Abbott Laboratories (ABT) — Q1 2023 Earnings Call Transcript

Good morning, and thank you for joining us. With me today are Robert Ford, Chairman 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 2023. 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 Form 10-K for the year ended December 31, 2022. 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. 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. Note that Abbott has not provided the GAAP financial measure for organic sales growth on a forward-looking basis because the company is unable to predict future changes in foreign exchange rates, which could impact reported sales growth. Unless otherwise noted, our commentary on sales growth refers to organic sales growth, which is defined in the quarterly results press release issued earlier today. With that, I will now turn the call over to Robert.

Thanks, Scott. Good morning, everyone, and thank you for joining us. Today, we reported strong results to start the year. First quarter adjusted earnings per share were $1.03, which is above consensus estimates, driven entirely by strong underlying base business performance, excluding COVID testing. Organic sales growth, excluding COVID testing, increased 10%, led by double-digit growth in Medical Devices, Established Pharmaceuticals and Nutrition. As you'll recall, back in January, I expressed some optimism that the headwinds Abbott and other companies faced over the last few years were starting to peak and in some cases ease a bit. As we move through the first part of the year, that's exactly what we continue to see. Most notably, the impact of COVID has rapidly and significantly lessened. As part of this transition, certain behavioral shifts have been evident across society. One simple illustrative example has been the significant increase in travel and tourism we've all seen, heard about or experienced firsthand. A much more relevant and important behavioral shift that we're seeing in health care globally has been the increased priority people are putting on getting healthy and staying healthy. And for our businesses, the impacts have been increased routine diagnostic testing volumes, improved medical device procedure trends and strong demand for consumer-based health products. The net result this past quarter was strong, broad-based growth across our portfolio. Importantly, this growing focus on health adds to and enhances other favorable demographic trends such as a global population that's growing older and living longer and increasing access to health care around the world. The combination of these favorable market dynamics, along with the strength of our growth platforms and new product pipeline provides a strong foundation for sustainable, top-tier growth going forward. I'll now summarize our first quarter results in more detail before turning the call over to Bob. I'll start with Established Pharmaceuticals, or EPD, where sales increased 11% in the quarter. This continues EPD's impressive stretch of consistent strong performance, including double-digit growth each of the last two years. Growth this past quarter was led by strong performance in Brazil, China and Southeast Asia and across several therapeutic areas, including cardiometabolic, gastroenterology, CNS and pain management. Turning to Nutrition, where sales increased more than 10% in the quarter. In the U.S., Pediatric Nutrition growth of more than 35% included the impact of lower sales in the first quarter of last year due to a voluntary recall of certain infant formula products. We continue to make good progress, increasing manufacturing production and recovering market share in this business. Internationally, total Nutrition sales grew mid-single digits overall, and sales in global Adult Nutrition also grew mid-single digits, driven by strong performance of our market-leading Ensure brand. Moving to Diagnostics, where, as forecasted, sales growth was negatively impacted by a significant decrease in COVID testing sales compared to the first quarter of last year. Excluding COVID testing, organic sales growth was led by mid- to high single-digit growth in Core Lab, Rapid and Point of Care Diagnostics. In Core Lab Diagnostics, growth was led by strong performance in the U.S. and Europe, which was partially offset by soft market conditions in China early in the year, though we're seeing improving market demand over the last several weeks. Excluding China, Core Laboratory Diagnostics sales grew nearly 8% globally. I'll wrap up with Medical Devices, where sales grew 12.5% globally on an organic basis, including mid-teens growth in the U.S. and double-digit growth internationally. In Diabetes Care, sales of FreeStyle Libre grew more than 25% on an organic basis in the quarter, including approximately 50% growth in the U.S. and mid-teens internationally. During the quarter, Libre received U.S. FDA clearance for connectivity with automated insulin delivery systems. We're working with leading insulin pump manufacturers to integrate their systems with both Libre 2 and Libre 3 as soon as possible. In cardiovascular devices, sales grew more than 8% overall in the quarter. And impressively, the organic sales growth rate improved sequentially compared to the prior quarter in every one of our cardiovascular device businesses. This broad-based strength was led by strong double-digit growth in Heart Failure and Structural Heart. In Heart Failure, sales of CardioMEMS grew more than 30%, which represents the third quarter in a row that CardioMEMS sales have grown more than 25%. In Electrophysiology, performance was led by high teens growth in Europe, including strong, broad-based performance across the big five European countries, driven by cardiac ablation catheters and mapping systems. In Structural Heart, growth was led by double-digit growth of MitraClip, along with strong contributions from three recently launched products, Amulet, Navitor and TriClip, which combined to grow nearly 50% in the quarter. Lastly, in Neuromodulation, sales grew 11%, driven by a recent launch of Eterna, our first rechargeable neurostimulation device for pain management, which targets a large segment of the market where we didn't previously compete. So in summary, we're off to a very good start to the year, exceeding financial expectations on both top and bottom lines. The strong performance we're achieving is broad-based and fueled by strong execution, new products and improving market conditions. Our core foundational growth platforms have strong momentum and are achieving exceptional results, positioning us well for top-tier growth going forward. And now I'll turn over the call to Bob. Bob?

