Earnings Call Transcript - ABT Q1 2020

Operator, Operator

Good morning and thank you for standing by. Welcome to Abbott's First Quarter 2020 Earnings Conference Call. This call is being recorded by Abbott. With the exception of any participants' questions asked during the question-and-answer session, the entire call, including the question-and-answer session, is material copyrighted by Abbott. It cannot be recorded or rebroadcast without Abbott's express written permission. I would now like to introduce Mr. Scott Leinenweber, Vice President, Investor Relations, Licensing and Acquisitions.

Scott Leinenweber, VP, Investor Relations

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 2020. Abbott cautions that these forward-looking statements are subject to risks and uncertainties, including the impact of the COVID-19 pandemic on Abbott's operations, results and financial results. This 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 Securities and Exchange Commission Form 10-K for the year ended December 31, 2019. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law. Please note that financial information provided on the call today for sales, EPS and line items of the P&L will be for continuing operations only. 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 on our website at abbott.com. Unless otherwise noted, our commentary on sales growth refers to organic sales growth, which is defined in our earnings news release issued earlier today. With that, I will now turn the call over to Robert.

Robert Ford, CEO

Thanks, Scott. Good morning, everyone, and thank you for joining us. As everyone here knows, we haven't seen a quarter or any time quite like this before. This global environment is unprecedented in our lifetimes. Before we get into the details of the quarter, I want to take a moment to thank our employees, our customers and our suppliers, all of whom are making extraordinary efforts to keep systems working and to maintain supply of our critically important products for the people who need them. This moment has strongly underscored two fundamental things to me. The first is the biggest and most important, and that's the essential nature of health and health care. Times like these make very clear what truly matters the most. The second, to bring it closer to home, has to do with the nature of Abbott. We've been in the business of improving people's health through medical innovation for more than 130 years, and it's in moments like these that the importance of our mission becomes even more critical: delivering for the people that depend on us. I've been extremely impressed, though not at all surprised, by the way my colleagues around the world have stepped up to this moment. As you know, we've quickly developed and launched three diagnostic tests for COVID-19: two for the laboratory setting and one for rapid point-of-care testing. At the same time, our teams in every business and around the world have been making extraordinary efforts to keep our operations running and our supply chains moving and to undertake the thousands of processes to make our vital products and get them to the people who need them. We're also donating both funding and products to support frontline health care workers, families and communities to meet the challenges of this pandemic. I think this speaks to a well-known attribute of Abbott's culture: We're execution-oriented, and we can be relied on to deliver when it matters the most because we know how important our work is, that lives depend on us, and we take that very seriously. Our diversified business model is a true strength in times like these. It's a model that has served our shareholders and the company very well. Under normal circumstances, it provides more opportunities for growth. In situations like this, it helps to dampen the impact by ensuring we're not overly reliant on a given business, product or geography. Overall, our sales grew nearly 4.5% on an organic basis in the first quarter. Looking across our portfolio, some parts of the business faced challenges, others have been relatively stable, and still others are performing at high levels to meet new demands. Beginning in February, as China implemented quarantine restrictions and nonemergency health care activities were postponed, we saw sharp declines in both cardiovascular device procedures and routine core laboratory diagnostic testing volumes in that country. Encouragingly, over the course of March and the first two weeks of April, we've seen a steady improvement in procedures and testing volumes in China from the lows we saw in February. As the virus spread geographically, the impact initially expanded to pockets of Asia and Europe beginning in late February, and more broadly across Europe and the U.S. during the last few weeks of March. As the health care industry shifted its focus to fighting the virus, we saw similar impacts to our business as those we had seen in China. Based on our most recent data points, while we haven't seen a rebound, we're starting to see some signs of stabilization. Importantly, while we're navigating the demands of the current environment, we've continued to advance our pipeline and strengthen our long-term growth platforms. Over the last few months, we've announced CE Mark approvals of new products in important cardiovascular device areas, including TriClip, the world's first minimally invasive device for repairing a leaky tricuspid heart valve; Tendyne, a first-of-its-kind device for mitral heart valve replacement; and Gallant, our next-generation implantable cardiac defibrillator. In EPD and Nutrition, underlying market growth and share dynamics remain in line with historical trends during the quarter, with the exception of increased demand during late March in advance of shelter-in-place restrictions in certain markets, most notably in U.S. Pediatric Nutrition. In Diabetes Care, Freestyle Libre continued to add new users at a strong and steady rate throughout the quarter as reflected by sales growth of more than 60%. We also continue to expand reimbursement coverage for Libre around the world, including recently becoming the only continuous glucose monitoring system to obtain reimbursement in Japan for people with Type 2 diabetes. Just last week, we announced the availability of Freestyle Libre for hospitalized patients with COVID-19. The Libre system allows frontline health care workers and hospitals to remotely monitor glucose levels in patients with diabetes in order to minimize exposure to COVID-19 and preserve the use of personal protective equipment. In partnership with the American Diabetes Association, Abbott has donated 25,000 Freestyle Libre sensors to U.S. hospitals and medical centers in outbreak hotspots to help accelerate access to the technology. Before I wrap up, I'd like to take a moment to discuss our ongoing efforts in the area of diagnostic testing for COVID-19. Abbott has long been a global leader in infectious disease testing, so leading in this area is a role we can and should play. In late March, we launched two molecular diagnostic tests to detect COVID-19: one for our ID NOW rapid point-of-care platform and one for our m2000 laboratory platform. Over the past few weeks, we've been actively working with government authorities and health systems to deploy these tests to places of greatest need. Just yesterday, we announced the launch of a lab-based serology test for the detection of the antibody IgG. While molecular testing detects whether someone currently has the virus, antibody tests determine if someone was previously infected. We already began shipping these antibody tests and intend to ship 4 million tests in April and ramping up capacity to 20 million tests per month in June and beyond. But our efforts don't stop there. We're moving as fast as we can to develop additional tests, including a lab-based serology test to detect another important antibody, IgM, which we expect to launch in the near future. I'd like to thank our outstanding scientists as well as our manufacturing, supply chain and business teams. They've really stepped up to the challenge and are doing extraordinary work to increase the availability of diagnostic testing as we fight this pandemic. In summary, this unprecedented situation underscores our purpose and the strength of our diversified business model. The underlying fundamentals of our business remain strong, and our manufacturing and supply chain have been highly resilient. We've long planned for how to maintain business continuity in the face of a global crisis, and our employees and suppliers have risen to the challenge. Abbott is contributing in a significant and meaningful way by providing new test solutions across our diagnostic platforms to help screen as many people as possible. I'll now turn over the call to Bob. Bob?

Robert Funck, CFO

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 first quarter increased 4.3%. Our adjusted gross margin ratio was 58% of sales. R&D investment was 7.3% of sales, and adjusted SG&A expense was 32.2% of sales. Exchange had an unfavorable year-over-year impact of 1.8% on first quarter sales. During the quarter, we saw the U.S. dollar strengthen versus most currencies, which resulted in a larger unfavorable impact on sales compared to expectations had exchange rates held steady since the time of our earnings call in January. Based on current rates, we would now expect exchange to have a negative impact of a little more than 3% on our full year sales. As we announced this morning in our earnings news release, given the uncertainties regarding the duration and impact of the COVID-19 pandemic, we're suspending our previously issued annual guidance for sales and earnings per share. We're actively monitoring the situation closely, and we'll provide updates as appropriate. Before we open the call for questions, I'd like to briefly discuss Abbott's overall financial condition. As this situation has reminded all of us, unforeseen events can rapidly change the environment we operate in. Our philosophy of maintaining strong financial flexibility is in place for just these types of moments. Overall, I'd say our financial health is strong. We ended the first quarter with approximately $3.7 billion of cash and short-term investments, and we have existing agreements in place that will provide additional access to $5 billion, if needed. Over the last couple of years, we have put a heavy emphasis on strong cash flow generation and rapid debt paydown following a period of strategic shaping. This focused effort has positioned us with healthy leverage ratios and only a modest amount of debt coming due over the next few years. It has also resulted in strong investment-grade credit ratings. That said, we are prudently planning to ensure we can withstand a variety of potential scenarios that may emerge over the coming months. As Robert mentioned earlier, our diversified business model is a true strength in times like these. I would also add that our disciplined and thoughtful approach to financial decisions and capital allocation priorities are also strengths and that Abbott is well positioned to navigate this challenge. With that, we'll now open the call for questions.

Operator, Operator

[Operator Instructions] And our first question comes from Robbie Marcus with JPMorgan.

Robbie Marcus, Analyst

Congrats on a good quarter, all things considered. Maybe I can start with the 2 positives in the portfolio here. I'll ask them separately. First, on diagnostics. Abbott's leading the way. You have three different tests: the ID NOW molecular tests, the m2000 SARS-COVID-19 test, and then the antibody test, which was just announced. I know a lot of people are interested in the potential of all three of these tests here. So I was wondering if you could give us an overview of where you are with the testing, the potential revenue implications and volumes that you'll have. And any other tests that we should be on the lookout for on the horizon here?

Robert Ford, CEO

Sure, Robbie. So yes, it was definitely an intense first quarter here for our Diagnostic business, even though it doesn't look like that in the sales number, right? We've got a core lab business that had some declines given the similar dynamics that we saw in our cardiovascular procedures as the hospitalization and procedures kind of came down. On the other side of the business, we have our rapid and molecular business where we did see positive growth in the quarter. We actually didn't have a lot of COVID test sales for those businesses in the quarter. As you know, we got our approvals towards the end of the quarter, last week or so in March. So the potential here for the COVID tests is more significant for us in the second quarter here. But our biggest motivation on the testing aspect here, the key driver is we want to help people. We want to help people get tested. We want to help society move forward. We want to help workers get back to work, people get back to schools, etc. When you look at the diagnostic platform, the suite of platforms and products that we have built over the last 20 years, they've really been aimed at being able to do just that. So in mid-February, when we saw that the virus was not going to mimic what we had seen in maybe previous viruses like SARS or MERS, and we saw that this was going to be something much more significant, much more widespread, we assembled four different and independent R&D teams to go after it in individual groups. There was obviously some collaboration between them, but we wanted them stand-alone going after four different types of tests: a molecular lab test, a molecular point-of-care test, a lab-based serology test, and a lateral flow serology test. We weren't looking for just one or two of them to work; we understood, given our experience here, that all four of these tests would be needed. They all have different value propositions. If you look at the lab-based systems, they're more high throughput, getting a lot of tests done with a turnaround time of 1, 2, or 3 days. We knew we needed that kind of testing volume. We also knew that we needed fast, immediate results, maybe with the notion of having some portability where you'd be able to take the test straight to testing people, rather than having to restrict them to go to a lab or a hospital. We also knew that there was going to be a demand for mass volume screening. So when we look at the assembly of these four different tests that we've been working on, that was the goal: to understand that there's a viral progression that occurs where initially, in the early stages, you need molecular testing to diagnose if someone has the virus. As the disease progresses and people start to build antibodies for that, you're going to need a different type of test and in different formats. Every single one of our programs here either met or beat their target dates. There are probably two reasons for that: One of them is a very passionate and committed scientific and manufacturing team here that really worked around the clock. One of our teams split in two so they could work 24 hours a day, seven days a week. That's one key driver. The other one is our collaborative, science-based approach with the FDA. Throughout every step of our development process, we worked in real time with the FDA, sharing our technology, sharing how we're going to do the clinical, sharing the results, taking input and feedback from them on a real-time basis. I think the combination of those two factors allowed us to accomplish these tests in record time. We're now seeing the reward of that. It's very gratifying to see the vision we had about these different types of tests and different types of platforms being deployed in the way we envisioned. I've received numerous stories from CEOs, mayors, and governors about our rapid test and how we envisioned that test rollout to start with frontline workers, such as an ICU nurse or an ER doctor. With a rapid test, they could be tested within 15 minutes to determine whether they needed appropriate care or could return to the front line. That's been exactly how we envisioned that product to work. We're also shipping a lot of m2000. We have many m2000s in the country, and we began shipping them to some challenging areas where the turnaround time had previously been over two weeks. These lab boxes can process close to 500 tests a day and get results in 24 hours. We developed these tests, launched them, and worked with the labs and hospitals as per our initial vision. Obviously, we’ve seen the difficulties in finding tests, but our efforts have delivered everything we've committed to. We still need to do more, and there's a pressing need to manufacture more tests. Scaling is crucial, and we employ high-precision, highly-automated manufacturing processes. Some of these existing assets have been used for manufacturing, but in certain cases, it is insufficient, and we need to set up more. That takes some time, but we have a committed team working around the clock. On the ID NOW side, we committed to manufacturing 50,000 tests per day starting April 1, and we've delivered exactly that. We're tracking our daily manufacturing and shipment output and have not fallen behind. On several days, we've exceeded that number. We’ve also collaborated with the federal government, state government, mayors, and governors, providing them with daily reports on production and shipments to ensure optimal allocation to areas with the highest needs. Regarding ID NOW, our first phase was to roll this out to ensure that frontline health care workers were tested and protected. As we ramp up manufacturing for ID NOW, we'll transition to testing more of the general population, collaborating on pilots with CVS and other retailers to explore how to conduct testing outside of hospital settings. So that's on target and on plan as well. On the m2000, we fulfilled our commitment to ship 1 million tests during March, and we did that. Regarding IgG, we've talked about a plan to ship 4 million tests. As of yesterday, we received orders for about one-quarter of that. We're moving quickly, and we’re aware of our responsibilities in manufacturing tests at scale. We're also developing our last platform, the lateral flow serology test, which will enable us to scale to more significant numbers. It remains on schedule. I see a promising Q2 ahead regarding testing. I won't forecast precisely how this will look, but it's clear that the demand for testing will persist. Our team has aligned a portfolio of testing solutions with various uses, which will be crucial in ramping up testing.

Robbie Marcus, Analyst

Appreciate the response. Very helpful. And maybe just one other bright spot in the portfolio is Libre. This is a non-procedure-based recurring revenue product. You had great international numbers. The U.S. number looked a little lighter this quarter, kind of flat quarter-over-quarter. Maybe just help us understand the trends in that business and how sustainable that is as people are away from their endocrinologists?

Robert Ford, CEO

Sure. As I said, if you look at our script data, our U.S. data had a very good quarter regarding scripts. At the beginning of the year, I talked about deploying many demand-generation strategies here, involving sales force expansions and direct-to-consumer advertising. You can observe the inflection point starting in the first few weeks of January versus where we exited. Our scripts between Q1 of 2020 and Q4 of 2019 actually grew 35% sequentially, over 100% year-over-year. The sequential growth rate you mention is focused on the timing of sales and shipments in this quarter. I expect shipment selling to mirror what we've been seeing in our Rx generation in the U.S. Our product provides accessible, affordable, and easy-to-use solutions. Internationally, our business has performed exceptionally well, experiencing high growth rates off a substantial base. I'm pleased with the international performance and believe there's more work to be done. We're also rolling out the Libre 2 product in Europe and international markets more intentionally. We shared some accuracy data on Libre 2 at a European conference earlier this month, which will help fuel further growth in international markets as well.

Operator, Operator

Our next question comes from David Lewis from Morgan Stanley.

David Lewis, Analyst

Robert, just a couple of quick questions for me. I guess the first thing, just sort of thinking about recovery. You gave some comments on China. But I wonder where is China right now as a percentage of prior normal. In the U.S., have you seen week-over-week, the business get softer? Has the U.S. sort of reached some stabilization at a trough? And then just more broadly, how are you thinking about recovery kind of across the quarters this year? Any qualitative commentary would be helpful. And then I have a quick follow-up.

Robert Ford, CEO

Sure. So just on your question on China, I mean, it's an important market for us, but we're not overly reliant on China. Let me put your general demand question into context. I'd break our business into two groups: more hospital-based demand generation businesses and consumer-based demand businesses, which are about 50-50 in size. We started looking at coronavirus with this two-part approach. On the consumer-based side: EPD, Nutrition, and Diabetes Care performed very well during the quarter, aligning with our strategies and targets. There was, however, pantry loading within our Nutrition business at the end of March as consumers stock up. Excluding that, all performed well. We saw increased demand for specific products, and our resilient supply chain met it. I envision these business segments continuing on this trajectory. The hospital-based businesses, such as core lab testing and our Cardiovascular portfolio, experienced a decrease in elective procedures and routine testing. Notably, our Heart Failure business remained stable, given its life-saving nature compared to more elective EP ablation procedures. In general, we noted drops in testing and procedures but are beginning to see an improving trend in China. While it's not at pre-COVID levels, it's rebounding from February lows, and we're seeing enhanced stability and recovery in other regions around the world. Our daily device implant data and hospital diagnostics data provide a substantial overview of our operations. Moving forward, the Q2 quarter will likely be our most challenging, especially for core lab, cardiovascular, and neuro businesses. Yet our consumer segments will likely continue meeting expectations. Our models suggest a recovery in Q3 and Q4, especially for elective procedures. It's been communicated by health systems about their plans to resume these important procedures. We expect that the recovery won't be as swift as the decline, but procedures will return to provide vital care. Testing will play a crucial role in getting people back to work and in schools, and we'll continue working tirelessly to respond to the demand.

David Lewis, Analyst

Okay. That's actually very specific, probably more than I hoped for. And then in terms of the second question, just you've probably been less active on growth-oriented M&A these last couple of years than some of your peers, but you're going to emerge from this pandemic crisis with probably the strongest balance sheet in large-cap device. So how are we thinking about your interest in buybacks? I imagine, are you less focused? But your interest in opportunistic M&A here coming out of this crisis?

Robert Ford, CEO

Sure. Listen, I'd say right now, we've done a lot of work on our balance sheet over the last couple of years. We've talked a lot about our efforts toward improving leverage ratios and cash conversion. Our financial strength is robust. As Bob mentioned, we have a strong cash position of close to $4 billion, access to credit, and cash-generating businesses. There isn't much debt maturing soon. I don't foresee a shift in our capital allocation strategy. We maintain a strong dividend, and we intend to do so as it's part of our identity. Historically, we haven’t focused much on share repurchases unless to offset dilution. Bob and the finance team are monitoring CapEx spending, which may slow due to current project demands, but we'll maintain necessary expansions. Regarding M&A, opportunistic and strategic avenues haven't led to anything compelling that aligns with our vision. We have a lot of internal opportunities to focus on, especially alongside the testing platforms.

Operator, Operator

Our next question comes from Bob Hopkins from Bank of America.

Robert Hopkins, Analyst

Just a couple of quick questions. First, I wanted to kind of circle back to testing, specifically regarding the two COVID-19 tests that are being run, on ID NOW and m2000. I just wanted to be super clear on where you are today in terms of shipping capacity. Is it that 5 million per month that you talked about? And also, can you give us a sense as we look forward, given the critical importance of these tests, kind of where you'll be, say, maybe mid-year in terms of testing and shipping capacity?

Robert Ford, CEO

Sure. On the testing side, we talked about achieving a manufacturing ramp-up with the ID NOW platform reaching about 1.5 million tests, and we're on target to do that throughout the middle of this month. Improvements in the manufacturing process and adding more shifts are aimed at reaching 2 million tests by June, which is what we discussed. We know we require more than 2 million ID NOW tests, so we're strategizing our ramp up. These manufacturing processes are highly precise and automated, which means initiating them isn't an instantaneous process. We've ensured that our tests are shipped with the necessary components to test effectively. For our m2000, we committed to shipping 1 million tests during March, which we fulfilled. We discussed shipping 4 million tests in April, and we are progressing well toward that goal. Our combined target for ID NOW and m2000 tests is around 5 million, and we will clarify this as we make progress.

Robert Hopkins, Analyst

Great. And then one follow-up on the same topic. Congratulations on the new serology test that you just announced. I was wondering if you could talk a little bit about sensitivity and specificity data relating to that test. And whether you think the high levels that have been quoted are sustainable when you think about general population testing?

Robert Ford, CEO

Yes, to answer your question on accuracy. Right now, the label we have states that if you take the test 14 days post symptoms, the sensitivity is 100%, and the specificity is 99.5%, based on over 1,000 samples. We believe we have a highly accurate and reliable test. If you attempt to do the test five days post exposure, your body hasn't generated enough antibodies for reliable detection, which is why we emphasized the timeline for the antibody test. Our tests have been carefully constructed to ensure accuracy.

Operator, Operator

And our next question comes from Vijay Kumar from Evercore.

Vijay Kumar, Analyst

Congratulations, guys. Two questions for me. So one, maybe on the near term. I guess when you think about the serology test and applicability to opening up the economy, there are some issues around prevalence rates and false positives, and is this now paving the way for a second wave of infection. So maybe address that? I mean, how can these tests be deployed in helping us open up the economy? And one other -- when you think about your employees getting back to work, what signs are you looking for to completely open up the workforce and let employees back?

Robert Ford, CEO

Sure. I mean as I said, we have to view the suite of tests as a comprehensive whole rather than focusing on a singular test. The serology test is reliable; we're also developing an IgG and IgM antibody test. Companies are considering how to resume operations, and we understand there’ll be different protocols in place. This could involve smaller meetings and significant safety measures, including social distancing and increased sanitization efforts. Adding a lateral flow test to these procedures would enhance security and allow for more effective testing for employees returning to work. It's essential to consider localized approaches; a factory or school can be managed differently, utilizing testing to facilitate safe resumption of activities. So, in our perspective, the comprehensive testing strategy will be pivotal in getting individuals back to work and school.

Vijay Kumar, Analyst

Yes, that's helpful. And then maybe one -- so a bigger picture question or maybe this is more -- help us understand how we should be thinking about the future. Because when I look at 2021, and obviously, I'm not asking for guidance. We know '20 was impacted. But what is the right base to be looking at procedure volumes, right? When you look at the underlying rate of incidence and prevalence pool for disease states, those really haven't changed. So if we don't have a, knock on wood, a second wave of infection coming in or next year being impacted, should we be looking at procedure volumes in '19 as the base, the right base to build off? Or should we be -- there are some issues on hospital capacity constraints. Should we be looking at the depressed 2020 procedure numbers as the right base to trend next year?

Robert Ford, CEO

Well, I can appreciate you trying to figure out 2021 already, Vijay, but it’s challenging for us to predict how Q2 will unfold, let alone next year. You've raised valid points; there are a lot of uncertainties that complicate forecasts regarding recovery speed, hospital normalcy, and testing developments. We’re all hoping for rapid recovery, but extended timelines are likely, which would sustain demand for testing. I believe the demand for cardiovascular devices and diagnostics is substantial; hospitals will likely prioritize resuming elective procedures that are essential for patient care. While we can’t definitively predict when existing volumes will return, once they do, I’d expect strong demand from patients needing care. We’re expected to see recovery in the latter half of this year, particularly for elective procedures, though it's uncertain if the return will match the previous levels of activity. Planning around a V-shape or L-shape recovery is challenging, but we're aiming for recovery.

