What changed in this filing

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Item 1. Financial Statements

2024-05-03 compared with 2023-11-06 · 269 added, 237 removed, 636 unchanged (44% of the section changed)

3 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(in millions, except per share data) 2024 2023

4 unchanged sentences

Acquired IPR&D and milestones 164 150

Other operating expense (income), net — 229 ( 179 ) 57

Other operating income — ( 10 )

Total operating costs and expenses 9,512 9,457

2 unchanged sentences

Net foreign exchange loss 4 35

Other expense (income), net ( 95 ) ( 330 ) 3,121 427

Other expense, net 586 1,804

Earnings before income tax expense 1,755 475

16 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(in millions) 2024 2023

Net earnings $ 1,372 $ 241

Foreign currency translation adjustments, net of tax expense (benefit) of $( 17 ) for the three months and $( 11 ) for the nine months ended September 30, 2023 and $( 11 ) for the three months and $( 30 ) for the nine months ended September 30, 2022

( 457 ) ( 989 ) ( 279 ) ( 2,043 )

Net investment hedging activities, net of tax expense (benefit) of $ 84 for the three months and $ 26 for the nine months ended September 30, 2023 and $ 165 for the three months and $ 348 for the nine months ended September 30, 2022

302 599 89 1,265

Pension and post-employment benefits, net of tax expense (benefit) of $ 1 for the three months and $ 11 for the nine months ended September 30, 2023 and $ 14 for the three months and $ 35 for the nine months ended September 30, 2022

Cash flow hedging activities, net of tax expense (benefit) of $ 7 for the three months and $( 1 ) for the nine months ended September 30, 2023 and $ 14 for the three months and $ 17 for the nine months ended September 30, 2022

52 83 ( 2 ) 98

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

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

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

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

Other comprehensive loss ( 149 ) ( 33 )

7 unchanged sentences

Condensed Consolidated Balance Sheets

(in millions, except share data) September 30,

(in millions, except share data) March 31,

2024 December 31,

23 unchanged sentences

Stockholders' equity

Common stock, $ 0.01 par value, 4,000,000,000 shares authorized, 1,822,577,212 shares issued as of September 30, 2023 and 1,813,770,294 as of December 31, 2022

Common stock held in treasury, at cost, 57,091,177 shares as of September 30, 2023 and 44,589,000 as of December 31, 2022

Common stock, $ 0.01 par value, 4,000,000,000 shares authorized, 1,829,957,662 shares issued as of March 31, 2024 and 1,823,046,087 as of December 31, 2023

Common stock held in treasury, at cost, 64,234,512 shares as of March 31, 2024 and 57,105,354 as of December 31, 2023

( 7,829 ) ( 6,533 )

Additional paid-in capital 20,656 20,180

Retained earnings 933 4,784

Accumulated deficit ( 2,384 ) ( 1,000 )

Accumulated other comprehensive loss ( 2,454 ) ( 2,305 )

7 unchanged sentences

Condensed Consolidated Statements of Equity (unaudited)

(in millions) Common shares outstanding Common stock Treasury stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Noncontrolling interest Total

Balance at June 30, 2022 1,768 $ 18 $ ( 4,591 ) $ 18,906 $ 3,516 $ ( 3,196 ) $ 35 $ 14,688

Net earnings attributable to AbbVie Inc.

— — — — 3,949 — — 3,949

Other comprehensive loss, net of tax — — — — — ( 247 ) — ( 247 )

Dividends declared — — — — ( 2,512 ) — — ( 2,512 )

Purchases of treasury stock — — ( 4 ) — — — — ( 4 )

Stock-based compensation plans and other — — 5 150 — — — 155

Change in noncontrolling interest — — — — — — ( 2 ) ( 2 )

Balance at September 30, 2022 1,768 $ 18 $ ( 4,590 ) $ 19,056 $ 4,953 $ ( 3,443 ) $ 33 $ 16,027

Balance at June 30, 2023 1,765 $ 18 $ ( 6,528 ) $ 19,839 $ 1,789 $ ( 2,252 ) $ 32 $ 12,898

Net earnings attributable to AbbVie Inc.

— — — — 1,778 — — 1,778

Other comprehensive loss, net of tax — — — — — ( 101 ) — ( 101 )

Dividends declared — — — — ( 2,634 ) — — ( 2,634 )

Purchases of treasury stock — — ( 4 ) — — — — ( 4 )

Stock-based compensation plans and other — — 7 182 — — — 189

Change in noncontrolling interest — — — — — — 3 3

Balance at September 30, 2023 1,765 $ 18 $ ( 6,525 ) $ 20,021 $ 933 $ ( 2,353 ) $ 35 $ 12,129

(in millions) Common shares outstanding Common stock Treasury stock Additional paid-in capital Retained earnings (accumulated deficit) Accumulated other comprehensive loss Noncontrolling interest Total

Balance at December 31, 2022 1,769 $ 18 $ ( 4,594 ) $ 19,245 $ 4,784 $ ( 2,199 ) $ 33 $ 17,287

6 unchanged sentences

Change in noncontrolling interest — — — — — — ( 4 ) ( 4 )

Balance at September 30, 2022 1,768 $ 18 $ ( 4,590 ) $ 19,056 $ 4,953 $ ( 3,443 ) $ 33 $ 16,027

Balance at March 31, 2023 1,764 $ 18 $ ( 6,524 ) $ 19,619 $ 2,393 $ ( 2,232 ) $ 29 $ 13,303

Balance at December 31, 2023 1,766 $ 18 $ ( 6,533 ) $ 20,180 $ ( 1,000 ) $ ( 2,305 ) $ 37 $ 10,397

6 unchanged sentences

Change in noncontrolling interest — — — — — — 3 3

Balance at September 30, 2023 1,765 $ 18 $ ( 6,525 ) $ 20,021 $ 933 $ ( 2,353 ) $ 35 $ 12,129

Balance at March 31, 2024 1,766 $ 18 $ ( 7,829 ) $ 20,656 $ ( 2,384 ) $ ( 2,454 ) $ 40 $ 8,047

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

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows (unaudited)

Nine months ended

September 30,

Three months ended

(in millions) (brackets denote cash outflows) 2024 2023

9 unchanged sentences

Acquired IPR&D and milestones 164 150

Gain on divestitures — ( 172 )

Non-cash litigation reserve adjustments, net of cash payments ( 205 ) 2,261

Impairment of intangible assets — 710

8 unchanged sentences

Cash flows from investing activities

Acquisitions and investments ( 670 ) ( 494 )

Acquisition of businesses, net of cash acquired ( 9,199 ) —

Other acquisitions and investments ( 190 ) ( 353 )

Acquisitions of property and equipment ( 193 ) ( 175 )

4 unchanged sentences

Cash flows from financing activities

Proceeds from issuance of other short-term borrowings 5,008 —

Repayments of other short-term borrowings ( 5,005 ) —

Proceeds from issuance of long-term debt 14,963 —

Repayments of long-term debt and finance lease obligations ( 103 ) ( 1,351 )

Debt issuance costs ( 99 ) —

Dividends paid ( 2,772 ) ( 2,661 )

23 unchanged sentences

Certain other reclassifications were made to conform the prior period interim condensed consolidated financial statements to the current period presentation.

On February 12, 2024, AbbVie completed its previously announced acquisition of ImmunoGen, Inc.

Refer to Note 4 and Note 8 for additional information regarding this acquisition.

Recent Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2023-09, Income Taxes - Improvements to Income Tax Disclosures (Topic 740) .

The standard requires disaggregation of the effective rate reconciliation into standard categories, enhances disclosure of income taxes paid, and modifies other income tax-related disclosures.

The standard will be effective for AbbVie starting in annual periods in 2025, with early adoption permitted.

AbbVie is currently assessing the impact of adopting this guidance on its consolidated financial statements.

In November 2023, the FASB issued ASU No.

2023-07 Segment Reporting - Improving Reportable Segment Disclosures (Topic 280) .

The standard requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources.

The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods.

The standard is effective for AbbVie starting in annual periods in 2024 and interim periods in 2025, with early adoption permitted and requires retrospective application to all prior periods presented in the financial statements.

AbbVie is currently assessing the impact of adopting this guidance on its consolidated financial statements.

2024 Form 10-Q |

Note 2 Supplemental Financial Information

1 unchanged sentence

Three months ended

September 30, Nine months ended

September 30,

(in millions) 2024 2023

2 unchanged sentences

Interest expense, net $ 453 $ 454

(in millions) September 30,

(in millions) March 31,

2024 December 31,

4 unchanged sentences

Property and Equipment, Net

(in millions) September 30,

(in millions) March 31,

2024 December 31,

2 unchanged sentences

Property and equipment, net $ 4,980 $ 4,989

Depreciation expense was $ 196 million for the three months and $ 565 million for the nine months ended September 30, 2023 and $ 181 million for the three months and $ 582 million for the nine months ended September 30, 2022.

Depreciation expense was $ 183 million for the three months ended March 31, 2024 and $ 179 million for the three months ended March 31, 2023.

2024 Form 10-Q |

5 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(in millions, except per share data) 2024 2023

17 unchanged sentences

The number of common shares excluded was insignificant for all periods presented.

2024 Form 10-Q |

Note 4 Licensing, Acquisitions and Other Arrangements

Other Licensing & Acquisitions Activity

Cash outflows related to acquisitions and investments totaled $ 670 million for the nine months ended September 30, 2023 and $ 494 million for the nine months ended September 30, 2022.

AbbVie recorded acquired IPR&D and milestones expense of $ 66 million for the three months and $ 496 million for the nine months ended September 30, 2023 and $ 40 million for the three months and $ 454 million for the nine months ended September 30, 2022.

Syndesi Therapeutics SA

In February 2022, AbbVie acquired Syndesi Therapeutics SA and its portfolio of novel modulators of the synaptic vesicle protein 2A, including its lead molecule ABBV-552, previously named SDI-118, and accounted for the transaction as an asset acquisition.

ABBV-552 is a small molecule, which is being evaluated to target nerve terminals to enhance synaptic efficiency.

Under the terms of the agreement, AbbVie made an upfront payment of $ 130 million which was recorded to acquired IPR&D and milestones expense in the condensed consolidated statement of earnings in the first quarter of 2022.

The agreement also includes additional future payments of up to $ 870 million upon the achievement of certain development, regulatory and commercial milestones.

Juvise Pharmaceuticals

In June 2022, AbbVie and Laboratories Juvise Pharmaceuticals (Juvise) entered into an asset purchase agreement where Juvise acquired worldwide commercial rights of a mature brand Pylera, which is used for the treatment of peptic ulcers with an infection by the bacterium Helicobacter pylori.

The transaction was accounted for as the sale of an asset.

Upon completion of the transaction,

Acquisition of ImmunoGen, Inc.

On February 12, 2024, AbbVie completed its previously announced acquisition of ImmunoGen.

ImmunoGen is a commercial-stage biotechnology company focused on the discovery, development and commercialization of antibody-drug conjugates (ADC) for cancer patients.

ImmunoGen's oncology portfolio includes its flagship cancer therapy Elahere, a first-in-class ADC approved for platinum-resistant ovarian cancer, and a pipeline of promising next-generation ADC's targeting hematologic malignancies and solid tumors.

The combination accelerates AbbVie’s entry into the solid tumor space and strengthens its oncology pipeline.

Under the terms of the agreement, AbbVie acquired all outstanding shares of ImmunoGen for $ 31.26 per share in cash.

The total fair value of the consideration transferred to owners of ImmunoGen common stock was $ 9.8 billion ($ 9.2 billion, net of cash acquired).

The acquisition of ImmunoGen has been accounted for as a business combination using the acquisition method of accounting.

The acquisition method requires, among other things, that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date.

The valuation of assets acquired and liabilities assumed has not yet been finalized as of March 31, 2024.

As a result, AbbVie recorded preliminary estimates for the fair value of assets acquired and liabilities assumed as of the acquisition date.

Finalization of the valuation during the measurement period could result in a change in the amounts recorded for the acquisition date fair value of intangible assets, goodwill and income taxes among other items.

The completion of the valuation will occur no later than one year from the acquisition date.

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the acquisition date:

(in millions)

Assets acquired and liabilities assumed

Cash and equivalents $ 591

Accounts receivable 171

Inventories 211

Prepaid expenses and other current assets 40

Property and equipment, net 7

Intangible assets, net

Developed product rights 7,200

License agreements 125

Acquired in-process research and development 1,280

Other noncurrent assets 273

Current portion of long-term debt ( 99 )

Accounts payable and accrued liabilities ( 312 )

Deferred income taxes ( 899 )

Other long-term liabilities ( 47 )

Total identifiable net assets 8,541

Goodwill 1,249

Total assets acquired and liabilities assumed $ 9,790

The fair value step-up adjustment to inventories of $ 179 million is being amortized to cost of products sold when the inventory is sold to customers, which is expected to be within approximately one year from the acquisition date.

Intangible assets relate to $ 7.3 billion of definite-lived intangible assets and $ 1.3 billion of acquired in-process research and development (IPR&D) associated with products that have not yet received regulatory approval.

The acquired definite-lived intangible assets consist of developed product rights and license agreements and are being amortized over a weighted-average estimated useful life of approximately 12 years using the estimated pattern of economic benefit.

The estimated fair values of identifiable intangible assets were determined using the "income approach" which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life.

Some of the more significant assumptions inherent in the development of these asset valuations include the estimated net cash flows for each year for each asset or product, the appropriate discount rate necessary to measure the risk inherent in each future cash flow stream, the life cycle of each asset, the potential regulatory and commercial success risk, competitive trends impacting the asset and each cash flow stream, as well as other factors.

2024 Form 10-Q |

AbbVie received net cash proceeds of $ 215 million and recognized a pre-tax gain of $ 172 million which was recorded in other operating income in the condensed consolidated statement of earnings in the second quarter of 2022.

Other Arrangements

AbbVie entered into several other arrangements resulting in charges related to upfront payments of $ 44 million for the three months and $ 396 million for the nine months ended September 30, 2023 and $ 40 million for the three months and $ 262 million for the nine months ended September 30, 2022.

Acquired IPR&D and milestones expense also included development milestones of $ 22 million for the three months and $ 100 million for the nine months ended September 30, 2023 and $ 62 million for the nine months ended September 30, 2022.

There were no development milestones for the three months ended September 30, 2022.

Other noncurrent assets primarily consist of $ 250 million of deferred tax assets.

The current portion of long-term debt assumed by AbbVie was repaid concurrent with the acquisition at the fair value of $ 99 million.

