(Reuters) - Abbott Laboratories (ABT.N) said it planned to focus on slashing its debt and integrating its $25 billion acquisition of St. Jude Medical in 2017, in a break from the hectic pace of dealmaking last year
The company in 2016 also agreed to buy Alere Inc ALR.N for $5.8 billion and to sell its medical optics division to Johnson & Johnson (JNJ.N) for $4.3 billion as it sheds its slow-growth, low-margin businesses and fortifies its presence in cardiovascular devices and diagnostics.
Abbott will also hold back on share repurchases, Chief Executive Miles White said on a post-earnings conference call on Wednesday.
The company, which is looking to abort the Alere deal, took on $15 billion in debt to finance the St. Jude deal and also assumed the heart device maker’s debt.
Abbott reported fourth-quarter sales just shy of estimates, largely due to a strong dollar and waning demand for its nutrition products in China.
Global sales of nutrition products, which account for roughly a quarter of Abbott’s net sales, fell 3.7 percent to $1.73 billion in the quarter, including a 1.1 percent hit from a strong dollar.
The decline was mainly due to changes in food safety regulations in China that require manufacturers to reregister their baby formulas with the government.
This has caused an oversupply in the Chinese market, White said, adding that nutrition growth in the country will be relatively flat in the first quarter but improve over the course of 2017.
Abbott also forecast first-quarter adjusted earnings from continuing operations in the range of 42 cents to 44 cents per share, below the average analysts’ estimate of 50 cents.
The forecast reflects continued weak nutrition and getting St. Jude up and running, but these are transitory issues, Edward Jones’ analyst John Boylan said.
St. Jude’s traditional cardiac rhythm management (CRM) business, which sells pacemakers and defibrillators, continued to struggle in the quarter, as it loses out to rivals with MRI-compatible devices in the United States, Abbott said.
Similar approvals for St. Jude are expected shortly, the company said.
Abbott also forecast 2017 adjusted earnings from continuing operations in the range of $2.40-$2.50 per share. Analysts on average were expecting $2.46.
The company’s net sales of $5.33 billion in the fourth quarter ended Dec. 31, came in just below the Thomson Reuters I/B/E/S estimate of $5.38 billion.
Abbott’s shares were marginally down at $40.50 in afternoon trading, recovering from a drop to $39.25 earlier on Wednesday.
The stock was the biggest drag on the S&P 500 healthcare index .SPXHC.
Reporting by Natalie Grover in Bengaluru; Editing by Sriraj Kalluvila