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Abbvie Reports Third-Quarter 2015 Financial Results

The following excerpt is from the company's SEC filing.

Reports Third-Quarter Adjusted EPS of $1.13, Up Nearly 27 Percent and Exceeding Previous Guidance Range of $1.04 to $1.06; Reports GAAP EPS of $0.74

Delivers Third-Quarter Revenue of $5.944 Billion, an Increase of 26.2 Percent Over Third-Quarter 2014 on an Operational Basis (Excluding 7.8 Percent Unfavorable Exchange); Reported Sales Increased 18.4 Percent

Revenue Growth Reflects 19.6 Percent Global Operational Sales Growth from HUMIRA (Excluding 7.5 Percent Unfavorable Exchange); Reported Global HUMIRA Sales Increased 12.1 Percent

Third-Quarter Global IMBRUVICA Net Revenue was $304 Million; U .S. Sales of IMBRUVICA were $267 Million; Third-Quarter Global VIEKIRA Sales were $469 Million

Achieves Adjusted Operating Margin Expansion to 44.9 Percent of Sales; Adjusted Gross Margin Improves to 83.3 Percent of Sales

Raises 2015 Adjusted EPS Guidance Range to $4.26 to $4.28; GAAP EPS Range of $3.16 to $3.18

Company Issues Long-Term Financial Objectives through 2020 and Issues Strong 2016 EPS Guidance (See Separate Release)

NORTH CHICAGO, Ill.,

October 30, 2015 AbbVie (NYSE:ABBV) announced financial results for the third quarter ended September 30, 2015.

We are pleased with our outperformance in the third quarter and our progress year-to-date. Weve driven strong commercial, operational and R&D execution, resulting in industry-leading top- and bottom-line performance, said Richard A. Gonzalez, chairman and chief executive officer, AbbVie. We are well-positioned to deliver robust EPS growth in 2015 and beyond, and we continue to make significant progress advancing our pipeline and other strategic actions that will help AbbVie achieve top-tier growth over the long term.

Third-Quarter Results

Worldwide sales were $5.944 billion in the third quarter, up 18.4 percent year-over-year. On an operational basis, sales increased 26.2 percent, excluding a 7.8 percent unfavorable impact from foreign exchange rate fluctuations.

Third-Quarter Results (continued)

Third-quarter sales growth was driven by the continued strength of HUMIRA and other promoted products. Global HUMIRA sales increased 19.6 percent on an operational basis, or 12.1 percent including the impact of foreign exchange rate fluctuations. Strong U.S. HUMIRA growth of 30.4 percent was driven by continued momentum across all three major market categories, rheumatology, dermatology and gastroenterology. International HUMIRA sales in the third quarter grew 7.1 percent on an operational basis, nearly double the rate of growth reported in the second quarter. Reported international HUMIRA sales growth in the quarter was reduced by 16 percent due to unfavorable foreign exchange.

Third-quarter global IMBRUVICA sales were $304 million with U.S. sales of $267 million and international profit sharing of $37 million for the quarter.

Total company sales growth was also driven by $469 million in global VIEKIRA sales, now approved in 61 countries with additional approvals anticipated throughout the remainder of 2015 and into 2016, as well as strong operational growth from Duodopa, Creon and Lupron.

The adjusted gross margin ratio in the third quarter was 83.3 percent, excluding intangible asset amortization and other specified items. Gross margin expansion of 220 basis points was driven by product mix, operating efficiencies and the impact of foreign exchange rates. The gross margin ratio under U.S. generally accepted accounting principles (GAAP) was 80.4 percent.

Adjusted selling, general and administrative (SG&A) expense was 23.0 percent of sales in the third quarter. On a GAAP basis, SG&A was 24.8 percent of sales.

Adjusted research and development (R&D) was 15.4 percent of sales in the quarter, reflecting funding actions in support of our mid- and late-stage pipeline assets. On a GAAP basis, R&D was 23.8 percent of sales.

The adjusted operating margin in the third quarter was 44.9 percent, compared to 38.5 percent in third-quarter 2014. On a GAAP basis, the operating margin was 31.7 percent.

Net interest expense was $197 million dollars, reflecting the impact of debt issued in connection with the Pharmacyclics acquisition. The adjusted tax rate was 21.9 percent in the quarter and 24.8 percent on a GAAP basis.

Adjusted diluted earnings per share, excluding intangible asset amortization expense and other specified items, were $1.13 in the third quarter, up nearly 27 percent. Diluted earnings per share were $0.74 on a GAAP basis.

Announced companys long-term strategic and financial objectives, including expectations for growth and other financial metrics such as sales targets, operating margin objectives and earnings-per-share growth over our long-range plan. Provided 2016 earnings per share guidance and confirmed intention to host a comprehensive R&D Pipeline Review in Chicago during the 2016 ASCO meeting (see separate release issued this morning).

Key Events from the Third Quarter

AbbVie announced that 34 abstracts from its chronic hepatitis C clinical development program have been accepted for presentation at The Liver Meeting®, the Annual Meeting of the American Association for the Study of Liver Diseases (AASLD) in San Francisco from November 13-17, 2015. New clinical studies will be presented on AbbVies next-generation HCV medicines, ABT-493 and ABT-530, focused on investigating pan-genotypic, ribavirin (RBV)-free, once-daily treatment options that may allow for shorter treatment durations of as little as eight weeks. Presentations will also highlight new data from Phase 3b studies of AbbVies VIEKIRA PAK, taken with or without ribavirin (RBV), for adults with genotype 1 (GT1) chronic HCV infection, including studies of GT1 patients with chronic kidney disease and genotype 1b (GT1b) patients with compensated cirrhosis.

Japanese Ministry of Health, Labour and Welfare (MHLW) approved Viekirax as a new interferon and RBV-free treatment option

for adult patients with chronic GT1 HCV infection, including those with compensated liver cirrhosis. Viekirax consists of a 12-week, two direct-acting antiviral, fixed-dose combination of paritaprevir/ritonavir with ombitasvir, dosed once...


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