Financial Data and Key Metrics Changes - Total revenue increased by 19% to $3.7 billion in 2025, driven by strong execution across the royalty portfolio and commercialized medicines [25][26] - Operating profit expanded to $1.26 billion, reflecting strong execution and increasing operating leverage as the business scales [26][30] - Sales of proprietary medicines totaled $632 million, up 54% year-over-year, accounting for approximately 28% of total revenue growth [16][25] Business Line Data and Key Metrics Changes - Epkinly achieved $468 million in sales for 2025, representing a 67% year-over-year increase, driven by its dual indication in diffuse large B-cell lymphoma and follicular lymphoma [17][19] - Tivdak generated $164 million in sales, a 26% year-over-year increase, maintaining market leadership in recurrent or metastatic cervical cancer [20][21] Market Data and Key Metrics Changes - Epkinly closed 2025 with regulatory approvals in over 65 countries, nearly all featuring the dual indication [17] - The U.S. market saw increased uptake for Epkinly, particularly in community settings, with a majority of health systems ordering from multiple sites [18] Company Strategy and Development Direction - The company aims to accelerate the development of its late-stage pipeline and maximize the potential of its commercialized medicines, with a focus on sustainable growth into the 2030s [5][6] - The acquisition of Merus is expected to enhance the late-stage portfolio with petosemtamab, providing multiple value-creating catalysts in 2026 and beyond [8][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute on key data readouts in 2026 and subsequent high-impact launches in 2027, emphasizing a disciplined approach to capital allocation [31] - The company anticipates continued momentum in Epkinly and its royalty portfolio, with a revenue growth guidance of 14% for 2026 [27][30] Other Important Information - The company has five combined breakthrough therapy designations for its late-stage programs, which have multi-billion dollar potential [9] - The company is committed to deleveraging, targeting gross leverage below 3x by the end of 2027 [30] Q&A Session Summary Question: Next steps for Epkinly following EPCORE DLBCL-1 study results? - Management confirmed that the study showed positive progression-free survival but missed overall survival, and discussions with regulatory agencies are ongoing regarding the next steps [34][36] Question: Update on outpatient data for Epkinly? - Management indicated that the outpatient study is crucial for modifying the label and facilitating administration in the community [43][46] Question: Expectations for Rina-S pivotal phase two readout? - Management stated that the study is designed to support accelerated approval based on overall response rate and duration of response [51][54] Question: Expectations for EPCORE DLBCL 4 trial? - Management expressed optimism that the trial will lead to registration in second-line and third-line settings, differentiating it from other studies [58][60] Question: Thoughts on pembro approval in PROC and implications for Rina-S? - Management acknowledged the approval as a good option for patients but believes Rina-S can be more transformative for a broader population [62][64] Question: Confirmation on interim results for Epkinly frontline DLBCL trial? - Management reiterated that the readout for the study is expected to happen in 2026 [55][68]

Financial Data and Key Metrics Changes - Total revenue increased by 19% to $3.7 billion in 2025, driven by strong execution across the royalty portfolio and commercialized medicines [24][25] - Operating profit expanded to $1.26 billion, reflecting strong execution and increasing operating leverage as the business scales [25][27] - Sales of proprietary medicines totaled $632 million, up 54% year over year, accounting for approximately 28% of total revenue growth [14][24] Business Line Data and Key Metrics Changes - Epkinly achieved $468 million in sales for the year, representing a 67% year-over-year increase, driven by its dual indication in diffuse large B-cell lymphoma and follicular lymphoma [15][24] - Tivdak generated $164 million in sales, representing a 26% year-over-year increase, maintaining market leadership in recurrent or metastatic cervical cancer [19][20] Market Data and Key Metrics Changes - Epkinly closed 2025 with