Certain Factors Affecting Forward-Looking Statements

References in this section to "embecta" refer to embecta Corp. as defined in the Condensed Consolidated Financial Statements included within this report.

We primarily sell our products to wholesalers and distributors, which in turn sell such products to customers in primarily retail and institutional channels.

Prior to the Separation, the Company was referred to as the Diabetes Care Business. For periods prior to April 1, 2022, the Condensed Consolidated Financial Statements included certain assets and liabilities that were historically been held at the BD corporate level but are specifically identifiable or otherwise allocable to the Diabetes Care Business.

COVID-19 Pandemic Impacts and Response and Global Economic Conditions

•the extent to which resurgences in COVID-19 infections or new strains of the virus, result in the imposition of new governmental lockdowns, quarantine requirements or other restrictions that may disrupt our operations;

•the effectiveness of vaccines and vaccination efforts.

Our unaudited Condensed Consolidated Statements of Income are as follows:

Three Months Ended June 30, 2022 Summary (on a comparative basis)

Key GAAP financial results for the three months ended June 30, 2022 were as follows:

•Revenue decreased by $3.9 million to $291.1 million from $295.0 million;

•Gross profit increased by $0.3 million to $202.9 million from $202.6 million. Gross profit as a percent of revenue was 69.7%, as compared to 68.7% in the prior year comparative period;

•Operating income decreased by $27.2 million to $97.1 million from $124.3 million; and

•Net income decreased by $42.3 million to $62.4 million from $104.7 million.

Key Non-GAAP financial results for the three months ended June 30, 2022 were as follows:

•Constant Currency Revenues increased by 2.0%;

•EBITDA decreased by $32.6 million to $102.2 million from $134.8 million; and

•Adjusted EBITDA decreased by $25.7 million to $117.9 million from $143.6 million.

Nine Months Ended June 30, 2022 Summary (on a comparative basis)

Key GAAP financial results for the nine months ended June 30, 2022 were as follows:

•Revenue decreased by $9.6 million to $854.9 million from $864.5 million;

•Operating income decreased by $62.2 million to $312.6 million from $374.8 million; and

•Net income decreased by $77.1 million to $240.8 million from $317.9 million. Dollar amounts are in millions except per share amounts or as otherwise specified.

Key Non-GAAP financial results for the nine months ended June 30, 2022 were as follows:

•Constant Currency Revenues increased by 0.8%;

•EBITDA decreased by $75.2 million to $332.7 million from $407.9 million; and

•Adjusted EBITDA decreased by $60.7 million to $372.7 million from $433.4 million.

Please see a description of our Non-GAAP Financial Measures below.

Revenues by geographic region are as follows:

Our selling and administrative expenses increased by $43.4 million, or 25.6%, to $212.9 million for the nine months ended June 30, 2022 as compared to $169.5 million for the nine months ended June 30, 2021.

The increase for both the three and nine month comparative periods were primarily driven by an increase in compensation and benefit costs due to increased headcount and to a lesser extent increases in marketing and advertising spend both attributed to the Separation and embecta becoming a stand-alone publicly-traded company.

Research and development expenses decreased by $1.4 million, or 8.9%, to $14.3 million in the third quarter of 2022 as compared to $15.7 million in the third quarter of 2021.

Our research and development expenses increased by $6.6 million, or 11.9%, to $49.0 million for the nine months ended June 30, 2022 as compared to $43.8 million for the nine months ended June 30, 2021.

The decrease for the three month comparative period was primarily driven by timing of research and development projects. The increase for the nine month comparative period was primarily driven by increased investment in the development of new products, specifically our insulin patch pump.

Other income (expense), net, decreased by $4.6 million to $(4.0) million in the third quarter of 2022 as compared to $0.6 million in the third quarter of 2021.

The decrease for the three and nine month comparative periods was mainly driven by amounts due to BD for tax liabilities incurred in deferred jurisdictions where BD is considered the primary obligor.

Dollar amounts are in millions except per share amounts or as otherwise specified.

For the three and nine month periods ended June 30, 2022, the reconciliation of net income to EBITDA and adjusted EBITDA was as follows:

(3)Relates to impairment charges incurred during fiscal year 2021. Refer to the Cost of products sold section above.

For the three and nine months ended June 30, 2022, the reconciliation of revenue growth to Constant Currency was as follows:

redeem or repurchase equity interests, and create or become subject to liens. As of June 30, 2022, we were in compliance with all of such covenants.

Less: debt issuance costs and discounts (38.9) Long-term debt

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

Maturities of our Holdrege finance lease and other operating lease liabilities as of June 30, 2022 by fiscal year are as follows:

On April 1, 2022, the Company entered into a real estate lease for a new Corporate Headquarters located in Parsippany, NJ that has not yet commenced. The lease is expected to commence during the first half of fiscal year 2023.

Access to Capital and Credit Ratings

Net Cash Flows from Operating Activities

The increase in inventories can primarily be attributed to the timing of capitalized variances as well as higher inventory on hand as of period end compared to prior year.

Net Cash Flows from Investing Activities

Net Cash Flows from Financing Activities

Net cash used for financing activities for the nine months ended June 30, 2021, represents net transfers entirely to BD (see Note 3 to the Condensed Consolidated Financial Statements included elsewhere in this report).

Cautionary Statements Regarding Forward-Looking Statements

•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.

•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.

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

•Any impact of the COVID-19 pandemic on embecta's business, including disruptions in its operations and supply chains. Dollar amounts are in millions except per share amounts or as otherwise specified.

•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.

•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, procedures and controls, diversion of management's attention and the impact on relationships with customers, suppliers, employees and other business counterparties.

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