Please stand by. Welcome, ladies and gentlemen, to the third quarter of fiscal year 2022 earnings conference call for Embecta Corp. At this time, all participants have been placed in a listen only mode. Please note that this conference call is being recorded, and that recording will be available on the company's website for replay shortly. I'll now hand the conference over to your speaker today, Mr. Pravesh Khandelwal, Vice President of Investor Relations. Please go ahead.
Thank you, operator. Good morning, everyone. Thank you for joining our fiscal third quarter 2022 earnings call. With me today are Dev Kurdikar, Embecta's Chief Executive Officer, and Jake Elguicze, our Chief Financial Officer. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements within the meaning of the federal securities laws, which may be identified by words like anticipate, expect, may, believe, estimate, and other similar words, and it is possible actual results could differ from management's expectations. As stated in more detail in our accompanying slides, these forward-looking statements include statements concerning our costs and growth opportunities, our cash flow and expected use, and our financial performance, and also include statements concerning future dividends.
Risks, uncertainties, and other factors that could cause such differences can be found in the company's earnings release and latest SEC filings, including the information statement dated February 11, 2022, filed as Exhibit 99.1 to the company's current report on Form 8-K and Form 10-Qs. In addition, we will discuss certain non-GAAP financial measures on this call, which should be considered a supplement to and not a substitute for financial measures prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in the press release and conference call presentation. Unless otherwise specified, all comparisons will be on a year-over-year basis versus the relevant period. Revenue % changes are on FX neutral basis unless otherwise noted. When management refers to any given period, they are referring to the fiscal period unless specifically noted as a calendar period.
The earnings press release, slide to accompany today's call, and webcast replay details are available on the investor relations section of the company's website, www.embecta.com. Starting on slide three, our plan for today's call is as follows. Dev will make a few opening remarks on the overall performance of our business. Jake will provide you with a more in-depth review of financial results for the third quarter of fiscal 2022, as well as our updated financial guidance as stated in the earnings press release issued earlier today. Dev will then provide some closing thoughts on our strategic imperatives. We will then open the call for questions. I would now like to turn the call over to our CEO, Dev Kurdikar. Dev.
Good morning, everyone, and thank you for joining us today for Embecta's third quarter of fiscal year 2022 earnings call, which also marks our first full quarter as a standalone public company. Before we get into the content of today's call, let me also welcome Pravesh Khandelwal, whom you just heard. Pravesh has joined us as our VP of investor relations. He was most recently in investor relations at a healthcare company and has prior experience in equity research. We're excited to have him join our team. Turning to slide five, let me first start with who we are. Quite simply, we are an organization with a truly unique opportunity to create the preeminent diabetes-focused company in the world. Our mission is to develop and provide solutions that make life better for people with diabetes. That is our entire focus.
We are the global leaders in the business of injection devices. We've been making and selling insulin injection devices for almost 100 years. Our global manufacturing infrastructure is unmatched and supported by geographically diverse sales and distribution network. We have built an incredible leadership team to advance our vision of empowering people to live a life unlimited by diabetes. We have recently added to our leadership talent by recruiting experienced leaders for our regulatory affairs, R&D, and quality functions, roles critical for our current business as well as for achieving our longer term objectives. Our global team of 2,000 employees have been hard at work standing up Embecta and driving our business for people with diabetes, for our customers, and for our stakeholders. Switching to slide six. Here are our financial and operating highlights for the third quarter of fiscal 2022.
We are pleased with the company's strong performance in the quarter, our first as a standalone public company amidst the current challenging operating environment, which includes having to navigate through raw material inflationary pressures, supply chain challenges, geopolitical concerns, and varying COVID-19 restrictions. This performance reflects the resilience of our business model, the defensive segment in which we operate, and most importantly, the character and determination of our global team that works tirelessly to serve our customers and people with diabetes who use our products. An important nuance of this business is that our products are primarily single-use disposable products, and hence their use is not significantly financially burdensome, in contrast with some other therapies. Moving to the financial results for this quarter, Embecta generated revenues of $291.1 million.
This represents a decline of 1.3% on an as-reported basis and growth of 2% on a constant currency basis. The constant currency revenue growth was primarily driven by higher volume and to a lesser extent, price in the United States and in Central and Southeast Asia. I'll comment on geographic revenue breakdown on the next slide in a moment. GAAP gross profit and margin for the third quarter of 2022 totaled $202.9 million and 69.7% respectively. Adjusted gross and EBITDA margins remained robust at 69.8% and 40.5% respectively.
Based on our strong third quarter results and outlook for the remainder of the year, we are raising our financial guidance for constant currency revenue growth, adjusted gross margin, and adjusted EBITDA margin for the second half of this fiscal year, while reiterating our as-reported revenue growth guidance despite incremental FX headwinds. Additionally, we continue to make progress building up our internal organization, systems, and processes so that we can exit the transition service agreements that we have with Becton, Dickinson within the planned time periods. Lastly, we continue to advance the development of type two closed-loop insulin delivery system utilizing our proprietary patch pump technology. Now clicking through geographic revenues on slide seven. Third quarter U.S. revenues of $158 million increased by 4.1% on both an as-reported and constant currency basis.
International revenues of $133.1 million decreased by 7.1% on an as-reported basis and 0.3% on a constant currency basis. Overall constant currency growth of 2% was primarily due to an increase in base business volume, in part due to the timing of certain orders within the U.S., the impact of contract manufacturing revenue to BD, and improved pricing. Somewhat offsetting this was a rebate reserve adjustment that occurred in the third quarter of 2021, which did not reoccur in the third quarter of 2022. While we benefited from the timing of certain orders this quarter, we continue to focus on the second half business performance as the timing and cadence of order patterns varies quarter to quarter. On a year-to-date basis, revenues were $854.9 million.
This represents a decrease of 1.1% on an as-reported basis, and an increase of 0.8% on a constant currency basis. Overall constant currency growth was driven by favorable price and volume, partially offset by the conscious decisions we made during the latter portion of 2021 to no longer participate in certain business, and which we have discussed on our prior call. With that, let me turn it over to Jake to discuss our Q3 results and our updated expectations for the second half of this year. Jake.
Thank you, Dev, and good morning, everyone. Before I discuss the results for the three- and nine-month periods ended June 30th, I would like to remind the investment community that Embecta was spun off from BD on April 1st of 2022, and that the financial results during the pre-spin period were based on carve-out accounting principles and do not reflect what Embecta's results would have been had Embecta operated as a standalone public company. Therefore, financial results for the three- and nine-month period ended June 30th, 2022 and June 30th, 2021 are not fully comparable.
Given the fact that Embecta's historical results for the pre-spin periods do not include all the actual expenses that would have been incurred had Embecta been a standalone public company during the periods presented, I plan on focusing most of my time discussing Embecta's recently updated second half of fiscal 2022 financial guidance. Turning to Embecta's financial performance for the third quarter on slide eight. Given the discussion that has already occurred regarding revenue, I will start at the gross profit line. GAAP gross profit and margin for the third quarter of 2022 totaled $202.9 million and 69.7%, respectively. This compares to $202.6 million and 68.7% in the prior year period. The 100 basis point improvement in GAAP gross margin was primarily due to favorable product mix.
This was partially offset by the negative impact of inflation on raw material costs, direct labor, and overhead. While from an adjusted gross profit and margin perspective for the three months ended June 30th, 2022, they totaled $203.1 million and 69.8%, respectively. This compares to $206.4 million and 70% in the prior year period. Despite incurring additional costs associated with standing up Embecta as an independent entity, adjusted gross margin for the third quarter of 2022 came in strong at approximately 70%, and this was better than we previously anticipated. Turning to GAAP net income, during the third quarter of 2022, it totaled $62.4 million. This compares to $104.7 million in the prior year period.
The decrease of approximately $42 million is due to a combination of factors, which include an increase in selling and admin expenses of approximately $23 million, which is driven by an increase in compensation and benefit costs due to increased headcount, and to a lesser extent, increases in marketing and advertising spend, both attributed to the separation and Embecta becoming a standalone, publicly traded company. A decrease in R&D of approximately $1 million, driven by the timing of certain spend, and interest expense of approximately $20 million that was incurred in the third quarter of fiscal 2022 as compared to 0 in the prior year period. Lastly, moving to adjusted EBITDA and margin. It totaled approximately $117.9 million and 40.5% for the third quarter of 2022.
