What changed in this filing

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Item 1. Financial Statements

2021-11-08 compared with 2021-08-09 · 268 added, 221 removed, 762 unchanged (39% of the section changed)

3 unchanged sentences

(in thousands)

September 30,

2021 March 31,

18 unchanged sentences

Lease obligations due within one year 36,939 22,774

Convertible debt, par value 168,000 —

Convertible debt, premium liability 198,478 —

Short-term indebtedness 21,875 —

21 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended June 30,

(*as adjusted)

Three Months Ended September 30, Six Months Ended September 30,

2021 2020 2021 2020

(*as adjusted) (*as adjusted)

Product $ 685,238 $ 339,504 $ 1,174,517 $ 640,612

17 unchanged sentences

Total non-operating expenses, net 26,896 7,477 70,197 14,680

Income (loss) before income tax expense ( 28,977 ) 108,614

Income tax (credit) expense ( 7,075 ) 19,083

Net (loss) income ( 21,902 ) 89,531

Net (loss) income attributable to noncontrolling interests ( 95 ) ( 66 )

Net (loss) income attributable to shareholders $ ( 21,807 ) $ 89,597

Net (loss) income per share attributed to shareholders

Income before income tax expense 89,607 133,786 60,630 242,399

Income tax expense 19,982 27,778 12,907 46,860

Net income 69,625 106,008 47,723 195,539

Net income (loss) attributable to noncontrolling interests ( 186 ) 150 ( 281 ) 84

Net income attributable to shareholders $ 69,811 $ 105,858 $ 48,004 $ 195,455

Net income per share attributed to shareholders

Basic $ 0.70 $ 1.24 $ 0.51 $ 2.30

1 unchanged sentence

Cash dividends declared per share ordinary outstanding $ 0.43 $ 0.40 $ 0.83 $ 0.77

*Certain amounts have been adjusted to reflect the change in inventory accounting method, as described our Annual Report on Form 10-K filed with the SEC o n May 28, 2021.

* Certain amounts have been adjusted to reflect the change in inventory accounting method, as described in our Annual Report on Form 10-K filed with the SEC o n May 28, 2021.

See notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended June 30,

(*as adjusted)

Net (loss) income $ ( 21,902 ) $ 89,531

Net (loss) income attributable to noncontrolling

Three Months Ended September 30, Six Months Ended September 30,

2021 2020 2021 2020

(*as adjusted) (*as adjusted)

Net income $ 69,625 $ 106,008 $ 47,723 $ 195,539

Net income attributable to noncontrolling

interests ( 186 ) 150 ( 281 ) 84

Net (loss) income attributable to shareholders ( 21,807 ) 89,597

Net income attributable to shareholders 69,811 105,858 48,004 195,455

Other comprehensive income (loss)

Amortization of pension and postretirement benefit plans cost, (net of taxes of $ 174 and $ 174 , respectively)

Amortization of pension and postretirement benefit plan costs, (net of taxes of $ 174 , $ 173 , $ 348 and $ 347 , respectively)

( 507 ) ( 510 ) ( 1,014 ) ( 1,020 )

Change in cumulative currency translation adjustment ( 68,409 ) 78,251 ( 43,476 ) 105,870

Total other comprehensive income 24,426 27,109

Total other comprehensive income (loss) ( 68,916 ) 77,741 ( 44,490 ) 104,850

Comprehensive income $ 895 $ 183,599 $ 3,514 $ 300,305

*Certain amounts have been adjusted to reflect the change in inventory accounting method, as described our Annual Report on Form 10-K filed with the SEC o n May 28, 2021.

*Certain amounts have been adjusted to reflect the change in inventory accounting method, as described in our Annual Report on Form 10-K filed with the SEC o n May 28, 2021.

See notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended June 30,

(*as adjusted)

Six Months Ended September 30,

Operating activities:

Net (loss) income $ ( 21,902 ) $ 89,531

(*as adjusted)

Net income $ 47,723 $ 195,539

Adjustments to reconcile net income to net cash provided by operating activities:

5 unchanged sentences

Fair value adjustment related to convertible debt, premium liability 27,806 —

Amortization of inventory fair value adjustments 85,154 —

Other items 7,986 5,460

8 unchanged sentences

Purchases of property, plant, equipment, and intangibles, net ( 133,369 ) ( 110,746 )

Proceeds from the sale of property, plant, and equipment 217 137

Proceeds from the sale of property, plant, equipment and intangibles 387 275

Acquisition of businesses, net of cash acquired ( 547,353 ) —

Other — ( 2,392 )

Net cash used in investing activities ( 680,335 ) ( 112,863 )

2 unchanged sentences

Proceeds from term loan 650,000 —

Payments on term loan ( 125,000 ) —

Payments on long-term obligations ( 721,284 ) ( 35,000 )

( 721,284 ) —

Payments on convertible debt ( 371,361 ) —

Payments on term loan ( 125,000 ) —

Payments under credit facilities, net ( 65,021 ) ( 107,162 )

1 unchanged sentence

Acquisition related deferred or contingent consideration ( 25,262 ) ( 42 )

( 25,150 ) ( 21 )

Repurchases of ordinary shares ( 24,751 ) ( 14,434 )

( 10,670 ) ( 14,296 )

Cash dividends paid to ordinary shareholders ( 77,107 ) ( 65,560 )

( 34,148 ) ( 31,471 )

Contributions from non-controlling interest

Distributions to noncontrolling interest ( 997 ) —

Contributions from noncontrolling interest — 2,258

Stock option and other equity transactions, net 7,829 20,621

4 unchanged sentences

Cash and cash equivalents at end of period $ 383,494 $ 312,028

*Certain amounts have been adjusted to reflect the change in inventory accounting method, as described our Annual Report on Form 10-K filed with the SEC o n May 28, 2021.

*Certain amounts have been adjusted to reflect the change in inventory accounting method, as described in our Annual Report on Form 10-K filed with the SEC o n May 28, 2021.

See notes to consolidated financial statements.

2 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended September 30, 2021

Ordinary Shares Retained

4 unchanged sentences

Number Amount

Balance at June 30, 2021 99,746 $ 4,736,838 $ 1,874,559 $ ( 36,817 ) $ 10,435 $ 6,585,015

Comprehensive income:

— — 69,811 — ( 186 ) 69,625

Other comprehensive income

— — — ( 68,916 ) — ( 68,916 )

Repurchases of ordinary shares ( 71 ) ( 5,866 ) ( 8,215 ) — — ( 14,081 )

Equity compensation programs and other 236 17,209 — — — 17,209

Cash dividends – $ 0.43 per ordinary share

— — ( 42,959 ) — — ( 42,959 )

Distributions to noncontrolling interest — — — — ( 997 ) ( 997 )

Other changes in noncontrolling interest — — — — 35 35

Balance at September 30, 2021 99,911 $ 4,748,181 $ 1,893,196 $ ( 105,733 ) $ 9,287 $ 6,544,931

Six Months Ended September 30, 2021

Ordinary Shares Retained

Earnings Accumulated

Comprehensive

Income (Loss) Non-controlling

Interest Total

Number Amount

Balance at March 31, 2021 85,353 $ 2,002,825 $ 1,939,408 $ ( 61,243 ) $ 10,478 $ 3,891,468

Comprehensive income:

Net income (loss) — — ( 21,807 ) — ( 95 ) ( 21,902 )

— — 48,004 — ( 281 ) 47,723

Other comprehensive income

— — — ( 44,490 ) — ( 44,490 )

Repurchases of ordinary shares ( 131 ) ( 7,642 ) ( 17,109 ) — — ( 24,751 )

7 unchanged sentences

Reclassification to Cantel convertible debt, premium liability — ( 175,555 ) — — — ( 175,555 )

Distributions to noncontrolling interest — — — — ( 997 ) ( 997 )

Other changes in noncontrolling interest — — — — 87 87

Balance at September 30, 2021 99,911 $ 4,748,181 $ 1,893,196 $ ( 105,733 ) $ 9,287 $ 6,544,931

STERIS PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Continued)

(in thousands, except per share amounts)

