REG - Steris Corp. Synergy Health - STERIS 2Q15 Earnings Release <Origin Href="QuoteRef">MDT.N</Origin> <Origin Href="QuoteRef">STE.N</Origin> <Origin Href="QuoteRef">SYR.L</Origin>

MedtronicAnnouncement

05/11/2014 07:00

RNS Number : 1581W
Steris Corporation
04 November 2014
STERIS Corporation
THISANNOUNCEMENTISNOTFORRELEASE,PUBLICATIONORDISTRIBUTION,IN
WHOLEORINPART,DIRECTLYORINDIRECTLYINORINTOORFROMANY JURISDICTIONWHERETODOSOWOULDCONSTITUTEAVIOLATIONOFTHE RELEVANTLAWSOFTHATJURISDICTION
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4 November 2014
For immediate release
STERIS Corporation
STERISCORPORATION ANNOUNCESFISCAL2015 SECOND QUARTER RESULTS
21%RevenueGrowth Fueled byOrganicGrowthand Acquisitions
Healthcare Revenue Grows 27%, 8% Organic
 Diluted EPS Grows 4% on U.S. GAAP basis and 24% Adjusted
 Board of Directors Approves Quarterly Dividend
Mentor, Ohio (November4, 2014)-STERIS Corporation (NYSE: STE)todayannounced financial results forits fiscal 2015 second quarterended September30, 2014 and filed a Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014 ("Form 10-Q") with the U.S. Securities and Exchange Commission ("SEC"). The Form 10-Q can be found on the SEC website at http://www.sec.gov. 
As reported,fiscal 2015 second quarterrevenueincreased 21%to $462.7million compared with $383.8 million in thesecond quarteroffiscal 2014. As reported, net incomewas $31.0 million, or$0.52 perdiluted share,compared with net incomeof$29.7million, or$0.50 perdiluted sharein thesecondquarteroffiscal 2014.
AdjustedResults
On an adjusted basis, netincome forthesecond quarteroffiscal 2015 was $40.6 million, or$0.68 perdiluted share,compared with adjusted net incomeof$32.6 million, or$0.55 perdiluted sharein the sameprioryearperiod. Pleasereferto theattached schedules foradditional information, including reconciliations ofadjusted "non-GAAPfinancialmeasures"toreportedresults.
"We arepleased to reportthat ourbusiness continues to perform well strategically, operationally, and financially,"said Walt Rosebrough, Presidentand CEO ofSTERIS Corporation. "Oursecond quarter revenuegrew 21%driven byacquisitions as well as strongorganicgrowthin both Healthcare and Isomedix. Wewereableto leveragethat revenuegrowth to drivea24%improvement in adjusted earnings perdiluted share. Given thestrength ofour first half andanticipated growth in thesecondhalf, we arerevisingouroutlook for earnings forthefull fiscalyearto theupper end ofourrange,and now anticipate adjusted earnings perdiluted sharein therangeof$2.86 -$2.91."
SegmentResults
As reported,Healthcarerevenuein thequarterincreased 27%to $351.2 million compared with
$277.3 million in thesecond quarteroffiscal 2014. Healthcareorganicrevenuegrew 8%in thequarter. Consumablerevenueincreased 13%and servicerevenuegrew 65%driven byboth organicgrowth and the acquisition ofIMS. In addition, capital equipment revenuegrew 9%with growth in both infection prevention and surgical solutions. As reported, segment operatingincomewas $29.9 million compared with $25.9 million inlast year's second quarter. Adjusted segment operatingincomeincreased 49%to $45.2 million in thesecond quarteroffiscal 2015compared with $30.3 million in thesameperiod last year. Theincreasein adjusted segment operating incomeyear-over-yearwas primarilydriven by improved gross margins,acquisitions and theincreased volume.
LifeSciences second quarter revenueincreased 1%to $59.1 million compared with $58.4 million in thesecond quarteroffiscal 2014. Contributingto thequarter,consumable revenueincreased 14%and servicerevenuegrew 4%, which wereoffset bya15%declinein capital equipment revenue. Asreported, segment operatingincomewas $13.0 million compared with $14.0 million in lastyear's second quarter. Adjusted segment operatingincomewas $13.2 million compared with $14.1 million in thesameperiod lastyear. Thedeclineinoperatingincomeis primarilyattributableto increased corporateallocation chargesrelatingto incentive compensation as compared with theprioryearperiod.
Fiscal 2015 second quarter revenue forIsomedixServices increased 9%to $51.9 million compared with $47.4 million in thesecond quarterof fiscal 2014. Revenuebenefited from increased volumes from coremedical deviceCustomers. As reported, segment operatingincomewas $14.4million compared with $13.7 million in lastyear's secondquarter. Adjusted segment operatingincomeincreased slightlyto $14.5 million in thequartercompared with $14.0 millionin thesecond quarteroflastyear, as theincreasein volumewas somewhat offset byhigherqualityand regulatoryexpenses and increased corporate allocation chargesrelatingto incentivecompensation as compared with theprioryearperiod.
CashFlow
Net cash provided byoperations forthe first sixmonths of fiscal 2015 was$104.9 million, compared with $80.0 million in thesameperiod lastyear. Freecashflow (seenote1) forthe first halfof fiscal 2015 was $69.2 million, compared with $32.9 million in the first halfoflastyear. Theincreasein freecash flow is primarilydueto theimpact ofworkingcapital improvements and lowercapital expenditures.
DividendAnnouncement
TheCompanyalso announced todaythat STERIS's Board ofDirectors hasauthorized aquarterly dividend of$0.23 per common share. Thedividend is payableDecember23, 2014 to shareholdersof recordat thecloseofbusiness on November26, 2014.
Outlook
Based uponcurrent trends, theCompanyis affirmingits original revenuegrowth outlook for fiscal
2015 of15-17%. However,given thestrength in the first halfoftheyearand anticipated second half performance, theCompanynowanticipates adjusted earnings perdiluted sharein therangeof$2.86 to
$2.91 forthe full fiscalyear, which isat thehigh-end oftheoriginal outlook. STERIS's outlook excludes anypotential impact from theproposed SynergyHealth acquisition described below.
AcquisitionofSynergyHealth
On October13, 2014, the Companycommenced a"recommended offer"to acquireSynergy Health plcin acash and stock transaction valued at $1.9 billion. As indicated in thetransaction announcement, thecombined business is expected to have approximately$2.6 billion in annual revenues from over60countries, approximately14,000employees, and will combineSTERIS's strongpresencein North Americawith SynergyHealth's strongpositions across Europe.
Commentingon thetransaction, Mr. Rosebrough stated, "STERIS'srecentlyannounced proposed acquisition ofSynergyHealth is astrategicstep inourgoal to beastrongerglobal leaderin infection prevention and sterilization. Together, we createabalanced portfolio ofproducts and services that can be tailored to best servetheevolvingneeds ofourglobal Customers. Oncethetransaction is completed,New STERISwill beastrongerglobal leaderin infection prevention and sterilization, better-positioned to provide comprehensivesolutions to medical device companies, pharma companies, and hospitals around theworld."
Thetransaction is subject to certain customaryclosingconditions, includingapprovals bySTERIS and SynergyHealth shareholders as well as regulatoryapprovals in theU.S. and U.K., and is anticipated to closebyMarch 31, 2015.
ConferenceCall
Inconjunction with this release, STERIS Corporation management will host a conferencecall tomorrow at 10:00 a.m.Eastern Standard time. Theconferencecall can beheard liveovertheInternet at www.steris-ir.com orviaphonebydialing1-800-369-8428 in theUnited States and Canada, and 1-773-799-3378 internationally,then referencingthepassword "STERIS".
Forthoseunableto listen to the conference call live, a replaywill be availablebeginning at 12:00 p.m. Eastern Standard timeon November5, 2014eitherovertheInternet at www.steris-ir.com orvia phonebycalling1-800-856-2254 in theUnited States and Canada, and 1-402-280-9961 internationally.
U.K. TakeoverCodeDirectors'Confirmation
UnderRule28.1 oftheU.K.'s CityCodeon Takeovers and Mergers(the"TakeoverCode")which applies in light ofourproposed acquisition ofSynergyHealth, ourdirectors must provideaso-called "directors' confirmation"in respect ofourConsolidated NetIncome forthethreemonths ended September30, 2014 reported in this announcement (the "NetIncomeStatement") and theoutlook contained in this announcement (the"Outlook")sincetheyconstitute an unaudited profit estimate and profit forecast respectivelyforthepurposes oftheTakeoverCode. Accordingly, ourdirectors confirm
that:
(i) theNetIncomeStatement has been properlycompiled on thebasis ofthe assumptions contained orreferred to in ourQuarterlyReport on Form 10-Qforthethreemonths ended September30, 2014;
(ii) theOutlook has been properlycompiled on thebasis ofthe assumptions contained in our current report onForm 8-K dated May8, 2014 underthesection captioned "Outlook", and the assumptions contained in ourAnnual Report on Form 10-Kfortheyear ended March 31, 2014 dated May29, 2014;and
(iii) thebasis of accountingused forthepurposes ofpreparingNetIncomeStatement and the Outlook is consistent with our accountingpolicies.
AboutSTERIS
Themission ofSTERIS Corporation is to help ourCustomers createahealthier and saferworld by providinginnovativehealthcare and lifescienceproduct and servicesolutions around theglobe. The Companyis listed on theNew York Stock Exchangeunderthesymbol STE. Formoreinformation, visit www.steris.com.
(1)Free cashflow is anon-GAAPnumberused bytheCompanyas ameasureto gaugeits abilityto fund futuredebt principal repayments,growth outsideof coreoperations, repurchase common shares, and paycash dividends. Freecash flow is defined as cash flows from operating activities less purchases ofproperty, plant, equipment and intangibles, net, plus proceeds from thesaleofproperty, plant, equipment and intangibles. STERIS's calculation offree cashflow mayvaryfrom othercompanies.
Enquiries:
STERIS 
Investor Contact: Julie Winter, Director, Investor Relations Tel: +1 440 392 7245
Media Contact:
Stephen Norton, Senior Director, Corporate Communications Tel: +1 440 392 7482
Lazard & Co., Limited (Financial Adviser to STERIS and New STERIS)
Stephen Sands Tel: +44 20 7187 2000
Nicholas Shott
Al Garner Tel: +1 212 632 6000
Andrew Dickinson Tel: +1 415 623 5000
Lazard&Co.,Limited,whichisauthorisedandregulatedintheUnitedKingdombytheFinancial ConductAuthority,isactingexclusivelyasfinancialadvisertoSTERISandNewSTERISandnoone elseinconnectionwiththeCombinationandwillnotberesponsibletoanyoneotherthanSTERISand New STERISfor providingthe protectionsaffordedtoclientsofLazard&Co., Limitednorfor providing adviceinrelationtotheCombinationoranyothermattersreferredtointhisAnnouncement.Neither Lazard&Co.,Limitednoranyofitsaffiliatesowesoracceptsanyduty,liabilityorresponsibility whatsoever(whetherdirectorindirect,whetherincontract,intort,understatuteorotherwise)toany personwhoisnotaclientof Lazard& Co.,LimitedinconnectionwiththisAnnouncement,any statement containedherein,theCombinationorotherwise.
DisclosurerequirementsoftheCode
UnderRule8.3(a)oftheCode,anypersonwhoisinterestedin1%ormoreofanyclassof relevantsecuritiesofanoffereecompanyorofanysecuritiesexchangeofferor(beingany offerorotherthananofferorinrespectofwhichithasbeenannouncedthatitsofferis,oris likely to be, solely in cash) must make an Opening Position Disclosure following the commencementoftheofferperiodand,iflater,followingtheannouncementinwhichany securitiesexchangeofferorisfirstidentified. AnOpeningPositionDisclosuremustcontain detailsoftheperson'sinterestsandshortpositionsin,andrightstosubscribefor,any relevantsecuritiesof eachof (i) the offereecompanyand (ii) anysecuritiesexchange offeror(s). AnOpeningPositionDisclosurebyapersontowhomRule8.3(a)appliesmustbe made byno later than 3.30pm (Londontime) on the 10th business dayfollowingthe commencementoftheofferperiodand, ifappropriate,bynolaterthan3.30pm(Londontime) onthe10thbusinessdayfollowingtheannouncementinwhichanysecuritiesexchange offerorisfirstidentified. Relevantpersonswhodealintherelevantsecuritiesoftheofferee companyorofasecuritiesexchangeofferorpriortothedeadlineformakinganOpening PositionDisclosuremustinsteadmakeaDealingDisclosure.
UnderRule8.3(b)oftheCode,anypersonwhois,orbecomes,interestedin1%ormoreof anyclassofrelevantsecuritiesoftheoffereecompanyorofanysecuritiesexchangeofferor mustmakeaDealingDisclosureifthepersondealsinanyrelevantsecuritiesoftheofferee company orofanysecuritiesexchange offeror. ADealingDisclosuremustcontaindetailsof thedealingconcernedandoftheperson'sinterestsandshortpositionsin,andrightsto subscribefor,anyrelevantsecuritiesofeach of(i)theoffereecompanyand (ii)anysecurities exchangeofferor,savetotheextentthatthesedetailshavepreviouslybeendisclosedunder Rule8. ADealingDisclosure byapersontowhomRule8.3(b)appliesmustbemadebyno laterthan3.30pm(Londontime)onthebusinessdayfollowingthedateoftherelevant dealing.
Iftwoormorepersonsacttogetherpursuanttoanagreementorunderstanding,whether formalor informal,to acquireor controlan interestin relevantsecuritiesof an offeree companyorasecuritiesexchangeofferor,theywillbedeemedtobeasinglepersonforthe purposeof Rule8.3.
OpeningPositionDisclosures mustalsobemade bytheoffereecompanyandbyanyofferor andDealingDisclosuresmustalsobemadebytheoffereecompany,byanyofferorandby anypersonsactinginconcertwithanyof them (seeRules8.1,8.2and8.4).
DetailsoftheoffereeandofferorcompaniesinrespectofwhoserelevantsecuritiesOpening PositionDisclosuresandDealingDisclosuresmustbemadecanbefoundintheDisclosure TableontheTakeoverPanel'swebsiteatwww.thetakeoverpanel.org.uk,includingdetailsof thenumberofrelevantsecuritiesinissue,whentheofferperiodcommencedandwhenany offerorwasfirstidentified. YoushouldcontactthePanel'sMarketSurveillanceUniton
+44 (0)2076380129ifyouareinanydoubtastowhetheryouarerequiredtomakeanOpeningPositionDisclosureoraDealingDisclosure.
No Offer or Solicitation 
This document is provided for informational purposes only and does not constitute an offer to sell, or an invitation to subscribe for, purchase or exchange, any securities or the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance, exchange or transfer of the securities referred to in this document in any jurisdiction in contravention of applicable law. 
Forward-Looking Statements 
This document may contain statements concerning certain trends, expectations, forecasts, estimates, or other forward-looking information affecting or relating to Synergy or STERIS or its industry, products or activities that are intended to qualify for the protections afforded "forward-looking statements" under the Private Securities Litigation Reform Act of 1995 and other laws and regulations. Forward-looking statements speak only as to the date of this document and may be identified by the use of forward-looking terms such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "targets," "forecasts," "outlook," "impact," "potential," "confidence," "improve," "optimistic," "deliver," "comfortable," "trend", and "seeks," or the negative of such terms or other variations on such terms or comparable terminology. Many important factors could cause actual results to differ materially from those in the forward-looking statements including, without limitation, disruption of production or supplies, changes in market conditions, political events, pending or future claims or litigation, competitive factors, technology advances, actions of regulatory agencies, and changes in laws, government regulations, labeling or product approvals or the application or interpretation thereof. Other risk factors are described herein and in STERIS and Synergy's other securities filings, including Item 1A of STERIS's Annual Report on Form 10-K for the year ended March 31, 2014 dated May 29, 2014 and in Synergy's annual report and accounts for the year ended 30 March 2014 (section headed "principal risks and uncertainties"). Many of these important factors are outside of STERIS's or Synergy's control. No assurances can be provided as to any result or the timing of any outcome regarding matters described herein or otherwise with respect to any regulatory action, administrative proceedings, government investigations, litigation, warning letters, consent decree, cost reductions, business strategies, earnings or revenue trends or future financial results. References to products and the consent decree are summaries only and should not be considered the specific terms of the decree or product clearance or literature. Unless legally required, STERIS and Synergy do not undertake to update or revise any forward-looking statements even if events make clear that any projected results, express or implied, will not be realized. Other potential risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, (a) the receipt of approval of both STERIS's shareholders and Synergy's shareholders, (b) the regulatory approvals required for the transaction not being obtained on the terms expected or on the anticipated schedule, (c) the parties' ability to meet expectations regarding the timing, completion and accounting and tax treatments of the transaction, (d) the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in connection with the transaction within the expected time-frames or at all and to successfully integrate Synergy's operations into those of STERIS, (e) the integration of Synergy's operations into those of STERIS being more difficult, time-consuming or costly than expected, (f) operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) being greater than expected following the transaction, (g) the retention of certain key employees of Synergy being difficult, (h) changes in tax laws or interpretations that could increase our consolidated tax liabilities, including, if the transaction is consummated, changes in tax laws that would result in New STERIS being treated as a domestic corporation for United States federal tax purposes, (i) the potential for increased pressure on pricing or costs that leads to erosion of profit margins, (j) the possibility that market demand will not develop for new technologies, products or applications or services, or business initiatives will take longer, cost more or produce lower benefits than anticipated, (k) the possibility that application of or compliance with laws, court rulings, certifications, regulations, regulatory actions, including without limitation those relating to FDA warning