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Abbott Reports Third-Quarter 2017 Results

Abbott Reports Third-Quarter 2017 Results

-- Third-quarter reported sales growth of 28.8 percent; comparable operational sales growth of 5.6 percent

-- Third-quarter GAAP EPS from continuing operations of $0.32; adjusted EPS from continuing operations of $0.66, at the high end of the previous guidance range

-- Numerous key product approvals across portfolio

ABBOTT PARK, Ill., Oct. 18, 2017 /PRNewswire/ -- Abbott (ABT) today announced financial results for the third quarter ended Sept. 30, 2017.

  • Third-quarter worldwide sales of $6.8 billion increased 28.8 percent on a reported basis and 5.6 percent on a comparable operational* basis.
  • Reported diluted EPS from continuing operations under GAAP was $0.32 in the third quarter. Excluding specified items, adjusted diluted EPS from continuing operations was $0.66 in the third quarter, at the high end of the previous guidance range of $0.64 to $0.66.
  • Abbott narrowed its full-year 2017 EPS guidance range, which continues to reflect double-digit growth. Abbott projects full-year diluted EPS from continuing operations on a GAAP basis of $0.97 to $0.99. Projected full-year adjusted diluted EPS from continuing operations is now $2.48 to $2.50, which represents an increase at the mid-point of the guidance range.
  • In September, Abbott received U.S. FDA approval for its FreeStyle® Libre glucose monitoring system as a replacement1 for finger stick blood glucose monitoring. This revolutionary technology is the only system available that comes factory-calibrated, thus eliminating the need for daily finger sticks that are required to calibrate other continuous glucose monitoring systems.
  • During the quarter, Abbott obtained national reimbursement for FreeStyle Libre in Japan and the United Kingdom for people with diabetes, both Type 1 and Type 2, on insulin therapy.
  • In September, Abbott received U.S. FDA approval for magnetic resonance (MR)-conditional labeling for its EllipseTM implantable cardioverter defibrillator (ICD). This approval follows U.S. FDA approval for MR-conditional labeling for its Assurity MRITM pacemaker earlier this year.
  • In August, Abbott received U.S. FDA approval for its HeartMate 3TM system, which helps a weak heart pump blood for patients with advanced heart failure.
  • On Oct. 3, 2017, Abbott completed the acquisition of Alere, Inc., establishing Abbott as the global leader in the point of care diagnostics market.

"We're very pleased with our performance and the steady cadence of innovative new product launches that are contributing to growth," said Miles D. White, chairman and chief executive officer, Abbott. "We're well-positioned to achieve the upper end of our initial full-year EPS guidance range."

* See note on comparable operational growth below.

THIRD-QUARTER BUSINESS OVERVIEW
Note: Management believes that measuring sales growth rates on a comparable operational basis is an appropriate way for investors to best understand the underlying performance of the business.

Comparable operational sales growth excludes the impact of exchange and for Total Abbott and Medical Devices, also includes prior year results for St. Jude Medical, which was acquired on Jan. 4, 2017, and excludes prior year and current year results for the Abbott Medical Optics (AMO) and St. Jude Medical vascular closure businesses, which were divested during the first quarter 2017. Comparable operational sales growth also reflects a reduction to St. Jude Medical's historic sales related to administrative fees paid to conform to Abbott's presentation, as further described in Form 8-K issued on April 18, 2017.

Following are sales by business segment and commentary for the third quarter and first nine months of 2017:

Total Company

($ in millions)










% Change vs. 3Q16



Sales 3Q17


Reported


Comparable Operational



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total *


2,313


4,516


6,829


40.6


23.5


28.8


2.0


7.6


5.6

Nutrition


759


1,009


1,768


0.5


1.0


0.8


0.5


1.1


0.8

Diagnostics


369


910


1,279


2.0


6.9


5.4


2.0


6.6


5.2

Established Pharmaceuticals


--


1,171


1,171


 n/a 


15.7


15.7


 n/a 


14.3


14.3

Medical Devices


1,177


1,420


2,597


126.8


79.5


98.2


3.1


7.8


5.6


* Total Abbott sales from continuing operations include Other Sales of $14 million. In 2016, the AMO business, which was divested during the first quarter 2017, was reported as part of the Medical Devices group. Comparable operational growth rates above exclude results from the AMO business.










