Embecta Corp. (NASDAQ:EMBC) reported better-than-expected fourth-quarter earnings on Tuesday, posting improved profitability even as sales declined. Shares edged up 0.75% in premarket trading after the release.
For the quarter ending September 30, Embecta delivered adjusted earnings of $0.50 per share, surpassing analyst expectations of $0.46. Revenue totaled $264 million — just under the $265.66 million consensus and down 7.7% from a year earlier.
The drop in revenue largely matched what the company had signaled in advance, tied to several timing-related factors: elevated distributor orders in the prior-year period ahead of a potential U.S. port strike, similar advance ordering in Q3 FY25 ahead of the July 4 holiday, and continued headwinds in China.
“In terms of profitability, our GAAP operating margin and net income were higher year over year, and we exceeded our previously provided fiscal year 2025 adjusted operating and adjusted EBITDA margin ranges,” said CEO Devdatt Kurdikar. Embecta reported an adjusted operating margin of 25.3%, up from 21.1% a year earlier.
In the U.S., revenue declined 15.2% on both a reported and adjusted basis. International revenue rose 2.8% on a reported basis but slipped 4.0% when adjusted for constant currency.
Looking ahead, Embecta expects fiscal 2026 revenue between $1.07 billion and $1.09 billion, consistent with Wall Street’s $1.08 billion outlook. The company anticipates adjusted EPS of $2.80 to $3.00, compared with consensus expectations of $2.92.
Embecta also emphasized progress in reducing leverage. The company paid down roughly $72.4 million in debt during the quarter and $184.5 million over the full fiscal year — well above its initial $110 million target. Free cash flow for the quarter totaled about $77 million.
“Fiscal year 2025 marked the completion of the first phase of our strategic roadmap: one focused on major separation and stand-up activities,” Kurdikar said. “We also initiated the second phase: seeding growth. By focusing on operational efficiency and executing restructuring, we were able to accelerate debt reduction and decrease our net leverage, creating additional financial flexibility for our goal to invest in growth.”
Embecta also declared a quarterly dividend of $0.15 per share.