INDIANAPOLIS, April 24, 2018 /PRNewswire/ -- Eli Lilly and
Company (NYSE: LLY) today announced financial results for the first
quarter of 2018.
|
|
|
|
|
$ in millions,
except
per share
data
|
First
Quarter
|
%
|
|
2018
|
|
2017
|
Change
|
Revenue
|
$
|
5,700.0
|
|
|
$
|
5,228.3
|
|
9%
|
Net Income (Loss) –
Reported
|
1,217.4
|
|
|
(110.8)
|
|
NM
|
Earnings (Loss) Per
Share – Reported
|
1.16
|
|
|
(0.10)
|
|
NM
|
|
|
|
|
|
Net Income –
Non-GAAP
|
1,406.1
|
|
|
1,039.6
|
|
35%
|
EPS –
Non-GAAP
|
1.34
|
|
|
0.98
|
|
37%
|
Certain financial information for 2018 and 2017 is presented on
both a reported and a non-GAAP basis. Some numbers in this press
release may not add due to rounding. Reported results were prepared
in accordance with generally accepted accounting principles (GAAP)
and include all revenue and expenses recognized during the periods.
Non-GAAP measures exclude the items described in the reconciliation
tables later in the release. The company's 2018 financial guidance
is also being provided on both a reported and a non-GAAP basis. The
non-GAAP measures are presented to provide additional insights into
the underlying trends in the company's business.
"Lilly delivered strong financial results in the first quarter,
fueled by revenue growth of new products and continued productivity
gains that together resulted in robust earnings growth and an
improved financial outlook for the year," said David A. Ricks, Lilly's chairman and CEO. "We
are in the early stages of a new growth era, driven by the strong
uptake of our new products, ongoing margin expansion, and the
momentum we are producing in our pipeline. Lilly remains poised to
deliver more innovation for patients and increased value for
stakeholders."
"While we are pleased that yesterday's FDA Arthritis Advisory
Committee supported the efficacy of both the 2-mg and 4-mg doses of
baricitinib, and recommended overall support for 2-mg, we are
disappointed that the committee did not recommend approval of the
4-mg dose," said Daniel Skovronsky,
M.D., Ph.D., senior vice president for clinical and product
development and incoming president of Lilly Research Labs. "We are
confident in the benefit-risk profile of both baricitinib 2-mg and
4-mg for the treatment of patients living with rheumatoid
arthritis, supported by the clinical data generated to-date, and by
the more than 40 countries in which both doses are approved. We'll
continue to work with the FDA on this important application."
Key Events Over the Last Three Months
Regulatory
- The U.S. Food and Drug Administration's (FDA) Arthritis
Advisory Committee recommended approval of the 2-mg dose of
baricitinib, a once-daily oral medication for the treatment of
moderately-to-severely active rheumatoid arthritis for adult
patients who have had an inadequate response or intolerance to
methotrexate. While the Advisory Committee unanimously supported
the efficacy of the 4-mg dose of baricitinib, it did not recommend
approval of the 4-mg dose of baricitinib for the proposed
indication based on the adequacy of the safety and benefit-risk
profiles.
- The FDA approved, and the company launched,
VerzenioTM (abemaciclib) in combination with an
aromatase inhibitor as initial endocrine-based therapy for the
treatment of postmenopausal women with hormone receptor-positive
(HR+), human epidermal growth factor receptor 2-negative (HER2-)
advanced or metastatic breast cancer.
Clinical
- The company announced additional results from a phase 3 study
of Cyramza® (ramucirumab) in combination with docetaxel
in patients with locally advanced or unresectable or metastatic
urothelial carcinoma whose disease progressed on or after
platinum-based chemotherapy. A positive trend was seen in the
secondary endpoint of overall survival which did not reach
statistical significance. The company previously announced that the
trial met its primary endpoint of investigator-assessed
progression-free survival.
- The company announced top-line results from a Phase 3 study of
Cyramza as a single agent in the second-line treatment of people
with hepatocellular carcinoma, also known as liver cancer. The
trial met its primary endpoint of overall survival as well as the
secondary endpoint of progression-free survival. The company
intends to initiate regulatory submissions in mid-2018.
- The company announced that Taltz® (ixekizumab) met
the primary and all key secondary endpoints in a Phase 3 study
evaluating the safety and efficacy of Taltz for the treatment of
ankylosing spondylitis (AS), also known as radiographic axial
spondyloarthritis (axSpA). The company plans to submit for
regulatory approvals pending additional data from the ongoing Taltz
development program later this year.
Business Development/Other Developments
- The company announced a global collaboration with Sigilon
Therapeutics to develop encapsulated cell therapies for the
potential treatment of type 1 diabetes. Under the terms of the
agreement, Lilly will receive an exclusive worldwide license to
Sigilon's Afibromer technology for islet cell encapsulation.
Sigilon will receive an upfront payment of $63 million, and Lilly will make an undisclosed
equity investment in Sigilon.
First-Quarter Reported Results
In the first quarter of 2018, worldwide revenue was $5.700 billion, an increase of 9 percent compared
with the first quarter of 2017. The revenue increase was driven by
a 4 percent increase due to the favorable impact of foreign
exchange rates, a 3 percent increase due to higher realized prices,
and a 2 percent increase due to volume.
Revenue in the U.S. increased 8 percent, to $3.155 billion, due to increased volume for new
pharmaceutical products, including Trulicity®,
Basaglar®, Jardiance®, Verzenio, and Taltz,
as well as higher realized prices, primarily for
Cialis®, Humalog® , Strattera®,
Basaglar, and companion animal products. The increase in revenue
was partially offset by decreased volume due to loss of exclusivity
for Strattera and Effient®, as well as decreased demand
for Cialis and food animal products.
Revenue outside the U.S. increased 11 percent, to $2.545 billion, largely due to the favorable
impact of foreign exchange rates and increased volume for new
pharmaceutical products, including Trulicity, Olumiant®,
Taltz, Jardiance, and LartruvoTM. The increase in
revenue was partially offset by lower realized prices for several
pharmaceutical products, as well as decreased volume for
Cialis.
Gross margin increased 6 percent, to $4.129 billion, in the first quarter of 2018
compared with the first quarter of 2017. Gross margin as a percent
of revenue was 72.4 percent, a decrease of 1.8 percentage points
compared with the first quarter of 2017. The decrease in gross
margin percent was primarily due to the effect of foreign exchange
rates on international inventories sold and, to a lesser extent,
product mix, partially offset by higher realized prices and
manufacturing efficiencies.
Operating expenses in the first quarter of 2018, defined as the
sum of research and development and marketing, selling, and
administrative expenses, decreased 5 percent to $2.677 billion. Research and development expenses
decreased 6 percent, to $1.177
billion, or 20.6 percent of revenue. This decrease was
driven primarily by a $50.0 million
charge in the first quarter of 2017 related to a collaboration with
DEKA Research & Development Corp. Marketing, selling, and
administrative expenses decreased 4 percent, to $1.500 billion, due to decreased expenses related
to late life-cycle products, partially offset by increased expenses
related to new pharmaceutical products.
There were no acquired in-process research and development
charges in the first quarter of 2018. In the first quarter of 2017,
the company recognized an acquired in-process research and
development charge of $857.6 million
associated with the acquisition of CoLucid Pharmaceuticals.
In the first quarter of 2018, the company recognized asset
impairment, restructuring, and other special charges of
$78.3 million. The charges are
primarily associated with asset impairment and restructuring
charges related to the decision to end Posilac® (rbST)
production at the Augusta, Georgia
manufacturing site. The company is continuing to explore options
related to exiting the site. The company also incurred expenses
associated with the ongoing review of strategic alternatives for
the Elanco animal health business. In the first quarter of 2017,
the company recognized asset impairment, restructuring, and other
special charges of $213.9 million, primarily related to
severance costs incurred as a result of actions taken to reduce the
company's cost structure, as well as integration costs related to
the acquisition of Novartis Animal Health.
Operating income in the first quarter of 2018 was $1.374 billion, compared to a loss of
$17.1 million in the first quarter of
2017 that was primarily driven by the in-process research and
development charge associated with the acquisition of CoLucid
Pharmaceuticals. Higher operating income in the first quarter of
2018 was also driven by higher gross margin, lower operating
expenses, and lower asset impairment, restructuring and other
special charges.
Other income (expense) was income of $67.5 million in the first quarter of 2018,
compared with income of $78.3 million
in the first quarter of 2017.
The effective tax rate was 15.5 percent in the first quarter of
2018. During the first quarter of 2017, the company incurred
$172.0 million of income tax expense,
despite earning $61.2 million of
income before income taxes, as a result of the nondeductible
$857.6 million acquired in-process
research and development charge for the acquisition of CoLucid
Pharmaceuticals.
In the first quarter of 2018, net income (loss) and earnings
(loss) per share were $1.217 billion and $1.16, respectively, compared with
$(110.8) million and $(0.10),
respectively, in the first quarter of 2017. The increases in net
income (loss) and earnings (loss) per share were primarily driven
by higher operating income.
First-Quarter Non-GAAP Measures
On a non-GAAP basis, first-quarter 2018 gross margin increased 5
percent, to $4.280 billion. Gross
margin as a percent of revenue was 75.1 percent, a decrease of 2.7
percentage points compared with the first quarter of 2017. The
decrease in gross margin percent was primarily due to the effect of
foreign exchange rates on international inventories sold and, to a
lesser extent, product mix, partially offset by higher realized
prices and manufacturing efficiencies.
