On Tuesday, Elanco Animal Health Incorporated (NYSE:ELAN) used its first Investor Day in five years to signal a turning point for the company, outlining a more focused strategy aimed at sustainable growth, margin expansion, and a stronger balance sheet.
CEO Jeff Simmons said the company is entering a new phase built on consistent execution of its Innovation, Portfolio, and Productivity framework, with a clear goal of becoming a reliable mid-single-digit organic grower with expanding profitability.
Financial Outlook
As part of its presentation, Elanco issued a three-year outlook beginning in 2026.
Management expects mid-single-digit organic revenue growth, high-single-digit adjusted EBITDA growth, and low-double-digit adjusted EPS growth.
Free cash flow of at least $1 billion is projected from 2026 through 2028, with net leverage falling below 3x in 2027 and targeting a longer-term range of 2.0x to 2.5x.
Also Read: Elanco Animal Health Stock Is Undervalued: Analyst
R&D Investments
The company also highlighted new U.S. investments tied to tax, tariff, and regulatory clarity.
Elanco plans to expand R&D operations in Indianapolis and increase its U.S.-based manufacturing footprint, including further investment in its Kansas monoclonal antibody facility.
Elanco announced progress toward final USDA approval for Befrena, its potential blockbuster dermatitis treatment for dogs.
Technical reviews and label alignment have been completed, with an administrative review underway. A first-half 2026 launch remains the company's expectation.
The company now forecasts approximately $1.1 billion in revenue from its innovation portfolio in 2026, up from prior expectations for 2025.
Elanco has expanded its focus to eight innovation areas and added two new internal development platforms in monoclonal antibodies and immunotherapy.
More than 10 major pipeline programs carry blockbuster potential, with approvals expected for five to six differentiated assets between 2026 and 2031.
Cost Initiatives
To support this innovation push and streamline operations, Elanco detailed its Ascend productivity initiative.
The company expects $25 million in savings in 2026 and $60 million in 2027, with 600 roles affected through reductions or shifts. A related charge of roughly $175 million is expected.
The company expects its Elanco Ascend program to deliver $200 to $250 million in adjusted EBITDA savings by 2030, with about 30% achieved in 2026.
CFO Bob VanHimbergen said the effort positions Elanco for "durable, profitable growth" with continued margin expansion and strong cash generation into the latter half of the decade.
Analyst Take
William Blair on Wednesday wrote, "We got initial details on over 15 projects in key areas like parasiticides, derm, pain, and CKD. These projects include five to six blockbusters, positioning Elanco for what it views as three waves of innovation over the next decade."
"In the end, if Elanco executes on this pipeline, we expect it can deliver upside to its long-term financial targets," William Blair added on Wednesday.
With shares at 21 times William Blair's 2026 EPS estimate, analyst Brandon Vazquez maintains an Outperform rating.
ELAN Price Action: Elanco Animal Health shares were up 1.08% at $21.54 at the time of publication on Thursday, according to Benzinga Pro data.
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