Q1 2022 Abbott Laboratories Earnings Call

[music].

Good morning, and thank you for standing by welcome to Abbott's first quarter 2022 earnings 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 Keith on your Touchtone phone.

Should you become disconnected throughout this conference call. Please dial the number provided to you and preference to Abbott earnings call.

This call is being recorded by Abbott with.

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

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

I would now like to introduce Mr. Scott, Lyne, and Weber, Vice President Investor Relations licensing and acquisitions.

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

And Bob Funck, Executive Vice President Finance, and Chief Financial Officer.

Robert and Bob will provide opening remarks following their comments, we will 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 <unk>.

Including the expected financial results for 2022.

Abbott cautions that these forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward looking statements.

Economic competitive governmental technological and other factors that may affect abbott's operations are discussed in item one a risk factors to our annual report on Form 10-K for the year ended December 31 2021.

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 in our earnings news release and regulatory filings from today, which are available on our website at Abbott Dot com.

Note that avid has not provided the GAAP financial measure organic sales growth on a forward looking basis, because the company is unable to predict future changes in foreign exchange rates, which could impact reported sales growth.

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 thank you for joining us.

Today, we reported results of another strong quarter.

Earnings per share were $1 73.

Reflecting more than 30% growth compared to the prior year.

Sales increased 17, 5% on an organic basis in the quarter.

Led by double digit growth in medical devices established pharmaceuticals, as well as diagnostics, both with and without Covid testing related sales.

In addition to the strong results during the quarter, we continued to strengthen our strategic position and long term growth opportunities with regulatory with regulatory approvals of new products and expanded indications of use.

Along with continued market uptake of several recently launched products and attractive growth areas.

I'll now summarize our first quarter results in more detail before turning the call over to Bob.

I'll start with established pharmaceuticals or <unk>.

Where sales increased 13, 5% in the quarter.

<unk> has now achieved double digit organic sales growth in three of the last four quarters.

Strong performance. This quarter was led by double digit growth across several countries and core therapeutic areas, including gastroenterology respiratory and CNS pain management.

Turning to nutrition, where our performance was mixed.

Our adult nutrition business continues to perform at a high level with global organic sales growth of 11, 5% led by our ensure and <unk> brands.

And we also achieved double digit growth globally, and our combined toddler nutrition products, which includes our market, leading Peter shore and Pedialyte brands.

As you know however, we initiated a voluntary recall in February of certain infant formula products manufactured at one of our U S facilities.

It's important to highlight.

Part of our quality system.

Retain in house samples of products that we ship to customers.

Testing of retained samples related to this recall action by both Abbott and the FDA have all come back negative for the presence of the bacteria that cause the reported illnesses.

Importantly, the FDA and CDC found that there is no genetic match between the strains of the bacteria identified non product contact areas of our facility.

Available samples obtained from customer complaints.

Suggesting a different source of contamination.

And lastly, no Salmonella was found in our factory or product and therefore, the FDA ruled out any link to our facility.

We hope these findings get parents caregivers and other stakeholders renewed confidence in our products.

We know the situation has further exacerbated industrywide infant formula supply shortages.

That's why we're doing everything possible to mitigate supply constraints by bringing in product from our FDA registered facility in Europe .

And ramping up production at our other U S plants.

And of course, we're working very closely with the FDA on corrective actions and enhancements. So that we can restart operations at the facility.

Moving to diagnostics, where sales grew 35%.

Covid test sales were $3 3 billion in the quarter.

More than 90% of which came from our rapid test and <unk>.

<unk> now in the U S.

<unk> bio internationally and IV now globally.

Excluding COVID-19 related.

Covid testing related sales, our global diagnostics sales grew 12% in the quarter.

Driven by the continued rollout of validity our innovative suite of diagnostic instruments and expanding menus across our testing platforms.

And I'll wrap up with medical devices.

Where sales grew 11, 5% in the quarter.

This strong performance was led by double digit growth in diabetes care structural heart heart failure and electrophysiology.

In diabetes care sales of freestyle Libre grew more than 25% on an organic basis in the quarter and the user base has now reached approximately 4 million users globally.

And cardiovascular devices, while procedure volumes were negatively impacted by elevated Covid case rates early in the year.

We saw steady improvement in procedure trends as the case rates came down in the second half of the quarter.

Which has continued into April .

In addition to improving market trends and our strong results. This was also another highly productive quarter for our pipeline.

In the U S. We received FDA approval for <unk>.

Leaderless pacemaker to treat patients with slow heart rhythms.

In Japan <unk>.

Spaniard reimbursement for Libre will now cover all people with diabetes, who use insulin at least once a day.

Cardio Mems received an expanded indication in the U S to treat more patients suffering from earlier stages of heart failure.

And we received U S FDA clearance for the latest generation of our insight X system, which provides a 360 degree view of the heart for improved cardiac mapping.

So in summary.

We're achieving strong growth overall and across several areas of our business.

As the first quarter progressed and Covid levels decrease we saw steady improvement in the hospital based procedure trends, which has continued into April .

And we continue to advance our pipeline with new products indications and reimbursement coverage in several attractive growth areas.

I'll now turn over the call to Bob 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 excludes the impact of foreign exchange.

Turning to our results.

For the first quarter increased 17, 5% on an organic basis.

Which was led by double digit growth in diagnostics medical devices and established pharmaceuticals, along with global Covid testing related sales of $3 3 billion in the quarter.

Excluding COVID-19 testing related sales organic sales growth was seven 7% versus the prior year.

Foreign exchange had an unfavorable year over year impact of three 7% on first quarter sales.

During the quarter, we saw the U S dollar continued to strengthen versus several currencies.

Which resulted in a more unfavorable impact on sales compared to exchange rates at the time of our earnings call in January .

Regarding other aspects of the P&L.

The adjusted gross margin ratio was 59, 1% of sales, which reflects higher than normal fall through on Covid testing sales as a result of significant production volumes during the first quarter.

Partially offset by the impacts of the nutrition recall and somewhat higher than expected inflation on certain manufacturing and distribution cost in the quarter.

Adjusted Research and development investment was five 6% of sales and adjusted SG&A investment was 23, 1% of sales in the first quarter.

Lastly, our first quarter adjusted tax rate was 14, 5%.

Before discussing our outlook for the full year.

Want to provide an update on our strategic capital deployment initiatives completed in the first quarter.

Which included approximately $2 3 billion.

Of share repurchases $800 million of.

Dividends scheduled debt repayments of $750 million.

$300 million of capital expenditures, which support future organic growth opportunities.

We continue to generate strong cash flow.

Which provides the flexibility required to execute a well balanced capital allocation strategy.

Turning to our outlook for the full year 2022.

Our adjusted earnings per share guidance of at least $4 70.

Remains unchanged.

We now forecast total company organic sales growth.

Excluding the impact of Covid testing related sales to be in the mid to high single digits, which is somewhat lower than our prior forecast of high single digits due to the recent recall event in nutrition.

It is important to note excluding sales impacted by the recall.

We continue to forecast total organic sales growth in the high single digits for the remainder of our combined businesses, which includes medical devices established pharmaceuticals die.

Diagnostics, excluding the impact of testing related sales in areas of nutrition not impacted by the recall.

We forecast Covid testing related sales of approximately $4 5 billion.

With a significant portion of these sales expected to occur in the first half of the year.

We continue to we'll continue to update our COVID-19 testing related sales forecast one quarter at a time throughout the year.

As appropriate.

Lastly, based on current rates, we would now expect exchange to have an unfavorable impact of a little more than 3%.

Our full year reported sales with that we'll now open the call for questions.

Thank you.

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

If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.

Optimal sound quality, we kindly ask that you. Please use your handset instead of your speaker phone when asking your question and then Thats Star then one to ask the question.

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

Hi, good morning, Thanks for taking the question and congrats on a good quarter.

Maybe to start.

For Robert or Bob.

You guys put up a good first quarter beat on Covid testing sales had double digit growth in <unk>.

And most of the businesses.

I was hoping maybe you can reconcile the strong <unk> in the reiterated guidance.

Walk us through some of the puts and takes and how to think about bridging the difference.

Sure Ravi.

Yes, I think <unk> been on <unk> been on these calls for a while.

Really raise in Q1 I.

I would say.

And despite that I mean, we've had a great start to the year as you pointed out and there's a lot of lot of good things going on at the company.

<unk>.

Talk a bit about procedure recovery in the comments we've seen good good.

Good recovery in our device portfolio, especially in cardiovascular seen routine diagnostic testing improving there'll be a little bit a little bit slower than what we've seen in devices, but definitely the trend of recovery is there.

<unk> execution is going very well like I said in the comments throughout the four quarters of double digit.

Strong COVID-19 sales both in the U S and internationally and I think that's an important aspect here is our international presence too.

Talk a little bit about the pipeline and the approvals not just the recent approvals, but the performance of some of the recently launched products.

<unk> talked about our cash flow generation and the deployment of that cash flow, we were able to kind of share.

Part of that cash flow with our shareholders, but also to continue to invest in the business. So there's a lot a lot a lot of good things going on here in the business.

But there are there is there are a couple of challenges that were managing and that's probably the piece there where the reconciliation.

Youre looking for is actually happening.

First of all obviously managing through.

Managing through the recall on the nutrition side, we're working with the FDA.

And we'd be contemplated in that reiterated guidance.

Various scenarios here in terms of kind of restart dates.

And share recovery curves et cetera, so it's difficult to give an exact date as to when that restart starts we're working closely with the FDA.

But I see this more as a short term challenge in the sense that once we.

Once we align with restarting with the FDA then we'll begin to execute.

Our strategy here in terms of coming back to market.

We supply in the market and.

Re regaining share.

