Abbott Laboratories (ABT) Q2 2021 Earnings Call Transcript

Abbott Laboratories (NYSE: ABT) Q2 2021 earnings call dated Jul. 22, 2021

Corporate Participants:

Scott Leinenweber — Vice President of Investor Relations, Licensing and Acquisitions

Robert B. Ford — President and Chief Executive Officer

Robert E. Funck — Executive Vice President, Finance and Chief Financial Officer

Analysts:

Bob Hopkins — Bank of America Merrill Lynch — Analyst

Robbie Marcus — J.P. Morgan — Analyst

Vijay Kumar — Evercore ISI — Analyst

Larry Biegelsen — Wells Fargo Securities — Analyst

Matthew Taylor — UBS — Analyst

Joanne Wuensch — Citi Research — Analyst

Joshua Jennings — Cowen and Company — Analyst

Presentation:

Operator

Good morning, and thank you for standing by. Welcome to Abbott’s Second Quarter 2021 Earnings Conference Call. [Operator Instructions]

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

Scott Leinenweber — Vice President of 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 risk 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.

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 at our website at abbott.com. Unless otherwise noted, our commentary for sales growth refers to organic sales growth, which excludes the impact of foreign exchange.

With that, I will now turn the call over to Robert.

Robert B. Ford — President and Chief Executive Officer

Thanks, Scott. Good morning, everyone, and thank you for joining us. Today, we reported results of a very strong quarter. Ongoing earnings per share were $1.17 reflecting more than 100% growth compared to the prior year. Sales increased 35% on an organic basis in the quarter compared to last year. Given the significant negative impact COVID had on demand for elective medical procedures and routine diagnostic testing last year, comparing sales versus pre-pandemic levels in 2019 provides one of the more relevant measures of performance. On this comparison, excluding sales from our COVID testing business, organic sales grew nearly 11.5% in the second quarter driven by strong sales growth across all four of our major businesses, including double-digit growth in Established Pharmaceuticals, Nutrition and Medical Devices.

I’ll now summarize our second quarter results before turning over the call to Bob, and I’ll start with Nutrition where sales increased 9.5% compared to last year. Strong growth in the quarter was led by mid-teens growth in Adult Nutrition, including more than 20% growth internationally. Since the beginning of the pandemic, we’ve seen two factors positively impact Adult Nutrition demand. New users are entering the category and existing customers have increased their usage. And as a global market leader, these dynamics are driving strong growth for our Ensure and Glucerna brands.

In Pediatric Nutrition, sales grew nearly 4.5% in the quarter led by growth of nearly 9% in the U.S. where we continue to capture share with our leading portfolio of infant formula and toddler brands. Sales of Pedialyte, our global rehydration brand, grew strong double-digits, driven by recently launched new products and increased investments we’re making in direct consumer promotion.

Turning to Diagnostics. Sales increased more than 55%, which includes $1.3 billion of COVID testing-related sales. Excluding COVID testing-related sales, underlying Diagnostics sales increased 37% compared to last year. Strong sales growth in our underlying Diagnostics business is being driven by improving routine diagnostic testing as healthcare systems continue to recover from the pandemic as well as the continued rollout of our Alinity platforms. Excluding COVID testing-related sales, second quarter sales in Core Laboratory and Molecular Diagnostics grew mid-single-digits compared to pre-pandemic levels in the second quarter of 2019.

Moving to Established Pharmaceuticals where sales grew nearly 15% in the quarter. Strong sales performance in the quarter was broad-based across several countries, including double-digit growth in India, China, Russia and Brazil, which led to overall sales growth of nearly 18.5% in our key emerging markets. While we continue to see COVID cases surge in several emerging markets, including the recent surge in India, our team is executing at a high level to meet market demand for our medicines.

And lastly, I’ll cover Medical Devices where sales grew 45% in the quarter compared to last year and more than 15.5% compared to the second quarter of 2019. Strong growth in the quarter was led by Structural Heart, Electrophysiology, Heart Failure and Diabetes Care, all of which grew double-digits compared to the second quarter of 2019. In Structural Heart, we achieved the highest number of MitraClip procedures ever in the second quarter, including a record number of procedures in the month of June.

