Abbott Laboratories 10-Q 2021-09-30

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-Q

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(Mark One)

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⌧	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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For the quarterly period ended September 30, 2021

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OR

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◻	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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For the transition period from to

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Commission File No. 1-2189

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ABBOTT LABORATORIES

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An Illinois Corporation		I.R.S. Employer Identification No.
​	​	36-0698440

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100 Abbott Park Road

Abbott Park**,** Illinois 60064-6400

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Telephone: (224) 667-6100

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Securities Registered Pursuant to Section 12(b) of the Act:

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Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common Shares, Without Par Value	​	ABT	​	New York Stock Exchange Chicago Stock Exchange, Inc.

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Indicate by check mark whether the registrant: (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of l934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ☐

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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Large Accelerated Filer ☒		Accelerated Filer ☐
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Non-Accelerated Filer ☐	​	Smaller reporting company ☐
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​	​	Emerging growth company ☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

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As of September 30, 2021, Abbott Laboratories had 1,768,286,969 common shares without par value outstanding.

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Abbott Laboratories

Table of Contents

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Part I - Financial Information	​
​	Page
Item 1. Financial Statements and Supplementary Data	​
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Condensed Consolidated Statement of Earnings	3
Condensed Consolidated Statement of Comprehensive Income	4
Condensed Consolidated Balance Sheet	5
Condensed Consolidated Statement of Shareholders’ Investment	6
Condensed Consolidated Statement of Cash Flows	8
Notes to the Condensed Consolidated Financial Statements	9
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
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Item 4. Controls and Procedures	30
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Part II - Other Information	​
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Item 1. Legal Proceedings	30
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	30
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Item 6. Exhibits	31
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Signature	32

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Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

(Unaudited)

(dollars in millions except per share data; shares in thousands)

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​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Nine Months Ended
​	​	September 30					​	September 30
​		2021			2020			2021			2020
Net sales	​	$	10,928	​	$	8,853	​	$	31,607	​	$	23,907
​	​	​	​	​	​	​	​	​	​	​	​	​
Cost of products sold, excluding amortization of intangible assets	​		4,423	​		3,966	​		13,771	​		10,510
Amortization of intangible assets	​		520	​		510	​		1,533	​		1,624
Research and development	​		672	​		580	​		1,980	​		1,722
Selling, general and administrative	​		2,767	​		2,302	​		8,276	​		7,126
Total operating cost and expenses	​		8,382	​		7,358	​		25,560	​		20,982
​	​	​	​	​	​	​	​	​	​	​	​	​
Operating earnings	​		2,546	​		1,495	​		6,047	​		2,925
​	​	​	​	​	​	​	​	​	​	​	​	​
Interest expense	​		133	​		137	​		402	​		410
Interest (income)	​		(10)	​		(10)	​		(32)	​		(37)
Net foreign exchange (gain) loss	​		4	​		(7)	​		7	​		(3)
Other (income) expense, net	​		(74)	​		(46)	​		(214)	​		(25)
Earnings from continuing operations before taxes	​		2,493	​		1,421	​		5,884	​		2,580
Tax expense (benefit) on earnings from continuing operations	​		393	​		189	​		802	​		267
Earnings from continuing operations	​		2,100	​		1,232	​		5,082	​		2,313
​	​	​	​	​	​	​	​	​	​	​	​	​
Earnings from discontinued operations, net of tax	​	​	—	​	​	—	​	​	—	​	​	20
​	​	​	​	​	​	​	​	​	​	​	​	​
Net Earnings	​	$	2,100	​	$	1,232	​	$	5,082	​	$	2,333
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Basic Earnings Per Common Share —	​	​	​	​	​	​	​	​	​	​	​	​
Continuing operations	​	$	1.18	​	$	0.69	​	$	2.85	​	$	1.30
Discontinued operations	​		—	​		—	​		—	​		0.01
Net earnings	​	$	1.18	​	$	0.69	​	$	2.85	​	$	1.31
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Diluted Earnings Per Common Share —	​	​	​	​	​	​	​	​	​	​	​	​
Continuing operations	​	$	1.17	​	$	0.69	​	$	2.83	​	$	1.29
Discontinued operations	​		—	​		—	​		—	​		0.01
Net earnings	​	$	1.17	​	$	0.69	​	$	2.83	​	$	1.30
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Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share	​		1,774,516	​		1,774,475	​		1,776,870	​		1,772,166
Dilutive Common Stock Options	​		14,483	​		13,378	​		14,407	​		12,381
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options	​		1,788,999	​		1,787,853	​		1,791,277	​		1

