ELAN Elanco Animal Health Incorporated

The Company issued a press release announcing its financial results of operations for the fiscal quarter and full year ended December 31, 2022. Subsequent to that date, in connection with finalization of the audited financial statements for the year ended December 31, 2022, the Company determined that an immaterial amount of estimated sales rebates and discounts was not recorded correctly in a Western Europe affiliate. The Company also reduced expense related to a management incentive plan. In connection with other immaterial revisions being made to the Company’s financial statements related to the previously disclosed valuation allowance for taxes for a Southeast Asia affiliate, the Company has further revised its financial statements to accurately reflect results in all periods. The revisions related to the sales rebates and discounts estimates had the following impacts on the Company’s results compared to those reported in the Company’s earnings release issued on February 21, 2023:

Revised consolidated statements of operations, and tables reconciling GAAP financial measures and non-GAAP financial measures and tables reflecting revisions to previously reported financial statements are attached as Exhibit 99.1 and incorporated by reference into this Item 2.02.

The revisions described above are reflected in the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The Form 10-K also reports a material weakness in internal control over financial reporting related to income tax provisions.

The Company is posting an updated version of the Q4 Earnings Presentation reflecting the revisions described above in the “Events and Presentations” section of its investor website.

Use of Non-GAAP Financial Measures:

We use non-GAAP financial measures, such as revenue growth excluding the impact of foreign exchange rate effects, EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net (income) loss, adjusted EPS, adjusted gross profit and adjusted gross margin and net debt leverage to assess and analyze our operational results and trends as explained in more detail in the reconciliation tables later in this Form 8-K/A.

We believe these non-GAAP financial measures are useful to investors because they provide greater transparency regarding our operating performance. Reconciliation of non-GAAP financial measures and reported GAAP financial measures are included in the tables accompanying this Form 8-K/A and are posted on our website at www.elanco.com. The primary material limitations associated with the use of such non-GAAP measures as compared to U.S. GAAP results include the following: (i) they may not be comparable to similarly titled measures used by other companies, including those in our industry, (ii) they exclude financial information and events, such as the effects of an acquisition or amortization of intangible assets, that some may consider important in evaluating our performance, value or prospects for the future, (iii) they exclude items or types of items that may continue to occur from period to period in the future and (iv) they may not exclude all unusual or non-recurring items, which could increase or decrease these measures, which investors may consider to be unrelated to our long-term operations. These non-GAAP measures are not, and should not be viewed as, substitutes for U.S. GAAP reported measures. We encourage investors to review our unaudited consolidated financial statements in their entirety and caution investors to use U.S. GAAP measures as the primary means of evaluating our performance, value and prospects for the future, and non-GAAP measures as supplemental measures.

The information in this Item 2.02, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities of that Section and shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly stated in such filing.