Abbott Laboratories on Wednesday reported lower-than-expected medical device sales for the fourth quarter as COVID-19 curbs in China and supply-chain issues hit its international operations.
The company also flagged that medical devices sales would remain soft in the first quarter, mirroring similar comments a day earlier from rival Johnson & Johnson, which cited China’s COVID-19 outbreak as the reason for the weakness.
Abbott’s medical device sales came in at $3.75 billion in the quarter, missing analysts’ average estimate of $3.84 billion.
The company’s overall profit was better than expected, underpinned by strong demand for its diagnostics business and glucose monitoring device FreeStyle Libre.
Freestyle Libre has been driving the sales of Abbott’s medical devices, offsetting a decline in COVID-19 diagnostic test sales as infections wane.
The company recorded $1.1 billion each in sales of FreeStyle Libre and COVID-testing related sales. It expects testing-related sales of around $2 billion this year.
However, the company reported an 11 percent drop in overall nutrition sales for the quarter, with U.S. pediatric nutrition revenue dropping by about a fifth due to disruptions at its baby formula facility in Michigan in the first half of 2022.
The facility reopened after the regulator and the company reached an agreement in May. The plant now faces a criminal investigation, causing further uncertainty after foreign infant formula makers grabbed away market share from Abbott.
Chief Executive Robert Ford said on an investor conference call that Abbott expects to recover its market share in 2023. Before the disruption, Abbott controlled 40 percent of the infant formula market, including Similac, but the plant closure led other players, including Reckitt Benckiser Group PLC, to chip away at its dominance.
Production has since ramped up and Abbott has begun to claw back share for formula, Ford said.
Abbott’s adjusted quarterly profit of $1.03 per share beat Refinitiv IBES estimate of 92 cents.
The company also forecast an adjusted profit of $4.30 to $4.50 per share for 2023, with the mid-point marginally lower than analysts’ average estimate of $4.41.
