One of the things that we’ve all speculated about when it comes to the SEC’s semiannual reporting proposal is whether large cap companies would elect to move to semiannual reporting. While most issuers have remained mum about their intentions, one mega cap company recently went public about its plans to move to semiannual reporting. In a LinkedIn post, Prof. Ann Lipton flagged a recent comment letter submitted by Eli Lilly on the SEC’s proposal in which the pharmaceutical giant  voiced its support and said that it currently intends to opt in if the rule is adopted.

Lilly says that it will supplement its semiannual reports with voluntary quarterly earnings releases, and that as a result, its decision will have a minimal impact on its investors. This excerpt explains Lilly’s position:

Lilly believes that the proposal will not meaningfully diminish the financial information available to our investors. In line with current market practice, Lilly initially and broadly disseminates its quarterly financial results through an earnings release. As a general matter, our earnings release contains all material information related to the applicable quarter. Subsequent to our earnings release, we file our quarterly report on Form 10-Q. Given this practice, we receive few inquiries from investors and other stakeholders about information available exclusively in our Form 10-Q filings.

If adopted, Lilly anticipates continuing to furnish quarterly earnings releases containing financial and operational metrics relied upon by investors to make informed and timely decisions. This is consistent with our longstanding practice and investor expectations. In combination with ongoing Form 8-K disclosure obligations, we believe that our investors and the public at large would continue to be well-informed with decision-useful information.

It appears that Lilly may not be the only member of Big Pharma that will move to semiannual reporting if the SEC approves the rule proposal.  Check out this comment letter from a group of pharmaceutical companies that include not only Eli Lilly, but also Bristol Myers Squibb, Gilead Sciences, Johnson & Johnson, Merck and Pfizer. That letter says that “If the proposal is adopted, some of our Companies currently anticipate electing semiannual reporting on Form 10-S while continuing to furnish voluntary quarterly earnings releases to keep investors informed.”

It should be noted that Lilly and other commenters supporting the proposal are vastly outnumbered. In fact, if you judge solely on the comments submitted, allowing a semiannual reporting option looks to be less popular than wet socks.  According to Prof. Tzachi Zach’s comment tracker, 99% of the 11,997 comments submitted to date oppose the proposal. Only 62 letters voice full-throated support for the proposal, while 67 offer conditional support.  If you think that Prof. Zach got to that 99% number by including “astroturfed” form letters, you’re wrong – he excluded almost 60,000 of those letters from the count.

– John Jenkins