Eli Lilly Q1 Results Top Estimates; Lifts 2020 Profit View

Eli Lilly and Co. (LLY) on Thursday reported a 66 percent decline in profit for the first-quarter from last year, reflecting the gain recognized on the disposition of Elanco Animal Health in the prior year. But, quarterly revenue increased 15 percent, driven by 22 percent volume growth. The company raised its profit outlook for fiscal year 2020, but it maintained annual revenue guidance.

Both adjusted earnings per share and revenues topped analysts’ expectations.

Looking ahead for fiscal year 2020, the company now expects earnings per share to be in the range of $6.20 to $6.40 on a reported basis and $6.70 to $6.90 on a non-GAAP basis. Analysts polled by Thomson Reuters expect the company to report earnings of $6.73 per share for the first-quarter. Analysts’ estimates typically exclude special items.

Earlier, the company had expected annual earnings per share to be in the range of $6.18 to $6.28 on a reported basis, and $6.70 to $6.80 on a non-GAAP basis.

The company still anticipates 2020 revenue between $23.7 billion and $24.2 billion. Analysts expect annual revenues of $23.84 billion.

The company reported that its net income for the first quarter of 2020 dropped 66 percent to $1.457 billion from the prior year’s $4.242 billion, with earnings per share declining to $1.60, from $4.31 in the first quarter of 2019. The decrease was primarily driven by the $3.681 billion gain recognized on the disposition of Elanco in the first quarter of 2019, partially offset by higher operating income in 2020.

On a non-GAAP basis, net income was $1.599 billion or $1.75 per share, compared to $1.237 billion or $1.33 per share in the previous year. The increase was driven primarily by higher operating income, partially offset by higher income taxes. Analysts expected the company to report earnings of $1.48 per share for the first-quarter.

Operating income grew to $1.591 billion, from $645.1 million in the prior year, primarily driven by higher gross margin and lower asset impairment, restructuring and other special charges and acquired in-process research and development charges. It was partially offset by higher research and development expenses.

Worldwide revenue for the first-quarter was $5.86 billion, an increase of 15 percent from $5.09 billion last year. The increase in revenue was driven by a 22 percent increase due to volume, partially offset by a 6 percent decrease due to lower realized prices. Wall Street analysts had a consensus revenue estimate of $5.51 billion for the first-quarter.

The company said worldwide volume growth in the first quarter of 2020 was favorably impacted by increased customer buying patterns and patient prescription trends resulting from the COVID-19 pandemic that increased worldwide revenue by about $250 million.

Revenue in the U.S. increased 15 percent to $3.329 billion, as increased volume of 19 percent was partially offset by lower realized prices. The company believed that the increase in U.S. revenue from COVID-19 primarily impacted its portfolio of diabetes medicines, with estimated increases of approximately $70 million to $80 million for insulin products and about $30 million to $40 million for Trulicity.

Revenue outside the U.S. increased 15 percent, to $2.531 billion, driven by increased volume of 25 percent, which was primarily from key growth products, including Tyvyt, Trulicity, Olumiant, Taltz.

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