Eli Lilly & Company LLY reported third-quarter 2015 adjusted earnings per share of 89 cents, well above the Zacks Consensus Estimate of 76 cents per share and 22% above the year-ago earnings.
Third-quarter revenues declined 4% to $4.959 billion, reflecting lower prices (2%) as well as negative currency movement (8%) partially offset by higher volume (7%). Revenues were just shy of the Zacks Consensus Estimate of $4.962 billion.
Reported earnings (including special items) shot up 60% to 75 cents per share in the third quarter of 2015.
Generics & Currency Hit Revenues
U.S. revenues grew 11% to $2.538 billion reflecting higher volume partially offset by the lower price for the authorized generic version of Evista. Ex-U.S. revenues declined 15% to $2.422 billion mainly due to unfavorable currency movement partially offset by higher volumes.
Cymbalta sales fell 34% to $242.9 million reflecting generic competition and the impact of negative currency movement.
Evista sales fell 35% to $58 million. U.S. sales were $15.5 million, while ex-U.S. sales declined 22% to $42.5 million due to unfavorable currency movement.
Humulin sales declined 6% to $316.7 million reflecting lower sales outside the U.S. due to currency movement and lower volume reflecting the loss of a contract in Brazil. Humalog sales remained flat at $705 million reflecting negative currency movement in international markets partially offset by higher prices and demand in the U.S. and higher volume in ex-U.S. markets. Alimta sales declined 13% to $628.5 million, reflecting the unfavorable impact of foreign exchange rates as well as lower volume in the U.S. due to higher competitive pressure and customer buying patterns.
Cyramza sales were $111.2 million, up 26.8% sequentially.
Lilly's Animal Health segment contributed $778.8 million to revenues benefiting from the Novartis Animal Health business acquisition.
Operating expenses declined 7% to $2.683 billion. While R&D spend declined 10%, marketing, selling and administrative expenses decreased 5%.
Earnings View Up
Lilly raised its 2015 earnings guidance to $3.40 – $3.45 per share from the previous range of $3.20 – $3.30 per share. Meanwhile, the company maintained its revenue guidance of $19.7 billion to $20.0 billion. The Zacks Consensus Estimate for earnings and revenues is currently $3.27 per share and $19.9 billion, respectively.
The company continues to expect gross margin of about 78%.
The company now expects marketing, selling and administrative expenses in the range of $6.3 billion – $6.5 billion (old guidance: $6.3 billion – $6.6 billion) and research and development expenses of $4.6 billion – $4.8 billion (old guidance: $4.7 billion – $4.9 billion)
Our Take
Lilly's third-quarter earnings were well above expectations and the company raised its earnings outlook for the year despite the impact of genericization and negative currency movement. Some of the company's key products and the animal health business should help offset the impact of genericization. The company also has some new products in its portfolio which should start contributing to revenues. Lilly is also working on controlling costs and is slated to return to growth from 2015.
Lilly is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the health care sector include AstraZeneca plc AZN, AbbVie, Inc. ABBV and Novo Nordisk NVO. While AstraZeneca is a Zacks Rank #1 (Strong Buy) stock, AbbVie and Novo Nordisk are Zacks Rank #2 (Buy) stocks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment