Dive Brief:
- Steris has agreed to sell its dental business to investment firm Peak Rock Capital for $787.5 million in cash, the companies said on Thursday.
- The sale will allow Steris to focus on its core markets of healthcare, pharma and medtech, CEO Dan Carestio said in a statement. The Mentor, Ohio-based company provides sterilizers and washers, surgical tables and other equipment.
- Steris decided to divest the dental segment “after a thorough review of strategic alternatives,” Carestio said. The business reported $407 million in revenue and $86 million in operating income during the 12-month period ending Dec. 31, 2023.
Dive Insight:
Steris acquired the dental business in 2021 when it bought Cantel for $4.6 billion. The purchase was expected to complement Steris’ existing business, adding infection control products for endoscopy and providing an entry into the dental market.
Now, the company is looking to sell the segment. Peak Rock Capital agreed to pay an additional $12.5 million to Steris if the dental business achieves certain revenue targets in fiscal year 2025.
“We are confident this business will do well with the investment and support of Peak Rock Capital,” Carestio said.
The planned sale comes after a few challenging quarters for the dental segment. Dental revenues declined by 6% on a constant currency basis in the quarter ending Dec. 31 because of “reduced orders from a large customer due to a temporary disruption of their operations as a result of a cybersecurity incident,” Carestio said. Without the cybersecurity incident, revenue for the segment would have been flat year over year.
On a November earnings call, the CEO said the economic downturn has affected people’s ability to spend money on elective dental procedures, a trend that is rippling through the entire dental industry.
Steris expects the sale to close in the first quarter of its 2025 fiscal year, subject to regulatory review and other customer closing conditions. The company expects the sale to reduce its interest expenses by about 35 cents per diluted share on a full-year run rate basis.
Steris will use most of the proceeds to repay debt.
