5 Revealing Analyst Questions From Eli Lilly's Q1 Earnings Call

Yahoo

2 days ago

Eli Lilly's first quarter saw rapid revenue growth, but the market responded negatively due to profit shortfalls and emerging competitive pressures. Management credited the surge in sales to the continued success of its diabetes and obesity medicines, particularly Mounjaro and Zepbound, which now account for a significant portion of total revenue. However, executives also acknowledged that higher marketing and R&D spending, as well as elevated costs tied to launching new products and acquiring late-stage assets, weighed on profitability. CEO Dave Ricks noted that the company is facing 'a lot of investor focus right now on tariffs and trade,' while CFO Lucas Montarce cited a '26% increase in marketing, selling and administrative expenses' as Lilly ramped up promotion for new launches.
Is now the time to buy LLY? Find out in our full research report (it's free).
Revenue: $12.73 billion vs analyst estimates of $12.62 billion (45.2% year-on-year growth, 0.9% beat)
Adjusted EPS: $3.34 vs analyst expectations of $3.46 (3.4% miss)
Adjusted EBITDA: $4.24 billion vs analyst estimates of $5.05 billion (33.3% margin, 16% miss)
The company reconfirmed its revenue guidance for the full year of $59.5 billion at the midpoint
Management lowered its full-year Adjusted EPS guidance to $21.53 at the midpoint, a 7.4% decrease
Operating Margin: 29%, in line with the same quarter last year
Market Capitalization: $711.3 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Asad Haider (Goldman Sachs) asked about the impact of the CVS formulary loss on Zepbound's market share and future PBM dynamics. CEO Dave Ricks replied that the affected segment is relatively small and emphasized a continued focus on broadening access rather than engaging in exclusive deals.
Geoff Meacham (Citibank) questioned whether orforglipron could be developed for more indications beyond diabetes and obesity. Chief Scientific Officer Dr. Dan Skovronsky said oral convenience opens opportunities in broader indications, including primary care and combination therapies.
Chris Schott (JPMorgan) sought clarity on the role of orforglipron in the obesity and diabetes markets relative to injectables. President of Cardiometabolic Health Patrik Jonsson noted that many patients prefer oral medications and that orforglipron could reach new populations with needle aversion.
Tim Anderson (Bank of America) probed the likelihood and implications of more PBMs shifting to single-product formularies. Jonsson indicated such arrangements remain rare and that the company will continue to prioritize access over exclusivity.
James Shin (Deutsche Bank) asked if the pricing headwind guidance remains intact after recent payer decisions. CFO Lucas Montarce confirmed that mid to high single-digit price headwinds are expected to persist and have been factored into the full-year outlook.
In the coming quarters, the StockStory team will monitor (1) results from additional Phase 3 trials of orforglipron and their potential to reshape the diabetes and obesity markets; (2) trends in PBM and payer coverage, particularly any changes in employer opt-in rates or further formulary restrictions; and (3) the pace of manufacturing expansions and supply chain execution to meet rising demand. Progress on new product launches and updates on regulatory submissions will also serve as key markers of business momentum.
Eli Lilly currently trades at $793, down from $896.02 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it's free).
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