Zoetis — Income Statement, Cash Flows & Balance Sheet
Is Zoetis profitable?
Zoetis continues to grow revenue and expand profitability, with net income rising meaningfully year over year.
| Metric | 2023 | 2024 | 2025 | Change (2024→2025) |
|---|---|---|---|---|
| Revenue ($M) | $8,544 | $9,256 | $9,467 | +$211 (+2.3%) |
| Cost of Sales ($M) | $2,561 | $2,719 | $2,666 | -$53 (-1.9%) |
| Gross Profit ($M) | $5,983 | $6,537 | $6,801 | +$264 (+4.0%) |
| Gross Margin | 70.0% | 70.6% | 71.8% | +1.2 pts |
| Net Income attributable to Zoetis ($M) | $2,344 | $2,486 | $2,673 | +$187 (+7.5%) |
| Diluted EPS | $5.07 | $5.47 | $6.02 | +$0.55 (+10.1%) |
Zoetis grew revenue modestly in 2025 but managed costs well — cost of sales actually declined despite higher revenue, pushing the gross margin above 71%. Net income grew at a faster pace than revenue, and diluted earnings per share jumped roughly 10%, partly aided by a shrinking share count from buybacks.
One-time items in prior years make year-over-year comparisons slightly tricky.
| Item | 2023 | 2024 | 2025 |
|---|---|---|---|
| Other (income)/deductions — net ($M) | $(159) | $(19) | $(36) |
| Includes: gain/(loss) on business sales ($M) | $(101) gain | $23 loss | $3 loss |
| Restructuring charges ($M) | $53 | $53 | $51 |
The 2023 "Other income" figure was unusually large, driven by a $101 million gain on the sale of a majority stake in Zoetis' pet insurance business. Stripping that out, the underlying earnings trend looks even more consistently positive across all three years.
Where does Zoetis's revenue come from?
Companion animals are the clear growth engine, while livestock has softened.
| Species | 2023 | 2024 | 2025 | Change (2024→2025) |
|---|---|---|---|---|
| Companion Animal ($M) | $5,576 | $6,278 | $6,587 | +$309 (+4.9%) |
| Livestock ($M) | $2,890 | $2,898 | $2,764 | -$134 (-4.6%) |
Companion animals — primarily dogs and cats — now account for roughly 70% of total product revenue and are growing steadily. Livestock revenue declined, partly reflecting the divestiture of the medicated feed additive business in late 2024. The contrast between the two businesses is becoming more pronounced over time.
Parasiticides, dermatology, and vaccines are the top three product categories and all grew.
| Product Category | 2023 | 2024 | 2025 | Change (2024→2025) |
|---|---|---|---|---|
| Parasiticides ($M) | $1,947 | $2,153 | $2,341 | +$188 (+8.7%) |
| Vaccines ($M) | $1,771 | $1,827 | $1,959 | +$132 (+7.2%) |
| Dermatology ($M) | $1,427 | $1,655 | $1,754 | +$99 (+6.0%) |
| Medicated Feed Additives ($M) | $354 | $293 | $27 | (divested Oct 2024) |
The three largest categories all posted strong growth. The steep drop in medicated feed additives simply reflects the completed divestiture — it is not an organic decline — so the underlying product portfolio is performing well.
Does Zoetis generate cash?
Zoetis is a strong cash generator, though most of that cash is flowing back to shareholders.
| Cash Flow Item | 2023 | 2024 | 2025 |
|---|---|---|---|
| Operating Cash Flow ($M) | $2,353 | $2,953 | $2,904 |
| Capital Expenditures ($M) | $(732) | $(655) | $(621) |
| Free Cash Flow ($M) | $1,621 | $2,298 | $2,283 |
| Share Repurchases ($M) | $(1,092) | $(1,858) | $(3,235) |
| Dividends Paid ($M) | $(692) | $(786) | $(889) |
Operating cash flow remains robust and well above net income, a healthy sign. Capital spending is declining year over year. Free cash flow (operating cash flow minus capex — a GAAP-derived but non-reported measure) is substantial. However, Zoetis returned significantly more cash to shareholders in 2025 than it generated from operations, funding a large portion of the buyback with proceeds from new debt issuances.
How strong is Zoetis's balance sheet?
Zoetis took on a significant amount of new debt in 2025, which substantially increased leverage.
| Debt Metric | 2024 | 2025 | Change |
|---|---|---|---|
| Total Long-Term Debt ($M) | $6,570 | $9,150 | +$2,580 |
| Cash & Equivalents ($M) | $1,987 | $2,312 | +$325 |
| Net Debt ($M) | $4,583 | $6,838 | +$2,255 |
| Current Portion of Long-Term Debt ($M) | $1,350 | $0 | -$1,350 |
Zoetis issued $3.85 billion in new debt during 2025 — a mix of traditional senior notes and a $2 billion convertible note — and used the proceeds primarily to repurchase shares and refinance maturing debt. The good news is that no debt matures in 2026, and the cash balance actually grew. Still, the jump in total debt is meaningful and worth monitoring.
Shareholder equity declined sharply as aggressive buybacks outpaced retained earnings growth.
| Equity Metric | 2024 | 2025 | Change |
|---|---|---|---|
| Total Zoetis Equity ($M) | $4,770 | $3,331 | -$1,439 |
| Treasury Stock ($M) | $(7,445) | $(10,685) | -$3,240 |
| Retained Earnings ($M) | $11,968 | $13,744 | +$1,776 |
The company earned more and retained more, but the share buyback program — $3.25 billion in repurchases in 2025 alone — more than offset those gains, shrinking the equity base. This is a deliberate capital allocation choice, not a sign of business distress, but it does mean the company is increasingly financed by debt rather than equity.