10-QPeriod: Q3 FY2016

AbbVie Inc. Quarterly Report for Q3 Ended Sep 30, 2016

Filed November 7, 2016For Securities:ABBV

Summary

AbbVie Inc.'s third-quarter 2016 report highlights strong revenue growth, primarily driven by its flagship drug Humira, which saw a 12% increase in global sales. The company also benefited from the recent acquisition of Pharmacyclics and the integration of its product IMBRUVICA, contributing significantly to a 64.5% increase in IMBRUVICA net revenues. Despite these top-line gains, gross margin as a percentage of net revenues declined due to higher intangible asset amortization and acquisition-related costs. Significant strategic moves during the period include the acquisition of Stemcentrx, which expanded AbbVie's oncology pipeline with the addition of rovalpituzumab tesirine (Rova-T), and the acquisition of rights to risankizumab from Boehringer Ingelheim, strengthening its immunology pipeline. AbbVie also continued to return capital to shareholders through dividends and share repurchases, demonstrating a commitment to shareholder value.

Financial Statements
Beta
Revenue$6.43B
Cost of Revenue$1.50B
Gross Profit$4.93B
SG&A Expenses$1.38B
Operating Expenses$4.07B
Operating Income$2.36B
Interest Expense$271.00M
Net Income$1.60B
EPS (Basic)$0.97
EPS (Diluted)$0.97
Shares Outstanding (Basic)1.63B
Shares Outstanding (Diluted)1.64B

Key Highlights

  • 1Net revenues increased by 8.2% to $6.43 billion for the three months ended September 30, 2016, compared to the prior year period, with a 14.5% increase for the nine months ended September 30, 2016, reaching $18.84 billion.
  • 2Humira sales showed robust growth, up 11.3% to $4.06 billion for the quarter and 14.5% to $11.79 billion for the nine months, demonstrating continued market strength.
  • 3Imbruvica sales surged by 64.5% to $501 million for the quarter and over 100% to $1.32 billion for the nine months, driven by new indications and market share gains, particularly in first-line CLL treatment.
  • 4The acquisition of Stemcentrx in June 2016 significantly expanded AbbVie's oncology pipeline, adding promising assets like Rova-T, with $2.31 billion in goodwill recognized.
  • 5Acquisition of rights to risankizumab (BI 655066) from Boehringer Ingelheim in April 2016 bolstered the immunology pipeline, with $3.89 billion in identifiable intangible assets recorded.
  • 6Diluted earnings per share (EPS) were $0.97 for the three months ended September 30, 2016, and $2.78 for the nine months ended September 30, 2016.
  • 7The company repurchased shares through an accelerated share repurchase (ASR) agreement of $3.8 billion in June 2016 following the Stemcentrx acquisition.

Frequently Asked Questions

Humira continued its strong performance, with global sales increasing by 11.3% to $4.06 billion for the quarter. Imbruvica saw a significant jump of 64.5% to $501 million, driven by new approvals and market share gains. However, Viekira sales decreased by 19.6% due to market dynamics and increased competition.

AbbVie made significant strategic acquisitions, notably Stemcentrx for its oncology pipeline and rights to risankizumab from Boehringer Ingelheim for its immunology pipeline. The company also funded these acquisitions and managed its capital structure through substantial debt issuances and an accelerated share repurchase program.

While acquisitions like Stemcentrx and the ongoing integration of Pharmacyclics contributed to revenue growth, they also led to increased amortization expenses and acquisition-related costs. This resulted in a decrease in gross margin as a percentage of net revenues from 80% to 77% year-over-year for the quarter.

AbbVie highlighted its robust pipeline with over 50 compounds in clinical development, focusing on immunology, oncology, virology, and neurology. The company mentioned several regulatory submissions and data readouts anticipated in the next twelve months, indicating a continued commitment to innovation and future growth.