Full Press Release Details
AbbVie Reports Third-Quarter 2018 Financial Results
NORTH CHICAGO, Ill., November 2, 2018 - AbbVie (NYSE:ABBV) announced financial results for the third quarter ended September 30, 2018.
"We delivered another exceptional quarter, with results well ahead of our expectations, including operational revenue growth above 18 percent and EPS growth greater than 50 percent. Based on our continued momentum across multiple products in our portfolio, we are raising our full year 2018 EPS guidance once again," said Richard A. Gonzalez, chairman and chief executive officer, AbbVie. "We're particularly pleased with our progress in building a leading hematologic oncology franchise, which is now delivering revenue in excess of $1 billion per quarter and is poised for continued strong growth next year and beyond."
Third-Quarter Results
Third-Quarter Results (continued)
Recent Events (continued)
Recent Events (continued)
Recent Events (continued)
Full-Year 2018 Outlook
AbbVie is updating its GAAP diluted EPS guidance for the full-year 2018 to $6.43 to $6.45. AbbVie is raising its adjusted EPS guidance range for the full-year 2018 from $7.76 to $7.86 to $7.90 to $7.92. The midpoint of this guidance reflects year-over-year growth of 41.3 percent. The company's 2018 adjusted diluted EPS guidance excludes $1.47 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.
Company Declares Dividend Increase of 11.5 Percent
AbbVie is announcing today that its board of directors declared an increase in the company's quarterly cash
dividend from $0.96 per share to $1.07 per share beginning with the dividend payable on February 15, 2019 to
shareholders of record as of January 15, 2019. This reflects an increase of approximately 11.5 percent,
continuing AbbVie's strong commitment to returning cash to shareholders through a growing dividend. Since the
company's inception in 2013, AbbVie has increased its quarterly dividend by 168 percent. AbbVie is a member of the S&P Dividend Aristocrats Index, which tracks companies that have annually increased their dividend for at least 25 consecutive years.
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 third-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.
| Media: | Investors: |
| Adelle Infante | Liz Shea |
| (847) 938-8745 | (847) 935-2211 |
| Todd Bosse | |
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| Jeffrey Byrne | |
| (847) 938-2923 |
Key Product Revenues
Quarter Ended September 30, 2018
| % Change vs. 3Q17 | ||||||||||||||
| Net Revenues (in millions) | International | Total | ||||||||||||
| U.S. | Int'l. | Total | U.S. | Operational | Reported | Operational | Reported | |||||||
| ADJUSTED NET REVENUES a | $5,597 | $2,639 | $8,236 | 22.0% | 11.7% | 9.6% | 18.5% | 17.8% | ||||||
| Immunology | 3,546 | 1,578 | 5,124 | 12.5 | 4.2 | 1.8 | 9.8 | 9.0 | ||||||
| Humira | 3,546 | 1,578 | 5,124 | 12.5 | 4.2 | 1.8 | 9.8 | 9.0 | ||||||
| Hematologic Oncology | 881 | 187 | 1,068 | 47.3 | 52.3 | 51.9 | 48.2 | 48.1 | ||||||
| Imbruvica b | 812 | 160 | 972 | 41.5 | 40.1 | 40.1 | 41.3 | 41.3 | ||||||
| Venclexta | 69 | 27 | 96 | >100.0 | >100.0 | >100.0 | >100.0 | >100.0 | ||||||
| HCV | 444 | 418 | 862 | >100.0 | 95.6 | 94.5 | >100.0 | >100.0 | ||||||
| Mavyret | 444 | 395 | 839 | >100.0 | >100.0 | >100.0 | >100.0 | >100.0 | ||||||
| Viekira | - | 23 | 23 | n/m | (86.1) | (87.0) | (86.2) | (87.1) | ||||||
| Other Key Products | 792 | 365 | 1,157 | 3.6 | (2.1) | (4.9) | 1.7 | 0.8 | ||||||
| Creon | 239 | - | 239 | 11.3 | n/a | n/a | 11.3 | 11.3 | ||||||
| Lupron | 173 | 41 | 214 | 7.6 | 7.2 | 1.5 | 7.5 | 6.4 | ||||||
| Synthroid | 192 | - | 192 | 0.7 | n/a | n/a | 0.7 | 0.7 | ||||||
| Synagis | - | 97 | 97 | n/a | (14.1) | (16.2) | (14.1) | (16.2) | ||||||
| AndroGel | 135 | - | 135 | (8.3) | n/a | n/a | (8.3) | (8.3) | ||||||
| Duodopa | 19 | 87 | 106 | 18.7 | 12.2 | 10.8 | 13.3 | 12.1 | ||||||
| Sevoflurane | 18 | 68 | 86 | (2.8) | (12.2) | (15.7) | (10.4) | (13.2) | ||||||
| Kaletra | 16 | 72 | 88 | (2.9) | 8.2 | 5.3 | 6.0 | 3.7 |
Note: "Operational" growth reflects the percentage change over the prior year excluding the impact of exchange rate fluctuations.
n/a = not applicable
n/m = not meaningful
Key Product Revenues
Nine Months Ended September 30, 2018
| % Change vs. 9M17 | ||||||||||||||
| Net Revenues (in millions) | International | Total | ||||||||||||
| U.S. | Int'l. | Total | U.S. | Operational | Reported | Operational | Reported | |||||||
| ADJUSTED NET REVENUES a | $15,836 | $8,592 | $24,428 | 19.2% | 15.1% | 19.5% | 17.8% | 19.3% | ||||||
| Immunology | 10,070 | 4,948 | 15,018 | 11.3 | 5.9 | 10.3 | 9.5 | 11.0 | ||||||
| Humira | 10,070 | 4,948 | 15,018 | 11.3 | 5.9 | 10.3 | 9.5 | 11.0 | ||||||
| Hematologic Oncology | 2,286 | 518 | 2,804 | 41.2 | 58.6 | 59.4 | 44.2 | 44.3 | ||||||
| Imbruvica b | 2,129 | 455 | 2,584 | 36.6 | 48.5 | 48.5 | 38.5 | 38.5 | ||||||
| Venclexta | 157 | 63 | 220 | >100.0 | >100.0 | >100.0 | >100.0 | >100.0 | ||||||
| HCV | 1,209 | 1,545 | 2,754 | >100.0 | >100.0 | >100.0 | >100.0 | >100.0 | ||||||
| Mavyret | 1,206 | 1,413 | 2,619 | >100.0 | >100.0 | >100.0 | >100.0 | >100.0 | ||||||
| Viekira | 3 | 132 | 135 | (96.3) | (78.9) | (78.1) | (80.6) | (79.8) | ||||||
| Other Key Products | 2,310 | 1,309 | 3,619 | 2.7 | (1.9) | 1.0 | 1.0 | 2.1 | ||||||
| Creon | 667 | - | 667 | 11.8 | n/a | n/a | 11.8 | 11.8 | ||||||
| Lupron | 530 | 126 | 656 | 8.7 | 6.9 | 7.4 | 8.3 | 8.4 | ||||||
| Synthroid | 567 | - | 567 | (1.5) | n/a | n/a | (1.5) | (1.5) | ||||||
| Synagis | - | 462 | 462 | n/a | (2.2) | 1.3 | (2.2) | 1.3 | ||||||
| AndroGel | 393 | - | 393 | (10.1) | n/a | n/a | (10.1) | (10.1) | ||||||
| Duodopa | 57 | 260 | 317 | 30.0 | 15.6 | 22.8 | 18.1 | 24.0 | ||||||
| Sevoflurane | 54 | 251 | 305 | (2.8) | (2.8) | (1.5) | (2.7) | (1.7) | ||||||
| Kaletra | 42 | 210 | 252 | (21.4) | (19.0) | (18.1) | (19.5) | (18.7) |
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 and Nine Months Ended September 30, 2018 and 2017
(Unaudited) (In millions, except per share data)
| Third Quarter Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net revenues | $ | 8,236 | $ | 6,995 | $ | 24,448 | $ | 20,477 | |||||||
| Cost of products sold | 1,835 | 1,616 | 5,696 | 4,761 | |||||||||||
| Selling, general and administrative | 1,919 | 1,457 | 5,470 | 4,339 | |||||||||||
| Research and development | 1,268 | 1,228 | 3,834 | 3,599 | |||||||||||
| Acquired in-process research and development | 55 | - | 124 | 15 | |||||||||||
| Other expense | - | - | 500 | - | |||||||||||
| Total operating cost and expenses | 5,077 | 4,301 | 15,624 | 12,714 | |||||||||||
| Operating earnings | 3,159 | 2,694 | 8,824 | 7,763 | |||||||||||
| Interest expense, net | 302 | 252 | 825 | 752 | |||||||||||
| Net foreign exchange loss | 2 | 9 | 18 | 28 | |||||||||||
| Other expense, net | 94 | 338 | 411 | 449 | |||||||||||
| Earnings before income tax expense | 2,761 | 2,095 | 7,570 | 6,534 | |||||||||||
| Income tax expense | 14 | 464 | 57 | 1,277 | |||||||||||
| Net earnings | $ | 2,747 | $ | 1,631 | $ | 7,513 | $ | 5,257 | |||||||
| Diluted earnings per share | $ | 1.81 | $ | 1.01 | $ | 4.79 | $ | 3.27 | |||||||
| Adjusted diluted earnings per share a | $ | 2.14 | $ | 1.41 | $ | 6.01 | $ | 4.11 | |||||||
| Weighted-average diluted shares outstanding | 1,515 | 1,603 | 1,561 | 1,602 |
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Quarter Ended September 30, 2018
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
| 3Q18 | |||||||||||
| Earnings | Diluted | ||||||||||
| Pre-tax | After-tax | EPS | |||||||||
| As reported (GAAP) | $ | 2,761 | $ | 2,747 | $ | 1.81 | |||||
| Adjusted for specified items: | |||||||||||
| Intangible asset amortization | 320 | 263 | 0.17 | ||||||||
| Acquired IPR&D | 55 | 55 | 0.04 | ||||||||
| Charitable contributions | 115 | 89 | 0.06 | ||||||||
| Change in fair value of contingent consideration | 95 | 95 | 0.06 | ||||||||
| Litigation reserves | 228 | 176 | 0.12 | ||||||||
| Impacts of U.S. tax reform | - | (177 | ) | (0.12 | ) | ||||||
| Other | 7 | 7 | - | ||||||||
| As adjusted (non-GAAP) | $ | 3,581 | $ | 3,255 | $ | 2.14 |
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:
| 3Q18 | |||||||||||||||
| Cost of products sold | SG&A | Acquired IPR&D | Other expense, net | ||||||||||||
| As reported (GAAP) | $ | 1,835 | $ | 1,919 | $ | 55 | $ | 94 | |||||||
| Adjusted for specified items: | |||||||||||||||
| Intangible asset amortization | (320 | ) | - | - | - | ||||||||||
| Acquired IPR&D | - | - | (55 | ) | - | ||||||||||
| Charitable contributions | - | (115 | ) | - | - | ||||||||||
| Change in fair value of contingent consideration | - | - | - | (95 | ) | ||||||||||
| Litigation reserves | - | (228 | ) | - | - | ||||||||||
| Other | (6 | ) | (1 | ) | - | - | |||||||||
| As adjusted (non-GAAP) | $ | 1,509 | $ | 1,575 | $ | - | $ | (1 | ) |
3. The adjusted tax rate for the third quarter of 2018 was 9.1 percent, as detailed below:
| 3Q18 | ||||||||||
| Pre-tax income | Income taxes | Tax rate | ||||||||
| As reported (GAAP) | $ | 2,761 | $ | 14 | 0.5 | % | ||||
| Specified items | 820 | 312 | 38.1 | % | ||||||
| As adjusted (non-GAAP) | $ | 3,581 | $ | 326 | 9.1 | % |
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Quarter Ended September 30, 2017
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
| 3Q17 | |||||||||||
| Earnings | Diluted | ||||||||||
| Pre-tax | After-tax | EPS | |||||||||
| As reported (GAAP) | $ | 2,095 | $ | 1,631 | $ | 1.01 | |||||
| Adjusted for specified items: | |||||||||||
| Intangible asset amortization | 268 | 201 | 0.13 | ||||||||
| Milestones and other R&D expenses | 32 | 32 | 0.02 | ||||||||
| Change in fair value of contingent consideration | 401 | 401 | 0.25 | ||||||||
| Litigation reserves | 4 | 3 | - | ||||||||
| Other | 6 | 5 | - | ||||||||
| As adjusted (non-GAAP) | $ | 2,806 | $ | 2,273 | $ | 1.41 |
Milestones and other R&D expenses are associated with milestone payments for previously announced collaborations. Other includes restructuring charges associated with streamlining global operations.
