filings.toolsItem 1. Financial Statements
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Item 1. Financial Statements
Consolidated Condensed Statements of Operations
(Unaudited)
ELI LILLY AND COMPANY
(Dollars and shares in millions, except per-share data)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Revenue | $ | 19,799 | $ | 12,729 | |||||||
| Costs, expenses, and other: | |||||||||||
| Cost of sales | 3,577 | 2,225 | |||||||||
| Research and development | 3,510 | 2,734 | |||||||||
| Marketing, selling, and administrative | 2,934 | 2,468 | |||||||||
| Acquired in-process research and development | 584 | 1,572 | |||||||||
| Asset impairment, restructuring, and other special charges | 279 | 35 | |||||||||
| Other–net, (income) expense | 65 | 239 | |||||||||
| 10,949 | 9,273 | ||||||||||
| Income before income taxes | 8,850 | 3,456 | |||||||||
| Income taxes | 1,454 | 697 | |||||||||
| Net income | $ | 7,396 | $ | 2,759 | |||||||
| Earnings per share: | |||||||||||
| Basic | $ | 8.27 | $ | 3.07 | |||||||
| Diluted | $ | 8.26 | $ | 3.06 | |||||||
| Shares used in calculation of earnings per share: | |||||||||||
| Basic | 894.5 | 898.7 | |||||||||
| Diluted | 895.9 | 900.6 |
See notes to consolidated condensed financial statements.
Consolidated Condensed Statements of Comprehensive Income
(Unaudited)
ELI LILLY AND COMPANY
(Dollars in millions)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net income | $ | 7,396 | $ | 2,759 | |||||||
| Other comprehensive income, net of tax | 47 | 547 | |||||||||
| Comprehensive income | $ | 7,443 | $ | 3,306 |
See notes to consolidated condensed financial statements.
Consolidated Condensed Balance Sheets
ELI LILLY AND COMPANY
(Dollars in millions)
| March 31, 2026 | December 31, 2025 | ||||||||||
| Assets | (Unaudited) | ||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 5,282 | $ | 7,268 | |||||||
| Accounts receivable | 18,429 | 17,760 | |||||||||
| Other receivables | 2,748 | 2,395 | |||||||||
| Inventories | 14,529 | 13,744 | |||||||||
| Prepaid expenses | 13,633 | 14,315 | |||||||||
| Other current assets | 214 | 147 | |||||||||
| Total current assets | 54,835 | 55,629 | |||||||||
| Noncurrent Assets | |||||||||||
| Investments | 3,116 | 2,802 | |||||||||
| Goodwill | 6,130 | 5,898 | |||||||||
| Other intangibles, net | 7,374 | 6,521 | |||||||||
| Deferred tax assets | 11,350 | 9,959 | |||||||||
| Property and equipment, net | 26,540 | 24,675 | |||||||||
| Other noncurrent assets | 7,231 | 6,992 | |||||||||
| Total assets | $ | 116,576 | $ | 112,476 | |||||||
| Liabilities and Equity | |||||||||||
| Current Liabilities | |||||||||||
| Short-term borrowings and current maturities of long-term debt | $ | 4,000 | $ | 1,635 | |||||||
| Accounts payable | 5,029 | 5,379 | |||||||||
| Employee compensation | 1,359 | 2,375 | |||||||||
| Sales rebates and discounts | 17,547 | 17,382 | |||||||||
| Other current liabilities | 8,699 | 8,457 | |||||||||
| Total current liabilities | 36,634 | 35,228 | |||||||||
| Noncurrent Liabilities | |||||||||||
| Long-term debt | 39,370 | 40,868 | |||||||||
| Long-term income taxes payable | 5,289 | 5,875 | |||||||||
| Other noncurrent liabilities | 4,085 | 3,970 | |||||||||
| Total noncurrent liabilities | 48,744 | 50,713 | |||||||||
| Commitments and Contingencies | |||||||||||
| Equity | |||||||||||
| Common stock | 590 | 590 | |||||||||
| Additional paid-in capital | 6,921 | 7,346 | |||||||||
| Retained earnings | 29,514 | 24,470 | |||||||||
| Employee benefit trust | (3,013) | (3,013) | |||||||||
| Accumulated other comprehensive loss | (2,833) | (2,880) | |||||||||
| Other equity | 19 | 22 | |||||||||
| Total equity | 31,198 | 26,535 | |||||||||
| Total liabilities and equity | $ | 116,576 | $ | 112,476 |
See notes to consolidated condensed financial statements.
Consolidated Condensed Statements of Cash Flows
(Unaudited)
ELI LILLY AND COMPANY
(Dollars in millions)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash Flows from Operating Activities | |||||||||||
| Net income | $ | 7,396 | $ | 2,759 | |||||||
| Adjustments to Reconcile Net Income to Cash Flows from Operating Activities: | |||||||||||
| Depreciation and amortization | 509 | 463 | |||||||||
| Change in deferred income taxes | (1,478) | (392) | |||||||||
| Stock-based compensation expense | 161 | 154 | |||||||||
| Acquired in-process research and development | 584 | 1,572 | |||||||||
| Other changes in operating assets and liabilities, net of acquisitions and divestitures | (1,664) | (3,364) | |||||||||
| Other operating activities, net | (175) | 474 | |||||||||
| Net Cash Provided by Operating Activities | 5,333 | 1,666 | |||||||||
| Cash Flows from Investing Activities | |||||||||||
| Purchases of property and equipment | (2,326) | (1,510) | |||||||||
| Purchases of noncurrent investments | (297) | (197) | |||||||||
| Purchases of in-process research and development | (204) | (1,757) | |||||||||
| Cash paid for acquisitions, net of cash acquired | (1,058) | — | |||||||||
| Other investing activities, net | (31) | 111 | |||||||||
| Net Cash Used for Investing Activities | (3,916) | (3,353) | |||||||||
| Cash Flows from Financing Activities | |||||||||||
| Dividends paid | (1,548) | (1,346) | |||||||||
| Net change in short-term borrowings | 1,775 | (1,849) | |||||||||
| Proceeds from issuance of long-term debt | — | 6,461 | |||||||||
| Repayments of long-term debt | (750) | — | |||||||||
| Purchases of common stock | (2,356) | (1,200) | |||||||||
| Other financing activities, net | (591) | (686) | |||||||||
| Net Cash (Used for) Provided by Financing Activities | (3,470) | 1,380 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 67 | 132 | |||||||||
| Net decrease in cash and cash equivalents | (1,986) | (175) | |||||||||
| Cash and cash equivalents at January 1 | 7,268 | 3,268 | |||||||||
| Cash and Cash Equivalents at March 31 | $ | 5,282 | $ | 3,093 |
See notes to consolidated condensed financial statements.
