Lilly Q2 Profit Down; Cuts FY21 EPS, Margin View; Backs Adj. Earnings Forecast

lilly aug03 lt

Drug major Eli Lilly And Co. reported Tuesday weak profit in its second quarter, despite higher revenues driven by strong volume across core business and most major geographies. Further, the company trimmed its forecast for fiscal 2021 earnings on a reported basis and operating margin, while maintained adjusted earnings view above market estimates. The company also tightened full-year revenue forecast.

Separately, Lilly and Incyte said that new data from Phase 3 COV-BARRIER sub-study indicated that baricitinib reduced deaths among patients with COVID-19 receiving invasive mechanical ventilation. As per the data, one death prevented for every six baricitinib-treated patients on mechanical ventilation compared to placebo. Baricitinib is an oral JAK inhibitor discovered by Incyte and licensed to Lilly.

In pre-market activity, Lilly shares were losing around 1.5 percent to trade at $243.

For fiscal 2021, earnings per share are now expected to be in the range of $6.73 to $6.93 on a reported basis reflecting certain adjustments, lower than previous estimate of $7.03 to $7.23. The outlook represents 1 percent drop to 2 percent rise from the same period last year.

On an adjusted basis, earnings forecast remains in the range of $7.80 to $8.00 per share. This represents a growth of 15 percent to 18 percent from last year.

On average, 20 analysts polled by Thomson Reuters expect earnings of $7.76 per share. Analysts' estimates typically exclude special items.

Further, Lilly now anticipates 2021 revenue to be between $26.8 billion and $27.4 billion, compared to previous estimate between $26.6 billion and $27.6 billion. Analysts expect revenues of $27.22 billion for the year.

The revision reflects an increase of $200 million in estimated revenue from products in core business, as well as a reduction in estimated revenue from COVID-19 therapies, which is now expected to be in the range of $1.0 billion to $1.1 billion.

Operating margin for 2021 is now expected to be approximately 24 percent on a reported basis and 30 percent on an adjusted basis. This is lower than previously expected 26 percent and 31 percent, respectively.

For the second quarter, Lilly's net income fell 2 percent to $1.39 billion or $1.53 per share from last year's $1.41 billion or $1.55 per share.

Adjusted earnings were $1.70 billion or $1.87 per share for the period, compared to $1.32 billion or $1.45 per share last year. Analysts expected earnings of $1.92 per share.

The company's revenue for the quarter, however, climbed 22.5 percent to $6.74 billion from $5.50 billion last year. The Wall Street estimated second-quarter revenues of $6.65 billion.

Revenues were driven by volume growth of 22 percent, mainly with strong growth in all key products. The strong growth was partially offset by a 2 percent decrease due to lower realized prices.

Revenue growth was 12 percent when excluding effects of 2020 COVID-related stocking patterns, revenue from COVID-19 antibodies and recent business development.

The company recognized worldwide revenue of $148.9 million in the second quarter of 2021 for its COVID-19 antibodies.

Revenue in the U.S. increased 18 percent, driven by an 18 percent increase in volume, partially offset by a 1 percent decrease due to lower realized prices.

Outside the U.S., revenue climbed 29 percent, driven by a 26 percent increase in volume, partially offset by a 4 percent drop in realized prices.

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