Third Quarter Fiscal Year 2026
Filed Aug 7, 2026Embecta Corp. Reports Third Quarter Fiscal 2026 Financial Results
Third-quarter revenue, gross margin, operating income, net income and adjusted EBITDA declined from the prior-year period, while management cited significant sequential improvement, repaid debt, repurchased shares and raised full-year adjusted operating margin and adjusted EPS guidance.
Actuals vs. the company’s prior outlook
from its previous release| Metric | Guided | Reported | Verdict |
|---|---|---|---|
| Reported Revenues | $1,015 - $1,035 | $754.7 million | n/a |
| Reported Revenue Growth (%) | (6.1)% - (4.2)% | down 7.6% on a reported basis | n/a |
| Impact of F/X (%) | 1.5% | 1.8 % | n/a |
| Impact of Italian Payback Measure (%) | (0.1)% | not reported | n/a |
| M&A (%) | 2.7% | not reported | n/a |
| Adjusted Organic Constant Currency Revenue Growth (%) | (10.2)% - (8.3)% | down 9.4% on an adjusted constant currency basis | n/a |
| Adjusted Operating Margin (%) | 22.25% - 23.25% | 26.1% | n/a |
| Adjusted Earnings per Diluted Share | $1.55 - $1.75 | $1.53 | n/a |
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Reported revenues, three months ended June 30, 2026GAAP | $271.7 million | increasing approximately $50 million | down 8.1% on a reported basis |
| Adjusted constant currency revenue growth, three months ended June 30, 2026non-GAAP | down 8.9% | – | down 8.9% on an adjusted constant currency basis |
| Gross profit, three months ended June 30, 2026GAAP | $153.3 million | – | – |
| Gross margin, three months ended June 30, 2026GAAP | 56.4% | – | – |
| Adjusted gross profit, three months ended June 30, 2026non-GAAP | $158.0 million | – | – |
| Adjusted gross margin, three months ended June 30, 2026non-GAAP | 58.2% | – | – |
| Operating income, three months ended June 30, 2026GAAP | $48.7 million | increasing approximately $14 million | – |
| Operating margin, three months ended June 30, 2026GAAP | 17.9% | – | – |
| Adjusted operating income, three months ended June 30, 2026non-GAAP | $69.4 million | increasing approximately $21 million | – |
| Adjusted operating margin, three months ended June 30, 2026non-GAAP | 25.5% | – | – |
| Net income, three months ended June 30, 2026GAAP | $21.1 million | – | – |
| Earnings per diluted share, three months ended June 30, 2026GAAP | $0.36 | – | – |
| Adjusted net income, three months ended June 30, 2026non-GAAP | $32.6 million | – | – |
| Adjusted earnings per diluted share, three months ended June 30, 2026non-GAAP | $0.56 | – | – |
| Adjusted EBITDA, three months ended June 30, 2026non-GAAP | $85.7 million | – | – |
| Adjusted EBITDA margin, three months ended June 30, 2026non-GAAP | 31.5% | – | – |
| Reported revenues, nine months ended June 30, 2026GAAP | $754.7 million | – | down 7.6% on a reported basis |
| Adjusted constant currency revenue growth, nine months ended June 30, 2026non-GAAP | down 9.4% | – | down 9.4% on an adjusted constant currency basis |
| Gross profit, nine months ended June 30, 2026GAAP | $442.8 million | – | – |
| Gross margin, nine months ended June 30, 2026GAAP | 58.7% | – | – |
| Adjusted gross profit, nine months ended June 30, 2026non-GAAP | $453.4 million | – | – |
| Adjusted gross margin, nine months ended June 30, 2026non-GAAP | 60.1% | – | – |
| Operating income, nine months ended June 30, 2026GAAP | $167.0 million | – | – |
| Operating margin, nine months ended June 30, 2026GAAP | 22.1% | – | – |
| Adjusted operating income, nine months ended June 30, 2026non-GAAP | $197.3 million | – | – |
| Adjusted operating margin, nine months ended June 30, 2026non-GAAP | 26.1% | – | – |
| Net income, nine months ended June 30, 2026GAAP | $61.1 million | – | – |
| Earnings per diluted share, nine months ended June 30, 2026GAAP | $1.03 | – | – |
| Adjusted net income, nine months ended June 30, 2026non-GAAP | $91.0 million | – | – |
| Adjusted earnings per diluted share, nine months ended June 30, 2026non-GAAP | $1.53 | – | – |
| Adjusted EBITDA, nine months ended June 30, 2026non-GAAP | $247.5 million | – | – |
| Adjusted EBITDA margin, nine months ended June 30, 2026non-GAAP | 32.8% | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| United States, three months ended June 30, 2026No separate driver reported. | $120.8 million | – | (24.6)% |
| International, three months ended June 30, 2026Positive impact of foreign currency translation primarily due to the weakening of the U.S. dollar. | $150.9 million | – | 11.5% |
| Pen Needles, three months ended June 30, 2026No separate driver reported. | $177.5 million | – | (18.2)% |
| Syringes, three months ended June 30, 2026No separate driver reported. | $36.6 million | – | 4.3% |
| Safety, three months ended June 30, 2026No separate driver reported. | $36.7 million | – | 5.5% |
| Other, three months ended June 30, 2026Other includes product sales for Owen Mumford products, swabs and other accessories. | $15.6 million | – | 387.5% |
| Contract Manufacturing, three months ended June 30, 2026$0.1 million decrease in contract manufacturing revenue. | $5.3 million | – | (3.6)% |
| United States, nine months ended June 30, 2026No separate driver reported. | $347.1 million | – | (20.6)% |
| International, nine months ended June 30, 2026Positive impact of foreign currency translation primarily due to the weakening of the U.S. dollar. | $407.6 million | – | 7.5% |
| Pen Needles, nine months ended June 30, 2026No separate driver reported. | $517.6 million | – | (13.2)% |
| Syringes, nine months ended June 30, 2026No separate driver reported. | $93.7 million | – | 1.5% |
| Safety, nine months ended June 30, 2026No separate driver reported. | $108.3 million | – | 4.9% |
| Other, nine months ended June 30, 2026Other includes product sales for Owen Mumford products, swabs and other accessories. | $23.2 million | – | 134.3% |
| Contract Manufacturing, nine months ended June 30, 2026$2.9 million decrease in contract manufacturing revenue. | $11.9 million | – | (19.0)% |
Fiscal Year 2026 outlook
- Revenue$1,015 - $1,035
- NoteReported Revenue Growth (%): (6.1)% - (4.2)%
- NoteImpact of F/X (%): 1.3%
- NoteImpact of Italian Payback Measure (%): (0.1)%
- NoteM&A (%): 2.9% - 3.4%
- NoteAdjusted Organic Constant Currency Revenue Growth (%): (10.2)% - (8.8)%
- NoteAdjusted Operating Margin (%): 23.50% - 24.00%
- NoteAdjusted Earnings per Diluted Share: $1.80 - $1.90
Capital returns
- Repurchased approximately $9 million of shares under the three-year, up to $100 million share repurchase program.
- Announced a dividend of $0.01 per share.
What drove it
- Third-quarter revenue decline was primarily driven by $20.1 million of unfavorable changes in price, $19.9 million of unfavorable changes in volume, and a $0.1 million decrease in contract manufacturing revenue.
- Third-quarter revenue decline was partially offset by $13.8 million of contribution of OM revenues and $2.5 million associated with the positive impact of foreign currency translation primarily due to the weakening of the U.S. dollar.
- Nine-month revenue decline was primarily driven by $60.0 million of unfavorable changes in volume, $27.4 million of unfavorable changes in price, and a $2.9 million decrease in contract manufacturing revenue.
- Completed the acquisition of Owen Mumford Holdings Limited, with integration progressing as planned.
- Generic GLP-1 therapies featuring embecta pen needles in the commercial packaging launched in Canada and Brazil, following the initial launch in India.
Concerns
- U.S. revenue decreased 24.6% in the third quarter and 20.6% in the nine-month period.
- Pen Needles revenue decreased 18.2% in the third quarter and 13.2% in the nine-month period.
- Third-quarter gross margin was 56.4%, compared to 66.7% in the prior-year period.
- Third-quarter adjusted operating margin was 25.5%, compared to 36.9% in the prior-year period.
- Nine-month adjusted earnings per diluted share was $1.53, compared to $2.46 in the prior-year period.
What to watch
- Market-appropriate pen needles progressing through regulatory review with the U.S. FDA and BSI for CE Mark certification.
- Market-appropriate syringe launches in certain geographies expected in the coming months.
- Completion of the brand transition in key European, Asian and Latin American markets, which remains on track to be substantially complete by end of calendar year 2026.
- Expected launch of the GLP-1 small pack format in the U.S. in fiscal fourth quarter.
- Owen Mumford integration progress and its revenue contribution.
Balance sheet and cash flow
- Borrowed ~$180 million under the Company's $500 million revolving credit facility to fund the Owen Mumford acquisition.
- Repaid approximately $53 million of debt, including approximately $3 million Term Loan B mandatory payment and approximately $50 million towards the revolving credit facility.
- The Company amended its credit agreement to extend the maturity date of $210 million of commitments under its revolving credit facility to December 30, 2028.
- The Company maintained $100 million of commitments under its revolving credit facility to mature on March 31, 2027.
- The revolving credit facility has been reduced from $500 million to $310 million.
Analysis
Embecta reported third-quarter revenue of $271.7 million, down 8.1% from $295.5 million in the prior-year period. The decline reflected $20.1 million of unfavorable price changes and $19.9 million of unfavorable volume changes, partly offset by $13.8 million of Owen Mumford revenue and $2.5 million of favorable foreign currency translation. The U.S. business declined 24.6%, while International revenue increased 11.5%.
Product mix remained pressured by Pen Needles, where third-quarter revenue was $177.5 million, down 18.2%. Syringes and Safety grew 4.3% and 5.5%, respectively, and Other revenue was $15.6 million, up 387.5%; Other includes Owen Mumford products, swabs and other accessories. For the nine-month period, Pen Needles declined 13.2%, while Syringes, Safety and Other grew 1.5%, 4.9% and 134.3%, respectively.
Profitability was materially below the prior-year quarter. GAAP gross margin was 56.4%, compared with 66.7%, and adjusted gross margin was 58.2%, compared with 67.2%. GAAP operating income was $48.7 million versus $94.0 million, while adjusted operating income was $69.4 million versus $109.1 million. Adjusted EBITDA was $85.7 million, compared with $131.0 million. Management nevertheless described sequential improvement in revenue, GAAP operating income and adjusted operating income.
The company completed the Owen Mumford acquisition, borrowed ~$180 million under its revolving credit facility to fund it, and subsequently repaid approximately $53 million of debt. It also repurchased approximately $9 million of shares and announced a dividend of $0.01 per share. The revolving credit facility was reduced from $500 million to $310 million, with $210 million of commitments extended to December 30, 2028 and $100 million maturing on March 31, 2027.
Management reaffirmed fiscal 2026 reported revenue guidance of $1,015 - $1,035 and raised adjusted operating margin guidance to 23.50% - 24.00% from 22.25% - 23.25%. Adjusted earnings per diluted share guidance increased to $1.80 - $1.90 from $1.55 - $1.75. Investors will focus on the pace of U.S. and Pen Needles stabilization, the planned U.S. fiscal fourth-quarter GLP-1 small pack launch, regulatory progress for market-appropriate pen needles, and Owen Mumford integration.
Management, verbatim
Our third quarter results improved significantly on a sequential basis, with revenue increasing approximately $50 million, GAAP operating income increasing approximately $14 million, and adjusted operating income increasing approximately $21 million as compared to our second quarter results. The sequential increase was due to a combination of factors, including improved performance within the United States and International, as well as contribution from the acquisition of Owen Mumford which closed mid-way through our third quarter.
Devdatt (Dev) Kurdikar, Chairman, President and Chief Executive Officer
We repaid approximately $53 million of debt during the quarter and also repurchased approximately $9 million of shares under our three-year, up to $100 million share repurchase program. While our GLP-1 B2B partners launched generic GLP-1 therapies co-packaged with our pen needles in Canada and Brazil.
Devdatt (Dev) Kurdikar, Chairman, President and Chief Executive Officer
Given our year-to-date performance, we are reaffirming our fiscal year revenue guidance range and raising our full year guidance ranges for adjusted operating margin and adjusted earnings per share.
Devdatt (Dev) Kurdikar, Chairman, President and Chief Executive Officer
Not in the filing
stated, not guessed- GAAP operating expenses
- Operating cash flow
- Free cash flow
- Cash and cash equivalents
- Total debt balance
- GAAP tax rate
- GAAP and non-GAAP metrics for the prior quarter, except the approximate sequential changes stated by management
- Fiscal-year 2026 actual results for direct comparison with prior full-year guidance
- Actual Italian Payback Measure contribution for the reported three-month and nine-month periods
- Actual M&A percentage contribution for the reported three-month and nine-month periods
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.