Q2 2024 Abbott Laboratories Earnings Call
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Operator: Good morning, and thank you for standing by.
Operator: Good morning, and thank you for standing by. Welcome to Abbott's second quarter 2024 earnings conference call. All participants will be able to listen only to the question and answer portion of this call. During the question and answer session, you will be able to ask your question by pressing the star one one keys on your touchtone phone.
Operator: Welcome to Abbott's second quarter 2024 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 will be able to ask your question by pressing the star one one keys on your touchstone phone.
Speaker Change: Good morning and thank you for standing by. Welcome to Abbott's second quarter 2024 earnings conference call.
Speaker Change: All participants will be able to listen only until the question and answer portion of this call. During the question and answer session, you will be able to ask your question by pressing the star 11 keys on your touchtone phone.
Operator: 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.
Operator: 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 reproached without Abbott's expressed written permission.
Speaker Change: 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.
Michael Comilla: I would now like to introduce Mr. Mike Comilla, Vice President Investor Relations.
Michael Comilla: I would now like to introduce Mr. Mike Comilla, Vice President, Investor Relations. Good morning, and thank you for joining us. With me today are Robert Ford, Chairman and Chief Executive Officer, and Phil Boudreau, Executive Vice President, Finance, and Chief Financial Officer. Robert and Phil will provide opening remarks. Following their comments, we'll take your questions. Before we get started, some statements made today may be forward-looking for purposes of the Private Securities Litigation Reform Act of 1995, including our expected financial results for 2024.
Michael Comilla: I would now like to introduce Mr. Mike Comilla, Vice President, Investor Relations.
Michael Comilla: Good morning and thank you for joining us. With me today, are Robert Ford, chairman and chief executive officer, and So Boudreau, executive vice president, finance and chief financial officer.
Speaker Change: Good morning and thank you for joining us. With me today are Robert Ford, Chairman and Chief Executive Officer, and Phil Boudreau, Executive Vice President, Finance and Chief Financial Officer.
Michael Comilla: Robert and Phil will provide opening remarks. Following their comments, will take your questions.
Michael Comilla: Robert and Phil will provide opening remarks. Following their comments, we'll take your questions.
Michael Comilla: Before we get started, some statements made today may be forward-looking for purposes of the Private Securities Litigation Reform Act of 1995, including the expected financial results for 2024. 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, "Risk Factors," to our annual report on Form 10-K for the year ended December 31st, 2023.
Michael Comilla: 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 statement. Economic, competitive, governmental, technological, and other factors that may affect Abbott's operations are discussed in item 1A, risk factors, of 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.
Speaker Change: Before we get started, some statements made today may be forward-looking for purposes of the Private Securities Litigation Reform Act of 1995, including the expected financial results for 2024.
Speaker Change: 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.
Speaker Change: Economic, competitive, governmental, technological, and other factors that may affect Abbott's operations are discussed in Item 1A, Risk Factors, to our annual report on Form 10-K for the year ended December 31, 2023.
Michael Comilla: 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 comparable GAAP financial measures in our earnings news release and regulatory filings from today, which are available on our website at Abbott.com.
Speaker Change: 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.
Michael Comilla: 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 comparable GAAP financial measures in our earnings news release and regulatory filings from today, which are available on our website at www.abbott.com. Note that Abbott 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.
Speaker Change: 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.
Speaker Change: These non-GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings news release and regulatory filings from today, which are available on our website at abbott.com.
Michael Comilla: Note that Abbott has not provided the gap 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 is defined in the press release issued earlier today.
Speaker Change: Note that Abbott 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.
Michael Comilla: Unless otherwise noted, our commentary on sales growth refers to organic sales growth, which is defined in the press release issued earlier today. With that, I will now turn the call over to Robert. Thanks, Mike. Good morning, everyone, and thank you for joining us.
Speaker Change: Unless otherwise noted, our commentary on sales growth refers to organic sales growth, which is defined in the press release issued earlier today. With that, I will now turn the call over to Robert.
Michael Comilla: With that, I will now turn the call over to Robert.
Robert Ford: Thanks, Mike.
Robert Ford: Good morning, everyone, and thank you for joining us. Today, we reported organic sales growth of more than 9% excluding COVID testing sales. We also reported adjusted earnings per share of $1.14, which exceeded analyst consensus estimates and represents a 16% sequential increase from the first quarter. Based on our performance in the quarter and confidence in our outlook for the remainder of the year, we raised our guidance. Lawrence, and now forecast full-year organic sales growth, excluded COVID testing sales to be 9.5% to 10%, and adjusted earnings per share in a range of $4.61 to $4.71. Our performance continues to be driven by broad-based growth across the portfolio.
Robert B. Ford: Today, we reported organic sales growth of more than 9% excluding COVID testing sales. We also reported adjusted earnings per share of $1.14, and the Exceeded Analyst Consensus Estimate, and represents a 16% sequential increase from the first quarter. Based on our performance in the quarter and confidence in our outlook for the remainder of the year, we raised our guidance, now forecast full-year organic sales growth, excluded COVID testing sales, to be 9.5 to 10%, and adjusted earnings per share in a range of $4.61 to $4.71, our performance, continues to be driven by broad-based growth across the portfolio, with growth this quarter led by double-digit growth in medical devices, high single-digit growth in established pharmaceuticals and nutrition, in addition to benefiting from outperforming expectations on the top line.
Robert B. Ford: Thanks, Mike.
Robert B. Ford: Good morning everyone and thank you for joining us.
Robert B. Ford: Today, we reported organic sales growth of more than 9% excluding COVID testing sales.
Speaker Change: We also reported adjusted earnings per share of $1.14.
Speaker Change: which exceeded analyst consensus estimates and represents a 16% sequential increase from the first quarter.
Speaker Change: Based on our performance in the quarter and confidence in our outlook for the remainder of the year, we raised our guidance.
Speaker Change: And now forecast full year organic sales growth excluded COVID testing sales to be nine and a half to ten percent.
Speaker Change: and adjusted earnings per share in the range of $4.61 to $4.71.
Speaker Change: Our performance...
Robert Ford: With growth as quarter-led by double-digit growth in medical devices, and high single-digit growth in established pharmaceuticals and nutrition. In addition to benefiting from outperforming expectations on the top line, we are also seeing positive contribution from gross margin expansion, coming from continued execution from our supply chain teams, lower commodity costs, and favorable sales mix.
Speaker Change: continues to be driven by broad-based growth across the portfolio, with growth this quarter led by double-digit growth in medical devices.
Speaker Change: and high single-digit growth in established pharmaceuticals and nutrition.
Speaker Change: In addition to benefiting from outperforming expectations on the top line,
Speaker Change: We are also seeing positive contribution from gross margin expansion, coming from continued execution from our supply chain teams, lower commodity costs.
Robert Ford: I will now summarize our second quarter results in more detail before turning the call over to Phil. I will start with nutrition, where sales increased 7.5% in the quarter. Strong growth in the quarter was led by double-digit growth in international adult nutrition and US pediatric nutrition. International Adult Nutrition continues to perform at a very high level. The five-year compound annual growth rate of this business is more than 10%, which, in addition to our market-leading position and commercial execution, reflects the impact from positive demographic trends that drive increasing demand for our Ensure and Blusurna brains. Through the investments we've made to expand capacity, we are well positioned to continue to capitalize on the secular demand trends.
Robert B. Ford: We are also seeing positive contribution from gross margin expansion, coming from continued execution from our supply chain team, lower commodity costs, and favorable sales. I'll now summarize our second quarter results in more detail before turning the call over to Phil, and I'll start with nutrition, where sales increased 7.5% in the quarter, strong growth in the quarter, led by Double-Digit Growth in International Adult Nutrition and U.S. Pediatric Nutrition. International Adult Nutrition continues to perform at a very high level; the five-year compound annual growth rate of this business is more than 10%, which, in addition to our market-leading position and commercial executive..., reflects the impact of positive demographic trends that drive increasing demand for our Ensure and Glucerna brands.
Speaker Change: and Favorable Sales Mix.
Speaker Change: I'll now summarize our second quarter results in more detail before turning the call over to Phil.
Speaker Change: And I'll start with nutrition.
Philip P. Boudreau: where sales increased 7.5% in the quarter.
Philip P. Boudreau: Strong growth in the quarter.
Philip P. Boudreau: was led by Double-Digit Growth in International Adult Nutrition and U.S. Pediatric Nutrition.
Philip P. Boudreau: International Adult Nutrition continues to perform at a very high level.
Philip P. Boudreau: The five-year compound annual growth rate of this business is more than 10 percent, which, in addition to our market-leading position and commercial execution,
Philip P. Boudreau: reflects the impact from positive demographic trends.
Philip P. Boudreau: that drive increasing demand for our Ensure and Glucerna brands.
Robert B. Ford: Through the investments we've made to expand capacity, we are well positioned to continue to capitalize on the secular demand trend. On the topic of litigation regarding preterm infant formula and human milk fortifier, Abbott stands by our products and the information provided to the neonatologist specialists who have used them for decades. Nerotizing androcolitis or NEC is a terrible gastrointestinal disease that primarily affects premature infants, and it is devastating to families. However...
Philip P. Boudreau: Through the investments we've made to expand capacity, we are well positioned to continue to capitalize on these secular demand trends.
Robert Ford: On the topic of litigation regarding pre-term infant formula and human milk fortifier, Abbott stands by our products and the information provided to the neonatologist specialists who have used them for decades. Necrotizing Androokalitis, or NEC, is a terrible gastrointestinal disease that primarily affects premature infants, and it is devastating to families. However, plaintiff lawyers are advancing a theory that is without merit or scientific support. These products, which are sold for hospital use, are incorporated into a feeding regimen along with human milk by experienced specialists and are an important part of the standard of care for the majority of pre-term infants.
Philip P. Boudreau: On the topic of litigation regarding preterm infant formula and human milk fortifier, Abbott stands by our products and the information provided to the neonatologist specialists who have used them for decades.
Philip P. Boudreau: Necrotizing enterocolitis or NEC.
Philip P. Boudreau: is a terrible gastrointestinal disease that primarily affects premature infants.
Philip P. Boudreau: And it is devastating to families.
Robert B. Ford: While plaintiff lawyers are advancing a theory that is without merit or scientific support, these products, which are sold for hospital use, are incorporated into a feeding regimen, along with human milk by experienced specialists, and are an important part of the standard of care for the majority of preterm infants. Their use is supported by medical associations in the United States and other countries around the world, and their ingredients have been reviewed and deemed safe for use by regulators, who have also reviewed their labels. There has been no increase in the rates of NEC, meaning these cases have not emerged in response to a trend or any new information.
Speaker Change: However, plaintiff lawyers are advancing a theory that is without merit or scientific support.
Speaker Change: These products...
Speaker Change: which are sold for hospital use, are incorporated into a feeding regimen along with human milk by experienced specialists and are an important part of the standard of care for the majority of preterm infants.
Robert Ford: Their use is supported by medical associations in the United States and other countries around the world. The products and their ingredients have been reviewed and are deemed safe for use by regulators, who have also reviewed their labels. There has been no increase in the rates of NEC, meaning these cases have not emerged in response to a trend or any new information. Yet we're seeing plaintiff lawyers investing millions of dollars in misleading TV advertising in an attempt to move position decisions from the hospital to the courtroom. Group. Total revenues for these products are about $9 million annually, and I've remained at that level for the past several years.
Speaker Change: Their use is supported by medical associations in the United States and other countries around the world.
Speaker Change: The products.
Speaker Change: and their ingredients have been reviewed and are deemed safe for use by regulators.
Speaker Change: who have also reviewed their labels.
Speaker Change: There has been no increase in the rates of NEC, meaning these cases have not emerged in response to a trend or any new information.
Robert B. Ford: Yet we're seeing plaintiffs lawyers investing millions of dollars in misleading TV advertising in an attempt to move physician decisions from the hospital to the courtroom. Total revenues for these products are about $9 million annually, and I've remained at that level for the past several years. If these products were no longer available, physicians would be deprived of the vital food that is needed in the NICU.
Speaker Change: Yet, we're seeing plaintiff's lawyers investing millions of dollars in misleading TV advertising in an attempt to move physician decisions from the hospital to the courtroom.
Speaker Change: Total revenues for these products are about $9 million annually.
Speaker Change: And I've remained at that level for the past several years.
Robert Ford: If these products were no longer available, physicians would be deprived of the vital food that is needed in the NICU. This would create a public health crisis affecting every state across this country.
Speaker Change: if these products were no longer available.
Speaker Change: Physicians would be deprived of the vital food that is needed in the NICU.
Robert B. Ford: This would create a public health crisis affecting every state across this country. We believe it's important for all who have an interest in the health of preterm infants to recognize the need for these products and to take action accordingly. Moving to diagnostics, where sales increased 6%, excluding COVID testing sales. Growth in the Quarter was driven by high single-digit growth in core laboratory diagnostics and double-digit growth in point-of-care diagnostics.
Speaker Change: This would create a public health crisis affecting every state across this country.
Robert Ford: We believe it's important for all who have an interest in the health of preterm infants to recognize the need for these products and to take action accordingly. Moving to diagnostics, where sales increased 6% excluded COVID testing sales. Growth in the quarter was driven by high single-digit growth in coral laboratory diagnostics and double-digit growth in point-of-care diagnostics. In coral lab diagnostics, we continue to drive growth through increased adoption and utilization of our market-leading systems and global demand for our extensive testing menus across the areas of immune assay, clinical chemistry, hematology, and blood screening. While our Illinity Family of Diagnostic Systems first launched more than six years ago, given the long contract cycles common in the diagnostics industry, we continue to see a benefit in our contract renewal and competitive win rates, with several recent large account wins expected to increasingly contribute to growth in the second half of the year.
Speaker Change: We believe it's important.
Speaker Change: for all who have an interest in health of preterm infants to recognize the need for these products and to take action accordingly.
Speaker Change: Moving to Diagnostics, where sales increased six percent, excluding COVID testing sales.
Speaker Change: Growth in the quarter was driven by high single-digit growth in core laboratory diagnostics and double-digit growth in point-of-care diagnostics.
Robert B. Ford: In Core Lab Diagnostics, we continue to drive growth through increased adoption and utilization of our market-leading systems and global demand for our extensive testing menus across the areas of immune assay, clinical chemistry, hematology, and blood screening. While our Alinity family of diagnostic systems first launched more than six years ago, given the long contract cycles common in the diagnostics industry, we continue to see a benefit in our contract renewal and competitive win rates, several recent large account wins, expected to increasingly contribute to growth in the second half of the year. Turning to EPD, where sales increased 8% in the quarter.
Speaker Change: In Core Lab Diagnostics, we continue to drive growth through increased adoption and utilization of our market-leading systems and global demand for our extensive testing menus across the areas of immunoassay, clinical chemistry, hematology, and blood screening.
Speaker Change: While our Alinity family of diagnostic systems first launched more than six years ago, given the long contract cycles common in the diagnostics industry, we continue to see a benefit in our contract renewal and competitive win rates.
Speaker Change: with several recent large account wins expected to increasingly contribute to growth in the second half of the year.
Robert Ford: Turning to EPD, where sales increased 8% in the quarter, EPD continues to deliver at a high level as this business executes its unique, branded, generic strategy in emerging markets, where growth is supported by favorable demographic trends, including increasing populations, growing middle classes, and increasing focus on expanding access to health care. As you recall, we identified biosimilars as a new strategic growth pillar for this business. With our extensive presence in emerging markets, we have a unique opportunity to scale a licensing model that is capital-efficient and can bring access to these life-changing medicines to millions of people in emerging markets.
Robert B. Ford: EPD continues to deliver at a high level as this business executes its unique branded generic strategy in emerging markets where growth is supported by favorable demographic trends, including an increasing population, growing middle classes, and an increasing focus on expanding access to health. As you recall, we identified biosimilars as a new strategic growth pillar for this business. With our extensive presence in emerging markets, we have a unique opportunity to scale a licensing model that is capital efficient and can bring access to these life-changing medicines to millions of people in emerging markets.
Speaker Change: Turning to EPD, where sales increased 8% in the quarter.
Speaker Change: EPD continues to deliver at a high level as this business executes its unique branded generic strategy in emerging markets where growth is supported.
Speaker Change: by favorable demographic trends, including increasing populations, growing middle classes, and increasing focus on expanding access to health care.
Speaker Change: As you recall, we identified biosimilars as a new strategic growth pillar for this business.
Speaker Change: With our extensive presence in emerging markets, we have a unique opportunity to scale a licensing model that is capital efficient and can bring access to these life-changing medicines to millions of people in emerging markets.
Robert Ford: We began implementing the strategy last year when we announced an agreement to commercialize several biosimilars in the areas of oncology and women's health, with the first of these expected to launch in 2025. We recently completed additional agreements that provide Abbott access to biosimilar versions of market-leading autoimmune disease and GLP-1 medications. Biosimilars represent the highest growth segment in the branded generic pharmaceutical market, and we look forward to continue to build one of the most complete portfolios in the industry.
Robert B. Ford: We began implementing this strategy last year when we announced an agreement to commercialize several biosimilars in the areas of oncology and women's health, with the first of these expected to launch in 2025. We recently completed additional agreements that provide Abbott access to biosimilar versions of market-leading autoimmune disease and GLP-1 medications.
Speaker Change: We began implementing this strategy last year when we announced an agreement to commercialize several biosimilars in the areas of oncology and women's health, with the first of these expected to launch in 2025.
Speaker Change: We recently completed additional agreements.
Speaker Change: that provide Abbott access to biosimilar versions of market-leading autoimmune disease and GLP-1 medications.
Robert B. Ford: Biosimilars represent the highest growth segment in the branded generic pharmaceutical market, and we look forward to continuing to build one of the most complete portfolios in the industry. And I'll wrap up with medical devices, where sales grew 12%. In diabetes care, Freestyle Libre sales were $1.6 billion in the quarter and grew 20%. And we announced in June that we received FDA approval for two new over-the-counter continuous glucose monitors, called Lingo and LibreRIO, which are based on Libre's glucose technology that is now used by more than 6 million people around the world, while over-the-counter availability is a new option in the United States.
Speaker Change: Biosimilars represents the highest growth segment in the branded generic pharmaceutical market and we look forward to continue to build one of the most complete portfolios in the industry.
Robert Ford: I'll wrap up with medical devices, where sales grew 12%. In diabetes care, Freestyle leverage sales were $1.6 billion in the quarter and grew 20%. and we announced in June that we received FDA approval for two new over-the-counter continuous glucose monitoring systems called Lingo and Libre Rio, which are based on Libre's glucose technology that is now used by more than six million people around the world. While over-the-counter availability is a new option in the United States, we've been selling over-the-counter in international markets since Libre launched ten years ago. Given our clear leadership position in these markets, we have demonstrated our ability to tailor solutions, approach, and communication to the various types of users who compose the CGM customer base.
Speaker Change: And I'll wrap up with medical devices.
Speaker Change: where sales grew 12%.
Speaker Change: In diabetes care, Freestyle Libre sales were $1.6 billion in the quarter and grew 20%.
Speaker Change: And we announced in June that we received FDA approval for two new over-the-counter continuous glucose monitoring systems called LINGO and LibreRIO.
Speaker Change: which are based on Libre's glucose technology that is now used by more than 6 million people around the world.
Speaker Change: While over-the-counter availability is a new option in the United States.
Robert B. Ford: We've been selling over-the-counter in international markets since Libre launched 10 years ago. Given our clear leadership position in these markets, we have demonstrated our ability to tailor solutions, approaches, and communication to the various types of users who compose the CGM customer base. Lingua is designed for consumers who are willing to improve their overall health and wellness. The Lingo Wearable Sensor and App will track glucose, provide personalized data, insights, and coaching to help create and maintain healthy habits. Lingua users do not use insulin and typically manage their diabetes through lifestyle modifications.
Speaker Change: We've been selling over-the-counter in international markets since Libre launched 10 years ago.
Speaker Change: Given our clear leadership position in these markets, we have demonstrated our ability to tailor solutions, approach, and communication to the various types of users who compose the CGM customer base.
Robert Ford: Lingo is designed for consumers who are willing to improve their overall health and wellness. The Lingo wearable sensor and Apple track glucose, provide personalized data, insights, and coaching to help create and maintain healthy habits. Libre Rio is designed for adults with type 2 diabetes. We do not use insulin and typically manage their diabetes through lifestyle modifications. In electrophysiology, growth of 17 percent was driven by double-digit growth in all major geographic regions, including 17 percent growth in the U.S., which represents an acceleration compared to the growth in the first quarter. Growth was broad-based across the portfolio and included 20 percent growth in ablation catheters.
Speaker Change: Lingua is designed for consumers who are willing to improve their overall health and wellness.
Speaker Change: The Lingo wearable sensor and app will track glucose, provide personalized data, insights, and coaching to help create and maintain healthy habits.
Speaker Change: Libre Rio is designed for adults with type 2 diabetes who do not use insulin and typically manage their diabetes through lifestyle modifications.
Robert B. Ford: In electrophysiology, growth of 17% was driven by double-digit growth in all major geographic regions, including 17% growth in the U.S., which represents an acceleration compared to growth in the first quarter. Growth was broad-based across the portfolio and included 20% growth in ablation catheters. In structural heart, growth of more than 15% reflects an acceleration of growth compared to the first quarter and was led by several recently launched products that are driving new adoption and share capture in attractive high-growth areas including TAVR, LAA, and tricuspid repair.
Speaker Change: In electrophysiology, growth of 17% was driven by double-digit growth in all major geographic regions.
Speaker Change: including 17% growth in the U.S. which represents an acceleration compared to the growth in the first quarter.
Speaker Change: Growth was broad-based across the portfolio and included 20% growth in ablation catheters.
Robert Ford: In structural heart, growth of more than 15 percent reflects an acceleration in growth compared to the first quarter and was led by several recently launched products that are driving new adoption and share capture in attractive high-growth areas, including TABER, LAA, and tricuspid repair. This quarter, we launch our tricuspid repair device Triclet in the United States and continued our trend of capturing market share in the global TABER market. In rhythm management, growth of 6 percent was led by a bear, our highly-innovated leafless pacemaker, and in June. We announced that we received sea mark in Europe for a bear to be used in dual chamber pacing procedures, which is the largest segment of the pacing market.
Speaker Change: and Structural Heart.
Speaker Change: Growth of more than 15% reflects an acceleration in growth compared to the first quarter and was led by several recently launched products that are driving new adoption and share capture in attractive high-growth areas, including TAVR.
Robert B. Ford: This quarter, we launched our tricuspid repair device, Triclip, in the United States and continued our trend of capturing market share in the global TAVR market. In rhythm management, growth of 6% was led by AVERE, our highly innovative leadless pacemaker. And in June, we announced that we received the C mark in Europe for AVERE to be used in dual chamber pacing procedures, which is the largest segment of the pacing market
Speaker Change: LAA, and Tricuspid Repair.
Speaker Change: This quarter we launch our tricuspid repair device, Triclip, in the United States and continued our trend of capturing market share in the global TAVR market.
Speaker Change: In rhythm management, growth of 6% was led by AVERE, our highly innovative leadless pacemaker. And in June , we announced that we received C mark in Europe for AVERE to be used in dual-chamber pacing procedures, which is the largest segment of the pacing market.
Robert Ford: In heart failure, growth of 9 percent was driven by our market-leading portfolio of heart assist devices that offer treatment for both chronic and temporary conditions. In neuromodulation, growth of 8 percent was driven by strong demand in international markets for our ETERNA rechargeable spinal cord stimulation device, which obtained CE mark in Europe last year. In vascular, we received FDA approval in late April for our Spree dissolved of stent, a breakthrough innovation for people who suffer from block arteries located below the knee. The spree is designed to keep the arteries open, deliver a drug to support vessel healing prior to completely dissolving over time.
Robert B. Ford: And heart failure growth of 9% was driven by our market-leading portfolio of heart assist devices that offer treatment for both chronic and temporary conditions. In neuromodulation, growth of 8% was driven by strong demand in international markets for our Eterna rechargeable spinal cord stimulation device, which obtained the CE mark in Europe last year. In vascular, we received FDA approval in late April for our ESPRIT dissolvable stent, a breakthrough innovation for people who suffer from blocked arteries located below the knee.
Speaker Change: In heart failure, growth of 9% was driven by our market-leading portfolio of heart assist devices that offer treatment for both chronic and temporary conditions.
Speaker Change: In neuromodulation, growth of 8% was driven by strong demand in international markets for our Eterna rechargeable spinal cord stimulation device, which obtained CE mark in Europe last year.
Speaker Change: In vascular, we received FDA approval in late April for our ESPRIT dissolvable stent.
Speaker Change: A Breakthrough Innovation for People Who Suffer from Block Arteries Located Below the Knee.
Robert B. Ford: This brief is designed to keep the arteries open, and deliver a drug to support vessel healing prior to completely dissolving over time. New products like Esprit, combined with the investments that we have made in our vascular business, both organically and inorganically, have expanded our presence in faster-growing areas and increased the future growth outlook for this business. So, in summary, we exceeded expectations on both the top and bottom lines, and as a result, we raised our financial outlook for the year.
Speaker Change: The spree is designed to keep the arteries open, deliver a drug to support vessel healing prior to completely dissolving over time.
Robert Ford: New products like a spree combine with the investments that we made in our vascular business both organically and inorganically have expanded our presence in faster growing areas and increase the future growth outlook for this.
Speaker Change: New products like Esprit, combined with the investments that we made in our vascular business, both organically and inorganically, have expanded our presence in faster growing areas and increased the future growth outlook for this business.
Robert Ford: Business. So, in summary, we exceeded the expectations on both the top and bottom lines, and as a result, we raised our financial outlook for the year. We continue to make good progress on our gross margin initiatives, and more importantly, our pipeline continues to be highly productive, and that's where we're well positioned to deliver strong results for the remainder of the year.
Speaker Change: So, in summary, we exceeded expectations on both the top and bottom lines and as a result we raised our financial outlook for the year.
Robert B. Ford: We continue to make good progress on our gross margin initiatives, and more importantly, our pipeline continues to be highly productive. And thus, we're well-positioned to deliver strong results for the remainder of the year. I'll now turn over the call to the field.
Speaker Change: We continue to make good progress on our gross margin initiatives, and more importantly, our pipeline continues to be highly productive, and thus we're well-positioned to deliver strong results for the remainder of the year.
Philip Boudreau: I'll now turn over the call to Phil.
Philip Boudreau: Thanks, Robert. As Mike mentioned earlier, please note that all references to sales growth rates, unless otherwise noted, are on an organic basis. Turning to our second quarter results, sales increased 7.4% on an organic basis and increased 9.3% when excluding COVID testing sales. Foreign exchange had an unfavorable year-over-year impact of 3.5% on second quarter sales. During the quarter, we saw the US dollar strength and versus several currencies, which resulted in a more unfavorable impact on sales compared to exchange rates at the time of our earnings call in April.
Philip P. Boudreau: Thanks, Robert. As Mike mentioned earlier, please note that all references to sales growth rates, unless otherwise noted, are on an organic... Turning to our second quarter results, sales increased 7.4% on an organic basis, increased 9.3% when excluding COVID test, and foreign exchange had an unfavorable year-over-year impact of 3.5% on second quarter sales. During the quarter, we saw the U.S. dollar strengthen versus several currencies, which resulted in a more unfavorable impact on sales compared to exchange rates at the time of our earnings call.
Speaker Change: I'll now turn it over to Colt to fill.
Colt: Thanks, Robert. As Mike mentioned earlier, please note that all references to sales growth rates, unless otherwise noted, are on an organic basis.
Colt: Turning to our second quarter results, sales increased 7.4% on an organic basis and increased 9.3% when excluding COVID testing sales.
Colt: Foreign exchange had an unfavorable year-over-year impact of 3.5% on second quarter sales.
Colt: During the quarter, we saw the U.S. dollar strengthen versus several currencies, which resulted in more unfavorable impact on sales compared to exchange rates at the time of our earnings call in April .
Philip Boudreau: Regarding other aspects of the P&L, the adjusted gross margin ratio was 56% of sales. Adjusted R&D was 6.3% of sales, and adjusted SGNA was 27.7% of sales in the second quarter. Lastly, our second quarter adjusted tax rate was 15%.
Philip P. Boudreau: Regarding other aspects of the P&L, the Adjusted Gross Margin Ratio was 56 percent of the total, adjusted R&D was 6.3% of sales, and adjusted SG&A was 27.7% of sales. Lastly, our second quarter adjusted tax rate was $15,000.
Colt: Regarding other aspects of the P&L, the adjusted gross margin ratio was 56% of sales.
Colt: Adjusted R&D was 6.3% of sales and adjusted SG&A was 27.7% of sales in the second quarter.
Colt: Lastly, our second quarter adjusted tax rate was 15 percent.
Philip Boudreau: Turning to our outlook for the full year, we now forecast full year adjusted earnings per share of $4.61 to $4.71, which represents an increase compared to the guidance range we provided in April. We also raised the midpoint of our guidance for organic sales growth. We now forecast organic sales growth excluding COVID testing sales to be in the range of 9.5% to 10%. Based on current rates, we expect exchange to have an unfavorable impact of more than 2.5% on full year reported sales, which includes an expected unfavorable impact of approximately 3% on third quarter reported sales.
Philip P. Boudreau: Turning to our outlook for the full year, we now forecast full-year adjusted earnings per share of $4.61 to $4.75, an increase compared to the guidance range we provided. We also raised the midpoint of our guidance for organic sales. We now forecast organic sales growth, excluding COVID, to be in the range of 9.5% to 10%. Based on current rates, we expect exchange to have an unfavorable impact of more than 2.5 percent on full-year reported sales, which includes an expected unfavorable impact of approximately 3% on third. Lastly, for the third quarter, we forecast adjusted earnings per share of $1.18 to $1.25.
Colt: Turning to our outlook for the full year, we now forecast full year adjusted earnings per share of $4.61 to $4.71.
Colt: which represents an increase compared to the guidance range we provided in April .
Colt: We also raised the midpoint of our guidance for organic sales growth.
Colt: We now forecast organic sales growth, excluding COVID testing sales, to be in the range of 9.5% to 10%.
