Investor Contact: Kathryn Grissom (317) 273-9284 or kathryn.grissom@elancoah.com Media Contact: Colleen Parr Dekker (317) 989-7011 or colleen.dekker@elancoah.com Elanco Animal Health Reports First Q

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Investor Contact: Kathryn Grissom (317) 273-9284 or kathryn.grissom@elancoah.com

Media Contact: Colleen Parr Dekker (317) 989-7011 or colleen.dekker@elancoah.com

Elanco Animal Health Reports

First Quarter 2022 Results

GREENFIELD, IN (May 9, 2022) - Elanco Animal Health Incorporated

(NYSE: ELAN) today reported financial results for the first quarter of 2022, provided guidance for the second quarter of 2022, and updated

guidance for the full year 2022.

"Our first quarter financial results demonstrate continued consistent

delivery and strong execution across our global enterprise with revenue, adjusted EBITDA and adjusted EPS all exceeding the mid-point

of our guidance. We are already seeing the benefits of a leaner, more agile organization, contributing to our ability to reduce operating

expenses sequentially and adapt quickly to the changing macro environment," said Jeff Simmons, Elanco president and chief executive

officer. "Elanco is well positioned in the durable Animal Health industry, our strategy is working, and the team is consistently

delivering on the items within our control, including our company-wide productivity agenda and price. We remain confident in our guidance

after adjusting for the continued strengthening of the U.S. dollar."

"Additionally, we continue to strengthen the business and advance

our late-stage pipeline, including achieving two major milestones for our Pet Health potential blockbuster candidates, and with our recently

announced strategic alliance with Royal DSM for Bovaer in the U.S. These advances and the execution of the Elanco team provide a foundation

for the next era of growth at Elanco and continued value for our customers."

Financial Highlights

(1) CER = Constant Exchange Rate, representing the growth

rate excluding the impact of foreign exchange rates.

Certain reclassifications of prior year farm animal species revenue has been made

to conform to the current year's presentation.

Numbers may not add due to rounding.

In the first quarter of 2022, revenue was $1,225 million, a decrease

of 1% on a reported basis, or an increase of 2% excluding the unfavorable impact of foreign exchange rates, compared with the first quarter

Pet Health revenue was $639 million, a decrease of 1% on a reported

basis or an increase of 2% excluding the unfavorable impact from foreign exchange rates, with a 2% increase from price. Seresto

returned to growth in the first quarter, contributing $161 million and growing 6% on a reported basis compared to the first quarter of

2021. This, and growth from the Credelio franchise and Galliprant, was partially offset by continued pressure on legacy parasiticide brands,

including prescription products Trifexis and Advantage Multi. The Advantage family of products contributed $137 million

in the quarter, a decline of 5% on a reported basis compared to the first quarter of 2021, driven by a decline in the U.S., including

temporary stock-outs for certain retail products, partially offset by strong growth in several international markets, including China.

Farm Animal revenue was $569 million, a decrease of 2% on a

reported basis or an increase of 1% excluding the unfavorable impact from foreign exchange rates, with a 1% increase from price. Improved

producer demand and innovation in poultry as well as strong aqua demand was partially offset by the continuation of pressured economics

for swine producers in China that began in the second half of 2021 compared to a strong first quarter of 2021. Additionally, cattle declined

in the quarter primarily driven by generic competition.

Contract Manufacturing revenue was $17 million, a decrease of

11% or 8% when excluding the unfavorable impact from foreign exchange rates.

Reported and adjusted gross profit was $716 million, or 58.4% of revenue

in the first quarter of 2022. Gross profit as a percent of revenue improved 430 bps on a reported basis, primarily driven by the amortization

of the fair value adjustment of $62 million recorded from the acquisition of Bayer Animal Health in the first quarter of 2021. On an adjusted

basis, gross profit as a percent of sales declined 80 bps as compared to the first quarter of 2021, primarily driven by inflation on input

costs, freight, and conversion costs, partially offset by continued improvements in manufacturing productivity.

Total operating expense was $401 million for the first quarter of 2022.

Marketing, selling and administrative expenses decreased 8% to $320 million, and research and development expenses decreased 9% to $81

The decrease was driven by the disciplined execution of recent strategic

actions more than offsetting cost inflation and continued investment in key strategic priorities.

Asset impairment, restructuring, and other special charges decreased

to $46 million in the first quarter of 2022 from $108 million in the first quarter of 2021, primarily due to period over period decreases

in overall acquisition and systems implementation related charges. Net interest expense decreased to $52 million in the first quarter

of 2022 from $61 million in the first quarter of 2021, primarily due to the favorable impact of refinancing debt at lower interest rates.

The reported effective tax rate increased to 32.1% in the first

quarter of 2022 compared to 23.5% in the first quarter of 2021, primarily driven by the 2017 U.S. tax law change that became

effective January 1st, 2022, requiring the capitalization of certain R&D expenses. The adjusted effective tax rate was also

impacted by the tax law change, increasing from 21.3% in the first quarter of 2021 to 30.4% in the first quarter of 2022.

Net income for the first quarter of 2022 was $48 million and $0.10

per diluted share on a reported basis, compared with a net loss of $61 million and $(0.12) per diluted share for the same period in 2021.

On an adjusted basis, net income for the first quarter of 2022 was $177 million and $0.36 per diluted share, representing a 3% decrease

for each, compared with the same period in 2021.

Adjusted EBITDA was $339 million in the first quarter of 2022, a decrease

of 1% compared to the first quarter of 2021. Adjusted EBITDA as a percent of revenue was 27.7% compared with 27.6% for the first quarter

of 2021, an increase of 10 basis points.

Working Capital and Balance Sheet

Operating cash flow was $(62) million in the first quarter of 2022

compared to $22 million in the first quarter of 2021. The cash used in the first quarter of 2022 reflects a reduction in accounts payable

and other liabilities, annual bonus payouts, and increased severance payments.

As of March 31, 2022, Elanco's net leverage ratio was 5.6x adjusted

EBITDA, an increase of 0.1x compared to December 31, 2021, driven by higher net debt in 2022 from the expected seasonality of higher cash

outflow in the first quarter. Elanco continues to expect to end 2022 with a net leverage ratio of 4.75x adjusted EBITDA.

For further detail of non-GAAP measures, see the Reconciliation of

GAAP Reported to Selected Non-GAAP Adjusted Information tables later in this press release.

Select Business Highlights Since the Last

Elanco is updating financial guidance for the full year 2022, summarized

in the following table:

For the full year 2022, the company now anticipates revenue between

$4,700 million and $4,755 million, including a headwind of approximately $140 million from the unfavorable impact of foreign exchange

rates compared to 2021. This represents an incremental $45 million headwind compared to the February guidance. Additionally, the company

has updated its guidance for reported net income, adjusted EBITDA, reported EPS and adjusted EPS to reflect the impact of the strengthening

Additionally, Elanco is providing financial guidance

for the second quarter of 2022, summarized in the following table:

For the second quarter of 2022, the company anticipates revenue between

$1,160 million and $1,200 million, with an expected headwind of approximately $45 million from the unfavorable impact of foreign exchange

rates compared to the second quarter of 2021. The expected 4% revenue decline at constant currency for the second quarter 2022 is primarily

driven by emerging macro conditions including the situations in China, Ukraine and Russia, as well as stock-outs of certain U.S. pet health

products and a partial shift of aqua product demand into the first quarter from the second quarter as a result of strong underlying salmon

The implied guidance for the second half of 2022 includes an acceleration of revenue and profitability growth. The company's initial

guidance for full year 2022 in February included an expected second half acceleration of revenue growth from price increases, the improvement

of year over year unfavorable comparisons across many parts of the business, including contract manufacturing, and the increasing contribution

from innovation. The company's updated guidance for full year 2022 now includes expected benefit from incremental price improvement

and sales phasing in China from the second quarter of 2022 to the second half of 2022 from expected easing of COVID-19 restrictions. Importantly,

the company expects headwinds from the war in Ukraine to continue the rest of this year.