Latest / Beta Finch - Eli Lilly - LLY - EN / Eli Lilly Q3 2026 Earnings Analysis

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Eli Lilly Q3 2026 Earnings Analysis · Beta Finch - Eli Lilly - LLY - EN

• 0:08
  Speaker 1: Welcome to Beta Finch, your AI-powered earnings breakdown. I'm Alex,
• 0:13
  Speaker 1: joined as always by Jordan, and today we're digging into
• 0:16
  Speaker 1: Eli Lilly's third quarter 2026 results. And folks, this is
• 0:20
  Speaker 1: a big one.
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  Speaker 2: Huge one. Stock popped over 6.5% on the news.
• 0:26
  Speaker 1: It really did. But before we get into it, quick disclaimer.
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  Speaker 1: This podcast is AI-generated content for educational and entertainment purposes only.
• 0:36
  Speaker 1: Nothing we discuss should be considered investment advice. Always do
• 0:40
  Speaker 1: your own research and consult a qualified financial advisor before
• 0:43
  Speaker 1: making any investment decisions.
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  Speaker 2: Important stuff. Okay, Alex, let's talk numbers because they're staggering.
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  Speaker 1: Revenue grew 39% year over year. That's nearly $ 7 billion
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  Speaker 1: in additional revenue in a single quarter. Non-GAAP EPS came
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  Speaker 1: in at $ 7. 48 and gross margin actually expanded nearly to 84.4%.
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  Speaker 2: And the guidance raise is what really got everyone's attention.
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  Speaker 2: Full-year revenue guidance moved up to $ 91 to $ 92 billion,
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  Speaker 2: and EPS guidance jumped to $ 35 to $ 36. That's roughly
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  Speaker 2: a $ 4 per share increase at the midpoint from where
• 1:24
  Speaker 2: they were tracking before.
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  Speaker 1: Which is wild because this isn't the first raise this year.
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  Speaker 1: CFO Lucas Montarse basically said they've now raised full-year revenue
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  Speaker 1: guidance by about $ 10 billion since the start of 2026.
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  Speaker 2: And when analysts pushed on that, like, are you guys
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  Speaker 2: just being too conservative? CEO David Ricks had a great answer.
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  Speaker 2: He basically said, look, we're in the middle of the
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  Speaker 2: largest category expansion in pharma history. There's real uncertainty here,
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  Speaker 2: and he'd rather beat estimates than miss them. Two big
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  Speaker 2: unknowns this year with a Medicare bridge program uptake and
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  Speaker 2: how deep international out-of-pocket demand would go. And both surprised
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  Speaker 2: at the upside.
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  Speaker 1: Let's talk about that Medicare bridge program because it's honestly
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  Speaker 1: the story of the quarter. This opened up obesity medicine
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  Speaker 1: access to about 20 million seniors starting July 1st. And
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  Speaker 1: in just one quarter, over half a million people already
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  Speaker 1: filled a prescription.
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  Speaker 2: And Lilly is absolutely dominating that channel. Seven out of
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  Speaker 2: 10 new bridge patients are starting on a Lilly medicine.
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  Speaker 2: There was even a USC Schaefer Center study cited saying
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  Speaker 2: this program could save Medicare over $ 20 billion cumulatively over
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  Speaker 2: 10 years. That's a pretty powerful argument for why this
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  Speaker 2: program might get extended or made permanent.
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  Speaker 1: Right. And that was actually a direct question in the
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  Speaker 1: Q & A. Will this bridge program survive past 2026?
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  Speaker 1: Rick sounded genuinely optimistic, citing strong uptake. appropriate use based
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  Speaker 1: on BMI and comorbidities, and that cost-effectiveness data. He thinks
• 3:04
  Speaker 1: it could get folded into the permanent Part D benefit
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  Speaker 1: going forward.
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  Speaker 2: Let's not overlook the core business, though. Manjaro and Zepbound
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  Speaker 2: combined for over $ 16 billion in the quarter alone, contributing
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  Speaker 2: $ 6 billion of year-over-year growth. China was a standout, too.
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  Speaker 2: Manjaro became the first medicine there ever to cross $ 1
• 3:24
  Speaker 2: billion in its first full year. with 62% constant currency growth.
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  Speaker 1: And it's not just in Cretans anymore. Management specifically called
• 3:34
  Speaker 1: out that oncology, immunology, and neuroscience revenue combined actually doubled
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  Speaker 1: year over year. J. Perka up 59%, Eblis up 59%,
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  Speaker 1: and Kusumla, their Alzheimer's drug, up a staggering 175%.
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  Speaker 2: That diversification story matters. David Ricks made a point of
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  Speaker 2: saying three-fourths of their clinical pipeline is actually outside of obesity.
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  Speaker 2: They don't want to be a one-trick pony, even though
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  Speaker 2: the trick is working extremely well right now.
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  Speaker 1: Speaking of the pipeline, there was some really juicy data
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  Speaker 1: this quarter. Ritatrutide, their triple agonist, went head-to-head with semaglutide
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  Speaker 1: in type 2 diabetics and basically more than doubled the
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  Speaker 1: weight loss, 20 to 21% versus 9.4%.
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  Speaker 2: And then there's this combo drug, oloratizapine, combining amylin agonism
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  Speaker 2: with trisepatide. hit 23% weight loss at 48 weeks, plus
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  Speaker 2: some diabetics got their A1c down to near-normal levels. The
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  Speaker 2: high-dose had tolerability issues, but they're already planning a gentler
• 4:38
  Speaker 2: escalation for Phase 3.
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  Speaker 1: Oh, and Foundeo, their oral GLP-1 is scaling fast. Nearly
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  Speaker 1: 4 in 10 new oral obesity patients are choosing it now,
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  Speaker 1: and it's live in 4 countries outside the U.S. with
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  Speaker 1: over 40 more under review. Type 2 diabetes approval in
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  Speaker 1: the U.S. is expected by year-end, too.
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  Speaker 2: On the capital side, they're putting real money behind manufacturing.
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  Speaker 2: Broke ground on a $ 6. 5 billion facility in Houston and
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  Speaker 2: a $ 5 billion one in Richmond, Virginia. That's a serious
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  Speaker 2: long-term supply bet.
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  Speaker 1: They're clearly preparing for sustained demand, not a sugar high.
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  Speaker 1: One thing I want to flag for listeners. Management was
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  Speaker 1: upfront that 2026 revenue got a boost from about $ 2
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  Speaker 1: billion in one-time items, milestone payments, and rebate estimate changes.
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  Speaker 1: That won't repeat in 2027. So don't just extrapolate this
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  Speaker 1: growth rate blindly.
• 5:33
  Speaker 2: Good catch. Pricing is also worth watching. U.S. net price declined,
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  Speaker 2: and management expects pricing to remain a headwind next year too,
• 5:42
  Speaker 2: just offset by continued volume growth. The mixed shift toward
• 5:46
  Speaker 2: Medicare and Medicaid could pressure average net price per prescription
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  Speaker 2: even as the overall pie keeps growing.
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  Speaker 1: So bottom line for investors, Lilly's incretin dominance is still intact.
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  Speaker 1: International demand is clearly deeper than people expected. The Medicare
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  Speaker 1: bridge program is a potential game changer for both the
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  Speaker 1: company and seniors and the pipeline behind obesity. Oncology, neuroscience,
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  Speaker 1: immunology is quietly becoming a second growth engine.
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  Speaker 2: Before we wrap, A reminder, everything discussed is AI-generated analysis
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  Speaker 2: for educational purposes. Past performance doesn't guarantee future results. Please
• 6:25
  Speaker 2: do your own due diligence.
• 6:27
  Speaker 1: Well said. Lilly's got their big investor day coming up
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  Speaker 1: December 7th, which should give us even more color on
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  Speaker 1: the pipeline. We'll be back to break that down when
• 6:35
  Speaker 1: it happens.
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  Speaker 2: Until then, thanks for tuning in to Beta Finch. See
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  Speaker 2: you next time.