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Eli Lilly and Company (LLY - Free Report) reported third-quarter 2022 adjusted earnings per share (EPS) of $1.98, which beat the Zacks Consensus Estimate of $1.97. Earnings rose 12% year over year on the back of higher operating profits.
Revenues of $6.94 billion also beat the Zacks Consensus Estimate of $6.91 billion. Sales increased 2% year over year.
Quarter in Detail
In the quarter, net realized prices decreased 7% in the quarter while volumes rose 14%. The unfavorable impact of foreign exchange rates hurt sales by 4% in the quarter.
Key growth products (the ones launched in 2014) grew 19% and contributed nearly 70% to total revenues, excluding revenues from COVID-19 antibodies. While U.S. revenues rose 11% to $4.42 billion, ex-U.S. revenues declined 9% to $2.52 billion.
Among the growth products, Trulicity generated revenues worth $1.85 billion, up 16% year over year, driven by increased demand worldwide, which offset the impact of lower realized prices in ex-U.S. markets and currency headwinds. However, the reported figures missed the Zacks Consensus Estimate and our model estimate of $1.95 billion and $1.87 billion, respectively.
Taltz brought in sales of $679.9 million, up 15% 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 $617.7 million in the reported quarter, up 84% 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 of $604 million during the quarter.
Jardiance sales surged 47% to $573.3 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 both the Zacks Consensus Estimates and our estimates of $512 million and $522.9 million, respectively.
Emgality generated revenues of $168.5 million in the quarter, up 20% year over year, as sales benefited from increased demand, which offset the impact of lower realized prices and currency headwinds.
In the reported quarter, Lilly recorded only $386.6 million of revenues from COVID-19 therapies, up 78% year-over-year.
Olumiant (baricitinib) generated sales of $182.9 million in the third quarter, down 55% 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 $232.1 million were down 8% year over year. Basaglar recorded revenues of $193 million, flat year over year.
Tyvyt revenues in China were $76.8 million, down 39% 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 $40.5 million, up 21% year over year.
The recently approved diabetes drug, Mounjaro, recorded $187.3 million during the quarter, much higher than $16.0 million recorded in the previous quarter. While Mounjaro generated $97.3 million in product sales in the United States, Lilly recorded $86 million from sale of the drug’s selling rights to a Japanese distributor. The reported sales figures exceeded our estimate of $75 million for the quarter.
Among the established products, Forteo sales declined 12% to $177.1 million. Humulin sales dropped 17% to $238.2 million. Alimta sales declined 74% to $119.4 million. Humalog sales declined 29% to $447.0 million due to lower realized prices and currency headwinds.
Adjusted gross margin remained flat year over year at 79%. Operating income rose 6% year over year to $2.01 billion, benefitting from increased sales volume experienced during the quarter.
2022 Guidance Updated
Lilly lowered its guidance for revenues and earnings. The company now expects revenues to be between $28.5-$29.0 billion, down from previous guidance range of $28.8-$29.3 billion to account for currency headwinds.
Earnings per share are expected to be between $7.70 and $7.85, down from $7.90 and $8.05 previously. Lilly lowered its earnings per share guidance due to currency headwinds and a 6 cents per share negative impact of acquired IPR&D and development milestone charges.
Acquired IPR&D and development milestone charges, are expected to be approximately $670 million in 2022, up from the previously reiterated $610 million.
Following the earnings announcement, shares of Lilly were down 4.3% in pre-market trading in response to the guidance cut. Shares of Lilly have risen 31.1% this year so far compared with the industry’s increase of 2.9%.
Image Source: Zacks Investment Research
The gross margin is expected to be approximately 78% (same as before) while the adjusted operating margin is expected to be around 29% (same as before).
Marketing, selling and administrative expenses are expected to be in the range of $6.4-$6.6 billion (same as before). Research and development expense is expected to be in the range of $7.1 billion to $7.3 billion (same as before).
Our Take
Though Lilly reported encouraging third-quarter results beating earnings and sales estimates despite currency headwinds, the company trimmed its full year earnings guidance for a third time this year.
