Nov 2, 2018 SOURCE: PR NewsWire
AbbVie Reports Third-Quarter 2018 Financial Results
NORTH CHICAGO, Ill., Nov. 2, 2018 /PRNewswire/ -- 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
-- Worldwide GAAP net revenues were $8.236 billion in the third quarter, up
17.8 percent year-over-year. Worldwide adjusted net revenues of $8.236
billion increased 18.5 percent on an operational basis, excluding a 0.7
percent unfavorable impact from foreign exchange.
-- Global HUMIRA sales increased 9.0 percent on a reported basis, or 9.8
percent operationally, excluding a 0.8 percent unfavorable impact from
foreign exchange. In the U.S., HUMIRA sales grew 12.5 percent in the
quarter. Internationally, HUMIRA sales grew 4.2 percent, excluding a 2.4
percent unfavorable impact from foreign exchange.
-- Third-quarter global IMBRUVICA net revenues were $972 million, with U.S.
sales of $812 million and international profit sharing of $160 million
for the quarter, reflecting growth of 41.3 percent.
-- Third-quarter global HCV net revenues were $862 million.
-- On a GAAP basis, the gross margin ratio in the third quarter was 77.7
percent. The adjusted gross margin ratio was 81.7 percent.
-- On a GAAP basis, selling, general and administrative expense was 23.3
percent of net revenues. The adjusted SG&A expense was 19.1 percent of
net revenues.
-- On a GAAP basis, research and development expense was 15.4 percent of
net revenues. The adjusted R&D expense was 15.4 percent, reflecting
funding actions supporting all stages of our pipeline.
-- On a GAAP basis, the operating margin in the third quarter was 38.4
percent. The adjusted operating margin was 47.2 percent.
-- On a GAAP basis, net interest expense was $302 million. On a GAAP basis,
the tax rate in the quarter was 0.5 percent. The adjusted tax rate was
9.1 percent.
-- Diluted EPS in the third quarter was $1.81 on a GAAP basis. Adjusted
diluted EPS, excluding specified items, was $2.14, up 51.8 percent.
Recent Events
-- AbbVie announced U.S. Food and Drug Administration (FDA) approval, under
Priority Review, of IMBRUVICA (ibrutinib) plus rituximab for the
treatment of adult patients with Waldenström's macroglobulinemia (WM),
a rare and incurable type of non-Hodgkin's lymphoma (NHL). With this
approval, the IMBRUVICA prescribing information now includes combination
use with rituximab, representing the first and only chemotherapy-free
combination treatment specifically indicated for the disease. The
approval 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 experienced an 80 percent
reduction in relative risk of disease progression or death compared to
those only treated with rituximab. IMBRUVICA is jointly developed and
commercialized with Janssen Biotech, Inc.
-- AbbVie announced FDA acceptance of a supplemental New Drug Application
(sNDA) for Priority Review for IMBRUVICA in combination with
obinutuzumab in previously untreated adult patients with chronic
lymphocytic leukemia or small lymphocytic lymphoma (CLL/SLL). The
submission is based on positive results from the Phase 3 iLLUMINATE
(PCYC-1130) trial, which demonstrated superior progression-free survival
for IMBRUVICA plus obinutuzumab versus chlorambucil plus obinutuzumab in
CLL/SLL. If approved, the use of IMBRUVICA with obinutuzumab would
become the first chemotherapy-free, anti-CD20 combination approved by
the FDA for the first-line treatment of CLL/SLL.
-- AbbVie announced the FDA expanded the label for VENCLEXTA (venetoclax)
in combination with rituximab to include information about patients with
previously-treated CLL who achieved minimal residual disease
(MRD)-negativity in the Phase 3 MURANO trial. In the MURANO study, more
than half (53 percent) of patients treated with the VENCLEXTA and
rituximab combination achieved MRD-negativity (undetectable disease) in
their blood after approximately nine months on therapy, while 12 percent
of patients treated with the standard chemoimmunotherapy regimen of
bendamustine plus rituximab achieved MRD-negativity. 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 that the European Commission (EC) has approved the
type-II variation application for VENCLYXTO (venetoclax) in combination
with rituximab for the treatment of patients with relapsed/refractory
(R/R) CLL who have received at least one prior therapy. This approval
allows more patients to receive VENCLYXTO in combination with rituximab
in the second-line setting and gives healthcare providers the ability to
prescribe this medicine to a broader population of patients with R/R CLL
than the previously approved indication for VENCLYXTO as monotherapy in
the European Union. The approval is based on results from the Phase 3
MURANO trial, which demonstrated a statistically significant improvement
in investigator-assessed progression-free survival for patients who
received VENCLYXTO plus rituximab compared with bendamustine plus
rituximab.
