Aug 6, 2026 earnings call — New North Carolina chemistry center investment
Company announced a $600 million investment to build a new Formulated Chemistry Center of Excellence in North Carolina.
Revenue $1.5B (est $1.5B) · EPS $2.59 (est $2.49)
Key quotes
"Before we shift gears to outlook, I want to comment on the announcement we made yesterday that we will be investing $600 million to build a new Formulated Chemistry Center of Excellence in North Carolina."
"For the first quarter, total as-reported revenue grew 7%. Constant currency organic revenue grew 6% in the quarter, driven by volume as well as 190 basis points of price."
"We are gaining share in that space, I can assure you, both in the equipment side with the automatic endoscope reprocessors, which are driving solid growth of our chemistries, our dedicated chemistries, as well as the services surrounding the repair of endoscopes and different instruments."
Analyst Q&A 6
AST service growth and endoscopy share
Q (Brett Fishbin · KeyBanc): He asked how AST service growth is trending and whether it will pick up in 2H. He also asked about timing and backlog in healthcare capital equipment and where endoscopy share gains are coming from.
A: Management said tough comps in the first half will linger but comparisons get easier as destocking starts in Q3, so they expect acceleration. They said the backlog swelled from timing, orders were up 4%, and they are confident fiscal-year capital equipment growth will be solid. They said they are gaining share in endoscopy across automatic endoscope reprocessors, dedicated chemistries, and repair services.
"We get into easier comparisons as we started seeing destocking in Q3." — Dan Carestio (CEO)
Tariffs impact and new factory move
Q (Patrick Wood · UBS): First, he asked if margins were up after removing tariff refunds and related expenses and why. Second, he asked why the company decided to shift production and make the big chemistry investment.
A: Karen said gross margin is up and, absent tariffs, they saw favorability from price and productivity; tariff refunds helped offset some cost and true tariff costs were $14 million in the quarter. Dan said existing chemistry sites were near capacity, so a greenfield was needed; they picked North Carolina for distribution efficiencies and STEM talent access and will build an automated, pharmaceutical-style facility.
"This factory will be the factory of the future for us." — Dan Carestio (CEO)
Hospital procedure volumes and onshoring
Q (Mac Etoch · Stephens): He asked whether hospital utilization or procedure volumes are slowing and what they see in the healthcare consumables business. He also asked about life-sciences onshoring and the project pipeline.
A: They said they have not seen any slowdown and see strong growth, especially in ASCs and in endoscopy, and they remain confident in customer resiliency despite payment challenges. On onshoring, they said localization is happening globally, sometimes duplicating manufacturing sites, which creates opportunities to add sterilizers, washers, and chemistries into new aseptic manufacturing footprints.
"We haven't seen any slowdown whatsoever, and we see strong growth, especially in the ASC market." — Dan Carestio (CEO)
AST destocking visibility and tariffs/refunds
Q (Jason Bednar · Piper Sandler): He asked whether the AST destocking is modeled and when they expect acceleration, and he asked about the status of tariff refunds and when restructuring savings will show up.
A: They modeled the destocking to continue through Q2 with a ramp in AST in the second half and expect material improvement by Q3. Karen said they received $4 million in the quarter, have about $27 million potentially available, 24 of which are eligible under phase one and two, and they have submitted those claims with initial phase one refunds coming in. Dan said consolidation will be initially cost neutral but over time will deliver leverage and lower labor needs via automation.
"We modeled it, so we would expect it through Q2 and then see a ramp in AST in the second half of the year." — Dan Carestio (CEO)
AST 7%-8% outlook and endoscopy drivers
Q (Michael Polark · Wolfe): He asked if AST can still be modeled at 7%-8% organic growth for the year and whether any planned go-lives will boost 2H. He also asked what is driving higher endoscopy procedure volumes.
A: They said they still fully expect AST to deliver in the 7%-8% range and that the main 2H driver is recovery from inventory destocking; builds coming online are baked into the model and incremental depreciation is included. On endoscopy, they said earlier detection ages (now below 50) and greater awareness around colon cancer are pulling more people into procedures, producing a strong quarter though sustainability is uncertain.
"In terms of the modeling, yes, we still fully expect AST to deliver in the 7%-8% range." — Dan Carestio (CEO)
AI/robotics in sterile processing and AST capital
Q (Mike Matson · Needham): He asked about the Nubis AI collaboration and whether robotics or AI could generate meaningful revenue for sterile processing. He also asked why AST capital declined and what capital products they sell.
A: They said the AI/robotics work is early development, promising, and could be meaningful in the future but is nascent and not material yet. For AST capital, they said the business sells electron beam accelerators to med tech customers and other applications, the projects are lumpy at about $2 million-$10 million a unit, and annual equipment revenue typically fluctuates between $18 million and $30 million, so quarter-to-quarter timing drives volatility.
"the capital is typically, they're electron beam accelerators that we sell to med tech customers typically, or other applications for electron beam" — Dan Carestio (CEO)