Yahoo Finance Eli Lilly (LLY) Q1 Earnings Miss, Sales Beat, '23 View Raised
Eli Lilly and Company LLY reported first-quarter 2023 adjusted earnings per share of $1.62, which missed the Zacks Consensus Estimate of $1.73 and just fell shy of our model estimate of $1.63. Earnings declined 38% year over year on the back of higher operating expenses.
Revenues of $6.96 billion beat the Zacks Consensus Estimate and our estimate of $6.81 billion and $6.71 billion, respectively. Sales declined 11% year over year. This decline was due to a significant fall in revenues from COVID-19 antibodies. COVID-19 antibodies aside, revenues in the reported quarter increased 10% on the back of volume growth from Mounjaro, Trulicity, Verzenio and Jardiance.
Despite the mixed earnings, shares of Eli Lilly’s have risen more than 3% in pre-market trading on increased guidance for 2023 and positive data from the second study evaluating Mounjaro for obesity (discussed below).
In the past year, shares of Eli Lilly have shot up 26.6% compared with the industry’s 8.5% increase.
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Quarter in Detail
In the reported quarter, net realized prices declined by 5%, while volumes fell by 4%. The unfavorable impact of foreign exchange rates hurt sales by 2% in the quarter.
Key growth products (the ones launched in 2014) grew 18% and contributed 65.5% to total revenues. While the U.S. revenues declined 14% to $4.44 billion, ex-U.S. revenues fell by 4% to $2.52 billion.
Importantly, Eli Lilly’s new products contributed $573.6 million to revenues led by Mounjaro.
Among the growth products, Trulicity generated revenues worth $1.98 billion, up 14% year over year, driven by increased worldwide demand and to a lesser extent, favorable wholesaler buying patterns, which offset the impact of currency headwinds and lower realized prices. Trulicity beat the Zacks Consensus Estimate of $1.78 billion as well as our model estimate of $1.77 billion.
Taltz brought in sales of $527.0 million, up 8% 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 $750.9 million in the reported quarter, up 60% year over year, driven by increased demand, partially offset by unfavorable customer buying patterns, lower realized prices and currency headwinds. Verzenio sales missed the Zacks Consensus Estimate of $776 million and Jardiance sales surged 38% to $577.5 million, driven by increased demand trends within the SGLT2 class of diabetes medicines in the United States and increased volume outside the United States, partially offset by currency headwinds. The reported sales figure exceeded the Zacks Consensus Estimates of $543 million during the quarter.
Emgality generated revenues of $154.3 million in the quarter, up 3% year over year, as sales benefited from increased volume outside the United States, which offset the impact of lower realized prices in U.S. markets.
In the reported quarter, Lilly recorded no revenues from COVID-19 therapies.
Olumiant (baricitinib) generated sales of $228.9 million in the first quarter, down 10% 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, partially offset by increased utilization for the treatment of alopecia areata. Lilly markets Olumiant in partnership with Incyte.
Cyramza revenues of $236.8 million were up 3% year over year.
Tyvyt revenues in China were $61.0 million, down 29% year over year. Lilly markets Tyvyt in partnership with China’s Innovent.
Among the newer drugs, the cancer drug Retevmo generated sales of $51.4 million, up 23% year over year.
The recently approved diabetes drug, Mounjaro, recorded $568.5 million during the quarter, much higher than $279.2 million in the previous quarter. The reported sales figures exceeded our estimate of $374.3 million for the quarter.
Among the established products, Alimta sales declined 75%, sequentially, to $58.2 million. Humalog sales declined 16% sequentially, to $460.9 million due to lower realized prices in China and the U.S. market.
Adjusted gross margin was 78.4%, a 2.3 percentage points increase from the year-ago quarter.
2023 Guidance Updated
Lilly raised the financial guidance for 2023, which it provided in February 2023.
The company raised its revenue guidance to $31.2 billion and $31.7 billion in 2023, from the previously expected range of $30.3 billion to $30.8 billion. Management now expects to record earnings per share in the range of $8.65-$8.85 per share, a rise from the previously provided range of $8.35-$8.55 per share. The Zacks Consensus Estimate for revenues and earnings is currently pegged at $30.55 billion and $8.45 per share, respectively.
The adjusted gross margin is expected to be approximately 79% (unchanged).
The company raised its guidance for operating expenses. Marketing, selling and administrative expenses are expected to be $7.0-$7.2 billion, which was $6.9-$7.1 billion previously. Research and development expense is now expected to be in the range of $8.3 billion to $8.5 billion, higher than the previously expected range of $8.2-$8.4 billion.
The tax rate guidance remains at around 13% for the full year (unchanged).
Product Update
In a separate press release, Lilly announced that tirzepatide, its dual GIP and GLP-1 receptor agonist, showed “superior weight loss” in the 72-week phase III SURMOUNT-2 study. In the study, for the efficacy primary endpoint, treatment with a higher dose of tirzepatide, 15 mg, led to up to 15.7% (34.4 lb. or 15.6 kg) weight reduction in obese or overweight adults with type II diabetes.
Moreover, 86.4% of the participants given tirzepatide 15 mg experienced at least 5% body weight reduction, which was the study’s other co-primary endpoint, compared with 30.5% in the placebo arm. Tirzepatide also met all key secondary objectives. SURMOUNT-2 is the second phase III study on tirzepatide to show superior weight loss reduction in obese or overweight patients. In the first study, SURMOUNT-1 study, treatment with tirzepatide led to up to 22.5% (52 lb or 24 kg) weight loss in obese or overweight adults with at least one comorbidity, who do not have diabetes. Results of the SURMOUNT-1 study were announced last year.
Eli Lilly intends to complete its rolling submission of a new drug application for tirzepatide in obesity in the coming weeks, following positive data from the SURMOUNT-2 study.
Lilly presently markets tirzepatide by the name of tirzepatide for type II diabetes.
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 & Stocks to Consider
Eli Lilly currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same industry include Novo Nordisk (NVO), J&J (JNJ) and Sanofi (SNY). While Novo Nordisk currently sports a Zacks Rank #1 (Strong Buy), J&J and Sanofi both have a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, estimates for Novo Nordisk’s 2023 earnings per share have increased from $4.38 to $4.70. Shares of Novo Nordisk have increased 49.8% in the past year.
The earnings of Novo Nordisk beat estimates in three of the last four quarters, missing the mark on one occasion, witnessing an earnings surprise of 3%, on average. In the last reported quarter, Novo’s earnings beat estimates by 2.47%.
In the past 60 days, estimates for J&J’s 2023 earnings per share have increased from $10.50 to $10.65. Shares of J&J have declined 11.4% in the past year.
The earnings of J&J beat estimates in each of the last four quarters, witnessing an earnings surprise of 3.96%, on average. In the last reported quarter, JNJ’s earnings beat estimates by 6.77%.
In the past 60 days, estimates for Sanofi’s 2023 earnings per share have increased from $4.42 to $4.50. Shares of Sanofi have increased by 3.3% in the past year.
The earnings of Sanofi beat estimates in three of the last four quarters, missing the mark on one occasion, witnessing an earnings surprise of 7.68%, on average. In the last reported quarter, Sanofi’s earnings missed estimates by 3.33%.
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