Q3 2021 Abbott Laboratories Earnings Call

Please standby your conference call will begin momentarily once again please.

The conference call will begin momentarily.

[music].

Okay.

Good morning, and thank you for standing by and welcome to Abbott's first quarter 2021 earnings conference call.

All participants will be able to listen only until the question and answer portion of this call.

I have a question and answer session, you'll be able to ask your question. My question. The Star one key on your Touchtone phone.

Should you become disconnected.

This conference call. Please redial, the number provided to you and buttons to edit earnings call.

This call is being recorded by Abbott.

With the exception of any participants questions asked during the question and answer session. The entire call, including the question and answer session is material copyrighted by Abbott.

It cannot be recorded.

What it will be broadcast without abbott's expressed written permission.

I would now like to introduce Mr. Scott Leinweber, Vice President Investor Relations licensing and acquisition.

Good morning, and thank you for joining US with me today are Robert Ford, President and Chief Executive Officer and Bob.

Bob Funck executive.

The Vice President Finance and Chief Financial Officer.

Robert and Bob will provide opening remarks.

Following their comments, we'll take your questions before.

Before we get started some statements made today maybe forward looking for purposes of the private Securities Litigation Reform Act of $19 95.

Including expected financial results for 2021.

Abbott cautions that these forward looking statements are subject to risk 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 one a risk factors to our annual report on Form 10-K for the year ended December 31 2020.

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.

On today's conference call as in the past non-GAAP financial measures will be used to help investors understand abbott's ongoing business performance.

These non-GAAP financial measures are reconciled with the comparable GAAP financial measures.

Our earnings news release, and regulatory filings from today, which are available on our website at Abbott com unless otherwise noted our commentary on sales growth prefers to organic sales growth, which excludes the impact of foreign exchange with that I will now turn the call over to Robert.

Thanks Scott.

Good morning, everyone and thanks for joining us.

Today, we reported results of another very strong quarter.

Ongoing earnings per share were $1 40.

Reflecting nearly 45% growth compared to last year and sales increased more than 22% on an organic basis.

Excluded COVID-19 testing related sales, which totaled $1 9 billion in the quarter organic sales increased 12% versus last year.

As we've seen since the start of the pandemic, our diversified mix of health care businesses continues to prove highly resilient.

Even as Covid case rates surged in the U S and other geographies during the third quarter.

Strong growth in our more consumer facing businesses Nutritionals established pharmaceuticals and diabetes care.

<unk> mitigated the modest impacts we saw from the surges in certain areas of our hospital based businesses.

Yes.

This has been a consistent theme throughout the pandemic.

Evidenced by an increase in total company sales, excluding COVID-19 tests of 11% on an organic basis through the first nine months of this year compared to our 2019 pre pandemic baseline.

<unk>, which highlights that our growth is real and not simply a function of easy comps versus last year.

As a result of our strong performance and outlook today, we increased our full year adjusted earnings per share guidance range now at $5 to $5 10.

Which reflects nearly.

Percent growth compared to last year.

I'll now summarize our third quarter results before turning the call over to Bob and I'll start with nutrition.

Where sales increased 9% compared to last year.

Strong growth in the quarter was led by U S pediatric and international adult nutrition.

40 in pediatric nutrition sales grew over eight 5% in the quarter led by strong growth in the U S from continued share gains in our infant formula and toddler portfolio.

Sales are pedialyte, our market, leading rehydration brand once again grew strong double digits.

Driven by market uptake of several recently launched new products as well as investments, we're making in direct consumer promotion.

In adult nutrition sales grew over 9% in the quarter, including mid teens growth internationally as we continue to see strong demand for our ensure and <unk> brands.

<unk>, including new users entering these categories and existing customers increasing their usage.

Turning to diagnostics.

Sales increased more than 45% overall and 12, 5%, excluding COVID-19 testing related sales.

During.

This quarter as the Delta variance spread in Covid cases search, particularly in the U S.

Demand for testing increased significantly most notably for rapid tests.

In total during the quarter, we sold more than $225 million Covid test globally and have now shipped over.

During the Clinton tests since the start of the pandemic.

Over the last several months we've.

We've learned that COVID-19 vaccines, while a powerful tool.

The loan solution needed in our global fight against this virus.

Testing, particularly rapid testing, which is fast.

1 billion affordable and easy to use as an important companion to vaccines and therapeutics.

Abbott has established a global leadership position in rapid testing, including supply capacity of more than 100 million tests per month.

Moving to established pharmaceuticals.

<unk>, where sales grew more than 15% driven by strong execution and a steady cadence of new product introductions.

Strong sales performance in the quarter was broad based across several countries, including double digit growth in China, Russia, and India, which led to overall sales growth of.

18% in our key emerging markets.

And lastly, I'll cover medical devices.

Where sales grew 13% in the quarter compared to last year and more than 16% compared to pre pandemic sales in the third quarter of 2019.

Strong performance.

<unk> for the quarter was led by double digit growth in rhythm management structural heart heart failure and diabetes care.

In structural heart, we continue to enhance our portfolio and large fast growing markets with the recent U S FDA approvals of annually.

Which closes.

Atrial appendage in heart to help reduce the risk of stroke and people with atrial fibrillation.

And portico for Transcatheter aortic valve replacement.

In heart failure, we announced results from the guide H F trial of our cardio <unk> system.

As with many other recent and ongoing.

Trials across the health care industry.

A portion of the Cardiome Ms trial overlapped with the COVID-19 pandemic.

After adjusting for this impact cardio.

<unk> demonstrated a 28% reduction in heart failure hospitalizations.

And we filed with the U S FDA for label expansion.

Clinical on the trial data in the middle of this year.

During the quarter. We also added an attractive growth platform to our vascular device portfolio with the acquisition of walk vascular a commercial stage company with a minimally invasive minimally invasive thrombectomy system called Jedi.

That removed.

Removes peripheral blood clots.

Peripheral thrombectomy is a large high growth area, where we could leverage our existing commercial presence.

And I'll wrap up with diabetes care.

We're strong growth was led by freestyle Libre sales of nearly $1 billion.

During the quarter we.

We added over 200000, new users, bringing the total global user base for libre to well over $3 5 million users.

So in summary, we continued to achieve strong well balanced growth across all of our major businesses.

Which is being fueled by strong execution in.

A steady cadence of new products.

Covid testing, particularly Covid testing remains an important companion to vaccines and therapeutics and habit has established a strong leadership position in this area and.

And based on the strength of our performance and outlook, we're raising our EPS guidance for the year, which now reflects growth of nearly.

Percent compared to last year.

I'll now turn it over the call to Bob to discuss our results and outlook for the year in more detail Bob.

Thanks, Robert as Scott mentioned earlier. Please note that all references to sales growth rates unless otherwise noted are on an organic basis, which is consistent.

40 previous guidance.

Turning to our results.

Sales for the third quarter increased 22, 4% on an organic basis.

Which was led by strong performance across all of our businesses along with global Covid testing related sales of $1 9 billion in the quarter.

With our excluding Covid testing related sales.

Organic sales growth was 12, 1% versus last year and.

An 11, 7% compared to the third quarter of 2019.

Foreign exchange had a favorable year over year impact of 1% on third quarter.

Yields, resulting in total reported sales growth of 23, 4% in the quarter.

Regarding other aspects of the P&L for the quarter.

The adjusted gross margin ratio was 58, 8% of sales.

Adjusted R&D investment was 6% of sales and.

And adjusted STD.

<unk> expense was 25% of sales.

Our third quarter adjusted tax rate was 15, 5%, which.

Which reflects an adjustment to align our year to date tax rate with our revised full year effective tax rate forecast of 15%.

The revised.

<unk> full year forecast is modestly higher than the estimate we provided in July.

Due to a shift in the mix of our business and geographic income.

Turning to the outlook for the fourth quarter, we forecast one to $1 4 billion.

Covid testing related sales.

Forecast.

Revised organic sales growth, excluding COVID-19 testing related sales in the low double digits versus last year.

And based on current rates.

We would expect exchange to have an unfavorable impact of around one half of 1% on our fourth quarter reported sales.

Castro with that we'll now open the call for questions.

Thank you.

If you have a question at this time please press star.

And the number one key on your Touchtone telephone.

If your question has been answered.

The removal from the queue. Please press the pound key.

<unk>.

Already we kindly ask that you please raise your hand.

Speaker phones, when asking your question and again, that's star and then one to ask a question.

Our first question comes from Robbie Marcus from Jpmorgan. Your line is open.

Great and congrats on a really nice quarter.

Okay.

So maybe after such a good quarter led by Covid testing I feel like do you have any unique perspective looking at both sides of the coin from Covid testing volumes and also device procedure volumes.

So Robert I would love to get.

And so where you think we are here in fourth quarter and heading into 2022 and.

Any early thoughts you could give us on sort of how to think about the progression of COVID-19 testing sales and the recovery and durability of med Tech volumes.

Sure I think regarding Covid testing.

We've obviously since the start of the pandemic, we've been learning a lot.

And I think one of the things that.

As we developed our strategy for that.

It is believed that the rapid test was going to be kind of more sustainable part of the business and.

And I think we're pretty.

There.

I'd say the key thing that and I made this in the.

In the comments in the opening commentary the key thing that we learned over the last let's say couple of months here is that the vaccine is just an incredible tool for device had a huge impact on public health around the world.

But alone is not enough we know that.

<unk>.

Dramatically reduces hospitalizations dramatically reduces mortality, but I think we're all seeing here that even if youre vaccinated and you could still you can still get and you could still transmit the virus.

Obviously you are not.

Heading to a hospital.

But I think we've all heard and seen stories of that so I think that's the biggest kind.

Learning year for Us as we go into Q4 and as we go into next year is that testing is going to remain an important and important companion here and even with therapeutics.