Three Months Ended September 30, 2020

Ordinary Shares Retained

Earnings (as adjusted *) Accumulated

Comprehensive

Income (Loss) Non-controlling

Interest Total

Number Amount

Balance at June 30, 2020 85,060 $ 1,983,047 $ 1,712,864 $ ( 208,354 ) $ 15,049 $ 3,502,606

Comprehensive income:

— — 105,858 — 150 106,008

Other comprehensive income

— — — 77,741 — 77,741

Repurchases of ordinary shares ( 13 ) ( 15,276 ) 15,138 — — ( 138 )

Equity compensation programs and other 204 23,109 — — — 23,109

Cash dividends $ 0.40 per ordinary share

— — ( 34,089 ) — — ( 34,089 )

Other changes in noncontrolling interest — — — — 111 111

Balance at September 30, 2020 85,251 $ 1,990,880 $ 1,799,771 $ ( 130,613 ) $ 15,310 $ 3,675,348

*Certain amounts have been adjusted to reflect the change in inventory accounting method, as described in our Annual Report on Form 10-K filed with the SEC o n May 28, 2021.

Six Months Ended September 30, 2020

Ordinary Shares Retained

6 unchanged sentences

Comprehensive income:

Net income (loss) — — 89,597 — ( 66 ) 89,531

— — 195,455 — 84 195,539

Other comprehensive income

— — — 104,850 — 104,850

Repurchases of ordinary shares ( 111 ) ( 25,649 ) 11,215 — — ( 14,434 )

4 unchanged sentences

Other changes in noncontrolling interest — — — — 120 120

Balance at June 30, 2020 85,060 $ 1,983,047 $ 1,712,864 $ ( 208,354 ) $ 15,049 $ 3,502,606

*Certain amounts have been adjusted to reflect the change in inventory accounting method, as described our Annual Report on Form 10-K filed with the SEC o n May 28, 2021.

See notes to consolidated financial statements.

Balance at September 30, 2020 85,251 $ 1,990,880 $ 1,799,771 $ ( 130,613 ) $ 15,310 $ 3,675,348

*Certain amounts have been adjusted to reflect the change in inventory accounting method, as described in our Annual Report on Form 10-K filed with the SEC o n May 28, 2021.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

For the Three Months Ended June 30, 2021 and 2020

(dollars in thousands, unless noted and except per share amounts)

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

STERIS is a leading global provider of products and services that meet the needs of healthcare growth areas:

procedures, devices, pharmaceuticals and dental.

Ou r MISSION IS TO HELP OUR CUSTOMERS CREATE A HEALTHIER AND SAFER WORLD by providing innovative healthcare and life science products and services around the globe.

STERIS is a leading global provider of products and services that support patient care with an emphasis on infection prevention.

Our MISSION IS TO HELP OUR CUSTOMERS CREATE A HEALTHIER AND SAFER WORLD by providing innovative healthcare and life science product and service solutions around the globe.

We offer our Customers a unique mix of innovative consumable products, such as detergents, gastrointestinal ("GI") endoscopy accessories, barrier product solutions, and other products and services, including:

3 unchanged sentences

The significant accounting policies applied in preparing the accompanying consolidated financial statements of the Company are summarized below:

On June 2, 2021, we completed our previously announced acquisition of Cantel Medical Corp.

Refer to note 2 titled, "Business Acquisitions" for additional information regarding this acquisition.

Interim Financial Statements

19 unchanged sentences

We revise the estimates and assumptions as new information becomes available.

This means that operating results for the three month period ended June 30, 2021 are not necessarily indicative of results that may be expected for future quarters or for the full fiscal year ending March 31, 2022.

This means that operating results for the three and six month periods ended September 30, 2021 are not necessarily indicative of results that may be expected for future quarters or for the full fiscal year ending March 31, 2022.

Revenue Recognition and Associated Liabilities

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

(dollars in thousands, except as noted)

Revenue is recognized when obligations under the terms of the contract are satisfied and control of the promised products or services have transferred to the Customer.

6 unchanged sentences

Shipping and handling costs charged to Customers are included in Product revenues.

The associated expenses are treated as fulfillment costs and are included in Cost of revenues.

