- Price
- $222.66
- Fair value
- $244.00
- Discount
- 8.7%
- Uncertainty
- Medium
- LSEG rating
- 2.10
- Moat
- Narrow
- Next earnings
- 2026-11-05
- Next earnings is estimate
- Yes
- Company name
- STERIS
- Sector
- Infection prevention and sterilization
- About
- STERIS is a global provider of products and services that prevent infection, based in Dublin, Ireland. It has three segments. Healthcare sells sterilizers, washers, surgical tables, lights, consumables and service to hospitals and surgery centers, and repairs and reprocesses surgical instruments and endoscopes. Applied Sterilization Technologies (AST) sterilizes medical devices for their makers in a global network of contract facilities, with gamma, electron beam, X-ray and ethylene oxide methods. Life Sciences sells consumables, equipment and service to pharmaceutical makers. Revenue was $5.9 billion in fiscal 2026, which ended on March 31, 2026, and most of it comes from consumables and services that customers buy again and again.
- Thesis
- The market prices STERIS for slower growth in its higher-margin AST business, for tariff costs and for the cost of its new Xodus purchase. AST revenue grew only 5% at constant currency in Q1 fiscal 2027, and its capital equipment revenue fell 13%. Ethylene oxide sterilization faces stricter US environmental rules. Tariffs raise costs in Healthcare. On October 11, 2026, STERIS agreed to buy Xodus Medical for $2.1 billion in cash, mostly with new debt, for a business with expected 2026 revenue of about $245 million. Results are on plan: in Q1 fiscal 2027, revenue rose 7%, constant currency organic growth was 6% and adjusted EPS rose to $2.59 from $2.34. For the gap to close, three things must be true. STERIS must reach its fiscal 2027 guidance of 6% to 7% constant currency organic growth and adjusted EPS of $11.10 to $11.30. AST growth must speed up as medical device makers increase volumes. The Xodus purchase must close by the end of 2026 and add to growth and margins, as STERIS expects. The Q2 fiscal 2027 report, estimated for about November 5, 2026, is the next test. The fiscal 2028 outlook in May 2027 is the main test. If these checks pass, the gap can close over the next three to five quarters. The main reason it may not close is a long slowdown in AST demand from medical device makers.
- Risks
- AST depends on the volumes of medical device makers. Lower volumes or stricter rules on ethylene oxide emissions can slow growth and raise costs in this high-margin segment.
The Xodus purchase adds about $2 billion of debt. If Xodus grows more slowly than STERIS expects, the return on the purchase price can be low.
Tariffs raise the cost of parts and products that STERIS moves across borders, and STERIS may not pass all of these costs to customers.
Hospital budgets drive sales of capital equipment. Lower hospital spending can delay orders for sterilizers, tables and lights.
- Balance sheet
- Cash: $482M
Debt: $1.9B
Net debt: $1.4B
Undrawn credit line: $1.1B, to October 2029
Debt due within 12 months: $243M
Last debt due: 2051
At June 30, 2026, STERIS had cash and cash equivalents of $482.3 million and total debt of $1.89 billion. The debt was $1.35 billion of senior public notes, including 2.700% notes due 2031 and 3.750% notes due 2051, and $557.1 million of private placement senior notes, of which $243.4 million was due within 12 months. Nothing was drawn on the $1.1 billion revolving credit facility, which ends in October 2029. Total equity was $7.22 billion. Net cash from operations was $367.1 million and free cash flow was $279.6 million in Q1 fiscal 2027. The Xodus purchase of $2.1 billion, expected to close by December 31, 2026, will be paid mostly with new debt, and STERIS has a $2.0 billion bridge loan commitment for it.
As of 2026-06-30.
- Checkpoints
- Nov 5, 2026 (estimate): Q2 fiscal 2027 earnings: AST growth. Pending. Watch: Organic growth on track for the 6% to 7% guidance and faster AST service growth pass; a cut to the guidance or slower AST growth fails.
Dec 31, 2026 (estimate): Xodus purchase closes. Pending. Watch: A close by December 31, 2026, with debt financing on good terms, passes; a delay or a regulatory challenge fails.
- Recent events
- 2026-10-11: STERIS agreed to buy Xodus Medical, a maker of single-use surgical products such as the Pink Pad patient positioning system, for $2.1 billion in cash, plus up to $150 million based on 2028 targets. STERIS expects Xodus to have 2026 revenue of about $245 million. It will pay mostly with debt and has a $2.0 billion bridge loan commitment. It expects the deal to close by December 31, 2026.
2026-08-05: STERIS reported Q1 fiscal 2027 results. Revenue rose 7% to $1.5 billion, and constant currency organic growth was 6%. Adjusted EPS was $2.59, up from $2.34. Healthcare revenue rose 8%, AST revenue rose 6% and Life Sciences revenue rose 9%. STERIS kept its fiscal 2027 guidance.
2026-08-05: STERIS announced a plan to move its US chemistry manufacturing and distribution to a new site in North Carolina and close sites in St. Louis, Missouri, and Plymouth, Minnesota. It expects pre-tax charges of $55 million to $70 million through fiscal 2030.
2026-05-11: STERIS reported fiscal 2026 results. Revenue from continuing operations rose 9% to $5.9 billion, and adjusted EPS was $10.17. For fiscal 2027, it guided for 6% to 7% constant currency organic growth, adjusted EPS of $11.10 to $11.30 and free cash flow of about $850 million. The board authorized a new $1 billion share buyback program.