regulatory approvals in more than 65 countries, nearly all featuring the dual indication [15] - The U.S. market saw increased uptake for Epkinly, particularly following its approval in second-line follicular lymphoma [17][18] - Tivdak's launch in Germany showed strong uptake, with positive physician feedback [20] Company Strategy and Development Direction - The company aims to accelerate the development of its late-stage pipeline and maximize the potential of its commercialized medicines [5][24] - The acquisition of Merus is expected to enhance the late-stage portfolio with petosemtamab, contributing to sustainable growth [6][25] - The focus for 2026 includes advancing proprietary portfolio impact, expanding market footprint, and preparing for multiple product launches [22][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute on key data readouts in 2026 and subsequent high-impact launches in 2027 [29] - The company anticipates continued revenue growth driven by Epkinly and its royalty portfolio, with a guidance of 14% total revenue growth for 2026 [26][28] - Management highlighted the importance of maintaining substantial profitability while investing in growth opportunities [27][28] Other Important Information - The company has five combined breakthrough therapy designations for its late-stage programs, indicating multi-billion dollar potential [7] - The anticipated data readouts in 2026 are expected to set the stage for multiple important product launches and line extensions in 2027 [8][10] Q&A Session Summary Question: Next steps for Epkinly following EPCORE DLBCL-1 study results - Management confirmed that the study showed positive progression-free survival but missed overall survival, with ongoing discussions with regulatory agencies about the data [31][33] Question: Update on outpatient data for Epkinly - Management indicated that the outpatient study is crucial for modifying the label and facilitating administration in the community [40][42] Question: Expectations for Rina-S pivotal phase two readout - Management stated that the study is designed to support accelerated approval based on overall response rate and duration of response [47][49] Question: Expectations for EPCORE DLBCL-4 trial outcomes - Management expressed optimism that the trial will lead to registration in second-line and third-line settings, differentiating it from other studies [53][55] Question: Thoughts on pembro approval in PROC and implications for Rina-S - Management acknowledged the approval as a good option for patients but believes Rina-S can be more transformative for a broader population [57][59] Question: Clarification on phase 3 for petosemtamab - Management confirmed that the phase 3 studies have dual endpoints of overall response rate and overall survival, which are standard in areas of unmet medical need [75]

Core Insights - AbbVie reported better-than-expected fourth-quarter results but faced stock price pressure due to declining oncology drug sales and market caution regarding growth sustainability [1] - The company has successfully launched new drugs, Skyrizi and Rinvoq, to offset the decline from Humira, which lost patent protection [2][3] - AbbVie expects continued revenue growth driven by strong performance in immunology and neuroscience, despite challenges in aesthetics and oncology segments [9][23] Group 1: Financial Performance - AbbVie achieved combined sales of Skyrizi and Rinvoq of $26 billion in 2025, representing over 40% year-over-year growth, with projections of over $31 billion for 2026 [3][9] - The company anticipates a revenue growth of approximately 9.5% in 2026, driven by Skyrizi, Rinvoq, and Vyalev, while facing headwinds from Humira erosion [23][24] - AbbVie's neuroscience drugs generated nearly $10.8 billion in sales in 2025, marking a 20% increase, supported by products like Botox Therapeutic and Vraylar [6] Group 2: Product Pipeline and Growth Drivers - AbbVie is focusing on expanding its immunology portfolio with potential new indications for Rinvoq, which could add approximately $2 billion to peak-year sales [4] - The oncology segment generated $6.6 billion in 2025, with new drugs like Elahere and Epkinly contributing to revenue despite a decline in Imbruvica sales [8][10] - AbbVie has been actively acquiring innovative pipeline candidates, investing over $5 billion in 2025 to enhance its early-stage