Aug 6, 2026 earnings call — Companion Animal pressure, updated full-year outlook
Zoetis revised full-year revenue guidance to $9.12 billion to $9.32 billion amid Companion Animal weakness.
Revenue $2.5B (est $2.5B) · EPS $1.87 (est $1.85) · Next-quarter revenue outlook $9.2B
Key quotes
"On an organic operational basis, revenue and adjusted net income declined 1% and 2%, respectively."
"In response to competitive conditions, we took select targeted actions across various franchises, ggross-to-net investments in Dermatology, and price adjustments on Cerenia and Convenia in the U.S. in response to generic competition."
"Our diversified portfolio continued to provide resilience with livestock delivering another quarter of strong 11% revenue growth."
Analyst Q&A 7
pricing approach and leadership changes
Q (Erin Wilson Wright · Morgan Stanley): Analyst asked what targeted pricing actions are baked into guidance, timing, and how much Derm and Simparica share loss is assumed. Also asked whether leadership changes are now settled and able to execute strategy.
A: Management said they are using targeted, time-bound gross-to-net investments rather than cutting list prices. They expect to accelerate these investments in the second half to protect or gain volume and share. They also said they are building the team needed after recent retirements and changes.
"And to do that, if you overall change your list price, that is a permanent structural change versus investing in what we're doing, which is gross-to-net investments, which are really targeted, they're time-bound, and they can demonstrate clear value." — Kristin Peck (CEO)
what gross-to-net means and guide changes
Q (Brandon Vazquez · William Blair): Analyst asked what gross-to-net pricing means, whether ASPs will be lower and the margin impact. Also asked for the 2–3 key changes comparing updated guidance to prior guidance.
A: Management clarified gross-to-net means promotions, rebates, bundling and point-of-sale discounts, not lowering list prices, and they will be aggressive defending volume and franchise value. They said the new guide assumes persistent macro and promotional pressure, and noted about $60 million, $65 million top-line FX headwind and about $30 million bottom-line FX headwind.
"So I would put it to around $60 million, $65 million of top-line headwind, about $30 million of bottom-line headwind from FX in terms of the dollar implications to your guidance -- the guidance." — Wetteny Joseph (CFO)
other actions and competitive outlook
Q (Michael Ryskin · BofA): Analyst asked what non-pricing actions (cost cuts, execution) are rolled into guidance and whether competition pressure will ease by year-end or persist into 2027.
A: Management said they are taking commercial execution and cost actions now, with SG&A down and manufacturing costs lower, and benefits will continue in back half and next year. They said a new Derm competitor entered in Q2 and they expect volume and share pressure to continue; timing to absorb that pressure could be 6–18 months and is uncertain.
"We think with a new competitor entering in Q2 in the U.S. in Derm, we think that our volume and our market share will continue to be under pressure." — Kristin Peck (CEO)
Q2 deterioration causes and contract timing
Q (David Westenberg · Piper Sandler): Analyst asked how much of Q2 weakness was macro versus competitive and if ASP impact from rebates can be quantified. Also asked about 2-year customer contracts for rebates.
A: Management said both macro (fewer visits) and competitive actions meaningfully impacted results and they cannot precisely split the effects. They gave examples: U.S. visits and flea, tick, heartworm were down about 7%, and some headwinds (like Cytopoint) were largely macro. They said many customer contracts run 2 to 3 years so visibility on customer-specific promos is limited.
"if you look at the broad macro, certainly, visits, therapeutic visits and wellness visits in the U.S., flea, tick, and heartworm was down about 7%" — Wetteny Joseph (CFO)
duration of promotions and livestock outlook
Q (Christopher Schott · JPMorgan): Analyst asked whether promotions will continue until macro improves or until competition normalizes, and what signs will allow pulling back. Also asked expected livestock growth.
A: Management said promo intensity depends on the therapy: Derm pressure is mostly competitive, parasiticides have more macro effects, and they will step off gross-to-net investments as share stabilizes quarter-to-quarter. For Livestock, management said fundamentals are strong and they expect mid- to high single-digit performance for the year, with Q2 U.S. normalized to high single-digit growth.
"So as we see that stabilize, I think those are going to be the signs that would say that we'll step off some of those gross-to-net investments." — Kristin Peck (CEO)
2026 price realization and which franchises affected
Q (Jonathan Block · Stifel): Analyst asked if 2026 price realization guidance changed from prior 1%–2%, whether gross-to-net is included, and which franchises drive changes. Also asked whether promos are in Derm, paras, or both and if Zoetis products are competitive.
A: Management said price in the quarter was flat and that gross-to-net responses are included; for the year price realization could be 0% to negative 1% and potentially negative 2% at the low end if responses accelerate. They said promos are in both Derm and paras, they believe their products remain differentiated on safety and efficacy, but macro affordability is driving trial and promotional pressure.
"So that's why I would range bound it for you in terms of what this means for the year." — Wetteny Joseph (CFO)
direct-to-consumer channel strategy and ROI
Q (Daniel Grosslight · Citi): Analyst asked if Zoetis is changing DTC investments and whether DTC advertising correlates to market share gains.
A: Management said they are heavily invested in direct-to-consumer and see the strongest ROI from advertising at retail or online retailer sites where conversion is high. They are focused on point-of-sale investments in clinics, websites and stores as part of gross-to-net and DTC strategy to convert interested customers.
"So by far, we would absolutely agree. The highest ROI in direct-to-consumer advertising is like at the retailer where someone is actually searching for a product and you're helping convert them and you already have an interested party." — Kristin Peck (CEO)