Embecta (EMBC) Morgan Stanley 22nd Annual Global Healthcare Conference summary

Business performance and operational updates

• Core injection business grew 0.4% year-to-date on a constant currency basis, with pen needle business up 4% and safety products up 2%.

• Syringe business declined 13% year-over-year, a trend expected to become less significant as U.S. syringe revenue decreases.

• Revenue was lower this quarter due to prior inventory pull-forward and ERP-related distributor stocking, but gross margin benefited from one-time inventory profit releases.

• International growth, especially in emerging markets, aligns with low to mid-single-digit expectations, despite some lumpiness from ERP implementations.

• Manufacturing facilities are highly scalable, with capacity to support new product opportunities and global distribution.

Market trends and product demand

• Insulin demand in the U.S. remains stable overall, with a shift from vials (declining) to pens (stable or slightly growing).

• Pen needle adoption is increasing, especially in the U.S., driven by payer coverage changes and new patient starts on pens.

• GLP-1 pen needle opportunity in Germany leverages a new 14-count pack, with plans to expand as GLP-1 delivery via pens grows globally.

• GLP-1s are expected to be a multi-year tailwind, with ongoing discussions for co-packaging with biosimilars and capacity in place to meet demand.

• Patch pump (open loop) received FDA clearance, with a limited commercial launch planned to gather feedback before broader investment.

Financial strategy and outlook

• Separation activities have cost about $400 million to date, with costs expected to drop from $180 million in 2024 to $50 million in 2025, freeing up cash flow.

• Net leverage stands at 3.7x, with a target to reduce to around 3x over the next 12–18 months, prioritizing debt repayment.

• Margin performance has exceeded pre-spin expectations, with EBITDA margins 125–150 bps above initial targets despite inflation.

• Future margin expansion will focus on cost optimization, favorable product mix, and leveraging GLP-1 tailwinds.

• Analyst Day in December will provide a three-year business and financial roadmap, including more detail on pump investments and product differentiation.