pipeline [11] Group 3: Challenges and Market Conditions - Humira sales are declining significantly due to biosimilar competition, with a projected 50% drop in 2025 and continued erosion expected in 2026 [12] - The aesthetics segment is facing challenges, with global sales declining 5.9% in 2025, and expectations for flat growth in 2026 [13][14] - AbbVie is navigating competitive pressures in its oncology portfolio, but remains optimistic about its pipeline and future product approvals [10][23] Group 4: Stock Valuation and Market Position - AbbVie stock has risen 17.9% over the past year, slightly underperforming the industry average of 19.5% [15][16] - The stock is trading at a price/earnings ratio of 15.75, which is lower than the industry average of 18.83, indicating reasonable valuation [18] - The Zacks Consensus Estimate for 2026 earnings has increased slightly from $14.45 to $14.49 per share, reflecting positive sentiment [20]

Financial Performance - In early February 2026, AbbVie reported Q4 2025 sales of $16.6 billion, exceeding market expectations of $16.4 billion; adjusted EPS was $2.71, above the analyst average estimate of $2.65. The company raised its 2026 adjusted EPS guidance to a range of $14.37 to $14.57, higher than the market expectation of $14.22, reflecting confidence in this year's performance [1]. Business Developments - In Q4, Botox sales reached $717 million, marking the first growth since Q3 2024 and surpassing market expectations. The company implemented new marketing strategies, such as the "Naturally You" campaign, to revive its aesthetic business. However, Botox is included in the U.S. federal Medicare price negotiation list, which may lead to price adjustments starting in 2028 [2]. - The neuroscience segment generated $10.767 billion in revenue for 2025, a 19% year-over-year increase, making it the fastest-growing segment. AbbVie plans to strengthen its pipeline through internal R&D and external collaborations, including the acquisition of Cerevel Therapeutics, with a focus on Parkinson's disease therapies like Tavapadon, which has been submitted for approval [3]. - The oncology segment reported $6.655 billion in revenue for 2025, showing a slowdown in growth. However, new drugs performed well, with the global first c-Met ADC drug Teliso-V approved in May 2025, and sales of CD3×CD20 bispecific antibody Epkinly and FRα ADC drug Elahere increasing by 85.5% and 44%, respectively. The company completed over 10 transactions in 2025, totaling over $13 billion, and secured exclusive licensing for PD-1/VEGF bispecific antibody RC148 with Rongchang Bio in January 2026, further expanding its oncology pipeline [4]. - The immunology segment achieved $30.4 billion in revenue for 2025, a 14% year-over-year increase. Despite a decline in Humira sales due to patent expiration, new drugs Skyrizi and Rinvoq showed strong demand, with Q4 sales of $5 billion and $2.4 billion, respectively, supporting the business transition [5].

Core Insights - AbbVie experienced a sales growth of approximately 8.5% year over year in 2025, despite facing biosimilar erosion of its flagship drug Humira, which lost exclusivity in early 2023 [2] - For 2026, AbbVie projects revenues to reach $67 billion, indicating a growth of about 9.5% over 2025, primarily driven by newer immunology drugs Rinvoq and Skyrizi [3][10] Immunology Segment - AbbVie expects to generate over $31 billion from sales of Skyrizi and Rinvoq in 2026, with both drugs anticipated to grow more than 20% year over year [4][5][10] - Skyrizi is projected to achieve sales of approximately $21.5 billion, while Rinvoq is expected to reach around $10.1 billion [5] Neuroscience Segment - The neuroscience franchise is expected to contribute $12.5 billion in sales for 2026, reflecting a 16% growth over 2025 [7][10] - AbbVie anticipates Vyalev, a new Parkinson's disease therapy, to surpass $1 billion in global sales [7][10] - The company is also seeking FDA approval for a new oral therapy for Parkinson's disease, tavapadon, which could further enhance its neuroscience portfolio [8] Oncology Segment - AbbVie faces near-term challenges in its oncology segment, particularly with the J&J-partnered Imbruvica, which is expected to see sales decline to $2.2 billion, a drop of over 23% from 2025 [11][12][10] - Despite this decline, other oncology drugs are expected to partially offset the impact, including Venclexta, Epkinly, Elahere, and Emrelis [12] Valuation and Market Performance - AbbVie shares have underperformed the industry over the past year and are currently trading at a P/E ratio of 15.25, below the industry average of 18.75 [13][14] - The bottom-line estimate per share for 2026 and 2027 has seen a decline in the past 30 days [16]

