EMBC

MKT CAP $380.2MP/E 4.6DIV YIELD 6.86%FCF YIELD 43.29%REV TTM $1B −7.6%NET INCOME $87.5M +4.7%NET DEBT $1.2B52W 2.90 – 14.64SEC XBRL · TTM TO Invalid Date

How EMBC rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

60%

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162

new sentences

Dropped

118

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Length

+1,539

words, now 22,616

New in FY2025

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. • 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.
A change in any of these factors could have an adverse impact on Embecta’s financial condition and results of operations. • Embecta may enter into strategic collaborations, in-licensing arrangements or alliances with third parties that may not result in the development of commercially viable products or the generation of revenue. • Embecta’s sales and marketing efforts rely upon independent distributors that are free to market products that compete with Embecta’s products, and if Embecta is unable to maintain or expand its network of independent distributors, its business could be materially adversely affected. • 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. • Embecta may be unable to maintain strong relationships with physicians and other healthcare professionals which could adversely affect its business. • Embecta may not be able to successfully execute its acquisition strategy, which could adversely affect its financial condition and results of operations. • Embecta’s international operations subject it to certain business risks. • Trade actions, such as tariffs, retaliatory tariffs, and private or governmental "buy local" initiatives could adversely and unexpectedly impact our business. • If the third parties on which Embecta relies to conduct its clinical trials and to assist it with pre-clinical development do not perform as contractually required or expected, or if market or clinical or other studies are unfavorable to its products in development, Embecta may not be able to obtain regulatory clearance or approval or commercialize its products. • Embecta’s business and operations are subject to risks related to climate change. • Embecta's intellectual property and proprietary technology are material to its business operations and are subject to infringement and other risks. • Breaches of Embecta’s Information Systems (as defined in Item 1C of this Annual Report on Form 10-K) or cyberattacks could adversely affect our business. • A disruption at one of our facilities could adversely affect our business and operating results. • Insurance coverage may be inadequate or unavailable to cover any product liability losses we incur. • Embecta is subject to a number of restrictive covenants under its indebtedness, including customary operating restrictions and financial covenants, which could restrict Embecta’s ability to pay dividends or adversely affect its financing options and liquidity position. • Embecta is subject to risks associated with public health threats, such as pandemics, which could have a material adverse effect on Embecta's financial condition and results of operations.
If such consents or approvals are not obtained, Embecta may not be entitled to the full benefit of such contracts, permits and other assets and rights, which could increase its expenses or otherwise harm its business and financial performance. • Satisfaction of indemnification obligations following the distribution could have a material adverse effect on Embecta’s financial condition, results of operations and cash flows.
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.
In some instances, competitors, including pharmaceutical companies, also offer, or are attempting to develop, alternative therapies, including oral and once-weekly anti-diabetic drugs (e.g., SGLT-2s, once-weekly insulin, GLP-1s, and GLP-1 combination products), for disease states (including diabetes) that may be administered and delivered less frequently compared to conventional and historical multiple daily injections or without a medical device, such as pen needles, entirely.
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.
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).
If they are successful in developing and commercializing these technologies or treatment therapies, the demand for Embecta’s products could decline or be delayed.
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, 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.
Certain raw materials that we obtain from suppliers are subject to fluctuations in price and availability attributable to a number of factors, including general economic conditions and environments, such as new and changing tariff policies instituted by the U.S. government and foreign governments, commodity price fluctuations, the demand by other companies for the same raw materials and the availability of complementary and substitute materials.
