Lilly reports Q3 2024 financial results highlighted by strong volume-driven revenue growth from New Products
Revenue in Q3 2024 increased 20%, driven by volume growth from Mounjaro and Zepbound, partially offset by $1.42 billion of revenue in Q3 2023 from the sale of rights for the olanzapine portfolio (Zyprexa). Excluding revenue from the olanzapine portfolio, total revenue increased 42%, and non-incretin revenue increased 17%.
Q3 2024 EPS increased to $1.07 on a reported basis and $1.18 on a non-GAAP basis, both inclusive of $3.08 of acquired IPR&D charges.
2024 revenue guidance range updated to $45.4 to $46.0 billion. 2024 reported EPS guidance updated to the range of $12.05 to $12.55, and non-GAAP EPS guidance updated to the range of $13.02 to $13.52, both driven by the acquired IPR&D charges incurred in Q3.
Approvals included Ebglyss in the U.S. for moderate-to-severe atopic dermatitis and Kisunla in Japan for early symptomatic Alzheimer's disease.
Positive Phase 3 data included the 176-week study of tirzepatide showing 94% reduction in the risk of developing type 2 diabetes in adults with pre-diabetes, and obesity or overweight, and the six-month TRAILBLAZER-ALZ 6 trial showing that modified titration achieved similar levels of amyloid plaque removal while also reducing the incidence of ARIA-E to 14%, compared with 24% in the standard dosing regimen.
INDIANAPOLIS, Oct. 30, 2024 /PRNewswire/ -- Eli Lilly and Company (NYSE:LLY) today announced its financial results for the third quarter of 2024.
"Lilly had another strong growth quarter in Q3, with total revenue increasing by 42% after excluding divestiture activity in the same period last year," said David A. Ricks, Lilly chair and CEO. "While the growth of Mounjaro and Zepbound is impressive, we are equally proud of the 17% growth in non-incretin revenue, which includes our oncology, immunology and neuroscience portfolios, compared with Q3 2023 on the same basis. The new product approvals for Ebglyss and Kisunla, exciting new pipeline data for tirzepatide, donanemab, imlunestrant and lebrikizumab, as well as key milestone achievements in our supply network, all point to the continued expansion of our impact on human health and significant growth of the company ahead."
Lilly shared numerous updates recently on key regulatory, clinical, business development and other events, including:
U.S. Food and Drug Administration approval of Ebglyss™, a first-line biologic for the treatment of adults and children 12 years of age or older with moderate-to-severe atopic dermatitis;
Approval of Kisunla™ in Japan for the treatment of early symptomatic Alzheimer's disease;
Positive topline results from the SURMOUNT-1 176-week study of tirzepatide (Zepbound® and Mounjaro®) showing 94% reduction in the risk of developing type 2 diabetes in adults with pre-diabetes, and obesity or overweight;
Positive six-month Phase 3 primary endpoint data from the TRAILBLAZER-ALZ 6 trial showing that modified titration achieved similar levels of amyloid plaque removal while also reducing the incidence of ARIA-E to 14%, compared with 24% in the standard dosing regimen;
Positive Phase 3 EMBER-3 study evaluating imlunestrant oral SERD in patients with second-line ER+, HER2- metastatic breast cancer;
Positive results from the ADjoin long-term extension study for Ebglyss showing sustained disease control for up to three years in more than 80% of adults and adolescents with moderate-to-severe atopic dermatitis who responded to Ebglyss treatment;
Launch of 2.5 mg and 5 mg single-dose Zepbound vials in the U.S. exclusively through LillyDirect® to expand supply and increase access;
Completion of the acquisition of Morphic Holding, Inc., expanding Lilly's immunology pipeline;
Expansion of the company's manufacturing footprint in Ireland with a $1.8 billion investment in Limerick ($1 billion) and Kinsale ($800 million) to enhance global medicine production;
Opening of the Lilly Seaport Innovation Center, a research and development facility which serves as the central hub for Lilly's genetic medicines efforts;
Announcement of $4.5 billion investment to develop the Lilly Medicine Foundry in Indiana, the first-ever facility to combine research and manufacturing in a single location to increase capacity for clinical trial medicines; and
Appointment of Lucas Montarce as Lilly's executive vice president and chief financial officer.
For information on important public announcements, visit the news section of Lilly's website.
Financial Results
$ in millions, except
per share data
Third Quarter
2024
2023
% Change
Revenue
$ 11,439.1
$ 9,498.6
20 %
Net income (loss), Reported
970.3
(57.4)
NM
Earnings (loss) per share, Reported
1.07
(0.06)
NM
Net income, Non-GAAP
1,064.5
94.8
NM
Earnings per share, Non-GAAP
1.18
0.10
NM
NM, not meaningful
A discussion of the non-GAAP financial measures is included below under "Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited)."
Third-Quarter Reported ResultsIn Q3 2024, worldwide revenue was $11.44 billion, an increase of 20% compared with Q3 2023, driven by a 15% increase in volume and a 6% increase due to higher realized prices, partially offset by a 1% decrease from the unfavorable impact of foreign exchange rates. The volume increase was primarily driven by growth from Mounjaro and Zepbound, partially offset by the sale of rights for the olanzapine portfolio (Zyprexa®) in Q3 2023 and declines in Trulicity®. Excluding revenue from the olanzapine portfolio, revenue in Q3 2024 increased 42%; worldwide volume increased 36%; and non-incretin revenue increased 17%. Higher realized prices were primarily driven by Trulicity, Humalog® and Verzenio®. New Products(i) revenue grew by $3.07 billion to $4.51 billion in Q3 2024, led by Mounjaro and Zepbound. Growth Products(ii) revenue increased 5% to $5.19 billion in Q3 2024 as growth led by Verzenio and Taltz® was largely offset by lower Trulicity sales.
(i) Lilly defines New Products as select products launched since 2022, which currently consist of Ebglyss, Jaypirca, Kisunla, Mounjaro, Omvoh and Zepbound.
(ii) Lilly defines Growth Products as select products launched prior to 2022, which currently consist of Cyramza, Emgality, Jardiance, Olumiant, Retevmo, Taltz, Trulicity, Tyvyt and Verzenio.
Revenue in the U.S. increased 46% to $7.81 billion, driven by a 35% increase in volume and an 11% increase in realized prices. The increase in U.S. volume was driven by Zepbound and Mounjaro, partially offset by declines in Trulicity. The higher realized prices in the U.S. were primarily driven by Trulicity, Humalog and Verzenio. Following higher wholesaler inventory levels at the end of Q2, Mounjaro and Zepbound sales in Q3 were negatively impacted by inventory decreases in the wholesaler channel. The company estimates this impacted Q3 sales of Mounjaro and Zepbound by mid-single digits as a percent of aggregate U.S. sales of these products.
Revenue outside the U.S. decreased 12% to $3.63 billion, driven by a 10% decrease in volume and a 1% decrease due to the unfavorable impact of foreign exchange rates, as realized prices remained relatively flat. The decrease in volume outside the U.S was driven by the sale of rights for the olanzapine portfolio in Q3 2023. Excluding the olanzapine portfolio, revenue and volume outside the U.S. increased 33% and 36%, respectively, primarily driven by Mounjaro and Verzenio.
Gross margin increased 21% to $9.27 billion in Q3 2024. Gross margin as a percent of revenue was 81.0%, an increase of 0.6 percentage points. The increase in gross margin percent was primarily driven by favorable product mix and higher realized prices, partially offset by the sale of rights for the olanzapine portfolio in Q3 2023 and higher manufacturing costs.
In Q3 2024, research and development expenses increased 13% to $2.73 billion, or 23.9% of revenue, driven by continued investments in the company's early and late-stage portfolio.
