Earnings Release • Jul 29, 2016
Earnings Release
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NORTH CHICAGO, Illinois, July 29, 2016 /PRNewswire/ --
- Reports Second-Quarter Diluted EPS of $0.98 on GAAP Basis; Adjusted Diluted EPS of $1.26, Reflecting Growth of 16.7 Percent Over Second-Quarter 2015
- Delivers Second-Quarter Net Revenues of $6.45 Billion; $6.43 Billion on Adjusted Basis, Reflecting an 18.0 Percent Increase Operationally
- Revenue Growth Reflects 17.4 Percent HUMIRA Global Reported Sales Growth; 17.7 Percent Growth on an Operational Basis
- Second-Quarter Global IMBRUVICA Net Revenue of $439 Million
- Second-Quarter Global VIEKIRA Net Revenue of $419 Million
- Reports Operating Margin of 37.0 Percent on a GAAP Basis; 43.9 Percent on an Adjusted Basis
- Successfully Completed Acquisition of Stemcentrx and its Lead Late-Stage Asset, Rova-T
- Received Regulatory Approvals for VENCLEXTA and ZINBRYTA, Further Expanding Presence in Oncology and Neuroscience
- Issues 2016 GAAP Diluted EPS Guidance Range of $3.82 to $3.92; Raises Adjusted EPS Guidance Range to $4.73 to $4.83, Representing Growth of 11.4 Percent at the Midpoint
AbbVie (NYSE:ABBV) announced financial results for the second quarter ended June 30, 2016.
"AbbVie continues to deliver on our long-term strategy, as demonstrated by our sixth consecutive quarter of double digit sales and earnings growth," said Richard A. Gonzalez, chairman and chief executive officer, AbbVie. "A key element to our long-term sustainable performance is our advancing pipeline and this quarter we saw several regulatory approvals, including VENCLEXTA and ZINBRYTA. We also made progress on a number of clinical development programs and completed the acquisition of Stemcentrx, which adds a promising late-stage asset for solid tumors and brings a target discovery platform to AbbVie's oncology portfolio, further enhancing the robustness of our pipeline."
Second-Quarter Results
Key Events from the Second Quarter
AbbVie Raises Full-Year 2016 Outlook
AbbVie is issuing GAAP diluted EPS guidance for the full-year 2016 of $3.82 to $3.92. AbbVie is raising its adjusted diluted EPS guidance for the full-year 2016 to $4.73 to $4.83 from $4.62 to $4.82, reflecting strong underlying business performance year-to-date and the expected continued positive trends over the remainder of the year. This updated guidance represents 11.4 percent growth at the midpoint versus 2015, and includes the dilutive impact of the Stemcentrx and Boehringer Ingelheim transactions. The company's 2016 adjusted diluted EPS guidance excludes $0.91 per share of intangible asset amortization expense, acquisition related costs and accounting impacts, the impact of the Venezuelan currency devaluation, and other specified items.
About AbbVie
AbbVie is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories. The company's mission is to use its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world's most complex and serious diseases. Together with its wholly-owned subsidiary, Pharmacyclics, AbbVie employs more than 28,000 people worldwide and markets medicines in more than 170 countries. For further information on the company and its people, portfolio and commitments, please visit www.abbvie.com. Follow @abbvie on Twitter or view careers on our Facebook or LinkedIn page.
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 www.abbvieinvestor.com. An archived edition of the call will be available after 11:00 a.m. Central time.
Non-GAAP Financial Results
Financial results for 2015 and 2016 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 2016 financial guidance is also being provided on both a reported and a non-GAAP basis.
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 2015 Annual Report on Form 10-K, which has been filed with the Securities and Exchange Commission. 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, 2016
(Unaudited)
% Change vs. 2Q15
Net Revenues (in millions) International Total
U.S. Int'l. Total U.S. Operational Reported Operational Reported
ADJUSTED
NET
REVENUES $4,100a $2,332 $6,432a 21.7%a 12.1% 10.8% 18.0%a 17.5%a
Humira 2,712 1,437 4,149 26.7 4.0 3.0 17.7 17.4
Imbruvica 384 55b 439 >100.0 >100.0 >100.0 >100.0 >100.0
Viekira 87 332 419 (61.4) >100.0 >100.0 8.2 9.1
Lupron 179 40 219 14.6 (1.4) (5.3) 11.2 10.4
Synagis 45 45 n/a 8.3 (2.6) 8.3 (2.6)
Synthroid 188 188 1.1 n/a n/a 1.1 1.1
Creon 180 180 12.9 n/a n/a 12.9 12.9
AndroGel 171 171 1.0 n/a n/a 1.0 1.0
Kaletra 30 116 146 (30.4) 1.0 (6.0) (7.2) (12.4)
Sevoflurane 22 92 114 6.5 (1.9) (5.8) (0.6) (3.8)
Duodopa 9 64 73 >100.0 18.2 20.8 28.7 31.2
Note: "Operational" growth reflects the percentage change over the prior year
excluding the impact of exchange rate fluctuations.
n/a = not applicable
a U.S. and total net revenues for the quarter ended June 30, 2016 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, 2016
(Unaudited)
% Change vs. 6M15
Net Revenues (in millions) International Total
U.S. Int'l. Total U.S. Operational Reported Operational Reported
ADJUSTED
NET
REVENUES $7,594a $4,796 $12,390a 26.2%a 12.0% 6.7% 20.1%a 17.8%a
Humira 4,907 2,819 7,726 29.0 4.3 (0.8) 18.4 16.2
Imbruvica 709 111 820 >100.0 >100.0 >100.0 >100.0 >100.0
Viekira 212 621 833 (41.7) >100.0 >100.0 37.7 35.4
Lupron 330 79 409 8.0 1.0 (6.4) 6.5 4.9
Synagis 364 364 n/a 2.8 (4.4) 2.8 (4.4)
Synthroid 370 370 (0.7) n/a n/a (0.7) (0.7)
Creon 330 330 15.2 n/a n/a 15.2 15.2
AndroGel 327 327 1.5 n/a n/a 1.5 1.5
Kaletra 63 216 279 (25.2) (9.5) (17.6) (13.3) (19.5)
Sevoflurane 39 186 225 2.7 (4.2) (9.9) (3.1) (7.9)
Duodopa 16 125 141 >100.0 20.9 18.7 32.6 30.5
Note: "Operational" growth reflects the percentage change over the prior year
excluding the impact of exchange rate fluctuations.
n/a = not applicable
a U.S. and total net revenues for the six months ended June 30, 2016 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, 2016 and 2015
(Unaudited) (In millions, except per share data)
Second Quarter Six Months
Ended June 30 Ended June 30
2016 2015 2016 2015
Net revenues $6,452 $5,475 $12,410 $10,515
Cost of products
sold 1,405 916 2,774 1,858
Selling, general
and
administrative 1,466 1,703 2,821 3,176
Research and
development 1,124 981 2,070 1,792
Acquired
in-process
research and
development 70 23 80 150
Total operating
cost and
expenses 4,065 3,623 7,745 6,976
Operating
earnings 2,387 1,852 4,665 3,539
Interest
expense, net 225 164 425 290
Net foreign
exchange loss 15 14 317 178
Other expense
(income), net 51 (4) 51 (3)
Earnings before
income tax
expense 2,096 1,678 3,872 3,074
Income tax
expense 486 312 908 686
Net earnings $1,610 $1,366 $2,964 $2,388
Diluted earnings
per share $0.98 $0.83 $1.81 $1.47
Diluted earnings
per share,
excluding
specified itemsa $1.26 $1.08 $2.41 $2.03
Weighted-average
diluted shares
outstanding 1,632 1,633 1,629 1,621
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, 2016
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
2Q16
Earnings Diluted
Pre-tax After-tax EPS
As reported (GAAP) $2,096 $1,610 $0.98
Adjusted for specified items:
Intangible asset amortization 181 144 0.09
Milestones and other R&D expenses 55 55 0.03
Acquired IPR&D 70 70 0.04
Acquisition related costs 145 122 0.08
Change in fair value of contingent consideration 41 41 0.02
Other 4 30 0.02
As adjusted (non-GAAP) $2,592 $2,072 $1.26
Milestones and other R&D expenses are associated with milestone payments
for previously announced collaborations. Acquired IPR&D primarily reflects
upfront payments related to licensing arrangements with third parties.
