What changed in this filing

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Item 1. Financial Statements

2024-08-07 compared with 2024-05-03 · 173 added, 106 removed, 799 unchanged (26% of the section changed)

3 unchanged sentences

Three months ended

June 30, Six months ended

(in millions, except per share data) 2024 2023 2024 2023

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June 30, Six months ended

(in millions) 2024 2023 2024 2023

Net earnings $ 1,373 $ 2,027 $ 2,745 $ 2,268

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

Foreign currency translation adjustments, net of tax expense (benefit) of $( 4 ) for the three months and $( 24 ) the six months ended June 30, 2024 and $( 6 ) for the three months and $ 6 six months ended June 30, 2023

( 157 ) ( 16 ) ( 553 ) 178

Net investment hedging activities, net of tax expense (benefit) of $ 23 for the three months and $ 80 for the six months ended June 30, 2024 and $ 2 for the three months and $( 58 ) six months ended June 30, 2023

84 11 291 ( 213 )

Pension and post-employment benefits, net of tax expense (benefit) of $ 3 for the three months and $ 4 for the six months ended June 30, 2024 and $( 4 ) for the three months and $ 10 for the six months ended June 30, 2023

8 ( 2 ) 18 36

Cash flow hedging activities, net of tax expense (benefit) of $( 2 ) for the three months and $ 5 for the six months ended June 30, 2024 and $( 4 ) for the three months and $( 8 ) for the six months ended June 30, 2023

6 ( 13 ) 36 ( 54 )

Other comprehensive loss ( 59 ) ( 20 ) ( 208 ) ( 53 )

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Condensed Consolidated Balance Sheets

(in millions, except share data) March 31,

(in millions, except share data) June 30,

2024 December 31,

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Current liabilities

Short-term borrowings $ 3 $ —

Current portion of long-term debt and finance lease obligations $ 12,586 $ 7,191

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Stockholders' equity

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

Common stock, $ 0.01 par value, 4,000,000,000 shares authorized, 1,830,226,561 shares issued as of June 30, 2024 and 1,823,046,087 as of December 31, 2023

Common stock held in treasury, at cost, 64,283,710 shares as of June 30, 2024 and 57,105,354 as of December 31, 2023

( 7,838 ) ( 6,533 )

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(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

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

Net earnings attributable to AbbVie Inc.

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

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

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

Net earnings attributable to AbbVie Inc.

— — — — 1,370 — — 1,370

Other comprehensive loss, net of tax — — — — — ( 59 ) — ( 59 )

Dividends declared — — — — ( 2,754 ) — — ( 2,754 )

Purchases of treasury stock — — ( 9 ) — — — — ( 9 )

Stock-based compensation plans and other — — — 223 — — — 223

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

Balance at June 30, 2024 1,766 $ 18 $ ( 7,838 ) $ 20,879 $ ( 3,768 ) $ ( 2,513 ) $ 43 $ 6,821

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

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Change in noncontrolling interest — — — — — — ( 1 ) ( 1 )

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

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

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

Net earnings attributable to AbbVie Inc.

— — — — 2,739 — — 2,739

Other comprehensive loss, net of tax — — — — — ( 208 ) — ( 208 )

Dividends declared — — — — ( 5,507 ) — — ( 5,507 )

Purchases of treasury stock ( 7 ) — ( 1,333 ) — — — — ( 1,333 )

Stock-based compensation plans and other 7 — 28 699 — — — 727

Change in noncontrolling interest — — — — — — 6 6

Balance at June 30, 2024 1,766 $ 18 $ ( 7,838 ) $ 20,879 $ ( 3,768 ) $ ( 2,513 ) $ 43 $ 6,821

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

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Condensed Consolidated Statements of Cash Flows (unaudited)

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

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Acquired IPR&D and milestones 1,101 430

Non-cash litigation reserve adjustments, net of cash payments 27 ( 118 )

Impairment of intangible assets — 710

65 unchanged sentences

Three months ended

June 30, Six months ended

(in millions) 2024 2023 2024 2023

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Interest expense, net $ 506 $ 454 $ 959 $ 908

(in millions) March 31,

(in millions) June 30,

2024 December 31,

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Property and Equipment, Net

(in millions) March 31,

(in millions) June 30,

2024 December 31,

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Property and equipment, net $ 5,023 $ 4,989

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

Depreciation expense was $ 184 million for the three months and $ 367 million for the six months ended June 30, 2024 and $ 190 million for the three months and $ 369 million for the six months ended June 30, 2023.