Now I’ll wrap up with Diabetes Care where strong growth was led by Freestyle Libre sales of more than $900 million. The global user base for Libre grew to approximately 3.5 million users, including approximately 1 million users in the U.S., 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 achieving strong growth across all four of our major businesses. Particularly pleased with the strong momentum and growth contributions we’re seeing from several recently launched products and investments we’re making in our key growth platforms. And our new product pipeline continues to be incredibly productive, delivering a steady cadence of new products with more to come over the next several months.

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

Robert E. Funck — Executive Vice President, Finance and Chief Financial Officer

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 second quarter increased 35% on an organic basis, which was led by strong performance across all of our businesses. Excluding COVID testing-related sales, organic sales growth was 29% versus last year and nearly 11.5% compared to the second quarter of 2019. Foreign exchange had a favorable year-over-year impact of 4.5% on second quarter sales, resulting in total reported sales growth of 39.5% in the quarter.

Regarding other aspects of the P&L for the quarter, the adjusted gross margin ratio was 56.9% of sales, adjusted R&D investment was 6.2% of sales and adjusted SG&A expense was 25.8% of sales. Our second quarter adjusted tax rate was 14.4%, which reflects an adjustment to align our year-to-date tax rate with our revised full year effective tax rate forecast of 14.7%. The revised full year forecast is modestly lower than the estimate we provided in January due to a shift in the mix of our business and geographic income.

Turning to our outlook for the full year 2021. Our full year adjusted earnings per share guidance of $4.30 to $4.50 remains unchanged and reflects strong double-digit growth compared to last year and approximately 35% growth at the midpoint compared to our pre-pandemic adjusted earnings per share in 2019. We continue to forecast $4 billion to $4.5 billion in COVID testing-related sales for the full year 2021. And based on current rates, we would expect exchange to have a favorable impact of around 2% on our full year 2021 sales.

Turning to the outlook for the third quarter. We forecast adjusted earnings per share of at least $0.90, which reflects continued strong growth and momentum in our core underlying business and a sequential step down in COVID testing-related sales compared to the second quarter. And based on current rates, we would expect exchange to have a favorable impact of around 1% on our third quarter reported sales.

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

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Bob Hopkins from Bank of America. Your line is open.

Bob Hopkins — Bank of America Merrill Lynch — Analyst

Great. Thank you, and good morning. I’ll keep my questions quick and high level. First for Robert. I’m just curious on your view on the pace of the recovery in surgical procedures generally. Is it kind of continued throughout the quarter and into July or are you starting to see signs of the spread of variance could cause a little lumpiness in the pace of the recovery? Just wanted to get your views on how things are going.

Robert B. Ford — President and Chief Executive Officer

Sure. Listen, we obviously had a very strong quarter in terms of recovery. I mean, we had planned to see that recovery in the U.S. and in Europe, in certain Asian markets, and that recovery has largely played out the way we had anticipated. I’d say, probably a little bit better even than what we thought.

I don’t think what you’re seeing here with relating to like increase in COVID cases. I don’t think that you’ll see the same — at least we’re not seeing the same kind of impact in terms of hospitals shutting procedures down, stopping testing, etc. I think it’s a very different situation where we are this year versus where we are last year. Even though, if you look at the case — global case counts, they’re pretty much in line to where we were October last year. We’ve got therapeutics, we’ve got vaccines, we’ve got testing. So we’re not seeing that.

On the device side, listen, our business has done very well overall. As I said in my comments, we’re up double-digits, mid-teens versus the second quarter 2019, largely driven by EP, Heart Failure, Structural Heart, Diabetes, as I said. And our — and actually if you look at the cardiovascular specific recovery, we exited the first quarter at about a 2% growth versus March of 2019. And then if you look at the second quarter, our June growth rate was around about 7% versus June of 2019. So we’re seeing this kind of sequential recovery in the procedures as evidenced by our growth rates in our procedures.

And we’re looking at data yesterday, the first couple of weeks of July are showing that same trajectory whether it’s in the U.S. and/or whether it’s outside the U.S. generally. Obviously there are some markets that have different kinds of trends and paces. But I’d say, overall, we’re seeing that recovery. And that’s how we’re looking at the rest of the year, Bob, is that continued trajectory in terms of recovery in procedures and diagnostic testing.

Bob Hopkins — Bank of America Merrill Lynch — Analyst

Okay. That’s really helpful. Thank you. And then my second question for Bob. I’d love you to comment on two things, if okay. One is just you had a nice EPS beat relative to consensus and really relative to the way you guys were describing the quarter, but your leading guidance is same. I just wanted to understand that dynamic. Why not boost the EPS a little bit?

And then secondly, if you — just curious if you think consensus estimates, as we look forward a little bit or kind of reflecting the way you guys are viewing the world right now, obviously, I’m specifically talking about next year. So any preliminary thoughts on whether consensus is sort of capturing the world as you see it? And wondering just about the EPS guidance for this year. Thank you.

Robert E. Funck — Executive Vice President, Finance and Chief Financial Officer

Yeah, Bob. I’ll take the first question on the guidance for this year. Clearly, about a third of that beat was due to a little higher COVID sales than we had projected. Obviously, forecasting COVID is quite challenging. And so that was about a third of the beat. About two-third really was better performance in the base business versus how the Street had modeled that. And so the way we look at it, we gave a pretty wide range on earnings guidance back at — beginning of June. And that really kind of accounts for any kind of fluctuations or changes in the COVID testing in the back half of this year as well as kind of underlying base business performance. So we feel really comfortable about the range we have and feel that kind of captures different scenarios around COVID testing.

Robert B. Ford — President and Chief Executive Officer

Hey, Bob, on the question of consensus for the rest of the year, I mean I think this is how we’re thinking about the second half of the year. Obviously, from a top-line perspective, we’re going to have to lap some of our COVID sales that we had in Q3 and Q4. Obviously, if you looked at last year, that was really the height of our ramp up in COVID sales. But the underlying business, excluding COVID sales, will be getting sequentially better every quarter. So we’re looking at our base underlying business growing low-double-digits for the rest of the year.

From a gross margin perspective, we’ll see expansion in gross margin versus where we were in Q2. There is obviously maybe some friction on some input costs, commodities, freight, etc. The team works hard to kind of offset those. So we’ll see improvement also as the base business recovers and the margin profiles from that recovery expand. And we’ll continue to make the ramp up of investments that we talked about from an R&D and SG&A perspective.

Some of those investments have a faster and more, I’d say, kind of more immediate return. So for example, direct consumer advertising in Nutrition or Libre, for example. And some of those investments are a little bit more medium term, whether it’s R&D programs or whether it’s kind of getting ready for upcoming launches. So the real, I’d say, kind of factor here becomes COVID testing. And we gave guidance about a month ago about $4 billion to $4.5 billion. After the two quarters, we’re about $3 billion, $3.5 billion. So we’ve got between $0.5 billion and $1 billion to go in the next six months.

And I think that’s really the question here is how will testing play itself out in the next kind of second half year? Whether it’s variance, whether it’s vaccination rates, etc. So that’s just something that we’re paying attention. And as Bob said, that’s why our guidance range was pretty wide, which is believed to account for that.

Bob Hopkins — Bank of America Merrill Lynch — Analyst

Great. Thank you.

Operator

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

Robbie Marcus — J.P. Morgan — Analyst

Great. Thanks for taking the questions, and congrats on a good quarter. Bob, maybe to follow-up on the last question, there is a lot of moving pieces down the P&L. Right now, you had a really good operating margin in the quarter. I was just wondering if you could update us on the latest on how you’re thinking of reinvestment of COVID testing revenues? How that’s flowing through the P&L? And if you have any preliminary thoughts on the impact or benefit it might add to next year as people think about their models now?

Robert E. Funck — Executive Vice President, Finance and Chief Financial Officer

In terms of investment, Robbie, if you look at our SG&A and R&D combined, we’re up around $700 million versus the prior year, and we expect to kind of sustain pretty strong investment in the base business. So we haven’t, as you know, reinvested some of those COVID testing sale profits back into the base business to drive growth going forward. As you say, we had really healthy operating margin profile in the second quarter. We’re going to see some impact on that operating margin profile the rest of the year with the step down in those COVID testing sales in the back half of this year. That’s going to obviously have some impact on our operating margin profile while we sustain a lot of that investment in particular in the R&D and SG&A spaces to drive growth the rest of the year and into next year.

Robbie Marcus — J.P. Morgan — Analyst

Great. And maybe just a quick follow-up. We have some — coming back to new product launches and clinical data sets, we have two interesting ones coming at ESC later in August with CardioMEMS and with Amulet. I was just hoping if we could get the latest thoughts on approval timing, product launch potential and how we should think about near-term expectations for product launches given the COVID environment is still impacting hospitals to a degree?

Robert B. Ford — President and Chief Executive Officer

Sure. On Amulet, we talked about this right, Robbie? We’ve filed with the FDA late last year. Right now we plan to present the data at ESC. So that’s kind of in the late August timeframe. We think it’s again an attractive market. Great opportunity for growth for us. The product is available in Europe, in those markets, albeit a smaller market than the U.S. We have a 50% market share. So we feel very good about our ability here to compete with the product we have.

Regarding timing, it’s one of those — I can’t give you an exact timing. It’s definitely, we think a kind of in this second half. And then it’s just going to depend in terms of impact this year versus next year, obviously, the impact next year is larger, and that’s just going to depend on when the approval hits this year. Obviously, if it’s more towards the back end of the year then we’ll see a less of an impact. If it’s sooner, there will be an opportunity for us here to execute on that.

On CardioMEMS, I guess, similar. We think this is another great opportunity. I mean, both these products were products — when we began the St. Jude integration, both these products were trials that we really wanted to invest in and drive on the clinical evidence and drive the clinical evidence of these two products. So it’s great to see we’re in a position now to be able to kind of disclose and share the data from these trials that we put together.

We filed our label expansion with the FDA on CardioMEMS this second quarter, more towards the end of the second quarter. And again, we think it’s a great opportunity also. And probably, in terms of an approval there, I’m not really banking on that approval from a sales perspective this year.

Robbie Marcus — J.P. Morgan — Analyst

Great. Thanks a lot.

Robert B. Ford — President and Chief Executive Officer

Yeah.

Operator

Thank you. Our next question comes from Vijay Kumar from Evercore ISI. Your line is open. Please check that you’re not on mute.

Vijay Kumar — Evercore ISI — Analyst

Hey, guys. Apologies. Congrats on this strong print this morning. Robert, maybe one high level question on the base business here. I think there was some confusion this morning on the base ex-COVID rate versus pre-pandemic 2019 levels. I think, you did 11% in 2Q and that was maybe perhaps low-double-digits in Q1. So the question I think people are asking is, if we had sequential improvements, is the 11% versus 10% that seems a little light, but I think that kind of ignores the business mix. Maybe perhaps, can you talk about what’s happening to device business? What was the sequential acceleration? And what is baked in for back half? Should we continue to see some benefit from backlog and further acceleration?

Robert B. Ford — President and Chief Executive Officer

Sure. I mean, I think the Med Device kind of grew — again, Q2 versus 2021, that growth rate has been increasing and has been sequentially improving, as I said in the first question. Obviously, the recovery is not uniform across all businesses. So if you look at our device portfolio, one of the parts of the portfolio that we’ve seen a little bit of a lagging recovery here has been in neuromodulation where I’d characterize that as a little bit even more elective than some of the other procedures. And we’ve seen, say, like a little bit of a slower recovery trend in that business versus, say, for example, a Structural Heart, an EP or a Diabetes business.

Similar to Diagnostics, our immunoassay and clinical chemistry business that’s growing high-single-digits in the second quarter versus the second quarter 2019 and that’s an improvement versus where we were in Q1. One of the issues that we see in our Diagnostics business is, we’re seeing a slower recovery in kind of blood donations, and that obviously impacts our transfusion business. So kind of similar to neuro on the Diagnostics side, seeing a bit of slower recovery. But I’d say, those businesses that were more impacted by COVID in Q2 last year, I’d say, they’ve largely kind of recovered very well, very nicely, and we expect that trend to continue in the second half.

Vijay Kumar — Evercore ISI — Analyst

That’s helpful. And then maybe one on the product side, on the CardioMEMS. We did some work. It looks like it’s an interesting trial. It’s a pretty large trial, I think 3,600 patients enrolled. That’s fairly large. I guess, assuming some of these results if they were to mimic CHAMPION, the original trial in terms of reduction in heart failure hospitalizations, I think mortality is an endpoint here. Should CardioMEMS be a multi-billion dollar product for Abbott? And the reason I’m asking is, historical adoption trends have been quite slow, but your investments in such a large trial suggests some optimism. So I’m curious how you guys are thinking about the longer term opportunity?

Robert B. Ford — President and Chief Executive Officer

Sure. I mean, I think a lot of these device segments that we see kind of large opportunities. I think the key thing here is to make sure that you put the clinical evidence to be able to kind of create a strong kind of market development approach here. And when we looked at CardioMEMS at the time back in 2017, where there were some issues with reimbursement in CMS, certainly the max kind of work reimbursing, etc. And you had positive CHAMPION’s data, I’m aware of some of the perceived shortcomings of that trial, but there was also plenty of real world evidence showing similar benefits and similar results that you had observed in CHAMPION.

So we looked at this and we believe that this was a significant opportunity in the cardiovascular space. We believe that monitoring pulmonary arterial pressure is a great indicator for prevention of acute heart failure and decided to make the investment in a larger trial to either address the perceived shortcomings of CHAMPION and/or augment the dataset. So I’m hesitant to put a number around here, Vijay, but I think the viewpoint here is that this is an opportunity as we’re building our heart failure portfolio together with our LVAD portfolio and even with MitraClip, quite frankly, to really have a comprehensive suite of solutions for it.

And I think this is going to be an opportunity that we will be intentional about investing whether it’s trial, whether it’s clinical and field-based teams to drive it. We think the opportunity to expand the label to a Class 2 and a Class 4 presents a significant opportunity for us to expand the market and also the indication here to include CardioMEMS with elevated levels of BNP. So I think that this is a great opportunity.

I guess, your comment on mortality, I think that’s important. But I also know in talking to health systems that hospitalization and reduction of hospitalization is still is very important. Some can argue that maybe you’re just kicking the can down the road. But I think that if you look at and have conversation with the healthcare systems, they’ll see this is an important reduction. Any reduction in hospitalization for this patient population will be significantly important for them. So bottom line, yeah, I think this is a great opportunity for us. And we’re being intentional about our investment and making the right clinical evidence to support the adoption so that we can get to numbers that you’re referencing or even bigger.

Vijay Kumar — Evercore ISI — Analyst

That’s helpful. Thanks, guys.

Operator

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

Larry Biegelsen — Wells Fargo Securities — Analyst

Good morning. Thanks for taking the question. Just two for me, I’ll start with Libre. Robert, just maybe at a high level your thoughts on kind of the roadmap for Libre from here given that you’re closing in on $1 billion a quarter in sales? And more specifically, any update on the launch of Libre 3 in Europe? And how delays at FDA might impact the timing of Libre 3 in the U.S.? And I had one follow-up.

Robert B. Ford — President and Chief Executive Officer

Sure. Listen, we had a real strong quarter, as you saw and as you mentioned, approaching at $1 billion mark on a quarterly run rate — on a quarterly perspective, sales above 40%. I think really important here, Larry, is the user base. And this is a different kind of device business. It’s a different — we’ve talked about it from a mass market opportunity versus other parts of our device portfolio that might be a little more, I’d say, call it nichey versus the size of Libre. But the user base is super important because when you’ve got this kind of retention level that we’re seeing on the product, so between 80 and 90% plus globally.

It really looks more like a subscription like model. And when you’re in that subscription like model and you’ve got this recurring revenue, the user base is hugely important. And I think that’s a lot of our focus right here as we talked about this mass market is building the user base, and I think we’ve done a really good job internationally and in the U.S. But as we’ve talked about, okay, we’ve got 3.5 million users. I’ve talked about numbers only up to 80 million users potential for this product once you aggregate insulin users and Type 2s, etc. So I think there is a real strong growth opportunity for us, and we’re still in the early innings.

As I’ve said, from a roadmap perspective, we’re not deviating from kind of how we thought about this, right, which is we will continue to provide superior technology, superior experience to the user whether it’s with the product, whether it’s how they get the product and still a value proposition that makes sense for a mass adoption. So that’s all gone very well and that will continue to go very well.

Libre 3, we launched it in, I’d say, in Germany at the beginning of the year here. A lot of our focus in that launch, Larry, was just more to understand kind of our marketing messaging, our positioning with our existing portfolio, reactions from physicians and even look at how others — users from other CGMs kind of reacted to it. And it’s basically surpassed my expectations as we went into that pilot launch. And so we’ll be now transitioning to full launch mode of Libre 3 where we’ve got approval.

Specifically in the U.S., obviously, it’s understood that the backlog that exists in — at the FDA regarding diabetes products. And I’m not going to comment on kind of timing here or expectations, but just that we’re very excited kind of to be able to bring Libre 3 to the U.S. also and augment our portfolio with the product.

Larry Biegelsen — Wells Fargo Securities — Analyst

That’s helpful, Robert. And just lastly for me. I know I’ve asked about this on a few earnings calls, but I’m just curious how your thoughts on capital allocation are evolving given your strong balance sheet? We know valuations are relatively high, are there areas where you think valuations look more attractive? And historically, the sweet spot for Abbott’s been acquisitions in the $5 billion to $10 billion range, is that still the case? I mean, obviously St. Jude was an exception to that. But just curious to see how your thoughts are evolving on M&A? Thank you.

Robert B. Ford — President and Chief Executive Officer

Well, specific to M&A, there is no change in thoughts there. I mean, I think rather than have a number tied to it, it’s more about, does it strategically fit, do we think that we can execute and drive more value out of it, and that mindset hasn’t changed independently of kind of a dollar amount there? We’re obviously actively looking. We constantly surveil and survey and pay attention and track. What I can’t say is that we’ve been probably actively monitoring much more than where we were back in 2017. But there are some pretty elevated valuations right now and I’m not going to do anything here that’s going to either dilute our profiles, our growth rates, etc. And key driver here is it being strategic.

I actually think a lot of opportunity we have from a capital allocation back to kind of how you started the question was, we got a lot of opportunity internally. A lot of great returns that we can have with our capital as we deploy them to support these opportunities that we have in our pipeline, specifically regarding kind of — manufacturing kind of ramp up in capacity whether it’s Libre, whether it’s MitraClip, seeing an opportunity here with Adult Nutrition as we’ve seen kind of several years here of strong kind of double-digit growth in Nutrition. So I think we’ve got great opportunity to be able to provide a great return to our shareholders by looking at our internal opportunities also.

Larry Biegelsen — Wells Fargo Securities — Analyst

Thanks, Robert.

Operator

Thank you. Our next question comes from Matt Taylor from UBS. Your line is open.

Matthew Taylor — UBS — Analyst

Hi, guys. Thanks for taking the question. So I just want to ask one about COVID testing, and we know your guidance for the year implies lower sales in the last two quarters. I was wondering if you could just give us any insight into the trends that you’re seeing, especially outside of the U.S. where we have less visibility so we can think about some of these different scenarios that you’re baking into the guidance for the rest of the year.

Robert B. Ford — President and Chief Executive Officer

Sure. Well, about a month ago, we talked a lot about COVID testing here, and I don’t think over the last 30 days we’ve seen anything materially different. I would say, we continue to see some of that kind of lowered kind of testing volumes in the U.S. whether it’s PCR, but probably a little bit more on the rapid side. We did a little bit better than what we had forecasted for the second quarter, and that was largely driven by international markets. Still about 80% of our sales are on the rapid side, but we did see higher international sales, and I’d say, yes, probably driven by Delta variant.

A lot of those international sales are more, I’d say, kind of tender-driven. And we’ve got great visibility to where cases are rising and our positions in those markets as a company, our relationships, our understanding of how health authorities in those countries are thinking about their testing. And all I could say is we’ve become — we’ve definitely become a preferred supplier here because of our scale, our capacity, the quality of our products and our pricing.

So the question here is going to be even with surges, are you going to see testing increase. I think we will. I think we will see some of that. The question will be geographically where we’re going to see it more. And I think geographically, we’ll see more internationally than at least what I think right now than what we’ll see in the United States from a back half perspective.

Matthew Taylor — UBS — Analyst

Thank you. And maybe I could just ask one follow-up on recovery in Diagnostics versus med tech. So I know you called out this issue with blood donations. And I guess, excluding that, would you think about the recovery in your core Diagnostics business ex-COVID similar to med techs should go in lockstep or is there going to be a difference there for some reason? Could you flesh out the blood donation headwind? How much is that?

Robert B. Ford — President and Chief Executive Officer

Yeah. At a high level, I would say, yeah. We’re seeing kind of that same kind of recovery trend again within its own kind of segment. Our immunoassay and clinical chemistry business which represents about 80% of our Core Lab business, that actually was up high-single-digits in Q2 versus Q2 of 2019. So we are seeing that recovery on the Core Lab.

There are some assays that haven’t recovered as much. What we’ve seen here in the U.S. is that we’re seeing post-surgery policies here from certain hospitals do less overnight stays. So when you’re doing that you’re getting a little bit less of that. But I’d say, that’s offset with higher share gain and growth in new accounts with the rollout of Alinity. So we’re seeing that kind of high-single-digit.

And as you mentioned, the issue is really kind of low donation, blood donations that are impacting our transfusion business which we’ve got 65%, 60% plus market share. So we’re hoping to see — we’ve been working with different agencies here to kind of bring awareness to this fact here because obviously there is inventory of blood, but if this rate of donations continues, then it will be a challenge for the U.S. So hopefully, we’ll start to see that recover here as we get towards the end of the year.

Matthew Taylor — UBS — Analyst

Okay, great. Thank you.

Operator

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

Joanne Wuensch — Citi Research — Analyst

Good morning, and thank you for taking the question. It’s really two questions. The first one is the follow-up on what Bob was asking earlier on. Is there anything that you can give us on 2022? I’m getting a lot of questions as it relates to margins, COVID, double-digit EPS. So anything on a framework basis that would be helpful. I’d appreciate it.

Robert B. Ford — President and Chief Executive Officer

Sure. Listen, we’ve talked about this a couple of times on a couple of calls already, and I just think it’s a little bit too early to kind of provide that forecast given there is so many different kinds of moving parts. We’re starting our process right now, but I don’t think the framework changes versus what we’ve talked about, which is our underlying business, so excluding COVID testing, it will clearly be very well positioned for very strong growth, top-line and bottom line just based on the trends that we’re seeing, based on the pipeline, the new products that we have in the pipeline that we have in place. So our underlying base business will clearly be setup for very strong top and bottom line growth.

We’ve obviously got to look at COVID testing, and that’s a factor here. We talked about it last call. It will be probably not very prudent here to assume a significant amount of COVID testing. Now if there is going to be demand of COVID testing, we’ve got plenty of capacity to meet it, and that’s ultimately going to be kind of the factor here. As I said, we’re going to start to kind of lap a little bit of this testing in Q3 and Q4 of this year. We’ve obviously had a real strong Q1 also. So that obviously has an impact.

And then having to look at our spend and modulate our spend here but in a way that doesn’t detract from our kind of long-term sustainable kind of growth even past 2022, 2023. So we’ve got a lot of good momentum, a lot of ongoing and upcoming launch activity. And I want to make sure that I capitalize on the positions and the opportunities that we’ve built upon.

Joanne Wuensch — Citi Research — Analyst

Thanks. And then I’ve heard pipeline investment couple of times there other than some of the names that we’ve — or products that we’ve already focused on such as Amulet, CardioMEMS, Libre 3. Are there other products in the pipeline that you’d like to draw our attention to? Thanks.

Robert B. Ford — President and Chief Executive Officer

Yeah, sure. Listen, if you look at Structural Heart, I think there’s two kind of really good opportunities for us over here; TAVR with bringing the product to the U.S. and the launch of our second-generation product in Navitor in Europe. I mean, these are two opportunities that we have. We know our position. We know the choices and the strategy that we’ll take as we enter this market here in the U.S. I think it’s great. It will be a great opportunity for us.

And then the second product on Structural Heart is our Tricuspid Repair System. It’s a great opportunity. It’s got a potential kind of billion dollar market opportunity for it. We’ve done very well with it actually. Right now, our sales have kind of annualized right now on $100 million basis and we launched this in the middle of the pandemic last year. So I think that’s a great near-term opportunity.

