Phibro’s (PAHC) Big Acquisition Bet Just Cleared Its First Full Year

Phibro Animal Health (NASDAQ: PAHC ) closed out fiscal 2026 with numbers that speak for themselves. Full-year net sales topped $1.5 billion, adjusted EBITDA climbed 39% to $255 million, and adjusted diluted earnings per share jumped 48% to $3.22. The results, covering the quarter and year ended June 30, mark the first complete fiscal year since the company folded in a large medicated feed additive portfolio, and management used its earnings call on August 27 to argue the deal is finally paying off on its own terms.

A Diversified Growth Engine Finally Clicking

The acquired feed additive business grew 70% for the full year and added $354.3 million in sales, but the more telling number might be how much the rest of the company grew without it. The Animal Health segment overall rose 21% to $1.162 billion, Mineral Nutrition climbed 11% to $282.3 million on stronger demand for zinc, copper and trace minerals, and vaccine sales rose 14% to $156.4 million behind poultry demand in Latin America and Israel. Nutritional Specialties grew as well, helped by North American dairy customers. That spread across several product lines suggests Phibro isn't leaning on one acquisition to carry the whole story.

Leadership is also pointing to newer growth levers: the companion animal joint health product Rejensa saw what management called a "nice uptick" as distribution widened beyond a single partner, and COO Larry Miller noted that livestock values sitting at all-time highs are pushing customers to spend more on animal health. Layered on top, the company says its three-year Phibro Forward efficiency program, which formally concluded in June, will still add roughly $50 million in cumulative EBITDA benefit in fiscal 2027, and the planned closure of its Chicago Heights plant is expected to save $15 million to $20 million a year starting in fiscal 2028.

The Cash Flow Question Nobody's Answered Yet

For all the EBITDA growth, free cash flow for fiscal 2026 came in at just $9.9 million, dragged down by an $86.3 million buildup in inventory tied mostly to the newly acquired portfolio. That leaves the balance sheet carrying $737.9 million in total debt and a gross leverage ratio of 2.9 times EBITDA, a figure worth watching if growth slows. And growth does look set to slow.

Guidance for fiscal 2027 calls for net sales of $1.55 billion to $1.6 billion and adjusted EBITDA of $258 million to $268 million, roughly 4% and 3% growth at the midpoint, a sharp step down from this year's pace. Part of that comes from tough comparisons, since acquired portfolio sales fell 11% in the fourth quarter against a strong prior-year period, and management expects negative EBIT growth in the fiscal first quarter because of a higher SG&A base built up over the year.