COVID-19 testing ain't what it used to be. That's abundantly clear after healthcare giant Abbott Laboratories (ABT 0.67%) lowered its full-year guidance because COVID-19 testing volumes won't be as strong as initially expected. In this Motley Fool Live video recorded on June 2, Motley Fool contributors Keith Speights and Brian Orelli talk about what investors should make of Abbott's reduced guidance.

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Keith Speights: Abbott, ticker there is ABT, had some other news that wasn't so good. Abbott is a big medical device company, big diagnostic test maker. The company recently came out and predicted that its revenue from COVID-19 testing will be significantly less than what it had previously thought, and Abbott lowered its guidance. Brian, what are your thoughts on this move from Abbott?

Brian Orelli: Yeah, there were pretty substantial moves down from just its prediction at the end of the first quarter to just a couple of months ago. That they were looking for GAAP earnings of at least $3.74 per share, and now they are looking for $2.75 to $2.95 per share, so down substantially. On the adjusted side, they were looking for earnings of at least $5 per share, and now they're down to $4.30 to $4.50 a share. That's still a double-digit growth over 2020. But I do know that's for the adjusted earnings where sold double-digit growth, but I did know that they increased the extra items.

They were expecting $1.26 per share in extra items and that's increased to $1.55 per share. The GAAP earnings dropped substantially more than the adjusted earnings, and that was because they increased the amount of the total that they're expecting in extra items and they didn't break out the individual components of the extra--. They listed them all but they didn't break them out individually to say how much where the extra that's coming from so it's a little hard to tell there. I think this is a double edged sword with the large diversified company like Abbott.

They're not completely dependent on their new COVID-19 testing. I don't know who said that, but that was the reason why the earnings dropped so much. It was because they're now not expecting as much COVID-19 testing as they were expecting before. That's a good part, is that they're not completely dependent on the COVID-19 testing and they are still able to get a double-digit growth over 2020. But the bad news is that it's really hard for investors to know how much is tied up in the guidance. Because there's so many different moving parts, you can't really tell whether their guidance is super accurate.

It's surprising that so many other companies have come out and said that they see lower testing for COVID-19, so it's surprising that Abbott was so bullish at the end of the first quarter when they did the first-quarter earnings, and now we're seeing the writing on the walls.

Speights: Brian, that's exactly what I was going to say, is that I was actually more surprised that Abbott initially had the pretty bullish outlook for COVID-19 testing. I was more surprised by that than I was that they ended up coming out and lowering their guidance.

Orelli: I think the peak of testing was in January. That means that gave them four months before they gave their first-quarter guidance to see the general declining sales. Maybe it's hard for them to tell because maybe the inventory was going down, and so maybe they couldn't actually tell that it was their tests that were having the problems. But they could see that the general trend in the amount of testing overall, they should have seen that as declining.

Speights: Maybe Abbott was counting on more growth from its BinaxNow product, which is now distributed in pharmacies. You can take it home and test yourself basically. Maybe they were counting on that to bolster their sales. But you and I have talked probably two months ago, you and I were talking about the huge downturn and number of COVID-19 tests in the U.S.

Orelli: Yeah. Quidel, I think came out and said that they were expecting lower guidance. What's the other big one, the other big test maker that came out? They had pretty good first-quarter results, but their guidance for the rest of the year wasn't nearly as good.

Speights: Yeah. But again, Abbott has a lot of other things going for it. Like you said, Brian, it absolutely isn't solely dependent on COVID-19 testing. The company has been around for a long time and it still has plenty of other growth drivers.

Orelli: If we do have a strong flu season that we talked about in the last segment, I think that could definitely help Abbott substantially because what will happen is people get tested for both the flu and COVID-19 because symptoms are so similar, and so that'll boost revenue there.