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Item 2. Management’s Discussion and Analysis

2025-05-09 compared with 2024-11-04 · 112 added, 197 removed, 177 unchanged (64% of the section changed)

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The following is a discussion and analysis of the financial condition of AbbVie Inc.

(AbbVie or the company) as of September 30, 2024 and December 31, 2023 and the results of operations for the three and nine months ended September 30, 2024 and 2023.

(AbbVie or the company) as of March 31, 2025 and December 31, 2024 and the results of operations for the three months ended March 31, 2025 and 2024.

This commentary should be read in conjunction with the Condensed Consolidated Financial Statements and accompanying notes appearing in Item 1, “Financial Statements and Supplementary Data.”

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Company Overview

AbbVie is a global, diversified research-based biopharmaceutical company positioned for success with a comprehensive product portfolio that has leadership positions across immunology, oncology, aesthetics, neuroscience and eye care.

AbbVie uses its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world’s most complex and serious diseases.

On August 1, 2024, AbbVie completed the acquisition of Cerevel Therapeutics Holdings, Inc.

(Cerevel Therapeutics).

The acquisition complements AbbVie’s neuroscience portfolio, adding a wide range of potentially best-in-class assets that may transform standards of care across psychiatric and neurological disorders where significant unmet needs remain for patients.

See Note 4 to the Condensed Consolidated Financial Statements for additional information on the acquisition.

Subsequent to the acquisition date, AbbVie's consolidated financial statements include the assets, liabilities, operating results and cash flows of Cerevel Therapeutics.

On July 1, 2024, AbbVie announced Robert A.

Michael, AbbVie's former president and chief operating officer, succeeded Richard A.

Gonzalez as the company's chief executive officer (CEO).

Gonzalez, who has served as CEO since the company's formation in 2013, retired from the role of CEO and became executive chairman of the board of directors, effective July 1, 2024.

Additionally, the board has appointed Mr.

Michael as a member of the board of directors effective July 1, 2024.

On February 12, 2024, AbbVie completed the acquisition of ImmunoGen, Inc.

The acquisition of ImmunoGen further builds on AbbVie's existing solid tumor pipeline of novel targeted therapies and next-generation immuno-oncology assets, which have the potential to create new treatment possibilities across multiple solid tumors and hematologic malignancies.

AbbVie and ImmunoGen's combined capabilities represent an opportunity to deliver potentially transformative antibody-drug conjugate (ADC) therapies to patients.

See Note 4 to the Condensed Consolidated Financial Statements for additional information on the acquisition.

Subsequent to the acquisition date, AbbVie's consolidated financial statements include the assets, liabilities, operating results and cash flows of ImmunoGen.

On February 13, 2025, the board of directors of AbbVie unanimously elected Chief Executive Officer (CEO) Robert A.

Michael to succeed Richard A.

Gonzalez as Chairman of the board of directors, effective July 1, 2025, at which time Mr.

Gonzalez will retire from the board.

AbbVie's products are generally sold worldwide directly to wholesalers, distributors, government agencies, health care facilities, specialty pharmacies and independent retailers from AbbVie-owned distribution centers and public warehouses.

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(ii) leveraging AbbVie's commercial strength and international infrastructure across therapeutic areas and ensuring strong commercial execution of new product launches;

(iii) continuing to invest in and expand its pipeline in support of opportunities in immunology, oncology, aesthetics, neuroscience and eye care as well as continued investment in key on-market products;

(iii) continuing to invest in and expand its pipeline in support of opportunities in immunology, neuroscience, oncology, aesthetics and eye care as well as continued investment in key on-market products;

(iv) generating substantial operating cash flows to support investment in innovative research and development, and return cash to shareholders via a strong and growing dividend while also continuing to repay debt.

In addition, AbbVie anticipates several regulatory submissions and data readouts from key clinical trials in the next 12 months.

2024 Form 10-Q |

Financial Results

The company's financial performance for the nine months ended September 30, 2024 included delivering worldwide net revenues of $41.2 billion, operating earnings of $10.6 billion, diluted earnings per share of $2.41 and cash flows from operations of $11.8 billion.

The company’s financial performance for the three months ended March 31, 2025 included delivering worldwide net revenues of $13.3 billion, operating earnings of $3.7 billion, diluted earnings per share of $0.72 and cash flows from operations of $1.6 billion.

Worldwide net revenues increased 8% on a reported basis and 10% on a constant currency basis.

Diluted earnings per share was $2.41 for the nine months ended September 30, 2024 and included the following after-tax costs:

Financial results for the three months ended March 31, 2025 also included the following costs:

(i) $1.9 billion related to the amortization of intangible assets;

(ii) $3.4 billion for the change in fair value of contingent consideration liabilities;

(iii) $894 million of acquisition and integration expenses;

and (iv) $585 million for charges related to litigation matters.

and (ii) $1.5 billion for the change in fair value of contingent consideration liabilities.

Additionally, financial results reflected continued funding to support all stages of AbbVie’s pipeline assets and continued investment in AbbVie’s on-market brands.

2025 Form 10-Q |

Recent Events

AbbVie’s business may be impacted by risks associated with global macroeconomic conditions, including international trade disruptions and disputes as well as trade protection measures.

For example, the U.S.

government has recently imposed broad based tariffs targeting specified countries.

While the impact of these tariffs on AbbVie’s operations to date has not been material, the U.S.

government may in the future pause, reimpose or increase tariffs and foreign governments have and, in the future, may impose retaliatory trade protection measures.

Any new or additional tariffs, particularly those targeting the pharmaceuticals industry, may increase uncertainties and associated risks and could adversely impact AbbVie’s business and results of operations.

Research and Development

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AbbVie’s long-term success depends to a great extent on its ability to continue to discover and develop innovative products and acquire or collaborate on compounds currently in development by other biotechnology or pharmaceutical companies.

AbbVie’s pipeline currently includes approximately 90 compounds, devices or indications in development individually or under collaboration or license agreements and is focused on such important specialties as immunology, oncology, aesthetics, neuroscience and eye care.

AbbVie’s pipeline currently includes approximately 90 compounds, devices or indications in development individually or under collaboration or license agreements.

Of these programs, approximately 50 are in mid- and late-stage development.

The company’s pipeline is focused on such important specialties as immunology, neuroscience, oncology, aesthetics and eye care.

AbbVie’s recently announced partnership with Gubra marks the company’s entrance into the obesity field, a therapeutic area with significant unmet need.

The following sections summarize transitions of significant programs from mid-stage development to late-stage development as well as developments in significant late-stage and registration programs.

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Significant Programs and Developments

• In January 2024, AbbVie initiated a Phase 3 clinical trial to evaluate Rinvoq in adults and adolescents with non-segmental vitiligo who are eligible for systemic therapy.

• In April 2024, AbbVie announced positive top-line results from its Phase 3 SELECT-GCA trial for Rinvoq in combination with a 26-week steroid taper regimen in patients with giant cell arteritis (GCA) achieved its primary endpoint.

• In April 2024, AbbVie announced positive top-line results from the head-to-head Phase 3b/4 Level-Up trial evaluating Rinvoq compared to dupilumab in adolescent and adult patients with moderate to severe atopic dermatitis.

In the study, Rinvoq demonstrated superiority to dupilumab on the primary endpoint and all ranked secondary endpoints.

• In June 2024, AbbVie announced that the U.S.

Food and Drug Administration (FDA) has approved Rinvoq for the treatment of pediatric patients two years of age and older with active polyarticular juvenile idiopathic arthritis (pJIA) as well as psoriatic arthritis (PsA), provided they have had an inadequate response or intolerance to one or more tumor necrosis factor (TNF) blockers.

• In July 2024, AbbVie announced that it has submitted applications for a new indication to the FDA and European Medicines Agency (EMA) for Rinvoq for the treatment of adult patients with GCA.

• In June 2024, AbbVie announced that the FDA has approved Skyrizi for adults with moderately to severely active ulcerative colitis (UC).

• In July 2024, AbbVie announced that the European Commission (EC) has approved Skyrizi for the treatment of adult patients with moderately to severely active UC who have had an inadequate response to, lost response to, or were intolerant to conventional therapy or a biologic therapy.

• In January 2024, AbbVie announced Phase 2 results showing adults with moderate to severe hidradenitis suppurativa (HS) who had previously failed anti-TNF therapy who received lutikizumab achieved higher response rates than placebo in the primary endpoint of achieving HS Clinical Response at week 16.

2024 Form 10-Q |

• In July 2024, AbbVie initiated a Phase 3 clinical trial to evaluate lutikizumab in adult and adolescent patients with moderate to severe HS.

• In March 2024, AbbVie initiated a Phase 3 clinical trial to evaluate Epkinly in combination with rituximab and lenalidomide in patients with previously untreated follicular lymphoma (FL).

• In June 2024, AbbVie announced that the FDA has approved Epkinly for the treatment of adults with relapsed or refractory (R/R) FL after two or more lines of prior therapy.

This indication is approved under the FDA's Accelerated Approval program based on overall response rate (ORR) and durability of response.

Continued approval for this indication may be contingent upon verification and description of clinical benefit in a confirmatory trial.

• In June 2024, AbbVie announced that the EMA Committee for Medicinal Products for Human Use has adopted a positive opinion recommending the conditional marketing authorization of Tepkinly as a monotherapy for the treatment of adult patients with R/R FL after two or more prior therapies.

• In August 2024, AbbVie announced that the EC has granted conditional marketing authorization for Tepkinly as a monotherapy for the treatment of adult patients with R/R FL after two or more lines of prior therapy.

• In March 2024, AbbVie announced that the FDA granted full approval for Elahere for the treatment of folate receptor alpha (FRα)-positive, platinum-resistant epithelial ovarian, fallopian tube or primary peritoneal adult cancer patients treated with up to three prior therapies.

• In June 2024, AbbVie announced positive topline results from the Phase 2 PICCOLO trial evaluating Elahere monotherapy in heavily pre-treated patients with FRα-positive, platinum-sensitive ovarian cancer.

