STERIS plc's Q1 2026: Navigating Tariff Turbulence and Life Sciences Growth Challenges

Tariff impact and mitigation, impact of vaccine spending on Life Sciences segment, free cash flow guidance and working capital improvements, tariff expectations and impact on costs, and life sciences segment backlog and growth are the key contradictions discussed in STERIS plc's latest 2026Q1 earnings call.



Revenue and Organic Growth:
- Steris plc reported 9% growth in total revenue for Q1 2026, with constant currency organic revenue growth of 8%.
- This growth was driven by strong volume and a 230 basis points increase in price, which outpaced inflation and tariff costs.

Segment Performance:
- The Healthcare segment saw constant currency organic revenue growth of 8%, with capital equipment revenue increasing by 6%.
- The growth was supported by underlying order growth of 14% and a strong backlog of over $400 million.

Cash Flow and Debt Reduction:
- Steris reported free cash flow of $327 million for Q1 2026, a significant improvement driven by increased earnings and better working capital management.
- The company also reduced its total debt to $1.9 billion, further strengthening its financial position.

Tariff and Foreign Currency Impact:
- The company adjusted its revenue outlook due to a significant shift in forward currency rates, anticipating an 8% to 9% revenue growth.
- While tariff costs increased by $15 million, favorable foreign currency rates helped offset this impact, maintaining the earnings outlook.

Operational Efficiency and Margin Expansion:
- Gross margin increased by 20 basis points to 45.3%, and EBIT margin improved by 50 basis points to 22.8%.
- This was achieved by leveraging positive price and productivity gains to offset inflation and tariff costs.