Good morning. Thank you for joining us for Elanco Animal Health's first quarter 2026 earnings call.

I'm Tiffany Kanaga, Vice President of Investor Relations and ESG. Joining me on today's call are Jeff Simmons, our President and Chief Executive Officer; Bob VanHimbergen, our Chief Financial Officer; and Beth Haney from Investor Relations.

The slides referenced during this call are available on the Investor Relations section of elanco.com. Today's discussion will include forward-looking statements.

These statements are based on our current assumptions and expectations and are subject to risks and uncertainties that could cause actual results to differ materially from our forecast. For more information, see the risk factors discussed in today's earnings press release, as well as in our latest Form 10-K and 10-Q filed with the SEC.

We do not undertake any duty to update any forward-looking statements. Our remarks today will focus on our non-GAAP financial measures.

Reconciliations of these non-GAAP measures are included in the appendix of today's slides and in the earnings press release. References to organic performance exclude certain royalty and milestone rights that were sold to a third party in May 2025.

After our prepared remarks, we will be happy to take your questions. I will now turn the call over to Jeff.

Thanks, Tiffany. Good morning, everyone.

Elanco's first quarter represents growing strength, momentum, and value. The company's solid first quarter results and raised full year guidance demonstrate continued progress on our priorities of growth, innovation, and cash.

As highlighted on slide 4, we delivered 10% organic constant currency revenue growth in the quarter, outperforming the high end of guidance for revenue, adjusted EBITDA, and adjusted EPS. This high-quality performance was driven by both price and volume, with growth across all major geographies and all species.

Thank you to the entire Elanco team for the execution, for high levels of engagement, and unified approach that have created this sustained, consistent delivery across the company. Elanco is in a position of strength, with a base business that grew in Q1 and a basket of significant innovation, all within a durable animal health industry.

Our momentum in each of our four businesses is evident in market share gains across our global portfolio. We drove share gains across all of our U.S.

pet health major categories: parasiticides, osteoarthritis pain, dermatology, and vaccines. Elanco is leading share growth in the largest categories, para and derm, with accelerating gains for Zenrelia and Credelio Quattro.

Internationally, both Zenrelia and AdTab continued their growth trajectories and captured market share. We also bolstered our leadership in U.S.

farm animal and achieved strong growth in international farm animal, particularly in poultry and ruminants. Our diverse basket of significant innovation is a key driver for this global momentum.

After delivering $287 million of first quarter revenue from our innovation products, we are raising our full year innovation target to $1.2 billion. Our big six products are performing extremely well, and they're providing portfolio benefits that supported our base business growth in Q1.

Robust top-line and adjusted EBITDA growth combined to enable continued deleveraging in the quarter. We are improving our net leverage target for year-end to 3.0 to 3.2 times from the previous guidance of 3.1 to 3.3 times.

With our solid start to the year and accelerating trends into March and April, we are well positioned to raise our top and bottom-line outlook. For the full year, we now expect organic constant currency growth of 5% to 7%, adjusted EBITDA of $975 million to $1.005 billion, representing 10% at the midpoint, and adjusted EPS of $1.03 to $1.09, representing 13% growth at the midpoint.

This guidance continues our prudent, balanced approach in a dynamic macro environment. Our confidence comes from the consistent outperformance of our diverse basket of innovation, a growing base business in Q1, and the megatrends supporting durable growth in today's global animal health industry.

Looking more closely at the first quarter revenue performance on slide 5, we break down the 10% underlying organic constant currency revenue growth. U.S.

Pet Health achieved 6% growth, despite winter storms impacting January and February in the vet clinic. We saw a sharp recovery in March to 8% growth, with April even better.

Both months were ahead of expectations and demonstrate our underlying strength. Zenrelia posted its best quarter yet, leading our Q1 growth in the clinic and far exceeding our plans.

Also, robust Credelio Quattro demand with accelerating market share gains more than offset the anticipated headwind from last year's typical launch dynamics of initial stocking. Both brands exited the quarter with strong momentum in March and extending into April.

We are well positioned for active derm and parasiticide seasons, with tick bites sending Americans to the emergency room at the highest rate in nearly a decade, according to April CDC data. We expect one of the most robust parasiticide seasons in a long time.

In our U.S. Retail OTC business, Q1 saw high single-digit consumption growth in a low-growth market, reflecting strong trends for our products, and Costco and Dollar General as new customers.

These two new retailers were meaningful additions to our business, as flagged at the December Investor Day, and should also contribute to growth in upcoming quarters after initial stocking. Both Seresto and the Advantage family saw double-digit dispensing growth at our top retailers.

Additionally, Zenrelia and Quattro are growing nicely at retail. We continue to expand our retail market leadership and competitive advantage with what we believe is the broadest access to pet owners in the industry.

Overall, our U.S. Pet Health business is demonstrating solid fundamentals, with our basket of innovation driving industry-leading growth.

We are confident in an expected acceleration for the business to high single-digit to low double-digit growth in the back half of the year as our new products continue to gain share. Moving to International Pet Health, we delivered 9% organic constant currency revenue growth driven by Zenrelia, AdTab, and Credelio.

Zenrelia is rapidly capturing share in the $800 million international derm market, with accelerating gains in key markets. U.S.

Farm Animal was up 15%, with good growth across all species and product categories. Our results demonstrate the power of innovation in a diverse portfolio in a favorable macroeconomic backdrop.

Finally, International Farm Animal was up 13% in organic constant currency, also achieving growth across all species. The quarter benefited from customer-driven accelerated shipments, primarily to the Middle East, contributing 1 percentage point of growth for the total company.

Turning now to slide 6, we delivered $287 million of innovation revenue in the first quarter. With a strong sales trajectory of the big six driven by our no-regrets launch approach, we are again raising our innovation guidance for 2026 by $50 million to $1.2 billion.

The big six are well positioned to drive sustainable growth over the coming years, as we continue to expect this group to double in revenue from 2025 to 2028 on top of a stable base. Let's further discuss the progress of our major innovation products on slide 7, starting with Zenrelia, the single largest brand driving Elanco's 10% growth.

Zenrelia reached blockbuster status on a trailing four-quarter basis, with a growth trajectory well exceeding our expectations even since the late February earnings call. We are in a stronger position, with momentum accelerating in the U.S.

and in our international business, and growing recognition of the strong efficacy profile. We see potential for Zenrelia to be a blockbuster in both the U.S.

and international as we grow the $2.1 billion global dermatology market and continue to take share. As we enter the derm season, we see Zenrelia as the leading derm market share taker, with demonstrated strong efficacy in the JAK-1 category.

March was Zenrelia's largest month yet, with U.S. vet clinic sell-in 30% larger than any other month to date.

We're now in over 16,000 U.S. vet clinics, or over 50% of the total, and the reorder rate is over 80%.

We've added 4,300 new purchasers since the September label improvement, and veterinarians are moving it to first-line treatment as they gain experience and see how this special product just works. We expect continued momentum entering the allergy season, with those cases representing about a third of the patient population.

On the U.S. label, we continue to have constructive dialogue with the FDA regarding our previously submitted data.

The FDA has requested additional data, and a new study is already underway. Given Zenrelia's success to date that is well beyond our plans, we now have greater expectations for the potential of this product, with additional label improvement in the U.S.

representing only further possible upside. Our guidance has always conservatively assumed no incremental change to the U.S.

label. Building on this success outside the U.S., Zenrelia has posted an excellent quarter across key geographies.

A great potential leading indicator example is the first market for Zenrelia, Brazil. Zenrelia has reached over 50% JAK market share in Brazil, becoming the market leader after just 1 year, and achieving this coming through the Southern Hemisphere derm season.

In Japan, it's over 35%. Traction continues to rapidly build also in Europe, with JAK market share in the high teens to over 30% in key European markets, again outperforming the competitive entrant.

Our EU head-to-head study has resonated well with veterinarians, and we're the only player providing this competitive data. With recent launches, Zenrelia is now in 45 countries, and our international labels are all without restrictions.

Zenrelia's efficacy is a clear differentiator and game-changer, addressing the top reason dogs go to the vet and satisfying an unmet need for pet owners. Over 2 million dogs have now been treated with Zenrelia, and we're just getting started.

We are increasing manufacturing capacity and moved production now to 24/7 to keep up with a sharply rising global demand and going into what we expect to be a robust derm season. Moving to our second derm product, Befrena, our phased launch approach is on track, with product already shipped to early experienced influencers and in use.

We expect to officially launch Befrena this quarter and have orders in hand as vets are eager for this new solution. Remember that a phased launch is very typical for a monoclonal antibody or mAb products as we scale our bioreactors with anticipated manufacturing ramp-up.

We're excited for Befrena as a potential blockbuster with positive differentiation on convenience, value, and efficacy. It's recommended at a dosing interval of 6 to 8 weeks post-treatment versus 4 to 8 weeks for the current market competitor.

When we shared a close proxy of the label to over 350 veterinarians, 83% responded they're likely to use Befrena, especially in seasonal cases. Importantly, Befrena is complementary to our broader portfolio, creating a more comprehensive offering to veterinarians.

Last week, we hosted over 300 veterinarians at our headquarters as part of the North American Veterinary Dermatology Forum. Anecdotal feedback from early experienced KOLs was positive on the efficacy of Befrena.

Next, on Credelio Quattro, we are very pleased by our accelerating pace of dollar share gains in broad-spectrum dispensing sales from U.S. clinics.

Quattro's market share is up 3 points since Q4 and exceeding our expectations. Most importantly, in the clinics that carry Quattro, which is now over 40% of the U.S.

clinic base today, our share increased 13 points in Q1, reaching 53%. Simply put, the clinics carrying Quattro are using it more than half the time for any broad-spectrum application.

These accelerating gains 1 year after launch demonstrate strong demand and growing interest from veterinarians and pet owners, who increasingly agree that Quattro is best medicine with its four dimensions of differentiation. The product's success also reflects our strategic DTC investments, enhanced sales team, and distribution partnerships, which combine to fuel a growth trajectory more like a first-to-market product.

We will continue to fund our data-driven, high-ROI investments in the brand. Like Zenrelia, sales for Quattro accelerated during the quarter.

March has been the product's largest month ever, creating strong momentum into the parasiticide season. We've added over 2,500 new clinics year-to-date through April and counting.

Yet there remains ample room for Quattro to continue to grow and take share in the $1.5 billion U.S. broad-spectrum parasiticide market.

An important leading indicator is Kynetec's puppy index, where Quattro ranks highest versus other broad-spectrum endectos and grew versus Q4. Outside the U.S., Quattro has made its debut in the $750 million international market, which is growing double digits.

In April, the product launched in Australia and gained approval in Canada. The EU, the UK, and Japan are next as we look to rapidly globalize sales.

We expect the global Credelio family to eventually become the largest product family in Elanco's history. Finally, our OTC parasiticide AdTab has continued its robust growth trajectory, with sales once again up more than 50%.

AdTab is the fastest-growing brand in the $600 million OTC ecto category in Europe, further strengthening its market leadership in Q1. Moving to farm animal, 55% of U.S.

cattle on feed are now using Experior. Overall, we expect Experior to continue to grow and drive meaningful portfolio benefits, including geo-expansion as another long-term growth driver, with recent expansion into Mexico.

We expect a moderating trajectory for this blockbuster with more challenging comparisons ahead. Lastly, on Bovaer, we continue to see demand from CPG companies supporting relatively consistent cow numbers.

We're investing in long-term initiatives to enhance the product value and demonstrate user flexibility. More near term, we expect growth at a measured pace as we build on Bovaer's value proposition.

Moving to slide 8, we provide recent highlights across the three parts of our consistent IPP strategy: innovation, portfolio, and productivity. Our innovation engine continues to make great progress, with further globalization of our big six innovations, resulting in recent approvals for Zenrelia in LatAm countries and Eastern Europe, Credelio Quattro in Canada and Australia, and new submissions including Befrena dossier in Canada.

The next wave of innovation portfolio further expanded and progressed in line with our plans, and we are clearly tracking towards five to six blockbuster potential approvals expected through 2031. Finally, Elanco's team has further strengthened the innovation pipeline with new additions coming from our internal discovery teams, while advancing key clinical programs, enabling us to clearly see our vision of a consistent flow of high-impact product innovations.

Today, the big six are driving broad-based growth across our portfolio and share gains across all quadrants. These launches are powering growth in U.S.

corporate accounts of 12% in Q1 versus the same quarter last year. They've enabled growth for our base business in the quarter, and we are seeing gains from pricing, up 2% Q1 and on track for full year acceleration from 2025.

We implemented our largest price increase in 5 years to U.S. vet clinics, reflecting our latest innovation and the value of our portfolio to customers.

Finally, we continue to pay down debt and strengthen our balance sheet. At 3.5 times net leverage in Q1, we have a clear path to the under 3 times landmark in 2027.

Our December strategic restructuring has further streamlined our organization, with expansion of R&D in our Indianapolis headquarters. As Bob will detail momentarily, our company-wide productivity initiative, Elanco Ascend, is on track to drive meaningful efficiencies and margin enhancement starting in 2026.

With that, I'll pass it to Bob to provide more on our first quarter results and financial guidance.

Thank you, Jeff. Good morning, everyone.

Today, I will focus my comments on our first quarter adjusted measures, please refer to today's earnings press release for a detailed description of the year-over-year changes in our reported results. Starting on slide 10, we delivered $1.371 billion of revenue, representing an increase of 15% on a reported basis.

Organic constant currency growth was 10% compared to the first quarter of 2025, with 2% from price and 8% from volume. Slide 11 provides revenue by the four quadrants of our business.

Total Pet Health revenue increased 7% in constant currency. In the U.S., we achieved 6% growth, with broad-based strength across all channels.

Key drivers were Zenrelia, Credelio Quattro, and our over-the-counter retail parasiticide business. Outside the U.S., our Pet Health business grew 9% in constant currency, driven by sales momentum of our innovation portfolio, including Zenrelia, AdTab, and Credelio family products.

Globally, our farm animal business achieved 13% growth in organic constant currency, growing across all species. The U.S.

Farm Animal business delivered 15% growth, with contributions across all product categories driven by cattle and poultry. While we are extremely pleased with the outsized performance in the quarter, we do expect growth to normalize to levels consistent with our long-term algorithm.

Outside the U.S., our farm animal business contributed 13% in organic constant currency growth, with poultry and ruminants the major contributors. We estimate that the favorable timing of customer purchases in the Middle East this year contributed 1 percentage point of growth for the total company.

Continuing down the income statement on slide 12, adjusted gross margin was 57%, a decrease of 40 basis points. As a reminder, we anticipated a year-over-year decline in the quarter due to pressures from inflation and the flow-through of inventory costs.

Gross margin performance was also impacted by product mix, with strong farm animal growth partly offset by benefits from both price and volume. Looking ahead, we continue to expect meaningful gross margin expansion in the second half of the year as we move past inventory cost headwinds and with mix benefits from expected acceleration in our U.S.

Pet Health business. Operating expenses increased 6% year-over-year in constant currency, driven by planned investments supporting our product launches, continued R&D investments, and compensation expense.

Interest expense for the quarter totaled $43 million, in line with our expectations. On slide 13, you'll see an adjusted EBITDA year-over-year comparison for the quarter.

Adjusted EBITDA was $334 million, an increase of $58 million or 21%. Adjusted EPS was 40 cents, an 8% increase year-over-year.

As a reminder, adjusted EPS was impacted by lapping favorable one-time tax benefits in the prior year. On slide 14, we provide an update on our cash and debt balances.

We ended the quarter with net debt of $3.3 billion and a net leverage ratio of 3.5 times. Debt paydown remains our primary use of free cash flow, with a long-term target ratio of 2 to 2.5 times.

We expect to reach below 3 times next year, giving us greater capital allocation flexibility. In the meantime, we continue to evaluate disciplined bolt-on M&A.

I'd like to recognize the closing of our AHV international acquisition on April 30th and welcome our new colleagues. AHV expands our share of voice in dairy, and we are excited about this platform for farm animal innovation.

Now let's move to our financial guidance starting on slide 16. Our first quarter overperformance allows us to raise our full year expectations and continue to invest in our innovation products.

We now expect to deliver organic constant currency revenue growth of 5% to 7% versus our previous outlook of 4% to 6%. We are increasing our expected reported revenue range to be between $5.01 billion and $5.085 billion.

This includes an expected $60 million year-over-year tailwind from the favorable impact of foreign exchange rates, majority of which was captured in our first quarter results. Slide 17 provides year-over-year bridges for 2026 adjusted EBITDA and adjusted EPS, and slide 24 in the appendix provides additional assumptions to help support your modeling efforts.

We are raising adjusted EBITDA guidance by $20 million. The increase reflects our $34 million outperformance in Q1, partly offset by approximately $9 million of incremental investment in our innovative launches and previously mentioned timing of international farm animal sales.

For adjusted EPS, we are raising our guidance by 3 cents, bringing the new range to $1.03 to $1.09. We have also updated our cash and balance sheet expectations for 2026 and now anticipate end-of-year net leverage of 3 to 3.2 times.

We continue to take a balanced and prudent approach to our guidance, considering a number of potential scenarios. On slide 18, we list drivers that could influence our results within the guided ranges.

We remain disciplined in monitoring external headwinds, specifically heightened competitive pressures, including generics, and consumer-level economic shifts. These could move results toward the lower end of our expectations.

We also continue to invest incremental dollars to support the launch of our innovation products, driving our market share gains and sustainable growth. Alternatively, the continued acceleration in our innovation pipeline, underlying strength from a growing base business, and our ability to leverage our diverse portfolio could drive results towards the high end of our expectations.

A favorable macro environment and rapid progress on Elanco Ascend could provide important tailwinds. In conclusion, we see a stronger set of opportunities and momentum in the business outweighing potential headwinds, resulting in the balanced guidance raise.

Now let me take a moment to offer an update on Elanco Ascend. We are seeing significant engagement across the organization as we execute initiatives to optimize our cost structure and drive operational efficiencies.

We continue to expect the projected Ascend savings detailed during our December Investor Day. As a reminder, 75% of our benefit from Ascend will be in gross margin, but the near-term benefits are more in G&A, driven by our previously announced restructuring.

With more than 5,000 projects logged to date, from large-scale transformations to smaller, localized improvements, Ascend is becoming deeply embedded in our operational discipline. Additionally, Elanco Ascend is integrating automation and AI across our entire value chain to accelerate our innovation pipeline, enhance manufacturing quality, and drive sales through deeper, data-driven customer insights.

Our comprehensive AI agenda also includes leveraging AI-driven automation to transform legacy processes as part of Ascend. For example, we recently implemented an automated sales order tool that modernizes the order-to-cash process.

This initiative enhances fulfillment accuracy and accelerates order cycles, leading to improved cash flow visibility and lower operational costs. When you combine our focus on operational excellence and productivity with the continued scaling of our margin-accretive innovation portfolio, we see a clear path for sustainable margin expansion over the long term.

Now, moving to our second quarter guidance presented on slide 19. On a reported basis, we expect $1.3 billion to $1.325 billion in revenue, representing organic constant currency revenue growth of 4% to 6%.

Growth is impacted by lapping Q2 2025 pre-tariff buying, primarily in China, by accelerated shipments to the Middle East in Q1 of this year, and by farm animal normalization against more challenging comparisons. The year-over-year increase in operating expenses, primarily related to launch investments, is expected to be approximately 8% in constant currency.

As a result, we anticipate adjusted EBITDA of $240 million to $260 million and adjusted EPS of 25 cents to 28 cents. Finally, on slide 20, we outline our expectations for a meaningful acceleration in our U.S.

Pet Health business in the second half of the year. As Jeff highlighted, we saw a sharp recovery in March to 8% growth and an even better April, demonstrating our underlying strength.

We are confident in our expectations for high single-digit to low double-digit growth in the back half of the year, reflecting continued momentum for Zenrelia and Credelio Quattro, and contributions from our Befrena launch. Additionally, a comprehensive portfolio is driving significant corporate account growth.

I'd also highlight our assumptions are not contingent on improvement in vet visit volumes. For the full year, we expect the U.S.

Pet Health business to achieve at least high single-digit revenue growth, once again leading the industry. Now, I'll hand it back to Jeff for closing comments.

Thanks, Bob. As we accelerate into 2026, our innovation, portfolio, and productivity strategy is working.

Elanco is a different company today, well positioned to lead growth in animal health through consistent execution of our strategic priorities: growth, innovation, and cash. The base business grew this quarter, while the launch of our big six innovation portfolio builds momentum.

Elanco will stay disciplined and focused, while anchored on the belief that we are about delivering, not promising. We are now advancing our next wave pipeline, targeting five to six new blockbusters by 2031, and unlocking more than $2 billion in unprobabilized peak sales potential.

Through Elanco Ascend, we expect to drive meaningful margin expansion and operational efficiency beginning this year, aiming to deliver more than $1 billion in free cash flow through 2028 and reduce net leverage below 3 times by 2027. All of this on top of sustainable megatrends in pets and protein that make animal health a durable, resilient industry, and one of the most compelling long-term growth sectors.

Elanco is confident in the animal health industry in both 2026 and into the longer-term future. These tailwinds are expected to extend animal health's mid-single-digit growth, adding an estimated $20 billion in industry value over the next decade.

Last quarter, I highlighted the robust protein trends for our farm animal segment. Specific to pets, I would point to my recent Shared Table podcast episode with Jay Mazelsky from IDEXX and Jay Price from Mission Veterinary Partners.

The pet opportunity is significant. Diagnostics are completed on just 20% of pets today.

We see only the surface of the true disease spectrum that exists. As we expand what we detect, AI accelerates what we can learn, and a generation of middle-aged pandemic pets enter their highest care years, the pie is growing.

