Steris Acquires Two Surgical Device Repair Companies

In late October, Mentor, Ohio-based Steris Corp. entered into a deal to acquire both Spectrum Surgical Instruments Corp. and Total Repair Express (TRE), both providers of surgical instrument repair services and instrument care products to hospitals and surgery centers in the United States. The two companies will be integrated into Steris’ healthcare segment as part of the company’s specialty services business, which provides a variety of niche services to customers including space decontamination solutions, chamber cleanings, and instrument repairs.

“As we continue to expand our Customer solutions, entering the surgical instrument repair business through these acquisitions will enhance our existing presence in hospital sterile processing and surgical departments,” said Walt Rosebrough, president and CEO of Steris. “These bolt-on acquisitions will give Steris one of the largest surgical instrument repair businesses in the United States, and we are excited about the opportunity to leverage our existing Customer relationships to grow these businesses throughout the country.”

According to Steris, the pressure placed on hospitals to reduce costs and increase procedure productivity has led to the need for solutions that deliver both tangible cost savings and the ability to focus their internal resources on patient care. So, the market for outsourced surgical instrument repair has emerged as an opportunity for healthcare facilities to more efficiently manage their operating costs. The surgical instrument repair business is shared between a variety of local and regional competitors, as well as by hospitals that perform their own repairs. This purchase will bolster Steris’s repair offerings in what company officials say is a “fragmented” market, as well widen its geographic presence.

The purchase of TRE gives Steris some more pull in the eastern United States, as the company is headquartered in Hillsborough, N.J. TRE’s core business is the repair of surgical instruments and other hospital equipment both on-site at hospital premises and at central repair facilities. The primary services offered include inspection, cleaning, lubrication, and repair of reusable surgical instruments such as forceps, retractors, and scissors. Typical contracts involve regular servicing of instruments in the surgical suite of hospitals, and may involve daily or weekly interaction with hospital sterile processing center personnel at client facilities. By contrast, Steris’s current service business is primarily focused on the installation, maintenance and repair of the company’s capital equipment in healthcare facilities. Spectrum is based closer to home in Stow, Ohio, and the company provides surgical instrument care products and surgical instrument cleaning brushes.

Steris acquired Spectrum and TRE for approximately $110 million, including contingent consideration. In calendar year 2012, the combined businesses are anticipated to generate revenue of approximately $72 million and operating income of approximately $7 million.