STERIS plc

For the fourth quarter of fiscal 2026, STERIS reported revenue growth of 7% as reported and 5% constant currency organic growth, with gross margin at 44% (down 30 bps year over year), EBIT margin at 24.2% (down 60 bps), and adjusted EPS from continuing operations of $2.83, up 3%. Adjusted net income from continuing operations was $278.3 million, and the adjusted effective tax rate was 25.4% versus 23.5% last year. For the full fiscal year 2026, the company said revenue grew 9%, constant-currency organic revenue grew 7%, adjusted EPS grew 10% to $10.17, EBIT margins expanded 10 bps to 23.3%, and incremental tariffs were about $46 million. Free cash flow was $982.9 million, capex was $369 million, and year-end total debt was $1.9 billion with gross debt to EBITDA at about 1.2x. For fiscal 2027, management guided to 7% to 8% reported revenue growth, 6% to 7% constant-currency organic growth, segment organic growth of 6% to 7% for Healthcare and Life Sciences and 7% to 8% for AST, adjusted EPS of $11.10 to $11.30, free cash flow of $850 million, capex of $375 million, and about 50 bps of EBIT margin expansion at the high end. The outlook assumes about 200 bps of price, about $45 million of combined revenue contribution from two tuck-in acquisitions, and an effective tax rate of 25%.

Dan Carestio framed fiscal 2026 as a banner year and said the company is positioned to keep growing mid- to high single digits organically over time, with double-digit bottom-line growth leverage. He emphasized that Healthcare has become a more strategic partner to customers, focused on procedure growth, quality outcomes, standardization, and compliance in sterile processing. His tone was upbeat but measured, especially on AST, where he sounded cautious about tough first-half comparisons and customer inventory management.

Karen Burton highlighted the quarter’s 7% reported revenue growth, 5% constant-currency organic growth, 44% gross margin, 24.2% EBIT margin, and $2.83 adjusted EPS, while noting that tariffs and inflation pressured margins and that the tax rate rose to 25.4% in Q4. For the full year, she pointed to $982.9 million of free cash flow, $369 million of capex, $486.5 million of D&A, $1.9 billion of debt, and gross debt to EBITDA of about 1.2x, while saying working capital should grow in line with volume going forward. She also said fiscal 2027 assumes a 25% tax rate due in part to withholding taxes, total tariff spend of $60 million to $65 million, and continued capital allocation to dividends, reinvestment, M&A, and a $200 million to $300 million annual share repurchase pace.

Analysts focused heavily on the margin bridge for fiscal 2027, asking about tariffs, inflation, energy, freight, bonus compensation, and whether management was assuming any benefit from tariff refunds; Karen said tariffs are actually a relative tailwind in 2027 versus volume, no refunds are included, and the bonus tailwind is about $20 million because fiscal 2026 had overachievement while 2027 assumes 100% achievement. Questions also centered on AST’s slower start and weather-related disruption, and Dan said the first-half comparison is tougher because of prior-year inventory flowback and the Q4 snowstorms that cut growth by roughly 150 to 200 bps, with improvement expected later in the year. Other questions covered USMCA, ethylene oxide regulations, buybacks, chips, and supply chain risk; management said there is no USMCA assumption in the guide, EtO changes are not a major capital issue because facilities are already upgraded, the new buyback plan is a measured use of excess cash, and supply chain resilience is much better than during the prior ‘golden screw’ period.