Notes to Consolidated Condensed Financial Statements
(Tables present dollars and shares in millions, except per-share data, and numbers may not add due to rounding)
Note 1: Basis of Presentation and Implementation of New Financial Accounting Standards
We have prepared the accompanying unaudited consolidated condensed financial statements in accordance with the requirements of Form 10-Q and, therefore, they do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States (GAAP). In our opinion, the consolidated condensed financial statements reflect all adjustments (including those that are normal and recurring) that are necessary for a fair presentation of the results of operations for the periods shown. In preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ from those estimates.
The information included in this Quarterly Report on Form 10-Q should be read in conjunction with our consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2025. We issued our financial statements by filing them with the Securities and Exchange Commission and have evaluated subsequent events up to the time of the filing of this Quarterly Report on Form 10-Q.
All per-share amounts, unless otherwise noted in the footnotes, are presented on a diluted basis; that is, based on the weighted-average number of common shares outstanding plus the effect of incremental shares from our stock-based compensation programs, if dilutive.
We operate as a single operating segment engaged in the discovery, development, manufacturing, marketing, and sales of pharmaceutical products worldwide. A global research and development organization and a supply chain organization are responsible for the discovery, development, manufacturing, and supply of our products. Our commercial organizations market, distribute, and sell the products. The business is also supported by global corporate staff functions. See Note 10 for additional information.
Implementation of New Financial Accounting Standards
Accounting Standards Update 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requires disaggregation of specific expense categories in the notes to the financial statements and a qualitative description of the remaining expense amounts not separately disaggregated. This standard is effective for annual reporting periods beginning after December 15, 2026, and requires prospective application with the option to apply it retrospectively. We intend to adopt this standard in our Annual Report on Form 10-K for the year ending December 31, 2027. We are currently evaluating the potential impact of adopting this standard on our disclosures.
Note 2: Revenue
The following table summarizes our revenue recognized in our consolidated condensed statements of operations:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net product revenue | $ | 18,453 | $ | 11,601 | |||||||
| Collaboration and other revenue | 1,346 | 1,127 | |||||||||
| Revenue | $ | 19,799 | $ | 12,729 |
We recognize revenue primarily from two different types of contracts, product sales to customers (net product revenue) and collaborations and other arrangements. Revenue recognized from collaborations and other arrangements includes our share of profits from the collaborations, as well as royalties, upfront, and milestone payments we receive under these types of contracts. See Note 3 for additional information related to our collaborations and other arrangements. Collaboration and other revenue disclosed above includes the revenue resulting from our collaboration with Boehringer Ingelheim, as well as the sale of product rights. Substantially all of the remainder of collaboration and other revenue is related to contracts accounted for as contracts with customers.
Adjustments to Revenue
Adjustments to revenue recognized as a result of changes in estimates for our most significant United States (U.S.) sales returns, rebates, and discounts liability balances for products shipped in previous periods were less than 3 percent and 1 percent of U.S. revenue during the three months ended March 31, 2026 and 2025, respectively.
Disaggregation of Revenue
The following table summarizes revenue, including net product revenue and collaboration and other revenue, by product for the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| U.S. | Outside U.S. | Total | U.S. | Outside U.S. | Total | ||||||||||||||||||
| Cardiometabolic Health: | |||||||||||||||||||||||
| Mounjaro | $ | 4,232 | $ | 4,430 | $ | 8,662 | $ | 2,656 | $ | 1,186 | $ | 3,842 | |||||||||||
| Zepbound*(1)* | 4,134 | 26 | 4,160 | 2,305 | 7 | 2,312 | |||||||||||||||||
| Jardiance(2) | 512 | 602 | 1,114 | 310 | 705 | 1,014 | |||||||||||||||||
| Trulicity | 600 | 318 | 919 | 771 | 325 | 1,095 | |||||||||||||||||
| Other cardiometabolic health | 446 | 460 | 905 | 535 | 410 | 945 | |||||||||||||||||
| Total cardiometabolic health | 9,924 | 5,836 | 15,760 | 6,577 | 2,631 | 9,208 | |||||||||||||||||
| Oncology: | |||||||||||||||||||||||
| Verzenio | 706 | 596 | 1,302 | 658 | 501 | 1,159 | |||||||||||||||||
| Other oncology | 522 | 444 | 966 | 388 | 400 | 789 | |||||||||||||||||
| Total oncology | 1,228 | 1,040 | 2,268 | 1,046 | 902 | 1,948 | |||||||||||||||||
| Immunology: | |||||||||||||||||||||||
| Taltz | 417 | 315 | 733 | 477 | 285 | 762 | |||||||||||||||||
| Other immunology | 202 | 269 | 470 | 102 | 225 | 326 | |||||||||||||||||
| Total immunology | 619 | 584 | 1,203 | 578 | 510 | 1,088 | |||||||||||||||||
| Neuroscience | 293 | 89 | 382 | 189 | 83 | 272 | |||||||||||||||||
| Other | 56 | 130 | 187 | 100 | 113 | 213 | |||||||||||||||||
| Revenue | $ | 12,119 | $ | 7,680 | $ | 19,799 | $ | 8,489 | $ | 4,239 | $ | 12,729 | |||||||||||
(1) Tirzepatide is marketed for obesity under the brand name Zepbound in Canada, Japan, and the U.S.
