Dan Carestio
President and Chief Executive Officer at STERIS
Thanks, Mike, and good morning, everyone. Thank you for taking the time to join us to hear more about our first quarter performance and our outlook for the rest of the year. As you heard from Mike, we had a solid start to our new fiscal year and continue to experience strong demand for our products and services. I will review the highlights of the quarter and then shift my commentary to our revised outlook.
Healthcare constant currency organic revenue grew 4% in the quarter. Strong capital equipment and service growth were offset by an organic decline in consumables, which is largely attributable to the timing of orders against very strong comparisons in the prior year.
Hospital capital spending remains very robust, as evidenced by our health care backlog, which totaled over $500 million at the end of the quarter and our orders for the quarter were 40% large project related.
AST grew constant currency organic revenue by 10% in the first quarter, as we continued to benefit from underlying demand from our core customers. Growth was somewhat limited by the timing of large capital shipments from our Mevex business unit which can often be lumpy.
Life Sciences also delivered 10% constant currency organic revenue growth in the quarter, with strong capital equipment shipments and solid mid-single-digit growth in our consumables business. Our Dental segment grew low single digits constant currency year-over-year for the quarter, as revenue was limited by supply chain challenges.
Turning to our revised outlook. From a macro perspective, we have several things impacting our business. As you have heard from many of our peers, the currency has moved significantly and the forward rates continue to indicate headwinds on for STERIS in both revenue and profit for the remainder of the fiscal year.
In addition, the supply chain environment has been limiting our ability to ship capital equipment. We believe approximately $35 million in capital equipment shipments were delayed in the first quarter.
While procedure volumes continue to recover, particularly in the US, we are not seeing recovery as quickly as anticipated. The key variable for that recovery appears to be staffing availability at hospitals, which seems to be limiting their ability to catch up with pent-up demand for procedures.
Reflecting on these challenges, we are adjusting our revenue outlook for the year. As reported, revenue is now expected to grow by 9% and constant currency organic revenue is anticipated to be 10%. As you recall, we grew 13% last year. So double-digit constant currency organic growth on top of that is a significant goal, but one we believe is achievable due to the momentum in our business and strong capital equipment backlog.
While we are not overly optimistic on supply chain improvements, we do see pockets of improvement there. The real key for us will be relief on parts, in particular, electronic components. In many cases, components are needed to convert our significant work-in-progress inventory to finish goods so that they can be shipped to customers.
As a result of anticipated easing and supply chain constraints, we expect revenue growth rates to increase at a faster pace in the second half of the year as compared to the first half. Factoring in these elements, our current expectations for earnings are $8.40 to $8.60 for the full fiscal year, a $0.15 decline from the prior outlook, with most of that decline due to foreign currency fluctuations.
For the year, the currency is now expected to reduce reported revenue by $100 million and adjusted EPS by approximately $0.10. The primary drivers of this are the weak euro and British pound.
Overall, our business continues to perform very well in this environment. The challenging environment we're in is no different for other companies. Foreign currency fluctuations are limiting both the top and bottom lines. Supply chain disruptions are slowing our ability to ship capital equipment and higher interest rates may negatively impact interest expense.
Despite these macro challenges, the fiscal year 2023 is still expected to be another record year for STERIS. Our teams and portfolios continue to come together to better meet the needs of our customers, and the breadth of our offering allows us to take advantage of several significant trends, in the industry, by leveraging our relationships to cross-sell within business segments and deliver value to our customer. Thank you. That concludes our prepared remarks.
I will hand the call over to Julie, to start the Q&A.