Sure.

Probably the second other part here, which is I think it is a little bit.

Not unique to Abbott and I think you'll probably see this across a lot of companies is just the macro environment right. Now is there's definitely changed versus where we were in January and it's gotten it's gotten a little bit more more challenging so.

We expect some of that macro environment with their supply chain et cetera to kind of be a little bit more persistent throughout this year. So so that being said wanted to see how these probably these two these two points here play out over the next couple of months and we'll be in a better position to be able to assess.

That and our guidance going forward after Q2.

But like I said, there's a lot of great momentum in the business.

Yes.

Devices, performing very well diagnostics performing very well the parts of nutrition that werent impacted by the recall continued to do very well I am not a big fan of the <unk>.

Exclude this but for that.

Statements, but I think in the context of how the business is performing.

If you exclude the Covid piece, which was pretty significant for US and then just look at the business without the base business without the impact of nutrition products, our growth rate was about 11%.

And I think that reflects the.

The strength of the portfolio the investments that we've made and the execution. So in that guidance that reiteration of $4 70, we've absorbed.

As Bob said.

More FX headwinds absorb some challenges and supply chain absorbed.

Portions of the nutrition recall, so I think it's I think it's the right I think it's the right.

<unk> guide right now in terms of where we are.

After Q1.

Great really good color and maybe as a follow up.

I think a lot of investors are focused on that go forward realizing that January and February warrant the strongest months due to some of the elevated omicron.

Levels. So we heard Johnson and Johnson yesterday talk about.

Reaching pre Covid volume levels in April it sounds like you exited and continue to see strong growth coming out of the quarter and into second quarter. I was hoping maybe you could give us a little more color on just the volume trends you're seeing.

Particularly in devices and diabetes, which was.

One that missed the street, a little bit in the quarter and how youre seeing the geographic spread.

Any differences there thanks a lot.

Sure.

Sure.

I mean I think the story line here was very similar as I said in my comments I mean, it started off a little bit.

Little bit slower than we had anticipated in January obviously, given on the <unk> and the.

The surge is there and the pressure that that put on staff at hospitals, but definitely sequential improvement.

On a dollar perspective.

Every every month as we moved along the quarter.

March was very strong I've always talked about how we compare our businesses versus pre pandemic levels to kind of avoid some of the.

To avoid some of the comp issues that ultimately don't do exist. If you look at our Q1 'twenty two.

Growth rate versus 2019.

We were up about seven 3%. So well ahead of where we were in 2019 and that was pretty broad based.

Graphically the U S was up 6% again versus 2019.

And.

And international was.

Up.

8% versus 2019, two so so I think our device businesses performed very well.

And we've seen that.

<unk> as we went through the quarter the cardiovascular side.

It's done very well as I've kind of given those numbers in March and March was really strong too.

I think it's part of it is recovery.

Ravi.

We're seeing but also I would also put in those numbers I made these comments about recently launched products that we started launching last year, it's always a challenge to launch these new technologies.

In that Covid environment, but it was the right decision to make and we're seeing good momentum on whether its annual at an avatar in Europe Cardio Mems.

The rollout of insight acts that began in Q4 of last year, our treichler products. So I think all of that it's the combination I would say of both recovery as the Covid cases subside, but also the new product launches in the pipeline that we put which is which is driving this performance were I would say, where we're ahead of where we were.

In 2019, having good growth rate in our cardiac portfolio.

I appreciate the color. Thanks.

Thank you. Our next question comes from Vijay Kumar from Evercore ISI. Your line is open.

Hey, guys. Thanks for taking my question Robert.

Back on the guidance question right.

Great.

Testing.

Guidance was raised by <unk> 2 billion.

Perhaps 40 sense of upside.

And depletion of this EPS like what is offsetting that.

Incremental tailwind from Covid.

Much of this is FX.

With this macro Russia versus some of the call the inflationary pressures I think.

Hello.

Granularity would be helpful.

Sure.

Well I mean, I think you hit on the you hit on the key points, there I mean inflation.

Additional inflation pressures is.

Is impacting some of that we've got a couple of hundred million dollars.

That we've contemplated throughout the rest of the year in terms of friction on supply chain costs input costs freight and distribution.

The recall.

Hum.

If you step back the FX is.

It's probably.

About.

Another about a nickel.

Friction that we're having as we've seen the.

The dollar strengthened.

On the rest of it is really coming from coming from nutrition, but it's very difficult right now <unk> got to kind of pinpoint exactly we've got a couple of different scenarios as I said in the first question in terms of the restart and the curve. So.

We are seeing more COVID-19 tests.

Cobot sales and that like I said is is absorbing some of these some of these challenges.

Understood and then one on <unk>.

Think of revenues decline.

My question is.

You've been adding I think couple of hundred thousand.

Patients towards is that new patient starts changing at all.

How should we be thinking about incremental reimbursement in Japan, and with the seasonality of what drove the sequential.

That makes sense.

Yes, I mean, I think we see some of that from time to time here, especially as you go from Q4 to Q1.

Vijay we've seen that a couple of times I.

I would say internationally the biggest driver of that is actually FX.

That created that we're seeing good growth.

Internationally from Libre.

Getting close to 20% on a very large base.

And in the U S that youre going to see some youre going to see some timing patterns there in terms of wholesaler ordering.

I like to look at scripts.

Both new to brand scripts in total Rx scripts here in the U S and the sequential.

Q1 to Q4, there is definitely growth there. So I think we've done a really good job.

In the U S. We've grown our business in this quarter by 50%.

Users now well over 1 billion users.

We've made the investments in the U S. Whether it's sales force DTC advertising I think the team is beginning to hit its stride over there they know that.

I am not satisfied we always want to see more.

Believe that we can do more but I think the U S is starting to kind of really hit its stride with those investments as the sales force gets deployed and establishes the relationships.

With what is.

New physicians that are getting introduced to CGM.

So I think that's that's worked out very well if I take a step back though.

And move away a little bit from the Rx is in the sequential I think one of the key things here.

To really take a look at is the evolution of the CGM market and Im starting to really see now what we had always envisioned this market to start to be.

Which is a market that is shifting from what traditionally was.

More of a type one.

More of a pumper.

<unk> pump kind of connectivity play.

Which is an important segment, but really start to move and expand beyond that and we're starting to see signs of that and I think libre is a big driver of the value proposition of Libre is a big driver of whether its physicians.

And payers quite frankly, starting to see the value of the sensing technology.

Across the across the much broader set of patients. If you look at our U S base of patients and we get to see this because we get to see the Rx data.

Terms of what medications that patients are using and over 40% of our user base, which is pretty large in the U S is already type two non intensive and.

As I said is really kind of the opportunity to expand this market and become a really strong growth driver the Japan reimbursement.

You just referenced again this goes back to a comment I made about we see this as a mass market opportunity. So counter to maybe how we think about reimbursement in different segments of devices.

Were you thinking about price of reimbursement.

Versus patient Tam.

We're looking at patient Tam much more than we are.

On the pricing side, we've got great reimbursement in Japan.

But to be able to have access to all of all insulin users in Japan with our product is a great opportunity for us.

And then youre seeing the value proposition again really strong.

There was a study that was published by UK Nice and I think that for me is the ultimate.

Validation of our strategy and the value proposition, we offer where it was clearly shown to be extremely cost effective whether you look at Ics qualities in the UK by nice.

And they are in their view here of how this can benefit a lot of patients. So.

That for me is the real exciting part of Libre is really starting to see that evolution from the CGM market to become much more than kind of a niche play and much more mass market play and I think we're starting to see evidence of that whether it's new studies or reimbursement access or even seeing physicians primary care docs.

Start to really.

<unk> the prescription.

CGM for type twos so.

That's helpful. Thank you.

Thank you. Our next question comes from Josh Jennings from Cowen Your line is open.

Hi, good morning, Thanks for taking my questions and congratulations on a strong start to the year, Robert but I just wanted to start with just a question on gross margins.

<unk> performance was the highest since 2002 quarters in 2019.

Just wanted to better understand the sustainability of this profile.

59 from one percentage point all the challenges in place in <unk> and then.

Should investors be thinking that returned to 2019 gross margin levels in that 59% range plus is achievable in the out years.

And then follow up is on.

Mitra clip, but just.

We wanted to hear an ambulance would it be.

In the early days the launch is the number two player in the U S.

<unk> closure Mark is that you can apply to your defense strategy. Starting this year may be carrying into next year when you're defending your mitraclip tariff is the number one player is assuming the U S. Pascal launch occurs in 2023.

Thanks for taking my questions.

Okay.

Josh I'll take the kind of the gross margin question in the first quarter.

Our gross margin certainly benefited from the from the very high.

Covid testing sales and as I mentioned in my remarks.

Actually the fall through on that was higher than we've seen in the past because of the.

The production volumes that we had gone through our plant we are basically running full out on that so our first quarter definitely been benefited from that.

As we look at the rest of the year, obviously, we're going to have to have the impact of the nutrition recall and the inflation increased inflation.

That Robert mentioned, obviously inflation is not unique to us.

As we said back in January we incorporated a sizable amount in our guidance at that point in time, and what we've seen and I think a lot of other companies have seen as kind of an increase in some of those headwinds and so with.

We've captured that in our.

And our guidance for the rest of the year.

When I think out beyond this year and were gross margin goes I mean gross margin is something we focus on.

In the company constantly we've got dedicated teams within each business.

Just on on.

On driving gross margin improvements I mean, a lots going to depend I think as we think out in the future of the evolution of.

Inflation and supply chain dynamics and how those.

Bob over time that will be a key key component and then obviously as we grow the top line in our medical device business.

That's accretive to the overall profile of the company and so.

That's kind of where we see gross margin.

