Abbott outpaces pre-pandemic performance with 11.6% growth in 2023—sans an 18% hit from COVID test sales

While many companies have spent the years since the COVID-19 pandemic began just hoping to get back on track with the way things were before, Abbott has devised its own definition of the “new normal.”

In its full-year earnings report Wednesday, the medtech tallied year-over-year organic sales growth of 11.6% in its base business for 2023—easily outstripping not only the “high single-digit” rate it had predicted at the start of the year, but also the 7% growth rate it had posted in the two years leading up to 2020, as CEO Robert Ford noted in a call with investors Wednesday morning.

“We exited the pandemic in an even stronger position,” he said. “2023 was a very successful year: We outperformed our initial expectations on both the top and bottom lines; the pipeline is generating a lot of new opportunities for growth; and we’re forecasting this positive momentum to continue and contribute to the strong growth we’re forecasting for 2024.”

Indeed, the company is hoping to make its 2023 performance a habit: It’s forecasting growth between 8% and 10% for its base business in 2024. Ford attributed that confidence to Abbott’s work over the last year to reinvest its bounty of COVID test earnings into the rest of the company, comprising its diagnostics, medical devices, nutrition and established pharmaceuticals divisions.

“Ultimately, that’s really the factor here. We operate in these four business segments, and their underlying attractiveness still is very sustainable,” he said. “I’d make the case here that all four of our major businesses are actually in better and stronger shape than they were pre-pandemic, which was about $10 billion less and growing at that seven to eight percent range.”

Noticeably missing from those base business calculations, however, is the impact of Abbott’s COVID test sales, which have been on a rapid nosedive as coronavirus vaccines and treatments became more widely available and overall case counts plummeted.

Though Abbott didn’t report an all-2023 total, it noted in Wednesday’s release that COVID tests brought in $288 million for the fourth quarter of the year—just over one-quarter of the $1.069 billion total reported a year before.

Crumbling COVID test sales took a 44% hit to Abbott’s diagnostics segment for the full year and brought down the company’s total 2023 sales by 17.8%. With those test sales included, Abbott’s annual sales actually dropped by just over 6%, with much of the COVID-related impact canceled out by double-digit growth in the other three non-diagnostics segments.

As for Abbott’s 2024 growth plans, Ford said the company will largely be doubling down on its work to strengthen its existing business. Particularly strong is the diabetes segment within the medical devices division: The CEO touted the FreeStyle Libre continuous glucose monitor’s $5.3 billion in 2023 sales and 24% growth in the fourth quarter alone, adding, “In terms of sales dollars, Libre has become the most successful medical device in history, and it has outpaced market growth in 13 out of the last 16 quarters.”

But Abbott isn’t against looking outward for future growth opportunities. When asked about plans for any major M&A moves, Ford suggested that the company is open to large acquisitions, but isn’t seeking to grow just for growth’s sake.

“We’ve got a great pipeline, we have great organic opportunities here to be able to drive top-tier sustainable growth, so that ends up allowing us to be in a selective position here, where we’re not trying to use M&A as a way to bulk up our top line or to cover any kind of topline gaps that might be there,” he said.

Ford admitted that large, return-generating acquisitions are somewhat more difficult to carry out nowadays, but added, “If there are opportunities that fit strategically and can generate an attractive return, then we’ve got the flexibility and the firepower to do that.”