Elanco Animal Health Reports Third Quarter 2026 Results
Elanco Animal Health Inc (ELAN) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 FOR IMMEDIATE RELEASE 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 Third Quarter 2026 Results Accelerated Price, Organic Co
How this was made
The 30-second read
Why it matters
The earnings beat and higher guidance provide fresh material for traders to reassess valuation.
Market read
The earnings release and raised outlook are likely to move ELAN and influence the broader animal health sector.
What to watch
Potential supply‑chain constraints or competitive pricing pressure could temper margin expansion.
Elanco Animal Health Reports Third Quarter 2026 Results Accelerated Price, Organic Constant Currency Revenue Growth, and Gross Margin Expansion; Raising Full Year Outlook and Innovation Target; Achieved 2.9x Net Leverage Ratio Milestone
Third-quarter revenue increased 11%, organic constant currency revenue growth was 9%, adjusted EBITDA increased 23%, adjusted EBITDA margin expanded to 19.5%, and the company raised full-year revenue, adjusted EBITDA and adjusted EPS guidance.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Third quarter total revenueGAAP | $1.26B | – | 11% |
| Third quarter organic constant currency revenue growthnon-GAAP | 9% | – | 9% organic constant currency growth |
| Third quarter cost of salesGAAP | $545M | – | – |
| Third quarter gross profitGAAP | $720M | – | 19% |
| Third quarter gross margin percentageGAAP | 56.9% | – | increase of 350 basis points |
| Third quarter adjusted gross profitnon-GAAP | $699M | – | – |
| Third quarter adjusted gross margin percentagenon-GAAP | 56.1% | – | increase of 300 basis points |
| Third quarter research and development expenseGAAP | $99M | – | 11% |
| Third quarter marketing, selling and administrative expenseGAAP | $393M | – | 12% |
| Third quarter total operating expensesGAAP | $492M | – | 12% |
| Third quarter amortization of intangible assetsGAAP | $144M | – | – |
| Third quarter asset impairment, restructuring and other special chargesGAAP | $3M | – | – |
| Third quarter interest expense, net of capitalized interestGAAP | $59M | – | increase of $7 million |
| Third quarter adjusted net interest expensenon-GAAP | $41M | – | increase of $7 million |
| Third quarter reported effective tax rateGAAP | 25.7% | – | – |
| Third quarter adjusted effective tax ratenon-GAAP | 19.4% | – | – |
| Third quarter net income (loss)GAAP | $18M | – | NM |
| Third quarter diluted EPSGAAP | $0.04 | – | NM |
| Third quarter basic EPSGAAP | $0.04 | – | – |
| Third quarter adjusted net incomenon-GAAP | $136M | – | 45% |
| Third quarter adjusted EPSnon-GAAP | $0.27 | – | 42% |
| Third quarter EBITDAnon-GAAP | $261M | – | – |
| Third quarter adjusted EBITDAnon-GAAP | $243M | – | 23% |
| Third quarter adjusted EBITDA marginnon-GAAP | 19.5% | – | – |
| Third quarter cash provided by operationsGAAP | $216M | – | – |
| Nine months total revenueGAAP | $4.00B | – | – |
| Nine months cost of salesGAAP | $1.70B | – | – |
| Nine months gross profitGAAP | $2.30B | – | – |
| Nine months research and development expenseGAAP | $288M | – | – |
| Nine months marketing, selling and administrative expenseGAAP | $1.22B | – | – |
| Nine months amortization of intangible assetsGAAP | $421M | – | – |
| Nine months asset impairment, restructuring and other special chargesGAAP | $28M | – | – |
| Nine months interest expense, net of capitalized interestGAAP | $175M | – | – |
| Nine months other (income) expense, netGAAP | −$2M | – | – |
| Nine months income (expense) before income taxesGAAP | $167M | – | – |
| Nine months income tax expense (benefit)GAAP | $38M | – | – |
| Nine months net incomeGAAP | $129M | – | – |
| Nine months basic EPSGAAP | $0.26 | – | – |
| Nine months diluted EPSGAAP | $0.26 | – | – |
| Nine months adjusted gross profitnon-GAAP | $2.26B | – | – |
| Nine months adjusted gross margin percentagenon-GAAP | 57.1% | – | – |
| Nine months adjusted net incomenon-GAAP | $514M | – | – |
| Nine months adjusted EPSnon-GAAP | $1.02 | – | – |
| Nine months EBITDAnon-GAAP | $861M | – | – |
| Nine months adjusted EBITDAnon-GAAP | $865M | – | – |
| Nine months adjusted EBITDA marginnon-GAAP | 21.8% | – | – |
| Cash and cash equivalents as of September 30, 2026GAAP | $465M | – | – |
| Total gross debt as of September 30, 2026non-GAAP | $3.73B | – | – |
| Net debt as of September 30, 2026non-GAAP | $3.00B | – | – |
| Net leverage ratio as of September 30, 2026non-GAAP | 2.9x | – | decrease of 0.7x compared to December 31, 2025 |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Pet HealthThe year-over-year volume increase was primarily driven by strong demand for Zenrelia, Credelio Quattro and AdTab. | $608M | – | 14% |
| Farm AnimalThe year-over-year reported increase was primarily driven by a 3% increase in price during the period and a 2% contribution from AHV. | $631M | – | 6% |
| CattleOrganic constant currency growth was 11%. | $339M | – | 17% |
| PoultryOrganic constant currency growth was (7)%. | $201M | – | (7)% |
| SwineOrganic constant currency growth was 5%. | $91M | – | 5% |
| Contract Manufacturing and OtherPrimarily represents royalty revenue, sales-based milestones and revenue from arrangements in which the company manufactures products on behalf of a third party. | $26M | – | 136% |
Amounts quoted below without a unit are in millions, as in the filing’s tables. Per-share figures are as printed.