Acquisition related costs primarily includes compensation expense,
financing and other costs associated with the acquisition of Stemcentrx and
Boehringer Ingelheim, as well as 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, a charge to increase tax reserves, and
milestone revenue under a previously announced collaboration.
2. The impact of the specified items by line item was as follows:
2Q16
Other
Net Cost of Acquired expense,
revenues products sold SG&A R&D IPR&D net
As reported (GAAP) $6,452 $1,405 $1,466 $1,124 $70 $51
Adjusted for specified
items:
Intangible asset
amortization -- (181) -- -- -- --
Milestones and other
R&D expenses -- -- -- (55) -- --
Acquired IPR&D -- -- -- -- (70) --
Acquisition related
costs -- (46) (15) (72) -- (12)
Change in fair value
of contingent
consideration -- -- -- -- -- (41)
Other (20) (9) (15) -- -- --
As adjusted (non-GAAP) $6,432 $1,169 $1,436 $997 $-- ($2)
3. The adjusted tax rate for the second quarter of 2016 was 20.1 percent, as
detailed below:
2Q16
Pre-tax Income
income taxes Tax rate
As reported (GAAP) $2,096 $486 23.2%
Specified items 496 34 6.9%
As adjusted (non-GAAP) $2,592 $520 20.1%
AbbVie Inc.
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Quarter Ended June 30, 2015
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
2Q15
Earnings Diluted
Pre-tax After-tax EPS
As reported (GAAP) $1,678 $1,366 $0.83
Adjusted for specified
items:
Intangible asset
amortization 86 66 0.04
Separation costs 95 80 0.05
Acquired IPR&D 23 23 0.01
Pharmacyclics
acquisition
related costs 359 215 0.13
Other 34 26 0.02
As adjusted (non-GAAP) $2,275 $1,776 $1.08
Separation costs are expenses related to the separation of AbbVie
from Abbott. Acquired IPR&D primarily reflects an upfront payment
related to a licensing arrangement with a third party.
Pharmacyclics acquisition related costs reflect compensation
expense, transaction, financing, integration and other costs
related to the acquisition of Pharmacyclics. Other is primarily
associated with restructuring activities.
2. The impact of the specified items by line item was as follows:
2Q15
Interest
Cost of Acquired expense,
products sold SG&A R&D IPR&D net
As reported (GAAP) $916 $1,703 $981 $23 $164
Adjusted for specified
items:
Intangible asset
amortization (86) -- -- -- --
Separation costs (2) (93) -- -- --
Acquired IPR&D -- (23) -- -- --
Pharmacyclics
acquisition related
costs (19) (220) (93) -- (27)
Other (3) (15) (16) -- --
As adjusted (non-GAAP) $806 $1,375 $872 -- $137
3. The adjusted tax rate for the second quarter of 2015 was 21.9 percent, as
detailed below:
2Q15
Pre-tax Income
income taxes Tax rate
As reported (GAAP) $1,678 $312 18.6%
Specified items 597 187 31.3%
As adjusted (non-GAAP) $2,275 $499 21.9%
AbbVie Inc.
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Six Months Ended June 30, 2016
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
6M16
Earnings Diluted
Pre-tax After-tax EPS
As reported (GAAP) $3,872 $2,964 $1.81
Adjusted for specified items:
Intangible asset amortization 346 277 0.17
Milestones and other R&D expenses 70 70 0.04
Acquired IPR&D 80 80 0.05
Acquisition related costs 204 159 0.11
Change in fair value of contingent consideration 41 41 0.02
Foreign exchange loss 298 298 0.18
Other 44 57 0.03
As adjusted (non-GAAP) $4,955 $3,946 $2.41
Milestones and other R&D expenses are associated with milestone payments
for previously announced collaborations. Acquired IPR&D primarily reflects
upfront payments related to licensing arrangements with third parties.
