Financial Release
"
First-Quarter Results
- Worldwide sales were
$4.563 billion in the first quarter, up 5.4 percent. On an operational basis, sales increased 6.7 percent, excluding a 1.3 percent unfavorable impact from foreign exchange rate fluctuations. Excluding sales from our lipid franchise due to the loss of exclusivity, sales increased 13.5 percent on an operational basis in the quarter. - First-quarter sales growth was driven primarily by the continued strength of HUMIRA. Global HUMIRA sales increased 17.5 percent, or 18.4 percent on an operational basis, excluding the impact of foreign exchange rate fluctuations. Total company sales growth was also driven by double-digit growth from key products including Synthroid, Creon and Duodopa.
- The adjusted gross margin ratio in the first quarter was 78.4 percent, up 220 basis points versus the prior year, excluding intangible asset amortization and other specified items. The gross margin ratio under U.S. generally accepted accounting principles (GAAP) was 75.9 percent.
- Adjusted selling, general and administrative (SG&A) expense was 27.6 percent of sales in the first quarter, up 4.6 percent versus the prior year, reflecting continued investment in our growth brands and the expected HCV launch. On a GAAP basis, SG&A was 29.4 percent of sales.
- Adjusted research and development (R&D) was 16.9 percent of sales in the quarter, up 22.0 percent versus the prior year, reflecting funding actions in support of our emerging mid- and late-stage pipeline assets and the continued pursuit of additional HUMIRA indications. On a GAAP basis, R&D was 16.9 percent of sales, up 21.8 percent.
- Net interest expense was
$65 million , and the adjusted tax rate was 22.3 percent in the quarter. On a GAAP basis, the first-quarter tax rate was 23.8 percent. - First-quarter diluted earnings per share were
$0.61 on a GAAP basis. Adjusted diluted earnings per share, excluding intangible asset amortization expense and other specified items, were$0.71 , up 4.4 percent from first-quarter 2013.
Key Events from the First Quarter
AbbVie recently submitted its U.S. regulatory application for its interferon-free combination for patients with genotype 1 hepatitis C virus (HCV). AbbVie plans to submit applications for regulatory approval of its regimen in theEuropean Union in early May. The company expects U.S. commercialization in 2014 and European approval in early 2015.AbbVie presented new data from its Phase 3 HCV program at the 2014International Liver Congress inLondon , including detailed results from the SAPPHIRE-I, SAPPHIRE-II, PEARL-III, and TURQUOISE-II studies. Data from TURQUOISE-II, a global, multi-center, randomized, open-label study evaluating the efficacy and safety of 12 weeks or 24 weeks of treatment withAbbVie's regimen with ribavirin (RBV) in adult patients with genotype 1 chronic HCV infection with compensated liver cirrhosis, was presented as a late-breaker. Patients in the study achieved sustained virologic response rates 12 weeks post-treatment (SVR12) of 91.8 percent and 95.9 percent in the 12-week and 24-week treatment arms, respectively.AbbVie announced the initiation of a global Phase 3 clinical trial evaluating the safety and efficacy of its investigational compound, veliparib (ABT-888), in patients with previously untreated locally advanced or metastatic squamous non-small cell lung cancer (NSCLC). This randomized, placebo-controlled, double-blind, multi-center trial will recruit approximately 900 patients, and the primary efficacy outcome of the trial is overall survival. Veliparib is a PARP inhibitor being evaluated in multiple tumor types.- At the recent Conference on Retroviruses and Opportunistic Infections (CROI),
AbbVie presented data on its next-generation HCV assets, ABT-493 and ABT-530, showing balanced pan-genotypic coverage. These next-generation assets are currently in Phase 2 development. AbbVie also presented the first detailed results from the pivotal Phase 3 study, PEARL-III. PEARL-III evaluated the efficacy and safety of 12 weeks of treatment withAbbVie's investigational therapy with or without RBV in non-cirrhotic, adult patients with chronic genotype 1b HCV infection who were new to treatment. AbbVie announced the initiation of a pivotal Phase 3 clinical trial that will evaluate the use of HUMIRA as a treatment for fingernail psoriasis in patients with moderate to severe chronic plaque psoriasis, an area of unmet need. Currently there are no approved treatments for fingernail psoriasis. The 26-week clinical trial is a multinational, double-blind, placebo-controlled study that is expected to enroll 200 patients with moderate to severe chronic plaque psoriasis with fingernail psoriasis. It will be conducted at approximately 32 sites worldwide.AbbVie announced plans to establish operations inSingapore for small molecule and biologics active drug substance manufacturing. When completed, the facility will provide manufacturing capacity for compounds withinAbbVie's oncology and immunology pipeline to serve markets globally. The investment will establishAbbVie's manufacturing presence inAsia .- On
February 20 , theAbbVie board of directors increased the company's quarterly cash dividend by 5 percent from$0.40 per share to$0.42 per share. The cash dividend is payableMay 15, 2014 to stockholders of record at the close of business onApril 15, 2014 .
Full-Year 2014 Outlook
About
Conference Call
Non-GAAP Financial Results
Financial results for 2013 and 2014 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
Forward-Looking Statements
Some statements in this news release may be 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 Inc. |
||||||||
Key Product Sales |
||||||||
Quarter Ended March 31, 2014 |
||||||||
(Unaudited) |
||||||||
% Change vs. 1Q13 |
||||||||
Sales (in millions) |
International |
Total |
||||||
U.S. |
Int'l. |
Total |
U.S. |
Operational |
Reported |
Operational |
Reported |
|
TOTAL SALES |
$2,226 |
$2,337 |
$4,563 |
4.9% |
8.5% |
5.9% |
6.7% |
5.4% |
Humira |
1,192 |
1,445 |
2,637 |
24.7 |
13.9 |
12.2 |
18.4 |
17.5 |
Synagis |
-- |
354 |
354 |
n/a |
9.3 |
2.7 |
9.3 |
2.7 |
AndroGel |
254 |
-- |
254 |
6.0 |
n/a |
n/a |
6.0 |
6.0 |
Kaletra |
54 |
141 |
195 |
2.2 |
(12.6) |
(15.5) |
(9.1) |
(11.3) |
Lupron |
140 |
49 |
189 |
11.8 |
(8.2) |
(13.5) |
5.6 |
3.9 |
Synthroid |
157 |
-- |
157 |
31.5 |
n/a |
n/a |
31.5 |
31.5 |
Sevoflurane |
19 |
123 |
142 |
15.9 |
5.2 |
1.5 |
6.5 |
3.2 |
Creon |
107 |
-- |
107 |
18.4 |
n/a |
n/a |
18.4 |
18.4 |
Duodopa |
-- |
52 |
52 |
n/a |
29.4 |
32.2 |
29.4 |
32.2 |
Niaspan |
47 |
-- |
47 |
(75.0) |
n/a |
n/a |
(75.0) |
(75.0) |
TriCor/Trilipix |
23 |
-- |
23 |
(81.8) |
n/a |
n/a |
(81.8) |
(81.8) |
Note: |
"Operational" growth reflects the percentage change over the prior year excluding the impact of exchange rate fluctuations. |
n/a = |
not applicable |
AbbVie Inc. |
||||
Consolidated Statements of Earnings |
||||
Quarter Ended March 31, 2014 and 2013 |
||||
(Unaudited) (In millions, except per share data) |
||||
2014 |
2013 |
|||
Net sales |
$4,563 |
$4,329 |
||
Cost of products sold |
1,100 |
1,153 |
||
Selling, general and administrative |
1,340 |
1,237 |
||
Research and development |
772 |
634 |
||
Total operating cost and expenses |
3,212 |
3,024 |
||
Operating earnings |
1,351 |
1,305 |
||
Interest expense, net |
65 |
66 |
||
Net foreign exchange loss |
3 |
15 |
||
Other income, net |
(3) |
(15) |
||
Earnings before income tax expense |
1,286 |
1,239 |
||
Income tax expense |
306 |
271 |
||
Net earnings |
$980 |
$968 |
||
Diluted earnings per share |
$0.61 |
$0.60 |
||
Diluted earnings per share, excluding specified items |
$0.71 |
$0.68 |
a) |
|
Average diluted shares outstanding |
1,609 |
1,605 |
a) |
Refer to the Reconciliation of GAAP Reported to Non-GAAP Adjusted Information for further details. |
Note: |
The computation of diluted earnings per share for the quarter ended March 31, 2014 was calculated pursuant to the two-class method which requires the allocation of net earnings between common stockholders and participating security holders. |
AbbVie Inc. |
|||
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information |
|||
Quarter Ended March 31, 2014 |
|||
(Unaudited) (In millions, except per share data) |
|||
1. Specified items impacted results as follows: |
|||
1Q14 |
|||
Earnings |
Diluted |
||
Pre-tax |
After-tax |
EPS |
|
As reported (GAAP) |
$1,286 |
$980 |
$0.61 |
Adjusted for specified items: |
|||
Intangible asset amortization |
110 |
80 |
0.05 |
Separation costs |
80 |
88 |
0.05 |
Restructuring/Other |
4 |
2 |
0.00 |
As adjusted (non-GAAP) |
$1,480 |
$1,150 |
$0.71 |
Intangible asset amortization reflects costs recognized as a result of licensing and acquisition activities. Separation costs are expenses related to the separation of AbbVie from Abbott. Restructuring/Other is primarily associated with previously announced restructuring activities. |
2. The impact of the specified items by line item was as follows: |
1Q14 |
|||
Cost of products sold |
SG&A |
R&D |
|
As reported (GAAP) |
$1,100 |
$1,340 |
$772 |
Adjusted for specified items: |
|||
Intangible asset amortization |
(110) |
-- |
-- |
Separation costs |
(2) |
(77) |
(1) |
Restructuring/Other |
(2) |
(2) |
-- |
As adjusted (non-GAAP) |
$986 |
$1,261 |
$771 |
3. The adjusted tax rate for the first quarter of 2014 was 22.3 percent, as detailed below: |
1Q14 |
|||
Pre-tax |
Income |
||
income |
taxes |
Tax rate |
|
As reported (GAAP) |
$1,286 |
$306 |
23.8% |
Specified items |
194 |
24 |
12.4% |
As adjusted (non-GAAP) |
$1,480 |
$330 |
22.3% |
AbbVie Inc. |
|||
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information |
|||
Quarter Ended March 31, 2013 |
|||
(Unaudited) (In millions, except per share data) |
|||
1. Specified items impacted results as follows: |
|||
1Q13 |
|||
Earnings |
Diluted |
||
Pre-tax |
After-tax |
EPS |
|
As reported (GAAP) |
$1,239 |
$968 |
$0.60 |
Adjusted for specified items: |
|||
Intangible asset amortization |
135 |
98 |
0.06 |
Separation costs |
34 |
22 |
0.01 |
Restructuring/Other |
(1) |
7 |
0.01 |
As adjusted (non-GAAP) |
$1,407 |
$1,095 |
$0.68 |
Intangible asset amortization reflects costs recognized as a result of licensing and acquisition activities. Separation costs are expenses related to the separation of AbbVie from Abbott. Restructuring/Other is primarily associated with previously announced restructuring activities and the impact of the Venezuelan currency devaluation. |
2. The impact of the specified items by line item was as follows: |
1Q13 |
|||||
Cost of products sold |
SG&A |
R&D |
Net foreign exchange loss |
Other income, net |
|
As reported (GAAP) |
$1,153 |
$1,237 |
$634 |
$15 |
($15) |
Adjusted for specified items: |
|||||
Intangible asset amortization |
(135) |
-- |
-- |
-- |
-- |
Separation costs |
(3) |
(29) |
(2) |
-- |
-- |
Restructuring/Other |
17 |
(2) |
-- |
(11) |
(3) |
As adjusted (non-GAAP) |
$1,032 |
$1,206 |
$632 |
$4 |
($18) |
3. The adjusted tax rate for the first quarter of 2013 was 22.2 percent, as detailed below: |
1Q13 |
|||
Pre-tax |
Income |
||
income |
taxes |
Tax rate |
|
As reported (GAAP) |
$1,239 |
$271 |
21.9% |
Specified items |
168 |
41 |
24.4% |
As adjusted (non-GAAP) |
$1,407 |
$312 |
22.2% |
SOURCE
Media: Jennifer Smoter, (847) 935-8865, or Adelle Infante, (847) 938-8745; Investors: Larry Peepo, (847) 935-6722, or Liz Shea, (847) 935-2211