Good morning and thank you for standing by. Welcome to Abbott's Third Quarter 2021 Earnings Conference call. All participants will be able to listen only until the question-and-answer portion of this call. During the question- and- answer session, you will be able to ask your question by pressing the star one key on your touchtone phone. Should you be some disconnected throughout this conference call, please redial the number provided to you and reference to Abbott earnings call.
This call is being recorded by Abbott. With the exception of any participant's questions asked during the question- and- answer session, the entire call, including the question- and- answer session, is material copyrighted by Abbott. It cannot be recorded or rebroadcast without Abbott's express written permission. I would now like to introduce Mr. Scott Leinenweber, Vice President, Investor Relations, Licensing and Acquisitions.
Good morning and thank you for joining us. With me today are Robert Ford, President 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 expected financial results for 2021.
Abbott cautions that these forward-looking statements are subject to risk 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 31st, 2020.
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. Unless otherwise noted, our commentary on sales growth refers to organic sales growth, which excludes the impact of foreign exchange. With that, I will now turn the call over to Robert.
Thanks, Scott. Good morning, everyone, and thanks for joining us. Today, we reported results of another very strong quarter. Ongoing earnings per share were $1.40, reflecting nearly 45% growth compared to last year, and sales increased more than 22% on an organic basis. Excluded COVID testing-related sales, which totaled $1.9 billion in the quarter, organic sales increased 12% versus last year. As we've seen since the start of the pandemic, our diversified mix of healthcare businesses continues to prove highly resilient.
Even as COVID case rates surged in the U.S. and other geographies during the third quarter, strong growth in our more consumer-facing businesses, Nutritionals, Established Pharmaceuticals, and Diabetes Care, mitigated the modest impacts we saw from the surges in certain areas of our hospital-based businesses.
This has been a consistent theme throughout the pandemic, as evidenced by an increase in total company sales, excluding COVID tests, of 11% on an organic basis through the first nine months of this year compared to our 2019 pre-pandemic baseline, which highlights that our growth is real and not simply a function of easy comps versus last year. As a result of our strong performance and outlook, today, we increased our full-year adjusted earnings per share guidance range, now at $5- $5.10, which reflects nearly 40% growth compared to last year.
I'll now summarize our third quarter results before turning the call over to Bob, and I'll start with Nutrition, where sales increased 9% compared to last year. Strong growth in the quarter was led by U.S. pediatric and international adult nutrition.
In pediatric nutrition, sales grew over 8.5% in the quarter, led by strong growth in the U.S. from continued share gains in our infant formula and toddler portfolio. Sales of Pedialyte, our market-leading rehydration brand, once again grew strong double- digits, driven by market uptake of several recently launched new products, as well as investments we're making in direct consumer promotion.
In adult nutrition, sales grew over 9% in the quarter, including mid-teens growth internationally, as we continue to see strong demand for our Ensure and Glucerna brands, including new users entering these categories and existing customers increasing their usage. Turning to Diagnostics, sales increased more than 45% overall and 12.5% excluding COVID testing-related sales. During the quarter, as the Delta variant spread and COVID cases surge, particularly in the U.S., demand for testing increased significantly, most notably for rapid tests.
In total, during the quarter, we sold more than 225 million COVID tests globally and have now shipped over 1 billion tests since the start of the pandemic. Over the last several months, we've learned that COVID vaccines, while a powerful tool, are not the lone solution needed in our global fight against this virus. Testing, particularly rapid testing, which is fast, affordable, and easy to use, is an important companion to vaccines and therapeutics. Abbott has established a global leadership position in rapid testing, including a supply capacity of more than 100 million tests per month.
Moving to Established Pharmaceuticals, where sales grew more than 15%, driven by strong execution and a steady cadence of new product introductions. Strong sales performance in the quarter was broad-based across several countries, including double-digit growth in China, Russia, and India, which led to overall sales growth of 18% in our key emerging markets.
Lastly, I'll cover medical devices, where sales grew 13% in the quarter compared to last year, and more than 16% compared to pre-pandemic sales in the third quarter of 2019. Strong performance in the quarter was led by double-digit growth in rhythm management, structural heart failure, and diabetes care.
In structural heart, we continued to enhance our portfolio in large, fast-growing markets with the recent U.S. FDA approvals of Amplatzer, which closes the left atrial appendage in the heart to help reduce the risk of stroke in people with atrial fibrillation, and Portico for transcatheter aortic valve replacement. In heart failure, we announced results from the GUIDE-HF trial of our CardioMEMS system. As with many other recent and ongoing clinical trials across the healthcare industry, a portion of the CardioMEMS trial overlapped with the COVID-19 pandemic.
