AbbVie Reports Full-Year and Fourth-Quarter 2017 Financial Results
- Reports Full-Year Diluted EPS of $3.30 on a GAAP Basis; Adjusted Diluted EPS of $5.60 Reflects Growth of 16.2 Percent
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NORTH CHICAGO, Ill., Jan. 26, 2018 /PRNewswire/ -- AbbVie (NYSE:ABBV) announced financial results for the fourth quarter ended December 31, 2017. "2017 reflects another year of top-tier performance, demonstrating the strong momentum in our business," said Richard A. Gonzalez, chairman and chief executive officer, AbbVie. "Our guidance for 2018 underscores our confidence in our ability to continue to deliver industry-leading performance. This is an exciting time for AbbVie -- we are poised to launch a number of differentiated products over the next 12 to 18 months that will fuel significant growth in the coming years. We remain committed to delivering on our long-term strategic vision for AbbVie." Fourth-Quarter Results
Key Events from the Fourth Quarter
Full-Year 2018 Outlook, Including Impact of U.S. Tax Reform GAAP diluted EPS for the full-year 2018 is expected to be between $6.45 and $6.55. AbbVie is raising its previously announced adjusted EPS guidance range for the full-year 2018 from $6.37 to $6.57 to $7.33 to $7.43 to reflect the impact of U.S. tax reform and stronger operating performance. The midpoint of this guidance reflects year-over-year growth of 32 percent, more than half of which is driven by growth in the underlying business. Relative to the previously issued 2018 guidance provided in October 2017, this guidance includes an increase of $0.08 as a result of stronger operating dynamics. AbbVie's adjusted EPS guidance range reflects an effective tax rate of approximately 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 anticipates 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. Increased U.S. Investments Over the next five years, AbbVie plans to invest approximately $2.5 billion in capital projects in the U.S. and the company is currently evaluating additional expansion of its U.S. facilities. Also, in 2018, the company plans to make a one-time charitable contribution of approximately $350 million to select not-for-profit organizations based in the United States. The company also plans to accelerate pension funding by $750 million, as well as enhance non-executive employee compensation. Provisional Estimates of the Impact of U.S. Tax Reform Financial results for 2017 reflect provisional amounts related to the December 2017 enactment of the Tax Cuts and Jobs Act. These provisional estimates are based on AbbVie's initial analysis and current interpretation of the legislation. Given the complexity of the legislation, anticipated guidance from the U.S. Treasury, and the potential for additional guidance from the Securities and Exchange Commission (SEC) or the Financial Accounting Standards Board, these estimates may be adjusted during 2018. 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 fourth-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 2017 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 2018 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 2016 Annual Report on Form 10-K, which has been filed with the 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 December 31, 2017
(Unaudited)
% Change vs. 4Q16
Net Revenues (in millions) International Total
U.S. Int'l. Total U.S. Operational Reported Operational Reported
---- ------ ----- ---- ----------- -------- ----------- --------
ADJUSTED NET
