Good Company

Elanco Grows Pet Health 14 Percent in Q3 as Zenrelia and Credelio Quattro Take Share

Elanco reported third quarter revenue of $1.265 billion, up 11 percent, with U.S. Pet Health up 13 percent on Zenrelia and Credelio Quattro, and raised its full year outlook in the same week Zoetis reported U.S. companion animal sales down 8 percent.

By Good Company Editorial Desk

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The News

Elanco Animal Health reported third quarter 2026 results on November 6, and pet health did the heavy lifting. Revenue rose 11 percent year over year to $1.265 billion, or 9 percent on an organic constant currency basis, with price up 4 percent and volume up 5 percent, the company said in its earnings release. Pet Health revenue rose 14 percent to $608 million, while Farm Animal revenue rose 6 percent to $631 million.

U.S. Pet Health grew 13 percent in organic constant currency terms, driven by veterinary clinic sales of Credelio Quattro and Zenrelia, and International Pet Health grew 17 percent, supported by demand for Zenrelia and AdTab, according to the company. Innovation revenue, led by what Elanco calls its Big 6 portfolio, reached $328 million in the quarter, up 40 percent year over year.

Both lead brands set records. Zenrelia, its once daily oral treatment for itching tied to allergic and atopic dermatitis in dogs, had its largest revenue quarter ever in the U.S. and internationally, with September as its largest month ever, the company said. Its U.S. share of the JAK inhibitor market grew 7 points year over year, and Elanco added 1,600 clinics in the quarter to reach approximately 19,000 U.S. clinics. Credelio Quattro, its broad spectrum parasiticide for dogs, grew U.S. share by 9 points year over year, added 1,600 clinics to pass 16,500 clinics, and became Elanco's largest U.S. Pet Health branded product, surpassing Seresto in the U.S., the company said.

"Third quarter results demonstrate Elanco is a consistent, reliable growth company, delivering our diverse portfolio of innovation along with accelerating cash flow," said Jeff Simmons, President and CEO of Elanco, in the release.

Elanco, reporting from Indianapolis, also raised its outlook. Full year 2026 revenue guidance moved to $5.155 billion to $5.18 billion, adjusted EBITDA guidance to $1.05 billion to $1.065 billion, and adjusted EPS guidance to $1.17 to $1.20. The company raised its 2026 innovation revenue target to $1.275 billion.

Why It Matters

The timing is what makes this quarter land. One day earlier, on November 5, Zoetis reported third quarter revenue of $2.4 billion, down 1 percent on both a reported and an organic operational basis. Its U.S. segment fell 6 percent to $1.2 billion, and U.S. companion animal revenue fell 8 percent, which Zoetis attributed to macro driven price sensitivity, competitive pressure in dermatology, and generic competition. Zoetis said its key dermatology sales fell 16 percent globally to $396 million, with U.S. dermatology sales down 13 percent to $266 million, mainly on Apoquel share losses.

Read side by side, the two reports describe the same fight from opposite ends. Elanco is gaining clinic penetration and share in dermatology and parasiticides, the two categories where the incumbent is losing ground. Elanco said Credelio Quattro received a positive opinion from the European Medicines Agency for expansion into the European Union, with a launch expected in the first quarter of 2027, and that Befrena, its injectable treatment for canine atopic dermatitis, is now open across clinics with a full launch planned for the first quarter of 2027. The company said about 20 percent of clinics that bought Befrena had never used Zenrelia, which suggests the new product is opening doors rather than just switching existing buyers.

Margins tell a second story. Elanco said adjusted gross margin expanded 300 basis points to 56.1 percent, helped by pricing and favorable mix from U.S. Pet Health and global ruminants, even as operating expenses rose 12 percent behind product launches. The company spent more to sell the new drugs and still expanded margin, because the mix shifted toward higher value clinic products.

The Numbers

  • Revenue: $1.265 billion, up 11 percent reported and 9 percent organic constant currency, from $1.137 billion a year earlier, with price up 4 percent and volume up 5 percent (Elanco earnings release, November 6, 2026)
  • Pet Health: $608 million, up 14 percent; Farm Animal: $631 million, up 6 percent reported (Elanco)
  • U.S. Pet Health up 13 percent organic; International Pet Health up 17 percent organic (Elanco)
  • Innovation revenue: $328 million, up 40 percent year over year, led by the Big 6 (Elanco)
  • Zenrelia U.S. JAK share up 7 points year over year; about 19,000 U.S. clinics after 1,600 additions in Q3, per Kynetec data cited by Elanco
  • Credelio Quattro U.S. share up 9 points year over year; more than 16,500 clinics, or about 55 percent penetration (Elanco, per Kynetec data)
  • Adjusted gross margin 56.1 percent, up 300 basis points; adjusted EBITDA $243 million, up 23 percent, for a 19.5 percent margin (Elanco)
  • Reported net income $18 million, versus a $34 million loss a year earlier; adjusted EPS $0.27, up 42 percent (Elanco)
  • Net leverage 2.9 times adjusted EBITDA at September 30, down 0.7 times from December 31, 2025 (Elanco)
  • Raised full year 2026 guidance: revenue $5.155 billion to $5.18 billion, adjusted EBITDA $1.05 billion to $1.065 billion, adjusted EPS $1.17 to $1.20, innovation target $1.275 billion (Elanco)
  • Contrast, Zoetis Q3: revenue $2.4 billion, down 1 percent; U.S. companion animal revenue down 8 percent; key dermatology sales $396 million, down 16 percent globally (Zoetis via Business Wire, November 5, 2026)

What It Means For You

If you run a clinic, expect the dermatology and parasiticide conversation to get louder. Elanco added 1,600 clinics for each of its two lead brands in a single quarter and is preparing a full Befrena launch in early 2027, while Zoetis is defending Apoquel and Cytopoint with promotional investment. That means more rep visits and more pressure to justify your first choice protocol on both efficacy and cost. Ask each company for clinic level share and retention data, not just its national headline, before you change a standard protocol.

If you sell pet health products in retail, watch the other channel. Elanco noted that Seresto sales were hurt in the quarter by U.S. retailer inventory drawdown, even as it described underlying demand as in line with expectations, and its Advantage and Seresto families produced $115 million and $49 million in the quarter. On its earnings call, management said its retail strategy is built to reach the one third of pet owners who do not regularly visit a veterinarian. Clinic growth and retail reach are one omnichannel plan for Elanco, and brands that only defend one shelf will feel it.

If you compete with either company, the lesson is sequencing. Elanco did not win the quarter with one launch. It stacked a dermatology pill, a broad parasiticide, a fast growing international flea and tick chew, and a pipeline product that recruits new clinics into the franchise. One differentiated product earns the clinic meeting, the second earns the protocol, and the portfolio earns the price increase. Elanco took 4 percent price in the quarter while gaining share, the clearest sign the differentiation is holding for now.

What To Watch

Watch the first quarter of 2027 launches. Credelio Quattro is expected to launch in the European Union in that quarter, and Befrena moves into full launch in the same window, so Elanco will test whether U.S. clinic momentum travels. Watch Zoetis's response as well: its Simparica franchise grew only 1 percent globally to $358 million in Q3, and management is planning cautiously for 2027 without assuming improvement in pet owner spending or clinic visits.

Watch clinic traffic most of all. Zoetis said on its call that U.S. clinic visits were down 3 percent year to date, with canine visits down 5 percent in the third quarter, and that veterinary service costs are up 50 percent since 2022. Elanco, on its call, cited a survey in which 93 percent of pet owners said they are maintaining or increasing health spending. Both can be true for different households, and the brand that keeps an effective product inside a budget owners will actually pay will take the next point of share.

Sources

  • Elanco Animal Health Reports Third Quarter 2026 Results, PR Newswire via Morningstar, November 6, 2026: https://www.morningstar.com/news/pr-newswire/20261106de90686/elanco-animal-health-reports-third-quarter-2026-results
  • Elanco (ELAN) Q3 2026 Earnings Call Transcript, The Motley Fool, November 6, 2026: https://www.fool.com/earnings/call-transcripts/2026/11/06/elanco-elan-q3-2026-earnings-call-transcript/?source=iedfolrf0000001
  • Zoetis Announces Third Quarter 2026 Results, Business Wire, November 5, 2026: https://www.businesswire.com/news/home/20261104076504/en/Zoetis-Announces-Third-Quarter-2026-Results-Highlights-Progress-Advancing-Innovation-Across-Diversified-Portfolio-and-Narrows-Full-Year-2026-Revenue-Guidance-Raises-Full-Year-2026-Adjusted-EPS-Guidance
  • ZTS Q3 Earnings Top Estimates, 2026 Profit Outlook Improves, Zacks, November 5, 2026: https://www.zacks.com/stock/news/3024775/zts-q3-earnings-top-estimates-2026-profit-outlook-improves-stock-up
  • Zoetis (ZTS) Q3 2026 Earnings Call Transcript, The Motley Fool, November 5, 2026: https://www.fool.com/earnings/call-transcripts/2026/11/05/zoetis-zts-q3-2026-earnings-call-transcript/