Elanco Animal Health, Inc. Q4 FY2024 earnings call

• Elanco entered 2025 with momentum, having sixth straight quarter of revenue growth (4% organic constant currency) in Q4 2024. - Exceeded innovation revenue target for 2024, with six potential blockbusters in the market. - Divested aqua business, paid down ~25% of debt, and had strong operating cash flow in 2024. - Anticipate 4%-6% organic constant currency revenue growth in 2025, with adjusted EBITDA expected to grow 1%-5% excluding FX and aqua divestiture. - Launched products like Zenrelia, Credelio Quattro, AdTab, and Experior, with Bovaer showing progress and IL-31 expected FDA approval in Q4 2025.

Pet Health: Fourth quarter constant currency revenue growth was 6% with price growth of 3%. U.S. Pet Health increased 2% driven by contributions from key innovation products like Zenrelia and the OTC retail parasiticide business, partially offset by competitive pressures in veterinarian clinics. International Pet Health delivered robust 11% constant currency growth, led by strong demand for AdTab and Seresto. Farm Animal: Globally, fourth quarter organic constant currency revenue growth was 2%. U.S. Farm Animal achieved a 6% increase, led by cattle with strong demand for Experior and Rumensin. International Farm Animal was flat due to the Kexxtone recall and strategic approach in certain geographies.

• For 2025, anticipate organic constant currency revenue growth of 4%-6%. - Adjusted EBITDA expected to grow 1%-5% excluding the impact of FX and aqua divestiture. - Reported revenue is expected between $4.445 billion and $4.510 billion. - Q1 2025 organic constant currency revenue growth expected to be 2%-4%, with adjusted EBITDA expected to be $240 million to $260 million.

• Strong dollar impact on results. - Regulatory uncertainties, particularly regarding the approval timeline of IL-31. - Tariff wars and supply chain dynamics potentially affecting input costs.

Q: Jon Block from Stifel asked about Zenrelia's U.S. penetration, market share by year end 2025, and differences in international markets.

A: Jeff Simmons responded that Zenrelia has 8,000 clinics using it, with sampling and DTC efforts driving growth, and international markets like Canada, Brazil, Japan have less restrictive labels. Todd Young added on revenue growth acceleration being due to Zenrelia, Credelio Quattro, and other innovation contributions.

Q: Michael Ryskin from Bank of America asked about increased confidence in 2025 innovation numbers and IL-31 approval.

A: Jeff Simmons said momentum from Experior, AdTab, Zenrelia, and Quattro drives confidence, and IL-31 is expected to be approved in Q4 2025 with no change in progress.

Q: Daniel Clark from Leerink Partners asked about sampling impact on Zenrelia's sales and marketing strategy and vet feedback on first-line treatment.

A: Jeff Simmons said sampling leads to clinic adoption and continued focus on sampling and tech-to-tech approaches, with vets showing increasing willingness to script Zenrelia.

Q: Andrea Alfonso from UBS asked about Credelio Quattro's cannibalization strategy and Galliprant dynamics.

A: Jeff Simmons said Quattro has less cannibalization due to differentiation, and Todd Young mentioned Galliprant's strong safety profile and positive trend in Q4.

Q: Erin Wright from Morgan Stanley asked about competitive environment in derm, margin progression, and investment cadence.

A: Jeff Simmons said competition is assumed in guidance, and Todd Young explained that first half 2025 margins are lower due to investment in new product launches.

Q: Balaji Prasad from Barclays asked about IL-31 approval timing and poultry segment.

A: Jeff Simmons said IL-31 is expected in Q4 2025, and poultry is a durable segment with Elanco's leadership position.

Q: Mike DiFiore in for Umer Raffat asked about Quattro's cannibalization mitigation and tariff effects.

A: Jeff Simmons said Quattro has less cannibalization due to differentiation, and Todd Young mentioned tariff impact on input costs is factored into guidance.

Q: Chris Scott from JPMorgan asked about margin dynamics and Bovaer launch curve.

A: Todd Young discussed margin improvement expectations and Jeff Simmons explained Bovaer's ramp as similar to Experior with in-field implementation driving growth.

Q: David Westenberg from Piper Sandler asked about competition dynamics and biologics manufacturing.

A: Jeff Simmons said Quattro's market growth and differentiation make it different from previous launches, and Todd Young mentioned investment in biologics manufacturing with potential first-to-market products in the 2027-2030 timeframe