Why did STERIS report a fourth-quarter net loss?

The U.S. GAAP fourth-quarter net loss of $1.4 million reflects a $206.4 million pre-tax loss recognized when the Dental segment's net assets and operations were reclassified to discontinued operations following the announced divestiture. Results also included $44.4 million of pre-tax restructuring charges.

What is the restructuring plan and what will it cost?

The plan covers restructuring of the Healthcare surgical business in Europe, impairment of an internally developed X-ray accelerator, product rationalizations and facility consolidations. STERIS expects about $100 million of pre-tax charges, with $44.4 million recorded in the fourth quarter and the balance in fiscal 2025. About $50 million is non-cash, and the company expects about $25 million of annual EBIT improvement, mostly from fiscal 2026 onward.

What does STERIS expect for fiscal 2025?

The company expects as-reported revenue from continuing operations to grow 6.5% to 7.5%, with constant currency organic growth of 6% to 7%. Adjusted diluted EPS from continuing operations is expected to be $9.05 to $9.25, versus $8.20 in fiscal 2024. Capital expenditures are estimated at about $360 million and free cash flow at about $700 million. The outlook assumes an effective tax rate of about 23%.

How did the Healthcare segment perform?

Healthcare fourth-quarter revenue rose 14% as reported to $1,007.9 million, with capital equipment revenue up 19%, consumable revenue up 14% and service revenue up 9%. Constant currency organic revenue increased 9%. Segment operating income was $245.2 million, compared with $208.8 million a year earlier, due to higher volume, favorable pricing and the addition of surgical instrumentation assets purchased from BD.

What is the status of the Dental divestiture and the Controlled Environment Services sale?

The Dental segment is presented as discontinued operations because of the agreement to divest it, and the filing notes that completion depends on closing conditions and regulatory approvals. The company also completed the divestiture of its Controlled Environment Services business in April 2024, which had approximately $35 million of fiscal 2024 revenue and is excluded from fiscal 2025 constant currency organic revenue growth.

STE 8-K: Earnings & Results & Financial Events

01—Abstract

Summary

Summary of the 8-K filed May 8, 2024. Cited figures are marked; the original filing is the authoritative source.

STERIS plc (NYSE: STE) reported fiscal 2024 fourth-quarter and full-year results for the periods ended March 31, 2024, and announced a targeted restructuring plan.

Fourth-quarter total revenue rose 10% to $1.5 billion^a, and full-year revenue rose 12% to $5.5 billion. Fourth-quarter U.S. GAAP results show a net loss of $1.4 million, or $(0.01) per diluted share, compared with net income of $187.2 million, or $1.88 per diluted share, a year earlier. The loss reflects a $206.4 million pre-tax loss from reclassifying the Dental segment to discontinued operations, following the announced divestiture, and $44.4 million of pre-tax restructuring charges.

Full-year U.S. GAAP net income was $378.2 million^b, or $3.81 per diluted share, while adjusted earnings per diluted share rose to $8.83 from $8.20. The restructuring plan covers the Healthcare surgical business in Europe, an impairment of an internally developed X-ray accelerator, product rationalizations and facility consolidations. The company expects about $100 million of pre-tax charges, of which about $50 million is non-cash, with $44.4 million recorded in the fourth quarter and the balance in fiscal 2025.

The company expects roughly $25 million^c of annual EBIT improvement, mostly from fiscal 2026 onward. For fiscal 2025, STERIS guided to as-reported revenue growth of 6.5% to 7.5% and adjusted diluted EPS from continuing operations of $9.05 to $9.25, compared with $8.20 in fiscal 2024.

Capital expenditures are expected to be about $360 million^d and free cash flow about $700 million. Full-year fiscal 2024 free cash flow was $620.3 million, up from $409.6 million.

02—Key points

Key Highlights

Total fiscal 2024 revenue rose 12% to $5.5 billion; fourth-quarter revenue rose 10% to $1.5 billion.
Fourth-quarter U.S. GAAP net loss of $1.4 million, or $(0.01) per diluted share, versus net income of $187.2 million ($1.88 per diluted share) a year earlier, driven by a $206.4 million pre-tax loss on the Dental segment's reclassification to discontinued operations and $44.4 million of restructuring charges.
Full-year U.S. GAAP net income of $378.2 million, or $3.81 per diluted share, versus $107.0 million ($1.07) in fiscal 2023; adjusted diluted EPS rose to $8.83 from $8.20.
Targeted restructuring plan with about $100 million of pre-tax charges (about $50 million non-cash), roughly $25 million of annual EBIT improvement expected mostly from fiscal 2026, and substantial completion by the end of fiscal 2025.
Healthcare segment fourth-quarter revenue rose 14% to $1,007.9 million, with operating income of $245.2 million versus $208.8 million a year earlier.
Fiscal 2025 outlook: as-reported revenue growth of 6.5% to 7.5%, adjusted diluted EPS from continuing operations of $9.05 to $9.25, capital expenditures of about $360 million and free cash flow of about $700 million.
Full-year fiscal 2024 operating cash flow of $973.3 million and free cash flow of $620.3 million, up from $756.9 million and $409.6 million.

03—Questions

Frequently Asked Questions

Why did STERIS report a fourth-quarter net loss?
The U.S. GAAP fourth-quarter net loss of $1.4 million reflects a $206.4 million pre-tax loss recognized when the Dental segment's net assets and operations were reclassified to discontinued operations following the announced divestiture. Results also included $44.4 million of pre-tax restructuring charges.
What is the restructuring plan and what will it cost?
The plan covers restructuring of the Healthcare surgical business in Europe, impairment of an internally developed X-ray accelerator, product rationalizations and facility consolidations. STERIS expects about $100 million of pre-tax charges, with $44.4 million recorded in the fourth quarter and the balance in fiscal 2025. About $50 million is non-cash, and the company expects about $25 million of annual EBIT improvement, mostly from fiscal 2026 onward.
What does STERIS expect for fiscal 2025?
The company expects as-reported revenue from continuing operations to grow 6.5% to 7.5%, with constant currency organic growth of 6% to 7%. Adjusted diluted EPS from continuing operations is expected to be $9.05 to $9.25, versus $8.20 in fiscal 2024. Capital expenditures are estimated at about $360 million and free cash flow at about $700 million. The outlook assumes an effective tax rate of about 23%.
How did the Healthcare segment perform?
Healthcare fourth-quarter revenue rose 14% as reported to $1,007.9 million, with capital equipment revenue up 19%, consumable revenue up 14% and service revenue up 9%. Constant currency organic revenue increased 9%. Segment operating income was $245.2 million, compared with $208.8 million a year earlier, due to higher volume, favorable pricing and the addition of surgical instrumentation assets purchased from BD.
What is the status of the Dental divestiture and the Controlled Environment Services sale?
The Dental segment is presented as discontinued operations because of the agreement to divest it, and the filing notes that completion depends on closing conditions and regulatory approvals. The company also completed the divestiture of its Controlled Environment Services business in April 2024, which had approximately $35 million of fiscal 2024 revenue and is excluded from fiscal 2025 constant currency organic revenue growth.

04—Continue

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