Abbott Laboratories (ABT) — Q1 2019 Earnings Call Transcript

Good morning, and thank you for joining us. With me today are Miles White, Chairman of the Board and Chief Executive Officer; Robert Ford, President and Chief Operating Officer; and Brian Yoor, Executive Vice President, Finance and Chief Financial Officer. Miles will provide opening remarks, and Brian will discuss our performance and outlook in more detail. 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 2019. Abbott cautions that these forward-looking statements are subject to risks 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 Securities and Exchange Commission Form 10-K for the year ended December 31, 2018. 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 first quarter financial results and guidance 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 Miles.

Okay. Thanks, Scott, and good morning. Today, we announced results for the first quarter and we're off to another good start. Our sales growth was strong and right on target, coming in at 7% on an organic basis in the quarter, and ongoing earnings per share of $0.63 exceeded our previous guidance range. Our full year 2019 adjusted earnings per share guidance of $3.15 to $3.25 remains unchanged and reflects mid-teens growth at the midpoint on a constant currency basis. As we've discussed previously, our emphasis today is on organic execution in the company. Today, all of our businesses have positive long-term outlooks and are well positioned with excellent products and attractive markets. At the start of the year, we issued guidance that reflected another year of strong performance. And for the first quarter, we're right on track with those expectations. We're particularly pleased with the exceptional performance of several long-term growth drivers that are leading the way, including FreeStyle Libre, MitraClip and the Alinity systems. These life-changing technologies are positively impacting lives and achieving impressive results. I'll now summarize our first quarter results before turning the call over to Brian, and I'll start with Diagnostics, where sales were led by Core Laboratory growth of 10%. Alinity, our family of next-generation diagnostic systems, is driving strong growth internationally, and we continue to achieve significant above-market growth in the United States. In Europe, we are both converting existing customers to Alinity and winning competitive bids for new business at a very high rate. We also recently increased our launch efforts for Alinity h, our hematology system, and obtained CE Mark for Alinity m, our highly automated Molecular Diagnostics system along with several infectious disease tests. And we're expanding our menu of tests in key markets such as China and the United States. With a steady menu expansion on multiple different instruments across geographies, Alinity will be a significant growth driver for years to come. In Nutrition, sales increased more than 6.5% in the quarter, reflecting strong execution and new product introductions. We continue to see good underlying market demand and growth, and we're achieving above-market growth in several geographies, particularly Asia and Latin America. Sales growth this quarter was balanced across our Pediatric and Adult Nutrition businesses with our core leading brands of Similac, PediaSure and Ensure all contributing to strong growth overall. In Established Pharmaceuticals, sales growth of 5.5% was right in line with our expectations and was a sequential improvement quarter-to-quarter. Performance in the quarter was led by a 7.5% growth in our key emerging markets, which represent the most attractive long-term growth countries for our branded generics portfolio and include India, Brazil, Russia and China, along with several other emerging countries. Underlying growth dynamics in these countries continue to remain strong and intact. And lastly, I'll cover Medical Devices, where sales grew nearly 10%, led by strong double-digit growth in Heart Failure, Structural Heart, Electrophysiology and Diabetes Care. In Heart Failure, growth of 23% was led by rapid U.S. market adoption of our HeartMate 3 left ventricular assist device following FDA approval of a long-term use indication late last year. The superior patient outcomes demonstrated in the clinical trial that supported this approval have been a critical component of the growth and the share capture that we're achieving. In Structural Heart, several products across our broad portfolio contributed to strong double-digit growth in the quarter, including MitraClip, our market-leading device for the treatment of mitral regurgitation, a condition caused by a leaky heart valve. During the quarter, we announced U.S. FDA approval for a new expanded indication for MitraClip, which significantly expands the number of people that can be treated. The formal process of seeking Medicare reimbursement for this new indication has been initiated. During the quarter, we also filed for CE Mark for our new triclip device, a first of its kind minimally invasive device for repairing a leaky tricuspid heart valve. We plan to initiate our U.S. pivotal trial for triclip in the coming months. I'll wrap up with Diabetes Care, where sales grew over 40% in the quarter led by FreeStyle Libre, our market-leading continuous glucose monitoring system, or CGM. Libre continues to perform exceptionally well with worldwide sales of $380 million in the quarter, reflecting growth of 80% with global leadership among CGM systems for both type 1 and type 2 users. In order to meet the tremendous demand that we're seeing for Libre, we're adding a significant amount of new manufacturing capacity, which will come online starting in the second half of this year. So in summary, we're right on track with our high expectations to start the year. All of our long-term growth drivers are intact and achieving significant growth, including FreeStyle Libre, MitraClip and Alinity. And we're well positioned to achieve the top tier sales and EPS growth targets that we set at the beginning of the year. I'll now turn the call over to Brian to discuss our results and outlook for the year in more detail. Brian?

Thanks, Miles. 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 7.1%, and exchange had a negative impact of 4.8% on sales versus the prior year. Reported sales increased 2% in the quarter. Regarding other aspects of the P&L. The adjusted gross margin ratio was 58.6% of sales, adjusted R&D investment was 7.4% of sales and adjusted SG&A expense was 32.3% of sales. All of these ratios were in line with previous guidance. Turning to our outlook for the full year. We continue to forecast organic sales growth of 6.5% to 7.5%. Based on current exchange rates, we would expect exchange to have a negative impact of around 2.5% on our full year reported sales, with the vast majority of the impact expected to occur in the first half of the year. We continue to forecast an adjusted gross margin ratio of somewhat above 59.5% of sales for the full year, which reflects underlying gross margin improvement across our businesses. We continue to forecast adjusted R&D investment of around 7.5% of sales and adjusted SG&A expense of around 29.5% of sales for the full year. Turning to our outlook for the second quarter. We forecast adjusted EPS of $0.79 to $0.81, which reflects strong double-digit underlying growth, partially offset by the impact of foreign exchange on our results. We forecast organic sales growth of around 7%. And at current rates, we would expect exchange to have a negative impact of around 4% on our second quarter reported sales. We forecast an adjusted gross margin ratio of somewhat above 59% of sales, adjusted R&D investment of a little less than 7.5% of sales and adjusted SG&A expense of around 29.5% of sales. Lastly, we forecast net interest expense of around $150 million in the second quarter. Before we open the call for questions, I'll now provide a quick overview of our second quarter sales growth outlook by business. For Established Pharmaceuticals, we forecast mid-single-digit growth, which is comprised of mid- to high single-digit growth in our priority key emerging markets along with a modest decline in other EPD sales, which reflects the recent continuation of a noncore, low-margin supply agreement. In Nutrition, we forecast mid-single-digit sales growth. In Diagnostics, we forecast Abbott's legacy Diagnostics business, which is comprised of Core Laboratory, Molecular Point of Care, to grow mid- to high single digits. In Rapid Diagnostics, we forecast low to mid-single-digit sales growth. And in Medical Devices, we forecast high single-digit sales growth, which reflects continued double-digit growth in several areas of this business.

So it was encouraging to see a lot of the big growth drivers here stay on track and really drive healthy double-digit growth. I was wondering if you could spend some time on each of those and specifically address Libre. I think a lot of investors are anticipating Libre 2 and other enhancements that you could make there in addition to all the capacity you're adding. So can you talk about the pathway for Libre and some of the other big growth drivers?

Thank you, Matt. I want to highlight a few things before focusing on Libre. We're experiencing strong performance across many device and diagnostic sectors. While there are certain geographies and product lines where we might not be entirely satisfied, overall, our product areas and even competitors in the medical device field are performing well, with improved growth rates in several areas. Despite pre-earnings concerns about the continuity of the medical device sector, I see a strong outlook ahead. Our pipelines and products are robust, and the overall sector looks promising with attractive markets for us. First and foremost, we're in a healthier environment than may currently be evident, and many companies are thriving within it. There are several new products and pipelines that look promising. Specifically, in Diabetes Care, we've seen significant advancements where new and affordable technology has greatly improved the lives of diabetics globally. Libre has established itself as a leader in this area, and we are excited about its success and acceptance among patients worldwide. We've achieved global leadership in continuous glucose monitoring for both type 1 and type 2 diabetes in a short period. The appeal to patients is largely due to the elimination of finger sticks and the continuous nature of monitoring that allows for better health management, which has been life-changing for many. Importantly, it's affordable enough to be widely accessible, which was our aim. Its ease of use is also appealing to all types of patients. This accessibility is reflected in the reimbursements globally; 80% of our sales now receive reimbursement in over 30 countries, and a significant portion of commercial lives in the U.S. is covered. We're also investing heavily in capacity expansion, which has been noted several times. The first phases of this expansion will come online in the second half of this year, followed by a steady rollout of further capacity. Growth will not be constrained. This product is unlike any other device or diagnostic we've seen before, as the millions of diabetics worldwide make it far from a niche offering. There is a vast global population managing diabetes, and our product will be accessible to all of them, necessitating significant capacity that will begin in the latter half of this year. We are also awaiting developments regarding Libre 2, which is currently under FDA review. We've submitted Libre 2 with alarms as an iCGM in the U.S. while we are not providing a forecast for FDA timelines, we do have expectations for reaching that milestone. Additionally, Libre 2 is already available in Europe.

That was very comprehensive, and I'll give you a second to think about it. My follow-up is on Libre 2. You mentioned iCGM. Can you discuss your confidence in obtaining that? I also want to inquire about the payer dynamics. In the last call, you mentioned some preferential co-pays. Can you share any updates regarding the payer side in terms of support for Libre?

Yes. Regarding Libre 2 in the U.S., we understand the iCGM standards and what is required to meet them. We filed for iCGM in the U.S. with confidence that we meet those standards. While we won't speculate on the timing of approval, we are clear about our submission and its purpose. On the payer side in the U.S., our goal has always been to eliminate obstacles, including affordability. The reimbursement landscape is evolving; we are seeing a reduction in prior authorizations, and patients are increasingly able to obtain products directly from pharmacies, similar to the blood glucose monitoring market. Our managed care strategy is aimed at facilitating this transition, focusing on access and affordability. We now have over 50% managed care life coverage in this patient population, reflected in the growing access to pharmacy. The prescription data shows this shift is taking place with Libre, which was a strategic decision to boost adoption in the U.S. by making our product available through pharmacies, a first for CGM systems. We are beginning to establish this trend within the pharmacy sector.

Matt, I know you guys like that. You can track publicly. You can track that every week. And we've been pretty pleased with the performance going through pharmacy. The patient acquisition and so forth continues to be obviously strong, frankly, right in line with our growth rates around the world, as you'd expect, because we're not trying to drive price here. We're trying to drive the volume and acquisition of patients. And obviously, that's going pretty strongly. So there's nothing but happiness about this product. I can tell you, we're pretty happy with it. It's doing really well. I actually think we're kind of in its early stages. And at this point, there's over 1 million type 1 users of Libre around the world and those only make up 2/3 of our user base. So with this kind of a growth rate, that kind of a user base with the capacity expansion coming online, we're obviously expecting this to be a continuingly big and bigger product for us.

Just a couple questions for me. One, more broadly for Miles and maybe a quick follow-up. Miles, I just wonder if you can kind of share with us how you see sort of the pacing of the year from here. I think in the fourth quarter, the messaging was core growth drivers very much intact, some one-off dynamics were suppressing growth and you expected that growth to improve in the first quarter. And sure enough, that's sort of what happened here, back in sort of the 7% range. As you think about the balance of the year, you had these core growth drivers doing relatively well, a couple of businesses probably not performing where you'd like to perform. So how do we think about the pacing of the business from the first quarter on given some of these very solid businesses and some of the businesses that are not performing as you'd like?

Every year, at the start, our earnings per share tend to begin lower and often appear back-end loaded, particularly in the third and fourth quarters. However, this pattern is starting to level out, reflecting growth and the penetration of new products. While there are some seasonal factors, they do not significantly impact our overall earnings profile. We've seen stronger performance in the first quarter in recent times, but traditionally, the third and fourth quarters have always been strong, primarily driven by the impressive growth of our new products like Alinity, Libre, HeartMate, and MitraClip. The growth we've observed in these new launches continues to improve as the year progresses. It is challenging to predict earnings precisely due to various factors, including comparisons to previous years, which can make our results seem variable. Nevertheless, our overall growth remains steady and robust. There are areas that require more attention for improvement, and while we've misjudged the speed of some enhancements, I am satisfied with our focus on areas needing improvement rather than the main growth drivers. Alinity, in particular, is performing excellently, achieving a winning rate of over 95% in accounts where we already have business and nearly two-thirds in competitive situations against established rivals. This data underscores the commitment customers must make to switch systems, as it involves a significant investment of time and resources. Winning that amount of new business is a strong endorsement of Alinity and our laboratory solutions. Growth is improving across the board, including in our Nutrition segment, where we've previously anticipated gradual improvements. Currently, its performance is solid across all regions and major product lines, and we project a future growth rate within the 4% to 6% range, which we're currently exceeding. While fluctuations can happen due to holidays and seasonal factors in certain countries, overall, the business is performing well, and management has excelled globally. Looking ahead, I am not concerned about many potential issues, apart from a couple of areas where we recognize the need for improvement. I am confident in our capability to enhance the performance of underperforming segments. However, some of these areas are taking longer to improve than I had initially expected.

Okay, Miles, very helpful as we think about the balance of the year. So I guess my follow-up would just be the other major growth driver investors are focused on is MitraClip. So by our math, it looks like the U.S. business accelerated for MitraClip even before the NCD. And I wonder if you could just sort of, A, talk about your time at the NCD, what you're seeing in the U.S. And then we had this other study, MITRA-FR, in the European business and our sense on diligence is that's maybe suppressing some performance ex U.S. So maybe time of the NCD, U.S. trends and sort of what you're seeing ex U.S. and outlook for the year.

We had a strong quarter in Structural Heart with growth across various franchises and regions. MitraClip played a significant role, and we are positioned as we hoped with it. The FDA approval came a few months earlier than expected, which reflects the positive data generated through COAPT. The labeling aligns with our expectations based on the COAPT patient enrollment criteria. We are currently working on the CMS process, which typically takes about 6 to 9 months. From our past experience with MR reimbursement, it took us around 7.5 months to secure approval, so we are confident in our ability to navigate this process. While reimbursement is crucial, it is just one of several key elements that contribute to our growth prospects over the years. Opening new centers is also essential, and we currently have about 350 implanting centers in the U.S., aiming to increase that number to around 550 in the coming years. This involves extensive training across sales representatives, centers, and implanters, with new reps usually requiring 6 to 9 months to become proficient with MitraClip. Additionally, developing and maintaining a patient referral network is vital as we raise awareness of the therapy among physicians and direct patients to our centers. We've been successfully implementing these strategies in the U.S. for four years and are proactively hiring more reps and expanding our sales force in anticipation of future growth. The mitral market presents a significant opportunity for Abbott, built over more than a decade of effort, and I expect to see continual growth as the year progresses. Regarding the MITRA-FR study, it did affect some European markets, particularly in France, which temporarily impacted implant rates there. However, we believe this is a transition rather than a fundamental shift in the European market, and we are also targeting other large international opportunities, like Japan, to boost growth. We expect the international segment to continue thriving, with the effects of the Mitra-FR study becoming clearer in the coming quarter.

Just have 2 pretty direct questions here. One more to focus on the growth drivers. On Alinity, a question on the U.S. launch. When do you think we'll see the full impact of that launch in the U.S.? When does that really show up in results in a meaningful way?

Bob, I'd say show up, we expect to get the almost full menu by the end of this year. Now that's kind of a running thing and we don't want to put a whole lot of effort out until we've got significant menu. We do have significant menu now, but we'd like to get more of it approved and then go. So I think you'll start to see the U.S. show up in the numbers really in 2020 because even if we were launching now, I think you'd be hard-pressed to see it relative to the size of the business worldwide. We're growing at 9% right now in the U.S. without much emphasis on Alinity. So I'd say you're probably going to see a measurable impact from it in 2020. But frankly, right now in the U.S., growth rate is pretty high even while we expand that menu.

Okay. And then the other question I just wanted to ask, obviously, you've got a lot of growth drivers that are driving really strong results in devices overall. One thing that's been a little weak is on the neuromod side the last couple of quarters. So I guess my question on neuromod is, do you think the weakness in the U.S. is related to a slower market at all? Or are these Abbott-specific issues? And when do you think we could expect a turn?

That's a great question. I somewhat anticipated this inquiry. I take responsibility for the speed at which I projected our performance turnaround. There is an apparent issue with Abbott and our own management, which I've acknowledged before. I believe we underestimated the pace of our performance improvement, particularly as we are increasing our sales force by 40% to 50%. This expansion has been a bit more disruptive than we anticipated. However, I remain confident in our business, management, and the direction we are heading. I recognize that I misjudged the timing, but I do not view this as a sign that the business is fundamentally broken or damaged, because it is not. I am optimistic about our prospects. Regarding growth, I don't see us achieving a high double-digit growth rate, but we are still on track for double-digit growth. Maintaining this level of growth in the medical devices sector, especially as we establish ourselves in some markets, is quite healthy. We are not losing confidence in the segments or their growth potential. I would place our growth within the double-digit range, which is what we anticipate. It is not a 50% growth, but it’s also not as low as 5%. Our performance in this particular segment is indeed below what we believe it could be. In terms of market slowdown, it is not at a 50% decline. Slow is a relative term, and any double-digit growth is something I view positively, and I consider this a healthy market.

Miles, a couple of product-related questions starting with Rhythm Management and Heart Failure. U.S. Rhythm Management was a little soft. Was that market-related or Abbott-specific? And I understand you made some management changes there. How quickly can you turn that around? And secondly, in Heart Failure, that was obviously very strong. Could you talk about the sustainability of that? And I had one follow-up.

In our Electrophysiology business, we experienced a growth rate of about 6% in the U.S., whereas international growth reached 20%. This situation is not due to market conditions; rather, it relates to Abbott as we prepare to launch our new ablation catheter, TactiCath SE, in the U.S., which has already been launched outside the U.S. We saw some inventory depletion of the older product in preparation for the new one. We anticipate a return to double-digit growth in the U.S. for the Electrophysiology segment. In the CRM segment, we faced disappointment and are focusing on improvement. While there has been some recovery in international markets, we are not satisfied with our U.S. performance, which is a crucial area for us. Our dedicated EP and CRM teams have proven effective internationally, leading to better performance in both CRM and EP. Recently, we implemented organizational changes to enhance our focus, establishing a more stand-alone vertical business unit for CRM. We believe this will boost accountability and focus in the U.S. commercial field. We have several new product innovations, including our next-generation ICD and two leadless programs, and this new structure will ensure they receive the attention they need.

In Heart Failure, our sales increased by 23%. In the U.S., sales rose by 26%, primarily due to the rapid share capture we achieved in destination therapy, supported by strong execution from our commercial team, which gained about 20 share points in that quarter. We anticipate that this share will be maintained. The product has performed exceptionally well, not only in our traditional Abbott accounts but also in competitor accounts. We believe that Heart Failure has significant potential for growth throughout the year, especially with CardioMEMS, which, while a smaller product, continues to perform strongly.

That's very helpful. And just lastly for me, Miles, as you pay down more debt, we're starting to get more questions on capital allocation. Can you please provide us with your latest thoughts, especially as it relates to M&A? When can we expect to see a pickup in M&A?

You're welcome. First of all, I believe the company has excelled in managing cash and reducing debt. It's been somewhat unprecedented considering the amount of debt we initially had. Following the St. Jude and Alere acquisitions, we were around $28 billion in debt, and we’ve since paid down over $10 billion, with nearly $8.5 billion repaid last year and an additional $0.5 billion in the first quarter. Our net debt-to-EBITDA ratio is now around 2x, down from approximately 4.3 after completing those acquisitions. We aim to reach about 1.5x by year-end, which reflects a rapid paydown. We want to continue reducing our debt, especially since we have strong cash flow and several options available. We increased our dividend by 14% last December, targeting it at around 40% to 45% of EPS, and currently we're at about 40%. While our EPS is growing quickly and might lead to a dividend adjustment, we are also mindful of share purchases. We've primarily bought back shares to offset dilution, but it's not a significant use of our capital. We've heavily invested internally in growth with Alinity and Libre capacity expansions, which are high-return capital uses, and we have solid cash flow. Regarding your question, we possess strategic flexibility and strong cash flow, giving us choices. However, I'm not currently seeing robust acquisition opportunities that align with our strategy. Right now, our focus is on executing our internal growth plans, which takes up about 95% of our attention. We are always monitoring other opportunities, but the market doesn't seem rich with attractive targets at the moment. One of our upcoming challenges will be capital deployment, as we expect to generate considerable cash and profit in the coming years. We aim to invest or return this capital to shareholders at the best possible rate. If M&A opportunities arise that align with our company’s strategy, we’re prepared to act, but I haven’t encountered compelling prospects recently.

Congrats on a nice start to the year and thanks for taking my question. So maybe I'll start one on the guidance, and I have a follow-up. On the guidance, Miles, MitraClip approval came in earlier. I know in the last call you said you're not expecting any inflection in MitraClip, but it looks like there might be some contribution in the back half. And I think FX assumptions changed modestly. It's slightly better. We had a I/IIb. Nutrition coming in better. I'm just curious on the guidance not being tweaked or changed. I know it's not your style, but I'm just curious on your guidance for the year.

Thank you for the question, Vijay. You touched on it when you mentioned it's not my style. I typically do not raise in the first quarter. If I were to do so, it would lead me to question why I didn't include it in my original plan a few months prior. I usually wait until mid-year to consider raising, especially since we've experienced volatility in past years around this time. However, I don't anticipate that this year. I'm not an expert in forecasting currency exchange rates. Like many companies, we remain cautious about various factors such as China trade, exchange volatility, oil prices, and Brexit. Currently, oil is nearing $70, and while Brexit concerns are significant for some, I believe businesses have adapted to many of these challenges. The primary reason we didn't consider raising in the first quarter is simply that I don’t typically do it then. We're off to a strong start, and as I've mentioned before, our growth strategy remains solid. I’m not seeing any threats to our growth vehicles. Despite some speculation about a slowdown in the med tech or medical devices sector, I'm not observing that myself, and I think many of my peers in the industry would agree. In fact, I notice projected growth rates increasing among competitors, which indicates a healthy outlook for the industry. There are many aspects that remain unchanged, and we've navigated these challenges effectively. While some may believe we could have raised in the first quarter, I prefer a more cautious approach and typically wait until mid-year to assess. I'm pleased with the company's performance and believe we have an exceptionally healthy pipeline across the board. I have no negatives to report; it just feels like it's too early in the year to make such decisions. That's my honest perspective.

That's fair enough, Miles. This is related to the macro environment, not the fundamentals. We are getting a lot of questions about the sector's fundamentals and their sustainability. Specifically for Abbott, can Libre become a product that generates over $5 billion for you in the long term? I'm asking this because of the concern for sustainability. I think you provided some figures on MitraClip regarding its total addressable market. For Libre, you mentioned that it's a multibillion-dollar product, but I'm curious if the Libre 2 submitted to the FDA is the same as the Libre 2 in Europe or if the algorithm was altered for the U.S. submission.

It's a similar product. Vijay, this is Robert. It's a similar product. It's just got a different label.

And on the TAM for Libre, can this be north of $5 billion for you guys longer term?

We've always viewed this as a significant opportunity, especially considering the number of diabetic patients globally. The technology has a more pronounced effect on insulin users, whether they are type 1 or type 2 and rely on traditional injection methods. There are about 40 million such patients worldwide, with 20 million in emerging markets and the rest in developed markets. Therefore, we believe this represents a multibillion-dollar opportunity. The potential could range from $2 billion to $5 billion or even more, based on these patient segments and numbers, which are substantial.

Vijay, I'd add a couple of things to that. We're investing in capacity expansion accordingly. But there's sort of more to the story. As you know, there's a Libre 2 in Europe. There's a Libre 2 under review in the United States. There's a Libre 3 in development and has been in development for some time. And there's a lot of potential for expansion of this product to other analytes besides glucose or additional analytes to glucose for the diabetic. There are other improvements that we can make in the product. All of that is in development. We know this platform well. It is a platform. It is not just a glucose test kit. And so there's, I guess, what I'll call an R&D development innovation strategy with it that is underway, has been underway. Our capacity expansion plans are well planned. We've already got almost 1.5 million users of Libre. And to be honest, we haven't exactly let the floodgates go. So I think you can kind of back into the math of that. This product is already great. Look, it's probably $1.5 billion or more in sales more and it's growing at 80%. So it doesn't take very long to figure out the math to what you just asked.

Miles, one follow-up on Bob's neuro question. We've seen new product launches drive momentum for a number of companies in that market over the past couple of years. You guys really haven't talked much about your pipeline there. Are there new products coming that could help turn that segment around? Or is it really just a matter of letting the dust settle on the sales force expansion?

Well, I'd say it's kind of like when you've got some issues with your own commercial execution and your sales force and you know you got to go fix them, it's kind of like ducking the question to go talk about your pipeline. So my own thought has been let's just address the sales force answer and not try to dodge and weave here about our own execution, which we admit we can do better and we're going to do better. Now having said that, yes, is there a pipeline in development? Robert?

Yes. So to that point, we also know that our first and foremost priority is the field execution. We also know that innovation and evidence also has an impact on our ability to kind of grow. So we've doubled our R&D investment in this business since taking it over about 2 years ago. And I do expect to see 2 new systems in the pain area come to market towards the end of this year or beginning of next year, and I think that will have a positive impact, obviously, ensuring that our sales force is getting up to speed and doing what it needs to do. Evidence is also another important driver here. So we do have trials that we're investing and working on for differentiated claims, whether it's pelvic pain or a pre-back surgery kind of claim. So your point of, yes, we are investing, we have to make sure we address the field force, but we do have a pipeline here that we know we're going to need to be able to have a sustainable double-digit growth business.

That's helpful. And then my last one, just Structural Heart, already a bright spot for the company today and feels like it has the potential to get even better as the pipeline there matures. Can you just go through the latest thinking on Tendyne in Europe, which we should be getting relatively close to here, and then also Portico in the U.S.?

Yes, I believe that's a promising area in our device portfolio. We've invested significantly in this sector. We've mentioned triclip, which we expect to see towards the end of this year. Regarding Tendyne, we filed for CE Mark last year, and we are on track to launch it by the end of this year. Additionally, we have a fourth-generation MitraClip product expected to be released in the second half of this year, which we're looking forward to. As for TAVR, we anticipate Portico to be available in the U.S. in the first half of next year.

Okay. Well, good. 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 11:00 a.m. Central Time today on Abbott Investor Relations website at abbottinvestor.com. Thank you for joining us today.