v3.26.1
Segment Information
 6 Months Ended
Jun. 30, 2026
Segment Reporting [Abstract]  
Segment Information
16. Segment Information
Operating Segments
We manage our operations through two geographic regions. Each operating segment has responsibility for its commercial activities. Within each of these operating segments, we offer a diversified product portfolio, including parasiticides, vaccines, dermatology, anti-infectives, pain and sedation, other pharmaceutical and animal health diagnostics for both companion animal and livestock customers.
Our operating segments are the U.S. and International. The chief operating decision maker (CODM), our Chief Executive Officer and Chief Financial Officer, uses the information provided to compare segment performance with segment resource requests and allocates human and capital resources based on segment’s actual results and expected future results.
Other Costs and Business Activities
Certain costs are not allocated to our operating segment results, such as costs associated with the following:
•    Other business activities, includes our Client Supply Services contract manufacturing results, our human health business, and expenses associated with our dedicated veterinary medicine research and development organization, research alliances, U.S. regulatory affairs and other operations focused on the development of our products. Other R&D-related costs associated with non-U.S. market and regulatory activities are generally included in the international commercial segment.
•    Corporate, includes enabling functions such as information technology, facilities, legal, finance, human resources, business development, certain diagnostic costs and communications, among others. These costs also include certain compensation costs, certain procurement costs and other miscellaneous operating expenses not charged to our operating segments, as well as interest income and expense.
•Certain transactions and events such as (i) Purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory, intangible assets and property, plant and equipment; (ii) Acquisition and divestiture-related costs, where we incur costs associated with acquiring and integrating newly acquired businesses, such as transaction costs and integration costs, as well as divestiture-related costs; and (iii) Certain significant items, which comprise substantive, unusual items that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis, such as restructuring charges and implementation costs associated with our cost-reduction/productivity initiatives that are not associated with an acquisition or divestiture, certain asset impairment charges, certain legal and commercial settlements and the impact of divestiture-related gains and losses.
•Other unallocated includes (i) certain overhead expenses associated with our global manufacturing operations not charged to our operating segments; (ii) certain costs associated with finance that specifically support our global manufacturing operations; (iii) certain supply chain and global logistics costs; and (iv) certain procurement costs.
Segment Assets
We manage our assets on a total company basis, not by operating segment. Therefore, our CODM does not regularly review any asset information by operating segment and, accordingly, we do not report asset information by operating segment.
Selected Statement of Income Information
Earnings
Depreciation and Amortization(a)
Three Months EndedThree Months Ended
June 30,June 30,
(MILLIONS OF DOLLARS)2026202520262025
U.S.
Revenue$1,266 $1,356 
Cost of sales214 208 
Gross profit1,052 1,148 
    Gross margin83.1 %84.7 %
Operating expenses(b)
215 218 
Other (income)/deductions-net— — 
U.S. Earnings837 930 $24 $22 
International
Revenue(c)
1,173 1,085 
Cost of sales340 321 
Gross profit833 764 
    Gross margin71.0 %70.4 %
Operating expenses(b)
172 171 
Other (income)/deductions-net— 1 
International Earnings661 592 25 26 
Total operating segments1,498 1,522 49 48 
Other business activities
(135)(129)13 13 
Reconciling Items:
Corporate
(315)(324)26 29 
Purchase accounting adjustments
(30)(33)30 33 
Acquisition and divestiture-related costs
(2)(1)— — 
Certain significant items
(81)(48)— — 
Other unallocated
(69)(75)1 1 
Total Earnings(d)
$866 $912 $119 $124 
(a)    Certain production facilities are shared. Depreciation and amortization is allocated to the reportable operating segments based on estimates of where the benefits of the related assets are realized.
(b)    Operating expenses primarily consisted of field selling, advertising and promotions, other marketing expenses, and freight and logistics costs.
(c)    Revenue denominated in euros was $282 million and $255 million for the three months ended June 30, 2026 and 2025, respectively.
(d)    Defined as income before provision for taxes on income.
Earnings
Depreciation and Amortization(a)
Six Months EndedSix Months Ended
June 30,June 30,
(MILLIONS OF DOLLARS)2026202520262025
U.S.
Revenue$2,356 $2,539 
Cost of sales408 407 
Gross profit1,948 2,132 
    Gross margin82.7 %84.0 %
Operating expenses(b)
414 423 
Other (income)/deductions-net— — 
U.S. Earnings1,534 1,709 $47 $45 
International
Revenue(c)
2,322 2,070 
Cost of sales674 616 
Gross profit1,648 1,454 
    Gross margin71.0 %70.2 %
Operating expenses(b)
347 334 
Other (income)/deductions-net1 1 
International Earnings1,300 1,119 51 49 
Total operating segments2,834 2,828 98 94 
Other business activities
(276)(262)26 24 
Reconciling Items:
Corporate
(630)(602)51 58 
Purchase accounting adjustments
(58)(65)61 65 
Acquisition and divestiture-related costs
(4)(1)— — 
Certain significant items
(108)(54)— — 
Other unallocated
(134)(159)2 2 
Total Earnings(d)
$1,624 $1,685 $238 $243 
(a)    Certain production facilities are shared. Depreciation and amortization is allocated to the reportable operating segments based on estimates of where the benefits of the related assets are realized.
(b)    Operating expenses primarily consisted of field selling, advertising and promotions, other marketing expenses, and freight and logistics costs.
(c)    Revenue denominated in euros was $545 million and $480 million for the six months ended June 30, 2026 and 2025, respectively.
(d)    Defined as income before provision for taxes on income.