Why is GAAP EPS up so much while adjusted EPS fell?

The comparison is distorted by the prior-year quarter. Q1 2023 GAAP results included a $1.872 billion pre-tax charge for changes in the fair value of contingent consideration and a $710 million intangible impairment, which depressed GAAP EPS to $0.13. Q1 2024 GAAP EPS of $0.77 was not affected by those items to the same degree. Adjusted EPS excludes these items in both periods, and it fell 6.1% to $2.31 because of Humira erosion and higher acquisition-related costs, partly offset by growth in Skyrizi, Rinvoq, and Neuroscience.

How significant is the Humira decline, and can Skyrizi and Rinvoq offset it?

Humira fell to $2.270 billion, down 35.9%, and U.S. Humira fell 39.9% to $1.771 billion. Skyrizi and Rinvoq together reached $3.101 billion, up roughly 52% year over year, which more than replaced the $1.27 billion Humira decline in the quarter. Total revenue still grew only 0.7%, so the offset is not yet complete at the top line, though revenue growth is positive. Investors should watch whether the ex-Humira portfolio keeps growing fast enough to lift total revenue as Humira erosion continues.

Why did AbbVie raise its 2024 EPS guidance, and does it include future deal costs?

AbbVie raised its adjusted diluted EPS guidance to $11.13–$11.33 from $10.97–$11.17. Management attributed the strong first quarter, which was well ahead of its expectations and driven by ex-Humira products. The guidance includes the $0.08 per-share first-quarter IPR&D and milestone expense but excludes any acquired IPR&D or milestone charges expected after the first quarter, because the company says these cannot be reliably forecast.

What is the impact of the ImmunoGen acquisition and what does it contribute so far?

The ImmunoGen acquisition closed on February 12, 2024. It added Elahere, which received full FDA approval for platinum-resistant ovarian cancer based on the MIRASOL Phase 3 trial, showing an overall survival benefit and a 35% reduction in the risk of progression. Elahere generated $64 million in the partial first quarter. The quarter also carried $511 million of acquisition and integration costs, mostly related to ImmunoGen, which were excluded from adjusted results. Those costs will weigh on GAAP earnings until integration is complete.

What leadership and pipeline events should investors note?

The board selected president and COO Robert A. Michael to succeed Richard A. Gonzalez as CEO effective July 1, 2024. Gonzalez, who has been CEO since AbbVie's formation in 2013, will become executive chairman, and Michael will join the board. On the pipeline, the FDA granted Priority Review to the Epkinly sBLA for relapsed or refractory follicular lymphoma, and Rinvoq showed positive Phase 3 results in giant cell arteritis and superiority over Dupixent in atopic dermatitis. The filing also cites a pending Cerevel Therapeutics acquisition in its forward-looking statements, so investors should check later filings for its status.

ABBV 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed April 26, 2024. Cited figures are marked; the original filing is the authoritative source.

AbbVie reported first-quarter 2024 net revenues of $12.310 billion^a, up 0.7% reported and 1.6% on an operational basis.

GAAP diluted EPS was $0.77^b, up from $0.13 a year earlier, but this reflects a large prior-year charge tied to contingent consideration. Adjusted diluted EPS was $2.31, down 6.1% from $2.46. The adjusted figure excludes $1.89 billion of intangible amortization, $511 million of acquisition and integration costs (mainly ImmunoGen), and a $660 million change in contingent consideration.

Management said results were well ahead of its expectations. The quarter shows a sharp mix shift away from Humira. Global Humira sales fell 35.9% to $2.270 billion^c because of biosimilar competition.

Skyrizi (+47.6% to $2.008 billion^d) and Rinvoq (+59.3% to $1.093 billion) more than offset that decline, and Neuroscience grew 15.9% to $1.965 billion, led by Vraylar, Ubrelvy, and Qulipta. Aesthetics fell 4.0%. The ImmunoGen acquisition closed on February 12, 2024, and contributed $64 million of Elahere revenue in a partial quarter.

AbbVie raised its full-year 2024 adjusted EPS guidance to $11.13–$11.33 from $10.97–$11.17, a $0.16 increase at the midpoint. The guidance includes a $0.08 per-share hit from first-quarter acquired IPR&D and milestone expense and excludes any future IPR&D or milestone charges. The filing also announced that Robert A.

Michael will succeed Richard A. Gonzalez as CEO effective July 1, 2024, with Gonzalez becoming executive chairman.

02—Key points

Key Highlights

Revenue of $12.310B (+0.7% reported, +1.6% operational) with immunology at $5.371B (-3.9%) as Humira declined 35.9% and Skyrizi (+47.6%) and Rinvoq (+59.3%) grew strongly.
Adjusted diluted EPS of $2.31, down 6.1% year over year; GAAP diluted EPS of $0.77 versus $0.13 in Q1 2023, which was depressed by a large prior-year contingent consideration charge.
2024 adjusted diluted EPS guidance raised to $11.13–$11.33 from $10.97–$11.17 (about $0.16 at the midpoint), including a $0.08 first-quarter IPR&D/milestone impact.
Neuroscience revenue grew 15.9% to $1.965B, led by Vraylar ($694M, +23.6%), Botox Therapeutic ($748M), and Ubrelvy/Qulipta ($334M combined).
Oncology revenue rose 9.0% to $1.543B, with Venclexta up 14.2% and Imbruvica down 4.5%; the ImmunoGen acquisition closed February 12, 2024, adding $64M of Elahere revenue.
Leadership transition: Robert A. Michael to succeed Richard A. Gonzalez as CEO effective July 1, 2024, and join the board.
Aesthetics revenue fell 4.0% to $1.249B, with Juvederm down 16.4% and Botox Cosmetic down 3.9%.

03—Questions

Frequently Asked Questions

Why is GAAP EPS up so much while adjusted EPS fell?
The comparison is distorted by the prior-year quarter. Q1 2023 GAAP results included a $1.872 billion pre-tax charge for changes in the fair value of contingent consideration and a $710 million intangible impairment, which depressed GAAP EPS to $0.13. Q1 2024 GAAP EPS of $0.77 was not affected by those items to the same degree. Adjusted EPS excludes these items in both periods, and it fell 6.1% to $2.31 because of Humira erosion and higher acquisition-related costs, partly offset by growth in Skyrizi, Rinvoq, and Neuroscience.
How significant is the Humira decline, and can Skyrizi and Rinvoq offset it?
Humira fell to $2.270 billion, down 35.9%, and U.S. Humira fell 39.9% to $1.771 billion. Skyrizi and Rinvoq together reached $3.101 billion, up roughly 52% year over year, which more than replaced the $1.27 billion Humira decline in the quarter. Total revenue still grew only 0.7%, so the offset is not yet complete at the top line, though revenue growth is positive. Investors should watch whether the ex-Humira portfolio keeps growing fast enough to lift total revenue as Humira erosion continues.
Why did AbbVie raise its 2024 EPS guidance, and does it include future deal costs?
AbbVie raised its adjusted diluted EPS guidance to $11.13–$11.33 from $10.97–$11.17. Management attributed the strong first quarter, which was well ahead of its expectations and driven by ex-Humira products. The guidance includes the $0.08 per-share first-quarter IPR&D and milestone expense but excludes any acquired IPR&D or milestone charges expected after the first quarter, because the company says these cannot be reliably forecast.
What is the impact of the ImmunoGen acquisition and what does it contribute so far?
The ImmunoGen acquisition closed on February 12, 2024. It added Elahere, which received full FDA approval for platinum-resistant ovarian cancer based on the MIRASOL Phase 3 trial, showing an overall survival benefit and a 35% reduction in the risk of progression. Elahere generated $64 million in the partial first quarter. The quarter also carried $511 million of acquisition and integration costs, mostly related to ImmunoGen, which were excluded from adjusted results. Those costs will weigh on GAAP earnings until integration is complete.
What leadership and pipeline events should investors note?
The board selected president and COO Robert A. Michael to succeed Richard A. Gonzalez as CEO effective July 1, 2024. Gonzalez, who has been CEO since AbbVie's formation in 2013, will become executive chairman, and Michael will join the board. On the pipeline, the FDA granted Priority Review to the Epkinly sBLA for relapsed or refractory follicular lymphoma, and Rinvoq showed positive Phase 3 results in giant cell arteritis and superiority over Dupixent in atopic dermatitis. The filing also cites a pending Cerevel Therapeutics acquisition in its forward-looking statements, so investors should check later filings for its status.

04—Continue

← View all 8-K filings