Elanco Animal Health Clocks 11% Lower Q4 Sales, FY22 Profit Guidance Below Consensus - Elanco Animal Health (NYSE:ELAN)

Elanco Animal Health Inc ELAN has reported a Q4 FY22 revenue of $988 million. That's a decrease of 11% Y/Y on a reported basis, or down 6%, excluding the unfavorable impact of foreign exchange rates, above the consensus of $980.94 million.
Adjusted EPS of $0.19, below the $0.21 reported a year ago, surpassing analysts' view of $0.13.
Pet Health's revenue decreased by 14% (-10% CER) to $423 million, with a 2% increase in price. Volume declines were driven by continued competitive pressure, global economic conditions impacting consumer purchasing behavior, and supply constraints.
Farm Animal revenue decreased 9% (-3% CER) to $552 million, increased demand for aqua products, and strength in international cattle was more than offset by declines in U.S. cattle.
The adjusted gross profit margin of 54.7% improved by 70 bps, primarily driven by improved price, partially offset by inflation and unfavorable product mix.
Guidance: Elanco expects FY23 revenue of $4.28-$4.40 billion, compared to the consensus of 4.39 billion, with a headwind of approximately $10-$15 million from the unfavorable impact of foreign exchange rates. It expects revenue to be flat to declining 3% in 2023, excluding currency impacts.
It forecasts adjusted EPS of $0.74-$0.83 versus the consensus of $0.99.
Investment bank William Blair & Co. writes that details around margin pressure are light, but the company is continuing to invest in pipeline innovation and growth initiatives despite expectations for declining 2023 reported sales.
This should be a positive signal for the company's long-term growth prospects, though it would come with near- to medium-term margin pressures.
Price Action: ELAN shares closed at $13.25 on Friday.

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