipated growth in the upcoming quarter. It highlights challenges faced by the Core Lab business, primarily due to the Volume-Based Procurement (VBP) implementation in China, which impacted results. Despite this, the international Core Lab business, excluding China, showed significant growth. The forecast was affected by the VBP delay, which shifted its impact to the third quarter. There's confidence in navigating these changes and maintaining momentum, with expectations for a strong close to the year and a commitment from the management team to meet guidance. The speaker expresses positivity about the business potential in China and the overall quarter's outlook.

In the paragraph, Robert Ford expresses confidence in the continuous glucose monitoring (CGM) market, noting a 21% growth in their Libre segment in Q3, with a 26% increase in the U.S. He highlights the market's potential, given the large number of diabetics globally and the mass market opportunity it presents. Ford emphasizes the importance of staying ahead in technology, scale, and cost as key strategic elements. Despite increased competition, he feels positive about their market position and strategy, which is designed with long-term growth in mind. He sees no significant changes in the market fundamentals and views it as a promising opportunity.

The paragraph discusses the growth and future potential of the Libre product, which is expected to become a $6 billion-plus product with 20% growth this year, surpassing initial growth rate targets. The company plans to add $1 billion in revenue and 1 million users, focusing on opportunities in both type 1 and type 2 diabetes markets. The product is considered a platform with ongoing opportunities, including a new initiative called Lingo, which targets non-diabetic users. The early interest and feedback for Lingo have been positive, particularly in its nonprescription model. The company's strategy to adapt learnings from the U.K. has led to higher reorder rates. Overall, the developments are expected to contribute positively towards their $10 billion revenue target.

In the paragraph, Robert Ford discusses future growth expectations for 2025, acknowledging that while it's early to provide specific guidance, the projections of high single-digit revenue growth and 10% EPS seem reasonable. Ford notes that unlike previous years, 2025 won't be affected by the "COVID cloud," which previously obscured baseline EPS growth. He highlights the company's strong positioning in appealing markets and its consistent high single-digit top-line growth, emphasizing their strategic planning and favorable market conditions.

The paragraph discusses the company's strategic positioning in various markets, emphasizing financial stability and growth opportunities. It highlights their focus on both stable, large-scale markets and high-growth sectors, such as TAVR and LAA, alongside innovative product launches like Lingo and TBI testing. The company has achieved significant revenue gains from recently launched products and maintains a strong pipeline for future growth. Efforts to expand gross margins and make strategic investments have led to notable spending leverage over five years. They intend to continue this disciplined approach to investments and margins, aiming for operational margin expansion, supported by a robust balance sheet.

The paragraph features a discussion between David Roman from Goldman Sachs and Robert Ford, focusing on investment spending and its impact on the company's financial trajectory. David Roman inquires about the trajectory of operating expenses concerning gross margin expansion and the company's share repurchase program. Robert Ford responds by highlighting the company's reduction in expenses from 37% in 2019 to around 34% currently, attributing this to $1 billion of spending leverage. He explains that the company's high single-digit five-year CAGR aligns with an operating expense CAGR of about 4%. Ford emphasizes a strategic, non-uniform approach to investment decisions, particularly in R&D and SG&A, which are tailored to each business’s opportunities. He notes that R&D investments are long-term commitments, unlike SG&A, which can be adjusted more easily. Key investment areas include the med tech portfolio, especially in electrophysiology, structural heart, diabetes care, and neuromodulation.

The paragraph discusses the strategic investment approach of a company, emphasizing a well-defined process for allocating resources across different areas such as sales, clinical trials, and diagnostics. The company has been successful in maintaining pre-pandemic operational margins by effectively managing investments, particularly in R&D, and driving revenue growth. The capital allocation strategy also includes dividends and share buybacks, with a new $7 billion buyback program recently approved to replace the previous one from 2021. Over the past five years, around $8 billion has been spent on buybacks, with adjustments made following acquisitions.

In the paragraph, Robert Ford addresses concerns about potential bottlenecks in the structural heart markets, particularly regarding the TAVR (transcatheter aortic valve replacement) market. Despite investor concerns about U.S. provider capacity potentially limiting growth, Ford reassures that Abbott, with its various offerings in structural heart solutions, is neither currently experiencing nor anticipating capacity constraints. He emphasizes that this is a growing area, not just for technology developers like Abbott, but also for healthcare systems, which are expanding their capacity by adding facilities like cath labs and hybrid ORs to accommodate this growth. Ford does not foresee any bottlenecks in the upcoming 12 to 36 months.

The speaker discusses their experiences with both large and small centers and addresses the challenges they face in ramping up new technologies. Despite these challenges, capacity has not been a limiting factor, and investments will be made if demand requires it, as seen in the structural heart field over the past decade. The speaker expresses optimism about their structural heart portfolio, emphasizing the company's comprehensive approach, new management, and forthcoming product launches. They highlight a commitment to investment in R&D, new product development, clinical trials, and expanding indications, especially in mitral and structural heart sectors, contributing to their strong portfolio.

The paragraph discusses Abbott's strategy to increase its field presence to support growth and market share in areas like tricuspid products. It transitions to a question from Vijay Kumar about a joint statement from the FDA, CDC, and NIH that found no causative link between infant formula and NEC. Kumar asks how this affects Abbott's legal stance in ongoing lawsuits. Robert Ford responds that the statement supports Abbott’s position that their products are medically necessary and viewed as standard care by neonatologists. He emphasizes that product labels have been reviewed by regulators and have not required any warnings, indicating agreement with the consensus of U.S. regulatory agencies.

The paragraph discusses a joint statement from prominent U.S. health agencies, emphasizing the importance of preterm formula as standard care and noting no conclusive evidence linking it to NEC. An expert panel reviewed extensive research to inform this statement. Despite the importance of this information, including a report and expert testimony, a judge has not allowed it in a current trial. The speaker expresses hope that future juries in federal cases will consider this evidence. The paragraph underscores the role of healthcare innovators in developing products, conducting clinical trials, and collaborating with regulators.

The paragraph discusses the importance of a strong regulatory process in evaluating and labeling products to ensure their safety, emphasizing that decisions should be based on solid scientific evidence rather than legal trials. The speaker expresses concern over potential liability issues in the United States and stresses the need to prioritize the health of preterm babies who depend on these products. There is criticism of the legal system being exploited for financial gain, which could threaten the availability of essential products. The speaker advocates for a quicker resolution process rather than lengthy litigation and is engaged in discussions to address the potential impact on families in the U.S.

Joanne Wuensch from Citi inquires about the state of the electrophysiology market and the impact of Pulsed Field Ablation (PFA) on mapping and navigation systems. Robert Ford responds by stating that the market is growing significantly, and with the introduction of PFA, their growth rate has increased compared to the pre-PFA period. He highlights that a significant percentage of procedures are now utilizing cardiac mapping, which has increased from 25-30% of RF cases to over 50%. This shift, along with improved treatment guidelines and technologies for identifying AFib patients, has contributed to market growth and increased procedure volumes. Ford also notes that RF catheters remain a growth area, with approximately 20% of mapped PFA cases using RF catheters. Currently, PFA is primarily employed for de novo procedures.

The paragraph discusses the breakdown of ablation procedures, noting that the majority are VT and SVT ablations or redos, with RF being important in these procedures. The company has initiated a focal FLEX trial to switch between PFA and RF. They've also leveraged their open mapping system to partner with electrophysiologists and are committed to bringing PFA to the market. Enrollment for the CE Mark was completed at the beginning of the year. The company believes in a comprehensive approach, investing in mapping, PFA, and RF technologies. The discussion then shifts to a question from Matt Miksic of Barclays regarding Libre in the diabetes business, focusing on market share trends and activities in the DME channel, as well as his positive experience with the Lingo product.

The paragraph discusses the performance and future plans of Abbott's Libre glucose monitoring system. Robert Ford responds to questions about their strategy for expanding Libre into the over-the-counter (OTC) market and its impact on the company's gross margin goals for 2024 and beyond. He praises the team's strong execution across various sales channels, noting a 26% growth in the U.S. despite temporary supply challenges with Libre 3. Abbott is investing in manufacturing to overcome these issues. Ford highlights the importance of maintaining a low-cost position as the target market expands to include basal insulin and oral medication users, which will increase the total addressable market.

The paragraph discusses strategic business considerations and future plans. It mentions the need for pricing adjustments and cost structures to maintain gross margins as the company expands its Libre product line. Manufacturing scale and facility depreciation are noted as factors potentially enhancing gross margins. The company is optimistic about market opportunities, focusing on their new biowearable product, Lingo, while hinting that another product, Rio, is ready if needed. Additionally, there is a mention of structural heart business developments, particularly potential expansion in LAA closure and upcoming competitive data in the tricuspid space by 2025.

In the paragraph, Robert Ford discusses the positive progress and strategic investments in two medical areas: left atrial appendage closure and the tricuspid market. Specifically, he highlights the success of the Amulet team, noting significant growth and positive registry data for the product used in left atrial appendage closure. Ford mentions ongoing and future trials, including the CATALYST trial and development of Amulet 2.0. He emphasizes the company's dedication to investing in new interventional categories, particularly in the emerging tricuspid market, despite its current lack of established interventional procedures.

The paragraph discusses the positive outlook for the company's structural heart business, particularly highlighting the success and potential of the TriClip product. Recent clinical data from European studies supports its effectiveness over medical therapy for treating TR. The company is optimistic about growth opportunities, planning investments to support adoption and expecting the business to become a $1 billion revenue generator. The company's sales growth, gross margin expansion, and accelerating EPS growth indicate strong performance, with momentum expected to continue into the next year.

The paragraph is the conclusion of Abbott's conference call. Mike Comilla and the operator thank participants for joining and participating in the call. It mentions that a webcast replay of the call will be available on Abbott's Investor Relations website after 11 a.m. Central Time. The operator then concludes the call by allowing participants to disconnect and wishing everyone a good day.

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