After adjusting for this impact, CardioMEMS demonstrated a 28% reduction in heart failure hospitalizations. We filed with the U.S. FDA for label expansion based on the trial data in the middle of this year. During the quarter, we also added an attractive growth platform to our vascular device portfolio with the acquisition of Walk Vascular, a commercial stage company with a minimally invasive thrombectomy system called JETi that removes peripheral blood clots. Peripheral thrombectomy is a large, high-growth area where we can leverage our existing commercial presence.
I'll wrap up with diabetes care, where strong growth was led by FreeStyle Libre sales of nearly $1 billion. During the quarter, we added over 200,000 new users, bringing the total global user base for Libre to well over 3.5 million users.
In summary, we continued to achieve strong, well-balanced growth across all of our major businesses, which is being fueled by strong execution and a steady cadence of new products. COVID testing, particularly COVID testing, remains an important companion to vaccines and therapeutics, and Abbott has established a strong leadership position in this area.
Based on the strength of our performance and outlook, we're raising our EPS guidance for the year, which now reflects growth of nearly 40% compared to last year. I'll now turn over the call to Bob to discuss our results and outlook for the year in more detail. Bob?
Thanks, Robert. As Scott mentioned earlier, please note that all references to sales growth rates, unless otherwise noted, are on an organic basis, which is consistent with our previous guidance. Turning to our results, sales for the third quarter increased 22.4% on an organic basis, which was led by strong performance across all of our businesses, along with global COVID testing-related sales of $1.9 billion in the quarter. Excluding COVID testing-related sales, organic sales growth was 12.1% versus last year and 11.7% compared to the third quarter of 2019.
Foreign exchange had a favorable year-over-year impact of 1% on third quarter sales, resulting in total reported sales growth of 23.4% in the quarter. Regarding other aspects of the P&L for the quarter, the adjusted gross margin ratio was 58.8% of sales, adjusted R&D investment was 6% of sales, and adjusted SG&A expense was 25% of sales.
Our third quarter adjusted tax rate was 15.5%, which reflects an adjustment to align our year-to-date tax rate with our revised full-year effective tax rate forecast of 15%. The revised full-year forecast is modestly higher than the estimate we provided in July due to a shift in the mix of our business and geographic income.
Turning to the outlook for the fourth quarter, we forecast $1 billion- $1.4 billion of COVID testing-related sales and forecast organic sales growth excluding COVID testing-related sales in the low double- digits versus last year. Based on current rates, we would expect exchange to have an unfavorable impact of around 1/2 of 1% on our fourth quarter reported sales. With that, we'll now open the call for questions.
Thank you. If you have a question at this time, please press the star then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. For optimum sound quality, we kindly ask that you please use your handset instead of your speaker phone when asking your question. And again, press star and then one to ask a question. Our first question comes from Robbie Marcus from JP Morgan. Your line is open.
Great, congrats on a really nice quarter.
Thanks.
Maybe after such a good quarter led by COVID testing, I feel like you have a unique perspective looking at both sides of the coin from COVID testing volumes and also device procedure volumes. Robert, I'd love to get your sense of where you think we are here in fourth quarter and heading into 2022, and any early thoughts you could give us on sort of how to think about the progression of COVID testing sales and the recovery and durability of med tech volumes.
Sure. I think regarding COVID testing, we've obviously, since the start here of the pandemic, we've been learning a lot. I think one of the things that as we developed our strategy for that, we always believed that the rapid test was going to be a kind of more sustainable part of the business. I think we were pretty right there. I'd say the key thing that I made this in the opening comments, Robert.
The key thing that we learned over the last, let's say, two months here is that the vaccine is just an incredible tool for the virus. Had a huge impact on public health around the world. Alone, it's not enough. We know that it dramatically reduces hospitalizations, dramatically reduces mortality.
I think we are all seeing here that even if you are vaccinated, you could still get and you could still transmit the virus. Obviously, you are not heading to a hospital, but I think we have all heard and seen stories of that. I think that is the biggest kind of learning here for us as we go into Q4 and as we go into next year, is that testing is going to remain an important companion here. Even with therapeutics, it is still going to remain an important part of fighting the virus.
I think we have also learned a lot about understanding kind of the difference between symptomatic testing and screening testing. We started to pay much closer attention to understanding the channels and the platforms that are more aligned to symptomatic testing versus screening testing.
We can definitely see a correlation on the symptomatic testing with cases going up, cases going down. What we don't see that correlation is on screening. Even as cases have started to come down a little bit in the U.S., actually screening demand has increased quite a bit. I think that is another kind of key learning as we think about going into Q4 and thinking about going into next year also. The other, I'd say, key distinction we've started to make is understanding kind of government purchasing of tests versus kind of private.
I'd say in the beginning of the pandemic, most of our sales were focused to governments, whether international governments, federal government here in the U.S., state governments also. That continues to be pretty strong.
What we've seen now grow pretty significantly, and I think it's aligned to the screening piece, is the private side of the market, whether it's OTC, cash pay, whether it's a lot of companies. We've seen a lot of companies in the last couple of months here sign contracts with us to ensure that they've got rapid testing to be able to give to their employees. You always see some shelf and stocking issues at the retail, and those will work their way through that in the next couple of weeks. We are seeing still a lot of companies buy tests to give to their employees.
I think all of this is basically saying, listen, I don't know how much is going to be there next year, but it's clearly here that that screening segment of the market is going to be an important part, even with therapeutics and vaccines. I think that's going to be an important part. Our base business has done very well. It continues to be on a recovery trajectory here, Robbie. Started in Q2. We saw that in devices. We saw that in diagnostics. Yeah, there was some softness during Q3 as Delta and cases increased here in the U.S.
That was probably more in August and throughout 1/2 of September, we started to see it kind of re-pick back up again towards the end of the quarter. First couple of weeks, we like what we're seeing here in terms of some pickup. These were pockets.
I wouldn't call it like a general softness and slowdown. There were pockets here in the U.S., some pockets in some countries. Generally speaking, that base business is doing very well. When you think about 2022, I expect our base business, our underlying base business, to continue that momentum, very strong momentum across the board, especially with all of our new product launches. The question here is going to be COVID. I think it's going to be very difficult as we go into next year to be able to forecast a full number, a full year number of COVID next year.
I think we're probably thinking about, okay, well, there's probably a COVID number that we're comfortable going into 2022, and then we'll have to update on a rolling quarterly basis here how COVID's going to play out throughout next year.
That's kind of how I see it. COVID testing will be there. We'll have to kind of do it more on a rolling basis as we go to next year. Our base business continues to accelerate. There was a little bit of softness in Q3, but I like what we're seeing in terms of recovery, and I like the portfolio that we built around our cardio business, our EPD business, our nutrition business, our diagnostic business. That's all good.
Great. That was really helpful. Maybe, Robert, to build on that, I know it's still very early in your planning process, but as you just said, there's a lot of variables, a lot of moving pieces. You've had a great year in devices so far, a bumper year in testing. Any early thoughts on how investors should be thinking about 2022 versus 2021 from a top and bottom line perspective? Thanks.
Yeah, I think like I said, we're still in our process. We'll give our guidance in 2022 in January like we always do, Robbie. I want to see a little bit more in terms of how this pandemic's unfolding here, especially on the COVID side, but on the base business side. I think our base business, I would say, is we've been pretty good at forecasting our business, both from a top line, from a margin on our base business.
I think what you can expect in 2022 is that base business getting even stronger with the rollout of all these product launches that we've announced over this year. The question here really is going to be kind of COVID testing.
Like I said, we'll have a portion of it that I think we'll feel good about putting it in, and then we'll have to be updating on a rolling basis. I think that's kind of how to think about it. The base business, which is probably the more sustainable piece, is building momentum, and it will go into 2022 with a lot of growth opportunity. We'll have to kind of look at COVID on a more rolling basis.
Great. Thanks a lot.
Thank you. Our next question comes from Bob Hopkins from Bank of America.
Well, thank you very much, good morning, congrats on such solid execution. I just have two questions, in the interest of time, I'll just mention them both up front, because the first 1's pretty straightforward. The first question is just on Amulet, I realize it's very early in the launch, just would love your sort of top-down comments on how things are going and maybe any metrics you can share in terms of perhaps like the percentage of your U.S. coronary accounts that are now active with Amulet. Would love some just color there.
The second question is more of a broad-based question. I was just wondering if you could provide just a little bit more detail on what you're seeing on inflation and supply chain, because the headlines are obviously just constant.
The message from Abbott and other companies we follow just seems to be that it's sort of generally manageable. Just wondering if you can kind of talk to that a little bit, if you can quantify the headwinds or just give us a better understanding of why it's manageable and just put some perspective around it for us. Thank you.