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Financial Review - Results of Operations

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Abbott’s revenues are derived primarily from the sale of a broad line of health care products under short-term receivable arrangements. Patent protection and licenses, technological and performance features, and inclusion of Abbott’s products under a contract most impact which products are sold; price controls, competition and rebates most impact the net selling prices of products; and foreign currency translation impacts the measurement of net sales and costs. Abbott’s primary products are medical devices, diagnostic testing products, nutritional products and branded generic pharmaceuticals.

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The following table details sales by reportable segment for the three and nine months ended September 30. Percent changes are versus the prior year and are based on unrounded numbers.

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​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Net Sales to External Customers
​		Three Months			Three Months			​		​		​
​	​	Ended		​	Ended		​	​	​	Impact of	​	Total Change
​	​	Sept. 30,		​	Sept. 30,		​	Total	​	Foreign	​	Excl. Foreign
(in millions)	​	2021		​	2020		​	Change	​	Exchange	​	Exchange
Established Pharmaceutical Products	​	$	1,265	​	$	1,099	​	15.1	%	(0.2)	%	15.3	%
Nutritional Products	​		2,108	​		1,924	​	9.6		0.7		8.9	​
Diagnostic Products	​		3,912	​		2,640	​	48.2		1.4		46.8	​
Medical Devices	​		3,632	​		3,170	​	14.6		1.5		13.1	​
Total Reportable Segments	​		10,917	​		8,833	​	23.6		1.1		22.5	​
Other	​		11	​		20	​	(51.4)		0.9		(52.3)	​
Net Sales	​	$	10,928	​	$	8,853	​	23.4		1.0		22.4	​
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Total U.S.	​	$	4,368	​	$	3,329	​	31.2		—		31.2	​
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Total International	​	$	6,560	​	$	5,524	​	18.7		1.7		17.0	​

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​		Net Sales to External Customers											​
​	​	Nine Months		​	Nine Months		​	​	​	​	​	​	​
​		Ended			Ended			​		Impact of		Total Change	​
​		Sept. 30,			Sept. 30,		​	Total	​	Foreign		Excl. Foreign	​
(in millions)		2021			2020			Change		Exchange		Exchange	​
Established Pharmaceutical Products	​	$	3,515	​	$	3,156		11.4	%	(0.6)	%	12.0	%
Nutritional Products	​		6,252	​		5,711		9.5		1.2		8.3	​
Diagnostic Products	​		11,173	​		6,460		73.0		3.8		69.2	​
Medical Devices	​		10,618	​		8,530		24.5		3.8		20.7	​
Total Reportable Segments	​		31,558	​		23,857		32.3		2.6		29.7	​
Other	​		49	​		50		(1.3)		2.8		(4.1)	​
Net Sales	​	$	31,607	​	$	23,907		32.2		2.6		29.6	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total U.S.	​	$	11,787	​	$	8,823		33.6		—		33.6	​
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Total International	​	$	19,820	​	$	15,084		31.4		4.1		27.3	​

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Note: In order to compute results excluding the impact of exchange rates, current year U.S. dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates.

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The 22.4 percent increase in total net sales during the third quarter of 2021, excluding the impact of foreign exchange, reflected demand for Abbott’s tests to detect COVID-19 as well as other growth across Abbott’s reportable segments. During the third quarter of 2021, Abbott’s COVID-19 testing-related sales totaled approximately $1.9 billion led by combined sales of approximately $1.6 billion related to Abbott’s BinaxNOW®, Panbio®, and ID NOW® rapid testing platforms. During the third quarter of 2020, COVID-19 testing-related sales totaled approximately $0.9 billion. Excluding the impact of COVID-19 testing-related sales, Abbott’s total net sales increased 13.2 percent. Excluding the impacts of COVID-19 testing-related sales and foreign exchange, Abbott’s total net sales increased 12.1 percent. Abbott’s net sales were favorably impacted by changes in foreign exchange rates in the third quarter as the relatively weaker U.S. dollar increased total international sales by 1.7 percent and total sales by 1.0 percent.

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The 29.6 percent increase in total net sales during the first nine months of 2021, excluding the impact of foreign exchange, reflected demand for Abbott’s tests to detect COVID-19 as well as other growth across Abbott’s reportable segments. During the first nine months of 2021, Abbott’s COVID-19 testing-related sales totaled approximately $5.4 billion led by combined sales of approximately $4.5 billion related to Abbott’s BinaxNOW, Panbio, and ID NOW rapid testing platforms. During the first nine months of 2020, COVID-19 testing-related sales totaled approximately $1.5 billion. Excluding the impact of COVID-19 testing-related sales, Abbott’s total net sales increased 17.3 percent. Excluding the impacts of COVID-19 testing-related sales and foreign exchange, Abbott’s total net sales increased 14.9 percent. Abbott’s net sales were favorably impacted by changes in foreign exchange rates in the first nine months as the relatively weaker U.S. dollar increased total international sales by 4.1 percent and total sales by 2.6 percent.

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Due to the unpredictability of the duration and impact of the current COVID-19 pandemic, the future extent to which the COVID-19 pandemic will have a material effect on Abbott’s business, financial condition or results of operations is uncertain.

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The table below provides detail by sales category for the nine months ended September 30. Percent changes are versus the prior year and are based on unrounded numbers.

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​	​	​	​	​	​	​	​	​	​	​	​	​	​
​		​	​		​	​		​		Impact of		Total Change
​	​	Sept. 30,		​	Sept. 30,		​	Total	​	Foreign	​	Excl. Foreign
(in millions)	​	2021		​	2020		​	Change	​	Exchange	​	Exchange
Established Pharmaceutical Products —		​			​								​
Key Emerging Markets	​	$	2,672	​	$	2,376	​	12.4	%	(1.8)	%	14.2	%
Other Emerging Markets	​		843	​		780	​	8.1		2.7		5.4	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Nutritionals —	​		​	​		​	​	​		​		​	​
International Pediatric Nutritionals	​		1,637	​		1,629	​	0.5		2.2		(1.7)	​
U.S. Pediatric Nutritionals	​		1,622	​		1,490	​	8.9		—		8.9	​
International Adult Nutritionals	​		1,987	​		1,644	​	20.9		2.0		18.9	​
U.S. Adult Nutritionals	​		1,006	​		948	​	6.0		—		6.0	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Diagnostics —	​		​	​		​	​	​		​		​	​
Core Laboratory	​		3,780	​		3,152	​	19.9		3.5		16.4	​
Molecular	​		1,082	​		956	​	13.2		3.3		9.9	​
Point of Care	​		401	​		387	​	3.6		1.0		2.6	​
Rapid Diagnostics	​		5,910	​		1,965	​	200.7		4.9		195.8	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Medical Devices —	​		​	​		​	​	​		​		​	​
Rhythm Management	​		1,657	​		1,382	​	19.9		3.3		16.6	​
Electrophysiology	​		1,403	​		1,128	​	24.4		3.1		21.3	​
Heart Failure	​		650	​		551	​	17.8		1.6		16.2	​
Vascular	​		1,976	​		1,736	​	13.9		3.5		10.4	​
Structural Heart	​		1,191	​		894	​	33.2		3.7		29.5	​
Neuromodulation	​		584	​		489	​	19.6		1.5		18.1	​
Diabetes Care	​	​	3,157	​	​	2,350	​	34.3	​	5.6	​	28.7	​

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Key Emerging Markets for the Established Pharmaceutical Products business include India, Russia, Brazil and China, along with several other markets that represent the most attractive long-term growth opportunities for Abbott’s branded generics product portfolio. Excluding the unfavorable effect of foreign exchange, sales in the Key Emerging Markets increased 14.2 percent compared to the first nine months of 2020 led by growth across several geographies, including India, China and Brazil. Other Emerging Markets, excluding the effect of foreign exchange, increased by 5.4 percent in the first nine months of 2021.

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International Pediatric Nutritional sales, excluding the effect of foreign exchange, decreased 1.7 percent in the first nine months of 2021 versus the comparable 2020 period and the decrease reflects lower sales in China, the Middle East and Canada partially offset by higher volumes sold in various countries in Latin America and Europe. U.S. Pediatric Nutritional sales increased 8.9 percent primarily due to increased demand for Pedialyte®, Abbott’s oral rehydration brand, and Similac®, Abbott’s infant brand. International Adult Nutritional sales, excluding the effect of foreign exchange, increased 18.9 percent, and U.S. Adult Nutritional sales increased 6.0 percent, reflecting continued growth of the Ensure® and Glucerna® brands in several countries including the U.S.

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The 69.2 percent increase in Diagnostic Products sales, excluding the impact of foreign exchange, was driven by demand for Abbott’s portfolio of COVID-19 tests as described above as well as growth in the base Core Laboratory and Molecular businesses. In Core Laboratory, sales increased 16.4 percent, excluding the effect of foreign exchange, due to the increased volume of routine diagnostic testing performed in hospitals and other laboratories, partially offset by lower sales of Abbott’s laboratory-based tests for the detection of the IgG and IgM antibodies, which determine if someone was previously infected with the COVID-19 virus. In March 2021, Abbott received an Emergency Use Authorization (EUA) in the U.S. for its AdviseDX SARS-CoV-2 IgG II test for the semi-quantitative detection of IgG antibodies to COVID-19 on its ARCHITECT® and Alinity® i platforms. In the first nine months of 2021 and 2020, Core Laboratory IgG and IgM antibody testing-related sales on Abbott’s ARCHITECT and Alinity i platforms were $159 million and $212 million, respectively. In the first nine months of 2021, Core Laboratory sales increased 23.1 percent, excluding COVID-19 testing-related sales, and increased 19.3 percent, excluding the impact of foreign exchange and COVID-19 testing-related sales.

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The 9.9 percent increase in Molecular Diagnostics sales, excluding the effect of foreign exchange, was driven by growth in the base business from the continued roll-out of the Alinity® m platform as well as higher demand in the first half of 2021 for Abbott’s laboratory-based molecular tests for COVID-19 on its m2000® and Alinity m platforms. In the first nine months of 2021 and 2020, Molecular Diagnostics COVID-19 testing-related sales were $699 million and $664 million, respectively. In March 2021, Abbott received an EUA in the U.S. for its multiplex molecular test on its Alinity m system to detect COVID-19, influenza A, influenza B, and respiratory syncytial virus (RSV) in one test. In the first nine months of 2021, Molecular Diagnostics sales increased 31.3 percent, excluding COVID-19 testing-related sales, and increased 28.1 percent, excluding the impact of foreign exchange and COVID-19 testing-related sales.

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In Rapid Diagnostics, sales increased 195.8 percent, excluding the effect of foreign exchange, due to the demand for Abbott’s COVID-19 tests on its rapid testing platforms, including the Panbio system, the ID NOW platform, and the BinaxNOW COVID-19 Ag Card test. In the first nine months of 2021 and 2020, Rapid Diagnostics COVID-19 testing-related sales were $4.5 billion and $0.65 billion, respectively. In January 2021, Abbott received CE Mark for two new uses of its Panbio rapid antigen test: asymptomatic testing and self-swabbing under the supervision of a healthcare worker. On March 31, 2021, Abbott announced that it had received an EUA in the U.S. for its over-the-counter, non-prescription BinaxNOW COVID-19 Ag Self Test for individuals with or without symptoms. In the first quarter of 2021, Abbott also received EUAs that allow the non-prescription use of the BinaxNOW COVID-19 Ag Card Home Test and the BinaxNOW COVID-19 Ag Card test for professional use for individuals with or without symptoms. In June 2021, Abbott announced that it had received CE Mark in Europe for its over-the-counter Panbio COVID-19 Antigen Self-Test for individuals with or without symptoms.

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Excluding the effect of foreign exchange, total Medical Devices sales grew 20.7 percent driven by double-digit growth across all divisions, led by Diabetes Care, Structural Heart and Electrophysiology. Growth in Diabetes Care sales was driven by continued growth of FreeStyle Libre®, Abbott’s continuous glucose monitoring system, internationally and in the U.S. FreeStyle Libre and Libre Sense™ sales totaled $2.7 billion in the first nine months of 2021, which reflected a 37.2 percent increase, excluding the effect of foreign exchange, over the first nine months of 2020 when Libre sales totaled $1.9 billion. Libre Sense, which received CE Mark in Europe in the third quarter of 2020, is Abbott’s glucose sport biosensor specifically designed for athletes.

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While procedure volumes across Abbott’s cardiovascular and neuromodulation businesses were negatively impacted early in 2021 by elevated COVID-19 case rates in certain countries, including the U.S., overall volumes improved over the course of the first nine months of 2021 across various businesses. The year-over-year increases in the various businesses reflect a recovery from the 2020 levels when the pandemic reduced procedure volumes as well as sales growth from pre-pandemic levels in Structural Heart, Electrophysiology, and Heart Failure, excluding the effect of foreign exchange. In January 2021, the U.S. Centers for Medicare & Medicaid Services expanded reimbursement coverage eligibility for MitraClip®, Abbott’s market-leading device for the minimally invasive treatment of mitral regurgitation (MR), a leaky heart valve. The growth in Structural Heart during the first nine months of 2021 was broad-based across several areas of the business, including MitraClip and TriClip®, the world’s first minimally invasive, clip-based device for repair of a leaky tricuspid heart valve which was launched in Europe in May 2020.

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In the first nine months of 2021, various product approvals in the Medical Devices segment included:

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	●	In May 2021, CE Mark in Europe for Navitor™, Abbott’s latest-generation transcatheter aortic valve implantation (TAVI) system for patients with severe aortic stenosis who are at high or extreme surgical risk,

	●	In August 2021, U.S. Food and Drug Administration (FDA) approval of the Amplatzer® Amulet® Left Atrial Appendage Occluder, which offers immediate closure of the left atrial appendage, an area in the heart where blood clots can form,

	●	In September 2021, FDA approval of the Portico® with FlexNav® TAVI system to treat people with symptomatic, severe aortic stenosis who are at high or extreme risk for open heart surgery, and

	●	In September 2021, FDA approval of the Amplatzer™ Talisman™ PFO Occlusion System to treat people with a patent foramen ovale – a small opening between the upper chambers of the heart – who are at risk of recurrent ischemic stroke.

The gross profit margin percentage was 54.8 percent for the third quarter of 2021 compared to 49.4 percent for the third quarter of 2020. The increase in the quarter reflects the effects of higher sales volume in various businesses, higher utilization at various manufacturing sites, a change in estimate to the restructuring actions recognized in the second quarter related to Abbott’s manufacturing network for COVID-19 diagnostic tests and the nonrecurrence of the 2020 impairment of an intangible asset. The gross profit margin percentage was 51.6 percent for the first nine months of 2021 compared to 49.2 percent for the first nine months of 2020. The increase primarily reflects the effects of higher sales volume, higher manufacturing utilization, and the nonrecurrence of the 2020 intangible asset impairment, partially offset by the impact of higher restructuring charges in the first nine months of 2021.

