PARSIPPANY, N.J.–(BUSINESS WIRE)–Zoetis Inc. (NYSE:ZTS) today reported its financial results for the second quarter of 2023 and updated its guidance for full year 2023.
The company reported revenue of $2.2 billion for the second quarter of 2023, an increase of 6% compared with the second quarter of 2022. On an operational1 basis, revenue for the second quarter of 2023 increased 9% compared with the second quarter of 2022, excluding the impact of foreign currency. Net income for the second quarter of 2023 was $671 million, or $1.45 per diluted share, an increase of 27% and 29%, respectively, on a reported basis.
Adjusted net income2 for the second quarter of 2023 was $652 million, or $1.41 per diluted share, an increase of 15% and 18%, respectively, on a reported basis. Adjusted net income for the second quarter of 2023 excludes the net favorable impact of $19 million for purchase accounting adjustments, acquisition-related costs and certain significant items.
EXECUTIVE COMMENTARY
“Today, we reported strong second quarter results of 9% operational growth in revenue and 12% operational growth in adjusted net income, based on our diverse portfolio across markets and species,” said Kristin Peck, Chief Executive Officer of Zoetis. “As expected, we returned to more balanced segment growth, with 11% operational revenue growth internationally and 7% revenue growth in the U.S. Our companion animal portfolio grew 11% operationally, driven by our major franchises in dermatology, osteoarthritis pain and pet parasiticides. Our livestock portfolio grew 4% operationally, driven by sales of poultry, cattle and fish products.”
“With the first half of the year playing out largely as expected, we are maintaining our full year guidance for operational growth of 6% to 8% in revenue and 7% to 9% in adjusted net income. We expect continued strong growth in the second half, led by our companion animal portfolio. Looking ahead, we remain confident in the sustainable, underlying demand for animal health, based on the strength of the human-animal bond, people’s willingness to spend on pet health, and the essential need for a safe and secure food supply. I remain very positive about achieving our full year guidance thanks to our purpose-driven colleagues, innovation-driven culture and diverse portfolio that continue to drive our success.”
QUARTERLY HIGHLIGHTS
Zoetis organizes and manages its commercial operations across two segments: United States (U.S.) and International. Within these segments, the company delivers a diverse portfolio of products for companion animals and livestock, tailored to local trends and customer needs. In the second quarter of 2023:
- Revenue in the U.S. segment was $1.165 billion, an increase of 7% compared with the second quarter of 2022. Sales of companion animal products increased 7%, driven by the company’s key dermatology portfolio including Apoquel® and Cytopoint®. Also contributing to growth in the quarter were the company’s vaccine portfolio and Solensia®, a monoclonal antibody product for osteoarthritis pain in cats. Sales of livestock products increased 5% in the quarter. Sales of cattle products increased primarily due to increased sales of Draxxin®, resulting from a favorable comparable quarter versus the prior year, and sales of the implant product Synovex®. Growth in the company’s poultry portfolio was due to increased sales of vaccines and medicated feed additives (MFAs). Sales of swine products declined modestly in the quarter, primarily due to decreased disease prevalence.
- Revenue in the International segment was $995 million, an increase of 6% on a reported basis and 11% operationally compared with the second quarter of 2022. Sales of companion animal products grew 13% on a reported basis and 17% operationally. Growth in the quarter was driven by the company’s parasiticide portfolio, including Revolution®/Stronghold® and Simparica Trio®, its monoclonal antibody products for osteoarthritis pain — Librela® for dogs and Solensia® for cats, as well as its key dermatology products Apoquel and Cytopoint. Sales of livestock products declined 1% on a reported basis and grew 4% operationally. Growth in the company’s poultry portfolio was driven by key account penetration and rotation of medicated feed additives in core poultry markets, including Latin America, Europe and the Middle East. Growth in the company’s fish portfolio was the result of increased sales of vaccines across key salmon markets, primarily Norway and Chile. Sales of cattle products grew primarily due to pricing in hyperinflationary markets and supply recovery, partially offset by unfavorable market conditions in some key and emerging markets. Sales of swine products declined as a result of supply constraints in Western Europe.
INVESTMENTS IN GROWTH AND SUSTAINABILITY
Zoetis continues to advance pain management and dermatology innovation for dogs. Since its last quarterly earnings announcement, the company received U.S. approval for Librela (bedinvetmab), the first and only injectable monoclonal antibody (mAb) treatment for the control of canine osteoarthritis (OA) pain. Librela is also approved in the European Union (EU), Canada, Brazil, Chile, Japan, Australia and other international markets. Additionally, Zoetis received U.S. approval for Apoquel Chewable (oclacitinib chewable tablet) for the control of pruritus associated with allergic dermatitis and control of atopic dermatitis in dogs. Previously approved in the EU, Mexico, Australia, Canada, Japan and other international markets, Apoquel Chewable is the first and only chewable treatment for the control of allergic itch and inflammation in dogs in the U.S.
In Diagnostics, the company enhanced its Vetscan® product line with the announcement of Vetscan Mastigram+, which will be launching in markets around the world in the second half of 2023. This rapid, on-farm mastitis diagnostic enables farmers and veterinarians to deliver more targeted therapies for dairy cows, enabling more judicious use of antimicrobials.
In June, Zoetis published its 2022 Sustainability Report, describing the company’s progress toward achieving its Driven to Care long-term sustainability aspirations and continued disclosure on environmental, social and governance (ESG) topics. The report highlights achievements toward the company’s journey to advance sustainability in animal health through specific actions that support Communities, Animals and the Planet.
FINANCIAL GUIDANCE
Zoetis is updating its full year reported 2023 guidance due to foreign exchange rates and a one-time gain from a business development deal.
- Updates revenue to between $8.500 billion to $8.650 billion (maintains operational growth of 6% to 8%)
- Updates reported net income to between $2.400 billion to $2.460 billion
- Updates adjusted net income to between $2.500 billion to $2.550 billion (maintains operational growth of 7% to 9%)
- Updates reported diluted EPS of $5.15 to $5.27 due to the impact of foreign exchange rates and a one-time gain from a business development deal
- Updates adjusted diluted EPS between $5.37 to $5.47 due to the impact of foreign exchange rates
This guidance reflects foreign exchange rates as of late July. Additional details on guidance are included in the financial tables and will be discussed on the company’s conference call this morning.
About Zoetis
As the world’s leading animal health company, Zoetis is driven by a singular purpose: to nurture our world and humankind by advancing care for animals. After innovating ways to predict, prevent, detect, and treat animal illness for more than 70 years, Zoetis continues to stand by those raising and caring for animals worldwide — from veterinarians and pet owners to livestock farmers and ranchers. The company’s leading portfolio and pipeline of medicines, vaccines, diagnostics and technologies make a difference in over 100 countries. A Fortune 500 company, Zoetis generated revenue of $8.1 billion in 2022 with approximately 13,800 employees. For more information, visit www.zoetis.com.
