Core Insights - Zoetis, Inc. (ZTS) reported fourth-quarter 2025 adjusted earnings of $1.48 per share, exceeding the Zacks Consensus Estimate of $1.40, and up from $1.40 in the same quarter last year [1] - Total revenues for the quarter increased by 3% year over year to $2.39 billion, surpassing the Zacks Consensus Estimate of $2.37 billion, compared to $2.32 billion in the prior year [1] Financial Performance - U.S. segment revenues decreased by 2% year over year to $1.24 billion, missing the Zacks Consensus Estimate of $1.27 billion [3] - Sales of companion animal products in the U.S. declined by 1% year over year to $1 billion, with growth in parasiticides and dermatology products offset by a decline in monoclonal antibody products for osteoarthritis pain [4] - Livestock product sales in the U.S. fell by 6% to $234 million, primarily due to the divestiture of the medicated feed additive product portfolio [6] - International segment revenues grew by 8% year over year to $1.12 billion, exceeding the Zacks Consensus Estimate of $1.06 billion [8] - Ex-U.S. sales of companion animal products rose by 7% to $599 million, driven by growth in key products [8] - Livestock product sales internationally increased by 9% to $522 million, supported by growth across core species [9] Full-Year Results and Guidance - For the full year 2025, Zoetis reported adjusted earnings of $6.41 per share, up from $5.92 the previous year, and total revenues of $9.47 billion, an increase of 2% year over year [10] - The company provided guidance for 2026, expecting adjusted earnings in the range of $7.00-$7.10 per share and revenues between $9.825 billion and $10.025 billion, indicating operational growth of 3-5% [11][13] Product Developments - Zoetis received EU approval for Lenivia, a long-acting monoclonal antibody therapy for canine osteoarthritis pain, with a commercial launch expected in 2026 [14] - The approval of Lenivia is anticipated to enhance Zoetis' position in the companion-animal biologics market and expand its offerings in the osteoarthritis segment [15]

Financial Data and Key Metrics Changes - For the full year 2025, the company reported global revenue of $9.5 billion, growing 2% on a reported basis and 6% on an organic operational basis, with 4% from price and 2% from volume [21][22] - Adjusted net income grew 6% on a reported basis and 7% on an organic operational basis to $2.8 billion [21][22] - Full year adjusted gross margin of 71.9% grew 120 basis points on a reported basis, with foreign exchange having a favorable impact of 80 basis points [39] Business Line Data and Key Metrics Changes - The companion animal portfolio grew 5% operationally, with the Simparica franchise reporting $1.5 billion in revenue, growing 12% operationally [22][24] - The livestock portfolio achieved $2.8 billion in revenue, reflecting 8% organic operational growth, driven by broad-based growth across geographies and species [24][30] - Companion animal diagnostics delivered 13% operational revenue growth, supported by the launch of new products like Vetscan OptiCell and Imagyst [16][23] Market Data and Key Metrics Changes - International markets contributed significantly, with 8% organic operational revenue growth, while the U.S. delivered 4% organic operational growth [7][21] - International companion animal revenue grew 7% operationally, driven by the Simparica and key dermatology franchises [28] - The international livestock portfolio grew 10% on an organic operational basis, with strong performance in cattle and poultry markets [30] Company Strategy and Development Direction - The company is focused on advancing long-acting approvals and maintaining a robust pipeline to extend growth opportunities [8][19] - Strategic actions are being taken to sustain growth through competition, including optimizing channel mix and reinforcing scientific leadership [9][20] - The company aims to leverage its diverse portfolio and robust pipeline, with 12 potential blockbusters in development [19][20] Management's Comments on Operating Environment and Future Outlook - Management noted that while there are economic pressures affecting pet owners, demand for animal health services remains strong [10][71] - The company expects gradual improvement in the macro environment as it moves through 2026, with guidance for 2026 set at 3%-5% organic operational revenue growth [18][42] - Management emphasized the importance of innovation and strategic execution in navigating competitive pressures [19][20] Other Important Information - The company completed a convertible bond offering to support a $1.75 billion common stock buyback while maintaining a strong balance sheet [42] - A multi-year initiative to transition the ERP system is underway to enhance operational efficiency and reporting capabilities [38] Q&A Session Summary Question: Competition and Pricing Dynamics for 2026 - Management acknowledged the competitive landscape and the impact of aggressive promotions on growth, particularly in the dermatology space [50][51] - Price increases are expected to return to a normal range of 2%-3%, with volume contributing to growth as well [52] Question: U.S. Companion Animal Operational Growth - The guidance incorporates current market conditions and the company's strong portfolio, with expectations for continued demand despite competitive pressures [55][56] Question: Dynamics of Simparica Trio Growth - Management highlighted the significant room for expansion in the triple combination space, with expectations for continued growth in 2026 [62] Question: Revenue Recognition and Accounting Changes - Management clarified that operational changes have resulted in some revenue deferrals, which will be factored into future guidance [61][63]

Fourth Quarter and Full Year 2025 Financial Results February 12, 2026 Forward-Looking Statements This presentation contains forward-looking statements, which reflect the current views of Zoetis with respect to: business plans or prospects, future operating or financial performance; future guidance, future operating models, R&D costs; timing and likelihood of success; expectations regarding products, product approvals or products under development and expected timing of product launches; expectations regardi ...

Core Insights - Zoetis, Inc. (ZTS) is anticipated to exceed expectations in its fourth-quarter 2025 earnings report, scheduled for February 12, 2026, with revenue estimates at $2.37 billion and earnings per share (EPS) at $1.40 [1][5] Group 1: Revenue Expectations - The Zacks Consensus Estimate for U.S. segment revenues is projected at $1.27 billion, likely reflecting a decrease from the previous year due to lower sales of companion animal products [3][5] - International segment revenues are expected to rise to $1.06 billion, driven by increased sales of companion animal products [4][5] Group 2: Product Performance - Sales of companion animal products, particularly from the parasiticides portfolio (including Simparica and Revolution) and key dermatology products (Apoquel and Cytopoint), are expected to contribute positively to revenues in both U.S. and International segments [7] - However, sales of monoclonal antibody products for osteoarthritis pain (Librela for dogs and Solensia for cats) are anticipated to decline in the U.S. due to concerns over side effects, potentially offsetting gains from other product categories [8] Group 3: Regulatory Developments - The FDA approved a new indication for Zoetis' Simparica Trio in 2025, which is expected to enhance sales by preventing flea tapeworm infections in dogs [10] Group 4: Historical Performance - Zoetis has a strong earnings surprise history, having surpassed estimates in each of the last four quarters with an average surprise of 5.37% [13]

Core Insights - The fourth-quarter 2025 reporting cycle for the Medical sector is commencing, with major firms expected to release earnings results in the coming weeks, primarily in the pharma/biotech and medical device segments [1] - Johnson & Johnson's strong performance has set a positive tone, while Roche faced challenges due to unfavorable foreign-exchange impacts, particularly from a weak U.S. dollar [1] - Sanofi reported mixed results, beating earnings estimates but slightly missing sales expectations [1] Earnings Trends - As of January 28, 11.7% of Medical sector companies, representing 26% of the sector's market capitalization, have reported quarterly earnings, with 42.9% beating both earnings and revenue estimates [2] - Year-over-year earnings decreased by 15.5%, while revenues increased by 10.3% [2] - Overall, fourth-quarter earnings for the Medical sector are expected to decrease by 2.4%, while sales are projected to rise by 8.7% compared to the previous year [3] Company Highlights - **Zoetis (ZTS)**: Expected to report earnings on February 12, with a consensus estimate of $1.40 per share and revenues of $2.37 billion. The company has an Earnings ESP of +0.84% and a Zacks Rank of 3. Recent performance has been driven by strong demand for companion animal products, although sales of certain monoclonal antibody products may have declined [7][8] - **Pacira BioSciences (PCRX)**: Anticipated to report earnings soon, with a consensus estimate of 85 cents per share and revenues of $196.99 million. The company has an Earnings ESP of +7.38% and a Zacks Rank of 2. Revenue growth is expected from its pain-management product, Exparel, and other products [9][10] - **Apellis Pharmaceuticals (APLS)**: Expected to report earnings soon, with a consensus estimate of a loss of 41 cents per share and revenues of $194.37 million. The company has an Earnings ESP of +4.52% and a Zacks Rank of 3. Revenue growth is likely driven by its geographic atrophy drug, Syfovre [11][12] - **Acadia Pharmaceuticals (ACAD)**: Set to report earnings soon, with a consensus estimate of 12 cents per share and revenues of $292.64 million. The company has an Earnings ESP of +14.92% and a Zacks Rank of 3. Revenue growth is expected from its lead drug, Nuplazid, and its second product, Daybue [13][14] - **Denali Therapeutics (DNLI)**: Expected to report a loss of 75 cents per share and revenues of $18.47 million. The company has an Earnings ESP of +6.11% and a Zacks Rank of 3. Revenue expectations are based on collaboration revenues, with updates on pipeline programs anticipated [15][16]

