Elanco Animal Health Raises Q4 Revenue Guidance

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Elanco Animal Health Inc. (ELAN) said it raised its fourth-quarter revenue guidance. It provides 2020 financial targets and 2021 guidance, and is outlining a comprehensive roadmap to long-term margin and net leverage target.

At Investor Day, the company will share the granular components of its long-term growth algorithm, which provide a clear path toward its targeted about 3%-4% average annual revenue growth, and double-digit annual adjusted EBITDA and adjusted earnings per share growth, Elanco said.

Elanco noted that it will provide an unprecedented view of its pipeline, starting with eight expected launches in 2021, including one with blockbuster potential. Innovation contributions will lead the company’s sustainable top-line growth, expected to add about $80 million to $150 million in revenue annually, or 2%-3% to total company revenue growth.

Elanco said it is accelerating the value capture opportunity through the Bayer Animal Health transaction to deliver $300 million in synergies by 2023, two years faster and at the high end of the company’s earlier commitment.

At the same time, the company said it will continue to execute the multi-year productivity agenda across its manufacturing network to achieve at least an additional $100 million in savings by 2023.

The company expects loss per to be in the range of $0.32 – $0.38, adjusted earnings per share of $0.06 to $0.12 for the fourth quarter of 2020. Analysts polled by Thomson Reuters expect the company to report earnings of $0.12 per share for the fourth-quarter. Analysts’ estimates typically exclude special items.

The company raised its fourth quarter 2020 revenue guidance to a range of $1.04 billion – $1.07 billion?, from the prior outlook of $1.02 billion to $1.06 billion. Analysts expect revenues of $1.05 billion for the fourth-quarter.

The company projects total revenue to be in the range of $4.37 billion to $4.40 billion for fiscal year 2020. Analysts expect annual revenues of $3.18 billion for fiscal year 2020.

For fiscal year 2021, the company anticipates loss per share of $0.14 – $0.28, adjusted earnings per share of $0.83 to $0.95, and revenue of $4.52 billion – $4.60 billion. Wall Street currently is looking for fiscal year 2021 earnings of $1.04 per share on annual revenues of $4.52 billion.

Elanco expects to achieve adjusted gross margin of 60% in the 2023 to 2024 timeframe, and adjusted EBITDA margin of 31% in 2024.

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