10-QPeriod: Q3 FY2024

ELI LILLY & Co Quarterly Report for Q3 Ended Sep 30, 2024

Filed October 30, 2024For Securities:LLY

Summary

Eli Lilly and Company reported strong financial results for the third quarter and the first nine months of 2024, with significant revenue growth driven by key products like Mounjaro®, Zepbound®, and Verzenio®. Revenue for the quarter reached $11.4 billion, a 20% increase year-over-year, and $31.5 billion for the first nine months, up 27%. This growth was primarily fueled by strong volume increases in the U.S. for Mounjaro and Zepbound, alongside Verzenio's continued expansion. While the company experienced a net loss of $57.4 million in Q3 2023, it achieved a net income of $970.3 million in Q3 2024, and year-to-date net income more than doubled to $6.18 billion. The company's pipeline remains robust, with several new molecular entities (NMEs) and line extensions in late-stage clinical trials across key therapeutic areas. Management highlighted ongoing investments in manufacturing capacity to meet demand, particularly for tirzepatide (Mounjaro/Zepbound). Despite facing pressures from healthcare legislation like the Inflation Reduction Act (IRA) and ongoing litigation, Lilly's financial performance and strategic investments position it for continued growth.

Financial Highlights

49 data points
Beta

Revenue

$11.44B

81.0% Gross Margin

Net Income

$970.30M

8.5% Net Margin

EPS (Diluted)

$1.07

Total Assets

$75.61B

Cash & Equivalents

$3.37B

Free Cash Flow

$3.71B

Financial Statements
Beta
Revenue$11.44B
Cost of Revenue$2.17B
Gross Profit$9.27B
SG&A Expenses$2.10B
Net Income$970.30M
EPS (Basic)$1.08
EPS (Diluted)$1.07
Shares Outstanding (Basic)901.00M
Shares Outstanding (Diluted)905.00M

Key Highlights

  • 1Revenue surged by 20% year-over-year to $11.4 billion in Q3 2024 and by 27% to $31.5 billion for the first nine months.
  • 2Net income for Q3 2024 was $970.3 million, a significant turnaround from a net loss of $57.4 million in Q3 2023. Year-to-date net income more than doubled to $6.18 billion.
  • 3Key drivers of revenue growth include Mounjaro®, Zepbound®, and Verzenio®, with Mounjaro and Zepbound showing substantial increases in U.S. sales.
  • 4The company made significant acquisitions, including Morphic Holding for $2.67 billion (net of cash acquired) and POINT Biopharma for $1.04 billion (net of cash acquired), aimed at enhancing its pipeline, particularly in radiopharmaceuticals and immunology.
  • 5Research and Development (R&D) expenses increased by 13% for the quarter and 18% year-to-date, reflecting continued investment in the company's extensive pipeline.
  • 6Manufacturing capacity is being expanded to meet the growing demand for tirzepatide (Mounjaro/Zepbound), addressing prior supply constraints.
  • 7The company is navigating regulatory pressures such as the Inflation Reduction Act (IRA) which will impact pricing for certain drugs, including Jardiance® effective 2026.

Frequently Asked Questions

Revenue and net income growth were primarily driven by strong sales volume and higher realized prices for key products, most notably Mounjaro® (for diabetes and obesity), Zepbound® (for obesity), and Verzenio® (for cancer). The company's successful management of R&D investments and operational efficiencies also contributed to improved profitability compared to the prior year's period.

Investors should monitor the progress of tirzepatide (Mounjaro/Zepbound) in various indications, including cardiovascular outcomes and metabolic dysfunction-associated steatohepatitis. In the immunology space, lebrikizumab (Ebglyss™) for atopic dermatitis and mirikizumab for Crohn's disease are key. For neuroscience, donanemab for early Alzheimer's disease continues to be a significant focus. Lilly is also investing heavily in new modalities, including gene therapy and radioligand therapies through acquisitions.

Eli Lilly is making substantial investments to expand manufacturing capacity globally, particularly to meet the high demand for tirzepatide (Mounjaro/Zepbound). While prior supply constraints existed, the company projects that supply will meet near-term demand in the U.S., and is working to bring tirzepatide to patients via different delivery presentations and launch in new markets as capacity allows.

The Inflation Reduction Act (IRA) poses a potential risk, as it mandates government price setting for certain drugs, including Jardiance®, starting in 2026. Lilly is also involved in various litigations, including those related to the 340B program, product liability, and pricing investigations, which could materially impact financial results if resolved unfavorably. The company is actively managing these risks and adapting its strategies.