Snapshot
Embecta Corp. reported $222M of revenue in Q2 2026, up -14.4% year over year, with diluted EPS of $-0.07 and an operating margin of 15.8%.
- Revenue
- $222M
- YoY growth
- +-14.4%
- Diluted EPS
- $-0.07
- Operating margin
- 15.8%
$222M
Revenue
+-14.4%
YoY growth
$-0.07
Diluted EPS
15.8%
Operating margin
01 Key takeaways
What management said
- •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.
- •I want to start the call by addressing our second quarter performance and full-year guidance revision.
- •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.
- •Our strategic priorities, along with our recent acquisition of Owen Mumford, will help us get there.
- •While our international business performed in line with our prior outlook, our U.S.
- •revenue is share loss within our pen needle product category, most of which is concentrated at a single customer.
- •That means that the revenue impact of this switching is estimated to be greater than what is indicated by an average unit price.
- •We believe this contributes to most of the remaining pen needle revenue decline.
- •This is driven by a decline in the retail channel but is being partially mitigated by growth in the long-term care channel.
What went well
- •International business performed in line with prior outlook, with revenue of approximately $126 million, up 2.1% on a reported basis; strength continued across Latin America, Asia, and Canada.
- •More than 75% of Embecta revenue is now represented by products commercially launched and shipped under the Embecta label, on track for substantial completion by end of calendar year 2026.
- •GLP-1 B2B pipeline advanced: approximately 40% of identified partners are now in active contract negotiations or have executed agreements, up from more than one-third the prior quarter.
- •Several partners launched generic GLP-1 therapies co-packaged with Embecta pen needles in India, described as a meaningful proof point of the B2B value proposition.
- •Partners received Canadian approval and the first U.S. FDA tentative approval for a generic semaglutide injection product.
- •Small pack GLP-1 retail configuration launched in Canada and Australia, with U.S. extension expected in coming months.
- •Market-appropriate syringes launched commercially in China, with active regulatory submissions for new pen needles under review by U.S. FDA, Brazilian authorities, and BSI for CE mark.
- •Repaid approximately $75 million of Term Loan B principal in the first six months; last 12 months net leverage approximately 3x against a covenant of below 4.75x.
- •Generated approximately $47 million in free cash flow during the six-month period ended March 31, 2026.
What went wrong
- •Consolidated revenue declined 14.4% year-over-year as-reported and 17.4% on an adjusted constant currency basis; CEO called it a difficult quarter with results below expectations.
- •U.S. revenue of approximately $95 million declined 29.4% on an adjusted constant currency basis.
- •Pen needle share loss concentrated at a single customer, deeper than anticipated, with additional losses across smaller regional and independent pharmacy customers; revenue impact greater than indicated by average unit price because affected patients are largely not on preferred payer plans.
- •Overall market volume softness for insulin pens and pen needles in the retail channel, with signs of decline in overall insulin pen prescriptions.
- •Pen needle revenue declined 20.4%, syringe revenue declined 14.6%, safety products declined 2.3%, and contract manufacturing revenue declined 43.2% on an adjusted constant currency basis.
- •GAAP net loss of $4.1 million ($0.07 loss per diluted share) versus GAAP net income of $23.5 million ($0.40 per share) in the prior year; adjusted EPS of $0.27 versus $0.70 prior year.
- •Adjusted gross margin fell to 59.4% from 63.7%, and adjusted operating margin fell to 21.9% from 31.4% year-over-year.
- •Discontinued alcohol swab products after the sole API supplier exited and no FDA-qualified alternate could be sourced, removing approximately $5 million of revenue.
- •Syringe declines, most stemming from lower syringe use associated with compounded drugs, accounted for approximately $13 million of the guidance reduction.
- •China revenue was lower than the prior year period given ongoing market dynamics and the geopolitical and trade environment.
Guidance changes
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Performance breakdown
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Earnings call themes & trends
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