Abbott 1Q profit rises on one-time items
WASHINGTON -- Abbott Laboratories reported a first-quarter profit that edged past Wall Street expectations, though analysts focused on weaker sales growth for its blockbuster drug Humira, sending shares lower Wednesday.
The North Chicago-based company's revenue slipped about 1 percent and was weaker than analysts expected, as unfavorable currency exchange rates and slower purchasing in the U.S. led to a drop in drug spending.
Abbott shares fell $2.57, or 5.8 percent, to $42.13.
The company reported lower-than-expected sales of $1.02 billion for its best-selling drug Humira, used to treat rheumatoid arthritis and a number of other diseases. Analysts were expecting sales of over $1.1 billion.
Company executives blamed the shortfall on tighter wholesale inventories and financial hardships facing patients, who are reconsidering medication copayments in the midst of the economic downturn. The company scaled back its 2009 growth guidance for the drug to between 15 and 20 percent from 25 percent, a move that "suggests the product's growth may be starting to slow," Credit Suisse analyst Catherine Arnold said.
But Chief Executive Miles White brushed off those concerns, saying "the reaction by some analysts and investors just boggles my mind." He said the drug is still positioned to add billions of dollars in revenue in coming years.
Humira has been a key to the Abbott success story in recent years, racking up approvals for half a dozen uses, including psoriasis and Crohn's disease.
White also downplayed speculation that Abbott is looking to make a large acquisition following a string of multibillion-dollar deals between competitors like Pfizer and Wyeth.
"We don't need any large deals to achieve our financial objectives or strategic objectives," White told analysts on a morning teleconference. White said he favors "smaller to midsize" purchases.
For the first quarter ended March 31, Abbott earned $1.44 billion, or 92 cents per share, up from $988 million, or 60 cents per share, a year ago.
Earnings benefited from the breakup of a partnership with Japanese drugmaker Takeda Pharmaceuticals.
Abbott and Takeda ended a 31-year-old joint venture called TAP Pharmaceutical Products last year. Takeda received the TAP product pipeline, and Abbott agreed to pay Takeda if some product candidates did not advance through clinical testing. The products have reached their goals, which freed Abbott from the obligation to pay and resulted in a one-time gain of $505 million after taxes.
Excluding that payment and other one-time items, Abbott earned 73 cents per share, 3 cents above analyst expectations.
The company's sales slipped 1 percent to $6.72 billion from $6.77 billion, and Abbott said the strong dollar lowered results by 6.1 percent. Analysts expected higher revenue of $7.06 billion, according to Thomson Reuters.
Sales of Abbott's Humira rose 17 percent to over $1 billion, but exchange rates hurt sales abroad by about 20 percentage points.
Overall drug sales fell 5.7 percent, to $3.63 billion, pressured 6.6 percent lower because of exchange rates. Generic competition for the company's Depakote, used to treat seizures and bipolar disorder, contributed more than $230 million of the sales decline, the company said.
That weaker performance was partially offset by higher sales of Xience drug-coated stents, which boosted vascular business more than 42 percent to $645 million. Stents are used to prop open clogged arteries after they have been cleared of plaque.
Nutritional product revenue grew 6.4 percent, and diagnostic revenue fell 1.8 percent.
Abbott maintained its full-year profit forecast of $3.65 to $3.70 per share and said it expects to earn 80 to 82 cents per share in the second quarter, or 87 to 89 cents per share excluding one-time items.
Analysts expect $3.67 per share for the year, and 88 cents per share in the second quarter, excluding one-time items.