10 unchanged sentences
• Embecta obtains components and raw materials for its products from third parties, including BD.
−Removed: These third parties may fail to perform under their agreements with Embecta, or there may be a reduction or interruption in the manufacturing and supply of these components and raw materials.
−Removed: Any such failure to perform or a reduction or interruption in supply could have a material adverse effect on Embecta’s business and operations.
+Added: These third parties may fail to perform under their agreements with Embecta, or there may be a reduction, interruption, or termination in the manufacturing and supply of these components and raw materials.
+Added: Any such failure to perform or a reduction, interruption, or termination in supply could have a material adverse effect on Embecta’s business and operations.
• Embecta may experience difficulties and delays in the manufacturing of its products or sterilization operations, and any such difficulties and delays could adversely affect Embecta’s business.
6 unchanged sentences
• Embecta’s future growth is dependent in part upon the development of new products, and there can be no assurance that such products will be developed or be successful.
−Removed: • If the third parties on which Embecta relies to conduct its clinical trials and to assist it with pre-clinical development do not perform as contractually required or expected, or if market or clinical or other studies are unfavorable to its products in development, Embecta may not be able to obtain regulatory clearance or approval or commercialize its products.
• Embecta may be unable to maintain strong relationships with physicians and other healthcare professionals which could adversely affect its business.
1 unchanged sentence
• Embecta’s international operations subject it to certain business risks.
+Added: • Trade actions, such as tariffs, retaliatory tariffs, and private or governmental "buy local" initiatives could adversely and unexpectedly impact our business.
+Added: • If the third parties on which Embecta relies to conduct its clinical trials and to assist it with pre-clinical development do not perform as contractually required or expected, or if market or clinical or other studies are unfavorable to its products in development, Embecta may not be able to obtain regulatory clearance or approval or commercialize its products.
• Embecta’s business and operations are subject to risks related to climate change.
• Embecta's intellectual property and proprietary technology are material to its business operations and are subject to infringement and other risks.
−Removed: • Breaches of Embecta’s information systems or cyberattacks could adversely affect our business.
+Added: • Breaches of Embecta’s Information Systems (as defined in Item 1C of this Annual Report on Form 10-K) or cyberattacks could adversely affect our business.
• A disruption at one of our facilities could adversely affect our business and operating results.
15 unchanged sentences
If such consents or approvals are not obtained, Embecta may not be entitled to the full benefit of such contracts, permits and other assets and rights, which could increase its expenses or otherwise harm its business and financial performance.
−Removed: • The closing of the Separation was deferred in certain jurisdictions, and may not occur at all in such jurisdictions, due to local regulatory requirements, which may adversely affect Embecta’s business, financial condition and results of operations.
• Satisfaction of indemnification obligations following the distribution could have a material adverse effect on Embecta’s financial condition, results of operations and cash flows.
1 unchanged sentence
• The price and trading volume of Embecta’s common stock may be volatile, and stockholders could lose all or part of their investment in Embecta.
−Removed: • The material weakness in our internal control over financial reporting that has been identified and our ability to remediate such material weakness.
• Embecta cannot guarantee the timing, amount or payment of any dividends on its common stock.
16 unchanged sentences
The development of new or improved products, processes or technologies by other companies (such as new technologies to administer insulin) that provide better features, pricing, clinical outcomes or economic value may make Embecta’s existing or new products less competitive.
−Removed: In some instances, competitors, including pharmaceutical companies, also offer, or are attempting to develop, alternative therapies, including oral and once-weekly anti-diabetic drugs, GLP-1s and GLP-1 combination products, for disease states (including diabetes) that may be delivered without a medical device, such as pen needles.
+Added: In some instances, competitors, including pharmaceutical companies, also offer, or are attempting to develop, alternative therapies, including oral and once-weekly anti-diabetic drugs (e.g., SGLT-2s, once-weekly insulin, GLP-1s, and GLP-1 combination products), for disease states (including diabetes) that may be administered and delivered less frequently compared to conventional and historical multiple daily injections or without a medical device, such as pen needles, entirely.
Lower cost producers have also created pricing pressure, particularly in emerging markets.
10 unchanged sentences
The diabetes treatment industry is subject to technological change and product innovation.
−Removed: A number of companies and medical researchers are developing and commercializing new ways to deliver insulin to patients, including insulin administration technologies that do not require the use of a needle, that reduce the frequency of insulin administration, or that treat diabetes without the use of insulin or by delaying the use of insulin, such as oral and once-weekly anti-diabetic drugs, GLP-1s and GLP-1 combination products.
−Removed: If they are successful in developing and commercializing these technologies or treatment therapies, the demand for Embecta’s products could decline.
+Added: A number of companies and medical researchers are developing and commercializing new ways to deliver insulin to patients, including insulin administration technologies that do not require the use of a needle, that reduce the frequency of insulin administration, or that treat diabetes without the use of insulin or by delaying the use of insulin, such as oral and once-weekly anti-diabetic drugs (e.g., SGLT-2s, once-weekly insulins, GLP-1s, and GLP-1 combination products).
+Added: If they are successful in developing and commercializing these technologies or treatment therapies, the demand for Embecta’s products could decline or be delayed.
Furthermore, the National Institutes of Health and other supporters of diabetes research are continually seeking ways to prevent diabetes.
1 unchanged sentence
Embecta obtains components, services and raw materials for its products from third parties, including BD.
−Removed: These third parties may fail to perform under their agreements with Embecta, or there may be a reduction or interruption in the manufacturing and supply of these components and raw materials.
−Removed: Any such failure to perform or a reduction or interruption in supply could have a material adverse effect on Embecta’s business and operations .
+Added: These third parties may fail to perform under their agreements with Embecta, or there may be a reduction, interruption, or termination in the manufacturing and supply of these components and raw materials.
+Added: Any such failure to perform or a reduction, interruption, or termination in supply could have a material adverse effect on Embecta’s business and operations .
Embecta relies on a number of third parties to supply and manufacture the components, services and raw materials for its products.
1 unchanged sentence
Cannulas are a component part of a wide variety of medical devices that use needles to deliver fluid into, or through which blood is drawn from, the body.
−Removed: BD retains ownership of all cannula production activities and all intellectual property rights of BD and its subsidiaries relating to cannula, the manufacture thereof and other critical cannula-related technology.
+Added: BD retains ownership of all cannula production activities and all intellectual property rights of BD and its subsidiaries relating to cannula, the manufacture thereof and
+Added: other critical cannula-related technology.
Pricing under the cannula supply agreement is determined by BD based on several factors, including Embecta's yearly forecast, the cost of raw materials and other cost methodologies.
−Removed: supply agreement is terminable by BD without cause by providing at least 36 months’ written notice;
+Added: The cannula supply agreement is terminable by BD without cause by providing at least 36 months’ written notice;
however, such termination can be effective no earlier than ten years from the Separation.
3 unchanged sentences
If BD fails to perform under this agreement or BD terminates this agreement in accordance with its terms and, in either case, Embecta cannot find a way to purchase cannula from another party or manufacture cannula, or if Embecta needs to purchase more cannula than it is permitted under cannula supply agreement, Embecta may have insufficient cannulas for its products, which could materially adversely affect Embecta’s business, financial condition or results of operations.
−Removed: In addition, in connection with the Separation, Embecta and BD entered into a lease agreement for a manufacturing facility location in Holdrege, Nebraska that Embecta leases from BD and several contract manufacturing agreements where BD provides certain manufacturing services to Embecta.
+Added: In addition, in connection with the Separation, Embecta and BD entered into a lease agreement for a manufacturing facility location in Holdrege, Nebraska that Embecta leases from BD where BD provides certain manufacturing services to Embecta.
If BD is unable to perform under these arrangements, terminates certain services or modifies its operations and Embecta cannot find substantially similar alternatives to perform these services or is forced to change its operations as a result, Embecta may incur additional costs, delays or other deficiencies in its operations, which could materially adversely affect Embecta’s business, financial condition or results of operations.
1 unchanged sentence
In many cases, Embecta does not have long-term supply agreements with suppliers of these component parts and raw materials, and its arrangements with these suppliers are on a purchase-order basis.
−Removed: Certain raw materials that we obtain from suppliers are subject to fluctuations in price and availability attributable to a number of factors, including general economic conditions, commodity price fluctuations, the demand by other companies for the same raw materials and the availability of complementary and substitute materials.
+Added: Certain raw materials that we obtain from suppliers are subject to fluctuations in price and availability attributable to a number of factors, including general economic conditions and environments, such as new and changing tariff policies instituted by the U.S.
+Added: government and foreign governments, commodity price fluctuations, the demand by other companies for the same raw materials and the availability of complementary and substitute materials.
In some cases, Embecta’s agreements with suppliers can be terminated by either party by convenience upon short notice.
Certain raw materials and components used in the manufacture of pen needles and syringes, including cannulas, certain oil-based resins and rubber stoppers, are not always available from multiple sources.
−Removed: New laws or regulations adopted in response to climate change could also increase energy and transportation costs, as well as the costs of certain raw materials and components.
−Removed: In addition, for quality assurance, cost-effectiveness and other reasons, Embecta purchases certain raw materials and components from a single supplier.
−Removed: The price and supply of these materials and components may be affected or disrupted for reasons beyond Embecta’s control.
+Added: New laws or regulations influenced or adopted in response to local and international tariff policies, or climate change, among others, could also increase import duties, energy costs, transportation costs, and the overall costs of certain raw materials and components.
+Added: In addition, for quality assurance, cost-effectiveness and other reasons, Embecta purchases certain raw materials and components from a single supplier, who in turn sometimes rely on their own single or sole sourced sub-suppliers for certain materials or components.
+Added: The price and supply of these materials and components may be affected or disrupted for reasons beyond Embecta’s control, including, but not limited to, such suppliers or sub-suppliers changes or cessation of business operations, whether voluntary or involuntary, and limitations in the availability of their materials, labor, or other resources.
While Embecta works with suppliers to ensure continuity of supply, no assurance can be given that these efforts will be successful.
−Removed: In the event that any of its existing supply arrangements are terminated or there is a reduction or interruption of supply under these existing arrangements, Embecta expects that it will be able to enter into new arrangements with alternative suppliers, but these new arrangements may be on terms that are less favorable, including with respect to price and volume, and it may be costly or cause delays in Embecta’s manufacturing process to transition to a new supplier, particularly in cases in which Embecta must comply with regulatory requirements relating to qualification of new suppliers.
+Added: In the event that any of its existing supply arrangements are terminated or there is a reduction or interruption of supply under these existing arrangements, Embecta expects that it will be able to enter into new arrangements with current or alternative suppliers, but these new arrangements may be on terms that are less favorable, including with respect to price and volume, and it may be costly or cause delays in Embecta’s manufacturing process to transition to a new supplier or new raw material or component, particularly in cases in which Embecta must comply with regulatory requirements relating to qualification of new suppliers or replacement raw materials or components from current suppliers.
The termination, reduction or interruption in supply of these raw materials and components could adversely impact Embecta’s ability to manufacture and sell certain of its products.
Third-party suppliers may encounter problems during manufacturing for a variety of reasons, including failure to follow specific protocols and procedures, failure to comply with applicable regulations, equipment malfunction, component part supply constraints, and environmental factors, any of which could delay or impede their ability to supply the components and raw materials for Embecta’s products.
−Removed: Any such failure to perform or a reduction or interruption in supply could have a material adverse effect on Embecta’s business and operations.
+Added: In addition, these third-party suppliers may be influenced or compelled to stop or pause shipments to Embecta due to new or changing tariff policies as a result of supply chain disruption, uncertainty over costs, and potential retaliatory measures from their local governments.
+Added: Any such failure to perform or a reduction, interruption, or termination in supply could have a material adverse effect on Embecta’s business and operations.
Embecta may experience difficulties and delays in the manufacturing of its products or sterilization operations, and any such difficulties and delays could adversely affect Embecta’s business.
1 unchanged sentence
manufacturing suspensions, shutdowns or delays;
−Removed: delays related to the construction of new facilities or the expansion of existing facilities;
+Added: delays related to the construction of new facilities or the expansion of
+Added: existing facilities;
and other manufacturing or distribution problems, including changes in manufacturing production sites and limits to manufacturing capacity resulting from regulatory requirements, changes in types of products produced and physical limitations that could affect supply.
7 unchanged sentences
A substantial portion of Embecta’s revenue is derived from sales to a few customers.
−Removed: For example, for the fiscal year ended September 30, 2024, gross sales to McKesson Corporation, Cardinal Health and Cencora, Embecta’s three largest distributors, together represented approximately 41% of Embecta’s worldwide gross sales.
+Added: For example, for the fiscal year ended September 30, 2025, gross sales to Cencora, McKesson Corporation, and Cardinal Health, Embecta’s three largest distributors, together represented approximately 42% of Embecta’s worldwide gross sales.
The costs charged by these and other distributors to distribute Embecta’s products is also subject to negotiation, and such distributors may propose increases in such charges from time to time.
7 unchanged sentences
In addition, consolidation and integration among healthcare institutions and providers significantly affects the competitive landscape for medical devices.
−Removed: Health plans, pharmacy benefit managers, wholesalers, and other supply chain stakeholders have been consolidating into fewer, larger entities, thus enhancing their purchasing strength and importance.
+Added: Health plans, pharmacy benefit managers ("PBMs"), wholesalers, and other supply chain stakeholders have been consolidating into fewer, larger entities, thus enhancing their purchasing strength and importance.
Specifically, private third-party insurers and governments typically maintain formularies that specify coverage (the conditions under which drugs and medical devices are included on a plan’s formulary) and reimbursement (including both the associated out-of-pocket cost to the consumer and payment to the distributor) to control costs by negotiating discounted prices, inflation guarantees and other terms in exchange for formulary inclusion.
7 unchanged sentences
In addition to the evolving payer market that continues to put price pressure on Embecta’s products, new competitors have emerged.
−Removed: Competitors that are new to the pen needle and insulin syringe categories, along with some that have emerged to begin engaging with payers, have accelerated the focus on these product categories, providing payers more choices for formulary partners within these medical device categories.
+Added: Competitors that are new to the pen needle and insulin syringe categories, along with some that have emerged to begin engaging with payers, have accelerated the focus on these product categories, providing payers more choices for formulary
+Added: partners within these medical device categories.
+Added: In addition to pressures imposed by public and private payers, the Centers for Medicare & Medicaid Services (“CMS”) of the U.S.
+Added: Department of Health and Human Services (“HHS”) has begun implementing measures outlined in the Inflation Reduction Act of 2022 to negotiate prices on certain high cost prescription drugs for Medicare beneficiaries, as well as proposing competitive bidding on other medical devices, including those used for the treatment of diabetes.
+Added: Embecta’s products are covered by Medicare Part D covered medical devices and if there is any expansion of price negotiations or competitive bidding by CMS, or other agencies, for the category of products within which Embecta competes and Embecta is unable to successfully negotiate favorable pricing for its products, it could adversely impact Embecta’s financial condition and results of operations.
+Added: Congress and many U.S.
+Added: States have and may continue to scrutinize key participants in the healthcare industry, including PBMs.
+Added: A number of bills have been introduced, proposed, and passed that would further regulate PBMs and impose additional requirements.
+Added: The FTC has issued statements about PBMs and conducted a study of PBMs that resulted in two published reports, which could motivate further actions with respect to PBMs regulation.
+Added: The FTC also filed an administrative complaint against the three largest PBMs and their affiliated group purchasing organizations alleging that the PBMs engaged in anti-competitive and unfair practices that increased costs for insulin medication.
+Added: It is unclear what the results of this matter and the above noted PBMs scrutiny will be, and what impact this will have on the PBMs industry and our business, financial condition and results of operations.
In addition to the ongoing challenges faced across the United States, Embecta faces similar access, pricing and reimbursement trends outside of the United States.
3 unchanged sentences
For example, in EMEA (which includes Europe, the Middle East and Africa), the demand for medical devices that are paid out of pocket by the end user is limited.
−Removed: Access to these products is largely defined by the availability and size of government reimbursement, or, in a limited number of countries, the ability of manufacturers to negotiate reimbursement
−Removed: directly with insurance companies.
+Added: Access to these products is largely defined by the availability and size of government reimbursement, or, in a limited number of countries, the ability of manufacturers to negotiate reimbursement directly with insurance companies.
In China, the most notable threat continues to be access through volume-based procurement and Group Purchasing Organizations ("GPOs"), with potential significant price erosion and cost containment within the healthcare landscape.
12 unchanged sentences
Embecta believes that a significant portion of its sales will continue to be from independent distributors for the foreseeable future, and it is possible that the percentage of its sales from independent distributors could increase.
−Removed: None of Embecta’s independent distributors in the United States has been required to sell Embecta’s products exclusively, and each of them may freely sell the products of Embecta’s competitors.
+Added: None of Embecta’s
+Added: independent distributors in the United States has been required to sell Embecta’s products exclusively, and each of them may freely sell the products of Embecta’s competitors.
If Embecta is unable to maintain or expand its network of independent distributors, its sales may be negatively affected.
2 unchanged sentences
Embecta’s future growth is dependent in part upon the development of new products, and there can be no assurance that such products will be developed or be successful.
−Removed: A significant element of Embecta’s strategy is to increase revenue growth by focusing on innovation and new product development.
−Removed: Even if Embecta submits an application to the FDA for clearance, there is no assurance that such clearance will be obtained or that Embecta will be able to market and sell such products successfully.
+Added: An element of Embecta’s strategy is to increase revenue growth by focusing on innovation and new product development.
+Added: Even if Embecta submits an application to the FDA or foreign regulatory authorities for approval and/or clearance, there is no assurance that such approval or clearance will be obtained or that Embecta will be able to market and sell such products successfully.
New product development requires significant investment in research and development.
The results of Embecta’s product development efforts may be affected by a number of factors, including Embecta’s ability to anticipate the needs of people with diabetes, successfully complete clinical and other trials, obtain regulatory clearance and approvals for its products, manufacture such products in a cost-effective manner, obtain appropriate intellectual property protection for such products, gain and maintain market acceptance of such products, secure distribution channels, and obtain access, coverage and reimbursement for such products.
−Removed: Even if cleared by the FDA or foreign regulatory agencies, future generations of our systems, expanded indications for use of future systems, our software platforms or any other system under development, may not be cleared for the indications that are necessary or desirable for successful commercialization.
+Added: Even if cleared by the FDA or foreign regulatory authorities, future generations of our products, expanded indications for use of future products, or any other products under development, may not be cleared for the indications that are necessary or desirable for successful commercialization.
There can be no assurance that Embecta will be able to successfully develop or commercialize any products now in development or that Embecta may seek to fully develop or commercialize such products in the future.
−Removed: If the third parties on which Embecta relies to conduct its clinical trials and to assist it with pre-clinical development do not perform as contractually required or expected, or if market or clinical or other studies are unfavorable to its products in development, Embecta may not be able to obtain regulatory clearance or approval or commercialize its products.
−Removed: Embecta relies on third parties, such as contract research organizations, medical institutions, clinical investigators, contract laboratories and other third parties, to conduct some of its studies, including clinical trials, human factors studies and pre-clinical investigations.
−Removed: If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, or if the quality or accuracy of the data they obtain is compromised due to failure to adhere to the protocols or regulatory requirements or for other reasons, Embecta’s pre-clinical development activities or clinical or other trials may be extended, delayed, suspended or terminated, and Embecta may not be able to obtain regulatory clearance or approval for, or successfully commercialize, its products on a timely basis, or at all, and Embecta’s business and operating results may be adversely affected.
−Removed: Furthermore, such third parties may experience delays or challenges in conducting such studies and trials for reasons outside of their control, including, but not limited to, recruiting enough participants for the studies.
−Removed: In addition, Embecta faces the risk of potential unauthorized disclosure or misappropriation of its intellectual property by contract research organizations, which may reduce Embecta’s trade secret protection and allow its potential competitors to access and exploit its proprietary technology.
−Removed: In addition, if future clinical trials fail to support the efficacy or safety of Embecta’s current or future products or if the data obtained from those and other studies are unfavorable or inadequate to support satisfactory conclusions about Embecta’s current or future products, Embecta’s commercialization efforts or sales may be adversely affected and may have a material adverse effect on its business, financial condition and results of operations.
−Removed: In addition, future clinical studies or other articles regarding Embecta’s existing products or any competing products may be published that either support a claim, or are perceived to support a claim, that a competitor’s product is clinically more effective or easier to use than Embecta’s existing products or products in development or that any such product is not as effective as Embecta claims.
−Removed: Any of these events may negatively affect Embecta’s sales efforts and result in decreased revenue.
Embecta’s failure to maintain strong relationships with physicians and other healthcare professionals could adversely affect its business.
8 unchanged sentences
A substantial amount of Embecta’s sales come from its operations outside the United States, and Embecta intends to continue to pursue growth opportunities outside of the United States, especially in emerging markets.
−Removed: Embecta’s international operations subject it to certain risks relating to, among other things, fluctuations in foreign currency exchange, local economic and political conditions, competition from local companies, increases in trade protectionism, United States relations with the governments of the foreign countries in which Embecta operates, foreign regulatory requirements or changes in such requirements, changes in local healthcare payment systems and healthcare delivery systems, local product preferences and requirements, longer payment terms for account receivables than we experience in the United States, difficulty in establishing, staffing and managing foreign operations, changes to international trade agreements and treaties, changes in tax laws, weakening or loss of the protection of intellectual property rights in some countries and import or export licensing requirements.
+Added: Embecta’s international operations subject it to certain risks relating to, among other things, fluctuations in foreign currency exchange, local economic and political conditions, competition from local companies, increases in trade protectionism, United States relations with the governments of the foreign countries in which Embecta operates, foreign regulatory requirements or changes in such requirements, changes in local healthcare payment systems and healthcare delivery systems, local or non-U.S.
+Added: originated product preferences and/or requirements, longer payment terms for account receivables than we experience in the United States, difficulty in establishing, staffing and managing foreign operations, changes to international trade policies, agreements, tariffs, regulations, and treaties, changes in tax laws, weakening or loss of the protection of intellectual property rights in some countries and import or export licensing requirements.
The success of Embecta’s international operations also depends, in part, on its ability to make necessary infrastructure enhancements to, among other things, its production facilities and sales and distribution networks.
2 unchanged sentences
• political instability and actual or anticipated military or political conflicts;
−Removed: • trade protection measures and barriers, such as tariffs, and import and export licensing, control and compliance requirements;
+Added: • trade protection measures and barriers, such as tariffs, import and export licensing, customs, control and compliance requirements;
• negative consequences from changes in or interpretations of tax laws;
• difficulty in establishing, staffing and managing international operations;
−Removed: • difficulties associated with foreign legal systems, including increased costs associated with enforcing contractual obligations in foreign jurisdictions;
+Added: • difficulties associated with foreign legal systems or other foreign regulations or commitments, including increased costs or penalties associated with enforcing or fulfilling certain governmental and/or non-governmental contractual obligations in foreign jurisdictions;
• changes in regulatory requirements;
14 unchanged sentences
Changes in United States policy regarding international trade, including import and export regulation and international trade agreements, could also negatively impact Embecta’s business.
−Removed: The United States has imposed tariffs and export controls on certain goods and products imported from China and certain other countries, which has resulted in retaliatory tariffs by China and other countries.
−Removed: Additional tariffs imposed by the United States on a broader range of imports, or further retaliatory trade measures taken by China or other countries in response, could result in an increase in supply chain costs that Embecta may not be able to offset or that otherwise adversely impact its results of operations.
In addition, political tensions between the United States and China and certain other countries have escalated in recent years between and among these countries.
13 unchanged sentences
The payment amounts are calculated based on the amount by which the regional ceilings for the given year were exceeded.
−Removed: In response to decrees issued by the Italian Ministry of Health, the
−Removed: various Italian regions issued invoices to medical device companies.
+Added: In response to decrees issued by the Italian Ministry of Health, the various Italian regions issued invoices to medical device companies.
Following the issuance of the invoices, numerous other medical device companies filed appeals with the Italian administrative courts challenging the enforceability of the payback measure, primarily on the basis that the law was unconstitutional.
−Removed: The Italian administrative courts referred the question regarding the constitutionality of the law to the Italian Constitutional Court, which in July 2024, issued a ruling upholding the law as constitutional.
−Removed: Following the ruling of the Italian Constitutional Court, the appeal before the Italian administrative court will proceed with respect to the remaining legal arguments asserted by the appellants with regard to the enforceability of the payback law.
−Removed: Since the law was enacted, Embecta has recognized an estimate for the amount of variable consideration but has not made any payments under the payback law.
−Removed: As litigation before Italian Courts is still pending, final resolution is unknown at this time, and it is possible that the amount of the Embecta’s liability could differ from the amount currently accrued.
+Added: The Italian administrative courts referred the
+Added: question regarding the constitutionality of the law to the Italian Constitutional Court, which in July 2024, issued a ruling upholding the law as constitutional.
+Added: Following the ruling of the Italian Constitutional Court, the appeal before the Italian administrative court was rejected in May 2025 and Italy passed the Economic Decree (Law Decree No.
+Added: 95/2025) in June 2025 offering a 75% discount on payback amounts for the years 2015 through 2018.
+Added: Although Embecta has paid and settled its 2015 through 2018 obligations, the determinations for 2019 and after are still pending.
+Added: Embecta has recognized an estimate for the amount of variable consideration but has not made any payments under the payback law for 2019 and after.
+Added: Given final resolution is unknown at this time, it is possible that the amount of the Embecta’s liability could differ from the amount currently accrued.
The military conflict between Russia and Ukraine has resulted in the implementation of sanctions by the United States and other governments against Russia and has caused significant volatility and disruptions to the global markets.
−Removed: It is not possible to predict the short- and long-term implications of this conflict, which could include but are not limited to further sanctions, uncertainty about economic and political stability, increases in inflation rate and energy prices, supply chain challenges, adverse effects on currency exchange rates and financial markets and disruption to its supplier, channels to market or customers.
+Added: Although the impact of the conflict on our supply chain has not been significant, it is not possible to predict the short- and long-term implications of this conflict, which could include but are not limited to further sanctions, uncertainty about economic and political stability, increases in inflation rate and energy prices, supply chain challenges, adverse effects on currency exchange rates and financial markets and disruption to its supplier, channels to market or customers.
In addition, the United States government reported that United States sanctions against Russia in response to the conflict could lead to an increased threat of cyberattacks against United States companies.
−Removed: These increased threats could pose risks to the security of Embecta’s Information Technology systems, networks and product offerings, as well as the confidentiality, availability and integrity of Embecta’s data.
+Added: These increased threats could pose risks to the security of Embecta’s information systems, networks and product offerings, as well as the confidentiality, availability and integrity of Embecta’s data.
In addition, the hostilities in Israel and the Middle East, including attacks on shipping vessels in the Red Sea, could develop to have a more widespread economic and geopolitical affect in the Middle East and Europe, and/or economic sanctions between or among countries, as well as general geopolitical issues in the Middle East.
9 unchanged sentences
economic sanctions.
−Removed: Due to Embecta’s international operations, it is subject to such laws and regulations, which are complex, restrict its business dealings with certain countries and individuals, and are constantly changing.
−Removed: Further restrictions may be enacted, amended, enforced or interpreted in a manner that materially impacts Embecta’s operations.
+Added: Due to Embecta’s international operations, it is subject to such laws and regulations, which are complex, restrict its business dealings with certain countries and individuals, and are constantly changing, including laws and regulations regarding sanctioned countries, entities and persons, customs, and import-export, which restrict, and in some cases can prevent, U.S.
+Added: companies from directly or indirectly selling goods or services to people or entities in certain countries.
+Added: These laws also require the appropriate amount of scrutiny in any engagement with these persons and entities in and from certain foreign countries.
+Added: Given we also sell and provide products to agents, representatives, and distributors, who may export such items to customers and end-users, if we, or the third parties through which we do business, are not in compliance with applicable import, export control, or economic sanctions laws and regulations, we may be subject to civil or criminal enforcement action, and varying degrees of liability.
+Added: Such actions may disrupt or delay sales of our products or services or result in further restrictions on our distribution and sales of products or services and further restrictions may be enacted, amended, enforced or interpreted in a manner that materially impacts Embecta’s operations.
Violations of these regulations are punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts and revocations or restrictions of licenses, as well as criminal fines and imprisonment.
2 unchanged sentences
Any such violation could adversely affect Embecta’s reputation, business, financial condition and results of operations.
+Added: Trade actions, such as tariffs, retaliatory tariffs, and private or governmental "buy local" initiatives could adversely and unexpectedly impact our business.
+Added: Given that a significant amount of our raw materials, components and products are sold and distributed globally, the actions by the U.S.
+Added: government or foreign governments could impact both the availability and cost of our products.
+Added: Most notably, new tariffs are, and could be, levied on raw materials and products shipped to the U.S.
+Added: and raw materials and products that originate from the U.S.
+Added: that are distributed globally.
+Added: For example, in April 2025, the current administration in the U.S.
+Added: increased tariff rates, subject to evolving exemptions, on numerous raw materials and products from a range of
+Added: nations and has announced on several occasions its intentions to potentially increase or decrease current tariffs, impose additional tariffs, and/or expand or reduce tariffs on raw materials and goods imported from various countries.
+Added: In addition, earlier this year, the U.S.
+Added: government imposed a universal baseline tariff on imports globally and raised the Section 232 tariff on imported steel for many countries.
+Added: In September 2025, the U.S.
+Added: Commerce Department Bureau of Industry and Security (the “Department”) initiated a national security investigation into imports of personal protective equipment, medical consumables, and medical equipment, including devices such as pen needles and insulin syringes, under Section 232 of the Trade Expansion Act of 1962 (the “Trade Act”).
+Added: The Trade Act allows the President of the U.S.
+Added: to negotiate tariffs to promote international trade, including the authority to impose tariffs if the Department determines imports threaten the U.S.
+Added: national security.
+Added: If it is determined these imports pose a national security risk, the ultimate impact remains uncertain and will depend on several factors, but could result in additional potential tariffs imposed in addition to the country-based tariffs, reductions on the benefit Embecta receives from currently available exemptions, additional trade protection measures, embargoes, import or export licensing requirements, trade sanctions or similar restrictions, all of which could significantly increase our costs, strain our resources, and/or create additional complexity in the management of our business and interpretation and compliance with such changes.
+Added: This may also cause foreign countries to implement retaliatory tariffs or other retaliatory measures.
+Added: Any such changes could have a material impact on our business, financial condition and results of operations.
+Added: The current tariff environment evolves continuously and is uncertain.
+Added: The United States has imposed tariffs and export controls on certain goods and products imported from China and certain other countries, which has resulted in retaliatory tariffs by China and other countries.
+Added: Additional tariffs imposed by the United States on a broader range of imports, or further retaliatory trade measures taken by China or other countries in response, could result in an increase in supply chain costs that Embecta may not be able to offset or that otherwise adversely impact its results of operations.
+Added: In addition, the U.S.
+Added: government has imposed, modified, and paused tariffs multiple times since the beginning of 2025, with changes to tariffs and other trade restrictions announced at any time, sometimes with little or no advanced notice.
+Added: As noted above, we export certain raw materials and products to other countries that have and may take future actions in response to these tariffs.
+Added: The use of tariffs as a policy tool has created significant uncertainty about the future trading relationship among the U.S., China, the European Union, Canada, Mexico and other exporting countries, including with respect to trade policies, treaties, government regulations and tariffs, and has led to concerns regarding the potential for extended trade barriers.
+Added: The escalation of trade tensions could impact us in a variety of ways, including increases in manufacturing costs, disruptions or delays to our global supply chain, limitations on our ability to sell our products, and reductions in sales volumes and gross margins for our products, any of which could materially affect our business, financial condition and results of operations.
+Added: We also face uncertainty in the interpretation of new tariffs and their applicability, including with respect to customs valuation, product classification and country-of-origin determinations.
+Added: Although we and our suppliers seek to comply with applicable customs laws and regulations, the application of rules regarding new tariffs can be subject to varying interpretations or future re-interpretations.
+Added: For example, the ongoing litigation regarding the IEEPA tariffs case that was recently heard by the U.S.
+Added: Supreme Court has created additional uncertainty as to the scale and short and long-term effect these tariffs will have on Embecta and the medical device industry overall.
+Added: It is possible that U.S.
+Added: or other relevant courts or authorities could, upon review or audit, disagree with the authority, valuation, rules of origin or classification methods applied to certain products.
+Added: Any such disagreement could result in the retroactive assessment of additional duties with interest, the imposition of penalties, or other enforcement actions without the ability to mitigate such penalties, thereby adversely affecting our operations or financial results.
+Added: Furthermore, certain of our competitors may be better positioned than us to withstand or react to border taxes, tariffs or other restrictions on global trade and, as a result, we may lose market share to such competitors.
+Added: Finally, certain governmental and private purchasers have threatened to or may restrict the purchase of products from certain countries (including the U.S.) in favor of “buying local,” resulting in the additional possibility that local manufacturers, brands, and other competitors may engage in aggressive competitive pricing to take advantage of the uncertain global trade environment and transition customers away from global manufacturers, all of which may impact our business and operations.
+Added: We cannot control the duration or depth of any of the above such actions which may increase our product costs, reduce our margins, potentially decrease the competitiveness of our products, or result in loss of certain contracts.
+Added: These actions could have a negative effect on our business, results of operations, or financial condition.
+Added: If the third parties on which Embecta relies to conduct its clinical trials and to assist it with pre-clinical development do not perform as contractually required or expected, or if market or clinical or other studies are unfavorable to its products in development, Embecta may not be able to obtain regulatory clearance or approval or commercialize its products.
+Added: Embecta relies on third parties, such as contract research organizations, medical institutions, clinical investigators, contract laboratories and other third parties, to conduct some of its studies, including clinical trials, human factors studies and pre-clinical investigations.
+Added: If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, or if the quality or accuracy of the data they obtain is compromised due to failure to adhere to the protocols or regulatory requirements or for other reasons, Embecta’s pre-clinical development activities or clinical or other trials may be extended, delayed, suspended or terminated, and Embecta may not be able to obtain regulatory clearance or approval for, or successfully commercialize, its products on a timely basis, or at all, and Embecta’s business and operating results may be adversely affected.
+Added: Furthermore, such third parties may experience delays or challenges in conducting such studies and trials for reasons outside of their control, including, but not limited to, recruiting enough participants for the studies.
+Added: In addition, Embecta faces the risk of potential unauthorized disclosure or misappropriation of its intellectual property by contract research organizations, which may reduce Embecta’s trade secret protection and allow its potential competitors to access and exploit its proprietary technology.
+Added: In addition, if future clinical trials fail to support the efficacy or safety of Embecta’s current or future products or if the data obtained from those and other studies are unfavorable or inadequate to support satisfactory conclusions about Embecta’s current or future products, Embecta’s commercialization efforts or sales may be adversely affected and may have a material adverse effect on its business, financial condition and results of operations.
+Added: In addition, future clinical studies or other articles regarding Embecta’s existing products or any competing products may be published that either support a claim, or are perceived to support a claim, that a competitor’s product is clinically more effective or easier to use than Embecta’s existing products or products in development or that any such product is not as effective as Embecta claims.
+Added: Any of these events may negatively affect Embecta’s sales efforts and result in decreased revenue.
Embecta’s business and operations are subject to risks related to climate change.
The long-term effects of global climate change present risks to Embecta’s business and operations.
−Removed: Extreme weather, natural disasters or other conditions caused by climate change could adversely impact its supply chain and the availability and cost of raw materials and components, energy supply, transportation or other inputs required for the operation of its business.
+Added: Extreme or severe weather, natural disasters, flooding, heat events, or other conditions caused by climate change could adversely impact its supply chain, logistics, and operations, and the availability and cost of raw materials and components, energy supply, transportation or other inputs required for the operation of its business.
Such conditions could also result in physical damage to products, plants and distribution centers, or our suppliers' facilities, as well as the infrastructure and facilities of hospitals, medical care facilities and other customers.
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Embecta may not be able to pass on these costs to its customers, which could have a material adverse effect on its results of operations and cash flows.
−Removed: The Russia and Ukraine conflict, the Israel-Hamas war, the possibility of military activity in countries near or adjacent to Israel, including attacks on shipping vessels in the Red Sea, and the growing geopolitical tensions between China and Taiwan, coupled with possible related supply chain shortages may affect the energy power and oil sector’s networks and ability to supply their customers, including Embecta.
+Added: The Russia and Ukraine conflict, the conflict in the Middle East, the possibility of military activity in countries near or adjacent to Israel, including attacks on shipping vessels in the Red Sea, and the growing geopolitical tensions between China and Taiwan, coupled with possible related supply chain shortages may affect the energy power and oil sector’s networks and ability to supply their customers, including Embecta.
These disruptions have led to supply chain delays and price increases and may lead to manufacturing shutdowns, raw material and component shortages, additional supply chain and logistics constraints, project delays, loss of productivity, divergent product standards and regulations, trade policies, labor shortages, commodity shortages, and additional price increases, among others.
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Increases in interest rates may adversely affect the financial condition of Embecta’s distributors and suppliers, thereby adversely affecting their ability to buy Embecta’s products and supply the components or raw materials needed by Embecta, in each case adversely affecting Embecta’s financial condition or results of operations.
−Removed: If the United States Federal Reserve decides to raise the benchmark interest rate, then Embecta could experience higher interest expense on its variable rate debt in fiscal year 2025.
+Added: Although interest rates have recently been declining, if the United States Federal Reserve decides to raise the benchmark interest rate, then Embecta could experience higher interest expense on its variable rate debt in fiscal year 2026.
To the extent Embecta borrows under its revolving credit facility, it will also be subject to risks related to changes in interest rates.
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Embecta’s effective tax rate is derived from a combination of applicable tax rates in the various countries, states and other jurisdictions in which it operates.
−Removed: In preparing its financial statements, Embecta estimates the amount of tax that will
−Removed: become payable in each of these jurisdictions and significant judgement is required in determining our worldwide provision for income taxes.
+Added: In preparing its financial statements, Embecta estimates the amount of tax that will become payable in each of these jurisdictions and significant judgment is required in determining our worldwide provision for income taxes.
Embecta’s effective tax rate may, however, differ from the estimated amount due to numerous factors, including a change in overall profitability, geographical mix of earnings before income taxes, tax discrete items that are not recurring in nature, and changes in tax laws, including potential proposed tax legislation.
−Removed: The Organization for Economic Cooperation and Development ("OECD") has developed major reform of the international tax system with respect to a global minimum 15% tax rate.
−Removed: In December 2022, European Union member states agreed to adopt the OECD’s minimum tax rules, which are expected to begin going into effect in tax years beginning on January 1, 2024 or later.
+Added: For example, the Organization for Economic Cooperation and Development ("OECD") has developed major reform of the international tax system with respect to a global minimum 15% tax rate.
+Added: European Union member states agreed to adopt the OECD’s minimum tax rules, which went into effect for tax years beginning on January 1, 2024 or later.
Certain countries have enacted the law changes and other countries are considering changes to their tax laws.
−Removed: the impact of the changes will go into effect for the Company beginning in fiscal year 2025.
−Removed: The Company is evaluating the impact of these proposed and enacted changes.
−Removed: If any potential legislative proposals are ultimately enacted, they could materially impact Embecta’s tax provision, cash tax liability and effective tax rate.
+Added: The impact of the changes went into effect for the Company beginning in fiscal year 2025.
+Added: The global minimum tax rules did not have a material impact to our provision for income taxes for the fiscal year ended September 30, 2025.
+Added: Also, on July 4, 2025, the U.S.
+Added: One Big Beautiful Bill Act ("OBBBA") was enacted which includes permanent extensions of certain expiring provisions of the Tax Cuts and Jobs Act and makes significant modifications to the U.S.
+Added: international tax framework.
+Added: The legislation has multiple effective dates, with certain provisions effective beginning in fiscal year ended September 30, 2025 and others becoming effective through the fiscal year ended September 30, 2027.
+Added: OBBBA did not have a material impact to our provision for income taxes for the fiscal year ended September 30, 2025.
+Added: If any existing legislation is amended or subject to revised interpretation, or if legislative proposals are ultimately enacted, in their current or amended form, they could materially impact Embecta’s tax provision, cash tax liability and effective tax rate.
Any of these factors could cause Embecta to experience an effective tax rate significantly different from previous periods or its current expectations, which could have an adverse effect on its business, financial condition, results of operations and cash flows.
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Breaches of Embecta’s Information Systems and cyberattacks aimed at accessing Embecta’s devices, products and services or related devices, products and services could have a material adverse effect on its operations.
−Removed: Embecta faces various security threats on a regular basis, including ongoing cyber security threats to and attacks on our information technology infrastructure.
−Removed: Some of Embecta’s products, and products in development may, include information systems that collect data, including sensitive medical information, regarding patients and patient therapy on behalf of Embecta’s customers and some connect to Embecta’s systems for maintenance and management purposes.
−Removed: Embecta uses its and certain third party, including BD's, information technology systems to manage or support a variety of business processes and activities, including sales, shipping, billing, customer service, procurement, supply chain, manufacturing, and accounts payable.
+Added: Embecta faces various security threats on a regular basis, including ongoing cyber security threats to and attacks on our information technology and data infrastructure.
+Added: Some of Embecta’s products and services may include information systems that collect data, including sensitive medical information, regarding patients and patient therapy on behalf of Embecta’s customers and some connect to Embecta’s systems for maintenance and management purposes.
+Added: Embecta uses its and certain third party information technology systems to manage or support a variety of business processes and activities, including, but not limited to, sales, shipping, distribution, billing, customer service, procurement, supply chain, manufacturing, and accounts payable.
In addition, Embecta uses enterprise information technology systems to record, process, and summarize transactions and other financial information and results of operations for internal reporting purposes and to comply with financial reporting, legal, and tax regulatory requirements.
−Removed: Embecta deploys defenses against such threats and attacks and works to secure the integrity of its data systems using techniques, hardware, and software typical of companies of its size and scope.
−Removed: Despite Embecta’s security measures, however, its information technology and infrastructure may be vulnerable to attacks by increasingly sophisticated intruders or others who try to cause harm to or interfere with its normal use of its systems.
−Removed: They are also susceptible to breach due to employee error, malfeasance, or other disruptions.
−Removed: Embecta’s suppliers, distributors, contractors, service providers, and other third parties with whom it does business also could be subject to cyber threats and attacks that are similar in frequency and sophistication.
−Removed: In many cases, Embecta has to rely on the controls and safeguards put in place by these suppliers, distributors, contractors, service providers, including BD, and other third parties to defend against, respond to, and report these attacks.
+Added: Embecta deploys defenses against such threats and attacks and works to secure the integrity of its Information Systems using techniques, hardware, and software typical of companies of its size and scope.
+Added: Despite Embecta’s security measures, however, its information technology and data infrastructure may be vulnerable to attacks by increasingly sophisticated intruders or others who try to cause harm to or interfere with the normal use of its systems.
+Added: They are also susceptible to breach due to employee error,
+Added: malfeasance, or other disruptions.
+Added: Embecta’s suppliers, distributors, contractors, service providers, partners, and other third parties with whom it does business could also be subject to cyber threats and attacks that are similar in frequency and sophistication.
+Added: In many cases, Embecta has to rely on the controls and safeguards put in place by these suppliers, distributors, contractors, service providers, partners, and other third parties to defend against, respond to, and report these attacks.
Many of Embecta’s Information Systems are cloud-hosted and managed by these third-party vendors, some of which may have access to confidential business, employee, healthcare professional, and/or customer information.
−Removed: Embecta’s information technology systems may also be susceptible to damage, disruptions, or shutdowns due to computer viruses, attacks by computer hackers, failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, telecommunication failures, user errors, or catastrophic events.
−Removed: Any failure by Embecta to maintain or protect its information technology systems and data integrity, including from cyberattacks, intrusions, disruptions, or shutdowns, could result in the unauthorized access to customer data and personally identifiable information, theft of intellectual property or other misappropriation of assets or the loss of key data and information, or otherwise compromise Embecta’s confidential or proprietary information and disrupt its operations.
+Added: Embecta’s Information Systems may also be susceptible to damage, disruptions, or shutdowns due to computer viruses, attacks by computer hackers, failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, telecommunication failures, user errors, or catastrophic events.
+Added: Any failure by Embecta to maintain or protect its Information Systems and data integrity, including from cyberattacks, intrusions, disruptions, or shutdowns, could result in the unauthorized access to customer, vendor, or patient data, including personally identifiable information or personal health information, theft of intellectual property or other misappropriation of assets or the loss of key data and information, or otherwise compromise Embecta’s confidential or proprietary information and disrupt its operations.
The potential impact of future cyber incidents can vary widely in severity and scale.
−Removed: This could also impact Embecta’s compliance with privacy and other laws and regulations and could result in actions by regulatory bodies or civil litigation.
+Added: This could also impact Embecta’s compliance with privacy and other laws and regulations and could result in actions by regulatory bodies or government agencies, and/or or civil litigation.
There can be no assurance that the various procedures and controls Embecta utilizes to mitigate these threats will be sufficient to prevent disruptions to its systems, in part because (i) cyberattack techniques change frequently and, at times, new techniques are not recognized until launched, and (ii) cyberattacks can originate from a wide variety of sources.
−Removed: For example, as multilateral sanctions and tensions continue to escalate against Russia by western nations and their allies in connection with the Russia-Ukraine war, retaliatory actions being undertaken by Russia and supporters of Russia in the form of cyberattacks have increased, including for example against certain U.S.
−Removed: infrastructure networks and hospital operations.
+Added: Multilateral sanctions and tensions could escalate between certain countries, such as between Russia and western nations and their allies, in connection with certain global events like the Russia Ukraine war, which could lead to retaliatory actions being undertaken against certain U.S.
+Added: infrastructure networks and hospital operations in the form of cyberattacks by Russia, supporters of Russia, or other parties and nations.
Increasing costs associated with information security, such as increased investment in technology, the cost of compliance and costs resulting from consumer fraud could cause our business and results of operations to suffer materially.
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While our technology infrastructure is designed to safeguard and protect personal and business information, we have limited ability to monitor the implementation of similar safeguards by our vendors.
+Added: Additionally, following the onset of the COVID-19 pandemic, many employees transitioned to a remote or hybrid work environment, which has increased risks associated with our information technology systems and networks.
+Added: These increased risks include cyber-attacks, computer viruses, disruptions, or shutdowns that could result in a failure to protect our Information Systems and data integrity.
Embecta will continue to evaluate organization risk priorities and dedicate resources to protect against unauthorized access, and work to align to industry-leading cybersecurity frameworks to incorporate cybersecurity into its enterprise systems, manufacturing processes and products.
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In addition, medical devices are increasingly connected to the internet, healthcare networks, and other medical devices to provide features that improve healthcare and increase the ability of healthcare providers to treat patients and patients to manage their conditions.
−Removed: As such, a cyberattack which intrudes, disrupts, or corrupts Embecta’s devices, products, and services, or related devices, products, and services could impact the quality-of-care patients receive or the confidentiality of patient information.
−Removed: Additionally, modifying or using any such devices, products, or services in a way inconsistent with Embecta’s FDA clearances and approvals may create risks to users and potential exposure to the Company.
+Added: As such, a cyberattack which intrudes, disrupts, or corrupts Embecta’s devices, products, and services, or related devices, products, and services could impact the quality-of-care patients receive or the confidentiality of customer or patient information.
+Added: Additionally, modifying or using any such devices, products, or services in a way inconsistent with Embecta’s FDA and other national and international regulatory government clearances and approvals may create risks to users and potential exposure to the Company.
Embecta needs to attract and retain key employees to be competitive.
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Competition for experienced employees, particularly for persons with specialized skills, can be intense.
−Removed: Embecta’s ability to recruit such talent will depend on a number of factors, including compensation and benefits, work location and work
+Added: Embecta’s ability to recruit such talent will depend on a number of factors, including compensation and benefits, work location and work environment.
If Embecta cannot effectively recruit and retain qualified executives and employees, its business could be adversely affected.
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Embecta is subject to extensive regulation.
−Removed: Embecta’s operations are global and are affected by complex state, federal and international laws relating to healthcare, environmental protection, antitrust, anti-corruption, marketing, fraud and abuse (including anti-kickback and false claims laws), import and export control, product safety and efficacy, employment, privacy, financial transparency, conflict minerals and other areas.
+Added: Embecta’s operations are global and are affected by complex state, federal and international laws relating to healthcare, environmental protection, antitrust, anti-corruption, marketing, fraud and abuse (including anti-kickback and false claims laws), import and export control, product safety and efficacy, employment, privacy and cybersecurity, financial transparency, conflict minerals and other areas.
Violations of these laws can result in criminal or civil sanctions, including substantial fines and, in some cases, exclusion from participation in healthcare programs such as Medicare and Medicaid.
−Removed: Environmental laws, particularly with respect to the emission of greenhouse gases, such as taxes on fuel and energy, to mitigate the impacts of climate change, are becoming more stringent throughout the world, which may increase Embecta’s costs of operations or necessitate closures of or changes to its manufacturing plants or processes or those of its suppliers, or result in liability to Embecta.
+Added: Environmental laws, particularly with respect to the emission of greenhouse gases, such as taxes on fuel and energy, to mitigate the impacts of climate change, are becoming more stringent throughout the world, including tightening emissions standards, which may increase Embecta’s costs of operations or necessitate closures of or changes to its manufacturing plants or processes or those of its suppliers, or result in liability to Embecta.
+Added: For example, Embecta’s operations and facilities may become subject to formal or informal scrutiny, audit, or enforcement actions or proceedings for noncompliance with environmental laws related to substances released into the environment.
+Added: Such matters are typically resolved with regulatory authorities through commitments to compliance, abatement, or remediation programs, and, in some cases, payment of penalties or fines.
+Added: and international governments have increasingly been regulating perfluorooctane sulfonate, perfluorooctanoic acid, and/or other per- and poly-fluoroalkyl substances.
+Added: These regulations include tightening emission standards and limits as to the presence of certain compounds.
+Added: As a result of uncertainties associated with environmental regulations and required remediation activities, costs incurred to maintain our compliance or resolve or remediate any identified issues could have an adverse effect on our business, results of operations and cash flows.
Embecta is also subject to various laws and regulations relating to the safety and effectiveness of medical devices, including relating to design, development and manufacturing, product traceability and record keeping procedures, product complaints, complaint reporting, recalls and field safety corrective actions, advertising and promotion and clinical trials and post-market studies with respect to its products.
−Removed: Failure to comply with these laws may result in enforcement actions by the FDA or other similar regulatory agencies and other liability to Embecta.
+Added: Failure to comply with these laws may result in enforcement actions by the FDA or other similar national and international regulatory agencies and other liability to Embecta.
The enactment of additional laws or changes in existing laws may increase compliance costs or otherwise adversely impact Embecta’s operations.
−Removed: Embecta is also subject to numerous post-marketing regulatory requirements, which include quality system regulations related to the manufacture of its devices, labeling regulations, and medical device reporting regulations.
−Removed: The last of these regulations requires Embecta to report to the FDA if its devices cause or contribute to a death or serious injury, or malfunction in a way that would likely cause or contribute to a death or serious injury if the malfunction recurred.
+Added: Embecta is also subject to numerous post-marketing regulatory requirements, which include, but are not limited to, quality system regulations related to the manufacture of its devices, labeling regulations, and medical device reporting regulations.
+Added: The last of these regulations requires Embecta to report to the FDA or other similar regulatory agencies if its products cause or contribute to a death or serious injury, or malfunction in a way that would likely cause or contribute to a death or serious injury if the malfunction recurred.
If Embecta fails to comply with present or future regulatory requirements that are applicable to it, it may be subject to enforcement action by the FDA, which may include any of the following sanctions:
2 unchanged sentences
• voluntary or mandatory recall or seizure of our current or future products;
−Removed: • administrative detention by the FDA of medical devices believed to be adulterated or misbranded;
+Added: • administrative detention by the FDA or other similar regulatory agencies of medical devices believed to be adulterated or misbranded or otherwise in violation of other regulatory laws;
• operating restrictions, suspension or shutdown of production;
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• criminal prosecution.
−Removed: In addition, the EU has adopted the EU Medical Device Regulation (the “EU MDR”), which imposes stricter requirements for the marketing and sale of medical devices, including in the area of labeling requirements, clinical evidence requirements, quality systems and post-market surveillance.
+Added: Other medical device regulations in countries that Embecta does business in vary substantially from country to country.
+Added: We must obtain the requisite regulatory approvals, clearances, registrations, and certifications to comply with extensive safety and quality regulations in those countries.
+Added: The time required to obtain these to market our products, including those related to the transition of our branding from BD to embecta labelled products, may be longer or shorter than those required for FDA clearance or approval, and the requirements may differ.
+Added: For example, medical devices in the European Economic Area need to comply with specific requirements and affix the CE mark to their medical devices, often after the intervention of a Notified Body and the issuing of a CE Certificate of Conformity.
+Added: In addition, the EU has adopted the EU Medical
+Added: Device Regulation (the “EU MDR”), which imposes stricter requirements for the marketing and sale of medical devices, including in the area of labeling requirements, clinical evidence requirements, quality systems and post-market surveillance.
The EU MDR has been fully operational for previously approved self-certified medical devices (class I) since May 2021, and previously CE marked products must become compliant when their certification expires, with a transition period ending December 2027 for higher classification devices, or December 2028 for lower classification devices (i.e., class II and III).
Additionally, the availability of EU notified body services certified to assist Embecta with validation of, and compliance with, the new requirements is limited, which may delay the marketing approval for some of Embecta's products under the EU MDR.
−Removed: Any such delays, or any failure to meet
−Removed: these requirements could adversely impact our business in the EU and other non-EU regions that tie their product registrations to EU conformity requirements.
+Added: Any such delays, any failure to meet these requirements, or the revocation or suspension of our regulatory approvals, clearances, registrations, or certifications could adversely impact our business in the EU, other non-EU regions that tie their product registrations to EU conformity requirements, or other foreign countries.
Healthcare reform may have a material adverse effect on Embecta’s financial condition and results of operations.
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It also encourages improvements in the quality of healthcare products and services and significantly impacts the United States pharmaceutical and medical device industries by, among other things, imposing certain stringent compliance, recordkeeping, and reporting requirements on companies in various sectors of the life sciences industry, and enhanced penalties for non-compliance.
+Added: The current U.S.
+Added: administration has implemented a number of regulatory, policy, and personnel changes, including, but not limited to, the elimination, downsizing, and reduced funding of certain government agencies and programs and the cancellation or delay of government contracts and research grants, each of which may be exacerbated by any future government shutdowns.
+Added: The current administration has also changed the composition of, and guidance from, advisory panels on healthcare practices and government enforcement.
Embecta cannot predict at this time the full impact of the Affordable Care Act or other new legislation, agency priorities, rulemaking and healthcare reform measures from U.S.
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Embecta’s promotional materials and training methods must comply with applicable laws, regulations and regulatory authority’s rules and guidelines, including the FDA and the Federal Trade Commission (the “FTC”).
−Removed: If the FDA, the FTC or another regulatory agency determines that Embecta’s promotional or training material constitutes off-label, false or misleading, unfair or deceptive promotion of its products, it could request that Embecta modify its training or promotional materials or subject Embecta to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine or criminal penalties.
+Added: If the FDA, the FTC or another regulatory agency determines that Embecta’s promotional or training material constitutes off-label, false or
+Added: misleading, unfair or deceptive promotion of its products, it could request that Embecta modify its training or promotional materials or subject Embecta to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine or criminal penalties.
It is also possible that other federal, state or foreign enforcement authorities might take action if they consider Embecta’s promotional, educational or training materials to constitute off-label, false or misleading, unfair or deceptive promotion of its products, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement, and reputational harm.
+Added: Changes in government funding for the FDA and other government agencies could affect their ability to obtain and retain key resources and personnel, properly administer medical device innovation, or prevent Embecta’s products from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing routine business functions on which the operation of Embecta’s business relies, which could adversely affect its business.
+Added: government shutdowns caused certain regulatory agencies, such as the FDA and the SEC, to furlough critical employees and stop critical activities.
+Added: In addition, the U.S.
+Added: government implemented substantial layoffs and workforce reductions in connection with recent federal government shutdown, which resulted in the suspension or delay of various government-funded programs.
+Added: While the recent government shutdown has ended, there is no assurance that future government shutdowns will be avoided that affect government employees and contractors or government-funded programs.
+Added: If there are any future government shutdowns, the ability of the FDA to review and approve or clear new products or to provide feedback on our programs, applications, and submissions can be affected by a variety of factors, including government budget and funding levels, reductions in workforce, ability to obtain and retain key personnel, and statutory, regulatory and policy changes.
+Added: In addition, there may be delays in necessary interactions with regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government or contractor personnel.
+Added: Government shutdowns, if prolonged, can significantly impact the ability of government agencies upon which we rely, such as the FDA and SEC, to operate and perform their duties as normal, which could have a material adverse effect on our business.
+Added: Disruptions at the FDA and other agencies may also slow the time necessary for our operations, facilities, products, submissions, and applications to be reviewed, approved, or cleared by the necessary government agencies, which could adversely affect our business, financial condition and results of operations.
+Added: For example, the current U.S.
+Added: administration has discussed several changes to the reach and oversight of the FDA, which could affect its relationship with the medical device industry, transparency in decision making and ultimately the cost and availability of medical devices and our products.
+Added: Additionally, over the past decade, the U.S.
+Added: government has shut down several times, and certain regulatory agencies, such as the FDA, have had to furlough critical employees and stop critical activities.
+Added: The current U.S.
+Added: administration also recently announced plans to reduce the number of federal employees by establishing voluntary termination programs, by position eliminations or by involuntary terminations.
+Added: If funding for the FDA is reduced, if the FDA workforce is reduced, or if futuregovernment shutdown occur, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
+Added: In addition, there remains substantial uncertainty as to how the current U.S.
+Added: administration will seek to or continue to modify or revise the requirements and policies of the FDA and other regulatory agencies with jurisdiction over our product candidates.
+Added: This uncertainty could present new challenges and the commercial prospects for our separation activities, operations, and business may be harmed and our ability to generate revenue may be adversely affected.
Embecta is subject to complex and evolving laws and regulations regarding privacy and data protection, many of which are subject to change and uncertain interpretation, which could result in claims, changes to its business practices, penalties, increased cost of operations or declines in user growth or engagement, or otherwise adversely affect its business.
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California’s and other states’ laws apply more broadly and now or in the future may reach data we hold that relates to employees and healthcare providers, not just customers.
−Removed: In addition, data security protection laws passed by the federal government and many states require notification to data subjects, including customers and others, when there is a security breach of personal data.
+Added: In addition, data security protection laws passed by the federal government and many states
+Added: require notification to data subjects, including customers and others, when there is a security breach of personal data.
The CCPA also created a private right of action with statutory damages for certain data breaches, thereby potentially increasing risks associated with a data breach.
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The use of AI solutions, such as ChatGPT, Co-Pilot, Grammarly, and Transvoyant by Embecta’s employees or third parties on which we rely could lead to the public disclosure of confidential information (including personal data or proprietary information) in contravention of Embecta’s internal policies, data protection or other applicable laws, or contractual requirements.
−Removed: The misuse of AI solutions could also result in unauthorized access and use of personal data of Embecta’s employees, clinical and other trial participants, collaborators, or other third parties.
+Added: The misuse of AI solutions could also result in unauthorized access and use of personal data of Embecta’s employees, clinical and other trial and research participants, collaborators, or other third parties.
In addition, the legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain, including in the areas of intellectual property, cybersecurity, and privacy and data protection.
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rules and regulations, the nature of which cannot be determined at this time and may be inconsistent from jurisdiction to jurisdiction.
−Removed: Several jurisdictions where we operate are considering or have proposed or enacted legislation and policies regulating AI and non-personal data, such as the European Union’s AI Act and the U.S.’s Executive Order on AI.
−Removed: These regulations may impose significant requirements on how we deploy and use AI and handle data.
−Removed: While we attempt to identify and mitigate ethical and legal issues presented by its use, we may be unsuccessful in identifying or resolving issues before they arise.
−Removed: Failure to appropriately respond to this evolving landscape may also result in legal liability, fines, penalties, regulatory action, loss of trade secrets or other intellectual property, brand and reputational harm, or lead to outcomes with unintended biases or other consequences.
+Added: As a result of the growing worldwide availability and release of AI-based technologies, there is a global trend towards more regulation and several jurisdictions where we operate or may intend to operate are considering or have proposed or enacted legislation and policies regulating AI and non-personal data.
+Added: These include, but are not limited to, the European Union’s AI Act, the U.S.
+Added: executive administration’s AI Action Plan and other Executive Orders on AI, and the various AI laws enacted in certain States within the U.S.
+Added: These regulations are aimed at the ethical use, privacy, and security of AI and the data it processes and may impose significant requirements and costs on how we deploy and use AI, handle data and comply with these current and future regulations, and any changes or amendments thereto.
+Added: While we attempt to identify and mitigate ethical and legal issues presented by the use of AI, we may be unsuccessful in identifying or resolving issues before they arise.
+Added: Failure to appropriately respond to this evolving landscape may also result in legal liability, fines, penalties, regulatory action, loss of data or trade secrets or other intellectual property, brand and reputational harm, or lead to outcomes with unintended biases or other consequences.
On the other hand, if Embecta is unable to use AI, it could make our business less efficient and result in competitive disadvantages.
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Although Embecta operates in multiple locations, manufacturing of its pen needles and syringes is conducted, and its components for such products are primarily stored, at its facilities in the United States, Ireland and China.
−Removed: Political or financial instability, currency fluctuations, the outbreak of pandemics, labor unrest, transport capacity and costs, port security, supply chain disruptions, wars, weather conditions, natural disasters, or other events that could slow or disrupt
−Removed: port activities and affect foreign trade are beyond Embecta’s control and could materially disrupt its supply of product from any of these locations, increase its costs, and/or adversely affect its results of operations.
+Added: Political or financial instability, currency fluctuations, the outbreak of pandemics, labor unrest, transport capacity and costs, port security, supply chain disruptions, wars, weather conditions, natural disasters, or other events that could slow or disrupt port activities and affect foreign trade are beyond Embecta’s control and could materially disrupt its supply of product from any of these locations, increase its costs, and/or adversely affect its results of operations.
Further, there may be increased pressure for United States medical device companies to reduce dependency on China for their supply chain and reevaluating nearshoring strategies.
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Embecta takes precautions to safeguard these facilities and data infrastructure.
−Removed: However, vandalism, terrorism, unplanned power outages, cyberattacks or a natural disaster, such as an earthquake, fire or flood, or other catastrophic event, could damage or destroy Embecta’s inventories of component supplies and finished goods, cause substantial delays in its operations, result in the loss of key information, result in reduced sales, and cause Embecta to incur additional expenses.
+Added: However, vandalism, terrorism, unplanned power outages, cyberattacks or a natural disaster, such as an earthquake, fire or flood, or other catastrophic event, could damage or destroy Embecta’s inventories of component supplies and finished goods, cause substantial delays in its operations, result in the loss of key information,
+Added: result in reduced sales, and cause Embecta to incur additional expenses.
Embecta’s insurance coverage may not be sufficient to provide coverage with respect to the damages incurred in any particular case, and its insurance carrier may deny coverage with respect to all or a portion of its claims.
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Any of these restrictions on Embecta's ability to operate its business in its discretion could adversely affect its business by, among other things, limiting Embecta's ability to adapt to changing economic, financial or industry conditions and to take advantage of corporate opportunities, including opportunities to obtain debt financing, repurchase stock, refinance or pay principal on Embecta's outstanding debt, dispose of property, complete acquisitions for cash or debt, or make other investments.
−Removed: In addition, events beyond Embecta's control, including prevailing economic, financial, and industry
−Removed: conditions, could affect Embecta's ability to satisfy applicable financial covenants, and Embecta cannot assure you that it will satisfy them.
+Added: In addition, events beyond Embecta's control, including prevailing economic, financial, and industry conditions, could affect Embecta's ability to satisfy applicable financial covenants, and Embecta cannot assure you that it will satisfy them.
Any failure to comply with the restrictions of Embecta's current indebtedness, or any future financing agreements, including as a result of events beyond Embecta's control, may result in an event of default under these agreements, which in turn may result in defaults or acceleration of obligations under these agreements and other agreements, giving Embecta's lenders and other debt holders the right to terminate any commitments they may have made to provide Embecta with further funds and to require Embecta to repay all amounts then outstanding.
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Public health threats have the potential to significantly impact Embecta’s supply chain if the manufacturing plants that produce its products, raw materials or product components, the distribution centers where Embecta manages its inventory or the operations of its logistics and other service providers, including third parties that sterilize its products, are disrupted, temporarily closed or experience worker shortages for a sustained period of time.
−Removed: For example, Embecta’s manufacturing sites in China, Ireland and the United States, where Embecta manufactures a significant amount of products, largely avoided any significant disruption due to the COVID-19 pandemic.
−Removed: However, notwithstanding that each of these communities has experienced a relative recovery in COVID-19 transmission and a lessening of restrictions related to COVID-19, a future outbreak of a public health threat, including COVID-19, at any of Embecta’s manufacturing sites in China, Ireland and/or the United States or in the surrounding communities, could lead to suspensions or delays in the manufacturing of Embecta’s products, which could have a material adverse effect on Embecta’s business and results of operations.
−Removed: Moreover, any resurgence in COVID-19 infections, including due to new variants of the virus for which current vaccines may not be effective, and public health measures could result in the imposition of new governmental lockdowns, quarantine requirements or other restrictions to slow the spread of the virus.
−Removed: The extent to which fear of exposure to or actual effects of COVID-19, new variants, disease outbreak, epidemic or a similar widespread health concern impacts our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the speed and extent of geographic spread of the disease, the duration of the outbreak, travel restrictions, the efficacy of vaccination and treatment;
−Removed: impact on the U.S.
−Removed: and international healthcare systems, the U.S.
−Removed: economy and worldwide economy, the timing, scope and effectiveness of U.S.
−Removed: and international governmental response, and the impact on the health, well-being and productivity of our employee.
−Removed: These could result in closures or other restrictions that significantly disrupt Embecta’s operations or those of distributors or suppliers in Embecta’s supply chain, which could adversely affect Embecta's financial condition.
+Added: Another global pandemic like COVID-19, including due to new variants of the virus for which current vaccines may not be effective, and public health measures could result in the imposition of new governmental lockdowns, quarantine requirements or other restrictions to slow the spread of the virus.
+Added: This could significantly impact our supply chain if the manufacturing plants that produce our products or product components, the distribution centers where we manage our inventory, or the operations of our logistics and other service providers, including third parties that sterilize our products, are disrupted, temporarily closed, or experience worker shortages for a sustained period of time.
+Added: These future developments, which are highly uncertain and cannot be predicted with confidence could adversely affect Embecta's financial condition.
Risks Related to the Separation from BD
Embecta has a limited history of operating as an independent company, and its historical financial information may not be a reliable indicator of its future results.
−Removed: Certain historical information about Embecta in this Annual Report on Form 10-K refers to the diabetes care business as operated by and integrated with BD.
−Removed: Certain historical financial information of Embecta’s fiscal year 2022 included in this Annual Report on Form 10-K is derived from the accounting records of BD.
−Removed: Accordingly, certain historical financial information included in this Annual Report on Form 10-K does not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved in previous fiscal years as a separate, publicly traded company during such periods or those that Embecta will achieve in the future primarily as a result of the factors described below:
Generally, prior to the Separation, Embecta’s working capital requirements and capital for its general corporate purposes, including capital expenditures and acquisitions, were historically satisfied as part of the corporate-wide cash management policies of BD.
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Other significant changes may occur in Embecta’s cost structure, management, effective tax rate, financing and business operations as a result of operating as a company separate from BD.
−Removed: For additional information about the past financial performance of its business and the basis of presentation of the historical combined financial statements, see Item 7 and Item 8 of this Annual Report on Form 10-K.
Since the Separation, Embecta’s financial profile has changed, and it is a smaller, less diversified company than BD prior to the Separation.
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(3) allowing Embecta to more effectively articulate a clear investment thesis to attract a long-term investor base suited to our business and providing investors with a distinct and targeted investment opportunity;
−Removed: (4) creating an independent equity security tracking Embecta’s underlying business, affording Embecta with direct access to the capital markets and facilitating its ability to consummate future acquisitions or other transactions using its common stock;
+Added: (4) creating an independent equity security tracking Embecta’s underlying business, affording Embecta with direct access to the capital markets and facilitating its ability to consummate future acquisitions or other transactions using its common
and (5) permitting Embecta to more effectively recruit, retain and motivate employees through the use of stock-based compensation that more closely aligns management and employee incentives with specific business goals and objectives related to Embecta’s business.
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If Embecta is unable to extend the services on similar terms or replace the services that BD currently provides to it on terms that are at least as favorable to Embecta as the terms on which BD is providing these services, or if BD otherwise terminates any of the services, Embecta’s business, financial condition and results of operations may be materially adversely affected.
−Removed: Embecta’s ability to effectively manage and operate its business depends significantly on the systems provided by BD.
−Removed: For example, Embecta currently relies upon BD to perform certain activities in markets in which it is unable to independently import, distribute, buy or sell certain products pending its receipt of required licenses, permits, and regulatory registrations.
−Removed: Embecta also relies on the services provided by BD to meet its financial reporting and other obligations.
+Added: Embecta’s ability to effectively manage and operate its business depends significantly on the services provided by BD.
+Added: For example, Embecta relies on the services provided by BD to meet its financial reporting and other obligations.
This includes relying on certain services from BD for material financial consolidation and reporting design and operation disclosure controls and procedures.
−Removed: Once all the transaction agreements, or any extension thereto, expire or terminate, if Embecta is unable to extend or replace the services that BD currently provides to it under these transaction agreements, until it is able to extend such services, complete the steps necessary to perform these services itself or otherwise materially replace these services on substantially similar terms and conditions, Embecta may not be able to effectively operate its business or maintain effective financial and management controls and reporting systems.
+Added: Once all the transaction agreements, or any extensions thereto, expire or terminate, if Embecta is unable to extend or replace the services that BD currently provides to it under these transaction agreements, until it is able to extend such services, complete the steps necessary to perform these services itself or otherwise materially replace these services on substantially similar terms and conditions, Embecta may not be able to effectively operate its business or maintain effective financial and management controls and reporting systems.
This could impair Embecta’s ability to effectively sell, distribute and commercialize its products, generate revenue, comply with local regulatory regulations, meet SEC reporting obligations and internal control over financial reporting, maintain its stock exchange listing, service its existing indebtedness and comply with the debt covenants under its existing indebtedness.
Any such occurrence may have a material adverse effect on Embecta’s business, financial condition and results of operations.
−Removed: In addition, Embecta may not be successful in timely, effectively or efficiently implementing these systems and services or in transitioning from BD’s systems to Embecta’s systems.
−Removed: Embecta will continue to engage in the process of creating its own, or engaging third parties separate from BD to provide, systems and services to replace many of the systems and services that BD currently provides to Embecta once the transaction agreements, or any extension thereto, expires or is terminated including, for example, information technology infrastructure, enterprise resource planning ("ERP") and other systems, logistics, employee, customer, vendor and accounting support services, distribution and regulatory support and services and accounting and reporting systems.
+Added: In addition, Embecta may not be successful in timely, effectively or efficiently implementing these services, including regulatory support.
+Added: Embecta will continue to engage in the process of creating its own, or engaging third parties separate from BD, to provide services to replace many of the services that BD currently provides to Embecta once the transaction agreements, or any extensions thereto, expire or are terminated.
Embecta expects this process to be complex, time-consuming and costly.
−Removed: Embecta may incur temporary interruptions in business operations if it cannot transition effectively from BD’s existing operating systems, logistics, distribution and regulatory support, databases and programming languages that support these functions to its own systems.
−Removed: The failure to implement the new systems and transition data successfully and cost-effectively could disrupt Embecta’s business operations, including preventing Embecta from paying suppliers and employees, receiving revenue from its customers, entering into new agreements, selling or delivering products in certain jurisdictions, complying with financial reporting and other obligations and performing administrative or other services on a timely basis, which could adversely affect Embecta’s financial condition and results of operations.
−Removed: In addition, Embecta’s costs for the operation of these systems may be higher than the amounts reflected in its historical combined financial statements.
+Added: The failure to implement the new services successfully and cost-effectively could disrupt Embecta’s business operations, including entering into new agreements, selling or delivering products in certain jurisdictions, complying with financial reporting and other obligations and performing administrative or other services on a timely basis, which could adversely affect Embecta’s financial condition and results of operations.
+Added: In addition, Embecta’s costs for the operation of these services may be higher than the amounts reflected in its historical combined financial statements.
Following the end of the transition period, Embecta will be required to rebrand its products to remove the BD name, transfer or obtain new manufacturing, supply chain, regulatory and product licenses and registrations in the name of Embecta, which could adversely affect its ability to attract and maintain customers and end users or which could result in delays or interruptions of Embecta's commercialization and distribution operations or the loss of customers and revenue, all of which could adversely affect its financial condition and results of operations.
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Under the terms of the agreements entered into with BD in connection with the Separation and Distribution, Embecta received a temporary license to use the “BD” and “Becton Dickinson” name and logo on its products and marketing, certain legal entities and relevant regulatory registrations.
−Removed: Following the expiration of this license, Embecta will be required to rebrand and update, as applicable, its products and marketing, manufacturing, supply chain, and regulatory registrations and licenses using the “Embecta” name or other names and marks and remove the “BD” name and logo on its products and marketing, registrations and licenses.
−Removed: These new names and brands may not benefit from the same recognition and association with product quality as the BD name, which could adversely affect Embecta’s ability to attract and maintain its customers and end users, who may prefer to use products with a stronger brand identity.
+Added: Following the expiration of this license, Embecta will be required to rebrand and update, as applicable, its products and marketing, manufacturing, supply chain, and regulatory registrations and licenses using the
+Added: “Embecta” name or other names and marks and remove the “BD” name and logo on its products and marketing, registrations and licenses.
+Added: While we have officially launched our brand transition from the "BD" name and logo in the U.S.
+Added: and Canada, the remaining launches worldwide are planned to occur in phases, and these new names and brands may not benefit from the same recognition and association with product quality as the BD name, which could adversely affect Embecta’s ability to attract and maintain its customers and end users, who may prefer to use products with a stronger brand identity.
The failure to timely transfer, or in certain instances obtain new, registrations and licenses in the “Embecta” name could result in delays or interruptions in Embecta’s ability to continuously commercialize, import, export, market, promote, sell and otherwise distribute its products to its customers.
This could result in customer dissatisfaction and turnover to our competitors, which could further result in loss of revenue for Embecta.
−Removed: In addition, Embecta will be required to closely collaborate with its customers, and ensure the proper changes, modifications, system inputs, supply chain logistics, administration, and adjudication operations are properly transitioned within the customer’s internal infrastructure,
−Removed: processes and systems, in order to successfully achieve the transition.
+Added: In addition, Embecta will be required to closely collaborate with its customers, and ensure the proper changes, modifications, system inputs, supply chain logistics, administration, and adjudication operations are properly transitioned within the customer’s internal infrastructure, processes and systems, in order to successfully achieve the transition.
Embecta’s or its customer’s inability to properly achieve these transitions could result in disruptions to Embecta’s product end-to-end product flow management and end-user access to products, which could adversely affect Embecta’s financial condition and results of operations.
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If Embecta does not satisfactorily perform its obligations under these agreements, it may be held liable for any resulting losses suffered by BD, subject to certain limits.
−Removed: In addition, during the transition services periods under the transition services agreement, Embecta’s management and employees may be required to divert their attention away from its business in order to provide services to BD, which could adversely affect Embecta’s business.
Embecta’s agreements with BD may be on terms that are less beneficial to Embecta than the terms may have otherwise been from unaffiliated third parties.
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The separation and distribution agreement provides that certain contracts, permits and other assets and rights are to be transferred from BD or its subsidiaries to Embecta or its subsidiaries in connection with the Separation.
−Removed: The transfer of certain of these contracts, permits and other assets and rights may require consents or approvals of third parties or governmental authorities or provide other rights to third parties.
+Added: The transfer of certain of these contracts, permits and other assets and rights may require consents or approvals of third parties or
+Added: governmental authorities or provide other rights to third parties.
In addition, in some circumstances, Embecta and BD are joint beneficiaries of contracts, and Embecta and BD may need the consents of third parties in order to split or separate the existing contracts or the relevant portion of the existing contracts to Embecta or BD.
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This could require us to expend additional resources in order to obtain the services or assets previously provided under the contract, or require us to seek arrangements with new third parties or obtain letters of credit or other forms of credit support.
−Removed: If Embecta is unable to
−Removed: obtain required consents or approvals, it may be unable to obtain the benefits, permits, assets and contractual commitments that are intended to be allocated to Embecta as part of its Separation from BD, and Embecta may be required to seek alternative arrangements to obtain services and assets that may be more costly and/or of lower quality.
+Added: If Embecta is unable to obtain required consents or approvals, it may be unable to obtain the benefits, permits, assets and contractual commitments that are intended to be allocated to Embecta as part of its Separation from BD, and Embecta may be required to seek alternative arrangements to obtain services and assets that may be more costly and/or of lower quality.
The termination or modification of these contracts or permits or the failure to timely complete the transfer or separation of these contracts or permits could negatively affect Embecta’s business, financial condition, results of operations and cash flows.
−Removed: The closing of the Separation was deferred in certain jurisdictions, and may not occur at all in such jurisdictions, due to local regulatory requirements, which may adversely affect Embecta’s business, financial condition and results of operations.
−Removed: The closing of the transfer of certain assets related to the Diabetes Care Business in certain jurisdictions, including India, as contemplated by the Separation and Distribution Agreement did not occur at the Separation and may not occur due to local regulatory requirements.
−Removed: If Embecta is unable to obtain required approval of local regulators or otherwise comply with such local regulatory requirements to effect the Separation in these jurisdictions, it may be unable to obtain the assets that are intended to be allocated to Embecta as part of its separation from BD.
−Removed: The failure to timely complete the transfer of these local assets or interruptions resulting from these foreign transfers could negatively affect Embecta’s business, financial condition, results of operations and cash flows.
Satisfaction of indemnification obligations could have a material adverse effect on Embecta’s financial condition, results of operations and cash flows.
−Removed: Pursuant to the Separation and Distribution Agreement and certain other agreements Embecta entered into with BD in connection with the separation and distribution, BD agreed to indemnify Embecta for certain liabilities, and Embecta will agree to indemnify BD for certain liabilities as discussed further in “Agreements Related to the Separation” in Item 1 of this Annual Report on Form 10-K.
+Added: Pursuant to the Separation and Distribution Agreement and certain other agreements Embecta entered into with BD in connection with the separation and distribution, BD agreed to indemnify Embecta for certain liabilities, and Embecta will agree to indemnify BD for certain liabilities as discussed further in Note 3 “Third Party Arrangements and Related Party Disclosures” and Note 18 “Leases” in the notes to our Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.
Indemnities that Embecta will be required to provide BD could negatively affect Embecta’s business, particularly with respect to indemnities provided in the tax matters agreement.
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The market price of Embecta common stock may fluctuate significantly due to a number of factors, some of which may be beyond our control, including:
−Removed: • actual or anticipated fluctuations in Embecta’s operating results, including those associated with the Interim Business Continuity Processes;
+Added: • actual or anticipated fluctuations in Embecta’s operating results, including those associated with the Business Continuity Processes;
• Embecta’s liquidity and ability to obtain additional capital, including the market’s reaction to any capital-raising transaction Embecta may pursue;
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• sales of substantial amounts of Embecta’s common stock, or the perception that substantial amounts of Embecta’s common stock may be sold, by stockholders in the public market;
−Removed: • changes to the regulatory and legal environment under which Embecta operates;
+Added: • changes to the global trade, regulatory, and legal environment under which Embecta operates;
• any negative decisions by the FDA or similar regulatory bodies inside and outside of the United States regarding Embecta’s products and product candidates;
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Such awards will have a dilutive effect on Embecta’s earnings per share, which could adversely affect the market price of Embecta common stock.
−Removed: If our remedial measures are insufficient to address material weaknesses in our internal control over financial reporting, our ability to report financial information could be adversely affected, it could result in a material misstatement in our financial statements not being prevented or detected, it could harm our business, it could cause investors to lose confidence in the accuracy and completeness of our financial reports, and the market price of our common stock may decline .
−Removed: Internal controls related to our account reconciliations and analyses are critical to maintaining adequate oversight of our financial reporting and providing reasonable assurance with respect to our financial reports.
−Removed: Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.
−Removed: As a public company, we are required to comply with the Sarbanes-Oxley Act and other rules that govern public companies.
−Removed: In particular, we are required to certify our compliance with Section 404 of the Sarbanes-Oxley Act, which requires us to furnish annually a report by management on the effectiveness of our internal control over financial reporting.
−Removed: In addition, our independent registered public accounting firm is required to report on the effectiveness of our internal control over financial reporting.
−Removed: As disclosed in Item 9A of this Annual Report on Form 10-K, in the process of assessing our internal control over financial reporting, management identified deficiencies in internal controls related to certain account reconciliations and analyses.
−Removed: Subsequent to the first and second phases of our ERP implementation, we instituted new internal controls, processes, and procedures ("Control Activities").
−Removed: Specifically, these newly designed Control Activities were executed for the first time in fiscal year 2024.
−Removed: Management has concluded that these newly designed Control Activities were not designed properly or operating effectively to ensure the appropriate level of management review, precision, and adequate evidence to confirm the completeness and accuracy of data used in the account reconciliations and analyses resulting in a material weakness.
−Removed: Specifically, management determined that we did not maintain effective controls over account reconciliations and analyses, thus constituting a material weakness in our internal control over financial reporting.
−Removed: As a result of this material weakness, management concluded that our internal control over financial reporting was not effective as of September 30, 2024.
−Removed: As described in Item 9A of this Annual Report on Form 10-K, we are implementing additional controls intended to remediate the material weakness.
−Removed: There can be no assurance that our remediation efforts will be successful.
−Removed: If we are unable to remediate the material weakness timely and sufficiently or are otherwise unable to maintain effective internal control over financial reporting in the future, our ability to report financial information timely and accurately could be adversely affected, we may fail to meet our reporting requirements, and investors may lose confidence in the accuracy and completeness of our financial reports.
−Removed: As a result, our business may be harmed, and the market price of our common stock could decline.
−Removed: In addition, we could become subject to investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.
−Removed: In addition, even if we are successful in strengthening our controls and procedures, those controls and procedures may not be adequate to prevent or identify irregularities or ensure the fair and accurate presentation of our financial statements included in our periodic reports filed with the SEC.
Embecta cannot guarantee the timing, amount or payment of dividends on its common stock.
Embecta currently expects that it will pay a regular cash dividend.
−Removed: However, the timing, declaration, amount and payment of any dividends will be within the discretion of Embecta’s Board of Directors, and will depend upon many factors,
−Removed: including Embecta’s financial condition, earnings, capital requirements of its operating subsidiaries, covenants associated with certain of Embecta’s debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets, and other factors deemed relevant by Embecta’s Board of Directors.
+Added: However, the timing, declaration, amount and payment of any dividends will be within the discretion of Embecta’s Board of Directors, and will depend upon many factors, including Embecta’s financial condition, earnings, capital requirements of its operating subsidiaries, covenants associated with certain of Embecta’s debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets, and other factors deemed relevant by Embecta’s Board of Directors.
Moreover, Embecta cannot guarantee that it will continue to pay any dividends in the future and cannot guarantee the amount of any such dividends.
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If and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another state court sitting in the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware).
−Removed: exclusive forum provisions will apply to all covered actions, including any covered action in which the plaintiff chooses to assert a claim or claims under federal law in addition to a claim or claims under Delaware law.
+Added: These exclusive forum provisions will apply to all covered actions, including any covered action in which the plaintiff chooses to assert a claim or claims under federal law in addition to a claim or claims under Delaware law.
These exclusive forum provisions will not apply to actions asserting only federal law claims under the Securities Act of 1933, as amended, (the "Securities Act") or the Securities Exchange Act of 1934, as amended (the "Exchange Act") regardless of whether the state courts in the State of Delaware have jurisdiction over those claims.
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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.