What changed in this filing

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Item 1. Financial Statements

2024-08-09 compared with 2024-05-09 · 103 added, 93 removed, 417 unchanged (32% of the section changed)

3 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

22 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

9 unchanged sentences

Embecta Corp.

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Current Assets

2 unchanged sentences

Restricted cash 6.7 0.2

Trade receivables, net (net of allowance for doubtful accounts of $ 1.6 million and $ 1.0 million as of March 31, 2024 and September 30, 2023, respectively)

Trade receivables, net (net of allowance for doubtful accounts of $ 2.4 million and $ 1.0 million as of June 30, 2024 and September 30, 2023, respectively)

Materials 38.2 32.1

26 unchanged sentences

Authorized - 250,000,000

Issued and outstanding - 57,661,433 as of March 31, 2024 and 57,333,353 as of September 30, 2023

Issued and outstanding - 57,676,467 as of June 30, 2024 and 57,333,353 as of September 30, 2023

Additional paid-in capital 46.2 27.9

8 unchanged sentences

Shares Par Value Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive (Loss) Income Total

Balance at January 1, 2023 57,213,757 $ 0.6 $ 12.7 $ ( 550.5 ) $ ( 298.9 ) $ ( 836.1 )

Balance at April 1, 2023 57,287,537 $ 0.6 $ 18.1 $ ( 545.1 ) $ ( 296.2 ) $ ( 822.6 )

Net income — — — 15.2 — 15.2

4 unchanged sentences

Issuance of shares related to stock-based compensation plans 14,519 — ( 0.4 ) — — ( 0.4 )

Balance at March 31, 2023 57,287,537 $ 0.6 $ 18.1 $ ( 545.1 ) $ ( 296.2 ) $ ( 822.6 )

Balance at January 1, 2024 57,573,497 $ 0.6 $ 33.4 $ ( 530.0 ) $ ( 297.5 ) $ ( 793.5 )

Balance at June 30, 2023 57,302,056 $ 0.6 $ 23.2 $ ( 538.5 ) $ ( 294.7 ) $ ( 809.4 )

Balance at April 1, 2024 57,661,433 $ 0.6 $ 39.7 $ ( 510.0 ) $ ( 299.9 ) $ ( 769.6 )

Net income — — — 14.7 — 14.7

4 unchanged sentences

Issuance of shares related to stock-based compensation plans 15,034 — ( 0.1 ) — — ( 0.1 )

Balance at March 31, 2024 57,661,433 $ 0.6 $ 39.7 $ ( 510.0 ) $ ( 299.9 ) $ ( 769.6 )

Balance at June 30, 2024 57,676,467 $ 0.6 $ 46.2 $ ( 504.2 ) $ ( 306.3 ) $ ( 763.7 )

See notes to the Unaudited Condensed Consolidated Financial Statements.

8 unchanged sentences

Issuance of shares related to stock-based compensation plans 246,729 — ( 3.4 ) — — ( 3.4 )

Balance at March 31, 2023 57,287,537 $ 0.6 $ 18.1 $ ( 545.1 ) $ ( 296.2 ) $ ( 822.6 )

Balance at June 30, 2023 57,302,056 $ 0.6 $ 23.2 $ ( 538.5 ) $ ( 294.7 ) $ ( 809.4 )

Balance at October 1, 2023 57,333,353 $ 0.6 $ 27.9 $ ( 541.1 ) $ ( 309.1 ) $ ( 821.7 )

5 unchanged sentences

Issuance of shares related to stock-based compensation plans 343,114 — ( 2.8 ) — — ( 2.8 )

Balance at March 31, 2024 57,661,433 $ 0.6 $ 39.7 $ ( 510.0 ) $ ( 299.9 ) $ ( 769.6 )

Balance at June 30, 2024 57,676,467 $ 0.6 $ 46.2 $ ( 504.2 ) $ ( 306.3 ) $ ( 763.7 )

See notes to the Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

Embecta Corp.

