A maker of sterilization and infection-prevention products and services, STERIS supplies hospitals, medical device makers, and pharmaceutical plants with sterilizers, cleaning chemistries, and contract sterilization. It was founded in 1985 in Mentor, Ohio, as Innovative Medical Technologies by microbiologist Raymond Kralovic, who invented a low-temperature liquid sterilization process for delicate instruments like endoscopes that couldn't survive steam. Renamed STERIS in 1987 — a nod to "sterile" — its brands include V-PRO sterilizers and VAPROX HC sterilant.
Steris Q1 FY2027 gross margin reached 45.8% as pricing and productivity offset inflation, while a new restructuring plan targets chemistries manufacturing.
hit its highest level in over three years. rose 7.3% to $1.49 billion and grew 16.2% to $285.8 million, driven by volume and pricing across all three segments. A new restructuring plan to consolidate U.S. chemistries manufacturing signals a multi-year effort to address cost structure, with charges of $55 million to $70 million expected through fiscal 2030.
Key takeaways
expanded 70 to 45.8%, as 100 basis points of favorable pricing, 40 basis points of productivity, and 40 basis points of favorable mix more than offset 60 basis points of inflation.
rose 7.3% to $1,492.7 million, with Healthcare up 7.6% to $1,048.3 million on of 6.4%, led by service and consumable sales.
AST grew 5.8% to $297.6 million, but declined to 48.0% as higher and labor inflation offset pricing gains.
Section summaries
Management's Discussion and Analysis
Q1 FY2027 revenue rose 7.3% to $1.49B on volume and pricing; gross margin expanded 70 bps to 45.8% despite inflation.
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Total revenues grew 7.3% to $1,492.7M, driven by higher volume in Healthcare and Life Sciences and pricing across all three segments.
improved to 45.8% from 45.1%, as favorable pricing (100 ), productivity (40 bps), and mix (40 bps) more than offset inflation (60 bps).
fell 12.6% to $367.1 million, as a lower contribution from more than offset higher .
The company announced a restructuring plan to consolidate U.S. chemistries manufacturing, expecting $55 million to $70 million in pre-tax charges through fiscal 2030.
What changed
The 120 of tariff costs that weighed on in the prior two quarters were not called out as a separate this quarter; inflation was cited at 60 basis points, down from 120 basis points of tariff costs alone in Q4 FY2026.
Healthcare , which had fallen to 24.3% in Q3 FY2026 from 25.1% in Q2 FY2026 as tariff and inflation costs flowed through, was not separately disclosed this quarter, but overall operating margin rose 1.5 points to 19.1%.
The capital equipment , which had built to $490.7 million at fiscal year-end 2026, was not updated in this filing, leaving the conversion trajectory unresolved.
fell 12.6% to $367.1 million, a reversal from the 66.9% increase in Q1 FY2026, driven by a lower contribution.
What to watch
Whether the new U.S. chemistries restructuring plan incurs charges at the high or low end of the $55 million to $70 million range in the next quarter, and whether it begins to pressure operating margins before any savings materialize.
Whether the 45.8% is sustainable, or if the 60 of inflation accelerates and erodes the pricing and productivity gains that drove this quarter's expansion.
The trajectory of AST , which fell to 48.0% — whether higher and labor inflation continue to compress profitability in that segment.
Whether recovers from the $367.1 million level, or if the lower contribution persists as a drag on cash generation.
Healthcare increased 7.6% to $1,048.3M with of 6.4%, led by service and consumable sales.
AST rose 5.8% to $297.6M, but declined to 48.0% as higher and labor inflation offset pricing gains.
fell to $367.1M from $420.0M due to a significantly lower contribution from , partially offset by higher .
The company announced a new restructuring plan to consolidate U.S. chemistries manufacturing, expecting $55M–$70M in pre-tax charges through fiscal 2030.
Quantitative and Qualitative Disclosures About Market Risk
Market-risk exposures have not changed materially since March 31, 2026; the company uses currency forwards and commodity swaps to manage select risks.
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The company states its exposures to interest rate, currency, and commodity risks have not changed materially since its fiscal 2026 10-K.
It held forward foreign currency contracts to hedge a portion of expected non-U.S. dollar earnings, without electing , which may cause income-statement volatility.
Unrealized and realized hedge gains or losses on those contracts are reported in SG&A, while the offsetting economic impact of hedged earnings appears in other income-statement lines.
The company also uses foreign currency forwards to hedge monetary assets and liabilities, including intercompany balances.
At June 30, 2026, net forward positions included selling 48.0 million euros, 7.0 million Australian dollars, and 7.0 million New Zealand dollars, and buying 175.0 million Mexican pesos.
To manage commodity price risk, the company held contracts to buy 0.5 million pounds of nickel and may enter long-term supply contracts for raw materials.
Information regarding our legal proceedings is included in this Form 10-Q in Note 9 to our consolidated financial statements titled, "Commitments and Contingencies" and in Item 7 of Part II, titled “Management's Discussion and Analysis of Financial Conditions and Results of Oper…
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Information regarding our legal proceedings is included in this Form 10-Q in Note 9 to our consolidated financial statements titled, "Commitments and Contingencies" and in Item 7 of Part II, titled “Management's Discussion and Analysis of Financial Conditions and Results of Operations," of our Annual Report on Form 10-K for the year ended March 31, 2026, which was filed with the SEC on May 29, 2026.
For a complete discussion of the Company's risk factors, you should carefully review the risk factors included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026, which was filed with the SEC on May 29, 2026. 41
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For a complete discussion of the Company's risk factors, you should carefully review the risk factors included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026, which was filed with the SEC on May 29, 2026.
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