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EL

ELI LILLY & Co (LLY)·Q1 2025 Earnings Summary

Executive Summary

  • Revenue grew 45% year over year to $12.73B, driven by Mounjaro and Zepbound volume; gross margin expanded to 82.5% (reported) and 83.5% (non-GAAP) .
  • Non-GAAP EPS was $3.34 vs Wall Street consensus of $3.54* (miss); revenue was $12.73B vs consensus $12.72B* (slight beat). Acquired IPR&D charges of $1.57B ($1.72 per share) weighed on EPS .
  • 2025 guidance: revenue reaffirmed at $58–$61B; tax rate raised to ~17%; EPS lowered to $20.17–$21.67 (reported) and $20.78–$22.28 (non-GAAP) due to IPR&D charges and equity losses .
  • Stock-reaction catalyst: management addressed the CVS formulary decision impacting Zepbound access and acknowledged investor concerns reflected “in the share price today” .

Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Mounjaro sales surged 113% to $3.84B; Zepbound reached $2.31B in the U.S.; Verzenio rose 10% to $1.16B. These products added >$4B to “Key Products” revenue, now $7.52B .
  • Gross margin improved to 82.5% reported (+160 bps) and 83.5% non-GAAP (+100 bps) on better production costs and favorable mix .
  • Orforglipron Phase III (ACHIEVE‑1) met efficacy/safety expectations; management highlighted future obesity data and potential global scalability of an oral incretin .

What Went Wrong

  • EPS missed consensus due to $1.57B acquired IPR&D and equity losses; tax rate increased to 20.2% (reported and non-GAAP) on nondeductible IPR&D, pressuring after‑tax earnings .
  • Price erosion: U.S price down ~6% in Q1; management reiterated mid‑ to high‑single‑digit price headwinds for 2025 .
  • PBM formulary headwind: CVS decision to limit Zepbound access raised investor concerns; management does not favor “one‑of‑one” access strategies and aims to expand choice/access .

Financial Results

MetricQ1 2024Q4 2024 (Prior Quarter)Q1 2025
Revenue ($USD Billions)$8.77 $13.53 $12.73
EPS – Reported ($)$2.48 $4.88 $3.06
EPS – Non-GAAP ($)$2.58 $5.32 $3.34
Gross Margin ($USD Billions)$7.09 (reported) $11.13 (reported) $10.50 (reported); $10.63 (non-GAAP)
Gross Margin (%)80.9% (reported); 82.5% (non-GAAP) 82.2% (reported); 83.2% (non-GAAP) 82.5% (reported); 83.5% (non-GAAP)
Operating Income ($USD Billions)$2.51 $5.15 $3.70
Effective Tax Rate (%)11.6% (reported); 11.9% (non-GAAP) 12.5% (reported); 13.2% (non-GAAP) 20.2% (reported and non-GAAP)

Product breakdown

Product Revenue ($USD Millions)Q1 2024Q1 2025
Mounjaro$1,806.5 $3,841.8
Zepbound (U.S.)$517.4 $2,311.9
Verzenio$1,050.3 $1,158.9
Total Revenue$8,768.0 $12,728.5

KPIs and operational metrics

KPIPeriodValue
U.S. Revenue ($USD Billions)Q1 2025$8.49 (+49% YoY)
Outside U.S. Revenue ($USD Billions)Q1 2025$4.24 (+38% YoY)
Volume vs Price FX driversQ1 2025+53% volume; −6% price; −2% FX
Jardiance one‑time benefitQ1 2025$370.0M
U.S incretin TRx market growthQ1 2025+46% YoY
Zepbound market share (U.S.)Q1 202560% TRx; 74% NBRx
Ebglyss commercial coverageAs of May 1, 2025~60% of commercially insured lives
Zepbound self‑pay revenueQ1 2025>$200M; NBRx via self‑pay ~17%
Zepbound vial pricing update (self‑pay)Feb 25, 20252.5mg $349; 5mg $499; 7.5mg/10mg $499 with Journey Program

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$58.0–$61.0B Unchanged Maintained
Performance Margin (reported)FY 202540.5%–42.5% Unchanged Maintained
Performance Margin (non-GAAP)FY 202541.5%–43.5% Unchanged Maintained
Other Income/(Expense) (reported)FY 2025($700)–($600)M ($850)–($750)M Lower (more expense)
Other Income/(Expense) (non-GAAP)FY 2025($700)–($600)M Unchanged Maintained
Tax RateFY 2025~16% ~17% Raised
EPS (reported)FY 2025$22.05–$23.55 $20.17–$21.67 Lowered
EPS (non-GAAP)FY 2025$22.50–$24.00 $20.78–$22.28 Lowered
Assumed IPR&D includedThrough Q1 2025N/A$1.57B ($1.72 per share) included; excludes future IPR&D Clarified

