Financial Data and Key Metrics Changes - The company reported second quarter revenue of $259 million, exceeding expectations of $250 million to $255 million, with half of the overachievement attributed to constant currency performance and the other half due to less adverse foreign exchange impacts than anticipated [1][5] - Year-over-year revenue declined by 9.8% on an as-reported basis and 7.7% on an adjusted constant currency basis [9] - GAAP gross profit for the second quarter was $164.1 million with a margin of 63.4%, compared to $185.4 million and 64.6% in the prior year [13] - Adjusted net income increased to $40.7 million, or $0.70 per diluted share, compared to $38.9 million and $0.67 in the prior year [16] Business Line Data and Key Metrics Changes - Pen needle revenue declined approximately 12.1%, while syringe revenue grew by 1.7%, safety products grew by 4.2%, and contact manufacturing grew by 73% [10][11] - The decline in pen needle revenue was primarily due to timing issues related to price increases and unfavorable prior year comparisons [11] Market Data and Key Metrics Changes - U.S. revenue for the quarter totaled $135.2 million, reflecting a year-over-year decline of 8.4% on an adjusted constant currency basis [9] - International revenue totaled $123.8 million, equating to a 7% decline on an adjusted constant currency basis compared to the prior year [10] Company Strategy and Development Direction - The company is advancing efforts to co-package pen needles with potential generic GLP-1 drugs, aiming to expand into a fast-growing market [3] - A restructuring plan has been initiated to streamline operations, with expected pretax charges of $4 million to $5 million and anticipated cost savings of $7 million to $8 million in the second half of fiscal 2025 [4][5] - The brand transition plan is underway in the U.S. and Canada, with expectations to complete the global transition within the next couple of years [7][8] Management's Comments on Operating Environment and Future Outlook - Management acknowledged lower projected U.S. volumes due to anticipated reductions in customer inventory levels tied to store closures at a specific U.S. retail pharmacy customer [6][22] - Despite the challenges, management expects to see flat to slightly positive overall constant currency revenue growth in the second half of the year [43][44] - The company remains committed to mitigating potential impacts from tariffs and is focused on maintaining profitability and reducing debt [19][24] Other Important Information - The company has received certification as a great place to work for 2025 in eight countries, reflecting a strong workplace culture [2] - The upcoming Analyst and Investor Day is scheduled for May 22, where the company will provide deeper insights into its portfolio and long-term financial objectives [26] Q&A Session Summary Question: Can you provide insights into growth and demand dynamics across pen and syringes? - Management explained that the decline in U.S. revenue was influenced by ERP implementations and price increase timing, but they expect improvements moving forward [29][35] Question: How should the market interpret the guidance cut? - Management indicated that despite the guidance cut, they expect stronger performance in the second half of the year, with low single-digit growth anticipated [41][44] Question: What is the impact of tariffs on margins? - Management confirmed a $3 million impact from tariffs in the second half of the year, with an estimated annualized impact of $8 million to $9 million for 2026 [49][51] Question: What is the status of the new efficiency program? - The restructuring program is focused on SG&A cost reductions, with expected savings of $7 million to $8 million in the second half of the year, and an annualized impact of around $15 million for fiscal 2026 [75][77]

Financial Data and Key Metrics Changes - Second quarter revenue totaled $259 million, exceeding expectations of $250 million to $255 million, with half of the overachievement attributed to constant currency performance and the other half due to less foreign exchange headwinds than anticipated [1][5] - GAAP gross profit for the second quarter was $164.1 million with a margin of 63.4%, compared to $185.4 million and 64.6% in the prior year [12] - Adjusted net income for the second quarter was $40.7 million, up from $38.9 million in the prior year, with adjusted earnings per share increasing to $0.70 from $0.67 [15] Business Line Data and Key Metrics Changes - In the U.S., revenue for the quarter was $135.2 million, reflecting an 8.4% decline on an adjusted constant currency basis [9] - International revenue totaled $123.8 million, equating to a 7% decline on an adjusted constant currency basis [10] - Thin needle revenue declined approximately 12.1%, while syringe revenue grew by approximately 1.7% and safety products grew approximately 4.2% [11] Market Data and Key Metrics Changes - The decline in U.S. revenue was primarily due to timing issues related to price increases and customer purchasing patterns [9][10] - The international business faced similar challenges with prior year inventory builds impacting comparisons [10] - The company noted that the anticipated reductions in customer inventory levels tied to store closures at a specific U.S. retail pharmacy customer would impact future volumes [21] Company Strategy and Development Direction - The company is advancing efforts to co-package pen needles with potential generic GLP-1 drugs, aiming to expand into a fast-growing market [3] - A restructuring plan was initiated to streamline operations, with expected pretax charges of $4 million to $5 million and estimated cost savings of $7 million to $8 million during the second half of fiscal 2025 [4][5] - The brand transition plan is underway, with a phased execution expected to complete globally within the next couple of years [7][8] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of lower projected U.S. volumes and customer inventory reductions on guidance, but maintained that these issues are transitory [21] - The company expects to see flat to slightly positive overall constant currency revenue growth in the second half of the year, despite a 150 basis point reduction in full-year guidance [42] - Management remains focused on maintaining profitability and reducing debt, with a goal of reducing gross debt by $110 million during fiscal 2025 [17][72] Other Important Information - The company has received several purchase orders from generic manufacturers for bulk pen needles, marking a significant strategic milestone [52] - The company is committed to mitigating potential impacts from tariffs, with an estimated $3 million impact on full-year margins due to U.S.-China tariffs [48][49] - The inaugural Analyst and Investor Day is scheduled for May 22, where the company will share more about its portfolio and long-term financial objectives [26] Q&A Session Summary Question: Can you provide insights into growth and demand dynamics across pen and syringes? - Management explained that the decline in U.S. revenue was influenced by ERP implementations and price increase timing, leading to unfavorable year-over-year comparisons [30][34] Question: Are the store closures isolated issues? - Management indicated that while aware of planned store closures, they believe the impact on their products will be manageable as patients may switch to other pharmacies [36][38] Question: What is the expected impact of tariffs on margins? - Management confirmed a $3 million impact on full-year margins due to tariffs, with potential annualized impacts estimated for future fiscal years [48][49] Question: Can you elaborate on the new efficiency program? - The restructuring program focuses on SG&A cost reductions, with expected savings of $7 million to $8 million in the second half of the year, potentially annualizing to around $15 million [75]

Group 1: Earnings Performance - Embecta Corp. reported quarterly earnings of $0.70 per share, exceeding the Zacks Consensus Estimate of $0.66 per share, and showing an increase from $0.67 per share a year ago, representing an earnings surprise of 6.06% [1] - The company has surpassed consensus EPS estimates in all four of the last quarters [2] - In the most recent quarter, Embecta Corp. posted revenues of $259 million, which fell short of the Zacks Consensus Estimate by 2.92%, compared to $287.2 million in revenues from the previous year [2] Group 2: Stock Performance and Outlook - Embecta Corp. shares have declined approximately 35.6% since the beginning of the year, contrasting with the S&P 500's decline of 3.7% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.79, with expected revenues of $274.85 million, and for the current fiscal year, the EPS estimate is $2.85 on revenues of $1.09 billion [7] Group 3: Industry Context - The Medical Services industry, to which Embecta Corp. belongs, is currently ranked in the top 21% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - The performance of Embecta Corp. may also be influenced by the overall industry outlook, as empirical research suggests a strong correlation between near-term stock movements and earnings estimate revisions [5][8] - Another company in the same industry, HealthEquity, is expected to report quarterly earnings of $0.81 per share, reflecting a year-over-year change of +1.3%, with revenues projected to be $321.13 million, up 11.7% from the previous year [9]

Financial Performance - Q2 Fiscal Year 2025 - Revenue for Q2 Fiscal Year 2025 was $259 million, a decrease of 9.8% compared to $287.2 million in Q2 Fiscal Year 2024 [21, 23] - Adjusted constant currency revenue decreased by 7.7% compared to the prior year period [21, 23] - GAAP gross profit was $164.1 million with a margin of 63.4%, compared to $185.4 million and 64.6% in the prior year period [23] - Adjusted EBITDA was $97.1 million, representing 37.5% of revenue, compared to $90.8 million and 31.6% in the prior year period [23] - The company paid down approximately $27.4 million of outstanding principal under its term loan B facility during the second quarter [14] Financial Performance - Six Months Ended March 31, 2025 - Total revenue was $520.9 million, a decrease of 7.7% compared to $564.5 million for the six months ended March 31, 2024 [32] - Adjusted constant currency revenue decreased by 6.3% [32] Fiscal Year 2025 Guidance - Reported revenue is projected to be between $1.073 billion and $1.090 billion, representing a decrease of 4.4% to 2.9% [24] - Adjusted constant currency revenue growth is expected to be between -4.0% and -2.5% [24] - The company expects pre-tax cost savings of between $7 million and $8 million during the second half of fiscal year 2025 [13]

FOR IMMEDIATE RELEASE Embecta Corp. Reports Second Quarter Fiscal 2025 Financial Results PARSIPPANY, N.J., May 9, 2025 (GLOBE NEWSWIRE) – Embecta Corp. ("embecta" or the "Company") (Nasdaq: EMBC), a global diabetes care company, today reported financial results for the three and six month periods ended March 31, 2025. "This quarter's financial results were once again slightly ahead of our prior expectations, as our teams executed well, which included driving an acceleration in our free-cash flow generation, ...

Core Viewpoint - Embecta Corp. reported financial results for the three and six month periods ended March 31, 2025, showing a decline in revenues but improvements in profitability metrics and cash flow generation [1][2][3]. Financial Highlights - For the second quarter, revenues were $259.0 million, down 9.8% year-over-year; U.S. revenues decreased by 8.4% and international revenues decreased by 11.3% [7][11]. - Gross profit was $164.1 million with a margin of 63.4%, compared to $185.4 million and 64.6% in the prior year [7][33]. - Operating income increased to $62.9 million with a margin of 24.3%, up from $39.2 million and 13.6% in the prior year [7][33]. - Net income was $23.5 million, or $0.40 per diluted share, compared to $28.9 million and $0.50 in the prior year [7][33]. - Adjusted EBITDA was $97.1 million with a margin of 37.5%, compared to $90.8 million and 31.6% in the prior year [7][33]. Strategic Highlights - The company is focused on strengthening its core business and has advanced its brand transition program in the U.S. and Canada, expected to be substantially complete in the second half of fiscal year 2025 [6][10]. - Embecta has received several purchase orders from pharmaceutical companies to co-package pen needles with potential generic GLP-1 drugs [10]. - The company has initiated a restructuring plan to streamline operations and optimize resources, which includes the discontinuation of the insulin patch pump program [10][12]. Updated Financial Guidance - For fiscal year 2025, the company expects reported revenues between $1,073 million and $1,090 million, with a revenue growth decline of 4.4% to 2.9% [14][15]. - Adjusted constant currency revenue growth is now projected to be between -4.0% and -2.5% [14][15]. Balance Sheet and Liquidity - As of March 31, 2025, the company had approximately $212.3 million in cash and equivalents and $1.542 billion in debt principal outstanding [17][18]. - The company declared a quarterly cash dividend of $0.15 per share, payable on June 13, 2025 [18].

Core Insights - Embecta Corp. will hold an Analyst and Investor Day on May 22, 2025, in New York City, focusing on strategic and business overview [1][2] - The event will feature presentations from the CEO, CFO, and other leadership team members, discussing value creation opportunities and the company's financial profile [2] - The webcast will be available for registration, and materials will be accessible post-event on the company's Investor Relations website [3] Company Overview - Embecta is a global diabetes care company with a 100-year legacy in insulin delivery, aiming to empower individuals with diabetes through innovative solutions [4] - The company employs approximately 2,000 individuals worldwide, emphasizing partnerships and a commitment to improving the lives of people with diabetes [4]

Core Viewpoint - Embecta Corp. will host a conference call to discuss its fiscal second quarter 2025 financial results and provide an operational update on May 9, 2025 [1] Group 1: Conference Call Details - The conference call is scheduled for 8:00 a.m. Eastern Time (ET) [1] - Participants can access the live webcast through the company's website or via a teleconference link [2] - A replay of the call will be available starting at 11:00 a.m. ET on the same day and will be archived for one year [2] Group 2: Company Overview - Embecta is a global diabetes care company with a 100-year legacy in insulin delivery [3] - The company aims to empower people with diabetes through innovative solutions and partnerships, supported by approximately 2,000 employees worldwide [3]

Core Insights - Embecta Corp. has announced the FITTER Forward Expert Recommendations, a significant update to global best practices for insulin injection technique and education, aimed at improving clinical outcomes for diabetes patients worldwide [1][2][3] Group 1: Publication and Initiative - The FITTER Forward initiative is a collaboration of 16 diabetes specialists from 13 countries, emphasizing the need for improved training and standardization in insulin delivery [1][2] - The publication titled "Advance Insulin Injection Technique and Education with FITTER Forward Expert Recommendations" is featured in the April edition of Mayo Clinic Proceedings [3] Group 2: Importance of Injection Technique - Proper injection technique, device handling, and insulin management are crucial for long-term glycemic control, often overlooked in discussions about insulin treatments [2] - The new recommendations provide healthcare professionals with evidence-based strategies to ensure correct and safe insulin delivery [2][3] Group 3: Advancements and Training - The update reflects advancements in device technology, research, and real-world patient data since the original FITTER guidelines were developed in 2016 [2] - Key components of the recommendations include new insights on injection device technology, standardized injection techniques, structured training programs for healthcare providers, and patient-centered tools [7]

Core Insights - Embecta's end market growth is influenced by new technologies that are capturing market share in insulin delivery, alongside the rising use of GLP-1 drugs which are reducing the frequency of Embecta's product usage [1] Company Analysis - Embecta is facing competition from emerging technologies in the insulin delivery market, which may impact its market share [1] - The increased adoption of GLP-1 drugs is leading to a decline in the frequency of Embecta's product usage, indicating a shift in treatment preferences among patients [1]