STERIS Revenue Rose as Organic Growth Rebounded
Adjusted earnings rose 11% to $2.59 a share in the quarter.
STERIS (STE), the sterilization-products and services provider, reported a 7.3% increase in first-quarter revenue to $1.493 billion as constant-currency organic growth rebounded to 6.2%.
Organic growth improved from 5% in the preceding quarter, reversing a slowdown from 9% in the fiscal second quarter and 8% in the third. The recovery came with wider margins: adjusted operating margin rose to about 23.8% from 22.8% a year earlier.
GAAP diluted earnings increased 14% to $2.04 a share from $1.79, while adjusted earnings rose from $2.34 a share. Adjusted earnings remained below the preceding quarter's $2.83 a share but exceeded the fiscal third quarter's $2.53.
Healthcare revenue grew 8% to $1.048 billion, accelerating from 7% growth in the preceding quarter. The mix shifted toward recurring business as service revenue rose 10% and consumables increased 9%, while capital-equipment growth slowed to 1%.
Healthcare operating income rose 10% to $260.2 million as volume, pricing, productivity and a favorable mix outweighed inflation and higher tariff costs, the company said. The segment's operating margin held at about 24.8%.
Applied Sterilization Technologies revenue increased 6% to $297.6 million, while constant-currency organic growth improved to 5% from 2% in the preceding quarter. Capital-equipment revenue remained a drag, falling 13%, though that decline narrowed from 62% previously. Life Sciences revenue rose 9% to $146.7 million, led by 17% growth in capital equipment, while its operating margin contracted to about 42.1%.
STERIS maintained its fiscal 2027 outlook for revenue growth of 7% to 8%, constant-currency organic growth of 6% to 7% and adjusted earnings of $11.10 to $11.30 a share. The company raised its capital-spending forecast by $75 million to about $450 million and cut its free-cash-flow forecast by $50 million to about $800 million.
Operating cash flow fell 13% to $367.1 million as working capital contributed less, even as STERIS increased share repurchases to $115.5 million. The company also announced a formulated-chemistries restructuring expected to produce $55 million to $70 million in pretax charges through fiscal 2030, extending the investment cycle behind its unchanged growth outlook.