This strategic move aims to enhance Embecta’s capabilities in drug-delivery systems.Deal Valued At Up To $200 MillionEmbecta values the acquisition at up to 150 million pounds (around $200.1 million). That includes an upfront cash payment of 100 million pounds and potential performance-based payments of up to 50 million pounds.Owen Mumford generated net revenue of 69.4 million pounds during its fiscal year 2025, and Embecta expects to close the deal in its fiscal third quarter of 2026, pending regulatory ap ...

Core Viewpoint - Embecta Corp. has announced a definitive agreement to acquire Owen Mumford Holdings Limited for up to £150 million, aiming to enhance its position in the drug-delivery device market and transform into a broad-based medical supplies company [1][3]. Acquisition Details - The acquisition involves an upfront cash payment of £100 million at closing, with an additional £50 million contingent on performance-based payments related to the Aidaptus auto-injector platform over three years [1][7]. - The transaction is expected to close in Embecta's fiscal third quarter of 2026, pending regulatory approvals [1]. Company Profiles - Owen Mumford is recognized for its innovative drug delivery platforms and has a strong portfolio in medical devices, including the Aidaptus auto-injector [2][14]. - Embecta is transitioning from a focus on insulin delivery to a broader range of medical supplies, leveraging its global presence and expertise [13]. Strategic and Financial Benefits - The acquisition is anticipated to improve Embecta's revenue growth trajectory and support its strategic transformation into a comprehensive medical supplies provider [3][4]. - Owen Mumford's Aidaptus platform is designed to streamline manufacturing and reduce supply chain complexity, enhancing operational efficiencies [4][6]. Market Opportunities - Owen Mumford generated approximately 80% of its revenue in the UK and the U.S. during fiscal year 2025, presenting significant opportunities for Embecta to expand its geographic reach [5]. - The combined capabilities of both companies are expected to drive innovation and improve the quality of life for patients with chronic conditions [3][14]. Financial Projections - The acquisition is expected to contribute to revenue growth in fiscal year 2027 and beyond, with an anticipated high-single-digit return on invested capital by year four [9]. - It is projected to be dilutive to adjusted net income in fiscal year 2027 but accretive thereafter [9]. Financing Strategy - Embecta plans to finance the acquisition through borrowings under its revolving credit facility, with a commitment to long-term debt reduction [11]. Advisors - J.P. Morgan Securities LLC is acting as the financial advisor for Embecta, while Forvis Mazars LLP is advising Owen Mumford [12].

Core Viewpoint - Embecta Corp. has appointed Devdatt Kurdikar as Chairman of the Board and Dr. Claire Pomeroy as Lead Independent Director, marking a significant leadership transition as the company aims to evolve from a focus on insulin delivery to a broader medical supplies company [1][3]. Group 1: Leadership Changes - Devdatt Kurdikar, previously leading the diabetes care business at BD, has been elected as Chairman of the Board following the retirement of LTG (Ret.) David F. Melcher [1][2]. - Dr. Claire Pomeroy, who has been on the Board since its inception in 2022, will continue her role as Lead Independent Director while also chairing the Corporate Governance and Nominating Committee [3][4]. Group 2: Company Vision and Strategy - Kurdikar expressed commitment to driving the company's transformation into a broad-based medical supplies entity, emphasizing the progress made since its launch as an independent company nearly four years ago [3]. - Dr. Pomeroy highlighted the Board's diverse experience and shared purpose, expressing confidence in advancing Embecta's mission to empower people with diabetes and improve lives through innovative solutions [4]. Group 3: Company Background - Embecta is a global company with a 100-year legacy in insulin delivery, now focusing on becoming a comprehensive medical supplies provider, supported by approximately 2,000 employees worldwide [4].

