What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-08 compared with 2023-05-12 · 87 added, 75 removed, 211 unchanged (43% of the section changed)

14 unchanged sentences

In addition to pen needles, we sell sterile, single-use insulin syringes, which are used to inject insulin drawn from insulin vials.

We also sell safety insulin syringes, which have sliding safety shield that can be activated with one-hand after the injection to help prevent needlestick exposure and injury during injection and disposal.

We also sell safety insulin syringes, which have a sliding safety shield that can be activated with one-hand after the injection to help prevent needlestick exposure and injury during injection and disposal.

We primarily sell our products to wholesalers and distributors that sell to retail and institutional channels who in turn sell to patients or use the products to deliver insulin injections to patients.

15 unchanged sentences

Pricing Pressures.

The increased scrutiny by regulators on healthcare spending, which has accelerated in light of the COVID-19 pandemic, along with a shift towards volume-based procurement and group purchasing organizations, which generally values lower cost over product features, benefits and quality, have placed significant pressure on Embecta to

The increased scrutiny by regulators on healthcare spending, which accelerated in light of the COVID-19 pandemic, along with a shift towards volume-based procurement and group purchasing organizations, which generally values lower cost over product features, benefits and quality, have placed significant pressure on Embecta to lower price in

Dollar amounts are in millions except per share amounts or as otherwise specified.

lower pricing.

both developed and emerging markets.

These trends may reduce our operating margins, which are only partially offset by our ability to differentiate our products and sell at higher prices.

5 unchanged sentences

Introduction of new drugs and increased penetration of oral anti-diabetic drugs (e.g., SGLT-2s) and GLP-1s and GLP-1 combination products have delayed initiation of insulin therapy and contributed to less demand for our products.

New drug therapies in development are targeted to challenge the current diabetes treatment paradigm, including insulin use.

Insulin therapy in developed markets continues to transition to infusion pumps.

Continuing Impact From COVID-19 on Delivery and Allocation of Healthcare.

The COVID-19 pandemic has accelerated the adoption of, and reimbursement by governments and private payers for, the delivery of healthcare using digital technologies, including telehealth technologies and other at-home self-care solutions and various media for virtual engagement with healthcare providers.

The COVID-19 pandemic accelerated the adoption of, and reimbursement by governments and private payers for, the delivery of healthcare using digital technologies, including telehealth technologies and other at-home self-care solutions and various media for virtual engagement with healthcare providers.

Our ability to adapt the delivery of our products and sales and marketing efforts to these trends, including with the development of our diabetes care app, may materially affect our results of operations.

The pandemic has also caused hospitals and other healthcare providers to reassess their prioritization and allocation of their healthcare resources.

The pandemic also caused hospitals and other healthcare providers to reassess their prioritization and allocation of their healthcare resources.

In many cases, providers were forced to balance between diverting resources toward COVID-19 needs and maintaining routine care, including for people living with long term conditions.

19 unchanged sentences

For all periods presented, our net sales in Russia and Ukraine were not material to our consolidated net revenues.

Although operations in both Russia and Ukraine do not constitute a material portion of our business, there is uncertainty around the military conflict and the impact it will have on the global economy, supply chains and energy prices generally, and therefore our business.

Although operations in both Russia and Ukraine do not constitute a material portion of our business, there is uncertainty around the military conflict, including further sanctions, and the impact it will have on the global economy, supply chains and energy prices generally, and therefore our business.

Refer to the "Risk Factors" set forth in the 2022 Form 10-K for further details.

5 unchanged sentences

Our unaudited Condensed Consolidated Statements of Income are as follows:

Three months ended March 31, Six months ended March 31,

Three months ended June 30, Nine months ended June 30,

Revenues $ 286.1 $ 291.1 (1.7) % $ 838.9 $ 854.9 (1.9) %

16 unchanged sentences

nm = not meaningful

Three Months Ended March 31, 2023 Summary (on a comparative basis)

Key financial results for the three months ended March 31, 2023 were as follows:

• Revenue increased by $2.6 million to $277.1 million from $274.5 million;

Three Months Ended June 30, 2023 Summary (on a comparative basis)

Key financial results for the three months ended June 30, 2023 were as follows:

• Revenue decreased by $5.0 million to $286.1 million from $291.1 million;

• Gross profit decreased by $13.4 million to $189.5 million from $202.9 million.

3 unchanged sentences

Dollar amounts are in millions except per share amounts or as otherwise specified.

Six Months Ended March 31, 2023 Summary (on a comparative basis)

Key financial results for the six months ended March 31, 2023 were as follows:

Nine Months Ended June 30, 2023 Summary (on a comparative basis)

Key financial results for the nine months ended June 30, 2023 were as follows:

• Revenue decreased by $16.0 million to $838.9 million from $854.9 million;

3 unchanged sentences

• Net income decreased by $176.4 million to $64.4 million from $240.8 million.

Our revenues increased by $2.6 million, or 0.9%, to $277.1 million for the three months ended March 31, 2023 as compared to revenues of $274.5 million for the three months ended March 31, 2022.

Our revenues decreased by $5.0 million, or 1.7%, to $286.1 million for the three months ended June 30, 2023 as compared to revenues of $291.1 million for the three months ended June 30, 2022.

Changes in our revenues are driven by the volume of goods that we sell, the prices we negotiate with customers and changes in foreign exchange rates.

The increase in revenues was driven by favorable impacts of $11.0 million related to increase in price and volume period over period in our international regions and the U.S.

Contract manufacturing revenue in the current period also contributed to the increase period over period.

This was partially offset by an unfavorable $8.4 million related to the impact of foreign currency translation primarily due to the strengthening of the U.S.

Our revenues decreased by $11.0 million, or 2.0%, to $552.8 million for the six months ended March 31, 2023 as compared to revenues of $563.8 million for the six months ended March 31, 2022.

The decrease in revenues was primarily driven by an unfavorable $24.0 million related to the impact of foreign currency translation primarily attributed to the strengthening of the US dollar.

This was partially offset by favorable impacts of $13.0 million related to increase in price and volume period over period in our international regions and the U.S.

Contract manufacturing revenue in the current period also contributed to the increase period over period.

The decrease in revenues was driven by $4.1 million associated with the negative impact of foreign currency translation primarily due to the strengthening of the U.S.

dollar, a $2.3 million decrease in contract manufacturing and sales of non-diabetes products within the U.S.

to BD , and $1.8 million of unfavorable changes in price and volume in the U.S.

This was partially offset by increases in revenues driven by $3.2 million of favorable changes in price and volume in our International operations.

Our revenues decreased by $16.0 million, or 1.9%, to $838.9 million for the nine months ended June 30, 2023 as compared to revenues of $854.9 million for the nine months ended June 30, 2022.

The decrease in revenues was primarily driven by $28.1 million associated with the negative impact of foreign currency translation primarily due to the strengthening of the U.S.

dollar and $6.2 million of unfavorable changes in price and volume in the U.S.

This was partially offset by increases in revenues driven by $12.9 million of favorable changes in price and volume in our International operations and a $5.4 million increase in contract manufacturing and sales of non-diabetes products within the U.S.

Revenues by geographic region are as follows:

Three months ended March 31, Six months ended March 31,

Three months ended June 30, Nine months ended June 30,

2023 2022 2023 2022

3 unchanged sentences

Cost of products sold

Cost of products sold increased by $4.0 million, or 4.8%, to $87.3 million for the three months ended March 31, 2023 as compared to $83.3 million for the three months ended March 31, 2022.

Cost of products sold as a percentage of revenues was 31.5% for the three months ended March 31, 2023 as compared to 30.3% for the three months ended March 31, 2022.

Cost of products sold increased by $5.5 million, or 3.3%, to $174.2 million for the six months ended March 31, 2023 as compared to $168.7 million for the six months ended March 31, 2022.

Cost of products sold as a percentage of revenues were 31.5% for the six months ended March 31, 2023 as compared to 29.9% in the six months ended March 31, 2022.

The increases in cost of products sold for the three and six month comparative periods were primarily driven by the impact of inflation on costs of certain raw materials (including freight), direct labor, and overhead.

Cost of products sold increased by $8.4 million, or 9.5%, to $96.6 million for the three months ended June 30, 2023 as compared to $88.2 million for the three months ended June 30, 2022.

Cost of products sold as a percentage of revenues was 33.8% for the three months ended June 30, 2023 as compared to 30.3% for the three months ended June 30, 2022.

Cost of products sold increased by $13.9 million, or 5.4%, to $270.8 million for the nine months ended June 30, 2023 as compared to $256.9 million for the nine months ended June 30, 2022.

Cost of products sold as a percentage of revenues were 32.3% for the nine months ended June 30, 2023 as compared to 30.1% in the nine months ended June 30, 2022.

The increases in cost of products sold for the three and nine month comparative periods were primarily driven by the impact of inflation on the costs of certain raw materials (including freight), direct labor, and overhead.

The increase for the nine month comparative period was also driven by higher costs associated with the Cannula Supply Agreement with BD post Separation.

We intend to continue to work to improve productivity to help partially offset these increased costs.

Selling and administrative expenses

Selling and administrative expenses increased by $18.3 million, or 27.4%, to $85.2 million for the three months ended March 31, 2023 as compared to $66.9 million for the three months ended March 31, 2022.

Selling and administrative expenses increased by $28.9 million, or 22.4%, to $158.0 million for the six months ended March 31, 2023 as compared to $129.1 million for the six months ended March 31, 2022.

The increases for the three and six month comparative periods were primarily driven by an increase in compensation and benefit costs due to increased headcount attributed to the Separation and Embecta becoming a stand-alone publicly-traded company.

Selling and administrative expenses increased by $3.8 million, or 4.5%, to $87.6 million for the three months ended June 30, 2023 as compared to $83.8 million for the three months ended June 30, 2022.

Selling and administrative expenses increased by $32.7 million, or 15.4%, to $245.6 million for the nine months ended June 30, 2023 as compared to $212.9 million for the nine months ended June 30, 2022.

The increases for the three and nine month comparative periods were primarily driven by an increase in compensation and benefit costs due to increased headcount attributed to the Separation and Embecta becoming a stand-alone publicly-traded company.

Dollar amounts are in millions except per share amounts or as otherwise specified.

Research and development expenses

Research and development expenses increased by $4.1 million, or 22.8%, to $22.1 million for the three months ended March 31, 2023 as compared to $18.0 million for the three months ended March 31, 2022.

Research and development expenses increased by $4.3 million, or 12.4%, to $39.0 million for the six months ended March 31, 2023 as compared to $34.7 million for the six months ended March 31, 2022.

The increases for the three and six month comparative periods were primarily driven by amounts paid in connection with a collaboration arrangement and the timing of research and development projects.

Research and development expenses increased by $8.3 million, or 58.0%, to $22.6 million for the three months ended June 30, 2023 as compared to $14.3 million for the three months ended June 30, 2022.

Research and development expenses increased by $12.6 million, or 25.7%, to $61.6 million for the nine months ended June 30, 2023 as compared to $49.0 million for the nine months ended June 30, 2022.

The increases for the three and nine month comparative periods were primarily driven by increased investment in our insulin patch pump program.

The increase for the nine month comparative period was also driven by amounts paid in connection with a collaboration arrangement.

For details on the collaboration arrangement refer to Note 4 within the Notes to Condensed Consolidated Financial Statements within this Form 10-Q.

Other operating expenses

We incurred other operating expenses of $26.9 million and $7.4 million for the three months ended March 31, 2023 and 2022, respectively, and $37.2 million and $15.8 million for the six months ended March 31, 2023 and 2022, respectively, driven by costs related to the Separation.

The costs incurred primarily relate to accounting, auditing, and legal services, including costs to establish certain stand-alone corporate functions and other transaction costs attributed to being a stand-alone publicly traded company.

We incurred other operating expenses of $28.0 million and $7.7 million for the three months ended June 30, 2023 and 2022, respectively, and $65.2 million and $23.5 million for the nine months ended June 30, 2023 and 2022, respectively, driven by costs related to the Separation.

The costs incurred primarily relate to accounting, auditing, legal services, supply chain, employee retention, costs associated with the implementation of the Company's new ERP, and certain other costs to establish certain stand-alone functions to assist with the transition to being a stand-alone entity.

Interest expense, net

Interest expense, net increased to $26.8 million and $52.4 million for the three and six months ended March 31, 2023, primarily as a result of debt outstanding for a longer period of time for fiscal year 2023 as compared to fiscal year 2022 and higher interest rates on our variable rate debt that was issued on March 31, 2022.

Interest expense, net increased by $7.5 million to $27.0 million for the three months ended June 30, 2023 as compared to $19.5 million for the three months ended June 30, 2022.

Interest expense, net increased by $55.0 million to $79.4 million for the nine months ended June 30, 2023 as compared to $24.4 million for the nine months ended June 30, 2022.

The increase for the three month comparative period is primarily a result of higher interest rates on our variable rate debt.

The increase for the nine month comparative period was primarily a result of debt outstanding for a longer period of time for fiscal year 2023 as compared to fiscal year 2022 and higher interest rates on our variable rate debt.

If the United States Federal Reserve continues to raise the benchmark interest rate, then we would expect the interest expense on our variable rate debt to increase during the remainder of fiscal 2023.

See "Liquidity and Capital Resources" below and Note 11 to the Condensed Consolidated Financial Statements included elsewhere in this report for a further description of our long-term debt.

See "Liquidity and Capital Resources" below and Note 11 within the Notes to Condensed Consolidated Financial Statements within this Form 10-Q for a further description of our long-term debt.

Other income (expense), net

Other income (expense), net, was $(4.3) million and $(11.4) million for the three and six months ended March 31, 2023, respectively.

Other income (expense), net, was $(4.2) million and $(4.0) million for the three months ended June 30, 2023 and 2022, respectively and $(15.6) million and $(4.1) million for the nine months ended June 30, 2023 and 2022, respectively.

The costs incurred primarily relate to amounts due to BD for income taxes payable incurred in deferred jurisdictions where BD is considered the primary obligor.

Costs incurred for the three and six months ended March 31, 2022 were not material.

Income tax provision

The effective tax rates were 42.9% and 15.2% for the three months ended March 31, 2023 and 2022, respectively, and 39.0% and 15.2% for the six months ended March 31, 2023 and 2022, respectively.

The increase in the Company’s effective tax rates from both prior comparative periods are primarily due to the establishment of a valuation allowance against the utilization of interest expense carryforwards generated during the current periods resulting from U.S.

interest deduction limitation rules, higher tax expense on undistributed earnings of foreign subsidiaries and higher U.S.

taxes on the earnings of foreign subsidiaries.

This was partially offset by tax benefits from non-taxable permanent differences.

The effective tax rates were 24.4% and 15.2% for the three months ended June 30, 2023 and 2022, respectively, and 36.0% and 15.2% for the nine months ended June 30, 2023 and 2022, respectively.

The increase in the Company’s effective tax rates for both comparative periods are primarily due to an increase in the valuation allowance on the utilization of interest expense carryforwards related to U.S.

interest deduction limitation rules, higher tax expense on undistributed earnings of foreign subsidiaries and an increase in non-deductible expenses;

partially offset by lower U.S.

tax expense on earnings of foreign affiliates.

LIQUIDITY AND CAPITAL RESOURCES

2 unchanged sentences

In February 2022, and in connection with the Separation, Embecta issued $500.0 million aggregate principal amount of 5.00% senior secured notes due February 15, 2030.

Interest payments on the 5.00% Notes are due semi-annually in February and August until maturity, with the first interest payment beginning in August 2022 .

Interest payments on the 5.00% Notes are due semi-annually in February and August until maturity.

Interest payments began in August 2022 .

Dollar amounts are in millions except per share amounts or as otherwise specified.

In March 2022, we entered into a credit agreement, providing for the Term Loan in the amount of $950.0 million, with a seven -year term that matures in March 2029 and a Revolving Credit Facility in an aggregate principal amount of up to $500.0 million, with a five -year term that matures in 2027.

1 unchanged sentence

Principal and interest payments on the Term Loan began on June 30, 2022.

Dollar amounts are in millions except per share amounts or as otherwise specified.

quarterly principal payments are calculated as 0.25% of the initial principal amount, with the remaining balance payable upon maturity.

Such quarterly principal payments are calculated as 0.25% of the initial principal amount, with the remaining balance payable upon maturity.

Principal amounts repaid under the Term Loan may not be reborrowed by us.

1 unchanged sentence

A commitment fee applies to the unused portion of the Revolving Credit Facility, equal to 0.25% per annum .

As of March 31, 2023, no amount has been drawn on the Revolving Credit Facility.

As of June 30, 2023, no amount has been drawn on the Revolving Credit Facility.

Additionally we have outstanding the 6.75% Notes, which carry an interest rate of 6.75% and are due February 2030.

Interest payments on the 6.75% Notes are due semi-annually in February and August until maturity, with the first interest payment beginning in August 2022.

Interest payments on the 6.75% Notes are due semi-annually in February and August until maturity.

Interest payments began in August 2022.

The credit agreement and the indentures for the 5.00% Notes and the 6.75% Notes contain customary financial covenants, including a total net leverage ratio covenant, which measures the ratio of (i) consolidated total net debt to (ii) consolidated earnings before interest, taxes, depreciation and amortization, and subject to other adjustments, must meet certain defined limits which are tested on a quarterly basis in accordance with the terms of the credit agreement and 5.00% Notes and the 6.75% Notes.

In addition, the credit agreement contains covenants that limit, among other things, our ability to prepay, redeem or repurchase our subordinated and junior lien debt, incur additional debt, make acquisitions, merge with other entities, pay dividends or distributions, redeem or repurchase equity interests, and create or become subject to liens.

As of March 31, 2023, we were in compliance with all of such covenants.

The following is a summary of Embecta's total debt outstanding as of March 31, 2023:

As of June 30, 2023, we were in compliance with all of such covenants.

The following is a summary of Embecta's total debt outstanding as of June 30, 2023:

Term Loan $ 938.1

5 unchanged sentences

Thereafter $ 1,597.7

Certain measures relating to our total debt outstanding as of March 31, 2023 were as follows:

Certain measures relating to our total debt outstanding as of June 30, 2023 were as follows:

Total debt $ 1,604.5

9 unchanged sentences

The lease is classified as an operating lease.

The Company has an option to extend the lease for additional periods of six years and four years, respectively.

Maturities of our finance lease and operating lease liabilities as of March 31, 2023 by fiscal year are as follows:

The Company has options to extend the lease for an additional period of six years and to extend for a subsequent additional period of four years after the expiration of the first extension period.

Maturities of our finance lease and operating lease liabilities as of June 30, 2023 by fiscal year are as follows:

Finance Lease Operating Leases Total

14 unchanged sentences

The following table summarizes our Condensed Consolidated Statements of Cash Flows:

Six Months Ended

Nine Months Ended

Net cash provided by (used for)

4 unchanged sentences

Net Cash Flows from Operating Activities

Net cash provided by operating activities during the six months ended March 31, 2023 was attributable to net income of $49.2 million and net adjustments of $1.8 million, which includes $33.5 million of non-cash adjustments that primarily relate to depreciation and amortization, stock-based compensation, deferred income taxes and pension expense, and a use of cash of $35.3 million related to changes in our assets and liabilities.

This was driven by a $30.7 million increase in inventories which is primarily driven by a concerted effort to build inventory to meet expected demand as we execute our separation and stand-up projects;

Net cash provided by operating activities during the nine months ended June 30, 2023 was attributable to net income of $64.4 million and net adjustments of $26.3 million, which includes $50.6 million of non-cash adjustments that primarily relate to depreciation and amortization, stock-based compensation, deferred income taxes and postretirement benefits, and a use of cash of $76.9 million related to changes in our assets and liabilities.

This was driven by an increase in amounts due from BD of $54.8 million, which is primarily related to factored receivables for which payment has not yet been collected from BD as of June 30, 2023;

a $42.5 million increase in inventories which is primarily driven by a concerted effort to build inventory to meet expected demand;

an increase of $29.2 million in prepaid expenses and other as a result of increased subscription contracts and increases in net assets for deferred closing entities;

an increase in amounts due from BD of $14.9 million, which is primarily related to factored receivables for which payment has not yet been collected from BD as of March 31, 2023;

and an $18.1 million increase in other assets and liabilities, net, is primarily due to costs capitalized related to the implementation of the Company's new ERP.

2 unchanged sentences

All other movements related to working capital were due to timing of payments and receipts of cash in the ordinary course of business.

Net cash provided by operating activities during the six months ended March 31, 2022 was attributable to net income of $178.4 million and net adjustments of $143.0 million, which includes $27.3 million of non-cash adjustments related to depreciation and amortization, stock-based compensation, and pension expense, and $115.7 million of cash provided relating to changes our assets and liabilities.

Cash provided relating to changes in our assets and liabilities was driven by a decrease in trade receivables of $133.3 million, an increase of $9.7 million in income and other net taxes payable, and a decrease of $0.4 million in other assets and liabilities, net, partially offset by an increase in inventories of $10.0 million, a decrease of $15.3 million in accounts payable, accrued expenses and other current liabilities, and an increase in prepaid expenses and other of $2.4 million.

The decrease in trade receivables can be attributed to the timing of payments made in the normal course of business and a decrease in certain rebate and cash discount reserves.

The increase in income and other net taxes payable that is primarily due to the timing of required tax payments.

The increase in inventories is primarily driven by a concerted effort in the first six months of fiscal year 2022 to build inventory in preparation for the spin-off.

The decrease in accounts payable, accrued expense and other current liabilities is mainly driven by the timing of payments made in the normal course of business for managed care rebates payments and a decrease in accrued professional services in connection with various market research and consulting projects.

Net cash provided by operating activities during the nine months ended June 30, 2022 was attributable to net income of $240.8 million and net adjustments of $113.4 million, which includes $47.2 million of non-cash adjustments related to depreciation and amortization, stock-based compensation, deferred income taxes and postretirement benefits, and $66.2 million of cash provided relating to changes in our assets and liabilities.

Cash provided relating to changes in our assets and liabilities was driven by a decrease in trade receivables of $123.6 million, an increase of $73.1 million in accounts payable, accrued expenses and other current liabilities, an increase of $10.8 million in income and other net taxes payable, and a decrease of $7.7 million in other assets and liabilities, net, partially offset by an increase in amounts due from BD of $99.6 million, an increase in prepaid expenses and other of $25.8 million, and an increase in inventories of $23.6 million.

The decrease in trade receivables primarily relates to the Factoring Agreements, in which embecta transfers certain trade receivable assets to BD in exchange for cash.

The increase in accounts payable, accrued expense and other current liabilities relates to current liabilities with BD primarily for inventory purchases.

The increase in income and other net taxes payable is primarily due to the timing of required tax payments.

The increase in amounts due from Becton, Dickinson and Company primarily relates to factored receivables and inventory purchases for which payment has not yet been collected from BD as of June 30, 2022.

Increases in prepaid expenses and other are primarily driven by increased prepaid service contracts related to information technology infrastructure as we transition to our own systems.

The increase in inventories is primarily driven by a concerted effort to build inventory to meet expected demand as we execute our separation and stand-up projects.

Net Cash Flows from Investing Activities

Net cash used for investing activities was primarily comprised of capital expenditures of $10.5 million and $9.7 million during the six months ended March 31, 2023 and 2022, respectively, to support further expansion of our business and operations.

Net cash used for investing activities was primarily comprised of capital expenditures of $17.3 million and $15.0 million during the nine months ended June 30, 2023 and 2022, respectively, to support further expansion of our business and operations.

Net Cash Flows from Financing Activities

Net cash used for financing activities for the six months ended March 31, 2023, was attributable to $17.2 million of dividend payments, $4.8 million of required payments on long-term debt, $3.0 million of payments related to tax withholding for stock-based compensation, and $1.8 million in payments on our finance lease.

Net cash used for financing activities for the six months ended March 31, 2022, was attributable to $1,266.0 million of net consideration paid to BD in connection with the Separation, $189.3 million related to net transfers to BD, $33.3 million of payments for long-term debt issuance costs, and $5.6 million of payments for debt fees associated with the Revolving Credit Facility.

Net cash used for financing activities for the nine months ended June 30, 2023, was attributable to $25.8 million of dividend payments, $7.1 million of required payments on long-term debt, $3.4 million of payments related to tax withholding for stock-based compensation, and $2.7 million in payments on our finance lease.

Net cash used for financing activities for the nine months ended June 30, 2022, was attributable to $1,266.0 million of net consideration paid to BD in connection with the Separation, $182.7 million related to net transfers to BD, $33.3 million of payments for long-term debt issuance costs, $5.6 million of payments for debt fees associated with the Revolving Credit Facility, and $2.4 million of required payments on long-term debt.

This was offset by proceeds from the issuance of long-term debt of $1,450.0 million.

On May 12, 2023, the Company’s Board of Directors declared a quarterly dividend of $0.15 for each issued and outstanding share of the Company’s common stock.

The dividend is payable on June 13, 2023 to stockholders of record at the close of business on May 29, 2023.

On August 8, 2023, the Company’s Board of Directors declared a quarterly dividend of $0.15 for each issued and outstanding share of the Company’s common stock.

The dividend is payable on September 13, 2023 to stockholders of record at the close of business on August 25, 2023.

Contractual Obligations

Our contractual obligations as of March 31, 2023, which require material cash requirements in the future, consist of purchase obligations and lease obligations.

Our contractual obligations as of June 30, 2023, which require material cash requirements in the future, consist of purchase obligations and lease obligations.

Purchase obligations are enforceable and legally binding obligations for purchases of goods and services which include inventory purchase commitments.

1 unchanged sentence

Lease obligations include lease agreements for which a contract has been signed even if the lease has not yet commenced.

Refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2022 Form 10-K for further details.

As of March 31, 2023, there have been no material changes to our contractual obligations outside the ordinary course of business.

Dollar amounts are in millions except per share amounts or as otherwise specified.

to "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2022 Form 10-K for further details.

As of June 30, 2023, there have been no material changes to our contractual obligations outside the ordinary course of business.

Critical Accounting Policies

2 unchanged sentences

A discussion of accounting estimates considered critical because of the potential for a significant impact on the financial statements due to the inherent uncertainty in such estimates are disclosed in the Critical Accounting Policies section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Embecta's 2022 Form 10-K.

There have been no changes to our critical accounting policies as of March 31, 2023.

There have been no changes to our critical accounting policies as of June 30, 2023.

Cautionary Statements Regarding Forward-Looking Statements

5 unchanged sentences

Such risks and uncertainties include, but are not limited to:

• Competitive factors that could adversely affect Embecta’s operations, including new product introductions by Embecta’s competitors, the development of new technologies, lower cost producers that create pricing pressure and consolidation resulting in companies with greater scale and market presence than Embecta.

• Competitive factors that could adversely affect Embecta’s operations, including adoption of new drug therapies for treatment of diabetes, new product introductions by Embecta’s competitors, the development of new technologies, lower cost producers that create pricing pressure, and consolidation resulting in companies with greater scale and market presence than Embecta.

• Any events that adversely affect the sale or profitability of one of Embecta’s key products or the revenue delivered from sales to its key customers.

6 unchanged sentences

• Any continuing impact of the COVID-19 pandemic or geopolitical instability on Embecta’s business, including disruptions in its operations and supply chains.

• New or changing laws and regulations affecting Embecta’s domestic and foreign operations, or changes in enforcement practices, including laws relating to healthcare, environmental protection, trade, monetary and fiscal policies, taxation (including tax reforms that could adversely impact multinational corporations) and licensing and regulatory requirements for products.

Dollar amounts are in millions except per share amounts or as otherwise specified.

policies, taxation (including tax reforms that could adversely impact multinational corporations) and licensing and regulatory requirements for products.

• The expected benefits of the Separation from BD.

• Risks associated with indebtedness and our use of indebtedness available to us.

Dollar amounts are in millions except per share amounts or as otherwise specified.

• The risk that dis-synergy costs, costs of restructuring transactions and other costs incurred in connection with the Separation will exceed Embecta's estimates.

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis