STERIS plc delivered a solid Q2 2026 performance, underscoring the durability of its diversified healthcare portfolio. Total as-reported revenue rose 10% to $1.4603 billion, with constant-currency organic growth of 9% driven by volume and a 2.1 percentage-point contribution from price. Gross margin expanded 60 basis points to 44.3%, as positive price/productivity more than offset tariff costs and inflation, supporting a 90-basis-point improvement in EBIT margin to 23.1% of revenue. Net income from continuing operations was $244.5 million (GAAP), with non-GAAP diluted EPS of $2.47, up 15% year-over-year. Free cash flow for the first half of fiscal 2026 totaled $527.7 million, demonstrating strong earnings leverage and working-capital improvements and fueling a raised full-year free cash flow target of $850 million. Debt remains modest relative to cash generation, and gross-to-EBITDA sits near ~1.2x, signaling healthy liquidity and leverage dynamics as the company enters the second half of the year.
Segment performance was broadly positive across the portfolio. Healthcare revenue grew 9% CC, with services up 13% and consumables up 10%; capital equipment grew 4% with a backlog exceeding $400 million. AST (Applied Sterilization Technologies) posted robust services growth (13%) and stable demand across end-markets, led by volume and pricing, with margins up about 250 bps. Life Sciences delivered a 12% CC revenue uplift, aided by a return of capital-equipment shipments and backlog growth. Management raised its FY2026 outlook: ~8% to 9% reported revenue growth, 7% to 8% CC organic growth, and 7% to 8% CC organic growth across all segments, with AST services expected to grow 9%–10%. Free cash flow guidance was increased by $30 million to $850 million, with capex around $375 million. The tone reflects confidence in continued strength in services, favorable currency tailwinds, and ongoing capacity expansion to satisfy backlog, albeit with ongoing tariff and inflation headwinds to monitor.