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Eli Lilly (LLY) Q2 Earnings Beat, Mounjaro Powers Sales Growth
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Eli Lilly and Company (LLY - Free Report) reported second-quarter 2023 adjusted earnings per share of $2.11, which beat the Zacks Consensus Estimate of $1.98. Earnings rose 69% year over year due to volume-driven revenue growth.
Revenues of $8.31 billion beat the Zacks Consensus Estimate of $7.55 billion. Sales rose 28% year over year driven by volume growth.
Quarter in Detail
In the reported quarter, net realized prices were flat, while volumes rose 29%. The unfavorable impact of foreign exchange rates hurt sales by 1% in the quarter.
Key growth products (select products launched prior to 2022 like Cyramza, Emgality, Jardiance, Olumiant, Retevmo, Taltz, Trulicity, Tyvyt and Verzenio) grew 16% to $4.93 billion. Eli Lilly’s new products (products launched since 2022 like Mounjaro, Jaypirca and Omvoh) contributed $1.0 billion to revenues led by Mounjaro, Lilly’s highly successful type II diabetes medicine, which is benefiting from strong demand trends.
While U.S. revenues rose 41% to $5.53 billion, ex-U.S. revenues increased 9% to $2.78 billion.
Among the growth products, Trulicity generated revenues worth $1.81 billion, down 5% year over, due to the impact of lower realized prices in the United States as well as ex-U.S. markets, lower volumes in international markets and currency headwinds. Trulicity missed the Zacks Consensus Estimate of $2.09 billion as well as our model estimate of $2.05 billion.
Jardiance sales surged 45% to $668.3 million, driven by increased demand trends. Jardiance beat the Zacks Consensus Estimate of $655.0 million but slightly missed our model estimate of $682.9 million.
Taltz brought in sales of $703.9 million, up 16% year over year, as the drug’s worldwide sales benefited from increased demand. Taltz beat the Zacks Consensus Estimate of $673.0 million as well as our model estimate of $678.4 million.
Verzenio generated sales of $926.8 million in the reported quarter, up 57% year over year, on increased demand, driven by the approval and launch of the adjuvant indication, and partly due to higher realized prices. Verzenio sales beat the Zacks Consensus Estimate of $908 million as well as our model estimate of $897.1 million.
Emgality generated revenues of $169.3 million in the quarter, up 8% year over year. Olumiant (baricitinib) generated sales of $218.9 million, up 18% on a year-over-year basis, driven by increased demand for the newly approved alopecia areata indication. Retevmo generated sales of $65.4 million, up 45% year over year.
Among the newer drugs, the new diabetes drug Mounjaro recorded sales of $979.7 million during the quarter, much higher than $568.5 million in the previous quarter. The reported sales figure exceeded our estimate of $741.6 million for the quarter.
Among the established products, Alimta sales declined 73% to $60.9 million. Humalog sales declined 1% to $440.4 million.
In the reported quarter, Lilly did not record any revenues from COVID-19 therapies compared to $129.1 recorded in the year-ago quarter since the FDA rescinded the authorization granted to its COVID-19 antibody bebtelovimab last November.
2023 Guidance Upped
Lilly raised the financial guidance for 2023.
The company raised its revenue guidance to a range of $33.4 billion to $33.9 billion from the previously expected range of $31.2 billion-$31.7 billion. Sales of rights to some products (olanzapine portfolio, including Zyprexa, to Cheplapharm Arzneimittel and Baqsimi to Amphastar) coupled with an improved underlying performance led to the guidance increase.
Management now expects to record 2023 earnings per share in the range of $9.70-$9.90, a rise from the previously provided range of $8.65-$8.85 per share.
Adjusted gross margin is expected to be approximately 80% (previously 79%).
The company raised its guidance for operating expenses. Marketing, selling and administrative expenses are expected to be $7.2 to $7.4 billion, compared with $7.0-$7.2 billion previously as the company prepares for new launches in the second half of the year. Research and development expense is now expected to be in the range of $8.9 billion to $9.1 billion, higher than the previously expected range of $8.3 billion to $8.5 billion.
The tax rate is expected to be around 14% to 15% for the full year (previously around 13%)
Our Take
Lilly’s second-quarter results were strong as it beat estimates for both earnings and sales. The company witnessed strong volume growth of Mounjaro, Verzenio, Jardiance and Taltz, which made up for the decline in sales of Alimta due to the loss of exclusivity in the United States and no COVID revenues in the quarter. In addition, Lilly raised its earnings and sales guidance for the year.
