According to the Wall Street Journal on Friday, 20 January 2023, the US Department of Justice is investigating Abbott Laboratories due to a product recall of infant formula and the subsequent shutdown of its manufacturing at its Sturgis, Michigan plant in February 2022. You may remember that there was a consequent nationwide shortage of infant formula in the spring of 2022. In turn this led to price gouging and many upset parents, and suspicions of major infant formula manufacturers.
It is only natural to wonder if Abbott Labs is, or has been deceptive, about the baby formula shortage. Therefore, a check of Abbott’s three 10(q)s subsequent to the recall and plant shutdown in Deception And Truth Analysis’ DATAbase product makes sense. Are they, or are they not being forthright about this key business risk?
Here is how we scored Abbott…
1. 2 May 2022 10(q)
a. Overall DATA Score = -14.57%
b. % of deceptive fragments = 85.71%
2. 1 August 2022 10(q)
a. Overall DATA Score = -16.77%
b. % of deceptive fragments = 87.50%
3. 31 October 2022 10(q)
a. Overall DATA Score = -18.14%
b. % of deceptive fragments = 87.50%
From the above, it may seem as if the company is being deceptive, given their overall DATA Scores indicating deceptiveness. However, we found something remarkable in all three 10(q)s. Namely, that the only truthful fragments in each of these documents are Abbott’s disclosures around its Pediatric Nutritionals, as it refers to its infant formula business. If you were a DATAbase Client you could verify this for yourself. Here is a screenshot of our DATAREDline of Abbott’s 31 October 2022 10(q) and its disclosure around its troubled segment:
In other words, if you are a shareholder invested in Abbott you do have things to be concerned about regarding Abbott Labs, since their documents score as consistently deceptive in the aggregate. But Abbott seems to be forthright, and likely cooperative, about any investigation done by the US Department of Justice into its Pediatric Nutritionals business.
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