What changed in this filing

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Item 1A. Risk Factors

2024-02-16 compared with 2023-02-17 · 55 added, 54 removed, 151 unchanged (42% of the section changed)

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Abbott’s operations and performance depend on its ability to manage its large and complex global supply chain.

The COVID-19 pandemic has contributed to global supply chain disruptions, which have adversely impacted the cost and availability of certain raw materials, supplies, and services.

While Abbott has taken actions to offset some of these inflationary pressures in its supply chain, Abbott may not be able to completely offset all the increases in its operational costs.

Further, Abbott has experienced, and may continue to experience, availability issues with some services, operations, and materials used in its products.

To date, Abbott has been able to manage the various supply chain challenges without significant supply disruption or shortage for services, raw materials and supplies.

The future extent to which supply chain disruptions may have a material effect on Abbott’s operating results is uncertain.

A more detailed discussion on the supply chain disruptions impact on Abbott’s business is contained in the “Financial Review” section in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report.

While Abbott has taken and will continue to take actions to mitigate the risks of disruptions to its global supply chain, disruptions to it could negatively affect Abbott's results of operations.

For example, the COVID-19 pandemic and macroeconomic conditions such as inflationary pressures and labor shortages contributed to global supply chain challenges over the last few years, which adversely impacted the cost and availability of certain raw materials, supplies, and services.

A discussion on the global supply chain challenges and its resulting impact on Abbott’s business is contained in the “Financial Review” section in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this report.

Abbott may acquire other businesses, license rights to technologies or products, form alliances, or dispose of or spin-off businesses, which could cause it to incur significant expenses and could negatively affect profitability.

From time to time, Abbott pursues acquisitions, licensing arrangements, and strategic alliances, or dispose of or spin-off some of its businesses, as part of its business strategy.

From time to time, Abbott pursues acquisitions, licensing arrangements, and strategic alliances, or may dispose of or spin-off some of its businesses, as part of its business strategy.

Abbott may not complete these transactions in a timely manner, on a cost-effective basis, or at all, and may not realize the expected benefits.

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These effects could cause a deterioration of Abbott’s credit rating, result in increased borrowing costs and interest expense, and decrease liquidity.

Abbott depends on sophisticated information technology systems and maintains protected personal data, and a cyber attack or other breach affecting these information technology systems or protected data could have a material adverse effect on Abbott’s results of operations.

Similar to other large multi-national companies, the size and complexity of the information technology systems on which Abbott relies for both its infrastructure and products make them susceptible to a cyber attack, malicious intrusion, breakdown, destruction, loss of data privacy, or other significant disruption.

These systems have been and are expected to continue to be the target of malware and other cyber attacks.

In addition, third party hacking attempts may cause Abbott’s information technology systems and related products, protected data, or proprietary information to be compromised or stolen.

A significant attack or other disruption could result in adverse consequences, including increased costs and expenses, manufacturing challenges or disruption, problems with product availability, functionality or safety, damage to customer relations, reputational damage, lost revenue, and legal or regulatory penalties.

Abbott depends on sophisticated information systems and maintains protected personal data, and a significant cybersecurity incident or other disruption affecting these information systems or protected data could have a material adverse effect on Abbott’s business, financial condition and results of operations.

Similar to other large multi-national companies, the size and complexity of the information systems on which Abbott relies for both its infrastructure and products make them susceptible to a cybersecurity incident, breakdown, destruction, loss of data privacy, or other significant disruption.

These systems have been and are expected to continue to be the target of malware and other cybersecurity incidents.

In addition, third party hacking attempts may cause Abbott’s information systems and related products, protected data, or proprietary information to be compromised or stolen.

A significant cybersecurity incident or other disruption could result in adverse consequences, including regulatory inquiries or litigation, increased costs and expenses, manufacturing challenges or disruption, problems with product availability, functionality or safety, damage to customer relations, reputational damage, lost revenue, and fines or penalties.

Abbott also collects, manages and processes protected personal data, including protected health information, in connection with certain medical products and service offerings.

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For additional information concerning data privacy and security regulation, see the discussion in “Regulation” under Item 1, “Business.” A breach of protected personal information could result in adverse consequences, including regulatory inquiries or litigation, increased costs and expenses, reputational damage, lost revenue, and fines or penalties.

Abbott invests in its systems and technology and in the protection of its products and data to reduce the risk of an attack or other significant disruption, and monitors its systems on an ongoing basis for any current or potential threats or vulnerabilities and for changes in technology and the regulatory environment.

There can be no assurance that these measures and efforts will prevent future attacks or other significant disruptions to any of the systems on which Abbott relies or that related product issues will not arise in the future.

Similarly, there can be no assurance that third party information technology providers or other partners with whom Abbott contracts will not suffer a significant attack or disruption that impacts customers like Abbott.

Any significant breach, attack or other disruption involving Abbott’s systems or products could have a material adverse effect on Abbott’s business.

Abbott invests in its information systems and technology and in the protection of its products and data to reduce the risk of a cybersecurity incident or other significant disruption, and monitors its information systems on an ongoing basis for any current or potential cybersecurity threats or vulnerabilities and for changes in technology and the regulatory environment.

There can be no assurance that these measures and efforts will prevent future cybersecurity incidents or other significant disruptions to any of the information systems on which Abbott relies or that related product issues will not arise in the future.

Similarly, there can be no assurance that third party information technology providers or other partners with whom Abbott contracts will not suffer a significant cybersecurity incident or disruption that impacts Abbott.

Any significant cybersecurity incident or other disruption affecting Abbott’s information systems or products could have a material adverse effect on Abbott’s business, financial condition and results of operations.

Abbott’s research and development efforts may not succeed in developing commercially successful products and technologies, which may cause Abbott’s revenue and profitability to decline.

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The manufacture of many of Abbott’s products is a highly exacting and complex process, due in part to strict regulatory requirements.

Problems may arise during manufacturing for a variety of reasons, including equipment malfunction, failure to follow specific protocols and procedures, problems with raw materials or the global supply chain, failure to meet product specifications, cyber attacks, natural disasters, and environmental factors.

Problems may arise during manufacturing for a variety of reasons, including equipment malfunction, failure to follow specific protocols and procedures, problems with raw materials or the global supply chain, failure to meet product specifications, cybersecurity incidents, natural disasters, and environmental factors.

In addition, single suppliers are currently used for certain products and materials.

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Legal and Regulatory Risks

Abbott is subject to numerous governmental regulations and it is costly to comply with these regulations and to develop compliant products and processes.

It is costly for Abbott to comply with numerous governmental regulations and to develop compliant products and processes, and consequences for non-compliance could have a material adverse effect on Abbott's revenues, profitability, cash flows, and financial condition.

Abbott’s products are subject to rigorous regulation by the FDA and numerous international, supranational, federal, and state authorities.

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Abbott must incur expense and spend time and effort to ensure compliance with these complex regulations.

Possible regulatory actions for non-compliance include warning letters, fines, damages, injunctions, civil penalties, recalls, consent decrees, seizures of Abbott’s products, and criminal prosecution.

These actions could result in, among other things, substantial modifications to Abbott’s business practices and operations;

refunds, recalls, or seizures of Abbott’s products;

a total or partial shutdown of production in one or more facilities while Abbott or Abbott’s suppliers remedy the alleged violation;

a total or partial shutdown of production in one or more facilities while Abbott or Abbott’s suppliers remedy any actual or potential issues;

the inability to obtain future pre-market approvals or marketing authorizations;

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For information on Abbott’s voluntary recall in February 2022 of certain powder infant formula products manufactured at its facility in Sturgis, Michigan, the manufacturing stoppage at such facility, and the consent decree that Abbott entered into with the FDA on May 16, 2022, see the discussion in the “Financial Review” section in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this report.

Laws and regulations affecting government benefit programs could impose new obligations on Abbott, require Abbott to change its business practices, and restrict its operations.

Laws and regulations affecting government benefit programs could impose new obligations on Abbott, require Abbott to change its business practices, and restrict its operations, which could result in a material adverse effect on Abbott's revenues, profitability, and financial condition.

Abbott’s industry is subject to various international, supranational, federal, and state laws and regulations pertaining to government benefit program reimbursement, price reporting and regulation, and health care fraud and abuse, including anti-kickback and false claims laws, and international and individual state laws relating to pricing and sales and marketing practices.

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Product liability losses are self-insured and could have a material adverse effect on Abbott’s profitability, cash flows, and financial condition.

Economic and Industry Risks

Abbott is subject to risks related to public health crises, such as widespread outbreaks of infectious diseases like the COVID-19 pandemic, which has had, and may continue to have, a material effect on Abbott’s business, financial condition and results of operations.

As a global healthcare company, public health crises, such as the widespread outbreaks of infectious diseases like the COVID-19 pandemic, may negatively impact certain of Abbott's operations.

Health concerns and significant changes in political or economic conditions caused by such outbreaks can cause, and during the COVID-19 pandemic have caused, significant reductions in demand for certain products, increased difficulty in serving customers, disruptions to manufacturing and supply chains, and negative effects on certain of Abbott’s operations as well as the operations of its suppliers, distributors and other third-party partners.

Furthermore, such widespread outbreaks may impact, and during the COVID-19 pandemic have impacted, the broader economies of affected countries, including negatively impacting economic growth, the proper functioning of financial and capital markets, inflation rates (including in the U.S.), foreign currency exchange rates, and interest rates.

In addition, the COVID-19 pandemic has contributed to global supply chain disruptions, which have adversely impacted the cost and availability of certain raw materials, supplies, and services.

With regard to COVID-19 diagnostic testing, the FDA issued Emergency Use Authorizations (EUAs) for several COVID‑19 related products in 2020 and 2021, including Abbott diagnostic tests.

EUAs are authorized pursuant to an EUA Declaration under the U.S.

Food, Drug, and Cosmetic Act and remain in effect until the Secretary of the U.S.

Department of Health and Human Services terminates the EUA Declaration or unless sooner terminated or revoked.

Abbott is actively pursuing the FDA’s customary regulatory approval process for various COVID-19 diagnostic tests which has uncertainty as discussed in “ Abbott is subject to numerous governmental regulations and it can be costly to comply with these regulations and to develop compliant products and processes.

” in “Legal and Regulatory Risks” under “Item 1A.

Risk Factors.” On January 30, 2023, the U.S.

announced that it plans to end the public health emergency on May 11, 2023.

Abbott is evaluating the potential impacts of the end of the public health emergency, and it will continue to monitor further regulatory actions from relevant U.S.

government agencies and assess potential impacts on pandemic-related government policies and product authorizations.

Further, the demand for COVID-19 tests has been volatile over the last two years as the number of COVID-19 cases has fluctuated during the period.

Abbott expects the COVID-19 pandemic to shift to an endemic state in 2023, which would likely result in significantly lower demand for COVID-19 tests.

Due to the unpredictability of the COVID-19 pandemic, including how and when it will shift to an endemic state, the extent to which COVID-19 will continue to have a material effect on Abbott’s business, financial condition or results of operations is uncertain.

A more detailed discussion on the impact of the COVID-19 pandemic on Abbott’s business is contained in the “Financial Review” section in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report.

Economic, Geopolitical and Industry Risks

Abbott is subject to cost containment efforts that could cause a reduction in future revenues and operating income.

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New products and technological advances by Abbott’s competitors may negatively affect Abbott’s results of operations.

Abbott’s products face intense competition from competitive products.

Abbott’s products face intense competition from competitors' products and technological advances.

Competitors’ products may be safer, more effective, more effectively marketed or sold, or have lower prices or superior performance features than Abbott’s products.

Abbott cannot predict with certainty the timing or impact of the introduction of competitors’ products.

Further, the development of new technology, health care products and medicines, and the development of new treatments for disease could significantly change the competitive landscape of the health care industry and negatively impact the demand for certain Abbott products.

Abbott cannot predict with certainty the timing or impact of the introduction of competitors’ products and technological advances.

Fluctuation in foreign currency exchange rates has adversely affected and may continue to adversely affect Abbott’s financial statements and its ability to realize projected sales and earnings.

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Information on the impact of foreign exchange rates on Abbott’s financial results is contained in the “Financial Review — Results of Operations” section in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this report.

A discussion of the steps taken to mitigate the impact of foreign exchange is contained in Item 7A, Quantitative and Qualitative Disclosures about Market Risk in Abbott’s 2022 Form 10-K.

A discussion of the steps taken to mitigate the impact of foreign exchange is contained in Item 7A, Quantitative and Qualitative Disclosures about Market Risk, of this report.

Information on Abbott’s hedging arrangements is contained in Note 12 to the consolidated financial statements in this report.

Adverse changes in tax laws, regulations and interpretations, both in the U.S.

and internationally, could have a material adverse effect on Abbott’s effective tax rate, financial condition and results of operations.

Abbott is a large, global corporation, and changes in tax laws, regulations or interpretations could adversely affect Abbott’s overall tax liabilities.

Changes in tax laws, regulations or interpretations, both in the U.S.

and internationally, such as the two-pillared plan proposed by the Organization for Economic Cooperation & Development (OECD), could materially adversely affect Abbott’s effective tax rate, financial condition and results of operations.

A discussion on the OECD proposals and their potential impact on Abbott’s business in the future is contained in the “Financial Review” section in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this report.

Abbott is unable to predict what changes to the tax laws of the U.S.

or other jurisdictions may be proposed or enacted in the future or what impact such changes would have on its business.

Deterioration in the economic condition and credit quality of certain countries may negatively affect Abbott’s results of operations.

Unfavorable economic conditions in certain countries may increase the time it takes to collect outstanding trade receivables.

Unfavorable economic conditions in certain countries may increase the time it takes to collect outstanding trade receivables or inhibit Abbott's ability to best utilize its cash.

Financial instability and fiscal deficits in these countries may result in additional austerity measures to reduce costs, including health care.

Deterioration in the quality of sovereign debt, including credit downgrades, could increase Abbott’s collection risk where a significant amount of Abbott’s receivables in these countries are with governmental health care systems or where Abbott’s customers depend on payment by government health care systems.

Abbott is subject to risks related to public health crises, such as widespread outbreaks of infectious diseases like the COVID-19 pandemic, which had a material effect on Abbott’s business, financial condition and results of operations.

As a global healthcare company, public health crises, such as the widespread outbreaks of infectious diseases like the COVID-19 pandemic, may negatively impact certain Abbott's operations.

Health concerns and significant changes in political or economic conditions caused by such outbreaks can cause, and during the COVID-19 pandemic caused, significant reductions in demand for certain products, increased difficulty in serving customers, disruptions to manufacturing and supply chains, and negative effects on certain of Abbott’s operations as well as the operations of its suppliers, distributors and other third-party partners.

Furthermore, such widespread outbreaks may impact, and during the COVID-19 pandemic impacted, the broader economies of affected countries, including negatively impacting economic growth, the proper functioning of financial and capital markets, inflation rates, foreign currency exchange rates, and interest rates.

In addition, the COVID-19 pandemic contributed to global supply chain disruptions, which adversely impacted the cost and availability of certain raw materials, supplies, and services.

With regard to COVID-19 diagnostic testing, the FDA issued Emergency Use Authorizations (EUA) for several COVID‑19 related products in 2020 and 2021, including Abbott diagnostic tests.

EUAs are authorized pursuant to an EUA Declaration under the U.S.

