What changed in this filing

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Item 1. Financial Statements

2025-05-09 compared with 2025-02-06 · 165 added, 110 removed, 421 unchanged (40% of the section changed)

3 unchanged sentences

Three Months Ended

March 31, Six Months Ended

2025 2024 2025 2024

Revenues $ 259.0 $ 287.2 $ 520.9 $ 564.5

9 unchanged sentences

Other income (expense), net ( 0.4 ) ( 1.5 ) ( 1.9 ) ( 5.0 )

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

Income tax (benefit) ( 0.7 ) ( 5.8 )

Income Before Income Taxes $ 35.8 $ 9.9 $ 35.1 $ 24.2

Income tax provision (benefit) 12.3 ( 19.0 ) 11.6 ( 24.8 )

Net Income $ 23.5 $ 28.9 $ 23.5 $ 49.0

7 unchanged sentences

Three Months Ended

March 31, Six Months Ended

2025 2024 2025 2024

Net Income $ 23.5 $ 28.9 $ 23.5 $ 49.0

Other Comprehensive (Loss) Income, net of tax

Other Comprehensive Income (Loss), net of tax

Foreign currency translation adjustments 11.4 ( 2.4 ) ( 15.5 ) 9.2

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

Comprehensive (Loss) Income $ ( 26.9 ) $ 31.7

Other Comprehensive Income (Loss), net of tax $ 11.4 $ ( 2.4 ) $ ( 15.5 ) $ 9.2

Comprehensive Income $ 34.9 $ 26.5 $ 8.0 $ 58.2

See notes to the Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

Embecta Corp.

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

Current Assets

2 unchanged sentences

Restricted cash 3.0 6.7

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)

Trade receivables, net (net of allowance for doubtful accounts of $ 2.6 million and $ 2.8 million as of March 31, 2025 and September 30, 2024, respectively)

Materials 42.4 40.4

26 unchanged sentences

Authorized - 250,000,000

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

Issued and outstanding - 58,327,015 as of March 31, 2025 and 57,707,285 as of September 30, 2024

Additional paid-in capital 65.0 52.5

8 unchanged sentences

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

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

Net Income — — — 28.9 — 28.9

Other comprehensive (loss), net of taxes — — — — ( 2.4 ) ( 2.4 )

Stock-based compensation plans — — 6.5 — — 6.5

Dividends and dividend equivalents declared ($ 0.15 per share)

— — 0.3 ( 8.9 ) — ( 8.6 )

Issuance of shares related to stock-based compensation plans 87,936 — ( 0.5 ) — — ( 0.5 )

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

Balance at January 1, 2025 58,131,759 $ 0.6 $ 58.2 $ ( 507.9 ) $ ( 319.7 ) $ ( 768.8 )

Net Income — — — 23.5 — 23.5

Other comprehensive income, net of taxes — — — — 11.4 11.4

Stock-based compensation plans — — 7.3 — — 7.3

Dividends and dividend equivalents declared ($ 0.15 per share)

— — 0.4 ( 9.1 ) — ( 8.7 )

Issuance of shares related to stock-based compensation plans 195,256 — ( 0.9 ) — — ( 0.9 )

Balance at March 31, 2025 58,327,015 $ 0.6 $ 65.0 $ ( 493.5 ) $ ( 308.3 ) $ ( 736.2 )

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 )

5 unchanged sentences

Issuance of shares related to stock-based compensation plans 328,080 — ( 2.7 ) — — ( 2.7 )

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

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

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

5 unchanged sentences

Issuance of shares related to stock-based compensation plans 619,730 — ( 4.6 ) — — ( 4.6 )

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

Balance at March 31, 2025 58,327,015 $ 0.6 $ 65.0 $ ( 493.5 ) $ ( 308.3 ) $ ( 736.2 )

See notes to the Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

Embecta Corp.

Three Months Ended

Six Months Ended

Operating Activities

15 unchanged sentences

Other assets and liabilities, net ( 0.1 ) ( 24.1 )

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

Net cash provided by operating activities $ 26.5 $ 11.2

Investing Activities

45 unchanged sentences

Recently Adopted Accounting Standards

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

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

Recently Issued Accounting Standards Not Yet Adopted

11 unchanged sentences

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.

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

Note 3 — Third Party Arrangements and Related Party Disclosures

5 unchanged sentences

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 amounts due from BD under the above agreements were $ 17.0 million and $ 7.5 million at March 31, 2025 and are included in Amounts due from Becton, Dickinson and Company and Trade receivables, net , respectively.

The amounts due to BD under these agreements were $ 20.7 million and $ 4.3 million at March 31, 2025 and are included in Amounts due to Becton, Dickinson and Company and Accounts payable , respectively.

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.

As of March 31, 2025, the amounts related to certain assets and liabilities in these jurisdictions are not material to the Company’s Condensed Consolidated Financial Statements.

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

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.

As a result, the Company incurred organizational restructuring plan (the "Patch Pump Restructuring Plan") costs during the three and six months ended March 31, 2025.

This Patch Pump Restructuring Plan is substantially complete as of March 31, 2025, with the cumulative pretax costs to be incurred by the Company to implement the Patch Pump Restructuring Plan estimated to be $ 30.0 million to $ 40.0 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)

During the second quarter of fiscal year 2025, the Company initiated a restructuring plan (the "2025 Restructuring Plan") to streamline the organization and optimize resources.

As a result, the Company incurred organizational restructuring plan costs during the three and six months ended March 31, 2025.

The Company expects these restructuring actions to be substantially completed by the end of fiscal year 2025, with the cumulative pretax costs to be incurred by the Company to implement the 2025 Restructuring Plan estimated to be $ 4.0 million to $ 5.0 million.

The following table summarizes the charges related to the restructuring programs by type of cost for the periods ended:

Three months ended March 31, 2025 Six months ended March 31, 2025

Employee Termination Non-Employee Related Total Employee Termination Non-Employee Related Total

Cost of products sold $ 0.1 $ — $ 0.1 $ 0.3 $ 6.1 $ 6.4

Selling and administrative expense 0.4 — 0.4 0.6 — 0.6

Research and development expense 4.3 — 4.3 6.6 4.3 10.9

Other operating expenses 5.3 ( 0.6 ) 4.7 14.2 4.7 18.9

$ 10.1 $ ( 0.6 ) $ 9.5 $ 21.7 $ 15.1 $ 36.8

Employee termination costs are associated with actual headcount reductions, including involuntary headcount reductions which were probable and could be reasonably estimated.

Non-employee related costs are associated with termination of contracts and long-lived asset impairments which are discussed further in Note 15 and Note 16.

The following table summarizes the charges and spending relating to restructuring program activities for the six months ended March 31, 2025:

Employee Termination Non-Employee Related Total

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

Charged to expense 21.7 15.1 36.8

Cash payments ( 13.1 ) ( 3.6 ) ( 16.7 )

Non-cash adjustments ( 3.0 ) ( 10.4 ) ( 13.4 )

Balance at December 31, 2024 (c)

Balance at March 31, 2025 (a)

$ 5.6 $ 1.1 $ 6.7

(a) As of March 31, 2025, $ 5.6 million is recorded in Salaries, wages and related items and $ 1.1 million is recorded in Accrued expenses .

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

(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

Other operating expenses are as follows:

Three months ended December 31,

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

2025 2024 2025 2024

Costs related to the Separation $ 6.2 $ 32.6 $ 16.6 $ 59.0

Amortization of cloud computing arrangements

2.7 1.2 5.2 1.6

Costs associated with the discontinued patch pump program 1.0 — 15.3 —

2 unchanged sentences

Total $ 13.6 $ 35.5 $ 40.6 $ 65.4

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.

In connection with the Separation, the Company incurred separation and stand-up costs.

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.

For both the three and six months ended March 31, 2025 and 2024, the Company recognized costs associated with the amortization of cloud computing arrangements which is further discussed in Note 11.

For the three and six months ended March 31, 2025, the Company recognized costs associated with the discontinuation of the patch pump program which is further discussed in Note 4.

For both the three and six months ended March 31, 2025 and 2024, the Company incurred restructuring, business optimization, and severance related costs associated with standing up and optimizing the organization.

Note 6 — Contingencies

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.

The Company was not a party to any material legal proceedings at March 31, 2025 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,

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.

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.

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

4 unchanged sentences

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.

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.

Additional factors considered in the estimate of the Company’s rebate liability include the quantification of inventory that is either in stock at

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

or in transit to the Company’s distributors, as well as the estimated lag time between the sale of product and the payment of corresponding rebates.

The Company’s liability attributed to variable consideration at March 31, 2025 and September 30, 2024 was $ 128.4 million and $ 149.6 million, respectively.

Sales deductions recorded as a reduction of gross revenues for the three months ended March 31, 2025 and 2024 were $ 143.2 million and $ 138.5 million, respectively.

Sales deductions recorded as a reduction of gross revenues for the six months ended March 31, 2025 and 2024 were $ 293.3 million and $ 265.2 million, respectively.

Disaggregation of Revenues

3 unchanged sentences

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

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

The Company’s contract asset balance was $ 1.2 million as of both March 31, 2025 and September 30, 2024.

Note 8 — Segment and Geographical Data

9 unchanged sentences

Revenues by geographic region are as follows:

Three months ended December 31,

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

2025 2024 2025 2024

United States $ 135.2 $ 147.6 $ 276.9 $ 296.2

International (1)

123.8 139.6 244.0 268.3

Total $ 259.0 $ 287.2 $ 520.9 $ 564.5

(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:

(1) For the three and six months ended March 31, 2025 and 2024, 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.

Three months ended December 31,

Revenues by product line are as follows:

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

2025 2024 2025 2024

Pen Needles $ 188.3 $ 218.2 $ 379.4 $ 428.0

1 unchanged sentence

Safety 34.2 33.3 68.4 64.1

3.3 3.1 6.7 7.1

Contract Manufacturing 4.4 2.6 9.2 4.5

3 unchanged sentences

Stock-Based Compensation Expense

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,

Total stock-based compensation expense for the three and six months ended March 31, 2025 and 2024 and the respective income tax benefits recognized by the Company in the Condensed Consolidated Statements of Income are as follows:

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

2025 2024 2025 2024

Cost of products sold $ 0.6 $ 1.1 $ 1.2 $ 2.0

4 unchanged sentences

Tax benefit associated with stock-based compensation costs recognized $ 1.0 $ 0.5 $ 2.0 $ 1.2

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,

The following table summarizes the Company's total stock-based compensation expense by classification of award for the three and six months ended March 31, 2025 and 2024:

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

2025 2024 2025 2024

Equity Awards $ 7.3 $ 6.5 $ 16.2 $ 13.8

1 unchanged sentence

Total $ 7.3 $ 6.5 $ 16.3 $ 13.9

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,

The following table summarizes the Company's total stock-based compensation expense by award type for the three and six months ended March 31, 2025 and 2024:

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

2025 2024 2025 2024

Time-Vested Restricted Stock Units (TVUs)

$ 6.2 $ 5.2 $ 11.8 $ 10.6

Performance-Based Restricted Stock Units (PSUs)

0.4 0.4 3.3 1.3

Stock Appreciation Rights (SARs)

0.7 0.9 1.2 2.0

Total $ 7.3 $ 6.5 $ 16.3 $ 13.9

Time Vested Restricted Stock Units ("TVUs")

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

During the six months ended March 31, 2025 , Embecta granted 1,541,980 restricted stock units ("RSUs") in the form of TVUs to employees.

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

The related stock-based compensation expense is recorded over the requisite service period, which is the vesting period or is based on retirement eligibility.

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

The related stock-based compensation

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:

expense is recorded over the requisite service period, which is the vesting period or is based on retirement eligibility.

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

A summary of TVUs outstanding as of March 31, 2025 and changes during the six months ended March 31, 2025 are as follows:

TVUs (in thousands) Weighted Average Grant Date Fair Value

3 unchanged sentences

Forfeited, canceled or expired ( 222.2 ) 19.08

Nonvested at December 31 2,633.1 $ 19.74

Expected to vest at December 31 2,502.9 $ 19.75

Nonvested at March 31 2,372.3 $ 19.60

Expected to vest at March 31 2,256.2 $ 19.66

*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 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.

The weighted average grant date fair value of TVUs granted during the six months ended March 31, 2025 is $ 18.55 and the total fair value of TVUs vested during the six months ended March 31, 2025 is $ 18.8 million.

At March 31, 2025, the weighted average remaining vesting term of TVUs is 1.9 years.

Performance Based Restricted Stock Units ("PSUs")

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.

During the six months ended March 31, 2025 , 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 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:

As of March 31, 2025 , there were 975,546 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 March 31, 2025 and changes during the six months ended March 31, 2025 are as follows:

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

1 unchanged sentence

Granted* 216.1 18.17

( 37.4 ) 18.70

Forfeited, canceled or expired ( 6.2 ) 18.96

Nonvested at December 31 270.7 $ 24.20

Expected to vest at December 31 259.2 $ 20.55

Nonvested at March 31 229.2 $ 21.39

Expected to vest at March 31 218.1 $ 21.38

*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.

At March 31, 2025, the weighted average remaining vesting term of PSUs is 0.6 years.

Stock Appreciation Rights

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:

A summary of stock appreciation rights ("SARs") outstanding as of March 31, 2025 and changes during the six months ended March 31, 2025 are as follows:

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

1 unchanged sentence

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

Forfeited, canceled or expired ( 159.6 ) 29.42

Balance at March 31 1,597.4 $ 29.12 6.2 $ —

Vested and expected to vest at March 31 1,563.1 29.08 6.2 $ —

Exercisable at March 31 973.2 $ 28.09 5.8 $ —

*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.

3,400 SARs w ere exercised during the six months ended March 31, 2025.

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 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.

The amount of unrecognized compensation expense for all non-vested stock-based awards granted as of March 31, 2025, is approximately $ 39.6 million which is expected to be recognized over a weighted-average remaining life of approximately 2.1 years.

At March 31, 2025, 3.1 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:

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

Amortized intangible assets

13 unchanged sentences

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

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

Short-term portion

6 unchanged sentences

$ 60.0 $ 64.5

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 .

Costs amortized during the three and six months ended March 31, 2025 and 2024 are included in Other operating expenses and were as follows:

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

2025 2024 2025 2024

Amortization of cloud computing arrangements

2.7 1.2 5.2 1.6

As of March 31, 2025, cloud computing arrangement assets in-service have remaining 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 December 31, 2024, no amount has been drawn on the Revolving Credit Facility.

As of March 31, 2025, 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.

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

As of March 31, 2025, 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:

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

The following is a summary of Embecta's total debt outstanding as of March 31, 2025:

Term Loan due March 2029 $ 841.5

5 unchanged sentences

Long-term debt $ 1,509.1

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

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.

During the six months ended March 31, 2025, the Company recorded approximately $ 4.1 million of amortization on deferred debt issuance costs and discounts.

During the six months ended March 31, 2025 , the Company made interest payments of $ 52.5 million on debt outstanding.

The weighted-average interest rate on total borrowings as of March 31, 2025 is 6.5 %.

During the six months ended March 31, 2025, the Company paid an aggregate principal amount of approximately $ 59.8 million on the Term Loan, of which $ 55.0 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.

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Thereafter 674.9

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.

The estimated fair value of long-term debt (including current portion) at March 31, 2025 was $ 1,477.4 million compared with a carrying value (which includes a reduction for unamortized debt issuance costs and discounts) of $ 1,518.6 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 months ended December 31, 2024 and 2023 was as follows:

The calculation of earnings per basic and diluted common share for the three and six months ended March 31, 2025 and 2024 was as follows:

Three Months Ended

March 31, Six Months Ended

($ in millions and shares in thousands, except per share amounts) 2025 2024 2025 2024

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Earnings per common share - Diluted $ 0.40 $ 0.50 $ 0.40 $ 0.85

Antidilutive Shares (millions) 3.9 4.2 2.5 2.8

Earnings per diluted 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 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.

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

Note 14 — Income Taxes

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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 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.

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

The effective tax rates were 34.4 % and ( 191.9 )% for the three months ended March 31, 2025 and 2024, respectively.

The increase in the Company's effective tax rate compared to the prior period is primarily due to the absence of non-recurring tax benefits recognized in the prior period related to withholding taxes on undistributed foreign earnings and tax reserves, partially offset by favorable tax impacts primarily resulting from overall higher earnings reflected in the current period.

The effective tax rates were 33.0 % and ( 102.5 )% for the six months ended March 31, 2025 and 2024, respectively.

The increase in the Company's effective tax rate compared to the prior period is primarily due to the absence of non-recurring tax benefits recognized in the prior period related to withholding taxes on undistributed foreign earnings, Swiss tax law changes and tax reserves, partially offset by favorable tax impacts primarily resulting from overall higher earnings reflected in the current period.

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 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

The following reconciles Cash and equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets as of March 31, 2025 and September 30, 2024, to the total amounts shown in the Condensed Consolidated Statements of Cash Flows:

March 31, 2025 September 30, 2024

Cash and equivalents

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$ 212.3 $ 274.2

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

Cash and equivalents as of March 31, 2025 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 $ 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 .

Interest income on Cash and equivalents was $ 1.3 million and $ 2.9 million for the three months ended March 31, 2025 and 2024, respectively, and $ 3.1 million and $ 6.3 million for the six months ended March 31, 2025 and 2024, 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.

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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 December 31, 2024 and September 30, 2024, respectively:

Hedge Designation December 31, 2024 September 30, 2024

The notional amounts of the Company’s foreign currency-related derivative instruments were as follows as of March 31, 2025 and September 30, 2024:

Hedge Designation March 31, 2025 September 30, 2024

Foreign exchange contracts (a)

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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.

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

In the first half 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 .

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Concentration of Credit Risk

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

Three of the Company’s customers represented at least 10.0% of total gross revenues individually and, in the aggregate, represented approximately 40.8 % for the three months ended March 31, 2025, and three of the Company's customers represented at least 10.0% of total gross revenues individually and, in the aggregate, represented approximately 41.4 % of total revenues for the six months ended March 31, 2025.

Two of the Company's customers represented at least 10.0% of total gross trade receivables individually and, in the aggregate, represented approximately 32.3 % as of March 31, 2025.

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

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Property, Plant and Equipment, Net consisted of:

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

Land $ 3.0 $ 3.1

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Total Property, Plant and Equipment, Net $ 257.4 $ 290.4

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

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

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

Finance Leases

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Weighted-average discount rate 7.0 % 6.5 %

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

Supplemental cash flow information related to leases for the six months ended March 31, 2025 and 2024 were as follows:

March 31, 2025 March 31, 2024

Right of use assets obtained in exchange for lease liabilities

Operating Leases 2.2 1.5

March 31, 2025 March 31, 2024

Cash used for amounts included in the measurement of lease liabilities

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Operating cash flows from Finance Lease

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

Maturities of the Company's finance and operating lease liabilities as of March 31, 2025 by fiscal year are as follows:

Finance Leases Operating Leases Total

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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-Q

Item 1. Financial Statements