Linda Bolduc

Linda Bolduc requested an update on the Phibro Forward initiative, specifically what achievements have been realized to date and what remains ahead. She also asked about the proportion of margin expansion in the latest outlook driven by structural cost initiatives versus cyclical or mix-related benefits. Additionally, she inquired if companion animal innovation, particularly oral health, would be a meaningful contributor in 2026 or later.

Answer

Glenn David, CFO, stated Phibro Forward is a significant growth driver, halfway through FY26, with optimal contributions expected in FY27 and accelerating benefits through the end of FY26. Donnie Bendheim, EVP of Corporate Strategy and CEO Designate, emphasized that Phibro Forward impacts all company parts, including structural changes, gross margin, revenue strategies, R&D, and technology. Glenn David, CFO, clarified that companion animal oral health would be a limited contributor in FY26, with more material contributions expected in FY27 and beyond.

Linda Bolduc requested an update on the Phibro Forward initiative, specifically what has been achieved to date versus what remains, and how much of the projected margin expansion in the latest outlook is due to structural cost initiatives versus cyclical or mix-related benefits. She also asked if companion animal innovation, particularly in oral health, is expected to be a significant contributor in 2026 or more so in future periods.

Answer

Glenn David, Chief Financial Officer, stated that Phibro Forward continues to be a significant growth driver, with optimal contributions expected in fiscal year 2027 as the company is halfway through the process. He anticipates accelerated contributions through the end of fiscal year 2026. Donnie Bendheim, EVP of Corporate Strategy and CEO Designate, emphasized that Phibro Forward impacts all company aspects, including structural changes, revenue strategies, R&D, and technology, laying groundwork for future growth. Mr. David clarified that companion animal innovation, including oral health, will be a limited contributor in 2026, with more material contributions expected in fiscal year 2027 and beyond.

Speaking on behalf of Erin Wright, Linda Bolduc asked about the potential implications of new tariffs on Phibro, the expected progression of EBITDA margins throughout the year, and the company's latest view on underlying demand trends across key animal species.

Answer

CEO Jack Bendheim stated that the impact from announced Chinese tariffs is expected to be 'very, very small.' CFO Glenn David added that the company expects continued strong adjusted EBITDA margin improvement driven by the Phibro Forward initiative and the Zoetis portfolio. He also confirmed a positive demand outlook for the rest of the year, citing strong profitability for customers across poultry, swine, and cattle.

Linda Bolduc asked about the impact of recent competitive launches in dermatology and parasiticides on Elanco's performance in Q3 2025 and into Q4 2025. She also inquired about the extent to which competition is embedded in the current guidance and if it is expected to ramp significantly in 2026. Additionally, she requested more details on the topics to be covered at the upcoming investor day, beyond the Elanco Ascend program.

Answer

Jeff Simmons, President and CEO, stated that competitive impacts are factored into the 2025 guidance, and Elanco has a clear view for 2026. He noted no material impact from competitive entries in the broad-spectrum endectocide market, which continues to grow at 40%, or from new international para competitors, attributing this to Elanco's differentiated portfolios. Regarding the investor day, Simmons mentioned that the content would reflect investor feedback, focusing on Elanco's growth trajectory, margin improvement, the Elanco Ascend opportunity, pipeline aspects, and the leverage reduction plan, with the executive team presenting the IPP strategy.

Linda Bolduc from Morgan Stanley asked about the impact of recent competitive launches in dermatology and parasiticides on Elanco's performance in Q3 and early Q4, and how much competition is embedded in the current 2025 guidance and future 2026 expectations. She also asked for additional topics to be covered at the upcoming investor day.

Answer

President and CEO Jeff Simmons stated that Elanco has not seen any material impact from competitive entries in the parasiticide market, which continues to grow, and that competition is fully embedded in both 2025 and 2026 guidance. Regarding the investor day, Jeff Simmons mentioned that content would reflect investor feedback, focusing on growth trajectory, margin improvement (Elanco Ascend), pipeline, leverage reduction, and the IPP strategy, with direct engagement from the executive team.

Linda Bolduc, on for Erin Wright, asked for more detail on the cadence for the remainder of 2025, inquiring about any unique quarterly dynamics related to margin expansion, utilization, or generic launches.

Answer

CFO Jennifer Phipps reiterated the full-year operating cash flow guidance of over $300 million, which implies that subsequent quarters may be lower than the $102 million generated in Q1. She noted the company remains focused on managing DSO and inventory while maintaining flexibility for strategic investments, expressing confidence in delivering on the annual target.

Linda Bolduc from Morgan Stanley, on for Erin Wright, asked for clarification on the specific drug on the IRA list and its exposure. She also asked to parse out the drivers of the Pharmacy segment's growth between market share gains and new drug launches.

Answer

CEO Jon Rousseau clarified the specialty oncology drug is IMBRUVICA, and the company feels confident about managing the situation. He attributed the Pharmacy segment's strong growth primarily to favorable market dynamics rather than just share gains. Key drivers include the high-growth oncology market, a robust pipeline of innovative and generic drugs, and BrightSpring's effectiveness as a launch partner for new LDDs due to its high service levels.