Thanks, Robert. As Scott mentioned earlier, please note that all references to sales growth rates, unless otherwise noted, are on an organic basis. Turning to our first quarter results. Sales decreased 14.5% on an organic basis due to, as expected, a year-over-year decline in COVID testing-related sales. Excluding COVID testing-related sales, underlying base business organic sales growth was 10% in the quarter. Foreign exchange had an unfavorable year-over-year impact of 3.3% on first quarter sales. During the quarter, we saw the U.S. dollar strengthen somewhat versus several currencies, which resulted in a slightly more unfavorable impact on sales compared to exchange rates at the time of our earnings call in January. Regarding other aspects of the P&L, the adjusted gross margin ratio was 55.9% of sales, which reflects flow-through impacts from the elevated inflation we experienced last year on certain manufacturing and distribution costs as well as an unfavorable impact from foreign exchange. Adjusted R&D was 6.4% of sales and adjusted SG&A was 28.3% of sales in the first quarter. Lastly, our first quarter adjusted tax rate was 14%. Turning to our outlook for the full year, we now forecast total underlying base business organic sales growth, excluding COVID testing sales, to be at least high single digits. We're now forecasting COVID testing-related sales of around $1.5 billion, which is below the full year forecast of approximately $2 billion we provided in January due to current testing dynamics we're seeing in the market. For the second quarter, we forecast COVID testing sales of around $200 million. Based on current rates, we expect exchange to have an unfavorable impact of a little more than 1% on full year reported sales, which includes an expected unfavorable impact of a little more than 2% on second quarter reported sales. Lastly, our full year adjusted earnings per share guidance of $4.30 to $4.50 remains unchanged, but now reflects a lower earnings contribution from COVID testing sales compared to expectations in January, offset by raising our underlying base business earnings forecast by a little more than $0.10 based on our strong performance and outlook. With that, we'll now open the call for questions.

Congratulations on a nice start to the year. So Robert, you raised the base business organic growth and held EPS flat despite lower expected COVID testing sales. Can you please provide more color on the trends you're seeing across your businesses and geographies that allowed you to maintain EPS? And how does that feed into 2024? It sounds like you're thinking more about the base business, excluding testing going forward? And I have one follow-up.

Sure, Larry. You summarized things well. We have lowered our COVID forecast from $2 billion to around $1.5 billion, while still keeping our previous guidance. This change is due to stronger performance in our core business. It's encouraging that our base business has increased by just over $0.10, which helps offset the decline in COVID testing. As I mentioned earlier, we saw signs of improvement back in January, particularly in our devices segment, where hospitals and systems were starting to manage staffing shortages. In terms of inflation, while not all commodities have improved, some are beginning to show positive trends. This has contributed to better sales in our core business, with improved diagnostic testing and more procedures being conducted. If you look at the trend of procedures throughout the quarter, particularly in cardiology, we saw around 8% growth, and by March, the growth was in double digits. The reopening of China in January created some challenges, but we observed broad-based improvement across our Diagnostics and Devices sectors in the U.S., Europe, and Asia, with notable performance in Japan as well. This gives us confidence in our current trajectory. We anticipate at least high single-digit growth for our core business due to our strategy of reinvesting some of the revenues and profits from COVID into the core business. This allows us to accelerate growth without needing additional funding. So far this year, we have seen strong performances in Devices, EPD, and Nutrition, indicating a robust start to the year that we believe is sustainable. Although we will continue to strive for more, this is a solid foundation. Regarding your question about 2024, I understand the concern. Typically, our first call focuses on the upcoming year due to COVID uncertainties. While I won't provide specific guidance now, we're expecting EPS to be just over $4 this year with a planning basis of double-digit growth. We forecast very strong double-digit growth this year by making smart investments and leveraging our operations without requiring significant additional investment to achieve earnings growth. As we look ahead to next year, our goal remains strong double-digit EPS growth, starting with solid revenue growth. I am confident in our growth drivers and their sustainability, as well as our investments and execution. We need to continue our focus on revenue growth while also improving our margins. These are the key elements as we approach 2024, targeting that double-digit growth alongside revenue and margin expansion.

That's super helpful. Just for my follow-up, Robert, Cardio and Neuro was strong this quarter at about 8.5% organic. Can you talk about the trends there and the sustainability of that? There's still concerns in the investment community about your EP business with PFA competition coming.

Sure. I think the trends in the quarter were very positive due to a combination of improving conditions. Hospital systems have managed through staffing shortages well, and we're beginning to see the benefits of that. Additionally, our product launches and their execution have been broad-based across various regions. The only challenge we encountered was in January in China, but we're now seeing significant growth in that market as well, which seems sustainable. Regarding your question about PFA, it is an interesting technology we've been developing for several years. We've kept a low profile on this, driven by my directive to the team, but we plan to share more at HRS this year. One advantage of having a large installed open mapping system is that we can observe these systems in real-world use, which serves as an excellent product development tool. Our focus in developing our program has been on addressing gaps and challenges in first-generation catheter systems. The work the team is doing is unique and differentiated. I don't believe PFA will be the singular solution; rather, it will be an important tool. We are working on our system, and I think the companies that will succeed in this space are those that can effectively integrate PFA along with RF. There are still some questions that need to be addressed in the next 12 to 18 months, particularly around safety and efficacy, as we are seeing varied signals in different markets. We need to observe how this product performs across different cases and patient types. One major question about PFA is whether it can actually improve real-world procedure times. That's a significant concern based on our observations. Additionally, with the pressures on health systems, we need to evaluate whether a 3x to 4x premium on RF is sustainable. Ultimately, I believe our cardio device portfolio is well-developed across various growth opportunities. PFA is going to be an important technology that we're working on and investing in as a second-generation product.

Congratulations on the strong start to the year. I have a question and a related follow-up. Rob, could you help us understand the core gross margin and operating margin trends in the business, especially with the decline in COVID testing volumes and the significant margin contributions we've seen over the past couple of years? I'm interested in the factors driving the expansion of gross and operating margins. Before COVID, we anticipated that an increase of up to 50 basis points in operating margin was attainable for your business. Could you also discuss the potential trajectories and any levers you can use to support a double-digit EPS growth path in 2024, particularly in light of any unexpected challenges that may arise? I have one related follow-up as well.

Sure. I believe it starts with increasing our top line, particularly from our medical device portfolio, which contributes positively to our overall margins. The growth drivers include our Structural Heart portfolio, the EP portfolio, Libre and Diabetes, as well as a recovery in Nutrition. All of these areas are crucial for boosting our top line growth and enhancing our margins. One challenge we've encountered is the effect of inflation on our input costs, though I think some of those costs are beginning to stabilize. Last year, our priority was to secure access to raw materials, which led to elevated prices that we had to manage. I expect some of these issues to ease over time; however, it won’t be an immediate fix. We anticipate steady improvement over the next couple of years. We have been able to implement price increases where possible to counteract some input cost rises, but the main focus must remain on growing our top line through our device portfolio which drives margin enhancement, along with our gross margin improvement programs that we monitor regularly in our operating meetings. These two factors together give us confidence in achieving margin expansion.

I was on mute. I apologize. I wanted to just, related follow-up, you already touched on taking price, Rob. And would love to hear mostly on the device business, how pricing is shaping up in 2023. But also, if you could touch on any other businesses where price is turning into a tailwind for your business that would be great to hear.

Yes. I think on price, we've historically, as a company, our high single-digit growth really driven by volume, whether it’s expanding markets or taking market share. I’d say on the device side, pricing has historically been a headwind for us. I’d say, over the last 12 to 18 months, it hasn’t been one. So we’ve been able to at least hold pricing; I wouldn’t say gone out and did big pricing increases, but at least being able to hold pricing. I’d say more on the consumer side of the business, Josh, is where we’ve been able to kind of take price. If you look at our Nutrition business, we haven’t been able to offset 100% of the commodity increase, but we’ve been able to apply some price increases globally across the portfolio. In our Established Pharmaceutical business, there are segments of the market where it is more kind of cash pay. And we’ve been able to implement pricing increases there. I think the team in EPD has done a pretty good job at how to implement those and still have good share positions across our therapeutic areas. So those are probably the areas that we’ve been able to implement pricing increases. And to your point on tailwinds, if we start to see the commodities and some of the input costs come down, especially these more consumer-based businesses, I think the strength of our brands, whether it’s in Nutrition or in EPD, there’s an opportunity there to have that kind of tailwind.

Great. Congrats on a nice quarter here. Maybe to start, Robert, we just saw you get approval earlier this week for Medicare reimbursement for type 2 patients that use basal insulin for Libre 3. Clearly, a really big opportunity. But would love to get your thoughts on, first, how this impacts Abbott. And then broader how you see improving reimbursement, both in the U.S., around the world evolving over the next few years and the benefit it could add to the Libre business?

Sure, Robbie. I've talked about how this is an important part of the growth strategy and an important part of the market opportunity for CGMs as a whole. We’ve been investing and generating the clinical data to be able to kind of support this. So this is a great opportunity for us. I'd say I talked about, there's about 4 million type 2 basal insulin users here in the U.S., about one-third of them are on Medicare. So it will start there. I think we built a robust position in this patient segment, and that includes not only the clinical data that we produced, but building a sales force that's focused more on the primary care side. I think the product lends itself very well to this patient population. So I think we're excited about the opportunity. I think I've sized it at about $1 billion plus in terms of opportunity in the short term here. And as the CMS reimbursement starts to play out, we know that there will be eventually a spill onto private payers here in the U.S. It's difficult to forecast that because each plan will look at its own population and make its own determinations. But I think that provides a nice tailwind of growth over the next couple of years for this franchise. And I don’t think it’s just a U.S. situation. We’re seeing other countries around the world also start to expand the reimbursement. It’s a combination of both the clinical data that supports the use of CGMs on this patient group and also specifically, I’d say, for FreeStyle Libre the value proposition in terms of being able to support a larger group of patients have the benefits without necessarily having to have a significant premium, I guess, call it over that. So we’ve seen markets outside the U.S. already kind of do that, and we’re seeing good results in terms of its implementation. So I think it’s a great opportunity for the category and more specifically for Libre.

Great. And maybe a quick follow-up here. Structural Heart faced challenges throughout the pandemic, yet we are now seeing impressive double-digit growth from you. Can you discuss whether this indicates the beginning of a strong recovery? Is there anything from this quarter that seems sustainable? Additionally, you presented some promising TriClip data at ACC earlier this year. What are your thoughts on how that might develop over the year?

Yes, we have consistently evaluated our Structural Heart portfolio over the last three to four years and have made significant investments in developing our product pipeline and expanding our global commercial infrastructure. This area is definitely growing. The entire portfolio appears robust, durable, and sustainable, whether it’s our position in mitral, our efforts in the tricuspid area, or our entry into the aortic space with Navitor, which is gaining good momentum. The launch of Amulet adds to our strong pipeline of products and commercial presence. This quarter demonstrates that it is fulfilling our expectations as a major growth contributor to Abbott. Regarding TriClip, I share your positive sentiment about the results. It's clear we can't rely on just one study; ongoing investment in generating clinical data is essential, as we've learned from MitraClip. The rapid enrollment in the trial is promising, reflecting the acceptance and enthusiasm from physicians, especially given the limited treatment options for these patients. Traditional surgery carries a high mortality rate, and diuretics often fall short. The outcomes we observed in terms of TR reduction and improvements in quality of life are among the best seen in heart failure trials. These patients are in serious condition, and physicians are aware of this. We are pleased with the data, which has already been submitted to the FDA, and I expect CMS to review it as well. Click-based devices are likely to become the preferred option due to their strong efficacy and safety data. I am cautiously optimistic about advancing this product, and we are witnessing great growth momentum in Europe, which further supports our confidence.

Sorry for my scratchy voice, a little bit. I was hoping we could talk about Diagnostics broadly ex COVID, you're thinking about what's next, broadly for the franchise as COVID wanes. But more specifically, we haven't had an Alinity update in a while. I know this is a multi-platform, multiyear rollout process. Where are we in that process? How much more do we have to go? And any other diagnostic perspectives you'd want to share?

Thank you, Rick. I think when we consider the Alinity rollout, it's important to recognize that it's a multi-platform endeavor spanning several years. The contracts we engage in typically last between 7 to 10 years, meaning around 12% to 15% of the market is up for renewal each year. We have always viewed this as a multi-year initiative. During COVID, the focus shifted somewhat, as many hospital systems were not prioritizing RFPs for diagnostics and were more concentrated on treating patients and conducting COVID-related tests. However, we noticed a resurgence in RFPs starting around the middle of last year, continuing into the fourth quarter and into this current quarter. This is reflected in our growth rate, particularly in our Core Lab business, which is the mainstay of our Diagnostics division. Excluding the challenges faced in China, this segment grew by 7%, aligning with our typical target range of about 8%. We're excited that the process is reigniting and gaining momentum, showing promising growth both in the U.S. and Europe. Another area affected during COVID was transfusion services, with a noticeable dip in blood donations. Fortunately, blood banks had sufficient inventory to manage this period, and we are now witnessing a recovery in donations and inventory levels. This is a positive development. Specifically for our Alinity s system in blood banking, it requires considerably less manual labor thanks to its automation, which is advantageous as donation levels increase. While we could potentially grow at a faster rate, it might lead to some margin erosion due to the need for increased placements to achieve double-digit growth. Consequently, I believe maintaining our current growth rate of 7% to 8.5% is optimal for generating top-line revenue while ensuring bottom-line profitability. Our margin profile in this sector is among the highest in the industry, which speaks to the effective balance our team has achieved. Overall, while there was a temporary slowdown during COVID, we have resumed our progress, and I am confident in our systems, position, and commercial strategy in place.

Okay. That’s very thorough. As a follow-up, I wanted to focus on Nutrition, but I’m also going to sneak in a quick question about CardioMEMS. In terms of Nutrition, it’s great to see the 10% performance and the strong recovery in the U.S. It sounds like you’re making solid progress. What’s next? When do you think we will return to normal, and what does the new normal growth look like? Also regarding CardioMEMS, I’ve been following its story for over a decade back to the St. Jude days, and I always thought it was great technology. What is Abbott’s unique advantage that enables such superb performance? Where do we go from here with CardioMEMS? What’s happening?

On the Nutrition side, the team has made significant progress and has been working very hard. Our manufacturing and market recovery are meeting our expectations. I've mentioned that we anticipate growth for this business to be between 4% to 6%, likely leaning towards the higher end of that range. This is assuming everything normalizes and we move past certain comparisons. As for CardioMEMS, it's been quite a journey. We believe we have found the right strategy by making necessary investments in generating clinical data and conducting trials. We had an expansion in our labeling last year, but the most crucial aspect is our commercial execution and managing workflow within hospital systems. Collaborating with hospitals to address these workflow challenges has had a significant impact. We will continue to invest in more clinical data and product upgrades, and I feel very optimistic about this product.

Congratulations on the results this morning. I have a follow-up question for you, Robert, regarding the base EPS. From the numbers you shared, it seems that the base earnings EPS is approximately $4.10 for fiscal '23, excluding COVID testing. If we assume a double-digit growth in base EPS based on historical averages, we might anticipate something around 450 for fiscal '24. The factors to consider here include the run rate for endemic COVID testing, potential decreases in inflation, and our assumptions about capital deployment. Could you clarify whether $250 million to $300 million is a reasonable estimate for endemic COVID testing? Also, what is the extent of total gross inflation that Abbott has experienced compared to pre-pandemic levels, and which aspects of that inflation are decreasing? Is there a possibility of pricing offsets affecting capital deployment?

Sure. So I think you've got the numbers kind of in the right direction there, Vijay, if I followed all of that. And I would say, as I said, that primary driver of that is going to be the base business performance driving that growth. Regarding COVID for 2024, listen, I'm going to need to see a little bit how the testing environment evolves. We brought down the forecast for this year based on what we're seeing. I'd say there's very little public investment, I would say, in testing. So it's mostly now a private market. I think we do very well in that segment with the brand that we've built, not just here in the U.S., but overseas also. But it might be a little bit early to try and forecast what COVID is going to be next year. But I think the number you threw out there of a few hundred million dollars is maybe a good starting point. But again, we're going to have to see how that evolves during the year. Regarding your inflation question, I'm going to ask Bob to address it.

Yes, we experienced significant inflation, which we've discussed in previous calls, amounting to approximately $1 billion last year. There has been some carryover inflation into this year, but we've managed to offset it through various gross margin initiatives across our businesses, as Robert mentioned. We've also implemented some price increases in certain areas, particularly within our consumer-facing divisions. As a result, we have largely mitigated the impact of that carryover inflation this year; however, we are still facing about $1 billion, which equates to roughly 240 to 250 basis points of headwind currently affecting our gross margin.

Understood. And then sorry, Robert, capital deployment, I think CSI acquisition, people thought was on the smaller side. How are you thinking about capital deployment? And then one on product side. The Libre U.S. number, 50% was a big number. Is there anything from a competitive perspective that's going on? Is Abbott gaining share? Or is this the underlying market growth?

I’ll talk about us. I think the 50% growth is quite impressive. We have maintained this rate for a few quarters now. This is likely due to our product launch, effective execution, and market expansion. So that 50% is our growth rate. I’m not sure what the other manufacturers are experiencing, but I feel that’s strong. Sorry, what was your first question? Yes, I believe you are looking for a model from us regarding our approach. The primary focus for us is determining the best return for our shareholders. We have found that a balanced approach works best, including maintaining a strong and growing dividend while investing in our organic opportunities to promote growth. We have made these investments in areas such as Med Device, Diagnostics, and Nutrition. If an opportunity for mergers and acquisitions arises that enhances our portfolio, we will pursue it. We recently announced our intention to acquire CSI, which aligns perfectly with our strategy as it strengthens our position in the peripheral sector. This follows our previous acquisition of a thrombectomy company about a year and a half ago, and now we are adding atherectomy with CSI. This acquisition makes strategic sense as they have a solid presence in a growth area we are interested in, and we are confident we can create value from the deal, which is financially advantageous for the company. Therefore, our allocation strategy remains balanced, and we will continue to focus on providing the best return for our shareholders as we allocate capital.

Nice quarter. A couple of catch-up questions. Can you update your guidance and thoughts on interest expense, and where you are on share purchases in the quarter and plans for the year? And I'll toss my real question in. EPD, another quarter of double-digit growth, what is driving that? And in your view, how sustainable is that in a potentially recessionary environment?

I will address the EPD question. We've been working in this space for many years and have established a solid position in the global pharma market, focusing on fast-growing emerging markets with a branded generic emphasis. Our approach here is distinct from that of proprietary pharmaceuticals and differs from pure generics as well. What you see now is an organization that has identified the optimal strategy to execute this plan, which is reflected in our results over the past few years. We emphasize a local approach, selecting the right markets, and developing relevant portfolios through local R&D and manufacturing, which has proven successful. The team has effectively driven profitability, not just in revenue but also in net income. One challenge has been foreign exchange, yet this team has excelled in achieving absolute dollar profit growth. They have mastered not only portfolio management but also channel integration, leading to a unique model that they understand well. Geographically, we've seen significant growth in Southeast Asia, Latin America, and India, where we have a substantial presence. Overall, this strategy is working effectively and appears sustainable given the market dynamics.

Yes. So Joanne, in terms of kind of net interest expense for the year, we're forecasting a few hundred million dollars there. And then you had a question on share buybacks. As you know, historically, we do buybacks to offset dilution. And so we did some buybacks in the first quarter, again, a few hundred million dollars' worth of buybacks.

Operator, we can move on to the next question.

Just a question on specifically two components of the Structural Heart business. The first being MitraClip. Robert, just curious about what you’re seeing in that market. That was a market that was severely impacted by both COVID mortality and hospital staffing constraints. Just curious about where you think we are in the recovery specifically in that market? You did seem to put up another decent growth quarter this quarter. And then I have one follow-up on Amulet.

I believe we experienced double-digit growth during the quarter, driven by sustained international momentum. This presents a great opportunity for us to expand our technology globally. Our new manufacturing site, which we've recently invested in and is now operational, will facilitate this international expansion. I view this as a significant growth driver. Additionally, there has been a recovery in the U.S. Some systems have learned to manage the staffing shortages, and our teams are contributing to this effort. I am cautiously optimistic that the issues affecting the ramp-up of MitraClip have been addressed. We are continuously working on enhancing the patient referral funnel, which had previously faced challenges. I am beginning to see positive progress in building those patient referral channels.

Okay, that's great. And then on Amulet, the question I have there is really about where you think you are in the launch. I mean that's a product that very high growth market. But let's be honest, you launched, I think, that product during Omicron right? So just curious about how you would characterize where you are in the launch of Amulet.

Yes, things are progressing well. We’ve seen a good ramp-up, although I had hoped for a steeper increase. One of the hurdles we’re facing is launching a product during the pandemic, as we experienced with a few other products. However, the team has done an excellent job of thoughtfully establishing a robust and sustainable market presence. We haven’t launched across the entire market yet, but in the accounts we have entered, we’re seeing approximately 25% market share. This serves as a solid foundation, and we’re noticing repeat usage and expansion within these accounts. As we continue to observe this momentum, we will look to expand into new accounts. This area is indeed exciting for us. While I would have preferred a more rapid launch, I remain optimistic about the product, the team, and the position we’ve established. We are also investing in this area, as evidenced by our CATALYST trial, which is enrolling well and comparing Amulet to NOACs. This presents a significant opportunity for growth and investment.

Operator, we'll take one more question.

Thank you for fitting me into the schedule. You covered a lot of important points. Robert, I would like to follow up on your comments from this morning, which seemed to convey a more optimistic outlook regarding what you've observed in the first quarter. It's clear that investor expectations have also increased during Q1 as reports came in. Can you clarify if you view the current situation as a volume recovery, or if it's related to the idea of a backlog that may be strong now but could weaken later in the year? Alternatively, are you noticing a more general trend of increased productivity and volumes that might be sustainable?

Yes, I have traveled quite a bit during this first quarter and I mentioned in my opening remarks. From my conversations with systems and consumers, not just in the U.S. but globally, there's a noticeable focus on health now that COVID is behind us. People are expressing a desire to maintain or improve their health. I hear many saying they've delayed procedures not due to COVID or backlog, but because they’ve been postponing them for a couple of years and want to finally address these issues. On the consumer side, whether it’s our EPD or Nutrition products, there is a greater willingness to spend disposable income on health products. I don't view this as dealing with a backlog but rather as an increase in interest in health investments. While some areas may have minor backlog issues, we generally collaborate with systems to plan procedures effectively, allowing us to gauge demand accurately. What I see is an increased interest in health rather than any significant backlog. On another note, systems have adapted to staffing challenges in diagnostics and cardiac procedures, utilizing technology and partnerships to address labor shortages. This trend appears to be sustainable. Companies reporting yesterday indicated growth in procedural changes, further confirming this sustainability. As I mentioned earlier, we are off to a strong start this year, with accelerated growth in our underlying base business across all product groups, platforms, and geographies. We are forecasting at least high single-digit growth in our underlying base business for the year. This growth profile is unique and differentiated, stemming from improved market conditions and a highly productive new product pipeline. We are pleased with our start to the year, and thank you for joining us.

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's Investor Relations website at abbottinvestor.com. Thank you for joining us.