Right now and potentially in the future.

Yeah on your question on Mitraclip and amulet.

So I'll talk a bit about mitraclip.

I'd say the progression of Mitraclip in the quarter was very similar to my commentary on our cardiovascular procedure right. So we obviously had high Covid case kind of impact if it's starting to really accelerate growth towards towards the end of February and into March.

Those cases came down we saw the improving growth rate.

But I will tell you I mean, while the growth rate has been strong and it's been strong for a while Josh I don't think we've really been able to benefit yet.

From the FMR indication, which we got kind of right in the middle of Covid and as part of that and I talked a bit about this if you're able to benefit from this pretty significant market expansion opportunity that we had with.

Incredible robust data from coal that.

You have to really start to work those patient referrals.

And the referral networks, and we began doing that win win.

When Covid took its first break and then that got put on hold again when when Delta Omicron served so.

I'm really looking forward and the team is kind of already putting in place that.

That strategy again to re engage.

The patient referral network, so that we can really take advantage of.

All of this indication, which is which is unique to us and will be unique to us for <unk>.

A wild.

Relating to competitive movements into the market. We just got to stay ahead, we've got a keep on investing in the product. So we've done that with Mitraclip.

Staying ahead, and Iterating and improving on the performance of the product.

We are investing in a.

And new trials I've talked about our investments that were made in moderate risk.

<unk> patients that will be.

A great opportunity for us.

And we have a great team and we have great relationships and a strong mitral position so.

Not discounting the fact that we'll have competition, we've had competition in Europe for a couple of years already.

Germany is probably the the <unk>.

Second largest global market and.

Our position there remains at 80% market share. So so acknowledge that we will have competition.

But we do.

<unk>.

And we do we have established as mitral leadership position and we intend to we intend to defend it.

Because of all the investments that we've made to create this market. So.

So.

That's what I would talk about Mitraclip.

I think the best is still to come.

Because I don't think we have been able to tap into the opportunity of the FMR indication.

Regarding annualized.

Listen I think the.

The team has done a really good job.

Again, reiterating the same kind of comments.

The challenge in the beginning of the quarter.

That was predominantly driven by the fact that we wanted to start the initial cases with every case being procter so difficult to move.

<unk> throughout the U S and travel international et cetera. So.

So that slowed us down a little bit in the beginning of the year, but I would tell you. The team has done we spent a lot of time and attention and focus with them in February and March and the team is definitely had a really strong.

Exit to Q1 caught up in terms of all the contract closes that we had established.

As part of our plan in Q1.

So I think the commercial execution is doing really well and that supported really by the performance of the product.

And once physicians have had an opportunity to get a couple of these implants done.

It's a little bit of a different technique, but they feel comfortable with it and then they get the benefits of.

What the data shows us.

Superior.

Superior closure.

And naturally because of our of our unique.

Dual ceiling mechanism so.

Yes. There was there was some data that came out late breaking data that came out at the ACC.

Let's talk about the importance of <unk>.

<unk> and leaks matter.

Whether they are big leaks or whether they are small leaks, they do matter and even a small leaks were associated with an increase in.

Thromboembolic events. So so I think we're in a good position now with with analyst I am pleased with the commercial team and what they are doing the clinical team.

We've got opportunities here to grow I think momentum is building with ambulant.

Thanks, so much for all that color I appreciate it.

Thank you. Our next question comes from Larry <unk> from Wells Fargo. Your line is open.

Good morning, Thanks for taking the question. So so Robert two high level questions for me one I'll push my luck, a little bit and see if we can get any preliminary thoughts on 2023, youre getting a meaningful testing benefit this year, which may not materialize next year. So how do you feel about your ability to grow margins and earnings next year.

If testing demand drops and I had one follow up.

Sure.

While we had a really strong quarter regarding testing Larry and.

I think to answer your question.

You have to kind of look at what's going on a little bit right now in the U S and internationally in the U S. We saw cases.

<unk> declined pretty significantly in February , but but I think we all agree that some of those cases that are being reported arent covering all cases.

Because of the use of the at home testing systems right that are currently available. So I think thats part of the process.

That we're seeing as testing is as we're moving more into this kind of endemic stake.

And as we move to this endemic state listen vaccines have been incredibly powerful to be able to prevent.

Serious illness to be able to protect.

The hospitals and the hospital system.

It's really testing that really allows us to kind of move to this endemic state and kind of live our day to day, and it's more about surveillance and screening and checking so.

So I think our product has done really well here. It is maintain a kind of a preferred status here in the U S. Even with a pretty significant increase in product coming into the country.

Whether its ease of use its shelf life. The reliability is hasnt studies et cetera. So I think that that's an important aspect as we go into 2023 is do we have confidence that.

Even in an endemic state.

Does testing continue and I would say, yes. It does continue.

One portion of that doesn't get a lot of attention is our international testing business.

50% of our sales in March.

Covid test came from the international markets and I'd say similar sense, there of governments investing and testing.

And coming to Abbott is one of the preferred suppliers. So so I think that to answer your question.

Obviously, there is a certain amount that you can't you can't overcome right.

But I do think that as we go into next year, we will have a portion of our of our testing business that will.

Look more like like a flu respiratory kind of endemic state and I think thats going to be important.

As as we continue to grow earnings and then on top of that.

I said.

The focus of our medical device business. The investments we've made in our diagnostics systems and increasing the test menus over there.

So I expect our base business too.

To grow very strongly.

It's a little bit early regarding 2023, but we are planning we are looking we are looking at where.

Where are we going to be able to kind of grow and I'd say there'll be some COVID-19 business next year I think we are in probably the strongest position to be able to kind of capitalize and lead in that market.

And then our base business is going to do very strongly next year with all the investments we've made in new product pipeline that we've got.

That's super helpful. Robert.

We're in a unique position with your strong balance sheet.

I saw you mentioned on the call you bought back I think $2 $5 billion in stock this quarter. What's your what are your updated thoughts on M&A and if you can't.

And attractive assets are you going to continue to return cash to shareholders like we saw this past quarter. Thank you.

On the M&A side, yes, I mean.

Sound like a broken record here, Larry I mean, we're always looking we're always studying we're always looking at ways to be able to add to the company to add to add to our.

Business, but it needs to be strategic and from that perspective.

I don't want to dilute our growth rate I don't want to dilute our profiles.

We need to make sure that we're looking at assets that will be.

Additive to our growth rate into our profile so at least at least the top line.

So so that's always that's always there and we're always looking.

Guarding.

Regarding the approach.

Listen it's always a balanced approach Larry we are generating strong cash strong cash flow, we've got a lot of financial flexibility here.

Returned $3 billion in terms of dividend this year, Bob talked about what we've done regarding buybacks.

And we're always going to look at this kind of a balanced approach.

We've made investments in our organic opportunities for growth because I believe that those are great returns for our shareholders, whether it's libre mitraclip expansion of our medical devices diagnostics. Those are all opportunities that deliver great returns for our shareholders and we will take that balanced approach.

And if there is an opportunity for more we will do more.

Thanks, so much Robert.

Thank you. Our next question comes from Joanne Wuensch from Citibank. Your line is open.

Good morning, and thank you very much for taking the question.

Circle back a little bit to the nutritional business.

A lot of the feedback that I get from investors is some level of concern regarding.

Brand name brand damage if you will.

And I'm curious your thoughts on what it would take to sort of revamp this business up thank you.

So are you referring to nutrition business, yes, okay.

Listen we've got a we've got a we've got a very robust manufacturing network kind of robust quality system, obviously, theres a shortage of product in the market.

Highlighting some of the things that we're doing to be able to.

Kind of re supply the market.

A key aspect of that is going to be the restart.

And we're in that process, we've got a strong brand with Similac.

We've maintained a lot of contracts.

We've been able to supply those contracts.

Even with a little bit of this shortage.

So I feel I feel confident in our team's ability here too.

Look at once we get restarted to be able to resupply re supply the market and build back our share we had just launched Joanne.

A new product last year end of last year.

With a blend of five hmos and Thats a significant advancement.

We were expecting that based on.

Everything that we had studied and seen what's going to be big.

Big growth driver for us in kind of brand enhancer. So.

So I think thats going to be important.

We will have to make some investments as we go back to the market.

But.

I'd say historically when some of these issues have happened in the past, whether it's abbott or other manufacturers share does does recover.

The question is just kind of the timing and the curve of that recovery, but sure do.

<unk> come to recover and you can look at past situations with other competitors and even with us.

Thank you and then as a follow up.

Forgive me for asking it this way what's next.

I mean.

I don't think we're going to be talking about current testing yeah, I hope, we're not going to be talking about it.

How do you see the kind of forward momentum of the company Big picture.

Yeah, well I don't think were going to be talking about COVID-19 testing the way we're talking about it.

Today, or how we've talked about it in the past year, but like I like I told Larry but I do think that theres going to be an opportunity for COVID-19 testing to play a role in this kind of endemic state and as I've said in the past also.

What Covid has allowed us to do is to further accelerate what we believed was a key trend in.

In diagnostics and point of care diagnostics, which is the expansion.

And the decentralization of that testing outside of the lab into pharmacies into People's homes.

And it being connected so so.

So I think that that.

Covid has accelerated that I guess I would say and we're obviously building menus, where we will be able to add to the I'd now instrument more panels more different tests and remember when we started the pandemic. We had about about 20000 kind of instruments. That's now five fold.

In terms of.

The opportunity that we have to be able to expand menu.

Into.

Basically.

An asset thats been capitalized and deployed into the market. So so.

So that's what we've been working on from that perspective on the I guess I would say on the rapid on the rapid testing side on the decentralized testing side.

I'd say going back to the device portfolio.

