Healthcare giant Abbott (NYSE:ABT) saw shares drop more than 4% this morning following announcements from its 3rd quarter earnings report, including narrowed guidance for 2012, a tempered M&A outlook and news of layoffs of over 500 with more on the way.
Abbott, which says it’s on track to complete its split on January 1, beat Wall Street’s expectations and delivered double-digit growth in earnings per share during the 3 months ended Sept. 30, 2012. The company also narrowed its 2012 outlook, previously in the range of $5.00 to $5.10 per share, to a tighter range of $5.06 to $5.08.
The company also cut 550 positions, most of them unrelated to previous restructuring efforts, and expects additional layoffs over the next year.
"Several hundred will be impacted through 2013," spokeswoman Ann Smith told MassDevice.com today.
Most of the cuts affects workers in the U.S. and the move will pare down the healthcare giant’s vascular, molecular diagnostics, global nutrition and pharmaceuticals businesses, Smith said.
The proprietary pharmaceuticals division, which will formally spin out into an independent company at the start of next year, is not affected by the layoffs.
"Our business has independently assessed the environment and competitive landscape and these changes will allow our businesses to align their resources to better meet evolving business needs," Smith told us.
Excluding the nutritionals division, the businesses affected by cuts all saw declines during the 3rd quarter.
Abbott’s total revenue dropped modestly, but earnings per share spiked more than 10% and beat analysts’ estimates by 2¢. Many of the company’s device divisions, however, fell on hard times during the quarter.
In Q3 2012 Abbott’s vascular division dropped 10.2% compared to the same period last year, with U.S. sales hit especially hard. U.S. vascular sales dropped 5.2% and worldwide sales lost 0.6%, with the remainder of the decline made up by declines in royalties and supply arrangements, including for the Promus stents, according to Abbott’s earnings report.
Medical device titan Boston Scientific (NYSE:BSX) has long paid royalties on its Promus stents, a private-label version Abbott’s Xience V device. The private-label deal ended in Europe in 2009, but a similar arrangement in the U.S. was slated to go until mid-2012.
Abbott’s diabetes care division also saw a steep decline, with sales 10.3% lower during Q3 2012 than they were during Q3 2011. Medical optics dropped 4.3% and molecular diagnostics dropped 8.4%, according to the company’s report.
Overall, the company reported a 541% increase in profits, which amounted to $1.94 billion, compared with $303 million during the same period last year.
Excluding 1-time items, earnings came to $1.30 per diluted share, a 10.2% increase from earnings of $1.18 in Q3 2011.
Moving forward, Abbott is focusing on internal growth rather than big-ticket acquisitions, CEO Miles White told investors during a conference call.
"My focus is primarily organic," White said, adding that investors shouldn’t expect "anything big" in M&A in coming months.