Elanco(US:ELAN)2025-11-05 14:06Revenue Performance - Revenue for Q3 2025 was $1,137 million, a 10% increase from $1,030 million in Q3 2024[107] - Pet Health revenue for Q3 2025 was $533 million, up 10% from $486 million in Q3 2024, accounting for 47% of total revenue[111] - Farm Animal revenue for Q3 2025 was $593 million, a 12% increase from $530 million in Q3 2024, representing 52% of total revenue[111] - For the nine months ended September 30, 2025, total revenue was $3,571 million, reflecting a 4% increase compared to the same period in 2024[115] - Revenue for Pet Health increased by $47 million, or 10%, for the three months ended September 30, 2025, driven primarily by higher volumes[116] - Farm Animal revenue increased by $63 million, or 12%, for the three months ended September 30, 2025, supported by increased volumes across cattle and poultry[118] Profitability - Gross profit for Q3 2025 reached $607 million, reflecting a 13% increase compared to $538 million in Q3 2024[107] - Gross profit for the three months ended September 30, 2025, was $607 million, a 13% increase from $538 million in the same period in 2024[121] - Gross margin percentage for the nine months ended September 30, 2025, remained flat at 56% compared to the same period in 2024[122] - The company recorded a net loss of $34 million in Q3 2025, compared to a net income of $364 million in Q3 2024[107] Expenses - Research and development expenses for Q3 2025 were $89 million, a 2% increase from $87 million in Q3 2024[107] - Research and development expenses increased by $2 million for the three months ended September 30, 2025, totaling $89 million, maintaining 8% of revenue[123] - Marketing, selling, and administrative expenses rose by $28 million for the three months ended September 30, 2025, totaling $323 million, which is 31% of revenue[124] - Interest expense decreased by $6 million for the three months ended September 30, 2025, totaling $58 million, due to lower average outstanding debt balances[131] - The company recognized an income tax benefit of $16 million for the three months ended September 30, 2025, compared to an expense of $195 million in the same period in 2024[133] Cash Flow and Financing - Cash provided by operating activities increased to $452 million for the nine months ended September 30, 2025, compared to $364 million for the same period in 2024, reflecting a year-over-year increase of 24%[142] - Cash used for investing activities was $215 million for the nine months ended September 30, 2025, a decrease of $1,463 million compared to cash provided by investing activities of $1,248 million in the same period of 2024[143] - Cash used for financing activities decreased to $257 million for the nine months ended September 30, 2025, compared to $1,460 million for the same period in 2024, indicating a reduction of approximately 82%[145] - The company refinanced its Term Loan B due 2027, paying off the $2,102 million balance in full with proceeds from new debt facilities and cash on hand[139] Asset Management - The company recorded asset impairments of $24 million during the three months ended September 30, 2025, primarily related to suspended capital projects[127] - As of September 30, 2025, the company had cash and cash equivalents of $505 million and unused borrowing capacity of approximately $750 million on its Revolving Credit Facility[138] - The company had approximately $110 million in undrawn borrowing capacity on its Securitization Facility as of September 30, 2025[138] Strategic Actions - The company completed the divestiture of its aqua business for $1,294 million in cash proceeds in July 2024, resulting in a pre-tax gain of $640 million[102] - A Purchase and Sale Agreement executed in May 2025 with Blackstone generated proceeds of $295 million for future royalties from Tarsus[100] - The company intends to indefinitely reinvest substantially all foreign earnings for continued use in foreign operations, which may change based on tax-efficient reinvestment alternatives[137] - Approximately 80% of the company's long-term indebtedness, excluding finance lease liability, bears interest at a fixed rate following the refinancing and interest rate swap settlement[152] - The company purchased approximately 56 acres of land in August 2025 to develop the One Health Innovation District research hub in Indianapolis, Indiana[143] Currency Exposure - Approximately 51% of revenue for the nine months ended September 30, 2025, was denominated in foreign currencies[108] - Revenue in Turkey represented less than 1% of the company's consolidated revenue during the nine months ended September 30, 2025[151] Revenue Shifts - The company experienced a shift in revenue due to customers accelerating purchases in anticipation of tariff increases, impacting Q2 and Q3 2025 results[98]