Eli Lilly (LLY) Misses on Q1 Earnings, Lowers Earnings Guidance

Eli Lilly and Company LLY reported second-quarter 2022 adjusted earnings per share of $1.25, which significantly missed the Zacks Consensus Estimate of $1.80. Earnings declined 32% year over year due to lower operating profits.

Revenues of $6.49 billion also missed the Zacks Consensus Estimate of $6.90 billion. Sales declined 4% year over year.

In the reported quarter, Lilly recorded only $129.1 million of revenues from COVID-19 therapies.

Quarter in Detail

In the quarter, net realized prices decreased 11% in the quarter while volumes rose 10%. The unfavorable impact of foreign exchange rates hurt sales by 3% in the quarter.

Key growth products (the ones launched in 2014) grew 20% and contributed nearly 67% to total revenues, excluding revenues from COVID-19 antibodies. While US revenues rose 6% to $3.93 billion, ex-US revenues declined 16% to $2.55 billion.

Among the growth products, Trulicity generated revenues worth $1.91 billion, up 25% year over year, driven by increased demand worldwide, which offset the impact of lower realized prices in ex-US markets and currency headwinds.

Taltz brought in sales of $606.2 million, up 7% year over year, as US sales benefited from increased demand, offset by lower realized prices and changes in estimates for rebates and discounts. Ex-US sales rose on increased volume, which offset the impact of lower realized prices and currency headwinds.

Verzenio generated sales of $588.5 million in the reported quarter, up 72% 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.

Jardiance sales surged 29% to $461.0 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.

Emgality generated revenues of $157.5 million in the quarter, up 1% year over year. While revenues in the United States declined due to lower realized prices, revenues in ex-US markets rose on the back of increased demand, which offset currency headwinds.

Olumiant (baricitinib) generated sales of $186.2 million in the second quarter, down 11% on a year-over-year basis, on account of lower utilization of the medicine of certain hospitalized patients with COVID-19 coupled with currency headwinds. Lilly markets Olumiant in partnership with Incyte.

Cyramza revenues of $231.3 million were down 14% year over year. Basaglar recorded revenues of $174.2 million, down 17% year over year.

Tyvyt revenues in China were $73.6 million, down 30% year over year due to lower realized prices due to updated 2022 NRDL price reductions in China and competition. Lilly markets Tyvyt in partnership with Innovent.

Among the newer drugs, Retevmo, a cancer drug, generated sales of $45.0 million compared with $41.8 million in the first quarter

Among the established products, Forteo sales declined 37% to $138.5 million. Humulin sales dropped 13% to $274.0 million. Alimta sales declined 63% to $227.7 million. Humalog sales declined 26% to $447.1 million due to lower realized prices and currency headwinds.

The new diabetes drug, Mounjaro, which was approved by the FDA in May 2022 for treating adults with type-2 diabetes, recorded $16.0 million during the quarter.

Lilly generated revenues of $129.1 million from its COVID-19 therapies, bamlanivimab, bamlanivimab/etesevimab cocktail medicine and bebtelovimab alone, in the quarter compared with 1.47 billion in the previous quarter.

Adjusted gross margin was 79.8% in the quarter, up 50 basis points. Operating income declined 32% year over year to $1.33 billion. This decline was attributable to higher acquired in-process research and development (IPR&D) and development milestone charges incurred during the quarter compared to the year-ago quarter’s levels.

2022 Guidance

Lilly reiterated its guidance for revenues to be between $28.8 billion and $29.3 billion.

Higher expected revenues from a new US government supply deal for bebtelovimab (signed in June) were offset by greater-than-previously expected potential currency headwinds.

Lilly lowered its earnings per share guidance due to the 61 cents per share negative impact of acquired IPR&D and development milestone charges. Earnings per share are expected to be between $7.90 and $8.05, down from $8.15 and $8.30 previously.

Lilly issued its guidance for acquired IPR&D and development milestone charges, which are expected to be approximately $610 million in 2022.

The gross margin is expected to be approximately 78% (same as before). The adjusted operating margin is expected to be approximately 29% (previously 30%). The operating margin guidance was lowered due to the greater negative impact attributable to acquired IPR&D and development milestone charges and currency headwinds.

Marketing, selling and administrative expenses are expected to be in the range of $6.4 billion to $6.6 billion (same as before). Research and development expenses are expected to be in the range of $7.1 billion to $7.3 billion (same as before).

Recent Updates

Alongside its earnings results, management announced that the FDA accepted the company’s regulatory filings seeking accelerated approval for two of its drugs, donanemab and pirtobrutinib, in Alzheimer’s disease and mantle cell lymphoma indications, respectively. The filings have been granted priority review designation by the regulatory agency.

Lilly has also partnered with the US government to make bebtelovimab commercially available across the country through a sole distributor, starting the week of Aug 15.

Our Take

Lilly reported dismal second-quarter results as it missed estimates for both sales and earnings.

Lower realized prices, currency headwinds, lower sales of Alimta following generic entry, and significantly lower COVID antibody sales hurt total revenues significantly in the quarter.

While Lilly reiterated its revenue expectations for the year, it further lowered its earnings guidance. This was the second time that Lilly reduced earnings estimates, the first time being done during its first-quarter results.

Lilly’s shares were down 2.8% in pre-market trading in response to the dismal results coupled with the guidance cut. Shares of Lilly have risen 13.6% this year so far compared with the industry’s increase of 0.6%.


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Nevertheless, Lilly 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 the end of 2023. These drugs, if approved, are expected to have multibillion-dollar sales potential.

Eli Lilly and Company Price

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 Alkermes ALKS, Jazz Pharmaceuticals JAZZ and Novavax NVAX. While Jazz Pharmaceuticals sports a Zacks Rank #1 (Strong Buy) at present, both Alkermes and Novavax carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Estimates for Jazz Pharmaceuticals’ 2022 earnings have increased from $17.05 to $17.06 in the past 30 days. JAZZ’s earnings estimates for 2023 have increased from $18.05 to $18.15 in the past 30 days. Shares of Jazz Pharmaceuticals have risen 19.0% in the year-to-date period.

Earnings of Jazz Pharmaceuticals beat estimates in three of the last four quarters and missed the mark on one occasion, the average surprise being 10.94%. In the last reported quarter, JAZZ delivered an earnings surprise of 2.38%.

Alkermes’ stock has risen 8.9% this year so far. Alkermes’ estimates for 2022 have gone up from a loss of 17 cents per share to earnings of 20 cents per share, while the consensus estimate for 2023 earnings has increased from 31 cents per share to 33 cents per share in the past 30 days.

Alkermes beat earnings estimates in each of the last four quarters, delivering an average earnings surprise of 325.48%, on average. In the last reported quarter, ALKS reported an earnings surprise of 50.00%.

Novavax’s stock has plunged 57.3% this year so far. Novavax’s earnings estimates for 2023 have increased from $10.43 per share to $10.62 per share over the past 30 days.

Novavax missed earnings estimates in each of the last four quarters, delivering a negative earnings surprise of 184.49%, on average. In the last reported quarter, NVAX delivered a negative earnings surprise of 23.12%.

5 Stocks Set to Double

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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