Elanco Animal Health Inc

Revenue

Our products are sold in more than 90 countries, and as a result, a significant portion of our revenue is recorded in currencies other than the U.S. Dollar. Because of this, our revenue is influenced by changes in foreign currency exchange rates. During the nine months ended September 30, 2025 and 2024, approximately 51% and 53%, respectively, of our revenue was denominated in foreign currencies, respectively.

Further, increases or decreases in inventory levels in our distribution channels can positively or negatively impact our periodic revenue results, leading to variations in revenue. This can be a result of various factors, such as end customer demand, new customer contracts, initial stocking of new products, heightened and generic competition, the need for certain inventory levels, our ability to renew distribution contracts with expected terms, our ability to implement commercial strategies, regulatory restrictions, unexpected customer behavior, proactive measures taken by us in response to shifting market dynamics, payment terms we extend, which are subject to internal policies, blackout shipping periods due to system downtime, implementations and integrations and procedures and environmental factors beyond our control.

Our revenue by product category for the three and nine months ended September 30, 2025 and 2024, was as follows:

2025 Q3 Form 10-Q | 23

Note: Numbers may not add due to rounding.

(1)Represents revenue from arrangements in which we manufacture products on behalf of a third party and royalty revenue. In May 2025, we entered into an agreement to sell certain qualifying royalties, among other potential future cash flows, to Blackstone for proceeds of $295 million in cash. While we are no longer entitled to these qualifying royalties, we are required under GAAP to continue recognizing them as revenue. For the three and nine months ended September 30, 2025, royalty revenue associated with this arrangement, which is reflected within the Contract Manufacturing and Other line in the table above, totaled $6 million and $10 million, respectively. See Note 10. Liability for Sale of Future Revenue to the condensed consolidated financial statements for additional information.

The effects of price, foreign currency exchange rates, volume and the impact of the prior year divestiture of our aqua business on changes in revenue for the three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 2024, were as follows:

Three months ended September 30, 2025

Nine months ended September 30, 2025

Note: Numbers may not add due to rounding.

Pet health revenue increased $47 million, or 10%, for the three months ended September 30, 2025, compared to the same period in 2024, driven primarily by higher volumes and, to a lesser extent, the impacts from foreign currency exchange rate movements. Pricing decreased 1% compared to the same period in 2024. Higher volumes were primarily driven by new products, led by Credelio Quattroand Zenrelia.

Pet health revenue increased $107 million, or 6%, for the nine months ended September 30, 2025, compared to the same period in 2024, also driven by higher volumes and a 2% increase in pricing. For the nine months ended September 30, 2025, volume growth was driven primarily new products, led by Credelio Quattro, Zenrelia and AdTab, including the impacts of initial stocking.

Farm animal revenue increased $63 million, or 12%, for the three months ended September 30, 2025, compared to the same period in 2024, driven by increased volumes across cattle and poultry, a 1% increase in pricing and the impacts from foreign currency exchange rate movements. Higher volumes were led by Experiorin U.S. cattle and strength in poultry sales globally. Further, while farm animal product volumes were 9% higher for the three months ended September 30, 2025, compared to the same period in 2024, we believe volumes were negatively impacted by the approximately $10 million to $20 million of previously disclosed accelerated customer purchases during the second quarter of 2025 for our international swine and poultry products that we believe was driven by our customers' anticipation of future tariff increases.

Farm animal revenue increased $42 million, or 3%, for the nine months ended September 30, 2025, compared to the same period in 2024, driven by higher volumes and a 2% increase in pricing. These increases were partially offset by the impact of the divestiture of our aqua business in July 2024, which generated revenue of $81 million during the nine months ended September 30, 2024. Higher volumes of our non-aqua products were led by Experiorin U.S. cattle, and to a lesser degree, strength in poultry sales globally.

2025 Q3 Form 10-Q | 24

Gross Profit

Gross profit increased $69 million for the three months ended September 30, 2025, driven largely by the increased revenue discussed above. Additionally, gross margin percentage (gross profit as a percentage of total revenue) increased to 53%, compared to 52% for the three months ended September 30, 2024, driven largely by the favorable productivity benefits from increased sales volumes.

Gross profit increased $87 million for the nine months ended September 30, 2025, driven by increased revenue, while gross margin percentage was flat at 56% compared to the nine months ended September 30, 2024. The favorable impacts from improved pricing and the productivity benefits from increased sales volumes were offset by the impacts of inflation and the higher manufacturing costs associated with owning Speke.

Research and Development

Research and development expenses increased $2 million and $12 million for the three and nine months ended September 30, 2025, respectively, as compared to the same periods in the prior year. The increase for the three months ended September 30, 2025, was primarily driven by foreign currency exchange rate movements, while the increase for the nine months ended September 30, 2025, also included higher employee-related expenses and project costs.

Marketing, Selling and Administrative

Marketing, selling and administrative expenses increased $28 million and $78 million for the three and nine months ended September 30, 2025, respectively, as compared to the same periods in the prior year. These increases were driven by strategic investments in the global launches of new products and increased selling costs, corresponding to increased revenue.

Amortization of Intangible Assets

Amortization of intangible assets increased $7 million for both the three and nine months ended September 30, 2025, as compared to the same periods in the prior year. These fluctuations were primarily driven by changes in foreign currency exchange rates.

Asset Impairment, Restructuring and Other Special Charges

Asset impairment, restructuring and other special charges increased $8 million for the three months ended September 30, 2025, and decreased $108 million for the nine months ended September 30, 2025, respectively, as compared to the same periods in the prior year.

Amounts recorded to asset impairment, restructuring and other special charges during the three and nine months ended September 30, 2025, included asset impairments of $24 million, prima rily comprised of $16 million related to two early-stage capital projects that we indefinitely suspended during the third quarter. Additional amounts recorded primarily consisted of upfront payments made during the first quarter in relation to new licensing arrangements.

2025 Q3 Form 10-Q | 25

Amounts recorded to asset impairment, restructuring and other special charges during the three months ended September 30, 2024, primarily reflected $15 million of asset impairments tied to the financial difficulties of our former contract manufacturing supply partner, TriRx Speke. Amounts recorded during thenine months ended September 30, 2024, also included a $53 million impairment charge related to a pet health IPR&D asset (IL-4R), $17 million of transaction costs associated with the divestiture of our aqua business and $45 million of costs associated with our restructuring plan announced in February 2024.

Gain on Divestiture

As discussed above, we recorded a pre-tax gain of $640 million on the divestiture of our aqua business during the three months ended September 30, 2024. See Note 4. Acquisitions, Divestitures and Other Arrangements to the condensed consolidated financial statements for further information.

Interest Expense, Net of Capitalized Interest

Interest expense, net of capitalized interest decreased $6 million and $49 million for the three and nine months ended September 30, 2025, respectively, as compared to the same periods in the prior year. These decreases were driven by lower average outstanding debt balances during the current year, given recent debt paydown activity. Imputed interest on our liability for sale of future revenue of $13 million and $20 million, respectively, for the three and nine months ended September 30, 2025 (see Note 10. Liability for Sale of Future Revenue to the condensed consolidated financial statements for further information), as well as interest expense related to our new corporate headquarters finance lease, partially offset these decre ases.

Other expense, net

Other expense, net for the nine months ended September 30, 2025 and 2024, primarily consisted of foreign currency exchange losses.

Income tax (benefit) expense

We recognized an income tax benefit of $16 million for the three months ended September 30, 2025, and income tax expense of $195 million for the three months ended September 30, 2024. Our effective tax rate of 30.9% for the three months ended September 30, 2025, differed from the statutory income tax rate primarily due to the tax impact from the jurisdictional mix of income and losses in non-U.S. jurisdictions. We also recognized a tax benefit of $16 million related to the remeasurement of certain deferred tax positions due to a foreign tax rate change during the three months ended September 30, 2025. Of the total income tax expense for the three months ended September 30, 2024, $170 million related to the income tax expense associated with the taxable gain on the divestiture of our aqua business. The taxable gain on divestiture exceeded the reported gain of $640 million primarily due to the derecognition of non-deductible goodwill. Our effective tax rate of 34.8% for the three months ended September 30, 2024, differed from the statutory income tax rate primarily due to the tax impact from this gain on divestiture, the jurisdictional earnings mix of projected income in higher tax jurisdictions and losses for which no tax benefit was recognized.

We recognized an income tax benefit of $9 million for the nine months ended September 30, 2025, and income tax expense of $193 million for the nine months ended September 30, 2024. Our effective tax rate of (24.5)% for the nine months ended September 30, 2025, differed from the statutory income tax rate primarily due to the remeasurement of certain deferred tax positions due to a foreign tax rate change in the third quarter of 2025 discussed above, as well as due to the jurisdictional mix of income and losses in non-U.S. jurisdictions. Our effective tax rate of 35.8% for the nine months ended September 30, 2024, differed from the statutory income tax

2025 Q3 Form 10-Q | 26

rate primarily due to the tax impact from the gain on divestiture, partially offset by the release of a valuation allowance attributable to the sale of our aqua business and the recognition of certain state tax credits.

On July 4, 2025, the One Big Beautiful Bill Act (Act) was enacted into law in the U.S. The Act includes significant provisions, including tax cut extensions and modifications to the U.S. and international tax frameworks. Based on our current analysis of these provisions, we do not believe these provisions will have a material impact on our consolidated financial statements, including our analysis of our U.S. valuation allowance position. The Act did not have a material impact on our income tax (benefit) expense during the three or nine months ended September 30, 2025.