TenQ

The Eli Lilly story

Eli Lilly makes medicines for diabetes, obesity and cancer, with growth increasingly dependent on whether Mounjaro and Zepbound volumes can outrun falling prices and the cost of expanding production.

Written from Eli Lilly's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $1184.78share price, last close
  • $1.12Tmarket value
  • 22/36TenQ Score checks passed
  • 23.8%growth a year the price assumes

The story in brief

  • Volume offsets lower prices. In the quarter to June 2026, revenue rose 48% to $23.0 billion as volume increased 60%, partly offset by a 13% decline in realized prices.
  • Expansion carries costs. Lilly committed an additional $4.5 billion to Indiana manufacturing, while acquired research charges reduced earnings by $3.03 per share in the quarter to June 2026.
  • Cash expectations exceed history. The reverse DCF implies 23.8% annual growth in free cash flow after stock pay for ten years, compared with a historical annual pace of 2.1%.

What drives the business

  • Lilly operates a single human pharmaceuticals business across approximately 90 countries, with Mounjaro for diabetes and Zepbound for obesity representing brands of the same molecule and driving most of its growth.
  • In the quarter to June 2026, worldwide Mounjaro revenue increased 91% to $9.9 billion, while Zepbound revenue in the United States increased 44% to $4.9 billion.
  • McKesson, Cencora and Cardinal Health each accounted for a significant share of revenue in 2025, 2024 and 2023, while LillyDirect represented a growing portion of the business in 2025.
  • The broader portfolio includes cancer, immunology and neuroscience medicines, with revenue from designated key products in those therapeutic areas growing 121% in the quarter to June 2026.
  • Lilly supplements internal drug development with acquisitions, completing Orna Therapeutics, Ajax Therapeutics, Centessa Pharmaceuticals and Kelonia Therapeutics in the quarter to June 2026 while expanding manufacturing capacity.

What the price assumes

At $1184.78 per share, the reverse DCF implies that free cash flow after stock pay grows 23.8% a year for ten years, using a 10.2% discount rate.

Lilly delivered 2.1% annual growth on that measure over the last 10 years, while the TenQ check sets a 3.1% bar by moving the historical rate halfway toward 4%.

Revenue grew 49.6% over the last twelve months, but that is a different measure from cash growth after stock pay, and the 1.6% free cash flow yield contributes to Lilly passing 0 of 6 Value checks.

Value LLY on your own assumptions

What could change the story

  • Dependence on Mounjaro and Zepbound ties growth to a narrow product base, leaving pricing, patient access, competition and manufacturing disruptions especially important.
  • In the quarter to June 2026, realized prices outside the United States fell 36%, primarily because Mounjaro joined China's National Reimbursement Drug List.
  • Rebate and discount estimate adjustments softened the reported price decline in the United States, where prices would otherwise have fallen approximately 9% in the quarter to June 2026.
  • Total debt of $54.9 billion against $9.1 billion of cash and short-term investments accompanies failed TenQ checks for near-term liquidity and debt relative to equity, although free cash flow over the last twelve months was $18.2 billion.
  • Acquisitions introduce development and integration uncertainty, and Lilly's 2026 earnings guidance excludes acquired research charges incurred after June 2026.

What to watch next

  • Lilly's raised 2026 guidance calls for revenue of $85.0 billion to $87.0 billion, a performance margin of 49.0% to 50.5% and non-GAAP earnings per share of $35.50 to $36.50.
  • Subsequent releases will show whether Mounjaro and Zepbound volume growth continues to offset lower realized prices, particularly without the benefit of rebate and discount estimate adjustments.
  • Free cash flow and manufacturing spending will show how much of the revenue expansion remains after funding production capacity.
  • Pipeline milestones include the United States diabetes submission for orforglipron and Lilly's planned retatrutide application in the first quarter of 2027, following completion of its clinical package for obesity, obstructive sleep apnea and knee osteoarthritis pain.

Sources

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