REVENUESa $4,967 $2,772 $7,739 15.9% 7.0% 11.0% 12.6% 14.1%
Humira 3,313 1,579 4,892 15.1 6.5 11.7 12.3 14.0
Imbruvicab 585 123 708 35.3 57.8 57.8 38.7 38.7
HCV 214 296 510 >100.0 14.5 15.4 62.7 63.4
Lupron 181 43 224 1.5 3.3 5.6 1.8 2.2
Creon 235 - 235 10.6 n/a n/a 10.6 10.6
Synagis - 282 282 n/a 4.3 4.4 4.3 4.4
Synthroid 205 - 205 - n/a n/a - -
AndroGel 140 - 140 (19.6) n/a n/a (19.6) (19.6)
Kaletra 17 96 113 (33.7) (11.3) (9.7) (15.6) (14.3)
Sevoflurane 22 77 99 (1.3) (3.4) (1.6) (2.9) (1.5)
Duodopa 17 83 100 55.2 15.7 23.0 21.3 27.6
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
Twelve Months Ended December 31, 2017
(Unaudited)
% Change vs. 12M16
Net Revenues (in millions) International Total
U.S. Int'l. Total U.S. Operational Reported Operational Reported
---- ------ ----- ---- ----------- -------- ----------- --------
ADJUSTED NET
REVENUESa $18,251 $9,965 $28,216 14.6% 2.7% 3.4% 10.1% 10.4%
Humira 12,361 6,066 18,427 18.5 6.7 7.4 14.4 14.6
Imbruvicab 2,144 429 2,573 35.8 70.0 70.0 40.5 40.5
HCV 338 936 1,274 (1.4) (20.5) (20.6) (16.2) (16.3)
Lupron 669 160 829 0.8 0.5 1.4 0.7 0.9
Creon 831 - 831 13.9 n/a n/a 13.9 13.9
Synagis - 738 738 n/a 0.6 1.2 0.6 1.2
Synthroid 781 - 781 2.3 n/a n/a 2.3 2.3
AndroGel 577 - 577 (14.5) n/a n/a (14.5) (14.5)
Kaletra 71 352 423 (38.6) (21.1) (18.8) (24.7) (22.9)
Sevoflurane 78 332 410 (2.1) (3.7) (4.6) (3.4) (4.1)
Duodopa 61 294 355 66.1 13.1 14.6 19.8 21.1
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 Twelve Months Ended December 31, 2017 and 2016
(Unaudited) (In millions, except per share data)
Fourth Quarter Twelve Months
Ended December 31 Ended December 31
2017 2016 2017 2016
---- ---- ---- ----
Net revenues $7,739 $6,796 $28,216 $25,638
Cost of products
sold 2,280 1,555 7,040 5,833
Selling, general and
administrative 1,951 1,653 6,275 5,855
Research and
development 1,402 1,190 4,982 4,366
Acquired in-process
research and
development 312 40 327 200
---
Total operating cost
and expenses 5,945 4,438 18,624 16,254
----- ----- ------ ------
Operating earnings 1,794 2,358 9,592 9,384
Interest expense,
net 252 290 1,004 965
Net foreign exchange
loss (gain) 320 (10) 348 303
Other expense, net 29 80 513 232
--- --- --- ---
Earnings before
income tax expense 1,193 1,998 7,727 7,884
Income tax expense 1,141 607 2,418 1,931
----- --- ----- -----
Net earnings $52 $1,391 $5,309 $5,953
=== ====== ====== ======
Diluted earnings per
share $0.03 $0.85 $3.30 $3.63
===== ===== ===== =====
Adjusted diluted
earnings per sharea $1.48 $1.20 $5.60 $4.82
===== ===== ===== =====
Weighted-average
diluted shares
outstanding 1,602 1,623 1,603 1,631
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 December 31, 2017
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
4Q17
Earnings Diluted
Pre-tax After-tax EPS
------- --------- ---
As reported (GAAP) $1,193 $52 $0.03
Adjusted for specified items:
Intangible asset amortization 268 203 0.13
Milestones and other R&D expenses 75 75 0.05
Acquired IPR&D 312 312 0.19
Change in fair value of contingent consideration 79 79 0.05
Litigation reserves 273 221 0.14
Intangible asset impairment 354 244 0.15
U.S. tax reform repatriation tax - 4,509 2.81
Other impacts related to tax law change 316 (3,267) (2.04)
Tax audit settlement - (91) (0.06)
Other 75 52 0.03
--- --- ----
As adjusted (non-GAAP) $2,945 $2,389 $1.48
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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. Other primarily includes
restructuring charges associated
with streamlining global
operations.
