Abbott Reports Strong Second Quarter Results Abbott (NYSE: ABT) today announced financial results for the second quarter ended June 30, 2012. Diluted earnings per share, excluding specified...

ABBOTT PARK, Ill., July 18, 2012 /PRNewswire/ -- Abbott (NYSE: ABT ) today announced financial results for the second quarter ended June 30, 2012 .

"Abbott continues to deliver strong results as we remain on track to separate into two leading health care companies," said Miles D. White , chairman and chief executive officer, Abbott. "During the second quarter, we launched and advanced numerous projects in our promising, broad-based pipeline and achieved key milestones in the separation process."

The following is a summary of second-quarter 2012 sales by major business category.

The following is a summary of six-month 2012 sales by major business category.

The following is a summary of second-quarter 2012 sales for select products.

The following is a summary of six-month 2012 sales for select products.

Business Highlights

Received Approval for Next-Generation XIENCE PRIME Drug Eluting Stent in Japan Announced approval in Japan for the next-generation XIENCE PRIME ™ drug eluting stent for the treatment of coronary artery disease. XIENCE PRIME features an enhanced delivery system designed for greater flexibility, ideal radial strength, excellent longitudinal strength and more accurate placement.

Received Positive Opinion for HUMIRA in Axial Spondyloarthritis Received Positive Opinion in Europe for HUMIRA ® in patients with non-radiographic axial spondyloarthritis (axSpA). Also presented new data including Phase 3 results in axSpA, Phase 3 results in peripheral spondyloarthritis, and 10-year data in patients with long-standing rheumatoid arthritis.

Announced Opening of First Nutrition R&D Center in India Established a nutrition R&D center in India in collaboration with Syngene, India 's leading contract research organization. The center will focus on the development of science-based, affordable nutrition products and enable the expansion of Abbott's nutrition product portfolio in India .

Acquired Investigational Compound for Prevention of Acute Kidney Injury Enhanced Abbott's pipeline in renal care with the acquisition of AP214 from Action Pharma A/S. AP214 is in development to prevent acute kidney injury associated with major cardiac surgery in patients at increased risk and has further potential in adjacent indications. AP214 is now known as ABT-719.

Launched Three New Medical Optics Technologies Received U.S. approval for iFS Advanced Femtosecond Laser in cataract surgery and Healon EndoCoat OVD for use as a surgical aid in cataract extraction and intraocular lens implantation. Additionally, Abbott launched in Europe and Japan the iDesign Advanced WaveScan Studio aberrometer for mapping and analyzing corneal aberrations in the eye.

Initiated Phase 3 Study of Elagolix in Patients with Endometriosis Announced the initiation of a pivotal Phase 3 clinical trial designed to evaluate the safety and efficacy of elagolix in female patients with endometriosis. Elagolix is an oral gonadotropin-releasing hormone (GnRH) antagonist, and is also being studied for the treatment of uterine fibroids.

Received XIENCE Indication in Europe for Three-Month Dual Anti-Platelet Therapy Announced that XIENCE PRIME and XIENCE V ® have received CE Mark in Europe for the use of dual anti-platelet therapy (DAPT) for at least three months after stent implantation in patients with coronary artery disease. This is the shortest duration of DAPT for any major drug eluting stent in Europe .

Introduced New Nutritional Products in the United States Announced the launch of several new nutritional products, including PediaSure SideKicks ® Clear for picky eaters, Ensure Clear™ fruit-flavored beverages, ZonePerfect Perfectly Simple™ limited-ingredient nutrition bars, and a new line of EAS® performance nutrition products for athletes.

Presented Strong Phase 2 Results from Abbott's Advancing Hepatitis C Program Presented clinical trial results from two interferon-free, Phase 2 studies for the treatment of hepatitis C, PILOT and CO-PILOT. Additional data from Abbott's advancing hepatitis C program will be presented later this year at the American Association for the Study of Liver Diseases (AASLD) meeting.

Introduced New Laboratory Solutions and Diagnostic Assays Launched key laboratory solutions, including OneLab, a novel, integrated Web-based software platform to help customers manage laboratory information, as well as important diagnostic tests in the areas of metabolics and infectious disease.

Abbott confirms ongoing earnings-per-share outlook for 2012

Abbott is confirming its ongoing earnings-per-share guidance for the full-year 2012 of $5.00 to $5.10 , reflecting another year of expected strong performance.

Abbott forecasts specified items for the full-year 2012 of approximately $0.71 per share, primarily associated with in-process R&D, separation costs, acquisition integration and cost-reduction initiatives. Including these specified items, projected earnings per share under Generally Accepted Accounting Principles (GAAP) would be $4.29 to $4.39 for the full-year 2012. Our full-year forecast of specified items has increased from our previous guidance as it now includes expected 2012 one-time separation costs related to the planned separation of Abbott into two companies. The forecast of specified items does not include bond refinancing costs related to the planned separation, which will be quantified at a later date.

Abbott declares 354th quarterly dividend

On June 8, 2012 , the board of directors of Abbott declared the company's quarterly common dividend of 51 cents per share. The cash dividend is payable Aug. 15, 2012 , to shareholders of record at the close of business on July 13, 2012 . This marks the 354th consecutive dividend paid by Abbott since 1924. Abbott is a member of the S&P 500 Dividend Aristocrats Index, which tracks companies that have annually increased their dividends for 25 consecutive years.