Six Months Ended

Nine Months Ended

Operating Activities

15 unchanged sentences

Net cash provided by operating activities $ 9.1 $ 38.1

$ 11.2 $ 47.4

Investing Activities

35 unchanged sentences

Recently Adopted Accounting Standards

There were no new material accounting standards adopted in the second first quarter of 2024.

There were no new material accounting standards adopted in the third quarter of 2024.

Recently Issued Accounting Standards Not Yet Adopted

2 unchanged sentences

This update is effective for the Company beginning with its fiscal year 2025 reporting and for interim reporting beginning with its fiscal year 2026.

As this accounting standard only impacts disclosures, it will not have a material impact on the Company’s Consolidated Financial Statements.

While this accounting standard will increase disclosures, it will not have a material impact on the Company’s Consolidated Financial Statement results.

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-09, Income Taxes (Topic 740):

1 unchanged sentence

This update is effective for the Company beginning with its fiscal year 2026 reporting.

As this accounting standard only impacts disclosures, it will not have a material impact on the Company’s Consolidated Financial Statements.

While this accounting standard will increase disclosures, it will not have a material impact on the Company’s Consolidated Financial Statement results.

Reclassification

8 unchanged sentences

For details on the rights and responsibilities of the parties under these agreements refer to Note 4 to the audited Consolidated Financial Statements in Embecta’s Annual Report on Form 10-K for the year ended September 30, 2023 filed with the Securities and Exchange Commission on November 29, 2023 (the “2023 Form 10-K”).

On March 28, 2024, we entered into (i) a second amendment (the “TSA Amendment”) to the TSA, dated as of March 31, 2022 and previously amended as of July 1, 2022 by and between Embecta and BD, and (ii) a second amendment (the “LSA Amendment”) to the LSA, dated January 1, 2022 and previously amended as of November 20, 2023, by and between Embecta and BD.

On March 28, 2024, the Company entered into (i) a second amendment (the “TSA Amendment”) to the TSA, dated as of March 31, 2022 and previously amended as of July 1, 2022 by and between Embecta and BD, and (ii) a second amendment (the “LSA Amendment”) to the LSA, dated January 1, 2022 and previously amended as of November 20, 2023, by and between Embecta and BD.

Pursuant to the TSA and the LSA, originally entered into in connection with the Separation, Embecta and BD and their respective affiliates provide each other, on an interim, transitional basis, the Business Continuity Processes.

Under the TSA Amendment and the LSA Amendment, BD granted Embecta, among other things, a limited extension until November 1, 2024 of certain services in a limited set of markets to support the Business Continuity Processes.

As of March 31, 2024, all factoring agreements between Embecta and BD have expired and terminated as a result of the Company's implementation and onboarding of certain systems and services, including, but not limited to, information technology, procurement, quality and regulatory affairs, medical affairs, tax and treasury services, distribution logistics, and shared services infrastructure support for order-to-cash, source-to-pay, and record-to-report, which, for clarity, includes enterprise resource planning (“ERP”) systems (“Business Continuity Processes”) in North America, and certain jurisdictions in Europe and Asia.

The amount due from BD under the above agreements was $ 43.3 million at March 31, 2024 and is included in Amounts due from Becton, Dickinson and Company .

The amount due to BD under these agreements was $ 38.5 million at March 31, 2024 and is included in Amounts due to Becton, Dickinson and Company .

The closing of the transfers of certain assets and liabilities related to the Diabetes Care Business in certain jurisdictions, including China, Mexico, Taiwan, India, Brazil, and Colombia as contemplated by the Separation and Distribution Agreement did not occur at Separation.

As of March 31, 2024, all Factoring Agreements between Embecta and BD had expired and terminated as a result of the Company's implementation and onboarding of certain systems and services, including, but not limited to, information technology, procurement, quality and regulatory affairs, medical affairs, tax and treasury services, distribution logistics, and shared services infrastructure support for order-to-cash, source-to-pay, and record-to-report, which, for clarity, includes enterprise resource planning (“ERP”) systems (“Business Continuity Processes”) in North America, and certain jurisdictions in Europe and Asia.

The amount due from BD under the above agreements was $ 71.6 million at June 30, 2024 and is included in Amounts due from Becton, Dickinson and Company .

The amount due to BD under these agreements was $ 51.7 million at June 30, 2024 and is included in Amounts due to Becton, Dickinson and Company .

The closing of the transfers of certain assets and liabilities related to the Diabetes Care Business in certain jurisdictions, including Mexico, India, Brazil, and Colombia as contemplated by the Separation and Distribution Agreement did not occur at Separation.

The transfers of the relevant local assets and liabilities in these certain jurisdictions are expected to close at a future date.

As of March 31, 2024, the Company estimates that amounts due from BD related to certain assets and liabilities in these certain jurisdictions are $ 18.9 million and are reflected in Prepaid expenses and other .

As of March 31, 2024, the Company estimates that amounts due to BD related to certain assets and liabilities in these certain jurisdictions is $ 7.0 million and are reflected in Accrued expenses .

As of June 30, 2024, the Company estimates that amounts due from BD related to certain assets and liabilities in these certain jurisdictions are $ 4.5 million and are reflected in Prepaid expenses and other .

As of June 30, 2024, the Company estimates that amounts due to BD related to certain assets and liabilities in these certain jurisdictions is $ 3.5 million and are reflected in Accrued expenses .

Note 4 — Collaboration Agreement

1 unchanged sentence

The Company believes that both parties are active participants in the operating activities of the collaboration and exposed to certain risks and rewards depending on commercial success.

The transaction included an upfront payment of $ 2.5 million for project costs, which was expensed to Research and development expense during the six month period ended March 31, 2023.

The transaction included an upfront payment of $ 2.5 million for project costs, which was expensed to Research and development expense during the nine month period ended June 30, 2023.

Upon successful commercialization of the iAGC, the Company will be responsible for the sales and marketing effort and would pay a royalty to the third-party based on future product sales to customers.

1 unchanged sentence

Note 5 — Other Operating Expenses

In connection with the Separation, the Company incurred separation and stand-up costs of approximately $ 32.6 million and $ 59.0 million during the three and six months ended March 31, 2024, respectively, and incurred separation and stand-up costs of approximately $ 25.6 million and $ 35.5 million during the three and six months ended March 31, 2023, respectively.

In connection with the Separation, the Company incurred separation and stand-up costs of approximately $ 25.8 million and $ 89.6 million during the three and nine months ended June 30, 2024, respectively, and incurred separation and stand-up costs of approximately $ 27.0 million and $ 64.1 million during the three and nine months ended June 30, 2023, respectively.

The costs incurred primarily consist of costs associated with accounting, auditing, legal services, marketing, supply chain, employee retention, the implementation of the Company's new ERP system, and certain other costs to

1 unchanged sentence

establish certain Business Continuity Processes and stand-alone functions to assist with the transition to being a stand-alone entity.

For the three and nine months ended June 30, 2024, the Company recognized $ 2.2 million and $ 3.8 million of costs associated with the amortization of cloud computing arrangements.

For the three and nine months ended June 30, 2023 there were no amortization of implementation costs associated with cloud computing arrangements due to the timing of when these projects were placed into service.

Note 6 — Contingencies

The Company was not a party to any material legal proceedings at March 31, 2024 or September 30, 2023, nor is it a party to any material legal proceedings as of the date of issuance of these Condensed Consolidated Financial Statements.

The Company was not a party to any material legal proceedings at June 30, 2024 or September 30, 2023, nor is it a party to any material legal proceedings as of the date of issuance of these Condensed Consolidated Financial Statements.

Note 7 — Revenues

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The allowance for doubtful accounts for trade receivables is not material to the Company’s Condensed Consolidated Financial Statements.

The Company’s gross revenues are subject to a variety of deductions which are recorded in the same period that the underlying revenues are recognized.

The Company’s gross revenues are subject to a variety of gross-to-net deductions which are recorded in the same period that the underlying revenues are recognized.

Such variable consideration includes rebates, sales discounts, and sales returns.

2 unchanged sentences

Additional factors considered in the estimate of the Company’s rebate liability include the quantification of inventory that is either in stock at or in transit to the Company’s distributors, as well as the estimated lag time between the sale of product and the payment of corresponding rebates.

The Company’s liability attributed to variable consideration at March 31, 2024 and September 30, 2023 was $ 177.2 million and $ 36.4 million, respectively.

Sales deductions recorded as a reduction of gross revenues for the three months ended March 31, 2024 and 2023 were $ 138.5 million and $ 95.2 million, respectively.

Sales deductions recorded as a reduction of gross revenues for the six months ended March 31, 2024 and 2023 were $ 265.2 million and $ 187.8 million, respectively.

The Company’s liability attributed to variable consideration at June 30, 2024 and September 30, 2023 was $ 190.4 million and $ 36.4 million, respectively.

Sales deductions recorded as a reduction of gross revenues for the three months ended June 30, 2024 and 2023 were $ 124.5 million and $ 106.2 million, respectively.

Sales deductions recorded as a reduction of gross revenues for the nine months ended June 30, 2024 and 2023 were $ 389.7 million and $ 294.0 million, respectively.

Disaggregation of Revenues

3 unchanged sentences

Contract assets consist of the Company’s right to consideration that is conditional upon its future performance pursuant to private label agreements and are presented within Prepaid expenses and other in the Condensed Consolidated Balance Sheets.

The Company’s contract asset balance was $ 1.2 million as of both March 31, 2024 and September 30, 2023.

The Company’s contract asset balance was $ 1.2 million as of both June 30, 2024 and September 30, 2023.

Note 8 — Segment and Geographical Data

Operating segments are identified as components of an enterprise in which discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in making decisions regarding assessing business performance and allocating resources and capital.

Management has concluded that the Company operates in one segment based upon the information used by the CODM in evaluating the performance of the Company’s business and allocating resources and capital.

Disaggregation of Revenues

The Company has distribution agreements with regional or national distributors (including wholesalers and medical suppliers) to ensure broad availability of its products as well as a direct sales force in certain countries and regions around

Management has concluded that the Company operates in one segment

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

based upon the information used by the CODM in evaluating the performance of the Company’s business and allocating resources and capital.

Disaggregation of Revenues

In the United States and Canada, the Company utilizes its large and small key account managers that call on payers, retailers, wholesalers and institutional customers, and field-based territory managers that call on health care providers and pharmacies.

4 unchanged sentences

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,

2024 2023 2024 2023

3 unchanged sentences

Total $ 272.5 $ 286.1 $ 837.0 $ 838.9

(1) For the three and six months ended March 31, 2024 and 2023, no individual country outside of the United States generated net revenues that represented more than 10.0% of total revenues.

(1) For the three and nine months ended June 30, 2024 and 2023, no individual country outside of the United States generated net revenues that represented more than 10.0% of total revenues.

Note 9 — Stock-Based Compensation

Stock-Based Compensation Expense

Total stock-based compensation expense for the three and six months ended March 31, 2024 and 2023 and the respective income tax benefits recognized by the Company in the Condensed Consolidated Statements of Income are as follows:

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

Total stock-based compensation expense for the three and nine months ended June 30, 2024 and 2023 and the respective income tax benefits recognized by the Company in the Condensed Consolidated Statements of Income are as follows:

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

2024 2023 2024 2023

4 unchanged sentences

Tax benefit associated with stock-based compensation costs recognized $ 0.6 $ 0.7 $ 1.8 $ 2.2

The following table summarizes the Company's total stock-based compensation expense by classification of award for the three and six months ended March 31, 2024 and 2023:

Three months ended March 31, Six Months Ended March 31,

The following table summarizes the Company's total stock-based compensation expense by classification of award for the three and nine months ended June 30, 2024 and 2023:

Three months ended June 30, Nine Months Ended June 30,

2024 2023 2024 2023

3 unchanged sentences

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

The following table summarizes the Company's total stock-based compensation expense by award type for the three and six months ended March 31, 2024 and 2023:

Three months ended March 31, Six Months Ended March 31,

The following table summarizes the Company's total stock-based compensation expense by award type for the three and nine months ended June 30, 2024 and 2023:

Three months ended June 30, Nine Months Ended June 30,

2024 2023 2024 2023

7 unchanged sentences

Time Vested Restricted Stock Units ("TVUs")

During the six months ended March 31, 2024 , Embecta granted 1,393,808 restricted stock units ("RSUs") in the form of TVUs to employees.

During the nine months ended June 30, 2024 , Embecta granted 1,420,364 restricted stock units ("RSUs") in the form of TVUs to employees.

TVUs vest on a graded basis over a period of three years .

1 unchanged sentence

These awards accumulate dividend equivalents, which are provided as additional units and are subject to the same vesting requirements as the underlying grant.

A summary of TVUs outstanding as of March 31, 2024 and changes during the six months ended March 31, 2024 are as follows:

RSUs (in thousands) Weighted Average Grant Date Fair Value

A summary of TVUs outstanding as of June 30, 2024 and changes during the nine months ended June 30, 2024 are as follows:

TVUs (in thousands) Weighted Average Grant Date Fair Value

Nonvested at October 1 1,188.8 $ 29.42

2 unchanged sentences

Forfeited, canceled or expired ( 97.9 ) 21.63

Nonvested at March 31 2,064.7 $ 21.59

Expected to vest at March 31 1,954.6 $ 21.64

Nonvested at June 30 2,004.0 $ 21.46

Expected to vest at June 30 1,900.9 $ 21.56

*Includes accumulated nonvested dividend equivalents

**The RSUs distributed include shares withheld for taxes that are not formally issued to the market.

The weighted average grant date fair value of TVUs granted during the six months ended March 31, 2024 is $ 17.42 and the total fair value of TVUs vested during the six months ended March 31, 2024 is $ 13.8 million.

At March 31, 2024, the weighted average remaining vesting term of TVUs is 2.1 years.

**The TVUs distributed include shares withheld for taxes that are not formally issued to the market.

The weighted average grant date fair value of TVUs granted during the nine months ended June 30, 2024 is $ 17.36 and the total fair value of TVUs vested during the nine months ended June 30, 2024 is $ 14.6 million.

At June 30, 2024, the weighted average remaining vesting term of TVUs is 1.9 years.

Performance Based Restricted Stock Units ("PSUs")

During the six months ended March 31, 2024 , Embecta awarded 541,958 RSUs in the form of PSUs to certain executive officers and employees which cliff vest after three years , subject to continued employment of the recipients and the achievement of certain performance metric targets.

During the nine months ended June 30, 2024 , Embecta awarded 548,252 RSUs in the form of PSUs to certain executive officers and employees which cliff vest after three years , subject to continued employment of the recipients and the achievement of certain performance metric targets.

The Company has identified certain performance metrics associated with these awards and certain targets will be fully established at a future date.

3 unchanged sentences

These awards accumulate dividend equivalents, which are provided as additional units and are subject to the same vesting requirements as the underlying grant.

As of March 31, 2024 , there were 725,912 RSUs in the form of PSUs that have been awarded, inclusive of accumulated dividend equivalents, for which a grant date has not yet been established.

As of June 30, 2024 , there were 728,811 RSUs in the form of PSUs that have been awarded, inclusive of accumulated dividend equivalents, for which a grant date has not yet been established.

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

As of both March 31, 2024 and September 30, 2023, there were approximately 57.8 thousand nonvested PSUs for which a grant date has been established with a weighted average grant date fair value of $ 30.24 .

As of March 31, 2024, there were approximately 54.6 thousand nonvested PSUs for which a grant date has been established that are expected to vest with a weighted average grant date fair value of $ 30.24 .

At March 31, 2024, the weighted average remaining vesting term of PSUs is 1.7 years.

A summary of PSUs outstanding as of June 30, 2024 and changes during the nine months ended June 30, 2024 are as follows:

Stock Units (in thousands) Weighted Average Grant Date Fair Value

Nonvested at October 1 57.8 $ 30.24

Forfeited, canceled or expired ( 0.3 ) 30.24

Nonvested at June 30 57.5 $ 30.24

Expected to vest at June 30 54.3 $ 30.24

At June 30, 2024, the weighted average remaining vesting term of PSUs is 1.9 years.

