Financial Performance - Elanco's Q2 2025 revenue reached $1.241 billion, a 5% increase compared to $1.184 billion in Q2 2024 [34] - Organic constant currency (CC) revenue growth was 8% [9, 11] - Adjusted EBITDA for Q2 2025 was $238 million, compared to $275 million in Q2 2024 [34] - Adjusted earnings per share (EPS) diluted was $0.26, compared to $0.30 in Q2 2024 [34] Innovation and Portfolio - Innovation revenue contribution in H1 2025 was $420 million [9, 15] - The 2025 innovation sales target has been raised to $720-$800 million [9, 14, 15] - U S Pet Health segment experienced an 11% revenue increase [9, 32] Financial Outlook and Strategy - The company is increasing organic CC revenue growth guidance for 2025 to 5%-6% [10] - Adjusted EBITDA guidance for 2025 is $850-$890 million [10] - Adjusted EPS guidance for 2025 is $0.85-$0.91 [10] - The company expects a $500-$550 million gross debt paydown in 2025, targeting a net leverage ratio of 3.8x-4.1x [9]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Elanco Animal Health's strong Q2 2025 performance, exceeding expectations with organic revenue growth and accelerated deleveraging, leads to an upward revision of full-year 2025 guidance [Second Quarter 2025 Performance Overview](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Overview) Elanco Animal Health achieved its eighth consecutive quarter of growth in Q2 2025, with revenue exceeding expectations, driven by 8% organic fixed currency growth and 11% in U.S. pet health - The company achieved its eighth consecutive quarter of growth, with performance exceeding expectations[3](index=3&type=chunk) - The innovative product portfolio drove accelerated organic fixed currency revenue growth of **8%**, with U.S. pet health growing **11%**[3](index=3&type=chunk) - The company deleveraged faster than anticipated, reaching a net leverage ratio of **4.0x** at quarter-end[3](index=3&type=chunk) Key Financial Data for Q2 2025 | Metric | Amount (Millions USD) | Change (%) | Organic Fixed Currency Growth (%) | | :--- | :--- | :--- | :--- | | Revenue | $1,241 | 5% | 8% | | Reported Net Income | $11 | (122)% | | | Adjusted Net Income | $131 | | | | Adjusted EBITDA | $238 | (13)% | | | Reported EPS | $0.02 | NM | | | Adjusted EPS | $0.26 | (13)% | | | Net Leverage Ratio | 4.0x | | | [Full Year 2025 Outlook & Key Targets](index=1&type=section&id=Full%20Year%202025%20Outlook%20%26%20Key%20Targets) Elanco raised its full-year 2025 outlook, projecting revenue of $4.57 billion to $4.62 billion, with organic fixed currency revenue growth of 5% to 6% - The company raised its full-year 2025 outlook, with anticipated growth in both revenue and adjusted EBITDA[4](index=4&type=chunk) - The 2025 innovation revenue target was increased by **$60 million**, reaching **$720 million to $800 million**[4](index=4&type=chunk) - The year-end 2025 net leverage ratio target improved to **3.8x to 4.1x**, driven by year-to-date execution and disciplined working capital management[4](index=4&type=chunk) Full Year 2025 Guidance (Updated) | Metric | Updated Guidance (Millions USD) | Change | | :--- | :--- | :--- | | Revenue | $4,570 to $4,620 | Upward | | Reported Net Loss | $(38) to $(14) | | | Adjusted EBITDA | $850 to $890 | Upward | | Reported Loss Per Share | $(0.08) to $(0.03) | | | Adjusted Earnings Per Share | $0.85 to $0.91 | Upward | | Expected Total Debt Repayment | $500 to $550 | Increased | | Year-End Net Leverage Target | 3.8x to 4.1x | Improved | [Business & Financial Review](index=2&type=section&id=Business%20%26%20Financial%20Review) A comprehensive review of Elanco's Q2 2025 business and financial performance, highlighting revenue drivers, profitability, and balance sheet strength [Second Quarter 2025 Financial Results](index=2&type=section&id=Second%20Quarter%202025%20Financial%20Results) Elanco achieved $1.241 billion in total revenue for Q2 2025, a 5% year-over-year increase and 8% organic fixed currency growth, driven by strong pet health performance Q2 2025 Financial Performance Overview | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | Change (%) | Organic Fixed Currency Growth (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $1,241 | $1,184 | 5% | 8% | | Gross Profit | $713 | $689 | 3% | | | Reported Net Income (Loss) | $11 | $(50) | (122)% | | | Adjusted EBITDA | $238 | $275 | (13)% | | | Reported EPS | $0.02 | $(0.10) | NM | | | Adjusted EPS | $0.26 | $0.30 | (13)% | | - Total revenue reached **$1.241 billion**, a 5% year-over-year increase and 8% organic fixed currency growth, primarily benefiting from new products and favorable foreign exchange impacts[7](index=7&type=chunk) - Reported net income improved from a **$50 million loss** in Q2 2024 to a **$11 million profit**, while adjusted net income was **$131 million**, a 13.3% decrease year-over-year[15](index=15&type=chunk) [Revenue Performance by Segment](index=2&type=section&id=Revenue%20Performance%20by%20Segment) Pet Health revenue grew 11% to $643 million, driven by new products, while Farm Animal revenue saw 6% organic fixed currency growth to $583 million despite the aquaculture divestiture Q2 2025 Revenue by Segment | Segment | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | Change (%) | Organic Fixed Currency Growth (%) | | :--- | :--- | :--- | :--- | :--- | | Pet Health | $643 | $579 | 11% | 10% | | Farm Animal | $583 | $594 | (2)% | 6% | | - Cattle | $268 | $257 | 4% | 4% | | - Poultry | $215 | $198 | 9% | 7% | | - Swine | $100 | $90 | 11% | 10% | | - Aquaculture | $— | $49 | (100)% | | | Contract Manufacturing & Other | $15 | $11 | 36% | | - Pet Health revenue grew **11%**, with price contributing 4% and volume growth of 6%, primarily driven by new products like Credelio Quattro, AdTab, and Zenrelia[8](index=8&type=chunk)[9](index=9&type=chunk) - Farm Animal organic fixed currency growth was **6%**, with price contributing 2% and volume growth of 4%, primarily due to increased U.S. cattle (driven by Experior) and international poultry and swine sales[9](index=9&type=chunk) - International farm animal product sales benefited from customer pull-forward, particularly in China, with an estimated **$10 million to $20 million** of future purchases accelerated into Q2[9](index=9&type=chunk) [Gross Profit and Operating Expenses](index=3&type=section&id=Gross%20Profit%20and%20Operating%20Expenses) Gross profit for Q2 2025 was $713 million, with a gross margin of 57.5%, a 75 basis point decrease year-over-year, primarily due to inflation and higher manufacturing costs - Gross profit was **$713 million**, with a gross margin of **57.5%**, a 75 basis point decrease year-over-year, primarily due to inflation and increased manufacturing costs at the Speke facility[10](index=10&type=chunk) - Total operating expenses were **$492 million**, an 11% increase, with marketing, selling, and administrative expenses up 13% to **$400 million**, and R&D expenses up 3% to **$92 million**[11](index=11&type=chunk) - Asset impairment, restructuring, and other special charges were **$1 million**, significantly lower than **$80 million** in Q2 2024, which was primarily related to pet health IPR&D asset impairment and the aquaculture divestiture[12](index=12&type=chunk) [Net Interest Expense and Tax Rate](index=3&type=section&id=Net%20Interest%20Expense%20and%20Tax%20Rate) Reported net interest expense decreased by $17 million to $48 million in Q2 2025, while the adjusted effective tax rate increased to 21.7% from 16.9% in Q2 2024 - Reported net interest expense was **$48 million**, a **$17 million** decrease year-over-year, primarily due to lower debt balances[13](index=13&type=chunk) - Adjusted net interest expense was **$38 million**, a **$27 million** decrease year-over-year[13](index=13&type=chunk) - The reported effective tax rate was **55.4%**, and the adjusted effective tax rate was **21.7%**, higher than 16.9% in the prior year period[14](index=14&type=chunk) [Net Income and Earnings Per Share](index=3&type=section&id=Net%20Income%20and%20EPS) Reported net income for Q2 2025 was $11 million ($0.02 EPS), a significant improvement from a $50 million net loss in Q2 2024, while adjusted net income decreased to $131 million ($0.26 EPS) Q2 2025 Net Income and EPS | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Reported Net Income (Millions USD) | $11 | $(50) | (122)% | | Reported EPS | $0.02 | $(0.10) | NM | | Adjusted Net Income (Millions USD) | $131 | $147 | (11)% | | Adjusted EPS | $0.26 | $0.30 | (13)% | - The decrease in adjusted net income was primarily due to increased sales and marketing expenses supporting global new product launches and the impact of the aquaculture divestiture last year[15](index=15&type=chunk) [Adjusted EBITDA](index=3&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA for Q2 2025 was $238 million, a 13.5% year-over-year decrease, resulting in an adjusted EBITDA margin of 19.2%, down from 23.2% in Q2 2024 Q2 2025 Adjusted EBITDA | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | Change (%) | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $238 | $275 | (13.5)% | | Adjusted EBITDA Margin | 19.2% | 23.2% | (400) bps | - The decrease in adjusted EBITDA was primarily driven by increased sales and marketing expenses related to global launches and the impact of the aquaculture divestiture[16](index=16&type=chunk) [Select Business Highlights](index=2&type=section&id=Select%20Business%20Highlights) Elanco achieved significant business milestones in Q2, including strong market penetration for Credelio Quattro, EU approval for Zenrelia, and USDA approval for TruCan Ultra CIV vaccine - Credelio Quattro™ captured approximately **14%** market share in broad-spectrum sales within U.S. veterinary clinics[8](index=8&type=chunk) - Zenrelia™ received European Commission approval, with a planned launch in EU countries in Q3 2025[8](index=8&type=chunk) - Experior® sales grew over **80%** year-over-year in Q2, and AdTab™ sales grew over **60%** year-over-year in Q2[8](index=8&type=chunk) - TruCan™ Ultra CIV received USDA approval and launched in the U.S. in July, enhancing Elanco's vaccine portfolio[8](index=8&type=chunk) - **$295 million** was generated from the monetization of lotilaner U.S. royalties, used for debt repayment[8](index=8&type=chunk) - Elanco Ascend, a productivity and capability program, was initiated, expected to deliver additional value in 2026 and beyond[8](index=8&type=chunk) - Robert (Bob) VanHimbergen was appointed Executive Vice President and Chief Financial Officer[8](index=8&type=chunk) [Working Capital and Balance Sheet](index=3&type=section&id=Working%20Capital%20and%20Balance%20Sheet) Operating cash flow for Q2 2025 was $237 million, and the net leverage ratio improved to 4.0x adjusted EBITDA as of June 30, 2025, driven by strong cash generation and debt repayment - Operating cash flow was **$237 million**, higher than **$200 million** in the prior year period[17](index=17&type=chunk) - As of June 30, 2025, the net leverage ratio was **4.0x** adjusted EBITDA, a 0.3x reduction from December 31, 2024[18](index=18&type=chunk) - The company anticipates the year-end net leverage ratio to improve to **3.8x to 4.1x**[18](index=18&type=chunk) [Financial Guidance](index=4&type=section&id=Financial%20Guidance) Elanco provides updated financial guidance for full-year 2025 and Q3 2025, reflecting strong performance and strategic investments in innovation [Full Year 2025 Guidance Update](index=4&type=section&id=Full%20Year%202025%20Guidance%20Update) Elanco updated its full-year 2025 guidance, raising revenue to $4.57 billion-$4.62 billion and adjusted EBITDA to $850 million-$890 million, reflecting strong Q2 execution and favorable foreign exchange Full Year 2025 Guidance (Updated) | Metric | May Guidance (Millions USD) | August Guidance (Millions USD) | | :--- | :--- | :--- | | Revenue | $4,510 to $4,580 | $4,570 to $4,620 | | Reported Net Loss | $(35) to $(7) | $(38) to $(14) | | Adjusted EBITDA | $830 to $870 | $850 to $890 | | Reported Loss Per Share | $(0.07) to $(0.01) | $(0.08) to $(0.03) | | Adjusted Earnings Per Share | $0.80 to $0.86 | $0.85 to $0.91 | - Favorable foreign exchange is expected to provide an approximate **$35 million** tailwind to revenue[20](index=20&type=chunk) - Excluding the impact of foreign exchange, divested royalty revenue, and the aquaculture divestiture, the company expects revenue growth of **5% to 6%** (previously 4% to 6%)[20](index=20&type=chunk) - Adjusted gross margin is projected to be **54.5% to 55.0%**, an increase of 30 basis points from the previous range[21](index=21&type=chunk) - Operating expenses are expected to increase by approximately **7%** at constant currency (previously 6%), reflecting strategic investments in the global launch of the innovation portfolio[21](index=21&type=chunk) [Full Year 2025 EPS Guidance Reconciliation](index=12&type=section&id=Full%20Year%202025%20EPS%20Guidance%20Reconciliation) Full-year 2025 reported loss per share guidance of $(0.08) to $(0.03) is reconciled to adjusted EPS guidance of $0.85 to $0.91 by adjusting for non-GAAP items Full Year 2025 EPS Guidance Reconciliation | Item | Full Year 2025 Guidance | | :--- | :--- | | Reported Loss Per Share | $(0.08) to $(0.03) | | Amortization of Intangible Assets | Approx. $1.08 | | Asset Impairment, Restructuring & Other Special Charges | $0.02 to $0.04 | | Other Net Expense | $0.03 to $0.04 | | Royalty Monetization | Approx. $0.03 | | Total Adjustments | $0.93 to $0.94 | | Adjusted