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 Second

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 Second Quarter

GREENFIELD, IN (August 8, 2022) - Elanco Animal Health

Incorporated (NYSE: ELAN) today reported financial results for the second quarter of 2022, provided guidance for the third quarter of

2022, and updated guidance for the full year 2022.

"Our relentless efforts to drive operational efficiency from

our company-wide productivity agenda allowed us to grow adjusted EBITDA and adjusted EPS despite topline pressures in the quarter,"

said Jeff Simmons, Elanco president and chief executive officer. "Our global teams are executing on items within our control while

continuing to weather the many macro challenges that are creating headwinds to our business. While we are reducing our revenue expectations

for the full year primarily based on these macro factors, we expect to deliver improved margins that will enable us to grow full year

adjusted EBITDA and adjusted EPS compared to 2021."

"Looking ahead, our innovation engine is building momentum and

we are delighted with the pace of development of our late-stage pipeline. In July, we launched Zorbium, a feline pain product in the U.S.,

and are seeing a strong start. Within the next two to four months, we expect to make regulatory submissions for two differentiated Pet

Health products, a parasiticide and a dermatology product, both with the potential to be blockbusters. We believe that our broad spectrum

parasiticide product has crossed the so-called 'heartworm threshold', an important step on the path to approval and commercial success.

And finally, we in-licensed a first-in-class feline diabetes product with FDA approval expected with the next 12 months. As our product

development pipeline continues to progress and mature, our prospects for accelerated revenue growth improve."

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

have been made to conform to the current year's presentation.

Numbers may not add due to rounding.

In the second quarter of 2022, revenue was $1,177 million, a decrease

of 8% on a reported basis, or a decrease of 4% excluding the unfavorable impact of foreign exchange rates, compared with the second quarter

Pet Health revenue was $612 million, a decrease of 11% on

a reported basis or a decrease of 7% excluding the unfavorable impact from foreign exchange rates, with a 1% increase from price in

the quarter as executed list price increases were partially offset by rebate and in-store marketing programs, primarily in the U.S.

retail business. The Advantage Family of products contributed $137 million, representing a 7% decline on a reported

basis, or a 3% decline excluding the unfavorable impact of foreign exchange rates. Seresto contributed $113 million, representing a

12% decline on a reported basis, or a 6% decline excluding the unfavorable impact for foreign exchange rates. For the second quarter

excluding the unfavorable impact of foreign exchange rates, declines in older generation parasiticide products, supply chain

disruption in the U.S. for certain retail products, and lower demand for Seresto was partially offset by growth in the Credelio

Farm Animal revenue was $553 million, a decrease of 2% on a

reported basis or an increase of 3% excluding the unfavorable impact from foreign exchange rates, with a 2% increase from price. Excluding

the unfavorable impact of foreign exchange rates, increased demand for ruminant products internationally, notably sheep products, and

the timing of generic defense programs for Rumensin shifting sales expected in the third quarter of 2022 into the second quarter was partially

offset by pressured economics for swine and poultry producers in China and a decline for swine in Europe.

Contract Manufacturing revenue was $12 million, a decrease of

56% or 53% when excluding the unfavorable impact from foreign exchange rates.

Reported and adjusted gross profit was $693 million, or 58.9% of revenue

in the second quarter of 2022. Gross profit as a percent of revenue improved 200 bps on a reported basis and 190 bps on an adjusted basis,

primarily driven by continued improvements in manufacturing productivity and price, and the effect of foreign exchange rates on international

inventories sold, partially offset by inflation on input costs, freight and conversion costs and unfavorable mix from lower Pet Health

Total operating expense was $425 million for the second quarter of

2022. Marketing, selling and administrative expenses decreased 11% to $343 million, and research and development expenses decreased 13%

to $82 million. The decrease in total operating expenses was primarily driven by the disciplined execution of recent strategic actions

and the benefit of a stronger U.S. dollar more than offsetting cost inflation and continued investment in key strategic priorities, including

Asset impairment, restructuring, and other special charges was $86

million in the second quarter of 2022, compared to $299 million in the second quarter of 2021. Charges recorded in the second quarter

of 2022 primarily related to a $59 million charge recorded for IPR&D related to the feline diabetes care asset Elanco licensed

during the quarter and costs associated with the implementation of new systems, programs, and processes due to the integration of Bayer

Animal Health. We continue to expect the integration to be completed by mid-2023.

