AbbVie Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA AbbVie Inc. and Subsidiaries Condensed Consolidated Statements of Earnings (unaudited) Three months ended March 31, (in millions, except per share data) 2025 2024 Net revenues $ 13,343 $ 12,310 Cost of products sold 4,002 4,094 Selling, general and administrative 3,293 3,315 Research and development 2,067 1,939 Acquired IPR&D and milestones 248 164 Total operating costs and expenses 9,610 9,512 Operating earnings 3,733 2,798 Interest expense, net 627 453 Net foreign exchange loss 4 4 Other expense, net 1,441 586 Earnings before income tax expense 1,661 1,755 Income tax expense 372 383 Net earnings 1,289 1,372 Net earnings attributable to noncontrolling interest 3 3 Net earnings attributable to AbbVie Inc. $ 1,286 $ 1,369 Per share data Basic earnings per share attributable to AbbVie Inc. $ 0.72 $ 0.77 Diluted earnings per share attributable to AbbVie Inc. $ 0.72 $ 0.77 Weighted-average basic shares outstanding 1,768 1,769 Weighted-average diluted shares outstanding 1,772 1,773 The accompanying notes are an integral part of these condensed consolidated financial statements. 2025 Form 10-Q | 1 AbbVie Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (unaudited) Three months ended March 31, (in millions) 2025 2024 Net earnings $ 1,289 $ 1,372 Foreign currency translation adjustments, net of tax expense (benefit) of $ 17 for the three months ended March 31, 2025 and $( 20 ) for the three months ended March 31, 2024 487 ( 396 ) Net investment hedging activities, net of tax expense (benefit) of $( 77 ) for the three months ended March 31, 2025 and $ 57 for the three months ended March 31, 2024 ( 283 ) 207 Pension and post-employment benefits, net of tax expense (benefit) of $ 0 for the three months ended March 31, 2025 and $ 1 for the three months ended March 31, 2024 ( 2 ) 10 Cash flow hedging activities, net of tax expense (benefit) of $( 4 ) for the three months ended March 31, 2025 and $ 7 for the three months ended March 31, 2024 ( 19 ) 30 Other comprehensive income (loss) 183 ( 149 ) Comprehensive income 1,472 1,223 Comprehensive income attributable to noncontrolling interest 3 3 Comprehensive income attributable to AbbVie Inc. $ 1,469 $ 1,220 The accompanying notes are an integral part of these condensed consolidated financial statements. 2025 Form 10-Q | 2 AbbVie Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in millions, except share data) March 31, 2025 December 31, 2024 (unaudited) Assets Current assets Cash and equivalents $ 5,175 $ 5,524 Short-term investments 1 31 Accounts receivable, net 12,477 10,919 Inventories 4,526 4,181 Prepaid expenses and other 5,496 4,927 Total current assets 27,675 25,582 Investments 287 279 Property and equipment, net 5,237 5,134 Intangible assets, net 58,489 60,068 Goodwill 35,285 34,956 Other assets 9,192 9,142 Total assets $ 136,165 $ 135,161 Liabilities and Equity Current liabilities Short-term borrowings $ 1,593 $ — Current portion of long-term debt and finance lease obligations 3,769 6,804 Accounts payable and accrued liabilities 31,041 31,945 Total current liabilities 36,403 38,749 Long-term debt and finance lease obligations 64,527 60,340 Deferred income taxes 2,582 2,579 Other long-term liabilities 31,191 30,129 Commitments and contingencies Stockholders' equity Common stock, $ 0.01 par value, 4,000,000,000 shares authorized, 1,837,071,074 shares issued as of March 31, 2025 and 1,831,594,494 as of December 31, 2024 18 18 Common stock held in treasury, at cost, 70,782,695 shares as of March 31, 2025 and 66,337,508 as of December 31, 2024 ( 9,137 ) ( 8,201 ) Additional paid-in capital 21,808 21,333 Accumulated deficit ( 9,527 ) ( 7,900 ) Accumulated other comprehensive loss ( 1,742 ) ( 1,925 ) Total stockholders' equity 1,420 3,325 Noncontrolling interest 42 39 Total equity 1,462 3,364 Total liabilities and equity $ 136,165 $ 135,161 The accompanying notes are an integral part of these condensed consolidated financial statements. 2025 Form 10-Q | 3 AbbVie Inc. and Subsidiaries Condensed Consolidated Statements of Equity (unaudited) (in millions) Common shares outstanding Common stock Treasury stock Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Noncontrolling interest Total 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. — — — — 1,369 — — 1,369 Other comprehensive loss, net of tax — — — — — ( 149 ) — ( 149 ) Dividends declared — — — — ( 2,753 ) — — ( 2,753 ) Purchases of treasury stock ( 7 ) — ( 1,324 ) — — — — ( 1,324 ) Stock-based compensation plans and other 7 — 28 476 — — — 504 Change in noncontrolling interest — — — — — — 3 3 Balance at March 31, 2024 1,766 $ 18 $ ( 7,829 ) $ 20,656 $ ( 2,384 ) $ ( 2,454 ) $ 40 $ 8,047 Balance at December 31, 2024 1,765 $ 18 $ ( 8,201 ) $ 21,333 $ ( 7,900 ) $ ( 1,925 ) $ 39 $ 3,364 Net earnings attributable to AbbVie Inc. — — — — 1,286 — — 1,286 Other comprehensive income, net of tax — — — — — 183 — 183 Dividends declared — — — — ( 2,913 ) — — ( 2,913 ) Purchases of treasury stock ( 5 ) — ( 963 ) — — — — ( 963 ) Stock-based compensation plans and other 6 — 27 475 — — — 502 Change in noncontrolling interest — — — — — — 3 3 Balance at March 31, 2025 1,766 $ 18 $ ( 9,137 ) $ 21,808 $ ( 9,527 ) $ ( 1,742 ) $ 42 $ 1,462 The accompanying notes are an integral part of these condensed consolidated financial statements. 2025 Form 10-Q | 4 AbbVie Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (unaudited) Three months ended March 31, (in millions) (brackets denote cash outflows) 2025 2024 Cash flows from operating activities Net earnings $ 1,289 $ 1,372 Adjustments to reconcile net earnings to net cash from operating activities: Depreciation 181 183 Amortization of intangible assets 1,858 1,891 Deferred income taxes ( 28 ) ( 389 ) Change in fair value of contingent consideration liabilities 1,518 660 Payments of contingent consideration liabilities ( 549 ) ( 391 ) Stock-based compensation 410 348 Acquired IPR&D and milestones 248 164 Non-cash litigation reserve adjustments, net of cash payments ( 729 ) ( 12 ) Other, net 17 ( 33 ) Changes in operating assets and liabilities, net of acquisitions: Accounts receivable ( 1,479 ) ( 702 ) Inventories ( 155 ) ( 75 ) Prepaid expenses and other assets ( 628 ) 284 Accounts payable and other liabilities ( 696 ) 362 Income tax assets and liabilities, net 378 378 Cash flows from operating activities 1,635 4,040 Cash flows from investing activities Acquisitions of businesses, net of cash acquired ( 204 ) ( 9,199 ) Other acquisitions and investments ( 334 ) ( 190 ) Acquisitions of property and equipment ( 235 ) ( 193 ) Purchases of investment securities ( 10 ) ( 6 ) Sales and maturities of investment securities 32 6 Other, net 16 ( 6 ) Cash flows from investing activities ( 735 ) ( 9,588 ) Cash flows from financing activities Net change in commercial paper borrowings 1,593 — Proceeds from issuance of other short-term borrowings — 5,008 Repayments of other short-term borrowings — ( 5,005 ) Proceeds from issuance of long-term debt 3,994 14,963 Repayments of long-term debt and finance lease obligations ( 3,026 ) ( 103 ) Debt issuance costs ( 20 ) ( 99 ) Dividends paid ( 2,925 ) ( 2,772 ) Purchases of treasury stock ( 961 ) ( 1,324 ) Proceeds from the exercise of stock options 56 127 Other, net 31 24 Cash flows from financing activities ( 1,258 ) 10,819 Effect of exchange rate changes on cash and equivalents 9 ( 18 ) Net change in cash and equivalents ( 349 ) 5,253 Cash and equivalents, beginning of period 5,524 12,814 Cash and equivalents, end of period $ 5,175 $ 18,067 The accompanying notes are an integral part of these condensed consolidated financial statements. 