Embecta Corp.

ladies and gentlemen, to the fiscal third quarter 2024 Imbecta earnings conference call. At this time, all participants have been placed in a listen-only mode. Please note that this conference call is being recorded, and the recording will be available on the company's website for replay following the completion of this call. I would now like to hand the conference call over to your host today, Mr. Pravesh Kandilwal, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone. and welcome to MBECTA's fiscal third quarter 2024 earnings conference call. The press release and slides to accompany today's call and webcast replay details are available on the investor relations section of the company's website at www.mbecta.com. With me today are Dev Kodekar, MBECTA's president and chief executive officer, and Jake Alguiz, our chief financial officer. Before we begin, I would like to remind you that some of the matters discussed in the conference call will contain forward-looking statements regarding future events as outlined in our slides. We wish to caution you that such statements are, in fact, forward-looking in nature and are subject to risks and uncertainties, and actual events or results may differ materially. The factors that could cause actual results or events to differ materially include, but are not limited to, factors referenced in our press release today, as well as our filings with the SEC, which can be accessed on our website. In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered a supplement to and not a substitute for financial measures prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in our press release and conference call presentation. Our agenda for today's call is as follows. Dev will begin by providing some remarks on the overall performance of our business during the fiscal third quarter of 2024, as well as an overview of our strategic priorities. Jake will then provide a more in-depth review of our Q3 financial results, as well as our updated financial guidance for the year. We will then open the call for questions. With that said, I would now like to turn the call over to our CEO, Dev Godekar. Dev?

Good morning, and thank you for taking the time to join us. Let's start with slide five, where you will see the three strategic priorities that we have executed in our spin-off in April of 2022. First, we continue to strengthen our base business while maintaining our global leadership position in the category of insulin injection devices. Second, we have made significant progress in our separation and stand-up activities necessary to establish ourselves as an operationally independent company. And finally, we continue to invest for growth, most notably around our insulin patch form program that is being developed for the Type 2 market, as well as seeking M&A and additional partnership opportunities. I am proud of the significant progress we have made within each of these goals. Turning to some third quarter highlights. During the third quarter, our team's disciplined execution led to financial results that were aligned with our prior expectations. we generated revenue of approximately $272.5 million, which represented a decrease of 4.8% on an as reported basis and a decrease of 3.9% on a constant currency basis. When normalizing for the transient contract manufacturing revenue that we generate based on the sales of non-diabetes products to our former parent, our constant currency core injection business revenue declined by 4.1%, as compared to the prior year period. While our revenue during the third quarter was lower year over year on a constant currency basis, this was something that we had expected and highlighted on our second quarter earnings call and was primarily due to inventory rebalancing that occurred with some of our distributors following the ERP implementation that occurred during the first six months of our fiscal year. On a year-to-date basis, our core injection business has remained stable, growing 0.4% on a constant currency basis. Over the past year, much news has come out regarding GLP-1 and the impact they might have on people with diabetes and insulin delivery. Based on what we have seen over the past several years, our view is that while GLP-1s may delay the onset of becoming insulin-dependent, they do not eliminate the need for insulin. In fact, as the method of GLP-1 administration continues to evolve over the next several years, from the use of an auto-injector to that of a pen injector, which requires a pen needle, we expect that we will stand to benefit. To that end, we have identified an opportunity to introduce a new small pack pen needle product that can be used for GLP-1 administration. We intend to first come to market with this product in Germany within the next several months and eventually expand this product offering to other countries in the future. We believe this will help meet the needs of the growing number of people using pens and therefore pen needles for GLP-1 administration. Turning to separation activities. I'm pleased to report that we made significant progress in the implementation of our own ERP system operationalization of our own distribution network, and shared services capabilities. Now, our systems and capabilities are operational in regions which cover approximately 93% of our revenue base. Looking ahead, with the exception of a few deferred closing jurisdictions, we remain on track to complete all ERP implementations, distribution network, and shared service separation activities by early fiscal year 2025. Once these implementations are complete, the only remaining separation program will be brand transition, which entails changing the product packaging from BD's brand to ours. We have been planning this transition since the spin-off, and we intend for the execution of this program to begin in phases during fiscal year 2025. Notably, we are not changing the product names or color schemes associated with our packaging. This is important. as people with diabetes will continue to experience the same look and feel on our boxes that they have been accustomed to for many years. Regarding our insulin patch pump program, we continue to progress on the open-loop patch pump. As a reminder, we submitted a 510K application to the FDA in December of 2023, and earlier this year, we received questions from the FDA concerning that application. We have since responded with the necessary data and await feedback from the FDA. We will continue to provide updates to the investment community on the progress regarding our insulin patch pump at the appropriate times. Relating to our objective of entering the infusion pump market, we also sponsored two abstracts at the American Diabetes Association 84th Scientific Sessions. that point to the potential for adults with type 2 diabetes to better manage insulin delivery through a patch pump with a larger 300-unit insulin reservoir, which could provide longer wear times and fewer disposable patches over time. The DAD app presented reaffirms what we've learned from speaking with people living with diabetes and their healthcare providers and validates our thesis that there is a critical unmet need among the type 2 diabetes population for pumps with a larger insulin reservoir. So, to summarize, we had another good quarter of results, and based on the year-to-date performance, as well as our expectations for the remainder of the fiscal year, we are again raising and tightening our guidance range for key financial metrics while reaffirming our revenue guidance range. now let's review our third quarter and year-to-date revenue performance in a bit more detail as i mentioned before during q3 we generated revenue of 272.5 million dollars which represented a decrease of 4.8 percent on an as reported basis and a decrease of 3.9 percent on a constant currency basis or 4.1% when normalizing for the impact of year-over-year changes in the revenue of the non-diabetes products that we contract manufacture and sell to BD. Within the US, during the quarter, revenue totaled $143.6 million, which represented year-over-year decline of approximately 6.7% on a constant currency basis. When normalizing for year-over-year contract manufacturing revenue, Our underlying Q3 constant currency revenue decline within the U.S. was approximately 7.3%. The lower revenue within the U.S. was expected and was primarily due to distributors normalizing their inventory levels after making advanced purchases ahead of our ERP implementation, as well as our annual price increase that went into effect on April 1st. This volume decline was partially offset by favorable price and gross to net adjustments. Turning to our international business, during Q3, revenue totaled $128.9 million, which equated to a year-over-year constant currency decline of 0.6%. Like the US, the decline in constant currency revenue within international this quarter was expected and was primarily due to the timing of advanced purchases that customers made in advance of our ERP implementation. Importantly, through all separation activities that occurred during fiscal year 2024, our core injection business remained stable, growing 0.4% year-to-date on a constant currency basis. That completes my prepared remarks, and with that, let me turn the call over to Jake to take you through the third quarter financial results as well as our updated full year financial guidance in more detail. Jake?