Steris is cutting back. The Ohio maker of surgical, critical care and infection prevention med tech ($STE) said it will shut down an Ohio plant and slash 150 jobs in a move expected to save about $10 million annually.
Steris ($STE), in its announcement earlier this week, noted that 100 of the affected jobs are in Ohio. The soon-to-be-shuttered Mentor, OH, facility makes the company's System 1E liquid chemical system to sterilize and disinfect medical devices, and it has faced a reduced demand following its transition to the 1E product from its controversial System 1 device. Executives said they will close the plant by Oct. 31, 2015, and relocate production to other North American manufacturing operations.
To save $10 million annually, Steris said it will take a $20 million restructuring charge in its fiscal 2014 fourth quarter relating to the plant closure and job cuts. Half of the savings is expected to begin in fiscal 2015, with the rest kicking in during fiscal 2016.
Steris said it generated $405.6 million in revenue during its fiscal 2014 third quarter ending Dec. 31, 2013, a 7% jump over the $380.4 million generated during the same period a year ago. Net income hit $28.5 million, versus $48.1 million in net income in the fiscal 2013 third quarter. The company attributed its income drop to restructuring in Europe and a class-action settlement relating to System 1.
Mass Device noted that System 1 faced flak from regulators going back to 2009 when the FDA ordered hospitals to stop using the devices because Steris made major changes without seeking new clearance. Eventually, Steris gained FDA clearance for its System 1E system, and the FDA allowed it to work with customers so they could transition away from their System 1 devices for rebates, the article explained.
Steris' stock closed at $47.57 on March 27, essentially flat from the previous day's trading.
- read the company's announcement
- here's Mass Device's take