Summary
Eli Lilly & Co. (LLY) filed an 8-K on October 23, 2019, primarily to formally recast its financial statements to reflect the disposition of its remaining 80.2% ownership of Elanco Animal Health (Elanco) as discontinued operations. This recasting impacts the company's 2018 Annual Report on Form 10-K and prior periods. Investors should note that this is a retrospective accounting adjustment and does not reflect new operational developments for LLY itself, but rather clarifies the financial presentation following the Elanco divestiture completed in March 2019. In addition to the accounting recasting, the filing provided a key operational update regarding Trulicity, a treatment for type 2 diabetes. Trulicity demonstrated robust revenue growth in the United States, increasing by 17% for the three months and 24% for the nine months ended September 30, 2019. International revenue for Trulicity also showed strong performance with 50% and 45% increases for the same periods. While growth was primarily driven by demand, the company noted negative price dynamics in the U.S., such as higher rebates and Medicare Part D cost increases, which are expected to moderate by the end of 2019 and into 2020.
Key Highlights
- 1Formal recasting of financial statements to present Elanco Animal Health as discontinued operations for all periods covered by the 2018 Form 10-K.
- 2Elanco divestiture was completed via a tax-free exchange offer on March 11, 2019.
- 3This 8-K serves as a retrospective accounting adjustment, not a reflection of new operational performance for LLY's continuing businesses.
- 4Trulicity (type 2 diabetes treatment) revenue increased 17% (3-months) and 24% (9-months) in the U.S. driven by demand.
- 5Trulicity revenue outside the U.S. increased 50% (3-months) and 45% (9-months) driven by volume.
- 6Negative price dynamics in the U.S. for Trulicity included higher rebates and Medicare Part D cost increases.
- 7Eli Lilly expects negative price dynamics for Trulicity to moderate by year-end 2019 and into 2020.