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Elanco reported Q2 FY2026 revenue of $1.4 billion, above the consensus estimate of $1.3 billion. Adjusted earnings per share were $0.34, compared with the consensus estimate of $0.27.
Revenue rose from $1.2 billion a year earlier. Elanco’s filing said pet health revenue increased $75 million, or 12%, as higher volumes, pricing and currency movements contributed; new products led by Zenrelia and Credelio Quattro drove higher volumes, including through adoption by new customers. Farm animal revenue increased $50 million, or 9%, as growth in ruminants and poultry was partly offset by lower swine volumes.
Diluted earnings per share rose to $0.11 from $0.02. Gross margin increased to 58.3% from 57.5%; the filing attributed the improvement to product mix and pricing, partly offset by higher inventory costs. Operating margin rose to 7.97% from 6.77%.
Elanco reported free cash flow of $244.0 million, compared with $180.0 million a year earlier. Its filing said marketing, selling and administrative expenses increased $49 million in the quarter, driven by compensation, currency movements and investments in global product launches.
| Q2 FY2026 | Q2 FY2025 | Change | |
|---|---|---|---|
| Revenue | $1.4 billion | $1.2 billion | 10.2% |
| Diluted EPS | $0.11 | $0.02 | 450.0% |
| Gross margin | 58.3% | 57.5% | 0.9 percentage points |
| Operating margin | 7.97% | 6.77% | 1.2 percentage points |
| Free cash flow | $244.0 million | $180.0 million | 35.6% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $0.34 | $0.27 | Beat by 25.9% |
| Revenue | $1.4 billion | $1.3 billion | Beat by 4.41% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
CEO Jeffrey Simmons said Zenrelia and Credelio Quattro led the products that generated $340 million in second-quarter innovation revenue. He said Zenrelia contributed more to Elanco’s quarterly growth than any other product, while Credelio Quattro gained 4 points of market share in Q2. Simmons said both products were also growing in alternative sales channels.
Simmons said pet owners were changing where they bought products, and that Elanco’s data showed veterinary home-delivery sales growing nearly twice as fast as in-clinic sales. He said U.S. pet health pricing accelerated from Q1 to Q2 and would continue to accelerate in the second half. Asked about pricing and competition, Simmons said companies were spending more to gain share, while Elanco had added sales representatives and expanded its media and distribution efforts.
Robert VanHimbergen said pricing in the quarter met Elanco’s expectations, with Pet Health pricing up 2%. Asked about margins, he said productivity and volumes should support second-half gross margin expansion, although inflation remained above historical levels. He also said innovation products carried higher margins than the corporate average.
VanHimbergen said Elanco would continue investing in direct-to-consumer marketing and product launches in Q3 and Q4. Pressed on how long that spending might continue, he said it was hard to put a time frame on it and that Elanco would scale spending back when it no longer saw a return. He also said the business was more weighted toward the first half of the year.
On Befrena, Simmons said demand had more than doubled from expectations set in Q1, and that Elanco was managing access while increasing supply each week. He expected supply to become unconstrained in early 2027.
Guidance
Elanco raised its FY2026 outlook and now expects organic constant-currency revenue growth of 6% to 7%, compared with 5% to 7% previously. Simmons said the company raised its innovation revenue target by $50 million to approximately $1.25 billion and now expects adjusted earnings per share of $1.10 to $1.16.
VanHimbergen said Elanco expects gross margin to expand by 50 basis points year over year, compared with its previous expectation of 40 basis points. Simmons said the company now targets year-end net leverage of approximately 3x, versus its prior range of 3 to 3.2x.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| EPS, non-GAAP | Q3 FY2026 | $0.19–$0.22 | — | New |
| Gross margin, non-GAAP | FY2026 | 55.2%–55.6% | — | New |
| EPS, non-GAAP | FY2026 | $1.10–$1.16 | — | New |
| Market size, US Pet Health Industry Growth | FY2026 | Elanco expects the U.S. pet health industry to continue growing in FY2026. | — | — |
| EBITDA, Non Gaap Ascend Savings | FY2030 | $200.0 million–$250.0 million | — | New |
| Revenue, Experior Growth | FY2027 | Elanco expects Experior to be a growth driver in FY2027. | — | — |
| EBITDA, non-GAAP | Q3 FY2026 | $200.0 million–$250.0 million | — | New |
| Revenue | Q3 FY2026 | $1.2 billion–$1.2 billion | — | New |
| Debt, Net Leverage Ratio | FY2026 | 3.0× | — | — |
| Gross margin, Non Gaap Change | FY2026 | 0.50% | — | New |
| EBITDA growth, Non Gaap Margin Change | FY2026 | 0.75% | — | New |
| EBITDA, non-GAAP | FY2026 | $1.0 billion–$1.0 billion | — | New |
| Revenue, US Pet Health Growth | FY2026 | Elanco expects at least high-single-digit U.S. Pet Health revenue growth in FY2026. | — | — |
| Revenue, Innovation | FY2026 | $1.3 billion | — | New |
| Revenue | FY2026 | $5.1 billion–$5.1 billion | — | New |