Embecta Corp. (EMBC) shares tumbled 7.79% in pre-market trading on Tuesday following the release of its fourth-quarter fiscal 2025 results and initial fiscal year 2026 guidance. The diabetes care company's performance and outlook fell short of analyst expectations, prompting the significant sell-off.
For the fourth quarter, Embecta reported revenue of $264 million, missing the consensus estimate of $265.7 million. The company's adjusted earnings per share came in at $0.50, also below the expected $0.54. The revenue decline of 7.7% year-over-year was attributed to several factors, including advanced distributor ordering in previous quarters and ongoing business challenges in China.
Despite the revenue miss, Embecta did show some positive signs in its operational performance. The company's adjusted EBITDA for Q4 was $89.9 million, surpassing analyst estimates and indicating strong cost management. Additionally, Embecta reported higher GAAP operating margin and net income compared to the previous year.
However, the company's guidance for fiscal year 2026 appears to have disappointed investors. Embecta expects fiscal 2026 revenue between $1,071 million and $1,093 million, with adjusted earnings per share projected at $2.80 to $3.00. While the revenue guidance is in line with analyst expectations of $1.08 billion, the earnings outlook suggests potential challenges ahead.
The pre-market plunge reflects investor concerns about Embecta's growth prospects and ability to navigate the competitive diabetes care market. As the company continues to focus on operational efficiency and debt reduction, it remains to be seen how quickly it can return to a growth trajectory and improve investor confidence.
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