Dive Brief:

• Abbott Laboratories on Tuesday reported first-quarter sales of $10.5 billion, a 32.9% increase, failing to meet Wall Street's consensus estimate of $10.69 billion. Abbott's shares were down more than 4% in mid-day trading.
• Results included a 13.1% increase in worldwide medical device sales on a reported basis, as well as a 119.8% jump in global diagnostics sales fueled by COVID-19 tests. However, coronavirus testing-related sales fell from $2.4 billion in the fourth quarter to $2.2 billion in the first quarter, suggesting a slowing of diagnostics demand with the rollout of vaccines. 
• J.P Morgan analysts said Abbott's softer-than-expected top line was "driven largely by a miss in diagnostics (-$313M), with COVID-19 testing sales of $2.2B below us and the Street at $2.5B." CEO Robert Ford told investors on a Tuesday earnings call that $1.8 billion in sales were from its rapid COVID-19 testing platforms as he sees a shift to surveillance. However, he acknowledged that testing is "difficult to forecast right now." 

Dive Insight:

What a difference a quarter makes. Abbott in late January reported fourth-quarter sales of $10.7 billion, including $2.4 billion generated by COVID-19 diagnostic testing, easily beating consensus expectations of $9.9 billion. However, Abbott's first-quarter diagnostics sales missed Wall Street estimates by $313 million as coronavirus test sales came in softer than expected. 

In particular, Abbott rapid COVID-19 testing sales of $1.8 billion missed the Street by about $275 million. The disappointing results come after Quidel, a rival in the antigen testing space, said in March that test demand fell 30% to 40% in February and March from the December high, leading it to reduce its 2021 guidance by $400 million.   

J.P. Morgan analysts noted the U.S. was slower to shift to the home testing market than Europe, though as of this week Abbott is now stocking pharmacies with its over-the-counter BinaxNOW antigen test, adding that they expect the company to "focus on their dominant position" in the at-home antigen testing segment which "should be the stickiest going forward."

Abbott on Monday announced it began shipping its BinaxNOW COVID-19 Ag Self Test to retailers including CVS Pharmacy, Walgreens and Walmart. The antigen test will be sold in two-count packs for $24, which the medtech says is the most affordable over-the-counter coronavirus rapid test available in the U.S. 

While CVS is charging $39 for Ellume's at-home antigen test and $125 for LabCorp’s at-home PCR collection kit, which must be mailed in to get a result, critics contend that even Abbott’s cheaper at-home testing option is still too steep a price to serve as a regular screening tool for U.S. families.

Nonetheless, Ford told investors on the call that he feels "very good" about Abbott's position in the at-home testing market given the medtech's manufacturing capabilities and channel experience. "Given the price point, there's a great opportunity for a lot of households in the U.S. to be able to have testing on hand," he added, with repeat purchases.    

Excluding COVID-19 testing sales in the first quarter, Ford said that the company saw strong growth across all four of its major businesses resulting in base business organic sales growth of nearly 6%.      

Abbott non-coronavirus businesses are in a position benefit from the easing of the pandemic pressures on elective care to offset any potential slowdown in COVID-19 testing. While coronavirus cases have been increasing as of late, Abbott's medical device business reported first-quarter sales of $3.33 billion, an increase of 13.1%, which was $19 million above the Street. 

Diabetes sales came at $980 million, an increase of 23.6%, which was $29 million above the Street and led by another strong quarter from FreeStyle Libre and Libre Sense with sales of $829 million. Ford noted that FreeStyle Libre now has more than 3 million users worldwide. 

Rhythm management and structural heart also had strong performances, with respective Street beats of $20 million and $14 million. However, the rest of of the medical device business fell short of expectations, with misses of $13 million in vascular and neuromodulation as well as $10 million in electrophysiology and heart failure.

Ford said heart failure is "probably the slowest part of the device portfolio" to benefit from the continued recovery from the COVID-19 pandemic as "a lot of those procedures require some ICU stays."