Earnings call transcript: Eli Lilly Q2 2025 beats forecasts, stock drops

Eli Lilly reported robust Q2 2025 results, with diluted EPS of $6.31 and revenue of $15.56 billion significantly surpassing analyst expectations, driven by strong demand for its incretin therapies like Mounjaro and Zepbound. Despite these strong financials and a raised full-year revenue guidance to $60-62 billion, the stock declined 13.37% in pre-market trading, reflecting broader market conditions and investor sentiment. The company also announced positive Phase III data for its oral GLP-1 orforglipron, with regulatory submission planned by year-end, and reaffirmed plans to increase incretin production by 1.8 times in 2025, underscoring its strategic focus on expanding its metabolic franchise and addressing supply.

Analysis

Eli Lilly & Co. (LLY) reported an exceptionally strong second quarter for 2025, with revenue surging 38% year-over-year to $15.56 billion and EPS reaching $6.31, significantly outperforming consensus estimates of $14.67 billion and $5.59, respectively. This performance was driven by the robust uptake of its incretin therapies, Mounjaro and Zepbound, with the company gaining market share in the incretin analog class for the fourth consecutive quarter. Despite these results and raised full-year guidance for revenue (to $60-62 billion) and EPS (to $21.75-$23.00), the stock experienced a sharp 13.37% pre-market decline, indicating a disconnect between fundamentals and market sentiment. Key pipeline developments include positive Phase III data for the oral GLP-1 candidate orforglipron, which demonstrated a 12.4% body weight loss and is slated for regulatory submission by year-end. However, the company faces near-term headwinds, most notably the exclusion of Zepbound from the CVS template formulary, which is expected to negatively impact the rate of volume growth in Q3. Management also highlighted plans to increase saleable incretin dose production by 1.8 times in 2025, addressing critical supply constraints to meet overwhelming market demand.

Key Decisions for Investors

• Investors should weigh the significant pre-market stock decline against the company's strong fundamental performance, including a substantial earnings beat and upwardly revised full-year guidance.
• Monitor the near-term impact of the CVS formulary exclusion on Zepbound's Q3 prescription volumes, as management has explicitly flagged this as a headwind to the growth rate.
• The upcoming regulatory submission and potential launch of the oral GLP-1 orforglipron represents a significant catalyst; its market adoption and pricing will be critical to observe, given its convenience may appeal to a broader patient base despite a different efficacy profile than injectables.
• Track the execution of the planned 1.8x increase in incretin production capacity, as the ability to meet market demand remains a primary determinant of realizing the franchise's full revenue potential.