Core Insights - Embecta is transitioning from a "stand-up" phase to a "seed growth" phase, focusing on stabilizing its core insulin delivery franchise and expanding its portfolio while enhancing financial flexibility [4][7]. Branding and Transition - More than 95% of U.S. and Canadian revenue has transitioned to the Embecta brand, with international rollouts expected to be substantially complete by the end of calendar year 2026 [1]. Financial Performance - For Q1 fiscal 2026, Embecta reported approximately $261 million in revenue, a 2% decline on an adjusted constant-currency basis, with U.S. revenue down 7.6% due to pricing and volume headwinds, while international sales grew [6][10]. - GAAP net income was $44.1 million, with adjusted EPS at $0.71, reflecting an improvement from the previous year [5][15]. - The company generated about $17 million in free cash flow and repaid approximately $38 million of debt, reducing net leverage to about 2.8x [5][16]. Product and Market Strategy - Embecta is pursuing a GLP-1 strategy to extend its insulin delivery capabilities, collaborating with over 30 pharmaceutical partners, with initial generic GLP-1 launches anticipated in markets like Canada, Brazil, China, and India starting in 2026 [17][18]. - The company is also focusing on expanding its product offerings, including market-appropriate pen needles and syringes, and has begun discussions on co-packaging opportunities with branded pharmaceutical companies [21]. Guidance and Expectations - For fiscal 2026, Embecta reaffirmed its guidance, expecting adjusted constant-currency revenue to be flat to down 2% year over year, with as-reported revenue projected between $1.071 billion and $1.093 billion [22]. - The company anticipates generating $180 million to $200 million in free cash flow and repaying about $150 million of debt in fiscal 2026 [23].

Financial Performance - Revenues decreased by $0.7 million, or 0.3%, to $261.2 million for the three months ended December 31, 2025, compared to $261.9 million for the same period in 2024[115] - Gross profit increased by $4.6 million to $161.7 million, with a gross profit margin of 61.9%, up from 60.0% in the prior year[117] - Operating income surged by $54.6 million to $83.3 million, compared to $28.7 million in the previous year[117] - Net income reached $44.1 million, a significant increase from $0.0 million in the prior year[117] - Cost of products sold decreased by $5.3 million, or 5.1%, to $99.5 million, representing 38.1% of revenues, down from 40.0%[118] - Selling and administrative expenses fell by $3.5 million, or 4.3%, to $77.6 million, primarily due to lower compensation expenses[119] - Research and development expenses dropped by $15.7 million, or 77.3%, to $4.6 million, reflecting the discontinuation of the insulin patch pump program[120] Debt and Liquidity - As of December 31, 2025, Embecta's total principal debt issued amounted to $1,379.3 million, with long-term debt at $1,352.9 million after accounting for current debt obligations and issuance costs[128][130] - Embecta's total debt as of December 31, 2025, was $1,362.4 million, with short-term debt constituting 0.7% of total debt and a weighted average cost of total debt at 6.1%[128] - The company made interest payments of $13.2 million on outstanding debt during the three months ended December 31, 2025, and paid approximately $37.5 million on the Term Loan, of which $35.1 million was discretionary[130] - Cash and equivalents, along with restricted cash, decreased to $204.4 million as of December 31, 2025, down from $228.6 million as of September 30, 2025, primarily due to financing activities[138] - The company maintains sufficient liquidity through cash, cash equivalents, and borrowing capacity to meet operational and growth needs[127] - The effective tax rate decreased to 25.1% from 100.0% in the prior year, due to changes in earnings mix and lower limitations on interest expense deductibility[126] Operational Risks and Challenges - Future cash flows and financial performance are subject to various risks, including competitive factors and the ability to replace services currently provided by BD[147] - Operating costs have increased due to new tariffs imposed by the U.S. and foreign governments, affecting raw materials and energy costs[149] - The company faces risks from the global trade environment, with potential shifts in customer preferences towards local products due to tariffs[149] - Changes in reimbursement practices and foreign currency exchange rates could adversely impact financial performance[149][150] - Interest rate risk is primarily related to the Term Loan, with a potential $6.8 million impact on interest expense from a 100 basis point change in rates[153] - The impact of geopolitical instability and pandemics on operations and supply chains remains a concern for the company[149] Strategic Initiatives - The company is focused on the expected benefits of its Separation from BD and the associated risks of dis-synergy costs[149] - There are risks related to the completion of strategic partnerships and acquisitions that could accelerate growth and access to new technologies[149] - The company is undergoing a Patch Pump Program Restructuring Plan and a 2025 Restructuring Plan, with expectations on costs and profitability[149] - The ability to obtain FDA clearance for new products is critical for the company's future business decisions and market success[149] - The company has entered into foreign currency forward exchange contracts to manage currency exposure, which helps offset gains and losses[151][152] Credit Ratings and Compliance - Embecta's credit ratings were reaffirmed by Moody's at B1 and by Standard & Poor's at B+ in early 2026[136] - The company is in compliance with all financial covenants related to its credit agreements as of December 31, 2025[128]

Financial Data and Key Metrics Changes - In Q1 fiscal year 2026, Embecta generated approximately $261 million in revenue, reflecting a 0.3% decline year-over-year on an as-reported basis, or a 2% decline on an adjusted constant currency basis [15] - GAAP gross profit for Q1 2026 totaled $161.7 million with a margin of 61.9%, compared to $151.7 million and 60% in the prior year [19] - GAAP net income for Q1 2026 was $44.1 million, with earnings per diluted share of $0.74, compared to zero in the prior year period [22] Business Line Data and Key Metrics Changes - Adjusted constant currency pen needle revenue declined approximately 4.4%, while syringe revenue grew by approximately 5.3% and safety product revenue grew approximately 7.3% [17] - Contract manufacturing revenue declined approximately 16.7% due to continued insourcing by Becton Dickinson [18] Market Data and Key Metrics Changes - U.S. revenue for Q1 totaled approximately $131 million, reflecting a year-over-year decline of 7.6% on an adjusted constant currency basis, driven by lower pricing and volumes [15] - International revenue for Q1 totaled approximately $130 million, representing an increase of 8.4% on a reported basis, driven by strength across EMEA and Latin America [16] Company Strategy and Development Direction - The company is in the seed growth phase, focusing on staying competitive in core markets, selectively expanding the portfolio, and building financial flexibility through disciplined capital allocation [7] - A significant initiative is the brand transition to establish Embecta as an independent company, with over 95% of U.S. and Canadian revenue transitioned to the Embecta brand [8] Management's Comments on Operating Environment and Future Outlook - Management expects the recovery in China to be more weighted towards the second half of the fiscal year, with ongoing market dynamics impacting performance [16] - The company reaffirmed its financial guidance for the year, now expecting to be closer to the lower end of the guidance ranges due to incremental U.S. pricing headwinds [18][25] Other Important Information - The company is collaborating with over 30 pharmaceutical partners on GLP-1 therapies, with several partners already selecting Embecta as a supplier [10] - The company expects to generate between $180 million and $200 million in free cash flow for 2026, although closer to the low end of that range [26] Q&A Session Summary Question: Can you provide insights on U.S. business dynamics, pricing impacts, and the expected recovery in China? - Management noted a year-over-year decline in the U.S. driven by lower pricing and volume, with channel dynamics impacting results. They expect a recovery in China in the second half of the year [31][32] Question: What factors contributed to the strength in international markets? - Management attributed the growth in international markets to superior execution, particularly in Latin America, where a new large customer has driven growth [43] Question: Can you elaborate on the GLP-1 opportunity and the impact of oral therapies? - Management remains confident in the GLP-1 opportunity, noting that injectables have better weight loss profiles and that oral therapies are expanding the market rather than pulling patients away from injectables [36][39]

Financial Data and Key Metrics Changes - In the first quarter of fiscal year 2026, the company generated approximately $261 million in revenue, reflecting a 0.3% decline year-over-year on an as-reported basis, or a 2% decline on an adjusted constant currency basis [15] - GAAP gross profit and margin for the first quarter totaled $161.7 million and 61.9%, compared to $151.7 million and 60% in the prior year period [19] - GAAP net income and earnings per diluted share were $44.1 million and $0.74 during the first quarter, compared to 0 in the prior year period [22] Business Line Data and Key Metrics Changes - Adjusted constant currency pen needle revenue declined approximately 4.4%, while syringe revenue grew by approximately 5.3% and safety product revenue grew approximately 7.3% [17] - Contract manufacturing revenue declined approximately 16.7% due to the continued insourcing of these products by Becton Dickinson [18] Market Data and Key Metrics Changes - U.S. revenue for the quarter totaled approximately $131 million, reflecting a year-over-year decline of 7.6% on an adjusted constant currency basis [15] - International revenue for the first quarter totaled approximately $130 million, representing an increase of 8.4% on a reported basis and an increase of 4.6% on an adjusted constant currency basis, driven by strength across EMEA and Latin America [16] Company Strategy and Development Direction - The company is focused on transitioning to a broader medical supplies company and drug delivery partner, building on its foundation as a leader in global insulin delivery [8] - The brand transition initiative aims to establish Embecta as an independent company, with over 95% of U.S. and Canadian revenue transitioned to the Embecta brand [9] - The company is advancing its GLP-1 strategy, collaborating with over 30 pharmaceutical partners, and expects initial generic GLP-1 launches in markets such as Canada, Brazil, China, and India beginning in calendar year 2026 [11] Management's Comments on Operating Environment and Future Outlook - Management expects to be closer to the lower end of the financial guidance ranges due to incremental U.S. pricing headwinds, while the international business outlook has improved [18][25] - The company anticipates a recovery in China in the second half of the year, with ongoing market dynamics and geopolitical factors impacting performance [32] Other Important Information - The company generated approximately $17 million in free cash flow during the first quarter and repaid approximately $38 million of outstanding debt, reducing net leverage to approximately 2.8 times [24] - The company reaffirmed its financial guidance for fiscal year 2026, expecting revenue to be flat to down 2% compared to 2025 levels [25] Q&A Session Summary Question: Can you provide insights on U.S. business dynamics, pricing impacts, and the expected recovery in China? - Management noted a year-over-year decline in U.S. revenue driven by lower pricing and volume, with channel dynamics impacting results. They expect a recovery in China in the second half of the year [30][32] Question: What factors contributed to the strength in international markets? - Management attributed the growth in international markets to superior execution, particularly in Latin America, where a new large customer has driven growth [42][43] Question: Can you elaborate on the GLP-1 opportunity and the impact of new oral therapies? - Management remains confident in the GLP-1 opportunity, noting that injectables have better weight loss profiles and that the market for orals is expanding rather than pulling patients away from injectables [36][39]

Financial Data and Key Metrics Changes - In the first quarter of fiscal year 2026, the company generated approximately $261 million in revenue, reflecting a 0.3% decline year-over-year on an as-reported basis, or a 2% decline on an adjusted constant currency basis [14] - GAAP gross profit and margin for the first quarter totaled $161.7 million and 61.9%, compared to $151.7 million and 60% in the prior year period [19] - GAAP net income and earnings per diluted share were $44.1 million and $0.74 during the first quarter, compared to $0 in the prior year period [21] Business Line Data and Key Metrics Changes - Adjusted constant currency pen needle revenue declined approximately 4.4%, while syringe revenue grew by approximately 5.3% and safety product revenue grew approximately 7.3% [17] - Contract manufacturing revenue declined approximately 16.7%, primarily due to the continued insourcing of these products by Becton Dickinson [17] Market Data and Key Metrics Changes - U.S. revenue for the quarter totaled approximately $131 million, reflecting a year-over-year decline of 7.6% on an adjusted constant currency basis, driven by lower pricing and lower volumes [15] - International revenue for the first quarter totaled approximately $130 million, representing an increase of 8.4% on a reported basis and an increase of 4.6% on an adjusted constant currency basis, driven by strength across EMEA and Latin America [16] Company Strategy and Development Direction - The company is focused on transitioning to a broader medical supplies company and drug delivery partner, with a strong emphasis on brand transition and portfolio expansion [6][7] - The company aims to strengthen its core business while selectively expanding its portfolio in areas that leverage existing strengths, particularly in the Medicare Part D channel [9][10] Management's Comments on Operating Environment and Future Outlook - Management expects the recovery in China to be more weighted towards the second half of the fiscal year, given ongoing market dynamics and geopolitical factors [16] - The company reaffirmed its financial guidance for the year, now expecting to be closer to the lower end of the guidance ranges due to incremental U.S. pricing headwinds [18][25] Other Important Information - The company is advancing its GLP-1 strategy, collaborating with over 30 pharmaceutical partners, with initial generic GLP-1 launches anticipated in markets such as Canada, Brazil, China, and India beginning in calendar year 2026 [11][12] - The company generated approximately $17 million in free cash flow during the first quarter and repaid approximately $38 million of outstanding debt, reducing its net leverage level to approximately 2.8 times [23][24] Q&A Session Summary Question: Can you provide insights on U.S. business dynamics, pricing impacts, and the expected recovery in China? - Management noted a year-over-year decline in the U.S. driven by lower pricing and volume, with channel dynamics impacting results. They expect a recovery in China in the second half of the year [30][32] Question: What factors contributed to the strength in international markets? - Management attributed the growth in international markets to superior execution, particularly in Latin America, where a new large customer has driven growth [43] Question: Can you elaborate on the GLP-1 opportunity and the impact of oral therapies? - Management remains confident in the GLP-1 opportunity, noting that injectables have better weight loss profiles and that the market for orals is expanding rather than pulling patients away from injectables [36][38]

Earnings Conference Call Fiscal Q1 2026 February 5, 2026 1 Forward-looking statements Safe Harbor Statement Regarding Forward-Looking Statements This presentation contains express or implied "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements concern our current expectations regarding our future results from operations, performance, financial condition, goals, strategies, plans and achievemen ...

Financial Performance - Reported revenues for Q1 FY 2026 were $261.2 million, a decrease of 0.3% from $261.9 million in Q1 FY 2025[4] - U.S. revenues decreased by 7.6% on both reported and adjusted constant currency basis, while international revenues increased by 8.4% on a reported basis[4] - Gross profit was $161.7 million with a margin of 61.9%, compared to $157.1 million and 60.0% in the prior year[4] - Operating income was $83.3 million, representing a margin of 31.9%, significantly up from $28.7 million and 11.0% in the prior year[4] - Net income was $44.1 million, with earnings per diluted share of $0.74, compared to $0.0 million in the prior year[4] - Adjusted EBITDA for the three months ended December 31, 2025, was $97.2 million, compared to $97.3 million in 2024, maintaining a stable performance[24] - GAAP gross profit increased to $161.7 million for the three months ended December 31, 2025, with a gross profit margin of 61.9%, up from 60.0% in 2024[25] - GAAP Operating Income for the three months ended December 31, 2025, was $83.3 million, compared to $28.7 million in 2024, representing a margin increase from 11.0% to 31.9%[28] - Adjusted Operating Income for the same period was $79.3 million, slightly down from $80.5 million in 2024, with a margin of 30.4%[28] - GAAP Net Income reached $44.1 million for Q4 2025, with an Adjusted Net Income of $42.3 million, up from $38.3 million in 2024[28] - Non-GAAP Free Cash Flow improved to $16.6 million in Q4 2025, compared to a negative $6.8 million in the same quarter of 2024[30] Debt and Financial Position - The company reduced debt by approximately $37.5 million during Q1 FY 2026, improving financial flexibility[5] - The company had approximately $204.4 million in cash and equivalents and $1.379 billion in outstanding debt as of December 31, 2025[12] - Total assets decreased from $1,090.9 million as of September 30, 2025, to $1,063.7 million as of December 31, 2025, a decline of approximately 2.5%[19] - Total current liabilities decreased from $261.5 million as of September 30, 2025, to $234.7 million as of December 31, 2025, a reduction of approximately 10.3%[19] - Cash and equivalents decreased from $225.5 million as of September 30, 2025, to $201.3 million as of December 31, 2025, a decline of about 10.7%[19] - Payments on long-term debt for the three months ended December 31, 2025, were $37.5 million, compared to $32.4 million in 2024, indicating an increase of 16.8%[21] Future Outlook - The company expects reported revenues for FY 2026 to be in the range of $1,071 million to $1,093 million, with an adjusted constant currency revenue growth of -2.0% to 0.0%[9] - A quarterly cash dividend of $0.15 per share was declared, payable on March 17, 2026[13] - The company is focused on expanding its product portfolio and maintaining its global leadership position in diabetes care[32] - Future strategies include enhancing financial flexibility through debt reduction and exploring strategic partnerships and acquisitions[32] - The company aims to transform into a broad-based medical supplies company serving chronic care patients and drug delivery partners[32] Operational Highlights - The company advanced over one third of more than 30 identified potential B2B generic partners into contract negotiations or executed contracts[5] - The company incurred one-time stand-up costs of approximately $4.8 million in Q4 2025, down from $10.4 million in Q4 2024[29] - The non-GAAP effective tax rate for Q4 2025 was 23.0%, compared to 25.0% in Q4 2024[29] - The basic weighted average number of shares outstanding increased to 58,796 thousand in Q4 2025 from 57,952 thousand in 2024[28]