What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-11-25 compared with 2024-12-11 · 78 added, 109 removed, 221 unchanged (46% of the section changed)

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

Separation from BD

Pursuant to the Separation and Distribution Agreement, the Separation from BD was completed on April 1, 2022.

On March 22, 2022, the record date for the distribution, 57,012,925 issued and outstanding shares of Embecta common stock were distributed pro-rata to BD stockholders as of the close of business, determined by applying a ratio of one share of Embecta common stock for every five shares of BD common stock.

"Regular-way" trading of Embecta common stock began on April 1, 2022, under the ticker symbol "EMBC".

Periods Prior to Separation

Prior to the Separation, the Company was referred to as the Diabetes Care Business.

For periods prior to April 1, 2022, the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K include certain assets, liabilities, revenues, and expenses that were historically held at the BD corporate level, but are specifically identifiable or otherwise allocable to the Diabetes Care Business.

Periods Post Separation

For the periods subsequent to April 1, 2022, as a standalone publicly traded company, Embecta presents its financial statements on a consolidated basis.

The Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K have been prepared in accordance with accounting principles generally accepted in the United States of America.

Key Trends Affecting Our Results of Operations

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Existing and new local and regional low-cost providers, in combination with a shift from insulin vials to insulin pens, have made the pen needle category highly competitive.

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

Global Trade.

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

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

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

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

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

Changes in Clinical Practice.

Introduction of new drugs and increased penetration of oral and once-weekly anti-diabetic drugs (e.g., SGLT-2s), GLP-1s and GLP-1 combination products have delayed initiation of insulin therapy and contributed to less demand for our products.

Introduction of new drugs and increased penetration of oral and once-weekly anti-diabetic drugs (e.g., SGLT-2s, once-weekly insulin, GLP-1s and GLP-1 combination products) have delayed initiation of insulin therapy and contributed to less demand for our products.

New drug therapies, including weekly insulin, are targeted to challenge the current diabetes treatment paradigm, including the frequency insulin is dosed (weekly vs.

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

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

physicians and longer wait times for patients.

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

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

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

In December 2023, we submitted our first 510(k) premarket filing to the FDA for our proprietary disposable insulin delivery system.

In September, 2024, we announced that we received 510(k) clearance from the FDA.

Given our global business, we expect recently announced tariffs will result in additional cost for us and our suppliers, and there is the potential that such tariffs may influence future decisions by foreign governments and private purchasers to source non-U.S., “locally” manufactured products instead of products originating from certain countries (including the U.S.) and that local manufacturers, brands and other competitors may engage in aggressive competitive pricing or other strategies to take advantage of the uncertain global trade environment and transition customers away from global manufacturers.

Tariffs did not have a material impact on our fiscal year 2025 results.

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

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

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

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

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

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

We estimate that we will incur approximately $10 million - $15 million of additional pre-tax non-cash charges related to asset impairments and asset write-offs.

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

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

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

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

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

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

As a result, the Company incurred organizational restructuring plan (the "Patch Pump Restructuring Plan") costs of $34.5 million during the year ended September 30, 2025.

Restructuring actions associated with the Patch Pump Restructuring Plan to discontinue the patch pump program are substantially complete as of September 30, 2025.

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

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

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

As a result, the Company incurred organizational restructuring plan costs of $3.5 million during the year ended September 30, 2025.

The 2025 Restructuring Plan is substantially complete as of September 30, 2025.

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

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

As of December 11, 2024, there is no material impact to our business operations and financial performance as a result of the aforementioned conflicts.

We also are monitoring the conflicts in the Middle East and Houthi attacks on commercial shipping vessels and other naval vessels.

As of November 25, 2025, there is no material impact to our business operations and financial performance as a result of the aforementioned conflicts.

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

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See Item 1A of this Annual Report on Form 10-K for further details.

In addition, our revenues and results of operations have been affected by various fluctuations in macroeconomic conditions and regulatory and policy changes, both on a global level and in particular markets, which include inflation and slowing economic growth and contractions, a rising interest rate environment, supply chain interruptions, tariff policy changes, volatility in capital markets and the availability of credit, tax rates and the rate of exchange between the United States dollar and foreign currencies.