It's still going to remain an important part of fighting the virus and I think we've also learned a lot about.

Understanding kind of the difference between symptomatic testing and screening testing.

We started to pay much closer attention to understanding the channels and the platforms that are more aligned to.

Symptomatic testing versus screening testing and we could definitely see a correlation.

On the symptomatic testing.

With with cases cases going up cases going down.

What we don't see that correlation is on screening so even as cases have started to come down a little bit and U S. Actually screen demand has increased quite a bit. So so I think that is another kind of key learning as we think about going into Q4 and thinking about going into.

Into next year also the other other I'd say key distinction we start to make his understanding kind of government.

Purchasing a test versus kind of private and I'd say in the beginning of the pandemic. Most of our sales were focused to governments, whether international governments federal government here in the U S State governments also.

And that.

<unk> to be pretty strong, but what we've seen now grew pretty significantly and I think it's aligned to the screening pieces the private side of the market, whether it's OTC cash pay.

It's a lot of companies we've seen a lot of companies in the last couple of months here sign contracts with us to ensure that they've got rapid testing.

To be able to give to their to their employees. So while we're not seeing you'll always see some shelf.

And stocking issues at the retail and those will work their bills work their way through that in the next couple of weeks, we are seeing still a lot of companies by test to get to their to their employees. So so I think all of this is basically saying listen I don't.

Don't know how much is going to be there next year, but it's clearly here that that screening segment of the market.

Is going to be an important part even with even with therapeutics and vaccines. So so I think thats going to be.

An important part of our base business is done.

Well.

Continues to be on a on a recovery trajectory here Robert Robbie started in Q2, we saw that in devices, we saw that in diagnostics.

Yes, there was some.

There was some softness.

During Q3 as as is.

Delta.

In cases increased here in.

In the U S.

That's probably more in August and throughout half of September we started to see it kind of re pick back up again towards the end of the quarter or first couple of weeks, we like what we're seeing here in terms of.

In terms of some pickup but these were pockets I wouldn't call. It looked at general softness some slowdown.

Down there are pockets here in the U S. Some pockets in some countries, but generally speaking that base business is doing very well. So when you think about 2022.

I expect our base business, our underlying base business to continue that momentum very strong momentum across the board.

With all of our new product launches and the question here is going.

B Covid.

Covid and I think it is going to be very difficult as we go into next year to be able to forecast.

A full number a full year number of Covid next year I think we'll probably we're probably thinking about okay, well theres, probably a COVID-19 number that we're comfortable going into 2022, and then we'll have to.

Update on a rolling quarterly basis here.

How COVID-19 is going to play out.

Throughout next year so that's.

That's kind of how I see it COVID-19 COVID-19 testing will be there will have to kind of do it more on a rolling basis as we go to next year.

In our base business continues to accelerate there was a little bit of softness in Q.

But I like what we're seeing.

In terms of recovery and I like the portfolio that we built around.

Our cardio business, our <unk> business, our nutrition business, our diagnostic business. So that's all that's all good.

Great Great that was really helpful. And then maybe Robert to build on that.

I know it's.

Q3, very early in your planning process, but as you just said there is a lot of variables a lot of moving pieces, you've had a great year and devices. So far a bumper year in testing any early thoughts on how investors should be thinking about 2022 versus 2021 from a top and bottom line perspective.

It's still.

Thanks.

Yes, I mean, I think like I said.

We're still in our process, we'll give our guidance in 2022 and January like we always do Robby and I want to see a little bit more in terms of how this pandemic is unfolding here.

Especially on the Covid side, but on the base business I think our base business I would say.

<unk> been pretty good at.

Forecasting our business both from a topline from from.

Margin on our base business. So I think what you can expect in 2022 is that base business is getting even stronger.

With the rollout of all of these product launches that we've announced.

Over this year.

Here and there.

The question here really is going to be kind of COVID-19 testing and like I said, we'll have that will have a portion of it that I think we'll feel good about putting it in and then we will have to be updating on a rolling basis, and I think thats kind of how to think about it the base business, which is probably the more sustainable piece is building momentum and it will go into 2022 with a lot of.

It's a growth opportunity and then we will have to kind of look at COVID-19 on a more rolling basis.

Great. Thanks, a lot.

Thank you. Our next question comes from Bob Hopkins from Bank of America. Your line is open.

Yeah.

Well, thank you very much.

Good morning, and congrats on a solid execution I just have two.

Two questions in the interest of time I'll, just mentioned them both upfront because the first one is pretty straightforward. The first question is just on amulet.

I realize it's very early in the launch.

But just would love your sort of top down comments on on how things are going.

And maybe any metrics you can share in terms of perhaps like the percentage of your U S. Coronary accounts that are now active with amulet. So would love some color there and then the second question is.

More of a broad based question I was just wondering if you could provide just a little bit more detail on what youre seeing on inflation.

<unk> and supply chain, because the headlines there obviously theyre just constant but the message from Abbott and other companies. We follow just seems to be that sort of generally manageable. So I'm. Just wondering if you can kind of talk to that a little bit.

If you can quantify the headwinds or just give us a better understanding of why it's manageable and just.

Some put some perspective around it for us thank you.

Okay, well I'll take the amulet and then I'll, let Bob talk to the kind of the inflation supply chain I would say just say it is manageable, but we have a great team. So.

And I'll, let Bob cover that.

On amulet listen we received approval in August.

We are ready already initiated the launch I know theres, a lot of anticipation or at least in the last two calls about that.

The data and when we're going to publish the data and why are we going to do at the time that we're going to do it and.

So we we released that data really close to our approval.

I think that was a good strategy because it allowed our team.

To kind of prepare for that.

We'll say regarding the data I mean, you saw when we released the data.

It's the product has got a lot of advantages versus the product. That's on the market right now we've got a pretty broad portfolio of sizes and that helps as you're looking at.

Yes.

Anatomies and having a better fit there they're suitable sheath that we've got.

As a resulted in great precision in the placement and that's super important, especially when you're looking at Transcatheter therapies.

And then you saw the data superior kind of closure rates.

Without the need for blood centers, right falling right out of the procedure.

And ultimately.

That's why the patient went to the hospital or part of the reason why they went there. So so I think we've got a great product here.

I think the team has done a good job getting the contracts ready.

Right now I would say we have a goal a certain amount of contracts by the end of this year.

And.

In the first month, we've already gotten 40% of them of that of that target. So.

I think that we're going to we're going to definitely hit what we need to hit in terms of getting our contracts.

Our accounts the ones that we want to get on contract up and running so we can start to build.

Build.

The usage.

<unk>.

Familiarity with the system.

We've got a really strong commercial presence here and I think that's a key that's a key aspect in the rollout.

The implant is that these devices the electrophysiologist, although the interventional cardiologists I mean, we've got a lot of great products and a lot of great call point, So thats worked out very well too.

There's always a certain amount of coordination that's required there and that coordination has been fantastic I'm really pleased just pleased to see that.

Initial feedback has been super positive so very very very happy with the initial signs like you said, it's about a month month and a half into it all the signs that I'm seeing show.

So that will have.

Great opportunity here too.

To establish and lead us.

Yes.

Another product in the category and then on top of that we're making the investments like I said to grow the category with all of our clinical trials catalysts is one of them that I think is important also so I'd say.

<unk>.

More than half are very very pleased with what I'm seeing.

Okay.

So I'll take the inflation comment so.

Inflation and supply chain are really linked together.

The global supply chains have not been able to keep up with strong demand out there and so like others, we're seeing some increased input cost.

First cross areas of our business.

Were experiencing some higher shipping costs and in some cases higher commodity cost I would say the commodity costs were really more in kind of in the nutrition area of the business.

In some areas, we have flexibility to adjust pricing a bit and we plan to do that.

In other areas that flexibility.

It doesn't exist and so we're working to mitigate the impacts we're seeing.

Such as looking at other manufacturing cost as Robert mentioned, we've got we've got a very strong procurement organization and supply chain organizations and Theyre doing a great job working with our suppliers and our suppliers understand the critical nature.

<unk> of our products and so.

We've been successful in terms of ensuring that we're able to get what we need to.

To support the business.

Thank you.

Okay.

Thank you. Our next question comes from Josh Jennings from.

Cowen Your line is open.

Hi, good morning, Thanks for taking the questions and.

Congratulations on the strong <unk> results.

Hopefully, rob, but hoping to just hear maybe some puts and takes.

Help us understand some of the puts and takes of the 2022 operating margin clearly.

Testing is going to be a factor, but any other drivers of operating margin expansion that you would highlight as we move into 2022 and then any other levers.

But it's able to pull to drive earnings next year, depending on how the Covid testing environment plays out.

Sure.

I'd say like I said in the beginning I mean, I think 2022, our base business, our underlying base business is going to grow.

Very strong both on the top and the bottom. So we will see margin expansion in that in that business and Thats a combination like Bob said, we've got gross margin improvement teams across all of our business that are.

Covid ways to mitigate other manufacturing costs, so that'll be important to be able to drive margin expansion and then just.

The nature of the mix as as we continue to rollout our.

Our pipeline, which is predominantly focused I'd say on the on the on the med device side.

Working.

<unk> got gross margin profiles, there that are accretive to the to the Companys gross margin. So I think a lot of it is really driven on the top line and driving our topline and the execution of these new product launches allows us to get that kind of margin expansion into 2022, and like I said, we the COVID-19 pieces.

Sites is really just one where we're going to have to go quarter by quarter.

And.

Update and roll our forecast every quarter, we'll have a number that we will feel comfortable with but.

<unk>.

Those are the kind of key drivers here are product launches, our ongoing base business margin expansions by mix and.

