Are the corporate account gains new commitments or competitive wins, and is the growth broad-based across products?

Simmons stated that corporate accounts growth (up 12% in Q1) is driven by the strong uptake of winning products like Zenrelia and Quattro, creating a 'pull' from corporate accounts. He emphasized a value-based approach, ensuring pricing is not negatively impacted. “When you start to see the uptake, when you got over half the clinics in the U.S. using Zenrelia, you see 40% with Quattro and you look at best medicine with Quattro demand for Zenrelia, if you're a corporate account, you don't have this and you've got clients coming and asking, there is more of a pull than a push that's happening with corporate accounts.”

Why is Zenrelia performing so well despite label restrictions, and what is the timing for additional trials and potential label changes?

Simmons attributed Zenrelia's success to its strong efficacy and the growing derm market. Regarding the FDA label, he clarified that additional data was requested for the booster data submission, a new study is underway, and results will be submitted by year-end. Management's guidance conservatively assumes no incremental label change in 2026, implying potential upside for 2027. “They requested this additional data, and we've already started the trials along the way. We've got good concurrence on the study, and we'll be submitting it by the end of the year, Michael. But given Zenrelia's success that's well beyond our plans, we now have greater expectations for the potential of this product, with additional label improvement in the U.S. really representing just further possible upside.”

What are the underlying drivers for strong cattle and poultry performance beyond herd count, and how sustainable are these trends?

Simmons highlighted a 'protein revolution' driving strong demand, noting that the industry grew 7% and Farm Animal 10% in 2025. He pointed out that producers are making money, and dairy is a strong growth area. He believes the cattle herd shortage benefits producers and that the Farm Animal business is in a strong leadership position. “I don't think people realize that last year in 2025, our industry grew 7% and Farm Animal grew 10%, Pet Health is 5%. Farm Animal has got durable undertones.”

ELAN

Elanco Animal Health (ELAN) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Health Care· May 6, 2026

Source: earnings call transcript

Executive summary

Elanco Animal Health Q1 FY26 — Strong Innovation-Driven Growth and Raised Full-Year Outlook

Elanco delivered a strong Q1 FY26, driven by robust performance of its 'Big 6' innovation products and broad-based growth across all major geographies and species. The company raised its full-year revenue, EBITDA, and EPS guidance, reflecting confidence in its innovation pipeline and operational efficiencies from Elanco Ascend, while also improving its net leverage target. Management anticipates continued acceleration in U.S. Pet Health and sustained momentum in Farm Animal segments.

Highlights

Delivered 10% organic constant currency revenue growth in Q1 FY26, outperforming the high end of guidance for revenue, adjusted EBITDA, and adjusted EPS.
Raised full-year 2026 innovation target to $1.2 billion, an increase of $50 million, driven by strong performance of 'Big 6' products.
Improved year-end 2026 net leverage target to 3.0x to 3.2x from the previous guidance of 3.1x to 3.3x.
Raised full-year 2026 organic constant currency growth guidance to 5% to 7% from 4% to 6%.
Zenrelia reached blockbuster status on a trailing 4-quarter basis, with its growth trajectory well exceeding expectations.

