Lilly lifts 2026 sales view on obesity drugs

Eli Lilly (LLY) increased its 2026 full-year revenue guidance to a range of $91 billion to $92 billion, with a midpoint of $91.5 billion that exceeds analyst consensus estimates. The company also updated its adjusted earnings per share outlook to $35.00 to $36.00, with a midpoint of $35.50. The guidance change reflects a $4.07 improvement in underlying non-GAAP EPS at the midpoint, more than offset by $4.57 of acquired in-process research and development charges tied to recent business development activity. Performance margin guidance was raised to 52.0% to 52.5%, and the non-GAAP tax rate guidance increased to 19% to 20%.

The higher revenue outlook underscores Lilly’s expanding position in the GLP-1 market, supported by strong demand for its injectable weight-loss and diabetes therapies. Management highlighted broad global consumer demand for Mounjaro and Zepbound, global launches of the obesity pill Foundayo, and expanded U.S. coverage for obesity care as key drivers. The updated guidance also assumes no additional acquired in-process R&D beyond charges incurred through September 30, 2026.

For the third quarter of 2026, Lilly reported revenue of $24.4 billion, ahead of analyst estimates and up strongly year on year. Adjusted earnings per share were $7.48, beating consensus forecasts. Reported EPS rose 16% to $7.22, while non-GAAP EPS increased 7% to $7.48. Third-quarter revenue included about $900 million of benefits, primarily $410 million in milestone payments related to diabetes drug Jardiance and favorable adjustments to rebate and discount estimates.

Mounjaro revenue grew 65% in the quarter to $10.7 billion, and Zepbound revenue increased 48% to $5.4 billion, both fueled by robust demand. Foundayo, Lilly’s newer obesity pill, generated $184 million in the quarter. Lilly’s realized prices fell 15%, offsetting part of a 53% increase in volume, with U.S. prices down 7% and prices outside the U.S. down 29%. The company’s gross margin expanded to 83.9% of revenue, up 1 percentage point year on year.

Lilly’s updated profit guidance reflects significant deal-related expenses in the quarter. The company recorded $4.2 billion of acquired in-process R&D charges in Q3 2026, primarily related to the acquisitions of AtaiBeckley Inc. and Curevo Inc., compared with $656 million a year earlier. These charges contributed $4.57 per share to reported and non-GAAP EPS. The effective tax rate rose to 23.3%, and the non-GAAP effective tax rate increased to 24.0%, mainly due to the unfavorable tax impact of nondeductible acquired IPR&D charges.

Research and development expenses increased 23% to $4.2 billion in the quarter, representing 17% of revenue, as Lilly continued to invest in its early and late-stage portfolio. Marketing, selling and administrative expenses rose 14% to $3.1 billion, driven by promotional spending behind ongoing and planned product launches. Despite these higher costs, the company’s performance margin guidance was raised, and its obesity and diabetes portfolio continued to expand, supported by both reimbursed channels and cash-pay platforms.