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It has been about a month since the last earnings report for Steris (STE). Shares have added about 0.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Steris due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
STE Q2 Earnings Beat Estimates, Margins Dip
STERIS plc reported second-quarter fiscal 2025 adjusted earnings per share (EPS) of $2.14, up 15.1% from the year-ago quarter’s figure. The figure surpassed the Zacks Consensus Estimate by 1.4%.
The adjustment excludes the impacts of certain non-recurring charges, such as the amortization of acquired intangible assets and acquisition and integration-related charges, among others.
The company’s GAAP EPS was $1.51, up 25.8% from the year-ago level of $1.20.
Q2 Revenues in Details
Revenues of $1.33 billion from continuing operations increased 7.3% year over year. The figure missed the Zacks Consensus Estimate by 0.6%.
Organic revenues at constant exchange rate or CER rose 7% year over year.
Quarterly Performance in Details
The company operates through three segments — Healthcare, Applied Sterilization Technologies (“AST”) and Life Sciences.
Revenues at Healthcare rose 9% year over year to $944.2 million (up 7% on a CER organic basis). While there was a 12% improvement in consumable revenues and a 14% increase in service revenues, these were partially offset by a 2% decline in capital equipment revenues.
Revenues at AST improved 9% to $256.7 million (up 9% on a CER organic basis). This performance indicated 6% growth in service revenues and a significant increase in capital equipment revenues.
Revenues in the Life Sciences segment decreased 4% to $127.9 million (up 3% year over year on a CER organic basis). The decline in revenues was due to the divestiture of the CECS business. This performance implied 21% growth in consumable revenues, offset by a 35% decline in capital equipment revenues and a 14% drop in service revenues.
Margins
The gross profit in the reported quarter was $578.8 million, up 6.0% from the prior-year level. The gross margin contracted 56 basis points (bps) year over year to 43.6% due to an 8.4% increase in the cost of revenues.
STERIS witnessed a 0.3% year-over-year rise in selling, general and administrative expenses. The figure amounted to $329.3 million. Research and development expenses rose 2.9% to $27.0 million. Adjusted operating expenses of $356.3 million increased 0.5% year over year. The adjusted operating margin expanded 127 bps to 16.7%.