Abbott Laboratories
Q3 2020 Earnings Call Transcript

Published: 21 Oct 2020

[Operator:]

Good morning and thank you for standing by. Welcome to Abbott's Third Quarter 2020 Earnings Conference Call. All participants will be able to listen only until the question and answer portion of this call. This call is being recorded by Abbott. With the exception of any participant questions asked during the question and answer session, the entire call, including the question and answer session, is material copyrighted by Abbott. It cannot be recorded or rebroadcast without Abbott's express written permission.

[Scott Leinenweber:]

Good morning and thank you for joining us. With me today are Robert Ford, President and Chief Executive Officer, and Bob Funck, Executive Vice President, Finance and Chief Financial Officer. Robert and Bob will provide opening remarks. Following their comments, we'll take your questions. Before we get started, some statements made today may be forward-looking for purposes of the Private Securities Litigation Reform Act of 1995, including the expected financial results for 2020. Abbott cautions that these forward-looking statements are subject to risks and uncertainties, including the impact of the COVID-19 pandemic, on Abbott's operations and financial results that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological, and other factors that may affect Abbott's operations are discussed in item 1A, Risk Factors to our annual report on Form 10-K for the year ended December 31, 2019, and in item 1A, Risk Factors in our quarterly report on Form 10-Q for the quarter ended March 31, 2020. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law. Please note that financial information provided on the call today for sales, EPS and line items of the P&L will be for continuing operations only. On today's conference call, as in the past, non-GAAP financial measures will be used to help investors understand Abbott's ongoing business performance. These non-GAAP financial measures are reconciled with the comparable GAAP financial measures in our earnings news release and regulatory filings from today, which are available on our website at abbott.com. Unless otherwise noted, our commentary on sales growth refers to organic sales growth, which excludes the impact of foreign exchange. With that, I will now turn the call over to Robert.

[Robert Ford:]

Thanks Scott. Good morning everyone and thank you for joining us. Today we reported organic sales growth of 10.5%, and ongoing earnings per share of $0.98, which reflects high teens growth versus the prior year. Based on our performance and momentum through the first nine months, along with our expectations for the remainder of the year, we increased our earnings per share guidance to at least $3.55 for the full year. This speaks to the strength and resilience of our diversified business model, as well as our ability to innovate and deliver in this challenging environment.

[Bob Funck:]

Thanks, Robert. As Scott mentioned earlier, please note that all references to sales growth rates, unless otherwise noted, are on an organic basis. Turning to our results, sales for the third quarter increased 10.6%, which was led by strong performance in nutrition and diabetes care, sequential growth improvements in cardiovascular and neuromodulation devices, along with global COVID testing related sales of approximately $880 million in the quarter. Foreign Exchange had an unfavorable impact of 1% on sales, which was somewhat favorable compared to expectations. Had exchange rates held steady since the time of our earnings call in July. reported sales increased 9.6% in the quarter. Regarding other aspects of the P&L, the adjusted gross margin ratio was 57.4% of sales. R&D investment was 6.3% of sales, and SG&A expense was 26.7% of sales. Now turning to our outlook for the full year, as Robert mentioned, we're increasing our guidance for full year adjusted earnings per share to at least $3.55, which includes our expectation for strong double-digit sales and earnings growth in the fourth quarter. Based on current rates, we would expect exchange to have a negative impact of approximately 1.5% on our reported sales. We forecast full year net interest expense of around 500 million and continue to forecast a full year adjusted tax rate of 15.6%. With that, I will now open the call for questions.

[Operator:]

Thank you. And our first question comes from David Lewis from Morgan Stanley. Your line is open.

[David Lewis:]

Good morning. Just a couple of related questions, Robert, I wanted to maybe think about next year a little bit given we're closing out this year and obviously investors are in the process of trying to figure out '21 estimates for a whole bunch of companies and whether they're achievable. In your case, at least for us, they clearly look beatable. But I wonder if on a high level, you could share with us how you're thinking about growth, earnings and frankly, the opportunities for reinvestment for Abbott in '21. And then I'll have a quick follow up?

[Robert Ford:]

Sure, I think it's - we had a very strong quarter, which gave us confidence here to be able to raise the bottom end of our forecast this year, and obviously, that momentum that strong momentum is going to - will carry into 2021. It's a little premature here David to kind of start talking specific about guidance. But I give some general comments here. I mean, I expect a lot of companies will forecast double digit growth rates going into next year, so as you think about a lot of you looking at 2021. But I think most of that is because there's - a lot of them are going to be coming out of a hole, right, they're going to have a certain amount of easy cons, especially if you look at like Q2 and Q3 this year. So they're essentially kind of making up for a lost year and getting back to '20 - getting back to 2019. We're in a very, very different position than that. We're forecasting double digit earnings growth this year, so when we look at the trajectory that we have going into 2021, which is a trajectory of strong double digit top and bottom line growth rates, I think that's pretty differentiated and pretty unique here because we're not coming out of that hole.

[David Lewis:]

Okay, thanks so those powerful thoughts, Robert. And just maybe following up on COVID testing here, I mean, obviously, you're testing revenues are going to be up very sharply in the fourth quarter on the strength of Binax. It sounds like thinking about the earnings, could be thinking about it COVID testing number this year, that's certainly in excess of kind of 2.7 billion, just want to get your commentary on that. And as you think about next year, and you think about new test capacity, Panbio, how should we think or how are you thinking about sort of duration of testing relative to kind of a $2.7 billion base here in 2020? Thanks so much.

[Robert Ford:]

Sure. So we had just under $900 million of COVID testing this quarter. I think it was just under $100 million favorable to some of the forecast there. A lot of that was driven by our manufacturing ramp up, our scale up and the new products we launched. So we actually exited the quarter at a higher run rate than that. That run rate into Q4 would be around $1.3 billion, $1.4 billion of sales at that run rate. But if I talk about COVID sustainability, I know this is a key topic here. I'd say when we talked about testing back in July earnings. I talked about the testing demand over four different phases, the pandemic phase, the recovery phase, a vaccine phase and a post-vaccine phase. And I shared that - my view here was that a lot of the volume was still going to be in this kind of pandemic recovery phase that even with a vaccine, you'd still get kind of more of a steady state, but a lot of the volume was going to be coming during this pandemic and recovery phase. I still think we're in this phase right now David, depending on what country you are or stay, you're in a pandemic or in a recovery, and I expect that to last definitely all next year.

[David Lewis:]

Very helpful, a lot to look at there. Thank you, Robert.

[Operator:]

Thank you. Our next question comes from Vijay Kumar from Evercore. Your line is open.

[Vijay Kumar:]

Hey, guys, congrats on a solid here and thanks for taking my question. So Robert, maybe back in the fiscal '21 question, I guess, maybe if I approach it slightly differently. Sweet numbers are EPS 4.25, based on the updated guidance for '20 of 3.55. That's still close to 20% earnings growth and I think implicit in those assumptions would be procedures normalized and obviously that that has a drop down on margin. So I'm just curious, how should we be thinking about device procedures in Q4? Because like you said the comp isn't easy for you guys, right? I mean, you guys, you will be doing high singles organic in fiscal '20 versus declines or flattish for other - some of your peers, so maybe if you could just unpack that a little bit and put that in context will be helpful.

[Robert Ford:]

Sure. So, yeah, I mean - as I said, looking at the 2021, the trajectory, the growth trajectory is those high, strong double digit top and bottom line Vijay. And again, I think that's going to be predicated on two factors, just like we spoke about it in July in the earnings call, it's going to be the continued recovery of our base business and then obviously, our ability to ramp up COVID and COVID testing. If you look at the businesses that were most hit by COVID, devices, and core lab, so laboratory testing outside of - out of COVID, those have shown a really, really nice recovery, starting in June into July, and then into the third quarter. September was actually our highest month of absolute sales in the quarter for both medical devices, especially in the cardiovascular area, across all areas. We saw a little bit of a July kind of pent up growth as the lockdown started to get reduced a little bit, we saw that growth rate in July. A lot of that was some pent-up demand. So if you look at the third quarter, I like to look at it the trajectory from August to September. And when you look at that in our cardiovascular devices, those growth rates in September were much better than the growth rates in August and the growth rates in September, were better than the third quarter overall. And that's true for both US and internationally for both devices - for devices. In core lab, we actually saw a nice growth in the month of September in the US, in Europe and in China also. So I like the rate of recovery that we're seeing in our base business. If you look at electrophysiology that was an interesting one, where when you look at the sales were hurt a little bit by the capital cycle, which is why we're only at about 2%, 3%. But if you look at the consumable part of our business, so which probably reflect better the return of procedures, so looking at mapping catheters and therapeutic catheters, we saw a high single digit growth rate there. So our plan here is to continue to see that recovery, and it's not just about recovery of COVID and easing, it's also the pipeline. And we've got a very rich pipeline in our cardiovascular area too and in our core lab business, the continued rollout of Alinity, improving our menu, expanding our menu, that's all helping us become more competitive in this recovery process.

