AbbVie Reports Third-Quarter 2019 Financial Results
NORTH CHICAGO, Ill., Nov. 1, 2019 /PRNewswire/ -- AbbVie (NYSE:ABBV) announced financial results for the third quarter ended September 30, 2019.
"Strong performance from our Immunology and Hematologic Oncology portfolios led our growth this quarter. We are also making excellent progress with several key strategic priorities, including the recent launch of our two new immunology therapies - Rinvoq and Skyrizi - both of which are off to an impressive start, as well as continued progress toward the completion of our planned acquisition of Allergan," said Richard A. Gonzalez, chairman and chief executive officer, AbbVie. "Based on the continued momentum of our portfolio, we are once again raising our full year 2019 EPS guidance range and increasing our dividend."
Third-Quarter Results
-- Worldwide net revenues were $8.479 billion, an increase of 3.0 percent
on a reported basis, or 3.5 percent operationally.
-- Global HUMIRA net revenues of $4.936 billion decreased 3.7 percent on a
reported basis, or 3.2 percent operationally. U.S. HUMIRA net revenues
were $3.887 billion, an increase of 9.6 percent. Internationally, HUMIRA
net revenues were $1.049 billion, a decrease of 33.5 percent on a
reported basis, or 31.8 percent operationally, due to biosimilar
competition.
-- Global net revenues from the hematologic oncology portfolio were $1.478
billion, an increase of 38.3 percent on a reported basis, or 38.5
percent operationally. Global IMBRUVICA net revenues were $1.257
billion, an increase of 29.3 percent, with U.S. net revenues of $1.042
billion and international profit sharing of $215 million. Global
VENCLEXTA net revenues were $221 million.
-- Global HCV net revenues were $698 million, a decrease of 19.0 percent on
a reported basis, or 18.6 percent operationally. In the U.S., HCV net
revenues of $368 million decreased 17.0 percent in the quarter.
Internationally, HCV net revenues of $330 million decreased 21.2 percent
on a reported basis, or 20.4 percent operationally.
-- On a GAAP basis, the gross margin ratio in the third quarter was 77.4
percent. The adjusted gross margin ratio was 82.0 percent.
-- On a GAAP basis, selling, general and administrative expense was 19.5
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 26.9 percent of
net revenues. The adjusted R&D expense was 14.5 percent of net revenues,
reflecting funding actions supporting all stages of our pipeline.
-- On a GAAP basis, the operating margin in the third quarter was 30.9
percent. The adjusted operating margin was 48.4 percent.
-- On a GAAP basis, net interest expense was $420 million. The adjusted net
interest expense was $288 million. On a GAAP basis, the tax rate in the
quarter was 5.9 percent. The adjusted tax rate was 8.8 percent.
-- Diluted EPS in the third quarter was $1.26 on a GAAP basis, inclusive of
an impairment charge related to intangible assets acquired as part of
the 2016 acquisition of Stemcentrx, Inc. Adjusted diluted EPS, excluding
specified items, was $2.33.
Note: "Operational" comparisons are presented at constant currency rates and reflect comparative local currency net revenues at the prior year's foreign exchange rates.
Recent Events
-- AbbVie announced the U.S. Food and Drug Administration (FDA) approval of
RINVOQ (upadacitinib) for the treatment of moderate to severe rheumatoid
arthritis (RA) in adult patients who have had an inadequate response or
intolerance to methotrexate. The approval is based on results from the
SELECT Phase 3 program, one of the largest registrational Phase 3
programs in RA with approximately 4,400 patients evaluated across five
studies. Additionally, the European Medicines Agency's Committee for
Medicinal Products for Human Use adopted a positive opinion for RINVOQ,
for the treatment of adult patients with moderate to severe active
rheumatoid arthritis who have responded inadequately to, or who are
intolerant to one or more disease-modifying anti-rheumatic drugs.
Discovered and developed by AbbVie, RINVOQ marks the second FDA approval
of a targeted immunomodulator therapy for AbbVie this year.
-- AbbVie announced positive top-line results from its first Phase 3
clinical trial of RINVOQ in adult patients with active psoriatic
arthritis. Results from the SELECT-PsA 2 study, which evaluated RINVOQ
versus placebo in patients who did not adequately respond to treatment
with one or more biologic DMARDs, showed that both doses of RINVOQ (15
mg and 30 mg) met the primary endpoint of ACR20 response at week 12. Key
secondary endpoints were also achieved and included HAQ-DI, PASI75,
minimal disease activity, ACR50 and ACR70. The safety profile was
consistent with that of previous studies across indications, with no new
safety signals detected. Detailed study results will be presented at an
upcoming medical conference.
-- AbbVie presented new long-term data showing a significant number of
patients with moderate to severe plaque psoriasis treated with SKYRIZI
(risankizumab) experienced complete skin clearance. At the World
Congress of Dermatology (WCD), AbbVie presented data from the Phase 3
IMMhance study which showed 73 percent of patients achieved a static
Physician Global Assessment (sPGA) score of clear or almost clear skin
and 72 percent of patients achieved a Psoriasis Area and Severity Index
(PASI) 100 score at week 94, among patients who achieved sPGA 0/1 at
week 28. At the European Academy of Dermatology and Venereology (EADV),
AbbVie presented data from the Phase 3 LIMMitless trial which showed
that at approximately 2.5 years of treatment SKYRIZI provides durable
maintenance of efficacy with 87 percent of patients achieving PASI 90,
61 percent achieving PASI 100 and 86 percent achieving a sPGA score of
clear or almost clear skin. SKYRIZI is part of a collaboration between
Boehringer Ingelheim (BI) and AbbVie, with AbbVie leading development
and commercialization globally.
-- AbbVie announced the FDA approval of MAVYRET (glecaprevir/pibrentasvir)
to shorten the once-daily treatment duration from 12 to 8 weeks in
treatment-naïve, compensated cirrhotic, chronic hepatitis C (HCV)
patients across all genotypes. Mavyret was previously approved by the
FDA as an 8-week, pan-genotypic treatment for treatment-naïve HCV
patients without cirrhosis. In addition, the European Commission (EC)
approved MAVIRET (glecaprevir/pibrentasvir) for 8 weeks of treatment in
treatment-naïve patients with chronic HCV and compensated cirrhosis
with genotype 1, 2, 4, 5 and 6. The label expansions were based on data
from the Phase 3b EXPEDITION-8 study in which an overall 98 percent of
patients achieved a sustained virologic response 12 weeks after
treatment.
-- AbbVie, in cooperation with Neurocrine Biosciences, Inc., announced the
submission of a New Drug Application (NDA) to the FDA for elagolix, an
investigational, orally administered gonadotropin-releasing hormone
antagonist, for the management of heavy menstrual bleeding (HMB)
associated with uterine fibroids in women. In two replicate Phase 3
clinical studies, elagolix demonstrated a statistically significant
reduction in HMB, in combination with add-back therapy, compared to
placebo. If approved by the FDA, elagolix will be an oral medical
management treatment option for HMB associated with uterine fibroids.
-- Following the closure of the MERU Phase 3 study evaluating
Rovalpituzumab Tesirine (Rova-T) as a first-line maintenance therapy for
advanced small-cell lung cancer, the termination of the Rova-T research
and development program and an evaluation of the Stemcentrx-related
intangible assets, AbbVie recorded an impairment charge related to
intangible assets acquired as part of its 2016 acquisition of
Stemcentrx, Inc. The after-tax net impact of this impairment and the
related adjustment to contingent consideration liabilities was $823
million. With this impairment there is no remaining balance on
Stemcentrx-related intangible assets. AbbVie continues to focus research
and development efforts on other therapies in its oncology portfolio of
investigational and marketed medicines.
-- At the International Congress of Parkinson's Disease and Movement
Disorders, AbbVie presented data from 22 abstracts in Parkinson's
disease (PD) and other neurodegenerative disorders. Final data from the
Phase 1b study evaluating the safety and tolerability of the
investigational medicine ABBV-951 in patients with advanced PD
demonstrated that ABBV-951 is safe and tolerable when delivered via
24-hour continuous subcutaneous infusion for 28 days and support future
investigations of ABBV-951 as a potentially new treatment option for PD
patients.
-- AbbVie and Allergan continue to cooperate fully with regulators
regarding AbbVie's proposed acquisition of Allergan and both companies
received a Request for Additional Information (Second Request) from the
Federal Trade Commission. Additionally, Allergan shareholders voted to
approve the proposed acquisition with more than 99 percent of the votes
cast at both a special court-ordered meeting of shareholders and at an
extraordinary general meeting of shareholders in favor of the
transaction. AbbVie and Allergan continue to expect to close the
transaction in early 2020.
Full-Year 2019 Outlook
AbbVie is updating its GAAP diluted EPS guidance for the full-year 2019 from $5.69 to $5.79 to $5.08 to $5.10, representing growth of 39.1 percent at the midpoint, inclusive of a non-cash charge for SKYRIZI contingent consideration following regulatory approvals in the second quarter and a third-quarter impairment charge related to intangible assets acquired as part of the 2016 acquisition of Stemcentrx, Inc. AbbVie is raising its previously announced adjusted EPS guidance range for the full-year 2019 from $8.82 to $8.92 to $8.90 to $8.92, representing growth of 12.6 percent at the midpoint. The company's 2019 adjusted diluted EPS guidance excludes $3.82 per share of intangible asset amortization expense, non-cash charges for contingent consideration adjustments and other specified items.
Company Declares Dividend Increase of 10.3 Percent
AbbVie is announcing today that its board of directors declared an increase in the company's quarterly cash dividend from $1.07 per share to $1.18 per share beginning with the dividend payable on February 14, 2020 to shareholders of record as of January 15, 2020. This reflects an increase of approximately 10.3 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 195 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.
Statements Required by the Irish Takeover Rules
The directors of AbbVie accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the directors of AbbVie (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.
Any holder of 1% or more of any class of relevant securities of AbbVie Inc. may have disclosure obligations under Rule 8.3 of the Irish Takeover Panel Act, 1997, Takeover Rules 2013.
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 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 2019 and 2018 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 2019 financial guidance is also being provided on both a reported and a non-GAAP basis.
No Offer or Solicitation
This release is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the proposed acquisition of Allergan or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. In particular, this release is not an offer of securities for sale into the United States. No offer of securities shall be made in the United States absent registration under the U.S. Securities Act of 1933, as amended, or pursuant to an exemption from, or in a transaction not subject to, such registration requirements. Any securities issued in the proposed acquisition are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act of 1933, as amended. The proposed acquisition will be made solely by means of the scheme document (or, if applicable, the takeover offer document), which will contain the full terms and conditions of the proposed acquisition, including details with respect to the Allergan shareholder vote in respect of the proposed acquisition. Any decision in respect of, or other response to, the proposed acquisition, should be made only on the basis of the information contained in the scheme document.
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, the possibility that the proposed acquisition of Allergan will not be pursued, failure to obtain necessary regulatory approvals or required financing or to satisfy any of the other conditions to the proposed acquisition, failure to realize the expected benefits of the proposed acquisition, failure to promptly and effectively integrate Allergan's businesses, significant transaction costs and/or unknown or inestimable liabilities, potential litigation associated with the proposed acquisition, 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 2018 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.
Profit Forecasts
AbbVie is updating its GAAP diluted EPS guidance for the full-year 2019 from $5.69 to $5.79 to $5.08 to $5.10.
AbbVie is raising its previously announced adjusted EPS guidance range for the full-year 2019 from $8.82 to $8.92 to $8.90 to $8.92.
The guidance statements above regarding GAAP EPS and adjusted EPS for the full-year 2019 each constitute a profit forecast for the purposes of the Rule 28 of the Irish Takeover Rules.
* Adjusted Earnings Per Share ("EPS") is a non-GAAP diluted earnings per share, typically reported in AbbVie's quarterly and annual financial results for the full year guidance and in the earnings calls for the next quarter guidance updates. This is not prepared in accordance with U.S. GAAP. This non-GAAP financial measure should not be considered in isolation from, as a substitute for, or superior to financial measures prepared in accordance with U.S. GAAP.
Adjusted EPS is calculated as net income excluding certain non-cash items and factors which are unusual or unpredictable, which include: amortization and impairment of intangible assets; change in fair value of contingent consideration; major restructuring costs, integration and other related transaction costs relating to acquisitions; litigation reserves; R&D milestones and acquired IPR&D, together with the tax effects of all these items.
Basis of preparation
The AbbVie profit forecasts (the "Profit Forecasts") are based on the unaudited interim financial results for the nine months ended September 30, 2019 and a forecast of the results for the three months to December 31, 2019.
In accordance with Rule 28 of the Irish Takeover Rules, the directors of AbbVie confirm that the Profit Forecasts have been properly compiled on the basis of the assumptions stated below on a basis consistent with the accounting policies of AbbVie, which are in accordance with U.S. GAAP and those which AbbVie anticipates will be applicable for the full year ending December 31, 2019 (as adjusted for AbbVie non-GAAP policy to disclose adjusted earnings excluding specified items).
The AbbVie non-GAAP profit forecast does not include the proposed acquisition of Allergan as it is assumed the transaction will not close until 2020. However, the AbbVie GAAP profit forecast includes estimated one-time expenses relating to the transaction such as financing costs, legal, consultants, accountants, regulatory and other fees, which are expected to be incurred in 2019.
Principal assumptions
The Profit Forecasts have been compiled on the basis of the following assumptions:
Assumptions which are within AbbVie's influence or control:
-- Executed licensing and partnership collaboration transaction impacts and
transactions expected to be executed in the next quarter are included.
In line with AbbVie's historical practices, management continues to
evaluate and pursue opportunities for further partnership collaborations
and in-licensing transactions. No material acquisitions or disposals are
anticipated in 2019;
-- There will be no material change in the operational strategy or current
management of AbbVie during the year ending December 31, 2019 other than
those already announced;
-- There will be no major site closures or rationalization during the
three-month forecast period to December 31, 2019 other than those
already commenced; and
-- Share repurchases and issuances are expected to be immaterial during the
three-month forecast period to December 31, 2019.
Assumptions which are outside of AbbVie's influence or control:
-- There will be no material supply chain, manufacturing and distribution
disruptions and other business interruptions, including natural
disasters or industrial disputes;
-- There will be no material adverse events that affect AbbVie's key
products, including adverse regulatory and clinical findings or
publications, product recalls, liability claims, or loss of patent
protection;
-- There will be no material changes to current litigation provisions due
to a new or ongoing litigation claim;
-- There will be no material change in general market, economic,
competitive environments or levels of demand in countries in which
AbbVie operates that would materially affect AbbVie's business;
-- There will be no material change to AbbVie customers' agreements,
rebates, or discount programs from those currently prevailing;
-- There will be no changes in exchange rates, interest rates, bases of
taxes, tax laws or interpretations, or legislative or regulatory
requirements from those currently prevailing that would have a material
impact on AbbVie's operations or its accounting policies;
-- There will be no material change to discount rate assumptions for
calculating the fair value of contingent consideration from those
currently prevailing; and
-- There will be no intangible asset impairments due to unfavorable
clinical study results or safety signals.
AbbVie Inc.
Key Product Revenues
Quarter Ended September 30, 2019
(Unaudited)
% Change vs. 3Q18
Net Revenues (in millions) International
Total
U.S. Int'l. Total U.S. Operational Reported Operational Reported
ADJUSTED NET
REVENUES
a $6,244 $2,235 $8,479 11.6% (13.7)% (15.3)% 3.5% 3.0%
Immunology 3,977 1,064 5,041 12.2 (30.9) (32.6) (1.1) (1.6)
Humira 3,887 1,049 4,936 9.6 (31.8) (33.5) (3.2) (3.7)
Skyrizi 76 15 91 n/m
n/m
n/m
n/m
n/m
Rinvoq 14 14 n/m
n/m
n/m
n/m
n/m
Hematologic Oncology 1,184 294 1,478 34.4 58.5 57.1 38.5 38.3
Imbruvicab 1,042 215 1,257 28.3 34.5 34.5 29.3 29.3
Venclexta 142 79 221 >100.0 >100.0
>100.0 >100.0
>100.0
HCV 368 330 698 (17.0) (20.4) (21.2) (18.6) (19.0)
Mavyret 368 327 695 (17.0) (16.4) (17.2) (16.7) (17.1)
Viekira - 3 3 n/m (88.6) (88.1) (88.5) (88.0)
Other Key Products 780 399 1,179 (1.9) 11.3 9.6 2.2 1.7
Creon 265 265 11.2
n/a
n/a 11.2 11.2
Lupron 187 43 230 8.6 6.2 3.7 8.2 7.7
Synthroid 197 197 2.3
n/a
n/a 2.3 2.3
Synagis - 132 132 n/a 35.4 36.2 35.4 36.2
Duodopa 26 91 117 36.4 9.6 5.8 14.4 11.3
Sevoflurane 18 66 84 (2.5) (0.5) (3.1) (0.9) (3.0)
Kaletra 7 67 74 (48.7) (6.1) (7.2) (13.9) (14.8)
AndroGel 53 53 (61.1)
n/a
n/a (61.1) (61.1)
Orilissa 27 27 >100.0
n/m
n/m >100.0
>100.0
Note: "Operational" comparisons are
presented at constant currency
rates and reflect comparative
local currency net revenues at the
prior year's foreign exchange
rates.