Earnings Per Share | $0.85 to $0.91 | [Full Year 2025 Adjusted EBITDA Guidance Reconciliation](index=12&type=section&id=Full%20Year%202025%20Adjusted%20EBITDA%20Guidance%20Reconciliation) Full-year 2025 reported net loss guidance of $(38) million to $(14) million is reconciled to adjusted EBITDA guidance of $850 million to $890 million by adjusting for non-GAAP items Full Year 2025 Adjusted EBITDA Guidance Reconciliation | Item | Full Year 2025 Guidance (Millions USD) | | :--- | :--- | | Reported Net Loss | $(38) to $(14) | | Net Interest Expense (including royalty monetization liability) | Approx. $220 | | Income Tax (Benefit) Expense | $(13) to $8 | | Depreciation and Amortization | Approx. $670 | | EBITDA | $836 to $886 | | Total Non-GAAP Adjustments | Approx. $10 | | Adjusted EBITDA | $850 to $890 | | Adjusted EBITDA Margin | 18.6% to 19.3% | [Third Quarter 2025 Guidance](index=4&type=section&id=Third%20Quarter%202025%20Guidance) Elanco projects Q3 2025 revenue between $1.08 billion and $1.11 billion, with organic fixed currency revenue growth of 4% to 6%, and adjusted EBITDA between $160 million and $180 million Third Quarter 2025 Guidance | Metric | Guidance (Millions USD) | | :--- | :--- | | Revenue | $1,080 to $1,110 | | Reported Net Loss | $(66) to $(45) | | Adjusted EBITDA | $160 to $180 | | Reported Loss Per Share | $(0.13) to $(0.09) | | Adjusted Earnings Per Share | $0.12 to $0.16 | - Favorable foreign exchange is expected to provide an approximate **$10 million** tailwind to revenue[22](index=22&type=chunk) - Growth is anticipated to be impacted by approximately **$15 million** in revenue and **$10 million** in adjusted EBITDA from pre-tariff customer pull-forward, primarily from China[22](index=22&type=chunk) - Operating expenses are expected to increase by approximately **8%** at constant currency, reflecting strategic investments in the global launch of the innovation portfolio[22](index=22&type=chunk) [Third Quarter 2025 EPS Guidance Reconciliation](index=13&type=section&id=Third%20Quarter%202025%20EPS%20Guidance%20Reconciliation) Q3 2025 reported loss per share guidance of $(0.13) to $(0.09) is reconciled to adjusted EPS guidance of $0.12 to $0.16 by adjusting for non-GAAP items Third Quarter 2025 EPS Guidance Reconciliation | Item | Third Quarter 2025 Guidance | | :--- | :--- | | Reported Loss Per Share | $(0.13) to $(0.09) | | Amortization of Intangible Assets | Approx. $0.27 | | Asset Impairment, Restructuring & Other Special Charges | $0.00 to $0.01 | | Other Net Expense | Approx. $0.01 | | Royalty Monetization | Approx. $0.01 | | Total Adjustments | Approx. $0.25 | | Adjusted Earnings Per Share | $0.12 to $0.16 | [Third Quarter 2025 Adjusted EBITDA Guidance Reconciliation](index=13&type=section&id=Third%20Quarter%202025%20Adjusted%20EBITDA%20Guidance%20Reconciliation) Q3 2025 reported net loss guidance of $(66) million to $(45) million is reconciled to adjusted EBITDA guidance of $160 million to $180 million by adjusting for non-GAAP items Third Quarter 2025 Adjusted EBITDA Guidance Reconciliation | Item | Third Quarter 2025 Guidance (Millions USD) | | :--- | :--- | | Reported Net Loss | $(66) to $(45) | | Net Interest Expense (including royalty monetization liability) | Approx. $50 | | Income Tax (Benefit) Expense | $(6) to $1 | | Depreciation and Amortization | Approx. $170 | | EBITDA | $158 to $182 | | Total Non-GAAP Adjustments | Approx. $2 | | Adjusted EBITDA | $160 to $180 | | Adjusted EBITDA Margin | 14.8% to 16.2% | [Non-GAAP Financial Measures & Reconciliations (Historical)](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations%20(Historical)) This section provides explanations and reconciliations for Elanco's non-GAAP financial measures, offering a clearer view of operational performance trends [Explanation of Non-GAAP Measures](index=6&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Elanco utilizes various non-GAAP financial measures, such as adjusted revenue growth, EBITDA, and adjusted EPS, to provide transparent insights into its operational performance and trends - The company uses non-GAAP financial measures to assess and analyze operating results and trends, providing greater transparency into operational performance[29](index=29&type=chunk)[31](index=31&type=chunk) - Non-GAAP metrics include revenue growth excluding divestitures and foreign exchange, EBITDA, adjusted EBITDA, adjusted net income, adjusted EPS, adjusted gross profit, adjusted gross margin, net debt, and net debt leverage[29](index=29&type=chunk) - These non-GAAP measures should not be considered a substitute for GAAP reported metrics, and investors should primarily use GAAP measures to evaluate the company's performance[31](index=31&type=chunk) [Adjusted Gross Profit and Margin Reconciliation](index=9&type=section&id=Adjusted%20Gross%20Profit%20and%20Margin%20Reconciliation) Adjusted gross profit, defined as gross profit less divested royalty revenue and cost of sales adjustments, was $709 million in Q2 2025, with an adjusted gross margin of 57.3% Adjusted Gross Profit and Margin Reconciliation | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | | :--- | :--- | :--- | | GAAP Reported Gross Profit | $713 | $689 | | Divested Royalty Revenue | $(4) | $— | | Cost of Sales Adjustments | $— | $— | | Adjusted Gross Profit | $709 | $689 | | Adjusted Gross Margin | 57.3% | 58.2% | [Adjusted Net Income and EPS Reconciliation](index=9&type=section&id=Adjusted%20Net%20Income%20and%20EPS%20Reconciliation) Adjusted net income and EPS are reconciled by excluding non-GAAP items such as intangible asset amortization and special charges, with Q2 2025 adjusted net income at $131 million and adjusted EPS at $0.26 Q2 2025 Adjusted Net Income and EPS Reconciliation | Item | Q2 2025 (Millions USD) | Q2 2025 EPS | Q2 2024 (Millions USD) | Q2 2024 EPS | | :--- | :--- | :--- | :--- | :--- | | GAAP Reported Net Income (Loss) | $11 | $0.02 | $(50) | $(0.10) | | Amortization of Intangible Assets | $136 | $0.27 | $131 | $0.26 | | Asset Impairment, Restructuring & Other Special Charges | $1 | $0.00 | $80 | $0.16 | | Divested Royalty Revenue | $(4) | $(0.01) | $— | $— | | Interest Expense Adjustments | $10 | $0.02 | $— | $— | | Income Tax Expense | $(22) | $(0.04) | $(12) | $(0.02) | | Adjusted Net Income | $131 | $0.26 | $147 | $0.30 | H1 2025 Adjusted Net Income and EPS Reconciliation | Item | H1 2025 (Millions USD) | H1 2025 EPS | H1 2024 (Millions USD) | H1 2024 EPS | | :--- | :--- | :--- | :--- | :--- | | GAAP Reported Net Income (Loss) | $78 | $0.16 | $(18) | $(0.04) | | Cost of Sales Adjustments | $1 | $0.00 | $— | $— | | Amortization of Intangible Assets | $264 | $0.53 | $264 | $0.53 | | Asset Impairment, Restructuring & Other Special Charges | $10 | $0.02 | $126 | $0.25 | | Divested Royalty Revenue | $(4) | $(0.01) | $— | $— | | Interest Expense Adjustments | $10 | $0.02 | $— | $— | | Other Net Expense | $4 | $0.01 | $3 | $0.01 | | Income Tax Expense | $(48) | $(0.10) | $(61) | $(0.12) | | Adjusted Net Income | $315 | $0.63 | $314 | $0.63 | [Adjusted EBITDA and Margin Reconciliation](index=10&type=section&id=Adjusted%20EBITDA%20and%20Margin%20Reconciliation) Adjusted EBITDA for Q2 2025 was $238 million, with an adjusted EBITDA margin of 19.2%, calculated by adjusting net income for interest, taxes, depreciation, amortization, and other non-GAAP items Adjusted EBITDA and Margin Reconciliation | Item | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | | :--- | :--- | :--- | | GAAP Reported Net Income (Loss) | $11 | $(50) | | Net Interest Expense | $48 | $65 | | Income Tax Expense (Benefit) | $14 | $18 | | Depreciation and Amortization | $169 | $164 | | EBITDA | $242 | $197 | | Total Non-GAAP Adjustments | $(4) | $78 | | Adjusted EBITDA | $238 | $275 | | Adjusted EBITDA Margin | 19.2% | 23.2% | [Gross and Net Debt and Net Leverage Ratio](index=11&type=section&id=Gross%20and%20Net%20Debt%20and%20Net%20Leverage%20Ratio) As of June 30, 2025, Elanco's net debt was $3.436 billion, resulting in a net leverage ratio of 4.0x, calculated by adjusting total debt for cash and financing lease liabilities Net Debt Calculation as of June 30, 2025 | Item | Amount (Millions USD) | | :--- | :--- | | Long-term debt | $4,148 | | Current portion of long-term debt | $61 | | Less: Unamortized debt issuance costs | $(21) | | **Total Debt** | **$4,230** | | Less: Cash and cash equivalents | $(539) | | Less: Finance lease liabilities | $(255) | | **Net Debt** | **$3,436** | Net Leverage Ratio Calculation as of June 30, 2025 | Item | Amount (Millions USD) | | :--- | :--- | | Net Debt | $3,436 | | Adjusted EBITDA for the trailing twelve months | $855 | | **Net Leverage Ratio** | **4.0** | [Company Information & Legal Disclosures](index=5&type=section&id=Company%20Information%20%26%20Legal%20Disclosures) This section provides details on Elanco's corporate communications, company profile, forward-looking statements, and definitions of key financial terms [Webcast & Conference Call