Core Insights - AbbVie Inc. reported fourth-quarter 2025 adjusted EPS of $2.71, surpassing the Zacks Consensus Estimate of $2.66 and the company's prior guidance of $2.61-$2.65, with earnings increasing over 25% year over year [1][10] - The company's revenues reached $16.62 billion, exceeding the Zacks Consensus Estimate of $16.36 billion, with a year-over-year growth of 10.0% on a reported basis and 9.5% operationally [2][10] Revenue Performance - Key drugs driving revenue included Rinvoq, Skyrizi, Venclexta, and Vraylar, alongside contributions from newer drugs like Ubrelvy, Qulipta, Elahere, and Vyalev, while sales of Humira and Imbruvica declined [3] - Immunology drug Rinvoq generated $2.37 billion in net revenues, up nearly 29%, although it missed the Zacks Consensus Estimate of $2.39 billion [4] - Skyrizi's sales reached $5.01 billion, reflecting a 32% increase and surpassing the Zacks Consensus Estimate of $4.91 billion [5] - Humira's sales fell 26% to $1.25 billion, with U.S. sales down 28% to $897 million, attributed to loss of exclusivity since January 2023, yet it exceeded the Zacks Consensus Estimate of $949 million [6] - Neuroscience portfolio sales rose over 17% to $2.96 billion, driven by Botox Therapeutic and Vraylar, but missed the Zacks Consensus Estimate of $3.00 billion [7] - Oncology franchise sales decreased 2.5% to $1.66 billion, primarily due to declining Imbruvica sales, missing the Zacks Consensus Estimate of $1.72 billion [9] Cost and Financial Outlook - Adjusted SG&A expenses increased 4% year over year to $3.71 billion, while adjusted R&D expenses rose approximately 13% to $2.56 billion [15] - For the full year 2025, AbbVie reported sales growth of 8.6% to $61.16 billion, exceeding the Zacks Consensus Estimate of $60.93 billion, with adjusted EPS of $10.00, down 1% year over year but beating estimates [16] - AbbVie provided guidance for 2026 adjusted EPS in the range of $14.37-$14.57, excluding impacts from proposed acquisitions, with the Zacks Consensus Estimate at $14.32 [17] Market Reaction and Strategic Focus - Despite strong results, AbbVie's shares traded lower in pre-market trading, likely due to underperformance in Rinvoq and oncology drugs [19] - The company is focusing on inorganic growth to strengthen its early-stage pipeline across multiple therapeutic areas, with recent acquisitions impacting near-term earnings [21][22]

Financial Data and Key Metrics Changes - The company reported full-year adjusted earnings per share of $10, exceeding initial guidance by $0.54, with total net revenues of $61.2 billion, surpassing guidance by over $2 billion [5][6] - Sales growth of 8.6% led to record net sales, exceeding previous peak revenue by more than $3 billion despite nearly $16 billion erosion from U.S. Humira [6][9] - Adjusted earnings per share for the fourth quarter were $2.71, $0.08 above guidance midpoint, with total net revenues of $16.6 billion, reflecting robust growth of 10% [32][33] Business Line Data and Key Metrics Changes - Immunology revenues reached approximately $8.6 billion in the fourth quarter, with Skyrizi sales of $5 billion (31.9% operational growth) and Rinvoq sales of nearly $2.4 billion (28.6% operational growth) [10][11] - Neuroscience full-year revenues exceeded $10.7 billion, with a quarterly revenue of over $2.9 billion, up 17.3% operationally, driven by Vraylar and Botox Therapeutic [16][17] - Oncology revenues were nearly $1.7 billion in the quarter, down 2.5% operationally, with Venclexta sales of $710 million, up 6.4% [19][20] Market Data and Key Metrics Changes - Global sales for Skyrizi in IBD reached approximately $6.4 billion in 2025, more than double the prior year performance [13][14] - The aesthetics market faced economic headwinds, with global sales of nearly $1.3 billion in the quarter, down 1.2% operationally [21][22] - The company anticipates total sales growth of 9.5% in 2026, driven by Skyrizi and Rinvoq, with combined sales expected to exceed $31 billion [7][8] Company Strategy and Development Direction - The company is focused on advancing its pipeline across all stages of development and has invested over $5 billion in new business development [6][7] - A voluntary agreement with the U.S. government aims to enhance patient access and affordability while committing $100 billion in U.S. R&D and capital investments over the next decade [9] - The company plans to leverage its diverse portfolio to deliver high single-digit revenue growth through 2029 [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong position to deliver robust growth despite headwinds from Humira erosion and pricing pressures [5][7] - The outlook for 2026 includes expectations for substantial sales growth driven by key products, with a focus on maintaining momentum in immunology and neuroscience [8][9] - Management highlighted the potential for long-term growth in neuroscience and oncology, with several promising assets in the pipeline [59][60] Other Important Information - The company anticipates a significant ramp for Vyalev, achieving blockbuster status as a treatment for Parkinson's [8][18] - The adjusted operating margin is expected to expand to approximately 48.5% in 2026, reflecting operational efficiencies [36] - The company expects to generate free cash flow of approximately $18.5 billion in 2026, supporting dividends and investments in business development [38][39] Q&A Session Summary Question: Details on the psychedelic therapy in development - Management highlighted the potential of the psychedelic therapy, noting its unique mechanism and observed high efficacy, with further readouts expected before phase III [42][43][44] Question: Insights on Skyrizi's performance in IBD - Management confirmed stable new patient starts for Skyrizi in both Crohn's and UC, with high capture rates despite competition, indicating strong market positioning [51][53][54] Question: Update on external innovation and business development - The company has invested over $8 billion in external innovation, focusing on early-stage opportunities to enhance its pipeline across core therapeutic areas [64][66] Question: Expectations for Rinvoq and lutikizumab phase III data - Management expressed optimism for Rinvoq's performance in treatment failure populations and highlighted lutikizumab's strong efficacy in phase II, anticipating meaningful results in phase III [68][69][70]

Core Viewpoint - AbbVie and Medtronic are highlighted as healthcare stocks that consistently grow their dividends, supported by healthy free cash flow, despite the general trend of lower dividend yields in the healthcare sector [1][3][15]. AbbVie - AbbVie has a dividend yield of 2.98% and has increased its quarterly dividend for 54 consecutive years, qualifying it as a Dividend King [4]. - The company reported revenue of $15.8 billion in the third quarter, a 9% year-over-year increase, although earnings per share (EPS) declined by 38% to $1.86 due to higher R&D spending [6]. - AbbVie has successfully transitioned from reliance on Humira, which previously accounted for 63% of its revenue, to a diversified portfolio including Rinvoq and Skyrizi, with Skyrizi generating $4.7 billion in the latest quarter [7]. - The oncology segment now contributes nearly 11% to AbbVie's revenue, bolstered by new therapies [8]. - AbbVie's dividend payout ratio is 58%, but its free cash flow per share of $11.11 supports its annual dividend payout of $6.92 [9]. Medtronic - Medtronic, with a market cap of $132 billion, is the largest stand-alone medical device maker, producing a wide range of medical equipment [10]. - The company reported revenue of $9 billion in the second quarter of fiscal 2026, a 6.6% year-over-year increase, with EPS rising 8% to $1.07 [13]. - Medtronic's dividend yield is approximately 2.76%, and it has increased its dividend for 48 consecutive years, with a payout ratio of 69% [14]. - The company plans to spin off its diabetes business, which accounts for only 8% of revenue, without impacting its dividend [14]. Industry Insights - Healthcare companies, unlike utilities, must continuously invest in R&D due to the nature of their products, which often face patent expirations and generic competition [2]. - AbbVie and Medtronic leverage their size and diversification to maintain revenue growth and dividend increases, mitigating risks from potential downturns in specific segments [15][16].

