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Eli Lilly & Co. (NYSE: LLY) reported its financial results for the third quarter of 2024. The company’s revenue for Q3 2024 surged by 20% to $11.44 billion, compared with $9.50 billion in Q3 2023.

This increase was largely attributed to the strong demand for Mounjaro and Zepbound, which contributed to a 15% rise in volume and a 6% increase in realized prices. Excluding the $1.42 billion revenue from the sale of rights for the olanzapine portfolio in Q3 2023, the revenue growth was even more impressive at 42%.

The company’s new products, including Ebglyss and Kisunla, reported a revenue increase of $3.07 billion, reaching $4.51 billion in Q3 2024. Mounjaro alone generated $3.11 billion in revenue, reflecting the strong market uptake.

Additionally, non-incretin revenue, which encompasses oncology, immunology, and neuroscience portfolios, grew by 17% compared to the previous year. This growth was further bolstered by the U.S. Food and Drug Administration’s approval of Ebglyss for atopic dermatitis and Kisunla for Alzheimer’s disease in Japan.

The company’s gross margin for Q3 2024 increased by 21% to $9.27 billion, representing 81% of revenue. This was primarily due to a favorable product mix and higher realized prices. However, the company incurred significant research and development expenses, which rose by 13% to $2.73 billion, reflecting ongoing investments in its pipeline. Despite these expenses, the company’s net income reached $970.3 million, translating to an earnings per share (EPS) of $1.07 on a reported basis and $1.18 on a non-GAAP basis.

Eli Lilly Reports Third Quarter with Lukewarm Results

Eli Lilly’s Q3 2024 performance exceeded several expectations but fell short in certain areas. The company’s reported EPS of $1.07 was below the anticipated EPS of $1.45. However, the non-GAAP EPS of $1.18, which excludes certain charges, indicates a closer alignment with market expectations. This discrepancy in EPS can be attributed to the $3.08 of acquired in-process research and development (IPR&D) charges incurred during the quarter.

Revenue expectations for the quarter were set at $12.09 billion, yet the company reported $11.44 billion. This shortfall is primarily due to the absence of the olanzapine portfolio revenue, which accounted for $1.42 billion in Q3 2023. When excluding this factor, Eli Lilly’s revenue growth of 42% indicates a strong underlying performance, driven by its new products and increased demand for existing offerings.

The company’s efforts to expand its product pipeline and secure regulatory approvals have been fruitful, as evidenced by the successful launches of Ebglyss and Kisunla. The positive Phase 3 data for tirzepatide and other pipeline advancements have positioned Eli Lilly for continued growth, despite the shortfall in EPS and revenue expectations for the quarter.

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Eli Lilly Downgrades EPS Guidance for Full Year 2024

Eli Lilly has updated its full-year 2024 revenue guidance to a range of $45.4 billion to $46.0 billion, reflecting its strategic investments in increasing the supply of tirzepatide. This guidance is slightly lower than the previous range of $45.4 billion to $46.6 billion, indicating a cautious approach to managing demand and production capabilities. The company remains focused on balancing demand generation activities with supply continuity to ensure patient care.

The EPS guidance for 2024 has been adjusted downward to a range of $12.05 to $12.55 on a reported basis and $13.02 to $13.52 on a non-GAAP basis. This revision accounts for the $3.09 billion of acquired IPR&D charges incurred through Q3 2024. Despite this adjustment, Eli Lilly continues to invest in its pipeline and expand its manufacturing footprint, as demonstrated by a $1.8 billion investment in Ireland and a $4.5 billion investment in Indiana for the Lilly Medicine Foundry.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.