And gross margin improvement I want to keep the same profiles that we've got right now in our base business in terms of spend R&D and SG&A. So those profiles, we wouldn't want to maintain obviously if you look at our profile right now, it's a little bit distorted because of the COVID-19 piece.

But if you look historically, where we've been in the low sevens.

<unk> and R&D and SG&A between 20, and 30%, that's where we're going to want to kind of land.

Yeah.

Thanks for that and then just quick follow up on Libre.

We've had some consultants talk about potential for Abbott to add other analytes.

Onto the platform and particularly the addition of key term.

And monitoring as a potential competitive advantage any any updates just in terms of how the three point, though on the.

SAP here, but any updates in terms of the future development plans for Libre and how you continue to maintain your competitive edge here. Thanks for taking the questions sure.

We've always said that labor Elisa platform.

We always are.

Every time, you put out a number it becomes like the next one.

What is that and what's after that and so we've launched Libre two is doing very well in the U S.

We've launched Libre three in Europe.

And we will obviously be rolling Libre three out regarding your question.

On analytes, yes.

Yes, I mean that is an area that we are.

<unk> intentionally looking at which is using the platform of libre the manufacturing platform to be able to develop new analytes. You mentioned one that we've got particular experience in in our blood glucose monitoring.

Platform blood ketone system.

So that we believe is an important aspect, especially for type one and bumpers.

Think that Thats, a real important kind of feature.

If you look at going into the type two population there is a lot of new new drugs for type two where there are certain.

Warnings regarding <unk>.

<unk> and <unk>.

We think that that might also be an opportunity to.

But that's only one analyte and we've got a pipeline here of analytes a dedicated team that is only focused on looking at what are the business opportunities to market needs for that and as we get closer.

We have launches, which will be coming out fairly soon we will be updating update in the market, but I'm really excited about using the libre platform here to be able to kind of expand.

Expand even beyond diabetes.

Great. Thanks, so much.

All right.

Thank you.

Our next question comes from Larry <unk> from.

Your line is open.

Good morning, Thanks for taking the questions.

Robert I wanted to focus on the device side and the pipeline.

Just starting with emulate.

As Bob earlier question in another way the survey seem.

Those will be coming back suggesting annually can take about a third of the U S market and maybe even 20% next year.

It's not easy for a.

Second to market to become market leader.

But amulet has a nice profile.

What's your reaction to some of these.

Consensus estimates for share do you think you can do better and I had a follow up.

Sure well I mean.

Annually, there is new to the U S. But it is not new to the international markets. When you look at the international market annual it's got a 50% market share.

I've seen some.

To be reports.

Not all of them, but I am aware of some of these surveys that are done with that.

With different physicians.

And what.

What I read and what I see them as similar.

What I see here in the U S.

Versus what we actually we <unk>.

Actually see it in Europe.

Which is it's a great product.

It's sized portfolio is an advantage.

Its closure rate is also an advantage.

And.

As I said this is a multibillion dollar market, where we think that we can be a true competitor in also.

But at the same time <unk>.

First to develop it.

I think that's an important part here also Larry so as I mentioned, we're making investments in next generation product, we're going to be making investments in and the commercial infrastructure, which is not only to be there during the implant, but also to develop the.

The patient referral network, and we're going to be investing in a clinical.

Nickel trials I think the catalyst trial is going to be.

Comparing it to <unk> I think that'll be a great opportunity to expand the market also so I think it's a combination of kind of market expansion and yet we're competitive with our offering we're competitive with our team and.

I think 50%.

<unk> internationally is a good aspiration to have here in the U S.

That's helpful. And then wanted to ask about portico in cardio ma'am, so with portico you have now inventory outside the U S.

Do you think you need that in the U S to really drive share.

And do you think you can compete.

Without.

Immediate a low risk indication, which I don't think you'll have to about 2024, and just lastly on cardio Mems how are you feeling about the label expansion.

And the commercial opportunity given the.

The Covid impact you mentioned on the guide H F trials, thanks for taking the questions.

Sure Larry.

Let me talk about.

They didn't go and and tabby here more broadly this is.

Hugely important segment in structural heart, we want to be a structural heart leader, we had that vision when we put the businesses together with St. Jude and we know that we need to be.

Through player here in the <unk> space.

I'm really.

Port at this for US is a long game and what I mean by that is.

We're launching portico in the U S Navy.

<unk> to your question is.

A great second generation device, we got it CE marked and feedback is that it's a very it's a very very competitive.

Looking at <unk> clinical profile and high risk is really strong.

And yes, I wanted to bring it to the U S also.

But not because I feel we need to because portico is not competitive because very competitive but in.

In this context of building a strategy here to be a.

It's a real player in the <unk> space.

Know that we're going to have to.

A second generation here in the U S. We will have to also look about how do we develop further on average so I think that.

<unk>.

We've got about a five share.

Europe.

Not my aspiration for the taxi space.

To your point Theres, two pretty well entrenched competitors in the market.

And.

But we have a higher exploration and just kind of a five share which is what we have in Europe. So I think the combination here of investment and the team investment in the pipeline and the clinical data Youre right R. R.

<unk>.

Kind of a low risk intermediate low risk trial.

Reads out little bit later on but it's there we're investing in it because we see this as a big opportunity for us to be eight to be a real player in this market. So.

I am excited about it.

And I know the team is too.

To to be able to kind of be a real.

Our go to full service player in the field of structural heart.

Regarding Cardiome Ms.

Listen I think.

The data I think it was pretty compelling I mean this is the second and you know this is Larry. This is the second RCT trials that we've done.

<unk>.

And I'm, a big believer in RCT trials, and the need for them to be able to generate the clinical evidence.

We filed for the label expansion to end of June I think the data was very compelling.

And part of it is expansion.

<unk> to class II and class four.

And then.

Also to be able to expand indication.

Two patients with elevated BNP, which is today just for patients that have been previously hospitalized. So I think the combination here of the data.

The fact that it is already the second RCT that we've done a very large one also on top of champions.

Champions trial, I think there's a great opportunity here.

To develop this market one of the things that we did in the quarter here also is.

We now have a more dedicated business unit for Hartford for heart failure, where both the L that cardiome and his team are going to be combined into one under one.

GM very similar to what we've done with our other businesses because we believe in the and the benefit of that focus and that attention to the business. So I think the combination of.

What we have submitted our focus this is a great opportunity for us in 2022 and beyond.

I'm not going to comment on.

When I can all.

I can tell you is we filed it at the end of Q2 and I think the data is very strong.

And we'll just leave it like that.

Im.

Highly hopeful that we'll be seeing that.

Next year for sure.

Thanks Robert.

Thank you our next question comes from.

Oh, yes, sorry, along some Martin Stanley Your line is open.

Okay. Thank you for taking the question I wanted to ask about the same.

Yes.

A firewall procedures in Q2, just sequential trends in the quarter. If you started to see recovery and some of that.

And some of your more deferrable procedures trending ahead of others and also how youre thinking about the ability to recapture deferred procedures, but the majority of procedure recapture can occurring for Q staffing shortages.

Some of this are covering procedural capture well into 2022.

Sure.

Well I would say this is probably out of our device businesses.

The business, that's had a little bit of a harder time.

Terms of recovering post COVID-19, it's probably more elective like you said.

It has been lagging a bit.

It's been pretty flat I would say in <unk>.

<unk>.

Its trajectory if you look at our trials and our implants.

So that's that's really something that we can control.

In terms of kind of how that is going to bounce back.

We have visibility to.

The pipeline of patients we work.

Closely with the with the surgery centers and we've got visibility to that.

Not expecting a big bolus to come into Q4, and then we'll have to see how our Q1 and Q2 of next year looks like to be able to kind of give a better sense there but.

But what we can control.

What I focus we focus the team on is is on our pipeline and I think the team here has done a really good job at height.

Alright, a couple of things here that we've done narrow sphere, which is this novel remote care platform.

We've launched it it's the first kind of system that was approved by the FDA, we did a full market.

Release at the end of June.

I really like the numbers, we're seeing we've done over over 5000 remote programming sessions and not only is it a remote programmer, but it also allows us to give visibility of the patients in the funnel. So using the adoption of that tool is great. Because I think it will it'll have a real big change on the sales.

Sales and.

Service kind of business model that exists in this business. So that's gone very well and I think that'll that'll help get better visibility. Another key thing here is.

Entrance into the rechargeable.

Chargeable segment, which is about half of the market, we really don't have a competitive system in there and.

The team has developed.

Chargeable system that is best in class significant advantages versus the market leaders in this segment. So we're looking forward to bringing that product to market next year and then we've also made investments in trials I think probably the most notably one is.

Distinct which is an.

Indication for non surgical lower back we've completed enrollment in that study so.

So I think the combination of these factors here.

Are important for us to be able to kind of take share and then if we see the bolus of patients come back in in Q1 and Q2.

That will be an.

An additional tailwind for us.

Okay.

Alright, Thank you Alan for US it's all about your recent acquisition of block vascular and maybe at a high level can you talk about your outlook just for the underlying market growth in the peripheral space over the next several years, let's assume that the other high growth target end market, including diabetes and <unk> are there other AG book to build out around your vascular.

Go ahead business.

Beyond that just what's your kind of outlook for pursuing a p/e indications at that time.

Thank you.

Sure.

So we've been looking at this area for.

Quite a bit.

As I always said, we're always looking we're always studying.

And this was an opportune.

<unk> that we saw.

We think it is.

It's an attractive segment.

We see it about $700 million growing double digits.

And this kind of fell right into that sweet spot of kind of strategic it makes sense strategically for us we've got a we've got a commercial footprint out there with a with an endovascular sales and services.

We know the customers we have the call point.

And we've got the capacity here to be able to leverage our manufacturing expertise here to be able to kind of scale up manufacturing. So so this made perfect sense for us.

To be able to add it to the portfolio and that integration is going pretty well.

I don't expect any significant contributions in Q4, but as we go into next year I think it will have an impact on our vascular business.

And yes, I mean, we're like I said, there are plenty of segments in the Endo space I would say.

That we continue to study we continue to look at areas.

Areas that we're interested in and.

If we find the right moment.

For us to be able to.

Add those those opportunities we will.

Regarding your question on the <unk> indication, yes, absolutely we know that is very.

Very important.

And the.

The peripheral space.

So we're investing.

One of the key aspects and the integration is to invest.

To be able to get that indication established so yes, we are working on that.

Okay. Thank you very much.

Thank you our next question.

Vijay Kumar from Evercore ISI Your line is open.

Oh, Hey, guys. Thanks for taking my question Robert My first one was.

Going back to testing I think in Q4 assumptions of one to one 4 billion Thats, a sequential step down versus <unk>.

I'm curious, though.

Where are we on capacity right now and what is.

What is your what is the demand for these testing products right now are we seeing any sequential.

A step down in demand right now and I think you guys did win about $600 million shift.

Dod contracts is that baked into the Q4 number or is that a fiscal 'twenty two contributor.

Okay.

So regarding the Q4 forecast of one to one four here our capacity is we can do significantly more than that.

Vijay, especially as Q3, we didn't have.

The full ramp up but now we're.

Finishing this month, there will be and will be in full ramp up mode. So we can do we can do more than than the one four I think the factor here.

We're looking at is as I said in the opening comments here in the first question I continue to see the surveillance and the screening.

Market to continue to increase and.

Thats with kind of buying <unk> and IV now also.

So we've got those those businesses.

Everything we can make we're rolling in here.

The only question.

We've got here a little bit is on the on the on the symptomatic.

And that's what you see maybe in this and this step down here is assuming as cases decline in the U S that we're going to see a little bit of a decline in <unk>.

Symptomatic testing so so that's a little that's one part of the factor the other factor in the 1% to one four is just pricing.

We've got a we've got a mall.

Market leadership position.

In rapid testing, especially in OTC. If you look at Nielsen data, you'll be able to see that where we were at about 90% share before the month of September we dropped to about 60, just because of supply and now we're back up to 75 share and we're seeing a little bit of price pressure.

<unk> number I baked in some price pressure to ensure that we maintain that market leadership position as we saw as we see more market entrants come in.

But if we don't need that price then that will obviously.

Drive another beat to that number too, but so thats.

Those are the drivers and the thinking there Vijay.

A little bit of pricing pressure and what are we going to see on the symptomatic testing.

So sorry.

Contract $600 million does that.

Assumed in Q4, and our fiscal 'twenty two contributor.

I have two so the Dod.

So in fact.

Is actually a I think you're quoting the maximum amount of the of the contract.

Which I know is kind of what got a lot of the news headlines, but the contract actually has a minimum amount.

Which is significantly lower than that.

Less than $100 million, so it's really.

Content here on the Dod and the federal government in terms of their purchasing.

We factored in a little bit of that minimum piece in Q4.

And as I talk about going into into into next year that'll be a portion of the department that we will feel comfortable with adding on so.

Are we going to do but it's a pretty big range Vijay in terms of what the maximum is and what the minimum is.

So.

Understood and just one on your.

Earlier comments, Robert on the SG&A looking back at historical.

Trends of 29% to 30% R&D at 7% of revenues.

With that comment.

Looking to fiscal 'twenty two.

What the.

What the Opex as a percentage of revenue should look like me a base business and then.

The variable.

And beyond that should be code is that the right way to think about.

The comment was more about ensuring that.

You don't see that there is a drop in investment when you look at our profile in Q3 and from D. It's down 6%, our SG&A is down to down to 25%. So that comment was more about that.

There is a little bit of a distortion factor here because of Covid.

And.

We're going to we're going to make sure that we.

We don't invest in the business. If you look at the investment we've made Vijay this year, we've added about about $1 billion between R&D and SG&A.

The business so that we can continue to drive.

The top line and at the same time drive the long term sustainability of the business with the R&D investments I talked.

Continue how we could pulsate that spend not only this year, but as we go into next year a portion of that spend is a little bit more discretion here on the SG&A side, and we'll be looking at that but so the comment there was more about ensuring that there wasn't a distortion.

At least understood the distortion of Covid in terms of our profiles.

About Houston, Thank you guys.

Thank you. Our next question comes from Matt.

From credit Suisse. Your line is open.

Hi, Thanks, and congrats on the strong results.

So maybe just to follow up on some of the.

You were just talking about sort of this concept of reinvesting.

The proceeds of this very strong COVID-19 business.

There's a perception out there I think because COVID-19 testing is.

Maybe not permanent and hard to predict that it somehow less.

Important.

If things are more value than the rest of your businesses, but.

The last few months, obviously in this quarter of $1 five of upside in Q3 is by our estimates more than half a billion in operating cash.

And that goes up against your two or $2 $5 billion of operating cash run.

Right.

The question is is in addition to kind of being part of the solution as you've talked about.

Pandemic, maybe drill down a little bit into some of the things you were just describing opportunities to invest behind which ones of your growth programs do you see an opportunity to sort of dial things up.

And how if at all does this change maybe the way you think about M&A and your activity on that front. Thanks.

Sure I think you captured it pretty well all of the elements there of how we look at Covid.

As I said at the beginning.

When we.

Started this there is definitely an opportunity.

To accelerate the strategy of decentralized testing.

Because of Covid and that strategy has been in place and that's an area that we are investing.

To ensure that we do have.

And the ability to do so.

So we see more testing and pharmacy more test.

And urgent care centers and testing that goes beyond COVID-19.

Even goes beyond flu and RSV and preparatory viruses by developing.

Assays that will.

Be used on on that rapid testing platform. So that's one investment for sure you.

You can see the impact on the investment on.

Some of the business you see it in nutrition. So we have been putting more disconnect your advertising and direct consumer promotion in that business and you could see the step up in the growth rate there we've obviously.

Put investment into Libre, both on the SG&A side.

We've rolled out a new TV commercial.

And funded that.

And at a level that we feel is.

As competitive as leading in terms of.

In terms of messaging.

Increased our sales force.

In the U S and other key markets for Libre, so that we can call on me.

<unk> physicians and you see the impact there.

On Libre I mean, we did almost $1 billion of sales of Libre this quarter.

And.

In the U S is about 65%, we're making great progress.

Penetrating the tie to popular.

Population, whether its non incident in users or non intensive insulin users. We've got about a 90% market share. So non incident end users or non intensive insulin users, we've got about a 90% market share of that.

That segment at least.

So that growth is also being supported and we've got all these new product.

Morph is that I've been talking about on the cardiovascular side that require.

Feet on the street, whether it's Salesforce clinical specialists and we're funding that also so.

So I think that thats.

Very clearly where we're putting our investments we've talked.

Launch of R&D investments.

And making sure that we've got pipeline beyond 'twenty, two and 'twenty three.

It's predominantly been in the diagnostics and device areas also so it's been pretty broad base.

That $1 billion increase has kind of gone well across all the businesses and if I asked my.

Talked about general managers, and my Presidents and my businesses do they have our next tranche of where they would go that they would have that list ready to go to so there's no shortage of opportunity.

And then the other the other topic you talked about or touched on was the cash.

Cash flow generation.

And as a result of the Covid business and.

Must generate a lot of cash we have.

<unk>.

Invested some of that cash and the organic opportunities we have whether it's manufacturing sites here in the U S for Covid.

Mitra clip for Libre. So we've made those internal investments, but we've also.

Looked at.

Yes, if you could provide the best return.

To our to our shareholders and you saw that in the form of our dividend increase at the beginning of this year, we increased our dividend by 20, 25%.

You saw that we also probably saw that we bought back shares in Q2.

And we've stepped that up even further in Q3, and we've got capacity to do.

More of that in Q4, if that makes sense for our shareholders. So so we find a way to kind of deploy that capital and on the M&A side.

About this.

If we think there is a strategic fit for US one that is financially justified for us that we can do better.

Do we can make it better and that there is value for our shareholders.

We'll do that also right now I'd say I think the med Tech and diagnostics Valley.

Evaluations out there, especially the ones that we would be interested in high quality high growth assets is it a little bit frothy. So.

So we're in the motive studying and paying attention.

I think the good news.

Here is that we don't we don't really need Emma.

M&A to be able to support what I think is pretty top tier top tier performance here. So.

So that's.

It's pretty comprehensive in terms of how we're looking at Covid.

<unk>.

And.

Both funds funds our.

Organic growth and allows us to provide some more value to shareholders through.

Backs dividends and if theres a growth vehicle out there I think would make sense, we'll won't be shy for that also so I'll just I'll just close here a little bit and just say our results were achieving very strong growth across all.

Our businesses I'm very excited and proud about the pipeline.

All the businesses had been focused on we've historically really focused on organic pipelines and that continues to be highly productive we're entering two.

Great.

New and attractive growth segments across our portfolio and and there is.

Internal audits along the way there so.

We're investing in our key platforms as I've said.

Covid testing is going to be an important companion to vaccines and therapeutics at what level I can't say right now for next year I have given a range of what I think is going to look like in Q4.

And there could be.

More opportunities there for us to first to do better than that but I think the rapid test here is really the.

The value proposition that is going to make sense going into next year and we're a leader in that segment. We built scale, we built manufacturing and we know how to operate in this environment whether it's.

Our performance fees or direct consumer so our focus right now is.

Going to finish strong.

'twenty one.

Enter into 2022 with a lot of momentum.

And.

I think we.

We're well placed strategically here.

As we go into as we go into next year, so with that I will.

Thank you all for joining us today.

Thank you operator, and thank you for all of your questions. This now concludes Abbott's conference call. A webcast replay of this call will be available after 11 am central time today.

