Q4 2025 Embecta Corp Earnings Call

November 25, 2025

Speaker #1: stand by. Welcome, ladies and finished. Please quarter 2025 earnings conference gentlemen, to Embecta Corp's fiscal fourth call. At this time, all participants on the listen-only mode.

Speaker #1: that this conference call is being recorded, and a Please note replay will be available in the company's website following the call. I would now like to hand the conference call over to your host today, Mr. Pravesh Khandelwal, Vice President of Investor Relations.

Speaker #1: ahead.

Pravesh Khandelwal: Thank you, Operator. Good morning, everyone, and welcome to Embecta's fiscal fourth quarter 2025 earnings conference call. The press release and slides to accompany today's call and webcast replay details are available on the Investor Relations section of the company's website at www.embecta.com. With me today are Dev Kurdikar, Embecta's President 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. Such statements are, in fact, forward-looking in nature and are subject to risk and uncertainties, and actual events or results may differ materially.

Speaker #2: everyone. And welcome to Thank you, Embecta's fiscal fourth quarter 2025 earnings conference call. The press release and slides to accompany today's call and webcast replay details are available on the Investor Relations section of the company's website at www.embecta.com.

Speaker #2: Kurdikar Embecta's President. With me today are Devdatt Kurdikar, Chief Executive Officer, and Jacob Elguicze, 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.

Speaker #2: Such statements are, in fact, forward-looking in nature and are subject to risk 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.

Pravesh Khandelwal: 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. 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. Our agenda for today's call is as follows. Dev will begin with an overview of Embecta's fiscal year 2025 performance and discuss progress across our strategic priorities. Jake will then review the financial results for the fourth quarter and full year 2025, and share our preliminary thoughts for fiscal year 2026.

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. 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. Our agenda for today's call is as follows. Dev will begin with an overview of Embecta's fiscal year 2025 performance and discuss progress across our strategic priorities. Jake will then review the financial results for the fourth quarter and full year 2025, and share our preliminary thoughts for fiscal year 2026.

Speaker #2: In addition, a reconciliation of comparable GAAP measures is included in our press release and conference call presentation. Our agenda for today's call is as follows.

Speaker #2: 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.

Speaker #2: Dev will begin with an overview of Embecta's fiscal year 2025 performance, and discuss progress across our strategic priorities. Jake will then review the financial results for the fourth quarter and full year 2025, and share a preliminary thoughts for fiscal year 2026.

Pravesh Khandelwal: Following these updates, we will open the call for questions. With that said, I would now like to turn the call over to our CEO, Dev Kurdikar.

Following these updates, we will open the call for questions. With that said, I would now like to turn the call over to our CEO, Dev Kurdikar.

Speaker #2: the call for questions. With that said, I would now like Following these updates, we will open to turn the call over to our CEO, Dev Kurdikar.

Dev Kurdikar: Good morning, and thank you for taking the time to join us. During fiscal year 2025, we achieved several key milestones. 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. We completed the implementation of our own ERP system and operationalized a new distribution network and shared service capabilities in Latin America and India, marking the completion of a major, complex, multi-year standard program. With this, 100% of our revenue now flows through our systems, and all TSAs and LSAs that we had at spin have been exited. We substantially completed our brand transition efforts in North America, with more than 95% of our US and Canadian revenue now converted to the Embecta brand.

Speaker #3: Good morning. And thank you for taking the time to join us. During fiscal year 2025, we achieved several key milestones. We made the decision to end executed a restructuring our patch pump program, and we plan aimed at enhancing our profitability and free cash implementation of our own ERP flow.

Speaker #3: distribution network and shared service system and operationalized a new We completed the major complex multi-year India. Marking the completion of a With this, 100% of standard program.

Speaker #3: our revenue now flows through our systems, and all TSAs and LSAs that we had at Spin have been exited. We substantially North America, with more than completed our brand transition efforts in 95% of our US and Canadian revenue now converted to the Embecta managed to ensure continuity for customers and patients, and This was carefully with this foundation in place, we have now commenced the next phase of the initiative globally.

Dev Kurdikar: This was carefully managed to ensure continuity for customers and patients, and with this foundation in place, we have now commenced the next phase of the initiative globally. Transition activities have already begun in certain international markets, and we expect to be significantly complete in most regions by the end of calendar year 2026. 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. Supporting this goal, we advanced our GLP-1 strategy meaningfully during fiscal 2025. We are now collaborating with more than 30 pharmaceutical partners to co-package our pen needles with generic GLP-1 therapies. 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.

This was carefully managed to ensure continuity for customers and patients, and with this foundation in place, we have now commenced the next phase of the initiative globally. Transition activities have already begun in certain international markets, and we expect to be significantly complete in most regions by the end of calendar year 2026. 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. Supporting this goal, we advanced our GLP-1 strategy meaningfully during fiscal 2025. We are now collaborating with more than 30 pharmaceutical partners to co-package our pen needles with generic GLP-1 therapies. 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.

Speaker #3: begun in certain international Transition activities have already markets, and we expect to be significantly complete in most regions by the end of calendar year these separation and stand-up activities have 2026.

Speaker #3: freed up capacity which we are now devoting to initiatives that we anticipate will help transition the Together, the completion of company towards long-term sustainable growth.

Speaker #3: Supporting this goal, we advanced our GLP-1 strategy meaningfully during fiscal 2025. We are now collaborating with more than 30 pharmaceutical partners to co-package our pen needles with generic GLP-1 therapies.

Speaker #3: 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.

Dev Kurdikar: Our generic GLP-1 partners are anticipating launches in Canada, Brazil, and India during calendar year 2026. While we do not control the timing and content of the company's regulatory submissions, nor the timing of their launches upon receiving regulatory approval, we are encouraged by their momentum and remain ready to support our partners by providing them with our pen needles. In parallel, we are continuing to expand the availability of pen needles in consumer-friendly small packs for the Canadian and select European markets. These small packs are targeted specifically towards out-of-pocket customers like GLP-1 users. Taken together, we continue to believe that the use of our pen needles with GLP-1s represents at least a $100 million annual revenue opportunity by 2033, and we anticipate that this will be a growing contributor to our results over the next several years.

Our generic GLP-1 partners are anticipating launches in Canada, Brazil, and India during calendar year 2026. While we do not control the timing and content of the company's regulatory submissions, nor the timing of their launches upon receiving regulatory approval, we are encouraged by their momentum and remain ready to support our partners by providing them with our pen needles. In parallel, we are continuing to expand the availability of pen needles in consumer-friendly small packs for the Canadian and select European markets. These small packs are targeted specifically towards out-of-pocket customers like GLP-1 users. Taken together, we continue to believe that the use of our pen needles with GLP-1s represents at least a $100 million annual revenue opportunity by 2033, and we anticipate that this will be a growing contributor to our results over the next several years.

Speaker #3: Our generic GLP-1 partners are anticipating launches in Canada in calendar year 2026, Brazil, and India. While we do not control the timing and content of the company's regulatory submissions, nor the timing of their launches upon receiving regulatory approval, we are encouraged by their momentum and remain ready to support our partners by providing them with our pen needles.

Speaker #3: To expand the availability of pen needles in consumer-friendly small packs for the Canadian and select European markets, we are continuing to target small packs specifically.

Speaker #3: Like GLP-1 towards out-of-pocket customer users. Taken use of our pen needles together, we continue to believe that the GLP-1s represent at least a $100 million annual revenue opportunity by 2033, and we anticipate that this will be a growing contributor to our results over the next several years.

Dev Kurdikar: We also initiated new product development programs for market-appropriate syringes and pen needles aimed at strengthening and expanding our portfolio, with the goal to maintain our leadership position in our core product categories. These programs are important because we believe they will allow us to expand our reach into market segments that we do not significantly participate in. We continue to prioritize financial discipline and debt reduction, as throughout the year, we generated approximately $182 million in free cash flow, and we paid down approximately $184 million of debt, exceeding our original fiscal year 2025 target of $110 million. With leverage now at 2.9x 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.

We also initiated new product development programs for market-appropriate syringes and pen needles aimed at strengthening and expanding our portfolio, with the goal to maintain our leadership position in our core product categories. These programs are important because we believe they will allow us to expand our reach into market segments that we do not significantly participate in. We continue to prioritize financial discipline and debt reduction, as throughout the year, we generated approximately $182 million in free cash flow, and we paid down approximately $184 million of debt, exceeding our original fiscal year 2025 target of $110 million. With leverage now at 2.9x 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.

Speaker #3: We also initiated new product development programs for market-appropriate syringes and pen needles, aimed at strengthening and expanding our portfolio with the goal of maintaining our leadership position in our core product categories.

Speaker #3: These programs are important because we believe they will allow us to expand our reach into market segments that we do not currently serve. Additionally, we continue to significantly participate in debt reduction, as we prioritize financial discipline, achieving $182 million in free cash flow.

Speaker #3: And we paid down approximately $184 million of debt. This year, we generated approximately $110 million, exceeding our original fiscal year 2025 target.

Speaker #3: 2.9 times net debt to adjusted EBITDA, we continue to create financial flexibility with leverage now at inorganic opportunities that can reshape Embecta's long-term growth profile.

Dev Kurdikar: In summary, fiscal year 2025 was a year of solid execution on multiple fronts, while outlining and initiating a new strategic direction for the company. From the standpoint of our financial results, we exceeded our previously provided fiscal year 2025 adjusted gross margin, adjusted operating margin, and adjusted EBITDA margin ranges, while our adjusted diluted earnings per share was at the top end of our previously provided guidance range. As we move into fiscal year 2026, we remain focused on the priorities and the long-term financial targets outlined at our 2025 analysts' and investors' day. 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.

In summary, fiscal year 2025 was a year of solid execution on multiple fronts, while outlining and initiating a new strategic direction for the company. From the standpoint of our financial results, we exceeded our previously provided fiscal year 2025 adjusted gross margin, adjusted operating margin, and adjusted EBITDA margin ranges, while our adjusted diluted earnings per share was at the top end of our previously provided guidance range. As we move into fiscal year 2026, we remain focused on the priorities and the long-term financial targets outlined at our 2025 analysts' and investors' day. 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.

Speaker #3: In summary, fiscal year 2025 was a year of solid execution on multiple fronts, while outlining direction for the company. From the standpoint of our financial results, we exceeded our previously provided margin and adjusted operating fiscal year 2025 adjusted gross margin ranges.

Speaker #3: In summary, fiscal year 2025 was a year of solid execution on multiple fronts, while outlining direction for the company. From the standpoint and initiating a new strategic of our financial results, we exceeded our previously provided margin, adjusted operating fiscal year 2025 adjusted gross margin, and adjusted EBITDA While our adjusted diluted earnings per share was at the top end of our previously provided guidance range.

Speaker #3: Into fiscal year 2026, as we move forward, we remain focused on the priorities and the long-term financial targets outlined at our 2025 Analyst and Investor Day.

Speaker #3: 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 constant currency basis.

Dev Kurdikar: Within the US, 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 US port strike totaling approximately $10 million, as well as the unwinding of the favorable order timing associated with the 4 July holiday that positively impacted our third quarter of 2025 results, totaling approximately $7 million. Additionally, year-over-year price in the US was unfavorable by approximately $7 million, primarily due to milestone payments made to a large US pharmacy customer. 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.

Within the US, 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 US port strike totaling approximately $10 million, as well as the unwinding of the favorable order timing associated with the 4 July holiday that positively impacted our third quarter of 2025 results, totaling approximately $7 million. Additionally, year-over-year price in the US was unfavorable by approximately $7 million, primarily due to milestone payments made to a large US pharmacy customer. 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.

Speaker #3: Within the U.S., revenue for the quarter totaled $142 million, reflecting a year-over-year decline of 15.2% on an adjusted constant currency basis.

Speaker #3: 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 US port strike totaling approximately 10 million dollars, as well as the unwinding of the favorable order timing associated with the July 4th impacted our third quarter of 2025 holiday, that positively results, totaling approximately 7 million dollars.

Speaker #3: Additionally, year-over-year price in the U.S. was unfavorable by approximately $7 million in payments made to a large U.S. pharmacy, primarily due to milestone customer.

Speaker #3: 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 constant currency basis.

Dev Kurdikar: This decline was anticipated primarily due to lower volumes and year-over-year pricing headwinds within China. This was driven by heightened competitive intensity in China, fueled by the growing preference of local Chinese brands amidst an evolving US-China geopolitical and trade environment. This was partially offset by performance in other emerging markets. While from a product family perspective, during the quarter, adjusted cost and currency pen needle revenue declined approximately 13.9%, syringe declined by approximately 4.5%, safety products grew approximately 3.7%, and contract manufacturing revenue grew approximately 8.5%. The year-over-year decline in pen needle revenue was driven by the same factors that impacted our US and international results. Turning to our syringe products, the decrease was primarily due to ongoing end-market volume declines within the US.

This decline was anticipated primarily due to lower volumes and year-over-year pricing headwinds within China. This was driven by heightened competitive intensity in China, fueled by the growing preference of local Chinese brands amidst an evolving US-China geopolitical and trade environment. This was partially offset by performance in other emerging markets. While from a product family perspective, during the quarter, adjusted cost and currency pen needle revenue declined approximately 13.9%, syringe declined by approximately 4.5%, safety products grew approximately 3.7%, and contract manufacturing revenue grew approximately 8.5%. The year-over-year decline in pen needle revenue was driven by the same factors that impacted our US and international results. Turning to our syringe products, the decrease was primarily due to ongoing end-market volume declines within the US.

Speaker #3: anticipated and primarily due to lower volumes and year-over-year pricing headwinds within China. This was driven by heightened competitive intensity. This decline was in China, fueled by the growing preference of local Chinese products and the US-China geopolitical and trade environment.

Speaker #3: This was partially offset by performance in other emerging brands amidst evolving markets. From a product family perspective, during the quarter, adjusted constant currency pen needle revenue declined approximately 13.9%, syringe revenue declined by approximately 4.5%, safety products grew approximately 3.7%, and contract manufacturing revenue grew approximately 8.5%.

Speaker #3: The year-over-year decline in pen needle revenue was driven by the same factors that impacted our U.S. and international results. Turning to our syringe due to ongoing end market volume declines within the U.S.

Speaker #3: products, the decrease was primarily persisted over the past several years, and is consistent with the This trend is not new and has vials, as compared with insulin decrease in prescriptions for insulin pens.

Dev Kurdikar: This trend is not new and has persisted over the past several years, and is consistent with the decrease in prescriptions for insulin vials as compared with insulin pens. This decline was partially offset by improved pricing. Finally, our safety products grew 3.7%, primarily due to improved pricing. For the full year, Embecta generated adjusted revenues of approximately $1,080 million, which represented a decline of 3.9% on an adjusted cost and currency basis. US revenues totaled $579.1 million, which is a decrease of 4.6% on an adjusted cost and currency basis. The year-over-year decline in the US was largely due to the aforementioned advanced distributor ordering that occurred in Q4 of fiscal 2024, associated with the potential port strike, as well as the continued end-market declines in syringe volumes. Meanwhile, international revenues totaled $501.3 million, which equated to a year-over-year adjusted cost and currency decline of approximately 3.1%.

This trend is not new and has persisted over the past several years, and is consistent with the decrease in prescriptions for insulin vials as compared with insulin pens. This decline was partially offset by improved pricing. Finally, our safety products grew 3.7%, primarily due to improved pricing. For the full year, Embecta generated adjusted revenues of approximately $1,080 million, which represented a decline of 3.9% on an adjusted cost and currency basis. US revenues totaled $579.1 million, which is a decrease of 4.6% on an adjusted cost and currency basis. The year-over-year decline in the US was largely due to the aforementioned advanced distributor ordering that occurred in Q4 of fiscal 2024, associated with the potential port strike, as well as the continued end-market declines in syringe volumes. Meanwhile, international revenues totaled $501.3 million, which equated to a year-over-year adjusted cost and currency decline of approximately 3.1%.

Speaker #3: This decline was partially offset by improved safety products grew pricing. 3.7%, primarily due to improved Finally, our the full year, Embecta pricing. For generated adjusted revenues of approximately 1 billion and 80 million, which represented a decline of 3.9% on an adjusted constant currency basis.

Speaker #3: US revenues totaled $579.1 million, which is a decrease on a constant currency basis. The year-over-year decline in the US was largely due to the aforementioned advanced distributor 4.6% on adjusted ordering that occurred in Q4 of fiscal 2024, associated with the potential port strike.

Speaker #3: The continued end market declines in syringes totaled $501.3 million, which equated to year-over-year volumes. Meanwhile, international revenues, over year adjusted for constant currency, saw a decline of approximately 3.1%.

Dev Kurdikar: The decline in international revenue was primarily due to lower revenue contribution from China. Turning to our product family revenue performance, globally, our pen needle revenue declined approximately 7.1%, totaling $784.1 million. Fiscal year 2025 pen needle revenue reflects the confluence of several transitory factors, including advanced distributor ordering in the prior year, lower China revenue, and pricing headwinds in certain markets. Turning to our syringe products, revenues grew year-over-year by 1.7%, primarily driven by improved pricing, while our safety products grew 6.3% due to a combination of improved pricing and volume increases. Lastly, contract manufacturing revenue grew approximately 53.9% as compared to the prior year. With that, let me turn the call over to Jake for him to review other financial highlights, as well as to provide our preliminary financial guidance for fiscal year 2026. Jake.

The decline in international revenue was primarily due to lower revenue contribution from China. Turning to our product family revenue performance, globally, our pen needle revenue declined approximately 7.1%, totaling $784.1 million. Fiscal year 2025 pen needle revenue reflects the confluence of several transitory factors, including advanced distributor ordering in the prior year, lower China revenue, and pricing headwinds in certain markets. Turning to our syringe products, revenues grew year-over-year by 1.7%, primarily driven by improved pricing, while our safety products grew 6.3% due to a combination of improved pricing and volume increases. Lastly, contract manufacturing revenue grew approximately 53.9% as compared to the prior year. With that, let me turn the call over to Jake for him to review other financial highlights, as well as to provide our preliminary financial guidance for fiscal year 2026. Jake.

Speaker #3: The decline in international revenue was from China. Turning to our product family revenue performance, primarily due to lower revenue contribution globally, our pen needle revenue declined approximately 7.1%, totaling $784.1 million.

Speaker #3: Needle revenue reflects the confluence for Fiscal Year 2025 of several transitory factors, including advanced distributor ordering in the prior year, lower China revenue, and pricing headwinds in certain markets.

Speaker #3: Turning to our syringe products, revenue grew year over year by 1.7%, primarily driven by improved pricing. Meanwhile, our safety products grew 6.3% due to a combination of improved pricing and volume increases.

Speaker #3: Lastly, contract manufacturing revenue grew approximately 53.9% compared to the prior year. With that, let me turn the call over to Jake for him to review other financial highlights as well as to provide our preliminary financial guidance for fiscal year 2026.

Speaker #3: 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 fourth quarter financial performance at the gross profit line. GAAP gross profit and margin for the fourth quarter of fiscal 2025 totaled $158.5 million and 60%, respectively. This compared to $173.8 million and 60.7% in the prior year period. While on an adjusted basis, our Q4 2025 adjusted gross profit and margin totaled $159.5 million and 60.6%. This compared to $178.3 million and 61.4% 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 volume, mix, and price that Dev mentioned earlier, as well as the negative impact of foreign currency translation.

Speaker #2: Thank you, Jeff. And good morning, everyone. Given the discussion that has already occurred regarding revenue, I will start my quarter financial performance at the review of Embecta's fourth gross profit line.

Speaker #2: Gap gross profit and margin for the fourth quarter of fiscal 2025 totaled $158.5 million and 60%, respectively. This compared to $173.8 million and 60.7% in the prior year period.

Speaker #2: While on an adjusted basis, our Q4 2025 adjusted gross profit and margin totaled $159.5 million and 60.6%. This compared to 61.4% in the prior year, $178.3 million and period.

Speaker #2: The year-over-year decline in adjusted gross profit and margin was primarily driven by the lower year-over-year volume and mix, and price that Dev mentioned earlier.

Speaker #2: As well as the negative impact of foreign currency translation. These headwinds were partially offset by manufacturing cost improvement programs, the favorable impact of net changes in profit and inventory adjustments, and lower freight costs.

Jake Elguicze: These headwinds were partially offset by manufacturing cost improvement programs, the favorable impact of net changes in profit and inventory adjustments, and lower freight costs. Turning to GAAP operating income and margin, during the fourth quarter, they were $56.5 million and 21.4%. This compared to $26.2 million and 9.2% in the prior year period. While on an adjusted basis, our Q4 2025 adjusted operating income and margin totaled $66.7 million and 25.3%. This compared to $61.2 million and 21.1% in the prior year period. The year-over-year increase in adjusted operating income is primarily due to lower R&D expenses associated with the discontinuation of our insulin patch pump program, as well as lower year-over-year SG&A expenses due to the restructuring initiative we announced earlier this year, coupled with no TSA expenses within the current year.

These headwinds were partially offset by manufacturing cost improvement programs, the favorable impact of net changes in profit and inventory adjustments, and lower freight costs. Turning to GAAP operating income and margin, during the fourth quarter, they were $56.5 million and 21.4%. This compared to $26.2 million and 9.2% in the prior year period. While on an adjusted basis, our Q4 2025 adjusted operating income and margin totaled $66.7 million and 25.3%. This compared to $61.2 million and 21.1% in the prior year period. The year-over-year increase in adjusted operating income is primarily due to lower R&D expenses associated with the discontinuation of our insulin patch pump program, as well as lower year-over-year SG&A expenses due to the restructuring initiative we announced earlier this year, coupled with no TSA expenses within the current year.

Speaker #2: Turning to GAAP operating income and margin, during the fourth quarter, they were $56.5 million and 21.4%. This compared to $26.2 million and 9.2% in the prior year period.

Speaker #2: While on an adjusted basis, our Q4 2025 adjusted operating income and margin totaled $66.7 million and 25.3%. This compared to $61.2 million and 21.1% in the prior year period.

Speaker #2: The year-over-year increase in adjusted operating income is primarily due to lower R&D expenses associated with the discontinuation of our insulin patch pump program.

Speaker #2: As well as expenses, due to the restructuring lower year-over-year SG&A initiative we announced earlier this year, coupled with no TSA expenses within the current year.

Jake Elguicze: This was partially offset by lower revenue and gross profit as compared to the prior year period. Turning to the bottom line, GAAP net income and earnings per diluted share were $26.4 million and $0.45 during the fourth quarter of fiscal 2025, as compared to $14.6 million and $0.25 in the prior year period. While on an adjusted basis, during the fourth quarter of fiscal 2025, net income and earnings per share were $29.4 million and $0.50, as compared to $25.9 million and $0.45 in the prior year period. The increase 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 reduction in interest expense. This was offset by an increase in our adjusted tax rate from approximately 9.5% in Q4 of 2024 to approximately 25% in Q4 of 2025.

This was partially offset by lower revenue and gross profit as compared to the prior year period. Turning to the bottom line, GAAP net income and earnings per diluted share were $26.4 million and $0.45 during the fourth quarter of fiscal 2025, as compared to $14.6 million and $0.25 in the prior year period. While on an adjusted basis, during the fourth quarter of fiscal 2025, net income and earnings per share were $29.4 million and $0.50, as compared to $25.9 million and $0.45 in the prior year period. The increase 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 reduction in interest expense. This was offset by an increase in our adjusted tax rate from approximately 9.5% in Q4 of 2024 to approximately 25% in Q4 of 2025.

Speaker #2: This was partially offset by lower revenue and gross profit as compared to the prior year period. Turning to the bottom line, GAAP net income and earnings per diluted share were $26.4 million and $0.45 during the fourth quarter of fiscal 2025.

Speaker #2: As compared to $14.6 million and $0.25 in the prior year period. While on an adjusted basis, during the fourth quarter of fiscal 2025, net income and earnings per share were $29.4 million and $0.50 as compared to $25.9 million and $0.45 in the prior year period.

