Investor Contact Tiffany Kanaga (765) 740-0314 or tiffany.kanaga elancoah.com Media Contact Colleen Parr Dekker (317) 989-7011 or colleen.dekker elancoah.com Elanco Animal Health Reports Fourth Quar

Investor Contact Tiffany Kanaga (765) 740-0314 or tiffany.kanaga elancoah.com

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

Elanco Animal Health Reports Fourth Quarter and Full Year 2024 Results

Fourth Quarter 2024 Financial Results

Revenue of $1,020 million, decreased 1% on a reported basis and increased 4% on an organic constant currency basis

Reported Net Loss of $8 million, Adjusted Net Income of $72 million

Adjusted EBITDA of $177 million, or 17.4% of Revenue, including an approximate $7 million foreign exchange (FX) headwind vs. late October rates

Reported EPS of $(0.02), Adjusted EPS of $0.14 including an approximate $0.01 FX headwind vs. late October rates

Full Year 2024 Financial Results

Exceeded innovation revenue target at $461 million

Revenue of $4,439 million, flat to prior year on a reported basis and up 3% on an organic constant currency basis

Reported Net Income of $338 million, Adjusted Net Income of $452 million

Adjusted EBITDA of $910 million, or 20.5% of Revenue

Reported EPS of $0.68, Adjusted EPS of $0.91

Net leverage ratio of 4.3x Adjusted EBITDA

Full Year 2025 Guidance

Unchanged vs. November outlook except incorporating estimated FX headwind of $110 million to revenue, $45 million to Adjusted EBITDA, and $0.07 to Adjusted EPS continue to expect accelerating organic constant currency revenue growth to mid-single digits

Raising 2025 innovation revenue target to $640 to $720 million

Revenue of $4,445 to $4,510 million

Reported Net (Loss) Income of $(25) to $7 million, Adjusted EBITDA of $830 to $870 million

Reported (Loss) Earnings Per Share of $(0.05) to $0.01, Adjusted EPS of $0.80 to $0.86

GREENFIELD, IN (February 25, 2025) - Elanco Animal Health Incorporated (NYSE ELAN) today reported its financial results for the fourth quarter and full year 2024 and provided initial guidance for both the first quarter and full year 2025.

Elanco delivered a strong finish to 2024, achieving our sixth consecutive quarter of organic constant currency revenue growth - with the fourth quarter up 4% - and building momentum as we head into 2025, said Jeff Simmons, President and CEO of Elanco Animal Health. For the year we grew in both Pet Health and Farm Animal, in our top five product franchises, and in nine of our top 10 countries, all on an organic constant currency basis, demonstrating the broad-based strength of our diverse portfolio. We exceeded our innovation revenue target for 2024 and raised the goal for 2025, with six potential blockbuster products now launched and reinforcing our confidence in mid-single digit organic constant currency revenue growth this year. We generated over half a billion dollars of operating cash flow in 2024, doubling from the prior year through working capital discipline. Employee engagement is at a four-year high and our teams are already off to a fast start in 2025, focused on delivering a successful year and creating long-term value.

Select Business Highlights Since the Last Earnings Call

Launched and shipped Credelio Quattro in January

Achieved Zenrelia use in over 8,000 U.S. clinics, representing penetration of nearly 30% momentum driving acceleration of direct-to-consumer and other targeted marketing in January launched in Japan in November and Canada in January

Received conditional approval in Canada for canine parvovirus monoclonal antibody in January

Strengthened U.S. Farm Animal leadership #1 in beef, swine, and poultry(1)

Achieved blockbuster status for Experior in the U.S. alone heifer clearance driving continued growth

Carbon inset market proven as dairy farmers earned approximately $10 million for credits in 2024 created by using Rumensin

(1) Per Q3 CEESA International Sales Survey (CISS). Updated quarterly survey occurs after animal health companies report earnings.

Financial Highlights

(1) Organic CC Growth Representing revenue growth excluding revenue from the aqua business, which the company divested July 9, 2024, and the impact of foreign exchange rates.

(2) Primarily represents revenue from arrangements in which the company manufactures products on behalf of a third party and royalty revenue.

Numbers may not add due to rounding.

Fourth Quarter Results

In the fourth quarter of 2024, revenue was $1,020 million, a decrease of 1% on a reported basis and a 4% increase on an organic constant currency basis, compared with the fourth quarter of 2023.

Pet Health revenue was $439 million, an increase of 6% on both a reported and organic constant currency basis, with a 3% increase from price in the quarter. The year over year increase in the fourth quarter was primarily driven by contributions from the continued strength of our global over-the-counter (OTC) retail parasiticide business and key innovation products, including Zenrelia and Credelio Plus, which were partially offset by competitive pressures in the U.S. veterinary channel. The Advantage Family of products and Seresto contributed revenue of $85 million and $50 million, respectively.

