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Novo Nordisk's (NVO) Q3 Earnings and Sales Beat Estimates

Novo Nordisk (NVO) reports better-than-expected results for Q3. Sales are aided by growth in Diabetes and Obesity Care owing to higher GLP-1 revenues.

This story originally appeared on Zacks

Novo Nordisk A/S NVO reported third-quarter 2021 earnings of 84 cents per American Depositary Receipt (ADR), beating the Zacks Consensus Estimate of 80 cents. The company reported earnings of 69 cents in the year-ago quarter.

- Zacks

Revenues of $5.7 billion increased 15% in terms of Danish kroner and at constant exchange rate (CER). The same also surpassed the Zacks Consensus Estimate of $5.6 billion. Year over year, sales were driven by higher Diabetes and Obesity care sales.

Shares of Novo Nordisk have rallied 57.5% so far this year compared with the industry’s rise of 14.3%.

Zacks Investment ResearchImage 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, namely Diabetes and Obesity Care, and Biopharmaceuticals.

The Diabetes and Obesity Care segment sales grew 18% at CER. In Diabetes Care, fast-acting insulin, Fiasp revenues rose 21% at CER. While NovoRapid revenues declined 7% at CER, Human insulin revenues were up 8% at CER. Premix insulin (Ryzodeg and NovoMix) revenues rose 9% at CER. Sales of long-acting insulins (Tresiba, Xultophy and Levemir) increased 8% at CER. Ozempic had a strong launch and recorded sales of DKK 8.89 billion for the quarter, up 66% at CER.

Obesity Care (Saxenda and Wegovy) sales were up 82% at CER year over year.

In June 2021, the FDA approved semaglutide as a weekly 2.4 mg injection for weight management in people living with obesity. The GLP-1 product is marketed under the brand name Wegovy for chronic weight management in adults with obesity (initial BMI≥30 kg/m2) or overweight (initial BMI≥27 kg/m2) with at least one weight-related comorbidity, such as high blood pressure, type II diabetes or high cholesterol.

Sales in the Biopharm segment were down 2% at CER year over year to DKK 4.51 billion. Sales of rare blood disorder products were DKK 2,326 million, flat at CER. Sales of hemophilia A products decreased 9% at CER. However, Hemophilia B products’ sales rose 20% at CER. Sales of NovoSeven were flat at DKK 1,676 million.

Sales and distribution costs climbed 12% in both Danish kroner as well as at CER year over year. This increase was due to International Operations and North America Operations reflecting the launch of Rybelsus and promotional activities related to Ozempic.

Research and development costs were up 9% in both Danish kroner and at CER from the respective year-ago quarter’s levels. Higher cost is driven by a rapid pipeline expansion during this time.

Administrative costs increased 2% in both Danish kroner and at CER from the respective levels registered in the same period of 2020.

2021 Outlook

Novo Nordisk raised its outlook for sales and operating profit last month.

The company now expects 12-15% sales growth at CER, higher than 10-13% expected previously. The guidance indicates steadysales growth in North America Operations and International Operations. The same also suggests a robust sales performance of GLP-1 diabetes care products, namely Ozempic and Rybelsus as well as growth within the Obesity Care unit. This apart, the outlook implies intensifying competition in both Diabetes care and Biopharm units.

Novo Nordisk faces stiff competition from Eli Lilly LLY and Sanofi SNY in the global insulin market. Lilly and AstraZeneca AZN are its rivals in the global GLP-1 market.

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

Our Take

Novo Nordisk beat on both revenues and earnings in the third quarter of 2021. Ozempic is off to a solid start and the launch of Rybelsus looks encouraging. Also, initial demand for Wegovy exceeded management’s expectations following its launch in June 2021. Saxenda too has witnessed a strong uptake so far.

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

Novo Nordisk currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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