STERIS (STE) Q3 2025 earnings summary

Executive summary

• Third quarter revenue grew 6% year-over-year to $1.4B, with constant currency organic revenue also up 6%, driven by volume and price increases, especially in Healthcare and AST segments.

• Gross margin improved to 44.6% for the quarter, while EBIT/operating margin was 23.3% and 17.9% respectively.

• Net income from continuing operations reached $229M, with adjusted EPS up 11% to $2.32; as reported EPS was $1.75.

• Free cash flow for the first nine months was $588.1M, on track for the $700M full-year target.

• Divestitures of Dental and CECS businesses contributed to improved capital structure and segment margins.

Financial highlights

• Adjusted effective tax rate was 24.5% for the quarter, up due to unfavorable discrete items.

• Capital expenditures for the first nine months totaled $299M; depreciation and amortization were $354M.

• Total debt at quarter end was $2.2B, with gross leverage at 1.5x EBITDA; debt-to-total capital ratio improved to 25.2%.

• Cash dividends paid totaled $1.66 per share for the nine months; Q3 dividend was $0.57 per share.

• Backlog at quarter-end: Healthcare $434.9M, Life Sciences $85.1M.

Outlook and guidance

• Full-year as-reported and constant currency organic revenue growth expected at approximately 6%, revised from prior 6.5%-7.5% due to currency headwinds.

• Adjusted EPS guidance narrowed to $9.05–$9.15, reflecting a $0.10 negative currency impact.

• Free cash flow guidance remains at about $700M, with $360M in capital spending.

• Restructuring actions expected to be substantially complete by fiscal year-end, with ~$25M annual operating income improvements anticipated for fiscal 2026 and beyond.

• Additional restructuring costs of ~$20M expected through fiscal 2025.