10-QPeriod: Q2 FY2019

AbbVie Inc. Quarterly Report for Q2 Ended Jun 30, 2019

Filed August 5, 2019For Securities:ABBV

Summary

AbbVie Inc. reported net revenues of $8.255 billion for the three months ended June 30, 2019, a slight decrease of 0.3% from the prior year, or a 1.3% increase on a constant currency basis. For the six months ended June 30, 2019, net revenues were $16.083 billion, a 0.8% decrease from the prior year, or a 0.9% increase on a constant currency basis. The company announced a significant development with the proposed acquisition of Allergan plc for approximately $63 billion, expected to close in early 2020, which will expand AbbVie's therapeutic areas and market reach. Despite a slight decline in overall revenue, key growth drivers like IMBRUVICA and VENCLEXTA showed strong performance, increasing by 29% and over 100% respectively for the quarter. While international HUMIRA sales experienced a significant decline due to biosimilar competition, U.S. HUMIRA sales demonstrated continued strength with an increase of 7.7%. The company also saw the approval and initial sales of SKYRIZI, a new immunology drug. Diluted earnings per share for the quarter were $0.49, a substantial decrease from $1.26 in the prior year, largely impacted by significant non-GAAP adjustments, including a substantial increase in the fair value of contingent consideration liabilities. The company continues to focus on pipeline development and returning cash to shareholders.

Financial Highlights

53 data points
Beta

Revenue

$8.26B

78.0% Gross Margin

Net Income

$741.00M

9.0% Net Margin

EPS (Diluted)

$0.49

Total Assets

$57.14B

Cash & Equivalents

$5.17B

Free Cash Flow

$2.35B

Financial Statements
Beta
Revenue$8.26B
Cost of Revenue$1.82B
Gross Profit$6.44B
SG&A Expenses$1.65B
Operating Expenses$4.86B
Operating Income$3.40B
Interest Expense$358.00M
Net Income$741.00M
EPS (Basic)$0.49
EPS (Diluted)$0.49
Shares Outstanding (Basic)1.48B
Shares Outstanding (Diluted)1.48B

Key Highlights

  • 1AbbVie announced a proposed acquisition of Allergan plc for approximately $63 billion, a significant move to diversify its business and expand into new therapeutic areas such as medical aesthetics and neuroscience.
  • 2Net revenues for the second quarter of 2019 were $8.255 billion, down 0.3% year-over-year (up 1.3% on a constant currency basis), impacted by international HUMIRA biosimilar competition.
  • 3Key growth products like IMBRUVICA and VENCLEXTA showed strong performance, with IMBRUVICA revenues up 29.3% and VENCLEXTA revenues up over 100% for the quarter.
  • 4U.S. HUMIRA sales remained resilient, increasing by 7.7% year-over-year for the quarter, while international HUMIRA sales declined significantly due to biosimilar competition.
  • 5SKYRIZI, a new immunology drug, received regulatory approvals in April 2019 and generated $48 million in revenue in its first quarter on the market.
  • 6Diluted earnings per share decreased significantly to $0.49 from $1.26 in the prior year, largely due to a substantial increase in the fair value of contingent consideration liabilities ($2.3 billion in the quarter).
  • 7AbbVie continued to return capital to shareholders, declaring a quarterly cash dividend of $1.07 per share and repurchasing shares under its stock repurchase program.

Frequently Asked Questions

For the three months ended June 30, 2019, AbbVie reported net revenues of $8.255 billion, a slight decrease of 0.3% compared to the prior year. On a constant currency basis, net revenues increased by 1.3%. Diluted earnings per share were $0.49, down from $1.26 in the same period last year, largely due to non-GAAP adjustments, particularly a significant increase in the fair value of contingent consideration liabilities.

Despite a slight overall decline, key drivers of growth include IMBRUVICA, which saw a 29.3% increase in revenue, and VENCLEXTA, with revenues growing by over 100%. U.S. HUMIRA sales also continued to perform well, increasing by 7.7%. The newly launched SKYRIZI contributed $48 million in its first quarter.

AbbVie announced its intention to acquire Allergan plc for approximately $63 billion. This strategic move is expected to diversify AbbVie's revenue streams, expand its presence in key therapeutic areas like medical aesthetics and neuroscience, and create significant commercial and operational synergies. The transaction is anticipated to close in early 2020, subject to regulatory and shareholder approvals.

International HUMIRA sales declined by 31% in the second quarter due to direct biosimilar competition following the expiration of the European Union composition of matter patent. However, U.S. HUMIRA sales remain strong, with a 7.7% increase, and biosimilar competition is not expected in the United States until 2023.