Albert Corporation held its second quarter financial report conference call for 2025, hosted by Mike Camilla. Attendees included Chairman and CEO Robert Ford and CFO Phil Baudre. The meeting discussed the company's financial results and expectations, while also reminding participants to be mindful of potential risks and uncertainties that may impact the company's operations.

In the second quarter of 2023, Abbott demonstrated strong business performance, achieving high single-digit sales growth, especially with a 7.5% growth excluding new COVID testing sales, showing the steady development of the company's core business. Nutrition sales grew significantly, with strong demand for adult nutrition products such as Ensure and Glucerna worldwide. Despite a slight decline in diagnostic business due to lower COVID testing sales and the impact of procurement plans in China, the core laboratory diagnostics business continued to show strong market demand. Sales of branded generic drugs in emerging markets, especially in India, China, Asia, Latin America, and the Middle East, grew by nearly 8%, reflecting a growing demand for high-quality medical solutions. Medical device business growth was particularly strong, reaching 12%, with double-digit sales growth in areas such as diabetes care, heart failure, structural heart, and cardiac arrhythmia management. In addition, Abbott emphasized progress in technological innovation and product pipeline expansion, including key achievements in partnership with Epic, electrophysiology, and structural heart business, as well as innovative breakthroughs in the areas of arrhythmia management and heart failure therapy.

The company reported its performance for the second quarter, stating that sales had grown organically and adjusted earnings per share were $1.26, a 1% increase compared to the previous year, exceeding market expectations. The fluctuation in foreign currency exchange rates had a positive impact on the company's sales and earnings for the second quarter. Adjusted gross margin, research and development expense ratio, sales and administrative expense ratio, and operating profit margin all improved. Based on current exchange rates, the company predicts that the foreign exchange impact on annual sales will be relatively neutral, and that the third quarter is expected to see a favorable impact of around 2% on sales. The company expects adjusted earnings per share for the third quarter to be between $1.28 and $1.32.

At the latest meeting, Johnson & Johnson detailed adjustments to its performance expectations for 2025, emphasizing that the adjustments are mainly due to the performance of the diagnostics business in non-US markets and the adverse impact of the COVID-19 diagnostics business. Company executives pointed out that despite facing multiple external pressures including declining sales of Covid tests, challenges in the core laboratory market in China, and changes in funding for HIV testing in the US, Johnson & Johnson still expects to achieve high single-digit growth. At the same time, the company is confident in upcoming market activities and product launches, including the Vault project in the US, the Tact D Flex Duo in international markets, and the introduction of the new Alinity system, which is expected to help the company overcome current challenges and achieve long-term stable growth.

Although the company is facing some headwinds and challenges, especially the interruption of the VP and China core laboratory business, the company still commits to achieving double-digit growth targets. It is expected that in the near future, these unfavorable factors will no longer exist, and the company will maintain strong growth momentum in the core laboratory business, including growth in the United States, Europe, and Latin America. Overall, the company believes that its financial expectations, including high single to double-digit earnings per share growth, are in line with historical growth, this year's guidance, and long-term sustainable growth goals. The company is confident in this business sector and looks forward to strong development after overcoming current challenges.

The discussion focused on whether the company could see a turnaround of the one-time adverse factors affecting this year's performance and the possibility of accelerating growth in the future. In particular, it was mentioned that the performance in the field of electrophysiology has exceeded expectations and could be a driving factor for accelerated growth. At the same time, the discussants mentioned that although it is still too early to discuss specific details, they are optimistic about future performance growth.

Abbott achieved significant performance growth in its diabetes management and electrophysiology (EP) product lines, especially in the United States with its Libre product line achieving double-digit growth. In the diabetes management field, Abbott observed strong growth momentum in various segmented markets, especially in the intensified insulin user segment market and non-insulin user segment market. With more markets starting to provide reimbursement for the Basil product, Abbott expects to continue maintaining its growth rate and market leadership position globally. At the same time, the electrophysiology product line has shown good growth trends with the launch of Volts in international markets.

Discusses the innovative impact of dual analyte sensor technology on the continuous glucose monitoring (CGM) market, especially for the user groups that require close monitoring. This technology can prevent diabetic ketoacidosis, which is particularly important for children and adult patients, while also providing a pathway for doctors to prescribe SGLT drugs to manage cardiovascular risks in diabetic patients. Additionally, it mentions that the EP business achieved double-digit growth this quarter, with accelerated growth in the US market, and is focusing on expanding the products to international markets.

The company tends to launch new products in a limited manner in order to collect direct feedback and optimize the product before a full market release. Currently, they are focusing on feedback from clinical trial participation sites, where the product has shown strong performance in comparison to competitors, particularly due to its unique balloon design tailored for specific medical procedures. Early cases demonstrate significant effectiveness in real-time feedback from organizational contacts, reducing application times and muscle contractions, suitable for market segments that do not require general anesthesia. The company's team has excelled in the past few years and is now transitioning to a new phase of strategy, introducing a more competitive PFA cap to further expand market share.

The conversation revolves around Libre products' market strategy, including reactions to competitive bidding, expectations for coverage of Type 2 diabetes patients, and the potential market-driving effect of dual ketone sensors.

The discussion focuses on the market strategy, potential impacts, and the role of continuous glucose monitor (CGM) technology as a behavior modification tool in health management and disease prevention. It mentions the competitive bidding route that CMS may take and its impact on the CGM market, as well as companies' commitment to becoming leaders in cost and scale. Furthermore, it emphasizes the significant effects of CGM as a wearable device in promoting health, reducing the risk of diabetes and heart disease, assisting in weight loss, and improving productivity. It also expresses support for the US health promotion initiative and anticipates that continuous glucose and ketone sensor technology will accelerate market share growth.

The discussion focused on the company's CRM product's successful performance in the market and its growth potential, highlighting the positive impact of product innovation, marketing promotion, and international expansion on growth. At the same time, the reasons for the EPS guidance adjustment were explored, indicating that despite the slight decline in organic growth and operating profit margins, the midpoint of the EPS guidance was maintained through offsetting by other factors.

Discussed how sales driving factors can reduce risks, while also mentioning the current exchange rate's impact on foreign exchange and its neutral impact on income, but still poses a headwind to profits. Additionally, mentioned the impact of tariffs in the second half of the year, and how these factors affect overall business costs through the inventory system.

It was pointed out in the discussion that the impact of tariffs on finances has decreased from previous estimates to about $200 million. At the same time, currency fluctuations in the past few years have had a negative impact on earnings per share (EPS) on average, although this impact has eased in recent times, it still has caused a certain negative impact on annual performance.

The discussion focuses on the changes in the healthcare technology and diagnostics industry merger and acquisition market, and whether larger scale mergers and acquisitions may occur this year.

The discussion revolved around the company's strategic planning, including the attitude towards mergers and acquisitions (M&A) in the current market environment, emphasizing selectively seeking opportunities that can bring strategic advantages and high returns, rather than just pursuing expansion in scale. At the same time, the company discussed considerations for next year's EPS forecast, including known exchange rates and tariff factors, and emphasized that the company is actively addressing these external challenges by implementing measures such as establishing new manufacturing bases to ensure long-term profitability.

In the discussion, the market dynamics of medical technology, especially in the field of structural heart disease, were mentioned. The focus was on the launch of the Amulet product and the upcoming competitor trial readings, which may have a positive driving effect on the entire market, creating a "rising tide lifts all boats" situation. Although current consensus estimates suggest that growth in the structural heart disease business may slow down next year, there is optimism expressed in the discussion about future accelerated growth and expansion of the total available market (TAM), believing that this will have a positive cascading effect on all relevant devices currently in the market.

The medical equipment company discussed the market expansion strategies of their competitors, emphasizing the importance of data-supported products, and mentioning their own ongoing experiments expected to be completed this year. In addition, the company has invested in research and development to accelerate the development of second-generation products, focusing on improving product usability and deployability, which has received positive feedback from doctors and teams. These strategies, combined with the growth of EP and Afib surgical procedures, are seen as important growth drivers for the company.

The dialogue focuses on the market growth expectations and business strategies of TBR (transcatheter valve repair) business, as well as how to increase market share through new products like Navi Tour and the next generation expandable platform. Special mention is made of the success drivers in international markets and the expansion plans in the US market, as well as the opportunities brought by competitors exiting the European market. Additionally, the impact of expanding the clinical team and product labeling on market growth is also discussed.

The discussion focuses on two key issues: the latest developments in patent litigation and possible resolution paths in multi-district litigation (MDL) processes; and a detailed exploration of the expected approval time, market launch plans, pricing strategies, and integration speed with different pump systems for dual-component sensors.

The spokesperson emphasized that they will not comment on specific lawsuit cases, but reiterated their support for controversial products that have been on the market for a long time. Although the product does not contribute significantly to the company's revenue, its safety and compliance have received wide support from the medical, regulatory, and scientific communities. The spokesperson stated that if the respect for science, regulatory processes, and the medical community is neglected, the company will find it difficult to continue selling this product. Currently, support from various stakeholders shows a consensus on resolving issues and maintaining the product's market position, advocating that decisions on how to serve America's most vulnerable populations should be made by medical professionals rather than lawyers.

The discussion focused on the launch time, pricing strategy, and integration plan with major insulin pump companies in the United States for a new type of sensor that can continuously measure different analytes. The spokesperson did not disclose specific timing and pricing information but confirmed that clinical trials have been completed and stated that they are in communication with multiple insulin pump companies to ensure that the product can serve a wide range of target populations.

During the discussion, the company's senior management emphasized the strategic importance of mergers and acquisitions (M&A) in the diagnostic and equipment field, expressing confidence in enhancing asset value and expanding medical service coverage through acquisitions. At the same time, the company's current high business growth rate makes it more cautious and selective in its M&A choices.

Discussed the opportunities for biosimilar drugs entering the market and their impact on market penetration, emphasizing the importance of expanding business in a capital-efficient way by utilizing existing infrastructure and sales force. It was also mentioned that increased sales, general, and administrative (SGNA) expenses may be necessary in education market and increasing market penetration of biological agents, particularly in emerging markets. The positioning of product portfolio was also mentioned, with a focus on autoimmune diseases, women's health, oncology, and GLP-1 drugs, and it is expected that the launch of these biosimilar drugs will contribute to business growth in the coming years.

The company achieved high single-digit sales growth and double-digit earnings per share growth in the first half of the year, while also successfully expanding gross margin and operating profit margin by approximately 100 basis points. Despite facing some temporary challenges and tariff impacts, the company remains optimistic about sales growth in the second half of the year, expecting quarterly revenue to continue to grow at a high single-digit rate and annual revenue to exceed one billion US dollars. The company has adjusted its sales growth guidance for the second half of the year to address specific challenges in the diagnostics field, and has reiterated its full-year performance guidance, demonstrating the resilience and strong performance delivery capability of its diversified model. The company shows great confidence for the year ahead, expecting the current positive momentum to continue.

This phone conference has ended. The recorded playback of Abbott's phone conference network will be available on its Investor Relations website after 11 am today. Thank you everyone for your participation. You may now disconnect. Have a great day.