Elanco Animal Health, a leading developer and manufacturer of pet and farm-animal medicines based in Greenfield, Ind., announced a significant widening of their third-quarter loss. Despite experiencing revenue growth, the company reported a net loss of $1.1 billion, or $2.22 per share, for the quarter ending in September. This loss is significantly wider than the $65 million loss, or 13 cents per share, reported during the same period last year.
The increased loss was primarily attributed to a hefty goodwill charge of $1.04 billion. Excluding this one-off charge and other exceptional items, Elanco's adjusted earnings reached 18 cents per share, surpassing analysts' expectations of 12 cents per share.
Elanco explained that the goodwill impairment charge was a result of reassessing its goodwill value due to rising Treasury yields. The company acquired Bayer Animal Health in 2020 for $6.89 billion, and the increase in Treasury yields affected the goodwill value. Elanco's current market capitalization is approximately $4.73 billion.
Despite the wider loss, Elanco reported a 4% increase in third-quarter revenue, reaching $1.07 billion. This figure exceeded Wall Street's average estimate of $1.04 billion, reflecting revenue growth in both pet and farm-animal health categories.
Executive Vice President and Chief Financial Officer Todd Young emphasized the company's efforts to manage balance sheet inventory and improve working capital. These efforts, combined with effective business execution, have contributed to increased cash flow generation for Elanco.
The pet industry has experienced a surge in demand, potentially driven by the ongoing pandemic. Companies like vet supplier Idexx Laboratories have also witnessed solid growth in recent quarters amid the boom in pet products.
