Summary
Full summaryExecutive Assessment
Revenue increased 44.7% to $65.2B, driven by volume growth in Mounjaro and Zepbound, partially offset by lower realized prices.
- Net income rose 94.9% to $20.6B, with diluted EPS of $22.95, up 96.0%.
- Gross margin expanded 170 bps to 83.0%, driven by favorable product mix and improved cost of production.
- Mounjaro and Zepbound together accounted for 56% of total revenue, up from 37% in 2024.
- Operating cash flow nearly doubled to $16.8B, supporting $7.8B in capital expenditures for manufacturing expansion.
Financial Highlights
| Metric | Current Period | Prior Period | Change | Investor Takeaway |
|---|---|---|---|---|
Revenue | $65.2B | $45.0B | +44.7% | Volume increased 50%, partially offset by 6% lower realized prices and 1% favorable foreign exchange. |
Net Income | $20.6B | $10.6B | +94.9% | Driven by higher gross margin, partially offset by increased operating expenses. |
Diluted EPS | $23.0 | $11.7 | +96.0% | Reflects net income growth and a 0.5% reduction in diluted shares outstanding. |
Gross Margin | 83.0% | 81.3% | +1.7 ppts | Favorable product mix and improved production costs, partially offset by lower realized prices. |
Operating Cash Flow | $16.8B | $8.8B | +90.7% | Higher net income and working capital changes, including a $10.2B increase in accounts payable and other liabilities. |
Total Assets | $112.5B | $78.7B | +42.9% | Growth driven by increases in cash, receivables, inventories, and property and equipment. |
Total Debt | $42.5B | $33.6B | +26.3% | Issued $13.2B in long-term debt, primarily for business development and general corporate purposes. |
Profitability
- Net margin expanded to 31.7% from 23.5%, reflecting operating leverage.
- R&D expense increased 21.3% to $13.3B, driven by continued investment in early and late-stage portfolio.
- Acquired IPR&D charges of $2.9B, down 11.3% from $3.3B in 2024, primarily from Scorpion and SiteOne acquisitions.
Cash flow
- Free cash flow (operating cash flow less capex) was $9.0B, up from $3.8B in 2024.
- Investing cash outflows of $11.0B included $7.8B in capex and $3.0B in acquired IPR&D.
- Financing cash outflows of $2.2B included $5.4B in dividends and $4.1B in share repurchases, partially offset by $13.2B in long-term debt issuances.
Balance sheet
- Cash and equivalents increased to $7.3B from $3.3B.
- Working capital improved to $20.4B from $4.4B, with current ratio rising to 1.58x from 1.15x.
- Shareholders' equity nearly doubled to $26.5B, driven by net income and comprehensive income.
Investment Risks & Concerns
Risk Factor
Concentration risk: Mounjaro and Zepbound accounted for 56% of total revenue in 2025.
Risk Factor
Government price controls: IRA drug price negotiation selected Jardiance (2026), Trulicity and Verzenio (2028); additional products expected.
Risk Factor
Patent expirations: Trulicity will lose significant patent and data protections in the next few years, exposing it to generic/biosimilar competition.
Risk Factor
Pipeline and R&D risk: High failure rate inherent in drug development; orforglipron and other candidates may not achieve regulatory approval or commercial success.
Risk Factor
Cybersecurity and data privacy: IT systems and confidential information are vulnerable to cyber-attacks; compliance with evolving global privacy laws imposes costs and risks.
Management Strategy & Execution
Themes
- Revenue growth driven by volume, partially offset by lower realized prices, primarily from Mounjaro and Zepbound.
- Gross margin improvement attributed to favorable product mix and improved cost of production.
- Significant manufacturing capacity expansion underway to meet anticipated demand for incretin products.
Capital allocation
- Capital expenditures increased to $7.8B (from $5.1B) for global manufacturing expansion.
- Dividends paid of $5.4B; quarterly dividend raised to $1.73 per share for Q1 2026 (indicated annual $6.92).
- Share repurchases of $4.1B under $15.0B program authorized in December 2024; $10.9B remaining.
- Acquired IPR&D payments of $3.0B, primarily for Scorpion and SiteOne acquisitions.
