Abbott Falls After Cutting 2021 Profit Forecast as Testing Slows

(Bloomberg) -- Abbott Laboratories fell the most in seven months after warning that profits for the year would be lower than expected because of eroding demand for Covid-19 tests.

Full-year adjusted earnings from continuing operations will range from $4.30 to $4.50 a share, the health-care company said Tuesday. In January, the company forecast at least $5 a share. Abbott fell as much as 6.9% to $108.63 as of 11 a.m. in New York, their biggest intraday loss since Nov. 9.

Abbott had hoped to maintain Covid test sales with the release of BinaxNOW for over-the-counter sale and home use. But as U.S. vaccination rates grow, infections wane and pandemic restrictions loosen, use of the assays has declined. In April, U.S. health officials said fully vaccinated individuals don’t need testing, though they were advised to continue wearing masks in certain circumstances and to avoid crowds.

“We’ve recently seen a rapid decline in Covid-19 testing demand and anticipate this trend will continue,” Robert Ford, Abbott’s chief executive officer, said in a statement.

Predicting Covid-19 testing needs after a year spent rapidly expanding capacity has proven challenging for test makers and providers. Early this year, Laboratory Corp of America Holdings said that testing demand could decline by as much as half in 2021. Rival Quest Diagnostics Inc., meanwhile, in late April provided guidance only for the first half of the year, and the company’s executives warned of declining virus testing demand in the latter part of the year.

Abbott benefited earlier in the pandemic from rising demand for Covid screening, but its shares have been falling of late, declining some 9% from a 52-week high reached on Feb. 12 through Friday’s close.

Abbott expects continued growth in non-Covid diagnostics. Compared with the first quarter of 2019, the most relevant pre-pandemic benchmark, the company’s base business grew nearly 10% organically in the first quarter of this year, Ford said on a call with investors.

“We expect this accelerating growth trend to continue over the remainder of the year,” he said.

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