Earnings Call Themes & Trends

TopicQ3 2024 (Prior-2)Q4 2024 (Prior-1)Q1 2025 (Current)Trend
Orforglipron (oral GLP‑1)Phase III programs laid out; expectations indexed to GLP‑1 monotherapy Manufacturing scale‑up; obesity submissions targeted late 2025 ACHIEVE‑1 T2D efficacy/safety met; obesity readouts expected; oral positioned to scale globally Strengthening; nearer‑term catalysts
Incretin market dynamicsZepbound launched; inventory effects noted Mounjaro/Zepbound gaining share; supply ramp to 1.5x H2 doses Zepbound leads TRx/NBRx; TRx +46% YoY; PBM formulary scrutiny Growth with payer access volatility
Pricing/AccessHigher realized prices in Q3 for select brands 2025 GLP‑1 pricing relatively stable with single‑digit erosion Q1 price −6%; portfolio strategy to compress list-to-net spread; oppose one‑of‑one PBM deals Managed erosion; strategic pricing posture
Tariffs/MacroN/ACautious on MFN/drug pricing risk; fix IRA small molecule issue Tariffs currently limited impact; support U.S. manufacturing; favor tax incentives over tariffs Monitoring; policy engagement
Alzheimer’s (Kisunla)Modified titration reduces ARIA‑E; approvals progressing Priority review for dosing modification; system readiness focus Preclinical TB‑ALZ‑3 event‑driven timing; expanding diagnostics and prescriber base Building market infrastructure
Oncology (Jaypirca, Olomorasib)Positive Phase 3 CLL data (pirtobrutinib) KRAS G12C Phase III plans; combining with other agents EU approval for CLL; more Phase III readouts expected Advancing labels and lines

Management Commentary

  • “Lilly had a solid start to the year, with 45% year-over-year revenue growth driven by strong sales of Mounjaro and Zepbound.” — David A. Ricks, Chair and CEO .
  • “Our hypothesis was that orforglipron could deliver efficacy, safety and tolerability similar to the best seen for available GLP-1 monotherapy injectables…ACHIEVE‑1 supports that hypothesis.” — Dan Skovronsky, CSO .
  • “Our performance in Q1 was strong…we are reaffirming our revenue and performance margin guidance.” — CFO Lucas Montarce .
  • “We are not interested in one‑of‑one deals reducing access and choice for doctors and patients…our focus is making better and more accessible medicine.” — David A. Ricks on PBMs .

Q&A Highlights

  • PBM/Formulary dynamics: Management expects limited near‑term impact from CVS decision; opposes restrictive “one‑of‑one” strategies; will focus on innovation and expanding access .
  • Orforglipron positioning: Targeting first‑line incretin in T2D and chronic weight management; oral convenience could broaden reach; obesity readouts expected Q3 .
  • Pricing strategy: Aim to compress list‑to‑net spreads, increase transparency; maintain disciplined approach, acknowledging mid‑ to high‑single‑digit price erosion .
  • Regulatory/clinical updates: FDA requested additional HFpEF confirmation for tirzepatide; pursuing alternatives while noting patients covered under obesity indication .
  • Self‑pay channel: LillyDirect is accelerating access; Q1 self‑pay revenues >$200M; additional vial doses and savings programs launched .

Estimates Context

MetricConsensus*Actual
Revenue ($USD Billions) – Q1 2025$12.72*$12.73
Primary EPS ($) – Q1 2025 (non-GAAP)$3.54*$3.34
  • Result: Revenue slight beat; EPS miss given IPR&D/tax headwinds. Management reaffirmed revenue/performance margin, lowered EPS on higher OI&E expense and tax rate .

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Demand remains robust: incretin portfolio is scaling globally; Zepbound commands leading market shares; TRx growth +46% YoY supports multi‑year topline trajectory .
  • EPS variability near term: IPR&D charges ($1.57B) and higher tax rate (to ~17%) reset EPS guidance ranges despite solid operating performance .
  • Pricing/access: Expect continued single‑digit price erosion; Lilly’s strategy favors broad access and transparent pricing over restrictive PBM deals .
  • Oral GLP‑1 optionality: Orforglipron offers a scalable path to expand the category; obesity/T2D readouts in 2025 could be meaningful catalysts .
  • Manufacturing/tariff positioning: Large U.S. build‑out reduces policy risk; management sees limited 2025 tariff impact, advocating tax incentives over tariffs .
  • Product diversity: Oncology (Jaypirca), immunology (Ebglyss/Omvoh), neuroscience (Kisunla) add balance beyond incretins, supporting medium‑term margin resilience .
  • Trading lens: Near‑term sentiment likely to track PBM headlines and obesity dataflow; fundamental revenue trajectory intact with reaffirmed FY revenue guide .