As the pet care industry experiences rapid growth, pharmaceutical companies are increasingly focusing on developing innovative treatments for companion animals.ELAN is charging ahead with explosive momentum. Get the inside scoop hereKeyBanc Capital Markets initiated coverage on Elanco Animal Health Incorporated (NYSE:ELAN) .The company’s recent Innovation Products launches (Zenrelia and Credelio Quattro) are showing strong revenue growth, the analyst said in a note.Analyst Steve Decher expects these and oth ...

So joining me now in a first on CNBC interview is Ela Co. Animal Health CEO Jeff Simmons. Jeff, we've spoken numerous times before.At this point, you know, I have multiple dogs in my household. Like many millions of Americans, we care about their health. What's been driving Ela Co's results, specifically when it comes to the pets versus the farm side of things.>> Yeah, Dom, thanks for the time. Yeah, we delivered a great quarter. 9% organic constant currency growth.That really marks uh nine consecutive quar ...

Core Insights - Ela Co. Animal Health reported a 9% organic constant currency growth, marking nine consecutive quarters of growth, driven by both pet and livestock segments [1][2] - The company experienced its highest quality quarter of growth in three to four years, attributed to innovation in pet health products and strong demand in the livestock sector [3][4] Pet Segment - Pet owners are increasingly willing to spend on innovative health products, particularly in areas like dermatology and pain management for pets [3] - The company has a significant product, Credelo Quattro, which has rapidly gained traction, becoming the fastest product to reach $100 million in sales [7][8] Livestock Segment - The livestock market is benefiting from high protein demand, with the US beef market experiencing a shortage of cattle at a 50-year low, leading to strong beef economics [4] - The company is focusing on ruminant markets, including dairy, beef, and poultry, as key growth areas [9] Innovation and Product Pipeline - Ela Co. emphasizes innovation as the primary driver of growth, with a diverse portfolio across multiple species and therapeutic classes [6][7] - The company plans to discuss its strategies for the ruminant, poultry, and pet markets during an upcoming investor day [9]

Financial Data and Key Metrics Changes - Elanco reported revenue of $1.137 billion for Q3 2025, representing a 10% increase on a reported basis and 9% organic constant currency growth, primarily driven by volume increases [23][24] - Adjusted EBITDA was $198 million, an increase of $35 million year-over-year, while adjusted EPS rose to $0.19, up $0.06 from the previous year [25] - The net leverage ratio improved to 3.7x, better than expectations, with a target to end the year between 3.7x and 3.8x [6][25] Business Line Data and Key Metrics Changes - U.S. Pet Health revenue grew by 9%, driven by key innovation products like Credelio Quattro and Zenrelia, while international pet health achieved 8% growth [7][23] - U.S. Farm Animal business saw a significant 20% growth, supported by strong performance in cattle and poultry vaccines, while international farm animal grew by 5% [8][23] - Innovation revenue reached $655 million year-to-date, with an increase in guidance for innovation revenue to $840 million-$880 million for the full year [5][9] Market Data and Key Metrics Changes - The U.S. broad spectrum endecto market is currently valued at $1.4 billion, growing at nearly 40%, with Credelio Quattro capturing significant market share [10][40] - The global dermatology market for Zenrelia is estimated at $2 billion, with Elanco capturing approximately 5% market share in launched countries [13][16] - The farm animal market is experiencing strong demand for protein, with a resurgence in the U.S. dairy industry and favorable producer economics driving growth [72] Company Strategy and Development Direction - Elanco's strategy focuses on innovation, portfolio management, and productivity, with a commitment to driving shareholder value through consistent growth and operational execution [6][22] - The company is expanding its product offerings and geographic reach, particularly with the international rollout of Credelio Quattro and Zenrelia [10][13] - Elanco aims to improve its net leverage ratio to under 3x by 2027, supported by a disciplined capital allocation strategy focused on debt paydown [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic challenges, with expectations for continued growth in both pet and farm animal segments [7][32] - The company anticipates a stable operating environment, with a focus on leveraging innovation to mitigate potential declines in vet visit volumes [56][57] - Elanco's management highlighted the importance of maintaining a competitive edge through differentiated products and strategic investments in marketing and distribution [66][72] Other Important Information - Elanco successfully refinanced its $2.1 billion term loan B facility, extending maturities and reducing the cost of debt [26][27] - The company is on track for significant operational efficiencies through the Elanco Ascend initiative, which aims to enhance productivity across various functions [22][66] Q&A Session Summary Question: Clarification on Quattro's sales and peak potential - Management clarified that Credelio Quattro reached $100 million in sales year-to-date as of September, indicating strong market potential and differentiation [37][38] Question: U.S. label aspirations for Zenrelia - Management discussed ongoing efforts to improve Zenrelia's label in the U.S. and the positive momentum in international markets, highlighting strong market share gains [43][45] Question: 2025 EBITDA guidance and OpEx investments - Management confirmed the increase in EBITDA guidance and emphasized a data-driven approach to ongoing investments in innovation and marketing [49][50] Question: Consumer macro pressure and vet visit trends - Management noted that while vet visits are stabilizing, Elanco's diversified portfolio and strong market presence position the company well against macro pressures [53][56] Question: Competitive landscape in derm and parasiticides - Management indicated that competition is accounted for in guidance, with no significant impact observed from new entrants in the parasiticide market [76][77]

Financial Data and Key Metrics Changes - Elanco reported revenue of $1.137 billion for Q3 2025, representing a 10% increase on a reported basis and 9% organic constant currency growth, primarily driven by volume increases [23][24] - Adjusted EBITDA was $198 million, an increase of $35 million year-over-year, while adjusted EPS rose to $0.19, up $0.06 from the previous year [25][29] - The net leverage ratio improved to 3.7x, better than expectations, with a target to end the year between 3.7x and 3.8x [6][25] Business Line Data and Key Metrics Changes - U.S. Pet Health revenue grew by 9%, driven by key products like Credelio Quattro and Zenrelia, while international pet health achieved 8% growth [7][23] - U.S. Farm Animal business saw a significant 20% growth, bolstered by strong performance in cattle and poultry vaccines, while international farm animal grew by 5% [8][24] - Innovation revenue reached $655 million year-to-date, with an increase in guidance for innovation revenue to $840 million-$880 million [5][9] Market Data and Key Metrics Changes - The U.S. broad spectrum endecto market is valued at $1.4 billion and is growing at nearly 40%, with Credelio Quattro capturing significant market share [10][40] - The global dermatology market is estimated at $2 billion, with Zenrelia gaining approximately 5% market share in launched countries [13][16] - The farm animal market is experiencing strong demand for protein, with a resurgence in the U.S. dairy industry and a historically small cattle herd size driving producer economics [72][73] Company Strategy and Development Direction - Elanco's strategy focuses on growth, innovation, and cash management, with a commitment to raising guidance based on strong underlying momentum [5][7] - The company is leveraging its diverse portfolio of innovative products to stabilize its base business and drive overall industry-leading growth [21][22] - The Elanco Ascend initiative aims to enhance productivity and efficiency across the organization, contributing to margin expansion starting in 2026 [22][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic challenges, citing strong execution and proactive mitigation strategies for tariff risks [6][32] - The outlook for 2026 includes expectations for continued revenue growth driven by innovation and a stabilizing base, despite competitive pressures [30][31] - Management highlighted the importance of maintaining a balanced approach to guidance, considering competition and macroeconomic factors [57][59] Other Important Information - The company successfully refinanced its $2.1 billion term loan B facility, extending maturities and reducing the cost of debt [26][27] - Elanco plans to provide more insights into its strategy and financial outlook during the upcoming investor day on December 9 [34][78] Q&A Session Summary Question: Clarification on Credelio Quattro's sales - Credelio Quattro reached $100 million in sales year-to-date as of September, indicating strong market potential and differentiation [37][38] Question: U.S. label aspirations for Zenrelia - Management is optimistic about achieving a cleaner label for Zenrelia, supported by positive data and increasing market share in international markets [44][46] Question: 2025 EBITDA guidance and OpEx investments - The updated EBITDA guidance reflects strong performance and continued investments in innovation, with a focus on data-driven decision-making [48][50] Question: Consumer macro pressure and vet visit trends - Management believes that the company is insulated from declines in vet visits due to strong market fundamentals and a diversified portfolio [56][59] Question: Sustainability of livestock growth - The demand for protein is expected to remain strong, with Elanco's strategy focusing on innovation and competitive advantages in the livestock market [72][74]

