Elanco Animal Health (ELAN) 10-Q 7 Nov 23 2023 Q3 Quarterly report Financial data

Cover Page

Cover Page - shares	9 Months Ended
	Sep. 30, 2023	Nov. 02, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-38661
Entity Registrant Name	Elanco Animal Health Inc
Entity Incorporation, State or Country Code	IN
Entity Tax Identification Number	82-5497352
Entity Address, Address Line One	2500 INNOVATION WAY
Entity Address, City or Town	GREENFIELD
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	46140
City Area Code	877
Local Phone Number	352-6261
Title of 12(b) Security	Common stock, no par value
Trading Symbol	ELAN
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		492,798,113
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001739104
Current Fiscal Year End Date	--12-31

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Revenue	$ 1,068	$ 1,026	$ 3,382	$ 3,426
Costs, expenses and other:
Cost of sales	487	472	1,415	1,465
Research and development	86	78	248	241
Marketing, selling and administrative	313	298	993	963
Amortization of intangible assets	140	128	410	398
Asset impairment, restructuring and other special charges	16	26	91	152
Goodwill impairment	1,042	0	1,042	0
Interest expense, net of capitalized interest	72	60	210	179
Other expense, net	9	8	41	11
Costs, expenses and other	2,165	1,070	4,450	3,409
(Loss) income before income taxes	(1,097)	(44)	(1,068)	17
Income tax (benefit) expense	(1)	21	22	41
Net loss	$ (1,096)	$ (65)	$ (1,090)	$ (24)
Loss per share:
Basic (usd per share)	$ (2.22)	$ (0.13)	$ (2.21)	$ (0.05)
Diluted (usd per share)	$ (2.22)	$ (0.13)	$ (2.21)	$ (0.05)
Weighted-average shares outstanding:
Basic (in shares)	492.7	488.4	492.1	488.3
Diluted (in shares)	492.7	488.4	492.1	488.3

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Net loss	$ (1,096)	$ (65)	$ (1,090)	$ (24)
Other comprehensive loss:
Cash flow hedges, net of taxes	0	62	(19)	179
Foreign currency translation, net of taxes	(197)	(418)	(65)	(973)
Defined benefit pension and retiree health benefit plans, net of taxes	(4)	(2)	(6)	(4)
Other comprehensive loss, net of taxes	(201)	(358)	(90)	(798)
Comprehensive loss	$ (1,297)	$ (423)	$ (1,180)	$ (822)

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Current Assets
Cash and cash equivalents	$ 369	$ 345
Accounts receivable, net	911	797
Other receivables	224	205
Inventories	1,690	1,538
Prepaid expenses and other	371	394
Total current assets	3,565	3,279
Noncurrent Assets
Goodwill	4,902	5,993
Other intangibles, net	4,475	4,842
Other noncurrent assets	410	378
Property and equipment, net	992	999
Total assets	14,344	15,491
Current Liabilities
Accounts payable	296	390
Sales rebates and discounts	356	324
Current portion of long-term debt	39	388
Other current liabilities	574	600
Total current liabilities	1,265	1,702
Noncurrent Liabilities
Long-term debt	5,870	5,448
Deferred taxes	643	662
Other noncurrent liabilities	432	390
Total liabilities	8,210	8,202
Commitments and Contingencies
Equity
Common stock, no par value, 5,000,000,000 shares authorized, 492,683,420 and 474,237,738 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	0	0
Additional paid-in capital	8,763	8,738
Accumulated deficit	(2,147)	(1,057)
Accumulated other comprehensive loss	(482)	(392)
Total equity	6,134	7,289
Total liabilities and equity	$ 14,344	$ 15,491

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - shares	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Common stock, shares authorized (in shares)	5,000,000,000	5,000,000,000
Common stock, shares issued (in shares)	492,683,420	474,237,738
Common stock, shares outstanding (in shares)	492,683,420	474,237,738

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Equity (Unaudited) - USD ($) $ in Millions	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss	Cash Flow Hedge	Foreign Currency Translation	Defined Benefit Pension and Retiree Health Benefit Plans
Balance at beginning of period (in shares) at Dec. 31, 2021		473,100,000
Balance at beginning of period at Dec. 31, 2021	$ 7,508	$ 0	$ 8,696	$ (979)	$ (209)	$ 25	$ (253)	$ 19
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	51			51
Other comprehensive income (loss), net of tax	23				23	109	(85)	(1)
Stock-based compensation activity, net (in shares)		1,000,000
Stock-based compensation activity, net	3		3
Balance at end of period (in shares) at Mar. 31, 2022		474,100,000
Balance at end of period at Mar. 31, 2022	7,585	$ 0	8,699	(928)	(186)	134	(338)	18
Balance at beginning of period (in shares) at Dec. 31, 2021		473,100,000
Balance at beginning of period at Dec. 31, 2021	7,508	$ 0	8,696	(979)	(209)	25	(253)	19
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(24)
Other comprehensive income (loss), net of tax	(798)
Balance at end of period (in shares) at Sep. 30, 2022		474,100,000
Balance at end of period at Sep. 30, 2022	6,714	$ 0	8,724	(1,003)	(1,007)	204	(1,226)	15
Balance at beginning of period (in shares) at Mar. 31, 2022		474,100,000
Balance at beginning of period at Mar. 31, 2022	7,585	$ 0	8,699	(928)	(186)	134	(338)	18
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(10)			(10)
Other comprehensive income (loss), net of tax	(463)				(463)	8	(470)	(1)
Stock-based compensation activity, net	13		13
Balance at end of period (in shares) at Jun. 30, 2022		474,100,000
Balance at end of period at Jun. 30, 2022	7,125	$ 0	8,712	(938)	(649)	142	(808)	17
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(65)			(65)
Other comprehensive income (loss), net of tax	(358)				(358)	62	(418)	(2)
Stock-based compensation activity, net	12		12
Balance at end of period (in shares) at Sep. 30, 2022		474,100,000
Balance at end of period at Sep. 30, 2022	$ 6,714	$ 0	8,724	(1,003)	(1,007)	204	(1,226)	15
Balance at beginning of period (in shares) at Dec. 31, 2022	474,237,738	474,200,000
Balance at beginning of period at Dec. 31, 2022	$ 7,289	$ 0	8,738	(1,057)	(392)	182	(672)	98
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	103			103
Other comprehensive income (loss), net of tax	82				82	(48)	130
Stock-based compensation activity, net (in shares)		1,000,000
Stock-based compensation activity, net	6		6
Conversion of tangible equity units (TEUs) into common stock (in shares)		17,200,000
Balance at end of period (in shares) at Mar. 31, 2023		492,400,000
Balance at end of period at Mar. 31, 2023	$ 7,480	$ 0	8,744	(954)	(310)	134	(542)	98
Balance at beginning of period (in shares) at Dec. 31, 2022	474,237,738	474,200,000
Balance at beginning of period at Dec. 31, 2022	$ 7,289	$ 0	8,738	(1,057)	(392)	182	(672)	98
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(1,090)
Other comprehensive income (loss), net of tax	$ (90)
Balance at end of period (in shares) at Sep. 30, 2023	492,683,420	492,700,000
Balance at end of period at Sep. 30, 2023	$ 6,134	$ 0	8,763	(2,147)	(482)	163	(737)	92
Balance at beginning of period (in shares) at Mar. 31, 2023		492,400,000
Balance at beginning of period at Mar. 31, 2023	7,480	$ 0	8,744	(954)	(310)	134	(542)	98
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(97)			(97)
Other comprehensive income (loss), net of tax	29				29	29	2	(2)
Stock-based compensation activity, net (in shares)		200,000
Stock-based compensation activity, net	8		8
Balance at end of period (in shares) at Jun. 30, 2023		492,600,000
Balance at end of period at Jun. 30, 2023	7,420	$ 0	8,752	(1,051)	(281)	163	(540)	96
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(1,096)			(1,096)
Other comprehensive income (loss), net of tax	(201)				(201)		(197)	(4)
Stock-based compensation activity, net (in shares)		100,000
Stock-based compensation activity, net	$ 11		11
Balance at end of period (in shares) at Sep. 30, 2023	492,683,420	492,700,000
Balance at end of period at Sep. 30, 2023	$ 6,134	$ 0	$ 8,763	$ (2,147)	$ (482)	$ 163	$ (737)	$ 92

Condensed Consolidated Statem_4

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash Flows from Operating Activities
Net loss	$ (1,090)	$ (24)
Adjustments to reconcile net loss to cash flows from operating activities:
Depreciation and amortization	523	514
Goodwill impairment	1,042	0
Stock-based compensation expense	31	44
Asset impairment and write-down charges	5	81
Proceeds from interest rate swap settlements	57	207
Changes in operating assets and liabilities, net of acquisitions	(446)	(385)
Other non-cash operating activities, net	(8)	2
Net Cash Provided by Operating Activities	114	439
Cash Flows from Investing Activities
Net purchases of property and equipment and software	(99)	(94)
Cash paid for acquisitions	(19)	0
Purchases of intangible assets	(14)	(11)
Other investing activities, net	(2)	2
Net Cash Used for Investing Activities	(134)	(103)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt	0	425
Repayments of long-term borrowings	(388)	(607)
Other financing activities, net	(6)	(33)
Net Cash Provided by (Used for) Financing Activities	56	(465)
Effect of exchange rate changes on cash and cash equivalents	(12)	(49)
Net increase (decrease) in cash and cash equivalents	24	(178)
Cash and cash equivalents – beginning of period	345	638
Cash and cash equivalents – end of period	369	460
Revolving Credit Facility
Cash Flows from Financing Activities
Proceeds from facility	350	563
Repayments of facility	(53)	(813)
Securitization Facility
Cash Flows from Financing Activities
Proceeds from facility	250	0
Repayments of facility	$ (97)	$ 0

