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STERIS: Revenue Rose and Income Fell in 2Q16

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STERIS’s price movement

STERIS (STE) has a market cap of $4.5 billion. STERIS’s YTD (or year-to-date) price movement is a mix of ups and downs in 2015. After the 2Q16 earnings report, STERIS rose by 7.1% to close at ~$75.0 per share as of October 30, 2015. The price movement on a weekly, monthly, and YTD basis is 11.0%, 15.2%, and 17.3%, respectively.

Technically, the stock has broken the support of 20-day, 50-day, and 200-day moving averages throughout 2015. Currently, it’s trading at 11.7% above the 20-day moving average, 14.9% above the 50-day moving average, and 13.4% above the 200-day moving average.

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The SPDR S&P Health Care Equipment ETF (XHE) invests 1.6% of its portfolio in STERIS. The ETF tracks an equal-weighted index of US healthcare equipment and supplies companies. The YTD price movement of the XHE ETF was 3.8% as of October 29, 2015. The iShares Dow Jones US Medical Devices Index Fund (IHI) invests 1.3% of its portfolio in STERIS.

The competitors of STERIS (STE) and their market caps are:

  • Stryker Corporation (SYK), at $35.9 billion
  • Ecolab (ECL), at $35.5 billion
  • Hill-Rom Holdings (HRC), at $3.0 billion
  • Cantel Medical (CMN), at $2.5 billion

Performance of STERIS in 2Q16

The company reported net revenue of $489.9 million in 2Q16, a rise of 11.4% when compared to the net revenue of $439.9 million in 1Q16. The revenue from healthcare, life sciences, and STERIS Isomedix services rose by 10.0%, 25.1%, and 4.0%, respectively in 2Q16.

The cost of revenue as a percentage of revenue and the operating income fell by 1.7% and 48.7%, respectively, in 2Q16. The company’s 2Q16 net income and EPS (earnings per share) fell 64.2% and 65.0%, respectively, on a quarter-over-quarter basis to $8.7 million and $0.14 per share, respectively. Cash and cash equivalents fell by 17.3% in 2Q16. The current ratio fell to 2.76, and the debt-to-equity ratio rose to 1.11 in 2Q16, as compared to the current ratio and debt-to-equity ratio of 2.78 and 0.98, respectively, in 1Q16.

The company announced that the US District Court for the Northern District of Ohio had denied the Federal Trade Commission’s request for a preliminary injunction to block STERIS’s acquisition of Synergy Health.

About STERIS

STERIS is involved in infection protection, contamination control, surgical, and critical care technologies.  It’s product range includes:

  • Surgical (storage cabinets, surgical lights, surgical tables, scrub sinks, and surgical table accessories)
  • Sterile processing (barrier and packaging products, steam sterilizers, washer racks, mobile sterilization solutions, high-level disinfection products, and washing and decontamination systems)
  • Infection prevention (skin care, ultraviolet disinfection, equipment decontamination, and care counts hand hygiene)
  • Perioperative solutions (RealView visual workflow management software and Analytics iQ or utilization service)
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