This compares to $143.6 million and 48.7% in the prior year period. Like our performance at the adjusted gross margin line, our adjusted EBITDA margin for the third quarter of 2022 also came in better than we initially anticipated. It was primarily driven by revenue in the quarter being better than expected, favorable product and geographic mix positively impacting our gross margin, and R&D expense being slightly lower than originally planned due to the timing of certain spend. Finally, with respect to our balance sheet and financial condition at quarter end. As of June 30th, 2022, we held approximately $292 million in cash and cash equivalents and approximately $1.65 billion in debt.
As we created our initial capital structure and leverage levels, we tried to be mindful of our current financial profile, the need to increase the level of investment into the business and shareholder returns. We have a balance sheet that we can use to invest both organically as well as use for M&A and partnership opportunities. As of June 30th, 2022, our last 12 months ended net leverage ratio stood at approximately 2.8x . Lastly, this morning we announced that our board of directors approved our inaugural cash dividend, which was set at $0.15 per share. Given that our GAAP net income could fluctuate quarter to quarter, we attempted to arrive at a dividend per quarter amount that would approximate 20% of our second half of 2022 expected GAAP net income. We to avoid quarter-to-quarter dividend per share fluctuations.
We think that we can provide this return to shareholders while preserving the ability to increase the level of investment in the business to drive acceleration in the future, all while maintaining a very strong liquidity profile. That completes my prepared remarks as it relates to Embecta's historical financial performance. Next, I'd like to outline Embecta's financial guidance on slide nine. Beginning with key assumptions. Unlike the first half of 2022 results, our second half of 2022 guidance attempts to take into consideration the various costs that Embecta will incur moving forward as an independent, publicly traded company. This includes various contract manufacturing agreements that we will have in place with BD, which result in third-party revenue for Embecta at very little gross margin.
While certain other supply agreements are for inputs that Embecta needs to obtain from BD, such as cannulas, which are used in Embecta's product offerings. In addition to these contract manufacturing and supply agreement impacts, our second half of 2022 financial guidance also assumes expenses that we will incur because of the lease of our Holdrege, Nebraska facility from BD, as well as expenses we will incur because of BD continuing to factor certain accounts receivable on Embecta's behalf. Furthermore, our second half of 2022 financial guidance also assumes 6 months worth of transition services expense related to a variety of activities that BD will perform for Embecta. The transition services expenses were determined and costed out at a very detailed line item level.
These TSAs can last for a period not to exceed two years and can be terminated earlier by Embecta with a defined notice period. As part of our second half of 2022 financial projections. We also included estimates associated with costs that we will anticipate incurring as we stand up our own public company. These costs include expenses associated with stock-based compensation, external audit fees, stock exchange listing fees, and most notably, the expenses associated with the creation of various corporate functions and infrastructure such as finance, treasury, tax, HR, IT, legal, supply chain, regulatory and quality, et cetera. Moreover, as we prepared and updated our second half of 2022 financial guidance, we also attempted to take into consideration the impact that COVID-19 is still having on certain markets, continued geopolitical concerns, as well as the negative impact stemming from inflation and supply chain disruptions.
We've attempted to give due consideration to these elements, but we realize that the future trajectory of these factors is unpredictable. Lastly, given that approximately half of Embecta's business is derived internationally, as well as the fact that several foreign currency exchange rates have changed significantly since we initially provided financial guidance for the second half of fiscal year 2022, I wanted to take a moment and highlight what we assumed for some of the key currency pairs that affect our business. Those being the euro-dollar, dollar-Japanese yen, and dollar-Chinese yuan. We base our updated second half of 2022 financial estimates on spot rates that existed near the beginning of August, including a euro to dollar rate of approximately 1.05 for the second half of the year and approximately 1.02 in the fourth quarter.
A dollar to Japanese yen rate of approximately 131 for the second half of the year and approximately 136 in the fourth quarter. A dollar to Chinese yuan rate of approximately 6.61 for the second half of the year and approximately 6.71 for the fourth quarter. These assumptions compare to second half of 2021 of approximately 1.19, 109, and 6.5, respectively. Now that I've outlined some of our key assumptions, I'd like to now take you through our updated financial guidance for the second half of fiscal 2022 and provide some perspective as to what some of the key drivers of change are as compared to our previously provided financial guidance. Beginning with revenue.
