Embecta Corp. 10-K

Item 8. Financial Statements and Supplementary Data. Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Embecta Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Embecta Corp. (the Company) as of September 30, 2025 and 2024, the related consolidated statements of income, comprehensive income , equity and cash flows for each of the three years in the period ended September 30, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated November 25, 2025 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Estimation of variable consideration for revenue recognition Description of the Matter As discussed in Note 2 and 7 of the consolidated financial statements, the Company’s revenue recognition involves estimates of variable consideration, such as chargebacks, which are treated as a reduction of revenue in the same period the related revenue is recognized. These estimates are based on contractual terms, historical practices and current trends, and are adjusted as new information becomes available. Factors considered in the estimate of the chargeback liability include the estimated lag time between the sale of product and the payment of corresponding variable consideration. Auditing management’s estimate for the chargeback liability attributable to the lag time between the sale of product and the payment of corresponding variable consideration is significant to our audit as the related impact on revenue recognition is material and sensitive to change. The estimate of the liability attributable to the estimated lag time by management is sensitive to changes in historical practices and current trends, which involves judgment and estimation to determine the impact of these assumptions on the deductions to gross revenues, and therefore requires a higher degree of auditor judgement. 46 How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process for estimating variable consideration, including management’s review process of the chargeback liability related to the estimated lag time and the significant assumptions and data utilized in the calculations. Our audit procedures included, among others, evaluating the methodology and assumptions used by management in developing the estimate for the chargeback liability attributed to the lag time. This included testing the completeness and accuracy of the historical underlying data, the calculation of the liability, and performing a sensitivity analysis on management’s estimate of the historical claim acceptance rate to evaluate the impact on the chargeback liability. We tested payments for chargeback claims throughout the year and performed a retrospective analysis of claims paid subsequent to the balance sheet date. /s/ ERNST & YOUNG LLP We have served as the Company’s auditor since 2021. New York, New York November 25, 2025 47 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Embecta Corp. Opinion on Internal Control Over Financial Reporting We have audited Embecta Corp’s internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Embecta Corp. (the Company) maintained, in all material respects, effective internal control over financial reporting as of September 30, 2025, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2025 and 2024, the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended September 30, 2025, and the related notes and our report dated November 25, 2025 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s 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 generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ ERNST & YOUNG LLP New York, New York November 25, 2025 48 Consolidated Statements of Income Embecta Corp. Years Ended September 30 2025 2024 2023 R evenues $ 1,080.4 $ 1,123.1 $ 1,120.8 Cost of products sold 403.6 387.9 370.9 Gross Profit $ 676.8 $ 735.2 $ 749.9 Operating expenses: Selling and administrative expense 332.0 365.1 341.3 Research and development expense 37.3 78.8 85.2 Impairment expense — — 2.5 Other operating expenses 65.4 124.5 99.4 Total Operating Expenses $ 434.7 $ 568.4 $ 528.4 Operating Income $ 242.1 $ 166.8 $ 221.5 Interest expense, net ( 107.3 ) ( 112.3 ) ( 107.0 ) Other income (expense), net 1.5 ( 10.3 ) ( 8.8 ) Income Before Income Taxes $ 136.3 $ 44.2 $ 105.7 Income tax provision (benefit) 40.9 ( 34.1 ) 35.3 Net Income $ 95.4 $ 78.3 $ 70.4 Net Income per common share: Basic $ 1.64 $ 1.36 $ 1.23 Diluted $ 1.62 $ 1.34 $ 1.22 See notes to the Consolidated Financial Statements. Dollar amounts are in millions except per share amounts or as otherwise specified. 49 Consolidated Statements of Comprehensive Income Embecta Corp. Years Ended September 30 2025 2024 2023 Net Income $ 95.4 $ 78.3 $ 70.4 Other Comprehensive Income, net of tax Benefit plan net gain (loss) and prior service credit, net of amortization 0.2 ( 1.7 ) ( 1.6 ) Cumulative translation adjustment 5.8 18.0 17.4 Total Other Comprehensive Income, net of tax $ 6.0 $ 16.3 $ 15.8 Comprehensive Income $ 101.4 $ 94.6 $ 86.2 See notes to the Consolidated Financial Statements. Dollar amounts are in millions except per share amounts or as otherwise specified. 50 Consolidated Balance Sheets Embecta Corp. September 30 2025 2024 Assets Current Assets Cash and equivalents $ 225.5 $ 267.5 Restricted cash 3.1 6.7 Trade receivables, net (net of allowance for doubtful accounts of $ 1.8 million and $ 2.8 million as of September 30, 2025 and September 30, 2024, respectively) 145.6 193.0 Inventories: Materials 50.0 40.4 Work in process 11.7 4.8 Finished products 116.9 126.3 Total Inventories $ 178.6 $ 171.5 Amounts due from Becton, Dickinson and Company 3.3 53.8 Prepaid expenses and other 75.3 68.5 Total Current Assets $ 631.4 $ 761.0 Property, Plant and Equipment, Net 257.2 290.4 Goodwill and Intangible Assets 22.4 23.7 Deferred Income Taxes and Other Assets 179.9 210.2 Total Assets $ 1,090.9 $ 1,285.3 Liabilities and Equity Current Liabilities Accounts payable $ 74.2 $ 91.0 Accrued expenses 98.9 134.2 Amounts due to Becton, Dickinson and Company 16.3 42.5 Salaries, wages and related items 49.4 66.7 Current debt obligations 9.5 9.5 Current finance lease liabilities 3.4 3.4 Income taxes 9.8 26.7 Total Current Liabilities $ 261.5 $ 374.0 Deferred Income Taxes and Other Liabilities 62.6 54.1 Long-Term Debt 1,388.7 1,565.3 Non Current Finance Lease Liabilities 28.7 30.2 Contingencies (Note 6) Embecta Corp. Equity Common stock, $ 0.01 par value Authorized - 250,000,000 Issued and outstanding - 58,496,113 as of September 30, 2025 and 57,707,285 as of September 30, 2024 0.6 0.6 Additional paid-in capital 80.0 52.5 Accumulated deficit ( 445.6 ) ( 498.6 ) Accumulated other comprehensive loss ( 285.6 ) ( 292.8 ) Total Equity $ ( 650.6 ) $ ( 738.3 ) Total Liabilities and Equity $ 1,090.9 $ 1,285.3 See notes to the Consolidated Financial Statements. Dollar amounts are in millions except per share amounts or as otherwise specified. 51 Consolidated Statements of Equity Embecta Corp. Common Stock Shares Par Value Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Balance at October 1, 2022 57,055,327 $ 0.6 $ 10.0 $ ( 577.1 ) $ ( 324.9 ) $ ( 891.4 ) Net income — — — 70.4 — 70.4 Other comprehensive income, net of taxes — — — — 15.8 15.8 Stock-based compensation plans — — 21.5 — — 21.5 Dividends declared ($ 0.60 per share) — — — ( 34.4 ) — ( 34.4 ) Issuance of shares related to stock-based compensation plans 278,026 — ( 3.6 ) — — ( 3.6 ) Balance at September 30, 2023 57,333,353 $ 0.6 $ 27.9 $ ( 541.1 ) $ ( 309.1 ) $ ( 821.7 ) Balance at October 1, 2023 57,333,353 $ 0.6 $ 27.9 $ ( 541.1 ) $ ( 309.1 ) $ ( 821.7 ) Net income — — — 78.3 — 78.3 Other comprehensive income, net of taxes — — — — 16.3 16.3 Stock-based compensation plans — — 26.3 — — 26.3 Dividends and dividend equivalents declared ($ 0.60 per share) — — 1.3 ( 35.8 ) — ( 34.5 ) Issuance of shares related to stock-based compensation plans 373,932 — ( 3.0 ) — — ( 3.0 ) Balance at September 30, 2024 57,707,285 $ 0.6 $ 52.5 $ ( 498.6 ) $ ( 292.8 ) $ ( 738.3 ) Balance at October 1, 2024 57,707,285 $ 0.6 $ 52.5 $ ( 498.6 ) $ ( 292.8 ) $ ( 738.3 ) Net income — — — 95.4 — 95.4 Other comprehensive income, net of taxes — — — — 6.0 6.0 Stock-based compensation plans — — 31.6 — — 31.6 Dividends and dividend equivalents declared ($ 0.60 per share) — — 1.6 ( 36.6 ) — ( 35.0 ) Issuance of shares related to stock-based compensation plans 788,828 — ( 5.7 ) — — ( 5.7 ) Separation-related adjustments — — — ( 5.8 ) 1.2 ( 4.6 ) Balance at September 30, 2025 58,496,113 $ 0.6 $ 80.0 $ ( 445.6 ) $ ( 285.6 ) $ ( 650.6 ) See notes to the Consolidated Financial Statements. Dollar amounts are in millions except per share amounts or as otherwise specified. 52 Consolidated Statements of Cash Flows Embecta Corp. Years Ended September 30 2025 2024 2023 Operating Activities Net income $ 95.4 $ 78.3 $ 70.4 Adjustments to net income to derive net cash provided by operating activities: Depreciation and amortization 40.7 36.2 32.6 Amortization of debt issuance costs 9.1 6.9 6.4 Amortization of cloud computing costs 10.4 6.3 — Impairment of property, plant and equipment 10.6 — 2.5 Stock-based compensation 31.6 26.3 21.5 Deferred income taxes 17.6 ( 70.6 ) 14.3 Change in operating assets and liabilities: Trade receivables, net 44.2 ( 174.7 ) 7.0 Inventories ( 6.1 ) ( 16.5 ) ( 28.8 ) Due from/due to Becton, Dickinson and Company 25.3 58.9 ( 23.2 ) Prepaid expenses and other 8.5 39.5 ( 14.2 ) Accounts payable, accrued expenses and other current liabilities ( 68.9 ) 60.0 7.9 Income and other net taxes payable ( 28.1 ) 13.2 ( 12.6 ) Other assets and liabilities, net 1.4 ( 28.1 ) ( 16.1 ) Net Cash Provided by Operating Activities $ 191.7 $ 35.7 $ 67.7 Investing Activities Capital expenditures ( 9.3 ) ( 15.8 ) ( 26.5 ) Net Cash Used for Investing Activities $ ( 9.3 ) $ ( 15.8 ) $ ( 26.5 ) Financing Activities Payments on long-term debt ( 184.6 ) ( 34.6 ) ( 9.5 ) Payments related to tax withholding for stock-based compensation ( 5.7 ) ( 3.0 ) ( 3.6 ) Payments on finance lease ( 1.4 ) ( 1.3 ) ( 1.2 ) Dividend payments ( 35.0 ) ( 34.5 ) ( 34.4 ) Net Cash Used for Financing Activities $ ( 226.7 ) $ ( 73.4 ) $ ( 48.7 ) Effect of exchange rate changes on cash and equivalents and restricted cash ( 1.3 ) 1.2 3.1 Net Change in Cash and equivalents and restricted cash $ ( 45.6 ) $ ( 52.3 ) $ ( 4.4 ) Opening Cash and equivalents and restricted cash 274.2 326.5 330.9 Closing Cash and equivalents and restricted cash $ 228.6 $ 274.2 $ 326.5 See notes to the Consolidated Financial Statements. Dollar amounts are in millions except per share amounts or as otherwise specified. 53 Notes to Consolidated Financial Statements Embecta Corp. Note 1 — Background Embecta Corp. ("Embecta" or the "Company") is a leading global medical device company focused on providing solutions to improve the health and well-being of people living with diabetes. The Company has a broad portfolio of marketed products, including a variety of pen needles, syringes and safety devices, which are complemented by a proprietary digital application designed to assist people with managing their diabetes. The Company primarily sells products to wholesalers and distributors that sell to retail and institutional channels who in turn sell to patients or use the products to deliver insulin injections to patients. Note 2 — Summary of Accounting Policies Basis of Presentation These consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). All intercompany transactions and accounts within Embecta have been eliminated. Revenue Recognition The Company recognizes revenue from product sales and considers performance obligations satisfied when the customer obtains control of the product, which is generally upon shipment or delivery, depending on the delivery terms specified in the sales agreement. The Company acts as the principal in its customer arrangements and therefore records revenue on a gross basis. When arrangements include multiple performance obligations, the total transaction price of the contract is allocated to each performance obligation based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. The point in time upon which shipment or delivery occurs is the most faithful depiction of when control of the goods transfers to the customer. Variable consideration such as rebates, chargebacks, sales discounts, and sales returns are estimated and treated as a reduction of revenue in the same period the related revenue is recognized. These estimates are based on contractual terms, historical practices and current trends, and are adjusted as new information becomes available. Revenues exclude any taxes that the Company collects from customers and remits to tax authorities. Additional disclosures regarding the Company’s accounting for revenue recognition are provided in Note 7. Cash and Equivalents Cash and equivalents include all highly liquid investments with a maturity of three months or less at the date of acquisition. Interest income on Cash and equivalents is recorded as earned, which is further discussed in Note 16. Restricted Cash Restricted cash consists of cash not readily available for use in the Company's operating activities and is primarily pledged as collateral for bank guarantees related to certain customer performance guarantees and property leases internationally, which are further discussed in Note 16. Trade Receivables The Company grants credit to customers in the normal course of business and the resulting trade receivables are stated at their net realizable value. The allowance for doubtful accounts represents the Company’s estimate of probable credit losses expected to be incurred over the life of its trade receivables and is determined based on historical loss experiences, current conditions, reasonable and supportable forecasts such as country or regional risks that are not captured in the historical loss information, and other specific account data such as customer specific credit risk. Amounts are written off against the allowances for doubtful accounts when the Company determines that a customer account is uncollectible. The allowance for doubtful accounts for trade receivables is not material to the Company’s Consolidated Financial Statements. Inventories Inventories are stated at the lower of approximate cost or net realizable value determined on the first-in, first-out basis. Cloud Computing Arrangements The Company capitalizes costs incurred to implement cloud computing arrangements that are service contracts within Prepaid expenses and other and Deferred Income Taxes and Other Assets in the Company's Consolidated Balance Sheets based on the expected period that amortization will be recognized. Implementation costs associated with cloud computing arrangements are capitalized when incurred during the application development phase. Once the implementation of a cloud Dollar amounts are in millions except per share amounts or as otherwise specified. 54 computing arrangement is complete and ready for its intended use, the Company amortizes the costs over the expected term of the hosting arrangement using the straight-line method to the same income statement line as the associated cloud operating expenses. Property, Plant and Equipment Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is principally provided on the straight-line basis over estimated useful lives, which range from 20 to 45 years for buildings, 4 to 13 years for machinery and equipment and 1 to 20 years for leasehold improvements. Depreciation expense was $ 38.1 million in 2025, $ 34.9 million in 2024, and $ 31.5 million in 2023. Property, plant and equipment are periodically reviewed when impairment indicators are present to assess recoverability or a decision has been made to abandon efforts associated with construction in progress assets. Recoverability is determined by comparing the carrying values of the assets or asset groups to the undiscounted cash flows to be generated from the use and eventual disposition of such assets or asset groups. If the asset’s or asset group’s carrying value exceeds such undiscounted cash flows, the assets or asset groups are not recoverable and an impairment loss is recognized based on the amount by which the carrying value of the asset or asset group exceeds its calculated fair value. Capitalized Interest The interest cost on capital projects is capitalized and included in the cost of the project. Capitalization commences with the first expenditure for the project and continues until the project is substantially complete and ready for its intended use. When no debt is incurred specifically for a project, interest is capitalized on project expenditures using the weighted average cost of the Company's outstanding borrowings. For the fiscal years ended September 30, 2025, 2024 and 2023 the Company capitalized $ 2.8 million, $ 3.7 million and $ 4.6 million of interest expense, respectively, into Property, Plant and Equipment, Net . For the fiscal years ended September 30, 2024 and 2023 the Company capitalized $ 0.1 million and $ 0.9 million of interest expense into Deferred Income Taxes and Other Assets, respectively . No interest expense was capitalized into Deferred Income Taxes and Other Assets during the fiscal year ended September 30, 2025. Advertising Costs Advertising costs are expensed as incurred and included in S elling and administrative expense . The Company recorded advertising costs of $ 16.2 million, $ 9.0 million, and $ 15.5 million in 2025, 2024, and 2023, respectively. Goodwill and Other Intangible Assets Goodwill represents the excess of the consideration transferred over the fair value of net assets of businesses acquired. The Company has one reporting unit. Goodwill is evaluated for impairment as of July 1 each year, or more frequently if impairment indicators exist, by first assessing qualitative factors to determine whether it is more likely than not that fair value is less than carrying value. If the Company concludes it is more likely than not that fair value is less than carrying value, a quantitative fair value test is performed. If carrying value is greater than fair value, a goodwill impairment charge will be recorded for the difference (up to the carrying value of goodwill). The Company completed the annual goodwill impairment test as of July 1, 2025 and concluded that no impairment to goodwill was necessary as the fair value of the Company's one reporting unit was significantly in excess of the carrying value. No goodwill impairments were identified during the fiscal years ended September 30, 2025, 2024, or 2023. As of September 30, 2025 there are no accumulated impairment losses related to goodwill. Amortized intangible assets primarily consist of patents and customer relationships. Patents are generally amortized over 20 years using the straight-line method. Customer relationship assets are generally amortized over periods ranging from 10 to 15 years, using the straight-line method. Other intangibles with finite useful lives are amortized over periods principally ranging from 1 to 40 years, using the straight-line method. Finite-lived intangible assets are periodically reviewed when impairment indicators are present to assess recoverability from future operations using undiscounted cash flows. The carrying values of these finite-lived assets are compared to the undiscounted cash flows they are expected to generate and an impairment loss is recognized in operating results to the extent any finite-lived intangible asset’s carrying value exceeds its calculated fair value. Foreign Currency and Derivative Financial Instruments Assets and liabilities denominated in their functional currencies are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates of exchange prevailing during the period. The United States dollar results that arise from such translation are included in Accumulated other comprehensive loss . The Company utilizes derivative instruments to manage market risks associated with fluctuations in certain foreign currency exchange rates. The Company utilizes foreign currency forward contracts to protect against market risks arising in the normal course of business. Dollar amounts are in millions except per share amounts or as otherwise specified. 55 At the end of the reporting period, foreign-currency-denominated assets and liabilities are remeasured into the functional currencies of the reporting entities at current market rates. The change in value from this remeasurement is reported as a foreign exchange gain or loss for that period in Other income (expense), net . The Company recorded transactional foreign exchange gains of $ 1.2 million and losses of $ 4.4 million during the fiscal years ended September 30, 2025 and 2024, respectively. Transactional foreign exchange impacts were not material to the Company's Consolidated Statements of Income during the fiscal year ended September 30, 2023. Shipping and Handling Costs The Company considers its shipping and handling costs to be contract fulfillment costs and records them within selling and administrative expense. Shipping and handling costs were $ 40.8 million, $ 41.3 million, and $ 36.9 million in 2025, 2024, and 2023, respectively. Contingencies The Company establishes accruals for future losses which are both probable and can be reasonably estimated (and in the case of environmental matters, without considering possible third-party recoveries). Additional disclosures regarding the Company’s accounting for contingencies are provided in Note 6. Stock-Based Compensation Effective April 1, 2022, the Company established the 2022 Employee and Director Equity Based Compensation Plan, as amended on February 7, 2024 (the "Plan"). The Plan provides for the grant of various types of awards, including restricted stock unit ("RSU") awards, stock appreciation rights, stock options, performance-based awards and cash awards. Under the Plan, the exercise price of awards, if any, is set on the grant date and generally may not be less than the fair market value per share on that date. The Company measures stock-based compensation for equity awards at fair value on the date of grant and records stock-based compensation as a charge to earnings net of the estimated impact of forfeited awards. For awards that ultimately settle in cash, we treat them as liability awards and mark the award to market each reporting period and recognize any adjustment in our Consolidated Statements of Income. The Company recognizes stock-based compensation cost only for those stock-based awards that are estimated to ultimately vest over their requisite service period, based on the vesting provisions of the individual grants. The cumulative effect on current and prior periods of a change in the estimated forfeiture rate is recognized as compensation cost in earnings in the period of the change (see Note 9). Benefit Plans For certain defined benefit plans, the over funded or underfunded status of the Plan was recognized as an asset or liability in the Company's Consolidated Balance Sheets. Embecta sponsors certain non-U.S. defined benefit pension plans (See Note 19). Research and Development Research and development costs are expensed as incurred. Income Taxes Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax basis of assets and liabilities at the applicable tax rates. The Company maintains valuation allowances where it is more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances are included in the tax provision in the period of change. In determining whether a valuation allowance is warranted, the Company evaluates factors such as prior earnings history, expected future earnings, carryback and carryforward periods, and tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. From time to time, the Company engages in transactions in which tax consequences may be subject to uncertainty. 