Fur-casting Success: Elanco Animal Health Tails Ahead with Raised Revenue Outlook, Stock Soars

Elanco Animal Health Inc ELAN reported a Q3 FY23 revenue of $1.068 billion, up 4% reported growth or 5% excluding the impact of foreign exchange rates, above the consensus of $1.04 billion. The management expected Q3 revenues of $1.03-$1.06 billion. 

Adjusted EPS of $0.18, up from $0.17 reported a year ago, surpassing the management guidance of $0.08-$0.13 and analysts' view of $0.12.

Pet Health's revenue increased by 6% to $495 million, with a 4% increase in price. Farm Animal revenue increased 3% to $561 million.

Gross profit margin increased 40 and 50 basis points on a reported and adjusted basis, respectively, primarily driven by improved price and productivity, partially offset by inflation, inventory losses, and planned reduced throughput at certain manufacturing sites in support of efforts to reduce balance sheet inventory and improve cash conversion.

"For the full year, we are tightening our guidance ranges to reflect third-quarter outperformance and the continued strengthening of the U.S. dollar. We are increasing the midpoint of our guidance range for constant currency revenue growth, and for adjusted EBITDA and adjusted EPS despite increased headwinds from foreign exchange rates. We expect constant currency revenue growth to continue in the fourth quarter and in 2024," said Jeff Simmons, Elanco President and CEO.

Guidance: Elanco raises FY23 revenue guidance to $4.36 billion-$4.4 billion compared to prior guidance of $4.35 billion-$4.41 billion and the consensus of $4.37 billion.

It forecasts adjusted EPS of $0.88-$0.94 compared to prior guidance of $0.80-$0.89 versus the consensus of $0.85.

For Q4, the company expects revenue guidance of $978-$1.02 billion compared to the consensus of $1.01 billion.

Elanco forecasts Q4 adjusted EPS of $0.07-$0.13 versus the consensus of $0.10.

Price Action: ELAN shares are up 13.30% at $10.60 on the last check Tuesday.