Lilly’s Robust Financial Performance in Q4 2023 and Outlook for 2024 Revealed

Eli Lilly and Company (NYSE: LLY) disclosed its financial outcomes for the final quarter of 2023, marking a year of notable accomplishments characterized by substantial revenue growth. David A. Ricks, Lilly’s chair and CEO, emphasized the company’s impactful contributions in providing transformative medicines to a record number of patients. The achievements included advancements in their pipeline of novel medications for severe ailments, establishment of new partnerships, and innovative collaborative approaches.

In preparation for the challenges ahead, Lilly fortified its supply chain by investing in state-of-the-art manufacturing facilities in the United States and Europe. As the company enters 2024, its unwavering commitment remains centered on addressing complex healthcare issues globally to enhance the lives of millions of patients.

Recent notable updates from Lilly encompass regulatory approvals, clinical milestones, business development ventures, and other significant events:

  1. FDA approval of Zepbound® (tirzepatide) for treating adult patients with obesity or overweight accompanied by weight-related comorbidities.
  2. FDA approval of Jaypirca® for treating adult patients with chronic lymphocytic leukemia or small lymphocytic lymphoma (CLL/SLL) who underwent at least two prior lines of therapy, including a BTK inhibitor and a BCL-2 inhibitor.
  3. Positive results from the SYNERGY-NASH Phase 2 study of tirzepatide in adults with nonalcoholic steatohepatitis (NASH), where a significant percentage achieved absence of MASH without fibrosis worsening at 52 weeks.
  4. Unfavorable Phase 3 CYCLONE-2 results, indicating that Verzenio added to abiraterone did not enhance radiographic progression-free survival (rPFS) in men with metastatic castration-resistant prostate cancer (mCRPC).
  5. Approval of Ebglyss® (lebrikizumab) for adult and adolescent patients with moderate-to-severe atopic dermatitis in the European Union and Japan.
  6. Introduction of LillyDirect™, the company’s comprehensive digital healthcare experience.
  7. Declaration of plans to invest $2.5 billion for the expansion of injectable manufacturing capacity with a new site in Germany.
  8. Completion of acquisitions of POINT Biopharma Global Inc. and Mablink Biosciences SAS.
  9. The sixth consecutive annual increase of 15% in Lilly’s quarterly dividend, resulting in more than a doubling of the dividend since 2018.
  10. Announcement of the retirement of Johna Norton, Lilly’s executive vice president of Global Quality, after 34 years of dedicated service, effective July 31, 2024.

For information on important public announcements, visit the news section of Lilly’s website.

Financial Results

$ in millions, exceptper share dataFourth Quarter
20232022% Change
Revenue$    9,353.4$    7,301.828 %
Net income – Reported2,189.61,937.713 %
Earnings per share – Reported2.422.1413 %
Net income – Non-GAAP2,249.41,893.119 %
Earnings per share – Non-GAAP2.492.0919 %

A discussion of the non-GAAP financial measures is included below under “Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited).”

Reported Results for the Fourth Quarter

During the fourth quarter of 2023, Eli Lilly and Company (NYSE: LLY) achieved a global revenue of $9.35 billion, marking a robust 28% increase compared to the same period in 2022. This growth was fueled by a 16% rise in realized prices, an 11% increase in volume, and a 1% boost from favorable foreign exchange rates. Notably, higher realized prices were propelled by Mounjaro® in the U.S., although offset by reduced prices for Humalog® and Trulicity®.

In the U.S., revenue surged by 39% to $6.46 billion, driven by a 27% spike in realized prices and a 12% uptick in volume. Mounjaro played a key role in driving the higher prices, while Trulicity experienced a decline. Excluding Mounjaro, realized prices in the U.S. witnessed a high-single-digit decrease for the quarter. The U.S. volume increase was attributed to several products, including Mounjaro, Zepbound, Verzenio, Jardiance, and Taltz.

Revenue outside the U.S. reached $2.90 billion, reflecting a 10% increase. This growth was driven by a 10% rise in volume and a 3% favorable impact from foreign exchange rates. However, it was partially offset by a 3% decrease due to lower realized prices. Verzenio, Mounjaro, Jardiance, Tyvyt®, and Taltz contributed significantly to the volume increase. Additionally, revenue received a boost of $65 million from milestones related to the EU approval and launch of Ebglyss. This was partially offset by approximately $130 million in one-time revenue from 2022 linked to the sale of Alimta rights in Korea and Taiwan.

The gross margin for Q4 2023 increased by 31% to $7.57 billion, with a gross margin percent of 80.9%, reflecting a 2.1 percentage point increase. The rise in gross margin percent was primarily attributed to higher realized prices, although partially offset by increased manufacturing expenses related to labor costs and capacity expansion investments.

Research and development expenses rose by 28% to $2.56 billion, constituting 27% of revenue in Q4 2023. This increase was primarily driven by development expenses for late-stage assets, additional investments in early-stage research, and higher incentive compensation costs.

Marketing, selling, and administrative expenses increased by 17% to $1.92 billion in Q4 2023, primarily due to costs associated with product launches and indications, as well as higher incentive compensation costs.

During Q4 2023, acquired in-process research and development (IPR&D) charges amounted to $622.6 million, compared to $240.1 million in Q4 2022. These charges were primarily related to the acquisition of Mablink Biosciences SAS and the business development transaction with Beam Therapeutics Inc.

Other income (expense) in Q4 2023 was $121.0 million of income, compared to $260.0 million of income in Q4 2022. The decrease in income was influenced by lower net gains on investments in equity securities and higher net interest expenses in Q4 2023 compared to Q4 2022.

The effective tax rate for Q4 2023 was 12.7%, an increase from 7.6% in Q4 2022. This higher effective tax rate was primarily driven by a lower net discrete tax benefit compared to Q4 2022 and the new Puerto Rico tax regime.

In Q4 2023, Eli Lilly and Company reported a net income of $2.19 billion and earnings per share (EPS) of $2.42, compared to net income of $1.94 billion and EPS of $2.14 in Q4 2022. EPS in Q4 2023 included $0.62 of acquired IPR&D charges, compared with $0.23 in Q4 2022.

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