Steris
(NYSE: STE)
, a major provider of sterilization products and services, announced a targeted restructuring to prepare for future growth.
The Mentor, Ohio–based company said the restructuring includes its Healthcare surgical capital business in Europe. Other actions include product rationalizations, facility consolidations and the impairment of an internally developed X-ray accelerator.
The news comes on top of Steris’ announcement a month ago that it will divest its dental segment to Peak Rock Capital for $787.5 million. Also last month, the company completed a divestiture of its Controlled Environment Services business within its Life Sciences segment.
“Combined, these actions allow us to focus on our core business and deliver on the long-term commitments we have made to our investors. We are confident that with these changes, we will have the right portfolio, sales channels, and network of facilities to deliver to our customers over the years to come,” Steris CEO Dan Carestio said during the company’s fourth-quarter earnings call with analysts this morning.
The restructuring announcement — along with Street-beating Q4 results — sent STE shares up more than 6% to $223.10 apiece by midday trading today. MassDevice’s MedTech 100 Index was up nearly 1%.
Delivering revenue growth in a changing sterilization landscape
In its after-hour earnings release yesterday, Steris announced that it swung to a loss of $1.0 million, or 1¢ per share, off of $1.419 billion in revenue for the fourth quarter ended March 31, 2024. During the same quarter a year ago, Steris earned $187.0 million, or $1.89 per share, off of $1.281 billion in revenue.
Adjusted to exclude one-time items, Steris saw Q4 EPS of $2.58. The result was 23¢ ahead of the consensus of Wall Street analysts, who predicted EPS of $2.35 and revenue of $1.41 billion.
Total revenue for fiscal 2024 increased 12% to $5.5 billion. For fiscal 2025, Steris is projecting revenue from continuing operations to increase 6.5–7.5%.
Steris and other companies in the medical device sterilization space are facing a shifting landscape as the EPA seeks to reduce emissions of ethylene oxide (also referred to as EtO or EO), which is widely used. The FDA, commercial sterilizers such as Steris, and medtech manufacturers have already sought EtO alternatives and emission reductions to lessen the health risks of emissions to workers and communities .
One possible alternative to EtO is vaporized hydrogen peroxide (VHP). Steris provides VHP sterilization services and sells VHP chambers and equipment.
Carestio said of the changes in the industry: “Steris is incredibly well positioned as a technology-neutral and location-neutral company in terms of how we help our customers — whether that is we sell them accelerators for their own in-house deployment, or VHP for their own in-house deployment for sterilization, or whether they use us in a large scale contract situation where we have consistently continued our expansion efforts as we expect the growth in the industry to continue long term.”
