STERIS-STE Q3 Earnings In Line, '25 Sales View Cut, Stock Up in Aftermarket

Core Viewpoint - STERIS plc reported third-quarter fiscal 2025 adjusted EPS of $2.32, reflecting a 9.9% increase year-over-year, aligning with Zacks Consensus Estimate, while revenues of$ 1.37 billion increased 5.6% year-over-year but missed estimates by 0.7% [1][3][12] Financial Performance - Adjusted EPS of $2.32, GAAP EPS of$ 1.75, up 17.4% from $1.49 year-over-year [1][2] - Revenues of$ 1.37 billion from continuing operations, a 5.6% increase year-over-year, but missed Zacks Consensus Estimate [3][12] - Organic revenues at constant exchange rate (CER) rose 6% year-over-year [3] Segment Performance - Healthcare segment revenues rose 7% year-over-year to $976.0 million, with consumable revenues up 9% and service revenues up 13%, partially offset by a 5% decline in capital equipment revenues [4] - Applied Sterilization Technologies (AST) revenues improved 10% to$ 258.1 million, driven by a 10% growth in service revenues [5] - Life Sciences segment revenues decreased 7% to $136.4 million, impacted by the divestiture of the CECS business, despite a 14% growth in consumable revenues [6] Margins and Expenses - Gross profit increased 9% to$ 610.3 million, with gross margin expanding 138 basis points to 44.5% [7] - Selling, general and administrative expenses rose 8.8% to $335.4 million, while research and development expenses increased 8.3% to$ 27.4 million [8] Cash Flow and Guidance - Cumulative net cash flow from operating activities reached $887.3 million, up from$ 718.5 million year-over-year [10] - Updated fiscal 2025 revenue guidance expects approximately 6% growth, down from earlier estimates of 6.5-7.5% [11] Overall Assessment - The earnings met estimates, but revenue performance was mixed, with growth in most segments except Life Sciences, attributed to a rebound in procedure volume and favorable pricing [12] - Margin expansion is a positive indicator, although the lowered revenue guidance may raise concerns [13]