Elanco Animal Health agreed on November 12, 2024, to pay a $15 million civil fine to settle U.S. Securities and Exchange Commission (SEC) anti-fraud charges. The charges alleged that Elanco misled investors about its revenue growth and end-user demand between its spinoff from Eli Lilly in 2019 and early 2020.
The SEC claimed Elanco used discounts and rebates to incentivize distributors to purchase more products than needed, which allowed the company to meet internal revenue targets. These practices and their associated risks were not disclosed to investors, who were instead informed that revenue growth was driven by strong demand.
When Elanco ceased these incentives in the first quarter of 2020, revenue reportedly fell by $160 million across the first half of the year, a shortfall the SEC alleged was misleadingly attributed to the COVID-19 pandemic. Elanco stated it cooperated fully with the SEC and implemented improved controls and disclosure processes.
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