New drug Mounjaro generated additional sales for the company during the quarter. The drug is expected to become a significant contributor to Lilly’s revenues in subsequent quarters. Management is gearing up for new drug launches in the form of donanemab (for Alzheimer’s disease) and pirtobrutinib (for mantle cell lymphoma). The launch of these drugs is in line with Lilly’s plan to launch five new medicines before 2023-end. These drugs, if approved, are expected to have a multibillion-dollar sales potential.
Some other top-ranked stocks in the overall healthcare sector include Angion Biomedica , GileadSciences (GILD - Free Report) and Merck (MRK - Free Report) . While Amarin sports a Zacks Rank #1 (Strong Buy) at present, both Gilead and Merck carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for Angion Biomedica’s 2022 loss per share have narrowed from $1.64 to $1.53 in the past 60 days. Angion’s loss estimates for 2023 have increased from $1.54 to $1.43 in the past 60 days. Shares of Angion Biomedica have plunged 65.5% in the year-to-date period.
Earnings of Angion Biomedicabeat estimates in three of the last four quarters and missed the mark on one occasion, the average surprise being 62.85%. In the last reported quarter, ANGN delivered an earnings surprise of 34.78%.
Gilead’s stock has risen 8.1% this year so far. While Gilead’s earnings estimates for 2022 have risen from $6.61 to $6.94 per share in the past 60 days, estimates for 2023 have increased from $6.32 to $6.75 per share during the same period.
Gilead beat earnings estimates in three of the last four quarters and missed the mark on one occasion, the average surprise being 0.36%. In the last reported quarter, ANGN delivered an earnings surprise of 31.94%.
Merck’s stock has risen 32.1% this year so far. Merck’s earnings estimates for 2023 have gone up from $7.17 to $7.30 per share in the past 60 days.
Merck beat earnings estimates in each of the last four quarters, delivering an average earnings surprise of 16.07%, on average. In the last reported quarter, Merck reported an earnings surprise of 10.78%.
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Lilly (LLY) Beats on Q3 Earnings & Sales, Lowers '22 View
Eli Lilly and Company (LLY - Free Report) reported third-quarter 2022 adjusted earnings per share (EPS) of $1.98, which beat the Zacks Consensus Estimate of $1.97. Earnings rose 12% year over year on the back of higher operating profits.
Revenues of $6.94 billion also beat the Zacks Consensus Estimate of $6.91 billion. Sales increased 2% year over year.
Quarter in Detail
In the quarter, net realized prices decreased 7% in the quarter while volumes rose 14%. The unfavorable impact of foreign exchange rates hurt sales by 4% in the quarter.
Key growth products (the ones launched in 2014) grew 19% and contributed nearly 70% to total revenues, excluding revenues from COVID-19 antibodies. While U.S. revenues rose 11% to $4.42 billion, ex-U.S. revenues declined 9% to $2.52 billion.
Among the growth products, Trulicity generated revenues worth $1.85 billion, up 16% year over year, driven by increased demand worldwide, which offset the impact of lower realized prices in ex-U.S. markets and currency headwinds. However, the reported figures missed the Zacks Consensus Estimate and our model estimate of $1.95 billion and $1.87 billion, respectively.
Taltz brought in sales of $679.9 million, up 15% 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 $617.7 million in the reported quarter, up 84% 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 of $604 million during the quarter.
Jardiance sales surged 47% to $573.3 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 both the Zacks Consensus Estimates and our estimates of $512 million and $522.9 million, respectively.
Emgality generated revenues of $168.5 million in the quarter, up 20% year over year, as sales benefited from increased demand, which offset the impact of lower realized prices and currency headwinds.
In the reported quarter, Lilly recorded only $386.6 million of revenues from COVID-19 therapies, up 78% year-over-year.
Olumiant (baricitinib) generated sales of $182.9 million in the third quarter, down 55% 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 $232.1 million were down 8% year over year. Basaglar recorded revenues of $193 million, flat year over year.
Tyvyt revenues in China were $76.8 million, down 39% 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 $40.5 million, up 21% year over year.
The recently approved diabetes drug, Mounjaro, recorded $187.3 million during the quarter, much higher than $16.0 million recorded in the previous quarter. While Mounjaro generated $97.3 million in product sales in the United States, Lilly recorded $86 million from sale of the drug’s selling rights to a Japanese distributor. The reported sales figures exceeded our estimate of $75 million for the quarter.
Among the established products, Forteo sales declined 12% to $177.1 million. Humulin sales dropped 17% to $238.2 million. Alimta sales declined 74% to $119.4 million. Humalog sales declined 29% to $447.0 million due to lower realized prices and currency headwinds.
Adjusted gross margin remained flat year over year at 79%. Operating income rose 6% year over year to $2.01 billion, benefitting from increased sales volume experienced during the quarter.
2022 Guidance Updated
Lilly lowered its guidance for revenues and earnings. The company now expects revenues to be between $28.5-$29.0 billion, down from previous guidance range of $28.8-$29.3 billion to account for currency headwinds.
Earnings per share are expected to be between $7.70 and $7.85, down from $7.90 and $8.05 previously. Lilly lowered its earnings per share guidance due to currency headwinds and a 6 cents per share negative impact of acquired IPR&D and development milestone charges.
Acquired IPR&D and development milestone charges, are expected to be approximately $670 million in 2022, up from the previously reiterated $610 million.
Following the earnings announcement, shares of Lilly were down 4.3% in pre-market trading in response to the guidance cut. Shares of Lilly have risen 31.1% this year so far compared with the industry’s increase of 2.9%.
Image Source: Zacks Investment Research
The gross margin is expected to be approximately 78% (same as before) while the adjusted operating margin is expected to be around 29% (same as before).
Marketing, selling and administrative expenses are expected to be in the range of $6.4-$6.6 billion (same as before). Research and development expense is expected to be in the range of $7.1 billion to $7.3 billion (same as before).
Our Take
Though Lilly reported encouraging third-quarter results beating earnings and sales estimates despite currency headwinds, the company trimmed its full year earnings guidance for a third time this year.
New drug Mounjaro generated additional sales for the company during the quarter. The drug is expected to become a significant contributor to Lilly’s revenues in subsequent quarters. Management is gearing up for new drug launches in the form of donanemab (for Alzheimer’s disease) and pirtobrutinib (for mantle cell lymphoma). The launch of these drugs is in line with Lilly’s plan to launch five new medicines before 2023-end. These drugs, if approved, 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 #3 (Hold).
Some other top-ranked stocks in the overall healthcare sector include Angion Biomedica , Gilead Sciences (GILD - Free Report) and Merck (MRK - Free Report) . While Amarin sports a Zacks Rank #1 (Strong Buy) at present, both Gilead and Merck carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for Angion Biomedica’s 2022 loss per share have narrowed from $1.64 to $1.53 in the past 60 days. Angion’s loss estimates for 2023 have increased from $1.54 to $1.43 in the past 60 days. Shares of Angion Biomedica have plunged 65.5% in the year-to-date period.
Earnings of Angion Biomedicabeat estimates in three of the last four quarters and missed the mark on one occasion, the average surprise being 62.85%. In the last reported quarter, ANGN delivered an earnings surprise of 34.78%.
Gilead’s stock has risen 8.1% this year so far. While Gilead’s earnings estimates for 2022 have risen from $6.61 to $6.94 per share in the past 60 days, estimates for 2023 have increased from $6.32 to $6.75 per share during the same period.
Gilead beat earnings estimates in three of the last four quarters and missed the mark on one occasion, the average surprise being 0.36%. In the last reported quarter, ANGN delivered an earnings surprise of 31.94%.
Merck’s stock has risen 32.1% this year so far. Merck’s earnings estimates for 2023 have gone up from $7.17 to $7.30 per share in the past 60 days.
Merck beat earnings estimates in each of the last four quarters, delivering an average earnings surprise of 16.07%, on average. In the last reported quarter, Merck reported an earnings surprise of 10.78%.