Stock Appreciation Rights

A summary of stock appreciation rights ("SARs") outstanding as of March 31, 2024 and changes during the six months ended March 31, 2024 are as follows:

A summary of stock appreciation rights ("SARs") outstanding as of June 30, 2024 and changes during the nine months ended June 30, 2024 are as follows:

SARs (in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value

1 unchanged sentence

Forfeited, canceled or expired ( 45.3 ) 27.36

Balance at March 31 1,786.4 $ 29.10 7.2 $ —

Vested and expected to vest at March 31 1,733.8 29.07 7.2 $ —

Exercisable at March 31 829.6 $ 27.84 6.5 $ —

No SARs w ere exercised during the six months ended March 31, 2024.

Balance at June 30 1,786.4 $ 29.10 7.0 $ —

Vested and expected to vest at June 30 1,735.0 29.07 7.0 $ —

Exercisable at June 30 851.8 $ 28.04 6.3 $ —

No SARs w ere exercised during the nine months ended June 30, 2024.

Unrecognized Stock-Based Compensation Expense and Other Stock Plans

The amount of unrecognized compensation expense for all non-vested stock-based awards granted as of March 31, 2024, is approximately $ 42.0 million which is expected to be recognized over a weighted-average remaining life of approximately 2.1 years.

At March 31, 2024, 2.6 million shares were authorized for future grants under the Company's 2022 Employee and Director Equity Based Compensation Plan.

The amount of unrecognized compensation expense for all non-vested stock-based awards granted as of June 30, 2024, is approximately $ 34.9 million which is expected to be recognized over a weighted-average remaining life of approximately 1.9 years.

At June 30, 2024, 2.6 million shares were authorized for future grants under the Company's 2022 Employee and Director Equity Based Compensation Plan.

Note 10 — Goodwill, Intangible Assets, and Cloud Computing Arrangements

1 unchanged sentence

Goodwill and Other Intangible Assets consisted of:

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Amortized intangible assets

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Capitalized costs to implement cloud computing arrangements at cost and accumulated amortization were as follows:

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Short-term portion

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$ 62.5 $ 38.0

Costs amortized during the three and six months ended March 31, 2024 were $ 1.2 million and $ 1.6 million, respectively, and are included in Other operating expenses .

For the three and six months ended March 31, 2023 there were no costs recognized related to the implementation of these cloud computing arrangements due to the timing of when these projects were placed into service.

As of March 31, 2024, cloud computing arrangement assets in-service have useful lives which range from approximately three to nine years .

Costs amortized during the three and nine months ended June 30, 2024 were $ 2.2 million and $ 3.8 million, respectively, and are included in Other operating expenses .

For the three and nine months ended June 30, 2023 there were no costs recognized related to the implementation of these cloud computing arrangements due to the timing of when these projects were placed into service.

As of June 30, 2024, cloud computing arrangement assets in-service have useful lives which range from approximately three to nine years .

Note 11 — Long-Term Debt

9 unchanged sentences

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

As of March 31, 2024, no amount has been drawn on the Revolving Credit Facility.

As of June 30, 2024, no amount has been drawn on the Revolving Credit Facility.

The Credit Agreement and the indentures for Embecta's outstanding 5.00 % senior secured notes due February 2030 (the " 5.00 % Notes") and 6.75 % senior secured notes due February 2030 (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 the 5.00 % Notes and 6.75 % Notes.

In addition, the Credit Agreement contains covenants that will limit, among other things, Embecta’s ability to prepay, redeem or repurchase its 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.

The following is a summary of Embecta's total debt outstanding as of March 31, 2024:

The following is a summary of Embecta's total debt outstanding as of June 30, 2024:

Term Loan due March 2029 $ 928.6

10 unchanged sentences

Thereafter 1,588.2

The estimated fair value of long-term debt (including current portion) at March 31, 2024 was $ 1,441.8 million compared with a carrying value (which includes a reduction for unamortized debt issuance costs and discounts) of $ 1,601.3 million.

The estimated fair value of long-term debt (including current portion) at June 30, 2024 was $ 1,454.6 million compared with a carrying value (which includes a reduction for unamortized debt issuance costs and discounts) of $ 1,600.3 million.

Fair value was estimated using inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability and would be considered Level 2 in the fair value hierarchy.

Note 12 — Earnings per Share

The calculation of earnings per basic and diluted common share for the three and six months ended March 31, 2024 and 2023 was as follows:

The calculation of earnings per basic and diluted common share for the three and nine months ended June 30, 2024 and 2023 was as follows:

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

($ in millions and shares in thousands, except per share amounts) 2024 2023 2024 2023

7 unchanged sentences

The computation of earnings per diluted share excludes the effect of the potential exercise of stock-based awards, when the effect of the potential exercise would be anti-dilutive.

For the three months ended March 31, 2024 and 2023, 4.2 million and 2.2 million, respectively, and for the six months ended March 31, 2024 and 2023, 2.8 million and 1.8 million, respectively, of dilutive share equivalents issuable under stock-based compensation plans were excluded from the diluted shares outstanding calculation because the result would have been antidilutive.

For the three months ended June 30, 2024 and 2023, 4.3 million and 2.1 million, respectively, and for the nine months ended June 30, 2024 and 2023, 2.8 million and 1.9 million, respectively, of dilutive share equivalents issuable under stock-based compensation plans were excluded from the diluted shares outstanding calculation because the result would have been antidilutive.

Note 13 — Income Taxes

2 unchanged sentences

The effective tax rate can change from quarter to quarter because of variability in global pretax income or geographical mix of the Company's earnings, changes in tax laws and matters related to tax audits.

The effective tax rates were ( 191.9 )% and 42.9 % for the three months ended March 31, 2024 and 2023, respectively.

The decrease in the Company’s effective tax rate from the prior comparative period is primarily due to lower withholding taxes on undistributed foreign earnings which includes a discrete tax benefit of approximately $ 18.8 million related to Swiss withholding taxes from prior years, reduced unrecognized tax benefits, and lower income in the current period which increases the variability of the effective tax rate.

The effective tax rates were ( 102.5 )% and 39.0 % for the six months ended March 31, 2024 and 2023, respectively.

The decrease in the Company’s effective tax rate from the prior comparative period is primarily due to lower withholding taxes on undistributed foreign earnings which includes a discrete tax benefit of approximately $ 18.8 million related to Swiss withholding taxes from prior years, a tax benefit of approximately $ 17.1 million for the establishment of a deferred tax asset attributed to a higher Swiss cantonal tax rate and additional tax basis that is amortizable for income tax purposes over

The effective tax rates were 45.6 % and 24.4 % for the three months ended June 30, 2024 and 2023, respectively.

The increase in the Company’s effective tax rate from the prior comparative period is primarily due to an increase in non-deductible interest expense in the United States and higher U.S.

tax on foreign earnings.

This was partially offset by lower tax expense due to a change in the mix of earnings among tax jurisdictions.

The effective tax rates were ( 24.4 )% and 36.0 % for the nine months ended June 30, 2024 and 2023, respectively.

The decrease in the Company’s effective tax rate from the prior comparative period is attributable to lower withholding taxes on undistributed foreign earnings which reflects a tax benefit of approximately $ 18.8 million related to Swiss withholding taxes from prior years.

Also contributing to the decrease was the recognition of a tax benefit of approximately $ 17.1 million for the establishment of a deferred tax asset as a result of a higher Swiss cantonal tax rate that contributed to an increased tax basis that is amortizable for income tax purposes over a period of seven years.

The decrease in the

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

a period of seven years, reduced unrecognized tax benefits, and lower income in the current period which increases the variability of the effective tax rate.

effective tax rate was also impacted by lower tax expense due to a change in the mix of earnings among tax jurisdictions.

This was partially offset by an increase in non-deductible interest expense in the U.S.

Note 14 — Financial Instruments and Fair Value Measurements

The following reconciles Cash and equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets as of March 31, 2024 and September 30, 2023, to the total amounts shown in the Condensed Consolidated Statements of Cash Flows:

March 31, 2024 September 30, 2023

The following reconciles Cash and equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets as of June 30, 2024 and September 30, 2023, to the total amounts shown in the Condensed Consolidated Statements of Cash Flows:

June 30, 2024 September 30, 2023

Cash and equivalents

3 unchanged sentences

$ 281.8 $ 326.5

Cash and equivalents as of March 31, 2024 includes cash held in money market funds and other cash equivalents.

Cash and equivalents as of June 30, 2024 includes cash held in money market funds and other cash equivalents.

All cash and equivalents are Level 1 in the fair value hierarchy.

Interest income on Cash and equivalents was $ 2.9 million and $ 2.7 million for the three months ended March 31, 2024 and 2023, respectively, and $ 6.3 million and $ 3.8 million for the six months ended March 31, 2024 and 2023, respectively, and is included as a component of Interest expense, net .

Interest income on Cash and equivalents was $ 3.1 million and $ 2.9 million for the three months ended June 30, 2024 and 2023, respectively, and $ 9.4 million and $ 6.7 million for the nine months ended June 30, 2024 and 2023, respectively, and is included as a component of Interest expense, net .

Restricted cash consists of cash not readily available for use in the Company's operating activities.

3 unchanged sentences

Transactional currency exposures that arise from entering into transactions, generally on an intercompany basis, in non-hyperinflationary countries that are denominated in currencies other than the functional currency are mitigated primarily through the use of forward contracts.

The notional amounts of the Company’s foreign currency-related derivative instruments were as follows as of March 31, 2024 and September 30, 2023, respectively:

Hedge Designation March 31, 2024 September 30, 2023

The notional amounts of the Company’s foreign currency-related derivative instruments were as follows as of June 30, 2024 and September 30, 2023, respectively:

Hedge Designation June 30, 2024 September 30, 2023

Foreign exchange contracts (a) Undesignated $ 5.1 $ 6.7

7 unchanged sentences

Concentration of Credit Risk

Three of the Company’s customers represented at least 10.0% of total gross revenues individually and, in the aggregate, represented approximately 42.0 % for the three months ended March 31, 2024, and three of the Company's customers represented at least 10.0% of total gross revenues individually and, in the aggregate, represented approximately 42.0 % of total revenues for the six months ended March 31, 2024.

Four of the Company's customers represented at least 10.0% of total gross trade receivables individually and, in the aggregate, represented approximately 63.6 % as of March 31, 2024.

Three of the Company’s customers represented at least 10.0% of total gross revenues individually and, in the aggregate, represented approximately 39.2 % for the three months ended June 30, 2024, and three of the Company's customers represented at least 10.0% of total gross revenues individually and, in the aggregate, represented approximately 41.1 % of total revenues for the nine months ended June 30, 2024.

Two of the Company's customers represented at least 10.0% of total gross trade receivables individually and, in the aggregate, represented approximately 38.0 % as of June 30, 2024.

Substantially all of the Company’s trade receivables are due from public and private entities involved in the healthcare industry.

3 unchanged sentences

Property, Plant and Equipment, Net consisted of:

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Land $ 3.0 $ 2.3

14 unchanged sentences

The Company's leases are included in its Condensed Consolidated Balance Sheets as follows:

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Finance Leases

15 unchanged sentences

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

Supplemental cash flow information related to leases for the six months ended March 31, 2024 and 2023 were as follows:

March 31, 2024 March 31, 2023

Supplemental cash flow information related to leases for the nine months ended June 30, 2024 and 2023 were as follows:

June 30, 2024 June 30, 2023

Right of use assets obtained in exchange for lease liabilities

Financing Leases $ — $ —

Operating Leases $ 1.5 $ 17.4

March 31, 2024 March 31, 2023

June 30, 2024 June 30, 2023

Cash used for amounts included in the measurement of lease liabilities

2 unchanged sentences

Operating cash flows from Finance Lease

Maturities of the Company's finance and operating lease liabilities as of March 31, 2024 by fiscal year are as follows:

Maturities of the Company's finance and operating lease liabilities as of June 30, 2024 by fiscal year are as follows:

Finance Leases Operating Leases Total

10 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 1. Financial Statements