Steris Corp. reports 47% drop in third-quarter earnings due to effects of settlement

 

Medical equipment maker Steris Corp. has reported that its profits fell 47% in its fiscal third quarter from a year earlier, partly because of a settlement payment related to a lawsuit involving its popular endoscope cleaning machines.

Profits slid to $21.8 million, or 37 cents per share, in the quarter that ended Dec. 31, 2010, from $41 million, or 70 cents per share, in the third quarter of fiscal 2010. The $19.8 million settlement in the latest third quarter took its toll on Steris’ profits. Excluding the effects of the settlement and a rebate program, Steris would have reported a profit of about $34 million, which still represents a 17% drop from its year-earlier earnings.

Revenue was essentially flat, at $328.3 million in the latest third quarter compared to $327.8 million in the third quarter of fiscal 2010. Sales increases in the company’s Healthcare and Isomedix segments offset sales declines in its Life Sciences segment.A class action suit that resulted in the settlement was filed by customers who had bought Steris’ System 1 endoscope processor. The U.S. Food and Drug Administration in December 2009 revoked the machine’s status as an FDA-approved device, saying that the company had made significant changes to the machine without seeking approval from the federal agency.Steris since has released the System 1E, a replacement for the System 1. The FDA approved the System 1E for sale in April 2010.Lower-than-expected shipments of the System 1E led the company to lower its revenue guidance for fiscal 2011. The company now expects revenue to grow 2% over the course of the year, down from the previous estimate of 5% growth. Earnings still are expected to remain in the range of $2.15 to $2.30 per diluted share.

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February 08, 2011 No Comments »
Posted by Rachel Sutton
Tags: Settlement, Steris Corp

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