[Vijay Kumar:]

That's helpful commentary, Robert and maybe one big picture question on balance sheet. You guys are really in an enviable position here. Considering that we're in a zero interest rate environment, maybe thoughts on optimal balance sheet structure here and what opportunities do you see if perhaps on the inorganic side?

[Robert Ford:]

Yeah, listen, our financial is stronger and is very healthy, we're generating nice cash and we're allocating to our needs. We don't see any changes Vijay to our allocation strategy. We focus on paying strong and growing dividend, it's part of our identity. It's different from a lot of med tech peers that that don't have that dividend. So we're going to continue to support that growth of the dividend. We haven't done a lot of share repurchasing, mostly to offset our dilution. A lot of our investment here has been to drive organic growth. So taking our balance sheet, and applying that cash to invest in areas where we see opportunities for growth, that's where we've been focused on. And I think that's the best return we've got right now for our shareholders. If you look at what we've done with COVID and the investments we've made there, the speed at which we've been able to make those investments and execute it because of that strategic flexibility that we have in the balance sheet, talked about manufacturing expansions with Libre, which we're definitely going to need as we expand the portfolio and build a portfolio and other parts of our medical devices too.

[Vijay Kumar:]

Got you, thank you guys, I'll just get back in the line.

[Operator:]

Thank you. Our next question comes from Robbie Marcus from JP Morgan. Your line is open.

[Robbie Marcus:]

Great. Thanks for taking the question and congrats on a good quarter. Robert, maybe, if we could spend a minute on diabetes here, you've had a lot of approvals over the past few months with Libre 3 and in Europe Libre 2, for a while now in the US and then also the Libre Sense starting to move into the consumer area outside of diabetes. I was hoping you could talk about your expectations, just for Libre growth, both US and outside the US, maybe when we could see a Libre 3 in the US, which would really help close the gap versus DexCom and your thoughts on the non-diabetes component.

[Robert Ford:]

Sure, Robbie, listen, I think Libre continues to perform really well. And as you saw our pipeline continues to be highly productive. We had a good growth rate this quarter, over 35%. That was a real nice sequential improvement versus Q2. I think due to our sales were just under $600 million and Q3 sales were just under 700. So I think we had a nice sequential Q2 to Q3 kind of growth rate. We continue to focus on our strategy of kind of mass market opportunity, mass market potential and not see this as a niche play. We now have over more than 2.5 million users that's significantly more than then our next competitor. Regarding Libre 2 in the US, we were able to get the product on shelf - in the retail shelf mid August, so we had about a partial quarter over here, but the customer response has been really positive. We've heard - just you're talking about closing the gap here with Libre 3, listen Libre 2 in my view has already done that and that's what we're hearing from our customers here. It's by far the smallest easiest sensor to use, got the best accuracy, low range, high range, mid range, adults, children. The readings every minute, which is unique to Libre, allows us to get a better alarm performance. And we can continue to mass produce it and sell it at a fraction of the price so that you're not really overburdening the healthcare system. So I think that's worked very well. Libre sales in the US, they actually grew 20% sequentially, Q3 versus Q2, and about 45% year-over-year. And that's what just about 40 days' worth of sales of Libre 2 in the quarter. So I've seen positive momentum and some of the prescriptions because our strategy is focused more in the retail environment, we get to see that prescription data every week, so we're seeing nice trend from high prescribers. We're also seeing a nice pickup here for the pediatric endocrinologist segment. So you see a nice pickup in prescriptions over there too. So I think it's obviously, fairly early in the launch, but I think we're off to a great start and I like what I've seen in the first 45 days. Regarding Libre 3, listen we always said that Libre was going to be a platform and we're going to be building on this platform. And are we funding R&D programs to continue to innovate. Yeah, we will have a Libre 4, we will have a Libre 5, but we get so that we get so caught up on every version over here, we might miss the bigger picture. And the bigger picture here is that to be able to sustain an ability to penetrate the mass market, you do need to have a variety of different platforms and continuously innovate. About bringing - about timing of Libre 3 in the US here, Robbie, I'm not going to provide details to you on that timing here. Obviously, the US team is having a good time launching Libre 2 right now. What I would say is it's a very different segment than the cardiovascular device segments as it relates to clinical trials in the sense that we haven't seen the impact of kind of Coronavirus slow down our trials here within this space. So you'll hear about Libre 3 approval when we get it and we issue a press release, just like we did with Libre 3 in Europe. On Libra Sense, listen we've always talked about we could expand beyond diabetes. And this is our first step over here. The goal with this product specifically is to help kind of athletes achieve kind of better performance by using data so they can kind of better fuel themselves to avoid fatigue. It's a different business model, Robbie, it will be a different business model, different channels, it will probably be a different usage pattern and frequency in this segment. But obviously, if you look at the athletic training and sports population, it's a significantly large population here. So we've actually built a team that's separated from the diabetes group that's just focused on developing this opportunity. We've done an initial collaboration here, which I think is going to provide us a great visibility on how this kind of very large mass segment needs to be addressed and the different strategies we'll be able to kind of deploy.

[Robbie Marcus:]

Great, that was really helpful. And maybe just a quick follow up, Robert, you talked about how the testing business in diagnostics is more than just COVID. It's the whole platform. Alinity is just getting going now in the US. How should we think about Abbott share gains over the past few months? You've obviously made huge strides in COVID testing, it's a leading platform, has that driven share shifts over to Alinity and some of your other platforms during this time that sets you up better going forward?

[Robert Ford:]

Yeah, I mean, I think we already had a real strong momentum before COVID with the rollout of the Alinity system. We were having great share gains, both in the immunoassay, and then the Clin Chem business also. So that obviously with COVID in Q2, a lot of the hospitals were - and the labs weren't focused so much on migrating of systems. But before that, we were renewing our existing contracts and in the 90% range, and new tenders that were coming up for bid, we were in that kind of 45% to 50% kind of win rate. So you put that together and you look at our sales growth, we were definitely taking share. The placements of instruments took a little bit of a pause in Q2. And as I said in the opening comments, we started to see a little bit of a pickup in September, in terms of positive growth for all these geographies, and that's coupled with again, a new cycle here of reopening of the tenders. I think that it's also allowed us Robbie with our position in COVID testing to be viewed as a more holistic partner to a large - to large systems, whether they're in the US or internationally and that's ultimately helped us. I think one of the things that's definitely helped us in our diagnostic business has been our molecular platform with the Alinity m launch. That's obviously had a kind of little bit of catapult effect with that launch, but in that platform, we have more than just COVID testing. So yeah, I think it's a good opportunity for us overall for diagnostics.

[Robbie Marcus:]

Appreciate the thoughts.

[Operator:]

Thank you. Our next question comes from Larry Biegelsen from Wells Fargo. Your line is open.

[Larry Biegelsen:]

Good morning. Thanks for taking the question. A couple of product questions and then one big picture question, Robert. Just on EPD, just the outlook there, it sounds like you started to see some recovery in adult nutrition, the strength there. Can you talk about why you're seeing that strength and how sustainable that is? And I have one follow up.

[Robert Ford:]

Sure. Hey, Larry. Yeah, EPD, we definitely saw some more challenging market conditions in this quarter than what we had in Q1 and Q2. If you look at how COVID kind of progressed a little bit, it hit the developed markets, I think harder in Q2, and then the emerging markets, it hit us more in Q3, especially markets like India, Russia, some markets in Latin America also. But when - we looked at a lot of the data, and we started to see a similar trend in September than what we saw in June in the developed markets, right, so you had that kind of drop and then it starts to kind of recover. So I kind of look at EPD is following the same trend that we saw in devices and core lab in Q2, but just a quarter later. So I think we'll see some of the recovery there. It's a good business. A lot of the portfolio is still very resilient. 50% of our portfolio is tied to chronic diseases. So that's the piece that then kind of got impacted, the acute part of the portfolio has actually done pretty well. So we expect to see that recovery curve continue into Q4. On the nutrition side on your question, it was on an adult, right? It was very strong growth in adult. And one of the things that the team did really well, starting in Q2 is they started to look at our messaging regarding the immunity benefits of our adult nutrition. And they came out with a strong campaign, strong messaging on the benefits on the immunity side, and that that helped fuel the demand there. I think we saw probably at the end of Q1, there's a little bit of pantry loading Larry, we saw that in the US, saw a little bit of that internationally too. But what we did - what we were able to do with that is we actually picked up new users and we picked up market share. So the combination of new users and market share and then the immunity messaging resonating with consumers and physicians is really kind of strengthened that that portfolio. And I think it's definitely sticks out a little bit in terms of our growth rate. But a lot of that what we're seeing is share gain and market expansion based on the data that we're seeing.

[Larry Biegelsen:]

That's helpful and then just one big picture question. It sounds like COVID testing should continue to be strong next year. But if you have a year at some point where COVID testing declines because we have a safe and effective vaccine, how are you thinking about reinvestment and managing, potentially smoothing out earnings? Is there any thoughts kind of, if we did see a decline in COVID testing at some point, how you would manage that? Thanks for taking the questions.

[Robert Ford:]

Yeah, I don't think we're going to see that kind of decline in COVID testing. I think even with a vaccine, you're going to see kind of more of a steady state and we've talked about that and we planned for that. The other part of your question regarding kind of reinvesting in the business, well, we're going to be able to do that next year and still deliver pretty differentiated, unique kind of earnings growth and earnings power. As I said, we've got over 100 new products in our pipeline that we're going to invest in. We can either accelerate their development and they're coming to market, we've got opportunities to expand, market development, the opportunities that we have in MitraClip to be able to invest in that, strengthening of that market, strengthening our competitiveness. So I think we've got a great opportunity here with COVID testing to deliver differentiated earnings power and growth while at the same time investing in this pipeline that Abbott has built over these years to sustain that growth rate, I'll just go back to the notion here that the COVID assay might go down to a steady state. But if you think about the installed base that we're building because of COVID, especially on the rapid side, I think that's going to be a strong growth driver for us going forward. I'll give an example of that, when we started the year, in the US we had over 20,000, ID NOWs placed in the US alone, in four months, we've already doubled that placement rate by more physician offices, retail channels and a variety - universities and different channels. So what we're building here with the COVID test is an installed base that will then be able to run different kind of assays and different tests. And if it's - if they're digital, if they're affordable, then the consumer behavior that's now today in COVID testing, we believe is going to be there for all the other assays that we're building on.

[Larry Biegelsen:]

Thank you very much.

[Operator:]

Thank you. Our next question comes from Bob Hopkins from Bank of America. Your line is open.

[Bob Hopkins:]

Thanks, and good morning and congrats on all the good results this quarter. I just sent two quick follow ups, first, is just done on COVID testing, does that $1.3 billion, $1.4 billion run rate that you highlighted include contribution from the OUS antigen test or is that more upside to come as that fully launches in the fourth quarter.

[Robert Ford:]

It's got some of it in there, Bob, obviously, when you're doing this kind of ramp up the way we're doing it across continents, very different platforms there, we want to make sure that we can deliver. So in that number, you've got some of that international antigen there. But obviously, we're working that. We could we could probably do a little bit better than that in that international antigen also.

[Bob Hopkins:]

Okay, and then just one follow up on the device side ex diabetes, I was wondering if you could talk a little bit about vascular in Q3 as that was down, I think 10%, which is a little worse than some of the other businesses. And then more importantly, Robert, I'd love to get your view, just like based on everything you're seeing right now, what are your directional thoughts on the outlook for 2021 for medical devices ex diabetes? Is there - should we be thinking about that as potentially close to normal in terms of the business or just how much uncertainty you think there is as we think about devices for next year based on what you're seeing now?

[Robert Ford:]

Sure, on the outlook there of devices, I would say, listen, I think that we had a really big impact in Q2 across the world, US and internationally because I think a lot of - this was a new thing, this was a new virus and the shutdown was pretty dramatic, was pretty significant. As I think about our device portfolio, there are still cardiovascular needs, people still need to get a pacemaker, there's still a need for mitral repair, there's still a need for ablation, for a fit. I mean, those are all conditions that the reason we're in them is because there were medically scientific needs for us to be in them. So I see the market is still an opportunity for growth. And I think that the hospitals and hospital systems have learned now how to deal with that and how to deal with that pandemic. You've seen certain systems kind of focus on treating COVID and keeping other hospitals more focused for electives. So I think that - I believe the device portfolio that we've built is relevant, is important and even in a COVID kind of world those are medically necessary procedures. And we're working with hospitals to assist them in opening and we'll see it continue to grow. We've seen a nice progression from Q2 to Q3. I expect that progression to continue into Q4. Yeah, there could be some lumpiness here and there, but I think the progression is going to be positive. And my expectation is that we'll see kind of devices get back to that growth rate that we previously had in those high single digits next year.

[Bob Hopkins:]

And then on vascular, sorry?

[Robert Ford:]

On the vascular question, yeah, we had - it's interesting. If you look at the device portfolios that were a little bit didn't recover as fast really was vascular and CRM. I think some of those are affected by some of the pricing dynamics that still exist in that channel. Vascular you've got an average price erosion there of 5% to 6%. So once you exclude that, it would probably be a little bit better, but there's a little bit of a slower kind of recovery. We did see vascular is right now at about 95% of their kind of pre COVID levels. So there's been a rebound. But I think there's been a little bit of a price impact there also.

[Bob Hopkins:]

Thank you very much.

[Operator:]

Thank you. Our next question comes from Joanne Wuensch from Citibank. Your line is open.

[Joanne Wuensch:]

Good morning and thank you for taking my question. Actually, there are two of them. And I'll put them up front. Can you give us an update on your structural heart platform and what we might be looking forward to in the next 12 to 18 months? And then my second question is, it sounds as if you are more leaning towards reinvesting some of the COVID-19 revenue versus sort of tuck in M&A. Can you just give us an idea of how we should think about how much of the upside actually flows through the EPS versus how much of it gets invested? Thank you.

[Robert Ford:]

For I think, on your structural heart - sorry, on your structural heart question here, I think we've got a leading kind of portfolio of products here. We've launched a couple novel products this year, TriClip for the tricuspid valve repair and then Tendyne, which is the first product for mitral valve replacement. Those have actually gone very well, especially when you're going to launch novel products like this, you want to kind of build evidence, you want to kind of build your way into it. So everything that we had planned for those two product launches really didn't get much impacted by COVID because we didn't have kind of significant sales attached to them more about kind of developing the clinical evidence. So that's gone very well. If you - your question the next kind of 12 to 18 months, I think we've got a really rich pipeline here. Obviously, the biggest opportunity we have is to expand the mitral valve repair with the NCD for the secondary MR indication. That will be a big driver for us. We've seen already patient referral networks starting to be built around, waiting for that indication, that reimbursement approval. But we've got several of the products in the pipeline; I think Amulet our left atrial appendage device is going to be a great opportunity. It does very well, from a share perspective internationally. The larger part of the market is here in the US. So we're looking forward to enter that market here in the US. We've got a next gen TAVR device called Navator that we've been working on this will be our third iteration. We've launched our FlexNav product in Europe this year with an improved delivery catheter and gotten good feedback from implanters over there. And then I think that TriClip and Tendyne are multibillion-dollar opportunities here for us that are as I described, very, very early in the innings. So I'm very excited about that structural heart portfolio. In the next 12, 18 months it's probably one of our richest portfolios in our device portfolio.

[Scott Leinenweber:]

There was a second question, Joanne, I - we didn't grab it here. Can you repeat the question?

[Joanne Wuensch:]

Of course, the second question was, there's - you're one of the few companies in med tech land that's going to have the benefit from COVID-19 diagnostic testing, and the revenue associated with it. I'm trying to think about how as we look forward, that revenue either is reinvested or flows through or maybe you redirect it towards targeted M&A.

[Robert Ford:]

Yeah, so I guess we're trying to triangulate here as much as we can, but we're not going to put out a specific number. What I can reemphasize here is that COVID is definitely going to be a big boost for us, continue to be a big driver for us into 2021. We're in a unique position, we're not coming out of a hole, we're going to be delivering what I would say, very high, strong double digit top and bottom line. And in doing that, and in delivering those very high double digit top and bottom line after double digit earnings this year, we're still going to have plenty of opportunity to put investment into R&A and into sales and marketing to continue to drive not only the pipeline, but all the opportunities that we've had that we've talked a bit about here, whether it's Libre, whether it's structural heart, whether it's in nutrition, we've got plenty of opportunities. So I guess that I leave you there Joanne with - we've got tremendous momentum, strong 2020, we're going to have a stronger 2021 and we realize that we've got a unique opportunity here with over 100 products in our pipeline to be able to kind of fund and drive on top of our double-digit earnings and top line growth next year.

[Joanne Wuensch:]

Thank you very much.

[Robert Ford:]

We'll take one more question.

[Operator:]

Thank you. Our last question comes from Josh Jennings from Cowen. Your line is open.

[Josh Jennings:]

Hi, great. Thanks for taking the questions. Robert, I'm hoping you could talk a little bit about the medical device franchise and following up on Bob's question just on the outlook, but just thinking about how you're setting internal targets for your med device sales team or just internally how you're going to judge success? I think there's - I'm confused about how we should be thinking about it, our team independently for the whole sector, but I mean, are you thinking about sequential improvement as we get into the Q4, Q1, Q2 next year as kind of a solid target to think about kind of a performance level and those type of targets you're setting for your sales force, are you looking back in 2019, over the next three quarters and thinking about that being the base in terms of how you're incentivizing yourself?

[Robert Ford:]

Yeah, we're looking for steady improvement quarter-over-quarter. And that's how we've kind of set our targets. I mean, I think the ultimate measure here of success and of winning is market share and market share gains, for those products, where we're competing more head-to-head, and then for other products, where we're unique in the space, whether it's mitral or tricuspid, et cetera, then we're looking at market development and market expansion. But to your question here, it's all about kind of steady sequential quarter-over-quarter improvement. Yeah, I think we're going to be at 10% med device growth by the end of this quarter. No, I don't. But I think Q4 is going to be better than Q3. Yeah, I do.

[Josh Jennings:]

That's helpful. Thank you. And then just wanted to ask on COVID testing, just focusing on the serology segment, can you give us a state of affairs for the demand level for COVID-19 antibody testing in the US and internationally currently? And then and then how you see that demand evolving? You said, maybe in the last earnings call that vaccine - success with vaccine programs could drive some incremental demand on the serology side, but thanks for taking the questions.

[Robert Ford:]

Sure. Yeah. I mean, when it first happened, we were fast to take advantage of the installed base that we had with our Alinity and ARCHITECT systems here to develop a blood antibody test. And we also developed lateral flow rapid antibody test. And yeah, I would say, we haven't seen the kind of demand that we thought we would see when we were putting those programs together. So in our numbers here, I think we've kind of excluded them. But do I think that there's an opportunity for antibody testing as the vaccine gets rolled out? Yeah, I do. And I see the opportunity for lab based and rapid lateral flow testing also. We've seen some governments already mandate on every blood draw, for other tests to check for antibodies, I think that's just going to get more intense when the vaccines get rolled out. So I think there'll be an opportunity there and Abbott will be in a unique position there to be able to capitalize on that.

[Robert Ford:]

So I'll just kind of wrap up here, we've had a nice growth step up here in the third quarter. We've achieved double digit top and bottom line growth. The businesses, we've spent some time talking about the businesses that were hardest hit by COVID. We can see that they're all trending in the right direction and showing sequential, steady improvement. Our pipeline continues to be highly productive. We've got a lot of ongoing launch activity across all the businesses in the markets here. And we've expanded our COVID testing platforms, adding more testing platforms, adding more capacity. I don't think that COVID testing is going to go away anytime soon and I think it's big. And I think that Abbott's in a in a unique position with not only the platforms that we've developed, but the manufacturing and supply chain that we've assembled. We've increased our full year guidance, which now reflects double digit EPS growth and I think that's pretty unique and differentiated in this environment. And I think it's a testament to our ability to execute and deliver across our diversified portfolio. And I think we're well positioned to go from what is a very good, strong year for us to an even better one in 2021. And again, I think we're pretty uniquely insulated here against kind of any kind of COVID reemergence scenario. So with that I thank you.

[A - Scott Leinenweber:]

Thank you, operator and thank you for all of your questions. This now concludes Abbott's conference call. A webcast replay of this call will be available after 11

[Operator:]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and you may now disconnect. Everyone have a wonderful day.