2. The impact of the specified
items by line item was as follows:
4Q17
Cost of SG&A R&D Acquired Net Other
products IPR&D foreign expense,
sold exchange net
loss
----
As reported (GAAP) $2,280 $1,951 $1,402 $312 $320 $29
Adjusted for specified items:
Intangible asset amortization (268) - - - - -
Milestones and other R&D expenses - - (75) - - -
Acquired IPR&D - - - (312) - -
Change in fair value of contingent consideration - - - - - (79)
Litigation reserves - (273) - - - -
Intangible asset impairment (354) - - - - -
Other impacts related to tax law change - - - - (316) -
Other (33) (37) (5) - - -
--- --- --- --- --- ---
As adjusted (non-GAAP) $1,625 $1,641 $1,322 $ - $4 $(50)
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3. The adjusted tax
rate for the fourth
quarter of 2017 was
18.9 percent, as
detailed below:
4Q17
Pre-tax Income Tax rate
income taxes
------ -----
As reported (GAAP) $1,193 $1,141 95.6%
Specified items 1,752 (585) (33.4)%
----- ---- ------
As adjusted (non-GAAP) $2,945 $556 18.9%
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AbbVie Inc.
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Quarter Ended December 31, 2016
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
4Q16
Earnings Diluted
Pre-tax After-tax EPS
------- --------- ---
As reported (GAAP) $1,998 $1,391 $0.85
Adjusted for specified items:
Intangible asset amortization 210 170 0.10
Milestones and other R&D expenses 10 10 0.01
Acquired IPR&D 40 40 0.02
Acquisition related costs 63 42 0.02
Change in fair value of contingent consideration 85 85 0.05
Revaluation due to Section 987 tax law change - 187 0.12
Other 55 39 0.03
--- --- ----
As adjusted (non-GAAP) $2,461 $1,964 $1.20
====== ====== =====
Milestones and other R&D expenses are
associated with milestone payments
for previously announced
collaborations. Acquired IPR&D
primarily reflects an R&D
collaboration. Acquisition related
costs primarily include the
amortization of the acquisition date
fair value step-up for inventory
related to the acquisition of
Pharmacyclics. Other primarily
includes a debt extinguishment
charge as a result of the redemption
of the company's 1.75% senior notes,
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:
4Q16
Net Cost of SG&A R&D Acquired Interest Other
revenues products IPR&D expense, expense,
sold net net
---- --- ---
As reported (GAAP) $6,796 $1,555 $1,653 $1,190 $40 $290 $80
Adjusted for specified items:
Intangible asset amortization - (210) - - - - -
Milestones and other R&D expenses - - - (10) - - -
Acquired IPR&D - - - - (40) - -
Acquisition related costs - (53) (5) (5) - - -
Change in fair value of contingent consideration - - - - - - (85)
Other (12) (5) (23) - - (39) -
--- --- --- --- --- --- ---
As adjusted (non-GAAP) $6,784 $1,287 $1,625 $1,175 $ - $251 $(5)
====== ====== ====== ====== === === ==== ===
3. The adjusted tax
rate for the fourth
quarter of 2016 was
20.2 percent, as
detailed below:
4Q16
Pre-tax Income Tax rate
income taxes
------ -----
As reported
(GAAP) $1,998 $607 30.4%
Specified
items 463 (110) (24.0)%
--- ---- ------
As adjusted
(non-GAAP) $2,461 $497 20.2%
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AbbVie Inc.