The study met its primary endpoint and no new safety concerns were identified.

• In September 2024, AbbVie announced that the EMA Committee for Medicinal Products for Human Use has adopted a positive opinion recommending the marketing authorization of Elahere for the treatment of adult patients with FRα-positive, platinum-resistant and high-grade serous epithelial ovarian, fallopian tube or primary peritoneal cancer who have received one to three prior treatment regimens.

• In April 2024, AbbVie announced its decision to discontinue the Phase 3 TRANSFORM-2 study evaluating navitoclax, a BCL-XL/BCL-2 inhibitor, plus ruxolitinib in patients with R/R myelofibrosis following evaluation of the totality of data from the Phase 3 TRANSFORM-1 trial and feedback from regulators.

• In June 2024, AbbVie initiated the CERVINO Phase 3 clinical trial to evaluate ABBV-383 monotherapy compared with standard available therapies in adult patients with R/R multiple myeloma who have received at least two lines of prior therapy.

• In September 2024, AbbVie announced submission of a Biologics License Application to the FDA for accelerated approval of Teliso-V in adult patients with previously treated, locally advanced or metastatic epidermal growth factor receptor (EGFR) wild type, nonsquamous non-small cell lung cancer (NSCLC) with c-Met protein overexpression.

Juvederm Collection

• In March 2024, AbbVie announced the FDA approval of Juvederm Voluma XC for injection in the temple region to improve moderate to severe temple hollowing in adults over the age of 21.

2024 Form 10-Q |

Botox Cosmetic

• In September 2024, AbbVie announced that Botox Cosmetic is now available for the treatment of masseter muscle prominence (MMP) in China.

• In October 2024, AbbVie announced that the FDA has approved Botox Cosmetic for temporary improvement in the appearance of moderate to severe vertical bands connecting the jaw and neck (platysma bands) in adults .

• In January 2024, AbbVie announced the launch of Produodopa (ABBV-951) in the European Union for the treatment of advanced Parkinson's disease with severe motor fluctuations and hyperkinesia (excessive movement) or dyskinesia (involuntary movement), and when available combinations of Parkinson's medicinal products have not given satisfactory results.

• In June 2024, AbbVie announced it received a Complete Response Letter (CRL) from the FDA for the New Drug Application (NDA) for ABBV-951 for the treatment of motor fluctuations in adults with advanced Parkinson's disease.

In its letter, the FDA cited observations that were identified during inspection of a third-party manufacturer listed in the NDA.

The CRL did not identify any issues related to the safety, efficacy or labeling of ABBV-951, including the device, and does not request that AbbVie conduct additional efficacy or safety trials related to the drug or device-related testing.

• In October 2024, AbbVie announced that the FDA has approved Vyalev (ABBV-951) as the first and only subcutaneous 24-hour infusion of levodopa-based therapy for the treatment of motor fluctuations in adults with advanced Parkinson's disease.

• In September 2024, AbbVie announced positive topline results from its Phase 3 TEMPO-1 trial for Tavapadon as a monotherapy in early Parkinson's disease.

• In April 2025, AbbVie announced that the European Commission (EC) granted marketing authorization to Rinvoq for the treatment of giant cell arteritis (GCA) in adult patients.

• In April 2025, AbbVie announced that the U.S.

Food and Drug Administration (FDA) approved Rinvoq for the treatment of GCA in adult patients.

• In February 2025, AbbVie initiated a Phase 3 clinical trial to evaluate Qulipta for the preventive treatment of menstrual migraine.

• In April 2025, AbbVie announced that it submitted a Biologics License Application (BLA) to the U.S.

FDA for approval of trenibotulinumtoxinE (BoNT/E) for the treatment of moderate to severe glabellar lines.

BoNT/E is a first-in-class botulinum neurotoxin serotype E characterized by a rapid onset of action as early as 8 hours after administration and short duration of effect of 2-3 weeks.

If approved, BoNT/E will be the first neurotoxin of its kind available to patients.

• In February 2025, AbbVie announced that the U.S.

FDA approved Emblaveo (aztreonam and avibactam), as the first fixed-dose, intravenous, monobactam/β-lactamase inhibitor combination antibiotic to treat complicated intra-abdominal infections, including those caused by Gram-negative bacteria.

For a more comprehensive discussion of AbbVie’s products and pipeline, see the company’s Annual Report on Form 10-K for the year ended December 31, 2024.

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(dollars in millions)

2024 2023 2024 2023

United States

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(dollars in millions)

2024 2023 2024 2023

Humira United States $ 1,765 $ 3,020 (41.6) % (41.6) % $ 5,896 $ 9,420 (37.4) % (37.4) %

International 462 527 (12.4) % (7.8) % 1,415 1,680 (15.8) % (10.8) %

Total $ 2,227 $ 3,547 (37.2) % (36.5) % $ 7,311 $ 11,100 (34.1) % (33.3) %

Skyrizi United States $ 2,919 $ 1,656 76.2 % 76.2 %

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Total $ 1,718 $ 1,093 57.2 % 59.7 %

Imbruvica United States $ 618 $ 678 (8.9) % (8.9) % $ 1,823 $ 1,982 (8.0) % (8.0) %

Collaboration revenues 210 230 (8.4) % (8.4) % 676 711 (4.9) % (4.9) %

Humira United States $ 744 $ 1,771 (58.0) % (58.0) %

International 377 499 (24.4) % (19.5) %

Total $ 1,121 $ 2,270 (50.6) % (49.5) %

Venclexta United States $ 340 $ 281 21.5 % 21.5 % $ 921 $ 811 13.6 % 13.6 %

Vraylar United States $ 763 $ 692 10.3 % 10.3 %

International 2 2 13.1 % 20.2 %

Total $ 765 $ 694 10.3 % 10.3 %

United States

$ 139 $ — n/m n/m $ 331 $ — n/m n/m

Epkinly Collaboration revenues

$ 31 $ 14 >100.0 % >100.0 % $ 82 $ 14 >100.0 % >100.0 %

Botox Therapeutic United States $ 723 $ 611 18.2 % 18.2 %

International 143 137 4.8 % 11.4 %

Total $ 866 $ 748 15.8 % 17.0 %

Botox Cosmetic United States $ 414 $ 388 6.5 % 6.5 % $ 1,253 $ 1,217 2.9 % 2.9 %

Ubrelvy United States $ 233 $ 197 17.6 % 17.6 %

International 7 6 23.3 % 29.3 %

Total $ 240 $ 203 17.8 % 18.0 %

Juvederm Collection United States $ 105 $ 116 (10.2) % (10.2) % $ 349 $ 363 (4.1) % (4.1) %

Qulipta United States $ 172 $ 128 34.2 % 34.2 %

International 21 3 >100.0 % >100.0 %

Total $ 193 $ 131 47.6 % 48.3 %

Other Aesthetics United States $ 272 $ 255 6.4 % 6.4 % $ 828 $ 785 5.6 % 5.6 %

Vyalev United States $ 6 $ — n/m n/m

International 57 9 >100.0 % >100.0 %

Total $ 63 $ 9 >100.0 % >100.0 %

Botox Therapeutic United States $ 708 $ 626 13.1 % 13.1 % $ 1,988 $ 1,827 8.8 % 8.8 %

Duodopa United States $ 20 $ 25 (19.4) % (19.4) %

International 76 90 (16.0) % (11.7) %

Total $ 96 $ 115 (16.7) % (13.3) %

Vraylar United States $ 873 $ 750 16.5 % 16.5 % $ 2,338 $ 1,967 18.9 % 18.9 %

Other Neuroscience United States $ 55 $ 61 (9.5) % (9.5) %

International 4 4 (1.0) % 6.5 %

Total $ 59 $ 65 (8.9) % (8.4) %

Duodopa United States $ 24 $ 25 (4.7) % (4.7) % $ 72 $ 74 (3.3) % (3.3) %

Imbruvica United States $ 529 $ 610 (13.3) % (13.3) %

Collaboration revenues 209 228 (8.2) % (8.2) %

Total $ 738 $ 838 (11.9) % (11.9) %

Venclexta United States $ 312 $ 281 11.0 % 11.0 %

International 353 333 6.0 % 13.4 %

Total $ 665 $ 614 8.3 % 12.3 %

Ubrelvy United States $ 261 $ 230 13.6 % 13.6 % $ 685 $ 574 19.3 % 19.3 %

United States

$ 165 $ 64 >100.0 % >100.0 %

International 14 — n/m n/m

$ 179 $ 64 >100.0 % >100.0 %

Epkinly Collaboration revenues

$ 36 $ 22 62.1 % 62.1 %

International 15 5 >100.0 % >100.0 %

Total $ 51 $ 27 89.8 % 94.8 %

Qulipta United States $ 168 $ 131 28.3 % 28.3 % $ 442 $ 292 51.3 % 51.3 %

Botox Cosmetic United States $ 295 $ 389 (24.3) % (24.3) %

International 261 244 6.9 % 11.1 %

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(dollars in millions)

2024 2023 2024 2023

Other Neuroscience United States $ 54 $ 55 (4.1) % (4.1) % $ 172 $ 195 (11.6) % (11.6) %

Juvederm Collection United States $ 75 $ 106 (29.0) % (29.0) %

International 156 191 (18.5) % (15.0) %

Total $ 231 $ 297 (22.2) % (20.0) %

Other Aesthetics United States $ 270 $ 281 (3.5) % (3.5) %

International 45 38 18.1 % 23.2 %

Total $ 315 $ 319 (0.9) % (0.3) %

Ozurdex United States $ 30 $ 34 (12.1) % (12.1) %

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Total $ 60 $ 59 1.9 % 6.3 %

Restasis United States $ 8 $ 104 (92.5) % (92.5) % $ 70 $ 265 (73.4) % (73.4) %

International 13 13 2.1 % 8.1 % 40 43 (7.4) % (2.2) %

Total $ 21 $ 117 (82.2) % (81.5) % $ 110 $ 308 (64.2) % (63.5) %

Other Eye Care United States $ 117 $ 149 (21.4) % (21.4) %

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n/m – Not meaningful

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

The following discussion and analysis of AbbVie’s net revenues by product is presented on a constant currency basis.

Global Humira sales decreased 37% for the three months and 33% for the nine months ended September 30, 2024.

In the United States, Humira sales decreased by 42% for the three months and 37% for the nine months ended September 30, 2024 primarily driven by direct biosimilar competition following the loss of exclusivity on January 31, 2023.

Internationally, Humira revenues decreased 8% for the three months and 11% for the nine months ended September 30, 2024 primarily driven by the continued impact of direct biosimilar competition.

AbbVie continues to pursue strategies to maintain broad formulary access of Humira and manage the impact of biosimilar erosion.

Net revenues for Skyrizi increased 51% for the three months and 49% for the nine months ended September 30, 2024 primarily driven by continued strong market share uptake as well as market growth across all indications.

Net revenues for Rinvoq increased 47% for the three months and 55% for the nine months ended September 30, 2024 primarily driven by continued strong market share uptake as well as market growth across all indications.

Net revenues for Skyrizi increased 72% for the three months ended March 31, 2025 primarily driven by continued strong market share uptake as well as market growth across all indications.

Net revenues for Rinvoq increased 60% for the three months ended March 31, 2025 primarily driven by continued strong market share uptake as well as market growth across all indications.

Net revenues for Humira decreased 50% for the three months ended March 31, 2025 primarily driven by continued impact of direct biosimilar competition following the loss of exclusivity.

Net revenues for Vraylar increased 10% for the three months ended March 31, 2025 primarily driven by continued market share uptake as well as market growth.

Net revenues for Botox Therapeutic increased 17% for the three months ended March 31, 2025 primarily driven by continued market share uptake as well as market growth.

Net revenues for Ubrelvy increased 18% for the three months ended March 31, 2025 primarily driven by continued market share uptake.

Net revenues for Qulipta increased 48% for the three months ended March 31, 2025 primarily driven by continued market share uptake.

Net revenues for Imbruvica represent product revenues in the United States and collaboration revenues outside of the United States related to AbbVie’s 50% share of Imbruvica profit.

AbbVie's global Imbruvica revenues decreased 9% for the three months and 7% for the nine months ended September 30, 2024 primarily driven by decreased demand and lower market share in the United States as well as decreased collaboration revenues.

Net revenues for Venclexta increased 18% for the three months and 17% for the nine months ended September 30, 2024 primarily driven by continued market share uptake and market growth across all indications.

AbbVie's global Imbruvica revenues decreased 12% for the three months ended

2025 Form 10-Q |

Net revenues for Elahere were $139 million for the three months and $331 million for the nine months ended September 30, 2024 for the period subsequent to the completion of the ImmunoGen acquisition.

Net revenues for Botox Cosmetic increased 10% for the three months and 5% for the nine months ended September 30, 2024 primarily driven by favorable pricing.

Net revenues for the nine months ended September 30, 2024 were also partially offset by the unfavorable impact of customer inventory destocking in the United States.

Net revenues for Juvederm Collection decreased 17% for the three months and 11% for the nine months ended September 30, 2024 primarily driven by decreased consumer demand across international markets.

Net revenues for the nine months ended September 30, 2024 were also unfavorably impacted by customer inventory destocking in the United States.

Net revenues for Botox Therapeutic increased 14% for the three months and 10% for the nine months ended September 30, 2024 primarily driven by continued market share uptake as well as market growth.

Net revenues for Vraylar increased 17% for the three months and 19% for the nine months ended September 30, 2024 primarily driven by continued market share uptake as well as market growth.

Net revenues for Ubrelvy increased 15% for the three months and 21% for the nine months ended September 30, 2024 primarily driven by continued market share uptake as well as market growth.

Net revenues for Qulipta increased 34% for the three months and 56% for the nine months ended September 30, 2024 primarily driven by continued strong market share uptake as well as market growth.

March 31, 2025 primarily driven by the timing of customer inventory stocking in the prior year, decreased demand and lower market share in the United States as well as decreased collaboration revenues.

Net revenues for Venclexta increased 12% for the three months ended March 31, 2025 primarily driven by continued market share uptake.

Net revenues for Elahere increased greater than 100% for the three months ended March 31, 2025 primarily driven by a full period of Elahere results in 2025 compared to the prior year.

Net revenues for Botox Cosmetic decreased 11% for the three months ended March 31, 2025.

In the United States, Botox Cosmetic net revenues decreased 24% primarily driven by unfavorable pricing due to consumer loyalty program changes and decreased market share.

Internationally, Botox Cosmetic net revenues increased 11% primarily driven by increased consumer demand across certain international markets and the timing of customer inventory stocking.

Net revenues for Juvederm Collection decreased 20% for the three months ended March 31, 2025 primarily driven by decreased global consumer demand and unfavorable pricing due to consumer loyalty program changes in the United States.

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Gross margin $ 9,341 $ 8,216 14 %

as a % of net revenues 70 % 67 %

Gross margin as a percentage of net revenues increased for the three and nine months ended September 30, 2024 compared to the prior year.

Gross margin percentage for the three and nine months ended September 30, 2024 was favorably impacted by lower amortization of intangibles and lower intangible asset impairment charges.

The three months ended September 30, 2023 included intangible asset impairment charges of $2.1 billion.

Gross margin as a percentage of net revenues increased for the three months ended March 31, 2025 compared to the prior year primarily due to increased leverage from net revenues growth, favorable changes in product mix and acquisition and integration costs incurred during the three months ended March 31, 2024 in connection with the ImmunoGen acquisition.

Selling, General and Administrative

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Selling, general and administrative $ 3,293 $ 3,315 (1) %

as a % of net revenues 25 % 27 %

Selling, general and administrative (SG&A) expenses as a percentage of net revenues increased for the three and nine months ended September 30, 2024 compared to the prior year.

SG&A expense was unfavorably impacted by higher litigation reserve charges and acquisition and integration costs incurred in connection with the ImmunoGen and Cerevel Therapeutics acquisitions including cash-settled, post-closing expense for both ImmunoGen and Cerevel Therapeutics employee incentive awards, partially offset by the favorable impact of leverage from revenue growth .

See Note 4 to the Condensed Consolidated Financial Statements for additional information.

2024 Form 10-Q |

Selling, general and administrative (SG&A) expenses as a percentage of net revenues decreased for the three months ended March 31, 2025 compared to the prior year primarily due to acquisition and integration costs incurred during the three months ended March 31, 2024 in connection with the ImmunoGen acquisition .

Research and Development

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Research and development $ 2,067 $ 1,939 7 %

as a % of net revenues 15 % 16 %

Research and development (R&D) expenses as a percentage of net revenues increased for the three and nine months ended September 30, 2024 compared to the prior year.

R&D expense percentage for the three and nine months ended September 30, 2024 was unfavorably impacted by increased funding to support all stages of the company’s pipeline assets as well as acquisition and integration costs incurred in connection with the ImmunoGen and Cerevel Therapeutics acquisitions including cash-settled, post-closing expense for employee incentive awards .

See Note 4 to the Condensed Consolidated Financial Statements for additional information.

R&D expense percentage increase for the nine months ended September 30, 2024 was partially offset by lower intangible asset impairment charges.

The nine months ended September 30, 2023 included an intangible asset impairment charge of $630 million.

Research and development (R&D) expenses as a percentage of net revenues decreased for the three months ended March 31, 2025 compared to the prior year primarily due to acquisition and integration costs incurred during the three months ended March 31, 2024 in connection with the ImmunoGen acquisition partially offset by increased funding to support all stages of the company’s pipeline assets.

Acquired IPR&D and Milestones

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Acquired IPR&D and milestones $ 248 $ 164

Acquired IPR&D and milestones expense for the nine months ended September 30, 2024 included a charge related to the upfront payment of $250 million to acquire Celsius Therapeutics.

See Note 4 to the Condensed Consolidated Financial Statements for additional information.

2025 Form 10-Q |

Other Non-Operating Expenses (Income)

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Interest expense, net $ 627 $ 453

Net foreign exchange loss (gain) $ (3) $ 25 $ 2 $ 97

Other expense (income), net 1,159 (95) 3,090 3,121

Interest expense increased for the three and nine months ended September 30, 2024 compared to the prior year primarily due to the incremental interest associated with financing the ImmunoGen and Cerevel Therapeutics acquisitions.

See Note 8 to the Condensed Consolidated Financial Statements for additional information related to debt issued to finance the ImmunoGen and Cerevel Therapeutics acquisitions.

Interest income decreased for the three months ended September 30, 2024 compared to the prior year primarily due to a lower average cash and cash equivalents balance.

Interest income increased for the nine months ended September 30, 2024 compared to the prior year primarily due to a higher average cash and cash equivalents balance and the impact of higher interest rates.

Other expense (income), net included charges related to changes in fair value of contingent consideration liabilities of $1.4 billion for the three months and $3.5 billion for the nine months ended September 30, 2024 and $8 million for the three months and $3.4 billion for the nine months ended September 30, 2023.

Net foreign exchange loss $ 4 $ 4

Other expense, net 1,441 586

Interest expense increased for the three months ended March 31, 2025 compared to the prior year primarily due to a higher average debt balance .

Interest income decreased for the three months ended March 31, 2025 compared to the prior year primarily due to a lower average cash and cash equivalents balance.

Other expense, net included charges related to changes in fair value of contingent consideration liabilities of $1.5 billion for the three months ended March 31, 2025 and $660 million for the three months ended March 31, 2024.

The fair value of contingent consideration liabilities is impacted by the passage of time and multiple other inputs, including the probability of success of achieving regulatory milestones, discount rates, the estimated amount of future sales of the acquired products and other market-based factors.

For the three and nine months ended September 30, 2024, the change in fair value reflected higher estimated Skyrizi sales and the passage of time.

For the three months ended September 30, 2024, the change in fair value also reflected the impact of lower discount rates.

For the three months ended September 30, 2023, the change in fair value reflected the passage of time offset by higher discount rates.

For the nine months

2024 Form 10-Q |

ended September 30, 2023, the change in fair value reflected higher Skyrizi sales driven by stronger market share uptake and the passage of time, partially offset by higher discount rates.

For the three months ended March 31, 2025, the change in fair value reflected higher estimated Skyrizi sales, the passage of time and lower discount rates.

For the three months ended March 31, 2024, the change in fair value reflected higher estimated Skyrizi sales and the passage of time, partially offset by higher discount rates.

Income Tax Expense

The effective tax rate was 25% for the three months and 28% for the nine months ended September 30, 2024 compared to 9% for the three months and 20% for the nine months ended September 30, 2023.

The effective tax rate was 22% for the three months ended March 31, 2025 and 2024.

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 and Cerevel Therapeutics acquisition-related costs.

The increase in the effective tax rate for the three months ended September 30, 2024 over the prior year was primarily due to changes in fair value of contingent consideration, impact of foreign operations and business development activities.

The increase in the effective tax rate for the nine months ended September 30, 2024 over the prior year was primarily due to the impact of foreign operations and business development activities.

Subsequent to September 30, 2024, the company was notified that the administrative proceeding related to its U.S.

federal income tax examination for certain tax years was substantially completed.

Final resolution of examination of such years may occur in the fourth quarter of 2024.

The company anticipates that final resolution will result in a decrease in the gross amount of unrecognized tax benefits on the condensed consolidated balance sheets and recognition of an income tax benefit in the condensed consolidated statement of earnings, which could be material.

The Company does not anticipate that such resolution will have a significant impact on its cash flows.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Nine months ended

September 30,

Three months ended

(in millions) 2025 2024

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Financing activities (1,258) 10,819

Operating cash flows for the nine months ended September 30, 2024 decreased compared to the prior year primarily due to the timing of working capital, higher contingent consideration payments classified as operating cash flows and decreased results from operations driven by ImmunoGen and Cerevel Therapeutics acquisition-related cash expenses.

Investing cash flows for the nine months ended September 30, 2024 included $18.5 billion cash consideration paid to acquire ImmunoGen and Cerevel Therapeutics offset by cash acquired of $952 million, net sales and maturities of investment securities of $470 million, payments made for other acquisitions and investments of $1.2 billion and capital expenditures of $683 million.

Investing cash flows for the nine months ended September 30, 2023 included payments made for other acquisitions and investments of $670 million and capital expenditures of $572 million.

Financing cash flows for the nine months ended September 30, 2024 included the issuance of unsecured senior notes totaling $15.0 billion aggregate principal which were used to finance the acquisitions of ImmunoGen and Cerevel Therapeutics.

Additionally, financing cash flows included the issuance and repayment of $5.0 billion under the term loan credit agreement and repayments of €1.5 billion aggregate principal amount of 1.38% senior euro notes, €700 million aggregate principal amount of 1.25% senior euro notes, $1.0 billion aggregate principal amount of 3.85% senior notes, $99 million of secured term notes assumed from ImmunoGen in conjunction with the acquisition and the settlement of $400 million aggregate amount of 2.5% convertible senior notes assumed from Cerevel Therapeutics.

Financing cash flows for the nine months ended September 30, 2023 included repayments of $1.0 billion floating rate term loan, $1.0 billion aggregate principal amount of 2.85% senior notes and $350 million aggregate principal amount of the company’s 2.80% senior notes.

Subsequent to September 30, 2024, the company refinanced its $2.0 billion floating rate three-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 due April 2027.

Financing cash flows also included cash dividend payments of $8.3 billion for the nine months ended September 30, 2024 and $7.9 billion for the nine months ended September 30, 2023.

The increase in cash dividend payments was primarily driven by the increase in the quarterly dividend rate.

Operating cash flows for the three months ended March 31, 2025 decreased compared to the prior year primarily due to the timing of working capital and payments related to litigation matters, partially offset by increased results from operations driven by higher net revenues and ImmunoGen acquisition-related cash expenses during the three-months ended March 31, 2024.

Investing cash flows for the three months ended March 31, 2025 included $210 million cash consideration paid to acquire Nimble Therapeutics, Inc.

offset by cash acquired of $6 million, payments made for other acquisitions and investments of $334 million and capital expenditures of $235 million.

Investing cash flows for the three months ended March 31, 2024 included $9.8 billion cash consideration paid to acquire ImmunoGen offset by cash acquired of $591 million, payments made for other acquisitions and investments of $190 million and capital expenditures of $193 million.

Financing cash flows for the three months ended March 31, 2025 included the issuance of unsecured senior notes totaling $4.0 billion aggregate principal and the repayment of $3.0 billion aggregate principal of 3.80% senior notes.

Financing cash flows for the three months ended March 31, 2024 included the issuance of unsecured senior notes totaling $15.0 billion aggregate principal which were used to finance the acquisitions of ImmunoGen and Cerevel Therapeutics.

Additionally, financing cash flows included the issuance and repayment of $5.0 billion under the term loan credit agreement and repayment of $99 million of secured term notes assumed from ImmunoGen in conjunction with the acquisition.

2025 Form 10-Q |

On September 6, 2024, the company announced that its board of directors declared a quarterly cash dividend of $1.55 per share for stockholders of record at the close of business on October 15, 2024, payable on November 15, 2024.

On October 30, 2024, the board of directors declared an increase in the company’s quarterly dividend from $1.55 per share to $1.64 per share beginning with the dividend payable on February 14, 2025 to stockholders of record as of January 15, 2025.

This reflects an increase of approximately 5.8% over the previous quarterly rate.

Financing cash flows also included cash dividend payments of $2.9 billion for the three months ended March 31, 2025 and $2.8 billion for the three months ended March 31, 2024.

The increase in cash dividend payments was primarily driven by the increase in the quarterly dividend rate.

On February 13, 2025, the company announced that its board of directors declared a quarterly cash dividend of $1.64 per share for stockholders of record at the close of business on April 15, 2025, payable on May 15, 2025.

The timing, declaration, amount of and payment of any dividends by AbbVie in the future is within the discretion of its board of directors and will depend upon many factors, including AbbVie’s financial condition, earnings, capital requirements of its operating subsidiaries, covenants associated with certain of AbbVie’s debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by its board of directors.

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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 nine months ended September 30, 2024 and 10 million shares for $1.6 billion during the nine months ended September 30, 2023.

Financing cash flows also included contingent consideration payments of $735 million for the nine months ended September 30, 2023.

There were no contingent consideration payments classified as financing cash flows for the nine months ended September 30, 2024.

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

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

AbbVie repurchased 3 million shares for $606 million during the three months ended March 31, 2025 and 5 million shares for $959 million during the three months ended March 31, 2024.

During the three months ended March 31, 2025 and 2024, the company issued and redeemed commercial paper.

The balance of commercial paper borrowings outstanding was $1.6 billion as of March 31, 2025 and there were no amounts outstanding as of December 31, 2024.

AbbVie may issue additional commercial paper or retire commercial paper to meet liquidity requirements as needed.

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Credit Facility

In January 2025, AbbVie entered into a new $3.0 billion five-year revolving credit facility that matures in January 2030 which is in addition to the existing $5.0 billion five-year revolving credit facility that matures in March 2028.

The revolving credit facilities are available to support AbbVie’s commercial paper program and enable the company to borrow funds to meet liquidity requirements on an unsecured basis at variable interest rates and contain various covenants.

At March 31, 2025, 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 facility as of March 31, 2025 and December 31, 2024.

Subsequent to March 31, 2025, the company entered into a $4.0 billion 364-day term loan credit agreement.

No amounts were borrowed under the term loan credit agreement as of the date of filing of this Quarterly Report on Form 10-Q.

In December 2023, in connection with the acquisitions of ImmunoGen and Cerevel Therapeutics, 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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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 March 2023, AbbVie entered into an amended and restated five-year revolving credit facility.

The amendment increased the unsecured revolving credit facility commitments from $4.0 billion to $5.0 billion and extended the maturity date of the facility from August 2023 to March 2028.

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

At September 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 facility as of September 30, 2024 and December 31, 2023.

Access to Capital

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Credit Ratings

In August 2024, Moody’s Investors Service (Moody’s) affirmed its A3 senior unsecured long-term rating.

At the same time, Moody’s revised its outlook to positive from stable.

There were no other changes in the company’s credit ratings during the nine months ended September 30, 2024.

There were no changes in the company’s credit ratings during the three months ended March 31, 2025.

Unfavorable changes to the ratings may have an adverse impact on future financing arrangements;

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A summary of the company’s significant accounting policies is included in Note 2, “Summary of Significant Accounting Policies” in AbbVie's Annual Report on Form 10-K for the year ended December 31, 2024.

There have been no significant changes in the company’s application of its critical accounting policies during the nine months ended September 30, 2024.

There have been no significant changes in the company’s application of its critical accounting policies during the three months ended March 31, 2025.

FORWARD-LOOKING STATEMENTS

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AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in the forward-looking statements.

Such risks and uncertainties include, but are not limited to challenges to intellectual property, competition from other products, difficulties inherent in the research and development process, adverse litigation or government action, changes to laws and regulations applicable to our industry, the impact of global macroeconomic factors, such as economic downturns or uncertainty, international conflict, trade disputes and tariffs, and other uncertainties and risks associated with global business operations.

Additional information about the economic, competitive, governmental, technological and other factors that may affect AbbVie’s operations is set forth in Item 1A, “Risk Factors,” in AbbVie’s Annual Report on Form 10-K for the year ended December 31, 2024, which has been filed with the Securities and Exchange Commission.

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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 2. Management’s Discussion and Analysis