Elanco Animal Health (ELAN) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $1.184 billion, up 12% year-over-year, with adjusted EBITDA of $275 million and adjusted EPS of $0.30, all exceeding guidance.

• Net loss for Q2 2024 was $50 million, but adjusted net income was $147 million, reflecting significant non-recurring charges.

• Completed sale of aqua business in July 2024 for $1.3 billion, enabling $1.3 billion in debt paydown and reducing gross debt below $4.5 billion.

• Strategic focus on innovation, with FDA progress for Bovaer and Zenrelia, and three major product launches expected in the next three quarters.

• Full-year revenue guidance raised to $4.41–$4.46 billion, with organic constant currency growth of 3%–4%.

Financial highlights

• Q2 2024 revenue was $1.184 billion, up 12% year-over-year (13% constant currency); adjusted EBITDA was $275 million, up 24%, and adjusted EPS was $0.30, up 67%.

• Adjusted net income was $147 million, up 63% year-over-year; reported net loss was $50 million.

• Gross margin for Q2 2024 was 58.2%, down 70 bps year-over-year, mainly due to manufacturing slowdowns and sales mix.

• Cash from operations was $200 million in Q2, up $139 million year-over-year.

• Net debt reduced to $5.3 billion at quarter end, with $1.3 billion of debt repaid in 2024.

Outlook and guidance

• Full-year 2024 organic constant currency revenue growth expected at 3%–4%, with revenue guidance raised to $4.41–$4.46 billion.

• Adjusted EBITDA guidance at $900–$940 million; adjusted EPS guidance at $0.88–$0.96.

• Q3 2024 revenue expected at $1.02–$1.05 billion, with adjusted EBITDA of $140–$170 million and adjusted EPS of $0.09–$0.14.

• Year-end net leverage expected in the mid-4x range, moving lower in 2025.

• Expect to record a pre-tax gain of $630–$660 million on the aqua business divestiture in Q3 2024.