10-QPeriod: Q2 FY2021

ELI LILLY & Co Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 3, 2021For Securities:LLY

Summary

Eli Lilly and Company reported strong revenue growth of 23% for the three months ended June 30, 2021, reaching $6.74 billion, and a 19% increase for the six months ended June 30, 2021, totaling $13.55 billion, compared to the prior year periods. This growth was driven by increased volume across key products like Trulicity, Taltz, and Verzenio, as well as favorable foreign exchange rates. While gross margin percentage saw a dip due to significant inventory charges related to COVID-19 antibodies, the company maintained profitability, with net income for the quarter at $1.39 billion, though slightly down year-over-year. The company also announced updated full-year 2021 financial guidance, anticipating revenue between $26.8 billion and $27.4 billion and earnings per share between $6.73 and $6.93.

Financial Highlights

52 data points
Beta

Revenue

$6.74B

71.0% Gross Margin

Net Income

$1.39B

20.6% Net Margin

EPS (Diluted)

$1.53

Total Assets

$47.81B

Cash & Equivalents

$3.22B

Free Cash Flow

$1.78B

Financial Statements
Beta
Revenue$6.74B
Cost of Revenue$1.95B
Gross Profit$4.79B
R&D Expenses$1.66B
SG&A Expenses$1.69B
Interest Expense$86.90M
Net Income$1.39B
EPS (Basic)$1.53
EPS (Diluted)$1.53
Shares Outstanding (Basic)907.30M
Shares Outstanding (Diluted)910.40M

Key Highlights

  • 1Revenue increased by 23% to $6.74 billion for the three months ended June 30, 2021, and by 19% to $13.55 billion for the six months ended June 30, 2021, compared to the prior year.
  • 2Key products like Trulicity, Taltz, and Verzenio showed strong volume-driven growth.
  • 3Gross margin percentage decreased due to significant inventory impairment charges ($423 million in Q2 2021) related to COVID-19 antibodies.
  • 4Acquired in-process R&D (IPR&D) expenses were $25 million for the quarter and $324.3 million for the six months, primarily related to business development transactions.
  • 5Asset impairment, restructuring, and other special charges amounted to $211.6 million for the six months, largely due to the sale of Qbrexza rights and Prevail acquisition costs.
  • 6The company updated its full-year 2021 financial guidance, expecting revenue between $26.8 billion and $27.4 billion and diluted EPS between $6.73 and $6.93.
  • 7Eli Lilly continued to advance its late-stage pipeline with several promising compounds in Phase III trials across various therapeutic areas, including oncology, immunology, and neuroscience.

Frequently Asked Questions

Revenue growth was primarily driven by increased sales volume of key products such as Trulicity, Taltz, and Verzenio. Favorable foreign exchange rates also contributed to the increase, particularly for international sales. The company also saw significant revenue from COVID-19 antibodies, although this is subject to demand changes and potential inventory write-downs.

The gross margin percentage decreased year-over-year primarily due to substantial inventory impairment charges of $423.0 million recognized in the second quarter of 2021 related to excess inventory of COVID-19 antibodies. These charges stemmed from evolving demand forecasts and near-term expiry dates.

Eli Lilly updated its full-year 2021 financial guidance. The company now anticipates revenue to be between $26.8 billion and $27.4 billion, and diluted earnings per share to be in the range of $6.73 to $6.93. This guidance reflects the impact of the COVID-19 antibody inventory charges and acquired IPR&D expenses.

The company recognized acquired IPR&D charges for several business development transactions, including with MiNA Therapeutics, Rigel Pharmaceuticals, and others. They also completed the acquisition of Prevail Therapeutics in January 2021, focusing on gene therapies for neurodegenerative diseases, and the sale of rights to Qbrexza. The pipeline remains robust with several late-stage assets in clinical development.