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Research and development expenses increased $92 million, or 16.1 percent, in the third quarter of 2021 and increased $258 million, or 15.0 percent, in the first nine months of 2021 compared to the prior year. The increases in R&D expenses in the third quarter and first nine months of 2021 were primarily driven by higher spending on various projects to advance products in development.

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Selling, general and administrative (SG&A) expenses for the third quarter of 2021 increased $465 million, or 20.2 percent, and increased $1.15 billion, or 16.1 percent, for the first nine months of 2021, due primarily to higher selling and marketing spending to drive growth across various businesses and the nonrecurrence of $100 million of income in 2020 from a litigation settlement. The increase in the first nine months of 2021 also includes charges related to certain litigation.

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Restructuring Plans

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On May 27, 2021, Abbott management approved a restructuring plan related to its Diagnostic Products segment to align its manufacturing network for COVID-19 diagnostic tests with changes in the second quarter in projected testing demand driven by several factors, including significant reductions in cases in the U.S. and other major developed countries, the accelerated rollout of COVID-19 vaccines globally and the U.S. health authority’s updated guidance on testing for fully vaccinated individuals. In the second quarter of 2021, Abbott recorded charges of $499 million under this plan in Cost of products sold. The charge recognized in the second quarter included fixed asset write-downs of $80 million, inventory-related charges of $248 million, and other exit costs, which included contract cancellations and employee-related costs of $171 million.

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In the third quarter of 2021, as the Delta variant of COVID-19 spread and the number of new COVID-19 cases increased significantly particularly in the U.S., demand for rapid COVID-19 tests increased significantly. As a result, in the third quarter Abbott sold approximately $120 million of inventory that was previously estimated to have no net realizable value under the second quarter restructuring action. In addition, the estimate of other exit costs was reduced by a net $19 million as Abbott fulfilled its purchase obligations under certain contracts for which a liability was recorded in the second quarter or Abbott settled with the counterparty in the third quarter.

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Other (Income) Expense, net

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Other income, net increased from $46 million of income in the third quarter of 2020 to $74 million of income in the third quarter of 2021 and from $25 million of income in the first nine months of 2020 to $214 million of income in the first nine months of 2021. The increase in the third quarter was primarily due to higher income in 2021 related to the non-service cost components of net pension and post-retirement medical benefit costs. The increase in the first nine months of 2021 was primarily due to a $100 million change related to the nonrecurrence of 2020 equity investment impairments, a gain on the sale of an equity method investment in 2021 and higher income in 2021 related to the non-service cost components of net pension and post-retirement medical benefit costs.

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Interest Expense, net

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Interest expense, net was virtually unchanged versus the prior year, decreasing $4 million in the third quarter of 2021 and decreasing $3 million in the first nine months of 2021 due to the reduction in interest expense driven by lower interest rates in 2021. The effect of higher cash and short-term investment balances mostly offset the impact of lower interest rates on interest income in the first nine months of 2021.

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Taxes on Earnings from Continuing Operations

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Taxes on earnings from continuing operations reflect the estimated annual effective rates and include charges for interest and penalties. In the first nine months of 2021 and 2020, taxes on earnings from continuing operations include approximately $97 million and $87 million, respectively, in excess tax benefits associated with share-based compensation. In the first nine months of 2020, taxes on earnings from continuing operations also include approximately $81 million in tax benefits related to the settlement of the former St. Jude Medical consolidated group’s 2014 through 2016 federal income tax returns in the U.S. Earnings from discontinued operations, net of tax, in the first nine months of 2020 reflect the recognition of $20 million of net tax benefits primarily as a result of the resolution of various tax positions related to prior years.

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Tax authorities in various jurisdictions regularly review Abbott’s income tax filings. Abbott believes that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease approximately $80 million, including cash adjustments, within the next twelve months as a result of concluding various domestic and international tax matters.

