Financial Data and Key Metrics Changes - The company reported Q3 revenue of almost $296 million, representing an 8% constant currency growth, marking one of the strongest quarters in its history [6][4] - The company has overachieved its fiscal 2024 targets, maintaining flat revenue while achieving a margin of about 30% [3][4] - The company expects to approach a net leverage of 3 by the end of the fiscal year, having already paid down about $110 million in debt by the end of Q3 [28][35] Business Line Data and Key Metrics Changes - The U.S. market contributed significantly to the revenue growth, with both pricing and volume being key drivers [6][10] - Internationally, Latin America and Asia showed strong growth, although there was some weakness observed in China [8][9] - The company is transitioning its brand from BD to Embecta, with over 90% of U.S. and Canada revenue now under the Embecta brand [27] Market Data and Key Metrics Changes - The Greater China market, which includes mainland China, Taiwan, and Hong Kong, contributes high single-digit percentages to total global revenues, but has faced increased price competition and a shift towards local brands [12][13] - The company anticipates a decline in its China business in Q4 due to inventory adjustments by national distributors [14] Company Strategy and Development Direction - The company has set three priorities: strengthening the core business, expanding the product portfolio, and increasing financial flexibility [4][27] - The company is focusing on becoming a more diversified medical supplies company, leveraging its core competencies in high-volume manufacturing and distribution [27][29] - The company is optimistic about the long-term potential in China, citing a large market of undiagnosed diabetes patients and existing strong infrastructure [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate cash flow and pay down debt, which will allow for opportunistic M&A in the future [35][41] - The company is optimistic about growth opportunities in the GLP-1 market, with several agreements already signed with generic companies [20][22] - Management noted that the completion of stand-up work allows for greater operational flexibility and cost optimization moving forward [34][39] Other Important Information - The company has made significant progress in transitioning to the Embecta brand, with plans to complete this transition internationally by the end of next year [27] - The company has a world-class manufacturing plant in China that began operations in 2016, producing products for both local and regional markets [16] Q&A Session Summary Question: Can you discuss the drivers behind the strong Q3 results? - The strong Q3 results were driven by both pricing and volume in the U.S., with adjustments in rebate reserves contributing to pricing [6][7] Question: What is the outlook for the U.S. market? - The U.S. market has shown better-than-expected pricing dynamics, and underlying volume trends remain stable despite some anomalies [10][11] Question: How is the company addressing challenges in China? - The company is optimistic about the long-term potential in China despite current challenges, citing strong infrastructure and ongoing initiatives [15][16] Question: What is the current status of tariffs and their impact? - The tariff environment is currently seen as negligible for fiscal 2025, with previous impacts expected to dissipate [18][20] Question: What are the growth drivers for the business? - The company is excited about GLP-1 initiatives, with ongoing discussions and agreements with multiple generic companies [20][22] Question: What milestones should investors expect in the next 12 to 18 months? - Investors should expect continued progress in brand transition, product portfolio expansion, and financial flexibility improvements [27][28]

This headline in my December 4, 2024 article “ New Initiatives Expected To Make Embecta More Profitable ” summed up my assessment at the time. Now, it has completed several of those initiatives and produced anRobert F. Abbott has been investing his family’s accounts since 1995, and in 2010 added options, mainly covered calls and collars with long stocks. He is a freelance writer, and his projects include a website that provides information for new and intermediate-level mutual fund investors. A resident of ...

Embecta Corp. (EMBC) closed the last trading session at $12.73, gaining 22.8% over the past four weeks, but there could be plenty of upside left in the stock if short-term price targets set by Wall Street analysts are any guide. The mean price target of $16 indicates a 25.7% upside potential. The mean estimate comprises three short-term price targets with a standard deviation of $7.81. While the lowest estimate of $11.00 indicates a 13.6% decline from the current price level, the most optimistic analyst exp ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=Part%20I.%20Financial%20Information) This part presents Embecta Corp.'s unaudited condensed consolidated financial statements and management's discussion and analysis for the periods ended June 30, 2025 [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Embecta Corp.'s unaudited condensed consolidated financial statements, including income, comprehensive income, balance sheets, equity, and cash flows, with detailed notes on accounting policies and transactions [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section provides the condensed consolidated statements of income, detailing revenues, expenses, and net income for the specified periods **Condensed Consolidated Statements of Income (in millions, except per share amounts):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $295.5 | $272.5 | $816.4 | $837.0 | | Cost of products sold | $98.4 | $82.4 | $298.1 | $275.6 | | Gross Profit | $197.1 | $190.1 | $518.3 | $561.4 | | Total Operating Expenses | $103.1 | $134.2 | $332.7 | $420.8 | | Operating Income | $94.0 | $55.9 | $185.6 | $140.6 | | Interest expense, net | $(26.6) | $(27.8) | $(81.2) | $(83.3) | | Other income (expense), net | $4.8 | $(1.1) | $2.9 | $(6.1) | | Income Before Income Taxes | $72.2 | $27.0 | $107.3 | $51.2 | | Income tax provision (benefit) | $26.7 | $12.3 | $38.3 | $(12.5) | | Net Income | $45.5 | $14.7 | $69.0 | $63.7 | | Basic EPS | $0.78 | $0.25 | $1.18 | $1.11 | | Diluted EPS | $0.78 | $0.25 | $1.18 | $1.10 | - Net Income for the three months ended June 30, 2025, increased by **$30.8 million (209.5%)** to **$45.5 million** compared to **$14.7 million** in the prior year[11](index=11&type=chunk)[120](index=120&type=chunk) - Net Income for the nine months ended June 30, 2025, increased by **$5.3 million (8.3%)** to **$69.0 million** compared to **$63.7 million** in the prior year[11](index=11&type=chunk)[120](index=120&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the condensed consolidated statements of comprehensive income, including net income and other comprehensive income components **Condensed Consolidated Statements of Comprehensive Income (in millions):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $45.5 | $14.7 | $69.0 | $63.7 | | Foreign currency translation adjustments | $25.0 | $(6.4) | $9.5 | $2.8 | | Other Comprehensive Income (Loss), net of tax | $25.0 | $(6.4) | $9.5 | $2.8 | | Comprehensive Income | $70.5 | $8.3 | $78.5 | $66.5 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides the condensed consolidated balance sheets, detailing assets, liabilities, and equity at specific reporting dates **Condensed Consolidated Balance Sheets (in millions):** | Asset/Liability/Equity | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Cash and equivalents | $230.6 | $267.5 | | Total Current Assets | $681.5 | $761.0 | | Property, Plant and Equipment, Net | $262.7 | $290.4 | | Goodwill and Intangible Assets | $22.7 | $23.7 | | Total Assets | $1,157.3 | $1,285.3 | | Total Current Liabilities | $275.5 | $374.0 | | Long-Term Debt | $1,458.8 | $1,565.3 | | Total Liabilities and Equity | $1,157.3 | $1,285.3 | | Total Equity | $(669.6) | $(738.3) | - Total Assets decreased to **$1,157.3 million** as of June 30, 2025, from **$1,285.3 million** as of September 30, 2024[17](index=17&type=chunk) - Total Equity improved to **$(669.6) million** as of June 30, 2025, from **$(738.3) million** as of September 30, 2024[17](index=17&type=chunk) [Condensed Consolidated Statements of Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This section outlines changes in total equity, including net income, other comprehensive income, and stock-based compensation **Condensed Consolidated Statements of Equity (in millions, except shares):** | Item | Balance at April 1, 2024 | Net Income | Other comprehensive (loss)/income | Stock-based compensation | Dividends declared | Issuance of shares | Balance at June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Equity | $(769.6) | $14.7 | $(6.4) | $6.5 | $(8.6) | $(0.1) | $(763.7) | | | Balance at April 1, 2025 | Net Income | Other comprehensive income | Stock-based compensation | Dividends declared | Issuance of shares | Balance at June 30, 2025 | | Total Equity | $(736.2) | $45.5 | $25.0 | $5.9 | $(8.7) | $(1.1) | $(669.6) | - Total Equity improved from **$(736.2) million** at April 1, 2025, to **$(669.6) million** at June 30, 2025, primarily due to **net income of $45.5 million** and **other comprehensive income of $25.0 million**[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the condensed consolidated statements of cash flows, categorizing cash movements from operating, investing, and financing activities **Condensed Consolidated Statements of Cash Flows (Nine Months Ended June 30, in millions):** | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $107.7 | $9.1 | | Net cash used for investing activities | $(2.0) | $(15.8) | | Net cash used for financing activities | $(145.1) | $(36.8) | | Effect of exchange rate changes on cash and equivalents and restricted cash | $(1.2) | $(1.2) | | Net Change in Cash and equivalents and restricted cash | $(40.6) | $(44.7) | | Closing Cash and equivalents and restricted cash | $233.6 | $281.8 | - Net cash provided by operating activities significantly increased to **$107.7 million** for the nine months ended June 30, 2025, from **$9.1 million** in the prior year[25](index=25&type=chunk) - Net cash used for financing activities increased to **$145.1 million** for the nine months ended June 30, 2025, from **$36.8 million** in the prior year, primarily due to higher debt payments[25](index=25&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures for the financial statements, covering accounting policies, significant transactions, restructuring, related party arrangements, and financial instruments [Note 1 — Background](index=10&type=section&id=Note%201%20%E2%80%94%20Background) This note provides background information on Embecta Corp., a global medical device company focused on diabetes solutions - Embecta Corp. is a leading global medical device company focused on providing solutions to improve the health and well-being of people living with diabetes, offering a broad portfolio of pen needles, syringes, and safety devices[28](index=28&type=chunk) [Note 2 — Basis of Presentation](index=10&type=section&id=Note%202%20%E2%80%94%20Basis%20of%20Presentation) This note details the basis of presentation for the unaudited financial statements, including compliance with U.S. GAAP and SEC instructions - The accompanying unaudited financial statements are prepared in accordance with U.S. GAAP and SEC instructions, with all necessary adjustments included and of a normal and recurring nature[29](index=29&type=chunk) - No new material accounting standards were adopted in the third quarter of fiscal year 2025, and recently issued ASUs are not expected to have a material impact on the Company's Consolidated Financial Statement results[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) [Note 3 — Third Party Arrangements and Related Party Disclosures](index=11&type=section&id=Note%203%20%E2%80%94%20Third%20Party%20Arrangements%20and%20Related%20Party%20Disclosures) This note describes third-party and related party arrangements, particularly those with Becton, Dickinson and Company (BD) post-spin-off - Embecta was spun off from Becton, Dickinson and Company (BD) on April 1, 2022, entering into various post-separation agreements including Transition Services, Factoring, Distribution, and Supply Agreements[38](index=38&type=chunk)[39](index=39&type=chunk) - As of June 30, 2025, amounts due from BD were **$10.1 million** (in Amounts due from Becton, Dickinson and Company) and **$9.2 million** (in Trade receivables, net), while amounts due to BD were **$19.5 million** (in Amounts due to Becton, Dickinson and Company) and **$3.5 million** (in Accounts payable)[41](index=41&type=chunk) [Note 4 — Business Restructuring Charges](index=12&type=section&id=Note%204%20%E2%80%94%20Business%20Restructuring%20Charges) This note details business restructuring charges, including costs associated with discontinuing the patch pump program and organizational streamlining - The Company approved a plan on November 22, 2024, to discontinue internal and external investment in its patch pump program, incurring **$34.3 million** in organizational restructuring costs during the nine months ended June 30, 2025[44](index=44&type=chunk) - A separate 2025 Restructuring Plan, initiated in the second quarter of fiscal year 2025 to streamline the organization, incurred **$3.5 million** in costs during the nine months ended June 30, 2025, and is also substantially complete[45](index=45&type=chunk) **Restructuring Program Charges (Nine Months Ended June 30, 2025, in millions):** | Cost Type | Employee Termination | Non-Employee Related | Total | | :--- | :--- | :--- | :--- | | Cost of products sold | $0.4 | $6.3 | $6.7 | | Selling and administrative expense | $0.6 | — | $0.6 | | Research and development expense | $6.8 | $4.7 | $11.5 | | Other operating expenses | $14.0 | $5.0 | $19.0 | | **Total** | **$21.8** | **$16.0** | **$37.8** | [Note 5 — Other Operating Expenses](index=13&type=section&id=Note%205%20%E2%80%94%20Other%20Operating%20Expenses) This note provides a breakdown of other operating expenses, including separation-related costs and those from the discontinued patch pump program **Other Operating Expenses (in millions):** | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Costs related to the Separation | $9.7 | $23.0 | $26.3 | $83.9 | | Amortization of cloud computing arrangements | $2.6 | $2.2 | $7.8 | $3.8 | | Costs associated with the discontinued patch pump program | $0.3 | — | $15.6 | — | | Business optimization and severance related costs | $1.0 | $2.8 | $4.6 | $5.7 | | Other | $0.7 | $0.1 | $0.6 | $0.1 | | **Total** | **$14.3** | **$28.1** | **$54.9** | **$93.5** | - Other operating expenses decreased for both the three and nine months ended June 30, 2025, primarily due to lower costs related to the Separation and business optimization, partially offset by new costs associated with the discontinued patch pump program[48](index=48&type=chunk) [Note 6 — Contingencies](index=13&type=section&id=Note%206%20%E2%80%94%20Contingencies) This note addresses contingencies, confirming no material legal proceedings for the specified periods - The Company was not a party to any material legal proceedings at June 30, 2025, or September 30, 2024[51](index=51&type=chunk) [Note 7 — Revenues](index=13&type=section&id=Note%207%20%E2%80%94%20Revenues) This note outlines revenue recognition policies and details sales deductions and variable consideration liabilities - The Company's revenue recognition policies remain consistent with the 2024 Form 10-K, primarily from selling diabetes management products to wholesalers and distributors[52](index=52&type=chunk) - Sales deductions recorded as a reduction of gross revenues were **$143.0 million** for the three months ended June 30, 2025 (vs. **$124.5 million** in 2024), and **$436.3 million** for the nine months ended June 30, 2025 (vs. **$389.7 million** in 2024)[56](index=56&type=chunk) - The liability attributed to variable consideration was **$143.9 million** at June 30, 2025, a decrease from **$149.6 million** at September 30, 2024[56](index=56&type=chunk) [Note 8 — Segment and Geographical Data](index=14&type=section&id=Note%208%20%E2%80%94%20Segment%20and%20Geographical%20Data) This note confirms the Company operates in one segment and provides revenue breakdowns by geographic region and product line - Management has concluded that the Company operates in one segment[58](index=58&type=chunk) **Revenues by Geographic Region (in millions):** | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | United States | $160.2 | $143.6 | $437.1 | $439.8 | | International | $135.3 | $128.9 | $379.3 | $397.2 | | **Total** | **$295.5** | **$272.5** | **$816.4** | **$837.0** | **Revenues by Product Line (in millions):** | Product Line | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Pen Needles | $216.9 | $201.3 | $596.3 | $629.3 | | Syringes | $35.1 | $31.7 | $92.3 | $92.5 | | Safety | $34.8 | $32.4 | $103.2 | $96.5 | | Other | $3.2 | $3.5 | $9.9 | $10.6 | | Contract Manufacturing | $5.5 | $3.6 | $14.7 | $8.1 | | **Total** | **$295.5** | **$272.5** | **$816.4** | **$837.0** | [Note 9 — Stock-Based Compensation](index=15&type=section&id=Note%209%20%E2%80%94%20Stock-Based%20Compensation) This note details stock-based compensation expense, including grants of Time-Vested and Performance-Based Restricted Stock Units **Total Stock-Based Compensation Expense (in millions):** | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30, | $5.9 | $6.5 | | Nine Months Ended June 30, | $22.2 | $20.4 | - During the nine months ended June 30, 2025, Embecta granted **1,576,493 Time-Vested Restricted Stock Units (TVUs)** and awarded **538,031 Performance-Based Restricted Stock Units (PSUs)**[62](index=62&type=chunk)[65](index=65&type=chunk) - The total unrecognized compensation expense for all non-vested stock-based awards as of June 30, 2025, is approximately **$30.9 million**, expected to be recognized over a weighted-average remaining life of approximately **1.9 years**[70](index=70&type=chunk) [Note 10 — Goodwill and Other Intangible Assets](index=17&type=section&id=Note%2010%20%E2%80%94%20Goodwill%20and%20Other%20Intangible%20Assets) This note provides a breakdown of goodwill and other intangible assets, including patents and customer relationships **Goodwill and Other Intangible Assets (in millions):** | Asset Type | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Patents – net | $5.3 | $5.7 | | Customer Relationships and Other – net | $2.0 | $2.4 | | Total amortized intangible assets | $7.3 | $8.1 | | Goodwill | $15.4 | $15.6 | | **Total Goodwill and Other Intangible Assets** | **$22.7** | **$23.7** | [Note 11 — Cloud Computing Arrangements](index=18&type=section&id=Note%2011%20%E2%80%94%20Cloud%20Computing%20Arrangements) This note details capitalized costs and amortization expenses related to cloud computing arrangements **Capitalized Cloud Computing Arrangement Costs, Net (in millions):** | Item | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total Capitalized implementation costs | $71.6 | $70.8 | | Less: accumulated amortization | $(14.2) | $(6.3) | | **Total Capitalized implementation costs, net** | **$57.4** | **$64.5** | **Amortization of Cloud Computing Arrangements (in millions):** | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Amortization Expense | $2.6 | $2.2 | $7.8 | $3.8 | [Note 12 — Long-Term Debt](index=18&type=section&id=Note%2012%20%E2%80%94%20Long-Term%20Debt) This note describes the Company's long-term debt, including the Term Loan B Facility and Revolving Credit Facility, and principal payments made - Embecta's Credit Agreement includes a **$950.0 million Term Loan B Facility** (maturing March 2029) and a **$500.0 million Revolving Credit Facility** (maturing March 2027), with no amount drawn on the Revolving Credit Facility as of June 30, 2025[73](index=73&type=chunk)[75](index=75&type=chunk) **Total Debt Outstanding (June 30, 2025, in millions):** | Debt Type | Amount | | :--- | :--- | | Term Loan due March 2029 | $789.1 | | 5.00% Notes due February 2030 | $500.0 | | 6.75% Notes due February 2030 | $200.0 | | **Total principal debt issued** | **$1,489.1** | | Less: current debt obligations | $(9.5) | | Less: debt issuance costs and discounts | $(20.8) | | **Long-term debt** | **$1,458.8** | - During the nine months ended June 30, 2025, the Company made **$112.2 million** in principal payments on the Term Loan, including **$105.0 million** in discretionary prepayments, and made **$68.5 million** in interest payments, with a weighted-average interest rate of **6.5%** on total borrowings[77](index=77&type=chunk)[78](index=78&type=chunk) [Note 13 — Earnings per Share](index=19&type=section&id=Note%2013%20%E2%80%94%20Earnings%20per%20Share) This note provides a detailed calculation of basic and diluted earnings per common share for the specified periods **Earnings Per Common Share (in millions and shares in thousands, except per share amounts):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $45.5 | $14.7 | $69.0 | $63.7 | | Basic weighted average number of shares outstanding | 58,490 | 57,768 | 58,239 | 57,641 | | Diluted weighted average shares outstanding | 58,495 | 57,842 | 58,721 | 58,143 | | Earnings per common share - Basic | $0.78 | $0.25 | $1.18 | $1.11 | | Earnings per common share - Diluted | $0.78 | $0.25 | $1.18 | $1.10 | [Note 14 — Income Taxes](index=20&type=section&id=Note%2014%20%E2%80%94%20Income%20Taxes) This note discusses the effective tax rates and factors influencing income tax provision or benefit for the periods - The effective tax rate for the three months ended June 30, 2025, was **37.0%** (vs. **45.6%** in 2024), primarily due to favorable tax impacts from higher earnings, partially offset by higher taxes on undistributed foreign earnings and reduced tax benefits from non-taxable income[81](index=81&type=chunk) - For the nine months ended June 30, 2025, the effective tax rate was **35.7%** (vs. **(24.4)%** in 2024), primarily due to the absence of non-recurring tax benefits recognized in the prior period related to withholding taxes, Swiss tax law changes, and lower tax reserves, partially offset by higher current period earnings[82](index=82&type=chunk) - The One Big Beautiful Bill (OBBB) Act, signed on July 4, 2025, is not expected to have a material impact on the Company's results of operations in fiscal year 2025[83](index=83&type=chunk) [Note 15 — Receivables Sale Agreement](index=20&type=section&id=Note%2015%20%E2%80%94%20Receivables%20Sale%20Agreement) This note describes the Company's trade receivables sale agreement and the amount of receivables sold - During the third quarter of 2025, the Company entered into a trade receivables sale agreement, selling **$26.2 million** of trade receivables during the nine months ended June 30, 2025, which resulted in derecognition from the balance sheet[84](index=84&type=chunk)[85](index=85&type=chunk) [Note 16 — Financial Instruments and Fair Value Measurements](index=20&type=section&id=Note%2016%20%E2%80%94%20Financial%20Instruments%20and%20Fair%20Value%20Measurements) This note details financial instruments, fair value measurements, and the Company's management of foreign currency and asset impairment **Cash and Equivalents and Restricted Cash (in millions):** | Item | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Cash and equivalents | $230.6 | $267.5 | | Restricted cash | $3.0 | $6.7 | | **Total** | **$233.6** | **$274.2** | - The Company uses foreign currency forward exchange contracts to manage transactional currency exposures, with notional amounts of **$2.7 million** at June 30, 2025, and **$4.5 million** at September 30, 2024[87](index=87&type=chunk)[89](index=89&type=chunk) - Non-cash asset impairment charges of **$10.6 million** were recorded in the first nine months of fiscal year 2025 to write down property and equipment due to the discontinued patch pump program[91](index=91&type=chunk) [Note 17 — Property, Plant and Equipment](index=21&type=section&id=Note%2017%20%E2%80%94%20Property%2C%20Plant%20and%20Equipment) This note provides a detailed breakdown of property, plant, and equipment, including impairment charges related to the patch pump program **Property, Plant and Equipment, Net (in millions):** | Category | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Land | $3.1 | $3.1 | | Buildings | $121.6 | $121.7 | | Machinery, equipment and fixtures | $593.5 | $607.3 | | Leasehold improvements | $12.9 | $11.9 | | Construction in progress | $57.9 | $35.1 | | **Total Gross PP&E** | **$789.0** | **$779.1** | | Less: accumulated depreciation | $(526.3) | $(488.7) | | **Total Property, Plant and Equipment, Net** | **$262.7** | **$290.4** | - Non-cash asset impairment charges of **$10.6 million** were recorded during the nine months ended June 30, 2025, to write down certain property and equipment as a result of the Company's plan to discontinue the patch pump program[94](index=94&type=chunk) [Note 18 — Leases](index=22&type=section&id=Note%2018%20%E2%80%94%20Leases) This note outlines the Company's finance and operating lease liabilities, including remaining lease terms and discount rates - The Company's finance leases primarily relate to its manufacturing site in Holdrege, Nebraska, with a weighted-average remaining lease term of **11.8 years** and a discount rate of **6.8%** as of June 30, 2025[96](index=96&type=chunk)[98](index=98&type=chunk) - Operating leases primarily relate to real estate, with a weighted-average remaining lease term of **6.0 years** and a discount rate of **6.8%** as of June 30, 2025[97](index=97&type=chunk)[98](index=98&type=chunk) **Maturities of Lease Liabilities (June 30, 2025, in millions):** | Fiscal Year | Finance Leases | Operating Leases | Total | | :--- | :--- | :--- | :--- | | 2025 | $0.9 | $1.8 | $2.7 | | 2026 | $3.7 | $3.6 | $7.3 | | 2027 | $3.8 | $2.0 | $5.8 | | 2028 | $3.9 | $2.0 | $5.9 | | 2029 | $3.9 | $1.8 | $5.7 | | Thereafter | $32.3 | $7.5 | $39.8 | | **Total lease payments** | **$48.5** | **$18.7** | **$67.2** | | Less: amount representing interest | $(16.0) | $(1.9) | $(17.9) | | **Present value of lease liabilities** | **$32.5** | **$16.8** | **$49.3** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's discussion and analysis of Embecta's financial condition and results of operations, covering business overview, key trends, recent developments, liquidity, and capital resources [Company Overview](index=24&type=section&id=Company%20Overview) This section provides an overview of Embecta's business as a global medical device company focused on diabetes solutions - Embecta is a leading global medical device company focused on providing solutions to improve the health and well-being of people living with diabetes, with products used by approximately **30 million people** in over **100 countries**[101](index=101&type=chunk) - The Company's broad portfolio includes pen needles, syringes, and safety injection devices, primarily sold to wholesalers and distributors[102](index=102&type=chunk)[103](index=103&type=chunk) [Key Trends Affecting Our Results of Operations](index=24&type=section&id=Key%20Trends%20Affecting%20Our%20Results%20of%20Operations) This section discusses key trends impacting Embecta's operations, including competition, pricing pressures, and changes in clinical practice - Embecta faces significant competition, pricing pressures leading to commoditization of injection devices, and potential financial impacts from global trade tariffs[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - Changes in clinical practice, such as the introduction of new anti-diabetic drugs (e.g., SGLT-2s, GLP-1s) and a transition to infusion pumps, are delaying insulin initiation and contributing to less demand for traditional injection products[108](index=108&type=chunk) - Other key trends include the decentralization of chronic care and political/economic instability in emerging markets, though proactive channel management helps mitigate variability[109](index=109&type=chunk)[110](index=110&type=chunk) [Recent Developments](index=25&type=section&id=Recent%20Developments) This section highlights recent developments, including the discontinuation of the patch pump program and ongoing monitoring of global supply chain issues - The Company discontinued its patch pump program R&D and commercial operations, incurring **$34.3 million** in restructuring costs for the nine months ended June 30, 2025, to refocus on its core business, optimize free cash flow, and strengthen its balance sheet by paying down debt[112](index=112&type=chunk) - An additional 2025 Restructuring Plan to streamline the organization incurred **$3.5 million** in costs during the nine months ended June 30, 2025[113](index=113&type=chunk) - Embecta continues to monitor global supply chain constraints, inflation, tariffs, and geopolitical conflicts (Ukraine, Middle East), which could impact costs and distribution, though no material impact from conflicts was reported as of August 8, 2025[111](index=111&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the Company's financial performance, including revenues, gross profit, and net income **Summary of Results of Operations (in millions, except per share amounts):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenues | $295.5 | $272.5 | 8.4% | $816.4 | $837.0 | (2.5)% | | Gross Profit | $197.1 | $190.1 | 3.7% | $518.3 | $561.4 | (7.7)% | | Operating Income | $94.0 | $55.9 | 68.2% | $185.6 | $140.6 | 32.0% | | Net Income | $45.5 | $14.7 | 209.5% | $69.0 | $63.7 | 8.3% | | Basic EPS | $0.78 | $0.25 | 212.0% | $1.18 | $1.11 | 6.3% | | Diluted EPS | $0.78 | $0.25 | 212.0% | $1.18 | $1.10 | 7.3% | [Revenues](index=27&type=section&id=Revenues) This section analyzes revenue performance, highlighting factors such as volume, price, and foreign currency translation impacts - Revenues increased by **$23.0 million (8.4%)** to **$295.5 million** for the three months ended June 30, 2025, driven by favorable volume (**$13.5 million**), price (**$6.8 million**), contract manufacturing (**$1.7 million**), and positive foreign currency translation (**$1.0 million**)[121](index=121&type=chunk) - Revenues decreased by **$20.6 million (2.5%)** to **$816.4 million** for the nine months ended June 30, 2025, due to unfavorable volume (**$31.0 million**) and negative foreign currency translation (**$7.0 million**), partially offset by favorable price (**$10.9 million**) and contract manufacturing (**$6.5 million**)[122](index=122&type=chunk) [Cost of products sold](index=27&type=section&id=Cost%20of%20products%20sold) This section examines the cost of products sold, including impacts from volumes, inventory adjustments, and impairment charges - Cost of products sold increased by **$16.0 million (19.4%)** to **$98.4 million** for the three months ended June 30, 2025, primarily due to higher volumes and the impact of net changes in profit in inventory adjustments[123](index=123&type=chunk) - For the nine months ended June 30, 2025, cost of products sold increased by **$22.5 million (8.2%)** to **$298.1 million**, mainly due to inventory adjustments and non-cash asset impairment charges from the Patch Pump Restructuring Plan, partially offset by lower volumes[124](index=124&type=chunk) - Gross profit as a percentage of revenue decreased to **66.7%** (from **69.8%**) for the three months and to **63.5%** (from **67.1%**) for the nine months ended June 30, 2025[118](index=118&type=chunk) [Selling and administrative expenses](index=27&type=section&id=Selling%20and%20administrative%20expenses) This section analyzes selling and administrative expenses, noting decreases due to lower TSA and LSA costs and reduced compensation - Selling and administrative expenses decreased by **$1.3 million (1.5%)** to **$84.4 million** for the three months and by **$23.2 million (8.6%)** to **$245.1 million** for the nine months ended June 30, 2025, primarily due to lower TSA and LSA costs with BD and reduced compensation expense[125](index=125&type=chunk) [Research and development expenses](index=27&type=section&id=Research%20and%20development%20expenses) This section details research and development expenses, highlighting a significant decrease due to the discontinuation of the insulin patch pump program - Research and development expenses significantly decreased by **$16.0 million (78.4%)** to **$4.4 million** for the three months and by **$26.3 million (44.6%)** to **$32.7 million** for the nine months ended June 30, 2025, primarily due to the discontinuation of the insulin patch pump program[126](index=126&type=chunk) - The Company expects its research and development expenses to decrease sequentially in fiscal year 2025 compared to fiscal year 2024[126](index=126&type=chunk) [Other operating expenses](index=28&type=section&id=Other%20operating%20expenses) This section provides a breakdown of other operating expenses, noting decreases primarily from reduced separation-related costs **Other Operating Expenses (in millions):** | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Costs related to the Separation | $9.7 | $23.0 | $26.3 | $83.9 | | Amortization of cloud computing arrangements | $2.6 | $2.2 | $7.8 | $3.8 | | Costs associated with the discontinued patch pump program | $0.3 | — | $15.6 | — | | Business optimization and severance related costs | $1.0 | $2.8 | $4.6 | $5.7 | | Other | $0.7 | $0.1 | $0.6 | $0.1 | | **Total** | **$14.3** | **$28.1** | **$54.9** | **$93.5** | - The decrease in other operating expenses for both periods is mainly due to reduced separation-related costs and business optimization expenses, partially offset by new costs from the discontinued patch pump program[128](index=128&type=chunk)[134](index=134&type=chunk) [Interest expense, net](index=28&type=section&id=Interest%20expense%2C%20net) This section analyzes net interest expense, noting a decrease primarily due to lower debt levels and short-term interest rates - Interest expense, net decreased by **$1.2 million** to **$26.6 million** for the three months and by **$2.1 million** to **$81.2 million** for the nine months ended June 30, 2025, primarily due to lower debt levels and lower short-term interest rates[129](index=129&type=chunk) [Other income (expense), net](index=28&type=section&id=Other%20income%20(expense)%2C%20net) This section details other income (expense), net, primarily attributed to favorable foreign exchange impacts - Other income (expense), net, was **$4.8 million** for the three months and **$2.9 million** for the nine months ended June 30, 2025, primarily attributed to favorable impacts from foreign exchange, a shift from net expenses in the prior year periods[130](index=130&type=chunk) [Income tax provision (benefit)](index=28&type=section&id=Income%20tax%20provision%20(benefit)) This section discusses the income tax provision (benefit) and the effective tax rate changes for the periods - The effective tax rate for the three months ended June 30, 2025, was **37.0%** (vs. **45.6%** in 2024), and for the nine months, **35.7%** (vs. **(24.4)%** in 2024), with changes driven by higher earnings and the absence of prior-period non-recurring tax benefits[131](index=131&type=chunk)[132](index=132&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=29&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses Embecta's liquidity and capital resources, including cash flow, debt, and access to capital - Embecta believes its cash, cash equivalents, cash from operations, and Revolving Credit Facility borrowing capacity will provide sufficient financial flexibility for the foreseeable future[135](index=135&type=chunk) **Total Debt Outstanding (June 30, 2025, in millions):** | Debt Type | Amount | | :--- | :--- | | Term Loan | $789.1 | | 5.00% Notes | $500.0 | | 6.75% Notes | $200.0 | | **Total principal debt issued** | **$1,489.1** | | Less: current debt obligations | $(9.5) | | Less: debt issuance costs and discounts | $(20.8) | | **Long-term debt** | **$1,458.8** | - During the nine months ended June 30, 2025, the Company paid **$112.2 million** in principal on the Term Loan, including **$105.0 million** in discretionary prepayments, and made **$68.5 million** in interest payments[137](index=137&type=chunk) [Leases](index=30&type=section&id=Leases) This section details the maturities of the Company's finance and operating lease liabilities **Maturities of Lease Liabilities (June 30, 2025, in millions):** | Fiscal Year | Finance Lease | Operating Leases | Total | | :--- | :--- | :--- | :--- | | 2025 | $0.9 | $1.8 | $2.7 | | 2026 | $3.7 | $3.6 | $7.3 | | 2027 | $3.8 | $2.0 | $5.8 | | 2028 | $3.9 | $2.0 | $5.9 | | 2029 | $3.9 | $1.8 | $5.7 | | Thereafter | $32.3 | $7.5 | $39.8 | | **Total lease payments** | **$48.5** | **$18.7** | **$67.2** | [Factoring Agreements](index=30&type=section&id=Factoring%20Agreements) This section discusses the expiration of prior factoring agreements and the initiation of a new trade receivables sale agreement - All Factoring Agreements between Embecta and BD expired and terminated as of March 31, 2024[142](index=142&type=chunk) - During the third quarter of 2025, the Company entered into a new trade receivables sale agreement with a third-party financial institution, selling **$26.2 million** of trade receivables during the nine months ended June 30, 2025[143](index=143&type=chunk)[144](index=144&type=chunk) [Access to Capital and Credit Ratings](index=30&type=section&id=Access%20to%20Capital%20and%20Credit%20Ratings) This section provides an overview of Embecta's credit ratings and a summary of its cash flow activities - Embecta's credit ratings are **B1** from Moody's Investor Services and **B+** from Standard & Poor's Rating Services as of May and June 2025, respectively[145](index=145&type=chunk) **Cash Flow Summary (Nine Months Ended June 30, 2025, in millions):** | Item | Amount | | :--- | :--- | | Opening Cash and equivalents and restricted cash balance | $274.2 | | Cash provided by operating activities | $107.7 | | Cash used for investing activities | $(2.0) | | Cash used for financing activities | $(145.1) | | Effect of exchange rate changes | $(1.2) | | **Closing Cash and equivalents and restricted cash balance** | **$233.6** | - Net cash provided by operating activities was primarily attributable to **net income of $69.0 million** and non-cash adjustments of **$86.5 million**, along with favorable changes in trade receivables and amounts due from/to Becton, Dickinson and Company[146](index=146&type=chunk)[147](index=147&type=chunk) [Contractual Obligations](index=32&type=section&id=Contractual%20Obligations) This section confirms no material changes to the Company's contractual obligations outside the ordinary course of business - As of June 30, 2025, there have been no material changes to the Company's contractual obligations, which include purchase and lease obligations, outside the ordinary course of business[150](index=150&type=chunk) [Critical Accounting Policies](index=32&type=section&id=Critical%20Accounting%20Policies) This section states that there have been no changes to the Company's critical accounting policies as of June 30, 2025 - There have been no changes to the Company's critical accounting policies as of June 30, 2025, which are discussed in the 2024 Form 10-K[151](index=151&type=chunk) [Cautionary Statements Regarding Forward-Looking Statements](index=32&type=section&id=Cautionary%20Statements%20Regarding%20Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements subject to various risks and uncertainties, which the Company disclaims any obligation to update - This report contains forward-looking statements subject to numerous risks and uncertainties, including competitive factors, reliance on BD services, product profitability, operating cost increases (e.g., tariffs), changes in clinical practice, and geopolitical instability[152](index=152&type=chunk) - Other risks include changes in reimbursement practices, foreign currency fluctuations, regulatory changes, impacts of pandemics, debt-related risks, and challenges associated with the Separation from BD and brand transition[152](index=152&type=chunk)[155](index=155&type=chunk) - Embecta expressly disclaims and assumes no obligation to update or revise such statements, except as required by applicable law[153](index=153&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses Embecta's exposure to market risks, including foreign currency exchange and interest rate risks, and the strategies used to manage them - The Company is exposed to foreign currency exchange risk globally and uses foreign currency forward exchange contracts to manage transactional currency exposures, with gains and losses on these contracts largely offsetting those on the underlying hedged items[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) - Interest rate risk primarily relates to the Term Loan, which bears interest at **300 basis points over SOFR**, where a **100 basis points** change in interest rates would impact interest expense on the Term Loan by **$7.9 million** on an annualized basis, based on outstanding borrowings at June 30, 2025[159](index=159&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of Embecta's disclosure controls and procedures, noting a material weakness in internal control over financial reporting and outlining the ongoing remediation plan [Evaluation of Disclosure Controls and Procedures](index=35&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section evaluates disclosure controls and procedures, concluding they were not effective due to a material weakness in internal control over financial reporting - As of June 30, 2025, management concluded that disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting, as described in the 2024 Form 10-K[161](index=161&type=chunk) - The Company commenced implementing a new ERP system and other Business Continuity Processes in phases, with the final phase (India) completed in the third quarter of fiscal year 2025, to replace existing systems provided by BD[162](index=162&type=chunk) [Management's Remediation Plan](index=35&type=section&id=Management's%20Remediation%20Plan) This section outlines management's active remediation plan for the material weakness, including control design evaluation and enhanced oversight - Management is actively executing a remediation plan for the material weakness, which includes evaluating control design, implementing formal training, enhancing oversight of account reconciliations, improving control documentation, and leveraging technology for reporting and automation[163](index=163&type=chunk)[166](index=166&type=chunk) - The Company believes these measures will remediate the underlying cause of the material weakness, but full remediation will not occur until these steps are completed and operating effectively for a sufficient period[163](index=163&type=chunk) [Changes in Internal Control over Financial Reporting](index=35&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section confirms no material changes in internal control over financial reporting during the quarter, as the material weakness remains - No changes in internal control over financial reporting during the three months ended June 30, 2025, have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting, as the material weakness has not yet been remediated[164](index=164&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=Part%20II.%20Other%20Information) This part includes other required information, such as risk factors, exhibits, and signatures [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This section confirms no material changes to the risk factors previously disclosed in Embecta's 2024 Form 10-K and prior Quarterly Report - There have been no material changes to Embecta's risk factors from those described in the 2024 Form 10-K and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025[168](index=168&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and iXBRL formatted financial statements - Exhibits include certifications of the Chief Executive Officer (31.1, 32.1) and Chief Financial Officer (31.2, 32.2), and iXBRL formatted financial statements (101, 104)[169](index=169&type=chunk) [Signatures](index=37&type=section&id=Signatures) This section contains the required signatures of Embecta Corp.'s authorized officers, affirming the filing of the report - The report is signed by Devdatt Kurdikar (President and Chief Executive Officer), Jacob Elguicze (Senior Vice President, Chief Financial Officer), and Anthony Roth (Vice President, Controller and Chief Accounting Officer) on August 8, 2025[173](index=173&type=chunk)

Financial Data and Key Metrics Changes - In Q3 2025, the company achieved record revenue of $295.5 million, reflecting an 8.4% growth on a reported basis and 8% on an adjusted constant currency basis [11][12] - GAAP gross profit was $197.1 million with a margin of 66.7%, compared to $190.1 million and 69.8% in the prior year [17] - Adjusted net income for Q3 2025 was $65.5 million, or $1.12 per diluted share, up from $43 million and $0.74 in the prior year [19] Business Line Data and Key Metrics Changes - Pen needle revenue grew approximately 6.8%, syringe revenue increased by 14.5%, safety products grew by 6.5%, and contract manufacturing surged by 47.2% [14] - The increase in syringe revenue was primarily driven by higher pricing, while pen needle volumes were supported by favorable comparisons to the prior year [14][15] Market Data and Key Metrics Changes - Revenue from the US totaled $160.2 million, representing year-over-year growth of 11.6% on an adjusted constant currency basis [12][13] - International revenue reached $135.3 million, reflecting a growth of 5% on a reported basis, primarily driven by Latin America and Asia [13] Company Strategy and Development Direction - The company is focused on strengthening its core business, expanding its product portfolio, and enhancing financial flexibility [6][10] - A significant transition from BD to Ambecta branded products in North America has been completed, with over 90% of the revenue base converted [7] - The company is collaborating with over 30 pharmaceutical companies to co-package pen needles with generic GLP-1 therapies, with potential commercialization starting in 2026 [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate strong free cash flow and achieve debt reduction targets, having already paid down $112 million year-to-date [20][21] - The company anticipates a decline in revenue for Q4 due to the reversal of timing benefits and a less favorable comparison to the prior year [28][29] Other Important Information - The company has completed its multi-year ERP program, which is expected to enhance operational efficiency [6][10] - The updated financial guidance for 2025 includes a revenue range of $1.078 billion to $1.085 billion, reflecting a decline of 3.4% [23] Q&A Session Summary Question: Guidance on revenue dynamics for Q4 - Management indicated that Q4 revenue is expected to decline to around $265 million, primarily due to the absence of distributor orders and the reversal of rebate reserve adjustments [28] Question: Margin expectations for Q4 - Management noted that a decline in gross and operating margins is typical from Q3 to Q4, with expected operating margins around 24% for Q4 [31] Question: Capital allocation and share repurchase interest - Management reiterated that debt repayment remains a priority, with no immediate plans for share buybacks [37] Question: Impact of competitive bidding proposal from CMS - Management acknowledged potential positive impacts on the pen needle business but emphasized the uncertainty surrounding the proposal's effects on pump adoption rates [41] Question: Tariff impacts and demand in China - Management stated that minimal incremental tariff impacts are expected, with a preference for local brands observed in the Chinese market [44][45] Question: Free cash flow generation outlook - Management highlighted strong free cash flow capabilities, with $81 million generated in Q3, indicating a positive trajectory towards achieving long-term targets [50] Question: Store closures and market dynamics - Management is monitoring the impact of store closures on performance, noting that patients may be shifting to other pharmacies [52]

Financial Performance - Q3 FY2025 - Reported revenue reached $295.5 million, an increase of 8.4% compared to the prior year period[13, 15] - Adjusted constant currency revenue growth was 8.0%[13, 15] - GAAP gross profit was $197.1 million with a margin of 66.7%[15] - Adjusted EBITDA was $131.0 million with a margin of 44.3%[15] - GAAP net income per diluted share was $0.78, compared to $0.25 in the prior year period[15] - Adjusted net income per diluted share was $1.12, compared to $0.74 in the prior year period[15] Financial Performance - Nine Months Ended FY2025 - Adjusted revenue was $816.4 million, a decrease of 2.5% compared to the prior year period[28] - Adjusted constant currency revenue decreased by 1.7%[28] FY2025 Updated Financial Guidance - Reported revenue is projected to be between $1.078 billion and $1.085 billion, representing a decline of 4.0% to 3.4%[16] - Adjusted constant currency revenue growth is expected to be between -3.6% and -3.0%[16] - Adjusted earnings per diluted share are projected to be between $2.90 and $2.95[16] - Adjusted EBITDA margin is expected to be between 37.25% and 37.50%[16] Strategic Priorities - The company paid down approximately $52 million of term loan B during the third quarter, reaching approximately $112 million in year-to-date debt reduction[11] - The company expects to generate pre-tax cost savings of between $7 million and $8 million during the second half of FY 2025 from the restructuring plan[11] - The company significantly advanced the U S and Canada brand transition, with substantial completion expected by the end of FY 2025[8, 24]

[Executive Summary](index=1&type=section&id=Executive%20Summary) This section provides an overview of Embecta's strong Q3 FY2025 performance, strategic initiatives, and updated financial outlook [Third Quarter Performance Overview](index=1&type=section&id=1.1%20Third%20Quarter%20Performance%20Overview) Embecta reported a strong third quarter for **FY 2025**, with solid commercial execution contributing to an increase in revenues. The company also tightened and raised its **FY 2025** outlook for key financial metrics - Q3 was a strong quarter for embecta, reflecting solid commercial execution, aided in part by the timing of customer orders[2](index=2&type=chunk) - Given the year-to-date performance and outlook, Embecta is tightening and raising its **FY 2025 outlook** for key financial metrics[2](index=2&type=chunk) [Strategic Initiatives and Outlook](index=1&type=section&id=1.2%20Strategic%20Initiatives%20and%20Outlook) The company successfully completed a multi-year separation program by implementing its ERP system and operationalizing distribution centers and shared services in India. Embecta remains focused on value creation drivers, including its long-term goal of transforming into a diversified medical supplies company - Implemented ERP system and operationalized own distribution centers and shared services in India, concluding a multi-year separation program[3](index=3&type=chunk) - Remaining focused on executing value creation drivers, including the long-term goal of transforming into a diversified medical supplies company[3](index=3&type=chunk) [Financial Highlights](index=3&type=section&id=Financial%20Highlights) This section details Embecta's financial performance for Q3 and the nine months ended June 30, 2025, including key income statement and balance sheet metrics [Third Quarter Fiscal Year 2025 Financial Highlights](index=3&type=section&id=2.1%20Third%20Quarter%20Fiscal%20Year%202025%20Financial%20Highlights) Embecta reported strong Q3 **FY2025** financial results, with significant increases across key metrics including revenue, operating income, net income, and adjusted EBITDA compared to the prior year period. The company also announced a dividend of **$0.15 per share** | Metric | Q3 FY2025 | Q3 FY2024 | Reported Change | Adjusted Constant Currency Change | | :-------------------------------- | :---------- | :---------- | :-------------- | :-------------------------------- | | Revenues | $295.5M | $272.5M | +8.4% | +8.0% | | U.S. Revenues | +11.6% | N/A | +11.6% | +11.6% | | International Revenues | +5.0% | N/A | +5.0% | +4.2% | | Gross Profit | $197.1M | $190.1M | +3.7% | N/A | | Adjusted Gross Profit | $198.6M | $190.3M | +4.4% | N/A | | Operating Income | $94.0M | $55.9M | +68.2% | N/A | | Adjusted Operating Income | $109.1M | $83.3M | +31.0% | N/A | | Net Income | $45.5M | $14.7M | +209.5% | N/A | | Diluted EPS | $0.78 | $0.25 | +212.0% | N/A | | Adjusted Net Income | $65.5M | $43.0M | +52.3% | N/A | | Adjusted Diluted EPS | $1.12 | $0.74 | +51.4% | N/A | | Adjusted EBITDA | $131.0M | $99.2M | +32.1% | N/A | - Announced a dividend of **$0.15 per share**[5](index=5&type=chunk) [Nine Months Ended June 30, 2025 Financial Highlights](index=4&type=section&id=2.2%20Nine%20Months%20Ended%20June%2030,%202025%20Financial%20Highlights) For the nine months ended June 30, 2025, Embecta's revenues decreased slightly on a reported and adjusted constant currency basis. However, the company achieved notable improvements in operating income, net income, and adjusted EBITDA compared to the prior year period | Metric | 9M FY2025 | 9M FY2024 | Reported Change | Adjusted Constant Currency Change | | :-------------------------------- | :---------- | :---------- | :-------------- | :-------------------------------- | | Revenues | $816.4M | $837.0M | -2.5% | -1.7% | | U.S. Revenues | -0.6% | N/A | -0.6% | -0.6% | | International Revenues | -4.5% | N/A | -4.5% | -2.7% | | Gross Profit | $518.3M | $561.4M | -7.6% | N/A | | Adjusted Gross Profit | $527.8M | $562.4M | -6.1% | N/A | | Operating Income | $185.6M | $140.6M | +32.0% | N/A | | Adjusted Operating Income | $271.0M | $235.7M | +15.0% | N/A | | Net Income | $69.0M | $63.7M | +8.3% | N/A | | Diluted EPS | $1.18 | $1.10 | +7.3% | N/A | | Adjusted Net Income | $144.5M | $117.2M | +23.3% | N/A | | Adjusted Diluted EPS | $2.46 | $2.02 | +21.8% | N/A | | Adjusted EBITDA | $325.4M | $280.4M | +16.0% | N/A | [Revenue Analysis](index=6&type=section&id=Revenue%20Analysis) This section analyzes Embecta's revenue performance by geographic region and product family for Q3 and the nine months ended June 30, 2025 [Third Quarter Revenue Breakdown](index=6&type=section&id=3.1%20Third%20Quarter%20Revenue%20Breakdown) In **Q3 FY2025**, total revenues increased by **$23.0 million** (**8.4%**) to **$295.5 million**. This growth was primarily driven by favorable changes in volume, price, increased contract manufacturing revenues, and positive foreign currency translation. Pen needles remained the largest product family Q3 FY2025 Revenue by Geographic Region | Region | 2025 (Reported) | 2024 (Reported) | Reported Growth | Adjusted Constant Currency Growth | | :------------- | :-------------- | :-------------- | :-------------- | :-------------------------------- | | United States | $160.2M | $143.6M | 11.6% | 11.6% | | International | $135.3M | $128.9M | 5.0% | 4.2% | | Total | $295.5M | $272.5M | 8.4% | 8.0% | Q3 FY2025 Revenue by Product Family | Product Family | 2025 (Reported) | 2024 (Reported) | Reported Growth | Adjusted Constant Currency Growth | | :------------- | :-------------- | :-------------- | :-------------- | :-------------------------------- | | Pen Needles | $216.9M | $201.3M | 7.7% | 6.8% | | Syringes | $35.1M | $31.7M | 10.7% | 14.5% | | Safety | $34.8M | $32.4M | 7.4% | 6.5% | | Contract Manufacturing | $5.5M | $3.6M | 52.8% | 47.2% | - The increase in revenues was driven by **$13.5 million** of favorable changes in volume, **$6.8 million** of favorable changes in price, a **$1.7 million** increase in contract manufacturing revenues, and **$1.0 million** associated with the positive impact of foreign currency translation[10](index=10&type=chunk) [Nine Months YTD Revenue Breakdown](index=7&type=section&id=3.2%20Nine%20Months%20YTD%20Revenue%20Breakdown) For the nine months ended June 30, 2025, revenues decreased by **$20.6 million** (**2.5%**) to **$816.4 million**. This decline was primarily due to unfavorable changes in volume and negative foreign currency translation, partially offset by favorable price changes and increased contract manufacturing revenues 9 Months YTD FY2025 Revenue by Geographic Region | Region | 2025 (Reported) | 2024 (Reported) | Reported Growth | Adjusted Constant Currency Growth | | :------------- | :-------------- | :-------------- | :-------------- | :-------------------------------- | | United States | $437.1M | $439.8M | (0.6)% | (0.6)% | | International | $379.3M | $397.2M | (4.5)% | (2.7)% | | Total | $816.4M | $837.0M | (2.5)% | (1.7)% | 9 Months YTD FY2025 Revenue by Product Family | Product Family | 2025 (Reported) | 2024 (Reported) | Reported Growth | Adjusted Constant Currency Growth | | :------------- | :-------------- | :-------------- | :-------------- | :-------------------------------- | | Pen Needles | $596.3M | $629.3M | (5.2)% | (4.8)% | | Syringes | $92.3M | $92.5M | (0.2)% | 4.1% | | Safety | $103.2M | $96.5M | 6.9% | 7.2% | | Contract Manufacturing | $14.7M | $8.1M | 81.5% | 80.3% | - The decrease in revenues was driven by **$31.0 million** of unfavorable changes in volume and **$7.0 million** associated with the negative impact of foreign currency translation, partially offset by **$10.9 million** of favorable changes in price and a **$6.5 million** increase in contract manufacturing revenues[11](index=11&type=chunk) [Strategic Highlights](index=5&type=section&id=Strategic%20Highlights) This section outlines Embecta's key strategic initiatives to strengthen its core business, expand its product portfolio, and increase financial flexibility [Strengthen Core Business](index=5&type=section&id=4.1%20Strengthen%20Core%20Business) Embecta completed its global ERP system transition and established shared service capabilities and distribution infrastructure in India. The company also significantly advanced its brand transition program in the U.S. and Canada, aiming for substantial completion by the end of **FY 2025** - Completed the global transition to our ERP system, shared service capabilities, and distribution infrastructure in India[7](index=7&type=chunk) - Significantly advanced the brand transition program in the U.S. and Canada, expected to be substantially complete by the end of **FY 2025**[7](index=7&type=chunk) [Expand Product Portfolio](index=5&type=section&id=4.2%20Expand%20Product%20Portfolio) The company is expanding its product portfolio by signing multiple contracts and receiving purchase orders to co-package embecta pen needles with potential generic GLP-1 drugs. Progress is also being made on expanding the availability of appropriately sized GLP-1 retail packaging - Signed multiple contracts and received several purchase orders from pharmaceutical companies to co-package embecta pen needles with potential generic GLP-1 drugs[7](index=7&type=chunk) - Continued to make progress on expanding availability of appropriately sized GLP-1 retail packaging for use with weekly injection therapies[7](index=7&type=chunk) [Increase Financial Flexibility](index=5&type=section&id=4.3%20Increase%20Financial%20Flexibility) Embecta substantially completed its restructuring plan, anticipating **$7 million to $8 million** in pre-tax cost savings in the second half of **FY 2025**. The company also reduced its debt by approximately **$52.4 million** in Q3, achieving its **FY 2025** debt reduction target of **$112 million** year-to-date - Substantially completed the restructuring plan, expecting **$7 million to $8 million** in pre-tax cost savings during the second half of **FY 2025**[7](index=7&type=chunk) - Reduced debt by approximately **$52.4 million** in Q3 **FY2025**, bringing total year-to-date debt reduction to approximately **$112 million**, achieving the **FY2025** target[7](index=7&type=chunk) [Fiscal Year 2025 Updated Financial Guidance](index=8&type=section&id=Fiscal%20Year%202025%20Updated%20Financial%20Guidance) This section presents Embecta's updated financial guidance for FY2025, including revised outlooks for revenues, margins, and earnings per share [Updated FY2025 Outlook](index=8&type=section&id=5.1%20Updated%20FY2025%20Outlook) Embecta has tightened and raised its **FY 2025** financial guidance, providing updated ranges for reported revenues, adjusted constant currency revenue growth, adjusted gross margin, adjusted operating margin, adjusted earnings per diluted share, and adjusted EBITDA margin Fiscal Year 2025 Updated Financial Guidance | Metric | Current Guidance | Previous Guidance | | :-------------------------------- | :--------------- | :---------------- | | Reported Revenues | $1,078 - $1,085M | $1,073 - $1,090M | | Reported Revenue Growth (%) | (4.0)% - (3.4)% | (4.4)% - (2.9)% | | Impact of F/X (%) | (0.8)% | (0.8)% | | Impact of Italian Payback Measure (%) | 0.4% | 0.4% | | Adjusted Constant Currency Revenue Growth (%) | (3.6)% - (3.0)% | (4.0)% - (2.5)% | | Adjusted Gross Margin (%) | 63.25% - 63.50% | 62.75% - 63.75% | | Adjusted Operating Margin (%) | 30.75% - 31.00% | 29.75% - 30.75% | | Adjusted Earnings per Diluted Share | $2.90 - $2.95 | $2.70 - $2.90 | | Adjusted EBITDA Margin (%) | 37.25% - 37.50% | 36.25% - 37.25% | - The company is unable to present a quantitative reconciliation of its expected adjusted non-GAAP metrics due to the unpredictable impact and timing of one-time items[15](index=15&type=chunk) [Balance Sheet, Liquidity and Other Updates](index=8&type=section&id=Balance%20Sheet,%20Liquidity%20and%20Other%20Updates) This section provides an overview of Embecta's financial position, liquidity, debt, and dividend declaration as of June 30, 2025 [Current Financial Position and Dividend](index=8&type=section&id=6.1%20Current%20Financial%20Position%20and%20Dividend) As of June 30, 2025, Embecta maintained a healthy liquidity position with **$233.6 million** in cash and equivalents and no draws on its **$500 million** Revolving Credit Facility, while managing **$1.489 billion** in debt principal outstanding. The Board of Directors declared a quarterly cash dividend of **$0.15 per share** Liquidity Snapshot (as of June 30, 2025) | Metric | Amount | | :-------------------------------- | :---------- | | Cash and equivalents and restricted cash | $233.6M | | Debt principal outstanding | $1.489B | | Revolving Credit Facility | $500M (no amount drawn) | - The Company's Board of Directors declared a quarterly cash dividend of **$0.15** for each issued and outstanding share of common stock, payable on September 15, **2025**[17](index=17&type=chunk) [Condensed Consolidated Financial Statements](index=9&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents Embecta's condensed consolidated statements of income, balance sheets, and cash flows for the reported periods [Condensed Consolidated Statements of Income](index=9&type=section&id=7.1%20Condensed%20Consolidated%20Statements%20of%20Income) The condensed consolidated statements of income provide a detailed overview of Embecta's financial performance, showing revenues, cost of products sold, gross profit, operating expenses, operating income, and net income for the three and nine months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Income (Selected Data) | Metric | Q3 FY2025 | Q3 FY2024 | 9M FY2025 | 9M FY2024 | | :-------------------------- | :---------- | :---------- | :---------- | :---------- | | Revenues | $295.5M | $272.5M | $816.4M | $837.0M | | Cost of products sold | $98.4M | $82.4M | $298.1M | $275.6M | | Gross Profit | $197.1M | $190.1M | $518.3M | $561.4M | | Total Operating Expenses | $103.1M | $134.2M | $332.7M | $420.8M | | Operating Income | $94.0M | $55.9M | $185.6M | $140.6M | | Net Income | $45.5M | $14.7M | $69.0M | $63.7M | | Diluted EPS | $0.78 | $0.25 | $1.18 | $1.10 | [Condensed Consolidated Balance Sheets](index=10&type=section&id=7.2%20Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets present Embecta's financial position as of June 30, 2025, and September 30, 2024, detailing assets, liabilities, and equity. Key changes include a decrease in total assets and long-term debt, and an improvement in total equity Condensed Consolidated Balance Sheets (Selected Data) | Metric | June 30, 2025 | Sept 30, 2024 | | :-------------------------------- | :-------------- | :-------------- | | Cash and equivalents | $230.6M | $267.5M | | Total Current Assets | $681.5M | $761.0M | | Total Assets | $1,157.3M | $1,285.3M | | Total Current Liabilities | $275.5M | $374.0M | | Long-Term Debt | $1,458.8M | $1,565.3M | | Total Equity | $(669.6)M | $(738.3)M | - Total assets decreased from **$1,285.3 million** as of September 30, **2024**, to **$1,157.3 million** as of June 30, **2025**[23](index=23&type=chunk) - Long-term debt decreased from **$1,565.3 million** to **$1,458.8 million**[23](index=23&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=7.3%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The condensed consolidated statements of cash flows illustrate the movement of cash from operating, investing, and financing activities for the nine months ended June 30, 2025 and 2024. Notably, net cash provided by operating activities significantly increased, while payments on long-term debt also saw a substantial rise Condensed Consolidated Statements of Cash Flows (Selected Data) | Activity | 9M FY2025 | 9M FY2024 | | :-------------------------------- | :---------- | :---------- | | Net cash provided by operating activities | $107.7M | $9.1M | | Net cash used for investing activities | $(2.0)M | $(15.8)M | | Net cash used for financing activities | $(145.1)M | $(36.8)M | | Net Change in Cash and equivalents and restricted cash | $(40.6)M | $(44.7)M | - Payments on long-term debt increased from **$7.2 million** in 9M **FY2024** to **$112.2 million** in 9M **FY2025**[25](index=25&type=chunk) [Non-GAAP Financial Measures and Reconciliations](index=12&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section explains Embecta's non-GAAP financial measures and provides reconciliations to their most directly comparable GAAP financial measures [About Non-GAAP Financial Measures](index=12&type=section&id=8.1%20About%20Non-GAAP%20Financial%20Measures) Embecta supplements its GAAP financial reporting with several non-GAAP measures, including Adjusted Revenues, EBITDA, Adjusted EBITDA, Adjusted Gross Profit, Adjusted Operating Income, and Adjusted Net Income. These measures are intended to provide greater transparency and assist investors in analyzing the underlying operating performance, but are not substitutes for GAAP results - Embecta uses non-GAAP financial measures to provide greater transparency and assist investors in making comparisons to historical operating results and analyzing underlying performance[27](index=27&type=chunk) - These non-GAAP measures are not required by GAAP and should not be considered in isolation or as a substitute for the company's results as reported under GAAP[27](index=27&type=chunk) [Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA](index=13&type=section&id=8.2%20Reconciliation%20of%20GAAP%20Net%20Income%20to%20EBITDA%20and%20Adjusted%20EBITDA) This section provides a reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA for the three and nine months ended June 30, 2025 and 2024. Key adjustments include stock-based compensation, one-time stand-up costs, EU MDR, business optimization costs, and costs associated with the discontinued patch pump program Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA (Selected Data) | Metric | Q3 FY2025 | Q3 FY2024 | 9M FY2025 | 9M FY2024 | | :-------------------------------- | :---------- | :---------- | :---------- | :---------- | | GAAP Net Income | $45.5M | $14.7M | $69.0M | $63.7M | | EBITDA | $108.0M | $63.7M | $216.1M | $161.2M | | Adjusted EBITDA | $131.0M | $99.2M | $325.4M | $280.4M | | Adjusted EBITDA Margin | 44.3% | 36.4% | 39.9% | 33.5% | - Significant adjustments to EBITDA include one-time stand-up costs (**$11.0M** in Q3 **FY25**, **$23.1M** in Q3 **FY24**) and costs associated with the discontinued patch pump program (**$2.3M** in Q3 **FY25**, **$45.4M** in 9M **FY25**)[28](index=28&type=chunk) [Reconciliation of GAAP to Adjusted Gross Profit, Operating Income, and Net Income Per Diluted Share](index=14&type=section&id=8.3%20Reconciliation%20of%20GAAP%20to%20Adjusted%20Gross%20Profit,%20Operating%20Income,%20and%20Net%20Income%20Per%20Diluted%20Share) This section details the reconciliations from GAAP to adjusted figures for gross profit, operating income, and net income per diluted share. Adjustments include amortization of intangible assets, one-time stand-up costs, EU MDR compliance costs, stock-based compensation, business optimization, and costs related to the discontinued patch pump program Reconciliation of GAAP to Adjusted Gross Profit (Selected Data) | Metric | Q3 FY2025 | Q3 FY2024 | 9M FY2025 | 9M FY2024 | | :-------------------------- | :---------- | :---------- | :---------- | :---------- | | GAAP Gross Profit | $197.1M | $190.1M | $518.3M | $561.4M | | Adjusted Gross Profit | $198.6M | $190.3M | $527.8M | $562.4M | | GAAP Gross Profit Margin | 66.7% | 69.8% | 63.5% | 67.1% | | Adjusted Gross Profit Margin | 67.2% | 69.8% | 64.6% | 67.2% | Reconciliation of GAAP to Adjusted Operating Income (Selected Data) | Metric | Q3 FY2025 | Q3 FY2024 | 9M FY2025 | 9M FY2024 | | :-------------------------- | :---------- | :---------- | :---------- | :---------- | | GAAP Operating Income | $94.0M | $55.9M | $185.6M | $140.6M | | Adjusted Operating Income | $109.1M | $83.3M | $271.0M | $235.7M | | GAAP Operating Income Margin | 31.8% | 20.5% | 22.7% | 16.8% | | Adjusted Operating Income Margin | 36.9% | 30.6% | 33.2% | 28.2% | Reconciliation of GAAP to Adjusted Net Income Per Diluted Share (Selected Data) | Metric | Q3 FY2025 | Q3 FY2024 | 9M FY2025 | 9M FY2024 | | :-------------------------------- | :---------- | :---------- | :---------- | :---------- | | GAAP Net Income per Diluted share | $0.78 | $0.25 | $1.18 | $1.10 | | Adjusted Net Income per Diluted share | $1.12 | $0.74 | $2.46 | $2.02 | [Company Information](index=17&type=section&id=Company%20Information) This section provides information about Embecta, its mission, forward-looking statements, and contact details for stakeholders [About Embecta](index=17&type=section&id=9.1%20About%20Embecta) Embecta is a global diabetes care company with a **100-year legacy** in insulin delivery, currently transforming into a broad-based medical supplies company. It aims to improve lives through innovative solutions, partnerships, and the dedication of its approximately **2,000 employees** worldwide - Embecta is a global company advancing its **100-year legacy** in insulin delivery to become a broad-based medical supplies company[35](index=35&type=chunk) - The company helps improve lives through innovative solutions, partnerships, and the passion of approximately **2,000 employees** globally[35](index=35&type=chunk) [Safe Harbor Statement Regarding Forward-Looking Statements](index=17&type=section&id=9.2%20Safe%20Harbor%20Statement%20Regarding%20Forward-Looking%20Statements) This section contains a safe harbor statement, indicating that the press release includes forward-looking statements about future results, performance, and strategic plans. These statements are subject to various known and unknown risks and uncertainties, and actual results may differ materially from expectations - This press release contains express or implied 'forward-looking statements' concerning current expectations regarding future results, performance, financial condition, goals, strategies, plans, achievements, and anticipated product clearances, approvals and launches[36](index=36&type=chunk) - These forward-looking statements are subject to various known and unknown risks, uncertainties, and other factors, and actual results may differ materially from expectations[36](index=36&type=chunk) [Contacts](index=17&type=section&id=9.3%20Contacts) Contact information for investor relations and media inquiries is provided for stakeholders seeking further information about Embecta Corp - Investors can contact Pravesh Khandelwal, VP, Head of Investor Relations at **551-264-6547**[37](index=37&type=chunk) - Media inquiries can be directed to Christian Glazar, Sr. Director, Corporate Communications at **908-821-6922**[37](index=37&type=chunk)

Core Insights - Embecta Corp. reported strong financial results for Q3 2025, with an increase in revenues and improved profitability metrics despite a challenging geopolitical environment [2][3][8] Financial Highlights - Q3 2025 revenues reached $295.5 million, an increase of 8.4% year-over-year, with U.S. revenues up 11.6% and international revenues up 5.0% [8][10] - Gross profit for Q3 was $197.1 million, with a gross margin of 66.7%, compared to $190.1 million and 69.8% in the prior year [8][20] - Operating income for Q3 was $94.0 million, with an operating margin of 31.8%, significantly higher than $55.9 million and 20.5% in the prior year [8][20] - Net income for Q3 was $45.5 million, or $0.78 per diluted share, compared to $14.7 million and $0.25 in the prior year [8][20] Nine-Month Performance - For the nine months ended June 30, 2025, revenues totaled $816.4 million, a decrease of 2.5% compared to $837.0 million in the prior year [13][20] - Gross profit for the nine-month period was $518.3 million, with a gross margin of 63.5%, down from 67.1% in the prior year [13][20] - Net income for the nine months was $69.0 million, or $1.18 per diluted share, compared to $63.7 million and $1.10 in the prior year [13][20] Strategic Developments - The company successfully implemented its ERP system and operationalized distribution centers in India, concluding a multi-year separation program [3][5] - Embecta is focused on diversifying its product offerings, including contracts with pharmaceutical companies for co-packaging pen needles with generic GLP-1 drugs [5][8] - The company has made significant progress in its brand transition program in the U.S. and Canada, expected to be largely complete by the end of fiscal year 2025 [5][8] Financial Guidance - The updated fiscal year 2025 guidance includes expected reported revenues of $1,078 - $1,085 million, with adjusted earnings per diluted share projected at $2.90 - $2.95 [14][19] - The company anticipates adjusted gross margins of 63.25% - 63.50% and adjusted operating margins of 30.75% - 31.00% for the fiscal year [14][19] Balance Sheet and Liquidity - As of June 30, 2025, the company had approximately $233.6 million in cash and equivalents, with total debt principal outstanding at $1.489 billion [15][21] - The company reduced its debt by approximately $52.4 million during Q3 2025, achieving its fiscal year 2025 debt reduction target with one quarter remaining [8][15]

Core Viewpoint - Embecta Corp. is transitioning from a company focused solely on insulin delivery to a broader medical supplies company, leveraging its 100-year legacy in the industry [1][3]. Group 1: Financial Results and Operational Update - Embecta will host a conference call on August 8, 2025, at 8:00 a.m. ET to discuss its fiscal third quarter 2025 financial results and provide an operational update [1]. - The call will include a question and answer session for participants [1]. Group 2: Accessing the Conference Call - Participants can access the live webcast through the provided links or via the company's investor relations website [2]. - A replay of the conference call will be available starting at 11:00 a.m. ET on August 8, 2025, and will be archived for one year [2]. Group 3: Company Overview - Embecta employs approximately 2,000 employees globally and aims to improve lives through innovative solutions and partnerships [3]. - The company is committed to advancing its legacy in insulin delivery while expanding into a wider range of medical supplies [3].

Summary of Embecta (EMBC) FY Conference Call - June 10, 2025 Company Overview - **Company**: Embecta (formerly part of Becton Dickinson's diabetes care business) - **Revenue**: Approximately $1.1 billion - **Product Categories**: - Pen needles - Conventional syringes - Safety products for injections - **Geographic Revenue Distribution**: - 50% from the US - ~30% from Europe, Middle East, and Africa - ~20% from Asia Pacific (including China) - ~5% from Latin America - **Business Model**: Focused on single-use disposable products for diabetes management, with a stable and recurring revenue base [4][5][6] Financial Performance and Projections - **Historical Performance**: - Revenue growth from 2022 to 2024 was around 1.3% CAGR, exceeding initial expectations of flat growth [11] - Adjusted EBITDA margins improved to 31.4%, surpassing the target of 30% despite facing inflationary pressures [13] - **Future Projections (2025-2028)**: - Expected constant currency revenue CAGR remains flattish, with a target of low single-digit growth [15] - Projected cumulative free cash flow of at least $600 million from 2026 to 2028, with plans to reduce debt by $450 million to $500 million during this period [15][49] - **Challenges**: - Decline in conventional syringe business in the US, projected to drop from $90 million in 2019 to around $35 million by 2025 [18] - Impact of pharmacy closures affecting inventory purchases and revenue [38] Growth Opportunities - **GLP-1 Market**: - Identified as the single biggest growth opportunity, with expectations for multi-dose pen injectors to replace single-use auto injectors [30][31] - Anticipated market opportunity of at least $100 million by 2033, with potential revenue contributions starting as early as 2026 [32][33] - **New Product Revenue Streams**: - Entering distribution agreements for products like blood glucose monitors and insulin pumps to diversify offerings [35] Operational Insights - **Manufacturing and Supply Chain**: - Transitioning to a new ERP system and establishing independent distribution networks post-spin from Becton Dickinson [8][9] - Current gross margins around 63%, with expectations for slight declines due to tariffs and increased R&D expenses [40][41] - **Debt Management**: - Current net leverage at 3.7 times, with a goal to reduce it to around 2 times by 2028 [48][49] Market Dynamics - **Geographic Growth**: - Emerging markets expected to grow at mid-single digits, while US business projected to see low single-digit declines [26][27] - **Impact of Formulary Changes**: - Generally viewed as beneficial if they make insulin more affordable for patients [25] Conclusion - **Investor Sentiment**: - Positive reception post-Analyst Day, with a focus on cautious and achievable financial projections [54][55] - **Future Outlook**: - The company aims to leverage its free cash flow capabilities to enhance its product portfolio and maintain stable growth despite market challenges [10][55]