Basis of Presentation and Summa

Basis of Presentation and Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation and Summary of Significant Accounting Policies	Note 1. Basis of Presentation and Summary of Significant Accounting Policies We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with the SEC requirements for interim reporting. As permitted under those rules, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the U.S. (GAAP) have been condensed or omitted. The information included in this Form 10-Q should be read in conjunction with our consolidated financial statements and accompanying notes for the year ended December 31, 2022 included in our 2022 Form 10-K . In addition, results for interim periods should not be considered indicative of results for any other interim period or for the full year ending December 31, 2023 or any other future period. In our opinion, the financial statements reflect all adjustments (including those that are normal and recurring) that are necessary for fair presentation of the results of operations for the periods shown. In preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ from those estimates. Certain reclassifications of prior year information have been made to conform to the current year's presentation. The significant accounting policies set forth in Note 4 to the consolidated financial statements in our 2022 Form 10-K appropriately represent, in all material respects, the current status of our accounting policies. Revision of Previously Issued Consolidated Financial Statements In connection with the preparation of our financial statements as of and for the year ended December 31, 2022, a cumulative error was identified and corrected relating to the valuation allowance for taxes for a Southeast Asia affiliate. While immaterial to prior years, correcting this cumulative error in 2022 would have caused the 2022 financial statements to be materially misstated. In conjunction with making these corrections, we made other adjustments to the prior years to revise uncorrected errors. The appropriate revisions to our historical condensed consolidated financial statements and the notes thereto are reflected herein. Further information is included in Note 2 and Note 21 to the consolidated financial statements in our 2022 Form 10-K

Implementation of New Financial

Implementation of New Financial Accounting Pronouncements	9 Months Ended
	Sep. 30, 2023
Accounting Changes and Error Corrections [Abstract]
Implementation of New Financial Accounting Pronouncements	Note 2. Implementation of New Financial Accounting Pronouncements The following table provides a brief description of an accounting standard that was adopted during the nine months ended September 30, 2023: Standard Description Effective Date Effect on the Financial Statements or Other Significant Matters ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting; ASU 2021-01, Reference Rate Reform (Topic 848): Scope; ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. ASU 2021-01 clarifies the scope of Topic 848 so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions. ASU 2022-06 extends the period of time entities can utilize the reference rate reform relief guidance under ASU 2020-04 from December 31, 2022 to December 31, 2024. Adoption of the guidance is optional and effective as of March 12, 2020 through December 31, 2024. Adoption is permitted at any time during the period on a prospective basis. Effective April 1, 2023, and in accordance with the provisions outlined in our underlying credit agreements, we have transitioned the reference rate used in our credit facilities from the London Interbank Offered Rate (LIBOR) to the Secured Overnight Financing Rate (Term SOFR). The change did not have a material impact on our condensed consolidated financial statements.

Revenue

Revenue	9 Months Ended
	Sep. 30, 2023
Revenue from Contract with Customer [Abstract]
Revenue	Note 3. Revenue We recognize revenue primarily from product sales to customers. Revenue from sales of products is recognized at the point where the customer obtains control of the goods and we satisfy our performance obligations, which is generally once the goods have been shipped and the customer has assumed title. For contract manufacturing organization (CMO) arrangements, we recognize revenue over time or at a point in time depending on our evaluation of when the customer obtains control of the promised goods or services. We have a single customer that accounted for approximately 10% and 11% of revenue for the nine months ended September 30, 2023 and 2022, respectively. Product sales with this customer resulted in accounts receivable of $96 million and $73 million at September 30, 2023 and December 31, 2022, respectively. Provisions for sales rebates and discounts are recorded as a reduction to revenue in the period the related sales are recognized and are based on specific agreements. In determining the appropriate accrual amount, we consider our historical experience with similar incentive programs, current sales data and estimates of inventory levels at our channel distributors. The following table summarizes the activity in our global sales rebates and discounts liability: Nine Months Ended September 30, 2023 2022 Beginning balance $ 324 $ 319 Reduction of revenue 558 524 Payments (522) (521) Foreign currency translation adjustments (4) (18) Ending balance $ 356 $ 304 Adjustments to revenue recognized as a result of changes in estimates during the nine months ended September 30, 2023 and 2022 for product shipped in previous periods were not material. Actual global product returns were approximately 1% of net revenue for the nine months ended September 30, 2023 and 2022. Disaggregation of Revenue The following table summarizes our revenue disaggregated by product category: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Pet Health $ 495 $ 469 $ 1,688 $ 1,718 Farm Animal: Cattle 242 227 700 722 Poultry 184 176 545 529 Swine 93 95 284 284 Aqua 42 47 132 132 Total Farm Animal 561 545 1,661 1,667 Contract Manufacturing (1) 12 12 33 41 Revenue $ 1,068 $ 1,026 $ 3,382 $ 3,426 (1) Represents revenue from arrangements in which we manufacture products on behalf of a third party. The following table summarizes our revenue disaggregated by geographic area: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 United States $ 479 $ 475 $ 1,522 $ 1,536 International 589 551 1,860 1,890 Revenue $ 1,068 $ 1,026 $ 3,382 $ 3,426

Acquisitions, Divestitures and

Acquisitions, Divestitures and Other Arrangements	9 Months Ended
	Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]
Acquisitions, Divestitures and Other Arrangements	Note 4. Acquisitions, Divestitures and Other Arrangements NutriQuest U.S. Acquisition On January 3, 2023, we acquired certain U.S. marketed products, pipeline products, inventory and an assembled workforce from NutriQuest, LLC (NutriQuest). NutriQuest is a provider of swine, poultry and cattle nutritional health products to animal producers. The acquisition allows us to expand our existing nutritional health offerings and furthers our efforts to explore innovative antibiotic alternatives. The composition of the purchase price was as follows: Up-front cash consideration $ 16 Deferred cash consideration due January 4, 2024 5 Fair value of contingent consideration 37 Total purchase consideration $ 58 The NutriQuest acquisition was accounted for as a business combination under the acquisition method of accounting. The acquisition method requires, among other things, that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date, with the excess of the purchase price over the fair value of the acquired assets recorded as goodwill. The determination of estimated fair value requires management to make significant estimates and assumptions. Contingent consideration for this acquisition includes up to $85 million of cash consideration payable if specific development, sales and geographic expansion milestones are achieved, as outlined in the asset purchase agreement. The initial fair value of this contingent consideration liability of $37 million was estimated at the acquisition date using a Monte Carlo simulation model, which represented a Level 3 measurement under the fair value measurement hierarchy (see Note 10. Fair Value for further information). The following table summarizes the preliminary amounts recognized for assets acquired as of the acquisition date: Inventories $ 3 Intangible assets: Marketed products 29 Acquired in-process research and development (IPR&D) 10 Other intangible assets 15 Total identifiable assets 57 Goodwill 1 Total consideration transferred $ 58 Other intangible assets consist of customer relationships and trade names. The acquired definite-lived intangible assets are being amortized over a weighted-average estimated useful life of approximately 12 years on a straight-line basis. The estimated fair values of identifiable intangible assets were determined using the income approach, which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the significant assumptions inherent in the development of these asset valuations include the estimated net cash flows for each year for each asset or product (including revenues, cost of sales, R&D expenses, marketing, selling and administrative expenses and contributory asset charges), the appropriate discount rate necessary to measure the risk inherent in each future cash flow stream, the life cycle of each asset, the potential regulatory and commercial success risk and competitive trends impacting the asset and each cash flow stream, as well as other factors. The accounting for this acquisition has not been finalized as of September 30, 2023. The purchase price allocation is preliminary and subject to change, including the valuation of the contingent consideration and intangible assets. The final determination of these amounts will be completed as soon as possible but no later than one year from the acquisition date. Revenue attributable to the NutriQuest acquisition for the nine months ended September 30, 2023, was approximately $16 million. NutriQuest Brazil Acquisition On August 1, 2023, we acquired certain assets including inventory and distribution rights for certain marketed products from NutriQuest Nutricao Animal Ltda (NutriQuest Brazil) for total purchase consideration of $19 million. The composition of the purchase price included cash paid on the closing date of approximately $3 million, with consideration payable through 2026 valued at approximately $16 million, a portion of which is contingent upon the continuation of certain terms and conditions set forth in the asset purchase agreement. The NutriQuest Brazil acquisition was accounted for as a business combination under the acquisition method of accounting. The following table summarizes the preliminary amounts recognized for assets acquired as of the acquisition date: Inventories $ 3 Definite-lived intangible assets 15 Total identifiable assets 18 Goodwill 1 Total consideration transferred $ 19 The acquired definite-lived intangible assets are being amortized over a weighted-average estimated useful life of approximately nine years on a straight-line basis. The estimated fair values of identifiable intangible assets were determined using the income approach. The purchase price allocation for this acquisition is preliminary as of September 30, 2023, and subject to change, including the valuation of the intangible assets. The final determination of these amounts will be completed as soon as possible but no later than one year from the acquisition date. Neither revenue nor income before taxes included within our condensed consolidated statements of operations from NutriQuest Brazil were material for the three and nine months ended September 30, 2023. Divestitures Microbiome R&D platform carve-out In April 2022, we signed an agreement to transfer assets associated with our microbiome R&D platform to a newly created, independent biopharmaceutical company, BiomEdit, focused on developing solutions for animal and human health. As part of the agreement, we retained a non-voting, minority stake in the company. In addition, we entered into transitional services agreements with the company for certain services. Assets transferred included intellectual property and laboratory equipment. The book values of those assets were not material. We recorded a gain on disposal of the assets of approximately $3 million during the year ended December 31, 2022. Shawnee and Speke During 2021, as part of our strategy to optimize our manufacturing footprint, we announced an agreement with TriRx Pharmaceuticals (TriRx) to sell our manufacturing sites in Shawnee, Kansas (Shawnee) and Speke, U.K. (Speke), including the transfer of approximately 600 employees. In connection with these arrangements, we also entered into long-term manufacturing and supply agreements, under which TriRx began manufacturing existing Elanco products at both sites upon the closing of the transactions. On August 1, 2021 and February 1, 2022, we completed the sales of our Shawnee and Speke sites, respectively. Upon closing the sale of the Speke site, we recorded a contract asset of $55 million for the favorable supply agreement, which was included in prepaid expenses and other and other noncurrent assets on our condensed consolidated balance sheets. Based on the terms of the agreements and cash proceeds received to date, as of September 30, 2023, we had a net receivable balance from TriRx of $73 million from the sales of Shawnee and Speke, which was included within other receivables on the condensed consolidated balance sheets. In May 2023, we entered into amendments to the agreements which effectively restructured the payment schedule related to the remaining amount owed. Under the terms of the amendments we expect to receive approximately $67 million of this receivable balance upon the earlier of the date on which certain conditions are met or in equal installments over a twelve-month period beginning January 31, 2024, with the remainder due within the next 12 months. We continue to assess the collectibility of these receivables from TriRx and continue to believe amounts owed are collectible. Further, we have rights to certain collateral in the event of a default and we continue to monitor the value of this collateral. BexCaFe Arrangement In June 2022, we signed a license agreement with BexCaFe, LLC (BexCaFe) for the development and commercialization of products related to Bexacat, an oral treatment intended to reduce glucose levels in diabetic cats. BexCaFe held the rights to the compound through a license agreement with similar terms and conditions. We will incur all development and regulatory costs associated with the products. Based on the guidance in Accounting Standards Codification (ASC) 810, Consolidation , we determined that BexCaFe represents a variable interest entity and that we are the primary beneficiary of BexCaFe because the terms of the license give us the power to direct the activities that most significantly impact the entity’s economic performance. As a result, we consolidated BexCaFe, a development-stage company with no employees that did not meet the definition of a business, as of the date we signed the license agreement. Upon initial consolidation of BexCaFe, we measured an IPR&D asset at its fair value of $59 million and recorded liabilities totaling $59 million, which included contingent consideration of $49 million based on the fair value of estimated future milestone payments and sales royalties owed under the license agreement. There is no minimum payout due on the contingent consideration and the maximum payout related to sales royalties is unlimited. Since BexCaFe did not meet the definition of a business, no goodwill was recorded and immediately after initial consolidation, we expensed the IPR&D asset because we concluded that it did not have an alternative future use. During the nine months ended September 30, 2023, we paid $13 million to BexCaFe in connection with development/regulatory milestones achieved upon U.S. Food and Drug Administration (FDA) approval of the original new animal drug application for Bexacat