2. The impact of the specified items by line item was as follows:
| 3Q17 | |||||||||||||||
| Cost of products sold | SG&A | R&D | Other expense, net | ||||||||||||
| As reported (GAAP) | $ | 1,616 | $ | 1,457 | $ | 1,228 | $ | 338 | |||||||
| Adjusted for specified items: | |||||||||||||||
| Intangible asset amortization | (268 | ) | - | - | - | ||||||||||
| Milestones and other R&D expenses | - | - | (32 | ) | - | ||||||||||
| Change in fair value of contingent consideration | - | - | - | (401 | ) | ||||||||||
| Litigation reserves | - | (4 | ) | - | - | ||||||||||
| Other | (6 | ) | - | - | - | ||||||||||
| As adjusted (non-GAAP) | $ | 1,342 | $ | 1,453 | $ | 1,196 | $ | (63 | ) |
3. The adjusted tax rate for the third quarter of 2017 was 19.0 percent, as detailed below:
| 3Q17 | ||||||||||
| Pre-tax income | Income taxes | Tax rate | ||||||||
| As reported (GAAP) | $ | 2,095 | $ | 464 | 22.1 | % | ||||
| Specified items | 711 | 69 | 9.7 | % | ||||||
| As adjusted (non-GAAP) | $ | 2,806 | $ | 533 | 19.0 | % |
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Nine Months Ended September 30, 2018
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
| 9M18 | |||||||||||
| Earnings | Diluted | ||||||||||
| Pre-tax | After-tax | EPS | |||||||||
| As reported (GAAP) | $ | 7,570 | $ | 7,513 | $ | 4.79 | |||||
| Adjusted for specified items: | |||||||||||
| Intangible asset amortization | 974 | 801 | 0.51 | ||||||||
| Milestones and other R&D expenses | 87 | 87 | 0.05 | ||||||||
| Acquired IPR&D | 124 | 124 | 0.08 | ||||||||
| Calico collaboration | 500 | 500 | 0.32 | ||||||||
| Charitable contributions | 235 | 182 | 0.12 | ||||||||
| Change in fair value of contingent consideration | 432 | 432 | 0.28 | ||||||||
| Litigation reserves | 346 | 276 | 0.18 | ||||||||
| Impacts of U.S. tax reform | - | (534 | ) | (0.34 | ) | ||||||
| Other | 38 | 39 | 0.02 | ||||||||
| As adjusted (non-GAAP) | $ | 10,306 | $ | 9,420 | $ | 6.01 |
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 milestone revenue under a previously announced collaboration and restructuring charges associated with streamlining global operations.
2. The impact of the specified items by line item was as follows:
| 9M18 | |||||||||||||||||||||||||||
| Net revenues | Cost of products sold | SG&A | R&D | Acquired IPR&D | Other operating expense | Other expense, net | |||||||||||||||||||||
| As reported (GAAP) | $ | 24,448 | $ | 5,696 | $ | 5,470 | $ | 3,834 | $ | 124 | $ | 500 | $ | 411 | |||||||||||||
| Adjusted for specified items: | |||||||||||||||||||||||||||
| Intangible asset amortization | - | (974 | ) | - | - | - | - | - | |||||||||||||||||||
| Milestones and other R&D expenses | - | - | - | (87 | ) | - | - | - | |||||||||||||||||||
| Acquired IPR&D | - | - | - | - | (124 | ) | - | - | |||||||||||||||||||
| Calico collaboration | - | - | - | - | - | (500 | ) | - | |||||||||||||||||||
| Charitable contributions | - | - | (235 | ) | - | - | - | - | |||||||||||||||||||
| Change in fair value of contingent consideration | - | - | - | - | - | - | (432 | ) | |||||||||||||||||||
| Litigation reserves | - | - | (346 | ) | - | - | - | - | |||||||||||||||||||
| Other | (20 | ) | (34 | ) | (1 | ) | (23 | ) | - | - | - | ||||||||||||||||
| As adjusted (non-GAAP) | $ | 24,428 | $ | 4,688 | $ | 4,888 | $ | 3,724 | $ | - | $ | - | $ | (21 | ) |
3. The adjusted tax rate for the first nine months of 2018 was 8.6 percent, as detailed below:
| 9M18 | ||||||||||
| Pre-tax income | Income taxes | Tax rate | ||||||||
| As reported (GAAP) | $ | 7,570 | $ | 57 | 0.8 | % | ||||
| Specified items | 2,736 | 829 | 30.3 | % | ||||||
| As adjusted (non-GAAP) | $ | 10,306 | $ | 886 | 8.6 | % |
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Nine Months Ended September 30, 2017
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
| 9M17 | |||||||||||
| Earnings | Diluted | ||||||||||
| Pre-tax | After-tax | EPS | |||||||||
| As reported (GAAP) | $ | 6,534 | $ | 5,257 | $ | 3.27 | |||||
| Adjusted for specified items: | |||||||||||
| Intangible asset amortization | 808 | 606 | 0.37 | ||||||||
| Milestones and other R&D expenses | 68 | 68 | 0.04 | ||||||||
| Acquired IPR&D | 15 | 15 | 0.01 | ||||||||
| Acquisition related costs | 73 | 49 | 0.03 | ||||||||
| Change in fair value of contingent consideration | 547 | 546 | 0.34 | ||||||||
| Litigation reserves | 97 | 65 | 0.04 | ||||||||
| Other | 19 | 16 | 0.01 | ||||||||
| As adjusted (non-GAAP) | $ | 8,161 | $ | 6,622 | $ | 4.11 |
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. Acquisition related costs primarily includes the amortization of the acquisition date fair value step-up for inventory related to the acquisition of Pharmacyclics. Other includes restructuring charges associated with streamlining global operations.
2. The impact of the specified items by line item was as follows:
| 9M17 | |||||||||||||||||||
| Cost of products sold | SG&A | R&D | Acquired IPR&D | Other expense, net | |||||||||||||||
| As reported (GAAP) | $ | 4,761 | $ | 4,339 | $ | 3,599 | $ | 15 | $ | 449 | |||||||||
| Adjusted for specified items: | |||||||||||||||||||
| Intangible asset amortization | (808 | ) | - | - | - | - | |||||||||||||
| Milestones and other R&D expenses | - | - | (68 | ) | - | - | |||||||||||||
| Acquired IPR&D | - | - | - | (15 | ) | - | |||||||||||||
| Acquisition related costs | (52 | ) | (14 | ) | (5 | ) | - | (2 | ) | ||||||||||
| Change in fair value of contingent consideration | - | - | - | - | (547 | ) | |||||||||||||
| Litigation reserves | - | (97 | ) | - | - | - | |||||||||||||
| Other | (14 | ) | (5 | ) | - | - | - | ||||||||||||
| As adjusted (non-GAAP) | $ | 3,887 | $ | 4,223 | $ | 3,526 | $ | - | $ | (100 | ) |
3. The adjusted tax rate for the first nine months of 2017 was 18.9 percent, as detailed below:
| 9M17 | ||||||||||
| Pre-tax income | Income taxes | Tax rate | ||||||||
| As reported (GAAP) | $ | 6,534 | $ | 1,277 | 19.5 | % | ||||
| Specified items | 1,627 | 262 | 16.1 | % | ||||||
| As adjusted (non-GAAP) | $ | 8,161 | $ | 1,539 | 18.9 | % |