Stock Analysis on Net
Stock Analysis on Net

Eli Lilly & Co. (NYSE:LLY)

Common-Size Income Statement 

Eli Lilly & Co., common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 31, 2025 Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Revenue 100.00 100.00 100.00 100.00 100.00
Cost of sales -16.96 -18.69 -20.75 -23.23 -25.82
Gross margin 83.04% 81.31% 79.25% 76.77% 74.18%
Research and development -20.46 -24.40 -27.29 -25.19 -24.47
Marketing, selling, and administrative -17.02 -19.08 -21.69 -22.57 -22.71
Acquired in-process research and development -4.46 -7.28 -11.14 -3.18 -3.43
Asset impairment, restructuring, and other special charges -0.74 -1.91 -0.20 -0.86 -1.12
Operating income 40.35% 28.64% 18.92% 24.97% 22.45%
Interest expense on borrowings -1.37 -1.73 -1.42 -1.16 -1.20
Other income (expense) 0.50 1.25 1.71 0.04 0.49
Other, net, income (expense) -0.88% -0.49% 0.28% -1.12% -0.71%
Income before income taxes 39.48% 28.15% 19.21% 23.85% 21.74%
Income taxes -7.81 -4.64 -3.85 -1.97 -2.03
Net income 31.67% 23.51% 15.36% 21.88% 19.71%

Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).

The common-size income statement reveals several noteworthy trends over the five-year period. A consistent improvement in gross margin is observed, alongside fluctuating expenses and ultimately, a significant increase in net income as a percentage of revenue.

Profitability
Gross margin demonstrates a steady upward trend, increasing from 74.18% in 2021 to 83.04% in 2025. This suggests improving efficiency in production or increased pricing power. Operating income as a percentage of revenue exhibits more volatility, peaking at 28.64% in 2024 before reaching a high of 40.35% in 2025. Net income shows a similar pattern, rising from 19.71% in 2021 to 31.67% in 2025, indicating a substantial improvement in overall profitability.
Cost of Sales
Cost of sales consistently decreases as a percentage of revenue, moving from -25.82% in 2021 to -16.96% in 2025. This decline contributes directly to the observed improvement in gross margin.
Operating Expenses
Research and development expenses initially increase as a percentage of revenue, peaking at -27.29% in 2023, before declining to -20.46% in 2025. Marketing, selling, and administrative expenses also decrease steadily over the period, from -22.71% to -17.02%. Acquired in-process research and development shows significant fluctuation, with a notable increase to -11.14% in 2023, followed by a decrease to -4.46% in 2025. Asset impairment, restructuring, and other special charges are relatively small but show an increase in 2024 before decreasing again in 2025.
Non-Operating Items
Interest expense on borrowings remains relatively stable, fluctuating between -1.16% and -1.73% of revenue. Other income (expense) and other net income (expense) exhibit minor variations throughout the period. These items have a limited impact on overall profitability.
Income Taxes
Income taxes as a percentage of revenue increase over time, from -2.03% in 2021 to -7.81% in 2025. This increase is consistent with the growth in income before income taxes and suggests a stable effective tax rate.

Overall, the financial performance demonstrates a positive trajectory. The company appears to be managing its costs effectively, particularly cost of sales, while strategically investing in research and development. The substantial increase in net income as a percentage of revenue suggests successful execution of its business strategy.

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