Medical equipment and services company Steris (NYSE: STE) met Wall Street’s revenue expectations in Q2 CY2026, with sales up 7.3% year on year to $1.49 billion. Its non-GAAP profit of $2.59 per share was 3.9% above analysts’ consensus estimates.

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Company Overview

With a mission critical role in preventing healthcare-associated infections, STERIS (NYSE: STE) provides infection prevention products, sterilization services, and medical equipment that help healthcare facilities and life science companies maintain sterile environments.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, STERIS’s sales grew at a solid 12.1% compounded annual growth rate over the last five years. Its growth beat the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. STERIS’s recent performance shows its demand has slowed as its annualized revenue growth of 7.4% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs.

We can dig further into the company’s sales dynamics by analyzing its constant currency revenue, which excludes currency movements that are outside their control and not indicative of demand. Over the last two years, its constant currency sales averaged 6.8% year-on-year growth. Because this number aligns with its reported revenue growth, we can see that foreign exchange has not had a meaningful impact on topline.

This quarter, STERIS grew its revenue by 7.3% year on year, and its $1.49 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 7.1% over the next 12 months, similar to its two-year rate. This projection is above the sector average and suggests its newer products and services will help sustain its recent top-line performance.

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Adjusted Operating Margin

STERIS has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average adjusted operating margin of 23.3%.

Analyzing the trend in its profitability, STERIS’s adjusted operating margin decreased by 1.6 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q2, STERIS generated an adjusted operating margin profit margin of 19.1%, down 3.6 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

STERIS’s EPS grew at a remarkable 9.6% compounded annual growth rate over the last five years. However, this performance was lower than its 12.1% annualized revenue growth, telling us the company became less profitable on a per-share basis as it expanded.

We can take a deeper look into STERIS’s earnings to better understand the drivers of its performance. As we mentioned earlier, STERIS’s adjusted operating margin declined by 1.6 percentage points over the last five years. Its share count also grew by 7.6%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

In Q2, STERIS reported adjusted EPS of $2.59, up from $2.34 in the same quarter last year. This print beat analysts’ estimates by 3.9%. Over the next 12 months, Wall Street expects STERIS’s full-year EPS to grow 9.9% from $10.42 to $11.45.

Key Takeaways from STERIS’s Q2 Results

It was good to see STERIS beat analysts’ EPS expectations this quarter. On the other hand, its revenue was in line. Zooming out, we think this was a mixed quarter. The market seemed to be hoping for more, and the stock traded down 3.7% to $224 immediately after reporting.

Is STERIS an attractive investment opportunity at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).