Reflecting the company's continued effort to reduce its cost
structure, operating expenses were 46.9 percent of revenue in the
first quarter of 2018, a reduction of 7.1 percentage points
compared with the first quarter of 2017.
Operating income increased $363.3
million, or 29 percent, to $1.604
billion in the first quarter of 2018, due to higher gross
margin and lower operating expenses.
The effective tax rate was 15.9 percent in the first quarter of
2018, compared with 21.2 percent in the first quarter of 2017. The
lower effective tax rate for the first quarter of 2018 was
primarily due to U.S. tax reform enacted in December 2017, and, to a lesser extent, a net
discrete tax benefit of approximately $23.0
million in the first quarter of 2018.
In the first quarter of 2018, net income increased 35 percent,
to $1.406 billion, and earnings per
share increased 37 percent, to $1.34,
compared with $1.040 billion and
$0.98, respectively, in the first
quarter of 2017. The increases in net income and earnings per share
were primarily driven by higher operating income.
For further detail of non-GAAP measures, see the reconciliation
below as well as the Reconciliation of GAAP Reported to Selected
Non-GAAP Adjusted Information table later in this press
release.
|
First
Quarter
|
|
2018
|
|
2017
|
% Change
|
Earnings (loss)
per share (reported)
|
$
|
1.16
|
|
|
$
|
(0.10)
|
|
NM
|
Amortization of
intangible assets
|
.12
|
|
|
.11
|
|
|
Asset impairment,
restructuring and other special charges
|
.06
|
|
|
.16
|
|
|
Acquired in-process
research and development
|
—
|
|
|
.81
|
|
|
Inventory step-up
costs associated with the acquisition of
Boehringer Ingelheim Vetmedica's U.S. feline, canine and
rabies vaccine portfolio
|
—
|
|
|
.01
|
|
|
Earnings per share
(non-GAAP)
|
$
|
1.34
|
|
|
$
|
0.98
|
|
37%
|
|
|
|
|
|
Numbers may not add
due to rounding.
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|
|
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|
Selected Revenue
Highlights
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|
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(Dollars in
millions)
|
First
Quarter
|
|
|
Established Pharma
Products
|
2018
|
|
2017
|
|
% Change
|
|
Humalog
|
$
|
791.7
|
|
|
$
|
708.4
|
|
|
12%
|
|
Alimta®
|
499.6
|
|
|
489.9
|
|
|
2%
|
|
Cialis
|
495.4
|
|
|
533.6
|
|
|
(7)%
|
|
Humulin®
|
325.9
|
|
|
314.5
|
|
|
4%
|
|
Forteo®
|
313.2
|
|
|
347.5
|
|
|
(10)%
|
|
Cymbalta®
|
169.6
|
|
|
174.6
|
|
|
(3)%
|
|
Erbitux®
|
149.6
|
|
|
154.4
|
|
|
(3)%
|
|
Trajenta(a)®
|
141.1
|
|
|
113.0
|
|
|
25%
|
|
Strattera
|
130.7
|
|
|
196.2
|
|
|
(33)%
|
|
Zyprexa®
|
122.6
|
|
|
147.5
|
|
|
(17)%
|
|
|
|
|
|
|
|
|
Select Products
Launched Since 2014
|
|
|
|
|
|
|
Trulicity
|
678.3
|
|
|
372.9
|
|
|
82%
|
|
Cyramza
|
183.6
|
|
|
171.2
|
|
|
7%
|
|
Basaglar
|
166.0
|
|
|
46.0
|
|
|
261%
|
|
Jardiance(b)
|
151.0
|
|
|
74.0
|
|
|
104%
|
|
Taltz
|
146.5
|
|
|
96.6
|
|
|
52%
|
|
Lartruvo
|
64.4
|
|
|
42.1
|
|
|
53%
|
|
Olumiant
|
32.2
|
|
|
1.9
|
|
|
NM
|
|
Verzenio
|
29.7
|
|
|
—
|
|
|
NM
|
|
Subtotal
|
1,451.7
|
|
|
804.7
|
|
|
80%
|
|
|
|
|
|
|
|
|
Animal
Health
|
761.3
|
|
|
769.4
|
|
|
(1)%
|
|
|
|
|
|
|
|
|
Total
Revenue
|
5,700.0
|
|
|
5,228.3
|
|
|
9%
|
|
|
|
|
|
|
|
|
(a)
Trajenta includes Jentadueto
(b)
Jardiance includes Glyxambi® and
Synjardy®
NM – not
meaningful
Numbers may not add
due to rounding
|
|
Selected Established Pharma Products
Humalog
For the first quarter of 2018, worldwide Humalog revenue
increased 12 percent compared with the first quarter of 2017, to
$791.7 million. Revenue in the U.S.
increased 12 percent, to $504.1
million driven by higher realized prices due to changes in
estimates to rebates and discounts and changes in payer segment
mix, and, to a lesser extent, increased volume. Revenue
outside the U.S. increased 11 percent, to $287.6 million, driven by the favorable impact of
foreign exchange rates and, to a lesser extent, increased
volume.
