Good morning, and thank you for standing by. Welcome to Abbott's First Quarter 2021 Earnings Conference Call. [Operator Instructions] This call is being recorded by Abbott.

With the exception of any participants' 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. .

I would now like to introduce Mr. Scott Leinenweber, Vice President, Investor Relations, Licensing and Acquisitions. .

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 2021.

Abbott cautions that these forward-looking statements 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 to our annual report on Form 10-K for the year ended December 31, 2020.

Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or development 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. .

Thanks, Scott. Good morning, everyone, and thank you for joining us. Today, we reported the results of a very strong quarter. Ongoing earnings per share were $1.32, reflecting more than 100% growth compared to the prior year. Sales increased 33% on an organic basis in the quarter. .

At the start of the year, we issued full year guidance that reflected another year of strong performance, and through the first quarter, we're right on track with those expectations. Our full year 2021 adjusted earnings per share guidance of at least $5 remains unchanged and reflects over 35% growth compared to last year. .

Our strong first quarter were comprised of several factors, including global COVID testing-related sales of $2.2 billion, with rapid tests compromising roughly 85% of those sales; strong sales growth across all 4 of our major business areas, which resulted in base business organic sales growth, excluding COVID testing-related sales, of nearly 6%; growth contributions and momentum from several recently launched products across all of our businesses; and the impact of significant investments we're making across our portfolio in R&D and commercial initiatives that will further strengthen our sustainable growth profile.

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I'll now summarize our first quarter results before turning the call over to Bob. And I'll start with Nutrition, where sales increased nearly 6.5% in the quarter. Performance was led by our Adult Nutrition business, with sales growth of more than 18% in the quarter.

The pandemic has brought a lot of awareness to the value of good nutrition, including immune support, which is helping to bring new users into the category and more specifically to our market-leading Ensure and Glucerna brands. .

Pediatric Nutrition sales declined 2.5% in the quarter. Recall, during the first quarter of last year, this business experienced significant pantry stocking ahead of the shelter-in-place restrictions in several countries at the start of the global pandemic.

Our sales growth this quarter in Pediatric Nutrition reflects that difficult year-over-year comparison. In the U.S. and several international markets, we continue to capture share with our leading portfolio of infant formula and toddler brands. .

In Diagnostics, sales increased 115%, which was led by significant demand for our portfolio of COVID-19 tests as well as improvement in the base business.

As I mentioned earlier, strong COVID testing-related sales were led by our rapid point-of-care platforms, ID NOW, BinaxNOW and Panbio, as we continue to see demand shift towards rapid testing worldwide. During the quarter, BinaxNOW received U.S.

Emergency Use Authorization for over-the-counter, nonprescription, self-use for people with or without symptoms. We began shipping test kits to major retailers yesterday. .

Just as importantly, our underlying base business continues to improve, driven by improving routine diagnostic testing levels and the continued rollout of our Alinity platforms. Excluding COVID testing-related sales, our Core Lab and Molecular Diagnostic businesses both achieved double-digit sales growth in the quarter. .

Turning to Established Pharmaceuticals, where sales grew over 6% in the quarter, which is particularly strong given the comparison versus a strong first quarter last year. Performance in the quarter was led by double-digit sales growth in India, China and Brazil.

And while we continue to see elevated COVID case levels across several emerging markets, the business is executing at a high level to ensure patients have access to our branded generic medicines. .

And lastly, I'll cover Medical Devices, where sales grew nearly 9% in the quarter, led by strong growth in Structural Heart, Rhythm Management, Electrophysiology and Diabetes Care.

Although procedure volumes across our cardiovascular and neuromodulation businesses were impacted early in the year by elevated [ coast ] case rates in certain countries including the U.S., we saw growth improve throughout the quarter and exited with good momentum. On average in March, U.S.

procedure levels were up mid-single digits compared to pre-COVID baselines across our cardiovascular business with some areas even higher. .

In Structural Heart, sales were up mid-teens overall with growth contributions coming from several products within our innovative portfolio, including MitraClip, TriClip, Portico and others. MitraClip sales grew more than 15% in the U.S., where we achieved our highest number of monthly procedures ever in the month of March.

In January, CMS expanded reimbursement covered for MitraClip, which significantly increases the number of people who can benefit from this market-leading device. .

