Lilly Reports Third-Quarter Financial Results, Updates Guidance
Eli Lilly announced Q3 2020 results, reporting revenue of $5.741 billion, a 5% increase from Q3 2019. Net income was $1.208 billion (-4%), with EPS of $1.33 (-3%). Non-GAAP net income grew by 3% to $1.407 billion, with EPS at $1.54 (+4%). Key growth products contributed significantly, with notable increases in Trulicity (+9%) and Taltz (+34%). Total operating expenses rose 9% to $3.035 billion, impacted by COVID-19 expenses of $125 million. Lilly also made strides in COVID-19 treatment development, submitting a request for Emergency Use Authorization for bamlanivimab.
- Revenue increased 5% to $5.741 billion, driven by key growth products.
- Non-GAAP EPS rose 4% to $1.54, reflecting improved underlying business.
- Trulicity revenue grew 9% to $1.107 billion, indicating strong demand.
- Taltz revenue surged 34%, showcasing significant growth potential.
- Lilly's COVID-19 therapy development led to an EUA submission for bamlanivimab.
- Reported net income decreased 4% to $1.208 billion, mainly due to higher expenses.
- Operating income fell to $1.278 billion, down from $1.431 billion in Q3 2019.
- Total operating expenses increased 9% to $3.035 billion, driven by COVID-19 related costs.
INDIANAPOLIS, Oct. 27, 2020 /PRNewswire/ -- Eli Lilly and Company (NYSE: LLY) today announced financial results for the third quarter of 2020.
$ in millions, except per share data | Third Quarter | % | ||||||
2020 | 2019 | Change | ||||||
Revenue | $ | 5,740.6 | $ | 5,476.6 | ||||
Net Income – Reported | 1,208.4 | 1,253.9 | (4)% | |||||
EPS – Reported | 1.33 | 1.37 | (3)% | |||||
Net Income – Non-GAAP | 1,406.9 | 1,360.0 | ||||||
EPS – Non-GAAP | 1.54 | 1.48 | ||||||
Certain financial information for 2020 and 2019 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 U.S. generally accepted accounting principles (GAAP), include all revenue and expenses recognized during the periods, and reflect Elanco Animal Health (Elanco) as discontinued operations during the first quarter of 2019. Non-GAAP measures reflect adjustments for the items described in the reconciliation tables later in the release, and assume that the disposition of Elanco occurred at the beginning of 2019 (including the benefit from the reduction in shares of common stock outstanding). The company's 2020 financial guidance is 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 solid financial results in the third quarter, as our key growth products continued to be the catalyst for volume-based revenue growth. Despite ongoing healthcare disruptions from the global pandemic, we remain confident in the strength of our underlying business and continue to manage our operations to deliver success over the long term," said David A. Ricks, Lilly's chairman and CEO. "At the same time, I am incredibly proud of the commitment and progress Lilly has made in the fight against COVID-19. In the third quarter, Lilly incurred expenses of
Key Events Over the Last Three Months
COVID-19
- The company submitted an initial request to the U.S. Food and Drug Administration (FDA) for Emergency Use Authorization for bamlanivimab (LY-CoV555) monotherapy in higher-risk patients who have been recently diagnosed with mild-to-moderate COVID-19.
- The company announced proof-of-concept data from an interim analysis of the BLAZE-1 clinical trial, showing a reduced rate of hospitalization for patients treated with bamlanivimab. The randomized, double-blind, placebo-controlled Phase 2 study evaluated bamlanivimab for the treatment of symptomatic COVID-19 in the outpatient setting. The trial enrolled mild-to-moderate recently diagnosed COVID-19 patients across four groups.
- Additional data from an interim analysis of the BLAZE-1 clinical trial showed that combination therapy with two of Lilly's SARS-CoV-2 neutralizing antibodies, bamlanivimab and etesevimab (LY-CoV016), reduced viral load, symptoms and COVID-related hospitalization and ER visits.
- The company announced the initiation of BLAZE-2, a Phase 3 trial studying bamlanivimab for the prevention of SARS-CoV-2 infection and COVID-19 in residents and staff at long-term care facilities in the U.S.
- The company announced a global antibody manufacturing collaboration with Amgen to significantly increase the supply capacity available for Lilly's potential COVID-19 therapies.