Abbott is a global, broad-based health care company devoted to the discovery, development, manufacture and marketing of pharmaceuticals and medical products, including nutritionals, devices and diagnostics. The company employs approximately 91,000 people and markets its products in more than 130 countries.

Abbott's news releases and other information are available on the company's Web site at www.abbott.com . Abbott will webcast its live second-quarter earnings conference call through its Investor Relations Web site at www.abbottinvestor.com at 8 a.m. Central time today. An archived edition of the call will be available after 11 a.m. Central time .

— Private Securities Litigation Reform Act of 1995 —

A Caution Concerning Forward-Looking Statements

Some statements in this news release may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995, including the planned separation of the research-based pharmaceutical company from the diversified medical products company and the expected financial results of the two companies after the separation. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Abbott's operations are discussed in Item 1A, "Risk Factors," to our Annual Report on Securities and Exchange Commission Form 10-K for the year ended Dec. 31, 2011 , and are incorporated by reference. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments.

Questions & Answers

Q1) What drove sales growth in the quarter?

A1) Excluding foreign exchange, worldwide sales increased 6.7 percent. Reported sales increased 2.0 percent, including an unfavorable 4.7 percent effect of foreign exchange. In emerging markets, sales increased more than 12 percent, excluding foreign exchange, with strong double-digit growth in many of the key emerging markets across Abbott's businesses.

Worldwide Nutritionals sales increased 8.3 percent in the quarter, excluding an unfavorable 2.0 percent effect of foreign exchange. U.S. Nutritionals increased 13.1 percent, with U.S. Pediatric Nutritionals sales growth of 25.3 percent on continued share gains of our infant formula, Similac®, and continued double-digit growth of PediaSure®. U.S. Adult Nutritionals grew 3.0 percent, driven by strong growth of Ensure® and Glucerna®. Several new pediatric and adult nutritional products were launched in the second quarter. International Nutritionals increased 4.5 percent, excluding an unfavorable 3.5 percent effect of foreign exchange, driven by continued growth of both the pediatric and adult segments, partially offset by the transition to a direct distribution model in certain markets.

Global sales of Core Laboratory Diagnostics increased 8.6 percent, excluding an unfavorable 5.3 percent effect of foreign exchange, driven by 15.3 percent growth in the U.S. due to continued growth of ARCHITECT and PRISM, and 7.2 percent international growth, excluding an unfavorable 6.5 percent effect of foreign exchange. Point of Care Diagnostics also drove global Diagnostics sales growth in the quarter.

Worldwide Proprietary Pharmaceuticals sales increased 9.3 percent, excluding an unfavorable 4.4 percent effect of foreign exchange, driven by strong growth across a number of key franchises including HUMIRA, AndroGel® and Creon®.

Q2) What is the update on Abbott's planned separation into two leading health care companies?

A2) In October 2011 , Abbott announced plans to separate into two publicly traded companies, one in diversified medical products and the other in research-based pharmaceuticals. The diversified medical products company will consist of Abbott's branded generic pharmaceuticals, devices, diagnostics and nutritionals businesses, and will retain the Abbott name. The research-based pharmaceutical company, named AbbVie, will include Abbott's current portfolio of proprietary pharmaceuticals and biologics.

The transaction is intended to take the form of a tax-free distribution to Abbott shareholders of a new publicly traded stock for the new pharmaceutical company. The stock distribution ratio will be determined at a future date. It is expected that the two companies will each pay a dividend that, when combined, will at least equal the current Abbott dividend at the time of separation.

In June, Abbott filed the initial Form 10 for AbbVie, which provided historical results for AbbVie on a GAAP basis for the past three years, and for the first quarters of 2012 and 2011. These historical results included an allocation of certain costs, previously held at the corporate level, to the business. In addition, senior management assignments for AbbVie were identified. We expect to file amendments to the Form 10 as more information becomes available.

We continue to expect the separation to be completed at the end of this year.

Q3) What was the gross margin ratio in the quarter?

A3) The gross margin ratio before and after specified items is shown below (dollars in millions):

The adjusted gross margin ratio was 63.3 percent in the second quarter, an increase of 310 basis points from the prior year quarter, driven by improved efficiencies across a number of operating divisions, favorable product mix and the effect of foreign exchange.

Q4) What drove ongoing SG&A and R&D investment?

A4) Both ongoing SG&A and R&D investment reflect Abbott's continued investment in programs to drive future growth. Ongoing R&D expense as a percentage of sales was 9.8 percent, or 10.3 percent on a GAAP basis, reflecting continued investment in Abbott's pipeline, including programs in vascular devices, diagnostics, nutritionals, immunology, neuroscience, chronic kidney disease and hepatitis C.

Q5) What was the tax rate?

A5) The ongoing tax rate this quarter was 15.0 percent, in line with expectations.

Q6) How did specified items affect reported results?

A6) Specified items impacted second-quarter results as follows:

Acquired in-process research and development is related to the acquisition of AP214 from Action Pharma A/S. Separation costs are expenses related to the planned separation of Abbott into two leading health care companies. Restructuring/integration/other is associated with previously announced restructuring actions and acquisition-related integration costs.

The impact of specified items by Consolidated Statement of Earnings line item is as follows (dollars in millions):

Q7) What are the key areas of focus in Abbott's pipeline?

A7) In the first half of 2012, we made significant progress in advancing both our pharmaceutical pipeline, which currently includes more than 20 compounds or new indications in Phase 2 or Phase 3 development, as well as our diversified medical products pipeline. Following are highlights: