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Elanco Animal Health raised its 2026 outlook after reporting stronger-than-expected first-quarter results, driven by broad-based growth across its pet health and farm animal businesses, accelerating demand for new products and continued debt reduction.
President and Chief Executive Officer Jeff Simmons said the quarter showed “growing strength, momentum and value,” with the company delivering 10% organic constant currency revenue growth. Elanco reported that revenue, adjusted EBITDA and adjusted EPS all exceeded the high end of its guidance for the quarter.
Chief Financial Officer Bob VanHimbergen said Elanco generated $1.371 billion in first-quarter revenue, up 15% on a reported basis. Organic constant currency growth was 10%, including 2% from price and 8% from volume.
Adjusted EBITDA increased 21% year over year to $334 million, while adjusted EPS rose 8% to $0.40. VanHimbergen noted that adjusted EPS comparisons were influenced by favorable one-time tax benefits in the prior-year period.
Following the outperformance, Elanco increased its full-year guidance to:
VanHimbergen said the revised revenue outlook includes an expected $60 million year-over-year benefit from foreign exchange rates, most of which was captured in the first quarter. He added that the adjusted EBITDA guidance increase reflects first-quarter outperformance, partly offset by additional investment behind product launches and the timing of certain international farm animal sales.
Elanco’s pet health business grew 7% in constant currency during the quarter. U.S. pet health revenue rose 6%, while international pet health increased 9% in constant currency.
Simmons said U.S. pet health was pressured early in the quarter by winter storms that affected veterinary clinic activity in January and February, but rebounded sharply in March (8% growth) and improved further in April.
Zenrelia, Elanco’s dermatology product, was a key driver. Simmons said Zenrelia reached blockbuster status on a trailing four-quarter basis and posted its largest month to date in March. He said the product is used by more than 16,000 U.S. veterinary clinics (more than 50% of the total) and has a reorder rate above 80%.
Elanco said Zenrelia has treated more than 2 million dogs and is available in 45 countries. Simmons added that the company moved production to 24/7 operations to meet rising global demand.
On the U.S. label, Simmons said Elanco continues constructive dialogue with the Food and Drug Administration. The FDA requested additional data, and Elanco said a new study is underway with submission expected by the end of the year. VanHimbergen emphasized that 2026 guidance does not assume an incremental U.S. label change for Zenrelia.
Credelio Quattro also gained share in U.S. clinics. Simmons said the product is now in more than 40% of the U.S. clinic base, and in clinics carrying the product, its share reached 53% for broad-spectrum applications. Elanco said it added more than 2,500 new clinics year to date through April.
Elanco also cited continued growth for AdTab in Europe. Befrena, a monoclonal antibody dermatology product, is expected to officially launch this quarter after early shipments to key opinion leaders and influencers. Simmons said the launch will be phased and should ramp into the second half of the year.
Elanco’s global farm animal business grew 13% in organic constant currency. U.S. farm animal revenue increased 15%, with contributions across cattle and poultry, while international farm animal also rose 13% in organic constant currency, led by poultry and ruminants.
VanHimbergen said favorable timing of customer purchases in the Middle East contributed about 1 percentage point of growth to the total company in the quarter. He added that Elanco expects farm animal growth to normalize to levels more consistent with its long-term algorithm.
During the question-and-answer session, Simmons said farm animal health is benefiting from durable protein demand trends, highlighting strength in beef, poultry and dairy. He said producers remain a key customer base for Elanco and described a “protein revolution,” adding that Elanco is in a leadership position across medicated feed additives, vaccines and other farm animal products.
Adjusted gross margin was 57%, down 40 basis points year over year. VanHimbergen said the decline was expected and reflected inflation, inventory cost flow-through and product mix, with strong farm animal growth partly offset by price and volume benefits. He said Elanco expects meaningful gross margin expansion in the second half of the year as inventory cost headwinds ease and U.S. labor productivity accelerates.
Operating expenses increased 6% in constant currency, driven by planned launch investments, research and development spending and compensation expense. Elanco said it will continue reinvesting in high-return promotional and direct-to-consumer efforts behind its innovation products.
The company ended the quarter with net debt of $3.3 billion and a net leverage ratio of 3.5x. VanHimbergen said debt paydown remains the primary use of free cash flow, with a long-term leverage target of 2.0x to 2.5x and an expectation to move below 3.0x in 2027.
Elanco also closed its acquisition of AHV International on April 30. VanHimbergen described AHV as a platform that expands Elanco’s “share of voice in dairy” and supports farm animal innovation.
Elanco provided second-quarter guidance for reported revenue of $1.3 billion to $1.325 billion, representing organic constant currency growth of 4% to 6%. Adjusted EBITDA is expected to range from $240 million to $260 million, with adjusted EPS of $0.25 to $0.28.
Simmons said Elanco remains focused on its priorities of growth, innovation and cash, while VanHimbergen said management is monitoring potential headwinds including competitive pressure, generics and consumer economic shifts. Management said its guidance assumes no improvement in veterinary visit volumes.
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