EMBC US Equity☆

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and accompanying notes presented in Item 8 of this Annual Report on Form 10-K. Within the tables presented throughout this discussion, certain columns may not add due to the use of rounded numbers for disclosure purposes. Percentages and earnings per share amounts presented are calculated from the underlying amounts. Dollar amounts are in millions except per share amounts or as otherwise specified. References to years throughout this discussion relate to our fiscal years, which end on September 30.

Company Overview

We are a leading global medical device company focused on providing solutions to improve the health and well-being of people living with diabetes. In the 100-year history of our business, we believe that our products have become some of the most widely recognized and respected brands in diabetes management in the world. We estimate that our products are used by approximately 30 million people in over 100 countries for insulin administration and to aid with the daily management of diabetes. Our business traces its origins to 1924, when BD developed the first dedicated insulin syringe. Since then, we have built a world-class organization with a unique manufacturing, supply chain and commercial footprint.

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We have a broad portfolio of marketed products, including a variety of pen needles, syringes and safety injection devices. Our pen needles are sterile, single-use, medical devices, designed to be used in conjunction with pen injectors that inject insulin or other diabetes medications. We also sell safety pen needles, which have shields on both ends of the cannula that automatically deploy after the injection to help prevent needlestick exposure and injury during injection and disposal. Our traditional and safety pen needles are compatible and frequently used with widely available pen injectors in the market today. In addition to pen needles, we sell sterile, single-use insulin syringes, which are used to inject insulin drawn from insulin vials. We also sell safety insulin syringes, which have a sliding safety shield that can be activated with one-hand after the injection to help prevent needlestick exposure and injury during injection and disposal.

We primarily sell our products to wholesalers and distributors that sell to retail and institutional channels who in turn sell to patients or use the products to deliver insulin injections to patients.

Separation from BD

Pursuant to the Separation and Distribution Agreement, the Separation from BD was completed on April 1, 2022. On March 22, 2022, the record date for the distribution, 57,012,925 issued and outstanding shares of Embecta common stock were distributed pro-rata to BD stockholders as of the close of business, determined by applying a ratio of one share of Embecta common stock for every five shares of BD common stock. "Regular-way" trading of Embecta common stock began on April 1, 2022, under the ticker symbol "EMBC".

Periods Prior to Separation

Prior to the Separation, the Company was referred to as the Diabetes Care Business. For periods prior to April 1, 2022, the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K include certain assets, liabilities, revenues, and expenses that were historically held at the BD corporate level, but are specifically identifiable or otherwise allocable to the Diabetes Care Business.

Periods Post Separation

For the periods subsequent to April 1, 2022, as a standalone publicly traded company, Embecta presents its financial statements on a consolidated basis. The Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K have been prepared in accordance with accounting principles generally accepted in the United States of America.

Key Trends Affecting Our Results of Operations

Competition. The regions in which we conduct our business and the medical devices industry in general are highly competitive. We face significant competition from a wide range of companies in a highly regulated industry. These include large companies with multiple product lines, some of which may have greater financial and marketing resources than us, as well as smaller more specialized companies. Non-traditional entrants, such as technology companies, are also entering into the diabetes care industry and its adjacent markets, some of which may have greater financial and marketing resources than us.

Pricing Pressures. We face significant pricing pressures from competitors in the pen needle and insulin syringe categories who not only can provide competitive products at lower costs, but also provide payors and customers with more choices for formulary partners in these categories. In addition, the increased scrutiny by regulators on healthcare spending, which accelerated in light of the COVID-19 pandemic, along with a shift towards volume-based procurement and group purchasing organizations, which generally values lower cost over product features, benefits and quality, have placed significant pressure on Embecta to lower price in both developed and emerging markets. These trends may reduce our operating margins, which are only partially offset by our ability to differentiate our products and sell at higher prices.

Commoditization of Injection Devices. Given the growing demand for medical devices to assist in the treatment of diabetes and difficulties around access to diabetes care due to complex and costly insurance plans, patient care is increasingly focused on providing more affordable products, which has led to the commoditization of more traditional injection delivery devices, such as insulin syringes and pen needles. Existing and new local and regional low-cost providers, in combination with a shift from insulin vials to insulin pens, have made the pen needle category highly competitive. This has forced providers to provide clinical evidence to differentiate their products.

Changes in Clinical Practice. Introduction of new drugs and increased penetration of oral and once-weekly anti-diabetic drugs (e.g., SGLT-2s), GLP-1s and GLP-1 combination products have delayed initiation of insulin therapy and contributed to less demand for our products. New drug therapies, including weekly insulin, are targeted to challenge the current diabetes treatment paradigm, including the frequency insulin is dosed (weekly vs. daily injections) and amount of insulin used. Additionally, insulin therapy in developed markets continues to transition to infusion pumps.

Decentralization of Chronic Care. Many countries are facing an aging population and a rapidly growing number of people living with diabetes. While healthcare investments in certain regions continue to grow, there is an increased burden on

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physicians and longer wait times for patients. Healthcare delivery for non-emergency diabetes care is expected to continue shifting outside of hospitals to primary care providers, which could have a material impact on our results of operations.

Political and Economic Instability in Emerging Markets. We operate in a number of emerging markets, many of which are subject from time to time to significant political and economic disruptions. However, the number of countries we provide products to and our proactive channel management strategies help us manage this variability.

Recent Developments

We continue to face increases in the cost and disrupted availability of raw materials, components, and other inputs necessary to manufacture and distribute our products due to constraints and inflation within the global supply chain, as well as increases in the cost and time to distribute our products. To date we have been able to successfully mitigate this disruption and provide uninterrupted supply to our customers by increasing our inventory levels and taking other measures.

In December 2023, we submitted our first 510(k) premarket filing to the FDA for our proprietary disposable insulin delivery system. In September, 2024, we announced that we received 510(k) clearance from the FDA. On November 22, 2024, the Company's Board of Directors approved a plan to discontinue internal and external investment in the research and development of our patch pump program. As a result of this decision, we will undergo an organizational restructuring (the "Restructuring Plan"). In addition, we intend to discontinue our commercial operation plans for the insulin delivery system, including the previous intended limited launch.

We estimate that we will incur approximately $25 million - $30 million in pre-tax cash-based charges primarily associated with employee severance payments and benefits related to the workforce reduction. We expect that the majority of the restructuring charges related to the workforce reduction will be incurred in the first quarter of fiscal year 2025 and that the implementation of the workforce reduction, including cash payments, will be substantially complete by the end of the second quarter of fiscal year 2025.

We estimate that we will incur approximately $10 million - $15 million of additional pre-tax non-cash charges related to asset impairments and asset write-offs. These preliminary estimates may be revised following the completion of the ongoing analysis of the expected additional pre-tax non-cash charges associated with the implementation of the Restructuring Plan.

The estimates of the pre-tax cash charges and additional charges that we expect to incur in connection with the Restructuring Plan, and the timing thereof, are subject to a number of assumptions and actual amounts may differ materially from estimates. In addition, we may incur other pre-tax cash charges or additional charges not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of the Restructuring Plan.

On March 28, 2024, we entered into (i) a second amendment (the “TSA Amendment”) to the TSA, dated as of March 31, 2022 and previously amended as of July 1, 2022 by and between Embecta and BD, and (ii) a second amendment (the “LSA Amendment”) to the LSA, dated January 1, 2022 and previously amended as of November 20, 2023, by and between Embecta and BD. Pursuant to the TSA and the LSA, originally entered into in connection with the Separation, Embecta and BD and their respective affiliates provide each other, on an interim, transitional basis, the Business Continuity Processes. Under the TSA Amendment and the LSA Amendment, BD granted Embecta, among other things, a limited extension until November 1, 2024 of certain services in a limited set of markets to support the Business Continuity Processes.

We continue to monitor the conflict in Ukraine and the associated sanctions and other restrictions. We also are monitoring the Israel-Hamas war and Houthi attacks on commercial shipping vessels and other naval vessels. As of December 11, 2024, there is no material impact to our business operations and financial performance as a result of the aforementioned conflicts. However, the full impact of the conflicts on our business operations and financial performance remains uncertain and will depend on future developments, including the severity and duration of the conflicts and their impact on regional and global economic conditions. We will continue to monitor these conflicts and assess the related restrictions and other effects on our business. See Item 1A of this Annual Report on Form 10-K for further details.

In addition, our revenues and results of operations have been affected by various fluctuations in macroeconomic conditions and regulatory and policy changes, both on a global level and in particular markets, which include inflation and slowing economic growth and contractions, a rising interest rate environment, supply chain interruptions, tariff policy changes, volatility in capital markets and the availability of credit, tax rates and the rate of exchange between the United States dollar and foreign currencies. The nature and extent of the impact of these factors among others varies by region and remains uncertain and unpredictable and may affect our business.

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Results of Operations

For a discussion of Results of Operations of fiscal year 2023 compared to fiscal year 2022 see our Annual Report on Form 10-K for the year ended September 30, 2023.

For the fiscal years ended September 30, 2024 and 2023, our Consolidated Statements of Income are as follows:

Operating expenses:

Selling and administrative expense 365.1 341.3

Research and development expense 78.8 85.2

Impairment expense — 2.5

Other income (expense), net (10.3) (8.8)

Income Before Income Taxes 44.2 105.7

Income tax provision (34.1) 35.3

Net Income per common share:

Year Ended September 30, 2024 Summary (on a comparative basis)

Key financial results for the year ended September 30, 2024 were as follows:

•Revenue increased by $2.3 million to $1,123.1 million from $1,120.8 million;

•Gross profit decreased by $14.7 million to $735.2 million, compared to $749.9 million. Gross profit as a percent of revenue was 65.5%, as compared to 66.9% in the prior year comparative period;

•Operating income decreased by $54.7 million to $166.8 million from $221.5 million; and

•Net income increased by $7.9 million to $78.3 million from $70.4 million.

Revenues

Our revenues increased by $2.3 million, or 0.2%, to $1,123.1 million for the year ended September 30, 2024 as compared to revenues of $1,120.8 million for the year ended September 30, 2023. The increase in revenues was primarily driven by $27.7 million associated with favorable changes in price. This was partially offset by $14.5 million of unfavorable changes in volume, $6.1 million associated with the negative impact of foreign currency translation primarily due to the strengthening of the U.S. dollar, $4.6 million of unfavorable gross-to-net adjustments primarily attributed to the recognition of incremental Italian payback accruals resulting from two July 22, 2024 rulings by the Constitutional Court of Italy, and a $0.2 million decrease in contract manufacturing revenues related to sales of non-diabetes products to BD.

Cost of products sold

Cost of products sold increased by $17.0 million, or 4.6%, to $387.9 million for the year ended September 30, 2024 as compared to $370.9 million for the year ended September 30, 2023. Cost of products sold as a percentage of revenues were 34.5% for the year ended September 30, 2024 as compared to 33.1% for the year ended September 30, 2023. The increase in cost of products sold was primarily driven by the impact of inflation on the costs of certain raw materials (including freight), direct labor, and overhead, the impact of negative year-over-year manufacturing variances primarily attributable to

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the as planned temporary shutdown of our Suzhou, China facility as it relates to production for the domestic Chinese market, and unfavorable impacts due to foreign exchange rates. We intend to continue to work to improve productivity to help partially offset these increased costs. This was partially offset by the impact of profit in inventory adjustments as a result of inventory that was sold to external customers that was manufactured in anticipation of our ERP system and other Business Continuity Processes that went live during fiscal 2024.

Operating expenses in 2024 and 2023 were as follows:

Increase

Selling and administrative expense $ 365.1 $ 341.3 $ 23.8

Research and development expense $ 78.8 $ 85.2 $ (6.4)

% of revenues 7.0 % 7.6 %

Impairment expense $ — $ 2.5 nm

nm = not meaningful

Selling and administrative expenses

Our selling and administrative expenses increased by $23.8 million, or 7.0%, to $365.1 million for the year ended September 30, 2024 as compared to $341.3 million for the year ended September 30, 2023. The increase year over year was primarily driven by an increase in compensation and benefit costs due to increased headcount on average in the current period in addition to increased outbound freight and warehousing costs. This was partially offset by lower TSA and LSA costs incurred from BD in the current year period.

Research and development expenses

Our research and development expenses decreased by $6.4 million, or 7.5%, to $78.8 million for the year ended September 30, 2024 as compared to $85.2 million for the year ended September 30, 2023. The decrease was primarily driven by timing of expenses incurred in connection with our insulin patch pump platform.

On November 22, 2024, the Company's Board of Directors approved a plan to discontinue internal and external investment in the research and development of the Company's patch pump program. The Company will refocus its research and development strategy on its core business. We expect our research and development expense to decrease sequentially in fiscal year 2025 compared to fiscal year 2024.

Impairment expense

During the year ended September 30, 2024, the Company did not record any impairment charges.

During the year ended September 30, 2023, the Company recorded impairment charges of $2.5 million related to the abandonment of certain manufacturing equipment in China that is no longer in use that was inherited as part of the Separation from BD. These assets were previously included as a component of Machinery, equipment and fixtures within Property, Plant and Equipment in our Consolidated Balance Sheets in Item 8 of this Annual Report on Form 10-K. The impairment charges are recognized within Impairment expense in the Consolidated Statements of Income.

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Other operating expenses

We incurred other operating expenses of $124.5 million and $99.4 million for the years ended September 30, 2024 and 2023, respectively.

The costs incurred primarily relate to accounting, auditing, legal services, marketing, supply chain, employee retention, costs associated with the implementation of our new ERP system and other Business Continuity Processes, and certain other costs to establish certain stand-alone functions to assist with the transition to being a stand-alone entity. These costs also include certain severance costs related to the optimization of certain business functions as we transition to being a stand-alone entity. We expect the amount of those costs to be less in fiscal year 2025 as compared to fiscal year 2024.

For the year ended September 30, 2024, we recognized costs associated with the amortization of cloud computing arrangements. For the year ended September 30, 2023, there was no amortization of implementation costs associated with cloud computing arrangements due to the timing of when these projects were placed into service.

Other operating expenses are as follows:

Twelve months ended September 30,

Costs related to the Separation $ 118.2 $ 98.3

Amortization of cloud computing arrangements 6.3 —

Other — 1.1

Interest expense, net

Interest expense, net increased to $112.3 million for the year ended September 30, 2024, from $107.0 million for the year ended September 30, 2023 primarily as a result of higher interest rates on our variable rate debt which is attributable to increases in SOFR that impacted our Term Loan. This was partially offset by an increase in interest income from amounts held in interest bearing accounts and money market funds. We are unable to predict future Federal Reserve interest rate decisions and the impact to interest expense on our variable rate debt. See "Liquidity and Capital Resources" below and Note 13 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for a further description of our long-term debt.

Other income (expense), net

Other income (expense), net was $(10.3) million and $(8.8) million for the years ended September 30, 2024 and 2023, respectively. The change in Other income (expense), net year over year is driven by higher losses due to unfavorable impacts from foreign exchange in the year ended September 30, 2024 offset by lower amounts paid to BD for income taxes incurred in deferred jurisdictions where BD is considered the primary obligor in the current period compared with the year ended September 30, 2023.

Income tax provision (benefit)

The Company's income tax provision (benefit) decreased to $(34.1) million for the year ended September 30, 2024 from $35.3 million for the year ended September 30, 2023. This decrease was primarily due to a reduction in withholding taxes on unremitted earnings of foreign subsidiaries related to the expiration of a two-year stock holding period requirement in Switzerland, the recognition of deferred tax assets from Switzerland tax reform, changes in the geographical mix of earnings and overall lower pre-tax earnings; partially offset by an increase in uncertain tax positions and non-deductible expenses.

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LIQUIDITY AND CAPITAL RESOURCES

For discussion on Liquidity and Capital Resources pertaining to the fiscal years 2023 and 2022 see our Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

We believe that our cash and our cash equivalents and cash from operations, together with our borrowing capacity under our revolving credit facility, will provide sufficient financial flexibility to fund seasonal and other working capital requirements, capital expenditures, debt service requirements and other obligations, cash dividends on common shares and additional growth opportunities for the foreseeable future. However, should it become necessary, we believe that our credit profile should provide us with access to additional financing in order to fund normal business operations, make interest payments, fund growth opportunities and satisfy upcoming debt maturities.

Debt-Related Activities

In February 2022, and in connection with the Separation, Embecta issued $500.0 million aggregate principal amount of 5.00% senior secured notes due February 15, 2030 (the "5.00% Notes"). Interest payments on the 5.00% Notes are due semi-annually in February and August until maturity. Interest payments began in August 2022.

In March 2022, Embecta entered into a credit agreement, providing for a Term Loan B Facility (the "Term Loan") in the amount of $950.0 million, with a seven-year term that matures in March 2029 and a Revolving Credit Facility in an aggregate principal amount of up to $500.0 million, with a five-year term that matures in 2027. The interest rate on the Term Loan is 300 basis points over the secured overnight financing rate (“SOFR”), with a 0.50% SOFR floor. Principal and interest payments on the Term Loan began on June 30, 2022. Such quarterly principal payments are calculated as 0.25% of the initial principal amount, with the remaining balance payable upon maturity. Principal amounts repaid under the Term Loan may not be reborrowed by us. The Company may from time to time voluntarily prepay the Term Loan in whole or in part without premium or penalty subject to certain exceptions. Borrowings under the Revolving Credit Facility bear interest, at Embecta’s option, initially at an annual rate equal to (a) in the case of loans denominated in United States dollars (i) the SOFR or (ii) the alternate base rate or (b) in the case of loans denominated in Euros, the EURIBOR rate, in each case plus an applicable margin specified in the credit agreement. A commitment fee applies to the unused portion of the Revolving Credit Facility, equal to 0.25% per annum. As of September 30, 2024, no amount has been drawn on the Revolving Credit Facility.

Additionally, Embecta has outstanding $200.0 million of senior secured notes (the "6.75% Notes"), which carry an interest rate of 6.75% and are due February 2030. Interest payments on the 6.75% Notes are due semi-annually in February and August until maturity. Interest payments began in August 2022.

The following is a summary of Embecta's total debt outstanding as of September 30, 2024:

Total principal debt issued $ 1,601.3

Less: current debt obligations (9.5)

Less: debt issuance costs and discounts (26.5)

The schedule of principal payments required on long-term debt for the next five years and thereafter is as follows:

Certain measures relating to our total debt outstanding as of September 30, 2024 were as follows:

Short-term debt as a percentage of total debt 0.6 %

Weighted average cost of total debt 6.8 %

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The credit agreement and the indentures for the 5.00% Notes and the 6.75% Notes contain customary financial covenants, including a total net leverage ratio covenant, which measures the ratio of (i) consolidated total net debt to (ii) consolidated earnings before interest, taxes, depreciation and amortization, and subject to other adjustments, must meet certain defined limits which are tested on a quarterly basis in accordance with the terms of the credit agreement and indentures governing the 5.00% Notes and the 6.75% Notes. In addition, the credit agreement contains covenants that limit, among other things, our ability to prepay, redeem or repurchase our subordinated and junior lien debt, incur additional debt, make acquisitions, merge with other entities, pay dividends or distributions, redeem or repurchase equity interests, and create or become subject to liens. As of September 30, 2024, we were in compliance with all of such covenants. The credit agreement and the senior secured notes are secured by substantially all assets of Embecta and each subsidiary guarantor, subject to certain exceptions.

In September 2024, the Company made a discretionary prepayment of $25.0 million on the Term Loan. Debt extinguishment charges as a result of this prepayment were not material to the Company's Consolidated Statements of Income.

For additional information related to the Company's debt related activities, refer to Note 13 within the Notes to Consolidated Financial Statements within this Form 10-K.

Leases

Maturities of our finance lease and operating lease liabilities as of September 30, 2024 by fiscal year are as follows:

Finance Lease Operating Leases Total

For additional information related to our leases, refer to Note 18 within the Notes toConsolidated Financial Statements of this Form 10-K.

Factoring Agreements

In conjunction with the Separation, we entered into Factoring Agreements (the "Factoring Agreements") with BD. Embecta owed BD a service fee calculated as 0.1% of annual revenues related to countries subject to the Factoring Agreements, in exchange for the services provided by BD pursuant to the Factoring Agreements.

As of March 31, 2024, all Factoring Agreements between Embecta and BD had expired and terminated as a result of our implementation and onboarding of certain Business Continuity Processes in North America, and certain jurisdictions in Europe and Asia.

Access to Capital and Credit Ratings

In May 2024 and June 2024, Moody’s Investor Services and Standard & Poor’s Ratings Services published updates to our credit ratings. Our Moody's Investors Services credit rating is B1 and our Standard & Poor's Rating Services credit rating is B+.

Cash and equivalents and restricted cash were $274.2 million as of September 30, 2024 as compared to $326.5 million as of September 30, 2023.

The primary sources and uses of cash that contributed to the $52.3 million decrease were:

September 30, 2023 Cash and equivalents and restricted cash balance $ 326.5

Cash provided by operating activities 35.7

Cash used for investing activities (15.8)

Cash used for financing activities (73.4)

Effect of exchange rate changes on cash and equivalents and restricted cash 1.2

September 30, 2024 Cash and equivalents and restricted cash balance $ 274.2

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Net cash provided by operating activities was primarily attributable to:

Net income $ 78.3

Change in in accounts payable and accrued expenses 60.0

Change in trade receivables (174.7)

Change in inventories (16.5)

Change in amounts due from/due to Becton, Dickinson and Company 58.9

Change in prepaid expenses and other 39.5

Change in income and other net taxes payable 13.2

Change in other assets and liabilities, net (28.1)

Net cash provided by operating activities $ 35.7

Update to the unaudited Consolidated Statements of Cash Flows Reported in Earnings Release

On November 26, 2024, we furnished a Current Report on Form 8-K that included as an exhibit a press release announcing our financial results for the fourth fiscal quarter and the fiscal year ended September 30, 2024 (the “Earnings Release”). Subsequent to furnishing the Earnings Release, the Company identified certain further revisions within the Consolidated Statements of Cash Flows that results in changes to the operating assets and liabilities related to Prepaid expenses and other and Income and other net taxes payable for fiscal 2024 that were reported in the Condensed Consolidated Statements of Cash Flows including in the Earnings Release. The updated amounts for these line items are included in the audited Consolidated Statements of Cash Flows included in the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K. Fiscal 2024 Net Cash Provided by Operating Activities of $35.7 million as presented in the Earnings Release remains unchanged from the amount presented on this Annual Report on Form 10-K.

The change in accounts payable and accrued expenses is primarily due to timing attributable to payments to vendors during the fiscal year ended September 30, 2024.

As a result of the implementation of certain Business Continuity Processes, including our ERP system that went live in November 2023 for our North America business operations and in March 2024 for our EMEA and Greater Asia business operations as well as the expiration and termination of the Factoring Agreements between Embecta and BD, we are now responsible for the collection of any outstanding trade receivables in those respective regions. The increase in trade receivables is a direct result of this impact, and we expect to convert these outstanding trade receivables into cash in line with contractual customer payment terms.

The change in inventories is driven by actions taken to increase raw material purchases and finished goods in the current fiscal year in anticipation of our ERP system and other Business Continuity Processes that went live during fiscal year 2024.

The change in amounts due from/due to Becton, Dickinson and Company primarily relates to the expiration and termination of the Factoring Agreement between Embecta and BD as we are now responsible for the collection of any outstanding trade receivables on a global basis.

The change in prepaid expenses and other are primarily driven by a reduction in payments to BD for future payments made to third parties on our behalf as a result of our implementation of certain Business Continuity Processes, including our ERP system, that went live in fiscal 2024.

The change in income and other net taxes payable was primarily due to the timing of required tax payments.

The change in other assets and liabilities, net is primarily due to costs capitalized during fiscal 2024 associated with the implementation of our ERP system.

All other movements related to working capital were due to timing of payments and receipts of cash in the ordinary course of business.

Net cash used for investing activities was comprised of capital expenditures of $15.8 million for the fiscal year to support our business and operations.

Net cash used for financing activities was primarily attributable to:

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Dividend payments (34.5)

Payments on long-term debt (34.6)

Payments related to tax withholding for stock-based compensation (3.0)

Payments on finance lease (1.3)

Net cash used for financing activities $ (73.4)

Contractual Obligations

Our contractual obligations as of September 30, 2024, which require material cash requirements in the future, consist of purchase obligations and lease obligations. Purchase obligations are enforceable and legally binding obligations for purchases of goods and services which include inventory purchase commitments. Over the next several years, we expect to incur material costs associated with operating and maintaining our information technology infrastructure. Lease obligations include lease agreements for which a contract has been signed even if the lease has not yet commenced.

As of September 30, 2024, total payments due for purchase obligations and lease obligations aggregate to approximately $211 million and $74 million, respectively. Contractual obligations due within the next twelve months approximate $112 million related to purchase commitments and $10 million related to lease obligations.

Critical Accounting Policies

The following discussion supplements the descriptions of our accounting policies contained in Note 3 to the Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K. Financial Statements and Supplementary Data. The preparation of the Consolidated Financial Statements requires management to use estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements. Some of those judgments can be subjective and complex and, consequently, actual results could differ from those estimates. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. For any given estimate or assumption made by management, it is possible that other people applying reasonable judgment to the same facts and circumstances could develop different estimates. Actual results that differ from management’s estimates could have an unfavorable effect in our Consolidated Financial Statements. Management believes the following critical accounting policies reflect the more significant judgments and estimates used in the preparation of the Consolidated Financial Statements:

Revenue Recognition

Our revenues are primarily recognized when the customer obtains control of the product sold, which is generally upon shipment or delivery, depending on the delivery terms specified in the distribution or sales agreement.

Our gross revenues are subject to a variety of deductions, which include rebates, chargebacks, sales discounts and sales returns. These deductions represent estimates of the related obligations, and judgment is required when determining the impact of these revenue deductions on gross revenues for a reporting period. Rebates are based upon prices determined under our agreements with the end-user customers. Additional factors considered in the estimate of our rebate liability include the quantification of inventory that is either in stock at or in transit to our distributors, as well as the estimated lag time between the sale of product and the payment of corresponding rebates.

Income Taxes

Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax basis of assets and liabilities at the applicable tax rates.

We maintain valuation allowances where it is more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances are included in the tax provision in the period of change. In determining whether a valuation allowance is warranted, we evaluate factors such as prior earnings history, expected future earnings, carryback and carryforward periods, and tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset.

From time to time, the Company engages in transactions in which tax consequences may be subject to uncertainty. The Company conducts business and files tax returns in numerous jurisdictions based on its interpretation of tax laws and regulations. In evaluating the Company’s tax provision, the Company establishes a reserve for uncertain tax positions unless such positions are determined to be more likely than not of being sustained upon examination based on the technical

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merits. The Company’s policy is to recognize, when applicable, interest and penalties on uncertain tax positions as part of income tax expense.

Prior to the Separation, our operations were included in the tax returns of BD. Income taxes as presented in the Consolidated Financial Statements attribute current and deferred income tax assets and liabilities of BD to us in a manner that is systematic, rational, and consistent with the asset and liability method prescribed by the accounting guidance for income taxes. Our income tax provision prior to the Separation was prepared using the separate return method. The separate return method applies the accounting guidance for income taxes to the standalone financial statements as if we were a separate taxpayer and a standalone enterprise. We believe the assumptions supporting the allocation and presentation of income taxes on a separate return basis are reasonable.

Additional disclosures regarding our accounting for income taxes are provided in Note 15 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

Cautionary Statements Regarding Forward-Looking Statements

This Annual Report on Form 10-K contains statements that constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995 and other securities laws. Forward-looking statements include those containing such words as “anticipates,” “believes,” "can," “could,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “outlook,” “plans,” "possible," “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning. All statements that reflect Embecta’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, forecasts relating to discussions of future operations and financial performance (including volume growth, pricing, sales and earnings per share growth and cash flows), restructuring expenses and charges, and statements regarding Embecta’s strategy for growth, future product development, anticipated product and regulatory clearances, approvals, and launches, competitive position and expenditures. Forward-looking statements are based upon our present intent, beliefs or expectations, are not guarantees of future performance and are subject to numerous risks, uncertainties, and changes in circumstances that are difficult to predict. Although Embecta believes that the expectations reflected in any forward-looking statements it makes are based on reasonable assumptions, it can give no assurance that these expectations will be attained and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Such risks and uncertainties include, but are not limited to:

•Competitive factors that could adversely affect Embecta’s operations, including adoption of new drug therapies for treatment of diabetes, new product introductions by Embecta’s competitors, the development of new technologies, lower cost producers that create pricing pressure and consolidation resulting in companies with greater scale and market presence than Embecta.

•The risk that Embecta is unable to replace the services, including the Business Continuity Processes, that BD currently provides to it on substantially similar terms as the terms on which BD is providing these services under the transaction agreements or that BD terminates such services.

•Any failure by BD to perform its obligations under the various separation agreements entered into in connection with the Separation and distribution, including the cannula supply agreement.

•Any events that adversely affect the sale or profitability of one of Embecta’s key products or the revenue delivered from sales to its key customers.

•Increases in operating costs, including fluctuations in the cost and availability of oil-based resins, other raw materials, and energy as well as certain components, used in its products, the ability to maintain favorable supplier arrangements and relationships, and the potential adverse effects of any disruption in the availability of such items.

•Embecta’s ability to obtain clearance from the FDA of any product, to market and sell such products successfully, to anticipate the needs of people with diabetes, and future business decisions by Embecta and its competitors.

•Changes in reimbursement practices of governments or private payers or other cost containment measures.

•The adverse financial impact resulting from unfavorable changes in foreign currency exchange rates, as well as regional, national and foreign economic factors, including inflation, deflation, and fluctuations in interest rates, and their potential effect on its operating performance.

•The impact of changes in United States, federal laws, and policy that could affect fiscal and tax policies, healthcare and international trade, including import and export regulation, tariffs, and international trade agreements. In particular, tariffs or other trade barriers imposed by the United States or other countries could adversely impact its supply chain costs or otherwise adversely impact its results of operations.

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•Any future impact of pandemics or geopolitical instability on Embecta’s business, including disruptions in its operations and supply chains.

•New or changing laws and regulations affecting Embecta’s domestic and foreign operations, or changes in enforcement practices, including laws relating to healthcare, environmental protection, trade, monetary and fiscal policies, taxation (including tax reforms that could adversely impact multinational corporations) and licensing and regulatory requirements for products.

•The expected benefits of the Separation from BD.

•Risks associated with indebtedness and our use of indebtedness available to us.

•The risk that dis-synergy costs, costs of restructuring transactions and other costs incurred in connection with the Separation will exceed Embecta's estimates.

•The impact of the Separation on Embecta's businesses and the risk that the Separation may be more difficult, time-consuming or costly than expected, including the impact on its resources, systems, including ERP, procedures and controls, diversion of management’s attention and the impact on relationships with customers, suppliers, employees and other business counterparties.

•The expectations related to the costs, profitability, timing and the estimated financial impact of, and charges associated with, the Restructuring Plan.

•The risk that we may not complete strategic collaborative partnerships and acquisition opportunities that enable us to accelerate our growth or strategic collaborative opportunities that give us access to innovative technologies, complementary product lines, and new markets.

•The risks associated with the material weakness identified in our internal control over financial reporting and our ability to remediate such material weakness.

There can be no assurance that the transactions or uncertainties described above will in fact be consummated or occur in the manner described or at all. As a result, you should not place undue reliance upon our forward-looking statements. The above list of factors is not exhaustive or necessarily in order of importance. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see the discussions under Item 1A, “Risk Factors,” or in our other filings with the SEC. Any forward-looking statement speaks only as of the date on which it is made, and Embecta expressly disclaims and assumes no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

In addition to the items noted below, the information required by this item is included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in Notes 3, 13 and 16 to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K, and is incorporated herein by reference.

Foreign Currency Exchange and Other Rate Risks

We operate on a global basis and are exposed to the risk that changes in foreign currency exchange rates could adversely affect our financial condition, results of operations and cash flows.

From time to time, we enter into foreign currency forward exchange contracts with major financial institutions to manage currency exposures for transactions denominated in a currency other than an entity’s functional currency. As a result, the impact of foreign currency gains/losses recognized in earnings are partially offset by gains/losses on the related foreign currency forward exchange contracts in the same reporting period. Refer to Note 16, Financial Instruments and Fair Value Measurements of the Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K for further information.

Consequently, foreign currency exchange contracts would not subject us to material risk due to exchange rate movements, because gains and losses on these contracts offset gains and losses on the assets, liabilities or transactions being hedged.

Interest Rate Risk

Debt - Our interest rate risk as of September 30, 2024 relates primarily to our Term Loan. The interest rate is set at 300 basis points over SOFR, with a 0.50% SOFR floor. Based on our outstanding borrowings at September 30, 2024, a 100 basis points change in interest rates would have impacted interest expense on the Term Loan by $9.0 million on an annualized basis. To the extent we borrow on our revolving credit facility, we will be subject to risks related to changes in SOFR. Refer to Note 13 to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K for further information.

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Item 8. Financial Statements and Supplementary Data.

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of EmbectaCorp.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Embecta Corp. (the Company) as of September 30, 2024 and 2023, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the three years in the period ended September 30, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2024, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated December 11, 2024 expressed an adverse opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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Measurement of uncertain tax positions

/s/ ERNST & YOUNG LLP

We have served as the Company’s auditor since 2021.

New York, New York

December 11, 2024

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Embecta Corp.

Opinion on Internal Control Over Financial Reporting

We have audited Embecta Corp’s internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Embecta Corp. (the Company) has not maintained effective internal control over financial reporting as of September 30, 2024, based on the COSO criteria.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment. Management has identified a material weakness in certain of the Company’s financial reporting processes.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2024 and 2023, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the three years in the period ended September 30, 2024, and the related notes. This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and this report does not affect our report dated December 11, 2024, which expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ ERNST & YOUNG LLP

New York, New York

December 11, 2024

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Consolidated Statements of Income

Embecta Corp.

Years Ended September 30

Operating expenses:

Research and development expense 78.8 85.2 66.9

Impairment expense — 2.5 58.9

Other income (expense), net (10.3) (8.8) (6.8)

Income tax provision (benefit) (34.1) 35.3 33.0

Net Income per common share:

(1)For the period prior to the Separation, this income statement line includes cost of products sold from related party inventory purchases. Refer to Note 4 for further detail.

See notes to the Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income

Embecta Corp.

Years Ended September 30

Other Comprehensive Income (Loss), net of tax

Foreign currency translation adjustments 18.0 17.4 (64.2)

Total Other Comprehensive Income (Loss), net of tax $ 16.3 $ 15.8 $ (64.2)

See notes to the Consolidated Financial Statements.

Consolidated Balance Sheets

Embecta Corp.

September 30

Assets

Current Assets

Restricted cash 6.7 0.2

Inventories:

Work in process 4.8 8.1

Amounts due from Becton, Dickinson and Company 53.8 142.4

Prepaid expenses and other 68.5 111.4

Property, Plant and Equipment, Net 290.4 300.2

Goodwill and Intangible Assets 23.7 24.7

Deferred Income Taxes and Other Assets 210.2 140.4

Liabilities and Equity

Current Liabilities

Amounts due to Becton, Dickinson and Company 42.5 73.1

Salaries, wages and related items 66.7 62.1

Current debt obligations 9.5 9.5

Current finance lease liabilities 3.4 3.6

Total Current Liabilities $ 374.0 $ 353.5

Deferred Income Taxes and Other Liabilities 54.1 57.2

Non Current Finance Lease Liabilities 30.2 31.5

Contingencies (Note 7)

Embecta Corp. Equity

Additional paid-in capital 52.5 27.9

Accumulated other comprehensive loss (292.8) (309.1)

See notes to the Consolidated Financial Statements.

Consolidated Statements of Equity

Embecta Corp.

Common Stock

Net income attributable to Embecta Corp. — — — 45.2 178.4 — 223.6

Other comprehensive loss, net of taxes — — — — — (64.2) (64.2)

Stock-based compensation plans — — 10.0 — — — 10.0

Dividends declared ($0.15 per share) — — — (8.6) — — (8.6)

Issuance of shares related to stock-based compensation plans 42,402 — — — — — —

Other comprehensive income, net of taxes — — — — — 15.8 15.8

Stock-based compensation plans — — 21.5 — — — 21.5

Dividends declared ($0.60 per share) — — — (34.4) — — (34.4)

Other comprehensive income, net of taxes — — — — — 16.3 16.3

Stock-based compensation plans — — 26.3 — — — 26.3

See notes to the Consolidated Financial Statements.

Consolidated Statements of Cash Flows

Embecta Corp.

Years Ended September 30

Operating Activities

Adjustments to net income to derive net cash provided by operating activities:

Amortization of debt issuance costs 6.9 6.4 3.2

Amortization of cloud computing costs 6.3 — —

Impairment of property, plant and equipment — 2.5 58.9

Change in operating assets and liabilities:

Due from/due to Becton, Dickinson and Company 58.9 (23.2) (47.0)

Accounts payable, accrued expenses and other current liabilities 60.0 7.9 76.9

Income and other net taxes payable 13.2 (12.6) 10.3

Other assets and liabilities, net (28.1) (16.1) 7.1

Net Cash Provided by Operating Activities $ 35.7 $ 67.7 $ 412.2

Investing Activities

Acquisition of intangible assets — — (0.4)

Net Cash Used for Investing Activities $ (15.8) $ (26.5) $ (24.0)

Financing Activities

Proceeds from the issuance of long-term debt — — 1,450.0

Payments on long-term debt (34.6) (9.5) (4.8)

Payment of long-term debt issuance costs — — (33.3)

Payment of revolving credit facility fees — — (5.6)

Payments related to tax withholding for stock-based compensation (3.0) (3.6) —

Payments on finance lease (1.3) (1.2) (1.8)

Net transfers to Becton, Dickinson and Company — — (177.9)

Net Cash Used for Financing Activities $ (73.4) $ (48.7) $ (48.0)

Net Change in Cash and equivalents and restricted cash $ (52.3) $ (4.4) $ 330.9

Opening Cash and equivalents and restricted cash 326.5 330.9 —

Closing Cash and equivalents and restricted cash $ 274.2 $ 326.5 $ 330.9

See notes to the Consolidated Financial Statements.

Notes to Consolidated Financial Statements

Embecta Corp.

Note 1 — Background

Embecta Corp. ("Embecta" or the "Company") is a leading global medical device company focused on providing solutions to improve the health and well-being of people living with diabetes. The Company has a broad portfolio of marketed products, including a variety of pen needles, syringes and safety devices, which are complemented by a proprietary digital application designed to assist people with managing their diabetes. The Company primarily sells products to wholesalers and distributors that sell to retail and institutional channels who in turn sell to patients or use the products to deliver insulin injections to patients.

On April 1, 2022 (the "Separation Date"), Embecta and Becton, Dickinson and Company ("BD") entered into a Separation and Distribution Agreement (the "Separation and Distribution Agreement"). Pursuant to the Separation and Distribution Agreement, BD agreed to spin off its diabetes care business (the "Diabetes Care Business") into Embecta, a new, publicly traded company (the "Separation").

The Separation occurred by means of a pro-rata distribution (the "Distribution") of all of Embecta’s issued and outstanding shares of common stock on the basis of one share of Embecta common stock, par value $0.01 per share, for every five shares of BD common stock, par value $1.00 per share, held as of the close of business on March 22, 2022, the record date for the distribution. Embecta is now a standalone publicly traded company and, on April 1, 2022, regular-way trading of Embecta common stock commenced on the Nasdaq Global Select Market under the ticker symbol "EMBC".

In connection with the Separation, BD and Embecta entered into various agreements to provide a framework for the relationship between BD and Embecta after the Separation, including, but not limited to, a separation and distribution agreement, a transition services agreement, a tax matters agreement, an employee matters agreement, a cannula supply agreement, contract manufacturing agreements, an intellectual property matters agreement, a logistics services agreement, distribution agreements, factoring and receivables agreements, local support and service agreements and other transaction documents. As of October 31, 2024, all of the factoring and trade receivables agreements and the distribution agreements and local support and services agreements have expired and terminated.

Note 2 — Basis of Presentation

On April 1, 2022, the Company became a standalone publicly traded company, and its financial statements are now presented on a consolidated basis. Prior to the Separation on April 1, 2022, the Company’s historical combined financial statements were prepared on a standalone basis and were derived from BD's consolidated financial statements and accounting records. The financial statements for all periods presented, including the historical results of the Company prior to April 1, 2022, are now referred to as "Consolidated Financial Statements", and have been prepared pursuant to the rules and regulations for reporting on Form 10-K.

Periods Prior to Separation

Prior to the Separation, the Company was referred to as the Diabetes Care Business. The assets, liabilities, revenue and expenses of the Diabetes Care Business were reflected in the combined financial statements on a historical cost basis, as included in the consolidated financial statements of BD, using the historical accounting policies applied by BD. The Consolidated Financial Statements did not purport to reflect what the Company’s results of operations, comprehensive income, financial position, equity or cash flows would have been had the Company operated as a standalone public company during the periods presented.

The Diabetes Care Business had historically functioned together with the other businesses controlled by BD. Accordingly, the Diabetes Care Business relied on BD’s corporate and other support functions for its business. Therefore, for the period prior to the Separation, certain corporate and shared costs were allocated to the Diabetes Care Business based on a specific identification basis or, when specific identification was not practicable, a proportional cost allocation method, including:

i.expenses related to BD support functions, including expenses for facilities, executive oversight, treasury, finance, legal, human resources, shared services, compliance, procurement, information technology and other corporate functions.

ii.certain manufacturing and supply costs incurred by BD, including facility management, distribution, logistics, planning and global quality.

iii.certain costs incurred by BD’s Medication Delivery Solutions organizational unit in relation to selling and marketing activities, and related administrative support functions.

iv.certain costs incurred by BD for activities related to device research and development, as well as medical and regulatory affairs.

v.stock-based compensation expenses (see Note 10).

vi.certain compensation expenses maintained on a centralized basis such as certain employee benefit expenses.

Management believes these cost allocations were a reasonable reflection of the utilization of services provided to, or the benefit derived by, the Diabetes Care Business during the period prior to the Separation, though the allocations may not be indicative of the actual costs that would have been incurred had the Diabetes Care Business operated as a standalone public company. Actual costs that may have been incurred if the Diabetes Care Business had been a standalone company would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by Diabetes Care Business employees, and strategic decisions made in areas such as manufacturing, selling and marketing, research and development, information technology and infrastructure.

BD utilized a centralized approach to cash management and the financing of its operations. Cash generated by the Diabetes Care Business was routinely transferred into accounts managed by BD’s centralized treasury function and cash disbursements related to operations prior to the Separation were funded as needed by BD. Balances held by the Diabetes Care Business with BD for cash transfers and loans were reflected as Amounts due to Becton, Dickinson and Company prior to the Separation. All other cash and equivalents and related transfers between BD and the Diabetes Care Business were generally held centrally through accounts controlled and maintained by BD and were not specifically identifiable to the Diabetes Care Business. Accordingly, such balances were accounted for through Net Investment from Becton, Dickinson and Company. BD’s third-party debt and related interest expense were not attributed to the Diabetes Care Business because the business was not the legal obligor of the debt and the borrowings were not specifically identifiable to the business.

For the Diabetes Care Business, transactions with BD affiliates were included in the Consolidated Statements of Income and related balances were reflected as Amounts due to Becton, Dickinson and Company orAmounts due from Becton, Dickinson and Company. Other balances between the Diabetes Care Business and BD were considered to be effectively settled in the Consolidated Financial Statements at the time the transactions were recorded.

As the separate legal entities that made up the Diabetes Care Business were not historically held by a single legal entity, Net Investment from Becton, Dickinson and Company was shown in lieu of stockholders’ equity in these Consolidated Financial Statements. Net Investment from Becton, Dickinson and Company represented BD’s interest in the recorded assets of the Diabetes Care Business and the cumulative investment by BD through the date of the Separation, inclusive of operating results.

For periods prior to the Separation, income tax expense and tax balances in the Consolidated Financial Statements were calculated on a separate tax return basis. The separate tax return method applies the accounting guidance for income taxes to the standalone financial statements as if the Company was a separate taxpayer and a standalone enterprise. Management believes the assumptions supporting the allocation and presentation of income taxes on a separate return basis are reasonable.

The provision for income taxes for the period prior to the Separation was calculated by applying an estimated effective income tax rate for the full year to ordinary income adjusted by the tax impact of discrete items.

As of the Separation Date

Certain assets and liabilities, including patents and unrecognized tax benefits that were included in the Consolidated Balance Sheet prior to the Separation, have been retained by BD post-Separation and therefore were transferred to BD through Net Investment from Becton, Dickinson and Company in the Company's Consolidated Financial Statements.

In connection with the Separation, additional pension assets, deferred tax assets, other compensation obligations, and certain other assets and liabilities were transferred to the Company through Net Investment from Becton, Dickinson and Company, and the Company recorded these in the Consolidated Balance Sheet.

As part of the Separation, Net Investment from Becton, Dickinson and Company was reclassified as Common Stock and Accumulated Deficit.

Periods Post Separation

Following the Separation, certain functions continue to be provided by BD under the Transition Services Agreements or are being performed using Embecta’s own resources or third-party service providers. Additionally, under manufacturing and supply agreements, the Company manufactures certain products for BD, or its applicable affiliate and BD manufactures certain products for the Company. The Company incurred certain costs in its establishment as a standalone public company and expects to incur ongoing additional costs associated with operating as an independent, publicly traded company.

All intercompany transactions and accounts within Embecta have been eliminated.

Note 3 — Summary of Accounting Policies

Revenue Recognition

The Company recognizes revenue from product sales and considers performance obligations satisfied when the customer obtains control of the product, which is generally upon shipment or delivery, depending on the delivery terms specified in the sales agreement. The Company acts as the principal in its customer arrangements and therefore records revenue on a gross basis. When arrangements include multiple performance obligations, the total transaction price of the contract is allocated to each performance obligation based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. The point in time upon which shipment or delivery occurs is the most faithful depiction of when control of the goods transfers to the customer. Variable consideration such as rebates, chargebacks, sales discounts, and sales returns are estimated and treated as a reduction of revenue in the same period the related revenue is recognized. These estimates are based on contractual terms, historical practices and current trends, and are adjusted as new information becomes available. Revenues exclude any taxes that the Company collects from customers and remits to tax authorities.

Additional disclosures regarding the Company’s accounting for revenue recognition are provided in Note 8.

Cash and Equivalents

Cash and equivalents include all highly liquid investments with a maturity of three months or less at the date of acquisition. Interest income on Cash and equivalents is recorded as earned.

Restricted Cash

Restricted cash consists of cash not readily available for use in the Company's operating activities and is primarily pledged as collateral for bank guarantees related to certain customer performance guarantees and property leases internationally, which are further discussed in Note 16.

Trade Receivables

The Company grants credit to customers in the normal course of business and the resulting trade receivables are stated at their net realizable value. The allowance for doubtful accounts represents the Company’s estimate of probable credit losses relating to trade receivables and is determined based on historical experience, current conditions, reasonable and supportable forecasts and other specific account data. Amounts are written off against the allowances for doubtful accounts when the Company determines that a customer account is uncollectible.

Inventories

Inventories are stated at the lower of approximate cost or net realizable value determined on the first-in, first-out basis.

Cloud Computing Arrangements

The Company capitalizes costs incurred to implement cloud computing arrangements that are service contracts within Prepaid expenses and other and Deferred Income Taxes and Other Assets in the Company's Consolidated Balance Sheets based on the expected period that amortization will be recognized. Implementation costs associated with cloud computing arrangements are capitalized when incurred during the application development phase. Once the implementation of a cloud computing arrangement is complete and ready for its intended use, the Company amortizes the costs over the expected term of the hosting arrangement using the straight-line method to the same income statement line as the associated cloud operating expenses.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is principally provided on the straight-line basis over estimated useful lives, which range from 20 to 45 years for buildings, 4 to 13 years for machinery and equipment and 1 to 20 years for leasehold improvements. Depreciation expense was $34.9 million in 2024, $31.5 million in 2023, and $31.0 million in 2022.

Property, plant and equipment are periodically reviewed when impairment indicators are present to assess recoverability or a decision has been made to abandon efforts associated with construction in progress assets. Recoverability is determined by comparing the carrying values of the assets or asset groups to the undiscounted cash flows to be generated from the use and eventual disposition of such assets or asset groups. If the asset’s or asset group’s carrying value exceeds such undiscounted cash flows, the assets or asset groups are not recoverable and an impairment loss is recognized based on the amount by which the carrying value of the asset or asset group exceeds its calculated fair value.

Capitalized Interest

The interest cost on capital projects is capitalized and included in the cost of the project. Capitalization commences with the first expenditure for the project and continues until the project is substantially complete and ready for its intended use. When no debt is incurred specifically for a project, interest is capitalized on project expenditures using the weighted average cost of the Company's outstanding borrowings. For the fiscal years ended September 30, 2024, 2023 and 2022 the Company capitalized $3.7 million, $4.6 million and $5.2 million of interest expense, respectively, into Property, Plant and Equipment, Net. For the fiscal year ended September 30, 2023the Company capitalized $0.9 million of interest expense into Deferred Income Taxes and Other Assets. Interest expense capitalized into Deferred Income Taxes and Other Assets during the fiscal year ended September 30, 2024 is not material to the Company’s Consolidated Financial Statements.

Advertising Costs

Advertising costs are expensed as incurred and included in Selling and administrative expense. The Company recorded advertising costs of $9.0 million, $15.5 million, and $11.6 million in 2024, 2023, and 2022, respectively.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the consideration transferred over the fair value of net assets of businesses acquired. The Company has one reporting unit. Goodwill is evaluated for impairment as of July 1 each year, or more frequently if impairment indicators exist, by first assessing qualitative factors to determine whether it is more likely than not that fair value is less than carrying value. If the Company concludes it is more likely than not that fair value is less than carrying value, a quantitative fair value test is performed. If carrying value is greater than fair value, a goodwill impairment charge will be recorded for the difference (up to the carrying value of goodwill). The Company completed the annual goodwill impairment test as of July 1, 2024 and concluded that no impairment to goodwill was necessary as the fair value of the Company's one reporting unit was significantly in excess of the carrying value.

No goodwill impairments were identified during the fiscal years ended September 30, 2024, 2023, or 2022, and no accumulated impairment losses are recorded.

Amortized intangible assets primarily consist of patents and customer relationships. Patents are generally amortized over 20 years using the straight-line method. Customer relationship assets are generally amortized over periods ranging from 10 to 15 years, using the straight-line method. Other intangibles with finite useful lives are amortized over periods principally ranging from 1 to 40 years, using the straight-line method. Finite-lived intangible assets are periodically reviewed when impairment indicators are present to assess recoverability from future operations using undiscounted cash flows. The carrying values of these finite-lived assets are compared to the undiscounted cash flows they are expected to generate and an impairment loss is recognized in operating results to the extent any finite-lived intangible asset’s carrying value exceeds its calculated fair value.

Foreign Currency and Derivative Financial Instruments

Assets and liabilities denominated in their functional currencies are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates of exchange prevailing during the period. The United States dollar results that arise from such translation are included in Accumulated other comprehensive loss.

The Company utilizes derivative instruments to manage market risks associated with fluctuations in certain foreign currency exchange rates. The Company utilizes foreign currency forward contracts to protect against market risks arising in the normal course of business.

At the end of the reporting period, foreign-currency-denominated assets and liabilities are remeasured into the functional currencies of the reporting entities at current market rates. The change in value from this remeasurement is reported as a foreign exchange gain or loss for that period in Other income (expense), net.

The Company recorded transactional foreign exchange losses of $4.4 million during the fiscal year ended September 30, 2024. For the fiscal years ended September 30, 2023 and 2022, transactional foreign exchange impacts were not material to the Company's Consolidated Statements of Income.

Shipping and Handling Costs

The Company considers its shipping and handling costs to be contract fulfillment costs and records them within selling and administrative expense. Shipping and handling costs were $41.3 million, $36.9 million, and $27.4 million in 2024, 2023, and 2022, respectively.

Contingencies

The Company establishes accruals for future losses which are both probable and can be reasonably estimated (and in the case of environmental matters, without considering possible third-party recoveries). Additional disclosures regarding the Company’s accounting for contingencies are provided in Note 7.

Stock-Based Compensation

Prior to the Separation, certain of the Company’s employees historically participated in BD’s stock-based compensation plans. Stock-based compensation expense was either allocated to the Company based on a proportionate cost allocation method or recorded based on specific identification. Effective April 1, 2022, the Company established the 2022 Employee and Director Equity Based Compensation Plan, as amended on February 7, 2024 (the "Plan"). The Plan provides for the grant of various types of awards, including restricted stock unit ("RSU") awards, stock appreciation rights, stock options, performance-based awards and cash awards. Under the Plan, the exercise price of awards, if any, is set on the grant date and generally may not be less than the fair market value per share on that date. The Company measures stock-based compensation for equity awards at fair value on the date of grant and records stock-based compensation as a charge to earnings net of the estimated impact of forfeited awards. For awards that ultimately settle in cash, we treat them as liability awards and mark the award to market each reporting period and recognize any adjustment in our Consolidated Statements of Income. The Company recognizes stock-based compensation cost only for those stock-based awards that are estimated to ultimately vest over their requisite service period, based on the vesting provisions of the individual grants. The cumulative effect on current and prior periods of a change in the estimated forfeiture rate is recognized as compensation cost in earnings in the period of the change (see Note 10).

Benefit Plans

Prior to the Separation, the defined benefit plans in which the Company participated related primarily to plans sponsored by BD and for which other businesses of BD also participate (the "Shared Plans"). The Company accounted for the Shared Plans as multiemployer plans and therefore the related assets and liabilities were not reflected in the Consolidated Balance Sheets. For such periods prior to the Separation, the Consolidated Statements of Income reflect a proportional allocation of net periodic benefit cost for the Shared Plans associated with the Company. The Company's participation in the defined pension and postretirement benefit plans sponsored by BD concluded upon the completion of the Separation on April 1, 2022. At and after Separation, Embecta became the plan sponsor for certain non-United States defined benefit pension plans (see Note 19).

Research and Development

Research and development costs are expensed as incurred.

Income Taxes

Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement and tax basis of assets and liabilities at the applicable tax rates.

The Company maintains valuation allowances where it is more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances are included in the tax provision in the period of change. In determining whether a valuation allowance is warranted, the Company evaluates factors such as prior earnings history, expected future earnings, carryback and carryforward periods, and tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset.

From time to time, the Company engages in transactions in which tax consequences may be subject to uncertainty. The Company conducts business and files tax returns in numerous jurisdictions based on its interpretation of tax laws and regulations. In evaluating the Company’s tax provision, the Company establishes a reserve for uncertain tax positions unless such positions are determined to be more likely than not of being sustained upon examination based on the technical merits. The Company’s policy is to recognize, when applicable, interest and penalties on uncertain tax positions as part of income tax expense.

While the Company believes it has identified all reasonable exposures and the reserve it has established is appropriate under the circumstances, it is possible that additional exposures exist and that exposures may be settled at amounts different than the amounts reserved. It is also possible that changes in facts and circumstances could cause the Company to either materially increase or reduce the carrying amount of its tax reserve.

The Tax Cuts and Jobs Act was enacted on December 22, 2017 and introduced an additional United States tax on the earnings of non-United States subsidiaries which are referred to as Global Intangible Low Taxed Income (“GILTI”). The Company has elected to treat GILTI as a period cost.

Prior to the Separation, the Company's operations were included in the tax returns of BD. Income taxes as presented in the Consolidated Financial Statements attribute current and deferred income tax assets and liabilities of BD to the Company in a manner that is systematic, rational, and consistent with the asset and liability method prescribed by the accounting guidance for income taxes. The Company's income tax provision prior to the Separation was prepared using the separate return method. The separate return method applies the accounting guidance for income taxes to the standalone financial

statements as if the Company were a separate taxpayer and a standalone enterprise. The Company believes the assumptions supporting the allocation and presentation of income taxes on a separate return basis are reasonable.

Additional disclosures regarding the Company's accounting for income taxes are provided in Note 15.

Segment Data

The Company operates and reports its financial information as one segment. In making this determination, the Company (i) determines its Chief Operating Decision Maker (“CODM”), (ii) identifies and analyzes potential business components, (iii) identifies its operating segments and (iv) determines whether there are multiple operating segments requiring presentation as reportable segments. The Company’s decision to report as one segment is based upon the following: (1) its internal organizational structure; (2) the manner in which its operations are managed; and (3) the criteria used by the Company’s President, its CODM, to evaluate performance of the Company’s business and allocate resources and capital.

Fair Value Measurements

A fair value hierarchy is applied to prioritize inputs used in measuring fair value. The three levels of inputs used to measure fair value are detailed below. Additional disclosures regarding the Company’s fair value measurements are provided in Note 16.

Level 1—Inputs to the valuation methodology which represent unadjusted quoted prices in active markets for identical assets and liabilities.

Level 2—Inputs to the valuation methodology which include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability.

Level 3—Inputs to the valuation methodology which are unobservable and significant to the fair value measurement.

Leases

The Company determines whether an arrangement contains a lease at inception. If a lease is identified in an arrangement, the Company recognizes a right-of-use asset and liability in the Company's Consolidated Balance Sheets and determines whether the lease should be classified as a finance or operating lease. The Company does not recognize assets or liabilities for leases with lease terms of less than 12 months.

A lease qualifies as a finance lease if any of the following criteria are met at the inception of the lease: (i) there is a transfer of ownership of the leased asset to Embecta by the end of the lease term, (ii) the Company holds an option to purchase the leased asset that the Company is reasonably certain to exercise, (iii) the lease term is for a major part of the remaining economic life of the leased asset, (iv) the present value of the sum of lease payments equals or exceeds substantially all of the fair value of the leased asset, or (v) the nature of the leased asset is specialized to the point that it is expected to provide the lessor no alternative use at the end of the lease term. All other leases are recorded as operating leases.

Finance and operating lease assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term using the discount rate implicit in the lease. If the implicit rate is not readily determinable, the Company utilizes its incremental borrowing rate at the lease commencement date. Operating lease assets are further adjusted for prepaid or accrued lease payments. Operating lease payments are expensed using the straight-line method as an operating expense over the lease term. Finance lease assets are amortized to depreciation expense using the straight-line method over the shorter of the useful life of the related asset or the lease term. Finance lease payments are bifurcated into (i) a portion that is recorded as imputed interest expense and (ii) a portion that reduces the finance liability associated with the lease.

For lease arrangements that are recognized on the Company’s Consolidated Balance Sheets, the right-of-use asset and lease liability is initially measured at the commencement date based upon the present value of the lease payments due under the lease. These payments represent the combination of the fixed lease and fixed non-lease components that are due under the arrangement. Variable lease payments are expensed as incurred. If a lease includes an option to extend or terminate the lease, the Company reflects the option in the lease term if it is reasonably certain the Company will exercise the option.

Finance leases are recorded in Property, Plant and Equipment, Net, Current finance lease liabilities, and Non Current Finance Lease Liabilities and operating leases are recorded in Deferred Income Taxes and Other Assets, Accrued expenses, and Deferred Income Taxes and Other Liabilities in the Company's Consolidated Balance Sheets.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates or assumptions affect reported assets, liabilities, revenues and expenses, including

determining the allocation of shared costs and expenses from BD for the period prior to the Separation, depreciable and amortizable lives, sales returns and allowances, rebate accruals, restructuring costs, inventory reserves and taxes on income as reflected in the Consolidated Financial Statements. Actual results could differ from these estimates.

Supplemental Disclosures Of Cash Flow Information

Cash paid for interest related to debt during the fiscal year ended September 30, 2024, 2023 and 2022 was $117.7 million, $111.0 million and $38.9 million, respectively. Cash paid for income taxes, net of refunds, for the fiscal years ended September 30, 2024, 2023 and 2022 was $29.1 million, $30.4 million and $15.6 million, respectively.

Recently Issued Accounting Standards Not Yet Adopted

In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which modifies the disclosure and presentation requirements of reportable segments. This update is effective for the Company beginning with its fiscal year 2025 reporting and for interim reporting beginning with its fiscal year 2026. While this accounting standard will increase disclosures, it will not have a material impact on the Company’s Consolidated Financial Statements.

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures. This update is effective for the Company beginning with its fiscal year 2026 reporting. While this accounting standard will increase disclosures, it will not have a material impact on the Company’s Consolidated Financial Statements.

In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40), to improve disclosures about an entity's expenses including more detailed information about the components of expenses in commonly presented expense captions. This update is effective for the Company beginning with its fiscal year 2028 reporting and for interim reporting beginning with its fiscal year 2029. While this accounting standard will increase disclosures, it will not have a material impact on the Company’s Consolidated Financial Statements.

Note 4 — Third Party Arrangements and Related Party Disclosures

Pursuant to the Separation, BD ceased to be a related party to Embecta and accordingly, no related party transactions or balances are reported subsequent to April 1, 2022.

In connection with the Separation, the Company entered into the Separation and Distribution Agreement, which contains provisions that, among other things, relate to (i) assets, liabilities and contracts to be transferred, assumed and assigned to each of Embecta and BD (including certain deferred assets and liabilities) as part of the Separation, (ii) cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of Embecta's business with Embecta and financial responsibility for the obligations and liabilities of BD’s remaining businesses with BD, (iii) procedures with respect to claims subject to indemnification and related matters, (iv) the allocation among Embecta and BD of rights and obligations under existing insurance policies with respect to occurrences prior to completion of the Separation, as well as the right to proceeds and the obligation to incur certain deductibles under certain insurance policies, and (v) procedures governing Embecta’s and BD’s obligations and allocations of liabilities with respect to ongoing litigation matters that may implicate each of BD’s business and Embecta’s business.

Agreements that Embecta entered into with BD that govern aspects of Embecta's relationship with BD following the Separation include, but are not limited to:

•Transition Services Agreements ("TSA") - Pursuant to the TSA, as amended, Embecta and BD and their respective affiliates provide each other, on an interim, transitional basis, various services, including, but not limited to, information technology, human resources, procurement, quality and regulatory affairs, medical affairs, tax and treasury services. The agreed-upon charges for such services are generally intended to allow the servicing party to charge a price comprised of out-of-pocket costs and expenses and a predetermined profit in the form of a mark-up of such out-of-pocket costs and expenses. Such services provided pursuant to the TSA were to terminate no later than April 1, 2024, 24 months following the Separation. On March 28, 2024, BD granted a limited extension until November 1, 2024 of certain services under the TSA and the Logistics Services Agreement (“LSA”) in a limited set of markets (the "Extension") to support the Interim Business Continuity Processes.

•Trade Receivables Factoring Agreements - Embecta and BD entered into trade receivables factoring agreements (the "Factoring Agreements"), under which Embecta transferred certain net trade receivable assets to BD, and paid a service fee calculated as 0.1% of annual revenues related to countries subject to the Factoring Agreements in exchange for the services provided by BD. Per the terms of the Factoring Agreements, the Company and its relevant subsidiaries sold receivables to the corresponding BD subsidiary in the same jurisdiction and such BD

subsidiary collected the receivables from Company's customers. The BD subsidiary assumed the credit risk in respect of the receivables, and accordingly deducted a factoring fee from the purchase price of such receivables. Accordingly, Embecta accounted for the transfer as sales of trade receivables by recognizing an increase to Cash and equivalents and a decrease to Trade Receivables, net in the Consolidated Balance Sheets when proceeds from the transactions are received. The transfers are presented in the Consolidated Statements of Cash Flows as operating activities and the related service fee is presented as a component of Other income (expense), net in the Consolidated Statements of Income. The Trade Receivables Factoring Agreements terminated and expired as of March 31, 2024.

•Distribution Agreements - Embecta and BD entered into distribution agreements for certain territories, principally in the Asia Pacific Region and Latin America, whereby a subsidiary of BD was appointed as a distributor of Embecta or its relevant subsidiaries to support certain commercial operations of the diabetes care business on a transitional basis in these regions for a maximum of two years. The distribution agreements each continued until either (1) certain governmental approvals needed to distribute products in the defined territory are obtained and order-to-cash processes and other services of the Company for such territory are migrated to an alternative commercial arrangement between the parties or (2) the applicable services are transitioned to a third-party distributor or independently performed by Embecta, but in any event no longer than the maximum term of two years, except certain such agreements may be extended in connection with the Extension. All distribution agreements in the Asia Pacific Region and Latin America terminated and expired in October 2024. Embecta paid BD a return of 1.5% to 2.0% of net revenue for each territory.

•Cannula Supply Agreement - Embecta and BD entered into a cannula supply agreement whereby BD sells to Embecta cannulas for incorporation into Embecta's existing syringes and pen needles, safety syringes and safety pen needles, and products currently under development. BD retains ownership of all cannula technology, cannula production activities and the intellectual property rights therein. Embecta is limited to a maximum number of cannulas that it can purchase under the cannula supply agreement, which will be an absolute upper limit of cannulas per year and yearly limits that vary with annual demand. The cannula supply agreement is terminable by Embecta without cause by providing at least 36 months’ written notice; however, such termination can be effective no earlier than five years from the Separation. The cannula supply agreement will be terminable by BD without cause by providing at least 36 months’ written notice; however, such termination can be effective no earlier than ten years from the Separation. However, in the event of a change of control of Embecta, BD has the right to terminate the cannula supply agreement in its sole discretion. The cannula supply agreement will also terminate automatically, subject to a 36-month wind-down period, if Embecta’s yearly forecast is below the required minimum purchase amount, and the parties have other customary termination rights for material breach or bankruptcy of the other party.

•Tax Matters Agreement - Pursuant to the tax matters agreement, Embecta agreed to certain covenants that contain restrictions intended to preserve the tax-free status of the distribution and certain related transactions. Embecta may take certain actions prohibited by these covenants only if Embecta obtains and provides to BD an opinion from a United States tax counsel or accountant of recognized national standing, in either case satisfactory to BD, to the effect that such action would not jeopardize the tax-free status of the distribution and certain related transactions, or if Embecta obtains prior written consent of BD. Embecta is barred from taking any action, or failing to take any action, where such action or failure to act adversely affects or could reasonably be expected to adversely affect the tax-free status of the distribution and certain related transactions or result in certain other taxes to BD, for all relevant time periods.

•Logistics Services Agreement - Embecta and BD entered into the LSA, as amended, whereby BD provides Embecta with certain order-to-cash and logistics services to support certain commercial operations for a maximum term of two years, which BD agreed to extend pursuant to the Extension. Embecta pays BD (i) reimbursable costs, including all shipping costs, selling costs, general administration costs, costs of goods, research and development services costs, and other income and expenses related solely to the diabetes care business, that are incurred by BD directly, as allocated costs or as costs payable to a third party and (ii) a monthly administrative fee of 1.0% of net revenue (which increased to 1.25% of net revenue after January 1, 2024).

•Other agreements that Embecta entered into with BD include, but are not limited to, the employee matters agreement ("EMA"), an intellectual property matters agreement, local support services agreements, certain other manufacturing arrangements and a process services agreement and lease agreement for a manufacturing facility located in Holdrege, Nebraska. See Note 18 for more information on the lease agreement for Holdrege.

As it pertains to the Distribution Agreements noted above, Embecta determined it was the principal under these arrangements and was entitled to all the benefits, and was liable for all the risks, related to the inventory and receivables. Additionally, Embecta had latitude in pricing, had the ability to direct BD regarding decisions over inventory, and was responsible for all credit and collections risks and losses associated with the related receivables when there was no factoring agreement in place. As such, Embecta recognized these sales on a gross basis.

On March 28, 2024, the Company entered into (i) a second amendment (the “TSA Amendment”) to the TSA, dated as of March 31, 2022 and previously amended as of July 1, 2022 by and between Embecta and BD, and (ii) a second amendment (the “LSA Amendment”) to the LSA, dated January 1, 2022 and previously amended as of November 20, 2023, by and between Embecta and BD. Under the TSA Amendment and the LSA Amendment, BD granted Embecta, among other things, the Extension.

As of March 31, 2024, all Factoring Agreements between Embecta and BD had expired and terminated as a result of the Company's implementation and onboarding of certain systems and services, including, but not limited to, information technology, procurement, quality and regulatory affairs, medical affairs, tax and treasury services, distribution logistics, and shared services infrastructure support for order-to-cash, source-to-pay, and record-to-report, which, for clarity, includes enterprise resource planning (“ERP”) systems (“Business Continuity Processes”) in North America, and certain jurisdictions in Europe and Asia.

The amounts due from BD under the above agreements were $53.8 million and $10.9 million at September 30, 2024 and are reflected in Amounts due from Becton, Dickinson and Company and Trade receivables, net, respectively. The amount due to BD under these agreements was $42.5 million at September 30, 2024 and is included in Amounts due to Becton, Dickinson and Company.

The closing of the transfers of certain assets and liabilities related to the Diabetes Care Business in certain jurisdictions, including Mexico, India, Brazil, and Colombia, as contemplated by the Separation and Distribution Agreement did not occur at Separation. The transfers of the relevant local assets and liabilities in Mexico, Brazil, and Colombia closed in October 2024. The transfer of the relevant local assets and liabilities in India are expected to close at a future date. As of September 30, 2024, the Company estimates that amounts due from BD related to certain assets and liabilities in these jurisdictions are $7.0 million and are reflected in Prepaid expenses and other. As of September 30, 2024, the Company estimates that amounts due to BD related to certain assets and liabilities in these jurisdictions is $6.3 million and are reflected in Accrued expenses.

Prior to the Separation, the Company did not operate as a standalone business and the Consolidated Financial Statements were derived from the consolidated financial statements and accounting records of BD. The following disclosures summarize activity between the Company and BD up to the Separation, including the affiliates of BD that were not part of the Separation.

Corporate and Medical Segment Allocations from BD

Prior to the Separation, BD provided significant corporate, finance, human resources, information technology, facilities, and legal services, among others (collectively, “General Corporate Expenses”) to the Company. Some of these services continue to be provided by BD to the Company on a temporary basis under the TSA. For purposes of these Consolidated Financial Statements for the periods prior to the Separation, the General Corporate Expenses have been allocated to the Company.

The allocations of General Corporate Expenses are reflected in the Consolidated Statements of Income as follows:

Year ended September 30,

Cost of products sold $ 2.3

Selling and administrative expense 47.9

Research and development expense 3.5

Other (income) expense, net (0.6)

Total General Corporate Expenses $ 53.1

These expenses were allocated to the Company on a pro rata basis of global and regional revenues, headcount, research and development spend and other drivers. Management believes the assumptions underlying the Consolidated Financial Statements, including the assumptions regarding allocating General Corporate Expenses from BD, are reasonable. Nevertheless, the Consolidated Financial Statements for periods prior to the Separation may not include all of the actual expenses that would have been incurred and may not reflect the Company’s Consolidated results of operations, financial position and cash flows had it been a standalone public company during the periods presented. Actual costs that would have been incurred if the Company had been a standalone public company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure.

Related party transactions

The following transactions represent activity in the ordinary course of business between the Company and BD prior to the Separation for certain materials for use in production of certain medical products that were not at arm’s length. The following table summarizes such former related party purchases as follows:

Year ended September 30,

Purchases from BD $ 28.0

All significant intercompany transactions between the Company and BD prior to the Separation have been included in the Consolidated Financial Statements and are considered to be effectively settled for cash at the time the transaction is recorded. For the period prior to the Separation, the total net effect of the settlement of these intercompany transactions is reflected in the Consolidated Statements of Cash Flows as a financing activity and in the Consolidated Balance Sheets as Net Investment from Becton, Dickinson and Company.

Prior to the Separation, net transfers to BD were included within Net Investment from Becton, Dickinson and Company. in the Consolidated Statements of Equity and represent the net effect of transactions between the Company and BD.

The following table summarizes the components of the net transfers to BD as follows:

Year ended September 30,

Cash pooling and general financing activities(1) $ 255.9

Taxes deemed settled with BD (16.2)

Other Separation related adjustments, net (11.4)

Share-based compensation expense (8.5)

Pension expense (3.6)

Net consideration paid to BD in connection with the Separation 1,266.0

Related party senior secured notes 197.0

Other transfers to (from) BD, net 84.1

Net transfers to BD $ 1,712.9

(1)The nature of activities includes financing activities for capital transfers, cash sweeps and other treasury services. As part of this activity, cash balances were swept to BD on a daily basis under the BD Treasury function and the Company receives capital from BD for its cash needs.

Related Party Senior Secured Notes

On March 31, 2022, Embecta issued $200.0 million of senior secured notes to BD (the "Related Party Notes"). The Related Party Notes issued to BD were not issued for cash and instead were subject to a debt-for-debt exchange which occurred on April 1, 2022. As of April 1, 2022 the Related Party Notes were reclassified to Long-Term Debt in the Consolidated Balance Sheets as the Related Party Notes are third party debt for periods post Separation. Refer to Note 13 for further information.

Note 5 — Collaboration Agreement

In March 2023, the Company entered into a collaboration agreement with a third-party to develop and commercialize an interoperable automated glycemic controller ("iAGC") to complement the Company's insulin patch pump currently in development. The Company believes that both parties are active participants in the operating activities of the collaboration and exposed to certain risks and rewards depending on commercial success. The transaction included an upfront payment

of $2.5 million for project costs, which was expensed to Research and development expense during the fiscal year ended September 30, 2023.

On November 22, 2024, the Company's Board of Directors approved a plan to discontinue internal and external investment in the research and development of the Company's patch pump program. The Company will refocus its research and development strategy on its core business. For additional information related to this matter, refer to Note 21.

Note 6 — Other Operating Expenses

In connection with the Separation, the Company incurred separation and stand-up costs of approximately $110.8 million, $92.7 million, and $44.7 million during the fiscal years ended September 30, 2024, 2023, and 2022, respectively. The costs incurred primarily consist of costs associated with accounting, auditing, legal services, marketing, supply chain, employee retention, the implementation of the Company's new ERP system, and certain other costs to establish certain Business Continuity Processes and stand-alone functions to assist with the transition to being a stand-alone entity.

During the fiscal year ended September 30, 2024, the Company recognized $6.3 million of costs associated with the amortization of cloud computing arrangements. For the fiscal years ended September 30, 2023 and 2022, there were no amortization of implementation costs associated with cloud computing arrangements due to the timing of when these projects were placed into service.

The Company recorded approximately $7.4 million and $5.6 million of severance costs related to the optimization of certain business functions during the fiscal years ended September 30, 2024, and 2023, respectively. These costs were primarily recorded in the U.S. and liabilities for costs associated with these activities were not material to any period presented. For the fiscal year ended September 30, 2022 severance costs were not material to the Company's Consolidated Statements of Income.

Note 7 — Contingencies

The Company is subject to potential liabilities under government regulations and various claims and legal actions that are pending or may be asserted from time-to-time. These matters arise in the ordinary course and conduct of the Company’s business and include, for example, commercial, product liability, breach of contract and tort, intellectual property, product liability, environmental, securities and employment matters. The Company intends to continue to defend itself vigorously in such matters and when warranted, take legal action against others. Furthermore, the Company regularly assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements.

An estimated loss contingency is accrued in the Company’s Financial Statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the Company’s assessment, it has adequately accrued an amount for contingent liabilities currently in existence. The Company does not accrue amounts for liabilities that it does not believe are probable. Litigation is inherently unpredictable, and unfavorable resolutions could occur. As a result, assessing contingencies is highly subjective and requires judgment about future events. The amount of ultimate loss may exceed the Company’s current accruals, and it is possible that its cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies.

The Company was not a party to any material legal proceedings at September 30, 2024 or September 30, 2023, nor is it a party to any material legal proceedings as of the date of issuance of these Consolidated Financial Statements.

Note 8 — Revenues

The Company’s policies for recognizing revenue have not changed from those described in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023. The Company sells syringes, pen needles and other products used in the management of diabetes which are primarily sold to wholesalers and distributors that sell to retail and institutional channels who in turn sell to patients or use the products to deliver insulin injections to patients. End-users of the Company’s products include healthcare institutions, physicians, life science researchers, clinical laboratories, the pharmaceutical industry, and the general public.

Measurement of Revenues

Payment terms extended to the Company’s customers are based upon commercially reasonable terms for the markets in which the Company’s products are sold. Because the Company generally expects to receive payment within one year or less from when control of a product is transferred to the customer, the Company does not generally adjust its revenues for the effects of a financing component. The Company’s allowance for doubtful accounts reflects the current estimate of credit losses expected to be incurred over the life of its trade receivables. Such estimated credit losses are determined based on historical loss experiences, customer specific credit risk, and reasonable and supportable forward-looking information,

such as country or regional risks that are not captured in the historical loss information. Amounts are written off against the allowances for doubtful accounts when the Company determines that a customer account is uncollectible. The allowance for doubtful accounts for trade receivables is not material to the Company’s Consolidated Financial Statements.

The Company’s gross revenues are subject to a variety of gross-to-net deductions which are recorded in the same period that the underlying revenues are recognized. Such variable consideration includes rebates, chargebacks, sales discounts, and sales returns. Because these deductions represent estimates of the related obligations, judgment is required when determining the impact of these revenue deductions on gross revenues for a reporting period. Rebates provided by the Company are based upon prices determined under the Company’s agreements primarily with its end-user customers. Additional factors considered in the estimate of the Company’s variable consideration liability include the quantification of inventory that is either in stock at or in transit to the Company’s distributors, as well as the estimated lag time between the sale of product and the payment of corresponding variable consideration.

The Company’s liability attributed to variable consideration at September 30, 2024 and September 30, 2023 was $149.6 million and $36.4 million, respectively. Sales deductions recorded as a reduction of gross revenues for the fiscal years ended September 30, 2024, 2023 and 2022 were $525.9 million, $411.1 million, and $336.4 million respectively.

Disaggregation of Revenues

Disaggregation of revenue by geographic region is provided within Note 9.

Contract Assets and Liabilities

The Company does not have contract liabilities. Contract assets consist of the Company’s right to consideration that is conditional upon its future performance pursuant to private label agreements and are presented within Prepaid expenses and other in the Consolidated Balance Sheets.

The Company’s contract asset balance was $1.2 million as of each of September 30, 2024 and 2023.

Note 9 — Segment, Geographic, and Product Information

Operating segments are identified as components of an enterprise in which discrete financial information is available for evaluation by the CODM in making decisions regarding assessing business performance and allocating resources and capital. Management has concluded that the Company operates in one segment based upon the information used by the CODM in evaluating the performance of the Company’s business and allocating resources and capital.

Disaggregation of Revenues

The Company has distribution agreements with regional or national distributors (including wholesalers and medical suppliers) to ensure broad availability of its products as well as a direct sales force in certain countries and regions around the world. In the United States and Canada, the Company utilizes its large and small key account managers that call on payers, retailers, wholesalers and institutional customers, and field-based territory managers that call on health care providers and pharmacies. In certain markets within Europe, the Company has dedicated sales representatives and in certain regions of the Middle East and Africa, the Company has distribution agreements. In Asia, the Company has distribution agreements and in China, the Company relies on its own commercial team to support sales execution. In Latin America, the Company maintains distribution agreements and direct sales representatives.

Revenues by geographic region are as follows:

Year ended September 30,

(1)For the fiscal years ended September 30, 2024, 2023, and 2022 no individual country outside of the United States generated net revenues that represented more than 10.0% of total revenues.

Revenues by product family are as follows:

Year ended September 30,

(1)In 2024, Other includes product sales for swabs and other accessories. In 2024, Other also includes the recognition of incremental Italian payback accruals resulting from two July 22, 2024 rulings by the Constitutional Court of Italy relating to certain prior years since 2015 which totaled $4.1 million.

Note 10 — Stock-Based Compensation

Periods Prior to Separation

Prior to the Separation, certain of the Company's employees participated in stock-based compensation plans sponsored by BD. Under these plans BD granted time-vested restricted stock units ("TVUs"), stock appreciation rights ("SARs"), and performance share units ("PSUs") to certain management level employees.

Prior to the Separation on April 1, 2022, share-based compensation expense in the Consolidated Statements of Income is representative of those employees who were dedicated to the Diabetes Care Business. Additionally, share-based compensation expense was allocated to the Diabetes Care Business for BD Corporate and Medical Segment employees who were not dedicated solely to the Diabetes Care Business. This stock-based compensation expense was allocated using a proportional cost allocation method and is included as a component of corporate allocations for periods prior to the Separation. The amounts presented for the periods prior to the Separation are not necessarily indicative of future awards and do not necessarily reflect the costs that the Company would have incurred as an independent company.

As of Separation Date and Periods Post Separation

In connection with the Separation, and in accordance with the EMA, Embecta's employees with outstanding former BD share-based awards received replacement share-based awards under the Plan. The ratio used to convert the BD share-based awards was designed to preserve the aggregate intrinsic value of the award immediately after the Separation when compared to the aggregate intrinsic value of the award immediately prior to Separation. As a result of the award modification, Embecta will incur $6.1 million of incremental stock-based compensation expense. Of this amount, $1.2 million, $1.8 million and $2.3 million was recognized during the fiscal years ended September 30, 2024, 2023 and 2022, respectively. $0.8 million will be recognized at a future date over the awards' remaining vesting period.

Effective April 1, 2022, Embecta established the Plan, as amended on February 7, 2024. A total of 10,189,000 shares of common stock are authorized under the Plan. The Plan provides for the grant of various types of awards including RSU awards, SARs, stock options, performance-based awards, and other stock-based awards. Under the Plan, the exercise price of awards, if any, is set on the grant date and may not be less than the fair market value per share on that date. Generally SARs have a term of ten years and a three or four year vesting period, subject to limited exceptions.

The Company recognizes stock-based compensation cost only for those stock-based awards that are estimated to ultimately vest over their requisite service period, based on the vesting provisions of the individual grants. The cumulative effect on current and prior periods of a change in the estimated forfeiture rate is recognized as compensation cost in earnings in the period of the change.

Stock-Based Compensation Expense

Total direct and allocated stock-based compensation expense for the fiscal years ended September 30, 2024, 2023, and 2022 and the respective income tax benefits recognized by the Company in the Consolidated Statements of Income are as follows:

Cost of products sold $ 3.0 $ 2.2 $ 2.3

Selling and administrative expense 21.4 18.1 14.6

Research and development expense 2.2 1.6 1.8

Total Stock-Based Compensation Expense $ 26.6 $ 21.9 $ 18.7

The following table summarizes the Company's total stock-based compensation expense by classification of award:

Liability Awards 0.3 0.4 —

The following table summarizes the Company's total stock-based compensation expense by award type for the fiscal years ended September 30, 2024, 2023 and 2022, subsequent to the Separation:

Time-Vested Restricted Stock Units (TVUs) $ 19.5 $ 16.2 $ 6.6

Performance-Based Restricted Stock Units (PSUs) 3.2 1.0 —

Stock Appreciation Rights (SARs) 3.9 4.7 3.7

Time Vested Restricted Stock Units

During the fiscal year ended September 30, 2024, Embecta granted 1,437,311 RSUs in the form of TVUs to employees which vest ratably over three years, subject to continued employment of the recipients. TVUs vest on a graded basis over a period of three years. The related stock-based compensation expense is recorded over the requisite service period, which is the vesting period or is based on retirement eligibility. The fair value of all TVUs is based on the market value of the Company’s stock on the date of grant.

A summary of TVUs outstanding as of September 30, 2024 and changes during the fiscal year then ended is as follows:

Stock Units (in thousands) Weighted Average Grant Date Fair Value

Forfeited, canceled or expired (154.2) 21.29

The weighted average grant date fair value of TVUs granted during the fiscal years 2024, 2023 and 2022 are as follows:

Weighted average grant date fair value of units granted $ 17.39 $ 31.00 $ 31.23

The total fair value of TVUs vested during the fiscal years 2024, 2023 and 2022 was as follows:

Total fair value of units vested $ 15.7 $ 10.9 $ 1.6

At September 30, 2024, the weighted average remaining vesting term of TVUs is 1.6 years.

Performance Based Restricted Stock Units

During the fiscal year ended September 30, 2024, Embecta awarded 553,235 RSUs in the form of PSUs to certain executive officers and employees which vest after three years, subject to continued employment of the recipients and the achievement of certain performance metric targets. The Company has identified certain performance metrics and targets that will be fully established at a future date. The Company has determined that the service inception date precedes the grant date for these awards as (a) the awards were authorized prior to establishing an accounting grant date, (b) the recipients began providing services prior to the grant date, and (c) there are performance conditions that, if not met by the accounting grant date, will result in the forfeiture of the awards. As the service inception date precedes the accounting grant date, the Company recognizes stock-based compensation expense for each separately-vesting tranche over the requisite service period based on the fair value at each reporting date. PSUs cliff vest on the third anniversary after grant date. The related stock-based compensation expense is recorded over the requisite service period, which is the vesting period or is based on retirement eligibility. The fair value of all PSUs is based on the market value of the Company’s stock on the date of grant.

A summary of PSUs outstanding as of September 30, 2024 and changes during the fiscal year then ended is as follows:

Stock Units (in thousands) Weighted Average Grant Date Fair Value

Forfeited, canceled or expired (1.1) 30.24

The weighted average grant date fair value of PSUs granted during the fiscal year 2023 is as follows:

Weighted average grant date fair value of units granted $ 30.24

At September 30, 2024, the weighted average remaining vesting term of PSUs is 1.2 years.

Stock Appreciation Rights

SARs represent the right to receive, upon exercise, shares of common stock having a value equal to the difference between the market price of common stock on the date of exercise and the exercise price on the date of grant. SARs generally vest over a period of three to four years and have a term of ten years. The fair value of awards are estimated on the date of grant using a Black-Scholes-Merton (“BSM”) model. The BSM assumptions include expected dividend yield, risk-free interest rate, volatility, and term of the SARs.

In connection with the SARs granted during 2022, the Company used the BSM to determine the fair value of the SARs as of the grant date. In applying this model, the Company uses both historical data and current market data to estimate the fair value of its SARs. The expected dividend yield is based on forecasted patterns of dividend payments. The risk-free interest rate is based on the rate at grant date of zero-coupon United States Treasury Notes with a term equal to the expected term of the SAR. Expected volatility is estimated using historical volatility. Due to the lack of trading history of Embecta's stock at the time of valuation efforts, the historical component of expected volatility is based on historical monthly price changes of the peer group within the industry. BD's historical data for Embecta employees was used to estimate equity award exercise and employee termination behavior within the valuation model. The expected term represents the amount of time that SARs granted are expected to be outstanding based on historical and forecasted exercise behavior. The weighted average fair value of SARs was determined using the following assumptions:

Risk-free interest rate 2.5 %

Expected volatility 37.8 %

Expected dividend yield 2.9 %

Expected life 6.5

Fair value per SAR $ 9.38

A summary of SARs outstanding as of September 30, 2024 and changes during the fiscal year then ended is as follows:

Forfeited, canceled or expired (71.3) $ 27.70

Vested and expected to vest at September 30 1,709.7 $ 29.09 6.7 $ —

A summary of SARs exercised during the fiscal years 2023 and 2022 is as follows:

Total intrinsic value of SARs exercised $ 0.3 $ 0.1

Total fair value of SARs exercised $ 0.6 $ 6.1

Unrecognized Compensation Expense and Other Stock Plans

The amount of unrecognized compensation expense for all non-vested stock-based awards as of September 30, 2024, is approximately $29.5 million, which is expected to be recognized over a weighted-average remaining life of approximately 1.7 years. At September 30, 2024, 2.7 million shares were authorized for future grants under the Plan.

Note 11 — Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets consisted of:

Amortized intangible assets

Less: accumulated amortization (5.1) (4.5)

Patents – net $ 5.7 $ 6.1

Customer Relationships and Other – gross 4.8 $ 5.2 $ 5.4

Less: accumulated amortization (2.8) (2.4)

Customer Relationships and Other – net $ 2.4 $ 3.0

Total amortized intangible assets $ 8.1 $ 9.1

Total Goodwill and Other Intangible Assets $ 23.7 $ 24.7

Intangible asset amortization expense was $1.1 million for the fiscal year ended September 30, 2024, $1.2 million for the fiscal year ended September 30, 2023 and $0.7 million for the fiscal year ended September 30, 2022, respectively. The estimated intangible asset amortization expense for each of the fiscal years ended September 30, 2025 through 2029 is expected to approximate $1.1 million per year and $2.8 million for fiscal years subsequent thereafter.

Note 12 — Cloud Computing Arrangements

Capitalized costs to implement cloud computing arrangements and accumulated amortization were as follows:

Short-term portion $ 10.2 $ —

Total Capitalized implementation costs $ 70.8 $ 38.0

Less: accumulated amortization (6.3) —

Total Capitalized implementation costs, net $ 64.5 $ 38.0

Costs amortized during the fiscal year ended September 30, 2024 were $6.3 million, and are included in Other operating expenses. For the fiscal years ended September 30, 2023 and 2022 there were no costs recognized related to the implementation of these cloud computing arrangements due to the timing of when these projects were placed into service. As of September 30, 2024, cloud computing arrangement assets in-service have remaining useful lives which range from approximately two to eight years.

Note 13 — Long-Term Debt

5.00% Senior Secured Notes due 2030

On February 10, 2022 Embecta issued $500.0 million aggregate principal amount of 5.00% senior secured notes due February 15, 2030 (the “5.00% Notes”). Interest payments on the 5.00% Notes are due semi-annually in February and August until maturity.

6.75% Senior Secured Notes due 2030

On March 31, 2022, Embecta issued $200.0 million of 6.75% Related Party Notes at a discount of $3.0 million. The Related Party Notes issued to BD were not issued for cash and instead were subject to a debt-for-debt exchange which occurred on April 1, 2022. As such, the issuance of the Related Party Notes is a non-cash financing activity and is not presented in the Consolidated Statements of Cash Flows for the fiscal year ended September 30, 2022.

On April 1, 2022, BD transferred the Related Party Notes with a notional value of $200.0 million issued by Embecta to Morgan Stanley in exchange for certain notes of BD that were purchased by Morgan Stanley pursuant to a tender offer. Morgan Stanley then sold the senior secured notes to qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act of 1933, as amended. As of April 1, 2022, the 6.75%senior secured notes (the "6.75% Notes") became third party debt of Embecta. Interest payments on the 6.75% Notes are due semi-annually in February and August until maturity. The 6.75% Notes will mature on February 15, 2030.

Credit Agreement

On March 31, 2022, Embecta entered into a credit agreement (the “Credit Agreement”), providing for:

•a Term Loan B Facility (the "Term Loan") in the amount of $950.0 million, with a seven-yearterm that matures in March 2029. The interest rate is 300 basis points over the secured overnight financing rate (“SOFR”), with a 0.50% SOFR floor. The Term Loan was issued at a discount of 0.50%. Principal and interest payments on the Term Loan commenced on June 30, 2022. Such quarterly principal payments are calculated as 0.25% of the initial principal amount, with the remaining balance payable upon maturity. Per the terms of the Credit Agreement, the Company may from time to time voluntarily prepay the Term Loan in whole or in part without premium or penalty subject to certain exceptions.

•a Revolving Credit Facility (the "Revolving Credit Facility") in an aggregate principal amount of up to $500.0 million, with a five-year term that matures in 2027. Borrowings under the Revolving Credit Facility bear interest, at Embecta’s option, at an annual rate equal to (a) in the case of loans denominated in United States dollars (i) the SOFR or (ii) the alternate base rate or (b) in the case of loans denominated in Euros, the EURIBOR rate, in each case plus an applicable margin specified in the credit agreement. A commitment fee applies to the unused portion of the Revolving Credit Facility, equal to 0.25% per annum. As of September 30, 2024, no amount has been drawn on the Revolving Credit Facility.

The Credit Agreement and the senior secured notes are secured by substantially all assets of Embecta and each subsidiary guarantor, subject to certain exceptions.

The Credit Agreement and the indentures for Embecta's outstanding 5.00% Notes and 6.75% Notes contain customary financial covenants, including a total net leverage ratio covenant, which measures the ratio of (i) consolidated total net debt to (ii) consolidated earnings before interest, taxes, depreciation and amortization, and subject to other adjustments, must

meet certain defined limits which are tested on a quarterly basis in accordance with the terms of the Credit Agreement and the 5.00% Notes and 6.75% Notes. In addition, the Credit Agreement contains covenants that will limit, among other things, Embecta’s ability to prepay, redeem or repurchase its subordinated and junior lien debt, incur additional debt, make acquisitions, merge with other entities, pay dividends or distributions, redeem or repurchase equity interests, and create or become subject to liens.

The following is a summary of Embecta's total debt outstanding as of September 30, 2024:

Total principal debt issued $ 1,601.3

Less: current debt obligations (9.5)

Less: debt issuance costs and discounts (26.5)

The debt issuance costs on the Term Loan, 5.00% Notes, 6.75% Notes and the discount on the Term Loan are reported in the Consolidated Balance Sheets as a reduction of debt and are amortized as a component of Interest expense, net over the term of the related debt using the effective interest method.

In September 2024, the Company made a discretionary prepayment of $25.0 million on the Term Loan. Debt extinguishment charges as a result of this prepayment were not material to the Company's Consolidated Statements of Income.

The Company made interest payments of $117.7 million related to its debt outstanding during the fiscal year ended September 30, 2024.

The schedule of principal payments required on long-term debt for the next five fiscal years and thereafter is as follows: