What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-02-06 compared with 2024-08-09 · 180 added, 169 removed, 351 unchanged (50% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Revenues $ 261.9 $ 277.3

9 unchanged sentences

Other income (expense), net ( 1.5 ) ( 3.5 )

Income Before Income Taxes $ 27.0 $ 20.1 $ 51.2 $ 100.7

Income tax provision (benefit)

12.3 4.9 ( 12.5 ) 36.3

(Loss) Income Before Income Taxes $ ( 0.7 ) $ 14.3

Income tax (benefit) ( 0.7 ) ( 5.8 )

Net Income $ — $ 20.1

7 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Net Income $ — $ 20.1

Other Comprehensive Income (Loss), net of tax

Other Comprehensive (Loss) Income, net of tax

Foreign currency translation adjustments ( 26.9 ) 11.6

Total Other Comprehensive Income (Loss), net of tax

$ ( 6.4 ) $ 1.5 $ 2.8 $ 30.2

Comprehensive Income $ 8.3 $ 16.7 $ 66.5 $ 94.6

Other Comprehensive (Loss) Income $ ( 26.9 ) $ 11.6

Comprehensive (Loss) Income $ ( 26.9 ) $ 31.7

See notes to the Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

Embecta Corp.

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

Current Assets

2 unchanged sentences

Restricted cash 6.7 6.7

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

Trade receivables, net (net of allowance for doubtful accounts of $ 2.7 million and $ 2.8 million as of December 31, 2024 and September 30, 2024, respectively)

Materials 39.4 40.4

22 unchanged sentences

Non Current Finance Lease Liabilities 29.8 30.2

Commitments and Contingencies

Contingencies (Note 6)

Embecta Corp.

1 unchanged sentence

Authorized - 250,000,000

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

Issued and outstanding - 58,131,759 as of December 31, 2024 and 57,707,285 as of September 30, 2024

Additional paid-in capital 58.2 52.5

8 unchanged sentences

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

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

Net income — — — 15.2 — 15.2

Other comprehensive income, net of taxes — — — — 1.5 1.5

Stock-based compensation plans — — 5.5 — — 5.5

Dividends declared ($ 0.15 per share)

— — — ( 8.6 ) — ( 8.6 )

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

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

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

Net income — — — 14.7 — 14.7

Other comprehensive loss, net of taxes — — — — ( 6.4 ) ( 6.4 )

Stock-based compensation plans — — 6.3 — — 6.3

Dividends and dividend equivalents declared ($ 0.15 per share)

— — 0.3 ( 8.9 ) — ( 8.6 )

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

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

See notes to the Unaudited Condensed Consolidated Financial Statements.

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

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

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

2 unchanged sentences

Stock-based compensation plans — — 7.3 — — 7.3

Dividends declared ($ 0.45 per share)

Dividends and dividend equivalents declared ($ 0.15 per share)

— — 0.4 ( 9.0 ) — ( 8.6 )

Issuance of shares related to stock-based compensation plans 240,144 — ( 2.2 ) — — ( 2.2 )

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

Balance at December 31, 2023 57,573,497 $ 0.6 $ 33.4 $ ( 530.0 ) $ ( 297.5 ) $ ( 793.5 )

Balance at October 1, 2024 57,707,285 $ 0.6 $ 52.5 $ ( 498.6 ) $ ( 292.8 ) $ ( 738.3 )

Net Income — — — — — —

Other comprehensive income, net of taxes — — — — 2.8 2.8

Other comprehensive (loss), net of taxes — — — — ( 26.9 ) ( 26.9 )

Stock-based compensation plans — — 8.9 — — 8.9

2 unchanged sentences

Issuance of shares related to stock-based compensation plans 424,474 — ( 3.7 ) — — ( 3.7 )

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

Balance at December 31, 2024 58,131,759 $ 0.6 $ 58.2 $ ( 507.9 ) $ ( 319.7 ) $ ( 768.8 )

See notes to the Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

Embecta Corp.

Nine Months Ended

Three Months Ended

Operating Activities

3 unchanged sentences

Amortization of debt issuance costs 2.1 1.6

Impairment of property, plant and equipment 10.4 —

Amortization of cloud computing arrangements

9 unchanged sentences

Other assets and liabilities, net ( 0.5 ) ( 9.3 )

Net cash provided by operating activities $ 9.1 $ 38.1

Net cash used for operating activities $ ( 5.3 ) $ ( 13.1 )

Investing Activities

20 unchanged sentences

("Embecta" or the "Company") is a leading global medical device company focused on providing solutions to improve the health and well-being of people living with diabetes.

The Company has a broad portfolio of marketed products, including a variety of pen needles, syringes and safety devices, which are complemented by a proprietary digital application designed to assist people with managing their diabetes.

The Company has a broad portfolio of marketed products, including a variety of pen needles, syringes and safety devices.

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

6 unchanged sentences

All intercompany transactions and accounts within Embecta have been eliminated.

These interim statements should be read in conjunction with the audited financial statements and notes thereto included in Embecta's Annual Report on Form 10-K for the year ended September 30, 2023.

These interim statements should be read in conjunction with the audited financial statements and notes thereto included in Embecta's Annual Report on Form 10-K for the year ended September 30, 2024, filed with the Securities and Exchange Commission on December 11, 2024 (the “2024 Form 10-K”).

Use of Estimates

2 unchanged sentences

Actual results could differ from these estimates.

The following provides updates to the Company's "Summary of Significant Accounting Policies" as disclosed in the 2024 Form 10-K.

Restructuring Costs

The Company records liabilities for costs associated with exit or disposal activities in the period in which the liability is incurred.

In accordance with existing benefit arrangements, future employee termination costs to be incurred in conjunction with involuntary separations are accrued when such separations are probable and estimable.

When accruing these costs, the Company will recognize the amount that is the best estimate.

Costs for one-time termination benefits are recognized at the date the employee is notified, unless the employee is required to render services beyond a minimum retention period, in which case the benefits are expensed ratably over the service period.

Liabilities for other costs associated with a restructuring activity are measured at fair value and are recognized when the liability is incurred.

Other costs primarily consist of contract termination fees and other costs related to restructuring activities and are expensed when incurred.

In connection with exit and disposal activities, the Company also assesses the recoverability of long-lived assets employed in the business.

Additional disclosures regarding the Company’s accounting for restructuring costs are provided in Note 4.

Recently Adopted Accounting Standards

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

There were no new material accounting standards adopted in the first quarter of fiscal year 2025.

Recently Issued Accounting Standards Not Yet Adopted

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

In November 2023, the Financial Accounting Standard Board ("FASB") 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.

1 unchanged sentence

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

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

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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

1 unchanged sentence

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

Reclassification

Certain prior period amounts have been reclassified to conform to the current year presentation.

In November 2024, the FASB issued ASU 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

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

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 3 — Third Party Arrangements and Related Party Disclosures

1 unchanged sentence

Pursuant to the Separation and Distribution Agreement, BD agreed to spin off its diabetes care business (the "Diabetes Care Business") into Embecta, a new, publicly traded company (the "Separation").

In connection with the Separation, the Company entered into the Separation and Distribution Agreement, which contains provisions that, among other things, relate to (i) assets, liabilities and contracts to be transferred, assumed and assigned to each of Embecta and BD (including certain deferred assets and liabilities) as part of the Separation, (ii) cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of Embecta's business with Embecta and financial responsibility for the obligations and liabilities of BD’s remaining businesses with BD, (iii) procedures with respect to claims subject to indemnification and related matters, (iv) the allocation among Embecta and BD of rights and obligations under existing insurance policies with respect to occurrences prior to completion of the Separation, as well as the right to proceeds and the obligation to incur certain deductibles under certain insurance policies, and (v) procedures governing Embecta’s and BD’s obligations and allocations of liabilities with respect to ongoing litigation matters that may implicate each of BD’s business and Embecta’s business.

In addition, the Company entered into a series of agreements with BD that govern aspects of Embecta's relationship with BD following the Separation which include, but are not limited to the Transition Services Agreements ("TSA"), Trade Receivables Factoring Agreements ("Factoring Agreements"), Distribution Agreements, Cannula Supply Agreement, Tax Matters Agreement, Logistics Services Agreement ("LSA"), employee matters agreement, 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.

Certain of these agreements have expired or terminated as disclosed in the 2024 Form 10-K.

For details on the rights and responsibilities of the parties under these agreements refer to Note 4 to the Consolidated Financial Statements in the 2024 Form 10-K.

The amount due from BD under the above agreements was $ 39.6 million at December 31, 2024 and is included in Amounts due from Becton, Dickinson and Company .

The amount due to BD under these agreements was $ 42.6 million at December 31, 2024 and is included in Amounts due to Becton, Dickinson and Company .

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

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

As of December 31, 2024, the amounts related to certain assets and liabilities in these jurisdictions are not material to the Company’s Condensed Consolidated Financial Statements.

Note 4 — Business Restructuring Charges

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.

As a result, the Company incurred organizational restructuring plan (the "Restructuring Plan") costs during the three months ended December 31, 2024.

This Restructuring Plan is expected to be completed by the end of the first half of fiscal year 2025, with the cumulative pretax costs to be incurred by the Company to implement the Restructuring Plan estimated to be $ 35.0 million to $ 45.0 million.

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

The following table summarizes the Company's restructuring related accrual balance as of December 31, 2024 and related activity for the three months ended December 31, 2024:

Employee Termination Non-Employee Related (a)

Balance at September 30, 2024 $ — $ — $ —

Charged to expense (b)

11.6 15.8 27.4

Cash payments ( 1.5 ) — ( 1.5 )

Non-cash adjustments ( 0.9 ) ( 10.4 ) ( 11.3 )

Balance at December 31, 2024 (c)

$ 9.2 $ 5.4 $ 14.6

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

obligations under existing insurance policies with respect to occurrences prior to completion of the Separation, as well as the right to proceeds and the obligation to incur certain deductibles under certain insurance policies, and (v) procedures governing Embecta’s and BD’s obligations and allocations of liabilities with respect to ongoing litigation matters that may implicate each of BD’s business and Embecta’s business.

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 the Transition Services Agreements ("TSA"), Trade Receivables Factoring Agreements ("Factoring Agreements"), Distribution Agreements, Cannula Supply Agreement, Tax Matters Agreement, Logistics Services Agreement ("LSA"), employee matters agreement, 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.

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

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

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

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

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

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

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

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

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

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

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

Note 4 — Collaboration Agreement

In March 2023, the Company entered into a collaboration agreement with a third-party to develop and commercialize an interoperable automated glycemic controller ("iAGC") to complement the Company's insulin patch pump currently in development.

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 nine month period ended June 30, 2023.

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

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.

(a) Primarily relates to other costs associated with the execution of the Company’s plan, such as termination of contracts and long-lived asset impairments which are discussed further in Note 15 and Note 16.

(b) For the three months ended December 31, 2024, approximately $ 14.3 million is recorded in Other operating expense, $ 6.5 million is recorded in Research and development expense, and $ 6.2 million is recorded in Cost of products sold .

Amounts recorded to Selling and administrative expense for the three months ended December 31, 2024 were no t material to the Company's Condensed Consolidated Statements of Income.

(c) As of December 31, 2024, approximately $ 9.2 million is recorded in Salaries, wages and related items and $ 5.4 million is recorded in Accrued expenses .

Note 5 — Other Operating Expenses

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

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

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

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

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

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

Other operating expenses are as follows:

Three months ended December 31,

Costs related to the Separation $ 10.4 $ 26.4

Amortization of cloud computing arrangements

Costs associated with the discontinued patch pump program 14.3 —

Business optimization and severance related costs — 1.9

Other ( 0.2 ) 1.2

Total $ 27.0 $ 29.9

In connection with the Separation, the Company incurred separation and stand-up costs of approximately $ 10.4 million and $ 26.4 million during the three months ended December 31, 2024 and December 31, 2023, respectively.

The costs incurred primarily consist of costs associated with accounting, auditing, legal services, marketing, supply chain, employee retention, brand transition, and certain other costs to establish 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 plan ("ERP") system (“Business Continuity Processes”) and stand-alone functions to assist with the transition to being a stand-alone entity.

For the three months ended December 31, 2024, the Company recognized $ 14.3 million of costs associated with the discontinuation of the patch pump program which is further discussed in Note 4.

The costs incurred primarily consist of severance-related and contract termination costs.

For the three months ended December 31, 2023, the Company recognized $ 1.9 million of costs related to the optimization of certain business functions.

For the three months ended December 31, 2024 and December 31, 2023, respectively, the Company recognized $ 2.5 million and $ 0.4 million of costs associated with the amortization of cloud computing arrangements.

Note 6 — Contingencies

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

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

Note 7 — Revenues

6 unchanged sentences

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.

5 unchanged sentences

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

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

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

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

The Company’s liability attributed to variable consideration at December 31, 2024 and September 30, 2024 was $ 128.6 million and $ 149.6 million, respectively.

Sales deductions recorded as a reduction of gross revenues for the three months ended December 31, 2024 and 2023 were $ 150.1 million and $ 126.7 million, respectively.

Disaggregation of Revenues

Disaggregation of revenue by geographic region is provided within Note 8.

Disaggregation of revenue by geographic region and product line is provided within Note 8.

Contract Assets and Liabilities

1 unchanged sentence

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

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

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

Note 8 — Segment and Geographical Data

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

Management has concluded that the Company operates in one segment

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

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

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

Disaggregation of Revenues

4 unchanged sentences

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.

The Company disaggregates its revenue by geography and product line as management believes these categories best depict how the nature, amount, and timing of revenues and cash flows are affected by economic factors.

Revenues by geographic region are as follows:

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

2024 2023 2024 2023

Three months ended December 31,

United States $ 141.7 $ 148.6

International (1)

128.9 132.2 397.2 389.3

Total $ 261.9 $ 277.3

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

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

Revenues by product line are as follows:

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

Three months ended December 31,

Pen Needles $ 191.1 $ 209.8

Syringes 28.4 30.8

Safety 34.2 30.8

Contract Manufacturing 4.8 1.9

Total $ 261.9 $ 277.3

(2) Other includes product sales for swabs and other accessories.

Note 9 — Stock-Based Compensation

Stock-Based Compensation Expense

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

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

2024 2023 2024 2023

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

Three months ended December 31,

Cost of products sold $ 0.6 $ 0.9

1 unchanged sentence

Research and development expense 0.1 0.6

Other operating expense 0.9 —

Total Stock-Based Compensation Expense $ 9.0 $ 7.4

Tax benefit associated with stock-based compensation costs recognized $ 1.0 $ 0.7

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

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

2024 2023 2024 2023

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

Three months ended December 31,

Equity Awards $ 8.9 $ 7.3

1 unchanged sentence

Total $ 9.0 $ 7.4

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

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

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

2024 2023 2024 2023

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

Three months ended December 31,

Time-Vested Restricted Stock Units (TVUs)

$ 4.8 $ 4.2 $ 15.4 $ 12.5

Performance-Based Restricted Stock Units (PSUs)

0.7 0.3 2.0 0.9

Stock Appreciation Rights (SARs)

1.0 1.2 3.0 3.6

Total $ 9.0 $ 7.4

Time Vested Restricted Stock Units ("TVUs")

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

During the three months ended December 31, 2024 , Embecta granted 1,404,047 restricted stock units ("RSUs") in the form of TVUs to employees.

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

1 unchanged sentence

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

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

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

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

TVUs (in thousands) Weighted Average Grant Date Fair Value

3 unchanged sentences

Forfeited, canceled or expired ( 32.7 ) 20.03

Nonvested at June 30 2,004.0 $ 21.46

Expected to vest at June 30 1,900.9 $ 21.56

Nonvested at December 31 2,633.1 $ 19.74

Expected to vest at December 31 2,502.9 $ 19.75

*Includes accumulated nonvested dividend equivalents

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

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

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

The weighted average grant date fair value of TVUs granted during the three months ended December 31, 2024 is $ 18.70 and the total fair value of TVUs vested during the three months ended December 31, 2024 is $ 14.8 million.

At December 31, 2024, the weighted average remaining vesting term of TVUs is 2.2 years.

Performance Based Restricted Stock Units ("PSUs")

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

During the three months ended December 31, 2024 , Embecta awarded 538,031 RSUs in the form of PSUs to certain executive officers and employees which cliff vest after three years , subject to continued employment of the recipients and the achievement of certain performance metric targets.

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

3 unchanged sentences

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

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

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

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

As of December 31, 2024 , there were 1,019,799 RSUs in the form of PSUs that have been awarded, inclusive of accumulated dividend equivalents, for which a grant date has not yet been established.

A summary of PSUs outstanding as of December 31, 2024 and changes during the three months ended December 31, 2024 are as follows:

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

Nonvested at October 1 56.7 $ 30.24

Granted* 216.1 18.17

Forfeited, canceled or expired ( 2.1 ) 20.08

Nonvested at June 30 57.5 $ 30.24

Expected to vest at June 30 54.3 $ 30.24

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

Nonvested at December 31 270.7 $ 24.20

Expected to vest at December 31 259.2 $ 20.55

*Includes accumulated nonvested dividend equivalents

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

At December 31, 2024, the weighted average remaining vesting term of PSUs is 0.7 years.

Stock Appreciation Rights

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

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

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

Balance at October 1 1,760.4 $ 29.11

Forfeited, canceled or expired ( 45.3 ) 27.36

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

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

Exercisable at June 30 851.8 $ 28.04 6.3 $ —

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

Exercised* ( 3.4 ) 13.30

Balance at December 31 1,757.0 $ 29.14 6.5 $ 0.1

Vested and expected to vest at December 31 1,716.6 29.11 6.5 $ 0.1

Exercisable at December 31 1,022.2 $ 28.08 6.0 $ 0.1

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

3,400 SARs w ere exercised during the three months ended December 31, 2024.

The intrinsic val ue and grant date fair value of SARs exercised was immaterial.

Unrecognized Stock-Based Compensation Expense and Other Stock Plans

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

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

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

Goodwill and Intangible Assets

The amount of unrecognized compensation expense for all non-vested stock-based awards granted as of December 31, 2024, is approximately $ 52.3 million which is expected to be recognized over a weighted-average remaining life of approximately 2.2 years.

At December 31, 2024, 4.7 million shares were authorized for future grants under the Company's 2022 Employee and Director Equity Based Compensation Plan, as amended.

Note 10 — Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets consisted of:

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

Amortized intangible assets

9 unchanged sentences

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

Cloud Computing Arrangements

Note 11 — Cloud Computing Arrangements

The Company capitalizes costs associated with the development of cloud computing arrangements in a manner consistent with internally developed software.

1 unchanged sentence

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

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

Short-term portion

$ 10.4 $ 10.2

Long-term portion

4 unchanged sentences

$ 62.6 $ 64.5

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

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

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

Costs amortized during the three months ended December 31, 2024 were $ 2.5 million and are included in Other operating expenses .

Costs amortized during the three months ended December 31, 2023 were not material to the Company's Condensed Consolidated Statements of Income.

As of December 31, 2024, cloud computing arrangement assets in-service have useful lives which range from approximately two to eight years .

Note 12 — Long-Term Debt

9 unchanged sentences

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

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

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

The Credit Agreement and the indentures for Embecta's outstanding 5.00 % senior secured notes due February 2030 (the " 5.00 % Notes") and 6.75 % senior secured notes due February 2030 (the " 6.75 % Notes") contain customary financial covenants, including a total net leverage ratio covenant, which measures the ratio of (i) consolidated total net debt to (ii) consolidated earnings before interest, taxes, depreciation and amortization, and subject to other adjustments, must meet certain defined limits which are tested on a quarterly basis in accordance with the terms of the Credit Agreement and the 5.00 % Notes and 6.75 % Notes.

In addition, the Credit Agreement contains covenants that will limit, among other things, Embecta’s ability to prepay, redeem or repurchase its subordinated and junior lien debt, incur additional debt, make acquisitions, merge with other entities, pay dividends or distributions, redeem or repurchase equity interests, and create or become subject to liens.

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

As of December 31, 2024, we were in compliance with all of such covenants.

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

Term Loan due March 2029 $ 868.9

5 unchanged sentences

Long-term debt $ 1,534.7

The debt issuance costs on the Term Loan, 5.00 % Notes, 6.75 % Notes and the discount on the Term Loan are reported in

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

the Condensed 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.

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 Condensed 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.

During the first quarter of fiscal year 2025, the Company recorded approximately $ 2.1 million of amortization on deferred debt issuance costs and discounts.

During the first quarter of fiscal 2025, the Company made interest payments of $ 27.4 million on debt outstanding.

The weighted-average interest rate on total borrowings as of December 31, 2024 is 6.7 %.

During the first quarter of fiscal year 2025 , the Company paid an aggregate principal amount of approximately $ 32.4 million on the Term Loan, of which $ 30.0 million was discretionary.

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

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

Thereafter 700.0

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

The estimated fair value of long-term debt (including current portion) at December 31, 2024 was $ 1,515.3 million compared with a carrying value (which includes a reduction for unamortized debt issuance costs and discounts) of $ 1,544.2 million.

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

Note 13 — Earnings per Share

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

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

Three Months Ended

June 30, Nine Months Ended

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

Net Income attributable to Embecta $ 14.7 $ 15.2 $ 63.7 $ 64.4

Net Income $ — $ 20.1

Basic weighted average number of shares outstanding 57,952 57,486

5 unchanged sentences

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

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

For the three months ended December 31, 2024 and 2023, 3.0 million and 3.2 million, respectively, of dilutive share equivalents issuable under stock-based compensation plans were excluded from the diluted shares outstanding calculation because the result would have been antidilutive.

Note 14 — Income Taxes

2 unchanged sentences

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

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

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

tax on foreign earnings.

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

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

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

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

The decrease in the

The effective tax rates were 100.0 % and ( 40.6 )% for the three months ended December 31, 2024 and 2023, respectively.

The increase in the Company’s effective tax rate from the prior comparative period is primarily due to the absence of a tax

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

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

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

benefit from the establishment of deferred tax assets related to tax law changes in Switzerland, as well as a decrease in earnings.

Note 15 — Financial Instruments and Fair Value Measurements

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

June 30, 2024 September 30, 2023

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

December 31, 2024 September 30, 2024

Cash and equivalents

3 unchanged sentences

$ 216.7 $ 274.2

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

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

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

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

Interest income on Cash and equivalents was $ 1.8 million and $ 3.4 million for the three months ended December 31, 2024 and 2023, respectively, and is included as a component of Interest expense, net .

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

3 unchanged sentences

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

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

Hedge Designation June 30, 2024 September 30, 2023

Foreign exchange contracts (a) Undesignated $ 5.1 $ 6.7

Represent hedges of transactional foreign exchange exposures resulting primarily from intercompany payables and receivables.

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

Hedge Designation December 31, 2024 September 30, 2024

Foreign exchange contracts (a)

Undesignated $ 5.4 $ 4.5

(a) Represent hedges of transactional foreign exchange exposures resulting primarily from intercompany payables and receivables.

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

4 unchanged sentences

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

In the first quarter of fiscal year 2025, the Company recorded a non-cash asset impairment charge of $ 10.4 million to write down the carrying value of certain property and equipment as a result of the Company's plan to discontinue the patch pump program.

$ 6.1 million was recorded to Cost of products sold and $ 4.3 million was recorded to Research and development expense .

The amount recognized was recorded to adjust the carrying amount of assets to the assets' fair values, which were estimated, based upon a market participant's perspective, using Level 3 measurements, including values estimated using the income approach.

Concentration of Credit Risk

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

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

Three of the Company’s customers represented at least 10.0% of total gross revenues individually and, in the aggregate, represented approximately 42.0 % for the three months ended December 31, 2024, and three of the Company's customers represented at least 10.0% of total gross revenues individually and, in the aggregate, represented approximately 40.8 % of total revenues for the three months ended December 31, 2023.

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

Two of the Company's customers represented at least 10.0% of total gross trade receivables individually and, in the aggregate, represented approximately 31.0 % as of December 31, 2024.

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

The Company does not normally require collateral from its customers.

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

Note 16 — Property, Plant and Equipment

Property, Plant and Equipment, Net consisted of:

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

Land $ 2.9 $ 3.1

6 unchanged sentences

Total Property, Plant and Equipment, Net $ 258.9 $ 290.4

$ 6.1 million was recorded to Cost of products sold and $ 4.3 million was recorded to Research and development expense .

Note 17 — Leases

4 unchanged sentences

The Company's operating leases primarily relate to its real estate leases that are not classified as finance leases.

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

Aggregate Lease Information

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

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

Finance Leases

14 unchanged sentences

Weighted-average discount rate 6.9 % 6.5 %

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

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

June 30, 2024 June 30, 2023

Right of use assets obtained in exchange for lease liabilities

Operating Leases $ 1.5 $ 17.4

June 30, 2024 June 30, 2023

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

For both the three months ended December 31, 2024 and 2023, right of use assets obtained in exchange for lease liabilities were not material.

December 31, 2024 December 31, 2023

Cash used for amounts included in the measurement of lease liabilities

2 unchanged sentences

Operating cash flows from Finance Lease

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

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

Finance Leases Operating Leases Total

10 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements