Abbott is a global manufacturer of rapid point-of-care diagnostic tests. The company operates in three business units: cardiometabolic, infectious disease, and toxicology testing. Abbott provides medicine and diagnostic testing to bring healthcare to people live a better life (Abbott, 2018) .
New Mission Statement
Abbott has a vision to deliver reliable and actionable information through innovative rapid diagnostic tests. The mission is to provide better clinical and economical healthcare results worldwide. A new mission statement addresses the following:
Delegate your assignment to our experts and they will do the rest.
1 . Customers
Abbott produces products and services that are mainly used in healthcare institutions by physicians and providers. However, some of the testing products are mobile and can be used by the patients. One such product is the Alere Determine HIV Combo – a point-of-care test that helps identify HIV days after infection.
2. Products and Services
Abbott specializes in products for consumers and healthcare professionals. These products include rapid point-of-care digital testing products in cardiometabolic, infectious disease, and toxicology testing as well as the nutrients tablets and formulas. Abbott ensures that physicians, providers, and patients have the right healthcare information at the right time. Abbott also looks into helping people reach their full potential at every age and stage of life using the nutritional medicine (Abbott, 2018) .
3. Markets
Abbott is based in Illinois, U.S. but also operates worldwide in North America, Asia Pacific, Europe, Middle East, Latin America, and Africa. In these locations, the company has headquarters and warehouses to reach the available market (Abbott, 2018) .
4. Technology
Rapid point-of-care testing is the most current and widely applied products for digital diagnostic testing. In a digital world, these products are useful and current as they provide instant medical information on various diagnoses.
5. Sustainability
Abbott has great concern for survival, growth, and profitability. Over the years, the company has undergone great changes in structure especially through acquisitions. The goal of these acquisitions is to expand its operations in all business facets. In its years of operations, Abbott takes strategic steps to ensure they reach more people with their products and services. In 2017, the company acquired Alere to ensure point of care testing reaches more people in more places. As a way of survival, Abbott invests profusely in new technology and innovations to change the face of point of care to its betterment. Abbott continues to makes profits in the past three years.
6. Philosophy
Abbott takes pride in corporate social responsibility. Abbott continually strives to bring more access to healthcare to the society by offering medicine that helps consumers live their best life. Abbott’s values and aspires to ensure that the healthcare system offers the best testing and treatments it can to the society. Abbott continues to bring to the society research and development techniques that will improve the health of many people. Some initiatives in corporate responsibility include Ultra rice (to ensure kids are fed) and I-STAT (data system on how to treat runners during major races in marathons (Abbott, 2018) .
7. Self-Concept
Abbott holds a great market share due to its corporate social responsibility and technology.
8. Public Image Concerns
Abbott continually looks out for the society to ensure effective and fast testing and treatment. There are a number of initiatives that the company runs to ensure this goal is continually achieved globally.
9. Concern for Employees
Abbott’s employees have the same sense of direction as the company. Employees have incentives and welfare programs to ensure meeting their needs.
Based on the above components and new changes in the company, the new mission statement is “ We help you live healthier through a better healthcare system with rapid point of care testing, treatment, diagnostic, and nutrition for better health outcomes.”
Financial Statements Analysis
a) Income Statement
| Year Ended December 31 |
2015 Base Yr. |
2016 |
Change % |
2017 |
Change % |
|
| Net Sales |
20,405 |
20,853 |
2.20% |
27,390 |
34.23% |
|
| Cost of products sold, excluding amortization of intangible assets |
8,747 |
9,024 |
3.17% |
12,337 |
41.04% |
|
| Amortization of intangible assets |
601 |
550 |
-8.49% |
1,975 |
228.62% |
|
| Research and development |
1,405 |
1,422 |
1.21% |
2,235 |
59.07% |
|
| Selling, general and administrative |
6,785 |
6,672 |
-1.67% |
9,117 |
34.37% |
|
| Total Operating Cost and Expenses |
17,538 |
17,668 |
0.74% |
25,664 |
46.33% |
|
| Operating Earnings |
2,867 |
3,185 |
11.09% |
1,726 |
||
| Interest expense |
163 |
431 |
164.42% |
904 |
454.60% |
|
| Interest income |
(105) |
(99) |
-5.71% |
(124) |
18.10% |
|
| Net foreign exchange (gain) loss |
(93) |
495 |
-632.26% |
(34) |
-63.44% |
|
| Other (income) expense, net |
(281) |
945 |
-436.30% |
(1,251) |
345.20% |
|
| Earnings from Continuing Operations Before Taxes |
3,183 |
1,413 |
-55.61% |
2,231 |
-29.91% |
|
| Taxes on Earnings from Continuing Operations |
577 |
350 |
-39.34% |
1,878 |
225.48% |
|
| Earnings from Continuing Operations |
2,606 |
1,063 |
-59.21% |
353 |
-86.45% |
|
| Earnings from Discontinued Operations, net of taxes |
65 |
321 |
393.85% |
124 |
90.77% |
|
| Gain on sale of Discontinued Operations, net of taxes |
1,752 |
16 |
-99.09% |
— |
||
| Net Earnings from Discontinued Operations, net of taxes |
1,817 |
337 |
-81.45% |
124 |
-93.18% |
|
| Net Earnings |
4,423 |
1,400 |
-68.35% |
477 |
-89.22% |
|
| Basic Earnings Per Common Share— | ||||||
| Continuing Operations |
1.73 |
0.71 |
-58.96% |
0.20 |
-88.44% |
|
| Discontinued Operations |
1.21 |
0.23 |
-80.99% |
0.07 |
-94.21% |
|
| Net Earnings |
2.94 |
0.94 |
-68.03% |
0.27 |
-90.82% |
|
| Diluted Earnings Per Common Share— | ||||||
| Continuing Operations |
1.72 |
0.71 |
-58.72% |
0.20 |
-88.37% |
|
| Discontinued Operations |
1.20 |
0.23 |
-80.83% |
0.07 |
-94.17% |
|
| Net Earnings |
2.92 |
0.94 |
-67.81% |
0.27 |
-90.75% |
|
| Average Number of Common Shares Outstanding Used for Basic | ||||||
| Earnings Per Common Share |
1,496 |
1,477 |
-1.27% |
1,740 |
16.31% |
|
| Dilutive Common Stock Options |
10 |
6 |
-40.00% |
9 |
-10.00% |
|
| Average Number of Common Shares Outstanding Plus Dilutive | ||||||
| Common Stock Options |
1,506 |
1,483 |
-1.53% |
1,749 |
16.14% |
|
| Outstanding Common Stock Options Having No Dilutive Effect |
1 |
5 |
— |
|||
b) Balance Sheet
|
2015 Base Yr. |
2016 |
Change % |
2017 |
Change % |
|
| Assets | |||||
| Current Assets: | |||||
| Cash and cash equivalents |
5,001 |
18,620 |
272.33% |
9,407 |
88.10% |
| Investments, primarily bank time deposits and U.S. treasury bills |
1,124 |
155 |
-86.21% |
203 |
-81.94% |
| Trade receivables, less allowances of—2017: $294; 2016: $250 |
3,418 |
3,248 |
-4.97% |
5,249 |
53.57% |
| Inventories: | |||||
| Finished products |
1,744 |
1,624 |
-6.88% |
2,339 |
34.12% |
| Work in process |
316 |
294 |
-6.96% |
472 |
49.37% |
| Materials |
539 |
516 |
-4.27% |
790 |
46.57% |
| Total inventories |
2,599 |
2,434 |
-6.35% |
3,601 |
38.55% |
| Other prepaid expenses and receivables |
1,908 |
1,806 |
-5.35% |
1,667 |
-12.63% |