In addition, our revenues and results of operations have been affected by various fluctuations in macroeconomic conditions and regulatory and policy changes, both on a global level and in particular markets, which include inflation and slowing economic growth and contractions, a changing interest rate environment, supply chain interruptions, tariff policy changes, volatility in capital markets and the availability of credit, tax rates and the rate of exchange between the United States dollar and foreign currencies.

The nature and extent of the impact of these factors among others varies by region and remains uncertain and unpredictable and may affect our business.

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Research and development expense 37.3 78.8

Impairment expense — 2.5

Other operating expenses 65.4 124.5

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Income Before Income Taxes 136.3 44.2

Income tax provision (34.1) 35.3

Income tax provision (benefit) 40.9 (34.1)

Net Income $ 95.4 $ 78.3

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Key financial results for the year ended September 30, 2025 were as follows:

• Revenue increased by $2.3 million to $1,123.1 million from $1,120.8 million;

• Revenue decreased by $42.7 million to $1,080.4 million from $1,123.1 million;

• Gross profit decreased by $58.4 million to $676.8 million, compared to $735.2 million.

Gross profit as a percent of revenue was 62.6%, as compared to 65.5% in the prior year comparative period;

• Operating income decreased by $54.7 million to $166.8 million from $221.5 million;

• Operating income increased by $75.3 million to $242.1 million from $166.8 million;

• Net income increased by $17.1 million to $95.4 million from $78.3 million.

Our revenues increased by $2.3 million, or 0.2%, to $1,123.1 million for the year ended September 30, 2024 as compared to revenues of $1,120.8 million for the year ended September 30, 2023.

The increase in revenues was primarily driven by $27.7 million associated with favorable changes in price.

This was partially offset by $14.5 million of unfavorable changes in volume, $6.1 million associated with the negative impact of foreign currency translation primarily due to the strengthening of the U.S.

dollar, $4.6 million of unfavorable gross-to-net adjustments primarily attributed to the recognition of incremental Italian payback accruals resulting from two July 22, 2024 rulings by the Constitutional Court of Italy, and a $0.2 million decrease in contract manufacturing revenues related to sales of non-diabetes products to BD.

Our revenues decreased by $42.7 million, or 3.8%, to $1,080.4 million for the year ended September 30, 2025 as compared to revenues of $1,123.1 million for the year ended September 30, 2024.

Changes in our revenues are driven by the volume of goods that we sell, the prices we negotiate with customers, and changes in foreign exchange rates.

The decrease in reported revenues was primarily driven by $52.9 million of unfavorable changes in volume and $3.5 million associated with the negative impact of foreign currency translation primarily due to the strengthening of the U.S.

This was partially offset by a $6.9 million increase in contract manufacturing revenues related to sales of non-diabetes products to BD, $4.8 million of favorable changes in gross-to-net adjustments attributed to the recognition of higher incremental Italian payback accruals in fiscal year 2024 as compared to fiscal year 2025, and a $2.0 million increase associated with favorable changes in price.

See Item 1A of this Annual Report on Form 10-K for further details.

Cost of products sold

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Cost of products sold as a percentage of revenues were 37.4% for the year ended September 30, 2025 as compared to 34.5% for the year ended September 30, 2024.

The increase in cost of products sold was primarily driven by the impact of inflation on the costs of certain raw materials (including freight), direct labor, and overhead, the impact of negative year-over-year manufacturing variances primarily attributable to

the as planned temporary shutdown of our Suzhou, China facility as it relates to production for the domestic Chinese market, and unfavorable impacts due to foreign exchange rates.

We intend to continue to work to improve productivity to help partially offset these increased costs.

This was partially offset by the impact of profit in inventory adjustments as a result of inventory that was sold to external customers that was manufactured in anticipation of our ERP system and other Business Continuity Processes that went live during fiscal 2024.

Operating expenses in 2024 and 2023 were as follows:

(Millions of dollars) 2024 2023 2024 vs.

Selling and administrative expense $ 365.1 $ 341.3 $ 23.8

% of revenues 32.5 % 30.5 %

Research and development expense $ 78.8 $ 85.2 $ (6.4)

% of revenues 7.0 % 7.6 %

Impairment expense $ — $ 2.5 nm

Other operating expense $ 124.5 $ 99.4 $ 25.1

nm = not meaningful

The increase in cost of products sold was primarily driven by the impact of net changes from profit in inventory adjustments period over period and non-cash asset impairment charges recorded to write down the carrying value of certain property and equipment

as a result of the Company's Patch Pump Restructuring Plan.

This was partially offset by lower volumes in fiscal year 2025 compared to fiscal year 2024.

Selling and administrative expenses

Our selling and administrative expenses increased by $23.8 million, or 7.0%, to $365.1 million for the year ended September 30, 2024 as compared to $341.3 million for the year ended September 30, 2023.

The increase year over year was primarily driven by an increase in compensation and benefit costs due to increased headcount on average in the current period in addition to increased outbound freight and warehousing costs.

This was partially offset by lower TSA and LSA costs incurred from BD in the current year period.

Our selling and administrative expenses decreased by $33.1 million, or 9.1%, to $332.0 million for the year ended September 30, 2025 as compared to $365.1 million for the year ended September 30, 2024.

The decrease year over year was primarily driven by lower TSA and LSA costs with BD in addition to lower compensation expense recognized in fiscal year 2025.

Research and development expenses

Our research and development expenses decreased by $41.5 million, or 52.7%, to $37.3 million for the year ended September 30, 2025 as compared to $78.8 million for the year ended September 30, 2024.

The decrease was primarily driven by timing of expenses incurred in connection with our insulin patch pump platform.

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

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

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

Impairment expense

During the year ended September 30, 2024, the Company did not record any impairment charges.

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

These assets were previously included as a component of Machinery, equipment and fixtures within Property, Plant and Equipment in our Consolidated Balance Sheets in Item 8 of this Annual Report on Form 10-K.

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

The decrease was primarily driven by a reduction in payments made in connection with the development of our insulin patch pump program in fiscal year 2025 as compared to fiscal year 2024, given the discontinuation of the patch pump program.

Other operating expenses

We incurred other operating expenses of $124.5 million and $99.4 million for the years ended September 30, 2024 and 2023, respectively.

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

These costs also include certain severance costs related to the optimization of certain business functions as we transition to being a stand-alone entity.

We expect the amount of those costs to be less in fiscal year 2025 as compared to fiscal year 2024.

For the year ended September 30, 2024, we recognized costs associated with the amortization of cloud computing arrangements.

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

Other operating expenses are as follows:

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Amortization of cloud computing arrangements

Costs associated with the discontinued patch pump program 15.7 —

Business optimization and severance related costs 7.3 7.4

Total $ 65.4 $ 124.5

Other operating expenses incurred primarily consist of the following:

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

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

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

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

Interest expense, net

Interest expense, net increased to $112.3 million for the year ended September 30, 2024, from $107.0 million for the year ended September 30, 2023 primarily as a result of higher interest rates on our variable rate debt which is attributable to increases in SOFR that impacted our Term Loan.

This was partially offset by an increase in interest income from amounts held in interest bearing accounts and money market funds.

Interest expense, net decreased to $107.3 million for the year ended September 30, 2025, from $112.3 million for the year ended September 30, 2024 primarily driven by lower debt levels and lower short-term interest rates in the current period as compared to the prior period.

We are unable to predict future Federal Reserve interest rate decisions and the impact to interest expense on our variable rate debt.

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Other income (expense), net was $1.5 million and $(10.3) million for the years ended September 30, 2025 and 2024, respectively.

The change in Other income (expense), net year over year is driven by higher losses due to unfavorable impacts from foreign exchange in the year ended September 30, 2024 offset by lower amounts paid to BD for income taxes incurred in deferred jurisdictions where BD is considered the primary obligor in the current period compared with the year ended September 30, 2023.

The income generated in fiscal year 2025 was primarily attributed to favorable impacts from foreign exchange.

The costs incurred for fiscal year 2024 were primarily attributed to amounts due to BD for income taxes payable incurred in deferred jurisdictions where BD is considered the primary obligor and the unfavorable impacts from foreign exchange.

Income tax provision (benefit)

The Company's income tax provision (benefit) decreased to $(34.1) million for the year ended September 30, 2024 from $35.3 million for the year ended September 30, 2023.

This decrease was primarily due to a reduction in withholding taxes on unremitted earnings of foreign subsidiaries related to the expiration of a two-year stock holding period requirement in Switzerland, the recognition of deferred tax assets from Switzerland tax reform, changes in the geographical mix of earnings and overall lower pre-tax earnings;

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

Income tax provision (benefit) increased to $40.9 million for the year ended September 30, 2025 from $(34.1) million for the year ended September 30, 2024.

This increase was primarily due to the absence of 2024 tax benefits from the recognition of deferred tax assets related to tax reform in Switzerland, the absence of 2024 tax benefits from the reduction of withholding tax accruals on unremitted foreign earnings resulting from the expiration of certain stock ownership holding period requirements, fewer nontaxable items of income and the correlative tax impacts of these changes on higher overall earnings in 2025.

This was partially offset by tax benefits from tax return true ups for tax filings made during 2025.

See Note 14 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for a further description of our provision for income taxes.

LIQUIDITY AND CAPITAL RESOURCES

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

Thereafter 700.0

Certain measures relating to our total debt outstanding as of September 30, 2025 were as follows:

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

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

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

During the year ended September 30, 2025 , the Company paid an aggregate principal amount of approximately $184.6 million on the Term Loan, of which $175.1 million was discretionary.

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

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

Such repurchases or exchanges, if any, will depend upon various factors existing at the time, including prevailing market conditions, our liquidity requirements, contractual restrictions and other factors, and there can be no assurance as to which, if any, of these alternatives, or combination thereof, we may choose to pursue in the future.

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

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For additional information related to our leases, refer to Note 18 within the Notes to Consolidated Financial Statements of this Form 10-K.

Factoring Agreements

In conjunction with the Separation, we entered into Factoring Agreements (the "Factoring Agreements") with BD.

Embecta owed BD a service fee calculated as 0.1% of annual revenues related to countries subject to the Factoring Agreements, in exchange for the services provided by BD pursuant to the Factoring Agreements.

As of March 31, 2024, all Factoring Agreements between Embecta and BD had expired and terminated as a result of our implementation and onboarding of certain Business Continuity Processes in North America, and certain jurisdictions in Europe and Asia.

Receivables Sale Agreement

During the third quarter of fiscal year 2025, the Company entered into a trade receivables sale agreement with a third-party financial institution to sell certain trade receivables of the Company at a discount on an uncommitted basis.

These trade receivable sales are accounted for as a sale of assets, as the Company's continuing involvement is limited to servicing the accounts receivables.

The Company receives the sales price, equal to the trade receivable less the applicable discount, at the time of sale.

In connection with the Company's receivables sale agreement, $63.2 million of trade receivables were sold during fiscal year 2025, resulting in derecognition of the receivables from the Company's Consolidated Balance Sheets.

Discounts recognized on the sale of trade receivables were not material to the Company's Consolidated Statements of Income.

The cash received on the sale of trade receivables during fiscal year 2025 is presented in changes in trade receivables, net within operating activities in the Consolidated Statement of Cash Flows.

Access to Capital and Credit Ratings

In May 2024 and June 2024, Moody’s Investor Services and Standard & Poor’s Ratings Services published updates to our credit ratings.

In May 2025 and June 2025, Moody’s Investor Services and Standard & Poor’s Ratings Services published updates and reaffirmed our preexisting credit ratings.

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

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Net income $ 95.4

Non-cash adjustments related to depreciation and amortization, plant and equipment, stock-based compensation, and deferred income taxes 5.1

Non-cash adjustments related to depreciation and amortization, impairment of property, plant, and equipment, stock-based compensation, and deferred income taxes 120.0

Change in in accounts payable and accrued expenses (68.9)

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Net cash provided by operating activities $ 191.7

Update to the unaudited Consolidated Statements of Cash Flows Reported in Earnings Release

On November 26, 2024, we furnished a Current Report on Form 8-K that included as an exhibit a press release announcing our financial results for the fourth fiscal quarter and the fiscal year ended September 30, 2024 (the “Earnings Release”).

Subsequent to furnishing the Earnings Release, the Company identified certain further revisions within the Consolidated Statements of Cash Flows that results in changes to the operating assets and liabilities related to Prepaid expenses and other and Income and other net taxes payable for fiscal 2024 that were reported in the Condensed Consolidated Statements of Cash Flows including in the Earnings Release.

The updated amounts for these line items are included in the audited Consolidated Statements of Cash Flows included in the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

Fiscal 2024 Net Cash Provided by Operating Activities of $35.7 million as presented in the Earnings Release remains unchanged from the amount presented on this Annual Report on Form 10-K.

The change in accounts payable and accrued expenses is primarily due to timing attributable to payments to vendors during the fiscal year ended September 30, 2024.

As a result of the implementation of certain Business Continuity Processes, including our ERP system that went live in November 2023 for our North America business operations and in March 2024 for our EMEA and Greater Asia business operations as well as the expiration and termination of the Factoring Agreements between Embecta and BD, we are now responsible for the collection of any outstanding trade receivables in those respective regions.

The increase in trade receivables is a direct result of this impact, and we expect to convert these outstanding trade receivables into cash in line with contractual customer payment terms.

The change in inventories is driven by actions taken to increase raw material purchases and finished goods in the current fiscal year in anticipation of our ERP system and other Business Continuity Processes that went live during fiscal year 2024.

The change in amounts due from/due to Becton, Dickinson and Company primarily relates to the expiration and termination of the Factoring Agreement between Embecta and BD as we are now responsible for the collection of any outstanding trade receivables on a global basis.

The change in prepaid expenses and other are primarily driven by a reduction in payments to BD for future payments made to third parties on our behalf as a result of our implementation of certain Business Continuity Processes, including our ERP system, that went live in fiscal 2024.

The change in income and other net taxes payable was primarily due to the timing of required tax payments.

The change in other assets and liabilities, net is primarily due to costs capitalized during fiscal 2024 associated with the implementation of our ERP system.

The change in accounts payable and accrued expenses is primarily due to timing attributable to payments to vendors.

The change in trade receivables is primarily attributed to the timing of sales and receivables factored.

The change in inventories is primarily attributed to actions taken to build inventory to support the execution of our brand transition program.

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

The change in prepaid expenses and other is primarily attributed to timing of payments to vendors.

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

The change in other assets and liabilities, net is primarily attributed to costs capitalized attributed to cloud computing arrangements.

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

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The Company conducts business and files tax returns in numerous jurisdictions based on its interpretation of tax laws and regulations.

In evaluating the Company’s tax provision, the Company establishes a reserve for uncertain tax positions unless such positions are determined to be more likely than not of being sustained upon examination based on the technical

The Company’s policy is to recognize, when applicable, interest and penalties on uncertain tax positions as part of income tax expense.

Prior to the Separation, our operations were included in the tax returns of BD.

Income taxes as presented in the Consolidated Financial Statements attribute current and deferred income tax assets and liabilities of BD to us in a manner that is systematic, rational, and consistent with the asset and liability method prescribed by the accounting guidance for income taxes.

Our income tax provision prior to the Separation was prepared using the separate return method.

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

We believe the assumptions supporting the allocation and presentation of income taxes on a separate return basis are reasonable.

The Company’s policy is to recognize, when applicable, interest and penalties related to income taxes as part of income tax expense.

Additional disclosures regarding our accounting for income taxes are provided in Note 14 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

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

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

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

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

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

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

• Embecta’s ability to obtain clearance from the FDA of any product, to market and sell such products successfully, to anticipate the needs of people with diabetes, and future business decisions by Embecta and its competitors.

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

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

• The risk that as a result of the current global trade environment from the newly instituted tariffs, certain foreign governments, private purchasers and other customers in certain countries may consider transitioning away from products originating from certain countries (including the U.S.) in favor of buying “local” products and local manufacturers and competitors may attempt to capitalize on these sentiments and participate in aggressive competitive pricing or other strategies to transition, or divert, current and potential customers away Embecta.

• Embecta’s ability to obtain clearance from the FDA or foreign regulatory authorities of any product, to market and sell such products successfully, to anticipate the needs of people with diabetes, and future business decisions by Embecta and its competitors.

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

8 unchanged sentences

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

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

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

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

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

• The risks associated with the material weakness identified in our internal control over financial reporting and our ability to remediate such material weakness.

There can be no assurance that the transactions or uncertainties described above will in fact be consummated or occur in the manner described or at all.

4 unchanged sentences

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

What changed 10-K

Item 7. Management’s Discussion and Analysis