-- The FDA accepted for Priority Review a supplemental NDA 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.
-- AbbVie announced positive results from CLL14, a Phase 3, randomized
clinical trial evaluating VENCLEXTA plus obinutuzumab versus
obinutuzumab plus chlorambucil in patients with CLL and coexisting
medical conditions who have not received a prior treatment. The study
met its primary endpoint of investigator-assessed progression-free
survival with a 12 months fixed duration of treatment. Results from the
CLL14 trial will be presented at a future medical meeting.
-- At the European Academy of Dermatology and Venereology (EADV) Congress,
AbbVie presented new data from its investigational medicines,
risankizumab and upadacitinib, and HUMIRA across multiple dermatological
conditions. Presentations included clinical and patient-reported
outcomes data from three pivotal Phase 3 trials evaluating risankizumab
in psoriasis, 32-week safety and efficacy data and patient-reported
outcomes data from a Phase 2b trial evaluating upadacitinib in atopic
dermatitis and long-term safety and efficacy data evaluating HUMIRA in
hidradenitis suppurativa. Risankizumab is being developed in
collaboration with Boehringer Ingelheim.
-- At the American College of Rheumatology (ACR)/Association for
Rheumatology Health Professionals (ARHP) Annual Meeting, AbbVie
presented new data for upadacitinib, an investigational oral
JAK1-selective inhibitor, and HUMIRA, with 35 abstracts presented across
multiple rheumatic conditions, including rheumatoid arthritis, psoriatic
arthritis, juvenile idiopathic arthritis and uveitis. Included in the
presentations were data from three of the five pivotal studies from the
SELECT Phase 3 program evaluating the safety and efficacy of
upadacitinib in patients with moderate to severe rheumatoid arthritis.
-- At the United European Gastroenterology Week (UEGW) conference, AbbVie
showcased its gastroenterology portfolio with 11 presentations of Humira
and pipeline data, including the first presentation of data from a Phase
2b study (U-ACHIEVE) evaluating upadacitinib in adult patients with
moderately to severely active ulcerative colitis. Results from the
U-ACHIEVE study demonstrated that after 8 weeks, upadacitinib (15/30/45
mg, once daily) met the primary endpoint of clinical remission (per
adapted Mayo Score) and ranked secondary endpoints, including endoscopic
improvement, clinical remission (per Full Mayo Score) and clinical
response, in patients with moderately to severely active ulcerative
colitis.
-- AbbVie received FDA approval of Humira for the treatment of
non-infectious intermediate, posterior, and panuveitis in patients down
to 2 years of age and for the treatment of hidradenitis suppurativa in
adolescent patients 12 years of age and older.
-- AbbVie, in cooperation with Neurocrine Biosciences, announced the FDA
and Health Canada approvals of 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.
-- AbbVie, in cooperation with Neurocrine Biosciences, announced top-line
results from the Phase 3 ELARIS UF-EXTEND extension study, which is
evaluating the efficacy and safety of elagolix alone and in combination
with low-dose hormone (add-back) therapy in premenopausal women with
heavy menstrual bleeding associated with uterine fibroids for an
additional six months (up to 12 months total) following treatment in one
of the two pivotal Phase 3 studies, ELARIS UF-I and ELARIS UF-II. The
extension study results showed elagolix, in combination with add-back
therapy, reduced heavy menstrual bleeding for up to 12 months, with 87.9
percent of women with uterine fibroids achieving clinical response. The
primary and secondary endpoint results from the extension study were
consistent with that observed in the two pivotal Phase 3 studies. Data
from the pivotal Phase 3 studies will be presented at a medical
conference later this year and the ELARIS UF-EXTEND Phase 3 study data
will be presented at a future medical conference. Data from the Phase 3
program will support regulatory submission for elagolix in uterine
fibroids, anticipated in 2019.