The associated

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

expenses are treated as fulfillment costs and are included in Cost of revenues.

Revenues are reported net of sales and value-added taxes collected from Customers.

11 unchanged sentences

Certain costs to fulfill a contract are capitalized and amortized over the term of the contract if they are recoverable, directly related to a contract and generate resources that we will use to fulfill the contract in the future.

At June 30, 2021, assets related to costs to fulfill a contract were not material to our Consolidated Financial Statements.

At September 30, 2021, assets related to costs to fulfill a contract were not material to our Consolidated Financial Statements.

Refer to Note 9, titled "Business Segment Information" for disaggregation of revenue.

5 unchanged sentences

Service Revenue

Within our Healthcare and Life Sciences segments, service revenues consist of revenue generated from parts and labor associated with the maintenance, repair and installation of capital equipment.

Within our Healthcare and Life Sciences segments, service revenues include revenue generated from parts and labor associated with the maintenance, repair and installation of capital equipment.

These contracts are primarily based on a Customer’s purchase order and may include a Distributor, Dealer, or Group Purchasing Organization ("GPO") agreement.

5 unchanged sentences

We also offer preventive maintenance and separately priced extended warranty agreements to our Customers, which require us to maintain and repair our products over the duration of the contract.

Generally, these contract terms are cancelable

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

(dollars in thousands, except as noted)

without penalty and range from one to five years.

Generally, these contract terms are cancellable without penalty and range from one to five years.

Amounts received under these Customer contracts are initially recorded as a service liability and are recognized as service revenue ratably over the contract term using a time-based input measure.

1 unchanged sentence

Sales contracts for contract sterilization and laboratory services are primarily based on a Customer’s purchase order and associated Customer agreement and revenues are generally recognized upon completion of the service.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

Contract Liabilities

2 unchanged sentences

Deferred revenue is recognized as revenue upon completion of the performance obligation, which generally occurs within one year.

During the first three months of fiscal 2022, $ 35,722 of the March 31, 2021 deferred revenue balance was recorded as revenue.

During the first three months of fiscal 2021, $ 30,804 of the March 31, 2020 deferred revenue balance was recorded as revenue.

During the first six months of fiscal 2022, $ 40,360 of the March 31, 2021 deferred revenue balance was recorded as revenue.

During the first six months of fiscal 2021, $ 36,768 of the March 31, 2020 deferred revenue balance was recorded as revenue.

Refer to Note 6, titled "Additional Consolidated Balance Sheet Information" for Deferred revenue balances.

7 unchanged sentences

With regard to service, these remaining performance obligations primarily include installation, certification, and outsourced reprocessing services.

As of June 30, 2021, the transaction price allocated to remaining performance obligations was approximately $ 1,371,500 .

As of September 30, 2021, the transaction price allocated to remaining performance obligations was approximately $ 1,374,000 .

We expect to recognize approximately 55 % of the transaction price within one year and approximately 36 % beyond one year.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

6 unchanged sentences

First Quarter Fiscal 2022 We adopted this standard effective April 1, 2021 with no material impact to our consolidated financial statements.

ASU 2020-06 "Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)" August 2020 This standard simplifies the accounting for convertible instruments and its application of the derivatives scope exception for contracts in an entity’s own equity.

ASU 2020-06 "Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)" August 2020

This standard simplifies the accounting for convertible instruments and its application of the derivatives scope exception for contracts in an entity’s own equity.

The standard reduces the number of accounting models that require separating embedded conversion features from convertible instruments.

2 unchanged sentences

The standard also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity’s own equity.

First Quarter Fiscal 2022

We adopted this standard effective April 1, 2021 and applied it to our accounting for the convertible debt assumed in the acquisition of Cantel Medical Corp.

First Quarter Fiscal 2022 We adopted this standard effective April 1, 2021 and applied it to our accounting for the convertible debt assumed in the acquisition of Cantel Medical Corp.

A detailed description of our significant and critical accounting policies, estimates, and assumptions is included in our consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2021 dated May 28, 2021.

1 unchanged sentence

Business Acquisitions

On June 2, 2021, we acquired all outstanding equity interests of Cantel Medical Corp.