The leaders who focus on delivering value to the pet, the owner, and the veterinarian to meet this increasing expectation of care will be the ones who grow with it and beyond. I especially want to thank the Elanco team for their commitment to serving customers and continuing to push boundaries to exceed their expectations.

Today, strong results and raised outlook for 2026 were made possible through our team's dedication, building on more than 70 years of transforming animal health to create long-term value for customers, communities, and our shareholders. With that, I'll turn it over to Tiffany to moderate the Q&A.

Thanks, Jeff. We'd like to take questions from as many callers as possible, we ask that you limit yourself to one question and one follow-up.

Operator, please provide the instructions for the Q&A session, and then we'll take the first caller.

Great. Thanks, guys.

Good morning. I'll start the U.S.

pet health result in the quarter was up 6%. I'm guessing it was probably a bit lower if we normalize for Advantage sales, call it into the new doors.

Jeff, can you talk about what held back the U.S. pet health in the earlier part of the quarter and more importantly the main drivers to the accelerating 2H '26 assumption?

I know there's some good color on page 20, which I think is very helpful, but any additional feedback would be great. I think that is a focal point for investors here in the near term.

Thank you, John. Look, we had I think like the whole industry a January and February that was cooler, but we saw a really nice rebound and all the lead indicators on our new products were extremely strong.

An 8% jump back in March, even stronger in April. As we look at the forecast with Bob and his team for the rest of the year, and as highlighted on that slide, we see Zenrelia, what a quarter for Zenrelia.

It was number one brand for our company and growth driver and we'll talk more about that, but Zenrelia was a major contributor as well as Quattro. Then, we've got the Befrena launch, we've got a step-up in price.

All of this we believe on the existing kind of industry backdrop. You mentioned on retail.

Retail had a extremely strong quarter and the strategy's working. If you look at retail, it was AdTab internationally, but in the U.S.

it's bringing an Advantage collar, adding distribution points with a value store in Dollar General all the way to a box store. Today we're taking share, we're adding double-digit growth to these major key retailers.

The omnichannel is working. We see a nice step-up the rest of the year.

That's why we wanted to be clear. It comes with a lot of confidence with a March and an April trajectory change.

That's great color. Thanks for that.

Then, the second question, it seems like you're talking more openly about these corporate accounts, and it seems like that also has a role in the acceleration. I'm just curious, are these commitments from corporates, call it for a first time?

Are they competitive wins? Also, when we think about these corporate deals, is it broad-based?

In other words, are we talking CQ, Zenrelia, Befrena upon launch? Maybe you can provide some details there.

Thanks, guys.

Thank you. Corporate accounts we were very under-indexed a year ago.

We shared in the last quarter how the number of corporate accounts were growing that weren't growing last year. We saw a 12% step-up, double the growth rate in corporate accounts.

It all comes back, John, you know this, to a winning portfolio. When you start to see the uptake, when you got over half the clinics in the U.S.

using Zenrelia, you see 40% with Quattro, and you look at best medicine with Quattro with the demand for Zenrelia. If you're a corporate account, you don't have this and you've got clients coming in asking if there isn't more of a pull than a push that's happening with corporate accounts.

I think Bob and his team, Chris Bartram and Matt Huttinpillar and the team, has done a very nice job of making sure though it is value-based. We are not going places where price would be impacted negatively with corporate accounts.

We're taking very value-based approach to these corporate accounts, and it's working.

Thank you.

Great. Thanks for taking the question.

I'll ask one big one on Zenrelia and then maybe a quick follow-up. On the one hand, you're doing, I think, much much better than any of us had anticipated given the label restrictions you touched on.

Blockbuster trailing 12 months, we're kind of pegging this into $40 million for the quarter. Continues to ramp very, very nicely despite the label.

On the other hand, the FDA label update, I think is less than what people were expecting. Just wonder if you could talk about why you're having such success despite the label restrictions, and if you could give an update on the additional trials, the data generation, just any thoughts on timing when we could get either more updates or see that label change.

I've got a quick follow-up.

Michael. I think I start with the derm market continuing to grow double-digit.

Truly an amazing quarter, and we've got a special product here in Zenrelia. We've got future year demands coming into this year.

We see the potential of this product much greater than we saw it even last quarter. We've got just greater expectations, and we're seeing it globally.

This, and we've talked about this, it's all back to efficacy, and the product just simply works. Relative to the label, I would say no.

I think it's a little bit of aligned relative to our strategy. We had constructive dialogue, as I mentioned, with the FDA regarding the data.

They've requested a little bit more research. I step back on this multi-prong approach we took, which is, hey, first we submitted the PCR data.

We got a positive improvement in the label. They requested the published booster data.

That's what we submitted, and we knew this was a potential expectation. They requested this additional data, and we've already started the trial.

Trials along the way. We've got good concurrence on the study, and we'll be submitting it by the end of the year, Michael.

Given Zenrelia's success that's well beyond our plans, we now have greater expectations for the potential of this product, with additional label improvement in the U.S. really representing just further possible upside.

Our guidance has always been, as I said, conservatively assumed with no incremental change to the label. With all of this, I come back to the most important thing: we're taking share, we're in over 50% of the clinics in the U.S., our expectations are growing, we have moved to 24/7 manufacturing because we see the future forecast for this product growing, especially as we head into derm season.

Again, we got now 2 million dogs, 2 years of use, great PV data, 44 countries internationally now with all labels without restrictions, we're in a really good place.

Michael, and Jeff Jeff highlighted it, right? Just as a reminder, our 2026 guidance and our Investor Day guidance we gave back in December assumes that the label is as is.

