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Lilly (LLY) Beats on Q4 Earnings, Lags on Sales, Raises '23 View
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Eli Lilly and Company (LLY - Free Report) reported fourth-quarter 2022 adjusted earnings per share (EPS) of $2.09, which beat both the Zacks Consensus Estimate and our model estimate of $1.83 and $1.90. Earnings declined 4% year over year on the back of higher operating expenses.
Revenues of $7.30 billion missed both the Zacks Consensus Estimate and our estimate of $7.32 billion and $7.34 billion, respectively. Sales declined 9% year over year.
Full-Year Results
For 2022, Lilly generated revenues of $28.54 billion, reflecting an increase of 1%, driven by higher demand for key growth products like Mounjaro, Trulicity, Taltz and others.
For 2022, the company reported adjusted earnings of $7.94 per share, up 7.4% year over year.
Quarter in Detail
In the quarter, net realized prices declined 3% in the quarter while volumes fell by 2%. The unfavorable impact of foreign exchange rates hurt sales by 4% in the quarter.
Key growth products (the ones launched in 2014) grew 21% and contributed 70% to total revenues. While U.S. revenues declined 10% to $4.66 billion, ex-U.S. revenues fell by 6% to $2.64 billion.
Among the growth products, Trulicity generated revenues worth $1.94 billion, up 3% year over year, driven by increased worldwide demand, which offset the impact of currency headwinds and lower realized prices. However, the reported figures missed the Zacks Consensus Estimate and our model estimate, both of which stood at $2.08 billion.
Taltz brought in sales of $707.8 million, up 9% year over year, as the drug’s worldwide sales benefited from increased demand, which offset the impact of lower realized prices and currency headwinds.
Verzenio generated sales of $808.0 million in the reported quarter, up 100% year over year, on increased demand, driven by the approval and launch of the adjuvant indication, partially offset by lower realized prices due to updated 2022 NRDL price reductions in China and currency headwinds. Verzenio sales beat the Zacks Consensus Estimate and our model estimates of $708 million and $689.7 million, respectively.
Jardiance sales surged 42% to $612.3 million, driven by increased demand trends within the SGLT2 class of diabetes medicines in the United States and increased demand outside the United States, partially offset by currency headwinds. The reported sales figure exceeded the Zacks Consensus Estimates of $611 million during the quarter.
Emgality generated revenues of $175.6 million in the quarter, up 9% year over year, as sales benefited from increased demand, which offset the impact of lower realized prices in ex-U.S. markets and currency headwinds.
In the reported quarter, Lilly recorded only $38.0 million of revenues from COVID-19 therapies, down 96% year-over-year, since the FDA rescinded the authorization granted to its COVID-19 antibody bebtelovimab last November.
Olumiant (baricitinib) generated sales of $205.8 million in the fourth quarter, down 33% on a year-over-year basis, on account of lower utilization of the medicine in COVID-19 treatment as the impact of the pandemic reduces. Lilly markets Olumiant in partnership with Incyte.
Cyramza revenues of $277.8 million were up 3% year over year. Basaglar recorded revenues of $201.7 million, down 17% year over year.
Tyvyt revenues in China were $57.5 million, down 26% year over year due to lower realized prices due to updated 2022 NRDL price reductions in China and increased competition. Lilly markets Tyvyt in partnership with Innovent.
Among the newer drugs, the cancer drug Retevmo generated sales of $64.6 million, up 67% year over year.
The recently approved diabetes drug, Mounjaro, recorded $279.2 million during the quarter, much higher than $187.3 million in the previous quarter. The reported sales figures exceeded our estimate of $262 million for the quarter.
Among the established products, Forteo sales declined 13% to $160.0 million. Humulin sales dropped 22% to $234.0 million. Alimta sales declined 46% to $236.6 million. Humalog sales declined 9% to $548.3 million due to lower realized prices in China and currency headwinds.
Adjusted gross margin stood at 80.5%, a 4.4 percentage points increase compared to the year-ago quarter. Operating income dropped 7% year over year to $2.00 billion, which suffered from declining sales volume experienced during the quarter.
2023 Guidance Updated
Lilly revised the financial guidance for 2023, which it provided in December 2022.
The company reiterated its revenue guidance to be between $30.3 billion and $30.8 billion in 2023. Management now expects to record earnings per share in the range of $8.35 and $8.55, a rise from the previously provided range of $8.10 and $8.30. The Zacks Consensus Estimate for revenues and earnings currently stands at $30.62 billion and $8.50 per share, respectively.
The adjusted gross margin is expected to be approximately 79% (unchanged).
The company also reiterated its guidance for operating expenses. Marketing, selling and administrative expenses are expected to be $6.9-$7.1 billion. Research and development (R&D) expense is expected to be in the range of $8.2 billion to $8.4 billion.
The tax rate guidance was reduced to around 13% for the full year, down from the previously provided 16% figure.
Our Take
Lilly reported mixed fourth-quarter results beating earnings estimates but missing out on sales.
Following the earnings announcement, shares of Lilly were down 2.0% in pre-market trading in response to the mixed earnings report. Yet, shares of Lilly have risen 36.6% this year so far compared with the industry’s increase of 7.6%.
Image Source: Zacks Investment Research
The company has also been investing heavily in its R&D to achieve its target of launching five new medicines before 2023-end. This includes the diabetes drug Mounjaro launched in the last year and the recently-approved lymphoma drug Jaypirca in the last week. These drugs are expected to have a multibillion-dollar sales potential.
In the past 60 days, estimates for Allogene’s 2023 loss per share have narrowed from $2.86 to $2.84. Shares of Allogene have declined 28.3% in the past year.
The earnings of Allogene beat estimates in each of the last four quarters, witnessing an earnings surprise of 9.44%, on average. In the last reported quarter, Allogene’s earnings beat estimates by 6.45%.
In the past 60 days, estimates for Eton Pharmaceuticals’ 2022 loss per share have narrowed from 44 cents to 38 cents. During the same period, the earnings estimates per share for 2023 have risen from 1 cent to 6 cents. Shares of ETON have declined by 4.7% in the past year.
Earnings of Eton Pharmaceuticals missed estimates in three of the last four quarters while beating the mark on one occasion, witnessing a negative earnings surprise of 115.63%, on average. In the last reported quarter, Eton Pharmaceuticals’earnings beat estimates by 20.00%.
In the past 60 days, estimates for 2seventy bio’s 2022 loss per share have narrowed from $8.76 to $8.16. Loss estimates for 2023 have narrowed from $5.16 to $4.49 during the same period. Shares of 2seventy bio have declined 17.5% in the year-to-date period.
Earnings of 2seventy bio missed estimates in three of the last four quarters and beat the mark just once, witnessing a negative surprise of 21.83%, on average. In the last reported quarter, TSVT’s earnings missed estimates by 1.15%.
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Lilly (LLY) Beats on Q4 Earnings, Lags on Sales, Raises '23 View
Eli Lilly and Company (LLY - Free Report) reported fourth-quarter 2022 adjusted earnings per share (EPS) of $2.09, which beat both the Zacks Consensus Estimate and our model estimate of $1.83 and $1.90. Earnings declined 4% year over year on the back of higher operating expenses.
Revenues of $7.30 billion missed both the Zacks Consensus Estimate and our estimate of $7.32 billion and $7.34 billion, respectively. Sales declined 9% year over year.
Full-Year Results
For 2022, Lilly generated revenues of $28.54 billion, reflecting an increase of 1%, driven by higher demand for key growth products like Mounjaro, Trulicity, Taltz and others.
For 2022, the company reported adjusted earnings of $7.94 per share, up 7.4% year over year.
Quarter in Detail
In the quarter, net realized prices declined 3% in the quarter while volumes fell by 2%. The unfavorable impact of foreign exchange rates hurt sales by 4% in the quarter.
Key growth products (the ones launched in 2014) grew 21% and contributed 70% to total revenues. While U.S. revenues declined 10% to $4.66 billion, ex-U.S. revenues fell by 6% to $2.64 billion.
Among the growth products, Trulicity generated revenues worth $1.94 billion, up 3% year over year, driven by increased worldwide demand, which offset the impact of currency headwinds and lower realized prices. However, the reported figures missed the Zacks Consensus Estimate and our model estimate, both of which stood at $2.08 billion.
Taltz brought in sales of $707.8 million, up 9% year over year, as the drug’s worldwide sales benefited from increased demand, which offset the impact of lower realized prices and currency headwinds.
Verzenio generated sales of $808.0 million in the reported quarter, up 100% year over year, on increased demand, driven by the approval and launch of the adjuvant indication, partially offset by lower realized prices due to updated 2022 NRDL price reductions in China and currency headwinds. Verzenio sales beat the Zacks Consensus Estimate and our model estimates of $708 million and $689.7 million, respectively.
Jardiance sales surged 42% to $612.3 million, driven by increased demand trends within the SGLT2 class of diabetes medicines in the United States and increased demand outside the United States, partially offset by currency headwinds. The reported sales figure exceeded the Zacks Consensus Estimates of $611 million during the quarter.
Emgality generated revenues of $175.6 million in the quarter, up 9% year over year, as sales benefited from increased demand, which offset the impact of lower realized prices in ex-U.S. markets and currency headwinds.
In the reported quarter, Lilly recorded only $38.0 million of revenues from COVID-19 therapies, down 96% year-over-year, since the FDA rescinded the authorization granted to its COVID-19 antibody bebtelovimab last November.
Olumiant (baricitinib) generated sales of $205.8 million in the fourth quarter, down 33% on a year-over-year basis, on account of lower utilization of the medicine in COVID-19 treatment as the impact of the pandemic reduces. Lilly markets Olumiant in partnership with Incyte.
Cyramza revenues of $277.8 million were up 3% year over year. Basaglar recorded revenues of $201.7 million, down 17% year over year.
Tyvyt revenues in China were $57.5 million, down 26% year over year due to lower realized prices due to updated 2022 NRDL price reductions in China and increased competition. Lilly markets Tyvyt in partnership with Innovent.
Among the newer drugs, the cancer drug Retevmo generated sales of $64.6 million, up 67% year over year.
The recently approved diabetes drug, Mounjaro, recorded $279.2 million during the quarter, much higher than $187.3 million in the previous quarter. The reported sales figures exceeded our estimate of $262 million for the quarter.
Among the established products, Forteo sales declined 13% to $160.0 million. Humulin sales dropped 22% to $234.0 million. Alimta sales declined 46% to $236.6 million. Humalog sales declined 9% to $548.3 million due to lower realized prices in China and currency headwinds.
Adjusted gross margin stood at 80.5%, a 4.4 percentage points increase compared to the year-ago quarter. Operating income dropped 7% year over year to $2.00 billion, which suffered from declining sales volume experienced during the quarter.
2023 Guidance Updated
Lilly revised the financial guidance for 2023, which it provided in December 2022.
The company reiterated its revenue guidance to be between $30.3 billion and $30.8 billion in 2023. Management now expects to record earnings per share in the range of $8.35 and $8.55, a rise from the previously provided range of $8.10 and $8.30. The Zacks Consensus Estimate for revenues and earnings currently stands at $30.62 billion and $8.50 per share, respectively.
The adjusted gross margin is expected to be approximately 79% (unchanged).
The company also reiterated its guidance for operating expenses. Marketing, selling and administrative expenses are expected to be $6.9-$7.1 billion. Research and development (R&D) expense is expected to be in the range of $8.2 billion to $8.4 billion.
The tax rate guidance was reduced to around 13% for the full year, down from the previously provided 16% figure.
Our Take
Lilly reported mixed fourth-quarter results beating earnings estimates but missing out on sales.
Following the earnings announcement, shares of Lilly were down 2.0% in pre-market trading in response to the mixed earnings report. Yet, shares of Lilly have risen 36.6% this year so far compared with the industry’s increase of 7.6%.
Image Source: Zacks Investment Research
The company has also been investing heavily in its R&D to achieve its target of launching five new medicines before 2023-end. This includes the diabetes drug Mounjaro launched in the last year and the recently-approved lymphoma drug Jaypirca in the last week. These drugs are expected to have a multibillion-dollar sales potential.
Eli Lilly and Company Price
Eli Lilly and Company price | Eli Lilly and Company Quote
Zacks Rank & Stocks to Consider
Lilly currently has a Zacks Rank #4 (Sell). Some other better-ranked stocks in the overall healthcare sector include Allogene (ALLO - Free Report) , Eton Pharmaceuticals (ETON - Free Report) and 2seventy bio (TSVT - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 60 days, estimates for Allogene’s 2023 loss per share have narrowed from $2.86 to $2.84. Shares of Allogene have declined 28.3% in the past year.
The earnings of Allogene beat estimates in each of the last four quarters, witnessing an earnings surprise of 9.44%, on average. In the last reported quarter, Allogene’s earnings beat estimates by 6.45%.
In the past 60 days, estimates for Eton Pharmaceuticals’ 2022 loss per share have narrowed from 44 cents to 38 cents. During the same period, the earnings estimates per share for 2023 have risen from 1 cent to 6 cents. Shares of ETON have declined by 4.7% in the past year.
Earnings of Eton Pharmaceuticals missed estimates in three of the last four quarters while beating the mark on one occasion, witnessing a negative earnings surprise of 115.63%, on average. In the last reported quarter, Eton Pharmaceuticals’earnings beat estimates by 20.00%.
In the past 60 days, estimates for 2seventy bio’s 2022 loss per share have narrowed from $8.76 to $8.16. Loss estimates for 2023 have narrowed from $5.16 to $4.49 during the same period. Shares of 2seventy bio have declined 17.5% in the year-to-date period.
Earnings of 2seventy bio missed estimates in three of the last four quarters and beat the mark just once, witnessing a negative surprise of 21.83%, on average. In the last reported quarter, TSVT’s earnings missed estimates by 1.15%.