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Liquidity and Capital Resources September 30, 2021 Compared with December 31, 2020

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The increase in cash and cash equivalents from $6.8 billion at December 31, 2020 to $9.3 billion at September 30, 2021 primarily reflects the cash generated from operations in the first nine months of 2021, partially offset by the payment of dividends, capital expenditures and share repurchases. Working capital was $10.6 billion at September 30, 2021 and $8.5 billion at December 31, 2020. The increase in working capital in 2021 primarily reflects the increase in cash and cash equivalents partially offset by an increase in the current portion of long-term debt.

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In the Condensed Consolidated Statement of Cash Flows, Net cash from operating activities for the first nine months of 2021 totaled $7.5 billion, an increase of $3.4 billion over the prior year primarily due to higher operating earnings and improved working capital management, partially offset by higher cash taxes paid. Cash taxes paid in 2021 totaled approximately $990 million versus $700 million in 2020. Other, net in Net cash from operating activities was a use of $140 million for the first nine months of 2021 and a source of $42 million for the first nine months of 2020. The year-over-year change in Other, net in Net cash from operating activities reflects the nonrecurrence of 2020 non-cash impairment charges related to intangible assets and equity investments.

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In September 2019, the board of directors authorized the early redemption of up to $5 billion of outstanding long-term notes. As of September 30, 2021, $2.15 billion of the $5 billion authorization remains available.

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At September 30, 2021, Abbott’s long-term debt rating was A+ by Standard & Poor’s Corporation and A2 by Moody’s Investors Service. Abbott expects to maintain an investment grade rating. Abbott has readily available financial resources, including lines of credit of $5.0 billion which expire in 2025.

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In October 2019, the board of directors authorized the repurchase of up to $3 billion of Abbott’s common shares from time to time. The 2019 authorization was in addition to the approximately $100 million of the share repurchase program authorized in 2014 that remained unused as of December 31, 2020. In the first nine months of 2021, Abbott repurchased 10.1 million of its common shares for $1.187 billion which fully utilized the authorization remaining under the 2014 share repurchase program and a portion of the 2019 authorization. As of September 30, 2021, $1.910 billion remains available for repurchase under the 2019 share repurchase program.

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On April 27, 2016, the board of directors authorized the issuance and sale for general corporate purposes of up to 75 million common shares that would result in proceeds of up to $3 billion. No shares have been issued under this authorization.

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In each of the first three quarters of 2021, Abbott declared a quarterly dividend of $0.45 per share on its common shares, which represents an increase of 25 percent over the $0.36 per share dividend declared in each of the first three quarters of 2020.

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Recently Adopted Accounting Standards

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In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which among other things, eliminates certain exceptions in the current rules regarding the approach for intraperiod tax allocations and the methodology for calculating income taxes in an interim period, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. Abbott adopted the standard on January 1, 2021. The new standard did not have an impact on its condensed consolidated financial statements.

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Legislative Issues

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Abbott’s primary markets are highly competitive and subject to substantial government regulations throughout the world. Abbott expects debate to continue over the availability, method of delivery, and payment for health care products and services. It is not possible to predict the extent to which Abbott or the health care industry in general might be adversely affected by these factors in the future. A more complete discussion of these factors is contained in Item 1, Business, and Item 1A, Risk Factors, in the 2020 Annual Report on Form 10-K.

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Private Securities Litigation Reform Act of 1995 — A Caution Concerning Forward-Looking Statements

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Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Abbott cautions that any forward-looking statements made by Abbott are subject to risks and uncertainties 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” in our Annual Report on Form 10-K for the year ended December 31, 2020, and are incorporated herein by reference. 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.

