Abbott’s Rapid Covid-19 Tests Boost Quarterly Sales Growth

In the U.S., shifting public-health priorities and regulatory challenges made rapid tests hard to come by at the end of last year, while demand for the diagnostics was soaring.

Abbott’s Covid-19 testing business has become a huge part of the company’s overall business, generating about $7.68 billion in sales for full-year 2021, or 18% of total company revenue.

Abbott delivered about 1 billion Covid-19 tests during 2021, including 300 million in the fourth quarter alone, fueled partly by the emergence of the Omicron variant of the coronavirus.

“We see very strong demand for testing to start the year,” Chief Executive

Robert Ford

said on a conference call with analysts.

But Abbott has learned the hard way not to predict too far in advance what Covid-19 testing sales will be, having cut its forecast last year only to see demand surge when variants emerged. For now, Abbott is predicting $2.5 billion in Covid-19 testing sales for 2022, but Mr. Ford said that is based mostly on near-term demand and could change quarter-to-quarter.

“Forecasting testing demand for more than a few months at a time has been challenging,” Mr. Ford said.

Covid-19 tests contributed to overall quarterly sales of $4.47 billion for Abbott’s diagnostics division, up 2.9% year over year. Along with growth elsewhere in the company, including in its nutrition and medical-device businesses, that trend helped propel Abbott’s quarterly revenue 7.2% higher, to $11.47 billion.

After factoring in rising costs, Abbott’s net earnings fell to $1.99 billion, from $2.16 billion in the year-earlier quarter. The company’s adjusted earnings of $1.32 a share still beat Wall Street analysts’ consensus projections for adjusted earnings of $1.21 a share and sales of $10.71 billion, according to FactSet.

Looking ahead, Abbott said it expects adjusted earnings of at least $4.70 a share in 2022. Analysts had been guessing that Abbott’s 2022 adjusted earnings would come in at $4.78 a share.

Abbott forecast that Covid-19 testing-related sales will be $2.5 billion in 2022—significantly down from last year’s total of $7.7 billion. Most of this year’s testing sales will likely occur earlier in the year, Abbott said.

“We see our guidance as a prudent starting point, given the unpredictability of the virus and variants,” a spokeswoman for the company said.

The stock was down 2.5% in late-morning trading Wednesday. At $123.27 through Tuesday’s close, the shares have lost 12% so far in 2022.

Abbott’s role as a leading maker of rapid at-home Covid-19 tests in the U.S. has put the company at the center of efforts to distribute enough of the diagnostics to meet rising demand since late last year as the highly infectious Omicron variant began sending case counts to record levels.

With infections surging, the Biden administration has pressed the industry to catch up with demand for the tests this month, outlining plans for the federal government to buy and distribute 1 billion of the over-the-counter diagnostics. An Abbott division was one of three manufacturers to get federal contracts for a total of 380 million rapid tests earlier in January.

Abbott has said it is planning to make 70 million rapid tests this month, with plans to raise monthly production to 100 million by March. Overall, Abbott has distributed 1.4 billion Covid-19 tests since the start of the pandemic, the company said Wednesday.

Throughout the pandemic, experts have debated the role that rapid tests such as Abbott’s BinaxNow brand should play alongside lab-based testing that takes longer but can deliver more accurate results. A relatively strict Food and Drug Administration review process for new tests also limited the selection available to the public.

During the Omicron wave, rapid tests have become indispensable as the rate of people experiencing milder Covid-19 infections shot up, especially as Americans navigated holiday plans last year and companies struggled with staffing shortages. The tests—when they could be found—have been critical to helping people decide whether they should stay home from work or keep apart from friends and family.

The supply-chain snags that have walloped sectors from car makers to supermarkets since last year have also hit other aspects of Abbott’s business. The company’s Similac-brand baby formula is one of several formulas that have grown hard to find in some parts of the U.S.

The company said earlier this month it is doing “all we can to ensure ongoing and consistent distribution of our products.”

Write to Matt Grossman at [email protected] and Peter Loftus at [email protected]