Zoetis raises EPS outlook as U.S. companion animal sales fall 8%

Zoetis sold $980M of animal health products to U.S. companion animal customers in the third quarter, down 8% from $1,069M in the same quarter of 2025, and still raised its full-year adjusted earnings guidance. The company reported total revenue of $2,391M, down 1% on both a reported and organic operational basis.

Net income fell 18% to $591M, or $1.44 per diluted share, down 12%. Adjusted net income was $720M, and adjusted diluted earnings per share came to $1.75, up 3%. Zoetis said the quarter included employee termination costs under a "comprehensive cost and productivity program" and impairment charges on in-process research and development assets it acquired from PetMedix in 2023. Reported and adjusted earnings per share moved in opposite directions.

"Our third-quarter performance was in line with our expectations," said Kristin Peck, Zoetis' chief executive. "We remain focused on defending our position and directing our resources where they can have the greatest impact."

U.S. pet sales fell while livestock and overseas grew

The U.S. segment brought in $1,246M, down 6% from $1,322M a year earlier, according to Zoetis' third-quarter 2026 earnings exhibit and its filing for the same quarter of 2025. U.S. companion animal revenue made up $980M of that, down 8%, and U.S. livestock revenue rose 5% to $266M. By our math, the U.S. companion animal decline is $89M in a single quarter.

Zoetis tied the U.S. companion animal result to "macro-driven price sensitivity and competitive pressure in dermatology, as well as generic competition." International revenue grew 4% to $1,116M. International companion animal revenue rose 1% as reported and was flat on an organic basis, while international livestock grew 8%.

Across the whole company, companion animal revenue was $1,565M, down 5%. Dogs and cats fell 6% and horses rose 6%. Livestock revenue was $797M, up 7%, with cattle up 6%, swine up 3%, poultry up 2% and fish up 23%.

U.S. companion animal has been the weak line this year. Zoetis reported an 11% drop in U.S. companion animal sales in the first quarter, and it cut its full-year outlook twice before this report, in the first and second quarters.

The guidance floor rose by $100M and adjusted EPS moved up

Zoetis narrowed its 2026 revenue guidance to $9,220M to $9,320M from $9,120M to $9,320M. It now expects organic operational revenue growth of negative 2% to negative 1%, compared with negative 3% to negative 1% in August. The top of the range did not move.

Adjusted diluted EPS guidance rose to $6.25 to $6.35 from $6.15 to $6.25. Adjusted net income guidance moved to $2,600M to $2,640M from $2,570M to $2,620M. Reported diluted EPS guidance went the other way, down to $5.50 to $5.60 from $5.55 to $5.65, because the company now expects about $210M of significant items and acquisition and divestiture costs, up from about $150M. Adjusted R&D spending guidance dropped to $705M to $715M from $720M to $730M.

Zoetis also reported product news. The FDA approved Convenia RTU for dogs in October, and the company expects it to reach veterinarians in the first quarter of 2027. Simparica Trio received an FDA emergency use authorization for the treatment of New World screwworm infestations in dogs and puppies, which we covered when the authorization came through in August.

Rivals are posting growth in the same companion animal aisle

Peers have reported growth in companion animal lines. Merck Animal Health said companion animal sales rose 6% to $628M in its third quarter, which we covered on October 29th. IDEXX grew third-quarter revenue 10% to $1.214B and raised its 2026 revenue guidance for a third time, as our IDEXX earnings story reported.

Elanco competes in dermatology, the category Zoetis named. In its second-quarter filing, Elanco reported revenue of $1,368M, up 10%, and said Zenrelia is used in about 18,000 U.S. clinics with U.S. JAK market share up 9 points year over year. Elanco also raised its 2026 revenue guidance to $5.09B to $5.14B. Elanco began its phased U.S. launch of Befrena, an anti-IL-31 antibody that competes with Cytopoint, in May, and we covered that launch when it started.

For investors, the narrowed range lifts the low end of Zoetis' revenue outlook, and the adjusted EPS increase comes with a lower reported EPS range, so the two measures now point in different directions. For veterinary clinics and distributors that buy across these companies, the quarter shows Zoetis' U.S. companion animal business shrinking while Elanco and Merck report growth in their own companion animal lines. For Zoetis' competitors in dermatology, the company named competitive pressure in that category as one reason its U.S. pet sales fell.

Next, Zoetis says Convenia RTU reaches veterinarians in the first quarter of 2027, and the company's fourth-quarter results will show how U.S. companion animal sales land against the narrowed range.

The guidance floor is higher, and U.S. pet sales are still falling.

Source: Zoetis via Business Wire