Elanco Animal Health Inc (NYSE: ELAN)

Sector: Healthcare Industry: Drug Manufacturers - Specialty & Generic CIK: 0001739104
Market Cap 12.79 Bn
P/B 1.89
P/E 355.14
P/S 2.78
ROIC (Qtr) 1.17
Div Yield % 0.00
Rev 1y % (Qtr) 10.39
Total Debt (Qtr) 4.32 Bn
Debt/Equity (Qtr) 0.64
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About

Elanco Animal Health Inc., frequently recognized as Elanco, operates as a prominent player in the animal health sector. The company, originally a business unit of Eli Lilly and Company, became an independent entity in 2

Investment thesis

Bull case

  • Healthy cash reserves of 505M provide 8.15x coverage of short-term debt 62M, demonstrating strong liquidity position and minimal refinancing risk.
  • Tangible assets of 5.19B provide robust 4.99x coverage of other current liabilities 1.04B, indicating strong asset backing.
  • Tangible assets of 5.19B provide robust 3.57x coverage of current liabilities 1.46B, showing strong asset backing.
  • Free cash flow of 368M provides solid 0.63x coverage of operating expenses 582M, showing operational efficiency.
  • Strong R&D investment of 356M at 1.36x of capex 261M shows balanced investment in innovation and infrastructure.

Bear case

  • Operating cash flow of 629M barely covers its investment activities of (305M), with a coverage ratio of -2.06, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 505M against inventory of 1.71B, the 0.30 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Investment activities of (305M) provide weak support for R&D spending of 356M, which is -0.86x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 505M provide limited coverage of acquisition spending of (27M), which is -18.70x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 629M provides minimal -12.10x coverage of tax expenses of (52M), suggesting potential tax planning inefficiencies or unsustainable tax positions.

Product and Service Breakdown of Revenue (2024)

Geographical Breakdown of Revenue (2024)

Peer comparison

Companies in the Drug Manufacturers - Specialty & Generic
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ZTS Zoetis Inc. 59.62 Bn 29.27 7.67 9.24 Bn
2 TAK Takeda Pharmaceutical Co Ltd 57.33 Bn 79.02 2.00 36.56 Bn
3 HLN Haleon plc 51.85 Bn 33.06 3.83 -
4 TEVA Teva Pharmaceutical Industries Ltd 39.45 Bn 27.98 2.29 17.09 Bn
5 UTHR UNITED THERAPEUTICS Corp 21.54 Bn 16.94 6.89 0.00 Bn
6 RGC Regencell Bioscience Holdings Ltd 16.16 Bn -4,510.00 0.00 -
7 ELAN Elanco Animal Health Inc 12.79 Bn 355.14 2.78 4.32 Bn
8 NBIX Neurocrine Biosciences Inc 12.71 Bn 26.56 4.44 0.42 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.24 38.12
EV to Cash from Ops. EV/CFO 26.63 -121.97
EV to Debt EV to Debt 3.87 403.43
EV to EBIT EV/EBIT 98.52 -55.05
EV to EBITDA EV/EBITDA 19.41 -57.64
EV to Free Cash Flow [EV/FCF] EV/FCF 45.51 -65.56
EV to Market Cap EV to Market Cap 1.31 -4.24
EV to Revenue EV/Rev 3.65 -1,205.44
Price to Book Value [P/B] P/B 1.89 43.48
Price to Earnings [P/E] P/E 355.14 -46.00
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.36
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 0.52
Dividend per Basic Share Div per Share (Qtr) 0.00 0.07
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 4.04
Interest Coverage Int. cover (Qtr) 0.91 -46.13
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -85.11 -154.90
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 3.06 86,151.29
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 2.89
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -215.08 31.16
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 21.72 9.88
EBIT Growth (1y) % EBIT 1y % (Qtr) -74.55 91.77
EBT Growth (1y) % EBT 1y % (Qtr) -103.88 90.13
EPS Growth (1y) % EPS 1y % (Qtr) -82.93 -12.06
FCF Growth (1y) % FCF 1y % (Qtr) -3.16 -224.48
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 3.57 26.23
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.34 0.49
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.02
Cash Ratio Cash Ratio (Qtr) 0.35 2.12
Current Ratio Curr Ratio (Qtr) 2.40 3.92
Debt to Equity Ratio Debt/Equity (Qtr) 0.64 -1.15
Interest Cover Ratio Int Coverage (Qtr) 0.91 -46.13
Times Interest Earned Times Interest Earned (Qtr) 0.91 -46.13
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 18.30 -59,714.97
EBIT Margin % EBIT Margin % (Qtr) 3.70 -60,539.44
EBT Margin % EBT Margin % (Qtr) -0.35 -64,118.78
Gross Margin % Gross Margin % (Qtr) 55.00 8,658.69
Net Profit Margin % Net Margin % (Qtr) 0.80 -64,120.53