Elanco Animal Health NYSE: ELAN raised its 2026 outlook after reporting stronger-than-expected first-quarter results, citing broad-based growth across pet health and farm animal businesses, accelerating demand for new products and continued debt reduction.
President and Chief Executive Officer Jeff Simmons said the quarter demonstrated “growing strength, momentum and value,” with the company delivering 10% organic constant currency revenue growth. Elanco said revenue, adjusted EBITDA and adjusted EPS all exceeded the high end of its guidance for the quarter.
“This high-quality performance was driven by both price and volume, with growth across all major geographies and all species,” Simmons said.
Elanco Raises 2026 Revenue, EBITDA and EPS Guidance
Chief Financial Officer Bob VanHimbergen said Elanco generated $1.371 billion in first-quarter revenue, up 15% on a reported basis. Organic constant currency growth was 10%, including 2% from price and 8% from volume.
Adjusted EBITDA rose 21% year over year to $334 million, while adjusted EPS increased 8% to $0.40. VanHimbergen noted that adjusted EPS comparisons were affected by favorable one-time tax benefits in the prior-year period.
Following the first-quarter outperformance, Elanco raised its full-year guidance. The company now expects:
- Organic constant currency revenue growth of 5% to 7%, up from a prior outlook of 4% to 6%.
- Reported revenue of $5.01 billion to $5.085 billion.
- Adjusted EBITDA of $975 million to $1.005 billion.
- Adjusted EPS of $1.03 to $1.09.
- Year-end net leverage of 3.0x to 3.2x, improved from prior guidance of 3.1x to 3.3x.
VanHimbergen said the revised revenue outlook includes an expected $60 million year-over-year benefit from foreign exchange rates, most of which was captured in the first quarter. He said the adjusted EBITDA guidance increase reflects first-quarter outperformance, partly offset by additional investment behind product launches and the timing of certain international farm animal sales.
Pet Health Growth Driven by Zenrelia and Credelio Quattro
Elanco’s pet health business grew 7% in constant currency during the quarter. U.S. pet health revenue rose 6%, while international pet health grew 9% in constant currency.
Simmons said U.S. pet health was pressured early in the quarter by winter storms that affected veterinary clinic activity in January and February, but the business rebounded sharply in March, when growth reached 8%, and improved further in April.
Zenrelia, Elanco’s dermatology product, was a major contributor to growth. Simmons said the product reached blockbuster status on a trailing four-quarter basis and posted its largest month to date in March. He said Zenrelia is now used by more than 16,000 U.S. veterinary clinics, representing more than 50% of the total, and has a reorder rate above 80%.
Elanco said Zenrelia has treated more than 2 million dogs and is now available in 45 countries. Simmons said the company has moved production to 24/7 operations to meet rising global demand.
On the U.S. label, Simmons said Elanco continues to have constructive dialogue with the Food and Drug Administration. The FDA requested additional data, and Simmons said a new study is underway, with submission expected by the end of the year. VanHimbergen emphasized that Elanco’s 2026 guidance does not assume an incremental U.S. label change for Zenrelia.
Credelio Quattro also gained share in U.S. clinics. Simmons said the product is now in more than 40% of the U.S. clinic base, and in clinics carrying the product, its share reached 53% for broad-spectrum applications. The company said it added more than 2,500 new clinics year to date through April.
Elanco also pointed to continued growth for AdTab in Europe and said Befrena, a monoclonal antibody dermatology product, is expected to officially launch this quarter after early shipments to key opinion leaders and influencers. Simmons said the launch will be phased, consistent with monoclonal antibody products, and should ramp into the second half of the year.
Farm Animal Segment Benefits From Cattle, Poultry and Ruminants
Elanco’s global farm animal business grew 13% in organic constant currency. U.S. farm animal revenue increased 15%, with contributions across cattle and poultry, while international farm animal also grew 13% in organic constant currency, led by poultry and ruminants.
VanHimbergen said favorable timing of customer purchases in the Middle East contributed about 1 percentage point of growth to the total company in the quarter. He added that Elanco expects farm animal growth to normalize to levels more consistent with its long-term algorithm.
During the question-and-answer session, Simmons said farm animal health is benefiting from durable protein demand trends. He highlighted strength in beef, poultry and dairy, saying producers remain a key customer base for Elanco.
“There is a protein revolution going on,” Simmons said, adding that Elanco is in a leadership position across medicated feed additives, vaccines and other farm animal products.
Margins, Debt Reduction and Productivity Initiatives in Focus
Adjusted gross margin was 57%, down 40 basis points year over year. VanHimbergen said the decline was expected and reflected inflation, inventory cost flow-through and product mix, with strong farm animal growth partly offset by price and volume benefits. He said Elanco expects meaningful gross margin expansion in the second half of the year as inventory cost headwinds ease and U.S. pet health accelerates.
Operating expenses increased 6% in constant currency, driven by planned launch investments, R&D spending and compensation expense. Elanco said it will continue reinvesting in high-return promotional and direct-to-consumer efforts behind its innovation products.
The company ended the quarter with net debt of $3.3 billion and a net leverage ratio of 3.5x. VanHimbergen said debt paydown remains the primary use of free cash flow, with a long-term leverage target of 2.0x to 2.5x and an expectation to move below 3.0x in 2027.
Elanco also closed its acquisition of AHV International on April 30. VanHimbergen described AHV as a platform that expands Elanco’s “share of voice in dairy” and supports farm animal innovation.
The company provided second-quarter guidance for reported revenue of $1.3 billion to $1.325 billion, representing organic constant currency growth of 4% to 6%. Adjusted EBITDA is expected to range from $240 million to $260 million, with adjusted EPS of $0.25 to $0.28.
Simmons said Elanco remains focused on its priorities of growth, innovation and cash, while VanHimbergen said the company is monitoring potential headwinds including competitive pressure, generics and consumer economic shifts. Management said its guidance assumes no improvement in veterinary visit volumes.
About Elanco Animal Health NYSE: ELAN
Elanco Animal Health Inc is a global leader in animal health dedicated to improving food and companion animal well-being. The company develops, manufactures and markets a range of products, including parasiticides, vaccines, antibiotics and feed additives designed to prevent and treat disease in livestock and pets. Elanco's portfolio spans both food-producing animals—such as cattle, swine, poultry and aquaculture—and companion animals, with offerings that support parasite control, pain management and infectious disease prevention.
Originally founded as the animal health division of Eli Lilly and Company in the mid-20th century, Elanco was spun off into an independent publicly traded company in 2018.
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