And I'll wrap up with Diabetes Care, where growth was led by Freestyle Libre sales of nearly $830 million. The global user base for Libre has now surpassed 3 million users, driven by market expansion and awareness efforts as well as ongoing new product launch activity in every major market around the world. .

So in summary, we're off to a very strong start and right on track with our expectations for the year. All 4 of our major businesses are achieving strong growth. We're particularly pleased with the growth contributions and momentum of several recently launched products.

And we're well positioned to achieve more than 35% EPS growth, as we have forecasted at the beginning of the year. .

I'll now turn over the call to Bob to discuss our results and outlook for the year in more detail.

Bob?.

Thanks, Robert. As Scott mentioned earlier, please note that all references to sales growth rates, unless otherwise noted, are on an organic basis, which is consistent with our previous guidance. .

Turning to our results. Sales for the first quarter increased 32.9%, which was led by strong performance across all of our businesses, along with strong global COVID testing-related sales. Organic sales growth was balanced, with 34% growth in the U.S. and 32% growth internationally.

COVID testing-related sales were also balanced geographically, with a little more than half of those sales coming from international markets. .

Foreign exchange had a favorable year-over-year impact of 2.5% on first quarter sales. During the quarter, we saw the U.S. dollar strengthen somewhat versus several currencies, which resulted in a slightly less favorable impact on sales compared to exchange rates at the time of our earnings call in January.

Based on current rates, we would expect exchange to have a favorable impact of approximately 4% on our second quarter reported sales and would now expect exchange to have a favorable impact of nearly 2% on our full year 2021 sales. .

Regarding other aspects of the P&L for the first quarter, the adjusted gross margin ratio was 58.3% of sales, adjusted R&D investment was 6% of sales, and adjusted SG&A expense was 25.1% of sales.

As Robert mentioned, the strength of our business performance has created an opportunity to significantly increase our investments in R&D and SG&A to further strengthen our pipeline and growth initiatives.

During the first quarter, our combined investments in these areas increased approximately $200 million compared to the same quarter last year and was at the highest level since our separation with AbbVie. .

For the first quarter, net interest expense was $124 million. Nonoperating income was $73 million. And our adjusted tax rate was 15%, which is consistent with our full year effective tax rate from last year. .

With that, we'll now open the call for questions. .

[Operator Instructions] Our first question comes from Bob Hopkins from Bank of America. .

Congratulations on the strong Q1 revenue and profit growth. I don't think I can recall the last time the company put up 100% earnings growth, so impressive there. .

I guess I'd love to hear your thoughts on 2 important topics, Robert, if you don't mind, and that the first topic is BinaxNOW OTC. I was wondering if you could just talk a little bit about capacity and your early thoughts on how you think demand will play out for that product. So that's the first topic. .

And then I'll just go ahead and list the second one in the interest of time. The second topic is a little bit longer-term oriented, because last quarter you expressed some confidence in Abbott's ability to drive double-digit earnings growth in 2022 off of that $5 number for this year. .

And the question I would have is, based on what you're seeing today, has anything changed with your views? And then I think investors would also love to hear, if you assume a more conservative testing scenario, how does that impact that goal of double-digit earnings growth next year? So I just wanted to list this all upfront there. .

Okay, thanks. On your first question regarding kind of the U.S. Binax OTC launch, so yes, we're very excited about that.

We see this is a as a significant opportunity, and quite frankly, a trend that's been happening overseas and is kind of now happening here in the U.S., which is this move, this accelerated move here from, say, more hospital lab-based testing to more rapid testing outside of that environment, where consumers and people can get the results at a much faster rate, and quite frankly, with a little bit less hassle, less process.

So we see this as a significant opportunity. It's easy and it's affordable. And I think that's a key part here, Bob, as we think about surveillance testing and serial testing. It needs to contemplate those 2 areas, right? It needs to be affordable. .

It's difficult to do serial testing on PCR when you've got a cost of $100-plus and takes between 2 to 3 days to get that. So I think we're in a great opportunity here to be able to capitalize on that. I think this is something that people are going to want to buy and have in their homes and stock up in their homes.

Think of it as maybe your new element in your medicine cabinet. But we've been seeing this shift happen towards the end of last year and definitely into this quarter here, this move towards rapid.

Specifically in the U.S., we've got a great position as a lot of this OTC is going to require understanding of the retail and the retail environment, the retail channel. And those are capabilities that, as you know through our Nutrition business, through our Diabetes business, we know how to operate and operate pretty well in there. .

