Medical products giant Abbott (NYSE:ABT) took a hit to its bottom line in the final quarter of 2012, with profits dropping by more than ⅓ as the company prepared for an overhaul.
The report is Abbott’s last as a single entity, painting a picture of the company’s operations in the final months before the healthcare giant shed its research pharmaceuticals division to form the independent, publicly traded entity AbbVie (NYSE:ABBV).
Abbott chairman & CEO Miles White hopes the smaller companies will be nimbler and more capable of capitalizing on fast-growing emerging markets, he said during a conference call with investors this morning.
White has previously told shareholders that the split "reflects long-term changes in the healthcare market that have led us over time to create distinctly different business models."
The Abbott Park, Ill.-based device and pharmaceutical titan reported $1.05 billion in profits on sales of $10.84 billion during the 3 months ended Dec. 31, 2012, representing a 35% drop in profits on a 4.4% increase in sales compared to the same period in 2011.
The company reported Q4 net earnings per share of 66¢, a 35.3% decrease year-over-year. Adjusted to include 1-time expenses EPS amounted to $1.51, nearly doubling analysts’ 72¢ forecast for the company.
For the full year Abbott reported net EPS of $3.72, a 23.6% increase year-over-year. Adjusted EPS came to $5.07, again doubling analysts’ expectations, which were at about $2.41.
One-time items took a big chunk out of Abbott’s bottom line, including a 54¢ per share hit due to the repayment of long-term debt, about 16¢ per share related to the separation of AbbVie and about 6¢ per share in write-downs for certain R&D acquisitions and equity investments, according to the report.
U.S. vascular device sales dropped nearly 25% during the 4th quarter of 2012 compared with the same period in 2011, amounting to about $282 million. The vascular division includes Abbott’s drug-eluting stents, bioresorbable vascular scaffolds, endovascular products and the MitraClip mitral regurgitation treatment implant.
Abbott attributed the decline to "a decrease in Xience sales due to market dynamics and the comparison to 4Q11 when Xience Prime was launched." U.S. Xience drug-eluting stent sales alone dropped 15.3% during Q4 and slipped 1.1% over the course of the year.
Full-year U.S. vascular division sales also took a hit, coming in at about $1.23 billion, 20.7% less than reported for 2011, which Abbott blamed largely on the declined of royalty payments associated with Boston Scientific’s (NYSE:BSX) Promus stent, a private-label version of Xience V.
The private-label deal ended in 2009 and each company began developing separate next-generation designs, and Boston Scientific in November 2011 won FDA approval for its new Promus Element stent. In 2012 Abbott won FDA approval and launched its own Xience Xpedition drug-eluting stent, which is also available internationally, and began clinical trials for its Absorb bioresorbable vascular scaffold.
Abbott issued 2013 earnings-per-share guidance in the range of $1.98 to $2.04, roughly in line with analysts’ expectations, not accounting for special expenses. Excluding about 59¢ per share in anticipated costs, the company forecast between $1.39 to $1.45 earnings per share in 2013.
Wall Street was apparently ambivalent about the results, with ABT shares jumping between highs of $33.15 and lows of $32.62 from an opening price of $33.01 this morning. Shares were down about 0.1% to $32.87 as of about 12:25 p.m. today.