We are reaffirming our previously provided as-reported revenue amount as we continue to expect to generate approximately $555 million during the second half of fiscal 2022. This comes despite significant fluctuations in various FX rates since we last provided guidance, which we now expect to be a headwind of approximately 4% in the second half of the year as compared to the prior year period, or an incremental FX headwind of approximately 50 basis points as compared to our previous financial guidance. Well, from a currency perspective, I'm pleased to say that we are raising our expectations for the second half of the year by 50 basis points as we now expect to see a decline of approximately 3% during the second half of fiscal 2022 as compared to the second half of fiscal 2021.
The raise in our constant currency revenue expectations for the second half of the fiscal year comes even though we now generate approximately $5 million less of contract manufacturing revenue with BD. Had the amount of contract manufacturing revenue remained consistent to our prior expectation, we expect constant currency revenue growth would have been better by an additional 50 basis points. The ability for us to raise our constant currency guidance is due to our base business, which is performing slightly better than we initially anticipated. Given that we only have one quarter left in fiscal 2022, our updated financial guidance for the second half of 2022 implies a fourth quarter revenue amount of approximately $264 million.
The sequential deceleration between Q3 revenue and our expectations for Q4 are due to a combination of factors, including the timing of shipments and orders that Dev referenced earlier that positively impacted Q3, as well as larger expected sequential FX headwinds being two of the primary drivers. When comparing Q4 against prior year results, it is important to understand that we are still dealing with uneven comps given COVID-19-related peaks and troughs that impacted revenue timing in prior and current year periods. That said, for the entirety of the second half of 2022 as compared to our previous guidance, our base business is expected to do slightly better, thereby allowing us to raise our constant currency revenue performance expectations. Turning to adjusted gross margin.
We are raising our expectations for adjusted gross margin as we now expect adjusted gross margin to be in the mid-60s% during the second half of this fiscal year. That compares to our initial guidance, which called for second half of the fiscal year adjusted gross margin to be in the low 60s%. Given our performance during the third quarter, this would imply that our fourth quarter adjusted gross margin would be in the low 60s%. The expectation for a sequential decline in adjusted gross margin from Q3 to our forecast for Q4 is primarily due to contract manufacturing and supply agreement impacts, most notably the impact of increased cannula costs, product and geographic mix shifts between quarters, incremental investments and standup costs, and the continued negative incremental impacts of inflation and increased labor and material costs.
With each of these factors contributing approximately equally to the expected sequential decline in Q3 to Q4 adjusted gross margin. Moving next to TSA expense. Here, our thoughts are unchanged as we continue to expect to incur approximately $35 million in expense, with roughly half of that expense expected to be incurred during Q4. Finally, that takes me to adjusted EBITDA margin, which, like adjusted gross margin, we are raising from our previous expectation. Given the strong results we achieved during the third quarter, we are increasing our expectations from our previous guidance that adjusted EBITDA margin would be in the low 30s% to our current expectation, which now calls for second half of the year adjusted EBITDA margin to be in the mid-30s%.
As we look forward, our updated guidance for the second half of fiscal 2022 adjusted EBITDA margin would imply a low 30s% margin during Q4, with the expected sequential decline from Q3 to Q4 primarily driven by our fourth quarter adjusted gross margin, which is expected to be in the low 60s%, and a sequential increase in operating expenses, primarily due to additional R&D expense, as well as additional expenses incurred associated with standing up Embecta as an independent company. In closing, Embecta continues to be very well positioned to exit fiscal year 2022 with a strong financial profile as we complete our first six months as an independent company. That completes my prepared remarks, and at this time I'd like to turn the call over to Dev for some final comments.
Thank you, Jake. Wrapping up our discussion on slide 10, you will see that our capital allocation priorities are set with the intention to make strategic investments to accelerate our long-term growth profile. We expect to do this through commercial investments, the introduction of next gen products, and M&A. First, we can continue to expand and penetrate through our core business. This includes e-commerce investments as well as educating people with diabetes and other stakeholders on the benefits of using a new device for every injection. Second, we intend to increase our investment in R&D, and we remain excited about our patch pump that is being developed for the type two market. Finally, we continue to seek partnerships and acquisitions where we can use our manufacturing strengths and commercial capabilities to add value.
Before we open up the line for Q&A, I would like to extend my thanks to the global Embecta team for everything they have done and continue to do to serve people with diabetes while we stand up Embecta as an independent company. With that, operator, we will now open up the line for questions.
As a reminder, to ask a question, please press star one one. Our first question comes from Travis Steed with Bank of America. Your line is open.
Hey, good morning, everybody. Congrats on a good quarter. I guess I'd start with maybe just talk about the performance in the quarter, you know, the ability to kind of raise the guidance on you know, the better performance in the quarter. It seems like on the margin side, most of the second half guide raise is all because of the Q3 outperformance, and you're assuming some of the similar things for Q4. Just trying to think through how that could actually impact some of the longer term if your view on the long-term margins are kind of in the same place, the low 60% by 2024 and 30% by on EBITDA margin.
Hi, Travis, this is Dev. Thanks for the question. Maybe I'll start off and ask Jake to jump in here. With respect to our thoughts on the longer term that we laid out in March, nothing has changed, really. With respect to this quarter's performance that we just disclosed today, those were all aligned with the guidance that we had provided earlier this year when we provided guidance for the second half of the year. Maybe Jake, you can comment on some specifics on the quarter.
Travis, again, thanks for the question. You know, I think that really across different line items within the P&L, I think for our first quarter as an independent entity, they did largely come in better than expected. You know, I think from a revenue perspective, some of that had to do with the fact that, as Dev mentioned in his prepared remarks, we had some orders that ended up just from a timing perspective falling into Q3, as compared to say what we previously would have expected it being in Q4. Now that said, we provided guidance for the entirety of the second half of the year.
As compared to that prior guidance, our business, our base business is doing slightly better than expected. I think off to a good start. Candidly had the contract manufacturing revenue to BD, which we've always said we viewed as sort of transient in nature, had that remained consistent at our prior guide of roughly $15 million, instead of now us expecting $10 million in the second half of the year, you know, that would have added another, let's call it 80 basis points or so to our constant currency revenue performance.
I think from an underlying base business standpoint, you should think of our kinda core injection franchise in doing something north of, let's call it 1%, 1%-1.5%, give or take, better than what we previously anticipated. A positive start for the year. Likewise, I would say, you know, from a gross margin and an EBITDA margin standpoint, you know, still very, very robust at roughly 70% and a little over 40.5% for the third quarter. I think out of the gate, continuing to manage costs well, continuing to stand up the company, and continuing to drive, you know, leverage through the P&L. Very happy to see for our first quarter.
You know, for the guidance for the second half of the year, we tried to be, you know, pretty prescriptive in the prepared remarks and talking about, you know, what that would imply for Q4. Essentially it still points people back to a thought that, you know, the margin profile for, in fact, the gross margin line will be, you know, roughly in that kinda low 60s-ish% area, and that the adjusted EBITDA margin will be in, you know, sort of that low 30s-ish% area for the fourth quarter. Nothing changed from our perspective regarding, you know, certainly the longer-term outlook.
You know, inflation is probably a little bit more of a negative headwind right now than what we would have previously anticipated back when we provided sort of those 2024 goals and objectives back in March. I think I'm happy to say that you know, nothing has changed regarding our thoughts concerning the financial profile of Embecta either you know, really nearer term or longer term through 2024.
All right. That's helpful. If you think about all the different buckets that you gave, your contract manufacturing agreement, the lease, the TSA, the whole list of things that you gave is kind of baked in. I don't know if there's a way to help quantify the different buckets or the totality of those things and to think about how much of that could roll off next year. Since you're a new company, I don't know if there's a way to think about FX and how like FX changes impact margins. If there's any rule of thumb you'd love to give on that, would love to hear that.
Sure. Look, from an FX standpoint, maybe I'll start there first. You know, from an FX standpoint, I think that impacted our gross margins, for instance, by roughly somewhere between 200-250 basis points negatively year-over-year in the third quarter. You know, from a standup cost standpoint, I think we're not necessarily going to provide specific dollar amounts associated with each individual line item. Some of them obviously, you know, from a TSA standpoint as we begin to kind of stand up the company, some of the TSAs, you know, could fall off.
I would sort of point you back to, you know, sort of that move from kind of Q3 either gross or EBITDA margins to Q4 as sort of being the main drivers, right? You know, those were really, I would say, four main items. The sequential move from kind of Q3 adjusted gross margin to Q4 adjusted gross margin serves as sort of a good proxy as to kind of where we were sort of pre-spin to, you know, sort of post-spin and the longer term outlook through 2024.
In the third quarter to fourth quarter, we talked about, you know, gross margins going from sort of 70% into the low 60s%, and the fourth being driven by a combination of the supply agreements, probably most notably the cannula costs, different product and geographic mix shifts, as well as just a variety of different incremental investments and stand up costs. Then lastly, obviously the impact of inflation. Each of those we would expect to probably impact Q3 to Q4 about equally.
Okay, great. Thanks for taking the question and congrats on a good quarter.
Thanks, Travis.
Thank you.
Our next question comes from Cecilia Furlong with Morgan Stanley. Your line is open.
Great. Good morning and thank you for taking the questions. I wanted to turn back to just your comments on the timing of some of the orders, the impact in Q3, and really how you're thinking about 4 Q contributions U.S. versus OUS on a sequential basis. Really what you saw in Q3 and how we should think about relative contributions in four Q. Tied in with that too, just how you're thinking about both China, some of the other geopolitical potential impacts on the business as well as the potential for pricing in four Q as well.
Hi, Cecilia, this is Dev. Again, I'll start off here. I'll try to go through each one of the, I think, topics you had raised. The first one, with respect to timing of orders, you know, in our business there is some order pattern variation that can occur quarter to quarter, but frankly, it's in line with what we had thought could potentially happen when we gave second half guidance, and that's why we gave second half guidance versus quarter to quarter. I think if you think about shifts from Q3 to Q4, and if you will, the geographic mix between U.S. and international, you know, that is likely to shift a little bit more towards international in Q4 versus Q3, and it's one of the factors that impacts the quarterly gross margin for Q4.
If you look at it from a certainly a normalized period over 12 months, I think you're gonna find that the U.S. and international mix is well aligned with you know expectations that we've set previously. With respect to China and geopolitical concerns, you know, again, when we gave guidance for the second half of the year, you know, we knew that there were COVID-19 disruptions going on in China. You may remember at that time, you know, lockdowns were still pretty fresh in everybody's mind. You know, the way things have played out in China, again, have been within the range of outcomes that we had expected. Clearly, it's a fluid situation. I think the geopolitical concerns in China may have heightened a little bit.
You know, we've all read about the drills that impact China, Taiwan, so it's a situation we are watching closely. Certainly even in the updated guidance that we've given, we think, you know, we've assumed sort of a moderate level of continued impact on the China business as a result both of COVID-19 as well as the geopolitical issues. Frankly, finally, with respect to pricing, you know, I did comment that we had some favorable price that we got in the most recent quarter in the U.S. and then some parts of Asia. You know, again, in line with my previous commentary, you know, where we get a chance to adjust and optimize price, certainly we do.
That happens on an ongoing basis, given just the diversity of the geographic revenue that we have and the diversity of customers that we have. You know, some of our contracts allow us to take price periodically, and so we exercise that when possible. You saw the favorable impact of that in the quarter that we just reported. Jake, anything you'd like to add to that?
The only thing I think I'd add is just maybe a little bit more color regarding, you know, sort of the sequential move in kinda Q3 revenue dollars to what we are essentially implying for Q4. I think that's really just due to a handful of items, you know, the timing issue that Dev's mentioned. Second, you know, we would expect there to be sequentially more of an incremental FX headwind from Q3 to Q4. Lastly, you know, we would expect there to be more of a net headwind between the rebate reserve adjustments that we would've generated in the fourth quarter of last year versus, you know, sort of the
There's gonna be incremental rebate reserve adjustments that we are going to see, you know, sort of negatively impacting us in the fourth quarter. You know, but all that said, I think we're very pleased that, you know, for the first quarter, as a publicly traded company, that we have the opportunity to increase our second half of the year constant currency revenue expectations, and that's really all due to slight improvements in that base business.
Great. If I could follow up as well, and appreciate your commentary on R&D and just the timing there, but can you speak to just your expectations both-
Expectations, and that's really all due to slight improvements in that base business.
Great. If I could follow up as well and appreciate your commentary on R&D and just the timing there, but can you speak to just your expectations both for 4Q as well as 2023, fiscal 2023, as you ramp contributions to the patch pump program? 3Q was a bit lighter than we were expecting, so just would love some more commentary on how you envision that ramping both through the balance of this year and into 2023.
Let me talk about Q3 and Q4 and R&D. First of all, our patch pump program is progressing as we would expect it to. You know, we continue to be pleased with the progress that we are making in the development of that product. With respect to R&D spend in Q3 and Q4, again, Cecilia, it's a timing. It's purely a timing thing in terms of total. Our expectations haven't changed with respect to what we expect to spend on R&D for this year. I wouldn't you know, draw any big conclusions from the timing shift from Q3 to Q4 for R&D spend.
Respectfully, with respect to FY 2023, you know, we'll comment on that more specifically when we have our Q4 earnings call and we set guidance for 2023. I would say, though, that our expectations that we laid out in March, you know, through sort of what we call long term then FY 2024, none of that has changed with respect to either revenue or we had laid out expectations for R&D. That hasn't changed either. But as I said, respectfully, I'll reserve our comments for FY 2023 when we speak in a little over 90 days.
Okay, understood. Congrats on the quarter, and thank you for taking the questions.
Thank you, Cecilia.
As a reminder, to ask a question, please press star one. Our next question comes from Marie Thibault with BTIG. Your line is open.
Good morning, Dev. Good morning, Jake. I'll add my congrats here also on a strong quarter. Nice to see. Wanted to ask maybe a very high-level question. You've given us some commentary around timing shifts and some thoughts on standing up costs for the public company. But just at a very high level, I'd love to hear a few months here into the transition, what's gone according to plan and what has surprised you either to the upside or downside about this whole process?
Marie, this is Dev. Thanks for your comments and for the question. Look, at a high level, you know, I must say I'm very pleased with how our team has performed in the first quarter as an independent company. You know, this business has been part of BD for almost 100 years. Now we're separate and we stand up a company, and I'm very pleased with how the team has performed, as I said. In terms of positive surprises, the morale and just the sort of leaning forward attitude of the team continues to drive our business forward.
I think on the negative side, you know, candidly, it would have been nice to start off as an independent company without the raft of geopolitical issues, the inflationary pressures, the transportation disruptions that I know all companies are facing with. But sort of having to wrestle through all of that in the first quarter as an independent company, let's just say I wouldn't have been disappointed to avoid.
Of course. Makes sense. Maybe I can ask my follow-up here. Maybe on a timely issue, you know, obviously hearing news about a price cap on insulin here in the U.S., is that going to have any impact on your business at all? Does that present a tailwind at all? Just love to hear your thoughts. Thank you.
Yeah. Look, in general, anything that expands access to insulin so that people with diabetes can manage their diabetes appropriately will help us, right? Also, my hypothesis, Marie, is that, you know, pricing sort of caps on insulin are going to help more people get access to insulin than previously, which again, sort of the hypothesis would be, I mean, these are likely people that will be using injection devices to deliver their insulin, and so could be a tailwind. Now, you know, all of this is still being wrestled through the legislative process, so it's not something we are dialing it into any of our projections. But certainly I would expect it to be a net positive.
All right. Very good. I'll jump back in queue. Thank you.
Thank you, Marie.
There are no further questions. I'd like to turn the call back over to Dev Kurdikar for any closing remarks.
Thank you all for attending our call and for your interest in our company. It's something we deeply appreciate. I also wanna end again by thanking our team for doing everything that they have done to continue to support people with diabetes, even as we stand up Embecta as its own independent, separate company. Have a great day, all, and we look forward to speaking with you again, next quarter.
This concludes the program. You may now disconnect.