ABT Abbott Laboratories

By Joseph Walker and Anne Steele 

The EpiPen pricing controversy roiling Mylan NV has ensnared another large health care company, albeit indirectly.

Abbott Laboratories, Mylan's largest shareholder, said on Wednesday that it had written down the value of its investment in the EpiPen maker by $947 million to reflect a sharp decline in Mylan's share price through the end of the quarter on September 30.

Abbott said the accounting charge contributed to a $329 million loss in the quarter, or 22 cents a share, compared with a year-earlier profit of $580 million, or 38 cents a share, a year earlier.

For now, the write-down is only a paper loss, and could be reduced or even erased if Mylan's share price rebounds before any Abbott sale of the stock. Mylan declined to comment.

Abbott currently owns a roughly 13% stake in Mylan, or nearly 70 million shares.

Abbott has been Mylan's biggest shareholder since selling part of its overseas pharmaceuticals operations to Mylan last year in exchange for 110 million Mylan shares that were valued at $5.77 billion when the transaction closed. Abbott sold more than a third of the shares last year for $2.29 billion.

Abbott Chief Executive Miles White has faced frequent questions from analysts about when he would sell the remaining shares. Mr. White said last year that Abbott intends to sell the shares at some point, but that he was not in a hurry to do so.

In an April 2015 conference call with analysts, Mr. White noted that Mylan's share price had already risen significantly since completing the acquisition with Abbott.

"I think it's been prudent to hold it," Mr. White said on the 2015 call. "It's proven to be a great value-gainer for us." The topic didn't come up on Wednesday's conference call. An Abbott spokesperson declined to comment on the company's plans for the Mylan stock.

But through September 30, Mylan shares had fallen about 27% from the time Abbott acquired the stock. Mylan's stock has fallen 17% over the past three months alone amid popular outrage and political scrutiny of the company's substantial price increases for the EpiPen emergency allergy treatment.

In the third quarter, Abbott's sales rose 3% to $5.3 billion. Mr. White cited strong performance in established pharmaceuticals and medical devices sales, which rose 5.3% and 6.4%, respectively. However, sales slipped 2% in Abbott's nutrition segment, the company's largest.

Abbott's adjusted profit -- excluding certain items including the Mylan write-down -- and revenue topped expectations. Abbott narrowed and raised at the midpoint its 2016 adjusted earnings view to $2.19 to $2.21 a share, from a previous range of $2.14 to $2.24.

In April, Abbott agreed to buy St. Jude Medical Inc. for $25 billion amid consolidation in the health-care sector. Companies are responding to cost pressures by beefing up, increasing their negotiating leverage and pricing power. St. Jude and Abbott have said they expect the merger to close in the fourth quarter.

St. Jude Medical on Wednesday said its third-quarter revenue rose, led by a 13% sales increase abroad, though profit edged lower.

Write to Joseph Walker at joseph.walker@wsj.com and Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

October 19, 2016 14:37 ET (18:37 GMT)

Abbott Laboratories (NYSE:ABT)
Historical Stock Chart
From Mar 2024 to Apr 2024

Abbott Laboratories (NYSE:ABT)
Historical Stock Chart
From Apr 2023 to Apr 2024