Speaker #2: The increase 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 reduction in interest expense.

Speaker #2: This was offset by an increase of approximately 9.5% in Q4 of 2024 to approximately 25% in Q4 of 2025. Lastly, from a P&L adjusted tax rate perspective, for the fourth quarter of 2025, our adjusted EBITDA and margin totaled approximately $73 million and $89.9 million, respectively, compared to $25.2% in the prior year period.

Jake Elguicze: Lastly, from a P&L perspective, for the fourth quarter of 2025, our adjusted EBITDA and margin totaled approximately $89.9 million and 34.1%, as compared to $73 million and 25.2% in the prior year period. Turning to our full year results, GAAP gross profit and margin for fiscal 2025 totaled $676.8 million and 62.6%, respectively. This compared to $735.2 million and 65.5% in the prior year. While on an adjusted basis, our 2025 gross profit and margin totaled $687.3 million and 63.7%. This compared to $740.7 million and 65.7% in the prior year. The year-over-year decrease in adjusted gross profit and margin was primarily driven by lower year-over-year volume and mix, and an unfavorable year-over-year impact from profit and inventory. This was partially offset by manufacturing cost improvement programs. Turning to GAAP operating income and margin, during 2025, they were $242.1 million and 22.4%.

Lastly, from a P&L perspective, for the fourth quarter of 2025, our adjusted EBITDA and margin totaled approximately $89.9 million and 34.1%, as compared to $73 million and 25.2% in the prior year period. Turning to our full year results, GAAP gross profit and margin for fiscal 2025 totaled $676.8 million and 62.6%, respectively. This compared to $735.2 million and 65.5% in the prior year. While on an adjusted basis, our 2025 gross profit and margin totaled $687.3 million and 63.7%. This compared to $740.7 million and 65.7% in the prior year. The year-over-year decrease in adjusted gross profit and margin was primarily driven by lower year-over-year volume and mix, and an unfavorable year-over-year impact from profit and inventory. This was partially offset by manufacturing cost improvement programs. Turning to GAAP operating income and margin, during 2025, they were $242.1 million and 22.4%.

Speaker #2: Turning to our full year results, the gap gross profit and margin for fiscal 2025 totaled $676.8 million and 34.1%.

Speaker #1: In the while on an hour basis, 2025 gross and adjusted margin profit totaled $687.3 million and $740.7 million, with 63.7% in the prior year and 65.7% this year.

Speaker #1: year over The in adjusted year decrease profit and margin was primarily gross by lower year over mix , and an unfavorable year volume and over impact from profit and year This was partially offset by cost improvement manufacturing programs .

Speaker #1: Turning to GAAP year operating income and . margin . 2025 , they were 242.1 million 22.4% . and This compared to and . While 14.9% in the prior on an basis , year adjusted income and 166.8 million operating totaled 2025 adjusted margin our and 337.7 million 31.3% .

Jake Elguicze: This compared to $166.8 million and 14.9% in the prior year. While on an adjusted basis, our 2025 adjusted operating income and margin totaled $337.7 million and 31.3%. This compared to $296.9 million and 26.3% in the prior year period. Similar to the comments relating to the fourth quarter, the year-over-year increase in adjusted operating income and margin is due to similar factors that impacted the fourth quarter, those being the lower R&D expenses associated with the discontinuation of our insulin patch pump program, as well as lower year-over-year SG&A expenses due to the restructuring initiative we announced earlier this year, coupled with a reduction in TSA expenses. This was partially offset by lower revenue and gross profit as compared to the prior year.

This compared to $166.8 million and 14.9% in the prior year. While on an adjusted basis, our 2025 adjusted operating income and margin totaled $337.7 million and 31.3%. This compared to $296.9 million and 26.3% in the prior year period. Similar to the comments relating to the fourth quarter, the year-over-year increase in adjusted operating income and margin is due to similar factors that impacted the fourth quarter, those being the lower R&D expenses associated with the discontinuation of our insulin patch pump program, as well as lower year-over-year SG&A expenses due to the restructuring initiative we announced earlier this year, coupled with a reduction in TSA expenses. This was partially offset by lower revenue and gross profit as compared to the prior year.

Speaker #1: This compared to 296.9 million 26.3% in the prior year period . Similar to the comments relating fourth quarter , to the the year over year increase in adjusted operating income and margin is due to similar and factors that impacted the fourth quarter .

Speaker #1: Being associated with the expenses of the R&D insulin patch pump program, as well as lower SG&A expenses year over year due to our earlier projections this year.

Speaker #1: Discontinuation of our Coupled with restructuring initiative, reduction in expenses announced. This was partially PSA revenue and gross as compared to prior year profit bottom line, GAAP income earnings per and net.

Speaker #1: was $95.4 million and $1.62 during 2025, which fiscal to compare and $1.34 in the prior year $78.3 million. While on an adjusted net income and earnings share per $173.9 million and $2.95.

Jake Elguicze: Turning to the bottom line, GAAP net income and earnings per diluted share was $95.4 million and $1.62 during fiscal 2025, which compared to $78.3 million and $1.34 in the prior year. While on an adjusted basis, net income and earnings per share were $173.9 million and $2.95 during fiscal 2025. This compared to $143.1 million and $2.45 in the prior year. Like my comments relating to the fourth quarter, the increase in year-over-year adjusted net income and diluted earnings per share is primarily due to the adjusted operating profit drivers I discussed, as well as lower year-over-year interest expense resulting from a reduction in outstanding borrowings under our term loan fee facility as we continue to pay down debt, somewhat offset by an increase in our adjusted tax rate from approximately 20% in 2024 to approximately 25% in 2025.

Turning to the bottom line, GAAP net income and earnings per diluted share was $95.4 million and $1.62 during fiscal 2025, which compared to $78.3 million and $1.34 in the prior year. While on an adjusted basis, net income and earnings per share were $173.9 million and $2.95 during fiscal 2025. This compared to $143.1 million and $2.45 in the prior year. Like my comments relating to the fourth quarter, the increase in year-over-year adjusted net income and diluted earnings per share is primarily due to the adjusted operating profit drivers I discussed, as well as lower year-over-year interest expense resulting from a reduction in outstanding borrowings under our term loan fee facility as we continue to pay down debt, somewhat offset by an increase in our adjusted tax rate from approximately 20% in 2024 to approximately 25% in 2025.

Speaker #1: During fiscal This 143.1 million and 2025 . $2.45 in the prior . year Like my compared to relating comments to the fourth quarter , the increase year adjusted net over and diluted earnings per share is primarily due to the adjusted operating discussed , as well as lower drivers .

Speaker #1: expense resulting from a reduction in borrowings under outstanding Loan . As we Facility . pay down continue to by an , somewhat debt in our offset adjusted tax rate from approximately 20% I in 2024 to approximately 25% in 2025 .

Speaker #1: Lastly , from a personal perspective , during 2025 , our adjusted and margin EBITDA totaled approximately and 415.3 million This 38.5% . compared to 353.4 million 31.4% in the prior year and .

Jake Elguicze: Lastly, from a P&L perspective, during 2025, our adjusted EBITDA and margin totaled approximately $415.3 million and 38.5%. This compared to $353.4 million and 31.4% in the prior year. Turning to the balance sheet and cash flow, during fiscal year 2025, we generated approximately $182 million in free cash flow. Additionally, during the year, we repaid approximately $184 million of outstanding debt and ended 2025 with a net leverage level of approximately 2.9 times, as defined under our credit facility agreement, compared to our covenant requirement of below 4.75 times. Finally, we recently executed an agreement with a third party to sell certain intellectual property rights and long-lived assets associated with the discontinued patch pump program for $10 million. This transaction occurred subsequent to year-end and therefore had no impact on our fiscal fourth quarter results.

Lastly, from a P&L perspective, during 2025, our adjusted EBITDA and margin totaled approximately $415.3 million and 38.5%. This compared to $353.4 million and 31.4% in the prior year. Turning to the balance sheet and cash flow, during fiscal year 2025, we generated approximately $182 million in free cash flow. Additionally, during the year, we repaid approximately $184 million of outstanding debt and ended 2025 with a net leverage level of approximately 2.9 times, as defined under our credit facility agreement, compared to our covenant requirement of below 4.75 times. Finally, we recently executed an agreement with a third party to sell certain intellectual property rights and long-lived assets associated with the discontinued patch pump program for $10 million. This transaction occurred subsequent to year-end and therefore had no impact on our fiscal fourth quarter results.

Speaker #1: Turning to the balance sheet and cash flow for the fiscal year 2025, we generated $182 million in free cash flow. Additionally, during the year, we paid down approximately $184 million of debt and ended 2025 with a net leverage level of approximately 2.9 times.

Speaker #1: As defined credit under our agreement . Compared to our covenant of requirement below Facility 4.75 times and finally , we recently executed an a third party sell certain to intellectual property rights and long lived agreement with assets associated with the discontinued pump patch program $10 million .

Speaker #1: This transaction occurred subsequent to year end and had no impact fiscal on our results fourth quarter for completes therefore . my That prepared remarks fourth quarter on our and full year Next , I'd like 2025 results .

Speaker #1: To discuss our preliminary 2020 financial and underlying assumptions guidance, I will go into all details before the surrounding context of our fiscal year. Let me provide our fiscal year 2026 guidance. In May, at our Analyst and Investor Day for 2025, we outlined our long-range plan through fiscal year 2028.

Jake Elguicze: That completes my prepared remarks on our fourth quarter and full year 2025 results. Next, I'd like to discuss our preliminary 2026 financial guidance and certain underlying assumptions. Before I go into all the details surrounding our fiscal year 2026 guidance, let me remind you that in May 2025, at our analyst and investor day, we laid out our long-range plan through fiscal year 2028. Those expectations included that our revenue growth CAGR would remain flattish on a constant currency basis from fiscal year 2026 through 2028, with modest declines of approximately 1% to 2% in core injection and contract manufacturing revenue over the LRP period, offset by contributions from new revenue streams, including GLP-1 opportunities and distributed product partnerships that were expected to build as we move through fiscal years 2026 through 2028.

That completes my prepared remarks on our fourth quarter and full year 2025 results. Next, I'd like to discuss our preliminary 2026 financial guidance and certain underlying assumptions. Before I go into all the details surrounding our fiscal year 2026 guidance, let me remind you that in May 2025, at our analyst and investor day, we laid out our long-range plan through fiscal year 2028. Those expectations included that our revenue growth CAGR would remain flattish on a constant currency basis from fiscal year 2026 through 2028, with modest declines of approximately 1% to 2% in core injection and contract manufacturing revenue over the LRP period, offset by contributions from new revenue streams, including GLP-1 opportunities and distributed product partnerships that were expected to build as we move through fiscal years 2026 through 2028.

Speaker #1: Those expectations included that our revenue would remain flattish, constant on a basis from fiscal year 2026 through 2028, with modest declines of approximately 1% to 2% in core injection contract and manufacturing revenue over the LRP, offset by contributions from new revenue streams, including one opportunities and distributed product partnerships that were expected to build.

Speaker #1: As we move through fiscal years 2026 through 2028 . Additionally , the financial targets that we provided at our analyst and Investor Day anticipated adjusted operating margin to be between 28% and 30% by fiscal 2028 , as to expenses were R&D increase 2025 levels .

Jake Elguicze: Additionally, the financial targets that we provided at our analyst and investor day anticipated adjusted operating margin to be between 28% and 30% by fiscal 2028, as R&D expenses were expected to increase from 2025 levels as we support key value creation initiatives through 2028, while SG&A expenses were expected to remain flattish as compared to 2025 levels. Despite a dynamic geopolitical and trade backdrop, I'm pleased to say that we believe our initial fiscal 2026 financial guidance is well aligned with the expectations established in our long-range plan. Beginning with revenue, on an adjusted constant currency basis, we currently anticipate that our revenues will be flat to down 2% as compared to 2025 levels. At the high end of our constant currency revenue range, we have factored in modest volume declines within our core injection business, primarily related to syringe declines within the US.

Additionally, the financial targets that we provided at our analyst and investor day anticipated adjusted operating margin to be between 28% and 30% by fiscal 2028, as R&D expenses were expected to increase from 2025 levels as we support key value creation initiatives through 2028, while SG&A expenses were expected to remain flattish as compared to 2025 levels. Despite a dynamic geopolitical and trade backdrop, I'm pleased to say that we believe our initial fiscal 2026 financial guidance is well aligned with the expectations established in our long-range plan. Beginning with revenue, on an adjusted constant currency basis, we currently anticipate that our revenues will be flat to down 2% as compared to 2025 levels. At the high end of our constant currency revenue range, we have factored in modest volume declines within our core injection business, primarily related to syringe declines within the US.

Speaker #1: We support key value creation initiatives through 2028. While SG&A expenses were expected to remain flattish as compared to 2025 levels, and despite a dynamic geopolitical and trade backdrop.

Speaker #1: I am pleased to say that we believe our initial 2026 fiscal guidance is well aligned with the expectations established in our long-range plan, beginning with revenue on an adjusted constant currency basis.

Speaker #1: We currently anticipate that our revenue will be flat to 2% as compared to down at the high end of our constant currency revenue range. We have factored in modest volume declines within our core injection business, primarily related to syringe declines within the U.S. that contract manufacturing revenues contribute to.

Speaker #1: We currently anticipate that our revenue will be flat to 2% as compared to being down at the high end of our constant currency revenue range. We have factored in modest volume declines within our core injection business, primarily related to syringe declines within the U.S. that contract manufacturing revenues contribute to, approximately 50 basis points. Pricing is relatively flat year over year, and the contribution from reduced new revenue decline contributes positively by approximately 100 basis points. While at the low end of our range, we are assuming that volumes within our core injection business contribute approximately 150 basis points to the 100 basis point decline, and that reduced contract manufacturing contributes approximately 50 basis points to the decline. Pricing remains relatively flat.

Jake Elguicze: That reduced contract manufacturing revenues contribute to approximately 50 basis points of the decline, that pricing is relatively flat year-over-year, and that the contribution from new revenue streams contribute positively by approximately 100 basis points. While at the low end of our range, we are assuming that volumes within our core injection business contribute to approximately 150 basis points of the decline, that reduced contract manufacturing revenues contribute to approximately 50 basis points of the decline, that pricing is relatively flat year-over-year, and that the contribution from new revenue streams is negligible. Turning to our thoughts on FX, our initial guidance calls for a foreign currency tailwind of approximately 1.2% during 2026. This assumption is based on foreign exchange rates that were in existence in the early November timeframe.

That reduced contract manufacturing revenues contribute to approximately 50 basis points of the decline, that pricing is relatively flat year-over-year, and that the contribution from new revenue streams contribute positively by approximately 100 basis points. While at the low end of our range, we are assuming that volumes within our core injection business contribute to approximately 150 basis points of the decline, that reduced contract manufacturing revenues contribute to approximately 50 basis points of the decline, that pricing is relatively flat year-over-year, and that the contribution from new revenue streams is negligible. Turning to our thoughts on FX, our initial guidance calls for a foreign currency tailwind of approximately 1.2% during 2026. This assumption is based on foreign exchange rates that were in existence in the early November timeframe.

Speaker #1: over year year , and at the contribution That from new revenue streams is negligible . Turning to our thoughts on FX . Our initial guidance a foreign currency tailwind of approximately 1.2% calls for during 2026 .

Speaker #1: This is assumption is based foreign on exchange rates that were in existence in the early timeframe , somewhat November FX is an estimated 0.1% year over year headwind the Italian payback measure , primarily driven by the favorable adjustment recognized associated with in fiscal year 2025 .

Jake Elguicze: Somewhat offsetting FX is an estimated 0.1% year-over-year headwind associated with the Italian payback measure, primarily driven by the favorable adjustment recognized in fiscal year 2025. On a combined basis, our as-reported revenue guidance calls for a range of between negative 0.9% to positive 1.1%, resulting in an initial revenue guide of between $1,071,000,000 and $1,093,000,000. Turning to adjusted operating margin, our initial guidance range calls for a range of between 29% and 30%, or lower by approximately 180 basis points at the midpoint as compared to 2025 levels. The expected decline at the midpoint is due to two factors contributing equally. First, adjusted gross margin is expected to decline due to increased cannula costs. While in terms of tariffs, based on current information, we expect incremental tariffs to have a negligible impact as compared to the prior year.

Somewhat offsetting FX is an estimated 0.1% year-over-year headwind associated with the Italian payback measure, primarily driven by the favorable adjustment recognized in fiscal year 2025. On a combined basis, our as-reported revenue guidance calls for a range of between negative 0.9% to positive 1.1%, resulting in an initial revenue guide of between $1,071,000,000 and $1,093,000,000. Turning to adjusted operating margin, our initial guidance range calls for a range of between 29% and 30%, or lower by approximately 180 basis points at the midpoint as compared to 2025 levels. The expected decline at the midpoint is due to two factors contributing equally. First, adjusted gross margin is expected to decline due to increased cannula costs. While in terms of tariffs, based on current information, we expect incremental tariffs to have a negligible impact as compared to the prior year.

Speaker #1: On a combined hour basis, as guidance calls of range for a between -0.9% to 1.1%, initial positive in a guide of between resulting $1,071,000,001 billion 93 million.

Speaker #1: Adjusted operating margin, our turning to initial guidance range, calls for a range of between 29% and 30%, or lower by approximately 180 basis points at the midpoint, as compared to 2025 levels.

Speaker #1: The expected decline at the midpoint is due to two factors contributing equally . First , adjusted gross margin expected to is decline due to increased cannula , while in terms of based tariffs on current information , we expect incremental tariffs to have a negligible impact as to the compared prior year .

Speaker #1: And second, we anticipate R&D to expense approximately 2% of revenue as we continue to invest in the development of market-appropriate pen needles and syringes and advance our efforts to qualify and onboard alternate cannula suppliers.

Jake Elguicze: We anticipate R&D expense to approximate 2% of revenue as we continue to invest in the development of market-appropriate pen needles and syringes and advance our efforts to qualify and onboard alternate cannula suppliers. SG&A as a percentage of revenue is expected to remain relatively consistent with fiscal 2025 levels. All totaled, our initial guidance range for adjusted operating margin aligns with the margin framework outlined in our analyst and investor day, and reflects our disciplined approach to balancing reinvestment for growth with sustained profitability as we advance through the next phase of our transformation. Moving to earnings, during 2026, our initial guidance calls for an adjusted diluted earnings per share range of between $2.80 and $3.00, and it's based on a weighted average diluted share amount of approximately 60 million shares.

We anticipate R&D expense to approximate 2% of revenue as we continue to invest in the development of market-appropriate pen needles and syringes and advance our efforts to qualify and onboard alternate cannula suppliers. SG&A as a percentage of revenue is expected to remain relatively consistent with fiscal 2025 levels. All totaled, our initial guidance range for adjusted operating margin aligns with the margin framework outlined in our analyst and investor day, and reflects our disciplined approach to balancing reinvestment for growth with sustained profitability as we advance through the next phase of our transformation. Moving to earnings, during 2026, our initial guidance calls for an adjusted diluted earnings per share range of between $2.80 and $3.00, and it's based on a weighted average diluted share amount of approximately 60 million shares.

Speaker #1: SG&A as a percentage of revenue is expected to remain consistent with fiscal 2025 levels . All told , our initial guidance range for adjusted operating margin aligns with the margin framework outlined in our analyst and Day relatively and reflects our disciplined approach to balancing reinvestment for growth with sustained As advance profitability .

Speaker #1: the we phase of our next transformation . Moving to earnings . During 2026 , our initial calls for a guidance adjusted diluted earnings per share range of between $2.80 and is $3 and based on a weighted average diluted share amount of approximately 60 million shares .

Speaker #1: Our initial adjusted earnings per share range includes an assumption that during 2026, we will repay approximately $150 million in debt and that our annual net interest expense will be approximately $93 million.

Jake Elguicze: Our initial adjusted earnings per share range includes an assumption that during 2026, we will repay approximately $150 million in debt and that our annual net interest expense will be approximately $93 million. While from a tax perspective, our initial adjusted earnings per share range assumes that our adjusted tax rate will be approximately 23% as compared to approximately 25% in fiscal year 2025 due to tax planning initiatives we put in place, US tax reform, and lower interest expense. Before I turn the call over to the operator, I'd like to highlight some considerations regarding the cadence of quarterly revenue expectations during 2026. Moving forward, we may not provide any further commentary concerning the quarterly cadence of revenue on an ongoing basis.

Our initial adjusted earnings per share range includes an assumption that during 2026, we will repay approximately $150 million in debt and that our annual net interest expense will be approximately $93 million. While from a tax perspective, our initial adjusted earnings per share range assumes that our adjusted tax rate will be approximately 23% as compared to approximately 25% in fiscal year 2025 due to tax planning initiatives we put in place, US tax reform, and lower interest expense. Before I turn the call over to the operator, I'd like to highlight some considerations regarding the cadence of quarterly revenue expectations during 2026. Moving forward, we may not provide any further commentary concerning the quarterly cadence of revenue on an ongoing basis.

Speaker #1: From a tax perspective, our initial adjusted earnings per share assumes that our adjusted tax rate will be approximately 23%, compared to approximately 25% in fiscal year 2025, due to tax initiatives.

Speaker #1: While from a tax perspective, our initial adjusted earnings per share assumes that our adjusted tax rate will be approximately 23%, as compared to approximately 25% in fiscal year 2025. This is due to the tax planning we have put in place.

Speaker #1: Tax reform in the U.S. and lower interest due to expense. And before I turn the call over to the operator, I'd like to highlight some considerations regarding the cadence of quarterly revenue expectations during 2026.

Speaker #1: Moving forward, we may not provide any further commentary concerning the quarterly cadence of revenue on an ongoing basis. During fiscal 2025, we generated approximately 48% of our adjusted revenue during the first half of the year, with revenue split roughly evenly between the first and second fiscal quarters.

Jake Elguicze: During fiscal year 2025, we generated approximately 48% of our adjusted revenue dollars during the first half of the year, with revenue split roughly evenly between the first and second fiscal quarters. During fiscal year 2026, we currently expect something similar to occur. Finally, during fiscal 2026, we expect to generate between $180 million and $200 million in free cash flow, which includes using approximately $20 million of cash for capital expenditures, as well as approximately $30 million of cash on one-time spend, primarily focused on advancing the global brand transition program, which remains on track to be substantially complete by the end of calendar year 2026.

During fiscal year 2025, we generated approximately 48% of our adjusted revenue dollars during the first half of the year, with revenue split roughly evenly between the first and second fiscal quarters. During fiscal year 2026, we currently expect something similar to occur. Finally, during fiscal 2026, we expect to generate between $180 million and $200 million in free cash flow, which includes using approximately $20 million of cash for capital expenditures, as well as approximately $30 million of cash on one-time spend, primarily focused on advancing the global brand transition program, which remains on track to be substantially complete by the end of calendar year 2026.

Speaker #1: During fiscal year 2026 , we currently something expect similar to occur finally , during We year to generate expect between 180 million and 200 million in free cash flow , which using fiscal 2026 .

Speaker #1: Cash of approximately $20 million will be allocated for capital expenditures, as well as approximately $30 million for one-time spending focused on advancing the primarily global transition program. This brand remains on track to be substantially completed by the end of calendar year 2026.

Speaker #1: complete by Importantly , the flow free cash that we expect to generate during year 2026 keeps fiscal firmly on pace with the commitment we our outlined at analyst and Investor to Day generate approximately cumulative free cash flow from 600 million of fiscal 2026 through 2028 , and fiscal demonstrates the strength of our cash generation reinforces our confidence in achieving long our deleveraging investment and objectives .

Jake Elguicze: Importantly, the free cash flow that we expect to generate during fiscal year 2026 keeps us firmly on pace with the commitment we outlined at our analyst and investor day to generate approximately $600 million of cumulative free cash flow from fiscal 2026 through fiscal 2028, and demonstrates the strength of our cash generation model, and reinforces our confidence in achieving our long-term deleveraging and investment objectives. That completes my prepared remarks. At this time, I would like to turn the call over to the operator for questions. Operator. Thank you. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Marie Thebault with BTIG. Your line is now open. Good morning.

Importantly, the free cash flow that we expect to generate during fiscal year 2026 keeps us firmly on pace with the commitment we outlined at our analyst and investor day to generate approximately $600 million of cumulative free cash flow from fiscal 2026 through fiscal 2028, and demonstrates the strength of our cash generation model, and reinforces our confidence in achieving our long-term deleveraging and investment objectives. That completes my prepared remarks. At this time, I would like to turn the call over to the operator for questions. Operator.

Speaker #1: That concludes my prepared remarks. At this time, I would like to turn the call over to the operator for questions.

Speaker #1: Operator

Speaker #2: you . To question ,

Speaker #2: ask a please press star one on your telephone and wait for your announced . . Thank withdraw your question , please press star one one again .

Operator: Thank you. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Marie Thebault with BTIG. Your line is now open.

Speaker #2: Stand by while we compile the please roster. Our first question comes from Marie from the line Thebault. Your line is now open.

Speaker #3: Taking the morning questions. I wanted to start with, thanks for being here, and see if I could learn a little bit more about the GOP.

Marie Thibault: Good morning.

Speaker #3: partnerships that you have . Can you just give us a little more . detail on how One many partners you have Good signed ?

Jake Elguicze: Thanks for taking the questions. I wanted to start here and see if I could learn a little bit more about the GLP-1 partnerships that you have. Can you just give us a little more detail on how many partners you have signed POs with, and anything on timing, how they might be ordering ahead of any approvals that they get on their side, just so we can sort of get a little more detail on how this might impact fiscal year 2026, of course, understanding that it's not being assumed in your revenue guidance? Yeah, good morning, Marie. Thanks for the question. We are in discussions with 30-plus potential GLP-1 entrants. As you remember, this is all about co-packaging of pen needles. They are moving through various stages of discussions. You can imagine we go through quality agreements.

Thanks for taking the questions. I wanted to start here and see if I could learn a little bit more about the GLP-1 partnerships that you have. Can you just give us a little more detail on how many partners you have signed POs with, and anything on timing, how they might be ordering ahead of any approvals that they get on their side, just so we can sort of get a little more detail on how this might impact fiscal year 2026, of course, understanding that it's not being assumed in your revenue guidance?

Speaker #3: POS with and anything on timing , how might be ordering they any approvals that they get on their side . Just so we can sort of ahead of get a little more detail on how this might impact fiscal year 26 .

Speaker #3: Of course, understanding that it's not being assumed in your revenue guidance.

Speaker #4: Yeah . Good morning Marie . Thanks for the question . So we are in discussions with other 30 plus potential GLP one entrants .

Dev Kurdikar: Yeah, good morning, Marie. Thanks for the question. We are in discussions with 30-plus potential GLP-1 entrants. As you remember, this is all about co-packaging of pen needles. They are moving through various stages of discussions. You can imagine we go through quality agreements.

Speaker #4: And as you remember, this is about co-packaging of pen needles. They are moving through the stages of various discussions. You can imagine.

Speaker #4: You know , through we go quality agreements . We about talk MSAs , the orders that they provide and a handful of them have already provided orders .

Jake Elguicze: We talk about MSAs, the orders that they provide, and a handful of them have already provided orders, and we've actually shipped product during 2025. Much of the volume, I would say, is for their own development purposes as they work out what data they need beyond the data we supply for their regulatory submissions. Several of them have actually submitted to the regulatory authorities. Now, they control the timing and the content of the submissions. These submissions, we believe, include many of them will include specs that our product satisfies. Obviously, timing of commercial quantities is contingent on when they get approval, which one of them gets approval, and when they get approval. As you might have heard publicly, the generic GLP-1s could be available in calendar year 2026 in China, India, Brazil, and Canada.

We talk about MSAs, the orders that they provide, and a handful of them have already provided orders, and we've actually shipped product during 2025. Much of the volume, I would say, is for their own development purposes as they work out what data they need beyond the data we supply for their regulatory submissions. Several of them have actually submitted to the regulatory authorities. Now, they control the timing and the content of the submissions. These submissions, we believe, include many of them will include specs that our product satisfies. Obviously, timing of commercial quantities is contingent on when they get approval, which one of them gets approval, and when they get approval. As you might have heard publicly, the generic GLP-1s could be available in calendar year 2026 in China, India, Brazil, and Canada.

Speaker #4: And we've actually shipped product Much of the , I would for their own development say , is , as work out , you , what they they need know data beyond the we supply for their regulatory volume submissions .

Speaker #4: them have actually to the regulatory Now they authorities . control the and the submitted submissions . And these submissions timing believe , include of them many will include specs are product satisfies .

Speaker #4: Now , obviously , timing of commercial quantities is contingent on when they approval . get that them gets approval and when they get approval .

Speaker #4: As you might have heard publicly , you know , Which one of GLP one could be available in calendar year 2026 . China , India , In and Canada .

Speaker #4: So there is obviously some uncertainty with are very , overall we associated pleased timing . the But progress that made in very fiscal I mean , you 2025 .

Jake Elguicze: There is obviously some uncertainty associated with timing, but overall, we are very, very pleased with the progress that we made in fiscal 2025. I mean, you might remember a year ago, we were just starting these discussions, and the team has made tremendous progress, and we continue to remain confident in the assumptions that we had laid out or the estimates that we had laid out during the analyst day of this being over $100 million opportunity for us by 2033. Marie, this is Jake. I'll just jump in regarding guidance. I think the low end of our guidance range assumes really a negligible impact in terms of new revenue streams mostly associated with GLP-1s, while from a high end of our revenue guidance range, we assume that new revenue streams, again, mostly coming from GLP-1 additional revenue, would contribute positively by about 1%.

There is obviously some uncertainty associated with timing, but overall, we are very, very pleased with the progress that we made in fiscal 2025. I mean, you might remember a year ago, we were just starting these discussions, and the team has made tremendous progress, and we continue to remain confident in the assumptions that we had laid out or the estimates that we had laid out during the analyst day of this being over $100 million opportunity for us by 2033.

Speaker #4: might we remember a year just team has discussions , and the made these ago we were continue remain to confident in tremendous we had out or the had laid out during estimates that we laid Analyst of day this progress being over us by $100 million opportunity for 2033 .

Speaker #5: And , Marie , this is Jake . I'll just jump in starting regarding regarding think guidance . the the low end of our guidance range I , assumes really a negligible in impact revenue of new streams .

Jake Elguicze: Marie, this is Jake. I'll just jump in regarding guidance. I think the low end of our guidance range assumes really a negligible impact in terms of new revenue streams mostly associated with GLP-1s, while from a high end of our revenue guidance range, we assume that new revenue streams, again, mostly coming from GLP-1 additional revenue, would contribute positively by about 1%.

Speaker #5: While from a from a end high of GLP our revenue guidance we assume that new revenue streams range , again , mostly coming from from revenue one , additional would positively GLP by about 1% .

Speaker #5: Deb mentioned that over the I think longer term that we feel that this can be at You know $100 million . , annual least product Embecta Corp revenue for feel like we're we're well on our way achieving

Jake Elguicze: We feel very good about where this is all going. Dev mentioned that over the longer term, we feel that this can be at least $100 million annual product revenue for Embecta through 2033, and we feel like we're well on our way towards achieving that. Thank you for that clarification, Jake, on the guidance as well. I guess I'll ask my follow-up here on China. You referred to it at the beginning, some of the geopolitical tensions. What are you seeing on the ground in China in terms of consumer willingness to buy non-Chinese products? Of course, the product is made in China, but not a Chinese brand, I suppose. Any further updates on how that dynamic is playing out? Thanks for taking the questions.

We feel very good about where this is all going. Dev mentioned that over the longer term, we feel that this can be at least $100 million annual product revenue for Embecta through 2033, and we feel like we're well on our way towards achieving that.

Speaker #3: Okay .

Speaker #3: that . clarification , Jake , on the And we well . I'll ask I guess my follow up China . You on referred to it through 2033 .

Marie Thibault: Thank you for that clarification, Jake, on the guidance as well. I guess I'll ask my follow-up here on China. You referred to it at the beginning, some of the geopolitical tensions. What are you seeing on the ground in China in terms of consumer willingness to buy non-Chinese products? Of course, the product is made in China, but not a Chinese brand, I suppose. Any further updates on how that dynamic is playing out? Thanks for taking the questions.

Speaker #3: at the beginning . You know , some of the tensions . What seeing on the are you here

Speaker #3: willingness to buy non , consumer Chinese course , the product is made in China , products ? but not a Of brand , I suppose .

Jake Elguicze: Yeah, Marie, on that, first, let me just say China in Q4 2025 performed very close or almost exactly in line with our expectations. Our thoughts when we had formulated or revised our FY25 guidance incorporated a significant year-over-year decline, partially because of the pressures that you mentioned, partially because of some inventory rebalancing, and Q4 2025 played out exactly as we thought it would. We've certainly taken steps to stabilize the situation, including reorganizing our sales team. We've actually introduced a more price-competitive pen needle, which also has a lower manufacturing cost. Our guidance for 2026 does incorporate some expectations around headwind in 2026 compared to 2025, but our current expectation is that it's going to be much less as compared to what we experienced in 2025.

Dev Kurdikar: Yeah, Marie, on that, first, let me just say China in Q4 2025 performed very close or almost exactly in line with our expectations. Our thoughts when we had formulated or revised our FY25 guidance incorporated a significant year-over-year decline, partially because of the pressures that you mentioned, partially because of some inventory rebalancing, and Q4 2025 played out exactly as we thought it would. We've certainly taken steps to stabilize the situation, including reorganizing our sales team. We've actually introduced a more price-competitive pen needle, which also has a lower manufacturing cost. Our guidance for 2026 does incorporate some expectations around headwind in 2026 compared to 2025, but our current expectation is that it's going to be much less as compared to what we experienced in 2025.

Speaker #4: You know , partially because of the that mentioned , partially because of that you inventory rebalancing and some Q4 2025 played out exactly it we thought would as steps certainly to .

Speaker #4: Stabilize the situation by reorganizing our sales team. We've actually become more competitive with our pen needle pricing, which has also lowered manufacturing costs.

Speaker #4: Cost guidance for 2026 does incorporate some expectations of headwinds in 2026 compared to 2025. However, our current expectation is that it's going to be much as to what we experienced in 2025.

Speaker #4: less You know , as we all press , I mean , the situation continues to compared evolve read in the , but certainly we focused on what we controlling can control to the situation there as quickly as are possible .

Jake Elguicze: As we all read in the press, I mean, the situation continues to evolve, but certainly, we are focused on controlling what we can control to stabilize the situation there as quickly as possible. Maybe just one final comment. Over the long term, we still continue to believe that this is going to be an important market for us. The market itself is growing mid-single digits. As you know, we have strong commercial and manufacturing infrastructure in China. You've heard us refer to the development of a market-appropriate pen needle. In fact, that pen needle is being developed by our team in China, and I'm quite hopeful that it will serve a segment in China that we don't serve today. As well as you asked about GLP-1s earlier, there are generic GLP-1 companies in China that have global aspirations that obviously we want to serve as well.

As we all read in the press, I mean, the situation continues to evolve, but certainly, we are focused on controlling what we can control to stabilize the situation there as quickly as possible. Maybe just one final comment. Over the long term, we still continue to believe that this is going to be an important market for us. The market itself is growing mid-single digits. As you know, we have strong commercial and manufacturing infrastructure in China. You've heard us refer to the development of a market-appropriate pen needle. In fact, that pen needle is being developed by our team in China, and I'm quite hopeful that it will serve a segment in China that we don't serve today. As well as you asked about GLP-1s earlier, there are generic GLP-1 companies in China that have global aspirations that obviously we want to serve as well.

Speaker #4: Maybe stabilize over the long term. You know, we still comment that this is going to be an important market for us.

Speaker #4: The market is growing to believe digits itself mid-single . As you strong commercial and manufacturing know , we infrastructure in China . You've heard market us appropriate pen needle fact , needle is being developed team by our China .

Speaker #4: quite . hopeful that it will serve that In China that we don't serve as well you asked today as about one earlier , you know , there are GLP one companies in that have global generic obviously aspirations that we want to serve well .

Speaker #4: So China still thinks it’s going to be a market important for us. And we’ll find a way through the term, whether it be an evolving landscape there over.

Jake Elguicze: Over the long term, we still think it's going to be an important market for us, and we'll find a way to weather through the evolving landscape over there. Thank you. Our next question comes from the line of Michael Polark with Wolfe Research. Your line is now open. Hi, good morning. Thank you for taking the questions. Two smaller ones for me. I'm interested in the cannula comments. You talked about increased costs there and an effort to source alternative suppliers. Maybe can you just unpack that for us a little bit? Why are the costs up, and what does the opportunity set look like to find other sources to mitigate that creep? Thank you. Yeah, good morning, Mike. Maybe I'll kick us off just as a reminder.

Over the long term, we still think it's going to be an important market for us, and we'll find a way to weather through the evolving landscape over there.

Speaker #2: Thank you . Our next question comes from the line of Michael Polak with Wolfe is now Research . Your line open .

Operator: Thank you. Our next question comes from the line of Michael Polark with Wolfe Research. Your line is now open. Hi, good morning.

Speaker #6: morning . Thank you Hi . Good for taking the questions . Two smaller ones for me interested . I'm in the cannula comments .

Speaker #6: You talked about increased costs . There and an effort to alternative source alternative So suppliers . maybe can you just unpack us a little bit that for the ?

Michael Polark: Thank you for taking the questions. Two smaller ones for me. I'm interested in the cannula comments. You talked about increased costs there and an effort to source alternative suppliers. Maybe can you just unpack that for us a little bit? Why are the costs up, and what does the opportunity set look like to find other sources to mitigate that creep? Thank you.

Speaker #6: Why are costs up and what does the opportunity like set to other sources find to look mitigate that creep ? you Thank .

Speaker #4: morning Mike . Yeah . Good Maybe I'll kick us off as a just reminder . So the entire supply of that we get is from our previous cannulas BD .

Dev Kurdikar: Yeah, good morning, Mike. Maybe I'll kick us off just as a reminder.

Speaker #4: And we have an agreement with them to supply those cannulas until it's sold in 2032. So BD right now. And you can see that we do want to have an alternate supplier for the cannula team.

Jake Elguicze: The entire supply of cannulas that we get is from our previous parent, BD, and we have a cannula agreement with them to supply those cannulas that goes until 2032. It is sole source from BD right now. You can imagine that we do want to have an alternate supplier for cannula. Our team has been working on this for the last couple of years. We have identified a couple of alternate cannula suppliers, and the team has made significant progress, including running some trials with alternate cannulas and doing some development work. I feel confident that certainly we have our current supply of cannula to 2032, but the team is making remarkable progress, and I feel reasonably confident that we are going to have at least one alternate supplier here qualified certainly well before our current cannula agreement runs out.

The entire supply of cannulas that we get is from our previous parent, BD, and we have a cannula agreement with them to supply those cannulas that goes until 2032. It is sole source from BD right now. You can imagine that we do want to have an alternate supplier for cannula. Our team has been working on this for the last couple of years. We have identified a couple of alternate cannula suppliers, and the team has made significant progress, including running some trials with alternate cannulas and doing some development work. I feel confident that certainly we have our current supply of cannula to 2032, but the team is making remarkable progress, and I feel reasonably confident that we are going to have at least one alternate supplier here qualified certainly well before our current cannula agreement runs out.

Speaker #4: imagine been Our working on this for the last couple of years . We've identified a of couple alternate cannula suppliers the and team has made significant progress , including running some trials with alternate cannulas and doing some development work .

Speaker #4: So , you know , I feel confident that certainly , you know , we have our current supply of cannula to 2032 , but the team is making remarkable progress , feel and I reasonably that confident we are going to have at one alternate least supplier qualified , certainly before before our well cannula agreement runs out that .

Speaker #4: , obviously , that allows us , you know , an With alternate supply with a different cost profile because since we became independent increase in cannula costs to , the us has significant been a contributor to the we've pressure on gross margin anything you'd like to . add .

Jake Elguicze: With that, obviously, that allows us an alternate supply with a different cost profile because since we became independent, the increase in cannula cost to us has been a significant contributor to the pressure we've faced on gross margin. Jake, anything you'd like to add? Yeah, Dev. Just to maybe add a little bit more, Dev had mentioned sort of what the margin profile of the company sort of looked like at the gross margin line kind of pre-spin as to sort of where we were during, say, 2025 and exiting 2025. Pre-spin, our gross margins were sort of or right at spin, right around, let's call it 67%. This year for 2025, our adjusted gross margins finished just under 64%. Really, Mike, the entirety of the decline over those years really came down to just increased cannula costs.

With that, obviously, that allows us an alternate supply with a different cost profile because since we became independent, the increase in cannula cost to us has been a significant contributor to the pressure we've faced on gross margin. Jake, anything you'd like to add?

Speaker #5: Deb . So so Yeah . just to maybe to little bit you know ,

Speaker #5: more , Deb had mentioned , you add a know , sort of what Take margin profile of the company the sort of looked like gross at the kind of margin line , pre-spin as sort of where we were , you know , during , say , 2025 and exiting 2025 .

Jake Elguicze: Yeah, Dev. Just to maybe add a little bit more, Dev had mentioned sort of what the margin profile of the company sort of looked like at the gross margin line kind of pre-spin as to sort of where we were during, say, 2025 and exiting 2025. Pre-spin, our gross margins were sort of or right at spin, right around, let's call it 67%. This year for 2025, our adjusted gross margins finished just under 64%. Really, Mike, the entirety of the decline over those years really came down to just increased cannula costs.

Speaker #5: And , you know , Pre-spin our gross sort of or right at spin around , let's right it 67% . You know , this year margins were 2025 , our adjusted gross margins finished just under 64% .

Speaker #5: And Mike , really , entirety the the over those decline years to just down increased really came cannula costs . So it really is important for us to to find an alternate , you know , provider both from a risk mitigation standpoint and you never be want to beholden to to one sole source .

Jake Elguicze: It really is important for us to find an alternate provider both from a risk mitigation standpoint, and you never want to be beholden to one sole source, and then also to drive some price decreases in the future as well, which we would certainly hope to do. In terms of our fiscal 2026 guidance in relation to 2025, we talked about our adjusted operating margins being down about 180 basis points at the midpoint compared to 2025 levels. About half of that is in the gross margin line entirely due to increased cannula costs, and the other half of that is just increases in terms of R&D expense as we need to make some investments in order to come to market with an alternate cannula provider, as well as some of those market-appropriate, low-cost products for pen needles and syringes to service some of the emerging markets.

It really is important for us to find an alternate provider both from a risk mitigation standpoint, and you never want to be beholden to one sole source, and then also to drive some price decreases in the future as well, which we would certainly hope to do. In terms of our fiscal 2026 guidance in relation to 2025, we talked about our adjusted operating margins being down about 180 basis points at the midpoint compared to 2025 levels. About half of that is in the gross margin line entirely due to increased cannula costs, and the other half of that is just increases in terms of R&D expense as we need to make some investments in order to come to market with an alternate cannula provider, as well as some of those market-appropriate, low-cost products for pen needles and syringes to service some of the emerging markets.

Speaker #5: And then also to , to to drive some price decreases in the future as well , which we would hope to do terms certainly of our in fiscal in relation 2026 guidance to 2025 .

Speaker #5: We talked about our adjusted operating margins down about points 180 basis being compared midpoint to the at the 2025 About half of that is gross margin the in the entirely levels .

Speaker #5: to cannula . And costs the other that is half of just increases in terms of of R&D expense . As we , you know , to to make some investments in order to market an alternate with cannula come to provider as need as some of those market appropriate , low cost products for well needles and to to some of the pen markets .

Speaker #5: service

Speaker #5: emerging

Speaker #6: Helpful the follow up , color I wanted to ask on one of the comments about the fourth quarter performance . I heard year on price unfavorable in the US , year mention of milestone payments to a large US pharmacy customer , 7 million make sure I and I just understand want to what that is .

Jake Elguicze: Helpful color. For the follow-up, I wanted to ask on one of the comments about the fourth quarter performance. I heard price unfavorable year on year in the US, $7 million, mention of milestone payments to a large US pharmacy customer. I just want to make sure I understand what that is, what you're saying there. The word milestone specifically tripped me up. If you can add any color on that dynamic, I'd appreciate it. Thank you. Yeah, Mike, I'm happy to. Obviously, I won't talk about this specific contract, but our contracts with the US change. There is a rebate level, right? There are sometimes marketing spend items that we contribute to marketing of our products. Finally, on achievement of certain volume levels, typically, there is an additional payment, and we often refer to them as milestone payment.

Michael Polark: Helpful color. For the follow-up, I wanted to ask on one of the comments about the fourth quarter performance. I heard price unfavorable year on year in the US, $7 million, mention of milestone payments to a large US pharmacy customer. I just want to make sure I understand what that is, what you're saying there. The word milestone specifically tripped me up. If you can add any color on that dynamic, I'd appreciate it. Thank you.

Speaker #6: What you’re saying there. The word "milestone" specifically trips me up, so if you can add any color on that dynamic, I’d appreciate it.

Speaker #6: Thank you .

Speaker #4: Mike , I'm happy to . Yeah , Obviously I won't talk about the specific contract , but you know , our with contracts you know , there change , is a rebate level right are marketing sometimes ?

Dev Kurdikar: Yeah, Mike, I'm happy to. Obviously, I won't talk about this specific contract, but our contracts with the US change. There is a rebate level, right? There are sometimes marketing spend items that we contribute to marketing of our products. Finally, on achievement of certain volume levels, typically, there is an additional payment, and we often refer to them as milestone payment.

Speaker #4: Items that we contribute to the marketing of our products typically achieve certain volume levels. Often, there is an additional payment associated with these achievements; we often refer to them as milestone payments.

Speaker #4: . And we the day , it all comes down to price , but depending upon the timing of the payments , it can lead to , you know , year over year , unfavorability or favorability during the course of a quarter .

Jake Elguicze: At the end of the day, it all comes down to price, but depending upon the timing of the payments, it can lead to year-over-year unfavorability or favorability during the course of a quarter. Thank you. Thank you. Our next question comes from the line of Anthony Petroni with Mizuho Americas. Your line is now open. Thanks. Good morning, everyone. Happy early Thanksgiving here to everyone, teams, family. Maybe start on GLP-1 and the generic contracting phase. I'm wondering, Dev and/or Jake, if you could talk a little bit about how those contracts are going to be structured here. Typically, when we have drug-device combination solutions, you're in the clinical phase, but if you get to market, you essentially get written into the drug master file and the instructions for use, and that can be a multi-year contract.

At the end of the day, it all comes down to price, but depending upon the timing of the payments, it can lead to year-over-year unfavorability or favorability during the course of a quarter.

Speaker #6: Thank you

Speaker #2: You. Our next question comes from the line of Pravesh Khandelwal.

Michael Polark: Thank you.

Speaker #2: Anthony Petrone, Mizuho. Thank you, Americas. Your line is now open.

Operator: Thank you. Our next question comes from the line of Anthony Petroni with Mizuho Americas. Your line is now open.

Speaker #7: Thanks , good morning , and everyone . Happy with early Thanksgiving year to Teams , family maybe on Glp1 start generic , everyone . contracting phase .

Speaker #7: Thanks , good morning , and everyone . Happy with early Thanksgiving year to Teams , family maybe on Glp1 start generic , everyone .

Anthony Petrone: Thanks. Good morning, everyone. Happy early Thanksgiving here to everyone, teams, family. Maybe start on GLP-1 and the generic contracting phase. I'm wondering, Dev and/or Jake, if you could talk a little bit about how those contracts are going to be structured here. Typically, when we have drug-device combination solutions, you're in the clinical phase, but if you get to market, you essentially get written into the drug master file and the instructions for use, and that can be a multi-year contract.

Speaker #7: I'm wondering dev Jake if you could talk a little bit about how contracts are going to be and or structured here . So we typically when have , you know , drug device combination solutions , you're in the clinical phase .

Speaker #7: But if you get to you , you know , essentially market , get into the drug master file and the instructions written use .

Speaker #7: be a that can And multiyear how contract . So contracting work with the generic glp1 in the clinical development phase ? will those look providers And what like once we get with success to a how long will they be ?

Jake Elguicze: How does contracting work with the generic GLP-1 providers in the clinical development phase, and what will those look like once we get with success to a commercial phase? How long will they be? Will there be minimum quantities baked in? How do the economics work over, let's say, a medium-term contract? I'll have a couple of follow-ups. Thanks. Yeah, Anthony, I don't want to get too far ahead of myself with respect to commercial quantities and commercial contracts until some of these generic manufacturers get approved. Let me at least provide additional color, right? As we go through the contracting phase, you can imagine the early discussions and initial discussions. We get NDAs in place. We get qualified as a vendor in our system. That includes providing some data on our product from a quality standpoint, from a regulatory standpoint.

How does contracting work with the generic GLP-1 providers in the clinical development phase, and what will those look like once we get with success to a commercial phase? How long will they be? Will there be minimum quantities baked in? How do the economics work over, let's say, a medium-term contract? I'll have a couple of follow-ups. Thanks.

Speaker #7: commercial Will there be minimum quantities baked in ? How do the economics work over , let's medium say , a term contract ? And then I'll have a couple of ups .

Speaker #7: Thanks .

Speaker #4: Yeah . Anthony . So , you know , I don't want to get too far ahead of myself with respect to quantities commercial and commercial until , you know , some of these generic contracts manufacturers get approved .

Dev Kurdikar: Yeah, Anthony, I don't want to get too far ahead of myself with respect to commercial quantities and commercial contracts until some of these generic manufacturers get approved. Let me at least provide additional color, right? As we go through the contracting phase, you can imagine the early discussions and initial discussions. We get NDAs in place. We get qualified as a vendor in our system. That includes providing some data on our product from a quality standpoint, from a regulatory standpoint.

Speaker #4: But let me let me at provide additional color . Right . as So we go through the contracting can imagine , imagine the early discussions and initials and discussions .

Speaker #4: We get initial . We get qualified as a vendor in our system . That place includes providing some data on our product from a quality standpoint , regulatory we have standpoint , we have from a a quality agreements in place .

Speaker #4: Then we actually start talking about getting a contracting, contract completion. But the contract, I will talk about some of these drugs that are once commercial, the quantities that they are commercially ordering now are due really to development work.

Jake Elguicze: We have quality agreements in place. We actually start talking about contracting, get a contract complete, but the commercial contract, I think we'll talk about once some of these drugs are commercial. The quantities that they are ordering now are really to do their own development work. You can imagine the way this is all going to play out is we will be supplying bulk pen needles to these manufacturers. They are going to co-package our pen needles with their pen injector, and they will be the ones to market that combined product to patients. They also, as I think you implied, are going to be responsible for the regulatory submission for the whole package that includes the drug and the device. Certainly, we'll help with providing data, but they are responsible for that submission, and our pen needle will get specced in.

We have quality agreements in place. We actually start talking about contracting, get a contract complete, but the commercial contract, I think we'll talk about once some of these drugs are commercial. The quantities that they are ordering now are really to do their own development work. You can imagine the way this is all going to play out is we will be supplying bulk pen needles to these manufacturers. They are going to co-package our pen needles with their pen injector, and they will be the ones to market that combined product to patients. They also, as I think you implied, are going to be responsible for the regulatory submission for the whole package that includes the drug and the device. Certainly, we'll help with providing data, but they are responsible for that submission, and our pen needle will get specced in.

Speaker #4: And you can imagine the way this is all going to play out is we will be supplying bulk pen needles to these manufacturers.

Speaker #4: They are going to co-package our pen needles with their injector pen, then they will be the ones to market that combined product to patients.

Speaker #4: as I also , think you They implied , are going to be responsible for the regulatory submission for the whole . That package includes the and the drug device will help with providing certainly but they are responsible for that submission .

Speaker #4: And our pen data , needle will get specked in now , obviously , once are part of that you combination imparts a level of stickiness to the product .

Jake Elguicze: Now, obviously, once you are part of that combination, that imparts a level of stickiness to the product. Beyond that, since they are going to be doing the co-packaging, the co-packaging lines will be configured, if you will, to be accepting of our pen needles, and that provides some additional stickiness, if you will, to our product as part of that combined package. Perhaps most importantly, I want to point out something that might seem obvious. We have a long history in demonstrating reliability of supply. If you're a generic manufacturer that's introducing a generic GLP-1 drug, I would think that you would want your pen needle supplier to be somebody you can depend upon and has that long demonstrated reliability of supply.

Now, obviously, once you are part of that combination, that imparts a level of stickiness to the product. Beyond that, since they are going to be doing the co-packaging, the co-packaging lines will be configured, if you will, to be accepting of our pen needles, and that provides some additional stickiness, if you will, to our product as part of that combined package. Perhaps most importantly, I want to point out something that might seem obvious. We have a long history in demonstrating reliability of supply. If you're a generic manufacturer that's introducing a generic GLP-1 drug, I would think that you would want your pen needle supplier to be somebody you can depend upon and has that long demonstrated reliability of supply.

Speaker #4: But beyond that , since they are going to be they're going to be doing the co-packaging , you know , the co-packaging will be lines configured if you will , to be accepting of our pen needles .

Speaker #4: And that provides some additional stickiness , if you will , to our product . As part of that combined package perhaps . most But importantly , you know , I want to point out something that might seem obvious .

Speaker #4: We have a long in demonstrating reliability of supply , and if you are a history manufacturer , that's GLP introducing a generic one drug , I would think that you would your pen want needle supplier to be somebody you can depend upon has that generic has has that long and demonstrated reliability of supply , not to mention our pen needles are already approved in markets where you would expect generic GLP one to to with respect to profitability .

Jake Elguicze: Not to mention, our pen needles are already approved in markets where you would expect generic GLP-1s to launch. With respect to profitability, what I would also say is that these are, as I pointed, bulk pen needles. We do not expect to spend any significant CapEx in meeting this demand. We would expect that there to be some incremental margin drop through as compared to our corporate averages of gross margin. Obviously, I will not comment on pricing. Maybe one final comment. Because we have established these conversations now with generic drug companies, we are also expanding the conversation to work with them on potential supply of other devices that they may use. I think on analyst day, I said the most sort of nearest adjacent device to us would be a pen injector.

Not to mention, our pen needles are already approved in markets where you would expect generic GLP-1s to launch. With respect to profitability, what I would also say is that these are, as I pointed, bulk pen needles. We do not expect to spend any significant CapEx in meeting this demand. We would expect that there to be some incremental margin drop through as compared to our corporate averages of gross margin. Obviously, I will not comment on pricing. Maybe one final comment. Because we have established these conversations now with generic drug companies, we are also expanding the conversation to work with them on potential supply of other devices that they may use. I think on analyst day, I said the most sort of nearest adjacent device to us would be a pen injector.

Speaker #4: would also What I say is that these I pointed are , as , bulk pen needles . We don't expect to spend any significant CapEx in meeting this demand .

Speaker #4: And so we would expect that there to, you know, be some incremental margin drop-through as compared to our corporate averages of gross margin.

Speaker #4: obviously , You know , I won't comment on on pricing . Maybe one final comment because we've established these conversations now with generic drug companies .

Speaker #4: We are the expanding conversation also to work with on them potential supply , supply of other devices that use . And I think on Analyst Day , I said , you know , the they may sort of nearest adjacent device to us would be a pen injector I'm hopeful that supplying .

Speaker #4: devices to generic drug for their generic So GLP one drugs is just the start . As we transition from , you know , pure injection delivery for insulin company to a broader medical supplies company .

Jake Elguicze: I'm hopeful that supplying devices to generic drug companies for their generic GLP-1 drugs is just the start as we transition from pure injection delivery for insulin company to a broader-based medical supplies company. Hopefully, that was helpful, Anthony. No, very helpful and provides some color as we think about the next few years ahead. The follow-up here will just be on capital deployment. You mentioned a little bit of CapEx here, but the leverage ratios are coming down. The company in the past has talked about potentially forging additional partnerships, perhaps outside of GLP-1 or being a little bit more focused a little bit on tuck-in M&A. Just a little bit to take the temperature on capital deployment outside of GLP-1 and the CapEx needs immediately. Do you see any tuck-in M&A opportunities over the next couple of years? Thanks. Yeah, thanks, Anthony.

I'm hopeful that supplying devices to generic drug companies for their generic GLP-1 drugs is just the start as we transition from pure injection delivery for insulin company to a broader-based medical supplies company. Hopefully, that was helpful, Anthony.

Speaker #4: Hopefully, that was helpful. Anthony.

Speaker #4: .

Speaker #7: very

Speaker #7: helpful . And provides No , as we think about the , you some color , next ahead then and the follow few years on capital deployment .

Anthony Petrone: No, very helpful and provides some color as we think about the next few years ahead. The follow-up here will just be on capital deployment. You mentioned a little bit of CapEx here, but the leverage ratios are coming down. The company in the past has talked about potentially forging additional partnerships, perhaps outside of GLP-1 or being a little bit more focused a little bit on tuck-in M&A. Just a little bit to take the temperature on capital deployment outside of GLP-1 and the CapEx needs immediately. Do you see any tuck-in M&A opportunities over the next couple of years? Thanks.

Speaker #7: a little bit of just be here , but You mentioned ratios the based coming down . You know , the company in the past has talked about potentially forging additional partnerships , perhaps outside of GLP one or being bit .

Speaker #7: A little focused, a little bit on tuck-in M&A. So, just a little bit to take the temperature on capital deployment outside of GLP-1.

Speaker #7: And the CapEx needs immediately, do you see any tuck-in M&A opportunities over the next few years?

Speaker #4: Thanks , Anthony . just say let me I'm very Yeah . First , with how profitability metrics ended up with respect to our guidance .

Yeah, thanks, Anthony.

Speaker #4: As you saw , we sort the end of our gross top margin exceeded margin , adjusted , adjusted margin . And really that allowed us to down pay significantly more debt in 2025 .

Jake Elguicze: First, let me just say I'm very pleased with how our profitability metrics ended up with respect to our guidance. As you saw, we sort of exceeded the top end of our gross margin, adjusted EBITDA margin, adjusted operating margin, and that really allowed us to pay down significantly more debt in 2025 and brought our net leverage down, as you pointed out, to 2.9. Our capital allocation plans remain unchanged from what I said on investor day. We think $600 million in free cash flow over the next three years. Most of that will go to debt pay down. We pay a dividend at this point. We are not considering changing that. Our highest priority still remains paying down debt. As our leverage comes down, certainly it's already below 3, and we drive it down further in 2026.

Dev Kurdikar: First, let me just say I'm very pleased with how our profitability metrics ended up with respect to our guidance. As you saw, we sort of exceeded the top end of our gross margin, adjusted EBITDA margin, adjusted operating margin, and that really allowed us to pay down significantly more debt in 2025 and brought our net leverage down, as you pointed out, to 2.9. Our capital allocation plans remain unchanged from what I said on investor day. We think $600 million in free cash flow over the next three years. Most of that will go to debt pay down. We pay a dividend at this point. We are not considering changing that. Our highest priority still remains paying down debt. As our leverage comes down, certainly it's already below 3, and we drive it down further in 2026.

Speaker #4: And brought our net As you leverage down . pointed out , to 2.9 , our capital allocation plans , remain unchanged from what I said on Day Investor .

Speaker #4: You know, we think $600 million in free cash flow over the next three years. Most of that will go to paying down, you know,.

Speaker #4: pay a We , dividend . At this point . We are not considering changing that . And our highest priority still debt remains paying down debt .

Speaker #4: But as our leverage comes down , already below three and we drive it down in further 2026 , certainly it's we are very open to and organic inorganic investments , and so by M&A its very nature is very opportunistic .

Jake Elguicze: We are very open to organic and inorganic investments. M&A, by its very nature, is very opportunistic. We will continue to be alert and aware if such an opportunity arises, and we feel that it is going to be value creative to our company and help transition the company towards long-term sustainable growth. We certainly will be ready to act on it. Thank you again. Thank you. As a reminder, to ask a question at this time, please press star 11 on your touchstone telephone. Our next question comes from the line of Travis Steed with Bank of America Securities. Your line is now open. Hey, this is Grace Shawn for Travis. Thanks for taking the questions. I just wanted to ask a follow-up on, in your prepared remarks, you mentioned selling certain intellectual properties of $10 million associated with a patch pump subsequent to year-end.

We are very open to organic and inorganic investments. M&A, by its very nature, is very opportunistic. We will continue to be alert and aware if such an opportunity arises, and we feel that it is going to be value creative to our company and help transition the company towards long-term sustainable growth. We certainly will be ready to act on it.

Speaker #4: will We continue to , you know , to be to be alert and aware if such an opportunity arises and , we and feel that it to be is going value creative to our company and help transition the company towards long term sustainable growth , we certainly will be ready to act on it .

Speaker #7: Thank you again .

Speaker #2: As a thank you, a reminder to ask a question at this time, please star one one on your touchtone telephone. Our next question comes from the line of Travis Steed with Bank of America Securities.

Anthony Petrone: Thank you again.

Operator: Thank you. As a reminder, to ask a question at this time, please press star 11 on your touchstone telephone. Our next question comes from the line of Travis Steed with Bank of America Securities. Your line is now open.

Speaker #2: Your press is now open.

Speaker #8: Hey , this is Grisha on for Travis . Thanks taking the questions . just wanted to ask a follow up I on in your prepared remarks .

Grace Song: Hey, this is Grace Shawn for Travis. Thanks for taking the questions. I just wanted to ask a follow-up on, in your prepared remarks, you mentioned selling certain intellectual properties of $10 million associated with a patch pump subsequent to year-end.

Speaker #8: You mentioned selling certain intellectual properties of the $10 million associated with patch pump subsequent to year end . wondering if you could So just any more details around this .

Speaker #8: And what's baked at that is with associated this?

Jake Elguicze: Just wondering if you could add any more details around this and what's baked into your assumptions moving forward that is associated with this. Yeah. Grace, thanks for the question. Yeah, we did sell certain IP and associated assets to a buyer for $10 million. We are pleased to be able to monetize these assets from the patch pump program that we discontinued about a year ago. I'll let Jake comment on. This was a Q1 event really for 2026 for us, but I'll let Jake comment on how you should expect to see that run through the financials. Yeah. So obviously, Grace, it'll obviously be an increase to cash from a guidance standpoint. This isn't going to impact our adjusted results that we provided guidance metrics for today. There'll be a gain most likely on the sale of these assets.

Just wondering if you could add any more details around this and what's baked into your assumptions moving forward that is associated with this.

Speaker #4: Yeah , great . Thanks for the question . Yeah , we did sell certain IP and associated assets to a buyer for $10 million .

Dev Kurdikar: Yeah. Grace, thanks for the question. Yeah, we did sell certain IP and associated assets to a buyer for $10 million. We are pleased to be able to monetize these assets from the patch pump program that we discontinued about a year ago. I'll let Jake comment on. This was a Q1 event really for 2026 for us, but I'll let Jake comment on how you should expect to see that run through the financials.

Speaker #4: We are pleased to be able to monetize these assets, the patch pump program that we started just a year ago. I'll let Jake comment on that.

Speaker #4: This was a Q1 event really for 2026 for But I'll us. Jake let comment on how you should expect to see through the financials.

Speaker #5: Yeah , so so

Speaker #5: obviously so it'll Grisha , obviously be an increase to to cash that run from from a standpoint . guidance This isn't going to impact , know , our our adjusted results that that we provided guidance metrics for you today .

Jake Elguicze: Yeah. So obviously, Grace, it'll obviously be an increase to cash from a guidance standpoint. This isn't going to impact our adjusted results that we provided guidance metrics for today. There'll be a gain most likely on the sale of these assets.

Speaker #5: There'll be the most gain likely on the sale of these assets then on. And as a result of that, we're just going to normalize that for purposes of our adjusted margins, operating or earnings per share.

Jake Elguicze: As a result of that, we're just going to normalize that for purposes of our adjusted operating margins or earnings per share. Great. Thank you. Maybe just one follow-up on the pharmacy closures that you saw earlier this year. You had the stocking dynamic for July 4th and ahead of the brand transition. A lot of one-time benefits. Can you just speak to any more detail of how you saw that play out in the second half of 2025? Maybe if there's any sort of visibility on that into 2026 on how the pharmacy volumes are moving forward. Thanks. Yeah. As you pointed out earlier in the year, we had commented on planned store closures at a major US pharmacy chain. We don't sell directly to that pharmacy chain. We sell to a third-party distributor that also serves other customers.

As a result of that, we're just going to normalize that for purposes of our adjusted operating margins or earnings per share.

Speaker #8: Great . Thank you . And then maybe just one follow up on the pharmacy closures that you saw in in earlier this year .

Grace Song: Great. Thank you. Maybe just one follow-up on the pharmacy closures that you saw earlier this year. You had the stocking dynamic for July 4th and ahead of the brand transition. A lot of one-time benefits. Can you just speak to any more detail of how you saw that play out in the second half of 2025? Maybe if there's any sort of visibility on that into 2026 on how the pharmacy volumes are moving forward. Thanks.

Speaker #8: And then you had the softening dynamic for July 4th and ahead of the brand transition. So, a lot of one-time benefits.

Speaker #8: Can you speak to more detail about anything you saw that played out in Q4? And if there's any sort of visibility on that in 2026?

Speaker #8: On how the volumes are moving forward. Thanks.

Speaker #4: So , Yeah . you know , as you pointed out earlier in the year , we had commented on storage planned closures at a closure , US pharmacy chain .

Yeah. As you pointed out earlier in the year, we had commented on planned store closures at a major US pharmacy chain. We don't sell directly to that pharmacy chain. We sell to a third-party distributor that also serves other customers.

Speaker #4: We don't sell directly to that pharmacy chain . We sell to a third party distributor that also serves other customers . But I think , as I said , at that point , you know , our product is medically necessary .

Speaker #4: So what happens is a if chain , if a store closes , patients will shift to other chains , other sources to procure product and as expected , saw we strength , some other chain outlets .

Jake Elguicze: I think, as I said at that point, our product is medically necessary. What happens is if a chain, if a store closes, patients will shift to other chains, other sources to procure product. As expected, we saw strength at some other chain outlets. We incorporated our thoughts around what the impact of that closures will be into our 2026 guidance. In the guidance that Jake went through, he talked about a 100 basis point range in the volume assumptions. That includes our thoughts on what might happen with the US pharmacy volume as well. Maybe one just final point on how 2025 played out. We had started the year with the original guidance. Actually, as the year played out, we did see what I'll say China year-over-year headwinds that were not incorporated in our original guidance.

Dev Kurdikar: I think, as I said at that point, our product is medically necessary. What happens is if a chain, if a store closes, patients will shift to other chains, other sources to procure product. As expected, we saw strength at some other chain outlets. We incorporated our thoughts around what the impact of that closures will be into our 2026 guidance. In the guidance that Jake went through, he talked about a 100 basis point range in the volume assumptions. That includes our thoughts on what might happen with the US pharmacy volume as well. Maybe one just final point on how 2025 played out. We had started the year with the original guidance. Actually, as the year played out, we did see what I'll say China year-over-year headwinds that were not incorporated in our original guidance.

Speaker #4: And we incorporated strength at thoughts around , know , what the you closures will be our into 2026 guidance . You know , in the guidance that impact of that he about , you know , 100 basis point range in the volume assumptions .

Speaker #4: Includes thoughts on what might happen with us in pharmacy volume as well. And, that you know, maybe one just final point on how 2025 played out.

Speaker #4: know , we had You started the year with the original guidance . And actually , as the year played out , we did see what I'll say .

Speaker #4: China year year over were headwinds that not incorporated in our original guidance . But actually the year including the out , impact of store closures us with played being within the range of our original guidance .

Jake Elguicze: Actually, the year played out, including the impact of store closures, with us being within the range of our original guidance had it not been for China. I think the store closures are playing out as we thought they would. Patients will move to other outlets, and we'll see strength. We incorporated our thoughts in the 2026 guidance. Thanks, Grace. Thank you so much. Thank you. I'm currently showing no further questions at this time. I'd now like to hand the call back over to Dev Kurdikar for closing remarks. As we close the call, I just want to express my sincere gratitude to all my colleagues at the company around the world. Fiscal 2025 represented a meaningful milestone as we completed the first phase of our strategic roadmap, standing up our core systems and infrastructure needed for the next stage of growth.

Actually, the year played out, including the impact of store closures, with us being within the range of our original guidance had it not been for China. I think the store closures are playing out as we thought they would. Patients will move to other outlets, and we'll see strength. We incorporated our thoughts in the 2026 guidance. Thanks, Grace.

Speaker #4: It not had so been for China. I think the stores are playing closures out as we thought they would. To patients, other outlets' strength and see our thoughts incorporated the 26 guidance.

Speaker #4: Thanks, and we Grisha.

Speaker #8: Thank you. So, we will move on.

Speaker #8: .

Speaker #2: Thank you . this now showing no the call back over Devdatt Kurdikar for closing time . .

Speaker #2: further currently questions at

Grace Song: Thank you so much.

Operator: Thank you. I'm currently showing no further questions at this time. I'd now like to hand the call back over to Dev Kurdikar for closing remarks.

Speaker #4: close

Speaker #4: to all my colleagues at the company around the world . Fiscal 2025 represented meaningful a milestone as we completed the first phase of our strategic roadmap , standing up our core And I'm systems and needed for the next stage of growth infrastructure .

Dev Kurdikar: As we close the call, I just want to express my sincere gratitude to all my colleagues at the company around the world. Fiscal 2025 represented a meaningful milestone as we completed the first phase of our strategic roadmap, standing up our core systems and infrastructure needed for the next stage of growth.

Speaker #4: despite a And complex trade and geo geopolitical backdrop , we continue to perform well and strengthen our operational . We foundation enter fiscal 2026 confident in the of the direction company .

Jake Elguicze: Despite a complex trade and geopolitical backdrop, we continue to perform well and strengthen our operational foundation. We enter fiscal 2026 confident in the direction of the company. Our focus remains clear, maintaining leadership in our core categories, advancing our innovation programs, and delivering strong profitability and cash flow in order to execute on the commitments we outlined at our 2025 analyst and investor day. Thank you for calling in, for your interest in Embecta, and happy Thanksgiving all. This concludes today's conference. Thank you for your participation. You may now disconnect.

Despite a complex trade and geopolitical backdrop, we continue to perform well and strengthen our operational foundation. We enter fiscal 2026 confident in the direction of the company. Our focus remains clear, maintaining leadership in our core categories, advancing our innovation programs, and delivering strong profitability and cash flow in order to execute on the commitments we outlined at our 2025 analyst and investor day. Thank you for calling in, for your interest in Embecta, and happy Thanksgiving all.

Speaker #4: Our remains maintaining clear leadership in our core categories, advancing our innovation programs, and delivering strong profitability and cash flow in order to execute on the goals we outlined at our 2025 Analyst Investor Day.

Speaker #4: Thank you, Day, for calling in for your interest in Happy Thanksgiving, all.

Operator: This concludes today's conference. Thank you for your participation. You may now disconnect.

Q4 2025 Embecta Corp Earnings Call

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