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PART I. FINANCIAL INFORMATION

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	(a)	Evaluation of disclosure controls and procedures. The President and Chief Executive Officer, Robert B. Ford, and Chief Financial Officer, Robert E. Funck, Jr., evaluated the effectiveness of Abbott Laboratories’ disclosure controls and procedures as of the end of the period covered by this report, and concluded that Abbott Laboratories’ disclosure controls and procedures were effective to ensure that information Abbott is required to disclose in the reports that it files or submits with the Securities and Exchange Commission (the “Commission”) under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and to ensure that information required to be disclosed by Abbott in the reports that it files or submits under the Exchange Act is accumulated and communicated to Abbott’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

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	(b)	Changes in internal control over financial reporting. During the quarter ended September 30, 2021, there were no changes in Abbott’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, Abbott’s internal control over financial reporting.

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PART II. OTHER INFORMATION

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Abbott is involved in various claims, legal proceedings and investigations as described in our Annual Report on Form 10-K for the year ended December 31, 2020.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

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	(c)	Issuer Purchases of Equity Securities

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​	​	​	​	​	​	​	​	​	​	​	​
​		​		​	​		​		(d) Maximum
​	​	​	​	​	​	​	​	​	Number (or
​	​	​	​	​	​	​	(c) Total Number	​	Approximate
​	​	​	​	​	​	​	of Shares (or	​	Dollar Value) of
​	​	(a) Total	​	​	​	​	Units) Purchased	​	Shares (or Units)
​	​	Number of	​	(b) Average		​	as Part of	​	that May Yet Be
​	​	Shares (or	​	Price Paid per		​	Publicly	​	Purchased Under
​	​	Units)	​	Share (or		​	Announced Plans	​	the Plans or
Period	​	Purchased	​	Unit)		​	or Programs	​	Programs
July 1, 2021 – July 31, 2021	​	450,000	(1) ​	$	120.849		450,000	​	$	2,540,924,508	(2)​
August 1, 2021 – August 31, 2021	​	2,175,000	(1)​	​	123.265		2,175,000	​	​	2,272,822,841	(2)​
September 1, 2021 – September 30, 2021	​	3,002,035	(1)​	​	120.814		3,000,000	​	​	1,910,394,012	(2)​
Total	​	5,627,035	(1)​	$	121.764		5,625,000	​	$	1,910,394,012	(2)​

1.	These shares include the shares deemed surrendered to Abbott to pay the exercise price in connection with the exercise of employee stock options – 0 in July, 0 in August, 2,035 in September; and

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These shares do not include the shares surrendered to Abbott to satisfy tax withholding obligations in connection with the vesting of restricted stock or restricted stock units.

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2.	On October 11, 2019, the board of directors authorized the repurchase of up to $3 billion of Abbott common shares, from time to time.

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	​
Exhibit No.		Exhibit
​	​	​
3.1	​	By-Laws of Abbott Laboratories, as amended and restated effective August 30, 2021, filed as Exhibit 3.1 to the Abbott Laboratories Current Report on Form 8-K filed on September 1, 2021.
​	​	​
31.1	​	Certification of Chief Executive Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).
​	​	​
31.2	​	Certification of Chief Financial Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).
​	​	​
Exhibits 32.1 and 32.2 are furnished herewith and should not be deemed to be “filed” under the Securities Exchange Act of 1934.
​	​	​
32.1	​	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
​	​	​
32.2	​	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
​	​	​
101	​	The following financial statements and notes from the Abbott Laboratories Quarterly Report on Form 10-Q for the quarter and nine months ended September 30, 2021, formatted in Inline XBRL: (i) Condensed Consolidated Statement of Earnings; (ii) Condensed Consolidated Statement of Comprehensive Income; (iii) Condensed Consolidated Balance Sheet; (iv) Condensed Consolidated Statement of Shareholders’ Investment; (v) Condensed Consolidated Statement of Cash Flows; and (vi) Notes to the Condensed Consolidated Financial Statements.
​	​	​
104	​	Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document and included in Exhibit 101).

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SIGNATURE

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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ABBOTT LABORATORIES		​
​		​
By:	/s/ Robert E. Funck, Jr.	​
​	Robert E. Funck, Jr.	​
​	Executive Vice President, Finance and Chief Financial Officer	​
​	​	​
​	Date: November 3, 2021	​

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