See Note 8 for additional information.

Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.

Specifically, the goodwill recognized from the acquisition of ImmunoGen represents expected synergies including, the ability to:

(i) expand AbbVie’s product portfolio as well as the potential to increase revenue from future growth platforms, (ii) accelerate AbbVie’s clinical and commercial presence in the solid tumor space within oncology, (iii) leverage the respective strengths of each company, and (iv) enhance AbbVie’s existing ADC development efforts.

The goodwill is not deductible for tax purposes.

Following the acquisition date, the operating results of ImmunoGen have been included in the condensed consolidated financial statements.

For the period from the acquisition date through March 31, 2024, net revenues attributable to ImmunoGen were $ 91 million and operating losses attributable to ImmunoGen were $ 404 million, inclusive of $ 349 million of cash-settled, post-closing expense for ImmunoGen employee incentive awards, $ 47 million of inventory fair value step-up amortization and $ 21 million of intangible asset amortization.

AbbVie also issued 0.3 million RSUs to holders of ImmunoGen equity awards based on a conversion factor described in the transaction agreement.

Stock compensation expense related to the issued RSUs during the three months ended March 31, 2024 was not significant.

Acquisition-related expenses, which were comprised primarily of regulatory, financial advisory and legal fees, totaled $ 59 million for the three months ended March 31, 2024 and were included in selling, general and administrative (SG&A) expense in the condensed consolidated statements of earnings .

Pro Forma Financial Information

The following table presents the unaudited pro forma combined results of AbbVie and ImmunoGen for the three months ended March 31, 2024 and 2023 as if the acquisition of ImmunoGen had occurred on January 1, 2023:

Three months ended

(in millions) 2024 2023

Net revenues $ 12,365 $ 12,275

Net earnings (loss) 1,739 ( 413 )

The unaudited pro forma combined financial information was prepared using the acquisition method of accounting and was based on the historical financial information of AbbVie and ImmunoGen.

In order to reflect the occurrence of the acquisition on January 1, 2023 as required, the unaudited pro forma financial information includes adjustments to reflect incremental amortization expense to be incurred based on the current preliminary fair values of the identifiable intangible assets acquired;

the incremental cost of products sold related to the fair value adjustments associated with acquisition date inventory;

the additional interest expense associated with the issuance of debt to finance the acquisition;

and the reclassification of acquisition-related costs incurred during the three months ended March 31, 2024 to the three months ended March 31, 2023.

The unaudited pro forma financial information is not necessarily indicative of what the consolidated results of operations would have been had the acquisition been completed on January 1, 2023.

In addition, the unaudited pro forma financial information is not a projection of future results of operations of the combined company nor does it reflect the expected realization of any synergies or cost savings associated with the acquisition.

Proposed Acquisition of Cerevel Therapeutics Holdings, Inc.

On December 6, 2023, AbbVie announced that it entered into a definitive agreement under which AbbVie will acquire Cerevel Therapeutics Holdings, Inc.

(Cerevel Therapeutics).

Under the terms of the agreement, AbbVie will acquire all outstanding shares of Cerevel Therapeutics for $ 45.00 per share in cash for a total value of approximately $ 8.7 billion.

The transaction is expected to close in 2024 subject to regulatory approvals and other customary closing conditions.

Cerevel Therapeutics is a clinical-stage biotechnology company focused on the discovery and development of differentiated therapies for Neuroscience diseases.

Cerevel Therapeutics neuroscience pipeline includes multiple clinical-stage and preclinical candidates with the potential to treat several diseases including schizophrenia, Parkinson's disease and mood disorders.

2024 Form 10-Q |

Other Licensing & Acquisitions Activity

Cash outflows related to other acquisitions and investments totaled $ 190 million for the three months ended March 31, 2024 and $ 353 million for the three months ended March 31, 2023.

The following table summarizes acquired IPR&D and milestones expense:

Three months ended

(in millions)

Upfront charges $ 79 $ 132

Development milestones 85 18

Acquired IPR&D and milestones $ 164 $ 150

Note 5 Collaborations

The company has ongoing transactions with other entities through collaboration agreements.

The following represent the significant collaboration agreements impacting the periods ended September 30, 2023 and 2022.

The following represent the significant collaboration agreements impacting the periods ended March 31, 2024 and 2023.

Collaboration with Janssen Biotech, Inc.

16 unchanged sentences

Other costs incurred under the collaboration are reported in their respective expense line items, net of Janssen's share.

2024 Form 10-Q |

The following table shows the profit and cost sharing relationship between Janssen and AbbVie:

Three months ended

September 30, Nine months ended

September 30,

(in millions) 2024 2023

2 unchanged sentences

Global - AbbVie's share of other costs (included in respective line items) 42 55

AbbVie’s receivable from Janssen, included in accounts receivable, net, was $ 253 million at September 30, 2023 and $ 295 million at December 31, 2022.

AbbVie’s payable to Janssen, included in accounts payable and accrued liabilities, was $ 308 million at September 30, 2023 and $ 379 million at December 31, 2022.

AbbVie’s receivable from Janssen, included in accounts receivable, net, was $ 250 million at March 31, 2024 and $ 236 million at December 31, 2023.

AbbVie’s payable to Janssen, included in accounts payable and accrued liabilities, was $ 275 million at March 31, 2024 and $ 307 million at December 31, 2023.

Collaboration with Genentech, Inc.

1 unchanged sentence

(Genentech), a member of the Roche Group, are parties to a collaboration and license agreement executed in 2007 to jointly research, develop and commercialize human therapeutic products containing BCL-2 inhibitors and certain other compound inhibitors which includes Venclexta, a BCL-2 inhibitor used to treat certain hematological malignancies.

2023 Form 10-Q |

shares equally with Genentech all pre-tax profits and losses from the development and commercialization of Venclexta in the United States.

AbbVie shares equally with Genentech all pre-tax profits and losses from the development and commercialization of Venclexta in the United States.

AbbVie pays royalties on Venclexta net revenues outside the United States.

2 unchanged sentences

Genentech’s share of United States profits is included in AbbVie’s cost of products sold.

AbbVie records sales and marketing costs associated with the United States collaboration as part of selling, general and administrative (SG&A) expenses and global development costs as part of research and development (R&D) expenses, net of Genentech’s share.

AbbVie records sales and marketing costs associated with the United States collaboration as part of SG&A expenses and global development costs as part of research and development (R&D) expenses, net of Genentech’s share.

Royalties paid for Venclexta revenues outside the United States are also included in AbbVie’s cost of products sold.

1 unchanged sentence

Three months ended

September 30, Nine months ended

September 30,

(in millions) 2024 2023

7 unchanged sentences

Balance as of December 31, 2023 $ 32,293

Additions (a)

Foreign currency translation adjustments ( 116 )

Balance as of September 30, 2023 $ 32,091

Balance as of March 31, 2024 $ 33,426

(a) Goodwill additions related to the acquisition of ImmunoGen (see Note 4).

The company performs its annual goodwill impairment assessment in the third quarter, or earlier if impairment indicators exist.

As of September 30, 2023, there were no accumulated goodwill impairment losses.

As of March 31, 2024, there were no accumulated goodwill impairment losses.

2024 Form 10-Q |

Intangible Assets, Net

The following table summarizes intangible assets:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in millions) Gross

10 unchanged sentences

Definite-Lived Intangible Assets

Amortization expense was $ 2.0 billion for the three months and $ 6.1 billion for the nine months ended September 30, 2023 and $ 2.0 billion for the three months and $ 5.7 billion for the nine months ended September 30, 2022.

The increase in definite-lived intangible assets during 2024 was primarily due to the acquisition of ImmunoGen.

The intangible assets will be amortized using the estimated pattern of economic benefit.

Refer to Note 4 for additional information regarding the acquisition.

Amortization expense was $ 1.9 billion for the three months ended March 31, 2024 and 2023.

Amortization expense was included in cost of products sold in the condensed consolidated statements of earnings.

In August 2023, as part of the Inflation Reduction Act (IRA) of 2022, the company’s oncology product Imbruvica sold in the United States (U.S.) was included on the list of products selected for negotiation by the Centers for Medicare & Medicaid Services.

The selection resulted in a significant decrease in the estimated future cash flows for the product and represented a triggering event

2023 Form 10-Q |

which required the company to evaluate the underlying definite lived-intangible asset for impairment.

The company utilized a discounted cash flow analysis to determine the fair value of $ 1.9 billion, which was lower than the carrying value of $ 4.0 billion and resulted in a partial impairment of both the gross and net carrying amount as of August 29, 2023.

Based on the revised cash flows, the company recorded a pre-tax impairment charge of $ 2.1 billion to cost of products sold in the condensed consolidated statement of earnings for the third quarter of 2023.

The fair value measurement was based on Level 3 inputs including estimated net revenues, cost of products sold, R&D costs, selling and marketing costs and discount rate.

The remaining intangible asset carrying value related to Imbruvica in the U.S.

totaled $ 1.8 billion as of September 30, 2023 .

In September 2022, the company made a strategic decision to reduce ongoing sales and marketing investment related to Vuity, an on-market product to treat presbyopia.

This strategic decision contributed to a significant decrease in the estimated future cash flows for the product and represented a triggering event which required the company to evaluate the underlying definite lived-intangible asset for impairment.

The company utilized a discounted cash flow analysis to estimate the fair value of the intangible asset resulting in a full impairment of both the gross and net carrying amount.

Based on the revised cash flows, the company recorded a pre-tax impairment charge of $ 770 million to cost of products sold in the condensed consolidated statement of earnings for the third quarter of 2022.

Indefinite-Lived Intangible Assets

1 unchanged sentence

The company performs its annual impairment assessment of indefinite-lived intangible assets in the third quarter, or earlier if impairment indicators exist.

The increase in indefinite-lived intangible assets during 2024 was primarily due to the acquisition of ImmunoGen.

Refer to Note 4 for additional information regarding the acquisition.

During the first quarter of 2023, the company made a decision to revise the research and development plan for AGN-151607, a novel investigational neurotoxin for the prevention of postoperative atrial fibrillation in cardiac surgery patients.

1 unchanged sentence

The company utilized a discounted cash flow analysis to estimate the fair value which was below the carrying value of the intangible asset.

Based on the revised cash flows, the company recorded a pre-tax impairment charge of $ 630 million to research and development expense in the condensed consolidated statement of earnings for the first quarter of 2023.

Note 7 Integration and Restructuring Plans

Based on the revised cash flows, the company recorded a pre-tax impairment charge of $ 630 million to research and development expense in the condensed consolidated statements of earnings for the first quarter of 2023.

2024 Form 10-Q |

Note 7 Restructuring Plans

AbbVie continuously evaluates its operations to identify opportunities to optimize its manufacturing and R&D operations, commercial infrastructure and administrative costs and to respond to changes in its business environment.

As a result, AbbVie management periodically approves individual restructuring plans to achieve these objectives.

As of March 31, 2024 and 2023, no such plans were individually significant.

Restructuring charges were $ 15 million for the three months ended March 31, 2024 and $ 27 million for the three months ended March 31, 2023.

These charges are recorded in cost of products sold, R&D expense and SG&A expense in the condensed consolidated statements of earnings based on the classification of the affected employees or the related operations.

The following table summarizes the cash activity in the restructuring reserve for the three months ended March 31, 2024:

(in millions)

Accrued balance as of December 31, 2023 $ 196

Restructuring charges 14

Payments and other adjustments ( 32 )

Accrued balance as of March 31, 2024 $ 178

Allergan Integration Plan

Following the closing of the Allergan acquisition, AbbVie implemented an integration plan designed to reduce costs, integrate and optimize the combined organization and incurred total cumulative charges of $ 2.5 billion through September 30, 2023 .

These costs consist of severance and employee benefit costs (cash severance, non-cash severance including accelerated equity award compensation expense, retention and other termination benefits) and other integration expenses.

The following table summarizes the charges (benefits) associated with the Allergan acquisition integration plan:

These costs consisted of severance and employee benefit costs (cash severance, non-cash severance including accelerated equity award compensation expense, retention and other termination benefits) and other integration ex penses.

The Allergan integration plan was substantially complete as of December 31, 2023 and the remaining accrual as of March 31, 2024 is not significant.

The following table summarizes the prior year charges associated with the Allergan acquisition integration plan:

Three months ended

September 30, Nine months ended

September 30,

(in millions) 2023

3 unchanged sentences

Total charges $ 58

The following table summarizes the cash activity in the recorded liability associated with the Allergan integration plan for the nine months ended September 30, 2023:

(in millions)

Accrued balance as of December 31, 2022

Payments and other adjustments ( 258 )

Accrued balance as of September 30, 2023 $ 41

2023 Form 10-Q |

Other Restructuring

AbbVie recorded restructuring charges of $ 10 million for the three months and $ 55 million for the nine months ended September 30, 2023 and $ 50 million for the three months and $ 143 million for the nine months ended September 30, 2022.

The following table summarizes the cash activity in the restructuring reserve for the nine months ended September 30, 2023:

(in millions)

Accrued balance as of December 31, 2022 $ 176

Restructuring charges 31

Payments and other adjustments ( 64 )

Accrued balance as of September 30, 2023 $ 143

Note 8 Financial Instruments and Fair Value Measures

3 unchanged sentences

Various AbbVie foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates for anticipated intercompany transactions denominated in a currency other than the functional currency of the local entity.

These contracts, with notional amounts totaling $ 2.5 billion at September 30, 2023 and $ 1.7 billion at December 31, 2022, are designated as cash flow hedges and are recorded at fair value.

These contracts, with notional amounts totaling $ 1.1 billion at March 31, 2024 and $ 1.8 billion at December 31, 2023, are designated as cash flow hedges and are recorded at fair value.

The durations of these forward exchange contracts were generally less than 18 months.

Accumulated gains and losses as of September 30, 2023 are reclassified from accumulated other comprehensive income (loss) (AOCI) and included in cost of products sold at the time the products are sold, generally not exceeding six months from the date of settlement.

Accumulated gains and losses as of March 31, 2024 are reclassified from accumulated other comprehensive income (loss) (AOCI) and included in cost of products sold at the time the products are sold, generally not exceeding six months from the date of settlement.

In 2019, the company entered into treasury rate lock agreements with notional amounts totaling $ 10.0 billion to hedge exposure to variability in future cash flows resulting from changes in interest rates related to the issuance of long-term debt in connection with the acquisition of Allergan.

The treasury rate lock agreements were designated as cash flow hedges and recorded at fair value.

The agreements were net settled upon issuance of the senior notes in 2019 and the resulting net gain was included in AOCI.

The agreements were net settled upon issuance of the senior notes in 2019 and the resulting net gain was recognized in AOCI.

This gain is reclassified to interest expense, net over the term of the related debt.

The company was a party to interest rate swap contracts designated as cash flow hedges that matured in November 2022.

The effect of the hedge contracts was to change a floating-rate interest obligation to a fixed rate for that portion of the floating-rate debt.

Realized and unrealized gains or losses were included in AOCI and reclassified to interest expense, net over the lives of the floating-rate debt.

In June 2023, the company entered into a cross-currency swap contract with a notional amount totaling € 433 million to hedge the company’s exposure to changes in future cash flows of foreign currency denominated debt related to changes in foreign exchange rates.

The cross-currency swap contract was designated as a cash flow hedge and effectively converted the interest and principal payments of the related foreign currency denominated debt to U.S.

The unrealized gains and losses on the contract are included in AOCI and are reclassified to net foreign exchange loss over the term of the related debt.

2024 Form 10-Q |

The company also enters into foreign currency forward exchange contracts to manage its exposure to foreign currency denominated trade payables and receivables and intercompany loans.

1 unchanged sentence

Resulting gains or losses are reflected in net foreign exchange gain or loss in the condensed consolidated statements of earnings and are generally offset by losses or gains on the foreign currency exposure being managed.

These contracts had notional amounts totaling $ 6.8 billion at September 30, 2023 and $ 6.5 billion at December 31, 2022.

These contracts had notional amounts totaling $ 6.2 billion at March 31, 2024 and $ 7.9 billion at December 31, 2023.

The company also uses foreign currency forward exchange contracts or foreign currency denominated debt to hedge its net investments in certain foreign subsidiaries and affiliates.

The company had an aggregate principal amount of senior Euro notes designated as net investment hedges of € 5.4 billion at September 30, 2023 and € 5.9 billion at December 31, 2022.

In addition, the company had foreign currency forward exchange contracts designated as net investment hedges with notional amounts totaling € 4.9 billion, SEK 1.4 billion, CAD 750 million and CHF 50 million at September 30, 2023 and € 4.3 billion, SEK 2.0 billion, CAD 750 million and CHF 90 million at December 31, 2022.

The company had an aggregate principal amount of senior Euro notes designated as net investment hedges of € 5.4 billion at March 31, 2024 and December 31, 2023.

The company uses the spot method of assessing hedge effectiveness for derivative instruments designated as net investment hedges.

Realized and unrealized gains and losses from these hedges are included in AOCI

2023 Form 10-Q |

and the initial fair value of hedge components excluded from the assessment of effectiveness is recognized in interest expense, net over the life of the hedging instrument.

The company is a party to interest rate swap contracts designated as fair value hedges with notional amounts totaling $ 5.0 billion at September 30, 2023 and $ 4.5 billion at December 31, 2022.

Realized and unrealized gains and losses from these hedges are included in AOCI and the initial fair value of hedge components excluded from the assessment of effectiveness is recognized in interest expense, net over the life of the hedging instrument.

The company is a party to interest rate swap contracts designated as fair value hedges with notional amounts totaling $ 5.0 billion at March 31, 2024 and December 31, 2023.

The effect of the hedge contracts is to change a fixed-rate interest obligation to a floating rate for that portion of the debt.

1 unchanged sentence

No amounts are excluded from the assessment of effectiveness for cash flow hedges or fair value hedges.

2023 Form 10-Q |

The following table summarizes the amounts and location of AbbVie’s derivative instruments on the condensed consolidated balance sheets:

1 unchanged sentence

Derivatives in liability position

(in millions) Balance sheet caption September 30, 2023 December 31, 2022 Balance sheet caption September 30, 2023 December 31, 2022

(in millions) Balance sheet caption March 31, 2024 December 31, 2023 Balance sheet caption March 31, 2024 December 31, 2023

Foreign currency forward exchange contracts

Designated as cash flow hedges Prepaid expenses and other $ 30 $ 12 Accounts payable and accrued liabilities $ 4 $ 32

Designated as cash flow hedges Other assets — 1 Other long-term liabilities — —

Designated as net investment hedges Prepaid expenses and other 53 13 Accounts payable and accrued liabilities 38 66

1 unchanged sentence

Not designated as hedges Prepaid expenses and other 10 41 Accounts payable and accrued liabilities 25 36

Cross-currency swap contracts

Designated as cash flow hedges Prepaid expenses and other — — Accounts payable and accrued liabilities 5 —

Interest rate swap contracts

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While certain derivatives are subject to netting arrangements with the company’s counterparties, the company does not offset derivative assets and liabilities within the condensed consolidated balance sheets.

2024 Form 10-Q |

The following table presents the pre-tax amounts of gains (losses) from derivative instruments recognized in other comprehensive loss:

Three months ended

September 30, Nine months ended

September 30,

(in millions) 2024 2023

2 unchanged sentences

Designated as net investment hedges 134 ( 94 )

Cross-currency swap contracts designated as cash flow hedges ( 14 ) — ( 5 ) —

Interest rate swap contracts designated as cash flow hedges — — — 6

Assuming market rates remain constant through contract maturities, the company expects to reclassify pre-tax gains of $ 74 million into cost of products sold for foreign currency cash flow hedges, pre-tax gains of $ 1 million into net foreign exchange loss for cross-currency swap cash flow hedges and pre-tax gains of $ 24 million into interest expense, net for treasury rate lock agreement cash flow hedges during the next 12 months.

Related to AbbVie’s non-derivative, foreign currency denominated debt designated as net investment hedges, the company recognized in other comprehensive loss pre-tax gains of $ 173 million for the three months and pre-tax gains of $ 47 million for the nine months ended September 30, 2023 and pre-tax gains of $ 431 million for the three months and pre-tax gains of $ 932 million for the nine months ended September 30, 2022.

2023 Form 10-Q |

Assuming market rates remain constant through contract maturities, the company expects to reclassify pre-tax gains of $ 50 million into cost of products sold for foreign currency cash flow hedges and pre-tax gains of $ 23 million into interest expense, net for treasury rate lock agreement cash flow hedges during the next 12 months.

Related to AbbVie’s non-derivative, foreign currency denominated debt designated as net investment hedges, the company recognized in other comprehensive loss pre-tax gains of $ 157 million for the three months ended March 31, 2024 and pre-tax losses of $ 162 million for the three months ended March 31, 2023.

The following table summarizes the pre-tax amounts and location of derivative instrument net gains (losses) recognized in the condensed consolidated statements of earnings, including the net gains (losses) reclassified out of AOCI into net earnings.

1 unchanged sentence

Three months ended

September 30, Nine months ended

September 30,

(in millions) Statement of earnings caption 2024 2023

4 unchanged sentences

Treasury rate lock agreements designated as cash flow hedges Interest expense, net 6 6

Cross-currency swap contracts designated as cash flow hedges Net foreign exchange loss ( 14 ) — ( 6 ) —

Interest rate swap contracts

Designated as cash flow hedges Interest expense, net — — — ( 3 )

Designated as fair value hedges Interest expense, net ( 65 ) 35

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• Level 3 – Valuations using significant inputs that are unobservable in the market and include the use of judgment by the company’s management about the assumptions market participants would use in pricing the asset or liability.

The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of September 30, 2023:

2024 Form 10-Q |

The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of March 31, 2024:

Basis of fair value measurement

9 unchanged sentences

Interest rate swap contracts $ 358 $ — $ 358 $ —

Cross-currency swap contracts 5 — 5 —

Foreign currency contracts 70 — 70 —

1 unchanged sentence

Total liabilities $ 20,587 $ — $ 428 $ 20,159

2023 Form 10-Q |

The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of December 31, 2023:

19 unchanged sentences

Changes to the fair value of the contingent consideration liabilities can result from changes to one or a number of inputs, including discount rates, the probabilities of achieving the milestones, the time required to achieve the milestones and estimated future sales.

Significant judgment is employed in determining the appropriateness of certain of these inputs.

Significant judgment is

2024 Form 10-Q |

employed in determining the appropriateness of certain of these inputs.

Changes to the inputs described above could have a material impact on the company's financial position and results of operations in any given period.

The fair value of the company's contingent consideration liabilities was calculated using the following significant unobservable inputs:

September 30, 2023 December 31, 2022

(in millions) Range Weighted average (a)

March 31, 2024 December 31, 2023

Range Weighted average (a)

Discount rate 4.6 % - 5.8 %

Probability of payment for unachieved milestones 100 % - 100 %

100 % - 100 %

Probability of payment for royalties by indication (b)

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(a) Unobservable inputs were weighted by the relative fair value of the contingent consideration liabilities.

(b) Excluding approved indications, the estimated probability of payment was 89 % at September 30, 2023 and 56 % at December 31, 2022.

2023 Form 10-Q |

(b) Excluding approved indications, the estimated probability of payment was 89 % at March 31, 2024 and December 31, 2023.

There have been no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy.

The following table presents the changes in fair value of total contingent consideration liabilities which are measured using Level 3 inputs:

Nine months ended

September 30,

Three months ended

(in millions) 2024 2023

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Ending balance $ 20,159 $ 17,931

The change in fair value recognized in net earnings is recorded in other expense (income), net in the condensed consolidated statements of earnings.

The change in fair value recognized in net earnings is recorded in other expense, net in the condensed consolidated statements of earnings.

Contingent consideration payments of amounts up to the initial acquisition date fair value are classified as cash outflows from financing activities and payments of amounts in excess of the initial acquisition date fair value are classified as cash outflows from operating activities in the condensed consolidated statements of cash flows.

Certain financial instruments are carried at historical cost or some basis other than fair value.

The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of September 30, 2023 are shown in the table below:

The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of March 31, 2024 are shown in the table below:

Basis of fair value measurement

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Total liabilities $ 74,337 $ 70,911 $ 70,156 $ 755 $ —

2024 Form 10-Q |

The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of December 31, 2023 are shown in the table below:

4 unchanged sentences

(Level 2) Significant unobservable inputs

Short-term borrowings $ 1 $ 1 $ — $ 1 $ —

Current portion of long-term debt and finance lease obligations, excluding fair value hedges $ 7,191 $ 7,069 $ 6,862 $ 207 $ —

3 unchanged sentences

The company records these investments at cost and remeasures them to fair value based on certain observable price changes or impairment events as they occur.

The carrying amount of these investments was $ 131 million as of September 30, 2023 and $ 129 million as of December 31, 2022.

No significant cumulative upward or downward adjustments have been recorded for these investments as of September 30, 2023.

2023 Form 10-Q |

The carrying amount of these investments was $ 161 million as of March 31, 2024 and $ 159 million as of December 31, 2023.

No significant cumulative upward or downward adjustments have been recorded for these investments as of March 31, 2024.

Concentrations of Risk

Of total net accounts receivable, three U.S.

wholesalers accounted for 81 % as of September 30, 2023 and 82 % as of December 31, 2022, and substantially all of AbbVie’s pharmaceutical product net revenues in the United States were to these three wholesalers.

Humira (adalimumab) is AbbVie’s single largest product and accounted for approximately 28 % of AbbVie’s total net revenues for the nine months ended September 30, 2023 and 36 % for the nine months ended September 30, 2022.

wholesalers accounted for 79 % as of March 31, 2024 and 81 % as of December 31, 2023, and substantially all of AbbVie’s pharmaceutical product net revenues in the United States were to these three wholesalers.

Debt and Credit Facilities

Long-Term Debt

Financing Related to ImmunoGen and Cerevel Therapeutics Acquisitions

In connection with the acquisition of ImmunoGen and proposed acquisition of Cerevel Therapeutics, in February, 2024, the company issued $ 15.0 billion aggregate principal amount of unsecured senior notes.

The notes are unsecured, unsubordinated obligations of AbbVie and will rank equally in right of payment with all of AbbVie’s existing and future unsecured, unsubordinated indebtedness, liabilities and other obligations.

AbbVie may redeem the fixed-rate senior notes prior to maturity at a redemption price equal to the greater of the principal amount or the sum of present values of the remaining scheduled payments of principal and interest on the fixed-rate senior notes to be redeemed plus a make-whole premium.

AbbVie may also redeem the fixed-rate senior notes at par between one and six months prior to maturity.

In connection with the offering, debt issuance costs incurred totaled $ 99 million and debt discounts totaled $ 37 million, which are being amortized over the respective terms of the notes to interest expense, net in the condensed consolidated statements of earnings.

AbbVie used the net proceeds received from the issuance of the notes to finance the acquisition of ImmunoGen, repay its term-loan, repay commercial paper borrowings, pay fees and expenses in respect of the foregoing, finance general corporate purposes and expects, together with cash on hand, to fund AbbVie’s proposed acquisition of Cerevel Therapeutics.

See Note 4 for additional information.

2024 Form 10-Q |

The following table summarizes issued debt in connection with the acquisition of ImmunoGen and proposed acquisition of Cerevel Therapeutics:

(in millions) March 31, 2024

4.80% Senior Notes due 2027 $ 2,250

4.80% Senior Notes due 2029 2,500

4.95% Senior Notes due 2031 2,000

5.05% Senior Notes due 2034 3,000

5.35% Senior Notes due 2044 750

5.40% Senior Notes due 2054 3,000

5.50% Senior Notes due 2064 1,500

Total acquired debt outstanding

In December 2023, 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.

Interest charged on this borrowing was based on Secured Overnight Financing Rate Reference Rate (SOFR) + 0.975 % with an effective interest rate of 6.29 %.

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 February 2024, concurrent with the acquisition, the company assumed and repaid an ImmunoGen senior secured term loan at a fair value of $ 99 million.

Long-Term Debt Repayments

In January 2023, the company repaid a $ 1.0 billion floating rate three-year term loan that was scheduled to mature in May 2023.

In March 2023, the company repaid a $ 350 million aggregate principal amount of 2.80 % senior notes at maturity.

In May 2023, the company repaid $ 1.0 billion aggregate principal amount of 2.85 % senior notes at maturity.

In January 2022, the company repaid $ 2.9 billion aggregate principal amount of 3.45 % senior notes that were scheduled to mature in March 2022.

This repayment was made by exercising, under the terms of the notes, 60-day early redemption at 100% of the principal amount.

In February 2022, the company refinanced its $ 2.0 billion floating rate five-year term loan.

As part of the refinancing, the company repaid the existing $ 2.0 billion term loan due May 2025 and borrowed $ 2.0 billion under a new term loan at a lower floating rate.

All other significant terms of the loan, including the maturity date, remained unchanged after the refinancing.

In July 2022, the company repaid $ 1.7 billion aggregate principal amount of 3.25 % senior notes that were scheduled to mature in October 2022.

This repayment was made by exercising, under the terms of the notes, 90-day early redemption at 100% of the principal amount.

In September 2022, the company repaid $ 1.0 billion aggregate principal amount of 3.2 % senior notes that were scheduled to mature in November 2022.

This payment was made by exercising, under the terms of the notes, 60-day early redemption at 100% of the principal amount.

Short-Term Borrowings

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.

The weighted average interest rate on commercial paper borrowings was 5.54 % for the three months ended March 31, 2024.

In March 2023, AbbVie entered into an amended and restated five-year revolving credit facility.

1 unchanged sentence

This amended facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants.

At September 30, 2023, 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 facilities as of September 30, 2023 and December 31, 2022.

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 facilities as of March 31, 2024 and December 31, 2023.

2024 Form 10-Q |

Note 9 Post-Employment Benefits

3 unchanged sentences

Three months ended

September 30, Nine months ended

September 30, Three months ended

September 30, Nine months ended

September 30,

March 31, Three months ended

(in millions) 2024 2023 2024 2023

2 unchanged sentences

Expected return on plan assets ( 197 ) ( 180 ) — —

Amortization of prior service cost (credit) — 1 1 2 ( 9 ) ( 10 ) ( 27 ) ( 29 )

Amortization of prior service credit — — ( 9 ) ( 9 )

Amortization of actuarial loss 13 4 4 3

Net periodic benefit cost (credit) $ ( 1 ) $ 68 $ ( 3 ) $ 204 $ 12 $ 16 $ 37 $ 47

The components of net periodic benefit cost other than service cost are included in other expense (income), net in the condensed consolidated statements of earnings.

2023 Form 10-Q |

Net periodic benefit cost $ 1 $ ( 1 ) $ 16 $ 11

The components of net periodic benefit cost other than service cost are included in other expense, net in the condensed consolidated statements of earnings.

Note 10 Equity

2 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(in millions) 2024 2023

5 unchanged sentences

After-tax compensation expense $ 288 $ 258

In addition to stock-based compensation expense included in the table above and in connection with the acquisition of ImmunoGen, AbbVie incurred $ 349 million of cash-settled, post-closing expense for ImmunoGen employee incentive awards, of which $ 192 million was recorded in SG&A expenses, $ 126 million was recorded in R&D expenses and $ 31 million was recorded in cost of products sold in the condensed consolidated statements of earnings for the three months ended March 31, 2024.

Refer to Note 4 for additional information regarding the ImmunoGen acquisition.

Stock Options

During the nine months ended September 30, 2023, primarily in connection with the company's annual grant, AbbVie granted 0.6 million stock options with a weighted-average grant-date fair value of $ 29.89 .

As of September 30, 2023, $ 7 million of unrecognized compensation cost related to stock options is expected to be recognized as expense over approximately the next two years .

During the three months ended March 31, 2024, primarily in connection with the company's annual grant, AbbVie granted 0.6 million stock options with a weighted-average grant-date fair value of $ 31.53 .

As of March 31, 2024, $ 11 million of unrecognized compensation cost related to stock options is expected to be recognized as expense over approximately the next two years .

RSUs and Performance Shares

During the nine months ended September 30, 2023, primarily in connection with the company's annual grant, AbbVie granted 5.8 million RSUs and performance shares with a weighted-average grant-date fair value of $ 149.59 .

As of September 30, 2023, $ 692 million of unrecognized compensation cost related to RSUs and performance shares is expected to be recognized as expense over approximately the next two years .

During the three months ended March 31, 2024, primarily in connection with the company's annual grant, AbbVie granted 4.9 million RSUs and performance shares with a weighted-average grant-date fair value of $ 175.97 .

In connection with the ImmunoGen acquisition, during the first quarter of 2024, AbbVie issued 0.3 million RSUs to holders of ImmunoGen equity awards based on a conversion factor described in the transaction agreement.

Refer to Note 4 for additional information regarding the ImmunoGen acquisition.

As of March 31, 2024, $ 967 million of unrecognized compensation cost related to RSUs and performance shares is expected to be recognized as expense over approximately the next two years .

2024 Form 10-Q |

Cash Dividends

12 unchanged sentences

On February 16, 2023, AbbVie’s board of directors authorized a $ 5.0 billion increase to the existing stock repurchase authorization.

AbbVie repurchased 10 million shares for $ 1.6 billion during the nine months ended September 30, 2023 and 8 million shares for $ 1.1 billion during the nine months ended September 30, 2022.

AbbVie's remaining stock repurchase authorization was approximately $ 4.8 billion as of September 30, 2023.

2023 Form 10-Q |

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.

AbbVie's remaining stock repurchase authorization was approximately $ 3.9 billion as of March 31, 2024.

Accumulated Other Comprehensive Loss

The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the nine months ended September 30, 2023:

The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the three months ended March 31, 2024:

(in millions) Foreign currency

6 unchanged sentences

Other comprehensive income (loss) before reclassifications ( 396 ) 228 3 44 ( 121 )

Net gains reclassified from accumulated other comprehensive loss — ( 67 ) ( 5 ) ( 63 ) ( 135 )

Net losses (gains) reclassified from accumulated other comprehensive loss — ( 21 ) 7 ( 14 ) ( 28 )

Net current-period other comprehensive income (loss) ( 396 ) 207 10 30 ( 149 )

Balance as of September 30, 2023 $ ( 1,792 ) $ 553 $ ( 1,420 ) $ 306 $ ( 2,353 )

Other comprehensive loss for the nine months ended September 30, 2023 included foreign currency translation adjustments totaling a loss of $ 279 million principally due to the impact of the weakening of the Euro on the translation of the company’s Euro-denominated assets and the offsetting impact of net investment hedging activities totaling a gain of $ 89 million.

The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the nine months ended September 30, 2022:

Balance as of March 31, 2024 $ ( 1,502 ) $ 272 $ ( 1,478 ) $ 254 $ ( 2,454 )

Other comprehensive loss for the three months ended March 31, 2024 included foreign currency translation adjustments totaling a loss of $ 396 million principally due to the impact of the weakening of the Euro on the translation of the company’s Euro-denominated assets and the offsetting impact of net investment hedging activities totaling a gain of $ 207 million.

The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the three months ended March 31, 2023:

(in millions) Foreign currency

6 unchanged sentences

Other comprehensive income (loss) before reclassifications 194 ( 202 ) 40 ( 10 ) 22

Net losses (gains) reclassified from accumulated other comprehensive loss — ( 53 ) 130 ( 53 ) 24

Net gains reclassified from accumulated other comprehensive loss — ( 22 ) ( 2 ) ( 31 ) ( 55 )

Net current-period other comprehensive income (loss) 194 ( 224 ) 38 ( 41 ) ( 33 )

Balance as of September 30, 2022 $ ( 2,613 ) $ 1,174 $ ( 2,410 ) $ 406 $ ( 3,443 )

Other comprehensive loss for the nine months ended September 30, 2022 included foreign currency translation adjustments totaling a loss of $ 2.0 billion principally due to the impact of the weakening of the Euro on the translation of the company’s Euro-denominated assets and the offsetting impact of net investment hedging activities totaling a gain of $ 1.3 billion.

Balance as of March 31, 2023 $ ( 1,319 ) $ 240 $ ( 1,420 ) $ 267 $ ( 2,232 )

Other comprehensive loss for the three months ended March 31, 2023 included foreign currency translation adjustments totaling a gain of $ 194 million principally due to the impact of the strengthening of the Euro on the translation of the company’s Euro-denominated assets and the offsetting impact of net investment hedging activities totaling a loss of $ 224 million.

2024 Form 10-Q |

1 unchanged sentence

Three months ended

September 30, Nine months ended

September 30,

(in millions) (brackets denote gains) 2024 2023

5 unchanged sentences

Pension and post-employment benefits

Amortization of actuarial losses and other (b)

$ ( 2 ) $ 55 $ ( 5 ) $ 166

Amortization of actuarial losses (gains) and other (b)

Tax benefit ( 1 ) —

4 unchanged sentences

Gains on treasury rate lock agreements (a)

( 6 ) ( 6 ) ( 18 ) ( 18 )

Losses on cross-currency swap contracts (d)

Losses on interest rate swap contracts (a)

Tax expense 2 4 16 9

Total reclassifications, net of tax $ ( 14 ) $ ( 31 )

2 unchanged sentences

(d) Amounts are included in net foreign exchange loss (see Note 8).

Note 11 Income Taxes

The effective tax rate was 9 % for the three months and 20 % for the nine months ended September 30, 2023 compared to 10 % for the three months and 11 % for the nine months ended September 30, 2022.

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 and business development activities.

The effective tax rate for the nine months ended September 30, 2023 and September 30, 2022 and the three months ended September 30, 2022 were also impacted by changes in fair value of contingent consideration.

The increase in the effective tax rate for the nine months ended September 30, 2023 over the prior year was primarily due to changes in fair value of contingent consideration.

Due to the potential for resolution of federal, state and foreign examinations and the expiration of various statutes of limitations, it is reasonably possible the company’s gross unrecognized tax benefits balance may change within the next 12 months by up to $ 620 million.

2023 Form 10-Q |

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.

It is reasonably possible that the company’s gross unrecognized tax benefits balance may change within the next 12 months by up to $ 162 million.

The company has various federal, state and foreign examinations ongoing.

Finalizing examinations with the relevant taxing authorities can include formal administrative and legal proceedings, and as a result, we cannot reasonably estimate the timing of resolution for certain unrecognized tax benefits.

Note 12 Legal Proceedings and Contingencies

6 unchanged sentences

Subject to certain exceptions specified in the separation agreement by and between Abbott Laboratories (Abbott) and AbbVie, AbbVie assumed the liability for, and control of, all pending and threatened legal matters related to its business, including liabilities for any claims or legal proceedings related to products that had been part of its business, but were discontinued prior to the distribution, as well as assumed or retained liabilities, and will indemnify Abbott for any liability arising out of or resulting from such assumed legal matters.

2024 Form 10-Q |

Antitrust Litigation

25 unchanged sentences

The plaintiffs in these lawsuits, which include states, counties, cities, other municipal entities, Native American tribes, union trust funds and other third-party payors, private hospitals and personal injury claimants, generally seek compensatory and punitive damages.

Of these approximately 610 lawsuits, approximately 195 of them are brought by states, counties, cities, and other municipal entities.

Three other lawsuits are brought by 3 Native American Tribes.

AbbVie recorded a charge of $ 2.1 billion to selling, general and administrative expense in the consolidated statement of earnings in the second quarter of 2022 related to its settlement of over 2,500 lawsuits by states, counties, cities, other municipal entities, and Native American

2023 Form 10-Q |

Approximately 160 of the remaining 198 such lawsuits are in the process of being dismissed with prejudice pursuant to that settlemen t .

Of these approximately 580 lawsuits, approximately 165 of them are brought by states, counties, cities, and other municipal entities, approximately 125 of which are in the process of being dismissed pursuant to the previously announced settlement for which AbbVie recorded a charge of $ 2.1 billion to selling, general and administrative expense in the consolidated statement of earnings in the second quarter of 2022.

In March 2023, AbbVie Inc.

13 unchanged sentences

In September 2021, the court granted plaintiffs' motion to certify a class.

In December 2022, the court granted Allergan's motion for summary judgment on the remaining claims, dismissing them with prejudice.

Plaintiffs are appealing the court's motion to dismiss and summary judgment rulings.

In December 2022, the court granted Allergan's motion for

2024 Form 10-Q |

summary judgment on the remaining claims, dismissing them with prejudice.

In February 2024, the United States Court of Appeals for the Second Circuit affirmed the district court’s dismissals.

In May and July 2022, two shareholder derivative lawsuits, Treppel Family Trust v.

21 unchanged sentences

Genentech, Inc., which is in a global collaboration with AbbVie concerning the development and marketing of Venclexta, is the co-plaintiff in this suit.

is seeking to enforce patent rights relating to upadacitinib (a drug sold under the trademark Rinvoq).

Litigation was filed in the United States District Court for the District of Delaware in November 2023 against Hetero USA, Inc., Hetero Labs Limited, Hetero Labs Limited Unit-V, Aurobindo Pharma USA, Inc., Aurobindo Pharma Ltd., Sandoz, Inc.

Sandoz Private Limited, Sandoz GMBH, Intas Pharmaceuticals Ltd., Accord Healthcare, Inc., and Sun Pharmaceutical Industries, Ltd.

AbbVie alleges defendants’ proposed generic upadacitinib products infringe certain patents and seeks declaratory and injunctive relief.

is seeking to enforce patent rights related to ubrogepant (a drug sold under the trademark Ubrelvy).

Litigation was filed in the United States District Court for the District of New Jersey in March 2024 against Aurobindo Pharma U.S.A., Inc., Aurobindo Pharma Limited, and Apitoria Pharma Private Limited;

Zydus Pharmaceuticals (USA) Inc.

and Zydus Lifesciences Limited;

MSN Pharmaceuticals Inc., MSN Laboratories Private Limited, and MSN Life Sciences Private Limited;

and Hetero USA Inc., Hetero Labs Limited Unit-III, and Hetero Labs Limited.

AbbVie alleges defendants’ proposed generic ubrogepant products infringe certain patents and seeks declaratory and injunctive relief.

Merck Sharp & Dohme LLC, which exclusively licenses certain patents to AbbVie, is a co-plaintiff in the litigation.

2024 Form 10-Q |

8 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(in millions) 2024 2023

2023 2022 2023 2022

Humira United States $ 1,771 $ 2,948

13 unchanged sentences

Total $ 614 $ 538

United States

Epkinly Collaboration Revenues $ 22 $ —

International 5 —

Total $ 27 $ —

Botox Cosmetic United States $ 389 $ 409

10 unchanged sentences

Total $ 748 $ 719

United States $ 750 $ 554 $ 1,967 $ 1,473

Vraylar United States $ 692 $ 560

International 2 1

Total $ 694 $ 561

2024 Form 10-Q |

Three months ended

(in millions) 2024 2023

Duodopa United States $ 25 $ 25

4 unchanged sentences

Total $ 203 $ 152

2023 Form 10-Q |

Three months ended

September 30, Nine months ended

September 30,

(in millions)

2023 2022 2023 2022

Qulipta United States $ 128 $ 66

29 unchanged sentences

Total net revenues $ 12,310 $ 12,225

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

2024 Form 10-Q |

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements