AbbVie 10-Q 2024-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35565

AbbVie Inc.

(Exact name of registrant as specified in its charter)
Delaware						32-0375147
(State or other jurisdiction of incorporation or organization)						(I.R.S. employer identification number)

1 North Waukegan Road

North Chicago, Illinois 60064-6400

Telephone: (847) 932-7900

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer			☒			Accelerated Filer			☐
Non-Accelerated Filer			☐			Smaller reporting company			☐
						Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class						Trading Symbol(s)						Name of each exchange on which registered
Common Stock, par value $0.01 per share						ABBV						New York Stock Exchange
												Chicago Stock Exchange
1.375% Senior Notes due 2024						ABBV24						New York Stock Exchange
1.250% Senior Notes due 2024						ABBV24B						New York Stock Exchange
0.750% Senior Notes due 2027						ABBV27						New York Stock Exchange
2.125% Senior Notes due 2028						ABBV28						New York Stock Exchange
2.625% Senior Notes due 2028						ABBV28B						New York Stock Exchange
2.125% Senior Notes due 2029						ABBV29						New York Stock Exchange
1.250% Senior Notes due 2031						ABBV31						New York Stock Exchange

As of April 25, 2024, AbbVie Inc. had 1,765,867,781 shares of common stock at $0.01 par value outstanding.

AbbVie Inc. and Subsidiaries

Table of Contents

PART I.			FINANCIAL INFORMATION
						Page
Item 1.			FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			1
Item 2.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			28
Item 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			37
Item 4.			CONTROLS AND PROCEDURES			38
PART II.			OTHER INFORMATION
Item 1.			LEGAL PROCEEDINGS			39
Item 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			39
Item 5.			OTHER ITEMS			40
Item 6.			EXHIBITS			41

PART I. FINANCIAL INFORMATION

AbbVie Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings (unaudited)

												Three months ended March 31,
(in millions, except per share data)																		2024						2023
Net revenues																		$	12,310					$	12,225
Cost of products sold																		4,094						3,986
Selling, general and administrative																		3,315						3,039
Research and development																		1,939						2,292
Acquired IPR&D and milestones																		164						150
Other operating income																		—						(10)
Total operating costs and expenses																		9,512						9,457
Operating earnings																		2,798						2,768
Interest expense, net																		453						454
Net foreign exchange loss																		4						35
Other expense, net																		586						1,804
Earnings before income tax expense																		1,755						475
Income tax expense																		383						234
Net earnings																		1,372						241
Net earnings attributable to noncontrolling interest																		3						2
Net earnings attributable to AbbVie Inc.																		$	1,369					$	239
Per share data
Basic earnings per share attributable to AbbVie Inc.																		$	0.77					$	0.13
Diluted earnings per share attributable to AbbVie Inc.																		$	0.77					$	0.13
Weighted-average basic shares outstanding																		1,769						1,770
Weighted-average diluted shares outstanding																		1,773						1,776

The accompanying notes are an integral part of these condensed consolidated financial statements.

2024 Form 10-Q |			1

AbbVie Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (unaudited)

									Three months ended March 31,
(in millions)															2024						2023
Net earnings															$	1,372					$	241
Foreign currency translation adjustments, net of tax expense (benefit) of $(20) for the three months ended March 31, 2024 and $12 for the three months ended March 31, 2023															(396)						194
Net investment hedging activities, net of tax expense (benefit) of $57 for the three months ended March 31, 2024 and $(60) for the three months ended March 31, 2023															207						(224)
Pension and post-employment benefits, net of tax expense (benefit) of $1 for the three months ended March 31, 2024 and $14 for the three months ended March 31, 2023															10						38
Cash flow hedging activities, net of tax expense (benefit) of $7 for the three months ended March 31, 2024 and $(4) for the three months ended March 31, 2023															30						(41)
Other comprehensive loss															(149)						(33)
Comprehensive income															1,223						208
Comprehensive income attributable to noncontrolling interest															3						2
Comprehensive income attributable to AbbVie Inc.															$	1,220					$	206

The accompanying notes are an integral part of these condensed consolidated financial statements.

2024 Form 10-Q |			2

AbbVie Inc. and Subsidiaries Condensed Consolidated Balance Sheets

(in millions, except share data)			March 31, 2024						December 31, 2023
			(unaudited)
Assets
Current assets
Cash and equivalents			$	18,067					$	12,814
Short-term investments			2						2
Accounts receivable, net			11,949						11,155
Inventories			4,245						4,099
Prepaid expenses and other			4,608						4,932
Total current assets			38,871						33,002
Investments			305						304
Property and equipment, net			4,980						4,989
Intangible assets, net			62,225						55,610
Goodwill			33,426						32,293
Other assets			9,067						8,513
Total assets			$	148,874					$	134,711
Liabilities and Equity
Current liabilities
Short-term borrowings			$	3					$	—
Current portion of long-term debt and finance lease obligations			10,193						7,191
Accounts payable and accrued liabilities			31,326

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The following is a discussion and analysis of the financial condition of AbbVie Inc. (AbbVie or the company) as of March 31, 2024 and December 31, 2023 and the results of operations for the three months ended March 31, 2024 and 2023. This commentary should be read in conjunction with the Condensed Consolidated Financial Statements and accompanying notes appearing in Item 1, “Financial Statements and Supplementary Data.”

EXECUTIVE OVERVIEW

Company Overview

AbbVie is a global, diversified research-based biopharmaceutical company positioned for success with a comprehensive product portfolio that has leadership positions across immunology, oncology, aesthetics, neuroscience and eye care. AbbVie uses its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world’s most complex and serious diseases.

On February 20, 2024, AbbVie announced Robert A. Michael, AbbVie's current president and chief operating officer, will succeed Richard A. Gonzalez as the company's chief executive officer (CEO). Mr. Gonzalez, who has served as CEO since the company's formation in 2013, will retire from the role of CEO and become executive chairman of the board of directors, effective July 1, 2024. Additionally, the board has appointed Mr. Michael as a member of the board of directors effective July 1, 2024.

On February 12, 2024, AbbVie completed the acquisition of ImmunoGen, Inc. (ImmunoGen). The acquisition of ImmunoGen further builds on AbbVie's existing solid tumor pipeline of novel targeted therapies and next-generation immuno-oncology assets, which have the potential to create new treatment possibilities across multiple solid tumors and hematologic malignancies. AbbVie and ImmunoGen's combined capabilities represent an opportunity to deliver potentially transformative antibody-drug conjugate (ADC) therapies to patients. See Note 4 to the Condensed Consolidated Financial Statements for additional information on the acquisition. Subsequent to the acquisition date, AbbVie's consolidated financial statements include the assets, liabilities, operating results and cash flows of ImmunoGen.

AbbVie's products are generally sold worldwide directly to wholesalers, distributors, government agencies, health care facilities, specialty pharmacies and independent retailers from AbbVie-owned distribution centers and public warehouses. Certain products (including aesthetic products and devices) are also sold directly to physicians and other licensed healthcare providers. In the United States, AbbVie distributes pharmaceutical products principally through independent wholesale distributors, with some sales directly to retailers, pharmacies, patients or other customers. Outside the United States, AbbVie sells products primarily to wholesalers or through distributors, and depending on the market works through largely centralized national payers system to agree on reimbursement terms. Certain products are co-marketed or co-promoted with other companies. AbbVie operates as a single global business segment and has approximately 50,000 employees.

2024 Strategic Objectives

AbbVie's mission is to discover and develop innovative medicines and products that solve serious health issues today and address the medical challenges of tomorrow while achieving top-tier financial performance through outstanding execution. AbbVie intends to execute its strategy and advance its mission in a number of ways, including: (i) maximizing the benefits of a diversified revenue base with multiple long-term growth drivers; (ii) leveraging AbbVie's commercial strength and international infrastructure across therapeutic areas and ensuring strong commercial execution of new product launches; (iii) continuing to invest in and expand its pipeline in support of opportunities in immunology, oncology, aesthetics, neuroscience and eye care as well as continued investment in key on-market products; (iv) generating substantial operating cash flows to support investment in innovative research and development, and return cash to shareholders via a strong and growing dividend while also continuing to repay debt. In addition, AbbVie anticipates several regulatory submissions and data readouts from key clinical trials in the next 12 months.

Financial Results

The company's financial performance for the three months ended March 31, 2024 included delivering worldwide net revenues of $12.3 billion, operating earnings of $2.8 billion, diluted earnings per share of $0.77 and cash flows from operations of $4.0 billion. Worldwide net revenues increased 1% on a reported basis and 2% on a constant currency basis.

Diluted earnings per share was $0.77 for the three months ended March 31, 2024 and included the following after-tax costs: (i) $1.6 billion related to the amortization of intangible assets; (ii) $643 million for the change in fair value of contingent

2024 Form 10-Q |			28

consideration liabilities; and (iii) $486 million of acquisition and integration expenses. Additionally, financial results reflected continued funding to support all stages of AbbVie’s pipeline assets and continued investment in AbbVie’s on-market brands.

Research and Development

Research and innovation are the cornerstones of AbbVie’s business as a global biopharmaceutical company. AbbVie’s long-term success depends to a great extent on its ability to continue to discover and develop innovative products and acquire or collaborate on compounds currently in development by other biotechnology or pharmaceutical companies.

AbbVie’s pipeline currently includes approximately 90 compounds, devices or indications in development individually or under collaboration or license agreements and is focused on such important specialties as immunology, oncology, aesthetics, neuroscience and eye care. Of these programs, approximately 50 are in mid- and late-stage development.

The following sections summarize transitions of significant programs from mid-stage development to late-stage development as well as developments in significant late-stage and registration programs. AbbVie expects multiple mid-stage programs to transition into late-stage programs in the next 12 months.

Significant Programs and Developments

Immunology

Rinvoq

• In January 2024, AbbVie initiated a Phase 3 study to evaluate Rinvoq in adults and adolescents with non-segmental vitiligo who are eligible for systemic therapy.

• In April 2024, AbbVie announced positive top-line results from its Phase 3 SELECT-GCA trial for Rinvoq in combination with a 26-week steroid taper regimen in patients with giant cell arteritis achieved its primary endpoint.

• In April 2024, AbbVie announced positive top-line results from the head-to-head Phase 3b/4 Level-Up trial evaluating Rinvoq compared to dupilumab in adolescent and adult patients with moderate to severe atopic dermatitis. In the study, Rinvoq demonstrated superiority to dupilumab on the primary endpoint and all ranked secondary endpoints.

Lutikizumab

• In January 2024, AbbVie announced Phase 2 results showing adults with moderate to severe hidradenitis suppurativa (HS) who had previously failed anti-TNF therapy who received lutikizumab achieved higher response rates than placebo in the primary endpoint of achieving HS Clinical Response at week 16. Based on these data, AbbVie will advance its clinical program of lutikizumab in HS to Phase 3.

Oncology

Epkinly

• In February 2024, AbbVie announced that the U.S. Food and Drug Administration (FDA) granted priority review of the supplemental Biologics License Application (sBLA) of Epkinly, for the treatment of adult relapsed or refractory (R/R) follicular lymphoma (FL).

• In March 2024, AbbVie initiated a Phase 3 clinical trial to evaluate Epkinly in combination with rituximab and lenalidomide in patients with previously untreated follicular lymphoma.

Elahere

• In March 2024, AbbVie announced that the FDA granted full approval for Elahere for the treatment of folate receptor alpha (FRα)-positive, platinum-resistant epithelial ovarian, fallopian tube or primary peritoneal adult cancer patients treated with up to three prior therapies.

Navitoclax

• In April 2024, AbbVie announced its decision to discontinue the Phase 3 TRANSFORM-2 study evaluating Navitoclax, a BCL-XL/BCL-2 inhibitor, plus ruxolitinib in patients with relapsed/refractory myelofibrosis following evaluation of the totality of data from the Phase 3 TRANSFORM-1 trial and recent feedback from regulators.

