Why did ABT's Q4 2024 earnings miss expectations?

Abbott Laboratories' Q4 2024 earnings missed expectations due to reduced demand for COVID-19 testing products, despite strong growth in other areas of the business. Here’s a detailed analysis:

1. Impact of COVID-19 Testing Demand: Abbott's Q4 performance was affected by the decline in demand for COVID-19 testing products. The company reported lower-than-expected sales, primarily due to this factor. This reduction in sales is a key reason for the earnings missing expectations.
2. Strong Growth in Other Areas: Despite the impact of COVID-19 testing demand, Abbott's organic sales grew by approximately 10% year-over-year, excluding COVID-19 testing-related sales. The company's nutrition segment saw growth, with US pediatric nutrition growing by 12% and US adult nutrition growing by 11.5%. Diabetes care sales grew by 21%, with continuous glucose monitors exceeding $1.6 billion in sales. These growths indicate a strong performance in non-COVID-related areas of the business.
3. Overall Financial Performance: Abbott's fourth-quarter earnings were $9.23 billion, with an EPS of $5.27, compared to $1.59 billion and $1.91 per share in the same period last year. Sales increased by 7.2% year-over-year, reaching $10.97 billion, slightly below the expected $11.03 billion. The company's full-year organic sales growth outlook remained positive, with an expected growth range of 7.5% to 8.5% for 2025.

In conclusion, while Abbott's Q4 2024 earnings were impacted by the decline in COVID-19 testing demand, the company's strong performance in other areas, such as nutrition and diabetes care, along with overall financial growth, suggests a resilient business model. The impact of COVID-19 testing demand on earnings can be seen as a one-time factor, and the company's long-term growth prospects remain positive.