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Eli Lilly (LLY) Q4 Earnings Miss, COVID Therapies Aid Sales

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Eli Lilly and Company (LLY - Free Report) reported fourth-quarter 2021 adjusted earnings per share of $2.49, which missed the Zacks Consensus Estimate of $2.51. Earnings, however, rose 8% year over year, driven by higher operating profits.

Revenues of $8.0 billion beat the Zacks Consensus Estimate of $7.56 billion. Sales increased 8% year over year as volume increases offset the impact of lower realized prices.

In the reported quarter, Lilly recorded $1.06 billion of revenues from COVID-19 therapies. Excluding COVID therapies, total revenues rose 6% in the quarter.

Lilly’s shares were slightly down in pre-market trading in response to the mixed results. Shares of Lilly have rallied 24.4% in the past year compared with the industry’s increase of 18%.

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Full-Year Results

For 2021, Lilly generated revenues of $28.32 billion, reflecting an increase of 15%, driven by high volume growth. Excluding COVID therapies, total revenues grew 10% in 2021.

For full-year 2021, the company reported earnings of $8.16 per share, up 20% year over year.

Quarter in Detail

Net realized prices decreased 3% in the quarter while volumes rose 11%.

Key growth products (the ones launched since 2014) drove 14% of revenue growth and represented nearly 61% of total revenues, excluding revenues from COVID-19 antibodies. U.S. revenues surged 13% to $5.17 billion, but ex-U.S. revenues decreased 1% to $2.82 billion due to lower realized prices and unfavorable impact of foreign exchange rates.

Among the growth products, Trulicity generated revenues worth $1.88 billion, up 25% year over year, driven by higher volumes and increased demand.

Cyramza revenues of $270.4 million were down 5% year over year as decreased demand in the United States was offset by increased volume outside the U.S. market.

Jardiance sales surged 38% to $431.9 million, driven by increased demand trends within the SGLT2 class of diabetes medicines in the United States and increased volume outside the United States.

Basaglar recorded revenues of $242.4 million, down 14% year over year due to lower realized prices and weak demand caused by competitive pressure in the United States. Basaglar sales also declined in international markets.

Taltz brought in sales of $647.4 million, up 31% year over year, as U.S. sales benefited from increased demand. Ex-U.S. sales rose on increased volume.

Olumiant (baricitinib) generated sales of $306 million in the fourth quarter, up 59% on a year-over-year basis, backed by increased use of the drug globally for treating COVID-19 amid rising infection rates. Lilly markets Olumiant in partnership with Incyte (INCY - Free Report) .

Last month, Lilly and Incyte announced two important updates on Olumiant for treating systemic lupus erythematosus (SLE or lupus) and atopic dermatitis (“AD”). Lilly and Incyte decided to discontinue the development of Olumiant in lupus.

Lilly and Incyte also expect the FDA to issue a complete response letter to the supplemental new drug application seeking label expansion for Olumiant in adults with moderate-to-severe AD, as Lilly does not have alignment with the FDA on the indicated population.

Verzenio generated sales of $404.1 million in the reported quarter, up 43% year over year, driven by increased demand, partially offset by lower realized prices.

Emgality generated revenues of $161.5 million in the quarter, up 47% year over year, driven by increased demand and higher realized prices in the United States. Revenues also rose in the international market.

Tyvyt revenues in China were $77.8 million, down 24% year over year due to lower realized prices. Lilly markets Tyvyt in partnership with Innovent.

Among the newer drugs, Retevmo generated sales of $38.6 million in the quarter compared with $33.6 million in the previous quarter.

Among the established products, Forteo sales declined 28% to $184 million. Humalog sales were down 16% to $601.7 million. Humulin sales dropped 8% to $298.8 million. Alimta sales declined 33% to $434.9 million.

Lilly generated revenues of $1.06 billion from its COVID-19 therapies, bamlanivimab and bamlanivimab/etesevimab cocktail medicine, in the quarter compared with $217.1 million in the previous quarter.

Lilly’s antibody cocktail, a combination of bamlanivimab and etesevimab, was granted emergency use authorization ("EUA") by the FDA to treat mild-to-moderate COVID-19 in high-risk patients in February. In September 2021, the FDA expanded the EUA for cocktail antibody medicine, bamlanivimab plus etesevimab, to include the post-exposure prevention (prophylaxis) for COVID-19 indication. Baricitinib (marketed as Olumiant) was granted EUA by the FDA for treating COVID-19 (hospitalized patients) in November 2020.

In December 2021, the FDA expanded the emergency approval granted to bamlanivimab plus etesevimab to allow its use in high-risk COVID-19 pediatric and infant patients, both for treatment as well as post-exposure prophylaxis.

Notably, in January 2022, the FDA revised the emergency use authorization (EUA) for bamlanivimab plus etesevimab as well as Regeneron Pharmaceuticals’ (REGN - Free Report) cocktail antibody drug, REGEN-COV (casirivimab plus imdevimab). The revision for these two cocktail COVID-19 drugs limits their use in patients who have been infected or exposed to a coronavirus variant that is susceptible to these treatments.

The FDA decided to limit the authorized use of Lilly and Regeneron’s cocktail COVID-19 drugs as these treatment options are highly unlikely to be effective against the Omicron variant in the United States. This decision is expected to hurt sales of Lilly and REGN's cocktail antibody in future quarters.

Adjusted gross margin was 76.1% in the quarter, down 250 basis points. Operating income rose 3% year over year to $2.53 billion.

2022 Guidance

Lilly reiterated the financial guidance for 2022, which it provided in December 2021.

The company expects revenues to be between $27.8 billion and $28.3 billion in 2022 while earnings per share are expected to be between $8.50 and $8.65. The Zacks Consensus Estimate for revenues and earnings currently stands at $28.05 billion and $8.45 per share, respectively.

Gross margin is expected to be approximately 80%. The adjusted operating margin is expected to be approximately 32%.

Marketing, selling and administrative expenses are expected to be in the range of $6.4 billion to $6.6 billion. Research and development expenses are expected to be in the range of $7.0 billion to $7.2 billion.

Eli Lilly and Company Price, Consensus and EPS Surprise

Eli Lilly and Company Price, Consensus and EPS Surprise

Eli Lilly and Company price-consensus-eps-surprise-chart | Eli Lilly and Company Quote

Zacks Rank & Key Pick

Lilly currently carries a Zacks Rank #2 (Buy). A top-ranked stock in the large-cap pharma sector is Pfizer Inc. (PFE - Free Report) , which has a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pfizer’s earnings estimates have been revised 39.6% upward for 2022 over the past 60 days. The stock has rallied 54.6% in the past year.

Pfizer’s earnings have surpassed estimates in three of the trailing four quarters and missed the same on the other occasion.