What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-09 compared with 2025-02-06 · 98 added, 59 removed, 194 unchanged (45% of the section changed)

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Our business traces its origins to 1924, when BD developed the first dedicated insulin syringe.

Since then, we have built a world-class organization with a unique manufacturing, supply chain and commercial footprint.

Since then, we have built a world-class organization with an unique manufacturing, supply chain and commercial footprint.

We have a broad portfolio of marketed products, including a variety of pen needles, syringes and safety injection devices.

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This has forced providers to provide clinical evidence to differentiate their products.

Global Trade.

The current global economic environment has been recently influenced by rapidly changing new tariff policies instituted by the United States ("U.S.") government and foreign governments.

As a global company that both imports raw materials and products into the U.S.

and distributes products and raw materials originating from the U.S.

to global manufacturing sites and markets, these new tariffs may have a financial impact on our cost of goods, our profit margins, our business generally and our global distribution strategy.

These new tariffs have also caused foreign governments and private purchasers to consider transitioning away from products originating from certain countries (including the U.S.) in favor of buying “local” products, which may impact the company’s business and operations.

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

Changes in Clinical Practice.

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Many countries are facing an aging population and a rapidly growing number of people living with diabetes.

While healthcare investments in certain regions continue to grow, there is an increased burden on

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

physicians and longer wait times for patients.

While healthcare investments in certain regions continue to grow, there is an increased burden on physicians and longer wait times for patients.

Healthcare delivery for non-emergency diabetes care is expected to continue shifting outside of hospitals to primary care providers, which could have a material impact on our results of operations.

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To date we have been able to successfully mitigate this disruption and provide uninterrupted supply to our customers by increasing our inventory levels and taking other measures.

Given our global business, we expect recently announced tariffs will result in additional cost for us and our suppliers as well as influencing potential future decisions by foreign governments and private purchasers to source non-U.S., “locally” manufactured products instead of products originating from certain countries (including the U.S.).

We will continue to monitor the evolving tariff environment and we will focus on optimizing operations and leveraging existing strategies to reduce the impact from tariffs.

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 our patch pump program.

As a result of this decision, the Company is in the process of executing an organizational Restructuring Plan which is expected to be completed by the end of the first half of the fiscal year, 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.

Restructuring actions associated with the Patch Pump Restructuring Plan to discontinue the patch pump program are substantially complete as of March 31, 2025.

Total cumulative pretax costs to be incurred by the Company to implement the Patch Pump Restructuring Plan are estimated to be between $30.0 million to $40.0 million.

In addition, we discontinued our commercial operation plans for the insulin delivery system, including the previous intended limited launch.

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.

During the second quarter of fiscal 2025, the Company initiated restructuring actions in connection with the 2025 Restructuring Plan to streamline the organization and optimize resources.

The Company expects the 2025 Restructuring Plan to be substantially completed by the end of fiscal year 2025.

Total cumulative pretax costs to be incurred by the Company to implement the 2025 Restructuring Plan are estimated to be between $4.0 million to $5.0 million.

We continue to monitor the conflict in Ukraine and the associated sanctions and other restrictions.

We also are monitoring the Israel-Hamas war and Houthi attacks on commercial shipping vessels and other naval vessels.

As of February 6, 2025, there is no material impact to our business operations and financial performance as a result of the aforementioned conflicts.

As of May 9, 2025, there is no material impact to our business operations and financial performance as a result of the aforementioned conflicts.

However, the full impact of the conflicts on our business operations and financial performance remains uncertain and will depend on future developments, including the severity and duration of the conflicts and their impact on regional and global economic conditions.

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Our unaudited Condensed Consolidated Statements of Income are as follows:

Three months ended December 31,

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

Revenues $ 259.0 $ 287.2 (9.8) % $ 520.9 $ 564.5 (7.7) %

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Other income (expense), net (0.4) (1.5) (73.3) (1.9) (5.0) (62.0)

(Loss) Income Before Income Taxes (0.7) 14.3 (104.9)

Income tax (benefit) (0.7) (5.8) (87.9)

Income Before Income Taxes 35.8 9.9 261.6 35.1 24.2 45.0

Income tax provision (benefit) 12.3 (19.0) (164.7) 11.6 (24.8) (146.8)

Net Income $ 23.5 $ 28.9 (18.7) $ 23.5 $ 49.0 (52.0)

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Diluted $ 0.40 $ 0.50 (20.0) % $ 0.40 $ 0.85 (52.9) %

Three Months Ended December 31, 2024 Summary (on a comparative basis)

Key financial results for the three months ended December 31, 2024 were as follows:

Three Months Ended March 31, 2025 Summary (on a comparative basis)

Key financial results for the three months ended March 31, 2025 were as follows:

• Revenue decreased by $28.2 million to $259.0 million from $287.2 million;

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Gross profit as a percent of revenue was 63.4%, as compared to 64.6% in the prior year comparative period;

• Operating income decreased by $16.8 million to $28.7 million from $45.5 million;

• Operating income increased by $23.7 million to $62.9 million from $39.2 million;

• Net income decreased by $5.4 million to $23.5 million from $28.9 million.

Our revenues decreased by $15.4 million, or 5.6%, to $261.9 million for the three months ended December 31, 2024 as compared to revenues of $277.3 million for the three months ended December 31, 2023.

Six Months Ended March 31, 2025 Summary (on a comparative basis)

Key financial results for the six months ended March 31, 2025 were as follows:

• Revenue decreased by $43.6 million to $520.9 million from $564.5 million;

• Gross profit decreased by $50.1 million to $321.2 million, from $371.3 million.

Gross profit as a percent of revenue was 61.7%, as compared to 65.8% in the prior year comparative period;

• Operating income increased by $6.9 million to $91.6 million from $84.7 million;

• Net income decreased by $25.5 million to $23.5 million from $49.0 million.

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

Our revenues decreased by $28.2 million, or 9.8%, to $259.0 million for the three months ended March 31, 2025 as compared to revenues of $287.2 million for the three months ended March 31, 2024.

Changes in revenues are driven by the volume of goods that the Company sells, the prices it negotiates with customers, and changes in foreign exchange rates.

The decrease in revenues was driven by $26.6 million of unfavorable changes in volume and $6.0 million associated with the negative impact of foreign currency translation primarily due to the strengthening of the U.S.

This was partially offset by $2.5 million of favorable changes in price and a $1.9 million increase in contract manufacturing revenues related to sales of non-diabetes products to BD.

Our revenues decreased by $43.6 million, or 7.7%, to $520.9 million for the six months ended March 31, 2025 as compared to revenues of $564.5 million for the six months ended March 31, 2024.

The decrease in revenues was driven by $44.5 million of unfavorable changes in volume and $8.0 million associated with the negative impact of foreign currency translation primarily due to the strengthening of the U.S.

This was partially offset by a $4.8 million increase in contract manufacturing revenues related to sales of non-diabetes products to BD and $4.1 million of favorable changes in price.

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

Cost of products sold

Cost of products sold increased by $13.4 million, or 14.7%, to $104.8 million for the three months ended December 31, 2024 as compared to $91.4 million for the three months ended December 31, 2023.

Cost of products sold as a percentage of revenues was 40.0% for the three months ended December 31, 2024 as compared to 33.0% for the three months ended December 31, 2023.

The increase in cost of products sold for the three month comparative period was primarily driven by a non-cash asset impairment charge 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.

Also, contributing to the period over period increase was the impact of net changes in profit in inventory adjustments.

These items were partially offset by the impact of lower sales recognized in the current period as compared to the prior year period.

Cost of products sold decreased by $6.9 million, or 6.8%, to $94.9 million for the three months ended March 31, 2025 as compared to $101.8 million for the three months ended March 31, 2024.

Cost of products sold as a percentage of revenues was 36.6% for the three months ended March 31, 2025 as compared to 35.4% for the three months ended March 31, 2024.

The decrease in cost of products sold for the three month comparative period was primarily driven by lower volumes partially offset by the impact of net changes in profit in inventory adjustments period over period.

Cost of products sold increased by $6.5 million, or 3.4%, to $199.7 million for the six months ended March 31, 2025 as compared to $193.2 million for the six months ended March 31, 2024.

Cost of products sold as a percentage of revenues was 38.3% for the six months ended March 31, 2025 as compared to 34.2% in the six months ended March 31, 2024.

The increase in cost of products sold for the six month comparative period was primarily driven by the impact of net changes from profit in inventory adjustments period over period and a non-cash asset impairment charge recorded in the first quarter of fiscal year 2025 to write down the carrying value of certain property and equipment as a result of the Company's Patch Pump Restructuring Plan.

This was partially offset by lower volumes in the current period compared to the prior year period.

Selling and administrative expenses

Selling and administrative expenses decreased by $9.2 million, or 10.2%, to $81.1 million for the three months ended December 31, 2024 as compared to $90.3 million for the three months ended December 31, 2023.

The decrease for the three month comparative period was primarily driven by lower TSA and LSA costs with BD in addition to lower compensation and marketing expense recognized in the current period.

Selling and administrative expenses decreased by $12.7 million, or 13.8%, to $79.6 million for the three months ended March 31, 2025 as compared to $92.3 million for the three months ended March 31, 2024.

Selling and administrative expenses decreased by $21.9 million, or 12.0%, to $160.7 million for the six months ended March 31, 2025 as compared to $182.6 million for the six months ended March 31, 2024.

The decrease for both the three and six month comparative periods was primarily driven by lower TSA and LSA costs with BD in addition to lower compensation and marketing expense recognized in the current periods.

Research and development expenses

Research and development expenses increased by $0.1 million, or 0.5%, to $20.3 million for the three months ended December 31, 2024 as compared to $20.2 million for the three months ended December 31, 2023.

The increase for the three month comparative period was primarily driven by certain asset impairments attributed to our decision to discontinue internal and external investment in the research and development of the Company's patch pump program.

This was partially offset by a reduction in payments made in connection with the development of our insulin patch pump program in the current period as compared to the prior period, given the discontinuation of the patch pump program.

We expect our research and development expense to decrease sequentially in fiscal year 2025 compared to fiscal year 2024.

Research and development expenses decreased by $10.4 million, or 56.5%, to $8.0 million for the three months ended March 31, 2025 as compared to $18.4 million for the three months ended March 31, 2024.

Research and development expenses decreased by $10.3 million, or 26.7%, to $28.3 million for the six months ended March 31, 2025 as compared to $38.6 million for the six months ended March 31, 2024.

The decrease for both the three and six month comparative periods was primarily driven by a reduction in payments made in connection with the development of our insulin patch pump program in the current periods as compared to the prior periods, given the discontinuation of the patch pump program.

We expect our research and development expenses to decrease sequentially in fiscal year 2025 compared to fiscal year 2024.

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

Other operating expenses

Other operating expenses incurred primarily relate to accounting, auditing, legal services, marketing, supply chain, employee retention, costs associated with the implementation of our new ERP system and other Business Continuity Processes, costs associated with brand transition, and certain other costs to establish certain stand-alone functions to assist with the transition to being a stand-alone entity.

These costs also include certain severance costs related to the optimization of certain business functions as we transition to being a stand-alone entity and severance and contract termination costs associated with the discontinued patch pump program.

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 —

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Total $ 13.6 $ 35.5 $ 40.6 $ 65.4

Other operating expenses incurred primarily consist of the following:

• Accounting, auditing, legal services, marketing, supply chain, employee retention, costs associated with the implementation of our new ERP system and other Business Continuity Processes, costs associated with brand transition, and certain other costs to establish certain stand-alone functions to assist with the transition to being a stand-alone entity

• Restructuring related costs associated with the optimization of certain business functions as we transition to being a stand-alone entity;

• Severance and contract termination costs associated with the discontinued patch pump program;

• Costs recognized associated with the amortization of cloud computing arrangements.

Interest expense, net

Interest expense, net increased by $0.2 million to $27.9 million for the three months ended December 31, 2024 as compared to $27.7 million for the three months ended December 31, 2023, which equates to a relatively flat change period over period.

Interest expense, net decreased by $1.1 million to $26.7 million for the three months ended March 31, 2025 as compared to $27.8 million for the three months ended March 31, 2024.

Interest expense, net decreased by $0.9 million to $54.6 million for the six months ended March 31, 2025 as compared to $55.5 million for the six months ended March 31, 2024.

The change for both periods was relatively flat.

It remains unclear whether the United States Federal Reserve will increase or decrease the benchmark interest rate during the remainder of fiscal 2025.

An increase in the benchmark interest rate would result in an increase in interest expense on our variable rate debt and a decrease in the benchmark interest rate would result in a decrease in interest expense on our variable rate debt.

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

Other income (expense), net

Other income (expense), net, was $(1.5) million and $(3.5) million for the three months ended December 31, 2024 and 2023, respectively.

The costs incurred for the three month period ended December 31, 2024 are primarily attributed to unfavorable impacts from foreign exchange.

The costs incurred for the three month period ended December 31, 2023, are primarily attributed to amounts due to BD for income taxes payable incurred in deferred jurisdictions where BD is considered the primary obligor.

Other income (expense), net, was $(0.4) million and $(1.5) million for the three months ended March 31, 2025 and 2024, respectively.

Other income (expense), net was $(1.9) million and $(5.0) million for the six months ended March 31, 2025 and 2024, respectively.

The costs incurred for the three and six month periods ended March 31, 2025 are primarily attributed to unfavorable impacts from foreign exchange.

The costs incurred for the three and six month periods ended March 31, 2024, are primarily attributed to amounts due to BD for income taxes payable incurred in deferred jurisdictions where BD is considered the primary obligor.

We do not expect to incur any additional amounts where BD is considered the primary obligor in the current fiscal year.

Income tax (benefit)

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

Income tax provision (benefit)

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.

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

LIQUIDITY AND CAPITAL RESOURCES

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However, should it become necessary, we believe that our credit profile should provide us with access to additional financing in order to fund normal business operations, make interest payments, fund growth opportunities and satisfy upcoming debt maturities.

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

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

Term Loan $ 841.5

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Thereafter 674.9

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

Certain measures relating to our total debt outstanding as of December 31, 2024 were as follows:

Certain measures relating to our total debt outstanding as of March 31, 2025 were as follows:

Total debt $ 1,518.6

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

As of 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.

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 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.

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

We may, from time to time, seek to retire or repurchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchase, or privately negotiated transactions, or otherwise may redeem some or all of our debt pursuant to its terms.

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For additional information related to the Company's debt related activities, refer to Note 12 within the Notes to Condensed Consolidated Financial Statements within this Form 10-Q.

Maturities of our finance lease and operating lease liabilities as of December 31, 2024 by fiscal year are as follows:

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

Maturities of our finance lease and operating lease liabilities as of March 31, 2025 by fiscal year are as follows:

Finance Lease Operating Leases Total

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Our Moody's Investors Services credit rating is B1 and our Standard & Poor's Rating Services credit rating is B+.

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

Cash and equivalents and restricted cash were $216.7 million as of December 31, 2024 as compared to $274.2 million as of September 30, 2024.

Cash and equivalents and restricted cash were $212.3 million as of March 31, 2025 as compared to $274.2 million as of September 30, 2024.

The primary uses of cash that contributed to the $61.9 million decrease were:

September 30, 2024 Cash and equivalents and restricted cash balance $ 274.2

Cash used for operating activities (5.3)

Cash provided by operating activities 26.5

Cash used for investing activities (1.6)

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Effect of exchange rate changes on cash and equivalents and restricted cash (4.3)

December 31, 2024 Cash and equivalents and restricted cash balance $ 216.7

Net cash used for operating activities was primarily attributable to:

March 31, 2025 Cash and equivalents and restricted cash balance $ 212.3

Net cash provided by operating activities was primarily attributable to:

Net Income $ 23.5

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Change in other assets and liabilities, net

Net cash used for operating activities $ (5.3)

Net cash provided by operating activities $ 26.5

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

The change in accounts payable and accrued expenses is primarily attributed to timing of payments to vendors and annual bonus payments.

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The change in amounts due from/due to Becton, Dickinson and Company is attributed to the timing of payments associated with certain agreements effectuated at Separation.

The change in prepaid expenses and other is primarily attributed to payments received from BD associated with the transfer of certain assets and liabilities related to the Diabetes Care Business in certain jurisdictions that closed in the first quarter of fiscal 2025.

The change in income and other net taxes payable is primarily attributed to timing of required tax payments.

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

Net cash used for investing activities was comprised of capital expenditures of $1.5 million for the three months ended December 31, 2024 to support our business and operations.

Net cash used for investing activities was comprised of capital expenditures of $1.6 million for the six months ended March 31, 2025 to support our business and operations.

Net cash used for financing activities was primarily attributable to:

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Net cash used for financing activities $ (82.5)

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

Contractual Obligations

Our contractual obligations as of December 31, 2024, which require material cash requirements in the future, consist of purchase obligations and lease obligations.

Our contractual obligations as of March 31, 2025, which require material cash requirements in the future, consist of purchase obligations and lease obligations.

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

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Management's Discussion and Analysis of Financial Condition and Results of Operations" in the 2024 Form 10-K for further details.

As of December 31, 2024, there have been no material changes to our contractual obligations outside the ordinary course of business.

As of March 31, 2025, there have been no material changes to our contractual obligations outside the ordinary course of business.

Critical Accounting Policies

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A discussion of accounting estimates considered critical because of the potential for a significant impact on the financial statements due to the inherent uncertainty in such estimates are disclosed in the Critical Accounting Policies section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2024 Form 10-K.

There have been no changes to our critical accounting policies as of December 31, 2024.

There have been no changes to our critical accounting policies as of March 31, 2025.

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

Cautionary Statements Regarding Forward-Looking Statements

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Forward-looking statements include those containing such words as “anticipates,” “believes,” "can," “could,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “outlook,” “plans,” "possible," “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning.

All statements that reflect Embecta’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, forecasts relating to discussions of future operations and financial performance (including volume growth, pricing, sales and earnings per share growth and cash flows) and statements regarding Embecta’s strategy for growth, the Restructuring Plan, brand transition, future product development, anticipated product and regulatory clearances, approvals, and launches, competitive position and expenditures.

All statements that reflect Embecta’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, forecasts relating to discussions of future operations and financial performance (including volume growth, pricing, sales and earnings per share growth and cash flows) and statements regarding Embecta’s strategy for growth, the Patch Pump Restructuring Plan, the 2025 Restructuring Plan, expectations related to the impact of incremental tariffs, brand transition, future product development, anticipated product and regulatory clearances, approvals, and launches, competitive position and expenditures.

Forward-looking statements are based upon our present intent, beliefs or expectations, are not guarantees of future performance and are subject to numerous risks, uncertainties, and changes in circumstances that are difficult to predict.

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

• Increases in operating costs, including fluctuations in the cost and availability of oil-based resins, other raw materials, and energy as well as certain components, used in its products, the ability to maintain favorable supplier arrangements and relationships, and the potential adverse effects of any disruption in the availability of such items.

• Increases in operating costs, including costs incurred from the new tariffs instituted by the U.S.

government and certain foreign governments on raw materials and products, fluctuations in the cost and availability of oil-based resins, other raw materials, and energy as well as certain components, used in its products, the ability to maintain favorable supplier arrangements and relationships, and the potential adverse effects of any disruption in the availability of such items.

• The risk that as a result of the current global trade environment from the newly instituted tariffs, certain foreign governments, private purchasers and other customers in certain countries may consider transitioning away from products originating from certain countries (including the U.S.) in favor of buying “local” products.

• Embecta’s ability to obtain clearance from the U.S.

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• Changes in reimbursement practices of governments or private payers or other cost containment measures.

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

• The adverse financial impact resulting from unfavorable changes in foreign currency exchange rates, as well as regional, national and foreign economic factors, including inflation, deflation, and fluctuations in interest rates, and their potential effect on its operating performance.

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

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

• The expected benefits of the Separation from BD.

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

• The impact of the Separation on Embecta's businesses and the risk that the Separation may be more difficult, time-consuming or costly than expected, including brand transition, the impact on its resources, systems, including ERP, procedures and controls, diversion of management’s attention and the impact on relationships with customers, suppliers, employees and other business counterparties.

• The expectations related to the costs, profitability, timing and the estimated financial impact of, and charges associated with, the Restructuring Plan.

• The impact of the Separation on Embecta's businesses and the risk that the Separation, including brand transition timelines and efforts, may be more difficult, time-consuming or costly than expected, the impact on its resources, systems, including ERP, procedures and controls, diversion of management’s attention and the impact on relationships with customers, suppliers, employees and other business counterparties.

• Embecta’s ability to timely and successfully complete the brand transition, including any resulting regulatory delays of transferring or obtaining registrations and licenses in the “Embecta” name, interruptions in, or customer confusion from, the replacement and transfer of the rebranded product into the current commercialization, supply and distribution networks, or other issues arising out of system, supply chain logistics, administrative and adjudicative operations transitions in the end-to-end product flow and end-user access.

• The expectations related to the costs, profitability, timing and the estimated financial impact of, and charges associated with, the Patch Pump Program Restructuring Plan and the 2025 Restructuring Plan.

• The risk that we may not complete strategic collaborative partnerships and acquisition opportunities that enable us to accelerate our growth or strategic collaborative opportunities that give us access to innovative technologies, complementary product lines, and new markets.

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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 2. Management’s Discussion and Analysis