DUBLIN - STERIS plc (NYSE: STE), a global leader in infection prevention, announced today that it has agreed to sell its Dental segment to private investment firm Peak Rock Capital. The $787.5 million deal includes an additional potential earnout of $12.5 million based on fiscal 2025 revenue targets.
The divestiture is structured as an equity sale, allowing STERIS to concentrate on its core markets in healthcare, pharmaceuticals, and medical technology. The Dental segment, acquired through the Cantel purchase, has reported a revenue of $407 million and an operating income of $86 million for the trailing twelve months ending December 31, 2023.
STERIS President and CEO Dan Carestio commented on the transaction, stating that the decision to divest came after a strategic review and a focus on lean manufacturing methods within the segment. He expressed confidence in the segment's future success under Peak Rock Capital's ownership.
The transaction is contingent on customary closing conditions, including regulatory approval, and is expected to be finalized in the first quarter of fiscal year 2025. STERIS plans to use the proceeds primarily to repay debt, anticipating an approximate $0.35 per diluted share benefit from the reduced interest expense on a full-year run rate basis.
The Dental segment will be classified as discontinued operations in STERIS's fourth-quarter and full-year fiscal 2024 financial statements. The company will provide an updated fiscal 2025 outlook reflecting the divestiture when it reports its fourth-quarter fiscal 2024 results.
Guggenheim Securities is serving as the financial advisor, with Jones Day as legal counsel to STERIS for this transaction.
STERIS, known for its commitment to creating a healthier and safer world, offers a range of products and services that support patient care, with a particular emphasis on infection prevention. This sale marks a strategic shift to focus on areas where the company believes it can deliver the most value.
This article is based on a press release statement.
InvestingPro Insights
As STERIS plc (NYSE: STE) streamlines its operations with the sale of its Dental segment, the company's financial health and market position remain of keen interest to investors. According to recent data from InvestingPro, STERIS has a market capitalization of $20.67 billion and is trading at a P/E ratio of 36.52, reflecting a premium compared to many peers in the healthcare sector.
The company's commitment to shareholder returns is evident, with a notable track record of raising its dividend for 13 consecutive years, a sign of confidence in its financial stability and future earnings potential.
On the growth front, STERIS has shown a solid revenue growth of 13.04% over the last twelve months as of Q3 2024, coupled with a gross profit margin of 43.64%, indicating efficient operations and strong pricing power. Despite the divestiture, analysts predict the company will remain profitable this year, a sentiment supported by a positive return on assets of 5.11% during the same period.
Investors considering a deeper dive into STERIS's financials and future outlook can find additional insights with InvestingPro, which offers more InvestingPro Tips to guide investment decisions. For those interested, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to a wealth of expert analysis and proprietary tools. As of now, there are 5 additional InvestingPro Tips available for STERIS, including assessments of earnings revisions and stock volatility, which could be particularly useful for evaluating the company's post-divestiture prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.