by Jin Wu
AbbVie Inc. (NYSE: ABBV), the Illinois-based biopharmaceutical company separated from Abbott Laboratories in 2013, reported lower profits in both the fourth quarter and the full year due to foreign currency volatility and expenses of the terminated acquisition of Shire Plc., a specialty biopharmaceutical company headquartered in Ireland. The stock dropped 4.3 percent.
For the quarter ended December 31, AbbVie swung to a loss of $810 million, or 51 cents per diluted share, from earnings of $1.13 billion, or 70 cents per diluted share, in the year-earlier quarter. The diluted EPS missed the negative 44 cents consensus estimate.
However, based on AbbVie’s adjusted measurement, which excluded intangible asset amortization expense and other specified items primarily related to the terminated Shire transaction, the company earned $1.45 billion, or 89 cents per diluted share, up 9.02 percent from $1.33 billion, or 82 cents per diluted share, in the year-earlier quarter, topping the consensus estimate of 86 cents adjusted EPS.
In the fourth quarter, revenues increased 6.7 percent to $5.45 billion from $5.11 billion.
For the 2014 fiscal year, AbbVie’s net income dropped 57.03 percent to $1.78 billion from $4.13 billion. Earnings per diluted share decreased to $1.10 from $2.56, missing the consensus estimate of $1.16 per diluted share. Adjusted diluted EPS increased to $3.32 from $3.14, topping the consensus estimate of $3.29.
Full year 2014 revenues were $19.96 billion, up 6.2 percent from $18.79 billion.
AbbVie’s fourth-quarter revenue growth was driven primarily by the continued strength of Humira, an anti-inflammatory drug. Global Humira sales increased 10.6 percent to $3.36 billion.
However, the company estimated the impact from foreign currency volatility would continue in 2015.
“If the recent rates were to remain in effect for the remainder of the year, our sales growth would be roughly 5 percent lower,” said William J. Chase, chief financial officer of AbbVie, in a conference call. “Given our global business structure and programs we have in place to mitigate exchange impacts, the fall-through from currency to the bottom line is much more modest for us. We are comfortable with our 2015 EPS guidance range despite potential currency swings.”
For 2015, AbbVie expects to post diluted EPS of $3.91 to $4.11 on a reported basis and $4.25 to $4.45 on an adjusted cash basis, which excludes about 34 cents per diluted share of intangible asset amortization expense and other specified items.
“For 2015, we expect Humira to once again be an important contributor to our robust performance with mid-teens global operational growth expected,” said AbbVie’s CEO Richard A. Gonzalez, in the conference call. “Another important driver of our performance in 2015 will be our interferon-free HCV therapy Viekira, which has now been approved in the U.S., the EU and a number of other countries around the world.”
Gonzalez said the company expects an annualized Viekira sales rate of $3 billion by the end of 2015. The company started shipping the drug in late December.
Damien Conover, analyst at Morningstar Inc., said in a research note: “The hepatitis C guidance that to close the year with an annualized Viekira sales rate of $3 billion is below expectations. While management tends to offer conservative guidance, the slower uptake is concerning since Merck and Bristol will likely enter the market in early 2016.”
Although sales of Viekira in the fourth quarter were below Morningstar’s expectation, Conover expressed confidence in its future growth. “Insurance contracting is showing accelerating levels of success, with 40 percent of U.S. patients now covered by insurance, which should rapidly drive Viekira sales in 2015,” he wrote.
The stock closed at $60.4 Friday, down $2.72.
