SEC Fines Elanco Animal Health $15M for Misleading Revenue Disclosures

UNITED STATES OF AMER ICA Before the SECURITIES AND EXCHAN GE COMMI SSION SECURITIES E XCHANG E ACT OF 1 934 Release No. 1049 11 / March 2, 2026 ADM INI ST RAT IVE PRO CEE DI NG File No. 3 - 22309 In the Matter of Elan co Anima l Health In c., Res pon dent.::::::: ORDER APPOINTIN G FUND ADMINISTRATOR, SETTING ADMINISTRATO R’S BOND AMOUNT, AND AUTHORIZ ING THE APP ROVAL AND PAYMENT O F THE FE ES AND EXPENSE S OF ADMINIST RATION On November 12, 2024, the Commission issued an Order Instituting Cease- and - Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease- and - Desist Orde r (the “Order”) 1 against Elanco Animal Health Inc. (the “Respondent”). In the Order, the Commission found that Elanco failed to disclo se mater ial information conce rning its sales pr actices tha t rendered statements it made about its revenue growth misleading. From the first quar ter of 2019 to the first quarter of 2020, Elanco relied on quarter-end incentives to its distributors so Elanco could m ake sales to me et its intern al quarter ly rev enue an d core revenu e gro wth targ ets (“Incent ivized Sales”). The Com mission found that without these Incentivized Sales, Elanco would have missed its internal revenue and core growth targets in each quarter in 2019. Additionally, the Commission found that Elanco failed to disclose the use of Incentivized Sales 1 Securit ies Act R el. No. 1132 6 (Nov. 12, 20 24).

publicly, r enderin g positive sta tements it ma de about rev enue ma terially mislea ding, and it failed to warn investors of the impact Incentivized Sales could have on its future revenue. Elanco decided to stop offering Quarter-End Incentivized Sales to distributors and to reduce channel inventory in the first quarter of 2020, which impacted Elanco’s revenue and profits for the quarter. On May 7, 2020, Elanco announced an expected $160 million decline in revenue for the first and second quarters of 2020 that caused its share price to drop by over 13%. As a result of the conduct described in the Order, Elanco violated Securities Act Sections 17(a)(2) and (3) and Exchange Act Section 13(a) and Rules 12b-20, 13a-1, 13a-11, 13a- 13, and 13a-15(a) thereunder. The Commission ordered the Respondent to pay a $15,000,000.00 civil money penalty to the Commission. The Commission also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes -Oxley Act of 2002, so the penalty collected can be distributed to harmed investors (the “Fair Fund ”). The Fair Fund consists of the $15,000,000.00 collected from the Respondent. The Fai r Fund has been deposited in a Commission- desi gnated acco unt at the U.S. D epartment of the Treasury, and any accrued interest will be added to the Fair Fu nd. The Division of Enforcement (the “Division”) now seeks the appointment of Epiq Class Action and Claims Solutions, Inc. (“Epiq”) as the fund administrator and requests that the administrator’s bond be set at $15,000,000.00. Epiq is included in the Commission’s approved pool of administrators. The Division further requests that the Commissio n autho rize the Office of Fina ncial Management (“OFM”), at the direction of an Assistant Director of the Office of Distributions, to pay the Fund Administrator’s fees and expenses from the Fair Fund, so long as the total amount

paid to the Fund Administrator, including the invoice to be paid, does not exceed the total amount of the approved cost proposal submitted by the Fund Administrator. Accordingly, IT IS HEREBY ORDERED that: A. Epiq is appointed as the Fund Administrator, pursuant to Rule 1105(a) of the Commission’s Rules on Fair Fund and Disgorgement Plans (“Commission’s Rules ”); 2 B. Epiq shall obtain a bond in accordance with Rule 1105(c) of the Commission’s Rules, 3 in the amount of $15,000,000.00; C. the Fund Administrato r will submit invoic es to the Commission staff for ser vices rendered, in accordance with Rule 1105(d) of the Commission’s Rules; 4 and D. at the dir ection of an Assistant Direc tor of the Office of Distr ibutions, OF M is authorized to pay the Fund Administrator’s fees and expenses from the Fair Fund, in accordance with Rule 1105(e) of the Commission’s Rules, 5 so long as the total amount paid to the Fund Administrator, including the invoice to be paid, does not exceed the total amount of the approved cost proposal submitted by the Fund Administrato r. For the Commission, by the Division of Enforcement, pursuant to delegated authority. 6 Vanessa A. Countryman Secreta ry 2 17 C.F.R. § 201. 1105(a). 3 17 C.F.R. § 201. 1105(c). 4 17 C.F.R. § 201.1 105(d). 5 17 C.F.R. § 201. 1105(e). 6 17 C.F.R. § 200. 30 - 4(a) (17) and 17 C.F.R. § 200.30 - 4(a)(21)(vi).