EMBC

Image source: The Motley Fool. Friday, Aug. 7, 2026 at 8:00 a.m. ET Vice President of Investor Relations - Pravesh Khandelwal Chairman and Chief Executive Officer - Devdatt Kurdikar Chief Financial Officer - Jake Elguicze Operator: Welcome, ladies and gentlemen, to Embecta Corporation's Fiscal Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded, and a replay will be available on the company's website following the call. I would now like to turn the call over to your host today, Mr. Pravesh Khandelwal, Vice President of Investor Relations. Mr. Khandelwal, please go ahead. Pravesh Khandelwal: Good morning, everyone, and welcome to Embecta's Fiscal Third Quarter 2026 Earnings Conference Call. The press release and slides to accompany today's call, along with webcast replay details, are available on the Investor Relations section of our website at www.embecta.com. With me today are Dev Kurdikar, Embecta's Chairman and Chief Executive Officer, and Jake Elguicze, our Chief Financial Officer. Before we begin, I would like to remind you that some of the matters discussed in the conference call will contain forward-looking statements regarding future events as outlined in our slides, including those referenced on Slide 2 of today's conference call presentation. Such statements are, in fact, forward-looking in nature and are subject to risks and uncertainties and actual events or results may differ materially. The factors that could cause actual results or events to differ materially include, but are not limited to, factors referenced in our press release today, as well as our filings with the SEC, which can be accessed on our website. We do not intend to update or revise any forward-looking statements, including any charts, financial projections, or other data referenced in this presentation, whether as a result of new information, future events, or otherwise, except as required by applicable law. In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered a supplement to, and not a substitute for, financial measures prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in our press release and conference call presentation, which are also included in the Investors section of our website at www.embecta.com. Our agenda for today's call is as follows. Dev will begin with a review of the company's performance during the third quarter, followed by an update of the Owen Mumford acquisition, and then a discussion of the progress we have made with our strategic objectives. Jake will then take you through our third quarter financial results in more detail as well as our updated fiscal year 2026 guidance. We will then open the call for questions. With that, I will now turn the call over to Dev. Devdatt Kurdikar: Good morning, everyone, and thank you for joining us today. Before I talk about our recent acquisition of Owen Mumford, let me briefly comment on our third quarter results. During the third quarter, Embecta generated total revenue of approximately $272 million, which is a decrease of 8.1% year-over-year on an as reported basis and a decline of 8.9% on an adjusted constant currency basis. While on a sequential basis, our third quarter financial performance improved significantly 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. The sequential increase was due to a combination of factors, including improved performance within the U.S. and International as well as the initial contribution from the Owen Mumford acquisition, which closed midway through the quarter. I will return to our U.S. and International performance for the quarter in more detail, but first let me spend a few minutes on Owen Mumford because we continue to be excited about what this acquisition means for Embecta's future. We closed the transaction on May 15 and integration is progressing as planned. Our conviction in the strategic rationale remains unchanged. As a reminder, Owen Mumford broadens our product offerings well beyond insulin injection devices with the addition of a pharmaceutical services business and a wider portfolio of medical devices. Within pharmaceutical services, the portfolio includes a range of auto-injectors designed to support pharmaceutical partners anchored by the new Aidaptus platform, while OM's medical devices include those used for point-of-care testing and self-injection among others. On Aidaptus specifically, it's an award-winning, next-generation auto-injector designed with a single form factor that accommodates both 1 mL and 2.25 mL fill volumes. What that practically means is that Aidaptus has a single final assembly process and was designed from the start to address customers' needs for reduced manufacturing changeovers, simplified supply chain logistics and large-scale production. We estimate the total addressable auto-injector market to be approximately $2.4 billion, growing at a double-digit CAGR, driven by the adoption of biologics, the emergence of generic GLP-1 therapies and the broader shift towards self-injection as the preferred modality across multiple chronic care categories. Aidaptus is already supporting customer clinical development programs today, and our commercial contract pipeline includes secured long-term agreements with several partners. Stepping back, the addition of auto-injectors to our portfolio significantly expands our addressable market, meaningfully broadening our opportunity set well beyond our historical insulin injection footprint and significantly increases our weighted average market growth rate potential. As we expand our work with pharmaceutical companies, from pen needles that can be used with either branded or generic GLP-1 drugs, to the development of a multi-dose pen injector and Owen Mumford's pharma services business, we are now serving a different customer base with needs distinct from our legacy insulin injection devices business. This opportunity requires dedicated leadership focus. To that end, I'm pleased to announce that Jeff Mann has been appointed President of Pharma Services and Product Management and Chief Legal Officer. In this expanded role, Jeff will assume responsibility for a new pharma services organization, bringing together a combination of Embecta and Owen Mumford talent dedicated to this important effort. This new organization will have dedicated leadership and staff focused on this important growth platform as we expand our capabilities and strengthen our partnerships across the pharmaceutical industry. Turning to our manufacturing and distribution footprint. As part of the Owen Mumford acquisition, we added 4 sites. These include 3 manufacturing plants, 2 of which are in the UK and 1 in Malaysia as well as a warehousing center in the U.S. This broadening of our manufacturing and distribution base creates options for future network optimization and further strengthens our presence in emerging markets. Now let me turn to the progress we made against our strategic priorities during the quarter. First, in terms of strengthening our core business, I'm pleased to announce that our market-appropriate pen needles continue to progress through review with the U.S. FDA and with BSI for CE Mark certification in Europe. In addition, we expect that we will launch market-appropriate syringes in additional countries in the coming months. Finally, we completed our brand transition in key European, Asian, and Latin American markets during the quarter. And currently, more than 90% of Embecta revenue is now represented by products commercially launched and shipped under the Embecta label, and we remain on track to substantially complete global brand transition by the end of calendar year 2026. Second, expanding our product portfolio. We continue to build commercial momentum with our B2B co-packaging opportunity as generic GLP-1 therapies featuring Embecta pen needles launched in Canada, Brazil and most recently South Africa. This follows the initial launch in India. In the coming months, we also expect to launch a pen needle small pack format in the U.S. to support those patients using Zepbound, which was recently made available in a pen injector format. Such small packs have already been launched in Canada and Australia. Third, increasing our financial flexibility. During the quarter, we borrowed approximately $180 million under our revolving credit facility to fund the Owen Mumford acquisition, which included the acquisition of OM's cash. We subsequently repaid approximately $53 million in debt, reflecting our continued commitment to disciplined deleveraging. We also returned approximately $9 million of capital to shareholders through share repurchases during the quarter. Moving to Slide 7, I want to take a moment to introduce Nimish Muzumdar, who recently joined Embecta as SVP and President, North America. Nimish brings more than 25 years of experience leading commercial organizations across U.S. retail pharmacy, hospital, and institutional markets. Most recently, he served as SVP and Head of Generics at Sandoz, where he restored the division to profitable growth and helped lead its commercial strategy through the company's 2023 spin-off from Novartis. His prior experience includes leadership roles across retail generics, OTC, institutional, hospitals and clinic channels at Sandoz, Ranbaxy USA, Watson Laboratories and Dr. Reddy's. Now turning back to our third quarter revenue performance. Within the U.S., revenue for the quarter totaled approximately $121 million, reflecting a year-over-year decline of 24.6% on both a reported and adjusted constant currency basis. In addition to the effects of favorable one-time contributions in the prior year as noted at that time, the year-over-year decline was driven by factors largely consistent with those that impacted our fiscal second quarter results. With regard to pen needles, our share of category in Q3 were generally in line with our expectations. Total prescriptions for insulin pens in the retail channel appeared sequentially stable, declined year-over-year in Q3 at a slightly greater rate than in Q2. Customer and payer mix impact on net pricing was greater in Q3 as compared to Q2. Syringes and safety products were generally in line with our expectations. We continue to monitor factors that may be impacting market volume, including trends in the insured population enrolled via ACA marketplaces and Medicaid as well as the accelerated adoption of GLP-1 therapies. On a sequential basis, U.S. revenue increased by approximately $25 million compared to the second quarter, reflecting a normalization in distributor order timing as well as a modest contribution from Owen Mumford as the acquisition closed slightly earlier than originally expected. Since joining Embecta, Nimish has brought a fresh perspective and rigorous commercial lens to our North America business. Through a comprehensive assessment of our commercial organization, customer engagement model, and go-to-market capabilities, his initial findings confirm that while our brand equity, customer trust, and product quality remain strong, there are meaningful opportunities to enhance commercial execution by strengthening strategic customer partnerships, anticipating evolving customer needs, and leveraging data-driven insights to inform decision-making and drive growth. While this will take time, we expect that the combination of strong leadership, disciplined execution, and a clear strategic focus will strengthen our U.S. business. Turning to our International business, revenue for the quarter totaled approximately $151 million, representing an increase of 11.5% on a reported basis and 9.7% on an adjusted constant currency basis. Year-over-year growth was driven by continued strength across Latin America and Asia, and contribution from Owen Mumford, partially offset by the anticipated softness in China. Meanwhile, from a product family perspective, during the quarter, adjusted constant currency pen needle revenue declined approximately 18.6%, primarily driven by the same U.S. factors just discussed. Turning to our syringe products, revenue was roughly flat year-over-year as continued declines in the U.S., driven by the ongoing long-term shift toward insulin pens, were largely offset by strong performance internationally, particularly in Latin America and Asia. Moving to our safety products, they delivered solid growth of 4.6% in the quarter, driven by gains in the U.S. Finally, contract manufacturing revenue, which we generated through the manufacturing and sale of nondiabetes products back to Becton Dickinson, declined a modest 3.6%, consistent with the continued insourcing of these products by BD. With that, let me turn the call over to Jake. Jake Elguicze: Thank you, Dev, and good morning, everyone. Given the discussion that has already occurred regarding revenue, I will start my review of Embecta's third quarter financial performance at the gross profit line. GAAP gross profit and margin for the third quarter of fiscal 2026 totaled $153.3 million and 56.4%, respectively. This compared to $197.1 million and 66.7% in the prior year period. While on an adjusted basis, our Q3 2026 adjusted gross profit and margin totaled $158 million and 58.2%. This compared to $198.6 million and 67.2% in the prior year period. The year-over-year decline in adjusted gross profit was primarily driven by lower year-over-year revenue in the U.S. as well as the impact of net changes from profit and inventory adjustments period over period. This was somewhat offset by the addition of Owen Mumford and our International business. While from a sequential perspective, Q3 2026 adjusted gross profit improved by approximately $26 million from Q2 of 2026, primarily due to improved performance within the U.S. and International as well as the initial contribution from the Owen Mumford acquisition, which closed midway through the quarter. Turning to GAAP operating income and margin, during the third quarter of 2026, they were $48.7 million and 17.9%. This compared to $94 million and 31.8% in the prior year period. While on an adjusted basis, our Q3 2026 adjusted operating income and margin totaled $69.4 million and 25.5%. This compared to $109.1 million and 36.9% in the prior year period. The year-over-year decrease in adjusted operating income was driven by the decline in adjusted gross profit as operating expenses remain roughly consistent with the prior year period, despite the addition of Owen Mumford due to cost optimization activities identified. Whereas in terms of sequential performance, adjusted operating profit improved by approximately $21 million due to improvement in gross profit. Turning to the bottom line, during the third quarter of 2026, we generated GAAP net income of $21.1 million and earnings per diluted share of $0.36. This compared to GAAP net income of $45.5 million and earnings per diluted share of $0.78 in the prior year period. While on an adjusted basis, during the third quarter of fiscal 2026, net income and earnings per share were $32.6 million and $0.56 as compared to $65.5 million and $1.12 in the prior year period. The decrease in year-over-year adjusted net income and diluted earnings per share is primarily due to the adjusted operating profit drivers I just discussed as well as a higher year-over-year adjusted tax rate driven by the lower U.S. revenue in the quarter. In terms of sequential performance, adjusted earnings per share improved by $0.29 due to a combination of the improved revenue and gross profit as well as a lower share count due to the repurchase of approximately 2.7 million shares during the third quarter. Turning to the balance sheet and cash flow. During the third quarter, we generated approximately $41 million in free cash flow, and we repaid approximately $53 million of outstanding debt, while our last 12 months net leverage as defined under our credit facility agreement was approximately 3.7x. This compared to our covenant requirement, which requires us to stay below 4.75x. Finally, at the quarter end, we amended and extended our revolving credit facility through December 30 of 2028. That completes my prepared remarks on our third quarter 2026 results. Next, I'd like to discuss our updated 2026 financial guidance and certain underlying assumptions. Beginning with revenue. On an as-reported basis, we are reaffirming our prior revenue guidance range of between $1.015 billion and $1.035 billion, which would represent a year-over-year decline of between 4.2% and 6.1%. In terms of our adjusted organic constant currency assumptions, at the low end, they are unchanged as compared to our prior guidance, while the high end is slightly lower, driven primarily by assumptions regarding customer and payer mix in the U.S., partially offset by improved International expectations. Turning to M&A. We're raising our expectations for Owen Mumford, primarily driven by the fact that the acquisition closed 2 weeks earlier than initially expected. Turning to our thoughts on FX. We currently expect foreign currency to be a tailwind of approximately 1.3% as compared to our prior guidance, which calls for FX to be a tailwind of approximately 1.5%. In terms of adjusted operating margin, we are raising our adjusted operating margin guidance from a range of between 22.25% and 23.25% to a new range of between 23.5% and 24%. As we mentioned on our second quarter earnings conference call, we initiated a review of our cost structure. And the improvement in our operating margin guidance reflects the implementation of operating expense cost controls and cost optimization efforts, which we expect will generate a further annualized benefit in 2027. We're also raising our adjusted earnings per share guidance from a range of between $1.55 and $1.75 to a new range of between $1.80 and $1.90. This increase is primarily driven by the operating expense cost controls and cost optimization efforts I just mentioned. This updated adjusted earnings per share range also includes the following guidance assumptions: a lower adjusted tax rate of approximately 27% as compared to our prior assumption of approximately 28%, a lower interest expense assumption of approximately $95 million as compared to our prior assumption of approximately $97 million and a reduction in our weighted average diluted share count to approximately 58.6 million shares as compared to our prior guidance of approximately 59.4 million shares, reflecting share repurchases made under our share repurchase program. Turning to the balance sheet and cash flow. We expect to repay at least $150 million of debt during 2026. As a reference, through the first 9 months of 2026, we have repaid approximately $128 million in debt. Lastly, in terms of free cash flow, our thoughts are largely unchanged from our prior expectation of generating free cash flow of approximately $100 million. This includes approximately $18 million to $20 million of capital expenditures, a significant majority of which we expect to occur in the fourth quarter of fiscal 2026. That completes my prepared remarks. And at this time, I would like to turn the call over to the operator for questions. Operator? Operator: [Operator Instructions] One moment for our first question that comes from Marie Thibault with BTIG. Marie Thibault: I wanted to start here to try to follow up on some of the discussion we had last quarter about competitive share shifts, low-cost competitors and some of the pressures you were seeing with some of the regional players as well. So any updates on what you've heard from your customer base and your strategies for sort of offsetting some of this low-cost competition? Devdatt Kurdikar: Yes. Thanks for the question. Look, we are pleased with our performance in Q3. With respect to the share question, it was tracking -- it is tracking within the range of expectations that we laid out in the last quarter. We saw share stability in Q3, and so we were pleased with that. We continue to make progress on our market-appropriate syringes and pen needles, which obviously, over time, will help us combat some of these low-cost players. Our pen needle is under review with the U.S. FDA. That review is progressing as you might expect. It's also under review with BSI for CE Mark. Our syringes have already launched in China, which is a tough low-cost market, but over time certainly will expand that to other geographies around the world. So overall, I'd say we are tracking within the range of expectations that we laid out 90 days ago and pleased with the progress that we've made on new products. Marie Thibault: All right. That's encouraging to hear, Dev. Glad to hear it. And then I wanted to follow up. You made some reference to watching trends in the U.S. market overall and some of the volume lightness that was seen last quarter. What's the latest there? I know you talked about potential impact from maybe insurance headlines or GLP-1s. But would love to hear more of what you heard, and