So we're excited, and I think this is going to eliminate a lot of the barriers that exist for frequent testing. A key aspect of that is obviously scale. We have to have scale to be able to meet the demand. And quite frankly, we're probably the leaders here in terms of production.

We've got an established capacity this quarter now, that we can do about 150 million rapid tests per month across all of our different platforms. .

So we feel very good about that position. We feel good about this opportunity. .

To your second question on 2022, yes, we did -- you did mention our confidence back in January, and we commented it on our call. And to be honest, nothing's changed on that front. Nothing's changed over the last 90 days. .

MitraClip G4, TriClip, I'd say our mapping systems, our new CRM devices. .

And then we've got coming out of this year going into next year, 4 key product launches that we feel very good about. We're very excited about them, given our position, given the product offering and the value proposition of them.

And you know those are LAA -- entering the LAA market here in the U.S., potential expansion of indication for CardioMEMS, entering the leadless pacemaker with single chamber and then follow that with a dual chamber, entering the U.S. TAVR market. I mean all 4 of those opportunities are multibillion-dollar segments.

And we've been working hard on the last, call it, 18 months to get us ready and to be in a position in 2022 to be able to capitalize on that. .

So the underlying base business, the pipeline, all of that is kind of heading in the right direction and don't see any changes. If anything, there's acceleration to kind of what we talked about 90 days ago. .

And we continue to believe a good portion of the COVID testing is sustainable. There's, as I said, there's a clear trend here to move towards rapid formats. We're the dominant producer here of these rapid tests, making about 150 million a month. So wherever that market goes, we know that we'll be the share leader here for sure.

So you look at all these different components here, Bob, we still feel very confident about our double digit. .

The one thing I'll say is that as you look at all these different businesses, probably one thing that we can try and model now but it will probably be different, January is just how the mix of those businesses are going to contribute to that double-digit growth. It always ends up differently in terms of how we plan.

We did double digit in '20, and it was very different versus how we set it up in January of 2020. .

So if you look at our history, we're pretty consistent about delivering on that. If there's any caution here, I guess, for next year, it'd already be -- seem to be priced here into our P/E. So -- but that being said, I don't think anything has changed here from the last 90 days from our perspective. We still feel very good about our double digit. .

That's great.

And then just if it was a more conservative testing environment, how does that impact the way you think about things?.

I mean that's -- I guess that's the model here where we start to model different ways, different parts of all these elements that I explained to you, and it's going to be difficult. I'm not going to put out an assumption there of what COVID testing level is required, but I do feel that a good portion of it is going to be sustainable.

And we'll get a lot of the share of the COVID testing that's remained. So... .

Our next question comes from Robbie Marcus from JPMorgan. .

Great. And I'll echo Bob's congratulations on a very nice quarter. Maybe just to follow up, Robert, I'd love to get a sense. One of the key investor topics, as you just touched on, is the double-digit target for EPS growth next year. And part of that, it looks like you're front-loading a lot of expenses into 2021 here.

You grew OpEx about $300 million versus last year. .

So I'd love to see if I could just get a little more meat on the bones in terms of the road map to that double-digit EPS, more down the P&L versus the top line, which you just talked about? And does it imply sort of high 20s operating margins to get there?.

On the high 20s operating margin, yes, that does appear to be the case. Regarding the areas of investment. I mean I talked a lot about these in terms of the investments we're making.

I'd say from a bigger picture perspective, we want to make sure that we're spending and investing a good portion of these COVID testing profits into the R&D portion of the P&L. We believe that is a very sustainable investment. .

And if I look across all of the businesses, in devices, in diagnostics, in rapid diagnostics, in nutrition, all of these businesses have opportunities to invest in R&D. And we've got clear programs across all of them to build the R&D programs that will sustain our growth beyond '22, '23, '24. .

A lot of the products that I just mentioned, whether it's the ones we've just launched over the last kind of quarter, 2 or 3 quarters, plus the 4 key areas that we're looking at entering in 2022, those are going to drive a lot of our revenue growth.

And those have already been funded, but I would say the investments here are really looking into next-generation products in Diagnostics, expansion in our portfolio and devices that will lead to new product launches in '23 and '24. .

On the SG&A side, we're making sure that we're supporting our big growth products. I'd say probably a lot of the SG&A is going towards Libre and driving Libre awareness and growth, both in the U.S. and international markets.

And you'll start to see that ramp up even more as we go throughout the year, both in terms of spend and the return on the top line. .

We're making investments also in Nutrition to strengthen our brand and capitalize on the expansion, especially in the adult nutrition side of the market.

And expanding footprint in several of our device businesses where we know that clinical specialists and sales force, et cetera, is important to be able to support not only the expansion of our current products, but the launch of new products. .

Great, really helpful. And maybe just a quick follow-up. We're all really interested to hear not just about how the devices business did in first quarter, but really the forward commentary on what you're seeing exiting March into April here.

So if you have any early feedback on the exit rates and what you're expecting in terms of catch-up, that would be really helpful. .

Yes. I mean I think as I said in my prepared comments and on the first question, too, I mean we saw a nice recovery. Obviously, there was obviously some -- a little bit of a slowdown in January. So we had a nice pickup, I'd say, in October, November where -- sorry, yes October, November, where we saw procedure growth rates return to growth.

And I'd say December, January saw that decline as the cases increased, but saw real nice progression in the month of February and then very strong growth in March. .

And Rob, what we try to do also is we try to look at there's -- March is a tricky month because you've got those 2 weeks of last year where things kind of really kind of shut down. So we look at March not only versus last year, but also looking at it versus March of 2019, and quite frankly, the whole quarter versus 2019.

And we actually see growth rates in this quarter that are higher than our pre-pandemic rates in 2019, in Q1 of 2019. So I think we saw a real nice growth. .

In Core Lab, that was very positive to see. We saw double-digit growth there, and that's a good indicator of routine testing coming back to hospitals, saw double digit there. .

Our Molecular Diagnostic business, excluding COVID and PCR COVID testing, was up 30%. So that's a real positive sign that our strategy of utilizing the Alinity M to launch into the market with COVID and then kind of build off the menu is also having a positive impact over there, too. .

So I'd say very good exit rate. And as we look at the first 2 weeks of April, and we look at it every week here, real nice progression. .

So I didn't see the bolus coming in and then the drop. I actually saw continued nice improvement in Structural Heart, in EP and even in CRM. So those are -- that's a nice trend as we're going into the second quarter, too. .

And we'll start to see a little bit of opening up here in Europe. I'd say the one area that was a little bit softer for us was Europe, given all the shutdowns there. But again, I'd say the first couple of weeks in Europe are looking pretty good. .

Our next question comes from Larry Biegelsen from Wells Fargo. .

Robert, one for me on capital allocation; and one on your favorite topic, I think, Libre. So a lot of questions around 2022.

And my question is, how important is it to hit that double-digit EPS growth target in 2022? And your thoughts around capital allocation helping you achieve the $5.50 in EPS, is it a buyback or an accretive deal, something you would consider to get there? And I have one follow-up on Libre. .

Sure. Well, we start every year, as I said, targeting double digit. If you look at where we are in 2021 versus 2019, we're up 53%. But we'll be targeting, as I said, double-digit in 2022. And again, there's multiple ways of how we can get there in terms of business mix, et cetera. .

We do have a strong balance sheet, and that provides us a lot of strategic flexibility. We try to have a balanced approach there, Larry, in terms of balancing between the short and long-term investing in the business and providing some of that return back to our shareholders. .

So whether it's in the form of dividend, we're committed to a strong growing dividend. It's an important part of our identity. .

On the share repurchasing, we've historically just really looked at share repurchasing to offset some of the dilution. We could be looking to do a little bit more than that going -- in this year, going into next year. .

And then from an M&A perspective, I'd say we're always actively monitoring. We're always actively looking. And you'll always hear me say that I'm not going to tip my hand and give up any kind of competitive advantage there.

But if there's something that is attractive, something that has got growth, that won't dilute our top line growth profile, which I think is best in class, or that we can do better with, we're always going to be interested.

But we're always going to be prudent about deploying our cash, Larry, always keeping our shareholders happy, balancing the long term, the short term, the internal and the external. .

And this is not a kind of a new CEO versus prior CEO philosophy. This has always been an Abbott philosophy. We're good stewards of that capital and good stewards of finding that right balance that I just described. .

That's very helpful. And then Libre, how should we think about the growth for the remainder of the year? The comps get a little easier. You talked about 40% as an aspirational goal on the last call. .

And just what's the latest on the Libre 3 launch in Europe? And if you'll give us any color on the U.S., it would be certainly appreciated, but I'm not sure we'll get it today. .

Sure. Well, I did put out a goal of growing 40% in 2021. You mentioned comparison. Yes, there was a little bit of a -- you've got a little bit of a balance here between Q1 and Q2. So Q1 last year, we saw some stocking up in international and in the U.S.

So I look at our 30% here and -- on top of a pretty strong quarter last year as really positive momentum. .

We'll have some effect on the reverse side of that in Q2. So then it becomes really a second half, can we kind of sustain this kind of mid-30s and accelerate it into the 40s in the second half? And the answer is we believe so. We've got a great portfolio.

We've got great momentum and making the investments, whether it's field force, whether it's direct-to-consumer advertising, not just in the U.S., but around the world, significant investments to building awareness for the category. .

I mean we've achieved 3 million -- surpassed 3 million users around the world. That's 3 -- we could say, hey, that's 3x our next competitor, but the reality is the penetration for us and for the categories is still pretty significant.

So there's plenty of room here for us to invest and grow, and we'll be doing that on the back of our -- not only our commercial investments, but also R&D. .

Your question on Libre 3, that's -- we launched that into Europe at the end of this quarter. We're right where we want to be. .

We start off usually small and focused here, Larry. We learn. We learn with the consumer. We learn with the HCP in terms of what resonates. We learn with our manufacturing. We've got a lot of capabilities in terms of how to manufacture at scale. .

But there's always a little bit of a learning curve here. It is a new platform. And we learn with insurance, and insurance switches over and all those things. And once we get all of that kind of lined up, then we accelerate and we go break it. But I've got -- we've got a lot of strategic flexibility here with Libre 2 and Libre 3.

I think we're in a great position. .

Feedback has been really good. I mean we've launched this with about over 1,000 HCPs. We've got close to a couple of hundred patients that we've now kind of just tried to see what their reactions are with the products, and it's been extremely positive. There's a lot of social media there.

I'm not very fluent in German, but I can tell a facial expression of awesomeness and coolness and amazement factor, and you can see those in the videos of these patients that are using it. .

size, ease of use, accuracy, alarm performance, wear experience, all that. It's all great. It's all good. .

So regarding your question on Libre time frame, I think you answered it. So that's good. I'm not going to provide any details here. But I'm just really excited about Libre 3 and the combination of the portfolio, having both 2 and 3. I just think it provides us a lot of strategic flexibility. .

Our next question comes from Vijay Kumar from Evercore ISI. .

Congrats on the [ printing ]. Robert, I did want to ask you on fiscal '21. If I look at Q1, excluding contribution from COVID, right, the base business looks like it was up 10% organic versus pre-pandemic in the '19 levels.

One, is that math correct? And if we're starting off at 10%, I guess, are we looking at perhaps teens kind of growth for fiscal '21 on the top line on the base business?.

Vijay, this is Bob. Yes, your math is spot-on. Our first quarter was up over 2019 and by around 10%. .

So we had really good performance in the quarter in the base business, and you really saw that across kind of the portfolio of businesses. And then we would expect to continue to see strong growth during the course of the rest of the year, in particular as medical device procedures continue to improve.

And we would expect to see kind of that base business growth in the mid-teens. .

That's helpful, guys. And then one on the antigen testing side, I saw the press release yesterday launching the asymptomatic consumer version of the product. .

What -- I guess how are revenues recognized? Is this recognized on shipment? And what are early -- what is early demand looking like from retailers, the CVS and Walgreens, Walmart? And is there expectation of $6.5 billion to $7 billion for fiscal '21? Is that unchanged?.

Yes. So on the $6.5 billion to $7 billion, yes, that remains unchanged. It's difficult to forecast here in that tight range that you'd expect from Abbott. But yes, we continue to forecast sales at around that level. .

Regarding your question, I think it was regarding the Binax OTC in the U.S., correct? Is that what you're referring to?.

Correct. .

Yes. So yes, I mean we received approval for the product several weeks ago, and we immediately started our manufacturing process. It is a different presentation from the previous Binax test in which we provide 2 tests and the necessary consumables to run those tests. So we started manufacturing that and began shipping literally yesterday to retailers.

And we'll start with CVS, Walgreens, Walmart. And you can expect all the other retailers, food merchants, et cetera, to roll into that as we expand and start manufacturing and accelerating our manufacturing. .

