Ohio infection control solutions provider Steris (NYSE:STE) closed the previously reported acquisition of Integrated Medical Systems, paying about $165 million for the surgical instrument management company.
The deal closed earlier this month with Steris paying an additional $10 million for certain real estate assets owned by IMS.
In a separate announcement, Steris reported strong earnings growth during its 4th fiscal quarter, with adjusted earnings up 30% on a sales boost of 9.2%. The company took a major hit to its bottom line with about $20.5 million in charges associated with closing a Hopkins manufacturing facility and cutting about 150 workers worldwide.
Restructuring costs took about 21¢ per share from Steris’ earnings, which amounted to 65¢ for the quarter, down 7% year-over-year on a non-adjusted basis. Excluding that and other special charges, Steris’ adjusted earnings came to 91¢ per share.
The company has said that it hopes to recoup about $10 million in annual savings by closing the manufacturing facility and slashing about 3% of its total workforce. The facility will close completely by October this year, according to previous company statements.
"As a result of the reduced demand for our System 1E product family following the completion of the System 1 transition, the Hopkins Facility is now running significantly below full capacity," Steris president & CEO Walt Rosebrough said when the closure was made public in March. "While we have not made final decisions on the locations of all of the Hopkins production, this closure enables us to more efficiently utilize our existing North American manufacturing network."
The FDA ordered hospitals across the country to stop using the System 1 devices in 2009, following more than 18 months of legal wrangling, ending in a de-facto recall of a product that hadn’t been linked to any cases of infection or injury. The federal watchdog agency warned that Steris made significant modifications to the SS1 without seeking additional 510(k) clearance, but Steris denied in letters to customers that changes to the device merited a new application. In a February 2010 letter the FDA further warned all endoscope makers that they must change the labeling on any devices that claimed they could be reprocessed using the SS1 system, and even suggested they add language indicating that "the Steris System 1 (SS1) is not a legally marketed device."
In total, Steris reported profits of $38.9 million, or 65¢ per diluted share, on sales of $465.3 million during the 3 months ended March 31. That compared with profits of $41.4 million, or 70¢ per share, on sales of $426.2 million during the same period last year.
For the full year the company posted profits of $129.4 million, or $2.17 per diluted share, on sales of $1.62 billion. That compared with profits of $156 million, or $2.72 per share, on sales of $1.48 billion in fiscal 2013.
STE shares closed last night at $53.87, down 2% on the day. The stock has gained 12.1% since the start of the year.
