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ABBOTT LABORATORIES (ABT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $10.974B (+7.2% YoY) and adjusted EPS was $1.34 (+12.6% YoY); revenue came in slightly below Street while EPS matched consensus, with med-tech strength offset by Diagnostics and FX headwinds .
  • Medical Devices grew 13.7% reported (14.0% organic), led by Diabetes Care (CGM revenue $1.8B, +22.7%) and Structural Heart (+22.4%) .
  • 2025 outlook: organic sales growth 7.5–8.5%, adjusted operating margin 23.5–24.0%, adjusted EPS $5.05–$5.25; Q1 2025 adjusted EPS $1.05–$1.09; CFO guided to ~57% adjusted gross margin and a 16–17% adjusted tax rate, with ~2.5% FY FX headwind (~3.5% in Q1) .
  • Shares initially dipped (~2% premarket) on the top-line miss before turning positive after the open, as investors focused on strong device momentum and 2025 profitability expansion .

What Went Well and What Went Wrong

  • What Went Well

    • Devices outperformance: Medical Devices +13.7% reported/+14.0% organic; Diabetes Care CGM revenue $1.8B (+22.7%) with Libre share gains and U.S. growth +22%; Structural Heart +22.4% on Navitor, TriClip, Amulet, Aveir .
    • Margin trajectory and cash flow: management reiterated the gross-margin expansion playbook (2024 +70 bps adjusted) and expects ~80 bps more in 2025; operating cash flow of $8.5B supported reinvestment, debt paydown, and $5B capital return (dividends and buybacks) .
    • Tone and pipeline: CEO emphasized “very strong momentum,” diversified growth drivers (Libre, TriClip, Aveir, Navitor, Amulet) and continued double‑digit EPS algorithm at the midpoint of 2025 guidance; EP “bridge” strategy via open mapping and PFA progress (international launch targeted in 2025) .

  • What Went Wrong

    • Top-line slight miss vs Street: revenue of $10.974B was modestly below consensus (~$11.01–$11.02B) even as EPS matched; Diagnostics reported -0.6% YoY on COVID testing decline and China VBP pressure .
    • FX and tax headwinds: 2025 guide embeds ~2.5% reported-sales headwind from FX, ~3.5% in Q1, and a higher adjusted tax rate (16–17%) due to Pillar 2; EPS growth guide implies offsets from mix and spending leverage .
    • Diagnostics mix and macro: COVID testing fell to $176M (from $288M in Q4’23), dampening Diagnostics; management flagged China VBP as a 2025 headwind to Core Lab, despite strength in other regions .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($B)$10.377 $10.635 $10.974
Adjusted EPS ($)$1.14 $1.21 $1.34
Organic Sales Growth ex‑COVID (%)9.3% 8.2% 10.1%
Reported YoY Revenue Growth (%)4.0% 4.9% 7.2%
Adjusted Tax Rate (%)15.0% 15.0% 15.0%

Segment sales and growth

Segment ($B)Q3 2024Q4 2024
Nutrition$2.066 $2.129
Diagnostics$2.412 $2.520
Established Pharmaceuticals$1.406 $1.268
Medical Devices$4.747 $5.052
YoY Growth – Nutrition(0.3%) 4.5%
YoY Growth – Diagnostics(1.5%) (0.6%)
YoY Growth – EPD2.7% 3.8%
YoY Growth – Medical Devices11.7% 13.7%

KPIs and subsegment trends

KPIQ2 2024Q3 2024Q4 2024
Diabetes Care sales ($B)$1.648 $1.725 $1.863
Diagnostics COVID‑19 testing sales ($M)$102 $265 $176
Diagnostics organic growth ex‑COVID (%)5.9% 3.3% 6.1%
Structural Heart YoY growth (%)13.2% 14.6% 22.4%

Estimates vs. actuals (Q4 2024)

MetricActualConsensusOutcome
Revenue ($B)$10.974 ~$11.01 Miss
Adjusted EPS ($)$1.34 $1.34 In line

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Sales GrowthFY 2025N/A7.5%–8.5% New
Adjusted Operating MarginFY 2025N/A23.5%–24.0% New
Adjusted Gross MarginFY 2025N/A~57% of sales New
Adjusted Tax RateFY 2025N/A16%–17% New
Adjusted Diluted EPSFY 2025N/A$5.05–$5.25 New
FX impact (reported sales)FY 2025 / Q1 2025N/A~–2.5% FY / ~–3.5% Q1 New
Adjusted Diluted EPSQ1 2025N/A$1.05–$1.09 New
Dividend/Share (Quarterly)Q4 2024$0.55 (prior) $0.59 (payable Feb 14, 2025) Raised