% Change vs. 9M16



Sales 9M17


Reported


Comparable Operational



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total *


6,997


12,804


19,801


44.8


19.8


27.6


3.0


4.5


3.9

Nutrition


2,262


2,879


5,141


1.7


(2.2)


(0.5)


1.7


(1.1)


0.1

Diagnostics


1,125


2,585


3,710


6.0


3.6


4.3


6.0


4.7


5.1

Established Pharmaceuticals


--


3,142


3,142


 n/a 


9.1


9.1


 n/a 


8.0


8.0

Medical Devices


3,504


4,084


7,588


130.5


73.2


95.6


2.8


5.8


4.4


* In 2017, total Abbott sales from continuing operations include Other Sales of $220 million, including sales of $175 million from the AMO business, which was divested during the first quarter 2017. In 2016, the AMO business was reported as part of the Medical Devices group. Comparable operational growth rates above exclude results from the AMO business.


n/a = Not Applicable.


Note: In order to compute results excluding the impact of exchange rates, current year U.S. dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates.

Third-quarter 2017 worldwide sales of $6.8 billion increased 28.8 percent on a reported basis. On a comparable operational basis, worldwide sales increased 5.6 percent. Refer to tables titled "Non-GAAP Reconciliation of Comparable Historical Revenue" for a reconciliation of comparable historical revenue.

 

Nutrition

($ in millions)










% Change vs. 3Q16



Sales 3Q17


Reported


Comparable Operational



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total


759


1,009


1,768


0.5


1.0


0.8


0.5


1.1


0.8

Pediatric


436


539


975


5.2


(2.4)


0.8


5.2


(2.6)


0.7

Adult


323


470


793


(5.3)


5.2


0.7


(5.3)


5.6


0.9










% Change vs. 9M16



Sales 9M17


Reported


Comparable Operational



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total


2,262


2,879


5,141


1.7


(2.2)


(0.5)


1.7


(1.1)


0.1

Pediatric


1,327


1,562


2,889


6.8


(6.1)


(0.6)


6.8


(5.1)


-

Adult


935


1,317


2,252


(4.8)


3.0


(0.3)


(4.8)


4.1


0.3

Worldwide Nutrition sales increased 0.8 percent on a reported and operational basis in the third quarter.

Worldwide Pediatric Nutrition sales increased 0.8 percent on a reported basis in the third quarter, including a favorable 0.1 percent effect of foreign exchange, and increased 0.7 percent on an operational basis. Sales growth in the quarter was led by above-market growth in the U.S. with continued strong performance across Abbott's portfolio of infant and pediatric nutrition products. As expected, sales growth in China improved sequentially versus the prior quarter, which was offset by continued challenging market conditions in certain other international countries.

Worldwide Adult Nutrition sales increased 0.7 percent on a reported basis in the third quarter, including an unfavorable 0.2 percent effect of foreign exchange, and increased 0.9 percent on an operational basis. International sales growth of 5.2 percent on a reported basis and 5.6 percent on an operational basis was led by growth of Ensure®, Abbott's market-leading complete and balanced nutrition brand, and Glucerna®, Abbott's market-leading diabetes-specific nutrition brand. As expected, U.S. sales growth was impacted by competitive and market dynamics.

 

Diagnostics

($ in millions)










% Change vs. 3Q16



Sales 3Q17


Reported


Comparable Operational



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total


369


910


1,279


2.0


6.9


5.4


2.0


6.6


5.2

Core Laboratory


230


803


1,033


4.6


6.0


5.7


4.6


5.9


5.6

Molecular


37


78


115


(13.8)


12.7


2.7


(13.8)


10.1


1.1

Point of Care


102


29


131


2.9


17.4


5.8


2.9


16.7


5.6










% Change vs. 9M16



Sales 9M17


Reported


Comparable Operational



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total


1,125


2,585


3,710


6.0


3.6


4.3


6.0


4.7


5.1

Core Laboratory


678


2,286


2,964


10.1


2.8


4.3


10.1


4.1


5.4

Molecular


123


218


341


(12.3)


9.6


0.6


(12.3)


8.9


0.1

Point of Care


324


81


405


6.1


12.3


7.3


6.1


12.7


7.4

Worldwide Diagnostics sales increased 5.4 percent on a reported basis in the third quarter, including a favorable 0.2 percent effect of foreign exchange, and increased 5.2 percent on an operational basis.

Core Laboratory Diagnostics sales increased 5.7 percent on a reported basis in the third quarter, including a favorable 0.1 percent effect of foreign exchange, and increased 5.6 percent on an operational basis. Growth in the quarter was led by continued share gains globally. Internationally, Abbott continued the early roll-out of its recently launched Alinity systems for the core laboratory, including "Alinity c" for clinical chemistry, "Alinity i" for immunoassay diagnostics and "Alinity s" for blood and plasma screening. Abbott expects to initiate the launch of its Alinity systems in the U.S. in 2018.

Molecular Diagnostics sales increased 2.7 percent on a reported basis in the third quarter, including a favorable 1.6 percent effect of foreign exchange, and increased 1.1 percent on an operational basis. Continued growth in infectious disease testing, Abbott's core area of focus in the molecular diagnostics market, was offset by a planned scale down in other testing areas.

Point of Care Diagnostics sales increased 5.8 percent on a reported basis in the third quarter, including a favorable 0.2 percent effect of foreign exchange, and increased 5.6 percent on an operational basis as this business continues to build and expand its presence in targeted developed and emerging markets.

 

Established Pharmaceuticals

($ in millions)










% Change vs. 3Q16



Sales 3Q17


Reported


Comparable Operational



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total


--


1,171


1,171


 n/a 


15.7


15.7


 n/a 


14.3


14.3

Key Emerging Markets


--


885


885


 n/a 


18.5


18.5


 n/a 


18.0


18.0

Other


--


286


286


 n/a 


7.6


7.6


 n/a 


4.0


4.0










% Change vs. 9M16



Sales 9M17


Reported


Comparable Operational



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total


--


3,142


3,142


 n/a 


9.1


9.1


 n/a 


8.0


8.0

Key Emerging Markets


--


2,413


2,413


 n/a 


13.0


13.0


 n/a 


11.6


11.6

Other


--


729


729


 n/a 


(2.3)


(2.3)


 n/a 


(2.5)


(2.5)

Established Pharmaceuticals sales increased 15.7 percent on a reported basis in the third quarter, including a favorable 1.4 percent effect of foreign exchange, and increased 14.3 percent on an operational basis.

Key Emerging Markets comprise several countries that represent the most attractive long-term growth opportunities for Abbott's branded generics product portfolio. Sales in these key geographies increased 18.5 percent on a reported basis and 18.0 percent on an operational basis in the third quarter, led by strong growth across several countries, including double-digit growth in Brazil, Russia, India and China.

As expected, sales in India were positively impacted by purchasing patterns following the implementation of a new Goods and Services Tax system that lowered second quarter sales in that country. Total Established Pharmaceuticals, Key Emerging Markets, and India sales growth increased double-digits with and without this impact.

 

Medical Devices

($ in millions)










% Change vs. 3Q16



Sales 3Q17


Reported


Comparable Operational



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total


1,177


1,420


2,597


126.8


79.5


98.2


3.1


7.8


5.6

Cardiovascular and Neuromodulation


1,093


1,131


2,224


258.2


180.7


214.1


4.6


2.8


3.6

Rhythm Management


250


261


511


 n/m 


 n/m 


 n/m 


(15.6)


(8.4)


(12.1)

Electrophysiology


147


195


342


 n/m 


 n/m 


 n/m 


7.9


12.9


10.7

Heart Failure


131


39


170


 n/m 


 n/m 


 n/m 


10.7


27.4


14.0

Vascular


292


432


724


11.1


21.5


17.1


(0.6)


