Full Press Release Details
AbbVie Reports First-Quarter 2018 Financial Results
NORTH CHICAGO, Ill., April 26, 2018 - AbbVie (NYSE:ABBV) announced financial results for the first quarter ended March 31, 2018.
"AbbVie is off to an excellent start in 2018, delivering first quarter revenue and EPS growth well ahead of expectations," said Richard A. Gonzalez, chairman and chief executive officer, AbbVie. "Since our inception, we have strived to create a business that has multiple strong growth drivers. This quarter clearly demonstrates that level of diversity, with HUMIRA, IMBRUVICA and MAVYRET all delivering significant contributions to our growth. Based on the robust performance of the business, we are increasing our full-year EPS guidance, with the new midpoint reflecting industry-leading year-over-year growth of 38 percent."
First-Quarter Results
First-Quarter Results (continued)
Recent Events (continued)
Recent Events (continued)
Full-Year 2018 Outlook
AbbVie is updating its GAAP diluted EPS for the full-year 2018 to $6.82 to $6.92. AbbVie is raising its previously announced adjusted EPS guidance range for the full-year 2018 from $7.33 to $7.43 to $7.66 to $7.76. The midpoint of this guidance reflects year-over-year growth of 38 percent. The company's 2018 adjusted diluted EPS guidance excludes $0.84 per share of intangible asset amortization expense, changes in the fair value of contingent consideration, a one-time net tax benefit related to the timing of the phase in of provisions of the U.S. tax reform legislation on certain subsidiaries, and other specified items.
AbbVie's adjusted EPS guidance range reflects an effective tax rate approaching 9 percent in 2018. In 2018, AbbVie will experience a one-time net tax benefit related to the timing of the phase in of provisions of the new legislation on certain subsidiaries. This benefit has been excluded from the adjusted EPS guidance, and included in the GAAP guidance range.
AbbVie continues to anticipate the company's adjusted effective tax rate to increase to 13 percent over the next five years as a result of increased domestic income and investment.
Tender Offer for Common Stock
AbbVie is announcing today that it plans to commence a tender offer to purchase for cash up to $7.5 billion in value of shares of its common stock through a modified "Dutch auction" tender offer at a specified price range to be determined. AbbVie expects to commence the tender offer as early as May 1, 2018.
The tender offer forms a part of AbbVie's $10 billion stock repurchase program announced on February 15, 2018.
AbbVie is a global, research-driven biopharmaceutical company committed to developing innovative advanced therapies for some of the world's most complex and critical conditions. The company's mission is to use its expertise, dedicated people and unique approach to innovation to markedly improve treatments across four primary therapeutic areas: immunology, oncology, virology and neuroscience. In more than 75 countries, AbbVie employees are working every day to advance health solutions for people around the world. For more information about AbbVie, please visit us at www.abbvie.com. Follow @abbvie on Twitter, Facebook or LinkedIn.
AbbVie will host an investor conference call today at 8:00 a.m. Central time to discuss our first-quarter performance. The call will be webcast through AbbVie's Investor Relations website at investors.abbvie.com. An archived edition of the call will be available after 11:00 a.m. Central time.
Non-GAAP Financial Results
Financial results for 2018 and 2017 are presented on both a reported and a non-GAAP basis. Reported results were prepared in accordance with GAAP and include all revenue and expenses recognized during the period. Non-GAAP results adjust for certain non-cash items and for factors that are unusual or unpredictable, and exclude those costs, expenses, and other specified items presented in the reconciliation tables later in this release. AbbVie's management believes non-GAAP financial measures provide useful information to investors regarding AbbVie's results of operations and assist management, analysts, and investors in evaluating the performance of the business. Non-GAAP financial measures should be considered in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP. The company's 2018 financial guidance is also being provided on both a reported and a non-GAAP basis.
Prior Period Reclassifications
Certain reclassifications were made to conform the prior period financial results to the current period presentation.
Forward-Looking Statements
Some statements in this news release are, or may be considered, forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," "project" and similar expressions, among others, generally identify forward-looking statements. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Such risks and uncertainties include, but are not limited to, challenges to intellectual property, competition from other products, difficulties inherent in the research and development process, adverse litigation or government action, and changes to laws and regulations applicable to our industry. Additional information about the economic, competitive, governmental, technological and other factors that may affect AbbVie's operations is set forth in Item 1A, "Risk Factors," of AbbVie's 2017 Annual Report on Form 10-K, which has been filed with the Securities and Exchange Commission (SEC). AbbVie 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.
