Embecta Corp. Reports Second Quarter Fiscal 2025 Financial Results

PARSIPPANY, N.J., May 09, 2025 (GLOBE NEWSWIRE) -- Embecta Corp. ("embecta” or the "Company") (Nasdaq: EMBC), a global diabetes care company, today reported financial results for the three and six month periods ended March 31, 2025.

"This quarter's financial results were once again slightly ahead of our prior expectations, as our teams executed well, which included driving an acceleration in our free-cash flow generation, thereby allowing us to continue to repay debt and create additional balance sheet flexibility," said Devdatt (Dev) Kurdikar, President and Chief Executive Officer of embecta.

Mr. Kurdikar added, "In this challenging operating environment, we are raising key profitability metrics while maintaining our prior adjusted earnings per share guidance despite a lowered fiscal year 2025 adjusted constant current revenue guidance range and the impact of incremental tariffs. This reflects favorable projected foreign exchange rates, which are allowing us to keep our as-reported revenue guidance range largely unchanged, as well as disciplined operating expense controls and the benefit of our recently announced restructuring program.

Looking ahead, we remain focused on executing our strategic priorities and look forward to sharing more at our Analyst & Investor Day on May 22, 2025."

Second Quarter Fiscal Year 2025 Financial Highlights:

• Revenues of $259.0 million, down 9.8% on a reported basis; down 7.7% on an adjusted constant currency basis
  • U.S. revenues decreased 8.4% on both a reported and adjusted constant currency basis
  • International revenues decreased 11.3% on a reported basis, and 7.0% on an adjusted constant currency basis
• Gross profit and margin of $164.1 million and 63.4%, compared to $185.4 million and 64.6% in the prior year period
• Adjusted gross profit and margin of $165.0 million and 63.7%, compared to $185.8 million and 64.7% in the prior year period
• Operating income and margin of $62.9 million and 24.3%, compared to $39.2 million and 13.6% in the prior year period
• Adjusted operating income and margin of $81.4 million and 31.4%, compared to $74.9 million and 26.1% in the prior year period
• Net income and earnings per diluted share of $23.5 million and $0.40, compared to $28.9 million and $0.50 in the prior year period
• Adjusted net income and adjusted earnings per diluted share of $40.7 million and $0.70, compared to $38.9 million and $0.67 in the prior year period
• Adjusted EBITDA and margin of $97.1 million and 37.5%, compared to $90.8 million and 31.6% in the prior year period
• Announced a dividend of $0.15 per share

Six Months Ended March 31 2025 Financial Highlights:

• Revenues of $520.9 million, down 7.7% on a reported basis; down 6.3% on an adjusted constant currency basis
  • U.S. revenues decreased 6.5% on both a reported and adjusted constant currency basis
  • International revenues decreased 9.1% on a reported basis, and 6.1% on an adjusted constant currency basis
• Gross profit and margin of $321.2 million and 61.7%, compared to $371.3 million and 65.8% in the prior year period
• Adjusted gross profit and margin of $329.2 million and 63.2%, compared to $372.1 million and 65.9% in the prior year period
• Operating income and margin of $91.6 million and 17.6%, compared to $84.7 million and 15.0% in the prior year period
• Adjusted operating income and margin of $161.9 million and 31.1%, compared to $152.4 million and 27.0% in the prior year period
• Net income and earnings per diluted share of $23.5 million and $0.40, compared to $49.0 million and $0.85 in the prior year period
• Adjusted net income and adjusted earnings per diluted share of $79.0 million and $1.35, compared to $74.2 million and $1.28 in the prior year period
• Adjusted EBITDA and margin of $194.4 million and 37.3%, compared to $181.2 million and 32.1% in the prior year period

Strategic Highlights:

• Strengthen core business
  • Advanced the brand transition program in the U.S. and Canada, which is on track to be substantially complete in the second half of fiscal year 2025
  • Published updated FITTER (Forum for Injection Technique and Therapy Expert Recommendations) Forward Expert Recommendations in Mayo Clinic Proceedings, enhancing global best practices for insulin injection technique and education to improve clinical outcomes, standardize injection methods, optimize device use, and strengthen provider training
  • Received certification as a Great Place to Work for 2025 in the following countries: Brazil, Canada, China, Germany, India, Mexico, Switzerland and the UK
• Expand product portfolio
  • Received several purchase orders from pharmaceutical companies to co-package our pen needles with potential generic GLP-1 drugs
  • Continued to make progress on expanding availability of appropriately sized GLP-1 retail packaging for use with weekly injection therapies
• Increase financial flexibility
  • Substantially completed the restructuring plan related to the discontinuation of the insulin patch pump program
  • Initiated a separate restructuring plan to streamline the organization and optimize resources
  • Reduced debt during the fiscal year 2025 second quarter by paying down approximately $27.4 million of outstanding principal under the term loan B facility that had an interest rate of 300 basis points over the secured overnight financing rate ("SOFR”), with a 0.50% SOFR floor

Adjusted Constant Currency Revenue Growth is based upon Reported Revenues, adjusted to exclude, depending on the period presented, the items described in Adjusted Revenues and to eliminate the impact of translating the results of international subsidiaries at different currency exchange rates from period to period. The impact of changes in foreign currency may vary significantly from period to period, and such changes generally are outside of the control of our management. We believe that this measure facilitates a comparison of our operating performance exclusive of currency exchange rate fluctuations that do not reflect our underlying performance or business trends. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Results on an Adjusted constant currency revenue basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP.

Second Quarter Fiscal Year 2025 Results:

Revenues by geographic region are as follows:

Revenues by product family are as follows:

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¹ Other includes product sales for swabs and other accessories.

The Company's revenues decreased by $28.2 million, or 9.8%, to $259.0 million for the three months ended March 31, 2025 as compared to revenues of $287.2 million for the three months ended March 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 $26.6 million of unfavorable changes in volume and $6.0 million associated with the negative impact of foreign currency translation primarily due to the strengthening of the U.S. dollar. This was partially offset by $2.5 million of favorable changes in price and a $1.9 million increase in contract manufacturing revenues related to sales of non-diabetes products to Becton, Dickinson and Company ("BD").

Revenues by geographic region are as follows: