Embecta Corp. Q1 FY2026 earnings call

• Brand transition: Over 95% of US and Canadian products have transitioned to the Embecta brand, with global transitions underway and expected to be substantially complete by end-2026.
• Medicare Part D: Contracted with an additional payer and renewed advantage formulary access with top three payers, strengthening business.
• Portfolio expansion: Progressing with market-appropriate pen needles and syringes, with product designs finalized, production equipment installed, and manufacturing validation underway; also expanding GLP-1 strategy with over 30 pharmaceutical partners, over one-third having selected as supplier, and pen needles included in regulatory submissions.
• Small pack configurations: Expanding availability of Embecta-branded small pack configurations in Canada and select European markets for out-of-pocket customers.

In the first quarter of 2026, on an adjusted constant currency basis, pen needle revenue declined approximately 4.4%, syringe revenue grew by approximately 5.3%, safety product revenue grew approximately 7.3%, and contract manufacturing revenue declined approximately 16.7%. For revenue contribution, pen needles, syringes, safety products, and contract manufacturing each had their respective contributions to the overall revenue during the quarter. Specifically, syringe revenue growth was driven by improved performance in Latin America, EMEA, and Asia, offsetting declines in the US. Safety products saw solid growth due to gains in the US and EMEA. Contract manufacturing revenue declined as expected due to BD insourcing non-diabetes products.

• Revenue: On an adjusted constant currency basis, reaffirming guidance range of flat to down 2% compared to 2025; foreign currency expected to be a tailwind of approx. 1.2%, Italian payback measure an estimated 0.1% headwind; as-reported revenue range between negative 0.9% to positive 1.1%, expecting to be closer to lower end of range due to incremental US pricing headwinds.
• Adjusted operating margin: Reaffirming guidance range of 29-30%.
• Adjusted diluted earnings per share: Reaffirming range of $2.80 to $3, expecting to be closer to lower end of range.

• Market competition: Intense competition in the medical supplies market which could impact market share and revenue.
• Geopolitical and trade environment: Dynamics in various regions could affect international business operations and revenue.
• Regulatory approvals: Uncertainty in timing of regulatory approvals for products and partnerships which could delay launches and revenue generation.

Q: Can you elaborate on the US business dynamics, including pricing and volume?

A: In the US, there was a year-over-year decline excluding CMA of about 7.4% driven by lower pricing and lower volume. Lower volume was due to channel dynamics and contractual dynamics. Pricing was impacted by a different customer and product mix than the same quarter last year. Volume was partially offset by advanced purchase ahead of a price increase on January 1.

Q: How do injectables still have a place with new oral GLP-1s?

A: Injectables have a better weight loss profile than orals. Orals may be for patients averse to needles, in geographies with limited cold storage, or as maintenance therapy. Most oral users are new to the therapy, pointing to market expansion. Major drug companies' pipelines have mostly injectable drugs, and with recent developments like Lilly's QuickPen approval, injectables still have opportunities.

Q: Can you provide details on the auto-injector project?

A: The pen injector project is in early phases. It's too early to talk about timing and market sizing, but the company has R&D and manufacturing capabilities and established relationships to present the product as the project evolves.

Q: How to characterize the penetration curve to reach the $100 million revenue?

A: The $100 million estimate included factors like patient count on GLP-1s, oral impact on market, indications considered, reimbursement, and delivery format assumptions. Timing is largely driven by patent expirations, with generic launches expected in markets like Canada, Brazil, China, India in 2026 and beyond.