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| Abbott Laboratories CEO Miles White |
Another quarter, another middling performance for Abbott Laboratories' ($ABT) medical device operation, as all of its business units slumped below the same period last year. But, with more than half a billion dollars locked up in pending acquisitions, the company believes its troubles will be short-lived.
Abbott clocked $1.4 billion in total device sales in second quarter, a 1.6% decline from 2012. And the particulars fall right in line with earnings past: Vascular, the largest segment, slipped 2% to $750 million, while diabetes care fell 1.3% to $326 million and medical optics revenue decreased 1.2% to $280 million.
As has been the case since Abbott cleaved off its proprietary pharma unit in January, the company's diagnostics unit tells a much different story. Abbott's testing segment grew 5.3% to $1.2 billion, driven by a 3.5% jump in core lab revenue and a 15.5% increase for the company's small but rapidly expanding point-of-care diagnostics business.
Still, within the vascular device business, Abbott continues to feel the sting of pricing pressures, increased competition and a decline in coronary procedures the world over, leading sales for stents and scaffolds to fall 2.7% to $389 million.
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| Abbott is counting on next-generation devices like Absorb to turn its vascular sales around.--Courtesy of Abbott Laboratories. |
But help is on the way from a few fronts, the company said. Last week, Abbott signed up to spend $310 million on IDEV Technologies, maker of a biomimetic stent for peripheral artery disease, and at least $250 million on OptiMedica, a specialist in laser-assisted cataract surgeries. Those deals, expected to close by year's end, are aimed to boost sales for the vascular and medical optics units, expanding Abbott's stent portfolio and giving it immediate entry into the laser eye surgery market.
The rest of Abbott's vascular saving graces will come from in-house efforts, the company said. Abbott is rolling out the Xience Xpedition stent around the globe, winning FDA approval in January and launching in Japan this month, and the company expects its latest drug-eluter to help make up ground lost by now-dated Xience implants. Meanwhile, the global response to the dissolvable Absorb has been strong since its launch last year, Abbott said, and the company is working through clinical trials to get the device approved in the U.S. and Japan.
On the whole, Abbott reported about $5.5 billion in sales on the quarter, a 2.5% increase due largely to the company's nutrition business, which grew 7.9% to $1.7 billion. Abbott's net profit came in at $476 million, 15.9% over the same period last year, excluding cash tied to what is now AbbVie ($ABBV).
"All things considered, including headwinds from foreign exchange and a mixed global economy, this was a good quarter," CEO Miles White said in a statement.
- read Abbott's full results