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Background and Basis of Presentation | 6 Months Ended
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Mar. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Background and Basis of Presentation | Background and Basis of Presentation Background On May 6, 2021, Becton, Dickinson and Company (“BD” or “Parent”) announced that its Board of Directors approved a plan to spin off its diabetes care business, comprising pen needles, syringes, and other products related to the injection or infusion of insulin and other drugs used in the treatment of diabetes (collectively, the “Company” or “Diabetes Care Business”). Under the plan, BD would transfer certain assets and liabilities associated with the Diabetes Care Business to Embecta Corp. (“embecta”), a newly formed wholly owned subsidiary of BD incorporated on July 8, 2021, and execute a spin off of embecta by way of a pro-rata distribution of common stock of embecta to BD’s shareholders at the close of business on the record date of the spin off. During the first half of 2022, in contemplation of the spin off, certain assets, liabilities, and operations attributable to the Diabetes Care Business were contributed to embecta, which has been reflected in these unaudited condensed combined financial statements. These condensed combined financial statements reflect the historical results of operations, financial position and cash flows of the Company. In February 2022 and in connection with separation and distribution, embecta issued $500.0 million of senior secured 5.00% notes due February 15, 2030. Furthermore, on March 31, 2022 and also in connection with the spin off, embecta issued to BD $200.0 million of senior secured 6.75% notes due February 2030, entered into a $950.0 million senior secured seven-year term loan B facility, and entered into a $500.0 million senior secured five-year credit facility. Refer to Note 3 and Note 10 for further details regarding the related party notes and long-term debt. On February 1, 2022, BD’s Board of Directors approved the spin off of the Diabetes Care Business. On February 10, 2022, the Securities and Exchange Commission ("SEC") declared effective embecta’s Registration Statement on Form 10, as amended. The spin off occurred by means of a pro-rata distribution of all of embecta’s issued and outstanding shares of common stock on the basis of one share of embecta common stock for every five shares of BD common stock held as of the close of business on March 22, 2022, the record date for the distribution. The distribution, which qualified as tax-free to BD and its shareholders for U.S. federal income tax purposes, was completed on April 1, 2022. Upon completion of the distribution, embecta became an independent, publicly traded company and BD retained no ownership interest. “When-issued” trading of embecta common stock began on the record date of March 22, 2022, under the ticker symbol “EMBCV”, and continued until the distribution date. “Regular-way” trading of embecta common stock began on the spin off date of April 1, 2022, under the ticker symbol of “EMBC”. In connection with the spin off, BD and embecta entered into various agreements to effect the spin off and provide a framework for the relationship between BD and embecta after the spin off, including a separation and distribution agreement, a transition services agreement, a tax matters agreement, an employee matters agreement, a cannula supply agreement, contract manufacturing agreements, an intellectual property matters agreement, a logistics services agreement, distribution agreements and other transaction agreements. Refer to Note 14 for further details regarding the spin off. Basis of Presentation The unaudited condensed combined financial statements have been derived from BD’s historical accounting records and were prepared on a standalone basis in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the SEC. The assets, liabilities, revenue and expenses of the Company have been reflected in these condensed combined financial statements on a historical cost basis, as included in the consolidated financial statements of BD, using the historical accounting policies applied by BD. Historically, separate financial statements have not been prepared for the Company and it has not operated as a standalone business from BD. The historical results of operations, financial position, and cash flows of the Company presented in these condensed combined financial statements may not be indicative of what they would have been had the Company actually been an independent standalone public company, nor are they necessarily indicative of the Company’s future results of operations, financial position, and cash flows. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. The condensed combined financial statements have been prepared in accordance with the instructions to Form 10-Q and, in the opinion of management, include all adjustments which are of a normal recurring nature, necessary for a fair presentation of the financial position and the results of operations and cash flows for the periods presented. The accounting policies and basis of preparation adopted in the preparation of these condensed combined financial statements are consistent with those followed in the preparation of the Company’s combined financial statements issued for the year ended September 30, 2021. However, the financial statements do not include all information and accompanying notes required for a presentation in accordance with GAAP. These condensed combined financial statements should be read in conjunction with the audited combined financial statements and the notes thereto included in the Company’s Registration Statement on Form 10. All intercompany transactions and accounts within the Diabetes Care Business have been eliminated. The provision for income taxes for the three and six months ended March 31, 2022 and 2021 was calculated by applying an estimated annual effective income tax rate for the full year to ordinary income adjusted by the tax impact of discrete items. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates or assumptions affect reported assets, liabilities, revenues and expenses, including determining the allocation of shared costs and expenses from BD, depreciable and amortizable lives, sales returns and allowances, rebate accruals, inventory reserves and taxes on income as reflected in the condensed combined financial statements. Actual results could differ from these estimates.

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- Definition The entire disclosure for the business description and basis of presentation concepts. Business description describes the nature and type of organization including but not limited to organizational structure as may be applicable to holding companies, parent and subsidiary relationships, business divisions, business units, business segments, affiliates and information about significant ownership of the reporting entity. Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -URI http://asc.fasb.org/topic&trid=2122149 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -URI http://asc.fasb.org/topic&trid=2134479 + Details
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