) reported its first-quarter fiscal 2015 adjusted earnings of 54
cents per share, up 22.7% from the year-ago level of 44 cents.
However, it missed the Zacks Consensus Estimate by a penny. Without
these adjustments, the reported EPS plummeted 24.1% to reach 41
cents in the reported quarter.
Revenues in Detail
Revenues improved 12.2% year over year to $412.6 million in the
quarter, but lagged the Zacks Consensus Estimate of $425 million.
The year-over-year growth was driven by solid performance in the
company's Healthcare and Isomedix segments. Organic growth in the
quarter was 3%.
According to the company, revenue growth remained in line with
its expectations as the consumables business successfully exceeded
the forecast but was offset by softness in capital equipment
Segments in Detail
Revenues from the
segment (73.4% of total revenue) increased 16.9% year over year to
$302.8 million in the reported quarter. Growth in the top line was
driven by 43% increase in service revenues, 12% growth in
consumable revenues and 1% increase in capital equipment revenues.
However, excluding the IMS and Eschmann acquisitions, organic
revenue growth in this segment was 4%.
(14.2% of total revenue) dropped 2.2% to $58.6 million in the
reported quarter. The 6% increase in consumable revenues and 9%
growth in service revenues were offset by an 18% decline in capital
equipment revenues during the quarter.
STERIS Isomedix Services
revenues were $51.2 million (accounting for the rest), up 6.2% year
Gross margin expanded 128 basis points (bps) year over year to
41.2% in the first quarter with 15.8% increase in gross profit. The
increase came on the back of favorable product mix and foreign
currency, partially offset by higher material costs and
Steris witnessed a 21% year-over-year increase in selling,
general, and administrative expenses to $113.7 million and 4.7%
increase in research and development expenses to $12.4 million in
the quarter. Consequently, operating margin contracted 51 bps to
10.7% year over year.
Steris exited the first quarter of fiscal 2015 with cash and
cash equivalents and short-term investment of $157.9 million
compared with $153.8 million at the end of 2014. The company had
long-term debt of $658.7 million at quarter-end.
During the reported quarter, the company generated $46.4 million
in cash flow from operations. Capital expenditure incurred by the
company was $23.4 million resulting in a free cash flow of $23.1
million for the quarter.
The company reiterated its outlook for fiscal 2015. It continues
to expect revenue growth in the range of 15-17% and adjusted
earnings per share in the range of $2.78 to $2.91 for the
year. The current Zacks Consensus Estimate for revenues is
pegged at $1.89 billion while the same for EPS stands at $2.88
(within the guided range).
Steris made a struggling start to fiscal 2015 with its first
quarter earnings and revenues both missing the respective Zacks
Consensus Estimate. Although revenues showed a year-over-year
improvement of 12%, acquisition-related growth accounted for the
lion's share of this. However, the Healthcare segment showed
strength in both consumable and service revenues.
The stock currently bears a Zacks Rank #3 (Hold).
Other Stocks to Consider
Better-ranked medical stocks that are worth a look include
Edwards Lifesciences Corp. (
), Hologic Inc. (
) and Hansen Medical, Inc. (
). All of these three stocks carry a Zacks Rank #2 (Buy).
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HOLOGIC INC (HOLX): Free Stock Analysis Report
EDWARDS LIFESCI (EW): Free Stock Analysis
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STERIS CORP (STE): Free Stock Analysis Report
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