Embecta Corp

Evaluation of Disclosure Controls and Procedures

An evaluation was carried out by Embecta’s management, with the participation of Embecta’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Embecta’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of September 30, 2024. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these controls and procedures were, as of the end of the period covered by this Annual Report on Form 10-K, not effective due to a material weakness in the Company's internal control over financial reporting related to the design and operation of certain process and management review controls, including management's review activities for account reconciliations and analyses that were executed for the first time during fiscal year 2024 subsequent to the first and second phases of the Company's ERP system implementation which is further described below.

In 2022, the Company commenced the process of implementing a new ERP system and other Business Continuity Processes to replace the existing systems provided by BD. The ERP system is designed to accurately maintain the Company's financial records used to report operating results. The implementation of the ERP system and other Business Continuity Processes is highly complex and has occurred and will continue to occur in phases across our geographies. The first phase of the implementation began in the fourth quarter of fiscal year 2023. The second phase began in the first quarter of fiscal year 2024 and continued through fiscal year 2024 in North America, EMEA and Greater China. The first and second phases of the implementation are now complete. The remaining third and fourth phases include Latin America and India, respectively. The third phase was completed in the first quarter of fiscal 2025. The fourth and final phase is expected to be completed in fiscal year 2025 subsequent to the date of this Annual Report on Form 10-K. A standardized internal control framework is implemented with each phase as the Company moves away from relying on BD’s systems and controls. Since the fourth and final phase has not yet been completed as of the date of this Annual Report on Form 10-K, the Company continues to rely on certain processes and internal control over financial reporting performed by BD.

Management’s Responsibilities

The financial statements included in Item 8 of this Annual Report on Form 10-K have been prepared by the Company's management in conformity with U.S. generally accepted accounting principles and include, where required, amounts based on the best estimates and judgments of management. The integrity and objectivity of data in the financial statements and elsewhere in this Annual Report on Form 10-K are the responsibility of the Company's management.

In fulfilling its responsibilities for the integrity of the data presented and to safeguard the Company’s assets, management employs a system of internal accounting controls designed to provide reasonable assurance, at appropriate cost, that the Company’s assets are protected and that transactions are appropriately authorized, recorded and summarized. This system of control is supported by the selection of qualified personnel, by organizational assignments that provide appropriate delegation of authority and division of responsibilities, and by the dissemination of written policies and procedures. This control structure is further reinforced by a program of internal audits, including a policy that requires responsive action by management.

The Board of Directors monitors the internal control system, including internal accounting and financial reporting controls, through its Audit Committee, which consists of three independent Directors. The Audit Committee meets periodically with the independent registered public accounting firm, the internal auditors and management to review the work of each and to satisfy itself that they are properly discharging their responsibilities. The independent registered public accounting firm and the internal auditors have full and free access to the Audit Committee and meet with its members, with and without management present, to discuss the scope and results of their audits including internal control, auditing and financial reporting matters.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Act of 1934, as amended. Management conducted an assessment of the effectiveness of internal control over financial reporting based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

In connection with the preparation and filing of this Annual Report on Form 10-K, the Company’s management, including our Chief Executive Officer and our Chief Financial Officer, conducted an evaluation of the effectiveness of its internal control over financial reporting as of September 30, 2024. Based on this evaluation, management concluded that the Company's internal control over financial reporting was not effective as of September 30, 2024, due to a material weakness in its internal controls related to the design and operation of certain process and management review controls, including certain account reconciliations and analyses. Subsequent to the first and second phases of ERP implementation, the Company instituted new Control Activities. Specifically, these newly designed Control Activities were executed for the first time in fiscal year 2024. Management has concluded that these newly designed Control Activities were not designed or operating effectively to ensure the appropriate level of management review, precision, and adequate evidence to confirm the completeness and accuracy of data used in the account reconciliations and analyses.

Notwithstanding the material weaknesses, management has concluded that the financial statements included elsewhere in this Annual Report on Form 10-K present fairly, in all material respects, our financial position, results of operations, and cash flows in conformity with GAAP.

The consolidated financial statements included in this Annual Report on Form 10-K and the effectiveness of the Company's internal control over financial reporting as of September 30, 2024 have been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report included in this Annual Report on Form 10-K. See “Report of Independent Registered Public Accounting Firm” which is included in Item 8 of this Annual Report on Form 10-K.

Remediation Plan

Upon the identification of the material weakness, management immediately effectuated a plan to remediate the design and operation of the related Control Activities. This plan has commenced and will continue into fiscal year 2025 and is intended to involve, but is not limited to, the following actions:

•reassess the design of processes and internal controls related to certain account reconciliations and certain analyses;

•execute a robust and formal training program regarding diligence in control performance and Sarbanes-Oxley Act requirements;

•implement enhanced oversight and governance over account reconciliations and certain financial analyses; and

•enhance control documentation and design to include additional procedures regarding confirmation of the completeness and accuracy of data used to perform controls and the precision of control activities.

The Company is committed to remediating the material weakness. The actions it is taking are subject to ongoing management review, as well as oversight from the Audit Committee. When fully implemented and operational, the Company believes the measures described above will remediate the underlying cause of the material weakness and will strengthen the Company's internal control over financial reporting. However, the Company will not be able to fully remediate this material weakness until these steps have been completed and have been operating effectively for a sufficient period of time. The Company may also identify additional measures that may be required to remediate the material weakness in its internal control over financial reporting, necessitating further action. The Company expects to complete the remediation plan in fiscal year 2025.

Changes in Internal Control over Financial Reporting

The Company is working towards executing the remediation plan to address the material weakness noted above. However, none of these efforts have resulted in the remediation of the material weakness noted above as of September 30, 2024. There have been no changes in its internal control over financial reporting during the fourth quarter of fiscal year 2024 other than the identification of the material weakness and the remediation plan disclosed above that have materially affected, or that are reasonably likely to materially affect, the Company's internal control over financial reporting.