Farm Animal revenue was $570 million, a 7% decrease on a reported basis and a 2% increase on an organic constant currency basis. In addition to a 3% contribution from price in the fourth quarter, the year over year organic constant currency growth was also driven by the continued strong demand for Experior and Rumensin in the U.S., as well as strong demand in swine across multiple geographies. These factors were partially offset by the impact of the Kexxtone recall and our strategic do different approach in certain geographies.

Gross profit was $519 million, or 51% of revenue in the fourth quarter of 2024. Gross profit as a percent of revenue increased 80 basis points, primarily driven by price, mix, and manufacturing performance benefits, which were partially offset by the impact of the aqua divestiture, inflationary pressures, and foreign exchange headwinds.

Total operating expenses were $381 million for the fourth quarter of 2024. Marketing, selling and administrative expenses increased 3% to $300 million, and research and development expenses increased 3% to $81 million. The 3% increase in total operating expenses was primarily driven by employee related expenses and investments to support our expanding pet health business, which were partially offset by savings realized from our first quarter restructuring initiative.

Asset impairment, restructuring, and other special charges were $7 million in the fourth quarter of 2024, compared to $36 million in the fourth quarter of 2023. Charges recorded in the fourth quarter of 2024 primarily related to intangible asset impairments, while charges in the fourth quarter of 2023 were attributable to a $26 million non-cash write-down of an asset associated with a long-term manufacturing and supply agreement, and, to a lesser degree, costs associated with the implementation of new systems, programs, and processes due to the integration of Bayer Animal Health.

Net interest expense was $46 million in the fourth quarter of 2024, a decrease of 31% as compared to the fourth quarter of 2023. The decrease was driven by lower debt levels primarily enabled by use of proceeds from the aqua divestiture to pay down debt.

Other expense was $6 million in the fourth quarter of 2024 on a reported basis, inclusive of foreign currency losses and the impairment of a previously divested R D platform, compared to expense of $34 million in the fourth quarter of 2023. Other expense recorded in the fourth quarter of 2023 reflected the impact from foreign currency transaction losses, which were most prominent for our Argentina subsidiary, and also included a $12.5 million accrual related to the previously disclosed SEC matter settled in November 2024.

The reported effective tax rate was 84.5% in the fourth quarter of 2024 compared to negative 11.1% in the fourth quarter of 2023. The adjusted effective tax rate was 26.2% in the fourth quarter of 2024 as compared to 39.7% in the fourth quarter of 2023. The tax rate in the fourth quarter of 2023 was negatively impacted by unfavorable discrete tax items.

Net loss for the fourth quarter of 2024 was $8 million and $0.02 per diluted share on a reported basis, compared with a net loss of $141 million and $0.29 per diluted share for the same period in 2023. On an adjusted basis, net income for the fourth quarter of 2024 was $72 million, as compared to $39 million for the fourth quarter of 2023, or $0.14 per diluted share, as compared to $0.08 per diluted share for the same period in 2023.

Adjusted EBITDA was $177 million in the fourth quarter of 2024, an increase of 7% compared to the fourth quarter of 2023. Adjusted EBITDA as a percent of revenue was 17.4% compared with 15.9% for the fourth quarter of 2023, an increase of 150 basis points.

Working Capital and Balance Sheet

Cash provided by operations was $177 million in the fourth quarter of 2024 compared to $157 million in the fourth quarter of 2023. The increase in cash from operations in the fourth quarter of 2024 reflects improved net income (loss) and improvements in net working capital.

As of December 31, 2024, Elanco's net leverage ratio was 4.3x adjusted EBITDA, flat to September 30, 2024.

Elanco is providing financial guidance for the full year 2025, summarized in the following table, subject to the assumptions described below

The company anticipates a headwind to revenue of approximately $110 million from the unfavorable impact of foreign exchange rates compared to prior year and since the November earnings call. Excluding the unfavorable impact of foreign exchange rates and the aqua divestiture, the company continues to expect revenue growth to accelerate to mid-single digits.

The company expects operating expenses to increase approximately 6% year over year in constant currency with strategic investment in the global launches of the innovation portfolio. Full year adjusted EBITDA includes an anticipated foreign exchange rate impact of approximately $45 million compared to prior year and since the November earnings call.

We are focused on accelerating organic constant currency revenue growth for 2025, with continued efforts to improve our earnings potential and leverage profile, said Todd Young, Executive Vice President and CFO of Elanco Animal Health. As we navigate a dynamic macroeconomic backdrop, we remain confident in the underlying drivers of the 2025 outlook provided during the November earnings call. The only adjustment we have made is for incremental currency headwinds using rates from earlier this month. We expect 2025 adjusted EBITDA to be more back half weighted than our historical cadence, with the stronger dollar and as our strategic investments in global launches drive the expected ramp for innovation revenue contributions.

In the first quarter, the company expects a headwind to revenue of approximately $40 million from the unfavorable impact of foreign exchange rates compared to prior year. Excluding the unfavorable impact of foreign exchange rates and the aqua divestiture, the company expects 2% to 4% revenue growth.

The company expects operating expenses up 6% to 8% year over year in constant currency with strategic investment in the global launches of the innovation portfolio. First quarter adjusted EBITDA includes an expected foreign exchange rate impact of approximately $15 million compared to prior year.

The company expects first quarter adjusted effective tax rate to be in the mid-single digit range as a result of a discrete tax item that will also benefit the full-year expected tax rate of 21% to 22%.

The 2025 full year and first quarter financial guidance reflects foreign exchange rates as of earlier this month. Further details on guidance, including GAAP reported to non-GAAP adjusted reconciliations, are included in the financial tables of this press release and will be discussed on the company's conference call this morning.

WEBCAST CONFERENCE CALL DETAILS

Elanco will host a webcast and conference call at 8 00 a.m. Eastern Time today, during which company executives will review fourth quarter and full year 2024 financial and operational results, provide financial guidance for the full year and first quarter of 2025, and respond to questions from analysts. Investors, analysts, members of the media and the public may access the live webcast and accompanying slides by visiting the Elanco website at https investor.elanco.com and selecting Events and Presentations. A replay of the webcast will be archived and made available a few hours after the event on the company's website, at https investor.elanco.com investor events-and-presentations.

Elanco Animal Health Incorporated (NYSE ELAN) is a global leader in animal health dedicated to innovating and delivering products and services to prevent and treat disease in farm animals and pets, creating value for farmers, pet owners, veterinarians, stakeholders and society as a whole. With nearly 70 years of animal health heritage, we are committed to helping our customers improve the health of animals in their care, while also making a meaningful impact on our local and global communities. At Elanco, we are driven by our vision of Food and Companionship Enriching Life and our Elanco Healthy Purpose - all to advance the health of animals, people, the planet and our enterprise. Learn more at www.elanco.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements concerning product launches and revenue from such products, our 2025 full year and first quarter guidance and long-term expectations, our expectations regarding debt levels, and expectations regarding our industry and our operations, performance and financial condition, and including, in particular, statements relating to our business, growth strategies, distribution strategies, product development efforts and future expenses.

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important risk factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions, including but not limited to the following

operating in a highly competitive industry

the success of our research and development (R D), regulatory approval and licensing efforts

the impact of disruptive innovations and advances in veterinary medical practices, animal health technologies and alternatives to animal-derived protein

competition from generic products that may be viewed as more cost-effective

changes in regulatory restrictions on the use of antibiotics in farm animals

an outbreak of infectious disease carried by farm animals

risks related to the evaluation of animals

consolidation of our customers and distributors

the impact of increased or decreased sales into our distribution channels resulting in fluctuations in our revenues

our dependence on the success of our top products

our ability to complete acquisitions and divestitures and to successfully integrate the businesses we acquire

our ability to implement our business strategies or achieve targeted cost efficiencies and gross margin improvements

manufacturing problems and capacity imbalances, including at our contract manufacturers

fluctuations in inventory levels in our distribution channels

risks related to the use of artificial intelligence (AI) in our business

our dependence on sophisticated information technology systems and infrastructure, including the use of third-party, cloud-based technologies, and the impact of outages or breaches of the information technology systems and infrastructure we rely on

the impact of weather conditions, including those related to climate change, and the availability of natural resources

demand, supply and operational challenges associated with the effects of a human disease outbreak, epidemic, pandemic or other widespread public health concern

the loss of key personnel or highly skilled employees

adverse effects of labor disputes, strikes and or work stoppages

the effect of our substantial indebtedness on our business, including restrictions in our debt agreements that limit our operating flexibility and changes in our credit ratings that lead to higher borrowing expenses and restrict access to credit

changes in interest rates that adversely affect our earnings and cash flows

risks related to the write-down of goodwill or identifiable intangible assets

the lack of availability or significant increases in the cost of raw materials

risks related to foreign and domestic economic, political, legal and business environments

risks related to foreign currency exchange rate fluctuations

risks related to underfunded pension plan liabilities

our current plan not to pay dividends and restrictions on our ability to pay dividends

the potential impact that actions by activist shareholders could have on the pursuit of our business strategies

risks related to tax expense or exposures

actions by regulatory bodies, including as a result of their interpretation of studies on product safety

the possible slowing or cessation of acceptance and or adoption of our farm animal sustainability initiatives