STERIS plc (NYSE: STE) (“STERIS” or the “Company”) today announced
that the Company has signed a definitive agreement to purchase Key
Surgical, a portfolio company of Water Street Healthcare Partners,
LLC, through a U.S. subsidiary for $850 million. STERIS
anticipates that the acquisition will qualify for a tax benefit
related to tax deductible goodwill. Adjusting for the present
value of the anticipated tax benefit, the purchase price is
effectively reduced to approximately $810 million. Key
Surgical, founded in 1988, is a leading global provider of
consumable products serving hospitals and surgical
facilities. Annual revenue for Key Surgical in calendar 2020
is anticipated to be approximately $170 million, with adjusted EBIT
of approximately $50 million.
“Key Surgical strengthens, complements and expands STERIS’s
product offering and reach around the globe. Their focus on the
sterile processing department, operating room and endoscopy fits
perfectly with our core Healthcare Customers,” said Walt
Rosebrough, President and Chief Executive Officer of STERIS.
“The business has demonstrated an ability to grow at rates above
industry levels with its product portfolio breadth, a steady stream
of new products and a highly effective commercial model. We
welcome the Key Surgical people to the STERIS team, and we look
forward to working together to enhance our service to our Customers
and the value for our shareholders.”
Under the terms of the agreement, STERIS will purchase the
shares of Key Surgical at closing. The transaction will be
financed through a combination of debt and cash on hand and is
anticipated to close by December 31, 2020 pending customary closing
conditions and regulatory approval. The transaction is
expected to be immediately accretive to STERIS’s adjusted earnings
after close and add approximately $40 million to revenue and about
$0.10 to adjusted earnings per diluted share in STERIS’s fiscal
2021 fourth quarter. STERIS expects to realize annualized
pre-tax earnings synergies of $10-$15 million by year three
following the close.
Conference Call STERIS management will host a
conference call at 10:00 a.m. ET today. The conference call
can be heard live online at www.steris-ir.com or via phone by
dialing 1-833-535-2199 in the United States or 1-412-902-6776
internationally, then asking to join the conference call for STERIS
plc.
For those unable to listen to the conference call live, a replay
will be available beginning at 12:00 p.m. ET today, either online
at www.steris-ir.com or via phone. To access the replay of
the call, please use the access code 10148662 and dial
1-877-344-7529 in the United States or 1-412-317-0088
internationally.
Second Quarter Financial ResultsSTERIS will
announce second quarter fiscal 2021 financial results after market
on Monday, November 2, with an investor call at 10:00 a.m. ET on
Tuesday, November 3, 2020.
AdvisorsGoldman Sachs & Co. LLC is serving
as exclusive financial advisor to STERIS and Jones Day and
Wachtell, Lipton, Rosen & Katz are serving as legal
counsel. Piper Sandler & Co. is serving as exclusive
financial advisor to Key Surgical and Winston & Strawn and
Stinson are serving as legal counsel.
About STERISSTERIS’s MISSION IS TO HELP OUR
CUSTOMERS CREATE A HEALTHIER AND SAFER WORLD by providing
innovative healthcare and life science product and service
solutions around the globe. For more information, visit
www.steris.com.
Investor Contact:Julie Winter, Vice President,
Investor Relations and Corporate
CommunicationsJulie_Winter@steris.com
+1 440 392 7245
Media Contact:
Stephen Norton, Senior Director, Corporate
CommunicationsStephen_Norton@steris.com+1 440 392 7482
Non-GAAP Financial MeasuresAdjusted net income,
adjusted EBIT, free cash flow and constant currency organic revenue
are non-GAAP measures that may be used from time to time and should
not be considered replacements for GAAP results. Non-GAAP
financial measures are presented in this release with the intent of
providing greater transparency to supplemental financial
information used by management and the Board of Directors in their
financial analysis and operational decision making. These amounts
are disclosed so that the reader has the same financial data that
management uses with the belief that it will assist investors and
other readers in making comparisons to our historical operating
results and analyzing the underlying performance of our operations
for the periods presented. The Company believes that the
presentation of these non-GAAP financial measures, when considered
along with our GAAP financial measures, provides a more complete
understanding of the factors and trends affecting our business than
could be obtained absent this disclosure.
Adjusted net income excludes the amortization of intangible
assets acquired in business combinations, acquisition related
transaction costs, integration costs related to acquisitions,
redomiciliation and tax restructuring costs, COVID-19 incremental
costs, and certain other unusual or non-recurring items. COVID-19
incremental costs includes the additional costs attributable to
COVID-19 such as enhanced cleaning protocols, personal protective
equipment for our employees, event cancellation fees, and payroll
costs associated with our response to COVID-19, net of any
government subsidies available. STERIS believes this measure is
useful because it excludes items that may not be indicative of or
are unrelated to our core operating results and provides a baseline
for analyzing trends in our underlying businesses.
The Company defines free cash flow as cash flows from operating
activities less purchases of property, plant, equipment and
intangibles, plus proceeds from the sale of property, plant,
equipment, and intangibles. STERIS believes that free cash
flow is a useful measure of the Company’s ability to fund future
principal debt repayments and growth outside of core operations,
pay cash dividends, and repurchase ordinary shares.
To measure the percentage organic revenue growth, the Company
removes the impact of significant acquisitions and divestitures
that affect the comparability and trends in revenue. To measure the
percentage constant currency organic revenue growth, the impact of
changes in currency exchange rates and acquisitions and
divestitures that affect the comparability and trends in revenue
are removed. The impact of changes in currency exchange rates
is calculated by translating current year results at prior year
average currency exchange rates.
Because non-GAAP financial measures are not standardized, it may
not be possible to compare these financial measures with other
companies’ non-GAAP financial measures having the same or similar
names. These adjusted financial measures should not be considered
in isolation or as a substitute for reported sales, gross profit,
operating income, net earnings and net earnings per diluted share,
the most directly comparable GAAP financial measures. These
non-GAAP financial measures are an additional way of viewing
aspects of the Company’s operations that, when viewed with GAAP
results and the reconciliations to corresponding GAAP financial
measures below, provide a more complete understanding of the
business. The Company strongly encourages investors and
shareholders to review its financial statements and publicly-filed
reports in their entirety and not to rely on any single financial
measure.
Forward-Looking StatementsThis release and the
referenced conference call may contain statements concerning
certain trends, expectations, forecasts, estimates, or other
forward-looking information affecting or relating
to STERIS or its industry, products or activities that
are intended to qualify for the protections afforded
“forward-looking statements” under the Private Securities
Litigation Reform Act of 1995 and other laws and regulations.
Forward-looking statements speak only as to the date the statement
is made and may be identified by the use of forward-looking terms
such as “may,” “will,” “expects,” “believes,” “anticipates,”
“plans,” “estimates,” “projects,” “targets,” “forecasts,”
“outlook,” “impact,” “potential,” “confidence,” “improve,”
“optimistic,” “deliver,” “orders,” “backlog,” “comfortable,”
“trend”, and “seeks,” or the negative of such terms or other
variations on such terms or comparable terminology. Many important
factors could cause actual results to differ materially from those
in the forward-looking statements including, without limitation,
disruption of production or supplies, changes in market conditions,
political events, pending or future claims or litigation,
competitive factors, technology advances, actions of regulatory
agencies, and changes in laws, government regulations, labeling or
product approvals or the application or interpretation thereof.
Other risk factors are described in STERIS’s other securities
filings, including Item 1A of our Annual Report on Form 10-K
for the year ended March 31, 2020. Many of these important factors
are outside of STERIS’s control. No assurances can be provided as
to any result or the timing of any outcome regarding matters
described in STERIS’s securities filings or otherwise with respect
to any regulatory action, administrative proceedings, government
investigations, litigation, warning letters, cost reductions,
business strategies, earnings or revenue trends or future financial
results. References to products are summaries only and should not
be considered the specific terms of the product clearance or
literature. Unless legally required, STERIS does not
undertake to update or revise any forward-looking statements even
if events make clear that any projected results, express or
implied, will not be realized. Other potential risks and
uncertainties that could cause actual results to differ materially
from those in the forward-looking statements include, without
limitation, (a) the impact of the COVID-19 pandemic on STERIS’s
operations, performance, results, prospects, or value, (b) STERIS's
ability to achieve the expected benefits regarding the accounting
and tax treatments of the redomiciliation to Ireland
(“Redomiciliation”), (c) operating costs, Customer loss and
business disruption (including, without limitation, difficulties in
maintaining relationships with employees, Customers, clients or
suppliers) being greater than expected following the
Redomiciliation, (d) STERIS’s ability to meet expectations
regarding the accounting and tax treatment of the Tax Cuts and Jobs
Act (“TCJA”) or the possibility that anticipated benefits resulting
from the TCJA will be less than estimated, (e) changes in tax
laws or interpretations that could increase our consolidated tax
liabilities, including changes in tax laws that would result in
STERIS being treated as a domestic corporation for United States
federal tax purposes, (f) the potential for increased pressure
on pricing or costs that leads to erosion of profit margins,
(g) the possibility that market demand will not develop for
new technologies, products or applications or services, or business
initiatives will take longer, cost more or produce lower benefits
than anticipated, (h) the possibility that application of or
compliance with laws, court rulings, certifications, regulations,
regulatory actions, including without limitation any of the same
relating to FDA, EPA or other regulatory authorities, government
investigations, the outcome of any pending or threatened FDA, EPA
or other regulatory warning notices, actions, requests, inspections
or submissions, or other requirements or standards may delay, limit
or prevent new product or service introductions, affect the
production, supply and/or marketing of existing products or
services or otherwise affect STERIS’s performance, results,
prospects or value, (i) the potential of international unrest,
economic downturn or effects of currencies, tax assessments,
tariffs and/or other trade barriers, adjustments or anticipated
rates, raw material costs or availability, benefit or retirement
plan costs, or other regulatory compliance costs, (j) the
possibility of reduced demand, or reductions in the rate of growth
in demand, for STERIS’s products and services, (k) the
possibility of delays in receipt of orders, order cancellations, or
delays in the manufacture or shipment of ordered products or in the
provision of services, (l) the possibility that anticipated
growth, cost savings, new product acceptance, performance or
approvals, or other results may not be achieved, or that
transition, labor, competition, timing, execution, regulatory,
governmental, or other issues or risks associated with STERIS’s
businesses, industry or initiatives including, without limitation,
those matters described in our Annual Report on Form 10-K for the
year ended March 31, 2020, and other securities filings, may
adversely impact STERIS’s performance, results, prospects or value,
(m) the impact on STERIS and its operations, or tax
liabilities, of Brexit or the exit of other member countries from
the EU, and the Company’s ability to respond to such impacts,
(n) the impact on STERIS and its operations of any
legislation, regulations or orders, including but not limited to
any new trade or tax legislation, regulations or orders, that may
be implemented by the U.S. administration or Congress, or of any
responses thereto, (o) the possibility that anticipated
financial results or benefits of recent acquisitions, including the
acquisition of Key Surgical, or of STERIS’s restructuring efforts,
or of recent divestitures, or of restructuring plans will not
be realized or will be other than anticipated, (p) the effects
of contractions in credit availability, as well as the ability of
STERIS’s Customers and suppliers to adequately access the credit
markets when needed, and (q) STERIS’s ability to complete the
acquisition of Key Surgical, including the fulfillment of closing
conditions and obtaining financing, on terms satisfactory to STERIS
or at all.
- STERIS to Acquire Key Surgical 10.6.2020 Table
STERIS (NYSE:STE)
Historical Stock Chart
From Mar 2024 to Apr 2024
STERIS (NYSE:STE)
Historical Stock Chart
From Apr 2023 to Apr 2024