01—Abstract
Summary
Summary of the 10-Q filed November 6, 2025. Cited figures are marked; the original filing is the authoritative source.
STERIS plc's 10-Q for the fiscal second quarter ended September 30, 2025 shows revenues rising 9.9% to $1,460.3 milliona for the three months and 9.3% to $2,851.4 million for the six months, with growth across all three segments (Healthcare, AST, and Life Sciences) driven by higher volume and pricing.
Gross profit percentage improved to 44.2% in the quarter from 43.6%, and income from operations rose to $265.8 millionb from $219.7 million, aided by lower restructuring expenses and lower interest expense of $14.9 million versus $19.7 million a year earlier. Net income attributable to shareholders was $191.9 million, or $1.94 diluted per share, compared with $150.0 million, or $1.51 diluted per share, in the prior-year quarter. Cash generation was strong: operating cash flow was $707.8 million and free cash flow was $527.7 million for the six months, versus $554.5 million and $344.5 million a year earlier.
The company repaid $125.0 millionc of Private Placement Senior Notes, reduced its debt-to-total capital ratio to 21.3% from 25.3% a year earlier, repurchased $100.0 million of shares, and paid $1.20 per share in dividends for the six months. Remaining share repurchase availability was $200.0 million at quarter end. Key items to monitor include an Illinois ethylene oxide litigation settlement with up to $48.2 million to settle claims, a pending IRS matter with a cumulative potential tax liability of approximately $50.0 million that the company is contesting, and an effective tax rate that rose to 23.9% in the quarter from 22.3%.
02—Key points
Key Highlights
- Total revenues increased 9.9% to $1,460.3 million in the quarter and 9.3% to $2,851.4 million for the six months, with all three segments contributing to growth.
- Gross profit percentage was 44.2% in the quarter versus 43.6% a year earlier, reflecting favorable pricing and productivity partly offset by inflation and tariff costs.
- Income from operations was $265.8 million in the quarter versus $219.7 million, and $511.8 million for the six months versus $405.2 million.
- Diluted EPS from continuing operations was $1.94 in the quarter versus $1.51 a year earlier, with net income attributable to shareholders of $191.9 million.
- Free cash flow was $527.7 million for the six months versus $344.5 million, supported by $707.8 million of operating cash flow.
- Debt-to-total capital ratio fell to 21.3% at September 30, 2025 from 25.3% a year earlier, after repaying $125.0 million of Private Placement Senior Notes.
- Healthcare backlog was $427.5 million and Life Sciences backlog was $113.7 million at September 30, 2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Steris kept $0.13.
- Revenue$1.46B100.0%
- Cost of revenue−$814.4M55.8%
- Gross profit$645.9M44.2%
- Operating costs−$380.1M26.0%
- Operating income$265.8M18.2%
- Interest, other & tax−$73.9M5.1%
- Net income$191.9M13.1%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed November 6, 2025Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $1.46B$1.33B | +9.9% |
| Cost of Revenue | $814.40M$750.10M | +8.6% |
| Gross Profit | $645.90M$578.80M | +11.6% |
| R&D Expenses | $28.20M$27.00M | +4.4% |
| SG&A Expenses | $349.70M$329.30M | +6.2% |
| Operating Expenses | $380.10M$359.10M | +5.8% |
| Operating Income | $265.80M$219.70M | +21.0% |
| Net Income | $191.90M$150.00M | +27.9% |
| EPS (Basic) | $1.95$1.52 | +28.3% |
| EPS (Diluted) | $1.94$1.51 | +28.5% |
| Shares Outstanding (Basic) | 98.40M98.70M | −0.3% |
| Shares Outstanding (Diluted) | 98.80M99.20M | −0.4% |
05—Questions
Frequently Asked Questions
How did STERIS perform in the fiscal second quarter of 2026?
Revenues rose 9.9% to $1,460.3 million, gross profit reached $645.9 million with a 44.2% gross margin, and income from operations increased to $265.8 million from $219.7 million. Net income attributable to shareholders was $191.9 million, or $1.94 per diluted share.
What drove the improvement in profitability?
The filing attributes the increase in gross profit percentage to favorable pricing, productivity, mix, and other cost reductions, partly offset by inflation and tariff costs. Income from operations also benefited from lower restructuring expenses, which were $2.2 million in the quarter versus $2.8 million a year earlier, and lower interest expense.
How strong is the company's cash position and cash generation?
Cash and cash equivalents rose to $319.2 million from $171.7 million at March 31, 2025. Operating cash flow was $707.8 million for the six months and free cash flow was $527.7 million, both higher than the prior-year period, with the increase attributed to higher earnings and working capital improvements.
What are the main legal and tax risks disclosed?
The company has agreed to settlements in the Illinois ethylene oxide litigation to pay up to $48.2 million, with a claims administration process expected to continue through the first half of fiscal 2027. Separately, STERIS is contesting IRS Notices of Deficiency that would result in a cumulative tax liability of approximately $50.0 million, and it has not established reserves for these notices.
What capital returns did the company make to shareholders?
During the first six months of fiscal 2026, STERIS repurchased 0.4 million ordinary shares for $100.0 million and paid cash dividends of $118.1 million, or $1.20 per share. As of September 30, 2025, $200.0 million remained available under the share repurchase program.
06—Continue