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Eli Lilly (LLY) Q3 Earnings & Sales Top, EPS View Cut, Stock Up
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Eli Lilly and Company (LLY - Free Report) reported third-quarter 2023 adjusted earnings per share (“EPS”) of 10 cents against the Zacks Consensus Estimate of a loss of 8 cents. In the year-ago quarter, Lilly had recorded earnings of $1.98 per share.
In the quarter, the company recognized acquired in-process research and development (IPR&D) charges of $2.98 billion ($3.29 per share), primarily related to the acquisitions of DICE Therapeutics, Versanis Bio and Emergence Therapeutics. These charges hurt earnings in the quarter.
Revenues of $9.5 billion beat the Zacks Consensus Estimate of $8.88 billion. Sales rose 37% year over year, driven by volume growth. Revenues in the quarter included $1.42 billion from sale of rights to the olanzapine portfolio, including Zyprexa, to Cheplapharm. EPS included $1.22 per share associated with the sale of rights for the olanzapine portfolio.
Quarter in Detail
In the reported quarter, net realized prices rose 6%, while volumes rose 31%. The favorable impact of foreign exchange rates was 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 12% to $4.96 billion. Eli Lilly’s new products (products launched since 2022 like Mounjaro, Jaypirca and Omvoh) contributed $1.44 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 21% to $5.37 billion, ex-U.S. revenues increased 64% to $4.13 billion.
Among the growth products, Trulicity generated revenues worth $1.67 billion, down 10% year over, due to changes to estimates for rebates and discounts, unfavorable segment mix and higher contracted rebates in the United States and lower realized prices and volumes in international markets. Trulicity missed the Zacks Consensus Estimate of $1.84 billion as well as our model estimate of $2.0 billion.
Jardiance sales surged 22% to $700.8 million, driven by increased demand trends. Jardiance missed the Zacks Consensus Estimate of $755.0 million as well as our model estimate of $773.7 million.
Taltz brought in sales of $744.2 million, up 9% year over year, as the benefit from increased demand was partially offset by lower realized prices in the United States and outside. Taltz missed the Zacks Consensus Estimate of $758.0 million.
Verzenio generated sales of $1.04 billion in the reported quarter, up 68% 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 $1.02 billion.
Emgality generated revenues of $168.5 million in the quarter, flat year over year. Olumiant (baricitinib) generated sales of $231.4 million, up 27% on a year-over-year basis, driven by increased demand for the newly approved alopecia areata indication, partially offset by lower realized prices. Retevmo generated sales of $63.4 million, up 56% year over year.
Among the newer drugs, the new diabetes drug Mounjaro recorded sales of $1.41 billion during the quarter, much higher than $979.7 million in the previous quarter. The reported sales figure slightly missed the Zacks Consensus Estimate of $1.42 billion. Though Mounjaro sales benefited from higher realized prices due to decreased utilization of savings card programs, intermittent delays in fulfilling orders of certain Mounjaro doses, given significant demand, continued to hurt volumes in the third quarter.
Nonetheless, 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 has shown a superior weight-loss reduction in clinical studies for the obesity indication. Regulatory applications have already been filed for Mounjaro for the obesity indication in the United States and the EU. In the United States, the FDA has assigned priority review to the regulatory filing, with a decision expected by year-end.
Among the established products, Alimta sales declined 55% to $53.5 million. Humalog sales declined 12% to $395.4 million.
In the reported quarter, Lilly did not record any revenues from COVID-19 therapies compared to $386.6 million recorded in the year-ago quarter as the FDA rescinded the authorization granted to its COVID-19 antibody bebtelovimab last November.
2023 Guidance Updated
Lilly maintained its sales guidance for 2023 but lowered the earnings view.
The company maintained its revenue guidance in the range of $33.4 billion to $33.9 billion.
Management now expects to record 2023 earnings per share in the range of $6.50 to $6.70, much lower than the previously provided range of $9.70-$9.90 per share due to higher acquired IPR&D charges and a higher tax rate.
Adjusted gross margin is expected to be approximately 80%.
The company maintained its guidance for operating expenses. Marketing, selling and administrative expenses are expected to be in the range of $7.2 billion to $7.4 billion. Research and development expense is expected to be in the range of $8.9 billion to $9.1 billion.
Acquired IPR&D guidance was increased from $202 million to $3.18 billion to include the charges incurred in the third quarter.
The tax rate is expected to be around 19% to 20% for the full year, much higher than 14% to 15%, expected previously due to the non-deductible acquired IPR&D charges incurred in the third quarter.
Our Take
Lilly’s third-quarter results were better-than-expected as it beat estimates for earnings as well as sales. The company witnessed strong sales growth of Mounjaro, Verzenio, Jardiance and Taltz, which made up for the decline in the sales of key diabetes drug Trulicity and no COVID revenues in the quarter. Though the company maintained its 2023 guidance for sales, it cut the same for earnings on charges related to acquisitions and collaboration deals.