2024 Form 10-Q |

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Three months ended

June 30, Six months ended

(in millions, except per share data) 2024 2023 2024 2023

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

2024 Form 10-Q |

Note 4 Licensing, Acquisitions and Other Arrangements

Acquisition of Cerevel Therapeutics Holdings, Inc.

Subsequent to June 30, 2024, on August 1, 2024, AbbVie completed its previously announced acquisition of Cerevel Therapeutics Holdings, Inc.

(Cerevel Therapeutics).

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

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.

Due to the proximity of the closing date of the acquisition to the date of filing this Quarterly Report on Form 10-Q, the initial accounting for the acquisition is not complete.

Significant, relevant information needed to complete the initial accounting, including the identification and measurement of the fair value of assets acquired and liabilities assumed, is pending.

As a result, it is not practicable to disclose the preliminary allocation of the purchase price to assets acquired and liabilities assumed or provide other related disclosures.

The accounting impact of this acquisition and the operating results of Cerevel Therapeutics will be included in the consolidated financial statements beginning in the third quarter of 2024.

2024 Form 10-Q |

Acquisition of ImmunoGen, Inc.

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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.

The valuation of assets acquired and liabilities assumed has not yet been finalized as of June 30, 2024.

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

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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 |

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

2024 Form 10-Q |

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.

Goodwill was calculated as the excess of the consideration transferred over the fair value of 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:

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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.

For the period from the acquisition date through June 30, 2024, net revenues attributable to ImmunoGen were $ 239 million and operating losses attributable to ImmunoGen were $ 562 million, inclusive of $ 349 million of cash-settled, post-closing expense for ImmunoGen employee incentive awards, $ 124 million of inventory fair value step-up amortization and $ 65 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 .

Stock compensation expense related to RSUs issued at the acquisition date was not significant.

Acquisition-related expenses, which were comprised primarily of regulatory, financial advisory and legal fees, totaled $ 59 million for the six months ended June 30, 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:

The following table presents the unaudited pro forma combined results of AbbVie and ImmunoGen for the three and six months ended June 30, 2024 and 2023 as if the acquisition of ImmunoGen had occurred on January 1, 2023:

Three months ended

June 30, Six months ended

(in millions) 2024 2023 2024 2023

Net revenues $ 14,462 $ 13,948 $ 26,827 $ 26,223

Net earnings (loss) 1,739 ( 413 )

Net earnings 1,422 1,861 3,158 1,444

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.

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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.

and the reclassification of acquisition-related costs incurred during the three and six months ended June 30, 2024 to the six months ended June 30, 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.

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.

Cash outflows related to other acquisitions and investments totaled $ 1.0 billion for the six months ended June 30, 2024 and $ 513 million for the six months ended June 30, 2023.

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

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(in millions)

2024 2023 2024 2023

Upfront charges $ 927 $ 220 $ 1,006 $ 352

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Acquired IPR&D and milestones $ 937 $ 280 $ 1,101 $ 430

Celsius Therapeutics, Inc.

In June 2024, AbbVie acquired Celsius Therapeutics, Inc.

(Celsius Therapeutics) including its lead pipeline asset CEL383.

Celsius Therapeutics is a clinical-stage biotechnology company focused on the discovery and development of precision medicine in inflammatory bowel disease.

The transaction was accounted as an asset acquisition as CEL383 represented substantially all of the fair value of the gross assets acquired.

The upfront payment of $ 250 million was recorded in acquired IPR&D and milestones expense in the condensed consolidated statement of earnings in the second quarter of 2024.

AbbVie entered into several other individually insignificant collaborations, licensing agreements or other asset acquisitions in which the related upfront payments were recorded in acquired IPR&D and milestones expense.

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 March 31, 2024 and 2023.

The following represent the significant collaboration agreements impacting the periods ended June 30, 2024 and 2023.

Collaboration with Janssen Biotech, Inc.

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(in millions) 2024 2023 2024 2023

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Global - AbbVie's share of other costs (included in respective line items) 40 57 82 112

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.

AbbVie’s receivable from Janssen, included in accounts receivable, net, was $ 256 million at June 30, 2024 and $ 236 million at December 31, 2023.

