ABBOTT LABORATORIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

February 18, 2022 at 04:06 pm EST

Financial Review

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 the
measurement of net sales and costs is impacted by foreign currency translation.

Abbott's primary products are medical devices, diagnostic testing products, nutritional products and branded generic pharmaceuticals. Sales in international markets comprise approximately 61 percent of consolidated net sales.



In 2020 and 2021, the coronavirus (COVID-19) pandemic affected Abbott's
diversified health care businesses in various ways. As is further described
below, some businesses have performed at the levels required to successfully
meet new demands, others have faced challenges during periods when the number of
COVID-19 cases significantly increased, and still others have been relatively
less impacted by the pandemic.

Abbott's Diagnostics segment experienced the most significant change in sales
from 2019 to 2021 as a result of the COVID-19 pandemic. In 2020 and 2021, Abbott
mobilized its teams across multiple fronts to develop and launch various new
diagnostic tests for COVID-19.

In March 2020, Rapid Diagnostics launched a molecular test to detect COVID-19 on
its ID NOW® rapid point-of-care platform in the U.S. pursuant to an Emergency
Use Authorization (EUA). In August 2020, Abbott launched its BinaxNOW® COVID-19
Ag Card test, a portable, lateral flow rapid test to detect COVID-19 pursuant to
an EUA in the U.S. In December 2020, Abbott received an EUA in the U.S. for
virtually guided at-home use of its BinaxNOW COVID-19 Ag Card rapid test and
launched the product for at-home use. In March 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 in the U.S. 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.

Outside the U.S., in September 2020, Rapid Diagnostics launched its Panbio®
rapid antigen test to detect COVID-19 pursuant to a CE Mark. In October 2020,
Abbott received approval by the World Health Organization for emergency use
listing for the Panbio antigen test. 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. In June 2021, Abbott
announced that it had received CE Mark for its over-the-counter Panbio COVID-19
Antigen Self-Test for individuals with or without symptoms.

In 2020, Molecular Diagnostics developed and launched molecular tests to detect
COVID-19 using polymerase chain reaction (PCR) methods on its m2000® RealTime
lab-based platform and its Alinity® m system pursuant to EUAs in the U.S. and CE
Marks. Molecular Diagnostics also developed and launched 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. This multiplex molecular test was
launched pursuant to a CE Mark in December 2020 and an EUA in the U.S. in March
2021.

In 2020 and 2021, Core Laboratory Diagnostics developed and launched various
lab-based serology blood tests on its ARCHITECT® i1000SR® and ARCHITECT i2000SR®
laboratory instruments and on its Alinity i system for the detection of an
antibody to determine if someone was previously infected with the virus. The
tests were launched under EUAs in the U.S. and CE Marks.

In 2020 and 2021, Abbott's COVID-19 testing-related sales totaled approximately
$3.9 billion and $7.7 billion, respectively, led by sales related to Abbott's
BinaxNOW, Panbio and ID NOW rapid testing platforms.  2021 volumes were affected
by fluctuations in the number of COVID-19 cases, especially in the U.S., over
the course of the year.  In the second quarter of 2021, demand for COVID-19
tests decreased from the previous quarter as COVID-19 vaccines were
administered, COVID-19 cases and hospitalizations declined, and the U.S. health
authority updated its guidance on testing for fully vaccinated individuals.

However, in the second half of 2021, as the Delta and Omicron variants of COVID-19 spread and the number of new COVID-19 cases increased, demand for rapid COVID-19 tests increased significantly.


With respect to other products sold by the Diagnostics segment, demand for
routine diagnostic testing generally fluctuated as the number of COVID-19 cases
changed in various geographic regions throughout the two-year period.  In 2020,
in addition to negatively impacting routine core diagnostic testing volumes, the
pandemic negatively affected the number of cardiovascular and neuromodulation
procedures performed by health care providers globally, thereby reducing the
demand for Abbott's cardiovascular and neuromodulation devices and routine
diagnostic tests.  The decrease began in February 2020 in China as that country
implemented quarantine restrictions and postponed non-emergency health care
activities.  The negative impact on cardiovascular and neuromodulation
procedures and routine diagnostic tests expanded to other countries and
geographic regions as COVID-19 spread geographically in the first half of 2020
and health care systems in these countries shifted their focus to fighting
COVID-19.

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The extent of the impact and the timing of a recovery in the number of procedures and routine testing in a particular country or geographic region depended upon the progression of COVID-19 cases in that country or region as well as the actions taken by the government in that country related to COVID-19.


 In 2020, the recovery in procedures and routine testing volumes in China began
in March 2020.  In other parts of the world, such as the U.S. and Europe,
volumes improved across Abbott's hospital-based businesses as the second quarter
progressed and the improvement continued in the third quarter.  However, in the
fourth quarter of 2020, the improving trends in the demand for procedures and
routine testing flattened or were negatively impacted depending upon the
business and the region as many countries, including the U.S., experienced an
increase in the number of COVID-19 cases and hospitalizations.

While routine diagnostic testing and cardiovascular and neuromodulation procedure volumes were negatively impacted early in 2021 by elevated COVID-19 case rates, overall volumes improved over the course of the year until the latter part of 2021 when demand softened in several geographies with the emergence of another variant.

While Abbott's branded generic pharmaceuticals business was also negatively affected by the pandemic in 2020 as COVID-19 spread across emerging market countries in the second and third quarters of 2020, volumes recovered and grew in 2021. Abbott's nutritional and diabetes care businesses were the least affected by the pandemic as is further discussed below.

Abbott is continually monitoring the effects of the pandemic on its operations.
Throughout the pandemic, Abbott has continued to ensure that its operations
throughout the world are aligned with the specific governmental orders and
guidelines affecting each location. Abbott has taken aggressive steps to limit
exposure to COVID-19 and enhance the safety of facilities for its employees.

The demand for COVID-19 tests has been highly volatile. Abbott expects this
volatility to continue as the possible emergence and severity of new variants
are unpredictable. Due to the unpredictability of the duration and impact of the
COVID-19 pandemic, the extent to which the pandemic will have a material effect
on Abbott's business, financial condition or results of operations is uncertain.

While Abbott's 2021 and 2020 sales were most significantly affected by the
COVID-19 pandemic, the increase in total sales over the last three years also
reflects the introduction of new products across various businesses as well as
higher sales of various existing products. Sales in emerging markets, which
represent approximately 35 percent of total company sales, increased 19.6
percent in 2021 and 2.0 percent in 2020, excluding the impact of foreign
exchange. (Emerging markets include all countries except the United States,
Western Europe, Japan, Canada, Australia and New Zealand.)

Over the last three years, Abbott's operating margin as a percentage of sales
increased from 14.2 percent in 2019 to 15.5 percent in 2020 and 19.6 percent in
2021.  The increase in 2021 from 2020 reflects the impact of sales volume
increases for COVID-19 tests in Rapid Diagnostics and growth across virtually
all of Abbott's businesses due, in part, to recovery from the COVID-19 pandemic,
partially offset by the impact of inflation and supply chain challenges on
various manufacturing inputs and transportation costs, an increase in
restructuring costs, and the unfavorable effect of foreign exchange.  The
increase in 2020 reflects the sales volume increases in the rapid and molecular
diagnostics businesses, partially offset by lower Medical Devices sales due to
the impact of the pandemic and the unfavorable effect of foreign exchange.  In
addition, a reduction in the costs associated with business acquisitions and
restructuring activities drove an improvement in operating margins from 2019 to
2020.

In 2021, Abbott experienced availability issues with some services and materials
used in its products.  To date, Abbott has been able to manage the various
supply chain challenges without significant supply disruption or shortage for
services, raw materials and supplies. While Abbott expects inflationary
pressures on various raw materials, packaging materials and transportation costs
to continue in 2022, the impact of such cost increases is expected to be at
least partially mitigated by price increases in certain businesses and the
impact of continued gross margin improvement initiatives. To the extent that
supply chain challenges in the industries in which Abbott operates normalize
over time, this may lessen inflationary pressures.

With respect to the performance of each reportable segment over the last three
years, sales in the Medical Devices segment, excluding the impact of foreign
exchange, increased 19.4 percent in 2021 and decreased 3.8 percent in 2020. The
sales increase in 2021 was driven by double-digit growth across all of Abbott's
Medical Devices divisions, led by Diabetes Care, Structural Heart and
Electrophysiology. The sales decrease in 2020 was driven by Abbott's
cardiovascular and neuromodulation businesses due primarily to reduced procedure
volumes as a result of the COVID-19 pandemic. These decreases were partially
offset by double-digit growth in Diabetes Care.

In 2021, operating earnings for the Medical Devices segment increased 48.6
percent. The operating margin profile increased from 30.8 percent of sales in
2019 to 31.4 percent in 2021 primarily due to higher sales volumes in Diabetes
Care and Abbott's cardiovascular and neuromodulation businesses. This growth was
partially offset by pricing pressures on drug eluting stents (DES) as a result
of market competition in the U.S. and other major markets.

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In 2021, key product approvals in the Medical Devices segment included:

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,

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,

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

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.


In Abbott's worldwide diagnostics business, sales increased 42.7 percent in 2021
and 40.6 percent in 2020, excluding the impact of foreign exchange. As was
discussed above, sales growth in 2021 was driven by demand for Abbott's
portfolio of rapid diagnostics tests for COVID-19 and higher routine diagnostics
testing in the core laboratory business, partially offset by lower demand for
Abbott's laboratory-based tests for COVID-19 in the molecular diagnostics
business. Growth in 2020 was driven by demand for Abbott's portfolio of COVID-19
diagnostics tests across its rapid and lab-based platforms, partially offset by
lower volumes of routine laboratory testing due to the pandemic.

Abbott has regulatory approvals in the U.S., Europe, China, and other markets
for the "Alinity c" and "Alinity i" instruments and has continued to build out
its test menu for clinical chemistry and immunoassay diagnostics. Abbott has
obtained regulatory approval for the "Alinity h" instrument for hematology in
Europe and Japan. Abbott has also obtained regulatory approvals in the U.S.,
Europe and other markets for the "Alinity s" (blood screening) and "Alinity m"
(molecular) instruments and several testing assays.

In 2021, operating earnings for the Diagnostics segment increased 68.0 percent.
The operating margin profile increased from 24.8 percent of sales in 2019 to
40.0 percent in 2021 primarily due to higher sales in Rapid Diagnostics in 2020
and 2021 and increased routine diagnostics testing in 2021 in Core Laboratory
Diagnostics.

In Abbott's worldwide nutritional products business, sales over the last three
years were positively impacted by numerous new product introductions, including
the roll-outs of human milk oligosaccharide, or HMO, in infant formula, that
leveraged Abbott's strong brands. Sales over the last two years were also
positively impacted by consumers' interest in nutrients that help support their
immune systems. Excluding the impact of foreign exchange, total adult nutrition
sales increased 12.8 percent in 2021 and 10.3 percent in 2020, led by the
continued growth of Ensure®, Abbott's market-leading complete and balanced
nutrition brand, and Glucerna®, Abbott's market-leading diabetes-specific
nutrition brand, across several countries. Excluding the impact of foreign
exchange, total pediatric nutrition sales increased 3.3 percent in 2021 and 0.3
percent in 2020 driven by the Pedialyte®, PediaSure® and Similac® brands in the
U.S. as well as infant and toddler product growth across several international
markets, partially offset by challenging market dynamics in the infant category
in Greater China. Operating margins for the worldwide nutritional products
business decreased from 23.0 percent in 2019 to 21.3 percent in 2021. The
decrease was driven by higher manufacturing and distribution costs, including
commodity prices, partially offset by the impact of gross margin improvement
initiatives.

The Established Pharmaceutical Products segment focuses on the sale of its
products in emerging markets. Excluding the impact of foreign exchange,
Established Pharmaceutical sales increased 10.4 percent in 2021 and 1.9 percent
in 2020. The sales increases in 2021 and 2020 reflect higher sales in several
geographies including India, China, Brazil and Russia. Operating margins
decreased from 20.1 percent of sales in 2019 to 18.8 percent in 2021 primarily
due to the unfavorable impact of foreign exchange, higher product costs and
product mix, partially offset by the impact of gross margin improvement
initiatives.

With respect to Abbott's financial position, at December 31, 2021, Abbott's cash
and cash equivalents and short-term investments total approximately $10.2
billion compared to $7.1 billion at December 31, 2020. Abbott's long-term debt
and short-term borrowings total $18.1 billion and $18.7 billion at December 31,
2021 and 2020, respectively.

Abbott declared dividends of $1.82 per share in 2021 compared to $1.53 per share
in 2020, an increase of approximately 19 percent. Dividends paid totaled $3.202
billion in 2021 compared to $2.560 billion in 2020. The year-over-year change in
the amount of dividends paid primarily reflects the increase in the dividend
rate. In December 2021, Abbott increased the company's quarterly dividend by 4.4
percent to $0.47 per share from $0.45 per share, effective with the dividend
paid in February 2022. In December 2020, Abbott increased the company's
quarterly dividend by 25 percent to $0.45 per share from $0.36 per share,
effective with the dividend paid in February 2021.

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In 2022, Abbott will focus on continuing to meet the demand for COVID-19 tests
and will continue to invest in product development areas that provide the
opportunity for strong sustainable growth over the next several years.  In its
diagnostics business, Abbott will continue to focus on driving market adoption
and geographic expansion of its Alinity suite of diagnostics instruments.  In
the Medical Devices segment, Abbott will focus on expanding its market position
across the various businesses.  In its nutritionals business, Abbott will
continue to focus on driving growth globally and further enhancing its portfolio
with the introduction of line extensions of its science-based products.  In the
established pharmaceuticals business, Abbott will continue to focus on growing
its business with the depth and breadth of its portfolio in emerging markets.

Critical Accounting Policies

Sales Rebates - In 2021, approximately 45 percent of Abbott's consolidated gross
revenues were subject to various forms of rebates and allowances that Abbott
recorded as reductions of revenues at the time of sale. Most of these rebates
and allowances in 2021 are in the Nutritional Products and Diabetes Care
businesses. Abbott provides rebates to state agencies that administer the
Special Supplemental Nutrition Program for Women, Infants, and Children (WIC),
wholesalers, group purchasing organizations, and other government agencies and
private entities. Rebate amounts are usually based upon the volume of purchases
using contractual or statutory prices for a product. Factors used in the rebate
calculations include the identification of which products have been sold subject
to a rebate, which customer or government agency price terms apply, and the
estimated lag time between sale and payment of a rebate. Using historical
trends, adjusted for current changes, Abbott estimates the amount of the rebate
that will be paid, and records the liability as a reduction of gross sales when
Abbott records its sale of the product. Settlement of the rebate generally
occurs from one to six months after sale. Abbott regularly analyzes the
historical rebate trends and makes adjustments to reserves for changes in trends
and terms of rebate programs. Rebates and chargebacks charged against gross
sales in 2021, 2020 and 2019 amounted to approximately $3.9 billion, $3.3
billion and $3.1 billion, respectively, or 17.5 percent, 20.1 percent and 19.1
percent of gross sales, respectively, based on gross sales of approximately
$22.3 billion, $16.6 billion and $16.3 billion, respectively, subject to rebate.
A one-percentage point increase in the percentage of rebates to related gross
sales would decrease net sales by approximately $223 million in 2021. Abbott
considers a one-percentage point increase to be a reasonably likely increase in
the percentage of rebates to related gross sales. Other allowances charged
against gross sales were approximately $268 million, $207 million and $169
million for cash discounts in 2021, 2020 and 2019, respectively, and $211
million, $232 million and $192 million for returns in 2021, 2020 and 2019,
respectively. Cash discounts are known within 15 to 30 days of sale, and
therefore can be reliably estimated. Returns can be reliably estimated because
Abbott's historical returns are low, and because sales returns terms and other
sales terms have remained relatively unchanged for several periods.

