C-Suite Conversations on Consumer Health, Earnings

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1:39Carol Massar:Bloomberg Audio Studios. Podcasts. Radio. News. This is Bloomberg Business Week Daily. Reporting from the magazine that helps global leaders stay ahead. with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Businessweek Daily Podcast with Carol Masser and Tim Stenebeck on Bloomberg Radio. We want to get a read, though, on the macro, Tim, and we've got one from the C-suite, a stock that rallied big time yesterday, but it's given back a bunch today. Yeah, we're talking about Elanco Animal Health.

2:18$11.8 billion market cap company reported earnings yesterday. Here to talk about the results, the outlook, and the macro coming at the company is the president and CEO of Elonco, Jeff Simmons, with us from Greenfield, Indiana. Jeff, good to have you on the program. What are you seeing that gives you a picture of whether or not we are slowing down when it comes to our spending on pets? Yeah, I will just say Animal Health has just completed one of the biggest years we had in 2025. 10 % growth on the farm side, up high single digit on the pet side. And we see no slowing. We just recently completed a survey.

2:58Some of this is part of the industry in our company where spend is up, you know,$500 a year plus on pets. If, you know, the expectation of care is high, you've got to bring value. You've got to bring convenience. But if you do that and you can reach the global market, 70 percent of new puppies are outside the U.S. So that global footprint matters. Listen, with expectation of care growing, the willingness to spend, we're seeing it. That's what turned in the best quarter since we spun out of Eli Lilly in 2018 that we turned in and announced yesterday with 10 percent growth. And we saw that growth on both sides, pet, farm, international and U.S.

3:38Carol Massar:Yeah, it's a great read. And, you know, it's interesting. It's in contrast to what we're seeing from some other players in the space, Zoetis and also Merck's animal health segment. I want to ask about those results because you did, as a result of what you reported, Jeff, it seems to seem that you guys are actually gaining share out there as some of your rivals are having a tougher time. First time in many years that we've seen your company outperform some of the competitors that are out there. Investors are focused on durability of these gains. They want it to be not just a one-quarter thing. So how heavy is the company cutting prices, trying to hold on to that share and gain even more?

4:17Thank you for the question. I mean, I'll just say we've been on a path. We're in the midst of three years of consistent growth. And let me contrast a little bit. First of all, I think the industry is extremely durable, and we can come back to it. But, you know, animal protein is growing significantly. I mean, meat case sales are up 100 % the last five years, right? cottage cheese meat sticks the the milkshakes the new dietary guidelines glp so protein is you know we're expecting five percent growth in protein and then on this pet side as i said high single digit growth so then well what's going on underneath when you start to look at companies elanco let me contrast a little bit first it's innovation just like on the pharmaceutical side we've launched six blockbusters in major markets two billion dollar during market we got the two fastest growing products.

5:04Six billion dollar parasiticide market. We've got the best medicine and just shared record market share growth there yesterday. And then the beef market, we know what's going on in beef. So I think it's innovation one. Two is we bought Bayer a few years ago to really they had a retail business. We've got an omni channel. We announced yesterday we're in the dollar store now all the way to Costco. We have the OTC leadership in pet. I can take you online to Chewy and Amazon to the dollar store all the way to a complex product in the vet clinic. Nobody reaches more pet owners where they want to shop at the price point than Elanco.

5:41And then we've got a big farm animal business. We're number one in beef, swine, poultry. So that diversity matters, reaching more customers. When you're dependent on one innovation in one country, you become dependent. Elanco for the rest of this decade, and we laid out in our investor conference, You know, we're looking at mid-single-digit consistent on the top, high on the bottom, and double-digit, low-double-digit on EPS. And we feel very good about that. And I think our stock performance has shown that over the last 12 to 14 months. And I'm more excited about the next 12 to 14 months. Hey, Jeff, we only have 20 seconds left.

6:15But the durability of the protein craze right now, how do you know that that's here for good? Very briefly. Yeah, I think you just – it's not one trend. It's many trends. And it's not just the U.S. It's global. wellness we used to be all about oh get meat into the diet or milk or whatever the the protein is higher quality a lot more than over a thousand new products in dairy and people are seeing this that hey protein you know muscle retention is the the key thing for for that aging population glp use so i i see many more converging trends and it's going to drive volume growth not just share growth

6:52Carol Massar:I got to say, the dog food we feed our pets, man, it is specialized, different ages, keeping them thin. It's interesting stuff. Jeff, come back soon. We'd love to do more with you. Jeff Simmons, of course, the CEO of Alanco. This is Bloomberg. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

7:13So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM. Support for the show comes from Public. Public. Lately, it feels like there are two types of investing platforms.

7:49Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth. On Public, you can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts, yep. High yield cash, Yes, again. They even have direct indexing. Public has modern design, powerful tools, and customer support that actually helps. Go to public.com slash market and earn an uncapped 1 % bonus when you transfer your portfolio.

8:25That's public.com slash market.

8:40public.com slash disclosures.

8:42Carol Massar:Being a small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. That's why they make business growth their priority. The Chase team takes the time to understand your mission, where you are now, and where you want to go. Their broad range of solutions is designed with you in mind so you can bring your ideas to life. From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all in one place with their digital tools. Looking for tips and advice? Their online resources are always available to give you the solutions you need to help your business thrive.

9:20Carol Massar:See how your business can get stronger and go farther with Chase for Business. Learn more at chase.com slash business. Chase for Business. Make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JPMorgan Chase Bank N.A. Member FDIC. Copyright 2026. JPMorgan Chase and Company. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. The guy's share is rising today as much as 15.6%.

9:58This after the company reported adjusted earnings per share for the first quarter that beat the average analyst estimate. The company also announced that this chief strategy officer will become CFO. That's effective next month. And narrowed its adjusted EBITDA forecast for the full year. Back with us, Gal Grubiner, co-founder and CEO at the$1.3 billion market cap, Pagaya Technologies. Always good to have you on the program. You use AI, machine learning. You help financial firms make credit decisions. Before we get to the most recent quarter, just remind everybody where specifically you operate when it comes to the spectrum of consumers and credit?

10:35So, Tim, Carol, thank you so much for having me. Yeah, in general terms, it's exactly what you said. We are using a very strong AI capabilities that we have built, and we are connected to banks, and we're helping them to approve more customers that otherwise maybe will find their approval somewhere else. And we are working with the biggest banks in the United States, so you can think about U.S. Bank and many others, like Ally Bank, And we do that across three different markets. We're doing that in personal loan. We're doing that in auto loan. And we're doing that in point of sale. Just this quarter, we actually announced the addition of Upstart and Sezzle, which are two very big.

11:15One of them, personal loan originator, actually public. And one of them, Sezzle, which is the buy now pay later, a public company too, to help them approve more customers under their brand.

11:27Carol Massar:Gal, one thing I want to ask you about. So you said you're connected to banks, so you're helping them with basically credit analysis, like where the risks are, like who's going to be a good customer to give credit to. So talk to me about what you are seeing as a result. Lots of data that you are seeing. What are you seeing about the quality of consumer credit today? So I can't express how much there is a differentiation between what Wall Street and Main Street is experiencing. so as we think about the consumer and we're talking about our average consumer is a good strong American$115 ,000,$660 ,000,$670 ,000 FICO, their performance is very stable and they are buying a lot of cars in the last tax season, they got additional money in the tax season, their payments are in due and the performance that we are seeing on these bowels that we are we are lending to are actually at a very strong place.

12:22Now, that is very contrary to the news that we see out there about geopolitical and other pieces and things that might will change the future. But as for now, as for the data we have and we see over a trillion dollar of applications a year, we are seeing a very steady U.S. economy, U.S. consumer.

12:41Carol Massar:I do want to push a little bit, though, the BNPL, buy now, pay later. What are you seeing? the alternative credit growth in this system. I mean, you guys back Klarna's portfolio in the US. Can you dig a little bit deeper into that area? Yeah, I can't obviously comment on a specific partner or the other, but I will say that Buy Now Pay Later is performing well too. And our point of sale book is as robust as it's ever been. It is true that this is changing in some respect, some credit card transactions that otherwise we'll do. We are focusing on the more longer dated loans. So a little bit less of the paying for and stuff like that.

13:17So all our official loans with official credit bureau. So we are exposed to the real main meat and bone of the U.S. consumer kind of like lending. And there we see quite strong stability.

13:29Carol Massar:Are people buying groceries on buy now, pay later? I really hope they don't. But are you seeing it? We can't speak about the specific transactions. But like in general, again, the things that we are dealing with are for TVs, for vacations, for other stuff. And in that area, you see a very strong momentum, like the U.S. economy is continuing to perform very strongly. How do you reconcile what you see with what we heard from Kraft Heinz, a CEO that, quote, talking about consumers, quote, they're literally running out of money at the end of the month. We're seeing negative cash flows in the lower income brackets where we're seeing where they're dipping into savings.

14:12How do you reconcile what we heard from the Kraft Heinz CEO and what you're seeing? You had exactly the answer in the question. You spoke about the very low income, and that's potentially things that are getting very squeezed by inflation, by gasoline prices, by all the second and third derivative effect of the oil and the geopolitical situation. But when we are talking about the people that have access to unconsumer debt and the people that could borrow$10 ,000,$20 ,000 and to go to vacation or to buy a car or$50 ,000, usually they tend to be in the, if not the first 10%, but like at the top 50%.

14:53So when we are thinking about the borrowers that we are actually lending to, they have an income of$115 ,000. That's twice as high as the average middle American, right? So you need to take these things in perspective. Some call it the K-shaped form economy. Some call it other ways. But what drives really the economy and its kind of like strength? Definitely the people who earn more, who the unemployment is still very low. and the ability of Pagaya to work with many more banks and to offer that capabilities is actually allowing them to lend more and to live a better life. And that's really the mission that we are behind.

15:31And a lot of the growth that we are experiencing is more banks are calling us and telling us that they want to sell their customers better. So they are connecting to the Pagaya network to be able to do that. And there are millions of Americans that are having a good income, they're having a good FICO, but just not getting the credit that they need. And that's what the guy is here to solve.

15:51Carol Massar:Hey, one of the things I'm curious about, just coming off of Milken, did a whole thing on consumer credit. And so part of the questions that we asked about is how folks are kind of adjusting their models to make sure that they are testing well for the current environment. I want to know, are you guys using AI for lending specifically? and with those expectations of a cooling U.S. labor market later this year, are your models being tested in a way that they haven't been since the company went public? And how is the AI adjusting your underwriting in real time to account for rising default risks?

16:27Carol Massar:I mean, we've been doing some reporting about that, too, especially for folks who have student loans, the amount of debt they have and the amount of kind of rising default rates that we are seeing. So that's a great question. And I think from my perspective as a CEO, you can think about growth and prudent risk that goes hand in hand. So when we looked on Q4 and we started to see some dislocation in the capital markets and many other pieces, the first thing we did as risk managers is to reduce our risk posture. So what you've seen in our results this quarter is actually after almost a billion dollar of a cut, which is the 10 % of what we believe to be, should have been the production of the loans by now if we didn't take these precautious preliminary actions.

17:13And I do agree with the things you spoke about in Milken, and we need to be very cautious about the way to do it. And uniquely, our business model is positioned as such that we have the luxury to do these adjustments and to be able to actually provide the consumer credit only to the people that we believe are going to be much more immune in these types of various situations. All right.

17:37Carol Massar:We have to leave it there. Come back soon because you're such a great read on what's going on with consumers. Gal Kubiner, co-founder and CEO of Pagaya Technologies. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

17:52Support for the show comes from Public. Lately, it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth. On Public, you can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts? Yep. High yield cash? Yes again. They even have direct indexing. Public has modern design, powerful tools, and customer support that actually helps.

18:27Go to public.com slash market and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash market. Ad paid for by Public Holdings. Brokered services by Public Investing, member FINRA SIPC. Advisory services by Public Advisors, SEC Registered Advisor. Crypto services by ZeroHash. All investing involves risk of loss. See complete disclosures at public.com slash disclosures.

18:51Carol Massar:Being a small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. That's why they make business growth their priority. The Chase team takes the time to understand your mission, where you are now, and where you want to go. Their broad range of solutions is designed with you in mind so you can bring your ideas to life. From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all in one place with their digital tools. Looking for tips and advice? Their online resources are always available to give you the solutions you need to help your business thrive.

19:29Carol Massar:See how your business can get stronger and go farther with Chase for Business. Learn more at chase.com slash business. Chase for Business. Make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JPMorgan Chase Bank N.A. Member FDIC. Copyright 2026. JPMorgan Chase and Company. Here's a paradox. We buy insurance for peace of mind, yet the very policies we trust can deliver the biggest financial shocks. Across America, millions of claims are denied every year, not because people did anything wrong, but because policies quietly excluded the things that happened.

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20:51Carol Massar:You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. Shares of Flex served a whopping 40, yes, 40 % yesterday. This after the Electronic Manufacturing Services Company issued profit guidance for 2027 and exceeded consensus estimates. Today, the stock hit a new all-time high as well. Additionally, Carol, the company announced that it will spin off its cloud and power infrastructure segment into a public company. That has investors excited.