Shares rose 2.3% in pre-market trading in response to the mixed earnings performance. Lilly’s stock has risen 51.5% year to date compared with an increase of 2.3% for the industry.
Image Source: Zacks Investment Research
In the quarter, Lilly gained approval for Omvoh for the treatment of adults with moderately to severely active ulcerative colitis and an expanded indication for Jardiance in adults with chronic kidney disease. Lilly completed some key acquisitions in the quarter, like DICE Therapeutics. The company also announced earlier this month that it has offered to buy POINT Biopharma, a maker of next-generation radioligand therapies for treating cancers, for approximately 1.4 billion in cash or $12.50 per share.
Earlier in the day, rival Novo Nordisk (NVO - Free Report) announced its earnings for the third quarter.The Danish drugmaker reported encouraging third-quarter 2023 results, beating both earnings and sales estimates. Sales rose 38% at a constant exchange rate (CER), driven by strong sales of diabetes drugs like Ozempic and Rybelsus as well as obesity drug, Wegovy, despite supply constraints. NVO continues to expand its supply capacity for Wegovy, post its re-launch in the United States as well as in other geographies. Novo Nordisk also raised its sales and profit expectations for 2023, reflecting higher expectations for GLP-1-based diabetes treatments like Ozempic.
In the past 60 days, estimates for Dynavax Technologies’ 2023 loss per share have narrowed from 24 cents to 22 cents. Meanwhile, during the same period, earnings per share estimates for 2024 have improved from 2 cents to 8 cents. Year to date, shares of DVAX have rallied 32.4%.
Earnings of Dynavax Technologies beat estimates in two of the last four quarters while missing the same on the remaining two occasions. DVAX delivered a four-quarter average earnings surprise of 25.78%.
In the past 60 days, estimates for MEI Pharma’s 2023 loss per share have improved from $6.54 to $4.89. During the same period, loss per share estimates for 2024 have narrowed from $5.14 to $4.02. Year to date, shares of MEIP have rallied 44.1%.
Earnings of MEI Pharma beat estimates in three of the trailing four quarters and met the same on the other occasion. On average, MEIP came up with an average four-quarter earnings surprise of 53.58%.
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Eli Lilly (LLY) Q3 Earnings & Sales Top, EPS View Cut, Stock Up
Eli Lilly and Company (LLY - Free Report) reported third-quarter 2023 adjusted earnings per share (“EPS”) of 10 cents against the Zacks Consensus Estimate of a loss of 8 cents. In the year-ago quarter, Lilly had recorded earnings of $1.98 per share.
In the quarter, the company recognized acquired in-process research and development (IPR&D) charges of $2.98 billion ($3.29 per share), primarily related to the acquisitions of DICE Therapeutics, Versanis Bio and Emergence Therapeutics. These charges hurt earnings in the quarter.
Revenues of $9.5 billion beat the Zacks Consensus Estimate of $8.88 billion. Sales rose 37% year over year, driven by volume growth. Revenues in the quarter included $1.42 billion from sale of rights to the olanzapine portfolio, including Zyprexa, to Cheplapharm. EPS included $1.22 per share associated with the sale of rights for the olanzapine portfolio.
Quarter in Detail
In the reported quarter, net realized prices rose 6%, while volumes rose 31%. The favorable impact of foreign exchange rates was 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 12% to $4.96 billion. Eli Lilly’s new products (products launched since 2022 like Mounjaro, Jaypirca and Omvoh) contributed $1.44 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 21% to $5.37 billion, ex-U.S. revenues increased 64% to $4.13 billion.
Among the growth products, Trulicity generated revenues worth $1.67 billion, down 10% year over, due to changes to estimates for rebates and discounts, unfavorable segment mix and higher contracted rebates in the United States and lower realized prices and volumes in international markets. Trulicity missed the Zacks Consensus Estimate of $1.84 billion as well as our model estimate of $2.0 billion.
Jardiance sales surged 22% to $700.8 million, driven by increased demand trends. Jardiance missed the Zacks Consensus Estimate of $755.0 million as well as our model estimate of $773.7 million.
Taltz brought in sales of $744.2 million, up 9% year over year, as the benefit from increased demand was partially offset by lower realized prices in the United States and outside. Taltz missed the Zacks Consensus Estimate of $758.0 million.
Verzenio generated sales of $1.04 billion in the reported quarter, up 68% 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 $1.02 billion.
Emgality generated revenues of $168.5 million in the quarter, flat year over year. Olumiant (baricitinib) generated sales of $231.4 million, up 27% on a year-over-year basis, driven by increased demand for the newly approved alopecia areata indication, partially offset by lower realized prices. Retevmo generated sales of $63.4 million, up 56% year over year.
Among the newer drugs, the new diabetes drug Mounjaro recorded sales of $1.41 billion during the quarter, much higher than $979.7 million in the previous quarter. The reported sales figure slightly missed the Zacks Consensus Estimate of $1.42 billion. Though Mounjaro sales benefited from higher realized prices due to decreased utilization of savings card programs, intermittent delays in fulfilling orders of certain Mounjaro doses, given significant demand, continued to hurt volumes in the third quarter.
Nonetheless, 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 has shown a superior weight-loss reduction in clinical studies for the obesity indication. Regulatory applications have already been filed for Mounjaro for the obesity indication in the United States and the EU. In the United States, the FDA has assigned priority review to the regulatory filing, with a decision expected by year-end.
Among the established products, Alimta sales declined 55% to $53.5 million. Humalog sales declined 12% to $395.4 million.
In the reported quarter, Lilly did not record any revenues from COVID-19 therapies compared to $386.6 million recorded in the year-ago quarter as the FDA rescinded the authorization granted to its COVID-19 antibody bebtelovimab last November.
2023 Guidance Updated
Lilly maintained its sales guidance for 2023 but lowered the earnings view.
The company maintained its revenue guidance in the range of $33.4 billion to $33.9 billion.
Management now expects to record 2023 earnings per share in the range of $6.50 to $6.70, much lower than the previously provided range of $9.70-$9.90 per share due to higher acquired IPR&D charges and a higher tax rate.
Adjusted gross margin is expected to be approximately 80%.
The company maintained its guidance for operating expenses. Marketing, selling and administrative expenses are expected to be in the range of $7.2 billion to $7.4 billion. Research and development expense is expected to be in the range of $8.9 billion to $9.1 billion.
Acquired IPR&D guidance was increased from $202 million to $3.18 billion to include the charges incurred in the third quarter.
The tax rate is expected to be around 19% to 20% for the full year, much higher than 14% to 15%, expected previously due to the non-deductible acquired IPR&D charges incurred in the third quarter.
Our Take
Lilly’s third-quarter results were better-than-expected as it beat estimates for earnings as well as sales. The company witnessed strong sales growth of Mounjaro, Verzenio, Jardiance and Taltz, which made up for the decline in the sales of key diabetes drug Trulicity and no COVID revenues in the quarter. Though the company maintained its 2023 guidance for sales, it cut the same for earnings on charges related to acquisitions and collaboration deals.
Shares rose 2.3% in pre-market trading in response to the mixed earnings performance. Lilly’s stock has risen 51.5% year to date compared with an increase of 2.3% for the industry.
Image Source: Zacks Investment Research
In the quarter, Lilly gained approval for Omvoh for the treatment of adults with moderately to severely active ulcerative colitis and an expanded indication for Jardiance in adults with chronic kidney disease. Lilly completed some key acquisitions in the quarter, like DICE Therapeutics. The company also announced earlier this month that it has offered to buy POINT Biopharma, a maker of next-generation radioligand therapies for treating cancers, for approximately 1.4 billion in cash or $12.50 per share.
Earlier in the day, rival Novo Nordisk (NVO - Free Report) announced its earnings for the third quarter.The Danish drugmaker reported encouraging third-quarter 2023 results, beating both earnings and sales estimates. Sales rose 38% at a constant exchange rate (CER), driven by strong sales of diabetes drugs like Ozempic and Rybelsus as well as obesity drug, Wegovy, despite supply constraints. NVO continues to expand its supply capacity for Wegovy, post its re-launch in the United States as well as in other geographies. Novo Nordisk also raised its sales and profit expectations for 2023, reflecting higher expectations for GLP-1-based diabetes treatments like Ozempic.
Zacks Rank & Stocks to Consider
Lilly currently has a Zacks Rank #3 (Hold).
Eli Lilly and Company Price and Consensus
Eli Lilly and Company price-consensus-chart | Eli Lilly and Company Quote
Some better-ranked stocks in the healthcare sector are Dynavax Technologies Corporation (DVAX - Free Report) and MEI Pharma, Inc. (MEIP - Free Report) , sporting a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, estimates for Dynavax Technologies’ 2023 loss per share have narrowed from 24 cents to 22 cents. Meanwhile, during the same period, earnings per share estimates for 2024 have improved from 2 cents to 8 cents. Year to date, shares of DVAX have rallied 32.4%.
Earnings of Dynavax Technologies beat estimates in two of the last four quarters while missing the same on the remaining two occasions. DVAX delivered a four-quarter average earnings surprise of 25.78%.
In the past 60 days, estimates for MEI Pharma’s 2023 loss per share have improved from $6.54 to $4.89. During the same period, loss per share estimates for 2024 have narrowed from $5.14 to $4.02. Year to date, shares of MEIP have rallied 44.1%.
Earnings of MEI Pharma beat estimates in three of the trailing four quarters and met the same on the other occasion. On average, MEIP came up with an average four-quarter earnings surprise of 53.58%.