Lilly Q1 revenue +56% to $19.8B on incretin surge; Emgality patent loss, AMP verdict affirmed

The Federal Circuit reversed Lilly's trial-court victory, reinstating Teva's patent-infringement claims and triggering a charge in Q1 2026. The case returns to the district court for further proceedings. This is an adverse development in a patent dispute over Emgality (migraine drug).

The TST significantly reduced the liquidated award in the Cosmopolis environmental-exposure case, a favorable development. The baseline disclosed an inflation-adjusted award of ~$251 million; the current filing states the award was "significantly reduced" but does not quantify the new amount.

The Second Circuit reversed the district court's dismissal, reviving the antitrust and unjust-enrichment claims against Lilly and other manufacturers over 340B contract-pharmacy policies. Lilly has petitioned the Supreme Court for review. This is an adverse appellate development.

The Seventh Circuit affirmed the adverse jury verdict in September 2025, triggering a charge. Lilly's petition for rehearing en banc was denied in December 2025, and the company has now petitioned the Supreme Court for review. This is a series of adverse developments in a Medicaid-pricing qui tam case.

The Ninth Circuit affirmed the class-certification order, and the Supreme Court denied certiorari, allowing the class action to proceed. This is an adverse development for Lilly (though Takeda is the primary indemnitor under the agreement).

The incretin product-liability litigation has expanded: Zepbound is now named alongside Mounjaro and Trulicity; the single federal MDL has split into two (one for GI injuries, one for NAION vision claims); state-court proceedings in Delaware, Indiana, and New Jersey are now disclosed; and two Canadian class actions have been added. The November 2024 master-complaint detail is removed (lifecycle). This reflects growth in the litigation.

The Texas Medicaid qui tam case has escalated: the relator filed a second lawsuit in August 2025 expanding the claims from three products (Humalog, Humulin, Forteo) to fifteen products and adding the State of Texas as a party. Lilly is opposing the relator's attempt to dismiss the first lawsuit. The stay is no longer mentioned.

The Ninth Circuit reversed in February 2026, instructing the district court to enter summary judgment for Lilly. Under the settlement agreement, Lilly owes no further payments to RCT. This is a favorable resolution of a contract dispute over manufacturing-process royalties for Humalog and Humulin.

Lilly disclosed new voluntary agreements with the U.S. government to lower Medicaid and other drug prices and to adopt a more balanced international pricing approach. The Medicare GLP-1 Bridge Program will provide discounted obesity medicines to Medicare beneficiaries from July 2026 through December 2027, with optional state Medicaid expansion. The filing notes that uptake from this expanded access is unknown and that the outcome of these arrangements and broader U.S. policy efforts to align domestic pharmaceutical pricing with international benchmarks is uncertain and could negatively impact pricing strategies, product demand, access, or competitive positioning across global markets.

The FDA approved Foundayo (orforglipron) for obesity treatment in April 2026. This is a new oral GLP-1 product that expands Lilly's incretin portfolio beyond Mounjaro and Zepbound. The filing also notes that a Phase 3 trial for orforglipron for type 2 diabetes met its primary endpoint, suggesting additional indications may follow.

Lilly disclosed pending acquisition agreements with potential closing payments up to approximately $12 billion, subject to closing conditions. No details are provided about the targets or timing. This represents a significant near-term capital deployment commitment beyond the company's ongoing manufacturing expansion and share repurchase program.

HHS selected Trulicity and Verzenio for government-set pricing under the Inflation Reduction Act, effective in 2028. This follows the prior selection of Jardiance (effective 2026). The filing notes that given Lilly's product portfolio, additional significant products are expected to be selected in future years, and the IRA will continue to meaningfully influence business strategies and could significantly impact results of operations.

Revenue increased 56% year-over-year to $19.8 billion (Q1 2026 vs Q1 2025), accelerating from the prior year's 45% growth rate (Q1 2025 vs Q1 2024). Mounjaro and Zepbound now account for 65% of total revenue ($12.8 billion combined), up from approximately 48% in the prior year period ($6.2 billion combined). The filing explicitly states that incretin volume fluctuations due to channel dynamics or demand can have a disproportionate impact on results in any given period.

Net income increased 168% to $7.4 billion and diluted EPS increased 170% to $8.26, driven by higher gross margin and lower acquired IPR&D charges, partially offset by higher R&D and marketing expenses. This represents a significant acceleration from the prior year's 23% net income and EPS growth rates.

Lilly repurchased $2.4B of shares in Q1 2026, nearly double the $1.2 billion repurchased in Q1 2025. The remaining authorization declined from $13.8 billion to $8.6 billion, reflecting the $2.4B in program repurchases during the quarter. The accelerated pace of buybacks reflects stronger cash generation from incretin sales.

Total debt increased modestly by $0.9 billion during Q1 2026 to $43.4 billion, compared to a $4.87 billion increase in Q1 2025 (which included a $6.5 billion debt issuance to fund the Scorpion acquisition). The current quarter's smaller increase suggests more modest incremental borrowing needs as operating cash flow has strengthened.

Unused committed credit facilities increased from $8.42 billion to $10.1 billion, with commercial paper support capacity increasing from $8.0 billion to $10.0 billion. This expansion provides additional financial flexibility for near-term capital needs, including the disclosed pending acquisitions of up to $12 billion.

The quarterly dividend increased from $1.50 per share to $1.73 per share, a 15% increase. Total dividend payments increased from $1.35 billion to $1.5 billion, reflecting both the higher per-share rate and the reduced share count from buybacks.

The current filing removed the detailed discussion of supply-demand dynamics (prior shortages, current supply exceeding demand, periodic unavailability of certain presentations) and replaced it with a forward-looking statement about cardiometabolic products representing a significant and growing portion of the business. The new disclosure emphasizes the Medicare Bridge Program and notes that incretin volume fluctuations can have a disproportionate impact on results in any given period, but does not address current supply-demand balance.

Mounjaro U.S. revenue growth decelerated from 75% to 59%, though the filing notes a favorable one-time adjustment to rebate and discount estimates in Q1 2026. International revenue grew from $1.2 billion to $4.4 billion, with the filing now explicitly attributing lower realized prices to the addition of Mounjaro to China's National Reimbursed Drug List (NRDL), a material pricing concession for market access.

Zepbound U.S. revenue increased approximately 79% in Q1 2026, primarily driven by strong demand, partially offset by lower realized prices, including previously announced reductions in cash pay prices. Lower realized prices were partially offset by a favorable one-time adjustment to estimates for rebates and discounts. The cash-pay price reductions represent a strategic pricing action to expand access and compete in the direct-to-consumer obesity market.

The disclosure of up to $8 billion in potential payments under contract manufacturing and supply agreements (if specified purchase amounts are not met over durations generally up to 8 years) was removed from the current filing. This may reflect that the commitments have been fulfilled, restructured, or are no longer considered material to disclose, though the filing continues to note that manufacturing expansion investments will result in meaningfully higher capital expenditures in the near term.

Lilly completed a $1.1 billion acquisition of Ventyx Biosciences in March 2026, adding oral therapies for inflammatory diseases to the pipeline. The acquired IPR&D intangibles primarily relate to VTX3232. This is a new business combination not present in the prior-year quarter.

The Federal Circuit reversed the trial court's favorable ruling on Emgality patent validity in April 2026, and Lilly recognized a charge in Q1 2026. The baseline filing reported the appeal as pending with no charge. This is an adverse litigation development with financial impact.

Orforglipron now has a brand name, Foundayo, disclosed in the current filing. The baseline described the compound by its generic name only. This reflects progression toward commercialization, though the royalty and milestone terms are unchanged.

The potential Jardiance sales-based milestones increased from $610 million (through end of 2026) to $660 million (in 2026). The current filing also reports a $250 million one-time benefit in Q1 2026 versus $370 million in Q1 2025, reflecting different collaboration adjustments year-over-year.

The potential sales-based milestones payable to Roche for Ebglyss decreased from $1.03 billion to $975 million, likely reflecting milestone achievements or contractual adjustments. The Almirall milestone also decreased from $1.25 billion to $975M.

The Brazilian superior labor court significantly reduced the liquidated award in the Cosmopolis labor litigation in December 2025. The baseline disclosed the award at ~$251 million; the current filing states it was reduced but does not quantify the new amount, indicating a favorable development.

The Ninth Circuit reversed in Lilly's favor in February 2026, and under the settlement agreement Lilly owes no further payments to RCT. The baseline reported the appeal as pending with conditional payments. This is a favorable resolution of a long-running contract dispute.

The incretin product liability litigation now includes Zepbound and has split into two MDLs: one for gastrointestinal injuries, one for NAION (vision-related claims). The baseline described a single MDL covering Mounjaro and Trulicity. This reflects expansion of the litigation scope and claims.

The Texas Medicaid fraud qui tam expanded in August 2025 from three products (Humalog, Humulin, Forteo) to fifteen products, and the State of Texas joined as a party. Lilly is opposing the relator's attempt to dismiss the original case. This is a material escalation of the litigation.

The DOJ subpoena related to the Branchburg manufacturing facility, disclosed in the baseline, is absent from the current filing. No resolution or status update is provided. This may indicate the matter closed or is no longer deemed material, though the filing does not confirm either.

The current filing discloses prepaid taxes of $11.8 billion at March 31, 2026, down from $12.9 billion at year-end 2025. The baseline did not separately disclose prepaid taxes. This is a new disclosure line item, likely reflecting significant advance tax payments.