Eli Lilly (LLY) Q4 2023 Earnings

Eli Lilly on Tuesday reported fourth-quarter revenue and adjusted earnings that beat expectations thanks to the strong launch of its new weight-loss drug, Zepbound, and higher prices for its blockbuster diabetes treatment, Mounjaro.

Zepbound, which won approval from U.S. regulators in early November, posted $175.8 million in sales during the fourth quarter.

The quarterly results are the first to include sales of Zepbound, which some analysts say could post more than $1 billion in sales in its first year on the market and eventually become the biggest drug of all time.

Eli Lilly shares rose about 5% in premarket trading Tuesday.

Here's what Eli Lilly reported for the fourth quarter compared to what Wall Street expected, according to a survey of analysts by LSEG, formerly known as Refinitiv:

• Earnings per share: Adjusted $2.49 vs. expected $2.22
• Revenue: $9.35 billion vs. $8.93 billion expected

Eli Lilly reported net income of $2.19 billion, or $2.42 per share, in the fourth quarter. That compares with a profit of $1.94 billion, or $2.14 per share, a year earlier.

Excluding one-time items associated with the value of intangible assets, among other adjustments, the company posted earnings per share of $2.49 for the fourth quarter of 2023.

The pharmaceutical giant posted fourth-quarter revenue of $9.35 billion, up 28% from the same period a year earlier.

Eli Lilly also released its full-year 2024 forecast, which was generally in line with expectations.

The company expects full-year adjusted earnings of between $12.20 and $12.70 per share. Eli Lilly also forecast 2024 revenue of between $40.4 billion and $41.6 billion.

Analysts surveyed by LSEG expected full-year adjusted earnings of $12.43 per share and sales of $39.38 billion.

Eli Lilly shares rose nearly 60% last year as the popularity of weight-loss drugs soared despite high prices, mixed insurance coverage and a handful of unpleasant side effects. With a market capitalization of approximately $673 billion, Eli Lilly is the largest U.S.-based pharmaceutical company.

Higher prices for older drugs, particularly Mounjaro, helped boost Eli Lilly's revenue, the company said. Mounjaro posted sales of $2.21 billion in the fourth quarter, compared to just $279.2 million in the same period a year earlier.

Analysts expected the drug to generate $1.73 billion in global sales, according to estimates compiled by FactSet.

That increase reflects higher demand but also “higher realized prices” in the U.S. due to lower use of Eli Lilly's savings card programs as access to the drug continued to expand during the quarter, the company said. The savings card programs aim to help reduce the out-of-pocket costs of medications like Mounjaro for patients.

Revenue growth was also driven by sales of Eli Lilly's breast cancer pill Verzenio, which rose 42% to $1.15 billion during the quarter due to higher demand and higher prices.

However, those results were below the expectations of analysts, who forecast sales of $1.18 billion for the period.

Sales of Jardiance, a tablet that lowers blood sugar in patients with type 2 diabetes, rose 30% to $798.1 million in the fourth quarter. Analysts expected Jardiance sales of $771.8 million.

Jardiance, which Eli Lilly shares with Boehringer Ingelheim, is among the first 10 drugs selected to face price negotiations with the federal Medicare program. Those pricing talks intensified last week after Medicare sent its initial price offers for each drug to manufacturers.

Meanwhile, Eli Lilly said the higher prices were offset by lower prices for its other diabetes drug, Trulicity, and for its Humalog insulin product.

Trulicity reported $1.67 billion in revenue, down 14% from the same period a year earlier. Analysts expected Trulicity to bring in $1.77 billion in sales during the quarter.

Humalog earned $366.6 million in revenue during the quarter, down 33% from the same period last year. Analysts expected the drug to post sales of $438 million, according to FactSet.

That decline isn't a surprise: Last year, Eli Lilly said it would cut prices for Humalog and other commonly prescribed insulin by 70% and cap monthly out-of-pocket costs at certain retail pharmacies for people who have private insurance to $35. starting May 1, 2023.

Eli Lilly will host an earnings conference call with investors at 10:00 a.m. ET on Tuesday.

Executives will likely be asked whether the company has made more progress in solving the supply problems affecting its weight loss and diabetes drugs.

There may also be questions related to the timing of the FDA's decision on Eli Lilly's experimental Alzheimer's drug, donanemab, which significantly slowed the progression of the memory-robbing disease in patients in the early stages of the disease.

The company did not mention the drug in its earnings release.

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