| Current assets held for disposition |
105 |
513 |
388.57% |
20 |
-80.95% |
| Total Current Assets |
14,155 |
26,776 |
89.16% |
20,147 |
42.33% |
| Investments |
4,041 |
2,947 |
-27.07% |
883 |
-78.15% |
| Property and Equipment, at Cost: | |||||
| Land |
432 |
408 |
-5.56% |
526 |
21.76% |
| Buildings |
2,769 |
2,602 |
-6.03% |
3,613 |
30.48% |
| Equipment |
8,254 |
8,394 |
10,394 |
25.93% |
|
| Construction in progress |
928 |
962 |
3.66% |
732 |
-21.12% |
|
12,383 |
12,366 |
-0.14% |
15,265 |
23.27% |
|
| Less: accumulated depreciation and amortization |
6,653 |
6,661 |
0.12% |
7,658 |
15.11% |
| Net Property and Equipment |
5,730 |
5,705 |
-0.44% |
7,607 |
32.76% |
| Intangible Assets, net of amortization |
5,562 |
4,539 |
-18.39% |
21,473 |
286.07% |
| Goodwill |
9,638 |
7,683 |
-20.28% |
24,020 |
149.22% |
| Deferred Income Taxes and Other Assets |
2,119 |
2,263 |
6.80% |
1,944 |
-8.26% |
| Non‑current Assets Held for Disposition |
2 |
2,753 |
176 |
||
|
41,247 |
52,666 |
27.68% |
76,250 |
84.86% |
c) Cash Flow Statement
| Year Ended December 31 | 2015 Base Yr. |
2016 |
Change % |
2017 |
Change % | |
| Cash Flow From (Used in) Operating Activities: | ||||||
| Net earnings | 4,423 | 1,400 |
-68.35% |
477 |
-89.22% |
|
| Adjustments to reconcile earnings to net cash from operating activities— | ||||||
| Depreciation | 871 | 803 |
-7.81% |
1,046 |
20.09% |
|
| Amortization of intangible assets | 601 | 550 |
-8.49% |
1,975 |
228.62% |
|
| Share‑based compensation | 292 | 310 |
6.16% |
406 |
39.04% |
|
| Impact of currency devaluation | — | 480 | — | |||
| Amortization of inventory step‑up | — | — | 907 | |||
| Investing and financing (gains) losses, net | (18) | 86 |
-577.78% |
47 |
-361.11% |
|
| Amortization of bridge financing fees | — | 165 | 5 | |||
| Gains on sale of businesses | (2,840) | (25) |
-99.12% |
(1,163) |
-59.05% |
|
| Mylan N.V. equity investment adjustment | — | 947 | — | |||
| Gain on sale of Mylan N.V. shares | (207) | — | (45) |
-78.26% |
||
| Trade receivables | (171) | (177) |
3.51% |
(207) |
21.05% |
|
| Inventories | (257) | (98) |
-61.87% |
249 |
-196.89% |
|
| Prepaid expenses and other assets | 57 | 113 |
98.25% |
109 |
91.23% |
|
| Trade accounts payable and other liabilities | (742) | (652) |
-12.13% |
615 |
-182.88% |
|
| Income taxes | 957 | (699) |
-173.04% |
1,149 |
20.06% |
|
| Net Cash From Operating Activities | 2,966 | 3,203 |
7.99% |
5,570 |
87.80% |
|
| Cash Flow From (Used in) Investing Activities: | ||||||
| Acquisitions of property and equipment | (1,110) | (1,121) |
0.99% |
(1,135) |
2.25% |
|
| Acquisitions of businesses and technologies, net of cash acquired | (235) | (80) |
-65.96% |
(17,183) | ||
| Proceeds from business dispositions | 230 | 25 |
-89.13% |
6,042 | ||
| Proceeds from the sale of Mylan N.V. shares | 2,290 | — | 2,704 |
18.08% |
||
| Purchases of investment securities | (4,933) | (2,823) |
-42.77% |
(210) |
-95.74% |
|
| Proceeds from sales of investment securities | 4,112 | 3,709 |
-9.80% |
129 |
-96.86% |
|
| Other | 52 | 42 |
-19.23% |
35 |
-32.69% |
|
| Net Cash From (Used in) Investing Activities | 406 | (248) |
-161.08% |
(9,618) | ||
| Cash Flow From (Used in) Financing Activities: | ||||||
| Proceeds from issuance of (repayments of ) short‑term debt and other | (1,281) | (1,767) |
37.94% |
(1,034) |
-19.28% |
|
| Proceeds from issuance of long‑term debt and debt with maturities | ||||||
| over 3 months | 2,485 | 14,934 |
500.97% |
6,742 |
171.31% |
|
| Repayments of long‑term debt and debt with maturities over 3 months | (57) | (12) |
-78.95% |
(8,650) | ||
| Payment of bridge financing fees | — | (170) | — | |||
| Purchase of Alere preferred stock | — | — | (710) | |||
| Acquisition and contingent consideration payments related to business | ||||||
| acquisitions | (17) | (25) |
47.06% |
(13) |
-23.53% |
|
| Purchases of common shares | (2,237) | (522) |
-76.67% |
(117) |
-94.77% |
|
| Proceeds from stock options exercised | 314 | 248 |
-21.02% |
350 |
11.46% |
|
| Dividends paid | (1,443) | (1,539) |
6.65% |
(1,849) |
28.14% |
|
| Net Cash From (Used in) Financing Activities | (2,236) | 11,147 |
-598.52% |
(5,281) |
136.18% |
|
| Effect of exchange rate changes on cash and cash equivalents | (198) | (483) |
143.94% |
116 |
-158.59% |
|
| Net (Decrease) Increase in Cash and Cash Equivalents | 938 | 13,619 |
1351.92% |
(9,213) |
-1082.20% |
|
| Cash and Cash Equivalents, Beginning of Year | 4,063 | 5,001 |
23.09% |
18,620 | ||
| Cash and Cash Equivalents, End of Year | 5,001 | 18,620 |
272.33% |
9,407 | ||
| Supplemental Cash Flow Information: | ||||||
| Income taxes paid | 631 | 620 |
-1.74% |
570 |
-9.67% |
|
| Interest paid | 166 | 181 |
9.04% |
917 |
452.41% |
|
Recommended Strategy and Long Term Objectives
Abbott needs a more solid strategy to ensure sustainability, innovation, and continuity. Healthcare is a critical aspect of people’s lives hence a solid strategy will help ensure provision of better healthcare. The recommended strategy is a growth strategy. A growth strategy is beneficial to a business because it helps in determining new products to launch and add important features to the existing ones. There are new diseases coming up now and then, some diseases have become common due to the lifestyle changes, and the healthcare system needs changes time to time.
A growth strategy will help meet the long-term objectives of the company. The long-term objectives are:
Improve the healthcare system worldwide.
Ensure every person has an equal chance to proper healthcare through rapid point of sale testing, diagnosis and treatment.
Ensure continued innovations for better outcomes in testing, diagnosis and treatment.
A strategy that ensure continued innovations and better changes to existing products will help improve the healthcare system globally and the health outcomes. The recommended strategy is the growth strategy to continually introduce new products and improve the existing.
References
Abbott. (2017). Financials: 2017 Annual Report. Retrieved April 14, 2018, from Abbott: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDAwOTEwfENoaWxkSUQ9LTF8VHlwZT0z&t=1&cb=636568089843798610
Abbott. (2018). About Us . Retrieved April 14, 2018, from Abbott: http://www.abbott.com/about-abbott.html
Abbott. (2018). About Us: Citizenship . Retrieved April 14, 2018, from Abbott: http://www.abbott.com/about-abbott/abbott-citizenship.html
Abbott. (2018). Products . Retrieved April 14, 2018, from Abbott website: http://www.abbott.com/our-products.html
