Elanco reports Q3, 2023 Performance

Elanco Animal Health Inc (NYSE:ELAN) posted Q3 2023 revenue of $1,068 million, indicating a 4% growth.

The reported net loss amounts to $1,096 million, primarily attributed to a non-cash goodwill impairment charge of $1,042 million.

For Q3 2023, the adjusted EBITDA stands at $214 million, constituting 20.0% of the revenue.

The company has updated its full-year 2023 guidance to incorporate Q3 outperformance and the anticipated impact of foreign exchange rates.

Warning! GuruFocus has identified 5 Warning Signs with ELAN.

Elanco Animal Health Inc (NYSE:ELAN) disclosed its financial results for the third quarter of 2023 on November 7, 2023. The company reported a 4% increase in revenue, reaching $1,068 million. Despite this positive revenue growth, ELAN recorded a net loss of $1,096 million, mainly due to a non-cash goodwill impairment charge amounting to $1,042 million. The adjusted EBITDA for the quarter was $214 million, representing 20.0% of the revenue.

Financial Performance

ELAN's Pet Health revenue experienced a 6% rise to $495 million, driven by price growth, improved market conditions in Europe, and enhanced vaccine supply in the U.S. Farm Animal revenue also saw a 3% increase to $561 million, primarily fueled by revenue from new products and strength in European poultry.

The company's gross profit amounted to $581 million, constituting 54.4% of revenue on a reported basis and $582 million, or 54.5% of revenue on an adjusted basis. This increase was mainly propelled by improved pricing and productivity, partially offset by inflation, inventory losses, and planned reduced throughput at certain manufacturing sites.

ELAN's total operating expense for Q3 2023 was $399 million. Marketing, selling, and administrative expenses increased by 5% to $313 million, primarily due to higher employee-related expenses and increased promotional spending.

Updated Full-Year 2023 Guidance

ELAN has revised its full-year 2023 guidance to account for Q3 outperformance and the anticipated adverse impact of foreign exchange rates. The company now expects revenue in the range of $4,360 to $4,400 million, a reported net loss of $1,174 to $1,204 million, and an adjusted EPS of $0.88 to $0.94.

Business Highlights

ELAN achieved U.S. Food and Drug Administration (FDA) submissions for Credelio Quattro, a broad-spectrum parasiticide product for dogs, and Bovaer, a feed additive designed to reduce methane emissions for dairy cows. The company also received approval for Elura, intended for stimulating appetite and weight gain in cats in the EU, and Credelio Cat, used for treating and preventing fleas and ticks in China.

Todd Young, Elanco's Executive Vice President and CFO, stated, "Our return to revenue growth in the third quarter and related growth in adjusted EBITDA and adjusted EPS was driven by improvement across both pet health and farm animal. The outperformance in the third quarter allowed us to increase the midpoint of our expectations for constant currency revenue growth, adjusted EBITDA and adjusted EPS, while covering the expected negative impact of the foreign exchange rates. Business execution paired with company-wide efforts to manage balance sheet inventory and improve working capital are leading to increased cash flow generation."

For more details, explore the complete 8-K earnings release from Elanco Animal Health Inc [link to the release].