01—Abstract
Summary
Summary of the 10-Q filed August 7, 2025. Cited figures are marked; the original filing is the authoritative source.
STERIS plc reported results for the first quarter of fiscal 2026, the three months ended June 30, 2025.
Total revenues rose 8.7% to $1,391.1 milliona from $1,279.5 million, driven by higher volume and pricing, with all three segments contributing. Gross profit percentage improved to 45.1% from 44.7%, and income from operations increased to $246.0 million from $185.5 million, helped by higher volume and pricing and lower restructuring expenses ($1.8 million versus $25.7 million in the prior-year income statement line). Net income attributable to shareholders was $177.4 million, or $1.79 diluted per share, compared with $145.4 million, or $1.46 diluted per share, in the prior year, which included discontinued operations.
Cash flow was strong. Net cash from operating activities was $420.0 millionb, versus $303.7 million a year earlier, and free cash flow was $326.5 million, versus $195.7 million. The filing attributes the increase to higher earnings and working capital, mainly a higher accounts payable balance from timing of disbursements.
The company repaid $125.0 millionc of Private Placement Senior Notes, and total debt fell to $1,903.1 million from $2,043.7 million at March 31, 2025. The debt-to-total capital ratio was 21.5%, down from 23.6% at March 31, 2025. The company paid $0.57 per share in dividends and made no share repurchases under its program during the quarter, leaving $300.0 million of authorization available.
The filing also covers risk items. The company has reached binding term sheets to settle substantially all pending Illinois ethylene oxide personal injury claims, with up to $48.2 milliond in settlements, of which a liability remains accrued.
Separately, the company is contesting IRS Notices of Deficiency for fiscal and calendar 2018 that could imply a cumulative tax liability of about $50.0 million, with no reserves established. The filing notes that the recently enacted One Big Beautiful Bill Act is still under assessment for its impact on the consolidated financial statements.
02—Key points
Key Highlights
- Revenues increased 8.7% to $1,391.1 million, with Healthcare revenues up 8.2%, AST up 12.6%, and Life Sciences up 5.2%.
- Income from operations rose to $246.0 million from $185.5 million, and gross profit percentage improved to 45.1% from 44.7%.
- Net cash provided by operating activities was $420.0 million, and free cash flow was $326.5 million, compared with $195.7 million a year earlier.
- Diluted EPS from net income attributable to shareholders was $1.79, compared with $1.46 in the prior-year period, which included discontinued operations.
- Total debt declined to $1,903.1 million after a $125.0 million repayment of Private Placement Senior Notes; the debt-to-total capital ratio was 21.5%.
- The company has entered binding term sheets to resolve substantially all pending Illinois ethylene oxide personal injury claims, with up to $48.2 million in settlements.
- The company is contesting IRS Notices of Deficiency with a potential cumulative tax liability of approximately $50.0 million, with no reserves established.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Steris kept $0.13.
- Revenue$1.39B100.0%
- Cost of revenue−$763.1M54.9%
- Gross profit$628.0M45.1%
- Operating costs−$382.0M27.5%
- Operating income$246.0M17.7%
- Interest, other & tax−$68.6M4.9%
- Net income$177.4M12.8%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed August 7, 2025Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $1.39B$1.28B | +8.7% |
| Cost of Revenue | $763.10M$707.10M | +7.9% |
| Gross Profit | $628.00M$572.40M | +9.7% |
| R&D Expenses | $26.40M$25.60M | +3.1% |
| SG&A Expenses | $353.80M$335.60M | +5.4% |
| Operating Expenses | $382.00M$386.90M | −1.3% |
| Operating Income | $246.00M$185.50M | +32.6% |
| Net Income | $177.40M$145.40M | +22.0% |
| EPS (Basic) | $1.80$1.47 | +22.4% |
| EPS (Diluted) | $1.79$1.46 | +22.6% |
| Shares Outstanding (Basic) | 98.40M98.90M | −0.5% |
| Shares Outstanding (Diluted) | 98.80M99.40M | −0.6% |
05—Questions
Frequently Asked Questions
What drove the revenue growth in the quarter?
The filing attributes the 8.7% increase in total revenues to higher volume and pricing, with all three segments contributing. Service revenues rose 12.4%, consumable revenues rose 5.0%, and capital equipment revenues rose 5.5%.
How did profitability change compared with the prior year?
Income from operations increased to $246.0 million from $185.5 million, mainly due to higher volume and pricing and lower restructuring expenses, partly offset by higher labor costs. Interest expense fell to $15.9 million from $30.4 million, reflecting lower debt principal outstanding.
What is the status of the Illinois ethylene oxide litigation?
The company entered binding confidential term sheets with plaintiffs' counsel on March 3, 2025, and has settled or expects to settle claims for up to $48.2 million. A claims administration process is expected to run through the fourth quarter of fiscal 2026. The company may exercise walkaway rights if certain conditions are not met.
Is the company returning cash to shareholders?
The company paid cash dividends of $56.2 million, or $0.57 per share, in the quarter. It made no share repurchases under its program during the quarter, leaving $300.0 million of remaining authorization.
What are the main tax-related uncertainties?
The company received two Notices of Deficiency from the IRS related to deemed dividend inclusions and withholding tax for fiscal and calendar 2018, which could imply a cumulative tax liability of approximately $50.0 million. The company is contesting the assertions in U.S. Tax Court and has not established reserves. The filing also says the One Big Beautiful Bill Act, enacted July 4, 2025, is still being assessed.
06—Continue