Mounjaro is expected to be a key long-term top-line driver for Lilly as it has the potential to be approved for obesity and other diabetes-related diseases. Mounjaro showed superior weight-loss reduction in clinical studies for obesity. Regulatory applications have already been filed for Mounjaro for the obesity indication in the United States and EU.
With demand for weight loss drugs rising rapidly, better-than-expected sales of Mounjaro, which has shown promise in obesity studies, caught investor attention.
Shares rose more than 9% in pre-market trading. Lilly’s stock has risen 24.1% year to date compared with an increase of 0.4% for the industry.
Image Source: Zacks Investment Research
Lilly’s shares also gained momentum as its rival Novo Nordisk (NVO - Free Report) , earlier on Tuesday, announced headline results from the SELECT cardiovascular outcomes study on its obesity drug, Wegovy. The data from the study showed that Novo Nordisk’s Wegovy reduced the risk of a major cardiovascular event like a stroke by 20% in adults who are overweight or obese. Novo Nordisk expects to file regulatory applications to seek approval of Wegovy for expanded use to reduce cardiovascular events in overweight/obese individuals in 2023.
Lilly’s key business development activity in the quarter included announcements to acquire DICE Therapeutics , Sigilon Therapeutics and Versanis Bio.
Lilly announced a definitive agreement to acquire DICE Therapeutics, which develops oral IL-17 inhibitors to treat chronic diseases in immunology, in June. Lilly has offered to buy DICE Therapeutics for $48 per share in cash (an aggregate of approximately $2.4 billion).
A large drug stock worth considering is J&J (JNJ - Free Report) , which has a Zacks Rank of 2 (Buy).
Estimates for J&J’s 2023 earnings per share have increased from $10.66 to $10.74 over the past 30 days. Estimates for 2024 have jumped from $11.01 per share to $11.29 in the same timeframe. J&J’s stock has declined 2% year to date.
J&J beat earnings expectations in all the trailing four quarters. The company delivered a four-quarter earnings surprise of 5.58%, on average.
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Eli Lilly (LLY) Q2 Earnings Beat, Mounjaro Powers Sales Growth
Eli Lilly and Company (LLY - Free Report) reported second-quarter 2023 adjusted earnings per share of $2.11, which beat the Zacks Consensus Estimate of $1.98. Earnings rose 69% year over year due to volume-driven revenue growth.
Revenues of $8.31 billion beat the Zacks Consensus Estimate of $7.55 billion. Sales rose 28% year over year driven by volume growth.
Quarter in Detail
In the reported quarter, net realized prices were flat, while volumes rose 29%. The unfavorable impact of foreign exchange rates hurt sales by 1% in the quarter.
Key growth products (select products launched prior to 2022 like Cyramza, Emgality, Jardiance, Olumiant, Retevmo, Taltz, Trulicity, Tyvyt and Verzenio) grew 16% to $4.93 billion. Eli Lilly’s new products (products launched since 2022 like Mounjaro, Jaypirca and Omvoh) contributed $1.0 billion to revenues led by Mounjaro, Lilly’s highly successful type II diabetes medicine, which is benefiting from strong demand trends.
While U.S. revenues rose 41% to $5.53 billion, ex-U.S. revenues increased 9% to $2.78 billion.
Among the growth products, Trulicity generated revenues worth $1.81 billion, down 5% year over, due to the impact of lower realized prices in the United States as well as ex-U.S. markets, lower volumes in international markets and currency headwinds. Trulicity missed the Zacks Consensus Estimate of $2.09 billion as well as our model estimate of $2.05 billion.
Jardiance sales surged 45% to $668.3 million, driven by increased demand trends. Jardiance beat the Zacks Consensus Estimate of $655.0 million but slightly missed our model estimate of $682.9 million.
Taltz brought in sales of $703.9 million, up 16% year over year, as the drug’s worldwide sales benefited from increased demand. Taltz beat the Zacks Consensus Estimate of $673.0 million as well as our model estimate of $678.4 million.
Verzenio generated sales of $926.8 million in the reported quarter, up 57% year over year, on increased demand, driven by the approval and launch of the adjuvant indication, and partly due to higher realized prices. Verzenio sales beat the Zacks Consensus Estimate of $908 million as well as our model estimate of $897.1 million.
