Why did Lilly cut its 2024 EPS guidance so sharply?

The cut was driven by $3.33 per share of acquired IPR&D charges now included in guidance, of which $3.08 was incurred in Q3 2024, primarily from the Morphic Holding acquisition. These are largely non-cash, acquisition-related charges. Operating guidance for margins and the operating expense ratio was unchanged on both a reported and non-GAAP basis.

Is the 20% revenue growth a fair measure of Lilly's underlying momentum?

Not fully. Q3 2023 included $1.42 billion from the sale of olanzapine rights, so reported growth of 20% understates the trend. Excluding that item, revenue grew 42% and volume grew 36%, which better reflects the underlying growth of the Mounjaro and Zepbound franchises.

Did wholesaler inventory changes affect Q3 results?

Yes. Following higher wholesaler inventory at the end of Q2, inventory was drawn down in Q3, which reduced U.S. Mounjaro and Zepbound sales by a mid-single-digit percentage of aggregate U.S. sales of those products. This timing effect could reverse in later quarters, but the release does not quantify future impact.

What are the key pipeline and capacity catalysts mentioned?

Key items include FDA approval of Ebglyss for atopic dermatitis, Japanese approval of Kisunla for early Alzheimer's, positive SURMOUNT-1 176-week data showing a 94% reduction in type 2 diabetes risk, and positive TRAILBLAZER-ALZ 6 data showing a modified titration reduced ARIA-E to 14% versus 24%. On capacity, Lilly announced a $1.8 billion investment in Ireland and a $4.5 billion Medicine Foundry in Indiana.

LLY 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed October 30, 2024. Cited figures are marked; the original filing is the authoritative source.

Eli Lilly reported Q3 2024 revenue of $11.44 billion^a, up 20% year over year, with the headline growth muted by the prior-year olanzapine (Zyprexa) rights sale of $1.42 billion.

Excluding that divestiture, revenue rose 42%, with worldwide volume up 36%. The growth was led by Mounjaro and Zepbound, while non-incretin revenue grew 17%. Reported EPS was $1.07^b and non-GAAP EPS was $1.18, both absorbing $3.08 per share of acquired IPR&D charges, primarily from the Morphic Holding acquisition.

Net income was $970.3 million^c, compared with a loss in Q3 2023. Lilly lowered 2024 EPS guidance to $12.05–$12.55 reported and $13.02–$13.52 non-GAAP, down from $15.10–$15.60 and $16.10–$16.60. The cut reflects the $3.33 per share of IPR&D charges now included in guidance, which investors should treat as a one-time, acquisition-driven reduction rather than an operating deterioration.

Revenue guidance was narrowed to $45.4^d–$46.0 billion, from $45.4–$46.6 billion, which implies a modestly lower top end. Management also noted that wholesaler inventory destocking reduced Q3 U.S. sales of Mounjaro and Zepbound by a mid-single-digit percentage of aggregate U.S. sales of those products.

The release also highlighted pipeline and capacity progress: FDA approval of Ebglyss, Japanese approval of Kisunla, positive SURMOUNT-1 176-week data showing a 94% reduction in type 2 diabetes risk, and a $1.8 billion Irish manufacturing expansion plus a $4.5 billion Indiana Medicine Foundry investment. Supply expansion is a central lever for meeting tirzepatide demand, and these investments support longer-term growth.

02—Key points

Key Highlights

Q3 2024 revenue rose 20% to $11.44 billion; excluding the prior-year olanzapine divestiture, revenue grew 42% and volume grew 36%.
Mounjaro revenue reached $3.11 billion (vs. $1.41 billion) and Zepbound U.S. revenue reached $1.26 billion, driving New Products revenue up $3.07 billion to $4.51 billion.
Reported EPS of $1.07 and non-GAAP EPS of $1.18 both include $3.08 per share of acquired IPR&D charges, mainly from the Morphic Holding acquisition.
2024 reported EPS guidance was cut to $12.05–$12.55 (from $15.10–$15.60), driven by $3.33 per share of year-to-date IPR&D charges.
2024 revenue guidance was narrowed to $45.4–$46.0 billion from $45.4–$46.6 billion.
Q3 U.S. Mounjaro and Zepbound sales were reduced by wholesaler inventory destocking, estimated at mid-single-digit percent of aggregate U.S. sales of those products.
Non-incretin revenue grew 17%, with growth across oncology, immunology and neuroscience, reducing reliance on the obesity and diabetes franchise.

03—Questions

Frequently Asked Questions

Why did Lilly cut its 2024 EPS guidance so sharply?
The cut was driven by $3.33 per share of acquired IPR&D charges now included in guidance, of which $3.08 was incurred in Q3 2024, primarily from the Morphic Holding acquisition. These are largely non-cash, acquisition-related charges. Operating guidance for margins and the operating expense ratio was unchanged on both a reported and non-GAAP basis.
Is the 20% revenue growth a fair measure of Lilly's underlying momentum?
Not fully. Q3 2023 included $1.42 billion from the sale of olanzapine rights, so reported growth of 20% understates the trend. Excluding that item, revenue grew 42% and volume grew 36%, which better reflects the underlying growth of the Mounjaro and Zepbound franchises.
Did wholesaler inventory changes affect Q3 results?
Yes. Following higher wholesaler inventory at the end of Q2, inventory was drawn down in Q3, which reduced U.S. Mounjaro and Zepbound sales by a mid-single-digit percentage of aggregate U.S. sales of those products. This timing effect could reverse in later quarters, but the release does not quantify future impact.
What are the key pipeline and capacity catalysts mentioned?
Key items include FDA approval of Ebglyss for atopic dermatitis, Japanese approval of Kisunla for early Alzheimer's, positive SURMOUNT-1 176-week data showing a 94% reduction in type 2 diabetes risk, and positive TRAILBLAZER-ALZ 6 data showing a modified titration reduced ARIA-E to 14% versus 24%. On capacity, Lilly announced a $1.8 billion investment in Ireland and a $4.5 billion Medicine Foundry in Indiana.

04—Continue

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