Asset Impairment, Restructuring

Asset Impairment, Restructuring and Other Special Charges	9 Months Ended
	Sep. 30, 2023
Restructuring and Related Activities [Abstract]
Asset Impairment, Restructuring and Other Special Charges	Note 5. Asset Impairment, Restructuring and Other Special Charges In recent years, we have incurred substantial costs associated with restructuring programs and cost-reduction initiatives designed to achieve a flexible and competitive cost structure. Restructuring activities primarily include charges associated with facility rationalization and workforce reductions. In connection with recent acquisitions, including the acquisition of Bayer Animal Health, we have also incurred costs associated with executing transactions and integrating acquired operations. In addition, we have incurred costs to stand up our organization as an independent company. All operating functions can be impacted by these actions; therefore, non-cash impairment charges can be incurred as a result of revised fair value projections and/or determinations to no longer utilize certain assets in the business on an ongoing basis. Determinations of fair value can result from a complex series of judgments and rely on estimates and assumptions. Components of asset impairment, restructuring and other special charges were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Restructuring charges (credits) (1) $ — $ — $ — $ (7) Acquisition related charges (2) 11 27 86 77 Asset impairments and other items (3) 5 (1) 5 82 Total expense $ 16 $ 26 $ 91 $ 152 (1) Restructuring credits in 2022 related to adjustments resulting from the reversal of severance accruals associated with 2021 restructuring programs, resulting from final negotiations and certain restructured employees filling open positions. (2) Acquisition related charges included transaction costs directly related to acquiring businesses, such as expenditures for banking, legal, accounting, consulting and other similar services, integration charges inclusive of system and process integration and product transfers, and independent company stand-up costs related to the implementation of new systems, programs and processes. (3) Asset impairments during the third quarter of 2023 primarily related to the write-down of certain indefinite-lived intangible assets due to increases in the relevant discount rates. Asset impairments during 2022 included a charge of $59 million related to the write-off of an IPR&D asset with no alternative future use licensed from BexCaFe and a $22 million charge related to the finalization of the write-down upon sale of the Speke site (see Note 4. Acquisitions, Divestitures and Other Arrangements for further discussion on each of these items). The changes in our restructuring reserves during the nine months ended September 30, 2023, were as follows: Balance at December 31, 2022 $ 36 Cash paid (29) Balance at September 30, 2023 $ 7

Inventories

Inventories	9 Months Ended
	Sep. 30, 2023
Inventory Disclosure [Abstract]
Inventories	Note 6. Inventories Inventories are stated at the lower of cost and net realizable value. We use the last-in, first-out (LIFO) method for a portion of our inventories located in the continental U.S. Other inventories are valued by the first-in, first-out (FIFO) method or the weighted-average cost method. Inventories consisted of the following: September 30, 2023 December 31, 2022 Finished products $ 831 $ 783 Work in process 772 683 Raw materials and supplies 145 130 Total 1,748 1,596 Decrease to LIFO cost (58) (58) Inventories $ 1,690 $ 1,538

Equity

Equity	9 Months Ended
	Sep. 30, 2023
Equity [Abstract]
Equity	Note 7. Equity Tangible Equity Unit (TEU) Offering In January 2020, we issued 11 million in TEUs at the stated amount of $50 per unit. Total proceeds, net of issuance costs, were $528 million. The gross proceeds and deferred finance costs from the issuance of the TEUs were allocated 86% to equity (prepaid stock purchase contracts) and 14% to debt (TEU amortizing notes) based on the

Debt

Debt	9 Months Ended
	Sep. 30, 2023
Debt Disclosure [Abstract]
Debt	Note 8. Debt Long-term debt consisted of the following: September 30, 2023 December 31, 2022 Incremental Term Facility due 2025 $ 175 $ 175 Incremental Term Facility due 2028 490 494 Incremental Term Facility due 2029 247 249 Term Loan B due 2027 3,849 3,881 Revolving Credit Facility (1) 297 — Securitization Facility (2) 153 — 4.272% Senior Notes due 2023 (3) — 344 4.900% Senior Notes due 2028 (4) 750 750 TEU Amortizing Notes due 2023 (5) — 7 Unamortized debt issuance costs (52) (64) 5,909 5,836 Less current portion of long-term debt 39 388 Total long-term debt $ 5,870 $ 5,448 (1) During the nine months ended September 30, 2023, we drew $350 million on our Revolving Credit Facility (subsequently repaying $53 million), both to fund working capital needs and to partially fund the repayment of the 4.272% Senior Notes due 2023 (see below for further information). Our Revolving Credit Facility provides up to $750 million in borrowing capacity (with incremental capacity if certain conditions are met), bears interest at Term SOFR plus 2.10% and matures in August 2025. (2) In August 2023, we entered into a new secured term facility that is secured and collateralized by our U.S. Net Eligible Receivables Balance (see below for further information). (3) We redeemed the 4.272% Senior Notes due 2023 in full in August 2023 (see below for further information). (4) Subsequent to issuance in August 2018, the 4.900% Senior Notes due 2028 have been subject to interest rate increases related to credit rating agency downgrades. As of September 30, 2023, these notes bear interest at a rate of 6.650%. (5) The TEU Amortizing Notes due 2023 matured on February 1, 2023 (see Note 7. Equity for further information). 2023 Financing On August 3, 2023, we entered into a new secured term facility (the "Securitization Facility") that is secured and collateralized by our U.S. accounts receivable subject to certain adjustments (defined as the Net Eligible Receivables Balance within the applicable agreement). Of the maximum borrowing capacity under the Securitization Facility of $300 million, $250 million was drawn on August 3, 2023, based on our borrowing capacity on that date. Our borrowing capacity under the Securitization Facility is subject to fluctuation monthly based on the level of our borrowing base as reported to the lender, which is correlated to our U.S. Net Eligible Receivables Balances. The Securitization Facility requires monthly interest payments over its three-year term at a variable rate based on Term SOFR plus 125 basis points. The full, outstanding balance of the Securitization Facility is due on July 31, 2026. During the three months ended September 30, 2023, we utilized the proceeds from the Securitization Facility, in addition to a $100 million draw on our Revolving Credit Facility, to redeem in full the 4.272% Senior Notes due 2023. The early redemption of the 4.272% Senior Notes due 2023 satisfied all obligations and commitments thereunder. Subsequent to our initial $250 million draw on the Securitization Facility, $97 million was repaid, resulting in a balance of $153 million outstanding as of September 30, 2023. The Securitization Facility includes various covenants specific to the underlying composition of our U.S. accounts receivables portfolio. As of September 30, 2023, approximately 76% of our long-term indebtedness bears interest at a fixed rate, including variable-rate converted to fixed-rate through the use of interest rate swaps (see Note 9. Financial Instruments for further information). We were in compliance with all of our debt covenants as of September 30, 2023.

Financial Instruments

Financial Instruments	9 Months Ended
	Sep. 30, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Financial Instruments	Note 9. Financial Instruments To manage our exposure to market risks, such as changes in foreign currency exchange rates and interest rates, we have entered into various derivative transactions. We formally assess, designate and document, as a hedge of an underlying exposure, each qualifying derivative instrument that will be accounted for as an accounting hedge at inception. We also assess at least quarterly thereafter whether the financial instruments used in the hedging transaction are effective at offsetting changes in either the fair values or cash flows of the underlying exposures. Derivative cash flows are principally classified in the operating activities section of the condensed consolidated statements of cash flows, consistent with the underlying hedged item. Further, we do not offset derivative assets and liabilities on the condensed consolidated balance sheets. Our outstanding positions are discussed below. Derivatives not designated as hedges We may enter into foreign exchange forward or option contracts to reduce the effect of fluctuating currency exchange rates. Foreign currency derivatives used for hedging are put in place using the same or like currencies and duration as the underlying exposures and are recorded at fair value with the gain or loss recognized in other expense, net in the condensed consolidated statements of operations. Forward contracts generally have maturities not exceeding 12 months. As of September 30, 2023 and December 31, 2022, we had outstanding foreign exchange contracts with aggregate notional amounts of $864 million and $784 million, respectively. The amounts of net gains (losses) on derivative instruments not designated as hedging instruments, recorded in other expense, net were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Foreign exchange forward contracts (1) $ 1 $ (5) $ 2 $ (20) (1) These amounts were substantially offset in other expense, net by the effect of changing exchange rates on the underlying foreign currency exposures. Derivatives designated as hedges To manage our exposure to variable interest rate risk, we utilize interest rate swap contracts to effectively convert our variable-rate debt into fixed-rate debt. We recognize any differences between the variable interest rate payments and the fixed interest rate settlements with the swap counterparties as an adjustment to interest expense, net of capitalized interest over the life of the swaps. We have designated our interest rate swaps as cash flow hedges and record them at fair value on the condensed consolidated balance sheets. Changes in the fair value of the hedges are recognized in other comprehensive income (loss). Fair value is estimated based on quoted market values of similar hedges and is classified as Level 2 in the fair value hierarchy (see Note 10. Fair Value for further information). Our outstanding forward-starting interest rate swaps had maturities ranging between 2023 and 2028, with aggregate notional amounts of $3,800 million and $3,050 million as of September 30, 2023 and December 31, 2022, respectively. In March 2023, we entered into new interest rate swap agreements with a combined notional amount of $1,000 million, which became effective on October 1, 2023, following the maturity of certain swaps with the same combined notional amount. Additionally, on May 1, 2023, we entered into new interest rate swap agreements with a combined notional amount of $750 million, which became effective on June 1, 2023, and mature in August 2028. Also, in September 2023, we took advantage of market opportunities to further restructure our interest rate swap portfolio (see below for further details). As of September 30, 2023, when factoring in the $3,800 million of variable rate debt converted to fixed-rate through the use of interest rate swaps (excluding the expected future reclassifications to interest expense, net of capitalized interest related to past interest rate swap settlements), the weighted-average effective interest rate on our outstanding indebtedness was 6.34%. Additionally, as a means of mitigating the impact of currency fluctuations on our operations in Switzerland, we entered into a series of cross-currency fixed interest rate swaps in September 2023 with a 1 billion CHF notional amount with tenors in 2027. These instruments were determined to be, and were designated as, effective economic hedges of net investments in our CHF denominated net assets. The fair values of these instruments were estimated based on quoted market values of similar hedges and is classified as Level 2 in the fair value hierarchy. Over the life of these instruments, gains or losses due to spot rate fluctuations will be recorded as cumulative translation adjustments, as a component of other comprehensive income (loss). Gains and losses within accumulated other comprehensive income (loss) will remain in accumulated other comprehensive income (loss) until either the sale or substantial liquidation of the hedged subsidiary. The amounts of gains (losses) on derivatives designated as cash flow hedges and net investment hedges, net of tax, recorded in other comprehensive loss were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Forward-starting interest rate swaps $ — $ 62 $ (19) $ 179 Cross-currency fixed interest rate swaps 9 — 9 — During the three months ended September 30, 2023 and 2022, activity on cash flow hedges recorded in other comprehensive loss included gains of $24 million and a gain of $75 million, net of tax, respectively, related to mark-to-market adjustments. During the nine months ended September 30, 2023 and 2022, activity on cash flow hedges recorded in other comprehensive loss included gains of $57 million and $218 million, net of tax, respectively, related to mark-to-market adjustments. As noted above, in September 2023, we took advantage of market opportunities to restructure $3,050 million of our interest rate swap portfolio by unwinding existing swaps and simultaneously entering into new agreements with the same notional amounts and tenors extending through 2026. As a result, we received cash settlements of $57 million in the aggregate. Also, in April 2022 and September 2022, we settled certain existing interest rate swaps and simultaneously entered into new agreements with the same notional amount and covering the same tenor. As a result, we received cash settlements of $207 million in the aggregate. The cash proceeds from these interest rate swap settlements were included in net cash from operating activities in the condensed consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022. During the three months ended September 30, 2023 and 2022, we reclassified $35 million and $11 million of net gains, respectively, into interest expense, net of capitalized interest. During the nine months ended September 30, 2023 and 2022, we reclassified $94 million of net gains and $10 million of net losses, respectively, into interest expense, net of capitalized interest. Over the next 12 months, we expect to reclassify a gain of $120 million to interest expense, net of capitalized interest related to our derivatives designated as hedges.

Fair Value

Fair Value	9 Months Ended
	Sep. 30, 2023
Fair Value Disclosures [Abstract]
Fair Value	Note 10. Fair Value Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value measurements are based on a framework that utilizes the inputs market participants use to determine the fair value of an asset or liability and establishes a fair value hierarchy to prioritize those inputs. Level 1 fair value measurements are based on quoted prices in active markets for identical assets or liabilities. We determine our Level 2 fair value measurements based on a market approach using quoted market values or significant other observable inputs for identical or comparable assets or liabilities. Our Level 3 fair value measurements, which include the value of contingent consideration as of September 30, 2023, are based on unobservable inputs based on little or no market activity. The following table summarizes the fair value information at September 30, 2023 and December 31, 2022 for assets and liabilities measured at fair value on a recurring basis in the respective balance sheet line items, as well as long-term debt, for which fair value is disclosed on a recurring basis: Fair Value Measurements Using Financial statement line item Carrying Quoted Prices in Active Markets for Identical Assets Significant Significant Fair September 30, 2023 Recurring fair value measurements Prepaid expenses and other - derivative instruments $ 64 $ — $ 64 $ — $ 64 Other noncurrent assets - derivative instruments 32 — 32 — 32 Other noncurrent assets - investments with readily determinable fair value 8 8 — — 8 Other current liabilities - derivative instruments (61) — (61) — (61) Other current liabilities - contingent consideration (16) — — (16) (16) Other noncurrent liabilities - contingent consideration (33) — — (33) (33) Financial instruments not carried at fair value Long-term debt, including current portion (5,961) — (5,877) — (5,877) December 31, 2022 Recurring fair value measurements Prepaid expenses and other - derivative instruments $ 90 $ — $ 90 $ — $ 90 Other noncurrent assets - derivative instruments 10 — 10 — 10 Other noncurrent assets - investments with readily determinable fair value 7 7 — — 7 Other current liabilities - derivative instruments (64) — (64) — (64) Financial instruments not carried at fair value Long-term debt, including current portion (5,900) — (5,711) — (5,711) We also had investments without readily determinable fair values and equity method investments, which were classified as other noncurrent assets on our condensed consolidated balance sheets totaling $28 million and $27 million as of September 30, 2023 and December 31, 2022, respectively. These investments are not recorded at fair value on a recurring basis, and as such, are not included in the fair value table above. Of the total value of the contingent consideration liabilities at September 30, 2023, $42 million related to our acquisition of certain assets from NutriQuest during the first quarter of 2023 (see Note 4. Acquisitions, Divestitures and Other Arrangements for further information). We may pay up to $85 million in cash consideration related to this acquisition, which is contingent upon the achievement of specific development, sales and geographic expansion milestones, as outlined in the asset purchase agreement. The fair values of these liabilities at September 30, 2023, were estimated using the Monte Carlo simulation model, consisting of Level 3 inputs not observable in the market, including estimates relating to revenue forecasts, discount rates and volatility.

Goodwill

Goodwill	9 Months Ended
	Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	Note 11. Goodwill The following table summarizes the changes in the carrying amount of goodwill: Balance as of December 31, 2022 $ 5,993 Additions related to acquisitions 2 Impairment charge (1,042) Foreign currency translation adjustments (51) Balance as of September 30, 2023 $ 4,902 Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired. Goodwill is not amortized, but is reviewed for impairment at least annually on October 1, or more frequently if certain qualitative impairment indicators are present. When required, a comparison of fair value to the carrying amount of our single reporting unit is performed to determine the amount of any impairment. Given the sharp increase in long-term treasury rates in the third quarter of 2023, we assessed our long-lived assets for impairment, concluding that qualitative impairment indicators (i.e., a triggering event) existed as of September 30, 2023, for certain indefinite-lived assets, including goodwill. Accordingly, we performed an interim quantitative goodwill impairment test, which resulted in a $1,042 million pre-tax impairment charge. The fair value of our single reporting unit was determined using the income approach, based on a discounted cash flow model. Significant management judgment was required in estimating our reporting unit’s fair value, including, but not limited to, estimates and assumptions regarding future cash flows, revenue growth and other profitability measures such as gross margin and EBITDA margin; and the determination of an appropriate discount rate. We made these judgments based on historical experience, relevant market size, historical pricing and expected industry trends. While we believe our estimates and assumptions underlying the September 30, 2023, interim goodwill impairment test were reasonable in view of all available information, future changes in our discount rate, whether driven by increases in long-term treasury rates or other factors, or future changes in other significant assumptions or the use of alternative estimates and assumptions, could have a significant impact on the estimated fair value of our reporting unit, exposing us to further goodwill impairment losses.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Note 12. Income Taxes Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Income tax (benefit) expense $ (1) $ 21 $ 22 $ 41 Effective tax rate 0.2 % (47.7) % (2.0) % 234.3 % For the three and nine months ended September 30, 2023, we recognized an income tax benefit of $1 million and income tax expense of $22 million, respectively. Our effective tax rates of 0.2% and (2.0)%, respectively, differ from the statutory income tax rates primarily due to the recognition of a goodwill impairment charge that was non-deductible in most of the impacted jurisdictions. For the three and nine months ended September 30, 2022, we recognized income tax expense of $21 million and $41 million, respectively. Our effective tax rates of (47.7)% and 234.3%, respectively, differ from the statutory income tax rate primarily due to the mix of earnings between periods resulting in projected losses in the U.S. and for various other foreign affiliates for which there was no tax benefit, as valuation allowances had been established in those jurisdictions. Income tax expense for the nine months ended September 30, 2022, included a $17 million income tax benefit reclassified from accumulated other comprehensive loss due to the termination of interest rates swaps.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Note 13. Commitments and Contingencies Legal Matters We are party to various legal actions that arise in the normal course of business. The most significant matters are described below. Loss contingency provisions are recorded when it is deemed probable that we will incur a loss and we can formulate a reasonable estimate of that loss. Seresto Class Action Lawsuits and EPA Safety Review Claims seeking actual damages, injunctive relief and/or restitution for allegedly deceptive marketing have been made against Elanco Animal Health Inc. and Bayer HealthCare LLC, along with other Elanco and Bayer entities, arising out of the use of Seresto™ , a non-prescription flea and tick collar for cats and dogs. During 2021, putative class action lawsuits were filed in federal courts in the U.S. alleging that the Seresto collars contain pesticides that can cause serious injury and death to cats and/or dogs wearing the product. In August 2021, the lawsuits were consolidated by the Judicial Panel on Multidistrict Litigation, and the cases were transferred to the Northern District of Illinois. In June 2023, the parties agreed on the monetary terms of a potential settlement of the consolidated class action lawsuits, and as a result, a charge of $15 million was recorded during the three months ended June 30, 2023. The parties must still reach agreement on non-monetary terms, and any settlement, if reached, is subject to approval by the court, and likely will be subject to other conditions. This $15 million provision was included within other noncurrent liabilities on our condensed consolidated balance sheet as of September 30, 2023. Also, in January 2023, a lawsuit seeking damages for alleged negligence, breach of statutory regulations, breach of statutory duties and deceptive marketing was filed in Israel against Elanco and other parties, arising out of the use of Seresto and Foresto™ flea and tick collars for cats and dogs that are marketed and sold in Europe and in Israel. We intend to defend our position vigorously, and as of the date of this filing, we are unable to estimate the probability of loss or range of loss, if any. Seresto is a pesticide registered with the U.S. Environmental Protection Agency (the EPA). In April 2021, a non-profit organization submitted a petition to the EPA requesting that the agency take action to cancel Seresto’s pesticide registration and suspend the registration pending cancellation. In response to the EPA's request for comments from the public on the petition, we submitted a comment to the EPA supporting the safety profile of Seresto and engaged in discussions with the EPA. On July 13, 2023, the EPA announced their completion of a comprehensive, multi-year review, with support from the FDA, of the Seresto flea and tick collar and confirmed the continued registration of the collar, denying the citizen's petition. As part of the EPA’s scientific review process, the agency analyzed incident data including third-party assessments and compared data to other EPA registered pet products. Based on comprehensive data from the review, the EPA concluded that Seresto continues to meet all the EPA’s standards for registration under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), which ensures that products do not pose unreasonable risk of harm. Additional Legal Matters For the litigation matters discussed below we either believe loss is not probable or are unable to estimate the possible loss or range of loss, if any. The process of resolving these matters is inherently uncertain and may develop over an extended period of time; therefore, at this time, the ultimate resolutions cannot be predicted. As of September 30, 2023 and December 31, 2022, we had no material liabilities established related to the litigation matters mentioned below. On May 20, 2020, a shareholder class action lawsuit captioned Hunter v. Elanco Animal Health Inc., et al. was filed in the United States District Court for the Southern District of Indiana (the Court) against Elanco and certain executives. On September 3, 2020, the Court appointed a lead plaintiff, and on November 9, 2020, the lead plaintiff filed an amended complaint adding additional claims against Elanco, certain executives and other individuals. The lawsuit alleged, in part, that Elanco and certain of its executives made materially false and/or misleading statements and/or failed to disclose certain facts about Elanco’s supply chain, inventory, revenue and projections. The lawsuit sought unspecified monetary damages and purports to represent purchasers of Elanco securities between September 30, 2018 and May 6, 2020, and purchasers of Elanco common stock issued in connection with Elanco's acquisition of Aratana. On January 13, 2021, we filed a motion to dismiss, and on August 17, 2022, the Court issued an order granting our motion to dismiss the case without prejudice. On October 14, 2022, the plaintiffs filed a motion for leave to amend the complaint. On December 7, 2022, we filed an opposition to the plaintiffs' motion, and on September 27, 2023, the Court denied the plaintiffs' motion for leave, issuing final judgment in favor of Elanco. On October 25, 2023, the plaintiffs filed a notice of appeal to the United Stated Court of Appeals for the Seventh Circuit. We continue to believe the claims made in the case are meritless, and we intend to continue to vigorously defend our position. On October 16, 2020, a shareholder class action lawsuit captioned Saffron Capital Corporation v. Elanco Animal Health Inc., et al. was filed in the Marion Superior Court of Indiana against Elanco, certain executives and other individuals and entities. On December 23, 2020, the plaintiffs filed an amended complaint adding an additional plaintiff. The lawsuit alleges, in part, that Elanco and certain of its executives made materially false and/or misleading statements and/or failed to disclose certain facts about Elanco’s relationships with third party distributors and revenue attributable to those distributors within the registration statement on Form S-3 dated January 21, 2020 and accompanying prospectus filed in connection with Elanco’s public offering which closed on or about January 27, 2020. The lawsuit seeks unspecified monetary damages and purports to represent purchasers of Elanco common stock or TEUs issued in connection with the public offering. From February 2021 to August 2022, this case was stayed in deference to Hunter v. Elanco Animal Health Inc . On October 24, 2022, we filed a motion to dismiss. On December 23, 2022, the plaintiffs filed their opposition to the motion to dismiss. Prior to the ruling on the motion to dismiss, on June 8, 2023, the plaintiffs filed a motion for leave to file a second amended complaint, which is now the operative complaint. We filed a motion to dismiss the complaint on August 7, 2023, to which the plaintiff filed their opposition on October 13, 2023. We continue to believe the claims made in the case are meritless, and we intend to vigorously defend our position. In the third quarter of 2019, Tevra Brands, LLC (Tevra) filed a complaint in the U.S. District Court of the Northern District of California, alleging that Bayer Animal Health (acquired by us in August 2020) had been involved in unlawful, exclusive dealing and tying of its flea and tick products Advantage , Advantix and Seresto and maintained a monopoly in the market. The complaint was amended in March 2020 and then dismissed in September 2020 with leave to amend. A second amended complaint was filed in March 2021 and realleges claims of unlawful exclusive dealing related to Advantage and Advantix and monopoly maintenance. A motion to dismiss the second amended complaint was denied in January 2022. Tevra’s demands include both actual and treble damages. The trial is scheduled for July 2024. We intend to defend our position vigorously. Regulatory Matters On July 1, 2021, we received a subpoena from the SEC relating to our channel inventory and sales practices prior to mid-2020. We have cooperated in providing documents and information to the SEC and will continue to do so. We have recently engaged in discussions with the SEC about a possible resolution or settlement of potential disclosure claims, but there can be no assurance that a resolution or settlement will be reached. Management continues to believe that its actions were appropriate. We are unable to estimate the range of any reasonably possible loss associated with this matter. Other Commitments As of September 30, 2023, we had a lease commitment that has not yet commenced for our new corporate headquarters in Indianapolis, Indiana. Total minimum lease payments are estimated to be approximately $378 million over a term of 25 years, excluding extensions. Final lease payments may vary depending on the actual cost of certain construction activities. Lease commencement is expected in 2025. The land for our new corporate headquarters is located in a Tax Increment Finance District, and the project is, in part, funded through Tax Incremental Financing (TIF) through an incentive agreement between us and the City of Indianapolis. The agreement provides for an estimated total incentive of $64 million to be funded by the City of Indianapolis in connection with the future tax increment revenue generated from the developed property. In December 2021, as part of a funding and development agreement entered into between us and the developer, we made a commitment to use the expected TIF proceeds towards the cost of developing and constructing the headquarters. In exchange, the developer reimbursed us up to the $64 million commitment in 2021. During 2022, we refunded approximately $15 million of the TIF proceeds to the developer. As a result, it is our expectation that our future lease payments will be reduced. The remaining accrued incentive was included in other noncurrent liabilities on our condensed consolidated balance sheets and will be amortized over the lease term beginning on the commencement date and offset future rent expense.

Earning Per Share

Earning Per Share	9 Months Ended
	Sep. 30, 2023
Earnings Per Share [Abstract]
Earning Per Share	Note 14. Earnings Per Share We compute basic earnings (loss) per share by dividing net income (loss) available to common shareholders by the actual weighted-average number of common shares outstanding for the reporting period. Elanco has variable common stock equivalents relating to certain equity awards in stock-based compensation arrangements. We also had variable common stock equivalents related to the TEU prepaid stock purchase contracts during the three and nine months ended September 30, 2022, and in the first quarter of 2023 through the settlement date of February 1, 2023 (see Note 7. Equity for further discussion). Diluted earnings per share reflects the potential dilution that could occur if holders of the unvested equity awards converted their holdings into common stock and that could have occurred if holders of unsettled TEUs had converted their holdings into common stock prior to the February 1, 2023 settlement date. The weighted-average number of potentially dilutive shares outstanding was calculated using the treasury stock method. Potential common shares that would have the effect of increasing diluted earnings per share (or reducing loss per share) were considered to be anti-dilutive and as such, these shares were not included in the calculation of diluted loss per share. Basic and diluted weighted-average shares outstanding were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Determination of shares: Basic weighted-average common shares outstanding (1) 492.7 488.4 492.1 488.3 Assumed conversion of dilutive common stock equivalents (2) — — — — Diluted weighted-average shares outstanding 492.7 488.4 492.1 488.3 (1) The TEU prepaid stock purchase contracts were convertible into a minimum of 14.3 million shares or a maximum of 17.2 million shares. The minimum 14.3 million shares were included in the calculation of basic weighted-average shares from January 22, 2020 to February 1, 2023. The 17.2 million shares that were ultimately issued were included in the calculation of basic weighted-average shares subsequent to the settlement date of February 1, 2023. (2) For the three months ended September 30, 2023 and 2022, approximately 2.7 million and 4.4 million, respectively, of potential common shares were excluded from the calculation of diluted loss per share because their effect was anti-dilutive. For the nine months ended September 30, 2023 and 2022, approximately 2.7 million and 2.6 million, respectively, of potential common shares were excluded from the calculation of diluted loss per share because their effect was anti-dilutive.

Pay vs Performance Disclosure

Pay vs Performance Disclosure - USD ($) $ in Millions	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net loss	$ (1,096)	$ (97)	$ 103	$ (65)	$ (10)	$ 51	$ (1,090)	$ (24)

Insider Trading Arrangements

Insider Trading Arrangements	3 Months Ended
	Sep. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Basis of Presentation and Sum_2

Basis of Presentation and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with the SEC requirements for interim reporting. As permitted under those rules, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the U.S. (GAAP) have been condensed or omitted. The information included in this Form 10-Q should be read in conjunction with our consolidated financial statements and accompanying notes for the year ended December 31, 2022 included in our 2022 Form 10-K . In addition, results for interim periods should not be considered indicative of results for any other interim period or for the full year ending December 31, 2023 or any other future period. In our opinion, the financial statements reflect all adjustments (including those that are normal and recurring) that are necessary for fair presentation of the results of operations for the periods shown. In preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ from those estimates. Certain reclassifications of prior year information have been made to conform to the current year's presentation.
Implementation of New Financial Accounting Pronouncements	The following table provides a brief description of an accounting standard that was adopted during the nine months ended September 30, 2023: Standard Description Effective Date Effect on the Financial Statements or Other Significant Matters ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting; ASU 2021-01, Reference Rate Reform (Topic 848): Scope; ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. ASU 2021-01 clarifies the scope of Topic 848 so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions. ASU 2022-06 extends the period of time entities can utilize the reference rate reform relief guidance under ASU 2020-04 from December 31, 2022 to December 31, 2024. Adoption of the guidance is optional and effective as of March 12, 2020 through December 31, 2024. Adoption is permitted at any time during the period on a prospective basis. Effective April 1, 2023, and in accordance with the provisions outlined in our underlying credit agreements, we have transitioned the reference rate used in our credit facilities from the London Interbank Offered Rate (LIBOR) to the Secured Overnight Financing Rate (Term SOFR). The change did not have a material impact on our condensed consolidated financial statements.

Implementation of New Financi_2

Implementation of New Financial Accounting Pronouncements (Tables)	9 Months Ended
	Sep. 30, 2023
Accounting Changes and Error Corrections [Abstract]
Schedule of Description of Accounting Standards Adopted and Not Yet Adopted	The following table provides a brief description of an accounting standard that was adopted during the nine months ended September 30, 2023: Standard Description Effective Date Effect on the Financial Statements or Other Significant Matters ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting; ASU 2021-01, Reference Rate Reform (Topic 848): Scope; ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. ASU 2021-01 clarifies the scope of Topic 848 so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions. ASU 2022-06 extends the period of time entities can utilize the reference rate reform relief guidance under ASU 2020-04 from December 31, 2022 to December 31, 2024. Adoption of the guidance is optional and effective as of March 12, 2020 through December 31, 2024. Adoption is permitted at any time during the period on a prospective basis. Effective April 1, 2023, and in accordance with the provisions outlined in our underlying credit agreements, we have transitioned the reference rate used in our credit facilities from the London Interbank Offered Rate (LIBOR) to the Secured Overnight Financing Rate (Term SOFR). The change did not have a material impact on our condensed consolidated financial statements.

Revenue (Tables)

Revenue (Tables)	9 Months Ended
	Sep. 30, 2023
Revenue from Contract with Customer [Abstract]
Schedule of Activity in Sales Rebates and Discounts Liability	The following table summarizes the activity in our global sales rebates and discounts liability: Nine Months Ended September 30, 2023 2022 Beginning balance $ 324 $ 319 Reduction of revenue 558 524 Payments (522) (521) Foreign currency translation adjustments (4) (18) Ending balance $ 356 $ 304
Schedule of Revenue Disaggregated by Product Category	The following table summarizes our revenue disaggregated by product category: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Pet Health $ 495 $ 469 $ 1,688 $ 1,718 Farm Animal: Cattle 242 227 700 722 Poultry 184 176 545 529 Swine 93 95 284 284 Aqua 42 47 132 132 Total Farm Animal 561 545 1,661 1,667 Contract Manufacturing (1) 12 12 33 41 Revenue $ 1,068 $ 1,026 $ 3,382 $ 3,426
Schedule of Revenue Disaggregated by Geographic Area	The following table summarizes our revenue disaggregated by geographic area: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 United States $ 479 $ 475 $ 1,522 $ 1,536 International 589 551 1,860 1,890 Revenue $ 1,068 $ 1,026 $ 3,382 $ 3,426

Acquisitions, Divestitures an_2

Acquisitions, Divestitures and Other Arrangements (Tables)	9 Months Ended
	Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]
Schedule of Purchase Consideration	The composition of the purchase price was as follows: Up-front cash consideration $ 16 Deferred cash consideration due January 4, 2024 5 Fair value of contingent consideration 37 Total purchase consideration $ 58
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed	The following table summarizes the preliminary amounts recognized for assets acquired as of the acquisition date: Inventories $ 3 Intangible assets: Marketed products 29 Acquired in-process research and development (IPR&D) 10 Other intangible assets 15 Total identifiable assets 57 Goodwill 1 Total consideration transferred $ 58 The following table summarizes the preliminary amounts recognized for assets acquired as of the acquisition date: Inventories $ 3 Definite-lived intangible assets 15 Total identifiable assets 18 Goodwill 1 Total consideration transferred $ 19

Asset Impairment, Restructuri_2

Asset Impairment, Restructuring and Other Special Charges (Tables)	9 Months Ended
	Sep. 30, 2023
Restructuring and Related Activities [Abstract]
Schedule of Asset Impairment, Restructuring and Other Special Charges	Components of asset impairment, restructuring and other special charges were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Restructuring charges (credits) (1) $ — $ — $ — $ (7) Acquisition related charges (2) 11 27 86 77 Asset impairments and other items (3) 5 (1) 5 82 Total expense $ 16 $ 26 $ 91 $ 152 (1) Restructuring credits in 2022 related to adjustments resulting from the reversal of severance accruals associated with 2021 restructuring programs, resulting from final negotiations and certain restructured employees filling open positions. (2) Acquisition related charges included transaction costs directly related to acquiring businesses, such as expenditures for banking, legal, accounting, consulting and other similar services, integration charges inclusive of system and process integration and product transfers, and independent company stand-up costs related to the implementation of new systems, programs and processes. (3) Asset impairments during the third quarter of 2023 primarily related to the write-down of certain indefinite-lived intangible assets due to increases in the relevant discount rates. Asset impairments during 2022 included a charge of $59 million related to the write-off of an IPR&D asset with no alternative future use licensed from BexCaFe and a $22 million charge related to the finalization of the write-down upon sale of the Speke site (see Note 4. Acquisitions, Divestitures and Other Arrangements for further discussion on each of these items).
Schedule of Activity in Reserves	The changes in our restructuring reserves during the nine months ended September 30, 2023, were as follows: Balance at December 31, 2022 $ 36 Cash paid (29) Balance at September 30, 2023 $ 7

Inventories (Tables)

Inventories (Tables)	9 Months Ended
	Sep. 30, 2023
Inventory Disclosure [Abstract]
Schedule of Inventories	Inventories consisted of the following: September 30, 2023 December 31, 2022 Finished products $ 831 $ 783 Work in process 772 683 Raw materials and supplies 145 130 Total 1,748 1,596 Decrease to LIFO cost (58) (58) Inventories $ 1,690 $ 1,538

Debt (Tables)

Debt (Tables)	9 Months Ended
	Sep. 30, 2023
Debt Disclosure [Abstract]
Schedule of Long-term Debt	Long-term debt consisted of the following: September 30, 2023 December 31, 2022 Incremental Term Facility due 2025 $ 175 $ 175 Incremental Term Facility due 2028 490 494 Incremental Term Facility due 2029 247 249 Term Loan B due 2027 3,849 3,881 Revolving Credit Facility (1) 297 — Securitization Facility (2) 153 — 4.272% Senior Notes due 2023 (3) — 344 4.900% Senior Notes due 2028 (4) 750 750 TEU Amortizing Notes due 2023 (5) — 7 Unamortized debt issuance costs (52) (64) 5,909 5,836 Less current portion of long-term debt 39 388 Total long-term debt $ 5,870 $ 5,448 (1) During the nine months ended September 30, 2023, we drew $350 million on our Revolving Credit Facility (subsequently repaying $53 million), both to fund working capital needs and to partially fund the repayment of the 4.272% Senior Notes due 2023 (see below for further information). Our Revolving Credit Facility provides up to $750 million in borrowing capacity (with incremental capacity if certain conditions are met), bears interest at Term SOFR plus 2.10% and matures in August 2025. (2) In August 2023, we entered into a new secured term facility that is secured and collateralized by our U.S. Net Eligible Receivables Balance (see below for further information). (3) We redeemed the 4.272% Senior Notes due 2023 in full in August 2023 (see below for further information). (4) Subsequent to issuance in August 2018, the 4.900% Senior Notes due 2028 have been subject to interest rate increases related to credit rating agency downgrades. As of September 30, 2023, these notes bear interest at a rate of 6.650%. (5) The TEU Amortizing Notes due 2023 matured on February 1, 2023 (see Note 7. Equity for further information).

Financial Instruments (Tables)

Financial Instruments (Tables)	9 Months Ended
	Sep. 30, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Schedule of Gains (Losses) , Net of Tax	The amounts of net gains (losses) on derivative instruments not designated as hedging instruments, recorded in other expense, net were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Foreign exchange forward contracts (1) $ 1 $ (5) $ 2 $ (20) (1) These amounts were substantially offset in other expense, net by the effect of changing exchange rates on the underlying foreign currency exposures. The amounts of gains (losses) on derivatives designated as cash flow hedges and net investment hedges, net of tax, recorded in other comprehensive loss were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Forward-starting interest rate swaps $ — $ 62 $ (19) $ 179 Cross-currency fixed interest rate swaps 9 — 9 —

Fair Value (Tables)

Fair Value (Tables)	9 Months Ended
	Sep. 30, 2023
Fair Value Disclosures [Abstract]
Schedule of Fair Value Information	The following table summarizes the fair value information at September 30, 2023 and December 31, 2022 for assets and liabilities measured at fair value on a recurring basis in the respective balance sheet line items, as well as long-term debt, for which fair value is disclosed on a recurring basis: Fair Value Measurements Using Financial statement line item Carrying Quoted Prices in Active Markets for Identical Assets Significant Significant Fair September 30, 2023 Recurring fair value measurements Prepaid expenses and other - derivative instruments $ 64 $ — $ 64 $ — $ 64 Other noncurrent assets - derivative instruments 32 — 32 — 32 Other noncurrent assets - investments with readily determinable fair value 8 8 — — 8 Other current liabilities - derivative instruments (61) — (61) — (61) Other current liabilities - contingent consideration (16) — — (16) (16) Other noncurrent liabilities - contingent consideration (33) — — (33) (33) Financial instruments not carried at fair value Long-term debt, including current portion (5,961) — (5,877) — (5,877) December 31, 2022 Recurring fair value measurements Prepaid expenses and other - derivative instruments $ 90 $ — $ 90 $ — $ 90 Other noncurrent assets - derivative instruments 10 — 10 — 10 Other noncurrent assets - investments with readily determinable fair value 7 7 — — 7 Other current liabilities - derivative instruments (64) — (64) — (64) Financial instruments not carried at fair value Long-term debt, including current portion (5,900) — (5,711) — (5,711)