So yes, we ship the product and the revenue is booked when the asset is transferred over to the retailer. But I think this is going to be, as I said, a great opportunity. It's a channel we know very well.

I think few diagnostic companies that have this product have the capacity, the manufacturing scale and the channel experience and domain here to kind of really compete. .

So we feel very good about our position. And we'll start -- we start off with initial stocking orders. And then from them, we'll roll out more distribution. And we expect, given the price point here, Vijay, that there's going to be a great opportunity for a lot of households in the U.S. to be able to have testing on hand, ready to go at their house.

So we expect that there'll be a nice repeat purchase also. .

Yes, I'm planning on stocking up, Robert. .

And our next question comes from Matt Miksic from Crédit Suisse. .

Just a quick question for me, if I could, is just on some of the pipeline opportunities around Amulet and CardioMEMS in Portugal, if you could provide us with maybe an update on those programs. And secondly, on just the progression of MitraClip, this has been a device and procedure that was a little bit more impacted by the slowdown over the winter.

And just love to get a sense of what the trajectory looks like now heading into Q2. .

So a couple there. So on the Amulet side, yes, listen, we've got experience in this category outside of the United States and the international markets, and the product does very well. We filed with the FDA late last year. We think this is a very attractive market. It's approaching about $1 billion today, and it's growing double digits.

And as I said, I think Amulet is a very competitive product in its current form. .

We're obviously -- we'll obviously be investing as part of some of those R&D investments I mentioned in next generations there also. But even in its current format, performs very well, and we've got a great experience in Europe. .

We believe a lot in this market in this segment. And so we've also initiated our CATALYST trial. So we started a new trial late last year, and this is a trial comparing Amulet to NOAC drugs, which is currently the standard treatment option for people with AF that -- or at risk of a stroke. .

So we think that this will be a significant kind of growth driver after we launch also. Results there will take a little bit longer to divulge those, probably in the 2023 time frame. But it just shows our commitment to this segment because we believe we've got a great product, great product portfolio, a pipeline, and it's a great segment here. .

So I think you had another question on MitraClip. MitraClip did very well in the quarter. Obviously, it got impacted by COVID last year. It was on a great trajectory. It kind of got slowed down as obviously the ICU beds and hospitals moved towards treating COVID. But we had great growth in Q1. We're up in the mid-teens in the U.S. So that was good. .

As I said in my prepared comments, we had our highest number of procedures ever in the month of March. And that wasn't just catch-up because I've looked at the procedures in the first 2 weeks of April and they continue to move up. So that's very positive for us. .

And we're making our investments, not only on the pipeline side, new versions of MitraClip, but also more importantly in the market development, so really to expand the funnel of patients being treated, creating those patient referral networks with the cardiologists and our implanting centers. So that's done very well. .

And I think the NCD that got approved in January, opens up a significant opportunity for us with MitraClip. Remember, we're only about 5% to 6%, maybe 7% penetrated right now in the total available market here. And I think that we've got a lot of runway for growth in the mitral space. .

And I think you also had a question on CardioMEMS. We expect to file for a label expansion relatively soon. This would also significantly broaden the U.S. market opportunity. And we plan to pursue CMS reimbursement after we obtain that label expansion. .

This segment continues to grow. Our Q1 growth in CardioMEMS was north of 20%. And that market has started to recover also from the pandemic, and I like the position we have in them. .

Our next question comes from Matt Taylor from UBS. .

So I wanted to go back to the idea of the double-digit growth and the investments that you're making this year. You called out R&D, and we've seen DTC has been stepping up. I think there's a lot of Libre commercials there now. .

I guess my question is, when you think about these investments and the sustainability, historically, we've thought about Abbott is driving 7% growth. That was your algorithm pre-COVID.

Do you think that the investments could lead to more sustainable, higher post-COVID organic growth? And then how quickly can you toggle them up and down if the environment changes quickly to manage earnings?.

Sure. So I'd say on the base business side, our identity, our target was really sustaining a 7% to 8% growth rate pre-COVID. And I'd say with these investments that we're making, excluding any kind of year-over-year comp, we'd probably be at the higher end of that 7% to 8% range, I mean, once you factor in maybe a Q1 comparison on the base business.

Next year, you're probably growing a little bit higher than that, Matt. But at the high end of that 7% to 8% is what we're looking at, with all these investments and product development and portfolio development. .

