STERIS delivered results for Q2 that were ahead of Wall Street’s expectations, with management attributing the performance to broad-based volume growth across its Healthcare, AST (Applied Sterilization Technologies), and Life Sciences segments. CEO Daniel Carestio highlighted double-digit service growth and robust order activity, particularly in Healthcare capital equipment, as key drivers. The company also benefited from stable medical device demand and improved productivity, despite incremental tariff costs impacting the Healthcare segment. Management emphasized that “service continued its streak of outperformance,” and cited a return to “a normal trajectory” in bioprocessing demand, supporting steady top-line expansion.

Is now the time to buy STE? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From STERIS’s Q2 Earnings Call

• Brett Fishbin (KeyBanc): Asked about drivers of higher tariff estimates. CFO Michael Tokich explained that recent policy changes, including higher tariffs on metals like steel and copper, increased the company’s tariff exposure.
• Steven Etoch (Stephens): Inquired about the recovery in bioprocessing demand. CEO Daniel Carestio responded that bioprocessing volumes have stabilized and are now following a more predictable pattern.
• Jason Bednar (Piper Sandler): Asked how strong capital order growth and backlog affect confidence in guidance. Carestio pointed to sustained strength in order intake and backlog as giving visibility for future revenue.
• Michael Polark (Wolfe): Sought clarification on regulatory relief for ethylene oxide (EO) sterilization. Carestio stated STERIS did not seek relief because its facilities were already compliant, and he downplayed the impact of regulatory changes on STERIS’ competitive position.
• David Windley (Jefferies): Asked about the impact of healthcare policy shifts on hospital volumes. Carestio indicated that any effect would be more about payment challenges for hospitals than a reduction in procedure demand.

Catalysts in Upcoming Quarters

In upcoming quarters, our team will be tracking (1) the pace at which Healthcare and Life Sciences backlogs convert to revenue, (2) STERIS’ ability to offset rising tariff and healthcare benefit costs through pricing and productivity, and (3) ongoing trends in bioprocessing and service demand. Strategic use of cash for acquisitions and dividend increases will be additional signposts for execution.

STERIS currently trades at $243.50, up from $221.50 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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