Full Press Release Details
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 First Quarter 2025 Results
Accelerating Debt Paydown in 2025
First Quarter 2025 Financial Results
Revenue of $1,193 million, a decline of 1% year-over-year 4% organic constant currency growth
Reported Net Income of $67 million, Adjusted Net Income of $184 million
Adjusted EBITDA of $276 million, or 23.1% of Revenue
Reported EPS of $0.13, Adjusted EPS of $0.37
Net leverage ratio of 4.4x Adjusted EBITDA
Full Year 2025 Guidance
Raising revenue guidance to $4,510 to $4,580 million, with $65 to $70 million increase since February driven by foreign exchange tailwind continue to expect accelerating organic constant currency revenue growth to mid-single digits
Raising 2025 innovation revenue target to $660 to $740 million
Reported Net Loss of $(35) to $(7) million, maintaining guidance for Adjusted EBITDA of $830 to $870 million
Reported Loss Per Share of $(0.07) to $(0.01), maintaining guidance for Adjusted EPS of $0.80 to $0.86
Outlook incorporates current estimate for tariff net impact of $16 to $20 million to Adjusted EBITDA and expected continued macro volatility, offset by a strong first quarter performance
Expecting gross debt paydown of $450 to $500 million in 2025
2025 year-end net leverage ratio target improved to 3.9x to 4.3x, enabled by disciplined working capital management, more favorable foreign exchange rates, and lotilaner U.S. royalty monetization
GREENFIELD, Ind (May 7, 2025) - Elanco Animal Health Incorporated (NYSE ELAN) today reported financial results for the first quarter of 2025, provided guidance for the second quarter of 2025, and updated guidance for the full year 2025.
Elanco exceeded first quarter guidance for revenue, adjusted EBITDA, and adjusted EPS," said Jeff Simmons, President and CEO of Elanco. "Our diverse portfolio delivered 4% organic constant currency revenue growth, with accelerating Pet Health trends in March and April, and consistently strong execution in Farm Animal. We have raised our 2025 revenue guidance given the FX tailwind, and we have increased our innovation revenue target, led by the commercialization of our potential blockbuster products which also enhance our stable base business. We continue to drive greater productivity and deleveraging, and have improved our net leverage target for year-end to reflect disciplined working capital management, favorable currency rates, and our non-core asset monetization of certain lotilaner U.S. royalties. While we are taking a prudent approach to the balance of the year given the dynamic macroeconomic backdrop, our durable portfolio and solid momentum bolster our confidence in sequential acceleration of revenue growth to deliver our 2025 goals while creating long-term value for shareholders and society.
Select Business Highlights Since the Last Earnings Call
Credelio Quattro achieved approximately 10% dollar share of broad-spectrum sales into U.S. vet clinics in Q1**
Zenrelia use in approximately 11,000 U.S. clinics, representing penetration of over 35% performing on or ahead of expectations in Brazil, Canada, and Japan Australia, EU, and UK approvals on track for 2025
AdTab approved and launched in the United Kingdom in April 2025 sales doubled in the first quarter of 2025 compared to the prior year
Cows on Bovaer doubled since February data submitted for expanded claim, enhancing value and user flexibility
Agreement to monetize certain lotilaner U.S. royalties and milestones from Q2 2025 through Q3 2033 for $295 million
** Per Animalytix Q1 data
| First Quarter Results (dollars in millions, except per share amounts) | 2025 | 2024 | Change (%) | Organic CC Growth (1) (%) | ||
| Pet Health | $635 | $639 | (1) | % | 1 | % |
| Farm Animal | $546 | $556 | (2) | % | 7 | % |
| Cattle | $272 | $244 | 11 | % | 14 | % |
| Poultry | $189 | $197 | (4) | % | 0 | % |
| Swine | $85 | $84 | 1 | % | 3 | % |
| Aqua | $- | $31 | (100) | % | ||
| Contract Manufacturing and Other (2) | $12 | $10 | 20 | % | ||
| Total Revenue | $1,193 | $1,205 | (1) | % | 4 | % |
| Gross Profit | $684 | $690 | (1) | % | ||
| Reported Net Income | $67 | $32 | 109 | % | ||
| Adjusted EBITDA | $276 | $294 | (6) | % | ||
| Reported EPS | $0.13 | $0.06 | 117 | % | ||
| Adjusted EPS | $0.37 | $0.34 | 9 | % |
(1) Organic CC Growth Representing revenue growth excluding revenue from the aqua business, which was 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.
In the first quarter of 2025, revenue was $1,193 million, a decrease of 1% on a reported basis, or an increase of 4% when excluding the unfavorable impacts from the aqua divestiture and foreign exchange rates compared to the first quarter of 2024.
Pet Health revenue was $635 million, a decrease of 1% on a reported basis, or an increase of 1% when excluding the unfavorable impact from foreign exchange rates, including a 2% increase from price, compared to the first quarter of 2024. The year over year volume decline in the first quarter was primarily driven by the year-ago benefit related to moving certain legacy Bayer products into distribution, a challenging U.S. retail environment in the first quarter of 2025, and decreased vaccine sales in the U.S., largely offset by increased sales of new products and continued strong demand for parasiticide products in Europe. The Advantage Family of products and Seresto contributed revenue of $123 million and $153 million, respectively.
Farm Animal revenue was $546 million, a decrease of 2% on a reported basis, or an increase of 7% when excluding the unfavorable impacts from the aqua divestiture and foreign exchange rates, driven by a 3% increase from price, compared to the first quarter of 2024. First quarter volumes were up 4%, primarily driven by strength in U.S. cattle, led by Experior.
Gross profit was $684 million, or 57.3% of revenue in the first quarter of 2025, flat as a percent of revenue compared to the first quarter of 2024. On an adjusted basis, gross profit was $685 million, or 57.4% of revenue in the first quarter of 2025 with a 10-basis point change in gross profit as a percent of revenue compared to the first quarter of 2024. The slight increase was primarily driven by price, favorable manufacturing performance and product mix, partially offset by manufacturing costs and foreign exchange headwinds.
Total operating expenses were $435 million for the first quarter of 2025. Marketing, selling and administrative expenses increased 1% to $341 million, primarily driven by increased expenses supporting the U.S. Pet Health business and higher employee related expenses. Research and development expenses increased 8% to $94 million driven by higher project expenses.
Asset impairment, restructuring and other special charges were $9 million in the first quarter of 2025 compared to $46 million in the first quarter of 2024. Charges recorded in the first quarter of 2025 primarily consisted of upfront payments made in relation to new licensing arrangements. Charges recorded in the first quarter of 2024 primarily related to the restructuring plan announced in February 2024 and costs related to the ultimate divestiture of our aqua business.
Reported and adjusted net interest expense was $40 million in the first quarter of 2025, a decrease of $26 million compared to the first quarter of 2024. The decrease was driven by lower debt, primarily enabled by the aqua divestiture in 2024.
The reported effective tax rate was (12.2)% in the first quarter of 2025, primarily driven by the jurisdictional mix of projected income and losses in non-U.S. jurisdictions, as well as the utilization of net operating losses and a valuation allowance release in the U.S. The reported effective tax rate was (182.2)% in the first quarter of 2024, driven by the recognition of certain state tax credits. The adjusted effective tax rate was 9.2% in the first quarter of 2025, driven by the impact of a discrete item recognized in the current quarter, compared to 15.0% in the first quarter of 2024.
Net income for the first quarter of 2025 was $67 million and $0.13 per diluted share on a reported basis, compared with a net income of $32 million and $0.06 per diluted share for the same period in 2024. On an adjusted basis, net income for the first quarter of 2025 was $184 million, or $0.37 per diluted share, a 9% increase compared with the same period in 2024. Adjusted EBITDA was $276 million in the first quarter of 2025, a 6% decrease compared to the first quarter of 2024. Adjusted EBITDA as a percent of revenue was 23.1% compared with 24.4% for the first quarter of 2024.
Working Capital and Balance Sheet
Cash used in operations was $4 million in the first quarter of 2025 compared to cash provided by operations of $2 million in the first quarter of 2024.
As of March 31, 2025, Elanco's net leverage ratio was 4.4x adjusted EBITDA, an increase of 0.1x compared to December 31, 2024. The company now expects to end the year with a net leverage ratio of 3.9x to 4.3x, enabled by disciplined working capital management, more favorable foreign exchange rates on cash balances and the lotilaner U.S. royalty monetization.
Elanco is updating financial guidance for the full year 2025, summarized in the following table.
| 2025 Full Year (dollars in millions, except per share amounts) | February Guidance | May Guidance | ||||||
| Revenue | $4,445 | to | $4,510 | $4,510 | to | $4,580 | ||
| Reported Net (Loss) Income | $(25) | to | $7 | $(35) | to | $(7) | ||
| Adjusted EBITDA | $830 | to | $870 | $830 | to | $870 | ||
| Reported (Loss) Earnings per Share | $(0.05) | to | $0.01 | $(0.07) | to | $(0.01) | ||
| Adjusted Earnings per Share | $0.80 | to | $0.86 | $0.80 | to | $0.86 |
The company anticipates a tailwind to revenue of approximately $65 to $70 million from the favorable impact of foreign exchange rates since the February earnings call. Excluding the 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 adjusted gross margin of 54.2% to 54.7%, and 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 a current estimate for tariff net impact of $16 to $20 million and expected continued macro volatility, offset by a strong first quarter performance.
We are raising our 2025 full-year revenue guidance and maintaining our adjusted EBITDA and adjusted EPS ranges, reflecting our strong first quarter execution, recent momentum and more favorable foreign exchange rates, balanced by expected tariff impact and a cautious approach in an uncertain macroeconomic environment, said Todd Young, Executive Vice President and CFO of Elanco Animal Health. On tariffs, we have taken several intervention actions, positioning us well to cover potential impacts with or without the pharmaceutical exemption. We are also accelerating our debt paydown to approximately half a billion dollars this year, now expecting to end 2025 with a net leverage ratio of 3.9x to 4.3x.
Additionally, the company is providing guidance for the second quarter of 2025, as summarized in the following table
| 2025 Second Quarter (dollars in millions, except per share amounts) | Guidance | |||||||
| Revenue | $1,175 | to | $1,195 | |||||
| Reported Ne t Loss | $(22) | to | $(3) | |||||
| Adjusted EBITDA | $200 | to | $220 | |||||
| Reported Loss per Share | $(0.04) | to | $(0.01) | |||||
| Adjusted Earnings per Share | $0.17 | to | $0.21 |
In the second quarter, the company expects a headwind to revenue of approximately $5 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 4% to 6% organic constant currency revenue growth. The company expects operating expenses up approximately 11% year over year in constant currency with strategic investment in the global launches of the innovation portfolio.
The 2025 full year and second quarter financial guidance reflects foreign exchange rates as of April. 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 first quarter financial and operational results, discuss second quarter and full year 2025 financial guidance, 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 events-and-presentations default.aspx#module-event-upcoming.
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 over 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 second 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 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
the impact of increased regulation or decreased governmental financial support related to the raising, processing or consumption of farm animals
risks related to tariffs, trade protection measures or other modifications of foreign trade policy
the impact of litigation, regulatory investigations and other legal matters, including the risk to our reputation and the risk that our insurance policies may be insufficient to protect us from the impact of such matters
challenges to our intellectual property rights or our alleged violation of rights of others
misuse, off-label or counterfeiting use of our products
unanticipated safety, quality or efficacy concerns and the impact of identified concerns associated with our products
insufficient insurance coverage against hazards and claims
compliance with privacy laws and security of information
risks related to environmental, health and safety laws and regulations and