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Embecta Corp.

Embecta Corp.EMBCEarnings & Financial Report

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What changed in Embecta Corp.'s 10-K — 2024 vs 2025

Top changes in Embecta Corp.'s 2025 10-K

339 paragraphs added · 329 removed · 240 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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In addition to helping make life better for people living with diabetes, our employee value proposition includes a strong rewards package, a focus on development, and engaging with our employees as we shape our new company together. At Embecta, our Total Rewards programs enable behaviors that drive performance, reward results and create long-term value for our stockholders and employees.
In addition to helping make life better for people living with diabetes, our employee value proposition includes a strong rewards package, a focus on development, and engaging with our employees as we shape our company together. At Embecta, our Total Rewards programs enable behaviors that drive performance, reward results and create long-term value for our stockholders and employees.
In the case of sole sourced parts, we manage risk through holding inventory ourselves and at our suppliers' facilities to ensure continuity of supply and lower the risk of disruption. Research and Development Our strategy seeks to update and develop enhanced technology for our portfolio of current and future products by focusing on patient unmet needs and market expansion.
In the case of sole sourced parts, we manage risk through holding inventory ourselves and at our suppliers' facilities to ensure continuity of supply and lower the risk of disruption. 1 Research and Development Our strategy seeks to update and develop enhanced technology for our portfolio of current and future products by focusing on patient unmet needs and market expansion.
In addition, other jurisdictions continue to update requirements for marketing and sale of products in their geography, often becoming more stringent. As we operate in other regions and continue to expand into emerging markets, new requirements may require updates to our quality management system. These global changes are monitored and reviewed as part of the overall quality lifecycle.
In addition, other jurisdictions continue to update requirements for marketing and sale of products in their geography, often becoming more stringent. As we operate in other regions and continue to expand into emerging markets, new requirements may require updates to our quality management system and operations. These global changes are monitored and reviewed as part of the overall quality lifecycle.
These 2 agencies possess the authority to take various administrative and legal actions against us, such as product recalls, product seizures and other civil and criminal sanctions. International sales of our products are subject to foreign government regulations, which may vary substantially from country to country.
These agencies possess the authority to take various administrative and legal actions against us, such as product recalls, product seizures and other civil and criminal sanctions. International sales of our products are subject to foreign government regulations, which may vary substantially from country to country.
These regulatory controls, as well as any changes in agency policies, can affect the time and cost associated with the development, introduction and continued availability of new and existing products. Where possible, we anticipate these factors in product development and planning processes.
These regulatory controls, as well as any changes in agency policies, can affect the time and cost associated with the development, introduction and continued availability of new and existing products. Where possible, we anticipate these 2 factors in product development and planning processes.
At Embecta, long term succession planning and capability building are integral to our talent practices that are aimed at helping our employees be the best versions of themselves while simultaneously building our future talent pipeline.
At Embecta, long term succession planning and capability building are integral to our talent practices that are aimed at helping our employees be the best versions of themselves while simultaneously building our 3 future talent pipeline.
In alignment with our continuous improvement culture, we seek feedback through surveys and other means so that employees can share their perspectives on ways to continuously improve our workplace climate. As a newly independent company with agility at its core, employee feedback helps us make adjustments in our ways of working and embedding our values.
In alignment with our continuous improvement culture, we seek feedback through surveys and other means so that employees can share their perspectives on ways to continuously improve our workplace climate. As a company with agility at its core, employee feedback helps us make adjustments in our ways of working and embedding our values.
The Company makes available its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, and its Current Reports on Form 8-K (and amendments to those reports) as soon as reasonably practicable after those reports are electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”).
The Company makes available its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, and its Current Reports on Form 8-K (and amendments to those reports) as soon as reasonably practicable after those reports are electronically filed with, or furnished to, the Securities and Exchange Commission ("SEC").
We maintain robust FDA Quality System Regulation and ISO Quality Systems that establish standards for our product design, manufacturing, and distribution processes, inclusive of Current Good Manufacturing Practices. The FDA and other regulatory agencies engage in periodic reviews and inspections of our quality systems, as well as product performance and advertising and promotional materials.
We maintain robust FDA Quality System Regulation and ISO Quality Systems that establish standards for our product design, manufacturing, testing, recording keeping, and distribution processes, inclusive of Current Good Manufacturing Practices. The FDA and other regulatory agencies engage in periodic reviews and inspections of our quality systems, as well as product performance and advertising and promotional materials.
Subsequent to the Separation, BD retained ownership of all cannula production activities and the associated intellectual property rights of BD and its subsidiaries relating to cannula, the manufacture thereof and other critical cannula-related technology. 1 The design and formulation of certain materials and components is proprietary and the intellectual property rights may be owned exclusively by one party.
BD retained ownership of all cannula production activities and the associated intellectual property rights of BD and its subsidiaries relating to cannula, the manufacture thereof and other critical cannula-related technology. The design and formulation of certain materials and components is proprietary and the intellectual property rights may be owned exclusively by one party.
Embecta may use this website as a means of disclosing material, non-public information and for complying with its disclosure obligations under Regulation FD adopted by the SEC. Our website and the information contained therein or connected thereto shall not be deemed to be incorporated into this Annual Report.
Embecta may use this website as a means of disclosing material, non-public information and for complying with its disclosure obligations under Regulation FD adopted by the SEC. Our website and the information contained therein or connected thereto shall not be deemed to be incorporated into this Annual Report on Form 10-K.
As a medical device manufacturer and distributor, our manufacturing facilities and the facilities of our suppliers are subject to periodic inspection by the FDA, certain corresponding state agencies, and other regulatory bodies. Prior to marketing or selling most of our products, we must secure clearance or approval from the FDA and counterpart non-United States regulatory agencies.
As a medical device manufacturer and distributor, our manufacturing facilities and the facilities of our suppliers are subject to periodic inspection by the FDA, certain corresponding state agencies, and other national and foreign regulatory authorities. Prior to marketing or selling most of our products, we must secure clearance or approval from the FDA and counterpart non-United States regulatory agencies.
As of September 30, 2024, we had about 400 trademark registrations in the United States and in various foreign countries in which we conduct business, as well as about 85 trademark applications pending worldwide for our core injection business. Embecta owns, and BD provides Embecta a license to use, intellectual property rights necessary to operate our business.
As of September 30, 2025, we had about 455 trademark registrations in the United States and in various foreign countries in which we conduct business, as well as about 160 trademark applications pending worldwide for our core injection business. Embecta owns, and BD provides Embecta a license to use, intellectual property rights necessary to operate our business.
We use a combination of patents, copyrights, trademarks, trade secrets, nondisclosure agreements and other measures to establish and protect our proprietary rights. In many cases, we own this intellectual property directly, but in other cases, we access technologies through a combination of license and supply arrangements.
Intellectual Property and Licenses Intellectual property is a strategic priority for our business. We use a combination of patents, copyrights, trademarks, trade secrets, nondisclosure agreements and other measures to establish and protect our proprietary rights. In many cases, we own this intellectual property directly, but in other cases, we access technologies through a combination of license and supply arrangements.
What we do at Embecta is personal to Embecta employees, and our HR practices are designed to enable our employees in fulfilling our mission of helping people with diabetes. 4 Diversity, Equity & Inclusion Embecta engages a workforce that reflects the communities where we operate.
What we do at Embecta is personal to Embecta employees, and our HR practices are designed to enable our employees in fulfilling our mission of helping people with diabetes. Equity & Inclusion Embecta engages a workforce, including our leadership team and our Board of Directors, that reflects the communities where we operate.
On April 1, 2022 (the "Separation Date"), Embecta and 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 ("Diabetes Care Business") into Embecta, a new, publicly traded company.
Pursuant to the Separation and Distribution Agreement, BD agreed to spin off its diabetes care business ("Diabetes Care Business") into Embecta, a new, publicly traded company.
FDA regulations govern, among other things, product design and development, preclinical and clinical testing, pre-market clearance and approval, manufacturing, labeling, product storage, advertising and promotion, sales and distribution, post-market adverse event reporting, postmarket surveillance, complaint handling, repair or recall of products and record keeping.
FDA and other regulations govern, among other things, product design and development, preclinical and clinical testing, pre-market clearance and approval, manufacturing, labeling, product storage, supply chain, global trade, advertising and promotion, sales and distribution, pricing and reimbursement, sampling, quality control, post-market adverse event reporting, postmarket surveillance, complaint handling, repair or recall of products, record keeping, storage, and disposal activities.
Human Resources ("HR") As of September 30, 2024, we had approximately 2,100 regular employees globally (which includes deferred closing countries), with approximately 900 employees in the United States. Our talented employees are an integral reason for our standing as one of the world's leading diabetes care companies.
Human Resources ("HR") As of September 30, 2025, we had approximately 1,850 regular employees globally, with approximately 700 employees in the United States. Our talented employees are an integral reason for our standing as one of the world's leading diabetes care companies.
Our products compete across a continuum of therapies and administration modalities designed to manage diabetes. We face competition and innovation from both new and existing companies pursuing new delivery devices, injection technologies, drugs, and therapeutics for the treatment of diabetes. Companies with whom we currently compete in the diabetes drug injection business include Novo Nordisk, HTL-Strefa, and Terumo Medical Corporation.
Our products compete across a continuum of therapies and administration modalities designed to manage diabetes. We face competition and innovation from both new and existing companies pursuing new delivery devices, injection technologies, drugs, and therapeutics for the treatment of diabetes.
We also compete with providers of insulin pumps and other insulin administration devices. We compete in the marketplace based on a number of factors, including product quality, clinical innovation, price, service, reputation and commercial excellence.
Companies with whom we currently compete in the diabetes drug injection business include Novo Nordisk, MTD Group, and Terumo Medical Corporation. We also compete with providers of insulin pumps and other insulin administration devices. We compete in the marketplace based on a number of factors, including product quality, clinical innovation, price, service, reputation and commercial excellence.
The actual protection afforded by a patent, which can vary from country to country, depends upon the type of patent, the scope of its coverage and the availability of legal remedies in the country.
The majority of our United States and foreign patents for individual products are in force for twenty years from the initial filing date. The actual protection afforded by a patent, which can vary from country to country, depends upon the type of patent, the scope of its coverage and the availability of legal remedies in the country.
We purchase most of these and other materials from a single or limited number of sources for various reasons, including quality assurance, cost-effectiveness, and continuity of supply, among others. In connection with the Separation, we entered into a cannula supply agreement with BD, whereby BD sells to us cannulas for incorporation into our pen needles and syringes.
We purchase most of these and other materials from a single or limited number of sources for various reasons, including quality assurance, cost-effectiveness, and continuity of supply, among others.
Embecta plans to provide an updated Sustainability Report during its 2025 fiscal year. Available Information Embecta maintains an official corporate website, which can be accessed at www.embecta.com.
Separately, the governance structures for managing ESG topics and updates were documented via the Company's Enterprise Risk Committee charter. Embecta provided a Sustainability Report during Fiscal Year 2025 and plans to provide an updated Sustainability Report during its 2026 fiscal year. Available Information Embecta maintains an official corporate website, which can be accessed at www.embecta.com.
As of September 30, 2024, we held about 670 patents in the United States and in various foreign countries in which we conduct business, as well as about 50 patents pending protecting our core injection business. The majority of our United States and foreign patents for individual products are in force for twenty years from the initial filing date.
As of September 30, 2025, we held about 655 patents in the United States and in various foreign countries in which we conduct business, as well as about 45 patent applications pending worldwide, protecting our core injection business.
The focus in fiscal year 2024 was to evaluate Embecta’s global ESG risks and impacts. This evaluation phase commenced with a Sustainability Materiality Assessment and an internal review of the United Nations Sustainable Development Goals. Separately, the governance structures for managing ESG topics and updates were documented via the Company's Enterprise Risk Committee charter.
Corporate Responsibility ("CR") and Environmental, Social and Governance ("ESG") Embecta is in the middle of a multi-year strategy to advance its ESG initiatives. The focus in fiscal year 2025 was to evaluate Embecta’s global ESG risks and impacts. This evaluation phase commenced with a Sustainability Materiality Assessment and an internal review of the United Nations Sustainable Development Goals.
We are a leading global medical device company focused on providing solutions to improve the health and well-being of people living with diabetes. Building on our 100-year centennial, we believe that our products have become one of the most widely recognized and respected brands in diabetes management throughout the world.
All references in this Form 10-K to "Embecta", "the Company", "we", "our" or "us" refer to Embecta Corp., a Delaware corporation, and its subsidiaries, unless otherwise indicated by the context. Building on our 100-year centennial, we believe that our products have become one of the most widely recognized and respected brands in diabetes management throughout the world.
We are committed to creating and sustaining an environment where everyone brings their authentic selves to work, to help us fulfill our mission of helping people with diabetes. Corporate Responsibility ("CR") and Environmental, Social and Governance ("ESG") Embecta has continued to stand up a standalone multi-year strategy to advance its ESG initiatives.
Our commitment to Equity & Inclusion is embedded in our values and we believe this makes us better at identifying opportunities and solving problems. We are committed to creating and sustaining an environment where everyone brings their authentic selves to work, to help us fulfill our mission of helping people with diabetes.
BD grants Embecta a license to use such intellectual property rights on the terms and conditions set forth in an intellectual property matters agreement, which are described under “Agreements Related to the Separation.” Regulation Changes in legislation or government policies, including with respect to licensing, health information privacy and data privacy and healthcare costs, reimbursement, coverage and access, can have a material impact on our worldwide operations.
BD grants Embecta a license to use such intellectual property rights on the terms and conditions set forth in an intellectual property matters agreement, which are described under “Spinoff from BD.” Regulation Our products and operations are subject to, and affected by, regulations of medical devices and drugs promulgated by federal, state and local authorities in the United States, including the U.S.
Our operations are subject to, and affected by, regulations of medical devices promulgated by federal, state and local authorities in the United States, including the U.S. Food and Drug Administration ("FDA"), and other regulatory authorities with jurisdiction over our foreign operations.
Food and Drug Administration ("FDA"), other national regulatory agencies, and foreign regulatory authorities with jurisdiction over our foreign operations.
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") - Pursuant to the TSA, as amended, and the related Logistics Services Agreement, as amended (“LSA”), 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”).
In addition, 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”).
Removed
Item 1. Business. General Embecta Corp. (also referred to herein as "Embecta") was formed through a spin-off of the diabetes care business (the "Separation") from Becton, Dickinson and Company ("BD"). All references in this Form 10-K to "Embecta", "the Company", "we", "our" or "us" refer to Embecta Corp., a Delaware corporation, and its subsidiaries, unless otherwise indicated by the context.
Added
Item 1. Business. General Embecta Corp. (also referred to herein as "Embecta") is a leading global medical device company, primarily focused on providing solutions to improve the health and well-being of people living with diabetes.
Removed
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 its patch pump program. The Company will refocus its research and development strategy on its core business. Intellectual Property and Licenses Intellectual property is a strategic priority for our business.
Added
In connection with our separation from Becton, Dickinson and Company ("BD") in 2022 (the “Separation”), we entered into a cannula supply agreement with BD, whereby BD sells to us cannulas for incorporation into our pen needles and syringes.
Removed
For further discussion of risks related to government regulations, see “Risk Factors” in Item 1A.
Added
We are also exploring the development of products that allow us to expand our portfolio outside of diabetes. For example, we intend to work on development of new products in category and patient adjacencies, such as drug delivery and chronic care, that leverage our manufacturing and channel expertise.
Removed
Agreements Related to 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.
Added
Additionally, changes in legislation or government policies, including with respect to licensing, health information, privacy and data privacy, security, cybersecurity, healthcare costs, protection of the confidentiality of certain personal information (including patient health information, financial information and other sensitive personal information), reimbursement, coverage and access, can substantially increase the time, difficulty, and costs incurred in developing, maintaining, and obtaining market clearance or approval, and marketing newly developed or existing products, and can have a material impact on our worldwide operations.
Removed
The agreed-upon charges for such services are 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.
Added
The European Union has adopted various regulations and directives regulating the design, development, clinical trials, manufacture, labeling, and adverse event reporting, among other things, for medical devices, including the EU Medical Device Regulation.
Removed
Such services provided pursuant to the TSA were to terminate no later than April 1, 2024, 24 months following the Separation, and such services provided pursuant to the LSA were to terminate no later than January 1, 2024, which BD had agreed to extend through March 31, 2024.
Added
Assessing conformity with the various regulations and directives depends on the class of product, usually including scrutiny and audit by a third-party “Notified Body” which is required for a manufacturer to commercially distribute the product throughout the European Union and affix the mandatory conforming marking, otherwise known as the CE mark, to their medical devices.
Removed
On March 28, 2024, BD granted a limited extension until November 1, 2024 of certain services under the TSA, LSA and other transaction documents in a limited set of markets (the "Extension") to support the Interim 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.
Added
For further discussion of risks related to government regulations, see “ Risk Factors ” in Item 1A. Spinoff from BD On April 1, 202 2 (the "Separation Date"), in connection with the Separation, Embecta and BD entered into a Separation and Distribution Agreement (the "Separation and Distribution Agreement").
Removed
The distribution agreements each continued until either (1) certain governmental approvals needed to distribute products in the defined territory were obtained and order-to-cash processes and other services of the Company for such territory were migrated to an alternative commercial arrangement between the parties or (2) the applicable services were 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.
Added
In addition, in connection with the Separation the Company entered into a Transition Services Agreement, as amended ("TSA"), distribution agreements, a Cannula Supply Agreement, a Tax Matters Agreement, the Logistics Services Agreement, as amended ("LSA"), Trade Receivables Factoring Agreements, an Intellectual Property Matters Agreement, local support services agreements, certain other manufacturing arrangements and process services agreement, and a lease agreement for a manufacturing facility located in Holdrege, Nebraska.
Removed
All distribution agreements in the Asia Pacific Region and Latin America terminated and expired in October 2024.
Added
Furthermore, all distribution agreements in the Asia Pacific Region and Latin America terminated and expired. These agreements are discussed in greater detail in Note 3 “Third Party Arrangements” and Note 18 “Leases” in the notes to our Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.
Removed
Embecta paid BD a return of 1.5% to 2.0% of net revenue for each territory. • 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.
Removed
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.
Removed
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.
Removed
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 3 right to terminate the cannula supply agreement in its sole discretion.
Removed
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.
Removed
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.
Removed
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. • Logistics Services Agreement - Embecta and BD entered into the LSA whereby BD provides Embecta with certain order-to-cash and logistics services to support certain commercial operations for a maximum term of two years, which BD had agreed to extend pursuant to the Extension.
Removed
Embecta pays 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 are 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). • Other agreements that Embecta entered into with BD include, but are not limited to, an 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 location in Holdrege, Nebraska.
Removed
Our workforce, including our leadership team, and our Board of Directors, includes diverse members and teams. Our commitment to Diversity, Equity & Inclusion is embedded in our values. We believe that employee diversity makes us better at identifying opportunities and solving problems.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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If these customers reduce the amount of product that they purchase from Embecta, reduce the amount that they are willing to pay for such products or increase charges to distribute such products, Embecta’s business, financial condition and results of operations could be adversely affected. A substantial portion of Embecta’s revenue is derived from sales to a few customers.
A substantial portion of Embecta’s revenue is derived from sales to a few customers. If these customers reduce the amount of product that they purchase from Embecta, reduce the amount that they are willing to pay for such products or increase charges to distribute such products, Embecta’s business, financial condition and results of operations could be adversely affected.
The Separation is expected to provide the following benefits, among others: (1) enabling management of Embecta to more effectively pursue the distinct operating priorities and strategies of its business; (2) permitting Embecta to allocate financial resources to meet the unique needs of its business, which will allow us to intensify our focus on distinct strategic priorities and to more effectively pursue our own distinct capital structures and capital allocation strategies; (3) allowing Embecta to more effectively articulate a clear investment thesis to attract a long-term investor base suited to our business and providing investors with a distinct and targeted investment opportunity; (4) creating an independent equity security tracking Embecta’s underlying business, affording Embecta with direct access to the capital markets and facilitating its ability to consummate future acquisitions or other transactions using its common stock; and (5) permitting Embecta to more effectively recruit, retain and motivate employees through the use of stock-based compensation that more closely aligns management and employee incentives with specific business goals and objectives related to Embecta’s business.
The Separation is expected to provide the following benefits, among others: (1) enabling management of Embecta to more effectively pursue the distinct operating priorities and strategies of its business; (2) permitting Embecta to allocate financial resources to meet the unique needs of its business, which will allow us to intensify our focus on distinct strategic priorities and to more effectively pursue our own distinct capital structures and capital allocation strategies; (3) allowing Embecta to more effectively articulate a clear investment thesis to attract a long-term investor base suited to our business and providing investors with a distinct and targeted investment opportunity; (4) creating an independent equity security tracking Embecta’s underlying business, affording Embecta with direct access to the capital markets and facilitating its ability to consummate future acquisitions or other transactions using its common 24 stock; and (5) permitting Embecta to more effectively recruit, retain and motivate employees through the use of stock-based compensation that more closely aligns management and employee incentives with specific business goals and objectives related to Embecta’s business.
Embecta may not achieve these and other anticipated benefits for a variety of reasons, including, among others: (1) the ongoing transition and separation activities may demand significant management resources and require significant amounts of management’s time and effort, which may divert management’s attention from operating and growing Embecta’s business; (2) Embecta may be more susceptible to market fluctuations, and other adverse events than if it were still a part of BD because Embecta’s business is less diversified than BD’s businesses prior to the completion of the Separation; (3) as a standalone company, Embecta may be unable to obtain certain goods, services and technologies at prices or on terms as favorable as those BD obtained prior to completion of the Separation; (4) under the terms of the tax matters agreement that Embecta entered into with BD, it is restricted from taking certain actions that could cause the distribution or certain related transactions to fail to qualify as tax-free to BD and BD shareholders, or could result in certain other taxes to BD,; and (6) the contractual arrangements between Embecta and BD are on less favorable terms than the prior existing intercompany arrangements from which Embecta benefited, and such arrangements may be inadequate to provide for the ongoing operation and growth of Embecta’s business.
Embecta may not achieve these and other anticipated benefits for a variety of reasons, including, among others: (1) the ongoing transition and separation activities may demand significant management resources and require significant amounts of management’s time and effort, which may divert management’s attention from operating and growing Embecta’s business; (2) Embecta may be more susceptible to market fluctuations, and other adverse events than if it were still a part of BD because Embecta’s business is less diversified than BD’s businesses prior to the completion of the Separation; (3) as a standalone company, Embecta may be unable to obtain certain goods, services and technologies at prices or on terms as favorable as those BD obtained prior to completion of the Separation; (4) under the terms of the tax matters agreement that Embecta entered into with BD, it is restricted from taking certain actions that could cause the distribution or certain related transactions to fail to qualify as tax-free to BD and BD shareholders, or could result in certain other taxes to BD; and (5) the contractual arrangements between Embecta and BD are on less favorable terms than the prior existing intercompany arrangements from which Embecta benefited, and such arrangements may be inadequate to provide for the ongoing operation and growth of Embecta’s business.
Embecta may experience difficulties and delays inherent in manufacturing its products, such as failure of Embecta or its suppliers to comply with applicable regulations and quality assurance guidelines, which failures may lead to: manufacturing suspensions, shutdowns or delays; delays related to the construction of new facilities or the expansion of existing facilities; and other manufacturing or distribution problems, including changes in manufacturing production sites and limits to manufacturing capacity resulting from regulatory requirements, changes in types of products produced and physical limitations that could affect supply.
Embecta may experience difficulties and delays inherent in manufacturing its products, such as failure of Embecta or its suppliers to comply with applicable regulations and quality assurance guidelines, which failures may lead to: manufacturing suspensions, shutdowns or delays; delays related to the construction of new facilities or the expansion of 8 existing facilities; and other manufacturing or distribution problems, including changes in manufacturing production sites and limits to manufacturing capacity resulting from regulatory requirements, changes in types of products produced and physical limitations that could affect supply.
Political or financial instability, currency fluctuations, the outbreak of pandemics, labor unrest, transport capacity and costs, port security, supply chain disruptions, wars, weather conditions, natural disasters, or other events that could slow or disrupt 20 port activities and affect foreign trade are beyond Embecta’s control and could materially disrupt its supply of product from any of these locations, increase its costs, and/or adversely affect its results of operations.
Political or financial instability, currency fluctuations, the outbreak of pandemics, labor unrest, transport capacity and costs, port security, supply chain disruptions, wars, weather conditions, natural disasters, or other events that could slow or disrupt port activities and affect foreign trade are beyond Embecta’s control and could materially disrupt its supply of product from any of these locations, increase its costs, and/or adversely affect its results of operations.
However, the timing, declaration, amount and payment of any dividends will be within the discretion of Embecta’s Board of Directors, and will depend upon many factors, 28 including Embecta’s financial condition, earnings, capital requirements of its operating subsidiaries, covenants associated with certain of Embecta’s debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets, and other factors deemed relevant by Embecta’s Board of Directors.
However, the timing, declaration, amount and payment of any dividends will be within the discretion of Embecta’s Board of Directors, and will depend upon many factors, including Embecta’s financial condition, earnings, capital requirements of its operating subsidiaries, covenants associated with certain of Embecta’s debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets, and other factors deemed relevant by Embecta’s Board of Directors.
However, vandalism, terrorism, unplanned power outages, cyberattacks or a natural disaster, such as an earthquake, fire or flood, or other catastrophic event, could damage or destroy Embecta’s inventories of component supplies and finished goods, cause substantial delays in its operations, result in the loss of key information, result in reduced sales, and cause Embecta to incur additional expenses.
However, vandalism, terrorism, unplanned power outages, cyberattacks or a natural disaster, such as an earthquake, fire or flood, or other catastrophic event, could damage or destroy Embecta’s inventories of component supplies and finished goods, cause substantial delays in its operations, result in the loss of key information, 22 result in reduced sales, and cause Embecta to incur additional expenses.
Pricing under the cannula supply agreement is determined by BD based on several factors, including Embecta's yearly forecast, the cost of raw materials and other cost methodologies. The cannula 8 supply agreement is terminable by BD without cause by providing at least 36 months’ written notice; however, such termination can be effective no earlier than ten years from the Separation.
Pricing under the cannula supply agreement is determined by BD based on several factors, including Embecta's yearly forecast, the cost of raw materials and other cost methodologies. The cannula supply agreement is terminable by BD without cause by providing at least 36 months’ written notice; however, such termination can be effective no earlier than ten years from the Separation.
If the FDA, the FTC or another regulatory agency determines that Embecta’s promotional or training material constitutes off-label, false or misleading, unfair or deceptive promotion of its products, it could request that Embecta modify its training or promotional materials or subject Embecta to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine or criminal penalties.
If the FDA, the FTC or another regulatory agency determines that Embecta’s promotional or training material constitutes off-label, false or 20 misleading, unfair or deceptive promotion of its products, it could request that Embecta modify its training or promotional materials or subject Embecta to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine or criminal penalties.
Cannulas are a component part of a wide variety of medical devices that use needles to deliver fluid into, or through which blood is drawn from, the body. BD retains ownership of all cannula production activities and all intellectual property rights of BD and its subsidiaries relating to cannula, the manufacture thereof and other critical cannula-related technology.
Cannulas are a component part of a wide variety of medical devices that use needles to deliver fluid into, or through which blood is drawn from, the body. BD retains ownership of all cannula production activities and all intellectual property rights of BD and its subsidiaries relating to cannula, the manufacture thereof and 7 other critical cannula-related technology.
These events could adversely affect Embecta’s operations and our financial performance. 14 Embecta's business could be negatively impacted by evolving regulations, policies and expectations relating to ESG initiatives, setting related goals, collecting data and disclosing related information. There is an increasing focus from certain investors, customers, consumers, employees and other stakeholders concerning ESG matters.
These events could adversely affect Embecta’s operations and our financial performance. Embecta's business could be negatively impacted by evolving regulations, policies and expectations relating to ESG initiatives, setting related goals, collecting data and disclosing related information. There is an increasing focus from certain investors, customers, consumers, employees and other stakeholders concerning ESG matters.
In addition, data security protection laws passed by the federal government and many states require notification to data subjects, including customers and others, when there is a security breach of personal data. The CCPA also created a private right of action with statutory damages for certain data breaches, thereby potentially increasing risks associated with a data breach.
In addition, data security protection laws passed by the federal government and many states 21 require notification to data subjects, including customers and others, when there is a security breach of personal data. The CCPA also created a private right of action with statutory damages for certain data breaches, thereby potentially increasing risks associated with a data breach.
For more information, see the section entitled “Agreements Related to the Separation” in Item 1 of this Annual Report on Form 10-K. Embecta may be held liable to BD if it fails to perform under its agreements with BD, and the performance of such services may negatively affect Embecta’s business and operations.
For more information, see the section entitled “Agreements Related to the Separation” in Item 1 of this Annual Report on Form 10-K. 26 Embecta may be held liable to BD if it fails to perform under its agreements with BD, and the performance of such services may negatively affect Embecta’s business and operations.
Any such failure to perform or a reduction or interruption in supply could have a material adverse effect on Embecta’s business and operations. • Embecta may experience difficulties and delays in the manufacturing of its products or sterilization operations, and any such difficulties and delays could adversely affect Embecta’s business. • A substantial portion of Embecta’s revenue is derived from sales to a few customers.
Any such failure to perform or a reduction, interruption, or termination in supply could have a material adverse effect on Embecta’s business and operations. • Embecta may experience difficulties and delays in the manufacturing of its products or sterilization operations, and any such difficulties and delays could adversely affect Embecta’s business. • A substantial portion of Embecta’s revenue is derived from sales to a few customers.
The misuse of AI solutions could also result in unauthorized access and use of personal data of Embecta’s employees, clinical and other trial participants, collaborators, or other third parties. In addition, the legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain, including in the areas of intellectual property, cybersecurity, and privacy and data protection.
The misuse of AI solutions could also result in unauthorized access and use of personal data of Embecta’s employees, clinical and other trial and research participants, collaborators, or other third parties. In addition, the legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain, including in the areas of intellectual property, cybersecurity, and privacy and data protection.
Embecta’s operations are global and are affected by complex state, federal and international laws relating to healthcare, environmental protection, antitrust, anti-corruption, marketing, fraud and abuse (including anti-kickback and false claims laws), import and export control, product safety and efficacy, employment, privacy, financial transparency, conflict minerals and other areas.
Embecta’s operations are global and are affected by complex state, federal and international laws relating to healthcare, environmental protection, antitrust, anti-corruption, marketing, fraud and abuse (including anti-kickback and false claims laws), import and export control, product safety and efficacy, employment, privacy and cybersecurity, financial transparency, conflict minerals and other areas.
In addition, the United States government reported that United States sanctions against Russia in response to the conflict could lead to an increased threat of cyberattacks against United States companies. These increased threats could pose risks to the security of Embecta’s Information Technology systems, networks and product offerings, as well as the confidentiality, availability and integrity of Embecta’s data.
In addition, the United States government reported that United States sanctions against Russia in response to the conflict could lead to an increased threat of cyberattacks against United States companies. These increased threats could pose risks to the security of Embecta’s information systems, networks and product offerings, as well as the confidentiality, availability and integrity of Embecta’s data.
These third parties may fail to perform under their agreements with Embecta, or there may be a reduction or interruption in the manufacturing and supply of these components and raw materials. Any such failure to perform or a reduction or interruption in supply could have a material adverse effect on Embecta’s business and operations .
These third parties may fail to perform under their agreements with Embecta, or there may be a reduction, interruption, or termination in the manufacturing and supply of these components and raw materials. Any such failure to perform or a reduction, interruption, or termination in supply could have a material adverse effect on Embecta’s business and operations .
In addition, Embecta will be required to closely collaborate with its customers, and ensure the proper changes, modifications, system inputs, supply chain logistics, administration, and adjudication operations are properly transitioned within the customer’s internal infrastructure, 24 processes and systems, in order to successfully achieve the transition.
In addition, Embecta will be required to closely collaborate with its customers, and ensure the proper changes, modifications, system inputs, supply chain logistics, administration, and adjudication operations are properly transitioned within the customer’s internal infrastructure, processes and systems, in order to successfully achieve the transition.
If Embecta is unable to 26 obtain required consents or approvals, it may be unable to obtain the benefits, permits, assets and contractual commitments that are intended to be allocated to Embecta as part of its Separation from BD, and Embecta may be required to seek alternative arrangements to obtain services and assets that may be more costly and/or of lower quality.
If Embecta is unable to obtain required consents or approvals, it may be unable to obtain the benefits, permits, assets and contractual commitments that are intended to be allocated to Embecta as part of its Separation from BD, and Embecta may be required to seek alternative arrangements to obtain services and assets that may be more costly and/or of lower quality.
Embecta’s information technology systems may also be susceptible to damage, disruptions, or shutdowns due to computer viruses, attacks by computer hackers, failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, telecommunication failures, user errors, or catastrophic events.
Embecta’s Information Systems may also be susceptible to damage, disruptions, or shutdowns due to computer viruses, attacks by computer hackers, failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, telecommunication failures, user errors, or catastrophic events.
These provisions may also prevent or discourage attempts to remove and replace incumbent directors. In addition, an acquisition or further issuance of Embecta common stock could trigger the application of Section 355(e) of the Code, causing the distribution to be taxable to BD.
These provisions may also prevent or discourage attempts to remove and replace incumbent directors. 29 In addition, an acquisition or further issuance of Embecta common stock could trigger the application of Section 355(e) of the Code, causing the distribution to be taxable to BD.
However, if a larger number of Embecta’s employees were to unionize, including in the wake of any future legislation or administrative regulation that makes it easier for employees to unionize, the effect could be significant. A significant portion of Embecta’s unionized employees have collective bargaining agreements.
However, if a larger number of Embecta’s employees were to unionize, including in the wake of any future legislation or administrative regulation that makes it easier for employees to unionize, the effect could be significant. 18 A significant portion of Embecta’s unionized employees have collective bargaining agreements.
Following the expiration of this license, Embecta will be required to rebrand and update, as applicable, its products and marketing, manufacturing, supply chain, and regulatory registrations and licenses using the “Embecta” name or other names and marks and remove the “BD” name and logo on its products and marketing, registrations and licenses.
Following the expiration of this license, Embecta will be required to rebrand and update, as applicable, its products and marketing, manufacturing, supply chain, and regulatory registrations and licenses using the 25 “Embecta” name or other names and marks and remove the “BD” name and logo on its products and marketing, registrations and licenses.
The risks we face include, but are not limited to, the following: 5 Risks Related to Embecta’s Business • The medical technology industry is very competitive. • Embecta generates a significant amount of its profits and cash flows from a few key products, and any events that adversely affect the sale or profitability of these products could have an adverse impact on Embecta’s sales, results of operations and cash flows. • Technological breakthroughs in diabetes treatment or prevention may reduce demand for Embecta’s products. • Embecta obtains components and raw materials for its products from third parties, including BD.
The risks we face include, but are not limited to, the following: 4 Risks Related to Embecta’s Business • The medical technology industry is very competitive. • Embecta generates a significant amount of its profits and cash flows from a few key products, and any events that adversely affect the sale or profitability of these products could have an adverse impact on Embecta’s sales, results of operations and cash flows. • Technological breakthroughs in diabetes treatment or prevention may reduce demand for Embecta’s products. • Embecta obtains components and raw materials for its products from third parties, including BD.
None of Embecta’s independent distributors in the United States has been required to sell Embecta’s products exclusively, and each of them may freely sell the products of Embecta’s competitors. If Embecta is unable to maintain or expand its network of independent distributors, its sales may be negatively affected.
None of Embecta’s 10 independent distributors in the United States has been required to sell Embecta’s products exclusively, and each of them may freely sell the products of Embecta’s competitors. If Embecta is unable to maintain or expand its network of independent distributors, its sales may be negatively affected.
Failure to appropriately respond to this evolving landscape may also result in legal liability, fines, penalties, regulatory action, loss of trade secrets or other intellectual property, brand and reputational harm, or lead to outcomes with unintended biases or other consequences.
Failure to appropriately respond to this evolving landscape may also result in legal liability, fines, penalties, regulatory action, loss of data or trade secrets or other intellectual property, brand and reputational harm, or lead to outcomes with unintended biases or other consequences.
Any such failure to perform or a reduction or interruption in supply could have a material adverse effect on Embecta’s business and operations. Embecta may experience difficulties and delays in the manufacturing of its products or sterilization operations, and any such difficulties and delays could adversely affect Embecta’s business.
Any such failure to perform or a reduction, interruption, or termination in supply could have a material adverse effect on Embecta’s business and operations. Embecta may experience difficulties and delays in the manufacturing of its products or sterilization operations, and any such difficulties and delays could adversely affect Embecta’s business.
Competitors that are new to the pen needle and insulin syringe categories, along with some that have emerged to begin engaging with payers, have accelerated the focus on these product categories, providing payers more choices for formulary partners within these medical device categories.
Competitors that are new to the pen needle and insulin syringe categories, along with some that have emerged to begin engaging with payers, have accelerated the focus on these product categories, providing payers more choices for formulary 9 partners within these medical device categories.
The payment amounts are calculated based on the amount by which the regional ceilings for the given year were exceeded. In response to decrees issued by the Italian Ministry of Health, the 13 various Italian regions issued invoices to medical device companies.
The payment amounts are calculated based on the amount by which the regional ceilings for the given year were exceeded. In response to decrees issued by the Italian Ministry of Health, the various Italian regions issued invoices to medical device companies.
In addition, the EU has adopted the EU Medical Device Regulation (the “EU MDR”), which imposes stricter requirements for the marketing and sale of medical devices, including in the area of labeling requirements, clinical evidence requirements, quality systems and post-market surveillance.
In addition, the EU has adopted the EU Medical 19 Device Regulation (the “EU MDR”), which imposes stricter requirements for the marketing and sale of medical devices, including in the area of labeling requirements, clinical evidence requirements, quality systems and post-market surveillance.
Embecta’s suppliers, distributors, contractors, service providers, and other third parties with whom it does business also could be subject to cyber threats and attacks that are similar in frequency and sophistication.
Embecta’s suppliers, distributors, contractors, service providers, partners, and other third parties with whom it does business could also be subject to cyber threats and attacks that are similar in frequency and sophistication.
Access to these products is largely defined by the availability and size of government reimbursement, or, in a limited number of countries, the ability of manufacturers to negotiate reimbursement 10 directly with insurance companies.
Access to these products is largely defined by the availability and size of government reimbursement, or, in a limited number of countries, the ability of manufacturers to negotiate reimbursement directly with insurance companies.
In addition, events beyond Embecta's control, including prevailing economic, financial, and industry 21 conditions, could affect Embecta's ability to satisfy applicable financial covenants, and Embecta cannot assure you that it will satisfy them.
In addition, events beyond Embecta's control, including prevailing economic, financial, and industry conditions, could affect Embecta's ability to satisfy applicable financial covenants, and Embecta cannot assure you that it will satisfy them.
These 29 exclusive forum provisions will apply to all covered actions, including any covered action in which the plaintiff chooses to assert a claim or claims under federal law in addition to a claim or claims under Delaware law.
These exclusive forum provisions will apply to all covered actions, including any covered action in which the plaintiff chooses to assert a claim or claims under federal law in addition to a claim or claims under Delaware law.
Once all the transaction agreements, or any extension thereto, expire or terminate, if Embecta is unable to extend or replace the services that BD currently provides to it under these transaction agreements, until it is able to extend such services, complete the steps necessary to perform these services itself or otherwise materially replace these services on substantially similar terms and conditions, Embecta may not be able to effectively operate its business or maintain effective financial and management controls and reporting systems.
Once all the transaction agreements, or any extensions thereto, expire or terminate, if Embecta is unable to extend or replace the services that BD currently provides to it under these transaction agreements, until it is able to extend such services, complete the steps necessary to perform these services itself or otherwise materially replace these services on substantially similar terms and conditions, Embecta may not be able to effectively operate its business or maintain effective financial and management controls and reporting systems.
These third parties may fail to perform under their agreements with Embecta, or there may be a reduction or interruption in the manufacturing and supply of these components and raw materials.
These third parties may fail to perform under their agreements with Embecta, or there may be a reduction, interruption, or termination in the manufacturing and supply of these components and raw materials.
As such, a cyberattack which intrudes, disrupts, or corrupts Embecta’s devices, products, and services, or related devices, products, and services could impact the quality-of-care patients receive or the confidentiality of patient information.
As such, a cyberattack which intrudes, disrupts, or corrupts Embecta’s devices, products, and services, or related devices, products, and services could impact the quality-of-care patients receive or the confidentiality of customer or patient information.
Health plans, pharmacy benefit managers, wholesalers, and other supply chain stakeholders have been consolidating into fewer, larger entities, thus enhancing their purchasing strength and importance.
Health plans, pharmacy benefit managers ("PBMs"), wholesalers, and other supply chain stakeholders have been consolidating into fewer, larger entities, thus enhancing their purchasing strength and importance.
The market price of Embecta common stock may fluctuate significantly due to a number of factors, some of which may be beyond our control, including: • actual or anticipated fluctuations in Embecta’s operating results, including those associated with the Interim Business Continuity Processes; • Embecta’s liquidity and ability to obtain additional capital, including the market’s reaction to any capital-raising transaction Embecta may pursue; • changes in earnings estimated by securities analysts or Embecta’s ability to meet those estimates; • the operating and stock price performance of comparable companies; • sales of substantial amounts of Embecta’s common stock, or the perception that substantial amounts of Embecta’s common stock may be sold, by stockholders in the public market; • changes to the regulatory and legal environment under which Embecta operates; • any negative decisions by the FDA or similar regulatory bodies inside and outside of the United States regarding Embecta’s products and product candidates; • actual or anticipated fluctuations in commodities prices; • analyst research reports, recommendation and changes in recommendations, price targets, and withdrawals of coverage; 27 • changes in the diabetes care landscape, including changes to consumer habits and market dynamics for means and methods of insulin delivery or alternative means of diabetes management without the use of insulin or by delaying the use of insulin; and • domestic and worldwide economic conditions.
The market price of Embecta common stock may fluctuate significantly due to a number of factors, some of which may be beyond our control, including: • actual or anticipated fluctuations in Embecta’s operating results, including those associated with the Business Continuity Processes; • Embecta’s liquidity and ability to obtain additional capital, including the market’s reaction to any capital-raising transaction Embecta may pursue; • changes in earnings estimated by securities analysts or Embecta’s ability to meet those estimates; • the operating and stock price performance of comparable companies; • sales of substantial amounts of Embecta’s common stock, or the perception that substantial amounts of Embecta’s common stock may be sold, by stockholders in the public market; • changes to the global trade, regulatory, and legal environment under which Embecta operates; • any negative decisions by the FDA or similar regulatory bodies inside and outside of the United States regarding Embecta’s products and product candidates; • actual or anticipated fluctuations in commodities prices; • analyst research reports, recommendation and changes in recommendations, price targets, and withdrawals of coverage; 28 • changes in the diabetes care landscape, including changes to consumer habits and market dynamics for means and methods of insulin delivery or alternative means of diabetes management without the use of insulin or by delaying the use of insulin; and • domestic and worldwide economic conditions.
The Italian administrative courts referred the question regarding the constitutionality of the law to the Italian Constitutional Court, which in July 2024, issued a ruling upholding the law as constitutional.
The Italian administrative courts referred the 12 question regarding the constitutionality of the law to the Italian Constitutional Court, which in July 2024, issued a ruling upholding the law as constitutional.
The transfer of certain of these contracts, permits and other assets and rights may require consents or approvals of third parties or governmental authorities or provide other rights to third parties.
The transfer of certain of these contracts, permits and other assets and rights may require consents or approvals of third parties or 27 governmental authorities or provide other rights to third parties.
In 2015, the Italian parliament enacted legislation that, among other things, imposed a “payback” measure on medical device companies that supply goods and services to the Italian National Healthcare System. Under the measure, companies are required to make payments to the Italian government if medical device expenditures in a given year exceed regional expenditure ceilings established for that year.
In 2015, the Italian parliament enacted legislation that, among other things, imposed a "payback" measure on medical device companies that supply goods and services to the Italian National Healthcare System. Under the measure, companies are required to make payments to the Italian government if medical device expenditures in a given year exceed regional expenditure ceilings established for that year.
These include large companies with multiple product lines and non-traditional entrants such as technology companies, some of 7 which may have greater financial and marketing resources than Embecta in the United States or other markets, as well as smaller, more specialized companies.
These include large companies with multiple product lines and non-traditional entrants such as technology companies, some of 6 which may have greater financial and marketing resources than Embecta in the United States or other markets, as well as smaller, more specialized companies.
Failure to comply with these laws may result in enforcement actions by the FDA or other similar regulatory agencies and other liability to Embecta. The enactment of additional laws or changes in existing laws may increase compliance costs or otherwise adversely impact Embecta’s operations.
Failure to comply with these laws may result in enforcement actions by the FDA or other similar national and international regulatory agencies and other liability to Embecta. The enactment of additional laws or changes in existing laws may increase compliance costs or otherwise adversely impact Embecta’s operations.
If they are successful in developing and commercializing these technologies or treatment therapies, the demand for Embecta’s products could decline. Furthermore, the National Institutes of Health and other supporters of diabetes research are continually seeking ways to prevent diabetes.
If they are successful in developing and commercializing these technologies or treatment therapies, the demand for Embecta’s products could decline or be delayed. Furthermore, the National Institutes of Health and other supporters of diabetes research are continually seeking ways to prevent diabetes.
The potential impact of future cyber incidents can vary widely in severity and scale. This could also impact Embecta’s compliance with privacy and other laws and regulations and could result in actions by regulatory bodies or civil litigation.
The potential impact of future cyber incidents can vary widely in severity and scale. This could also impact Embecta’s compliance with privacy and other laws and regulations and could result in actions by regulatory bodies or government agencies, and/or or civil litigation.
The departure of the United Kingdom ("U.K.") from the European Union (“EU”) (commonly known as “Brexit”) on January 31, 2020 created uncertainties affecting business operations in the United Kingdom, the EU and a number of other countries, including with respect to compliance with the regulatory regimes regarding the labeling and registration of the products Embecta sells in these markets.
The departure of the United Kingdom ("U.K.") from the European Union ("EU") (commonly known as "Brexit") on January 31, 2020 created uncertainties affecting business operations in the United Kingdom, the EU and a number of other countries, including with respect to compliance with the regulatory regimes regarding the labeling and registration of the products Embecta sells in these markets.
Investors and prospective investors should consider the risks described below and the information contained under the caption “Cautionary Statements Regarding Forward-Looking Statements” and elsewhere in this Annual Report on Form 10-K before deciding whether to invest in our securities. We may update these risk factors in our future periodic reports.
Investors and prospective investors should consider the risks described below and the information contained under the caption "Cautionary Statements Regarding Forward-Looking Statements" and elsewhere in this Annual Report on Form 10-K before deciding whether to invest in our securities. We may update these risk factors in our future periodic reports.
Despite Embecta’s security measures, however, its information technology and infrastructure may be vulnerable to attacks by increasingly sophisticated intruders or others who try to cause harm to or interfere with its normal use of its systems. They are also susceptible to breach due to employee error, malfeasance, or other disruptions.
Despite Embecta’s security measures, however, its information technology and data infrastructure may be vulnerable to attacks by increasingly sophisticated intruders or others who try to cause harm to or interfere with the normal use of its systems. They are also susceptible to breach due to employee error, 17 malfeasance, or other disruptions.
In addition, for the fiscal year ended September 30, 2024, direct gross sales to the five largest retail pharmacies for Embecta’s products together represented approximately 14% of Embecta’s worldwide gross sales.
In addition, for the fiscal year ended September 30, 2025, direct gross sales to the five largest retail pharmacies for Embecta’s products together represented approximately 14% of Embecta’s worldwide gross sales.
Embecta deploys defenses against such threats and attacks and works to secure the integrity of its data systems using techniques, hardware, and software typical of companies of its size and scope.
Embecta deploys defenses against such threats and attacks and works to secure the integrity of its Information Systems using techniques, hardware, and software typical of companies of its size and scope.
Environmental laws, particularly with respect to the emission of greenhouse gases, such as taxes on fuel and energy, to mitigate the impacts of climate change, are becoming more stringent throughout the world, which may increase Embecta’s costs of operations or necessitate closures of or changes to its manufacturing plants or processes or those of its suppliers, or result in liability to Embecta.
Environmental laws, particularly with respect to the emission of greenhouse gases, such as taxes on fuel and energy, to mitigate the impacts of climate change, are becoming more stringent throughout the world, including tightening emissions standards, which may increase Embecta’s costs of operations or necessitate closures of or changes to its manufacturing plants or processes or those of its suppliers, or result in liability to Embecta.
If Embecta fails to comply with present or future regulatory requirements that are applicable to it, it may be subject to enforcement action by the FDA, which may include any of the following sanctions: • untitled letters, warning letters, fines, injunctions, consent decrees, and civil penalties; • customer notification, or orders for repair, replacement, or refunds; • voluntary or mandatory recall or seizure of our current or future products; • administrative detention by the FDA of medical devices believed to be adulterated or misbranded; • operating restrictions, suspension or shutdown of production; • refusing our requests for 510(k) clearance of new products, new intended uses or modifications to Embecta’s current products; • rescinding 510(k) clearance or suspending that have already been granted; or • criminal prosecution.
If Embecta fails to comply with present or future regulatory requirements that are applicable to it, it may be subject to enforcement action by the FDA, which may include any of the following sanctions: • untitled letters, warning letters, fines, injunctions, consent decrees, and civil penalties; • customer notification, or orders for repair, replacement, or refunds; • voluntary or mandatory recall or seizure of our current or future products; • administrative detention by the FDA or other similar regulatory agencies of medical devices believed to be adulterated or misbranded or otherwise in violation of other regulatory laws; • operating restrictions, suspension or shutdown of production; • refusing our requests for 510(k) clearance of new products, new intended uses or modifications to Embecta’s current products; • rescinding 510(k) clearance or suspending that have already been granted; or • criminal prosecution.
The Russia and Ukraine conflict, the Israel-Hamas war, the possibility of military activity in countries near or adjacent to Israel, including attacks on shipping vessels in the Red Sea, and the growing geopolitical tensions between China and Taiwan, coupled with possible related supply chain shortages may affect the energy power and oil sector’s networks and ability to supply their customers, including Embecta.
The Russia and Ukraine conflict, the conflict in the Middle East, the possibility of military activity in countries near or adjacent to Israel, including attacks on shipping vessels in the Red Sea, and the growing geopolitical tensions between China and Taiwan, coupled with possible related supply chain shortages may affect the energy power and oil sector’s networks and ability to supply their customers, including Embecta.
Embecta’s future growth is dependent in part upon the development of new products, and there can be no assurance that such products will be developed or be successful. A significant element of Embecta’s strategy is to increase revenue growth by focusing on innovation and new product development.
Embecta’s future growth is dependent in part upon the development of new products, and there can be no assurance that such products will be developed or be successful. An element of Embecta’s strategy is to increase revenue growth by focusing on innovation and new product development.
These and other factors may adversely impact its ability to pursue its growth strategy in these regions. 12 In addition to the risks discussed elsewhere, other risks associated with doing business internationally, include, but are not limited to: • political instability and actual or anticipated military or political conflicts; • trade protection measures and barriers, such as tariffs, and import and export licensing, control and compliance requirements; • negative consequences from changes in or interpretations of tax laws; • difficulty in establishing, staffing and managing international operations; • difficulties associated with foreign legal systems, including increased costs associated with enforcing contractual obligations in foreign jurisdictions; • changes in regulatory requirements; • adapting to the differing laws and regulations, business and clinical practices, and consumer preferences in foreign markets; • difficulties in managing foreign relationships and operations, including any relationships that we establish with foreign partners, distributors or sales or marketing agents; and • difficulty in collecting accounts receivable and longer collection periods.
These and other factors may adversely impact its ability to pursue its growth strategy in these regions. 11 In addition to the risks discussed elsewhere, other risks associated with doing business internationally, include, but are not limited to: • political instability and actual or anticipated military or political conflicts; • trade protection measures and barriers, such as tariffs, import and export licensing, customs, control and compliance requirements; • negative consequences from changes in or interpretations of tax laws; • difficulty in establishing, staffing and managing international operations; • difficulties associated with foreign legal systems or other foreign regulations or commitments, including increased costs or penalties associated with enforcing or fulfilling certain governmental and/or non-governmental contractual obligations in foreign jurisdictions; • changes in regulatory requirements; • adapting to the differing laws and regulations, business and clinical practices, and consumer preferences in foreign markets; • difficulties in managing foreign relationships and operations, including any relationships that we establish with foreign partners, distributors or sales or marketing agents; and • difficulty in collecting accounts receivable and longer collection periods.
Embecta’s international operations subject it to certain risks relating to, among other things, fluctuations in foreign currency exchange, local economic and political conditions, competition from local companies, increases in trade protectionism, United States relations with the governments of the foreign countries in which Embecta operates, foreign regulatory requirements or changes in such requirements, changes in local healthcare payment systems and healthcare delivery systems, local product preferences and requirements, longer payment terms for account receivables than we experience in the United States, difficulty in establishing, staffing and managing foreign operations, changes to international trade agreements and treaties, changes in tax laws, weakening or loss of the protection of intellectual property rights in some countries and import or export licensing requirements.
Embecta’s international operations subject it to certain risks relating to, among other things, fluctuations in foreign currency exchange, local economic and political conditions, competition from local companies, increases in trade protectionism, United States relations with the governments of the foreign countries in which Embecta operates, foreign regulatory requirements or changes in such requirements, changes in local healthcare payment systems and healthcare delivery systems, local or non-U.S. originated product preferences and/or requirements, longer payment terms for account receivables than we experience in the United States, difficulty in establishing, staffing and managing foreign operations, changes to international trade policies, agreements, tariffs, regulations, and treaties, changes in tax laws, weakening or loss of the protection of intellectual property rights in some countries and import or export licensing requirements.
In addition, Embecta’s costs for the operation of these systems may be higher than the amounts reflected in its historical combined financial statements.
In addition, Embecta’s costs for the operation of these services may be higher than the amounts reflected in its historical combined financial statements.
In preparing its financial statements, Embecta estimates the amount of tax that will 15 become payable in each of these jurisdictions and significant judgement is required in determining our worldwide provision for income taxes.
In preparing its financial statements, Embecta estimates the amount of tax that will become payable in each of these jurisdictions and significant judgment is required in determining our worldwide provision for income taxes.
In many cases, Embecta has to rely on the controls and safeguards put in place by these suppliers, distributors, contractors, service providers, including BD, and other third parties to defend against, respond to, and report these attacks.
In many cases, Embecta has to rely on the controls and safeguards put in place by these suppliers, distributors, contractors, service providers, partners, and other third parties to defend against, respond to, and report these attacks.
A number of companies and medical researchers are developing and commercializing new ways to deliver insulin to patients, including insulin administration technologies that do not require the use of a needle, that reduce the frequency of insulin administration, or that treat diabetes without the use of insulin or by delaying the use of insulin, such as oral and once-weekly anti-diabetic drugs, GLP-1s and GLP-1 combination products.
A number of companies and medical researchers are developing and commercializing new ways to deliver insulin to patients, including insulin administration technologies that do not require the use of a needle, that reduce the frequency of insulin administration, or that treat diabetes without the use of insulin or by delaying the use of insulin, such as oral and once-weekly anti-diabetic drugs (e.g., SGLT-2s, once-weekly insulins, GLP-1s, and GLP-1 combination products).
In addition, in connection with the Separation, Embecta and BD entered into a lease agreement for a manufacturing facility location in Holdrege, Nebraska that Embecta leases from BD and several contract manufacturing agreements where BD provides certain manufacturing services to Embecta.
In addition, in connection with the Separation, Embecta and BD entered into a lease agreement for a manufacturing facility location in Holdrege, Nebraska that Embecta leases from BD where BD provides certain manufacturing services to Embecta.
Some of Embecta’s products, and products in development may, include information systems that collect data, including sensitive medical information, regarding patients and patient therapy on behalf of Embecta’s customers and some connect to Embecta’s systems for maintenance and management purposes.
Some of Embecta’s products and services may include information systems that collect data, including sensitive medical information, regarding patients and patient therapy on behalf of Embecta’s customers and some connect to Embecta’s systems for maintenance and management purposes.
Any failure by Embecta to maintain or protect its information technology systems and data integrity, including from cyberattacks, intrusions, disruptions, or shutdowns, could result in the unauthorized access to customer data and personally identifiable information, theft of intellectual property or other misappropriation of assets or the loss of key data and information, or otherwise compromise Embecta’s confidential or proprietary information and disrupt its operations.
Any failure by Embecta to maintain or protect its Information Systems and data integrity, including from cyberattacks, intrusions, disruptions, or shutdowns, could result in the unauthorized access to customer, vendor, or patient data, including personally identifiable information or personal health information, theft of intellectual property or other misappropriation of assets or the loss of key data and information, or otherwise compromise Embecta’s confidential or proprietary information and disrupt its operations.
Even if Embecta submits an application to the FDA for clearance, there is no assurance that such clearance will be obtained or that Embecta will be able to market and sell such products successfully. New product development requires significant investment in research and development.
Even if Embecta submits an application to the FDA or foreign regulatory authorities for approval and/or clearance, there is no assurance that such approval or clearance will be obtained or that Embecta will be able to market and sell such products successfully. New product development requires significant investment in research and development.
It is not possible to predict the short- and long-term implications of this conflict, which could include but are not limited to further sanctions, uncertainty about economic and political stability, increases in inflation rate and energy prices, supply chain challenges, adverse effects on currency exchange rates and financial markets and disruption to its supplier, channels to market or customers.
Although the impact of the conflict on our supply chain has not been significant, it is not possible to predict the short- and long-term implications of this conflict, which could include but are not limited to further sanctions, uncertainty about economic and political stability, increases in inflation rate and energy prices, supply chain challenges, adverse effects on currency exchange rates and financial markets and disruption to its supplier, channels to market or customers.
Embecta currently has approximately $1,601 million in aggregate principal amount of indebtedness outstanding as of September 30, 2024 (not including undrawn commitments of $500 million under its revolving credit facility). Embecta may also incur additional indebtedness in the future.
Embecta currently has approximately $1,417 million in aggregate principal amount of indebtedness outstanding as of September 30, 2025 (not including undrawn commitments of $500 million under its revolving credit facility). Embecta may also incur additional indebtedness in the future.
In the event that any of its existing supply arrangements are terminated or there is a reduction or interruption of supply under these existing arrangements, Embecta expects that it will be able to enter into new arrangements with alternative suppliers, but these new arrangements may be on terms that are less favorable, including with respect to price and volume, and it may be costly or cause delays in Embecta’s manufacturing process to transition to a new supplier, particularly in cases in which Embecta must comply with regulatory requirements relating to qualification of new suppliers.
In the event that any of its existing supply arrangements are terminated or there is a reduction or interruption of supply under these existing arrangements, Embecta expects that it will be able to enter into new arrangements with current or alternative suppliers, but these new arrangements may be on terms that are less favorable, including with respect to price and volume, and it may be costly or cause delays in Embecta’s manufacturing process to transition to a new supplier or new raw material or component, particularly in cases in which Embecta must comply with regulatory requirements relating to qualification of new suppliers or replacement raw materials or components from current suppliers.
Embecta’s ability to generate profits and operating cash flow depends largely upon the continued profitability of its key products, such as its pen needles and syringes. For example, for the fiscal year ended September 30, 2024, sales of pen needles accounted for approximately $844 million, or 75%, of total net revenues.
Embecta’s ability to generate profits and operating cash flow depends largely upon the continued profitability of its key products, such as its pen needles and syringes. For example, for the fiscal year ended September 30, 2025, sales of pen needles accounted for approximately $784 million, or 73%, of total net revenues.
Embecta is also subject to numerous post-marketing regulatory requirements, which include quality system regulations related to the manufacture of its devices, labeling regulations, and medical device reporting regulations.
Embecta is also subject to numerous post-marketing regulatory requirements, which include, but are not limited to, quality system regulations related to the manufacture of its devices, labeling regulations, and medical device reporting regulations.
Embecta uses its and certain third party, including BD's, information technology systems to manage or support a variety of business processes and activities, including sales, shipping, billing, customer service, procurement, supply chain, manufacturing, and accounts payable.
Embecta uses its and certain third party information technology systems to manage or support a variety of business processes and activities, including, but not limited to, sales, shipping, distribution, billing, customer service, procurement, supply chain, manufacturing, and accounts payable.
For the fiscal year ended September 30, 2024, McKesson Corporation, Cardinal Health and Cencora, Embecta’s three largest distributors, together represented approximately 41% of Embecta’s worldwide gross sales.
For the fiscal year ended September 30, 2025, McKesson Corporation, Cardinal Health and Cencora, Embecta’s three largest distributors, together represented approximately 42% of Embecta’s worldwide gross sales.
While we attempt to identify and mitigate ethical and legal issues presented by its use, we may be unsuccessful in identifying or resolving issues before they arise.
While we attempt to identify and mitigate ethical and legal issues presented by the use of AI, we may be unsuccessful in identifying or resolving issues before they arise.
If the United States Federal Reserve decides to raise the benchmark interest rate, then Embecta could experience higher interest expense on its variable rate debt in fiscal year 2025. To the extent Embecta borrows under its revolving credit facility, it will also be subject to risks related to changes in interest rates.
Although interest rates have recently been declining, if the United States Federal Reserve decides to raise the benchmark interest rate, then Embecta could experience higher interest expense on its variable rate debt in fiscal year 2026. To the extent Embecta borrows under its revolving credit facility, it will also be subject to risks related to changes in interest rates.
Extreme weather, natural disasters or other conditions caused by climate change could adversely impact its supply chain and the availability and cost of raw materials and components, energy supply, transportation or other inputs required for the operation of its business.
Extreme or severe weather, natural disasters, flooding, heat events, or other conditions caused by climate change could adversely impact its supply chain, logistics, and operations, and the availability and cost of raw materials and components, energy supply, transportation or other inputs required for the operation of its business.
Risks Related to Embecta’s Common Stock • The price and trading volume of Embecta’s common stock may be volatile, and stockholders could lose all or part of their investment in Embecta. • The material weakness in our internal control over financial reporting that has been identified and our ability to remediate such material weakness. • Embecta cannot guarantee the timing, amount or payment of any dividends on its common stock. • Anti-takeover provisions could enable Embecta’s Board of Directors to resist a takeover attempt by a third-party and limit the power of its stockholders. • Embecta’s amended and restated certificate of incorporation designates the state courts within the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by Embecta stockholders, which could discourage lawsuits against Embecta and its directors and officers.
Risks Related to Embecta’s Common Stock • The price and trading volume of Embecta’s common stock may be volatile, and stockholders could lose all or part of their investment in Embecta. • Embecta cannot guarantee the timing, amount or payment of any dividends on its common stock. • Anti-takeover provisions could enable Embecta’s Board of Directors to resist a takeover attempt by a third-party and limit the power of its stockholders. • Embecta’s amended and restated certificate of incorporation designates the state courts within the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by Embecta stockholders, which could discourage lawsuits against Embecta and its directors and officers.
To the extent Embecta or third parties (including BD) are unable to sterilize Embecta’s products, whether due to lack of capacity, increased demand, regulatory requirements or changes or otherwise, Embecta may be unable to transition sterilization to other sites or modalities in a timely or cost effective manner, or at all, which could have an adverse impact on Embecta’s business. 9 A substantial portion of Embecta’s revenue is derived from sales to a few customers.
To the extent Embecta or third parties (including BD) are unable to sterilize Embecta’s products, whether due to lack of capacity, increased demand, regulatory requirements or changes, or otherwise, Embecta may be unable to transition sterilization to other sites or modalities in a timely or cost effective manner, or at all, which could have an adverse impact on Embecta’s business.
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. In December 2022, European Union member states agreed to adopt the OECD’s minimum tax rules, which are expected to begin going into effect in tax years beginning on January 1, 2024 or later.
For example, the Organization for Economic Cooperation and Development ("OECD") has developed major reform of the international tax system with respect to a global minimum 15% tax rate. 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.
The last of these regulations requires Embecta to report to the FDA if its devices cause or contribute to a death or serious injury, or malfunction in a way that would likely cause or contribute to a death or serious injury if the malfunction recurred.
The last of these regulations requires Embecta to report to the FDA or other similar regulatory agencies if its products cause or contribute to a death or serious injury, or malfunction in a way that would likely cause or contribute to a death or serious injury if the malfunction recurred.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Our Chief Information Officer ("CIO") and Vice President of IT Infrastructure and Security ("VP IT") are responsible for updating the Audit Committee and Board of Directors on Embecta’s cyber risk. The CIO and VP IT have oversight of cybersecurity strategy, policy, standards, architecture, and processes that protect Embecta’s enterprise network, Information Systems and information assets, and product technologies.
Our Chief Information Officer ("CIO") and Vice President, CISO & IT Infrastructure and Security ("VP IT") are responsible for updating the Audit Committee and Board of Directors on Embecta’s cyber risk. The CIO and VP IT have oversight of cybersecurity strategy, policy, standards, architecture, and processes that protect Embecta’s enterprise network, Information Systems and information assets, and product technologies.
Governance 30 Cybersecurity risk management is integrated into our broader Enterprise Risk Management (“ERM”) framework to promote a Company-wide culture of awareness and proactive risk management. Our ERM framework is overseen by the Audit Committee and Board of Directors.
Governance Cybersecurity risk management is integrated into our broader Enterprise Risk Management (“ERM”) framework to promote a Company-wide culture of awareness and proactive risk management. Our ERM framework is overseen by the Audit Committee and Board of Directors.
Such attacks could result in the loss of confidentiality, integrity, and/or availability of our data and Information Systems. Security risks to both the Company and its customers data and information are continuously evaluated and monitored. We actively monitor security 24 hours a day and seven days a week through our global Security Operations Center.
Such attacks could result in the loss of confidentiality, integrity, and/or availability of our data and Information Systems. 30 Security risks to both the Company and its customers’ data and information are continuously evaluated and monitored. We actively monitor security 24 hours a day and seven days a week through our global Security Operations Center.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy We rely on industry-standard software applications, IT systems, computing infrastructure, and cloud service providers (collectively referred to as "Information Systems") to perform essential operations. Many of these systems are managed, hosted, provided, or utilized by third parties, including BD, to support our business activities.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy We rely on industry-standard software applications, IT systems, computing infrastructure, enterprise resource planning systems, and cloud service providers (collectively referred to as "Information Systems") to perform essential operations. Many of these systems are managed, hosted, provided, or utilized by third parties, to support our business activities.
We have implemented administrative, physical, and technical safeguards and processes to assess, identify, and manage material risks from known cybersecurity threats to our Information Systems and operations.
We have implemented administrative, physical, and technical safeguards and processes to assess, identify, and manage material risks from known cybersecurity, information, or data security risks and threats to our Information Systems and operations.
This team is responsible for the response to security threats by implementing our detailed incident response plan. Our incident response plan includes processes, procedures, and playbooks for assessing potential internal and external threats, developing remediation plans, and facilitating post-incident recovery; all designed to safeguard the confidentiality, integrity and availability of both Company and customer data.
Our incident response plan includes processes, procedures, and playbooks for assessing potential internal and external threats, developing remediation plans, and facilitating post-incident recovery; all designed to safeguard the confidentiality, integrity and availability of both Company and customer data.
Embecta utilizes the ISO 27001 framework, which incorporates the National Institute of Standards and Technology and Center for Internet Security frameworks, and various risk management frameworks to proactively evaluate its cybersecurity controls, risks, and overall program effectiveness. As part of our risk management process, we engage external providers to conduct periodic internal and external penetration testing and security assessments.
Embecta utilizes the ISO 27001 and 42001 frameworks, which incorporates the National Institute of Standards and Technology and Center for Internet Security frameworks, and various risk management frameworks to proactively evaluate its cybersecurity controls, risks, and overall program effectiveness against emerging risks including AI.
Additionally, we and our third-party providers have experienced and expect to continue experiencing phishing attempts, network scanning attempts, and other unauthorized access attempts to our computers, Information Systems, networks, and devices. These increasingly sophisticated attacks are carried out by groups and individuals with various motives and expertise, including state and quasi-state actors, criminal groups, hackers, and others.
Additionally, we and our third-party providers have experienced and expect to continue experiencing phishing attempts, network scanning attempts, and other unauthorized access attempts to our computers, Information Systems, networks, and devices.
Our VP IT reports to our CIO, who has over twenty years of experience in information technology and process leadership, including leading teams with global cybersecurity responsibilities. Our CIO reports to the Chief Financial Officer.
Our VP IT reports to our CIO, who brings over 30 years of diverse strategic and operational experience in IT management, process leadership, digital, and technology modernization. Our CIO reports to the Chief Financial Officer.
Enterprise cybersecurity policies undergo an annual review and approval by our Information Security Risk Committee (“ISRC”). Embecta has established a Cyber Security Incident Response Team, a cross-functional team composed of representatives from our Information Technology, Information Security, Product Security, Privacy, Legal, and Human Resources groups.
Embecta has established a Cyber Security Incident Response Team, a cross-functional team composed of representatives from our Information Technology, Information Security, Research and Development, Privacy, Legal, and Human Resources groups. This team is responsible for the response to security threats by implementing our detailed incident response plan.
Additionally, under our third-party risk management program, we assess vendor cybersecurity risks, including those associated with our cloud vendors and other third-parties. We maintain security and privacy policies and procedures that align with industry-standard control frameworks and comply with applicable regulatory requirements, laws, and standards.
We maintain security and privacy policies and procedures that align with industry-standard control frameworks and comply with applicable regulatory requirements, laws, and standards. Enterprise cybersecurity policies undergo an annual review and approval by our Information Security Risk Committee (“ISRC”).
Added
These increasingly sophisticated attacks are carried out by groups and individuals with various motives and expertise, including, but not limited to, state and quasi-state actors, criminal groups, hackers, and others.
Added
As part of our risk management process, we engage external providers to conduct periodic internal and external penetration testing and security assessments. Additionally, under our third-party risk management program, we assess vendor cybersecurity risks, including those associated with our cloud vendors and other third-parties.

Item 2. Properties

Properties — owned and leased real estate

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Item 2. Properties. Embecta's corporate headquarters is located in Parsippany, New Jersey, USA. The Company also maintains secondary regional headquarters at leased office facilities in Eysins, Switzerland, Shanghai, China and Singapore. The Company has a global research and development center in a leased office/lab facility located in Andover, Massachusetts, USA.
Item 2. Properties. Embecta's corporate headquarters is located in Parsippany, New Jersey, USA. The Company also maintains secondary regional headquarters at leased office facilities in Eysins, Switzerland, Shanghai, China and Singapore. Embecta has three manufacturing facilities located in Ireland, the United States, and China which occupy an aggregate of approximately 800,000 square feet of space.
Removed
Embecta has three manufacturing facilities located in Ireland, the United States, and China which occupy an aggregate of approximately 800,000 square feet of space.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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We accrue a liability for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts accrued for those claims. As of September 30, 2024, we were not a party to or subject to any material proceedings.
We accrue a liability for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of 31 resolving legal claims may be substantially higher or lower than the amounts accrued for those claims. As of September 30, 2025, we were not a party to or subject to any material proceedings.
Item 4. Mine Safety Disclosures. Not applicable. 31 PART II.
Item 4. Mine Safety Disclosures. Not applicable. 32 PART II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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The graph assumes an investment of $100 on April 1, 2022 through the last trading day of the year ended September 30, 2024. The calculation of cumulative stockholder return includes reinvestment of dividends in the common stock and in each index. The performance shown is not necessarily indicative of future performance.
The graph assumes an investment of $100 on April 1, 2022 through the last trading day of the year ended September 30, 2025. The calculation of cumulative stockholder return includes reinvestment of dividends in the common stock and in each index. The performance shown is not necessarily indicative of future performance.
This number does not include beneficial owners who hold Embecta's common stock in nominee or "street name" accounts through brokers or banks. During the fiscal year ended September 30, 2024, Embecta did not repurchase any of its outstanding common stock. Dividends 1.
This number does not include beneficial owners who hold Embecta's common stock in nominee or "street name" accounts through brokers or banks. During the fiscal year ended September 30, 2025, Embecta did not repurchase any of its outstanding common stock. Dividends 1.
Unregistered Sales Of Equity Securities And Use Of Proceeds We did not sell any unregistered equity securities during the three months ended September 30, 2024. Item 6. [ Reserved ]
Unregistered Sales Of Equity Securities And Use Of Proceeds We did not sell any unregistered equity securities during the three months ended September 30, 2025. Item 6. [ Reserved ]
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Embecta’s common stock is listed on the Nasdaq Global Select Market ("Nasdaq") under the symbol "EMBC". As of October 31, 2024, there were approximately 6,500 stockholders of record.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Embecta’s common stock is listed on the Nasdaq Global Select Market ("Nasdaq") under the symbol "EMBC". As of October 31, 2025, there were approximately 6,000 stockholders of record.
On May 9, 2024, Embecta's Board of Directors declared a quarterly dividend of $0.15 for each issued and outstanding share of Embecta's common stock. The dividend was paid on June 14, 2024 to stockholders of record at the close of business on May 28, 2024. 4.
On May 9, 2025, Embecta's Board of Directors declared a quarterly dividend of $0.15 for each issued and outstanding share of Embecta's common stock. The dividend was paid on June 13, 2025 to stockholders of record at the close of business on May 28, 2025. 4.
The dividend is payable on December 18, 2024 to stockholders of record at the close of business on December 6, 2024. 32 Performance Graph The following graph compares the cumulative total stockholder returns for the period from the Separation Date of April 1, 2022 to September 30, 2024 for (i) Embecta's common stock; (ii) the Nasdaq Composite Index; and (iii) the S&P Smallcap 600 Health Care Index.
The dividend is payable on December 18, 2025 to stockholders of record at the close of business on December 5, 2025. 33 Performance Graph The following graph compares the cumulative total stockholder returns for the period from the Separation Date of April 1, 2022 to September 30, 2025 for (i) Embecta's common stock; (ii) the Nasdaq Composite Index; and (iii) the S&P Smallcap 600 Health Care Index.
On February 9, 2024, Embecta's Board of Directors declared a quarterly dividend of $0.15 for each issued and outstanding share of Embecta's common stock. The dividend was paid on March 15, 2024 to stockholders of record at the close of business on February 28, 2024. 3.
On February 6, 2025, Embecta's Board of Directors declared a quarterly dividend of $0.15 for each issued and outstanding share of Embecta's common stock. The dividend was paid on March 14, 2025 to stockholders of record at the close of business on February 28, 2025. 3.
On November 26, 2024, Embecta's Board of Directors declared a quarterly dividend of $0.15 for each issued and outstanding share of Embecta's common stock.
On November 25, 2025, Embecta's Board of Directors declared a quarterly dividend of $0.15 for each issued and outstanding share of Embecta's common stock.
On November 21, 2023, Embecta's Board of Directors declared a quarterly dividend of $0.15 for each issued and outstanding share of Embecta's common stock. The dividend was paid on December 15, 2023 to stockholders of record at the close of business on December 4, 2023. 2.
On November 26, 2024, Embecta's Board of Directors declared a quarterly dividend of $0.15 for each issued and outstanding share of Embecta's common stock. The dividend was paid on December 18, 2024 to stockholders of record at the close of business on December 6, 2024. 2.
On August 9, 2024, Embecta's Board of Directors declared a quarterly dividend of $0.15 for each issued and outstanding share of Embecta's common stock. The dividend was paid on September 13, 2024 to stockholders of record at the close of business on August 27, 2024. 5.
On August 8, 2025, Embecta's Board of Directors declared a quarterly dividend of $0.15 for each issued and outstanding share of Embecta's common stock. The dividend was paid on September 15, 2025 to stockholders of record at the close of business on August 29, 2025. 5.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Many countries are facing an aging population and a rapidly growing number of people living with diabetes. While healthcare investments in certain regions continue to grow, there is an increased burden on 34 physicians and longer wait times for patients.
Many countries are facing an aging population and a rapidly growing number of people living with diabetes. While healthcare investments in certain regions continue to grow, there is an increased burden on physicians and longer wait times for patients.
In addition, our revenues and results of operations have been affected by various fluctuations in macroeconomic conditions and regulatory and policy changes, both on a global level and in particular markets, which include inflation and slowing economic growth and contractions, a rising interest rate environment, supply chain interruptions, tariff policy changes, volatility in capital markets and the availability of credit, tax rates and the rate of exchange between the United States dollar and foreign currencies.
In addition, our revenues and results of operations have been affected by various fluctuations in macroeconomic conditions and regulatory and policy changes, both on a global level and in particular markets, which include inflation and slowing economic growth and contractions, a changing interest rate environment, supply chain interruptions, tariff policy changes, volatility in capital markets and the availability of credit, tax rates and the rate of exchange between the United States dollar and foreign currencies.
A commitment fee applies to the unused portion of the Revolving Credit Facility, equal to 0.25% per annum. As of September 30, 2024, no amount has been drawn on the Revolving Credit Facility. Additionally, Embecta has outstanding $200.0 million of senior secured notes (the "6.75% Notes"), which carry an interest rate of 6.75% and are due February 2030.
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. Additionally, Embecta has outstanding $200.0 million of senior secured notes (the "6.75% Notes"), which carry an interest rate of 6.75% and are due February 2030.
Our business traces its origins to 1924, when BD developed the first dedicated insulin syringe. Since then, we have built a world-class organization with a unique manufacturing, supply chain and commercial footprint. 33 We have a broad portfolio of marketed products, including a variety of pen needles, syringes and safety injection devices.
Our business traces its origins to 1924, when BD developed the first dedicated insulin syringe. Since then, we have built a world-class organization with a unique manufacturing, supply chain and commercial footprint. 34 We have a broad portfolio of marketed products, including a variety of pen needles, syringes and safety injection devices.
Additional disclosures regarding our accounting for income taxes are provided in Note 15 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K. Cautionary Statements Regarding Forward-Looking Statements This Annual Report on Form 10-K contains statements that constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995 and other securities laws.
Additional disclosures regarding our accounting for income taxes are provided in Note 14 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K. Cautionary Statements Regarding Forward-Looking Statements This Annual Report on Form 10-K contains statements that constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995 and other securities laws.
Critical Accounting Policies The following discussion supplements the descriptions of our accounting policies contained in Note 3 to the Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K. Financial Statements and Supplementary Data.
Critical Accounting Policies The following discussion supplements the descriptions of our accounting policies contained in Note 2 to the Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K. Financial Statements and Supplementary Data.
The nature and extent of the impact of these factors among others varies by region and remains uncertain and unpredictable and may affect our business. 35 Results of Operations For a discussion of Results of Operations of fiscal year 2023 compared to fiscal year 2022 see our Annual Report on Form 10-K for the year ended September 30, 2023.
The nature and extent of the impact of these factors among others varies by region and remains uncertain and unpredictable and may affect our business. 36 Results of Operations For a discussion of Results of Operations of fiscal year 2024 compared to fiscal year 2023 see our Annual Report on Form 10-K for the year ended September 30, 2024.
All other movements related to working capital were due to timing of payments and receipts of cash in the ordinary course of business. Net cash used for investing activities was comprised of capital expenditures of $15.8 million for the fiscal year to support our business and operations.
All other movements related to working capital were due to timing of payments and receipts of cash in the ordinary course of business. Net cash used for investing activities was comprised of capital expenditures of $9.3 million for the fiscal year to support our business and operations.
Introduction of new drugs and increased penetration of oral and once-weekly anti-diabetic drugs (e.g., SGLT-2s), GLP-1s and GLP-1 combination products have delayed initiation of insulin therapy and contributed to less demand for our products.
Changes in Clinical Practice. Introduction of new drugs and increased penetration of oral and once-weekly anti-diabetic drugs (e.g., SGLT-2s, once-weekly insulin, GLP-1s and GLP-1 combination products) have delayed initiation of insulin therapy and contributed to less demand for our products.
The following is a summary of Embecta's total debt outstanding as of September 30, 2024: Term Loan $ 901.3 5.00% Notes 500.0 6.75% Notes 200.0 Total principal debt issued $ 1,601.3 Less: current debt obligations (9.5) Less: debt issuance costs and discounts (26.5) Long-term debt $ 1,565.3 The schedule of principal payments required on long-term debt for the next five years and thereafter is as follows: 2025 $ 9.5 2026 9.5 2027 9.5 2028 9.5 2029 863.3 Thereafter 700.0 Certain measures relating to our total debt outstanding as of September 30, 2024 were as follows: Total debt $ 1,574.8 Short-term debt as a percentage of total debt 0.6 % Weighted average cost of total debt 6.8 % 39 The credit agreement and the indentures for the 5.00% Notes and 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 indentures governing the 5.00% Notes and the 6.75% Notes.
The following is a summary of Embecta's total debt outstanding as of September 30, 2025: Term Loan $ 716.8 5.00% Notes 500.0 6.75% Notes 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 39 The schedule of principal payments required on long-term debt for the next five 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 credit agreement and the indentures for the 5.00% Notes and 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 indentures governing the 5.00% Notes and the 6.75% Notes.
Such risks and uncertainties include, but are not limited to: • Competitive factors that could adversely affect Embecta’s operations, including adoption of new drug therapies for treatment of diabetes, new product introductions by Embecta’s competitors, the development of new technologies, lower cost producers that create pricing pressure and consolidation resulting in companies with greater scale and market presence than Embecta. • The risk that Embecta is unable to replace the services, including the Business Continuity Processes, that BD currently provides to it on substantially similar terms as the terms on which BD is providing these services under the transaction agreements or that BD terminates such services. • Any failure by BD to perform its obligations under the various separation agreements entered into in connection with the Separation and distribution, including the cannula supply agreement. • Any events that adversely affect the sale or profitability of one of Embecta’s key products or the revenue delivered from sales to its key customers. • Increases in operating costs, including fluctuations in the cost and availability of oil-based resins, other raw materials, and energy as well as certain components, used in its products, the ability to maintain favorable supplier arrangements and relationships, and the potential adverse effects of any disruption in the availability of such items. • Embecta’s ability to obtain clearance from the FDA of any product, to market and sell such products successfully, to anticipate the needs of people with diabetes, and future business decisions by Embecta and its competitors. • Changes in reimbursement practices of governments or private payers or other cost containment measures. • The adverse financial impact resulting from unfavorable changes in foreign currency exchange rates, as well as regional, national and foreign economic factors, including inflation, deflation, and fluctuations in interest rates, and their potential effect on its operating performance. • The impact of changes in United States, federal laws, and policy that could affect fiscal and tax policies, healthcare and international trade, including import and export regulation, tariffs, and international trade agreements.
Such risks and uncertainties include, but are not limited to: • Competitive factors that could adversely affect Embecta’s operations, including adoption of new drug therapies for treatment of diabetes, new product introductions by Embecta’s competitors, the development of new technologies, lower cost producers that create pricing pressure and consolidation resulting in companies with greater scale and market presence than Embecta. • The risk that Embecta is unable to replace the services, including the Business Continuity Processes, that BD currently provides to it on substantially similar terms as the terms on which BD is providing these services under the transaction agreements or that BD terminates such services. • Any failure by BD to perform its obligations under the various separation agreements entered into in connection with the Separation and distribution, including the cannula supply agreement. • Any events that adversely affect the sale or profitability of one of Embecta’s key products or the revenue delivered from sales to its key customers. • Increases in operating costs, including costs incurred from the new tariffs instituted by the U.S. government and certain foreign governments on raw materials and products, fluctuations in the cost and availability of oil-based resins, other raw materials, and energy as well as certain components, used in its products, the ability to maintain favorable supplier arrangements and relationships, and the potential adverse effects of any disruption in the availability of such items. • The risk that as a result of the current global trade environment from the newly instituted tariffs, certain foreign governments, private purchasers and other customers in certain countries may consider transitioning away from products originating from certain countries (including the U.S.) in favor of buying “local” products and local manufacturers and competitors may attempt to capitalize on these sentiments and participate in aggressive competitive pricing or other strategies to transition, or divert, current and potential customers away Embecta. 43 • Embecta’s ability to obtain clearance from the FDA or foreign regulatory authorities of any product, to market and sell such products successfully, to anticipate the needs of people with diabetes, and future business decisions by Embecta and its competitors. • Changes in reimbursement practices of governments or private payers or other cost containment measures. • The adverse financial impact resulting from unfavorable changes in foreign currency exchange rates, as well as regional, national and foreign economic factors, including inflation, deflation, and fluctuations in interest rates, and their potential effect on its operating performance. • The impact of changes in United States, federal laws, and policy that could affect fiscal and tax policies, healthcare and international trade, including import and export regulation, tariffs, and international trade agreements.
Net cash used for financing activities was primarily attributable to: 41 Dividend payments (34.5) Payments on long-term debt (34.6) Payments related to tax withholding for stock-based compensation (3.0) Payments on finance lease (1.3) Net cash used for financing activities $ (73.4) Contractual Obligations Our contractual obligations as of September 30, 2024, which require material cash requirements in the future, consist of purchase obligations and lease obligations.
Net cash used for financing activities was primarily attributable to: Dividend payments (35.0) Payments on long-term debt (184.6) Payments related to tax withholding for stock-based compensation (5.7) Payments on finance lease (1.4) Net cash used for financing activities $ (226.7) Contractual Obligations Our contractual obligations as of September 30, 2025, which require material cash requirements in the future, consist of purchase obligations and lease obligations.
All statements that reflect Embecta’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, forecasts relating to discussions of future operations and financial performance (including volume growth, pricing, sales and earnings per share growth and cash flows), restructuring expenses and charges, and statements regarding Embecta’s strategy for growth, future product development, anticipated product and regulatory clearances, approvals, and launches, competitive position and expenditures.
All statements that reflect Embecta’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, forecasts relating to discussions of future operations and financial performance (including volume growth, pricing, sales and earnings per share growth and cash flows), restructuring expenses and charges, and statements regarding Embecta’s strategy for growth and paying down debt, the Patch Pump Restructuring Plan, the 2025 Restructuring Plan, expectations related to the impact of incremental tariffs, brand transition, future product development, anticipated product and regulatory clearances, approvals, and launches, competitive position and expenditures.
As of September 30, 2024, total payments due for purchase obligations and lease obligations aggregate to approximately $211 million and $74 million, respectively. Contractual obligations due within the next twelve months approximate $112 million related to purchase commitments and $10 million related to lease obligations.
As of September 30, 2025, total payments due for purchase obligations and lease obligations aggregate to approximately $143 million and $68 million, respectively. Contractual obligations due within the next twelve months approximate $108 million related to purchase commitments and $10 million related to lease obligations.
Cost of products sold as a percentage of revenues were 34.5% for the year ended September 30, 2024 as compared to 33.1% for the year ended September 30, 2023.
Cost of products sold as a percentage of revenues were 37.4% for the year ended September 30, 2025 as compared to 34.5% for the year ended September 30, 2024.
In particular, tariffs or other trade barriers imposed by the United States or other countries could adversely impact its supply chain costs or otherwise adversely impact its results of operations. 43 • Any future impact of pandemics or geopolitical instability on Embecta’s business, including disruptions in its operations and supply chains. • New or changing laws and regulations affecting Embecta’s domestic and foreign operations, or changes in enforcement practices, including laws relating to healthcare, environmental protection, trade, monetary and fiscal policies, taxation (including tax reforms that could adversely impact multinational corporations) and licensing and regulatory requirements for products. • The expected benefits of the Separation from BD. • Risks associated with indebtedness and our use of indebtedness available to us. • The risk that dis-synergy costs, costs of restructuring transactions and other costs incurred in connection with the Separation will exceed Embecta's estimates. • The impact of the Separation on Embecta's businesses and the risk that the Separation may be more difficult, time-consuming or costly than expected, including the impact on its resources, systems, including ERP, procedures and controls, diversion of management’s attention and the impact on relationships with customers, suppliers, employees and other business counterparties. • The expectations related to the costs, profitability, timing and the estimated financial impact of, and charges associated with, the Restructuring Plan. • The risk that we may not complete strategic collaborative partnerships and acquisition opportunities that enable us to accelerate our growth or strategic collaborative opportunities that give us access to innovative technologies, complementary product lines, and new markets. • The risks associated with the material weakness identified in our internal control over financial reporting and our ability to remediate such material weakness.
In particular, tariffs or other trade barriers imposed by the United States or other countries could adversely impact its supply chain costs or otherwise adversely impact its results of operations. • Any future impact of pandemics or geopolitical instability on Embecta’s business, including disruptions in its operations and supply chains. • New or changing laws and regulations affecting Embecta’s domestic and foreign operations, or changes in enforcement practices, including laws relating to healthcare, environmental protection, trade, monetary and fiscal policies, taxation (including tax reforms that could adversely impact multinational corporations) and licensing and regulatory requirements for products. • The expected benefits of the Separation from BD. • Risks associated with indebtedness and our use of indebtedness available to us. • The risk that dis-synergy costs, costs of restructuring transactions and other costs incurred in connection with the Separation will exceed Embecta's estimates. • The impact of the Separation on Embecta's businesses and the risk that the Separation may be more difficult, time-consuming or costly than expected, including the impact on its resources, systems, including ERP, procedures and controls, diversion of management’s attention and the impact on relationships with customers, suppliers, employees and other business counterparties. • Embecta’s ability to timely and successfully complete the brand transition, including any resulting regulatory delays of transferring or obtaining registrations and licenses in the “Embecta” name, interruptions in, or customer confusion from, the replacement and transfer of the rebranded product into the current commercialization, supply and distribution networks, or other issues arising out of system, supply chain logistics, administrative and adjudicative operations transitions in the end-to-end product flow and end-user access. • The expectations related to the costs, profitability, timing and the estimated financial impact of, and charges associated with, the Patch Pump Restructuring Plan and the 2025 Restructuring Plan. • The risk that we may not complete strategic collaborative partnerships and acquisition opportunities that enable us to accelerate our growth or strategic collaborative opportunities that give us access to innovative technologies, complementary product lines, and new markets.
These include large companies with multiple product lines, some of which may have greater financial and marketing resources than us, as well as smaller more specialized companies. Non-traditional entrants, such as technology companies, are also entering into the diabetes care industry and its adjacent markets, some of which may have greater financial and marketing resources than us. Pricing Pressures.
Non-traditional entrants, such as technology companies, are also entering into the diabetes care industry and its adjacent markets, some of which may have greater financial and marketing resources than us. Pricing Pressures.
We also are monitoring the Israel-Hamas war and Houthi attacks on commercial shipping vessels and other naval vessels. As of December 11, 2024, there is no material impact to our business operations and financial performance as a result of the aforementioned conflicts.
We also are monitoring the conflicts in the Middle East and Houthi attacks on commercial shipping vessels and other naval vessels. As of November 25, 2025, there is no material impact to our business operations and financial performance as a result of the aforementioned conflicts.
Recent Developments We continue to face increases in the cost and disrupted availability of raw materials, components, and other inputs necessary to manufacture and distribute our products due to constraints and inflation within the global supply chain, as well as increases in the cost and time to distribute our products.
However, the number of countries we provide products to and our proactive channel management strategies help us manage this variability. 35 Recent Developments We continue to face increases in the cost and disrupted availability of raw materials, components, and other inputs necessary to manufacture and distribute our products due to constraints and inflation within the global supply chain, as well as increases in the cost and time to distribute our products.
As of September 30, 2024, 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. In September 2024, the Company made a discretionary prepayment of $25.0 million on the Term Loan.
As of September 30, 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.
For the fiscal years ended September 30, 2024 and 2023, our Consolidated Statements of Income are as follows: 2024 2023 Revenues $ 1,123.1 $ 1,120.8 Cost of products sold 387.9 370.9 Gross Profit 735.2 749.9 Operating expenses: Selling and administrative expense 365.1 341.3 Research and development expense 78.8 85.2 Impairment expense — 2.5 Other operating expenses 124.5 99.4 Total Operating Expenses 568.4 528.4 Operating Income 166.8 221.5 Interest expense, net (112.3) (107.0) Other income (expense), net (10.3) (8.8) Income Before Income Taxes 44.2 105.7 Income tax provision (34.1) 35.3 Net Income $ 78.3 $ 70.4 Net Income per common share: Basic $ 1.36 $ 1.23 Diluted $ 1.34 $ 1.22 Year Ended September 30, 2024 Summary (on a comparative basis) Key financial results for the year ended September 30, 2024 were as follows: • Revenue increased by $2.3 million to $1,123.1 million from $1,120.8 million; • Gross profit decreased by $14.7 million to $735.2 million, compared to $749.9 million.
For the fiscal years ended September 30, 2025 and 2024, our Consolidated Statements of Income are as follows: 2025 2024 Revenues $ 1,080.4 $ 1,123.1 Cost of products sold 403.6 387.9 Gross Profit 676.8 735.2 Operating expenses: Selling and administrative expense 332.0 365.1 Research and development expense 37.3 78.8 Other operating expenses 65.4 124.5 Total Operating Expenses 434.7 568.4 Operating Income 242.1 166.8 Interest expense, net (107.3) (112.3) Other income (expense), net 1.5 (10.3) Income Before Income Taxes 136.3 44.2 Income tax provision (benefit) 40.9 (34.1) Net Income $ 95.4 $ 78.3 Net Income per common share: Basic $ 1.64 $ 1.36 Diluted $ 1.62 $ 1.34 Year Ended September 30, 2025 Summary (on a comparative basis) Key financial results for the year ended September 30, 2025 were as follows: • Revenue decreased by $42.7 million to $1,080.4 million from $1,123.1 million; • Gross profit decreased by $58.4 million to $676.8 million, compared to $735.2 million.
Gross profit as a percent of revenue was 65.5%, as compared to 66.9% in the prior year comparative period; • Operating income decreased by $54.7 million to $166.8 million from $221.5 million; and • Net income increased by $7.9 million to $78.3 million from $70.4 million.
Gross profit as a percent of revenue was 62.6%, as compared to 65.5% in the prior year comparative period; • Operating income increased by $75.3 million to $242.1 million from $166.8 million; and • Net income increased by $17.1 million to $95.4 million from $78.3 million.
In determining whether a valuation allowance is warranted, we evaluate 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.
Changes in valuation allowances are included in the tax provision in the period of change. In determining whether a valuation allowance is warranted, we evaluate 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.
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.
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. 42 We maintain valuation allowances where it is more likely than not that all or a portion of a deferred tax asset will not be realized.
On November 22, 2024, the Company's Board of Directors approved a plan to discontinue internal and external investment in the research and development of our patch pump program. As a result of this decision, we will undergo an organizational restructuring (the "Restructuring Plan").
On November 22, 2024, the Company's Board of Directors approved a plan to discontinue internal and external investment in the research and development of our patch pump program. As a result, the Company incurred organizational restructuring plan (the "Patch Pump Restructuring Plan") costs of $34.5 million during the year ended September 30, 2025.
Debt extinguishment charges as a result of this prepayment were not material to the Company's Consolidated Statements of Income. For additional information related to the Company's debt related activities, refer to Note 13 within the Notes to Consolidated Financial Statements within this Form 10-K.
For additional information related to the Company's debt related activities, refer to Note 12 within the Notes to Consolidated Financial Statements within this Form 10-K.
Leases Maturities of our finance lease and operating lease liabilities as of September 30, 2024 by fiscal year are as follows: Finance Lease Operating Leases Total 2024 3.7 6.2 9.9 2025 3.7 3.4 7.1 2026 3.8 1.8 5.6 2027 3.9 1.8 5.7 2028 3.9 1.7 5.6 Thereafter 32.3 7.3 39.6 Total lease payments $ 51.3 $ 22.2 $ 73.5 For additional information related to our leases, refer to Note 18 within the Notes to Consolidated Financial Statements of this Form 10-K.
Leases Maturities of our finance lease and operating lease liabilities as of September 30, 2025 by fiscal year are as follows: Finance Lease 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 For additional information related to our leases, refer to Note 18 within the Notes to Consolidated Financial Statements of this Form 10-K. 40 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.
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 42 merits.
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.
The change in income and other net taxes payable was primarily due to the timing of required tax payments. The change in other assets and liabilities, net is primarily due to costs capitalized during fiscal 2024 associated with the implementation of our ERP system.
The change in income and other net taxes payable is primarily attributed to timing of required tax payments. 41 The change in other assets and liabilities, net is primarily attributed to costs capitalized attributed to cloud computing arrangements.
The primary sources and uses of cash that contributed to the $52.3 million decrease were: September 30, 2023 Cash and equivalents and restricted cash balance $ 326.5 Cash provided by operating activities 35.7 Cash used for investing activities (15.8) Cash used for financing activities (73.4) Effect of exchange rate changes on cash and equivalents and restricted cash 1.2 September 30, 2024 Cash and equivalents and restricted cash balance $ 274.2 40 Net cash provided by operating activities was primarily attributable to: Net income $ 78.3 Non-cash adjustments related to depreciation and amortization, plant and equipment, stock-based compensation, and deferred income taxes 5.1 Change in in accounts payable and accrued expenses 60.0 Change in trade receivables (174.7) Change in inventories (16.5) Change in amounts due from/due to Becton, Dickinson and Company 58.9 Change in prepaid expenses and other 39.5 Change in income and other net taxes payable 13.2 Change in other assets and liabilities, net (28.1) Net cash provided by operating activities $ 35.7 Update to the unaudited Consolidated Statements of Cash Flows Reported in Earnings Release On November 26, 2024, we furnished a Current Report on Form 8-K that included as an exhibit a press release announcing our financial results for the fourth fiscal quarter and the fiscal year ended September 30, 2024 (the “Earnings Release”).
The primary sources and uses of cash that contributed to the $45.6 million decrease were: September 30, 2024 Cash and equivalents and restricted cash balance $ 274.2 Cash provided by operating activities 191.7 Cash used for investing activities (9.3) Cash used for financing activities (226.7) Effect of exchange rate changes on cash and equivalents and restricted cash (1.3) September 30, 2025 Cash and equivalents and restricted cash balance $ 228.6 Net cash provided by operating activities was primarily attributable to: Net income $ 95.4 Non-cash adjustments related to depreciation and amortization, impairment of property, plant, and equipment, stock-based compensation, and deferred income taxes 120.0 Change in in accounts payable and accrued expenses (68.9) Change in trade receivables 44.2 Change in inventories (6.1) Change in amounts due from/due to Becton, Dickinson and Company 25.3 Change in prepaid expenses and other 8.5 Change in income and other net taxes payable (28.1) Change in other assets and liabilities, net 1.4 Net cash provided by operating activities $ 191.7 The change in accounts payable and accrued expenses is primarily due to timing attributable to payments to vendors.
Cost of products sold Cost of products sold increased by $17.0 million, or 4.6%, to $387.9 million for the year ended September 30, 2024 as compared to $370.9 million for the year ended September 30, 2023.
See Item 1A of this Annual Report on Form 10-K for further details. Cost of products sold Cost of products sold increased by $15.7 million, or 4.0%, to $403.6 million for the year ended September 30, 2025 as compared to $387.9 million for the year ended September 30, 2024.
See "Liquidity and Capital Resources" below and Note 13 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for a further description of our long-term debt. Other income (expense), net Other income (expense), net was $(10.3) million and $(8.8) million for the years ended September 30, 2024 and 2023, respectively.
We are unable to predict future Federal Reserve interest rate decisions and the impact to interest expense on our variable rate debt. See "Liquidity and Capital Resources" below and Note 12 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for a further description of our long-term debt.
This was partially offset by $14.5 million of unfavorable changes in volume, $6.1 million associated with the negative impact of foreign currency translation primarily due to the strengthening of the U.S. dollar, $4.6 million of unfavorable gross-to-net adjustments primarily attributed to the recognition of incremental Italian payback accruals resulting from two July 22, 2024 rulings by the Constitutional Court of Italy, and a $0.2 million decrease in contract manufacturing revenues related to sales of non-diabetes products to BD.
This was partially offset by a $6.9 million increase in contract manufacturing revenues related to sales of non-diabetes products to BD, $4.8 million of favorable changes in gross-to-net adjustments attributed to the recognition of higher incremental Italian payback accruals in fiscal year 2024 as compared to fiscal year 2025, and a $2.0 million increase associated with favorable changes in price.
To date we have been able to successfully mitigate this disruption and provide uninterrupted supply to our customers by increasing our inventory levels and taking other measures. In December 2023, we submitted our first 510(k) premarket filing to the FDA for our proprietary disposable insulin delivery system. In September, 2024, we announced that we received 510(k) clearance from the FDA.
To date we have been able to successfully mitigate this disruption and provide uninterrupted supply to our customers by increasing our inventory levels and taking other measures.
Research and development expenses Our research and development expenses decreased by $6.4 million, or 7.5%, to $78.8 million for the year ended September 30, 2024 as compared to $85.2 million for the year ended September 30, 2023. The decrease was primarily driven by timing of expenses incurred in connection with our insulin patch pump platform.
Research and development expenses Our research and development expenses decreased by $41.5 million, or 52.7%, to $37.3 million for the year ended September 30, 2025 as compared to $78.8 million for the year ended September 30, 2024.
Existing and new local and regional low-cost providers, in combination with a shift from insulin vials to insulin pens, have made the pen needle category highly competitive. This has forced providers to provide clinical evidence to differentiate their products. Changes in Clinical Practice.
Existing and new local and regional low-cost providers, in combination with a shift from insulin vials to insulin pens, have made the pen needle category highly competitive. Global Trade. The current global economic environment has been recently influenced by rapidly changing new tariff policies instituted by the United States government and foreign governments.
Key Trends Affecting Our Results of Operations Competition. The regions in which we conduct our business and the medical devices industry in general are highly competitive. We face significant competition from a wide range of companies in a highly regulated industry.
We primarily sell our products to wholesalers and distributors that sell to retail and institutional channels who in turn sell to patients or use the products to deliver insulin injections to patients. Key Trends Affecting Our Results of Operations Competition. The regions in which we conduct our business and the medical devices industry in general are highly competitive.
Cash and equivalents and restricted cash were $274.2 million as of September 30, 2024 as compared to $326.5 million as of September 30, 2023.
Our Moody's Investors Services credit rating is B1 and our Standard & Poor's Rating Services credit rating is B+. Cash and equivalents and restricted cash were $228.6 million as of September 30, 2025 as compared to $274.2 million as of September 30, 2024.
Revenues Our revenues increased by $2.3 million, or 0.2%, to $1,123.1 million for the year ended September 30, 2024 as compared to revenues of $1,120.8 million for the year ended September 30, 2023. The increase in revenues was primarily driven by $27.7 million associated with favorable changes in price.
Revenues Our revenues decreased by $42.7 million, or 3.8%, to $1,080.4 million for the year ended September 30, 2025 as compared to revenues of $1,123.1 million for the year ended September 30, 2024. Changes in our revenues are driven by the volume of goods that we sell, the prices we negotiate with customers, and changes in foreign exchange rates.
The change in Other income (expense), net year over year is driven by higher losses due to unfavorable impacts from foreign exchange in the year ended September 30, 2024 offset by lower amounts paid to BD for income taxes incurred in deferred jurisdictions where BD is considered the primary obligor in the current period compared with the year ended September 30, 2023.
The costs incurred for fiscal year 2024 were primarily attributed to amounts due to BD for income taxes payable incurred in deferred jurisdictions where BD is considered the primary obligor and the unfavorable impacts from foreign exchange. 38 Income tax provision (benefit) Income tax provision (benefit) increased to $40.9 million for the year ended September 30, 2025 from $(34.1) million for the year ended September 30, 2024.
The costs incurred primarily relate to accounting, auditing, legal services, marketing, supply chain, employee retention, costs associated with the implementation of our new ERP system and other Business Continuity Processes, and certain other costs to establish certain stand-alone functions to assist with the transition to being a stand-alone entity.
Other operating expenses Other operating expenses are as follows: Twelve months ended September 30, 2025 2024 Costs related to the Separation $ 31.3 $ 110.8 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 Other 0.7 — Total $ 65.4 $ 124.5 Other operating expenses incurred primarily consist of the following: • Accounting, auditing, legal services, marketing, supply chain, employee retention, costs associated with the implementation of our new ERP system and other Interim Business Continuity Processes, costs associated with brand transition, and certain other costs to establish certain stand-alone functions to assist with the transition to being a stand-alone entity; • Restructuring related costs associated with the optimization of certain business functions as we transition to being a stand-alone entity; • Severance and contract termination costs associated with the discontinued patch pump program; and • Costs recognized associated with the amortization of cloud computing arrangements.
The increase year over year was primarily driven by an increase in compensation and benefit costs due to increased headcount on average in the current period in addition to increased outbound freight and warehousing costs. This was partially offset by lower TSA and LSA costs incurred from BD in the current year period.
The decrease year over year was primarily driven by lower TSA and LSA costs with BD in addition to lower compensation expense recognized in fiscal year 2025.
Access to Capital and Credit Ratings In May 2024 and June 2024, Moody’s Investor Services and Standard & Poor’s Ratings Services published updates to our credit ratings. Our Moody's Investors Services credit rating is B1 and our Standard & Poor's Rating Services credit rating is B+.
The cash received on the sale of trade receivables during fiscal year 2025 is presented in changes in trade receivables, net within operating activities in the Consolidated Statement of Cash Flows. Access to Capital and Credit Ratings In May 2025 and June 2025, Moody’s Investor Services and Standard & Poor’s Ratings Services published updates and reaffirmed our preexisting credit ratings.
In addition, we intend to discontinue our commercial operation plans for the insulin delivery system, including the previous intended limited launch. We estimate that we will incur approximately $25 million - $30 million in pre-tax cash-based charges primarily associated with employee severance payments and benefits related to the workforce reduction.
Restructuring actions associated with the Patch Pump Restructuring Plan to discontinue the patch pump program are substantially complete as of September 30, 2025. In addition, we discontinued our commercial operation plans for the insulin delivery system, including the previous intended limited launch.
Removed
We primarily sell our products to wholesalers and distributors that sell to retail and institutional channels who in turn sell to patients or use the products to deliver insulin injections to patients. Separation from BD Pursuant to the Separation and Distribution Agreement, the Separation from BD was completed on April 1, 2022.
Added
We face significant competition from a wide range of companies in a highly regulated industry. These include large companies with multiple product lines, some of which may have greater financial and marketing resources than us, as well as smaller more specialized companies.
Removed
On March 22, 2022, the record date for the distribution, 57,012,925 issued and outstanding shares of Embecta common stock were distributed pro-rata to BD stockholders as of the close of business, determined by applying a ratio of one share of Embecta common stock for every five shares of BD common stock.
Added
As a global company that both imports raw materials and products into the U.S. and distributes raw materials and products originating from the U.S. to global manufacturing sites and markets, these new tariffs may have a financial impact on our cost of goods, our profit margins, our business generally and our global distribution strategy.
Removed
"Regular-way" trading of Embecta common stock began on April 1, 2022, under the ticker symbol "EMBC". Periods Prior to Separation Prior to the Separation, the Company was referred to as the Diabetes Care Business.
Added
These new tariffs may cause foreign governments and private purchasers to consider transitioning away from products originating from certain countries (including the U.S.) in favor of buying “local” products resulting in the additional possibility that local manufacturers, brands and other competitors may engage in aggressive competitive pricing to take advantage of the uncertain global trade environment and transition customers away from global manufacturers, all of which may impact the Company’s business and operations.
Removed
For periods prior to April 1, 2022, the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K include certain assets, liabilities, revenues, and expenses that were historically held at the BD corporate level, but are specifically identifiable or otherwise allocable to the Diabetes Care Business.
Added
Given our global business, we expect recently announced tariffs will result in additional cost for us and our suppliers, and there is the potential that such tariffs may influence future decisions by foreign governments and private purchasers to source non-U.S., “locally” manufactured products instead of products originating from certain countries (including the U.S.) and that local manufacturers, brands and other competitors may engage in aggressive competitive pricing or other strategies to take advantage of the uncertain global trade environment and transition customers away from global manufacturers.
Removed
Periods Post Separation For the periods subsequent to April 1, 2022, as a standalone publicly traded company, Embecta presents its financial statements on a consolidated basis. The Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K have been prepared in accordance with accounting principles generally accepted in the United States of America.
Added
Tariffs did not have a material impact on our fiscal year 2025 results. We will continue to monitor the evolving tariff environment and we will focus on optimizing operations and leveraging existing strategies to reduce the impact from tariffs.
Removed
However, the number of countries we provide products to and our proactive channel management strategies help us manage this variability.
Added
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.
Removed
We expect that the majority of the restructuring charges related to the workforce reduction will be incurred in the first quarter of fiscal year 2025 and that the implementation of the workforce reduction, including cash payments, will be substantially complete by the end of the second quarter of fiscal year 2025.
Added
As a result, the Company incurred organizational restructuring plan costs of $3.5 million during the year ended September 30, 2025. The 2025 Restructuring Plan is substantially complete as of September 30, 2025. We continue to monitor the conflict in Ukraine and the associated sanctions and other restrictions.
Removed
We estimate that we will incur approximately $10 million - $15 million of additional pre-tax non-cash charges related to asset impairments and asset write-offs. These preliminary estimates may be revised following the completion of the ongoing analysis of the expected additional pre-tax non-cash charges associated with the implementation of the Restructuring Plan.
Added
The decrease in reported revenues was primarily driven by $52.9 million of unfavorable changes in volume and $3.5 million associated with the negative impact of foreign currency translation primarily due to the strengthening of the U.S. dollar.
Removed
The estimates of the pre-tax cash charges and additional charges that we expect to incur in connection with the Restructuring Plan, and the timing thereof, are subject to a number of assumptions and actual amounts may differ materially from estimates.
Added
The increase in cost of products sold was primarily driven by the impact of net changes from profit in inventory adjustments period over period and non-cash asset impairment charges recorded to write down the carrying value of certain property and equipment 37 as a result of the Company's Patch Pump Restructuring Plan.
Removed
In addition, we may incur other pre-tax cash charges or additional charges not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of the Restructuring Plan.
Added
This was partially offset by lower volumes in fiscal year 2025 compared to fiscal year 2024. Selling and administrative expenses Our selling and administrative expenses decreased by $33.1 million, or 9.1%, to $332.0 million for the year ended September 30, 2025 as compared to $365.1 million for the year ended September 30, 2024.
Removed
On March 28, 2024, we entered into (i) a second amendment (the “TSA Amendment”) to the TSA, dated as of March 31, 2022 and previously amended as of July 1, 2022 by and between Embecta and BD, and (ii) a second amendment (the “LSA Amendment”) to the LSA, dated January 1, 2022 and previously amended as of November 20, 2023, by and between Embecta and BD.
Added
The decrease was primarily driven by a reduction in payments made in connection with the development of our insulin patch pump program in fiscal year 2025 as compared to fiscal year 2024, given the discontinuation of the patch pump program.
Removed
Pursuant to the TSA and the LSA, originally entered into in connection with the Separation, Embecta and BD and their respective affiliates provide each other, on an interim, transitional basis, the Business Continuity Processes.
Added
Interest expense, net Interest expense, net decreased to $107.3 million for the year ended September 30, 2025, from $112.3 million for the year ended September 30, 2024 primarily driven by lower debt levels and lower short-term interest rates in the current period as compared to the prior period.
Removed
Under the TSA Amendment and the LSA Amendment, BD granted Embecta, among other things, a limited extension until November 1, 2024 of certain services in a limited set of markets to support the Business Continuity Processes. We continue to monitor the conflict in Ukraine and the associated sanctions and other restrictions.
Added
Other income (expense), net Other income (expense), net was $1.5 million and $(10.3) million for the years ended September 30, 2025 and 2024, respectively. The income generated in fiscal year 2025 was primarily attributed to favorable impacts from foreign exchange.
Removed
The increase in cost of products sold was primarily driven by the impact of inflation on the costs of certain raw materials (including freight), direct labor, and overhead, the impact of negative year-over-year manufacturing variances primarily attributable to 36 the as planned temporary shutdown of our Suzhou, China facility as it relates to production for the domestic Chinese market, and unfavorable impacts due to foreign exchange rates.
Added
This increase was primarily due to the absence of 2024 tax benefits from the recognition of deferred tax assets related to tax reform in Switzerland, the absence of 2024 tax benefits from the reduction of withholding tax accruals on unremitted foreign earnings resulting from the expiration of certain stock ownership holding period requirements, fewer nontaxable items of income and the correlative tax impacts of these changes on higher overall earnings in 2025.
Removed
We intend to continue to work to improve productivity to help partially offset these increased costs. This was partially offset by the impact of profit in inventory adjustments as a result of inventory that was sold to external customers that was manufactured in anticipation of our ERP system and other Business Continuity Processes that went live during fiscal 2024.
Added
This was partially offset by tax benefits from tax return true ups for tax filings made during 2025. See Note 14 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for a further description of our provision for income taxes.
Removed
Operating expenses in 2024 and 2023 were as follows: Increase (Millions of dollars) 2024 2023 2024 vs. 2023 Selling and administrative expense $ 365.1 $ 341.3 $ 23.8 % of revenues 32.5 % 30.5 % Research and development expense $ 78.8 $ 85.2 $ (6.4) % of revenues 7.0 % 7.6 % Impairment expense $ — $ 2.5 nm Other operating expense $ 124.5 $ 99.4 $ 25.1 nm = not meaningful Selling and administrative expenses Our selling and administrative expenses increased by $23.8 million, or 7.0%, to $365.1 million for the year ended September 30, 2024 as compared to $341.3 million for the year ended September 30, 2023.
Added
LIQUIDITY AND CAPITAL RESOURCES For discussion on Liquidity and Capital Resources pertaining to the fiscal years 2024 and 2023 see our Annual Report on Form 10-K for the fiscal year ended September 30, 2024.
Removed
On November 22, 2024, the Company's Board of Directors approved a plan to discontinue internal and external investment in the research and development of the Company's patch pump program. The Company will refocus its research and development strategy on its core business.
Added
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.
Removed
We expect our research and development expense to decrease sequentially in fiscal year 2025 compared to fiscal year 2024. Impairment expense During the year ended September 30, 2024, the Company did not record any impairment charges.
Added
We may, from time to time, seek to retire or repurchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchase, or privately negotiated transactions, or otherwise may redeem some or all of our debt pursuant to its terms.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Consequently, foreign currency exchange contracts would not subject us to material risk due to exchange rate movements, because gains and losses on these contracts offset gains and losses on the assets, liabilities or transactions being hedged. Interest Rate Risk Debt - Our interest rate risk as of September 30, 2024 relates primarily to our Term Loan.
Consequently, foreign currency exchange contracts would not subject us to material risk due to exchange rate movements, because gains and losses on these contracts offset gains and losses on the assets, liabilities or transactions being hedged. Interest Rate Risk Debt - Our interest rate risk as of September 30, 2025 relates primarily to our Term Loan.
To the extent we borrow on our revolving credit facility, we will be subject to risks related to changes in SOFR. Refer to Note 13 to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K for further information. 44
To the extent we borrow on our revolving credit facility, we will be subject to risks related to changes in SOFR. Refer to Note 12 to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K for further information. 45
Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in Notes 3, 13 and 16 to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K, and is incorporated herein by reference.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in Notes 2, 12 and 16 to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K, and is incorporated herein by reference.
The interest rate is set at 300 basis points over SOFR, with a 0.50% SOFR floor. Based on our outstanding borrowings at September 30, 2024, a 100 basis points change in interest rates would have impacted interest expense on the Term Loan by $9.0 million on an annualized basis.
The interest rate is set at 300 basis points over SOFR, with a 0.50% SOFR floor. Based on our outstanding borrowings at September 30, 2025, a 100 basis points change in interest rates would have impacted interest expense on the Term Loan by $7.1 million on an annualized basis.
Foreign Currency Exchange and Other Rate Risks We operate on a global basis and are exposed to the risk that changes in foreign currency exchange rates could adversely affect our financial condition, results of operations and cash flows.
Foreign Currency Exchange and Other Rate Risks We operate on a global basis and are exposed to the risk that changes in foreign currency exchange rates could adversely affect our financial condition, results of operations and cash flows. 44 From time to time, we enter into foreign currency forward exchange contracts with major financial institutions to manage currency exposures for transactions denominated in a currency other than an entity’s functional currency.
Removed
From time to time, we enter into foreign currency forward exchange contracts with major financial institutions to manage currency exposures for transactions denominated in a currency other than an entity’s functional currency.

Other EMBC 10-K year-over-year comparisons