LLY · Eli Lilly and Company

Lilly’s Q1 2026 results reflect exceptional top-line growth—$19.8 billion in revenue, up 56% year-over-year—driven overwhelmingly by volume expansion (+65%), particularly for Mounjaro ($8.7B, +125%) and Zepbound ($4.2B, +80%), which together accounted for $12.8 billion of Key Products revenue. While lower realized prices (-13% overall, -7% in U.S., -25% ex-U.S.) weighed on margins, gross margin still rose 54% to $16.2 billion (81.9% of revenue), reflecting scale advantages and product mix. The decline in gross margin % was attributed solely to pricing pressure, not cost inflation or manufacturing issues. Non-GAAP EPS of $8.55 surged 156%, aided by a sharp reduction in acquired IPR&D charges ($584M vs. $1.6B in Q1 2025) and stable tax rate dynamics (16.5% non-GAAP vs. 20.2% prior year). Management explicitly tied the $2 billion upward revision to full-year revenue guidance—and corresponding EPS guidance lift—to ‘strong revenue performance in Q1’ and momentum across all four therapeutic areas. The FDA approval of Foundayo, highlighted as ‘the only approved GLP-1 pill that can be taken any time of day, without food and water restrictions,’ is positioned as a major access-enabling milestone, broadening the GLP-1 user base beyond injectable-dependent patients. Pipeline progress—including positive Phase 3 data for Foundayo in type 2 diabetes, retatrutide in diabetes, and Taltz+Zepbound in psoriasis—reinforces near-term commercial runway beyond current flagships. Four strategic acquisitions signal aggressive investment in next-generation modalities, particularly in vivo CAR-T (Kelonia), cell therapy (Orna), and rare hematologic indications (Ajax), suggesting sustained R&D intensity and long-term diversification beyond metabolic dominance.