Eli Lilly (LLY) reported significantly better-than-expected earnings Thursday, with revenue coming in 13% higher than Wall Street estimates of $11.3 billion for the second quarter.

That's a 36% jump in revenue from the prior year, largely driven by GLP-1 drugs Mounjaro and Zepbound, with combined sales of $4.3 billion, compared to Wall Street consensus of $3.2 billion. The boost in sales comes just as the US Food and Drug Administration took both drugs off its shortage list — signaling Lilly's supply constraints have eased.

As a result, Lilly increased its full-year outlook for the second time this year — a $5 billion increase in guidance since it first set the bar at $40.4 billion to $41.6 billion at the end of 2023. Guidance is now set at $45.4 billion to $46.6 billion for the year.

The stock was up more than 10% on the news Thursday morning.

Mizuho's health sector expert Jared Holz said in a note Thursday that the beat on earnings should allay any fears of the pace of uptake of the drugs.

"We believe many investors came into this quarter on the sidelines or with a short bias given expectations/valuation but [it's] incredibly rare to see results out of a large-cap pharma company as excellent as what we are seeing here with LLY this morning," Holz said.

Future outlook

Besides the ongoing demand for GLP-1s, Lilly is also focused on advancing a pill form (orforglipron) of the drug in clinical trials as well as additional use cases for the existing drugs — which would result in greater adoption of and sales of the injectables.

Lilly said it has already submitted an application for the use of Zepbound to treat sleep apnea in the US. Additional uses for both Lilly and Novo's GLP-1s will open the door to greater insurance coverage, as many large payers still won't cover the drugs for weight loss alone.

JPMorgan analyst Chris Schott said in a note Thursday the story isn't a one-time shot for Lilly.

"LLY remains one of our favorite names in the group as we see further upside to Street estimates as injectable capacity ramps, orforglipron comes to market and outcomes data supports broad use of obesity medications," Schott said.

Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. Follow Anjalee on all social media platforms @AnjKhem.

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