Elanco to cut 420 jobs in restructuring to focus on pet health
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Elanco Animal Health Inc. said Monday it plans to restructure operations, which will result in the loss of 420 jobs.
The Greenfield-based maker of vaccines, antibiotics and other animal-health products did not immediately say how many of those job cuts would occur in Indiana, where it employs more than 1,000 people.
The company has about 9,000 employees worldwide, according to its website.
The move appears to be Elanco’s largest downsizing since it cut 900 jobs across 40 countries in 2020 following its $6.9 billion acquisition of German conglomerate Bayer AG’s animal-health division.
The company said the restructuring is designed to shift resources from its farm animal operations to its pet health operations and “concentrate roles into strategic locations.” It said the move is also meant to help with the “adoption of innovation products” and launch of three upcoming products now under regulatory review.
Elanco also announced fourth-quarter earnings that appeared to be a mix. Adjusted earnings per share were 8 cents, below Wall Street consensus estimate of 10 cents a share. But quarterly revenue was $1.04 billion, higher than the consensus estimate of $999.7 million and up 5% from a year ago.
Adjusted EBITA was $165 million, down 4% from a year ago. The reported net loss was $141 million, more than double the $55 million net loss from a year.
“While we exceeded our sales expectations and demonstrated strong operating expense management in the fourth quarter, adjusted EBITDA was adversely impacted by approximately $18 million of unexpected items, primarily the significant devaluation of the Argentinian peso that occurred in December of 2023,” CEO Jeff Simmons said in written remarks. “Over the past year, we have enhanced our commercial infrastructure to support future growth, doubled year over year innovation sales, returned to revenue growth and taken actions to accelerate debt paydown.”
Shares in Elanco dipped 2.4% in premarket trading to $15.98.
The company’s fourth quarter results were fueled by a 10% growth in farm animal revenue of $610 million, while pet health revenue fell 1% to $416 million.
The company provided full-year 2024 guidance, saying revenue would fall in the range of $4.45 billion to $4.54 billion. Adjusted earnings per share will fall in a range of 87 cents to 95 cents, the company said.
The company did not provide details on the upcoming restructuring, except to say it will shift resources to its pet health business as it prepares to launch several products and will transition its business models to distribution or other third-party models in certain markets, notably Argentina.
Elanco said the restructuring is expected to result in net savings of $20 million to $25 million, primarily in compensation and benefits in 2024, which the company plans to reinvest “in areas with greater earnings potential.” In the short term, the restructuring will result in charges of $50 million to $55 million, including $40 million to $45 million for severance expenses, which it will record in the first quarter.
“We remain encouraged by our three late-stage pipeline products under regulatory review that have a path toward approval in the first half of 2024 and would be additive to our top-line expectations in the second half of the year,” Simmons said.