whether you think that's a trend you'll continue to see or whether we're seeing some improvement there as well. Devdatt Kurdikar: Yes, Marie, we continue to watch that. I mean, since we spoke 90 days ago, we've noted with interest other public commentary around ACA enrollment trends and Medicaid trends. Obviously, as the insured population changes, that potentially has impact on insulin pen total prescriptions. It's a trend we had noted also 90 days ago that we had seen a decline in insulin pen TRx year-over-year. I'm pleased to say that in Q3, we saw sequential stability. As I noted in my prepared remarks, the year-over-year decline in Q3 was slightly greater than in Q2, but I would say sort of within the range of variability that we've seen in this data in the past. So our guide continues to assume no further recovery or deterioration. But obviously, these are macro factors that we will continue to monitor closely. Operator: One moment for our next question. That comes from Travis Steed with Bank of America. Gracia Mahoney: This is Gracia on for Travis. I just kind of wanted to first ask about the revenue guidance. You reiterated it, but beat the Street by about $17 million. And I think that means the Q4 guide implies about $270 million, which is just a little bit lower than where the Street is today. So any more color on potential changes and expectations for Q4 versus prior expectations on the Q2 call? Devdatt Kurdikar: Yes. Look, we did reiterate the guide, as you noted. I mean, we are pleased with the progress that we made in Q3, and expect, obviously, to continue making that progress in Q4. We are tracking within the range of all the expectations that we had laid out 90 days ago, Gracia. I mean, the Owen Mumford contribution has been tracking along the lines, our U.S. performance has been tracking along within the range of expectations. International is performing strongly. So at this point, we just thought it was prudent to stick with the guide that we laid out 90 days ago and continue to execute in Q4, hopefully, just like we did in Q3. Gracia Mahoney: Great. Super helpful. And then maybe just on how to think about 2027 revenue growth and any preliminary thoughts on how the headwinds that you've seen in 2026 either stay the same or changed? And how to think about maybe an updated LRP framework? Devdatt Kurdikar: Look, 2027, obviously, I mean, this has been a year of change. So we want to execute Q4. Let 2026 play out before we really comment on 2027. And that will give us some time to really understand, particularly with some of those macro factors that I laid out before, sort of where they level out. With respect to our LRP, I think our plan right now is to update it sometime towards the end of calendar year next year. And the idea behind that is, certainly, we have a lot of initiatives going on that will have progressed by that time, whether it's our new products on the syringe or pen needle, the GLP-1 opportunities that we've spoken about previously. And now particularly with Zepbound being launched in KwikPen, that opens up an additional revenue opportunity as well. And obviously, with the Owen Mumford acquisition, we are excited about the pen injector that we have in development, the auto-injector that we are developing with Owen Mumford. So we want all these initiatives to progress over the next 12 to 18 months or so before we update our LRP. Operator: [Operator Instructions] We have a question from Ryan Schiller with Wolfe Research. Please proceed. Ryan Schiller: Two from me. So with the Owen deal now closed and integration work underway, how are you thinking about capital allocation? And then within, Owen, can you remind us the timeline that Aidaptus should really start contributing more revenue growth? Devdatt Kurdikar: So on Owen Mumford, I'll take your second one first, and I'll let Jake comment on capital allocation. On Owen Mumford, look, I mean, it's been 6 -- it closed midway sort of in May, right? So it's been under 3 months that we've had Owen Mumford, if you will, under our watch. The integration is going well. It's proceeding quite well. The Aidaptus program is tracking to the R&D timelines that they have. I think, again, as I said before, I would like some more time before we actually lay out revenue expectations for Aidaptus. But stepping back from specific expectations for Aidaptus, I mean, let me just again reiterate, I mean, this is a $2 billion plus TAM, right, significant expansion of our TAM, current TAM for insulin injection devices, and it's growing in the double-digit. Owen Mumford has a history of being in the auto-injector space. As you may know, Humira auto-injector is produced by Owen Mumford. So with the auto-injector portfolio that they have, plus Aidaptus, we think it is going to be a significant revenue contributor over the years. But with respect to specific numbers, Ryan, I'm going to sort of wait on that till we close out 2026. Let some of the program development continue to proceed as it is before we lay out specific numbers. But Jake, you want to talk about capital allocation? Jake Elguicze: Sure, Ryan. Yes, I'd say, look, in terms of capital allocation, it's primarily going to be focused on continued debt reduction. I think at spin, we were given a fair amount of debt and leverage. In the years following spin, there was a fair amount of cash that we needed to use associated with separation and stand-up work. And then really over the last couple of years, we've been able to make some significant progress in terms of delevering. Now obviously, we acquired Owen Mumford, but yet we were still able to repay more debt in the quarter than we expected just 90 days ago. And that's really going to be the focus moving forward is primarily on continued debt reduction. Operator: Ladies and gentlemen, this will conclude our Q&A session for today, and I will pass it back to Dev Kurdikar for final comments. Devdatt Kurdikar: As we close the call, I just want to thank my colleagues across Embecta for their continued focus and commitment. This was a quarter of solid progress with sequential improvement in our U.S. business, continued strength internationally and the successful close of the Owen Mumford acquisition. We are not standing still, and the steps we are taking, strengthening our commercial execution in the U.S., integrating Owen Mumford and maintaining discipline in our cost structure and capital allocation are purposeful and aligned with our long-term strategic road map. Thank you for joining us today and for your continued interest in Embecta. Operator: And this concludes our conference. Thank you all for participating. You may now disconnect. Before you buy stock in Embecta, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Embecta wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Embecta (EMBC) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Sequential revenue improvement of approximately $50 million was driven by normalized U.S. distributor order timing and the initial contribution from the Owen Mumford acquisition. The Owen Mumford acquisition strategically expands Embecta's addressable market into the $2.4 billion auto-injector space, diversifying beyond legacy insulin injection devices. International growth of 9.7% on a constant currency basis was fueled by strong performance in Latin America and Asia, successfully offsetting anticipated softness in China. Management established a dedicated Pharma Services organization to capture emerging opportunities in generic GLP-1 therapies and multi-dose pen injectors. U.S. revenue declines of 24.6% year-over-year reflect unfavorable prior-year comparisons and increased pressure from customer and payer mix on net pricing. The company achieved a significant milestone with over 90% of revenue now represented by Embecta-labeled products, moving toward full brand independence by late 2026. Fiscal 2026 adjusted EPS guidance was raised to $1.80-$1.90, primarily reflecting the implementation of aggressive cost optimization and expense controls. Revenue guidance assumes no further recovery or deterioration in U.S. insulin pen prescriptions, which showed sequential stability despite year-over-year declines. Management expects to launch market-appropriate syringes in additional global markets and a new pen needle small pack format in the U.S. to support Zepbound users. The company remains committed to disciplined deleveraging, targeting at least $150 million in total debt repayment for fiscal 2026. A comprehensive Long-Range Plan (LRP) update is deferred until late calendar year 2027 to allow for the maturation of GLP-1 initiatives and Aidaptus R&D timelines. The acquisition of Owen Mumford added four global sites, providing new options for network optimization and strengthening the emerging markets footprint. Management is closely monitoring the 'redetermination' impact of Medicaid and ACA marketplace enrollment trends on the total addressable insulin pen market. Contract manufacturing revenue continues to decline as Becton Dickinson proceeds with the planned insourcing of non-diabetes products. The appointment of a new President for North America signals a strategic shift toward data-driven customer engagement to combat low-cost competitive pressures. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management reported that market share was stable in Q3 and tracking within the expected range. The primary defense strategy involves the rollout of 'market-appropriate' products, specifically pen needles currently under regulatory review with the FDA and BSI, and syringes which are expected to launch in additional countries in the coming months. Total prescriptions for insulin pens were sequentially stable in Q3, though management noted the year-over-year decline was slightly greater than in Q2. The company is monitoring macro factors like ACA enrollment but currently assumes a stable environment for its forward guidance. Integration is proceeding well, and the Aidaptus program is currently tracking to its internal R&D timelines. Management declined to provide specific revenue numbers for Aidaptus until the end of fiscal 2026, citing the need for further program development. Debt reduction remains the primary focus for capital allocation to address the leverage profile established at the time of the spin-off. Despite the acquisition, the company repaid more debt in the quarter than originally anticipated 90 days prior.

