Abbott Is Bouncing Back From Baby Formula Problems And Lost Covid Test Sales

Abbott Laboratories is rebounding from last year’s manufacturing shutdown of its U.S. baby formula plant thanks to strong medical device sales and a pediatric nutrition revenue rebound taking the place of lost revenue from Covid-19 tests.

Abbott, which grabbed headlines and reaped billions of dollars in global sales of its family of tests for the Coronavirus throughout the Covid-19 pandemic, beat Wall Streets earnings expectations Wednesday thanks to its diversified portfolio of healthcare products.

Abbott reported $1.3 billion in profits, which were down 46% from $2.4 billion a year-ago when the company was still selling billions of dollars worth of Covid tests around the world. Abbott reported $9.7 billion in first quarter sales, which were down 18% largely due to the lost Covid test sales that peaked from 2020 through 2022 as the Coronavirus raged around the world.

Abbott was also losing sales last year in its nutritional business after the company temporarily closed its baby formula plant in Sturgis, Mich. after a bacteria was uncovered by the U.S. Food and Drug Administration there.

But nutrition sales increased 10% in the first quarter to $1.9 billion, led by U.S. pediatric nutrition sales that were up 36%, the diversified maker of medical devices, established pharmaceuticals and nutrition said.

“Organic sales growth excluded COVID testing increased 10% led by double-digit growth in Medical Devices, Established Pharmaceuticals and Nutrition,” Abbott chief executive Robert Ford told analysts on a call Wednesday morning to discuss earnings.

Abbott’s sales of medical devices, which includes its market leading continuous blood glucose monitoring system Freestyle Libre, rose 12% in the quarter to nearly $4 billion.

“As you’ll recall, back in January, I expressed some optimism that the headwinds Abbott and other companies faced over the last few years were starting to peak and in some cases ease a bit,” Ford said. “As we move through the first part of the year, that’s exactly what we continue to see. Most notably, the impact of COVID has rapidly and significantly lessened.”

Abbott, which had more than $3 billion in Covid testing sales in the first quarter of last year, had just $730 million in Covid testing sales in the first quarter of this year. That contributed to an overall 49% decline in diagnostic sales to $2.68 billion.

Still, a return to normalcy as the U.S. public health emergency ends next month and people return to their pre-pandemic lives is good news for Abbott, Ford said.

“A much more relevant and important behavioral shift that we’re seeing in health care globally has been the increased priority people are putting on getting healthy and staying healthy,” Ford said. “And for our businesses, the impacts have been increased routine diagnostic testing volumes, improved medical device procedure trends and strong demand for consumer-based health products. The net results this past quarter was strong, broad-based growth across our portfolio.”