AbbVie Inc. 2022 Form 10-K Summary
Business context and reporting period
AbbVie is a global biopharmaceutical company operating as one business segment across immunology, oncology, aesthetics, neuroscience and eye care. This filing covers the fiscal year ended December 31, 2022; fourth-quarter figures below are unaudited. The 10-K was filed February 17, 2023.
Financial performance and liquidity
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Net revenue | $58.054 billion | $56.197 billion | +3.3% reported; +5.1% at constant currency |
| Operating earnings | $18.117 billion | $17.924 billion | +1.1% |
| Net earnings attributable to AbbVie | $11.836 billion | $11.542 billion | +2.5% |
| Diluted EPS | $6.63 | $6.45 | +2.8% |
| Gross margin | 70% | 69% | +1 percentage point |
| Cash from operating activities | $24.943 billion | $22.777 billion | +9.5% |
Reported 2022 operating and net margins were approximately 31% and 20%, respectively. Gross margin improved mainly from product mix, partly offset by a $770 million intangible-asset impairment. Net earnings and EPS included substantial special and non-cash items, including intangible amortization, contingent-consideration remeasurement and litigation charges.
Fourth-quarter 2022 revenue was $15.121 billion, net earnings attributable to AbbVie were $2.473 billion, and diluted EPS was $1.38. The provided filing text does not give comparative fourth-quarter 2021 figures.
At year-end, cash and equivalents were $9.201 billion and total long-term debt and finance lease obligations were $63.270 billion, down from $76.670 billion a year earlier. Current assets were $28.463 billion versus current liabilities of $29.538 billion. AbbVie paid $10.043 billion in dividends and repurchased $1.487 billion of shares during 2022. Its $4.0 billion revolving credit facility had no borrowings outstanding; the company reported covenant compliance. Moody’s upgraded its senior unsecured rating to Baa1, and S&P affirmed BBB+; both revised outlooks to positive.
Material changes versus the prior year
- Growth was led by Skyrizi revenue (+76% reported), Rinvoq (+53%), Venclexta (+10%), and neuroscience products including Botox Therapeutic and Vraylar. Skyrizi sales were $5.165 billion and Rinvoq sales $2.522 billion.
- Humira revenue rose 2.6% to $21.237 billion overall, with international revenue down 22.2% amid biosimilar competition and U.S. revenue up 7.4%. Humira represented approximately 37% of total 2022 net revenue. U.S. biosimilar competition began in 2023 after exclusivity ended January 31, 2023.
- Imbruvica revenue declined 15.5% to $4.568 billion, primarily on lower U.S. demand and market share. Aesthetics revenue was mixed: Botox Cosmetic increased, while Juvederm and other aesthetics declined. Restasis revenue fell 48.3%; Mavyret fell 9.9%.
- SG&A rose 24% to $15.260 billion, primarily reflecting litigation reserves, including a $2.1 billion charge tied to a potential opioid settlement. R&D expense decreased 6% to $6.510 billion; acquired IPR&D and milestone costs were $697 million versus $1.124 billion.
- Other expense included a $2.761 billion charge from the change in fair value of contingent-consideration liabilities, mainly reflecting higher estimated Skyrizi sales and the passage of time. The effective tax rate was 12.1%, versus 11.1% in 2021; 2022 included a $323 million tax benefit from Puerto Rico tax-related deferred-tax remeasurement.
- Operating cash flow increased, while investing cash outflow narrowed to $623 million. Financing cash outflow increased to $24.803 billion, including significant debt repayments, dividends and share repurchases.
Outlook, risks and unusual items
AbbVie provided no specific numerical 2023 revenue or EPS guidance in the filing text. Management’s stated priorities include expanding Skyrizi and Rinvoq, growing neuroscience and aesthetics, advancing the pipeline, reducing debt, returning cash to shareholders, and managing Humira biosimilar erosion. The company cited anticipated regulatory submissions and clinical readouts over the next 12 months.
Key risks include rapid U.S. Humira biosimilar uptake; pricing and reimbursement pressure, including implementation of the Inflation Reduction Act; competition and patent challenges; clinical, regulatory and manufacturing uncertainty; and reliance on a concentrated group of U.S. wholesalers. Three wholesalers accounted for 82% of year-end receivables. COVID-19 had not materially affected operations overall, but lower new-patient starts continued in certain products and markets. AbbVie suspended Russian aesthetics operations following the Russia-Ukraine conflict.
Unusual items included the $770 million Vuity intangible impairment following a decision to reduce sales and marketing investment; the $2.1 billion opioid settlement-related charge, subject to settlement conditions; and $2.761 billion of contingent-consideration fair-value expense. The company also reported pending litigation concerning, among other matters, opioid products, breast implants, antitrust claims and securities allegations. Management said it could not estimate possible losses beyond recorded accruals for certain matters.
Important facts for investors to verify
- Track Humira U.S. biosimilar market share, net pricing and revenue erosion against growth in Skyrizi and Rinvoq.
- Review the timing and assumptions behind pipeline approvals, clinical readouts and commercial launches.
- Assess whether litigation accruals and the opioid settlement terms or conditions change, and whether other proceedings create additional exposure.
- Monitor debt repayment, interest costs, cash conversion, dividend commitments and the company’s ability to maintain liquidity as debt matures.
- Evaluate the assumptions used to value $16.384 billion of contingent-consideration liabilities and the potential effect of future remeasurement.
- Review rebate accrual estimates: sales rebate accruals were $10.717 billion at year-end, and the auditor identified these estimates as a critical audit matter.