01—Abstract
Summary
Summary of the 8-K filed May 1, 2025. Cited figures are marked; the original filing is the authoritative source.
Eli Lilly reported first-quarter 2025 revenue of $12.73 billiona, up 45% year over year, driven by a 53% volume increase that more than offset a 6% decline in realized prices.
Growth was led by the obesity and diabetes franchise: Mounjaro revenue rose 113% to $3.84 billionb and U.S. Zepbound revenue reached $2.31 billion, versus $517.4 million a year earlier. Gross margin improved to 82.5% of revenue on a reported basis (83.5% non-GAAP), reflecting better cost of production and favorable mix. Reported EPS was $3.06 (up 23%) and non-GAAP EPS was $3.34 (up 29%), both after a $1.72-per-share acquired IPR&D charge, primarily related to Scorpion Therapeutics' PI3Kα inhibitor STX-478.
The charge is a non-cash acquisition cost that weighed on Q1 earnings and the tax rate, which rose to 20.2% because the IPR&D charge is non-deductible. The company reaffirmed 2025 revenue guidance of $58.0 to $61.0 billionc, but lowered its 2025 EPS guidance. Reported EPS guidance fell to $20.17 to $21.67 from $22.05 to $23.55, and non-GAAP EPS guidance fell to $20.78 to $22.28 from $22.50 to $24.00.
The cuts reflect the Q1 IPR&D charge and net losses on equity investments. Reported other expense guidance widened to $750 million to $850 milliond, and the expected tax rate rose to about 17% from about 16%. Guidance includes only IPR&D incurred through Q1 2025, so future acquisition charges could pressure reported EPS further.
Management also highlighted positive Phase 3 results for oral GLP-1 orforglipron in type 2 diabetes, the first of seven late-stage obesity and diabetes trials. Outside the U.S., revenue rose 38% to $4.24 billion, but that figure includes a one-time $370 million benefit from an amendment to the Jardiance collaboration with Boehringer Ingelheim, so underlying growth was lower.
Verzenio U.S. sales grew only 3%, reflecting wholesaler buying patterns and competitive pressure. Overall, the quarter shows strong demand momentum for Lilly's incretin franchise, with the key investor questions centering on pricing pressure, the durability of volume growth, and the impact of acquired IPR&D on reported earnings.
02—Key points
Key Highlights
- Q1 2025 revenue rose 45% to $12.73 billion, driven by a 53% volume increase, partially offset by a 6% decline in realized prices and a 2% FX headwind.
- Mounjaro revenue grew 113% to $3.84 billion, and U.S. Zepbound revenue reached $2.31 billion, versus $517.4 million in Q1 2024.
- Reported EPS of $3.06 (up 23%) and non-GAAP EPS of $3.34 (up 29%) both absorbed a $1.72-per-share acquired IPR&D charge of $1.57 billion, mainly from the Scorpion STX-478 acquisition.
- Gross margin improved to 82.5% of revenue on a reported basis (+1.6 points) and 83.5% non-GAAP (+1.0 point), on better production costs and favorable mix.
- 2025 revenue guidance was reaffirmed at $58.0 to $61.0 billion, while reported EPS guidance was cut to $20.17 to $21.67 (from $22.05 to $23.55) and non-GAAP EPS guidance to $20.78 to $22.28 (from $22.50 to $24.00).
- The 2025 tax rate guidance rose to about 17% from about 16%, and reported other expense guidance widened to $750 million to $850 million due to equity investment losses.
- Orforglipron, an oral GLP-1, posted positive Phase 3 results in type 2 diabetes, the first of seven late-stage obesity and diabetes trials. Q1 revenue also included a one-time $370 million Jardiance benefit tied to a Boehringer Ingelheim amendment.
03—Questions
Frequently Asked Questions
Why did Lilly cut its 2025 EPS guidance if revenue guidance was unchanged?
The EPS cut reflects costs rather than sales expectations. Guidance now includes the $1.57 billion of acquired IPR&D charges incurred in Q1 2025, which lowered reported and non-GAAP EPS by $1.72 per share. Reported EPS guidance also reflects net losses on equity investments, and the tax rate guidance rose to about 17%. Guidance excludes any IPR&D incurred after Q1, so further acquisition charges could reduce EPS later in the year.
How strong is the growth in the obesity franchise?
Very strong on a volume basis. Mounjaro worldwide revenue rose 113% to $3.84 billion, with U.S. revenue up 75% to $2.66 billion and ex-U.S. revenue up to $1.19 billion from $286.2 million. U.S. Zepbound revenue rose to $2.31 billion from $517.4 million. Growth was partially offset by lower realized prices, which reflect pricing pressure in the market.
Is the 45% revenue growth fully representative of the underlying business?
Not entirely. Ex-U.S. revenue included a one-time $370 million benefit from an amendment to the Jardiance collaboration with Boehringer Ingelheim. Excluding that item, growth would be lower. Verzenio's U.S. revenue grew only 3%, affected by wholesaler buying patterns and competition, so growth is concentrated in the incretin products.
What does the orforglipron result mean for Lilly?
Orforglipron is an oral small-molecule GLP-1 agonist. Its first Phase 3 trial in type 2 diabetes produced statistically significant efficacy and a safety profile consistent with injectable GLP-1 medicines. It is the first of seven obesity and diabetes Phase 3 studies, so the results so far are an early indicator. Future readouts will determine its commercial potential against injectable and other oral alternatives.
Why did the effective tax rate rise to 20.2%?
The acquired IPR&D charge is non-deductible for tax purposes, so it increased the effective tax rate. The reported rate was 20.2%, compared with 11.6% a year earlier. The non-GAAP rate was also 20.2%, versus 11.9% in Q1 2024. The 2025 and 2024 rates were also affected by discrete tax benefits in each period.
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