Company: ABBV
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0001551152-25-000029
Chunk: 31

Company: AbbVie Inc.
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 1
Chunk 31
---
 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, 2025December 31, 2024RangeWeighted average(a)RangeWeighted average(a)Discount rate4.2% - 4.9%4.5%4.6% - 5.2%4.8%Probability of payment for royalties by indication100%100%100%100%Projected year of payments2025 - 203420292025 - 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 endedMarch 31,(in millions)20252024Beginning balance$21,666 $19,890