Financial Times reports that Embecta (Nasdaq:EMBC), the former diabetes unit at BD, hired advisers to look into a possible sale of the company.
Shares of EMBC ticked up 16.5% to $15.34 apiece in early-morning trading today.
The company has operated as a standalone, publicly-traded company since April 2022, when it completed its spin-off from BD. Since then, the company has touted growth potential, with eyes on the GLP-1 market and even progress for insulin delivery technology.
Embecta’s open-loop insulin patch pump technology currently remains under FDA review. The company’s closed-loop insulin delivery system for type 2 diabetes, which has FDA breakthrough device designation, continues to move forward, too.
However, FT reports that two people familiar with the matter say the company enlisted advisers from Centerview Partners to guide a possible sale of the business. According to the report, underperforming shares in the two years since the spin represent the driving factor behind the exploration of a sale.
The report described Embecta as a potentially attractive target for private equity — a growing trend in medtech. Medtech companies, including Medtronic and Baxter, previously looked to private equity for spinoff and separation opportunities. Firms also make significant investments, like one in Medline years ago. Earlier this year, Surmodics sold to a private equity firm, too.
FT says the sale is not certain at this point, but analysts say the suggestion doesn’t come as a shock.
“While we do not know whether the report is true, we are not surprised by the suggestion,” wrote BTIG’s Marie Thibault and Sam Eiber. “Earlier this year, EMBC’s stock price fell nearly 50% between January and May, though there was little new news to explain the weakness.”
The analysts attribute the possible sale to investor uncertainty around a number of things, including GLP-1s and patch pump competition. Lack of sales growth is another area of concern, they said, but they still “see plenty to like about Embecta as an asset.”
“While underscoring that we do not know if the Financial Times report is true, we think [Embecta] could be appealing to private equity or companies evaluating a broader reach, scale and manufacturing capabilities in medical supplies, diabetes or drug delivery, among others.”