- The independent data safety monitoring board from the ACTIV-3 clinical trial being run by the National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health (NIH), recommended that no additional COVID-19 patients in the trial's hospitalized setting receive bamlanivimab. This recommendation was based on trial data suggesting that bamlanivimab is unlikely to help hospitalized COVID-19 patients recover from this advanced stage of their disease. All other studies of bamlanivimab remain ongoing, and the company remains confident that bamlanivimab monotherapy may prevent progression of disease for those earlier in the course of COVID-19.
- The company entered into an agreement with the Bill & Melinda Gates Foundation, as part of the COVID-19 Therapeutics Accelerator, to facilitate access to future Lilly therapeutic antibodies under development for the potential prevention and treatment of COVID-19 to benefit low- and middle-income countries.
- The company and Incyte Corporation presented data showing baricitinib in combination with remdesivir reduced time to recovery and improved clinical outcomes for patients with COVID-19 infection compared with remdesivir. Based on this data, the companies submitted an initial request to the FDA for Emergency Use Authorization.
Regulatory
- The FDA approved, and the company began commercializing, two additional doses of Trulicity®, expanding the label of once-weekly Trulicity to include 3.0 mg and 4.5 mg doses.
- The European Commission approved Olumiant® for the treatment of adult patients with moderate-to-severe atopic dermatitis (AD) who are candidates for systemic therapy.
- The FDA informed the company and Pfizer that it intends to hold an Advisory Committee meeting to discuss the Biologics License Application (BLA) for tanezumab. The meeting is expected to occur in March 2021 and, as a result, the FDA's review of the tanezumab BLA will extend beyond the current PDUFA date in December 2020. The FDA's review of the BLA is ongoing and the Agency has not requested new clinical studies to be completed at this time.
Clinical
- The company presented additional data for Verzenio® at the European Society for Medical Oncology (ESMO) 2020 Virtual Congress. Verzenio, in combination with standard adjuvant endocrine therapy (ET), significantly decreased the risk of breast cancer recurrence by 25 percent compared to standard adjuvant ET alone for people with hormone receptor-positive (HR+), human epidermal growth factor receptor 2-negative (HER2-) high-risk early breast cancer.
Business Development/Other Developments
- The company added its Insulin Value Program, featuring a
$35 copay card, to its comprehensive suite of insulin affordability solutions in the U.S. for people with diabetes. Anyone with commercial insurance, and those without insurance at all, can fill their monthly prescription of Lilly insulins for$35 through this program. - The company and Innovent Biologics, Inc. announced a global expansion of their strategic alliance for TYVYT®. Lilly and Innovent currently co-commercialize Tyvyt in China. Under the terms of the expanded license agreement, Lilly will obtain an exclusive license for Tyvyt for geographies outside of China and plans to pursue registration of Tyvyt in the U.S. and other markets. In return, Innovent will receive an upfront payment of
$200 million and will be eligible for up to$825 million in success-based regulatory and sales-based milestones, as well as tiered double-digit royalties on net sales. Both companies will also retain the right to study Tyvyt in combination with other medicines as part of their own clinical programs. The transaction closed in the fourth quarter of 2020. - The company announced a definitive agreement to acquire Disarm Therapeutics, a privately-held biotechnology company creating a new class of disease-modifying therapeutics for patients with axonal degeneration.
Third-Quarter Reported Results
In the third quarter of 2020, worldwide revenue was
Revenue in the U.S. increased 3 percent, to
Revenue outside the U.S. increased 7 percent, to
Gross margin increased 3 percent, to
Total operating expenses in the third quarter of 2020, defined as the sum of research and development and marketing, selling, and administrative expenses, increased 9 percent to
There were no acquired in-process research and development charges recognized in the third quarter of 2020. In the third quarter of 2019, the company recognized acquired in-process research and development charges of
In the third quarter of 2020, the company recognized asset impairment, restructuring and other special charges of
Operating income in the third quarter of 2020 was
Other income was
The effective tax rate was 15.9 percent in the third quarter of 2020, compared with 10.8 percent in the third quarter of 2019. The higher effective tax rate in the third quarter of 2020 was driven primarily by a mix of earnings in higher tax jurisdictions and a lower net discrete tax benefit compared to the same period in 2019.
In the third quarter of 2020, net income and earnings per share were
Third-Quarter Non-GAAP Measures
On a non-GAAP basis, third-quarter 2020 gross margin increased 4 percent, to
Operating income on a non-GAAP basis decreased
The effective tax rate on a non-GAAP basis was 15.5 percent in the third quarter of 2020, compared with 11.7 percent in the third quarter of 2019. The higher effective tax rate for the third quarter of 2020 was driven by a mix of earnings in higher tax jurisdictions and a lower net discrete tax benefit compared to the same period in 2019.
On a non-GAAP basis, in the third quarter of 2020 net income increased 3 percent, to
For further detail on 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.
Third Quarter | ||||||||
2020 | 2019 | % Change | ||||||
Earnings per share (reported) | $ | 1.33 | $ | 1.37 | (3)% | |||
Asset impairment, restructuring and other special charges | 0.11 | — | ||||||
Amortization of intangible assets | 0.11 | .05 | ||||||
Acquired in-process research and development | — | .07 | ||||||
Earnings per share (non-GAAP) | $ | 1.54 | $ | 1.48 | ||||
Numbers may not add due to rounding. | ||||||||
Year-to-Date Reported Results
For the first nine months of 2020, worldwide revenue increased 6 percent to
Year-to-Date Non-GAAP Measures
For the first nine months of 2020, operating income was
For further detail on 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.
Year-to-Date | ||||||||
2020 | 2019 | % Change | ||||||
Earnings per share (reported) | $ | 4.47 | $ | 7.24 | (38)% | |||
Discontinued operations | — | (3.91) | ||||||
Earnings per share from continuing operations | 4.47 | 3.33 | ||||||
Acquired in-process research and development | .30 | .20 | ||||||
Amortization of intangible assets | .25 | .13 | ||||||
Asset impairment, restructuring and other special charges | .17 | .44 | ||||||
Lartruvo® charges | — | .14 | ||||||
Impact of reduced shares outstanding for non-GAAP | — | .07 | ||||||
Earnings per share (non-GAAP) | $ | 5.18 | $ | 4.31 | ||||
Numbers may not add due to rounding. (a) Non-GAAP earnings per share assume that the disposition of Elanco occurred at the beginning of 2019 and, therefore, exclude the approximately 65.0 million shares of Lilly common stock retired in the Elanco exchange offer. | ||||||||
Selected Revenue Highlights
Selected Revenue Highlights | |||||||||||||||||||||
(Dollars in millions) | Third Quarter | Year-to-Date | |||||||||||||||||||
Selected Products | 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||||
Trulicity | $ | 1,106.6 | $ | 1,011.5 | $ | 3,565.7 | $ | 2,919.7 | |||||||||||||
Humalog(a) | 656.9 | 648.9 | 1,907.8 | 2,057.3 | (7)% | ||||||||||||||||
Alimta | 578.0 | 508.2 | 1,677.2 | 1,585.1 | |||||||||||||||||
Taltz | 454.5 | 340.0 | 1,293.2 | 946.3 | |||||||||||||||||
Humulin | 305.9 | 321.8 | (5)% | 935.2 | 942.1 | (1)% | |||||||||||||||
Basaglar | 248.2 | 263.2 | (6)% | 842.3 | 805.4 | ||||||||||||||||
Jardiance(b) | 310.8 | 240.7 | 840.3 | 676.2 | |||||||||||||||||
Forteo | 266.9 | 370.7 | (28)% | 791.9 | 1,044.4 | (24)% | |||||||||||||||
Cyramza | 252.7 | 240.0 | 748.4 | 680.1 | |||||||||||||||||
Verzenio | 234.4 | 157.2 | 631.1 | 400.6 | |||||||||||||||||
Olumiant | 162.0 | 114.6 | 446.7 | 299.1 | |||||||||||||||||
Emgality | 91.5 | 47.7 | 252.9 | 96.3 | NM | ||||||||||||||||
Tyvyt | 84.4 | 46.6 | 205.9 | 96.6 | NM | ||||||||||||||||
Baqsimi | 20.9 | 6.2 | NM | 52.3 | 6.2 | NM | |||||||||||||||
Retevmo | 11.6 | — | NM | 17.9 | — | NM | |||||||||||||||
Total Revenue | 5,740.6 | 5,476.6 | 5 | % | 17,099.8 | 16,205.5 | |||||||||||||||
(a) Humalog includes Insulin Lispro (b) Jardiance includes Glyxambi®, Synjardy®, and Trijardy® XR NM – not meaningful | |||||||||||||||||||||
Trulicity
Third-quarter 2020 worldwide Trulicity revenue was
Humalog
For the third quarter of 2020, worldwide Humalog revenue increased 1 percent compared with the third quarter of 2019, to
