Elanco Animal Health reported a strong third quarter, marking its fifth consecutive quarter of growth and exceeding mid-point expectations for adjusted EBITDA and adjusted EPS. The company's focus on innovation and strategic investments is driving growth and improving financial performance, with key milestones achieved in both pet health and farm animal businesses.
Strategic Innovation and Portfolio Expansion
Elanco's strategic innovation strategy is paying off, with new products such as Experior, AdTab, Credelio Plus, and Zenrelia driving organic constant currency revenue growth. The company's investment in research and development is leading to the launch of differentiated products in both pet health and farm animal sectors, positioning Elanco for long-term growth.
Pet Health Business
In pet health, Elanco received U.S. FDA approval for both Zenrelia and Credelio Quattro, two meaningful competitors in the largest markets of pet health. The Zenrelia vaccine booster study showed promising results, with dogs achieving protective thresholds at 1x and 3x doses, and no serious adverse events observed. These products are expected to be key contributors to the U.S. pet business's return to growth in the fourth quarter of this year and into 2025.
Farm Animal Business
In the farm animal sector, Elanco's focus on innovation and sustainability is driving growth. The first on-farm feeding of Bovaer, a product aimed at reducing methane emissions from dairy cows, marks the beginning of a trend towards more sustainable livestock practices. Additionally, the company's strategic investment in key launches is expected to drive mid-single-digit growth in the underlying business in 2025.
Financial Performance
Elanco's debt paydown remains a priority, with $1.3 billion paid down in the third quarter, enabling a reduction in net leverage from the mid-5x range to the mid-4x range by the end of 2024. The company is confident in its 2025 expectations, with continued revenue growth and a focus on strategic investments in key launches.
Looking Ahead
Elanco's strong third quarter performance, coupled with its strategic focus on innovation and growth, positions the company for continued success in the coming years. The launch of Zenrelia and Credelio Quattro, along with the continued growth of Experior and AdTab, is expected to drive revenue growth and expand the company's market share in both pet health and farm animal sectors. With a focus on sustainability and a robust pipeline of innovative products, Elanco is well-positioned for long-term growth and value creation for its shareholders.