Embecta Corp.

Previous wording

Pricing Pressures. We face significant pricing pressures from competitors in the pen needle and insulin syringe categories who not only can provide competitive products at lower costs, but also provide payors and customers with more choices for formulary partners in these categories. In addition, the increased scrutiny by regulators on healthcare spending, which accelerated in light of the COVID-19 pandemic, along with a shift towards volume-based procurement and group purchasing organizations, which generally values lower cost over product features, benefits and quality, have placed significant pressure on Embecta to lower price in both developed and emerging markets. These trends may reduce our operating margins, which are only partially offset by our ability to differentiate our products and sell at higher prices.

Current wording

Pricing and Volume Pressures. We face significant pricing pressures from competitors in the pen needle and insulin syringe categories who not only can provide competitive products at lower costs, but also provide payors and customers with more choices for formulary partners in these categories. As a result, select distributors and retailers, especially in the United States, can exercise substantial pricing pressure power in view of the competitive nature of our business which can significantly affect sales volume and market share. In addition, the increased scrutiny by regulators on healthcare spending, which accelerated in light of the COVID-19 pandemic, along with a shift towards volume-based procurement and group purchasing organizations, which generally values lower cost over product features, benefits and quality, have placed significant pressure on Embecta to lower price in both developed and emerging markets. These trends may reduce our operating margins, which are only partially offset by our ability to differentiate our products and sell at higher prices.

Previous wording

Global Trade. The current global economic environment has been recently influenced by rapidly changing new tariff policies instituted by the United States government and foreign governments. As a global company that both imports raw materials and products into the U.S. and distributes raw materials and products originating from the U.S. to global manufacturing sites and markets, these new tariffs may have a financial impact on our cost of goods, our profit margins, our business generally and our global distribution strategy. These new tariffs may cause foreign governments and private purchasers to consider transitioning away from products originating from certain countries (including the U.S.) in favor of buying “local” products resulting in the additional possibility that local manufacturers, brands and other competitors may engage in aggressive competitive pricing to take advantage of the uncertain global trade environment and transition customers away from global manufacturers, all of which may impact the Company’s business and operations.

Current wording

Global Trade. The current global economic environment has been recently influenced by rapidly changing tariff policies instituted by the United States government and foreign governments. As a global company that both imports raw materials and products into the U.S. and distributes raw materials and products originating from the U.S. to global manufacturing sites and markets, these tariffs may have a financial impact on our cost of goods, our profit margins, our business generally and our global distribution strategy. These 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

Previous wording

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. 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. 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. 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.

Current wording

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. 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. Given our global business, we expect tariffs announced over the past year 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. 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.

Previous wording

We continue to monitor the conflict in Ukraine and the associated sanctions and other restrictions. We also are monitoring the conflicts in the Middle East and Houthi attacks on commercial shipping vessels and other naval vessels. As of February 5, 2026, there is no material impact to our business operations and financial performance as a result of the aforementioned conflicts. However, the full impact of the conflicts on our business operations and financial performance remains uncertain and will depend on future developments, including the severity and duration of the conflicts and their impact on regional and global economic conditions. We will continue to monitor these conflicts and assess the related restrictions and other effects on our business.

Current wording

We continue to monitor global conflicts, including activity in the Middle East and Houthi attacks on commercial shipping vessels and other naval vessels, and the associated sanctions and other restrictions. As of May 5, 2026, there is no material impact to our business operations and financial performance as a result of the aforementioned conflicts. However, the full impact of the conflicts on our business operations and financial performance remains uncertain and will depend on future developments, including the severity and duration of the conflicts and their impact on regional and global economic conditions. We will continue to monitor these conflicts and assess the related restrictions and other effects on our business.

Previous wording

Our unaudited Condensed Consolidated Statements of Income are as follows:

Current wording

Our unaudited Condensed Consolidated Statements of (Loss) Income are as follows:

Previous wording

•Gross profit increased by $4.6 million to $161.7 million from $157.1 million. Gross profit as a percent of revenue was 61.9%, as compared to 60.0% in the prior year comparative period;

Current wording

•Gross profit decreased by $36.3 million to $127.8 million from $164.1 million. Gross profit as a percent of revenue was 57.6%, as compared to 63.4% in the prior year comparative period;

Previous wording

•Operating income increased by $54.6 million to $83.3 million from $28.7 million; and

Current wording

•Operating income increased by $26.7 million to $118.3 million from $91.6 million; and

Previous wording

•Net income increased by $44.1 million to $44.1 million from $0.0 million.

