Eli Lilly and Company (LLY) Earnings

Management highlights

### Overall Business Performance - Q2 2026 total revenue grew 48% YoY, with broad-based growth across all key products and major geographies - Gross margin hit 86.3% of revenue, up 1.3 percentage points YoY, driven by favorable product mix and improved production costs - Non-GAAP performance margin was 54.8%, up 9 percentage points YoY; non-GAAP earnings per share were $8.38, up from $6.31 in Q2 2025 - Distributed $1.5 billion in dividends and executed $1.6 billion in share repurchases in Q2 ### Commercial Launch Updates - The U.S. Foundeo launch continues to build momentum: commercial access was secured across all three major PBMs by June 2026, broad direct-to-consumer marketing launched, and week-over-week prescription growth has accelerated, with volume almost doubling over one month and an inflection point reached in late July 2026 - Foundeo for obesity has been approved and launched in the UAE, approved in Saudi Arabia, and approved for obesity and type 2 diabetes in Mexico; early uptake in the UAE has been encouraging, with regulatory review ongoing in more than 40 additional countries - The Medicare GLP-1 Bridge Program launched July 1, 2026, granting 20 million eligible Americans insurance coverage for GLP-1 obesity treatments with a $50 monthly out-of-pocket maximum, expanding U.S. coverage by 35% ### Pipeline & Regulatory Milestones - Achieved multiple key regulatory approvals: U.S. FDA approval of Eblis (lebrikizumab) for once every eight weeks maintenance dosing for atopic dermatitis; EU approval of J-PERCA for CLL across all lines of therapy; positive CHMP opinion for once-weekly insulin F-sitora-alpha (trade name Onswik) for type 2 diabetes in the EU - Announced positive top-line results from three phase 3 retritutide trials in obesity, with unprecedented weight loss results approaching bariatric surgery levels at the highest dose - Completed U.S. submission of Foundeo for type 2 diabetes, with regulatory action expected by the end of 2026 ### Business Development & Manufacturing - Completed multiple acquisitions to expand the pipeline: Kirovo (shingles vaccine), Limitech Biologics (bacterial infection vaccines), The Vaccine Company (Epstein-Barr virus vaccine), and Atai Berk-Beckley (novel treatments for treatment-resistant depression) - Opened the first dedicated genetic medicine manufacturing facility in Lebanon, Indiana; produced the first batch of commercial material at the new Limerick, Ireland manufacturing site ### Sustainability & Access - Exceeded the 2030 goal of reaching 30 million people in resource-limited settings, reaching approximately 40 million people in 2025; a new commitment to address diabetes and obesity in low-resource settings will be announced later in 2026

Guidance

- Full year 2026 revenue guidance was revised upward: the low end of the range was increased by $3 billion and the high end increased by $2 billion, with new guidance calling for total revenue between $85 billion and $87 billion - Full year 2026 non-GAAP performance margin guidance was revised upward by 2 percentage points at both the low and high end of the range, with new guidance calling for margin between 49% and 50.5% - Full year 2026 non-GAAP earnings per share guidance is now $35.50 to $36.50, an increase of $2.78 per share at the midpoint, before accounting for Q2 2026 acquired IPR&D charges - Retatrutide global regulatory submission in the U.S. is planned for Q1 2027 via the BLA pathway; first phase 3 readout for Foundeo in obstructive sleep apnea is expected by the end of 2026, with a full global Foundeo rollout across major markets planned for 2027

Segment performance

**Immunology**: Eptly worldwide sales more than doubled year-over-year (YoY); in the U.S., Eptly gained 4 percentage points of new prescription share in the specialty dermatology market since 2025. This segment contributed approximately 4% of total Q2 revenue. **Oncology**: Jaipirka worldwide sales grew 56% YoY, supported by expanded labeling and positive clinical data. InLureo achieved over 50% new prescription share in the U.S. metastatic breast cancer oral CDK4/6 market after only two full quarters on the market. This segment contributed approximately 8% of total Q2 revenue. **Neuroscience**: Kisonla posted strong revenue growth, expanding its leadership in the U.S. anti-amyloid Alzheimer's treatment market; the number of PTAL 217 blood tests more than doubled YoY, driving more diagnoses and treatment uptake, with solid growth also coming from China and Japan. This segment contributed approximately 7% of total Q2 revenue. **Cardiometabolic Health**: Monjaro and Zepan combined for $14.9 billion in Q2 revenue, representing $6.3 billion of YoY growth. Combined, this pair accounts for approximately 81% of total Q2 revenue. In the U.S. incretin obesity market, Lilly holds 60% of total prescriptions and 70% of injectable prescriptions; in the U.S. type 2 diabetes incretin market, Lilly holds over 60% of prescriptions. Globally, Lilly holds ~55% of the international incretin analog market, gaining almost 2 percentage points of share since Q1 2026. Foundeo (oral orforglipron) generated $67 million in U.S. revenue and $31 million in UAE revenue in Q2.

Risks & headwinds

- There is ongoing litigation with the FDA over whether retatrutide qualifies for the BLA regulatory pathway, with no guaranteed outcome on the filing classification - Ex-U.S. regulations for direct-to-consumer patient access and direct distribution models differ from the U.S., requiring adapted operating models that carry implementation uncertainty - Generic versions of competing GLP-1 products have launched in markets including India and Brazil, with ongoing supply constraints for generic manufacturers but potential for increased long-term competitive pressure - Reimbursement approval for new products including Foundeo in ex-U.S. markets typically takes time, which could delay commercial uptake even after regulatory approval - Net pricing for Zepan is expected to decline in coming quarters as full formulary access is restored (reducing reliance on higher-priced medical exceptions), which could pressure margins partially offset by expected volume growth - Seasonality impacts, including European vacation patterns in Q3 and typical U.S. type 2 diabetes demand softness in Q4, are factored into guidance and could create near-term revenue volatility

Analyst Q&A

• Q: How does Lilly expect the consumer obesity treatment market to evolve in the U.S. versus international markets, and what is the strategy for aesthetic-focused demand?

  A: Global obesity treatment penetration is still only in the mid-single digits, leaving enormous untapped demand for new patients. The U.S. Medicare GLP-1 Bridge Program has already meaningfully expanded access, and Lilly is investing heavily in consumer awareness and expanding direct-to-patient access offerings. A: Ex-U.S. obesity markets are currently mostly out-of-pocket/self-pay, so consumer activation is a core priority. Lilly is replicating many U.S. direct patient access models internationally, but will adapt to different local regulatory frameworks with the core goal of ensuring patient access to authentic, safe Lilly products.

• Q: What is driving the slower-than-expected initial U.S. Foundeo launch, when will inflection occur, and how is competition impacting ex-U.S. share?

  A: Foundeo has already hit an inflection point in late July 2026, with total volume nearly doubling in a month and new patient starts accounting for ~1 out of 4 new oral GLP-1 starts, following PBM access expansion and the launch of full DTC marketing. Leading indicators for prescription growth and physician adoption are positive. A: Early ex-U.S. launches (including the UAE) show that oral GLP-1s are expanding the overall market, with most patients being treatment-naive. Lilly's combined incretin market share has held steady even after a competitor launched its oral GLP-1, and Lilly has full supply to support upcoming 2027 launches in major markets.

• Q: What is the status of the retatrutide BLA pathway regulatory dispute with the FDA, and could this pathway apply to future incretins?

  A: Lilly has maintained that retatrutide qualifies as a biologic for BLA submission per FDA rules, and the issue is currently in active litigation after an initial mixed court decision. The company is in ongoing communication with the FDA to resolve the filing status, and will update investors as progress is made. A: All required clinical data for retatrutide submission is complete, with only additional manufacturing and chemistry work ongoing. The company remains on track to submit by Q1 2027, and holds a large lead over competitors with its triple-acting GLP-1 candidate with unprecedented efficacy.

• Q: What early trends have you observed from the new Medicare GLP-1 Bridge Program rollout, including breakdown between oral and injectable demand?

  A: It is still early days, but the program has already driven a clear inflection point in demand for both ZepBound (injectable) and Foundeo (oral). Around 60-70% of patients accessing treatment via the Bridge program are new patients that previously did not have access to obesity pharmacotherapy. A: Approximately 80% of Bridge patients have chosen injectable therapy to date, with the remaining 20% opting for oral Foundeo. Lilly has enabled Lilly Direct to fulfill Bridge prescriptions, and ongoing education of physicians, patients, and pharmacies on program eligibility is continuing to drive adoption.

• Q: What is Lilly's M&A strategy for entering new areas like psychiatry and vaccines, are these long-term scalable priorities?

  A: All business development activity is driven by large, unmet medical need, which is the common throughline for both psychiatry and vaccines. Lilly only pursues acquisitions that offer impactful potential assets at disciplined prices that create long-term shareholder value. A: The company will remain opportunistic for future deals in these and other areas, rather than committing to large-scale mandatory expansion. Management is excited about the potential of the recently acquired assets in both segments.