Okay. Well, I'll take the Amulet. I'll let Bob kind of talk through kind of the inflation supply chain. I would just say it is manageable, that we have a great team. I'll let Bob cover that. On Amulet, listen, we received approval in August. We're already initiated the launch. I know there's a lot of anticipation, at least on the last two calls, about the data and when we're going to publish the data and why we were going to do it, the time that we were going to do it. We released that data really close to our approval. I think that was a good strategy because it allowed our team to kind of prepare for that.
I will say regarding the data, you saw when we released the data, the product's got a lot of advantages versus the product that's on the market right now. We've got a pretty broad portfolio of sizes. That helps as you're looking at different anatomies and having a better fit there. The steerable sheath that we've got has resulted in great precision in the placement. That's super important, especially when you're looking at transcatheter therapies.
You saw the data of superior kind of closure rates without the need for blood thinners falling right after procedure. Ultimately, that's why the patient went to the hospital or part of the reason why they went there. I think we've got a great product here. I think the team has done a good job getting the contracts ready.
Right now, I would say we have a goal of a certain amount of contracts by the end of this year. In the first month, we've already gotten 40% of that target. I think that we're going to definitely hit what we need to hit in terms of getting our contracts, our accounts, the ones that we want to get on contract up and running so we could start to build the usage and familiarity with the system. We've got a really strong commercial presence here, and I think that's a key aspect in the rollout.
The implanters of these devices, the electrophysiologists or the interventional cardiologists, we've got a lot of great products and a lot of great call points. That's worked out very well, too. There's always a certain amount of coordination that's required there, and that coordination has been fantastic.
I'm really pleased to see that. Initial feedback has been super positive. I'm very happy with the initial signs. Like you said, it's about a month and a half into it. All the signs that I'm seeing show that we'll have a great opportunity here to establish Amulet as another product in the category. On top of that, we're making the investments, like I said, to grow the category with all of our clinical trials. Catalyst is one of them that I think is important also. I'd say first month and a half, very pleased with what I'm seeing.
Okay. Thanks. I'll take the inflation comments. I think inflation and supply chain are really linked together. The global supply chains have not been able to keep up with the strong demand out there. Like others, we're seeing some increased input cost across areas of our business. We're experiencing some higher shipping costs and in some cases, higher commodity costs. I'd say the commodity costs are really more in the nutrition area of the business. In some areas, we have flexibility to adjust pricing a bit, and we plan to do that.
In other areas, that flexibility doesn't exist, we're working to mitigate the impacts we're seeing, such as looking at other manufacturing costs. As Robert mentioned, we've got a very strong procurement organization, a supply chain organizations, and they're doing a great job working with our suppliers. Our suppliers understand the critical nature of our products. We've been successful in terms of ensuring that we're able to get what we need to support the business.
Thank you.
Thank you. Our next question comes from Joshua Jennings from Cowen. Your line is open.
Hi. Good morning. Thanks for taking the questions, and congratulations on the strong 3Q results. I wanted hopefully, Rob, hoping to just hear maybe some puts and takes or help us understand some of the puts and takes of 2022 operating margin. Clearly, COVID testing is going to be a factor, but any other drivers of operating margin expansion that you would highlight as we move into 2022 and then any other levers that Abbott's able to pull to drive earnings next year, depending on how the COVID testing environment plays out?
Sure. I'd say, like I said in the beginning, I think 2022, our base business, our underlying base business is going to grow very strong, both on the top and the bottom. We'll see margin expansion in that business. That's a combination. Like Bob said, we've got gross margin improvement teams across all of our business that are working at ways to mitigate other manufacturing costs. That'll be important to be able to drive margin expansion.
Just the nature of the mix as we continue to roll out our pipeline which is predominantly focused, I'd say on the med device side. We've got gross margin profiles there that are accretive to the company's gross margin.
I think a lot of it is really driven on the top line and driving our top line and the execution of these new product launches allows us to get that kind of margin expansion into 2022. Like I said, the COVID piece is really just one where we're going to have to go quarter by quarter, and update and roll our forecast every quarter. We'll have a number that we'll feel comfortable with. I'd say those are the key drivers here, our product launches, our ongoing base business, margin expansions by mix, and gross margin improvement.
I want to keep the same profiles that we've got right now in our base business in terms of spend, R&D, and SG&A. Those profiles we want to maintain. Obviously if you look at our profiles right now, it's a little bit distorted because of the COVID piece. If you look historically where we've been in the low sevens in R&D and SG&A between 20% and 30%, that's where we're going to want to land.
Thanks for that. Just quick follow-up on Libre. We've had some consultants talk about the potential for Abbott to add other analytes onto the platform and particularly the addition of ketone monitoring as a potential competitive advantage. Any updates just in terms of how the 3.0 on tap here, but any updates in terms of future development plans for Libre and how you continue to maintain your competitive edge here? Thanks for taking the questions.
Sure. We've always said that Libre was a platform. I know every time you put out a number, it becomes like the next, what is that? What's after that? We've launched Libre 2. It's doing very well in the U.S. We've launched Libre 3 in Europe. We'll obviously be rolling Libre 3 out. Regarding your question on analytes, yeah, that is an area that we are intentionally looking at, which is using the platform of Libre, the manufacturing platform, to be able to develop new analytes.
You mentioned one that we've got particular experience in our blood glucose monitoring. We have a blood ketone system. That we believe is an important aspect, especially for type one and pumpers. We think that that's a real important feature.
If you look at going into the type 2 population, there's a lot of new drugs for type 2 where there are certain warnings regarding DKA. We think that that might also be an opportunity too. That's only one analyte. We've got a pipeline here of analytes, a dedicated team that's only focused on looking at what are the business opportunities the market needs for that. As we get closer to those launches which will be coming up fairly soon, we'll be updating the market. I'm really excited about using the Libre platform here to be able to expand even beyond diabetes.
Great. Thanks so much.
Thank you. Our next question comes from Larry Biegelsen from Wells Fargo. Your line is open.
Good morning. Thanks for taking the questions. Robert, I wanted to focus on the device side and the pipeline. Just starting with Amulet, to ask Bob's earlier question another way, the surveys seem to be coming back suggesting Amulet can take about 1/3 of the U.S. market and maybe even 20% next year. It's not easy for a second-to-market to become a market leader. Amulet has a nice profile. What's your reaction to some of these consensus estimates for share? Do you think you can do better? I had a follow-up.
Sure. Well, Amulet is new to the U.S., but it's not new to the international markets. When you look at the international market, Amulet's got a 50% market share. I've seen some of the reports, not all of them, but I'm aware of some of these surveys that are done with different physicians. What I read and what I see then is similar, what I see here in the U.S. versus what we actually see in Europe, which is, it's a great product. Its size portfolio is an advantage. Its closure rate is also an advantage.
Yeah, as I said, this is a multi-billion dollar market where we think that we can be a true competitor in also. At the same time, invest to develop it. I think that's an important part here also, Larry. As I mentioned, we're making investments in next generation product.
We're going to be making investments in the commercial infrastructure, which is not only to be there during the implant, but also to develop the patient referral network. We're going to be investing in clinical trials. I think the CATALYST trial is going to be comparing it to NOACs. I think that'll be a great opportunity to expand the market also. I think it's a combination of kind of market expansion, and, yeah, we're competitive with our offering. We're competitive with our team. I think 50% internationally is a good aspiration to have here in the U.S.
That's helpful. Wanted to ask about Portico and CardioMEMS. With Portico, you have Navitor outside the U.S. Do you think you need that in the U.S. to really drive share? Do you think you can compete without an intermediate and low risk indication, which I don't think you'll have till about 2024? Just lastly, on CardioMEMS, how are you feeling about the label expansion, and the commercial opportunity given the COVID impact you mentioned on the GUIDE-HF trial? Thanks for taking the questions.
Sure, Larry. Let me talk about Portico and TAVI here more broadly. This is a hugely important segment in structural heart. We want to be a structural heart leader. We had that vision when we put the businesses together with St. Jude. We know that we need to be a true player here in the TAVI space. I'm really looking at this for us as a long game. What I mean by that is, we're launching Portico in the U.S. Navitor, to your question, is a great second-generation device. We got it CE marked.
Feedback is that it's a very competitive device. Its clinical profile in high risk is really strong. Yeah, I want to bring it to the U.S. also. Not because I feel we need to, because Portico is not competitive. Portico is very competitive.
In this context of building a strategy here to be a real player in the TAVI space, we know that we're going to have to bring a second generation here to the U.S. We'll have to also look about how do we develop further on Navitor. I think that we've got about a 5% share in Europe. That's not my aspiration for the TAVI space. To your point, there's two pretty well-entrenched competitors in the market.
We have a higher aspiration than just kind of a 5% share, which is what we have in Europe. I think the combination here of investment in the team, investment in the pipeline, and the clinical data, you're right, our kind of intermediate low risk trial kind of reads out a little bit later on, but it's there.
We're investing in it, because we see this as a big opportunity for us to be a real player in this market. I'm excited about it. I know the team is, too, to be able to kind of be a real go-to full-service player in the field of structural heart. Regarding CardioMEMS, listen, I think the data was pretty compelling. This is the second, and you know this, Larry, RCT trial that we've done. I'm a big believer in RCT trials and the need for them to be able to generate the clinical evidence. We filed for the label expansion at the end of June. I think the data was very compelling. Part of it is expansion to Class 2 and Class 4.
Also to be able to expand indication to patients with elevated BNP, which is today just for patients that have been previously hospitalized. I think the combination here of the data, the fact that it is already the second RCT that we've done, a very large one also on top of the CHAMPION trial, I think there's a great opportunity here for us to develop this market.
One of the things that we did in the quarter here also is we now have a more dedicated business unit for heart failure, where both the LVAD and CardioMEMS team are going to be combined under one GM, very similar to what we've done with our other businesses, because we believe in the benefit of that focus and that attention to the business.
I think the combination of what we've submitted, our focus, this is a great opportunity for us in 2022 and beyond. I'm not going to comment on when. All I can tell you is we filed it at the end of Q2, and I think the data is very strong. We'll just leave it like that, and I'm highly hopeful that we'll be seeing that next year for sure.
Thanks, Robert.
Thank you. Our next question comes from Cecilia Furlong from Morgan Stanley. Your line is open.
Great. Thank you for taking the questions. I wanted to ask about just your neuromod business, SCS, as well as other deferrable procedures. Can you walk through just sequential trends in the quarter if you've started to see recovery in some of your more deferrable procedures trending ahead of others? Also how you're thinking about the ability to recapture deferred procedures if the majority of procedure recapture can occur in 4Q or if staffing shortages, does some of this recovery and procedure recapture flow into 2022?
Sure. I would say this is probably out of our device businesses, the business that's had a little bit of a harder time in terms of recovering post-COVID. It's probably more elective, like you said, Cecilia. It has been lagging a bit. It's been pretty flat, I would say, in terms of its trajectory if we look at our trials and our implants. That's really something that we can't control in terms of how that is going to bounce back. We have visibility to the pipeline of patients.
We work closely with the surgery centers, and we've got visibility to that. We're not expecting a big bolus to come into Q4, and then we'll have to see how Q1 and Q2 of next year looks like to be able to give a better sense there.
What we can control, and that's what we focus the team on is on our pipeline, and I think the team here has done a really good job. I'd highlight a couple things here that we've done. NeuroSphere, which is this novel remote care platform. We've launched it. It's the first kind of system that was approved by the FDA.
We did a full market release at the end of June, and I really like the numbers we're seeing. We've done over 5,000 remote programming sessions. Not only is it a remote programmer, but it also allows us to get visibility of the patients in the funnel. Using the adoption of that tool is great because I think it'll have a real big change on the sales and service kind of business model that exists in this business.
That's going very well, and I think that'll help get better visibility. Another key thing here is entrance into the rechargeable segment, which is about 1/2 of the market. We really don't have a competitive system in there, and the team has developed a rechargeable system that is best in class, significant advantages versus the market leaders in this segment.
We're looking forward to bringing that product to market next year. We've also made investments in trials. I think probably the most notably one is DISTINCT, which is an indication for non-surgical lower back. We've completed enrollment in that study. I think the combination of these factors here are important for us to be able to take share, and then if we see the bolus of patients come back in Q1 and Q2, that'll be an additional tailwind for us.
Great. Thank you. I wanted to ask as well about your recent acquisition of Walk Vascular, and really at a high level, can you talk about your outlook just for the underlying market growth in the peripheral space over the next several years versus some of your other high-growth target end markets, including diabetes and EP? Are there other areas you'd look to build out around your vascular business? Beyond that too, just what's your current outlook for pursuing a PE indication for the thrombectomy system? Thank you.
Sure. We've been looking at this area for quite a bit. As I always say, we're always looking, we're always studying. This was an opportunity that we saw. We think it's an attractive segment. We see it about $700 million, growing double- digits. This kind of fell right into that sweet spot of kind of strategic, makes sense strategically for us.
We've got a commercial footprint out there with an endovascular sales and service team. We know the customers. We have the call point. We've got the capacity here to be able to leverage our manufacturing expertise here to be able to scale up manufacturing. This made perfect sense for us to be able to add it to the portfolio, and that integration is going pretty well.
