During the most recent trading session, Sterling Check Corp. (NASDAQ: STER) sent shockwaves through the stock market by rising an astounding 26.17% to close at $15.67. A number of events, including the release of its financial results for the fourth quarter and full year ending December 31, 2023, and an alluring takeover offer, served as the impetus for this incredible ascent.
In terms of numbers, Sterling Check’s quarterly revenues decreased by 0.3% from the previous year to $169.4 million, while its yearly revenues decreased by a larger 6.1% to $719.6 million. Nevertheless, the yearly Adjusted EBITDA amount experienced a minor decline, falling 6.8% to $185.0 million. The same was true for adjusted net income, which dropped by 3.8% for the quarter and a much larger 11.9% for the whole year.
Despite challenges posed by the macro environment in 2023, including base declines beyond initial expectations, Sterling Check showcased strong results and improvements throughout the year, particularly in new business and up-sell/cross-sell efforts, which accelerated notably in the fourth quarter. The company exceeded its long-term revenue targets for key drivers such as new business, up/cross-sell, and customer retention, setting a positive momentum for 2024.
Furthermore, Sterling Check saw significant success in its mergers and acquisitions endeavors during the year, with successful integration of acquisitions such as Socrates and A-Check, alongside the acquisition of Vault Workforce Screening in early January 2024. The acquisition of Vault extends Sterling’s capabilities in drug and health testing, providing a broader range of clinical options and service models, and strategically enhancing its position within healthcare and industrials verticals.
In a monumental turn of events, First Advantage Corporation entered into a definitive purchase agreement to acquire Sterling Check, signaling a validation of Sterling’s market potential and growth prospects. With a valuation of approximately $2.2 billion, including outstanding debt, this acquisition underscores Sterling Check’s status as a sought-after asset in the corporate landscape, aligning seamlessly with its overarching strategy of expansion through both organic growth and strategic acquisitions.
