) has expanded its portfolio banking on two acquisitions
Spectrum Surgical Instruments and Total Repair Express for $110
million. After adjusting for anticipated tax benefits, the
purchase price came in at approximately $93 million. The
transactions are likely to have no impact on Steris' earnings in
fiscal 2013, but are expected to be accretive in fiscal 2014 and
The privately held Spectrum Surgical Instruments and Total
Repair Express, with combined revenue of about $72 million,
provide surgical instrument repair services and instrument care
products to hospitals and surgery centers in the US. They repair
the instruments both at the hospital premises and at central
repair facilities. The services offered encompass inspection,
cleaning, lubrication and repair of reusable surgical instruments
such as forceps, retractors and scissors. On the contrary,
the current Service business of Steris is primarily focused on
the installation, maintenance and repair of its capital
equipments in healthcare facilities.
These two acquisitions would be integrated into Steris's
Healthcare segment as part of its Specialty Services business.
Banking on this deal, the company would have one of the largest
surgical instrument repair businesses in the U.S., which can be
expanded further by leveraging its existing customer base.
Hospitals are under the growing pressure to cut costs and
increase procedure productivity, hence they have opted to
outsource the repair of surgical instruments to keep operating
costs under control. According to estimates, the amount of
outsourced business is more than $500 million in the US and is
growing in the mid- to high-single digits.
Steris is on an acquisition spree and has expanded its
presence in the gastrointestinal market with its decision to
acquire United States Endoscopy for $270.0 million in cash in
July. The company's acquisitions are in sync with its strategy of
expansion in areas with attractive market dynamics.
Steris is expected to report fiscal 2013 second quarter
results on October 31, 2012. The company had delivered an
earnings surprise of 17.8% for the first quarter of fiscal 2013
(ended June 30). Shares for this provider of medical appliances
and equipment have been rising over the recent past, and hit the
52-week high of $37.18 on October 5.
The Healthcare segment of Steris witnessed tough competition
from players namely
), among others.
The stock carries a Zacks #2 Rank (Buy) in the short term.
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