Grace Shawn

Grace Shawn asked for more details on the $10 million sale of intellectual property and assets associated with the discontinued Patch Pump Program, inquiring about its financial implications for future periods. She also followed up on the impact of U.S. pharmacy closures and the July 4th stocking dynamic, asking how these played out in the second half of Fiscal Year 2025 and for visibility into 2026 pharmacy volumes.

Answer

Dev Kurdikar (President and CEO) expressed satisfaction with monetizing the Patch Pump assets. Jake Elguicze (CFO) clarified that the $10 million sale, occurring in Q1 2026, would increase cash but would be normalized for adjusted results, appearing as a gain on sale. Dev Kurdikar explained that the impact of planned store closures at a major U.S. pharmacy chain played out as expected, with patients shifting to other outlets, leading to strength elsewhere. He noted that the 2026 guidance incorporates these assumptions, including a 100 basis point range in volume assumptions. He also mentioned that 2025 performance, excluding China headwinds, was within original guidance despite the store closures.

Grace Shawn asked for more details on the $10 million sale of intellectual property and associated assets from the discontinued patch pump program, inquiring about its financial impact and how it's factored into future assumptions. She also followed up on the impact of U.S. pharmacy closures, asking how this played out in the second half of fiscal 2025 and for visibility into pharmacy volumes for fiscal year 2026.

Answer

Dev Kurdikar (President and CEO, Embecta Corp) confirmed the $10 million sale of IP and assets from the patch pump program, expressing satisfaction with monetizing these assets. Jake Elguicze (CFO, Embecta Corp) clarified that this transaction occurred subsequent to year-end (Q1 2026 event), will increase cash, but will not impact adjusted results or guidance metrics as any gain will be normalized. Dev Kurdikar explained that U.S. pharmacy closures led to patient shifts to other chains, resulting in strength elsewhere, and that the impact was incorporated into the 2026 guidance's 100 basis point volume assumption range. He noted that 2025 performance, excluding China headwinds, was within original guidance despite store closures, indicating the situation played out as expected.