The top executive with sterilization products maker STERIS (NYSE:STE) said the transition to a replacement version of its flagship sterilization device is “moving along as expected.”
The Mentor, Ohio-based company during the most recent quarter shipped 700 units of its new System 1E device, which is a liquid chemical sterilizing system used by hospitals, surgical centers and other healthcare facilities to sterilize heat-sensitive medical instruments.
The company also received 2,000 orders beyond what it shipped during the quarter, CEO Walt Rosebrough said in a conference call with investors and analysts after STERIS released its first-quarter earnings information. STERIS projects selling between 5,000 and 8,000 units of the System 1E during the year.
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STERIS has been battling issues related to its System 1 device since December 2009, when the U.S. Food and Drug Administration issued a safety alert warning that the device could be harmful to patients. The System 1 has been recalled and STERIS is hoping to transition customers to its replacement, the System 1E.
The FDA has yet to clear an accessory part for the device, which Rosebrough acknowledged could be slightly holding down sales. That part, called a biological indicator, isn’t necessary to operate the System 1E, though many customers prefer to use it. The part indicates the presence of biological materials on equipment.
Rather than proceed through the FDA’s 510(k) process for medical devices, the biological indicator will be reviewed as part of the agency’s “de novo” process, which is intended for devices for which there is no existing “substantial equivalent” on the market. STERIS officials wouldn’t offer a prediction on the timing of when the FDA might clear the indicator for sales. “I believe that we’re in a process to have this device cleared,” Rosebrough said.
STERIS turned in a first-quarter financial performance that slightly exceeded analysts’ expectations. Earnings per share stood at 48 cents, 1 cent better than analysts’s projections. Revenue was up 9 percent on the quarter to $319 million. Analysts had expected about $311 million.
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Sales were helped by increased demand and added capacity for STERIS’s contract sterilization business unit, Isomedix Services.
The company maintained its full-year outlook of earnings between $2.25 and $2.45 per share, and year-over-year revenue growth between 8 percent and 10 percent.
