STERIS(STE) - 2025 Q4 - Annual Results

Fiscal 2025 Financial Performance Overview STERIS achieved a record fiscal year 2025, marked by significant revenue growth and increased adjusted diluted EPS, with strong performance continuing into the fourth quarter Fourth Quarter & Full Year Highlights STERIS reported a record fiscal year 2025, with full-year revenue from continuing operations increasing 6% to $5.5 billion, driven by 6% constant currency organic growth Fiscal 2025 Full Year Financial Highlights (vs. FY 2024) | Metric | FY 2025 | FY 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue from Continuing Operations | $5.5 billion | $5.1 billion | +6% | | Constant Currency Organic Revenue Growth | 6% | N/A | N/A | | As Reported Diluted EPS | $6.16 | $5.55 | +11.0% | | Adjusted Diluted EPS | $9.22 | $8.20 | +12.4% | Q4 Fiscal 2025 Financial Highlights (vs. Q4 FY 2024) | Metric | Q4 FY 2025 | Q4 FY 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue from Continuing Operations | $1.5 billion | $1.4 billion | +4% | | Constant Currency Organic Revenue Growth | 6% | N/A | N/A | | As Reported Diluted EPS | $1.48 | $1.54 | -3.9% | | Adjusted Diluted EPS | $2.74 | $2.41 | +13.7% | - The President and CEO, Dan Carestio, stated that fiscal 2025 was a record year, benefiting from a diversified customer base and growth in global procedure volumes[4] Fourth Quarter Segment Performance In Q4 FY2025, the Healthcare and AST segments drove growth, with revenues increasing 5% and 9% respectively, while Life Sciences experienced a 7% revenue decline due to a divestiture Healthcare The Healthcare segment's Q4 revenue grew 5% to $1.1 billion, with a 6% constant currency organic growth, driven by service and consumable revenue increases Healthcare Segment Q4 Performance | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $1.1 billion | $1.0 billion | +5% | | Constant Currency Organic Revenue Growth | 6% | N/A | N/A | | Operating Income | $279.7 million | $245.2 million | +14.1% | - Revenue growth drivers included a 13% improvement in service revenue and 6% growth in consumable revenue, while capital equipment revenue declined by 4%[6] Applied Sterilization Technologies (AST) The AST segment's Q4 revenue increased 9% to $273.9 million, with strong constant currency organic growth of 10%, supported by service revenue and capital equipment sales AST Segment Q4 Performance | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $273.9 million | $250.9 million | +9% | | Constant Currency Organic Revenue Growth | 10% | N/A | N/A | | Operating Income | $122.2 million | $114.2 million | +7.0% | Life Sciences Life Sciences Q4 revenue decreased 7% to $149.5 million, largely due to a divestiture and a 16% decline in capital equipment revenue, though operating income remained stable Life Sciences Segment Q4 Performance | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $149.5 million | $160.6 million | -7% | | Constant Currency Organic Revenue Growth | 0% | N/A | N/A | | Operating Income | $65.0 million | $64.5 million | +0.8% | - The revenue decline was primarily caused by the divestiture of the CECS business and significant declines in capital equipment (-16%) and service (-21%) revenue, which was partially offset by 8% growth in consumable revenue[8] Cash Flow For fiscal 2025, net cash provided by operations increased to $1.15 billion, and free cash flow rose to $787.2 million, primarily driven by improvements in working capital Fiscal 2025 Cash Flow Summary (vs. FY 2024) | Metric | FY 2025 | FY 2024 | Change | | :--- | :--- | :--- | :--- | | Net Cash Provided by Operations | $1.15 billion | $973.3 million | +18.2% | | Free Cash Flow | $787.2 million | $620.3 million | +26.9% | Fiscal 2026 Outlook STERIS anticipates continued growth in fiscal 2026, projecting a 6-7% increase in revenue and a 7-10% increase in adjusted EPS, despite an estimated $30 million negative impact from tariffs Key Projections STERIS anticipates continued growth in fiscal 2026, projecting a 6-7% increase in both reported and constant currency organic revenue, with adjusted EPS expected between $9.90 and $10.15 Fiscal 2026 Guidance | Metric | FY 2026 Projection | | :--- | :--- | | As Reported Revenue Growth | 6% - 7% | | Constant Currency Organic Revenue Growth | 6% - 7% | | Adjusted EPS from Continuing Operations | $9.90 - $10.15 | | Capital Expenditures | ~$375 million | | Free Cash Flow | ~$770 million | - The outlook includes an estimated negative pre-tax profit impact of approximately $30 million due to tariffs[11] Consolidated Financial Statements (Unaudited) This section provides an unaudited overview of STERIS's consolidated financial statements, including statements of operations, balance sheets, and cash flows Consolidated Condensed Statements of Operations For the twelve months ended March 31, 2025, STERIS reported revenues of $5.46 billion, a 6.2% increase, with gross profit growing to $2.40 billion and income from continuing operations rising to $611.6 million FY 2025 Income Statement Highlights (in thousands) | Line Item | Twelve Months Ended Mar 31, 2025 | Twelve Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Revenues | $5,459,515 | $5,138,701 | | Gross Profit | $2,402,764 | $2,218,160 | | Income from Operations | $866,641 | $836,118 | | Income from Continuing Operations, Net of Tax | $611,557 | $553,280 | | Diluted EPS - Continuing Operations | $6.16 | $5.55 | Consolidated Condensed Balance Sheets As of March 31, 2025, STERIS's total assets were $10.15 billion, with total equity increasing to $6.62 billion and long-term indebtedness significantly reduced to $1.92 billion Balance Sheet Summary (in thousands) | Line Item | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $2,000,765 | $2,869,123 | | Total Assets | $10,146,811 | $11,063,697 | | Long-term Indebtedness | $1,918,701 | $3,120,162 | | Total Equity | $6,615,757 | $6,315,346 | | Total Liabilities and Equity | $10,146,811 | $11,063,697 | Consolidated Condensed Statements of Cash Flows For fiscal 2025, net cash from operating activities was $1.15 billion, with investing activities providing $388.8 million, and financing activities using $1.57 billion FY 2025 Cash Flow Summary (in thousands) | Activity | Twelve Months Ended Mar 31, 2025 | | :--- | :--- | | Net cash provided by operating activities | $1,148,087 | | Net cash provided by (used in) investing activities | $388,773 | | Net cash used in financing activities | ($1,572,364) | | Decrease in cash and cash equivalents | ($35,319) | | Cash and cash equivalents at end of period | $171,701 | Non-GAAP Financial Measures & Reconciliations This section provides reconciliations of non-GAAP financial measures, including organic revenue growth and adjusted net income and EPS, to their most directly comparable GAAP measures Organic Revenue Growth Reconciliation For fiscal year 2025, STERIS's reported revenue growth of 6.2% was reconciled to a constant currency organic growth rate of 6.2% after adjusting for acquisitions, divestitures, and foreign currency movements FY 2025 Revenue Growth Reconciliation | Growth Metric | Percentage | | :--- | :--- | | As Reported U.S. GAAP Growth | 6.2% | | Organic Growth | 5.9% | | Constant Currency Organic Growth | 6.2% | GAAP to Adjusted Net Income & EPS Reconciliation For fiscal year 2025, STERIS adjusted its U.S. GAAP net income from continuing operations of $611.6 million to an adjusted figure of $914.7 million, resulting in an adjusted diluted EPS of $9.22 FY 2025 GAAP to Adjusted EPS Reconciliation (Continuing Operations) | Line Item | Per Diluted Share | | :--- | :--- | | As reported, U.S. GAAP | $6.16 | | Net impact of adjustments | $3.06 | | Adjusted | $9.22 | - Major adjustments for the full year included amortization of acquired intangible assets, acquisition and integration charges, restructuring charges, and a $48.15 million Illinois EO litigation settlement[34] Supplemental Information This section provides additional financial data, including recurring revenue composition, geographic revenue distribution, and total backlog for continuing operations Supplemental Financial Data For fiscal year 2025, recurring revenue constituted approximately 78% of total revenues, with the United States accounting for 73% of total revenue, and the total backlog increasing to $452.9 million - For the full fiscal year 2025, recurring revenues (Consumables and Service) totaled $4.27 billion, representing 78.3% of total revenues[36] - The United States remains the primary market, accounting for 73% of total revenues in fiscal 2025[36] Total Backlog - Continuing Operations | Period | Backlog Amount | | :--- | :--- | | End of Q4 FY2025 | $452.9 million | | End of Q4 FY2024 | $425.2 million |