Steris reports strong Q1 on big gains in healthcare

August 1, 2023 By Jim Hammerand

Steris (NYSE: PHG) + "}" data-sheets-userformat="{"2":769,"3":{"1":0},"11":3,"12":0}"> (NYSE: STE) + today reported first-quarter results that exceeded Wall Street’s expectations while upping guidance for the year ahead due to a recently announced acquisition.

The Dublin, Ireland-based provider of sterilization services and other infection prevention tech posted profits of $123.6 million in the quarter ended June 30, 2023. That amounts to $1.25 per share on sales of $1.28 billion.

Steris reported top- and bottom-line gains of 11%.

Adjusted to exclude one-time items, earnings per share (EPS) totaled $2.00. Wall Street analysts were expecting adjusted EPS of $1.87 on sales of $1.21 billion.

“We are pleased to start the year with strong performance,” Steris President and CEO Dan Carestio said in a news release. “Our first quarter results benefited from continued improvement in procedure volumes and supply chain challenges easing. In addition to those factors, our ability to reduce lead times for Healthcare capital equipment drove our outperformance in the quarter.”

Healthcare sales grew 17% in the quarter to $818.9 million, including gains of 33% in capital equipment revenue, 11% in consumables and 12% in services.

Healthcare operating income increased to $198.2 million from $156.5 million in the same time a year ago. “This improvement was primarily attributable to the increase in volume along with favorable pricing and mix,” the company said.

Applied Sterilization Technologies (AST) revenue grew 6% to $233.1 million. “Revenue growth was limited by customer inventory management and the continued reduction in demand from bioprocessing customers,” the company said.

And Life Sciences revenue decreased 1% to $131.4 million from a “strong first quarter last year.” Revenue in the latest quarter grew 4% in consumables and 20% for services, but declined 23% in capital equipment revenue

Dental revenue sales dropped 4% in the quarter to $101.2 million, but operating income improved to $22.0 million from $19.6 million in Q12022, “primarily due to favorable pricing and improved operating efficiencies.”

Steris updated its 2024 guidance to include its pending acquisition of Becton, Dickinson and Co. (BD) surgical instrumentation, laparoscopic instrumentation and sterilization container assets. That $540 million deal is now expected to close early this month.

The company now expects revenue growth of 9-10% in fiscal 2024, an increase from previous guidance of 7-8%. That bump solely reflects the pending deal, Steris said.

The company expects Adjusted EPS in the range of $8.60 to $8.80, up from previous guidance of $8.55 to $8.75.

Funding requirements for the deal, on the other hand, have reduced the company’s free cash flow expectation from $700 million to $685 million

Filed Under: Blog, Business/Financial News, Dental, Wall Street Beat Tagged With: Applied Sterilization Technologies, Steris