Financial Data and Key Metrics Changes - The company reported $2.4 billion in revenue for Q3 2025, growing 1% on a reported basis and 4% on an organic operational basis, primarily driven by price as volume was flat [26][27] - Adjusted net income was $754 million, growing 5% on a reported basis and 9% on an organic operational basis [27][44] - Adjusted diluted EPS grew 7% operationally in the quarter and 12% on an organic operational basis [44] Business Line Data and Key Metrics Changes - The global companion animal portfolio posted revenue of $1.7 billion, growing 2% operationally, with the Simparica franchise contributing $356 million, growing 7% [27][31] - The livestock portfolio grew 10% on an organic operational basis, contributing $725 million in revenue, reflecting strong performance across segments and species [27][28] - The osteoarthritis pain franchise declined 11% operationally, with global Librela sales down 15% [13][27] Market Data and Key Metrics Changes - In the U.S., companion animal revenue was flat, while livestock grew 14% on an organic operational basis [29] - Internationally, revenue grew 3% on a reported basis and 6% on an organic operational basis, with companion animal growing 4% and livestock growing 8% [37][38] - The international Simparica franchise grew 22% operationally, with Simparica Trio growing 32% [39][40] Company Strategy and Development Direction - The company is focused on enhancing its U.S. commercial structure to better serve customers and improve agility, aiming for a leaner field organization [16][17] - Continued investment in manufacturing excellence and innovation is emphasized, with plans for new product launches and geographic expansions [15][20] - The company anticipates a major new market approval each year for the next several years, reinforcing its long-term growth trajectory [15][22] Management's Comments on Operating Environment and Future Outlook - Management noted that therapeutic visits in U.S. clinics have been declining, impacting new patient starts, but alternative channels are showing strong growth [63][64] - The company is optimistic about returning to growth in 2026, particularly in the livestock segment, which has shown resilience [55][96] - Management expressed confidence in the long-term growth potential of the business and the broader animal health market despite near-term challenges [46][96] Other Important Information - The company announced the retirement of Rob Holder, Head of R&D, and the appointment of Kevin Esch as his successor [22][23] - The company is implementing a multi-pronged strategy to return Librela to growth, focusing on education and awareness of osteoarthritis [14][80] Q&A Session Summary Question: What changed intra-quarter after raising guidance last quarter? - Management acknowledged deceleration in the back half of the year due to strong comps and macro impacts, particularly in U.S. clinics [50][51] Question: How is competition affecting the dermatology category? - Management noted that competitive dynamics have intensified, but they remain confident in their product positioning and market share [58][89] Question: What are the growth drivers for livestock moving forward? - Management highlighted sustainable demand for protein and urbanization as key growth drivers for livestock [96][97]

Financial Data and Key Metrics Changes - The company reported $2.2 billion in revenue, growing 1% on a reported basis and 9% on an organic operational basis, driven by 4% price and 5% volume [22][24][36] - Adjusted net income was $662 million, growing 4% on a reported basis and 6% on an organic operational basis [22][36] - Adjusted diluted EPS grew 4% operationally and 8% on an organic operational basis, reflecting a lower share count due to ongoing share buybacks [33][36] Business Line Data and Key Metrics Changes - The companion animal portfolio generated $1.5 billion in revenue, growing 9% operationally, with significant contributions from the Simparica franchise, key dermatology, and OA pain mAbs [22][23][24] - Livestock revenue declined 2% on an organic operational basis, primarily due to aggressive price competition [24][27] - The U.S. segment grew 2% on a reported basis and 6% on an organic operational basis, with companion animal growing 8% and livestock declining [24][27] Market Data and Key Metrics Changes - The international segment's revenue was flat on a reported basis but grew 11% on an organic operational basis, with companion animal growing 10% and livestock growing 12% [27][31] - The international Simparica franchise grew 23% operationally, driven by strong market share gains in Latin America and Eastern Europe [28][31] - The livestock segment's growth was supported by higher prices and volume growth in poultry vaccines across Asia, the Middle East, and Latin America [31] Company Strategy and Development Direction - The company maintains a full-year organic operational revenue guidance range of 6% to 8%, reflecting confidence in its diversified portfolio [19][36] - The focus remains on executing a multi-levered strategy, emphasizing innovation, operational excellence, and strategic capital allocation [10][21] - The company is investing in medical education and direct-to-consumer campaigns to drive awareness and adoption of its products, particularly in the OA pain market [15][17][61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the animal health industry despite macroeconomic uncertainties, highlighting the essential nature of their business [9][19] - The company is adapting to challenges while seizing opportunities, maintaining a strong balance sheet and operational excellence [10][21] - Future guidance reflects potential impacts from enacted tariffs, with a focus on navigating the dynamic environment [36][37] Other Important Information - The adjusted gross margin was 72.1%, growing 140 basis points on a reported basis, with foreign exchange having a favorable impact [32] - The company is actively monitoring the FDA and USDA for any potential delays or backlogs in product approvals [83][84] - Retail sales grew 40% in the quarter, with alternative channels continuing to gain traction [86][88] Q&A Session Summary Question: Insights on Librela and Tariffs - Management reported 15% organic operating growth for Librela globally, with strong vet satisfaction and ongoing education efforts [41][42] - The tariff impact embedded in guidance primarily relates to imports from China, with a net headwind of $20 million expected [44][72] Question: Competitive Landscape - The company noted that competition in dermatology and parasiticides remains strong, with a focus on maintaining market share through innovation and first-mover advantages [49][53] - Despite new entrants, the company continues to see growth in its key franchises, with double-digit growth expected [58][60] Question: Consumer Sentiment and Compliance - Management acknowledged a more measured approach to managing chronic conditions among consumers, but remains confident in the durability of the animal health industry [94] - The company expects price and volume mix to remain consistent with previous expectations, with a focus on maintaining growth across its portfolio [96]