AbbVie Inc. (ABBV) Earnings

Management highlights

### Overall Company Performance - AbbVie delivered a better-than-expected Q2 2026, with adjusted EPS of $3.65 (6 cents above guidance midpoint) and total net revenues of nearly $17 billion ($300 million above expectations). - The company maintained strong momentum across its diversified portfolio, with double-digit overall sales growth, continued pipeline advancement, and a planned acquisition to expand its immunology franchise. ### Commercial Development Highlights - SkyRizzy has achieved market share leadership in over 30 countries for psoriasis, capturing 4x more new and switching patients in the U.S. than any competing biologic or oral treatment, with no expected material impact from new competitive launches. It is also the fastest growing in IBD, leading U.S. new patient starts in the quarter. - RINVOC is outperforming sales expectations, with Renvoke on track for 30% global sales growth in 2026, and recently gained European approvals for vitiligo and alopecia areata, with U.S. decisions pending. - The neuroscience portfolio is outperforming expectations, with Vylev on track to achieve blockbuster status in 2026, and the full Parkinson's portfolio expected to reach over $5 billion in peak sales. - The recently launched Decnupaz (for BPDCN, an ultra-rare blood cancer) expands AbbVie's marketed ADC portfolio in hematology. - The newly approved Bowie aesthetics toxin (Europe/Canada) complements the existing toxin portfolio and is expected to expand the overall aesthetic toxin market. ### Research & Development Highlights - Recent regulatory approvals include U.S. approval of Decnupaz (hematology ADC), multiple European approvals for Q-Lipta (migraine), Eptin-Li (follicular lymphoma), Bowie (aesthetics), and RINVOC (vitiligo/alopecia areata). Combined peak sales for RINVOC's two new dermatology indications are now expected to approach $2 billion, above prior forecasts. - Multiple late-stage pipeline milestones are anticipated in H2 2026: a U.S. approval decision for SkyRizzy subcutaneous induction for Crohn's disease (fall 2026), 16-week data from RINVOC and ludicizumab Phase 3 trials for hidradenitis suppurativa (HS), and interim data for etentamig in multiple myeloma (Q3 2026). - Early-stage pipeline advancement includes three new dermatology programs entering clinical testing, new Phase I/II trials for Alzheimer's, schizophrenia, and essential tremor in neuroscience, and ongoing expansion of the oncology ADC pipeline across multiple solid tumor types. - The planned acquisition of Apogee Therapeutics adds differentiated long-acting biologic assets in immunology (atopic dermatitis, respiratory inflammatory disease), deepening the company's immunology pipeline for long-term growth in the 2030s and beyond. ### Financial Performance - Adjusted gross margin was 84.7% of sales; adjusted operating margin was 48.3% of sales; adjusted R&D expense was 13.6% of sales; adjusted SG&A expense was 21% of sales.

Guidance

- Full-year 2026 adjusted EPS guidance is updated to $13.87 to $14.07. The update reflects a 10-cent underlying improvement from strong Q2 performance, offset partially by 14 cents of expected dilution from the planned Apogee acquisition. - Full-year 2026 total net revenue guidance is raised by $300 million to approximately $67.6 billion, representing a $600 million total upward revision since the start of 2026. The guidance assumes ~0.5% favorable foreign exchange impact on full-year sales growth. - Updated 2026 product-specific revenue assumptions: Skyrizzy global revenue is projected at $21.7 billion (+$100 million from prior guidance); total neuroscience revenue is projected at $12.7 billion (+$100 million from prior guidance); the remaining $100 million revenue increase comes from better-than-expected momentum for Renvoke and Van Clexta. - Full-year 2026 adjusted gross margin is projected to remain above 84% of sales. Adjusted R&D expense is projected at ~$9.8 billion (+$100 million from prior guidance to account for Apogee acquisition-related pipeline investments). Adjusted operating margin is projected to approach 47% of sales; adjusted net interest expense is projected at ~$2.9 billion (+$200 million from prior guidance to account for partial-year Apogee acquisition financing costs). - Q3 2026 guidance calls for net revenues of approximately $17.2 billion, with adjusted EPS between $3.84 and $3.88. - The Apogee acquisition is expected to close in Q3 2026. Management targets a net leverage ratio of 2x within 2-3 years of deal close, and maintains sufficient financial flexibility to pursue additional business development opportunities.

Segment performance

1. Immunology: Total revenues of nearly $8.8 billion, 51.8% of total Q2 net revenue, with 14.6% operational sales growth. SkyRizzy generated $5.5 billion (up 24% operationally); RINVOC generated more than $2.5 billion (up 23.7% operationally); Humira generated $756 million (down 36.1% operationally due to biosimilar competition, in line with expectations). 2. Neuroscience: Total revenues of more than $3.2 billion, 18.8% of total Q2 net revenue, with ~20% operational sales growth. Vrelar generated nearly $1.1 billion (up ~19%); Vylev generated $256 million (up more than 27% sequentially); Botox Therapeutic, Ubrelvi, and Q-Lipta all delivered double-digit sales growth. 3. Oncology: Total revenues of more than $1.6 billion, 9.4% of total Q2 net revenue, with a 2.4% operational sales decline. Van Clexta generated $771 million (up 9.6% operationally); Elahir, Eptinli, and Amrelis all delivered double-digit sales growth; Imbruvica was down 29.4% as expected due to IRA pricing and competitive pressure. 4. Aesthetics: Global sales of nearly $1.3 billion, 7.6% of total Q2 net revenue, with a 0.9% operational sales decline. Botox Cosmetic generated $728 million (up 3.4% operationally); Juvederm generated $245 million (down 6.6% operationally due to ongoing headwinds in key dermal filler markets). Total Q2 2026 net revenues were nearly $17 billion, representing 10.2% total sales growth.

Risks & headwinds

- Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from current expectations, with additional risk details available in AbbVie's SEC filings. - Humira sales continue to decline due to ongoing biosimilar competition, a dynamic that was already incorporated into prior forecasts. - Imbruvica sales are declining due to IRA pricing impacts and competitive share pressure, which is also in line with management expectations. - Aesthetics dermal filler markets continue to face ongoing headwinds that have negatively impacted Juvederm sales. - New competitive product launches in core therapeutic areas (such as psoriasis) could impact market share growth for key products like SkyRizzy, though management has not observed material impact to date. - GLP-1 weight loss drug use could potentially increase placebo response rates in ongoing HS clinical trials, though trial design accounts for this by having GLP-1 use distributed equally across active and placebo arms. - A Tevapidon launch following Q3 2026 FDA approval will face an initial modest ramp due to formulary placement timelines for Medicare, which will delay full patient access.

Analyst Q&A

• Q: What is management's confidence in the upcoming Skyrizzy subcutaneous induction approval for Crohn's, and will the Skyrizzy + alpha-4-beta-7 combination data be presented at the fall UEGW conference? /

  A: The regulatory submission for subcutaneous Skyrizzy is complete, the review is proceeding as planned, and manufacturing is well established with no current concerns. Interim combination data has already been released; full data is targeted for the fall UEGW conference, but if the timeline cannot be met, it will be presented at a 2027 medical congress instead.

• Q: What is the development timeline for the large IBD combination platform study, and will the combination assets be a co-formulation or co-administration at launch? /

  A: The study combines Skyrizzy with higher-dose alpha-4-beta-7 and a TL1a antibody, and enrollment is starting imminently. Management will not wait for full trial completion to act: strong interim efficacy data would trigger immediate Phase 3 planning, with Phase 3 launches targeted for the first half of 2028. The plan is to develop a co-formulation for commercial launch to improve patient convenience.

• Q: What competitive dynamics have you observed in psoriasis after the launch of new competing therapies, and what is your outlook for Skyrizzy's remaining growth in this indication? /

  A: There has been no material impact to Skyrizzy's momentum since the new competitive launch. Most of the new competitor's share gains have come from older oral therapies, matching management expectations, and Skyrizzy's new patient acquisition rates have actually improved since March 2026. There is still significant unpenetrated headroom in moderate-to-severe psoriasis, and Skyrizzy's superior efficacy and convenience profile support continued growth.

• Q: What is your outlook for the Tevapidon launch in Parkinson's, and how is AbbVie's Alzheimer's asset differentiated from competing programs? /

  A: Tevapidon is a first-in-class selective D1-D5 agonist with a highly favorable safety and efficacy profile, and is expected to reach over $5 billion in peak Parkinson's sales alongside the rest of AbbVie's portfolio. The launch will ramp modestly initially because Q3 approval falls outside of Medicare formulary negotiation windows, delaying full insurance coverage. For Alzheimer's, AbbVie's asset achieves 1%+ cerebrospinal fluid penetration (multiple-fold higher than standard naked antibodies), targets the more toxic pyroglutamate A-beta species, and is designed for convenient monthly subcutaneous dosing.