As I said, a big portion of our COVID cash flows and profits, part of it goes to our shareholders, but part of it goes back into the business. And we've got a lot of flexibility here to toggle that investment up or down if we need to.

I mean I'd probably say that each business has their list of go-to areas that we've all agreed to are kind of next steps. If we have more opportunity to invest in the business, we know exactly where to go. .

As it relates to toggling down, yes, I mean, I wouldn't be toggling down R&D. I think that's more of a sustainable kind of investment that sustains our growth rate. It's easier to toggle on SG&A, and we've got that capabilities also if we need to. .

Great. And I just had a follow-up on Diagnostics. The underlying growth, as you called out in Core Lab and Molecular, was impressive. And I'm wondering if we're going to see you get increased momentum in the underlying business because of your success with COVID diagnostics.

Do you think you can leverage that larger installed base and drive to higher growth in the core diagnostic business over time now?.

Yes, I think the answer to that is yes. We've definitely been elevated to a kind of higher level of partnership here with a lot of hospitals and IDNs and institutions as it relates to their kind of COVID testing.

There's been large set of accounts that we've historically been out of and now had the opportunity to place our instruments and show what we can do. .

So the answer to that is yes on the core lab for sure. You saw -- you're seeing a little bit of that strategy play out in the molecular side of the business, where we haven't seen these kind of growth rates in our molecular business, excluding COVID, in a very long time. And we were up close to 30%, excluding COVID testing.

A lot of that has to do with the instruments that we're placing and getting the test pull-through on the other assays on the other tests. .

So on the rapid side, too, I wouldn't just look at it from a Core Lab perspective. The sustainability of COVID is one portion of it is the actual COVID test. The other portion of it is the installed base that we're placing as a result of that. .

I've talked a little bit about this building sustainability of a rapid testing channel beyond just COVID, and COVID is allowing us to do that.

But if you think about, for example, our ID NOW instrument, where we basically ceded the market here for an opportunity to do much more in the world outside of COVID by placing these instruments, we had roughly about 19,000 boxes in the U.S. in 2019, and we're currently at 75,000 boxes. So we almost quadrupled our installed base there. .

And will they all be as productive from a COVID testing perspective at the highest level of the pandemic 1, 2 years out? No, probably not, but they'll be very productive with all of our other assays. And that installed base will continue to grow and will continue to produce for us. .

So to answer your question, yes, I do think this is a great opportunity here for us to continue to roll out our Alinity platform on the Core Lab, on the molecular side and continue to build our rapid testing channel in the rapids business. .

Our next question comes from Joanne Wuensch from Citibank. .

I'll just put them both upfront. Can you give us an idea of how you're thinking about revenue for the remainder of the year? Particularly I'm going to ask questions about COVID-19 diagnostic revenue in 2021. .

And then my second question has to do with the other areas of med tech that are starting to support or continue to support that high single-digit growth rate. Anything you can add color on a neuromod, vascular or CRM would be helpful. .

Sure. So kind of growth rate in our diagnostic business, the way to think about it is, at least how we've modeled it, is we'll see our, let's call it, non-COVID diagnostic business continue to accelerate, continue to grow. Obviously, you'll have comps over there, Joanne, in Q2 and Q3.

That will be producing some mid-teens kind of growth numbers in this business. .

But I think we always look at it, at least the way we're managing it here, is we're always looking at it on a 2-year CAGR. So if we can get back up to that kind of 10%, 11%, 12% growth rate that we were seeing in our Core Lab business that -- on a 2-year CAGR, that's basically our target to be able to get to those numbers. .

COVID testing, it's difficult to forecast right now. I can't give you an exact quarterly progression of that. I think the range that we've given last call, I'd continue to reiterate it. But it's going to be a little bit difficult here to get the exact calendarization, the exact mix, the exact geography right in terms of the COVID testing. .

What I will say though is that I do continue to believe that the shift from lab-based PCR will still play a role in COVID, but I think that the bigger role will be played by the rapid testing as it relates to surveillance. And as I said, I think we're well positioned there. .

I think you had -- your second question was regarding some of the other devices. I'd say, listen, I'm very pleased with CRM. I'm not saying that we've completely turned it around, but it's a great progression that we're seeing here.

The launch of our ICDs and CRT-Ds with the Gallant brand with Bluetooth capability in Europe and U.S., all of the numbers show that we're picking up share, and that's the ultimate measure here. .

