Q4 2025 Elanco Animal Health Inc Earnings Call

February 24, 2026

Speaker #1: Ladies and gentlemen, thank you for standing by. Welcome to Elanco Animal Health fourth quarter 2025 earnings conference call. At this time, all lines have been placed on mute to prevent any background noise.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to Elanco Animal Health's Q4 2025 Earnings Conference Call. At this time, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, again, press star one. Thank you. I'd now like to hand the call over to Tiffany Cannis, Vice President of Investor Relations. You may begin.

Speaker #1: After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad.

Operator: If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, again, press star one. Thank you. I'd now like to hand the call over to Tiffany Cannis, Vice President of Investor Relations. You may begin.

Speaker #1: If you'd like to withdraw your question, again, press star 1. Thank you. I'd now like to hand the call over to Tiffany Kanaga, Vice President of Investor Relations.

Speaker #1: You may begin.

Speaker #2: Good morning. Thank you for joining us for Elanco Animal Health's fourth quarter 2025 earnings call. I'm Tiffany Kanaga, Vice President of Investor Relations and ESG.

Tiffany Cannis: Good morning. Thank you for joining us for Elanco Animal Health's Q4 2025 Earnings Call. I'm Tiffany Cannis, Vice President of Investor Relations and ESG. Joining me on today's call are Jeff Simmons, our President and Chief Executive Officer, Bob Van Himbergen, our Chief Financial Officer, and Beth Haney from Investor Relations. The slides referenced during this call are available on the Investor Relations section of elanco.com. Today's discussion will include forward-looking statements. These statements are based on our current assumptions and expectations and are subject to risks and uncertainties that could cause actual results to differ materially from our forecast. For more information, see the risk factors discussed in today's earnings press release, as well as in our latest Form 10-K and 10-Q filed with the SEC. We do not undertake any duty to update any forward-looking statement.

Tiffany Kanaga: Good morning. Thank you for joining us for Elanco Animal Health's Q4 2025 Earnings Call. I'm Tiffany Cannis, Vice President of Investor Relations and ESG. Joining me on today's call are Jeff Simmons, our President and Chief Executive Officer, Bob Van Himbergen, our Chief Financial Officer, and Beth Haney from Investor Relations. The slides referenced during this call are available on the Investor Relations section of elanco.com.

Speaker #2: Joining me on today's call are Jeff Simmons, our President and Chief Executive Officer; Bob VanHimbergen, our Chief Financial Officer; and Beth Haney from Investor Relations.

Speaker #2: The slides referenced during this call are available on the Investor Relations section of Elanco.com. Today’s discussion will include forward-looking statements. These statements are based on our current assumptions and expectations and are subject to risks and uncertainties that could cause actual results to differ materially from our forecast.

Tiffany Kanaga: Today's discussion will include forward-looking statements. These statements are based on our current assumptions and expectations and are subject to risks and uncertainties that could cause actual results to differ materially from our forecast. For more information, see the risk factors discussed in today's earnings press release, as well as in our latest Form 10-K and 10-Q filed with the SEC. We do not undertake any duty to update any forward-looking statement.

Speaker #2: For more information, see the risk factors discussed in today's earnings press release, as well as in our latest Form 10-K and 10-Q filed with the SEC.

Speaker #2: We do not undertake any duty to update any forward-looking statement. Our remarks today will focus on our non-gap financial measures. Reconciliations of these non-gap measures are included in the Appendix of today's slides and in the earnings press release.

Tiffany Cannis: Our remarks today will focus on our non-GAAP financial measures. Reconciliations of these non-GAAP measures are included in the appendix of today's slides and in the earnings press release. References to organic performance exclude the estimated impact of the Aqua business, which was divested 9 July 2024, and certain royalty and milestone rights that were sold to a third party in May 2025. After our prepared remarks, we will be happy to take your questions. I will now turn the call over to Jeff.

Tiffany Kanaga: Our remarks today will focus on our non-GAAP financial measures. Reconciliations of these non-GAAP measures are included in the appendix of today's slides and in the earnings press release. References to organic performance exclude the estimated impact of the Aqua business, which was divested 9 July 2024, and certain royalty and milestone rights that were sold to a third party in May 2025. After our prepared remarks, we will be happy to take your questions. I will now turn the call over to Jeff.

Speaker #2: References to organic performance, exclude the estimated impact of the aqua business, which was divested July 9, 2024, and certain royalty and milestone rights that were sold to a third party in May 2025.

Speaker #2: After our prepared remarks, we will be happy to take your questions. I will now turn the call over to Jeff.

Speaker #1: Thanks, Tiffany. Good morning, everyone. 2025 was the year of significant delivery for Elanco, across all three of our priorities: growth, innovation, and cash. As highlighted on slide 4, Elanco delivered a strong fourth quarter with 9% organic constant currency revenue growth.

Jeff Simmons: Thanks, Tiffany. Good morning, everyone. 2025 was a year of significant delivery for Elanco across all three of our priorities: growth, innovation, and cash. As highlighted on slide 4, Elanco delivered a strong Q4 with 9% organic constant currency revenue growth. We outperformed the high end of guidance for revenue, Adjusted EBITDA, and Adjusted EPS. Growth was led by US Farm Animal, up 17%, and US Pet Health, up 10%. This now marks 10 consecutive quarters of underlying total growth. Revenue from innovation exceeded expectations in 2025 at $892 million for the year, as the Q4 was our largest quarter for innovation to date. We are raising our 2026 outlook for innovation to $1.15 billion, reflecting contributions across a broad set of geographies, species, and products.

Speaker #1: We outperformed the high end of guidance for revenue, adjusted EBITDA, and adjusted EPS. Growth was led by U.S. farm animal up 17% and U.S.

Speaker #1: pet health up 10%. This now marks 10 consecutive quarters of underlying total growth. Revenue from innovation exceeded expectations in 2025 at $892 million for the year.

Jeff Simmons: This now marks 10 consecutive quarters of underlying total growth. Revenue from innovation exceeded expectations in 2025 at $892 million for the year, as the Q4 was our largest quarter for innovation to date. We are raising our 2026 outlook for innovation to $1.15 billion, reflecting contributions across a broad set of geographies, species, and products.

Speaker #1: As the fourth quarter was our largest quarter for innovation to date. We are raising our 2026 outlook for innovation to $1.15 billion, reflecting contributions across a broad set of geography, species, and products.

Speaker #1: Our continued focus on cash, combined with strong results, improved our net leverage ratio faster than planned to 3.6 times at year-end. We now expect to finish 2026 at 3.1 to 3.3 times.

Jeff Simmons: Our continued focus on cash, combined with strong results, improved our net leverage ratio faster than planned to 3.6x at year-end. We now expect to finish 2026 at 3.1x to 3.3x. With our consistent execution, we are well-positioned to introduce 2026 guidance in line with our longer-term algorithm. We expect full-year organic constant currency revenue growth of 4% to 6%, Adjusted EBITDA of $955 to $985 million, representing growth of 8% at the midpoint, and Adjusted EPS of $1.00 to $1.06, representing growth of 10% at the midpoint. This guidance continues our prudent, balanced approach in a dynamic macro environment. On Slide 5, let me ground today's discussion in accountability and transparency by sharing a checklist for the year in review.

Speaker #1: With our consistent execution, we are well positioned to introduce 2026 guidance in line with our longer-term algorithm. We expect full-year organic constant currency revenue growth of 4 to 6%, adjusted EBITDA of $955 to $985 million, representing growth of 8% at the midpoint, and adjusted EPS of $1 to $1.06, representing growth of 10% at the midpoint.

Jeff Simmons: We expect full-year organic constant currency revenue growth of 4% to 6%, Adjusted EBITDA of $955 to $985 million, representing growth of 8% at the midpoint, and Adjusted EPS of $1.00 to $1.06, representing growth of 10% at the midpoint. This guidance continues our prudent, balanced approach in a dynamic macro environment. On Slide 5, let me ground today's discussion in accountability and transparency by sharing a checklist for the year in review.

Speaker #1: This guidance continues our prudent, balanced approach in a dynamic macro environment. On slide 5, let me ground today's discussion in accountability and transparency. By sharing a checklist for the year in review, Elanco delivered across our full set of 2025 commitments to our customers and our shareholders.

Jeff Simmons: Elanco delivered across our full set of 2025 commitments to our customers and our shareholders. We have entered our new era of growth with a track record of consistent execution. Innovation revenue cleared a bar that was raised each quarter in 2025. We brought the entire Big Six across the finish line with Befrena's December approval. This is a real testament to the optimized innovation engine that Ellen's team has built over the past few years. Organic constant currency revenue growth reached 7% for the full year, with balanced contributions across species and geographies, as well as between volume and price. 2025 revenue, Adjusted EBITDA, and Adjusted EPS all exceeded last February's expectations, with steady outperformance throughout the year. We delevered about a half a turn faster than expected, while also refinancing our Term Loan B ahead of schedule.

Speaker #1: We have entered our new era of growth with a track record of consistent execution. Innovation revenue cleared a bar that was raised each quarter in 2025.

Speaker #1: We brought the entire Big Six Berfrenna's December approval. This is a real testament to the optimized innovation engine that Ellen's team has built over the past few years.

Speaker #1: Organic constant currency revenue growth reached 7% for the full year, with balanced contributions across species and geographies, as well as between volume and price.

Jeff Simmons: Organic constant currency revenue growth reached 7% for the full year, with balanced contributions across species and geographies, as well as between volume and price. 2025 revenue, Adjusted EBITDA, and Adjusted EPS all exceeded last February's expectations, with steady outperformance throughout the year. We delevered about a half a turn faster than expected, while also refinancing our Term Loan B ahead of schedule.

Speaker #1: 2025 revenue, adjusted EBITDA, and adjusted EPS all exceeded last February's expectations, with steady outperformance throughout the year. And we delivered about a half a turn faster than expected, while also refinancing our term loan B ahead of schedule.

Speaker #1: Team Elanco, o, I want to extend my gratitude for an incredible year. Your level of engagement and execution has never been higher, while your unwavering dedication to transforming animal care has truly shown.

Jeff Simmons: Team Elanco, I want to extend my gratitude for an incredible year. Your level of engagement and execution has never been higher, while your unwavering dedication to transforming animal care has truly shown. Looking more closely at the Q4 revenue performance on slide six, we break down the 9% underlying organic constant currency revenue growth. This chart demonstrates strength across our global business, with all four quadrants growing nicely. US Pet Health had a robust quarter, up 10%. Credelio Quattro and Zenrelia led solid growth in the vet clinic and also drove broader portfolio benefits with positive trends for Galliprant. Retail likewise grew in Q4. Dispensing trends were healthy across our OTC parasiticides, including Seresto and the Advantage family. Importantly, our strong end of the year for US Pet Health led us to gain share in every major category for the full year 2025.

Speaker #1: Looking more closely at the fourth quarter revenue performance on slide 6, we break down the 9% underlying organic constant currency revenue growth. This chart demonstrates strength across our global business, with all four quadrants growing nicely.

Speaker #1: U.S. pet health had a robust quarter, up 10%. Credelio Quattro and Zenrelia led solid growth in the vet clinic and also drove broader portfolio benefits with positive trends for Galiprant.

Jeff Simmons: Credelio Quattro and Zenrelia led solid growth in the vet clinic and also drove broader portfolio benefits with positive trends for Galliprant. Retail likewise grew in Q4. Dispensing trends were healthy across our OTC parasiticides, including Seresto and the Advantage family. Importantly, our strong end of the year for US Pet Health led us to gain share in every major category for the full year 2025.

Speaker #1: Retail, likewise, grew in Q4, and dispensing trends were healthy across our OTC parasiticides, including Seresto and the Advantage family. Importantly, our strong end to the year for U.S.

Speaker #1: Pet Health led us to gain share in every major category for the full year 2025: prescription parasiticides, osteoarthritis pain, dermatology, and vaccines. Moving to International Pet Health, we achieved 8% organic constant currency revenue growth, driven by Zenrelia, Credelio, and AdTab.

Jeff Simmons: Prescription parasiticides, osteoarthritis pain, dermatology, and vaccines. Moving to international pet health, we achieved 8% organic constant currency revenue growth, driven by Zenrelia, Credelio, and Adtab. Zenrelia is exceeding expectations in the $700 million+ international market, with double-digit share in several key markets and strong early traction in Europe, the UK, and Australia. US Farm Animal delivered an excellent quarter, up 17% on top of 6% last year, building on our market leadership. Cattle led the way with strong growth for Experior and Pradalex, with positive contributions from poultry as well. Finally, International Farm Animal was up 4% in organic constant currency, with growth coming from ruminants, swine, and poultry. Looking at slide seven, we delivered $892 million of innovation revenue in 2025, outperforming across a diverse basket led by Credelio Quattro, Experior, Zenrelia, and Adtab.

Speaker #1: Zenrelia is exceeding expectations in the $700 million-plus international market, with double-digit share in several key markets, and strong early traction in Europe, the UK, and Australia.

Speaker #1: U.S. Farm Animal delivered an excellent quarter, up 17% on top of 6% last year, building on our market leadership. Cattle led the way with strong growth for Experia and Pratalax, with positive contributions from poultry as well.

Jeff Simmons: US Farm Animal delivered an excellent quarter, up 17% on top of 6% last year, building on our market leadership. Cattle led the way with strong growth for Experior and Pradalex, with positive contributions from poultry as well. Finally, International Farm Animal was up 4% in organic constant currency, with growth coming from ruminants, swine, and poultry. Looking at slide seven, we delivered $892 million of innovation revenue in 2025, outperforming across a diverse basket led by Credelio Quattro, Experior, Zenrelia, and Adtab.

Speaker #1: And finally, international farm animal was up 4% in organic constant currency, with growth coming from ruminants, swine, and poultry. Looking at slide 7, we delivered $892 million of innovation revenue in 2025, outperforming across a diverse basket led by Credelio Quattro, Experia, Zenrelia, and AdTab.

Speaker #1: We are now committing to at least another $250 million of growth in 2026, to $1.15 billion. This target is led by our Big Six gaining traction in the global marketplace with our no-regrets launch approach.

Jeff Simmons: We are now committing to at least another $250 million of growth in 2026 to $1.15 billion. This target is led by our Big 6 gaining traction in the global marketplace with our no regrets launch approach. We are driving sustainable growth as we expect the Big 6 to double in revenue from 2025 to 2028, on top of a stabilizing base. We've refilled the pipeline to deliver a consistent flow of high-impact innovation. Let's further discuss the progress of our Big 6 major innovation products on Slide 8, starting with Credelio Quattro. This groundbreaking parasiticide, the first FDA-approved product with four active ingredients, is the fastest blockbuster in our history, and we believe has the potential to become our biggest product class ever.

Speaker #1: We are driving sustainable growth as we expect the Big Six to double in revenue from 2025 to 2028, on top of a stabilizing base.

Speaker #1: And we've refilled the pipeline to deliver a consistent flow of high-impact innovation. Let's further discuss the progress of our Big Six major innovation products on slide 8, starting with Credelio Quattro.

Jeff Simmons: Let's further discuss the progress of our Big 6 major innovation products on Slide 8, starting with Credelio Quattro. This groundbreaking parasiticide, the first FDA-approved product with four active ingredients, is the fastest blockbuster in our history, and we believe has the potential to become our biggest product class ever.

Speaker #1: This groundbreaking parasiticide, the first FDA-approved product with four active ingredients, is the fastest blockbuster in our history, and we believe it has the potential to become our biggest product class ever.

Speaker #1: We see Quattro as best medicine, with its four dimensions of differentiation. Fueling a growth trajectory more like a first-to-market product, in the fourth quarter, Quattro continued to gain dollar share of U.S.

Jeff Simmons: We see Quattro as the best medicine, with its four dimensions of differentiation, fueling a growth trajectory more like a first-to-market product. In Q4, Quattro continued to gain dollar share of US broad-spectrum sales and was the only one to gain share in the quarter in vet clinics, demonstrating continued strong momentum almost a year after its launch. Credelio Quattro enters 2026 with the most momentum in the $1.4 billion US broad-spectrum parasiticide market. We have significant runway ahead, with approximately 1/3 of clinics penetrated today and plenty of room to grow share within those clinics. A good leading indicator is Kinetic Puppy Index, where Quattro ranked highest in Q4 versus other broad-spectrum endectos and grew versus Q3. Quattro is gaining share and also expanding what is the fastest-growing animal health market today, the US broad-spectrum endecto market, up 30% year-over-year.

Speaker #1: Broad-spectrum sales were the only ones to gain share in the quarter in vet clinics, demonstrating continued strong momentum almost a year after its launch.

Speaker #1: Credelio Quattro enters 2026 with the most momentum in the $1.4 billion U.S. broad-spectrum parasiticide market. We have significant runway ahead. With approximately one-third of clinics penetrated today and plenty of room to grow share within those clinics, a good leading indicator is the kinetics puppy index, where Quattro ranked highest in Q4 versus other broad-spectrum endectos and grew versus Q3.

Jeff Simmons: We have significant runway ahead, with approximately 1/3 of clinics penetrated today and plenty of room to grow share within those clinics. A good leading indicator is Kinetic Puppy Index, where Quattro ranked highest in Q4 versus other broad-spectrum endectos and grew versus Q3. Quattro is gaining share and also expanding what is the fastest-growing animal health market today, the US broad-spectrum endecto market, up 30% year-over-year.

Speaker #1: Quattro is gaining share and also expanding what is the fastest growing animal health market today. The U.S. broad-spectrum indecto market up 30% year over year.

Speaker #1: We expect Quattro to lead that growth through its profitability for the clinic and its differentiated offering for the pet owner. Aided by our DTC investments, expanded sales teams, and distribution partners.

Jeff Simmons: We expect Quattro to lead that growth through its profitability for the clinic and its differentiated offering for the pet owner, aided by our DTC investments, expanded sales teams, and distribution partners. Importantly, Quattro has boosted our broader Elanco portfolio in clinics. Its momentum and portfolio benefits drove Elanco to be the only major animal health player to see share gains for the total parasiticide prescription portfolio in US vet clinics in 2025. Looking beyond the US, Quattro's global rollout begins now, with approval in Australia last week. With this approval, we are kicking off our expansion into the $700 million international market, which is growing double digits. Next, we couldn't be more pleased with Zenrelia's performance in the $2 billion derm market. Every quarter, Zenrelia's efficacy profile becomes more recognized, and its success is becoming more global. We have a special product in Zenrelia.

Speaker #1: Importantly, Quattro has boosted our broader Elanco portfolio in clinics. Its momentum in portfolio benefits drove Elanco to be the only major animal health player to see share gains for the total parasiticide prescription portfolio in the U.S.

Speaker #1: vet clinics in 2025. Looking beyond the U.S., Quattro's global rollout begins now, with approval in Australia last week. With this approval, we are kicking off our expansion into the $700 million international market, which is growing double digits.

Jeff Simmons: Looking beyond the US, Quattro's global rollout begins now, with approval in Australia last week. With this approval, we are kicking off our expansion into the $700 million international market, which is growing double digits. Next, we couldn't be more pleased with Zenrelia's performance in the $2 billion derm market. Every quarter, Zenrelia's efficacy profile becomes more recognized, and its success is becoming more global. We have a special product in Zenrelia.

Speaker #1: Next, we couldn't be more pleased with Zenrelia's performance in the $2 billion derm market. Every quarter, Zenrelia's efficacy profile becomes more recognized, and its success is becoming more global.

Speaker #1: We have a special product in Zenrelia. The Zenrelia momentum is building. With December as our best month yet, importantly, we exited the month with double-digit share of the U.S.

Jeff Simmons: The Zenrelia momentum is building, with December as our best month yet. Importantly, we exited the month with double-digit share of the US JAK market. This strength is continuing into January. We're now in about half of the clinics in the US, and the reorder rate is over 80%. Trends accelerated after the label update in September, adding 2,500 new purchasers. We remain committed to making the US label consistent with the other 40 countries, where it's already approved without restrictions. Zenrelia's Q4 international results were exceptional. In our 1st cohort of launches, Brazil, Canada, and Japan, we've already achieved year 3 or year 4 analog share in just the 1st year. Zenrelia's JAK market share in Brazil has reached 40%, and Japan is over 30%.

Speaker #1: jack market. This strength is continuing into January. We're now in about half of the clinics in the U.S. and the reorder rate is over 80%.

Speaker #1: Trends accelerated after the label update in September, adding 2,500 new purchasers. We remain committed to making the U.S. label consistent with the other 40 countries where it's already approved without restrictions.

Jeff Simmons: We remain committed to making the US label consistent with the other 40 countries, where it's already approved without restrictions. Zenrelia's Q4 international results were exceptional. In our 1st cohort of launches, Brazil, Canada, and Japan, we've already achieved year 3 or year 4 analog share in just the 1st year. Zenrelia's JAK market share in Brazil has reached 40%, and Japan is over 30%.

Speaker #1: Zenrelia's Q4 international results were exceptional. In our first cohort of launches—Brazil, Canada, and Japan—we've already achieved year three or year four analog share in just the first year.

Speaker #1: Zenrelia's jack market share in Brazil has reached 40%. And Japan is over 30%. The rapid success and overwhelmingly positive customer feedback are driven by Zenrelia's strong efficacy.

Jeff Simmons: The rapid success and overwhelmingly positive customer feedback are driven by Zenrelia's strong efficacy and support our long-term belief in the product with a clean label. We're also encouraged by the early traction in Europe, the UK, and Australia. Zenrelia is outperforming the new competitive entrant in the key EU markets. Local sell-out data confirms double-digit JAK market share in France, Italy, and Spain. We've already contracted with all major EU corporate accounts, helping to drive growth ahead of our expectations. We've also achieved more than 10% share in the UK. Our EU head-to-head study results are coming to life in the field, and we're the only player providing that competitive data. Again, efficacy is the differentiator across Europe and around the world, with over 1 million dogs treated with Zenrelia globally. Its efficacy is resonating strongly with vets and pet owners alike.

Speaker #1: And support our long-term belief in the product with a clean label. We're also encouraged by the early traction in Europe, the UK, and Australia.

Speaker #1: Zenrelia is outperforming the new competitive entrant in the key EU markets. Local sell-out data confirms double-digit jack market share in France, Italy, and Spain.

Speaker #1: We've already contracted with all major EU corporate accounts, helping to drive growth ahead of our expectations. We've also achieved more than a 10% share in the UK.

Jeff Simmons: We've already contracted with all major EU corporate accounts, helping to drive growth ahead of our expectations. We've also achieved more than 10% share in the UK. Our EU head-to-head study results are coming to life in the field, and we're the only player providing that competitive data. Again, efficacy is the differentiator across Europe and around the world, with over 1 million dogs treated with Zenrelia globally. Its efficacy is resonating strongly with vets and pet owners alike.

Speaker #1: Our EU head-to-head study results are coming to life in the field. And we're the only player providing that competitive data. Again, efficacy is the differentiator across Europe, and around the world, with over a million dogs treated with Zenrelia globally.

Speaker #1: Its efficacy is resonating strongly with vets and pet owners alike. Zenrelia works, and it works really well. Moving now to Befrena, our second monoclonal antibody and our second derm product.

Jeff Simmons: Zenrelia works. It works really well. Moving now to Befrena, our second monoclonal antibody and our second derm product. We gained USDA approval on 31 December, fulfilling our year-end commitment. We expect a launch in Q2 2026 as we progress through the anticipated manufacturing ramp-up. A phased launch is very typical for monoclonal antibodies or mAb products as we scale our bioreactors. Our expanded facilities in Elwood, Kansas, are ready, our manufacturing plans are right on track. We feel good about our overall mAb capabilities for Befrena and beyond. Befrena offers positive differentiation on convenience, value, and efficacy. It's recommended at a dosing interval of 6 to 8 weeks post-treatment versus 4 to 8 weeks for the current market competitor.

Speaker #1: We gained USDA approval on December 31, fulfilling our year-end commitment. We expect a launch in the second quarter of 2026 as we progress through the anticipated manufacturing ramp-up.

Speaker #1: A phased launch is very typical for monoclonal antibodies, or MAB products, as we scale our bioreactors. Our expanded facilities in Elwood, Kansas, are ready, our manufacturing plans are right on track, and we feel good about our overall MAB capabilities for Befrena and beyond.

Jeff Simmons: Our expanded facilities in Elwood, Kansas, are ready, our manufacturing plans are right on track. We feel good about our overall mAb capabilities for Befrena and beyond. Befrena offers positive differentiation on convenience, value, and efficacy. It's recommended at a dosing interval of 6 to 8 weeks post-treatment versus 4 to 8 weeks for the current market competitor.

Speaker #1: Befrena offers positive differentiation on convenience, value, and efficacy. It is recommended at a dosing interval of six to eight weeks post-treatment, versus four to eight weeks for the current market competitor.

Speaker #1: And when we showed a close proxy of the label to approximately 350 veterinarians, 83% responded they are likely to use Befrena, especially in seasonal cases.

Jeff Simmons: When we showed a close proxy of the label to approximately 350 veterinarians, 83% responded they are likely to use Befrena, especially in seasonal cases. Finally, our OTC parasiticide Adtab has continued its robust growth trajectory, with sales up more than 50%. Adtab is the fastest-growing brand in the $600 million OTC Decto market in Europe, achieving more than 50% oral OTC share to become number 1 in less than 2 years on the market. Moving to farm animal, Experior continues to grow nicely, up 35% in Q4 against a tougher compare. We are benefiting from the historically small US cattle herd size, while noting that heifer retention recently turned positive for the first time since January 2017.

Speaker #1: Finally, our OTC parasiticide Add Tab has continued its robust growth trajectory, with sales up more than 50%. Add Tab is the fastest-growing brand in the $600 million OTC ecto market in Europe, achieving more than 50% oral OTC share to become number one in less than two years on the market.

Jeff Simmons: Adtab is the fastest-growing brand in the $600 million OTC Decto market in Europe, achieving more than 50% oral OTC share to become number 1 in less than 2 years on the market. Moving to farm animal, Experior continues to grow nicely, up 35% in Q4 against a tougher compare. We are benefiting from the historically small US cattle herd size, while noting that heifer retention recently turned positive for the first time since January 2017.

Speaker #1: Moving to farm animal, Experia continues to grow nicely, up 35% in Q4 against a tougher compare. We are benefiting from the historically small U.S.

Speaker #1: Cattle herd size, while noting that heifer retention recently turned positive for the first time since January 2017. Experia crossed the $200 million mark in 2025, up nearly 80% for the full year.

Jeff Simmons: Experior crossed the $200 million mark in 2025, up nearly 80% for the full year, with significant runway still ahead for this blockbuster and its portfolio benefits. We see strong opportunity in an estimated potential market of over $350 million in the US and Canada through extending the days of use, continued adoption, and price, with geo expansion as another longer-term growth driver. Lastly, regarding Bovaer, we continue to see demand from CPG companies that supports sustained interest and consistent cow numbers, with farmer retention remaining over 90%. We will continue to invest in Bovaer to achieve its expected potential by enhancing the product's strategic optionality and demonstrating an increased value proposition for farmers and CPG companies. Long term, we continue to view Bovaer as a blockbuster, with near-term growth at a measured pace in a dynamic market backdrop.

Speaker #1: With significant runway still ahead for this blockbuster and its portfolio benefits, we see strong opportunity in an estimated potential market of over $350 million in the U.S.

Speaker #1: And Canada, through extending the days of use, continued adoption, and price. With GEO expansion as another longer-term growth driver. Lastly, regarding Bovaer, we continue to see demand from CPG companies that support sustained interest and consistent cow numbers.

Jeff Simmons: Lastly, regarding Bovaer, we continue to see demand from CPG companies that supports sustained interest and consistent cow numbers, with farmer retention remaining over 90%. We will continue to invest in Bovaer to achieve its expected potential by enhancing the product's strategic optionality and demonstrating an increased value proposition for farmers and CPG companies. Long term, we continue to view Bovaer as a blockbuster, with near-term growth at a measured pace in a dynamic market backdrop.

Speaker #1: With farmer retention remaining over 90%, we will continue to invest in Bovaer to achieve its expected potential by enhancing the product's strategic optionality and demonstrating an increased value proposition for farmers and CPG companies.

Speaker #1: Long-term, we continue to view Bovaer as a blockbuster, with near-term growth at a measured pace in a dynamic market backdrop. Moving to slide nine, we offer some recent highlights across the three parts of our IPP strategy: innovation, portfolio, and productivity.

Jeff Simmons: Moving to slide 9, we offer some recent highlights across the 3 parts of our IPP strategy: innovation, portfolio, and productivity. Ellen and her team have built a science-based engine and organizational capability to maximize throughput. With the Big Six now each approved in the US without attrition, we are focused on the next wave, with 5 to 6 blockbuster potential approvals expected through 2031. Elanco's R&D engine is humming with depth and expertise and a laser focus on the next milestones, all with a vision of creating a consistent flow of high-impact innovation. At the same time, we're optimizing our diverse portfolio to drive near-term growth and to gain share. We experienced broad-based organic, constant currency, top-line growth in 2025 across our top 5 product franchises and in 9 of our top 10 countries. Very importantly, our launch excellence is enabling share gains with accelerating pricing.

Speaker #1: Ellen and her team have built a science-based engine and organizational capability to maximize throughput. With the Big Six now each approved in the U.S., without attrition, we are focused on the next wave with five to six blockbuster potential approvals expected through 2031.

Jeff Simmons: Elanco's R&D engine is humming with depth and expertise and a laser focus on the next milestones, all with a vision of creating a consistent flow of high-impact innovation. At the same time, we're optimizing our diverse portfolio to drive near-term growth and to gain share. We experienced broad-based organic, constant currency, top-line growth in 2025 across our top 5 product franchises and in 9 of our top 10 countries. Very importantly, our launch excellence is enabling share gains with accelerating pricing.

Speaker #1: Elanco's R&D engine is humming, with depth and expertise, and a laser focus on the next milestones—all with a vision of creating a consistent flow of high-impact innovation.

Speaker #1: At the same time, we're optimizing our diverse portfolio to drive near-term growth and to gain share. We experienced broad-based organic constant currency top-line growth in 2025 across our top five product franchises and in nine of our top 10 countries.

Speaker #1: And, very importantly, our launch excellence is enabling share gains with accelerating pricing. As Bob will detail, we achieved 2% price growth in 2025, in line with our expectations, and we anticipate acceleration in 2026.

