TLDR:
- Eli Lilly stock dropped ~10% after missing Q3 profit estimates
- Sales of Mounjaro ($3.11B) and Zepbound ($1.26B) fell below analyst expectations
- Company lowered full-year adjusted earnings guidance to $13.02-$13.52 per share
- $2.8B acquisition-related charge impacted quarterly results
- Revenue grew 20% YoY to $11.44B, but missed $12.11B forecast
Eli Lilly (LLY) saw its shares tumble more than 10% in premarket trading Wednesday after the pharmaceutical giant reported third-quarter results that fell short of Wall Street expectations and cut its full-year profit outlook.
The Indianapolis-based drugmaker reported third-quarter revenue of $11.44 billion, representing a 20% increase from the same period last year. However, this figure missed analysts’ expectations of $12.11 billion, according to LSEG data.
The company’s adjusted earnings per share came in at $1.18, below the $1.47 that analysts had forecast. Net income for the quarter reached $970.3 million, or $1.07 per share, marking a turnaround from a net loss of $57.4 million, or 6 cents per share, during the same quarter in 2023.
A major factor impacting the quarterly results was a $2.8 billion acquisition-related charge. This charge prompted Eli Lilly to reduce its full-year adjusted earnings guidance to between $13.02 and $13.52 per share, down from its previous forecast of $16.10 to $16.60 per share.
The company’s revenue outlook was also adjusted, with the high end being lowered. Eli Lilly now expects annual sales between $45.4 billion and $46 billion, compared to its earlier projection that reached $46.6 billion.
Sales of the company’s popular weight-loss and diabetes drugs fell below analyst expectations. Mounjaro recorded sales of $3.11 billion, while Zepbound revenues reached $1.26 billion. These figures fell short of analyst predictions, which had anticipated sales of $4.20 billion for Mounjaro and $1.69 billion for Zepbound.
The company attributed the lower-than-expected drug sales to inventory decreases in the wholesale channel. Outside the United States, Lilly’s drug is marketed under the brand name Mounjaro for both diabetes and weight loss treatments.
To address the high demand for these injectable drugs, Eli Lilly has made substantial investments in expanding its production capacity. The company has committed approximately $7 billion to enhance its Indiana site and facilities in Ireland.
The supply challenges that have affected Eli Lilly’s incretin drugs, including Zepbound and Mounjaro, have shown signs of improvement. As of Wednesday, the Food and Drug Administration’s drug database indicated that all doses of both medications are available in the U.S., following extended periods of shortages.
However, the FDA continues to caution that patients might not always be able to immediately fill their prescriptions for these drugs at specific pharmacies. The agency maintains this warning despite the improved supply situation.
Demand in the U.S. market has consistently exceeded supply for these treatments over the past year. Both Zepbound and Mounjaro work by mimicking certain gut hormones to reduce appetite and regulate blood sugar levels.
The manufacturing expansion efforts aren’t unique to Eli Lilly. Its main competitor, Novo Nordisk, has also invested billions to increase its production capacity for similar treatments.
The quarterly results show that despite strong year-over-year growth, Eli Lilly faces challenges in meeting market expectations and managing its supply chain effectively. The company’s stock reaction reflects investor concern about these challenges and the revised guidance.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support