Eco Animal Health results: stronger margins and first vaccine launch support the growth case

Eco Animal Health Group (AIM: EAH) has delivered a stronger set of annual results, with revenue, margins and profit all moving in the right direction.

The animal health specialist reported revenue of £87.5 million for the year ended 31 March 2026, up 10%, while adjusted EBITDA rose 16% to £8.5 million. EBITDA is a measure of operating performance before interest, tax, depreciation and amortisation.

The more strategically important development may be the launch of ECOVAXXIN MS, the first commercial product from the group's research and development pipeline. It gives Eco Animal Health an initial foothold in preventative medicines and reduces its long-term dependence on the Aivlosin antibiotic franchise.

There are still some points for investors to watch. Trading in China weakened towards the end of the year, India remained challenging and no dividend has been recommended. The development pipeline also carries unavoidable technical and regulatory risk.

Eco Animal Health's key figures

Metric	2026	2025	Change
Revenue	£87.5 million	£79.6 million	10%
Constant currency revenue	£91.0 million	£79.6 million	14%
Gross margin	48.6%	45.1%	3.5 percentage points
Adjusted EBITDA	£8.5 million	£7.3 million	16%
Adjusted EBITDA margin	9.8%	9.2%	0.6 percentage points
Profit before tax	£5.4 million	£4.0 million	35%
Earnings per share	3.26p	2.49p	31%
R&D expenditure	£8.8 million	£8.6 million	2%
Closing net cash	£25.4 million	£25.0 million	2%

The reported figures were affected by sterling's strength against currencies including the US dollar and Chinese yuan. On a constant currency basis, which removes exchange-rate movements, revenue would have been £91.0 million, representing growth of 14%.

Adjusted EBITDA was around 5% ahead of consensus, while revenue and adjusted EBITDA were ahead of upgraded market expectations following a strong second half.

North America and Latin America lead growth

North America was the standout region. Revenue increased 22% to £26.1 million, or 28% at constant currency. Eco Animal Health attributed the performance to new business wins, increased use by existing customers and demand for Aivlosin during severe disease outbreaks and mycoplasma elimination programmes.

Latin American revenue rose 15% to £18.8 million, or 21% at constant currency. Brazil was particularly strong, with revenue increasing 25% after the group moved towards selling more product directly to customers rather than through a distributor. Management said this also produced higher gross margins.

China and Japan revenue grew 5% to £24.1 million, although Chinese trading slowed during the final quarter as weaker pork producer economics reduced demand for animal health products.

South and Southeast Asia revenue declined 7% to £11.1 million, but that headline masks two contrasting performances. Shipments to India were restricted to £0.9 million, down from £5.2 million, as Eco Animal Health managed distributor credit risk. Excluding India, regional revenue increased 52% to £10.2 million.

This geographical mix matters. North America and Brazil are higher-margin markets, so their growing contribution supported profitability as well as revenue.

Margin improvement is a major positive

Gross margin increased from 45.1% to 48.6%, reflecting better pricing, lower product input costs and a more favourable geographical sales mix. On constant currency revenue, management calculated that gross margin would have reached 50.5%.

That improvement helped adjusted EBITDA rise despite higher staff bonuses, increased expensed R&D and a £3.6 million provision against receivables, compared with £0.5 million in the previous year.

The receivables provision deserves attention. Management plans full recovery, but the ageing of specific accounts required a provision. Positively, total trade receivables fell from £28.5 million to £24.0 million, while average debtor days improved from 131 to 100.

Inventory also declined from £14.6 million to £13.5 million, with inventory days falling from 122 to 109. These improvements suggest tighter working capital management, although operating cash flow eased from £12.1 million to £10.2 million.

ECOVAXXIN MS moves from research to revenue

ECOVAXXIN MS received EU marketing authorisation in December 2025, several months ahead of schedule. The poultry vaccine targets Mycoplasma synoviae infection and was launched after the year end, with first orders received.

This is an important strategic milestone because Eco Animal Health has historically relied heavily on Aivlosin, its antibiotic treatment for respiratory and intestinal diseases in pigs and poultry. Vaccines move the business into disease prevention and could create additional revenue streams if commercial adoption follows regulatory approval.

The group said recent data confirmed a 44-week duration of immunity for ECOVAXXIN MS. It plans to submit this data for inclusion on the product label.

Further regulatory expansion is under way. The United States Department of Agriculture has accepted pivotal efficacy data, with US marketing approval expected by the end of the calendar year. Dossiers have also been submitted in Thailand and Argentina.

The broader pipeline includes ECOVAXXIN MG, another poultry vaccine, and a bivalent pig vaccine targeting PCV2 and Mycoplasma hyopneumoniae. Eco Animal Health expects up to nine products to receive US or EU approval over the next five to six years.

That potential should be balanced against development risk. The group stopped an earlier-stage necrotic enteritis monoclonal antibody project because it did not show sufficient clinical efficacy. Ending an unsuccessful programme limits further spending, but it is also a reminder that not every pipeline asset will reach the market.

Cash provides useful flexibility

Eco Animal Health ended the year with net cash of £25.4 million, up slightly from £25.0 million, after spending £8.8 million on R&D.

However, 61% of cash was held in China. The board treats cash in its Chinese subsidiaries as unavailable outside China for day-to-day treasury decisions, although funds are repatriated through annual dividends. A £3.1 million post-tax dividend was received from the wholly owned Chinese subsidiary in June 2026.

The group has also renewed a £10 million revolving credit facility and £5 million overdraft for five years on improved terms. Both were undrawn, giving management additional financial headroom without adding current borrowing.

No shareholder dividend has been recommended. Management is reinvesting profits in the pipeline and says future revenue and profit from R&D products could eventually support a progressive dividend policy. For now, this remains a growth and reinvestment story rather than an income proposition.

What should investors watch next?

Management expects FY2027 profitability to be in line with current market expectations, with performance again weighted towards the second half.

The key near-term questions are whether gross margin improvement proves sustainable, whether North American momentum continues and whether weaker Chinese demand recovers as expected. Commercial traction for ECOVAXXIN MS and progress towards further regulatory approvals will also be important.

Overall, these results show a core Aivlosin business producing better growth and margins while funding a potentially valuable vaccine pipeline. The balance sheet remains strong, but China exposure, receivables risk and the uncertain nature of product development prevent the investment case from being entirely straightforward.