STERIS plc

STERIS plc is a leading global provider of products and services that support patient care with an emphasis on infection prevention, offering a unique mix of consumable products, services, capital equipment, and connectivity solutions. The company operates and reports its financial information in three reportable business segments: Healthcare, Applied Sterilization Technologies (AST), and Life Sciences. As a result of the fiscal 2025 divestiture of the Dental segment, Dental is presented as discontinued operations, and historical information has been retrospectively adjusted to exclude discontinued operations for comparability. The bulk of the company’s revenues are derived from healthcare, medical device, and pharmaceutical customers, with growth in these industries driven by the aging population, increased demand for medical procedures, and a desire by customers to operate more efficiently.

The Healthcare segment provides a comprehensive offering for healthcare providers worldwide, focused on sterile processing departments and procedural centers, with products including cleaning chemistries, sterility assurance products, automated endoscope reprocessing systems, and capital equipment such as sterilizers and surgical tables. Services offered include equipment installation, maintenance, repair, and outsourced instrument sterile processing. The AST segment supports medical device and pharmaceutical manufacturers through a global network of contract sterilization and laboratory testing facilities, offering a wide range of sterilization modalities and integrated sterilization equipment and control systems. The Life Sciences segment provides a comprehensive offering of products and services designed to support biopharmaceutical and medical device manufacturing facilities, including pharmaceutical detergents, cleanroom disinfectants, sterilizers, and high purity water systems.

For the fiscal year ended March 31, 2026, total revenues increased $476.4 million, or 8.7%, to $5,935.9 million ¹ compared to $5,459.5 million ² for the prior year, reflecting higher volume and pricing as well as favorable impacts from foreign currency movements. The gross profit percentage increased to 44.2% ³ for fiscal 2026 as compared to 44.0% ⁴ for fiscal 2025, with favorable impacts from pricing, operational improvements, lower restructuring costs, and productivity partially offset by unfavorable impacts from tariffs and inflation. Income from operations increased 27.1% to $1,101.8 million ⁵ over fiscal 2025 income from operations of $866.6 million ⁶, primarily due to increased pricing, volume, and lower restructuring and litigation costs, which were partially offset by inflation and tariffs.

During fiscal 2026, the company completed two tuck-in acquisitions which continued to expand its product and service offerings in the Healthcare segment, with total aggregate consideration of approximately $23.4 million ⁷, including fair value of contingent consideration. The company also purchased investments totaling $134.0 million ⁸, predominantly related to a noncontrolling equity investment in a non-U.S.-based healthcare product manufacturer. As of March 31, 2026, the company had a backlog of $490.7 million ⁹, of which $392.1 million ¹⁰ and $98.7 million ¹¹ related to the Healthcare and Life Sciences segments, respectively, compared to backlog orders of $452.9 million ¹² at March 31, 2025.

The company holds a significant intellectual property portfolio, with 606 United States patents and 2,402 patents in other jurisdictions as of March 31, 2026 ¹³, along with 94 United States patent applications and 235 patent applications pending in other jurisdictions ¹⁴. STERIS had no Class I recalls in fiscal 2026, 2025, or 2024 ¹⁵, and was not the subject of any FDA or Regulatory Authority enforcement actions in fiscal 2026 ¹⁶. The company’s continuous improvement framework applies Lean principles across manufacturing, service operations, back office, and support functions, with a dedicated Continuous Improvement team partnering with the business to coach, build capability, and accelerate results.

In fiscal 2027 and beyond, management expects to manage costs, grow the business with internal product and service development, invest in greater capacity and efficiency, and augment these value creating methods with potential acquisitions of additional products and services. The company’s growth is driven by the aging of the population throughout the world, increased demand for medical procedures including preventive screenings such as endoscopies and colonoscopies, and a desire by customers to operate more efficiently, all of which are driving increased demand for many of the company’s products and services.

The company’s capital allocation plans include the payment of quarterly dividends, having paid quarterly dividends each year since 2005 and increased the dividend each consecutive year, including an increase during fiscal 2026 to $0.63 per share ¹⁷. On May 5, 2026, the Board of Directors terminated the Outgoing Repurchase Program and authorized a new share repurchase program for the purchase of up to $1,000.0 million ¹⁸ (exclusive of fees, commissions, and other charges), with no limitation on the number of shares that can be repurchased in a year and no expiration date. As of March 31, 2026, there was $75.0 million ¹⁹ of remaining availability under the Outgoing Repurchase Program.

The company expects to manage its cost structure through its continuous improvement framework, which applies Lean principles across manufacturing, service operations, back office, and support functions. The company also continues to invest in smart manufacturing to drive structural cost reduction in its facilities, including aligning work to more efficient manufacturing centers, implementing advanced manufacturing capabilities such as digital initiatives, automation and robots, and closing facilities that are not required to meet future capacity and work needs. The company’s debt-to-total capital ratio was 21.3% ²⁰ at March 31, 2026.

The company continues to expand its irradiation processing capacity with accelerator-based technologies in order to help mitigate the potential cobalt-60 supply risk. The company also continues to evaluate opportunities to in-source, outsource, or adopt technology to drive value, and extends Lean principles to back office and support functions where Improvement tools streamline workflows, reduce waste, and improve service delivery. The company’s outlook also includes the expectation to manage the impacts of tariffs and inflation, which partially offset favorable impacts from pricing, operational improvements, and productivity in fiscal 2026.

The company faces significant risks from changes in healthcare policy or government and third-party payor reimbursement levels, noting that the One Big Beautiful Bill Act passed in the United States in 2025 may reduce Medicaid funding, result in decreased Medicaid reimbursements, and negatively impact customers who purchase the company’s products and services. The company is subject to extensive regulatory requirements and must receive and maintain regulatory clearance or approval for many products and operations, with failure to do so potentially hurting revenues, profitability, financial condition, or value. The company’s ethylene oxide (EO) sterilization operations subject it to claims of liability, and pursuant to binding confidential settlement agreements entered into in March and October 2025, the company agreed to pay up to approximately $48.2 million ²¹ to resolve substantially all of the claims for personal injury against a subsidiary related to EO exposure pending in the Circuit Court of Cook County, Illinois. The company also faces risks from supply chain disruption, noting that key raw materials include cobalt-60 and EO which are necessary to AST operations and have a limited number of suppliers, with some being single-sourced in certain regions of the world. Additionally, the company faces risks from geopolitical instability, including changes to trade policy such as increasing tariffs on imports, which may result in increased production costs, supply chain disruptions, and reduced customer demand, with the company noting that the United States-Mexico-Canada Agreement requires a formal six-year joint evaluation expected to commence on July 1, 2026.

Management’s message to shareholders emphasizes the company’s role as a leading global provider of products and services that support patient care with an emphasis on infection prevention, with the core mission of helping customers create a healthier and safer world. The tone is forward-looking and focused on growth, with management stating that in fiscal 2027 and beyond, they expect to manage costs, grow the business with internal product and service development, invest in greater capacity and efficiency, and augment these value creating methods with potential acquisitions of additional products and services. The two or three strategic priorities emphasized include managing costs, growing the business through internal product and service development, and investing in greater capacity and efficiency, while also augmenting these methods with potential acquisitions.