Summary of Zoetis Conference Call Company Overview - **Company**: Zoetis - **Industry**: Animal Health - **Current Market Size**: Approximately $50 billion, projected to grow to $90 billion over the next 10 years [4][3] Key Industry Insights - **Growth Drivers**: - Strong sectoral tailwinds in both companion animal and livestock segments [3] - Increasing global population demanding nutritious protein [4] - Shift towards pet medicalization driven by younger pet owners (Millennials and Gen Z) [6] - **Market Trends**: - Companion animal market growth driven by increased spending on veterinary care and advanced therapies [6] - Livestock sector recovering from disruptions caused by African swine fever and COVID-19, with mid-single-digit growth [8] Company Performance - **Revenue Growth**: - Zoetis has achieved an 8% compound annual growth rate (CAGR) since its IPO, outperforming the industry average of 5% [5] - **Profitability**: - EBITDA margins of 41%-42% and mid-20s return on invested capital (ROIC) [21] - **R&D Investment**: - $5 billion invested in R&D since IPO, leading to 2,000 regulatory approvals over the last decade [9][10] Product Pipeline and Innovation - **Future Blockbusters**: - 12 potential blockbuster drugs in the pipeline, with expectations for major market approvals annually [11][12] - **Key Areas of Focus**: - Chronic kidney disease, oncology, cardiology, obesity, and anxiety in pets, with significant market potential [13][14][15][16] - **Diagnostics and Preventatives**: - Emphasis on expanding diagnostics and preventative care in livestock and companion animals [20] Market Position and Strategy - **Commercial Excellence**: - Direct field force in 45 markets, combining sales with medical affairs and marketing for effective execution [15] - **Product Leadership**: - Simparica Trio leading in the parasiticide space, with high customer satisfaction [16] - **Dermatology Portfolio**: - Strong portfolio including Apoquel and Cytopoint, with plans for long-acting products [17][18] Financial Strategy - **Capital Allocation**: - Focus on innovation, disciplined capital allocation, and returning excess cash to shareholders through dividends and buybacks [24][25] - **Shareholder Returns**: - Over 125% of free cash flow returned to shareholders in the last three years, with a 13% CAGR in dividends [24] Challenges and Outlook - **Short-term Headwinds**: - Anticipated slowdown in companion animal growth due to price increases and macroeconomic factors [27][29] - **Long-term Confidence**: - Sustained growth expected from livestock and diagnostics, with a focus on executing commercial strategies [30][32] - **Future Growth Projections**: - Long-term growth expectations remain robust, supported by industry trends and Zoetis's innovation pipeline [35] Conclusion - **Zoetis's Position**: - Well-positioned to capitalize on the growing animal health market with a strong pipeline, innovative products, and a disciplined approach to capital allocation [26]

44TH ANNUAL J.P. MORGAN HEALTHCARE CONFERENCE Leading the Future of Animal Health January 12, 2026 Forward-Looking Statements This presentation contains forward-looking statements, which reflect the current views of Zoetis with respect to: industry growth and market outlook; business plans or prospects; future operating or financial performance; future guidance; future operating models; R&D costs; timing and likelihood of success; expectations regarding products, product approvals or products under developm ...

Core Insights - Zoetis (ZTS) shares have decreased by 24.8% year to date due to safety concerns regarding its monoclonal antibody therapies for osteoarthritis in dogs and cats, namely Librela and Solensia, which are significant revenue sources for the company [1][8] - The FDA raised alarms about Librela in late 2024 after adverse event reports indicated serious neurologic effects and other health issues in dogs, including seizures and even death [2][3] - An analysis revealed that dogs treated with Librela reported musculoskeletal adverse events at approximately nine times the rate of other osteoarthritis therapies, raising further safety concerns [4][5] - Consequently, Librela and Solensia experienced year-over-year sales declines in the second and third quarters of 2025, leading Zoetis to revise its full-year revenue guidance down to $9.4-$9.475 billion from a previous range of $9.45-$9.6 billion [6][8] Sales and Financial Performance - Librela and Solensia's sales declines have pressured Zoetis' stock, which has fallen 29.9% over the past year, contrasting with a mere 0.3% decline in the industry [7][8] - Despite the challenges in the osteoarthritis segment, Zoetis is seeing strong performance in its parasiticides and dermatology portfolios, which are helping to mitigate some of the revenue losses [9][12] Future Outlook - Zoetis is planning for a potential rebound in 2026 by expanding its product offerings, including new long-acting therapies for osteoarthritis, which aim to enhance treatment adherence and broaden market uptake [11][12] - The company has received approvals for new products like Lenivia and Portela, which are designed to complement existing therapies and provide veterinarians with more treatment options [11][12]

