Elanco Animal Health (ELAN) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was $1.193 billion, down 1% reported but up 4% organically, with net income of $67 million, up 109% year-over-year; adjusted net income was $184 million.

• Adjusted EBITDA was $276 million (23.1% margin), and adjusted EPS increased to $0.37, driven by tax benefits and lower interest expense.

• Innovation revenue reached $198 million in Q1, prompting a full-year innovation revenue guidance increase to $660–$740 million, led by several blockbuster launches.

• Raised full-year revenue guidance to $4,510–$4,580 million due to FX tailwinds and strong performance, maintaining organic constant currency growth outlook of 4–6%.

• Net leverage ratio at quarter-end was 4.4x adjusted EBITDA, with a year-end target of 3.9x–4.3x, supported by $295 million royalty monetization and planned $450–$500 million debt paydown.

Financial highlights

• Q1 revenue was $1.193 billion, down 1% reported but up 4% organically; Pet Health revenue was $635 million (down 1% reported, up 1% organic), Farm Animal revenue $546 million (down 2% reported, up 7% organic).

• Gross profit was $684 million (57.3% of revenue), with gross margin up 10 bps to 57.4% year-over-year.

• Adjusted EBITDA was $276 million, down year-over-year but up excluding divestiture and FX headwinds; adjusted EBITDA margin was 23.1%.

• Adjusted EPS improved to $0.37, with reported EPS at $0.13; net income increased to $67 million.

• Net debt at quarter-end was $3.933 billion; interest expense fell to $40 million due to lower average debt balances.

Outlook and guidance

• Full-year 2025 revenue guidance raised to $4,510–$4,580 million, with organic constant currency growth expected at 4–6%.

• Adjusted EBITDA guidance maintained at $830–$870 million and adjusted EPS at $0.80–$0.86.

• Q2 2025 revenue expected at $1,175–$1,195 million, with 4–6% organic constant currency growth; adjusted EBITDA $200–$220 million; adjusted EPS $0.17–$0.21.

• Gross debt paydown of $450–$500 million expected in 2025, targeting year-end net leverage of 3.9x–4.3x.

• 2025 reported net loss expected between $(35) million and $(7) million; reported loss per share $(0.07) to $(0.01).