Management analyzes the adequacy of ending rebate accrual balances each quarter.
In the domestic nutritional business, management uses both internal and external
data available to estimate the accruals. In the WIC business, estimates are
required for the amount of WIC sales within each state where Abbott holds the
WIC contract. The state where the sale is made, which is the determining factor
for the applicable rebated price, is reliably determinable. Rebated prices are
based on contractually obligated agreements generally lasting a period of two to
four years. Except for a change in contract price or a transition period before
or after a change in the supplier for the WIC business in a state, accruals are
based on historical redemption rates and data from the U.S. Department of
Agriculture (USDA) and the states submitting rebate claims. The USDA, which
administers the WIC program, has been making its data available for many years.
Management also estimates the states' processing lag time based on sales and
claims data. Inventory in the retail distribution channel does not vary
substantially. Management has access to several large customers' inventory
management data, which allows management to make reliable estimates of inventory
in the retail distribution channel. At December 31, 2021, Abbott had WIC
business in 36 states.

Historically, adjustments to prior years' rebate accruals have not been material
to net income. Abbott employs various techniques to verify the accuracy of
claims submitted to it, and where possible, works with the organizations
submitting claims to gain insight into changes that might affect the rebate
amounts. For government agency programs, the calculation of a rebate involves
interpretations of relevant regulations, which are subject to challenge or
change in interpretation.

Income Taxes - Abbott operates in numerous countries where its income tax
returns are subject to audits and adjustments. Because Abbott operates globally,
the nature of the audit items is often very complex, and the objectives of the
government auditors can result in a tax on the same income in more than one
country. Abbott employs internal and external tax professionals to minimize
audit adjustment amounts where possible. In accordance with the accounting rules
relating to the measurement of tax contingencies, in order to recognize an
uncertain tax benefit, the taxpayer must be more likely than not of sustaining
the position, and the measurement of the benefit is calculated as the largest
amount that is more than 50 percent likely to be realized upon resolution of the
benefit. Application of these rules requires a significant amount of judgment.
In the U.S., Abbott's federal income tax returns through 2016 are settled.
Undistributed foreign earnings remain indefinitely reinvested in foreign
operations. Determining the amount of unrecognized deferred tax liability
related to any remaining undistributed foreign earnings not subject to the
transition tax and additional outside basis difference in its foreign entities
is not practicable.

Pension and Post-Employment Benefits - Abbott offers pension benefits and
post-employment health care to many of its employees. Abbott engages outside
actuaries to assist in the determination of the obligations and costs under
these programs. Abbott must develop long-term assumptions, the most significant
of which are the health care cost trend rates, discount rates and the expected
return on plan assets. The discount rates used to measure liabilities were
determined based on high-quality fixed income securities that match the duration
of the expected retiree benefits. The health care cost trend rates represent
Abbott's expected annual rates of change in the cost of health care benefits and
are a forward projection of health care costs as of the measurement date. A
difference between the assumed rates and the actual rates, which will not be
known for years, can be significant in relation to the obligations and the
annual cost recorded for these programs. The impact of higher interest rates and
improved asset returns during 2021 significantly decreased the net actuarial
losses for these plans. At December 31, 2021, pretax net actuarial losses and
prior service costs and (credits) recognized in Accumulated other comprehensive
income (loss) were net losses of $3.1 billion for Abbott's defined benefit plans
and net losses of $373 million for Abbott's medical and dental plans. Actuarial
losses and gains are amortized over the remaining service attribution periods of
the employees under the corridor method, in accordance with the rules for
accounting for post-employment benefits. Differences between the expected
long-term return on plan assets and the actual annual return are amortized over
a five-year period.

Valuation of Intangible Assets - Abbott has acquired and continues to acquire
significant intangible assets that Abbott records at fair value at the
acquisition date. Transactions involving the purchase or sale of intangible
assets occur with some frequency between companies in the health care field and
valuations are usually based on a discounted cash flow analysis. The discounted
cash flow model requires assumptions about the timing and amount of future net
cash flows, risk, cost of capital, terminal values and market participants. Each
of these factors can significantly affect the value of the intangible asset.
Abbott engages independent valuation experts who review Abbott's critical
assumptions and calculations for acquisitions of significant intangibles. Abbott
reviews definite-lived intangible assets for impairment each quarter using an
undiscounted net cash flows approach. If the undiscounted cash flows of an
intangible asset are less than the carrying value of an intangible asset, the
intangible asset is written down to its fair value, which is usually the
discounted cash flow amount. Where cash flows cannot be identified for an
individual asset, the review is applied at the lowest group level for which cash
flows are identifiable. Goodwill and indefinite-lived intangible assets, which
relate to in-process research and development acquired in a business
combination, are reviewed for impairment annually or when an event that could
result in impairment occurs. At December 31, 2021, goodwill amounted to $23.2
billion and net intangibles amounted to $12.7 billion. Amortization expense in
continuing operations for intangible assets amounted to $2.0 billion in 2021,
$2.1 billion in 2020 and $1.9 billion in 2019. There was no reduction of
goodwill relating to impairments in 2021, 2020 and 2019.

Litigation - Abbott accounts for litigation losses in accordance with Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC) No.
450, "Contingencies." Under ASC No. 450, loss contingency provisions are
recorded for probable losses at management's best estimate of a loss, or when a
best estimate cannot be made, a minimum loss contingency amount is recorded.
These estimates are often initially developed substantially earlier than the
ultimate loss is known, and the estimates are refined each accounting period as
additional information becomes known. Accordingly, Abbott is often initially
unable to develop a best estimate of loss, and therefore the minimum amount,
which could be zero, is recorded. As information becomes known, either the
minimum loss amount is increased, resulting in additional loss provisions, or a
best estimate can be made, also resulting in additional loss provisions.
Occasionally, a best estimate amount is changed to a lower amount when events
result in an expectation of a more favorable outcome than previously expected.
Abbott estimates the range of possible loss to be from approximately $30 million
to $45 million for its legal proceedings and environmental exposures. Accruals
of approximately $40 million have been recorded at December 31, 2021 for these
proceedings and exposures. These accruals represent management's best estimate
of probable loss, as defined by FASB ASC No. 450, "Contingencies."

Results of Operations

Sales

The following table details the components of sales growth by reportable segment
for the last two years:

Components of % Change
Total
% Change Price Volume Exchange
Total Net Sales
2021 vs. 2020 24.5 (1.5) 24.4 1.6
2020 vs. 2019 8.5 (0.4) 10.2 (1.3)

Total U.S.
2021 vs. 2020 27.8 (1.9) 29.7 -
2020 vs. 2019 14.2 (1.1) 15.3 -

Total International
2021 vs. 2020 22.5 (1.3) 21.2 2.6
2020 vs. 2019 5.3 0.1 7.2 (2.0)

Established Pharmaceutical Products Segment
2021 vs. 2020 9.6 4.2 6.2 (0.8)
2020 vs. 2019 (4.1) 2.7 (0.8) (6.0)

Nutritional Products Segment
2021 vs. 2020 8.5 1.0 6.7 0.8
2020 vs. 2019 3.2 0.8 3.9 (1.5)

Diagnostic Products Segment
2021 vs. 2020 44.8 (6.2) 48.9 2.1
2020 vs. 2019 40.1 (0.8) 41.4 (0.5)

Medical Devices Segment
2021 vs. 2020 21.9 (0.9) 20.3 2.5
2020 vs. 2019 (3.7) (1.9) (1.9) 0.1

The increase in Total Net Sales in 2021 reflects volume growth across all of
Abbott's segments. In 2021, Abbott's COVID-19 testing-related sales totaled
approximately $7.7 billion led by combined sales of approximately $6.6 billion
related to Abbott's BinaxNOW, Panbio, and ID NOW rapid testing platforms. In
2021, excluding the impact of COVID-19 testing-related sales, Abbott's total net
sales increased 15.2 percent. Excluding the impacts of COVID-19 testing-related
sales and foreign exchange, Abbott's total net sales in 2021 increased 13.7
percent. The price decline related to the Diagnostic Products segment in 2021
primarily reflects lower pricing for COVID-19 tests. The increase in Total Net
Sales in 2020 reflects volume growth in the Diagnostics and Nutritional Products
segments. In 2020, COVID-19 testing-related sales totaled approximately $3.9
billion. In Medical Devices, the 2020 impact of COVID-19 on Abbott's
cardiovascular and neuromodulation businesses was partially offset by
double-digit volume growth in Diabetes Care. The price declines related to the
Medical Devices segment in 2021 and 2020 primarily reflect DES pricing pressures
as a result of market competition in the U.S. and other major markets.

A comparison of significant product and product group sales is as follows.
Percent changes are versus the prior year and are based on unrounded numbers.

Total Impact of Total Change
2021 2020 Change Exchange Excl. Exchange
(dollars in millions)
Total Established Pharmaceuticals -
Key Emerging Markets $ 3,539 $ 3,209 10 % (2) % 12 %
Other 1,179 1,094 8 2 6

Nutritionals -


International Pediatric Nutritionals         2,106      2,140       (2)            1               (3)
U.S. Pediatric Nutritionals                  2,192      1,987        10            -                10
International Adult Nutritionals             2,632      2,228        18


       1                17
U.S. Adult Nutritionals                      1,364      1,292         6            -                 6

Diagnostics -
Core Laboratory                              5,128      4,475        15            3                12
Molecular                                    1,427      1,438       (1)            2               (3)
Point of Care                                  536        516         4            1                 3
Rapid Diagnostics                            8,553      4,376        95            2                93

Medical Devices -
Rhythm Management                            2,198      1,914        15            2                13
Electrophysiology                            1,907      1,578        21            2                19
Heart Failure                                  889        740        20            1                19
Vascular                                     2,654      2,339        14            3                11
Structural Heart                             1,610      1,247        29            2                27
Neuromodulation                                781        702        11            1                10
Diabetes Care                                4,328      3,267        33            4                29


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                                                                 Total     Impact of     Total Change
                                            2020       2019      Change    Exchange     Excl. Exchange
(dollars in millions)
Total Established Pharmaceuticals -
Key Emerging Markets                       $ 3,209    $ 3,392       (5) %        (8) %               3 %
Other                                        1,094      1,094         -            1               (1)

Nutritionals -


International Pediatric Nutritionals         2,140      2,282       (6)          (2)               (4)
U.S. Pediatric Nutritionals                  1,987      1,879         6            -                 6
International Adult Nutritionals             2,228      2,017        11


     (3)                14
U.S. Adult Nutritionals                      1,292      1,231         5            -                 5

Diagnostics -
Core Laboratory                              4,475      4,656       (4)          (1)               (3)
Molecular                                    1,438        442       225          (1)               226
Point of Care                                  516        561       (8)            -               (8)
Rapid Diagnostics                            4,376      2,054       113            1               112

Medical Devices -
Rhythm Management                            1,914      2,144      (11)            -              (11)
Electrophysiology                            1,578      1,721       (8)            1               (9)
Heart Failure                                  740        769       (4)            -               (4)
Vascular                                     2,339      2,850      (18)            -              (18)
Structural Heart                             1,247      1,400      (11)            -              (11)
Neuromodulation                                702        831      (16)            -              (16)
Diabetes Care                                3,267      2,524        29            -                29


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.

Total Established Pharmaceutical Products sales increased 10.4 percent in 2021
and 1.9 percent in 2020, excluding the impact of foreign exchange. The
Established Pharmaceutical Products segment is focused on several key emerging
markets including India, Russia, China and Brazil. Excluding the impact of
foreign exchange, total sales in these key emerging markets increased 11.9
percent in 2021 and 2.6 percent in 2020 due to higher sales in several
geographies including India, China, Russia and Brazil. Excluding the impact of
foreign exchange, sales in Established Pharmaceuticals' other emerging markets
increased 6.0 percent in 2021 and decreased 0.5 percent in 2020.

Total Nutritional Products sales increased 7.7 percent in 2021 and 4.7 percent
in 2020, excluding the impact of foreign exchange. In 2021, International
Pediatric Nutritional sales, excluding the effect of foreign exchange, decreased
3.2 percent as lower sales in China, the Middle East and various countries in
Southeast Asia were partially offset by higher volumes sold in various countries
in Latin America and Europe. The 4.1 percent decrease in 2020 International
Pediatric Nutritional sales, excluding the effect of foreign exchange, was due
to challenging market dynamics in the infant category in Greater China that more
than offset growth across Abbott's pediatric products in various countries in
Southeast Asia. In the U.S. Pediatric Nutritional business, sales increased 10.3
percent in 2021 and 5.8 percent in 2020, reflecting growth in Pedialyte, Similac
and PediaSure.

In International Adult Nutritionals, sales increased 17.0 percent and 13.6
percent in 2021 and 2020, respectively, excluding the effect of foreign
exchange, due to continued growth of Ensure and Glucerna in several countries.
U.S. Adult Nutritional sales increased 5.6 percent in 2021, primarily due to
growth of Ensure and Glucerna. In 2020, U.S. Adult Nutritional sales increased
4.9 percent, primarily due to growth of Ensure.

                                       29

In the Diagnostics segment, Core Laboratory Diagnostics sales increased 12.4
percent in 2021 and decreased 2.8 percent in 2020, excluding the effect of
foreign exchange. In 2021, growth was driven by 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 2020, the decrease was due to the lower volume of
routine testing performed in hospital and other laboratories due to COVID-19,
partially offset by sales of Abbott's COVID-19 laboratory-based tests for the
detection of the IgG and IgM antibodies. Core Laboratory Diagnostics COVID-19
testing-related sales on Abbott's ARCHITECT and Alinity i platforms were $204
million and $262 million in 2021 and 2020, respectively. In 2021, Core
Laboratory Diagnostics sales increased 16.9 percent, excluding COVID-19
testing-related sales, and increased 14.4 percent, excluding the impact of
foreign exchange and COVID-19 testing-related sales.

In Molecular Diagnostics, sales decreased 2.9 percent and increased 225.7
percent in 2021 and 2020, respectively, excluding the effect of foreign
exchange. In 2021, the decrease was due to lower demand for Abbott's
laboratory-based molecular tests for COVID-19 on its m2000 platform, partially
offset by growth in the base business from the continued roll-out of the Alinity
m platform. In 2020, the increase reflects higher volumes due to demand for
Abbott's laboratory-based molecular tests for COVID-19. Abbott received U.S. FDA
approval in March 2020 for its Alinity m molecular diagnostics system. Molecular
Diagnostics COVID-19 testing-related sales were $891 million and $1.0 billion in
2021 and 2020, respectively. In 2021, Molecular Diagnostics sales increased 29.2
percent, excluding COVID-19 testing-related sales, and increased 27.0 percent,
excluding the impact of foreign exchange and COVID-19 testing-related sales.

In Rapid Diagnostics, sales increased 93.3 percent and 112.3 percent in 2021 and
2020, respectively, excluding the effect of foreign exchange, due to strong
demand for Abbott's point-of-care COVID-19 molecular test on its ID NOW platform
and its BinaxNOW COVID-19 Ag Card test in the U.S. as well as international
demand for COVID-19 rapid tests on its Panbio platform.  The sales increase for
2021 also included the recovery of routine diagnostic testing.  The sales
increase for 2020 also included increased testing in the first quarter for the
flu in the U.S., partially offset by the unfavorable impact of COVID-19 on
routine diagnostic testing in 2020.  Rapid Diagnostics COVID-19 testing-related
sales were $6.6 billion and $2.6 billion in 2021 and 2020, respectively.  In
2021, Rapid Diagnostics sales increased 10.4 percent, excluding COVID-19
testing-related sales, and increased 9.2 percent, excluding the impact of
foreign exchange and COVID-19 testing-related sales.

In Medical Devices, sales increased 19.4 percent and decreased 3.8 percent in
2021 and 2020, respectively, excluding the effect of foreign exchange.  In 2021,
the increase was driven by double-digit growth across all divisions, led by
Diabetes Care, Structural Heart and Electrophysiology.  In 2020, double-digit
growth in Diabetes Care was more than offset by decreases in Abbott's
cardiovascular and neuromodulation businesses due to the impact of COVID-19 and
lower vascular sales in China in the fourth quarter of 2020 as a result of a new
national tender program.

The 2021 and 2020 growth in Diabetes Care revenue was driven by continued growth
of FreeStyle Libre, Abbott's continuous glucose monitoring system,
internationally and in the U.S. In 2021, FreeStyle Libre sales totaled $3.7
billion, which reflected a 36.8 percent increase over 2020, excluding the effect
of foreign exchange. FreeStyle Libre sales in 2020 were $2.6 billion, which
reflected a 42.6 percent increase, excluding the effect of foreign exchange,
over 2019 when sales totaled $1.8 billion.

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 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
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.

Abbott has periodically sold product rights to non-strategic products and has recorded the related gains in net sales in accordance with Abbott's revenue recognition policies as discussed in Note 1 to the consolidated financial statements. Related net sales were not significant in 2021, 2020 and 2019.

The expiration of licenses and patent protection can affect the future revenues and operating income of Abbott. There are no significant patent or license expirations in the next three years that are expected to materially affect Abbott.



                                       30

Operating Earnings

Gross profit margins were 52.2 percent of net sales in 2021, 50.5 percent in
2020 and 52.5 percent in 2019. In 2021, the increase primarily reflects the
effects of higher sales volume, higher manufacturing utilization, and the
nonrecurrence of the 2020 impairment of intangible assets, partially offset by
increases in various manufacturing costs and the impact of higher restructuring
charges. In 2020, the decrease primarily reflects the mix of sales across
Abbott's various businesses and operational inefficiencies due to the impact of
COVID-19, as well as the increase in intangible asset amortization, the
impairment of intangible assets and the unfavorable effect of foreign exchange
on gross margin.

Research and development (R&D) expenses were $2.7 billion in 2021, and $2.4
billion in both 2020 and 2019. The increase in 2021 R&D spending was primarily
driven by higher spending on various projects to advance products in
development. R&D spending in 2020 was relatively flat compared to 2019 as the
impact of the immediate expensing in 2019 of an R&D asset valued at $102 million
that was acquired in conjunction with the acquisition of Cephea Valve
Technologies, Inc. was partially offset by the $55 million impairment of an
in-process R&D intangible asset in 2020. R&D expense in 2020 also reflects lower
integration and restructuring costs in 2020 related to R&D, partially offset by
higher spending on various projects.

Selling, general and administrative (SG&A) expenses increased 16.8 percent in
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 2021 also includes charges
related to certain litigation. SG&A expenses were basically flat in 2020
compared to 2019. In 2020, the favorable effect of foreign exchange, income of
approximately $100 million from a litigation settlement in 2020, lower spending
due to COVID-19 travel restrictions, and the impact of various cost saving
initiatives were offset by higher spending to drive growth in various
businesses.

Restructurings


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.

In the second half of 2021, as the Delta and Omicron variants 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 second half of 2021, Abbott sold approximately $181 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 $58 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 second half of 2021. As of December
31, 2021, the accrued liabilities remaining in the Consolidated Balance Sheet
related to these actions total $23 million and primarily represent severance
obligations.

From 2017 to 2021, Abbott management approved restructuring plans as part of the
integration of the acquisitions of St. Jude Medical, Inc. (St. Jude Medical)
into the Medical Devices segment, and Alere Inc. (Alere) into the Diagnostic
Products segment, in order to leverage economies of scale and reduce costs. As
of December 31, 2018, the accrued balance associated with these actions was $41
million. From 2019 to 2021, Abbott recorded employee-related severance and other
charges totaling approximately $95 million, comprised of $10 million in 2021,
$13 million in 2020, and $72 million in 2019. Approximately $31 million was
recorded in Cost of products sold, approximately $5 million was recorded in
Research and development, and approximately $59 million was recorded in Selling,
general and administrative expense over the last three years. As of December 31,
2021, the accrued liabilities remaining in the Consolidated Balance Sheet
related to these actions total $9 million.

From 2017 to 2020, Abbott management approved plans to streamline operations in
order to reduce costs and improve efficiencies in various Abbott businesses
including the nutritional, established pharmaceuticals and vascular businesses.
As of December 31, 2018, the accrued balance associated with these actions was
$70 million. From 2019 to 2020, Abbott recorded employee-related severance and
other charges totaling approximately $102 million, comprised of $36 million in
2020 and $66 million in 2019. Approximately $22 million was recorded in Cost of
products sold, approximately $30 million was recorded in Research and
development, and approximately $50 million was recorded in Selling, general and
administrative expense over the two years. As of December 31, 2021, the accrued
liabilities remaining in the Consolidated Balance Sheet related to these actions
total $24 million.

                                       31


In 2021, Abbott management approved plans to streamline operations in order to
reduce costs and improve efficiencies in various Abbott businesses including the
diagnostics, established pharmaceuticals and nutritional businesses. Abbott
recorded employee-related severance and other charges of approximately $68
million. Approximately $16 million was recorded in Cost of products sold,
approximately $4 million was recorded in Research and development, and
approximately $48 million was recorded in Selling, general and administrative
expense. As of December 31, 2021, the accrued liabilities remaining in the
Consolidated Balance Sheet related to these actions total $61 million and
primarily represent severance obligations.

Interest Expense and Interest (Income)


Interest expense, net decreased $10 million in 2021 due to the reduction of
interest expense driven by lower interest rates in 2021. The effects of higher
cash and short-term investment balances were more than offset by the impact of
lower interest rates on interest income in 2021. In 2020, interest expense, net
decreased $76 million due to a reduction in interest expense resulting from the
favorable impact of the euro debt financing in November 2019, the repayment of
debt in December 2019 and a lower interest rate environment in 2020.

Debt Extinguishment Costs

On December 19, 2019, Abbott redeemed the $2.850 billion principal amount of its 2.9% Notes due 2021. Abbott incurred a charge of $63 million related to the early repayment of this debt.

Other (Income) Expense, net


Other (income) expense, net includes income of approximately $270 million, $205
million and $225 million in 2021, 2020 and 2019, respectively, related to the
non-service cost components of the net periodic benefit costs associated with
the pension and post-retirement medical plans. Other (income) expense, net also
includes a gain on the sale of an equity method investment in 2021 and equity
investment impairments that totaled approximately $115 million in 2020.

Taxes on Earnings

The income tax rates on earnings from continuing operations were 13.9 percent in 2021, 10.0 percent in 2020, and 9.6 percent in 2019.


In 2021, taxes on earnings from continuing operations include approximately $145
million in excess tax benefits associated with share-based compensation and
approximately $55 million of net tax benefits as a result of the resolution of
various tax positions related to prior years.

In 2020, taxes on earnings from continuing operations include the recognition of
approximately $170 million of tax benefits associated with the impairment of
certain assets, approximately $140 million of net tax benefits as a result of
the resolution of various tax positions related to prior years, and
approximately $100 million in excess tax benefits associated with share-based
compensation. In 2020, taxes on earnings from continuing operations also include
a $26 million increase to the transition tax liability associated with the 2017
Tax Cuts and Jobs Act (TCJA). The $26 million increase to the transition tax
liability was the result of the resolution of various tax positions related to
prior years. This adjustment increased the cumulative net tax expense related to
the TCJA to $1.53 billion. As of December 31, 2021, the remaining balance of
Abbott's transition tax obligation is approximately $794 million, which will be
paid over the next five years as allowed by the TCJA. Earnings from discontinued
operations, net of tax, in 2020 reflect the recognition of $24 million of net
tax benefits primarily as a result of the resolution of various tax positions
related to prior years. In 2019, taxes on earnings from continuing operations
included approximately $100 million in excess tax benefits associated with
share-based compensation, an $86 million reduction of the transition tax and $68
million of tax expense resulting from tax legislation enacted in the fourth
quarter of 2019 in India. The $86 million reduction to the transition tax
liability was the result of the issuance of final transition tax regulations by
the U.S. Department of Treasury in 2019.

Exclusive of these discrete items, tax expense was favorably impacted by lower
tax rates and tax exemptions on foreign income primarily derived from operations
in Puerto Rico, Switzerland, Ireland, the Netherlands, Costa Rica, Singapore,
and Malta. Abbott benefits from a combination of favorable statutory tax rules,
tax rulings, grants, and exemptions in these tax jurisdictions. See Note 14 to
the consolidated financial statements for a full reconciliation of the effective
tax rate to the U.S. federal statutory rate.

Research and Development Programs

Abbott currently has numerous pharmaceutical, medical devices, diagnostic and nutritional products in development.

Research and Development Process


In the Established Pharmaceuticals segment, the development process focuses on
the geographic expansion and continuous improvement of the segment's existing
products to provide benefits to patients and customers. As Established
Pharmaceuticals does not actively pursue primary research, development usually
begins with work on existing products or after the acquisition of an advanced
stage licensing opportunity.

Depending upon the product, the phases of development may include:

? Drug product development.

Phase I bioequivalence studies to compare a future Established Pharmaceutical's

? brand with an already marketed compound with the same active pharmaceutical

ingredient (API).

? Phase II studies to test the efficacy of benefits in a small group of patients.

? Phase III studies to broaden the testing to a wider population that reflects

the actual medical use.

? Phase IV and other post-marketing studies to obtain new clinical use data on

existing products within approved indications.




The specific requirements (e.g., scope of clinical trials) for obtaining
regulatory approval vary across different countries and geographic regions. The
process may range from one year for a bioequivalence study project to six or
more years for complex formulations, new indications, or geographic expansion in
specific countries, such as China.

In the Diagnostics segment, the phases of the research and development process include:

? Discovery which focuses on identification of a product that will address a

specific therapeutic area, platform, or unmet clinical need.

Concept/Feasibility during which the materials and manufacturing processes are

? evaluated, testing may include product characterization and analysis is

performed to confirm clinical utility.

Development during which extensive testing is performed to demonstrate that the

? product meets specified design requirements and that the design specifications

conform to user needs and intended uses.




The regulatory requirements for diagnostic products vary across different
countries and geographic regions. In the U.S., the FDA classifies diagnostic
products into classes (I, II, or III) and the classification determines the
regulatory process for approval. While the Diagnostics segment has products in
all three classes, the vast majority of its products are categorized as Class I
or Class II. Submission of a separate regulatory filing is not required for
Class I products. Class II devices typically require pre-market notification to
the FDA through a regulatory filing known as a 510(k) submission. Most Class III
products are subject to the FDA's Premarket Approval (PMA) requirements. Other
Class III products, such as those used to screen blood, require the submission
and approval of a Biological License Application (BLA).

In the European Union (EU), diagnostic products are also categorized into
different categories and the regulatory process, which has been governed by the
European In Vitro Diagnostic Medical Device Directive, depends upon the
category, with certain product categories requiring review and approval by an
independent company, known as a Notified Body, before the manufacturer can affix
a CE mark to the product to declare conformity to the Directive.  Other products
only require a self-certification process. In 2017, the EU adopted the new In
Vitro Diagnostic Regulation (IVDR) which replaces the existing directive in the
EU for in vitro diagnostic products and imposes additional premarket and
post-market regulatory requirements on manufacturers of such products.  In
December 2021, the IVDR was amended to extend the regulation's previous two-year
transition period by one to three years, with the transition period extending to
May 2027 for certain devices.  However, the amendment does not delay the date of
application of the IVDR itself which will take effect on May 26, 2022.

In the Medical Devices segment, the research and development process begins with
research on a specific technology that is evaluated for feasibility and
commercial viability. If the research program passes that hurdle, it moves
forward into development. The development process includes evaluation, selection
and qualification of a product design, completion of applicable clinical trials
to test the product's safety and efficacy, and validation of the manufacturing
process to demonstrate its repeatability and ability to consistently meet
pre-determined specifications.

Similar to the diagnostic products discussed above, in the U.S., medical devices
are classified as Class I, II, or III. Most of Abbott's medical device products
are classified as Class II devices that follow the 510(k) regulatory process or
Class III devices that are subject to the PMA process.

                                       33

In the EU, medical devices are also categorized into different classes and the
regulatory process, which had been governed by the European Medical Device
Directive and the Active Implantable Medical Device Directive, varies by class.
In the second quarter of 2017, the EU adopted the new Medical Devices Regulation
(MDR) which replaced the existing directives in the EU for medical devices and
imposes additional premarket and post-market regulatory requirements on
manufacturers of such products. The MDR applies to manufacturers as of May 26,
2021 after a four-year transition period. Each product must bear a CE mark to
show compliance with the MDR.

Some products require submission of a design dossier to the appropriate
regulatory authority for review and approval prior to CE marking of the device.
For other products, the company is required to prepare a technical file which
includes testing results and clinical evaluations but can self-certify its
ability to apply the CE mark to the product. Outside the U.S. and the EU, the
regulatory requirements vary across different countries and regions.

After approval and commercial launch of some medical devices, post-market trials may be conducted either due to a conditional requirement of the regulatory market approval or with the objective of proving product superiority.


In the Nutritional segment, the research and development process generally
focuses on identifying and developing ingredients and products that address the
nutritional needs of particular populations (e.g., infants and adults) or
patients (e.g., people with diabetes). Depending upon the country and/or region,
if claims regarding a product's efficacy will be made, clinical studies
typically must be conducted.

In the U.S., the FDA requires that it be notified of proposed new formulations
and formulation or packaging changes related to infant formula products. Prior
to the launch of an infant formula or product packaging change, the company is
required to obtain the FDA's confirmation that it has no objections to the
proposed product or packaging. For other nutritional products, notification or
pre-approval from the FDA is not required unless the product includes a new food
additive. In some countries, regulatory approval may be required for certain
nutritional products, including infant formula and medical nutritional products.

Areas of Focus

In 2022 and beyond, Abbott's significant areas of therapeutic focus will include the following:

Established Pharmaceuticals - Abbott focuses on building country-specific
portfolios made up of high-quality medicines that meet the needs of people in
emerging markets. Over the next several years, Abbott plans to expand its
product portfolio in key therapeutic areas with the aim of being among the first
to launch new off-patent and differentiated medicines. In addition, Abbott
continues to expand existing brands into new markets, implement product
enhancements that provide value to patients and acquire strategic products and
technology through licensing activities. Abbott is also actively working on the
further development of several key brands such as Creon™, Duphaston™, Duphalac™
and Influvac™. Depending on the product, the activities focus on development of
new data, markets, formulations, delivery systems, or indications.

Medical Devices - Abbott's research and development programs focus on:

Cardiac Rhythm Management - Development of next-generation rhythm management

? technologies, including advanced communication capabilities and leadless pacing

therapies.

Heart Failure - Continued enhancements to Abbott's mechanical circulatory

? support and pulmonary artery pressure systems, including enhanced clinical

performance and usability.

? Electrophysiology - Development of next-generation technologies in the areas of

ablation, diagnostic, mapping, and visualization and recording.

? Vascular - Development of next-generation technologies for use in coronary and

peripheral vascular procedures.

Structural Heart - Development of transcatheter and surgical devices for the

? repair and replacement of heart valves, and occlusion therapies for congenital

heart defects and stroke-risk reduction.

Neuromodulation - Development of additional clinical evidence and

? next-generation technologies leveraging digital health to improve patient and

physician engagement to treat chronic pain, movement disorders and other

indications.

Diabetes Care - Develop enhancements and additional indications for the

? FreeStyle Libre platform of continuous glucose monitoring products to help

patients improve their ability to manage diabetes and for use beyond diabetes.

Nutritionals - Abbott is focusing its research and development spend on platforms that span the pediatric and adult nutrition areas: gastro intestinal/immunity health, brain health, mobility and metabolism, and user experience platforms. Numerous new products that build on advances in these platforms are currently under development, including clinical outcome testing, and are expected to be launched over the coming years.

Core Laboratory Diagnostics - Abbott continues to commercialize its
next-generation blood and plasma screening, immunoassay, clinical chemistry and
hematology systems, along with assays, including a focus on unmet medical need,
in various areas including infectious disease, cardiac care, metabolics, and
oncology, as well as informatics solutions to help optimize diagnostics
laboratory performance and automation solutions to increase efficiency in
laboratories.

Molecular Diagnostics - Several new molecular in vitro diagnostic (IVD) tests are in various stages of development and launch.

Rapid Diagnostics - Abbott's research and development programs focus on the development of diagnostic products for infectious disease, cardiometabolic disease and toxicology.

In addition, the Diagnostics segment is pursuing the FDA's customary regulatory process for various COVID-19 tests for which EUAs were obtained.



Given the diversity of Abbott's business, its intention to remain a broad-based
health care company and the numerous sources for potential future growth, no
individual project is expected to be material to cash flows or results of
operations over the next five years. Factors considered included research and
development expenses projected to be incurred for the project over the next year
relative to Abbott's total research and development expenses, as well as
qualitative factors, such as marketplace perceptions and impact of a new product
on Abbott's overall market position. There were no delays in Abbott's 2021
research and development activities that are expected to have a material impact
on operations.

While the aggregate cost to complete the numerous projects currently in
development is expected to be material, the total cost to complete will depend
upon Abbott's ability to successfully finish each project, the rate at which
each project advances, and the ultimate timing for completion. Given the
potential for significant delays and the risk of failure inherent in the
development of medical device, diagnostic and pharmaceutical products and
technologies, it is not possible to accurately estimate the total cost to
complete all projects currently in development. Abbott plans to manage its
portfolio of projects to achieve research and development spending that will be
competitive in each of the businesses in which it participates, and such
spending is targeted at approximately 7 percent of total Abbott sales in 2022.
Abbott does not regularly accumulate or make management decisions based on the
total expenses incurred for a particular development phase in a given period.

Goodwill



At December 31, 2021, goodwill recorded as a result of business combinations
totaled $23.2 billion. Goodwill is reviewed for impairment annually in the third
quarter or when an event that could result in an impairment occurs, using a
quantitative assessment to determine whether it is more likely than not that the
fair value of any reporting unit is less than its carrying amount. The income
and market approaches are used to calculate the fair value of each reporting
unit. The results of the last impairment test indicated that the fair value of
each reporting unit was substantially in excess of its carrying value.

Financial Condition

Cash Flow


Net cash from operating activities amounted to $10.5 billion, $7.9 billion and
$6.1 billion in 2021, 2020 and 2019, respectively. The increase in Net cash from
operating activities in 2021 was primarily due to the favorable cash flow impact
of higher segment operating earnings and improved working capital management
partially offset by higher cash taxes paid and the net impact of litigation
settlements. The increase in Net cash from operating activities in 2020 was
primarily due to the favorable cash flow impact of higher segment operating
earnings, lower payments related to interest, integration expenses, and
restructuring actions, and the proceeds from a litigation settlement partially
offset by an increased investment in working capital and higher income tax
payments.

A substantial portion of Abbott's cash and cash equivalents at December 31, 2021, is held by Abbott affiliates outside of the U.S. If these funds were needed for operations in the U.S., Abbott does not expect to incur significant additional income taxes in the future to repatriate these funds.

Abbott funded $418 million in 2021, $400 million in 2020 and $382 million in
2019 to defined benefit pension plans. Abbott expects pension funding of
approximately $415 million in 2022 for its pension plans. Abbott expects annual
cash flow from operating activities to continue to exceed Abbott's capital
expenditures and cash dividends.

                                       35

Debt and Capital



At December 31, 2021, Abbott's long-term debt rating was A+ by Standard & Poor's
Corporation and A2 by Moody's. Abbott expects to maintain an investment grade
rating.

Abbott has readily available financial resources, including unused lines of
credit that support commercial paper borrowing arrangements and provide Abbott
with the ability to borrow up to $5 billion on an unsecured basis. The lines of
credit are part of a Five Year Credit Agreement (Revolving Credit Agreement)
that Abbott entered into on November 12, 2020. At that time, Abbott also
terminated its 2018 revolving credit agreement. There were no outstanding
borrowings under the 2018 revolving credit agreement at the time of its
termination. Any borrowings under the Revolving Credit Agreement will mature and
be payable on November 12, 2025. Any borrowings under the Revolving Credit
Agreement will bear interest, at Abbott's option, based on either a base rate or
Eurodollar rate, plus an applicable margin based on Abbott's credit ratings.

In 2021, Abbott repaid approximately $195 million on a short-term facility upon
maturity. After the repayment, Abbott has no short-term debt, and as of December
31, 2021, Abbott's total debt is $18.1 billion.

In 2020, financing activities related to the issuance and repayment of long-term debt included the following:

On June 24, 2020, Abbott completed the issuance of $1.3 billion aggregate

? principal amount of senior notes, consisting of $650 million of its 1.15% Notes

due 2028 and $650 million of its 1.40% Notes due 2030.

On September 28, 2020, Abbott repaid the €1.140 billion outstanding principal

? amount of its 0.00% Notes due 2020 upon maturity. The repayment equated to

approximately $1.3 billion.




In 2019, Abbott committed to reducing its debt levels which had increased as
part of the acquisitions of St. Jude Medical and Alere in 2017. On February 24,
2019, Abbott redeemed the $500 million outstanding principal amount of its 2.80%
Notes due 2020.

In September 2019, the board of directors authorized the early redemption of up
to $5 billion of outstanding long-term notes. This bond redemption authorization
superseded the board's previous authorization under which $700 million had not
yet been redeemed. On December 19, 2019, Abbott redeemed the $2.850 billion
outstanding principal amount of its 2.90% Notes due 2021. Of the $5 billion
authorization, $2.15 billion remains available as of December 31, 2021.

On November 19, 2019, Abbott's wholly owned subsidiary, Abbott Ireland Financing
DAC, completed a euro debt offering of €1.180 billion of long-term debt. The
proceeds equated to approximately $1.3 billion. The Notes are guaranteed by
Abbott. On November 21, 2019, Abbott borrowed ¥59.8 billion under a 5-year term
loan and designated the yen-denominated loan as a hedge of its net investment in
certain foreign subsidiaries. The term loan bears interest at TIBOR plus a fixed
spread, and the interest rate is reset quarterly. The proceeds equated to
approximately $550 million.

In total, these 2019 transactions resulted in the repayment of approximately of $1.6 billion of debt, net of borrowings.



In September 2014, the board of directors authorized the repurchase of up to $3
billion of Abbott's common shares from time to time. Under the program
authorized in 2014, Abbott repurchased 48.5 million shares at a cost of $2.205
billion from 2015 through 2018, 6.3 million shares at a cost of $525 million in
2019 and 1.6 million shares at a cost of $173 million in 2020 for a total of
approximately $2.9 billion. In October 2019, the board of directors authorized
the repurchase of up to $3 billion of Abbott's common shares from time to time.
In 2021, Abbott repurchased 16.6 million of its common shares for $2.016 billion
which fully utilized the authorization remaining under the 2014 share repurchase
program and a portion of the 2019 authorization. In December 2021, the board of
directors authorized the repurchase of up to $5 billion of Abbott's common
shares from time to time. The new authorization is in addition to the $1.081
billion unused portion of the share repurchase program authorized in 2019.

