01—Abstract
Summary
Summary of the 8-K filed August 5, 2026. Cited figures are marked; the original filing is the authoritative source.
Eli Lilly reported strong second-quarter 2026 results, with revenue up 48% year over year to $23.0 billiona, driven by a 60% increase in volume partially offset by a 13% decline in realized prices.
Growth was led by Mounjaro (up 91% to $9.9 billionb) and Zepbound (up 46% to $4.9 billion in Q2 U.S. revenue terms), while Key Products revenue reached $15.7 billion. Gross margin as a percent of revenue expanded to 85.8% reported (86.3% non-GAAP). Lilly raised full-year 2026 revenue guidance to $85.0-$87.0 billion and raised its performance margin guidance to 49.0%-50.5%.
Reported EPS rose 26% to $7.94c and non-GAAP EPS rose 33% to $8.38. However, both figures absorbed $3.03 per share of acquired IPR&D charges ($2.8 billion pre-tax) tied to Q2 business development, including Orna Therapeutics and Ajax Therapeutics. Excluding this charge, underlying EPS growth was substantially stronger.
Full-year non-GAAP EPS guidance was set at $35.50d-$36.50, an increase of $2.78 at the midpoint from underlying growth that was more than offset by the $3.03 IPR&D charge, so the net guidance range is actually narrowed at the top end from $37.00 to $36.50. Investors should weigh the strong top-line momentum and pipeline progress, including a complete retatrutide clinical package with a planned BLA submission in Q1 2027, against ongoing pricing pressure (ex-adjustment U.S. price declined roughly 9%), a higher effective tax rate from non-deductible IPR&D, and continued acquisition activity including the pending AtaiBeckley deal.
02—Key points
Key Highlights
- Q2 2026 revenue rose 48% to $23.0 billion, driven by a 60% volume increase partially offset by a 13% decline in realized prices; U.S. revenue grew 33% to $14.4 billion and ex-U.S. revenue grew 80% to $8.6 billion.
- Mounjaro revenue nearly doubled (+91%) to $9.9 billion in Q2, and Key Products revenue reached $15.7 billion; Mounjaro ex-U.S. revenue rose 172% to $5.2 billion.
- Reported EPS of $7.94 (+26%) and non-GAAP EPS of $8.38 (+33%) both include $3.03 per share of acquired IPR&D charges, versus $0.14 in Q2 2025.
- Full-year 2026 revenue guidance raised to $85.0-$87.0 billion from $82-$85 billion; non-GAAP EPS guidance set at $35.50-$36.50, with the $2.78 underlying increase more than offset by the $3.03 Q2 IPR&D charge.
- Retatrutide's clinical data package is complete for obesity, obstructive sleep apnea, and knee osteoarthritis pain, with a BLA submission to the FDA planned for Q1 2027.
- Business development accelerated: four acquisitions closed in Q2 (Orna, Ajax, Centessa, Kelonia), three infectious disease acquisitions completed after quarter end, and a pending agreement to acquire AtaiBeckley.
- Gross margin expanded to 85.8% of revenue on a reported basis (+1.5 points), while pricing pressure persisted, with U.S. realized prices down 3% (about 9% excluding rebate adjustments) and ex-U.S. prices down 36% due to China NRDL inclusion of Mounjaro.
03—Questions
Frequently Asked Questions
Why did reported EPS and non-GAAP EPS grow less than underlying business performance would suggest?
Both EPS measures included $3.03 per share of acquired IPR&D charges in Q2 2026 (about $2.8 billion pre-tax), mainly from the Orna Therapeutics and Ajax Therapeutics acquisitions. These charges are non-deductible for tax purposes, which also raised the effective tax rate to 23.3% reported and 22.2% non-GAAP. Excluding the IPR&D charge, EPS would have been well above the reported figures.
How did Lilly's full-year guidance change?
Revenue guidance was raised to $85.0-$87.0 billion from $82-$85 billion. Performance margin guidance rose to 49.0%-50.5% from 47.0%-48.5%. Non-GAAP EPS guidance is $35.50-$36.50, versus the prior $35.50-$37.00. Underlying EPS was raised by $2.78 at the midpoint, but this was more than offset by the $3.03 Q2 IPR&D charge. Guidance excludes IPR&D incurred after June 30, 2026, so future business development charges could reduce EPS further.
What is the outlook for pricing and margins?
Realized prices declined 13% overall in Q2. U.S. prices fell 3% reported, but about 9% excluding favorable rebate and discount adjustments. Ex-U.S. prices fell 36%, primarily from Mounjaro's addition to China's National Reimbursement Drug List. Despite this, gross margin improved to 85.8% reported due to better production costs and favorable product mix. Management's raised performance margin guidance suggests it expects operating leverage to offset continued pricing pressure.
What are the key pipeline catalysts to watch?
Retatrutide, the triple agonist, has a complete Phase 3 data package supporting global registrations in obesity, obstructive sleep apnea, and knee osteoarthritis pain, with a BLA submission planned for Q1 2027. The FDA submission for orforglipron in type 2 diabetes is also under way. Other notable items include the pending AtaiBeckley acquisition for treatment-resistant depression, and Ebglyss's new every-eight-week maintenance dosing approval. Investors should watch regulatory timelines and the potential commercial impact of these programs.
Are the recent acquisitions expected to create value, and what are the risks?
Lilly completed four acquisitions in Q2 2026 and three infectious disease acquisitions after quarter end, and agreed to acquire AtaiBeckley. Acquisitions are expensed as acquired IPR&D when they are asset purchases, which depresses reported EPS in the period of closing. The filing notes that acquisitions carry uncertain outcomes and integration costs; Q2 also included $703 million of special charges tied to Kelonia and Centessa integration and accelerated equity vesting. Returns depend on successful clinical development of the acquired assets.
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