Financial Data and Key Metrics Changes - Elanco reported revenue of $1.137 billion for Q3 2025, representing a 10% increase on a reported basis and 9% organic constant currency growth, primarily driven by volume increases [20][21] - Adjusted EBITDA was $198 million, an increase of $35 million year-over-year, while adjusted EPS rose to $0.19, up $0.06 from the previous year [22] - The net leverage ratio improved to 3.7 times, better than expectations, with a goal to end the year between 3.7-3.8 times [5][22] Business Line Data and Key Metrics Changes - U.S. Pet Health revenue grew by 9%, driven by key products like Credelio Quattro and Zenrelia, while international pet health saw an 8% increase [20][21] - U.S. Farm Animal business achieved a remarkable 20% growth, supported by strong performance in cattle and poultry vaccines [20][21] - International Farm Animal revenue increased by 5%, with growth attributed to poultry and ruminants [7][20] Market Data and Key Metrics Changes - The overall pet health market in the U.S. is experiencing strong growth, with the broad spectrum endecto market reaching $1.4 billion and growing at nearly 40% [9][34] - The global dermatology market is also expanding, with Zenrelia capturing approximately 5% market share in countries where it has launched [12][14] - The farm animal sector is benefiting from a historically small U.S. cattle herd, driving demand for products like Experior, which grew 70% in Q3 [15][51] Company Strategy and Development Direction - Elanco is focused on innovation, portfolio management, and productivity, with a strong emphasis on cash generation and operational execution [4][19] - The company is raising its full-year expectations for innovation revenue to $840 million-$880 million, reflecting broad-based momentum across its product portfolio [4][6] - The strategy includes geographic expansion and leveraging differentiated products to capture market share in both pet and farm animal segments [7][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic challenges, including tariff impacts, while maintaining strong growth momentum [5][25] - The outlook for 2026 includes expectations for continued revenue growth driven by innovation and a stabilizing base business, despite competitive pressures [27][28] - Management highlighted the importance of maintaining a balanced approach to guidance, considering both competitive dynamics and macroeconomic factors [41][42] Other Important Information - The company successfully refinanced its $2.1 billion term loan B facility, extending maturities and reducing the cost of debt [5][23] - Elanco's innovation pipeline is robust, with several products expected to launch in 2026, including IL31, which is currently under USDA review [17][19] - The company is committed to enhancing productivity through initiatives like Elanco Ascend, aimed at driving efficiencies across the organization [19][49] Q&A Session Summary Question: Clarification on Credelio Quattro's sales - Management clarified that Credelio Quattro reached $100 million in net sales since its launch, not just in Q3, and expressed optimism about its potential peak sales [31][34] Question: Insights on Zenrelia's label update and market share - Management discussed the positive momentum for Zenrelia, highlighting its growing market share and the recent removal of vaccine-induced disease language from its label [35][36] Question: 2025 EBITDA guidance and OpEx investments - Management confirmed the increase in EBITDA guidance and discussed the ongoing investments in operational expenses to support product launches and growth [38][39] Question: Competitive landscape and market dynamics - Management acknowledged the competitive pressures in the derm and parasiticides markets but emphasized that their differentiated portfolio has allowed them to maintain market share [53]

D 2025 Earnings – Third Quarter November 5, 2025 2025 | Q3 Earnings Notices and Disclaimers Forward-Looking Statements. This presentation contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements concerning product launches and revenue from such products, our 2025 full year and fourth quarter guidance, long-term expectations, our expectations regarding debt levels, and expectations regarding our industry and our operations, performance a ...

Core Insights - Elanco Animal Health Incorporated reported strong financial results for Q3 2025, exceeding expectations with a focus on growth, innovation, and cash management [2][3] - The company raised its full-year revenue guidance to a range of $4,645 million to $4,670 million, reflecting an expected organic constant currency revenue growth of 6% to 6.5% [7][20] - Elanco's net leverage ratio target for year-end 2025 has been improved to 3.7x to 3.8x, demonstrating effective debt management and cash generation [3][19] Financial Performance - Total revenue for Q3 2025 was $1,137 million, a 10% increase year-over-year, with 9% organic constant currency growth [9][11] - Pet Health revenue reached $533 million, up 10% year-over-year, while Farm Animal revenue was $593 million, reflecting a 12% increase [10][11] - Adjusted EBITDA for Q3 2025 was $198 million, a 21% increase compared to Q3 2024, with an adjusted EBITDA margin of 17.5% [18] Product Innovation and Market Performance - Credelio Quattro achieved $100 million in net sales within eight months, marking it as Elanco's fastest pet health blockbuster [8] - Zenrelia's global sales nearly doubled compared to Q2 2025, with a market share of approximately 5% in launched countries [8] - Experior sales increased by approximately 70% year-over-year, and AdTab continued its growth trajectory with over 25% year-over-year sales increase [8] Cost Management and Operational Efficiency - Total operating expenses for Q3 2025 were $440 million, a 7% increase year-over-year, driven by strategic investments in new product launches [13] - Gross profit was $607 million, with a gross margin percentage of 53.4%, reflecting a 120 basis point increase compared to Q3 2024 [12] - The company successfully refinanced its $2.1 billion Term Loan B debt facility, improving its debt maturity profile and reducing interest costs [8] Guidance and Future Outlook - For the full year 2025, Elanco expects reported net loss to be between $56 million and $41 million, with adjusted EPS guidance raised to a range of $0.91 to $0.94 [7][21] - The company anticipates a revenue tailwind of approximately $30 million from favorable foreign exchange rates compared to previous guidance [21] - Elanco plans to host an investment community event on December 9, 2025, to discuss its growth strategies and long-term shareholder value creation [3][20]

Core Insights - Elanco Animal Health has announced label expansions for its canine prescription parasiticides, Credelio Quattro and Credelio, to include prevention of Lyme disease and protection against the longhorned tick [1][6][11] Group 1: Product Expansion and Efficacy - The expanded labels for Credelio Quattro and Credelio now include claims for the prevention of Lyme disease in dogs by killing black-legged ticks (Ixodes scapularis) [2][6] - Both products demonstrated 100% efficacy against the longhorned tick (Haemaphysalis longicornis) within 48 hours after infestation, continuing throughout the month [5][6] - The active ingredient lotilaner in both products is effective against various tick species, including the lone star tick (Amblyomma americanum), which is known for its association with alpha-gal syndrome in humans [7][9] Group 2: Market Context and Health Concerns - There have been over 422,000 cases of Lyme disease in dogs reported this year, surpassing the total annual cases of 2019, with northeast states being particularly affected [3][6] - The Companion Animal and Parasite Council (CAPC) has noted a significant rise in canine Lyme disease cases, emphasizing the need for effective parasite protection [4][6] - The longhorned tick is an invasive species now present in 22 states, posing a significant health risk to both animals and humans due to its ability to transmit various pathogens [4][6][5] Group 3: Company Commitment and Vision - Elanco emphasizes its commitment to innovation and scientific excellence, continuously working to address emerging threats in animal health [2][8] - The company aims to provide comprehensive protection for pets, enhancing the health and well-being of dogs through its expanded product offerings [7][8]

Financial Data and Key Metrics Changes - Elanco reported revenue of $1,241 million, representing a 5% increase on a reported basis and an 8% organic constant currency growth driven by a 5% increase in volume and a 3% contribution from price [43][44] - Adjusted EBITDA was $238 million, a decrease of $37 million year-over-year, while adjusted EPS was $0.26, down $0.04 year-over-year [48] - The net debt leverage ratio improved to four times, reflecting strong second quarter results and working capital discipline [8][48] Business Line Data and Key Metrics Changes - U.S. Pet Health revenue increased by 11%, driven by demand for key innovation products and contributions from the vaccine portfolio [11][44] - International Pet Health grew by 7% in organic constant currency, led by demand for AdTab and ZENRELIA [12][44] - The U.S. Farm Animal business grew by 5%, while international farm animal revenue increased by 6% in organic constant currency [13][45] Market Data and Key Metrics Changes - The overall pet health market is experiencing double-digit growth, with significant contributions from innovative products like Credelio Quattro and ZENRELIA [20][21] - The dermatology market is growing rapidly, with ZENRELIA gaining market share and achieving a reorder rate of almost 80% [21][27] - The farm animal market is supported by increased demand for animal protein, with Experior showing rapid adoption and strong customer retention [30][31] Company Strategy and Development Direction - The company is focused on growth, innovation, and cash generation, with a clear path to becoming a leader in pet health and farm animal markets [6][10] - Elanco is increasing its full-year innovation revenue expectations by $60 million, reflecting strong performance across multiple products [8][15] - The Elanco Ascend initiative aims to drive efficiencies and improve productivity through automation and AI [39][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating external uncertainties and executing long-term growth strategies, with a strong position to raise revenue and earnings outlook [10][56] - The company anticipates organic constant currency growth of 5% to 6% for the full year, with adjusted EBITDA guidance raised to $850 million to $890 million [10][50] - Management highlighted the importance of innovation in stabilizing the base business and driving future growth [10][76] Other Important Information - The company is actively managing tariff risks and has implemented strategies to mitigate potential impacts, estimating a net impact of $10 million to $14 million for 2025 [9][53] - Elanco's cash generated from operations was $237 million in the quarter, compared to $200 million in the same quarter last year [48] Q&A Session Summary Question: Can you talk about some of the accelerated investments being made in the business? - Management indicated that investments are focused on DTC spending for Credelio Quattro and R&D for upcoming blockbusters, with a strong market response supporting these initiatives [61][62] Question: What are the expectations for the sustainability of mid-single-digit growth for the company? - Management believes that the base business is stable, with innovation expected to drive additional growth, and emphasized the importance of maximizing the potential of their product portfolio [72][76] Question: Can you provide insight into the main contributors to the increased innovation sales target? - Management noted that growth is being led by multiple products, particularly Credelio Quattro, and highlighted the seasonal nature of some products [81] Question: How does the company plan to allocate upside in a given quarter? - Management stated that they will monitor the effectiveness of investments in sales and marketing or R&D and adjust spending accordingly [83] Question: Can you discuss the margin uplift from innovation gaining scale? - Management confirmed that margin accretion is expected as new products gain scale, with a focus on operational improvements and leveraging existing cost structures [90][92]