Emgality generated revenues of $169.3 million in the quarter, up 8% year over year. Olumiant (baricitinib) generated sales of $218.9 million, up 18% on a year-over-year basis, driven by increased demand for the newly approved alopecia areata indication. Retevmo generated sales of $65.4 million, up 45% year over year.
Among the newer drugs, the new diabetes drug Mounjaro recorded sales of $979.7 million during the quarter, much higher than $568.5 million in the previous quarter. The reported sales figure exceeded our estimate of $741.6 million for the quarter.
Among the established products, Alimta sales declined 73% to $60.9 million. Humalog sales declined 1% to $440.4 million.
In the reported quarter, Lilly did not record any revenues from COVID-19 therapies compared to $129.1 recorded in the year-ago quarter since the FDA rescinded the authorization granted to its COVID-19 antibody bebtelovimab last November.
2023 Guidance Upped
Lilly raised the financial guidance for 2023.
The company raised its revenue guidance to a range of $33.4 billion to $33.9 billion from the previously expected range of $31.2 billion-$31.7 billion. Sales of rights to some products (olanzapine portfolio, including Zyprexa, to Cheplapharm Arzneimittel and Baqsimi to Amphastar) coupled with an improved underlying performance led to the guidance increase.
Management now expects to record 2023 earnings per share in the range of $9.70-$9.90, a rise from the previously provided range of $8.65-$8.85 per share.
Adjusted gross margin is expected to be approximately 80% (previously 79%).
The company raised its guidance for operating expenses. Marketing, selling and administrative expenses are expected to be $7.2 to $7.4 billion, compared with $7.0-$7.2 billion previously as the company prepares for new launches in the second half of the year. Research and development expense is now expected to be in the range of $8.9 billion to $9.1 billion, higher than the previously expected range of $8.3 billion to $8.5 billion.
The tax rate is expected to be around 14% to 15% for the full year (previously around 13%)
Our Take
Lilly’s second-quarter results were strong as it beat estimates for both earnings and sales. The company witnessed strong volume growth of Mounjaro, Verzenio, Jardiance and Taltz, which made up for the decline in sales of Alimta due to the loss of exclusivity in the United States and no COVID revenues in the quarter. In addition, Lilly raised its earnings and sales guidance for the year.
Mounjaro is expected to be a key long-term top-line driver for Lilly as it has the potential to be approved for obesity and other diabetes-related diseases. Mounjaro showed superior weight-loss reduction in clinical studies for obesity. Regulatory applications have already been filed for Mounjaro for the obesity indication in the United States and EU.
With demand for weight loss drugs rising rapidly, better-than-expected sales of Mounjaro, which has shown promise in obesity studies, caught investor attention.
Shares rose more than 9% in pre-market trading. Lilly’s stock has risen 24.1% year to date compared with an increase of 0.4% for the industry.
Image Source: Zacks Investment Research
Lilly’s shares also gained momentum as its rival Novo Nordisk (NVO - Free Report) , earlier on Tuesday, announced headline results from the SELECT cardiovascular outcomes study on its obesity drug, Wegovy. The data from the study showed that Novo Nordisk’s Wegovy reduced the risk of a major cardiovascular event like a stroke by 20% in adults who are overweight or obese. Novo Nordisk expects to file regulatory applications to seek approval of Wegovy for expanded use to reduce cardiovascular events in overweight/obese individuals in 2023.
Lilly’s key business development activity in the quarter included announcements to acquire DICE Therapeutics , Sigilon Therapeutics and Versanis Bio.
Lilly announced a definitive agreement to acquire DICE Therapeutics, which develops oral IL-17 inhibitors to treat chronic diseases in immunology, in June. Lilly has offered to buy DICE Therapeutics for $48 per share in cash (an aggregate of approximately $2.4 billion).
Zacks Rank & Stock to Consider
Lilly currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Eli Lilly and Company Price, Consensus and EPS Surprise
Eli Lilly and Company price-consensus-eps-surprise-chart | Eli Lilly and Company Quote
A large drug stock worth considering is J&J (JNJ - Free Report) , which has a Zacks Rank of 2 (Buy).
Estimates for J&J’s 2023 earnings per share have increased from $10.66 to $10.74 over the past 30 days. Estimates for 2024 have jumped from $11.01 per share to $11.29 in the same timeframe. J&J’s stock has declined 2% year to date.
J&J beat earnings expectations in all the trailing four quarters. The company delivered a four-quarter earnings surprise of 5.58%, on average.