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 merits. The Company’s policy is to recognize, when applicable, interest and penalties related to income taxes as part of income tax expense. While the Company believes it has identified all reasonable exposures and the reserve it has established is appropriate under the circumstances, it is possible that additional exposures exist and that exposures may be settled at amounts Dollar amounts are in millions except per share amounts or as otherwise specified. 56 different than the amounts reserved. It is also possible that changes in facts and circumstances could cause the Company to either materially increase or reduce the carrying amount of its tax reserve. The Company accounts for the tax effects of global intangible low-taxed income (“GILTI”) in the income tax provision in the period the tax arises. Additional disclosures regarding the Company's accounting for income taxes are provided in Note 14. Segment Data The Company operates and reports its financial information as one segment. In making this determination, the Company (i) determines its Chief Operating Decision Maker (“CODM”), (ii) identifies and analyzes potential business components, (iii) identifies its operating segments and (iv) determines whether there are multiple operating segments requiring presentation as reportable segments. The Company’s decision to report as one segment is based upon the following: (1) its internal organizational structure; (2) the manner in which its operations are managed; and (3) the criteria used by the Company’s Chief Executive Officer, its CODM, to evaluate performance of the Company’s business and allocate resources and capital. Fair Value Measurements A fair value hierarchy is applied to prioritize inputs used in measuring fair value. The three levels of inputs used to measure fair value are detailed below. Additional disclosures regarding the Company’s fair value measurements are provided in Note 16. Level 1—Inputs to the valuation methodology which represent unadjusted quoted prices in active markets for identical assets and liabilities. Level 2—Inputs to the valuation methodology which include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability. Level 3—Inputs to the valuation methodology which are unobservable and significant to the fair value measurement. Leases The Company determines whether an arrangement contains a lease at inception. If a lease is identified in an arrangement, the Company recognizes a right-of-use asset and liability in the Company's Consolidated Balance Sheets and determines whether the lease should be classified as a finance or operating lease. The Company does not recognize assets or liabilities for leases with lease terms of less than 12 months. A lease qualifies as a finance lease if any of the following criteria are met at the inception of the lease: (i) there is a transfer of ownership of the leased asset to Embecta by the end of the lease term, (ii) the Company holds an option to purchase the leased asset that the Company is reasonably certain to exercise, (iii) the lease term is for a major part of the remaining economic life of the leased asset, (iv) the present value of the sum of lease payments equals or exceeds substantially all of the fair value of the leased asset, or (v) the nature of the leased asset is specialized to the point that it is expected to provide the lessor no alternative use at the end of the lease term. All other leases are recorded as operating leases. Finance and operating lease assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term using the discount rate implicit in the lease. If the implicit rate is not readily determinable, the Company utilizes its incremental borrowing rate at the lease commencement date. Operating lease assets are further adjusted for prepaid or accrued lease payments. Operating lease payments are expensed using the straight-line method as an operating expense over the lease term. Finance lease assets are amortized to depreciation expense using the straight-line method over the shorter of the useful life of the related asset or the lease term. Finance lease payments are bifurcated into (i) a portion that is recorded as imputed interest expense and (ii) a portion that reduces the finance liability associated with the lease. For lease arrangements that are recognized in the Company’s Consolidated Balance Sheets, the right-of-use asset and lease liability is initially measured at the commencement date based upon the present value of the lease payments due under the lease. These payments represent the combination of the fixed lease and fixed non-lease components that are due under the arrangement. Variable lease payments are expensed as incurred. If a lease includes an option to extend or terminate the lease, the Company reflects the option in the lease term if it is reasonably certain the Company will exercise the option. Finance leases are recorded in Property, Plant and Equipment, Net , Current finance lease liabilities , and Non Current Finance Lease Liabilities and operating leases are recorded in Deferred Income Taxes and Other Assets , Accrued expenses , and Deferred Income Taxes and Other Liabilities in the Company's Consolidated Balance Sheets. Dollar amounts are in millions except per share amounts or as otherwise specified. 57 Sales and Transfers of Financial Instruments The Company may discount and sell accounts receivables during the normal course of business. These receivables which are sold to a third party without recourse, are excluded from the amounts reported in the Consolidated Balance Sheets. The Company’s continuing involvement is limited to servicing the receivables. The cash proceeds received from such sales are included in operating cash flows. The expenses associated with the sale of receivables are recorded within Other operating expenses in the Consolidated Statements of Income. Additional disclosures regarding the Company's accounting for the sales of financial instruments are provided in Note 15. Restructuring Costs The Company records liabilities for costs associated with exit or disposal activities in the period in which the liability is incurred. In accordance with existing benefit arrangements, future employee termination costs to be incurred in conjunction with involuntary separations are accrued when such separations are probable and estimable. When accruing these costs, the Company will recognize the amount that is the best estimate. Costs for one-time termination benefits are recognized at the date the employee is notified, unless the employee is required to render services beyond a minimum retention period, in which case the benefits are expensed ratably over the service period. Liabilities for other costs associated with a restructuring activity are measured at fair value and are recognized when the liability is incurred. Other costs primarily consist of contract termination fees and other costs related to restructuring activities and are expensed when incurred. In connection with exit and disposal activities, the Company also assesses the recoverability of long-lived assets employed in the business. Additional disclosures regarding the Company’s accounting for restructuring costs are provided in Note 4. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates or assumptions affect reported assets, liabilities, revenues and expenses, depreciable and amortizable lives, sales returns and allowances, rebate accruals, restructuring costs, inventory reserves and taxes on income as reflected in the Consolidated Financial Statements. Actual results could differ from these estimates. Supplemental Disclosures Of Cash Flow Information Cash paid for interest related to debt during the fiscal year ended September 30, 2025, 2024 and 2023 was $ 103.8 million, $ 117.7 million and $ 111.0 million, respectively. Cash paid for income taxes, net of refunds, for the fiscal years ended September 30, 2025, 2024 and 2023 was $ 50.1 million, $ 29.1 million and $ 30.4 million, respectively. Recently Adopted Accounting Standards In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which modifies the disclosure and presentation requirements of reportable segments. This ASU is effective for the Company beginning with its fiscal year 2025 reporting and for interim reporting beginning with its fiscal year 2026. The Company adopted this ASU for the fiscal year beginning on October 1, 2024 on a retrospective basis for all periods presented. The adoption of the ASU did not have an impact on the Company’s consolidated financial condition or results of operations. See Note 8 for more information. Recently Issued Accounting Standards Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures. This ASU is effective for the Company beginning with its fiscal year 2026 reporting. While this ASU will increase disclosures, it will not have a material impact on the Company’s Consolidated Financial Statements. In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40), to improve disclosures about an entity's expenses including more detailed information about the components of expenses in commonly presented expense captions. This ASU is effective for the Company beginning with its fiscal year 2028 reporting and for interim reporting beginning with its fiscal year 2029. While this ASU will increase disclosures, it will not have a material impact on the Company’s Consolidated Financial Statements. In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal Use Software. This ASU eliminates accounting consideration of software project development stages and clarifies the threshold applied to begin capitalizing costs. This ASU is effective for the Company beginning with its fiscal 2029 reporting and permits prospective, modified prospective, or retrospective adoption. Early adoption is permitted. The Company is evaluating the impact of this ASU on its Consolidated Financial Statements and related disclosures. Dollar amounts are in millions except per share amounts or as otherwise specified. 