Snapshot
Embecta Corp. reported $264M of revenue in Q4 2025, up -7.7% year over year, with diluted EPS of $0.45 and an operating margin of 21.4%.
- Revenue
- $264M
- YoY growth
- +-7.7%
- Diluted EPS
- $0.45
- Operating margin
- 21.4%
$264M
Revenue
+-7.7%
YoY growth
$0.45
Diluted EPS
21.4%
Operating margin
01 Key takeaways
What management said
- •Jake will then review the financial results for the Fourth Quarter and Full Year 2025 and share our preliminary thoughts for Fiscal Year 2026.
- •We made the decision to end our Patch Pump Program, and we executed a restructuring plan aimed at enhancing our profitability and free cash flow.
- •With this, 100% of our revenue now flows through our systems, and all TSAs and LSAs that we had at spin have been exited.
- •Together, the completion of these separation and stand-up activities have freed up capacity, which we are now devoting to initiatives that we anticipate will help transition the company towards long-term sustainable growth.
- •Several of these partners have already signed agreements and placed purchase orders, and our products are included in multiple GLP-1 partner-managed regulatory submissions expected to lead to commercial launches.
- •With leverage now at 2.9 times net debt to adjusted EBITDA, we continue to create financial flexibility to invest in potential organic and inorganic opportunities that can reshape Embecta's long-term growth profile.
- •Now, let's review our revenue performance for the Fourth Quarter and Full Year.
- •During the Fourth Quarter of Fiscal Year 2025, Embecta generated $264 million in revenue, reflecting a 7.7% decline year-over-year on an as-reported basis or a 10.4% decline on an adjusted cost and currency basis.
- •Within the U.S., revenue for the quarter totaled $142 million, reflecting a year-over-year decline of 15.2% on an adjusted cost and currency basis.
- •The year-over-year decline was primarily driven by an unfavorable comparison to the prior year Fiscal Fourth Quarter, which benefited from additional distributor orders that occurred because of the then looming U.S.
- •Turning to our international business, revenue for the Fourth Quarter totaled $122 million, representing an increase of 2.8% on a reported basis, but a decline of 4% on an adjusted cost and currency basis.
- •The year-over-year decline in pen needle revenue was driven by the same factors that impacted our U.S.
What went well
- •Full year adjusted EPS of $2.95 at the top end of the previously provided guidance range, up from $2.45 in the prior year.
- •Exceeded previously provided fiscal 2025 adjusted gross margin, adjusted operating margin, and adjusted EBITDA margin ranges.
- •Generated approximately $182 million in free cash flow and repaid approximately $184 million of debt, exceeding the original $110 million debt reduction target; net leverage reduced to 2.9x.
- •Completed the multi-year complex stand-up program: own ERP operational, new distribution and shared services in Latin America and India, 100% of revenue flowing through Embecta systems, and all TSAs and LSAs exited.
- •Substantially completed brand transition in North America, with more than 95% of U.S. and Canadian revenue converted to the Embecta brand.
- •Advanced the GLP-1 strategy with more than 30 pharmaceutical partners, several having signed agreements and placed purchase orders, and products included in multiple partner-managed regulatory submissions.
- •Full year adjusted operating income and margin rose to $337.7 million and 31.3%, from $296.9 million and 26.3% prior year.
- •Full year adjusted EBITDA and margin of approximately $415.3 million and 38.5%, up from $353.4 million and 31.4%.
- •Full year syringe revenue grew 1.7%, safety products grew 6.3%, and contract manufacturing grew approximately 53.9%.
- •Executed an agreement to sell certain Patch Pump Program IP and long-lived assets for $10 million (a fiscal 2026 Q1 event).
What went wrong
- •Q4 revenue of $264 million declined 7.7% as-reported and 10.4% on an adjusted constant currency basis.
- •Q4 U.S. revenue of $142 million declined 15.2% adjusted constant currency, against a prior-year Q4 that benefited from ~$10 million of distributor orders ahead of a U.S. port strike and the ~$7 million unwind of favorable July 4 order timing from Q3 2025.
- •Q4 U.S. price was unfavorable by approximately $7 million, primarily due to milestone payments made to a large U.S. pharmacy customer.
- •Q4 international revenue of $122 million declined 4% adjusted constant currency, driven by lower volumes and pricing headwinds in China amid heightened competitive intensity and a growing preference for local Chinese brands.
- •Q4 adjusted constant currency by product: pen needles -13.9%, syringes -4.5%.
- •Full year adjusted revenue declined 3.9% adjusted constant currency to approximately $1.080 billion; full-year U.S. revenue of $579.1 million declined 4.6% and international of $501.3 million declined 3.1%.
- •Full year pen needle revenue declined approximately 7.1% to $784.1 million, reflecting prior-year advanced distributor ordering, lower China revenue, and pricing headwinds.
- •Q4 adjusted gross margin declined to 60.6% from 61.4%, and full year adjusted gross margin declined to 63.7% from 65.7%, driven primarily by increased cannula costs.
- •Q4 adjusted tax rate increased to approximately 25% from approximately 9.5% in Q4 2024; full year adjusted tax rate rose to approximately 25% from approximately 20%.
- •Gross margin has fallen from roughly 67% at spin to just under 64% in 2025, with the entirety of the decline attributed to increased cannula costs from sole-source supplier BD.
Guidance changes
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Performance breakdown
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Earnings call themes & trends
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