Elanco Animal Health Q2 Earnings Call Highlights

Key Points

• Strong Q2 performance: Elanco reported revenue of $1.368 billion, up 10% year over year, while adjusted EBITDA rose 21% to $288 million and adjusted EPS increased 31% to $0.34.
• Pet health drove growth: U.S. and international pet-health revenue increased 11% and 9% organically, respectively, led by Zenrelia and Credelio Quattro. Zenrelia surpassed 2.5 million dogs treated and reached more than 60% of U.S. veterinary clinics.
• Outlook raised: Elanco lifted its full-year organic constant-currency revenue growth forecast to 6%–7% and expects 2026 innovation revenue of approximately $1.25 billion, while reducing net leverage to 3.1 times.

Elanco Animal Health NYSE: ELAN reported second-quarter 2026 revenue of $1.368 billion, up 10% on a reported basis and 8% organically in constant currency, as demand for new pet-health products and strength in U.S. farm animal operations supported growth.

Chief Executive Officer Jeff Simmons said the company exceeded the high end of its prior guidance for revenue, adjusted EBITDA and adjusted earnings per share. Elanco raised its full-year outlook for organic constant-currency revenue growth to 6% to 7%, from a prior range of 5% to 7%.

“Our strong year-to-date results underscore Elanco’s long-term opportunity,” Simmons said, pointing to product innovation, portfolio breadth and productivity initiatives as the company’s principal growth drivers.

Pet Health Growth Led by Zenrelia and Credelio Quattro

U.S. pet health revenue increased 11% organically in constant currency during the quarter, while international pet health revenue rose 9%. Simmons said Elanco gained share across its four major U.S. pet-health categories: dermatology, parasiticides, osteoarthritis pain and vaccines.

Zenrelia, a dermatology treatment, and Credelio Quattro, a broad-spectrum parasiticide, were the largest contributors to Elanco’s quarterly growth, according to management. Zenrelia reached blockbuster status in July, Simmons said, and the company reported that more than 2.5 million dogs have been treated with the product.

Zenrelia was available in approximately 18,000 U.S. veterinary clinics, representing more than 60% of the clinic base, with a reorder rate above 80%, Simmons said. The company said first-line use of Zenrelia had increased to more than 40% of users. Internationally, the product is now available in 47 countries.

Credelio Quattro gained four percentage points of market share in the second quarter following a three-point gain in the first quarter, according to Elanco. The product was carried by more than half of U.S. clinics at quarter-end, after adding roughly 3,000 clinics from the first quarter.

Elanco also highlighted early demand for Befrena, a dermatology product that was soft-launched in May. Commercial product had shipped to about 1,400 U.S. clinics. However, management said supply remains constrained as manufacturing capacity is expanded, with unconstrained supply expected in early 2027.

In international over-the-counter parasiticides, AdTab sales increased more than 30%, management said. Simmons described AdTab as the fastest-growing brand in Europe’s approximately $600 million OTC ectoparasiticide category.

Farm Animal Results and Innovation Revenue

Elanco’s farm animal business grew 5% organically in constant currency. U.S. farm animal revenue rose 11%, with beef cattle leading growth and support from Experior. International farm animal revenue increased 2%, though management said results reflected shipment timing to the Middle East earlier in 2026; year-to-date international farm animal growth was 7%.

Global ruminants rose 17% on a reported basis, including the contribution from recently acquired AHV International and foreign exchange. Simmons said innovation helped support organic constant-currency growth of 12% in Elanco’s beef and dairy portfolio.

Experior grew at a double-digit rate in the quarter, though management expects growth to moderate against more difficult comparisons. Bovaer also posted year-over-year growth from a smaller base, with Elanco continuing to invest in long-term initiatives for the product.

Revenue from Elanco’s “Big Six” innovation portfolio totaled $340 million in the second quarter. The company raised its 2026 innovation revenue target by $50 million to approximately $1.25 billion.

Margins, Debt Reduction and Updated Outlook

Adjusted gross margin was 58.1%, improving 80 basis points from the prior-year quarter. Chief Financial Officer Bob VanHimbergen said favorable product mix and acceleration in the company’s Elanco Ascend productivity program more than offset inventory-cost pressure.

Adjusted EBITDA increased 21% year over year to $288 million, while adjusted EPS rose 31% to $0.34. Operating expenses increased 10% in constant currency, reflecting direct-to-consumer support for new product launches and ongoing research and development spending.

Elanco reduced net debt by approximately $90 million during the quarter, bringing net leverage to 3.1 times. The company now expects year-end net leverage of approximately 3 times, improved from its prior 3-to-3.2-times target.

• Full-year revenue outlook: $5.09 billion to $5.14 billion.
• Organic constant-currency revenue growth outlook: 6% to 7%.
• Full-year adjusted EBITDA outlook: $1.01 billion to $1.035 billion.
• Full-year adjusted EPS outlook: $1.10 to $1.16.
• Third-quarter revenue outlook: $1.195 billion to $1.22 billion, with organic constant-currency growth of 5% to 7%.

For the second half, VanHimbergen said the company expects pricing to accelerate and expects continued benefits from innovation mix and productivity efforts. He also said Elanco plans to continue investing in direct-to-consumer marketing where it sees a strong correlation between spending and market-share gains, particularly for Credelio Quattro.

Simmons said Elanco sees pet-owner buying behavior shifting across veterinary, retail and alternative channels rather than declining alongside veterinary visit trends. He said the company’s data showed veterinary home-delivery sales growing nearly twice as fast as in-clinic sales, while the broader U.S. pet-health industry grew at a mid-single-digit rate over the trailing four quarters through the first quarter.

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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