LLY Eli Lilly and Company 10-Q 2026-09-30 section summaries

Eli Lilly (LLY) — Q3 and first nine months of 2026

Lilly reports one operating and reportable segment. The CEO/CODM assesses performance using consolidated net income and allocates R&D resources based on technical-success likelihood, unmet medical need, and commercial viability. Lilly says long-term success depends significantly on developing innovative medicines.

Consolidated results

Revenue increased 38.6% in Q3 and 46.4% in 9M; net income rose 15.6% and 49.6%, respectively. Higher acquired IPR&D expense—largely tied to acquisitions and pipeline investments—was a significant drag on reported earnings. The effective tax rate was 23.3% versus 22.8% in Q3 and 21.0% versus 19.8% for 9M, primarily reflecting the larger unfavorable effect of nondeductible acquired IPR&D. Prepaid taxes were $15.1B at September 30, 2026, versus $12.9B at year-end 2025.

Q3 product revenue drivers

Tirzepatide products Mounjaro and Zepbound were the standout growth drivers. For 9M, cardiometabolic revenue was $53.877B versus $33.729B, including Mounjaro at $29.328B versus $15.556B and Zepbound at $14.440B versus $9.281B. U.S. revenue was $15.136B versus $11.300B in Q3 and $41.668B versus $30.604B for 9M; outside-U.S. revenue was $9.261B versus $6.301B and $25.502B versus $15.283B, respectively.

Cash flow and balance sheet

Cash and equivalents declined from $7.268B at January 1 to $4.885B at September 30, 2026; 9M 2025 ending cash was $9.792B.

Equity less goodwill and other intangible assets was $12.313B at September 30, 2026. Inventory growth included work in process of $10.688B versus $8.183B and finished products of $2.998B versus $1.931B.

Investment, financing and capital returns

Lilly issued $9.0B of long-term debt in May 2026, with maturities from 2028 to 2066 and stated rates of 4.150%–5.700%; $1.3B of 2028–2029 notes have floating rates tied to SOFR plus 0.350% or 0.460%. Proceeds supported general corporate purposes, commercial-paper repayment and acquisition funding. Its $6.0B 364-day credit facility was renewed and its $4.0B multi-year facility extended to August 2031; neither was drawn at quarter-end.

Shares outstanding fell from 944.8M at December 31, 2025 to 941.2M at September 30, 2026. Lilly repurchased 4.7M shares for $4.361B in 9M, versus 3.3M for $2.598B; $6.6B remained on its $15.0B December 2024 authorization. 9M dividends declared were $3.46 per share ($3.088B), versus $3.00 ($2.692B). Stock-based compensation was $0.562B for 9M versus $0.490B.

Acquisitions and risks

2026 acquisitions expanded the pipeline in CAR-T, sleep-wake disorders and inflammatory disease. Acquisition-date fair value of consideration for Kelonia, Centessa and Ventyx was $4.897B, $6.593B and $1.178B, respectively; acquired IPR&D was $4.695B, $6.058B and $0.977B. Maximum contingent payments were $3.750B for Kelonia and $1.542B for Centessa. Contingent-consideration liabilities rose to $2.888B from $251M, primarily due to Kelonia, and depend on Level 3 assumptions such as technical-success probabilities and milestone timing. Separately, Q3 asset-acquisition IPR&D charges included $2.610B for AtaiBeckley, $0.954B for Curevo, $0.909B for Ajax and $1.233B for Orna. In October 2026 Lilly acquired Merida for up to $2.9B, including milestone-dependent payments.

Other notable exposures include milestone and royalty obligations (including Ebglyss and Foundayo), increased debt, early-stage pipeline spending and preliminary acquisition valuations. Lilly is predominantly self-insured for litigation losses; individual-period operating results could be materially affected. Litigation includes generic challenges involving Mounjaro/Zepbound and Verzenio, Emgality patent proceedings, 340B and insulin-pricing matters, and product-liability proceedings alleging injuries associated with Mounjaro, Trulicity and Zepbound. IRS examinations of tax years 2019–2021 remain ongoing; examination of 2022–2024 began in October 2026, and resolution of the relevant tax matters is expected to extend beyond 12 months.

Lilly — Q3 and 9M 2026

Financial results

Revenue growth was driven by volume, especially for Mounjaro and Zepbound. Higher gross profit reflected improved production costs and favorable mix, which more than offset lower realized prices. Earnings growth was partly offset by higher acquired in-process research and development (IPR&D), R&D, and marketing, selling, and administrative (MS&A) expenses.

R&D increases reflected pipeline investment; higher MS&A was primarily related to launch promotion. Acquired IPR&D included Q3 acquisitions AtaiBeckley and Curevo; the 9M total also included Orna and Ajax. Effective tax rates were 23.3% in Q3 and 21.0% in 9M, compared with 22.8% and 19.8%, respectively, primarily reflecting the larger unfavorable tax impact of nondeductible acquired IPR&D. Prior-year rates were also affected by U.S. tax-law changes.

Revenue by geography and product

Volume, pricing, and foreign exchange contributed +53%, −15%, and 0% to Q3 revenue growth, respectively; for 9M, the contributions were +59%, −14%, and +1%. U.S. volume growth primarily reflected Mounjaro and Zepbound. Outside the U.S., Mounjaro volume growth was partly offset by lower realized prices, including following its addition to China’s National Reimbursement Drug List.

Strong demand drove Mounjaro and Zepbound growth, partly offset by lower U.S. realized prices. Mounjaro, Zepbound, and Foundayo together represented 66% of 9M revenue, leaving results substantially exposed to incretin demand, pricing, and access.

Liquidity, funding, and capital allocation

Debt rose $7.0B from year-end. In May, Lilly issued $9.0B of long-term debt for general corporate purposes, including repaying commercial paper and funding part of the upfront consideration and related costs for Centessa and Kelonia. It had $10.1B of unused committed bank facilities, including $10.0B available to support commercial paper. Lilly said cash, operating cash generation, and borrowing access should fund planned needs. Manufacturing investment has increased capital expenditures, which are expected to remain higher in the near term. Unfunded venture-capital commitments were approximately $862M, expected to be funded over up to 10 years.

Lilly spent $18.2B on business-development activity in 9M, primarily for Centessa, Kelonia, AtaiBeckley, Orna, Ventyx, Curevo, and Ajax. In October 2026, after quarter-end, it acquired Merida for up to $2.9B, including upfront consideration and potential clinical and regulatory milestones. It repurchased $4.3B of shares under its $15.0B December 2024 authorization, with $6.6B remaining available at September 30. It paid $4.6B in 9M dividends ($5.19 per share) and declared a Q4 dividend of $1.73 per share, approximately $1.5B total, payable December 10.

Strategy, outlook, and risks

FDA approvals included insulin efsitora alfa (Onswik) for type 2 diabetes and orforglipron (Foundayo) for obesity; tirzepatide was also approved to reduce cardiovascular risk in type 2 diabetes. Retatrutide Phase 3 trials met primary endpoints in obesity and type 2 diabetes. Lilly advanced several other Phase 3 programs, including baricitinib in type 1 diabetes and eloralintide in obesity, sleep apnea, and osteoarthritis pain. Sofetabart mipitecan received FDA Breakthrough Therapy designation for certain patients with platinum-resistant ovarian cancer. Foundayo launched in the U.S. in Q2, with international launches and submissions expanding. Manufacturing capacity is being expanded, with additional capacity expected over several years.

Near-term performance remains sensitive to incretin demand, channel dynamics, new-market uptake, regulatory timing, and Medicare access. A Medicare GLP-1 Bridge offers discounted access to Lilly obesity medicines from July 1, 2026 through December 31, 2027, but future uptake and longer-term access are uncertain. IRA government-set prices apply to Jardiance beginning in 2026 and to Trulicity and Verzenio beginning in 2028; further product selections could materially affect the business. Other risks include global price controls and payer concessions, restrictive coverage, litigation and 340B matters, tariffs and trade restrictions, manufacturing or regulatory issues, tax-law changes, currency volatility, and counterfeit or compounded incretin products. Lilly also monitors customer and supplier creditworthiness, interest-rate and foreign-exchange movements, equity-security fair values, economic conditions, conflicts, and uncertain healthcare legislation and government funding. It reported no material changes to critical accounting estimates since its 2025 Form 10-K.

Item 3 — Quantitative and Qualitative Disclosures About Market Risk

Item 3 presents no new market-risk figures or changes. It refers readers to Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of Eli Lilly’s Form 10-K for the year ended December 31, 2025, for the market-risk discussion.

Controls and procedures

As of September 30, 2026, management, including the CEO and CFO, concluded that disclosure controls and procedures were effective. During Q3 2026, no changes to internal control over financial reporting materially affected, or were reasonably likely to materially affect, those controls.

This section reports no financial results, business developments, or additional risks.

Lilly states that the material risk factors described in its 2025 Form 10-K remain applicable and that there have been no material changes to them since that filing. This section reports no new financial metrics, business developments, or specific risk updates.

Four Lilly executives adopted Rule 10b5-1 plans to sell up to the following amounts of shares:

The plans were adopted during open trading windows, may terminate earlier under their terms, and are intended to meet Rule 10b5-1(c) affirmative-defense conditions and Lilly’s securities-trading policies. They disclose potential insider sales; the filing reports no actual sales or financial impact.