AbbVie announced financial results for the second quarter ended June 30, 2018.
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AbbVie (NYSE: ABBV) announced financial results for the second quarter ended June 30, 2018. "We are extremely pleased with the strong momentum of our business in the quarter and progress year-to-date. We've driven strong commercial, operational and R&D execution, resulting in top- and bottom-line results once again ahead of our expectations," said Richard A. Gonzalez, chairman and chief executive officer, AbbVie. "This outstanding performance was driven by growth from several assets across our portfolio, including significant contributions from HUMIRA, IMBRUVICA, and MAVYRET. Based on our performance in the first half of the year and the tremendous confidence we have in our business, we are raising our full year 2018 EPS guidance for the third time." Second-Quarter Results
Recent Events
Full-Year 2018 Outlook AbbVie is updating its GAAP diluted EPS guidance for the full-year 2018 to $6.47 to $6.57. AbbVie is raising its adjusted EPS guidance range for the full-year 2018 from $7.66 to $7.76 to $7.76 to $7.86. The midpoint of this guidance reflects year-over-year growth of 39.5 percent. The company's 2018 adjusted diluted EPS guidance excludes $1.29 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. About AbbVie 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. Conference Call AbbVie will host an investor conference call today at 8:00 a.m. Central time to discuss our second-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. AbbVie Inc.
Key Product Revenues
Quarter Ended June 30, 2018
(Unaudited)
% Change vs. 2Q17
Net Revenues (in millions) International Total
U.S. Int'l. Total U.S. Operational Reported Operational Reported
---- ------ ----- ---- ----------- -------- ----------- --------
ADJUSTED NET
REVENUESa $5,449 $2,809 $8,258 17.3% 16.9% 22.2% 17.1% 18.9%
Humira 3,521 1,664 5,185 10.0 4.4 9.8 8.2 10.0
Imbruvicab 693 157 850 31.1 59.5 59.5 35.6 35.6
HCV 422 551 973 >100.0 >100.0 >100.0 >100.0 >100.0
Creon 219 - 219 11.4 n/a n/a 11.4 11.4
Lupron 180 43 223 4.3 11.0 13.2 5.5 5.9
Synthroid 193 - 193 0.1 n/a n/a 0.1 0.1
Synagis - 44 44 n/a 13.2 10.1 13.2 10.1
AndroGel 128 - 128 (16.8) n/a n/a (16.8) (16.8)
Duodopa 20 88 108 41.6 21.5 31.0 25.1 32.9
Sevoflurane 19 94 113 (2.0) 9.0 10.8 6.9 8.4
Kaletra 13 78 91 (29.7) (16.7) (15.3) (19.0) (17.8)
Note: "Operational" growth reflects the
percentage change over the prior year
excluding the impact of exchange rate
fluctuations.
n/a = not applicable
a Adjusted net revenues exclude
specified items. Refer to the
Reconciliation of GAAP Reported to
Non-GAAP Adjusted Information for
further details. Percentage change
is calculated using adjusted net
revenues.
b Reflects profit sharing for
Imbruvica international revenues.
AbbVie Inc.
Key Product Revenues
Six Months Ended June 30, 2018
(Unaudited)
% Change vs. 6M17
Net Revenues (in millions) International Total
U.S. Int'l. Total U.S. Operational Reported Operational Reported
---- ------ ----- ---- ----------- -------- ----------- --------
ADJUSTED NET
REVENUESa $10,239 $5,953 $16,192 17.7% 16.7% 24.4% 17.4% 20.1%
Humira 6,524 3,370 9,894 10.6 6.7 14.7 9.3 12.0
Imbruvicab 1,317 295 1,612 33.7 53.5 53.5 36.9 36.9
HCV 765 1,127 1,892 >100.0 >100.0 >100.0 >100.0 >100.0
Creon 428 - 428 12.1 n/a n/a 12.1 12.1
Lupron 357 85 442 9.2 6.6 10.4 8.8 9.5
Synthroid 375 - 375 (2.6) n/a n/a (2.6) (2.6)
Synagis - 365 365 n/a 1.9 7.3 1.9 7.3
AndroGel 258 - 258 (11.1) n/a n/a (11.1) (11.1)
Duodopa 38 173 211 36.4 17.5 29.7 20.8 30.9
Sevoflurane 36 183 219 (2.8) 1.6 5.1 0.9 3.7
Kaletra 26 138 164 (29.5) (28.9) (26.6) (29.0) (27.1)
Note: "Operational" growth reflects the
percentage change over the prior year
excluding the impact of exchange rate
fluctuations.
n/a = not applicable
a Adjusted net revenues exclude
specified items. Refer to the
Reconciliation of GAAP Reported to
Non-GAAP Adjusted Information for
further details. Percentage change
is calculated using adjusted net
revenues.
b Reflects profit sharing for
Imbruvica international revenues.
AbbVie Inc.
Consolidated Statements of Earnings
Quarter and Six Months Ended June 30, 2018 and 2017
(Unaudited) (In millions, except per share data)
Second Quarter Six Months
Ended June 30 Ended June 30
2018 2017 2018 2017
---- ---- ---- ----
Net revenues $8,278 $6,944 $16,212 $13,482
Cost of products
sold 1,934 1,529 3,861 3,145
Selling, general and
administrative 1,760 1,509 3,551 2,882
Research and
development 1,322 1,229 2,566 2,371
Acquired in-process
research and
development - 15 69 15
Other expense 500 - 500 -
--- --- --- ---
Total operating cost
and expenses 5,516 4,282 10,547 8,413
----- ----- ------ -----
Operating earnings 2,762 2,662 5,665 5,069
Interest expense,
net 272 253 523 500
Net foreign exchange
loss 8 6 16 19
Other expense, net 470 50 317 111
--- --- --- ---
Earnings before
income tax expense 2,012 2,353 4,809 4,439
Income tax expense 29 438 43 813
--- --- --- ---
Net earnings $1,983 $1,915 $4,766 $3,626
====== ====== ====== ======
Diluted earnings per
share $1.26 $1.19 $2.99 $2.25
===== ===== ===== =====
Adjusted diluted
earnings per sharea $2.00 $1.42 $3.87 $2.70
===== ===== ===== =====
Weighted-average
diluted shares
outstanding 1,572 1,600 1,584 1,602
a Refer to the Reconciliation of GAAP
Reported to Non-GAAP Adjusted
Information for further details.
AbbVie Inc.
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Quarter Ended June 30, 2018
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
2Q18
Earnings Diluted
Pre-tax After-tax EPS
------- --------- ---
As reported (GAAP) $2,012 $1,983 $1.26
Adjusted for specified items:
Intangible asset amortization 324 266 0.17
Milestones and other R&D expenses 55 55 0.03
Calico collaboration 500 500 0.32
Charitable contributions 120 93 0.06
Change in fair value of contingent consideration 485 485 0.30
Impacts of U.S. tax reform - (202) (0.13)
Other (20) (15) (0.01)
As adjusted (non-GAAP) $3,476 $3,165 $2.00
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Milestones and other R&D expenses
are associated with milestone
payments for previously announced
collaborations. 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.
2. The impact of the specified items by line item was as follows:
2Q18
Net Cost of SG&A R&D Other Other
revenues products operating expense,
sold expense net
---- ------- ---
As reported (GAAP) $8,278 $1,934 $1,760 $1,322 $500 $470
Adjusted for specified items:
Intangible asset amortization - (324) - - - -
Milestones and other R&D expenses - - - (55) - -
Calico collaboration - - - - (500) -
Charitable contributions - - (120) - - -
Change in fair value of contingent consideration - - - - - (485)
Other (20) (3) 3 - - -
As adjusted (non-GAAP) $8,258 $1,607 $1,643 $1,267 $ - $(15)
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3. The adjusted tax rate for the second quarter of 2018 was 9.0 percent, as detailed below:
2Q18
Pre-tax Income Tax rate
income taxes
------ -----
As reported (GAAP) $2,012 $29 1.5%
Specified items 1,464 282 19.3%
As adjusted (non-GAAP) $3,476 $311 9.0%
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AbbVie Inc.
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Quarter Ended June 30, 2017
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
2Q17
Earnings Diluted
Pre-tax After-tax EPS
------- --------- ---
As reported (GAAP) $2,353 $1,915 $1.19
Adjusted for specified items:
Intangible asset amortization 269 202 0.12
Milestones and other R&D expenses 8 8 0.01
Acquired IPR&D 15 15 0.01
Acquisition related costs 35 24 0.01
Change in fair value of contingent consideration 61 61 0.04
Litigation reserves 93 62 0.04
Other 3 2 -
As adjusted (non-GAAP) $2,837 $2,289 $1.42
====== ====== =====
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:
2Q17
Cost of SG&A R&D Acquired Other
products IPR&D expense,
sold net
---- ---
As reported (GAAP) $1,529 $1,509 $1,229 $15 $50
Adjusted for specified items:
Intangible asset amortization (269) - - - -
Milestones and other R&D expenses - - (8) - -
Acquired IPR&D - - - (15) -
Acquisition related costs (26) (5) (3) - (1)
Change in fair value of contingent consideration - - - - (61)
Litigation reserves - (93) - - -
Other (2) (1) - - -
As adjusted (non-GAAP) $1,232 $1,410 $1,218 $ - $(12)
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3. The adjusted tax rate for the second quarter of 2017 was 19.3 percent, as detailed below:
2Q17
Pre-tax Income Tax rate
income taxes
------ -----
As reported (GAAP) $2,353 $438 18.6%
Specified items 484 110 22.7%
As adjusted (non-GAAP) $2,837 $548 19.3%
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AbbVie Inc.
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Six Months Ended June 30, 2018
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
6M18
Earnings Diluted
Pre-tax After-tax EPS
------- --------- ---
As reported (GAAP) $4,809 $4,766 $2.99
Adjusted for specified items:
Intangible asset amortization 654 538 0.34
Milestones and other R&D expenses 87 87 0.05
Acquired IPR&D 69 69 0.04
Calico collaboration 500 500 0.32
Charitable contributions 120 93 0.06
Change in fair value of contingent consideration 337 337 0.21
Litigation reserves 118 100 0.06
Impacts of U.S. tax reform - (357) (0.22)
Other 31 32 0.02
As adjusted (non-GAAP) $6,725 $6,165 $3.87
====== ====== =====
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 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:
6M18
Net Cost of SG&A R&D Acquired Other Other
revenues products IPR&D operating expense,
sold expense net
---- ------- ---
As reported (GAAP) $16,212 $3,861 $3,551 $2,566 $69 $500 $317
Adjusted for specified items:
Intangible asset amortization - (654) - - - - -
Milestones and other R&D expenses - - - (87) - - -
Acquired IPR&D - - - - (69) - -
Calico collaboration - - - - - (500) -
Charitable contributions - - (120) - - - -
Change in fair value of contingent consideration - - - - - - (337)
Litigation reserves - - (118) - - - -
Other (20) (28) - (23) - - -
As adjusted (non-GAAP) $16,192 $3,179 $3,313 $2,456 $ - $ - $(20)
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3. The adjusted tax rate for the first six months of 2018 was 8.3 percent, as detailed below:
6M18
Pre-tax Income Tax rate
income taxes
------ -----
As reported (GAAP) $4,809 $43 0.9%
Specified items 1,916 517 27.0%
As adjusted (non-GAAP) $6,725 $560 8.3%
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AbbVie Inc.
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Six Months Ended June 30, 2017
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
6M17
Earnings Diluted
Pre-tax After-tax EPS
------- --------- ---
As reported (GAAP) $4,439 $3,626 $2.25
Adjusted for specified items:
Intangible asset amortization 540 405 0.25
Milestones and other R&D expenses 36 36 0.02
Acquired IPR&D 15 15 0.01
Acquisition related costs 73 49 0.03
Change in fair value of contingent consideration 146 145 0.09
Litigation reserves 93 62 0.04
Other 13 11 0.01
As adjusted (non-GAAP) $5,355 $4,349 $2.70
====== ====== =====
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 primarily includes
restructuring charges associated
with streamlining global operations.
2. The impact of the specified items by line item was as follows:
6M17
Cost of SG&A R&D Acquired Other
products IPR&D expense,
sold net
---- ---
As reported (GAAP) $3,145 $2,882 $2,371 $15 $111
Adjusted for specified items:
Intangible asset amortization (540) - - - -
Milestones and other R&D expenses - - (36) - -
Acquired IPR&D - - - (15) -
Acquisition related costs (52) (14) (5) - (2)
Change in fair value of contingent consideration - - - - (146)
Litigation reserves - (93) - - -
Other (8) (5) - - -
As adjusted (non-GAAP) $2,545 $2,770 $2,330 $ - $(37)
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3. The adjusted tax rate for the first six months of 2017 was 18.8 percent, as detailed below:
6M17
Pre-tax Income Tax rate
income taxes
------ -----
As
reported
(GAAP) $4,439 $813 18.3%
Specified
items 916 193 21.0%
As
adjusted
(non-
GAAP) $5,355 $1,006 18.8%
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Company Codes: NYSE:ABBV |
