What Zoetis (ZTS) Said on Its Q3 Earnings Call

Key Points

• Third-quarter revenue fell 1% to $2.4 billion, as weaker veterinary visits and competition drove companion-animal revenue down 5%; U.S. revenue declined 6%, while international revenue rose 4%.
• Livestock revenue grew 7% and companion-animal diagnostics rose 13%, partly offsetting pressure in pet care. Zoetis narrowed its 2026 revenue outlook to $9.22 billion–$9.32 billion and raised its adjusted earnings-per-share forecast to $6.25–$6.35.
• Zoetis expects several product approvals and launches, including long-acting Cytopoint and Simparica Duo, but said new products will contribute only modestly to revenue in 2027.

Zoetis NYSE: ZTS reported lower third-quarter revenue as competition and weaker veterinary visits pressured its companion animal business, while livestock and diagnostics provided growth. The animal health company narrowed its full-year revenue outlook to the high end of its previous range and raised its adjusted earnings guidance.

Revenue fell 1% to $2.4 billion on both a reported and organic operational basis, reflecting a 1% decline in price and flat volume, Chief Financial Officer and Chief Operating Officer Jay Saccaro said. Adjusted net income fell 7% on an organic operational basis to $720 million, while adjusted earnings per share rose 1% to $1.75, helped by a lower share count from repurchases.

U.S. revenue declined 6% to $1.2 billion, while international revenue rose 4% to $1.1 billion. Unless otherwise stated, revenue growth figures are on an organic operational basis, which excludes currency effects and certain acquisitions and divestitures.

Dermatology and Pet-Care Pressures

Global companion animal revenue declined 5% to $1.6 billion, including an 8% drop in the U.S. and flat international sales. Chief Executive Officer Kristin Peck said U.S. clinic visits were down 3% year to date, as higher veterinary costs and softer consumer confidence made pet owners more selective about spending.

Key dermatology sales fell 16% globally to $396 million amid competition and pricing actions. U.S. sales declined 13% to $266 million, reflecting share losses for Apoquel and lower Cytopoint sales. International dermatology revenue fell 20% to $130 million, with competition particularly acute in Europe.

Peck said promotional investments slowed U.S. dermatology share loss to four points in the third quarter from about seven points in the second. She said the company was using targeted discounts and other gross-to-net investments rather than cutting list prices, and would adjust its approach as competition evolves.

Saccaro said volume accounted for most of the dermatology revenue decline, although pricing had a greater effect on that franchise than on the company as a whole. Peck said the investments are not necessarily permanent, but Zoetis wants to see market shares stabilize before adjusting its strategy.

Generic competition also continued to weigh on U.S. sales of Cerenia and Convenia, although the pace of volume declines moderated to its lowest level since generics entered in the first quarter.

Livestock and Diagnostics Offer Offsets

Livestock revenue rose 7% to $797 million. U.S. sales increased 5%, supported by cattle, swine and poultry products, while international sales grew 9%, led by cattle and higher fish vaccination rates in Norway.

The Simparica parasiticide franchise grew 1% globally to $358 million. International sales rose 10%, driven by Simparica Trio, while U.S. sales fell 2% as declines in flea, tick and heartworm clinic visits weighed on demand.

Osteoarthritis pain medicine sales increased 2% globally to $137 million. Growth from Lenivia and Portela in Europe and Canada helped offset a 12% U.S. decline, where lower osteoarthritis visits and safety perception headwinds affected Librela adoption, Saccaro said.

Companion animal diagnostics revenue rose 13% to $122 million, driven primarily by recent acquisitions, including VitalRADS and VPG, alongside continued adoption of Zoetis’ point-of-care and Imagyst platforms.

Outlook and Product Launches

Zoetis now expects 2026 revenue of $9.22 billion to $9.32 billion, representing an organic operational decline of 1% to 2%. It raised its adjusted net income forecast to $2.60 billion to $2.64 billion and its adjusted diluted earnings forecast to $6.25 to $6.35 per share.

Saccaro said the company expects a high-single-digit sequential revenue decline from the third quarter to the fourth, partly reflecting the timing of promotional activity. He said Zoetis would plan prudently for 2027 without assuming an improvement in economic conditions, pet-owner spending or competitive dynamics.

Peck said Zoetis expects U.S. approval of long-acting Cytopoint in the fourth quarter and plans to launch it in the first half of 2027. The company also expects approval of prescription product Simparica Duo by year-end and a launch next year. Lenivia is expected to receive U.S. approval in 2027.

Saccaro said new launches are expected to make a limited revenue contribution in 2027, with their impact building later in the year and into 2028. He said the company will continue to pursue cost savings while funding research and development.

About Zoetis (NYSE:ZTS)

Zoetis is an animal health company that discovers, develops, manufactures and markets medicines, vaccines, diagnostic products and other services for animals. Its products support both companion animals, such as dogs and cats, and livestock, including cattle, pigs, poultry, sheep and fish.

The company's offerings include treatments for pain, infections and skin conditions, as well as vaccines, parasiticides, diagnostic tools and genetic testing services. Zoetis serves veterinarians, livestock producers and other animal health professionals around the world.

Zoetis originated as Pfizer's animal health business and became an independent public company in 2013.

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