I mean, there is still a lot of what next.

In our pipeline of products that we've just launched that are still in the early it's still in the early <unk>.

Early innings here.

One of them that we got approved.

This quarter, which I'm really excited about is a fair and our lead list pacemaker I think this is going to be a great opportunity to kind of reignite growth back in our in our CRM business I mean, we've seen an improvement already with the existing portfolio and had a 4% growth this quarter, but I think a very as a real game changer for our CRM portfolio.

So obviously the single chamber is a smaller part of the market. We know that it's about 15%, but I think when youre coming second to the market.

Get to observe what needs to what could be addressed that maybe the first generation didn't do and I think that our product whether its retrieve ability its ability to be retrieved.

It's longer lasting battery right now it's about two weeks.

That's on the market.

But I think what's really exciting about this is its ability to upgrade.

Two to a dual chamber device so.

It's upgrade ability is what were hearing extremely big interest from the physician community. So I think thats a great opportunity for us.

That I think is really going to start to show as we evolve.

Our trial for dual chamber.

And begin to collect data there I think that's going to be a great opportunity for our CRM portfolio.

I look at cardio Mems is another great opportunity that we have just really just started the expanded indication is going to really open up the market I've seen some of the implant.

<unk> that we've seen post.

Post expansion indication and that gives me a lot of excitement about what this product can be we talked about and I think that the <unk> piece is one that.

As I've said in the past, we're investing I think nabataea is an extremely competitive product and we're seeing that in Europe as we've launched it in six months in the market now. So this great opportunities over there libre II as an opportunity for us not only in the U S, but in Europe to continue.

To expand the market.

I think lingo as I said last last call is another great opportunity that is really in the early stages, but to look at using our bio wearable sensors outside of diabetes and looking at opportunities. There. So I think we have a lot of a lot of what next that are early in their early stages.

And then on top of all the all the products that we've been talking about right now also so.

So I'm excited about the what next.

Thank you.

Thank you our next.

Question comes from Travis Steed from Bank of America. Your line is open.

Hey, good morning, Thanks for taking the questions.

Chris on the inflation supply chain some of it's gotten about $200 million worse than $500 million.

Built into the P&L just to confirm that Im curious, what youre seeing the biggest pain points and wages raw materials shipping costs and expectations on when that could start to ease to some degree are or how you're thinking for potential offsets the price.

Yes.

Perhaps I'll take that question. This is Bob So as we said back in January we did incorporate a sizable impact.

Impact into our 2022 guidance, which was about $500 million on the gross margin line and as Robert mentioned, we've now incorporated an additional $200 million in gross margin impact.

In our occurred in our current guidance the biggest impact we're seeing is really on logistics.

In commodities and some other manufacturing inputs is not so much on the labor front.

Labor is a smaller portion.

Our of our total product cost so it's really on the commodities.

Terms of when this will ease and change I mean, that's a very.

There's a lot a lot of things that affect that.

And where the.

Inflation May go we do know that historically on commodities, we do see cycles, we do see.

Commodity cost go up but they also come down.

And we would expect at some point.

It's very difficult to call exactly when that will be.

We will see some some inflationary pressures subside.

And then given your presence in China, but just kind of love to hear it.

Your thoughts on.

Both China from a procedure standpoint, and also a supply chain standpoint, and just given how much business you have there and any thoughts on the progress you're making with the phase III and the FDA would be great. Thank you.

Sure.

I think regarding China saw a little bit of a inverse in terms of what we saw in all of the other geographies where.

Started off pretty well in the quarter and then as the lockdown started to occur specifically.

Specifically in Shanghai.

Towards the end of February and into March started to see the impact of that in our procedures.

We look at our testing.

Platforms, it's kind of early indicators in our proxy. So we saw those go down also during the month of April during the month of March.

And I'd say over the last two weeks in April started to see a recovery of those diagnostic testing. So I think what we saw was a lot of the testing.

That was being done.

In the major cities was shifted over to kind of PCR testing.

Together with rapid testing and that obviously impacted some of the.

Some of the routine hospital testing, but we're starting to see that now probably two two solid weeks of kind of positive trend back in the right direction still not at the level, we were before the lockdowns, but definitely starting to move in the right direction. There. So I would expect.

Just based on patterns that we've seen in the past that we're starting to kind of move to sequential week over week improvements and the procedures and not all procedures are the same.

Some of them returned faster some of them have a different kind of recovery curve, but I do expect.

Kind of the impact that we saw in March.

A little bit in the beginning of April on devices start to kind of improve.

Great. Thanks for taking I'm, sorry, you had a question on.

Libre three.

Yes, Lisa III at any any update on how the progress is working with the FDA on what the label might look like there's any any additional color would be it would be great. Thank you sure.

Surely yes, like I mentioned on the call we filed as an IC GM I don't have much to kind of update you there regarding that.

I'll say that.

We have moved Libre three in Europe .

And two from kind of more of a limited rollout in Germany.

A while back to kind of more of a.

Accelerated conversion from Libre to lead with three and I think the process started really well in Germany.

We got initial feedback from.

From physicians very positive feedback from the reimbursement system also and that gave us the confidence here that kind of really begin to accelerate this market transition.

And Libre three we did that in Libre two also.

When we moved from Libre, one for Libre two in Germany that took us about a year I think it is going to be faster than that with Libre III.

We've got over 90% of reimbursement coverage for Libre three in Germany. So that's now moved into high gear not only in Germany, but for the rest of the year. So I'm focused a lot on what we can do with libre.

The countries that we do have an approved and right now everything everything that we're seeing is that it is a very very compelling product.

Great. Thanks, a lot.

Okay, operator, we'll take one more question.

Thank you our last question will come from Matt <unk> from Credit Suisse. Your line is open.

Hey, Thanks, so much for squeezing me in.

Just in the context of some of these new products.

But maybe follow up with just a level set expectations for <unk>.

For example.

<unk> rollout.

Menu expansion.

Strong growth in the quarter.

Robert If you could maybe talk about what's the.

Duration of this rollout.

It started into the pandemic and what does that look like through this year and potentially into next year and then.

I know you've touched a few times here about amulet just love to get your updated thoughts on where do you think share could go.

And the next year 18 months, you've made some comments in Q4, the pace is picking up here in the U S.

Any numbers you could put around your thoughts there would be super helpful.

Sure.

<unk> is a is a multiyear strategy and rollout here.

Matt we are doing it not only with immunoassay, we're doing with clinical chemistry, we are doing with hematology, we're doing it with transfusion.

This has never been done at this kind of scale to be able to really recycle all of our systems. So.

So I think that if you.

Look at the way the market is set up.

The contracts are lasting between seven to 10 years.

So on any given year, you got you've got 15% of the market. That's that's coming up for an RFP.

So regarding its legs like you're asking I mean, I still think that we've got multiple multiple years here the COVID-19 pandemic definitely slowed that down.

In terms of the.

Renewal cycles, a lot of hospitals, focusing on just on just dealing with just dealing with the COVID-19 , but.

Sure.

I guess, what I would say is there is there is.

There's plenty more to come the key here is to balance between.

That 15% that comes up for.

For RFP.

What's what's renewable so an existing customer and what's kind of share gain and I think the team has done a really good job at being able to look at.

Having a real strong balance about not just defending the base and we've done that pretty well. So I would say nine out of 10 accounts, we've been able to we've been able to maintain.

And then if you look at the business that's coming up for grabs.

I would say our win rate here is over 50%. So when you think about that math.

Retaining 90, 90% and winning 50% of the new businesses, that's what ultimately drives our top line growth and then once you put those instruments. In then the key aspect here is to be able to.

Expand the menu use of them.

<unk> instruments, while they are in an account right you've got the capital deployed you've got the service cost that's kind of been deployed there. So everything we can do to be able to add new menus, new tests et cetera is accretive from both the top and bottom line. So.

That's a big focus of the team on the R&D side is to be able to expand the menus.

<unk>.

Concurrent to what I would say is this kind of placement strategy that we have with the new systems. So.

Ambulate on your question on amulet.

Listen I think we continue to capture share.

We estimate.

That we're in double digit share position here in the U S.

Longer term I would say our aspiration is to build a significant share position.

The European market is much smaller than the U S market and that market we have.

A 50 share so.

I think the key thing here is for US is to every time you are a new player coming into the market you have a different technology. We believe ours is superior, but it's different in terms of how it gets used how it gets implanted so you.

You need to make sure that.

The physicians as you roll it out.

Learn how to use our product our plan our system.

And from there you build off there. So I think we'll be looking at not only expansion into new accounts, but also utilization in existing accounts and thats. The piece that I'm actually getting very excited about as we've looked at the accounts that we started back in September and October were starting to see nice share movement over there. So that's very exciting for us.

So.

That's great. Thanks, so much yes, let me just close here I think we've had a very strong start to the year like I said in my prepared comments.

We've reaffirmed our guidance that.

That we set back in January .

Absorbing I would say impact of the nutrition recall, which we're working hard on.

Two.

To restart.

Other parts of nutrition are doing very well and I expect them to continue to do very well, we're absorbing as Bob said.

Challenges with inflation and supply chain.

Many companies I know are facing.

And we are absorbing.

Some some headwinds on on FX side.

That being said there is a lot of great things that are going on at Abbott in the company a lot of positives I talked about them.

In the beginning of the call and I would expect all of that positive to continue and for that momentum to continue to build on that business like I said, excluding COVID-19 , excluding some of the recalled products our base business grew 11% in the quarter.

The team is.

Focus on building off that and building off that momentum so thanks.

Good.

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 Abbott Investor Dot Com.

Thank you for joining us today.

Thank you. This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.

[music].

[music].

Good morning, and thank you for standing by welcome to Abbott's first quarter 2022 earnings 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 Keith on your Touchtone phone.

Should you become disconnected throughout this conference call. Please dial the number provided to you in preference to Abbott 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 or rebroadcast without Abbott's express written permission.

I would now like to introduce Mr. Scott <unk>, Vice President Investor Relations licensing and acquisitions.

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

And Bob <unk>, Executive Vice President Finance, and Chief Financial Officer.

Robert and Bob will provide opening remarks following their comments, we will 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 <unk>.

Including the expected financial results for 2022.

Abbott cautions that these forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward looking statements.

Economic competitive governmental technological and other factors that may affect abbott's operations are discussed in item one a risk factors to our annual report on Form 10-K for the year ended December 31 2021.

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 in our earnings news release and regulatory filings from today, which are available on our website at Abbott Dot com.

Note that avid has not provided the GAAP financial measure for organic sales growth on a forward looking basis, because the company is unable to predict future changes in foreign exchange rates, which could impact reported sales growth.

Unless otherwise noted our commentary on sales growth refers 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 thank you for joining us.

Today, we reported results of another strong quarter.

Earnings per share were $1 73.

Reflecting more than 30% growth compared to the prior year.

Sure.

Sales increased 17, 5% on an organic basis in the quarter.

Led by double digit growth in medical devices established pharmaceuticals, as well as diagnostics, both with and without Covid testing related sales.

In addition to the strong results during the quarter, we continued to strengthen our strategic position and long term growth opportunities with regulatory with regulatory approvals of new products and expanded indications of use.

Along with continued market uptake of several recently launched products and the attractive growth areas.

I'll now summarize our first quarter results in more detail before turning the call over to Bob.

I'll start with established pharmaceuticals or <unk>.

Where sales increased 13, 5% in the quarter.

<unk> has now achieved double digit organic sales growth in three of the last four quarters.

Strong performance. This quarter was led by double digit growth across several countries and core therapeutic areas, including gastroenterology respiratory and CNS pain management.

Turning to nutrition, where our performance was mixed.

Our adult nutrition business continues to perform at a high level with global organic sales growth of 11, 5% led by our ensure and <unk> brands.

And we also achieved double digit growth globally, and our combined toddler nutrition products, which includes our market, leading <unk> and PD light brands.

As you know however, we initiated a voluntary recall in February of certain infant formula products manufactured at one of our U S facilities.

It's important to highlight as part of our quality system, we retain in house samples of products that we shipped to customers.

Testing of retained samples related to this recall action by both Abbott and the FDA have all come back negative for the presence of the bacteria that cause the reported illnesses.

Importantly, the FDA and CDC found that there is no genetic match between the strains of the bacteria identified a non product contact areas of our facility.

And available samples obtained from customer complaints.

Suggesting a different source of contamination.

And lastly, no Salmonella was found in our factory or a product and therefore, the FDA ruled out any link to our facility.

We hope these findings get parents caregivers and other stakeholders renewed confidence in our products.

We know the situation has further exacerbated industrywide infant formula supply shortages.

That's why we're doing everything possible to mitigate supply constraints by bringing in product from our FDA registered facility in Europe .

And ramping up production at our other U S plants.

And of course, we're working very closely with the FDA on corrective actions and enhancements. So that we can restart operations at the facility.

Moving to diagnostics, where sales grew 35%.

Covid test sales were $3 3 billion in the quarter.

More than 90% of which came from our rapid test and <unk>.

Including buying <unk> now in the U S <unk>.

<unk> internationally and IV now globally.

Excluding COVID-19 related.

<unk> testing related sales are global diagnostic sales grew 12% in the quarter.

Driven by the continued rollout of validity our innovative suite of diagnostic instruments and expanding menus across our testing platforms.

And I'll wrap up with medical devices.

Where sales grew 11, 5% in the quarter.

This strong performance was led by double digit growth in diabetes care structural heart heart failure and electrophysiology.

In diabetes care sales of freestyle Libre grew more than 25% on an organic basis in the quarter and the user base has now reached approximately 4 million users globally.

And cardiovascular devices, while procedure volumes were negatively impacted by elevated Covid case rates early in the year.

We saw steady improvement in procedure trends as the case rates came down in the second half of the quarter.

Which has continued into April .

In addition to improving market trends and our strong results. This was also another highly productive quarter for our pipeline.

In the U S. We received FDA approval for <unk>, our lead list pacemaker to treat patients with slow heart rhythms.

In Japan expanded reimbursement for Libre will now cover all people with diabetes, who use insulin at least once a day.

Cardiome Mems received an expanded indication in the U S to treat more patients suffering from earlier stages of heart failure.

And we received U S FDA clearance for the latest generation of our insight X system, which provides a 360 degree view of the heart for improved cardiac mapping.

So in summary.

We're achieving strong growth overall and across several areas of our business.

As the first quarter progressed and Covid levels decrease we saw steady improvement in the hospital based procedure trends, which has continued into April .

And we continue to advance our pipeline with new products indications and reimbursement coverage in several attractive growth areas.

I'll now turn over the call to Bob 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 excludes the impact of foreign exchange.

Turning to our results.

Sales for the first quarter increased 17, 5% on an organic basis, which was led by double digit growth in diagnostics medical devices and established pharmaceuticals, along with global Covid testing related sales of $3 3 billion in the quarter.

Excluding COVID-19 testing related sales organic sales growth was seven 7% versus the prior year.

Foreign exchange had an unfavorable year over year impact of three 7% on first quarter sales.

During the quarter, we saw the U S. Dollar continued to strengthen versus several currencies, which resulted in a more unfavorable impact on sales compared to exchange rates at the time of our earnings call in January .

Regarding other aspects of the P&L.

The adjusted gross margin ratio was 59, 1% of sales, which reflects higher than normal fall through on Covid testing sales as a result of significant production volumes during the first quarter par.

Partially offset by the impacts of the nutrition recall and somewhat higher than expected inflation on certain manufacturing and distribution cost in the quarter.

Adjusted Research and development investment was five 6% of sales and adjusted SG&A investment was 23, 1% of sales in the first quarter.

Lastly, our first quarter adjusted tax rate was 14, 5%.

Before discussing our outlook for the full year.

I want to provide an update on our strategic capital deployment initiatives completed in the first quarter.

Which included approximately $2 3 billion of share repurchases $800 million of dividends scheduled debt repayments of $750 million.

And $300 million of capital expenditures, which support future organic growth opportunities.

We continue to generate strong cash flow.

Which provides the flexibility required to execute a well balanced capital allocation strategy.

Turning to our outlook for the full year 2022.

Our adjusted earnings per share guidance of at least $4 70.

Remains unchanged.

We now forecast total company organic sales growth.

Excluding the impact of Covid testing related sales to be in the mid to high single digits, which is somewhat lower than our prior forecast of high single digits due to the recent recall event in nutrition.

It is important to note excluding sales impacted by the recall.

We continue to forecast total organic sales growth in the high single digits for the remainder of our combined businesses, which includes medical devices established pharmaceuticals diagnostic.

Diagnostics, excluding the impact of testing related sales in areas of nutrition not impacted by the recall.

We forecast Covid testing related sales of approximately $4 5 billion.

With a significant portion of these sales expected to occur in the first half of the year.

We continue to we will continue to update our COVID-19 testing related sales forecast one quarter at a time throughout the year.

As appropriate.

Lastly, based on current rates, we would now expect exchange to have an unfavorable impact of a little more than 3% on our full year reported sales with that we'll now open the call for questions.

Thank you.

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

If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.

So our optimal sound quality, we kindly ask that you. Please use your handset instead of your speaker phone when asking your question again Thats Star then one to ask the question.

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

Hi, good morning, Thanks for taking the question and congrats on a good quarter.

Maybe to start.

For Robert or Bob.

You guys put up a good first quarter beat on Covid testing sales had double digit growth in <unk>.

And most of the businesses.

I was hoping maybe you can reconcile the strong <unk> in the reiterated guidance.

Walk us through some of the puts and takes and how to think about bridging the difference.

Sure Ravi.

I think <unk> been on <unk> been on these calls for a while we rarely raise in Q1 I.

I would say.

And despite that I mean, we've had a great start to the year as you pointed out and there's a lot of lot of good things going on at the company.

Sure.

Talk a bit about procedure recovery in the comments we've seen good good.

Good recovery in our device portfolio, especially in cardiovascular seen routine diagnostic testing, improving, albeit a little bit a little bit slower than what we've seen in devices, but definitely the trend of recovery is there.

<unk> execution is going very well like I said in the comments three out of four quarters double digit.

Strong COVID-19 sales both in the U S and internationally I think that's an important aspect here is our international presence too.

Talk a little bit about the pipeline and the approvals not just the recent approvals, but the performance of some of the recently launched products.

<unk> talked about our cash flow generation and the deployment of that cash flow are able to kind of share.

Part of that cash flow with our shareholders, but also to continue to invest in the business. So there's a lot of a lot of lot of good things going on here in the business.

But there are there are a couple of challenges that were managing and that's probably the piece there where the reconciliation that you that you are looking for is actually happening.

First of all obviously managing through.

Managing through the recall on the nutrition side, we're working with the FDA.

And we've contemplated in that reiterated guidance.

Various scenarios here in terms of kind of restart dates.

And share recovery curves et cetera, so it's difficult to give an exact date right now as to when that restart starts we're working closely with the FDA, but.

But I see this more as a short term challenge in the sense that once we <unk>.

Once we align with restarting with the FDA then we'll begin to execute our strategy here in terms of coming back to market.

Supply in the market and.

Regaining share.

Sure.

Probably the second other part here, which is I think it is a little bit.

Not unique to Abbott and I think you'll probably see this across a lot of companies is just the macro environment right. Now is there's definitely changed versus where we were in January and it's gotten it's gotten a little bit more more challenging so.

We expect some of that macro environment with our supply chain et cetera to kind of be a little bit more persistent throughout this year. So so that being said I wanted to see how these probably these two these two points here play out over the next couple of months and we'll be in a better position.

To be able to assess.

That and our guidance going forward after Q2.

Like I said Theres, a lot of great momentum in the business.

Sure.

Devices, performing very well diagnostics performing very well the parts of nutrition that werent impacted by the recall continued to do very well I am not a big fan of the.

Glued this but for that.

Statements, but I think in the context of how the business is performing.

If you exclude the Covid piece, which was pretty significant for US and then just look at the business without the base business without the impact of nutrition products, our growth rate was about 11%.

<unk>.

I think that reflects the.

The strength of the portfolio of the investments that we've made and the execution. So in that guidance that reiteration of $4 70, we've absorbed.

As Bob said.

More FX headwinds absorb some challenges and supply chain absorbed.

Portions of the nutrition recall, so I think it's I think it's the right I think it's the right.

Guide right now in terms of where we are.

After Q1.

Great really good color and then maybe.

Follow up.

I think a lot of investors are focused on the go forward realizing that January and February warrant the strongest months due to some of the elevated omicron.

Levels.

We heard Johnson and Johnson yesterday talk about.

Reaching pre Covid volume levels in April it sounds like you exited and continue to see strong growth coming out of the quarter and into the second quarter. I was hoping maybe you could give us a little more color on just the volume trends, you're seeing particularly in devices and diabetes, which was.

<unk>.

One that missed the street, a little bit in the quarter and how youre seeing the geographic spread and any differences there. Thanks a lot.

Sure.

Sure.

I mean, I think the storyline here was very similar as I said in my comments I mean, it started off a little bit.

Little bit slower than we had anticipated in January obviously, given omicron surges.

The surge is there and the pressure that that put on staff at hospitals, but definitely sequential improvement.

From a dollar perspective.

Every every month as we moved along the quarter March was very strong I've always talked about how we compare our businesses versus pre pandemic levels to kind of avoid some of the.

To avoid some of the comp issues that ultimately does do exist. If you look at our Q1 'twenty two.

Growth rate versus 2019.

We were up about seven 3%. So well ahead of where we were in 2019 and that was pretty broad based.

Geographically the U S was up 6% again versus 2019.

And.

And international.

Was up over 8% versus 2019, two so so I think our device businesses performed very well.

And we've seen that improvement as we went through the quarter the cardiovascular side.

It's done very well is as I've kind of given those numbers in March and March was really strong too.

I think it's part of it is recovery.

Ravi.

We're seeing but also I would also put in those numbers I made these comments about recently launched products that we started launching last year, it's always a challenge to launch these new technologies.

In that Covid environment, but it was the right decision to make and we're seeing good momentum on whether its annual at Nab a tour in Europe Cardio Mems.

The rollout of <unk> that began in Q4 of last year, our <unk> products. So I think all of that it's the combination I would say of both recovery as the Covid cases subside, but also the new product launches in the pipeline that we put which is which is driving this performance were I would say, where we're ahead of where we are.

In 2019, having good growth rate in our cardio portfolio.

I appreciate the color. Thanks.

Thank you. Our next question comes from Vijay Kumar from Evercore ISI. Your line is open.

Hey, guys. Thanks for taking my question Robert.

Back on the guidance question right.

Great.

Testing.

Guidance was raised by $2 billion.

Perhaps 40 sense of upside.

And <unk> of this EPS like what is offsetting the staff.

Incremental tailwind from Covid related how much of this effort.

<unk>.

With this macro Russia versus some of the color and play for your pressures I think.

Hello.

Granularity will be helpful.

Sure.

Well I mean, I think you hit on the you hit on the key points, there I mean inflation.

Additional inflation pressures is.

Is impacting some of that we've got a couple of hundred million dollars.

That we've contemplated.

The rest of the year in terms of friction on supply chain costs input costs freight and distribution.

The recall.

Well, let me take a step back the FX is.

It's probably.

About.

Another about a nickel.

Friction that we're having as we've seen the.

The dollar strengthened.

On the rest of it is really coming from coming from nutrition, but it's very difficult right now Vijay be able to kind of pinpoint exactly we've got a couple of different scenarios as I said and the first question in terms of the restart and the curve. So we.

We are seeing more COVID-19 tests.

<unk> sales and that like I said is is absorbing some of these some of these challenges.

Understood and.

Then one on <unk>.

Think of revenues decline.

My question is.

You've been adding I think couple of hundred thousand.

Patients towards is that new patient starts changing at all.

How should we think about incremental things worth maybe dependent with the seasonality of what drove the sequential.

<unk> revenue trends.

Yes, I mean, I think we see some of that from time to time here, especially as you go from Q4 to Q1.

Vijay we've seen that a couple of times I.

I would say internationally the biggest driver of that is actually FX.

That created that we're seeing good growth.

Internationally from Libre.

Getting close to 20% on a very large base.

And in the U S that youre going to see some youre going to see some timing patterns there in terms of wholesaler ordering.

I like to look at scripts.

Both new to brand scripts in total Rx scripts here in the U S and the sequential.

Q1 to Q4, there is definitely growth there. So I think we've done a really good job.

In the U S. We've grown our business in this quarter by 50%.

Users now well over 1 billion users.

We've made the investments in the U S. Whether it's sales force DTC advertising I think the team is beginning to hit its stride over there they know that.

I am not satisfied we always want to see more.

Believe that we can do more but I think the U S is starting to kind of really hit its stride with those investments as the sales force gets deployed and establishes the relationships.

With what is.

New physicians that are getting introduced to CGM.

So I think that's that's worked out very well if I take a step back though.

And move away a little bit from the Rx is in the sequential I think one of the key things here.

To really take a look at is the evolution of the CGM market and I'm starting to really see now what we had always envisioned this market to start to be.

Which is a market that is shifting from what traditionally was.

More of a type one.

More of a pumper.

<unk> pump kind of connectivity play.

Which is an important segment, but really start to move and expand beyond that and we're starting to see signs of that and I think libre is a big driver of the value proposition of Libre is a big driver of whether its physicians.

And payers quite frankly, starting to see the value of the sensing.

Technology.

The cost of a much broader set of patients. If you look at our U S base of patients and we get to see this because we get to see the Rx data in terms of what medications that patients are using and over 40% of our user base, which is pretty large in the U S is already type two non intensive.

And that as I said is really kind of the opportunity to expand this market and become a really strong growth driver of the Japan reimbursement.

Just referenced again this goes back to a comment I made about we see.

This is a mass market opportunity so counter to maybe how we think about reimbursement in different segments of devices.

Were you thinking about price of reimbursement.

Versus patient Tam.

We're looking at patient Tam much more than we are.

On the pricing side, we've got great reimbursement in Japan, but to be able to have access to all of all insulin users in Japan with our product is a great opportunity for us.

And then youre seeing the value proposition again really strong.

There was a study that was published by UK Nice and I think that for me is the ultimate.

Validation of our strategy and the value proposition, we offer where it was clearly shown to be extremely cost effective whether you look at <unk> qualities in the UK by nice.

And they are in their view here of how this can benefit a lot of patients. So.

That for me is the real exciting part of Libre is we're really starting to see that evolution from the CGM market to become much more than kind of a niche play and much more mass market play and I think we're starting to see evidence of that whether it's new studies or reimbursement access or even seeing physicians primary care docs.

Start to really.

Embraced the prescription.

CGM for type twos so.

That's helpful. Thank you.

Thank you our next call.

Comes from Josh Jennings from Cowen Your line is open.

Hi, good morning, Thanks for taking the questions and congratulations on the strong start to the year.

Robert I just wanted to start with just a question on gross margins. The <unk> performance was the highest since 2002 quarters in 2019.

Just wanted to better understand the sustainability of this this profile.

59, 1% of spread all the challenges in place in <unk> and then <unk>.

Should we be thinking that returned to 2019 gross margin levels in that 59% range plus is achievable in the out years.

And then the follow up is on.

Mitraclip, but just.

We wanted to hear an ambulance what have you learned.

In the early days the launches a number two player in the U S left atrial appendage closure market that you can apply to your defense strategy is starting this year may be carrying into next year when you're defending your mitraclip tariff is the number one player assuming the U S. Pascal launch occurs in 2023, thanks for taking my questions.

Okay.

Josh I'll take the kind of the gross margin question in the first quarter.

Our gross margins certainly benefited from the from the very high.

Covid testing sales and as I mentioned in my remarks.

Actually the fall through on that was higher than we've seen in the past because of the.

The production volumes that we had gone through our plant we are basically running running full out on that so our first quarter definitely been benefited from that.

As we look at the rest of the year, obviously, we're going to have to have the impact of the nutrition recall any inflation increased inflation.

That Robert mentioned, obviously inflation is not unique to us.

As we said back in January we incorporated a sizeable amount.

Our guidance at that point in time, and what we've seen I think a lot of other companies have seen as kind of an increase in some of those headwinds and so we.

We've captured that in our in our guidance for the rest of the year.

I think out beyond this year and were gross margin goes I mean gross margin is something we focus on.

In the company constantly we've got dedicated teams within each business.

We're focused on.

On driving gross margin improvements I mean, a lots going to depend I think as we think out in the future of the evolution of <unk>.

Inflation and supply chain dynamics and how those.

Bob over time that will be a key key component and then obviously as we grow the top line in our medical device business.

That's accretive to the overall profile of the company and so.

That's kind of where we see gross margin.

Right now and potentially in the future.

Yeah on your question on Mitraclip and amulet.

Ill talk a bit about mitraclip.

I would say that the progression of Mitraclip in the quarter was very similar to my commentary on our cardiovascular procedure right. So we obviously had high Covid case kind of impact if it's starting to really accelerate growth towards towards the end of February and into March.

Those cases came down we saw the improving growth rate.

But I will tell you I mean, while the growth rate has been strong and it's been strong for a while Josh I don't think we've really been able to benefit yet.

From the FMR indication, which we got kind of right in the middle of Covid and as part of that and I talked a bit about this to be able to benefit from this pretty significant market expansion opportunity that we had with <unk>.

Incredible robust data from coal that you.

You have to really start to work those patient referrals.

And the referral networks, and we began doing that win win.

When Covid took its first break and then that got put on hold again when when Delta Omicron served so.

I'm really looking forward and the team is kind of already putting in place that.

That strategy again.

Reengage.

The patient referral network, so that we can really take advantage of.

All of this indication, which is which is unique to us and will be unique to us for for a while.

Relating to competitive movements into the market. We've just got to stay ahead, we've got a keep on investing in the product. So we've done that with Mitraclip.

Staying ahead, and Iterating and improving on the performance of the product.

We are investing in.

And new trials I've talked about are our investment that were made in moderate risk or surgery patients that will be.

A great opportunity for us.

And we have a great team and we have great relationships and a strong mitral position so.

Not discounting the fact that we'll have competition, we've had competition in Europe .

For a couple of years already.

Germany is probably the second largest global market and our position there remains at 80% market share. So so acknowledge that we will have competition.

But we do.

And we do we have established as mitral leadership position and we intend to we intend to defend it.

Because of all the investments that we've made to create this market. So.

So.

That's what I would talk about Mitraclip.

We'll take the best is still to come.

I don't think we've been able to tap into the opportunity of the FMR indication.

Regarding annualized.

Listen I think.

The team has done a really good job.

Again, reiterating the same kind of comments will.

A bit challenged in the beginning of the quarter.

And that was predominantly driven by the fact that we wanted to start the initial cases with every case being procter so difficult to move.

<unk> throughout the U S and travel international et cetera. So.

So that slowed us down a little bit in the beginning of the year, but I would.

Tell you. The team has done we spent a lot of time and attention and focus with them in February and March and the team is definitely had a really strong.

The exit to Q1 caught up in terms of all the contract closes that we had established.

As part of our plan in Q1.

So I think the commercial execution is doing really well and that is supported really by the performance of the product.

And once physicians have had an opportunity to get a couple of these implants done.

It's a little bit of a different technique, but they feel comfortable with it and then they get the benefits of.

What the data shows us.

Superior.

Superior closure.

And naturally because of our of our unique.

Dual ceiling mechanism so.

Yes. There was there was some data that came out late breaking data that came out at the ACC.

Let's talk about the importance of <unk>.

<unk> and leaks matter.

Whether they are big leaks or whether they are small leaks, they do matter and and even a small leaks were associated with an increase in <unk>.

Thromboembolic events. So so I think we're in a good position now with with analyst I am pleased with the commercial team and what they're doing the clinical team.

We've got opportunities here to grow I think momentum is building with ambulance.

Thanks, so much for all that color I appreciate it.

Thank you. Our next question comes from Larry Dave Wilson from Wells Fargo. Your line is open.

Good morning, Thanks for taking the question. So so Robert two high level questions for me one I'll push my luck, a little bit and see if we can get any preliminary thoughts on 2023, youre getting a meaningful testing benefit this year, which may not materialize next year. So how do you feel about your ability to grow margins and earnings next year.

If testing demand drops and I had one follow up.

Sure.

We had a really strong quarter regarding testing Larry and.

I think to answer your question.

I think you have to kind of look at what's going on a little bit right now in the U S and internationally in the U S. We saw cases <expletive> .

<unk> declined pretty significantly in February , but but I think we all agree that some of those cases that are being reported arent covering all cases.

Of the use of the at home testing systems right.

Currently available so I think thats part of the process.

We're seeing as testing has moved.

As we're moving more into this kind of endemic state.

And as we move to this endemic stateless and vaccines have been incredibly powerful to be able to prevent <unk>.

Serious illness to be able to protect.

The hospitals and the hospital system, but it's really testing that.

Really allows us to kind of move to this endemic state and kind of live our day to day, and it's more about surveillance and screening and checking so.

So I think our product has done really well here, it's maintain a kind of a preferred status here in the U S. Even with a pretty significant increase in product coming into the country.

Whether its ease of use its shelf life reliability. It Hasnt studies et cetera. So I think that that's an important aspect as we go into 2023 is do we have confidence that.

Even in an endemic state.

Does testing continue and I would say, yes. It does continue.

One portion of that doesn't get a lot of attention is our international testing business.

50% of our sales in March.

Covid test came from the international markets and I'd say similar sense there off.

<unk> investing in testing.

And coming to Abbott is one of the preferred suppliers. So so I think that to answer your question.

Obviously, theres a certain amount that you can't you can't overcome right.

But I do think that as we go into next year, we will have a portion of our of our testing business that will.

Look more like like a flu respiratory kind of endemic state and I think that's going to be important.

As as we.

We continue to grow earnings.

And then on top of that.

Like I said.

The focus of our medical device business. The investments we've made in our diagnostic systems and increasing the test menus over there.

So I expect our base business too.

Continue to grow very strongly.

It's a little bit earlier regarding 2023, but we are planning we are looking we are looking at where we.

Where are we going to be able to kind of grow and I'd say there'll be some COVID-19 business next year I think we are in probably the strongest position to be able to kind of capitalize and lead in that market.

And then our base business is going to do very strongly next year with all the investments we've made in new product pipeline that we've got.

That's super helpful. Robert.

We're in a unique position with your strong balance sheet.

You mentioned on the call you bought back I think to $5 billion in stock this quarter. What's your what are your updated thoughts on M&A and if you can't.

<unk> attractive assets are you going to continue to return cash to shareholders like we saw this past quarter. Thank you.

On the M&A side, yes, I mean.

Sound like a broken record here, Larry I mean, we're always looking we're always studying we're always looking at ways to be able to add to the company to add to add to our business, but it needs to be strategic and from that perspective, I don't want to dilute our growth rate I don't want to dilute our profiles.

<unk>.

We need to make sure that we're looking at assets that will be.

Additive to our growth rate into our profile so at least at least at the topline.

So that's always that's always there and we're always looking.

Regarding.

Regarding the approach.

It's always a balanced approach Larry.

We're generating strong cash strong cash flow, we've got a lot of financial flexibility here.

Returned $3 billion in terms of dividend this year, Bob talked about what we've done regarding buybacks.

And we're always going to look at this kind of a balanced approach.

Made investments in our organic opportunities for growth because I believe that those are great returns for our shareholders, whether it's libre mitraclip expansion of our medical devices diagnostics. Those are all opportunities that deliver great returns for our shareholders and we will take that balanced approach.

And if there is an opportunity for more we will do more.

Thanks, so much Robert.

Thank you. Our next question comes from Joanne Wuensch from Citibank. Your line is open.

Good morning, and thank you very much for taking the question.

Circle back a little bit to the nutritional business.

A lot of the feedback that I get from investors is some level of concern regarding.

Brand name brand damage if you will.

I'm curious your thoughts on what it would take to sort of revamp this business up thank you.

So are you referring to nutrition business.

Yes, okay.

Listen we've got a we've got a we've got a very robust manufacturing network kind of robust quality system, obviously, theres a shortage of product in the market.

Highlighted some of the things that we're doing to be able to.

Kind of re supply the market.

Key aspect of that is going to be the restart.

And we're in that process.

Got a strong brand with Similac.

We've maintained a lot of our contracts.

We've been able to supply those contracts.

Even with a little bit of this shortage.

So I feel I feel confident in our team's ability here too.

Look at once we get restarted to be able to resupply re supply the market and build back our share we had just launched Joanne.

A new product last year end of last year.

With a blend of five hmos and Thats a significant advancement.

We were expecting that based on everything.

Everything that we had studied and seen what's going to be big.

Big growth driver for us in kind of brand enhancer. So.

So I think thats going to be important.

We will have to make some investments as we go back to the market.

But.

I'd say historically when some of these issues have happened in the past, whether it's abbott or other manufacturers sure does.

Does recover.

The question is just kind of the timing and the curve of that recovery, but sure do.

<unk> come to recover and you can look at past situations with other competitors and even with us.

Thank you and as a follow up.

Forgive me for asking it this way what's next.

I mean.

I don't think we're going to be talking about current testing yeah, I hope, we're not going to be talking about it and how do you. How do you see the kind of forward momentum of the company be petcare. Thanks.

Yeah, well I don't think were going to be talking about COVID-19 testing the way we're talking about it.

Today, or how we've talked about it in the past year, but like I like I told Larry I mean, I do think that theres going to be an opportunity for COVID-19 testing to play a role in this kind of endemic state and as I've said in the past also what Covid has allowed us to do is to further accelerate what we believe.

He was a key trend in.

In diagnostics and point of care diagnostics, which is the expansion.

And the decentralization of that testing outside of the lab into pharmacies into People's homes.

And it being connected so.

So I think that that.

Covid has accelerated that I guess I would say and we're obviously building menus, where we'll be able to add to the I'd now instrument more panels more different tests and remember when we started the pandemic we had about about 20000 kind of instruments. That's now fivefold.

In terms of.

The opportunity that we have to be able to expand menu.

Into.

Basically.

An asset thats been capitalized and deployed into the market. So so.

So that's what we've been working on from that perspective on the I guess I would say on the rapid on the rapid testing side on the decentralized testing side.