This article first appeared on GuruFocus. Total Revenue: Approximately $272 million, a decrease of 8.1% year-over-year on an as-reported basis and a decline of 8.9% on an adjusted constant currency basis. U.S. Revenue: Approximately $121 million, reflecting a year-over-year decline of 24.6% on both a reported and adjusted constant currency basis. International Revenue: Approximately $151 million, representing an increase of 11.5% on a reported basis and 9.7% on an adjusted constant currency basis. GAAP Gross Profit and Margin: Totaled $153.3 million and 56.4%, respectively, compared to $197.1 million and 66.7% in the prior year period. Adjusted Gross Profit and Margin: Totaled $158 million and 58.2%, compared to $198.6 million and 67.2% in the prior year period. GAAP Operating Income and Margin: Totaled $48.7 million and 17.9%, compared to $94 million and 31.8% in the prior year period. Adjusted Operating Income and Margin: Totaled $69.4 million and 25.5%, compared to $109.1 million and 36.9% in the prior year period. GAAP Net Income and EPS: Generated $21.1 million and earnings per diluted share of $0.36, compared to $45.5 million and $0.78 in the prior year period. Adjusted Net Income and EPS: Totaled $32.6 million and $0.56, compared to $65.5 million and $1.12 in the prior year period. Free Cash Flow: Generated approximately $41 million during the third quarter. Debt Repayment: Repaid approximately $53 million of outstanding debt during the quarter. Net Leverage: Last 12 months net leverage was approximately 3.7 times, compared to a covenant requirement of below 4.75 times. Product Family Revenue (Adjusted Constant Currency): Pen needle revenue declined approximately 18.6%; syringe revenue was roughly flat year-over-year; safety products delivered solid growth of 4.6%; contract manufacturing revenue declined a modest 3.6%. Fiscal 2026 Guidance: Reaffirmed revenue guidance of $1,015 million to $1,035 million; raised adjusted operating margin guidance to 23.5% to 24%; raised adjusted EPS guidance to $1.80 to $1.90. Warning! GuruFocus has detected 6 Warning Signs with EMBC. Is EMBC fairly valued? Test your thesis with our free DCF calculator. Release Date: August 07, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Embecta Corp (NASDAQ:EMBC) reported significant sequential improvement in Q3 fiscal 2026, with revenue increasing approximately $50 million and adjusted operating income rising about $21 million compared to Q2. The Owen Mumford acquisition closed on May 15th and integration is progressing as planned, expanding Embecta Corp (NASDAQ:EMBC)'s portfolio into the $2.4 billion auto-injector market with the Adaptus platform. Embecta Corp (NASDAQ:EMBC) raised its fiscal 2026 adjusted operating margin guidance to 23.5%-24% and adjusted EPS guidance to $1.80-$1.90, driven by cost optimization efforts. International business showed strong performance, with revenue increasing 11.5% year-over-year on a reported basis, driven by strength in Latin America and Asia. Embecta Corp (NASDAQ:EMBC) continues to build commercial momentum with B2B co-packaging opportunities, as generic GLP-1 therapies featuring its pen needles launched in Canada, Brazil, and South Africa. The company generated approximately $41 million in free cash flow during Q3 and repaid about $53 million of debt, demonstrating disciplined capital allocation. Embecta Corp (NASDAQ:EMBC) experienced a year-over-year revenue decline of 8.1% in Q3 fiscal 2026, with U.S. revenue falling 24.6% due to customer and payer mix impacts and lower insulin pen prescriptions. Adjusted gross profit margin declined significantly year-over-year, from 67.2% to 58.2%, driven by lower U.S. revenue and inventory adjustments. The company faces ongoing pressure from low-cost competitors in the pen needle market, though market-appropriate products are under FDA review. U.S. insulin pen prescriptions declined year-over-year at a slightly greater rate in Q3 compared to Q2, with macro factors like ACA enrollment trends and GLP-1 adoption potentially impacting volumes. Embecta Corp (NASDAQ:EMBC) reaffirmed its revenue guidance of $1,015-$1,035 million, implying a Q4 revenue run-rate of approximately $270 million, which is below current street expectations. The company's net leverage stands at 3.7 times, and management has not provided specific revenue expectations for the Adaptus platform, creating uncertainty about future growth contributions. Q: Can you provide an update on the competitive share shifts and low-cost competition pressures, and what strategies are in place to offset them?A: Devdatt (Dev) Kurdikar, Chairman, President, and CEO: We are pleased with our Q3 performance. Our share is tracking within the range of expectations we laid out last quarter, and we saw share stability in Q3. We continue to make progress on our market-appropriate syringes and pen needles, which will help combat low-cost players over time. Our pen needle is under review with the U.S. FDA and BSI for CE mark, and our syringes have already launched in China, a tough low-cost market, with plans to expand to other geographies. Q: What is the latest on U.S. market volume trends, including potential impacts from insurance headlines or GLP-1 therapies?A: Devdatt (Dev) Kurdikar, Chairman, President, and CEO: We continue to monitor macro factors like ACA enrollment and Medicaid trends, which can impact insulin pen prescriptions. In Q3, we saw sequential stability in insulin pen TRx, though the year-over-year decline was slightly greater than in Q2, within the range of past variability. Our guidance assumes no further recovery or deterioration, but we will continue to monitor these factors closely. Q: You reiterated revenue guidance but beat the street by about $17 million. Does the Q4 guide imply lower expectations than the street, and can you provide color on Q4 expectations?A: Devdatt (Dev) Kurdikar, Chairman, President, and CEO: We are pleased with Q3 progress and expect to continue that momentum in Q4. We are tracking within the range of expectations laid out 90 days ago. The Owen Mumford contribution is tracking along the lines, U.S. performance is within expectations, and international is performing strongly. We thought it prudent to stick with the guide and continue executing in Q4. Q: How should we think about 2027 revenue growth and the headwinds seen in 2026, and is there an updated LRP framework?A: Devdatt (Dev) Kurdikar, Chairman, President, and CEO: We want to execute Q4 and let 2026 play out before commenting on 2027, allowing time to understand where macro factors level out. We plan to update our LRP towards the end of calendar year next year, as initiatives like new syringe and pen needle products, GLP-1 opportunities, and the Owen Mumford acquisition progress over the next 12 to 18 months. Q: With the Owen Mumford deal closed, how are you thinking about capital allocation, and when will Adaptus start contributing more revenue growth?A: Devdatt (Dev) Kurdikar, Chairman, President, and CEO: On Adaptus, integration is going well and the program is tracking to R&D timelines. We need more time before laying out specific revenue expectations, but the auto-injector market is a $2.4 billion TAM growing at double-digit CAGR. Owen Mumford has a history in the space, producing the Humira auto-injector, so we expect it to be a significant revenue contributor over the years. Jacob (Jake) Elguicze, CFO: Capital allocation will primarily focus on continued debt reduction. We were able to repay more debt in the quarter than expected, and that remains the focus moving forward. Q: Can you provide more detail on the sequential improvement in Q3 financial performance?A: Devdatt (Dev) Kurdikar, Chairman, President, and CEO: Q3 revenue increased approximately $50 million sequentially, GAAP operating income increased approximately $14 million, and adjusted operating income increased approximately $21 million compared to Q2. This was driven by improved performance in the U.S. and international, as well as the initial contribution from the Owen Mumford acquisition, which closed midway through the quarter. Q: What drove the year-over-year decline in adjusted gross profit and operating income?A: Jacob (Jake) Elguicze, CFO: The decline in adjusted gross profit was primarily driven by lower U.S. revenue and net changes from profit and inventory adjustments, partially offset by the addition of Owen Mumford and international business. Adjusted operating income decreased due to the decline in gross profit, while operating expenses remained roughly consistent with the prior year despite the Owen Mumford addition, due to cost optimization activities. Q: What are the key drivers behind the raised adjusted operating margin and EPS guidance?A: Jacob (Jake) Elguicze, CFO: We raised adjusted operating margin guidance from 22.25%-23.25% to 23.5%-24%, reflecting the implementation of operating expense cost controls and cost optimization efforts, which we expect to generate further annualized benefits in 2027. We also raised adjusted EPS guidance from $1.55-$1.75 to $1.80-$1.90, driven by these cost controls, a lower adjusted tax rate of approximately 27%, lower interest expense of approximately $95 million, and a reduced share count of approximately 58.6 million shares. Q: Can you provide an update on the progress of the brand transition and new product launches?A: Devdatt (Dev) Kurdikar, Chairman, President, and CEO: We completed the brand transition in key European, Asian, and Latin American markets during the quarter, with more than 90% of revenue now under the Embecta label. We remain on track to substantially complete the global brand transition by the end of calendar year 2026. Additionally, we expect to launch market-appropriate syringes in additional countries in the coming months, and we are building commercial momentum with B2B co-packaging opportunities for generic GLP-1 therapies in Canada, Brazil, and South Africa. Q: What is the status of the Owen Mumford integration and the new Pharma Services organization?A: Devdatt (Dev) Kurdikar, Chairman, President, and CEO: The Owen Mumford acquisition closed on May 15th, and integration is progressing as planned. We added four sites, including three manufacturing plants in the UK and Malaysia and a warehousing center in the U.S. Jeff Mann has been appointed President of Pharma Services and Product Management and Chief Legal Officer, leading a new Pharma Services organization that combines Embecta and Owen Mumford talent dedicated to this growth platform. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Embecta Corp.? Here are five stocks we like better. Embecta’s fiscal Q3 revenue fell 8.1% year over year to about $272 million, while adjusted EPS declined to $0.56 from $1.12. Results improved significantly sequentially, helped by stronger international performance and the initial contribution from the Owen Mumford acquisition. The Owen Mumford deal, completed May 15, expands Embecta into pharmaceutical services, auto-injectors, point-of-care testing and self-injection products. Its Adaptis auto-injector platform targets a roughly $2.4 billion market expected to grow at a double-digit rate. Embecta maintained fiscal 2026 revenue guidance of $1.015 billion to $1.035 billion but raised adjusted operating-margin guidance to 23.5%-24% and adjusted EPS guidance to $1.80-$1.90. Management plans to prioritize debt reduction after borrowing about $180 million to fund the acquisition. 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. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth Kurdikar said integration of Owen Mumford is proceeding as planned. The acquisition adds pharmaceutical services and a broader medical-device portfolio, including auto-injectors, point-of-care testing products and self-injection devices. 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. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High 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. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling 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. 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. 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. 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. 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Embecta Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

The stock was sluggish on the back of Embecta Corp.'s (NASDAQ:EMBC) recent earnings report. Along with the solid headline numbers, we think that investors have some reasons for optimism. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. One key financial ratio used to measure how well a company converts its profit to free cash flow (FCF) is the accrual ratio. To get the accrual ratio we first subtract FCF from profit for a period, and then divide that number by the average operating assets for the period. You could think of the accrual ratio from cashflow as the 'non-FCF profit ratio'. As a result, a negative accrual ratio is a positive for the company, and a positive accrual ratio is a negative. That is not intended to imply we should worry about a positive accrual ratio, but it's worth noting where the accrual ratio is rather high. That's because some academic studies have suggested that high accruals ratios tend to lead to lower profit or less profit growth. Embecta has an accrual ratio of -0.17 for the year to March 2026. That indicates that its free cash flow quite significantly exceeded its statutory profit. To wit, it produced free cash flow of US$205m during the period, dwarfing its reported profit of US$111.9m. Embecta's free cash flow improved over the last year, which is generally good to see. That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates. As we discussed above, Embecta's accrual ratio indicates strong conversion of profit to free cash flow, which is a positive for the company. Because of this, we think Embecta's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! And on top of that, its earnings per share have grown at an extremely impressive rate over the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you'd like to know more about Embecta as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 4 warning signs with Embecta, and understanding these should be part of your investment process. Today we've zoomed in on a single data point to better understand the nature of Embecta's profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Performance was significantly impacted by a 17.4% constant currency revenue decline, primarily driven by share loss at a single major U.S. customer and broader retail market softness. Management attributes U.S. weakness to a shift in patient purchasing patterns toward lower-priced channels and competitive products not covered by preferred payer plans. A notable decline in insulin pen prescriptions was observed, potentially linked to the increasing affordability of GLP-1 therapies and the expiration of ACA subsidies impacting patient uptake. The company is transitioning from a pure-play insulin delivery firm to a diversified medical supplies provider, accelerated by the acquisition of Owen Mumford. Operational headwinds included the discontinuation of alcohol swab products due to the exit of a sole API supplier and failure to qualify an alternative under FDA standards. Strategic progress continues with 75% of revenue now under the embecta label and the launch of generic GLP-1 co-packaged products in India. Management has initiated a comprehensive review of the cost structure and organizational footprint to align with the reduced revenue outlook. Fiscal 2026 revenue guidance was lowered to $1.015 billion - $1.035 billion, assuming current share loss and market softness persist without further deterioration or recovery. The Owen Mumford acquisition is expected to contribute approximately $30 million in revenue for the final four months of fiscal 2026. Management targets returning to revenue growth by leveraging the Aidaptus auto-injector platform, which they believe could become a $100 million product line. The company plans to launch small-pack GLP-1 retail configurations in the U.S. to serve the growing out-of-pocket patient population using Zepbound. Guidance assumes an increased adjusted tax rate of 28% due to lower U.S. profitability and the dilutive near-term impact of the Owen Mumford acquisition. The quarterly dividend was reduced from $0.15 to $0.01 per share to provide flexibility for a new $100 million share repurchase program and debt reduction. The company faces a $5 million revenue headwind from the strategic exit of the alcohol swab product line, which had lower gross margins than core products. Net leverage remains at approximately 3x, well below the 4.75x covenant, with a commitment to repay $150 million in debt during fiscal 2026. Free cash flow guidance was reduced to $95 million - $105 million, inclusive of $40 million in one-time costs for brand transition and M&A. Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management clarified that share loss was concentrated at one customer but exacerbated by patients on non-preferred plans switching to competitors, which carries a higher revenue impact per unit. The decline in insulin pen prescriptions is more pronounced in the retail channel and long-acting insulin, suggesting a potential shift in how type 2 diabetes is being initiated. Management expressed confidence in returning to growth, citing a $100 million opportunity in generic GLP-1 partnerships and the diversification into auto-injectors via Owen Mumford. The company is moving toward providing a full suite of products—auto-injectors, pen injectors, and pen needles—to pharmaceutical partners. International performance remains stable, with China showing early signs of sequential stability following a sales team reorganization and the launch of price-competitive products. Management expects China to remain a mid-single-digit growth market long-term, despite current geopolitical and trade headwinds. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here.

Image source: The Motley Fool. Tuesday, May 5, 2026 at 8 a.m. ET Chairman and Chief Executive Officer — Devdatt Kurdikar Chief Financial Officer — Jake Elguicze Dev Kurdikar, embecta's Chairman and Chief Executive Officer; and Jake Elguicze, our Chief Financial Officer. Before we begin, I would like to remind you that some of the matters discussed in the conference call will contain forward-looking statements regarding future events as outlined in our slides, including those referenced on Slide 2 of today's conference call presentation. Such statements are, in fact, forward-looking in nature and are subject to risks and uncertainties, and actual events or results may differ materially. The factors that could cause actual results or events to differ materially include, but are not limited to, factors referenced in our press release today as well as our filings with the SEC, which can be accessed on our website. We do not intend to update or revise any forward-looking statements, including any charts, financial projections or other data referenced in this presentation, whether as a result of new information, future events or otherwise, except as required by applicable law. In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered a supplement to and not a substitute for financial measures prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in our press release and conference call presentation, which are also included in the Investors section of our website at embecta.com. Our agenda for today's call is as follows. Dev will begin with an assessment of the company's performance during the second quarter and associated financial guidance implications. We will also share the progress we have made on our strategic objectives and will discuss the expected imminent closing of the Owen Mumford acquisition. Jake will then take you through our second quarter financial results in more detail as well as our updated fiscal year 2026 guidance. Dev will then conclude with our updated approach to capital allocation, and we will open the call for questions. With that, I will now turn the call over to Dev. Devdatt Kurdikar: Good morning, everyone, and thank you for joining us today. I want to start the call by addressing our second quarter performance and full year guidance revision. This was a difficult quarter for embecta. Our results were below expectations with consolidated revenues down 14.4% year-over-year on an as-reported basis or 17.4% on an adjusted constant currency basis. As a result, we are updating our full year guidance to account for the underlying factors that impacted performance during the quarter and that we expect to persist for the remainder of the year. We have a number of initiatives underway already to counteract them as we transition from our roots as a spun-out insulin injection delivery company toward a more diversified broad-based medical supplies company. We are actively laying the foundation to one day serve patients beyond those solely with diabetes. Our strategic priorities, along with our recent acquisition of Owen Mumford, will help us get there. Turning to the second quarter. While our International business performed in line with our prior outlook, our U.S. business fell short of expectations due to a combination of factors that I'm going to take you through now. The largest contributor to the lower year-over-year U.S. revenue is share loss within our pen needle product category, most of which is concentrated at a single customer. We estimate that the remainder is spread across smaller regional and independent pharmacy customers. It is important to understand that the patients switching to competitive products are likely not on payer plans where we have preferred access. That means that the revenue impact of the switching is estimated to be greater than what is indicated by an average unit price. The second largest contributor is overall market volume softness for insulin pens and pen needles in the retail channel. We believe this contributes to most of the remaining pen needle revenue decline. And as it relates to the insulin pen market, we are seeing signs of decline in overall insulin pen prescriptions. This is driven by a decline in the retail channel, but is being partially mitigated by growth in the long-term care channel. We are also seeing volume softness in longstanding accounts where we have a stable share position. Additionally, more patients choosing to acquire pen needles from channels where we do not participate or where products are lower priced is driving additional pressure on retail pen needle volumes. The remaining pen needle decline is related to inventory reductions at certain accounts and additional net pricing pressure. Finally, a reduction in syringe and safety products revenue comprised the remainder of the overall U.S. revenue decline. As a result, we are revising our fiscal 2026 revenue guidance to a range of between $1.015 billion and $1.035 billion. This reflects both the U.S. revenue shortfall in the second quarter and our updated expectations in the U.S. for the remainder of the fiscal year. International is performing as expected, and our outlook there is unchanged. Additionally, the revised range includes approximately $30 million in revenue contribution from the acquisition of Owen Mumford, which is expected to close by the end of this month. This compares to our previous guidance range of between $1.071 billion and $1.093 billion. As a reminder, during our first quarter earnings conference call, we had commented that we expected to be closer to the lower end of that revenue guidance range. Excluding the anticipated 4-month contribution from Owen Mumford, our current organic revenue outlook at the midpoint is approximately $995 million or a reduction of approximately $75 million from the low end of our prior expectations. Pen needles account for approximately 70% of the $75 million revenue guidance reduction or approximately $53 million. Given that pen needle market volume estimates can be somewhat imprecise, it is not possible to exactly calculate the individual contributions of competitive share loss and market volume softness on our product volumes. Our estimate is that share loss accounts for nearly half of the pen needle revenue reduction or approximately $25 million, while overall market volume softness is estimated to account for approximately $20 million. The remaining pen needle headwinds we are seeing are related to inventory reductions at certain accounts and additional net pricing pressure, which together accounts for approximately $8 million of the revenue guidance reduction. Turning to syringes. They account for approximately $13 million of the remaining $22 million revenue guidance reduction, most of which stems from lower syringe use associated with compounded drugs. While our decision to discontinue our swab products accounts for approximately $5 million of the revenue guidance reduction. For context, in late 2025, our sole supplier of the active ingredient in our alcohol swabs exited the API manufacturing space. Despite extensive efforts, we were unable to qualify an alternate supplier under applicable FDA standards. And while we remain committed to supporting our customers and patients through this transition, we recently made the decision to cease production of alcohol swaps. This product line had lower gross margins than our insulin injection devices. Finally, a reduction in estimated growth of safety products accounts for the remaining amount of approximately $4 million. Our guidance assumes that share loss and softness in market volumes persist throughout the remainder of the year without any further deterioration or recovery. Taken together, these are the drivers behind our performance in the second quarter as well as the full year revenue guidance revision. Considering the magnitude of the guidance reduction, we have initiated a review of our cost structure and organizational footprint. We will communicate findings and resulting actions as part of our standard quarterly reporting once that work has been completed. Now let me briefly touch on our strategic priorities. First, we continue to advance our global brand transition program during the quarter. More than 75% of embecta revenue is now represented by products commercially launched and shipped under the embecta label, and we remain on track for substantial completion by the end of calendar year 2026. Second, in terms of the development of market-appropriate pen needles and syringes, we continue to make meaningful progress during the quarter. These products are designed to compete in price-sensitive markets and may help mitigate share loss. Market appropriate syringes have launched commercially in China, and we are monitoring customer feedback. We plan to expand availability of these products in additional geographies upon the receipt of regulatory approvals. Regarding new pen needles, we have active regulatory submissions under review by the U.S. FDA, Brazilian authorities, and BSI for CE Mark certification in Europe. Third, portfolio expansion. During the quarter, we made meaningful progress on our GLP-1 B2B strategy, building directly on what we shared with you last quarter. At that time, we reported that we were collaborating with over 30 pharmaceutical partners with more than 1/3 having selected embecta as their preferred device supplier or having executed agreements in place. Three months later, the pipeline has continued to develop and now approximately 40% of our identified partners are either in active contract negotiations or have executed agreements in place. We also note that our partners have received Canadian approval and the first U.S. FDA tentative approval for a generic semaglutide injection product. Additionally, this quarter, we moved from pipeline to execution as several of our partners launched generic GLP-1 therapies co-packaged with embecta pen needles in India. That is a meaningful proof-point of our B2B value proposition and our commercial execution. Furthermore, our small pack GLP-1 retail configuration launched in Canada and Australia. These products are designed specifically to meet the needs of the growing out-of-pocket GLP-1 user population, and we expect to extend availability of such configurations into the U.S. market in the coming months to serve those patients who need pen needles to administer Zepbound in a pen injector. Regarding our fourth priority, financial flexibility, during the first 6 months of the year, we repaid approximately $75 million of outstanding principal of our Term Loan B. Disciplined deleveraging has been a consistent priority and this repayment of debt is consistent with our track record of applying free cash flow to strengthen the balance sheet and preserve strategic optionality. That financial discipline is what creates the capacity to pursue transactions like Owen Mumford. When we announced this acquisition in March, we noted that Owen Mumford had earned a global reputation for innovation, quality and patient-centered design. The more time we spend with this team in this business, the more confident we are in that view. At its core, this acquisition accelerates our transformation into a broad-based medical supplies company, one that serves both pharmaceutical partners seeking drug delivery platforms and chronic care patients across diabetes, obesity, autoimmune diseases, and the anaphylaxis markets. More specifically, we are adding a differentiated drug delivery platform designed to support pharmaceutical companies seeking a device to deliver injectable drugs. In addition, we will expand our product portfolio beyond insulin injection devices and capitalize on our global presence, thereby diversifying our revenue base. Finally, given the nature of the products being added to the portfolio, we expect to be able to leverage our core manufacturing strengths and optimize our manufacturing and distribution network, all of which is consistent with the strategy we presented at our 2025 Investor Day. Next I'll provide a brief overview of the business we are acquiring. Owen Mumford is a privately held U.K.-based innovator with a 70-year track record of developing medical devices and drug delivery technologies. OM brings a diversified portfolio of devices that serve chronic care and point-of-care testing markets, including self-injection systems, lancing devices and venous blood collection solutions. These are durable, clinically established franchises with long-standing customer relationships. Their top 10 customers have maintained relationships averaging 20 years, which speaks to the stickiness of their platform and the quality of their execution. Like embecta, Owen Mumford also has a September 30 fiscal year-end. And during fiscal year 2025, they generated revenue of approximately GBP 69.4 million with approximately 80% of their revenue concentrated in the U.K. and the United States. Their business is split between medical devices, which represents approximately 60% of revenue, and pharmaceutical services, which represents the remaining 40%. We view the pharmaceutical services business as the higher growth area of the 2, anchored by the Aidaptus auto-injector platform, which I will discuss next. Aidaptus is an award-winning next-generation auto-injector designed with a single form factor that accommodates both 1 ml and 2.25 ml fill volumes. What that practically means is that Aidaptus has a single final assembly process and was designed from the start to address customers' needs for reduced manufacturing changeovers, simplified supply chain logistics and large-scale production. We estimate the total addressable auto-injector market to be approximately $2.4 billion, growing at a double-digit CAGR. This is driven by the adoption of biologics, the emergence of generic GLP-1 therapies and the broad shift towards self-injection as a preferred modality across multiple chronic care categories. Aidaptus is well positioned to capture a meaningful share of that growth as the platform is already supporting customer clinical development programs with a commercial contract pipeline that includes secured long-term agreements with several partners. The strategic alignment with our existing GLP-1 B2B strategy is also worth highlighting as Aidaptus deepens our relevance to pharmaceutical partners who need a drug delivery device to go alongside their injectable therapy. During fiscal year 2026, Aidaptus is expected to generate a small amount of revenue as market penetration and growth are expected in future years. To that point, the acquisition of Owen Mumford was structured as an upfront payment of GBP 100 million at closing and up to an additional GBP 50 million in performance-based payments based on the net sales of Aidaptus. Regarding synergies, we have assumed a modest level of operational synergies in our financial model, reflecting opportunities to leverage embecta's manufacturing scale and infrastructure alongside Owen Mumford's capabilities. And while we have not assumed any revenue synergies in our financial model, given that OM generates approximately 80% of their revenue in only 2 countries, we believe that the commercial opportunity of pairing Owen Mumford's portfolio with embecta's presence in over 100 countries could be significant. That completes my prepared remarks at this time. And with that, let me turn the call over to Jake to take you through the financials in more detail. Jake? Jake Elguicze: Thank you, Dev, and good morning, everyone. Since Dev outlined the items impacting Q2 revenue, I will keep my comments brief. During the second quarter, embecta generated approximately $222 million in revenue, which is a year-over-year decline of 14.4% on an as-reported basis or 17.4% on an adjusted constant currency basis. Within the U.S., revenue for the quarter totaled approximately $95 million, reflecting a year-over-year decline of 29.4% on an adjusted constant currency basis. The lower U.S. revenue is attributed to the factors that Dev described earlier. Turning to our International business. Revenue for the quarter totaled approximately $126 million, representing an increase of 2.1% on a reported basis, but a decline of 4.1% on an adjusted constant currency basis. Results within International were in line with our expectations as revenue within China was lower as compared to the prior year period, given ongoing market dynamics and the broader geopolitical and trade environment. These declines were partially offset by continued strength across Latin America, Asia, and Canada. Meanwhile, from a product family perspective, during the quarter, adjusted constant currency pen needle revenue declined 20.4%, syringe revenue declined 14.6%, safety product revenue declined 2.3%, and contract manufacturing revenue declined 43.2%. GAAP gross profit and margin for the second quarter of fiscal 2026 totaled $127.8 million and 57.6%, respectively. This compared to $164.1 million and 63.4% in the prior year period. While on an adjusted basis, our Q2 2026 adjusted gross profit and margin totaled $131.8 million and 59.4%. This compared to $165 million and 63.7% in the prior year period. The year-over-year decline in adjusted gross profit and margin was primarily driven by the lower year-over-year revenue in the U.S. as well as lower year-over-year revenue in China. These headwinds were partially offset by net changes in profit and inventory adjustments and FX. Turning to GAAP operating income and margin. During the second quarter of 2026, they were $35 million and 15.8%. This compared to $62.9 million and 24.3% in the prior year period. While on an adjusted basis, our Q2 2026 adjusted operating income and margin totaled $48.6 million and 21.9%. This compared to $81.4 million and 31.4% in the prior year period. The year-over-year decrease in adjusted operating income was driven by the decline in adjusted gross profit as operating expenses remained consistent with the prior year period. Turning to the bottom line. During the second quarter of 2026, we generated a GAAP net loss of $4.1 million and a loss per diluted share of $0.07. This compared to GAAP net income of $23.5 million and earnings per diluted share of $0.40 in the prior year period. While on an adjusted basis, during the second quarter of fiscal 2026, net income and earnings per share were $16.1 million and $0.27 as compared to $40.7 million and $0.70 in the prior year period. The decrease in year-over-year adjusted net income and diluted earnings per share is primarily due to the adjusted operating profit drivers I just discussed as well as a higher year-over-year adjusted tax rate driven by the lower U.S. revenue in the quarter. Turning to the balance sheet and cash flow. During the 6-month period ended March 31, 2026, we generated approximately $47 million in free cash flow, and we repaid $75 million of outstanding debt. While our last 12 months net leverage as defined under our credit facility agreement was approximately 3x. This compared to our covenant requirement, which requires us to stay below 4.75x. That completes my prepared remarks on our second quarter 2026 results. Next, I'd like to discuss our updated 2026 financial guidance and certain underlying assumptions. Beginning with revenue. On an as-reported basis, we are lowering our guidance from a range of between $1.071 billion and $1.093 billion to a range of between $1.015 billion and $1.035 billion. This new range assumes an organic as-reported revenue range of between $985 million and $1.05 billion. It also assumes that we will close the acquisition of Owen Mumford by the end of this month, which would then generate 4 months of contribution or approximately $30 million. In terms of adjusted operating margin, given the expected decline in U.S. revenue as compared to our prior projections, we are lowering our adjusted operating margin guidance from a range of between 29% and 30% to a new range of between 22.25% and 23.25%. We are also lowering our adjusted earnings per share guidance from a range of between $2.80 and $3 to a new range of between $1.55 and $1.75. The largest driver of this reduction is the impact of the lower U.S. revenue and associated gross profit, which accounts for most of this change. In addition to the U.S. revenue and gross profit impact, the addition of Owen Mumford, including the interest expense on the associated borrowings is expected to be dilutive by approximately $0.15. Over the longer term, we continue to expect that the acquisition of Owen Mumford will contribute to revenue growth in fiscal year 2027 and beyond, that OM will be immaterial to embecta's fiscal year 2027 adjusted operating income and to be accretive thereafter, that OM will be dilutive to adjusted net income in fiscal year 2027 to be immaterial to embecta's fiscal year 2028 adjusted net income and to be accretive thereafter, and that the acquisition will generate high single-digit return on invested capital by year 4 with increasing contribution thereafter. Lastly, because of the lower expected U.S. profitability, coupled with the addition of Owen Mumford, we now expect that our adjusted tax rate will increase from approximately 23% to approximately 28%, thereby reducing our adjusted EPS as compared to our prior expectations by approximately $0.10. Turning to the balance sheet and cash flow. Despite the reduction in our revenue and profitability guidance ranges, we continue to target repaying approximately $150 million in debt during 2026. Lastly, in terms of free cash flow and inclusive of the addition of Owen Mumford, we now expect to generate free cash flow of between $95 million and $105 million. This compares to our prior guidance range of between $180 million and $200 million. This updated guidance range includes approximately $40 million in one-time use of cash associated with brand transition and the Owen Mumford acquisition. That completes my prepared remarks. And at this time, I would like to turn the call back to Dev to discuss our updated capital allocation framework. Dev? Devdatt Kurdikar: Recently, our Board authorized a 3-year share repurchase program of up to $100 million and concurrently reduced our quarterly dividend from $0.15 per share to $0.01 a share. We believe that this change in our capital allocation will provide us with additional flexibility to deploy capital towards share repurchases or additional debt reduction, which are currently our primary focus areas. We expect to commence share repurchases beginning in the current quarter, subject to market conditions and our share price, amongst other factors. That completes my prepared remarks, and I will now turn the call over to the operator for questions. Operator? Operator: [Operator Instructions] Our first question comes from the line of Marie Thibault with BTIG. Marie Thibault: I want to spend a little time better understanding the U.S. weakness this quarter and assumptions going forward. I think you said in your commentary that in the U.S. pen needle segment, the losses were concentrated at a single customer. I wanted to understand if that was the same customer as was referenced last quarter, where there were pricing concessions made and why, if so, the volumes weren't stabilized by that move? And then secondly, you called out weakness in insulin pen prescriptions. Can you tell us a little bit more about what's driving that? Could that be short-lived? Or is that a long-term trend? Devdatt Kurdikar: Let me start by taking the market question first on insulin pens and pen needles, and then go to the competitive loss question. So first on insulin pens, if we look at prescriptions for insulin pens, we have now begun to see a decline maybe more pronounced in the most recent quarter that we reported. That decline is actually greater in the retail channel than it is in other channels. And insulin pens are sold primarily in retail, but some in long-term care and very little in the specialty care channel. So insulin pen is mostly stored and sold in retail, and there has been a decline. That decline is greater in long-acting than fast-acting. And it seems to be driven by a decline in new prescriptions. That obviously translates into the pen needle market as well, but maybe a bit exacerbated in the pen needle market because what we are also seeing is a decline in retail that maybe is a little bit faster for pen needles than there is for insulin pens. Now some of this is likely being caused by shift in purchasing patterns from retail to perhaps lower cost channels or where pen needles are available at a lower price. We've also seen declines in accounts, as I referenced, where we believe we have a stable share position, so more indicative of market than anything else. And those are the market trends that we are seeing. Of all the variables that we try to account for in our guidance, this is perhaps the one where there is maybe more uncertainty because what we are observing is more of a recent shift than certainly what we've seen over the past several years. So that's about the market. Now with respect to the competitive loss, yes, it was the same customer that we had referred to earlier. Obviously, I don't want to talk about pricing at any specific customer or even broadly in the U.S. market. But I think what we've ended up is the share loss at that customer is a little bit deeper than we anticipated. But I want to point out a couple of factors that I referenced in my prepared remarks. So when there is a shift in share at a particular retailer, we believe that much of that share loss occurs with patients who are not on preferred plans with us. And so they can move to a different brand of pen needles and still use their insurance plan. And so when that happens, the revenue impact of that share loss is higher since if we are not on a preferred plan for that patient, obviously the rebate amount for that payer plan is less for us. Secondly, while, yes, most of that competitive loss was concentrated at the aforementioned account, we are seeing some declines in smaller regional players as well as independent pharmacies. Now with these smaller regional players and independent pharmacies, the rebates that these retailers get are obviously less than our large customers. And so that has an impact on the revenue as well. And so the competitive share loss affects us maybe at a higher rate than one might imagine just by using an average unit price. So those are the 2 factors that are impacting the U.S. results this quarter and drove the majority of the guidance revision for the year. Marie Thibault: Okay. That's helpful. And just to clarify, could GLP-1s be an impact on the insulin prescriptions? Is that anything you're seeing in the field? Devdatt Kurdikar: It's hard to definitively state what it is. But certainly, as we explored what the factors were that could be leading to market softness, right? The 2 factors that actually bubbled to sort of the top of the mind are, one, GLPs. And now you could ask sort of what's changed in GLP-1s and GLPs have been around. And we do wonder whether the increasing affordability of GLP-1 drugs certainly over the past several months could have played a factor in increasing penetration rate. Now if that were to be the case, what would result is obviously a larger number of patients sort of would try GLP-1s before they start insulin. And could that be having an effect? Certainly, that's possible, but it's hard to conclusively state that. The second thing, obviously, that occurred in December of 2025, so the beginning of our fiscal second quarter, is the expiration of the ACA subsidies. And could that be having an impact on the insured population, particularly as it affects sort of insulin uptake and doctors' visit and getting sort of progressively treated for type 2 diabetes? Maybe. Those are the 2 factors that potentially have shown an inflection point at the beginning of the quarter, Marie, but it's hard at this point to conclusively state the contribution of those factors or whether there are others. Marie Thibault: Yes. Lastly for me, and then I'll hop back in queue. I understand it's early right now. But as we think about embecta long term, beyond this fiscal year, do you envision that you can return to sales growth here from this level? Devdatt Kurdikar: Yes, absolutely. That's certainly what our intention is, that's what our target is, and that's what we believe the Owen Mumford acquisition will position us for, right? So let me zoom back a little bit. Almost 1.5 years ago, we announced the termination of the patch program. And then at the Analyst Day a year ago, we sort of conveyed our strategic intent to diversify into being a broad-based medical supplies company and really get further into chronic care drug delivery and build out our B2B segment. Prior to the acquisition of Owen Mumford, we started some initiatives. We wanted to expand our portfolio of syringes and pen needles, and you heard today about the advances that we've made over there. And we laid out a plan to really go deeper into the B2B segment and establish relationships with generic drug companies wanting to enter the generic GLP-1 market. And we, at that point, pointed out that was a $100 million opportunity for us. Everything that we've seen since then, I think, further validates that $100 million opportunity, including the launch of generic GLP-1 therapies in India that actually have our pen needles co-packaged with them. Obviously, we noted with excitement, Canadian approvals. We still expect Brazil and China to launch generic GLP-1s as well. Obviously, timing is a little bit uncertain. China might actually end up being in 2027 rather than 2026. But certainly, the advances that we are making over there do position us to get back to revenue growth. And then on top of that, if you add the Owen Mumford acquisition, it really diversifies our product portfolio into chronic care, broad-based medical supplies. Their medical devices business is really concentrated in a few countries. And while we haven't assumed any revenue synergies in our model, certainly we are excited about the prospect of taking that bag of products and putting it into the hands of our commercial people all over the world. And then the auto-injector platform that I talked about Aidaptus, we believe that is certainly a product that's differentiated. It allows for reducing supply chain complexity and manufacturing changeovers, which we believe pharmaceutical partners will accept. And over time, by the way, it has a list of secured customers, a pipeline that's developing, and it fits in very nicely with what has been our focus, which is establishing smaller -- deeper relationships with pharmaceutical companies that are looking for drug delivery options. I think you take that and you combine it with our efforts on developing a pen injector, certainly will leverage Owen Mumford's expertise since they have right now a reusable pen injector in their portfolio. And over time, we see ourselves as being a company that can provide an auto-injector, a pen injector and pen needles as a suite of products that will be available to pharmaceutical companies. And I think all of these initiatives absolutely are designed and with the intent of really returning us to revenue growth. One final point I want to mention, sorry Marie, is talking about Aidaptus. I mean, we certainly believe that could be a $100 million product line for us. Operator: Our next question comes from the line of Anthony Petrone with Mizuho Financial Group. Anthony Petrone: So maybe on the pen needle contract, obviously a competitive loss there. But just wondering the length of the contract in terms of the loss there and when maybe it comes up for renewal, do you think looking ahead, whenever there is another request for proposal there, an RFP that you can look at that contract and be more competitive on the next go around. And then I'll have a couple of follow-ups. Devdatt Kurdikar: Yes. Anthony, on that, maybe it's worth clarifying. It's not like we've lost all the share. It's just our share position is reduced versus what it was. So it's not like we are out of that customer entirely. Now with respect to when we can get back, look, I mean, we have action plans right now underway to not only stem competitive losses, but also figure out ways to get back and win that share. So I don't want to sort of forecast exactly when that will happen, but I do want to convey that we are not going to be standing still waiting for contract renewals or what have you since it's not like we are completely out of those accounts. I think our share position has been reduced in those accounts, and we are certainly going to work as hard as possible to bring our share position back up. Anthony Petrone: That's helpful. I don't know, is there any timing you can put around those efforts? Is that a multiyear effort? Or is it something that you can see in a range of a 12- to 15-month time frame? Or is it, again, longer term? Devdatt Kurdikar: Yes. Look, I don't expect it to be a multiyear effort, honestly. So again, I don't want to put a specific time frame on it, obviously, for competitive and other reasons, but maybe I'll leave it at that. I don't expect it to be a multiyear effort, no. Anthony Petrone: No, all good. And then just when you think about the pressure, you kind of highlighted almost 3 areas here. There's lower-cost providers coming in. There's the GLP-1 question that Marie asked. And then just legacy, there was this pressure moving away from multiple daily injections to patch pumps as well as automated insulin delivery devices. When you think of those 3 buckets, it seems like the lower cost strategy kind of won the day here. But if you had to bucket those 3 headwinds, how would you kind of weight, if you had to put a weighted average on those 3 competitive headwinds in the pen needle business, how would you weight those? And then just a real quick one here would be, you had a trade receivables factoring agreement where there were receivables sold, I think, to Becton. It was roughly like $64 million. Just given the impacts in the business here, I want to make sure that trade receivable agreement is intact. Devdatt Kurdikar: Yes. I'll let Jake take the trade receivable agreement. But with respect to sort of putting a weight on each of the factors, maybe there are 3 different things, I think, factors that affect the market in 3 different ways, right? The increasing affordability of GLP-1 drugs potentially affects insulin pen prescriptions. And we have seen insulin pen prescriptions trend downwards most recently. Could that be because of the increasing affordability of GLP-1 drugs? Maybe so. And what we've seen over there is the long-acting insulin, which is what you would expect the GLP-1 effect to be concentrated on, is decreasing faster than long-acting insulin. With respect to movement towards maybe lower-priced products, what it is really maybe more a shifting of where patients are buying pen needles. So instead of the traditional retail channel and maybe they are going to retail, but maybe more patients buying sort of cash pay products or over-the-counter products or in channels where lower-priced products are available, that affects the pen needle market. And then thirdly, you asked about pump adoption. The way sort of we think about that is we look at fast-acting, right, so mealtime insulin prescription trends. And yes, while there has been a decline in fast-acting insulin, really what's driving, I believe, the total prescription decline has been the decline in long-acting. So really, pump adoption is something that, as you know, this business has been dealing with for a number of years. It's hard at this point to look at the data and say that is the primary factor, Anthony. So I would say it's more towards a shift towards lower-priced products and potentially the 2 other factors I outlined earlier in my question -- in my answer to Marie, is that the increasing affordability of GLP-1 drugs. Could the impact of the ACA subsidies have had some impact on the overall market volume as well? Potentially. But it's going to take months, maybe a couple of quarters to really get the data. Jake Elguicze: And then, Anthony, on the receivables factoring program, this is a standard AR factoring program that we have actually with a third-party bank. So very common in the industry to have something like this. It doesn't have anything to do with Becton, Dickinson in any way. It was something, I think, that we put into effect around a year or so ago. We continue to factor receivables under normal due course, and we would continue to expect to do so in the future. So none of that has necessarily really changed by this. And in terms of liquidity and whatnot, we continue to expect good free cash flow, continue to expect to repay $150 million in debt during the course of this year, which was our original guidance assumption coming into the year. And obviously that's despite the revenue call down in the U.S. today. Operator: [Operator Instructions] Our next question comes from the line of Ryan Schiller with Wolfe Research. Ryan Schiller: I was hoping we could look out further to next fiscal year. Understanding there is no formal guidance in place, but maybe how are you thinking about the FY '27 revenue growth given all the pressure in the U.S.? Devdatt Kurdikar: Yes, Ryan, I think it's too early to comment on that. As you heard me say, right, some of the trends that we are observing now in the most recent quarter are all sort of early. So really, our plan right now is to focus on executing on 2026, closing the impending Owen Mumford acquisition, getting those products in our bag, advancing the pipeline, both on our B2B products for pen needles as well as the auto-injector platform. And really, then we'll talk about 2027. It's far too early at this point for me to comment on 2027. Ryan Schiller: Okay. And then OUS finished in line with your expectations in the quarter. I'm hoping you can give us the latest on what you're seeing in China and any updated growth outlook there? Devdatt Kurdikar: Yes, very pleased with our International performance, certainly performing per expectations. With regard to China, just as a reminder, obviously we don't disclose China separately, but we think about Greater China, which includes Mainland China, Taiwan, and Hong Kong. And over there, we sell the product to 3 or 4 national distributors that then go on to sell to sub distributors. Certainly, last year, fiscal 2025, there were significant declines and we took a bunch of steps to stabilize the situation. We are seeing early signs of sequential stability. We really reordered our sales team, that had a more price competitive pen needle that we launched over there. We will see likely some headwinds this year, but certainly it's going to be significantly less than what we saw last year. And look, over the long term, our view on China hasn't changed, right? The market is growing there in mid-single digits. We have a strong commercial and manufacturing infrastructure over there. The new pen needle that I referenced where we've already submitted for regulatory approvals, that is being developed and manufactured over there. And finally, I also mentioned in the GLP-1 generic space that there are Chinese companies that want to get into the generic GLP-1 market as well. And obviously, we want to partner with them. So for all those reasons, we continue to remain optimistic on how China will end up. Now obviously cognizant of the fact that China -- the geopolitical considerations when it comes to China can impact in the short term, but we still remain optimistic in our long-term view on China. Operator: Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Dev for closing remarks. Devdatt Kurdikar: As we close the call, I just want to thank my colleagues across embecta for their continued focus and commitment. This was a difficult quarter. But I do want to be clear, we are not standing still and actions are already underway to address the issues we face. The steps that we are taking, closing the Owen Mumford transaction, reshaping our capital allocation and executing on our strategic priorities, are purposeful steps to build a stronger, more flexible company for the long term and are aligned with our strategic road map. Thank you for joining us today and for your continued interest in embecta. Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect. Before you buy stock in Embecta, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Embecta wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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