New laws or regulations influenced or adopted in response to local and international tariff policies, or climate change, among others, could also increase import duties, energy costs, transportation costs, and the overall costs of certain raw materials and components.
In addition, for quality assurance, cost-effectiveness and other reasons, Embecta purchases certain raw materials and components from a single supplier, who in turn sometimes rely on their own single or sole sourced sub-suppliers for certain materials or components.
The price and supply of these materials and components may be affected or disrupted for reasons beyond Embecta’s control, including, but not limited to, such suppliers or sub-suppliers changes or cessation of business operations, whether voluntary or involuntary, and limitations in the availability of their materials, labor, or other resources.
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.
In addition, these third-party suppliers may be influenced or compelled to stop or pause shipments to Embecta due to new or changing tariff policies as a result of supply chain disruption, uncertainty over costs, and potential retaliatory measures from their local governments.
For example, for the fiscal year ended September 30, 2025, gross sales to Cencora, McKesson Corporation, and Cardinal Health, Embecta’s three largest distributors, together represented approximately 42% 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.
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.
In addition to pressures imposed by public and private payers, the Centers for Medicare & Medicaid Services (“CMS”) of the U.S.
Department of Health and Human Services (“HHS”) has begun implementing measures outlined in the Inflation Reduction Act of 2022 to negotiate prices on certain high cost prescription drugs for Medicare beneficiaries, as well as proposing competitive bidding on other medical devices, including those used for the treatment of diabetes.
Embecta’s products are covered by Medicare Part D covered medical devices and if there is any expansion of price negotiations or competitive bidding by CMS, or other agencies, for the category of products within which Embecta competes and Embecta is unable to successfully negotiate favorable pricing for its products, it could adversely impact Embecta’s financial condition and results of operations.
States have and may continue to scrutinize key participants in the healthcare industry, including PBMs.
A number of bills have been introduced, proposed, and passed that would further regulate PBMs and impose additional requirements.
The FTC has issued statements about PBMs and conducted a study of PBMs that resulted in two published reports, which could motivate further actions with respect to PBMs regulation.
The FTC also filed an administrative complaint against the three largest PBMs and their affiliated group purchasing organizations alleging that the PBMs engaged in anti-competitive and unfair practices that increased costs for insulin medication.
It is unclear what the results of this matter and the above noted PBMs scrutiny will be, and what impact this will have on the PBMs industry and our business, financial condition and results of operations.
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.
An element of Embecta’s strategy is to increase revenue growth by focusing on innovation and new product 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.
Even if cleared by the FDA or foreign regulatory authorities, future generations of our products, expanded indications for use of future products, or any other products under development, may not be cleared for the indications that are necessary or desirable for successful commercialization.
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 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.
Following the ruling of the Italian Constitutional Court, the appeal before the Italian administrative court was rejected in May 2025 and Italy passed the Economic Decree (Law Decree No. 95/2025) in June 2025 offering a 75% discount on payback amounts for the years 2015 through 2018.
Although Embecta has paid and settled its 2015 through 2018 obligations, the determinations for 2019 and after are still pending.
Embecta has recognized an estimate for the amount of variable consideration but has not made any payments under the payback law for 2019 and after.
Given final resolution is unknown at this time, it is possible that the amount of the Embecta’s liability could differ from the amount currently accrued.
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.
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.

