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Eli Lilly and Company (NYSE: LLY) has reported a strong financial performance for the second quarter of 2024, showcasing significant growth across various metrics.

Revenue for Q2 2024 increased by 36% year-over-year, reaching $11.30 billion, driven primarily by the success of Mounjaro, Zepbound, and Verzenio. When excluding the $579 million revenue from the sale of rights for Baqsimi in Q2 2023, the revenue growth stands at an impressive 46%. The volume increase was a substantial 27%, complemented by a 10% rise due to higher realized prices, albeit slightly offset by a 1% decrease from unfavorable foreign exchange rates.

Earnings per share (EPS) saw a remarkable increase, with reported EPS rising by 68% to $3.28 and non-GAAP EPS soaring by 86% to $3.92. This growth includes $0.14 from acquired in-process research and development (IPR&D) charges.

The company’s gross margin also improved, increasing by 40% to $9.13 billion, which translates to 80.8% of revenue, up by 2.5 percentage points from the previous year. This improvement was driven by a favorable product mix and higher realized prices, although higher production costs presented a partial offset.

In terms of operational expenses, research and development costs increased by 15% to $2.71 billion, reflecting continued investments in the company’s portfolio. Marketing, selling, and administrative expenses also rose by 10% to $2.12 billion, driven by investments in product launches and personnel. Net income for Q2 2024 was $2.97 billion, a significant increase from $1.76 billion in Q2 2023.
 

LLY Beats Expectations Significantly in Q2

Eli Lilly’s Q2 2024 performance exceeded market expectations significantly. Analysts had projected an EPS of $2.75 and revenue of $10 billion for the quarter. However, the company reported an EPS of $3.28 on a reported basis and $3.92 on a non-GAAP basis, far surpassing the anticipated figures. The actual revenue of $11.30 billion also exceeded expectations by a substantial margin.

The standout performance was largely driven by the robust sales of Mounjaro, which generated $3.09 billion in revenue compared to $979.7 million in Q2 2023. This remarkable growth was fueled by strong demand, improved channel dynamics, and higher realized prices in the U.S. Similarly, Zepbound and Verzenio also contributed significantly to the revenue, with Zepbound recording $1.24 billion in U.S. sales following its launch in November 2023 for treating obesity and overweight patients.

When compared to the projections, the 36% increase in revenue and the 68% rise in reported EPS highlight the company’s ability to outperform market expectations. The non-GAAP EPS increase of 86% further underscores the strong operational performance and strategic initiatives undertaken by Eli Lilly. The company’s ability to navigate supply constraints and competitive dynamics, particularly with Trulicity, which saw a 31% decline in revenue, also reflects its resilience and strategic agility.
 

LLY Up Guidance for Full Year 2024

Eli Lilly has raised its full-year revenue guidance by $3 billion, now forecasting revenue in the range of $45.4 billion to $46.6 billion. This upward revision is primarily driven by the strong performance of Mounjaro and Zepbound, as well as the company’s non-incretin medicines.

The company has also gained greater clarity into the timing and pace of its production expansions and planned launches of Mounjaro outside the U.S.

The EPS guidance has been adjusted upward as well, with reported EPS now expected to be between $15.10 and $15.60, and non-GAAP EPS projected to range from $16.10 to $16.60. These revisions reflect the company’s confidence in its operational performance and strategic initiatives.

The ratio of (Gross Margin – OPEX) / Revenue is now expected to be in the range of 36% to 38% on a reported basis and 37% to 39% on a non-GAAP basis.

Other income (expense) guidance has also been updated, with expectations set for a range of ($525) to ($425) million of expense on a reported basis and ($400) to ($300) million on a non-GAAP basis. The effective tax rate is now anticipated to be approximately 15% on both a reported and non-GAAP basis, driven by changes in the company’s forecasted mix of earnings in higher tax jurisdictions.

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