On Abbott's Investor Relations website at Avon Investor Dot com. Thank.

Thank you for joining us today.

This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

[music].

Okay.

[music].

[music].

[music].

Good morning, and thank you for calling Bob welcome to Abbott's fourth quarter 2021.

This conference call.

All participants will be able to listen only until the question and answer portion of this call.

During the question and answer session, you'll be able to ask your question by pressing the star one key on your touch Samsung should.

Should you become disconnected throughout this conference call. Please redial the number provided to you and buttons for Abbott.

Uh huh.

This call is being recorded by Abbott.

With the exception of any participants questions asked during the question and answer session. The entire call, including the question and answer session is material copyrighted by Abbott.

It cannot be recorded or rebroadcast without abbott's expressed written permission.

I would now like to introduce.

Mr. Scott lineup Weber, Vice President Investor Relations licensing and acquisitions.

Good morning, and thank you for joining US with me today are Robert Ford, President and Chief Executive Officer, and Bob Funck, Executive Vice President Finance and Chief Financial Officer.

Robert and Bob will provide.

The remarks.

Following their comments, we'll take your questions before we get started some statements made today maybe forward looking for purposes of the private Securities Litigation Reform Act of $19 95, including expected financial results for 2021.

Abbott cautions.

[laughter] opening 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 one a risk.

Thats Easters to our annual report on Form 10-K for the year ended December 31 2020.

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.

On today's.

<unk> conference call as in the past non-GAAP financial measures will be used to help investors understand abbott's ongoing business performance.

These non-GAAP financial measures are reconciled with the comparable GAAP financial measures in our earnings news release and regulatory filings from today, which are available on our website.

Today's call at Abbott Dot com, unless otherwise noted our commentary on sales growth prefers to organic sales growth, which excludes the impact of foreign exchange with that I will now turn the call over to Robert.

Thanks, Scott Good morning, everyone and thanks for joining us.

Today, we reported results of.

I'd say theyre very strong quarter.

Ongoing earnings per share were $1 40.

Reflecting nearly 45% growth compared to last year and sales increased more than 22% on an organic basis.

Excluded COVID-19 testing related related sales, which totaled one.

One 9 billion in the quarter organic sales increased 12% versus last year.

As we've seen since the start of the pandemic, our diversified mix of health care businesses continues to prove highly resilient.

Even as Covid case rates surged in the U S and other.

No other fees during the third quarter straw.

Strong growth in our more consumer facing businesses Nutritionals established pharmaceuticals and diabetes care.

Mitigated the modest impacts we saw from the surges in certain areas of our hospital based businesses.

This has been a consistent theme throughout the.

Other genomic.

As evidenced by an increase in total company sales, excluding COVID-19 tests of 11% on an organic basis through the first nine months of this year compared to our 2019 pre pandemic baseline.

Which highlights that our growth is real and not simply.

<unk> of easy comps versus last year.

As a result of our strong performance and outlook.

We increased our full year adjusted earnings per share guidance range now at $5 to $5 10.

Which reflects nearly 40% growth compared to last year.

We have a funnel now summarize our third quarter results before turning the call over to Bob and I'll start with nutrition.

Where sales increased 9% compared to last year.

Strong growth in the quarter was led by U S pediatric and international adult nutrition.

In pediatric nutrition.

Sales grew.

Were eight 5% in the quarter led by strong growth in the U S from continued share gains in our infant formula and toddler portfolio.

Sales are pedialyte, our market, leading rehydration brand once again grew strong double digits driven by market uptake of several recently.

Through new products as well as investments, we're making in direct consumer promotion.

In adult nutrition sales grew over 9% in the quarter, including mid teens growth internationally as we continue to see strong demand for our ensure and <unk> brands, including new users entering.

The launch categories and existing customers increasing their usage.

Turning to diagnostics.

Sales increased more than 45% overall and 12, 5%, excluding COVID-19 testing related sales.

During the quarter as the Delta variance spread.

These COVID-19 cases search, particularly in the U S D.

Demand for testing increased significantly most notably for rapid test and.

In total during the quarter, we sold more than $225 million Covid test globally and have now shipped over $1 billion tests since the start of the pandemic.

And over the last several months.

We've learned that COVID-19 vaccines, while a powerful tool or.

We're not the lone solution needed in our global fight against this virus.

Testing, particularly rapid testing, which is fast affordable and easy to use as an important companion.

Scenes and therapeutics.

Abbott has established a global leadership position in rapid testing, including supply capacity of more than 100 million tests per month.

Moving to established pharmaceuticals, where sales grew more than 15% driven by strong execution.

So back on a steady cadence of new product introductions.

Strong sales performance in the quarter was broad based across several countries, including double digit growth in China, Russia, and India, which led to overall sales growth of 18% in our key emerging markets.

<unk> and lastly, I'll cover medical devices.

<unk> sales grew 13% in the quarter compared to last year and more than 16% compared to pre pandemic sales in the third quarter of 2019.

Strong performance in the quarter was led by double digit growth in rhythm management structural heart.

Heart failure and diabetes care.

In structural heart, we continue to enhance our portfolio and large fast growing markets with the recent U S FDA approvals of amulet.

Which closes the left atrial appendage and hard to help reduce the risk of stroke and people with atrial fibrillation.

And portico for Transcatheter aortic valve replacement.

In heart failure, we announced results from the guide H F trial of our cardio <unk> system.

As with many other recent and ongoing clinical trials across the health care industry, a portion of the Cardiome Ms trial overlap.

With the COVID-19 pandemic.

After adjusting for this impact.

<unk> demonstrated a 28% reduction in heart failure hospitalizations.

And we filed with the U S. FDA for label expansion based on the trial data in the middle of this year.

During the quarter.

<unk>, we also added an attractive growth platform to our vascular device portfolio with the acquisition of walk vascular.

<unk> stage company with a minimally invasive minimally invasive thrombectomy system called Jedi.

That removes peripheral blood clots.

Peripheral thrombectomy is a large high growth.

<unk> area, where we could leverage our existing commercial presence.

And I'll wrap up with diabetes care.

Our strong growth was led by freestyle Libre sales of nearly $1 billion.

During the quarter, we added over 200000, new users, bringing the total global user base for Libre.

Growth at well over $3 5 million users.

So in summary, we continued to achieve strong well balanced growth across all of our major businesses.

Which is being fueled by strong execution and a steady cadence of new products.

Covid testing, particularly COVID-19 testing.

<unk> remains an important companion to vaccines and therapeutics and habit has established a strong leadership position in this area.

And based on the strength of our performance and outlook, we're raising our EPS guidance for the year, which now reflects growth of nearly 40% compared to last year.

I'll now turn over the call to Bob to discuss our results.

<unk> and outlook for the year in more detail Bob.

Thanks, Robert as Scott mentioned earlier. Please note that all references to sales growth rates unless otherwise noted are on an organic basis, which is consistent with our previous guidance.

Turning to our results sales for the third quarter.

<unk> increased 22, 4% on an organic basis, which was led by strong performance across all of our businesses along with global Covid testing related sales of $1 9 billion in the quarter.

Excluding COVID-19 testing related sales organic sales growth was 12, 1%.

<unk> versus last year, and 11, 7% compared to the third quarter of 2019.

Foreign exchange had a favorable year over year impact of 1% on third quarter sales, resulting in total reported sales growth of 23, 4% in the.

<unk>.

Regarding other aspects of the P&L for the quarter the.

The adjusted gross margin ratio was 58, 8% of sales.

Adjusted R&D investment was 6% of sales and.

And adjusted SG&A expense was 25% of sales.

Our third quarter.

Quarter to tax rate was 15, 5%, which reflects an adjustment to align our year to date tax rate with our revised full year effective tax rate forecast of 15%.

The revised full year forecast is modestly higher than the estimate we provided in July due to a.

Adjusting the mix of our business and geographic income.

Turning to the outlook for the fourth quarter.

We forecast one to $1 4 billion of.

Covid testing related sales.

Forecast organic sales growth, excluding COVID-19 testing related sales in the low double digits.

Shift versus last year.

And based on current rates, we would expect exchange to have an unfavorable impact of around one half of 1% on our fourth quarter reported sales.

With that we'll now open the call for questions.

Thank you if you have a question at this time. Please press the Star then the number one key on your Touchtone telephone.

Is your question has been answered or you will start moving up from the queue. Please press the pound key.

Optimal sound quality, we kindly ask that you. Please raise your hand.

Speaker phones when asking your question.

And again.

And then one to ask a question.

Our first question comes from Robbie Marcus from Jpmorgan. Your line is open.

Great and congrats on a really nice quarter.

Okay.

So so maybe after such a good quarter led by Covid.

Covid testing I feel like do you have any unique perspective.

Looking at both sides of the coin from Covid testing volumes and also device procedure volumes.

Robert I'd Love to get your sense of where you think we are here in fourth quarter and heading into 2022.

<unk>.

Any early thoughts you can give us on sort of how to think about the progression of COVID-19 testing sales and the recovery and durability of med Tech volumes.

Sure I think regarding Covid testing.

Obviously since the start here the pandemic, we've been learning a lot.

And.

And I think one of the things that.

As we as we developed our strategy for that.

It is believed that the rapid test was going to be kind of more sustainable part of the business and.

And I think we're pretty right there.

Say, the key thing that and I made this in.

And the comments in the opening commentary the key thing that we learned over the last let's say couple of months here is that the vaccine is just an incredible tool for device had a huge impact.

On public health around the world, but that alone is not enough we know that.

Dramatically.

<unk> reduces hospitalization dramatically reduces mortality, but I think we're all seeing here that even if youre vaccinated you could still you can still get and you could still transmit the virus.

Obviously youre not.

Heading to a hospital, but I think we've all heard and seen stories of that so I think that's the biggest kind of learning.