-- AbbVie announced that it will assume full development and commercial
responsibility for its collaboration with Galapagos to discover and
develop new therapies to treat cystic fibrosis (CF). Under a revised
agreement, AbbVie will assume full development and commercial
responsibility over the investigational program comprising several
clinical and pre-clinical compounds originally discovered and developed
jointly by AbbVie and Galapagos. Galapagos will not pursue further
research and development in CF, but is eligible for future milestones
and royalties on commercialized programs.
-- AbbVie announced global resolutions of all intellectual property-related
litigation with two manufacturers, Sandoz and Fresenius Kabi, over their
proposed biosimilar adalimumab products. Under the terms of the
settlement agreements, AbbVie will grant to Sandoz and Fresenius Kabi
non-exclusive licenses to AbbVie's intellectual property relating to
HUMIRA beginning on certain dates in certain countries in which AbbVie
has intellectual property. The license period will begin on September
30, 2023 in the U.S. for both Sandoz and Fresenius Kabi, and will not be
accelerated by the entry of companies who have already taken a license.
The license for Sandoz began on October 16, 2018 in most countries in
the European Union, and will begin on other dates in various countries
in which AbbVie has intellectual property. In the European Union,
Fresenius Kabi can launch upon approval from the European Medicines
Agency. Sandoz and Fresenius Kabi will pay royalties to AbbVie for
licensing its HUMIRA patents and both manufacturers acknowledge the
validity of the licensed patents. AbbVie will make no payments to Sandoz
or Fresenius Kabi. The precise terms are confidential between the
parties. All litigation pending between the parties will be dismissed.
On September 28, 2017, AbbVie announced a global resolution with Amgen
to enter the U.S. on January 31, 2023, and on April 5, 2018, AbbVie
announced a similar resolution with Samsung Bioepis to enter the U.S. on
June 30, 2023. On July 17, 2018, AbbVie announced resolution with Mylan
to enter the U.S. on July 31, 2023.
-- AbbVie made charitable contributions totaling $115 million in the third
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 $6.43 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.
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, LinkedIn or Instagram.
Conference Call
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.
AbbVie Inc.
Key Product Revenues
Quarter Ended September 30, 2018
(Unaudited)
% 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
Imbruvicab 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
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
Nine Months Ended September 30, 2018
(Unaudited)
% 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
Imbruvicab 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
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 Nine Months Ended September 30, 2018 and 2017
(Unaudited) (In millions, except per share data)
Third Quarter Nine Months
Ended September 30
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
sharea $
2.14 $
1.41 $
6.01 $
4.11
Weighted-average
diluted shares
outstanding 1,515 1,603 1,561 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 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
SG&A Acquired Other
products IPR&D expense,
sold 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 Tax rate
income
taxes
---
As reported (GAAP) $
2,761 $
14 0.5
%
Specified items 820 312 38.1
%
As adjusted (non-GAAP) $
3,581 $
326 9.1
%
===
AbbVie Inc.
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
SG&A
R&D Other
products expense,
sold 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 Tax rate
income
taxes
---
As reported (GAAP) $
2,095 $
464 22.1
%
Specified items 711 69 9.7
%
As adjusted (non-GAAP) $
2,806 $
533 19.0
%
===
AbbVie Inc.
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 Cost of
SG&A
R&D Acquired Other Other
revenues products IPR&D operating expense,
sold 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 Tax rate
income
taxes
---
As reported (GAAP) $
7,570 $
57 0.8
%
Specified items 2,736 829 30.3
%
As adjusted (non-GAAP) $
10,306 $
886 8.6
%
===
AbbVie Inc.
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
SG&A
R&D Acquired Other
products IPR&D expense,
sold 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 Tax rate
income
taxes
---
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
%
===
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SOURCE AbbVie
