One year ago, when Abbott Laboratories snapped up St. Jude Medical, one of Minnesota’s largest and longest-running medical device makers, deal skeptics abounded.
“There was a fair amount of concern and criticism when we acquired St. Jude,” Abbott Labs Chief Executive Miles White recalled Wednesday, noting during a call with analysts that the Little Canada company had struggled to grow for several years before the deal. “But frankly, as you can see in the numbers, there’s growth here and there’s going to be growth here. … I’m really happy with the performance of St. Jude.”
Illinois-based Abbott reported fourth-quarter earnings Wednesday that beat analysts’ adjusted estimates by a penny per share and full-year financials that showed just how much the year-old St. Jude deal has helped the overall company.
Medical devices now comprise Abbott’s largest product group by revenue, with more than $10.3 billion in revenue during 2017, amounting to operational growth of almost 6 percent on the year. Adding the St. Jude Medical’s product pipeline of heart device and pain therapies helped offset operational revenue declines in another major medical device category for Abbott — its $1.1 billion stent division, which slid nearly 2 percent compared to the prior year.
Revenue from St. Jude products accelerated during the year, starting with 2.4 percent growth in the first quarter and ending with 10 percent growth in the fourth quarter.
“I won’t tell you that I think 10 percent is sustainable for the year, but they had a 10 percent fourth quarter and they didn’t have to stretch to do it, and the product launches and approvals, mainly the product approvals particularly in the U.S. that I forecasted to you in both July and October, all happened,” White said.
That included getting Food and Drug Administration approval to add MRI-safe labels to pacemakers and defibrillators, and launching the HeartMate 3 left-ventricular assist device, the Confirm Rx implantable cardiac monitor, and the EnSite Precision digital cardiac mapping system.
A company spokesperson said Abbott “achieved all key St. Jude priorities and more than doubled the growth rate of that business since acquisition. We now compete in nearly every area of the $30 billion cardiovascular market.”
Analysts with Leerink Partners wrote that Abbott’s fourth quarter was “its best quarter yet,” particularly in terms of operational sales growth in the U.S.
“ABT is very much an execution story as the company integrates 2 recent major acquisitions … and drives a new product cycle through its Medical Devices business and a steady turnaround in its Nutritionals business,” Leerink analysts wrote Wednesday, using Abbott’s stock ticker abbreviation. (Abbott also acquired diagnostics maker Alere for about $4.6 billion in 2017.)
Including a tax-related charge, Abbott reported an $828 million fourth-quarter loss.
Excluding special items, its 74 cents per share adjusted earnings per share edged the consensus Wall Street forecast of 73 cents per share.
Abbott stock rose more than 4 percent to close at $61.72 on Wednesday, as it announced upbeat guidance for 2018.
Abbott said it expects to post adjusted diluted earnings per share of $2.80 to $2.90 during 2018, compared to the $2.83 anticipated by analysts.
The company also projects “mid-to-high single digit” percentage sales growth in its medical devices division, which includes everything from its St. Jude products to its own Freestyle Libre glucose sensor that recently received Medicare coverage.