Current wording

•Net income increased by $16.5 million to $40.0 million from $23.5 million.

Previous wording

The Company's revenues decreased by $0.7 million, or 0.3%, to $261.2 million for the three months ended December 31, 2025 as compared to revenues of $261.9 million for the three months ended December 31, 2024. Changes in revenues are driven by the volume of goods that the Company sells, the prices it negotiates with customers, and changes in foreign exchange rates. The decrease in revenues was driven by $7.8 million of unfavorable changes in price and a $0.7 million decrease in contract manufacturing revenues related to sales of non-diabetes products to BD, partially offset by $4.6 million associated with the positive impact of foreign currency translation primarily due to the weakening of the U.S. dollar and $3.2 million of favorable changes in volume.

Current wording

Our revenues decreased by $37.2 million, or 14.4%, to $221.8 million for the three months ended March 31, 2026 as compared to revenues of $259.0 million for the three months ended March 31, 2025. Changes in revenues are driven by the volume of goods that the Company sells, the prices it negotiates with customers, and changes in foreign exchange rates. The decrease in revenues was driven by $39.3 million of unfavorable changes in volume, $3.6 million of unfavorable changes in price, and a $2.0 million decrease in contract manufacturing revenues. This was partially offset by $7.7 million associated with the positive impact of foreign currency translation primarily due to the weakening of the U.S. dollar.

Previous wording

Cost of products sold decreased by $5.3 million, or 5.1%, to $99.5 million for the three months ended December 31, 2025 as compared to $104.8 million for the three months ended December 31, 2024. Cost of products sold as a percentage of revenues was 38.1% for the three months ended December 31, 2025 as compared to 40.0% for the three months ended December 31, 2024. The decrease in cost of products sold for the three month comparative period was primarily driven by impairment charges recorded in the prior period to write down the carrying value of certain property and equipment with no comparable impairment charges in the current period.

Current wording

Cost of products sold decreased by $6.2 million, or 3.1%, to $193.5 million for the six months ended March 31, 2026 as compared to $199.7 million for the six months ended March 31, 2025. Cost of products sold as a percentage of revenues was 40.1% for the six months ended March 31, 2026 as compared to 38.3% in the six months ended March 31, 2025. The decrease in cost of products sold for the six month comparative period was primarily driven by lower volumes, the impact of net changes from profit in inventory adjustments period over period, and by impairment charges recorded in the prior period to write down the carrying value of certain property and equipment with no comparable impairment charges in the current period. This was partially offset by an increase due to a shift in product mix in the current period as compared to the prior period.

Previous wording

Selling and administrative expenses decreased by $3.5 million, or 4.3%, to $77.6 million for the three months ended December 31, 2025 as compared to $81.1 million for the three months ended December 31, 2024. The decrease for the three month comparative period was primarily driven by lower compensation expense in the current period.

Current wording

Selling and administrative expenses decreased by $3.4 million, or 4.3%, to $76.2 million for the three months ended March 31, 2026 as compared to $79.6 million for the three months ended March 31, 2025. Selling and administrative expenses decreased by $6.9 million, or 4.3%, to $153.8 million for the six months ended March 31, 2026 as compared to $160.7 million for the six months ended March 31, 2025. The decrease for both the three and six month comparative periods was primarily driven by lower compensation expense in the applicable current periods.

Previous wording

Research and development expenses decreased by $15.7 million, or 77.3%, to $4.6 million for the three months ended December 31, 2025 as compared to $20.3 million for the three months ended December 31, 2024. The decrease for the three month comparative period was primarily driven by expenses incurred in connection with the development of our insulin patch pump program in the prior year before the decision was made to discontinue the program. There were no comparable expenses associated with the patch pump program in the current year.

Current wording

Research and development expenses decreased by $2.6 million, or 32.5%, to $5.4 million for the three months ended March 31, 2026 as compared to $8.0 million for the three months ended March 31, 2025. Research and development expenses decreased by $18.3 million, or 64.7%, to $10.0 million for the six months ended March 31, 2026 as compared to $28.3 million for the six months ended March 31, 2025. The decrease for both the three and six month comparative periods was primarily driven by expenses incurred in connection with the development and subsequent discontinuance of our insulin patch pump program in the prior year.

Previous wording

Other operating (income) expense, net are as follows:

Current wording

Other operating expense, net are as follows:

Previous wording

Other operating (income) expense, net incurred primarily consist of the following:

Current wording

Other operating expense, net incurred primarily consist of the following:

Previous wording

Interest expense, net decreased by $3.8 million to $24.1 million for the three months ended December 31, 2025 as compared to $27.9 million for the three months ended December 31, 2024. The decrease for the three month comparative period was primarily driven by lower debt levels and lower short-term interest rates in the current period as compared to the prior period. It remains unclear whether the United States Federal Reserve will increase or decrease the benchmark interest rate during the remainder of fiscal 2026. An increase in the benchmark interest rate would result in an increase in interest expense on our variable rate debt and a decrease in the benchmark interest rate would result in a decrease in interest expense on our variable rate debt.

Current wording

Interest expense, net decreased by $4.1 million to $22.6 million for the three months ended March 31, 2026 as compared to $26.7 million for the three months ended March 31, 2025. Interest expense, net decreased by $7.9 million to $46.7 million for the six months ended March 31, 2026 as compared to $54.6 million for the six months ended March 31, 2025. The decrease for both the three and six month comparative periods was primarily driven by lower debt levels and lower short-term interest rates in the current period as compared to the prior periods. It remains unclear whether the United States Federal Reserve will increase or decrease the benchmark interest rate during the remainder of fiscal 2026. An increase in the benchmark interest rate would result in an increase in interest expense on our variable rate debt and a decrease in the benchmark interest rate would result in a decrease in interest expense on our variable rate debt.

Previous wording

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

Current wording

The effective tax rates were 143.2% and 34.4% for the three months ended March 31, 2026 and 2025, respectively. The increase in the Company's effective tax rate compared to the prior period is primarily due to the tax impacts from changes in level and mix of earnings and higher non-deductible costs.

Previous wording

We believe that our cash and our cash equivalents and cash from operations, together with our borrowing capacity under our Revolving Credit Facility, will provide sufficient financial flexibility to fund seasonal and other working capital requirements, capital expenditures, debt service requirements and other obligations, cash dividends on common shares and additional growth opportunities for the foreseeable future. However, should it become necessary, we believe that our credit profile should provide us with access to additional financing in order to fund normal business operations, make interest payments, fund growth opportunities and satisfy upcoming debt maturities.

Current wording

We believe that our cash and our cash equivalents and cash from operations, together with our borrowing capacity under our Revolving Credit Facility, will provide sufficient financial flexibility to fund seasonal and other working capital requirements, capital expenditures, debt service requirements and other obligations, cash dividends on common shares and additional growth opportunities for the foreseeable future. We have also initiated a review of our cost structure and organizational footprint. However, should it become necessary, we believe that our credit profile should provide us with access to additional financing in order to fund normal business operations, make interest payments, fund growth opportunities and satisfy upcoming debt maturities.

Previous wording

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

Current wording

During thesix months ended March 31, 2026, the Company paid an aggregate principal amount of approximately$75.0 million on the Term Loan, of which$70.3 million was discretionary. Debt extinguishment charges as a result of these discretionary prepayments were not material to the Company's Condensed Consolidated Statements of Income.

Previous wording

During the three months ended December 31, 2025, the Company made interest payments of $13.2 million on debt outstanding.

Current wording

During the six months ended March 31, 2026, the Company made interest payments of $44.1 million on debt outstanding.

Previous wording

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

Current wording

In connection with the Company's receivables sale agreement, $120.3 million of trade receivables were sold during the six months ended March 31, 2025, resulting in derecognition of the receivables from the Company's Condensed Consolidated Balance Sheets. Discounts recognized on the sale of trade receivables were not material to the Company's Condensed Consolidated Statements of Income. The cash received on the sale of trade receivables during the six months ended March 31, 2025 is presented in changes in trade receivables, net within operating activities in the Condensed Consolidated Statement of Cash Flows. As of March 31, 2026, the Company had collected $5.4 million, on behalf of the financial institution, which is reflected as Restricted cash and the related obligation to remit the cash within Accrued expenses. The net cash flows related to these collections are reported as financing activities in the Condensed Consolidated Statement of Cash Flows.

Previous wording

Cash and equivalents and restricted cash were $204.4 million as of December 31, 2025 as compared to $228.6 million as of September 30, 2025.

Current wording

Cash and equivalents and restricted cash were $193.4 million as of March 31, 2026 as compared to $228.6 million as of September 30, 2025.

Previous wording

The primary uses of cash that contributed to the $24.2 million decrease were:

Current wording

The primary uses of cash that contributed to the $35.2 million decrease were:

Previous wording

Net cash provided by investing activities for the three months ended December 31, 2025 was comprised of proceeds from the sale of certain intellectual property rights and long-lived assets of $10.1 million offset by capital expenditures of $0.6 million to support our business and operations.

Current wording

Net cash provided by investing activities for the six months ended March 31, 2026 was comprised of proceeds from the sale of certain intellectual property rights and long-lived assets of $10.1 million offset by capital expenditures of $1.1 million to support our business and operations.

Previous wording

Our contractual obligations as of December 31, 2025, which require material cash requirements in the future, consist of purchase obligations and lease obligations. Purchase obligations are enforceable and legally binding obligations for purchases of goods and services which include inventory purchase commitments. Over the next several years, we expect to incur material costs associated with operating and maintaining our information technology infrastructure. Lease obligations include lease agreements for which a contract has been signed even if the lease has not yet commenced. Refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in the 2025 Form 10-K for further details. As of December 31, 2025, there have been no material changes to our contractual obligations outside the ordinary course of business.

Current wording

Our contractual obligations as of March 31, 2026, which require material cash requirements in the future, consist of purchase obligations and lease obligations. Purchase obligations are enforceable and legally binding obligations for purchases of goods and services which include inventory purchase commitments. Over the next several years, we expect to incur material costs associated with operating and maintaining our information technology infrastructure. Lease obligations include lease agreements for which a contract has been signed even if the lease has not yet commenced. Refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in the 2025 Form 10-K for further details. As of March 31, 2026, there have been no material changes to our contractual obligations outside the ordinary course of business other than the Purchase Agreement entered into to acquire OM for an upfront cash payment of £100 million at closing (subject to customary adjustments, including for closing net cash), and up to an additional £50 million upon the achievement of certain commercial milestones related to sales of the Aidaptus® next-generation auto-injector platform through the period ending June 30, 2029.

Previous wording

•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.

Current wording

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

Previous wording

•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.

Current wording

•Increases in operating costs, including costs incurred from the 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.

Previous wording

•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.

Current wording

•The risk that as a result of the global trade environment from 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.

Previous wording

•Any future impact of pandemics or geopolitical instability on Embecta’s business, including disruptions in its operations and supply chains.

Current wording

•Any future impact of pandemics or geopolitical instability, including conflicts in the Middle East, on Embecta’s business, including disruptions in its operations and supply chains.

Previous wording

•The risk that dis-synergy costs, costs of restructuring transactions and other costs incurred in connection with the Separation will exceed Embecta's estimates.

Current wording

•The risk that ongoing dis-synergy costs, costs of restructuring and other costs incurred in connection with the Separation will exceed Embecta's estimates.

Previous wording

•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.

Current wording

•The risk that we may not complete strategic collaborative partnerships and acquisition opportunities, including the acquisition of OM, in the expected time frames and in a way that enable us to accelerate our growth or strategic collaborative opportunities that give us access to innovative technologies, complementary product lines, and new markets.

Previous wording

There can be no assurance that the transactions or uncertainties described above will in fact be consummated or occur in the manner described or at all. As a result, you should not place undue reliance upon our forward-looking statements. The above list of factors is not exhaustive or necessarily in order of importance. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see the discussions under “Risk Factors,” included within the 2025 Form 10-K. Any forward-looking statement speaks only as of the date on which it is made, and Embecta expressly disclaims and assumes no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

Current wording

There can be no assurance that the transactions or uncertainties described above will in fact be consummated or occur in the manner described or at all. As a result, you should not place undue reliance upon our forward-looking statements. The above list of factors is not exhaustive or necessarily in order of importance. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see the discussions under “Risk Factors,” both in Part II, Item 1A below and included within the 2025 Form 10-K. Any forward-looking statement speaks only as of the date on which it is made, and Embecta expressly disclaims and assumes no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.