Core Viewpoint - A rotation in investor interest is occurring, moving from high-flying tech stocks to undervalued healthcare stocks, driven by strong earnings and emerging uptrends in the healthcare sector [1]. Group 1: Healthcare Sector Overview - The healthcare sector is experiencing a surge, with several stocks showing strong momentum and favorable rankings on Benzinga's Momentum scores [2]. - Investors are increasingly favoring healthcare stocks due to their strong earnings performance and technical indicators suggesting upward trends [1]. Group 2: Cardinal Health Inc. - Cardinal Health (NYSE:CAH) has a market cap of $48 billion and has consistently generated over $50 billion in sales each quarter since Q1 2023, primarily from generic and branded drug sales [4]. - The stock has increased over 70% year-to-date, with a significant 15% jump following a Q3 earnings report that exceeded consensus expectations by more than 16% [6]. Group 3: Guardant Health Inc. - Guardant Health (NASDAQ:GH) specializes in oncology diagnostics and reported a record revenue of $265 million, reflecting over 38% year-over-year growth [9]. - The stock has shown strong momentum, with a significant increase following better-than-expected earnings results [9]. Group 4: Abivax SA - Abivax (NASDAQ:ABVX) focuses on chronic inflammatory diseases and has seen its stock rise nearly 600% in a single session following positive Phase 3 clinical trial results [10]. - The stock has continued to rise, with a 60% increase over the last three months and a consensus Buy rating from analysts [12]. Group 5: Medpace Holdings Inc. - Medpace (NASDAQ:MEDP) provides clinical trial services and has experienced a stock increase of over 75% year-to-date, driven by strong earnings performance [13]. - The company reported Q3 revenue growth of more than 23% year-over-year, exceeding expectations and indicating strong future prospects [15]. Group 6: Elanco Animal Health Inc. - Elanco Animal Health (NYSE:ELAN) develops healthcare products for pets and farm animals, with shares up 76% this year due to solid earnings [16]. - The company raised its full-year guidance following strong sales growth in both its Pet Health and Farm Animal divisions [18]. Group 7: GeneDx Holdings Corp. - GeneDx Holdings (NASDAQ:WGS) specializes in exome and genome testing and has recently turned a profit, with a market cap approaching $4 billion [19]. - The company has raised guidance for total revenue and adjusted gross margins, indicating strong growth potential [19].

Core Insights - Zoetis, Inc. (ZTS) reported third-quarter 2025 adjusted earnings of $1.70 per share, exceeding the Zacks Consensus Estimate of $1.62, while total revenues grew 1% year over year to $2.4 billion, missing the estimate of $2.41 billion [1][7] Financial Performance - U.S. revenues decreased 2% year over year to $1.32 billion, missing both the Zacks Consensus Estimate of $1.34 billion and the model estimate of $1.38 billion [3][7] - Sales of companion animal products in the U.S. remained flat at $1.07 billion, with growth in parasiticides and dermatology products offset by declines in monoclonal antibody products for osteoarthritis pain [4][7] - Livestock product sales in the U.S. fell 9% to $253 million, primarily due to the divestiture of the medicated feed additive product portfolio [6][9] International Segment - Revenues from the International segment increased 3% year over year to $1.06 billion, surpassing the Zacks Consensus Estimate of $1.04 billion [8] - Ex-U.S. sales of companion animal products rose 8% to $583 million, driven by growth in key products [9] Guidance and Future Outlook - Zoetis has cut its 2025 revenue guidance to $9.4-$9.475 billion from a previous range of $9.45 billion to $9.6 billion, while maintaining adjusted earnings guidance of $6.30-$6.40 per share [10] - The company secured a positive opinion for Lenivia, a long-acting monoclonal antibody therapy for canine osteoarthritis pain, with a final European decision expected in late 2025 [11][13]