Abbott Laboratories (NYSE:ABT) Q2 2023 Earnings Call Transcript

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So, that’s one of the big drivers there. Yes, your question on infant, that obviously contributes as the product – as we are recovering the share and the manufacturing is ramping up again. But it’s really a combination of all of the areas, right. As the device business grows and grows disproportionately that has a higher gross margin profile too, so I would say it’s really across the board on all of the businesses. And this is an area of focus that we have. To your question on gross margin, this is our biggest opportunity, I would say, maintaining this kind of growth rate and then looking at areas where we can improve our gross margins. Your point on endpoint costs are true, we are seeing certain input costs come down, certain commodities come down.

And if we see that continue throughout going into next year, I think we will have a great opportunity there. One of the things that I wanted to make sure we focused on going into this year was that we had the inventory we needed to be able to capitalize on the opportunities we have from the top line perspective. And if you remember, Jayson, second half of last year, supply chain is really challenged, and we had some challenges, right. And that – those supply chain challenges had an impact on our top line. So, going into this year, we told the team, let’s make sure we have got all the inventory we need to capitalize on these opportunities. And one of the ways you do that is you have got to lock in your supply, you have got to lock in your volume, you have got to lock in your price.

So, as commodities come down and we start to look at our contracts for next year, I think that will be a great opportunity for us as we go through it. So, that being said, I will just wrap up here with a few closing comments. We had a very strong start for the first half of the year. We achieved double-digit organic sales growth on the underlying business. We have done it for two quarters in a row now. The growth was broad-based. It’s not focused on one specific area or one geographic area, it’s across the entire portfolio and all of the areas have delivered great performance. The pipeline has been highly productive. And I think that’s the key for us and for our strategy is to make sure that we are bringing new innovations to the market that can kind of sustain our top line and meet unmet needs for patients.

We have raised the organic sales growth and the EPS guidance on the base business. And the EPS guidance on the base business is now forecast is, as I have said in the beginning, to be about $0.15 higher than our original guidance back in January. So, momentum is building. We are well positioned for the second half of the year and heading into next year. So with that, thank you for joining us.

Mike Comilla: Thank you, operator and thank you all for your questions. This now concludes Abbott’s conference call. A webcast replay of this call will be available after 11:00 a.m. Central Time today on Abbott’s Investor Relations website at abbottinvestor.com. Thank you for joining us today.

Operator: Thank you. This concludes today’s conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.

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