Phibro Animal Health reported fiscal 2026 results that showed broad revenue growth alongside a sharp rise in adjusted profitability, driven by the integration of its medicated feed additives acquisition and execution under its enterprise transformation program, Phibro Forward. Management also provided fiscal 2027 guidance that calls for continued top-line expansion and modest adjusted EBITDA growth at the midpoint, while flagging regulatory uncertainty tied to virginiamycin in Brazil and the financial impact from the planned closure of its Chicago Heights manufacturing facility.
Key takeaways
- Profitability surged: Adjusted EBITDA rose 39% to $255 million for the fiscal year.
- Catalysts centered on integration and efficiency: Results reflected improved operating efficiencies and integration of acquired assets, plus contributions from the medicated feed additives portfolio.
- Animal Health remains the engine: Animal Health segment revenue increased 21% to $1.162 billion.
- Fiscal 2027 outlook is constructive but cautious: Net sales are guided to $1.55 billion to $1.60 billion and adjusted EBITDA to $258 million to $268 million, with margin and growth impacted by Brazil regulatory timing assumptions.
- Cash flow was pressured by inventory: Free cash flow was limited to $9.9 million as working capital investments increased inventory ahead of integration.
What drove the move in fiscal 2026
For the year ended June 30, 2026, Phibro reported consolidated net sales of $1.518 billion, up 17% year over year. Management said the gain was led by Animal Health, where segment revenue increased 21% to $1.162 billion, benefiting from stronger demand across multiple animal health categories and a $354.3 million contribution from the acquired medicated feed additives portfolio.
Adjusted EBITDA climbed to $255 million, up 39%, reflecting improved gross profit generation, operating efficiency efforts and the integration of acquired businesses. In the fourth quarter, net sales increased 5% to $396.7 million and adjusted EBITDA rose 29% to $64.2 million, supported by favorable product mix and lower input costs, according to management’s prepared remarks.
Within the Animal Health segment, management highlighted that legacy performance continued to grow. Legacy Animal Health sales increased 8% in the fourth quarter and 7% for the full year. For medicated feed additives, legacy MFAs rose 11% in the quarter and 4% for the year. Nutritional Specialties and vaccines also added growth, with Nutritional Specialties revenue up 9% for the year and vaccines revenue up 14%, management said.
Market focus: guidance, integration wrap-up and Brazil risk
Management’s fiscal 2027 guidance suggests continued progress, with net sales expected to range from $1.55 billion to $1.60 billion and adjusted EBITDA expected to be $258 million to $268 million. Adjusted diluted EPS is guided to $3.41 to $3.59. The company’s midpoint framework implies continued sales growth but slower adjusted EBITDA growth than net sales, consistent with management’s expectation for mix benefits and the impact of regulatory uncertainty.
In particular, management said the outlook assumes only minimal virginiamycin sales in Brazil in fiscal 2027. In its earnings call, CFO Glenn David said that minimal sales from Brazil would negatively impact revenue growth and have a larger effect on EBITDA because of the product’s higher margin profile and unabsorbed overhead. He added that the company is working with Brazilian regulatory authorities and, while optimistic about eventual therapeutic approvals, the guidance reflects a conservative assumption tied to regulatory timing.
The guidance also includes benefits from the company’s manufacturing network optimization following its decision to close its Chicago Heights facility. Management said the planned closure is expected to contribute a small positive impact on adjusted EBITDA in fiscal 2027, with the majority of the estimated $15 million to $20 million annual savings expected to materialize starting in fiscal 2028.
Operating and cash flow signals investors will track
Despite higher profitability, cash flow was constrained in fiscal 2026. Free cash flow for the year totaled $9.9 million, which management attributed to working capital investments, specifically a $86.3 million increase in inventory during fiscal 2026. Management said the inventory build was primarily related to the newly acquired medicated feed additives portfolio.
For fiscal 2027, management expects inventory growth to be far smaller than in fiscal 2026, guiding inventory build to $25 million to $30 million. Management also indicated it enhanced its focus on inventory controls and processes as part of the Phibro Forward initiative.
Capital spending is also an area of near-term focus. The company reported $59 million in capital expenditures for fiscal 2026, and management expects capex to rise in fiscal 2027 and into fiscal 2028 as it invests to expand vaccine manufacturing capacity in Ireland and Israel. Management said the Chicago Heights transition could add additional, smaller capital requirements, but it expects improved free cash flow conversion in fiscal 2027 compared with fiscal 2026.
Broader implications: where growth may come from next
Management framed its fiscal 2026 performance as evidence that the integration and operational improvements are working, while reiterating that Phibro Forward’s capabilities remain embedded in how the company operates. CEO Dani Bendheim said the transformation program concluded in June, and management expects cumulative EBITDA contributions from the initiative of roughly $50 million in fiscal 2027 versus a fiscal 2024 baseline.
Investors will also be watching how Phibro allocates resources across its portfolio. During the call, management emphasized continued focus on Animal Health growth, particularly vaccines and nutritional specialties, and described opportunities in companion animal through products such as Rejensa, where distribution is shifting from a single partner to multiple distributors. Management also discussed how sustained demand across meat and dairy end markets is supporting customer willingness to invest in animal health.
On financial structure, management reported a gross leverage ratio of 2.9 times at fiscal year-end based on total debt, alongside continued dividend payments. The company also noted that capital deployment priorities include supporting organic growth first and evaluating business development thereafter, particularly in higher-growth and higher-margin areas.
What to watch next: Phibro’s near-term performance will likely hinge on the regulatory timeline for virginiamycin therapeutic approvals in Brazil, the execution and cost trajectory of the Chicago Heights facility transition, and whether inventory and capex levels remain consistent with management’s fiscal 2027 assumptions. Investors will also look for early-quarter operating signals, including how SG&A carries into fiscal 2027 following the infrastructure build tied to the acquired portfolio, as management indicated Q1 tends to be a lower revenue period and expected early-year EBIT growth to be negative before improving later in the year.