(2) Jardiance revenue includes Glyxambi, Synjardy, and Trijardy XR.
The following table summarizes revenue by geographical area:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Revenue(1): | |||||||||||
| U.S. | $ | 12,119 | $ | 8,489 | |||||||
| Europe | 3,646 | 2,389 | |||||||||
| China | 693 | 451 | |||||||||
| Japan | 571 | 402 | |||||||||
| Rest of world | 2,771 | 997 | |||||||||
| Revenue | $ | 19,799 | $ | 12,729 |
(1) Revenue is attributed to the countries based on the location of the customer or other party.
Note 3: Collaborations and Other Arrangements
We often enter into collaborative and other arrangements to develop and commercialize drug candidates or to sell the rights of a product. See Note 2 for a discussion of our recognition of revenue from our collaborations and other arrangements.
Collaborative activities may include research and development, marketing and selling, manufacturing, and distribution for which we may receive from or pay to the collaboration partner expense reimbursements. Operating expenses for costs incurred pursuant to these arrangements are reported in their respective expense line item, net of any payments due to or reimbursements due from our collaboration partners, with such reimbursements being recognized at the time the party becomes obligated to pay. Each arrangement is unique in nature, and our more significant arrangements are discussed below.
Boehringer Ingelheim Collaboration
We and Boehringer Ingelheim have a global agreement to jointly develop and commercialize a portfolio of compounds. Boehringer Ingelheim's Jardiance product family, which includes Glyxambi, Synjardy, and Trijardy XR, is the significant product family included in the collaboration.
For the Jardiance product family in the most significant markets, which remains in the collaboration through December 31, 2028, we receive a share of net sales depending on performance of the product, which we recognize as collaboration and other revenue. The following table summarizes our revenue recognized:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Jardiance | $ | 1,114 | $ | 1,014 | |||||||
During the three months ended March 31, 2026 and 2025, we recognized $250 million and $370 million of one-time benefits for Jardiance, respectively. As of March 31, 2026, we have the right to receive up to $660 million in potential sales-based milestones related to the Jardiance product family in certain markets in 2026.
Ebglyss
We have a license agreement with F. Hoffmann-La Roche Ltd and Genentech, Inc. (collectively, Roche), which provides us the worldwide development and commercialization rights to lebrikizumab, which is branded and trademarked as Ebglyss. Roche receives tiered royalty payments on worldwide net sales ranging in percentages from high single digits to high teens, which we recognize as cost of sales. As of March 31, 2026, Roche is eligible to receive additional payments from us, including up to $975 million in potential sales-based milestones.
We have a license agreement with Almirall, S.A. (Almirall), under which Almirall licensed the rights to develop and commercialize Ebglyss, for the treatment or prevention of dermatology indications, including, but not limited to, atopic dermatitis, in Europe. We receive tiered royalty payments on net sales in Europe ranging in percentages from low double digits to low twenties, which we recognize as collaboration and other revenue. As of March 31, 2026, we are eligible to receive additional payments up to $1.2 billion in a series of sales-based milestones.
Foundayo
We have a license agreement with Chugai Pharmaceutical Co., Ltd (Chugai), which provides us the worldwide development and commercialization rights to orforglipron, which is branded and trademarked as Foundayo. In addition to milestone payment rights which are not material, Chugai receives tiered royalty payments on worldwide net sales ranging in percentages from mid single digits to low teens, which we recognize as cost of sales.
Note 4: Acquisitions
We engage in various forms of business development activities to enhance or refine our product pipeline, including acquisitions, collaborations, investments, and licensing arrangements. In connection with these arrangements, our partners may be entitled to future royalties and/or commercial milestones based on sales if the products are approved for commercialization and/or milestones based on the successful progress of compounds through the development process. We account for each arrangement as either a business combination or an asset acquisition in accordance with GAAP.
Business Combinations
When an acquisition met the definition of a business under GAAP, the assets acquired and liabilities assumed were recorded at their respective fair values as of the acquisition date in our consolidated condensed financial statements. The determination of estimated fair value required management to make significant estimates and assumptions. The excess of the purchase price over the fair value of the acquired net assets was recorded as goodwill. The results of operations of the acquisition are included in our consolidated condensed financial statements from the date of acquisition.
Ventyx Acquisition
Overview of Transaction
In March 2026, we acquired all shares of Ventyx Biosciences, Inc. (Ventyx) for a purchase price of $14.00 per share in cash (or an aggregate of $1.1 billion, net of cash acquired). Ventyx is developing oral therapies for patients with inflammatory-mediated diseases.
Assets Acquired and Liabilities Assumed
Our access to information was limited prior to this acquisition. As a consequence, we are in the process of determining fair values and tax bases of the assets acquired and liabilities assumed, including the identification and valuation of intangible assets and tax exposures. The final determination of these amounts will be completed as soon as possible but no later than one year from the acquisition date. The final determination may result in asset and liability fair values and tax bases that differ from the preliminary estimates and require changes to the preliminary amounts recognized.
