Medical device company STERIS (NYSE:STE) is viewing its recently started fiscal 2013 as a “turning point” for the company, as it moves beyond a lengthy and costly transition from its flagship sterilization system.
Mentor, Ohio-based STERIS experienced several challenges to its bottom line last year, including costs associated with moving customers to its System 1E, a liquid chemical sterilizing system used by hospitals, surgical centers and other healthcare facilities to sterilize heat-sensitive medical instruments. It’s a replacement device for the System 1.
The U.S. Food and Drug Administration is requiring customers to transition away from the System 1 because it found in December 2009 that STERIS had made so many changes to the device over the years that the agency hadn’t cleared its modified version.
The transition took a toll on STERIS’ profitability in its fiscal 2012, which ended on March 31, 2012. Adjusted net income fell slightly to $2.16 per diluted share compared with $2.19 per diluted share in the previous year.
But an end for STERIS is in sight. An FDA deadline for STERIS to continue supporting System 1 customers is set for Aug. 2.
“We anticipate that fiscal 2013 will be a turning point for the company, as we complete the System 1 transition and establish a new foundation from which we intend to grow revenue and earnings in the future,” CEO Walt Rosebrough said in announcing the company’s fourth-quarter and full-year financial results.
Leaving aside the System 1 and System 1E issues, Rosebrough said the rest of STERIS’ business performed “very well” last year, including products associated with integrated operating rooms, LED lighting and its V-Pro sterilization systems.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
For its fiscal 2013, STERIS expects revenue to be flat compared with $1.41 billion in 2012. Earnings per diluted share are pegged between $2 and $2.20.
