U.S. News

Abbott Laboratories Earns 75 Cents a Share, Excluding Items


Drug and medical device maker Abbott Laboratories posted a big fourth-quarter loss due to a charge related to its $3.7 billion purchase of Kos Pharmaceuticals, offsetting stellar sales growth of its medical devices and drugs.

The suburban Chicago-based company posted a net loss of $476.2 million, or 31 cents a share, compared with a profit of $976.4 million, or 63 cents a share, a year earlier.

Excluding special items, including a charge of 82 cents a share from the Kos acquisition, Abbott earned 75 cents a share for the quarter. Analysts, on average, expected 74 cents a share, according to Thomson Financial.

Sales rose 2.8% to $6.22 billion. But sales increased 14.5% excluding revenues received in 2005 from three products it stopped co-promoting for German drug maker Boehringer Ingelheim in January 2006. Abbott had captured only a slight share of profits from the three products that it sold for years in partnership with Boehringer, including arthritis drug Mobic and Flomax for enlarged prostates.

The company estimated 2007 earnings of $2.77 to $2.83 a share, reflecting its recently announced sale of two diagnostics businesses to General Electric  and sales growth that year of 13% to 15%.

That forecast does not include a gain from the sale of the assets. Including the gain, Abbott's 2007 earnings will be in the range of $4.77 to $4.83 a share.

On Jan. 18, the company announced the planned sale of its laboratory diagnostics business to General Electric for $8.13 billion in cash. The deal, expected to close in the first half of this year, comes on the heels of Abbott's acquisition of Kos Pharmaceutical for $3.7 billion, consummated in December.

Abbott also projected sales growth this year of 13% to 15%.

Prudential Equity Group raised its price target on Abbott shares to $57 last Friday, saying the company's growth prospects look brighter.

"We like what this deal signals regarding Abbott's plans for growth," wrote analyst Larry Biegelsen in a report sent to clients. "We are optimistic regarding management’s ability to redeploy the capital freed up by divestiture given the impressive track record management has seeking out growth opportunities."

Sales of Abbott prescription drugs fell 8.2% in the fourth quarter to $3.54 billion, but rose 9.4% when excluding the year-earlier sales of Boehringer's products. Revenue from Humira, an injectible treatment for rheumatoid arthritis, soared 41% to $620 million, helped by its
more-convenient dosing schedule than rival medicines.

Sales of Depakote, used to treat bipolar disorder and epilepsy, jumped 15% to $405 million. Sales of TriCor, used to lower blood fats called triglycerides, rose 4.3% to $326 million.

But sales of antibiotic Biaxin and anesthetic Ultane both fell 16%, to $235 million and $195 million,respectively, hurt by cheaper generics.

The company's line of diagnostics posted sales gains of 6.4%, to $1.05 billion, while revenue from nutritional products jumped 9.3% to $1.1 billion.

The company reported sales of $389 million for vascular products, primarily those obtained from its purchase last April of Guidant Corp.'s vascular business -- including its Xience drug-coated stent used to prop open coronary arteries that have been cleared of plaque.