2026 Full Year outlook
- Revenue$5,155 to $5,180
- Gross margin55.8% to 56.0%
- NoteInnovation revenue target of $1.275 billion
- NoteAdjusted EBITDA of $1,050 to $1,065
- NoteAdjusted Earnings per Share of $1.17 to $1.20
- NoteApproximately 8% revenue growth excluding the impacts of foreign exchange rates, the AHV International acquisition, and royalty revenue and sales-based milestones sold to a third party
- NoteA tailwind to revenue of approximately $60 million from the favorable impact of foreign exchange rates compared to prior year
- NoteAdjusted gross margin increase of 100 basis points versus 2025
- NoteApproximately 2.9x Adjusted EBITDA year-end net leverage ratio target
- NoteFourth quarter 2026 revenue of $1,190 to $1,215
- NoteFourth quarter 2026 Adjusted EBITDA of $185 to $200
- NoteFourth quarter 2026 Adjusted Earnings per Share of $0.16 to $0.19
- NoteFourth quarter 2026 revenue growth of 4% to 6% excluding the impacts of foreign exchange rates, the AHV International acquisition, and royalty revenue and sales-based milestones sold to a third party
- NoteFourth quarter operating expenses up approximately 11% year-over-year in constant currency
- Note2027 early outlook: mid-single digit organic constant currency revenue growth, high-single digit Adjusted EBITDA growth, and low-double digit Adjusted EPS growth
What drove it
- Price increased 4% in Q3, led by global Pet Health at 5%.
- The third-quarter year-over-year volume increase of 9% was primarily driven by strong demand for Zenrelia, Credelio Quattro and AdTab.
- Pet Health revenue increased 14% on both a reported and organic constant currency basis.
- Farm Animal reported revenue increased 6%, driven primarily by a 3% increase in price and a 2% contribution from AHV.
- Reported and adjusted gross-margin expansion was primarily driven by increased pricing and favorable mix from strong performance in U.S. Pet Health and global ruminants.
- Adjusted EBITDA guidance reflects savings from the Elanco Ascend initiative alongside incremental strategic investments in global innovation launches and the R&D pipeline.
Concerns
- Poultry revenue was $201 million, down (7)%, with organic constant currency growth of (7)%.
- Seresto was negatively impacted by U.S. retailer inventory draw down.
- Third-quarter total operating expenses increased 12% to $492 million, including higher compensation expense and strategic investments in global new-product launches.
- Reported net interest expense was $59 million, an increase of $7 million, principally due to the maturity of interest rate swaps in September 2025 and imputed interest on the liability for sale of future revenue.
- The company expects fourth-quarter operating expenses to be up approximately 11% year-over-year in constant currency with incremental support for innovation products and R&D investments.
What to watch
- Fourth-quarter revenue guidance of $1,190 to $1,215, adjusted EBITDA guidance of $185 to $200, and adjusted EPS guidance of $0.16 to $0.19.
- The expected Q1 2027 EU launch of Credelio Quattro following its positive European Medicines Agency opinion.
- Befrena access across clinics, with outstanding orders expected to be filled by next week and a full launch expected in Q1 2027.
- The full-year adjusted gross-margin target of 55.8% to 56.0% and the expected 100 basis points of improvement versus 2025.
- Progress toward the approximately 2.9x Adjusted EBITDA year-end net leverage ratio target and the stated accelerated capital allocation flexibility.
