Eli Lilly and Co.’s Strong Q1 Results, Updated 2018 Guidance



Eli Lilly’s revenues

Eli Lilly and Co. (LLY) reported revenues of ~$5.7 billion for 1Q18 today, reflecting 9% growth from 1Q17. The company beat Wall Street analysts’ estimates for earnings-per-share (or EPS) and revenues in 1Q18 and reported EPS of $1.34 on revenues of ~$5.7 billion, compared to an estimated EPS of $1.14 on revenues of ~$5.5 billion.

The above graph compares the quarterly revenues and EPS for Eli Lilly since 1Q17.

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1Q18 performance

Eli Lilly’s top line increased 9% to ~$5.7 billion in 1Q18. Its net income increased to ~$1.2 billion, compared to a net loss of $110.8 million in 1Q17.

Human pharmaceutical

The human pharmaceutical business includes oncology products, cardiology products, neuroscience products, endocrinology products, and other products. This business contributed ~86.6% of total revenues for Eli Lilly in 1Q18. Total human pharmaceutical sales increased ~11% from 1Q17 to ~$4.9 billion. The growth was driven by strong performance of Alimta, Basaglar, Cyramza, Humalog, Humulin, Jardiance, Lartruvo, Olumiant, Taltz, Trajenta, and Trulicity in 1Q18.

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Elanco, the animal health business 

Eli Lilly operates its animal health business through Elanco. For 1Q18, Elanco contributed ~13.4% of total revenues for Eli Lilly. Elanco reported revenues of $761.3 million, a 1% decline from 1Q17. The decline in revenues was driven by an 8% decrease in volumes, offset by a 3% positive impact of foreign exchange and a 5% positive impact of higher realized prices.

At constant exchange rates, the human pharmaceuticals business reported a 7% growth in revenues, while the animal health business reported a 4% decline in revenues. Overall revenues increased by 5% at constant exchange rates in 1Q18.

2018 guidance

Eli Lilly updated its financial guidance for 2018 and now estimates revenues to be between $23.7 billion and $24.2 billion for 2018, driven by a favorable portfolio and foreign exchange rates. Research and development expenses and marketing, selling, and administrative expenses are expected to increase due to foreign exchange rates. Also, EPS are now estimated between $5.10 and $5.20 for 2018 as a whole, compared to the previous guidance of $4.81–$4.91.

The SPDR S&P Pharmaceuticals ETF (XPH) invests 4.3% of its total holdings in Eli Lilly (LLY), 4.3% in Pfizer (PFE), 4.4% in Zoetis (ZTS), and 4.1% in Perrigo (PRGO).

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