AbbVie’s payable to Janssen, included in accounts payable and accrued liabilities, was $ 270 million at June 30, 2024 and $ 307 million at December 31, 2023.

Collaboration with Genentech, Inc.

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(in millions) 2024 2023 2024 2023

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Foreign currency translation adjustments ( 156 )

Balance as of March 31, 2024 $ 33,426

Balance as of June 30, 2024 $ 33,386

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

As of June 30, 2024, there were no accumulated goodwill impairment losses.

2024 Form 10-Q |

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The following table summarizes intangible assets:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(in millions) Gross

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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 $ 1.9 billion for the three months and $ 3.8 billion for the six months ended June 30, 2024 and $ 2.1 billion for the three months and $ 4.0 billion for the six months ended June 30, 2023.

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

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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.

As of June 30, 2024 and 2023, no such plans were individually significant.

Restructuring charges were $ 49 million for the three months and $ 64 million for the six months ended June 30, 2024 and $ 18 million for the three months and $ 45 million for the six months ended June 30, 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:

The following table summarizes the cash activity in the restructuring reserve for the six months ended June 30, 2024:

(in millions)

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Payments and other adjustments ( 77 )

Accrued balance as of March 31, 2024 $ 178

Accrued balance as of June 30, 2024 $ 182

Allergan Integration Plan

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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 Allergan integration plan was substantially complete as of December 31, 2023 and the remaining accrual as of June 30, 2024 is not significant.

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

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(in millions) 2023

(in millions) Three Months Ended

June 30, 2023 Six Months Ended

June 30, 2023

Cost of products sold $ 32 $ 46

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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 $ 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.

These contracts, with notional amounts totaling $ 1.3 billion at June 30, 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 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.

Accumulated gains and losses as of June 30, 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.

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2024 Form 10-Q |

In June 2023, the company entered into a cross-currency swap contract that matured in November 2023 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 were included in AOCI and reclassified to net foreign exchange loss over the term of the related debt.

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.

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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 $ 6.2 billion at March 31, 2024 and $ 7.9 billion at December 31, 2023.

These contracts had notional amounts totaling $ 8.6 billion at June 30, 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 March 31, 2024 and December 31, 2023.

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 March 31, 2024 and December 31, 2023.

The company had an aggregate principal amount of senior Euro notes designated as net investment hedges of € 3.2 billion at June 30, 2024 and € 5.4 billion at December 31, 2023.

In addition, the company had foreign currency forward exchange contracts designated as net investment hedges with notional amounts totaling € 7.1 billion, SEK 1.9 billion, CAD 750 million and CHF 70 million at June 30, 2024 and € 4.9 billion, SEK 1.4 billion, CAD 750 million and CHF 50 million at 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 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 company is a party to interest rate swap contracts designated as fair value hedges with notional amounts totaling $ 3.5 billion at June 30, 2024 and $ 5.0 billion at 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.

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Derivatives in liability position

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

(in millions) Balance sheet caption June 30,

2024 December 31,

2023 Balance sheet caption June 30,

2024 December 31,

Foreign currency forward exchange contracts

Designated as cash flow hedges Prepaid expenses and other $ 21 $ 12 Accounts payable and accrued liabilities $ 2 $ 32

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

Designated as net investment hedges Prepaid expenses and other 78 13 Accounts payable and accrued liabilities 17 66

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Interest rate swap contracts

Designated as fair value hedges Prepaid expenses and other — — Accounts payable and accrued liabilities 1 —

Designated as fair value hedges Other assets — — Other long-term liabilities 304 293

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(in millions) 2024 2023 2024 2023

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Designated as net investment hedges 88 6 222 ( 88 )

Cross-currency swap contracts designated as cash flow hedges — 9 — 9

Assuming market rates remain constant through contract maturities, the company expects to reclassify pre-tax gains of $ 55 million into cost of products sold for foreign currency cash flow hedges and pre-tax gains of $ 22 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.

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 $ 50 million for the three months and $ 207 million for the six months ended June 30, 2024 and pre-tax gains of $ 36 million for the three months and pre-tax losses of $ 126 million for the six months ended June 30, 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.

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(in millions) Statement of earnings caption 2024 2023 2024 2023

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Treasury rate lock agreements designated as cash flow hedges Interest expense, net 6 6 12 12

Cross-currency swap contracts designated as cash flow hedges Net foreign exchange loss — 8 — 8

Interest rate swap contracts

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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:

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 June 30, 2024:

Basis of fair value measurement

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Range Weighted average (a)

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Discount rate 4.8 % - 5.9 %

4.3 % - 5.9 %

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 March 31, 2024 and December 31, 2023.

(b) Excluding approved indications, the estimated probability of payment was 89 % at June 30, 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:

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(in millions) 2024 2023

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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 March 31, 2024 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 June 30, 2024 are shown in the table below:

Basis of fair value measurement

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(Level 2) Significant unobservable inputs

Short-term borrowings $ 3 $ 3 $ — $ 3 $ —

Current portion of long-term debt and finance lease obligations, excluding fair value hedges $ 12,569 $ 12,388 $ 12,244 $ 144 $ —

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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 $ 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.

The carrying amount of these investments was $ 160 million as of June 30, 2024 and $ 159 million as of December 31, 2023.

No significant cumulative upward or downward adjustments have been recorded for these investments as of June 30, 2024.

Concentrations of Risk

Of total net accounts receivable, three U.S.

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.

wholesalers accounted for 77 % as of June 30, 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

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.

In connection with the acquisitions of ImmunoGen and 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.

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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.

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, together with cash on hand, fund AbbVie’s 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

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

(in millions)

4.80% Senior Notes due 2027 $ 2,250

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5.50% Senior Notes due 2064 1,500

Total acquired debt outstanding

Total debt issued $ 15,000

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.

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Long-Term Debt Repayments

In May 2024, the company repaid a € 1.5 billion aggregate principal amount of 1.38 % senior euro notes at maturity.

In June 2024, the company repaid a € 700 million aggregate principal amount of 1.25 % senior euro notes and $ 1.0 billion aggregate principal amount of 3.85 % senior notes at maturity.

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.

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.

During the six months ended June 30, 2024, the company issued and redeemed $ 1.7 billion of commercial paper.

There were no commercial paper borrowings outstanding as of June 30, 2024 and December 31, 2023.

The weighted average interest rate on commercial paper borrowings was 5.54 % for the six months ended June 30, 2024.

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

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

At June 30, 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 June 30, 2024 and December 31, 2023.

2024 Form 10-Q |

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Three months ended

March 31, Three months ended

June 30, Six months ended

June 30, Three months ended

June 30, Six months ended

(in millions) 2024 2023 2024 2023 2024 2023 2024 2023

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Expected return on plan assets ( 196 ) ( 182 ) ( 393 ) ( 362 ) — — — —

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

Amortization of prior service cost (credit) — 1 — 1 ( 9 ) ( 9 ) ( 18 ) ( 18 )

Amortization of actuarial loss 13 4 26 8 5 3 9 6

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June 30, Six months ended

(in millions) 2024 2023 2024 2023

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After-tax compensation expense $ 184 $ 149 $ 472 $ 407

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 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 .

During the six months ended June 30, 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 June 30, 2024, $ 9 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 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 .

During the six months ended June 30, 2024, primarily in connection with the company's annual grant, AbbVie granted 5.0 million RSUs and performance shares with a weighted-average grant-date fair value of $ 176.13 .

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 .

As of June 30, 2024, $ 840 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 |

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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.

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

AbbVie repurchased 5 million shares for $ 959 million during the six months ended June 30, 2024 and 10 million shares for $ 1.6 billion during the six months ended June 30, 2023.

AbbVie's remaining stock repurchase authorization was approximately $ 3.9 billion as of June 30, 2024.

Accumulated Other Comprehensive Loss

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:

The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the six months ended June 30, 2024:

(in millions) Foreign currency

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Net current-period other comprehensive income (loss) ( 553 ) 291 18 36 ( 208 )

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:

Balance as of June 30, 2024 $ ( 1,659 ) $ 356 $ ( 1,470 ) $ 260 $ ( 2,513 )

Other comprehensive loss for the six months ended June 30, 2024 included foreign currency translation adjustments totaling a loss of $ 553 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 $ 291 million.

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

(in millions) Foreign currency

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Net current-period other comprehensive income (loss) 178 ( 213 ) 36 ( 54 ) ( 53 )

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.

