Embecta (NASDAQ:EMBC) reported fiscal third-quarter 2026 revenue of approximately $272 million, down 8.1% from the prior-year period on a reported basis and down 8.9% on an adjusted constant-currency basis. The company said results improved sequentially from the fiscal second quarter, with revenue rising about $50 million, GAAP operating income increasing about $14 million and adjusted operating income increasing about $21 million.
Chairman and Chief Executive Officer Dev Kurdikar said the sequential improvement reflected better performance in the U.S. and international businesses, along with an initial contribution from the acquisition of Owen Mumford, which closed May 15.
Owen Mumford acquisition expands product portfolio
The pharmaceutical-services portfolio is anchored by the Adaptis auto-injector platform. Kurdikar described Adaptis as a next-generation auto-injector designed to accommodate both 1 milliliter and 2.25 milliliter fill volumes using a single form factor and final assembly process. He said the product is intended to reduce manufacturing changeovers, simplify supply-chain logistics and support large-scale production.
Embecta estimates the total addressable auto-injector market at about $2.4 billion and expects it to grow at a double-digit compound annual growth rate, driven by biologics adoption, potential generic GLP-1 therapies and a broader shift toward self-injection. Adaptis is supporting customer clinical-development programs and has secured long-term agreements with several partners, according to Kurdikar.
The transaction also added three manufacturing facilities—two in the U.K. and one in Malaysia—as well as a U.S. warehousing center. Kurdikar said the expanded footprint creates future network-optimization options and strengthens the company’s emerging-market presence.
Embecta appointed Jeff Mann as President, Pharma Services and Product Management, and Chief Legal Officer. Mann will lead the new pharmaceutical-services organization, which will combine personnel from Embecta and Owen Mumford.
U.S. declines while international business grows
U.S. revenue totaled about $121 million, down 24.6% year over year on both a reported and adjusted constant-currency basis. Kurdikar said the decline reflected favorable one-time contributions in the prior-year quarter, as well as factors similar to those affecting the second quarter.
Pen-needle category share was generally in line with expectations, while insulin-pen prescriptions in the retail channel were sequentially stable but declined year over year at a slightly greater rate than in the prior quarter. Customer and payer mix had a larger effect on net pricing in the third quarter than in the second quarter, he said.
Sequentially, U.S. revenue rose about $25 million, driven by normalized distributor order timing and a modest Owen Mumford contribution. Kurdikar said Embecta is assessing its North American commercial organization, customer-engagement model and go-to-market capabilities under newly appointed Senior Vice President and President, North America Nimish Muzumdar.
International revenue reached approximately $151 million, up 11.5% as reported and 9.7% on an adjusted constant-currency basis. Growth was driven by Latin America and Asia and by Owen Mumford’s contribution, partially offset by anticipated softness in China.
Adjusted constant-currency pen-needle revenue declined about 18.6%, largely due to U.S. factors. Syringe revenue was roughly flat, as U.S. declines associated with the long-term shift toward insulin pens were mostly offset by strength in Latin America and Asia. Safety-product revenue grew 4.6%, supported by U.S. gains, while contract-manufacturing revenue declined 3.6% as Becton Dickinson continued insourcing products.
Margins and earnings fell from prior year but improved sequentially
GAAP gross profit was $153.3 million, or a 56.4% margin, compared with $197.1 million, or 66.7%, a year earlier. Adjusted gross profit was $158 million, with a 58.2% margin, versus $198.6 million and 67.2% in the prior-year quarter.
Chief Financial Officer Jake Elguicze said the year-over-year adjusted gross-profit decline was primarily due to lower U.S. revenue and net changes in profit and inventory adjustments. International operations and Owen Mumford partly offset those factors. Adjusted gross profit improved approximately $26 million sequentially.
GAAP operating income was $48.7 million, or 17.9% of revenue, compared with $94 million, or 31.8%, in the prior year. Adjusted operating income was $69.4 million, or 25.5%, down from $109.1 million, or 36.9%. The company said operating expenses remained roughly consistent with the prior-year period despite the Owen Mumford addition because of cost-optimization efforts.
GAAP net income was $21.1 million, or $0.36 per diluted share, compared with $45.5 million, or $0.78 per share, a year earlier. Adjusted net income was $32.6 million, or $0.56 per share, compared with $65.5 million, or $1.12 per share. Adjusted earnings per share increased $0.29 sequentially, aided by higher revenue and gross profit and a lower share count following the repurchase of approximately 2.7 million shares.
Guidance maintained for revenue, raised for margins and earnings
Embecta reaffirmed fiscal 2026 revenue guidance of $1.015 billion to $1.035 billion, representing an expected year-over-year decline of 4.2% to 6.1%. The company slightly reduced its high-end organic constant-currency assumptions, citing U.S. customer and payer mix, while improving its international outlook and raising expectations for Owen Mumford because the acquisition closed earlier than anticipated.
- Adjusted operating margin guidance was raised to 23.5% to 24%, from 22.25% to 23.25%.
- Adjusted earnings-per-share guidance was raised to $1.80 to $1.90, from $1.55 to $1.75.
- Expected free cash flow remained approximately $100 million.
- The company expects to repay at least $150 million in debt during fiscal 2026.
During the quarter, Embecta generated approximately $41 million in free cash flow and repaid about $53 million of debt. It borrowed roughly $180 million under its revolving credit facility to finance the Owen Mumford acquisition, including acquired cash, and reported last-12-month net leverage of about 3.7 times, below its 4.75-times covenant limit. The company also amended and extended its revolving credit facility through Dec. 30, 2028.
Management said capital allocation will primarily focus on continued debt reduction. Kurdikar said the company expects to provide a longer-term plan update toward the end of the next calendar year after allowing newer product initiatives, GLP-1 opportunities and Owen Mumford programs to progress further.
About Embecta (NASDAQ:EMBC)
Embecta Corp (NASDAQ: EMBC) is a pure-play diabetes care company that was spun off from Becton, Dickinson and Company on July 1, 2021. Headquartered in Franklin Lakes, New Jersey, Embecta focuses exclusively on the development, manufacturing and commercialization of products that enable insulin delivery and blood glucose monitoring for people with diabetes.
The company’s product portfolio includes insulin infusion sets, durable and patch pumps, pen needles, infusion tubing, blood glucose test strips, lancets and lancing devices.
