Earnings Call Insights: Eli Lilly and Company (LLY) Q4 2025
Management View
- David Ricks, Chairman & CEO, stated that “2025 was a strong year for Lilly. We delivered robust revenue growth, advanced our pipeline, expanded our manufacturing footprint and helped over 70 million people around the world.” He highlighted the launch of new medicines including Inluriyo, new indications for Omvoh and Jaypirca, and international rollouts of Mounjaro and Kisunla.
- Ricks announced that Lilly executed 39 business development transactions, completed a collaboration with NVIDIA for an AI lab, and continued major manufacturing expansion with new sites in the U.S. and Europe. “Since 2020, we’ve committed over $55 billion, the largest manufacturing build-out in company history.”
- The CEO noted a government agreement to provide access to obesity medicines through Medicare and Medicaid, with out-of-pocket costs of $50 per month. He also highlighted that the LillyDirect platform grew to over 1 million patients.
- Ricks welcomed new executives Carole Ho and Adrienne Brown to the leadership team.
- Lucas Montarce, Executive VP & CFO, stated: “Our full year revenue of $65.2 billion increased by 45% compared to 2024 and earnings per share grew by 86% to $24.21. Q4 financial performance was also strong… Revenue grew 43% compared to Q4 2024, driven by our key products.”
- Montarce added, “Our non-GAAP performance margin was 47.2%, an increase of 4.2 percentage points compared to Q4 2024. Our effective tax rate was 19.7% and earnings per share were $7.54, inclusive of $0.52 of acquired IPR&D charges.”
- Kenneth Custer, Executive VP & President of Lilly Cardiometabolic Health, emphasized strong international launches and market expansion for key products like Mounjaro and Zepbound.
Outlook
- Montarce shared, “We expect revenue to be between $80 billion and $83 billion. The midpoint of our revenue range is an increase of 25% compared to 2025.”
- He outlined expectations for industry-leading volume growth from key products, partially offset by a “drag on growth in the low to mid-teens” from lower realized prices, particularly related to the government agreement, direct-to-patient pricing, and lower Medicaid prices.
- Montarce indicated that gross margin will be “relatively stable to slightly down compared to Q4 2025,” with continued investment in R&D and increased marketing and administrative expenses to support new launches.
- Expected earnings per share for 2026 were guided to be between $33.50 and $35.
Financial Results
- Full year revenue for 2025 was reported as $65.2 billion, a 45% increase over 2024.
- Q4 revenue grew 43% year-over-year, with gross margin at 83.2%.
- R&D expenses rose by 26%, and marketing, selling, and administrative expenses increased 29%.
- Q4 earnings per share were $7.54, including $0.52 of acquired IPR&D charges, compared to $5.32 in Q4 2024.
- Key products contributed over $13 billion to revenue in Q4, growing 91% year-over-year.
- Kisunla became the U.S. market leader in amyloid targeting therapy, with $109 million in revenue this quarter.
- International Mounjaro launches drove volume doubling in the rest of world segment, and Zepbound held nearly 70% share of new prescriptions in the branded obesity market.
Q&A
- Evan Seigerman, BMO Capital Markets: Asked about metrics for orforglipron launch. Kenneth Custer responded that Lilly is focused on market expansion, patient satisfaction, and real-world efficacy, “We’re excited to get off to the races here… look at overall patient satisfaction scores and real-world efficacy with these agents.”
- Courtney Breen, Bernstein: Inquired about regulatory approval timelines for orforglipron ex-U.S. Patrik Jonsson explained that most international launches are expected in the first half of 2027, with a few markets in late 2026.
- Christopher Schott, JPMorgan: Asked about international Mounjaro ramp. Jonsson indicated Q4 as a base for 2026 growth, with priorities on expanding chronic weight management markets and gaining type 2 diabetes reimbursement in more countries.
- Seamus Fernandez, Guggenheim: Asked about broader investment in immunology. Daniel Skovronsky replied that proceeds from obesity are being reinvested in oncology, neuroscience, and immunology, “We’re reinvesting some of the proceeds from the obesity opportunity to make sure we can further accelerate growth in those promising areas.”
- Terence Flynn, Morgan Stanley: Queried Medicare volume ramp and commercial opt-ins. Montarce and Ilya Yuffa highlighted that Medicare access is expected by July 1, with a bolus of existing patients moving to Medicare, while employer coverage is anticipated to increase mostly in 2027.
Sentiment Analysis
- Analysts displayed a positive to neutral tone, focusing on launch metrics, regulatory approvals, and market expansion. There was optimism about orforglipron and international growth, but also scrutiny on pricing and coverage dynamics.
- Management’s tone in prepared remarks was confident, emphasizing achievements and future growth targets. During Q&A, responses remained constructive and transparent, with management reiterating confidence in new launches and mitigation of pricing pressures. Montarce used “we expect” and “we are confident” frequently.
- Compared to the previous quarter, both analysts and management maintained a similar level of confidence, with the tone shifting to more forward-looking discussion on new product launches and Medicare access.
Quarter-over-Quarter Comparison
- Revenue guidance increased from a 2025 range of $63–$63.5 billion to a 2026 range of $80–$83 billion, signaling higher growth expectations.
- Management’s confidence in pipeline progression and market expansion remains strong, with greater focus on new product launches and Medicare coverage compared to Q3.
- Analysts’ questions shifted more toward launch execution, international expansion timelines, and pricing dynamics, versus the prior quarter’s focus on manufacturing and product approvals.
- Management continues to emphasize volume-led growth while acknowledging pricing pressures, a shift from the previous quarter where price erosion was less pronounced.
- The tone of both management and analysts remains positive, with increased attention to execution risks and competitive dynamics.
Risks and Concerns
- Lower realized prices due to government agreements, direct-to-patient pricing, and lower Medicaid prices are expected to be a drag on growth.
- Medicare access for obesity medicines is anticipated no later than July 1, 2026, but Medicaid access is expected to decline in 2026 due to states like California removing coverage.
- R&D and marketing expenses will scale up as the company supports new launches, which could exert pressure on margins.
- Management highlighted that price concessions will be offset by volume growth, but acknowledged pricing as a challenge in both the U.S. and international markets.
Final Takeaway
Eli Lilly ended 2025 with strong revenue and earnings growth, driven by expansion in obesity and diabetes treatments, new product launches, and strategic investments in manufacturing and technology. Management projects continued momentum into 2026, targeting $80–$83 billion in revenue and emphasizing volume-led growth from key brands despite anticipated pricing headwinds. The launch of orforglipron and broader Medicare access for obesity medicines are expected to be pivotal drivers of growth, with management confident in their pipeline and market leadership position.