Embecta (Nasdaq:EMBC) shares rose this morning as it increased its full-year guidance and shared an update on its automated insulin delivery technology.
The company also reported third-quarter results that came in ahead of the consensus forecast.
Shares of EMBC ticked up 3.1% at $22.27 apiece in early-morning trading today. MassDevice’s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — remained unchanged.
Since its spinoff from BD last year, Embecta says it continues to make progress on the development of a closed-loop insulin delivery system for type 2 diabetes. The system utilizes its proprietary patch pump system, which holds FDA breakthrough device designation.
Additionally, Embecta has an ongoing collaboration with Tidepool on automated insulin delivery. The companies commenced engineering work to integrate Tidepool’s insulin dosing algorithm with the patch pump to develop a closed-loop system. They also initiated a small observational study to analyze type 2 diabetes patients using Tidepool’s algorithm.
The rest of the financial results for Embecta
The Parsippany, New Jersey-based diabetes technology company posted profits of $15.2 million in the quarter. That equals 26¢ per share on sales of $286.1 million for the three months ended June 30, 2023.
Embecta recorded a 75.6% bottom-line slide on a sales decline of 1.7%.
Adjusted to exclude one-time items, earnings per share totaled 69¢. That landed 23¢ ahead of projections on Wall Street, where analysts expected $275.1 million in revenue.
“Having completed nearly a year and a half as an independent, publicly-traded company, we continue to make significant progress in building an organization well-positioned to advance our mission to develop and provide solutions that make life better for people living with diabetes,” said Devdatt (Dev) Kurdikar, CEO of Embecta. “We remain steadfast in our focus on three strategic priorities: strengthening our base business, separating and standing up Embecta as an independent company, and investing for growth. While executing against initiatives in each of these areas, we continued to deliver quarterly financial results that exceeded our expectations.
“With strong year-to-date performance, we are tightening and raising our fiscal 2023 outlook for our key financial metrics.”
Embecta now projects revenues between $1.107 billion and $1.113 billion. It tightened the low end of the previous forecast for $1.101 billion to $1.113 billion. It raised both ends of its adjusted EPS guidance from $2.50 to $2.60 up to $2.75 to $2.80.
The analysts’ view
BTIG analysts Marie Thibault and Sam Eiber wrote in a report that they like Embecta’s “consistent earnings track record.” They also look positively upon the company’s geographic diversity, cash flow and dividend payments.
However, they maintain a “Neutral” rating for a number of reasons, including flat total sales growth and a lack of detail on catalysts. Additionally, positive study results for a diabetes drug from Novo Nordisk “may add to noise around the GLP-1 drug class.” They said that applies pressure on Embecta’s shares.
The analysts still say a large funnel of patients needing insulin should continue growing as emerging markets won’t have access to the drug class for years.
“We view EMBC as a value story that is undertaking a multiyear transition to a growth play, as the company is making long-term investments in commercial programs and R&D initiatives,” the analysts wrote.