Additional Information and Where to Find It
This news release is for informational purposes only, is not a recommendation to buy or sell shares of AbbVie common stock, and does not constitute an offer to buy or the solicitation to sell shares of AbbVie common stock. The tender offer described in this news release has not yet commenced, and there can be no assurances that AbbVie will commence the tender offer on the terms described in this news release or at all. The tender offer will be made only pursuant to the Offer to Purchase, the related Letter of Transmittal and other related materials that AbbVie expects to file with the SEC upon commencement of the tender offer. STOCKHOLDERS ARE URGED TO CAREFULLY READ THE OFFER TO PURCHASE, LETTER OF TRANSMITTAL AND RELATED MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION, INCLUDING THE VARIOUS TERMS OF, AND CONDITIONS TO, THE TENDER OFFER, THAT STOCKHOLDERS SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING TENDERING THEIR SHARES. If and when the tender offer is commenced, stockholders will be able to obtain a free copy of the tender offer materials (including the Offer to Purchase, the related Letter of Transmittal and other documents) that AbbVie will be filing with the SEC at the SEC's website at www.sec.gov. Additional copies of these materials may be obtained for free by contacting AbbVie at 1 North Waukegan Road, North Chicago, IL 60064, Attn: Investor Relations.
In addition to the Offer to Purchase, the related Letter of Transmittal and certain other tender offer documents, AbbVie files annual, quarterly and current reports and other information with the SEC. You may read and copy any reports or other information filed by AbbVie at the SEC public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. AbbVie's filings with the SEC are also available at the SEC's website at www.sec.gov.
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Key Product Revenues
Quarter Ended March 31, 2018
| % Change vs. 1Q17 | ||||||||||||||
| Net Revenues (in millions) | International | Total | ||||||||||||
| U.S. | Int'l. | Total | U.S. | Operational | Reported | Operational | Reported | |||||||
| NET REVENUES | $4,790 | $3,144 | $7,934 | 18.3% | 16.6% | 26.4% | 17.6% | 21.4% | ||||||
| Humira | 3,003 | 1,706 | 4,709 | 11.4 | 9.3 | 20.0 | 10.7 | 14.4 | ||||||
| Imbruvica a | 624 | 138 | 762 | 36.7 | 47.2 | 47.2 | 38.5 | 38.5 | ||||||
| HCV | 343 | 576 | 919 | >100.0 | >100.0 | >100.0 | >100.0 | >100.0 | ||||||
| Creon | 209 | - | 209 | 13.0 | n/a | n/a | 13.0 | 13.0 | ||||||
| Lupron | 177 | 42 | 219 | 14.8 | 2.5 | 7.8 | 12.2 | 13.3 | ||||||
| Synthroid | 182 | - | 182 | (5.3) | n/a | n/a | (5.3) | (5.3) | ||||||
| Synagis | - | 321 | 321 | n/a | 0.4 | 6.9 | 0.4 | 6.9 | ||||||
| AndroGel | 130 | - | 130 | (4.6) | n/a | n/a | (4.6) | (4.6) | ||||||
| Duodopa | 18 | 85 | 103 | 30.8 | 13.6 | 28.5 | 16.5 | 28.9 | ||||||
| Sevoflurane | 17 | 89 | 106 | (3.6) | (5.4) | (0.3) | (5.0) | (0.8) | ||||||
| Kaletra | 13 | 60 | 73 | (29.3) | (40.6) | (37.4) | (38.7) | (36.0) |
Note: "Operational" growth reflects the percentage change over the prior year excluding the impact of exchange rate fluctuations.
n/a = not applicable
Consolidated Statements of Earnings
Quarter Ended March 31, 2018 and 2017
(Unaudited) (In millions, except per share data)
| First Quarter Ended March 31 | |||||||
| 2018 | 2017 | ||||||
| Net revenues | $ | 7,934 | $ | 6,538 | |||
| Cost of products sold | 1,927 | 1,616 | |||||
| Selling, general and administrative | 1,791 | 1,373 | |||||
| Research and development | 1,244 | 1,142 | |||||
| Acquired in-process research and development | 69 | - | |||||
| Total operating cost and expenses | 5,031 | 4,131 | |||||
| Operating earnings | 2,903 | 2,407 | |||||
| Interest expense, net | 251 | 247 | |||||
| Net foreign exchange loss | 8 | 13 | |||||
| Other (income) expense, net | (153 | ) | 61 | ||||
| Earnings before income tax expense | 2,797 | 2,086 | |||||
| Income tax expense | 14 | 375 | |||||
| Net earnings | $ | 2,783 | $ | 1,711 | |||
| Diluted earnings per share | $ | 1.74 | $ | 1.06 | |||
| Adjusted diluted earnings per share a | $ | 1.87 | $ | 1.28 | |||
| Weighted-average diluted shares outstanding | 1,596 | 1,603 |
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Quarter Ended March 31, 2018
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
| 1Q18 | |||||||||||
| Earnings | Diluted | ||||||||||
| Pre-tax | After-tax | EPS | |||||||||
| As reported (GAAP) | $ | 2,797 | $ | 2,783 | $ | 1.74 | |||||
| Adjusted for specified items: | |||||||||||
| Intangible asset amortization | 330 | 272 | 0.17 | ||||||||
| Milestones and other R&D expenses | 32 | 32 | 0.02 | ||||||||
| Acquired IPR&D | 69 | 69 | 0.04 | ||||||||
| Change in fair value of contingent consideration | (148 | ) | (148 | ) | (0.09 | ) | |||||
| Litigation reserves | 118 | 100 | 0.06 | ||||||||
| Impacts of U.S. tax reform | - | (155 | ) | (0.10 | ) | ||||||
| Other | 51 | 47 | 0.03 | ||||||||
| As adjusted (non-GAAP) | $ | 3,249 | $ | 3,000 | $ | 1.87 |
Milestones and other R&D expenses are associated with milestone payments for previously announced collaborations. Acquired IPR&D primarily reflects upfront payments related to R&D collaborations and licensing arrangements with third parties. Impacts of U.S. tax reform reflects a net tax benefit related to the timing of the new legislation's phase in on certain subsidiaries. Other primarily includes restructuring charges associated with streamlining global operations.
2. The impact of the specified items by line item was as follows:
| 1Q18 | |||||||||||||||||||
| Cost of products sold | SG&A | R&D | Acquired IPR&D | Other (income) expense, net | |||||||||||||||
| As reported (GAAP) | $ | 1,927 | $ | 1,791 | $ | 1,244 | $ | 69 | $ | (153 | ) | ||||||||
| Adjusted for specified items: | |||||||||||||||||||
| Intangible asset amortization | (330 | ) | - | - | - | - | |||||||||||||
| Milestones and other R&D expenses | - | - | (32 | ) | - | - | |||||||||||||
| Acquired IPR&D | - | - | - | (69 | ) | - | |||||||||||||
| Change in fair value of contingent consideration | - | - | - | - | 148 | ||||||||||||||
| Litigation reserves | - | (118 | ) | - | - | - | |||||||||||||
| Other | (25 | ) | (3 | ) | (23 | ) | - | - | |||||||||||
| As adjusted (non-GAAP) | $ | 1,572 | $ | 1,670 | $ | 1,189 | $ | - | $ | (5 | ) |
3. The adjusted tax rate for the first quarter of 2018 was 7.6 percent, as detailed below:
| 1Q18 | ||||||||||
| Pre-tax income | Income taxes | Tax rate | ||||||||
| As reported (GAAP) | $ | 2,797 | $ | 14 | 0.5 | % | ||||
| Specified items | 452 | 235 | 51.8 | % | ||||||
| As adjusted (non-GAAP) | $ | 3,249 | $ | 249 | 7.6 | % |
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Quarter Ended March 31, 2017
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
| 1Q17 | |||||||||||
| Earnings | Diluted | ||||||||||
| Pre-tax | After-tax | EPS | |||||||||
| As reported (GAAP) | $ | 2,086 | $ | 1,711 | $ | 1.06 | |||||
| Adjusted for specified items: | |||||||||||
| Intangible asset amortization | 271 | 203 | 0.13 | ||||||||
| Milestones and other R&D expenses | 28 | 28 | 0.02 | ||||||||
| Acquisition related costs | 38 | 25 | 0.01 | ||||||||
| Change in fair value of contingent consideration | 85 | 84 | 0.06 | ||||||||
| Other | 10 | 9 | - | ||||||||
| As adjusted (non-GAAP) | $ | 2,518 | $ | 2,060 | $ | 1.28 |
Milestones and other R&D expenses are associated with milestone payments for previously announced collaborations. Acquisition related costs primarily include the amortization of the acquisition date fair value step-up for inventory related to the acquisition of Pharmacyclics. Other primarily includes restructuring charges associated with streamlining global operations.
2. The impact of the specified items by line item was as follows:
| 1Q17 | |||||||||||||||
| Cost of products sold | SG&A | R&D | Other (income) expense, net | ||||||||||||
| As reported (GAAP) | $ | 1,616 | $ | 1,373 | $ | 1,142 | $ | 61 | |||||||
| Adjusted for specified items: | |||||||||||||||
| Intangible asset amortization | (271 | ) | - | - | - | ||||||||||
| Milestones and other R&D expenses | - | - | (28 | ) | - | ||||||||||
| Acquisition related costs | (26 | ) | (9 | ) | (2 | ) | (1 | ) | |||||||
| Change in fair value of contingent consideration | - | - | - | (85 | ) | ||||||||||
| Other | (6 | ) | (4 | ) | - | - | |||||||||
| As adjusted (non-GAAP) | $ | 1,313 | $ | 1,360 | $ | 1,112 | $ | (25 | ) |
3. The adjusted tax rate for the first quarter of 2017 was 18.2 percent, as detailed below:
| 1Q17 | ||||||||||
| Pre-tax income | Income taxes | Tax rate | ||||||||
| As reported (GAAP) | $ | 2,086 | $ | 375 | 18.0 | % | ||||
| Specified items | 432 | 83 | 19.2 | % | ||||||
| As adjusted (non-GAAP) | $ | 2,518 | $ | 458 | 18.2 | % |