Operator, Operator

Our next question comes from Matt Taylor with UBS.

Matthew Taylor, Analyst

So first question, I just wanted to follow up on the testing since it's so important and certainly commend the team for their efforts in getting those out so quickly. So it's two parts. One is, you mentioned in the earlier remarks that there's been a lot of commentary about difficulty in the testing market. It's not only due to kits, but folks have mentioned swabs and reagents and other things like that. I was just wondering from your perspective -- I'm sure you're getting a lot of feedback on this. What do you think is the biggest challenge out there in terms of getting access to testing now? And how do you see that improving over the next weeks and months?

Robert Ford, CEO

No. So on the question of testing and testing supplies and shortages, I think we've ensured that when we ship out our tests, they include everything necessary for testing, such as controls, calibrators, and swabs in ID NOW. A significant challenge lies in workflow and sample collection. Many hospitals may be reluctant to conduct mass testing on-site. Optimizing sample collection and transportation back to the hospital to ensure efficient turnaround represents a considerable action item. The federal government, along with state authorities, is working on sharing best practices that are yielding improvements. We’re starting to see a ramp-up in the m2000, while recognizing there is much more progress needed.

Matthew Taylor, Analyst

Okay. And then one follow-up on that. I think on Bob's question, you commented on the accuracy of the serology test, which is high. Could you comment on the accuracy of the other tests, your confidence in them with smaller samples that you had to get out quickly and the relative importance of the two serology tests in determining who's had the virus and who has immunity?

Robert Ford, CEO

Yes, sure. On the molecular test, it's recognized as the gold standard for accuracy. We tested viral load; our tests are operating at expected outcomes in all samples for both negative and positive results. The m2000 also showcases levels of detection that affirm its reliability. The antibody tests will provide a vital tool in conjunction with molecular testing for screening the population moving forward. The use of both serves a critical role in infection prevention strategies.

Operator, Operator

And our final question comes from Larry Biegelsen from Wells Fargo.

Larry Biegelsen, Analyst

Robert, let me just ask one multipart device question. On two milestones we're waiting for, the MitraClip FMR, NCD, any update there? Libre 2, any update on the status there? Just lastly, any other timelines in devices that could be impacted by coronavirus would be helpful.

Robert Ford, CEO

Sure, Larry. I was awaiting the Libre question. Regarding the CMS secondary MR, they've delayed the proposed NCD issuance, previously expected mid-February, due to current circumstances. This delay is not negatively affecting our business. I maintain confidence that this process will proceed at the appropriate time. As for Libre 2, I remain optimistic about the product's capabilities. We shared some accuracy data at the European conference in February, which reinforces my confidence. We're addressing some open items with the FDA; however, these won't hinder growth for Libre. Additionally, we are monitoring timelines for clinical trials and regulatory processes; however, our near-term forecast isn't overly reliant on patient enrollment metrics, and we plan to optimize enrollment once the current constraints lift. Closing, this has been an unusual quarter for us. The strength of our diversified business model was evident. We've faced challenges in some areas, while stability remained in others, with high performance in key segments. We'll observe how swiftly we can ramp our testing capabilities. Our financial position remains robust, and I believe we will see recovery in Q3 and Q4. Health care dynamics differ from other sectors, and I look forward to providing additional qualitative updates as the year progresses.

Scott Leinenweber, VP, Investor Relations

Good. All right. Well, thank you, operator, and thank you for all of your questions. This now concludes Abbott's conference call. A webcast replay of this call will be available after 11 a.m. Central time today on Abbott's Investor Relations website at abbottinvestor.com. Thank you for joining us today.

Operator, Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone, have a wonderful day.