Elanco (ELAN) Q4 FY25 earnings call: guidance and Q&A

Asked about the reasons behind strong international Zenrelia share gains and what it means for potential US label changes.

Jeff Simmons attributed international success to Zenrelia's efficacy, noting 40% share in Brazil and over 30% in Japan, outperforming new entrants in Europe. He highlighted 1 million dogs treated globally, 1.5 years of use, and 40 countries with clean labels, expressing optimism for a positive FDA response on the US label. Bob VanHimbergen clarified guidance assumes the label "as is."

“Zenrelia is all about efficacy... Brazil is a very mature market compared to what people think, and we're 40% share.”

asked by John Block · answered by Jeffrey Simmons

Asked for Elanco's thoughts on the Covetrus and MWI merger and its implications for manufacturers, especially given Elanco's relationship with Covetrus.

Jeff Simmons stated Elanco has a great relationship with distributors, who are valuable for launching new products. He noted Elanco's competitive advantage with its comprehensive portfolio in buy-sell agreements, unlike some competitors. He emphasized focusing on the current state and value provided by distributors as the structure evolves.

“We're the only company that really has our total comprehensive portfolio with them in a buy-sell agreement, where others have actually retracted.”

asked by John Block · answered by Jeffrey Simmons

Asked for quantification of the expected price acceleration in 2026, whether it's due to lifting introductory pricing, aggressive pricing, and the contribution from new products vs. the rest of the portfolio.

Bob VanHimbergen stated price is expected to accelerate from 2% in 2025, reflecting enhanced value from innovation. He mentioned the highest price increase to US vets in 5 years. New launches from 2025 (Zenrelia, Quattro) will contribute to pricing in 2026, unlike 2025 where they were not a contributor.

“in our U.S. Pet Health business here in the U.S., we took the highest price increase to vets in the last 5 years, all right?”

asked by Michael Ryskin · answered by Robert VanHimbergen

Asked how new products like Quattro are boosting the broader portfolio, enabling better competition in corporate accounts, and if there are any portfolio gaps.

Jeff Simmons highlighted Quattro's success, noting 2,600 clinics adding additional products after purchasing Quattro. He mentioned strong corporate account growth, with 90% of corporates growing significantly, and Zenrelia's rapid adoption in European corporates. He stated Befrena will further strengthen the portfolio, making Elanco competitive with "best medicine."

“we've got -- if you think about we're near 1/3 of the clinics, so 10,000-plus clinics, we got 2,600 that have actually by purchasing Quattro are now adding on additional products.”

asked by Michael Ryskin · answered by Jeffrey Simmons

Asked for an update on the Zenrelia US label update timeline and how Zenrelia is performing against competitors in Europe.

Jeff Simmons confirmed constructive dialogue with the FDA, noting 1 million dogs treated globally and strong pharmacovigilance data. He stated they submitted booster data and are confident in achieving a label aligned with other countries, but did not give a specific date. In Europe, Zenrelia is outperforming new entrants, achieving double-digit share in key markets like France, Italy, and Spain, driven by efficacy.

“We've not given a date, but we are confident with everything that I just mentioned that we believe with this data, it allows us to get a label that looks a lot more aligned with the other 40 countries, and we do look forward to an FDA response, and we'll update you when that happens.”

asked by Erin Wilson Wright · answered by Jeffrey Simmons

Questioned if the 2026 guidance was conservative given expected price acceleration and sustained volume, which would imply growth above the high end of the range.

Bob VanHimbergen reiterated confidence in the guidance, which aligns with the Investor Day framework (mid-single-digit top line, high single-digit EBITDA, low double-digit EPS). He acknowledged momentum but cited higher-than-normal inflation and competitive responses as balancing factors. He also noted that 2026 will lap significant innovation growth from 2025.

“But listen, we're also in an environment where we see higher-than-normal inflation. We're being responsive and cognizant of competitive response.”

asked by Brandon Vazquez · answered by Robert VanHimbergen

Asked why gross margin was flat in 2025 despite innovation growth, suggesting underlying business deterioration, and questioned the 2026 guidance for flattish gross margin.

Bob VanHimbergen explained Q4 FY25 gross margin improvement (30 bps) was offset by inflationary pressures and higher inventory costs. For 2026, he expects 40 bps expansion driven by accelerating price, higher-margin innovation products, and Elanco Ascend savings. He noted that higher inventory costs will flush through in H1 2026, leading to stronger margins in H2.

“So as I look at 2026, first off, we're going to make the right decisions for the long-term success of the business, but we do expect gross margin expansion of 40 basis points year-over-year.”

asked by Umer Raffat · answered by Robert VanHimbergen