What happened
Shares of Embecta (NASDAQ: EMBC.V) were sinking 12.4% lower as of 10:52 a.m. ET on Tuesday. The decline came after the diabetes care provider announced its fourth-quarter results earlier in the morning.
Embecta reported Q4 revenue of $274.6 million, down 8.7% year over year. This topped the average analysts' revenue estimate of $261 million. The company posted a net loss in the fourth quarter of $17.2 million, or $0.30 per share. Analysts were expecting positive earnings of between $0.61 and $0.72 per share.
So what
Embecta's lower-than-expected Q4 bottom-line results came with an asterisk. The company recorded an impairment charge of $58.9 million after throwing in the towel on some U.S. manufacturing production lines. It also wrote off $5.5 million related to purchase commitments associated with these production lines.
It's likely that investors were more disappointed about Embecta's 2023 guidance than they were about its Q4 earnings miss. The company projects 2023 revenue of between $1.05 billion and $1.073 billion. The upper end of this range is lower than the revenue of $1.1 billion to $1.13 billion expected by analysts. Embecta anticipates that adjusted earnings per share next year will be between $1.75 and $2.00. This range is well below than analysts' estimates of adjusted earnings per share of $3.08 to $3.15.
Now what
Becton, Dickinson, and Company spun off Embecta as a separate entity on April 1. It's been mostly downhill for the new healthcare stock since then. But Embecta is still a work in progress as the company fully separates from its parent, with the goal of functioning independently.
There are two key things to watch with Embecta in the new year. The company could benefit as its sales team promotes Intuity Medical's glucose monitoring system. Embecta is also moving forward with the development of a type 2 closed-loop insulin system using its patch pump.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Becton, Dickinson And. The Motley Fool has a disclosure policy.
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