Concerns

Adjusted gross margin decreased 40 basis points year-over-year in Q1 FY26 to 57% due to pressures from inflation, inventory costs, and product mix.
Q2 FY26 organic constant currency revenue growth (4-6%) is impacted by lapping Q2 2025 pre-tariff buying in China and Q1 2026 accelerated shipments to the Middle East.
Q2 FY26 operating expenses are expected to increase approximately 8% year-over-year in constant currency, primarily related to launch investments.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Organic Constant Currency Revenue Growth	5% to 7% high materiality	FY26	High
Full-year 2026 Adjusted EBITDA	$975 million to $1.005 billion high materiality	FY26	High
Full-year 2026 Adjusted EPS	$1.03 to $1.09 high materiality	FY26	High
Full-year 2026 Innovation Revenue	$1.2 billion medium materiality	FY26	High
Year-end 2026 Net Leverage	3.0x to 3.2x high materiality	FY26	High
Q2 2026 Reported Revenue	$1.3 billion to $1.325 billion medium materiality	Q2 · FY26	High
Q2 2026 Organic Constant Currency Revenue Growth	4% to 6% medium materiality	Q2 · FY26	High
Q2 2026 Adjusted EBITDA	$240 million to $260 million medium materiality	Q2 · FY26	High
Q2 2026 Adjusted EPS	$0.25 to $0.28 medium materiality	Q2 · FY26	High
U.S. Pet Health Business Growth	high single-digit to low double-digit growth high materiality	H2 FY26	High
U.S. Pet Health Business Full-Year Revenue Growth	at least high single-digit revenue growth high materiality	FY26	High
Net Leverage	below 3x high materiality	FY27	High
Big 6 Products Revenue Growth	double in revenue high materiality	2025 to 2028	High
Free Cash Flow	more than $1 billion medium materiality	through 2028	High
Next Wave Pipeline Approvals	5 to 6 blockbuster potential approvals high materiality	through 2031	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
U.S. Pet Health Achieved 6% growth despite winter storms in January and February, with sharp recovery to 8% growth in March and even better April. Strong trends for products at Costco and Dollar General. Zenrelia: leading Q1 growthCredelio Quattro: robust demand, accelerating market share gainsU.S. retail OTC: high single-digit consumption growthSeresto: double-digit dispensing growth at top retailersAdvantage family: double-digit dispensing growth at top retailersZenrelia: over 16,000 U.S. vet clinics (over 50% of total)Zenrelia: reorder rate over 80%Zenrelia: 4,300 new purchasers since September label improvementCredelio Quattro: market share up 3 points since Q4Credelio Quattro: 53% share in clinics carrying it (over 40% of U.S. clinic base)Credelio Quattro: 2,500 new clinics year-to-date through AprilKinetics Puppy Index: Quattro ranks highest vs. other broad-spectrum andectose and grew vs. Q4	—	6%	—	—
International Pet Health Driven by sales momentum of innovation portfolio including Zenrelia, Adtab, and Credelio. Zenrelia's international labels are without restrictions. Zenrelia: rapidly capturing share in $800M international derm marketAdtab: robust growth, sales up >50%Adtab: fastest-growing brand in $600M OTC acto category in EuropeZenrelia: over 50% JAK market share in BrazilZenrelia: over 35% JAK market share in JapanZenrelia: high teens to over 30% JAK market share in key European marketsZenrelia: now in 45 countries	—	9%	—	—
U.S. Farm Animal Good growth across all species and product categories, driven by cattle and poultry. Expect growth to normalize to long-term algorithm. Experior: 55% of U.S. Catalon feed using it	—	15%	—	—
International Farm Animal Achieved growth across all species, with poultry and ruminants as major contributors. Benefited from customer-driven accelerated shipments primarily to the Middle East, contributing 1 percentage point to total company growth.	—	13%	—	—

ELAN operating KPIs by quarter

ELAN operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2025 Q4 FY25	Jun 2026 Q2 FY26	Change vs prior quarter
Reorder rate Zenrelia - US	80%+ We're now in about half of the clinics in the US and the reorder rate is over 80%. Source: earnings call transcript	80%+ That's greater than 60% of the total clinic base with a reorder rate maintained at over 80%. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline	Details
Befrena	launch	this quarter

Deals & partnerships

AHV International Expands share of voice in dairy and provides a platform for farm animal innovation.

Acquisition closed on April 30. Welcomes new colleagues.

Risks & headwinds

Heightened competitive pressures, including generics

Could move results toward the lower end of our expectations.

Mitigation:Continued investment in innovation products, driving market share gains and sustainable growth.

Consumer level economic shifts

Could move results toward the lower end of our expectations.

Mitigation:Comprehensive portfolio, diverse product offerings, and focus on value.

Q2 revenue impact from lapping prior year's pre-tariff buying in China Q2 2026

Impacted Q2 organic constant currency revenue growth (4-6%).

Q2 revenue impact from accelerated shipments to Middle East in Q1 Q2 2026

Impacted Q2 organic constant currency revenue growth (4-6%).

Q2 revenue impact from Farm Animal normalization against more challenging comparisons Q2 2026

Impacted Q2 organic constant currency revenue growth (4-6%).

Q2 operating expenses increase Q2 2026

Approximately 8% in constant currency.

Mitigation:Primarily related to launch investments, expected to drive future growth.

What to watch in Q2 FY26

Zenrelia U.S. label update

Next quarter (updates on study progress), year-end 2026 (submission).

Current New study underway, submission by year-end 2026.

Target FDA decision or further clarity on label expansion.

Why it matters

Potential for significant upside to Zenrelia's growth trajectory in the U.S. beyond current conservative guidance.

They requested this additional data, and we've already started the trials along the way. We've got good concurrence on the study, and we'll be submitting it by the end of the year, Michael. But given Zenrelia's success that's well beyond our plans, we now have greater expectations for the potential of this product, with additional label improvement in the U.S. really representing just further possible upside.

Find out whether ELAN delivers this. Inve re-checks your case every morning.

Q&A highlights

What factors held back U.S. Pet Health in early Q1, and what are the main drivers for the expected acceleration, especially given the low base for Quattro in Q1 '25?

Jeff Simmons attributed early Q1 softness to winter storms but highlighted a strong rebound in March (8% growth) and April. Key drivers for acceleration are Zenrelia and Quattro momentum, the upcoming Befrena launch, and strategic pricing. The retail business, including new customers like Costco and Dollar General, also contributed significantly.

“Look, we had, I think, like the whole industry, January and February, that was cooler, but we saw a really nice rebound and all the lead indicators on our new products were extremely strong. So an 8% jump back in March, even stronger in April.”

asked by John Block · answered by Jeffrey Simmons

2 min read 6 chapters

Detailed narrative

Innovation-Driven Growth and Market Share Gains

Elanco's 'Big 6' innovation products, particularly Zenrelia and Credelio Quattro, were the primary drivers of the 10% organic constant currency revenue growth in Q1 FY26. Zenrelia achieved blockbuster status on a trailing 4-quarter basis, exceeding expectations, and is rapidly gaining market share in the global dermatology market.

Credelio Quattro's market share increased 3 points since Q4, reaching 53% in clinics that carry the product, demonstrating strong demand and positioning for the parasiticide season.

U.S. Pet Health Acceleration

Despite initial softness in January and February due to winter storms, the U.S. Pet Health business saw a sharp recovery in March (8% growth) and April, indicating underlying strength. Management is confident in an expected acceleration to high single-digit to low double-digit growth in the second half of the year, driven by continued momentum from Zenrelia and Credelio Quattro, and contributions from the upcoming Befrena launch.

This outlook is not contingent on improvements in vet visit volumes.

Robust Farm Animal Performance

The Farm Animal business delivered strong results, with U.S. Farm Animal revenue up 15% and International Farm Animal up 13% in organic constant currency. This performance is attributed to a 'protein revolution' driving demand across cattle, poultry, and dairy segments. The recent acquisition of AHV International further strengthens Elanco's portfolio in dairy, and the company expects continued durable growth in this segment.

Elanco Ascend and Operational Efficiency

Elanco's productivity initiative, Elanco Ascend, is progressing well with over 5,000 projects logged to date. The program aims to optimize cost structure and drive operational efficiencies, with 75% of the projected benefits expected in gross margin, and near-term benefits in G&A.

Elanco Ascend is integrating automation and AI across the value chain to accelerate innovation, enhance manufacturing quality, and drive sales, contributing to long-term margin expansion.

Strategic Pricing and Corporate Account Engagement

Elanco implemented its largest price increase in five years to U.S. vet clinics, reflecting the enhanced value of its innovation portfolio. The company also reported a 12% growth in U.S. corporate accounts in Q1, indicating a strong 'pull' for its products from these key customers. This strategic approach to pricing and distribution is contributing to market share gains and overall growth.

Future Pipeline and Industry Outlook

Elanco is actively advancing its next wave pipeline, targeting 5 to 6 new blockbusters by 2031, with an estimated $2 billion in unproblized peak sales potential. The company remains optimistic about the durable animal health industry, anticipating mid-single-digit growth and an estimated $20 billion in added industry value over the next decade, supported by mega-trends in pet care and protein consumption.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.