2025 Form 10-Q | 5 AbbVie Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) Note 1 Basis of Presentation Basis of Historical Presentation The unaudited interim condensed consolidated financial statements of AbbVie Inc. (AbbVie or the company) have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the company’s audited consolidated financial statements and notes included in the company’s Annual Report on Form 10-K for the year ended December 31, 2024. It is management’s opinion that these financial statements include all normal and recurring adjustments necessary for a fair presentation of the company’s financial position and operating results. Net revenues and net earnings for any interim period are not necessarily indicative of future or annual results. Certain other reclassifications were made to conform the prior period interim condensed consolidated financial statements to the current period presentation. Recent Accounting Pronouncements Recent Accounting Pronouncements Not Yet Adopted ASU No. 2024-03 In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40 ). The standard requires further disaggregation of relevant expense captions in a separate note to the financial statements. The standard is effective for AbbVie starting in annual periods in 2027 and interim periods beginning in 2028, with early adoption permitted. AbbVie is currently assessing the impact of adopting this guidance on its consolidated financial statements. ASU No. 2023-09 In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) . The standard requires disaggregation of the effective rate reconciliation into standard categories, enhances disclosure of income taxes paid, and modifies other income tax-related disclosures. The standard is effective for AbbVie starting in annual periods in 2025. AbbVie is currently assessing the impact of adopting this guidance on its consolidated financial statements. Note 2 Supplemental Financial Information Interest Expense, Net Three months ended March 31, (in millions) 2025 2024 Interest expense $ 700 $ 660 Interest income ( 73 ) ( 207 ) Interest expense, net $ 627 $ 453 Inventories (in millions) March 31, 2025 December 31, 2024 Finished goods $ 1,441 $ 1,173 Work-in-process 1,974 1,951 Raw materials 1,111 1,057 Inventories $ 4,526 $ 4,181 2025 Form 10-Q | 6 Property and Equipment, Net (in millions) March 31, 2025 December 31, 2024 Property and equipment, gross $ 12,571 $ 12,267 Accumulated depreciation ( 7,334 ) ( 7,133 ) Property and equipment, net $ 5,237 $ 5,134 Depreciation expense was $ 181 million for the three months ended March 31, 2025 and $ 183 million for the three months ended March 31, 2024. Note 3 Earnings Per Share AbbVie grants certain restricted stock units (RSUs) that are considered to be participating securities. Due to the presence of participating securities, AbbVie calculates earnings per share (EPS) using the more dilutive of the treasury stock or the two-class method. For all periods presented, the two-class method was more dilutive. The following table summarizes the impact of the two-class method: Three months ended March 31, (in millions, except per share data) 2025 2024 Basic EPS Net earnings attributable to AbbVie Inc. $ 1,286 $ 1,369 Earnings allocated to participating securities 10 10 Earnings available to common shareholders $ 1,276 $ 1,359 Weighted-average basic shares outstanding 1,768 1,769 Basic earnings per share attributable to AbbVie Inc. $ 0.72 $ 0.77 Diluted EPS Net earnings attributable to AbbVie Inc. $ 1,286 $ 1,369 Earnings allocated to participating securities 10 10 Earnings available to common shareholders $ 1,276 $ 1,359 Weighted-average shares of common stock outstanding 1,768 1,769 Effect of dilutive securities 4 4 Weighted-average diluted shares outstanding 1,772 1,773 Diluted earnings per share attributable to AbbVie Inc. $ 0.72 $ 0.77 Certain shares issuable under stock-based compensation plans were excluded from the computation of EPS because the effect would have been antidilutive. The number of common shares excluded was insignificant for all periods presented. 2025 Form 10-Q | 7 Note 4 Licensing, Acquisitions and Other Arrangements Acquisition of Nimble Therapeutics, Inc. On January 23, 2025, AbbVie completed its acquisition of Nimble Therapeutics, Inc. (Nimble). Nimble is a biotechnology company dedicated to delivering on the promise of oral peptide therapeutics and its lead asset, an investigational oral peptide IL23R inhibitor, is in preclinical development for the treatment of psoriasis. The aggregate purchase price of $ 288 million was comprised of a $ 210 million upfront cash payment and $ 78 million for the acquisition date fair value of contingent consideration liabilities, for which AbbVie may owe up to $ 130 million in future payments upon achievement of certain development milestones. The transaction was accounted for as a business combination using the acquisition method of accounting. As of the acquisition date, AbbVie acquired $ 118 million of intangible assets and resulted in the recognition of $ 170 million of goodwill. 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, including expected synergies related to enhancement of AbbVie’s existing immunology discovery capabilities and development efforts. The goodwill is not deductible for tax purposes. Other assets acquired and liabilities assumed were insignificant. Acquisition of Cerevel Therapeutics Holdings, Inc. On August 1, 2024, AbbVie completed its acquisition of Cerevel Therapeutics Holdings, Inc. (Cerevel Therapeutics). Cerevel Therapeutics is a clinical-stage biotechnology company focused on the discovery and development of differentiated therapies for neuroscience diseases. Cerevel Therapeutics neuroscience pipeline included multiple clinical-stage and preclinical candidates with the potential to treat several diseases including schizophrenia, Parkinson's disease and mood disorders. The total fair value of the consideration transferred to owners of Cerevel Therapeutics common stock was $ 8.7 billion ($ 8.3 billion, net of cash acquired). The acquisition of Cerevel Therapeutics was accounted for as a business combination using the acquisition method of accounting and the valuation of assets acquired and liabilities assumed was finalized during the three months ended March 31, 2025. Acquisition of ImmunoGen, Inc. On February 12, 2024, AbbVie completed its acquisition of ImmunoGen, Inc. (ImmunoGen). ImmunoGen is a commercial-stage biotechnology company focused on the discovery, development and commercialization of antibody-drug conjugates (ADC) for cancer patients. ImmunoGen's oncology portfolio included its flagship cancer therapy Elahere, a first-in-class ADC approved for platinum-resistant ovarian cancer, and a pipeline of promising next-generation ADC's targeting hematologic malignancies and solid tumors. The total fair value of the consideration transferred to owners of ImmunoGen common stock was $ 9.8 billion ($ 9.2 billion, net of cash acquired). The acquisition of ImmunoGen was accounted for as a business combination using the acquisition method of accounting and the valuation of assets acquired and liabilities assumed was finalized during the three months ended December 31, 2024. Other Licensing & Acquisitions Activity Cash outflows related to other acquisitions and investments totaled $ 334 million for the three months ended March 31, 2025 and $ 190 million for the three months ended March 31, 2024. The following table summarizes acquired IPR&D and milestones expense: Three months ended March 31, (in millions) 2025 2024 Upfront charges $ 246 $ 79 Development milestones 2 85 Acquired IPR&D and milestones $ 248 $ 164 2025 Form 10-Q | 8 Gubra A/S Subsequent to March 31, 2025, AbbVie completed its previously announced licensing agreement with Gubra A/S. Under the terms of the agreement, AbbVie will receive an exclusive global license to develop and commercialize GUB014295 (ABBV-295), a long-acting amylin analog for the treatment of obesity. AbbVie made an upfront payment of $ 350 million which will be recorded in acquired IPR&D and milestones expense in the condensed consolidated statement of earnings in the second quarter of 2025. AbbVie could make additional payments of up to $ 1.9 billion upon achievement of certain development, regulatory and commercial milestones and pay tiered royalties. 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, 2025 and 2024. Collaboration with Janssen Biotech, Inc. In December 2011, Pharmacyclics, a wholly-owned subsidiary of AbbVie, entered into a worldwide collaboration and license agreement with Janssen Biotech, Inc. and its affiliates (Janssen), one of the Janssen Pharmaceutical companies of Johnson & Johnson, for the joint development and commercialization of Imbruvica, a novel, orally active, selective covalent inhibitor of Bruton’s tyrosine kinase and certain compounds structurally related to Imbruvica, for oncology and other indications, excluding all immune and inflammatory mediated diseases or conditions and all psychiatric or psychological diseases or conditions, in the United States and outside the United States. The collaboration provides Janssen with an exclusive license to commercialize Imbruvica outside of the United States and co-exclusively with AbbVie in the United States. Both parties are responsible for the development, manufacturing and marketing of any products generated as a result of the collaboration. The collaboration has no set duration or specific expiration date and provides for potential future development, regulatory and approval milestone payments of up to $ 200 million to AbbVie. The collaboration also includes a cost sharing arrangement for associated collaboration activities. Except in certain cases, Janssen is responsible for approximately 60 % of collaboration development costs and AbbVie is responsible for the remaining 40 % of collaboration development costs. In the United States, both parties have co-exclusive rights to commercialize the products; however, AbbVie is the principal in the end-customer product sales. AbbVie and Janssen share pre-tax profits and losses equally from the commercialization of products. Sales of Imbruvica are included in AbbVie's net revenues. Janssen's share of profits is included in AbbVie's cost of products sold. Other costs incurred under the collaboration are reported in their respective expense line items, net of Janssen's share. Outside the United States, Janssen is responsible for and has exclusive rights to commercialize Imbruvica. AbbVie and Janssen share pre-tax profits and losses equally from the commercialization of products. AbbVie's share of profits is included in AbbVie's net revenues. Other costs incurred under the collaboration are reported in their respective expense line items, net of Janssen's share. The following table shows the profit and cost sharing relationship between Janssen and AbbVie: Three months ended March 31, (in millions) 2025 2024 United States - Janssen's share of profits (included in cost of products sold) $ 247 $ 283 International - AbbVie's share of profits (included in net revenues) 209 228 Global - AbbVie's share of other costs (included in respective line items) 25 42 AbbVie’s receivable from Janssen, included in accounts receivable, net, was $ 235 million at March 31, 2025 and $ 237 million at December 31, 2024. AbbVie’s payable to Janssen, included in accounts payable and accrued liabilities, was $ 245 million at March 31, 2025 and $ 282 million at December 31, 2024. Collaboration with Genentech, Inc. AbbVie and Genentech, Inc. (Genentech), a member of the Roche Group, are parties to a collaboration and license agreement executed in 2007 to jointly research, develop and commercialize human therapeutic products containing BCL-2 inhibitors and certain other compound inhibitors which includes Venclexta, a BCL-2 inhibitor used to treat certain hematological malignancies. AbbVie 2025 Form 10-Q | 9 shares equally with Genentech all pre-tax profits and losses from the development and commercialization of Venclexta in the United States. AbbVie pays royalties on Venclexta net revenues outside the United States. AbbVie manufactures and distributes Venclexta globally and is the principal in the end-customer product sales. Sales of Venclexta are included in AbbVie’s net revenues. Genentech’s share of United States profits is included in AbbVie’s cost of products sold. AbbVie records sales and marketing costs associated with the United States collaboration as part of selling, general and administrative (SG&A) expenses and global development costs as part of research and development (R&D) expenses, net of Genentech’s share. Royalties paid for Venclexta revenues outside the United States are also included in AbbVie’s cost of products sold. The following table shows the profit and cost sharing relationship between Genentech and AbbVie: Three months ended March 31, (in millions) 2025 2024 Genentech's share of profits, including royalties (included in cost of products sold) $ 242 $ 227 AbbVie's share of sales and marketing costs from U.S. collaboration (included in SG&A) 10 9 AbbVie's share of development costs (included in R&D) 17 19 Note 6 Goodwill and Intangible Assets Goodwill The following table summarizes the changes in the carrying amount of goodwill: (in millions) Balance as of December 31, 2024 $ 34,956 Additions (a) 170 Foreign currency translation adjustments 159 Balance as of March 31, 2025 $ 35,285 (a) Goodwill additions related to the acquisition of Nimble (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, 2025, there were no accumulated goodwill impairment losses. Intangible Assets, Net The following table summarizes intangible assets: March 31, 2025 December 31, 2024 (in millions) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Definite-lived intangible assets Developed product rights $ 81,638 $ ( 29,981 ) $ 51,657 $ 81,428 $ ( 28,253 ) $ 53,175 License agreements 8,352 ( 6,811 ) 1,541 8,315 ( 6,624 ) 1,691 Total definite-lived intangible assets 89,990 ( 36,792 ) 53,198 89,743 ( 34,877 ) 54,866 Indefinite-lived intangible assets 5,291 — 5,291 5,202 — 5,202 Total intangible assets, net $ 95,281 $ ( 36,792 ) $ 58,489 $ 94,945 $ ( 34,877 ) $ 60,068 Definite-Lived Intangible Assets Amortization expense was $ 1.9 billion for the three months ended March 31, 2025 and 2024. Amortization expense was included in cost of products sold in the condensed consolidated statements of earnings. 2025 Form 10-Q | 10 Indefinite-Lived Intangible Assets Indefinite-lived intangible assets represent acquired IPR&D associated with products that have not yet received regulatory approval. The company performs its annual impairment assessment of indefinite-lived intangible assets in the third quarter, or earlier if impairment indicators exist. Note 7 Restructuring Plans AbbVie continuously evaluates its operations to identify opportunities to optimize its manufacturing and R&D operations, commercial infrastructure and administrative costs and to respond to changes in its business environment. As a result, AbbVie management periodically approves individual restructuring plans to achieve these objectives. As of March 31, 2025 and 2024, no such plans were individually significant. Restructuring charges were $ 17 million for the three months ended March 31, 2025 and $ 15 million for the three months ended March 31, 2024. 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, 2025: (in millions) Accrued balance as of December 31, 2024 $ 236 Restructuring charges 12 Payments and other adjustments ( 18 ) Accrued balance as of March 31, 2025 $ 230 Note 8 Financial Instruments and Fair Value Measures Risk Management Policy See Note 11 to the company’s Annual Report on Form 10-K for the year ended December 31, 2024 for a summary of AbbVie’s risk management policy and use of derivative instruments. Financial Instruments 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 $ 1.7 billion at March 31, 2025 and $ 1.9 billion at December 31, 2024, 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, 2025 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. 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. These contracts are not designated as hedges and are recorded at fair value. Resulting gains or losses are reflected in net foreign exchange 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 $ 6.6 billion at March 31, 2025 and $ 5.9 billion at December 31, 2024. 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 € 3.1 billion at March 31, 2025 and December 31, 2024. In addition, the company had foreign currency forward exchange contracts designated as net investment hedges with notional amounts totaling € 6.5 billion, SEK 1.9 billion, CAD 500 million and CHF 80 million at March 31, 2025 and € 6.2 billion, SEK 1.4 billion, CAD 500 million and CHF 50 million at December 31, 2024. 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. 2025 Form 10-Q | 11 The company is a party to interest rate swap contracts designated as fair value hedges with notional amounts totaling $ 3.5 billion at March 31, 2025 and December 31, 2024. The effect of the hedge contracts is to change a fixed-rate interest obligation to a floating rate for that portion of the debt. AbbVie records the contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting amount. No amounts are excluded from the assessment of effectiveness for cash flow hedges or fair value hedges. The following table summarizes the amounts and location of AbbVie’s derivative instruments on the condensed consolidated balance sheets: Fair value – Derivatives in asset position Fair value – Derivatives in liability position (in millions) Balance sheet caption March 31, 2025 December 31, 2024 Balance sheet caption March 31, 2025 December 31, 2024 Foreign currency forward exchange contracts Designated as cash flow hedges Prepaid expenses and other $ 48 $ 119 Accounts payable and accrued liabilities $ 1 $ 5 Designated as cash flow hedges Other assets 1 — Other long-term liabilities — — Designated as net investment hedges Prepaid expenses and other 2 4 Accounts payable and accrued liabilities 43 — Designated as net investment hedges Other assets 20 148 Other long-term liabilities 35 — Not designated as hedges Prepaid expenses and other 16 42 Accounts payable and accrued liabilities 38 30 Interest rate swap contracts Designated as fair value hedges Other assets 43 — Other long-term liabilities 135 231 Total derivatives $ 130 $ 313 $ 252 $ 266 While certain derivatives are subject to netting arrangements with the company’s counterparties, the company does not offset derivative assets and liabilities within the condensed consolidated balance sheets. The following table presents the pre-tax amounts of gains (losses) from derivative instruments recognized in other comprehensive income (loss): Three months ended March 31, (in millions) 2025 2024 Foreign currency forward exchange contracts Designated as cash flow hedges $ ( 19 ) $ 55 Designated as net investment hedges ( 193 ) 134 Assuming market rates remain constant through contract maturities, the company expects to reclassify pre-tax gains of $ 105 million into cost of products sold for foreign currency cash flow hedges and pre-tax gains of $ 21 million into interest expense, net for other 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 income (loss) pre-tax losses of $ 133 million for the three months ended March 31, 2025 and pre-tax gains of $ 157 million for the three months ended March 31, 2024. 2025 Form 10-Q | 12 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. See Note 10 for the amount of net gains (losses) reclassified out of AOCI. Three months ended March 31, (in millions) Statement of earnings caption 2025 2024 Foreign currency forward exchange contracts Designated as cash flow hedges Cost of products sold $ ( 1 ) $ 12 Designated as net investment hedges Interest expense, net 34 27 Not designated as hedges Net foreign exchange loss ( 29 ) ( 18 ) Interest rate swap contracts Designated as fair value hedges Interest expense, net 55 ( 65 ) Debt designated as hedged item in fair value hedges Interest expense, net ( 55 ) 65 Other Interest expense, net 5 6 Fair Value Measures The fair value hierarchy consists of the following three levels: • Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets that the company has the ability to access; • Level 2 – Valuations based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations in which all significant inputs are observable in the market; and • Level 3 – Valuations using significant inputs that are unobservable in the market and include the use of judgment by the company’s management about the assumptions market participants would use in pricing the asset or liability. The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of March 31, 2025: Basis of fair value measurement (in millions) Total Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets Cash and equivalents $ 5,175 $ 4,834 $ 341 $ — Money market funds and time deposits 10 — 10 — Debt securities 36 — 36 — Equity securities 85 54 31 — Interest rate swap contracts 43 — 43 — Foreign currency contracts 87 — 87 — Total assets $ 5,436 $ 4,888 $ 548 $ — Liabilities Interest rate swap contracts $ 135 $ — $ 135 $ — Foreign currency contracts 117 — 117 — Financing liability 332 — — 332 Contingent consideration 22,713 — — 22,713 Total liabilities $ 23,297 $ — $ 252 $ 23,045 2025 Form 10-Q | 13 The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of December 31, 2024: Basis of fair value measurement (in millions) Total Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets Cash and equivalents $ 5,524 $ 5,179 $ 345 $ — Money market funds and time deposits 10 — 10 — Debt securities 33 — 33 — Equity securities 98 70 28 — Foreign currency contracts 313 — 313 — Total assets $ 5,978 $ 5,249 $ 729 $ — Liabilities Interest rate swap contracts $ 231 $ — $ 231 $ — Foreign currency contracts 35 — 35 — Financing liability 328 — — 328 Contingent consideration 21,666 — — 21,666 Total liabilities $ 22,260 $ — $ 266 $ 21,994 Money market funds and time deposits are valued using relevant observable market inputs including quoted prices for similar assets and interest rate curves. Equity securities primarily consist of investments for which the fair values were determined by using the published market prices per unit multiplied by the number of units held, without consideration of transaction costs. The derivatives entered into by the company were valued using observable market inputs including published interest rate curves and both forward and spot prices for foreign currencies. The financing liability is related to financing arrangements which the company elected to account for in accordance with the fair value option, as permitted under ASC 825 Financial Instruments . The fair value measurement of the financing liability was determined based on significant unobservable inputs. Potential payments are estimated by applying a probability-weighted expected payment model, which are then discounted to present value. Changes to the fair value of the financing liability can result from changes to one or a number of inputs, including discount rates, estimated probabilities and timing of achieving milestones and estimated amounts of future sales. The change in fair value recognized in net earnings is recorded in other expense, net in the condensed consolidated statements of earnings and the change in fair value attributable to instrument-specific credit risk is recognized in other comprehensive income (loss). Changes in fair value recognized in other expense, net and other comprehensive income (loss) for the three months ended March 31, 2025 were insignificant. The fair value measurements of the contingent consideration liabilities were determined based on significant unobservable inputs, including the discount rate, estimated probabilities and timing of achieving specified development, regulatory and commercial milestones and the estimated amount of future sales of the acquired products. The potential contingent consideration payments are estimated by applying a probability-weighted expected payment model for contingent milestone payments and a Monte Carlo simulation model for contingent royalty payments, which are then discounted to present value. Changes to the fair value of the contingent consideration liabilities can result from changes to one or a number of inputs, including discount rates, the probabilities of achieving the milestones, the time required to achieve the milestones and estimated future sales. Significant judgment is employed in determining the appropriateness of certain of these inputs. Changes to the inputs described above could have a material impact on the company's financial position and results of operations in any given period. 2025 Form 10-Q | 14 The fair value of the company's contingent consideration liabilities was calculated using the following significant unobservable inputs: March 31, 2025 December 31, 2024 Range Weighted average (a) Range Weighted average (a) Discount rate 4.2 % - 4.9 % 4.5 % 4.6 % - 5.2 % 4.8 % Probability of payment for royalties by indication 100 % 100 % 100 % 100 % Projected year of payments 2025 - 2034 2029 2025 - 2034 2029 (a) Unobservable inputs were weighted by the relative fair value of the contingent consideration liabilities. 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: Three months ended March 31, (in millions) 2025 2024 Beginning balance $ 21,666 $ 19,890 Additions (a) 78 — Change in fair value recognized in net earnings 1,518 660 Payments ( 549 ) ( 391 ) Ending balance $ 22,713 $ 20,159 (a) Additions during the three months ended March 31, 2025, represent contingent consideration liabilities related to the Nimble acquisition. The change in fair value recognized in net earnings is recorded in other expense, net in the condensed consolidated statements of earnings. 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, 2025 are shown in the table below: Basis of fair value measurement (in millions) Book value Approximate fair value Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Liabilities Short-term borrowings $ 1,593 $ 1,593 $ — $ 1,593 $ — Current portion of long-term debt and finance lease obligations, excluding fair value hedges 3,767 3,765 3,748 17 — Long-term debt and finance lease obligations, excluding fair value hedges and financing liability 64,350 60,904 58,486 2,418 — Total liabilities $ 69,710 $ 66,262 $ 62,234 $ 4,028 $ — 2025 Form 10-Q | 15 The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of December 31, 2024 are shown in the table below: Basis of fair value measurement (in millions) Book value Approximate fair value Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Liabilities Current portion of long-term debt and finance lease obligations, excluding fair value hedges $ 6,797 $ 6,767 $ 6,620 $ 147 $ — Long-term debt and finance lease obligations, excluding fair value hedges and financing liability 60,243 55,836 53,441 2,395 — Total liabilities $ 67,040 $ 62,603 $ 60,061 $ 2,542 $ — AbbVie also holds investments in equity securities that do not have readily determinable fair values. 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 $ 157 million as of March 31, 2025 and $ 169 million as of December 31, 2024. No significant cumulative upward or downward adjustments have been recorded for these investments as of March 31, 2025. Concentrations of Risk Of total net accounts receivable, three U.S. wholesalers accounted for 81 % as of March 31, 2025 and December 31, 2024, and substantially all of AbbVie’s pharmaceutical product net revenues in the United States were to these three wholesalers. Debt and Credit Facilities Issuance and Repayment of Long-Term Debt In February 2025, the company issued $ 4.0 billion aggregate principal amount of unsecured senior notes. The following table summarizes the issued debt: (in millions) Senior Notes 4.65% Senior Notes due 2028 $ 1,250 4.875% Senior Notes due 2030 1,000 5.20% Senior Notes due 2035 1,000 5.60% Senior Notes due 2055 750 Total debt issued $ 4,000 The notes are unsecured, unsubordinated obligations of AbbVie and will rank equally in right of payment with all of AbbVie’s existing and future unsecured, unsubordinated indebtedness, liabilities and other obligations. AbbVie may redeem the fixed-rate senior notes prior to maturity at a redemption price equal to the greater of the principal amount or the sum of present values of the remaining scheduled payments of principal and interest plus a make-whole premium. AbbVie may also redeem the fixed-rate senior notes at par between one and six months prior to maturity. In March 2025, the company repaid $ 3.0 billion aggregate principal of 3.80 % senior notes at maturity. Short-Term Borrowings Short-term borrowings included commercial paper borrowings of $ 1.6 billion as of March 31, 2025 and there were no amounts outstanding as of December 31, 2024. The weighted-average interest rate on commercial paper borrowings was 4.59 % for the three months ended March 31, 2025 and 5.54 % for the three months ended March 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. 2025 Form 10-Q | 16 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 facilities as of March 31, 2025 and December 31, 2024. Financing Related to ImmunoGen and Cerevel Therapeutics Acquisitions 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. AbbVie may redeem the fixed-rate senior notes prior to maturity at a redemption price equal to the greater of the principal amount or the sum of present values of the remaining scheduled payments of principal and interest on the fixed-rate senior notes to be redeemed plus a make-whole premium. AbbVie may also redeem the fixed-rate senior notes at par between one and six months prior to maturity. In connection with the offering, debt issuance costs incurred totaled $ 99 million and debt discounts totaled $ 37 million, which are being amortized over the respective terms of the notes to interest expense, net in the condensed consolidated statements of earnings. AbbVie used the net proceeds received from the issuance of the notes to finance the acquisition of ImmunoGen, repay its term-loan, repay commercial paper borrowings, pay fees and expenses in respect of the foregoing, finance general corporate purposes and, together with cash on hand, fund AbbVie’s acquisition of Cerevel Therapeutics. In December 2023, AbbVie entered into a $ 9.0 billion 364-day bridge credit agreement and $ 5.0 billion 364-day term loan credit agreement. In February 2024, AbbVie borrowed and repaid $ 5.0 billion under the term loan credit agreement. Interest charged on this borrowing was based on Secured Overnight Financing Rate Reference Rate (SOFR) + 0.975 % with an effective interest rate of 6.29 %. Subsequent to the $ 15.0 billion issuance of senior notes, AbbVie terminated both the bridge and term loan credit agreements in the first quarter of 2024. In February 2024, concurrent with the ImmunoGen acquisition, the company assumed and repaid an ImmunoGen senior secured term loan at a fair value of $ 99 million. Note 9 Post-Employment Benefits The following table summarizes net periodic benefit cost relating to the company’s defined benefit and other post-employment plans: Defined benefit plans Other post- employment plans Three months ended March 31, Three months ended March 31, (in millions) 2025 2024 2025 2024 Service cost $ 63 $ 72 $ 10 $ 11 Interest cost 117 113 11 10 Expected return on plan assets ( 206 ) ( 197 ) — — Amortization of prior service credit — — ( 9 ) ( 9 ) Amortization of actuarial loss 6 13 2 4 Net periodic benefit cost (credit) $ ( 20 ) $ 1 $ 14 $ 16 The components of net periodic benefit cost other than service cost are included in other expense, net in the condensed consolidated statements of earnings. 2025 Form 10-Q | 17 Note 10 Equity Stock-Based Compensation Stock-based compensation expense is principally related to awards issued pursuant to the AbbVie 2013 Incentive Stock Program and the AbbVie Amended and Restated 2013 Incentive Stock Program and is summarized as follows: Three months ended March 31, (in millions) 2025 2024 Cost of products sold $ 22 $ 22 Research and development 160 133 Selling, general and administrative 228 193 Pre-tax compensation expense 410 348 Tax benefit 70 60 After-tax compensation expense $ 340 $ 288 In addition to stock-based compensation expense included in the table above and in connection with the acquisition of ImmunoGen, AbbVie incurred cash-settled, post-closing expense for ImmunoGen employee incentive awards, which is summarized in the table below: (in millions) Three months ended March 31, 2024 Cost of products sold $ 31 Research and development 126 Selling, general and administrative 192 Total post-closing cash settled expense $ 349 Stock Options During the three months ended March 31, 2025, 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 $ 38.39 . As of March 31, 2025, $ 12 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, 2025, primarily in connection with the company's annual grant, AbbVie granted 4.7 million RSUs and performance shares with a weighted-average grant-date fair value of $ 193.46 . As of March 31, 2025, $ 1.1 billion of unrecognized compensation cost related to RSUs and performance shares is expected to be recognized as expense over approximately the next two years . Cash Dividends The following table summarizes quarterly cash dividends declared during 2025 and 2024: 2025 2024 Date Declared Payment Date Dividend Per Share Date Declared Payment Date Dividend Per Share 02/13/25 05/15/25 $ 1.64 10/30/24 02/14/25 $ 1.64 09/06/24 11/15/24 $ 1.55 06/21/24 08/15/24 $ 1.55 02/15/24 05/15/24 $ 1.55 Stock Repurchase Program The company's stock repurchase authorization permits purchases of AbbVie shares from time to time in open-market or private transactions at management's discretion. The program has no time limit and can be discontinued at any time. Shares repurchased under this program are recorded at acquisition cost, including related expenses, and are available for general corporate purposes. 2025 Form 10-Q | 18 On February 16, 2023, AbbVie’s board of directors authorized a $ 5.0 billion increase to the existing stock repurchase authorization. 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. AbbVie's remaining stock repurchase authorization was approximately $ 2.9 billion as of March 31, 2025. 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, 2025: (in millions) Foreign currency translation adjustments Net investment hedging activities Pension and post-employment benefits Cash flow hedging activities Total Balance as of December 31, 2024 $ ( 2,114 ) $ 549 $ ( 664 ) $ 304 $ ( 1,925 ) Other comprehensive income (loss) before reclassifications 487 ( 256 ) ( 1 ) ( 17 ) 213 Net gains reclassified from accumulated other comprehensive loss — ( 27 ) ( 1 ) ( 2 ) ( 30 ) Net current-period other comprehensive income (loss) 487 ( 283 ) ( 2 ) ( 19 ) 183 Balance as of March 31, 2025 $ ( 1,627 ) $ 266 $ ( 666 ) $ 285 $ ( 1,742 ) Other comprehensive income for the three months ended March 31, 2025 included foreign currency translation adjustments totaling a gain of $ 487 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 $ 283 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, 2024: (in millions) Foreign currency translation adjustments Net investment hedging activities Pension and post-employment benefits Cash flow hedging activities Total Balance as of December 31, 2023 $ ( 1,106 ) $ 65 $ ( 1,488 ) $ 224 $ ( 2,305 ) Other comprehensive income (loss) before reclassifications ( 396 ) 228 3 44 ( 121 ) Net losses (gains) reclassified from accumulated other comprehensive loss — ( 21 ) 7 ( 14 ) ( 28 ) Net current-period other comprehensive income (loss) ( 396 ) 207 10 30 ( 149 ) Balance as of 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. 2025 Form 10-Q | 19 The following table presents the impact on AbbVie’s condensed consolidated statements of earnings for significant amounts reclassified out of each component of accumulated other comprehensive loss: Three months ended March 31, (in millions) (brackets denote gains) 2025 2024 Net investment hedging activities Gains on derivative amount excluded from effectiveness testing (a) $ ( 34 ) $ ( 27 ) Tax expense 7 6 Total reclassifications, net of tax $ ( 27 ) $ ( 21 ) Pension and post-employment benefits Amortization of actuarial losses (gains) and other (b) $ ( 1 ) $ 8 Tax benefit — ( 1 ) Total reclassifications, net of tax $ ( 1 ) $ 7 Cash flow hedging activities Losses (gains) on foreign currency forward exchange contracts (c) $ 1 $ ( 12 ) Other (a) ( 5 ) ( 6 ) Tax expense 2 4 Total reclassifications, net of tax $ ( 2 ) $ ( 14 ) (a) Amounts are included in interest expense, net (see Note 8) . (b) Amounts are included in the computation of net periodic benefit cost (see Note 9). (c) Amounts are included in cost of products sold (see Note 8). Note 11 Income Taxes 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. Note 12 Legal Proceedings and Contingencies AbbVie is subject to contingencies, such as various claims, legal proceedings and investigations regarding product liability, intellectual property, commercial, securities and other matters that arise in the normal course of business. Loss contingency provisions are recorded for probable losses at management’s best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount within a probable range is recorded. The recorded accrual balance for litigation was approximately $ 1.8 billion as of March 31, 2025 and $ 2.5 billion as of December 31, 2024. For litigation matters discussed below for which a loss is probable or reasonably possible, the company is unable to estimate the possible loss or range of loss, if any, beyond the amounts accrued. Initiation of new legal proceedings or a change in the status of existing proceedings may result in a change in the estimated loss accrued by AbbVie. While it is not feasible to predict the outcome of all proceedings and exposures with certainty, management believes that their ultimate disposition should not have a material adverse effect on AbbVie’s consolidated financial position, results of operations or cash flows. 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. Antitrust Litigation Lawsuits are pending against AbbVie and others generally alleging that the 2005 patent litigation settlement involving Niaspan entered into between Kos Pharmaceuticals, Inc. (a company acquired by Abbott in 2006 and presently a subsidiary of AbbVie) and a 2025 Form 10-Q | 20 generic company violated federal and state antitrust laws and state unfair and deceptive trade practices and unjust enrichment laws. Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys' fees. 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 federal multi-district litigation (MDL) Rules as In re: Niaspan Antitrust Litigation, MDL No. 2460. In October 2016, the Orange County, California District Attorney’s Office filed a lawsuit on behalf of the State of California regarding the Niaspan patent litigation settlement in Orange County Superior Court, asserting a claim under the unfair competition provision of the California Business and Professions Code seeking injunctive relief, restitution, civil penalties and attorneys’ fees. In November 2022, the State of Oregon filed a lawsuit in the Multnomah County, Oregon Circuit Court, alleging that 2011 patent litigation by Abbott with a generic company regarding AndroGel was sham litigation and the settlement of that litigation violated state antitrust law. Oregon also brought a claim under the Oregon False Claims Act, which the court dismissed on October 31, 2024. In March 2025, the court approved the parties’ settlement of this matter. Government Proceedings Lawsuits are pending against Allergan and several other manufacturers generally alleging that they improperly promoted and sold prescription opioid products. Approximately 430 lawsuits are pending against Allergan in federal and state courts. Most of the federal court lawsuits are consolidated for pre-trial purposes in the United States District Court for the Northern District of Ohio under the MDL rules as In re: National Prescription Opiate Litigation, MDL No. 2804. Approximately 30 of the lawsuits are pending in various state courts. 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 430 lawsuits, approximately 25 of them are brought by states, counties, cities, and other municipal entities, approximately 5 of which are in the process of being dismissed pursuant to the previously announced settlement. Another approximately 45 of the approximately 430 lawsuits are in the process of being dismissed pursuant to class settlement between Allergan and a class of acute care hospitals, which received final court approval in March 2025. In March 2023, AbbVie Inc. filed a petition in the United States Tax Court, AbbVie Inc. and Subsidiaries v. Commissioner of Internal Revenue. The petition disputes the Internal Revenue Service determination concerning a $ 572 million income tax benefit recorded in 2014 related to a payment made to a third party for the termination of a proposed business combination. Shareholder and Securities Litigation In October 2018, a federal securities lawsuit, Holwill v. AbbVie Inc., et al., was filed in the United States District Court for the Northern District of Illinois against AbbVie, its former chief executive officer and former chief financial officer, alleging that reasons stated for Humira sales growth in financial filings between 2013 and 2018 were misleading because they omitted alleged misconduct in connection with Humira patient and reimbursement support services and other services and items of value that allegedly induced Humira prescriptions. In September 2021, the court granted plaintiffs' motion to certify a class. Product Liability and General Litigation In April 2023, a putative class action lawsuit, Camargo v. AbbVie Inc., was filed in the United States District Court for the Northern District of Illinois on behalf of Humira patients who paid for Humira based on its list price or who, after losing insurance coverage, discontinued Humira because they could not pay based on its list price, alleging that Humira’s list price is excessive in violation of multiple states’ unfair and deceptive trade practices statutes. The plaintiff generally seeks monetary damages, injunctive relief, and attorneys’ fees. In 2018, a qui tam lawsuit, U.S. ex rel. Silbersher v. Allergan Inc., et al., was filed in the United States District Court for the Northern District of California against several Allergan entities and others, alleging that their conduct before the U.S. Patent Office resulted in false claims for payment being made to federal and state healthcare payors for Namenda XR and Namzaric. The plaintiff-relator sought damages and attorneys' fees under the federal False Claims Act and state law analogues. The federal government and state governments declined to intervene in the lawsuit. In March 2023, the court granted Allergan’s motion to dismiss, dismissing plaintiff-relator’s federal law claims with prejudice and state law claims without prejudice. In January 2025, the United States Court of Appeals for the Ninth Circuit affirmed that dismissal. 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 145 ALCL lawsuits and 1,260 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 2025 Form 10-Q | 21 Product Liability Litigation, MDL No. 2921. Approximately 75 ALCL lawsuits and 475 other lawsuits are pending in various state courts. Approximately 60 ALCL and 1,000 other lawsuits are pending in other countries. Plaintiffs generally seek monetary damages, medical monitoring, and attorneys’ fees. In January 2025, a putative class action lawsuit, Sheet Metal Workers’ Health Plan of Southern California, Arizona, and Nevada v. AbbVie Inc., was filed in the United States District Court for the Northern District of Illinois on behalf of third-party payors of Humira, alleging that AbbVie’s rebating practices are impairing biosimilar competition with Humira in violation of federal and state antitrust laws. The plaintiff generally seeks monetary damages, injunctive relief and attorneys' fees. Intellectual Property Litigation AbbVie Inc. is seeking to enforce patent rights relating to upadacitinib (a drug sold under the trademark Rinvoq). Litigation was filed in the United States District Court for the District of Delaware in November 2023 against Hetero USA, Inc., Hetero Labs Limited, Hetero Labs Limited Unit-V, Aurobindo Pharma USA, Inc., Aurobindo Pharma Ltd., Sandoz, Inc., Sandoz Private Limited, Sandoz GMBH, and Sun Pharmaceutical Industries, Ltd. AbbVie alleges defendants’ proposed generic upadacitinib products infringe certain patents and seeks declaratory and injunctive relief. AbbVie Inc. is seeking to enforce patent rights related to ubrogepant (a drug sold under the trademark Ubrelvy). Litigation was filed in the United States District Court for the District of New Jersey in March 2024 against Aurobindo Pharma U.S.A., Inc., Aurobindo Pharma Limited, and Apitoria Pharma Private Limited; Zydus Pharmaceuticals (USA) Inc. and Zydus Lifesciences Limited; MSN Pharmaceuticals Inc., MSN Laboratories Private Limited, and MSN Life Sciences Private Limited; and Hetero USA Inc., Hetero Labs Limited Unit-III, and Hetero Labs Limited. AbbVie alleges defendants’ proposed generic ubrogepant products infringe certain patents and seeks declaratory and injunctive relief. Merck Sharp & Dohme LLC, which exclusively licenses certain patents to AbbVie, is a co-plaintiff in the litigation. 2025 Form 10-Q | 22 Note 13 Segment Information AbbVie operates as a single global business segment dedicated to the research and development, manufacturing, commercialization and sale of innovative medicines and therapies. This operating structure enables the Chief Executive Officer, as chief operating decision maker (CODM), to allocate resources and assess business performance on a global basis in order to achieve established long-term strategic goals. Consistent with this structure, a global research and development and supply chain organization is responsible for the discovery, manufacturing and supply of products. Commercial efforts that coordinate the marketing, sales and distribution of these products are organized by geographic region or therapeutic area. All of these activities are supported by a global corporate administrative staff. The determination of a single business segment is consistent with the consolidated financial information regularly reviewed by the CODM for purposes of assessing performance, allocating resources and planning and forecasting future periods. The CODM regularly reviews net revenues, net earnings and significant segment expenses and uses net earnings as its principal measure of segment profit or loss. Net earnings and significant segment expenses reviewed by CODM are reported on the condensed consolidated statements of earnings for the periods ended March 31, 2025 and 2024. The CODM uses net earnings as its principal measure of segment profit or loss to compare past financial performance with current performance and analyze underlying business performance and trends. The CODM does not use segment assets to make decisions regarding resources; therefore, the total asset disclosure has not been included. The following table details AbbVie’s worldwide net revenues: Three months ended March 31, (in millions) 2025 2024 Immunology Skyrizi United States $ 2,919 $ 1,656 International 506 352 Total $ 3,425 $ 2,008 Rinvoq United States $ 1,220 $ 725 International 498 368 Total $ 1,718 $ 1,093 Humira United States $ 744 $ 1,771 International 377 499 Total $ 1,121 $ 2,270 Neuroscience Vraylar United States $ 763 $ 692 International 2 2 Total $ 765 $ 694 Botox Therapeutic United States $ 723 $ 611 International 143 137 Total $ 866 $ 748 Ubrelvy United States $ 233 $ 197 International 7 6 Total $ 240 $ 203 Qulipta United States $ 172 $ 128 International 21 3 Total $ 193 $ 131 Vyalev United States $ 6 $ — International 57 9 Total $ 63 $ 9 Duodopa United States $ 20 $ 25 International 76 90 Total $ 96 $ 115 Other Neuroscience United States $ 55 $ 61 International 4 4 Total $ 59 $ 65 2025 Form 10-Q | 23 Three months ended March 31, (in millions) 2025 2024 Oncology Imbruvica United States $ 529 $ 610 Collaboration revenues 209 228 Total $ 738 $ 838 Venclexta United States $ 312 $ 281 International 353 333 Total $ 665 $ 614 Elahere United States $ 165 $ 64 International 14 — Total $ 179 $ 64 Epkinly Collaboration revenues $ 36 $ 22 International 15 5 Total $ 51 $ 27 Aesthetics Botox Cosmetic United States $ 295 $ 389 International 261 244 Total $ 556 $ 633 Juvederm Collection United States $ 75 $ 106 International 156 191 Total $ 231 $ 297 Other Aesthetics United States $ 270 $ 281 International 45 38 Total $ 315 $ 319 Eye Care Ozurdex United States $ 30 $ 34 International 93 97 Total $ 123 $ 131 Lumigan/Ganfort United States $ 48 $ 29 International 58 62 Total $ 106 $ 91 Alphagan/Combigan United States $ 26 $ 15 International 34 44 Total $ 60 $ 59 Other Eye Care United States $ 117 $ 149 International 100 108 Total $ 217 $ 257 Other Key Products Mavyret United States $ 142 $ 144 International 164 205 Total $ 306 $ 349 Creon United States $ 355 $ 285 Linzess/Constella United States $ 139 $ 257 International 9 9 Total $ 148 $ 266 All other $ 747 $ 744 Total net revenues $ 13,343 $ 12,310 See the following for additional information about certain income and expenses included in net earnings: intangible assets amortization expense (Note 6), change in fair value of contingent consideration (Note 8), interest income and expense (Note 2), depreciation expense (Note 2), litigation matters (Note 12), income tax expense (Note 11) and restructuring expense (Note 7). 2025 Form 10-Q | 24