and 122 more.

Gone since FY2024

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. • 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.
A change in any of these factors could have an adverse impact on Embecta’s financial condition and results of operations. • Embecta may enter into strategic collaborations, in-licensing arrangements or alliances with third parties that may not result in the development of commercially viable products or the generation of revenue. • Embecta’s sales and marketing efforts rely upon independent distributors that are free to market products that compete with Embecta’s products, and if Embecta is unable to maintain or expand its network of independent distributors, its business could be materially adversely affected. • 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. • If the third parties on which Embecta relies to conduct its clinical trials and to assist it with pre-clinical development do not perform as contractually required or expected, or if market or clinical or other studies are unfavorable to its products in development, Embecta may not be able to obtain regulatory clearance or approval or commercialize its products. • Embecta may be unable to maintain strong relationships with physicians and other healthcare professionals which could adversely affect its business. • Embecta may not be able to successfully execute its acquisition strategy, which could adversely affect its financial condition and results of operations. • Embecta’s international operations subject it to certain business risks. • Embecta’s business and operations are subject to risks related to climate change. • Embecta's intellectual property and proprietary technology are material to its business operations and are subject to infringement and other risks. • Breaches of Embecta’s information systems or cyberattacks could adversely affect our business. • A disruption at one of our facilities could adversely affect our business and operating results. • Insurance coverage may be inadequate or unavailable to cover any product liability losses we incur. • Embecta is subject to a number of restrictive covenants under its indebtedness, including customary operating restrictions and financial covenants, which could restrict Embecta’s ability to pay dividends or adversely affect its financing options and liquidity position. • Embecta is subject to risks associated with public health threats, such as pandemics, which could have a material adverse effect on Embecta's financial condition and results of operations.
If such consents or approvals are not obtained, Embecta may not be entitled to the full benefit of such contracts, permits and other assets and rights, which could increase its expenses or otherwise harm its business and financial performance. • The closing of the Separation was deferred in certain jurisdictions, and may not occur at all in such jurisdictions, due to local regulatory requirements, which may adversely affect Embecta’s business, financial condition and results of operations. • Satisfaction of indemnification obligations following the distribution could have a material adverse effect on Embecta’s financial condition, results of operations and cash flows.
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.
In some instances, competitors, including pharmaceutical companies, also offer, or are attempting to develop, alternative therapies, including oral and once-weekly anti-diabetic drugs, GLP-1s and GLP-1 combination products, for disease states (including diabetes) that may be delivered without a medical device, such as pen needles.
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.
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.
If they are successful in developing and commercializing these technologies or treatment therapies, the demand for Embecta’s products could decline.
Any such failure to perform or a reduction or interruption in supply could have a material adverse effect on Embecta’s business and operations.
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.
Certain raw materials that we obtain from suppliers are subject to fluctuations in price and availability attributable to a number of factors, including general economic conditions, commodity price fluctuations, the demand by other companies for the same raw materials and the availability of complementary and substitute materials.
New laws or regulations adopted in response to climate change could also increase energy and transportation costs, as well as the costs of certain raw materials and components.
In addition, for quality assurance, cost-effectiveness and other reasons, Embecta purchases certain raw materials and components from a single supplier.
The price and supply of these materials and components may be affected or disrupted for reasons beyond Embecta’s control.
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.
For example, for the fiscal year ended September 30, 2024, gross sales to McKesson Corporation, Cardinal Health and Cencora, Embecta’s three largest distributors, together represented approximately 41% of Embecta’s worldwide gross sales.
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.
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.
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.
A significant element of Embecta’s strategy is to increase revenue growth by focusing on innovation and new product development.
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.
Even if cleared by the FDA or foreign regulatory agencies, future generations of our systems, expanded indications for use of future systems, our software platforms or any other system under development, may not be cleared for the indications that are necessary or desirable for successful commercialization.
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.
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.
Following the ruling of the Italian Constitutional Court, the appeal before the Italian administrative court will proceed with respect to the remaining legal arguments asserted by the appellants with regard to the enforceability of the payback law.
Since the law was enacted, Embecta has recognized an estimate for the amount of variable consideration but has not made any payments under the payback law.
As litigation before Italian Courts is still pending, final resolution is unknown at this time, and it is possible that the amount of the Embecta’s liability could differ from the amount currently accrued.
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.
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.
Due to Embecta’s international operations, it is subject to such laws and regulations, which are complex, restrict its business dealings with certain countries and individuals, and are constantly changing.
Further restrictions may be enacted, amended, enforced or interpreted in a manner that materially impacts Embecta’s operations.
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.
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.
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.
In preparing its financial statements, Embecta estimates the amount of tax that will become payable in each of these jurisdictions and significant judgement is required in determining our worldwide provision for income taxes.
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.
Certain countries have enacted the law changes and other countries are considering changes to their tax laws; the impact of the changes will go into effect for the Company beginning in fiscal year 2025.
The Company is evaluating the impact of these proposed and enacted changes.

and 78 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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