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Elanco’s 4Q15 Performance: Eli Lilly’s Animal Health Segment

Mike Benson

Eli Lilly and Co.’s 4Q15 Earnings Showed Growth of ~5%

(Continued from Prior Part)

Animal Health segment

Eli Lilly and Co.’s (LLY) Animal Health business, Elanco, reported an increase of ~28% to $811.7 million for 4Q15 as compared to $633.3 million for 4Q14. This segment contributed ~15.1% of total revenues to Lilly. It offers products for companion animals, as well as food and other products.

Reported revenues for Animal Health segment

The US sales for the Animal Health segment increased ~19% to $381.8 million while Animal Health sales outside the US market increased 38% to $429.9 million. This was mainly driven by the inclusion of revenues from Novartis (NVS) Animal Health. The 2014 revenues do not include Novartis Animal Health, and the 2015 results include the operating results of the business as well as acquisition costs.

With respect to Novartis Animal Health’s results for 2014, the US Animal Health sales decreased by 2%. Animal Health sales outside the US decreased by 18%, resulting in an 11% decline in worldwide Animal Health sales. The decrease in US sales was due to lower volumes in companion animal products. The decline in sales outside the US was driven by lower sales of companion animal products and the negative impact of foreign exchange.

Other companies like Zoetis (ZTS), the Animal Health arm of Pfizer (PFE), Merck and Company (MRK), and Merial (a Sanofi (SNY) company) compete with Lilly on certain product mixes.

Investors can consider the Healthcare Select Sector SPDR ETF (XLV), which holds ~3.0% of its total assets in Lilly, ~7.3% of its total assets in Pfizer (PFE), ~5.4% of its total assets in Merck and Company (MRK), and ~0.8% of its total assets in Zoetis (ZTS). The iShares Core S&P 500 ETF (IVV) holds ~0.5% of its total assets in Lilly.

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