Core Viewpoint - AbbVie is expected to report fourth-quarter and full-year 2025 earnings on February 4, with sales projected at $16.36 billion and earnings per share (EPS) at $2.66, although EPS estimates for 2025 and 2026 have declined recently [2][6]. Earnings Performance - AbbVie has consistently exceeded earnings expectations in the past four quarters, with an average earnings surprise of 3.05%, including a 5.08% surprise in the last quarter [4][6]. Revenue Drivers - The anticipated revenue growth for AbbVie in Q4 2025 is primarily driven by increased sales of newer immunology drugs, Skyrizi and Rinvoq, as sales of the flagship drug Humira continue to decline due to biosimilar competition [9][10]. - The Zacks Consensus Estimate for Skyrizi sales is $4.91 billion, while Rinvoq is estimated at $2.39 billion [9]. Sales Estimates - Humira's sales are projected at $949 million, reflecting ongoing erosion from biosimilars, while Imbruvica sales are expected to decline to $715 million due to competition [10]. - Sales for Roche-partnered Venclexta are estimated to rise to $725 million, driven by strong demand [11]. - Neuroscience product sales are expected to reach approximately $3.00 billion, supported by strong performances from Botox Therapeutic, Vraylar, and new migraine drugs [12]. - Aesthetics product sales are projected at $1.28 billion, showing signs of recovery from previous sluggishness [13]. Valuation and Market Position - AbbVie shares are currently trading at a P/E ratio of 15.38, below the industry average of 18.42, indicating a discount relative to peers [17]. - Despite underperforming the industry over the past year, AbbVie is expected to achieve robust revenue growth driven by its newer drug launches [19]. Future Outlook - AbbVie anticipates a high single-digit revenue compound annual growth rate (CAGR) through 2029, supported by the successful launches of Skyrizi and Rinvoq [19]. - The company continues to invest in its pipeline through strategic collaborations, including a recent licensing deal with RemeGen for a bispecific antibody candidate [21]. - A favorable valuation and strong earnings growth expectations provide a compelling case for long-term investment in AbbVie stock [22].

Core Viewpoint - Analysts expect AbbVie (ABBV) to report quarterly earnings of $2.66 per share, reflecting a year-over-year increase of 23.2%, with revenues projected at $16.36 billion, up 8.3% from the previous year [1] Earnings Estimates - Changes in earnings estimates are crucial for predicting investor reactions, with empirical research showing a strong correlation between earnings estimate revisions and short-term stock performance [2] Revenue Projections - Analysts estimate 'Net Revenue- Imbruvica' at $714.90 million, indicating a year-over-year decline of 15.7% [4] - 'Net Revenue- Botox Therapeutic- Total' is expected to reach $995.91 million, reflecting a year-over-year increase of 14.1% [4] - 'Net Revenue- Venclexta' is projected at $725.34 million, suggesting a year-over-year increase of 10.7% [4] Neuroscience and Humira Revenue - 'Net Revenue- Neuroscience- Total' is estimated at $3.00 billion, indicating a year-over-year increase of 19.5% [5] - 'Net Revenue- Humira- US' is expected to be $574.85 million, reflecting a significant decline of 53.9% from the prior year [5] - 'Net Revenue- Humira- International' is projected at $374.40 million, indicating a year-over-year decrease of 14.1% [6] Oncology and New Products - 'Net Revenue- Oncology- Elahere- Total' is expected to reach $191.62 million, reflecting a year-over-year increase of 29.5% [6] - 'Net Revenue- Epkinly- International' is projected at $48.50 million, suggesting a substantial year-over-year increase of 120.5% [6] - 'Net Revenue- Qulipta- U.S.' is estimated at $271.58 million, indicating a year-over-year increase of 46% [7] - 'Net Revenue- Qulipta- International' stands at $39.74 million, reflecting a significant year-over-year increase of 165% [8] Stock Performance - AbbVie shares have decreased by 3.5% over the past month, contrasting with the Zacks S&P 500 composite's increase of 0.9%, and the stock is expected to closely follow the overall market with a Zacks Rank 3 (Hold) [8]