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How Did AbbVie Perform in 1Q16?

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1Q16 earnings overview

AbbVie posted its 1Q16 earnings on April 28, 2016. The company registered diluted EPS (earnings per share) attributable to common shareholders of $1.15, which is about 22.3% higher than its EPS in 1Q15. In 1Q16, AbbVie also managed to beat the Wall Street analyst estimates by about $0.02.

In 1Q16, AbbVie earned $6.0 billion in revenues, which was a rise of 18.2% on a YoY (year-over-year) basis. Net operational revenues also rose by about 22.4% on a YoY basis. This performance is attributed to strong growth in operational sales of products such as Humira, Imbruvica, Viekira Pak, Creon, and Duodopa, partially offset by the negative impact of foreign exchange fluctuations.

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Affected by the Pharmacyclics transaction and foreign exchange fluctuations, AbbVie’s adjusted gross margin ratio reached 81.3% in 1Q16. The company’s adjusted operating margin increased YoY by 3% and reached 43.1% while net profit margin also rose by about 0.5% on a YoY basis in 1Q16. In the absence of these one-time events, the company’s adjusted gross margin ratio would have been higher by about 2% while adjusted operating margin would have been higher by 6% on a YoY basis. Solid revenue growth coupled with cost efficiencies have been key contributors to AbbVie’s strong margin performance in 1Q16.

If AbbVie continues with its strong operational performance in future quarters, it may boost the company’s share price as well as those of the Vanguard Growth ETF (VUG). AbbVie makes up about 1.1% of VIG’s total portfolio holdings.

In 1Q16, peers Amgen (AMGN), Celgene (CELG), and Gilead Sciences (GILD) earned revenues of about $5.5 billion, $2.5 billion, and $7.8 billion, respectively.

Stock price movement

Since the release of its 4Q15 earnings on January 29, 2016, AbbVie’s (ABBV) share price rose by about 11.5% and reached $61.24 on April 28, 2016. With Humira’s composition of matter patent expiring in December 2016, investors have been concerned about increasing biosimilar competition for the drug. The fears of generic erosion of the drug’s revenues have been a key factor affecting the company’s share prices. To know more about the impact of Humira patent expiration on AbbVie’s share prices and valuations, please refer to AbbVie: How Does Its Valuation Compare to Its Peers?

In the next part, we’ll explore the performance of AbbVie’s Humira in 1Q16.

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