Eli Lilly & Co. (NYSE:LLY)

Goodwill and intangible assets exhibited varied trends over the five-year period. Overall, the balance of goodwill and other intangibles increased, though fluctuations were observed within individual components.

Goodwill

Goodwill increased consistently from $3,892 million in 2021 to $5,898 million in 2025. The most significant increase occurred between 2022 and 2023, rising from $4,073 million to $4,940 million, and again between 2023 and 2024, increasing to $5,770 million. The rate of increase slowed between 2024 and 2025.

Marketed Products & Finite-Lived Intangible Assets

The value of marketed products, representing gross finite-lived intangible assets, remained relatively stable, fluctuating between $7,958 million and $8,217 million. Accumulated amortization increased steadily throughout the period, from -$2,290 million in 2021 to -$2,963 million in 2025. Consequently, the net value of finite-lived intangible assets decreased from $5,767 million in 2021 to $4,952 million in 2025, with a slight recovery in 2023 and 2024.

Acquired IPR&D and Indefinite-Lived Intangible Assets

Acquired in-process research and development (IPR&D) and indefinite-lived intangible assets showed a decreasing trend from 2021 to 2024, falling from $1,925 million to $898 million. However, a notable increase was observed in 2025, rising to $1,569 million. The values for Acquired IPR&D and Indefinite-lived intangible assets were identical throughout the period.

Other Intangibles

Other intangibles experienced a general decline from $7,692 million in 2021 to $6,166 million in 2024. A partial recovery occurred in 2025, with the balance increasing to $6,521 million.

Goodwill and Other Intangibles (Aggregate)

The combined value of goodwill and other intangibles increased overall, from $11,584 million in 2021 to $12,419 million in 2025. While there was a slight decrease between 2021 and 2022, the aggregate value generally trended upward, driven primarily by the increases in goodwill.

The increases in goodwill suggest potential acquisitions or increased valuations of existing businesses. The decreasing net value of finite-lived intangible assets, coupled with rising accumulated amortization, indicates the consumption of the value of these assets over time. The fluctuations in acquired IPR&D and other intangibles warrant further investigation to understand the underlying drivers of these changes.

The information presents a five-year trend of reported and adjusted total assets, alongside reported and adjusted total shareholders’ equity. A consistent difference exists between the reported and adjusted figures for both assets and equity, suggesting the adjustments relate to the removal of goodwill and associated impacts. Total assets demonstrate a substantial upward trend over the period, while adjusted total assets exhibit a similar, though less pronounced, increase. Shareholders’ equity also shows an increasing trend, with adjusted shareholders’ equity growing at a slower rate than reported equity.

Total Asset Trends

Reported total assets increased from US$48,806 million in 2021 to US$112,476 million in 2025, representing a significant growth rate. Adjusted total assets also increased, moving from US$44,914 million in 2021 to US$106,578 million in 2025. The difference between reported and adjusted assets widens over time, starting at US$3,892 million in 2021 and expanding to US$5,898 million in 2025. This suggests a growing amount of goodwill or intangible assets initially present on the balance sheet.

Shareholders’ Equity Trends

Reported total shareholders’ equity increased from US$8,979 million in 2021 to US$26,535 million in 2025. Adjusted total shareholders’ equity increased from US$5,087 million in 2021 to US$20,637 million in 2025. The gap between reported and adjusted equity also widens over the period, beginning at US$3,892 million in 2021 and reaching US$5,898 million in 2025, mirroring the trend observed in total assets. This indicates that the adjustments impacting assets also affect the equity portion of the balance sheet.

Adjustment Impact

The consistent reduction in both total assets and shareholders’ equity through the adjustments indicates a systematic removal of an item from the balance sheet. Given the context, this is likely goodwill or other intangible assets. The magnitude of the adjustments increases over time, suggesting either larger initial amounts of these items or a continued recognition and subsequent removal of such assets. The adjustments appear to have a proportional impact on both assets and equity, which is consistent with the accounting treatment of goodwill impairment.

In summary, the figures demonstrate substantial growth in both reported and adjusted financial positions. However, the consistent and increasing adjustments to both assets and equity suggest a significant impact from the removal of goodwill or intangible assets, which warrants further investigation into the underlying business combinations and impairment policies.

The financial metrics demonstrate a notable impact from adjusting for goodwill and intangible assets. Generally, removing goodwill from the asset base results in higher ratios for asset turnover and leverage, and significantly elevated returns on equity and assets. Trends observed across the five-year period reveal shifts in these adjusted metrics, offering insights into the underlying performance of the company’s operations excluding the influence of goodwill.

Total Asset Turnover

Reported total asset turnover remained relatively stable between 2021 and 2025, fluctuating between 0.53 and 0.58. However, the adjusted total asset turnover consistently exceeded the reported figure, ranging from 0.61 to 0.63 in the initial years and then decreasing to 0.61-0.62. This suggests that goodwill contributes to a lower apparent efficiency in asset utilization when included in the asset base.

Financial Leverage

Reported financial leverage exhibited volatility, decreasing from 5.44 in 2021 to 4.65 in 2022, increasing to 5.94 in 2023, decreasing to 5.55 in 2024, and then falling to 4.24 in 2025. The adjusted financial leverage was substantially higher, indicating a greater proportion of assets financed by debt when goodwill is excluded. Adjusted leverage peaked at 10.13 in 2023 before declining to 5.16 in 2025, mirroring the trend of reported leverage but at a magnified scale. This indicates that a significant portion of the company’s asset base is comprised of goodwill, which reduces the apparent level of financial risk when reported.

Return on Equity (ROE)

Reported ROE showed fluctuations, beginning at 62.16% in 2021, decreasing to 48.65% in 2023, and then increasing significantly to 77.78% in 2025. The adjusted ROE was consistently and substantially higher, starting at 109.72% in 2021 and remaining above 89.85% throughout the period, peaking at 125.75% in 2024 before decreasing slightly to 100.01% in 2025. The difference between reported and adjusted ROE highlights the considerable impact of goodwill on equity, as its exclusion leads to a much higher return attributable to shareholders.

Return on Assets (ROA)

Reported ROA varied between 8.19% and 18.35% over the period. The adjusted ROA consistently exceeded the reported ROA, ranging from 8.87% to 14.52%. The adjusted ROA demonstrates a more consistent, though still fluctuating, profitability picture when goodwill is removed from the asset base. The increase in both reported and adjusted ROA from 2023 to 2025 suggests improving operational efficiency or profitability.

In summary, the adjustments for goodwill consistently reveal a stronger financial position in terms of asset utilization, leverage, and profitability. The magnitude of the differences between reported and adjusted figures underscores the substantial contribution of goodwill to the company’s reported financial statements. The trends observed in the adjusted ratios provide a clearer view of the underlying operational performance, independent of the impact of goodwill.

The period under review demonstrates a consistent increase in reported and adjusted total assets, alongside relatively stable total asset turnover ratios. However, a closer examination of the adjusted figures reveals nuanced trends worthy of note.

Total Asset Growth

Reported total assets increased from US$48,806 million in 2021 to US$112,476 million in 2025, representing substantial growth over the five-year period. Adjusted total assets followed a similar trajectory, rising from US$44,914 million to US$106,578 million. The difference between reported and adjusted assets suggests the presence of goodwill and intangible assets impacting the reported figures.

Reported Total Asset Turnover

The reported total asset turnover ratio remained remarkably consistent, fluctuating between 0.53 and 0.58 throughout the period. This indicates a stable relationship between revenue and reported total assets. A slight dip to 0.53 in 2023 was followed by a recovery to 0.57 in 2024 and 0.58 in 2025.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio exhibited a slight downward trend. Starting at 0.63 in both 2021 and 2022, it decreased to 0.58 in 2023 before partially recovering to 0.62 in 2024 and settling at 0.61 in 2025. This suggests that when goodwill and intangible assets are excluded, the efficiency of asset utilization has modestly declined over the period, although it remains higher than the reported turnover.

The divergence between reported and adjusted asset turnover ratios highlights the impact of non-operating assets on overall efficiency metrics. While the reported turnover presents a stable picture, the adjusted ratio provides a more conservative assessment of how effectively the core operating assets are being utilized to generate revenue. The consistent growth in total assets, coupled with the slight decline in adjusted turnover, warrants further investigation into the nature and performance of the acquired assets contributing to the increase in goodwill and intangibles.

Implications of Adjustment

The adjustments made to total assets appear to primarily relate to goodwill and intangible assets. The consistent difference between the reported and adjusted figures suggests these components represent a significant portion of the company’s asset base. Monitoring the performance of these assets is crucial, as their value may not directly correlate with revenue generation, potentially impacting the adjusted asset turnover ratio.

An examination of the financial information reveals trends in total assets, shareholders’ equity, and associated leverage ratios over a five-year period. Reported total assets demonstrate consistent growth, accelerating significantly from 2023 onwards. Adjusted total assets follow a similar pattern, though consistently lower than reported figures, indicating the impact of adjustments related to goodwill and intangible assets.

Total Assets

Reported total assets increased from US$48,806 million in 2021 to US$112,476 million in 2025, representing a substantial overall increase. The growth rate appears to have increased markedly after 2022. Adjusted total assets also increased over the period, moving from US$44,914 million to US$106,578 million, but at a lower magnitude than reported assets.

Shareholders’ Equity

Reported total shareholders’ equity also shows an upward trend, rising from US$8,979 million in 2021 to US$26,535 million in 2025. Adjusted shareholders’ equity, however, presents a more volatile pattern. While increasing overall from US$5,087 million to US$20,637 million, it experienced a decrease between 2022 and 2023 before resuming growth. The difference between reported and adjusted equity suggests a significant portion of reported equity is tied to items reduced in the adjusted calculation.

Reported Financial Leverage

Reported financial leverage, calculated as total assets divided by total shareholders’ equity, decreased from 5.44 in 2021 to 4.24 in 2025. This indicates a decreasing reliance on equity financing relative to assets, potentially due to increased profitability or debt financing. The ratio experienced fluctuations, peaking at 5.94 in 2023.

Adjusted Financial Leverage

Adjusted financial leverage exhibits a different trend. It began at 8.83 in 2021, decreased to 6.91 in 2022, then increased to 10.13 in 2023 before declining to 5.16 in 2025. This suggests that when goodwill and intangible assets are adjusted, the company appears more leveraged. The higher adjusted leverage ratios throughout the period indicate a greater proportion of assets are funded by equity when these adjustments are considered. The decrease in 2025 brings the adjusted leverage closer to the reported leverage.

The divergence between reported and adjusted figures, particularly in financial leverage, highlights the importance of considering the impact of goodwill and intangible assets when assessing the company’s financial risk and capital structure. The increasing trend in both reported and adjusted total assets suggests continued expansion, while the differing trends in the leverage ratios indicate a changing relationship between assets and equity when accounting for these adjustments.

Shareholders’ equity, both as reported and adjusted, demonstrates a generally increasing trend over the five-year period. However, the magnitude of growth differs significantly between the two measures. Reported return on equity (ROE) fluctuates, while adjusted ROE consistently remains high, though with a recent shift in trend.

Shareholders’ Equity

Reported total shareholders’ equity increased from US$8,979 million in 2021 to US$26,535 million in 2025, representing substantial growth. Adjusted total shareholders’ equity also increased over the period, moving from US$5,087 million to US$20,637 million, but the growth is less pronounced than that of the reported figure. The divergence between reported and adjusted equity widens considerably in later years, particularly from 2024 onwards.

Reported Return on Equity (ROE)

Reported ROE began at 62.16% in 2021, decreased to 48.65% in 2023, and then rebounded strongly to 77.78% in 2025. This indicates considerable volatility in profitability as measured by the reported equity base. The increase in 2024 and 2025 suggests improved performance relative to the reported equity.

Adjusted Return on Equity (ROE)

Adjusted ROE consistently exceeds 89% throughout the period. It started at 109.72% in 2021, then experienced a gradual decline to 89.85% in 2023. However, it then increased significantly to 125.75% in 2024 before moderating slightly to 100.01% in 2025. The adjusted ROE demonstrates a more stable, albeit fluctuating, performance compared to the reported ROE. The recent moderation in 2025, while still high, warrants further investigation.

The substantial difference between reported and adjusted ROE suggests that a significant portion of reported shareholders’ equity may be attributable to items that are adjusted out in the calculation of adjusted equity. The increasing divergence between the two equity measures, coupled with the trends in adjusted ROE, indicates a potential shift in the composition of equity and its impact on profitability assessments.

The period under review demonstrates increasing total assets, both as reported and adjusted, from 2021 through 2025. However, the adjusted figures consistently present a lower asset base than the reported values, suggesting the impact of goodwill and intangible assets on the reported total. Return on Assets (ROA), both reported and adjusted, exhibits a generally positive trend, though with some fluctuation.

Total Assets

Reported total assets increased steadily from US$48,806 million in 2021 to US$112,476 million in 2025. Adjusted total assets followed a similar trajectory, rising from US$44,914 million to US$106,578 million over the same period. The difference between reported and adjusted assets widened considerably from US$3,892 million in 2021 to US$5,900 million in 2025, indicating a growing proportion of goodwill and intangible assets contributing to the overall asset base.

Reported ROA

Reported ROA experienced an initial increase from 11.44% in 2021 to 12.62% in 2022. A subsequent decline to 8.19% was observed in 2023, followed by a strong recovery to 13.45% in 2024 and further growth to 18.35% in 2025. This suggests a period of profitability challenges in 2023, followed by significant improvements in subsequent years.

Adjusted ROA

Adjusted ROA mirrored the trend of reported ROA, increasing from 12.43% in 2021 to 13.75% in 2022. It also decreased to 8.87% in 2023, before rebounding to 14.52% in 2024 and reaching 19.37% in 2025. The adjusted ROA consistently exceeded the reported ROA across all years, indicating that excluding goodwill and intangible assets results in a higher profitability ratio. The difference between the two ROA figures remained relatively stable, generally ranging between 0.7% and 1.0%.

The consistent difference between reported and adjusted ROA highlights the influence of goodwill and intangible assets on the overall profitability metrics. While reported ROA benefits from these assets, the adjusted ROA provides a clearer picture of operational profitability, excluding the impact of acquisitions and internally generated intangibles. The strong growth in both ROA measures in 2024 and 2025 suggests improved operational performance and efficient asset utilization.