Abbott Laboratories: Cardiovascular Disease Has Been A Tailwind, But Things Could Change

Summary:

• Cardiovascular disease is rising, presenting an opportunity for investors; Abbott Laboratories is well-positioned in the CVD treatment space to benefit from this trend.
• Abbott’s recent double-digit growth in medical devices, particularly in its CVD segment, underscores its strong market position and potential for continued success.
• Abbott’s focus on glucose monitoring aligns with the link between sugar levels and CVD, further strengthening its growth prospects in this critical area.
• Despite a seemingly high valuation, Abbott’s growth potential and resilience in a potential recession make it an attractive investment option for both growth and stability.
• Investors need to consider the possibility that CVD may revert back to the downward trend pre-pandemic.

Preamble

This article is a positive one for Abbott Laboratories (NYSE:ABT) investors for lamentable circumstances. It would appear that cardiovascular disease, already one of the most common causes of death in the US, is at an elevated level, which is a mystifying anomaly since the incidence of this ailment had been declining.

However, there are some signs that cardiovascular disease may return to more normal levels, meaning Abbott Labs may lose some revenues from a lowered demand.

Increase In Cardiovascular Disease

In a study published by the American Journal of Preventative Medicine (“AJPM”) in April 2024, we can discover that there was a clear downward trend in the incidence of Cardiovascular Disease (“CVD”) until COVID-19 struck in early 2020. The data shows that the pandemic has dealt a significant blow to heart health in the US, reversing years of progress in reducing deaths from heart disease.

Even as the immediate public health emergency subsided, the number of heart disease deaths continued to climb, undoing nearly a decade of advancements. This alarming trend has resulted in hundreds of thousands of excess deaths, primarily driven by heart attacks, though stroke mortality rates also increased.

The report theorizes that there are many possible causes of this increase, ranging from direct complications of COVID-19 infection to indirect consequences such as delayed medical care, unhealthy lifestyle changes, and heightened stress.

Whilst the AJPM study takes us to the end of 2022, another piece of research shows that by the end of 2023, CVD mortality remained elevated.

To quote from the research paper; “By the end of 2023, excess death remained persistent in nearly all groups except the young and middle-aged cohorts.”

This second research offers similar explanations for the rise in CVD; disrupted healthcare, reduced access to medical services, lifestyle changes, such as increased poor dietary choices and the direct effects of COVID-19 infections.

Interestingly, neither report offers up the possibility that COVID vaccines could have played even the teeny-weeniest part in the rise of excess mortality, after all, some of the declared, well-publicized and rare side effects include myocarditis and blood clots.

It’s hard to disagree with the findings of these reports that CVD is at a higher rate than one would expect. Few could deny that a diminished availability of health-related treatment would lead to more people meeting their maker ahead of schedule, either.

However, it would be interesting to speculate on the nature of poor dietary choices as a potential contributor to individuals encountering their premature demise. There is certainly a wealth of evidence suggesting that unwise dietary choices can significantly increase the risk of various chronic diseases, such as heart disease and stroke.

In fact, a massive study carried out at the Karolinska Institute for Medicine involving over 800,000 participants, followed for 35 years, concludes that diet plays a significant part in heart health.

Karolinska Institute For Medicine

This globally renowned research led medical centre has produced a gaggle of Nobel Prize winners and has provided the world with top-drawer medical knowledge. More recently, it has become famous for its AMORIS research, which is a quest to determine how certain individuals are able to reach the ripe old age of 100. And, some of the findings may come as a bit of a shock.

To quote from one of the research papers; “we found that a higher total cholesterol level was associated with a higher chance of becoming centenarian, which stands in contrast to clinical guidelines regarding cholesterol levels but is in line with previous studies showing that high cholesterol is generally favorable for mortality in very old age.”

Another interesting published paper describes the effect of elevated blood sugar levels on longevity. Individuals with more sugar dissolved in their blood are more likely to experience increased glycation. This is a process that involves sugar binding to proteins or fats, and not in a good way. So, as you may well deduce, elevated blood sugar exerts a downward pressure on life expectancy.

One of the effects of glycation is to convert what is often referred to as “bad” cholesterol, Low Density Lipoproteins (LDL), into a form known as glycated LDL, which is a whole lot worse than plain old vanilla LDL. That is to say, glycated LDL is particularly harmful as it contributes to the build-up of plaque in the arteries, which can then morph into cardio vascular disease.

Armed solely with this scientific research, you would conceivably conclude that cholesterol is not so bad for you, but sugary treats ought to be avoided in the same way as you might veer away from radioactive waste.

Dietary Choices During COVID

A publication by the US department of Agriculture adds support to the thesis that poor dietary choices hastened the onset of cardio vascular disease. The report concludes that travel restrictions and lowered opportunities for exercise led to an increase in obesity.

Before the pandemic, about 40.7% of US adults were obese. But just one year later, that number jumped to 42.5%.

So, to sum up, it would appear that we may theorize that those that switched to a diet largely of candy bars or other sugar laden “foods” during the pandemic were more likely to develop CVD. I suppose, if we add to the mix a more sedentary lifestyle, well then, this combination could be less than cardio protective.

Other Potential Causes Of Heart Disease During Pandemic

A study involving over a million people conducted by AstraZeneca (AZN) in order to support their now withdrawn vaccine, Vaxzevria, indicated that the COVID virus did indeed induce blood clots and so on. The report also noted that while very rare clotting issues were seen with both mRNA vaccines and Vaxzevria, these were about as common as you’d expect in the general population, and less common than in people with COVID-19.

Another peer reviewed paper, which was based on research carried out in Switzerland, investigated the incidence and potential causes of mild heart injury after receiving the Moderna COVID-19 booster vaccine. The study involved hospital employees who were scheduled to get the booster shot. The researchers checked for signs of heart injury by measuring a protein called troponin in the blood a few days after vaccination.

The study found that mild heart injury was more common than previously thought, occurring in about 2.8% of people. Most cases were in women, and the injury was temporary and not severe. None of the participants experienced serious heart problems within a month after vaccination.

Anyway, the upshot is that CVD is at elevated levels, and this unfortunate situation underscores the critical need for innovative solutions in cardiovascular disease management and prevention. Therefore, Abbott Laboratories, with their focus on addressing these very challenges, stand to continue to benefit significantly from this heightened demand.

Abbott Laboratories

The July report revealed that Abbott was doing a remarkable job with; “Global sales for the quarter reached $10.4 billion, up 9.3% on an organic basis.”

Given the rise in heart disease, I’m sure it comes as no surprise that there was a double-digit growth in Medical Devices, which includes their CVD segment. From the company’s form 10 Q, page 25, we can see that for instance, Abbott’s Structural Heart range surged by 12.4% YoY. Their portfolio in this area is comprehensive, offering solutions for both valve repair and replacement, as well as other structural interventions.

From the graphic above, we can see that Medical Devices represents approximately 45.6% of Abbott’s total revenue. Little wonder that a rise in demand would have such a positive effect overall.

Given the connection between sugar levels and CVD, it was heartening to hear that Abbott is also focusing on this area. The press release stated that; “In June, Abbott announced U.S. FDA clearance for two new over-the-counter continuous glucose monitoring systems — Lingo^™ and Libre Rio^™, which are based on Abbott’s world-leading FreeStyle Libre^® continuous glucose monitoring technology.”

So, overall, Abbott is well-placed to continue to benefit from evident tailwinds. The next question concerns valuation; is the stock a bargain?

Valuation

Whilst it is true that Abbott appears to be expensive relative to its peers and receives a less than favorable valuation, there is the possibility of continued growth. On top of that, if indeed the much talked about recession comes to pass, the stock may be a safe option, given that people have the unfortunate habit of becoming sick, even during recessionary periods.

However, as we have seen, much of the recent growth may we have been due to a temporary heightened demand resulting from the consequences of the COVID-19 pandemic.

Caution

From the two studies summarized describing the strange phenomenon of a lift in the incidence of CVD, it can be seen that there would appear to be a reversal of the upward trend. This is clearly due to the fact that COVID symptoms and presence are on the wane.

Under these circumstances, investors would be wise to consider their investments in Abbott with heightened caution.

Summary

Cardiovascular disease is unfortunately on the rise, and this sad trend is likely to persist. While this is a concerning public health issue, it presents an opportunity for investors. Abbott Laboratories, with its strong presence in the CVD treatment space, is well-positioned to benefit from this gloomy reality.

The company’s recent double-digit growth in medical devices, including its CVD segment, underscores its potential. Furthermore, Abbott’s focus on glucose monitoring aligns with the link between sugar levels and CVD, further strengthening its prospects.

Despite a seemingly high valuation, Abbott’s growth potential and its resilience in a potential recession make it an attractive investment option. The regrettable rise in CVD, while concerning, creates a tailwind for Abbott, making it a compelling choice for investors seeking both growth and stability.

However, the reasons for the alarming rise in CVD are abating, meaning Abbott investors should remain vigilant for any reversal of fortune.

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