Eli Lilly Q2 2025 slides: Revenue up 38%, raises guidance despite stock drop

Introduction & Market Context

Eli Lilly and Company (NYSE:LLY) reported strong second-quarter 2025 financial results on August 7, with revenue growing 38% year-over-year to $15.6 billion. Despite the impressive performance and raised guidance, the company’s stock dropped significantly in premarket trading, falling 14.38% to $639.01, suggesting investors may have had even higher expectations or concerns about specific aspects of the results.

This quarterly performance follows a challenging first quarter where Eli Lilly missed earnings expectations, reporting $3.34 EPS against a forecast of $3.46. The Q2 results show significant improvement in key metrics, but the market reaction indicates continued investor uncertainty.

Quarterly Performance Highlights

Eli Lilly delivered robust financial performance in Q2 2025, with total revenue reaching $15.6 billion, a 38% increase compared to Q2 2024. This growth was primarily driven by the company’s key products, which generated $10.4 billion in revenue, an impressive 80% year-over-year increase.

As shown in the following comprehensive breakdown of strategic deliverables, Eli Lilly achieved strong results across all key performance indicators:

Non-GAAP earnings per share reached $6.31, representing a 61% increase compared to the same period last year. The company’s gross margin improved to 85.0% on a non-GAAP basis, a 3.0 percentage point increase year-over-year. Operating income grew by 63% to nearly $7 billion, while the company continued to invest in future growth with R&D spending up 23% to $3.3 billion.

The detailed income statement reveals the strength of Eli Lilly’s financial performance across all key metrics:

The company maintained a balanced capital allocation strategy in the first half of 2025, investing $10.3 billion in growth initiatives (including R&D, capital investments, and business development) while returning $4.6 billion to shareholders through dividends ($2.7 billion) and share repurchases ($1.9 billion).

Incretin Market Leadership

Eli Lilly continues to strengthen its position in the rapidly growing incretin analogs market, which expanded by 41% in Q2 compared to the prior year. The company’s market share increased to 57.0%, a gain of 3.8 percentage points versus the previous quarter, while competitor Novo Nordisk (NYSE:NVO) holds 42.5% of the market.

The following chart illustrates Eli Lilly’s growing dominance in the U.S. incretin analogs market:

Mounjaro (tirzepatide for type 2 diabetes) and Zepbound (tirzepatide for obesity) continue to be the primary growth drivers. Mounjaro achieved a 42% U.S. type 2 diabetes incretin analogs total prescription share of market (TRx SOM) and 50% new-to-brand prescription share of market (NBRx SOM) by the end of Q2. Meanwhile, Zepbound captured 66% of the U.S. branded anti-obesity TRx SOM and 68% of NBRx SOM.

However, Eli Lilly noted that Zepbound’s NBRx SOM was impacted by a loss of access on CVS template plans effective July 1, 2025, though the drug has confirmed open access at two of three major pharmacy benefit managers (PBMs).

Clinical Pipeline Progress

Eli Lilly reported significant advances in its clinical pipeline, highlighted by positive results from two key trials. The ATTAIN-1 study for orforglipron, an oral GLP-1 receptor agonist for obesity, demonstrated substantial weight loss efficacy:

Orforglipron delivered weight loss of more than 27 pounds (12.4%) at the highest dose in the ATTAIN-1 trial, with approximately 60% of participants achieving body weight reductions of at least 10%. Based on these results, Eli Lilly plans to submit orforglipron to regulatory agencies by year-end.

Additionally, the SURPASS-CVOT trial showed that tirzepatide (Mounjaro) demonstrated cardiovascular protection, with an 8% lower rate of major adverse cardiovascular events (MACE-3) compared to dulaglutide and a 16% lower rate of all-cause death. The drug also showed a 28% reduction in MACE-3 events versus placebo.

The company’s pipeline continues to advance across multiple therapeutic areas, with numerous potential key events expected throughout 2025:

Updated Guidance

Based on the strong performance in the first half of the year, Eli Lilly raised its full-year 2025 financial guidance:

The company increased its revenue guidance by $1.5 billion to a range of $60.0-$62.0 billion, up from the previous guidance of $58.0-$61.0 billion. This adjustment reflects the strength of the underlying business and updated foreign exchange rate expectations.

Non-GAAP earnings per share guidance was raised to $21.75-$23.00, up from $20.78-$22.28 previously. The company also increased its performance margin guidance to 43.0%-44.5% on a non-GAAP basis, up from 41.5%-43.5%.

Market Reaction & Analysis

Despite the strong results and raised guidance, Eli Lilly’s stock dropped 14.38% in premarket trading to $639.01, moving closer to its 52-week low of $677.09 and significantly below its recent high of $972.53. This negative reaction follows a similar pattern to the company’s Q1 results, when the stock fell 8.56% after missing EPS expectations.

The disconnect between the company’s reported performance and the market reaction suggests investors may have had even higher expectations, particularly for the performance of Mounjaro and Zepbound. The loss of CVS template plan access for Zepbound effective July 1 could be raising concerns about future revenue growth, despite the company’s increased guidance.

Additionally, while the clinical results for orforglipron were positive, investors may have been hoping for even more impressive efficacy data to compete with injectable GLP-1 products. The safety profile, which showed discontinuation rates due to adverse events ranging from 5.1% to 10.3% across different doses, might also be contributing to investor caution.

The market reaction highlights the high expectations investors have for Eli Lilly given its significant stock price appreciation over the past year, driven largely by excitement around its incretin franchise and weight loss treatments. Despite the strong Q2 performance, the company will need to continue executing flawlessly to meet these elevated expectations.

Full presentation:

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