Balance sheet and cash flow
- Cash provided by operations was $216 million in the third quarter of 2026, compared to cash provided by operations of $219 million in the third quarter of 2025.
- Long-term debt was $3,633 million and current portion of long-term debt was $74 million as of September 30, 2026.
- Cash and cash equivalents were $465 million and finance lease liabilities were $258 million as of September 30, 2026.
- Net debt was $3,005 million and trailing twelve month adjusted EBITDA was $1,053 million as of September 30, 2026.
Analysis
Elanco reported a stronger third quarter, with revenue of $1,265 million, up 11%, and organic constant currency revenue growth of 9%. Pet Health revenue grew 14% to $608 million, while Farm Animal revenue increased 6% to $631 million. Management attributed the quarter's volume growth to demand for Zenrelia, Credelio Quattro and AdTab, while price increased 4% overall and 5% in global Pet Health. Cattle revenue increased 17%, but Poultry revenue declined (7)%.
Profitability expanded materially. GAAP gross margin was 56.9%, up 350 basis points, and adjusted gross margin was 56.1%, up 300 basis points from 53.1%. The company cited pricing and favorable mix from U.S. Pet Health and global ruminants. Adjusted EBITDA increased 23% to $243 million, with adjusted EBITDA margin reaching 19.5% from 17.5%. GAAP net income was $18 million, compared with a $34 million loss, while adjusted net income increased 45% to $136 million.
Elanco continued to fund commercial and pipeline activity. Total operating expenses increased 12% to $492 million, marketing, selling and administrative expense rose 12% to $393 million, and research and development expense increased 11% to $99 million. Interest expense increased to $59 million from $52 million. The company also identified U.S. retailer inventory draw down as a negative factor for Seresto, even as it described underlying Seresto performance as in line with expectations.
Cash provided by operations was $216 million, compared with $219 million in the prior-year quarter. At September 30, net debt was $3,005 million and the net leverage ratio was 2.9x, a decrease of 0.7x compared to December 31, 2025. Management described reaching the 2.9x milestone earlier than anticipated as unlocking accelerated capital allocation flexibility.
The company raised full-year guidance. Revenue guidance is now $5,155 to $5,180, adjusted EBITDA guidance is $1,050 to $1,065, and adjusted EPS guidance is $1.17 to $1.20. Full-year adjusted gross margin is expected at 55.8% to 56.0%, while fourth-quarter guidance calls for revenue of $1,190 to $1,215, adjusted EBITDA of $185 to $200, and adjusted EPS of $0.16 to $0.19. The early 2027 outlook retains the December 2025 Investor Day annual algorithm of mid-single digit organic constant currency revenue growth, high-single digit adjusted EBITDA growth, and low-double digit adjusted EPS growth.
Management, verbatim
Third quarter results demonstrate Elanco is a consistent, reliable growth company, delivering our diverse portfolio of innovation along with accelerating cash flow.
Jeff Simmons, President and CEO of Elanco
Elanco achieved significant adjusted gross margin expansion in the third quarter, up 300 basis points reflecting accelerating price gains to 4% year-over-year and beneficial mix, as well as early progress on our Elanco Ascend productivity initiatives.
Bob VanHimbergen, Executive Vice President and CFO of Elanco Animal Health
Not in the filing
stated, not guessed- Free cash flow was not reported.
- Share repurchases were not reported.
- Dividend amount or dividend declaration was not reported.
- GAAP operating income was not reported as a line item.
- Third-quarter GAAP gross-margin percentage for the prior-year period was not reported.
- Third-quarter total operating-expense amount for the prior-year period was not reported.
- Full-year 2026 tax-rate guidance was not reported.
- Full-year 2026 operating-expense guidance was not reported.
- No previous release outlook section was provided for formal actual-versus-prior-guidance comparison.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Elanco Animal Health Inc. filed a Form 8‑K reporting its third‑quarter 2026 financial results and updated guidance.
Ticker impact
Elanco reported Q3 2026 results with 11% revenue growth and raised full‑year 2026 guidance.
likely upward pressure as investors price in higher revenue and EPS guidance
The company posted a beat on revenue and net income, expanded margins and announced higher guidance, which typically supports a bullish move.
Market effects
Pet health and animal nutrition sector may see broader optimism from Elanco's strong growth.
U.S. animal health stocks could benefit from the guidance lift.
International pet health markets may see increased demand as Elanco highlights strong overseas growth.
Counterpoint
If the raised guidance is already priced in, the stock could face a short‑term pull‑back.
Key entities
- companyElanco Animal Health Inc.
U.S. listed animal health company (NYSE: ELAN).
