Lilly Reports Second-Quarter 2013 Results
- Worldwide revenue increased 6 percent as growth in key products offset lower Zyprexa revenue following patent expirations in most major markets.
- Cymbalta sales increased 22 percent while Cialis increased 13 percent.
- Higher revenue and ongoing cost containment drove strong earnings growth.
- Second quarter earnings per share grew to
$1.11 (reported), or$1.16 (non-GAAP). - 2013 earnings per share guidance range raised to
$4.28 -$4.38 (reported), or$4.05 -$4.15 (non-GAAP)
$ in millions, except per share data |
Second Quarter |
% | ||
2013 |
2012 |
Growth | ||
Total Revenue — Reported |
|
|
6% | |
Net Income — Reported |
1,206.2 |
923.6 |
31% | |
EPS — Reported
|
1.11 |
0.83 |
34% | |
Net Income — non-GAAP |
1,254.9 |
923.6 |
36% | |
EPS — non-GAAP |
1.16 |
0.83 |
40% |
Certain financial information for 2013 and 2012 are 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 period. Non-GAAP measures exclude the items described in the reconciliation tables later in the release. The non-GAAP measures are presented in order to provide additional insights into the underlying trends in the company's business. The company's 2013 financial guidance is also being provided on both a reported and a non-GAAP basis.
"In the second quarter, Lilly delivered solid financial results, highlighted by good revenue growth and strict cost containment efforts that led to robust earnings growth," said
Key Events Over the Last Three Months
- The marketing authorization application for LY2963016, an investigational basal (long-acting) insulin for the treatment of type 1 and type 2 diabetes, was accepted for review by the
European Medicines Agency . LY2963016 is a new insulin glargine product being developed in collaboration with Boehringer Ingelheim. - The company disclosed positive Phase III clinical trial data for several late-stage investigational medicines from its diabetes pipeline, including dulaglutide and, in collaboration with Boehringer Ingelheim, empagliflozin, as part of the American Diabetes Association Scientific Sessions.
- The company expressed its disappointment with the
Centers for Medicare & Medicaid Services draft decision proposing Coverage withEvidence Development for the use of beta-amyloid positron emission tomography (PET) imaging agents, including Lilly's product, Amyvid™. - The company announced plans to stop development of enzastaurin, which was being studied in a Phase III clinical trial as a monotherapy in the prevention of relapse in patients with diffuse large B-cell lymphoma.
- The company stopped its Phase II study for LY2886721, a beta secretase (BACE) inhibitor being investigated as a once-daily treatment for its potential to slow the progression of Alzheimer's disease.
- The company announced that the PRONOUNCE study of Alimta® did not achieve its primary endpoint of improved progression-free survival without grade four adverse events in nonsquamous non-small cell lung cancer.
Second-Quarter Reported Results
In the second quarter of 2013, worldwide total revenue was
Gross margin increased 7 percent to
Total operating expense in the second quarter of 2013, defined as the sum of research and development, marketing, selling and administrative expenses, decreased 2 percent compared with the second quarter of 2012 to
In the second quarter of 2013, the company recognized asset impairment, restructuring and other special charges of
Operating income in the second quarter of 2013 was
Other income (expense) was income of
The effective tax rate was 20.4 percent in the second quarter of 2013, compared with an effective tax rate of 22.1 percent in the second quarter of 2012. The decrease in the second quarter 2013 effective tax rate reflects the reinstatement of the R&D tax credit in the U.S. effective
In the second quarter of 2013, net income and earnings per share increased to
Second-Quarter 2013 non-GAAP Measures
On a non-GAAP basis, second-quarter 2013 operating income increased 30 percent to
The increases in net income and earnings per share were driven by higher operating income, and to a lesser extent, higher other income and a lower effective tax rate. Earnings per share also benefited from a lower number of shares outstanding in the second quarter of 2013 compared to the second quarter of 2012.
Non-GAAP measures in the second quarter of 2013 exclude items totaling
Second Quarter |
||||
2013 |
2012 |
% Change | ||
Earnings per share (reported) |
|
|
34% | |
Asset impairment, restructuring and other special charges |
.04 |
- |
||
Earnings per share (non-GAAP) |
|
|
40% |
Numbers do not add due to rounding.
Year-to-Date Results
For the first six months of 2013, worldwide total revenue was
Non-GAAP measures exclude items totaling
Year-to-date |
% Change | |||
2013 |
2012 |
|||
Earnings per share (reported) |
|
|
46% | |
Asset impairment, restructuring and other special charges |
.06 |
.01 |
||
Income from the transfer of exenatide commercial rights |
(0.29) |
- |
||
Earnings per share (non-GAAP) |
|
|
32% |
Revenue Highlights | ||||||||||||
(Dollars in millions) |
Second Quarter |
% Change |
Year-to-Date |
% Change |
||||||||
2013 |
2012 |
2012 |
2013 |
2012 |
2012 |
|||||||
Cymbalta® |
|
|
22% |
|
|
21% |
||||||
Alimta |
669.4 |
659.5 |
2% |
1,286.3 |
1,266.3 |
2% |
||||||
Humalog® |
628.6 |
613.4 |
2% |
1,261.3 |
1,203.6 |
5% |
||||||
Cialis® |
529.4 |
469.5 |
13% |
1,044.4 |
931.3 |
12% |
||||||
Humulin® |
327.5 |
303.0 |
8% |
639.4 |
610.7 |
5% |
||||||
Forteo® |
296.9 |
276.4 |
7% |
578.4 |
547.7 |
6% |
||||||
Zyprexa |
283.2 |
379.5 |
(25)% |
568.0 |
942.1 |
(40)% |
||||||
Evista® |
278.7 |
265.9 |
5% |
519.2 |
522.1 |
(1)% |
||||||
Strattera® |
168.3 |
153.0 |
10% |
335.0 |
311.9 |
7% |
||||||
Effient® |
137.4 |
111.0 |
24% |
253.2 |
226.9 |
12% |
||||||
|
543.5 |
512.2 |
6% |
1,042.4 |
1,003.0 |
4% |
||||||
Total Revenue |
|
|
6% |
|
|
3% |
||||||
Cymbalta
For the second quarter of 2013, Cymbalta generated
Alimta
For the second quarter of 2013, Alimta generated sales of
Humalog
For the second quarter of 2013, worldwide Humalog sales increased 2 percent, to
Cialis
Cialis sales for the second quarter of 2013 increased 13 percent to
Humulin
Worldwide Humulin sales increased 8 percent in the second quarter of 2013, to
Forteo
Second-quarter 2013 sales of Forteo were
Zyprexa
In the second quarter of 2013, Zyprexa sales totaled
Evista
Evista sales for the second quarter of 2013 increased 5 percent to
Strattera
During the second quarter of 2013, Strattera generated
Effient
Effient sales were
Worldwide sales of animal health products in the second quarter of 2013 were
2013 Financial Guidance
The company has raised its 2013 earnings per share guidance and now expects full-year 2013 earnings per share to be in the range of
2013 Expectations |
2012 Results |
% Change | |||
Earnings per share (reported) |
|
|
17% to 20% | ||
Asset impairment, restructuring and other special charges |
.06 |
0.16 |
|||
Income from the transfer of exenatide commercial rights |
(0.29) |
(0.43) |
|||
Earnings per share (non-GAAP) |
|
|
19% to 22% |
The company still anticipates 2013 revenue of between
The company now anticipates that gross margin as a percent of revenue will be approximately 79 percent.
Marketing, selling and administrative expenses are now expected in the range of
On a reported basis, other income and deductions is still expected to be in a range between
On a reported basis, the 2013 tax rate is still expected to be approximately 20.5 percent. On a non-GAAP basis, the 2013 tax rate is still expected to be approximately 19.0 percent. Both tax rates for 2013 include the one-time impact associated with the R&D tax credit for 2012 that was recorded in 2013 resulting from the delay in the enactment of the American Taxpayer Relief Act of 2012.
Operating cash flows are still expected to be more than sufficient to allow for capital expenditures of approximately
Webcast of Conference Call
As previously announced, investors and the general public can access a live webcast of the second-quarter 2013 financial results conference call through a link on Lilly's website at www.lilly.com. The conference call will be held today from
Lilly, a leading innovation-driven corporation, is developing a growing portfolio of pharmaceutical products by applying the latest research from its own worldwide laboratories and from collaborations with eminent scientific organizations. Headquartered in
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" 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 with respect to pipeline products that the products will receive the necessary clinical and manufacturing regulatory approvals or that they will prove to be commercially successful. Pharmaceutical products can develop unexpected safety or efficacy concerns. The company's results may also be affected by such
factors as competitive developments affecting current products; market uptake of recently launched products; the timing of anticipated regulatory approvals and launches of new products; regulatory actions regarding currently marketed products; issues with product supply; regulatory changes or other developments; regulatory compliance problems or government investigations; patent disputes; changes in patent law or regulations related to data-package exclusivity; other litigation involving current or future products; the impact of governmental actions regarding pricing, importation, and reimbursement for pharmaceuticals, including U.S. health care reform and deficit-reduction measures; changes in tax laws, including the American Taxpayer Relief Act of 2012; asset impairments and restructuring charges; acquisitions and business development transactions; 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-Q and Form 10-K filed with the
Alimta® (pemetrexed, Lilly)
AmyvidTM ((Florbetapir F 18 Injection, Lilly)
Axiron® (testosterone,
Cialis® (tadalafil, Lilly)
Cymbalta® (duloxetine hydrochloride, Lilly)
Effient® (prasugrel, Lilly)
Evista® (raloxifene hydrochloride, Lilly)
Forteo® (teriparatide of recombinant DNA origin injection, Lilly)
Humalog® (insulin lispro injection of recombinant DNA origin, Lilly)
Humulin® (human insulin of recombinant DNA origin, Lilly)
Strattera® (atomoxetine hydrochloride, Lilly)
Tradjenta® (linagliptin, Boehringer Ingelheim)
Trifexis® (spinosad + milbemycin oxime, Lilly)
Zyprexa®
(olanzapine, Lilly)
| ||
|
| |
Worldwide Employees |
38,100 |
38,350 |
| ||||||||||||||||||||||||||
Operating Results (Unaudited) — REPORTED | ||||||||||||||||||||||||||
(Dollars in millions, except per share data) | ||||||||||||||||||||||||||
Three Months Ended |
Six Months Ended | |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||
2013 |
2012 |
% Chg. |
2013 |
2012 |
% Chg. | |||||||||||||||||||||
Total Revenue |
$ |
5,929.7 |
$ |
5,600.7 |
6% |
$ |
11,531.7 |
$ |
11,202.7 |
3% | ||||||||||||||||
Cost of sales |
1,165.2 |
1,146.7 |
2% |
2,323.5 |
2,344.6 |
(1)% | ||||||||||||||||||||
Research and development |
1,330.4 |
1,320.7 |
1% |
2,678.5 |
2,472.2 |
8% | ||||||||||||||||||||
Marketing, selling and administrative |
1,867.6 |
1,931.1 |
(3)% |
3,519.6 |
3,778.6 |
(7)% | ||||||||||||||||||||
Asset impairments, restructuring and other special charges |
63.5 |
- |
NM |
85.2 |
23.8 |
NM | ||||||||||||||||||||
Operating income |
1,503.0 |
1,202.2 |
25% |
2,924.9 |
2,583.5 |
13% | ||||||||||||||||||||
Net interest income (expense) |
(10.6) |
(15.8) |
(27.3) |
(35.0) |
||||||||||||||||||||||
Other income (expense) — Special |
- |
- |
495.4 |
- |
||||||||||||||||||||||
Net other income (expense) |
22.5 |
(0.7) |
73.0 |
(27.5) |
||||||||||||||||||||||
Other income (expense) |
11.9 |
(16.5) |
NM |
541.1 |
(62.5) |
NM | ||||||||||||||||||||
Income before income taxes |
1,514.9 |
1,185.7 |
28% |
3,466.0 |
2,521.0 |
37% | ||||||||||||||||||||
Income taxes |
308.7 |
262.1 |
18% |
711.8 |
586.3 |
21% | ||||||||||||||||||||
Net income |
$ |
1,206.2 |
$ |
923.6 |
31% |
$ |
2,754.2 |
$ |
1,934.7 |
42% | ||||||||||||||||
Earnings per share — diluted |
$ |
1.11 |
$ |
0.83 |
34% |
$ |
2.53 |
$ |
1.73 |
46% | ||||||||||||||||
Dividends paid per share |
$ |
.49 |
$ |
.49 |
0% |
$ |
.98 |
$ |
.98 |
0% | ||||||||||||||||
Weighted-average shares outstanding (thousands) — diluted |
1,084,037 |
1,118,707 |
1,087,907 |
1,117,839 |
NM — not meaningful
|
||||||||||||
Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited) |
||||||||||||
(Dollars in millions, except per share data) |
||||||||||||
Three Months Ended |
Three Months Ended | |||||||||||
GAAP Reported |
Adjustments |
Non-GAAP Adjusted(a) |
GAAP Reported |
Adjustments |
Non-GAAP Adjusted(a) | |||||||
Total Revenue |
$ |
5,929.7 |
$ |
- |
$ |
5,929.7 |
$ |
5,600.7 |
$ |
- |
$ |
5.600.7 |
Cost of sales |
1,165.2 |
- |
1,165.2 |
1,146.7 |
- |
1.146.7 | ||||||
Operating Expenses(b) |
3,198.0 |
- |
3,198.0 |
3,251.8 |
- |
3.251.8 | ||||||
Asset impairments, restructuring and other special charges(c) |
63.5 |
(63.5) |
- |
- |
- |
- | ||||||
Other income (expense) |
11.9 |
- |
11.9 |
(16.5) |
- |
(16.5) | ||||||
Income taxes |
308.7 |
14.8 |
323.5 |
262.1 |
- |
262.1 | ||||||
Net income |
1,206.2 |
48.7 |
1,254.9 |
923.6 |
- |
923.6 | ||||||
Earnings per share — diluted |
1.11 |
0.04 |
1.16 |
0.83 |
- |
0.83 |
Numbers do not add due to rounding.
(a) We use non-GAAP financial measures that differ from financial statements reported in conformity with U.S. generally accepted accounting principles ("GAAP"). The items that we exclude when we provide non-GAAP measures or expectations are typically highly variable, difficult to predict, and of a size that could have a substantial impact on our reported operations for a period. We believe that these non-GAAP measures provide useful information to investors. Among other things, they may help investors evaluate our 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, marketing, selling and administrative expenses.
(c) Certain GAAP reported measures have been adjusted to eliminate asset impairments, restructuring and other special charges. During the three months ended
|
||||||||||||
Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited) |
||||||||||||
(Dollars in millions, except per share data) |
||||||||||||
Six Months Ended |
Six Months Ended | |||||||||||
GAAP Reported |
Adjustments |
Non-GAAP Adjusted(a) |
GAAP Reported |
Adjustments |
Non-GAAP Adjusted(a) | |||||||
Total Revenue |
$ |
11,531.7 |
$ |
- |
$ |
11,531.7 |
$ |
11,202.7 |
$ |
- |
$ |
11,202.7 |
Cost of sales |
2,323.5 |
- |
2,323.5 |
2,344.6 |
- |
2,344.6 | ||||||
Operating Expenses(b) |
6,198.1 |
- |
6,198.1 |
6,250.8 |
- |
6,250.8 | ||||||
Asset impairments, restructuring and other special charges(c) |
85.2 |
(85.2) |
- |
23.8 |
(23.8) |
- | ||||||
Other income (expense)(d) |
541.1 |
(495.4) |
45.7 |
(62.5) |
- |
(62.5) | ||||||
Income taxes |
711.8 |
(158.6) |
553.2 |
586.3 |
8.0 |
594.3 | ||||||
Net income |
2,754.2 |
(251.6) |
2,502.6 |
1,934.7 |
15.8 |
1,950.5 | ||||||
Earnings per share — diluted |
2.53 |
(0.23) |
2.30 |
1.73 |
0.01 |
1.74 |
(a) We use non-GAAP financial measures that differ from financial statements reported in conformity with U.S. generally accepted accounting principles ("GAAP"). The items that we exclude when we provide non-GAAP measures or expectations are typically highly variable, difficult to predict, and of a size that could have a substantial impact on our reported operations for a period. We believe that these non-GAAP measures provide useful information to investors. Among other things, they may help investors evaluate our 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, marketing, selling and administrative expenses.
(c) Certain GAAP reported measures have been adjusted to eliminate asset impairments, restructuring and other special charges. During the six months ended
(d) Certain GAAP reported measures have been adjusted to eliminate a portion of other income (expense). During the six months ended
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