Alimta
For the third quarter of 2020, worldwide Alimta revenue increased 14 percent compared with the third quarter of 2019, to
Taltz
For the third quarter of 2020, worldwide Taltz revenue increased 34 percent compared with the third quarter of 2019, to
Humulin
For the third quarter of 2020, worldwide Humulin revenue decreased 5 percent compared with the third quarter of 2019, to
Basaglar
For the third quarter of 2020, worldwide Basaglar revenue was
Jardiance
The company's worldwide Jardiance revenue during the third quarter of 2020 was
Forteo
For the third quarter of 2020, worldwide Forteo revenue decreased 28 percent compared with the third quarter of 2019, to
The company expects further volume declines for Forteo as a result of the anticipated entry of generic and biosimilar competition following the loss of patent exclusivity in the third quarter of 2019 in the U.S., Japan and major European markets.
Cyramza
For the third quarter of 2020, worldwide Cyramza revenue was
Verzenio
For the third quarter of 2020, worldwide Verzenio revenue increased 49 percent compared with the third quarter of 2019, to
Olumiant
For the third quarter of 2020, Olumiant generated worldwide revenue of
Emgality
For the third quarter of 2020, Emgality generated worldwide revenue of
Tyvyt
The company's Tyvyt revenue in China during the third quarter of 2020 was
Baqsimi
For the third quarter of 2020, Baqsimi generated worldwide revenue of
Retevmo
For the third quarter of 2020, Retevmo generated U.S. revenue of
2020 Financial Guidance
The company has updated certain elements of its 2020 financial guidance to reflect management's current expectations for underlying business performance.
Earnings per share for 2020 are now expected to be in the range of
Key management assumptions related to the COVID-19 pandemic that support the company's 2020 guidance include:
- Healthcare activity will continue the positive trends seen in the third quarter of 2020, returning to historical levels as health care providers utilize telehealth or in-person visits to see patients despite additional COVID-19 outbreaks;
- New patient prescriptions will continue to improve in the U.S.;
- Pricing headwinds from increased utilization of patient affordability programs and changes in segment mix due to increased U.S. unemployment will continue to be modest; and
- Promotional spend will constitute a mix of in-person customer interactions, direct-to-consumer advertising, and investments in digital promotion.
2020 Expectations | % Change from | |
Earnings per share (reported)(a) | ||
Acquired IPR&D(b) | .47 | |
Amortization of intangible assets | .36 | |
Asset impairment, restructuring and other special charges | .17 | |
Earnings per share (non-GAAP) | ||
Numbers may not add due to rounding (a) Reported earnings per share percent change from 2019 calculated based on change from 2019 earnings per share from continuing operations. (b) Includes costs related to business development transactions with a pre-clinical stage company, Sitryx Therapeutics, AbCellera Biologics, Evox Therapeutics, Junshi Biosciences and Innovent. Excludes costs related to the acquisition of Disarm Therapeutics. |
The company still anticipates 2020 revenue between
Gross margin as a percent of revenue is still expected to be approximately 78 percent on a reported basis and approximately 80 percent on a non-GAAP basis.
Marketing, selling and administrative expenses are now expected to be in the range of
Operating margin is now expected to be 25 percent on a reported basis, 29 percent on a non-GAAP basis, and 31 percent on a non-GAAP basis excluding COVID-19 research and development investments of approximately
Other income (expense) is now expected to be in the range of
The 2020 effective tax rate is still expected to be approximately 14 percent on both a reported basis and a non-GAAP basis.
