Lilly raises its outlook, but fourth quarter growth could slow to 26 percent

Revenue rose 39% as volume added 53 points and price took away 15. Guidance puts the fourth quarter only 3.5% above a third quarter cleaned of one-offs.

Eli Lilly raised its 2026 revenue guidance by $5.5 billion at the midpoint, to $91 billion to $92 billion. The shares rose about 6% to about $1,368 in Thursday midday trading, which puts the market value above $1.2 trillion.

Demand is real, but growth slows every quarter. The new range implies fourth quarter revenue of $24.33 billion at the midpoint, only 3.5% above a third quarter stripped of about $900 million of one-time benefits. The fourth quarter print on $23.83 billion to $24.83 billion is the early indicator for the $1,368 share price.

Volume rises as prices fall

The third quarter release shows revenue up 39% to $24.4 billion, "driven by a 53% increase in volume, partially offset by a 15% decrease in realized prices". Volume added 53 points and price took away 15. Rounding gives the 39%.

Volume and price split the same way by region. In the United States, volume added 41 points and price took away 7, for growth of 34%. Outside it, volume added 76 points and price took away 29, for growth of 47%. The release ties the overseas price drop primarily to Mounjaro joining China's National Reimbursement Drug List.

About $900 million of third quarter revenue will not repeat. Jardiance milestones supplied $410 million, with none left, and favourable rebate and discount estimates most of the rest. Without it, growth is 33.5%.

The year earlier quarter had $380 million of its own one-offs ($200 million of Jardiance milestones, $180 million from selling Cialis rights outside the U.S.). Clean both years and growth is 36.4%.

Lilly’s finance chief explained the one-offs on the call, where Chief Financial Officer Lucas Montarce put the 2026 total at about $2 billion. He described one time items "primarily related to milestones payments and changes in estimates for rebates and discounts that we don't expect to recur".

He expects net realised price to stay "a headwind, more than offset by volume growth".

What guidance implies for the fourth quarter

The wire stories skip the quarterly series in the SEC filings. Revenue grew 55.5% year on year in the first quarter, 47.7% in the second and 38.6% in the third.

Fourth quarter 2025 revenue was $19.29 billion, which is full year revenue of $65.18 billion less the first nine months. Nine months of 2026 came to $67.17 billion. The guidance range therefore leaves $23.83 billion to $24.83 billion for the fourth quarter.

The midpoint means 26.1% growth, within a range of 23.5% to 28.7%. Against underlying third quarter revenue of about $23.5 billion, the range runs from up 1.4% to up 5.7%.

The raise leaves more second half revenue to find. The old $86 billion midpoint left $43.2 billion for the second half, and the new $91.5 billion leaves $48.7 billion. Even at the top of the range, the fourth quarter would be the slowest growth quarter of the year.

The third quarter beat the street by a wide margin. It delivered $24.4 billion, $1.79 billion above the LSEG estimate of $22.61 billion, Reuters reported. The new midpoint is $2.65 billion above the $88.85 billion analysts expected, Yahoo Finance reported.

Where the revenue comes from

Two molecules account for most of the company’s revenue. Mounjaro and Zepbound together brought in $16.1 billion in the quarter, 66% of revenue. Their increase of $6.0 billion is 88% of the company's $6.8 billion gain.

Mounjaro sold $10.7 billion, up 65%, and Zepbound sold $5.4 billion, up 49%. Over nine months Mounjaro is up 89% at $29.3 billion.

Four new launches add up to about 2.7% of revenue: Foundayo at $184 million, Kisunla at $193 million, Ebglyss at $202 million and Inluriyo at $73 million. Foundayo, which is orforglipron, fell short of the $217 million analysts expected, Reuters reported.

Foundayo demand is stronger than that miss suggests. Montarce told Reuters that U.S. demand excluding channel stocking (pharmacy inventory build) more than tripled from the second quarter, to over $120 million from about $37 million. U.S. regulatory action on Foundayo for type 2 diabetes is expected in the fourth quarter.

Margins, earnings and valuation

Profit guidance moves the other way. Gross margin was 83.9% as reported. The adjusted operating margin guide rises 2.5 points at the midpoint, to 52.0% to 52.5%.

Costs grew slower than sales. Research and development rose 23% and marketing, selling and administrative costs 14%, both behind revenue growth of 39%.

Earnings per share guidance fell by $0.50 at the midpoint, to $35.00 to $36.00. Lilly booked $4.2 billion of acquired research and development (deal related pipeline purchases) in the quarter, or $4.57 a share, against $0.71 a year ago. Excluding that charge, guidance rose by $4.07.

The valuation rests on the fourth quarter. At $1,368 the shares trade at about 38.5 times the midpoint of the non-GAAP (adjusted) earnings guide. Excluding the $4.57 charge, the multiple is 34.1 times.

Pricing and the 2027 outlook

The Medicare GLP-1 Bridge adds volume at a lower price. It started on 1 July and expanded access for about 20 million seniors. More than half a million people have filled a Lilly prescription through it.

Medicare patients pay a $50 monthly copay, per CMS. Reuters put Lilly's cash pay platform at $449 a month.

Price is the variable for 2027. RBC analyst Trung Huynh said the $5.5 billion raise should ease pricing concerns for the time being, Reuters reported.

Lilly USA head Ilya Yuffa told analysts to expect a "modest and disciplined approach around pricing and access" in commercial plans. Wider Medicare and Medicaid coverage lowers net price per script through mix, "not about decreasing the price overall". The CFO's line is that price stays a headwind that volume more than offsets.

Pipeline news helps the story but not the fourth quarter. Lilly's retatrutide cut weight 19.5% at 9 mg and 20.9% at 12 mg against 9.4% for Ozempic 2 mg in a type 2 diabetes trial reported on 28 October.

The 2027 growth requirement follows from the revenue base. Take roughly $2 billion of one-time revenue out of a $91.5 billion base and $89.5 billion is left, so growth must come from volume that outruns price.

A fourth quarter at the top of the implied range, $24.83 billion, would put the run rate near $99 billion a year. A print near $23.8 billion would put it near $95 billion. Lilly gives 2027 guidance on its fourth quarter call, and it holds Innovation Day on 7 December.