AbbVie Reports Second-Quarter 2018 Financial Results

NORTH CHICAGO, Ill., July 27, 2018 /PRNewswire/ -- 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

    --  Worldwide GAAP net revenues were $8.278 billion in the second quarter,
        up 19.2 percent year-over-year. Worldwide adjusted net revenues of
        $8.258 billion increased 17.1 percent on an operational basis, excluding
        a 1.8 percent favorable impact from foreign exchange.
    --  Global HUMIRA sales increased 10.0 percent on a reported basis, or 8.2
        percent operationally, excluding a 1.8 percent favorable impact from
        foreign exchange. In the U.S., HUMIRA sales grew 10.0 percent in the
        quarter. Internationally, HUMIRA sales grew 4.4 percent, excluding a 5.4
        percent favorable impact from foreign exchange.
    --  Second-quarter global IMBRUVICA net revenues were $850 million, with
        U.S. sales of $693 million and international profit sharing of $157
        million for the quarter, reflecting growth of 35.6 percent.
    --  Second-quarter global HCV net revenues were $973 million.
    --  On a GAAP basis, the gross margin ratio in the second quarter was 76.6
        percent. The adjusted gross margin ratio was 80.5 percent.
    --  On a GAAP basis, selling, general and administrative expense was 21.3
        percent of net revenues. The adjusted SG&A expense was 19.9 percent of
        net revenues.
    --  On a GAAP basis, research and development expense was 16.0 percent of
        net revenues. The adjusted R&D expense was 15.3 percent, reflecting
        funding actions supporting all stages of our pipeline.
    --  On a GAAP basis, the operating margin in the second quarter was 33.4
        percent. The adjusted operating margin was 45.3 percent.
    --  On a GAAP basis, net interest expense was $272 million. On a GAAP basis,
        the tax rate in the quarter was 1.5 percent. The adjusted tax rate was
        9.0 percent.
    --  Diluted EPS in the second quarter was $1.26 on a GAAP basis. Adjusted
        diluted EPS, excluding specified items, was $2.00, up 40.8 percent.

Recent Events

    --  AbbVie, in cooperation with Neurocrine Biosciences, announced the U.S.
        Food and Drug Administration (FDA) approved, under Priority Review,
        ORILISSA (elagolix) for the management of moderate to severe pain
        associated with endometriosis. ORILISSA represents the first
        FDA-approved oral treatment for the management of moderate to severe
        pain associated with endometriosis in over a decade and is expected to
        be available in U.S. retail pharmacies in early August 2018.
    --  At the American College of Obstetricians and Gynecologists (ACOG) Annual
        Clinical and Scientific Meeting, AbbVie, in cooperation with Neurocrine
        Biosciences, presented new data highlighting the company's research in
        endometriosis and uterine fibroids. Presentations for elagolix included
        long-term safety and efficacy data from two extension Phase 3 studies,
        as well as new data highlighting rescue analgesic use, fatigue scores,
        and pain burden from pivotal Phase 3 studies of elagolix in women with
        moderate to severe pain associated with endometriosis. New data from a
        Phase 2b study highlighting the impact of elagolix on productivity in
        women with uterine fibroids was also presented.
    --  AbbVie announced FDA approval, under Priority Review, of VENCLEXTA in
        combination with rituximab as a treatment for patients with chronic
        lymphocytic leukemia (CLL) or small lymphocytic lymphoma (SLL), with or
        without 17p deletion, who have received at least one prior therapy. The
        approval is based on data from the Phase 3 MURANO trial, which
        demonstrated a significant improvement in progression-free survival
        (PFS) for relapsed/refractory (R/R) CLL patients, reducing the risk of
        disease progression or death by 81 percent when compared to bendamustine
        in combination with rituximab, a standard of care chemoimmunotherapy
        regimen. The FDA also approved expansion of the indication of VENCLEXTA
        as monotherapy for CLL or SLL patients, with or without 17p deletion,
        who have received one prior therapy. Outside of the U.S., regulatory
        submissions to and reviews with health authorities are underway.
        VENCLEXTA is being developed by AbbVie and Roche; it is jointly
        commercialized by AbbVie and Genentech, a member of the Roche Group, in
        the U.S. and by AbbVie outside of the U.S.
    --  AbbVie announced submission of a supplemental new drug application
        (sNDA) to the FDA for VENCLEXTA in combination with a hypomethylating
        agent (HMA) or in combination with low dose cytarabine (LDAC) for the
        treatment of newly diagnosed patients with acute myeloid leukemia (AML)
        who are ineligible for intensive chemotherapy. VENCLEXTA has received
        two Breakthrough Therapy Designations from the FDA for combination
        treatments of patients with untreated AML not eligible for standard
        induction chemotherapy.
    --  At the European Hematology Association (EHA) Annual Congress, AbbVie
        presented new data from several investigational studies of VENCLEXTA as
        monotherapy or in combination for the management of a number of
        difficult-to-treat blood cancers. Multiple studies investigating
        VENCLEXTA in CLL, AML, multiple myeloma (MM), and acute lymphoblastic
        leukemia (ALL) were presented, including results from a new analysis of
        undetectable minimal residual disease (uMRD) rates from the Phase 3
        MURANO trial of VENCLEXTA in combination with rituximab in patients with
        R/R CLL.
    --  At the Annual Meeting of the American Society of Clinical Oncology
        (ASCO), AbbVie presented data from studies evaluating IMBRUVICA
        (ibrutinib) and VENCLEXTA across multiple hematologic malignancies,
        including positive data from the Phase 2 CAPTIVATE study evaluating
        IMBRUVICA in combination with VENCLEXTA in previously-untreated CLL/SLL
        patients. Also featured at ASCO were data from late-stage
        investigational products, including rovalpituzumab tesirine (Rova-T),
        depatuxizumab mafodotin (Depatux-M) and veliparib, as well as data from
        early-stage investigational compounds, including ABBV-075 (Mivebresib)
        and ABT-165.
    --  AbbVie announced the FDA has accepted for Priority Review a supplemental
        NDA for IMBRUVICA in combination with rituximab as a new treatment
        option for Waldenström's macroglobulinemia (WM), a rare and incurable
        form of blood cancer. The filing is based on data from the Phase 3
        iNNOVATE study, which demonstrated a significant improvement in
        progression-free survival (PFS) with IMBRUVICA plus rituximab compared
        to rituximab alone. Patients taking IMBRUVICA plus rituximab also
        experienced an 80 percent reduction in relative risk of disease
        progression or death than those only treated with rituximab. If
        approved, the sNDA would expand the prescribing information of IMBRUVICA
        in WM beyond its current approved use as a single agent for all lines of
        therapy to include combination use with rituximab. Data from the Phase 3
        iNNOVATE study was featured as an oral presentation at ASCO. IMBRUVICA
        is jointly developed and commercialized with Janssen Biotech, Inc.
    --  AbbVie announced positive top-line results from the Phase 3 iLLUMINATE
        trial, which evaluated IMBRUVICA in combination with obinutuzumab in
        previously untreated CLL/SLL patients. The study met its primary
        endpoint for a clinically and statistically significant difference in
        PFS for patients treated with IMBRUVICA plus obinutuzumab versus those
        who received chlorambucil plus obinutuzumab. Regulatory submissions to
        health authorities are planned for the second half of 2018 based on
        iLLUMINATE results for this chemotherapy-free CD20 combination in
        first-line CLL.
    --  AbbVie announced topline results from the Phase 3 PHOENIX trial
        (DBL3001) evaluating the investigational use of IMBRUVICA in the
        treatment of newly diagnosed non-Germinal Center B-cell (non-GCB)
        subtype of diffuse large B-cell lymphoma (DLBCL). The DBL3001 study
        evaluated the addition of IMBRUVICA to a chemotherapy regimen consisting
        of five different agents used in combination - rituximab,
        cyclophosphamide, doxorubicin, vincristine, and prednisone (R-CHOP) -
        versus R-CHOP plus placebo. The DBL3001 study targeted a subtype of
        DLBCL disease that typically has poorer treatment outcomes. At the
        conclusion of the study, data collected found that IMBRUVICA plus
        R-CHOP, was not superior to R-CHOP alone, and that the study did not
        meet its primary endpoint of improving event-free survival (EFS) in the
        targeted patient population. Full results from this study will be
        submitted for presentation at a future medical meeting.
    --  AbbVie announced positive top-line results from the Phase 3 SELECT-EARLY
        trial, which evaluated the company's investigational oral JAK1-selective
        inhibitor, upadacitinib, as a monotherapy treatment compared to
        methotrexate (MTX) monotherapy in adult patients with moderate to severe
        rheumatoid arthritis (RA) who were MTX-naïve. The results showed that
        both once-daily doses of upadacitinib monotherapy (15mg and 30mg) met
        the primary endpoints of ACR50 at week 12 and clinical remission at week
        24 versus MTX monotherapy. Additionally, all ranked secondary endpoints
        were met with both doses. Both doses of upadacitinib monotherapy also
        significantly inhibited radiographic progression (mTSS) from baseline at
        week 24 compared to MTX. The safety profile of upadacitinib was
        consistent with previously reported Phase 3 SELECT trials and Phase 2
        studies, with no new safety signals detected. The company expects to
        submit regulatory applications in the fourth quarter of 2018.
    --  AbbVie presented new patient-reported outcome data at the Annual
        European Congress of Rheumatology (EULAR) from three Phase 3 trials
        evaluating upadacitinib in adult patients with moderate to severe RA.
        New data highlighted improvements in pain, physical function and morning
        joint stiffness after 12 weeks of treatment with upadacitinib (15 mg and
        30 mg, once-daily) in SELECT-NEXT and SELECT-BEYOND and after 14 weeks
        of treatment in SELECT-MONOTHERAPY. Additionally, improvements were
        reported in fatigue and work instability in SELECT-NEXT and patients'
        physical component of health-related quality of life in SELECT-NEXT and
        SELECT-BEYOND at 12 weeks. In SELECT-MONOTHERAPY, upadacitinib
        monotherapy demonstrated improvements in patients' physical function and
        health-related quality of life, as well as reductions in the duration of
        morning joint stiffness compared to patients receiving methotrexate.
    --  AbbVie submitted a Biologics License Application (BLA) to the FDA and a
        marketing authorization application (MAA) to the European Medicines
        Agency (EMA) for risankizumab for the treatment of patients with
        moderate to severe plaque psoriasis. The BLA and MAA are supported by
        data from the global risankizumab Phase 3 psoriasis program evaluating
        more than 2,000 patients with moderate to severe plaque psoriasis across
        four pivotal Phase 3 studies: ultIMMa-1, ultIMMa-2, IMMhance and
        IMMvent. Risankizumab is being developed in collaboration with
        Boehringer Ingelheim.
    --  AbbVie announced a collaboration with Calibr, a nonprofit drug discovery
        division of Scripps Research, to develop T-cell therapies aimed
        primarily at cancer. Calibr's novel cell therapy program is designed to
        enhance safety, versatility and efficacy through a proprietary modular
        "switchable" CAR-T cell that uses antibody-based switch molecules to
        control the activation and antigen specificity of CAR-T cells. Calibr's
        proprietary technology may enable the development of universal
        CAR-T-based treatments across several types of hematological and solid
        tumor indications. This collaboration broadens AbbVie's oncology
        research to access advanced precision medicine technology to expand the
        development of potentially life-changing treatments for patients with
        cancer.
    --  AbbVie announced an extension of its collaboration with Calico, an
        Alphabet-backed life sciences company, to discover, develop and bring to
        market new therapies for patients with age-related diseases, including
        neurodegeneration and cancer. Working together with AbbVie, Calico is
        pursuing discovery-stage research and development. AbbVie provides
        scientific and clinical development support and will lend its commercial
        expertise to lead future development and commercialization activities.
        Since 2014, the collaboration between the two companies has produced
        more than two dozen early-stage programs addressing disease states
        across oncology and neuroscience and has yielded new insights into the
        biology of aging.
    --  AbbVie announced patent license agreements with Mylan over its proposed
        biosimilar adalimumab product. Under the terms of the agreements, AbbVie
        will grant Mylan a non-exclusive license on specified dates to AbbVie's
        intellectual property relating to HUMIRA in the United States and in
        various other countries around the world in which AbbVie has
        intellectual property, excluding Europe. Mylan's U.S. license will begin
        on July 31, 2023. Mylan will pay royalties to AbbVie for licensing its
        HUMIRA patents once its biosimilar product is launched.
    --  AbbVie made charitable contributions totaling $120 million in the second
        quarter. These donations are part of AbbVie's plan to make an additional
        $350 million in charitable contributions to U.S. not-for-profit
        organizations in 2018. The contributions will provide AbbVie with the
        opportunity to support charities creating long-term impact in
        communities in need, including Puerto Rico, North Chicago and cities
        across America.

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
                                                                                                          ======                             ======          =====


    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)
                                                                                   ======                     ======                  ======                 ======        ===  ===  ====



    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%
                                                                                              ======                     ====        ===


                                                                                   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)
                                                                                   ======                   ======                    ======     === ===  ====



    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%
                                                                                                ======                     ====        ====


                                                                                  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)
                                                                                   =======                     ======                    ======                     ======       === ===       === ===   ====



    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%
                                                                                              ======                      ====        ===


                                                                                   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)
                                                                                   ======                   ======                    ======      === ===  ====



    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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SOURCE AbbVie