EMBC · Embecta Corp.

Embecta Corp. reported second quarter fiscal 2026 results that were significantly below expectations, with total revenues declining 14.4% to $221.8 million compared to $259.0 million in the prior year period. The decline was driven by a 29.4% drop in U.S. revenues, attributed to increased competitive dynamics and softness in overall market volumes, while International revenues increased 2.1% on a reported basis. Gross margin contracted to 57.6% from 63.4%, and adjusted gross margin fell to 59.4% from 63.7%. Operating income plunged to $35.0 million (15.8% margin) from $62.9 million (24.3% margin), and adjusted operating income dropped to $48.6 million (21.9% margin) from $81.4 million (31.4% margin). The company reported a GAAP net loss of $4.1 million ($0.07 loss per diluted share) versus net income of $23.5 million ($0.40 per share) a year ago. Adjusted net income was $16.1 million ($0.27 per diluted share), down from $40.7 million ($0.70 per share). Adjusted EBITDA fell to $64.6 million (29.1% margin) from $97.1 million (37.5% margin).

Management lowered fiscal year 2026 guidance significantly, now expecting reported revenues of $1,015-$1,035 million (down from $1,071-$1,093 million), adjusted operating margin of 22.25%-23.25% (down from 29.0%-30.0%), and adjusted earnings per diluted share of $1.55-$1.75 (down from $2.80-$3.00). The lowered guidance reflects the assumption that U.S. business dynamics will persist for the balance of the year and includes the impact of the pending Owen Mumford acquisition, which is expected to close in May 2026 and add approximately $30 million in revenue but be dilutive to adjusted EPS by about $0.15. The company also announced a review of its cost structure and organizational footprint, a three-year $100 million share repurchase program, and a reduction in the quarterly dividend from $0.15 to $0.01 per share to increase financial flexibility. Despite the challenges, management reiterated plans to repay approximately $150 million in debt during 2026 and highlighted progress on strategic priorities, including the brand transition program and expansion into GLP-1 B2B partnerships.