Jeff Simmons: As Bob will detail, we achieved 2% price growth in 2025, in line with our expectations, and we anticipate acceleration in 2026, including our largest increase in 5 years to US vet clinics. Our pricing strategy reflects our latest innovation and the value of our total portfolio to customers. We've also signed an agreement to acquire AHV International, a Dutch-based farm animal health innovator, focused on a portfolio of products for cattle that improves animal health and optimize efficiency while reducing the need for antibiotics. The deal accelerates Elanco's efforts to expand our leadership in the dairy industry, particularly in North America and Europe, growing both our share of voice and enhancing our portfolio with exciting solutions that supports transition cow health, one of the greatest needs in the dairy industry.

Speaker #1: Including our largest increase in five years to U.S. vet clinics. Our pricing strategy reflects our latest innovation and the value of our total portfolio to customers.

Speaker #1: We've also signed an agreement to acquire AHV International, a Dutch-based farm animal health innovator focused on a portfolio of products for cattle that improves animal health and optimizes efficiency, while reducing the need for antibiotics.

Jeff Simmons: We've also signed an agreement to acquire AHV International, a Dutch-based farm animal health innovator, focused on a portfolio of products for cattle that improves animal health and optimize efficiency while reducing the need for antibiotics. The deal accelerates Elanco's efforts to expand our leadership in the dairy industry, particularly in North America and Europe, growing both our share of voice and enhancing our portfolio with exciting solutions that supports transition cow health, one of the greatest needs in the dairy industry.

Speaker #1: The deal accelerates Elanco's efforts to expand our leadership in the dairy industry, particularly in North America and Europe, growing both our share of voice and enhancing our portfolio with exciting solutions that support transition cow health, one of the greatest needs in the dairy industry.

Speaker #1: We're excited about the potential of this opportunity to bring needed solutions to producers and one of the fastest growing proteins and we believe one of the greatest market opportunities in animal health.

Jeff Simmons: We're excited about the potential of this opportunity to bring needed solutions to producers and one of the fastest-growing proteins. We believe one of the greatest market opportunities in animal health. At the same time, we continue to rapidly pay down debt and strengthen our balance sheet. We improved our net leverage ratio by two turns in just two years, with the under three times landmark expected in 2027. As Bob will also describe momentarily, our company-wide productivity initiative, Elanco Ascend, is off to a good start to drive meaningful efficiencies and margin enhancement starting in 2026. With that, I'll pass it to Bob to review our Q4 results and financial guidance.

Speaker #1: At the same time, we continue to rapidly pay down debt and strengthen our balance sheet. We improved our net leverage ratio by two turns in just two years.

Jeff Simmons: We improved our net leverage ratio by two turns in just two years, with the under three times landmark expected in 2027. As Bob will also describe momentarily, our company-wide productivity initiative, Elanco Ascend, is off to a good start to drive meaningful efficiencies and margin enhancement starting in 2026. With that, I'll pass it to Bob to review our Q4 results and financial guidance.

Speaker #1: With the under three times landmark expected in 2027. And, as Bob will also describe momentarily, our company-wide productivity initiative Elanco Ascend is off to a good start.

Speaker #1: To drive meaningful efficiencies and margin enhancement starting in 2026. With that, I'll pass it to Bob to review our fourth-quarter results and financial guidance.

Speaker #2: Thank you, Jeff. Good morning, everyone. I will focus my comments on our adjusted measures, so please refer to today's earnings press release for a detailed description of the year-over-year changes in our reported results.

Robert VanHimbergen: Thank you, Jeff, and good morning, everyone. I will focus my comments on our adjusted measures, so please refer to today's earnings press release for a detailed description of the year-over-year changes in our reported results. Starting on Slide 11, we delivered $1.14 billion of revenue in Q4, representing an increase of 12% on a reported basis. Organic constant currency growth was 9%, primarily driven by an increase in volume, with price contributing. Slide 12 provides revenue by the four quadrants of our business. Globally, Pet Health revenue grew 9% in constant currency during Q4. US performance delivered 10% growth, driven by demand for our key innovation products, Credelio Quattro and Zenrelia. Outside the US, the Pet Health business grew 8% in constant currency, led by Zenrelia.

Bob VanHimbergen: Thank you, Jeff, and good morning, everyone. I will focus my comments on our adjusted measures, so please refer to today's earnings press release for a detailed description of the year-over-year changes in our reported results. Starting on Slide 11, we delivered $1.14 billion of revenue in Q4, representing an increase of 12% on a reported basis. Organic constant currency growth was 9%, primarily driven by an increase in volume, with price contributing.

Speaker #2: Starting on slide 11, we delivered $1.14 billion of revenue in the fourth quarter, representing an increase of 12% on a reported basis. Organic constant currency growth was 9%, primarily driven by an increase in volume, with price contributing.

Speaker #2: Slide 12 provides revenue by the four quadrants of our business. Globally, pet health revenue grew 9% in constant currency during the fourth quarter. U.S.

Bob VanHimbergen: Slide 12 provides revenue by the four quadrants of our business. Globally, Pet Health revenue grew 9% in constant currency during Q4. US performance delivered 10% growth, driven by demand for our key innovation products, Credelio Quattro and Zenrelia. Outside the US, the Pet Health business grew 8% in constant currency, led by Zenrelia.

Speaker #2: Performance delivered 10% growth, driven by demand for our key innovation products, Cordelia Quattro and Zenrelia. Outside the U.S., the pet health business grew 8% in constant currency, led by Zenrelia.

Speaker #2: On a global basis, our farm animal business achieved 10% organic constant currency growth. The U.S. farm animal business grew 17%, driven by the strength of Experia, Pratelex, and poultry vaccines.

Robert VanHimbergen: On a global basis, our Farm Animal business achieved 10% organic constant currency growth. The US Farm Animal business grew 17%, driven by the strength of Experior, Pradalex, and poultry vaccines. Outside the US, our Farm Animal business contributed 4% in organic constant currency, driven by broad geographic and species growth, led by ruminants in Europe and Latin America, poultry in Europe and the US, and swine in the APAC region. Continuing down the income statement on Slide 13, adjusted gross margin increased 30 basis points to 51.2%, primarily driven by price, increased sales volumes, and mixed benefits, partially offset by the flow-through of higher inventory costs. Year-over-year expansion was also impacted by the outperformance of our US Farm Animal business, which carries lower gross margins, but more comparable EBITDA margins to the Pet Health business.

Bob VanHimbergen: On a global basis, our Farm Animal business achieved 10% organic constant currency growth. The US Farm Animal business grew 17%, driven by the strength of Experior, Pradalex, and poultry vaccines. Outside the US, our Farm Animal business contributed 4% in organic constant currency, driven by broad geographic and species growth, led by ruminants in Europe and Latin America, poultry in Europe and the US, and swine in the APAC region.

Speaker #2: Outside the U.S., our farm animal business contributed 4% in organic constant currency, driven by broad geographic and species growth, led by ruminants in Europe and Latin America, poultry in Europe and the U.S., and swine in the APAC region.

Bob VanHimbergen: Continuing down the income statement on Slide 13, adjusted gross margin increased 30 basis points to 51.2%, primarily driven by price, increased sales volumes, and mixed benefits, partially offset by the flow-through of higher inventory costs. Year-over-year expansion was also impacted by the outperformance of our US Farm Animal business, which carries lower gross margins, but more comparable EBITDA margins to the Pet Health business.

Speaker #2: Continuing down the income statement on slide 13, adjusted gross margin increased 30 basis points to 51.2%, primarily driven by price, increased sales volumes, and mix benefits, partially offset by the flow-through of higher inventory costs.

Speaker #2: Year-over-year expansion was also impacted by the outperformance of our U.S. farm animal business, which carries lower gross margins but more comparable EBITDA margins to the pet health business.

Speaker #2: Our operating expenses grew by 10% in constant currency. This planned increase supports our strategic investment in our global pet health product launches and our R&D pipeline development.

Robert VanHimbergen: Our operating expenses grew by 10% in constant currency. This planned increase supports our strategic investment in our global Pet Health product launches and our R&D pipeline development. As expected, interest expense totaled $47 million in Q4, a 2% increase compared to the same period last year. As a reminder, we had the expiration of a favorable interest rate swap amortization benefit in Q3 2025, which originated from a 2022 interest rate swap restructuring. On Slide 14, we include a bridge for Q4 results compared to the prior year. Adjusted EBITDA was $189 million, an increase of $12 million or 7%. Adjusted EPS was $0.13 in Q4, a 7% decrease year-over-year, driven by an anticipated higher tax rate, primarily due to timing of one-time benefits.

Bob VanHimbergen: Our operating expenses grew by 10% in constant currency. This planned increase supports our strategic investment in our global Pet Health product launches and our R&D pipeline development. As expected, interest expense totaled $47 million in Q4, a 2% increase compared to the same period last year.

Speaker #2: As expected, interest expense totaled $47 million in the quarter. A 2% increase compared to the same period last year. As a reminder, we have the expiration of our favorable interest rate swap amortization benefit in the third quarter of 2025, which originated from a 2022 interest rate swap restructuring.

Bob VanHimbergen: As a reminder, we had the expiration of a favorable interest rate swap amortization benefit in Q3 2025, which originated from a 2022 interest rate swap restructuring. On Slide 14, we include a bridge for Q4 results compared to the prior year. Adjusted EBITDA was $189 million, an increase of $12 million or 7%. Adjusted EPS was $0.13 in Q4, a 7% decrease year-over-year, driven by an anticipated higher tax rate, primarily due to timing of one-time benefits.

Speaker #2: On slide 14, we include a bridge for fourth-quarter results compared to the prior year. Adjusted EBITDA was $189 million. An increase of $12 million or 7%.

Speaker #2: Adjusted EPS was $0.13 in the quarter, a 7% decrease year-over-year, driven by an anticipated higher tax rate, primarily due to the timing of one-time benefits.

Speaker #2: On slide 15, we provide the full year income statement highlights. We generated $4.715 billion in reported revenue, representing 6% growth. Revenue breakdowns by key affiliates and products are available on slides 29 and 30.

Robert VanHimbergen: On Slide 15, we provide the full-year income statement highlights. We generated $4.715 billion in reported revenue, representing 6% growth. Revenue breakdowns by key affiliates and products are available on Slides 29 and 30. Continuing down the P&L, full-year adjusted gross margin of 54.9% was flat compared to 2024. The favorable impacts from price, increased sales volumes, and mixed benefits were offset by inflationary pressures and higher manufacturing costs. These factors, combined with an increased investment in our strategic growth initiatives, resulted in Adjusted EBITDA of $901 million for the full year, as shown on Slide 16. Full-year Adjusted EPS came in at $0.94, compared to $0.91 in 2024.

Bob VanHimbergen: On Slide 15, we provide the full-year income statement highlights. We generated $4.715 billion in reported revenue, representing 6% growth. Revenue breakdowns by key affiliates and products are available on Slides 29 and 30. Continuing down the P&L, full-year adjusted gross margin of 54.9% was flat compared to 2024.

Speaker #2: Continuing down the P&L, full year adjusted gross margin of 54.9% was flat compared to 2024. The favorable impacts from price, increased sales volumes, and mixed benefits were offset by inflationary pressures and higher manufacturing costs.

Bob VanHimbergen: The favorable impacts from price, increased sales volumes, and mixed benefits were offset by inflationary pressures and higher manufacturing costs. These factors, combined with an increased investment in our strategic growth initiatives, resulted in Adjusted EBITDA of $901 million for the full year, as shown on Slide 16. Full-year Adjusted EPS came in at $0.94, compared to $0.91 in 2024.

Speaker #2: These factors, combined with an increased investment in our strategic growth initiatives, resulted in adjusted EBITDA of $901 million for the full year. As shown on slide 16.

Speaker #2: Full year adjusted EPS came in at $0.94, compared to $0.91 in 2024. The effect of tax rate for 2025 was 21.8%. Our year-over-year increase of $370 basis points primarily due to the recognition of non-recurring tax credits in 2024.

Robert VanHimbergen: The effective tax rate for 2025 was 21.8%, a year-over-year increase of 370 basis points, primarily due to the recognition of non-recurring tax credits in 2024. On Slide 17, we provide an update on our balance sheet. Cash generated from operations was $108 million in the quarter, compared to $177 million in the prior year. The year-over-year reduction reflects expected cash tax payments related to the 2024 Aqua divestiture, partially offset by continued momentum and working capital improvement. We ended the quarter with net debt of approximately $3.2 billion and a net leverage ratio of 3.6x. Looking ahead, we remain disciplined in our capital allocation strategy, prioritizing debt paydown alongside making high-value strategic investments like AHV. The acquisition is not factored into our guidance.

Bob VanHimbergen: The effective tax rate for 2025 was 21.8%, a year-over-year increase of 370 basis points, primarily due to the recognition of non-recurring tax credits in 2024. On Slide 17, we provide an update on our balance sheet. Cash generated from operations was $108 million in the quarter, compared to $177 million in the prior year. The year-over-year reduction reflects expected cash tax payments related to the 2024 Aqua divestiture, partially offset by continued momentum and working capital improvement.

Speaker #2: On slide 17, we provide an update on our balance sheet. Cash generated from operations was $108 million in the quarter, compared to $177 million in the prior year.

Speaker #2: The year-over-year reduction reflects expected cash tax payments related to the 2024 Aqua divestiture, partially offset by continual momentum in working capital improvement. We entered the quarter with net debt of approximately $3.2 billion, and a net leverage ratio of 3.6 times.

Bob VanHimbergen: We ended the quarter with net debt of approximately $3.2 billion and a net leverage ratio of 3.6x. Looking ahead, we remain disciplined in our capital allocation strategy, prioritizing debt paydown alongside making high-value strategic investments like AHV. The acquisition is not factored into our guidance.

Speaker #2: Looking ahead, we remain disciplined in our capital allocation strategy, prioritizing debt paydown alongside making high-value strategic investments like AHV. The acquisition is not factored into our guidance.

Speaker #2: Given its size and additive, bolt-on nature, and expected second-quarter close, we anticipate AHV to provide a modest contribution to revenue and adjusted EBITDA in 2026.

Robert VanHimbergen: Given its size and additive bolt-on nature and expected Q2 close, we anticipate AHV to provide a modest contribution to revenue and Adjusted EBITDA in 2026, with greater benefit in 2027. It will not impact our deleveraging timeline. We expect to reduce leverage to 3.1 to 3.3x in 2026, regardless of AHV. A long-term target range of 2 to 2.5x, with a path to sub 3x leverage in 2027, as previously stated in our December Investor Day. Now let's move to our guidance starting on Slide 19. Our 2026 full-year outlook is consistent with the framework provided at Investor Day. We expect organic constant currency growth of 4% to 6%, which translates to revenue between $4.95 and $5.02 billion.

Bob VanHimbergen: Given its size and additive bolt-on nature and expected Q2 close, we anticipate AHV to provide a modest contribution to revenue and Adjusted EBITDA in 2026, with greater benefit in 2027. It will not impact our deleveraging timeline. We expect to reduce leverage to 3.1 to 3.3x in 2026, regardless of AHV. A long-term target range of 2 to 2.5x, with a path to sub 3x leverage in 2027, as previously stated in our December Investor Day.

Speaker #2: With greater benefit in 2027, and it will not impact our deleveraging timeline. We expect to reduce leverage to 3.1 to 3.3 times in 2026, regardless of AHV, and a long-term target range of 2 to 2.5 times, with a path to sub-3 times leverage in 2027, as previously stated in our December investor day.

Speaker #2: Now let's move to our guidance starting on slide 19. Our 2026 full year outlook is consistent with the framework provided at investor day. We expect organic constant currency growth of 4 to 6 percent, which translates to revenue between $4.95 and $5.02 billion.

Bob VanHimbergen: Now let's move to our guidance starting on Slide 19. Our 2026 full-year outlook is consistent with the framework provided at Investor Day. We expect organic constant currency growth of 4% to 6%, which translates to revenue between $4.95 and $5.02 billion.

Speaker #2: This guidance incorporates an accelerating 2025, reflecting the enhanced value that our latest innovation and our comprehensive portfolio bring to our customers. For adjusted EBITDA, we are forecasting $955 to $985 million.

Robert VanHimbergen: This guidance incorporates an accelerating contribution from price versus 2025, reflecting the enhanced value that our latest innovation and our comprehensive portfolio bring to our customers. For Adjusted EBITDA, we are forecasting $955 to $985 million, which represents 8% growth at the midpoint. We expect Elanco Ascend to enable Adjusted EBITDA margin expansion, while at the same time, we will continue our strategic investment in the global launches of our innovation portfolio and advancement of our R&D pipeline. Gross margin is expected to be up approximately 40 basis points and OpEx up 7%. Finally, Adjusted EPS is expected at $1.00 to $1.06, or up 10% at the midpoint. Slide 31 in the appendix provides a number of additional assumptions to help support your modeling efforts.

Bob VanHimbergen: This guidance incorporates an accelerating contribution from price versus 2025, reflecting the enhanced value that our latest innovation and our comprehensive portfolio bring to our customers. For Adjusted EBITDA, we are forecasting $955 to $985 million, which represents 8% growth at the midpoint.

Speaker #2: Which represents 8% growth at the midpoint. We expect to link to Ascend to enable adjusted EBITDA margin expansion. We'll at the same time, we will continue our strategic investment in the global launches of our innovation portfolio and advancement of our R&D pipeline.

Bob VanHimbergen: We expect Elanco Ascend to enable Adjusted EBITDA margin expansion, while at the same time, we will continue our strategic investment in the global launches of our innovation portfolio and advancement of our R&D pipeline. Gross margin is expected to be up approximately 40 basis points and OpEx up 7%. Finally, Adjusted EPS is expected at $1.00 to $1.06, or up 10% at the midpoint. Slide 31 in the appendix provides a number of additional assumptions to help support your modeling efforts.

Speaker #2: Gross margin is expected to be up approximately 40 basis points, and OPEX up 7%. Finally, adjusted EPS is expected at $1 to $1.06, or up 10% at the midpoint.

Speaker #2: Slide 31 in the appendix provides a number of additional assumptions to help support your modeling efforts. Our first-quarter guidance, presented on slide 20, includes organic constant currency revenue growth of 4 to 6 percent, led by our farm animal business, and good growth anticipated in pet health.

Robert VanHimbergen: Our Q1 guidance, presented on slide 20, includes organic constant currency revenue growth of 4% to 6%, led by our farm animal business and good growth anticipated in pet health, which translates to $1.28 billion to $1.305 billion in revenue. Adjusted gross margin is expected to decline year-over-year, with the timing of inflation and the flow-through of higher inventory costs, particularly in the first half of the year. We are continuing to invest in our launches, with OpEx up 7% or 4% in constant currency. Adding it all up, we anticipate adjusted EBITDA of $290 million to $310 million, representing 9% growth at the midpoint and adjusted EPS of $0.33 to $0.36. Turning to slide 21, we summarize the 2026 headwinds and tailwinds integrated into our guidance.

Bob VanHimbergen: Our Q1 guidance, presented on slide 20, includes organic constant currency revenue growth of 4% to 6%, led by our farm animal business and good growth anticipated in pet health, which translates to $1.28 billion to $1.305 billion in revenue. Adjusted gross margin is expected to decline year-over-year, with the timing of inflation and the flow-through of higher inventory costs, particularly in the first half of the year.

Speaker #2: Which translates to $1.28 billion to $1.305 billion in revenue. Adjusted gross margin is expected to decline year-over-year, with the timing of inflation and the flow-through of higher inventory costs.

Speaker #2: Particularly in the first half of the year. We are continuing to invest in our launches, with OPEX up 7%, or 4% in constant currency.

Bob VanHimbergen: We are continuing to invest in our launches, with OpEx up 7% or 4% in constant currency. Adding it all up, we anticipate adjusted EBITDA of $290 million to $310 million, representing 9% growth at the midpoint and adjusted EPS of $0.33 to $0.36. Turning to slide 21, we summarize the 2026 headwinds and tailwinds integrated into our guidance.

Speaker #2: Adding it all up, we anticipate adjusted EBITDA of $290 million to $310 million, representing 9% growth at the midpoint, and adjusted EPS of $33 to $36.

Speaker #2: Turning to slide 21, we summarize that 2026 headwinds and tailwinds integrated into our guidance. Our outlook anticipates sustainable, competitive revenue growth as our innovation portfolio scales globally, on top of a stabilizing base.

Robert VanHimbergen: Our outlook anticipates sustainable, competitive revenue growth as our innovation portfolio scales globally on top of a stabilizing base. This innovation, combined with strategic pricing, helps to insulate us from broader macro pressures. In pet health, we expect to gain incremental share by leveraging our comprehensive portfolio and OTC retail leadership. We are now shipping product to three major new retailers. We also acknowledge that these tailwinds are balanced against competitive pressures, including generics within the market. On the farm animal side, despite tough US comparisons, we see a clear runway for growth driven by new cattle products, favorable producer economics, and accelerating animal protein consumption. We expect to further strengthen our leadership position in both ruminants and poultry. On the margin front, Elanco Ascend is our company-wide productivity program, focused on general and administrative cost savings, as well as manufacturing efficiencies.

Bob VanHimbergen: Our outlook anticipates sustainable, competitive revenue growth as our innovation portfolio scales globally on top of a stabilizing base. This innovation, combined with strategic pricing, helps to insulate us from broader macro pressures. In pet health, we expect to gain incremental share by leveraging our comprehensive portfolio and OTC retail leadership. We are now shipping product to three major new retailers.

Speaker #2: This innovation, combined with strategic pricing, helps to insulate us from broader macro pressures. In pet health, we expect to gain incremental share by leveraging our comprehensive portfolio and OTC retail leadership.

Speaker #2: We are now shipping product to three major new retailers. We also acknowledge that these tailwinds are balanced against competitive pressures, including generics within the market.

Bob VanHimbergen: We also acknowledge that these tailwinds are balanced against competitive pressures, including generics within the market. On the farm animal side, despite tough US comparisons, we see a clear runway for growth driven by new cattle products, favorable producer economics, and accelerating animal protein consumption.

Speaker #2: On the farm animal side, despite tough U.S. comparisons, we see a clear runway for growth driven by new cattle products, favorable producer economics, and accelerating animal protein consumption.

Speaker #2: We expect to further strengthen our leadership position in both ruminants and poultry. On the margin front, Elanco Ascend is our company-wide productivity program, focused on general and administrative cost savings, as well as manufacturing efficiencies.

Bob VanHimbergen: We expect to further strengthen our leadership position in both ruminants and poultry. On the margin front, Elanco Ascend is our company-wide productivity program, focused on general and administrative cost savings, as well as manufacturing efficiencies.

Speaker #2: I am pleased with the progress we have achieved so far in 2026. The recently communicated restructuring is on track to generate $25 million in savings this year.

Robert VanHimbergen: I am pleased with the progress we have achieved so far in 2026. The recently communicated restructuring is on track to generate $25 million in savings this year. These savings are expected to directly contribute to our profitability, reflecting our commitment to operational efficiency and prudent cost management. Additionally, our teams are actively advancing key AI, operational, and procurement initiatives, which are expected to result in both PNL and cash flow benefits. Now, I'll hand it back to Jeff for closing comments.

Bob VanHimbergen: I am pleased with the progress we have achieved so far in 2026. The recently communicated restructuring is on track to generate $25 million in savings this year. These savings are expected to directly contribute to our profitability, reflecting our commitment to operational efficiency and prudent cost management.

Speaker #2: These savings are expected to directly contribute to our profitability, reflecting our commitment to operational efficiency and prudent cost management. Additionally, our teams are actively advancing key AI, operational, and procurement initiatives, which are expected to result in both P&L and cash flow benefits.

Bob VanHimbergen: Additionally, our teams are actively advancing key AI, operational, and procurement initiatives, which are expected to result in both PNL and cash flow benefits. Now, I'll hand it back to Jeff for closing comments.

Speaker #2: Now I'll hand it back to Jeff for closing comments.

Speaker #1: Thanks, Bob. Before we move to Q&A, I want to reiterate my deep confidence in Elanco's trajectory. We are not just a company delivering results with significant momentum, but also a dedicated team.

Jeff Simmons: Thanks, Bob. Before we move to Q&A, I want to reiterate my deep confidence in Elanco's trajectory. We are not just a company delivering results with significant momentum, but we're also a dedicated team, building a durable, long-term foundation for the future of animal health. On slide 22, you will see that this is more than a story about Elanco's compelling growth proposition. It's about the accelerating opportunity across the broader animal health industry and our ability to lead it. It's about having the best of pharma with science-based innovation, disciplined regulation, and high barriers to entry. This, combined with strong customer relationships built on trusted brands and a cash market that responds to growing value propositions from winning portfolios. It's about generational shifts in both pet health and farm animal, where pets and protein are increasingly central to culture, care, and global demand.

Speaker #1: Building a durable, long-term foundation for the future of animal health. On slide 22, you will see that this is more than a story about Elanco's compelling growth proposition.

Speaker #1: It's about the accelerating opportunity across the broader animal health industry, and our ability to lead it. It's about having the best of pharma, with science-based innovation, discipline regulation, and high barriers to entry.

Jeff Simmons: It's about having the best of pharma with science-based innovation, disciplined regulation, and high barriers to entry. This, combined with strong customer relationships built on trusted brands and a cash market that responds to growing value propositions from winning portfolios. It's about generational shifts in both pet health and farm animal, where pets and protein are increasingly central to culture, care, and global demand.

Speaker #1: This, combined with strong customer relationships built on trusted brands and a cash market that responds to growing value propositions from winning portfolios. It's about generational shifts in both pet health and farm animal, where pets and protein are increasingly central to culture, care, and global demand.

Speaker #1: And together, it's about the animal health industry at an inflection point, projected to add $20 billion in value as we enter the next decade.

Jeff Simmons: Together, it's about the animal health industry at an inflection point, projected to add $20 billion in value as we enter the next decade, with Elanco uniquely positioned to convert momentum across both pet and farm into sustainable, consistent growth. Simply, we will grow from both expanded market share and a growing industry. Let's take a closer look. In pet health on slide 23, we're seeing a fundamental shift in pet care as owners take a more active role, choosing not only what products to use, but how and where they access care. While vet visit volumes remain a metric to track, the more powerful shift is in the global consumer behavior, where access, convenience, and willingness to spend are becoming more material and more meaningful. Today, subscription sales account for 40% of pet care dollars, with omni-channel consumers spending 30% more annually than single-channel shoppers.

Speaker #1: With Elanco uniquely positioned to convert momentum across both pet and farm into sustainable, consistent growth, simply, we will grow from both expanded market share and a growing industry.

Speaker #1: Let's take a closer look. In pet health on slide 23, we're seeing a fundamental shift in pet care, as owners take a more active role.

Jeff Simmons: Let's take a closer look. In pet health on slide 23, we're seeing a fundamental shift in pet care as owners take a more active role, choosing not only what products to use, but how and where they access care. While vet visit volumes remain a metric to track, the more powerful shift is in the global consumer behavior, where access, convenience, and willingness to spend are becoming more material and more meaningful.

Speaker #1: Choosing not only what products to use, but how and where they access care. While vet visit volumes remain a metric to track, the more powerful shift is in the global consumer behavior, where access, convenience, and willingness to spend are becoming more material and more meaningful.

Speaker #1: Today, subscription sales account for 40% of pet care dollars, with omnichannel consumers spending 30% more annually than single-channel shoppers. The pet owner's behavior is changing.

Jeff Simmons: Today, subscription sales account for 40% of pet care dollars, with omni-channel consumers spending 30% more annually than single-channel shoppers. The pet owner's behavior is changing. Our strategy is built around meeting the modern pet owners where, when, and how they choose to engage. This unique omni-channel approach is core to our pet health strategy and is driving our industry-leading growth.

Jeff Simmons: The pet owner's behavior is changing. Our strategy is built around meeting the modern pet owners where, when, and how they choose to engage. This unique omni-channel approach is core to our pet health strategy and is driving our industry-leading growth. Over on the farm animal side, on slide 24, we're capitalizing on the accelerating global animal protein consumption, which is projected now to grow at 5% annually in the US alone. There are several key factors driving the real food movement, fueled by consumer focus on health and wellness. First, 70% of US consumers are actively increasing protein intake. Second, updated dietary guidelines now recommend nearly doubling current average protein use. By 2035, 21% of Americans are projected to use GLP-1 therapies, who will consume 40% to 50% more protein, and this trend is now globalizing.

Speaker #1: Our strategy is built around meeting the modern pet owner's where, when, and how they choose to engage. This unique omnichannel approach is core to our pet health strategy and is driving our industry-leading growth.

Speaker #1: Over on the farm animal side, on slide 24, we're capitalizing on the accelerating global animal protein consumption, which is projected now to grow at 5% annually in the US alone.

Jeff Simmons: Over on the farm animal side, on slide 24, we're capitalizing on the accelerating global animal protein consumption, which is projected now to grow at 5% annually in the US alone. There are several key factors driving the real food movement, fueled by consumer focus on health and wellness.

Speaker #1: There are several key factors driving the real food movement, fueled by consumer focus on health and wellness. First, 70% of US consumers are actively increasing protein intake.

Jeff Simmons: First, 70% of US consumers are actively increasing protein intake. Second, updated dietary guidelines now recommend nearly doubling current average protein use. By 2035, 21% of Americans are projected to use GLP-1 therapies, who will consume 40% to 50% more protein, and this trend is now globalizing.

Speaker #1: Second, updated dietary guidelines now recommend nearly doubling current average protein use. Also, by 2035, 21% of Americans are projected to use GLP-1 therapies, who will consume 40 to 50% more protein, and this trend is now globalizing.

Speaker #1: Increasing protein intake is a key also for muscle retention, with an aging population the number of people over 60s expected to expand by more than 25% globally by 2030.

Jeff Simmons: Increasing protein intake is a key also for muscle retention with an aging population. The number of people over 60 is expected to expand by more than 25% globally by 2030. Finally, taste still drives two-thirds of protein choices, making animal protein the most accessible, cost-effective preference. Strong demand for high-quality protein presents significant opportunities for Elanco and our customers, both in the near and long term. To close, on slide 25, our strategic focus on growth, innovation, and cash is clearly paying off, demonstrated by our strong performance in 2025 and the robust outlook for 2026 and beyond. Elanco is a different company today. More agile, more innovative, more capable than ever before.

Speaker #1: And finally, taste still drives two-thirds of protein choices, making animal protein the most accessible, cost-effective preference. Strong demand for high-quality protein presents significant opportunities for Elanco and our customers, both in the near and long term.

Speaker #1: To close, on slide 25, our strategic focus on growth, innovation, and cash is clearly paying off. Demonstrated by our strong performance in 2025 and the robust outlook for 2026 and beyond.

Jeff Simmons: To close, on slide 25, our strategic focus on growth, innovation, and cash is clearly paying off, demonstrated by our strong performance in 2025 and the robust outlook for 2026 and beyond. Elanco is a different company today. More agile, more innovative, more capable than ever before.

Speaker #1: Elanco is a different company today. More agile, more innovative, more capable than ever before. We are building on our 70-year legacy of delivering for our customers and we come into 2026 entering our new era of growth, well-positioned to continue transforming animal care, and to create long-term value for our shareholders.

Jeff Simmons: We are building on our 70-year legacy of delivering for our customers, and we come into 2026 entering our new era of growth, well-positioned to continue transforming animal care and to create long-term value for our shareholders. Thank you. With that, I'm gonna turn it over to Tiffany to moderate the Q&A.

Speaker #1: Thank you. With that, I'm going to turn it over to Tiffany to moderate the Q&A.

Speaker #2: Thanks, Jeff. We'd like to take questions from as many callers as possible. So we ask that you limit yourself to one question and one follow-up.

Tiffany Cannis: Thanks, Jeff. We'd like to take questions from as many callers as possible. We ask that you limit yourself to one question and one follow-up. Operator, please provide the instructions for the Q&A session. We'll take the first caller.

Tiffany Kanaga: Thanks, Jeff. We'd like to take questions from as many callers as possible. We ask that you limit yourself to one question and one follow-up. Operator, please provide the instructions for the Q&A session. We'll take the first caller.

Speaker #2: Operator, please provide the instructions for the Q&A session, and then we'll take the first caller.

Speaker #3: Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star one in your telephone keypad.

Operator: Thank you. We'll now begin the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Your first question today comes from the line of Jonathan Block from Stifel. Your line is open.

Speaker #3: If you would like to withdraw your question, simply press star one again. Your first question today comes from the line of John Block from Stifel.

Speaker #3: Your line is open.

Speaker #4: Great. Thanks, guys. Good morning. Is it really an international share gains really stood out to me, and implies switching to Zenrelia from the incumbent because you just really can't get that level of share that quickly in this market dynamic without switchers.

Jonathan Block: Great. Thanks, guys. Good morning. The Zenrelia international share gains really stood out to me and, you know, implies switching to Zenrelia from the incumbent, because you just really can't get that level of share that quickly in this market dynamic without switchers. Maybe, Jeff, just to kick things off, can you elaborate on, you know, the ramping international Zenrelia share gains and then what that may mean for the US if the label is altered positively down the road? I'll ask my follow-up. Thanks.

Jon Block: Great. Thanks, guys. Good morning. The Zenrelia international share gains really stood out to me and, you know, implies switching to Zenrelia from the incumbent, because you just really can't get that level of share that quickly in this market dynamic without switchers. Maybe, Jeff, just to kick things off, can you elaborate on, you know, the ramping international Zenrelia share gains and then what that may mean for the US if the label is altered positively down the road? I'll ask my follow-up. Thanks.

Speaker #4: So maybe, Jeff, just to kick things off, can you elaborate on the ramping international Zenrelia share gains, and then what that may mean for the U.S. if the label is altered positively down the road?

Speaker #4: And then I'll ask my follow-up. Thanks.

Speaker #3: Yeah. Thank you, John. Thanks for opening with maybe one of the most exciting things in the quarter. Zenrelia is all about efficacy, as I said in my comments.

Jeff Simmons: Yeah. Thank you, John. Thanks for opening with maybe one of the most exciting things in the quarter. Zenrelia is all about efficacy. As I said in my comments every quarter, John, Zenrelia's efficacy is more and more recognized, and that is happening in the international market. I was in Japan three weeks ago. It's the buzz in the marketplace. They've exceeded 30% share there, acting very much like a differentiated best medicine product. Brazil's, you know, very, you know, mature market compared to what people think, and we're 40% share. Yes, I would tell you that efficacy, and in derm, it is all about stopping the dog's itch, and we're seeing that really resonate.

Speaker #3: Every quarter, John, Zenrelia's efficacy is more and more recognized and that is happening in the international market. So that was in Japan three weeks ago.

Speaker #3: It's the buzz in the marketplace. We've exceeded 30% share there, acting very much like a differentiated best medicine product. Brazil's very mature market compared to what people think, and we're 40% share.

Jeff Simmons: They've exceeded 30% share there, acting very much like a differentiated best medicine product. Brazil's, you know, very, you know, mature market compared to what people think, and we're 40% share. Yes, I would tell you that efficacy, and in derm, it is all about stopping the dog's itch, and we're seeing that really resonate.

Speaker #3: So yes, I would tell you that efficacy and Indurm, it is all about stopping the dog's itch, and we're seeing that really resonate. In Europe, interestingly, even with the new competitive entrant, we continue to climb and be the leading market share gainer in Europe, as I noted in some of the major markets. And again, it's coming back to clean labels, high efficacy profile, and we do see this product with greater expectations.

Jeff Simmons: In Europe, interestingly, even with the new competitive entrant, we continue to climb and be the leading market share gainer in Europe, as I noted in some of the major markets. Again, it's coming back to, you know, clean labels, high efficacy profile, and we do see this product with, you know, greater expectations, and it's far exceeded our expectations in international. More to come. As I step back, I think to your linkage to the label, I think it's really important to understand that, hey, we now have 1 million dogs on. We've got 2,500 new clinics in the US.

Speaker #3: And it's far exceeded our expectations in international. So more to come. And as I step back, I think to your linkage to the label, I think it's really important to understand that, hey, we now have a million dogs on.

Speaker #3: We've got we picked up 2,500 new clinics in the US, so we're nearly 50% in the US. A year and a half of usage, 40 countries with clean labels with good pharmacovigilance data, and we're the only company out there using head-to-head efficacy studies, which I think also is significant.

Jeff Simmons: We're nearly 50% in the US, a year and a half of usage, 40 countries with clean labels, with good pharmacovigilance data, and we're the only company out there using head-to-head efficacy studies, which I think also is significant. We are optimistic, and we could talk more about the label. We're optimistic that with our submission into the FDA, that we look forward to hearing a good response from the FDA soon.

Speaker #3: So we are optimistic, and we could talk more about the label. We're optimistic that with our submission into the FDA, that we look forward to hearing a good response from the FDA soon.

Speaker #5: Yeah. And John, maybe that is just—maybe to add on, our guidance assumes the label as is right now.

Jonathan Block: Yeah, John, maybe I was just maybe add on, our guidance assumes the label as is right now.

Bob VanHimbergen: Yeah, John, maybe I was just maybe add on, our guidance assumes the label as is right now.

Speaker #3: Yeah. Yeah.

Jeff Simmons: Yeah. Yeah.

Speaker #4: Okay. That's helpful, Bob. Thanks for that clarification. And maybe I'll zoom out for the second question. Jeff, you're the first industry leader to maybe be teed up for an earnings call post some of the news on the distributor side.

Jonathan Block: Okay. That's helpful, Bob. Thanks for that clarification. You know, maybe I'll zoom out for the second question. You know, Jeff, you're the first industry leader to maybe be teed up for an earnings call, post some of the news on the distributor side. You know, would love your thoughts on the Covetrus and MWI merger and what that may mean for manufacturers. You know, more specifically, Elanco, as I believe you guys have a solid, broad relationship with Covetrus, but it's certainly, you know, a lot of share going into the hands of one. You know, any thoughts would be great.

Jon Block: Okay. That's helpful, Bob. Thanks for that clarification. You know, maybe I'll zoom out for the second question. You know, Jeff, you're the first industry leader to maybe be teed up for an earnings call, post some of the news on the distributor side. You know, would love your thoughts on the Covetrus and MWI merger and what that may mean for manufacturers.

Speaker #4: So we'd love your thoughts on the Covetris and MWI merger and what that may mean for manufacturers. And more specifically, Elanco, as I believe you guys have a solid broad relationship with Covetris, but it's certainly a lot of share going into the hands of one.

Jon Block: You know, more specifically, Elanco, as I believe you guys have a solid, broad relationship with Covetrus, but it's certainly, you know, a lot of share going into the hands of one. You know, any thoughts would be great.

Speaker #4: So any thoughts would be great.

Speaker #3: Yeah. Thanks for the question. I have to start with the 25 momentum in 26 early fast start. We've got a great relationship with distributors.

Jeff Simmons: Yeah, thanks for the question. You know, I have to start with, you know, the 25 momentum and 26 early fast start. We've got a great relationship with distributors. We're adding them a lot of value, and they're adding us a lot of value right now, the, you know, the major distributors. You know they're very good at launching new products. We're the only one... Today, we have competitive advantage, I believe strongly, and you probably picked this up at VMX last week. You know, there's a lot of momentum in those distributors with the Credelio Quattro, the Zenrelia. We're the only company that really has our total comprehensive portfolio with them in a buy-sell agreement, where others have actually retracted. We're focused right now on the current state.

Speaker #3: We're adding them a lot of value, and they're adding us a lot of value right now. The major distributors, you know, they're very good at launching new products.

Speaker #3: And we're the only one today we have competitive advantage, I believe, strongly, and you probably picked this up at VMX, Western last week. There's a lot of momentum in those distributors.

Jeff Simmons: You know, there's a lot of momentum in those distributors with the Credelio Quattro, the Zenrelia. We're the only company that really has our total comprehensive portfolio with them in a buy-sell agreement, where others have actually retracted. We're focused right now on the current state.

Speaker #3: With the Cordelia Quattro, the Zenrelia, we're the only company that really has our total comprehensive portfolio with them in a buy-sell agreement, where others have actually retracted.

Speaker #3: So we're focused right now on the current state. Of course, as the structure evolves, we'll continue to focus on value and the value they can provide.

Jeff Simmons: Of course, as the structure evolves, we'll continue to focus on value and the value they can provide, and that's the lens that we're gonna look through. Bobby and team, I think, have done an amazing job. You step back and look at US pet health, we gained share in every category this year, from derm to para, to pain, and also vaccines. I attribute some of that to the distributors.

Speaker #3: And that's the lens that we're going to look through. But Bobby and team, I think, have done an amazing job. And you step back and look at U.S. Pet Health.

Speaker #3: We gained share in every category this year, from derm to para, to pain, and also vaccines. And I attribute to contribute some of that to the distributors.

Speaker #4: Thanks, guys. Appreciate the time.

Jonathan Block: Thanks, guys. Appreciate the time.

Jon Block: Thanks, guys. Appreciate the time.

Speaker #3: Thank you, John.

Jeff Simmons: Thank you, John.

Speaker #1: Your next question comes from a line of Michael Riskin from Bank of America. Your line is open.

Operator: Your next question comes from the line of Michael Ryskin from Bank of America. Your line is open.

Speaker #5: Great. Thanks for taking the question, guys. I saw on the results. I want to ask first on price. You guys called out accelerating price a number of times, looking forward to 2026.

Michael Ryskin: Great. Thanks for taking the question, guys, and congrats on the results. I wanna ask first on price. You guys called out accelerating price a number of times looking forward to 2026. I was wondering if you could quantify that a little bit more specifically. Just more broadly, you know, in 2025, you had, I think you had, we'd call it introductory pricing or sort of initial go-to-market pricing for some of your products. For 2026, is this just a matter of that being lifted and going more to a normal price? Are you taking price more aggressively? Maybe just comment on how much of that is coming from the Big 6 or the new products versus the rest of the portfolio? I've got a follow-up. Thanks.

Speaker #5: I was wondering if you could quantify that a little bit more specifically. And just more broadly, in 2025, I think you had, we'd call it introductory pricing or sort of initial go-to-market pricing.

Speaker #5: For some of your products, for '26, is this just a matter of that being lifted and going more to a normal price? Are you taking price more aggressively?

Michael Ryskin: For 2026, is this just a matter of that being lifted and going more to a normal price? Are you taking price more aggressively? Maybe just comment on how much of that is coming from the Big 6 or the new products versus the rest of the portfolio? I've got a follow-up. Thanks.

Speaker #5: Maybe you can just comment on how much of that is coming from the big six or the new products versus the rest of the portfolio?

Speaker #5: And I've got a follow-up. Thanks. Hey, sure, Michael. Good morning. Thanks for the question. So, a couple of points. One, I'll point you to Investor Day, right, where we did highlight we expect mid-single-digit growth, which does include price.

Robert VanHimbergen: Hey, sure, Michael. Good morning. Thanks for the question. Hey, a couple points. One, you know, I'll point you to Investor Day, right? Where we did highlight, we expect mid-single-digit growth, which does include price. As we think about 2026, we do expect price to accelerate from where we were in 2025. 2025, as a reminder, was at that 2%, and really, that's reflecting the enhanced value that we're bringing with innovation and our comprehensive portfolio that we're bringing to customers. Jeff highlighted in his prepared remarks that, you know, in our US pet health business here in the US, we took the highest price increase to vets in the last five years. All right? We'll continue to price based on the value we're bringing to customers.

Bob VanHimbergen: Hey, sure, Michael. Good morning. Thanks for the question. Hey, a couple points. One, you know, I'll point you to Investor Day, right? Where we did highlight, we expect mid-single-digit growth, which does include price. As we think about 2026, we do expect price to accelerate from where we were in 2025. 2025, as a reminder, was at that 2%, and really, that's reflecting the enhanced value that we're bringing with innovation and our comprehensive portfolio that we're bringing to customers.

Speaker #5: As we think about 2026, we do expect price to accelerate from where we were in 2025, 2025 as a reminder was at that 2%.

Speaker #5: And really, that's reflecting the enhanced value that we're bringing with innovation and our comprehensive portfolio that we're bringing to customers. Jeff highlighted in his prepared remarks that in our U.S. Pet Health business here in the U.S., we took the highest price increase to vets in the last five years.

Bob VanHimbergen: Jeff highlighted in his prepared remarks that, you know, in our US pet health business here in the US, we took the highest price increase to vets in the last five years. All right? We'll continue to price based on the value we're bringing to customers.

Speaker #5: All right? So we'll continue to price based on the value we're bringing to customers. I mean, the last thing I would highlight is you think about pricing in 2025, we had a lot of launches and those launches were not a contributor to price.

Robert VanHimbergen: I mean, the last thing I would highlight is, you think about pricing in 2025, we had a lot of launches, and those launches were not a contributor to price. We'll start lapping those in 2026. The Zenrelia and Quattro will have a pricing component in it, in the, in this 2026 year compared to 2025. I would walk away with the expecting price to accelerate from where we were in the last 12 months.

Bob VanHimbergen: I mean, the last thing I would highlight is, you think about pricing in 2025, we had a lot of launches, and those launches were not a contributor to price. We'll start lapping those in 2026. The Zenrelia and Quattro will have a pricing component in it, in the, in this 2026 year compared to 2025. I would walk away with the expecting price to accelerate from where we were in the last 12 months.

Speaker #5: We'll start lapping those in 2026. And so the Zenrelios and Quattros will have a pricing component in it in this 2026 year compared to 2025.

Speaker #5: So I would walk away with the expecting price to accelerate from where we were in the last 12 months. Okay. Thanks. And you had some really interesting comments when you were talking about Quattro in terms of not just the strong result you've seen with that product itself, but sort of the uplift to the rest of the portfolio, the ability to use that to gain share for other products as you bring a more complete portfolio.

Michael Ryskin: Okay, thanks. You had some really interesting comments when you were talking about Quattro in terms of not just the strong result you've seen with that product itself, but sort of the uplift for the rest of the portfolio, the ability to use that to gain share for other products as you bring a more complete portfolio to your customers. Just wondering how you think about that continuing in 2026 as Zenrelia ramps, as you got Befrena coming on, maybe kind of tying that back to John Block's earlier question on distributors. Is this enabling you to become a better competitor as you go in for the big contract renewals, either with distributors or individual vet clinics? Just talk about the broader uplift you're getting from those. Thanks.

Speaker #5: To your customers, just wondering how you think about that continuing in '26 as Zenreli ramps, as you got befriended coming on, maybe kind of tying that back to John Bloch's earlier question on distributors.

Michael Ryskin: Just wondering how you think about that continuing in 2026 as Zenrelia ramps, as you got Befrena coming on, maybe kind of tying that back to John Block's earlier question on distributors. Is this enabling you to become a better competitor as you go in for the big contract renewals, either with distributors or individual vet clinics? Just talk about the broader uplift you're getting from those. Thanks.

Speaker #5: Is it enabling you to become a better competitor as you go in for the big contract renewals either with distributors or individual vet clinics?

Speaker #5: And just talk about that broader uplift you're getting from those. Thanks.

Speaker #3: Yeah, thank you, Michael. Great question. Yeah, Quattro had a great quarter—definitely acting like the best medicine. We're the only major animal health company gaining US RxPara share, which I think is a real representation, and our share continues to climb as we not only come to the fourth quarter but even here in the beginning of the year.

Jeff Simmons: Yeah, thank you, Michael. Great question. Yeah, Quattro had a great quarter. Definitely acting like best medicine, only major animal health company, gaining US Rx pair share, which I think is a real representation, and our share continues to climb as we not only come through the Q4, but even here in the beginning of the year, and we're still seeing more than 75% being new starts. You know, I would point to 2 things, specific number. If you think about we're near at a third of the clinic, so, you know, 10,000 plus clinics, you know, we got 2,600 that have actually, by purchasing Quattro, are now adding on additional products.

Speaker #3: And we're still seeing more than 75% being new starts. But I would point to a couple of things, specific number. We've got if you think about we're near a third of the clinics, so 10,000-plus clinics we got 2,600 that have actually by purchasing Quattro are now adding on additional products.

Jeff Simmons: You know, I would point to 2 things, specific number. If you think about we're near at a third of the clinic, so, you know, 10,000 plus clinics, you know, we got 2,600 that have actually, by purchasing Quattro, are now adding on additional products.

Speaker #3: So we're seeing that additive portfolio effect, I think, is definitely obvious. And we're seeing that vet confidence with the puppy index, as I mentioned, is it's climbing.

Jeff Simmons: We're seeing that additive portfolio effect, I think is definitely obvious, and we're seeing that vet confidence with the puppy index, as I mentioned, as it's climbing, it's the highest of all the major products, and it grew from Q3, and we're in the number one position on that puppy index. We see that. I would also point to corporates. As I mentioned, it's on the slide, but I didn't get into it in my commentary, that we actually saw corporates really move in on this portfolio effect. 90% of our corporates, which grew significantly in number, all of them grew. Only 13% grew in 2024, and the European team has done a masterful job. We've got all the corporates on the Zenrelia product as well.

Speaker #3: It's the highest of all the major products. And it grew from Q3, and we're in the number one position on that puppy index. So we see that.

Speaker #3: I would also point to corporates. As I mentioned, it's on the slide, but I didn't get into it in my commentary, that we actually saw corporates really move in on this portfolio effect.

Jeff Simmons: As I mentioned, it's on the slide, but I didn't get into it in my commentary, that we actually saw corporates really move in on this portfolio effect. 90% of our corporates, which grew significantly in number, all of them grew. Only 13% grew in 2024, and the European team has done a masterful job. We've got all the corporates on the Zenrelia product as well.

Speaker #3: So 90% of our corporates, which grew significantly in number, all of them grew. Only 13% grew in 2024. And the European team has done a masterful job.

Speaker #3: We've got all the corporates on the Zenrelia product as well. So we're seeing it with portfolio. We're seeing it with corporates. We're seeing the confidence from the corporates, even in the puppy index.

Jeff Simmons: We're seeing it with portfolio, we're seeing it with corporates, we're seeing the confidence from the corporates, even in the puppy index. Yes, we do expect this to be beneficial. When we come with two derm products right now, then we can say, not only do we have as equal of a portfolio, we've got best medicine. We got best medicine with Zenrelia, Quattro, and we believe Befrena has got, again, differentiation. I think you're on to a very important point.

Speaker #3: So yes, we do expect this to be beneficial. And then when we come with two derm products, right now, then we can say not only do we have as equal of a portfolio; we've got best medicine.

Speaker #3: We've got best medicine with Zenrelia, Quattro, and we believe Befrenna has got, again, differentiation. So I think you're on to a very important point.

Speaker #5: All right. Thanks. Appreciate that.

Michael Ryskin: All right. Thanks. Appreciate it.

Speaker #1: Your next question comes from a line of Aaron Wright from Morgan Stanley. Your line is open.

Robert VanHimbergen: Your next question comes from the line of Erin Wright from Morgan Stanley. Your line is open.

Operator: Your next question comes from the line of Erin Wright from Morgan Stanley. Your line is open.

Speaker #6: Hey, thanks. So can you speak to any stock EMD stocking dynamics in the quarter or as we head into some of the seasonal purchasing from some of the distributors that typically happens in the first quarter?

Erin Wright: Hey, thanks. Can you speak to any stocking, destocking dynamics in the quarter or as we head into some of the seasonal purchasing from some of the distributors that typically happens in Q1? You know, one of your competitors, a very significant player in parasiticides historically, is further de-emphasizing, I think you alluded to this earlier, further de-emphasizing distribution in 2026. I guess, how much does that help your positioning in parasiticides, especially just continuing the conversion to combination parasiticides? Thanks.

Speaker #6: And one of your competitors, a very significant player in parasiticides historically, is further de-emphasizing—I think you alluded to this earlier—further de-emphasizing distribution in 2026.

Speaker #6: I guess, how much does that help your positioning in parasiticides, especially just continuing the conversion to combination parasiticides? Thanks.

Speaker #3: Thanks, Aaron. Yeah. And I know you've been engaged in some of the major industry shows. I'll just take the second question first, and that is that we see our relationship as good as it's ever been.

Jeff Simmons: Thanks, Erin. I know you've been engaged in some of the major industry shows. I'll just take the second question first, that is that, you know, we see our relationship as good as it's ever been with distribution. They're adding a lot of value, all the way down to the field force. They're working very much in collaboration with, you know, the largest sales force we've ever had in US Pet Health ourselves. Our share of voice has never been stronger, Elanco, with our team and with distribution as well, the investment we're making in the media. Look, on stocking, it's real clear to us, no change. We've got distributors ordering multiple times per quarter.

Speaker #3: With distribution, they're adding a lot of value. And all the way down to the field force, they're working very much in collaboration with the largest sales force we've ever had in US Pet Health ourselves.

Speaker #3: So our share of voice has never been stronger on any LANCO with our team and with distribution as well. And then the investment we're making in the media.

Jeff Simmons: Our share of voice has never been stronger, Elanco, with our team and with distribution as well, the investment we're making in the media. Look, on stocking, it's real clear to us, no change. We've got distributors ordering multiple times per quarter.

Speaker #3: Look on stocking, it's real clear to us, no change. We've got distributors ordering multiple times per quarter. There's a strong dispensing, and you can see it.

Jeff Simmons: There's a strong dispensing, and you can see it, dispensing demand coming out of the clinics, multiple orders going in. We don't see stocking having really any effect at all as we head into this spring.

Speaker #3: Dispensing demand coming out of the clinics, multiple orders going in. We don't see stocking having really any effect at all as we head into this spring.

Speaker #6: And then can you give us an update specifically on the timeline for the label update for Zenrelia in the US? I think before maybe at VMX, you mentioned five, six months from now, we should hear an update on that front.

Erin Wright: Can you give us an update specifically on the timeline for the label update, for Zenrelia in the US? I think before, maybe at VMX, you mentioned five, six months from now, we should hear an update on that front. Is that still the case? Just where are you matching up? I think you also alluded to this earlier, but where are you matching up to the existing competitor versus the new entrant in Europe specifically? We don't have head-to-head data for new Melvy, but where are you seeing the vets actually use the different JAKs in Europe? Thanks.

Speaker #6: Is that still the case? And then just where are you matching up? And I think you also alluded to this earlier, but where are you matching up to the existing competitor versus the new entrant in Europe specifically?

Speaker #6: So we don't have head-to-head data for new Melvy, but where you see the vets actually use the different Thanks.

Speaker #3: Yeah. Thank you. Look, first of all, on the label, I just want to say we are in a constructive dialogue with the FDA. They've made one adjustment to the labels.

Jeff Simmons: Yeah, thank you. Look, first of all, on the label, I just want to say, you know, we're in a constructive dialogue with the FDA. They've made one adjustment to the labels. We mentioned we picked up 2,500 new users since then. I stepped back, Erin, as I just mentioned earlier, you've got 1 million dogs, a year and a half of use, 40 countries with clean labels, strong pharmacovigilance data. We've submitted the PCR data before to get the first label change. This was a request from the CVM and the FDA on the booster data and the package that we submitted in the fall.

Speaker #3: We mentioned we picked up 2,500 new users since then. I stepped back. Aaron, as I just mentioned earlier, you've got a million dogs, a year and a half of use, 40 countries with clean labels, strong pharmacovigilance data.

Jeff Simmons: We've submitted the PCR data before to get the first label change. This was a request from the CVM and the FDA on the booster data and the package that we submitted in the fall. We've not given a date, we are confident with everything that I just mentioned, that, you know, 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.

Speaker #3: We've submitted the PCR data before to get the first label change. And then this was a request from the CVM and the FDA on the booster data and the package that we submitted in the fall.

Speaker #3: We've not given a date, but we are confident with everything that I just mentioned. 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.

Jeff Simmons: We've not given a date, we are confident with everything that I just mentioned, that, you know, 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. Look, I think the story in Europe is, it actually probably has profiled Zenrelia's efficacy in a more differentiated way than any market that we've been in. You know, that not only the head-to-head study, but the head-to-head study is being seen by the KOLs in Europe in a, in a very significant way.

Jeff Simmons: Look, I think the story in Europe is, it actually probably has profiled Zenrelia's efficacy in a more differentiated way than any market that we've been in. You know, that not only the head-to-head study, but the head-to-head study is being seen by the KOLs in Europe in a, in a very significant way.

Speaker #3: Look, I think the story in Europe is it actually probably has profiled Zenrelia's efficacy in a more differentiated way than any market that we've been in.

Speaker #3: And that not only the head-to-head study, but the head-to-head study is being seen by the KOLs in Europe in a very significant way. We're off to a much faster start than the other market entrant.

Jeff Simmons: We're off to a much faster start than the other market entrant, double digit in the first, you know, months, is something that does not look like an analog of a second or third to market product. Where is it being used? I mean, it's being used in first line, in a lot of these big countries, like I mentioned, like France, Italy, and Spain. You know, off to a good start, and look, it's a small world too. There's a lot of, you know, buzz from the Canada, Japan, and Brazil markets as well. More to come. We're coming into derm season as we get into that spring and summer, and that sets up well for Zenrelia.

Speaker #3: And double-digit in the first months is something that does not look like an analog of a second- or third-to-market product. So where is it being used?

Speaker #3: I mean, it's being used in first line in a lot of these big countries, like I mentioned, like France and Italy and Spain. And off to a good start.

Jeff Simmons: You know, off to a good start, and look, it's a small world too. There's a lot of, you know, buzz from the Canada, Japan, and Brazil markets as well. More to come. We're coming into derm season as we get into that spring and summer, and that sets up well for Zenrelia.

Speaker #3: And look, it's a small world, too. There's a lot of buzz from the Canada, Japan, and Brazil markets as well. So more to come.

Speaker #3: We're coming into derm season. As we get into that spring and summer, and that sets up well for Zenrelia.

Speaker #1: Your next question comes from a line of brand investors from William Blair. Your line is open.

Operator: Your next question comes from the line of Brandon Vazquez from William Blair. Your line is open.

Speaker #5: Hey, everyone. Thanks for taking the question and congrats on a strong end of the year here. I wanted to start first on the guidance.

Brandon Vazquez: Hi, everyone. Thanks for taking the question, congrats on a strong end of the year here. I wanted to start first on the guidance. Maybe just push a little bit just to understand if there's conservatism baked in here, if there's something we're missing, 'cause if I think of a price of 2 points in 2025 and a volume of 5 points, that gets you 7% growth in 2025. We're talking about meaningfully more price coming through in 2026, and I don't think there's any reason that volume should meaningfully decelerate. That algorithm already puts you above your initial 2026 guidance, the high end of that range. Again, like, the question is, one, are we simply baking in some conservatism here?

Speaker #5: Maybe just push a little bit just to understand if there's conservatism baked in here or if there's something we're missing because if I think of a price of two points in '25 and a volume of five points that gets you 7% growth in '25, we're talking about meaningfully more price coming through in 2026.

Brandon Vazquez: We're talking about meaningfully more price coming through in 2026, and I don't think there's any reason that volume should meaningfully decelerate. That algorithm already puts you above your initial 2026 guidance, the high end of that range. Again, like, the question is, one, are we simply baking in some conservatism here? I wanna make sure that we're not missing any big moving pieces that would meaningfully change that algorithm in the 26 guide.

Speaker #5: And I don't think there's any reason that volume should meaningfully decelerate. So that algorithm already puts you above your initial 2026 guidance, the high end of that range.

Speaker #5: So again, the question is, one, am I are we simply baking in some conservatism here? I want to make sure that we're not missing any big moving pieces that would meaningfully change that algorithm in '26 guide.

Brandon Vazquez: I wanna make sure that we're not missing any big moving pieces that would meaningfully change that algorithm in the 26 guide.

Speaker #3: Yeah. So let's say thanks for the question, Brian, and good morning. Hey, so listen, we feel great about the momentum that we've seen exiting 2025.

Robert VanHimbergen: Yeah. Hey, thanks for the question, Brandon. Good morning. Hey, listen, we feel great about the momentum that we've seen exiting 2025. Listen, our guidance is right in line with the framework we gave at Investor Day. Mid-single digit top line growth, high single digit EBITDA growth, and low double digit EPS growth. Again, we're gonna be focusing on deleveraging and getting to that low 3s by the end of the year. Listen, we feel great about the basket of innovation. We feel great about Elanco Ascend coming in. Listen, we're also in an environment where, you know, we see higher than normal inflation. We're being responsive and cognizant of competitive response.

Bob VanHimbergen: Yeah. Hey, thanks for the question, Brandon. Good morning. Hey, listen, we feel great about the momentum that we've seen exiting 2025. Listen, our guidance is right in line with the framework we gave at Investor Day. Mid-single digit top line growth, high single digit EBITDA growth, and low double digit EPS growth.

Speaker #3: And listen, our guidance is right in line with the framework we gave at Investor Day: mid-single-digit top-line growth, high single-digit EBITDA growth, and low double-digit EPS growth.

Bob VanHimbergen: Again, we're gonna be focusing on deleveraging and getting to that low 3s by the end of the year. Listen, we feel great about the basket of innovation. We feel great about Elanco Ascend coming in. Listen, we're also in an environment where, you know, we see higher than normal inflation. We're being responsive and cognizant of competitive response.

Speaker #3: And again, we're going to be focusing on de-leveraging and getting to that low threes by the end of the year. But listen, we feel great about the basket of innovation.

Speaker #3: We feel great about LANCO Ascend coming in. But listen, we're also in an environment where we see higher-than-normal inflation. We're being responsive and cognizant of competitive response.

Speaker #3: And as we mentioned in Investor Day, we're going to take a wide range of potential headwinds and tailwinds and be transparent on that. But listen, we feel good about the 2026 guide we gave as also the long-term algorithm we gave as well.

Robert VanHimbergen: You know, as we mentioned in Investor Day, we're gonna take a wide range of potential headwinds and tailwinds and be transparent on that. Listen, we feel good about the 2026 guide we gave as also the long term algorithm we gave as well. Then the last thing I would maybe just highlight when you're looking at just growth trends, keep in mind, we are lapping some significant growth within that basket of innovation. Our basket of innovation grew $400 million in 2025, you know, we're growing that $250 million here with the recent uplift, additional $50 million that Jeff highlighted.

Bob VanHimbergen: You know, as we mentioned in Investor Day, we're gonna take a wide range of potential headwinds and tailwinds and be transparent on that. Listen, we feel good about the 2026 guide we gave as also the long term algorithm we gave as well.

Speaker #3: And then the last thing I would maybe just highlight when you're looking at just growth trends, keep in mind we are lapping some significant growth within that basket of innovation.

Bob VanHimbergen: Then the last thing I would maybe just highlight when you're looking at just growth trends, keep in mind, we are lapping some significant growth within that basket of innovation. Our basket of innovation grew $400 million in 2025, you know, we're growing that $250 million here with the recent uplift, additional $50 million that Jeff highlighted.

Speaker #3: Our basket of innovation grew $400 million in 2025, and we're growing that $250 million here with the recent uplift, an additional $50 million that Jeff highlighted.

Speaker #5: Okay. Great. And then one maybe follow-up is a little bit of a bigger picture question on the commercial side. I think in the past, we've talked about trying to more meaningfully get into the corporate accounts.

Brandon Vazquez: Okay, great. One maybe follow-up is a little bit of a bigger picture question on the commercial side. I think in the past we've talked about trying to more meaningfully get into the corporate accounts. You know, you need a broader portfolio of innovation. You've certainly had a lot of good products coming out. You have more coming. Where are you guys today, in terms of maybe what inning are you in getting into those big corporate accounts to draw some of that big volume? If there are any kind of, like, portfolio gaps left that you need, I think in the past we've maybe talked about vaccines as being one of those areas. What is left that you may need to do for the corporates, and what's the timelines to start moving that forward a little more? Thanks, guys.

Speaker #5: You need a broader portfolio of innovation. You've certainly had a lot of good products coming out. You have more coming. Where are you guys today in terms of maybe what inning are you in getting into those big corporate accounts to draw some of that big volume?

Brandon Vazquez: Where are you guys today, in terms of maybe what inning are you in getting into those big corporate accounts to draw some of that big volume? If there are any kind of, like, portfolio gaps left that you need, I think in the past we've maybe talked about vaccines as being one of those areas. What is left that you may need to do for the corporates, and what's the timelines to start moving that forward a little more? Thanks, guys.

Speaker #5: If there are, any kind of portfolio gaps left that you need? I think in the past, we've maybe talked about vaccines as being one of those areas.

Speaker #5: What is left that you may need to do for the corporates and what's timelines to start making moving that forward a little more? Thanks, guys.

Speaker #3: Yeah. Thank you, Brian. And so yeah, a great finish of the year. Our best corporate year. And I know more than five years we've got a dedicated team.

Jeff Simmons: Thank you, Brandon. A great finish to the year, our best corporate year in I know more than five years. We've got a dedicated team. We've brought in some additional expertise from industry competitors, it has been a very big focus point for Bobby and the team and Chris, a real credit to them. Probably some of the best metrics as we look at lead indicators. We're seeing growth. We're in most all the clinics here in the US. Befrena will be a big addition because you start to now say, Hey, we've got everything that everyone else has, we believe they're differentiated. When you look at a Befrena having, you know, efficacy, value, and convenience differentiation, it's, you know, lasts a minimum of six weeks.

Speaker #3: We brought in some additional expertise. From industry competitors and it has been a very big focus point for Bobby and the team and Chris and so a real credit to them.

Speaker #3: Probably some of the best metrics as we look at lead indicators. So we're seeing growth. We're in most all the clinics here in the U.S.

Jeff Simmons: Befrena will be a big addition because you start to now say, Hey, we've got everything that everyone else has, we believe they're differentiated. When you look at a Befrena having, you know, efficacy, value, and convenience differentiation, it's, you know, lasts a minimum of six weeks.

Speaker #3: Berfrano will be a big addition because you start to now say, "Hey, we've got everything that everyone else has." And we believe they're differentiated.

Speaker #3: When you look at a Berfrano having efficacy value and convenience differentiation, it's lasted a minimum of six weeks. All of that's going to resonate really well.

Jeff Simmons: All of that's gonna resonate really well. I think our offers and our portfolio show that, and again, we see that in the results. Europe has been tremendous. I mean, I'm really surprised by how quickly we got Zenrelia into all the corporates already. That's been beneficial. Yeah, if I had to point to what's next, I think the international pet vaccines will be important, and that's going to take some time. We know that. Vaccines are continued to be a focus point for us. As a whole, look for our corporates in pet to be a really nice growth driver for us in 2026, and it really comes from the teams working really hard on building, you know, best-in-industry teams.

Speaker #3: But I think our offer is in our portfolio, and we show that. And again, we see that in the results. Europe has been tremendous. I mean, to see—I'm really surprised by how quickly we got Zenrelia into all the corporates already.

Speaker #3: So that's been beneficial. But yeah, if I had to point to what's next, I think the international pet vaccines will be important. That's going to take some time.

Speaker #3: We know that vaccines continue to be a focus point for us. But as a whole, look for corporates in pet to be a really nice growth driver for us in 2026.

Jeff Simmons: Vaccines are continued to be a focus point for us. As a whole, look for our corporates in pet to be a really nice growth driver for us in 2026, and it really comes from the teams working really hard on building, you know, best-in-industry teams.

Speaker #3: And it really comes from the teams working really hard on building best-in-industry teams.

Speaker #1: Your next question comes from Lina of Daniel Clark from Lyrinc Partners. Your line is open.

Operator: Your next question comes from the line of Daniel Clark from Leerink Partners. Your line is open.

Speaker #5: All right. Thanks so much. Good morning, start with Quattro. The further gains via the kinetic index that you saw in the quarter, was that sort of in line with your expectations from a couple of months ago, or was that incremental upside?

Daniel Clark: Great. Thanks, thanks so much. Good morning, everyone. Just wanted to, I guess, first start with Quattro. The further gains via the kinetic index that you saw in the quarter, was that sort of in line with your expectations from a couple of months ago, or was that incremental upside?

Jeff Simmons: Well, I think it's, as we said, you know, to see the jump we had in Q3 and then exceed it again in Q4, and being a leader in the puppy index, I always have looked with my many years in this industry, the puppy index is definitely where people are leaning in and saying, Hey, this is the opportunity, and if I'm going to put you on a product, I'd like you to start on, you know, the best that's available today. I think that's a real statement about Quattro. You know, 4 active ingredients, 4 dimensions of differentiation. We've added palatability, which has really come out as, we think, the fourth now dimension of differentiation.

Speaker #3: Well, I think it's, as we said, to see the jump we had in third quarter and then exceed it again in the fourth quarter and being a leader in the puppy index.

Speaker #3: I always have looked, with my many years in this industry, to puppy index—it's definitely where people are leaning in and saying, "Hey, this is the opportunity." And if I'm going to put you on a product, I'd like you to start on the best that's available today.

Speaker #3: And I think that's a real statement about Quattro for active ingredients, for dimensions of differentiation. We've added palatability, which has really come out as, we think, the fourth dimension of differentiation now.

Jeff Simmons: I think that's a real statement about Quattro. You know, 4 active ingredients, 4 dimensions of differentiation. We've added palatability, which has really come out as, we think, the fourth now dimension of differentiation.

Jeff Simmons: As I mentioned in my trends earlier, Daniel, I think the comment around 70% of new puppies are in international markets. Getting the Australia approval last week and starting the global approvals of Quattro will also be advantageous. Yeah, good trends and a nice opportunity here with Quattro. Hey, this space grew 30% last year.

Speaker #3: As I mentioned in my trends, earlier, Daniel, I think the comment around 70% of new puppies are in international markets getting the Australia approval last week and starting the global approvals of Quattro will also be advantageous.

Speaker #3: So yeah, good trends and a nice opportunity here with Quattro. And hey, this space grew 30% last year.

Speaker #5: Great. Thanks.

Daniel Clark: Great, thanks. Just a follow-up. Wanted to ask, you know, on your no regrets policy and sort of leaning into launches that are going well, and I think a safe say, a lot of your launches are sort of going well at this point. As we think about the ongoing duration of investing against those, you know, how should we think about that kind of going forward here? Should we think continued launch support throughout 2026 and into 2027 to keep this momentum up? Like, what are the different what's in cases you're thinking about on that front? Thank you.

Speaker #3: Just a follow-up. Wanted to ask on your no-regrets policy and sort of leaning into launches that are going well. I mean, I think if they'd say a lot of your launches are sort of going well at this point.

Speaker #3: So, as we think about the ongoing duration of investing against those, how should we think about that going forward here? Should we think continued launch support throughout 2026 and into 2027 to keep the momentum up, or what are the different puts and takes you're thinking about on that front?

Speaker #3: Thank you.

Speaker #6: Yeah, Daniel. Hey, so I would consider us applying the same no-regrets approach in 2026 that we had in 2025. And that's not only Berfrano, but also the launches we had in '25, right?

Robert VanHimbergen: Yeah, Daniel. Hey, so I would consider us applying the same no regrets approach in 2026 that we had in 2025, and that's not only for Befrena, but also the launches we had in 2025, right? We're using data to determine, hey, are we getting the ROI on those investments? You do see OpEx. You know, we did guide 7% OpEx growth in 2026, and that's particularly associated with the no regrets approach to launches, as well as funding R&D for the longer term benefit of the company. Again, Elanco Ascend is extremely important, right? This is where Elanco Ascend's coming in and ensuring that we are operationally excellent across our entire P&L.

Bob VanHimbergen: Yeah, Daniel. Hey, so I would consider us applying the same no regrets approach in 2026 that we had in 2025, and that's not only for Befrena, but also the launches we had in 2025, right? We're using data to determine, hey, are we getting the ROI on those investments? You do see OpEx.

Speaker #6: And we're using data. To determine hey, are we getting the ROI on those investments? And so you do see OPEX. We did guide 7% OPEX growth in '26.

Bob VanHimbergen: You know, we did guide 7% OpEx growth in 2026, and that's particularly associated with the no regrets approach to launches, as well as funding R&D for the longer term benefit of the company. Again, Elanco Ascend is extremely important, right? This is where Elanco Ascend's coming in and ensuring that we are operationally excellent across our entire P&L.That allows us to get to that high single-digit EBITDA commitment we've made, while also funding R&D, as well as the no regrets approach, that we're taking with our products.

Speaker #6: And that's particularly associated with the no-regrets approach to launches as well as funding R&D for the longer-term benefit of the company. But again, Alenko Ascend is extremely important, right?

Speaker #6: This is where Alenko Ascend's coming in. And ensuring that we are operationally excellent across our entire P&L that allows us to get to that high single-digit EBITDA A commitment we've made while also funding R&D as well as the no-regrets approach that we're taking with our products.

Robert VanHimbergen: That allows us to get to that high single-digit EBITDA commitment we've made, while also funding R&D, as well as the no regrets approach, that we're taking with our products.

Speaker #1: Your next question comes from Alina of Umer Rafat from Evercore ISI. Your line is open.

Operator: Your next question comes from the line of Umer Raffat from Evercore ISI. Your line is open.

Speaker #3: Morning, guys. Thanks for taking my question. I have two, if I may. Perhaps first, on gross margin, I thought I should dig into it a little more because if I step back and think about the $400 million-plus in innovation growth in '25, I would have thought there would be a gross margin expansion.

Umer Raffat: Morning, guys. Thanks for taking my question. I have two, if I may. Perhaps first, on gross margin, I thought I should dig into it a little more because, if I step back and think about the $400 million+ in innovation growth in 2025, I would have thought there would be a gross margin expansion. The fact that it was flat almost suggests that the underlying business outside innovation deteriorated in gross margin. How do you think about that? Especially because your guidance for 2026 assumes about flattish on gross margin, best I can tell, even though the top line is akin to your first half 2025 annualized, and we know first half 2025 was almost 200+ dips higher on gross margin.

Speaker #3: And the fact that it was flat almost suggests that the underlying business outside of innovation deteriorated in gross margin. How do you think about that, especially because your guidance for 2026 assumes about flattish on gross margin, best I can tell, even though the top line is akin to your first half 2025 annualized.

Umer Raffat: The fact that it was flat almost suggests that the underlying business outside innovation deteriorated in gross margin. How do you think about that? Especially because your guidance for 2026 assumes about flattish on gross margin, best I can tell, even though the top line is akin to your first half 2025 annualized, and we know first half 2025 was almost 200+ dips higher on gross margin.

Speaker #3: And we know first half '25 was almost 200 plus bips higher on gross margin.

Speaker #6: Yeah, Uber. Hey, thanks for the question. So as we think about just Q4, and I'll pivot into 2026 as well, so in Q4, we did see 30 basis points of improvement margins.

Robert VanHimbergen: Yeah, Umer, hey, thanks for the question. As we think about just Q4, and I'll pivot into 2026 as well, you know, in Q4, we did see 30 basis points of improvement in margins, and that was driven from price as well as sales volumes and mixed benefits. That's partially offset by inflationary pressures that we're seeing, as well as the flow-through of higher costs and inventory that we've built up throughout the year. We saw some of that come out in Q4, and you'll see that come out in the first half of 2026. As I look at 2026, first off, we're going to make the right decisions for the long-term success of the business, we do expect gross margin expansion of 40 basis points year-over-year.

Bob VanHimbergen: Yeah, Umer, hey, thanks for the question. As we think about just Q4, and I'll pivot into 2026 as well, you know, in Q4, we did see 30 basis points of improvement in margins, and that was driven from price as well as sales volumes and mixed benefits. That's partially offset by inflationary pressures that we're seeing, as well as the flow-through of higher costs and inventory that we've built up throughout the year.

Speaker #6: And that was driven from price as well as sales volumes and mixed benefits. But that's partially offset by inflationary pressures that we're seeing as well as the flow-through of higher costs and inventory that we've built up throughout the year.

Speaker #6: And so you'll see that. We saw some of that come out in Q4, and you'll see that come out in the first half of 2026.

Bob VanHimbergen: We saw some of that come out in Q4, and you'll see that come out in the first half of 2026. As I look at 2026, first off, we're going to make the right decisions for the long-term success of the business, we do expect gross margin expansion of 40 basis points year-over-year.

Speaker #6: 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.

Speaker #6: Price is going to be a component of that. And again, we expect that price to accelerate from 2025. The basket of innovation, as you've highlighted, we do expect that to grow 250 million dollars.

Robert VanHimbergen: Price is going to be a component of that. Again, we expect that price to accelerate from 2025. The basket of innovation, as you've highlighted, we do expect that to grow to $250 million. That does carry higher margins than our corporate average. Elanco Ascend, we're seeing good benefits coming through the just the progress that the global team is making on that. Now, one or two things I would look at is, one, you know, we do have inflation that's above historical levels. Two, as I mentioned, we have this higher cost inventory flushing through in the first half of the year. You'll see our margins enhancing and accelerating throughout 2026.

Bob VanHimbergen: Price is going to be a component of that. Again, we expect that price to accelerate from 2025. The basket of innovation, as you've highlighted, we do expect that to grow to $250 million. That does carry higher margins than our corporate average. Elanco Ascend, we're seeing good benefits coming through the just the progress that the global team is making on that.

Speaker #6: That does carry higher margins than our corporate average. And then Alenko Ascend, we're seeing good benefits coming through. Just the progress that the global team's making on that.

Speaker #6: Now, the one thing, the one or two things I would look at is one, we do have inflation. That's above historical levels. And two, as I mentioned, we have this higher cost inventory flushing through in the first half of the year.

Bob VanHimbergen: Now, one or two things I would look at is, one, you know, we do have inflation that's above historical levels. Two, as I mentioned, we have this higher cost inventory flushing through in the first half of the year. You'll see our margins enhancing and accelerating throughout 2026.

Speaker #6: And so what you'll see are margins enhancing and accelerating throughout 2026. And the second half will be stronger than the first half. But long-term, we feel confident in improving margins with the basket of innovation, the volume leverage.

Robert VanHimbergen: The second half will be stronger than the first half. Long term, we feel confident in improving margins with the basket of innovation, the volume leverage, and then again, Elanco Ascend proactively enhancing margins over the next three to five years.

Bob VanHimbergen: The second half will be stronger than the first half. Long term, we feel confident in improving margins with the basket of innovation, the volume leverage, and then again, Elanco Ascend proactively enhancing margins over the next three to five years.

Speaker #6: And then again, Alenko Ascend proactively enhancing margins over the next three to five years.

Speaker #3: Got it. And then also on the innovation guidance of about 250 million plus growth in '26, considering Cordelio franchise alone grew almost 137 million in '25, is it reasonable to assume that half of '26 growth is Cordelio franchise alone?

Umer Raffat: Got it. Also on the innovation guidance of about $250 million plus growth in 2026, considering Credelio franchise alone grew almost $137 million in 2025, is it reasonable to assume that half of 2026 growth is Credelio franchise alone?

Speaker #6: I think you're definitely seeing that that was a major contributor. And I know some of the way you're thinking about Cordelio on Umer and say we definitely are seeing that kind of a trajectory.

Jeff Simmons: ... I think you're definitely seeing that was a major contributor, and I know some of the way you're thinking about Credelio Quattro, I would build on Umer and say, you know, we definitely are seeing that kind of a trajectory. No question, Quattro ends 25 with more momentum than we expected. International Zenrelia. If we get this label change, you know, there's a lot of opportunity here with Zenrelia, and Befrena comes in differentiated. All of that, I think we step back and say, Hey, there's opportunity. I also think the competitive front has changed some. I don't think the long-acting injectable parasiticides are maybe what were anticipated a year ago. I think that's actually contributing to the bigger growth in the broad spectrum in Decto market, Umer.

Speaker #6: We're not going to get into guiding by product. But no question, Quattro ends '25 with more momentum than we expected. International Zenrelia and if we get this label change there's a lot of opportunity here with Zenrelia.

Speaker #6: And Berfrano comes in differentiated. So all of that, I think we step back and say, hey, there's opportunity. I also think the competitive front has changed some.

Jeff Simmons: All of that, I think we step back and say, Hey, there's opportunity. I also think the competitive front has changed some. I don't think the long-acting injectable parasiticides are maybe what were anticipated a year ago. I think that's actually contributing to the bigger growth in the broad spectrum in Decto market, Umer.

Speaker #6: I don't think the long-acting injectable parasiticides are maybe what we anticipated a year ago. I think that's actually contributing to the bigger growth in the broad spectrum endectocide market, Umer.

Speaker #6: So, I think the competitive set's different, and that's an advantage as well. So we like it. We are lapping $400 million that we mentioned. But we do see, really, what's different about the Elanco story is we've got a basket of best medicines in major markets that are growing double-digit.

Jeff Simmons: I think the competitive set's different, and that's an advantage as well. We like it. We are lapping 400 that we mentioned, but we do see really... What's different about the Elanco story is we got a basket of best medicine in major markets that are growing double digit.

Speaker #3: Thank you very much.

Michael Ryskin: Thank you very much.

Umer Raffat: Thank you very much.

Speaker #1: Your next question comes from Alina of Nivantai from BNP Paribas. Your line is open.

Operator: Your next question comes from the line of Navantai from BNP Paribas. Your line is open.

Speaker #5: Hi. Thanks for taking my question. Maybe first, if you could discuss your assumptions behind a stabilization-based business in 2026. And my second question is on the livestock business that also drove the Q4 beat.

Navin Seth: Hi, thanks for taking my question. Maybe first, if you could discuss your assumptions behind a stabilizing base business in 2026. My second question is on the livestock business that also drove the Q4 beat. Can you discuss your outlook by species, and in particular, how long do you expect a favorable cattle producer economics to last? Thank you.

Navann Ty: Hi, thanks for taking my question. Maybe first, if you could discuss your assumptions behind a stabilizing base business in 2026. My second question is on the livestock business that also drove the Q4 beat. Can you discuss your outlook by species, and in particular, how long do you expect a favorable cattle producer economics to last? Thank you.

Speaker #5: Can you discuss your outlook by species and, in particular, how long do you expect favorable cattle producer economics to last? Thank you.

Speaker #6: Yeah. So on the base business, Nivan, really right in line with what we committed back in investor day. So we're seeing low single-digit to high single-digit trend really since the last three quarters.

Robert VanHimbergen: Yeah, on the base business, Navant, really right in line with what we committed back at Investor Day. We're seeing low single digit to high single digit trend really since the last three quarters. We expect that as we move forward. It'll pivot a bit quarter by quarter, but the basket of innovation is working and bringing in some of our base products. You know, we see this as a stable base as we look in 2026 as well as beyond that time frame.

Bob VanHimbergen: Yeah, on the base business, Navant, really right in line with what we committed back at Investor Day. We're seeing low single digit to high single digit trend really since the last three quarters. We expect that as we move forward. It'll pivot a bit quarter by quarter, but the basket of innovation is working and bringing in some of our base products. You know, we see this as a stable base as we look in 2026 as well as beyond that time frame.

Speaker #6: We expect that as we move forward. It'll pivot a bit. Quarter by quarter. But the basket of innovation is working and bringing in some of our base products.

Speaker #6: So we see this as a stable base as we look in 2026 as well as beyond that timeframe.

Speaker #5: And Nivan, just real quick—I mean, great protein markets, as I mentioned. I think you're seeing US projection at 5%. These protein trends are real.

Jeff Simmons: Navin Seth, just real quick, I mean, great protein markets, as I mentioned. I think you're seeing, you know, US projection 5%. These protein trends are real. Farm animal is going to be a big contributor, I think, to the animal health growth we see in the next decade. If I break it down, cattle and beef, you know, the low supply, high demand, profitable markets, there is starting to make that turn on the rebuilding of the herd, but it's gonna take some time. That's advantageous for our portfolio. I just call out dairy. Dairy ended at 4.2% growth as an industry in Q4. We're excited about this AHV acquisition leaning in. It's gonna expand our portfolio and our share of voice.

Speaker #5: Farm animal is going to be a big contributor, I think, to the animal health growth we see. In the next decade, if I break it down, cattle and beef—the low supply, high demand, profitable markets—there is starting to make that turn.

Jeff Simmons: If I break it down, cattle and beef, you know, the low supply, high demand, profitable markets, there is starting to make that turn on the rebuilding of the herd, but it's gonna take some time. That's advantageous for our portfolio. I just call out dairy.

Speaker #5: On the rebuilding of the herd. But it's going to take some time. But that's advantageous for our portfolio. And then I just call out dairy.

Speaker #5: Dairy ended at 4.2% growth as an industry in Q4. We're excited about this AHV acquisition leaning in. It's going to expand our portfolio and our share of voice.

Jeff Simmons: Dairy ended at 4.2% growth as an industry in Q4. We're excited about this AHV acquisition leaning in. It's gonna expand our portfolio and our share of voice. Dairy is the protein to watch, and poultry's had 3 years at 3% growth, and they're projecting the same for the fourth year in a row.

Speaker #5: Dairy is the protein to watch. And poultry's had three years at 3% growth. And they're projecting the same for the fourth year in a row.

Jeff Simmons: Dairy is the protein to watch, and poultry's had 3 years at 3% growth, and they're projecting the same for the fourth year in a row.

Speaker #1: Your next question comes from Alina of Chris Shock from JPMorgan. Your line is open.

Operator: Your next question comes from the line of Chris Schott from JPMorgan. Your line is open.

Speaker #3: Great. Thanks so much for the questions. I just want to come back to the derm market, maybe particularly on the international side. Can you just elaborate a little bit more on what you're seeing on market growth prior to your entry in the market?

Chris Schott: Great. Thanks so much for the questions. I just want to come back to the derm market, maybe particularly on the international side. Can you just elaborate a little bit more on what you're seeing on market growth prior to your entry in the market? I'm just trying to get my hands around, are we seeing new competition accelerating the overall derm market beyond the share gains, or is this really, again, more about share? Just any directional color there would be helpful. Just my second question was on the 4% to 6% guide for 2026. Just, should we think about that kind of evenly balanced between pet and farm, or is it skewed one way or the other? I'm just trying to get, again, any directional color there. Thank you.

Speaker #3: I'm just trying to get my arms around it. Are we seeing new competition accelerating the overall derm market beyond the share gains? Or is this really, again, more about share?

Speaker #3: So just any directional color there would be helpful. And then just my second question was on the four to six percent guide for 2026.

Chris Schott: Just any directional color there would be helpful. Just my second question was on the 4% to 6% guide for 2026. Just, should we think about that kind of evenly balanced between pet and farm, or is it skewed one way or the other? I'm just trying to get, again, any directional color there. Thank you.

Speaker #3: Just should we think about that kind of evenly balanced between pet and farm? Or is it skewed one way or the other? I'm just trying to get, again, any directional color there.

Speaker #3: Thank you.

Speaker #6: Yeah, Chris. At a high level, yes. We saw, coming into the data for fourth quarter—not in yet—but double-digit growth. What we're seeing in Europe, where there's just a lot more promotion, new starts continue to be anywhere in the 10% to 20% range.

Jeff Simmons: Yeah, Chris, at a high level, yes. We saw coming into the data for Q4 is not in yet, but double digit growth. What we're seeing in Europe, where there's just a lot more promotion, new starts continue to be anywhere in the, you know, 10% to 20%, so. You've got, you know, in the international markets, as I just mentioned, 70% of the new puppies globally are in international. I see a lot of trends and all this increased noise about, hey, solutions to an itching dog. It's a great market backdrop, and it's great for us as well as we, as we come with Zenrelia globally.

Speaker #6: So and then you've got in the international markets, as I just mentioned, 70% of the new puppies globally are in international. So I see a lot of trends.

Jeff Simmons: You've got, you know, in the international markets, as I just mentioned, 70% of the new puppies globally are in international. I see a lot of trends and all this increased noise about, hey, solutions to an itching dog. It's a great market backdrop, and it's great for us as well as we, as we come with Zenrelia globally.

Speaker #6: And all this increased noise about, hey, solutions to an itching dog, it's a great market backdrop. And it's great for us as well as we come with Zenrelia globally.

Speaker #6: Yeah. And then on your second one, Chris, generally speaking, I would assume it's balanced across the four quarters, and generally balanced across pet and farm throughout 2026.

Robert VanHimbergen: Yeah, and then on your second one, Chris, you know, generally speaking, I would assume it's balanced across the 4 quarters and generally balanced across pet and farm throughout 2026. You know, again, as Investor Day, we highlighted that farm business is generally mid-single digit growth, and then the pet's probably a mid-single digit plus.

Bob VanHimbergen: Yeah, and then on your second one, Chris, you know, generally speaking, I would assume it's balanced across the 4 quarters and generally balanced across pet and farm throughout 2026. You know, again, as Investor Day, we highlighted that farm business is generally mid-single digit growth, and then the pet's probably a mid-single digit plus.

Speaker #6: And again, as an investor day, we highlighted that farm business is generally mid-single-digit growth. And then the pet's probably a mid-single-digit plus.

Speaker #1: And we have reached the end of our question-and-answer session. I will now turn the call back over to Jeff Simmons for closing remarks.

Operator: We have reached the end of our question and answer session. I will now turn the call back over to Jeff Simmons for closing remarks.

Speaker #4: Yeah. Thank you, everybody, for your interest in Elanco historical year in 2025. But I want everyone to be assured that Elanco is—the engagement and the execution have never been higher in the company.

Jeff Simmons: Yeah, thank you, everybody, for your interest in Elanco. Historical year in 2025. I want everyone to be assured that Elanco is the engagement and the execution have never been higher in the company. We take a balanced and prudent and very disciplined approach, serving our customers as we head into 2026, and we're excited to engage with you going forward. Our priorities remain the same, and that's growth, innovation, and cash. We'll be assured that the continued delivery is our top priority for you as shareholders. Thank you for your interest in Elanco and your investment in Elanco. Look forward to working with you throughout 2026. Have a great day.

Speaker #4: We take a balanced and prudent and very disciplined approach serving our customers as we head into 2026. And we're excited to engage with you going forward.

Speaker #4: Our priorities remain the same, and that's growth, innovation, and cash. We'll be assured that continued delivery is our top priority for you, as shareholders.

Jeff Simmons: Our priorities remain the same, and that's growth, innovation, and cash. We'll be assured that the continued delivery is our top priority for you as shareholders. Thank you for your interest in Elanco and your investment in Elanco. Look forward to working with you throughout 2026. Have a great day.

Speaker #4: Thank you for your interest in Alenko and your investment in Alenko. Look forward to working with you throughout 2026. Have a great day.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Q4 2025 Elanco Animal Health Inc Earnings Call

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