Balance as of June 30, 2023 $ ( 1,335 ) $ 251 $ ( 1,422 ) $ 254 $ ( 2,252 )

Other comprehensive loss for the six months ended June 30, 2023 included foreign currency translation adjustments totaling a gain of $ 178 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 $ 213 million.

2024 Form 10-Q |

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June 30, Six months ended

(in millions) (brackets denote gains) 2024 2023 2024 2023

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

$ 9 $ ( 1 ) $ 17 $ ( 3 )

Tax benefit ( 3 ) — ( 4 ) —

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Gains on treasury rate lock agreements (a)

( 6 ) ( 6 ) ( 12 ) ( 12 )

Gains on cross-currency swap contracts (d)

— ( 8 ) — ( 8 )

Total reclassifications, net of tax $ ( 12 ) $ ( 31 ) $ ( 26 ) $ ( 62 )

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

Note 11 Income Taxes

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 was 36 % for the three months and 30 % for the six months ended June 30, 2024 compared to 22 % for the three months and 26 % for the six months ended June 30, 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.

The increase in the effective tax rate for the three months ended June 30, 2024 over the prior year was primarily due to business development activities.

The increase in the effective tax rate for the six months ended June 30, 2024 over the prior year was primarily due to business development activities in the current period, offset by decreased changes in fair value of contingent consideration and impairment of certain intangible assets in the prior period.

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.

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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.

2024 Form 10-Q |

Note 12 Legal Proceedings and Contingencies

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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

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The lawsuits pending in federal court consist of six individual plaintiff lawsuits and a certified class action by Niaspan direct purchasers.

The cases are pending in the United States District Court for the Eastern District of Pennsylvania for coordinated or consolidated pre-trial proceedings under the MDL Rules as In re:

The cases are pending in the United States District Court for the Eastern District of Pennsylvania for coordinated or consolidated pre-trial proceedings under the federal multi-district litigation (MDL) Rules as In re:

Niaspan Antitrust Litigation, MDL No.

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In February 2023, the court granted Forest Laboratories’ motion to dismiss the cases, dismissing them with prejudice.

Plaintiffs are appealing the court’s motion to dismiss ruling.

In May 2024, the United States Court of Appeals for the Second Circuit affirmed that dismissal.

Government Proceedings

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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 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.

Of these approximately 460 lawsuits, approximately 45 of them are brought by states, counties, cities, and other municipal entities, approximately 25 of which are in the process of being dismissed pursuant to the previously announced

2024 Form 10-Q |

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.

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

Lawsuits were filed against Allergan and certain of its former officers alleging they made misrepresentations and omissions regarding Allergan's textured breast implants.

The lawsuits, which were filed by Allergan shareholders, have been consolidated in the United States District Court for the Southern District of New York as In re:

Allergan plc Securities Litigation.

The plaintiffs generally seek compensatory damages and attorneys’ fees.

In September 2019, the court partially granted Allergan's motion to dismiss.

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

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.

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The plaintiff-relator is appealing the court’s motion to dismiss ruling.

Lawsuits are pending against various Allergan entities in the United States and other countries including Brazil, Canada, South Korea, and the Netherlands, in which plaintiffs generally allege that they developed, or may develop, breast implant-associated anaplastic large cell lymphoma (ALCL) or other injuries from Allergan’s Biocell® textured breast implants, which were voluntarily withdrawn from worldwide markets in 2019.

Approximately 130 ALCL lawsuits and 1,000 other lawsuits are coordinated for pre-trial purposes in the United States District Court for the District of New Jersey under the MDL rules as In re:

Allergan Biocell Textured Breast Implant Product Liability Litigation, MDL No.

Approximately 75 ALCL lawsuits and 460 other lawsuits are pending in various state courts.

Approximately 50 ALCL and 800 other lawsuits are pending in other countries.

Plaintiffs generally seek monetary damages, medical monitoring, and attorneys’ fees.

Intellectual Property Litigation

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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.

Sandoz Private Limited, Sandoz GMBH, and Sun Pharmaceutical Industries, Ltd.

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

2024 Form 10-Q |

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

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June 30, Six months ended

(in millions) 2024 2023 2024 2023

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United States

$ 128 $ — $ 192 $ —

Epkinly Collaboration Revenues $ 29 $ — $ 51 $ —

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June 30, Six months ended

(in millions) 2024 2023 2024 2023

39 unchanged sentences

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