Abbott Laboratories (ABT) Q4 2017 earnings summary

Executive summary

• 2017 net sales were $27.390B; net earnings were $477M and diluted EPS was $0.27, with results shaped by major acquisitions and a substantial tax-reform charge.

• St. Jude Medical and Alere expanded cardiovascular, neuromodulation and diagnostics portfolios; 2018 priorities included integration, debt reduction and continued product development.

Financial highlights

• Net sales rose to $27.390B from $20.853B in 2016; acquisitions, partly offset by the AMO divestiture, contributed 26.5 percentage points of total sales growth.

• Operating earnings were $1.726B versus $3.185B; net earnings were $477M versus $1.400B, and diluted EPS was $0.27 versus $0.94.

• Operating cash flow increased to $5.570B from $3.203B, supported by working-capital management, St. Jude Medical and higher segment operating earnings.

• Excluding acquisition-related amortization and inventory step-up, acquired businesses generated $6.5B of 2017 sales; reported pre-tax loss was ~$1.3B, including ~$1.5B intangible and $907M inventory step-up amortization.

Outlook and guidance

• 2018 priorities: integrate Alere, pay down debt, expand cardiovascular and neuromodulation products and approvals, grow emerging-market pharmaceuticals, and advance nutrition products and margins.

• R&D spending was expected to approximate 7.5% of 2018 sales; no individual development project was expected to be material to cash flows or results over the next five years.

• Operating cash flow was expected to continue exceeding capital expenditures and cash dividends; planned 2018 pension contributions were ~$114M.