embc-20251231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: December 31, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-41186

EMBECTA CORP.

(Exact name of registrant as specified in its charter)


Delaware						87-1583942
(State or other jurisdiction of incorporation or organization)						(I.R.S. employer identification no.)

300 Kimball Drive, Suite 300, Parsippany, New Jersey						07054
(Address of principal executive offices)						(Zip code)

(862) 401-0000

(Registrant’s telephone number, including area code)

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Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

symbol(s)

Name of each exchange

on which registered

Common Stock, par value $0.01 per share

EMBC

The Nasdaq Stock Market LLC (Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Emerging growth company

☐

Smaller reporting company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of Embecta Corp. common stock outstanding as of January 29, 2026 was 59,219,854 shares, par value $0.01 per share.

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Embecta Corp.

Form 10-Q

For the Quarterly Period ended December 31, 2025

Table of Contents


		Page
Part I. Financial Information		1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Statements of Income	1
	Condensed Consolidated Statements of Comprehensive Income	2
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30
Part II. Other Information		31

Item 1A.	Risk Factors	31




Item 6.	Exhibits	31
Signatures		32

-i-

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Condensed Consolidated Statements of Income

Embecta Corp.

(Unaudited)


	Three Months Ended December 31,
	2025		2024

Revenues	$	261.2	$	261.9
Cost of products sold	99.5		104.8
Gross Profit	$	161.7	$	157.1
Operating expenses:
Selling and administrative expense	77.6		81.1
Research and development expense	4.6		20.3

Other operating (income) expense, net	(3.8)		27.0
Total Operating Expenses	$	78.4	$	128.4
Operating Income	$	83.3	$	28.7
Interest expense, net	(24.1)		(27.9)
Other income (expense), net	(0.3)		(1.5)
Income (Loss) Before Income Taxes	$	58.9	$	(0.7)
Income tax provision (benefit)	14.8		(0.7)
Net Income	$	44.1	$	—

Net Income per common share:
Basic	$	0.75	$	—
Diluted	$	0.74	$	—

See notes to the Unaudited Condensed Consolidated Financial Statements.


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

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Condensed Consolidated Statements of Comprehensive Income

Embecta Corp.

(Unaudited)


	Three Months Ended December 31,
	2025		2024

Net Income	$	44.1	$	—
Other Comprehensive Income (Loss), net of tax
Benefit plan net gain and prior service credit, net of amortization	0.3		—
Foreign currency translation adjustments	0.9		(26.9)
Total Other Comprehensive Income (Loss), net of tax	$	1.2	$	(26.9)
Comprehensive Income (Loss)	$	45.3	$	(26.9)

See notes to the Unaudited Condensed Consolidated Financial Statements.


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

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Condensed Consolidated Balance Sheets

Embecta Corp.


	December 31, 2025		September 30, 2025
	(Unaudited)
Assets
Current Assets
Cash and equivalents	$	201.3	$	225.5
Restricted cash	3.1		3.1
Trade receivables, net (net of allowance for doubtful accounts of $2.0 million and $1.8 million as of December 31, 2025 and September 30, 2025, respectively)	159.2		145.6
Inventories:
Materials	52.4		50.0
Work in process	14.3		11.7
Finished products	115.1		116.9
Total Inventories	$	181.8	$	178.6
Amounts due from Becton, Dickinson and Company	—		3.3
Prepaid expenses and other	74.8		75.3
Total Current Assets	$	620.2	$	631.4
Property, Plant and Equipment, Net	248.9		257.2
Goodwill and Intangible Assets	22.1		22.4
Deferred Income Taxes and Other Assets	172.5		179.9
Total Assets	$	1,063.7	$	1,090.9
Liabilities and Equity
Current Liabilities
Accounts payable	$	72.1	$	74.2
Accrued expenses	111.6		98.9
Amounts due to Becton, Dickinson and Company	—		16.3
Salaries, wages and related items	31.3		49.4
Current debt obligations	9.5		9.5
Current finance lease liabilities	3.5		3.4
Income taxes	6.7		9.8
Total Current Liabilities	$	234.7	$	261.5
Deferred Income Taxes and Other Liabilities	61.0		62.6
Long-Term Debt	1,352.9		1,388.7
Non Current Finance Lease Liabilities	28.2		28.7
Contingencies (Note 6)
Embecta Corp. Equity
Common stock, $0.01 par value Authorized - 250,000,000 Issued and outstanding - 59,211,992 as of December 31, 2025 and 58,496,113 as of September 30, 2025	$	0.6	$	0.6
Additional paid-in capital	81.8		80.0
Accumulated deficit	(411.1)		(445.6)

Accumulated other comprehensive loss	(284.4)		(285.6)
Total Equity	$	(613.1)	$	(650.6)
Total Liabilities and Equity	$	1,063.7	$	1,090.9

See notes to the Unaudited Condensed Consolidated Financial Statements.


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

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Condensed Consolidated Statements of Equity

Embecta Corp.

(Unaudited)


	Common Stock
	Shares	Par Value		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total
Balance at October 1, 2024	57,707,285	$	0.6	$	52.5	$	(498.6)	$	(292.8)	$	(738.3)


Net Income	—	—		—		—		—		—
Other comprehensive (loss), net of taxes	—	—		—		—		(26.9)		(26.9)
Stock-based compensation plans	—	—		8.9		—		—		8.9
Dividends and dividend equivalents declared ($0.15 per share)	—	—		0.5		(9.3)		—		(8.8)
Issuance of shares related to stock-based compensation plans	424,474	—		(3.7)		—		—		(3.7)
Balance at December 31, 2024	58,131,759	$	0.6	$	58.2	$	(507.9)	$	(319.7)	$	(768.8)

Balance at October 1, 2025	58,496,113	$	0.6	$	80.0	$	(445.6)	$	(285.6)	$	(650.6)


Net Income	—	—		—		44.1		—		44.1
Other comprehensive income, net of taxes	—	—		—		—		1.2		1.2
Stock-based compensation plans	—	—		5.9		—		—		5.9
Dividends and dividend equivalents declared ($0.15 per share)	—	—		0.7		(9.6)		—		(8.9)
Issuance of shares related to stock-based compensation plans	715,879	—		(4.8)		—		—		(4.8)
Balance at December 31, 2025	59,211,992	$	0.6	$	81.8	$	(411.1)	$	(284.4)	$	(613.1)

See notes to the Unaudited Condensed Consolidated Financial Statements.


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

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Condensed Consolidated Statements of Cash Flows

Embecta Corp.

(Unaudited)


	Three Months Ended December 31,
	2025		2024
Operating Activities
Net Income	$	44.1	$	—
Adjustments to net income to derive net cash provided by operating activities:
Depreciation and amortization	10.3		9.4
Amortization of debt issuance costs	1.9		2.1
Impairment of property, plant and equipment	—		10.4
Gain on sale of certain intellectual property rights and long-lived assets	(10.1)		—
Amortization of cloud computing arrangements	2.6		2.5
Stock-based compensation	5.9		8.9

Deferred income taxes	3.4		2.3
Change in operating assets and liabilities:
Trade receivables, net	(12.0)		5.8
Inventories	(3.5)		(4.5)
Due from/due to Becton, Dickinson and Company	—		15.8
Prepaid expenses and other	2.0		9.6
Accounts payable, accrued expenses and other current liabilities	(23.8)		(40.8)
Income and other net taxes payable	(1.8)		(26.3)
Other assets and liabilities, net	(1.8)		(0.5)
Net cash provided by (used for) operating activities	$	17.2	$	(5.3)
Investing Activities
Capital expenditures	$	(0.6)	$	(1.5)
Proceeds from the sale of certain intellectual property rights and long-lived assets	10.1		—
Net cash provided by (used for) investing activities	$	9.5	$	(1.5)
Financing Activities

