Elanco Raised Outlook as Pet Health Drove Growth
Adjusted earnings rose 31% to $0.34 a share in the second quarter.
The animal-health company Elanco Animal Health (ELAN) raised its full-year outlook for a second consecutive quarter after Pet Health products drove second-quarter growth.
Revenue rose 10% year over year to $1.368 billion, though it was essentially flat from the first quarter. Organic constant-currency growth eased to 8% from 10% in the prior quarter, marking the second consecutive moderation in the underlying growth rate.
Reported net income increased to $54 million from $11 million a year earlier. Adjusted net income rose to $174 million from $131 million, and adjusted earnings increased to $0.34 a share from $0.26, though they declined from $0.40 in the first quarter.
Pet Health became Elanco’s principal growth engine, with revenue rising 12% to $718 million and organic growth accelerating to 11% from 7% in the prior quarter. Volume increased 9%, primarily on demand for Zenrelia and Credelio Quattro, while pricing added 2%. Credelio Quattro reached more than 50% of U.S. clinics, up from more than 40% in the first quarter, and Befrena shipments expanded to nearly 1,400 clinics as demand ran at twice the company’s expectations.
Farm Animal revenue rose 9% to $633 million, but organic growth slowed to 5% from 13% in the first quarter. Cattle remained the strongest major category with 12% organic growth, while poultry slowed to 2% and swine declined 4%. Global ruminants grew 12% organically and 17% including currency effects and the AHV International acquisition.
Adjusted EBITDA increased 21% to $288 million, and its margin expanded 200 basis points to 21.2%. Both measures retreated sequentially from the first quarter, when adjusted EBITDA was $334 million and the margin was 24.5%. Gross-margin gains reflected a more favorable U.S. Pet Health mix and pricing, despite higher inflation-related inventory costs.
Elanco now expects full-year revenue of $5.09 billion to $5.14 billion and organic constant-currency growth of 6% to 7%. Adjusted EBITDA is projected at $1.01 billion to $1.035 billion, while adjusted earnings are expected at $1.10 to $1.16 a share. The company also raised its 2026 innovation-revenue target to $1.25 billion.
Cash provided by operations increased to $277 million from $237 million a year earlier. Net leverage improved to 3.1 times adjusted EBITDA from 3.5 times after the first quarter, leaving Elanco near its year-end target of approximately 3.0 times.