It did not assume a label change here in 2026. Where we are today, right, with the current status and timeline, that provides potential upside to growth, potentially starting in 2027 with a clean label.

Okay. If I could squeeze in a quick follow-up on price.

I think you saw 2% price in the quarter, but you also in your prepared remarks talked about implementing a significant price increase as you'd mentioned in the past. Could you just talk about how big that was, price assumptions for the rest of the year, [cough] any specifics on that would be helpful.

Thanks.

Sure. Thanks for the question.

Hey, price in the quarter is right aligned and right in with our expectations for the quarter and for the year. Price in the quarter, as I highlighted, was 2% across the board.

That's both on the pet side and the farm side. I'd remind you that pricing can be influenced by customer and product mix for any quarter.

We do expect 2026 pricing to accelerate from where it was in 2025, and that quite honestly just reflects the enhanced value that our best innovations bringing and the comprehensive portfolio we're bringing to customers. I'd remind you that in U.S.

Pet Health side, we did bring the highest pricing to vet clinics this year. It's been the highest in 5 years as we continue to price to value.

Listen, I think you'll see price accelerate as we see continued ramps in Zenrelia and Quattro throughout 2026. I think

as Bob and I, and Bob, another I think an observation we made, Michael, is prices in the industry are holding up strong, even in U.S. pet, very nicely, even in corporates.

I think what the change has been is there's just an increased need to spend to hold and capture share. I think that's a positive as everyone is selling value, and we don't see price impact.

We see spend maybe impact, and we got good measures on seeing the return on our spend, and that's why we're leaning in on it.

Thank you.

Hi, guys. Thanks for taking my question.

I thought I would focus a bit today on the non-innovation side for a second, and specifically what I'm seeing is while there's all this focus on some of the new launches, your cattle business might have hit an all-time high if I'm not mistaken, and poultry is also at near the best numbers you've ever put up. Could you speak to the broader dynamic in farm business?

I realize herd count's part of it, but I don't think that's all of it. I'm just trying to understand what the underlying drivers are on both sides, but also how sustainable they are as herd counts come back, etc., over time.

Very insightful question, Umer, and I agree with you. I don't think people realize that last year in 2025, our industry grew 7%.

In farm animal, it grew 10%. Pet health, 5%.

Farm animal is got durable undertones. I saw what we spoke at the Semafor conference out with some of the major, major CEOs the last 4 months, and there is a protein revolution going on, and it's playing through in the numbers.

You see Tyson's results yesterday with the chicken business. What you've got here is we're expecting a 5% growth in U.S.

on the protein side. We've seen meat sales up 100% the last 5 years, and it's coming back to this shift back to protein.

Now, as you look at the different species, yes, there's a shortage in the beef market, but you're seeing the benefit carry over to international beef and in poultry. Actually, producers are making a lot of money, packers are not, and we serve producers.

That dynamic in beef is positive. Probably the quiet species nobody's talking about is dairy, and dairy could be second to poultry and benefiting from this protein revolution.

They just got more SKUs when you look at the shakes and the yogurts and the things that are going on. I think there's big investment in dairy.

That's where AHV acquisition plays nicely. Then, yes, poultry, 3% growth the last three consecutive years, and we don't see that slowing at all.

I think the carryover of protein, there's been a little bit of an over-indexing on the cattle herd size, and that may be a little longer. I actually think that benefits us and benefits producers as the rebuild comes a little stronger, the prices will hold up.

Farm animal business, we look like we're in a very strong position. We're in a leadership position, the medicated feed additives, vaccines, and across all the other additives, and we're adding to that portfolio with the AHV acquisition.

Thank you very much.

Hey, everyone. Thanks for taking the question.

Congrats on a nice quarter here. There's not too much to pick on in a nice quarter, but I did want to go back to the question that John was asking just about the U.S.

pet health number, and I can appreciate there was a little bit of noise maybe in end markets, things like that. I'm kind of curious, is there anything else we should be thinking about on a year-over-year basis as you think of that number, trying to think of the ramp?

Why would a business that, if you think about Quattro, was a pretty low base in Q1 '25, why would the monthlys be changing so much? I think that's part of what a lot of us are trying to understand as we think about the ramp through the rest of the year.

Maybe I'll give you some color, Brandon. Thanks for the question.

Reminder, last year in Q1, we did have the initial launch of Credelio Quattro, and so we did have a tough compare. Even in light of that, we still outgrew Quattro versus last year.

That's kind of one point of interest. We did highlight it.

Jeff touched a bit about it, and it's certainly on a slide I presented. Maybe just to give you a little bit more color on the second half, and which gives us a high degree of confidence in the second half of the year.

We continue to see strong momentum in Quattro and Zenrelia. You think about the clinics and the data we gave about new purchasers, that's going to continue to ramp throughout the year as we see order rates holding strong.

We are investing more in DTC behind these brands. Befrena continues to be on pace with our launch expectations, and there's a high degree of excitement from vets, particularly on our entire derm portfolio.

Bob did have a group of vets in last week, and the buzz was about both Zenrelia and Befrena. Then corporate accounts, we talked just a bit about this on the call, but listen, those contracts will continue to ramp throughout the year.

Again, we're confident in the second half of '26 here with the U.S. pet side.

Again, our guidance does not assume an improvement in vet visits for the year here.

Okay. Thanks.

Then, as a follow-up here on the guidance, there was a comment about generics in the investor deck and, just in general, competition. You guys have talked about this, that it's a competitive space.

How do you guys think about competition when you're putting together guidance? I think you're in a unique position now where you have a lot of innovative products out there, this is something to think about on a go-forward basis.

How do you bake that in? Are these transient headwinds?

Are they price? Are they volume?

Any details you can give on what's baked into the guidance from competition and generics would be helpful. Thank you.

We assess it market by market, Brandon, and do this in our quarterly forecasting. We've got good read, good data from a competitive standpoint and a good competitive intel group.

I believe as Bob has highlighted, we've taken a balanced approach. No change.

We're in our third year of growth and delivery, and that same philosophy is carried forward as we look at the rest of the year for U.S. Pet Health or look at the rest of the year for any one of our businesses, generics included in competition.

Feel very good about our assumptions as we look at the rest of this year.

Great. Thank you.

Just wanted to ask about how we should think about the progression of clinic penetration for both Zenrelia and Quattro, and the share within those clinics as we go through the rest of 2026, especially just given the ramp you have for U.S. pet.

Maybe because we haven't talked much about Quattro, I just point to a couple statistics we highlighted. It's off to a really great start, and the momentum we have with this product, we do see everything run relative to best medicine here.

Bob highlighted four key metrics that were hit critical at the Investor Day: more clinics, increase share within these clinics, puppy starts, and growing market. I would keep anchoring back to these, Daniel, as we look going forward.

We picked up 2,500 new purchasers year-to-date through April. I think the biggest metric that I would point to is we're in 40% of the U.S.

clinics with Quattro. That will continue to grow, but most importantly is we picked up 13 points of share.

Now we're at 53% of share within those clinics. We are truly moving to first-line treatment, and we're the number one growth company in market share growth.

I think that's the statistic to watch, as it's really demonstrating best medicine. Now this is the third quarter in a row that we're winning the puppy index, and Q1 was greater than Q4, and the market grew 27% last year.

I think when you put all that together, maybe a weather challenge in January, February, we see a lot of resiliency, tick bites being up, we see a potentially one of the biggest parasiticide season. Then on derm, it's just continuing not only to get more clinics, but we're seeing a major shift now to first-line treatment.

Watch the international markets especially with Zenrelia given the market shares that we've seen. Those would be the key areas to watch, and again, it's all back to market share and market growth.

We're getting market share growth and market growth while a base business in Q1 grew.

Got it. Super helpful.

Actually wanted to ask on the international dynamics for Zenrelia. What are you seeing in terms of competitive or promotional intensity from other manufacturers that have oral JAK on the market and any change there?

Then, could you just size the market growth you're seeing in derm ex-U.S.? Thanks.

It's an $800 million market internationally, and that's growing double-digit, growing even faster than the U.S. Again, remember, 70% of puppy starts are actually outside the U.S., a lot of positive trends.

Then, yeah, we again see that with the head-to-head study playing out in field and a lot of KOL support, you're seeing these market shares. Taking over market leadership after 1 year in Brazil, coming through a Southern Hemisphere derm season, I think is a great proof point of how strong this product is.

Even with a new competitive market entrant, the head-to-head study is showing, and we're winning share even there, with high teens to 30% European markets. We'll continue to globalize, but again, we're in 44 international countries.

Now it's all about more share and moving to first-line treatment. Next question.

Great. Thanks for the questions, and congrats on all the progress.

Just first one for me is the no-regrets launch approach has clearly paid off. I guess my question is, if this outperformance continues, how should we think about Elanco thinking about reinvestment of potential upside back into the business?

Should we think about this still as you got to keep putting money back in for promotions, or do we reach a point where we think about more of the top-line upside maybe falling to the bottom line? Then my second question was just on maybe the type of pets moving onto Zenrelia given the share gains you've been seeing.

Can you just elaborate a little bit more of what you're seeing there in terms of new starts versus those who've maybe failed Apoquel in terms of the type of animals going on the drug? Thanks so much.

Great. Hey, Chris.

I'll take the first one here. Thanks for the question.

As I sit here today, I'm really pleased with take Q1, for instance. This is the exact profile that I'd love to have where we exceed our expectations and we continue to reinvest in these innovative products.

We're using data to determine how much we invest, and we see high ROI on these investments. We'll continue to use that data to keep the pressure on and keep the pedal to the metal, if you will, on growing these top-line numbers with these brands.

We're going to keep doing that. Elanco Ascend is so important to this process because what it allows us to do is continue to beat expectations, drive value to the bottom line while also reinvesting in the business.

I would say that investment's really in two spots. It's not only in the near-term DTC, if you will, for the brands, but it's also continue to fund more in R&D for that next wave and that next wave.

I'd pick up, Chris. We just hosted last week there was a major vet conference here in Indianapolis and dermatology experts.

I had over 300 of them here at the headquarters, and, I would say the buzz is the Zenrelia efficacy, the movement to first-line treatment, and really, as we started out with acute and seasonal cases, and the shift, going more to chronic, which is two-thirds actually of patients are acute and seasonal, but the volume of course is in the chronic side. I would just say that we're starting to see that shift and of course, the global momentum of the product.

I think I got to highlight also Befrena. Here we come with this quarter we're launching.

We've got the product in the hands of all the major influencers and KOLs, a lot of buzz at the conference about that product being differentiated, too, with the 6 to 8-week claim. I think it's going to do really well even as new innovations come, with the two-thirds of derm patients being acute and seasonal, that plays really nicely with Befrena.

Really, Elanco now becomes a very competitive derm player with two differentiated assets with a lot of momentum in a marketplace that wants new products, in a derm market that's growing double digits. The news here in this corner has to be pointed to Zenrelia and the momentum and the increased momentum, and then here comes Befrena and our derm competitiveness, and Quattro will help derm as well.

Hey, guys. Thanks for the questions.

Just wanted to touch on your expectations for visit volumes. It sounded like March you saw a big improvement, and then in April that continued.

I guess just how are you thinking about the rest of the year with what might be a more constrained consumer budget? I understand you're not baking any of this into your guidance, but just wanted to get your outlook.

Thanks.

Thank you. We we believe that, vet visits are something we keep our eyes on.

Non-wellness visits went up. I know people have pointed to that.

We we really look at we think they're over-indexed for Elanco. They will not play a factor and be a determinant of our success in '26, and we we don't see this even as a short-term or a long-term factor.

I think the ones we point to are expectations of care are driving a willingness to spend, you got to have innovation and portfolios, and we do. Convenience matters, and we are the leader in omnichannel.

We can reach more pets where they want to shop at the price points they want to shop at, and you got to be globalized. I think that's under-indexed as well.

All of that run by a really good team and a great ground game. One thing I would call out is our relationship with distribution is giving us a share share of voice advantage.

All of these things matter so much more, and the trends that we think are more important than vet visits. It'll be something we monitor, but we don't see it being a determinant of our success.

Great. Thanks.

Just wanted to ask one more on Befrena, just any key milestones we should be looking for over the next few quarters, and then just any more color you can provide on the feedback that you've received to date? Thanks.

I'll remind everybody it's a ramp launch that will come into H2, which is common with monoclonal antibodies. We'll be into the marketplace.

We're in it now with KOLs and the key influencers. We'll start to move into the marketplace here this quarter, and then it'll ramp in a staged way into the second half and be a contributor to the U.S.

pet health growth. We've also got a submission to Canada as well, and then, it'll be a major player of growth as we go into 2027.

Great. Thank you.

Hi, good morning. Thanks for taking my question.

One on Befrena, if you can maybe expand on your strategy, especially as competitors launching a long-acting likely in early 2027. Interested to hear if you take a similar approach that you did with Zenrelia.

In farm animal, you touched based on herd regrowth. Can you discuss your outlook for MFAs in particular?

Thank you.

Great question. Again, I would step back and say we've got our second derm product coming with a lot of momentum with Zenrelia, a differentiation on efficacy, convenience, and value across the board with Befrena coming in.

I would point to, we start with a big market that we already have with two-thirds of derm patients being acute and seasonal, and so that's less than 3 months of use window. That plays very nicely for a very big market for Befrena.

Yes, we've got in our pipeline, next-generation derm and including long-acting as well, we're well suited to grow our leadership in derm the rest of the decade globally. Then on MFA question, durable trends, MFAs continue to grow nicely.

We point to our portfolio of Experior, Rumensin, even on ionophores and poultry. We are the MFA market leader, and we continue to hold and grow share there across the globe.

Thank you.

sorry about that. I was on mute.

Thanks for taking the question, and congrats on the quarter here. I did want to ask about capital deployment priorities now that it seems like you're going to hit that leverage target earlier than anticipated.

I'm curious how you're thinking about M&A. You obviously had a nice tuck-in this quarter, but going forward, does this open up the aperture for larger M&A deals?

If so, what are some areas you'd be looking at there? Also, I guess, similar question on share repurchases.

When would you feel comfortable turning on share repurchases as your leverage comes under that 3 times target? Thanks.

Right, Daniel. Hey, and thanks for the question.

Good morning. As I think about capital allocation, really no change to the strategy that we've laid out here for a while here.

Organically investing in the business and paying down debt is still going to be our number one priority. We will continue to look at M&A, but I will tell you these are going to be small, tuck-under opportunities.

It's not going to derail us from our deleveraging timeline of getting into that now 3 to 3.2 times at the end of this year and getting below 3 in 2027. What we've said is when we get below 3 in 2027, that certainly gives us some flexibility with capital deployment and shareholder return.

We haven't been explicit on what that looks like yet. We'll continue obviously work with our board of directors on what that strategy is and we'll certainly be transparent with the street as we have more clarity around that.

I'll maybe just...

Sorry,

go ahead.

No, go forward. I was going to ask another question on just the ramp-up given the new deals with Costco and Dollar General on the retail side.

How should we think about the revenue and margin impact of these new partnerships as they ramp in '26 and then kind of scale in '27 and beyond?

Maybe I'll give you just color on what I would call normal buying patterns of these sort of customers, and particularly with the Advantage brand is where we saw strength here in launches with Costco and Dollar General. These are more seasonal buys here, and so what you'll see is really a first half of the year purchasing dynamic with reorder rates kind of throughout the first half.

Then because this is seasonal, you'll actually see inventory deplete here over these customers here in the second half. We'd expect reorders again in 2027.

Think of this as a seasonal first half opportunity for us as we move forward.

I'll just maybe close. Thank you for your time, everybody, this morning, and continued interest in Elanco.

The best quarter that we've probably had as an independent company since being an IPO, high-quality growth, a base business that grew in Q1, the basket of significant innovation is building momentum, all on the backdrop of what I believe is a very durable animal health industry. Our momentum, I hope, is evident in the market share gains that we highlighted today across our portfolio.

The IPP strategy's working. The level of engagement in Elanco is very high.

We're a different company today, well positioned to really be a leader in the animal health business. We'll keep our focus on growth, innovation, cash, and we appreciate all of the interest in Elanco.

We will remain focused, I promise you, on delivering value for you, customers, and the greater society as well. Thank you for your time today.

We look forward to engaging with you all through the quarter. Have a great day.