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AbbVie Inc (ABBV) Faces Headwinds Amid Declining Revenues and Earnings

GuruFocus Research
·4-min read

  • Full-Year Revenue: $54.318 billion, a decrease of 6.4% on a reported basis.

  • Full-Year Diluted EPS: $2.72 on a GAAP basis, a decrease of 59.0%; Adjusted Diluted EPS of $11.11, a decrease of 19.3%.

  • Q4 Revenue: $14.301 billion, a decrease of 5.4%.

  • Q4 Diluted EPS: $0.46 on a GAAP basis, a decrease of 66.7%; Adjusted Diluted EPS of $2.79, a decrease of 22.5%.

  • Immunology Portfolio: Full-year net revenues of $26.136 billion, a decrease of 9.6% due to Humira biosimilar competition.

  • Oncology Portfolio: Full-year net revenues of $5.915 billion, a decrease of 10.1%.

  • Neuroscience and Aesthetics Portfolios: Showed growth, with neuroscience increasing by 18.2% and aesthetics by 0.9% on an operational basis.

On February 2, 2024, AbbVie Inc (NYSE:ABBV) released its 8-K filing, detailing the financial results for the full year and fourth quarter ended December 31, 2023. AbbVie, a pharmaceutical firm known for its immunology and oncology products, including the blockbuster drug Humira, faced significant challenges in the reported period. The company, which was spun off from Abbott in 2013 and expanded with the acquisition of Allergan in 2020, saw a notable decline in revenues and earnings per share (EPS).

Financial Performance and Challenges

AbbVie's full-year net revenues decreased by 6.4% to $54.318 billion, with a reported decrease in diluted EPS of 59.0% to $2.72 on a GAAP basis. The adjusted diluted EPS also fell by 19.3% to $11.11. These results include an unfavorable impact related to acquired IPR&D and milestones expense. The fourth-quarter figures also reflected downturns, with net revenues at $14.301 billion, a 5.4% decrease, and a significant drop in diluted EPS by 66.7% on a GAAP basis.

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The company's immunology portfolio, particularly affected by Humira biosimilar competition, saw a 9.6% decrease in full-year net revenues. The oncology portfolio also experienced a downturn, with a 10.1% decrease in full-year net revenues. However, there were bright spots in the neuroscience and aesthetics portfolios, which showed increases on an operational basis.

Financial Achievements and Industry Impact

Despite the challenges, AbbVie's neuroscience portfolio delivered a strong performance with an 18.2% increase in full-year global net revenues, driven by products such as Botox Therapeutic and Vraylar. The aesthetics portfolio, including Botox Cosmetic and Juvederm, also saw a slight operational increase. These achievements are significant as they demonstrate AbbVie's ability to grow in areas beyond its traditional immunology stronghold, which is crucial for the company's diversification strategy in the competitive drug manufacturing industry.

Key Financial Metrics

Important metrics from the earnings report include:

- The adjusted gross margin ratio was 83.9% for the fourth quarter.

- Selling, general and administrative (SG&A) expenses were 24.7% of net revenues on an adjusted basis.

- Research and development (R&D) expenses accounted for 13.4% of net revenues, reflecting increased investment in the company's pipeline.

- The adjusted operating margin for the fourth quarter was 43.8%.

- The adjusted tax rate for the fourth quarter was 17.2%.

2023 was another outstanding year, marked by strong operational execution and significant overperformance from our non-Humira growth platform. During the year we meaningfully increased R&D investment and bolstered our pipeline with the proposed ImmunoGen and Cerevel Therapeutics acquisitions," said Richard A. Gonzalez, chairman and chief executive officer, AbbVie.

Analysis of AbbVie's Performance

AbbVie's performance in 2023 was a mixed bag, with significant declines in its core immunology and oncology segments but growth in other areas. The company's strategic investments in R&D and acquisitions are aimed at offsetting the impact of biosimilar competition and preparing for future growth. AbbVie's reaffirmed expectations for a high single-digit compound annual revenue growth rate through 2029 and raised sales outlook for Skyrizi, Rinvoq, Ubrelvy, and Qulipta signal confidence in its long-term strategy.

For more detailed information and analysis, investors are encouraged to review the full 8-K filing and consider the implications of AbbVie's financial health and strategic direction.

Explore the complete 8-K earnings release (here) from AbbVie Inc for further details.

This article first appeared on GuruFocus.