And I'm excited about the ability for us to enter the leadless segment in next year with our product and the capabilities that -- and the value proposition that, that product will bring versus competitive systems. So I think that's done very well. .

I'd say heart failure, one of the challenges there is probably -- that's probably the slowest part of the device portfolio to recover. A lot of those procedures require some ICU stays. So I think that one was one where we saw a little bit of impact to market. I'd say our share has started pretty high around the mid-80s, 85%.

So that's mostly a market condition that we'll see come back. But I think that the CardioMEMS is another great opportunity for us where we saw growth in the quarter for 26%. .

So I don't know if I covered all the device areas that you wanted me to hit on. .

If you can hit on neuromod, that would be great. .

Yes. So we did see a little bit of a slowdown in trials towards the end of the year and the beginning of the year, and we saw that start to pick up a little bit now. We think that we like our position. .

We recently launched our remote programming and monitoring system, the NeuroSphere. I think that's going to create a whole new opportunity for us in terms of business model, in terms of our ability to service the patients and the physicians better with that. So we started to roll it out in the U.S. .

I think it applies to both SCS and DBS, too. We've gotten great feedback on that. So I think that we'll see sequential improvement on our performance in neuro not only as we lap the comps, but also as the NeuroSphere gets widely used. And then we've got a nice pipeline of products to be launching towards the end of the year here. .

And our last question comes from Josh Jennings from Cowen. .

Congratulations on the quarter. I wanted to, Rob, just to ask about your commentary about the potential to pursue M&A to support, if need be, to support the double-digit earnings growth in 2022.

And anything you can provide investors or analysts with in terms of the areas of focus? I mean should we be thinking that each business unit could receive some support with the acquisition?.

And then specifically on Medical Devices, just a follow-up to Joanne's question, should we be thinking about potential the bolstering heart failure, vascular, neuromod to some of the softer businesses here? I mean you have such a pipeline and had such success with internal development initiatives, is Medical Device an area where you can add?.

And then lastly, just on this Structural Heart business. I mean in the U.S., you're going to be adding Amulet and Portico in the near term. And just how are you thinking about that -- you mentioned a specialized sales force.

Should we be thinking about individual sales teams for MitraClip, TAVR and left atrial appendage occlusion? And how could that all shape out?.

Yes. So I think on the M&A side, you'll hear me say the same thing, which is I think it always starts off strategically. Does the business that we're looking at have a strategic fit to Abbott, both from a market position, from a financial standpoint? So we wouldn't be looking at anything that doesn't fit us strategically just to fill an EPS.

We want businesses that we can grow, that we can obviously operate and can fit well into the company. .

So I think it always starts like that. It always starts with the strategic fit. And then if it's attractive, if the timing is right, then we'll look at it. .

I think all the areas that you mentioned are all areas that we look at. So we look at all those areas that you mentioned. We look at diagnostics. We look at all the areas we're always studying. And we're always paying attention to the new technologies, the new companies, et cetera.

So I just won't tip my hand here and give anything away in terms of our competitive position here. .

So regarding your second question on sales forces, it always depends. But we tend to have a viewpoint here, Josh, where we believe that kind of focused and dedicated teams has always been best. That's kind of how we've run our businesses. It's how we've run our businesses for many, many decades.

We don't try and bring things together that don't make sense just for the sake of synergies. .

If we believe we're in growth areas and growth businesses, then we'll fund them as growth business and growth areas. And quite frankly, all the businesses that you talked about in Structural Heart are areas of high potential growth. So we will treat them and resource them as such. .

So I'll just close here by saying we set guidance of at least $5, which is about 35% growth year-over-year. That's after a 13% growth in 2020. And we feel very good about our first quarter. We feel that our first quarter puts us on track to achieve those -- at least those $5. We have multiple ways to get there. .

The COVID market is going to move more and more towards rapid, and our position in this segment of COVID testing is unmatched with our capabilities, our scale, et cetera. And we believe a good portion of those tests, of that COVID testing market will remain at least into 2022. .

And I'm very pleased with the pace of recovery of our base business Abbott, or let's call it the non-COVID side of our business. And we're making investments in 2021, so we can accelerate our growth in 2022 and beyond, and we've talked about this also.

So we feel very good about the position we're in today and the position we have this year and going into next year. .

Very good. 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 11:00 a.m. Central Time today on Abbott's Investor Relations website at abbottinvestor.com. Thank you for joining us today. .

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