Steris agrees to buy Xodus Medical for $2.1 billion in cash
Key Facts
Steris has agreed to acquire Xodus Medical for $2.1 billion in cash at closing, according to a filing with the U.S. Securities and Exchange Commission. The cash consideration is subject to customary adjustments under the agreement, which expands the company's portfolio of operating room consumables. Steris said in the filing that it expects to finance the acquisition primarily with debt and has secured a bridge financing commitment for that purpose. The unsecured facility totals up to $2.0 billion, under a commitment from JPMorgan and Goldman Sachs and subject to customary conditions. The acquisition includes a business specializing in operating room supplies that Steris Chief Executive Dan Carestio said has demonstrated an ability to deliver double-digit growth.
On the economics of the acquisition, Steris expects cash tax benefits with a net present value of about $300 million, according to Investing.com's coverage. Those expected benefits reduce the net purchase price, after accounting for them, to about $1.8 billion, according to estimates cited in the coverage. The agreement also includes potential additional consideration of up to $150 million, according to Jones Day, Steris's legal adviser on the deal. That consideration is tied to the achievement of specified post-closing performance targets in calendar year 2028, making payment contingent on the acquired business's performance. The potential payments are in addition to the consideration payable at closing, while the net purchase price estimate reflects the cash tax benefits the company expects.
Xodus Medical's projected annual revenue is estimated at about $245 million for calendar year 2026, according to figures cited by Investing.com in its coverage of the agreement. Its projected adjusted earnings before interest and taxes total about $135 million for the same period, according to estimates for the acquisition target's business. In outlining Xodus's performance drivers, Carestio linked its growth to its specialized product portfolio and its ability to continue bringing new products to customers. The chief executive said, in remarks published by Xodus, that the company benefits from a "steady stream of new products," alongside its effective commercial team. The deal adds that portfolio to Steris's operating room consumables, the area Xodus identified in its announcement of the agreement.
Xodus Medical was founded in 1993 and is based near Pittsburgh, Pennsylvania, according to Morgan Lewis, its legal adviser on the agreement. Its product portfolio includes "Pink Pad" patient positioning systems as part of its business serving hospitals, according to the firm's description of the company. Hospitals around the world use Xodus products, according to Morgan Lewis, while the consumables the deal will add to Steris are used in operating rooms. Xodus described Steris in its announcement of the agreement as a company with revenue of nearly $6 billion, illustrating the scale of the buyer's business. Xodus added that Steris has a workforce of 18,000 employees, providing background on the company with which it signed the agreement to acquire its business.
The agreement followed results in which Steris reported a 7% increase in revenue in the first quarter of its fiscal year 2027 compared with the corresponding quarter. According to the earnings release filed with the U.S. Securities and Exchange Commission, organic revenue growth at constant currencies was 6% in the same fiscal quarter. In the Healthcare segment, consumables revenue rose 9% from the corresponding period, according to the results preceding the announcement of the agreement to buy Xodus. Carestio said in that earnings release that market share gains in consumables and services were supporting Steris's performance, identifying areas underpinning the company's business. The planned acquisition adds operating room consumables to the company's portfolio, following the consumables revenue growth shown in the Healthcare segment's results before the agreement.
Steris shares rose 2.5% in morning trading on the day the agreement was announced, according to Investing.com's coverage of the stock's movement during that session. On the acquisition's execution, the deal is expected to close by the end of 2026, according to an announcement by Jones Day, the buyer's legal adviser. Completion remains subject to regulatory clearances and customary closing conditions, according to details of the agreement outlined by Steris's legal adviser. After closing, Steris will announce revised financial guidance incorporating Xodus Medical's business, according to Investing.com's coverage of the next step in the agreed acquisition. In calendar year 2028, the potential additional consideration is tied to the achievement of specified post-closing performance targets, according to the terms cited by Jones Day.