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 Fourth Quarter and Full Year 2025 Results
Raising 2026 Innovation Target Full Year 2026 Guidance of 4%-6% Organic Constant Currency Revenue Growth, 6%-9% Adjusted EBITDA Growth In Line with Investor Day Outlook
Fourth Quarter 2025 Financial Results
Revenue of $1,144 million, increased 12% on a reported basis 9% in organic constant currency
Reported Net Loss of $276 million, Adjusted Net Income of $64 million
Adjusted EBITDA of $189 million Adjusted EBITDA Margin of 16.7%
Reported EPS of $(0.56), Adjusted EPS of $0.13
Full Year 2025 Financial Results
Exceeded innovation revenue target at $892 million delivered all 'Big 6' blockbuster potential products by the end of 2025 with Befrena approval in Q4 2025
Revenue of $4,715 million, increased 6% on a reported basis and 7% in organic constant currency
Reported Net Loss of $232 million, Adjusted Net Income of $473 million
Adjusted EBITDA of $901 million Adjusted EBITDA Margin of 19.2%
Reported EPS of $(0.47), Adjusted EPS of $0.94
Net leverage ratio of 3.6x Adjusted EBITDA
Full Year 2026 Guidance
Raising innovation revenue target to $1.15 billion
Revenue of $4,950 million to $5,020 million, or 4% to 6% organic constant currency growth
Adjusted EBITDA of $955 million to $985 million, an increase of 8% at midpoint
Adjusted EPS of $1.00 to $1.06, an increase of 10% at midpoint
Year-end net leverage ratio target of 3.1x to 3.3x
In line with three-year outlook introduced at December Investor Day, outlining mid-single digit top-line organic constant currency growth, high-single digit Adjusted EBITDA growth, and low double-digit Adjusted EPS growth
Indianapolis, IN (February 24, 2026) - Elanco Animal Health Incorporated (NYSE ELAN) today reported its financial results for the fourth quarter and full year 2025 and provided initial guidance for both the first quarter and full year 2026.
Elanco delivered significant progress across our strategic priorities of growth, innovation, and cash in 2025, said Jeff Simmons, President and CEO of Elanco. We achieved a strong fourth quarter with 9% organic constant currency revenue growth, marking our 10th consecutive quarter of underlying growth. Importantly, 2025 growth was high quality, spanning all four business quadrants, with contributions from price and volume, and with nine of our top 10 largest countries growing. Our innovation continues to exceed expectations, and we're raising our outlook for this basket to $1.15 billion in 2026 given the strong momentum, market share gains, and positive customer response. Our relentless focus on cash generation has allowed us to improve our net leverage ratio faster than planned, ending the year at 3.6x, well on our way to under 3x in 2027. Elanco is excited about our new era of growth built on a proven track record of consistent execution, with a robust pipeline and a highly engaged team to continue transforming animal care and delivering long-term value for our shareholders.
Select Business Highlights Since the Last Earnings Call
Received USDA approval for Befrena , a new anti-IL31 monoclonal antibody (mAb) injection targeting canine allergic and atopic dermatitis recommended at a dosing interval of 6 to 8 weeks post-treatment vs. 4 to 8 weeks for the current market competitor
Credelio Quattro achieved continued dollar share gains of broad-spectrum sales out of U.S. vet clinics in Q4, at the same pace as in Q3** Australian approval received in February as Advocate Ultra Chew
Achieved Zenrelia use in approximately 50% of U.S. clinics and double-digit share of the U.S. JAK market exiting December** efficacy driving global momentum and share gains, with approximately 40% share of JAK market in Brazil, over 30% share in Japan, over 10% share in the U.K., and double-digit share in France, Italy, and Spain, outperforming the competitive entrant***
Experior 2025 sales over $200 million, up nearly 80% year over year AdTab continued robust growth trajectory with Q4 sales up over 50% year over year
**Per Kynetec Q3 and Q4 data
***Internal estimates based on multiple data sources
Select Investor Day Highlights (December 2025)
Detailed three-year outlook with annual mid-single digit top-line organic constant currency growth driven by a consistent flow of high-impact innovation, high-single digit Adjusted EBITDA growth and low double-digit Adjusted EPS growth, all starting in 2026
Expecting free cash flow of at least $1 billion over the period from 2026 through 2028, and further net leverage ratio improvement to 3x in 2027, with a long-term target of 2.0x to 2.5x
Expected innovation revenue contribution of approximately $1.1 billion in 2026 -- now raised to $1.15 billion -- with aims to double revenue from Big 6' blockbuster potential products by 2028
Expecting five to six blockbuster-potential approvals over the next six years. Two in-house technology development platforms contributing to next wave innovation pipeline monoclonal antibody discovery and immuno-therapeutics
Announced intended closure of German animal R D facility and targeted reduction to manufacturing workforce along with increased investment in Elanco Innovation Laboratories at Indiana headquarters and continued investments in U.S. manufacturing with greater clarity on U.S. tariffs and accelerated USDA regulatory timelines. This includes an accelerated conditional approval pathway for a potential first-in-class immuno-therapeutic major pet blockbuster, expected in the next two to three years
Outlined Elanco Ascend productivity initiative expected to deliver $200 million to $250 million in Adjusted EBITDA savings by 2030, with approximately 30% achieved in 2026
Announced restructuring as part of Elanco Ascend to support margin expansion, optimize footprint and further increase innovation capacity. Approximately $155 million recorded as restructuring costs in the fourth quarter, of which $116 million is related to expected cash-based costs. An additional $25 million to $30 million of costs are anticipated in 2026, a majority of which are expected to be non-cash costs. Expecting savings of approximately $25 million in 2026 and approximately $60 million in 2027
Financial Highlights
| Fourth Quarter Results (dollars in millions, except per share amounts) | 2025 | 2024 | Change (%) | Organic CC Growth (1) (%) | ||
| Pet Health | $489 | $439 | 11 | % | 9 | % |
| Farm Animal | $640 | $570 | 12 | % | 10 | % |
| Cattle | $296 | $253 | 17 | % | 15 | % |
| Poultry | $237 | $213 | 11 | % | 8 | % |
| Swine | $107 | $104 | 3 | % | 1 | % |
| Contract Manufacturing and Other (2) | $15 | $11 | 36 | % | ||
| Total Revenue | $1,144 | $1,020 | 12 | % | 9 | % |
| Gross Profit | $589 | $519 | 13 | % | ||
| Reported Net Loss | $(276) | $(8) | NM | |||
| Adjusted EBITDA | $189 | $177 | 7 | % | ||
| Reported EPS | $(0.56) | $(0.02) | NM | |||
| Adjusted EPS | $0.13 | $0.14 | (7) | % |
| Full Year Results (dollars in millions, except per share amounts) | 2025 | 2024 | Change (%) | Organic CC Growth (1) (%) | ||
| Pet Health | $2,300 | $2,143 | 7 | % | 7 | % |
| Farm Animal | $2,362 | $2,250 | 5 | % | 8 | % |
| Cattle | $1,125 | $1,007 | 12 | % | 11 | % |
| Poultry | $858 | $796 | 8 | % | 7 | % |
| Swine | $379 | $366 | 4 | % | 3 | % |
| Aqua | $- | $81 | (100) | % | ||
| Contract Manufacturing and Other (2) | $53 | $46 | 15 | % | ||
| Total Revenue | $4,715 | $4,439 | 6 | % | 7 | % |
| Gross Profit | $2,593 | $2,436 | 6 | % | ||
| Reported Net (Loss) Income | $(232) | $338 | NM | |||
| Adjusted EBITDA | $901 | $910 | (1) | % | ||
| Reported EPS | $(0.47) | $0.68 | NM | |||
| Adjusted EPS | $0.94 | $0.91 | 3 | % |
(1) Organic CC Growth Represents revenue growth excluding the impacts from prior year divestiture of the aqua business, which was divested July 9, 2024, royalty revenue that was sold to a third party 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. Sold royalty revenue to which the company is no longer entitled, totaled $9 million and $19 million, for the three and twelve months ended December 31, 2025, respectively.
Numbers may not add due to rounding.
NM - Not meaningful.
Fourth Quarter Results
In the fourth quarter of 2025, revenue was $1,144 million, an increase of 12% on a reported basis and a 9% increase on an organic constant currency basis, compared with the fourth quarter of 2024.
Pet Health revenue was $489 million, an increase of 11% on a reported basis and a 9% increase on an organic constant currency basis, with a 1% increase from price in the quarter. The year over year increase in the fourth quarter was primarily driven by new products, including Credelio Quattro and Zenrelia. The Advantage Family of products and Seresto contributed revenue of $84 million and $52 million, respectively.
Farm Animal revenue was $640 million, a 12% increase on a reported basis and a 10% increase on an organic constant currency basis. In addition to a 2% contribution from price in the fourth quarter of 2025, growth was also
driven by increased volumes across cattle and poultry, led by Experior in U.S. cattle and strength in U.S. and European poultry sales.
Gross profit was $589 million, or 51.5% of revenue in the fourth quarter of 2025. Gross profit as a percent of revenue increased 60 basis points, primarily driven by price, increased sales volumes, and mix benefits, which were partially offset by higher manufacturing costs. On an adjusted basis, gross profit was $581 million and gross margin percentage was 51.2% in the fourth quarter of 2025, a 30 basis point increase compared to the fourth quarter of 2024.
Total operating expenses were $431 million for the fourth quarter of 2025, a 13% increase compared to the fourth quarter of 2024. Marketing, selling and administrative expenses increased 13% to $338 million, driven by investments to support the company's expanding pet health business and people related expenses. Research and development expenses increased 15% to $93 million driven by pipeline investments.
Asset impairment, restructuring, and other special charges were $202 million in the fourth quarter of 2025, compared to $7 million in the fourth quarter of 2024. The company recorded $155 million of charges in the fourth quarter of 2025 associated with our recently announced restructuring plan, of which $116 million related to expected cash-based severance costs and $39 million related primarily to non-cash impairment charges associated with facilities the company plans to exit in Monheim, Germany, and Kansas City, Kansas. The company also recorded a $47 million impairment of a marketed product intangible asset during the fourth quarter of 2025 due to a decline in projected sales of a product group acquired in a past acquisition.
Net interest expense was $80 million in the fourth quarter of 2025, an increase of 74% as compared to the fourth quarter of 2024. This increase was primarily driven by $20 million related to refinancing costs and the write-off of previously deferred debt issuance costs and $13 million of imputed interest on the company's liability related to the lotilaner U.S. royalty monetization. Adjusted net interest expense, which excludes these two items, was $47 million in the fourth quarter of 2025, an increase of $1 million compared to the fourth quarter of 2024. As of September 30, 2025, the interest benefits being amortized from past interest rate swap settlements were fully realized, resulting in increased interest expense that was mostly offset by the impact of lower outstanding debt balances.
Other income was $4 million in the fourth quarter of 2025 on a reported basis, driven by foreign currency gains, compared to other expense of $6 million in the fourth quarter of 2024, which was driven by foreign currency losses and the impairment of a previously divested R D platform.
The reported effective tax rate was (6.5)% in the fourth quarter of 2025 compared to 84.5% in the fourth quarter of 2024. The adjusted effective tax rate was 39.9% in the fourth quarter of 2025 as compared to 26.2% in the fourth quarter of 2024.
Net loss for the fourth quarter of 2025 was $276 million, or $0.56 per diluted share on a reported basis, compared with a net loss of $8 million and $0.02 per diluted share for the same period in 2024. On an adjusted basis, net income for the fourth quarter of 2025 was $64 million, or $0.13 per diluted share, as compared to $72 million, or $0.14 per diluted share, for the fourth quarter of 2024.
