Embecta to Cease Insulin Patch Pump Program, Begins Restructuring

Embecta, a diabetes care company, revealed in its Q4 2024 and full-year financial results (ended September 30, 2024) that it would be discontinuing its insulin patch pump program and begin an organizational restructuring plan.

“We believe this approach will streamline operations, reduce costs and enhance our profitability and free cash flow profile,” said said Devdatt (Dev) Kurdikar, CEO of embecta. “We intend to concentrate our resources on our core business and to prioritize our free cash flow towards paying down debt which we expect will give us the financial flexibility needed for future investments.”

In September, the company won a U.S. Food and Drug Administration (FDA) nod for a disposable, tubeless insulin patch pump. The device is indicated for adults who need insulin to manage diabetes, including both type 1 and type 2.

The company said it expects to incur $35-45 million in pre-tax charges in fiscal year 2025 related to the restructuring plan. This includes charges for planned workforce reductions, asset impairments, write-offs, and other associated costs from the patch pump program’s discontinuation.

Embecta expects the restructuring to be completed during H1 2025. Cost savings of $60-65 million are anticipated due to the patch pump program’s cease.

Q4 and full-year 2024 results

Embecta posted reported revenues of $286.1 million in its Q4 2024, up 1.5% over the prior year’s quarter. U.S. revenues ascended 10.3% during this period and international proceeds dropped 8.8%—both on a reported basis.

Gross profit and margin were $173.8 million and 60.7%, compared to $181.8 million and 64.5% in the prior year period. Operating income and margin were $26.2 million and 9.2%, compared to $25.8 million and 9.2% in FY 2023.

For the full year, embecta reported $1.12 billion in sales, which were flat at 0.2%. U.S. revenues grew a slight 1% and international revenues declined 0.7% for the year, both on a reported basis. Gross profit and margin were $735.2 million and 65.5%, compared to $749.9 million and 66.9% in the prior year period.

The increase in revenues was mainly driven by $27.7 million related to 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 the 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.

“We are pleased to report a strong fourth quarter and end to our fiscal year, as we once again delivered results that exceeded our expectations across key financial metrics,” said Kurdikar. “We continued to execute on our strategic priorities, and to date, our significant accomplishments include the successful transition of approximately 98% of our revenue to our own ERP system, shared service capabilities, and distribution infrastructure, with India remaining as our only deferred market. Additionally, the recent launch of our small-pack GLP-1 needles in Germany has gone well, and we are evaluating expanding into other markets.”