Acquisition related costs primarily includes compensation expense,
financing and other costs associated with the acquisition of Stemcentrx and
Boehringer Ingelheim, as well as the amortization of the acquisition date
fair value step-up for inventory related to the acquisition of
Pharmacyclics. The foreign exchange loss relates to a devaluation of
AbbVie's net monetary assets denominated in the Venezuelan bolivar. Other
includes a charge for the impairment of an intangible asset, restructuring
charges associated with streamlining global operations, a charge to
increase tax reserves, and milestone revenue under a previously announced
collaboration.
2. The impact of the specified items by line item was as follows:
6M16
Cost of Net
Net products Acquired foreign Other
revenues sold SG&A R&D IPR&D exchange expense,
loss net
As reported (GAAP) $12,410 $2,774 $2,821 $2,070 $80 $317 $51
Adjusted for specified
items:
Intangible asset
amortization -- (346) -- -- -- -- --
Milestones and other
R&D expenses -- -- -- (70) -- -- --
Acquired IPR&D -- -- -- -- (80) -- --
Acquisition related costs -- (91) (20) (81) -- -- (12)
Change in fair value of
contingent consideration -- -- -- -- -- -- (41)
Venezuela devaluation loss -- -- -- -- -- (298) --
Other (20) (53) (18) 7 -- -- --
As adjusted (non-GAAP) $12,390 $2,284 $2,783 $1,926 $-- $19 ($2)
3. The adjusted tax rate for the first half of 2016 was 20.4 percent, as detailed
below:
6M16
Pre-tax Income
income taxes Tax rate
As reported (GAAP) $3,872 $908 23.4%
Specified items 1,083 101 9.4%
As adjusted (non-GAAP) $4,955 $1,009 20.4%
AbbVie Inc.
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Six Months Ended June 30, 2015
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
6M15
Earnings Diluted
Pre-tax After-tax EPS
As reported (GAAP) $3,074 $2,388 $1.47
Adjusted for specified items:
Intangible asset amortization 154 118 0.07
Separation costs 199 169 0.10
Acquired IPR&D 150 150 0.09
Pharmacyclics acquisition related costs 420 256 0.16
Shire termination 170 170 0.10
Other 68 49 0.04
As adjusted (non-GAAP) $4,235 $3,300 $2.03
Separation costs are expenses related to the separation of AbbVie
from Abbott. Acquired IPR&D primarily reflects the C2N
collaboration. Pharmacyclics acquisition related costs reflect
compensation expense, transaction, financing, integration and
other costs related to the acquisition of Pharmacyclics. Shire
termination reflects the completed liquidation of remaining
foreign currency positions related to the terminated Shire
transaction. Other is primarily associated with restructuring
activities.
2. The impact of the specified items by line item was as follows:
6M15
Net
Interest foreign
Cost of Acquired expense, exchange
products sold SG&A R&D IPR&D net loss
As reported (GAAP) $1,858 $3,176 $1,792 $150 $290 $178
Adjusted for specified
items:
Intangible asset
amortization (154) -- -- -- -- --
Separation costs (5) (194) -- -- -- --
Acquired IPR&D -- -- -- (150) -- --
Pharmacyclics
acquisition related
costs (19) (222) (93) -- (86) --
Shire termination -- -- -- -- -- (170)
Other (12) (40) (16) -- --
As adjusted (non-GAAP) $1,668 $2,720 $1,683 -- $204 $8
3. The adjusted tax rate for the first half of 2015 was 22.1
percent, as detailed below:
6M15
Pre-tax Income
income taxes Tax rate
As reported (GAAP) $3,074 $686 22.3%
Specified items 1,161 249 21.4%
As adjusted (non-GAAP) $4,235 $935 22.1%
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