58 Note 3 — Third Party Arrangements On April 1, 2022 (the "Separation Date"), Embecta and Becton, Dickinson and Company ("BD") entered into a Separation and Distribution Agreement (the "Separation and Distribution Agreement"). The Separation and Distribution Agreement contains provisions that, among other things, relate to (i) assets, liabilities and contracts to be transferred, assumed and assigned to each of Embecta and BD (including certain deferred assets and liabilities) as part of the Separation, (ii) cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of Embecta's business with Embecta and financial responsibility for the obligations and liabilities of BD’s remaining businesses with BD, (iii) procedures with respect to claims subject to indemnification and related matters, (iv) the allocation among Embecta and BD of rights and obligations under existing insurance policies with respect to occurrences prior to completion of the Separation, as well as the right to proceeds and the obligation to incur certain deductibles under certain insurance policies, and (v) procedures governing Embecta’s and BD’s obligations and allocations of liabilities with respect to ongoing litigation matters that may implicate each of BD’s business and Embecta’s business. Agreements that Embecta entered into with BD that govern aspects of Embecta's relationship with BD following the Separation include, but are not limited to: • Transition Services Agreements ("TSA") and Logistics Services Agreement ("LSA") - Pursuant to the TSA, as amended, and the related LSA, as amended, Embecta and BD and their respective affiliates provide each other, on an interim, transitional basis, various services, including, but not limited to, information technology, procurement, quality and regulatory affairs, medical affairs, tax and treasury services, distribution logistics, and shared services infrastructure support for order-to-cash, source-to-pay, and record-to-report (collectively, the “Interim Business Continuity Processes”). The agreed-upon charges for such services were generally intended to allow the servicing party to charge a price comprised of out-of-pocket costs and expenses and a predetermined profit in the form of a mark-up of such out-of-pocket costs and expenses. Specifically for the LSA, Embecta paid BD (i) reimbursable costs, including all shipping costs, selling costs, general administration costs, costs of goods, research and development services costs, and other income and expenses related solely to the diabetes care business, that were incurred by BD directly, as allocated costs or as costs payable to a third party and (ii) a monthly administrative fee of 1.0 % of net revenue (which increased to 1.25 % of net revenue after January 1, 2024). Such services provided pursuant to the TSA and the LSA have terminated and expired. • Trade Receivables Factoring Agreements - Embecta and BD entered into trade receivables factoring agreements (the "Factoring Agreements"), under which Embecta transferred certain net trade receivable assets to BD, and paid 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. Per the terms of the Factoring Agreements, the Company and its relevant subsidiaries sold receivables to the corresponding BD subsidiary in the same jurisdiction and such BD subsidiary collected the receivables from Company's customers. The BD subsidiary assumed the credit risk in respect of the receivables, and accordingly deducted a factoring fee from the purchase price of such receivables. Accordingly, Embecta accounted for the transfer as sales of trade receivables by recognizing an increase to Cash and equivalents and a decrease to Trade Receivables, net in the Consolidated Balance Sheets when proceeds from the transactions are received. The transfers are presented in the Consolidated Statements of Cash Flows as operating activities and the related service fee is presented as a component of Other income (expense), net in the Consolidated Statements of Income. The Trade Receivables Factoring Agreements have terminated and expired as a result of the Company's implementation and onboarding of certain systems and services, including, but not limited to, information technology, procurement, quality and regulatory affairs, medical affairs, tax and treasury services, distribution logistics, and shared services infrastructure support for order-to-cash, source-to-pay, and record-to-report, which, for clarity, includes enterprise resource planning (“ERP”) systems (“Business Continuity Processes”). • Distribution Agreements - Embecta and BD entered into distribution agreements for certain territories, principally in the Asia Pacific Region and Latin America, whereby a subsidiary of BD was appointed as a distributor of Embecta or its relevant subsidiaries to support certain commercial operations of the diabetes care business on a transitional basis in these regions for a maximum of two years . The distribution agreements each continued until either (1) certain governmental approvals needed to distribute products in the defined territory are obtained and order-to-cash processes and other services of the Company for such territory are migrated to an alternative commercial arrangement between the parties or (2) the applicable services are transitioned to a third-party distributor or independently performed by Embecta, but in any event no longer than the maximum term of two years , except certain such agreements may be extended in connection with the Extension. Embecta paid BD a return of 1.5 % to 2.0 % of net revenue for each territory. As it pertains to the Distribution Agreements noted above, Embecta determined it was the principal under these arrangements and was entitled to all the benefits, and was liable for all the risks, related to the inventory and receivables. Additionally, Embecta had latitude in pricing, had the ability to direct BD regarding decisions over inventory, and was responsible for all credit and collections Dollar amounts are in millions except per share amounts or as otherwise specified. 59 risks and losses associated with the related receivables when there was no factoring agreement in place. As such, Embecta recognized these sales on a gross basis. All distribution agreements have terminated and expired. • Cannula Supply Agreement - Embecta and BD entered into a cannula supply agreement whereby BD sells to Embecta cannulas for incorporation into Embecta's existing syringes and pen needles, safety syringes and safety pen needles, and products currently under development. BD retains ownership of all cannula technology, cannula production activities and the intellectual property rights therein. Embecta is limited to a maximum number of cannulas that it can purchase under the cannula supply agreement, which will be an absolute upper limit of cannulas per year and yearly limits that vary with annual demand. The cannula supply agreement is terminable by Embecta without cause by providing at least 36 months’ written notice; however, such termination can be effective no earlier than five years from the Separation. The cannula supply agreement will be 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. However, in the event of a change of control of Embecta, BD has the right to terminate the cannula supply agreement in its sole discretion. The cannula supply agreement will also terminate automatically, subject to a 36 -month wind-down period, if Embecta’s yearly forecast is below the required minimum purchase amount, and the parties have other customary termination rights for material breach or bankruptcy of the other party. • Tax Matters Agreement - Pursuant to the tax matters agreement, Embecta agreed to certain covenants that contain restrictions intended to preserve the tax-free status of the distribution and certain related transactions. Embecta may take certain actions prohibited by these covenants only if Embecta obtains and provides to BD an opinion from a United States tax counsel or accountant of recognized national standing, in either case satisfactory to BD, to the effect that such action would not jeopardize the tax-free status of the distribution and certain related transactions, or if Embecta obtains prior written consent of BD. Embecta is barred from taking any action, or failing to take any action, where such action or failure to act adversely affects or could reasonably be expected to adversely affect the tax-free status of the distribution and certain related transactions or result in certain other taxes to BD, for all relevant time periods. • Other agreements that Embecta entered into with BD include, but are not limited to, the employee matters agreement ("EMA"), an intellectual property matters agreement, local support services agreements, certain other manufacturing arrangements and a process services agreement and lease agreement for a manufacturing facility located in Holdrege, Nebraska. See Note 18 for more information on the lease agreement for Holdrege. The amounts due from BD under the above agreements were $ 3.3 million and $ 12.2 million at September 30, 2025 and are reflected in Amounts due from Becton, Dickinson and Company and Trade receivables, net , respectively. The amount due to BD under these agreements was $ 16.3 million and $ 4.1 million at September 30, 2025 and are included in Amounts due to Becton, Dickinson and Company and Accounts payable , respectively. As of September 30, 2025, the closing of the transfers of certain assets and liabilities in certain jurisdictions which did not occur at Separation, is complete. Dollar amounts are in millions except per share amounts or as otherwise specified. 60 Note 4 — Business Restructuring Charges On November 22, 2024, the Company’s Board of Directors approved a plan to discontinue internal and external investment in the research and development of the Company's patch pump program. As a result, the Company incurred organizational restructuring plan (the "Patch Pump Restructuring Plan") costs of $ 34.5 million during the twelve months ended September 30, 2025. This Patch Pump Restructuring Plan is substantially complete as of September 30, 2025. 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 twelve months ended September 30, 2025. The 2025 Restructuring Plan is substantially complete as of September 30, 2025. The following table summarizes the charges related to the restructuring programs by type of cost for the period ended September 30, 2025: Employee Termination Non-Employee Related Total Cost of products sold $ 0.5 $ 6.3 $ 6.8 Selling and administrative expense 0.6 — 0.6 Research and development expense 6.8 4.7 11.5 Other operating expenses 14.1 5.0 19.1 $ 22.0 $ 16.0 $ 38.0 Employee termination costs are associated with actual headcount reductions, including involuntary headcount reductions which were probable and could be reasonably estimated. Non-employee related costs are associated with termination of contracts and long-lived asset impairments are discussed further in Note 16 and Note 17. The following table summarizes the charges and spending relating to restructuring program activities for the period ended September 30, 2025: Employee Termination Non-Employee Related Total Balance at September 30, 2024 $ — $ — $ — Charged to expense 22.0 16.0 38.0 Cash payments ( 18.4 ) ( 4.0 ) ( 22.4 ) Non-cash adjustments ( 3.1 ) ( 10.6 ) ( 13.7 ) Balance at September 30, 2025 (a) $ 0.5 $ 1.4 $ 1.9 (a) As of September 30, 2025, $ 0.5 million is recorded in Salaries, wages and related items and $ 1.4 million is recorded in Accrued expenses . Dollar amounts are in millions except per share amounts or as otherwise specified. 61 Note 5 — Other Operating Expenses Other operating expenses are as follows: Twelve months ended September 30, 2025 2024 2023 Costs related to the Separation $ 31.3 $ 110.8 $ 92.7 Amortization of cloud computing arrangements 10.4 6.3 — Costs associated with the discontinued patch pump program 15.7 — — Business optimization and severance related costs 7.3 7.4 5.6 Other 0.7 — 1.1 Total $ 65.4 $ 124.5 $ 99.4 In connection with the Separation, the Company incurred separation and stand-up costs. The costs incurred primarily consist of costs associated with accounting, auditing, legal services, marketing, supply chain, employee retention, brand transition, and certain other costs to establish certain systems and services, including but not limited to, information technology, procurement, quality and regulatory affairs, medical affairs, tax and treasury services, distribution logistics, and shared services infrastructure support for order-to-cash, source-to-pay, and record-to-report, which, for clarity, includes enterprise resource plan ("ERP") system (“Business Continuity Processes”) and stand-alone functions to assist with the transition to being a stand-alone entity. For both the fiscal years ended September 30, 2025 and 2024, the Company recognized costs associated with the amortization of cloud computing arrangements which is further discussed in Note 11. For the fiscal 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. For the fiscal year ended September 30, 2025, the Company recognized costs associated with the discontinuation of the patch pump program which is further discussed in Note 4. No such costs were recognized for the fiscal years ended September 30, 2024 and 2023. For the fiscal years ended September 30, 2025, 2024 and 2023, the Company incurred restructuring, business optimization, and severance related costs associated with standing up and optimizing the Company. Note 6 — Contingencies The Company is subject to potential liabilities under government regulations and various claims and legal actions that are pending or may be asserted from time-to-time. These matters arise in the ordinary course and conduct of the Company’s business and include, for example, commercial, product liability, breach of contract and tort, intellectual property, product liability, environmental, securities and employment matters. The Company intends to continue to defend itself vigorously in such matters and when warranted, take legal action against others. Furthermore, the Company regularly assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements. An estimated loss contingency is accrued in the Company’s Financial Statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the Company’s assessment, it has adequately accrued an amount for contingent liabilities currently in existence. The Company does not accrue amounts for liabilities that it does not believe are probable. Litigation is inherently unpredictable, and unfavorable resolutions could occur. As a result, assessing contingencies is highly subjective and requires judgment about future events. The amount of ultimate loss may exceed the Company’s current accruals, and it is possible that its cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies. The Company was not a party to any material legal proceedings at September 30, 2025 or September 30, 2024, nor is it a party to any material legal proceedings as of the date of issuance of these Consolidated Financial Statements. Dollar amounts are in millions except per share amounts or as otherwise specified. 62 Note 7 — Revenues The Company’s policies for recognizing revenue have not changed from those described in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024. The Company sells syringes, pen needles and other products used in the management of diabetes which are primarily sold 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. End-users of the Company’s products include healthcare institutions, physicians, life science researchers, clinical laboratories, the pharmaceutical industry, and the general public. Measurement of Revenues Payment terms extended to the Company’s customers are based upon commercially reasonable terms for the markets in which the Company’s products are sold. Because the Company generally expects to receive payment within one year or less from when control of a product is transferred to the customer, the Company does not generally adjust its revenues for the effects of a financing component. The Company’s gross revenues are subject to a variety of gross-to-net deductions which are recorded in the same period that the underlying revenues are recognized. Such variable consideration includes rebates, chargebacks, sales discounts, and sales returns. Because these deductions represent estimates of the related obligations, judgment is required when determining the impact of these revenue deductions on gross revenues for a reporting period. Rebates provided by the Company are based upon prices determined under the Company’s agreements primarily with its end-user customers. Additional factors considered in the estimate of the Company’s variable consideration liability include the quantification of inventory that is either in stock at or in transit to the Company’s distributors, as well as the estimated lag time between the sale of product and the payment of corresponding variable consideration. The Company’s liability attributed to variable consideration at September 30, 2025 and September 30, 2024 was $ 113.7 million and $ 149.6 million, respectively. Sales deductions recorded as a reduction of gross revenues for the fiscal years ended September 30, 2025, 2024 and 2023 were $ 578.3 million, $ 525.9 million, and $ 411.1 million respectively. Disaggregation of Revenues Disaggregation of revenue by geographic region is provided within Note 8. Note 8 — Segment, Geographic, and Product Information The Company's operations include four product lines which constitute one operating segment engaged in providing solutions to improve the health and well-being of people living with diabetes. The Company's CODM is the Chief Executive Officer. The CODM assesses performance and decides how to allocate resources for the Company's one operating segment based on consolidated net income that is reported on the Consolidated Statements of Income. The Company has also evaluated the significant segment expenses incurred by our single segment regularly provided to the CODM. The significant expenses provided to the CODM are consistent with those reported on the Consolidated Statements of Income and include cost of products sold, selling and administrative expense, research and development, other operating expenses, interest expense, other income and expense, and income taxes. The CODM uses these metrics to make key operating decisions which include approving the design of key commercialization strategies, decision about key personnel, and approving annual operating and capital budgets. Our CODM considers budget-to-actual variances and year over year performance when making decisions supporting resource allocation. The Company manages assets on a consolidated basis as reported on the Consolidated Balance Sheets. Disaggregation of Revenues The Company has distribution agreements with regional or national distributors (including wholesalers and medical suppliers) to ensure broad availability of its products as well as a direct sales force in certain countries and regions around the world. In the United States and Canada, the Company utilizes its large and small key account managers that call on payers, retailers, wholesalers and institutional customers, and field-based territory managers that call on health care providers and pharmacies. In certain markets within Europe, the Company has dedicated sales representatives and in certain regions of the Middle East and Africa, the Company has distribution agreements. In Asia, the Company has distribution agreements and in China, the Company relies on its own commercial team to support sales execution. In Latin America, the Company maintains distribution agreements and direct sales representatives. Dollar amounts are in millions except per share amounts or as otherwise specified. 63 Revenues by geographic region are as follows: Year ended September 30, 2025 2024 2023 United States $ 579.1 $ 607.2 $ 601.4 International (1) 501.3 515.9 519.4 Total $ 1,080.4 $ 1,123.1 $ 1,120.8 (1) For the fiscal years ended September 30, 2025, 2024, and 2023 no individual country outside of the United States generated net revenues that represented more than 10.0% of total revenues. Revenues by product family are as follows: Year ended September 30, 2025 2024 2023 Pen Needles $ 784.1 $ 844.4 $ 829.2 Syringes 124.6 126.2 138.1 Safety 137.8 129.4 126.3 Other (1) 14.0 10.3 14.2 Contract Manufacturing 19.9 12.8 13.0 Total $ 1,080.4 $ 1,123.1 $ 1,120.8 (1) Other includes product sales for swabs and other accessories. Other also reflects the recognition of changes in estimates for the Italian payback measure relating to certain prior fiscal years between 2015 and 2023. Note 9 — Stock-Based Compensation The Company grants stock appreciation rights ("SARs"), time-vested restricted stock units ("TVUs"), performance based restricted stock units ("PSUs") and cash awards pursuant to the 2022 Employee and Director Equity Based Compensation Plan ("the Plan"). A total of 10,189,000 shares of common stock are authorized under the Plan. Under the Plan, the exercise price of awards, if any, is set on the grant date and may not be less than the fair market value per share on that date. Generally SARs have a term of ten years and a three or four year vesting period, subject to limited exceptions. The Company recognizes stock-based compensation cost only for those stock-based awards that are estimated to ultimately vest over their requisite service period, based on the vesting provisions of the individual grants. The cumulative effect on current and prior periods of a change in the estimated forfeiture rate is recognized as compensation cost in earnings in the period of the change. Stock-Based Compensation Expense Total direct and allocated stock-based compensation expense for the fiscal years ended September 30, 2025, 2024, and 2023 and the respective income tax benefits recognized by the Company in the Consolidated Statements of Income are as follows: 2025 2024 2023 Cost of products sold $ 2.8 $ 3.0 $ 2.2 Selling and administrative expense 25.8 21.4 18.1 Research and development expense 0.4 2.2 1.6 Other operating expense 2.8 — — Total Stock-Based Compensation Expense $ 31.8 $ 26.6 $ 21.9 Tax benefit associated with stock-based compensation costs recognized $ 4.2 $ 3.2 $ 2.7 Dollar amounts are in millions except per share amounts or as otherwise specified. 64 The following table summarizes the Company's total stock-based compensation expense by classification of award: 2025 2024 2023 Equity Awards $ 31.6 $ 26.3 $ 21.5 Liability Awards 0.2 0.3 0.4 Total $ 31.8 $ 26.6 $ 21.9 The following table summarizes the Company's total stock-based compensation expense by award type for the fiscal years ended September 30, 2025, 2024 and 2023: 2025 2024 2023 Time-Vested Restricted Stock Units (TVUs) $ 21.8 $ 19.5 $ 16.2 Performance-Based Restricted Stock Units (PSUs) 8.1 3.2 1.0 Stock Appreciation Rights (SARs) 1.9 3.9 4.7 Total $ 31.8 $ 26.6 $ 21.9 Time Vested Restricted Stock Units During the fiscal year ended September 30, 2025 , Embecta granted 1,595,839 RSUs in the form of TVUs to employees which vest ratably over three years , subject to continued employment of the recipients. TVUs vest on a graded basis over a period of three years . The related stock-based compensation expense is recorded over the requisite service period, which is the vesting period or is based on retirement eligibility. The fair value of all TVUs is based on the market value of the Company’s stock on the date of grant. A summary of TVUs outstanding as of September 30, 2025 and changes during the fiscal year then ended is as follows: Stock Units (in thousands) Weighted Average Grant Date Fair Value Nonvested at October 1 1,918.0 $ 21.34 Granted 1,595.8 18.53 Distributed* ( 1,103.5 ) 22.47 Forfeited, canceled or expired ( 354.9 ) 18.84 Nonvested at September 30 2,055.4 $ 18.97 Expected to vest at September 30 1,994.9 $ 19.02 *The amounts distributed include shares withheld for taxes that are not formally issued to the market. The weighted average grant date fair value of TVUs were as follows: 2025 2024 2023 Weighted average grant date fair value of units granted $ 18.53 $ 17.39 $ 31.00 The total fair value of TVUs vested were as follows: 2025 2024 2023 Total fair value of units vested $ 25.6 $ 15.7 $ 10.9 At September 30, 2025, the weighted average remaining vesting term of TVUs is 0.9 years. Performance Based Restricted Stock Units During the fiscal year ended September 30, 2025 , Embecta awarded 530,014 RSUs in the form of PSUs to certain executive officers and employees which cliff vest after three years , subject to continued employment of the recipients and the achievement of certain performance metric targets. The Company has identified certain performance metrics associated with these awards and certain targets will be fully established at a future date. The Company has determined that the service inception date precedes the grant date for these awards as (a) the awards were authorized prior to establishing an accounting grant date, (b) the recipients began providing services prior to the grant date, and (c) there are performance conditions that, if not met by the accounting grant date, will result in the forfeiture of the awards. As the service inception Dollar amounts are in millions except per share amounts or as otherwise specified. 65 date precedes the accounting grant date, the Company recognizes stock-based compensation expense for each separately-vesting tranche over the requisite service period based on the fair value at each reporting date. The requisite service period is equal to the vesting period or is based on retirement eligibility. These awards accumulate dividend equivalents, which are provided as additional units and are subject to the same vesting requirements as the underlying grant. As of September 30, 2025, there were 901,360 RSUs in the form of PSUs that have been awarded, inclusive of accumulated dividend equivalents, for which a grant date has not yet been established. In October 2025, the Compensation Committee certified the Company achieved certain performance targets set for the PSUs awarded in November 2022 (the “2023 PSUs”). Therefore, applicable employees are entitled to vesting of the 2023 PSUs at 125 % of the target shares awarded under the Plan. A summary of PSUs outstanding as of September 30, 2025 and changes during the fiscal year then ended is as follows: Stock Units (in thousands) Weighted Average Grant Date Fair Value Nonvested at October 1 56.7 $ 30.24 Granted (a) 269.9 18.17 Distributed* ( 47.6 ) 18.76 Forfeited, canceled or expired ( 6.2 ) 18.96 Nonvested at September 30 272.8 $ 22.63 Expected to vest at September 30 271.8 $ 22.64 *The amounts distributed include shares withheld for taxes that are not formally issued to the market. (a) Includes a payout adjustment of 53.8 thousand units due to the actual performance level achieved for PSUs granted in fiscal 2023 that will vest during fiscal 2026. The weighted average grant date fair value of PSUs were as follows: 2025 2024 2023 Weighted average grant date fair value of units granted $ 18.17 $ — $ 30.24 At September 30, 2025, the weighted average remaining vesting term of PSUs is 0.1 years. Stock Appreciation Rights SARs represent the right to receive, upon exercise, shares of common stock having a value equal to the difference between the market price of common stock on the date of exercise and the exercise price on the date of grant. SARs generally vest over a period of three to four years and have a term of ten years . The fair value of awards are estimated on the date of grant using a Black-Scholes-Merton (“BSM”) model. The BSM assumptions include expected dividend yield, risk-free interest rate, volatility, and term of the SARs. A summary of SARs outstanding as of September 30, 2025 and changes during the fiscal year then ended is as follows: SARs (in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Balance at October 1 1,760.4 $ 29.11 Exercised* ( 7.9 ) 13.72 Forfeited, canceled or expired ( 309.2 ) $ 28.95 Balance at September 30 1,443.3 $ 29.23 5.8 $ — Vested and expected to vest at September 30 1,434.2 $ 29.24 5.8 $ — Exercisable at September 30 1,278.0 $ 29.27 5.7 $ — A summary of SARs exercised were as follows: 2025 2024 2023 Total intrinsic value of SARs exercised $ — $ — $ 0.3 Total fair value of SARs exercised $ 0.1 $ — $ 0.6 Dollar amounts are in millions except per share amounts or as otherwise specified. 66 Unrecognized Compensation Expense and Other Stock Plans The amount of unrecognized compensation expense for all non-vested stock-based awards as of September 30, 2025, is approximately $ 27.1 million, which is expected to be recognized over a weighted-average remaining life of approximately 1.7 years. At September 30, 2025, 3.3 million shares were authorized for future grants under the Plan. Note 10 — Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets consisted of: Weighted Average Amortization Period (Years) September 30, 2025 September 30, 2024 Amortized intangible assets Patents – gross 10.6 $ 10.8 $ 10.8 Less: accumulated amortization ( 5.7 ) ( 5.1 ) Patents – net $ 5.1 $ 5.7 Customer Relationships and Other – gross 3.8 $ 5.3 $ 5.2 Less: accumulated amortization ( 3.4 ) ( 2.8 ) Customer Relationships and Other – net $ 1.9 $ 2.4 Total amortized intangible assets $ 7.0 $ 8.1 Goodwill 15.4 15.6 Total Goodwill and Other Intangible Assets $ 22.4 $ 23.7 Intangible asset amortization expense was $ 1.1 million for the fiscal year ended September 30, 2025, $ 1.1 million for the fiscal year ended September 30, 2024 and $ 1.2 million for the fiscal year ended September 30, 2023, respectively. The estimated intangible asset amortization expense for the next five fiscal years and thereafter is as follows: 2026 $ 1.1 2027 1.1 2028 1.1 2029 1.0 2030 0.4 Thereafter 2.3 Note 11 — Cloud Computing Arrangements Capitalized costs to implement cloud computing arrangements and accumulated amortization were as follows: September 30, 2025 September 30, 2024 Short-term portion $ 10.4 $ 10.2 Long-term portion 61.3 60.6 Total Capitalized implementation costs $ 71.7 $ 70.8 Less: accumulated amortization ( 16.8 ) ( 6.3 ) Total Capitalized implementation costs, net $ 54.9 $ 64.5 Costs amortized during the fiscal year ended September 30, 2025 and 2024 were $ 10.4 million and $ 6.3 million, respectively, and are included in Other operating expenses . For the fiscal year ended September 30, 2023 there were no costs recognized related to the implementation of these cloud computing arrangements due to the timing of when these projects were placed into service. As of September 30, 2025, cloud computing arrangement assets in-service have remaining useful lives of up to seven years . Dollar amounts are in millions except per share amounts or as otherwise specified. 67 Note 12 — Long-Term Debt 5.00 % Senior Secured Notes due 2030 On February 10, 2022 Embecta issued $ 500.0 million aggregate principal amount of 5.00 % senior secured notes due February 15, 2030 (the “ 5.00 % Notes”). Interest payments on the 5.00 % Notes are due semi-annually in February and August until maturity . 6.75 % Senior Secured Notes due 2030 On March 31, 2022, Embecta issued $ 200.0 million of 6.75 % Related Party Notes at a discount of $ 3.0 million. The Related Party Notes issued to BD were not issued for cash and instead were subject to a debt-for-debt exchange which occurred on April 1, 2022. On April 1, 2022, BD transferred the Related Party Notes with a notional value of $ 200.0 million issued by Embecta to Morgan Stanley in exchange for certain notes of BD that were purchased by Morgan Stanley pursuant to a tender offer. Morgan Stanley then sold the senior secured notes to qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act of 1933, as amended. As of April 1, 2022, the 6.75 % senior secured notes (the " 6.75 % Notes") became third party debt of Embecta. Interest payments on the 6.75 % Notes are due semi-annually in February and August until maturity. The 6.75 % Notes will mature on February 15, 2030. Credit Agreement On March 31, 2022, Embecta entered into a credit agreement (the “Credit Agreement”), providing for: • a Term Loan B Facility (the "Term Loan") in the amount of $ 950.0 million, with a seven -year term that matures in March 2029. The interest rate is 300 basis points over the secured overnight financing rate (“SOFR”), with a 0.50 % SOFR floor. The Term Loan was issued at a discount of 0.50 %. Principal and interest payments on the Term Loan commenced on June 30, 2022. Such quarterly principal payments are calculated as 0.25 % of the initial principal amount, with the remaining balance payable upon maturity. Per the terms of the Credit Agreement, the Company may from time to time voluntarily prepay the Term Loan in whole or in part without premium or penalty subject to certain exceptions. • a Revolving Credit Facility (the "Revolving Credit Facility") in an aggregate principal amount of up to $ 500.0 million, with a five -year term that matures in 2027. Borrowings under the Revolving Credit Facility bear interest, at Embecta’s option, at an annual rate equal to (a) in the case of loans denominated in United States dollars (i) the SOFR or (ii) the alternate base rate or (b) in the case of loans denominated in Euros, the EURIBOR rate, in each case plus an applicable margin specified in the credit agreement. A commitment fee applies to the unused portion of the Revolving Credit Facility, equal to 0.25 % per annum. As of September 30, 2025, no amount has been drawn on the Revolving Credit Facility. The Credit Agreement and the indentures for Embecta's outstanding 5.00 % Notes and 6.75 % Notes contain customary financial covenants, including a total net leverage ratio covenant, which measures the ratio of (i) consolidated total net debt to (ii) consolidated earnings before interest, taxes, depreciation and amortization, and subject to other adjustments, must meet certain defined limits which are tested on a quarterly basis in accordance with the terms of the Credit Agreement and the 5.00 % Notes and 6.75 % Notes. In addition, the Credit Agreement contains covenants that will limit, among other things, Embecta’s ability to prepay, redeem or repurchase its subordinated and junior lien debt, incur additional debt, make acquisitions, merge with other entities, pay dividends or distributions, redeem or repurchase equity interests, and create or become subject to liens. As of September 30, 2025, the Company was in compliance with all of such covenants. The credit agreement and the senior secured notes are secured by substantially all assets of Embecta and each subsidiary guarantor, subject to certain exceptions. The following is a summary of Embecta's total debt outstanding as of September 30, 2025: Term Loan due March 2029 $ 716.8 5.00 % Notes due February 2030 500.0 6.75 % Notes due February 2030 200.0 Total principal debt issued $ 1,416.8 Less: current debt obligations ( 9.5 ) Less: debt issuance costs and discounts ( 18.6 ) Long-term debt $ 1,388.7 The debt issuance costs on the Term Loan, 5.00 % Notes, 6.75 % Notes and the discount on the Term Loan are reported in the Consolidated Balance Sheets as a reduction of debt and are amortized as a component of Interest expense, net over the term of the related debt using the effective interest method. Amounts amortized during the years ended September 30, Dollar amounts are in millions except per share amounts or as otherwise specified. 68 2025, 2024 and 2023 were $ 9.1 million, $ 6.9 million and $ 6.4 million, respectively. 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. The Company made interest payments of $ 103.8 million related to its debt outstanding during the fiscal year ended September 30, 2025. The schedule of principal payments required on long-term debt for the next five fiscal years and thereafter is as follows: 2026 $ 9.5 2027 9.5 2028 9.5 2029 688.3 2030 700.0 Thereafter — Certain measures relating to our total debt outstanding as of September 30, 2025 were as follows: Total debt $ 1,398.2 Short-term debt as a percentage of total debt 0.7 % Weighted average cost of total debt 6.4 % The estimated fair value of long-term debt (including current portion) at September 30, 2025 was $ 1,387.0 million compared with a carrying value (which includes a reduction for unamortized debt issuance costs and discounts) of $ 1,398.2 million. Fair value was estimated using inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability and would be considered Level 2 in the fair value hierarchy. Note 13 — Earnings per Share The calculation of earnings per basic and diluted common share for the fiscal years ended September 30, 2025, 2024 and 2023 were as follows: ($ in millions and shares in thousands, except per share amounts) 2025 2024 2023 Net Income $ 95.4 $ 78.3 $ 70.4 Basic weighted average number of shares outstanding 58,309 57,681 57,248 Stock awards and equity units (share equivalent) 606 645 510 Diluted weighted average shares outstanding 58,915 58,326 57,758 Earnings per common share - Basic $ 1.64 $ 1.36 $ 1.23 Earnings per common share - Diluted $ 1.62 $ 1.34 $ 1.22 The computation of earnings per diluted share excludes the effect of the potential exercise of stock-based awards, when the effect of the potential exercise would be anti-dilutive. PSUs vest based upon achievement of performance targets and are excluded from the diluted shares outstanding unless the performance targets have been met as of the end of the applicable reporting period regardless of whether such performance targets are probable of achievement. As of September 30, 2025, 2024, and 2023, 2.3 million, 2.8 million, and 1.8 million dilutive share equivalents issuable under stock-based compensation plans were excluded from the diluted shares outstanding calculation because the result would have been antidilutive. Dollar amounts are in millions except per share amounts or as otherwise specified. 69 Note 14 — Income Taxes Income Before Income Taxe s The components of Income Before Income Taxes for the fiscal years ended September 30 consisted of: 2025 2024 2023 Domestic $ ( 39.0 ) $ ( 116.7 ) $ ( 100.9 ) Foreign 175.3 160.9 206.6 Income before income taxes $ 136.3 $ 44.2 $ 105.7 Provision (benefit) for Income Taxes The provision (benefit) for income taxes for the fiscal years ended September 30 consisted of: 2025 2024 2023 Current: Federal $ 1.0 $ 23.4 $ 2.6 State 1.5 2.0 ( 0.8 ) Foreign 20.8 11.1 19.2 $ 23.3 $ 36.5 $ 21.0 Deferred: Federal $ 10.3 $ ( 44.1 ) $ 5.9 State ( 3.0 ) ( 4.6 ) 0.7 Foreign 10.3 ( 21.9 ) 7.7 $ 17.6 $ ( 70.6 ) $ 14.3 Income tax provision (benefit) $ 40.9 $ ( 34.1 ) $ 35.3 Tax Rate Reconciliation A reconciliation of federal statutory tax rate to the Company's effective income tax rate was as follows: 2025 2024 2023 Federal statutory tax rate 21.0 % 21.0 % 21.0 % State and local income taxes, net of federal tax benefit ( 1.3 ) ( 6.8 ) — Foreign income tax at rates other than 21% ( 8.4 ) ( 43.4 ) ( 17.3 ) US tax on foreign earnings 2.3 2.7 12.5 Taxes on unremitted foreign earnings 2.9 ( 40.6 ) 11.1 Tax reserves 3.0 14.5 ( 0.4 ) Valuation allowances 30.7 41.9 14.0 Tax credits ( 0.4 ) ( 7.5 ) ( 1.5 ) Tax law changes — ( 65.0 ) — Nontaxable items — ( 12.2 ) ( 8.6 ) Nondeductible expenses 3.4 16.5 2.5 Tax basis adjustments ( 17.4 ) — — — Other, net ( 5.8 ) 1.8 0.1 Effective income tax rate 30.0 % ( 77.1 ) % 33.4 % The increase in the Company's effective income tax rate for fiscal year 2025 as compared to fiscal year 2024 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; partially offset by approximately $ 5.1 million of tax benefits from various tax return true ups for filings made during 2025 which are reflected above in the Other, net category. Dollar amounts are in millions except per share amounts or as otherwise specified. 70 The decrease in the Company's effective income tax rate for fiscal year 2024 as compared to fiscal year 2023 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. 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. 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. The impact of the changes went into effect for the Company beginning in fiscal year 2025. 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. On July 4, 2025, the U.S. 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. international tax framework. 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. OBBBA did not have a material impact to our provision for income taxes for the fiscal year ended September 30, 2025. Deferred Income Taxes Deferred income taxes at September 30 consisted of: 2025 2024 Deferred tax assets: Compensation and benefits $ 12.4 $ 13.2 Accruals and reserves 20.1 23.8 Intangibles 40.3 46.4 Property, plant and equipment 15.0 10.7 Capitalized research and development expenses 24.4 25.9 Leases 11.0 11.6 Deferred income 11.1 13.3 Interest expense carryforwards 40.9 27.8 Tax loss and credit carryforwards 35.0 12.5 Other 5.3 5.9 Gross deferred tax assets before valuation allowance $ 215.5 $ 191.1 Valuation allowance $ ( 90.7 ) $ ( 50.2 ) Total deferred tax assets $ 124.8 $ 140.9 Deferred tax liabilities: Taxes on unremitted foreign earnings $ ( 5.6 ) $ ( 1.9 ) Right of use asset ( 10.9 ) ( 12.1 ) Capitalized cloud computing costs ( 9.9 ) ( 10.7 ) Total deferred tax liabilities $ ( 26.4 ) ( 24.7 ) Net deferred tax assets (liabilities) (i) $ 98.4 $ 116.2 i. Net deferred tax assets are included in Deferred Income Taxes and Other Assets and net deferred tax liabilities are included in Deferred Income Taxes and Other Liabilities in the Consolidated Balance Sheets. Deferred tax assets and liabilities are netted in the Consolidated Balance Sheets by separate tax jurisdictions. As of September 30, 2025 and September 30, 2024, the Company has recorded deferred taxes on undistributed earnings of its foreign subsidiaries. During fiscal year 2025, the Company recorded a deferred tax asset of approximately $ 23.8 million related to tax losses incurred in connection with an internal restructuring which is fully offset by a valuation allowance. As of September 30, 2025, the Company has recorded valuation allowances of approximately $ 90.7 million due to uncertainty that exists regarding the future realizability of certain deferred tax assets, primarily for interest expense carryforwards in the U.S. Dollar amounts are in millions except per share amounts or as otherwise specified. 71 related to limitations on the annual deductibility of such interest, tax loss carryforwards, annual limitations on utilization of amortization deductions and tax credits in Switzerland and deferred tax assets related to certain foreign manufacturing operations. During fiscal year 2024, the Company recorded a tax benefit of approximately $ 16.8 million related to a reversal of taxes on unremitted foreign earnings due to the expiration of certain holding period requirements for stock ownership in its foreign affiliates. In addition, the Company recorded a tax benefit of approximately $ 28.7 million (before valuation allowance) related to the recognition of deferred tax assets for future amortization deductions and tax credits resulting from tax law changes in Switzerland. As of September 30, 2024, the Company has recorded valuation allowances of $ 50.2 million due to uncertainty that exists regarding the future realizability of certain deferred tax assets, primarily for interest expense carryforwards in the U.S. related to limitations on the annual deductibility of such interest, annual limitations on utilization of amortization deductions and tax credits in Switzerland, state tax credits and deferred tax assets related to certain foreign manufacturing operations. Beginning in fiscal year 2025, the Company no longer receives tax benefits related to tax holidays. For fiscal year 2024, the approximate tax benefit related to a tax holiday in Switzerland was $ 0.7 million and $ 0.01 impact on diluted earnings per share. As of September 30, 2025, the Company had tax loss and credit carryforwards of approximately $ 2.9 million of state income tax credit carryforwards, $ 4.2 million of Switzerland cantonal tax credit carryforwards and $ 27.9 million in net operating loss carryforwards in various jurisdictions. Approximately $ 0.4 million of net operating loss carryforwards will not expire and the remaining carryforwards expire in varying amounts from 2026 through 2045. Unrecognized Tax Benefits The table below summarizes the gross amounts of unrecognized tax benefits without regard to reduction in tax liabilities or additions to deferred tax assets and liabilities if such unrecognized tax benefits were settled. 2025 2024 2023 Balance at October 1 $ 13.5 $ 9.4 $ 5.7 Increase due to current year tax positions 3.1 8.9 5.0 Increase due to prior year tax positions 0.9 2.1 3.7 Decrease due to prior year tax positions ( 0.9 ) ( 6.9 ) ( 0.3 ) Decrease due to settlements with tax authorities — — — Decrease due to lapse of statute of limitations — — ( 4.7 ) Balance at September 30 $ 16.6 $ 13.5 $ 9.4 Unrecognized tax benefits including interest and penalties that would affect the effective tax rate if recognized $ 17.7 $ 13.6 $ 7.2 The Company conducts business and files tax returns in numerous countries and currently has no tax audits in progress as of September 30, 2025. The following were included for the fiscal years ended September 30 as a component of Income tax provision (benefit) in the Consolidated Statements of Income and the Consolidated Balance Sheets. 2025 2024 2023 Interest and penalties expense (benefit) associated with unrecognized tax benefits on the Consolidated Statements of Income $ 1.0 $ — $ ( 1.2 ) Interest and penalties associated with unrecognized tax benefits on the Consolidated Balance Sheets 1.1 0.1 0.2 Note 15 — 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 Dollar amounts are in millions except per share amounts or as otherwise specified. 72 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. Note 16 — Financial Instruments and Fair Value Measurements The following reconciles Cash and equivalents and Restricted cash reported within the Consolidated Balance Sheets as of September 30, 2025 and September 30, 2024, to the total amounts shown in the Consolidated Statements of Cash Flows: September 30, 2025 September 30, 2024 Cash and equivalents $ 225.5 $ 267.5 Restricted cash 3.1 6.7 Cash and equivalents and restricted cash $ 228.6 $ 274.2 Cash and equivalents includes cash held in money market funds and other cash equivalents. All cash and equivalents are Level 1 in the fair value hierarchy. Interest income on Cash and equivalents was $ 6.0 million, $ 12.0 million, and $ 9.4 million for the fiscal years ended September 30, 2025, 2024, and 2023 respectively, and is included as a component of Interest expense, net . Restricted cash consists of cash not readily available for use in the Company's operating activities. The Company's restricted cash balance is primarily pledged as collateral for bank guarantees related to certain customer performance guarantees and property leases internationally. Foreign Currency Risks and Related Strategies The Company has foreign currency exposures throughout Europe, Asia, Canada, and Latin America. Transactional currency exposures that arise from entering into transactions, generally on an intercompany basis, in non-hyperinflationary countries that are denominated in currencies other than the functional currency are mitigated primarily through the use of forward contracts. The notional amounts of the Company’s foreign currency-related derivative instruments were as follows: Hedge Designation September 30, 2025 September 30, 2024 Foreign exchange contracts (a) Undesignated $ 9.7 $ 4.5 a. Represent hedges of transactional foreign exchange exposures resulting primarily from intercompany and third-party transactions. Gains and losses on these instruments are recognized immediately in Other income (expense), net . These gains and losses are largely offset by gains and losses on the underlying hedged items, as well as the hedging costs associated with the derivative instruments. Gains and losses recognized to date on these instruments were not material to the Company's Consolidated Financial Statements. Nonrecurring Fair Value Measurements Non-financial assets, including property, plant and equipment as well as intangible assets, are measured at fair value when there are indicators of impairment and these assets are recorded at fair value only when an impairment is recognized. These measurements of fair value are generally based upon Level 3 inputs, including values estimated using the income approach. In the fiscal year ended September 30, 2025, the Company recorded non-cash asset impairment charges of $ 10.6 million to write down the carrying value of certain property and equipment as a result of the Company's plan to discontinue the patch pump program. $ 6.3 million was recorded to Cost of products sold and $ 4.3 million was recorded to Research and development expense . The amount recognized was recorded to adjust the carrying amount of assets to the assets' fair values, which were estimated, based upon a market participant's perspective, using Level 3 measurements, including values estimated using the income approach. During the fiscal 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 . The impairment charges are recognized within Impairment expense in the Consolidated Statements of Income. Dollar amounts are in millions except per share amounts or as otherwise specified. 73 Concentration of Credit Risk Three of the Company’s customers represented at least 10.0% of total gross revenues individually and, in the aggregate, represented approximately 41.5 %, 41.3 % and 40.2 % for the fiscal years ended September 30, 2025, 2024 and 2023 respectively. One of the Company's customers represented at least 10.0% of total gross trade receivables individually and represented approximately 11.2 % as of September 30, 2025. Substantially all of the Company’s trade receivables are due from public and private entities involved in the healthcare industry. The Company does not normally require collateral from its customers. Note 17 — Property, Plant and Equipment Property, Plant and Equipment, Net consisted of: As of September 30, 2025 As of September 30, 2024 Land $ 3.1 $ 3.1 Buildings 121.0 121.7 Machinery, equipment and fixtures 595.4 607.3 Leasehold improvements 13.2 11.9 Construction in progress 58.6 35.1 $ 791.3 $ 779.1 Less: accumulated depreciation ( 534.1 ) ( 488.7 ) Total Property, Plant and Equipment, Net $ 257.2 $ 290.4 During the fiscal year ended September 30, 2025, the Company recorded non-cash asset impairment charges of $ 10.6 million to write down the carrying value of certain property and equipment as a result of the Company's plan to discontinue the patch pump program. $ 6.3 million was recorded to Cost of products sold and $ 4.3 million was recorded to Research and development expense . Note 18 — Leases Finance Lease In conjunction with the Separation, we entered into a lease agreement with BD pursuant to which the Company would lease approximately 278,000 square feet of manufacturing space and equipment at BD's manufacturing facility in Holdrege, Nebraska for an initial term of ten years and an option for the Company to extend the lease term for an additional period of up to five years . This lease is classified as a finance lease. Operating Leases The Company's operating leases primarily relate to its real estate leases that are not classified as finance leases. The Company entered into a real estate lease for a new Corporate Headquarters located in Parsippany, NJ which commenced during the second quarter of fiscal year 2023 for an initial term of ten years . The Company has options to extend the lease for additional period of six years and to extend for a subsequent additional period of four years , after the expiration of the first extension period. Dollar amounts are in millions except per share amounts or as otherwise specified. 74 Aggregate Lease Information The Company's leases are included in its Consolidated Balance Sheets as follows: As of September 30, 2025 As of September 30, 2024 Finance Lease Property, Plant, and Equipment, Net $ 28.3 $ 30.8 Total Finance Lease Assets $ 28.3 $ 30.8 Current finance lease liabilities $ 3.4 $ 3.4 Non Current Finance Lease Liabilities 28.7 30.2 Total Finance Lease Liabilities $ 32.1 $ 33.6 Weighted-average remaining lease term (years) 11.5 12.5 Weighted-average discount rate 6.8 % 6.8 % Operating Leases Deferred Income Taxes and Other Assets $ 20.2 $ 22.6 Total Operating Lease Assets $ 20.2 $ 22.6 Accrued expenses $ 6.9 $ 6.0 Deferred Income Taxes and Other Liabilities 10.2 11.9 Total Operating Lease Liabilities $ 17.1 $ 17.9 Weighted-average remaining lease term (years) 5.6 6.3 Weighted-average discount rate 6.6 % 6.5 % Lease costs incurred are as follows: (in millions) Classification 2025 2024 2023 Operating lease expense Selling and administrative and Research and Development expense $ 6.3 $ 7.5 $ 4.5 Finance lease cost: Depreciation of lease assets Cost of products sold 2.5 2.5 2.4 Interest on lease liabilities Interest expense, net 2.3 2.4 2.4 Total lease cost $ 11.1 $ 12.4 $ 9.3 Supplemental cash flow information related to leases was as follows as of September 30, 2025, 2024 and 2023: September 30, 2025 September 30, 2024 September 30, 2023 Right of use assets obtained in exchange for lease liabilities Finance Lease $ — $ — $ — Operating Leases 2.2 3.0 19.0 September 30, 2025 September 30, 2024 September 30, 2023 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from Operating Leases $ 5.8 $ 6.4 $ 2.9 Financing cash flows from Finance Lease 1.4 1.3 1.2 Operating cash flows from Finance Lease 2.3 2.4 2.4 Dollar amounts are in millions except per share amounts or as otherwise specified. 75 Maturities of the Company's finance and operating lease liabilities as of September 30, 2025 by fiscal year are as follows: Finance Leases Operating Leases Total 2026 $ 3.7 $ 5.9 $ 9.6 2027 3.8 2.6 6.4 2028 3.9 2.0 5.9 2029 3.9 2.1 6.0 2030 4.0 1.8 5.8 Thereafter 28.3 5.7 34.0 Total lease payments $ 47.6 $ 20.1 $ 67.7 Less: amount representing interest 15.5 3.0 18.5 Present value of lease liabilities $ 32.1 $ 17.1 $ 49.2 Note 19 — Benefit Plans Defined Benefit Plans The Company's retiree benefit plans include defined benefit plans for employees in its affiliates in Switzerland (the "Swiss Plan") as well as other insignificant defined benefit plans in other countries where the Company maintains an operating presence. These Consolidated Financial Statements reflect the periodic benefit costs and funded status of such plans. The Company uses September 30 as the year-end measurement date. The Company's Swiss Plan is a government-mandated retirement account balance plan. Companies within the Swiss regulatory environment have substantial freedom in setting their pension plan design (e.g. with regards to the salary covered, level of retirement benefits, or overall benefit design) provided the benefits are always at least equal to the minimum requirements as defined by law. Most employers provide higher benefits than those required by law, which is the case for Embecta. The minimum level of retirement benefit is expressed by an account balance formula with age-related contribution rates based on an insured salary defined by law, and a minimum required interest crediting rate which is set by the government (1.25% in 2025 and 2024 and 1.00% in 2023). The sum of the Company's contributions should be at least equal to the sum of employee contributions. Contributions to the Swiss Plan are invested into a diversified fund managed by an investment fiduciary. As of September 30, 2025 and 2024, the Swiss plan had an unfunded net pension obligation of $ 3.9 million and $ 4.0 million, respectively, and plan assets that totaled $ 21.1 million, and $ 18.4 million, respectively. Net periodic benefit cost was not material to the Company's Consolidated Statements of Income for any period presented. Defined Contribution Plans The Company has various defined contribution savings plans that cover substantially all employees in the United States, Ireland, and Japan. The Company matches a certain percentage of each employee’s contributions as per the provisions of the plans. Total employer contributions by the Company to the plans were $ 14.3 million, $ 15.1 million and $ 14.1 million for the fiscal years ended September 30, 2025, 2024 and 2023, respectively. Deferred Compensation Plan The Company has a Deferred Compensation Plan in which certain directors and employees of the Company may defer the payment and taxation of up to 75 % of their base salary and up to 100 % of bonus amounts and other eligible cash compensation. A participant's deferrals are “invested” at the direction of the employee in a hypothetical portfolio of investments which are tracked by an administrator. The amounts accrued under this plan were $ 12.1 million and $ 10.0 million as of September 30, 2025 and 2024, respectively. Dollar amounts are in millions except per share amounts or as otherwise specified. 76 Note 20 — Supplemental Financial Information Trade Receivables, Net The amounts recognized in fiscal years 2025, 2024 and 2023 relating to allowances for doubtful accounts and cash discounts, which are netted against trade receivables, are provided in the following table: Allowance for Doubtful Accounts Allowance for Cash Discounts Total Balance at September 30, 2022 $ ( 1.3 ) $ ( 0.1 ) $ ( 1.4 ) Additions charged to costs and expenses ( 0.2 ) ( 18.7 ) ( 18.9 ) Deductions and other 0.5 (a) 18.8 19.3 Balance at September 30, 2023 $ ( 1.0 ) $ — $ ( 1.0 ) Additions charged to costs and expenses ( 2.2 ) ( 17.5 ) ( 19.7 ) Deductions and other 0.4 (a) ( 3.6 ) ( 3.2 ) Balance at September 30, 2024 $ ( 2.8 ) $ ( 21.1 ) $ ( 23.9 ) Additions charged to costs and expenses ( 1.0 ) ( 18.5 ) ( 19.5 ) Deductions and other 2.0 (a) 24.5 26.5 Balance at September 30, 2025 $ ( 1.8 ) $ ( 15.1 ) $ ( 16.9 ) (a) Accounts written off Long-Lived Assets Long-lived assets, which include Property, Plant and Equipment, net , and Goodwill and Other Intangibles, net, by geographic area where located at September 30, 2025 and 2024 is as follows: 2025 2024 United States $ 85.0 $ 105.0 Europe, Middle East, and Africa 159.7 170.8 Asia 33.3 37.2 Other 1.6 1.1 $ 279.6 $ 314.1 Note 21 — Subsequent Events Sale of Assets In November 2025, the Company executed an agreement with a third party to sell certain intellectual property rights and long-lived assets associated with the patch pump program for $ 10.0 million. Dollar amounts are in millions except per share amounts or as otherwise specified. 77 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures. None.