Adjusted EBITDA was $189 million in the fourth quarter of 2025, an increase of 7% compared to the fourth quarter of 2024. Adjusted EBITDA margin was 16.7%, compared with 17.4% for the fourth quarter of 2024.
Working Capital and Balance Sheet
Cash provided by operations was $108 million in the fourth quarter of 2025 compared to $177 million in the fourth quarter of 2024. The decrease in cash from operations in the fourth quarter of 2025 reflects expected cash tax payments primarily related to the 2024 divestiture of the Aqua business partially offset by improvements in net working capital.
As of December 31, 2025, Elanco's net leverage ratio was 3.6x adjusted EBITDA, a reduction of 0.1x to September 30, 2025.
Elanco is providing financial guidance for the full year 2026, summarized in the following table, subject to the assumptions described below
| 2026 Full Year (dollars in millions, except per share amounts) | Guidance | ||
| Revenue (1) | $4,950 | to | $5,020 |
| Adjusted EBITDA | $955 | to | $985 |
| Adjusted Earnings per Share | $1.00 | to | $1.06 |
(1) Revenue guidance excludes royalty revenue that was sold to a third party.
For the full year, the company expects a $55 million tailwind from foreign exchange rates compared to prior year. Excluding the impacts of foreign exchange rates and royalty revenue sold to a third party, the company expects revenue growth of 4% to 6%. Guidance includes an accelerating contribution from price compared to the prior year. Adjusted EBITDA guidance reflects savings from the Elanco Ascend initiative as well as incremental strategic investment in the global launches of the company's innovation portfolio and advancement of the R D pipeline.
We are entering 2026 with positive momentum, and strong confidence in our IPP strategy to drive continued execution and value creation, said Bob VanHimbergen, Executive Vice President and CFO of Elanco. Our full-year outlook is balanced and consistent with the framework provided at our December Investor Day. We anticipate sustainable, competitive revenue growth as our innovation portfolio scales globally, on top of a stabilizing base. This innovation, combined with strategic pricing, helps to insulate us from broader macro pressures. Elanco Ascend, our productivity initiative, is on track to enable adjusted EBITDA margin expansion starting this year. We expect accelerating free cash flow over the next three years to further strengthen our balance sheet and improve our net leverage ratio.
| 2026 First Quarter (dollars in millions, except per share amounts) | Guidance | ||
| Revenue (1) | $1,280 | to | $1,305 |
| Adjusted EBITDA | $290 | to | $310 |
| Adjusted Earnings per Share | $0.33 | to | $0.36 |
(1) Revenue guidance excludes royalty revenue that was sold to a third party.
In the first quarter, the company expects a $40 million tailwind from foreign exchange rates compared to prior year. Excluding the impacts of foreign exchange rates and royalty revenue sold to a third party, the company expects 4% to 6% revenue growth. The company expects operating expenses up 7% year over year (4% in constant currency) including strategic investment in the global launches of the innovation portfolio.
The 2026 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.
A reconciliation of forward-looking non-GAAP measures, including adjusted EPS, adjusted EBITDA and adjusted EBITDA margin guidance, to the most directly comparable GAAP measures is not provided because comparable GAAP measures for such measures are not reasonably accessible or reliable due to the inherent difficulty in forecasting and quantifying measures that would be necessary for such reconciliation. Namely, Elanco is not, without unreasonable effort, able to reliably predict the impact of net interest expense income tax expense benefit depreciation and amortization charges asset impairment, restructure and other special charges sold royalty revenue and other adjustments. In addition, Elanco believes such a reconciliation would imply a degree of precision and certainty that could be confusing to investors. These items are uncertain, depend on various factors and may have a material impact on future GAAP results. See Cautionary Statement Regarding Forward-Looking Statements and Use of Non-GAAP Financial Measures.
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 2025 financial and operational results, provide financial guidance for the full year and first quarter of 2026, 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 more than 70 years of animal health heritage, we are committed to breaking boundaries and going beyond to help 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 purpose - to Go Beyond for Animals, Customers, Society and Our People. 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 2026 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
an increased use of alternative distribution channels or changes within existing distribution channels
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