• Revenue: $1.02 billion in Q4, representing a 1% reported decline; 4% organic constant currency growth.
• Adjusted EBITDA: $177 million in Q4, an increase of $12 million on a reported basis.
• Adjusted EPS: $0.14 per share in Q4, up by $0.06.
• Net Leverage Ratio: 4.3 times at year-end, down from 5.6 times at the start of 2024.
• Operating Cash Flow: $541 million for the full year 2024, an improvement of $270 million from the previous year.
• Gross Margin: Increased by 80 basis points to approximately 51% in Q4.
• Pet Health Revenue: Increased 6% in constant currency in Q4.
• US Farm Animal Revenue: $223 million in sales, a 6% increase in Q4.
• International Farm Animal Revenue: Flat in Q4.
• Innovation Revenue: $140 million in Q4 and $461 million for the full year 2024.
• Debt Reduction: Paid down $1.475 billion in debt in 2024.
• 2025 Revenue Guidance: $4.445 to $4.510 billion, with mid-single digit organic constant currency growth expected.
• 2025 Adjusted EBITDA Guidance: $830 million to $870 million.
• 2025 Adjusted EPS Guidance: $0.80 to $0.86.

• Warning! GuruFocus has detected 2 Warning Sign with ELAN.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Elanco Animal Health Inc (NYSE:ELAN) reported its sixth consecutive quarter of revenue growth, with a 4% increase on an organic constant currency basis.
• The company successfully launched six potential blockbuster products, exceeding its innovation revenue target for 2024.
• Elanco Animal Health Inc (NYSE:ELAN) paid down approximately 25% of its debt in 2024, supported by strong operating cash flow and the sale of its aqua business.
• The company achieved market share gains in global pet retail and US farm animal sectors, holding leadership positions in these areas.
• Elanco Animal Health Inc (NYSE:ELAN) expects continued growth in 2025, with anticipated organic constant currency revenue growth of 4% to 6% and adjusted EBITDA growth of 1% to 5%.

Negative Points

• Elanco Animal Health Inc (NYSE:ELAN) faces challenges from foreign exchange headwinds, which negatively impacted its fourth quarter results and 2025 guidance.
• The company experienced a decline in international farm animal revenue due to challenging swine economics in Asia and commercial model changes in certain geographies.
• The adoption of the canine arbovirus monoclonal antibody has been slower than expected, impacting the company's innovation contributions.
• Elanco Animal Health Inc (NYSE:ELAN) anticipates a decline in gross margin due to the UK CMO transition and FX headwinds.
• The company expects increased operating expenses in 2025, driven by strategic investments in global product launches, which may impact short-term profitability.

Q & A Highlights

Q: Jeff, regarding Zenrelia's US penetration, where do you see this going by the end of 2025, and how does it compare to international markets? A: Jeffrey Simmons, CEO: Zenrelia is gaining traction, with 8,000 clinics in the US adopting it. We expect continued growth as we enter the peak season, driven by aggressive sampling and direct-to-consumer (DTC) marketing. Internationally, Zenrelia is performing well in markets like Brazil and Japan, with less restrictive labels, and we anticipate further growth in Europe and Australia.

Q: Todd, can you elaborate on the factors contributing to the expected acceleration in revenue growth throughout 2025? A: Todd Young, CFO: The acceleration is driven by the ramp-up of Zenrelia and Credelio Quattro, along with continued growth in our innovation portfolio, particularly Bovaer. We also expect to overcome headwinds from the first quarter, such as distribution changes and international farm challenges.

Q: Michael, regarding the innovation contribution for 2025, what gives you confidence in the increased guidance? A: Jeffrey Simmons, CEO: The momentum from products like Experior and Adtab, along with the strong market potential for Zenrelia and Credelio Quattro, supports our confidence. Bovaer is also expected to contribute more significantly in the second half of the year.

Q: Daniel, how has the success of Zenrelia's sampling influenced your sales and marketing strategy? A: Jeffrey Simmons, CEO: The sampling program has been effective in driving clinic adoption, and we plan to continue leveraging it alongside tech-to-tech engagement and DTC marketing to increase Zenrelia's use as a first-line treatment.

Q: Andrea, can you provide insights into the early launch of Credelio Quattro and its impact on legacy products? A: Jeffrey Simmons, CEO: Credelio Quattro's launch has been positive, with minimal cannibalization of legacy products. The product's differentiation, including speed of tick kill and broad coverage, is resonating well, and we are focusing on DTC efforts to drive pet owner engagement.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.