The following table summarizes the company's 2020 financial guidance:
2020 Guidance | |||
Prior | Updated | ||
Revenue | Unchanged | ||
Gross Margin % of Revenue (reported) | Approx. | Unchanged | |
Gross Margin % of Revenue (non-GAAP) | Approx. | Unchanged | |
Marketing, Selling & Administrative | |||
Research & Development | |||
Other Income/(Expense) | |||
Tax Rate | Approx. | Unchanged | |
Earnings per share (reported) | |||
Earnings per share (non-GAAP) | Unchanged | ||
Operating Margin (reported) | |||
Operating Margin (non-GAAP) | |||
Operating Margin (non-GAAP excluding | - | ||
Non-GAAP guidance reflects adjustments presented in 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 third-quarter 2020 financial results conference call through a link on Lilly's website at www.lilly.com. The conference call will begin at 9:00 a.m. Eastern time (ET) today and will be available for replay via the website.
Lilly is a global healthcare leader that unites caring with discovery to create medicines that 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 volunteerism. 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. 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 and the company's pipeline; 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 actions of governmental and private payers affecting the pricing of, reimbursement for, and access to pharmaceuticals; 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 past, current or future products; unauthorized disclosure, misappropriation, or compromise of trade secrets or other confidential data stored in the company's information systems, networks and facilities, or those of third parties with which the company shares its data; changes in tax law and regulations, including the impact of U.S. 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; information technology system inadequacies or operating failures; the impact of the evolving COVID-19 pandemic, and the global response thereto; reliance on third-party relationships and outsourcing arrangements; 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 and subsequent Forms 8-K and 10-Q 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)
Baqsimi™ (glucagon, Lilly)
Basaglar® (insulin glargine injection, Lilly)
Cyramza® (ramucirumab, Lilly)
Emgality® (galcanezumab-gnlm, 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)
Lartruvo® (olaratumab, Lilly)
Olumiant® (baricitinib, Lilly)
Retevmo™ (selpercatinib, Lilly)
Synjardy® (empagliflozin/metformin, Boehringer Ingelheim)
Taltz® (ixekizumab, Lilly)
Tradjenta®(linagliptin, Boehringer Ingelheim)
Trijardy® XR (empagliflozin/linagliptin/metformin hydrochloride extended release tablets, Boehringer Ingelheim)
Trulicity® (dulaglutide, Lilly)
Tyvyt® (sintilimab injection, Lilly)
Verzenio® (abemaciclib, Lilly)
Third party trademarks used herein are trademarks of their respective owners.
Eli Lilly and Company Employment Information |
September 30, 2020 | December 31, 2019 | |||
Worldwide Employees | 35,065 | 33,755 |
Eli Lilly and Company Operating Results (Unaudited) – REPORTED (Dollars in millions, except per share data) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2020 | 2019 | % Chg. | 2020 | 2019 | % Chg. | ||||||||||||
Revenue | $ | 5,740.6 | $ | 5,476.6 | $ | 17,099.8 | $ | 16,205.5 | |||||||||
Cost of sales | 1,326.4 | 1,175.0 | 3,763.5 | 3,438.6 | |||||||||||||
Research and development | 1,465.4 | 1,380.9 | 4,247.7 | 4,013.6 | |||||||||||||
Marketing, selling and administrative | 1,569.1 | 1,412.3 | 4,567.3 | 4,515.7 | |||||||||||||
Acquired in-process research and development | — | 77.7 | NM | 294.1 | 239.6 | ||||||||||||
Asset impairment, restructuring and other special charges | 101.4 | — | NM | 161.3 | 423.9 | (62)% | |||||||||||
Operating income | 1,278.3 | 1,430.7 | (11)% | 4,065.9 | 3,574.1 | ||||||||||||
Net interest income (expense) | (83.8) | (90.1) | (243.2) | (237.5) | |||||||||||||
Net other income (expense) | 242.7 | 65.2 | 938.1 | 266.2 | |||||||||||||
Other income (expense) | 158.9 | (24.9) | NM | 694.9 | 28.7 | NM | |||||||||||
Income before income taxes | 1,437.2 | 1,405.8 | 4,760.8 | 3,602.8 | |||||||||||||
Income tax expense | 228.8 | 151.9 | 683.9 | 460.6 | |||||||||||||
Net income from continuing operations | 1,208.4 | 1,253.9 | (4)% | 4,076.9 | 3,142.2 | ||||||||||||
Net income from discontinued operations | — | — | NM | — | 3,680.5 | NM | |||||||||||
Net income | $ | 1,208.4 | $ | 1,253.9 | (4)% | $ | 4,076.9 | $ | 6,822.7 | (40)% | |||||||
Earnings from continuing operations - diluted | 1.33 | 1.37 | (3)% | 4.47 | 3.33 | ||||||||||||
Earnings from discontinued operations - diluted | — | — | NM | — | 3.91 | NM | |||||||||||
Earnings per share - diluted | $ | 1.33 | $ | 1.37 | (3)% | $ | 4.47 | $ | 7.24 | (38)% | |||||||
Dividends paid per share | $ | 0.740 | $ | 0.645 | $ | 2.220 | $ | 1.940 | |||||||||
Weighted-average shares outstanding (thousands) - | 911,423 | 918,454 | 911,868 | 942,398 | |||||||||||||
NM – not meaningful | |||||||||||||||||
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 September 30, 2020 | Three Months Ended September 30, 2019 | |||||||||||||||||
GAAP | Adjustments(b) | Non-GAAP | GAAP | Adjustments(c) | Non-GAAP | |||||||||||||
Cost of sales | $ | 1,326.4 | $ | (126.5) | $ | 1,199.9 | $ | 1,175.0 | $ | (56.6) | $ | 1,118.4 | ||||||
Acquired in-process | — | — | — | 77.7 | (77.7) | — | ||||||||||||
Asset impairment, | 101.4 | (101.4) | — | — | — | — | ||||||||||||
Income tax expense | 228.8 | 29.4 | 258.2 | 151.9 | 28.2 | 180.1 | ||||||||||||
Net income | 1,208.4 | 198.5 | 1,406.9 | 1,253.9 | 106.1 | 1,360.0 | ||||||||||||
Earnings per share - | 1.33 | 0.22 | 1.54 | 1.37 | 0.11 | 1.48 | ||||||||||||
Numbers may not add due to rounding. | |
The table above reflects only line items with non-GAAP adjustments. | |
(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 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) | Adjustments to certain GAAP reported measures for the three months ended September 30, 2020, include the following: |
(Dollars in millions, except per share data) | Amortization (i) | Other specified items(ii) | Total | ||||||
Cost of sales | $ | (126.5) | $ | — | $ | (126.5) | |||
Asset impairment, restructuring and other special | — | (101.4) | (101.4) | ||||||
Income tax expense | 26.3 | 3.1 | 29.4 | ||||||
Net income | 100.2 | 98.3 | 198.5 | ||||||
Earnings per share - diluted | 0.11 | 0.11 | 0.22 | ||||||
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 primarily severance costs incurred as a result of actions taken worldwide to reduce the company's cost structure. |
(c) | Adjustments to certain GAAP reported measures for the three months ended September 30, 2019, include the following: |
(Dollars in millions, except per share data) | Amortization (i) | IPR&D (ii) | Total | ||||||
Cost of sales | $ | (56.6) | $ | — | $ | (56.6) | |||
Acquired in-process research and development | — | (77.7) | (77.7) | ||||||
Income tax expense | 11.8 | 16.4 | 28.2 | ||||||
Net income | 44.8 | 61.3 | 106.1 | ||||||
Earnings per share - diluted | 0.05 | 0.07 | 0.11 | ||||||
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 payments for acquired in-process research and development projects acquired in a transaction other than a business combination. These costs were related to business development transactions with Centrexion Therapeutics Corporation and AC Immune SA. |
Eli Lilly and Company | ||||||||||||||||||
Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited) | ||||||||||||||||||
(Dollars in millions, except per share data) | ||||||||||||||||||
Nine Months Ended September 30, 2020 | Nine Months Ended September 30, 2019 | |||||||||||||||||
GAAP | Adjustments(b) | Non-GAAP | GAAP | Adjustments(c) | Non-GAAP | |||||||||||||
Cost of sales | $ | 3,763.5 | $ | (287.9) | $ | 3,475.6 | $ | 3,438.6 | $ | (236.4) | $ | 3,202.2 | ||||||