Alimta
For the first quarter of 2018, Alimta generated worldwide
revenue of $499.6 million, which
increased 2 percent compared with the first quarter of 2017. U.S.
Alimta revenue increased 8 percent, to $245.3 million, driven by increased volume
and, to a lesser extent, higher realized prices. Alimta revenue
outside the U.S. decreased 3 percent, to $254.3 million, driven by competitive pressure
and loss of exclusivity in several countries, partially offset by
the favorable impact of foreign exchange rates.
Cialis
For the first quarter of 2018, worldwide Cialis revenue
decreased 7 percent to $495.4
million. U.S. Cialis revenue was $313.4 million in the first quarter, a 6 percent
increase compared with the first quarter of 2017, driven by higher
realized prices, largely offset by decreased demand due to the
entry of generic sildenafil. Cialis revenue outside the U.S.
decreased 23 percent to $182.0
million, driven by the loss of exclusivity in Europe, partially offset by the favorable
impact of foreign exchange rates.
Humulin
For the first quarter of 2018, worldwide Humulin revenue
increased 4 percent compared with the first quarter of 2017, to
$325.9 million. U.S. revenue
increased 8 percent, to $221.6
million, driven by increased demand, partially offset by
lower realized prices. Revenue outside the U.S. decreased
4 percent, to $104.3 million,
driven by decreased volume, primarily due to buying patterns in
China and, to a lesser extent,
lower realized prices, partially offset by the favorable impact of
foreign exchange rates.
Forteo
For the first quarter of 2018, worldwide revenue for Forteo was
$313.2 million, a 10 percent decrease
compared with the first quarter of 2017. U.S. revenue decreased 31
percent, to $122.1 million, primarily
due to decreased volume from wholesale and retail buying patterns,
and, to a lesser extent, lower realized prices. Revenue outside the
U.S. increased 13 percent, to $191.1 million, driven by the favorable
impact of foreign exchange rates and, to a lesser extent, increased
volume.
Selected Products Launched Since 2014
Trulicity
First-quarter 2018 worldwide Trulicity revenue was $678.3 million, an increase of 82 percent
compared with the first quarter of 2017. U.S. revenue increased 78
percent, to $528.2 million, primarily
driven by higher demand as a result of growth in the GLP-1 class
and increased share of market for Trulicity. Revenue outside the
U.S. was $150.1 million, an increase
of 96 percent, primarily driven by increased volume and, to a
lesser extent, the favorable impact of foreign exchange rates.
Cyramza
For the first quarter of 2018, worldwide Cyramza revenue was
$183.6 million, an increase of 7
percent compared with the first quarter of 2017. U.S. revenue was
$68.3 million, an increase of 3
percent, driven by increased volume and higher realized prices.
Revenue outside the U.S. was $115.3 million, an increase of 10 percent,
driven by the favorable impact of foreign exchange rates and
increased volume, partially offset by lower realized prices.
Basaglar
For the first quarter of 2018, Basaglar generated worldwide
revenue of $166.0 million. U.S.
revenue was $126.7 million, an
increase of $12.3 million compared
with the fourth quarter of 2017, driven by increased demand due to
Medicare Part D formulary access, partially offset by lower
realized prices due to changes in estimates of rebates and
discounts. Revenue outside the U.S. was $39.3 million, which was essentially flat
compared with the fourth quarter of 2017. Basaglar is part of the
company's alliance with Boehringer Ingelheim, and Lilly reports
total sales as revenue, with payments made to Boehringer Ingelheim
for its portion of the gross margin reported as cost of sales.
Jardiance
The company's worldwide Jardiance revenue during the first
quarter of 2018 was $151.0 million,
an increase of 104 percent compared with the first quarter of 2017.
U.S. revenue increased 99 percent, to $95.0
million, driven by increased share of market for Jardiance
and growth in the SGLT2 class. Revenue outside the U.S. was
$56.0 million, an increase of 113
percent, primarily driven by increased volume and, to a lesser
extent, the favorable impact of foreign exchange rates. Jardiance
is part of the company's alliance with Boehringer Ingelheim, and
Lilly reports as revenue a portion of Jardiance's gross margin.
Taltz
For the first quarter of 2018, Taltz generated worldwide revenue
of $146.5 million. U.S. revenue
was $111.2 million, a decrease
of $31.3 million compared with the
fourth quarter of 2017, driven by lower volume due to specialty
pharmacy buying patterns, partially offset by higher demand,
including an increase in new patient starts. Revenue outside the
U.S. was $35.3 million, an increase
of $5.3 million compared with the
fourth quarter of 2017 due to continued uptake from new
launches.
Lartruvo
For the first quarter of 2018, Lartruvo generated worldwide
revenue of $64.4 million. U.S.
revenue was $43.0 million, an
increase of $1.5 million compared
with the fourth quarter of 2017. Revenue outside the U.S. was
$21.4 million, an increase of
$3.9 million compared with the fourth
quarter of 2017.
Olumiant
For the first quarter of 2018, Olumiant generated worldwide
revenue of $32.2 million, an increase
of $9.2 million compared with the
fourth quarter of 2017, reflecting strong launch uptake in
Germany.
Verzenio
For the first quarter of 2018, Verzenio, a treatment for women
with HR+, HER2- advanced breast cancer, generated U.S. revenue of
$29.7 million, an increase of
$8.7 million compared with the fourth
quarter of 2017.
Animal Health
In the first quarter of 2018, worldwide animal health revenue
totaled $761.3 million, a decrease of
1 percent compared with the first quarter of 2017. Worldwide
food animal revenue decreased 7 percent, to $474.3 million, primarily driven by market access
pressures. Worldwide companion animal revenue increased 10 percent,
to $287.0 million, primarily driven
by higher realized prices for several products, and, to a lesser
extent, the favorable impact of foreign exchange rates.
2018 Financial Guidance
The company has revised certain elements of its 2018 financial
guidance on a reported and non-GAAP basis. Earnings per share
estimates for 2018 are being increased to be in the range of
$4.52 to $4.62 on a reported basis and $5.10 to $5.20 on a
non-GAAP basis, to reflect company expectations of higher operating
income and a lower effective tax rate.
|
2018
Expectations
|
% Change from
2017
|
Earnings per share
(reported)
|
$4.52 to
$4.62
|
NM
|
Amortization of
intangible assets
|
.42
|
|
Asset impairment,
restructuring and other special charges
|
.11
|
|
Acquired in-process
research and development
|
.05
|
|
Earnings per share
(non-GAAP)
|
$5.10 to
$5.20
|
19% to
21%
|
Numbers may not add
due to rounding
|
|
|
The company now anticipates 2018 revenue between $23.7 billion and $24.2
billion. The increase from prior guidance is due to lower
anticipated rebates and discounts in the U.S. as a result of lower
expected Medicaid utilization and favorable payer mix for several
products, as well as the impact of foreign exchange rates. Revenue
growth is still expected to be driven by new products including
Trulicity, Taltz, Basaglar, Jardiance, Verzenio, Cyramza, Olumiant
and Lartruvo.
The company now anticipates marketing, selling and
administrative expenses in 2018 to be between $6.2 billion and $6.5
billion. The increase from prior guidance is primarily due
to the impact of foreign exchange rates.
The company now anticipates research and development expenses in
2018 to be between $5.2 billion and
$5.4 billion. The increase from prior
guidance is due to increased funding of pipeline opportunities and
the impact of foreign exchange rates.
The company now anticipates other income/expense in 2018 to be
income between $75 million and
$200 million.
The 2018 effective tax rate is now expected to be approximately
17 percent on both a reported and a non-GAAP basis. The lower rate
reflects a more favorable jurisdictional mix of earnings. The
2018 effective tax rate benefits from a lower corporate income tax
rate, partially offset by the changes to certain business
exclusions, deductions, credits and international tax provisions.
The 2018 effective tax rate is subject to change based upon changes
in the company's interpretations of the tax laws, along with
subsequent regulations, interpretations, guidance, and accounting
policy elections that the company continues to evaluate.
The following table summarizes the company's 2018 financial
guidance:
|
2018
Guidance
|
|
Prior
|
|
Revised
|
Revenue
|
$23.0 to $23.5
billion
|
|
$23.7 to $24.2
billion
|
|
|
|
|
Gross Margin % of
Revenue (reported)
|
Approx.
73%
|
|
Unchanged
|
Gross Margin % of
Revenue (non-GAAP)
|
Approx.
75%
|
|
Unchanged
|
|
|
|
|
Marketing, Selling
& Administrative
|
$6.1 to $6.4
billion
|
|
$6.2 to $6.5
billion
|
|
|
|
|
Research &
Development
|
$5.0 to $5.2
billion
|
|
$5.2 to $5.4
billion
|
|
|
|
|
Other
Income/(Expense)
|
$75 to $175
million
|
|
$75 to $200
million
|
|
|
|
|
Tax Rate
(reported)
|
Approx.
18%
|
|
Approx.
17%
|
Tax Rate
(non-GAAP)
|
Approx.
18%
|
|
Approx.
17%
|
|
|
|
|
Earnings per share
(reported)
|
$4.39 to
$4.49
|
|
$4.52 to
$4.62
|
Earnings per share
(non-GAAP)
|
$4.81 to
$4.91
|
|
$5.10 to
$5.20
|
|
|
|
|
Capital
Expenditures
|
Approx. $1.2
billion
|
|
Unchanged
|
|
|
|
|
Non-GAAP adjustments
are consistent with the earnings per share table above.
|
Webcast of Conference Call
As previously announced, investors and the general public can
access a live webcast of the first-quarter 2018 financial results
conference call through a link on Lilly's website at www.lilly.com.
The conference call will be held today from 9 a.m. to 10:30 a.m. Eastern time (ET) and will
be available for replay via the website.
Lilly is a global healthcare leader that unites caring with
discovery to make life better for people around the world. We were
founded more than a century ago by a man committed to creating
high-quality medicines that meet real needs, and today we remain
true to that mission in all our work. Across the globe, Lilly
employees work to discover and bring life-changing medicines to
those who need them, improve the understanding and management of
disease, and give back to communities through philanthropy and
voluntarism. To learn more about Lilly, please visit us at
www.lilly.com and http://newsroom.lilly.com/social-channels.
F-LLY
This press release contains management's current intentions and
expectations for the future, all of which are forward- looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934. The
words "estimate", "project", "intend", "expect", "believe",
"target", "anticipate" and similar expressions are intended to
identify forward-looking statements. Actual results may differ
materially due to various factors. There are significant risks and
uncertainties in pharmaceutical research and development. There can
be no guarantees that pipeline products will receive the necessary
clinical and manufacturing regulatory approvals or that they will
prove to be commercially successful. With respect to the review of
and any potential initial public offering, merger, sale, or
retention of the Elanco animal health business, there can be no
guarantee that the company will realize the expected benefits of
the review or other strategic efforts or that the review or other
strategic efforts will be completed on the anticipated timeline, if
at all. The company's results may also be affected by such factors
as the timing of anticipated regulatory approvals and launches of
new products; market uptake of recently launched products;
competitive developments affecting current products; the expiration
of intellectual property protection for certain of the company's
products; the company's ability to protect and enforce patents and
other intellectual property; the impact of governmental actions
regarding pricing, importation, and reimbursement for
pharmaceuticals, including U.S. health care reform; regulatory
compliance problems or government investigations; regulatory
actions regarding currently marketed products; unexpected safety or
efficacy concerns associated with the company's products; issues
with product supply stemming from manufacturing difficulties or
disruptions; regulatory changes or other developments; changes in
patent law or regulations related to data-package exclusivity;
litigation involving current or future products; the extent to
which third-party indemnification obligations relating to product
liability litigation and similar matters will be performed;
unauthorized disclosure of trade secrets or other confidential data
stored in the company's information systems and networks; changes
in tax law and regulations, including the impact of tax reform
legislation enacted in December 2017
and related guidance; changes in inflation, interest rates, and
foreign currency exchange rates; asset impairments and
restructuring charges; changes in accounting standards promulgated
by the Financial Accounting Standards Board and the Securities and
Exchange Commission (SEC); acquisitions and business development
transactions and related integration costs; and the impact of
exchange rates and global macroeconomic conditions. For additional
information about the factors that could cause actual results to
differ materially from forward-looking statements, please see the
company's latest Form 10-K filed with the SEC. You should not place
undue reliance on forward-looking statements, which speak only as
of the date of this release. Except as is required by law, the
company expressly disclaims any obligation to publicly release any
revisions to forward-looking statements to reflect events after the
date of this release.
Alimta® (pemetrexed disodium, Lilly)
Basaglar® (insulin glargine injection, Lilly)
Cialis® (tadalafil, Lilly)
Cymbalta® (duloxetine hydrochloride, Lilly)
Cyramza® (ramucirumab, Lilly)
Effient® (prasugrel, Lilly)
Erbitux® (cetuximab, Lilly)
Forteo® (teriparatide of recombinant DNA origin
injection, Lilly)
Glyxambi® (empagliflozin/linagliptin, Boehringer
Ingelheim)
Humalog® (insulin lispro injection of recombinant DNA
origin, Lilly)
Humulin® (human insulin of recombinant DNA origin,
Lilly)
Jardiance® (empagliflozin, Boehringer Ingelheim)
Jentadueto® (linagliptin/metformin HCl, Boehringer
Ingelheim)
LartruvoTM (olaratumab, Lilly)
Olumiant® (baricitinib, Lilly)
Posilac® (recombinant bovine somatotropin, Lilly)
Strattera® (atomoxetine hydrochloride, Lilly)
Synjardy® (empagliflozin/metformin, Boehringer
Ingelheim)
Taltz® (ixekizumab, Lilly)
Trajenta® (linagliptin, Boehringer Ingelheim)
Trulicity® (dulaglutide, Lilly)
VerzenioTM (abemaciclib, Lilly)
Zyprexa® (olanzapine, Lilly)
Eli Lilly and Company
Employment Information
|
|
|
|
|
|
|
March 31,
2018
|
|
December 31,
2017
|
|
Worldwide
Employees
|
38,130
|
|
40,655
|
|
Eli Lilly and
Company
|
Operating
Results (Unaudited) – REPORTED
|
(Dollars in millions,
except per share data)
|
|
|
Three Months
Ended
|
|
|
|
March 31,
|
|
|
2018
|
|
2017
|
|
% Chg.
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
5,700.0
|
|
$
|
5,228.3
|
|
9
|
%
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
1,571.3
|
|
|
1,347.9
|
|
17
|
%
|
|
Research and
development
|
|
1,176.9
|
|
|
1,258.3
|
|
(6)
|
%
|
|
Marketing, selling
and administrative
|
|
1,500.0
|
|
|
1,567.7
|
|
(4)
|
%
|
|
Acquired in-process
research
and development
|
|
—
|
|
|
857.6
|
|
NM
|
|
Asset impairment,
restructuring and
other special charges
|
|
78.3
|
|
|
213.9
|
|
(63)
|
%
|
|
|
|
|
|
|
|
|
Operating
income
|
|
1,373.5
|
|
|
(17.1)
|
|
NM
|
|
|
|
|
|
|
|
|
Net interest income
(expense)
|
|
(15.7)
|
|
|
(14.0)
|
|
|
|
Net other income
(expense)
|
|
83.2
|
|
|
92.3
|
|
|
|
Other income
(expense)
|
|
67.5
|
|
|
78.3
|
|
(14)
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
1,441.0
|
|
|
61.2
|
|
NM
|
|
Income
taxes
|
|
223.6
|
|
|
172.0
|
|
30
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
1,217.4
|
|
$
|
(110.8)
|
|
NM
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share
|
$
|
1.16
|
|
$
|
(0.10)
|
|
NM
|
|
|
|
|
|
|
|
|
Dividends paid per
share
|
$
|
0.5625
|
|
$
|
0.52
|
|
8
|
|
|
Weighted-average
shares
outstanding (thousands)
|
|
1,049,839
|
|
|
1,056,306
|
|
|
|
|
NM – not
meaningful
|
Beginning in 2018,
pension and postretirement benefit cost components other than
service costs are presented in other income (expense). As a result,
comparable amounts for the three months ended March 31, 2017 have
been reclassified to conform with this new presentation.
|
Eli Lilly and
Company
|
|
|
Reconciliation of
GAAP Reported to Selected Non-GAAP Adjusted Information
(Unaudited)
|
|
|
(Dollars in millions,
except per share data)
|
|
|
|
|
|
|
Three Months
Ended
March 31,
2018
|
|
Three Months
Ended
March 31,
2017
|
|
|
|
GAAP
Reported
|
Adjustments(c)
|
Non-GAAP
Adjusted(a)
|
|
GAAP
Reported
|
Adjustments(d)
|
Non-GAAP
Adjusted(a)
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
$
|
1,571.3
|
|
$
|
(151.1)
|
|
$
|
1,420.2
|
|
$
|
1,347.9
|
|
$
|
(184.7)
|
|
$
|
1,163.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses(b)
|
|
2,676.9
|
|
|
(1.3)
|
|
|
2,675.6
|
|
|
2,826.0
|
|
|
(1.8)
|
|
|
2,824.2
|
|
Acquired
in-process
research and
development
|
|
—
|
|
|
—
|
|
|
—
|
|
|
857.6
|
|
|
(857.6)
|
|
|
—
|
|
Asset
impairment,
restructuring and other
special charges
|
|
78.3
|
|
|
(78.3)
|
|
|
—
|
|
|
213.9
|
|
|
(213.9)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
223.6
|
|
|
42.0
|
|
|
265.6
|
|
|
172.0
|
|
|
107.6
|
|
|
279.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
1,217.4
|
|
|
188.6
|
|
|
1,406.1
|
|
|
(110.8)
|
|
|
1,150.4
|
|
|
1,039.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share
|
|
1.16
|
|
|
0.18
|
|
|
1.34
|
|
|
(0.10)
|
|
|
1.09
|
|
|
0.98
|
|
|
|
|
Numbers may not add
due to rounding.
|
|
The table above
reflects only line items with non-GAAP adjustments.
|
|
Beginning in 2018,
pension and postretirement benefit cost components other than
service costs are presented in other income (expense). As a result,
comparable amounts for the three months ended March 31, 2017 have
been reclassified to conform with this new presentation.
|
|
|
(a)
|
The company uses
non-GAAP financial measures that differ from financial statements
reported in conformity with U.S. generally accepted accounting
principles (GAAP). The company's non-GAAP measures adjust reported
results to exclude amortization of intangibles and items that are
typically highly variable, difficult to predict, and/or of a size
that could have a substantial impact on the company's reported
operations for a period. The company believes that these non-GAAP
measures provide useful information to investors. Among other
things, they may help investors evaluate the company's ongoing
operations. They can assist in making meaningful period-over-period
comparisons and in identifying operating trends that would
otherwise be masked or distorted by the items subject to the
adjustments. Management uses these non-GAAP measures internally to
evaluate the performance of the business, including to allocate
resources and to evaluate results relative to incentive
compensation targets. Investors should consider these non-GAAP
measures in addition to, not as a substitute for or superior to,
measures of financial performance prepared in accordance with
GAAP.
|
(b)
|
Operating expenses
include research and development and marketing, selling and
administrative expenses.
|
(c)
|
Adjustments to
certain GAAP reported measures for the three months ended March 31,
2018, include the following:
|
(Dollars in millions,
except per share data)
|
Amortization(i)
|
Other
specified
items(ii)
|
Total
Adjustments
|
Cost of
sales
|
$
|
(151.1)
|
|
$
|
—
|
|
$
|
(151.1)
|
|
|
|
|
|
Operating
expenses
|
(1.3)
|
|
—
|
|
(1.3)
|
|
Asset impairment,
restructuring and other special charges
|
—
|
|
(78.3)
|
|
(78.3)
|
|
|
|
|
|
Income
taxes
|
29.9
|
|
12.1
|
|
42.0
|
|
|
|
|
|
Net income
|
122.5
|
|
66.2
|
|
188.6
|
|
|
|
|
|
Earnings per share –
diluted
|
0.12
|
|
0.06
|
|
0.18
|
|
|
|
|
Numbers may not add
due to rounding.
|
|
The table above
reflects only line items with non-GAAP adjustments.
|
|
|
i.
|
Exclude amortization
of intangibles primarily associated with costs of marketed products
acquired or licensed from third parties.
|
ii.
|
Exclude charges
primarily associated with asset impairment and restructuring
charges related to the decision to end Posilac (rbST) production at
the Augusta, Georgia manufacturing site, as well as expenses
associated with the review of strategic alternatives for the Elanco
Animal Health business.
|
(d)
|
Adjustments to
certain GAAP reported measures for the three months ended March 31,
2017, include the following:
|
(Dollars in millions,
except per share data)
|
Amortization(i)
|
IPR&D(ii)
|
Inventory
step-up(iii)
|
Other
specified
items(iv)
|
Total
Adjustments
|
Cost of
sales
|
$
|
(174.3)
|
|
$
|
—
|
|
$
|
(10.4)
|
|
$
|
—
|
|
$
|
(184.7)
|
|
|
|
|
|
|
|
Operating
expenses
|
(1.8)
|
|
—
|
|
—
|
|
—
|
|
(1.8)
|
|
Acquired in-process
research and
development
|
—
|
|
(857.6)
|
|
—
|
|
—
|
|
(857.6)
|
|
Asset impairment,
restructuring and other
special charges
|
—
|
|
—
|
|
—
|
|
(213.9)
|
|
(213.9)
|
|
|
|
|
|
|
|
Income
taxes
|
55.2
|
|
—
|
|
3.6
|
|
48.7
|
|
107.6
|
|
|
|
|
|
|
|
Net income
|
120.8
|
|
857.6
|
|
6.7
|
|
165.2
|
|
1,150.4
|
|
|
|
|
|
|
|
Earnings per
share
|
0.11
|
|
0.81
|
|
0.01
|
|
0.16
|
|
1.09
|
|
|
|
|
Numbers may not add
due to rounding.
|
|
The table above
reflects only line items with non-GAAP adjustments.
|
|
|
i.
|
Exclude amortization
of intangibles primarily associated with costs of marketed products
acquired or licensed from third parties.
|
ii.
|
Exclude costs
associated with upfront payments for acquired in-process research
and development projects acquired in a transaction other than a
business combination. These costs are related to the
acquisition of CoLucid Pharmaceuticals.
|
iii.
|
Exclude inventory
step-up costs associated with the acquisition of Boehringer
Ingelheim Vetmedica's U.S. feline, canine and rabies vaccine
portfolio.
|
iv.
|
Exclude charges
related to severance costs incurred as a result of actions taken to
reduce the company's cost structure, as well as integration costs
related to the acquisition of Novartis Animal Health.
|
Refer
to:
|
Mark Taylor;
mark.taylor@lilly.com; (317) 276-5795 (Media)
|
|
Kevin Hern;
hern_kevin_r@lilly.com; (317) 277-1838 (Investors)
|
View original content with
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SOURCE Eli Lilly and Company