Eli Lilly earnings Q2 2018

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Traders work beneath monitors displaying Eli Lilly & Co. signage on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, May 23, 2016.

Shares of Eli Lilly surged 5 percent Tuesday after the pharmaceutical company surpassed second-quarter estimates and announced it would file an initial public offering for its animal health unit public.

In the quarter, Eli Lilly reported a net loss of $259.9 million, or 25 cents per share. After stripping special items like charges related to business development transactions, Lilly earned $1.55 billion, or $1.50 per share, eclipsing estimates from analysts polled by Thomson Reuters of $1.30 per share.

In the year-ago quarter, Lilly’s net income was $1.01 billion, or 95 cents per share.

Lilly posted revenue of $6.36 billion, up 9 percent from the year-ago quarter and above estimates of $6.05 billion.

Investors welcomed Lilly’s decision to file an initial public offering for a less than 20 percent stake in its Elanco Animal Health unit. Following the offering, Lilly plans to divest its remaining ownership through a tax-efficient transaction. The unit’s sluggish sales had weighed on Lilly in previous quarters, prompting Lilly to perform a strategic review.

Lilly hiked its full-year adjusted earnings forecast to between $5.40 and $5.50 a share, up from the previous range of between $5.10 to $5.20.

The company has approved a plan to buy back $8 billion in stock.

Correction: Eli Lilly plans to take public a less than 20 percent stake in its Elanco Animal Health unit. An earlier version incorrectly stated the company would hold a minority stake in the unit after the IPO.