Food, Drug, and Cosmetic Act and remain in effect until the Secretary of the U.S.

Department of Health and Human Services terminates the EUA Declaration or unless sooner terminated or revoked.

Abbott is actively pursuing the FDA’s customary regulatory approval process for various COVID-19 diagnostic tests, which has uncertainty as discussed in “ Abbott is subject to numerous governmental regulations and it can be costly to comply with these regulations and to develop compliant products and processes.

” in “Legal and Regulatory Risks” under “Item 1A.

Risk Factors.” The U.S.

federal public health emergency (PHE) expired on May 11, 2023, which has not impacted the availability of the products authorized under the EUAs.

Abbott will continue to monitor further regulatory actions from relevant U.S.

government agencies and assess potential impacts on pandemic-related government policies and product authorizations.

Further, the COVID-19 pandemic has shifted to an endemic state, resulting in significantly lower demand for COVID-19 tests.

A more detailed discussion on the impact that the COVID-19 pandemic had on Abbott’s business is contained in the “Financial Review” section in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this report.

The international nature of Abbott’s business subjects it to additional business risks that may cause its revenue and profitability to decline.

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• potentially negative consequences from changes in or interpretations of tax laws;

• political and economic instability, including sovereign debt issues;

• geopolitical and economic instability, including sovereign debt issues;

• restrictions on local currency conversion and/or cash extraction;

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and for contingent liabilities such as litigation, the absence of a recorded amount, or an amount recorded at the minimum, compared to the actual amount;

• changes in the rate of inflation (including the cost of raw materials, commodities, and supplies), interest rates, market value of Abbott’s equity investments, and the performance of investments held by Abbott or Abbott’s employee benefit trusts;

• changes in the rate of inflation (including the cost of raw materials, labor, commodities, and supplies), interest rates, market value of Abbott’s equity investments, and the performance of investments held by Abbott or Abbott’s employee benefit trusts;

• changes in the creditworthiness of counterparties that transact business with or provide services to Abbott or Abbott’s employee benefit trusts;

• changes in business, economic, and political conditions, including:

• changes in business, economic, and geopolitical conditions, including:

war, political instability, terrorist attacks, the threat of future terrorist activity and related military action;

global climate change, extreme weather and natural disasters;

widespread outbreaks of infectious diseases;

the cost and availability of insurance due to any of the foregoing events;

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and pressure from third-party interest groups;

• changes in Abbott’s business units and investments and changes in the relative and absolute contribution of each to earnings and cash flow resulting from evolving business strategies, changing product mix, changes in tax laws or tax rates both in the U.S.

and abroad and opportunities existing now or in the future;

• changes in the buying patterns of a major distributor, retailer, wholesaler, or other customer resulting from buyer purchasing decisions, pricing, seasonality, or other factors, or other problems with licensors, suppliers, distributors, and business partners;

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However, it is difficult to predict the future implications and consequences of the situation on local, regional or global economies and Abbott’s operations.

There could be additional sanctions, economic volatility, cybersecurity threats, political instability, transportation and other supply disruptions, as well as collection default risk or limited availability of resources to conduct essential business processes that could have a material adverse impact to Abbott’s operations and financial condition.

There could be additional sanctions, economic volatility, cybersecurity threats, political instability, transportation and other supply disruptions, as well as collection default or liquidity risks or limited availability of resources to conduct essential business processes that could have a material adverse impact to Abbott’s operations and financial condition.

The resolution and long-term impact of this matter are uncertain and difficult to predict.

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This Form 10-K contains forward-looking statements that are based on management’s current expectations, estimates, and projections.

Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “forecasts,” variations of these words, and similar expressions are intended to identify these forward-looking statements.

Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “forecasts,” “could,” “may,” variations of these words, and similar expressions are intended to identify these forward-looking statements.

Certain factors, including but not limited to those identified under “Item 1A.

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Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as the result of subsequent events or developments, except as required by law.

UNRESOLVED STAFF COMMENTS

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors