Exchange: NYSE | Sector: Healthcare | Industry: Drug Manufacturers General
Q1 2024
Published: Apr 30, 2024
Earnings Highlights
Revenue of $8.77B up 26% year-over-year
EPS of $2.48 increased by 67.1% from previous year
Gross margin of 82.5%
Net income of 2.24B
"David Ricks, CEO: "Our focus is to bring innovative medicines to people in need and we’re investing in our pipeline and manufacturing expansion to support this goal."" - David Ricks
Eli Lilly and Company (LLY) Q1 2024 Financial Results: Strong Growth and Strategic Advancements in Pipeline and Manufacturing
Executive Summary
In Q1 2024, Eli Lilly reported a remarkable revenue growth of 26%, reaching $8.77 billion, predominantly driven by strong sales from its newly launched products Mounjaro and Zepbound. The quarter also saw significant operational achievements including key pipeline advancements, such as the Phase III success of tirzepatide for obstructive sleep apnea, alongside a promising capital strategy focused on expanding manufacturing capabilities. The company's net income increased to $2.24 billion, reflecting a robust earnings per share of $2.58, underscoring management's confidence in sustaining growth momentum throughout the year amid rising demands for incretin therapies and a strategic focus on innovative drug development.
- Gross Profit: $7.23 billion (82.5% gross margin)
- Increase from 78.4% YoY attributed to enhanced pricing and product mix.
- Operating Income: $2.62 billion, up 63% YoY, reflecting effective management and strong product performance.
- Net Income: $2.24 billion, net income margin of 25.6% (increased 66.8% YoY).
- EPS: $2.58, representing a 59% YoY increase despite one-time charges from IPR&D.
### Key Trends
- Significant growth from new product lines as demand for innovative therapies remains high.
- Continued investment in R&D, increasing by 27% YoY as Eli Lilly expands its pipeline with multiple new drug applications and clinical trials.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
8.77B
25.98%
-6.26%
Gross Profit
7.23B
35.63%
-5.99%
Operating Income
2.62B
75.33%
-14.90%
Net Income
2.24B
66.77%
2.43%
EPS
2.49
67.11%
7.79%
Key Financial Ratios
currentRatio
1.35
grossProfitMargin
82.5%
operatingProfitMargin
29.9%
netProfitMargin
25.6%
returnOnAssets
3.51%
returnOnEquity
17.5%
debtEquityRatio
2.05
operatingCashFlowPerShare
$1.29
freeCashFlowPerShare
$0.2
dividendPayoutRatio
52.1%
priceToBookRatio
53.47
priceEarningsRatio
76.36
Net Income vs. Revenue
Expense Breakdown
Management Commentary
*Management emphasized that the strong Q1 results are a continuation of positive momentum from previous years. CEO David Ricks stated, "Our focus is to bring innovative medicines to people in need," highlighting the strategic investment in new drugs and the expansion of their production capabilities. CFO Anat Ashkenazi mentioned, "Gross margin as a percent of revenue increased from 78.4% in Q1 2023 to 82.5% in Q1 2024," pointing to better realized prices which significantly benefited the profit margins. The positive Phase III results for tirzepatide also indicate potential for new revenue streams as this drug is positioned for broader use in multiple indications, including obstructive sleep apnea.
David Ricks, CEO: "Our focus is to bring innovative medicines to people in need and we’re investing in our pipeline and manufacturing expansion to support this goal."
— David Ricks
Anat Ashkenazi, CFO: "We’ve seen a gross margin improvement due to higher realized prices and an improved product mix, enabling us to remain competitive and profitable."
— Anat Ashkenazi
Forward Guidance
Given the strong performance and optimistic market projections, management has raised the full year revenue outlook by $2 billion, now estimated between **$42.4 billion to $43.6 billion**. This positive revision signals confidence in the production capacity expansion and expected acceleration in sales growth, particularly from Mounjaro and Zepbound. The company intends to maintain an effective tax rate around 11% and anticipates EPS between **$13.05 to $13.55** (reported basis) for 2024. Investors are encouraged to monitor the ramp-up in production for incretin medicines, which plays a crucial role in sustaining profitability amid high demand.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
LLY Focus
82.50%
29.90%
17.50%
76.36%
JNJ
69.60%
29.30%
4.65%
29.18%
BMY
75.30%
32.60%
-72.20%
-2.25%
ABBV
66.80%
22.70%
17.10%
58.39%
PFE
70.60%
30.60%
3.38%
12.59%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Eli Lilly is positioned for a strong year ahead, driven by both quantitative metrics and qualitative management strategies. Given the positive trajectory in revenue, continued pipeline expansion, and effective cost management, investors can expect resilient growth. However, attention should be given to market competition and production capabilities as key factors influencing long-term performance.
Key Investment Factors
Growth Potential
Eli Lilly's robust pipeline, marked by successful launches, particularly Mounjaro's increasing market share and promising clinical trials, exhibits a high growth trajectory driven by innovation and effective market strategies.
Profitability Risk
The ongoing manufacturing expansion, while promising, carries risks related to production capacity and potential regulatory hurdles. Market competition, especially within the weight-loss drug segment, presents challenges that could impact future growth.
Financial Position
With a strong cash position ($2.46 billion at end of Q1 2024) and the ability to generate substantial free cash flow ($1.8 billion in Q1), Eli Lilly appears financially sound. The company holds a reasonable debt-to-equity ratio of 2.05, indicating manageable leverage levels.
SWOT Analysis
Strengths
Strong revenue growth driven by new product launches
Robust pipeline with several advanced-stage candidates
Significant increases in gross and operating margins