Details](index=5&type=section&id=Webcast%20%26%20Conference%20Call%20Details) Elanco hosted a webcast and conference call on August 7, 2025, at 8:00 AM ET to discuss Q2 results and provide updated financial guidance, with a replay available online - The company held a webcast and conference call on **August 7, 2025, at 8:00 AM ET**[24](index=24&type=chunk) - Investors, analysts, media members, and the public can access the live event and slides via the Elanco website, with a replay available within hours after the event[24](index=24&type=chunk) [About Elanco](index=5&type=section&id=About%20Elanco) Elanco Animal Health Incorporated (NYSE: ELAN) is a global leader in animal health, dedicated to innovating products and services for preventing and treating diseases in farm animals and pets - Elanco Animal Health Incorporated (NYSE: ELAN) is a global leader in animal health[25](index=25&type=chunk) - The company is dedicated to innovating and providing products and services to prevent and treat diseases in farm animals and pets[25](index=25&type=chunk) - The company's vision is "Food and Companionship Enriching Life," with a purpose to "make a difference" for animals, customers, society, and employees[25](index=25&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=5&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) This press release contains forward-looking statements regarding product launches, revenue, 2025 guidance, and debt levels, subject to inherent uncertainties and risks that may cause actual results to differ materially - This press release contains forward-looking statements regarding product launches, revenue, 2025 guidance, debt levels, and industry and operational expectations[26](index=26&type=chunk) - Forward-looking statements are based on current expectations and assumptions but are subject to inherent uncertainties, risks, and changes in circumstances, where actual results may differ materially from those stated[27](index=27&type=chunk) - Key risk factors include a highly competitive industry, success of R&D and regulatory approvals, disruptive innovation, generic competition, restrictions on antibiotic use, animal disease outbreaks, customer and distributor consolidation, manufacturing issues, reliance on information technology systems, climate conditions, labor disputes, impact of significant debt, interest rate changes, and intellectual property challenges[27](index=27&type=chunk)[30](index=30&type=chunk) [Availability of Certain Information](index=7&type=section&id=Availability%20of%20Certain%20Information) Elanco discloses important corporate information, including investor overview presentations, to investors, customers, employees, and other stakeholders through its website - The company discloses important corporate information to investors, customers, employees, and relevant parties through its website[32](index=32&type=chunk) - Investors can access the investor overview presentation on the "Events & Presentations" page of the company's website[32](index=32&type=chunk) [Additional Information and Definitions](index=7&type=section&id=Additional%20Information%20and%20Definitions) This section defines "innovation revenue" as incremental revenue from new products and lifecycle management, and "organic fixed currency revenue growth" as revenue growth excluding divestitures and foreign exchange impacts - Innovation revenue is defined as incremental revenue from new products, lifecycle management, specific geographic expansion, and business development transactions, excluding cannibalization of the base portfolio[33](index=33&type=chunk) - Organic fixed currency revenue growth is defined as revenue growth excluding the aquaculture divestiture (July 9, 2024), divested royalty revenue (May 2025), and the impact of foreign exchange[34](index=34&type=chunk)

Core Insights - Elanco Animal Health reported its financial results for Q2 2025, achieving its 8th consecutive quarter of growth with an organic constant currency revenue growth of 8% [2][4] - The company raised its full-year revenue guidance to a range of $4,570 million to $4,620 million, reflecting strong performance and favorable foreign exchange rates [4][21] - Elanco's net leverage ratio improved to 4.0x adjusted EBITDA, with expectations to end the year between 3.8x and 4.1x [19][21] Financial Results - Q2 2025 revenue reached $1,241 million, a 5% increase year-over-year, with an 8% organic constant currency growth [4][8] - Reported net income was $11 million, compared to a net loss of $50 million in Q2 2024 [16][38] - Adjusted EBITDA for Q2 2025 was $238 million, a 13.5% decrease from the previous year, with an adjusted EBITDA margin of 19.2% [17][52] Business Segments Performance - Pet Health revenue was $643 million, up 11% year-over-year, driven by new products and a 4% price increase [9][10] - Farm Animal revenue was $583 million, down 2% on a reported basis but up 6% on an organic constant currency basis, with strong demand in U.S. cattle and international poultry [10][11] - The company saw significant growth in specific products, with Experior sales up over 80% year-over-year and AdTab sales up over 60% [5][10] Strategic Initiatives - Elanco launched several new products, including Credelio Quattro and Zenrelia, contributing to revenue growth [5][9] - The company is focused on a productivity initiative called Elanco Ascend, aimed at enhancing operational capabilities [5] - Bob VanHimbergen was appointed as the new CFO to guide sustainable value creation [5] Guidance and Outlook - For the full year 2025, Elanco expects adjusted EBITDA to be between $850 million and $890 million, with an adjusted EPS range of $0.85 to $0.91 [21][22] - The company anticipates a revenue tailwind of approximately $35 million from favorable foreign exchange rates compared to previous estimates [21][23] - Q3 2025 revenue guidance is set between $1,080 million and $1,110 million, with expected organic constant currency revenue growth of 4% to 6% [23][24]

In its upcoming report, Elanco Animal Health Incorporated (ELAN) is predicted by Wall Street analysts to post quarterly earnings of $0.20 per share, reflecting a decline of 33.3% compared to the same period last year. Revenues are forecasted to be $1.19 billion, representing a year-over-year increase of 0.1%. Over the last 30 days, there has been an upward revision of 1.5% in the consensus EPS estimate for the quarter, leading to its current level. This signifies the covering analysts' collective reconsider ...

Core Insights - Elanco Animal Health has received approval from the European Commission for Zenrelia™ (ilunocitinib), marking a significant milestone in the EU canine dermatology market [1][2][3] Group 1: Product Approval and Market Impact - Zenrelia is recognized as a highly effective, convenient, and safe once-daily oral JAK inhibitor for controlling pruritus associated with allergic dermatitis and atopic dermatitis in dogs aged at least 12 months [2][3] - The approval reinforces Elanco's position as a leader in pet health innovation and is expected to enhance the treatment options available for veterinarians and pet owners in Europe [3][4] Group 2: Clinical Study and Efficacy - A head-to-head non-inferiority study against the market leader, Apoquel, involved 338 client-owned dogs and demonstrated that Zenrelia is at least as effective as the incumbent JAK inhibitor at the primary endpoint on Day 28 [4] - The study results have been published in the peer-reviewed journal Veterinary Dermatology, further validating the product's efficacy [4] Group 3: Commercial Strategy and Launch - Elanco's commercial teams are prepared for an immediate product launch, with supply availability expected in the third quarter of 2025 [4][8] - Zenrelia will join Elanco's growing pet health portfolio in Europe, which includes other products like AdTab, Credelio, and Galliprant [4]

Core Insights - Elanco Animal Health Incorporated (ELAN) is currently positioned as a more attractive investment compared to U.S. Physical Therapy (USPH) based on Zacks Rank and valuation metrics [3][7] Valuation Metrics - ELAN has a forward P/E ratio of 17.91, significantly lower than USPH's forward P/E of 30.39 [5] - The PEG ratio for ELAN is 2.93, while USPH's PEG ratio stands at 3.66, indicating ELAN's better valuation relative to its expected earnings growth [5] - ELAN's P/B ratio is 1.17, compared to USPH's P/B of 2.3, further supporting ELAN's superior valuation metrics [6] Earnings Outlook - ELAN has a Zacks Rank of 2 (Buy), reflecting positive revisions in earnings estimates, while USPH has a Zacks Rank of 5 (Strong Sell), indicating a less favorable earnings outlook [3][7] - The improving earnings outlook for ELAN is a critical factor for value investors [3]

Core Viewpoint - Elanco Animal Health Incorporated will announce its second quarter 2025 financial results on August 7, 2025, and will hold a conference call to discuss the performance with the investment community and media [1][2]. Group 1: Financial Results Announcement - The financial results for the second quarter of 2025 will be disclosed on August 7, 2025 [1]. - A conference call will take place on the same day at 8:00 a.m. Eastern time to provide further details [2]. Group 2: Access to Information - Investors, media, and the public can access a live webcast of the conference call through Elanco's website [2]. - A replay of the conference call will be available shortly after the event on the website [2]. Group 3: Company Overview - Elanco Animal Health is a global leader in animal health, focusing on innovating and delivering products and services for disease prevention and treatment in farm animals and pets [3]. - The company has a 70-year heritage in animal health and aims to create value for various stakeholders, including farmers, pet owners, and veterinarians [3]. - Elanco is driven by its vision of Food and Companionship Enriching Life and is committed to making a meaningful impact on communities [3].

Core Insights - Elanco has received USDA approval for TruCan Ultra CIV, a vaccine designed to protect dogs from canine influenza and improve their respiratory health [1][4] - The vaccine is part of Elanco's Tru Portfolio, reinforcing the company's commitment to innovative animal health solutions [1][3] - The introduction of TruCan Ultra CIV aims to enhance the overall experience for pets and their owners during veterinary visits, reducing fear and anxiety associated with illness [4][3] Company Overview - Elanco Animal Health is a global leader in animal health, focusing on innovative products and services to prevent and treat diseases in both farm animals and pets [6][7] - The company has a 70-year heritage in animal health and is dedicated to creating value for various stakeholders, including farmers, pet owners, and veterinarians [6][7] Product Details - TruCan Ultra CIV has demonstrated effectiveness in protecting dogs' lungs and reducing viral shedding, with zero vaccinated dogs developing lung lesions post H3N2 challenge [6][7] - The vaccine is proven safe across multiple breeds and ages, addressing the needs of high-risk dog breeds, particularly brachycephalic breeds [2][6] - TruCan Ultra CIV is now available for pre-order and will ship within the next 30 business days [4]

Financial Performance & Strategy - Elanco reported revenue of $4439 billion in 2024[10] - Adjusted EPS was $091 in 2024[10] - Adjusted EBITDA reached $910 million in 2024[10] - The company expects $660-$740 million in incremental revenue from innovation by 2025[19, 33, 41] - Elanco anticipates revenue growth of 4%-6% in 2025[49] Portfolio & Market - Pet health accounts for 50% of Elanco's revenue[47] - Farm animal also accounts for 50% of Elanco's revenue[47] - 53% of revenue comes from outside the U S[10] - The global animal health pharmaceutical industry is valued at approximately $41 billion, with pet health at $16 billion and farm animal at $25 billion[19] Debt Reduction - Elanco reduced gross debt by $148 billion in 2024[76]

Core Viewpoint - Elanco Animal Health Incorporated appears to be turning a corner after years of market share losses and uneven execution, with a stabilized core business and promising innovation pipeline [1][2]. Business Performance - Investor meetings hosted by William Blair have led to an upgrade of Elanco's stock, highlighting the stabilization of the core business, which constitutes about 85% of sales, due to improved execution [2][3]. - The company's recent product launches in both livestock and pet health are expected to enhance growth, potentially contributing around five percentage points to overall growth in 2025 [4]. Product Pipeline and Innovation - Elanco's Zenrelia (ilunocitinib) received a positive opinion from the European Medicines Agency, with expectations for market approval and supply before the end of Q3 [5]. - New farm animal products like Bovaer and Experior, which currently face little to no competition, may increase demand for older products such as Rumensin [5]. Competitive Landscape - Elanco faces significant competition from larger, well-funded companies like Merck and Zoetis, which are also heavily investing in new product development [6]. - Merck's JAK inhibitor could impact the performance of Elanco's Zenrelia, as it is expected to have fewer safety concerns, while Zoetis has a strong track record of improving existing products [6]. Stock Performance - Elanco's stock is currently up 3.05%, trading at $14.18 [7].