Marketing, selling and administrative expenses increased 16% to $2.10 billion in Q3 2024, primarily driven by promotional efforts supporting ongoing and future launches.
In Q3 2024, the company recognized acquired in-process research and development (IPR&D) charges of $2.83 billion compared with $2.98 billion in Q3 2023. The Q3 2024 charges were primarily related to the acquisition of Morphic Holding, Inc. The Q3 2023 charges were primarily related to the acquisitions of DICE Therapeutics, Inc., Versanis Bio, Inc. and Emergence Therapeutics AG.
Asset impairment, restructuring and other special charges of $81.6 million in Q3 2024 were primarily related to impairment of an intangible asset associated with a molecule in development. There were no asset impairment, restructuring and other special charges in Q3 2023.
Other income (expense) was income of $62.0 million in Q3 2024, compared to expense of $23.2 million in Q3 2023. The higher income was primarily driven by net gains on investments in equity securities in Q3 2024, partially offset by higher interest expenses.
The effective tax rate was 38.9% in Q3 2024 compared with 113.4% in Q3 2023. The effective tax rates for Q3 2024 and Q3 2023 were both unfavorably impacted by non-deductible acquired IPR&D charges, with a larger impact occurring in Q3 2023.
In Q3 2024, net income and earnings per share (EPS) were $970.3 million and $1.07, respectively, compared with a net loss of $(57.4) million and loss per share of $(0.06) in Q3 2023. EPS in Q3 2024 included $3.08 of acquired IPR&D charges. EPS in Q3 2023 included $1.22 of EPS associated with the sale of rights for the olanzapine portfolio and $3.29 of acquired IPR&D charges.
Third-Quarter Non-GAAP MeasuresOn a non-GAAP basis, Q3 2024 gross margin increased 21% to $9.41 billion. Gross margin as a percent of revenue was 82.2%, an increase of 0.5 percentage points. The increase in gross margin percent was primarily driven by favorable product mix and higher realized prices, partially offset by the sale of rights for the olanzapine portfolio in Q3 2023 and higher manufacturing costs.
The effective tax rate on a non-GAAP basis was 37.6% in Q3 2024 compared with 84.6% in Q3 2023. The effective tax rates for Q3 2024 and Q3 2023 were both unfavorably impacted by non-deductible acquired IPR&D charges, with a larger impact occurring in Q3 2023.
On a non-GAAP basis, Q3 2024 net income and EPS were $1.06 billion and $1.18, respectively, compared with net income of $94.8 million and EPS of $0.10 in Q3 2023. Non-GAAP EPS in Q3 2024 included $3.08 of acquired IPR&D charges. Non-GAAP EPS in Q3 2023 included $1.22 of EPS associated with the sale of rights for the olanzapine portfolio and $3.29 of acquired IPR&D charges.
For further detail on non-GAAP measures, see the reconciliation below as well as the "Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited)" table later in this press release.
Third Quarter
2024
2023
% Change
Earnings (loss) per share (reported)
$ 1.07
$ (0.06)
NM
Amortization of intangible assets
.12
.11
Asset impairment, restructuring and other special charges
.07
—
Net (gains) losses on investments in equity securities
(.09)
.06
Earnings per share (non-GAAP)
$ 1.18
$ 0.10
NM
Acquired IPR&D
3.08
3.29
(6) %
Numbers may not add due to rounding
NM, not meaningful
Selected Revenue Highlights
(Dollars in millions)
Third Quarter
Year-to-Date
Selected Products
2024
2023
% Change
2024
2023
% Change
Mounjaro
$ 3,112.7
$ 1,409.3
NM
$ 8,010.0
$ 2,957.5
NM
Trulicity
1,301.4
1,673.6
(22) %
4,003.3
5,463.2
(27) %
Verzenio
1,369.3
1,040.2
32 %
3,751.5
2,717.9
38 %
Zepbound
1,257.8
—
NM
3,018.4
—
NM
Taltz
879.6
744.2
