Embecta (EMBC) risk factors, FY2024 10-K

Risks Related to Embecta’s Business

1. 01The medical technology industry is very competitive
2. 02which may have greater financial and marketing resources than Embecta in the United States or other markets, as well as smaller, more specialized companies
3. 03Embecta generates a significant amount of its profits and cash flows from a few key products, and any events that adversely affect the sale or profitability of these products could have an adverse impact on Embecta’s sales, results of operations and cash flows
4. 04Technological breakthroughs in diabetes treatment or prevention may reduce demand for Embecta’s products
5. 05Embecta may experience difficulties and delays in the manufacturing of its products or sterilization operations, and any such difficulties and delays could adversely affect Embecta’s business
6. 06Embecta may enter into strategic collaborations, in-licensing arrangements or alliances with third parties that may not result in the development of commercially viable products or the generation of revenue
7. 07Embecta’s sales and marketing efforts rely upon independent distributors that are free to market products that compete with Embecta’s products, and if Embecta is unable to maintain or expand its network of independent distributors, its business could be materially adversely affected
8. 08Embecta’s future growth is dependent in part upon the development of new products, and there can be no assurance that such products will be developed or be successful
9. 09Embecta’s failure to maintain strong relationships with physicians and other healthcare professionals could adversely affect its business
10. 10Embecta may not be able to successfully execute its acquisition strategy, which could adversely affect its financial condition and results of operations
11. 11Embecta’s international operations subject it to certain business risks
12. 12Embecta’s business and operations are subject to risks related to climate change
13. 13Embecta's business could be negatively impacted by evolving regulations, policies and expectations relating to ESG initiatives, setting related goals, collecting data and disclosing related information
14. 14Foreign currency exchange rate, inflation, commodity price, energy and oil prices and supply, and interest rate fluctuations may adversely affect Embecta’s financial condition and results of operations
15. 15Fluctuations in Embecta’s effective tax rate and changes to tax laws may adversely affect it
16. 16If Embecta fails to protect its intellectual property or proprietary technology, such failure could adversely affect its business and results of operations
17. 17Embecta’s products or processes may infringe the intellectual property rights of others, which may cause Embecta to pay unexpected litigation costs, damages, or settlement fees (including royalties) or prevent Embecta from selling its products
18. 18Breaches of Embecta’s information systems and cyberattacks aimed at accessing Embecta’s devices, products and services or related devices, products and services could have a material adverse effect on its operations
19. 19Embecta needs to attract and retain key employees to be competitive
20. 20Embecta’s business may be adversely affected by work stoppages, union negotiations and labor disputes
21. 21Embecta is subject to extensive regulation
22. 22Healthcare reform may have a material adverse effect on Embecta’s financial condition and results of operations
23. 23Once a medical device is permitted to be legally marketed in the United States pursuant to a 510(k) clearance, a manufacturer may be required to notify the FDA of certain modifications to the device
24. 24Embecta may be subject to enforcement actions if it engages in improper marketing or promotion of its products
25. 25A disruption at one of Embecta's facilities could adversely affect our business and operating results
26. 26Insurance coverage may be inadequate or unavailable to cover any product liability losses Embecta incurs
27. 27Embecta is subject to a number of restrictive covenants under its indebtedness, including customary operating restrictions and financial covenants, which could restrict Embecta's ability to pay dividends or adversely affect its financing options and liquidity position
28. 28conditions, could affect Embecta's ability to satisfy applicable financial covenants, and Embecta cannot assure you that it will satisfy them
29. 29Embecta is subject to risks associated with public health threats, such as pandemics, which could have a material adverse effect on Embecta's financial condition and results of operation

Risks Related to the Separation from BD

1. 30Embecta has a limited history of operating as an independent company, and its historical financial information may not be a reliable indicator of its future results
2. 31Since the Separation, Embecta’s financial profile has changed, and it is a smaller, less diversified company than BD prior to the Separation
3. 32Embecta may not achieve some or all of the expected benefits of the Separation
4. 33Embecta currently has approximately $1,601 million in aggregate principal amount of indebtedness outstanding as of September 30, 2024 (not including undrawn commitments of $500 million under its revolving credit facility). Embecta may also incur additional indebtedness in the future
5. 34Embecta may be affected by significant restrictions under the tax matters agreement, in order to avoid triggering significant tax-related liabilities
6. 35Embecta may be held liable to BD if it fails to perform under its agreements with BD, and the performance of such services may negatively affect Embecta’s business and operations
7. 36Embecta’s agreements with BD may be on terms that are less beneficial to Embecta than the terms may have otherwise been from unaffiliated third parties
8. 37The closing of the Separation was deferred in certain jurisdictions, and may not occur at all in such jurisdictions, due to local regulatory requirements, which may adversely affect Embecta’s business, financial condition and results of operations
9. 38Satisfaction of indemnification obligations could have a material adverse effect on Embecta’s financial condition, results of operations and cash flows

Risks Related to Embecta Common Stock

1. 39The price of Embecta common stock may fluctuate significantly, and stockholders could lose all or part of their investment in Embecta
2. 40Your percentage of ownership in Embecta may be diluted in the future
3. 41As a result of this material weakness, management concluded that our internal control over financial reporting was not effective as of September 30, 2024. As described in Item 9A of this Annual Report on Form 10-K, we are implementing additional controls intended to remediate the material weakness
4. 42Embecta cannot guarantee the timing, amount or payment of dividends on its common stock
5. 43Anti-takeover provisions could enable Embecta’s Board of Directors to resist a takeover attempt by a third-party and limit the power of its stockholders
6. 44Embecta’s amended and restated certificate of incorporation designates the state courts within the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by Embecta stockholders, which could discourage lawsuits against Embecta and its directors and officers