Elanco Animal Health (ELAN) Q3 2026 Earnings Report

The call was strongly positive. Elanco reported broad-based revenue growth, record or expanding share for key innovation products, substantial margin improvement, strong EBITDA and EPS growth, debt reduction, improving cash flow, and raised full-year guidance. Management also reaffirmed its 2027 growth algorithm and expressed confidence in its pipeline and productivity initiatives. The main challenges were retail and Seresto inventory pressure, Costco's 2027 non-renewal, competitive promotions, initial Befrena margin dilution, and cyclicality in portions of Farm Animal, but these lowlights were outweighed by the reported operating momentum and outlook.

For the full year, Elanco now expects organic constant currency revenue growth of approximately 8%, reported revenue of $5.155 billion to $5.180 billion, adjusted EBITDA growth of approximately $35 million or 17% growth at the midpoint, adjusted EPS of $1.17 to $1.20, representing 26% growth at the midpoint, and a net leverage ratio of approximately 2.9 times; fourth-quarter guidance is revenue of $1.190 billion and $1.215 billion, organic constant currency growth of 4% to 6%, operating expenses increasing approximately 11% in constant currency, adjusted EBITDA of $185 million to $200 million, and adjusted EPS between $0.16 and $0.19. US Pet Health is expected to deliver high single digit to low double digit growth in the fourth quarter and at least high-single-digit revenue growth for the full year. For 2027, Elanco is targeting mid single digit organic constant currency revenue growth, high single digit adjusted EBITDA growth, and low double digit adjusted EPS growth, with Pet expected to outperform versus Farm as Farm returns to mid-single-digit growth; the company also targets $200 million to $250 million in total adjusted EBITDA savings by 2030, $1 billion in cumulative free cash flow through 2028, and expects the Big 6 to double in revenues by 2028.