Abbott (ABT 0.49%) reported its full-year and fourth-quarter results for 2022 on Wednesday. As is often the case with companies' updates, there was both good news and bad news.

Our human nature is to usually focus more on the bad than the good. Abbott's bad news definitely jumped out. The healthcare giant's sales fell 12% year over year in Q4. Earnings plunged 48%. Should investors worry about these negative trends?

Behind the declines

While Abbott's sales fell 12% on a reported basis, the year-over-year decline was only 6.1% excluding the impact of foreign exchange. The strong U.S. dollar ranked as a significant headwind for the company, with 58% of its total revenue in the quarter generated in international markets.

Abbott isn't alone in this regard. For example, Johnson & Johnson reported a similar negative impact on its top line due to foreign exchange in its recent Q4 update.

The company's COVID-19 testing business also was a big factor in Abbott's revenue decline. Worldwide COVID-related sales slid to $1.069 billion in Q4 compared to $2.319 billion in the prior-year period. To paraphrase a quote often attributed to the late Sen. Everett Dirksen, a $1.25 billion decline here and a $1.25 billion decline there, and pretty soon you're talking about real money.

Abbott's nutrition segment faced another challenge. Sales fell 11.1% year over year on a reported basis in Q4 due in large part to disruptions in the production of infant formula products at the company's Sturgis, Michigan manufacturing facility.

The expectations game

It's certainly not great for a company's top and bottom lines to worsen. However, investors also have to consider the expectations game played by Wall Street. Bad news can be good news when results exceed expectations.

A year ago, Abbott projected that it would generate adjusted earnings per share of at least $4.70 in full-year 2022. The actual result for the year was adjusted earnings per share of $5.34.

The average analyst's revenue estimate for Q4 was $9.67 billion. Abbott easily topped that estimate with Q4 revenue of $10.1 billion. The consensus Q4 adjusted earnings estimate was $0.92 per share. Abbott delivered adjusted earnings in the quarter of $1.03 per share.

The company also provided full-year 2023 adjusted earnings guidance that was in line with Wall Street expectations. Abbott projects adjusted diluted earnings per share from continuing operations will be between $4.30 and $4.50 this year. The average analyst's estimate is $4.41.

Better days ahead

No one on Wall Street was taken by surprise by any of the issues Abbott faced in Q4. Lower COVID-related sales were fully anticipated. Foreign exchange headwinds are impacting every U.S. company that conducts significant business in international markets. Abbott's manufacturing woes with its infant formula products were widely publicized.

COVID-19 testing revenue is likely to continue to decline. However, Abbott's year-over-year comparisons could improve in future quarters. And there could be reasons for even more optimism on the other fronts.

The U.S. dollar's strength is partially due to aggressive interest rate hikes by the Federal Reserve. The Fed seems likely to moderate any rate increases going forward. Some economists think rate cuts could even be on the way later this year. Abbott also appears to have resolved its manufacturing issues at the Sturgis facility.

Income investors can still count on Abbott. The company's board of directors recently declared its 396th consecutive quarterly dividend. Abbott is a Dividend King with 51 consecutive years of dividend increases. 

Innovation stands out as the most important factor behind Abbott's long track record of success. The company remains highly innovative. In October 2022, the Galien Foundation named Freestyle Libre continuous glucose monitoring system the "best medical technology" in the last 50 years. Abbott recently won two key U.S. regulatory approvals for new products.

Should investors worry about Abbott's declining sales and earnings? I don't think so. There should be better days ahead for this healthcare leader. Abbott remains a solid blue-chip stock to buy and hold for the long term.