Colt: Based on current rates, we expect exchange to have an unfavorable impact of more than 2.5% on full-year reported sales, which includes an expected unfavorable impact of approximately 3% on third-quarter reported sales.
Philip Boudreau: Lastly, for the third quarter, we forecast adjusted earnings per share of $1.18 to $1.22.
Colt: Lastly, for the third quarter, we forecast adjusted earnings per share of $1.18 to $1.22.
Operator: With that, we'll now open the call for questions.
Operator: With that, we'll now open the call for questions. Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone. You will then hear an automated message advising you that your hand is free.
Operator: Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star one on your telephone. You will then hear an automated message advising you that your hand is raised. To withdraw your question, please press star one one again. For optimal sound quality, we kindly ask that you please use your handset instead of your speaker phone when asking your question. And again, that's star one one to ask a question. Please stand by.
Speaker Change: With that, we'll now open the call for questions.
Operator: To withdraw your question, please press star one one again. For optimal sound quality, we kindly ask that you please use your handset instead of your speakerphone when asking your question. And again, that's star 11 to ask a question. Please stand by while we compile the Q&A roster. And our first question will come from Larry Biegelsen from Wells Fargo. Your line is now open.
Speaker Change: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1 1 on your telephone.
Speaker Change: You will then hear an automated message advising you that your hand is raised.
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Speaker Change: For optimal sound quality, we kindly ask that you please use your handset instead of your speakerphone when asking your question. And again, that's star 1-1 to ask a question. Please stand by while we compile the Q&A roster.
Operator: We compile the Q&A roster.
Lawrence Biegelsen: And our first question will come from Larry Beagelson from Wells Fargo. Your line is now open.
Speaker Change: And our first question will come from Larry Biegelsen from Wells Fargo. Your line is now open.
Lawrence Biegelsen: Good morning. Thanks for taking the question. And Robert, congratulations on a nice quarter. And thanks for your comments on the neck litigation. I'm wondering if you have anything to add on that.
Robert B. Ford: Good morning. Thanks for taking the question. And Robert, congratulations on a nice quarter, and thanks for your comments on the NEC litigation. I'm wondering if you have anything to add to that, Robert. I had one follow-up question. No, Larry, I think I said everything I said during my prepared comments.
Lawrence H. Biegelsen: Good morning. Thanks for taking the question and Robert congratulations on a nice quarter and thanks for your comments on the the neck litigation. I'm wondering if you have anything to add on that Robert I had one follow-up question.
Robert Ford: Robert, I had one follow-up question. No, Larry, I think I said everything. I said, Drew, my prepared comments.
Robert B. Ford: No, Larry, I think I said everything I said during my prepared comments. I guess the only add here was I think this is way overblown in terms of its impact.
Robert B. Ford: I guess the only thing I can add here is that I think this is way overblown in terms of its impact. And we are, obviously, working to defend our position and, you know, working with all the different stakeholders so that they are aware of the situation, the gravity of the situation as it progresses. But I've said all I had to say right now in my prepared comments, and, you know, if there's a need to kind of get further updates. All right, thanks. And separately, Robert, your EP business grew nicely in the second quarter, 17% in both the US and international. What drove that?
Robert Ford: I guess the only ad here is I think this is way overblown in terms of its impact. And we are working to, obviously, defend our position. And working with all the different stakeholders so that they are aware of the situation and the gravity of the situation as it progresses. But I said all I had to say right now in my prepared comments. And you know, if there's a need to kind of give further updates. we will.
Robert B. Ford: and we are, we're working to obviously defend our position.
Robert B. Ford: and, you know, working with all the different stakeholders so that they're aware of the situation, the gravity of the situation as it progresses. So, but I've said all I had to say right now in my prepared comments and, you know, if there's a need to kind of get further updates, we will.
Lawrence Biegelsen: All right, thanks. Separately, Robert, your EP business grew nicely in the second quarter, 17% in both the U.S. and international.
Robert B. Ford: All right, thanks. And separately, Robert, your EP business grew nicely in the second quarter, 17% in both the U.S. and international.
Robert B. Ford: You know, what are you seeing with PFA and the different geographies? And how are you thinking about the sustainability of that growth before Volt launches? Thank you. Sure. Well, I'm seeing what I thought I was going to see. It might be a little different from what some of you think you are going to see.
Robert Ford: What drove that? You know, what are you seeing with PFA and the different geographies? And how are you thinking about the sustainability of that growth before vote launches? Thank you.
Robert B. Ford: What drove that, you know, what are you seeing with PFA and the different geographies?
Speaker Change: and how are you thinking about the sustainability of that growth before Volt launches? Thank you.
Robert Ford: Sure. Well, I'm seeing what I thought I was going to see. It might be a little different from what some of you thought you were going to see. But what we've been seeing is obviously an increase in the market. So, you know, right now the market has accelerated; it seems to be growing above 20%. So, when you look at our 17%, it's lower than the market, but it's actually growing faster than what it was growing pre-pandemic or just after we had done the acquisition. So, we'll see if the, I mean, that growth is obviously in value.
Speaker Change: Sure. Well, I'm seeing what I thought I was going to see. It might be a little different from what some of you thought you were going to see. But what we've been seeing is obviously an increase in the market. So right now the market has accelerated, seems to be growing above 20 percent.
Robert B. Ford: But what we've been seeing is obviously an increase in the market. So right now, the market is accelerating, and it seems to be growing above 20 percent. So when you look at our 17 percent, it's it's lower than the market, but it's actually growing faster than what it was growing pre-pandemic or just after we had done the acquisition. So we'll see if the
Speaker Change: So when you look at our 17%, it's lower than the market, but it's actually growing faster than what it was growing pre-pandemic, or just after we had done the acquisition. So
Robert B. Ford: I mean, that growth is obviously in value. We'll see if the growth in procedures actually translates. We are actually in more procedures than we were in the past, given our mapping and our teams. But I think it's a little bit too early to say if the actual number of procedures is going to significantly increase. So the market is accelerating. But it's probably, I think, price right now with the introduction of this new product; it's predominantly being used in de novo procedures, atrial procedures. Right. And we think that's about a third of all ablation procedures, Larry. The other two thirds.
Robert Ford: We'll see if the growth in procedures actually translates. We are actually in more procedures than what we were in the past, given our mapping and our teams. But I think it's a little bit too early to say if the actual number of procedures is going to significantly increase. So, the market has accelerated, but it's probably, I think, price right now with the introduction of this new product.
Speaker Change: We'll see if the, we'll see, I mean that growth is obviously in value, we'll see if the...
Speaker Change: growth and procedures actually translates. We are actually in more procedures than what we were in the past, given our mapping and our teams.
Speaker Change: But I think it's a little bit too early to say if the actual number of procedures is going to significantly increase. So the market has accelerated.
Speaker Change: But it's predominantly, I think, price right now with the introduction of this new product.
Robert Ford: It's predominantly being used in denobo procedures, atrial procedures, right? And we think that's about a third of all ablation procedures, Larry. The other two thirds, we continue to see, you know, whether it's reduced, VTS, DT, ablations. In that case, we continue to see our app really being viewed as the better option for those procedures. We'll see how that's going to translate over time. But OUS, you know, the penetration is, you know, around 10-15%, and it's been pretty stable. From the point of view of mapping, you know, I think we haven't seen a real big change of what we saw during those first couple of months of launch in the last call.
Speaker Change: It's predominantly being used in de novo procedures, atrial procedures, right, and we think that's about a third of all ablation procedures, Larry. The other two-thirds, we continue to see, you know, whether it's re-do's, VT, SVT, ablations.
Robert B. Ford: We continue to see, you know, whether it reduces VT, SVT ablations. In that case, we continue to see our app really being viewed as the better option for those procedures. We'll see how that's going to translate over time. But, oh, US, you know, the penetration is around 10, 15 percent. It's been pretty stable from the point of view of mapping.
Speaker Change: In that case, we continue to see RF really being viewed as the better option for those procedures. We'll see how that's going to translate over time.
Speaker Change: But OUS
Speaker Change: You know, the penetration is...
Speaker Change: you know, is around 10-15% and it's been pretty stable.
Robert B. Ford: You know, I think we haven't seen a real big change from what we saw during those first couple of months of launch in the last call. So over 90 percent of cases here in the US are still being used for mapping. We've got a 50 share of those mapping cases. I don't try and, you know, look at different types of denominators to get to that market share, so I make sure my team just basically has the best access. And from what we're seeing, it's about 50 percent. RF catheters, similar to what we saw in the last call, are still being used in about 20 percent of the cases.
Speaker Change: from the point of view of mapping.
Speaker Change: You know, I think we haven't seen a real big change of what we saw, you know, during those first couple of months of launch in the last call, so over 90% of cases here in the U.S. are still being used as mapping.
Robert Ford: So, over 90% of cases here in the U.S. are still being used as mapping. We've got a 50 share of those mapping cases. I don't try and, you know, look at different types of denominators to get to that market share. So, I make sure my team just basically had the best access. And from what we're seeing, it's about 50%. Our app catheters, similar to what we saw in the last call, are still being used in about 20% of the PFA cases. So, we continue to see that. So, I think the net effect of all of this is the market's growing.
Speaker Change: a 50 share of those mapping cases. I don't try and...
Speaker Change: You know, look at different types of denominators to get to that market share. So I make sure my team just basically has the best access.
Speaker Change: And from what we're seeing, it's about 50%. RF catheters, similar to what we saw in the last call, still being used in about 20% of the PFA cases. So we continue to see that.
Robert B. Ford: We continue to see that. So I think the net effect of all of this is that the market is growing and it's accelerating.
Robert Ford: It's accelerating. We've got a strong position. You know, everything that we've talked about in the past about, you know, our opportunity with the mapping and all the other consumables is there. Our app still plays a role. It's still an effort before. You know, to look at 19, we're about 12%. 18 was about 14%. So, we're actually doing better now.
Speaker Change: So, I think the net effect of all of this is the market's growing, it's accelerating, we've got a strong position. You know, everything that we've talked about in the past about, you know, our opportunity with, you know, with the mapping and all the other consumables is there. You know, RF still plays a role, it's still an important role. And our business is actually growing faster than what it was growing before. You know, if you look at 19, we're about 12 percent, 18 was about 14 percent.
Robert B. Ford: We've got a strong position. Everything that we talked about in the past about, you know, our opportunity with the mapping and all the other consumables is there. RF still plays a role, is still an important role. And our business is actually growing faster than it was growing before. You know, if you look at 19, we're about 12 percent. Eighteen was about 14 percent.
Robert B. Ford: So we're actually doing better now. So I think that this is positive for the market, which is why we've invested heavily in our in our portfolio, which will you start to see hit the market in the in the, you know, I'd say next year, I'm going to try and kind of time the quarter here, but definitely next year. So I think this is good, and the teams have done an incredible job of executing the strategy that we laid out. So kudos to them. Thanks so much.
Robert Ford: So, I think that this is positive for the market, which is why we've invested heavily in our PFA portfolio, which we'll start to see hit the market in the, you know, I'd say next year. I'm not going to try and kind of time the quarter here, but definitely next year. So, I think this is good. And the team's done an incredible job at executing the strategy that we laid out. So, kudos to them.
Speaker Change: So, we're actually doing better now. So I think that this is positive for the market, which is why we've invested heavily in our PFA portfolio.
Speaker Change: which you'll start to see hit the market in the coming months.
Speaker Change: I'd say next year, I'm not going to try and kind of time the quarter here, but definitely next year. So I think this is good, and the teams have done an incredible job at executing the strategy that we laid out. So kudos to them.
Lawrence Biegelsen: Thank you so much. Thanks for the comprehensive answer.
Robert B. Ford: Thanks for the comprehensive answer. Thank you. Our next question will come from Travis Steed from B of A Securities. Your line is open.
Speaker Change: Thanks so much. Thanks for the comprehensive answer.
Travis Steed: Thank you. Our next question will come from Travis Steed from B of A Securities.
Speaker Change: Thank you.
Speaker Change: Our next question will come from Travis Steed from B of A Securities. Your line is open.
Robert Ford: Your line is open. Hey, congrats on the good quarter. I wanted to ask about structural heart really stood out this quarter; it's celebrated from last quarter. Disperse how much of that's on my flip recovery. You got tri-clip approved early. How much is coming in from some of the newer products like Amulet and Navator? Sure.
Robert B. Ford: Hey, congrats on the good quarter. I wanted to ask about StructuralHeart. It really stood out this quarter, accelerated from last quarter. Just curious how much of that's on MitraClip recovery. You got TriClip approved early.
Travis Lee Steed: Hey, congrats on the good quarter. I wanted to ask about StructuralHeart, really stood out this quarter, accelerated from last quarter. Just curious how much of that's on on MitraClip recovery, you got TriClip approved early, how much you're seeing from the TriClip side and and how much is coming in from some of the other newer products like Amulet and Abbottor.
Robert B. Ford: How much you're seeing from the TriClip side, and how much is coming in from some of the other newer products like Amulet and Abbottor? Sure. Obviously, Triclip was an important launch, you know, and helped accelerate the growth rate, Travis, but I think it's pretty broad-based here. I mean, if you look at Triclip, we were ready to go because we had certain built-in advantages in this area, right? We had the scale, we had the sales force, and the manufacturing capacity, so we were ready to go.
Robert Ford: Obviously, tri-clip was an important launch and helped accelerate the growth rate, Travis, but I think it's pretty broad-based here. If you look at tri-clip, we were ready to go because we had certain built-in advantages in this area. We had the scale, we had the sales force, the manufacturing capacity, so we were ready to go. I think from our estimate here, even though we launched a quarter after our competitor with their system, I think the repair device is already in twice as many accounts as the replacement system. So we had a natural kind of built-in advantage here as we went to the market.
Travis Lee Steed: Sure.
Speaker Change: Obviously, Triclip was an important launch, you know, and helped accelerate the growth rate, Travis, but I think it's pretty broad-based here. I mean, if you look at Triclip, we were ready to go.
Speaker Change: Because we had certain built-in advantages in this area, right? We had the scale, we had the sales force, the manufacturing capacity, so we were ready to go. I think from our estimates here, even though we launched a quarter after our competitor with their system, I think
Robert B. Ford: I think from our estimates here, even though we launched a quarter after our competitor with their system, I think the repair devices are already in twice as many accounts as the replacement system, so we had a natural kind of built-in advantage here as we went to the market, and the cases are doing very well. The feedback's been very positive, but I think it's really broad-based here.
Speaker Change: the repair devices is already in twice as many accounts as the replacement system. So we had a natural kind of built-in advantage here as we went to the market.
Robert Ford: And the cases are doing very well. The feedback's been very positive, but I think it's really broad-based here. Navator has done very well, both in international markets and in the U.S. And the value proposition is starting to gain more traction, great clinical profile, excellent hemodynamics. And that's driving a lot of opportunity for us in international and U.S. markets. We shared some data from our registry, from our Japan registry, and that great safety also. So that's doing very well. Amelette, we saw a really nice growth in the U.S. For Amelette, this quarter was about 45%. So that product is doing very well, and we're focusing here on continued what I would call penetration in same store sales.
Speaker Change: And the cases are doing very well, the feedback's been very positive, but I think it's really broad based here. Navitor has done very well, both in international markets and in the U.S.
Robert B. Ford: Navator has done very well, both in international markets and in the U.S., and, you know, the value proposition is starting to gain more traction, you know, great clinical profile, excellent hemodynamics, and that's driving a lot of opportunity for us in international and U.S. markets. We shared some data from our registry, from our Japan registry, and great safety also, so that's doing very well. Amulet, we saw really nice growth in the U.S. for Amulet this quarter of about 45%, so that product, you know, is doing very well, and, you know, we're focusing here on, you know, continued, you know, continued what I would call penetration in same-store sales, so we're about, you know, close to 20% in the accounts that we're in.
Speaker Change: And, you know, the value proposition is starting to gain more traction, you know, great clinical profile, excellent, you know, hemodynamics, and that's...
Speaker Change: That's driving a lot of opportunity for us.
Speaker Change: international and U.S. markets. We shared some data from our registry, from our JAPAN registry, and great safety also. So that's doing very well. Amulet, we saw really nice growth in the U.S. for Amulet. This quarter was about 45 percent.
Speaker Change: So that product, you know, is doing very well, and, you know, we're focusing here on, you know, continued
Speaker Change: continued what I would call penetration in same-store sales. So we're about close to 20 percent in the accounts that we're in.
Robert B. Ford: We're in about half of the market here in the U.S., so our opportunity here is to continue to expand the sales force and go to newer accounts, so that's going very well, too. MitraClip, I think we continue to see some, you know, some continued growth internationally. In the U.S., with competitive activity, that's kind of slowed down a little bit of the growth, but I think with MitraClip now coming into the market and gaining traction, we'll be able to provide a value proposition across, you know, both repair systems and drive there. So Structural Heart, the growth rate has accelerated from Q1, is doing very well, and I'd say it's There's work we have to do in MitraClip, but that's clear.
Robert Ford: So we're about close to 20% in the accounts that we're in. We're in about half of the market here in the U.S. So our opportunity here is to continue to expand sales force and go to newer accounts. So that's done some continued growth internationally in the U.S. with competitive activity.
Speaker Change: We're in about half of the market here in the U.S. so our opportunity here is to continue to expand the sales force and go to newer accounts.
Speaker Change: So that's done very well, too. MitraClip, I think we continue to see some, you know, some continued growth internationally in the U.S.
Robert Ford: That's kind of slowed down a little bit of the growth, but I think we'll try to put now coming into the market and gaining traction. We'll be able to provide a value proposition across both repair systems and drive there. So structural heart, the growth rate is accelerated from Q1, doing very well. And I'd say it's really across a full portfolio approach versus just really trying to sing it out. One product or one technology. There's work we have to do in my trickling, but that's that's clear. In the U.S., internationally, it's done very well, but all the other products that I talked about are doing very well in gaining market share and gaining adoption.
Speaker Change: With competitive activity, that's kind of slowed down a little bit of the growth, but I think with Triclip now coming into the market and gaining traction, we'll be able to provide a value proposition across both repair systems.
Speaker Change: and drive there. So, structural heart, the growth rate has accelerated from Q1, doing very well.
Speaker Change: And I'd say it's really across a full portfolio approach versus just really trying to sing it out, one product or one technology. There's work we have to do in microclique, that's clear. In the U.S., internationally, it's done very well. But all the other products that I've talked about are doing very well in gaining market share and gaining adoption. So that's why you saw structural hearts growth rate actually accelerate, and I continue to...
Robert B. Ford: In the U.S., internationally, it's done very well, but all the other products that I talked about are doing very well in gaining market share and gaining adoption, so that's why you saw Structural Heart's growth rate actually accelerate, and I continue to see that that's definitely going to be helpful for the rest of this year and beyond. And then on your sensor business, you know, how are you thinking about segmenting the market with lingo versus Rio? And how?
Robert Ford: So that's why you saw structural heart growth rate actually accelerate. And I continue to see that that's going to be definitely for the rest of this year and going... in the next year.
Speaker Change: see that that's going to be definitely for the rest of this year and going into next year.
Robert Ford: That's super helpful. And then on your sensor business, you know, how do you think you're about segmenting the market with Lingo versus Rio, and how do you think those markets are going to kind of develop over time, and you look at your core lead rate business, does anything to call it, and it changes in kind of US versus international market dynamics?
Speaker Change: That's super helpful. And then on your sensor business, you know, how are you thinking about segmenting the market with Lingo versus Rio, and how do you think those markets are going to kind of develop over time? And when you look at your core Libre business, is there anything to call it, any changes in kind of U.S. versus international market dynamics?
Robert B. Ford: How do you think those markets are going to kind of develop over time? And when you look at your core Libre business, anything to call it any changes in the kind of us versus international market dynamic? Well, you're trying to cover a lot of ground there with that question. You could probably spend a whole call going through all of that.
Robert Ford: Well, you're trying to cover a lot of ground there with that question. You could probably spend the whole call going through all of that. I think at its highest level, you know, lead rate continues to do very well. There's still a lot of growth opportunity. Obviously, the base of opportunity is the biggest one, and we're doing great progress over there, but even in the MDI segment, you know, there's still a lot of penetration to occur in the MDI segment. I think in the US, there's still about a third of multiple daily injectors that aren't using CGM, and international developed markets, it's around 50%.
Speaker Change: Well, you're trying to cover a lot of ground there with that question. You could probably spend a whole call going through all of that. I think at its highest level, Libre continues to do very well. There's still a lot of growth opportunity. Obviously, the Basel opportunity is the biggest one, and we're having great progress over there, but even in the MDI segment.
Robert B. Ford: I think at its highest level, you know, Libre continues to do very well. But there's still a lot of growth opportunity. Obviously, the basic opportunity is the biggest one, and we're making great progress over there. But even in the MDI segment, you know, there's still a lot of penetration to occur in the MDI segment. I think in the U.S., there's still about a third of multiple daily injectors that aren't using CGM and developed international markets. It's around 50 percent.
Speaker Change: You know, there's still a lot of penetration to occur in the MDI segment. I think in the U.S. there's still about a third of multiple daily injectors that aren't using CGM. In international developed markets, it's around 50 percent. So there's plenty of growth.
Robert Ford: So there's plenty of growth in Libre.
Robert B. Ford: So there's plenty of growth in Libre. Our strategy here with Lingo and Libre Rio is just really to, like, have a full portfolio and look at this as a platform where we can expand the use of the sensor technology across different types of diabetes populations but also, you know, what is probably the larger market, which is people that don't have diabetes. Right. And I think if you mean if you take right now, I would say, we're going to launch it here in the U.S., and we're going to start expanding globally, and we'll see what it looks like and, you know, what it takes to, you know, win there.
Robert Ford: Our strategy here with Lingo and Libre Rio is just really to have a full portfolio and look at this as a platform where we can expand the use of the sensor technology across different types of diabetes, populations, but also what is probably the larger market, which is people that don't have diabetes, right? And I think if you take right now, I would say, we're going to launch it here in the US and we're going to start expanding globally and we'll see how it looks like and what it takes to win there. But what I do know based on the UK experience is that it takes some time to educate and communicate with a patient population that, while excited about having new tools to drive healthier habits, they do need some time to understand its use.
Speaker Change: in Libre. Our strategy here with Lingo and Libre Rio is just really to like have a full portfolio and look at this as a platform where we can expand the use.
Speaker Change: of the sensor technology across, you know, different types of diabetes populations, but also, you know, what is probably the larger market, which is people that don't have diabetes, right? And I think if you...
Speaker Change: I mean even if you take, right now I would say we're going to launch it here in the U.S. and we're going to start expanding globally and we'll see how it looks like and what it takes to win there, but what I do know based on the U.K. experience is that
Robert B. Ford: But what I do know, based on the U.K. experience, is that, you know, it takes some time to educate and communicate with, you know, a patient population that, while excited about, you know, having new tools to drive healthier habits, they do need some time to understand its use. But I think it's a pretty big opportunity for us and one that we've disproportionately invested in to be able to get into this position.
Speaker Change: You know, it takes some time to educate and communicate with, you know, a patient population that while excited about, you know, having new tools to drive healthier habits, they do need some time to understand, you know, its use.
Robert Ford: But I think it's a pretty big opportunity for us and one that we disproportionately invested to be able to get into this position. I think if you take Lingo and you look at US and Western Europe, the adult population, you got about 400 million people in those markets. If you take a single digit penetration rate, a few sensors a year, and you're looking at a multibillion opportunity there, and we're not there yet. I think once we've got a better understanding of how this is going to work, we'll be better at forecasting it, but just at a high level and looking at it from a total adult population and relatively modest penetration rate, it's a pretty big opportunity.
Speaker Change: But I think it's a pretty big opportunity for us and one that we've disproportionately invested to be able to get into this position. I think if you take lingo and you look at U.S.
Robert B. Ford: I think if you take lingo and you look at the U.S. and Western Europe, the adult population there, you've got about 400 million people in those markets. If you take a single-digit penetration rate, a few sensors a year, you're looking at a multi-billion opportunity there. We're not there yet.
Speaker Change: and Western Europe , the adult population there, you've got about 400 million people in those markets. If you take a single-digit penetration rate, a few sensors a year, you're looking at a multi-billion opportunity there.
Robert B. Ford: I think once we've got better understanding of how this is going to work, we'll be better at forecasting it, but just at a high level and looking at it from, you know, a total adult population and relatively, I'd say, modest penetration rates, it's a pretty big opportunity. So, like I said in my comments, we've done this for a while since we launched internationally. And, you know, we've learned a lot, and we're going to bring that learning and experience here to the U.S. So, it's an exciting opportunity for us. Thanks, Robert. Thank you. And our next question will come from Robbie Marcus from J.P. Morgan. Your line is open.
Speaker Change: We're not there yet. I think once we've got better understanding of how this is going to work, we'll be better at forecasting it, but just at a high level and looking at it from, you know, a total adult population and, you know, relatively, I'd say, modest penetration rates. It's a pretty big opportunity, so.
Robert Ford: Like I said in my comments, we've done this for a while since we've launched internationally, and we've learned a lot, and we're going to bring that learning and experience here to the US. So it's an exciting opportunity for us.
Speaker Change: And like I said in my comments, we've done this for a while, since we've launched internationally. And you know, we've learned a lot. And we're going to bring that learning and experience here to the U.S. So it's an exciting opportunity for us.
Robbie Marcus: Thank you.
Robbie Marcus: Our next question will come from Robbie Marcus from JP Morgan.
Robert B. Ford: Thanks, Robert.
Robert B. Ford: Thank you.
Robbie Marcus: Your line is open. Great. Thanks.
Robert B. Ford: And our next question will come from Robbie Marcus from J.P. Morgan. Your line is open.
Robert B. Ford: Oh, great. Thanks. I'll add my congratulations on a good quarter. Two for me, two product questions. Maybe just to follow up on the Diabetes Libre question.
Robert Ford: I'll add my congratulations on a good quarter. Two for me, two product questions, maybe just to follow up on the diabetes Libre question. Robert, how are you thinking about sort of a holistic drive of advertising and word of mouth for these new products, especially as we move into the OTC versus generating data, and how much will be necessary? Because I think back five years ago and where we are today was probably not in most people's forecasts, and with the amount of data we have showing in non-diabetics how beneficial CGM is. So how are you thinking about you know, data versus not data, insurance coverage versus not insurance coverage, and how do the markets look one way or the other?
Robert Justin Marcus: Oh, great. Thanks. I'll add my congratulations on a good quarter.
Robert Justin Marcus: Two for me, two product questions. Maybe just to follow up on the
Robert B. Ford: Robert, how are you thinking about sort of a holistic drive of advertising and word of mouth for these new products, especially as we move into the OTC, versus generating data, and how much will be necessary? Because I just think back five years ago, and where we are today was probably not in most people's forecasts, and with the amount of data we have showing in non-diabetics, how beneficial CGM is. So, what are you thinking about? you know, data versus not data, insurance coverage versus not insurance coverage, and how do the markets look one way or the other? Yeah, I don't think so.
Speaker Change: the diabetes leebrake question.
Speaker Change: Robert, how are you thinking about sort of a holistic drive of advertising and word of mouth?
Speaker Change: for these new products, especially as we move into the OTC versus generating data, and how much will be necessary, because I just, I think back five years ago and
Speaker Change: You know, where we are today was probably not in most people's forecasts, and with the amount of data we have showing in non-diabetics, how beneficial CGM is. So how are you thinking about...
Speaker Change: You know, data versus not data, insurance coverage versus not insurance coverage, and how do the markets look one way or the other?
Robert B. Ford: From an insurance coverage perspective, I mean, if you're referring to lingo specifically for non-diabetes, you know, I think it's going to be, you know, I don't think that that's going to be something that we're building a forecast for, assuming, you know, reimbursement coverage over it. Even though I agree with you, there's nice data that shows that people that don't have And it helps sustain behavior modification, right?
Robert Ford: Yeah, I don't think so. From an insurance coverage perspective, I mean, if you're referring to lingo specifically for non-diabetes, you know, I think it's going to be, you know, I don't think that that's going to be something that we're building a forecast, assuming, you know, reimbursement coverage over it. Even though I agree with you, you know, there's nice data that shows that people that don't have diabetes can benefit from this, Robbie, and it helps sustain behavior modification, right? I mean, ultimately, this is what it is, right? It's using data to be able to kind of, you know, help people that want to stay healthy, give them more information, and ensure that they can refine their habits or change habits.
Speaker Change: Yeah, I don't think so. From an insurance coverage perspective, I mean, if you're referring to lingo specifically for non-diabetes, you know, I think it's going to be...
Robert Justin Marcus: that people that don't have diabetes can benefit from this, Robbie. And it helps sustain behavior modification, right? I mean, ultimately that this is what it is, right? It's using data to be able to kind of, you know,
Robert B. Ford: I mean, ultimately, this is what it is, right? It's using data to be able to kind of, you know, help people that wanna stay healthy, give them more information, and ensure that they can refine their habits or change their habits. So I think that that is, you know, at the core there, it's really communicating directly with consumers. If you think about the diabetes space and how CGM, you know, uptake, you need, you know, both communication with the patient and, obviously, communication with the physician. I think that that's still important for non-diabetes.
Robert Justin Marcus: help people that want to stay healthy, give them more information, and ensure that they can refine their habits or change habits.
Robert Ford: So, I think that that is, you know, at the core there, it's really communicating directly with consumers. If you think about the diabetes space and how CGM, you know, uptake, you needed, you know, both a communication with the patient, and you needed obviously a communication, you know, with the physician. I think that that's still important for the non-diabetes. I think that some people will want, you know, to have some sort of, you know, recognition from the health care professional that this might be a good investment to do in, right? And the key thing here is just the utilization, right?
Robert Justin Marcus: So, I think that that is, you know, at the core there, it's really communicating directly with consumers. If you think about the diabetes space and how CGM...
Robert Justin Marcus: you know, uptake, you needed, you know, both a communication with the patient and you needed obviously a communication.
Robert B. Ford: I think that some people will want, you know, to have some sort of, you know, recognition from the healthcare professional that this might be a good investment to make, right? And the key thing here is just utilization, right? I don't think you're gonna see people that don't have diabetes use this, you know, a sensor 365 days a year.
Robert Justin Marcus: with the physician. I think that that's still important for the non-diabetics. I think that some people will want to have some sort of...
Robert Justin Marcus: recognition from the healthcare professional that this might be a good investment to do in, right? And the key thing here is just the utilization, right? I don't think you're going to see...
Robert Ford: I don't think you're going to see, you know, people that don't have diabetes use this, you know, a sensor at 365 days a year. But, like I said, if they're using it, you know, a couple of times a year, they're still a benefit. And we'll be generating data on this over time. I think that's going to be important to generate data. Even if it's not to communicate the payers to get reimbursed, but even if it's to communicate the physicians, you know, the primary care and the direct consumers that there's a value here doing that. Yeah, I think the key thing here is personalization.
Robert B. Ford: But like I said, if they're using it, you know, a couple of times a year, there's still a benefit. And we'll be generating data on this over time. I think it's gonna be important to generate data, even if it's not to communicate to payers to get reimbursement, but even if it's to communicate to physicians, you know, primary care, and the direct consumers that there's a value here of doing that. And I think the key thing here is personalization, and how do you personalize information, data, and coaching.
Robert Justin Marcus: You know, people that don't have diabetes use this, you know, a sensor 365 days a year. But like I said, if they're using it, you know, a couple times a year, there's still a benefit.
Robert Justin Marcus: And we'll be generating data on this over time. I think it's going to be important to generate data, even if it's not to communicate to payers to get reimbursement, but even if it's to communicate to the physicians, you know, the primary care and the direct consumers, that there's a value here of doing that. I think the key thing here is personalization.
Robert Ford: And how do you personalize information and the data and the coaching. So the strategy here is, yeah, you're going to have to use TV to be able to communicate. But I don't think it's, I don't think, given our experience here, that you can just go on TV and, you know, blast TV advertising and you'll get this, you know, big uptake. And, you know, you're going to have to do some on-the-ground kind of gorilla marketing, let's call it like that together with TV advertising to really be able to open up the market and then sustain it, right, and sustain its use.
Robert Justin Marcus: and how do you personalize information and the data and the coaching.
Robert B. Ford: So the strategy here is, yeah, you're going to have to use TV to be able to communicate, but I don't think it's – I don't think, given our experience here, that you can just go on TV and blast TV advertising and you'll get this big uptake, and you're going to have to do some on-the-ground kind of guerrilla marketing, let's call it that, together with TV advertising So that's how we're thinking about it, and that's why we have a separate team completely removed from the Libre and the diabetes team, so they're focusing on how to execute this strategy.
Robert Justin Marcus: So, the strategy here is, yeah, you're going to have to use TV to be able to communicate, but I don't think it's – I don't think, given our experience here, that you can just go on TV and, you know, blast TV advertising and you'll get this, you know, big uptake and, you know, you're going to have to do some –
Robert Justin Marcus: some on-the-ground kind of guerrilla marketing, let's call it like that, together with TV advertising to really be able to open up the market and then sustain it, right, and sustain its use.
Robert Ford: So, so that's how we're thinking about it. And that's why, you know, we have a separate team completely removed from the Libre and the diabetes team that they're focusing on, how, you know, how they execute this strategy. I think it's more of a kind of S curve growth versus kind of an out of the gates. I know that everybody's focused on what the sales are in the second half and, you know, whether it's me or the competitor. I think the bigger picture here is like, hey, there's a really big opportunity here. And if we do it right, it's an opportunity that will be more than a flash in the fine prime.
Robert Justin Marcus: So, that's how we're thinking about it, and that's why, you know, we have a separate team completely removed from the Libre and the diabetes team, that they're focusing on how to execute this strategy.
Robert B. Ford: I think it's more of a kind of S-curve growth versus kind of out-of-the-gates growth. I know that everybody's focused on what the sales are in the second half, and whether it's me or the competitor, I think the bigger picture here is like, hey, there's a really big opportunity here, and if we do it right, it's an opportunity that will be more than a flash It'll just – it'll sustain itself, and it could become standard. Great, Culler. One more for me.
Robert Justin Marcus: I think it's more of a kind of S-curve growth versus kind of an out-of-the-gates.
Robert Justin Marcus: I know that everybody's focused on what the sales are in the second half. And whether it's me or the competitor, I think the bigger picture here is like, hey, there's a really big opportunity here. And if we do it right, it's an opportunity that will be more than a flash in the fine print, it'll sustain itself and it could become standard, so.
Robert Ford: It'll just, it'll sustain itself and it could become standard.
Robert B. Ford: VEER and the leadless pacing, particularly the dual chamber now with coverage, I think is an underappreciated opportunity. Maybe, if you don't mind, spend a minute there explaining how you see this market evolving and what's the early feedback on the launch so far. Thanks.
Robbie Marcus: Great color. One more for me, Vier and the leadless pacing, particularly the dual chamber now with coverage, I think is an underappreciated opportunity.
Culler: Great, Culler. One more for me. VEER and the leadless pacing, particularly the dual chamber now with coverage, I think is an underappreciated opportunity. Maybe, if you don't mind, spend a minute there, how you see this market evolving and what's the early feedback on the launch so far? Thanks.
Robert Ford: Maybe if you don't mind, spend a minute there, how you see this market evolving and what's the early feedback on the launch so far. Thanks. Yeah, I mean, ultimately I think this whole lead list is going to change the growth trajectory of our CRM business, right? If you look at CRM, it grew 7%. Last year, it's grown 7%. The first half of this year is previously a flat business, right? And we've been doing that, you know, I would say with good success on dual, but I wouldn't say that it's, you know, at full cycle yet because one of the things that we're working on is ensuring that you know, we're doing the training and we're getting physicians comfortable with the procedure, right?
Robert B. Ford: Yeah, I mean, ultimately, I think this whole lead list is going to change the growth trajectory of our CRM business, right? If you look at CRM, it grew seven percent last year. It's grown seven percent the first half of this year. It was previously a flat business.
Speaker Change: Yeah, I mean, ultimately, I think this whole lead list is going to change the growth trajectory of our CRM business, right? If you look at CRM, it grew 7%.
Robert B. Ford: Right. And we've been doing that, you know, I would say with good success on dual. But I wouldn't say that it's, you know, at full cycle yet because one of the things that we're working on is ensuring that, you know, we're doing the training, and we're getting physicians comfortable with the procedure. It's a completely different procedure versus what, you know, the entire industry has been accustomed to. You know, we're using mapping. We're going into the groin versus doing pockets above the chest.
Speaker Change: Last year it's grown seven percent, the first half of this year it was previously a flat business, right, and we've been doing that.
Speaker Change: You know, I would say, with good success on Doodle, but I wouldn't say that it's, you know, at full cycle yet, because one of the things that we're working on is ensuring that
Robert Ford: It's a completely different procedure versus what, you know, the entire industry's been accustomed to. You know, we're using mapping; we're going into the growing versus doing pockets above the chest. So, so it is a little different, and we're focusing on that. But that being said, you know, we've been able to accelerate the growth rate just with a single chamber. I think right now after two years, we've probably captured about 50 share, but to your point, the bigger opportunities in dual, and the procedures are going great. And once physicians get, you know, several under their, you know, experience with several of them, you know, they're talking about, okay, how do we accelerate this?
Speaker Change: You know, we're doing the training, and we're getting physicians comfortable with the procedure, right? It's a completely different procedure versus what, you know, the entire industry has been accustomed to. You know, we're using mapping. We're going into the groin versus doing pockets above the chest.
Robert B. Ford: So, it is a little different, and we're focusing on that. But that being said, you know, we've been able to accelerate the growth rate just with a single chamber. I think right now, after two years, we probably have about 50 percent share. But to your point, bigger opportunities in dual, and the procedures are going great. And once physicians get up, you know, several based on their experience with several of them, you know, they're talking about, OK, how do we accelerate this and an opportunity to drive more patients into it, you know.
Speaker Change: So it is a little different, and we're focusing on that. But that being said, you know, we've been able to accelerate the growth rate just with a single chamber. I think right now, after two years, we've probably captured about 50 share. But to your point, the bigger opportunity is in dual, and the procedures are going great.
Speaker Change: And once physicians get a, you know, several under their, you know, experience with several of them...
Robert Ford: And an opportunity to drive more patients into it, you know. But we want to make sure we've got a pretty large base of well-trained, great outcomes physicians across the United States. Listen, this is a $3 billion global segment, and it really hasn't been much innovation in it. And here you have something that's truly unique and differentiated. And I'd say once we feel that we've gotten to a point where we feel good about the capabilities and the training and the amount of physician coverage that exists, you know, this is definitely a product that I can see going a little bit more mainstream, having more direct consumer accumulated.
Speaker Change: You know, they're talking about, okay, how do we accelerate this and an opportunity to drive more patients into it, you know. But we want to make sure we've got a pretty large base of well-trained, great outcomes physicians.
Robert B. Ford: But we want to make sure we've got a pretty large base of well-trained and great outcomes physicians across the United States. Listen, this is a $3 billion global segment, and there really hasn't been much innovation in it. And here you have something that's truly unique and differentiated.
Speaker Change: across the United States.
Speaker Change: Listen, this is a three billion dollar global segment and there really hasn't been much innovation in it and and here you have something That's truly unique and differentiated
Robert B. Ford: And I'd say once we feel that we've gotten to a point where we feel good about the capabilities and the training and the amount of physician coverage that exists, you know, this is definitely a product that I can see going a little bit more mainstream, having more direct consumer communications because of the value proposition it affords them. So I think this is a great opportunity for us. It might be underappreciated, you know, in the market, but it is definitely appreciated amongst me and the device team and the CRM team. And, you know, we're working hard to get to that point where we can really let it go strong. Great, thank you very much.
Speaker Change: And I'd say once we feel that we've gotten to a point where we feel good about the capabilities and the training and the amount of physician coverage that exists, you know, this is definitely a product that I can see.
Speaker Change: going a little bit more mainstream, having more direct consumer communications.
Robert Ford: So, I think this is a great opportunity for us. It might be underappreciated, you know, with the market, but it is definitely appreciated amongst me and the device team and the CRM team. And, you know, we're working hard to get to that point where you can really let it go strong. So, great.
Speaker Change: because of the value proposition it affords them. So, I think this is a great opportunity for us. It might be underappreciated, you know, with the market, but it is definitely appreciated amongst me and the device team and the CRM team. And, you know, we're working hard to get to that point where we can really let it go strong.
Robert Ford: Thank you very much. Thank you.
Speaker Change: Great. Thank you very much.
Josh Jennings: And our next question will come from Josh Jennings from PD Talent.
Robert B. Ford: Thank you. And our next question will come from Josh Jennings from TD Cowen. Your line is now open.
Speaker Change: Thank you.
Josh Jennings: Your line is now open. Good morning. Thanks for taking the questions. Robert, I wanted to just start asking about just kind of this multi-year trajectory for Abbott. You've been delivered top-tier organic revenue growth performances over the last two years, and potentially have a two-year double-digit stack comp next year. But I think the team has been publicly stating that potentially the business could outpace pre-pandemic levels, which in that 78% range. I mean, during this call, you've put forward a lot that supports that type of trajectory, but maybe just to reiterate your confidence level there.
Speaker Change: And our next question will come from Josh Jennings from TD Cowen. Your line is now open.
Robert B. Ford: Good morning, thanks for taking the questions. Robert, I wanted to just start asking about just kind of this multi-year trajectory for Abbott. You've been delivering top-tier organic revenue growth performances over the last two years and potentially could have a double-digit stack comp next year. But I think the team has been publicly stating that the business could potentially outpace pre-pandemic levels, which are in that 7 to 8% range. I think during this call, you've put forward a lot that supports that type of trajectory, but maybe just to reiterate your confidence level there, and is this kind of outpacing pre-pandemic levels over the medium term, dependent on M&A, or is this the core business with internal development programs that's really going to drive this top-tier growth out over the next couple of years? Is that the attempt to get to the 2025 kind of question
Joshua Thomas Jennings: Good morning. Thanks for taking the questions. Robert, I wanted to just start asking about
Speaker Change: Just kind of this multi-year
Joshua Thomas Jennings: trajectory for Abbott. You've been delivering top-tier organic revenue growth performances over the last two years and potentially have a two-year double-digit stack comp next year.
Speaker Change: But I think the team has been publicly stating that potentially the business could outpace pre-pandemic levels, which in that 7% to 8% range.
Speaker Change: I think during this call, you've put forward a lot that supports that type of trajectory, but maybe just to...
Robert Ford: And is this kind of outpacing of pre-pandemic levels over the medium term, depending on M&A, or is this the core business with internal development programs that's really going to drive this top-tier growth out over the next couple of years?
Speaker Change: Reiterate your confidence level there, and is this kind of outpacing the pre-pandemic levels over the medium term depending on M&A, or is this the core business with internal development programs that's really going to drive this top-tier growth out over the next couple of years?
Robert Ford: Is that the attempt to get to the 2025 kind of question? I'd say, we've been saying that we made investments during COVID to accelerate the company, make it stronger, build our portfolios so we could accelerate the growth, right? If you look at the last six quarters, we've been delivering top tier high single digit, double digit growth, and this is on a company that's doing 40 plus billion dollars of revenue. So I think that's pretty impressive. If you look at our MedTech portfolio, it was the fastest growing MedTech portfolio last year, fastest growing in the first quarter of this year. We'll see what happens this second quarter.
Robert B. Ford: I'd say, listen. We've been saying that we made investments during COVID to accelerate the company, make it stronger, build our portfolio so we could accelerate growth, right? If you look at the last six quarters, we've been delivering top-tier, high single-digit, double-digit growth. And this is on a company that's doing 40 plus billion dollars in revenue. So I think that's pretty impressive. If you look at our MedTech portfolio, it was the fastest growing MedTech portfolio last year and the fastest growing in the first quarter of this year. We'll see what happens in the second quarter.
Speaker Change: Was that the attempt to get to the 2025 kind of question?
Speaker Change: I'd say, listen, we've been saying that we made investments during COVID.
Speaker Change: to accelerate the company, make it stronger, build our portfolio so we could accelerate the growth, right? If you look at the last six quarters, we've been delivering top tier, high single digit, double digit growth. And this is on a company that's doing 40 plus billion dollars of revenue. So I think that's pretty impressive. If you look at our MedTech portfolio, it was the fastest growing MedTech portfolio last year. The fastest growing in the first quarter of this year. We'll see what happens this second quarter. But we've positioned the company to be able to deliver this. And do I think that
Robert Ford: But we've positioned the company to be able to deliver this, and do I think that we can continue to deliver this top tier performance throughout this year and to next year? Yeah, I absolutely do, because of what we've built and then just the evidence in the proof points that we've been able to reliably and sustainably deliver that. So, yeah, we feel good about our ability. The markets that we're participating in are attractive, so there are markets that we lead, and when those markets grow like our leadership benefits, there are markets that are attractive, that we're entering, and there's plenty of opportunity for markets to regain, and there are markets that are attractive that we're building, and there's no real clinical opportunity, or there's a clinical opportunity for our products that we're developing to come in there.
Robert B. Ford: But we positioned the company to be able to deliver this. And do I think that we can continue to deliver this top-tier performance throughout this year and into next year? Yeah, I absolutely do.
Speaker Change: you know, we can continue to deliver this top tier performance.
