Exchange: NYSE | Sector: Healthcare | Industry: Drug Manufacturers General
Q4 2023
Published: Feb 21, 2024
Earnings Highlights
Revenue of $9.35B up 28.1% year-over-year
EPS of $2.31 increased by 13.2% from previous year
Gross margin of 82.3%
Net income of 2.19B
""We continue to invest in quality, the reliability and the resilience of our company's manufacturing infrastructure, and most importantly, delivered new life-saving and life-changing medicines to more patients.", - David Ricks" - David Ricks
Eli Lilly and Company (LLY) Q4 2023 Financial Results: Growth Momentum and Strategic Advancements
Executive Summary
In Q4 2023, Eli Lilly and Company (LLY) demonstrated robust financial performance, achieving a remarkable 28% year-over-year revenue growth, surpassing $9.35 billion in sales. This surge was primarily fueled by the increasing momentum of their newly launched products, notably Mounjaro, Verzenio, and Zepbound. The company's strategic advancements, including the FDA approvals for innovative therapies and substantial investments in manufacturing, underscore their commitment to delivering life-changing medicines to patients. Management provided optimistic guidance for 2024, forecasting continued revenue growth driven by the expanding portfolio while addressing supply constraints regarding existing blockbuster products. With a focus on external innovation through collaborations and acquisitions, Eli Lilly is positioned for sustained growth despite facing competitive pressures in the healthcare sector.
Key Performance Indicators
Revenue
9.35B
QoQ: -1.53% | YoY:28.10%
Gross Profit
7.69B
82.30% margin
QoQ: 0.73% | YoY:33.73%
Operating Income
3.08B
QoQ: 583.41% | YoY:67.62%
Net Income
2.19B
QoQ: 3 914.81% | YoY:13.01%
EPS
2.31
QoQ: 3 720.69% | YoY:13.24%
Revenue Trend
Margin Analysis
Key Insights
**Q4 2023 Revenue**: $9.35 billion, up 28% YoY;
**Gross Profit**: $7.69 billion, gross margin of 82.3%.
**Operating Income**: $3.08 billion, a 29% increase YoY.
**Net Income**: $2.19 billion, translating to an EPS of $2.31, a 19% increase over the same quarter last year.
**Operating Cash Flow**: -$311.9 million, reflecting significant working capital changes.
Financial Highlights
Revenue Performance:
- Q4 2023 Revenue: $9.35 billion, up 28% YoY;
- Gross Profit: $7.69 billion, gross margin of 82.3%.
Profitability Metrics:
- Operating Income: $3.08 billion, a 29% increase YoY.
- Net Income: $2.19 billion, translating to an EPS of $2.31, a 19% increase over the same quarter last year.
Cash Flow Highlights:
- Operating Cash Flow: -$311.9 million, reflecting significant working capital changes.
- Free Cash Flow: -$1.96 billion, highlighting the need for ongoing capital investments.
Key Ratios:
- Current Ratio: 0.943, Debt-to-Equity: 2.34, indicating substantial leverage but manageable liquidity.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
9.35B
28.10%
-1.53%
Gross Profit
7.69B
33.73%
0.73%
Operating Income
3.08B
67.62%
583.41%
Net Income
2.19B
13.01%
3 914.81%
EPS
2.31
13.24%
3 720.69%
Key Financial Ratios
currentRatio
0.94
grossProfitMargin
82.3%
operatingProfitMargin
32.9%
netProfitMargin
23.4%
returnOnAssets
3.42%
returnOnEquity
20.3%
debtEquityRatio
2.34
operatingCashFlowPerShare
$-0.33
freeCashFlowPerShare
$-2.07
dividendPayoutRatio
46.5%
priceToBookRatio
51.38
priceEarningsRatio
63.18
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Strategic Focus and Pipeline Progress:
- David Ricks (CEO): "2023 was a year of advancement across our company... revenue grew 20% for the full year and 28% for the most recent quarter, as our newly launched portfolio continued to gain momentum." Ricks emphasized that the strong pipeline and external collaborations are central to the company's future innovations.
- Anat Ashkenazi (CFO): Reported Q4 revenue growth was driven by new products, particularly mentioning Mounjaro and Zepbound, highlighting a diverse product portfolio. She noted, "We are pleased with the strong financial performance in the fourth quarter and for the full year."
Opportunities and Guidance: Ricks noted positive Phase III results and advancements in their product pipeline will drive future growth: "We expect continued robust revenue growth... approaching 30% in 2024 from our core business."
"We continue to invest in quality, the reliability and the resilience of our company's manufacturing infrastructure, and most importantly, delivered new life-saving and life-changing medicines to more patients.", - David Ricks
â David Ricks
"We are pleased with the strong financial performance in the fourth quarter and for the full year."
, - Anat Ashkenazi.
â Anat Ashkenazi
Forward Guidance
Management has provided optimistic guidance for 2024, projecting revenues between $40.4 billion and $41.6 billion, indicating a growth rate of approximately 20%, and nearly 30% for the core business excluding divestitures. Key drivers for this growth include Mounjaro and Zepbound, along with anticipated FDA actions for Donanemab and Lebrikizumab. However, management cautioned that the softer sales trends for Trulicity could offset some of the growth from new products. Moving forward, investors should monitor the ongoing supply constraints for Mounjaro and the market penetration of Zepbound as essential elements of revenue performance. Overall, the company's strategic initiatives appear conducive to capturing a larger market share amid competitive pressures.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
LLY Focus
82.30%
32.90%
20.30%
63.18%
JNJ
68.20%
23.80%
5.89%
23.30%
BMY
76.10%
14.70%
5.99%
14.76%
ABBV
83.30%
31.50%
7.93%
83.23%
PFE
39.70%
-11.20%
-3.76%
-12.15%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Eli Lilly's financial performance in Q4 2023 indicates strong growth potential fueled by innovative drug launches and a solid pipeline. However, the company must navigate structural challenges in supply chains and increasing competition. The decision to build capacity ahead of Phase III for key products signifies confidence in their future performance. Given the health sector's dynamics and Eli Lilly's strategic positioning, the investment outlook appears positive, especially for long-term investors. Close monitoring of supply chain issues and regulatory developments will be essential.
Key Investment Factors
Growth Potential
Eli Lilly is poised for substantial growth with its innovative product pipeline including Mounjaro, Zepbound, and Donanemab, which are expected to drive revenue sharply in 2024 and beyond.
Profitability Risk
Supply chain bottlenecks for key products, particularly Trulicity, pose a risk to sustaining revenue streams. Additionally, increasing competition in the GLP-1 receptor agonist market adds uncertainty.
Financial Position
Eli Lilly maintains a balanced financial position with a strong historical revenue growth; however, the current ratio below 1 indicates liquidity challenges that need management as expansion efforts continue.
SWOT Analysis
Strengths
Robust revenue growth driven by new product launches
Strong pipeline with multiple products in late-stage trials
High gross margin providing financial flexibility
Weaknesses
Below 1 current ratio indicating potential liquidity issues
High debt-to-equity ratio suggests financial leverage
Opportunities
Expansion of Mounjaro and new weight loss drugs gaining market share
Acquisitions bolstering pipeline and market reach
Increased demand for diabetes and obesity treatments
Threats
Intense competition in diabetes and obesity market