- Q4 Organic Revenue Growth: 9% organic constant currency revenue growth, outperforming guidance for revenue, adjusted EBITDA ($189M, +7%), and adjusted EPS ($0.13, -7% YoY).
- Innovation Revenue: $892M in 2025, exceeding expectations; 2026 raised to $1.15B ($250M+ growth), driven by "big six" products like Credelio Quattro and Zenrelia.
- Net Leverage Ratio: Improved to 3.6x (vs. 2026 target of 3.1–3.3x) and 3.0–3.5x by 2027, reflecting disciplined capital allocation and debt reduction.
- Credelio Quattro Momentum: Fastest blockbuster in Elanco’s history, gaining U.S. broad-spectrum sales share and driving 2,600+ clinics to adopt complementary products.
- Zenrelia Performance: Strong growth in $2B derm market, with double-digit gains in Europe (France, Italy, Spain) and best month (December) on record globally.
Innovation Revenue and Future Outlook
The company's innovation revenue is expected to continue growing, with a commitment to at least another $250 million of growth in 2026, reaching $1.15 billion. This target is led by the "big six" major innovation products, including Credelio Quattro and Zenrelia, which are gaining traction in the global marketplace. As Jeff Simmons stated, "We are committing to at least another $250 million of growth in 2026 to $1.15 billion." The company's no-regrets approach to launches will continue in 2026, with data-driven decisions on ROI.
Segment Performance
The company's Pet Health business delivered 9% constant currency growth in the fourth quarter, driven by demand for key innovation products. The U.S. performance delivered 10% growth, while outside the U.S., the pet health business grew 8% in constant currency. The Farm Animal business also showed strong performance, with 17% growth in the U.S. The livestock business drove the Q4 beat, with protein markets expected to grow 5% in the U.S.
Valuation and Future Expectations
Analysts estimate next year's revenue growth at 5.2%. Elanco's current valuation metrics include a P/E Ratio of -56.5, P/B Ratio of 2.0, and EV/EBITDA of 18.97. The company's net debt to EBITDA ratio is 3.97, indicating a relatively high level of debt. For 2026, the company is guiding towards mid-single-digit top-line growth, high single-digit EBITDA growth, and low double-digit EPS growth. The guidance assumes the acquisition of AHV is not factored in.
Key Drivers and Challenges
The company's key drivers include the continued growth of its innovation products, particularly Credelio Quattro and Zenrelia. The derm market is expected to grow double-digits, driven by new competition. However, the company faces challenges, including inflationary pressures and higher cost of inventory, which may impact gross margin. The company's no-regrets approach to launches and funding R&D will also impact OpEx growth.