notices or letters, government investigations, the outcome of any pending FDA requests, inspections or submissions, or other requirements or standards may delay, limit or prevent new product introductions, affect the production and marketing of existing products or services or otherwise affect Company performance, results, prospects or value, (l) the potential of international unrest, economic downturn or effects of currencies, tax assessments, adjustments or anticipated rates, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs, (m) the possibility of reduced demand, or reductions in the rate of growth in demand, for products and services, (n) the possibility that anticipated growth, cost savings, new product acceptance, performance or approvals, or other results may not be achieved, or that transition, labor, competition, timing, execution, regulatory, governmental, or other issues or risks associated with STERIS and Synergy's businesses, industry or initiatives including, without limitation, the consent decree or those matters described in STERIS's Form 10-K for the year ended March 31, 2014 and other securities filings, may adversely impact Company performance, results, prospects or value, (o) the possibility that anticipated financial results or benefits of recent acquisitions, or of STERIS's restructuring efforts will not be realized or will be other than anticipated, (p) the effects of the contractions in credit availability, as well as the ability of STERIS and Synergy's customers and suppliers to adequately access the credit markets when needed, and (q) those risks described in STERIS's Annual Report on Form 10-K for the year ended March 31, 2014, and other securities filings. 
Important Additional Information Regarding the Transaction Will Be Filed With The SEC
It is expected that the shares of New STERIS to be issued by New STERIS to Synergy Shareholders in the English law scheme of arrangement transaction that forms a part of the transaction will be issued in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended, provided by Section 3(a)(10) thereof. 
In connection with the issuance of New STERIS shares to STERIS shareholders pursuant to the merger that forms a part of the transaction, New STERIS will file with the SEC a registration statement on Form S-4 that will contain a prospectus of New STERIS as well as a proxy statement of STERIS relating to the merger that forms a part of the transaction, which we refer to together as the Form S-4/Proxy Statement. 
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE FORM S-4/PROXY STATEMENT, AND OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE TRANSACTION CAREFULLY AND IN THEIR ENTIRETY, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION, THE PARTIES TO THE TRANSACTION AND THE RISKS ASSOCIATED WITH THE TRANSACTION. Those documents, if and when filed, as well as STERIS'S and New STERIS's other public filings with the SEC may be obtained without charge at the SEC's website at www.sec.gov, at STERIS's website at www.steris-ir.com. Security holders and other interested parties will also be able to obtain, without charge, a copy of the Form S-4/Proxy Statement and other relevant documents (when available) by directing a request by mail or telephone Julie_Winter@steris.com or (440) 392-7245. Security holders may also read and copy any reports, statements and other information filed with the SEC at the SEC public reference room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at (800) 732-0330 or visit the SEC's website for further information on its public reference room. 
STERIS, its directors and certain of its executive officers may be considered participants in the solicitation of proxies in connection with the transactions contemplated by the Proxy Statement. Information about the directors and executive officers of STERIS is set forth in its Annual Report on Form 10-K for the year ended March 31, 2014, which was filed with the SEC on May 29, 2014, and its proxy statement for its 2014 annual meeting of shareholders, which was filed with the SEC on June 9, 2014. Other information regarding potential participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Form S-4/Proxy Statement when it is filed. 
Synergy and New STERIS are each organized under the laws of England and Wales. Some of the officers and directors of Synergy and New STERIS are residents of countries other than the United States. As a result, it may not be possible to sue Synergy, New STERIS or such persons in a non-US court for violations of US securities laws. It may be difficult to compel Synergy, New STERIS and their respective affiliates to subject themselves to the jurisdiction and judgment of a US court or for investors to enforce against them the judgments of US courts. 
Participants in the Solicitation 
STERIS, its directors and certain of its executive officers may be considered participants in the solicitation of proxies in connection with the transactions contemplated by the Proxy Statement. Information about the directors and executive officers of STERIS is set forth in its Annual Report on Form 10-K for the year ended March 31, 2014, which was filed with the SEC on May 29, 2014, and its proxy statement for its 2014 annual meeting of shareholders, which was filed with the SEC on June 9, 2014. Other information regarding potential participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Proxy Statement/Prospectus when it is filed. 

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