Josh Nathan-Kazis and Elsa Ohlen

Eli Lilly ripped off the bandage when it reported preliminary fourth-quarter results in mid-January, getting the bad news out of the way early.

On Thursday morning, when the company formally released its fourth-quarter report, the news that was left was mostly good.

Shares were up 2.3% Thursday. When Lilly pre-announced results in mid-January, shares fell 6.6% day to $744.91 in what was the stock's worst trading day since 2021. They've recovered since, and shares closed Wednesday at $842.18.

Fourth-quarter revenue was $13.5 billion, in line with what the company had said to expect last month. Sales of its blockbuster Type 2 diabetes drug Mounjaro were $3.5 billion for the quarter, and sales of its weight loss drug Zepbound were $1.9 billion, both in line with the company's pre-announcement.

When Lilly first rolled out those numbers last month, they were far below what had been the FactSet consensus estimates of $4.4 billion for Mounjaro and $2.1 billion for Zepbound.

Non-GAAP earnings per share for the quarter were $5.32, a number the company had not pre-annnounced. Analysts had anticipated earnings per share of $5.01, according to FactSet.

Lilly had previously guided 2025 revenue of $58 billion to $61 billion, and Thursday provided a bottom-line outlook for the year, saying it expects non-GAAP earnings per share of $22.50 to $24. That midpoint tops the $22.77 FactSet consensus estimate.

In a presentation released ahead of a Thursday morning earnings call, Lilly said it expects a sharp increase in manufacturing capacity compared with last year, with the ability to make 60% more salable doses in the first half of the year of its incretin medicines, a category that includes Mounjaro and Zepbound.

The Food and Drug Administration concluded in December, after a torturous process, that tirzepatide, the drug sold under the brand names Mounjaro and Zepbound, is no longer in shortage. That means that certain compounding pharmacies that were making legal knockoffs of the drug will need to stop by Feb. 18, and others by March 19.

That could brush away what had been a growing worry over the threat the compounders pose to Lilly and its competitor Novo Nordisk, but might also put more pressure on Lilly's supply.

Investors have been looking for reassurance from Lilly since late October, when it disclosed third-quarter sales of Zepbound and Mounjaro that fell short of Wall Street estimates. That raised concern that demand for the new GLP-1 weight loss medicines may have been overestimated, and Lilly shares fell by roughly 20% in the ensuing weeks.

Despite all that, the stock has been performing well in recent weeks, as the tech sector has stumbled. The stock is up 9.1% so far this year.

In mid-January, as the stock was falling on the fourth quarter pre-announcement, Lilly CEO David Ricks attempted to rally the troops, telling attendees at the conference that all was well with the outlook for Zepbound and Mounjaro.

"We think we're in the early innings of this," Ricks said. He said that while there may be limits to demand for specific conditions treated by incretins, the drug category that includes GLP-1s, the number of categories will keep growing.

"We see a long room to run on volume growth," Ricks said. "Our view is we've got at least a decade of growth ahead. It will unfold chapter by chapter. It won't be a straight line up and to the right."

Lilly shares were up 0.8% between the start of August, and the end of January, saved in part by a run-up in shares that began Jan. 21. The stock was up 16% from the close of trading on Jan. 17 through the close of trading on Wednesday.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

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February 06, 2025 09:56 ET (14:56 GMT)

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