2024 Form 10-Q |			29

Aesthetics

Juvederm Collection

• In March 2024, AbbVie announced the FDA approval of Juvederm Voluma XC for injection in the temple region to improve moderate to severe temple hollowing in adults over the age of 21.

Neuroscience

ABBV-951

• In January 2024, AbbVie announced the launch of Produodopa (ABBV-951) in the European Union for the treatment of advanced Parkinson's disease with severe motor fluctuations and hyperkinesia (excessive movement) or dyskinesia (involuntary movement), and when available combinations of Parkinson's medicinal products have not given satisfactory results.

For a more comprehensive discussion of AbbVie’s products and pipeline, see the company’s Annual Report on Form 10-K for the year ended December 31, 2023.

2024 Form 10-Q |			30

RESULTS OF OPERATIONS

Net Revenues

The comparisons presented at constant currency rates reflect comparative local currency net revenues at the prior year’s foreign exchange rates. This measure provides information on the change in net revenues assuming that foreign currency exchange rates had not changed between the prior and current periods. AbbVie believes that the non-GAAP measure of change in net revenues at constant currency rates, when used in conjunction with the GAAP measure of change in net revenues at actual currency rates, may provide a more complete understanding of the company’s operations and can facilitate analysis of the company’s results of operations, particularly in evaluating performance from one period to another.

																		Three months ended March 31,												Percent change
																								At actual currency rates						At constant currency rates
(dollars in millions)																					2024						2023
United States																														$	9,041					$	9,201					(1.7)		%				(1.7)		%
International																														3,269						3,024						8.1		%				11.6		%
Net revenues																														$	12,310					$	12,225					0.7		%				1.6		%

2024 Form 10-Q |			31

The following table details AbbVie’s worldwide net revenues:

																					Three months ended March 31,												Percent change
																											At actual currency rates						At constant currency rates
(dollars in millions)																								2024						2023
Immunology
Humira			United States																														$	1,771					$	2,948					(39.9)		%				(39.9)		%
			International																														499						593						(15.8)		%				(11.6)		%
			Total																														$	2,270					$	3,541					(35.9)		%				(35.2)		%
Skyrizi			United States																														$	1,656					$	1,139					45.3		%				45.3		%
			International																														352						221						59.4		%				61.6		%
			Total																														$	2,008					$	1,360					47.6		%				48.0		%
Rinvoq			United States																														$	725					$	449					61.4		%				61.4		%
			International																														368						237						55.3		%				62.8		%
			Total																														$	1,093					$	686					59.3		%				61.9		%
Oncology
Imbruvica			United States																														$	610					$	638					(4.3)		%				(4.3)		%
			Collaboration revenues																														228						240						(5.1)		%				(5.1)		%
			Total																														$	838					$	878					(4.5)		%				(4.5)		%
Venclexta			United States																														$	281					$	265					6.2		%				6.2		%
			International																														333						273						21.9		%				26.1		%
			Total																														$	614					$	538					14.2		%				16.3		%
Elahere(a)			United States																														$	64					$	—					n/m						n/m
Epkinly			Collaboration revenues																														$	22					$	—					n/m						n/m
			International																														5						—						n/m						n/m
			Total																														$	27					$	—					n/m						n/m
Aesthetics
Botox Cosmetic			United States																														$	389					$	409					(4.9)		%				(4.9)		%
			International																														244						250						(2.2)		%				1.2		%
			Total																														$	633					$	659					(3.9)		%				(2.6)		%
Juvederm Collection			United States																														$	106					$	122					(13.2)		%				(13.2)		%
			International																														191						233						(18.1)		%				(14.0)		%
			Total																														$	297					$	355					(16.4)		%				(13.7)		%
Other Aesthetics			United States																														$	281					$	246					13.7		%				13.7		%
			International																														38						40						(3.7)		%				1.2		%
			Total																														$	319					$	286					11.3		%				12.0		%
Neuroscience
Botox Therapeutic			United States																														$	611					$	587					4.1		%				4.1		%
			International																														137						132						3.9		%				6.3		%
			Total																														$	748					$	719					4.1		%				4.5		%
Vraylar			United States																														$	692					$	560					23.5		%				23.5		%
			International																														2						1						>100.0 %						>100.0 %
			Total																														$	694					$	561					23.6		%				23.6		%
Duodopa			United States																														$	25					$	25					(2.6)		%				(2.6)		%
			International																														90						93						(2.7)		%				(3.7)		%
			Total																														$	115					$	118					(2.7)		%				(3.5)		%
Ubrelvy			United States																														$	197					$	150					31.5		%				31.5		%
			International																														6						2						>100.0 %						>100.0 %
			Total																														$	203					$	152					33.8		%				33.8		%
Qulipta			United States																														$	128					$	66					94.5		%				94.5		%
			International																														3						—						>100.0 %						>100.0 %
			Total																														$	131					$	66					97.7		%				97.7		%

2024 Form 10-Q |			32

																					Three months ended March 31,												Percent change
																											At actual currency rates						At constant currency rates
(dollars in millions)																								2024						2023
Other Neuroscience			United States																														$	61					$	75					(18.5)		%				(18.5)		%
			International																														13						4						>100.0 %						>100.0 %
			Total																														$	74					$	79					(6.9)		%				(6.7)		%
Eye Care
Ozurdex			United States																														$	34					$	39					(13.7)		%				(13.7)		%
			International																														97						76						27.9		%				29.3		%
			Total																														$	131					$	115					13.7		%				14.6		%
Lumigan/Ganfort			United States																														$	29					$	63					(55.0)		%				(55.0)		%
			International																														62						67						(7.6)		%				(6.4)		%
			Total																														$	91					$	130					(30.5)		%				(29.9)		%
Alphagan/Combigan			United States																														$	15					$	28					(47.0)		%				(47.0)		%
			International																														44						43						1.9		%				6.9		%
			Total																														$	59					$	71					(17.7)		%				(14.7)		%
Restasis			United States																														$	44					$	79					(44.1)		%				(44.1)		%
			International																														13						13						(1.4)		%				4.1		%
			Total																														$	57					$	92					(38.1)		%				(37.3)		%
Other Eye Care			United States																														$	105					$	110					(4.8)		%				(4.8)		%
			International																														95						90						5.9		%				9.3		%
			Total																														$	200					$	200					—		%				1.5		%
Other Key Products
Mavyret			United States																														$	144					$	171					(15.8)		%				(15.8)		%
			International																														205						193						6.2		%				9.0		%
			Total																														$	349					$	364					(4.1)		%				(2.6)		%
Creon			United States																														$	285					$	305					(6.6)		%				(6.6)		%
Linzess/Constella			United States																														$	257					$	251					2.5		%				2.5		%
			International																														9						8						9.2		%				6.8		%
			Total																														$	266					$	259					2.8		%				2.7		%
All other																																	$	744					$	691					8.2		%				9.9		%
Total net revenues																																	$	12,310					$	12,225					0.7		%				1.6		%

n/m – Not meaningful

(a)Net revenues include ImmunoGen product revenues after the acquisition closing date of February 12, 2024.

The following discussion and analysis of AbbVie’s net revenues by product is presented on a constant currency basis.

Global Humira sales decreased 35% for the three months ended March 31, 2024. In the United States, Humira sales decreased by 40% for the three months ended March 31, 2024 primarily driven by direct biosimilar competition following the loss of exclusivity on January 31, 2023. Internationally, Humira revenues decreased 12% for the three months ended March 31, 2024 primarily driven by the continued impact of direct biosimilar competition. AbbVie continues to pursue strategies to maintain broad formulary access of Humira and manage the impact of biosimilar erosion.

Net revenues for Skyrizi increased 48% for the three months ended March 31, 2024 primarily driven by continued strong market share uptake and market growth across all indications, partially offset by the timing of retail inventory destocking.

Net revenues for Rinvoq increased 62% for the three months ended March 31, 2024 primarily driven by continued strong market share uptake as well as market growth across all indications.

Net revenues for Imbruvica represent product revenues in the United States and collaboration revenues outside of the United States related to AbbVie’s 50% share of Imbruvica profit. AbbVie's global Imbruvica revenues decreased 5% for the three months ended March 31, 2024 primarily driven by decreased demand and lower market share in the United States as well as decreased collaboration revenues, partially offset by the timing of inventory stocking.

Net revenues for Venclexta increased 16% for the three months ended March 31, 2024 driven by continued market share uptake as well as market growth across all indications.

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Net revenues for Elahere were $64 million for the three months ended March 31, 2024 for the period subsequent to the completion of the ImmunoGen acquisition.

Net revenues for Botox Cosmetic decreased 3% for the three months ended March 31, 2024 primarily driven by the unfavorable impact related to timing of customer inventory destocking in the United States.

Net revenues for Juvederm Collection decreased 14% for the three months ended March 31, 2024 primarily driven by the unfavorable impact related to timing of customer inventory destocking in the United States and decreased consumer demand across certain international markets.

Net revenues for Botox Therapeutic increased 5% for the three months ended March 31, 2024 primarily driven by continued market share uptake as well as market growth.

Net revenues for Vraylar increased 24% for the three months ended March 31, 2024 primarily driven by continued market share uptake.

Net revenues for Ubrelvy increased 34% for the three months ended March 31, 2024 primarily driven by continued market share uptake as well as market growth.

Net revenues for Qulipta increased 98% for the three months ended March 31, 2024 primarily driven by continued strong market share uptake. Net revenues were also favorably impacted by the regulatory approval of Qulipta for the preventive treatment of chronic migraine in adults.

Gross Margin

												Three months ended March 31,
(dollars in millions)																								2024						2023						% change
Gross margin																								$	8,216					$	8,239					—		%
as a % of net revenues																								67		%				67		%

Gross margin as a percentage of net revenues was flat for the three months ended March 31, 2024 compared to the prior year. Gross margin percentage for the three months ended March 31, 2024 was unfavorably impacted by changes in product mix, offset by lower amortization of intangibles.

Selling, General and Administrative

												Three months ended March 31,
(dollars in millions)																								2024						2023						% change
Selling, general and administrative																								$	3,315					$	3,039					9		%
as a % of net revenues																								27		%				25		%

Selling, general and administrative (SG&A) expenses as a percentage of net revenues increased for the three months ended March 31, 2024 compared to the prior year. SG&A expense percentage was unfavorably impacted by acquisition and integration costs incurred in connection with the ImmunoGen acquisition including cash-settled, post-closing expense for ImmunoGen employee incentive awards. See Note 4 to the condensed consolidated financial statements for additional information.

Research and Development

												Three months ended March 31,
(dollars in millions)																								2024						2023						% change
Research and development																								$	1,939					$	2,292					(15)		%
as a % of net revenues																								16		%				19		%

Research and development (R&D) expenses as a percentage of net revenues decreased for the three months ended March 31, 2024 compared to the prior year primarily due to an intangible asset impairment charge of $630 million incurred during the three months ended March 31, 2023, partially offset by increased funding to support all stages of the company’s pipeline assets as well as acquisition and integration costs incurred in connection with the ImmunoGen acquisition including cash-settled, post-closing expense for ImmunoGen employee incentive awards. See Note 4 to the condensed consolidated financial statements for additional information.

2024 Form 10-Q |			34

Acquired IPR&D and Milestones

																		Three months ended March 31,
(dollars in millions)																		2024						2023
Upfront charges																		$	79					$	132
Development milestones																		85						18
Acquired IPR&D and milestones																		$	164					$	150

Other Non-Operating Expenses (Income)

												Three months ended March 31,
(in millions)																		2024						2023
Interest expense																		$	660					$	553
Interest income																		(207)						(99)
Interest expense, net																		$	453					$	454
Net foreign exchange loss																		$	4					$	35
Other expense, net																		586						1,804

Interest expense increased for the three months ended March 31, 2024 compared to the prior year primarily due to the incremental interest and debt issuance costs associated with financing the ImmunoGen and proposed Cerevel Therapeutics acquisitions as well as the impact of higher interest rates. See Note 8 to the condensed consolidated financial statements for additional information related to debt issued to finance the ImmunoGen acquisition.

Interest income increased for the three months ended March 31, 2024 compared to the prior year primarily due to a higher average cash and cash equivalents balance and the impact of higher interest rates.

Other expense, net included charges related to changes in fair value of contingent consideration liabilities of $660 million for the three months ended March 31, 2024 and $1.9 billion for the three months ended March 31, 2023. The fair value of contingent consideration liabilities is impacted by the passage of time and multiple other inputs, including the probability of success of achieving regulatory/commercial milestones, discount rates, the estimated amount of future sales of the acquired products and other market-based factors. For the three months ended March 31, 2024, the change in fair value reflected higher estimated Skyrizi sales driven by stronger market share uptake and the passage of time, partially offset by higher discount rates. For the three months ended March 31, 2023 the change in fair value reflected higher estimated Skyrizi sales driven by stronger market share uptake, the passage of time, lower discount rates and favorable clinical trial results.

Income Tax Expense

The effective tax rate was 22% for the three months ended March 31, 2024 compared to 49% for the three months ended March 31, 2023. The effective tax rate in each period differed from the U.S. statutory tax rate of 21% principally due to the impact of foreign operations which reflects the impact of lower income tax rates in locations outside the United States, changes in fair value of contingent consideration and business development activities, including ImmunoGen acquisition-related costs. The decrease in the effective tax rate for the three months ended March 31, 2024 over the prior year was primarily due to changes in fair value of contingent consideration and impairment of certain intangible assets in the prior year.

2024 Form 10-Q |			35

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

			Three months ended March 31,
(in millions)			2024						2023
Cash flows provided by (used in):
Operating activities			$	4,040					$	4,193
Investing activities			(9,588)						(499)
Financing activities			10,819						(6,192)

Operating cash flows for the three months ended March 31, 2024 decreased compared to the prior year primarily due to ImmunoGen acquisition-related cash expenses, decreased results from operations driven by changes in product mix and increased R&D funding to support all stages of the company’s pipeline assets, partially offset by the timing of working capital.

Investing cash flows for the three months ended March 31, 2024 primarily included $9.8 billion cash consideration paid to acquire ImmunoGen offset by cash acquired of $591 million, payments made for other acquisitions and investments of $190 million and capital expenditures of $193 million. Investing cash flows for the three months ended March 31, 2023 included payments made for other acquisitions and investments of $353 million and capital expenditures of $175 million.

Financing cash flows for the three months ended March 31, 2024 included the issuance of unsecured senior notes totaling $15.0 billion aggregate principal which were used to finance the acquisition of ImmunoGen and proposed acquisition of Cerevel Therapeutics. Additionally, financing cash flows included the issuance and repayment of $5.0 billion under the term loan credit agreement and the repayment of $99 million of secured term notes assumed from ImmunoGen in conjunction with the acquisition. Financing cash flows for the three months ended March 31, 2023 included repayments of $1.0 billion floating rate term loan and $350 million aggregate principal amount of the company’s 2.80% senior notes.

Financing cash flows also included cash dividend payments of $2.8 billion for the three months ended March 31, 2024 and $2.7 billion for the three months ended March 31, 2023. The increase in cash dividend payments was primarily driven by the increase in the quarterly dividend rate.

On February 15, 2024, the company announced that its board of directors declared a quarterly cash dividend of $1.55 per share for stockholders of record at the close of business on April 15, 2024, payable on May 15, 2024. The timing, declaration, amount of and payment of any dividends by AbbVie in the future is within the discretion of its board of directors and will depend upon many factors, including AbbVie’s financial condition, earnings, capital requirements of its operating subsidiaries, covenants associated with certain of AbbVie’s debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by its board of directors.

The company's stock repurchase authorization permits purchases of AbbVie shares from time to time in open-market or private transactions at management's discretion. The program has no time limit and can be discontinued at any time. On February 16, 2023, AbbVie’s board of directors authorized a $5.0 billion increase to the existing stock repurchase authorization. AbbVie repurchased 5 million shares for $959 million during the three months ended March 31, 2024 and 10 million shares for $1.6 billion during the three months ended March 31, 2023.

During the three months ended March 31, 2024, the company issued and redeemed $1.7 billion of commercial paper. There were no commercial paper borrowings outstanding as of March 31, 2024 and December 31, 2023. AbbVie may issue additional commercial paper or retire commercial paper to meet liquidity requirements as needed.

Credit Risk

AbbVie monitors economic conditions, the creditworthiness of customers and government regulations and funding, both domestically and abroad. AbbVie regularly communicates with its customers regarding the status of receivable balances, including their payment plans and obtains positive confirmation of the validity of the receivables. AbbVie establishes an allowance for credit losses equal to the estimate of future losses over the contractual life of outstanding accounts receivable. AbbVie may also utilize factoring arrangements to mitigate credit risk, although the receivables included in such arrangements have historically not been a significant amount of total outstanding receivables.

2024 Form 10-Q |			36

Credit Facility, Access to Capital and Credit Ratings

Credit Facility

In December 2023, in connection with the acquisition of ImmunoGen and proposed acquisition of Cerevel Therapeutics, AbbVie entered into a $9.0 billion 364-day bridge credit agreement and $5.0 billion 364-day term loan credit agreement. In February, 2024, AbbVie borrowed and repaid $5.0 billion under the term loan credit agreement. Subsequent to the $15.0 billion issuance of senior notes, AbbVie terminated both the bridge and term loan credit agreements in the first quarter of 2024.

In March 2023, AbbVie entered into an amended and restated five-year revolving credit facility. The amendment increased the unsecured revolving credit facility commitments from $4.0 billion to $5.0 billion and extended the maturity date of the facility from August 2023 to March 2028. This credit facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants. At March 31, 2024, the company was in compliance with all covenants, and commitment fees under the credit facility were insignificant. No amounts were outstanding under the company's credit facility as of March 31, 2024 and December 31, 2023.

Access to Capital

The company intends to fund short-term and long-term financial obligations as they mature through cash on hand, future cash flows from operations or has the ability to issue additional debt. The company’s ability to generate cash flows from operations, issue debt or enter into financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for the company’s products or in the solvency of its customers or suppliers, deterioration in the company’s key financial ratios or credit ratings or other material unfavorable changes in business conditions. At the current time, the company believes it has sufficient financial flexibility to issue debt, enter into other financing arrangements and attract long-term capital on acceptable terms to support the company’s growth objectives.

Credit Ratings

There were no changes in the company’s credit ratings during the three months ended March 31, 2024. Unfavorable changes to the ratings may have an adverse impact on future financing arrangements; however, they would not affect the company’s ability to draw on its credit facility and would not result in an acceleration of scheduled maturities of any of the company’s outstanding debt.

CRITICAL ACCOUNTING POLICIES

A summary of the company’s significant accounting policies is included in Note 2, “Summary of Significant Accounting Policies” in AbbVie's Annual Report on Form 10-K for the year ended December 31, 2023. There have been no significant changes in the company’s application of its critical accounting policies during the three months ended March 31, 2024.

FORWARD-LOOKING STATEMENTS

Some statements in this quarterly report on Form 10-Q are, or may be considered, forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “project,” and similar expressions and use of future or conditional verbs, generally identify forward-looking statements. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Such risks and uncertainties include, but are not limited to challenges to intellectual property, competition from other products, difficulties inherent in the research and development process, adverse litigation or government action and changes to laws and regulations applicable to our industry. Additional information about the economic, competitive, governmental, technological and other factors that may affect AbbVie’s operations is set forth in Item 1A, “Risk Factors,” in AbbVie’s Annual Report on Form 10-K for the year ended December 31, 2023, which has been filed with the Securities and Exchange Commission. AbbVie notes these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. AbbVie undertakes no obligation, and specifically declines, to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law.