[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]

Summary of the Conference Call Company Overview - **Company Name**: Inbecta - **Background**: Inbecta was spun out from Becton Dickinson's diabetes business on April 1, 2022, and has been a public company for over three years. The company generates approximately $1 billion in revenue and operates in around 140 countries with three main product categories: pen needles, safety products, and syringes [3][4]. Financial Performance and Growth Drivers - **Revenue Composition**: About 85% of Inbecta's revenue comes from pen needles and safety products, which have been growing at a rate of 2% to 2.5% over the past few years [4]. - **Financial Goals**: The company set a revenue CAGR target from 2022 to 2024 that was expected to be flat, with an adjusted EBITDA margin of around 30%. Inbecta exceeded both metrics during this period despite facing significant inflationary impacts [5][6]. - **Future Projections**: The core injection business is projected to experience a 1% to 2% CAGR decline over the long-range planning (LRP) period, primarily due to pressures in the US syringe business and a transition to other technologies [7][9]. Market Dynamics - **Syringe Business Challenges**: The US syringe business is under pressure, with expectations that revenue from this segment could decline significantly by 2028 [10]. - **Emerging Markets Growth**: Emerging markets, which represent about 20% of the business, are expected to grow at mid-single digits, while developed markets may see slight declines [12]. New Revenue Streams and Product Development - **New Product Opportunities**: Inbecta is focusing on leveraging its manufacturing capabilities and distribution agreements to introduce new products, including blood glucose monitors (BGMs), insulin pumps, and ultrasound products [15][17][27]. - **GLP-1 Market Potential**: The company is exploring partnerships with generic pharmaceutical companies for GLP-1 products, which could represent a $100 million annual market opportunity by 2033 [20][21]. Financial Strategy and Cash Flow - **Free Cash Flow Generation**: Inbecta anticipates generating approximately $600 million in cumulative free cash flow over the LRP period, with plans to pay down at least $110 million in debt in 2025 [35][36]. - **Debt Management**: The company aims to reduce its net leverage to around three times by the end of 2025, with potential for further reductions by 2028 [39][40]. Margin and Cost Considerations - **Operating Margin Decline**: The adjusted operating margin is expected to decline by approximately 125 basis points due to incremental tariffs and increased R&D expenses related to sourcing cannulas from multiple suppliers [28][29][31]. - **Tariff Impact**: Incremental tariffs are estimated to impact the business by $9 million to $10 million annually, but most products are largely exempt from tariffs due to medical necessity [43]. Key Takeaways - **Underappreciated Aspects**: The free cash flow capabilities of Inbecta have been masked by the complexities of separation from Becton Dickinson. The company is poised for growth through new product introductions and strategic partnerships [45][46].

Summary of Embecta (EMBC) 2025 Investor Day Company Overview - **Company**: Embecta (EMBC) - **Event**: 2025 Investor Day held on May 22, 2025 - **Background**: Embecta is the world's leading producer of pen needles and insulin syringes, having spun off from BD in 2022, with a focus on diabetes care products [8][9][10] Industry Insights - **Diabetes Prevalence**: Approximately 589 million adults aged 20-79 are living with diabetes, projected to rise to 853 million by 2050. The global prevalence rate is expected to increase from 10% in 2021 to 13% by 2050 [27][28] - **Emerging Markets**: The majority of new diabetes cases are expected to occur in emerging markets, with significant growth in insulin therapy adoption [29][30] Key Financial Metrics - **Revenue Composition**: Over 80% of Embecta's revenue comes from seven key markets, with the US accounting for 54% of total revenue. The company holds significant market shares in pen needles (50%), safety pen needles (60%), and insulin syringes (40%) [15][11][12] - **Production Capacity**: Embecta produces over 8 billion units annually across three highly automated plants, with room for expansion [13][12] Strategic Priorities 1. **Strengthening Core Business**: Focus on seamless brand transition and maintaining leadership in insulin injection devices [23] 2. **Expanding Product Portfolio**: Introduction of market-appropriate products leveraging manufacturing expertise [24] 3. **Increasing Financial Flexibility**: Plans to pay down approximately $110 million in debt during 2025 and enhance financial agility [25] Market Dynamics - **Product Demand**: Pen needles and safety pen needles account for approximately 84% of total revenue, with a stable outlook despite a decline in syringe usage due to a shift towards insulin pens [17][18] - **Commercial Strategy**: A comprehensive approach in the US market, focusing on retail pharmacies, mail, long-term care, and government customers [54][55] International Strategy - **Global Presence**: Embecta operates in key international markets, including LATAM, EMEA, and Asia, with a strong infrastructure to support local needs [85][86] - **Market Engagement**: Strong relationships with healthcare providers and direct engagement with patients to reinforce education and adherence [88][90] Product Differentiation - **Pen Needles**: Unique features include contoured needle bases and ultra-thin wall technology, enhancing user experience and confidence in insulin delivery [42][44] - **Safety Products**: Safety pen needles and syringes designed to reduce the risk of needle stick injuries, with a strong reputation for quality and reliability [48][49] Future Outlook - **Growth Opportunities**: Anticipated growth in emerging markets, particularly in China, where a significant number of people remain undiagnosed [94][95] - **Long-term Vision**: Transitioning from a focused insulin delivery company to a diversified medical supplies company by 2028 and beyond [22][21] Conclusion - **Sustainable Success**: Embecta is well-positioned for future growth through strategic initiatives, strong market presence, and a commitment to improving diabetes care globally [25][49]

Company Overview - embecta's FY'24 sales reached $1.1 billion[11], with an adjusted EBITDA of $353 million, representing a ~31% margin[11] - Pen needles and safety pen needles accounted for approximately 84% of total FY'24 revenue[13] - The company serves >100 countries[11], with key markets accounting for >80% of revenue[19] Market Dynamics - Approximately 84% of FY'24 total revenue comes from the pen needle and safety pen needle products[22] - The U.S market accounts for ~$607 million in pen needle revenue, representing ~54% of total revenues[20] - Other Developed Markets account for ~$325 million in pen needle revenue, representing ~29% of total revenues[20] - Emerging Markets account for ~$191 million in pen needle revenue, representing ~17% of total revenues[20] Financial Outlook - The company reaffirms FY'25 financial guidance, expecting adjusted constant currency revenue growth to be between (4.0%) - (2.5%)[226] - The company aims to reduce debt between $450 million and $500 million and drive net leverage to ~2x during FY'26 – FY'28[232] - The company projects ~$600 million in cumulative free cash flow during FY'26 – FY'28[234]

Core Insights - Embecta Corp. is hosting its inaugural Analyst and Investor Day to present its phased approach for value creation and long-range financial plan [1][2] - The company aims to transition into a broader medical supplies company while maintaining its leadership in insulin injection [2][3] Strategic Priorities - Embecta's core insulin injection business provides a stable revenue base with attractive margins, and the company is focusing on three strategic priorities for long-term success [3] - The company reaffirmed its fiscal year 2025 financial guidance, with reported revenues expected between $1,073 million and $1,090 million, reflecting a revenue growth decline of (4.4)% to (2.9)% [4][3] Financial Guidance - The adjusted gross margin is projected to be between 62.75% and 63.75%, with an adjusted operating margin of 29.75% to 30.75% [4] - Adjusted earnings per diluted share are expected to be between $2.70 and $2.90, with an adjusted EBITDA margin of 36.25% to 37.25% [4] Long Range Financial Plan - The long-range financial plan for fiscal years 2025 through 2028 includes strengthening the core business, expanding the product portfolio, and increasing financial flexibility through cost savings and debt reduction [5][6] - The company aims to maintain a flattish constant currency revenue CAGR, achieve an adjusted operating margin of approximately 28% to 30%, generate about $600 million in cumulative free cash flow, and repay between $450 million and $500 million of debt [6] Event Details - The Analyst and Investor Day is taking place live in New York City and via webcast, providing an opportunity for stakeholders to engage with the company's strategic vision [8]

Core Viewpoint - Embecta reported a decline in revenue for Q2 2025, primarily due to the termination of its insulin patch pump project and a strategic shift towards the rapidly growing GLP-1 market [1][6][10]. Financial Performance - Q2 2025 revenue was $259 million (approximately 1.87 billion RMB), a year-over-year decrease of 9.8%, with a constant currency decline of 7.7% [2][3]. - Net income for the quarter was $23.5 million, down 18.7% year-over-year, attributed to reduced revenue and increased restructuring costs [2]. - Revenue breakdown showed a significant decline in pen needles by 13.7% to $188.3 million, while syringes decreased by 4.0% to $28.8 million [3][4]. - Safety devices saw a slight increase of 2.7% to $34.2 million, and contract manufacturing revenue surged by 69.2% to $4.4 million [4]. Insulin Patch Pump Project Termination - The insulin patch pump project, aimed at developing systems for type 2 diabetes, was terminated in November 2024 due to competitive pressures and the rise of GLP-1 drugs [7][9]. - The termination is expected to incur restructuring costs between $35 million to $45 million, including cash and non-cash asset impairments [9]. - This decision is projected to save the company $60 million to $65 million annually, allowing a focus on core business and growth opportunities [9]. Strategic Shift to GLP-1 Market - The GLP-1 receptor agonist market is anticipated to reach $109 billion by 2030, prompting Embecta to explore opportunities in this area [10]. - The company began developing GLP-1 drug delivery solutions in September 2023, launching a small packaging GLP-1 needle in Germany in December 2024 [10]. - Embecta aims to expand its market share through partnerships with generic drug companies, expecting continued growth in the GLP-1 sector [10]. Company Overview - Embecta specializes in innovative insulin delivery and disease management solutions for diabetes patients, having become an independent Nasdaq-listed company in 2022 [11]. - The company’s core products include pen needles, syringes, and safety injection devices, serving approximately 30 million diabetes patients globally [11].

Part I [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Embecta Corp. as of and for the periods ended March 31, 2025 [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the three months ended March 31, 2025, revenues were $259.0 million, a decrease from $287.2 million in the prior year period, with net income at $23.5 million, down from $28.9 million Condensed Consolidated Statements of Income (in millions, except per share amounts) | | Three Months Ended March 31, | | Six Months Ended March 31, | | | :--- | :--- | :--- | :--- | :--- | | | **2025** | **2024** | **2025** | **2024** | | **Revenues** | $259.0 | $287.2 | $520.9 | $564.5 | | **Gross Profit** | $164.1 | $185.4 | $321.2 | $371.3 | | **Operating Income** | $62.9 | $39.2 | $91.6 | $84.7 | | **Net Income** | $23.5 | $28.9 | $23.5 | $49.0 | | **Diluted EPS** | $0.40 | $0.50 | $0.40 | $0.85 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) For the three months ended March 31, 2025, comprehensive income was $34.9 million, including a $11.4 million positive foreign currency translation adjustment, while the six-month period saw comprehensive income of $8.0 million, significantly lower than the prior year Condensed Consolidated Statements of Comprehensive Income (in millions) | | Three Months Ended March 31, | | Six Months Ended March 31, | | | :--- | :--- | :--- | :--- | :--- | | | **2025** | **2024** | **2025** | **2024** | | **Net Income** | $23.5 | $28.9 | $23.5 | $49.0 | | **Foreign currency translation adjustments** | $11.4 | $(2.4) | $(15.5) | $9.2 | | **Comprehensive Income** | $34.9 | $26.5 | $8.0 | $58.2 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets decreased to $1,120.2 million from $1,285.3 million, with total liabilities at $1,856.4 million and a total equity deficit of $736.2 million Balance Sheet Highlights (in millions) | | **March 31, 2025** | **September 30, 2024** | | :--- | :--- | :--- | | **Total Current Assets** | $643.4 | $761.0 | | **Total Assets** | $1,120.2 | $1,285.3 | | **Total Current Liabilities** | $259.3 | $374.0 | | **Long-Term Debt** | $1,509.1 | $1,565.3 | | **Total Equity** | $(736.2) | $(738.3) | [Condensed Consolidated Statements of Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) The company's total equity deficit slightly improved to $736.2 million at March 31, 2025, driven by net income offset by dividends and accumulated other comprehensive loss Changes in Total Equity (Six Months Ended March 31, 2025, in millions) | Description | Amount | | :--- | :--- | | **Balance at October 1, 2024** | $(738.3) | | Net Income | $23.5 | | Other comprehensive (loss), net of taxes | $(15.5) | | Stock-based compensation plans | $16.2 | | Dividends and dividend equivalents declared | $(17.5) | | Issuance of shares related to stock-based compensation | $(4.6) | | **Balance at March 31, 2025** | $(736.2) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended March 31, 2025, net cash provided by operating activities was $26.5 million, while net cash used for financing activities was $82.5 million, resulting in a net decrease in cash of $61.9 million Summary of Cash Flows (Six Months Ended March 31, in millions) | | **2025** | **2024** | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $26.5 | $11.2 | | **Net cash used for investing activities** | $(1.6) | $(6.1) | | **Net cash used for financing activities** | $(82.5) | $(25.3) | | **Net Change in Cash** | $(61.9) | $(20.0) | | **Closing Cash and equivalents and restricted cash** | $212.3 | $306.5 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the discontinuation of the patch pump program, new restructuring plans, revenue disaggregation, and the company's $1.5 billion debt - The company initiated two restructuring plans: the 'Patch Pump Restructuring Plan' to discontinue its patch pump program with estimated costs of **$30.0-$40.0 million**, and a '2025 Restructuring Plan' to streamline the organization with estimated costs of **$4.0-$5.0 million**[44](index=44&type=chunk)[45](index=45&type=chunk) - A non-cash asset impairment charge of **$10.4 million** was recorded in the first half of fiscal 2025 to write down property and equipment due to the discontinuation of the patch pump program[89](index=89&type=chunk)[92](index=92&type=chunk) Revenues by Geography and Product Line (Six Months Ended March 31, in millions) | Category | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | **By Geography** | | | | | United States | $276.9 | $296.2 | (6.5%) | | International | $244.0 | $268.3 | (9.1%) | | **By Product Line** | | | | | Pen Needles | $379.4 | $428.0 | (11.4%) | | Syringes | $57.2 | $60.8 | (5.9%) | | Safety | $68.4 | $64.1 | +6.7% | - As of March 31, 2025, the company had total principal debt of **$1,541.5 million**, consisting of a Term Loan, 5.00% Notes, and 6.75% Notes, and was in compliance with all debt covenants[76](index=76&type=chunk)[78](index=78&type=chunk) [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) Management discusses a 7.7% revenue decrease for the six months ended March 31, 2025, driven by lower volumes and unfavorable foreign currency translation, while operating income increased due to reduced operating expenses - The company faces significant pricing pressure from competitors, commoditization of its traditional injection devices, and a shift in diabetes treatment towards new drug therapies (e.g., GLP-1s) that delay or reduce insulin use[102](index=102&type=chunk)[103](index=103&type=chunk)[105](index=105&type=chunk) - In November 2024, the company discontinued its patch pump R&D program to refocus on its core business, optimize free cash flow, and pay down debt, initiating a new restructuring plan in Q2 2025 to streamline the organization[109](index=109&type=chunk)[110](index=110&type=chunk) Results of Operations Summary (in millions) | | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | **Revenues** | $520.9 | $564.5 | (7.7)% | | **Gross Profit** | $321.2 | $371.3 | (13.5)% | | **Operating Income** | $91.6 | $84.7 | 8.1% | | **Net Income** | $23.5 | $49.0 | (52.0)% | - For the six months ended March 31, 2025, the company made a discretionary principal payment of **$55.0 million** on its Term Loan, part of a total **$59.8 million** in debt payments[133](index=133&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from foreign currency exchange rates and interest rates, with foreign currency risk managed through forward exchange contracts and interest rate risk primarily related to its variable-rate Term Loan - The company uses foreign currency forward exchange contracts to manage currency exposures from transactions denominated in currencies other than an entity's functional currency[152](index=152&type=chunk) - The primary interest rate risk is from the Term Loan, which has a variable rate based on SOFR, where a **100 basis point** change in interest rates would affect annualized interest expense by approximately **$8.5 million** based on the outstanding balance at March 31, 2025[154](index=154&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting related to a new ERP system implementation - The CEO and CFO concluded that disclosure controls and procedures were not effective as of March 31, 2025, due to a material weakness in internal control over financial reporting[156](index=156&type=chunk) - The material weakness is related to the ongoing, phased implementation of a new ERP system across the company's global operations, which is expected to be fully completed in the third quarter of fiscal 2025[157](index=157&type=chunk) - A remediation plan is in progress, including enhancing control design, executing robust training, and implementing enhanced oversight, but the material weakness has not yet been fully remediated[158](index=158&type=chunk)[159](index=159&type=chunk) Part II. Other Information [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) This section introduces a new material risk factor regarding trade actions, highlighting that new or increased tariffs and 'buy local' initiatives could adversely impact the availability and cost of raw materials and products - A new risk factor was added concerning trade actions, warning that tariffs, retaliatory tariffs, and 'buy local' initiatives could negatively affect the business by increasing product costs, reducing margins, and potentially decreasing product competitiveness[163](index=163&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications of the Chief Executive Officer and Chief Financial Officer, and iXBRL data files List of Exhibits | Exhibit | Description | | :--- | :--- | | 31.1 | Certification of Chief Executive Officer, pursuant to SEC Rule 13a–14(a) | | 31.2 | Certification of Chief Financial Officer, pursuant to SEC Rule 13a–14(a) | | 32.1 | Certification of Chief Executive Officer, pursuant to Rule 13a–14(b) and Section 1350 | | 32.2 | Certification of Chief Financial Officer, pursuant to Rule 13a–14(b) and Section 1350 | | 101 | iXBRL formatted financial statements and notes | | 104 | Cover Page Interactive Data File (Inline XBRL) |