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Eli Lilly Q4 profit misses estimates, cuts 2019 outlook

Eli Lilly and Company (LLY) swung to a profit in the fourth quarter from a loss last year, helped by lower asset impairment, restructuring, and other special charges as well as the impact of US tax reform. However, the bottom line missed analysts’ expectations.

The company lowered its earnings and revenue outlook for the full year 2019 due to the costs relating to the pending purchase of Loxo Oncology and the recent trial failure of cancer-treating Lartruvo. Following this, the stock inched down 0.96% in the premarket session.

Net income was $1.13 billion or $1.10 per share compared to a loss of $1.66 billion or $1.58 per share in the previous year quarter. Adjusted earnings grew 17% to $1.33 per share.

Eli Lilly fourth quarter 2018 earnings snapshot
Eli Lilly Q4 2018 Earnings Infographic

Revenue rose 5% to $6.44 billion driven by increased demand for newer medicines as well as an 11% increase in volume. Revenue in the US increased 7% driven by increased volume, backed by newer pharmaceutical products, including Trulicity, Taltz, and Basaglar. Revenue outside the US rose 1% on higher volume of 8%, which was primarily from newer pharmaceutical products, including Trulicity, Olumiant, and Taltz.

The company reported revenues increases across all its products such as lung cancer treating chemotherapy Alimta, type 2 diabetes medication Trulicity, autoimmune diseases treating injectable drug Taltz, solid tumors treating drug Cyramza, high blood sugar controlling insulin Basaglar, type 2 diabetes medication Jardiance, and chemotherapy Lartruvo, primarily driven by increased demand.

Revenue from Humalog, a rapid-acting human insulin analog used to lower blood glucose, decreased 2% as the impact of patient affordability programs dragged realized prices down as well as the unfavorable impact of foreign exchange rates.

Revenue from erectile dysfunction treating pill Cialis plunged 41% as the entry of generic tadalafil lowered the demand as well as the loss of exclusivity in Europe. Revenue from osteoporosis treating injection Forteo dropped 15% due to lower demand and a decline in realized prices as well as the unfavorable impact of foreign exchange rates. Revenue from human insulin suspension Humulin slid 7% as changes in estimates to rebates and discounts lowered realized prices.

Eli Lilly tops market estimates; revises guidance

Animal health revenue rose 3% on increased volume and, to a lesser extent, higher prices. In terms of product categories, higher sales of companion animal disease prevention products and future protein and health products were partially offset by lower sales of ruminants and swine products and, to a lesser extent, declines in companion animal therapeutics.

Looking ahead into the full year 2019, the company lowered its revenue outlook to the range of $25.1 billion to $25.6 billion from the prior range of $25.3 billion to $25.8 billion. Earnings guidance is lowered to the range of $4.57 to $4.67 per share from the previous range of $5.52 to $5.62 per share. Adjusted earnings forecast is reduced to the range of $5.55 to $5.65 per share from the prior estimates of $5.90 to $6.10 per share.

The revenue growth is still expected to be driven by volume from newer medicines including Trulicity, Taltz, Basaglar, Jardiance, Verzenio, Cyramza and Olumiant. The growth is also expected to benefit from the recent launch of Emgality and the anticipated inclusion of Vitrakvi, and could benefit from the potential approval and launch of other medicines is 2019.

Shares of Eli Lilly ended Tuesday’s regular session up 0.22% at $120.43 on the NYSE. The stock has risen over 55% in the past year and over 9% in the past three months.

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