Allergan has reported its fourth quarter and full year 2016 continuing operations performance.

Fourth Quarter and Full-Year 2016 Continuing Operations

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(unaudited; $ in millions, except per share amounts)

 

Q4 '16

 

Q4 '15

 

Q3 '16

 

Q4 '16 v Q4 '15

 

Q4 '16 v Q3 '16

 

Twelve Months Ended December 31, 2016

 

Twelve Months Ended December 31, 2015

2016 v 2015

Total net revenues**

 

$ 3,864.3

 

$ 3,606.9

 

$ 3,622.2

 

7.1%

 

6.7%

 

$ 14,570.6

 

$ 12,688.1

14.8%

                

Operating (Loss)

 

$ (900.0)

 

$ (569.5)

 

$ (266.4)

 

58.0%

 

237.8%

 

$ (1,825.5)

 

$ (3,131.0)

(41.7)%

Diluted EPS - Continuing Operations

 

$ (0.31)

 

$ (2.18)

 

$ (1.15)

 

(85.8)%

 

(73.0)%

 

$ (3.17)

 

$ (8.64)

(63.3)%

SG&A Expense

 

$ 1,276.8

 

$ 1,276.3

 

$ 1,157.2

 

0.0%

 

10.3%

 

$ 4,740.3

 

$ 4,481.5

5.8%

R&D Expense

 

$ 913.3

 

$ 430.6

 

$ 622.8

 

112.1%

 

46.6%

 

$ 2,575.7

 

$ 2,358.5

9.2%

Continuing Operations Tax Rate

 

96.4%

 

12.7%

 

29.5%

 

83.7%

 

66.9%

 

67.0%

 

35.3%

31.7%

                

Non-GAAP Adjusted Operating Income

 

$ 1,868.7

 

$ 1,867.3

 

$ 1,784.4

 

0.1%

 

4.7%

 

$ 7,245.3

 

$ 6,781.4

6.8%

Non-GAAP Performance Net Income Per Share *

 

$ 3.90

 

$ 3.36

 

$ 3.32

 

16.1%

 

17.5%

 

$ 13.51

 

$ 13.20

2.3%

Non-GAAP Adjusted EBITDA

 

$ 1,975.7

 

$ 1,951.8

 

$ 1,902.2

 

1.2%

 

3.9%

 

$ 7,628.7

 

$ 7,086.7

7.6%

Non-GAAP SG&A Expense

 

$ 1,067.0

 

$ 997.0

 

$ 1,006.9

 

7.0%

 

6.0%

 

$ 4,081.7

 

$ 3,324.0

22.8%

Non-GAAP R&D Expense

 

$ 425.9

 

$ 338.1

 

$ 386.4

 

26.0%

 

10.2%

 

$ 1,433.8

 

$ 1,116.8

28.4%

Non-GAAP Continuing Operations Tax Rate

 

10.4%

 

7.6%

 

8.2%

 

2.8%

 

2.2%

 

8.9%

 

7.7%

1.2%

                

* New nomenclature for non-GAAP earnings per share. Metrics and calculations for this measure have not changed. Refer to table 3 for additional definition of non-GAAP performance net income per share.

    

** Excludes the reclassification of revenues of ($43.6) million in Q4 2015 and ($23.7) million in Q3 2016 related to the portion of Allergan product revenues sold by our former Anda Distribution Business into discontinued operations. Excludes the reclassification of revenues of ($80.0) million in the twelve months ended December 31, 2016 and ($157.4) million in the twelve months ended December 31, 2015 related to the portion of Allergan product revenues sold by our former Anda Distribution Business into discontinued operations.

    

Total net revenues of $3.9 billion, a seven percent increase versus the prior year quarter, were driven by strong performance from higher revenues in Facial Aesthetics, BOTOX® Therapeutic, Eye Care, LINZESS® and new product launches across therapeutic areas, partially offset by lower revenues from Namenda XR® and loss of exclusivity of ASACOL® HD. For the full year 2016, Allergan reported total net revenues of $14.57 billion, a 15 percent increase versus the prior year, driven by continued strong growth across key therapeutic areas and products, and a full year impact of acquired Allergan brands.

"2016 was a year of transformation for Allergan. We are now a branded biopharmaceutical leader, focused on delivering sustainable revenue growth, advancing our pipeline, maintaining industry leading margins and allocating capital to maximize shareholder return. In the fourth quarter of 2016, we delivered against these priorities. Our top global products and new launches powered revenue growth, including, but not limited to, BOTOX®, RESTASIS®, OZURDEX®, Fillers, LINZESS®, VRAYLAR™, VIBERZI®, KYBELLA® and Lo LOESTRIN®. Our R&D team continued to advance key programs and deliver FDA approvals for new products that change lives. And we made fast progress in our capital deployment program, enhancing short- and long-term value for our shareholders," said Brent Saunders, Chairman and CEO of Allergan.

"2017 is a pivotal year for Allergan and we are well-positioned to deliver growth through excellent execution. We have growing products and franchises, with nine product launches planned in 2017. Our Open Science pipeline is advancing innovative, high-value treatments for patients, including our six 'stars' entering or currently in phase 3 development. And our operational excellence and capital deployment initiatives will support our continued growth and enhance shareholder value," added Saunders.

"I thank our 16,000 global colleagues who continue to Be Bold. They are delivering new ideas that allow us to build strong bridges with customers, act fast, and drive results for Allergan. And they are focused on advancing innovative new treatments across our therapeutic areas that can make a profound impact on global health and patient care," added Saunders.

Fourth-Quarter 2016 Performance GAAP operating loss from continuing operations in the fourth quarter 2016 was $900 million an increase in losses of 58.0 percent versus prior year primarily due to research and development (R&D)-related charges and impairments. Non-GAAP adjusted operating income from continuing operations in the fourth quarter of 2016 was $1.87 billion. Non-GAAP adjusted operating income was impacted by higher operating expenses.

Full Year 2016 Performance GAAP operating loss from continuing operations for the full year 2016 was $1.8 billion, a decrease in losses of 41.7 percent versus prior year primarily due to the fact that 2015 included the impact of selling through acquired inventory, higher acquisition related stock compensation expense and higher restructuring costs all in connection with the Allergan acquisition. Non-GAAP adjusted operating income from continuing operations for the full year 2016 was $7.25 billion, an increase of 7 percent versus prior year. Cash flow from operations of approximately $1.4 billion for the full year, a decrease of 68.5 percent versus prior year, was due primarily to reduced revenues from the Global Generics business, tax payments related to the Global Generics and Anda Distribution divestitures to Teva and increased R&D investment.

Operating Expenses Total GAAP Selling, General and Administrative (SG&A) Expense was $1.28 billion for the fourth quarter 2016 unchanged from $1.28 billion in the prior year period. Total non-GAAP SG&A Expense increased to $1.07 billion for the fourth quarter 2016 from $997 million in the prior year quarter, primarily due to additional selling and promotional expenses for key products and new product launches. GAAP R&D investment for the fourth quarter 2016 was $913 million, compared to $431 million in the fourth quarter of 2015. Non-GAAP R&D investment for the fourth quarter 2016 was $426 million, an increase of 26 percent over prior year, due to increased costs associated with clinical programs which were weighted toward the back-half of 2016.

Amortization, Tax and Capitalization Amortization expense from continuing operations for the fourth quarter 2016 was $1.64 billion, compared to $1.58 billion in the fourth quarter of 2015. The Company's GAAP continuing operations tax rate was 96.4 percent in the fourth quarter 2016. The Company's non-GAAP adjusted continuing operations tax rate was 10.4 percent in the fourth quarter 2016. As of December 31, 2016, Allergan had cash and marketable securities of $13.2 billion and outstanding indebtedness of $32.8 billion.

Discontinued Operations and Continuing Operations As a result of the divestiture of the Company's Anda Distribution business to Teva on October 3, 2016, financial results of this business are being reported as discontinued operations in the condensed consolidated statements of operations up through the date of divestiture. Included in segment revenues are product sales that were sold by the Anda Distribution business once the Anda Distribution business had sold the product to a third-party customer. These sales are included in segment results and are excluded from total continuing operations revenues through a reduction to Corporate revenues. Cost of sales for these products in discontinued operations is equal to our average third-party cost of sales for third-party branded products distributed by Anda Distribution.

Fourth Quarter 2016 Business Segment Results

   

      

US Specialized Therapeutics

     

Segment Information

     

    

(Unaudited; $ in millions)

 

Three Months Ended December 31,

   

2016

 

2015 (1)

 

      

Eye Care

 

$ 660.1

 

$ 618.1

 

Total Medical Aesthetics

 

440.3

 

383.6

 

Facial Aesthetics

 

333.0

 

269.9

 

Plastic Surgery

 

57.3

 

64.9

 

Skin Care

 

50.0

 

48.8

 

Medical Dermatology

 

114.3

 

106.5

 

Neuroscience & Urology

 

342.5

 

301.7

 

Other Revenues

 

13.7

 

10.3

 

Net revenues

 

$ 1,570.9

 

$ 1,420.2

 

Operating expenses:

     

Cost of sales(2)

 

75.9

 

75.6

 

Selling and marketing

 

292.2

 

247.8

 

General and administrative

 

47.8

 

22.2

 

Segment contribution

 

$ 1,155.0

 

$ 1,074.6

 

Segment margin

 

73.5%

 

75.7%

 

Segment gross margin(3)

 

95.2%

 

94.7%

 

      

(1) Includes revenues earned that were distributed through our former Anda Distribution business to third party customers.

(2) Excludes amortization and impairment of acquired intangibles including product rights.

   

(3) Defined as net revenues less segment related cost of sales as a percentage of net revenues.

   

U.S. Specialized Therapeutics net revenues grew 11 percent driven by growth in Eye Care, Facial Aesthetics and Neuroscience & Urology.

Eye Care

Allergan's Eye Care franchise experienced strong results versus prior year.

RESTASIS® net revenues of $393.1 million in the fourth quarter of 2016, up 13 percent driven by demand and pricing.

The Glaucoma franchise experienced a modest decline, with ALPHAGAN®/COMBIGAN® net revenues in the fourth quarter of 2016 of $102.3 million, up 2 percent versus prior year quarter offset by LUMIGAN® net revenues declining 9 percent driven primarily by trade buying patterns.

OZURDEX® net revenues in the fourth quarter of 2016 were strong at $22.6 million, up 18 percent versus prior year quarter driven by continued strong demand from the diabetic macular edema indication.

Medical Aesthetics

The Facial Aesthetics franchise continues to deliver strong double-digit growth.

BOTOX® Cosmetic net revenues in the fourth quarter of 2016 were $199.4 million, up 18 percent versus prior year quarter reflecting continued strong volume growth.

Fillers net revenues in the fourth quarter of 2016 were $121.6 million, up 25 percent versus prior year quarter driven by continued strong demand for Voluma and market share gains following the launch of Volbella.

KYBELLA® net revenues in the fourth quarter of 2016 were $12 million. Demand and consumer interest is increasing following DTC launch in mid-August.

Plastic Surgery

Breast implant net revenues in the fourth quarter of 2016 were $56.8 million, a decline of 9 percent, in-line with overall market declines.

Skin Care

SkinMedica® net revenues in the fourth quarter of 2016 were $26.8 million, up 7 percent versus prior year quarter driven primarily by the launch of HA5.

Medical Dermatology

ACZONE® net revenues in the fourth quarter of 2016 were $61.2 million, up 8 percent versus prior year quarter driven by continued strong demand following the launch of ACZONE 7.5%.

TAZORAC® net revenues in the fourth quarter of 2016 remained stable at $27.5 million.

Neurosciences & Urology

BOTOX® Therapeutic revenues in the fourth quarter of 2016 were $313.5 million, up 14 percent versus prior year quarter driven by continued strong demand across chronic migraine, overactive bladder and adult spasticity indications.

RAPAFLO® revenues in the fourth quarter of 2016 were $29.0 million, up 5 percent versus prior year quarter.

U.S. Specialized Therapeutics gross margin for the fourth quarter of 2016 was 95.2 percent. SG&A expenses in the segment in the fourth quarter 2016 were $340 million. Selling and marketing expenses increased $44 million versus prior year primarily attributed to sales force expansion and new product promotion. General and administrative expenses increased $26 million at the segment level due to the Company's new operating management structure that began in 2016 where more costs support the operating segments versus corporate functions. Segment contribution for the fourth quarter 2016 remained strong at $1.2 billion versus the prior year period of $1.1 billion.

US General Medicine

     

Segment Information

     

    

(Unaudited; $ in millions)

 

Three Months Ended December 31,

   

2016

 

2015 (1)

 

      

Central Nervous System

 

$ 339.0

 

$ 356.0

 

Gastrointestinal

 

444.0

 

436.9

 

Women's Health

 

314.5

 

281.3

 

Anti-Infectives

 

58.0

 

50.5

 

Diversified Brands

 

327.8

 

381.5

 

Other Revenues

 

49.7

 

28.5

 

Net revenues

 

$ 1,533.0

 

$ 1,534.7

 

Operating expenses:

     

Cost of sales(2)

 

230.2

 

235.5

 

Selling and marketing

 

282.9

 

277.6

 

General and administrative

 

46.7

 

16.5

 

Segment contribution

 

$ 973.2

 

$ 1,005.1

 

Segment margin

 

63.5%

 

65.5%

 

Segment gross margin(3)

 

85.0%

 

84.7%

 

      

(1) Includes revenues earned that were distributed through our former Anda Distribution business to third party customers.

(2) Excludes amortization and impairment of acquired intangibles including product rights.

   

(3) Defined as net revenues less segment related cost of sales as a percentage of net revenues.

   

U.S. General Medicine net revenues in the fourth quarter 2016 remained stable compared to the prior year quarter, impacted by a decline in Central Nervous System and Diversified Brands revenues, offset primarily by strong growth in Women's Health products and a stable Gastrointestinal franchise.

Central Nervous System

Allergan CNS franchise revenues of $339 million decreased $17 million from the prior year quarter as a result of lower revenues of NAMENDA XR® offset by continued growth from VRAYLAR™.

NAMZARIC® net revenues in the fourth quarter of 2016 increased to $19.5 million from $7.9 million in the prior year quarter following the approval in July of an expanded label with new dosages for the product allowing patients to begin combination therapy on NAMZARIC®.

NAMENDA XR® net revenues in the fourth quarter of 2016 were $141.1 million, down 26 percent versus prior year quarter driven primarily by lower demand as a result of a reduction in promotional support and higher rebates and discounts.

VRAYLAR™ net revenues in the fourth quarter of 2016 were strong at $43.2 million, reflecting its rapid acceptance in its first year post-launch.

VIIBRYD®/FETZIMA® continue to perform well with net revenues in the fourth quarter of 2016 of $89.7 million, up 8 percent versus prior year quarter.

SAPHRIS® net revenues were $43.2 million, down 18 percent versus prior year quarter impacted by higher discount rates for Medicaid as a result of pediatric approval and moderately lower demand following a reduction in promotional support.

Gastrointestinal

LINZESS® net revenues in the fourth quarter of 2016 were $173.6 million, up 34 percent versus prior year quarter driven primarily by strong demand and continued OTC conversion.

VIBERZI® net revenues in the fourth quarter of 2016 were $38 million, driven by continued uptake by gastroenterologists and primary care physicians.

ASACOL®/DELZICOL® net revenues in the fourth quarter of 2016 were $62.9 million, a reduction of 57%, impacted by generic product entry for ASACOL® HD.

Women's Health

Lo LOESTRIN® net revenues in the fourth quarter of 2016 were $107.5 million, up 13 percent versus prior year quarter. Lo LOESTRIN® remains the number one prescribed branded oral contraceptive.

ESTRACE® Cream net revenues in the fourth quarter were $103.0 million and MINASTRIN® 24 net revenues in the fourth quarter of 2016 were $78.4 million.

LILETTA® net revenues in the fourth quarter of 2016 were $8.3 million following launch of the single-hand inserter in September 2016.

Anti-Infectives

TEFLARO® and DALVANCE® net revenues in the fourth quarter of 2016 were $31.7 million and $12.6 million, respectively.

AVYCAZ® net revenues in the fourth quarter of 2016 were $9.2 million reflecting a temporary reduction in supply, with supply resuming in the latter part of the fourth quarter.

Diversified Brands and Other Products

Diversified Brands net revenues in the fourth quarter of 2016 were $327.8 million, impacted by genericization of ENABLEX®.

Within Diversified Brands, BYSTOLIC®/BYVALSON® net revenues in the fourth quarter of 2016 were $159.8 million, a decline of 5 percent versus prior year quarter when the product experienced higher revenues following inventory re-stocking of the 20 mg dose. BYSTOLIC® continues to remain the flagship product of Allergan's primary care sales force.

U.S. General Medicine gross margin for the fourth quarter of 2016 remained stable at 85.0 percent. SG&A expenses in the segment were $329.6 million in the fourth quarter of 2016. General and administrative expenses increased $30 million at the segment level due to the Company's new operating management structure that began in 2016 where more costs are directly supporting the operating segments versus corporate functions. Segment contribution for the fourth quarter 2016 was $973.2 million.

International

Segment Information

 

(Unaudited; $ in millions)

Three Months Ended December 31,

 

2016

 

2015

    

Eye Care

$ 315.0

 

$ 295.0

Total Medical Aesthetics

284.6

 

246.4

Facial Aesthetics

244.0

 

203.4

Plastic Surgery

37.8

 

40.0

Skin Care

2.8

 

3.0

Botox Therapeutics and Other

138.3

 

132.2

Other Revenues

15.3

 

17.3

Net revenues

$ 753.2

 

$ 690.9

Operating expenses:

   

Cost of sales(1)

108.9

 

107.1

Selling and marketing

205.5

 

175.0

General and administrative

30.7

 

31.9

Segment contribution

$ 408.1

 

$ 376.9

Segment margin

54.2%

 

54.6%

Segment gross margin (2)

85.5%

 

84.5%

    

(1) Excludes amortization and impairment of acquired intangibles including product rights.

  

(2) Defined as net revenues less segment related cost of sales as a percentage of net revenues.

  

International net revenues excluding foreign exchange impact increased 11 percent year over year, driven by growth in Facial Aesthetics and Eye Care.

Medical Aesthetics

Facial Aesthetics

BOTOX® Cosmetic revenues in the fourth quarter of 2016 were $127.1 million, up 12 percent excluding foreign exchange driven by continued growth mainly in Asia Pacific (APAC) and Turkey, Middle East and Africa (TMEA).

Fillers revenues in the fourth quarter of 2016 was $116.2 million, up 34 percent excluding foreign exchange reflecting continued strong performance across most regions.

Plastic Surgery

Breast implant revenues in the fourth quarter of 2016 decreased 6 percent excluding foreign exchange to $37.4 million.

Eye Care

LUMIGAN®/GANFORT® and ALPHAGAN®/COMBIGAN® revenues in the fourth quarter of 2016 were $92.5 million, a 2 percent increase excluding foreign exchange versus prior year, and $42.0 million, a 10 percent increase excluding foreign exchange versus prior year, respectively, reflecting solid performance across Allergan's glaucoma product franchise.

OZURDEX® revenues in the fourth quarter of 2016 were $48.8 million, up 27 percent excluding foreign exchange reflecting strong demand across all regions.

OPTIVE® revenues in the fourth quarter of 2016 were $26.2 million, up 5 percent excluding foreign exchange versus prior year quarter.

Botox Therapeutic & Other Products

BOTOX® Therapeutic revenues in the fourth quarter of 2016 were $83.0 million, up 12 percent excluding foreign exchange reflecting continued volume growth across all regions.

ASACOL®/DELZICOL® revenues in the fourth quarter of 2016 were $13.2 million, reflecting continued decline.

International gross margin for the fourth quarter of 2016 was 85.5 percent. SG&A expenses in the segment were $236 million in the fourth quarter of 2016, an increase of 16 percent excluding foreign exchange versus prior year, primarily due to investments in key brands and market expansion. Segment contribution was $408.1 million.

Corporate Function Included within our corporate function are shared costs, including above site and unallocated costs associated with running our global manufacturing facilities, corporate general and administrative expenses and corporate initiatives.

Pipeline Update Allergan R&D continues to build and deliver on its pipeline. Key development highlights included:

U.S. and International Branded Product Approvals and Launches

Allergan announced that it received approval from the U.S. Food and Drug Administration (FDA) for the XEN® Glaucoma Treatment System (consisting of the XEN45 Gel Stent and the XEN Injector) for use in the U.S.

Allergan announced that it received FDA approval to market NATRELLE INSPIRA® SoftTouch breast implants, offering women undergoing breast reconstruction, augmentation or revision surgery a new medium firmness gel, or cohesive, implant option.

Allergan announced that it received FDA approval for RESTASIS MULTIDOSE™ (Cyclosporine Ophthalmic Emulsion) 0.05%, a preservative-free, multi-dose bottle offering the same preservative-free formulation of RESTASIS since the product's launch in 2003.

Allergan announced that it received FDA approval for RHOFADE™ cream for the topical treatment of persistent facial erythema (redness) associated with rosacea in adults.

Allergan and Ironwood Pharmaceuticals announced the FDA approval of a 72 mcg dose of LINZESS® (linaclotide) for the treatment of chronic idiopathic constipation (CIC) in adult patients.

Allergan announced that the FDA approved the Company's supplemental New Drug Application (sNDA) to update the label for AVYCAZ® (ceftazidime and avibactam) with clinical data from two Phase 3 trials supporting the indication to treat patients with complicated urinary tract infections (cUTI), including pyelonephritis, caused by designated susceptible Gram-negative microorganisms.

Allergan announced the launch of TAYTULLA™ (norethindrone acetate and ethinyl estradiol capsules and ferrous fumarate capsules), 1mg/20mcg, the first and only oral contraceptive in a softgel capsule for the prevention of pregnancy.

Allergan announced the U.S. launch of JUVÉDERM VOLBELLA® XC for use in the lips for lip augmentation and for correction of perioral rhytids in adults over the age of 21.

Regulatory Milestones & Clinical Updates

Allergan and Ironwood announced positive data from two Phase IIb clinical trials evaluating the investigational linaclotide in colonic release formulations in adult patients with irritable bowel syndrome with constipation (IBS-C).

Allergan and Gedeon Richter announced positive results from Venus II, the second of two pivotal phase III clinical trials evaluating the efficacy and safety of ulipristal acetate in women with abnormal bleeding due to uterine fibroids. A new drug application filing for ulipristal acetate is planned for the second half of 2017.

Allergan and Medicines360 announced that the FDA accepted for filing the companies' supplemental New Drug Application (sNDA) to potentially extend the duration of use for the prevention of pregnancy from up to three years to up to four years for LILETTA® (levonorgestrel-releasing intrauterine system) 52 mg.

Update on Allergan's Social Contract and U.S. Drug Pricing Actions

In September 2016, Allergan introduced its Social Contract with Patients. Allergan committed to limit price increases on its products to once per year, and to only increase the list price of a product by single-digits with the expectation that net price increases would be in the low to mid- single digit range after discounts and rebates.

For the full-year 2016, Allergan's net price increases on its U.S. products averaged 4.8 percent (list price increases averaged 8.1 percent).

Effective January 2017, Allergan increased the price of certain U.S. branded products. These changes are consistent with Allergan's Social Contract. The average list price increase was 6.7%. No single product list price has increased more than single digits and the net increase for these products is expected to be in the low single digits (2-3%) after discounts and rebates. This will be the only increase in 2017 for these branded products.

"We have taken bold actions to address issues impacting our industry and society. We are committed to our Social Contract with Patients, and our recent pricing actions are aligned with its principles. In November, we announced enhancements to our Patient Assistance Program (PAP) that position Allergan among industry leaders in providing free medicines for those who cannot afford our treatments. These commitments are important to the long-term stability of our Company, but most importantly, they help the people who count on us to find and provide treatments for their most pressing medical needs," said Saunders.

First Quarter and Full Year 2017 Continuing Operations Guidance Allergan's full year 2017 estimates are based on management's current belief about prescription trends, pricing levels, inventory levels and the anticipated timing of future product launches and events. Continuing operations includes the U.S. Specialized Therapeutics, U.S. General Medicine and International.

The following guidance includes the following assumptions:

Full-Year 2017:

Contribution of LifeCell as of February 1, 2017

NAMENDA XR® generic launch in the fourth quarter of 2017

RESTASIS® remains stable

~$100 million of foreign exchange impact

R&D Expense similar split across quarters

Non-GAAP Net Interest Expense weighted toward back-half of 2017

Share count reflects current progress on Accelerated Share Repurchase Program settlement – higher share count in the first half of 2017

First Quarter 2017:

Revenue estimate reflects normal seasonality, the addition of two months of LifeCell revenues and a change in U.S. wholesale buying patterns.

 

GAAP

NON-GAAP

 

Full Year 2017

   

Total Net Revenues

$15,500 - $15,800 million

$15,500 - $15,800 million

 

Gross Margin (as a % of revenues)

~84.5% - 85.5%

~86-87%

 

SG&A Expense

~$4.4 - $4.5 billion

~$4.3-$4.4 billion

 

R&D Expense

~$1.8 - $1.9 billion

~$1.45 - $1.55 billion

 

Net Interest Expense/Other Income

~$1.050 billion

~$1.075 billion

 

Tax Rate

~75%

~13.5%

 

Net Income / (Loss) Per Share1

$(1.80) - $(1.30)

$15.80 - $16.30

 

Average 2017 Share Count2

~333 million shares

~356 million shares

 

    

First Quarter 2017

   

Total Net Revenues

~$3,500 million

~$3,500 million

 

    

1 GAAP represents EPS for ordinary shareholders. GAAP (loss) per share includes the impact of amortization of approximately $6.9 billion including the preliminary assumptions around acquired LifeCell intangible assets, IPR&D impairments and asset sales and impairments, net of $60 million and dividends on preferred shares of approximately $278 million. Non-GAAP represents performance net income per share.

2 GAAP EPS shares do not include dilution of shares as earnings are a net loss. As such, the dilution impact of preferred share conversion and outstanding equity awards is not included in the forecasted shares.