I don't expect any significant contributions in Q4, but as we go into next year, I think it'll have an impact on our vascular business. Yes, like I said, there are plenty of segments in the endo space, I would say, that we continue to study, we continue to look at areas that we're interested in. If we find the right moment for us to be able to add those opportunities, we will.
Regarding your question on the PE indication, yes, absolutely. We know that is very important in the peripheral space. We're investing. That's one of the key aspects in the integration is to invest to be able to get that indication established. Yes, we are working on that.
Great. Thank you very much.
Thank you. Our next question comes from Vijay Kumar from Evercore ISI. Your line is open.
Hey guys. Thanks for taking my question. Robert, my first one was, going back to testing, I think your Q4 assumptions of $1 billion-$1.4 billion, that's a sequential step down versus 3Q. I'm curious, where are we on capacity right now? What is the demand for these testing products right now? Are we seeing any sequential step down in demand right now? I think you guys did win about $600 million-ish of DoD contracts. Is that baked into that Q4 number, or is that a fiscal 2022 contributor?
Regarding the Q4 forecast of $1-$1.4 here, our capacity is we can do significantly more than that, Vijay, especially as Q3, we didn't have the full ramp-up. Now we're finishing this month here, we'll be in full ramp-up mode. We can do more than the $1.4. I think the factor here that we're looking at is, as I said in the opening comments here in the first question, I continue to see the surveillance and the screening market to continue to increase. That's with kind of BinaxNOW and ID NOW also. We've got those businesses, everything we can make, we're rolling in here.
I'd say the only question we've got here a little bit is on the symptomatic and that's what you see maybe in this step down here is assuming as cases decline in the U.S., that we're going to see a little bit of a decline in symptomatic testing. That's one part of the factor. The other factor in the $1-$1.4 is just pricing.
We've got a market leadership position in rapid testing, especially in OTC. If you look at Nielsen data, you'll be able to see that we were at about 90% share before the month of September. We dropped to about 60% just because of supply, and now we're back up to 75% share, and we're seeing a little bit of price pressure.
In that number, I baked in some price pressure to ensure that we maintain that market leadership position as we see more market entrants come in. If we don't need that price, then that will obviously drive another beat to that number too. Those are the drivers and the thinking there, Vijay. A little bit of pricing pressure and what are we going to see on the symptomatic testing.
Sorry. Now the DoD contract, $600 million, is that assumed in Q4, or is that a fiscal 2022 contributor?
Well, we're going to have to. Yes. The DoD contract is actually a I think you're quoting the maximum amount of the contract, which I know is kind of what got a lot of the news headlines. The contract actually has a minimum amount, which is significantly lower than that, less than $100 million. It's really going to depend here on the DoD and the federal government in terms of their purchasing.
We factored in a little bit of that minimum piece in Q4. As I talk about going into next year, that'll be a portion of the part that we will feel comfortable with adding on. It's a pretty big range, Vijay, in terms of what the maximum is and what the minimum is.
Understood. Just one on your earlier comments, Robert, on the SG&A, looking back at historical trends of 29%-30%, R&D at 7% of revenues. Was that comment referring to fiscal 2022, what the OpEx as a percentage of revenue should look like for your base business and then the variable over and beyond the COVID? Is that the right way to think about fiscal 2022?
That comment was more about ensuring that you don't see that there's a drop in investment. When you look at our profile in Q3, in terms of R&D, it's down to 6%, our SG&A is down to 25%. That comment was more about, there's a little bit of a distortion factor here because of COVID. We're going to make sure that we continue to invest in the business.
If you look at the investment we've made, Vijay, this year, we've added about $1 billion between R&D and SG&A to the business so that we can continue to drive the top line and at the same time, drive the long-term sustainability of the business with the R&D investments. I talked about how we could pulsate that spend not only this year, but as we go into next year.
A portion of that spend is a little bit more discretionary on the SG&A side, and we'll be looking at that. The comment there was more about ensuring that there wasn't a distortion, we at least understood the distortion of COVID in terms of our profiles.
Understood. Thank you, guys.
Thank you. Our next question comes from Matt Miksic from Credit Suisse. Your line is open.
Hi. Thanks, and congrats on the strong results. Maybe just to follow up on some of the things you were just talking about, sort of this concept of reinvesting the proceeds of this very strong COVID business. There's a perception out there, I think, because COVID testing is maybe not permanent and hard to predict that it's somehow less important or harder to value than the rest of your businesses. The last few months, obviously, in this quarter, a billion five of upside in Q3 is, by our estimates, more than 1/2 a billion in operating cash.
That goes up against your $2 billion or $2.5 billion operating cash run rate. The question is, in addition to being part of the solution as you've talked about to the pandemic, maybe drill down a little bit into some of the things you were just describing.
Opportunities to invest behind, which ones of your growth programs do you see an opportunity to sort of dial things up? How, if at all, does this change maybe the way you think about M&A and your activity on that front? Thanks.
Sure. I think you've captured pretty well all the elements there of how we look at COVID. As I said in the beginning when we started this, there's definitely an opportunity to accelerate the strategy of decentralized testing because of COVID.
That strategy's been in place, and that's an area that we are investing to ensure that we do have an ability. We see more testing in pharmacy, more testing in urgent care centers, and testing that goes beyond COVID, that even goes beyond flu and RSV and respiratory viruses by developing assays that will be used on that rapid testing platform. That's one investment for sure. You can see the impact on investment on some of the business. You see it in nutrition.
We have been putting more discretionary advertising and direct consumer promotion in that business, and you could see the step-up in the growth rate there. We've obviously put investment into Libre both on the SG&A side. We've rolled out a new TV commercial and funded that to a level that we feel is competitive, is leading in terms of messaging. Increased our sales force in the U.S. and other key markets for Libre so that we can call on more physicians, and you see the impact there on Libre. We did almost $1 billion of sales of Libre this quarter.
In the U.S., it's about 65%. We're making great progress in penetrating the type 2 population, whether it's non-insulin users or non-intensive insulin users. We've got about a 90% market share, so non-insulin users or non-intensive insulin users.
We've got about a 90% market share of that segment at least. That growth is also being supported. We've got all these new product launches that I've been talking about on the cardiovascular side that require feet on the street, whether it's sales force, clinical specialists, and we're funding that also. I think that's very clearly where we're putting our investments. We've talked about R&D investments and making sure that we've got pipeline beyond 2022 and 2023. That's predominantly been in the diagnostics and device areas also. It's been pretty broad-based.
That billion-dollar increase has kind of gone well across all the businesses. If I ask my general managers and my presidents of my businesses, do they have a next tranche of where they would go, they would have that list ready to go, too. There's no shortage of opportunity.
The other topic you talked about or touched on was the cash flow generation and as a result of the COVID business. Yes, it has generated a lot of cash. We have invested some of that cash in the organic opportunities we have, whether it's manufacturing sites here in the U.S. for COVID, for MitraClip, for Libre. We've made those internal investments, but we've also looked at where we could provide the best return to our shareholders. You saw that in the form of our dividend increase at the beginning of this year.
We increased our dividend by 25%. You probably saw that we bought back shares in Q2, and we've stepped that up even further in Q3, and we've got capacity to do more of that in Q4 if that makes sense for our shareholders.
We found a way to kind of deploy that capital. On the M&A side, I've talked about this. If we think there's a strategic fit for us, one that is financially justified for us, that we can do better with it, that we can make it better, and that there's value for our shareholders, we'll do that also. Right now, I'd say I think the med tech and diagnostic valuations out there, especially for the ones that we would be interested in high quality, high growth assets, is a little bit frothy.
We're in the mode of studying and paying attention. I think the good news here is that we don't really need M&A to be able to support what I think is pretty top-tier performance here. That's pretty comprehensive in terms of how we're looking at COVID.
It both funds our internal organic growth and allows us to either provide some more value to shareholders through buybacks, dividends, and if there's a growth vehicle out there that I think would make sense, we won't be shy for that also. I'll just close here a little bit and just say our results, we're achieving very strong growth across all of our businesses. I'm very excited and proud about the pipeline that all the businesses have been focused on. We've historically really focused on organic pipelines, and that continues to be highly productive.
We're entering into very new and attractive growth segments across our portfolio, and there's more products along the way there. We're investing in our key platforms, as I've said. COVID testing is going to be an important companion to vaccines and therapeutics. At what level? I can't say right now for next year.
I've given a range on what I think it's going to look like in Q4, and there could be opportunities there for us to do better than that. I think the rapid test here is really the value proposition that's going to make sense going into next year. We're a leader in that segment. We built scale, we built manufacturing, and we know how to operate in this environment, whether it's retail pharmacies or direct consumer. Our focus right now is we're going to finish strong 2021, enter into 2022 with a lot of momentum. I think we're well-placed strategically here as we go into next year. With that, I'll thank you all for joining us today.
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 today.
This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.