STERIS(STE) - 2026 Q1 - Quarterly Results

Executive Summary & Q1 FY26 Performance Overall Financial Performance (Q1 FY26) STERIS began fiscal 2026 with strong performance, reporting a 9% revenue increase to $1.4 billion and exceeding adjusted EPS expectations Total Company First Quarter Results from Continuing Operations: | Metric | Q1 FY26 (2025) | Q1 FY25 (2024) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1.4 billion | $1.3 billion | +9% | | Constant Currency Organic Revenue Growth | 8% | N/A | N/A | | Net Income | $177.4 million | $139.8 million | +26.9% | | Diluted EPS | $1.79 | $1.41 | +26.9% | | Adjusted Net Income | $231.2 million | $201.7 million | +14.6% | | Adjusted Diluted EPS | $2.34 | $2.03 | +15.3% | - CEO Dan Carestio stated, "We are pleased with a strong start to fiscal 2026. Our performance exceeded expectations and margins improved nicely, despite tariff headwinds. Revenue also benefited from favorable foreign currency during the quarter, which we anticipate will continue throughout the fiscal year."[3] Segment Performance (Q1 FY26) All three segments demonstrated revenue and operating income growth in Q1 FY26, driven by improved volume, price, and productivity Healthcare Segment The Healthcare segment's revenue grew 8% to $974.7 million, driven by strong performance across service, capital equipment, and consumables Healthcare Segment Q1 FY26 Performance: | Metric | Q1 FY26 (2025) | Q1 FY25 (2024) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $974.7 million | $901.2 million | +8% | | Constant Currency Organic Revenue Growth | 8% | N/A | N/A | | Service Revenue Growth | 13% | N/A | N/A | | Capital Equipment Revenue Growth | 6% | N/A | N/A | | Consumable Revenue Growth | 5% | N/A | N/A | | Operating Income | $235.5 million | $216.9 million | +8.6% | - The increase in operating income was primarily due to improved volume, price, productivity, and the benefit of prior restructuring efforts, partially offset by tariffs and inflation[4] Applied Sterilization Technologies (AST) Segment AST revenue increased 13% to $281.2 million, driven by strong growth in both service and capital equipment revenue Applied Sterilization Technologies (AST) Segment Q1 FY26 Performance: | Metric | Q1 FY26 (2025) | Q1 FY25 (2024) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $281.2 million | $249.8 million | +13% | | Constant Currency Organic Revenue Growth | 10% | N/A | N/A | | Service Revenue Growth | 12% | N/A | N/A | | Capital Equipment Revenue Growth | 46% | N/A | N/A | | Operating Income | $136.7 million | $117.7 million | +16.1% | - The operating income increase primarily reflects improved price and volume, which more than offset increased energy costs and labor inflation[5] Life Sciences Segment Life Sciences revenue grew 5% to $135.2 million, with consumables leading at 8% growth and operating income improving due to better mix and productivity Life Sciences Segment Q1 FY26 Performance: | Metric | Q1 FY26 (2025) | Q1 FY25 (2024) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $135.2 million | $128.5 million | +5% | | Constant Currency Organic Revenue Growth | 4% | N/A | N/A | | Consumable Revenue Growth | 8% | N/A | N/A | | Service Revenue Growth | 3% | N/A | N/A | | Capital Equipment Revenue Growth | 1% | N/A | N/A | | Operating Income | $58.7 million | $52.6 million | +11.6% | - Operating income increased reflecting improvement in mix, price, and productivity[6] Cash Flow Performance (Q1 FY26) STERIS reported a significant increase in cash flow from operations and free cash flow, primarily driven by earnings growth and improved working capital Cash Flow Performance Q1 FY26: | Metric | Q1 FY26 (2025) | Q1 FY25 (2024) | YoY Change | | :--- | :--- | :--- | :--- | | Net Cash Provided by Operations | $420.0 million | $303.7 million | +38.3% | | Free Cash Flow | $326.5 million | $195.7 million | +66.8% | - The increase in free cash flow was driven primarily by the growth in earnings and improved working capital[7] Company Updates & Fiscal 2026 Outlook Board of Directors Changes Two board members retired and Louis Shapiro, former President and CEO of Hospital for Specialty Surgery, was elected as a new member - Dr. Jaqueline Kosecoff and Dr. Richard Steeves retired from the Board as of July 31, 2025[9] - Louis Shapiro, retired President and CEO of the Hospital for Specialty Surgery (HSS), has been elected to the Board, adding additional perspective from the healthcare industry[9][10] Updated Fiscal 2026 Outlook The company raised its as-reported revenue growth outlook due to favorable currency, while maintaining its adjusted EPS and organic growth expectations Revised FY26 Revenue Outlook (Continuing Operations): | Metric | Previous Expectation | Updated Expectation | Change | | :--- | :--- | :--- | :--- | | As reported revenue increase | 6-7% | 8-9% | +2% | | Constant currency organic revenue growth | 6-7% | 6-7% | Unchanged | | Foreign Currency Favorability | N/A | ~200 basis points | New | Revised FY26 Adjusted EPS Outlook (Continuing Operations): | Metric | Previous Expectation | Updated Expectation | | :--- | :--- | :--- | | Adjusted EPS range | $9.90 - $10.15 | $9.90 - $10.15 | - Favorable foreign currency changes will be offset by increased tariffs (estimated to reduce pre-tax profit by approximately $45 million) and higher employee healthcare benefit costs, resulting in unchanged adjusted EPS[10] Revised FY26 Capital Expenditures & Free Cash Flow: | Metric | Previous Expectation | Updated Expectation | Change | | :--- | :--- | :--- | :--- | | Capital expenditures | N/A | ~$375 million | N/A | | Free cash flow | ~$770 million | ~$820 million | +$50 million | - The increase in free cash flow is due to improvements in working capital[11] About STERIS & Investor Information About STERIS STERIS is a global provider of products and services focused on patient care and infection prevention to create a healthier and safer world - STERIS is a leading global provider of products and services that support patient care with an emphasis on infection prevention[14] - The company's mission is to "HELP OUR CUSTOMERS CREATE A HEALTHIER AND SAFER WORLD by providing innovative healthcare and life science products and services around the globe"[14] Conference Call Information Management will host a conference call on August 7, 2025, at 9:00 a.m. ET to discuss results, with replay options available - A conference call will be hosted on August 7, 2025, at 9:00 a.m. ET[12] - The conference call can be accessed at www.steris-ir.com or via phone (US: 1-833-535-2199, International: 1-412-902-6776)[12] - A replay will be available starting 12:00 p.m. ET on August 7, 2025, at www.steris-ir.com or via phone (Access Code: 2889488)[13] Financial Statements & Supplemental Data Consolidated Condensed Statements of Operations The statement shows significant year-over-year improvements in gross profit, income from operations, and net income from continuing operations Consolidated Condensed Statements of Operations (in millions, except per share data): | Metric | Q1 FY26 (2025) | Q1 FY25 (2024) | YoY Change | | :--- | :--- | :--- | :--- | | Revenues | $1,391.1 | $1,279.5 | +8.7% | | Gross profit | $628.0 | $572.4 | +9.7% | | Income from operations | $246.0 | $185.5 | +32.6% | | Income from continuing operations, net of income tax | $178.0 | $139.9 | +27.2% | | Net income attributable to shareholders | $177.4 | $145.4 | +22.0% | | Diluted EPS - Continuing Operations | $1.79 | $1.41 | +26.9% | | Cash dividends declared per share | $0.57 | $0.52 | +9.6% | Consolidated Condensed Balance Sheets Total assets increased, driven by higher cash, fixed assets, and goodwill, while total liabilities saw a slight decrease Consolidated Condensed Balance Sheets (in millions): | Metric | June 30, 2025 | March 31, 2025 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $279.7 | $171.7 | +$108.0 | | Total current assets | $2,057.8 | $2,000.8 | +$57.0 | | Property, plant, and equipment, net | $2,054.8 | $1,956.5 | +$98.3 | | Goodwill | $4,223.1 | $4,095.7 | +$127.4 | | Total assets | $10,405.0 | $10,146.8 | +$258.2 | | Total current liabilities | $926.6 | $1,022.2 | -$95.6 | | Long-term indebtedness | $1,903.1 | $1,918.7 | -$15.6 | | Total equity | $6,969.9 | $6,615.8 | +$354.1 | | Total liabilities and equity | $10,405.0 | $10,146.8 | +$258.2 | Consolidated Condensed Statements of Cash Flows The company shows a substantial increase in net cash from operating activities and free cash flow compared to the prior year Consolidated Condensed Statements of Cash Flows (in millions): | Metric | Q1 FY26 (2025) | Q1 FY25 (2024) | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $420.0 | $303.7 | +$116.3 | | Net cash (used in) provided by investing activities | $(108.5) | $687.8 | -$796.3 | | Net cash used in financing activities | $(213.1) | $(998.9) | +$785.8 | | Increase (decrease) in cash and cash equivalents | $108.0 | $(8.7) | +$116.7 | | Free Cash Flow | $326.5 | $195.7 | +$130.8 | - The significant change in investing activities is primarily due to proceeds from the sale of businesses in the prior year ($809.6 million in Q1 FY25)[28] Segment Financial Data This section provides a detailed breakdown of revenues and operating income, highlighting growth across all three business segments Segment Data (in millions): | Segment | Q1 FY26 (2025) Revenues | Q1 FY25 (2024) Revenues | YoY Revenue Change | Q1 FY26 (2025) Op. Income | Q1 FY25 (2024) Op. Income | YoY Op. Income Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Healthcare | $974.7 | $901.2 | +8.2% | $235.5 | $216.9 | +8.6% | | AST | $281.2 | $249.8 | +12.6% | $136.7 | $117.7 | +16.1% | | Life Sciences | $135.2 | $128.5 | +5.2% | $58.7 | $52.6 | +11.6% | | Corporate Operating Loss | $(114.0) | $(101.8) | -12.0% | N/A | N/A | N/A | | Total revenues | $1,391.1 | $1,279.5 | +8.7% | N/A | N/A | N/A | | Total income from operations before adjustments | $316.9 | $285.4 | +11.0% | N/A | N/A | N/A | Unaudited Supplemental Financial Data Supplemental data provides a breakdown of revenues by product type and geography, along with backlog and income tax rate details Total Company Revenues - Continuing Operations (Q1 FY26 vs Q1 FY25): | Revenue Type (in millions) | FY26 Q1 | FY25 Q1 | YoY Change | | :--- | :--- | :--- | :--- | | Consumables | $435.0 | $414.1 | +5.0% | | Service | $700.6 | $623.2 | +12.4% | | Total Recurring | $1,135.6 | $1,037.3 | +9.5% | | Capital Equipment | $255.5 | $242.2 | +5.5% | | Total Revenues | $1,391.1 | $1,279.5 | +8.7% | Geographic Revenue Distribution (Q1 FY26): | Region | Revenue (in millions) | % of Total | | :--- | :--- | :--- | | United States | $1,025.6 | 74% | | International | $342.9 | 24% | | Ireland | $22.5 | 2% | Backlog (Continuing Operations, as of June 30, 2025): | Segment | Backlog (in millions) | | :--- | :--- | | Healthcare | $403.5 | | Life Sciences | $111.0 | | Total Backlog | $514.5 | Income Tax Rates (Continuing Operations, Q1 FY26 vs Q1 FY25): | Tax Rate Type | FY26 Q1 | FY25 Q1 | | :--- | :--- | :--- | | As reported, U.S. GAAP Income Tax Rate | 23.3% | 20.1% | | Adjusted Income Tax Rate | 23.5% | 21.3% | Non-GAAP Financial Measures Definition and Purpose of Non-GAAP Measures STERIS uses non-GAAP measures to provide greater transparency and a more complete understanding of its core operating results - Non-GAAP financial measures are presented to provide greater transparency to supplemental financial information used by management and the Board of Directors[15][30] - Adjusted net income, adjusted EPS, and adjusted income from operations exclude items such as amortization of acquired intangible assets, acquisition costs, and other unusual or non-recurring items[17] - Free cash flow is defined as cash flows from operating activities less purchases of property, plant, equipment and intangibles, plus proceeds from sales of those assets[18][28] - Constant currency organic revenue growth removes the impact of currency exchange rates, acquisitions, and divestitures to measure underlying revenue trends[19][32] - Non-GAAP measures should not be considered replacements for U.S. GAAP results and may not be comparable to similarly titled measures used by other companies[15][20][31] Reconciliation of Non-GAAP Financial Measures This section provides detailed reconciliations of GAAP to non-GAAP financial measures for revenue, gross profit, net income, and EPS Segment Revenues - Constant Currency Organic Growth (Q1 FY26): | Segment | As reported, U.S. GAAP Growth | Constant Currency Organic Growth | | :--- | :--- | :--- | | Healthcare | 8.2% | 7.6% | | AST | 12.6% | 10.2% | | Life Sciences | 5.2% | 4.2% | | Total | 8.7% | 7.8% | Reconciliation of GAAP to Adjusted Financials (Q1 FY26 vs Q1 FY25, in millions, except EPS): | Metric | GAAP (2025) | Adjustments (2025) | Adjusted (2025) | GAAP (2024) | Adjustments (2024) | Adjusted (2024) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $628.0 | $1.6 | $629.6 | $572.4 | $3.8 | $576.6 | | Income from Operations | $246.0 | $71.0 | $316.9 | $185.5 | $100.0 | $285.4 | | Income from continuing operations, net of income tax | $178.0 | $53.8 | $231.8 | $139.9 | $80.6 | $201.7 | | Net income attributable to shareholders | $177.4 | $53.8 | $231.2 | $145.4 | $67.2 | $212.6 | | Diluted EPS from continuing operations | $1.79 | $0.55 | $2.34 | $1.41 | $0.62 | $2.03 | FY2026 Outlook Non-GAAP Reconciliation This section provides the reconciliation for the fiscal 2026 outlook for adjusted EPS and free cash flow FY26 Outlook - Adjusted Net Income from Continuing Operations per Diluted Share: | Metric | Outlook (Ended March 31, 2026) | | :--- | :--- | | Net income from continuing operations per diluted share | $7.79 - $8.04 | | Amortization of acquired intangible assets | $2.08 | | Restructuring | $0.03 | | Adjusted net income from continuing operations per diluted share | $9.90 - $10.15 | FY26 Outlook - Free Cash Flow (in millions): | Metric | Outlook (Ended March 31, 2026) | | :--- | :--- | | Cash flows from operating activities | $1,195.0 | | Purchases of property, plant, equipment, and intangibles, net | $(375.0) | | Free Cash Flow | $820.0 | Cautionary Statement Regarding Forward-Looking Information This section advises that forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from projections - The release contains forward-looking statements, identified by terms such as "may," "will," "expects," "believes," "anticipates," and "outlook"[21] - Actual results could differ materially due to various factors, including operating costs, pricing pressure, integration of acquisitions, changes in tax laws or tariffs, and regulatory actions[22] - Other potential risks include international unrest, economic downturns, currency fluctuations, increasing competition, and labor-related issues[23] - STERIS does not undertake to update or revise any forward-looking statements unless legally required[23]