Speaker Change: throughout this year and into next year, yeah, I absolutely do, because of, one, what we've built, and then just the evidence and the proof points that we've been able to reliably and sustainably deliver that. So yeah, we feel good about our ability. The markets that we're participating in are attractive.
Robert B. Ford: Because of one, what we've built, and then just the evidence and the proof points that we've been able to reliably and sustainably deliver that. So yeah, we feel good about our ability. The markets that we're participating in are attractive, and so there are markets that we lead. And when those markets grow, like our leadership benefits, there are markets that are attractive that we're entering, and there's plenty of opportunity for market share gain. And there are markets that are attractive that we're building, and there's no real clinical opportunity, or there is a clinical opportunity for our products that we're developing to come into those.
Robert B. Ford: So as we build those markets, they become attractive, and our position gets solidified. And I think that framework applies to all of them. All four of our business units have opportunities across those three frameworks. On the M&A front, yeah, if we're able to find an asset that makes sense strategically to us, makes sense financially, that could add even further to that growth, then yeah, we've got the balance sheet to be able to do that.
Speaker Change: So, there are markets that we lead, and when those markets grow, like our leadership benefits, there are markets that are attractive, that we're entering, and there's plenty of opportunity for market share gain, and there are markets that are attractive that we're building, and there's no real clinical opportunity, or there's a clinical opportunity for our products that we're developing to come in there, so as we build those markets, they become attractive and our position gets solidified, and I think that...
Robert Ford: So as we build those markets, that they become attractive and our position gets solidified, and I think that framework applies to all of all four of our business units have opportunities across those three frameworks.
Speaker Change: framework applies to all of all four of our business units have opportunities across that those three frameworks.
Robert Ford: On the M&A front, if we're able to find an asset that makes sense strategically to us, makes sense financially, that could add even further to that growth end, and we've got the balance sheet to be able to do that. So it's not dependent, as I told you; it's really focused on your organic side to be able to deliver this top-tier growth.
Speaker Change: On the M&A front, yeah, if we're able to, you know, find an asset that, you know, makes sense strategically to us, makes sense financially, that could add even further to that growth then, yeah, we've got the balance sheet to be able to do that, so.
Robert B. Ford: But it's not dependent, as I told you; it's really focused on the organic side to be able to deliver this top-tier growth. Understandable, and thanks for that answer. And another kind of high-level question you probably receive regularly, but just wanted to ask you, it's our understanding as well that your team, the board, every year, at least once a year, maybe multiple times a year, considers the strategic fit of the four major business units for Abbott and maybe just to get an update on your thoughts on the business combinations and the potential for spins down the line. Thanks a lot.
Speaker Change: But it's not dependent, as I told you, it's really focused on the organic side to be able to deliver this top-tier growth.
Robert Ford: Understood, and thanks for that answer.
Robert Ford: And another kind of high-level question, you probably received regularly, but just wanted, it's our understanding as well that I'm your team, the board every year at least once a year, maybe multiple times a year, is just considering the strategic fit of the four major business units for Abbott, and maybe just to get an update on your thoughts on the business combinations, and the potential for spins down the line. Thanks a lot. Well, we look at our portfolio on an ongoing basis. I don't think there's like this one moment in the year that we do it.
Speaker Change: Understood, and thanks for that answer. And another kind of high-level question you probably receive regularly, but just wanted, it's our understanding as well, that your team, the board,
Speaker Change: every year, at least once a year, maybe multiple times a year, is just considering the strategic fit of the four major business units for Abbott and maybe just to get an update on your thoughts on the business combinations and the potential for spins down the line. Thanks a lot.
Robert B. Ford: Well, we, you know, we look at our portfolio on an ongoing basis. I don't think there's like this one moment in the year that we do it. We do it on an ongoing basis, and the company has a history of ensuring that, you know, the portfolio that is assembled is not only delivering value to patients and governments and healthcare systems, but it's also delivering value to our shareholders. And we historically haven't shied away from asking ourselves the questions and answering those questions.
Speaker Change: Well, we, you know, we look at our portfolio on an ongoing basis. I don't think there's, like, this one moment in the year that we do it. We're doing it on an ongoing basis. And the company has a history of ensuring that, you know, the portfolio that is assembled is not only delivering value to patients and...
Robert Ford: We're doing it on an ongoing basis, and the company has a history of ensuring that the portfolio that it's assembled is not only delivering value to patients and governments and healthcare systems, but it's also delivering value to our shareholders. And we historically have, you know, haven't shied away from asking ourselves questions and answering those questions, and if there's an opportunity to create value through addition or through subtraction, then the company has shown that it's ready to do that. I think the two fundamental questions about that are, is there an opportunity to create value for shareholders, and is there somebody that could do better with our businesses?
Speaker Change: and government and health care systems, but it's also delivering value to our shareholders.
Speaker Change: And we historically have, you know, haven't shied away from, you know, from asking ourselves questions and answering those questions. And if there's an opportunity to create value through addition or through subtraction, then the company has shown that it's ready to do that. I think the two fundamental questions about that is, you know, is there an opportunity to create value for shareholders?
Robert B. Ford: And if there's an opportunity to create value through addition or through subtraction, then the company has shown that it's ready to do that. I think the two fundamental questions about that are, you know, is there an opportunity to create value for shareholders? And, you know, is there, is there, is there somebody that could do better with, you know, our businesses?
Robert Ford: And right now, you look at what we're doing with our businesses. We're performing at the highest level across all of the four segments. We'll see what happens during this earning season here, but I feel very good about the team and what they're doing. Obviously, there are areas that we could always do better, and we focus on that. But at the highest level, all four of our sectors have been delivering outstanding growth, market-leading growth, and, quite frankly, innovating and fulfilling our purpose on a mission, which is to help people live, help your lives. So I like the diversity; the diversity provides both defense and offense capabilities, and as long as you're managing them within each one of their segments, allocating capital that is a proportion that to their growth and their industry, and we spend a lot of time managing all four segments, then I think we're doing a good job at running them.
Speaker Change: and you know is there is there is there somebody that could do better with you know with our businesses and right now you look at what we're doing with our businesses.
Speaker Change: We're performing at the highest level across all of the four segments. You know, we'll see what happens during this earnings season here, but I feel very good about the team and what they're doing. Obviously, there are areas that we could always do better, and we focus on that, but at the highest level, all four of our sectors have been delivering outstanding growth.
Robert B. Ford: And right now, you look at what we're doing with our businesses; we're performing at the highest level across all of the four segments. You know, we'll see what happens during this earnings season here, but I feel very good about the team and what they're doing. Obviously, there are areas that we could always do better, and we focus on that. But at the highest level, all four of our sectors have been delivering outstanding growth, market-leading growth, and, quite frankly, innovating and fulfilling our purpose and our mission, which is to help people live healthier lives. So, I like the diversity.
Speaker Change: market-leading growth and quite frankly innovating and fulfilling our purpose and our mission which is to help people live healthier lives. So I like the diversity. The diversity provides you know both defense and offense capabilities.
Robert B. Ford: The diversity provides, you know, both defense and offense capabilities. And as long as you're managing them within each one of their segments, allocating capital that is proportionate to, you know, their growth and their industry, and we spend a lot of time managing all four segments, then, you know, I think we're doing a good job running them. So, yeah. Great, thanks a lot.
Speaker Change: And as long as you're managing them within each one of their segments, allocating capital that is proportionate to, you know, their growth and their industry, and we spend a lot of time managing all four segments, then, you know, I think we're doing a good job at running them.
Robert Ford: So yeah. Great.
David Roman: Thanks a lot. Thank you.
Speaker Change: So, um...
Speaker Change: Yeah.
Speaker Change: Great, thanks a lot.
David Roman: And our next question will come from David Roman from Goldman Tax. The line is open. Thank you and good morning, everybody. I was hoping to ask one question on the PNL side and one on the capital allocation side.
Robert B. Ford: Thank you. And our next question will come from David Roman of Goldman Sachs. Your line is open.
Speaker Change: Thank you.
Speaker Change: And our next question will come from David Roman from Goldman Sachs. Your line is open.
David Harrison Roman: Thank you and good morning, everybody. I was hoping to ask one question on the P&L side and one on the capital allocation side. Maybe I'll start with the P&L here and kind of look at the guidance here for the back half of the year. Our math implies it's something like 100 basis points plus of year-over-year operating margin expansion and about 9% EPS growth at the midpoint of the range. Can you maybe talk through some of the drivers that underpin that margin expansion on a year-over-year basis?
David Roman: Thank you and good morning everybody. I was hoping to ask one question on the P&L side and one on the capital allocation side.
David Roman: Maybe I'll start with the PNL here. Kind of look at the guidance here for the back after the year. Our math implies it's something like a hundred basis points plus of your operating margin expansion and about nine percent EPS growth at the midpoint of the range. Can you maybe talk through some of the drivers that underpin that margin expansion on the your basis? Obviously, we saw a turn here in Q2 versus what we saw in Q1, but maybe walk us through some of the drivers that get to that improved margin and earnings growth performance in the back half of the year.
David Roman: Maybe I'll start with the P&L here. Kind of look at the guidance here for the back half of the year. Our math implies it's something like 100 basis points plus of your operating margin expansion.
David Roman: at about 9% EPS growth at the midpoint of the range.
Speaker Change: Can you maybe talk through some of the drivers that underpin that margin expansion on a year-over-year basis? Obviously, we saw a turn here in Q2 versus what we saw in Q1, but maybe walk us through some of the drivers that get to that improved margin and earnings growth performance in the back half of the year.
Philip Boudreau: So I'll have Phil take that. Yeah, good morning, David.
David Harrison Roman: Obviously, we saw a turn here in Q2 versus what we saw in Q1, but maybe you could walk us through some of the drivers that got to that improved margin and earnings growth performance in the back half of the year. Sure, I'll let Bill take that. Yeah, good morning, David. Good morning, Bill.
Philip P. Boudreau: You know, Robert touched on some of the opening comments here on some of that expansion already this year. And, you know, we're in a pretty unique position relative to some of our peers in terms of our operating margin profile, and we're already back to pre-pandemic levels. And we did that strategically through managing spend through the ups and downs of COVID testing. As we talked earlier this year, Q1 was really the last big comp on sort of... COVID testing impacts on sales and profiles.
Philip Boudreau: You know, Robert wanted to open a comment here on some of that expansion already this year. And you know, we're in a pretty unique position relative to some of our peers in terms of our margin profile that we're already back to pre-pandemic levels. And we did that strategically through managing spend through the ups and downs of COVID testing. And as we talked earlier this year, Q1 was really the last big comp on sort of COVID testing impacts on sales and profiles. With respect to margin expansion and gross margin in particular, you know, the guidance for the year is around 75 basis points, as you highlight some progress here and more to go.
Speaker Change: For all that, they'll take that.
Bill: Yeah, good morning, David. You know, Robert touched on some of the opening comments here on some of that expansion already this year. And, you know, we're in a pretty unique position relative to some of our peers in terms of our op margin profile that we're already back to pre-pandemic levels.
Speaker Change: And we did that strategically through managing spend, through the ups and downs of COVID testing. And as we talked earlier this year, Q1 was really the last big comp on sort of COVID testing impacts on sales and profiles.
Philip P. Boudreau: With respect to margin expansion and gross margin, in particular, you know, the guidance for the year is around 75 basis points, as you highlight some progress here and more to go, but the trajectory is there. We're focused on the things that we can control and execute on, and in particular, some of this great portfolio contribution from our sales top line performance, particularly in accretive businesses, is a contributor here and one that we anticipate will continue to expand here throughout the year.
Speaker Change: With respect to margin expansion and gross margin in particular, you know, the guidance for the year is around 75 basis points as you highlight some progress here and more to go, but the trajectory is there.
Philip Boudreau: But the trajectory is there. We're focused on the things that we can control and execute on. And in particular, some of this great portfolio contribution from our sales top line performance, particularly in a creative business, is a contributor here and one that we anticipate will continue to expand here throughout the year.
Speaker Change: We're focused on the things that we can control and execute on, and in particular, some of this great portfolio contribution from our sales top-line performance, particularly in accretive businesses.
Speaker Change: is a contributor here and one that we anticipate will continue to expand here throughout the year.
Philip Boudreau: We have dedicated teams in each one of our businesses focus solely on gross margin improvement, productivity yield improvements, cost reductions, innovation that brings accretion to the portfolio. All of those elements are contributors here, quarter and quarter out, and continue to contribute through the rest of the year.
Philip P. Boudreau: We have dedicated teams in each one of our businesses focused solely on gross margin improvement, productivity, yield improvements, cost reduction, and innovation that brings accretion to the portfolio. All of those elements are contributors here, quarter in and quarter out. And then we also have elements, we've talked about some of the cycles that we go through, be it in commodities markets and the like, some of the inflation in the last few years that are starting to sort of stabilize itself.
Speaker Change: We have dedicated teams in each one of our businesses focused solely on gross margin improvement, productivity, yield improvements, cost reductions.
Speaker Change: innovation that brings accretion to the portfolio. All of those elements are contributors here quarter in and quarter out and continue to contribute through the rest of the year.
Philip Boudreau: And then we also have elements. We've talked about some of the cycles that we go through, be it in commodities markets and the like, some of the inflation last few years that are starting to sort of stabilize and normalize. We're seeing freight and distribution profiles normalize and start to be more tailwinds as opposed to headwinds. And we've also seen in commodity markets as well, things not only stabilizing but coming down and also contributing to tailwinds to gross margin and anticipate that to persist here as well. So the combination of all of those contributes to the confidence here and continuing to drive the top tier sales performance, but also expand margins throughout the year.
Speaker Change: And then we also have elements, we've talked about some of the cycles that we go through, be it in commodities markets and the like, some of the inflation in the last few years that are starting to sort of stabilize and normalize.
Philip P. Boudreau: We're seeing freight and distribution profiles normalize and start to be more tailwinds as opposed to headwinds. And we've also seen in commodity markets as well things not only stabilizing but coming down and also contributing to tailwinds to gross margin. So the combination of all of those contributes to the confidence here, drive top-tier sales performance, but also, Very helpful. Thank you.
Speaker Change: We're seeing freight and distribution profiles normalize and start to be more tailwinds as opposed to headwinds. And we've also seen in commodity markets as well things not only stabilizing but coming down and also contributing to tailwinds to gross margin and anticipate that to persist here as well. And so the combination of all of those.
Speaker Change: contribute to the confidence here and continuing to drive the top-tier sales performance but also expand margins throughout the year.
Robert B. Ford: And then maybe just on the capital allocation side, maybe thinking of the other side of Josh's question, if you look across the sector here, we've seen M&A pick up a little bit in the second quarter. I think there were $2 billion plus transactions announced, with sort of transaction multiples starting to trend toward the lower end of historical levels. But can you maybe give us your latest perspective on the M&A environment and how you're thinking about capital allocation as your cash balance continues to build nicely here?
David Roman: Super helpful. Thank you.
David Roman: And then maybe just on the capital allocation side, maybe thinking that the other side of Josh's question, if you look across the sector here, we've seen M&A pick up a little bit in the second quarter. I think there were two billion dollar plus transactions announced, with sort of transaction multiple starting to trend toward the lower end of historical levels.
Speaker Change: Super helpful, thank you. And then maybe just on the capital allocation side, maybe thinking of the other side of Josh's question. If you look across the sector here, we've seen M&A pick up a little bit in the second quarter. I think there were $2 billion plus transactions.
Philip Boudreau: But if you maybe give us your latest perspective on the M&A environment and how you're thinking about capital allocation as your cash balance continues to build nicely here. Well, on the application more broadly, listen, I've been pretty clear every call about we have a balanced approach. I know you guys cover a lot of companies that have different approaches. Our approach is balanced, and we believe that that balanced approach benefits the long-term shareholder. One of the metrics that I believe David is a good measure of evaluating capital deployment effectiveness is ROIC benefits. If you look at ROIC over the last three years, we've averaged around high teens, and that's on the higher end of the metric peers that we often get compared to.
Speaker Change: announced with sort of transaction multiples starting to trend toward the lower end of historical levels. But can you maybe give us your latest perspective on the M&A environment and how you're thinking about capital allocation as your cash balance continues to build nicely here?
Robert B. Ford: Well, on the capital occasion more broadly, listen, I've been pretty clear on every call about how we have a balanced approach, right? I know you guys cover a lot of companies that, you know, have different approaches. Our approach is balanced.
Speaker Change: Well, on the capital occasion more broadly, listen, I've been pretty...
Speaker Change: clear every call about, we have a balanced approach.
Speaker Change: I know you cover, you guys cover a lot of companies that, you know, have different approaches.
Speaker Change: Our approach is balanced, and we believe that that balanced approach...
Robert B. Ford: And we believe that that balanced approach, you know, benefits the long-term shareholder, right? You know, one of the metrics that I believe, David, is a good measure of evaluating capital deployment effectiveness is ROIC. And if you look at ROIC over the last three years, our, we've averaged around, you know, the high teens. And that's on the higher end of the med tech peers that we often get compared to.
Speaker Change: Benefits the long-term shareholder, right? One of the metrics that I believe, David, is a good measure of evaluating capital deployment effectiveness is ROIC assessment. And if you look at ROIC over the last three years, our
David Roman: We've averaged around, you know, high teens.
David Roman: And that's on the higher end of kind of the med-tech peers that, you know, we often get compared to. So we believe that, you know, ROIC is a good measure of how effectively we're deploying the capital, and we look at a balanced approach, right? So there are internal capital investments that drive future growth, and, you know, we've been talking about all these great opportunities we have, and we're funding them, and they're great returns.
Robert B. Ford: So we believe that, you know, ROIC is a good measure of how effectively we're deploying capital, and we look at a balanced approach, right? So are there internal capital investments that drive future growth? And, you know, we've been talking about all these great opportunities we have, and we're funding them, and they're great returns. You know, debt paydown.
Philip Boudreau: We believe that ROIC is a good measure of how effectively we're deploying the capital, and we look at a balanced approach. Other internal capital investments that drive future growth, and we've been talking about all these great opportunities we have, and we're funding them, and they're great returns, debt paydown. We don't have much this year, but we took care of some powers last year because we obviously didn't want to refinance them. Dividend and buybacks are a dividend definitely core to run investment identity, and we intend to continue to grow our dividends. That is a balanced approach.
Robert B. Ford: You know, we don't have much this year, but, you know, we took care of some towers last year because we didn't want, we obviously didn't want to refinance them. Dividends and buybacks are, you know, the dividend is definitely core to our investment identity, and we intend to continue to grow our dividends. So that is a balanced approach. And even with all of that, we also, as you probably see, we have an opportunity from a balance sheet perspective to deploy that from an M&A perspective.
David Roman: Debt pay down. We don't have much this year, but we took care of some powers last year because we obviously didn't want to refinance them.
David Roman: Dividend and buybacks are, you know, the dividend is definitely core to our investment identity and we intend to continue to grow our dividends. So that is a balanced approach. And even with all of that, we also, as you probably see, we have opportunity from a balance sheet perspective to deploy that from an M&A perspective.
Philip Boudreau: Even with all of that, we also, as you probably see, we have opportunity from a balance sheet perspective to deploy that from an M&A perspective. We've been spending time talking about our strong top line and the pipeline that we've developed, and that allows us to be a little more selective. You look at other transactions that happened, and you have to ask what's the strategy behind that, and a lot of the times you can see you're having to sustain your growth rates. If you're in the business of driving top line through acquisitions, then that's part of your model.
Robert B. Ford: And, you know, we've been spending time talking about our strong top line and the pipeline that we've developed. And that allows us to be a little bit more selective. You know, you look at other transactions that have happened, and you have to ask, okay, what's the strategy behind that? And, you know, a lot of the times, you can see you're having to sustain your growth rate, right? If you're in the business of driving top line growth through acquisitions, then you gotta, you know, that's part of your model. You're gonna have to keep doing that whether the valuations are right or wrong or not right.
Speaker Change: You know, we've been spending time talking about our strong top line and the pipeline that we've developed, and that allows us to be a little bit more selective. You look at other transactions that happen, and you have to ask, okay, what's the strategy behind that? And, you know, a lot of the times, you can see you're having to sustain your growth rate, right? If you're in the business of driving top line through acquisitions...
Philip Boudreau: You're going to have to keep doing that, whether the valuations are right or wrong or not right. But we look at these strategic fit. Can they generate an attractive return? Can we make the business better that we're acquiring? We don't want to be just a holding. I think that we've shown that when we do our acquisitions, that's the framework. Fits in strategically, generates a nice return, and we tend to operate them or add value to them than when they were standalone.
Speaker Change: Then you've got to, you know, that's part of your model, you're going to have to keep doing that, whether the valuations are right or wrong, or not right. But we look at the...
Robert B. Ford: But we look at strategic fit; can they generate an attractive return? You know, can we make the business better that we're acquiring? You know, we don't wanna be just a holding.
Speaker Change: Can they generate an attractive return? Can we make the business better that we're acquiring? We don't want to be just a holding. And I think that we've shown that when we do do our acquisitions, that's the framework. It fits in strategically.
Robert B. Ford: And I think that we've shown that when we do our acquisitions, that's the framework, you know, fits in strategically, generates a nice return, and we tend to operate them or add value to them than when they were standalone. I appreciate all the perspective, and thanks for taking the question. Thank you. Our next question will come from Danielle Antalffy from UBS. Your line is open.
Speaker Change: It generates a nice return, and we tend to operate them or add value to them than when they were standalone.
David Roman: Appreciate all; I appreciate it. Thanks for taking the question.
Speaker Change: I appreciate all the perspective and thanks for taking the question.
Danielle Antalffy: Thank you.
Danielle Antalffy: Our next question will come from Danielle and Palfy from UBS. Your line is open. Hey, good morning, guys. Thanks so much for taking the question. Congrats on a really good quarter here. Robert, one of the things that struck me when we spoke: I have two product questions, product-specific questions. When we last spoke, is how you're looking at the sustainability of historically slower growing businesses and areas exposed to historically slower growing markets. So obviously I'm thinking CRM. Can you talk a little bit about the strategy there? Obviously, there's a big part of that and just legal spacing in general.
Speaker Change: Thank you.
Speaker Change: Our next question will come from Danielle Antalffy from UBS. Your line is open.
Danielle Joy Antalffy: Hey, good morning, guys. Thanks so much for taking the time to answer the question. Congratulations on a really good quarter here. Robert, one of the things that struck me when we spoke was that I have two product-specific questions. When we last spoke, you were discussing how you're looking at the sustainability of historically slower growing businesses and areas exposed to historically slower growing markets. So obviously, I'm thinking CRM. Can you talk a little bit about the strategy there? Obviously, there's a big part of that and just legalizing marijuana in general. And how sustainable is it?
Danielle Joy Antalffy: Hey, good morning guys. Thanks so much for taking the question. Congrats on a really good quarter here. Robert, one of the things that struck me when we spoke, I have two product questions.
Speaker Change: product-specific questions. When we last spoke is...
Speaker Change: how you're looking at the sustainability of historically slower-growing businesses and, you know, areas exposed to historically slower-growing markets. So, obviously, I'm thinking CRM. Can you talk a little bit about the strategy there? Obviously, there's a big part of that, and just legal spacing in general, and how sustainable? I mean, it's like been multiple quarters now of organic growth in the mid-plus single-digit range, and then just one follow-up, another product question.
Robert Ford: How sustainable? I mean, it's been multiple quarters now of organic growth in the mid-plus single-digit range, and then just one follow-up, another product point.
Robert B. Ford: I mean, it's been multiple quarters now of organic growth in the mid plus single digit range. And then just one follow-up, another product question. Yeah, well, that was part of our strategy. As we looked at our medtech portfolio, you've obviously got high growth drivers there with EP, structural heart, diabetes care, neuro, heart failure, and we looked at CRM and vascular. And those are more flat businesses.
Robert B. Ford: So the combination of that is you had a medtech portfolio that was growing, you know, seven, eight, you know, maybe 9% a quarter. And to get to double digits, we needed those two businesses to grow at least to mid single digits, right? And I'd say on the CRM side, our strategy there was to really focus on Avair and Leedless Pacemaking. And, you know, there's a pipeline of products there. I don't want to; I don't want to tilt my hand here.
Speaker Change: Yeah, well that was part of our strategy as we looked at our MedTech portfolio, you've obviously got high growth drivers there with EP, structural heart, diabetes care, neuro, heart failure, and we looked at CRM and vascular, and those are more flat businesses, so the combination of that is you had a MedTech portfolio that was growing, you know, 7, 8, you know, maybe 9% or a quarter, and to get to double digits we needed those two businesses to get at least to mid-single digits, right? And I'd say on the CRM side, our strategy there was to really focus on Avera and lead the pacemaking.
Robert B. Ford: But you know, we didn't do Avair, DR, and stop there. The team has, you know, gotten R&D programs to continue to advance those. And even to look at, you know, the ICD market also, and what are the opportunities that we can do to innovate? There is space to innovate in that market. And that's, what for me is important, is that, you know, the diabetes market, 15 years ago, people would have said, well, gee, that's a slow growth market. Well, now, look at it, right?
Speaker Change: Leisure Space Makers, and, you know, there's a pipeline of products there. I don't want to, I don't want to tilt my hand here, but, you know, we didn't do, you know, a very DR and stop there. The team's, you know, gotten R&D programs to continue to advance those.
Robert B. Ford: So if you focus on innovation, on meeting needs, on meeting wants, you can turn a market around. From a bachelor's perspective, you know, as I said in my comments, we're trying to reposition the portfolio to more higher growth areas, peripheral areas, endovascular areas. But we started that a little bit, a little bit later than what we did in CRM.
Speaker Change: and even to look at, you know, the ICD market also and what are the opportunities that we can do to innovate. There is space to innovate in that market and that's...
Speaker Change: That, for me, is important.
Speaker Change: You know, the diabetes market, you know, 15 years ago, you know, people would say, well, gee, that's a slow growth market. Well, now look at it, right? So if you if you focus on innovation, on meeting needs, on met needs.
Speaker Change: you can turn a market around.
Speaker Change: From a bachelor perspective, as I said in my comments, we've been repositioning the portfolio to more higher growth areas.
Robert B. Ford: So I expect to start to see our vascular business start to also contribute to a higher growth rate the same way that CRM is. And that just kind of bolsters our entire medtech portfolio and gets us into that 12, 13 kind of percent growth rate. At least that's our target. Okay, that's helpful.
Speaker Change: peripheral areas, endovascular areas.
Speaker Change: But we started that a little bit later than what we did in CRM, so I expect to start to see our vascular business start to also contribute.
Speaker Change: to a higher growth rate the same way that CRM is, and that just kind of bolsters our entire MedTech portfolio and gets us into that 12, 13 kind of percent growth rate. At least that's our target.
Robert B. Ford: And then the follow-up question is on the structural heart side of things. And I know Amulet's been on the market for a little bit here, but my impression is that now it's kind of like Abbott is no longer fighting with one hand tied behind their back. Can you talk a little bit about that? And, you know, your 45% growth, I think you said in the quarter, where do we go from here for Amulet? And thanks so much for taking the question. Yeah, so it was a great quarter.
Speaker Change: Okay, that's helpful. And then the follow up question is on the structural heart side of things. And I know, Amulet's been on the market for a little bit here. But my impression is that now it's kind of like Abbott's no longer fighting with one hand tied behind their back. Can you talk a little bit about that? And, and you know, you 45% growth, I think you said in the quarter, where to from here for Amulet? And thanks so much for taking the question.
Robert B. Ford: I think the team's kind of hitting its stride right now. As I said, our focus here was really to kind of drive adoption in the centers that we were at versus expansion. The competitor has expanded the market. There are probably about 800 centers that are doing these implants, and we're probably in about half of them. Now, that's good, right?
Speaker Change: Yeah, so it was a great quarter. I think the team's kind of hitting its stride right now. As I said, our focus here was really to kind of drive adoption in the centers that we were at versus
Speaker Change: The competitor has expanded the market, there's probably about 800 centers that are doing these implants, and we're probably in about half of it. Now that's good, right? That provides a market expansion dynamic here in the U.S.
Robert B. Ford: That provides a market expansion dynamic here in the US. But so I think, I'm really encouraged by some of the data that I'm seeing, and I think it starts with the data, right? We had patient registry data come out where it showed that 95% closure rates were achieved post-implant and sustained after 45 days. 90% of closure success rate using AMLET for patients that actually failed to achieve proper closure rates with a competitive product.
Speaker Change: I'm really encouraged by some of the data that I'm seeing, and I think it starts with the data, right? We had a patient registry data come out where it showed that 95% closure rates were achieved post-implant and sustained after 45 days.
Speaker Change: 90% of closure success rate using AMLET.
Speaker Change: for patients that actually fail to achieve proper closure rate with a competitive product. So I think that there's an opportunity here for our value proposition.
Robert B. Ford: So I think that there's an opportunity here for our value proposition, and then we've got to continue to invest. We are already investing in our next generation AMLET, focusing on ease of use, focusing, and we'll maintain our superiority here that we believe we have regarding the ceiling of the LAA. We're investing in clinical trials. Obviously, we've been public about CATALYST, which is a trial that will compare AMLET to NOAC antiregulation treatment.
Speaker Change: And then we've got to continue to invest. You know, we are already investing on our next generation amulet.
Speaker Change: You know, focusing on ease of use, focusing, and we'll maintain our superiority here that we believe we have regarding the sealing of the LAA.
Speaker Change: We're investing in clinical trials, obviously we've been public about Catalyst, which is a trial that will compare Amulet to NOAC.
Robert B. Ford: So this is an exciting market for us, and we're going to continue to invest in it. And ultimately, it comes down to really surrounding the electrophysiologist with the most comprehensive portfolio, whether it's pacemakers and ICDs, structural heart interventions with stroke preventions, and then obviously ablations and AF treatment.
Speaker Change: So this is an exciting market for us, and we're going to continue to invest in it. And ultimately, it comes down to really looking at surrounding the electrophysiologist with the most comprehensive portfolio, whether it's on pacemakers and ICDs.
Speaker Change: structural heart interventions with, you know, stroke preventions, and then obviously, you know, ablations and AF treatment. So, you know, at its highest level, you know, that's the important side here, is ambulance fits an important role, even though we reported a structural heart, it's really playing a role here to surround the physician, the EP, with the tools that they need to advance care.
