Zoetis (NYSE:ZTS) reported second-quarter revenue of $2.5 billion, flat on a reported basis and down 1% organically, as pressure in U.S. companion-animal categories offset growth in livestock, diagnostics and international markets. Adjusted net income was $781 million, down 2% organically, while adjusted diluted earnings per share rose 4% to $1.87, benefiting from a lower share count following share repurchases.
Chief Executive Officer Kristin Peck said the quarter fell short of the company’s expectations amid declining veterinary clinic visits, more selective spending by pet owners and greater promotional activity from competitors. Zoetis lowered its full-year outlook, now expecting organic operational revenue to decline 3% to 1% and adjusted net income to decline 9% to 5%.
Companion-Animal Demand and Competition Weigh on Results
Global companion-animal revenue was $1.7 billion, down 6% in the quarter. U.S. companion-animal revenue declined 11% to $1 billion, while international companion-animal revenue increased 5% to $664 million.
Key dermatology revenue fell 16% to $395 million globally. In the U.S., dermatology revenue declined 18% to $251 million, as canine pruritic clinic visits fell by more than 2%, according to Peck. Chief Financial Officer Wetteny Joseph said the company’s U.S. dermatology franchise retained about 86% in-clinic share during the quarter, though share declined 5 percentage points sequentially and 10 points from a year earlier.
Zoetis has begun using targeted promotions, rebates and other “growth-to-net” investments to protect volume and share rather than lowering list prices, Peck said. Those actions can include clinic-specific promotions, cross-portfolio bundles and point-of-sale discounts for pet owners.
“We are not changing the list price of our products,” Peck said in response to analyst questions. “What we’re talking about is investments in what, in the industry, they’ll call growth to net.”
The Simparica franchise generated $442 million in revenue, flat globally. Simparica Trio revenue fell 1% to $350 million, while Simparica revenue rose 4% to $91 million. International franchise growth was offset by U.S. pressure from softer flea, tick and heartworm visits, as well as a more competitive and promotional marketplace.
U.S. Simparica franchise revenue declined 6% to $308 million. Joseph said Simparica Trio held approximately 21% in-clinic share in U.S. oral parasiticides, nearly double its nearest competitor, and its puppy share was about 28%.
OA Pain Products Show Mixed Performance
Global osteoarthritis pain monoclonal-antibody revenue was $147 million, down 3%. Canine OA pain products Librela and Lenivia produced $105 million in revenue, down 8%, while feline OA pain products Solensia and Portela generated $42 million, up 12%.
U.S. canine OA pain revenue declined 24% to $34 million, reflecting a strong prior-year comparison, softer clinic traffic and affordability pressures on premium therapies. International OA pain revenue increased 7% to $96 million, supported by early launches of long-acting Lenivia and Portela in the European Union and Canada.
Peck said Zoetis expects U.S. approval of long-acting Cytopoint later in 2026. The company also said early experience with Lenivia and Portela has been encouraging and that it expects further market expansion in the coming year.
Diagnostics and Livestock Provide Offsets
Companion-animal diagnostics revenue rose 12% to $118 million, driven by adoption of technologies including Vetscan Imagyst and Vetscan OptiCell. During the quarter, Zoetis completed its acquisition of VitalRADS, a veterinary teleradiology services platform, expanding its capabilities in veterinary imaging interpretation.
Peck said commercial validation of Vetscan OmniMax, a multimodal chemistry platform that the company views as a potential blockbuster opportunity, remains expected by year-end.
Livestock revenue increased 11% to $731 million, with U.S. livestock revenue rising 23% to $222 million. Growth was driven by cattle and poultry, improved product supply and elevated U.S. demand for Dectomax and other injectable parasiticides in connection with the New World screwworm outbreak.
Joseph said several factors behind the U.S. livestock performance were transitory, including supply timing and screwworm-related demand. Zoetis expects U.S. livestock growth to moderate to the mid-single-digit range in the second half, while citing mid- to high-single-digit growth as a sustainable range for the business’ broader fundamentals.
Guidance Reduced as July Trends Show No Stabilization
Zoetis now expects 2026 revenue of $9.12 billion to $9.32 billion. It projected adjusted net income of $2.57 billion to $2.62 billion, adjusted diluted EPS of $6.15 to $6.25, and reported diluted EPS of $5.55 to $5.65.
Joseph said the revised forecast incorporates sales trends through July, which had “not yet indicated market stabilization.” The upper end assumes competitive and pricing pressures remain contained, while the lower end contemplates accelerated pressure, greater dermatology and parasiticide share losses, continued July-like weakness and slower livestock uptake.
The company also cited an additional foreign-exchange headwind of roughly $60 million to $65 million to revenue and about $30 million to profit compared with its prior outlook.
Zoetis repurchased more than $550 million of shares during the quarter. Joseph said the company is maintaining investment in R&D and selected commercial priorities while pursuing cost and productivity actions; adjusted SG&A declined 4% operationally in the quarter.
Separately, Peck said Abhay Nayak was promoted to executive vice president and president of U.S. Commercial Operations. Jay Saccaro will join Zoetis on Aug. 17 as executive vice president, chief financial officer and chief operating officer, a newly created role overseeing finance as well as global manufacturing and supply. Joseph will remain a special advisor on financial matters until early 2027 to support the transition.
About Zoetis (NYSE:ZTS)
Zoetis Inc (NYSE: ZTS) is a global animal health company that develops, manufactures and markets a broad portfolio of products and services for companion animals and livestock. The company’s offerings include pharmaceuticals, vaccines and biologics, parasiticides and anti-infectives, as well as diagnostic instruments, consumables and laboratory testing services. Zoetis serves the veterinary community, livestock producers and other animal-health customers with products designed to prevent, detect and treat disease and to support animal productivity and welfare.
Zoetis traces its roots to the animal health business of Pfizer and became an independent, publicly traded company following a 2013 separation and initial public offering.
