Elanco Animal Health Incorporated Q4 FY2025 earnings call

2025 was a year of significant delivery with strong fourth quarter organic constant currency revenue growth of 9%. Outperformed guidance for revenue, adjusted EBITDA, and adjusted EPS. Growth led by US farm animal and US pet health. Innovation revenue exceeded expectations at $892 million in 2025. Progress with major innovation products like Credelio Quattro, ZENRELIA, Experior, Bifrenna. Acquired AHV International. Elanco Ascend productivity initiative underway with progress on savings.

US pet health had 10% organic constant currency revenue growth; international pet health 8% organic constant currency revenue growth; US farm animal up 17%; international farm animal up 4% in organic constant currency. Revenue from innovation was $892 million in 2025 and expected to be $1,150 million in 2026 with at least $250 million growth in 2026.

2026 full-year organic constant currency revenue growth expected 4%-6%, adjusted EBITDA $955-$985 million, adjusted EPS $1.00-$1.06. First quarter guidance: organic constant currency revenue growth 4%-6%, revenue $1,280-$1,305 million, adjusted EBITDA $290-$310 million, adjusted EPS $0.33-$0.36. Tailwinds from innovation portfolio scaling, strategic pricing; headwinds from competitive pressures, macroeconomic factors.

Competitive pressures in the market, macroeconomic uncertainties affecting consumer spending, regulatory changes impacting product approvals, and potential impact of distributor consolidations on business operations.

Q: Switching to ZENRELIA from incumbent, elaborate on international share gains and US label update.

A: ZENRELIA has strong international share gains due to efficacy, clean labels, etc. Optimistic about US label update with ongoing FDA dialogue.

Q: Thoughts on Covetrus and MWI merger and impact on manufacturers.

A: Focus on current strong relationship with distributors, competitive advantage with portfolio.

Q: Quantify price acceleration in 2026.

A: Price expected to accelerate from 2025, with ZENRELIA and Quattro contributing, and US pet health taking highest price increase in 5 years.

Q: Timeline for ZENRELIA US label update and Europe performance.

A: In constructive dialogue with FDA, Europe performance strong with double-digit share gains.

Q: Conservatism in 2026 guidance.

A: Guidance in line with framework, considering lapping of innovation growth and potential headwinds/tailwinds.

Q: Commercial side, corporate accounts and portfolio gaps.

A: Strong corporate performance, Bifrenna will add differentiation, vaccines part of portfolio.

Q: Quattro trends and no-regrets policy.

A: Quattro has strong trends, no-regrets policy continues with focus on ROI.

Q: Gross margin and innovation growth.

A: Margin improvement from price, sales volumes, mix, offset by inflation; innovation growth contributing.

Q: Base business stability and livestock outlook.

A: Base business stable with low to high single-digit trends; livestock driven by protein trends, favorable cattle economics with long-term outlook.

Q: Derm market growth and 2026 guidance balance.

A: Derm market growing with share gains, 2026 guidance balanced across pet and farm.