2023 trends:
Embecta raised its revenue and earnings forecasts for 2023 after the diabetes-device maker, which separated from Becton Dickinson last year, posted better-than-expected results in the first quarter on higher sales at its international business.
“Financial performance in the first fiscal quarter ... exceeded our initial expectations,” in a “challenging” market, and leading the firm to raise guidance for the full year, CEO Dev Kurdikar said in a statement on Tuesday.
"During fiscal year 2023, we remain focused on three key strategic priorities: strengthening our base business, separating and standing up Embecta as an independent company, and investing in growth,” Kurdikar added.
For its 2023 fiscal year, the company expects revenue of $1.08 billion to $1.11 billion, an increase from its previous forecasted range of $1.05 billion to $1.07 billion. It also raised its forecast for adjusted earnings per share to $2.20 to $2.35, from its previous estimates of $1.75 to $2, and boosted its estimate for adjusted operating margin to 26.5% from 25%.
The new forecast includes “several assumptions,” BTIG analyst Marie Thibault wrote in a research note, including that the company’s revenue strength outside of the U.S. continues, that gross margins will benefit from inventory revaluation and that its operating spending will increase.
“Despite blowing past expectations for F1Q and raising the FY23 guide,” Embecta’s management said that “nothing major had changed” to affect the company’s pre-spinoff outlook for fiscal year 2024 margins, Thibault added.
Q1 results:
For its fiscal first quarter, Embecta exceeded internal revenue estimates by about $14 million, CFO Jake Elguicze said in a Tuesday investor call. Elguicze attributed about $6 million of that to the strength of Embecta’s international business, and about $2 million to better than expected foreign exchange rates.
The company reported a decline in gross profit and margins, which Elguicze said was primarily driven by inflation, low-margin contract manufacturing revenue that was not included in the prior year’s results and “incremental standup and separation costs.”
The CFO cautioned that results between the two quarters “are not meaningfully comparable” as Embecta’s Q1 2022 results were presented on a “carve-out basis” before the company was spun out of BD in April.
The company shared little detail about its planned insulin patch-pump product, which received a breakthrough designation from the Food and Drug Administration. Kurdikar told investors that the company’s “patent products program is progressing as we would expect,” and declined to comment on rival patch-pump maker Insulet’s recent patent purchase from Bigfoot Biomedical.
Embecta also announced a quarterly dividend of $0.15 per share. The stock has gained 15% since the market close on Monday and mid-morning trading on Wednesday.
