Inbecta at Jefferies Conference: Strategic Growth and Challenges

On Thursday, 05 June 2025, Inbecta Corp (NASDAQ:EMBC) presented at the Jefferies Global Healthcare Conference 2025, outlining its strategic roadmap post-spin-off from Becton Dickinson. The company, now operating independently, detailed its financial successes and future challenges, including a focus on debt reduction and new revenue streams, amid potential declines in its syringe segment.

Key Takeaways

• Inbecta anticipates generating $600 million in cumulative free cash flow through 2028.
• The company plans to pay down $450-500 million in debt by 2028, enhancing balance sheet flexibility.
• Strategic initiatives include partnerships for GLP-1 drugs and distribution agreements for new products.
• Operating margins may face pressure from tariffs and increased R&D expenses.
• Emerging markets are expected to grow at mid-single-digit rates, offsetting declines in core segments.

Financial Results

• Annual revenue is approximately $1 billion.
• The company exceeded initial revenue CAGR and adjusted EBITDA margin targets set for 2024.
• Free cash flow for 2025 is projected to be around $135 million.
• Debt reduction plans include at least $110 million by the end of 2025.
• Operating margins may decline by around 125 basis points from 2025 to 2028 due to tariffs and R&D investments.

Operational Updates

• Inbecta has completed its separation from Becton Dickinson, establishing independent ERP and distribution systems.
• The company is leveraging its manufacturing capabilities to expand into new medical supply areas.
• New distribution agreements have been signed for products like blood glucose monitors (BGMs) and insulin pumps.
• Partnerships with generic pharmaceutical companies are underway for pen needles used with GLP-1 injectors.
• R&D investments aim to achieve cannula independence, improving cost efficiency in the long term.

Future Outlook

• Revenue growth is expected to remain flat, driven by new products and GLP-1 market opportunities.
• Inbecta plans to expand its international presence, including in China.
• The company aims to significantly reduce debt, enhancing potential for mergers and acquisitions (M&A).
• Tariff exemptions could improve operating margins by 50 to 60 basis points.

Q&A Highlights

• The decline in the core injection business is attributed to the US syringe market and transition from non-diabetes products.
• Volume growth in emerging markets is expected to offset declines in developed markets.
• New revenue streams are anticipated to maintain overall flat growth.
• Negotiations with pharmaceutical companies for GLP-1 partnerships are progressing, with revenue expected in late 2025.
• The impact of tariffs is estimated at $9 million to $10 million annually, with potential mitigation through customer price increases.

Inbecta’s comprehensive strategy focuses on leveraging existing strengths while navigating industry challenges. For more details, refer to the full transcript below.

Full transcript - Jefferies Global Healthcare Conference 2025:

Mike Sarcone, Analyst, Jefferies: All right. Good afternoon, everyone. My name is Mike Sarcone. I’m an analyst on the US medical supplies and devices team here. And this is the last session for Jefferies twenty twenty five New York Healthcare Conference and this is a fireside chat with MBECTA.

And from the company we’ve got Jake Elgouy, CFO and we’re also joined here by Pravesh Kandawal who heads the IR function. So gentlemen, thank you both for being with us today.

Jake Elgouy, CFO, Inbecta: Yeah, Mike, thanks for having us and thanks for saving the best for last. Appreciate

Mike Sarcone, Analyst, Jefferies: it. Absolutely. That was the plan. So maybe just, you know, a high level, Jake, for those who aren’t as familiar with Inbecta, maybe you can just give us a high level overview, talk about company’s value proposition and some growth drivers.

Jake Elgouy, CFO, Inbecta: Yeah, sure. Inbecta was the spin out of the diabetes business, which occurred from Becton Dickinson on April first of twenty twenty two. So we are a public company for the last three plus years. I would say for us, we’re about $1,000,000,000 in revenue, strong free cash flow generation, strong profitability, more in close to 140 different countries, have three main product categories. We operate within the pen needle space, safety products and then syringe.

And around, let’s call it, 85% of our revenue tends to be tied into that pen needle and safety product categories. And that has certainly been growing somewhere in the magnitude of let’s call it 2% to 2.5% over the last few years. If you step back for a second, I think since spin, really the first stage of company’s life has really been focused on trying to separate ourselves and stand ourselves up as quickly as we could, which I’m pleased to say is now largely complete. And while doing that over the last three years, trying to keep the business as stable as possible. So very intentionally, we haven’t done anything in terms of cost optimization or additional meaningful product development or whatnot.