Abbott declared dividends of $1.82 per share in 2021 compared to $1.53 per share
in 2020, an increase of approximately 19 percent. Dividends paid were $3.202
billion in 2021 compared to $2.560 billion in 2020. The year-over-year change in
dividends paid primarily reflects the impact of the increase in the dividend
rate.

                                       36

Working Capital


Working capital was $11.1 billion at December 31, 2021 and $8.5 billion at
December 31, 2020. The increase was due in large part to the higher level of
cash and cash equivalents, which was due primarily to the increase in cash
generated from operating activities, partially offset by the classification of
$750 million of Senior Notes due 2022 as current liabilities at December 31,
2021 and an increase in accounts payable associated with the growth of the
business.

Abbott monitors the credit worthiness of customers and establishes an allowance
that reflects the current estimate of credit losses expected to be incurred over
the life of the financial asset. Abbott considers various factors in
establishing, monitoring, and adjusting its allowance for doubtful accounts,
including the aging of the accounts and aging trends, the historical level of
charge-offs, and specific exposures related to particular customers. Abbott also
monitors other risk factors and forward-looking information, such as country
risk, when determining credit limits for customers and establishing adequate
allowances.

Capital Expenditures


Capital expenditures of $1.9 billion in 2021, $2.2 billion in 2020 and $1.6
billion in 2019 were principally for upgrading and expanding manufacturing and
research and development facilities and equipment in various segments,
investments in information technology, and laboratory instruments placed with
customers. The 2020 increase in capital expenditures primarily reflects the
building of capacity for the manufacture of COVID-19 diagnostics tests.

Contractual Obligations

Abbott believes that its available cash and cash equivalents along with its
ability to generate operating cash flow and continued access to debt markets are
sufficient to fund existing and planned cash requirements. Abbott's material
cash requirements include the following contractual obligations:

Debt - Principal payments required on long-term debt outstanding at December 31,
2021 are $754 million in 2022, $2.3 billion in 2023, $1.2 billion in 2024, $1.5
billion in 2025, $3.0 billion in 2026 and $9.3 billion in 2027 and thereafter.
Interest payments required on long-term debt outstanding at December 31, 2021
are $579 million in 2022, $569 million in 2023, $526 million in 2024, $494
million in 2025, $463 million in 2026 and $5.8 billion in 2027 and thereafter.

Operating leases - As of December 31, 2021, estimated contractual obligations
for operating lease payments were $1.351 billion, with $272 million due within
12 months.

In addition, Abbott enters into purchase commitments in the normal course of
business to meet operational and capital expenditure requirements. The majority
of outstanding purchase commitments generally do not extend past one year.

Contingent Obligations

Abbott periodically acquires a business or product rights in which Abbott agrees
to pay contingent consideration based on attaining certain thresholds or based
on the occurrence of certain events.

Legislative Issues

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.

Recently Issued Accounting Standards



In December 2019, the Financial Accounting Standards Board (FASB) 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 consolidated financial
statements.

                                       37

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit
Losses, which changes the methodology to be used to measure credit losses for
certain financial instruments and financial assets, including trade receivables.
The new methodology requires the recognition of an allowance that reflects the
current estimate of credit losses expected to be incurred over the life of the
financial asset. Abbott adopted the standard on January 1, 2020 and recorded a
cumulative adjustment that was not significant to Earnings employed in the
business in the Consolidated Balance Sheet.

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



Under the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995, Abbott cautions investors that any forward-looking statements or
projections made by Abbott, including those made in this document, are subject
to risks and uncertainties that may cause actual results to differ materially
from those projected. Economic, competitive, governmental, technological and
other factors that may affect Abbott's operations are discussed in Item 1A, Risk
Factors.

Real-time Estimate Cboe BZX Other stock markets 01:12:42 2024-04-30 pm EDT			5-day change	1st Jan Change
106.2 ^USD	-1.03%		-1.35%	-3.57%

Apr. 29	Abbott's Dissolving Stent Gets FDA Approval For Arteries Below the Knee	MT
Apr. 26	Dexcom's profit beats estimates on strong glucose monitor demand	RE

Abbott's Dissolving Stent Gets FDA Approval For Arteries Below the Knee	Apr. 29	MT
Dexcom's profit beats estimates on strong glucose monitor demand	Apr. 25	RE
Edwards Lifesciences first-quarter profit beats estimates on heart devices strength	Apr. 25	RE
Daiwa Securities Trims Abbott Laboratories Price Target to $125 From $126	Apr. 23	MT
Barclays Adjusts Abbott Laboratories' Price Target to $140 From $141, Maintains Overweight Rating	Apr. 22	MT
UBS Raises Abbott Laboratories Price Target to $143 from $136, Buy Rating Kept	Apr. 19	MT
Correction to Health Care Roundup Article	Apr. 18	DJ
RBC Lowers Price Target on Abbott Laboratories to $125 From $128, Keeps Outperform Rating	Apr. 18	MT
Raymond James Adjusts Abbott Laboratories' Price Target to $124 From $127, Keeps Outperform Rating	Apr. 18	MT
Health Care Down After Abbott Earnings -- Health Care Roundup	Apr. 17	DJ
Sector Update: Health Care Stocks Retreating Late Afternoon	Apr. 17	MT
News Highlights : Top Company News of the Day - Wednesday at 3 PM ET	Apr. 17	DJ
S&P 500, Nasdaq dip as interest rate concerns, earnings weigh	Apr. 17	RE
Abbott Laboratories Raises Midpoint of 2024 Guidance After First-Quarter Beat	Apr. 17	MT
Top Stories at Midday: U.S. Bancorp, Abbott, Citizens Financial, First Horizon, Prologis, ASML, Travelers Report Earnings; Tesla Asks Shareholders Vote on Musk's Compensation; Eli Lilly Sleep Apnea Drug Trials Hit Primary Endpoints	Apr. 17	MT
News Highlights : Top Company News of the Day - Wednesday at 1 PM ET	Apr. 17	DJ
News Highlights : Top Company News of the Day - Wednesday at 11 AM ET	Apr. 17	DJ
Wall St slips as dour earnings, chip stocks weigh	Apr. 17	RE
Sector Update: Health Care Stocks Advance Premarket Wednesday	Apr. 17	MT
News Highlights : Top Company News of the Day - Wednesday at 9 AM ET	Apr. 17	DJ
Transcript : Abbott Laboratories, Q1 2024 Earnings Call, Apr 17, 2024	Apr. 17
Abbott: target ranges for 2024 tightened upwards	Apr. 17	CF
Abbott Laboratories' Q1 Adjusted Earnings Down, Revenue Up; 2024 Outlook Narrowed	Apr. 17	MT
Earnings Flash (ABT) ABBOTT Posts Q1 Revenue $9.96B, vs. Street Est of $9.87B	Apr. 17	MT
Earnings Flash (ABT) ABBOTT Posts Q1 EPS $0.98, vs. Street Est of $0.95	Apr. 17	MT

	1st Jan change	Capi.
ABBOTT LABORATORIES	-3.57%	186B
MEDTRONIC PLC	-2.52%	107B
BECTON, DICKINSON AND COMPANY	-4.08%	67.44B
DEXCOM, INC.	+2.64%	50.03B
CENCORA, INC.	+16.48%	47.81B
HOYA CORPORATION	+4.79%	41.03B
METTLER-TOLEDO INTERNATIONAL, INC.	+1.45%	26.85B
WEST PHARMACEUTICAL SERVICES, INC.	+2.81%	25.82B
ZIMMER BIOMET HOLDINGS, INC.	-0.69%	25.01B
TERUMO CORPORATION	+16.55%	24.74B

Abbott Laboratories

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