Robert B. Ford: So at its highest level, that's the important side here: AMLET fits an important role. Even though we reported a structural heart, it's really playing a role here to surround the physician, the EP, with the tools that they need to advance care. Thank you. Operator, we'll take one more question. Thank you. And our final question will come from Vijay Kumar from Evercore ISI. Your line is open. Hi, Robert.
Operator: Thank you.
Operator: Operator, we'll take one more question, please.
Speaker Change: Thank you.
Vijay Kumar: Thank you.
Vijay Kumar: And our final question will come from Vijay Kumar from Evercore ISI; your line is open.
Speaker Change: Operator, we'll take one more question, please.
Speaker Change: Thank you.
Speaker Change: And our final question will come from Vijay Kumar from Evercore ISI. Your line is open.
Vijay Muniyappa Kumar: Thanks for taking my question, and congrats on a nice sprint here. I want to touch on biosimilars. You know, you brought this up on the call. Can you elaborate on your strategy there? Are you planning to manufacture these products? Is Abbott going to be a CDMO in that space? Or do you plan to launch your own biosimilars? Or is this more of Abbott being a distributor and taking advantage of its brand presence in emerging markets? What is Abbott's role in that place?
Robert Ford: Hi, Robert. Thanks for taking my question, and I can rest in an ice prince here. I wanted to touch on the biosimlers; you brought this up on the call. Can you elaborate on your strategy? Are you planning to manufacture these products? Is Abbott going to be a CDMO in that space? Or do you plan to launch your own biosimlers? Or is this more of a Abbott being a distributor in taking advantage of your brand presence in emerging markets? What is Abbott's role in the place? And how do you size at the market opportunity for Abbott?
Vijay Muniyappa Kumar: Hi Robert, thanks for taking my question and congrats on a nice sprint here. I wonder, touching on biosimilars, you know, you brought this up on the call.
Speaker Change: Is
Vijay Muniyappa Kumar: Can you can you elaborate on your strategy there? Are you planning to?
Speaker Change: manufacture these products? Is Abbott going to be a CDMO in that space? Or do you plan to launch your own biosimilars? Or is this more of Abbott being a distributor and taking advantage of your brand presence in emerging markets?
Robert B. Ford: And how do you size that market opportunity for Abbott? When should it start contributing to Abbott? Sure.
Speaker Change: What is Abbott's role in that place and how do you size that market opportunity for Abbott? When should that start contributing to Abbott?
Robert Ford: When should that start contributing to Abbott?
Robert Ford: Sure. You know, this is one where I say there's a couple phases to the strategy. The core premise of this VJ is if you look at the emerging markets and the disease prevalence that exist in these emerging markets, they're no different than the disease prevalence in the US or Europe. You can look at some of them or higher, etc. But in general, there's an opportunity to bring these biologics into the emerging market. And for a variety of reasons, those markets have not been a priority for the originators. They're main focus is obviously been in the international development markets: US, Western Europe, Pan-Canada, Australia, etc.
Robert B. Ford: You know, this is one where I'd say there are a couple of phases to this strategy. You know, the core premise of this, Vijay, is if you look at the emerging markets and the disease prevalence that exists in these emerging markets, they're no different than the disease prevalence in the U.S. or Europe. I mean, you know, you could look at, you know, some of them are higher, et cetera
Speaker Change: Sure.
Speaker Change: You know, this is one where I'd say there's a couple of phases to the strategy. You know, the core premise of this, Vijay, is if you look at the emerging markets and the disease prevalence that exists,
Speaker Change: in these emerging markets. They're no different than the disease prevalence in the US or Europe . I mean, you could look at some of the more higher, et cetera. But in general, there's an opportunity to bring these biologics into the emerging markets. And for a variety of reasons.
Robert B. Ford: But in general, there's an opportunity to bring these biologics into emerging markets, and for a variety of reasons, you know, those markets have not been a priority for the originators. Their main focus has obviously been on the developed international markets, the U.S., Western Europe, Japan, Canada, Australia, et cetera. So this, you know, provides just a patient need opportunity that we want to size up, you know, and what we've seen from some of our, you know, we have done some more regional biosimilar deals that we've launched, and what we've seen is that the growth of the molecule grows significantly once, you know, once a biosimilar enters the market in terms of penetration into a patient population.
Speaker Change: You know, those markets have not been a priority for the originators.
Speaker Change: Their main focus has obviously been in the international developed markets, U.S., Western Europe , Japan, Canada, Australia, etc. So this provides just a patient need opportunity.
Robert Ford: So this provides just a patient need opportunity that we want to size up. And what we've seen, some of our, we have done some more regional biosimilar deals that we've launched. And what we've seen is that the growth of the molecule grows significantly once, you know, once a biosimilar enters. In terms of penetration and sopation population. It's a different dynamic in developed markets, as we know, but in emerging markets, the category really expands.
Speaker Change: that we want to size up, you know, and what we've seen through some of our, you know, we have done some more regional biosimilar deals that we've launched and what we've seen is...
Speaker Change: that the growth of the molecule grows significantly once a biosimilar enters, in terms of penetration into a patient population.
Robert B. Ford: It's a different dynamic in developed markets, as we know, but in emerging markets, the category really expands. So what we wanted to do is to say, okay, before we start to think about manufacturing, before we start to think about that, we want to be able to understand what the uptake of these products will be once you go ahead and, you know, put a concerted effort into developing these types of products in emerging markets, right?
Speaker Change: It's a different dynamic in developed markets, as we know, but in emerging markets, the category really expands.
Robert Ford: So what we wanted to do is to say, okay, before we start to think about manufacturing, before we start to think about that, we want to be able to understand what is the, you know, what is the uptake of these products. Once you go ahead and, and, you know, put a concerted effort to developing, you know, these types of products in emerging markets, right? And, and it fits right into our wheels where we've got relationships with governments; we have relationships with physicians. And we've got relationships with the distribution area. And the question is, how can you do it and how can you execute that, you know, that strategy with, you know, that's capital efficient.
Speaker Change: So what we wanted to do is to say, okay, before we start to think about manufacturing, before we start to think about that, we want to be able to understand.
Speaker Change: What is the...
Speaker Change: You know, what is the uptake of these products once you go ahead and put a concerted effort to developing?
Robert B. Ford: And it fits right into our wheelhouse, where we've got relationships with governments, we have relationships with physicians, and we've got relationships with the distribution area. And the question is, how can you do it, and how can you execute that, you know, that strategy with a capital efficient and, you know, and doesn't erode the gross margin of that business?
Speaker Change: these types of products in emerging markets, right? And it fits right into our wheelhouse where we've got relationships with governments, we have relationships with.
Speaker Change: Physicians, and we've got relationships with the distribution area. And the question is, how can you do it, and how can you execute that strategy that's capital efficient and doesn't erode kind of gross margin of that business? And I give a lot of kudos to the team, because they've really been able to position our presence in these markets.
Robert Ford: And, you know, and doesn't erode kind of gross margin of that business. And, you know, I get a lot of kudos to the team, because they've really been able to position, you know, our presence from these markets. As an advantage to these players that, you know, really aren't focusing on emerging markets. They're focusing more on the opportunities that exist in developed markets. And now they can partner with one single company, a reputable company, to be able to, you know, use that capacity in other markets.
Robert B. Ford: And, you know, I give a lot of kudos to the team, because they've really been able to position, you know, our presence in these markets as a, as an advantage to these players that, you know, really aren't focusing on emerging markets. They're focusing more on the, on the opportunity that exists in developed markets. And now they can partner with one single company, reputable company, to be able to, you know, use that capacity in other markets. So I'd say.
Speaker Change: as an advantage to these players that, you know, really aren't focusing on emerging markets. They're focusing more on the opportunities that exist in developed markets.
Speaker Change: and now they can partner with one single company, reputable company, to be able to use that capacity in other markets. So, I'd say...
Robert Ford: So, I'd say, we're in the phase right now, okay? Is there a sustainability to this? So the deals that we've done give us access, our gross margin is not polluted, and we're going to see how it goes. As you think about the ramp above what we've got at the pipeline, we'll start launching in 2025, but you'll look at some of the big molecules that will come up for us, you know, 26, 27, and that's what I think went some of these very large, like oncology opportunities that we have, it will play as you draw for us and accelerate the growth there.
Robert B. Ford: We're in the phase right now of, okay, is there sustainability for this? So the deals that we've done give us access, our gross margin is not diluted, and we're gonna see how it goes. As you think about the ramp-up of what we've got in the pipeline, we'll start launching in 2025, but you look at some of the big molecules that will come up for us, 26, 27, that's what I think when some of these very large oncology opportunities that we have will play a huge role for us and accelerate the growth. That's helpful.
Speaker Change: We're in the phase right now of, okay, does...
Speaker Change: Is there sustainability to this?
Speaker Change: So the deals that we've done give us access, our gross margin is not diluted.
Speaker Change: And we're going to see how it goes. As you think about the ramp-up of what we've got at the pipeline, we'll start launching in 2025.
Speaker Change: But you look at some of the big molecules that will come up, you know, for us, you know, 26, 27. That's, I think, when some of these very large, like, oncology opportunities that we have will play a huge role for us and accelerate the growth there.
Robert Ford: The helpful, and maybe one last one on that capital deployment, I know it's been asked, I'm curious on the sharing purchases, you know, based on guns and animal growth. Street doesn't seem to be given credit. Why not, you know, didn't see any shared repose in first half, why is that even being conservative on sharing purchases? Yeah, well, we've done a lot of shared repurchases in over the last couple of years. It's a catching up a little bit to maybe not doing as much repurchasing after the two, you know, the two acquisitions we did in 2017 and 2018.
Robert B. Ford: And maybe one last one on capital deployment. I know it's been asked, but I'm curious about share rate purchases. You know, you guys have done phenomenal growth. Street doesn't seem to be giving credit. Why not?
Speaker Change: That's helpful. And maybe one last one on capital deployment. I know it's been asked. I'm curious on share repurchases. You know, you guys have done phenomenal growth.
Speaker Change: Our street doesn't seem to be giving credit, why not, you know, didn't see any Chevrolet posts in the first half, why is Abbott being conservative on Chevrolet purchases?
Robert B. Ford: You know, I didn't see any share reports in the first half. Why is Abbott being conservative on share rate purchases? Yeah, well, we've done a lot of share repurchases over the last couple of years, let's say catching up a little bit to... maybe not doing as much repurchasing after the two acquisitions we did in 2017 and 2018. If you look at our repurchases and dividends, it's been about $20 billion that we've returned over the last year, four years, Vijay, $20 billion in dividends and And that accounts for a good amount of our free cash flow over the last couple of years to our shareholders. So the year's not over yet.
Speaker Change #100: Yeah, well, we've done a lot of share repurchases over the last couple of years, let's say catching up a little bit to
Speaker Change #101: maybe not doing as much repurchasing after the two acquisitions we did in 2017 and 2018. If you look at our repurchases and dividends, it's been about $20 billion that we've returned over the last...
Robert Ford: You know, if you look at our repurchases and dividends, it's been about $20 billion that we've returned over the last four years. You know, $20 billion in dividends and buybacks. And that accounts for, you know, a good amount of our free cash flow of the last couple of years to our 多少 holders, so, you know, we're not, you know, the year’s not over, you know, and again, we’ll see opportunities, we’ve got plenty of opportunities to be able to do that. So, I'd say, I think we've done a pretty good job here at returning cash back to our shareholders over the last couple of years, and that commitment will maintain.
Speaker Change #101: four years.
BJ: Vijay, $20 billion in dividends and buybacks.
BJ: And that accounts for a good amount of our free cash flow over the last couple of years to our shareholders. So, you know, we're not, you know, the year's not over, you know, and again, we'll see opportunities. We've got plenty of opportunities to be able to do that. So.
Robert B. Ford: And again, if we see opportunities, we've got plenty of opportunities to be able to do that. So I'd say I think we've done a pretty good job here at returning cash back to our shareholders over the last couple of years. And that commitment we'll maintain. I'll just close here. This was a great quarter for us, and quite frankly, a great quarter in connection with five quarters before that where we delivered above-market growth.
BJ: I'd say, I think we've done a pretty good job here at returning cash back to our shareholders over the last couple of years, and that commitment we'll maintain.
Robert Ford: So, I'll just close here. This was a great quarter for us and, quite frankly, a great quarter in connection with, you know, five, you know, five quarters before that, where we've delivered above market growth. I'm really pleased with our continued strong performance. We've raised our sales outlook; our EPS ranges for the second time this year. The toughest COVID test comps are now behind us. So, I look forward to not having to, you know, we'll obviously report our COVID testing sales, but you'll start to see those comps start to, to do window the way now, which means then that our EPS.
BJ: I'll just close here, this was a great quarter for us, and quite frankly, a great quarter in connection with, you know, five quarters before that where we've delivered above-market growth. I'm really pleased with our continued strong performance. We've raised our sales outlook, our EPS ranges for the second time.
Robert B. Ford: I'm really pleased with our continued strong performance. We've raised our sales outlook and our EPS ranges for the second time this year. The toughest COVID test comps are now behind us. So I look forward to not having to, you know, obviously report our COVID testing sales, but you'll start to see those comps start to dwindle away now, which means then that our EPS is back to growth. And I think one of the questions there about showing our EPS, exiting the year in high single digits, double digit kind of range, and getting back to our formula, that's what we're interested in. And we've got a lot of positive momentum here heading into the second half of the year.
BJ: this year, the toughest COVID.
BJ: Test comps are now behind us.
BJ: So, I look forward to not having to, you know, we'll obviously report our COVID testing sales, but you'll start to see those comps start to dwindle away now, which means then that our APS...
Robert Ford: It's back to growth, and I think one of the questions there about showing our EPS exiting the year in high single digits, double-digit kind of range and getting back to our formula, that's, that's what we're interested in. And we got a lot of positive momentum; you're heading into the second half of the year.
BJ: It's back to growth, and I think one of the questions there about showing our EPS, exiting the year in high single digits, double digit kind of range, and getting back to our formula, that's
BJ: That's what we're interested in and we've got a lot of positive momentum here heading into the second half of the year. So with that, we'll wrap up and thank you for joining us.
Robert B. Ford: So with that, we'll wrap up, and thank you for joining us. Thank you, operator, and thank you all for your questions. This now concludes Abbott's conference call. A webcast replay of this call will be available after 11 a.m. Central Time today on Abbott's Investor Relations website at abbottinvestor.com.
Michael Comilla: So, with that, we'll wrap up and thank you for joining us.
Operator: Thank you, operator, and thank you all for your questions.
Operator: This now concludes Abbott's conference call. The webcast replay of this call will be available after 11 a.m. central time today on Abbott's Investor Relations website at AbbottInvestor.com. Thank you for joining. Thank you.
Speaker Change #104: Thank you, operator, and thank you all for your questions. This now concludes Abbott's conference call. A webcast replay of this call will be available after 11 a.m. Central Time today on Abbott's Investor Relations website at abbottinvestor.com. Thank you for joining us today.
Operator: Thank you for joining us. Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day. ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect everyone. Have a wonderful day. Thank you.
Speaker Change #103: Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.
Operator: Thank you for watching!
Speaker Change #105: Thank you for watching!