So as we go into Q4 and as we go into next year is that testing is going to remain an important and important companion here and even with therapeutics.

It's still going to remain an important part of fighting the virus and I think we've also learned a lot about understanding kind of the difference between symptomatic testing and screening testing.

Here from and.

And we started to pay much closer attention to understanding the channels and the platforms that are more aligned to.

Symptomatic testing versus screening testing and we could definitely see a correlation on the symptomatic testing.

With with cases cases going up cases gone down.

What we don't see that correlation.

Testing is on screening so even as cases have started to come down a little bit and U S. Actually screening demand has increased quite a bit. So so I think that is another kind of key learning as we think about going into Q4 and thinking about going into into next year also.

The other I'd say.

Key distinction we.

<unk> make us understanding kind of government.

Purchasing a test versus kind of private and had seen the beginning of the pandemic. Most of our sales were focused to governments, whether international governments federal government here in the U S State governments also.

And that continues to be pretty strong, but what we've seen now grew pretty significantly and I think it's aligned.

We've started the screening pieces the private side of the market, whether it's OTC cash pay.

Whether it's a lot of companies we've seen a lot of companies in the last couple of months here sign contracts with us to ensure that they've got rapid testing to be able to give to their to their employees. So while we're not seeing you'll always see some shelf.

<unk>.

And stocking issues at the retail and those will work their bills work their way through that in the next couple of weeks, we are seeing still a lot of companies by test to get to their to their employees. So so I think all of this is basically saying listen I don't know how much is going to be there next year, but it's clearly here that that screening segment.

Market.

Is going to be an important part even with even with therapeutics and vaccines. So so I think thats going to be.

An important part of our base business has done very well.

<unk> to be on a on a recovery trajectory here Robert Robbie started in Q.

Two we saw that in devices, we saw that in diagnostics.

Yes, there was some there.

There was some softness during Q3 as as is.

Delta.

In cases increased here in the U S.

That's probably more in August and throughout half of September we started to see it.

<unk> pick back up again towards the end of the quarter in the first couple of weeks, we like what we're seeing here in terms of.

In terms of some pickup but these were pockets I wouldn't call. It looked at general softness and slowed down there are pockets here in the U S. Some pockets in some countries, but generally speaking that base business.

<unk> is doing very well so when you think about 2022.

I expect our base business, our underlying base business to continue that momentum very strong momentum across the board.

Special with all of our new product launches and the question here is going to be.

Covid and I think it is going to be very difficult as we go into next year to be.

Business forecast.

A full number a full year number of Covid next year I think we'll probably we're probably thinking about okay, well theres, probably a COVID-19 number that we're comfortable going into 2022, and then we'll have to update on a rolling quarterly basis here.

How COVID-19 is going to play out.

We're able to throughout the throughout next year. So that's.

That's kind of how I see it COVID-19 COVID-19 testing will be there will have to kind of do it more on a rolling basis as we go into next year.

In our base business continues to accelerate those a little bit of softness in Q3, but I like what we're seeing.

In terms of recovery and I like the portfolio that we've built.

Round.

Our cardio business, our <unk> business, our nutrition business, our diagnostic business. So that's all that's all good.

Great Great that was really helpful. And then maybe Robert to build on that.

I know, it's still very early in your planning process, but as you. Just said there is a lot of variables a lot of moving.

<unk> had a great year and devices, so far a bumper year in testing any early thoughts on how investors should be thinking about 2022 versus 2021 from a top and bottom line perspective. Thanks.

Yes, I mean, I think like I said it.

We're.

Moving to our process, we'll give our guidance in 2022 and January like we always do Robby and I want to see a little bit more in terms of how this pandemic unfolding here.

Especially on the Covid side, but on the base business I think our base business I would say it's been pretty good at.

Forecasting our business both from a top line from us.

We're still and from a margin on our base business. So I think what you can expect in 2022 is that base business getting even stronger.

With the rollout of all of these product launches that we've announced.

Over this year and then the question here really is going to be kind of COVID-19 testing and like I said, we will have that will have a portion of it that I think.

Good about putting it in and then we will have to be updating on a rolling basis and I think that's kind of how to think about it the base business, which is probably the more sustainable peace is building momentum and it will go into 2022 with a lot of a lot of growth opportunity and then we will have to kind of look at COVID-19 on a more rolling basis.

Great. Thanks, a lot.

Thank you. Our next question comes from Bob Hopkins from Bank of America. Your line is open.

Well, thank you very much and good morning, and congrats on a solid execution I just have.

Two questions in the interest of time I'll just.

We will send them both upfront because the first one is pretty straightforward.

First question is just on amulet.

I realize it's very early in the launch but.

But just would love your sort of top down comments on on how things are going and maybe any metrics you can share in terms of perhaps like the percentage of your U S. Coronary accounts that are now active with annually.

So would love some color there and then the second question is.

More of a broad based question I was just wondering if you could provide just a little bit more detail on what youre seeing on inflation and supply chain because the headlines there obviously theyre just constant but the message from Abbott.

Emulate and other companies, we follow just seems to be that sort of generally manageable. So I'm. Just wondering if you can kind of talk to that a little bit.

You can quantify the headwinds or just give us a better understanding of why it's manageable and just some put some perspective around it for us. Thank you.

Okay, well I'll take the amyloid and then I'll, let Bob talk to kind of the.

But in the inflation and supply chain.

They just say it is manageable, but we have a great team so and I'll.

And I'll, let Bob cover that.

An amulet listen we received approval in August.

We are ready already initiated the launch I know theres, a lot of anticipation or at least in the last two calls about.

The data.

When we're going to publish the data and why are we going to do at the time that we're going to do it and.

So we we released that data really close to our approval.

I think that was a good strategy because it's allowed our team to kind of prepare for that.

I will say regarding the data I mean, you saw when we really.

<unk> the data.

It's the products got a lot of advantages versus the product that's on the market right now we've got a.

Broad portfolio sizes and that helps as you're looking at.

Different anatomies and having a better fit <unk> sheath that we've got.

As a resulted in great precision.

And the placement and that's super important, especially when you're looking at Transcatheter therapies.

And then you saw the data superior kind of closure rates.

The need for blood centers right following right after procedure and ultimately.

That's why the patient went to the hospital or part of the reason why they went there. So so I think we've got a great.

<unk> products here.

I think the team has done a good job getting the contracts ready.

Right now I would say we have a goal of a certain amount of contracts by the end of this year.

In the first month, we've already gotten 40% of them of that of that target. So.

I think that we're going.

We're going to definitely hit what we need to hit in terms of getting our contracts.

Our accounts the ones that we want to get on contract up and running so we could start to build.

Build.

The usage.

And familiarity with the system.

We've got a really strong commercial presence here and I think that's.

That's a key that's a key aspect in the rollout.

The implant is are these devices the electrophysiologist, although the interventional cardiologists I mean, we've got a lot of great products and a lot of great call point. So that's worked out very well too.

There's always a certain amount of coordination that's required there and that coordination has been fantastic I'm really pleased pleased.

Yeah.

Initial feedback has been super positive so very very very happy with the initial signs like you said, it's about a month month and a half into it all the signs that I'm seeing show that we'll have a great opportunity here too.

To establish and lead us.

To see the.

Another product in the category and then on top of that we're making the investments like I said to grow the category with all of our clinical trials catalysts is one of them that I think is important also so I would say.

First month, and a half very very pleased with what I'm seeing.

Okay. Thanks.

So I'll take the <unk>.

So.

I think inflation in supply chain are really linked together.

The global supply chain has not been able to keep up with strong demand out there and so like others. We're seeing some increased input cost across areas of our business, we're experiencing some higher shipping cost and in some cases higher commodity cost.

Contrary to commodity costs and really more in kind of in the nutrition area of the business.

In some areas, we have flexibility to adjust pricing a bit and we plan to do that.

Other areas that flexibility doesn't exist and so we're working to mitigate the impacts we're seeing.

Such as looking at other manufacturing.

As Robert mentioned, we've got a we've got a very strong procurement organization and supply chain organizations and Theyre doing a great job working with our suppliers and our suppliers understand the critical nature of our products and so.

We've been successful in terms of ensuring that we're able to get what we.

We need to.

Fourth the business.

Thank you.

Thank you.

Next question comes from Josh Jennings from Cowen Your line is open.

Hi, good morning, Thanks for taking the questions.

<unk> on the strong <unk> results.

Hopefully, Rob hoping to just hear maybe some puts and takes.

It would help us understand some of the puts and takes of the 2022 operating margin clearly COVID-19 testing is going to be a factor, but any other drivers of operating margin expansion that you would highlight.

As we move into 2022, and then any other levers that I have.

Stable to pull to drive earnings next year, depending on how the Covid testing environment plays out.

Sure.

I'd say like I said in the beginning I mean, I think 2022, our base business, our underlying base business.

This is going to grow.

Strong both on the top and the bottom. So we will see margin expansion in that in that business and Thats a combination like Bob said, we've got gross margin improvement teams across all of our business that are working at ways to mitigate other manufacturing costs, so that'll be important to be able to drive.

Margin expansion and then just.

The nature of the mix as as we continue to rollout our.

Our pipeline, which is predominantly focused I'd say on the on the on the med device side. We've got gross margin profiles, there that are accretive to the to the Companys gross margin. So I think a lot.

It is really driven on the top line and driving our top line and the execution of these new product launches allows us to get that kind of margin expansion into 2022, and like I said, we the COVID-19 pieces is really just one where we're going to have to go quarter by quarter.

And.

Update.

And roll our forecast every quarter, we will have a number that we will feel comfortable with but.

I'd say those are the kind of key drivers here are product launches, our ongoing base business margin expansions by mix and gross margin improvement.