Goodwill (Tables)

Goodwill (Tables)	9 Months Ended
	Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Goodwill	The following table summarizes the changes in the carrying amount of goodwill: Balance as of December 31, 2022 $ 5,993 Additions related to acquisitions 2 Impairment charge (1,042) Foreign currency translation adjustments (51) Balance as of September 30, 2023 $ 4,902

Income Taxes (Tables)

Income Taxes (Tables)	9 Months Ended
	Sep. 30, 2023
Income Tax Disclosure [Abstract]
Schedule of Provision for Taxes on Income	Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Income tax (benefit) expense $ (1) $ 21 $ 22 $ 41 Effective tax rate 0.2 % (47.7) % (2.0) % 234.3 %

Earning Per Share (Tables)

Earning Per Share (Tables)	9 Months Ended
	Sep. 30, 2023
Earnings Per Share [Abstract]
Schedule of Basic And Diluted Weighted-average Shares Outstanding	Basic and diluted weighted-average shares outstanding were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Determination of shares: Basic weighted-average common shares outstanding (1) 492.7 488.4 492.1 488.3 Assumed conversion of dilutive common stock equivalents (2) — — — — Diluted weighted-average shares outstanding 492.7 488.4 492.1 488.3 (1) The TEU prepaid stock purchase contracts were convertible into a minimum of 14.3 million shares or a maximum of 17.2 million shares. The minimum 14.3 million shares were included in the calculation of basic weighted-average shares from January 22, 2020 to February 1, 2023. The 17.2 million shares that were ultimately issued were included in the calculation of basic weighted-average shares subsequent to the settlement date of February 1, 2023. (2) For the three months ended September 30, 2023 and 2022, approximately 2.7 million and 4.4 million, respectively, of potential common shares were excluded from the calculation of diluted loss per share because their effect was anti-dilutive. For the nine months ended September 30, 2023 and 2022, approximately 2.7 million and 2.6 million, respectively, of potential common shares were excluded from the calculation of diluted loss per share because their effect was anti-dilutive.

Revenue - Narrative (Details)

Revenue - Narrative (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Concentration Risk [Line Items]
Accounts receivable, net	$ 911		$ 797
Product Sales
Concentration Risk [Line Items]
Accounts receivable, net	$ 96		$ 73
Customer Concentration Risk | Revenue | Single Customer
Concentration Risk [Line Items]
Concentration risk	10%	11%
Product Return Concentration Risk | Net revenue | Global Customers
Concentration Risk [Line Items]
Concentration risk	1%	1%

Revenue - Activity in Sales Reb

Revenue - Activity in Sales Rebates and Discounts Liability (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Change In Contract With Customer, Liability [Roll Forward]
Beginning balance	$ 324	$ 319
Reduction of revenue	558	524
Payments	(522)	(521)
Foreign currency translation adjustments	(4)	(18)
Ending balance	$ 356	$ 304

Revenue - Disaggregation of Rev

Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Revenue	$ 1,068	$ 1,026	$ 3,382	$ 3,426
United States
Disaggregation of Revenue [Line Items]
Revenue	479	475	1,522	1,536
International
Disaggregation of Revenue [Line Items]
Revenue	589	551	1,860	1,890
Pet Health
Disaggregation of Revenue [Line Items]
Revenue	495	469	1,688	1,718
Farm Animal
Disaggregation of Revenue [Line Items]
Revenue	561	545	1,661	1,667
Cattle
Disaggregation of Revenue [Line Items]
Revenue	242	227	700	722
Poultry
Disaggregation of Revenue [Line Items]
Revenue	184	176	545	529
Swine
Disaggregation of Revenue [Line Items]
Revenue	93	95	284	284
Aqua
Disaggregation of Revenue [Line Items]
Revenue	42	47	132	132
Contract Manufacturing
Disaggregation of Revenue [Line Items]
Revenue	$ 12	$ 12	$ 33	$ 41

Acquisitions, Divestitures an_3

Acquisitions, Divestitures and Other Arrangements - Schedule of The Composition of The Purchase Consideration (Details) - NutriQuest, LLC $ in Millions	Jan. 03, 2023 USD ($)
Business Acquisition [Line Items]
Up-front cash consideration	$ 16
Deferred cash consideration due January 4, 2024	5
Fair value of contingent consideration	37
Total purchase consideration	$ 58

Acquisitions, Divestitures an_4

Acquisitions, Divestitures and Other Arrangements - NutriQuest US Acquisition & NutriQuest Brazil Acquisition (Details) - USD ($) $ in Millions			3 Months Ended		9 Months Ended
	Aug. 01, 2023	Jan. 03, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Business Acquisition [Line Items]
Revenue			$ 1,068	$ 1,026	$ 3,382	$ 3,426
NutriQuest, LLC
Business Acquisition [Line Items]
Contingent consideration liability			$ 42		42
Fair value of contingent consideration		$ 37
Weighted average useful life		12 years
Total purchase consideration		$ 58
Up-front cash consideration		16
NutriQuest, LLC | NutriQuest, LLC
Business Acquisition [Line Items]
Revenue					$ 16
NutriQuest Brazil
Business Acquisition [Line Items]
Contingent consideration liability	$ 16
Weighted average useful life	9 years
Total purchase consideration	$ 19
Up-front cash consideration	$ 3
Maximum | NutriQuest, LLC
Business Acquisition [Line Items]
Contingent consideration liability		$ 85

Acquisitions, Divestitures an_5

Acquisitions, Divestitures and Other Arrangements - Amounts Recognized for Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions	Sep. 30, 2023	Aug. 01, 2023	Jan. 03, 2023	Dec. 31, 2022
Business Acquisition [Line Items]
Goodwill	$ 4,902			$ 5,993
NutriQuest, LLC
Business Acquisition [Line Items]
Inventories			$ 3
Total identifiable assets			57
Goodwill			1
Total consideration transferred			58
NutriQuest, LLC | Marketed products
Business Acquisition [Line Items]
Definite-lived intangible assets			29
NutriQuest, LLC | Acquired in-process research and development (IPR&D)
Business Acquisition [Line Items]
Definite-lived intangible assets			10
NutriQuest, LLC | Other intangible assets
Business Acquisition [Line Items]
Definite-lived intangible assets			$ 15
NutriQuest Brazil
Business Acquisition [Line Items]
Inventories		$ 3
Definite-lived intangible assets		15
Total identifiable assets		18
Goodwill		1
Total consideration transferred		$ 19

Acquisitions, Divestitures an_6

Acquisitions, Divestitures and Other Arrangements - Divestitures and BexCaFe Arrangement (Details) $ in Millions	1 Months Ended	9 Months Ended	12 Months Ended	26 Months Ended
	May 31, 2023	Sep. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)	Sep. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Feb. 01, 2022 USD ($)	Dec. 31, 2021 employee
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Contract with customer, asset, before allowance for credit loss						$ 55
Liabilities		$ 8,210	$ 8,202	$ 8,210
Variable Interest Entity, Primary Beneficiary | BexCaFe, LLC
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Liabilities					$ 59
Payment on agreement		13
Variable Interest Entity, Primary Beneficiary | BexCaFe, LLC | Future Milestone Payments And Sales Royalties
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Liabilities		$ 35		35	49
Variable Interest Entity, Primary Beneficiary | BexCaFe, LLC | Acquired in-process research and development (IPR&D)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Finite-lived intangible assets					$ 59
Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of employees transferred | employee							600
Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | Microbiome R&D Platform Carve-Out
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain on disposal			$ 3
Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | Shawnee and Speke
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from site divestitures				73
Duration over which proceeds will be received	12 months
Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | Shawnee and Speke | Other Receivables
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from site divestitures				$ 67

Asset Impairment, Restructuri_3

Asset Impairment, Restructuring and Other Special Charges - Component of Asset Impairment, Restructuring and Other Special Charges (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Restructuring Cost and Reserve [Line Items]
Restructuring charges (credits)	$ 0	$ 0	$ 0	$ (7)
Acquisition related charges	11	27	86	77
Asset impairments and other items	5	(1)	5	82
Total expense	$ 16	$ 26	$ 91	$ 152
Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | Speke Site
Restructuring Cost and Reserve [Line Items]
Asset impairments and other items					$ 22
Variable Interest Entity, Primary Beneficiary | BexCaFe, LLC | Acquired in-process research and development (IPR&D)
Restructuring Cost and Reserve [Line Items]
Asset impairments and other items					$ 59

Asset Impairment, Restructuri_4

Asset Impairment, Restructuring and Other Special Charges - Activity in Reserves (Details) $ in Millions	9 Months Ended
	Sep. 30, 2023 USD ($)
Restructuring Reserve [Roll Forward]
Balance at beginning of period	$ 36
Cash paid	(29)
Balance at end of period	$ 7

Inventories (Details)

Inventories (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Finished products	$ 831	$ 783
Work in process	772	683
Raw materials and supplies	145	130
Total	1,748	1,596
Decrease to LIFO cost	(58)	(58)
Inventories	$ 1,690	$ 1,538

Equity (Details)

Equity (Details) - Tangible Equity Unit - USD ($) $ / shares in Units, $ in Millions	1 Months Ended
	Jan. 31, 2020	Feb. 01, 2023
Class of Stock [Line Items]
TEUs issued (in shares)	11,000,000
Offering price (usd per share)	$ 50
Proceeds after underwriting discounts and commissions	$ 528
Equity component	86%
Debt component	14%
Settlement rate		156.25%
Shares issued upon conversion of prepaid stock purchase contracts (in shares)		17,000,000
Maximum
Class of Stock [Line Items]
Average applicable market value necessary to be included in calculation of diluted shares outstanding (usd per share)		$ 32

Debt - Long-term Debt (Details)

Debt - Long-term Debt (Details) - USD ($) $ in Millions		2 Months Ended	3 Months Ended	9 Months Ended
	Aug. 03, 2023	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2022	Aug. 31, 2023	Dec. 31, 2022	Aug. 31, 2018
Debt Instrument [Line Items]
Unamortized debt issuance costs		$ (52)	$ (52)	$ (52)			$ (64)
Total debt		5,909	5,909	5,909			5,836
Less current portion of long-term debt		39	39	39			388
Total long-term debt		5,870	5,870	5,870			5,448
Securitization Facility
Debt Instrument [Line Items]
Proceeds from Revolving Credit Facility				250	$ 0
Repayment of revolving credit facility				97	$ 0
Line of Credit | Secured Debt | Incremental Term Facility due 2025
Debt Instrument [Line Items]
Long-term debt, gross		175	175	175			175
Line of Credit | Secured Debt | Incremental Term Facility due 2028
Debt Instrument [Line Items]
Long-term debt, gross		490	490	490			494
Line of Credit | Secured Debt | Incremental Term Facility due 2029
Debt Instrument [Line Items]
Long-term debt, gross		247	247	247			249
Line of Credit | Secured Debt | Securitization Facility
Debt Instrument [Line Items]
Long-term debt, gross		153	153	153			0
Proceeds from Revolving Credit Facility	$ 250
Repayment of revolving credit facility		97
Line of Credit | Secured Debt | Securitization Facility | Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Basis spread on variable rate	1.25%
Line of Credit | Term Loan B due 2027
Debt Instrument [Line Items]
Long-term debt, gross		3,849	3,849	3,849			3,881
Line of Credit | Revolving Credit Facility
Debt Instrument [Line Items]
Long-term debt, gross		297	297	297			0
Proceeds from Revolving Credit Facility			100	350
Repayment of revolving credit facility				53
Credit facility, maximum borrowing capacity		750	750	$ 750
Line of Credit | Revolving Credit Facility | Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Basis spread on variable rate				2.10%
Senior Notes | 4.272% Senior Notes due 2023
Debt Instrument [Line Items]
Long-term debt, gross		$ 0	$ 0	$ 0			344
Interest rate		4.272%	4.272%	4.272%		4.272%
Senior Notes | Senior Notes due 2028
Debt Instrument [Line Items]
Long-term debt, gross		$ 750	$ 750	$ 750			750
Interest rate		4.90%	4.90%	4.90%				4.90%
Effective interest rate		6.65%	6.65%	6.65%
Senior Notes | TEU Amortizing Notes due 2023
Debt Instrument [Line Items]
Long-term debt, gross		$ 0	$ 0	$ 0			$ 7

Debt - Narrative (Details)

Debt - Narrative (Details) - USD ($) $ in Millions		2 Months Ended	3 Months Ended	9 Months Ended
	Aug. 03, 2023	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2022	Aug. 31, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Percentage of long term debt bearing fixed interest		76%	76%	76%
Credit Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Proceeds from Revolving Credit Facility			$ 100	$ 350
Repayment of revolving credit facility				53
Long-term debt, gross		$ 297	297	$ 297			$ 0
Credit Facility | Revolving Credit Facility | Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Basis spread on variable rate				2.10%
Securitization Facility
Debt Instrument [Line Items]
Proceeds from Revolving Credit Facility				$ 250	$ 0
Repayment of revolving credit facility				97	$ 0
Securitization Facility | Credit Facility | Secured Debt
Debt Instrument [Line Items]
Debt instrument, face amount	$ 300
Proceeds from Revolving Credit Facility	$ 250
Repayment of revolving credit facility		97
Long-term debt, gross		$ 153	$ 153	$ 153			0
Securitization Facility | Credit Facility | Secured Debt | Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Debt maturity term	3 years
Basis spread on variable rate	1.25%
4.272% Senior Notes due 2023 | Senior Notes
Debt Instrument [Line Items]
Interest rate		4.272%	4.272%	4.272%		4.272%
Long-term debt, gross		$ 0	$ 0	$ 0			$ 344

Financial Instruments - Narrati

Financial Instruments - Narrative (Details) $ in Millions, SFr in Billions		1 Months Ended	3 Months Ended		9 Months Ended
	May 01, 2023 USD ($)	Mar. 31, 2023 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 CHF (SFr)	Dec. 31, 2022 USD ($)
Derivative Instruments, Gain (Loss) [Line Items]
Proceeds from interest rate swap settlements					$ 57	$ 207
Reclassification of gain (loss) from AOCI			$ 35	$ 11	94	(10)
Unrealized gains to be reclassified during next 12 months			$ 120		$ 120
Weighted Average
Derivative Instruments, Gain (Loss) [Line Items]
Effective interest rate			6.34%		6.34%		6.34%
Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Unrealized gain (loss) on investments			$ 24	$ 75	$ 57	$ 218
Cross-currency fixed interest rate swap | Not Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Notional amount			864		864			$ 784
Cross-currency fixed interest rate swap | Designated as Hedging Instrument | Net Investment Hedging
Derivative Instruments, Gain (Loss) [Line Items]
Notional amount | SFr							SFr 1
Interest Rate Swap | Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Notional amount			3,800		3,800			$ 3,050
Increase in derivative notional amount during period	$ 750	$ 1,000
Derivative amount restructured			$ 3,050		$ 3,050

Financial Instruments - Net Los

Financial Instruments - Net Losses/Gains on Derivative Instruments (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Interest Rate Swap | Designated as Hedging Instrument | Cash Flow Hedging
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income (loss), net investment hedge, gain (loss), net of tax	$ 0	$ 62	$ (19)	$ 179
Cross-currency fixed interest rate swap | Not Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Foreign exchange forward contracts	1	(5)	2	(20)
Cross-currency fixed interest rate swap | Designated as Hedging Instrument | Net Investment Hedging
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income (loss), net investment hedge, gain (loss), net of tax	$ 9	$ 0	$ 9	$ 0

Fair Value - Schedule of Fair V

Fair Value - Schedule of Fair Value Information (Details) - Recurring - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, including current portion	$ 0	$ 0
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, including current portion	(5,877)	(5,711)
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, including current portion	0	0
Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, including current portion	(5,961)	(5,900)
Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, including current portion	(5,877)	(5,711)
Prepaid expenses and other | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets (liabilities)	0	0
Prepaid expenses and other | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets (liabilities)	64	90
Prepaid expenses and other | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets (liabilities)	0	0
Prepaid expenses and other | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets (liabilities)	64	90
Prepaid expenses and other | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets (liabilities)	64	90
Other noncurrent assets | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets (liabilities)	0	0
Investments with readily determinable fair value	8	7
Other noncurrent assets | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets (liabilities)	32	10
Investments with readily determinable fair value	0	0
Other noncurrent assets | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets (liabilities)	0	0
Investments with readily determinable fair value	0	0
Other noncurrent assets | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets (liabilities)	32	10
Investments with readily determinable fair value	8	7
Other noncurrent assets | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets (liabilities)	32	10
Investments with readily determinable fair value	8	7
Other current liabilities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets (liabilities)	0	0
Contingent consideration	0
Other current liabilities | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets (liabilities)	(61)	(64)
Contingent consideration	0
Other current liabilities | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets (liabilities)	0	0
Contingent consideration	(16)
Other current liabilities | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets (liabilities)	(61)	(64)
Contingent consideration	(16)
Other current liabilities | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets (liabilities)	(61)	$ (64)
Contingent consideration	(16)
Other noncurrent liabilities | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	0
Other noncurrent liabilities | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	0
Other noncurrent liabilities | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	(33)
Other noncurrent liabilities | Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	(33)
Other noncurrent liabilities | Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	$ (33)

Fair Value - Narrative (Details

Fair Value - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2023	Jan. 03, 2023	Dec. 31, 2022
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Equity method investments	$ 28		$ 27
NutriQuest, LLC
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Contingent consideration liability	$ 42
NutriQuest, LLC | Maximum
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Contingent consideration liability		$ 85

Goodwill - Goodwill Activity (D

Goodwill - Goodwill Activity (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Goodwill [Roll Forward]
Balance as of December 31, 2022			$ 5,993
Additions related to acquisitions			2
Impairment charge	$ (1,042)	$ 0	(1,042)	$ 0
Foreign currency translation adjustments			(51)
Balance as of September 30, 2023	$ 4,902		$ 4,902

Goodwill - Narrative (Details)

Goodwill - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Impairment charge	$ 1,042	$ 0	$ 1,042	$ 0

Income Taxes - Provision for Ta

Income Taxes - Provision for Taxes on Income (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Income tax (benefit) expense	$ (1)	$ 21	$ 22	$ 41
Effective tax rate	0.20%	(47.70%)	(2.00%)	234.30%

Income Taxes - Narrative (Detai

Income Taxes - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Income tax (benefit) expense	$ (1)	$ 21	$ 22	$ 41
Effective tax rate	0.20%	(47.70%)	(2.00%)	234.30%
Release of stranded tax benefits				$ 17

Commitments and Contingencies (

Commitments and Contingencies (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2023	Sep. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Loss Contingencies [Line Items]
Operating lease, lease not yet commenced liability		$ 378
Lessee, operating lease, lease not yet commenced, term of contract		25 years
New corporate headquarters, estimated total incentive to be funded by TIF		$ 64
Tax incremental financing, commitment amount				$ 64
Refund within next three months			$ 15
Seresto Class Action Lawsuits
Loss Contingencies [Line Items]
Accrual charge	$ 15
Loss contingency accrual		$ 15

Earning Per Share (Details)

Earning Per Share (Details) - shares shares in Millions	3 Months Ended		8 Months Ended	9 Months Ended		36 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2022	Jan. 31, 2023
Determination of shares:
Basic weighted-average common shares outstanding (in shares)	492.7	488.4		492.1	488.3
Assumed conversion of dilutive common stock equivalents (in shares)	0	0		0	0
Diluted weighted-average shares outstanding (in shares)	492.7	488.4		492.1	488.3
Antidilutive shares not included in calculating diluted loss per share (in shares)	2.7	4.4		2.7	2.6
Tangible Equity Unit
Determination of shares:
Conversion of tangible equity units (TEUs) into common stock (in shares)			17.2
Minimum | Tangible Equity Unit
Determination of shares:
Conversion of tangible equity units (TEUs) into common stock (in shares)				14.3		14.3
Maximum | Tangible Equity Unit
Determination of shares:
Conversion of tangible equity units (TEUs) into common stock (in shares)				17.2