Nov 6, 2026, 6:27 AM ETHealthcare

Elanco Animal Health — Third Quarter 2026 Earnings Summary

ELANELANCO ANIMAL HEALTH INC

Financial Performance

Third quarter 2026 revenue was $1.265 billion, an 11% year-over-year increase, with 9% organic constant currency growth.
Reported net income was $18 million ($0.04 EPS), compared to a net loss of $34 million ($0.07 EPS) in the same period in 2025.
Adjusted net income was $136 million ($0.27 EPS), representing a 42% year-over-year increase from $94 million ($0.19 EPS) in Q3 2025.
Adjusted EBITDA was $243 million, a 23% increase from $198 million in Q3 2025, with an adjusted EBITDA margin of 19.5% (up from 17.5%).
Gross profit was $720 million (56.9% margin), an increase of 350 basis points year-over-year; adjusted gross profit was $699 million (56.1% margin), up 300 basis points.
Net leverage ratio was 2.9x Adjusted EBITDA as of September 30, 2026, a decrease of 0.7x from December 31, 2025.
Cash provided by operations was $216 million in Q3 2026, compared to $219 million in Q3 2025.
Total operating expenses were $492 million, a 12% increase year-over-year; marketing, selling, and administrative expenses rose 12% to $393 million, and R&D expenses increased 11% to $99 million.
Asset impairment, restructuring, and other special charges were $3 million in Q3 2026, down from $25 million in Q3 2025.

Full year 2026 revenue guidance was raised to $5.155 billion to $5.18 billion, implying approximately 8% organic constant currency growth.
Full year 2026 Adjusted EBITDA guidance was raised to $1.05 billion to $1.065 billion, a 17% year-over-year increase at the midpoint.
Full year 2026 Adjusted EPS guidance was raised to $1.17 to $1.20, a 26% year-over-year increase at the midpoint.
Full year 2026 innovation revenue target was raised to $1.275 billion.
Full year 2026 adjusted gross margin is expected to be 55.8% to 56.0%, an increase of 100 basis points versus 2025.
Fourth quarter 2026 revenue guidance is $1.190 billion to $1.215 billion.
Fourth quarter 2026 Adjusted EBITDA guidance is $185 million to $200 million.
Fourth quarter 2026 Adjusted EPS guidance is $0.16 to $0.19.
Early outlook for 2027 expects mid-single digit organic constant currency revenue growth, high-single digit Adjusted EBITDA growth, and low-double digit Adjusted EPS growth, aligning with the December 2025 Investor Day annual algorithm.

Pet Health revenue was $608 million, a 14% year-over-year increase on both reported and organic constant currency bases.
Farm Animal revenue was $631 million, a 6% reported increase (4% organic constant currency), driven by a 3% price increase and 2% contribution from AHV International.
Cattle revenue was $339 million, a 17% reported increase (11% organic constant currency).
Poultry revenue was $201 million, a 7% reported decrease (7% organic constant currency).
Swine revenue was $91 million, a 5% reported increase (5% organic constant currency).
Contract Manufacturing and Other revenue was $26 million, a 136% reported increase.
Zenrelia achieved its largest revenue quarter ever in the U.S. and International markets; U.S. JAK market share grew 7 points year-over-year.
Credelio Quattro became Elanco's largest U.S. Pet Health branded product, surpassing Seresto; U.S. share grew 9 points year-over-year.
Credelio Quattro received a positive opinion from the European Medicines Agency for EU expansion, with a Q1 2027 launch expected.
Befrena access opened across clinics with a full launch expected in Q1 2027; ~20% of Befrena buyers had never used Zenrelia.
Global ruminants remained the fastest-growing species, with year-to-date revenue up 12% on an organic constant currency basis.
Price increased 4% in Q3, led by a 5% increase in global Pet Health.

Zenrelia and Credelio Quattro reached new market share highs in September, with competitive activity having no fundamental impact on their trajectory.
Zenrelia gained 10 share points in Europe in H1 2026, 5x the rate of the competitive entrant.
Seresto was negatively impacted by U.S. retailer inventory drawdown, though underlying performance remained in line with expectations.
The company operates in a highly competitive industry with risks related to generic products, disruptive innovations, and regulatory restrictions on antibiotics.

Risks include operating in a highly competitive industry, success of R&D and regulatory approvals, and competition from generic products.
Potential impacts from disruptive innovations, advances in veterinary practices, and alternatives to animal-derived protein.
Regulatory restrictions on antibiotic use in farm animals and potential changes in government financial support for farm animals.
Dependence on top products, manufacturing capacity, and supply chain challenges.
Risks related to foreign currency exchange rates, geopolitical conditions, and potential activist shareholder actions.
The company currently has a plan not to pay dividends.

CEO Jeff Simmons described results as demonstrating a "consistent, reliable growth company" with accelerating cash flow and a "durable top-line."
Management highlighted that price acceleration to 4% exceeded expectations and volume remained robust at 5%.
CFO Bob VanHimbergen noted significant adjusted gross margin expansion driven by pricing, mix, and early progress on Elanco Ascend productivity initiatives.
Management stated that reaching the 2.9x net leverage ratio milestone unlocks accelerated capital allocation flexibility.
The tone reflects confidence in the company's momentum heading into 2027 and a recommitment to the annual growth algorithm.

Elanco announced Jamie Preston as Executive Vice President and Chief People Officer effective November 3, 2026, succeeding Dave Kinard.
The company achieved its highest employee engagement levels since IPO and earned Great Place To Work® certifications in 11 markets.
AHV International B.V. was acquired on April 30, 2026, contributing to revenue growth and included in organic constant currency calculations.
Royalty revenue and sales-based milestones sold to a third party totaled $21 million for the three months ended September 30, 2026.
The company anticipates a tailwind to revenue of approximately $60 million from favorable foreign exchange rates for the full year 2026.
Net interest expense increased to $59 million in Q3 2026 due to the maturity of interest rate swaps in September 2025 and imputed interest on the liability for sale of future revenue.