I want to keep the same profiles that we've got right now in our base business.

In terms of spend R&D and SG&A. So those profiles, we wouldn't want to maintain obviously if you look at our profile right now, it's a little bit distorted because of the COVID-19 piece.

But if you look historically, where we've been in the low sevens in R&D and SG&A between 20, and 30%, that's where we're going to want to kind of land.

Thanks.

Date that and then just quick follow up on Libre.

We've had some consultants talk about potential for Abbott to add other analytes.

To the platform and particularly the addition of key term monitoring as a potential competitive advantage any any.

So just kind of highlight at this point no.

On tap here, but any updates in terms of the future development plans for Libre and how you continue to maintain your competitive edge here. Thanks for taking the questions sure.

We've always said the libre with the platform.

I know every time you put out a number at it becomes like the next.

What is that.

And what's after that and so we've launched libre two it's doing very well in the U S.

We've launched Libre three in Europe.

We will obviously be rolling Libre three out regarding your question on analytes.

I mean that is an area that we are.

Intentionally.

And at which is using the platform of Libre the manufacturing platform to be able to develop new analytes. You mentioned one that we've got particular experience in our blood glucose monitoring we have.

Key tone system.

So that we believe is an important aspect special.

Looking for type one and bumpers, we think that that's a real important kind of feature if.

If you look at going into the type two population there is a lot of new new drugs for type two where there are certain warnings regarding.

Dk and <unk> and we think that that might also be an opportunity to.

<unk>, but that's the only one analyte and we've got a pipeline here of analytes a dedicated team that is only focused on looking at what are the business opportunities the market needs for that and as we get closer to those launches, which will be coming out fairly soon we'll be updating updating the market, but I'm really excited about.

Using the libre platform here to be able to kind of expand.

Expand even beyond diabetes.

Great. Thanks, so much.

All right.

Thank you. Our next question comes from Larry.

Your line is open.

Good.

Morning, Thanks for taking the question Robert.

Robert I wanted to focus on the device side and the pipeline.

Starting with emulate to as Bob's earlier question in another way the survey seem to be coming back, suggesting ambulate can take.

A third of the U S market.

Even.

20% next year.

You know, it's not easy for a.

Second to market to become market leader.

But amulet has a nice profile.

Your reaction to some of these <unk>.

Consensus estimates for share do you think you can do better than I had.

Follow up.

Sure well I mean amulet is new to the U S. But it is not new to the international markets. When you look at the international market annual it's got a 50% market share.

I've seen some of the reports.

Not all of them, but I am aware of some of these surveys that are done with <unk>.

With different physicians.

And.

What I read and what I see them as similar.

What I see here in the U S.

What we actually.

Actually see it in Europe, which is it's a great product.

Size portfolio is an advantage.

Its closure.

It is also an advantage.

And yes, we do.

As I said this is a multibillion dollar market, where we think that we can be a true competitor in also.

But at the same time invest to develop it.

I think that's an important part here also Larry so as I mentioned, we're making investments.

You're right and next generation product, we are going to be making investments in and the commercial infrastructure, which is not only to be there during the implant, but also to develop the <unk>.

The patient referral network.

And we're going to be investing in clinical trials I think the catalyst trial is going to be.

Comparing it to <unk> I think that'll be a great opportunity.

<unk> expand the market also so so I think it's a combination of kind of market expansion and yes, we're competitive with our offering we're competitive with our team and.

I think 50% internationally is a good aspiration to have here in the U S.

That's helpful and then.

To ask about.

Portico in cardio ma'am, so with portico you have an avatar outside the U S.

Do you think you need that in the U S to really drive.

Sure.

And do you think you can compete.

Without an intermediate and low risk indication, which I don't think youll have to about 2024, and just lastly on cardio Mems how are.

Talking about the label expansion and the commercial opportunity given the.

The Covid impact you mentioned on the guide HFF trials, thanks for taking the questions.

Sure Larry.

Let me talk about portico and and taboo here more broadly.

As a hugely.

Are you feeling segment in structural heart, we want to be a structural heart leader, we had that vision when we put the businesses together with St. Jude and we know that we need to be.

Through player here in the <unk> space.

I'm really looking at this for US is a long game and what I mean by that is.

We're launching.

<unk> portico in the U S Napa.

<unk> to your question is a great second generation device, we got it CE marked and feedback is that it's a very it's a very very competitive device its clinical profile and high risk is really strong.

And yes, I wanted to bring it to the U S also.

But not because I feel we need to because portico is not competitive pork is very competitive but in this context of building a strategy here to be a real player in the <unk> space.

We know that we're going to have to.

Bring a second generation here.

The U S. We will have to also look about how do we develop further on Nab at first so I think that.

We've got about a five share in Europe.

My aspiration for the tablet space.

To your point Theres, two pretty well entrenched competitors in the market.

And.

We have a higher exploration and just kind of a five share which is what we have in Europe. So I think the combination here of investment and the team investment in the pipeline and the clinical data Youre right R. R.

Low risk intermediate low risk trial.

Reads out little bit later on but it's there.

But vesting in it because we see this as a big opportunity for us to be able to be a real player in this market. So.

I am excited about it.

And I know the team has to.

To be able to kind of be a rule.

Our go to full service player in the field.

The structural heart.

Regarding Cardiome Ms.

Listen I think.

The data I think it was pretty compelling I mean this is the second and you know this is Larry. This is the second RCT trials that we've done.

And I'm, a big believer in RCT trials, and the need for them to be able to generate the clinical evidence.

When we filed for the label expansion to end of June I think the data was very compelling.

And part of it is expansion expansion to class II and class four.

And then also to be able to expand indication.

Patients with elevated BNP, which is today.

For patients that have been previously hospitalized so I think the combination here of the data.

The fact that it is already the second RCT that we've done a very large one also on top of champions.

The champion trial, I think theres, a great opportunity here for us to develop this market one of the things that we did in the quarter.

Here also as.

We now have a more dedicated business unit for Hartford for heart failure, where both the El that Cardiome and his team are going to be combined into one under one GM very similar to what we've done with our other businesses because we believe in the and the benefit of that focus on that.

Tension to the business. So I think the combination of what we have submitted our focus this is a great opportunity for us in 2022 and beyond.

I'm not going to comment on.

When.

All I can tell you is we filed at the end of Q2 and I think the data is very strong.

And we'll just leave it like that.

And.

No.

Highly hopeful that we'll be seeing that.

Next year for sure.

Thanks Robert.

Thank you. Our next question comes from the Oes.

Fair along from Morgan Stanley Your line is open.

Okay. Thank you for taking the question.

I wanted to ask about just your neuro Mod business Ics as well as other deferrable procedures and can you walk to the sequential trends in the quarter. If you've started to see recovery in some of the and some of your more deferrable procedures trending ahead of others.

So how youre thinking about the ability to recapture.

<unk> is that the majority of it.

Procedure recapture can occurring for Q staffing shortages.

This recurring procedure recapture well into 2022.

Sure.

<unk>.

Well I would say this is probably out of our device businesses.

The business, that's had a little bit of a harder time in terms of recovering post COVID-19, it's probably more elective like you said for <unk>. So it has been lagging a bit it's been pretty flat I would say in terms of kind of its its trajectory. If we look at our trials and our implants.

So that's that's really something that we can control.

In terms of kind of how that is going to bounce back.

And we have visibility to.

The pipeline of patients we worked closely with the with the surgery centers.

And we've got visibility to that.

We're not expecting.

A big bolus to come into Q4, and then we'll have to kind of see how how Q1 and Q2 of next year it looks like to be able to kind of give a better sense there.

But what we can control.

And that's what I focus we focus the team on is is on our pipeline and I think the team here has done a really good job.

I'd highlight a couple of things here that we've done narrow sphere, which is this novel remote care platform.

We've launched it it's the first kind of system that was approved by the FDA. We did a full market release at the end of June and I really like the numbers, we're seeing we've done over over 5000 remote programming.

<unk> sessions and not only is that a remote programmer, but it also allows us to give visibility of the patients in the funnel. So using the adoption of that tool is great. Because I think it will it'll have a real big change on the sales and.

Service kind of business model that exists in this business. So that's gone very well and I think that will.

That will help get better visibility another key thing here is as entrance into the rechargeable.

The chargeable segment, which is about half of the market.

We really don't have a competitive system in there and the team has developed a rechargeable system that is best in class.

Significant advantages versus.

The market leaders in this segment. So we're looking forward to bringing that product to market next year and then we've also made investments in trials I think probably the most notably one is.

Distinct which is an indication for non surgical lower back we've completed enrollment in that study.

So I think the combination of these.

So here are.

Are important for us to be able to kind of take share and then if we see the bolus of patients come back in in Q1, and Q2 that will be.

An additional tailwind for us.

Okay. Thank you and I Island basketball about your recent acquisition of block vascular and really at a high level can you.

Factors outlook, just for the underlying market growth in the peripheral space over the next several years versus some of the other high growth target end markets, including diabetes in EPS.

And are there other ADC book to build out around your vascular business.

Beyond that just what's your kind of outlook for pursuing a p/e indications at that.

Talk about can system and thank you.

Sure.

So we've been looking at this area for for.

For quite a bit.

As I always said, we're always looking we're always studying.

And this was an opportunity that we saw.

Think it's it's a it's an attractive segment.

About 700.

<unk> million dollars growing double digits.

This kind of fell right into that sweet spot of kind of strategic it makes sense strategically for us. We've got we've got a commercial footprint out there with a with an endovascular sales and service team. We know the customers we have the call point.

And we've got capacity here to be able.

It sounds leverage our manufacturing expertise here to be able to kind of scale up manufacturing. So so this made perfect sense for us.

To be able to add it to the portfolio and that integration is going pretty well I don't expect any significant contributions in Q4, but as we go into next year I think it will have.

<unk> on our vascular business.

And yes, I mean, we are like I said, there are plenty of segments in the Endo space I would say.

That we.

We continue to study we continue to look at areas that we're interested in and.

If we find the right moment.

For us to be able to.

Add those those opportunities we will.

Regarding your question on the <unk> indication, yes, absolutely we know that is.

Very important.

In the peripheral space.

So we're investing.

One of the key aspects and the integration is to invest.

To be able to get that indication established so yes, we are working on that.

Okay. Thank you very much.

Thank you our next question comes from.

C J Kumar Evercore ISI your line is open.

Oh, Hey, guys. Thanks for taking my question.

Robert My first one was.

Going back to testing.

In Q4 assumptions of a one to $1 4 billion, that's the sequential step down versus <unk>.

I'm curious where.

Where are we on capacity right now and what is Hum.

Question now what.

What is the demand for these testing products right now are we seeing any sequential step.

Step down in demand right now and I think you guys did about $600 million Dod contracts.

Baked into the Q4 number or is that a fiscal 'twenty two contract.

Okay.

Guarding the Q4 forecast of one to one fourth year. Our capacity is we can do significantly more than that Vijay, especially as we have two or three we didnt have the full ramp up but now we're.

Finishing this month, there will be and will be in full ramp up mode.

So we can do we can do more than than the one four I think the factor here.

That we're looking at is as I said in the opening comments and the first question I continue to see the surveillance and the screening market to continue to increase and.

Thats with kind of buying <unk> and <unk> now.

So we've got those those businesses.

Everything we can make we're rolling in here.

I'd say the only question we've got here a little bit is on the on the on the symptomatic and and that's what you see maybe in this and the step down here is assuming as cases decline in the U.

U S that we're going to see a little bit of a decline in <unk>.

Symptomatic testing so so that's a little that's one part of the factor the other factor in the one to one four is just pricing.

We've got we've got a market leadership position.

In rapid testing, especially in OTC, if you look at Nielsen data you'll be able.

To see that where we were at about 90% share before the month of September we dropped to about 60, just because of supply and now we're back up to 75 share and we're seeing little bit of price pressure. So in that number I baked in some price pressure to ensure that we maintain that.

Market leadership position as we saw as we see more market entrants come in.

But if we don't need that price then that will obviously.

Drive another beat to that number too, but so those are the drivers and the thinking there Vijay.

A little bit of pricing pressure and what are we going to.

On the symptomatic testing.

So sorry, I know the Dod contract $600 million is that assumed.

Assumed in Q4 or is that a fiscal 'twenty two contributor.

I have two so the Dod contract.

Is actually a I think you're quoting the maximum amount of the.

See on tract.

Which I know is kind of what got a lot of the news headlines, but the contract actually has a minimum amount.

Which is significantly lower than that.

Less than $100 million. So it is really going to depend here on the Dod and the federal government in terms of their purchasing.

Factored in a little bit.

The minimum piece in Q4.

And as I talk about going into into into next year that'll be a portion of the part with that we will feel comfortable with adding on so but it's a pretty big range Vijay in terms of what the maximum is and what the minimum is.

No.

Understood and just one on Europe.

Earlier comments, Robert on the SG&A looking back at historical trend.

<unk> of 29% to 30% R&D at 7% of revenues.

With that comment.

<unk> to fiscal 'twenty two.

What the.

What the Opex.

Opex as a percentage of revenue should look like me a base business and then.

The variable.

And beyond that you'd be COVID-19 is that the right way to think about.

The comment was more about ensuring that we don't you don't see that there is a drop in investment when you look at our profile in Q3 in terms of R&D.

It's down to 6% our SG&A is down to down to 25%. So that comment was more about there's a little bit of a distortion factor here because of Covid.

And.

We're going to we're going to make sure that we continue to invest in the business. If you look at the investment we've made Vijay this year, we've added about about 1 billion.

In R&D and SG&A.

The business so that we can continue to drive.

The top line and at the same time drive the long term sustainability of the business with the R&D investments I talked about how we could pulsate.

That spend not only this year, but as we go into next year a portion of that spend.

There's a little bit more discretionary or on the SG&A side, and we will be looking at that but so the comment there was more about ensuring that there wasn't a distortion.

At least understood the distortion of Covid in terms of our profiles.

Understood. Thank you guys.

Thank you our next question from.

Matt.

Credit Suisse. Your line is open.

Hi, Thanks, and congrats on the strong results.

So maybe just to follow up on some of the things you were just talking about sort of this concept of reinvesting.

The proceeds of this very.

Covid business.

There's a perception out there I think because COVID-19 testing is.

Maybe not permanent and hard to predict that it somehow less.

Important or.

In order to value than the rest of your businesses, but.

Last few months obviously.

In this quarter of $1 five of upside in Q3 is by our estimates more than half of $1 billion in operating cash.

And that goes up against your two or $2 $5 billion of operating cash run rate. So.

Question is in addition to kind of being part of the solution as you've talked about.

To the pandemic, maybe drill down a little bit into some of the things you were just describing opportunities to invest behind which ones of your growth programs do you see an opportunity to sort of dial things up.

And how if at all does this change maybe the way you think about M&A in.

Your activity on that front. Thanks.

Sure I think you captured it pretty well all of the elements there of how do we look at Covid.

As I said at the beginning.

When we started this there is definitely an opportunity.

To accelerate the strategy of decentralized testing.

Because of Covid and that strategy has been in place and that's an area that we are investing.

To ensure that we do have.

Ability.

So we see more testing and pharmacy more testing and urgent care centers and testing that goes beyond COVID-19 that even goes beyond flu and RSV.

Viruses by developing.

Assays that will be used on on that rapid testing platform. So that's one investment for sure.

You can see the impact on investment on some of the business, we see it in nutrition. So we have been putting more discovery advertising and direct consumer promotion.

And that business and you could see the step up in the growth rate there.

Obviously put investment into libre.

Both on the SG&A side.

We've rolled out a new TV commercial and funded that too.

Two and a level that we feel is.

As.

<unk> is leading in terms of.

In terms of messaging.

<unk> increased our sales force and.

In the U S and other key markets for Libre, so that we can call on.

More physicians and you see the impact there on Libre.

We did almost 1 billion.

Have sales of Libre this quarter.

And.

In the U S is about 65%.

Making great progress in.

Penetrating the type two population whether its non incident in users or non intensive insulin users, we've got about a 90% market share.

Non incident in users or non intensive insulin users, we've got about a 90% market share of that segment at least.

So that growth is also being supported and we've got all these new product launches that I've been talking about on the cardiovascular side that require.

Our feet on the street, whether it's.

Course, clinical specialists and and we're funding that also so.

So I think that thats.

Very clearly, where we're putting our investments we've talked about R&D investments.

And making sure that we've got pipeline beyond 'twenty two.

Sales 23.

It's predominantly been in the diagnostics and device areas also so it's been pretty broad base.

That $1 billion increase has kind of gone well across all the businesses and if I asked my general managers and my Presidents and my businesses do they have our next tranche of where they would go that they would have that list ready.

And two so there is no shortage of opportunity.

And then the other the other topic you talked about or touched on was the cash.

Cash flow generation.

And as a result of the Covid business and yes. It has generated lot of cash we have.

Invested some of that cash and the organic opportunities.

And it goes we have whether it's manufacturing sites here in the U S for Covid.

For Mitraclip for Libre. So we've made those internal investments, but we've also looked at where we can provide the best return.

To our to our shareholders and you saw that in the form of our dividend increase at.

<unk> this year, we increased our dividend by 20, 25%.

You saw that we also probably saw that we bought back shares in Q2.

And we've stepped that up even further in Q3 and we've got capacity to do more of that in Q4, if that makes sense for our shareholders. So so we find.

The beginning of the kind of deploy that capital and on the M&A side talked about this.

If we think there is a.

Fit for us one that.

This financially justified for us that we can do better with it that we can make it better and that there is value for our shareholders.

We'll do that also right now I'd say I think the med tech.

Final way Ignostic values.

Evaluations out there, especially the ones that we would be interested in high quality high growth assets is it a little bit frothy. So.

So we're in the mode of studying and paying attention.

I think the good news here is that we don't we don't really need.

M&A to be able to support what I think is pretty top tier.

Diageo performance here so.

So thats.

It's pretty comprehensive in terms of how we're looking at Covid.

<unk>.

And.

Both funds funds, our internal organic growth and allows us to either provide some more value to shareholders through buybacks.

Backs dividends and if theres a growth vehicle out there I think it makes sense, we'll won't be shy for that also.

I'll just close here, a little bit and just say our results were achieving.

Very strong growth across all of our businesses I'm very excited and proud about the pipeline.

All the businesses had been focused on we've historic.

Vertically really focused on organic pipelines and that continues to be highly productive.

Entering two.

Very.

New and attractive growth segments across our portfolio and there's more products along the way there so.

We're investing in our key platforms as I've said.

Covid testing is going to be an important companion to vaccines and therapeutics at what level I can't say right now for next year I have given a range of what I think it is going to look like in Q4.

And there could be.

Opportunities there for us to first to do better than that but I think the rapid test here is really the.

The value proposition that is going to make sense going into next year and we're a leader in that segment, we built scale rebuild manufacturing and we know how to operate in this environment, whether it's retail pharmacies or direct consumer so our focus right now.

To finish strong 2020.

Juan enter into 2022 with a lot of momentum.

And.

I think we are well placed strategically here.

As we go into as we go into next year, so with that I'll. Thank you all for joining us today.

Thank you operator, and thank you for all of your questions. This now concludes.

Abbott's conference call a web.

Cast replay of this call will be available after 11 am central time today on Abbott's Investor Relations website at Avon Investor Dot Com.

Thank you for joining us today.

This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.