Two days after saying it was spending up to $710 million to acquire IDEV Technologies and OptiMedica Corp., Abbott Laboratories (ABT) reported a drop in earnings due to costs associated with spinning-out its branded prescription drugs business. Excluding those expenses, Abbott topped analyst expectations for profits as sales in emerging markets drove sales in the second quarter.
For the quarter ended June 30, the Abbott Park, Illinois-based company reported revenue of $5.45 billion, up from $5.31 billion in the second quarter last year. Net earnings from continuing operations were $476 million, or 30 cents per share, down from $1.73 billion, or $1.08 per share, in the year prior quarter. Less one-time items associated with the spin-off and other items, adjusted earnings – which are more closely watched by analysts and investors – totaled $724 million, or 46 cents per share, compared to $689 million, or 43 cents per share, in last year’s quarter.
Wall Street was expecting adjusted earnings of 44 cents on revenue of $5.5 billion.
Revenue got a shot in the arm from a 13.4-percent jump in sales in emerging markets, which rose to $2.3 billion, representing more than 40 percent of total global sales for Abbott. Sales in the nutrition segment of $1.70 billion improved 8.4 percent on an operational basis, despite a 3.1-percent decline in U.S. sales. International sales surged 18.4 percent. Abbott’s nutrition products include items such as Ensure adult drink and baby formula.
Sales in Abbott’s diagnostic business rose 7.6 percent to $1.135 billion, lifted in part by a 9.1-percent rise in international revenue.
Operating costs increased modestly from $4.75 billion to $4.82 billion on slightly higher selling, general and administrative expenses. Gross margin as a percentage to sales dipped to 55.0 percent from 55.9 percent last year.
The second quarter featured Abbott launching 24 new products in its nutrition segment as well as the first FDA-approved genotyping test for the hepatitis C virus. It also launched Tecnis® toric one-piece intraocular Lens for cataract patients with astigmatism. The Tecnis launch dovetails with the acquisition of OptiMedica, a maker of laser-assisted surgery systems for cataract patients.
"All things considered, including headwinds from foreign exchange and a mixed global economy, this was a good quarter," said Miles D. White, chairman and chief executive officer at Abbott.
In January, Abbott spun-out its prescription drugs business into another public company, called AbbVie Inc. (ABBV) , and kept its medical device, generic drug, diagnostic tests and nutritional product businesses. AbbVie is scheduled to release its second-quarter financial results on July 26. In the first quarter, AbbVie reported $4.33 billion in sales, with Humira accounting for $2.24 million of those sales. Earnings were $968 million, or 60 cents per share, up from $883 million, or 56 cents per share, a year prior.
Shares of are pushing ahead in Wednesday trading on the earnings beat, rising 2 percent to $36.42 in early action. With the move, shares are up 17 percent so far in 2013.
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