Elanco Animal Health Incorporated (ELAN) reported $1.02 billion in revenue for the quarter ended December 2024, representing a year-over-year decline of 1.5%. EPS of $0.14 for the same period compares to $0.08 a year ago.The reported revenue represents a surprise of +0.83% over the Zacks Consensus Estimate of $1.01 billion. With the consensus EPS estimate being $0.15, the EPS surprise was -6.67%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expe ...

Core Viewpoint - Elanco Animal Health reported quarterly earnings of $0.14 per share, missing the Zacks Consensus Estimate of $0.15 per share, but showing an improvement from $0.08 per share a year ago, indicating a -6.67% earnings surprise [1] Financial Performance - The company posted revenues of $1.02 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.83%, although this represents a decline from year-ago revenues of $1.04 billion [2] - Over the last four quarters, Elanco has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times as well [2] Stock Performance - Elanco shares have declined approximately 8.3% since the beginning of the year, contrasting with the S&P 500's gain of 1.7% [3] - The current consensus EPS estimate for the upcoming quarter is $0.31 on revenues of $1.2 billion, and for the current fiscal year, it is $0.89 on revenues of $4.51 billion [7] Industry Outlook - The Medical - Outpatient and Home Healthcare industry, to which Elanco belongs, is currently ranked in the top 22% of over 250 Zacks industries, suggesting a favorable industry outlook [8]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 Commission file number 001-38661 Elanco Animal Health Incorporated (Exact name of Registrant as specified in its charter) INDIANA 82-5497352 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2500 INNOVATION WAY, GREENFIELD, INDIANA 46140 (Address an ...

Revenue Performance - Fourth quarter 2024 revenue was $1,020 million, a decrease of 1% on a reported basis and an increase of 4% on an organic constant currency basis[6]. - Full year 2024 revenue was $4,439 million, flat to the prior year on a reported basis and up 3% on an organic constant currency basis[3]. - Pet Health revenue for the fourth quarter was $439 million, a 6% increase on both a reported and organic constant currency basis[7]. - Farm Animal revenue for the fourth quarter was $570 million, a 7% decrease on a reported basis but a 2% increase on an organic constant currency basis[8]. - Revenue for Q4 2024 was $1,020 million, a decrease of 1.5% compared to $1,035 million in Q4 2023[36]. - Full year revenue for 2024 was $4,439 million, an increase of 0.5% from $4,417 million in 2023[36]. - Full year 2025 revenue guidance is set between $4,445 million and $4,510 million, with an estimated foreign exchange headwind of $110 million[18]. - The innovation revenue target for 2025 has been raised to between $640 million and $720 million[18]. Profitability and Loss - Adjusted EBITDA for the fourth quarter of 2024 was $177 million, representing 17.4% of revenue, an increase of 7% compared to the fourth quarter of 2023[16]. - Adjusted net income for Q4 2024 was $80 million, compared to an adjusted net income of $180 million in Q4 2023[43]. - The reported net loss for the fourth quarter of 2024 was $8 million, compared to a net loss of $141 million in the same period of 2023[15]. - Basic loss per share for Q4 2024 was $(0.02), improving from $(0.29) in Q4 2023[36]. - Adjusted EBITDA for the twelve months ended December 31, 2024, was $910 million, down from $979 million in 2023, resulting in an adjusted EBITDA margin of 20.5% compared to 22.2%[55]. - The company reported a diluted EPS of $0.68 for the year ended December 31, 2024, compared to a loss of $2.50 in 2023, marking a significant turnaround[52]. - Total adjustments to diluted EPS for the year ended December 31, 2024, amounted to $0.23, while for 2023, it was $3.39, indicating a significant reduction in adjustments year-over-year[52]. Cash Flow and Debt - The company generated over $500 million in operating cash flow for 2024, doubling from the prior year[3]. - The company reported a net debt of $2,500 million, with a net leverage ratio of 3.5x trailing twelve month adjusted EBITDA[32]. - The total gross debt as of December 31, 2024, was $4.349 billion, with a net debt of $3.881 billion after accounting for cash and cash equivalents of $468 million[57]. Future Guidance and Expectations - The company expects operating expenses to increase approximately 6% year over year in constant currency for 2025, driven by strategic investments in innovation[19]. - The company plans to continue focusing on product development and market expansion strategies to drive future growth[26]. - Elanco is committed to enhancing its research and development efforts to innovate in animal health technologies[28]. - The company expects to continue focusing on restructuring and integration efforts to improve operational efficiency and financial performance in the upcoming quarters[59]. - 2025 full year reported EPS guidance ranges from $(0.05) to $0.01, with adjusted EPS expected to be between $0.80 and $0.86[60]. - Reported net (loss) income for 2025 is projected to be between $(25) million and $7 million, with adjusted EBITDA guidance ranging from $830 million to $870 million[62]. - First quarter 2025 reported EPS guidance is between $0.03 and $0.08, while adjusted EPS is expected to be between $0.29 and $0.34[63]. - First quarter 2025 reported net income is projected to be between $13 million and $41 million, with adjusted EBITDA guidance ranging from $240 million to $260 million[65]. - Adjusted EBITDA margin for 2025 is expected to be between 18.7% and 19.3%[62]. - Adjusted EBITDA margin for the first quarter of 2025 is projected to be between 21.0% and 22.2%[65]. - Total adjustments to EPS for 2025 full year are estimated at $0.85[60]. - Non-GAAP adjustments for 2025 full year include asset impairment and restructuring charges of approximately $20 million[62]. - Amortization of intangible assets for 2025 full year is approximately $1.02 million[60]. - Tax impact of adjustments for 2025 full year is estimated to be between $(0.25) and $(0.24) million[60].

Core Insights - Elanco Animal Health reported strong financial results for Q4 and full year 2024, achieving its sixth consecutive quarter of organic constant currency revenue growth, with Q4 revenue up 4% [2][4] - The company demonstrated broad-based strength across its diverse portfolio, with growth in both Pet Health and Farm Animal segments, exceeding innovation revenue targets for 2024 and raising the goal for 2025 [2][5] - Elanco generated over $500 million in operating cash flow in 2024, doubling from the previous year, and reported a net loss of $8 million for Q4, significantly improved from a net loss of $141 million in Q4 2023 [4][18] Financial Highlights - Q4 2024 total revenue was $1,020 million, a decrease of 1% on a reported basis but an increase of 4% on an organic constant currency basis compared to Q4 2023 [4][9] - Pet Health revenue for Q4 was $439 million, up 6% year-over-year, driven by strong OTC retail parasiticide sales and key innovation products [10] - Farm Animal revenue for Q4 was $570 million, down 7% on a reported basis but up 2% on an organic constant currency basis, supported by strong demand for specific products [11] Full Year Results - For the full year 2024, Elanco reported total revenue of $4,439 million, flat compared to the prior year on a reported basis and up 3% on an organic constant currency basis [5][7] - Reported net income for 2024 was $338 million, with adjusted net income of $452 million, reflecting significant improvement from a net loss of $1,231 million in 2023 [7][54] - Adjusted EBITDA for 2024 was $910 million, representing 20.5% of revenue, with reported EPS of $0.68 and adjusted EPS of $0.91 [5][7] 2025 Guidance - Elanco provided guidance for 2025, expecting revenue between $4,445 million and $4,510 million, with a reported net loss or income ranging from $(25) million to $7 million [21][22] - The company anticipates a foreign exchange headwind of approximately $110 million to revenue and $45 million to adjusted EBITDA for 2025 [22][24] - For Q1 2025, revenue is expected to be between $1,155 million and $1,180 million, with adjusted EPS projected between $0.29 and $0.34 [25][26] Business Developments - Elanco launched Credelio Quattro™ in January 2025 and achieved significant market penetration with Zenrelia™ in the U.S. [6] - The company strengthened its leadership in the U.S. Farm Animal market, achieving blockbuster status for Experior® [6] - Elanco's strategic investments in innovation and marketing are expected to drive growth in 2025, with a focus on mid-single digit organic constant currency revenue growth [24][22]

Core Insights - Elanco Animal Health has entered into an agreement with Medgene to commercialize a highly pathogenic avian influenza (HPAI) vaccine for dairy cattle, which is in the final stages of review for conditional license approval by the USDA [1][3][4] Industry Context - The poultry industry has faced ongoing challenges in controlling HPAI, which has now affected nearly 1,000 dairy herds across the U.S. since March 2024, highlighting the urgent need for new interventions [2] - The cross-species transmission of HPAI and its zoonotic potential necessitates the development of a cattle vaccine to mitigate the spread of the virus [2] Company Strategy - Elanco's partnership with Medgene aims to provide new solutions to dairy producers, enhancing their vaccination protocols and contributing to the overall health of the dairy industry [3] - The collaboration is expected to strengthen Elanco's diverse dairy portfolio and support its One Health platform, which benefits both dairy and poultry sectors [3] Technological Advancements - Medgene's vaccine platform technology has been previously approved by the USDA, facilitating the accelerated development of the H5N1 vaccine for dairy cattle [4] - Medgene is prepared with existing vaccine manufacturing capabilities to support the U.S. dairy herd [4]

Company Participation in Investor Conferences - Elanco Animal Health Incorporated will participate in several upcoming investor conferences, including a fireside chat at the Bank of America 2025 Animal Health Summit on February 27, featuring Todd Young, executive vice president and CFO [1] - Jeff Simmons, president and CEO, will participate in a fireside chat at the TD Cowen 45th Annual Health Care Conference on March 3 [2] - Todd Young will also participate in a fireside chat at the Barclays 27th Annual Global Healthcare Conference on March 11 [2] Webcast Availability - Live audio webcasts of the events will be available in the "Events and Presentations" section of Elanco's investor website, with replays accessible for a limited time after each event [3] Company Overview - Elanco Animal Health is a global leader in animal health, focused on innovating and delivering products and services to prevent and treat diseases in farm animals and pets, thereby creating value for various stakeholders [4] - The company has nearly 70 years of heritage in animal health and is committed to improving animal health while making a positive impact on local and global communities [4] - Elanco's vision emphasizes the enrichment of life through food and companionship, aligning with its mission to advance the health of animals, people, the planet, and the enterprise [4]

Core Insights - Elanco Animal Health Incorporated has launched Pet Protect, a line of veterinarian-formulated supplements for dogs and cats, addressing the growing demand in the pet supplement market [1][2][4] - The U.S. pet supplement market reached $2.7 billion in 2023, with a CAGR of 20% over the past five years, indicating strong growth and consumer interest in pet health [2][4] - Pet Protect aims to provide comprehensive support for pets' everyday health, featuring products for joint health, multivitamins, Omega-3, calming, allergy and immune support, and digestive function [4][6] Company Overview - Elanco is a global leader in animal health, dedicated to innovating products and services for the prevention and treatment of diseases in both farm animals and pets [7] - The company has nearly 70 years of experience in animal health and is committed to improving the health of animals while making a positive impact on communities [7] Product Features - Pet Protect is distinguished by its veterinarian-formulated, science-backed supplements, developed with over 25 years of veterinary experience [5][6] - The product line includes specific formulations such as Synovi G3 for joint health, DVM Daily Soft Chews for multivitamin support, and Tranquilify for calming effects [9]

Core Viewpoint - Elanco Animal Health is committed to enhancing veterinary and pet owner education following a warning letter from the U.S. FDA regarding misleading promotional practices related to its product Zenrelia [1][3][5]. Group 1: FDA Warning Letter - The FDA issued a warning letter to Elanco concerning misleading claims in promotional materials for Zenrelia (ilunocitinib tablets), which misbrands the product under the Federal Food, Drug, and Cosmetic Act [3][11][22]. - The letter highlights that the promotional communications create a misleading impression about the safety and effectiveness of Zenrelia, particularly regarding its use in dogs [11][12][22]. - Elanco is required to address the concerns raised in the letter and submit a written response within 15 working days [26][27]. Group 2: Product Information and Safety - Zenrelia is indicated for controlling itching and inflammation associated with skin allergies in dogs over 12 months of age [6][12]. - The FDA-approved prescribing information includes a boxed warning about the risk of fatal vaccine-induced disease and inadequate immune response to vaccines in dogs receiving Zenrelia [8][12][13]. - The promotional materials omitted critical safety information, including specific timeframes for withholding Zenrelia before and after vaccination, which is misleading for pet owners [16][17][18]. Group 3: Company Response and Future Outlook - Elanco is actively reviewing and updating Zenrelia's promotional materials in response to the FDA's concerns and does not expect these adjustments to materially impact Zenrelia's revenue [4][5]. - The company anticipates accelerating organic constant currency revenue growth in the mid-single digits for 2025 [5]. - Elanco emphasizes its dedication to helping veterinarians and pet owners understand the benefits of Zenrelia while ensuring compliance with regulatory standards [2][4].

Core Points - Elanco Animal Health Incorporated will announce its fourth quarter and full year 2024 financial results on February 25, 2025 [1] - A conference call will be held on the same day at 8:00 a.m. eastern time for investors, media, and the public to discuss the company's performance [2] - Elanco is a global leader in animal health, focusing on innovating products and services for the prevention and treatment of diseases in farm animals and pets [3] Company Overview - Elanco has a 70-year heritage in animal health and aims to create value for farmers, pet owners, veterinarians, and society [3] - The company is committed to improving animal health while making a positive impact on local and global communities [3] - Elanco's vision emphasizes the importance of food and companionship in enriching life, supported by its sustainability pillars [3]