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Abbott (NYSE:ABT) recently announced financial results for the third quarter ended September 30th, 2012. Diluted earnings per share, excluding specified items, were $1.30, reflecting 10.2% growth, exceeding the company's guidance range. Diluted earnings per share under GAAP were $1.21, including specified items. Excluding foreign exchange, worldwide sales at $9.77 billion increased 4.1%. This was made up of $4.2 billion in the United States and $5.55 billion in the rest of the world. Reported sales decreased 0.4%, if you account for an unfavorable 4.5% effect of adverse foreign exchange rates.

Abbott is narrowing its ongoing earnings-per-share guidance for 2012 to $5.06 to $5.08 a share from $5.00 to $5.10 a share, showing another year of strong performance. Including specified items, projected earnings per share under GAAP would be $3.83 to $3.85 a share for the full-year 2012. Net earnings amounted to $1.94 billion compared to $303 million in the same quarter of the previous year. However, it should be noted that the same quarter of the previous year included $1.5 billion in litigation reserves. For the nine months to September 30, 2012, total revenues at $$29 billion showed a 2% increase over $28.47 billion recorded in the same quarter of the previous year. Net earnings at $4.9 billion showed a 57% increase over the figure of $3.11 billion year on year. Diluted EPS per common share was $3.06 per share against $1.98 per share, an increase of over 54%.

In emerging markets, sales increased more than 10%, excluding foreign exchange, with strong double-digit growth in many of the key emerging markets across Abbott's businesses. Worldwide Nutritionals sales increased 6.3% in the quarter, excluding an unfavorable 1.8% effect of foreign exchange. U.S. Nutritionals increased 5.0%, with U.S. Pediatric Nutritionals sales grew 7.9% on gains for the infant formula, Similac, and double-digit growth of PediaSure. U.S. Adult Nutritionals grew 3.1%, driven by growth of Ensure and Glucerna. International Nutritionals grew by 7.4%, excluding an unfavorable 3.3% effect of unfavorable foreign exchange rates, driven by continued growth of both the pediatric and adult segments. Global sales of Core Laboratory Diagnostics increased 7.2%, excluding an unfavorable 5.5% effect of foreign exchange rates, driven by 8.3% international growth, excluding an unfavorable 6.8% effect of foreign exchange. Worldwide Proprietary Pharmaceuticals sales grew by 6.4%, excluding an unfavorable 4.0% effect of adverse foreign exchange rates, because of strong growth in key franchises including HUMIRA and AndroGel.

In October 2011, Abbott announced plans to separate into two publicly traded companies with one company in diversified medical products and the other company in research-based pharmaceuticals. The diversified medical products company will consist of the branded generic pharmaceuticals, devices, diagnostics and nutritionals businesses, and will retain the Abbott name. The research-based pharmaceutical company, named AbbVie, will include Abbott's current portfolio of proprietary pharmaceuticals and biologics. It is expected that the two companies will each pay a dividend which, when combined, will at least be equal to the current Abbott dividend at the time of separation. The separation is expected to be completed on January 1st, 2013.

Abbott has made significant progress in 2012 in development of its pharmaceutical pipeline, which currently includes more than 20 compounds or new indications. Abbott's antiviral program is focused on developing treatments for Hepatitis C (HCV), a disease that affects more than 170 million people worldwide. The broad-based HCV program includes three mechanisms of action in clinical trials, including protease, polymerase and NS5A inhibitors with the objective of transforming current treatment practices by shortening the duration of therapy, improving tolerability and increasing cure rates. The company recently initiated a Phase 3 clinical program to evaluate its interferon-free regimen in HCV genotype 1 (GT1) patients.

There are some factors to be considered in analyzing the company. The company has paid a dividend since 1924 and the present dividend yield stands at around 3%. The company is focused primarily in the manufacture of healthcare products which people buy even in tough economic conditions so that the company is for all intents and purposes recession proof. It also does not have a major patent cliff problem. Finally, the company has a strong balance sheet with a cash flow of around $11 billion compared to $18 billion in debt.

One of the company's more interesting products is the newly introduced plastic stent called Absorb. Since September 2012 Absorb, the world's first drug-eluting bioresorbable vascular scaffold (BVS), has been available in more than 30 countries across Europe and parts of Asia Pacific and Latin America though it is not yet approved for sale in the U.S. Unlike a metal stent, this stent dissolves naturally when support for the blood is no longer required. Absorb is coated with a drug called everolimus, which inhibits in-stent thickening in the coronary arteries. Everolimus was developed by Novartis (NYSE:NVS) and licensed to Abbott. San Diego based Reva Medical's ReZolve Bioresorbable Coronary Stent is also designed to restore blood flow and promote arterial healing, before gradually dissolving. Medtronic (NYSE:MDT) is an investor in Reva while Boston Scientific (NYSE:BSX), a major player in stents, has an option to negotiate for a worldwide exclusive right to distribute its stent products.

The revenue growth at Abbott is in sharp contrast to competitors such as Merck (NYSE:MRK), which saw a 4% decline, and GlaxoSmithKline (NYSE:GSK), which saw a 2% decline. I expect Abbott's strong product development pipeline will lead to continued growth. This is a strong and well managed healthcare company with a decent dividend yield. If you are looking for great exposure to the healthcare sector, I strongly recommend buying Abbott today.

Source: Abbott: A Lucrative Play On Strong Revenue Growth