Acquired in-process | 294.1 | (294.1) | — | 239.6 | (239.6) | — | ||||||||||||
Asset impairment, | 161.3 | (161.3) | — | 423.9 | (423.9) | — | ||||||||||||
Income tax expense | 683.9 | 93.3 | 777.2 | 460.6 | 57.2 | 517.8 | ||||||||||||
Net income from | 4,076.9 | 650.0 | 4,726.9 | 3,142.2 | 842.7 | 3,984.9 | ||||||||||||
Net income from | — | — | — | 3,680.5 | (3,680.5) | — | ||||||||||||
Net income | 4,076.9 | 650.0 | 4,726.9 | 6,822.7 | (2,837.8) | 3,984.9 | ||||||||||||
Earnings per share - | 4.47 | 0.71 | 5.18 | 7.24 | (2.93) | 4.31 | ||||||||||||
Weighted-average shares | 911,868 | — | 911,868 | 942,398 | (18,056) | 924,342 | ||||||||||||
Numbers may not add due to rounding. | |
The table above reflects only line items with non-GAAP adjustments. |
(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 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) | Adjustments to certain GAAP reported measures for the nine months ended September 30, 2020, include the following: |
(Dollars in millions, except per share | Amortization(i) | IPR&D(ii) | Other specified | Total | ||||||||
Cost of sales | $ | (283.7) | $ | — | $ | (4.2) | $ | (287.9) | ||||
Acquired in-process research and | — | (294.1) | — | (294.1) | ||||||||
Asset impairment, restructuring and | — | — | (161.3) | (161.3) | ||||||||
Income tax expense | 58.9 | 25.0 | 9.4 | 93.3 | ||||||||
Net income | 224.8 | 269.1 | 156.1 | 650.0 | ||||||||
Earnings per share – diluted | 0.25 | 0.30 | 0.17 | 0.71 | ||||||||
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 payments for acquired in-process research and development projects acquired in a transaction other than a business combination. These costs were related to both a business development transaction with a pre-clinical stage company as well as business development transactions with Sitryx, AbCellera Biologics Inc., Evox Therapeutics, and Junshi Biosciences. |
iii. | Exclude primarily severance costs incurred as a result of actions taken worldwide to reduce the company's cost structure, as well as acquisition and integration costs incurred as part of the closing of the acquisition of Dermira. |
(c) | Adjustments to certain GAAP reported measures for the nine months ended September 30, 2019, include the following: |
(Dollars in millions, | Amortization(i) | IPR&D(ii) | Other | Reduced | Lartruvo | Discontinued | Total | ||||||||||||||
Cost of sales | $ | (151.8) | $ | — | $ | — | $ | — | $ | (84.6) | $ | — | $ | (236.4) | |||||||
Acquired in-process | — | (239.6) | — | — | — | — | (239.6) | ||||||||||||||
Asset impairment, | — | — | (411.8) | — | (12.1) | — | (423.9) | ||||||||||||||
Income tax expense | 31.2 | 50.3 | 4.2 | — | (28.5) | — | 57.2 | ||||||||||||||
Net income | 120.6 | 189.3 | 407.6 | — | 125.2 | (3,680.5) | (2,837.8) | ||||||||||||||
Earnings per share - | 0.13 | 0.20 | 0.44 | 0.07 | 0.14 | (3.91) | (2.93) | ||||||||||||||
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 were related to business development transactions with AC Immune SA, ImmuNext, Inc., Avidity Biosciences, Inc., and Centrexion Therapeutics Corporation. |
iii. | Exclude charges primarily associated with the accelerated vesting of Loxo Oncology employee equity awards as part of the closing of the acquisition of Loxo Oncology. |
iv. | Non-GAAP earnings per share assume that the disposition of Elanco occurred at the beginning of all periods presented and therefore include the benefit from the reduction in shares of common stock outstanding. |
v. | Exclude charges related to the suspension of promotion of Lartruvo. |
vi. | Exclude discontinued operations of Elanco. |
Refer to: | Mark Taylor; mark.taylor@lilly.com; (317) 276-5795 (Media) |
Kevin Hern; hern_kevin_r@lilly.com; (317) 277-1838 (Investors) |
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SOURCE Eli Lilly and Company
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