Payments on long-term debt	$	(37.5)	$	(32.4)


Payments related to tax withholding for stock-based compensation	(4.8)		(3.7)
Payments on finance lease	(0.4)		(0.3)
Dividend payments	(8.9)		(8.8)
Net cash used for financing activities	$	(51.6)	$	(45.2)
Effect of exchange rate changes on cash and equivalents and restricted cash	0.7		(5.5)
Net Change in Cash and equivalents and restricted cash	$	(24.2)	$	(57.5)
Opening Cash and equivalents and restricted cash	228.6		274.2
Closing Cash and equivalents and restricted cash	$	204.4	$	216.7

See notes to the Unaudited Condensed Consolidated Financial Statements.


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

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Notes to Unaudited Condensed 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. 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 — Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and disclosures required by GAAP for complete consolidated financial statements are not included herein. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year. In the Company's opinion, all adjustments necessary for a fair statement of these interim statements have been included and are of a normal and recurring nature. All intercompany transactions and accounts within Embecta have been eliminated. These interim statements should be read in conjunction with the audited financial statements and notes thereto included in Embecta's Annual Report on Form 10-K for the year ended September 30, 2025, filed with the Securities and Exchange Commission on November 25, 2025 (the “2025 Form 10-K”).

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, inventory reserves and taxes on income as reflected in the Condensed Consolidated Financial Statements. Actual results could differ from these estimates.

Recently Adopted Accounting Standards

There were no new material accounting standards adopted in the first quarter of fiscal year 2026.

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures. This update is effective for the Company beginning with its annual fiscal year 2026 reporting. While this accounting standard 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 update is effective for the Company beginning with its fiscal year 2028 reporting and for interim reporting beginning with its fiscal year 2029. While this accounting standard will increase disclosures, it is not expected to 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.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. This ASU clarifies and improves existing interim reporting guidance by consolidating disclosure requirements within Topic 270 and introducing a disclosure principle requiring entities to disclose events and changes occurring after the most recent annual reporting period that are expected to have a material effect on the entity’s financial condition or results of operations. The ASU does not introduce significant changes to recognition or measurement guidance. This ASU is effective for the Company beginning with its fiscal 2029 reporting and permits both prospective and retrospective adoption. The Company is currently evaluating the effect of adopting this pronouncement on its Consolidated Financial Statements and related disclosures.


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

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Note 3 — Third Party Arrangements

On April 1, 2022, Embecta and Becton, Dickinson and Company ("BD") entered into a Separation and Distribution Agreement (the "Separation and Distribution Agreement"). Pursuant to the Separation and Distribution Agreement, BD agreed to spin off its diabetes care business (the "Diabetes Care Business") into Embecta, a new, publicly traded company (the "Separation").

In connection with the Separation, the Company entered into the Separation and Distribution Agreement, which 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. In addition, the Company entered into a series of agreements with BD that govern aspects of Embecta's relationship with BD following the Separation which include, but are not limited to the Transition Services Agreements ("TSA"), Trade Receivables Factoring Agreements ("Factoring Agreements"), Distribution Agreements, Cannula Supply Agreement, Tax Matters Agreement, Logistics Services Agreement ("LSA"), employee matters agreement, 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. Certain of these agreements have expired or terminated as disclosed in the 2025 Form 10-K.

For details on the rights and responsibilities of the parties under these agreements refer to Note 3 to the Consolidated Financial Statements in the 2025 Form 10-K.

Amounts associated with the above agreements are included in the Condensed Consolidated Balance Sheets. Certain amounts previously presented within Amounts due from Becton, Dickinson and Company and Amounts due to Becton, Dickinson and Company are presented within Trade receivables, net and Accounts Payable, respectively, beginning October 1, 2025. As of December 31, 2025, $13.9 million was in Trade receivables, net and $16.3 million was in Accounts payable.


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

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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 $27.4 million during the three months ended December 31, 2024. The actions under the Patch Pump Restructuring Plan were substantially complete as of September 30, 2025.

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. The actions under the 2025 Restructuring Plan were substantially complete as of September 30, 2025.

There were no charges incurred related to the restructuring programs for the three month period ended December 31, 2025.

The following table summarizes the charges related to the restructuring programs by type of cost for the three month period ended December 31, 2024:



	Employee Termination		Non-Employee Related		Total
Cost of products sold	$	0.2	$	6.1	$	6.3
Selling and administrative expense	0.3		—		0.3
Research and development expense	2.2		4.3		6.5
Other operating (income) expense, net	8.9		5.4		14.3
	$	11.6	$	15.8	$	27.4

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.

The restructuring reserve balances as of December 31, 2025 and September 30, 2025 were not material to the Company’s Condensed Consolidated Financial Statements.


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

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Note 5 — Other Operating (Income) Expense, Net

The following table presents the income and expenses recorded for the three months ended December 31, 2025 and 2024:



	2025		2024
Costs related to the Separation	$	3.1	$	10.4
Amortization of cloud computing arrangements	2.6		2.5
Costs associated with the discontinued patch pump program	—		14.3

Gain on sale of certain intellectual property rights and long-lived assets	(10.1)		—
Other	0.6		(0.2)
Total	$	(3.8)	$	27.0

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

For the three months ended December 31, 2024, the Company recognized costs associated with the discontinuation of the patch pump program which is further discussed in Note 4.

During the three months ended December 31, 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 and recorded a gain on sale of $10.1 million.

Note 6 — Contingencies

The Company was not a party to any material legal proceedings at December 31, 2025 or September 30, 2025, nor is it a party to any material legal proceedings as of the date of issuance of these Condensed Consolidated Financial Statements.

Note 7 — Revenues

The Company’s policies for recognizing revenue have not changed from those described in the 2025 Form 10-K. 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 and 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’s allowance for doubtful accounts reflects the current estimate of credit losses expected to be incurred over the life of its trade receivables. Such estimated credit losses are determined based on historical loss experiences, customer specific credit risk, and reasonable and supportable forward-looking information, such as country or regional risks that are not captured in the historical loss information. Amounts are written off against the allowances for doubtful accounts when the Company determines that a customer account is uncollectible. The allowance for doubtful accounts for trade receivables is not material to the Company’s Condensed Consolidated Financial Statements.

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, 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 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.


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

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The Company’s liability attributed to variable consideration at December 31, 2025 and September 30, 2025 was $130.5 million and $113.7 million, respectively. Sales deductions recorded as a reduction of gross revenues for the three months ended December 31, 2025 and 2024 were $159.9 million and $150.1 million, respectively.

Disaggregation of Revenues

Disaggregation of revenue by geographic region and product line is provided within Note 8.

Note 8 — Segment and Geographical Data

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 chief operation decision maker ("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 Condensed Consolidated Statements of Income. The Company has also evaluated the significant segment expenses incurred by our single segment that are regularly provided to the CODM. The significant expenses provided to the CODM are consistent with those reported on the Condensed Consolidated Statements of Income and include cost of products sold, selling and administrative expense, research and development, other operating income and expense, 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, decisions about key personnel, and approving annual operating and capital budgets. The 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 Condensed 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 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.

The Company disaggregates its revenue by geography and product line as management believes these categories best depict how the nature, amount, and timing of revenues and cash flows are affected by economic factors.

Revenues by geographic region are as follows:


	Three months ended December 31,
	2025		2024
United States	$	130.9	$	141.7
International(1)	130.3		120.2
Total	$	261.2	$	261.9

(1)For the three months ended December 31, 2025 and 2024, no individual country outside of the United States generated net revenues that represented more than 10.0% of total revenues.


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

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Revenues by product line are as follows:


	Three months ended December 31,
	2025		2024
Pen Needles	$	185.5	$	191.1
Syringes	30.7		28.4
Safety	37.3		34.2
Other(2)	3.6		3.4
Contract Manufacturing	4.1		4.8
Total	$	261.2	$	261.9

(2)Other includes product sales for swabs and other accessories.

Note 9 — Stock-Based Compensation

Stock-Based Compensation Expense

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


	Three months ended December 31,
	2025		2024
Cost of products sold	$	0.8	$	0.6
Selling and administrative expense	5.0		7.4
Research and development expense	0.1		0.1
Other operating (income) expense, net	—		0.9
Total Stock-Based Compensation Expense	$	5.9	$	9.0
Tax benefit associated with stock-based compensation costs recognized	$	0.8	$	1.0

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


	Three months ended December 31,
	2025		2024
Equity Awards	$	5.9	$	8.9
Liability Awards	—		0.1
Total	$	5.9	$	9.0


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

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


	Three months ended December 31,
	2025		2024
Time-Vested Restricted Stock Units (TVUs)	$	5.0	$	5.6
Performance-Based Restricted Stock Units (PSUs)	0.6		2.9
Stock Appreciation Rights (SARs)	0.3		0.5
Total	$	5.9	$	9.0

Time Vested Restricted Stock Units ("TVUs")

During the three months ended December 31, 2025, Embecta granted 1,817,448 restricted stock units ("RSUs") in the form of TVUs to employees. TVUs vest on a graded basis over a period of three years. The related stock-based compensation expense is recorded over the requisite service period, which is the vesting period or is based on retirement eligibility. These awards accumulate dividend equivalents, which are provided as additional units and are subject to the same vesting requirements as the underlying grant.

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


	TVUs (in thousands)	Weighted Average Grant Date Fair Value
Nonvested at October 1	2,055.4	$	18.97
Granted*	1,817.4	12.57
Distributed**	(838.5)	20.09
Forfeited, canceled or expired	(19.9)	18.04
Nonvested at December 31	3,014.4	$	14.82
Expected to vest at December 31	2,848.7	$	14.83

*Includes accumulated nonvested dividend equivalents
**The TVUs distributed include shares withheld for taxes that are not formally issued to the market.

The weighted average grant date fair value of TVUs granted during the three months ended December 31, 2025 is $12.57 and the total fair value of TVUs vested during the three months ended December 31, 2025 is $16.8 million.

At December 31, 2025, the weighted average remaining vesting term of TVUs is 2.3 years.

Performance Based Restricted Stock Units ("PSUs")

During the three months ended December 31, 2025, Embecta granted 1,265,061 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.

For PSUs awarded in the prior fiscal year, certain performance metrics and 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 date precedes the accounting grant date, the Company recognizes stock-based compensation expense 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 December 31, 2025, there were 488,756 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.


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

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A summary of PSUs outstanding as of December 31, 2025 and changes during the three months ended December 31, 2025 are as follows:


	Stock Units (in thousands)	Weighted Average Grant Date Fair Value
Nonvested at October 1	272.8	$	22.63
Granted*	1,265.1	11.80
Distributed	(279.0)	18.96

Nonvested at December 31	1,258.9	$	11.82
Expected to vest at December 31	1,189.6	$	11.80

*Includes accumulated nonvested dividend equivalents

At December 31, 2025, the weighted average remaining vesting term of PSUs is 2.1 years.

Stock Appreciation Rights

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


	SARs (in thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Balance at October 1	1,443.3	$	29.23


Forfeited, canceled or expired	(17.8)	16.97
Balance at December 31	1,425.5	$	29.39	5.6	$	—
Vested and expected to vest at December 31	1,423.7	29.39		5.6	$	—
Exercisable at December 31	1,392.5	$	29.34	5.6	$	—

*The amounts exercised include shares withheld for taxes that are not formally issued to the market.

No SARs were exercised during the three months ended December 31, 2025.

Unrecognized Stock-Based Compensation Expense and Other Stock Plans

The amount of unrecognized compensation expense for all non-vested stock-based awards granted as of December 31, 2025, is approximately $47.5 million which is expected to be recognized over a weighted-average remaining life of approximately 2.3 years. At December 31, 2025, 0.8 million shares were authorized for future grants under the Company's 2022 Employee and Director Equity Based Compensation Plan, as amended.


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

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Note 10 — Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets consisted of:


	December 31, 2025		September 30, 2025
Amortized intangible assets
Patents – gross	$	10.8	$	10.8
Less: accumulated amortization	(5.8)		(5.7)
Patents – net	$	5.0	$	5.1
Customer Relationships and Other – gross	$	5.2	$	5.3
Less: accumulated amortization	(3.5)		(3.4)
Customer Relationships and Other – net	$	1.7	$	1.9
Total amortized intangible assets	$	6.7	$	7.0
Goodwill	15.4		15.4
Total Goodwill and Other Intangible Assets	$	22.1	$	22.4

Note 11 — Cloud Computing Arrangements

The Company capitalizes costs associated with the development of cloud computing arrangements in a manner consistent with internally developed software. Capitalized costs are included in Prepaid expenses and other and Deferred Income Taxes and Other Assets. Capitalized costs to implement cloud computing arrangements at cost and accumulated amortization were as follows:


	December 31, 2025		September 30, 2025
Short-term portion	$	10.5	$	10.4
Long-term portion	61.2		61.3
Total Capitalized implementation costs	$	71.7	$	71.7
Less: accumulated amortization	(19.4)		(16.8)
Total Capitalized implementation costs, net	$	52.3	$	54.9

Costs amortized during the three months ended December 31, 2025 and 2024 are included in Other operating (income) expense, net and were as follows:


	Three months ended December 31,
	2025		2024

Amortization of cloud computing arrangements	$	2.6	$	2.5

As of December 31, 2025, cloud computing arrangement assets in-service have remaining useful lives of up to seven years.

Note 12 — Long-Term Debt

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; and

•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 March 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 December 31, 2025, no amount has been drawn on the Revolving Credit Facility.


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

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The Credit Agreement and the indentures for Embecta's outstanding 5.00% senior secured notes due February 2030 (the "5.00% Notes") and 6.75% senior secured notes due February 2030 (the "6.75% Notes") contain customary financial covenants, including a total net leverage ratio covenant, which measures the ratio of (i) consolidated total net debt to (ii) consolidated earnings before interest, taxes, depreciation and amortization, and subject to other adjustments, must meet certain defined limits which are tested on a quarterly basis in accordance with the terms of the Credit Agreement and the 5.00% Notes and 6.75% Notes. In addition, the Credit Agreement contains covenants that will limit, among other things, Embecta’s ability to prepay, redeem or repurchase its subordinated and junior lien debt, incur additional debt, make acquisitions, merge with other entities, pay dividends or distributions, redeem or repurchase equity interests, and create or become subject to liens. As of December 31, 2025, we were in compliance with all of such covenants. The credit agreement and the senior secured notes are secured by substantially all assets of Embecta and each subsidiary guarantor, subject to certain exceptions.

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


Term Loan due March 2029	$	679.3
5.00% Notes due February 2030	500.0
6.75% Notes due February 2030	200.0
Total principal debt issued	$	1,379.3
Less: current debt obligations	(9.5)
Less: debt issuance costs and discounts	(16.9)
Long-term debt	$	1,352.9

The debt issuance costs on the Term Loan, 5.00% Notes, 6.75% Notes and the discount on the Term Loan are reported in the Condensed Consolidated Balance Sheets as a reduction of debt and are amortized as a component of Interest expense, net over the term of the related debt using the effective interest method. During the three months ended December 31, 2025, the Company recorded approximately $1.9 million of amortization on deferred debt issuance costs and discounts.

During the three months ended December 31, 2025, the Company made interest payments of $13.2 million on debt outstanding. The weighted-average interest rate on total borrowings as of December 31, 2025 is 6.1%.

During the three months ended December 31, 2025, the Company paid an aggregate principal amount of approximately $37.5 million on the Term Loan, of which $35.1 million was discretionary. Debt extinguishment charges as a result of these discretionary prepayments were not material to the Company's Condensed Consolidated Statements of Income.

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


2026	$	7.1
2027	9.5
2028	9.5
2029	653.2
2030	700.0
Thereafter	—

The estimated fair value of long-term debt (including current portion) at December 31, 2025 was $1,356.8 million compared with a carrying value (which includes a reduction for unamortized debt issuance costs and discounts) of $1,362.4 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.


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

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Note 13 — Earnings per Share

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


	Three Months Ended December 31,
($ in millions and shares in thousands, except per share amounts)	2025		2024
Net Income	$	44.1	$	—

Basic weighted average number of shares outstanding	58,796		57,952
Stock awards and equity units (share equivalent)	494		670
Diluted weighted average shares outstanding	59,290		58,622

Earnings per common share - Basic	$	0.75	$	—
Earnings per common share - Diluted	$	0.74	$	—

Antidilutive Shares (millions)	2.0		3.0

Earnings per diluted share is computed by giving effect to all potentially dilutive stock awards that are outstanding. The computation of earnings per diluted share excludes the effect of the potential exercise of stock-based awards, when the effect of the potential exercise would be anti-dilutive. 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.

Note 14 — Income Taxes

The Company is subject to income tax in the various jurisdictions in which it operates. A significant portion of the Company's earnings are taxed in jurisdictions with tax rates that are lower than the statutory tax rate of the United States. The effective tax rate can change from quarter to quarter because of variability in global pretax income or geographical mix of the Company's earnings, changes in tax laws and matters related to tax audits.

The effective tax rates were 25.1% and 100.0% for the three months ended December 31, 2025 and 2024, respectively. The decrease in the Company's effective tax rate compared to the prior period is primarily due to the level and mix of earnings, lower limitations on the deductibility of interest expense in the U.S. and lower U.S. tax on foreign earnings.

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 period ended December 31, 2025.

On January 5, 2026, the OECD released the Pillar 2 Side-by-Side Package, which addresses how subsidiaries of U.S. listed companies are taxed under Pillar 2, including the addition of some safe harbors. As countries adopt these rules, the Company will continue to evaluate the future impact of these changes.

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 the Company's provision for income taxes for the period ended December 31, 2025.

Note 15 — Receivables Sale Agreement

The Company has established 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.


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

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In connection with the Company's receivables sale agreement, $56.0 million of trade receivables were sold during the three months ended December 31, 2025, resulting in derecognition of the receivables from the Company's Condensed Consolidated Balance Sheets. Discounts recognized on the sale of trade receivables were not material to the Company's Condensed Consolidated Statements of Income. The cash received on the sale of trade receivables during the three months ended December 31, 2025 is presented in changes in trade receivables, net within operating activities in the Condensed 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 Condensed Consolidated Balance Sheets as of December 31, 2025 and September 30, 2025, to the total amounts shown in the Condensed Consolidated Statements of Cash Flows:


	December 31, 2025		September 30, 2025
Cash and equivalents	$	201.3	$	225.5
Restricted cash	3.1		3.1
Cash and equivalents and restricted cash	$	204.4	$	228.6

Cash and equivalents as of December 31, 2025 includes cash held in money market funds and other cash equivalents. All cash and equivalents are Level 1 in the fair value hierarchy. Interest income on Cash and equivalents was $0.9 million and $1.8 million for the three months ended December 31, 2025 and 2024, respectively, and is included as a component of Interest expense, net. Restricted cash consists of cash not readily available for use in the Company's operating activities. 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 as of December 31, 2025 and September 30, 2025:

Hedge Designation

December 31, 2025

September 30, 2025

Foreign exchange contracts(a)

Undesignated

SEC Form 10-Q filed by Embecta Corp.