STERIS plc reported a solid Q3 2026, with total revenue of $1.496 billion, up 9% year over year (YoY) and 2.5% quarter over quarter (QoQ) on an as-reported basis. Constant currency (CC) organic revenue rose 8%, driven by volume with a 200 basis point contribution from price. Gross margin declined 70 basis points to 43.9%, as tariff-related costs and broader inflation more than offset price and productivity gains. EBIT margin compressed 40 bps to 22.9%, while adjusted metrics remained supported by disciplined cost management. Net income was $192.8 million, or $1.96 per diluted share, up 9–12% YoY depending on the proxy, with free cash flow (FCF) for the first nine months of fiscal 2026 totaling $199.5 million and operating cash flow (OCF) of $298.2 million.
Segment detail underpins a diversified growth profile: Healthcare CC revenue grew 8% with backlogs above $400 million, AST (Applied Sterilization Technologies) CC revenue rose 8% with robust capital equipment growth (>100% in that sub-segment), and Life Sciences CC revenue advanced about 5% with solid consumables demand. Backlog stability in Healthcare contrasted with stronger Life Sciences activity, reflecting a healthier cadence in consumables and capacity-related capital investments. Management reaffirmed FY26 guidance, signaling 7–8% CC organic revenue growth and 8–9% as-reported revenue growth, with EPS guidance of roughly $10.00 to $10.30 and year-end free cash flow around $850 million, despite tariff headwinds.
From the earnings call, management emphasized resilience of a utility-like capital base in sterilization and disinfection, ongoing productivity gains, and a constructive macro backdrop for onshoring and ASC-driven capacity expansion. The team outlined tariff mitigation strategies and highlighted that the fourth quarter could be more pressured in Healthcare Services, while AST and Life Sciences backlog provide meaningful optionality for the year ahead. The combination of backlog strength, prudent capital allocation (net repurchases of $103.5 million in nine months; $61.9 million in dividends), and continued cash generation supports a favorable long-term investment thesis, even as tariff headwinds remain a near-term earnings headwind.