Elanco Animal Health (ELAN) UBS Global Healthcare Conference summary

Quarterly performance and outlook

• Q3 organic growth was 9%; reported growth was 11%, including ~1 point from AHV. Pricing contributed 4%, with growth across all four business quadrants.

• Pet health grew 14%; U.S. Pet Health grew 13% and international Pet Health 17%, supported by share gains from newer products.

• Gross margin rose 300 bps YoY; earnings exceeded expectations, and net leverage reached 2.9x ahead of the prior 2027 target.

• The 2025–2028 annual growth algorithm remains mid-single-digit revenue, high-single-digit EBITDA and low-double-digit earnings growth.

• For 2027, pricing is expected at 2%–3%, with volume providing the balance of mid-single-digit revenue growth; pricing was expected to return to 2%–3% in Q4.

Pet health, retail and innovation

• Costco’s lost business represented less than 0.5 point of annual growth; retail is expected to grow in 2027 vs. 2026, while online OTC and RX sales at Costco continue.

• Befrena targets a U.S. IL-31 mAb market of ~$450 million; launch pricing is near incumbent list price, with differentiated convenience, efficacy and value to support adoption as supply becomes available.

• Befrena efficacy is on the six-to-eight-week end; management cited acute or seasonal use in ~2/3 of pet patients and said convenience and compliance can expand the market.

• Credelio Quattro is in ~55% of clinics and Zenrelia in 2/3, leaving room for clinic additions and deeper share; ~500 clinics per month were being added for each product.

• The pipeline targets five to six products by 2031 from 15 projects; after 11 months, there had been no attrition, with opportunities in pain, dermatology, parasiticides, feline CKD and obesity.

Efficiency and capital allocation

• Elanco Ascend is tracking over 5,000 projects; ~25% of program value is expected from G&A and 75% from margins, with $200 million–$250 million of EBITDA savings targeted by 2030.

• Q3 G&A expense rose 2% YoY, or fell 2% excluding higher incentive compensation; marketing and selling costs rose 18% and R&D expense 11% as investment supported growth and pipeline development.

• Capital priorities remain debt reduction and organic R&D and manufacturing investment; M&A is expected to focus on smaller tuck-ins, while the deleveraging goal is 2x–2.5x.

• Falling below 3x leverage ahead of schedule opens the opportunity for shareholder returns; discussions with the board are underway.

• M&A must deliver ROIC above WACC, support the growth algorithm and not derail deleveraging; areas of interest include dermatology, parasiticides and farm animal health.