And then on CRM, we’ve made the investment here to get our leadless program back on track here regarding a single chamber and then making the investment on a dual chamber, and I think that’s another kind of big opportunity that we’ll have to continue our kind of growth recovery in our CRM. So we’re targeted to enter this market next year, again with a single chamber and then build off there. So I think we’ve got great opportunity in the device space.

And then the Diagnostics is the continuing of building the menu, the assays, the menu of assays. We’re obviously making investments in our rapid business to capitalize on the placements that we’ve made for ID NOW with COVID to be able to kind of not only drive flu, but other respiratory viruses that we think will be opportunity for us also. But I think those are probably more than near-term, i.e., next kind of 12, 18 months and then a larger pipeline after that.

Joanne Wuensch — Citi Research — Analyst

Thank you very much.

Scott Leinenweber — Vice President of Investor Relations, Licensing and Acquisitions

Operator, we’ll take one more question.

Operator

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

Joshua Jennings — Cowen and Company — Analyst

Hi, good morning. Thanks a lot for taking the question. Robert, I just wanted to ask a multi-part question on duopolies in the U.S. market. You’re about to create one with the entrance of Amulet, and then down the line you’ll be in a different position as the first mover in the duopoly being created by a competitor into the edge-to-edge mitral repair market. I was hoping you could just give us your views on U.S. duopolies in terms of second player coming into the market, cannibalizing market growth, how you think about that, the risk for competitive pricing to ensue, and then the potential for that second mover to capture share and where those could play out? Thanks for taking the question.

Robert B. Ford — President and Chief Executive Officer

Sure. I mean, generally speaking, competition will always kind of drive further innovation, further investment. So one can kind of make the analysis here that when you are — when you have a competitor coming into your segment, you will do more to invest in the business and that investment will then drive the category. So I think on one side, I do believe in that, and I think you can see how that’s kind of had an impact. Definitely when we came into the U.S. with Libre and kind of what happened to that market and what happened to the technology in terms of kind of making all the technologies better and etc.

So the flip side of that is, competition is — you could potentially see I guess price as a lever to drive demand or to drive share capture. We’ve tried to focus every time we’re entering markets with a value proposition that sustains our pricing strategy and focus on the benefits that our solution will bring. And so I think you’ve got these two parts of kind of competition in markets. I’d say, that’s probably true for two player market or a three player market. But listen, we’re excited to come into the LAA market share in the U.S. We’re obviously a player internationally and we’re making the investments. So for example, we’ve already began our investment in market expansion in LAA with our CATALYST trial, which is comparing our products to NOAC, which is the standard of care. And I know that competitors are making kind of similar clinical vaccine. I think that’s good. I think that’s positive.

Joshua Jennings — Cowen and Company — Analyst

Thanks a lot.

Robert B. Ford — President and Chief Executive Officer

Okay. So that being said, I’d say here, if I just kind of sum up, our results clearly demonstrate here that we’re showing real strong growth across all of our businesses, Devices, Diagnostics, our Established Pharmaceutical business and our Nutrition. And as I said in the beginning of the call, as we look to the second half of the year, we expect that growth to continue in our underlying business, I think Joanne’s question, maybe to Bob’s question also.

Optically, you’re going to see a little bit of this, I’d say, artificial fog or lapping here or a comp versus for a few quarters as we kind of go through these sales that we’ve had from this big role that we played in COVID testing during the pandemic. But I don’t let that cloud kind of how we think about the business and how we think about the business long-term. And I think our forecast here shows that we’ll have a pretty differentiated underlying base business performance here. Our pipeline is highly productive. We’ve got a lot of ongoing launch activity, and there is even more on the way here. So we’re very excited about that and we’re investing across our key growth platform. So we’re feeling really good about our underlying base business and the momentum that we’ve got. So thanks for joining us today.

Scott Leinenweber — Vice President of Investor Relations, Licensing and Acquisitions

Thank you, operator, and thank you for all of your questions. That now concludes Abbott’s conference call. A webcast replay of this call will be available after 11:00 AM Central Time today on Abbott’s Investor Relations website at abbottinvestor.com. Thank you for joining us today.

Operator

[Operator Closing Remarks]