Reported net interest expense increased to $67 million in the second

quarter of 2022 from $60 million in the second quarter of 2021, primarily due to a debt extinguishment loss recorded upon the retirement

of a portion of the company's senior notes and the impact of rate increases on variable rate debt. Adjusted net interest expense was $50

million, or a decline of $10 million compared to the second quarter of 2021 primarily driven by the repayment of the company's $500

million bond in August of 2021.

The reported effective tax rate decreased to negative 22.5% in the

second quarter of 2022 compared to 11.1% in the second quarter of 2021, primarily driven by the jurisdictional location of Elanco profits

and a benefit from a cash interest rate swap settlement. The adjusted effective tax rate decreased from 29.6% in the second quarter of

2021 to 18.0% in the second quarter of 2022, primarily driven by the jurisdictional location of Elanco profits and discrete items which

increased tax expense in the second quarter of 2021 and decreased tax expense in the second quarter of 2022.

Net loss for the second quarter of 2022 was $22 million and $(0.04)

per diluted share on a reported basis, compared with a net loss of $210 million and $(0.43) per diluted share for the same period in 2021.

On an adjusted basis, net income for the second quarter of 2022 was $177 million, a 31% increase as compared to the second quarter of

2021, or $0.36 per diluted share, a 29% increase compared with the same period in 2021.

Adjusted EBITDA was $300 million in the second quarter of 2022, an

increase of 3% compared to the second quarter of 2021. Adjusted EBITDA as a percent of revenue was 25.5% compared with 22.8% for the second

quarter of 2021, an increase of 270 basis points.

Working Capital and Balance Sheet

Cash flow from operations was $312 million in the second quarter

of 2022 compared to $149 million in the second quarter of 2021. The increase in cash from operations in the second quarter of 2022

reflects a lower reported net loss and the benefit of a net $124 million cash interest rate swap settlement. The settlement provided

a cash benefit in the second quarter of 2022 that will negatively impact operating cash flow over the next four years as this cash acceleration

As of June 30, 2022, Elanco's net leverage ratio was 5.3x

adjusted EBITDA, a decrease of 0.3x compared to March 31, 2022, driven by lower net debt and better adjusted EBITDA. Elanco expects

to improve its net leverage over the rest of 2022, ending the year at approximately 5.0x 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 $4,465 million and $4,550 million, including a headwind of approximately $205 million from the unfavorable impact of foreign

exchange rates compared to 2021. Elanco is reducing its full year guidance range by $220 million at the midpoint compared to its

May guidance. The reduction includes an incremental $65 million headwind from foreign exchange rates and $100 to $120 million

from macro environmental factors including the pace of recovery from China's Covid lockdowns, disruptions in the global supply

chain, and the impact from an expected economic slowdown around the world. Additionally, the reduction includes a $40 to $50 million

headwind related to company-specific factors including pricing realization, slower innovation ramp, and U.S. parasiticides

competition. Finally, the company has updated its guidance for reported net income, adjusted EBITDA, reported EPS and adjusted EPS

to reflect the expected impact of the strengthening U.S. dollar, reduction in revenue, and the impact of increased inflation.

"While the change in revenue guidance today by $220 million is

significant, the durability and diversity of Elanco's portfolio remains highly valuable to our customers. Even with the myriad

factors from the war in Ukraine and Covid lockdowns in China to droughts and excessive heat across U.S. cattle country, as well as competitive

pressures in U.S. Pet Health, we are declining by approximately $50 million in constant currency sales in 2022, while we are increasing