0.7


0.2

Structural Heart


109


160


269


172.3


242.5


210.1


13.7


9.1


11.0

Neuromodulation


164


44


208


 n/m 


 n/m 


 n/m 


55.9


19.6


46.8

Diabetes Care


84


289


373


(13.0)


37.6


21.7


(13.0)


33.9


19.1










% Change vs. 9M16



Sales 9M17


Reported


Comparable Operational



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total


3,504


4,084


7,588


130.5


73.2


95.6


2.8


5.8


4.4

Cardiovascular and Neuromodulation


3,264


3,323


6,587


247.1


169.2


202.9


2.9


1.6


2.3

Rhythm Management


783


791


1,574


 n/m 


 n/m 


 n/m 


(15.7)


(5.7)


(10.9)

Electrophysiology


446


555


1,001


 n/m 


 n/m 


 n/m 


10.4


10.7


10.5

Heart Failure


363


108


471


 n/m 


 n/m 


 n/m 


0.3


10.4


2.5

Vascular


891


1,267


2,158


9.1


16.4


13.3


(2.3)


(1.9)


(2.1)

Structural Heart


320


473


793


177.8


227.5


205.5


14.8


9.8


11.7

Neuromodulation


461


129


590


 n/m 


 n/m 


 n/m 


61.0


17.4


49.0

Diabetes Care


240


761


1,001


0.4


28.2


20.2


0.4


29.2


21.0


n/m = Percent change is not meaningful.

Worldwide Medical Devices sales increased 98.2 percent on a reported basis in the third quarter. On a comparable operational basis, sales increased 5.6 percent. Refer to tables titled "Non-GAAP Reconciliation of Comparable Historical Revenue" for a reconciliation of comparable historical revenue.

In Cardiovascular and Neuromodulation, worldwide sales were led by double-digit growth in Electrophysiology, Structural Heart, Heart Failure and Neuromodulation. Growth in Structural Heart was driven by the continued double-digit growth of MitraClip®, Abbott's market-leading device for the minimally-invasive treatment of mitral regurgitation. In Heart Failure, during the third quarter, Abbott received U.S. FDA approval for its HeartMate 3 system, which helps a weak heart pump blood through the body for patients with advanced heart failure. In Neuromodulation, another quarter of strong double-digit growth was led by several recently launched products for the treatment of chronic pain and movement disorders. As expected, Rhythm Management sales in the U.S. were impacted by continued competitive dynamics in the magnetic resonance (MR)-conditional category of products. In the quarter, Abbott received FDA approval for MR-conditional labeling for its Ellipse implantable cardioverter defibrillator (ICD), which significantly enhances its competitive position in this category of the market. 

Worldwide Diabetes Care sales increased 21.7 percent on a reported basis in the third quarter, including a favorable 2.6 percent effect of foreign exchange, and increased 19.1 percent on an operational basis. Strong double-digit international sales growth was led by FreeStyle Libre, Abbott's revolutionary sensor-based glucose monitoring system. In September, Abbott received U.S. FDA approval for FreeStyle Libre as a replacement1 for finger stick blood glucose monitoring. This revolutionary technology is the only system available that comes factory-calibrated, thus eliminating the need for daily finger sticks that are required to calibrate other systems currently available. During the quarter, Abbott also obtained national reimbursement for FreeStyle Libre in Japan and the United Kingdom for people with diabetes, both Type 1 and Type 2, on insulin therapy. 

ABBOTT NARROWS FULL-YEAR EARNINGS-PER-SHARE GUIDANCE

Abbott is narrowing its full-year 2017 earnings per share guidance range, which continues to reflect double-digit growth. Abbott now projects its earning per share from continuing operations under Generally Accepted Accounting Principles (GAAP) to be $0.97 to $0.99 for the full year 2017.

Projected diluted earnings per share from continuing operations on an adjusted basis is now $2.48 to $2.50 for the full year 2017, which represents an increase at the mid-point of the guidance range.

Abbott forecasts net specified items for the full year 2017 of approximately $1.51 per share. Specified items include acquisition-related expenses, intangible amortization expense, charges associated with cost reduction initiatives and other expenses, partially offset by a gain on the sale of the AMO business.

Abbott is issuing fourth-quarter 2017 guidance for diluted earnings per share from continuing operations under GAAP of $0.28 to $0.30. Abbott forecasts specified items for the fourth quarter 2017 of $0.44 primarily related to intangible amortization, acquisition-related expenses, cost reduction initiatives and other expenses. Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be $0.72 to $0.74 for the fourth quarter.

ABBOTT DECLARES 375TH QUARTERLY DIVIDEND

On Sept. 14, 2017, the board of directors of Abbott declared the company's quarterly dividend of $0.265 per share. Abbott's cash dividend is payable Nov. 15, 2017, to shareholders of record at the close of business on Oct. 13, 2017.

Abbott has increased its dividend payout for 45 consecutive years and is a member of the S&P 500 Dividend Aristocrats Index, which tracks companies that have annually increased their dividend for at least 25 consecutive years.

About Abbott:
Abbott is a global healthcare company devoted to improving life through the development of products and technologies that span the breadth of healthcare. With a portfolio of leading, science-based offerings in diagnostics, medical devices, nutritionals and branded generic pharmaceuticals, Abbott serves people in more than 150 countries and employs approximately 94,000 people.

Visit Abbott at www.abbott.com and connect with us on Twitter at @AbbottNews.

Abbott will webcast its live third-quarter earnings conference call through its Investor Relations website at www.abbottinvestor.com at 8 a.m. Central time today. An archived edition of the call will be available later that day.

Private Securities Litigation Reform Act of 1995 —
A Caution Concerning Forward-Looking Statements

Some statements in this news release may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Abbott's operations are discussed in Item 1A, "Risk Factors'' to our Annual Report on Securities and Exchange Commission Form 10-K for the year ended Dec. 31, 2016, and are incorporated by reference. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law.

1 Finger sticks are required for treatment decisions when you see Check Blood Glucose symbol, when symptoms do not match system readings, when you suspect readings may be inaccurate, or when you experience symptoms that may be due to high or low blood glucose.          

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

Third Quarter Ended September 30, 2017 and 2016

(in millions, except per share data)

(unaudited)




3Q17


3Q16


% Change


Net Sales


$6,829


$5,302


28.8










Cost of products sold, excluding amortization expense


2,857


2,285


25.1


Amortization of intangible assets


501


140


n/m


Research and development


562


352


59.3


Selling, general, and administrative


2,099


1,628


28.9


Total Operating Cost and Expenses


6,019


4,405


36.7










Operating earnings


810


897


(9.7)










Interest expense, net


182


95


90.7


Net foreign exchange (gain) loss


(6)


9


n/m


Other expense, net


8


972


(99.2)

1)

Earnings (Loss) from Continuing Operations before taxes


626


(179)


n/m










Tax expense on Earnings (Loss) from Continuing Operations


65


178


(63.5)

2)

Earnings (Loss) from Continuing Operations


561


(357)


n/m










Earnings from Discontinued Operations, net of taxes


42


28


53.1


Gain on Sale of Discontinued Operations, net of taxes


--


--




Net Earnings from Discontinued Operations, net of taxes


42


28


53.1










Net Earnings (Loss)


$603


$(329)


n/m










Earnings from Continuing Operations, excluding 








Specified Items, as described below


$1,158


$883


31.1

3)









Diluted Earnings (Loss) per Common Share from:








Continuing Operations


$0.32


$(0.24)


n/m


Discontinued Operations


0.02


0.02


--


Total


$0.34


$(0.22)


n/m










Diluted Earnings per Common Share from Continuing 








Operations, excluding Specified Items, as described below


$0.66


$0.59


11.9

3)









Average Number of Common Shares Outstanding








Plus Dilutive Common Stock Options 


1,754


1,476



4)



NOTES:


See tables below for an explanation of certain non-GAAP financial information.

n/m = Percent change is not meaningful.

See footnotes below.



1)

2016 Other expense, net includes a charge of $947 million related to an adjustment of Abbott's holdings of Mylan N.V. ordinary shares to reflect the share price as of Sept. 30, 2016.



2)

2016 Tax expense on Earnings (Loss) from Continuing Operations includes the impact of the non-deductible Mylan equity investment adjustment and the recognition of deferred taxes associated with the sale of AMO, partially offset by a net tax benefit of approximately $105 million as a result of the resolution of various tax positions from prior years.



3)

2017 Earnings from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $597 million, or $0.34 per share, for intangible amortization expense and expenses primarily associated with acquisitions, restructuring actions and other expenses.




2016 Earnings from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $1.240 billion, or $0.83 per share, for intangible amortization expense, an adjustment to the equity investment in Mylan, expenses primarily associated with acquisitions, including bridge facility fees, charges related to cost reduction initiatives and other expenses and the recognition of deferred taxes associated with the sale of AMO, partially offset by the favorable impact of a net tax benefit as a result of the resolution of various tax positions from prior years.



4)

2016 Average number of common shares outstanding excludes approximately 6.7 million shares related to dilutive common stock options, which would be antidilutive.

 

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

Nine Months Ended September 30, 2017 and 2016

(in millions, except per share data)

(unaudited)




9M17


9M16


% Change


Net Sales


$19,801


$15,520


27.6










Cost of products sold, excluding amortization expense


9,074


6,712


35.2


Amortization of intangible assets


1,415


429


n/m


Research and development


1,622


1,079


50.3


Selling, general, and administrative


6,655


5,063


31.5


Total Operating Cost and Expenses


18,766


13,283


41.3










Operating earnings


1,035


2,237


(53.7)










Interest expense, net


569


203


n/m


Net foreign exchange (gain) loss


(34)


497


n/m

1)

Other (income) expense, net


(1,157)


999


n/m

2)

Earnings from Continuing Operations before taxes


1,657


538


n/m










Tax expense on Earnings from Continuing Operations


440


240


83.6

3)

Earnings from Continuing Operations


1,217


298


n/m










Earnings from Discontinued Operations, net of taxes


88


288


(69.4)


Gain on Sale of Discontinued Operations, net of taxes


--


16


n/m


Net Earnings from Discontinued Operations, net of taxes


88


304


(71.0)

4)









Net Earnings


$1,305


$602


n/m










Earnings from Continuing Operations, excluding 








Specified Items, as described below


$3,097


$2,310


34.1

5)









Diluted Earnings per Common Share from:








Continuing Operations


$0.69


$0.20


n/m


Discontinued Operations


0.05


0.20


(75.0)

4)

Total


$0.74


$0.40


85.0










Diluted Earnings per Common Share from Continuing 








Operations, excluding Specified Items, as described below


$1.76


$1.55


13.5

5)









Average Number of Common Shares Outstanding








Plus Dilutive Common Stock Options 


1,746


1,483






NOTES:


See tables below for an explanation of certain non-GAAP financial information.

n/m = Percent change is not meaningful.

See footnotes below.



1)

2016 Net foreign exchange (gain) loss includes a loss of $481 million related to the revaluation of Abbott's net monetary assets in Venezuela using the Dicom exchange rate, which is the Venezuelan government's official floating exchange rate.



2)

2017 Other (income) expense, net includes a pretax gain of $1.163 billion from the sale of the AMO business.




2016 Other (income) expense, net includes a charge of $947 million related to an adjustment of Abbott's holdings of Mylan N.V. ordinary shares to reflect the share price as of Sept. 30, 2016.



3)

2017 Tax expense on Earnings from Continuing Operations includes the tax associated with a $1.163 billion pretax gain on the sale of the AMO business.




2016 Tax expense on Earnings from Continuing Operations includes the impact of a net tax benefit of approximately $250 million as a result of the resolution of various tax positions from prior years, partially offset by the unfavorable impact of non-deductible foreign exchange losses related to Venezuela and an adjustment to the equity investment in Mylan and the recognition of deferred taxes associated with the sale of the AMO business.



4)

2017 Earnings and Diluted Earnings per Common Share from Discontinued Operations, net of taxes primarily relates to a net tax benefit as a result of the resolution of various tax positions from prior years.




2016 Earnings and Diluted Earnings per Common Share from Discontinued Operations, net of taxes primarily reflect the impact of a net tax benefit of $289 million as a result of the resolution of various tax positions from prior years.



5)

2017 Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $1.880 billion, or $1.07 per share, for intangible amortization expense and other expenses primarily associated with acquisitions and restructuring actions, partially offset by a gain on the sale of the AMO business.




2016 Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $2.012 billion, or $1.35 per share, for intangible amortization expense, the foreign exchange loss related to Venezuela, an adjustment to the equity investment in Mylan, expenses associated with acquisitions, including bridge facility fees, other charges related to cost reduction initiatives and other expenses and the recognition of deferred taxes associated with the sale of AMO, partially offset by the favorable impact of a net tax benefit as a result of the resolution of various tax positions from prior years.

NON-GAAP RECONCILIATION OF FINANCIAL INFORMATION FROM CONTINUING OPERATIONS

Abbott Laboratories and Subsidiaries

Non-GAAP Reconciliation of Financial Information From Continuing Operations

Third Quarter Ended September 30, 2017 and 2016

(in millions, except per share data) 

(unaudited)




3Q17



As
Reported
(GAAP) 


Specified
Items


As
Adjusted


% to
Sales

Intangible Amortization


$501


$(501)


--



Gross Margin


3,471


580


$4,051


59.3%

R&D


562


(91)


471


6.9%

SG&A


2,099


(90)


2,009


29.4%

Other expense, net


8


1


9



Earnings (Loss) from Continuing Operations before taxes 


626


760


1,386



Tax expense on Earnings (Loss) from Continuing Operations

65


163


228



Earnings (Loss) from Continuing Operations


561


597


1,158



Diluted Earnings (Loss) per Share from Continuing Operations

$0.32


$0.34


$0.66



Specified items reflect intangible amortization expense of $501 million and other expenses of $259 million, primarily associated with acquisitions, restructuring actions and other expenses. See tables titled "Details of Specified Items"  for additional details regarding specified items.



3Q16



As
Reported
(GAAP)


Specified
Items


As
Adjusted 


% to
Sales

Intangible Amortization


$140


$(140)


--



Gross Margin


2,877


158


$3,035


57.3%

R&D


352


(22)


330


6.2%

SG&A


1,628


(53)


1,575


29.7%

Interest expense, net


95


(70)


25



Net foreign exchange (gain) loss


9


(4)


5



Other expense, net


972


(957)


15



Earnings (Loss) from Continuing Operations before taxes


(179)


1,264


1,085



Tax expense on Earnings (Loss) from Continuing Operations


178


24


202



Earnings (Loss) from Continuing Operations


(357)


1,240


883



Diluted Earnings (Loss) per Share from Continuing Operations

$(0.24)


$0.83


$0.59



Specified items reflect intangible amortization expense of $140 million, an adjustment to the equity investment in Mylan of $947 million, and other expenses of $177 million, primarily associated with acquisitions, including bridge facility fees, charges related to cost reduction initiatives and other expenses and the recognition of approximately $130 million of deferred taxes associated with the sale of AMO, partially offset by a net tax benefit of approximately $105 million as a result of the resolution of various tax positions from prior years. See tables titled "Details of Specified Items" for additional details regarding specified items.

null

Abbott Laboratories and Subsidiaries

Non-GAAP Reconciliation of Financial Information From Continuing Operations

Nine Months Ended September 30, 2017 and 2016

(in millions, except per share data) 

(unaudited)




9M17



As
Reported
(GAAP) 


Specified
Items


As
Adjusted


% to
Sales

Intangible Amortization


$1,415


$(1,415)


--



Gross Margin


9,312


2,459


$11,771


59.5%

R&D


1,622


(146)


1,476


7.5%

SG&A