Embecta Pumps the Brakes on Insulin Patch Pump Program

One of the diabetes market’s newest spinoffs is set to undergo a significant change. Embecta, which was spun out of Becton Dickinson in April of 2022, is instituting a restructuring plan that includes exiting the insulin patch pump program.    

The measure comes as the Readers’ Choice for 2022 Company of the Year, reported beating expectations in 4Q24 on adjusted revenue, margins, and earnings per share while setting FY2025 preliminary adj. EBITDA and adj. EPS guidance well ahead of expectations. 

In a prepared statement Embecta's CEO, Devdatt Kurdikar said, “As our stand-up work nears completion and following an in-depth review of our portfolio and strategy, we have decided to discontinue our insulin patch pump program and initiate an organizational restructuring plan. We believe this approach will streamline operations, reduce costs, and enhance our profitability and free cash flow profile. 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."

The Parsippany, NJ-based company expects the restructuring plan to be substantially complete during the first half of fiscal year 2025 and expects the discontinuation of the patch pump program and organizational restructuring plan to generate annualized pre-tax cost savings of between $60 million and $65 million.

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Marie Thibault, a BTIG analyst, wrote in a research note that ending the insulin patch program was something many investors … “wanted to see, as there was skepticism about the attractiveness of this market for Embecta and the level of spending needed to compete effectively.”

Thibault went on to write, “We expect Embecta shares to move higher in Tuesday trading since this move should allow the company to focus on free cash flow generation and redirect investments in the patch pump program to paying down debt and perhaps evaluating capital allocation initiatives offering more near-term return on investment.”

Shares of EMBC were up a little more than 30% on Tuesday, trading at $18.75.

The discontinuation of Embecta’s patch pump program and the restructuring plan comes a few months after the Financial Times reported the company was exploring a potential sale. According to the article, Embecta’s "lackluster" stock performance, low market value, and similarity to other companies that have recently attracted buyout interest could make it a good acquisition candidate.