Embecta Corp. (EMBC) | Investment Case

1. Company Snapshot

1.a. Company Description

Embecta Corp., a medical device company, focuses on the provision of various solutions to enhance the health and wellbeing of people living with diabetes.Its products include pen needles, syringes, and safety devices, as well as digital applications to assist people with managing their diabetes.The company primarily sells its products to wholesalers and distributors in the United States and internationally.

Embecta Corp.was founded in 1924 and is based in Parsippany, New Jersey.Embecta Corp.(NasdaqGS:EMBC) operates independently of Becton, Dickinson and Company as of April 1, 2022.

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1.b. Last Insights on EMBC

Embecta Corp.'s recent performance was negatively impacted by the increasing adoption of new insulin delivery technologies and GLP-1 drugs, which are expected to lead to a decline in the use of traditional insulin delivery routes. The company's end market is also facing headwinds from the growing use of pump patches, further exacerbating the decline in demand for Embecta's products.

1.c. Company Highlights

Last Price	11.69
Change Percentage	0.09%
Open	11.53
Previous Close	11.68
Market Cap ( Millions)	684
Volume	940549
Year High	21.23
Year Low	9.2
M A 50	13.71
M A 200	12.53

FCF Yield	26.67%
Dividend Yield	5.13%
ROE	-13.41%
Debt / Equity	-219.84%
Net Debt / EBIDTA	408.82%
Price To Book	-1.05
Price Earnings Ratio	7.22
Price To FCF	3.75
Price To sales	0.63
EV / EBITDA	6.41

2. Embecta Corp.'s FY2025 Results: Navigating Challenges Amidst Strategic Progress

Embecta Corp.'s fiscal year 2025 revenue was $1.08 billion, a 3.9% decline on an adjusted constant currency basis, while generating $182 million in free cash flow and paying down $184 million of debt, achieving a net leverage level of 2.9 times. For the fourth quarter, revenue was $264 million, reflecting a 7.7% decline year-over-year on an as-reported basis, or a 10.4% decline on an adjusted constant currency basis. The company’s adjusted gross profit and margin for Q4 2025 were $159.5 million and 60.6%, respectively, with adjusted operating income and margin at $66.7 million and 25.3%. For the full year, adjusted EBITDA and margin totaled $415.3 million and 38.5%.

Publication Date: Dec -02

                                    📋 Highlights
                                    Revenue Decline::
                                                FY2025 revenue fell 3.9% to $1.08 billion on an adjusted constant currency basis, with Q4 revenue down 10.4% to $264 million.
Free Cash Flow & Debt Paydown::
                                                Generated $182 million in free cash flow and reduced debt by $184 million, achieving a net leverage ratio of 2.9x.
Profitability Metrics::
                                                Q4 adjusted operating margin reached 25.3%, while FY2025 adjusted EBITDA margin was 38.5% ($415.3 million total).
2026 Guidance::
                                                Revenue projected flat to -2% ($1.071–1.093 billion) with 29–30% adjusted operating margin, down 180 bps from 2025 due to higher cannula costs.
GLP-1 Growth Opportunity::
                                                Aims for $100 million annual revenue from GLP-1 by 2033, with potential 1% positive impact on 2026 revenue at the high end of guidance.

                                

Guidance and Outlook

For fiscal year 2026, the company expects revenue to be flat to down 2% on an adjusted constant currency basis, with an initial revenue guide of between $1.071 billion and $1.093 billion. The company anticipates adjusted operating margin to be between 28-30% by fiscal 2028. Analysts estimate next year's revenue growth at -0.2%, indicating a continued challenging environment. The actual EPS for the quarter came out at $0.5, relative to estimates at $0.7.

Strategic Progress and Opportunities

The company is focused on long-term sustainable growth, with a $100 million annual revenue opportunity from GLP-1 by 2033. It has made progress on its strategic priorities, including exiting transitional services agreements and completing a brand transition in North America. The company is in discussions with over 30 potential GLP-1 entrants for co-packaging of pen needles, with several having provided orders.

Valuation and Financial Metrics

Embecta Corp.'s current valuation metrics include a P/E Ratio of 7.57, P/S Ratio of 0.66, EV/EBITDA of 6.52, and a Dividend Yield of 4.9%. The company's ROIC stands at 20.04%, indicating efficient capital allocation. The Net Debt / EBITDA ratio is 4.09, reflecting a manageable debt burden. These metrics suggest that the market has priced in the challenges faced by the company, but its strong profitability and cash flow generation capabilities provide a foundation for future growth.

Operational Challenges and Mitigation

The company faced increased cannula costs, which have been a significant contributor to pressure on its gross margin. To mitigate this, Embecta is working to find alternative cannula suppliers, with a goal of qualifying at least one new supplier before its current agreement with BD expires in 2032. In China, the company saw a decline in Q4 2025 but expects a less significant headwind in 2026, driven by efforts to reorganize its sales team and introduce more price-competitive pen needles.

3. NewsRoom

Embecta Growth Stalls Despite Strong Fiscal 2025 Results (Rating Downgrade)

Nov -29

Source: seekingalpha.com

Meet 33 Ideal "Safer" November Small/MidCap Value DiviBuys Of The S&P600

Nov -26

Source: seekingalpha.com

Embecta Corp. (EMBC) Q4 2025 Earnings Call Transcript

Nov -25

Source: seekingalpha.com

Embecta Corp. Reports Fiscal 2025 Fourth Quarter and Full Year Financial Results; Provides Initial Fiscal Year 2026 Financial Guidance

Nov -25

Source: globenewswire.com

embecta Announces Quarterly Cash Dividend

Nov -25

Source: globenewswire.com

AXQ Capital LP Acquires Shares of 31,298 Embecta Corp. $EMBC

Nov -25

Source: defenseworld.net

EMBC Q4 Preview: Product Momentum and Strategy Gains to Support Growth?

Nov -20

Source: zacks.com

embecta announces changes to Board of Directors

Nov -17

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.37%)

6. Segments

Diabetes Care

Expected Growth: 8.37%

Embecta Corp's Diabetes Care segment growth of 8.37% is driven by increasing prevalence of diabetes, rising demand for insulin delivery systems, and growing adoption of continuous glucose monitoring systems. Additionally, expanding product portfolios, strategic partnerships, and geographic expansion into emerging markets contribute to the segment's growth.

7. Detailed Products

Omnipod Insulin Management System

A wearable, tubeless insulin pump that provides continuous insulin delivery and insulin bolus dosing for people with diabetes.

Omnipod DASH System

A next-generation insulin management system that combines a wearable insulin pump with a mobile app and cloud-based data management.

Omnipod 5 System

An automated insulin delivery system that integrates with continuous glucose monitoring data to predict and adjust insulin doses in real-time.

8. Embecta Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Embecta Corp. is medium due to the presence of alternative products and services in the market.

Bargaining Power Of Customers

The bargaining power of customers is high due to the availability of alternative products and services, and the ability of customers to switch to competitors.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the presence of multiple suppliers and the ability of Embecta Corp. to negotiate prices.

Threat Of New Entrants

The threat of new entrants is medium due to the presence of barriers to entry, such as high capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of multiple competitors in the market, and the need for Embecta Corp. to differentiate itself through innovation and marketing.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	200.60%
Debt Cost	8.06%
Equity Weight	-100.60%
Equity Cost	8.06%
WACC	8.06%
Leverage	-199.40%

11. Quality Control: Embecta Corp. passed 3 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Embecta

A-Score: 5.5/10

Value: 8.2

Growth: 1.7

Quality: 6.2

Yield: 7.0

Momentum: 7.0

Volatility: 3.0

1-Year Total Return ->

Amphastar Pharmaceuticals

A-Score: 4.8/10

Value: 7.1

Growth: 8.8

Quality: 8.0

Yield: 0.0

Momentum: 0.0

Volatility: 4.7

1-Year Total Return ->

Dynavax

A-Score: 4.7/10

Value: 6.3

Growth: 5.8

Quality: 4.8

Yield: 0.0

Momentum: 5.0

Volatility: 6.3

1-Year Total Return ->

PetIQ

A-Score: 3.5/10

Value: 3.6

Growth: 7.8

Quality: 3.1

Yield: 0.0

Momentum: 5.0

Volatility: 1.7

1-Year Total Return ->

Zomedica

A-Score: 3.3/10

Value: 8.2

Growth: 5.9

Quality: 5.0

Yield: 0.0

Momentum: 0.0

Volatility: 1.0

1-Year Total Return ->

Ironwood Pharmaceuticals

A-Score: 3.2/10

Value: 8.3

Growth: 4.2

Quality: 5.8

Yield: 0.0

Momentum: 0.0

Volatility: 0.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-6.95%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.06%

Embecta Corp. - US29082K1051

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on EMBC

1.c. Company Highlights

Higher Yield

Weak Momentum

Average Growth

Earnings Beats

Revenues Beats

Lower Growth

Stable Momentum

Revenues Miss

Medium Volatility

Strong Momentum

Average Quality

Fairly Valued

Earnings Miss

2. Embecta Corp.'s FY2025 Results: Navigating Challenges Amidst Strategic Progress

Guidance and Outlook

Strategic Progress and Opportunities

Valuation and Financial Metrics

Operational Challenges and Mitigation

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.37%)

6. Segments

Diabetes Care

Expected Growth: 8.37%

7. Detailed Products

Omnipod Insulin Management System

Omnipod DASH System

Omnipod 5 System

8. Embecta Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Embecta Corp. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

11.69$

Current Price

11.69$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA