April 20, 2023: On Wednesday, shares of Abbott Laboratories popped after the company’s revenue and earnings topped Wall Street’s expectations, defying a dramatic decrease in sales of its Covid-19 tests.
The medical products firm posted adjusted earnings per share of $1.03. That’s above the average of nearly 99 cents per share, the survey of analysts by Refinitiv stated.
Abbott reported earnings of $9.7 billion for the first quarter, slightly exceeding the Refinitiv assessment of $9.64 billion due to its medical devices business recovery. But the Chicago-based firm noted that revenue decreased by 18.1% from a similar period last year, primarily driven by a steep refusal in global sales of its rapid Covid assessment.
The company posted a Covid-testing trade of $730 million during the three months, compared to $3.3 billion in the first quarter of 2022.
Sales of Abbott’s $5 Covid test reached an all-time high in that year and have buoyed the company’s overall revenue since starting the U.S. market in 2020.
But Abbott and different drugmakers such as Pfizer and Moderna have been bracing for a decrease in Covid-related sales as the world starts from the pandemic and demand for blockbuster injections and treatments declines.
During an earnings call, Abbott Chairman and CEO Robert Ford said that those Covid-related headwinds might be easing.
“As we moved through the initial part of the year, that’s what we continued to see,” he stated. “Most notably, the effect of Covid has rapidly and significantly lessened,” he further stated.
Still, Abbott has come down its outlook for Covid-testing sales this year to $1.5 billion from the $2 billion forecast in January.
Abbott’s medical devices business’s strong sales fueled the company’s first-quarter limits. The unit started with $3.9 billion in sales during the quarter, up almost 9% from the previous year.
Abbott’s glucose monitors Freestyle Libre device, contributed only $1.2 billion.
Ford stated that the rise signals a recovery in demand for surgical procedures, pointing to improved staffing levels at hospitals all over the U.S.
“I believe that the hospital systems have done an excellent job right now at managing through the staffing shortages, and we’re beginning to see the impact there,” Ford said.
That comes following rival Johnson & Johnson’s reported strong growth in its medical devices unit, noting that surgical procedures are “well in recovery.”