I'd say going back to the device portfolio.

I mean, there is still a lot of what next.

In our pipeline.

<unk> products that we've just launched that are still in the early it's still in the early <unk>.

Early innings here.

One of them that we got approved.

This quarter, which I'm really excited about is a fair and our lead list pacemaker I think this is going to be a great opportunity to kind of reignite growth back in our in our CRM business I mean, we've seen an improvement.

Already with the existing portfolio and had a 4% growth this quarter, but I think a very is a real kind of game changer for our CRM portfolio. Obviously the single Chamber is a smaller part of the market. We know that it's about 15%, but I think when youre coming second to the market you get to observe what needs to what could be addressed that.

Maybe the first generation didn't do and I think that our product whether it's retrieve ability its ability to be retrieved.

Its longer lasting battery right now it's about two X product that's on the market.

But I think what's really exciting about this is its ability to upgrade.

Two to a dual chamber device so.

It's upgrade ability is what were hearing extremely big interest from the physician community. So I think thats a great opportunity for us.

That I think is really going to start to show as we evolve.

Our trial for dual chamber.

And begin to collect data there I think that's going to be a great opportunity for our CRM portfolio.

I look at cardio Mems is another great opportunity that we have just really just started the expanded indication is going to really open up the market I've seen some of the implant.

<unk> that we've seen post.

Post expansion indication and that gives me a lot of excitement about what this product can be we talked about amulet I think that the <unk> piece is one that.

As I've said in the past, we're investing I think nabataea is an extremely competitive product and we're seeing that in Europe as we've launched it in six months in the market now. So this great opportunities over there Libre III is an opportunity for us not only in the U S, but in Europe to continue.

To expand the market.

I think lingo as I said last last call is another great opportunity that is really in the early stages, but to look at using our bio wearable sensors outside of diabetes and looking at opportunities. There. So I think we have a lot of a lot of what next that are truly early in their early stages.

And then on top of all the all the products that we've been talking about right now also so.

So I'm excited about the what next.

Thank you.

Thank you our next.

Question comes from Travis Steed from Bank of America. Your line is open.

Hey, good morning, Thanks for taking the questions.

Personal inflation supply chain, some of it's gotten about $200 million worse than $500 million.

Built into the P&L just to confirm that Im curious what youre seeing the biggest pain points as wages raw materials shipping cost expectations on when that could start to ease to some degree are or how you're thinking for potential offsets.

Yes.

Perhaps I'll take that question. This is Bob So as we said back in January we did incorporate a sizable.

Impact into our 2022 guidance, which was about $500 million on the gross margin line.

And as Robert mentioned, we've now incorporated an additional $200 million in gross margin impact.

In our in our current guidance the biggest impact.

Seeing as really on logistics.

In commodities and some other manufacturing inputs is not so much on the labor front.

Labor is a smaller portion of our of our total product cost. So it's really on the commodities.

Or when this will ease and change I mean, that's a very I think there's a lot a lot of things that affect that.

And where the.

Where inflation May go we do know that historically.

Commodities, we do see cycles, we do see.

Commodity cost go up but they also come down.

And we would expect at some point.

And it's very difficult to call exactly when that will be.

We will see some some of the inflationary pressures subside.

And then given your presence in China, which is kind of lumpy.

Your thoughts on China.

China from a procedure standpoint, and also a supply chain standpoint, and just given how much of the business you have there and any thoughts on the progress you're making with the phase III and the FDA would be great. Thank you.

Sure.

I think regarding China saw a little bit of a inverse in terms of what we saw in all of the other geographies where.

Started off pretty well in the quarter and then as lockdown started to occur.

Specifically in Shanghai.

Towards the end of February and into March started to see the impact of that in our procedures.

We look at our testing platforms is kind of early indicators in our proxy. So we saw those go down.

So during the month of April during the month of March.

And I'd say over the last two weeks in April started to see a recovery of those diagnostic testing. So I think what we saw was a lot of the testing.

That was being done.

In the major cities was shifted over to kind of PCR testing.

With rapid testing and that obviously impacted some of the.

Some of the routine hospital testing, but we're starting to see that now probably two two solid weeks of kind of positive trend back in the right direction still not at the level, we were before the lockdowns, but definitely starting to move in the right direction. There. So I would expect.

Just based on patterns that we've seen in the past that we're starting to kind of move to sequential week over week improvements and the procedures and not all procedures are the same.

Some of them returned faster some of them have a different kind of recovery curve, but I do expect.

Kind of the impact that we saw in March.

And a little bit in the beginning of April on devices start to kind of improve.

Great. Thanks, Sorry, you had a question on labor.

<unk> III.

Yes, Lisa III at any any update on how the progress is working with the FDA on what the label might look like there's any any additional color would be it would be great. Thank you shortly.

Surely I like I mentioned on the call we filed as an IC GM I don't have much to kind of update you there regarding that.

I'll say that.

We have moved Libre three in Europe .

And two from kind of more of a limited rollout in Germany, a while back to kind of more of a.

Accelerated conversion from Libre, two <unk>, three and I think the process started really well in Germany.

We got initial feedback from.

From physicians very positive feedback from the reimbursement system also and that gave us the confidence here that kind of really begin to accelerate this market transition.

And Libre three we did that in Libre two also.

When we moved from Libre, one to Libre two in Germany that took us about a year I think it's going to be faster than that with Libre III.

We've got over 90% of reimbursement coverage for Libre three in Germany. So that's now moved into high gear not only in Germany, but for the rest of the year. So I'm focused a lot on what we can do with libre.

The countries that we do have an approved and right now everything everything that we're seeing is that it is a very very compelling product.

Great. Thanks, a lot.

Okay, operator, we'll take one more question.

Thank you our last question will come from Matt <unk> from Credit Suisse. Your line is open.

Hey, Thanks, so much for squeezing me in.

In the context of some of these new products.

But maybe follow up with just to level set expectations for.

For example, the <unk>.

<unk> rollout.

Menu expansion.

Very strong growth in the quarter.

Robert If you could maybe talk about what's the.

Duration of this rollout.

So it started into the pandemic.

What does that look like through this year and potentially through next year and then.

No you've touched a few times here about amulet just love to get your updated thoughts on where you think share could go.

In the next year or 18 months, you've made some kind of a Q4 I know the pace is picking up here in the U S.

Any numbers you could put around your thoughts there would be super helpful.

Sure Linda.

<unk> is a is a multiyear strategy and rollout here.

Matt we are doing it not only with immunoassay, we're doing with clinical chemistry, we are doing with hematology, we're doing it with transfusion.

This has never been done at this kind of scale to be able to really recycle all of our systems. So.

So I think that if you look at the way the market is set up.

The contracts are lasting between seven to 10 years.

So on any given year, you got you've got 15% of the market that that's coming up for an RFP.

So regarding its legs like Youre, asking I mean, I still think that we've got multiple multiple years here the COVID-19 pandemic definitely slowed that down.

In terms of the.

Renewal cycles, a lot of hospitals, focusing on just on just dealing with just dealing with the COVID-19 , but.

Sure.

I guess, what I would say is there is there is plenty more to come.

The key here is to balance between.

That 15% that comes up for <unk>.

For RFP.

What's what's renewable so an existing customer and what's kind of share gain and I think the team has done a really good job at being able to look at.

Having a real strong balance about not just defending the base and we've done that pretty well. So I would say nine out of 10 accounts, we've been able to we've been able to maintain.

And then if you look at the business Thats coming up for grabs.

I would say our win rate here is over 50%. So when you think about that math.

Retaining 90, 90% and winning 50% of the new businesses, that's what ultimately drives our top line growth and then once you put those instruments. In then the key aspect here is to be able to.

Expand the menu use of those instruments, while they are in an account right you've got the capital deployed you got the service cost that's kind of been deployed there. So everything we can do to be able to add new menus, new tests et cetera is accretive from both the top and bottom line. So.

That's a big focus of the team on the R&D side is to be able to expand the menus.

<unk>.

Concurrent to.

I'd say as kind of placement strategy that we have with the new systems. So.

Ambulate on your question on annual it.

Listen I think we continue to capture share.

We estimate.

That we're in double digit share position here in the U S.

Longer term I would say our aspiration is to build a significant share position.

The European market is much smaller than the U S market and that market, we have a 50 share so.

I think the key thing here is for US is to every time you are a new player coming into the market you have a different technology. We believe ours is superior, but it is different in terms of how it gets used how it gets implanted so.

You need to make sure that.

The physicians as you roll it out.

Learn how to use our product our implant our system.

And from there you build off there. So I think we will be looking at not only expansion into new accounts, but also utilization in existing accounts and thats. The piece that I'm actually getting very excited about as we've looked at the accounts that we started back in September and October were starting to see nice share movement over there. So that's very exciting for us.

So.

That's great. Thanks, so much yes, let me just close here I think we've had a very strong start to the year like I said in my prepared comments.

We've reaffirmed our guidance that.

That we set back in January .

Absorbing I would say impact of nutrition recall, which we're working hard on.

Two.

To restart.

Other parts of nutrition are doing very well and I expect them to continue to do very well, we're absorbing as Bob said.

Challenges with inflation and supply chain.

Many companies I know are facing.

And we are absorbing.

Some some headwinds on on FX side.

That being said.

There is a lot of great things that are going on at Abbott in the company a lot of positives I talked about them.

In the beginning of the call and I would expect all of that positive to continue.

That momentum continued to build on that business like I said, excluding COVID-19 , excluding some of the recalled products our base business grew 11% in the quarter and the.

<unk> is focused on building off that and building off that momentum so thanks.

Very good. 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 Abbott Investor Dot Com.

You for joining us today.

Thank you. This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.