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, 2019
(Unaudited)
% Change vs. 9M18
Net Revenues (in millions) International Total
U.S. Int'l. Total U.S. Operational Reported Operational Reported
ADJUSTED NET
REVENUES
a $17,478 $7,084 $24,562 10.4% (14.0)% (17.6)% 1.8% 0.5%
Immunology 11,027 3,378 14,405 9.5 (28.1) (31.7) (2.9) (4.1)
Humira 10,895 3,357 14,252 8.2 (28.5) (32.1) (3.9) (5.1)
Skyrizi 118 21 139 n/m n/m
n/m n/m
n/m
Rinvoq 14 14 n/m n/m
n/m n/m
n/m
Hematologic Oncology 3,121 798 3,919 36.5 56.0 54.2 40.1 39.8
Imbruvicab 2,757 621 3,378 29.5 36.5 36.5 30.7 30.7
Venclexta 364 177 541 >100.0 >100.0
>100.0 >100.0
>100.0
HCV 1,167 1,130 2,297 (3.5) (23.9) (26.9) (14.9) (16.6)
Mavyret 1,167 1,098 2,265 (3.2) (19.3) (22.3) (11.9) (13.5)
Viekira - 32 32 (100.0) (72.5) (75.4) (73.7) (76.6)
Other Key Products 2,239 1,264 3,503 (3.2) 1.1 (3.4) (1.7) (3.3)
Creon 749 749 12.4 n/a
n/a 12.4 12.4
Lupron 546 122 668 3.1 2.7 (3.3) 3.1 1.9
Synthroid 582 582 2.6 n/a
n/a 2.6 2.6
Synagis - 457 457 n/a 2.2 (1.0) 2.2 (1.0)
Duodopa 72 271 343 25.5 10.7 4.5 13.4 8.3
Sevoflurane 53 214 267 (2.2) (9.8) (14.8) (8.4) (12.5)
Kaletra 30 199 229 (27.7) (1.0) (5.1) (5.5) (8.9)
AndroGel 149 149 (62.2) n/a
n/a (62.2) (62.2)
Orilissa 58 1 59 >100.0 n/m
n/m >100.0
>100.0
Note: "Operational" comparisons are
presented at constant currency
rates and reflect comparative
local currency net revenues at the
prior year's foreign exchange
rates.
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.
Consolidated Statements of Earnings
Quarter and Nine Months Ended September 30, 2019 and 2018
(Unaudited) (In millions, except per share data)
Third Quarter Nine Months
Ended September 30 Ended September 30
2019 2018 2019 2018
---
Net revenues $
8,479 $
8,236 $
24,562 $
24,448
Cost of products
sold 1,920 1,835 5,433 5,696
Selling, general and
administrative 1,657 1,919 4,991 5,470
Research and
development 2,285 1,268 4,865 3,834
Acquired in-process
research and
development - 55 246 124
Other expense - 500
Total operating
costs and expenses 5,862 5,077 15,535 15,624
Operating earnings 2,617 3,159 9,027 8,824
Interest expense,
net 420 302 1,054 825
Net foreign exchange
loss 19 2 31 18
Other expense, net 177 94 2,590 411
Earnings before
income tax expense 2,001 2,761 5,352 7,570
Income tax expense 117 14 271 57
Net earnings $
1,884 $
2,747 $
5,081 $
7,513
Diluted earnings per
share $
1.26 $
1.81 $
3.41 $
4.79
Adjusted diluted
earnings per sharea $
2.33 $
2.14 $
6.73 $
6.01
Weighted-average
diluted shares
outstanding 1,483 1,515 1,483 1,561
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, 2019
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
3Q19
Earnings Diluted
Pre-tax After-tax EPS
---
As reported (GAAP) $
2,001 $
1,884 $
1.26
Adjusted for specified items:
Intangible asset
amortization 389 323 0.22
Milestones and other
R&D expenses 20 20 0.01
Change in fair value
of contingent
consideration 271 271 0.19
Restructuring 17 14
Litigation reserves 7 5
Stemcentrx-related
impairment 939 823 0.56
Acquisition related
costs 158 128 0.09
As adjusted (non-
GAAP) $
3,802 $
3,468 $
2.33
Milestones and other R&D expenses
are associated with milestone
payments for previously announced
collaborations. Restructuring is
primarily associated with
streamlining global operations.
Stemcentrx-related impairment
refers to the net impact of the
intangible asset impairment and the
related fair value adjustment to
contingent consideration
liabilities. Acquisition related
costs reflect transaction and
financing costs related to the
proposed Allergan acquisition.
2. The impact of the specified items by line item was as follows:
3Q19
Cost of
SG&A
R&D Interest Other
expense, net expense, net
products
sold
---
As reported (GAAP) $
1,920 $
1,657 $
2,285 $
420 $
177
Adjusted for specified items:
Intangible asset amortization (389)
Milestones and other R&D expenses - (20)
Change in fair value of contingent consideration - (271)
Restructuring (6) (3) (8)
Litigation reserves - (7)
Stemcentrx-related impairment - (1,030) 91
Acquisition related costs - (26) (132)
As adjusted (non-GAAP) $
1,525 $
1,621 $
1,227 $
288 $
(3)
3. The adjusted tax rate for the third quarter of 2019 was 8.8 percent, as detailed below:
3Q19
Pre-tax Income Tax rate
earnings taxes
---
As reported (GAAP) $
2,001 $
117 5.9
%
Specified items 1,801 217 12.1
%
As adjusted (non-GAAP) $
3,802 $
334 8.8
%
===
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 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
expense,
products IPR&D net
sold
---
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
earnings 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
Nine Months Ended September 30, 2019
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
9M19
Earnings Diluted
Pre-tax After-tax
EPS
---
As reported (GAAP) $
5,352 $
5,081 $
3.41
Adjusted for specified items:
Intangible asset
amortization 1,162 962 0.65
Milestones and other
R&D expenses 95 95 0.06
Acquired IPR&D 246 241 0.16
Change in fair value
of contingent
consideration 2,744 2,746 1.85
Restructuring 188 153 0.10
Litigation reserves 27 21 0.01
Stemcentrx-related
impairment 939 823 0.56
Acquisition related
costs 189 155 0.10
Tax audit settlement - (267) (0.18)
Other 20 20 0.01
As adjusted (non-
GAAP) $
10,962 $
10,030 $
6.73
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. Restructuring is primarily
associated with streamlining global
operations. Stemcentrx-related
impairment refers to the net impact
of the intangible asset impairment
and the related fair value
adjustment to contingent
consideration liabilities.
Acquisition related costs reflect
transaction and financing costs
related to the proposed Allergan
acquisition.
2. The impact of the specified items by line item was as follows:
9M19
Cost of
SG&A
R&D Acquired Interest Other
expense, expense,
products IPR&D net net
sold
---
As reported (GAAP) $
5,433 $
4,991 $
4,865 $
246 $
1,054 $
2,590
Adjusted for specified items:
Intangible asset amortization (1,162)
Milestones and other R&D expenses - (95)
Acquired IPR&D - (246)
Change in fair value of contingent consideration - (2,744)
Restructuring (15) (110) (63)
Litigation reserves - (27)
Stemcentrx-related impairment - (1,030) 91
Acquisition related costs - (50) (139)
Other (1) (19)
As adjusted (non-GAAP) $
4,255 $
4,804 $
3,658
$ $
915 $
(63)
3. The adjusted tax rate for the first nine months of 2019 was 8.5 percent, as detailed below:
9M19
Pre-tax Income Tax rate
earnings taxes
---
As reported (GAAP) $
5,352 $
271 5.1
%
Specified items 5,610 661 11.8
%
As adjusted (non-GAAP) $
10,962 $
932 8.5
%
===
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 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 operating expense,
products IPR&D expense net
sold
---
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
earnings 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
%
===
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SOURCE AbbVie