And I think that really sort of sets the stage for the next stage of the company’s life. We recently had an Analyst Day in which we talked about some financial goals and objectives through 2028 and what some new product opportunities are and sort of what the margin profile and cash flow profile looks like. So I think if you think about the financial targets that we sort of set out immediately prior to spin, we talked about a revenue CAGR from 2022 through 2024 that would be relatively flat. And we talked about an adjusted EBITDA margin of around 30%. And I’m pleased to say that during that period of time, we ended up exceeding both of those metrics.

We’re certainly a management team. Think that is going to on the side of being a little bit more cautious and trying to put out multi year financial targets that we have a high degree of visibility into and likelihood that we would meet if not exceed. And that certainly was the case for the targets that we put out there through 2024. Ultimately, we ended up exceeding both the top line and the bottom line despite needing to absorb significant inflationary impacts that were never originally contemplated as part of the initial guide. And yet, we were able to exceed both the top line and the bottom line by roughly 150 basis points each.

Mike Sarcone, Analyst, Jefferies: Great. Well, thank you for the overview. And let’s drill down into some of those targets. So starting with the core injection business, I think you’ve talked about a 1% to 2% CAGR decline over the LRP period. So maybe just to kick off, can you talk about the factors that are leading to that decline and maybe what gets you to flattish performance eventually?

Jake Elgouy, CFO, Inbecta: Sure. So again, I think over a multi year period of time, we’re certainly going to put out targets that are going to allow for the unforeseen. And for us to be able to, again, meet or exceed those financial objectives given what may happen over a multi year period of time. Our business from 2022 through 2024 had grown around 1.3%. Included in that was an assumption that our pen needle business and our safety products business actually grew somewhere between 2% to 2.5% during that time.

And really, it came down to our syringe business, which is a legacy technology. And particularly, the syringe business within The US sort of seeing some pressure there and some transition to other technologies, whether that’s pen needles that we benefited from or maybe pumps, which we don’t have a pump in our business. So again, sort of the core base business had kind of historically grown around 1.3%. The sort of base case assumption that we had was despite that, despite the pen needle business and the safety business sort of growing 2% to 2.5% over the last couple of years, over the next three years, we sort of view that as kind of flat. We’ll have to see whether or not that proves to be conservative or not, but that is certainly sort of the base case working assumption is that that business remains relatively flat.

The drivers of the potential 1% to 2% decline largely then kind of comes back to two things. One, the US syringe business, as well as we continue to manufacture certain non diabetes products in some of our manufacturing locations and sell them back to Becton until they sort of take over the product registrations and in source that business themselves. So our sort of working assumption is that The US syringe business and the contract manufacturing business, which combined totals up to around $55,000,000 or so in revenue in 2025, could get cut in half or could go to zero by 2028. And again, we’ll sort of see whether or not that happens, but that’s sort of the premise behind what would happen in terms of the 1% to 2% decline in kind of the core base business.

Mike Sarcone, Analyst, Jefferies: Got it. Okay. That is very helpful. And then again, within that core business, how do you think about parsing out volumes versus price?

Jake Elgouy, CFO, Inbecta: So I would say in developed markets, again, of what we’re assuming in terms of the syringe business as well as the contract manufacturing business, that would essentially mean that volumes would down slightly and that pricing could be down slightly. And that’s somewhat offset by additional volumes that we would expect to generate in emerging markets.

Mike Sarcone, Analyst, Jefferies: Got it. And maybe that takes us to the next one. Guess, you talk around the assumptions that you have baked into the guide around regional and product family growth rates?

Jake Elgouy, CFO, Inbecta: Yeah. So again, I think despite the fact that our safety products and our pin needles had historically grown somewhere between two percent to 2.5% globally, I think we’re taking a bit of a conservative approach in the outlook given that it is three years in nature, who knows what could happen over a three year period of time, that that business would be flat. And that largely that the syringe business and the contract manufacturing business would sort of be the ones that would be down slightly causing the 1% or 2% decline. I think in terms of regional growth, it’s probably reasonable to think that, you know, sort of the developed markets would be down slightly. And that emerging markets, which represents about 20% or so of our business, would be up sort of mid single digit.

Mike Sarcone, Analyst, Jefferies: Okay. And then I think you also did talk about some new revenue streams and adjacencies. So you know, how much of your LRP growth is expected to come from some of those new revenue streams?

Jake Elgouy, CFO, Inbecta: Yeah. So this is this is something that’s exciting for us. So I think, our overall constant currency revenue growth rate assumptions assume that the total company would remain flat and largely driven by these new revenue streams. So there’s a few things that now that we have our own ERP system in place, we now have the ability to add additional products into our ERP. Whereas before, we were prohibited from putting in additional SKUs into our former parents ERP system.

So now it opens up a much bigger opportunity for us to really, I would say, do a couple things. Leverage our existing manufacturing capabilities. We have three highly automated facilities that make 8,000,000,000 units of single use disposable plastic oriented product a year. So how can we sort of better leverage those kind of core competencies and begin to sort of migrate into other medical supplies, medical device product areas, and not solely be sort of an insulin delivery company. And that’s obviously going to take some time, but I think we have a really good backbone in order to do that.

The second thing is is that with the spin came a commercial presence and a channel in well over a 40 countries. And that is something where that is a it made the separation complex, but now that we’re through that and we’ve sort of successfully navigated all of that, it’s something that we can really leverage moving forward. And something as simple as distribution agreements. We’ve already begun to enter into and have signed several distribution agreements to be able to leverage that channel. And included in our LRP is some revenue contribution from some of these distribution agreements.

For instance, we signed distribution agreements with some companies regarding BGMs. So BGMs, obviously a legacy technology for for sort of The US market, but something that is very, very applicable for international markets. And we would expect that to be the case for a period of time. So that is one example. Another is distributing pumps, so insulin pumps.

So there are companies out there that that don’t necessarily have the ability to to or financial capability to to build out that direct sales force presence and have come to us and want us to distribute their pumps in certain markets for them. So that is something that we that we see as an opportunity moving forward. And then lastly, I would say some ultrasound products as well. So moving forward, I think the new product revenue generation is going to come from a combination of these distributed products. It’s also going to come from GLP-one uptake.

As GLP-1s go generic, what we’ve been having conversations with probably close to 25 different generic pharmaceutical companies over the last, let’s call it, fifteen to eighteen months at some degree. We’ve reached some agreements with some. And this largely has to do with the mode of how GLP-1s are administered. Today, it is largely administered via a single use auto injector, which we do not manufacture ourselves today. The manufacturing of an auto injector may be something that we would look to do at some point in the future.

However, as these generic companies come to market with a GLP-one, what they’re looking to do is actually come to market and administer that through a pen in like a multi dose pen injector. So instead of a single use auto injector, it will become a a multi dose pen injector. And they want to partner with us just given our our, I would say, leading market share, you know, position, our ability to to the continuity of supply, our manufacturing capabilities. We’re really the market leader in sort of the pen needle category. And and they want to partner with us and have our pen needles used with their pen injectors as as GLP ones become generic.

And and at the Analyst Day, you know, we talked about this being at least a $100,000,000 market opportunity for us on an annual basis and once we get to sort of the 2033 timeframe. So this could be something that meaningful for us in terms of sustainable revenue growth moving forward.

Mike Sarcone, Analyst, Jefferies: And that is really interesting. Guess the follow-up there, you said you’ve been having talks with 25 different generics companies. I guess where do you stand in that process? How complex, if at all, are those negotiations? And when could you actually start to see some revenue on that front?

Jake Elgouy, CFO, Inbecta: Yeah, so varying degrees obviously is where things stand. For several of them, we already have POs in hand. We’re anticipating generating some amount of revenue in the back half of twenty twenty five as they kind of continue to go through some of their testing. Some of these generics go, depending on what country that we’re talking about, mostly OUS at first, could start to generate revenue as early as 2026. It’s exciting.

It could be a really nice opportunity for us over a multi year period of time. Know, the probably one of the larger markets, The US doesn’t go generic until 02/1931. And I think at that point, that’s where we’ll also see another kind of inflection.

Mike Sarcone, Analyst, Jefferies: That is pretty interesting. And then I think there’s also, you’ve mentioned the concept of market appropriate pen needles and syringes. What does that opportunity look like and what can we expect from a revenue contribution standpoint there?

Jake Elgouy, CFO, Inbecta: Sure. So there, we tend to be a more premium featured product. And as a result of that, have historically been able to kind of price our products at a premium. And there are some markets that are more price sensitive in in nature. And kind of coming back to the point that I made maybe a few minutes ago about as we were kind of going through separation, we really did not have the ability to introduce new SKUs, new products to the pre existing ERP system until we had our own setup.

So now that that is done, we do think that there is an opportunity for us terms of being able to come to market with a lower featured, lower cost alternative on both the pen needle and the syringe side that is again gonna be very market specific, o US focused and hopefully will allow us to win some of these international tenders that we really didn’t historically compete in.

Mike Sarcone, Analyst, Jefferies: Okay. Have you talked about potential revenue contribution there or

Jake Elgouy, CFO, Inbecta: Yeah. So I think some of these products will not be available until probably most likely the end of fiscal twenty twenty seven. So I think it is something that would generate some revenue beginning in 2028 and may total up to about, let’s call it around 1% of our overall revenue in 2028. So it’s still relatively small in 2028, but the idea being that there could be more upside, if you will, outside of the ORP period.

Mike Sarcone, Analyst, Jefferies: Got it. Okay. And then you’ve also what has been the revenue contribution from some of your synergistic partnership opportunities that you’ve spoken about? Considering this is relatively near term, can you size up those opportunities and maybe discuss which regions you’re focused on?

Jake Elgouy, CFO, Inbecta: Yes. So this is really where it comes down to how do we leverage that commercial channel distribution. And it kind of comes back to the distribution agreements and all that we’ve put into the LRP is distribution agreements that we have already signed, already reached, and already have like a good idea as to how that’s going to sort of play out. And that really kind of comes back to the BGM, the pump, and the ultrasound products. Again, all of these things largely internationally focused, including China.

Mike Sarcone, Analyst, Jefferies: Got it. Okay. Very helpful. Then maybe we can one or two on margins and cash flow. I guess you’ve talked about a decline in your adjusted operating margin over the LRP period.

Maybe talk us through the drivers there and what’s causing that?

Jake Elgouy, CFO, Inbecta: Sure. So and I’ll talk sort of from maybe midpoint to midpoint of our kind of 2025 guide to the midpoint of our 2028 guide. That would indicate essentially that our margins could decline. And I say could decline because who knows exactly what’s going to happen, but could decline around 125 basis points at the midpoint of each guide. That really comes down to two things.

One, it comes down to our thoughts on incremental tariffs and the impact that incremental tariffs may have. So we have factored in incremental tariffs associated with sort of The US and China that were sort of talked about and have since been paused, but were sort of contemplated in kind of that mid April ish timeframe sort of the 145%, one hundred and twenty five % type tariff levels. So we did factor in incremental tariffs impacting our business through the LRP. We’ll have to see exactly how that kind of plays out. But about half of the expected decline in the operating margins is due to those incremental tariffs.

If that weren’t to occur, then obviously we would see some benefit for that. The other half of the operating margin decline has to do with R and D and sort of ramping up R and D expense by about 50 basis points. And that’s really focused on us becoming cannula independent. So the cannula is the needle that goes into our products. And we source those needles today from our former parent.

So as part of the separation, they continue to provide us with a multi year agreement in which we can continue to procure the needles from them. That obviously comes at a at a markup. And for us, for a few different reasons, it would benefit us to introduce the potential for additional cannula suppliers over time. It’s it would always be good for us to have a sort of dual or more supply and not necessarily be beholden to one particular company in terms of supply. And it could potentially introduce some price benefits as well.

So we factored in the additional expenses associated with sort of qualifying one or more alternate cannula supplier through 2028. However, the benefits in terms of, you know, potentially procuring those products at a lower cost from another supplier are something that would fall outside of the LRP 2028 time frame. So again, you know, sort of factoring in all the costs associated with it, but then, you know, post 2028 is probably when we would see the future benefit.

Mike Sarcone, Analyst, Jefferies: Got it. And just a clarification on on the tariffs. We we had some kind of relative de escalation, you know, from that 145%, you know, moving down. So is there automatic upside, you know, to that adjusted operating margin figure as well just based on the kind of post de escalation?

Jake Elgouy, CFO, Inbecta: Yeah. I I would say, you know, largely, if you if you sort of step back, most of our products, because of, you know, sort of the section 98 Nairobi Accords are are largely exempt from tariffs. We factored in the incremental headwinds associated with The US and China situation. Obviously, were temporarily paused, but we did factor that in. If that were not to occur or if if those, tariffs were sort of exempt you know, in the future, if if those proposed tariffs were exempt because of sort of medical necessity like the historical tariffs were, yeah, that would be something that would probably cause somewhere between a 50 to 60 basis point improvement in terms of our operating margins.

Okay.

Mike Sarcone, Analyst, Jefferies: Helpful. And then you also mentioned generating around $600,000,000 in cumulative free cash flow over the LRP period. Can you talk about the priorities, what the priorities are for using that cash?

Jake Elgouy, CFO, Inbecta: Yeah. Sure. And and this has been something I think that, you know, for the first, you know, let’s call it three years since spin, you know, the the free cash flow capabilities have really sort of been masked of this company. And I and I say that because there was, you know, a significant amount of cash that was used over the the first, let’s call it, three, three and a half years, towards separation, setting up our own ERP system and distribution network in a 40 countries. And most recently, doing brand transition from the Becton labeled boxes to our own and Becton labeled boxes.

So now that we are largely through that, we stated that we intend to generate somewhere around, let’s call it $135,000,000 of free cash flow in 2025. Obviously, that would indicate pretty significant improvement in the second half of the year in 2025. And that we would intend to pay down at least $110,000,000 in debt in 2025. We’re well on our way to doing that. And I think importantly, on a potential flattish constant currency revenue business through 2028 with relatively flat margins generating at least $600,000,000 in free cash flow is very meaningful.

And right now, we’re sort of assuming that we would pay down somewhere between, let’s call it $450,000,000 to $500,000,000 in debt, that we would continue to pay a dividend at the same dividend per share that we have historically. So around $107,000,000 in cumulative dividends as well. And that largely our cash balance, we would expect our cash balance to be to end this year in 2025 somewhere in or around a $250,000,000 mark. And then our cash balance would be relatively flat through by the end of twenty twenty eight. So if we were to accomplish all that, our net leverage levels by the end of this fiscal year in ’twenty five would go down to let’s call it around three times net levered.

And by ’twenty as early as 2027, it could be sort of in the low to mid twos as defined under our credit facility. And certainly by 2028, it’ll get to most likely slightly below two times. So as early as kind of fiscal twenty twenty seven, it’s going to free up a tremendous amount of additional balance sheet flexibility for us to continue to sort of augment, if you will, the base business and continue to sort of transform it over time focused on how do we improve, you know, sort of the the constant currency revenue growth profile and how do we sort of diversify the the business from what it is today.

Mike Sarcone, Analyst, Jefferies: Got it. Have you talked about, you know, what a target debt ratio is for you?

Jake Elgouy, CFO, Inbecta: Yeah. So I think over the over the longer term, you know, this business had a fair amount of leverage on it, you know, at spin. And, you know, that combined with the need to spend a fair amount of cash in terms of separation and stand up has really caused the leverage levels to sort of be elevated. Our most recent quarter, it was around 3.7 times. We still have very, very significant cushion as compared to the covenant.

The covenant requires us to stay under four and three quarters. But by the end of this year, again, a combination of delevering and just EBITDA growth, will be closer to a three times net levered mark. I think over the longer term, there may be periods where we go significantly below three, like I just sort of talked about through kind of 2728. But then, you know, if there is M and A opportunities out there, you know, a willingness to sort of take that up into the mid to upper threes for the right deal or deals. But as long as there’s a path back down closer to like a three times net levered mark over the long term.

I think trying to maintain in or around that three times net levered mark would allow us the flexibility to do deals, integrate them and then yet drive leverage levels down just given the free cash flow nature of our business.

Mike Sarcone, Analyst, Jefferies: Got it. Okay. That is helpful. Thanks for the clarification. I guess one on tariffs.

You talked about 50% of the operating margin degradation reflecting the incremental tariffs on a gross basis. Have you talked about what the tariff impact is and what type of mitigation strategies you may be able to implement?

Jake Elgouy, CFO, Inbecta: Sure. So for us, those incremental tariffs would be on an annual basis somewhere to the tune of let’s call it 9,000,000 to $10,000,000 So in grand scheme of things, relatively small. We do have three manufacturing facilities. Again, the majority of our products tend to not be exposed to tariffs because of the exemptions and medical necessity of those products. So we’re not facing some of the tariff headwinds, if you will, that some of the other, know, some other medical device companies are.

You know, to to to date, we have not necessarily factored in the ability to, if those tariffs were to remain to sort of push those tariffs to our customers in the form of price increases that have not been factored in. But obviously that’s something that we’ll always consider.

Mike Sarcone, Analyst, Jefferies: Okay. And you know, we only have twenty seconds left and so you know, maybe we’ll just end it with an open ended one. You know, what do you think is the most kind of misunderstood or under underappreciated aspect of the story for investors?

Jake Elgouy, CFO, Inbecta: Yeah. I mean, admittedly, I think, you know, because of the separation and all the work that had to go into it over the last couple of years, I I think that sort of, you you know, masked, I think, the the free cash flow capabilities of the of the company. I think that’s gonna become very, very evident. I I I think that, you know, over time, I think the core base business has remained very stable. I do think that there are, you know, natural growth adjacencies, if you will, for us to take advantage of over the next, let’s call it, three plus years, whether it’s GLP-1s, whether it’s some of these distribution agreements, or even broadening out the product portfolio.

And I think you you’ll see that occur in in the next, you know, few years coupled with some pretty significant delevering.

Mike Sarcone, Analyst, Jefferies: Okay. Great. Well, that’s that’s all the time we have. So Jake, Pravesh, thank you very much for your time today.

Jake Elgouy, CFO, Inbecta: Yeah. Thanks for having us.

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