The following table summarizes the preliminary amounts recognized for assets acquired and liabilities assumed as of the acquisition date:
| Estimated Fair Value at March 4, 2026 | |||||
| Cash | $ | 120 | |||
| Acquired in-process research and development (IPR&D)(1) | 977 | ||||
| Other assets and liabilities, net | 81 | ||||
| Acquisition date fair value of consideration transferred | 1,178 | ||||
| Less: | |||||
| Cash acquired | (120) | ||||
| Cash paid, net of cash acquired | $ | 1,058 |
(1) Acquired IPR&D intangibles primarily relate to VTX3232.
Verve Acquisition
Overview of Transaction
In July 2025, we acquired all shares of Verve Therapeutics, Inc. (Verve) for a purchase price of $10.50 per share in cash (or an aggregate of $549 million, net of cash acquired), plus one non-tradeable contingent value right (CVR) per share that entitles the holder to receive up to an additional $3.00 per share (or an aggregate of up to approximately $300 million) payable, subject to certain terms and conditions, upon the achievement of a certain specified milestone. Verve is developing genetic medicines for cardiovascular disease.
Assets Acquired and Liabilities Assumed
Our access to information was limited prior to this acquisition. As a consequence, we are in the process of determining fair values and tax bases of the assets acquired and liabilities assumed, including the identification and valuation of intangible assets and tax exposures. The final determination of these amounts will be completed as soon as possible but no later than one year from the acquisition date. The final determination may result in asset and liability fair values and tax bases that differ from the preliminary estimates and require changes to the preliminary amounts recognized.
The following table summarizes the preliminary amounts recognized for assets acquired and liabilities assumed as of the acquisition date:
| Estimated Fair Value at July 25, 2025 | |||||
| Cash | $ | 389 | |||
| Acquired IPR&D(1) | 608 | ||||
| Other assets and liabilities, net | 166 | ||||
| Acquisition date fair value of consideration transferred | 1,163 | ||||
| Less: | |||||
| Cash acquired | (389) | ||||
| Fair value of CVR liability | (177) | ||||
| Fair value of equity interest in Verve held before the business combination | (48) | ||||
| Cash paid, net of cash acquired | $ | 549 |
(1) Acquired IPR&D intangibles primarily relate to VERVE-102 (PCSK9 Editor).
Asset Acquisitions
Upon each asset acquisition, the cost allocated to acquired IPR&D was immediately expensed as acquired IPR&D if the compound had no alternative future use. Milestone payment obligations incurred prior to regulatory approval of the compound were expensed as acquired IPR&D when the event triggering an obligation to pay the milestone occurred. We recognized acquired IPR&D charges of $584 million and $1.6 billion for the three months ended March 31, 2026 and 2025, respectively. Acquired IPR&D charges for the three months ended March 31, 2025 were primarily related to the acquisition of Scorpion Therapeutics, Inc.'s PI3Kα inhibitor program STX-478.
Note 5: Income Taxes
The effective tax rate was 16.4 percent for the three months ended March 31, 2026, compared to 20.2 percent for the three months ended March 31, 2025, primarily driven by the unfavorable tax impact of a non-deductible acquired IPR&D charge in 2025. The 2026 and 2025 effective tax rates were impacted by net discrete tax benefits in each period.
At March 31, 2026 and December 31, 2025, prepaid expenses included prepaid taxes of $11.8 billion and $12.9 billion, respectively.
The U.S. examination of tax years 2019-2021 remains ongoing. For tax years 2016-2018, we are pursuing competent authority assistance through the Mutual Agreement Procedure (MAP) process for the pricing of certain intercompany transactions. The resolution of both audit periods will likely extend beyond the next 12 months.
Note 6: Inventories
The following table summarizes components of inventories:
| March 31, 2026 | December 31, 2025 | ||||||||||
| Finished products | $ | 2,273 | $ | 1,931 | |||||||
| Work in process | 8,456 | 8,183 | |||||||||
| Raw materials and supplies | 3,763 | 3,587 | |||||||||
| Total (approximates replacement cost) | 14,492 | 13,701 | |||||||||
| Increase to last-in, first-out cost | 37 | 43 | |||||||||
| Inventories | $ | 14,529 | $ | 13,744 |
Note 7: Financial Instruments
Investments in Equity and Debt Securities
The following table summarizes certain fair value information at March 31, 2026 and December 31, 2025 for investment assets measured at fair value on a recurring basis, as well as the carrying amount and amortized cost of certain other investments:
| Fair Value Measurements Using | |||||||||||||||||||||||||||||||||||
| Carrying Amount | Cost | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value | ||||||||||||||||||||||||||||||
| March 31, 2026 | |||||||||||||||||||||||||||||||||||
| Cash equivalents(1) | $ | 2,383 | $ | 2,383 | $ | 2,383 | $ | — | $ | — | $ | 2,383 | |||||||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||||||||||||||
| Available-for-sale debt securities(2) | $ | 13 | $ | 13 | $ | 2 | $ | 11 | $ | — | $ | 13 | |||||||||||||||||||||||
| Other securities | 133 | 133 | — | 30 | 103 | 133 | |||||||||||||||||||||||||||||
| Short-term investments | $ | 146 | |||||||||||||||||||||||||||||||||
| Noncurrent investments: | |||||||||||||||||||||||||||||||||||
| Available-for-sale debt securities(2) | $ | 360 | $ | 371 | $ | 72 | $ | 288 | $ | — | $ | 360 | |||||||||||||||||||||||
| Other securities | 60 | 29 | — | 2 | 58 | 60 | |||||||||||||||||||||||||||||
| Marketable equity securities | 448 | 445 | 448 | — | — | 448 | |||||||||||||||||||||||||||||
| Equity investments without readily determinable fair values(3) | 912 | ||||||||||||||||||||||||||||||||||
| Equity method investments(3) | 1,336 | ||||||||||||||||||||||||||||||||||
| Noncurrent investments | $ | 3,116 | |||||||||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Cash equivalents(1) | $ | 4,392 | $ | 4,392 | $ | 4,392 | $ | — | $ | — | $ | 4,392 | |||||||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||||||||||||||
| Available-for-sale debt securities(2) | $ | 16 | $ | 16 | $ | 9 | $ | 7 | $ | — | $ | 16 | |||||||||||||||||||||||
| Other securities | 89 | 89 | — | 12 | 78 | 89 | |||||||||||||||||||||||||||||
| Short-term investments | $ | 105 | |||||||||||||||||||||||||||||||||
| Noncurrent investments: | |||||||||||||||||||||||||||||||||||
| Available-for-sale debt securities(2) | $ | 360 | $ | 368 | $ | 69 | $ | 291 | $ | — | $ | 360 | |||||||||||||||||||||||
| Other securities | 85 | 54 | — | 2 | 83 | 85 | |||||||||||||||||||||||||||||
| Marketable equity securities | 223 | 292 | 223 | — | — | 223 | |||||||||||||||||||||||||||||
| Equity investments without readily determinable fair values(3) | 846 | ||||||||||||||||||||||||||||||||||
| Equity method investments(3) | 1,288 | ||||||||||||||||||||||||||||||||||
| Noncurrent investments | $ | 2,802 |
(1) We consider all highly liquid investments with a maturity of three months or less from the date of purchase to be cash equivalents. The cost of these investments approximates fair value.
(2) For available-for-sale debt securities, amounts disclosed represent the securities' amortized cost.
(3) Fair value disclosures are not applicable for equity method investments and investments accounted for under the measurement alternative for equity investments.
Debt
The following table summarizes the carrying amount and fair value using Level 2 inputs for our short-term and long-term debt:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||
| Short-term commercial paper borrowings | $ | 1,775 | $ | 1,771 | $ | — | $ | — | |||||||||
| Long-term debt, including current portion | 41,595 | 38,233 | 42,503 | 39,799 |
Risk Management and Related Financial Instruments
To manage foreign currency and interest rate risk, we may enter into derivative instruments intended to offset losses and gains on the assets, liabilities, and transactions being hedged. Such instruments are entered into in accordance with documented corporate risk-management policies.
Foreign Currency Risk
As a global company, we face foreign currency risk exposure from fluctuating currency exchange rates, primarily the U.S. dollar against the euro, Japanese yen, and Chinese yuan. We manage foreign currency risk primarily through the use of foreign currency debt and foreign currency forward contracts. Our foreign currency-denominated notes designated as accounting hedges had carrying amounts of $3.6 billion and $6.0 billion as of March 31, 2026 and December 31, 2025, respectively. The following table summarizes the aggregate outstanding notional amounts of our foreign currency forward contracts in U.S. dollar equivalent:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||
| Purchase | Sell | Purchase | Sell | ||||||||||||||
| Designated as accounting hedges | $ | 297 | $ | — | $ | 67 | $ | — | |||||||||
| Not designated as accounting hedges | 13,297 | 5,520 | 14,281 | 9,264 |
Forward contracts generally have maturities not exceeding 12 months.
Interest Rate Risk
In the normal course of business, our operations are exposed to fluctuations in interest rates which can vary the costs of financing, investing, and operating. Our primary interest-rate risk exposure results from changes in short-term U.S. dollar interest rates. In an effort to manage interest-rate exposures, we may enter into derivative contracts to achieve an acceptable balance between fixed- and floating-rate debt or to reduce cash flow variability from changes in interest rates as part of anticipated debt issuances. The impact of our interest rate contracts on our consolidated condensed financial statements was not material for all periods presented.
Impact of Significant Risk Management Programs on the Financial Statements
The following table summarizes the effects of significant risk-management programs:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Recognized in other–net, (income) expense: | |||||||||||
| Foreign currency forward contracts not designated as accounting hedges | $ | (97) | $ | 13 | |||||||
| Recognized in other comprehensive income (loss): | |||||||||||
| Foreign currency-denominated notes: | |||||||||||
| Designated as accounting hedges | 115 | (204) | |||||||||
| Foreign currency forward contracts: | |||||||||||
| Designated as accounting hedges | (30) | (327) |
The following table summarizes the fair value of assets and liabilities on a gross basis for significant risk-management programs using Level 2 inputs:
| March 31, 2026 | December 31, 2025 | ||||||||||
| Foreign currency forward contracts: | |||||||||||
| Designated as accounting hedges: | |||||||||||
| Other receivables | $ | 4 | $ | — | |||||||
| Other current liabilities | (2) | — | |||||||||
| Not designated as accounting hedges: | |||||||||||
| Other receivables | 37 | 39 | |||||||||
| Other current liabilities | (18) | (329) |
Note 8: Contingencies
We are and may become involved in various lawsuits, claims, government investigations and other legal proceedings that arise from time to time in the course of our business, including patent, environmental, commercial, contractual, licensing, employment, health and safety, consumer protection, pricing, access, consumer, sales and marketing, product liability, insurance, antitrust, securities, and regulatory compliance matters, among others. Such matters may involve inquiries from or disputes with various types of parties, including governments, regulatory agencies, competitors, customers, suppliers, service providers, licensees, employees, or shareholders, among others. We cannot predict the final outcome of these proceedings, and while we intend to vigorously prosecute or defend our position as appropriate, there can be no assurance that we will be successful or obtain any requested relief. Matters often develop over a long period of time and expectations can change as a result of new findings, rulings, appeals, settlements, legal or regulatory changes, or other factors. From time to time we may discontinue or settle and compromise matters as appropriate in our best interest.
Legal proceedings that we believe are significant or could become significant or material are described below. For proceedings in which we are named as defendants, unless otherwise noted, we cannot reasonably estimate the maximum potential exposure or the range of possible loss in excess of amounts accrued; however, we believe that the resolution of all such matters will not have a material adverse effect on our consolidated financial position or liquidity, but could possibly be material to our consolidated results of operations in any one accounting period.
Litigation accruals and environmental liabilities and any related estimated insurance recoverables are reflected on a gross basis as liabilities and assets, respectively, on our consolidated balance sheets. We accrue for estimated exposures to the extent they are both probable and reasonably estimable based on the then available information. We accrue for certain unfiled product liability claims to the extent we can formulate a reasonable estimate of their exposure. We estimate these exposures based primarily on historical claims experience and data regarding product usage. Legal defense costs expected to be incurred in connection with significant liability loss contingencies are accrued when both probable and reasonably estimable.
Because of the nature of pharmaceutical products, it is possible that we could become subject to large numbers of additional product liability and related claims in the future. Due to a very restrictive market for litigation liability insurance, we are predominantly self-insured for litigation liability losses for all our currently and previously marketed products.
Patent Matters
In the course of our business, we are subject to actions and proceedings by third parties that seek to challenge, invalidate, or circumvent our patents and patent applications relating to our products, product candidates, and technologies, including the matter described below.
Emgality Patent Litigation
In September 2018, Teva Pharmaceuticals International GmbH and Teva Pharmaceuticals USA, Inc. (collectively, Teva) filed a complaint in the U.S. District Court for the District of Massachusetts alleging that Lilly's launch and continued sales of Emgality infringed various claims in three Teva patents. In November 2022, following a trial, a jury returned a verdict in favor of Teva. In September 2023, the trial court overruled the jury verdict, found all asserted claims invalid, and entered judgment in Lilly's favor. In April 2026, the U.S. Court of Appeals for the Federal Circuit issued an opinion reversing the trial court's finding that the patents are invalid and remanding to the district court, and we recognized a charge related to the matter during the three months ended March 31, 2026. We are assessing next steps.
Environmental Matters
Superfund Matters
Under the Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as "Superfund," we have been designated as one of several potentially responsible parties with respect to the cleanup of fewer than 10 sites. Under Superfund, each responsible party may be jointly and severally liable for the entire amount of the cleanup.
Brazil Litigation – Cosmopolis Facility
Labor Attorney Litigation
In March 2008, the state Labor Public Attorney (LPA) filed a public civil action against Eli Lilly do Brasil Limitada (Lilly Brasil) in the Labor Court of Paulinia, State of Sao Paulo, alleging harm to employees and former employees from alleged exposure to soil and groundwater contaminants at a former manufacturing facility in Cosmopolis, operated by the company between 1977 and 2003. In May 2014, the trial court ruled against Lilly Brasil, ordering several remedial and compensatory actions, including health coverage for a class of individuals and certain of their children, and imposing a liquidated award. In December 2025, the superior labor court (TST) significantly reduced the liquidated award. Further appeals are possible.
In July 2019, at the LPA's request, the trial court ordered a freeze of certain of Lilly Brasil's immovable property, which amount was reduced on Lilly's appeal. Both parties have appealed to the TST.
The trial court is continuing to assess the status of Lilly Brasil's compliance with the obligations as to the land.
Pricing Matters
340B Litigation and Investigations
In January 2021, we filed a lawsuit in the U.S. District Court for the Southern District of Indiana against the U.S. Department of Health and Human Services (HHS), the Secretary of HHS, the Health Resources and Service Administration (HRSA), and the Administrator of HRSA. The lawsuit challenges HHS's December 2020 advisory opinion that the 340B program requires drug manufacturers to deliver discounts to all contract pharmacies, as well as HHS's December 2020 administrative dispute resolution (ADR) regulations. It seeks declaratory, injunctive, and other related relief. In March 2021, the court preliminarily enjoined the government's use of the ADR process as to us. In May 2021, we amended the complaint to add claims related to a May 2021 letter from HRSA asserting that Lilly's contract pharmacy policy violated the 340B statute. In October 2021, the court granted in part and denied in part the parties' cross-motions for summary judgment. Both parties appealed to the U.S. Court of Appeals for the Seventh Circuit. The appeal remains pending.
We have been named in various ADR petitions, filed between 2021 and 2024, seeking declaratory, injunctive, and/or monetary relief related to the 340B program. In light of the preliminary injunction order described above, these petitions are being held in abeyance as to us.
In July 2021, Mosaic Health, Inc. filed a putative class action lawsuit in the U.S. District Court for the Western District of New York against us, Sanofi-Aventis U.S., LLC, Novo Nordisk Inc., and AstraZeneca Pharmaceuticals LP, alleging antitrust and unjust enrichment claims related to the defendants' 340B programs. In October 2021, an amended complaint added Central Virginia Health Services, Inc. as a plaintiff. After the district court dismissed the case for failure to state a claim, the U.S. Court of Appeals for the Second Circuit reversed. We filed a petition seeking U.S. Supreme Court review in March 2026. This matter is ongoing.
We have multiple other challenges against HHS and related parties related to interpretations and actions under the 340B program.
Insulin Pricing Litigation
Since 2017, various plaintiffs, including consumers, states and state attorneys general, counties, municipalities, Native American tribes, school districts, wholesalers, third-party payers, and others, have filed lawsuits, including putative class actions, against us, other manufacturers, pharmacy benefit managers, and others, relating to the pricing of insulin medications, and in some cases other diabetes medications, and rebates paid by manufacturers to pharmacy benefit managers. The complaints in the various lawsuits assert a variety of claims, including among others consumer protection, unfair or deceptive trade practices, fraud, false advertising, unjust enrichment, civil conspiracy, racketeering, antitrust, and unfair competition claims. Most cases have been coordinated or consolidated for pretrial proceedings in a multidistrict litigation (MDL) pending in the U.S. District Court for the District of New Jersey. The lawsuits are at various stages in the litigation process.
The MDL court has issued various case management and other orders, including but not limited to orders establishing separate tracks for state attorney general claims, putative class actions, and non-class suits by self-funded payers; orders dismissing certain claims; and an order setting a constructive notice date of January 14, 2021 for statute of limitations purposes.
In January 2022, the Michigan attorney general filed a petition in Michigan state court seeking authorization to investigate Lilly for potential violations of the Michigan Consumer Protection Act (MCPA), along with a complaint seeking a declaratory judgment that the state has authority to investigate Lilly's sale of insulin under the MCPA. The court authorized the proposed investigation and the issuance of civil investigative subpoenas. In April 2022, however, the parties entered into a stipulation providing that the state will not issue any civil investigative subpoena to us under the MCPA until the declaratory judgment action is resolved, and in July 2022, the court dismissed the case in its entirety. In June 2023, the Michigan Court of Appeals affirmed the judgment in our favor. The state's appeal to the Michigan Supreme Court remains pending.
Lilly entered into settlement agreements with New York and Minnesota to resolve allegations relating to insulin pricing in 2023 and 2024, respectively. These agreements involved no monetary payments and no admission of wrongdoing or liability.
Insulin and Other Pricing Investigations
We have been subject to various investigations and received subpoenas, civil investigative demands, information requests, interrogatories, and other inquiries from various governmental entities related to pricing issues, including the pricing and sale of insulin medications, and in some instances certain other diabetes medications, and/or calculations of average manufacturer price and best price. These include subpoenas, civil investigative demands, or information requests from the U.S. Department of Justice, the U.S. Federal Trade Commission, and attorneys general from various states and the District of Columbia.
To the extent the foregoing governmental entities have not filed lawsuits, we are cooperating with the various investigations, subpoenas, and inquiries.
Average Manufacturer Price Litigation
In November 2014, a relator filed a qui tam action in the U.S. District Court for the Northern District of Illinois against us and Takeda Pharmaceuticals America, Inc. The relator's complaint alleged that the defendants should have treated certain credits from distributors as retroactive price increases and included such increases in calculating average manufacturer prices. In August 2022, following a trial, the jury returned a verdict in favor of the relator. In September 2025, the U.S. Court of Appeals for the Seventh Circuit affirmed, and we recognized a charge related to the matter. In December 2025, the Seventh Circuit denied our petition for rehearing en banc. In March 2026, we filed a petition seeking U.S. Supreme Court review.
Other Matters
Actos Litigation
We, along with Takeda Chemical Industries, Ltd. and Takeda affiliates (collectively, Takeda), are named in a third-party payer class action in the U.S. District Court for the Central District of California. The plaintiffs allege that bladder cancer risk was concealed from them and claim that as a result they and a proposed class of third-party payers are entitled to recover money paid for Actos prescriptions. Our agreement with Takeda calls for Takeda to defend and indemnify us against losses and expenses with respect to U.S. litigation arising out of the manufacture, use, or sale of Actos and other related expenses in accordance with the terms of the agreement. In May 2023, the district court granted class certification. The U.S. Court of Appeals for the Ninth Circuit subsequently affirmed, and the U.S. Supreme Court denied our petition for certiorari. The matter is ongoing.
Mounjaro, Trulicity, and Zepbound Product Liability Litigation
Since August 2023, various plaintiffs have filed lawsuits against us, Novo Nordisk A/S, and other related entities, alleging various injuries following purported use of incretin medicines, including Mounjaro, Trulicity, and Zepbound. The complaints assert a variety of claims and generally seek damages and/or other relief. Most of these lawsuits in the United States have been coordinated or consolidated for pretrial proceedings in two federal MDLs: one focused on alleged gastrointestinal injuries, and the other relating to claims of non-arteritic anterior ischemic optic neuropathy (NAION). Both MDLs are pending in the U.S. District Court for the Eastern District of Pennsylvania. There are also similar proceedings pending in Delaware, Indiana, and New Jersey state courts. In addition to the cases in the United States, there are two class action petitions in Israel and two class action petitions in Canada alleging various injuries and claims.
Health Choice Alliance
In October 2019, a relator filed a qui tam lawsuit against us in Texas state court asserting claims under the Texas Medicaid Fraud Prevention Act (TMFPA) based on allegations about certain patient support programs related to three of our products. The relator sought to recover the value of payments by the Texas Medicaid Program for these products, as well as civil penalties and other relief. In August 2025, the relator purported to dismiss the first lawsuit and filed a second lawsuit in a different Texas state court adding the State of Texas as a party and expanding claims under the TMFPA to fifteen of our products. We are opposing the relator's purported dismissal of the first lawsuit.
Research Corporation Technologies, Inc.
In April 2016, Research Corporation Technologies, Inc. (RCT) filed a lawsuit against us in the U.S. District Court for the District of Arizona asserting damages claims for breach of contract, unjust enrichment, and conversion related to processes used to manufacture certain products, including Humalog and Humulin. In October 2021, the court issued a summary judgment decision in favor of RCT on certain issues, including with respect to a disputed royalty. In July 2024, we reached a confidential agreement with RCT providing for different payments based on various litigation outcomes as determined on appeal. The settlement agreement was not an admission of liability or fault and was subject to conditions. Pursuant to the agreement, the court entered final judgment, Lilly filed a notice of appeal to the U.S. Court of Appeals for the Ninth Circuit, and Lilly made an initial payment under the agreement. In February 2026, the Ninth Circuit reversed and remanded the case with instructions to enter summary judgment for Lilly. Under the settlement agreement, Lilly owes no further payments to RCT.
Note 9: Equity
During the three months ended March 31, 2026, we repurchased $2.3 billion of shares associated with our share repurchase program. As of March 31, 2026, we had $8.6 billion remaining under our $15.0 billion share repurchase program authorized in December 2024. We retire shares once we repurchase them.
The following table summarizes components of equity with significant changes during the three months ended March 31, 2026 and 2025:
| Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||
| Balance at December 31, 2025 | 944.8 | $ | 590 | $ | 7,346 | $ | 24,470 | $ | (2,880) | ||||||||||||||||||||
| Net income | 7,396 | ||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | 47 | ||||||||||||||||||||||||||||
| Purchases of common stock | (2.4) | (1) | (2,356) | ||||||||||||||||||||||||||
| Issuance of stock under employee stock plans, net | 1.1 | 1 | (586) | ||||||||||||||||||||||||||
| Stock-based compensation | 161 | ||||||||||||||||||||||||||||
| Other | 4 | ||||||||||||||||||||||||||||
| Balance at March 31, 2026 | 943.5 | $ | 590 | $ | 6,921 | $ | 29,514 | $ | (2,833) | ||||||||||||||||||||
| Balance at December 31, 2024 | 947.9 | $ | 592 | $ | 7,439 | $ | 13,545 | $ | (4,322) | ||||||||||||||||||||
| Net income | 2,759 | ||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | 547 | ||||||||||||||||||||||||||||
| Purchases of common stock | (1.4) | (1) | (1,199) | ||||||||||||||||||||||||||
| Issuance of stock under employee stock plans, net | 1.6 | 1 | (683) | ||||||||||||||||||||||||||
| Stock-based compensation | 154 | ||||||||||||||||||||||||||||
| Other | (6) | ||||||||||||||||||||||||||||
| Balance at March 31, 2025 | 948.1 | $ | 593 | $ | 6,910 | $ | 15,100 | $ | (3,775) |
The following table summarizes the activity related to each component of accumulated other comprehensive income (loss) during the three months ended March 31, 2026 and 2025:
| Foreign Currency Translation**(1)** | Retirement Benefit Plans | Other | Accumulated Other Comprehensive Loss | ||||||||||||||||||||
| Balance at December 31, 2025 | $ | (1,149) | $ | (1,987) | $ | 255 | $ | (2,880) | |||||||||||||||
| Other comprehensive income (loss) | 50 | (2) | (1) | 47 | |||||||||||||||||||
| Balance at March 31, 2026 | $ | (1,099) | $ | (1,989) | $ | 254 | $ | (2,833) | |||||||||||||||
| Balance at December 31, 2024 | $ | (2,390) | $ | (2,179) | $ | 246 | $ | (4,322) | |||||||||||||||
| Other comprehensive income (loss) | 566 | (3) | (16) | 547 | |||||||||||||||||||
| Balance at March 31, 2025 | $ | (1,824) | $ | (2,182) | $ | 230 | $ | (3,775) |
(1) Includes the impact of foreign currency transactions designated as net investment hedges. See Note 7 for additional information.
Note 10: Segment Information
We operate as a single reportable segment engaged in the discovery, development, manufacturing, marketing, and sales of pharmaceutical products worldwide. A global research and development organization and a supply chain organization are responsible for the discovery, development, manufacturing, and supply of our products. Our commercial organizations market, distribute, and sell the products. The business is also supported by global corporate staff functions. Our determination that we operate as a single segment is consistent with the nature of our operations and the financial information regularly reviewed by the chief executive officer, in his capacity as the chief operating decision maker (CODM), for the purposes of evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting for future periods.
Our purpose is to unite caring with discovery to create medicines that make life better for people around the world. Our long-term success is significantly dependent on our ability to research and develop innovative medicines. The CODM uses consolidated net income to assess performance of our company, ensuring that we are investing in future research and development while efficiently delivering products to patients. The CODM allocates research and development resources based upon several factors, including the likelihood of technical success, unmet medical needs, and the viability of commercial success. A significant component of the CODM’s decision-making process is to ensure a balanced investment in our research and development portfolio to drive near-term success and sustain for the long-term.
The following table summarizes information for our single reportable segment, including significant segment expenses:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Revenue | $ | 19,799 | $ | 12,729 | |||||||
| Less: | |||||||||||
| Cost of sales | 3,577 | 2,225 | |||||||||
| Early-stage research and development(1) | 1,266 | 990 | |||||||||
| Late-stage research and development(1) | 2,244 | 1,744 | |||||||||
| Marketing, selling, and administrative | 2,934 | 2,468 | |||||||||
| Acquired in-process research and development | 584 | 1,572 | |||||||||
| Other segment items(2) | 1,798 | 971 | |||||||||
| Net income | $ | 7,396 | $ | 2,759 | |||||||
| Interest expense | $ | 332 | $ | 244 | |||||||
| Expenditures for long-lived assets(3) | 2,438 | 1,517 |
(1) Early-stage research and development primarily includes costs incurred from discovery through Phase 2 clinical trials. Late-stage research and development primarily includes costs incurred from Phase 3 clinical trials.
(2) Other segment items primarily include income taxes.
(3) Includes expenditures for property and equipment and computer software costs.
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