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Novo Nordisk's (NVO) Q2 Earnings Miss, Sales Beat Estimates

·5-min read

Novo Nordisk A/S NVO reported second-quarter 2022 earnings of 84 cents per American Depositary Receipt ("ADR"), which missed the Zacks Consensus Estimate of 87 cents. The company had reported earnings of 85 cents in the year-ago quarter.

Revenues of $5.91 billion increased 25% in Danish kroner and were up 15% at constant exchange rate (“CER”) in the reported quarter. Revenues surpassed the Zacks Consensus Estimate of $5.86 billion. Year over year, sales were driven by higher Diabetes and Obesity care sales as GLP-1 sales increased.

Shares of Novo Nordisk were down on Wednesday following the announcement of the earnings result. However, the stock recovered in pre-market trading on Thursday. Novo Nordisk shares have plunged 10.8% this year against the industry’s rise of 2%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

All growth rates mentioned below are on a year-over-year basis.

Quarter in Detail

Novo Nordisk operates under two segments: Diabetes and Obesity Care, and Biopharmaceuticals.

The Diabetes and Obesity Care segment’s sales grew 18% at CER. In Diabetes Care, fast-acting insulin, Fiasp’s revenues rose 12% at CER. NovoRapid revenues were down 18% at CER. Human insulin revenues were also down 17% at CER. Premix insulin (Ryzodeg and NovoMix) revenues declined 13% at CER. Sales of long-acting insulins (Tresiba, Xultophy and Levemir) decreased 8% at CER.

Ozempic had witnessed a strong launch and recorded sales of DKK 14.34 billion for the quarter, up 75% at CER. Rybelsus too witnessed a strong uptake and recorded sales of DKK 2.17 billion for the quarter, up 110% at CER.

Obesity Care (Saxenda and Wegovy) sales were up 66% at CER year over year.

Per the company, the contract manufacturer filling syringes for Wegovy has reinitiated commercial production, and Novo Nordisk expects to make all Wegovy dose strengths available in the United States by the end of 2022.

Last December, Novo Nordisk announced that a contract manufacturer in the United States, which was filling syringes for Wegovy pens, has temporarily stopped deliveries and manufacturing after issues with goods-manufacturing practices.

Sales in the Rare disease segment were down 2% at CER year over year to DKK 5,218 million. Sales of rare blood disorder products were DKK 2,863 million, down 3% at CER. Sales of hemophilia A products decreased 6% at CER. Hemophilia B products’ sales were also down 4% at CER. Sales of NovoSeven were down 2% at CER to DKK 2,018 million.

Sales and distribution costs climbed 35% in Danish kroner and increased 25% at CER year over year. This increase was due to International Operations and North America Operations owing to promotional activities related to Ozempic and Rybelsus as well as Obesity care market development activities.

Research and development costs were up 30% in Danish kroner and increased 24% at CER from the year-ago quarter’s level. Higher costs were driven by clinical activity for late-stage studies.

Administrative costs increased 10% in Danish kroner and were up 5% at CER from the year-ago quarter’s level.

2022 Outlook

Novo Nordisk now expects 12-16% sales growth at CER, which was previously expected to be 10-14%. The guidance indicates steady sales growth in North America and International Operations, primarily driven by Diabetes and Obesity care. The guidance also reflects the expectation of meeting the demand for Wegovy in the United States. This apart, the outlook implies intensifying competition in both Diabetes care and Rare disease units.

Persistent pricing pressure within Diabetes Care, especially in the United States, might also negatively impact sales.

Our Take

Novo Nordisk's revenues beat estimates in the second quarter of 2022 while earnings missed the same. Ozempic is off to a solid start and the launch of Rybelsus looks encouraging. Both medicines continue to drive growth, witnessing a solid uptake. Saxenda, too, has witnessed strong uptake so far. The approval for Wegovy is also likely to boost sales of the drug in the days ahead.

Novo Nordisk AS Price, Consensus and EPS Surprise

Novo Nordisk AS Price, Consensus and EPS Surprise
Novo Nordisk AS Price, Consensus and EPS Surprise

Novo Nordisk AS price-consensus-eps-surprise-chart | Novo Nordisk AS Quote

Zacks Rank & Stocks to Consider

Novo Nordisk currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the biotech sector include Beam Therapeutics Inc. BEAM, Atara Biotherapeutics, Inc. ATRA and Precision BioSciences, Inc. DTIL, all carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Beam Therapeutics’ loss per share estimates narrowed 0.7% for 2022 and 0.8% for 2023 in the past 60 days.

Earnings of Beam Therapeutics have surpassed estimates in three of the trailing four quarters and missed on the remaining occasion. BEAM delivered an earnings surprise of 1.80%, on average.

Atara Biotherapeutics’ loss per share estimates narrowed 0.6% for 2022 and 13.3% for 2023 in the past 60 days.

Earnings of Atara Biotherapeutics have surpassed estimates in two of the trailing four quarters and missed the same on the other two occasions. ATRA delivered an earnings surprise of -12.51%, on average.

Precision BioSciences’ loss per share estimates narrowed 5.8% for 2022 and 16.2% for 2023 in the past 60 days.

Earnings of Precision BioSciences have surpassed estimates in each of the trailing four quarters. DTIL delivered an earnings surprise of 76.15%, on average.


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