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Twelve Months Ended December 31, 2017
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
12M17
Earnings Diluted
Pre-tax After-tax EPS
------- --------- ---
As reported (GAAP) $7,727 $5,309 $3.30
Adjusted for specified items:
Intangible asset amortization 1,076 809 0.51
Milestones and other R&D expenses 143 143 0.09
Acquired IPR&D 327 327 0.20
Acquisition related costs 73 49 0.03
Change in fair value of contingent consideration 626 625 0.39
Litigation reserves 370 286 0.18
Intangible asset impairment 354 244 0.15
U.S. tax reform repatriation tax - 4,509 2.81
Other impacts related to tax law change 316 (3,267) (2.04)
Tax audit settlement - (91) (0.06)
Other 94 68 0.04
As adjusted (non-GAAP) $11,106 $9,011 $5.60
======= ====== =====
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:
12M17
Cost of SG&A R&D Acquired Net Other
products IPR&D foreign expense,
sold exchange net
loss
----
As reported (GAAP) $7,040 $6,275 $4,982 $327 $348 $513
Adjusted for specified items:
Intangible asset amortization (1,076) - - - - -
Milestones and other R&D expenses - - (143) - - -
Acquired IPR&D - - - (327) - -
Acquisition related costs (52) (14) (5) - - (2)
Change in fair value of contingent consideration - - - - - (626)
Litigation reserves - (370) - - - -
Intangible asset impairment (354) - - - - -
Other impacts related to tax law change - - - - (316) -
Other (47) (42) (5) - - -
--- ---
As adjusted (non-GAAP) $5,511 $5,849 $4,829 $ - $32 $(115)
====== ====== ====== === === === =====
3. The adjusted tax
rate for the full-year
2017 was 18.9 percent,
as detailed below:
12M17
Pre-tax Income Tax rate
income taxes
------ -----
As reported (GAAP) $7,727 $2,418 31.3%
Specified items 3,379 (323) (9.6)%
-----
As adjusted (non-GAAP) $11,106 $2,095 18.9%
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AbbVie Inc.
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Twelve Months Ended December 31, 2016
(Unaudited) (In millions, except per share data)
1. Specified items impacted results as follows:
12M16
Earnings Diluted
Pre-tax After-tax EPS
------- --------- ---
As reported (GAAP) $7,884 $5,953 $3.63
Adjusted for specified items:
Intangible asset amortization 764 615 0.38
Milestones and other R&D expenses 80 80 0.05
Acquired IPR&D 200 200 0.12
Acquisition related costs 392 273 0.16
Change in fair value of contingent consideration 228 228 0.14
Venezuela devaluation loss 298 298 0.18
Revaluation due to Section 987 tax law change - 187 0.12
Other 59 70 0.04
As adjusted (non-GAAP) $9,905 $7,904 $4.82
====== ====== =====
Milestones and other R&D expenses are
associated with milestone payments
for previously announced
collaborations. Acquired IPR&D
primarily reflects R&D
collaborations as well as upfront
payments related to licensing
arrangements with third parties.
Acquisition related costs primarily
includes compensation expense,
financing and other costs associated
with the acquisitions of Stemcentrx
and Boehringer Ingelheim compounds,
as well as the amortization of the
acquisition date fair value step-up
for inventory related to the
acquisition of Pharmacyclics. Other
includes a debt extinguishment
charge as a result of the redemption
of the company's 1.75% senior notes,
a charge for the impairment of an
intangible asset, restructuring
charges associated with streamlining
global operations, a charge to
increase tax reserves, milestone
revenue under previously announced
collaborations and prior period
royalty revenue related to a patent
lawsuit settlement.
2. The impact of the specified
items by line item was as follows:
12M16
Net Cost of SG&A R&D Acquired Interest Net Other
revenues products IPR&D expense, foreign expense,
sold net exchange net
loss
----
As reported (GAAP) $25,638 $5,833 $5,855 $4,366 $200 $965 $303 $232
Adjusted for specified items:
Intangible asset amortization - (764) - - - - - -
Milestones and other R&D expenses - - - (80) - - - -
Acquired IPR&D - - - - (200) - - -
Acquisition related costs - (197) (41) (140) - - - (14)
Change in fair value of contingent consideration - - - - - - - (228)
Venezuela devaluation loss - - - - - - (298) -
Other (78) (66) (38) 6 - (39) - -
As adjusted (non-GAAP) $25,560 $4,806 $5,776 $4,152 $ - $926 $5 $(10)
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3. The adjusted tax
rate for the full-year
2016 was 20.2 percent,
as detailed below:
12M16
Pre-tax Income Tax rate
income taxes
------ -----
As reported (GAAP) $7,884 $1,931 24.5%
Specified items 2,021 70 3.4%
----- ---
As adjusted (non-GAAP) $9,905 $2,001 20.2%
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Company Codes: NYSE:ABBV |