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.
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.