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Eli Lilly and Company sets capex at $1 billion, EPS to $2.67

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Staff Writer | Thursday December 15, 2016 8:19AM ET
Eli Lilly and Company
Eli Lilly and Company   The negative outcome of the solanezumab study

Eli Lilly and Company announced its 2017 financial guidance and highlighted key events for the upcoming year.


Earnings per share in 2016 are now expected to be in the range of $2.57 to $2.67 on a reported basis.

This revision is primarily due to restructuring charges associated with the negative outcome of the recent solanezumab study, as well as the charge associated with the agreement with AstraZeneca to co-develop MEDI1814.

Non-GAAP earnings per share in 2016 are still expected to be in the range of $3.50 to $3.60.

The company still expects 2016 revenue of between $20.8 billion and $21.2 billion.

Gross margin percentage is now expected to be approximately 73.5 percent on a reported basis, and 76.5 percent on a non-GAAP basis.

Marketing, selling and administrative expenses are still expected to be in the range of $6.2 billion to $6.4 billion. Research and development expenses are now expected to be in the range of $5.0 billion to $5.2 billion.

Other income (expense) is still expected to be in a range between $150 million and $100 million of expense on a reported basis. On a non-GAAP basis, other income (expense) is still expected to be in a range between $50 million and $100 million of income.

The 2016 tax rate is now expected to be approximately 20.5 percent on a reported basis. On a non-GAAP basis, the 2016 tax rate is still expected to be approximately 21.0 percent.

Capital expenditures are still expected to be approximately $1 billion.

The company reaffirmed its financial expectations through the remainder of the decade, including at least 5 percent average annual revenue growth driven by volume and an increase in gross margin as a percent of revenue, both on a constant currency basis.

The company also reaffirmed its commitment to achieve an OPEX-to-revenue ratio of 50 percent or less in 2018, along with annual dividend increases for shareholders.

"As we move past the negative solanezumab data read-out, Lilly's innovation-based strategy is generating strong momentum in multiple therapeutic areas.

"Most recently we have received an important cardiovascular indication for Jardiance, as well as U.S. approval and conditional EU approval of Lartruvo, and we are awaiting global regulatory decisions for baricitinib," said David A. Ricks, president of Lilly Bio-Medicines and Lilly's incoming president and chief executive officer.

Ricks added, "We are already seeing substantial revenue from recently launched products, including Trulicity and Cyramza, and we are pleased with early uptake for Taltz. We remain confident that we could launch at least 20 new products in 10 years from 2014 through 2023, creating value for all stakeholders in the company."

"Because of our confidence in our future growth prospects, we are reaffirming our financial commitments through the remainder of the decade," said Derica Rice, Lilly's executive vice president for global services and chief financial officer.

"In 2017, we are expecting mid-single-digit revenue growth driven by volume from recent product launches. By improving productivity through prudent expense management, we expect to leverage this top-line growth into double-digit earnings growth."

 

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