8-K: STERIS Announces Fiscal 2025 Third Quarter Results: Revenue and EPS Rise, Outlook Updated

STERIS plc reports a 6% increase in total revenue and constant currency organic revenue for Q3 2025, with adjusted EPS rising to $2.32, and updates its fiscal year outlook.

Summary

• STERIS plc announced its financial results for the third quarter of fiscal year 2025, which ended on December 31, 2024.
• Total revenue from continuing operations increased by 6% to $1.4 billion, compared to $1.3 billion in the same quarter of the previous year.
• Constant currency organic revenue also grew by 6%.
• As reported EPS from continuing operations increased to $1.75, while adjusted EPS increased to $2.32.
• The company has updated its fiscal 2025 outlook, primarily to reflect a significant shift in foreign currency based on forward rates through March 31, 2025.
• Healthcare revenue grew 7% to $976.0 million, driven by improvements in consumable and service revenue.
• Applied Sterilization Technologies (AST) revenue increased 10% to $258.1 million.
• Life Sciences revenue decreased 7% to $136.4 million, mainly due to the divestiture of the CECS business and a decline in capital equipment revenue.
• Net cash provided by operations for the first nine months of fiscal 2025 was $887.3 million, compared to $718.5 million in fiscal 2024.
• Free cash flow for the first nine months of fiscal 2025 was $588.1 million, compared to $457.0 million in the prior year period.
• The company now expects as reported revenue to increase approximately 6% for fiscal 2025.
• Constant currency organic revenue from continuing operations is anticipated to be approximately 6%.
• Adjusted earnings per diluted share from continuing operations are expected to be in the range of $9.05 to $9.15.
• Capital expenditures are anticipated to be approximately $360 million, and free cash flow is expected to be approximately $700 million.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. While there are some challenges related to currency fluctuations and a slight reduction in the outlook, the company is still experiencing revenue and earnings growth. Management's comments are optimistic, and the company's overall performance is solid.

Positives

• Total revenue and constant currency organic revenue from continuing operations increased by 6%.
• Adjusted EPS increased to $2.32.
• Healthcare and AST segments showed revenue growth.
• Net cash provided by operations and free cash flow increased compared to the previous year.
• The company is experiencing improved volume, price, and productivity in its Healthcare segment.

Negatives

• Life Sciences revenue decreased 7% due to the divestiture of the CECS business and a decline in capital equipment revenue.
• The fiscal 2025 outlook for as reported revenue was revised down slightly due to currency impacts and lower than anticipated revenue for capital equipment in the Healthcare segment.
• Adjusted earnings per diluted share outlook was also slightly reduced due to currency impacts.

Risks

• Unfavorable foreign currency exchange rates are expected to negatively impact revenue and earnings in fiscal 2025.
• Lower than anticipated revenue for capital equipment in the Healthcare segment could affect future performance.
• The Life Sciences segment experienced a decline in capital equipment revenue, which could continue to be a challenge.

Future Outlook

The company expects as reported revenue to increase approximately 6% for fiscal 2025, with constant currency organic revenue also around 6%. Adjusted earnings per diluted share are anticipated to be in the range of $9.05 to $9.15. Capital expenditures are expected to be approximately $360 million, and free cash flow is projected to be approximately $700 million.

Management Comments

• We are pleased with our results through the first nine months of the fiscal year, said Dan Carestio, President and CEO of STERIS.
• We are updating our outlook primarily to reflect a significant shift in foreign currency based on forward rates through March 31, 2025.
• We appreciate the efforts of our global Associates who continue to focus on our Customers and look forward to another year of solid performance.

Industry Context

STERIS operates in the healthcare and life sciences industries, providing infection prevention and sterilization products and services. The results reflect the ongoing demand for these services, particularly in the Healthcare and AST segments. The updated outlook acknowledges the impact of currency fluctuations, a common factor affecting multinational corporations.

Comparison to Industry Standards

• Comparing STERIS's performance to companies like Getinge and Cantel Medical (now part of STERIS), a 6% revenue growth and adjusted EPS increase of $2.32 is competitive.
• STERIS's focus on infection prevention aligns with industry trends emphasizing patient safety and hygiene.
• The company's free cash flow of $588.1 million for the first nine months indicates strong financial health compared to industry peers.
• Capital expenditure guidance of $360 million suggests continued investment in growth and innovation, similar to strategies employed by other major players in the medical device and sterilization services market.

Stakeholder Impact

• Shareholders can expect continued dividends and potential share repurchases, supported by strong free cash flow.
• Employees will benefit from a stable and growing company.
• Customers will continue to receive innovative healthcare and life sciences products and services.
• Suppliers can expect continued business relationships with STERIS.
• Creditors can be confident in the company's ability to meet its debt obligations.

Next Steps

• STERIS management will host a conference call on February 6, 2025, to discuss the results.
• The company will continue to monitor and manage the impact of currency fluctuations.
• STERIS will focus on driving growth in its Healthcare and AST segments.

Key Dates