STERIS Q4 2025: Navigating Contradictions in Life Sciences Growth, Capital Orders, and M&A Strategy

Life Sciences growth expectations, capital equipment orders and timing, tariff impact and mitigation strategy, growth expectations for the Life Sciences segment, M&A activity and share repurchases are the key contradictions discussed in STERIS's latest 2025Q4 earnings call.



Revenue and Earnings Growth:
- STERIS plc reported a 4% increase in total as-reported revenue for Q4 2025, with constant currency organic revenue growth of 6%, driven by both volume and price factors.
- The company also saw a 40% increase in adjusted earnings per diluted share from continuing operations, attributed to factors such as lower interest expense following the divestiture of the Dental segment and strong earnings growth across segments.

Segment Performance:
- The Healthcare segment reported a 6% revenue growth for the year, with Healthcare capital equipment orders growing over 12%. Revenue growth was driven by strong procedure volumes in the U.S. and price and market share gains.
- The AST segment reported a 9% revenue growth for the year, with bioprocessing experiencing some lumpy performance, while capital equipment shipments more than doubled, exceeding expectations.

Tariff Impact and Mitigation:
- STERIS anticipates a $30 million tariff cost impact for fiscal 2026, reflecting both global and China-related tariffs. The company plans to mitigate this exposure by leveraging its strength to offset tariffs, with the potential for a 20 basis point increase in EBIT margins at the high end of the earnings range.

Free Cash Flow and Debt Reduction:
- The company achieved record free cash flow of $787 million for fiscal 2025, driven by significant working capital improvements, particularly in inventory.
- STERIS also successfully reduced its total debt to $2 billion, with a gross debt to EBITDA ratio of approximately 1.4x, demonstrating strong financial management.