# Elanco Animal Health (ELAN.US)

Canonical: https://gigainvestors.com/s/ELAN

Analysis as of: 2026-10-16T07:28:14.246Z. Financial observations: FY2015–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: fail; earnings resilience is evidence only). Published buy qualification: no.

Share price: $23.54 per share; close as of 2026-10-15.

Estimated value: low $5.04 per share, central $5.83 per share, high $6.64 per share. Buy at or below the central value $5.83 per share. Valuation as of 2026-10-16T07:28:14.246Z; scenarios are not confidence intervals.

Expected annual return: 4.5% at the stated quote. About 4.5% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: fail

- 2 revenue declines in the last 10 years (informational)

- more than 2 net loss years

- operating margin variation exceeds 0.35

- Financial history: 10 years

- Years with declining revenue: 2

- Years with a net loss: 7

- Operating margin variation: 0.55×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.05×

- FY2018: 0.10×

- FY2019: 0.12×

- FY2020: -0.02×

- FY2021: 0.06×

- FY2022: 0.09×

- FY2023: 0.07×

- FY2024: 0.06×

- FY2025: 0.05×

- LTM to Jun 2026: 0.09×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- ROIC, median of available years: 3.9%

- ROIC, second-lowest year: 2.5%

- Typical minus recent gross margin: 0.0 pp

- Typical gross margin (annual median): 43.5%

- Recent gross margin (lower of latest and 3-year median): 43.5%

- Years with nonpositive capital: 0

- Capital spending / revenue: 4.2%

- ROIC including acquisitions, ten-year median: 1.6%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2016: 5.3%

- FY2017: 2.5%

- FY2018: 5.6%

- FY2019: 7.0%

- FY2020: -0.8%

- FY2021: 3.4%

- FY2022: 4.5%

- FY2023: 3.9%

- FY2024: 3.1%

- FY2025: 3.8%

### economics: pass

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $1.0B

- Net income, five-year total: -$1.4B

- Return on incremental invested capital: >100%

- Working capital / revenue, annual change: -0.4 pp

- Working capital / revenue, change between three-year averages: -2.8 pp

- Working capital / revenue, final three-year average: 49.1%

Chart: Owner earnings · five years; fiscal year observations.

- FY2022: $420M

- FY2023: -$691M

- FY2024: $853M

- FY2025: $172M

- LTM to Jun 2026: $256M

### management: fail

- Historical market-dollar context (not the management verdict): 2018 to 2025 (7 years)

- buybacks unrelated to price (informational)

- ROIC first 3 years vs last 3 years: 5.3% vs 3.8%

- Per-share earnings: -0.59 to -0.47 (three-year endpoint medians)

- per-share value declined or ends nonpositive

- five-year and ten-year diluted share growth both above threshold

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: 3.4%

- Ordinary dilution, 5-year annual growth: 2.4%

- Market cap gain: -$282M

- Cumulative retained earnings: -$2.2B

- Diluted shares, 10-year annual growth: 3.4%

- Diluted shares, 5-year annual growth: 2.4%

- $1 test, starting fiscal year: FY2018

- $1 test, ending fiscal year: FY2025

- Per-share value change: $0.12

- Per-share value, starting three-year median: -$0.59

- Per-share value, ending three-year median: -$0.47

- Buyback history: 0 years

- Debt-funded buybacks: No

- Cumulative net income, 10 years: -$2.5B

- ROIC, first three-year median: 5.3%

- ROIC, last three-year median: 3.8%

Chart: Earnings per share; fiscal year observations.

- FY2016: -$0.16

- FY2017: -$1.06

- FY2018: $0.28

- FY2019: $0.18

- FY2020: -$1.27

- FY2021: -$0.99

- FY2022: -$0.16

- FY2023: -$2.50

- FY2024: $0.68

- FY2025: -$0.47

### accounting: pass

- Sloan accruals: -5.9%

- Receivables to sales index (DSRI): 1.00×

- Restructuring years, last five: 2

- Stock compensation / operating cash flow: 12.1%

- Earnings backed by cash: Yes

- Accounting red flags: 0

- Goodwill and intangibles / equity: 1.25×

Chart: Sloan accruals; fiscal year observations.

- FY2016: -2.5%

- FY2017: -5.4%

- FY2018: -4.5%

- FY2019: -1.7%

- FY2020: -2.9%

- FY2021: -5.9%

- FY2022: -3.4%

- FY2023: -10.5%

- FY2024: -1.6%

- FY2025: -5.9%

## Holders

- [David Hoeft](https://gigainvestors.com/DAC): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Lee Ainslie](https://gigainvestors.com/mc): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Down 28% since Oct 2021 · sales +6.5%

Story as of 2026-10-16T09:58:41.272Z; price observation 2026-10-15.

Price needs cash profits to grow 21.4% a year for ten years

- 2025-05-07: Elanco (NYSE:ELAN) Beats Q1 Sales Targets, Full-Year Outlook Slightly Exceeds Expectations ([finance.yahoo.com](https://finance.yahoo.com/news/elanco-nyse-elan-beats-q1-105300046.html))

- 2025-06-12: Elanco gains positive EMA opinion for Zenrelia for itching in dogs ([seekingalpha.com](https://seekingalpha.com/news/4457808-elanco-gains-positive-ema-opinion-zenrelia-itching-dogs?utm_source=feed_news_all&utm_medium=referral&feed_item_type=news))

- 2025-08-12: ELAN Q2 Deep Dive: Innovation and Execution Drive Raised Full-Year Outlook ([finance.yahoo.com](https://finance.yahoo.com/news/elan-q2-deep-dive-innovation-072537265.html))

- 2025-11-06: Elanco (ELAN): One-Off Gain Drives Profit, Raising Questions on Earnings Quality vs. Growth Narrative ([finance.yahoo.com](https://finance.yahoo.com/news/elanco-elan-one-off-gain-161339955.html))

- 2026-02-24: Elanco targets $1.15B innovation revenue in 2026 as Big 6 launches gain momentum ([seekingalpha.com](https://seekingalpha.com/news/4556061-elanco-targets-1_15b-innovation-revenue-in-2026-as-big-6-launches-gain-momentum?utm_source=feed_news_all&utm_medium=referral&feed_item_type=news))

- 2026-05-07: Elanco Animal Health (ELAN) Is Up 20.1% After Raising 2026 Guidance On Innovation-Led Growth ([finance.yahoo.com](https://finance.yahoo.com/sectors/healthcare/articles/elanco-animal-health-elan-20-182000280.html))

### Sales · FY2025–2026

sales +6.5%; source https://www.sec.gov/Archives/edgar/data/1739104/000173910426000012/elan-20251231.htm; observed 2026-02-24.

- FY2017: $2.9B 

- FY2018: $3.1B 

- FY2019: $3.1B 

- FY2020: $3.3B 

- FY2021: $4.8B 

- FY2022: $4.4B 

- FY2023: $4.4B 

- FY2024: $4.4B 

- FY2025: $4.7B 

- FY2026: $5.0B 

### Gross margin · FY2025

gross margin 43.5%; source https://www.sec.gov/Archives/edgar/data/1739104/000173910426000012/elan-20251231.htm; observed 2026-02-24.

- FY2016: 45.8% 

- FY2017: 40.6% 

- FY2018: 42.2% 

- FY2019: 45.6% 

- FY2020: 38.1% 

- FY2021: 43.6% 

- FY2022: 44.7% 

- FY2023: 43.9% 

- FY2024: 43.0% 

- FY2025: 43.5% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in drug manufacturers specialty & generic; annual sales are USD 4.7 billion.

- Source: https://www.sec.gov/Archives/edgar/data/1739104/000173910426000012/elan-20251231.htm (filed 2026-02-24); FY2025: revenue 4715000000; grossProfit 2050000000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); ELAN.US: Elanco Animal Health Incorporated, an animal health company, innovates, develops, manufactures, and markets products for pets and farm animals worldwide. The company offers pet health products, such as parasiticides, vaccines, and therapeutics that protect pets from fleas, ticks, and internal parasites under the Seresto, K-9 Advantage, Advantix, and Advocate trademarks; prescription parasiticide products, an over-the-counter treatments for the prevention and elimination of fleas and ticks under the Credelio Family, Interceptor Plus, Drontal family, and Drontal Plus; vaccines portfolio that provides differentiated prevention coverage for a number of important pet health risks; and therapeutics portfolio for the treatment of pain, otitis, cardiovascular, and dermatology indications, as well as osteoarthritis for dogs and cats under the Galliprant trademark. It also provides farm animal products that help farmers improve animal health and wellbeing, and raise livestock, such as cattle, swine, and poultry. In addition, the company offers medicated feed additives, injectable antibiotics, vaccines, insecticides and enzymes, and others under the Rumensin, Baytril, and Experior trademarks for cattle; and under the Maxiban and Monteban trademarks for the control and prevention of intestinal disease in poultry. Further, it offers other pet health products for cats and dogs under the Atopica, Milbemax, Onsior, and Tru Family trademarks; and other farm animal products for poultry, cattle, and swine under the AviPro, Catosal, Denagard, Hemicell, Pulmotil, and Surmax tradmarks. The company sells its products to third-party distributors and independent retailers; and directly to farm animal producers and veterinarians. Elanco Animal Health Incorporated was founded in 1954 and is headquartered in Indianapolis, Indiana.

### Why customers stay

Margins ranged from 43% to 43.9% during 2023–25; it earns 3.9% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2023: grossProfit / revenue = 43.9%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2024: grossProfit / revenue = 43%.

- Source: https://www.sec.gov/Archives/edgar/data/1739104/000173910426000012/elan-20251231.htm (filed 2026-02-24); FY2025: grossProfit / revenue = 43.5%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); 10-year return on capital observations [[2016,0.05349656870950001],[2017,0.025067629297858593],[2018,0.0561534173664803],[2019,0.07023128380874682],[2020,-0.007715157680569684],[2021,0.03422545247256662],[2022,0.0446972152644762],[2023,0.03931308197221798],[2024,0.031408917914315757],[2025,0.03799236641221374]]; median 0.03865272419221586. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Can it raise prices

Kept about a 45% gross margin through 2022 cost inflation.

- Source: https://www.sec.gov/Archives/edgar/data/1739104/000173910426000012/elan-20251231.htm (filed 2026-02-24); Gross margin observations: [[2021,0.4357682619647355],[2022,0.4466107458626162],[2023,0.43875933891781754]]; range within 2 percentage points.

### Where the cash goes

Paid no dividends in 10 years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2016: growth capex 0; upkeep 110300000; owner earnings 96200000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2018: growth capex 0; upkeep 134500000; owner earnings 248000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2019: growth capex 0; upkeep 197400000; owner earnings 185000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2021: growth capex 0; upkeep 197000000; owner earnings 36000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2022: growth capex 0; upkeep 184000000; owner earnings 420000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); FY2024: growth capex 0; upkeep 147000000; owner earnings 853000000. Growth capex / owner earnings = 0.

- Source: https://www.sec.gov/Archives/edgar/data/1739104/000173910426000012/elan-20251231.htm (filed 2026-02-24); FY2025: growth capex 0; upkeep 276000000; owner earnings 172000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); Dividend observations: [[2016,0],[2017,0],[2018,0],[2019,0],[2020,0],[2021,0],[2022,0],[2023,0],[2024,0],[2025,0]]. Zero only counted when supported by a complete cash-flow statement.

### Are managers owners

Insiders own 1.2% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); ELAN.US SharesStats.PercentInsiders = 1.207 percentage points; cache date 2026-10-16.

### What the price says

The price assumes cash profits grow 21.4% yearly over ten years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-24); Ten-year compound average after fade. Initial solved rate 0.2989322518521026. Price 23.54; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2015 owner earnings/share -0.20774845592363841 → FY2025 0.34649476228847703. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2018-09: $34.89 per share

- 2018-10: $30.48 per share

- 2018-11: $33.41 per share

- 2018-12: $31.53 per share

- 2019-01: $29.18 per share

- 2019-02: $30.24 per share

- 2019-03: $32.07 per share

- 2019-04: $31.50 per share

- 2019-05: $31.28 per share

- 2019-06: $33.80 per share

- 2019-07: $32.96 per share

- 2019-08: $26.02 per share

- 2019-09: $26.59 per share

- 2019-10: $27.02 per share

- 2019-11: $27.71 per share

- 2019-12: $29.45 per share

- 2020-01: $30.90 per share

- 2020-02: $27.40 per share

- 2020-03: $22.39 per share

- 2020-04: $24.71 per share

- 2020-05: $21.41 per share

- 2020-06: $21.45 per share

- 2020-07: $23.63 per share

- 2020-08: $29.06 per share

- 2020-09: $27.93 per share

- 2020-10: $31.01 per share

- 2020-11: $30.59 per share

- 2020-12: $30.67 per share

- 2021-01: $29.03 per share

- 2021-02: $32.86 per share

- 2021-03: $29.45 per share

- 2021-04: $31.71 per share

- 2021-05: $35.98 per share

- 2021-06: $34.69 per share

- 2021-07: $36.47 per share

- 2021-08: $33.38 per share

- 2021-09: $31.89 per share

- 2021-10: $32.88 per share

- 2021-11: $28.74 per share

- 2021-12: $28.38 per share

- 2022-01: $26.04 per share

- 2022-02: $28.41 per share

- 2022-03: $26.09 per share

- 2022-04: $25.31 per share

- 2022-05: $23.70 per share

- 2022-06: $19.63 per share

- 2022-07: $20.26 per share

- 2022-08: $15.13 per share

- 2022-09: $12.41 per share

- 2022-10: $13.19 per share

- 2022-11: $12.87 per share

- 2022-12: $12.22 per share

- 2023-01: $13.73 per share

- 2023-02: $11.47 per share

- 2023-03: $9.40 per share

- 2023-04: $9.47 per share

- 2023-05: $8.15 per share

- 2023-06: $10.06 per share

- 2023-07: $12.07 per share

- 2023-08: $12.20 per share

- 2023-09: $11.24 per share

- 2023-10: $8.81 per share

- 2023-11: $11.78 per share

- 2023-12: $14.90 per share

- 2024-01: $14.74 per share

- 2024-02: $15.89 per share

- 2024-03: $16.28 per share

- 2024-04: $13.16 per share

- 2024-05: $17.68 per share

- 2024-06: $14.43 per share

- 2024-07: $13.04 per share

- 2024-08: $15.47 per share

- 2024-09: $14.69 per share

- 2024-10: $12.64 per share

- 2024-11: $13.21 per share

- 2024-12: $12.11 per share

- 2025-01: $12.03 per share

- 2025-02: $11.17 per share

- 2025-03: $10.50 per share

- 2025-04: $9.48 per share

- 2025-05: $13.44 per share

- 2025-06: $14.28 per share

- 2025-07: $13.68 per share

- 2025-08: $18.35 per share

- 2025-09: $20.14 per share

- 2025-10: $22.15 per share

- 2025-11: $23.27 per share

- 2025-12: $22.63 per share

- 2026-01: $24.08 per share

- 2026-02: $26.40 per share

- 2026-03: $23.93 per share

- 2026-04: $22.37 per share

- 2026-05: $23.85 per share

- 2026-06: $24.61 per share

- 2026-07: $26.37 per share

- 2026-08: $23.92 per share

- 2026-09: $22.39 per share

- 2026-10: $23.54 per share

## Annual estimated value (USD per share)

- FY2019: low $3.73 per share, central $4.14 per share, high $4.69 per share

- FY2020: low $3.65 per share, central $4.02 per share, high $4.51 per share

- FY2021: low $1.92 per share, central $2.03 per share, high $2.18 per share

- FY2022: low $6.47 per share, central $7.29 per share, high $8.39 per share

- FY2023: low $1.28 per share, central $1.38 per share, high $1.51 per share

- FY2024: low $1.50 per share, central $1.60 per share, high $1.74 per share

- FY2025: low $4.86 per share, central $5.60 per share, high $6.37 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/1739104/000173910426000012/elan-20251231.htm); period 2025-12-31, filed 2026-02-24.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.