Elanco Animal Health (ELAN 17.42%), a global animal health company providing products and services for pets and livestock, reported its second quarter 2025 earnings on August 7, 2025. The most notable news was a strong revenue beat and solid performance in its innovation portfolio, especially from new pet and cattle products. GAAP revenue reached $1,241 million, topping the consensus GAAP estimate of $1,186 million. Adjusted earnings per share (EPS) came in at $0.26, ahead of the $0.20 expected by analysts (non-GAAP). Although margins and adjusted EBITDA declined, the quarter reflected accelerating growth, leading management to increase full-year 2025 revenue and adjusted EPS guidance.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| Revenue (Non-GAAP) | N/A | $1,186 million | N/A | N/A |
| Adjusted EPS (Non-GAAP) | $0.26 | $0.20 | $0.30 | (13.3%) |
| Adjusted EBITDA | $238 million | $275 million | (13.5%) | |
| Adjusted EBITDA Margin | 19.2% | 23.2% | (4.0) pp |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About Elanco Animal Health and Its Strategy
Elanco Animal Health develops and markets medicines and vaccines for both companion animals (pet dogs and cats) and farm animals (cattle, pigs, poultry, and others). It operates in over 90 countries and maintains a portfolio that spans around 200 brands. The company’s product suite includes treatments that prevent flea and tick infestations, improve animal growth and health, and treat or prevent a range of conditions.
In recent years, Elanco’s main focus has been rapid product innovation, portfolio diversity, and expanding its global reach. Strong investment in research and development (GAAP R&D expenses of $344 million in 2024) has resulted in a series of new launches. Key success factors for the business include driving innovation to meet evolving animal health needs, managing regulatory risks, and maintaining a balanced mix of products for both pets and livestock. Another area of emphasis is sustainability, as evident in the Healthy Purpose™ initiative focusing on animal welfare and environmental responsibility.
Second Quarter Results: Performance Drivers and Notable Events
GAAP revenue beat estimates with year-over-year growth of 4.8%, driven mainly by new product launches in the U.S. Pet Health segment and resilience in farm animal health. Within Pet Health, GAAP revenue reached $643 million, up 11% year-over-year on a reported basis, with strong performance from recent introductions. Leading new entrants included Credelio Quattro (a flea, tick, and worm chewable), AdTab (an oral flea and tick treatment), and Zenrelia (a dermatology solution for dogs). Price increases contributed about 4% of Pet Health segment growth, while volume increases made up 6%, mostly from new products.
Flagship brands like Advantage Family (flea and tick protection) and Seresto (flea/tick collars) continued to contribute, with sales of $147 million and $113 million, respectively. Management cited Credelio Quattro achieving approximately 14% of U.S. broad-spectrum market share in dollar terms in June 2025, and AdTab registering sales growth of more than 60% year over year. Zenrelia received regulatory approval in Europe in Q3 2025 and had its U.S. label improved in Q4 2025, removing risk language to support adoption going forward.
The Farm Animal segment brought in $583 million in revenue, slipping 2% on a reported basis due to the divestiture of Elanco's former aqua (fish health) business. However, on an organic constant currency basis, which excludes divestitures and currency shifts, farm animal revenue rose 6%. Notable drivers included Experior (a cattle feed additive that reduces ammonia emissions), with sales growth exceeding 80%, and Bovaer (a feed ingredient aimed at reducing cows' methane emissions) quadrupled the number of cows receiving the product since February 2025. Poultry and swine sub-segments grew 9% and 11%, respectively. The company noted some poultry and swine product demand in China was pulled forward as customers accelerated purchases before expected future tariffs, shifting approximately $10–20 million of sales into the quarter.
Profitability metrics weakened, with adjusted EBITDA down by 13.5% year over year to $238 million and the adjusted EBITDA margin fell from 23.2% in Q2 2024 to 19.2%. Gross profit (GAAP) rose by 3.5% compared to Q2 2024, but gross margin (GAAP) declined to 57.5%. The margin drop resulted from higher manufacturing costs, including the impact of owning the Speke facility in the UK, and general inflation pressures, partly offset by price and product mix benefits. Operating expenses climbed 11% to $492 million, in part due to marketing investment in global launches of new products. Reported net income improved to $11 million versus a $50 million loss in Q2 2024, despite adjusted net income declining by 13% due to higher costs. Net leverage improved as well, reaching 4.0x adjusted EBITDA, helped by strong cash generation and the monetization of lotilaner U.S. royalties for $295 million, which went toward debt reduction.
Product Families and Regulatory Milestones
Innovation continued to drive results. Leading product gains included the following:
Credelio Quattro: This broad-spectrum chewable for parasite protection quickly reached an approximately 14% share of U.S. veterinary clinic sales for such products.
AdTab: An oral tablet against fleas and ticks, particularly strong in European markets, posted sales up over 60% year over year.
Zenrelia: A canine dermatologic therapy that secured European approval and is expected to ramp up further with broader geographic launches ahead.
Experior: Cattle feed additive sales rose more than 80% year over year on expanded U.S. use, especially after regulatory clearance for use in heifers (young cows).
Bovaer: A feed supplement to reduce methane emissions in dairy cows, has quadrupled the number of cows on the product since February 2025.
On the regulatory front, Zenrelia’s new European Union approval provides an additional growth lever as the company expands into the $600–700 million international dermatology segment for pets. The TruCan Ultra CIV vaccine (canine influenza protection) received U.S. Department of Agriculture approval, positioning it for a new product launch. The mix of successful launches, regulatory wins, and higher product sampling continued to lift broader portfolio performance and stabilize legacy brands.
Outlook and What to Watch
Management raised its outlook for FY2025, now guiding for revenue of $4,570–$4,620 million, up from prior guidance of $4,510–$4,580 million. Adjusted EBITDA guidance for FY2025 was raised to $850–$890 million, and adjusted EPS guidance is $0.85–$0.91 for the full year. The innovation revenue target was increased by $60 million to a range of $720–$800 million for FY2025. Operating expenses are expected to rise about 7% year over year in constant currency for the full year, reflecting continued investment in product launches. The company improved its year-end 2025 net leverage ratio target to a range of 3.8x–4.1x.
For Q3 2025, Elanco expects revenue of $1,080–$1,110 million, adjusted EBITDA of $160–$180 million, and adjusted EPS of $0.12–$0.16. Management specifically noted that around $15 million in revenue and $10 million in adjusted EBITDA were pulled forward into the previous quarter by pre-tariff buying, which will soften Q3 2025 performance. Going forward, investors should monitor the impact of higher operating costs, margin trends, tariff and regulatory uncertainties, and further progress on product launches and regulatory approvals. ELAN does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
