Abbott maintains sunny outlook for 2023 despite faster-than-expected COVID testing declines

Last year, as Abbott issued stark warnings about a major drop-off in demand for COVID-19 diagnostics, the medtech giant was pleasantly surprised as, over and over, it reported quarterly test sales that far outweighed its gloomy forecasts.

Unfortunately for Abbott, that doesn’t appear to be the case in 2023. One quarter into the year, the company has already shaved 25% off its original COVID test sales forecast: from a prediction of $2 billion at the start of this year down to $1.5 billion, according to a Wednesday earnings report.

That’s the opposite of 2022’s trajectory. Last year also kicked off with a full-year forecast of $2 billion from COVID tests—less than a third of 2021’s $7.7 billion total—but that outlook grew each quarter until Abbott ultimately tallied a total of nearly $8.4 billion in sales from the diagnostics for the year.

The edited forecast for 2023 came as the company raked in $730 million in first-quarter COVID test sales, down almost 78% from the more than $3.3 billion it took in during the same period last year.

Altogether, for the first quarter of the year, Abbott saw its sales drop more than 18% year over year, all thanks to a decline of nearly 50% across its entire diagnostics department.

With COVID-related sales expected to clock in at a mere fraction of last year’s—and to drag down 2023’s total sales in the process—Abbott is redoubling its focus on non-COVID-related operations across the company.

Minus coronavirus tests and on an organic basis—that is, excluding the impact of shifting foreign exchange rates and of Abbott’s decision to leave the pediatric nutrition business in China—the diagnostics- and devicemaker saw its sales grow a solid 10%. The improvement was led by positive results in the medical devices, established pharmaceuticals and nutrition segments, in that order, all of which saw organic growth above the 10% mark. Even the diagnostics business, with those exceptions, clocked year-over-year growth of more than 4%.

Buoyed by those results, Abbott reiterated in Wednesday’s report the forecast it set at the start of the year, though it took a slightly more optimistic tone than before. Whereas the company had previously stated that it was expecting organic, sans-COVID sales to grow by “high single-digits,” the updated forecast now suggests that the sales growth will be “at least” that.

Abbott’s strongest sales in the quarter came from its medical devices segment, which brought in $3.9 billion. That represents growth of 8.5% on an as-reported basis compared to the previous quarter and an increase of more than 12% on an organic basis.

More than a third of those sales came from the diabetes care department. Nearly all of that $1.3 billion haul came from sales of Abbott’s FreeStyle Libre continuous glucose monitor systems, which saw growth of 50% in the U.S. alone.

The strong performance in diabetes tech sales may go a long way in outweighing Abbott’s losses in COVID testing, according to Third Bridge senior analyst George Congdon, who wrote of the department’s earnings, “This news is particularly well received given the FDA’s 2023 clearance of the Freestyle Libre 2 and 3 sensors to integrate with autonomous insulin delivery systems, which will pave the way for Abbott to partner with Insulet’s newly launched Omnipod 5 insulin pump, the current standard of care on the market.”