“Revenue increased in 2025 driven primarily by increased volume, partially offset by lower realized prices.”
— Management (MD&A)
“Gross margin as a percent of revenue in 2025 increased 1.7 percentage points compared with 2024, primarily driven by favorable product mix and improved cost of production, partially offset by lower realized prices.”
— Management (MD&A)
Business Segment Analysis
| Segment | Revenue | Change | Commentary |
|---|---|---|---|
| Cardiometabolic Health | $48,221M | +63.3% | Driven by Mounjaro ($22,965M, +99%) and Zepbound ($13,542M, +175%). Trulicity declined to $4,276M (-18.6%). |
| Oncology | $9,376M | +7.1% | Verzenio revenue of $5,723M (+7.8%), with 20% growth outside U.S. offset by 1% U.S. growth. |
| Immunology | $5,247M | +19.4% | Taltz revenue of $3,563M (+9.3%); other immunology includes Ebglyss launch. |
| Neuroscience | $1,391M | -5.6% | Decline driven by loss of exclusivity on certain products; Kisunla (donanemab) launched in 2024. |
Liquidity & Capital Structure
Leverage: Total debt of $42.5B, debt-to-equity ratio of 1.60x (2024: 2.36x). Long-term debt increased to $40.9B from $28.5B.
Liquidity: Cash and equivalents of $7.3B; $10.1B in unused committed bank credit facilities; operating cash flow of $16.8B.
Shareholder returns
- Dividends paid: $5,384M in 2025, up from $4,680M in 2024.
- Share repurchases: $4,108M in 2025, up from $2,500M in 2024.
- Dividend per share increased to $6.00 paid in 2025; indicated annual rate for 2026 of $6.92.
Forward Outlook & Investment Implications
Not disclosed—no specific quantitative guidance provided in the excerpts.
Drivers
- Near-term performance impacted by timing of potential regulatory approvals for orforglipron and U.S. Medicare access for Zepbound.
- Manufacturing expansion to support anticipated demand for incretin products; additional capacity expected over next several years.
Watch items
- IRA drug price negotiation: Trulicity and Verzenio selected for 2028; additional products expected in future years.
- Patent cliff: Trulicity to lose significant protections in the next few years.
- Competitive landscape for incretin therapies and obesity market evolution.
- Regulatory and legislative changes affecting pharmaceutical pricing and intellectual property.
Notable Footnotes
| Item | Impact |
|---|---|
| Acquired IPR&D charges | $2.9B in 2025, primarily from Scorpion ($1,412M) and SiteOne ($494M) acquisitions; expensed immediately as no alternative future use. |
| Pre-launch inventory capitalization | $1.5B of pre-launch inventory capitalized as of Dec 31, 2025, primarily related to orforglipron. |
| Income taxes – OBBBA impact | OBBBA enacted July 2025 made permanent immediate R&D expensing and 100% bonus depreciation; effective tax rate increased to 19.8% from 16.5%. |
| Verve acquisition | Acquired in July 2025 for $549M net cash plus CVRs; preliminary fair value includes $608M in acquired IPR&D and $127M goodwill. |
3-Year Investment Perspective
Revenue and net income have accelerated sharply over the three-year period, driven by the launch and rapid uptake of incretin products Mounjaro and Zepbound. Revenue grew from $34.1B in 2023 to $65.2B in 2025, while net income increased from $5.2B to $20.6B. Gross margin expanded from 79.2% to 83.0%, and operating cash flow rose from $4.2B to $16.8B.
Inflections
- 2024: Revenue growth of 32.0% driven by Mounjaro and Zepbound launches; net income doubled to $10.6B.
- 2025: Revenue growth accelerated to 44.7%; Mounjaro + Zepbound revenue reached $36.5B, representing 56% of total.
- Gross margin improved each year: 79.2% (2023), 81.3% (2024), 83.0% (2025).
Prior-period comparison
- 2023 revenue of $34.1B included $1.4B gain on sale of olanzapine portfolio and $579M gain on Baqsimi divestiture.
- 2023 net income of $5.2B reflected higher acquired IPR&D charges ($3.8B) and lower gross margin.
- Diluted EPS grew from $5.80 in 2023 to $22.95 in 2025, a compound annual growth rate of approximately 99%.
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