What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-12-11 compared with 2023-11-29 · 292 added, 231 removed, 842 unchanged (38% of the section changed)

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Embecta Corp (the Company) as of September 30, 2023 and 2022, the related consolidated statements of income, comprehensive income , equity, and cash flows for each of the three years in the period ended September 30, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Embecta Corp.

(the Company) as of September 30, 2024 and 2023, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the three years in the period ended September 30, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2024, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated November 29, 2023 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated December 11, 2024 expressed an adverse opinion thereon.

Basis for Opinion

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The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Description of the Matter As described in Notes 3 and 14 to the consolidated financial statements, the Company’s provision for income taxes post-Separation contemplates its stand-alone legal entity structure.

The Company’s income tax provision for 2023 was $35.3 million.

In addition, as of September 30, 2023, the Company recorded a liability for unrecognized tax benefits of $7.2 million, and total deferred tax assets and liabilities of $78.1 million and $33.3 million, respectively.

Given the multi-jurisdictional nature of the business, the complexity of the tax rules across the various countries the Company operates in, and the stand-alone legal entity structure, auditing management’s accounting for uncertain tax positions required a high degree of auditor judgment and increased extent of effort, including the need to involve our tax subject matter professionals.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s evaluation of uncertain tax positions, including assessment of technical merits of positions.

With the support of our tax subject matter professionals, our audit procedures included evaluating the appropriateness of transfer pricing assumptions underlying the income tax provision.

For example, we developed an expectation of the foreign income tax expense by jurisdiction and compared it to the recorded balances.

We involved our tax subject matter professionals to evaluate the technical merits of the Company’s accounting for its tax positions, including assessing correspondence with the relevant tax authorities and evaluating third-party advice obtained.

Measurement of uncertain tax positions

Description of the Matter As described in Notes 3 and 15 to the consolidated financial statements, the Company recorded a consolidated income tax benefit totaling $34.1 million for the year ended September 30, 2024, and a liability for unrecognized tax benefits totaling $13.6 million at September 30, 2024.

In addition, as of September 30, 2024, the Company recorded total of deferred tax assets and liabilities of $140.9 million and $24.7 million, respectively.

The Company conducts business and files tax returns in numerous jurisdictions based on its interpretation of tax laws and regulations and engages in transactions for which the tax consequences may be subject to uncertainty.

The Company uses significant judgment to (1) determine whether, based on the technical merits, its tax position is more likely than not to be sustained upon examination and (2) measure the amount of the tax benefit that qualifies for recognition.

Given the multi-jurisdictional nature of the business, the complexity of the tax laws and legal rulings across the various countries the Company operates in, auditing management’s accounting for uncertain tax positions required a high degree of auditor judgment and increased extent of effort, including the need to involve our tax subject matter professionals.

How We Addressed the Matter in Our Audit With the support of our tax subject matter professionals, our audit procedures included assessing the technical merits of the Company’s tax positions, including assessing correspondence with relevant tax authorities and evaluating third-party advice obtained.

We evaluated changes in tax law that occurred during the year and assessed the Company’s interpretation of those changes under the relevant jurisdictional tax law.

We also evaluated the Company’s significant assumptions, and the completeness and accuracy of the data, used to determine the amount of tax benefits recognized and tested the accuracy of such calculations.

Further, we evaluated the Company’s income tax disclosures included in Note 15 in relation to these matters.

/s/ ERNST & YOUNG LLP

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New York, New York

November 29, 2023

December 11, 2024

Report of Independent Registered Public Accounting Firm

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We have audited Embecta Corp’s internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria).

In our opinion, Embecta Corp.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of September 30, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements of the Company as of September 30, 2023 and 2022, the related consolidated statements of income, comprehensive income and cash flows for each of the three years in the period ended September 30, 2023, and the related notes and our report dated November 29, 2023 expressed an unqualified opinion thereon.

In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Embecta Corp.

(the Company) has not maintained effective internal control over financial reporting as of September 30, 2024, based on the COSO criteria.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

Management has identified a material weakness in certain of the Company’s financial reporting processes.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2024 and 2023, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the three years in the period ended September 30, 2024, and the related notes.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and this report does not affect our report dated December 11, 2024, which expressed an unqualified opinion thereon.

Basis for Opinion

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New York, New York

November 29, 2023

December 11, 2024

Consolidated Statements of Income

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Income Before Income Taxes $ 44.2 $ 105.7 $ 256.6

Income tax provision 35.3 33.0 80.1

Income tax provision (benefit) ( 34.1 ) 35.3 33.0

Net Income $ 78.3 $ 70.4 $ 223.6

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Diluted $ 1.34 $ 1.22 $ 3.89

(1) For periods prior to the Separation, this income statement line includes cost of products sold from related party inventory purchases.

(1) For the period prior to the Separation, this income statement line includes cost of products sold from related party inventory purchases.

Refer to Note 4 for further detail.

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Foreign currency translation adjustments 18.0 17.4 ( 64.2 )

$ 15.8 $ ( 64.2 ) $ ( 8.9 )

Total Other Comprehensive Income (Loss), net of tax $ 16.3 $ 15.8 $ ( 64.2 )

Comprehensive Income $ 94.6 $ 86.2 $ 159.4

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Current Assets

Cash and cash equivalents $ 326.5 $ 330.9

Cash and equivalents $ 267.5 $ 326.3

Restricted cash 6.7 0.2

Trade receivables, net (net of allowance for doubtful accounts of $ 2.8 million and $ 1.0 million as of September 30, 2024 and September 30, 2023, respectively)

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Property, Plant and Equipment, Net 290.4 300.2

Goodwill and Other Intangible Assets 24.7 24.6

Goodwill and Intangible Assets 23.7 24.7

Deferred Income Taxes and Other Assets 210.2 140.4

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Non Current Finance Lease Liabilities 30.2 31.5

Commitments and Contingencies

Contingencies (Note 7)

Embecta Corp.

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Balance at October 1, 2021 — — — — 864.8 ( 270.5 ) 594.3

Net income attributable to Diabetes Care Business — — — — 414.8 — 414.8

Other comprehensive loss, net of taxes — — — — — ( 8.9 ) ( 8.9 )

Net transfers to Becton, Dickinson and Company — — — — ( 383.8 ) — ( 383.8 )

Balance at September 30, 2021 — — — — 864.8 ( 270.5 ) 594.3

Balance at October 1, 2021 — — — — 864.8 ( 270.5 ) 594.3

Net transfers to Becton, Dickinson and Company including Separation adjustments — — — — ( 390.3 ) 9.8 ( 380.5 )

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Stock-based compensation plans — — 10.0 — — — 10.0

Common dividends ($ 0.15 per share)

Dividends declared ($ 0.15 per share)

— — — ( 8.6 ) — — ( 8.6 )

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Balance at October 1, 2022 57,055,327 0.6 10.0 ( 577.1 ) — ( 324.9 ) ( 891.4 )

Net income attributable to Embecta Corp.

Net income — — — 70.4 — — 70.4

Other comprehensive income, net of taxes — — — — — 15.8 15.8

Stock-based compensation plans — — 21.5 — — — 21.5

Dividends declared ($ 0.60 per share)

— — — ( 34.4 ) — — ( 34.4 )

Other comprehensive loss, net of taxes — — — — — 15.8 15.8

Issuance of shares related to stock-based compensation plans 278,026 — ( 3.6 ) — — — ( 3.6 )

Balance at September 30, 2023 57,333,353 $ 0.6 $ 27.9 $ ( 541.1 ) $ — $ ( 309.1 ) $ ( 821.7 )

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

Net income — — — 78.3 — — 78.3

Other comprehensive income, net of taxes — — — — — 16.3 16.3

Stock-based compensation plans — — 26.3 — — — 26.3

Common dividends ($ 0.15 per share)

Dividends and dividend equivalents declared ($ 0.60 per share)

— — 1.3 ( 35.8 ) — — ( 34.5 )

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Balance at September 30, 2024 57,707,285 $ 0.6 $ 52.5 $ ( 498.6 ) $ — $ ( 292.8 ) $ ( 738.3 )

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

See notes to the Consolidated Financial Statements.

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Amortization of debt issuance costs 6.9 6.4 3.2

Amortization of cloud computing costs 6.3 — —

Impairment of property, plant and equipment — 2.5 58.9

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Net Cash Used for Financing Activities $ ( 73.4 ) $ ( 48.7 ) $ ( 48.0 )

Effect of exchange rate changes on cash and cash equivalents 3.1 ( 9.3 ) —

Net Change in Cash and cash equivalents $ ( 4.4 ) $ 330.9 $ —

Opening Cash and cash equivalents 330.9 — —

Closing Cash and cash equivalents $ 326.5 $ 330.9 $ —

Effect of exchange rate changes on cash and equivalents and restricted cash

1.2 3.1 ( 9.3 )

Net Change in Cash and equivalents and restricted cash $ ( 52.3 ) $ ( 4.4 ) $ 330.9

Opening Cash and equivalents and restricted cash 326.5 330.9 —

Closing Cash and equivalents and restricted cash $ 274.2 $ 326.5 $ 330.9

See notes to the Consolidated Financial Statements.

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In connection with the Separation, BD and Embecta entered into various agreements to provide a framework for the relationship between BD and Embecta after the Separation, including, but not limited to, a separation and distribution agreement, a transition services agreement, a tax matters agreement, an employee matters agreement, a cannula supply agreement, contract manufacturing agreements, an intellectual property matters agreement, a logistics services agreement, distribution agreements, factoring and receivables agreements, local support and service agreements and other transaction documents.

As of October 31, 2024, all of the factoring and trade receivables agreements and the distribution agreements and local support and services agreements have expired and terminated.

Note 2 — Basis of Presentation

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stock-based compensation expenses (see Note 10).

certain compensation expenses maintained on a centralized basis such as certain employee benefit expenses.

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

certain compensation expenses maintained on a centralized basis such as certain employee benefit expenses.

Management believes these cost allocations were a reasonable reflection of the utilization of services provided to, or the benefit derived by, the Diabetes Care Business during the period prior to the Separation, though the allocations may not be indicative of the actual costs that would have been incurred had the Diabetes Care Business operated as a standalone public company.

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Balances held by the Diabetes Care Business with BD for cash transfers and loans were reflected as Amounts due to Becton, Dickinson and Company prior to the Separation.

All other cash and cash equivalents and related transfers between BD and the Diabetes Care Business were generally held centrally through accounts controlled and maintained by BD and were not specifically identifiable to the Diabetes Care Business.

All other cash and equivalents and related transfers between BD and the Diabetes Care Business were generally held centrally through accounts controlled and maintained by BD and were not specifically identifiable to the Diabetes Care Business.

Accordingly, such balances were accounted for through Net Investment from Becton, Dickinson and Company .

BD’s third-party debt and related interest expense were not attributed to the Diabetes Care Business because the business was not the legal obligor of the debt and the borrowings were not specifically identifiable to the business.

For the Diabetes Care Business, transactions with BD affiliates were included in the Consolidated Statements of Income and related balances were reflected as Amounts due to Becton, Dickinson and Company , Amounts due from Becton, Dickinson and Company or Related Party Loans Payable .

For the Diabetes Care Business, transactions with BD affiliates were included in the Consolidated Statements of Income and related balances were reflected as Amounts due to Becton, Dickinson and Company or Amounts due from Becton, Dickinson and Company .

Other balances between the Diabetes Care Business and BD were considered to be effectively settled in the Consolidated Financial Statements at the time the transactions were recorded.

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All intercompany transactions and accounts within Embecta have been eliminated.

Certain reclassifications were made to conform the prior period Consolidated Financial Statements to the current period presentation.

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

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Additional disclosures regarding the Company’s accounting for revenue recognition are provided in Note 8.

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid investments with a maturity of three months or less at the date of acquisition.

Interest income on Cash and cash equivalents is recorded as earned.

Cash and Equivalents

Cash and equivalents include all highly liquid investments with a maturity of three months or less at the date of acquisition.

Interest income on Cash and equivalents is recorded as earned.

Restricted Cash

Restricted cash consists of cash not readily available for use in the Company's operating activities and is primarily pledged as collateral for bank guarantees related to certain customer performance guarantees and property leases internationally, which are further discussed in Note 16.

Trade Receivables

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Cloud Computing Arrangements

The Company capitalizes costs incurred to implement cloud computing arrangements that are service contracts within Prepaid expenses and other and Deferred Income Taxes and Other Assets in the Company's Condensed Consolidated Balance Sheets.

Implementation costs associated with cloud computing arrangements are capitalized when incurred during the application development phase.

Once the implementation of a cloud computing arrangement is complete and ready for its intended use, the Company amortizes the costs over the expected term of the hosting arrangement using the straight-line method to the same income statement line as the associated cloud operating expenses.

The total balance of capitalized costs associated with these arrangements as of September 30, 2023 is $ 38.0 million which primarily relates to the implementation of the Company's new enterprise resource planning ("ERP") system.

These capitalized costs are included in Deferred Income Taxes and Other Assets.

Costs amortized during fiscal year ended September 30, 2023 were not material to the Company's consolidated financial results.

As of September 30, 2023, cloud computing arrangement assets in-service have useful lives which range from approximately three to nine years .

In 2022, the Company commenced on the process of building a new ERP system to replace the existing systems provided by BD.

The ERP system is designed to accurately maintain the Company's financial records used to report operating results.

The implementation of the ERP will occur in phases.

The first phase of the ERP system implementation began in the fourth quarter of 2023.

Property, Plant and Equipment

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Recoverability is determined by comparing the carrying values of the assets or asset groups to the undiscounted cash flows to be generated from the use and eventual disposition of such assets or asset groups.

If the asset’s or asset group’s carrying value exceeds such

If the asset’s or asset group’s carrying value exceeds such undiscounted cash flows, the assets or asset groups are not recoverable and an impairment loss is recognized based on the amount by which the carrying value of the asset or asset group exceeds its calculated fair value.

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

undiscounted cash flows, the assets or asset groups are not recoverable and an impairment loss is recognized based on the amount by which the carrying value of the asset or asset group exceeds its calculated fair value.

Capitalized Interest

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When no debt is incurred specifically for a project, interest is capitalized on project expenditures using the weighted average cost of the Company's outstanding borrowings.

For the years ended September 30, 2023 and 2022, the Company capitalized $ 4.6 million and $ 5.2 million of interest expense, respectively, into Property, Plant and Equipment, Net and capitalized $ 0.9 million of interest expense into Deferred Income Taxes and Other Assets during the year ended September 30, 2023.

For the fiscal years ended September 30, 2024, 2023 and 2022 the Company capitalized $ 3.7 million, $ 4.6 million and $ 5.2 million of interest expense, respectively, into Property, Plant and Equipment, Net .

For the fiscal year ended September 30, 2023 the Company capitalized $ 0.9 million of interest expense into Deferred Income Taxes and Other Assets.

Interest expense capitalized into Deferred Income Taxes and Other Assets during the fiscal year ended September 30, 2024 is not material to the Company’s Consolidated Financial Statements.

Advertising Costs

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The Company completed the annual goodwill impairment test as of July 1, 2024 and concluded that no impairment to goodwill was necessary as the fair value of the Company's one reporting unit was significantly in excess of the carrying value.

No goodwill impairments were identified during the years ended September 30, 2022, or 2021, and no accumulated impairment losses are recorded.

No goodwill impairments were identified during the fiscal years ended September 30, 2024, 2023, or 2022, and no accumulated impairment losses are recorded.

Amortized intangible assets primarily consist of patents and customer relationships.

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The carrying values of these finite-lived assets are compared to the undiscounted cash flows they are expected to generate and an impairment loss is recognized in operating results to the extent any finite-lived intangible asset’s carrying value exceeds its calculated fair value.

Foreign Currency Translation

Generally, foreign subsidiaries’ functional currency is the local currency of operations and the net assets of foreign operations are translated into United States dollars using current exchange rates.

Foreign Currency and Derivative Financial Instruments

Assets and liabilities denominated in their functional currencies are translated into U.S.

dollars at the exchange rate on the balance sheet date.

Revenues and expenses are translated at average rates of exchange prevailing during the period.

The United States dollar results that arise from such translation are included in Accumulated other comprehensive loss .

The Company utilizes derivative instruments to manage market risks associated with fluctuations in certain foreign currency exchange rates.

The Company utilizes foreign currency forward contracts to protect against market risks arising in the normal course of business.

At the end of the reporting period, foreign-currency-denominated assets and liabilities are remeasured into the functional currencies of the reporting entities at current market rates.

The change in value from this remeasurement is reported as a foreign exchange gain or loss for that period in Other income (expense), net .

The Company recorded transactional foreign exchange losses of $ 4.4 million during the fiscal year ended September 30, 2024.

For the fiscal years ended September 30, 2023 and 2022, transactional foreign exchange impacts were not material to the Company's Consolidated Statements of Income.

Shipping and Handling Costs

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Additional disclosures regarding the Company’s accounting for contingencies are provided in Note 7.

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

Stock-Based Compensation

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Stock-based compensation expense was either allocated to the Company based on a proportionate cost allocation method or recorded based on specific identification.

Effective April 1, 2022, the Company established the 2022 Employee and Director Equity Based Compensation Plan (the "Plan").

Effective April 1, 2022, the Company established the 2022 Employee and Director Equity Based Compensation Plan, as amended on February 7, 2024 (the "Plan").

The Plan provides for the grant of various types of awards, including restricted stock unit ("RSU") awards, stock appreciation rights, stock options, performance-based awards and cash awards.

Under the Plan, the exercise price of awards, if any, is set on the grant date and generally may not be less than

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

the fair market value per share on that date.

Under the Plan, the exercise price of awards, if any, is set on the grant date and generally may not be less than the fair market value per share on that date.

The Company measures stock-based compensation for equity awards at fair value on the date of grant and records stock-based compensation as a charge to earnings net of the estimated impact of forfeited awards.

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The Company's income tax provision prior to the Separation was prepared using the separate return method.

The separate return method applies the accounting guidance for income taxes to the standalone financial statements as if the Company were a separate taxpayer and a standalone enterprise.

The separate return method applies the accounting guidance for income taxes to the standalone financial

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

statements as if the Company were a separate taxpayer and a standalone enterprise.

The Company believes the assumptions supporting the allocation and presentation of income taxes on a separate return basis are reasonable.

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The Company operates and reports its financial information as one segment.

In making this determination, the Company (i) determines its Chief Operating Decision Maker (“CODM”), (ii) identifies and analyzes potential business components, (iii)

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

identifies its operating segments and (iv) determines whether there are multiple operating segments requiring presentation as reportable segments.

In making this determination, the Company (i) determines its Chief Operating Decision Maker (“CODM”), (ii) identifies and analyzes potential business components, (iii) identifies its operating segments and (iv) determines whether there are multiple operating segments requiring presentation as reportable segments.

The Company’s decision to report as one segment is based upon the following:

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The Company determines whether an arrangement contains a lease at inception.

If a lease is identified in an arrangement, the Company recognizes a right-of-use asset and liability in the Company's Consolidated Balance Sheets and determine whether the lease should be classified as a finance or operating lease.

If a lease is identified in an arrangement, the Company recognizes a right-of-use asset and liability in the Company's Consolidated Balance Sheets and determines whether the lease should be classified as a finance or operating lease.

The Company does not recognize assets or liabilities for leases with lease terms of less than 12 months.

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The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions.

These estimates or assumptions affect reported assets, liabilities, revenues and expenses, including determining the allocation of shared costs and expenses from BD, depreciable and amortizable lives, sales returns and allowances, rebate accruals, restructuring costs, inventory reserves and taxes on income as reflected in the Consolidated Financial Statements.

Actual results could differ from these estimates.

Net Investment from Becton, Dickinson and Company — Net investment from Becton, Dickinson and Company represented BD’s interest in the recorded assets of the Company and the cumulative investment by BD in the Company through the date of the Separation, inclusive of operating results and the net effect of the transactions with and allocations from BD.

See Notes 2 and 4 for additional information.

These estimates or assumptions affect reported assets, liabilities, revenues and expenses, including

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

determining the allocation of shared costs and expenses from BD for the period prior to the Separation, depreciable and amortizable lives, sales returns and allowances, rebate accruals, restructuring costs, inventory reserves and taxes on income as reflected in the Consolidated Financial Statements.

Actual results could differ from these estimates.

Supplemental Disclosures Of Cash Flow Information

Cash paid for interest related to debt during the year ended September 30, 2023 and 2022 was $ 111.0 million and $ 38.9 million, respectively.

The Company did not have any debt outstanding during the year ended September 30, 2021.

Cash paid for income taxes, net of refunds, for the years ended September 30, 2023 and 2022 was $ 30.4 million and $ 15.6 million, respectively.

For the year ended September 30, 2021, the Company's current tax liabilities computed under the separate return method are considered to be effectively settled at the time the transaction is recorded, with the offset recorded against Net investment from Becton, Dickinson and Company .

Recently Adopted Accounting Standards

In October 2021, the Financial Accounting Standards Board issued Accounting Standards Update 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers, as if it had originated the contracts.

The Company adopted this guidance at the beginning of fiscal year 2023 and it did not materially impact the Company's Condensed Consolidated Financial Statements.

Cash paid for interest related to debt during the fiscal year ended September 30, 2024, 2023 and 2022 was $ 117.7 million, $ 111.0 million and $ 38.9 million, respectively.

Cash paid for income taxes, net of refunds, for the fiscal years ended September 30, 2024, 2023 and 2022 was $ 29.1 million, $ 30.4 million and $ 15.6 million, respectively.

Recently Issued Accounting Standards Not Yet Adopted

In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which modifies the disclosure and presentation requirements of reportable segments.

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

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

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

Improvements to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures.

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

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

In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40), to improve disclosures about an entity's expenses including more detailed information about the components of expenses in commonly presented expense captions.

This update is effective for the Company beginning with its fiscal year 2028 reporting and for interim reporting beginning with its fiscal year 2029.

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

Note 4 — Third Party Arrangements and Related Party Disclosures

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Agreements that Embecta entered into with BD that govern aspects of Embecta's relationship with BD following the Separation include, but are not limited to:

• Transition Services Agreements ("TSA") - Pursuant to the TSA, Embecta and BD and their respective affiliates provide each other, on an interim, transitional basis, various services, including, but not limited to, information technology, human resources, procurement, quality and regulatory affairs, medical affairs, tax and treasury services.

• Transition Services Agreements ("TSA") - Pursuant to the TSA, as amended, Embecta and BD and their respective affiliates provide each other, on an interim, transitional basis, various services, including, but not limited to, information technology, human resources, procurement, quality and regulatory affairs, medical affairs, tax and treasury services.

The agreed-upon charges for such services are generally intended to allow the servicing party to charge a price comprised of out-of-pocket costs and expenses and a predetermined profit in the form of a mark-up of such out-of-pocket costs and expenses.

The services will terminate no later than 24 months following the Separation, subject to the Extension.

The Extension is conditioned upon BD obtaining a supplemental private letter ruling.

The service recipient may terminate any services by giving prior written notice to the provider of such services and paying any applicable wind-down charges.

• Trade Receivables Factoring Agreements - Embecta and BD entered into trade receivables factoring agreements (the "Factoring Agreements"), under which Embecta transfers certain net trade receivable assets to BD, and pays a service fee calculated as 0.1 % of annual revenues related to countries subject to the Factoring Agreements in exchange for the services provided by BD.

Per the terms of the Factoring Agreements, the Company and its relevant subsidiaries sell receivables to the corresponding BD subsidiary in the same jurisdiction and such BD subsidiary collects the receivables from Company's customers.

The BD subsidiary assumes the credit risk in respect of the receivables, and accordingly deducts a factoring fee from the purchase price of such receivables.

Accordingly, Embecta accounts for the transfer as sales of trade receivables by recognizing an increase to Cash and cash equivalents and a decrease to Trade Receivables, net in the Consolidated Balance Sheets when proceeds from the transactions are received.

The transfers are presented in the Consolidated Statements of Cash Flows as operating activities and the related service fee is presented as a component of Other income (expense), net in the Consolidated Statements of Income.

• Distribution Agreements - Embecta and BD entered into distribution agreements for certain territories, principally in the Asia Pacific Region and Latin America, whereby a subsidiary of BD is appointed as a distributor of Embecta or its relevant subsidiaries to support certain commercial operations of the diabetes care business on a transitional basis in these regions for a maximum of two years .

The distribution agreements will each continue

Such services provided pursuant to the TSA were to terminate no later than April 1, 2024, 24 months following the Separation.

On March 28, 2024, BD granted a limited extension until November 1, 2024 of certain services under the TSA and the Logistics Services Agreement (“LSA”) in a limited set of markets (the "Extension") to support the Interim Business Continuity Processes.

• Trade Receivables Factoring Agreements - Embecta and BD entered into trade receivables factoring agreements (the "Factoring Agreements"), under which Embecta transferred certain net trade receivable assets to BD, and paid a service fee calculated as 0.1 % of annual revenues related to countries subject to the Factoring Agreements in exchange for the services provided by BD.

Per the terms of the Factoring Agreements, the Company and its relevant subsidiaries sold receivables to the corresponding BD subsidiary in the same jurisdiction and such BD

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

until either (1) certain governmental approvals needed to distribute products in the defined territory are obtained and order-to-cash processes and other services of the Company for such territory are migrated to an alternative commercial arrangement between the parties or (2) the applicable services are transitioned to a third-party distributor or independently performed by Embecta, but in any event no longer than the maximum term of two years , except certain such agreements may be extended in connection with the Extension.

Embecta shall pay BD a return of 1.5 % to 2.0 % of net revenue for each territory.

subsidiary collected the receivables from Company's customers.

The BD subsidiary assumed the credit risk in respect of the receivables, and accordingly deducted a factoring fee from the purchase price of such receivables.

Accordingly, Embecta accounted for the transfer as sales of trade receivables by recognizing an increase to Cash and equivalents and a decrease to Trade Receivables, net in the Consolidated Balance Sheets when proceeds from the transactions are received.

The Trade Receivables Factoring Agreements terminated and expired as of March 31, 2024.

• Distribution Agreements - Embecta and BD entered into distribution agreements for certain territories, principally in the Asia Pacific Region and Latin America, whereby a subsidiary of BD was appointed as a distributor of Embecta or its relevant subsidiaries to support certain commercial operations of the diabetes care business on a transitional basis in these regions for a maximum of two years .

The distribution agreements each continued until either (1) certain governmental approvals needed to distribute products in the defined territory are obtained and order-to-cash processes and other services of the Company for such territory are migrated to an alternative commercial arrangement between the parties or (2) the applicable services are transitioned to a third-party distributor or independently performed by Embecta, but in any event no longer than the maximum term of two years , except certain such agreements may be extended in connection with the Extension.

All distribution agreements in the Asia Pacific Region and Latin America terminated and expired in October 2024.

Embecta paid BD a return of 1.5 % to 2.0 % of net revenue for each territory.

• Cannula Supply Agreement - Embecta and BD entered into a cannula supply agreement whereby BD sells to Embecta cannulas for incorporation into Embecta's existing syringes and pen needles, safety syringes and safety pen needles, and products currently under development.

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Embecta is barred from taking any action, or failing to take any action, where such action or failure to act adversely affects or could reasonably be expected to adversely affect the tax-free status of the distribution and certain related transactions or result in certain other taxes to BD, for all relevant time periods.

In addition, during the period ending two years after the Separation, these covenants include specific restrictions on Embecta’s (i) discontinuing the active conduct of Embecta’s trade or business;

(ii) issuance or sale of stock or other securities (including securities convertible into Embecta stock, but excluding certain compensatory arrangements);

(iii) liquidating, merging, or consolidating with any other person;

(iv) amending Embecta’s certificate of incorporation (or other organizational documents) or taking any other action, whether through a stockholder vote or otherwise, affecting the voting rights of Embecta common stock;

(v) sales of assets outside the ordinary course of business;

and (vi) entering into any other corporate transaction which would cause Embecta to undergo a 50 % or greater change in its stock ownership.

• Logistics Services Agreement - Embecta and BD entered into a logistics services agreement whereby BD provides Embecta with certain order-to-cash and logistics services to support certain commercial operations for a maximum term of two years , which BD has agreed to extend through March 31, 2024.

Embecta will pay BD (i) reimbursable costs, including all shipping costs, selling costs, general administration costs, costs of goods, research and development services costs, and other income and expenses related solely to the diabetes care business, that are incurred by BD directly, as allocated costs or as costs payable to a third party and (ii) a monthly administrative fee of 1.0 % of net revenue (which will increase to 1.25 % of net revenue after January 1, 2024).

• Logistics Services Agreement - Embecta and BD entered into the LSA, as amended, whereby BD provides Embecta with certain order-to-cash and logistics services to support certain commercial operations for a maximum term of two years , which BD agreed to extend pursuant to the Extension.

Embecta pays BD (i) reimbursable costs, including all shipping costs, selling costs, general administration costs, costs of goods, research and development services costs, and other income and expenses related solely to the diabetes care business, that are incurred by BD directly, as allocated costs or as costs payable to a third party and (ii) a monthly administrative fee of 1.0 % of net revenue (which increased to 1.25 % of net revenue after January 1, 2024).

• Other agreements that Embecta entered into with BD include, but are not limited to, the employee matters agreement ("EMA"), an intellectual property matters agreement, local support services agreements, certain other manufacturing arrangements and a process services agreement and lease agreement for a manufacturing facility located in Holdrege, Nebraska.

See Note 18 for more information on the lease agreement for Holdrege.

As it pertains to the Distribution Agreements noted above, Embecta has determined it is the principal under these arrangements and is entitled to all the benefits, and is liable for all the risks, related to the inventory and receivables.

Additionally, Embecta has latitude in pricing, has the ability to direct BD regarding decisions over inventory, and is responsible for all credit and collections risks and losses associated with the related receivables when there is no factoring agreement in place.

As such, Embecta recognizes these sales on a gross basis.

The amount due from BD under the above agreements was $ 142.4 million at September 30, 2023 and is reflected in Amounts due from Becton, Dickinson and Company .

The amount due to BD under these agreements was $ 73.1 million at September 30, 2023 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, and Italy, as contemplated by the Separation and Distribution Agreement did not occur at

As it pertains to the Distribution Agreements noted above, Embecta determined it was the principal under these arrangements and was entitled to all the benefits, and was liable for all the risks, related to the inventory and receivables.

Additionally, Embecta had latitude in pricing, had the ability to direct BD regarding decisions over inventory, and was responsible for all credit and collections risks and losses associated with the related receivables when there was no factoring agreement in place.

As such, Embecta recognized these sales on a gross basis.

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

The transfers of the remaining relevant local assets and liabilities for these deferred countries are expected to close at a future date.

As of September 30, 2023, the Company estimates that amounts due to BD related to certain assets and liabilities in deferred close jurisdictions is $ 29.7 million and are reflected in Accrued expenses .

As of September 30, 2023, the Company estimates that amounts due from BD related to certain assets and liabilities in deferred close jurisdictions are $ 8.4 million and is reflected in Prepaid expenses and other .

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.

Under the TSA Amendment and the LSA Amendment, BD granted Embecta, among other things, the Extension.

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 amounts due from BD under the above agreements were $ 53.8 million and $ 10.9 million at September 30, 2024 and are reflected in Amounts due from Becton, Dickinson and Company and Trade receivables, net , respectively.

The amount due to BD under these agreements was $ 42.5 million at September 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 Mexico, Brazil, and Colombia closed in October 2024.

The transfer of the relevant local assets and liabilities in India are expected to close at a future date.

As of September 30, 2024, the Company estimates that amounts due from BD related to certain assets and liabilities in these jurisdictions are $ 7.0 million and are reflected in Prepaid expenses and other .

As of September 30, 2024, the Company estimates that amounts due to BD related to certain assets and liabilities in these jurisdictions is $ 6.3 million and are reflected in Accrued expenses .

Prior to the Separation, the Company did not operate as a standalone business and the Consolidated Financial Statements were derived from the consolidated financial statements and accounting records of BD.

The following disclosure summarizes activity between the Company and BD up to the Separation, including the affiliates of BD that were not part of the Separation.

For the years ended September 30, 2022 and 2021, cost of products sold from related party inventory purchases were $ 28.0 million and $ 40.6 million, respectively.

For the year ended September 30, 2023 there were no cost of products sold from related party inventory purchases.

The following disclosures summarize activity between the Company and BD up to the Separation, including the affiliates of BD that were not part of the Separation.

Corporate and Medical Segment Allocations from BD

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Actual costs that would have been incurred if the Company had been a standalone public company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure.

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

Related party transactions

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in the Consolidated Statements of Equity and represent the net effect of transactions between the Company and BD.

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

The following table summarizes the components of the net transfers to BD as follows:

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Cash pooling and general financing activities (1)

$ 255.9 $ 599.5

Corporate and segment allocations, excluding non-cash stock-based compensation ( 50.4 )

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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 year ended September 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.

The Company expects that it will be the principal in the end customer sale and 100 % of product sales will be included in Revenues and any royalty payments and continued project costs after commercialization will be included in Cost of products sold as they are incurred.

The transaction included an upfront payment

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

of $ 2.5 million for project costs, which was expensed to Research and development expense during the fiscal year ended September 30, 2023.

On November 22, 2024, the Company's Board of Directors approved a plan to discontinue internal and external investment in the research and development of the Company's patch pump program.

The Company will refocus its research and development strategy on its core business.

For additional information related to this matter, refer to Note 21.

Note 6 — Other Operating Expenses

In connection with the Separation, the Company incurred separation and stand-up costs of approximately $ 92.7 million, $ 44.7 million, and $ 4.8 million during the years ended September 30, 2023, 2022, and 2021, respectively.

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

During the year ended September 30, 2023, the Company recorded approximately $ 5.6 million of severance costs related to the optimization of certain business functions.

In connection with the Separation, the Company incurred separation and stand-up costs of approximately $ 110.8 million , $ 92.7 million, and $ 44.7 million during the fiscal years ended September 30, 2024, 2023, and 2022, 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 establish certain Business Continuity Processes and stand-alone functions to assist with the transition to being a stand-alone entity.

During the fiscal year ended September 30, 2024, the Company recognized $ 6.3 million of costs associated with the amortization of cloud computing arrangements.

For the fiscal years ended September 30, 2023 and 2022, there were no amortization of implementation costs associated with cloud computing arrangements due to the timing of when these projects were placed into service.

The Company recorded approximately $ 7.4 million and $ 5.6 million of severance costs related to the optimization of certain business functions during the fiscal years ended September 30, 2024, and 2023, respectively.

These costs were primarily recorded in the U.S.

and severance costs were not material to any comparable prior year periods presented.

Liabilities for costs associated with these activities were not material to any period presented.

For the years ended September 30, 2022, and 2021 severance costs were not material to the Company's Consolidated Statements of Income.

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

and liabilities for costs associated with these activities were not material to any period presented.

For the fiscal year ended September 30, 2022 severance costs were not material to the Company's Consolidated Statements of Income.

Note 7 — Contingencies

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Note 8 — Revenues

The Company’s policies for recognizing revenue have not changed from those described in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

The Company sells syringes, pen needles and other products used in the management of diabetes which are primarily sold 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.

End-users of the Company’s products include healthcare institutions, physicians, life science researchers, clinical laboratories, the pharmaceutical industry, and the general public.

Measurement of Revenues

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The Company’s allowance for doubtful accounts reflects the current estimate of credit losses expected to be incurred over the life of its trade receivables.

Such estimated credit losses are determined based on historical loss experiences, customer specific credit risk, and reasonable and supportable forward-looking information, such as country or regional risks that are not captured in the historical loss information.

Such estimated credit losses are determined based on historical loss experiences, customer specific credit risk, and reasonable and supportable forward-looking information,

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

such as country or regional risks that are not captured in the historical loss information.

Amounts are written off against the allowances for doubtful accounts when the Company determines that a customer account is uncollectible.

The allowance for doubtful accounts for trade receivables is not material to the Company’s consolidated financial results.

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.

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

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

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, chargebacks, sales discounts, and sales returns.

Because these deductions represent estimates of the related obligations, judgment is required when determining the impact of these revenue deductions on gross revenues for a reporting period.

Rebates provided by the Company are based upon prices determined under the Company’s agreements primarily with its end-user customers.

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.

Additional factors considered in the estimate of the Company’s variable consideration 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 variable consideration.

The Company’s liability attributed to variable consideration at September 30, 2024 and September 30, 2023 was $ 149.6 million and $ 36.4 million, respectively.

Sales deductions recorded as a reduction of gross revenues for the years ended September 30, 2023, 2022 and 2021 were $ 411.1 million, $ 336.4 million, and $ 298.7 million respectively.

Sales deductions recorded as a reduction of gross revenues for the fiscal years ended September 30, 2024, 2023 and 2022 were $ 525.9 million, $ 411.1 million, and $ 336.4 million respectively.

Disaggregation of Revenues

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

Note 9 — Segment and Geographical Data

Note 9 — Segment, Geographic, and Product Information

Operating segments are identified as components of an enterprise in which discrete financial information is available for evaluation by the 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.

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

Disaggregation of Revenues

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In Latin America, the Company maintains distribution agreements and direct sales representatives.

The Company disaggregates its revenue by geography as management believes this category best depicts how the nature, amount, and timing of revenues and cash flows are affected by economic factors.

Revenues by geographic region are as follows:

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Total $ 1,123.1 $ 1,120.8 $ 1,129.5

(1) For the years ended September 30, 2023, 2022, and 2021 no individual country outside of the United States generated net revenues that represented more than 10.0% of total revenues.

(1) For the fiscal years ended September 30, 2024, 2023, and 2022 no individual country outside of the United States generated net revenues that represented more than 10.0% of total revenues.

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

Revenues by product family are as follows:

Year ended September 30,

2024 2023 2022

Pen Needles $ 844.4 $ 829.2 $ 824.6

Syringes 126.2 138.1 156.0

Safety 129.4 126.3 119.6

10.3 14.2 14.3

Contract Manufacturing 12.8 13.0 15.0

Total $ 1,123.1 $ 1,120.8 $ 1,129.5

(1) In 2024, Other includes product sales for swabs and other accessories.

In 2024, Other also includes the recognition of incremental Italian payback accruals resulting from two July 22, 2024 rulings by the Constitutional Court of Italy relating to certain prior years since 2015 which totaled $ 4.1 million.

Note 10 — Stock-Based Compensation

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As a result of the award modification, Embecta will incur $ 6.1 million of incremental stock-based compensation expense.

Of this amount, $ 1.8 million and $ 2.3 million was recognized during the year ended September 30, 2023 and 2022, respectively.

Of this amount, $ 1.2 million, $ 1.8 million and $ 2.3 million was recognized during the fiscal years ended September 30, 2024, 2023 and 2022, respectively.

$ 0.8 million will be recognized at a future date over the awards' remaining vesting period.

Effective April 1, 2022, Embecta established the Plan.

Effective April 1, 2022, Embecta established the Plan, as amended on February 7, 2024.

A total of 10,189,000 shares of common stock are authorized under the Plan.

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

On April 1, 2022, Embecta granted 48,192 potential shares to non-employee directors in the form of RSUs, which vest at the earlier of (i) the first anniversary of the grant date or (ii) the date of the first annual meeting of stockholders, subject to continued service of the recipients.

On April 4, 2022 and in connection with the Separation, Embecta granted 860,611 of potential shares to members of the Embecta leadership team as a one-time sign-on equity grant, subject to continued employment, comprised of the following:

• 172,787 grants of time-vested RSUs which cliff vest on the third anniversary after grant date;

• 528,167 grants of SARs which cliff vest on the third anniversary after grant date and;

• 27,653 of TVUs and 132,004 of SARs granted to the Embecta's chief executive officer which vest evenly over three and four years , respectively.

Stock-Based Compensation Expense

Total direct and allocated stock-based compensation expense for the years ended September 30, 2023, 2022, and 2021 and the respective income tax benefits recognized by the Company in the Consolidated Statements of Income are as follows:

Total direct and allocated stock-based compensation expense for the fiscal years ended September 30, 2024, 2023, and 2022 and the respective income tax benefits recognized by the Company in the Consolidated Statements of Income are as follows:

2024 2023 2022

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Total $ 26.6 $ 21.9 $ 18.7

The following table summarizes the Company's total stock-based compensation expense by award type for the years ended September 30, 2023 and 2022, subsequent to the Separation:

The following table summarizes the Company's total stock-based compensation expense by award type for the fiscal years ended September 30, 2024, 2023 and 2022, subsequent to the Separation:

2024 2023 2022

Time-Vested Restricted Stock Units (TVUs)

$ 19.5 $ 16.2 $ 6.6

Performance-Based Restricted Stock Units (PSUs)

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Time Vested Restricted Stock Units

During the year ended September 30, 2023 , Embecta granted 680,281 RSUs in the form of TVUs to employees which vest ratably over three years , subject to continued employment of the recipients.

During the fiscal year ended September 30, 2024 , Embecta granted 1,437,311 RSUs in the form of TVUs to employees which vest ratably over three years , subject to continued employment of the recipients.

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

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The fair value of all TVUs is based on the market value of the Company’s stock on the date of grant.

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

A summary of TVUs outstanding as of September 30, 2023 and changes during the year then ended is as follows:

A summary of TVUs outstanding as of September 30, 2024 and changes during the fiscal year then ended is as follows:

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

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*The amounts 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 years 2023 and 2022 are as follows:

The weighted average grant date fair value of TVUs granted during the fiscal years 2024, 2023 and 2022 are as follows:

2024 2023 2022

Weighted average grant date fair value of units granted $ 17.39 $ 31.00 $ 31.23

The total fair value of TVUs vested during the years 2023 and 2022 was as follows:

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

The total fair value of TVUs vested during the fiscal years 2024, 2023 and 2022 was as follows:

2024 2023 2022

Total fair value of units vested $ 15.7 $ 10.9 $ 1.6

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Performance Based Restricted Stock Units

During the year ended September 30, 2023 , Embecta awarded 244,192 RSUs in the form of PSUs to certain executive officers and employees which vest after three years , subject to continued employment of the recipients and the achievement of certain performance metric targets.

For a portion of these awards, the Company has identified certain performance metrics and targets that will be fully established at a future date.

During the fiscal year ended September 30, 2024 , Embecta awarded 553,235 RSUs in the form of PSUs to certain executive officers and employees which 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 and targets that will be fully established at a future date.

The Company has determined that the service inception date precedes the grant date for these awards as (a) the awards were authorized prior to establishing an accounting grant date, (b) the recipients began providing services prior to the grant date, and (c) there are performance conditions that, if not met by the accounting grant date, will result in the forfeiture of the awards.

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The fair value of all PSUs is based on the market value of the Company’s stock on the date of grant.

A summary of PSUs outstanding as of September 30, 2023 and changes during the year then ended is as follows:

A summary of PSUs outstanding as of September 30, 2024 and changes during the fiscal year then ended is as follows:

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

Nonvested at October 1 57.8 $ 30.24

Granted 61.0 30.24

Forfeited, canceled or expired ( 1.1 ) 30.24

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Expected to vest at September 30 53.5 $ 30.24

The weighted average grant date fair value of PSUs granted during 2023 is as follows:

The weighted average grant date fair value of PSUs granted during the fiscal year 2023 is as follows:

Weighted average grant date fair value of units granted $ 30.24

At September 30, 2024, the weighted average remaining vesting term of PSUs is 1.2 years.

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

Stock Appreciation Rights

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The weighted average fair value of SARs was determined using the following assumptions:

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

Risk-free interest rate 2.5 %

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Fair value per SAR $ 9.38

A summary of SARs outstanding as of September 30, 2023 and changes and changes during the year then ended is as follows:

A summary of SARs outstanding as of September 30, 2024 and changes during the fiscal year then ended is as follows:

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

Balance at October 1 1,831.7 $ 29.06

Exercised* ( 25.1 ) 21.98

Forfeited, canceled or expired ( 71.3 ) $ 27.70

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Exercisable at September 30 838.8 $ 28.03 6.1 $ —

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

A summary of SARs exercised during the years 2023 and 2022 is as follows:

A summary of SARs exercised during the fiscal years 2023 and 2022 is as follows:

Total intrinsic value of SARs exercised $ 0.3 $ 0.1

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At September 30, 2024, 2.7 million shares were authorized for future grants under the Plan.

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

Note 11 — Goodwill and Other Intangible Assets

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Total Goodwill and Other Intangible Assets $ 23.7 $ 24.7

Intangible asset amortization expense was $ 1.2 million for the year ended September 30, 2023, $ 0.7 million for the year ended September 30, 2022 and $ 0.3 million for the year ended September 30, 2021, respectively.

The estimated intangible asset amortization expense for each of the fiscal years ended September 30, 2024 through 2028 is expected to approximate $ 1.1 million per year and $ 3.6 million for years subsequent thereafter.

Intangible asset amortization expense was $ 1.1 million for the fiscal year ended September 30, 2024, $ 1.2 million for the fiscal year ended September 30, 2023 and $ 0.7 million for the fiscal year ended September 30, 2022, respectively.

The estimated intangible asset amortization expense for each of the fiscal years ended September 30, 2025 through 2029 is expected to approximate $ 1.1 million per year and $ 2.8 million for fiscal years subsequent thereafter.

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

Note 12 — Cloud Computing Arrangements

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

September 30, 2024 September 30, 2023

Short-term portion $ 10.2 $ —

Long-term portion 60.6 38.0

Total Capitalized implementation costs

$ 70.8 $ 38.0

accumulated amortization ( 6.3 ) —

Total Capitalized implementation costs, net

$ 64.5 $ 38.0

Costs amortized during the fiscal year ended September 30, 2024 were $ 6.3 million, and are included in Other operating expenses .

For the fiscal years ended September 30, 2023 and 2022 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 September 30, 2024, cloud computing arrangement assets in-service have remaining useful lives which range from approximately two to eight years .

Note 13 — Long-Term Debt

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The Related Party Notes issued to BD were not issued for cash and instead were subject to a debt-for-debt exchange which occurred on April 1, 2022.

As such, the issuance of the Related Party Notes is a non-cash financing activity and is not presented in the Consolidated Statements of Cash Flows for the year ended September 30, 2022.

As such, the issuance of the Related Party Notes is a non-cash financing activity and is not presented in the Consolidated Statements of Cash Flows for the fiscal year ended September 30, 2022.

On April 1, 2022, BD transferred the Related Party Notes with a notional value of $ 200.0 million issued by Embecta to Morgan Stanley in exchange for certain notes of BD that were purchased by Morgan Stanley pursuant to a tender offer.

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

Per the terms of the Credit Agreement, the Company may from time to time voluntarily prepay the Term Loan in whole or in part without premium or penalty subject to certain exceptions.

• a Revolving Credit Facility (the "Revolving Credit Facility") in an aggregate principal amount of up to $ 500.0 million, with a five -year term that matures in 2027.

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

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

The Credit Agreement and the senior secured notes are secured by substantially all assets of Embecta and each subsidiary guarantor, subject to certain exceptions.

The Credit Agreement and the indentures for Embecta's outstanding 5.00 % Notes and 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.

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

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.

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The debt issuance costs on the Term Loan, 5.00 % Notes, 6.75 % Notes and the discount on the Term Loan are reported in the Consolidated Balance Sheets as a reduction of debt and are amortized as a component of Interest expense, net over the term of the related debt using the effective interest method.

In September 2024, the Company made a discretionary prepayment of $ 25.0 million on the Term Loan.

Debt extinguishment charges as a result of this prepayment were not material to the Company's Consolidated Statements of Income.

The Company made interest payments of $ 117.7 million related to its debt outstanding during the fiscal year ended September 30, 2024.

The schedule of principal payments required on long-term debt for the next five fiscal years and thereafter is as follows:

Thereafter 700.0

Certain measures relating to our total debt outstanding as of September 30, 2024 were as follows:

Total debt $ 1,574.8

Short-term debt as a percentage of total debt 0.6 %

Weighted average cost of total debt 6.8 %

The estimated fair value of long-term debt (including current portion) at September 30, 2024 was $ 1,527.3 million compared with a carrying value (which includes a reduction for unamortized debt issuance costs and discounts) of $ 1,574.8 million.

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Note 14 — Earnings per Share

On April 1, 2022, the date of the Separation, 57,012,925 shares of Embecta's common stock, par value $ 0.01 per share, were distributed to BD shareholders of record as of March 22, 2022, the record date of the distribution.

This share amount is utilized for the calculation of earnings per basic and diluted common share for all periods presented prior to the Separation.

In connection with the Separation, and in accordance with the EMA, Embecta's employees with outstanding former BD share-based awards received replacement share-based awards under the Plan.

The ratio used to convert the BD share-based awards was designed to preserve the aggregate intrinsic value of the award immediately after the Separation when compared to the aggregate intrinsic value of the award immediately prior to the Separation (see Note 10 for additional details).

The calculation of earnings per basic and diluted common share for the years ended September 30, 2023, 2022 and 2021 were as follows:

The calculation of earnings per basic and diluted common share for the fiscal years ended September 30, 2024, 2023 and 2022 were as follows:

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

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Earnings per common share - Diluted $ 1.34 $ 1.22 $ 3.89

For periods prior to the Separation, it is assumed that there were no dilutive equity instruments as there were no equity awards of Embecta outstanding prior to the Separation.

For periods subsequent to the Separation, diluted earnings per share is computed by giving effect to all potentially dilutive stock awards that are outstanding.

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 both 2023 and 2022, 1.8 million 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.

As of September 30, 2024, 2.8 million 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.

As of both September 30, 2023 and September 30, 2022, 1.8 million 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 15 — Income Taxes

Income (Loss) Before Income Taxe s

The components of Income Before Income Taxes for the years ended September 30 consisted of:

The components of Income Before Income Taxes for the fiscal years ended September 30 consisted of:

2024 2023 2022

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Provision (benefit) for Income Taxes

The provision (benefit) for income taxes for the years ended September 30 consisted of:

The provision (benefit) for income taxes for the fiscal years ended September 30 consisted of:

2024 2023 2022

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$ ( 70.6 ) $ 14.3 $ ( 26.5 )

Income tax provision $ 35.3 $ 33.0 $ 80.1

The Company's income tax provision for the first half of 2022 and the year ended September 30, 2021 were prepared using a separate return method.

Income tax provision (benefit) $ ( 34.1 ) $ 35.3 $ 33.0

The Company's income tax provision for the first half of fiscal 2022 was prepared using a separate return method.

The separate return method applies the accounting guidance for income taxes to the standalone financial statements as if the Company was a separate taxpayer and a standalone enterprise.

The Company believes the assumptions supporting the allocation and presentation of income taxes on a separate return basis are reasonable.

For a portion of fiscal year 2022 and all periods prior to the Separation, the Company’s domestic and foreign operations were included in BD’s domestic consolidated and foreign tax returns, and payments to all tax authorities were made by BD on the Company’s behalf.

For a portion of fiscal year 2022, the Company’s domestic and foreign operations were included in BD’s domestic consolidated and foreign tax returns, and payments to all tax authorities were made by BD on the Company’s behalf.

The Company filed its own foreign tax return and made its own foreign tax payments in Ireland.

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Tax credits ( 7.5 ) ( 1.5 ) ( 0.7 )

Tax law changes ( 65.0 ) — —

Nontaxable items ( 12.2 ) ( 8.6 ) ( 1.1 )

Nondeductible compensation 2.5 — —

Nondeductible expenses 16.5 2.5 —

Other, net 1.8 0.1 ( 0.1 )

Effective income tax rate ( 77.1 ) % 33.4 % 12.9 %

The decrease in the Company's effective income tax rate for fiscal year 2024 as compared to fiscal year 2023 was primarily due to a reduction in withholding taxes on unremitted earnings of foreign subsidiaries related to the expiration of a two-year stock holding period requirement in Switzerland, the recognition of deferred tax assets from Switzerland tax reform, changes in the geographical mix of earnings and overall lower pre-tax earnings;

partially offset by an increase in uncertain tax positions and non-deductible expenses.

The increase in the Company's effective income tax rate for fiscal year 2023 as compared to fiscal year 2022 was primarily due to the establishment of a valuation allowance against interest expense carryforwards in the U.S., an increase in U.S.

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partially offset by increased tax benefits from non-taxable items and change in geographical mix of earnings.

For fiscal year 2023, the Other, net included a tax benefit for the establishment of net deferred tax assets incurred in connection with the ongoing separation of the Diabetes Care Business from BD, partially offset by a return to provision adjustment from the prior year.

The decrease in the Company's effective income tax rate for fiscal year 2022 as compared to fiscal year 2021 was primarily due to the change in geographical mix of earnings and favorable unrecognized tax benefits recorded in fiscal year 2022;

partially offset by tax expense that have been provided on undistributed earnings of foreign subsidiaries.

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

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Leases 11.6 12.9

Deferred income 13.3 —

Interest expense carryforwards 27.8 16.4

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Right of use asset ( 12.1 ) ( 12.8 )

Capitalized cloud computing costs ( 10.7 ) —

Total deferred tax liabilities $ ( 24.7 ) ( 33.3 )

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Deferred tax assets and liabilities are netted in the Consolidated Balance Sheets by separate tax jurisdictions.

As of September 30, 2023 and September 30, 2022, the Company has recorded deferred taxes on undistributed earnings of foreign subsidiaries.

The vast majority of these taxes were accrued, in part, because the Company does not meet certain holding period requirements for stock ownership.

During fiscal year 2024, the Company anticipates that it will meet these requirements at which time approximately $ 18.0 million of the accrued balance as of September 30, 2023 will be recorded as a reduction to income tax expense.

As of September 30, 2024 and September 30, 2023, the Company has recorded deferred taxes on undistributed earnings of its foreign subsidiaries.

During fiscal year 2024, the Company recorded a tax benefit of approximately $ 16.8 million related to a reversal of taxes on unremitted foreign earnings due to the expiration of certain holding period requirements for stock ownership in its foreign affiliate.

In addition, the Company recorded a tax benefit of approximately $ 28.7 million (before valuation allowance) related to the recognition of deferred tax assets for future amortization deductions and tax credits resulting from tax law changes in Switzerland.

As of September 30, 2024, the Company has recorded valuation allowances of $ 50.2 million due to uncertainty that exists regarding the future realizability of certain deferred tax assets, primarily for interest expense carryforwards in the U.S.

related to limitations on the annual deductibility of such interest, annual limitations on utilization of amortization deductions and tax credits in Switzerland, state tax credits and deferred tax assets related to certain foreign manufacturing operations

As of September 30, 2023, the Company has recorded valuation allowances of $ 31.6 million due to the uncertainty that exists regarding future realizability of certain deferred tax assets primarily for interest expense carryforwards in the U.S.

related to limitations on the annual deductibility of such interest, state net operating losses, state tax credits and deferred tax assets related to certain foreign manufacturing operations.

As of September 30, 2022, the Company has recorded valuation allowances of $ 10.4 million for deferred tax assets related to certain foreign manufacturing operations.

The approximate tax reduction related to a tax holiday in Switzerland in which the Company does business is $ 2.1 million and $ 0.04 impact on diluted earnings per share in fiscal year 2023.

The tax holiday will expire in 2026.

Tax loss and credit carryforwards consist of approximately $ 1.0 million of state income tax credit carryforwards and $ 5.6 million net operating loss carryforwards in various jurisdictions.

The approximate tax benefit related to a tax holiday in Switzerland is $ 0.7 million and $ 0.01 impact on diluted earnings per share in fiscal year 2024.

The Company will no longer receive tax benefits from the tax holiday beginning in 2025.

As of September 30, 2024, the Company had tax loss and credit carryforwards of approximately $ 3.1 million of state income tax credit carryforwards, $ 6.3 million of Switzerland cantonal tax credit carryforwards and $ 3.1 million in net operating loss carryforwards in various jurisdictions.

Approximately $ 0.3 million of net operating loss carryforwards will not expire and the remaining carryforwards expire in varying amounts from 2028 through 2044.

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Unrecognized tax benefits including interest and penalties that would affect the effective tax rate if recognized $ 13.6 $ 7.2 $ 7.2

For a portion of fiscal year 2022, the Company’s domestic and foreign operations were included in BD’s domestic consolidated and foreign tax returns, with the exception of Ireland.

The Company conducts business and files tax returns in numerous countries and currently has no tax audits in progress for the period after the Separation.

The following were included for the years ended September 30 as a component of Income tax provision in the Consolidated Statements of Income and the Consolidated Balance Sheets.

The following were included for the fiscal years ended September 30 as a component of Income tax provision (benefit) in the Consolidated Statements of Income and the Consolidated Balance Sheets.

2024 2023 2022

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Note 16 — Financial Instruments and Fair Value Measurements

The following reconciles Cash and cash equivalents reported within the Consolidated Balance Sheets as of September 30, 2023 and September 30, 2022, to the total amounts shown in the Consolidated Statements of Cash Flows:

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

September 30, 2024 September 30, 2023

Cash and cash equivalents $ 326.5 $ 330.9

Cash and cash equivalents includes cash held in money market funds and other cash equivalents.

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

Interest income on Cash and cash equivalents was $ 9.4 million for the year ended September 30, 2023 and is included as a component of Interest expense, net .

For the years ended September 30, 2022 and 2021, interest income was not material to the Company's Consolidated Statements of Income.

Cash and equivalents $ 267.5 $ 326.3

Restricted cash

Cash and equivalents and restricted cash $ 274.2 $ 326.5

Cash and equivalents 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 $ 12.0 million and $ 9.4 million for the fiscal years ended September 30, 2024 and 2023, respectively, and is included as a component of Interest expense, net .

For the fiscal year ended September 30, 2022, interest income was not material to the Company's Consolidated Statements of Income.

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

The Company's restricted cash balance is primarily pledged as collateral for bank guarantees related to certain customer performance guarantees and property leases internationally.

Foreign Currency Risks and Related Strategies

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The notional amounts of the Company’s foreign currency-related derivative instruments were as follows:

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

Hedge Designation September 30, 2024 September 30, 2023

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Gains and losses on these instruments are recognized immediately in Other income (expense), net .

These gains and losses are largely offset by gains and losses on the underlying hedged items, as well as the

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

hedging costs associated with the derivative instruments.

These gains and losses are largely offset by gains and losses on the underlying hedged items, as well as the hedging costs associated with the derivative instruments.

Gains and losses recognized to date on these instruments were not material to the Company's Consolidated Financial Statements.

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These measurements of fair value are generally based upon Level 3 inputs, including values estimated using the income approach.

During the year ended September 30, 2023, the Company recorded impairment charges of $ 2.5 million related to the abandonment of certain manufacturing equipment in China that is no longer in use that were inherited as part of the spin from BD.

During the fiscal year ended September 30, 2023, the Company recorded impairment charges of $ 2.5 million related to the abandonment of certain manufacturing equipment in China that is no longer in use that was inherited as part of the Separation from BD.

These assets were previously included as a component of Machinery, equipment and fixtures within Property, Plant and Equipment .

The impairment charges are recognized within Impairment expense in the Consolidated Statements of Income.

During the year ended September 30, 2022, the Company recorded impairment charges of $ 58.9 million related to the abandonment of certain manufacturing production lines in the United States that are no longer expected to be completed.

During the fiscal year ended September 30, 2022, the Company recorded impairment charges of $ 58.9 million related to the abandonment of certain manufacturing production lines in the United States that are no longer expected to be completed.

These assets were previously included as a component of Construction in progress within Property, Plant and Equipment .

The impairment charges are recognized within Impairment expense in the Consolidated Statements of Income.

During the year ended September 30, 2021, the Company recorded impairment charges related to certain construction in progress assets related to discontinued projects totaling $ 13.8 million.

The impairment charges were recorded to adjust the carrying amount of the assets to the assets’ fair values, which were estimated through a discounted cash flow model that utilized Level 3 inputs.

The impairment charges are recognized within Cost of products sold in the Consolidated Statements of Income.

Concentration of Credit Risk

Historically and prior to the Separation, the Company’s operations formed part of BD’s monitoring of concentrations of credit risk associated with financial institutions for which BD conducted business.

As of September 30, 2023, the Company had transferred the majority of its trade receivables to BD under the Factoring Agreements (see Note 4).

As a result, the Company is no longer exposed to credit risk associated with those transferred receivables and does not have material credit risk exposure associated with the remaining $ 16.7 million of trade receivables.

Three of the Company’s customers represented at least 10.0% of total gross revenues individually and, in the aggregate, represented approximately 40.2 % and 40.1 % for the years ended September 30, 2023 and 2022, respectively.

Two customers represented at least 10.0% of total revenues individually and, in the aggregate, represented approximately 30.7 % of total revenues for the year ended September 30, 2021.

Three of the Company’s customers represented at least 10.0% of total gross revenues individually and, in the aggregate, represented approximately 41.3 %, 40.2 % and 40.1 % for the fiscal years ended September 30, 2024, 2023 and 2022 respectively.

One of the Company's customers represented at least 10.0% of total gross trade receivables individually and represented approximately 11.1 % as of September 30, 2024.

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

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Total Property, Plant and Equipment, Net $ 290.4 $ 300.2

These assets were previously included as a component of Machinery, equipment and fixtures within Property, Plant and Equipment .

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

These assets were previously included as a component of Construction in progress within Property, Plant and Equipment .

The impairment charges are recognized within Impairment expense in the Consolidated Statements of Income.

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

Note 18 — Leases

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This lease is classified as a finance lease.

For the year ended September 30, 2023, the Company recorded total finance lease costs of $ 4.8 million which is comprised of $ 2.4 million attributable to depreciation of assets and $ 2.4 million attributable to interest expense associated with the lease liability.

The amounts are included in Cost of products sold and Interest expense, net, respectively.

For the year ended September 30, 2022, total finance lease costs were not material to the Company's Consolidated Statements of Income.

Operating Leases

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

For the year ended September 30, 2023 operating lease costs were $ 4.5 million.

For the years ended September 30, 2022, and 2021 total operating lease costs were not material to the Company's Consolidated Statements of Income.

Aggregate Lease Information

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

Lease costs incurred are as follows:

(in millions) Classification 2024 2023

Operating lease expense Selling and administrative and Research and Development expense $ 7.5 $ 4.5

Finance lease cost:

Depreciation of lease assets Cost of products sold 2.5 2.4

Interest on lease liabilities Interest expense, net 2.4 2.4

Total lease cost $ 12.4 $ 9.3

For the fiscal year ended September 30, 2022, operating lease costs and finance lease costs were not material to the Company's Consolidated Statements of Income.

Supplemental cash flow information related to leases was as follows as of September 30, 2024, 2023 and 2022:

September 30, 2023 September 30, 2022

September 30, 2024 September 30, 2023 September 30, 2022

Right of use assets obtained in exchange for lease liabilities

Finance Lease

$ — $ — $ 36.7

Operating Leases 3.0 19.0 2.8

For the year ended September 30, 2021 right of use assets obtained in exchange for lease liabilities was not material.

September 30, 2023

September 30, 2024 September 30, 2023

Cash paid for amounts included in the measurement of lease liabilities

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Operating cash flows from Finance Lease

For the years ended September 30, 2022, and 2021 cash paid for amounts included in the measurement of lease liabilities were not material.

For the fiscal year ended September 30, 2022, cash paid for amounts included in the measurement of lease liabilities was not material.

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

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The retirement benefits accounting guidance provides that liabilities beyond any contributions currently due and unpaid are not required to be reported.

Accordingly, no assets or liabilities associated with plans where the Company was a participant in a multi-employer plan with the other businesses of BD have been reflected in the Company’s Consolidated Balance Sheets.

The Consolidated Statements of Income include expense allocations for these benefits, which were determined using a proportional allocation method.

Total benefit plan expense allocated to the Company for the years ended September 30, 2022 and 2021 was $ 3.6 million and $ 9.0 million, respectively.

For the period prior to the Separation, the Consolidated Statements of Income include expense allocations for these benefits, which were determined using a proportional allocation method.

Total benefit plan expense allocated to the Company for the fiscal year ended September 30, 2022 was $ 3.6 million.

Except for deferred closing countries, the Company's participation in the defined pension and postretirement benefit plans sponsored by BD concluded upon the completion of the Separation on April 1, 2022.

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These Consolidated Financial Statements reflect the periodic benefit costs and funded status of such plans.

The Company uses September 30 as the year-end measurement date for these plans.

Net periodic benefit cost for the Company’s global defined benefit pension plans for the years ended September 30, 2023 and 2022 was $ 1.0 million and $ 0.7 million, respectively.

The Company uses September 30 as the year-end measurement date.

Of the plans, the defined benefit pension plan covering employees in Switzerland (the "Swiss Plan") is the only defined benefit pension plan material to the Company's Consolidated Financial Statements.

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Most employers provide higher benefits than those required by law, which is the case for Embecta.

The minimum level of retirement benefit is expressed by a cash balance formula with age-related contribution rates (or "retirement credits") based on an insured salary defined by law, and a minimum required interest crediting rate which is set by the government (1.00% in 2023 and 2022).

The sum of the Company's contributions should be at least equal to the sum of employee contributions.

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As of September 30, 2024 and 2023, the Swiss plan had an unfunded net pension obligation of $ 4.0 million and $ 1.9 million, respectively, and plan assets that totaled $ 18.4 million, and $ 14.1 million, respectively.

Since the Separation, the Company recognized net periodic benefit cost totaling $ 0.9 million and $ 0.2 million during the fiscal years ended September 30, 2023 and 2022, respectively, related to the Company's Swiss plan, of which $ 0.3 million and $ 0.1 million was included in Other income (expense), net during the fiscal years ended September 30, 2023 and 2022, respectively.

Net periodic benefit cost was not material to the Company's Consolidated Statements of Income for any period presented.

Defined Contribution Plans

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The Company matches a certain percentage of each employee’s contributions as per the provisions of the plans.

Total employer contributions by the Company to the plans were $ 14.1 million and $ 8.9 million for the fiscal years ended September 30, 2023 and 2022, respectively.

Total employer contributions by the Company to the plans were $ 15.1 million, $ 14.1 million and $ 8.9 million for the fiscal years ended September 30, 2024, 2023 and 2022, respectively.

Between April 1, 2022 and September 30, 2022, BD remained the defined benefit pension plan sponsor for certain Embecta employees in Ireland.

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Additions charged to costs and expenses ( 0.3 ) ( 18.1 ) ( 18.4 )

Deductions and other 1.1 (a) 15.1 16.2

Deductions and other 2.1 (b) 21.1 23.2

Balance at September 30, 2022 ( 1.3 ) ( 0.1 ) ( 1.4 )

Additions charged to costs and expenses ( 0.2 ) ( 18.7 ) ( 18.9 )

Deductions and other 2.1 (b) 21.1 23.2

Deductions and other 0.5 (a) 18.8 19.3

Balance at September 30, 2023 ( 1.0 ) — ( 1.0 )

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Note 21 — Subsequent Events

Discontinuation of the patch pump program

On November 22, 2024, the Company’s Board of Directors approved a plan to discontinue internal and external investment in the research and development of the Company's patch pump program.

The Company will refocus its investment on its core business while looking to optimize free cash flow and strengthen its balance sheet by paying down debt.

As a result of this decision, the Company will undergo an organizational restructuring (the "Restructuring Plan").

In addition, the Company intends to discontinue its plans to manufacture and commercialize the insulin delivery system, including the previous intended limited launch.

The Company estimates that it will incur approximately $ 25 million - $ 30 million in pre-tax cash-based charges primarily associated with employee severance payments and benefits related to the workforce reduction.

The Company expects that the majority of the restructuring charges related to the workforce reduction will be incurred in the first quarter of fiscal 2025 and that the implementation of the workforce reduction, including cash payments, will be substantially complete by the end of the second quarter of fiscal 2025.

The Company estimates that it will incur approximately $ 10 million - $ 15 million of additional pre-tax non-cash charges related to asset impairments and asset write-offs.

These preliminary estimates may be revised following the completion of the ongoing analysis of the expected additional pre-tax non-cash charges associated with the implementation of the Restructuring Plan.

The estimates of the pre-tax cash charges and additional charges that the Company expects to incur in connection with the Restructuring Plan, and the timing thereof, are subject to a number of assumptions and actual amounts may differ

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

materially from estimates.

In addition, the Company may incur other pre-tax cash charges or additional charges not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of the Restructuring Plan.

Performance-Based and Time-Vested Restricted Stock Units

In November 2023 and pursuant to the Company's 2022 Employee and Director Equity Based Compensation Plan (the "Plan"), the Company granted approximately 1.3 million TVUs in connection with the Company's annual grant which vest on a graded basis over a period of three years , subject to continuous service to the Company by the employee.

In November 2024 and pursuant to the Plan, the Company granted approximately 1.4 million TVUs in connection with the Company's annual grant which vest on a graded basis over a period of three years , subject to continuous service to the Company by the employee.

The Company also awarded approximately 0.5 million PSUs to certain executive officers and employees in connection with the Company's annual grant which vest after three years , subject to continued employment of the recipients and the achievement of certain performance metric targets.

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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-K

Item 8. Financial Statements and Supplementary Data