Elanco Animal Health's Q1 Earnings Show Improved Base Business, Analyst Highlights Slightly Delayed But Encouraging Pipeline

Zinger Key Points
  • William Blair notes that Elanco's yearly guidance improved slightly, indicating a positive trend despite a modest increase.
  • Pet Health revenue was $639 million, down 5% Y/Y, with a 3% increase from price.

Elanco Animal Health Incorporated ELAN reported first-quarter adjusted EPS of $0.34, down 26% year over year, beating the consensus of $0.26 and management guidance of $0.25-$0.28.

The animal health company’s sales of $1.21 billion were down 4% year over year, beating the consensus of $1.174 billion and guidance of $1.16 billion—$1.185 billion.

The ERP Blackout negatively impacted growth by an estimated 7% to 9%.

Pet Health revenue was $639 million, down 5% year over year, with a 3% increase in price compared to the first quarter of 2023. Farm Animal revenue was $556 million, down 3%. 

Guidance: Elanco Animal Health forecasts 2024 adjusted EPS of $0.88-$0.96 versus prior guidance of $0.87-$0.95 and consensus of $0.92.

The company expects 2024 revenue of $4.46 billion-$4.515 billion versus prior guidance of $4.45 billion-$4.54 billion and consensus Of $4.49 billion, with adjusted EBITDA of $960 million-$1 billion versus previous guidance Of $960 million-$1.01 billion.

Related: Investor Activism: Elanco Animal Health Settles with Ancora, Adds New Board Members.

For the second quarter, the company sees revenues of $1.145 billion-$1.17 billion versus a consensus of $1.15 billion.

It expects second-quarter adjusted EPS of $0.23-$0.26 compared to the consensus of $0.24.

William Blair notes that Elanco’s yearly guidance improved slightly, indicating a positive trend despite a modest increase. The ability to surpass expectations in a volatile macroeconomic climate is significant for Elanco. 

Although key product approvals may be delayed by one to two quarters, with management nearing the end of discussions with the FDA, William Blair believes this delay won’t greatly worry investors. This is especially true as Quattro is anticipated to include a crucial one-month heartworm claim in its labeling, enhancing its appeal for adoption.

The analyst maintains its Market Perform rating as it waits for pipeline approvals.

Price Action: ELAN shares are up 24.8% at $16.88 at last check Wednesday.

Photo via Pixabay

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