Transaction concentrates Elanco's focus
on significant value creation opportunities and accelerates
deleveraging progress
GREENFIELD, Ind., July 9, 2024
/PRNewswire/ -- Elanco Animal Health Incorporated (NYSE: ELAN)
announced today it has completed the divestiture of its aqua
business to Merck Animal Health (NYSE: MRK) for approximately
$1.3 billion in cash, with
approximately $1.05-$1.1 billion in net proceeds available for debt
paydown in the third quarter of 2024.
"Finalizing this transaction marks a significant milestone in
concentrating our focus on high-value opportunities in pet health
and livestock sustainability while creating balance sheet
flexibility. Elanco's positive trajectory, demonstrated by three
consecutive quarters of underlying revenue growth, pipeline
progress, and our ability to reduce debt, strengthens our value
proposition," said Todd Young,
Executive Vice President and CFO of Elanco Animal Health.
"The proceeds from this transaction, combined with increased free
cash flow from our operations, accelerates our deleveraging and
positions us to deliver substantial value over time."
The successful completion of this transaction enables the
company to pay down term loan debt on a pro-rata basis per the
terms of the company's credit agreements. Combined with the
expected $280 million to $320 million of cash generated from the base
business, the company expects to pay down approximately
$1.3 to $1.4
billion of debt in 2024, ending the year with net debt to
adjusted EBITDA in the mid-4x range. Net debt to adjusted EBITDA is
projected to improve further in 2025 to the high-3x to low-4x
range. The company will provide additional information about the
transaction's impact on its 2024 financial outlook during the
second quarter earnings call in August.
ABOUT ELANCO
Elanco Animal Health Incorporated (NYSE:
ELAN) is a global leader in animal health dedicated to innovating
and delivering products and services to prevent and treat disease
in farm animals and pets, creating value for farmers, pet owners,
veterinarians, stakeholders and society as a whole. With nearly 70
years of animal health heritage, we are committed to helping our
customers improve the health of animals in their care, while also
making a meaningful impact on our local and global communities. At
Elanco, we are driven by our vision of Food and Companionship
Enriching Life and our Elanco Healthy Purpose– all to advance the
health of animals, people, the planet and our enterprise. Learn
more at www.elanco.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This press release contains forward-looking statements within
the meaning of the federal securities laws. These forward-looking
statements include, without limitation, statements regarding the
expected financial impacts of the divestiture, plans for using the
cash we receive in the divestiture, the impact of the divestiture
on our business and financial results, and expected financial
results for 2024 and 2025. There are a number of important factors
that could cause actual events to differ materially from those
suggested or indicated by such forward-looking statements,
including our ability to recognize the expected financial and cash
generation benefits of the transaction; the impact of disruptive
innovations and advances in veterinary medical practices, animal
health technologies and alternatives to animal-derived protein;
changes in regulatory restrictions on the use of antibiotics in
farm animals; the success of our research and development and
licensing efforts; unanticipated safety, quality of efficacy
concerns and the impact of identified concerns associated with our
products; the lack of availability or significant increases in the
cost of raw materials; risks related to the evaluation of animals;
manufacturing problems and capacity imbalances; and actions by
regulatory bodies, including as a result of their interpretation of
studies on product safety. For information about other factors that
could cause actual results to differ materially from
forward-looking statements, please see the company's latest Form
10-K and Form 10-Qs filed with the Securities and Exchange
Commission. Although we have attempted to identify important risk
factors, there may be other risk factors not presently known to us
or that we presently believe are not material that could cause
actual results and developments to differ materially from those
made in or suggested by the forward-looking statements contained in
this press release. We caution you against relying on any
forward-looking statements, which should also be read in
conjunction with the other cautionary statements that are included
elsewhere in this press release. Any forward-looking statement made
by us in this press release speaks only as of the date thereof.
Factors or events that could cause our actual results to differ may
emerge from time to time, and it is not possible for us to predict
all of them. We undertake no obligation to publicly update or to
revise any forward-looking statement, whether as a result of new
information, future developments or otherwise, except as may be
required by law.
Investor Contact: Katy Grissom, (317) 273-9248,
kathryn.grissom@elancoah.com
Media Contact: Colleen Parr Dekker,
(317) 989-7011, colleen.dekker@elancoah.com
View original content to download
multimedia:https://www.prnewswire.com/news-releases/elanco-completes-sale-of-aqua-business-302191953.html
SOURCE Elanco Animal Health