Earnings Call Themes & Trends

TopicQ2 2024 (Q‑2)Q3 2024 (Q‑1)Q4 2024 (Current)Trend
Technology & pipelineFDA approvals (Esprit BTK), OTC Lingo/Rio; Libre partnerships expanded VOLT‑AF IDE enrollment completed ahead of schedule; new HD Grid X mapping catheter EP bridge via open mapping; PFA targeted internationally in 2025 Advancing toward PFA; mapping strength
Supply chain——Libre 3 supply stabilized with two sites online; expect improving TRx/NBRx trends Improving
Macro/FX—FX turned favorable intra‑Q3 vs July guide ~2.5% FY FX headwind; ~3.5% Q1 Headwind in 2025
China/VBP—Core Lab pressured by VBP in China; ex‑China double‑digit growth VBP remains 2025 headwind for Diagnostics Ongoing headwind
Product performanceLibre sales $1.6B, +18.4% reported Libre +21%; U.S. +26%; Lingo U.S. launch CGM $1.8B, +22.7%; Devices +14% organic Strong, accelerating Devices
Legal/regulatory—NEC litigation context; strong agency joint statement noted —Monitored
EPD/emerging markets—EPD +7% organic; broad-based EM growth EPD +8.5% organic in Q4; EM strength Sustained growth

Management Commentary

  • “We finished the year with very strong momentum… achieving the upper end of our initial guidance ranges for 2024 and… well‑positioned to deliver another year of strong growth in 2025.” — Robert B. Ford, CEO .
  • “We forecast our full year 2025 adjusted gross margin profile to be around 57%… and adjusted operating margin… 23.5% to 24%… driven by… gross margin expansion and operating margin leverage.” — Philip Boudreau, CFO .
  • “Libre 3 supply… is now at full force with two manufacturing sites up and running… we’ll likely expand LINGO more nationally in the U.S.” — Robert B. Ford .
  • “EP growth… bridged via our mapping strategy… confident we can maintain a strong position in mapping… PFA more like 2025 internationally.” — Robert B. Ford .
  • “Structural Heart… grew 23%… comprehensive portfolio (MitraClip/TriClip/Amulet/Navitor) is yielding outstanding results.” — Robert B. Ford .

Q&A Highlights

  • 2025 guide drivers: high‑single‑digit top line, double‑digit EPS at midpoint; gross‑margin expansion (~80 bps) plus spending leverage offsets FX/tax headwinds; “Abbott identity” re‑established post‑COVID .
  • CGM outlook: resolving Libre 3 supply; growth from basal reimbursement expansion, insulin‑delivery connectivity, and Lingo OTC; under‑penetration remains significant (type 1/2 opportunity) .
  • EP and PFA: continued mapping-led bridge; competitive dynamics manageable; aim for international PFA in 2025 with a stronger 2H ramp as Volt comes on board .
  • Margins sustainability: Nutrition margin recovery in-flight; EPD margins resilient despite FX; ongoing gross‑margin improvement targeted 50–100 bps per year over time .
  • Tax/FX framework: Pillar 2 lifts adjusted tax rate (16–17%); ~2.5% FY FX headwind and ~3.5% in Q1; management emphasized absorbing these within the model .

Estimates Context

  • S&P Global (Capital IQ) consensus retrieval was unavailable due to an API rate limit on our end; values from Reuters/Zacks indicate Q4 2024 revenue slightly missed (~$11.01–$11.02B consensus) while adjusted EPS matched ($1.34) .
  • Street takeaways: top-line miss tied to Diagnostics/COVID testing and China VBP; Devices outperformed; FY25 guide in line with consensus on EPS with conservative FX assumptions .

Key Takeaways for Investors

  • Devices remain the engine: Libre, Structural Heart, and EP mapping underpin double‑digit Device growth; watch for international PFA milestones and continued Libre connectivity/basal expansion as catalysts .
  • 2025 profitability expansion credible: ~80 bps gross‑margin expansion plus operating leverage support EPS growth despite FX/tax headwinds; track cadence versus the ~57% gross margin and 23.5–24.0% operating margin targets .
  • Diagnostics normalization: COVID testing now <2% of sales; Core Lab growth ex‑China solid; monitor China VBP trajectory and respiratory seasonality in Rapid .
  • EM resilience via EPD: consistent high‑single‑digit organic growth across geographies/therapeutic areas provides diversification and cash flow stability .
  • Capital returns durable: dividend raised to $0.59 and a long dividend‑aristocrat track record; buyback authorization and strong cash generation add flexibility for M&A or incremental returns .
  • Near‑term stock drivers: execution vs. 2025 guide (FX/tax absorption), Libre 3 supply and Lingo scale‑up, PFA path/timing, and any updates on Diagnostics VBP impact; shares responded to device strength despite a modest revenue miss .

Supporting Details: Other Relevant Q4 2024 Releases

  • Dividend increase: Quarterly dividend raised 7.3% to $0.59; 53rd consecutive annual increase; 404th consecutive quarterly payment (payable Feb 14, 2025) .
  • Q4 Results PR and 8‑K detail: full financials, non‑GAAP reconciliations, COVID testing disclosure ($176M), and 2025 outlook .