Eli Lilly Q2 2026 Earnings: $23.0 Billion Quarter and $85–87 Billion Guide as GLP-1 Royalty Compounds

On August 5, 2026, Eli Lilly reported second-quarter revenue of $23.0 billion, up 48%, raised its full-year revenue guidance to $85–87 billion, and printed $7.94 of reported EPS and $8.38 of non-GAAP EPS — after absorbing $2.8 billion of acquired IPR&D charges in the same quarter. Mounjaro and Zepbound alone were $14.9 billion, 65% of everything Lilly sold. Lilly is no longer a diversified pharma growing mid-single digits; it is a GLP-1 royalty that is spending the royalty on the next pipeline.

The Headline Numbers​

Eli Lilly and Company's fiscal year is the calendar year; Q2 2026 is the three months ended June 30, 2026. Every figure below is from the Form 10-Q and the 8-K earnings release cited in Sources; the ledger period was rebuilt from the same 10-Q.

Revenue grew 48% and net income grew 25%, and the gap between those two numbers is the quarter. Lilly's release attributes the top line to a 60% increase in volume, partially offset by a 13% decrease in realized prices — volume is doing more than all of the work, and price is giving some of it back. Below the gross-margin line, three items ate the operating leverage: acquired IPR&D of $2.8 billion (Orna Therapeutics and Ajax Therapeutics), $703 million of special charges from closing the Kelonia and Centessa acquisitions (mostly accelerated vesting of employee equity awards), and an effective tax rate that jumped from 16.5% to 23.3% because acquired IPR&D is not deductible. Strip those out and non-GAAP net income rose 32%, roughly in step with revenue. Keep them in — as the ledger does — and net margin fell five and a half points.

Revenue Deep Dive​

Product detail comes from the 8-K release's "Selected Revenue Highlights" table, which reconciles to the 10-Q's $22,974 million. The thesis for this quarter is in the concentration, not the total.

Mounjaro nearly doubled to $9.9 billion. The release splits it: U.S. revenue was $4.8 billion, up 45%, "reflecting strong demand, partially offset by lower realized prices"; the rest — more than half — came from outside the U.S., where Lilly's volume rose 113% after Mounjaro was added to China's National Reimbursement Drug List. That listing is also why realized prices outside the U.S. fell 36%: the NRDL buys volume with price. Zepbound grew 46% to $4.9 billion in the U.S., with "previously announced reductions in cash-pay prices" named as the offset. Together the two tirzepatide brands were $14.9 billion, 64.7% of revenue, up from 55.1% a year ago. The six other Key Products (Ebglyss, Jaypirca, Kisunla, Omvoh, the newly launched oral GLP-1 Foundayo, and Inluriyo) added $835 million; Lilly's Key Products basket as a whole reached $15.7 billion.

The remaining $7.3 billion — Verzenio, Jardiance, Trulicity, Humalog, Taltz and the rest of the legacy book — grew 9%, and that figure includes a one-time $250 million sales-based milestone on Jardiance from the Boehringer Ingelheim collaboration. Geographically, U.S. revenue rose 33% to $14.4 billion (volume +37%, price −3%) and international revenue rose 80% to $8.6 billion (volume +113%, price −36%). The mix shift is toward the two products with the steepest realized-price declines, which is the tension the rest of this post is about.

The Margin Story​

FY2023 and FY2024 are the comparative columns of the FY2025 Form 10-K; Q2 2026 is a single quarter. Gross margin has expanded every period — 79.2% to 85.8% — and the release attributes the latest step to "improved cost of production and favorable product mix, partially offset by lower realized prices." R&D has fallen from 27% of revenue to 17% not because Lilly spends less (R&D rose 14% to $3.8 billion) but because the denominator grew 48%. That is operating leverage in its purest form: FY2025 net margin was 31.7%, double FY2023's.

The quarter's net margin of 30.9% sits below the FY2025 run-rate for one mechanical reason: acquired IPR&D. In FY2025, $2.9 billion of IPR&D was spread across $65 billion of revenue (4.5%); in Q2 2026, $2.8 billion landed in a single $23 billion quarter (12.1%). Without it the quarter's pretax margin would have been about 52%, which is where Lilly's raised "performance margin" guidance of 49.0–50.5% says the underlying business now runs.

The One Big Question: How Much of the Royalty Is Being Reinvested?​

The defining question this quarter is not whether GLP-1 demand is real — 60% volume growth answers that — but what Lilly does with the cash. The answer in Q2 was: buy pipeline. Four acquisitions closed in the quarter (Orna, Ajax, Centessa, Kelonia), three more followed after quarter-end to build an infectious-disease portfolio, and Lilly committed a further $4.5 billion to Indiana manufacturing. The accounting consequence is that $2.8 billion of purchase price was expensed immediately as acquired IPR&D, taking $3.03 off EPS, and that Lilly's guidance for non-GAAP EPS was lowered at the top end ($35.50–36.50 from $35.50–37.00) even as the revenue guide was raised, because the IPR&D is included in the number.

Note what the bridge does not remove: the $2,776 million of acquired IPR&D stays in both the reported and the non-GAAP number. Lilly's convention is to include it and footnote it, which is why the $8.38 non-GAAP EPS already carries a $3.03 IPR&D charge. The ledger goes one step further and gives it its own line — Expenses:AcquiredIPRD — so the reinvestment is visible as a posting rather than a footnote.

The repeatability test is therefore two-sided. On the revenue side, the realized-price line is the thing to watch: worldwide −13%, U.S. −3%, international −36%. Lilly is choosing volume over price (China NRDL, cash-pay cuts), and the release's own guidance note says the first half "benefited from sales based milestones and adjustments for rebates and discounts" — items that do not recur at the same rate. On the spending side, guidance explicitly "does not include acquired IPR&D incurred after June 30, 2026," so every further deal lands as a surprise in reported EPS.

Tracking a $23.0B quarter in plain text​

Double-entry forces every dollar to reconcile, which is why the Beancount ledger is the audit. The income-statement transaction below is the quarter as filed in the Form 10-Q — negative income, positive expenses, and the check that proves they sum to zero.

; Revenue: 22974 | CoS: 3268 | R&D: 3819 | MS&A: 3430 | Acquired IPR&D: 2776 | Special charges: 703 | Other-net income: -269 | Tax: 2152 | Net Income: 7095
; Check: -22974 + 3268 + 3819 + 3430 + 2776 + 703 - 269 + 2152 + 7095 = 0 ✓
 
2026-06-30 * "Eli Lilly and Company" "FY2026Q2 Income Statement"
  Income:Revenue                         -22974 MUSD
  Expenses:CostOfRevenue                    3268 MUSD  ; cost of sales
  Expenses:ResearchAndDevelopment           3819 MUSD
  Expenses:SellingGeneralAdministrative     3430 MUSD  ; marketing, selling, and administrative
  Expenses:AcquiredIPRD                     2776 MUSD  ; acquired in-process research and development
  Expenses:OtherNet                          703 MUSD  ; asset impairment, restructuring, and other special charges
  Expenses:OtherNet                         -269 MUSD  ; other—net, (income) expense: a net income of 269 this quarter
  Expenses:IncomeTax                        2152 MUSD
  Equity:Adjustments                        7095 MUSD  ; net income offset

That block is not an illustration; it is the period that was validated with bea check and pushed to open_ledger/eli-lilly, with every line traceable to the 10-Q's Consolidated Condensed Statement of Operations. Two things are deliberate. Acquired IPR&D gets its own account instead of being folded into R&D, because Lilly reports it as its own line and it is the quarter's swing item. And "other–net" is posted as a negative expense of $269 million rather than netted against the $703 million of special charges, so both the 10-Q's lines survive in the ledger.

The balance sheet tells the same story from the other side. Between December 31, 2025 and June 30, 2026, goodwill rose from $5,898 million to $8,849 million and other intangibles from $6,521 million to $18,110 million — $14.5 billion of acquired assets in six months — while total debt (short-term borrowings plus long-term debt) went from $42,503 million to $54,908 million. Cash ended at $8,950 million. The one line that captures the GLP-1 model best is sales rebates and discounts, a current liability of $21,122 million, up from $17,382 million at year-end: that is the gap between list price and realized price, sitting on the balance sheet as an obligation.

The Multi-Year Arc​

The FY2025 10-K is the source for the three annual rows. Revenue has nearly doubled in two years ($34.1 billion to $65.2 billion) while net income quadrupled ($5.2 billion to $20.6 billion), and EPS went from $5.80 to $22.95. Full-year 2026 guidance of $85–87 billion implies about 32% growth over FY2025 at the midpoint — a deceleration from FY2025's 45%, but on a base that is now twice as large. The arc is what a royalty looks like when the royalty is growing: each incremental dollar of tirzepatide revenue carries an 86% gross margin into a cost base that is growing at a third of the rate.

The Verdict: Bull vs. Bear​

Bull Case

• Volume growth of 60% worldwide and 113% outside the U.S. shows demand is still supply- and access-limited, not saturated; the China NRDL listing is the first of several reimbursement unlocks.
• Gross margin expanded again to 85.8%, and the raised performance-margin guide (49.0–50.5%) says the underlying business is absorbing price cuts with room to spare.
• Foundayo (orforglipron) launched with $98 million in its first partial quarter, and the retatrutide Phase 3 package is complete, so the franchise has a second and third act before tirzepatide faces competition.
• The $2.8 billion of Q2 IPR&D is one-time by nature; if H2 brings no comparable deal, reported EPS re-converges with the $35.50–36.50 non-GAAP guide.

Bear Case

• Realized price fell 13% worldwide and 36% internationally in a single quarter; if the cash-pay and NRDL price curve keeps steepening, volume has to grow faster every quarter just to hold revenue growth.
• Net margin fell 5.5 points year over year and the effective tax rate rose to 23.3% — the acquisition program is already visible in the reported numbers, and guidance excludes any deal after June 30.
• Two products are 65% of revenue, up ten points in a year; the "all other" book grew 9% and that included a $250 million one-time Jardiance milestone.
• Total debt rose $12.4 billion in six months to fund acquisitions and the $4.5 billion Indiana expansion, while cash is $9.0 billion against $21.1 billion of rebate liabilities.

Our Take: The Q2 report settles the demand question — 60% volume growth on a $23 billion base is not a channel fill — and reopens the capital-allocation one. Lilly is spending the GLP-1 royalty on pipeline at a pace that cost $3.03 of EPS this quarter, and the ledger now books that spend as its own line so next quarter's filing can be read the same way: if Expenses:AcquiredIPRD goes back toward zero and realized price stabilizes, the 31.7% FY2025 net margin is the floor, not the peak. If both keep moving the way they did in Q2, the growth is real but the owner is paying for it twice.

Correction (2026-10-05): an earlier version of this analysis stated Q2 2026 revenue of $12.2 billion and net income of $2.9 billion, taken from a secondary summary rather than the filing; those figures were wrong. Every figure above has been re-read from the Form 10-Q and the 8-K release, and the open_ledger/eli-lilly FY2025 and FY2026Q2 periods were rebuilt from the Form 10-K and Form 10-Q in the same change.