Phibro Animal Health (PAHC -1.35%), a veterinary pharmaceutical and nutrition provider, reported earnings for Q4 FY2025 on August 27, 2025, covering the three months ending June 30. Driven by its largest-ever acquisition and strong international appetite for its medicated feed additives, the company’s sales, adjusted earnings, and profit margins all surpassed expectations. GAAP revenue reached $378.7 million, up 39% from the previous year. Adjusted diluted earnings per share (EPS) climbed to $0.57 from $0.41, also beating consensus expectations. Management described the result as a step-change, reflecting both solid underlying product demand and successful integration of new product lines, though a decline in gross margin showed that rising input and distribution costs remain a concern.
| Metric | Q4 2025 | Q4 2024 | Y/Y Change |
|---|---|---|---|
| Adjusted Diluted EPS (Non-GAAP) | $0.57 | $0.41 | 39 % |
| Revenue | $378.7 million | $273.2 million | 38.6 % |
| Adjusted EBITDA (Non-GAAP) | $50.0 million | N/A | N/A |
| Adjusted Net Income (Non-GAAP) | $23.2 million | $16.7 million | 39 % |
| Gross Margin | 29.0 % | 31.9 % | (2.9 pp) |
Phibro Animal Health's Business and Strategies
Phibro Animal Health manufactures and sells products that support animal health and nutrition across more than 90 countries. Its main product lines include medicated feed additives, which help prevent disease in livestock; nutritional specialty products that enhance animal health; and vaccines to combat specific animal diseases. The company’s clients include food producers, veterinarians, and animal health distributors.
Recently, Phibro has focused on expanding its reach and product portfolio through acquisitions and global growth. The October 2024 purchase of Zoetis's medicated feed additive portfolio added 37 products and six new manufacturing sites to its business. Success in this market relies on regulatory compliance, strong product innovation, and a global presence, with about 55% of animal health sales coming from outside the United States.
Quarter Highlights: Growth, Product Mix, and Margin Trends
The quarter marked a pivotal moment for Phibro, with GAAP revenue climbing 39% compared to the prior year. The acquisition of Zoetis's medicated feed additive (MFA) products played a central role, contributing $94.5 million in additional sales. Animal Health segment sales increased by 53%, primarily due to the Zoetis MFA acquisition. Vaccine revenues grew 21%, fueled by high demand in Latin America, while nutritional specialties posted solid gains of 11%.
Adjusted EBITDA, a measure of profit excluding both non-cash and one-off items, rose faster than revenue, up 49%, reflecting successful integration of acquired assets and improvements in operating leverage. Adjusted net income followed suit, reaching $23.2 million. Phibro’s ability to quickly benefit from the recent acquisition shows its execution on large, cross-border deals and boosts its long-term earnings potential.
Not all trends were positive, however. Gross margin, a measure of how much profit remains after covering production costs, slipped from 31.9% to 29.0% (GAAP). Management cited several causes, such as higher distribution costs, inventory write-offs, and a less favorable product mix. Despite these cost pressures, adjusted gross margin for the full fiscal year rose slightly, showing that the cost impact was most pronounced in the fourth quarter.
Looking at the company’s broader portfolio, Mineral Nutrition sales (GAAP) inched up 3%, while Performance Products rose 13%. Mineral Nutrition and Performance Products Adjusted EBITDA increased $4.4 million and $2.9 million, respectively, with Mineral Nutrition’s adjusted EBITDA up 4% and Performance Products by 38%. Free cash flow was $41.8 million, just below the previous period. Phibro maintained its quarterly dividend at $0.12 per share, continuing a stable return to shareholders.
Business Segments and Drivers: Product Lines Explained
The company’s core Animal Health segment is built on three main product lines: medicated feed additives (medicines delivered in animal feed), nutritional specialties (products that enhance animal health and growth), and vaccines (biological products to prevent livestock disease). The recent strength in this segment has been driven mostly by medicated feed additives, especially the new Zoetis-acquired products, which led to a 77% year-over-year jump in sales for this line. Vaccines saw demand rise due to success in international poultry markets.
Mineral Nutrition products supply trace minerals like copper and zinc, important for healthy livestock. Growth here was modest but steady, driven by broader demand for feed minerals. Performance Products comprise specialty chemicals used in industrial applications, rounding out Phibro’s diversified offerings. Each of these areas supports the company’s efforts to reduce dependence on any single customer group or geographic market.
Financial Outlook and What to Watch
For FY2026, management expects continued double-digit growth. Guidance points to net sales between $1.43 billion and $1.48 billion, representing about 12% projected growth. Adjusted EBITDA is anticipated to rise 25%. This outlook reflects management’s confidence in continued growth across all segments.
Investors should watch margin trends closely. The drop in quarterly GAAP gross margin, if it continues, could signal sustained cost or mix pressures. Free cash flow and leverage levels are also important to monitor, as integration and expansion require capital, and gross leverage ended the year at 3.1x. Management made no notable changes to its dividend policy, with a quarterly payout of $0.12 per share continuing as before.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
