AbbVie’s 2018: Revenues up, Earnings Down as Company Enters "Important New Phase"

AbbVie logo on large outdoor sign

AbbVie reported a loss of $1.83 billion for the fourth quarter of 2018. Overall revenues were up for the full year, however, hitting $32.75 billion compared to $28.2 billion in 2017.

Quarterly results, however, failed to meet Wall Street expectations. On a per-share basis for the fourth quarter, AbbVie had a loss of $1.23, earnings per share were $1.90. An average estimate by seven analysts had projected earnings of $1.92 per share. In the same period, AbbVie cited revenue of $8.31 billion for the quarter. A survey of four analysts had projected $8.36 billion.

“We delivered exceptional performance in 2018, including operational revenue growth of more than 15 percent and EPS growth above 40 percent,” stated AbbVie chairman and chief executive officer, Richard A. Gonzalez. “We’re entering an important new phase for AbbVie. The continued momentum of our business, combined with the launch and ramp of several new products, will allow us to drive strong earnings growth once again in 2019 and position us for growth over the longer term.”

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The company’s blockbuster drug Humira, despite biosimilar competition, increased sales by half a percent in the fourth quarter, or 1.4 percent operationally. In the U.S., Humira sales grew 9.1 percent in the quarter. However, in Europe, where biosimilar competition is more intense, Humira sales dropped 14.8 percent, “due to direct biosimilar competition in certain international markets.”

The company’s hematology-oncology portfolio had net revenues of $1.130 billion, an increase of 50.2 percent for the quarter, with global net revenues for Imbruvica hitting $1.006 billion, an increase of 42 percent. Global net revenues were Venclexta for the quarter were $124 million.

Revenues for the company’s hepatitis C (HCV) portfolio globally were $862 million.

Revenue guidance for 2019 projects earnings of $8.65 and $8.75 per share, a 10 percent increase over the 2018 mid-point. 

AbbVie’s board of directors also authorized a $5 billion increase in its existing stock repurchase program. This is perhaps not surprising, given the company’s 2017 annual report, where it noted that its tax rate for 2018 was 9 percent, significantly lower than the expected 20 percent.

In the fourth quarter, revenues were $8.305 billion compared to $7.739 billion in the same quarter in 2017. However, total operating costs were significantly higher in 2018. The company reported total operating costs and expenses for the fourth quarter of 2018 as $10.746 billion compared to $5.957 billion in 2017.

For the full year, total operating costs and expenses were $26.370 billion compared to $18.671 billion in 2017.

Yahoo! Finance notes, “The company has previously talked up its cancer drug portfolio, which it says will buoy revenue as sales of Humira decline in future, but a recent trial setback for Imbruvica and the failure of its expensive cancer drug Rova-T have worried investors.”

In addition, the fourth quarter, AbbVie reported $4.12 billion in impairment charges related to ending the development program for Rova-T. AbbVie picked up Rova-T in 2016 when it acquired Stemcentrx for $5.8 billion.

AbbVie shares dropped about 2.3 percent in premarket trading this morning. Since the beginning of the year, shares have dropped about seven percent, and lost about 20.7 percent in the last 12 months.

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