Abbott Reports Fourth-Quarter 2020 Results; Issues Strong Double-Digit Growth Forecast for 2021

·18 min read

- Sales of $10.7 billion, including $2.4 billion of COVID-19 diagnostic testing-related sales

- Sales growth of 28.7 percent; organic sales growth of 28.4 percent

- GAAP diluted EPS from continuing operations growth of 103.4 percent; adjusted diluted EPS growth of 52.6 percent

- Delivered more than 300 million COVID-19 diagnostics tests in fourth quarter 2020

- R&D pipeline continues to be highly productive, delivering ground-breaking innovations and a steady cadence of important new products across all business areas

- Issues 2021 EPS growth forecast of more than 35 percent

ABBOTT PARK, Ill., Jan. 27, 2021 /PRNewswire/ -- Abbott (NYSE: ABT) today announced financial results for the fourth quarter and full year ended Dec. 31, 2020, and issued its financial outlook for 2021.

  • Fourth-quarter sales of $10.7 billion increased 28.7 percent on a reported basis and 28.4 percent on an organic basis, which excludes the impact of foreign exchange.

  • Fourth-quarter GAAP diluted EPS was $1.20 and adjusted diluted EPS, which excludes specified items, was $1.45, reflecting 52.6 percent growth versus the prior year.1

  • Full-year 2020 GAAP diluted EPS from continuing operations was $2.49 and adjusted diluted EPS from continuing operations was $3.65, at the upper-end of guidance range issued in January 2020.2

  • Abbott issues full-year 2021 guidance for diluted EPS from continuing operations on a GAAP basis of at least $3.74 and full-year adjusted diluted EPS from continuing operations of at least $5.00, reflecting growth of more than 35 percent versus the prior year.3

  • In the fourth quarter, global COVID-19 testing-related sales were $2.4 billion, led by combined sales of $1.9 billion from Abbott's BinaxNOW, Panbio and ID NOW rapid testing platforms.

  • R&D pipeline continued to be highly productive in 2020: U.S. approval of FreeStyle® Libre 2 and CE Mark of FreeStyle Libre 3 and Libre Sense Glucose Sport Biosensor; CE Mark of MitraClip® G4, TriClip and Tendyne heart valve devices; U.S. approval of Gallant cardiac rhythm devices; CE Mark of EnSite X 3D cardiac mapping system; portfolio expansions in Nutrition and Established Pharmaceuticals.

"Despite challenging conditions, we achieved double-digit EPS growth, delivered ground-breaking innovation and advanced our new product pipeline in 2020," said Robert B. Ford, president and chief executive officer, Abbott. "We exited the year with a lot of momentum and are forecasting EPS growth of more than 35 percent in 2021."

FOURTH-QUARTER BUSINESS OVERVIEW
Note: Management believes that measuring sales growth rates on an organic basis is an appropriate way for investors to best understand the underlying performance of the business. Organic sales growth excludes the impact of foreign exchange.

Following are sales by business segment and commentary for the fourth quarter 2020:

Total Company
($ in millions)









% Change vs. 4Q19



Sales 4Q20


Reported


Organic



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total *


4,199


6,502


10,701


41.8


21.4


28.7


41.8


20.9


28.4

Nutrition


841


1,095


1,936


6.5


1.4


3.6


6.5


2.9


4.4

Diagnostics


1,981


2,364


4,345


158.5


83.0


111.1


158.5


79.6


108.9

Established Pharmaceuticals


--


1,147


1,147


n/a


(2.3)


(2.3)


n/a


3.4


3.4

Medical Devices


1,369


1,888


3,257


(2.5)


4.9


1.7


(2.5)


1.2


(0.4)


* Total Q4 2020 Abbott sales from continuing operations include Other Sales of approximately $16 million.










% Change vs. 12M19



Sales 12M20


Reported


Organic



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total *


13,022


21,586


34,608


14.2


5.3


8.5


14.2


7.3


9.8

Nutrition


3,279


4,368


7,647


5.4


1.6


3.2


5.4


4.2


4.7

Diagnostics


4,774


6,031


10,805


65.3


25.0


40.1


65.3


25.8


40.6

Established Pharmaceuticals


--


4,303


4,303


n/a


(4.1)


(4.1)


n/a


1.9


1.9

Medical Devices


4,931


6,856


11,787


(8.2)


(0.1)


(3.7)


(8.2)


(0.3)


(3.8)


* Total 12M 2020 Abbott sales from continuing operations include Other Sales of approximately $66 million.


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.

Fourth-quarter 2020 worldwide sales of $10.7 billion increased 28.7 percent on a reported basis and 28.4 percent on an organic basis.

Nutrition
($ in millions)









% Change vs. 4Q19



Sales 4Q20


Reported


Organic



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total


841


1,095


1,936


6.5


1.4


3.6


6.5


2.9


4.4

Pediatric


497


511


1,008


5.2


(9.5)


(2.8)


5.2


(8.4)


(2.2)

Adult


344


584


928


8.4


13.4


11.5


8.4


15.3


12.7
















% Change vs. 12M19



Sales 12M20


Reported


Organic



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total


3,279


4,368


7,647


5.4


1.6


3.2


5.4


4.2


4.7

Pediatric


1,987


2,140


4,127


5.8


(6.2)


(0.8)


5.8


(4.1)


0.3

Adult


1,292


2,228


3,520


4.9


10.5


8.4


4.9


13.6


10.3

Worldwide Nutrition sales increased 3.6 percent on a reported basis and 4.4 percent on an organic basis in the fourth quarter. Strong performance of Ensure®, Abbott's market-leading complete and balanced nutrition brand, and Glucerna®, Abbott's market-leading diabetes nutrition brand, led to global Adult Nutrition sales growth of 11.5 percent on a reported basis and 12.7 percent on an organic basis. In Pediatric Nutrition, U.S. sales growth of 5.2 percent was led by share growth of Similac®, Abbott's infant formula brand, which was offset by challenging conditions in Greater China.

Diagnostics
($ in millions)









% Change vs. 4Q19



Sales 4Q20


Reported


Organic



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total


1,981


2,364


4,345


158.5


83.0


111.1


158.5


79.6


108.9

Core Laboratory


326


997


1,323


10.9


4.3


5.9


10.9


3.3


5.1

Molecular


192


290


482


427.0


263.1


314.5


427.0


254.2


308.3

Point of Care


91


38


129


(11.9)


14.2


(5.5)


(11.9)


12.3


(6.0)

Rapid Diagnostics


1,372


1,039


2,411


312.2


366.2


333.9


312.2


354.0


329.0










% Change vs. 12M19



Sales 12M20


Reported


Organic



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total


4,774


6,031


10,805


65.3


25.0


40.1


65.3


25.8


40.6

Core Laboratory


1,166


3,309


4,475


7.3


(7.3)


(3.9)


7.3


(5.9)


(2.8)

Molecular


621


817


1,438


315.5


178.8


224.9


315.5


179.9


225.7

Point of Care


369


147


516


(15.9)


20.2


(8.0)


(15.9)


20.6


(7.9)

Rapid Diagnostics


2,618


1,758


4,376


115.7


109.2


113.0


115.7


107.4


112.3

Worldwide Diagnostics sales increased 111.1 percent on a reported basis in the fourth quarter and increased 108.9 percent on an organic basis. Strong growth in the quarter was driven by demand for Abbott's portfolio of COVID-19 diagnostics tests across its rapid and lab-based platforms. Global COVID-19 testing-related sales were $2.4 billion in the fourth quarter, led by combined sales of $1.9 billion from Abbott's BinaxNOW, Panbio and ID NOW rapid testing platforms.

During 2020, Abbott mobilized its teams across multiple fronts to develop and launch multiple diagnostic tests for COVID-19:

  • U.S. Emergency Use Authorization (EUA) of BinaxNOW COVID-19 Ag Card test, a portable, lateral flow rapid antigen test to detect COVID-19.

  • CE Mark and World Health Organization emergency use listing of Panbio rapid antigen test to detect COVID-19.

  • U.S. EUA of molecular test to detect COVID-19 on its ID NOW rapid point-of-care platform.

  • U.S. EUA and CE Mark of molecular test on its m2000 RealTime lab-based platform to detect COVID-19.

  • U.S. EUA and CE Mark of molecular test on its Alinity m system to detect COVID-19.

  • U.S. EUA and CE Mark of IgG (Immunoglobulin G) lab-based serology blood test on its ARCHITECT® i1000SR and i2000SR laboratory instruments for the detection of an antibody to determine if someone was previously infected with the virus.

  • U.S. EUA and CE Mark of SARS-CoV-2 IgG lab-based serology blood test on its Alinity i system.

  • Lateral flow COVID-19 rapid antibody test on its Panbio system in select countries for the detection of an antibody to determine if someone was previously infected with the virus.

  • U.S. EUA and CE Mark of AdviseDx SARS-CoV-2 IgM (Immunoglobulin M) lab-based serology test for use on its ARCHITECT and Alinity platforms.

  • CE Mark of IgG (Immunoglobulin G) quantitative lab-based serology test for use on its ARCHITECT and Alinity platforms.

  • CE Mark of multiplex molecular tests on its Alinity m system to detect COVID-19, Flu A/B and RSV.

Established Pharmaceuticals
($ in millions)









% Change vs. 4Q19



Sales 4Q20


Reported


Organic



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total


--


1,147


1,147


n/a


(2.3)


(2.3)


n/a


3.4


3.4

Key Emerging Markets


--


833


833


n/a


(7.1)


(7.1)


n/a


1.1


1.1

Other


--


314


314


n/a


13.0


13.0


n/a


10.8


10.8










% Change vs. 12M19



Sales 12M20


Reported


Organic



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total


--


4,303


4,303


n/a


(4.1)


(4.1)


n/a


1.9


1.9

Key Emerging Markets


--


3,209


3,209


n/a


(5.4)


(5.4)


n/a


2.6


2.6

Other


--


1,094


1,094


n/a


-


-


n/a


(0.5)


(0.5)

Established Pharmaceuticals sales decreased 2.3 percent on a reported basis in the fourth quarter and increased 3.4 percent on an organic basis.

Key Emerging Markets include India, Brazil, Russia and China along with several additional emerging countries that represent the most attractive long-term growth opportunities for Abbott's branded generics product portfolio. Sales in these geographies decreased 7.1 percent on a reported basis in the quarter and increased 1.1 percent on an organic basis. Organic sales growth in India, Russia and Brazil was partially offset by market softness across several countries as a result of COVID-19.

Other sales increased 13.0 percent on a reported basis in the quarter and increased 10.8 percent on an organic basis, led by strong sales of Influvac®.

Medical Devices
($ in millions)









% Change vs. 4Q19



Sales 4Q20


Reported


Organic



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total


1,369


1,888


3,257


(2.5)


4.9


1.7


(2.5)


1.2


(0.4)

Rhythm Management


248


284


532


(6.8)


2.1


(2.3)


(6.8)


(1.7)


(4.2)

Electrophysiology


184


266


450


(4.5)


0.1


(1.9)


(4.5)


(3.6)


(4.0)

Heart Failure


136


53


189


(6.7)


0.4


(4.8)


(6.7)


(2.3)


(5.5)

Vascular


225


378


603


(14.0)


(16.6)


(15.6)


(14.0)


(19.0)


(17.1)

Structural Heart


154


199


353


(9.1)


(3.3)


(5.9)


(9.1)


(7.0)


(7.9)

Neuromodulation


172


41


213


(1.6)


(12.7)


(4.0)


(1.6)


(15.7)


(4.6)

Diabetes Care


250


667


917


29.3


34.1


32.7


29.3


29.1


29.2




















Vascular Product Lines:



















Coronary and Endovasculara)


210


377


587


(12.3)


(16.4)


(15.0)


(12.3)


(18.8)


(16.5)





a)

Includes drug-eluting stents, balloon catheters, guidewires, vascular imaging/diagnostics products, vessel closure, carotid and other coronary and peripheral products.









% Change vs. 12M19



Sales 12M20


Reported


Organic



U.S.


Int'l


Total


U.S.


Int'l


Total


U.S.


Int'l


Total

Total


4,931


6,856


11,787


(8.2)


(0.1)


(3.7)


(8.2)


(0.3)


(3.8)

Rhythm Management


903


1,011


1,914


(14.5)


(7.1)


(10.7)


(14.5)


(7.2)


(10.8)

Electrophysiology


660


918


1,578


(11.0)


(6.2)


(8.3)


(11.0)


(6.8)


(8.6)

Heart Failure


547


193


740


(4.7)


(1.3)


(3.9)


(4.7)


(1.3)


(3.9)

Vascular


853


1,486


2,339


(18.6)


(17.6)


(18.0)


(18.6)


(17.4)


(17.8)

Structural Heart


540


707


1,247


(12.2)


(9.9)


(10.9)


(12.2)


(10.3)


(11.2)

Neuromodulation


564


138


702


(14.6)


(19.2)


(15.5)


(14.6)


(19.0)


(15.5)

Diabetes Care


864


2,403


3,267


27.4


30.2


29.5


27.4


30.1


29.4




















Vascular Product Lines:



















Coronary and Endovasculara)


785


1,478


2,263


(17.1)


(17.5)


(17.4)


(17.1)


(17.3)


(17.3)





a)

Includes drug-eluting stents, balloon catheters, guidewires, vascular imaging/diagnostics products, vessel closure, carotid and other coronary and peripheral products.

Worldwide Medical Devices sales increased 1.7 percent on a reported basis in the fourth quarter and decreased 0.4 percent on an organic basis. Strong growth in Diabetes Care, led by FreeStyle Libre, was offset by reduced cardiovascular and neuromodulation procedure volumes due to the COVID-19 pandemic and lower Vascular sales in China, as a result of a new national tender program in that country. Excluding Vascular sales in China, global Vascular sales decreased 10.4 percent on an organic basis, and Medical Devices sales increased 1.4 percent on an organic basis in the fourth quarter.

In Diabetes Care, strong growth in the quarter was led by FreeStyle Libre, which grew 41.3 percent on a reported basis and 37.1 percent on an organic basis. For the full year, FreeStyle Libre grew 43.1 percent on a reported basis and 42.6 percent on an organic basis.

Abbott continues to strengthen its Medical Devices portfolio, with several key product approvals in 2020, including:

  • U.S. FDA clearance of FreeStyle Libre 2 as an integrated continuous glucose monitoring (iCGM) system for adults and children ages 4 and older with diabetes, achieving the highest level of accuracy and performance standards.4

  • CE Mark of FreeStyle Libre 3, which automatically delivers up-to-the-minute glucose readings, unsurpassed 14-day accuracy5 and real-time glucose alarms in the world's smallest and thinnest6 wearable glucose sensor.

  • CE Mark of Libre Sense Glucose Sport Biosensor, a small wearable sensor that helps athletes better understand the efficacy of their nutritional choices on training and athletic performance.

  • CE Mark of MitraClip G4, Abbott's next-generation MitraClip heart system, the leading minimally invasive mitral heart valve repair device in the world.

  • CE Mark of TriClip, the world's first minimally invasive, clip-based device for repair of a leaky tricuspid heart valve.

  • CE Mark of Tendyne, a first-of-its-kind technology to replace a faulty mitral heart valve.

  • U.S. approval of Gallant implantable cardioverter defibrillator (ICD) and cardiac resynchronization therapy defibrillator (CRT-D) devices, which include Bluetooth technology and a new patient smartphone app for improved remote monitoring and enhanced patient-physician engagement to help manage heart rhythm disorders.

  • CE Mark of EnSite X EP System, a next-generation 3D cardiac mapping platform used for ablation therapy to treat abnormal heart rhythms.

  • U.S. FDA clearance and CE Mark of the IonicRF Generator, a non-surgical, minimally invasive device that uses heat to target specific nerves for the management of chronic pain.

ABBOTT ISSUES GUIDANCE FOR 2021
Abbott projects full-year 2021 diluted earnings per share from continuing operations under GAAP of at least $3.74. Abbott forecasts specified items for the full-year 2021 of $1.26 primarily related to intangible amortization, expenses associated with acquisitions, restructuring and cost reduction initiatives and other net expenses. Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be at least $5.00 for full-year 2021.

ABBOTT DECLARES 388TH CONSECUTIVE QUARTERLY DIVIDEND
On Dec. 11, 2020, the board of directors of Abbott increased the company's quarterly dividend to $0.45 per share from $0.36 per share, an increase of 25 percent. Abbott's cash dividend is payable Feb. 16, 2021, to shareholders of record at the close of business on Jan. 15, 2021.

Abbott has increased its dividend payout for 49 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 leader that helps people live more fully at all stages of life. Our portfolio of life-changing technologies spans the spectrum of healthcare, with leading businesses and products in diagnostics, medical devices, nutritionals and branded generic medicines. Our 109,000 colleagues serve people in more than 160 countries.

Connect with us at www.abbott.com, on LinkedIn at www.linkedin.com/company/abbott-/, on Facebook at www.facebook.com/Abbott and on Twitter @AbbottNews.

Abbott will live webcast its fourth-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 webcast 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, including the impact of the COVID-19 pandemic on Abbott's operations and financial results, 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" in our Annual Report on Form 10-K for the year ended Dec. 31, 2019 and in Item 1A, "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, and are incorporated herein 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

Fourth-quarter 2020 diluted EPS from continuing operations on a GAAP basis reflects 103.4 percent growth.

2

Full year 2020 diluted EPS from continuing operations on a GAAP basis exceeded the guidance range Abbott issued in January 2020 of $2.35 to $2.45.

3

Full year 2021 guidance for diluted EPS from continuing operations on a GAAP basis reflects growth of at least 50 percent versus the prior year.

4

Based on FDA iCGM special controls.

5

Alva Shridhara, Timothy Bailey, Ronald Brazg, Erwin S. Budiman, Kristin Castorino, Mark P. Christiansen, Gregory Forlenza, Mark Kipnes, David R. Liljenquist, and Hanqing Liu. "Accuracy of a 14-Day Factory-Calibrated Continuous Glucose Monitoring System With Advanced Algorithm in Pediatric and Adult Population With Diabetes." Journal of Diabetes Science and Technology, (September 2020). https://doi.org/10.1177/1932296820958754.

6

Among patient-applied sensors. Data on File, Abbott Diabetes Care.

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

Fourth Quarter Ended December 31, 2020 and 2019

(in millions, except per share data)

(unaudited)




4Q20


4Q19


%
Change


Net Sales


$10,701


$8,314


28.7










Cost of products sold, excluding amortization expense


4,493


3,434


30.8


Amortization of intangible assets


508


483


5.2


Research and development


698


595


17.5


Selling, general, and administrative


2,570


2,413


6.5


Total Operating Cost and Expenses


8,269


6,925


19.4










Operating Earnings


2,432


1,389


75.0










Interest expense, net


127


139


(8.3)


Net foreign exchange (gain) loss


(5)


(2)


n/m


Debt extinguishment costs


--


63


n/m


Other (income) expense, net


(78)


(51)


49.6


Earnings from Continuing Operations before taxes


2,388


1,240


92.4










Tax expense on Earnings from Continuing Operations


230


191


20.2

1)

Earnings from Continuing Operations


2,158


1,049


105.5










Earnings from Discontinued Operations, net of taxes


4


--


n/m










Net Earnings


$2,162


$1,049


105.9










Earnings from Continuing Operations, excluding Specified Items, as described below


$2,612


$1,705


53.2

2)









Diluted Earnings per Common Share from:








Continuing Operations


$1.20


$0.59


103.4


Discontinued Operations


--


--


n/m


Total


$1.20


$0.59


103.4










Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, as described below


$1.45


$0.95


52.6

2)









Average Number of Common Shares Outstanding








Plus Dilutive Common Stock Options


1,789


1,781





NOTES:

See tables titled "Non-GAAP Reconciliation of Financial Information From Continuing Operations" for an explanation of certain non-GAAP financial information.

n/m = Percent change is not meaningful.

See footnotes below.



1)

2020 Tax expense on Earnings from Continuing Operations includes the recognition of approximately $135 million of tax benefits related to the impairment of certain assets, approximately $25 million of net tax benefits as a result of the resolution of various tax positions related to prior years and approximately $10 million in excess tax benefits associated with share-based compensation.



2)

2020 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $454 million, or $0.25 per share, for intangible amortization and impairment expenses and other net expenses primarily associated with acquisitions and restructuring actions.




2019 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $656 million, or $0.36 per share, for intangible amortization expense and other expenses primarily associated with acquisitions and restructuring actions.

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

Year Ended December 31, 2020 and 2019

(in millions, except per share data)

(unaudited)




12M20


12M19


%
Change


Net Sales


$34,608


$31,904


8.5










Cost of products sold, excluding amortization expense


15,003


13,231


13.4


Amortization of intangible assets


2,132


1,936


10.1


Research and development


2,420


2,440


(0.8)

1)

Selling, general, and administrative


9,696


9,765


(0.7)


Total Operating Cost and Expenses


29,251


27,372


6.9










Operating Earnings


5,357


4,532


18.2










Interest expense, net


500


576


(13.2)


Net foreign exchange (gain) loss


(8)


7


n/m


Debt extinguishment costs


--


63


n/m


Other (income) expense, net


(103)


(191)


(46.5)


Earnings from Continuing Operations before taxes


4,968


4,077


21.8










Tax expense on Earnings from Continuing Operations


497


390


27.3

2)

Earnings from Continuing Operations


4,471


3,687


21.2










Earnings from Discontinued Operations, net of taxes


24


--


n/m










Net Earnings


$4,495


$3,687


21.9










Earnings from Continuing Operations, excluding Specified Items, as described below


$6,552


$5,810


12.8

3)









Diluted Earnings per Common Share from:








Continuing Operations


$2.49


$2.06


20.9


Discontinued Operations


0.01


--


n/m


Total


$2.50


$2.06


21.4










Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, as described below


$3.65


$3.24


12.7

3)









Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options


1,786


1,781





NOTES:

See tables titled "Non-GAAP Reconciliation of Financial Information From Continuing Operations" for an explanation of certain non-GAAP financial information.

n/m = Percent change is not meaningful.

See footnotes below.



1)

In 2019, in conjunction with the acquisition of Cephea Valve Technologies, Inc., Abbott acquired an R&D asset valued at $102 million, which was immediately expensed.



2)

2020 Tax expense on Earnings from Continuing Operations includes the recognition of approximately $170 million of tax benefits related to the impairment of certain assets, approximately $140 million of net tax benefits as a result of the resolution of various tax positions related to prior years and approximately $100 million in excess tax benefits associated with share-based compensation.




2019 Tax expense on Earnings from Continuing Operations includes the impact of a $86 million reduction of the transition tax associated with the Tax Cuts and Jobs Act (TCJA) and approximately $100 million in excess tax benefits associated with share-based compensation.



3)

2020 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $2.081 billion, or $1.16 per share, for intangible amortization expense, impairment charges and other net expense primarily associated with acquisitions, restructuring actions and income from a litigation settlement.




2019 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $2.123 billion, or $1.18 per share, for intangible amortization expense and other expenses primarily associated with acquisitions and restructuring actions.

Abbott Laboratories and Subsidiaries

Non-GAAP Reconciliation of Financial Information From Continuing Operations

Fourth Quarter Ended December 31, 2020 and 2019

(in millions, except per share data)

(unaudited)




4Q20



As
Reported
(GAAP)


Specified
Items


As
Adjusted


% to Sales










Intangible Amortization


$ 508


$ (508)


$ --



Gross Margin


5,700


557


6,257


58.5%

R&D


698


(61)


637


6.0%

SG&A


2,570


(56)


2,514


23.5%

Other (income) expense, net


(78)


23


(55)



Earnings from Continuing Operations before taxes


2,388


651


3,039



Tax expense on Earnings from Continuing Operations


230


197


427



Earnings from Continuing Operations


2,158


454


2,612



Diluted Earnings per Share from Continuing Operations


$1.20


$0.25


$1.45




Specified items reflect intangible amortization expense of $508 million and other net expenses of $143 million, primarily associated with acquisitions, restructuring actions and other expenses. See tables titled "Details of Specified Items" for additional details regarding specified items.



4Q19



As
Reported
(GAAP)


Specified
Items


As
Adjusted


% to Sales










Intangible Amortization


$ 483


$ (483)


$ --



Gross Margin


4,397


545


4,942


59.4%

R&D


595


(39)


556


6.7%

SG&A


2,413


(62)


2,351


28.3%

Debt extinguishment costs


63


(63)


--



Other (income) expense, net


(51)


(5)


(56)



Earnings from Continuing Operations before taxes


1,240


714


1,954



Tax expense on Earnings from Continuing Operations


191


58


249



Earnings from Continuing Operations


1,049


656


1,705



Diluted Earnings per Share from Continuing Operations


$0.59


$0.36


$0.95




Specified items reflect intangible amortization expense of $483 million and other expenses of $231 million, primarily associated with acquisitions, restructuring actions and other expenses. See tables titled "Details of Specified Items" for additional details regarding specified items.

Abbott Laboratories and Subsidiaries

Non-GAAP Reconciliation of Financial Information From Continuing Operations

Year Ended December 31, 2020 and 2019

(in millions, except per share data)

(unaudited)




12M20



As
Reported
(GAAP)


Specified
Items


As
Adjusted


% to
Sales










Intangible Amortization


$ 2,132


$ (2,132)


$ --



Gross Margin


17,473


2,452


19,925


57.6%

R&D


2,420


(125)


2,295


6.6%

SG&A


9,696


(75)


9,621


27.8%

Other (income) expense, net


(103)


(88)


(191)



Earnings from Continuing Operations before taxes


4,968


2,740


7,708



Tax expense on Earnings from Continuing Operations


497


659


1,156



Earnings from Continuing Operations


4,471


2,081


6,552



Diluted Earnings per Share from Continuing Operations


$2.49


$1.16


$3.65




Specified items reflect intangible amortization expense of $2.132 billion and other net expenses of $608 million, primarily associated with acquisitions, restructuring actions, asset impairments, other expenses and litigation settlement income. See tables titled "Details of Specified Items" for additional details regarding specified items.



12M19



As
Reported
(GAAP)


Specified
Items


As
Adjusted


% to Sales










Intangible Amortization


$ 1,936


$ (1,936)


$ --



Gross Margin


16,737


2,140


18,877


59.2%

R&D


2,440


(198)


2,242


7.0%

SG&A


9,765


(240)


9,525


29.9%

Debt extinguishment costs


63


(63)


--



Other (income) expense, net


(191)


(37)


(228)



Earnings from Continuing Operations before taxes


4,077


2,678


6,755



Tax expense on Earnings from Continuing Operations


390


555


945



Earnings from Continuing Operations


3,687


2,123


5,810



Diluted Earnings per Share from Continuing Operations


$2.06


$1.18


$3.24




Specified items reflect intangible amortization expense of $1.936 billion and other expenses of $742 million, primarily associated with acquisitions, restructuring actions and other expenses. See tables titled "Details of Specified Items" for additional details regarding specified items.


A reconciliation of the fourth-quarter tax rates for continuing operations for 2020 and 2019 is shown below:







4Q20


($ in millions)


Pre-Tax
Income


Taxes on
Earnings


Tax
Rate


As reported (GAAP)


$2,388


$ 230


9.6%

1)

Specified items


651


197




Excluding specified items


$3,039


$427


14.1%












4Q19


($ in millions)


Pre-Tax
Income


Taxes on
Earnings


Tax
Rate


As reported (GAAP)


$1,240


$191


15.4%


Specified items


714


58




Excluding specified items


$1,954


$249


12.8%




1)

2020 Tax expense on Earnings from Continuing Operations includes the recognition of approximately $135 million of tax benefits related to the impairment of certain assets, approximately $25 million of net tax benefits as a result of the resolution of various tax positions related to prior years and approximately $10 million in excess tax benefits associated with share-based compensation.


A reconciliation of the year-to-date tax rates for continuing operations for 2020 and 2019 is shown below:



12M20


($ in millions)


Pre-Tax
Income


Taxes on
Earnings


Tax
Rate


As reported (GAAP)


$4,968


$497


10.0%

2)

Specified items


2,740


659




Excluding specified items


$7,708


$1,156


15.0%












12M19


($ in millions)


Pre-Tax
Income


Taxes on
Earnings


Tax
Rate


As reported (GAAP)


$4,077


$390


9.6%

3)

Specified items


2,678


555




Excluding specified items


$6,755


$945


14.0%




2)

2020 Tax expense on Earnings from Continuing Operations includes the recognition of approximately $170 million of tax benefits related to the impairment of certain assets, approximately $140 million of net tax benefits as a result of the resolution of various tax positions related to prior years and approximately $100 million in excess tax benefits associated with share-based compensation.



3)

Reported tax rate on a GAAP basis for 2019 includes the impact of a $86 million reduction of the transition tax associated with the TCJA and approximately $100 million in excess tax benefits associated with share-based compensation.

Abbott Laboratories and Subsidiaries

Details of Specified Items

Fourth Quarter Ended December 31, 2020

(in millions, except per share data)

(unaudited)




Acquisition or
Divestiture-
related (a)


Restructuring
and Cost
Reduction
Initiatives (b)


Intangible
Amortization


Other (c)


Total
Specifieds

Gross Margin


$ 23


$ 23


$ 508


$ 3


$ 557

R&D


(2)


6


--


(65)


(61)

SG&A


(25)


(4)


--


(27)


(56)

Other (income) expense, net


24


--


--


(1)


23

Earnings from Continuing Operations before taxes


$ 26


$ 21


$ 508


$ 96


651

Tax expense on Earnings from Continuing Operations (d)










197

Earnings from Continuing Operations










$ 454

Diluted Earnings per Share from Continuing Operations










$ 0.25


The table above provides additional details regarding the specified items described on tables titled "Non-GAAP Reconciliation of Financial Information From Continuing Operations."



a)

Acquisition-related expenses include integration costs, which represent incremental costs directly related to integrating the acquired businesses and include expenditures for retention and the integration of systems, processes and business activities.



b)

Restructuring and cost reduction initiative expenses include severance, outplacement, and other direct costs associated with specific restructuring plans and cost reduction initiatives. Restructuring and cost reduction plans consist of distinct initiatives to streamline operations including the consolidation and rationalization of business activities and facilities, workforce reductions, the transfer of product lines between manufacturing facilities, and the transfer of other business activities between sites.



c)

Other primarily relates to the impairment of an intangible asset and the net costs related to certain litigation.



d)

Reflects the net tax benefit associated with the specified items and excess tax benefits associated with share-based compensation.

Abbott Laboratories and Subsidiaries

Details of Specified Items

Fourth Quarter Ended December 31, 2019

(in millions, except per share data)

(unaudited)




Acquisition or
Divestiture-
related (a)


Restructuring and
Cost Reduction
Initiatives (b)


Intangible
Amortization


Other (c)


Total
Specifieds

Gross Margin


$ 34


$ 28


$ 483


$ --


$ 545

R&D


(15)


(22)


--


(2)


(39)

SG&A


(39)


(23)


--


--


(62)

Debt extinguishment costs


--


--


--


(63)


(63)

Other (income) expense, net


(5)


--


--


--


(5)

Earnings from Continuing Operations before taxes


$ 93


$ 73


$ 483


$ 65


714

Tax expense on Earnings from Continuing Operations (d)










58

Earnings from Continuing Operations










$ 656

Diluted Earnings per Share from Continuing Operations










$ 0.36


The table above provides additional details regarding the specified items described on tables titled "Non-GAAP Reconciliation of Financial Information From Continuing Operations."



a)

Acquisition-related expenses include costs for tax and other services related to business acquisitions, integration costs which represent incremental costs directly related to integrating the acquired businesses and include expenditures for retention, severance, and the integration of systems, processes and business activities.



b)

Restructuring and cost reduction initiative expenses include severance, outplacement, asset impairments, and other direct costs associated with specific restructuring plans and cost reduction initiatives. Restructuring and cost reduction plans consist of distinct initiatives to streamline operations including the consolidation and rationalization of business activities and facilities, workforce reductions, the transfer of product lines between manufacturing facilities, and the transfer of other business activities between sites.



c)

Other primarily relates to costs associated with the early extinguishment of debt.



d)

Reflects the net tax benefit associated with the specified items and excess tax benefits associated with share-based compensation.

Abbott Laboratories and Subsidiaries

Details of Specified Items

Year Ended December 31, 2020

(in millions, except per share data)

(unaudited)




Acquisition or
Divestiture-
related (a)


Restructuring and
Cost Reduction
Initiatives (b)


Intangible
Amortization


Other (c)


Total
Specifieds

Gross Margin


$ 84


$ 80


$ 2,132


$ 156


$ 2,452

R&D


(10)


(3)


--


(112)


(125)

SG&A


(108)


(40)


--


73


(75)

Other (income) expense, net


21


--


--


(109)


(88)

Earnings from Continuing Operations before taxes


$ 181


$ 123


$ 2,132


$ 304


2,740

Tax expense on Earnings from Continuing Operations (d)










659

Earnings from Continuing Operations










$ 2,081

Diluted Earnings per Share from Continuing Operations










$ 1.16


The table above provides additional details regarding the specified items described on tables titled "Non-GAAP Reconciliation of Financial Information From Continuing Operations."



a)

Acquisition-related expenses include integration costs, which represent incremental costs directly related to integrating the acquired businesses and include expenditures for retention, severance, and the integration of systems, processes and business activities.



b)

Restructuring and cost reduction initiative expenses include severance, outplacement, and other direct costs associated with specific restructuring plans and cost reduction initiatives. Restructuring and cost reduction plans consist of distinct initiatives to streamline operations including the consolidation and rationalization of business activities and facilities, workforce reductions, the transfer of product lines between manufacturing facilities, and the transfer of other business activities between sites.



c)

Other primarily relates to impairment charges related to certain assets and the costs to acquire R&D assets, partially offset by income from the settlement of litigation.



d)

Reflects the net tax benefit associated with the specified items, the resolution of prior years' tax positions and excess tax benefits associated with share-based compensation.


Abbott Laboratories and Subsidiaries

Details of Specified Items

Year Ended December 31, 2019

(in millions, except per share data)

(unaudited)




Acquisition or
Divestiture-
related (a)


Restructuring and
Cost Reduction
Initiatives (b)


Intangible
Amortization


Other (c)


Total
Specifieds

Gross Margin


$ 103


$ 101


$ 1,936


$ --


$ 2,140

R&D


(38)


(44)


--


(116)


(198)

SG&A


(153)


(70)


--


(17)


(240)

Debt extinguishment costs


--


--


--


(63)


(63)

Other (income) expense, net


(15)


--


--


(22)


(37)

Earnings from Continuing Operations before taxes


$ 309


$ 215


$ 1,936


$ 218


2,678

Tax expense on Earnings from Continuing Operations (d)










555

Earnings from Continuing Operations










$ 2,123

Diluted Earnings per Share from Continuing Operations










$ 1.18


The table above provides additional details regarding the specified items described on tables titled "Non-GAAP Reconciliation of Financial Information From Continuing Operations."



a)

Acquisition-related expenses include costs for tax and other services related to business acquisitions, integration costs which represent incremental costs directly related to integrating the acquired businesses and include expenditures for retention, severance, and the integration of systems, processes and business activities, and fair value adjustments to contingent consideration related to a business acquisition.



b)

Restructuring and cost reduction initiative expenses include severance, outplacement, asset impairments, and other direct costs associated with specific restructuring plans and cost reduction initiatives. Restructuring and cost reduction plans consist of distinct initiatives to streamline operations including the consolidation and rationalization of business activities and facilities, workforce reductions, the transfer of product lines between manufacturing facilities, and the transfer of other business activities between sites.



c)

Other primarily relates to the acquisition of R&D assets, costs associated with the early extinguishment of debt, charges related to the impairment of certain assets, and expenses related to certain litigation settlements.



d)

Reflects the net tax benefit associated with the specified items, a reduction in the transition tax associated with the TCJA and excess tax benefits associated with share-based compensation.

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SOURCE Abbott