Healthcare Business News

Abbott Q2 net income drops from one-time tax hit, other charges

By Beth Kutscher
Posted: July 16, 2014 - 3:30 pm ET

Abbott, the medical device, generic drug and nutrition company, reported a 21.2% increase in operating earnings for its second quarter compared to the same period a year ago as sales continued to grow in its diagnostics and international businesses. However, the quarter also included several one-time items that lowered net earnings, including charges associated with its cost-reduction initiatives and tax expenses from bringing funds from overseas back to the U.S.

Concerns about U.S. tax rates and the costs associated with repatriating offshore earnings have led other devicemakers, such as Minneapolis-based Medtronics, to engineer recent deals that will see them incorporate in other countries.

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Abbott's net income declined to $466 million on $5.6 billion in revenue compared with $476 million on $5.5 billion in revenue during the same period in 2013.

The Abbott Park, Ill.-based company raised its earnings per share guidance for the full year to $2.19 to $2.29 from $2.16 to $2.26.

Second-quarter results included sales from its branded generics business in developed countries, which it plans to sell to Mylan. Abbott will retain its branded generics business in emerging markets, and has forged deals to buy two drug companies overseas: CFR Pharmaceuticals in Chile and Veropharm in Russia.

As the U.S. becomes a tougher market for medical devicemakers, international sales grew to comprise 70% of Abbott's total sales. Sales in emerging markets compose 40% of the total, increasing 7.7%.

Abbott also said it launched a number of new products in the second quarter, including an intraocular lens in Europe and a diabetes test in the U.S.

Follow Beth Kutscher on Twitter: @MHbkutscher

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