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What Drove Abbott’s Diagnostics Division Revenues?

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1Q16 performance

Abbott Laboratories (ABT) reported ~$4.9 billion in total revenues in 1Q16. Of that, ~$1.1 billion, or ~23%, came from Abbott’s diagnostics division. These sales figures represent approximately a 6.9% YoY (year-over-year) increase in 1Q16 on an operational basis. But the negative foreign exchange impact of ~4.6% led to the reported increase in revenues of ~2.3%. In comparison, revenues fell 1.1% YoY in the previous quarter, mainly due to the negative impact of currency headwinds, which became less severe in 1Q16. Core Laboratory and Point of Care sales reported an increase of 2.1% and 8.8%, respectively. Molecular Diagnostics sales declined by ~2.8%.
DIAGNOSTICS

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Key growth drivers

Abbott witnessed strong operational sales growth across all of its diagnostic segment divisions, driven by above-market growth worldwide. Emerging markets witnessed double-digit growth. The customer-focused offerings and efficient commercial execution in the diagnostics segment continue to be a key focus of Abbott Laboratories.

Abbott Point of Care diagnostics division’s strong sales growth drove its diagnostics division sales. Continued adoption of i-STAT, a premium handheld device with data management and diagnostic capabilities, contributed significantly to these sales. Molecular diagnostic sales witnessed a decline due to the impact of the genetics business scale-down despite the strong operational sales growth reported in the infectious disease testing business. Becton Dickinson’s (BDX) BD Veritor system competes against Abbott’s i-STAT in the Point of Care diagnostics market. Thermo Fisher Scientific (TMO), Becton Dickinson, and Bio-Rad Laboratories (BIO) are some of Abbott Laboratories’ major competitors in the infectious disease testing segment.

Investors can gain diversified exposure to Abbott Laboratories by investing in the Health Care Select Sector SPDR ETF (XLV). Abbott Laboratories accounts for approximately 2% of XLV’s total holdings.

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