On June 2, 2021, we acquired all outstanding equity interests of Cantel Medical LLC.

("Cantel") through a U.S.

Cantel, headquartered in Little Falls, New Jersey, with approximately 3,700 employees, is a global provider of infection prevention products and services primarily to endoscopy and dental Customers.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

(dollars in thousands, except as noted)

We believe that the acquisition will strengthen STERIS’s leadership in infection prevention by bringing together two complementary businesse s able to offer a broader set of Customers a more diversified selection of infection prevention, endoscopy and sterilization products and services.

3 unchanged sentences

Additionally, the acquisition is expected to result in cost savings from optimizing global back-office infrastructure, leveraging best-demonstrated practices across locations and eliminating redundant public company costs.

Fiscal 2022 first quarter acquisition and integration expenses related to the Cantel acquisition totaled $ 140,347 and are reported in the selling, general and administrative expenses line of our Consolidated Statements of Income.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

Acquisition and integration expenses which were primarily related to the Cantel acquisition totaled $ 17,404 and $ 158,400 for the second quarter and first half of fiscal 2022, respectively, and are reported in the selling, general and administrative expenses line of our Consolidated Statements of Income.

Acquisition and integration expenses include but are not limited to investment banker, advisory, legal, other professional fees, and certain employee-related expenses.

27 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

15 unchanged sentences

Net assets acquired $ 3,599,471

(1) Purchase price allocation is still preliminary as of June 30, 2021, as valuations have not been finalized.

(1) Purchase price allocation is still preliminary as of September 30, 2021, as valuations have not been finalized.

Other Intangible Assets

5 unchanged sentences

Total intangible assets acquired $ 2,190,000

(1) Amounts are preliminary as of June 30, 2021, as valuations have not been finalized .

Contingent liabilities assumed totaled $ 25,000 and were related to contingent consideration associated with a prior acquisition completed b y Cantel.

(1) Amounts are preliminary as of September 30, 2021, as valuations have not been finalized.

Contingent liabilities assumed totaled $ 25,000 and were related to contingent consideration associated with a prior acquisition completed by Cantel.

Payment of the liability was made in June 2021.

Actual and Pro Forma Impact

Our consolidated financial statements include Cantel's results of operations from the date of acquisition on June 2, 2021 through June 30, 2021.

Net sales and operating income (loss) attributable to Cantel during this period and included in our consolidated financial statements for the three month period ended June 30, 2021 total $ 101,758 and $( 133,190 ).

The following unaudited pro forma information gives effect to our acquisition of Cantel as if the acquisition had occurred on April 1, 2020 a nd Cantel had been included in our consolidated results of operations for the three month periods ended June 30, 2021 and 2020.

Our consolidated financial statements include Cantel's results of operations from the date of acquisition on June 2, 2021 through September 30, 2021.

Net sales and operating income (loss) attributable to Cantel and included in our consolidated financial statements for the three-month period ended September 30, 2021 total $ 312,903 and $( 57,946 ), respectively.

Net sales and operating income (loss) attributable to Cantel from the date of acquisition and included in our consolidated financial statements for the six-month period ended September 30, 2021 total $ 414,661 and $( 191,136 ), respectively.

The following unaudited pro forma information gives effect to our acquisition of Cantel as if the acquisition had occurred on April 1, 2020 and Cantel had been included in our consolidated results of operations for the three-month and six-month periods ended September 30, 2021 and 2020.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

Three Months Ended June 30

Three Months Ended September 30, Six Months Ended September 30

(unaudited) (unaudited)

2021 2020 2021 2020

Net revenues $ 1,196,985 $ 1,035,265 $ 2,370,504 $ 1,905,139

7 unchanged sentences

Inventory costs include material, labor, and overhead .

Inventory costs include material, labor, and overhead.

Inventories, net consisted of the following:

September 30,

2021 March 31,

9 unchanged sentences

Information related to the major categories of our depreciable assets is as follows:

September 30,

2021 March 31,

14 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

Indebtedness was as follows:

September 30,

2021 March 31,

Convertible debt, par value $ 168,000 $ —

Short-term debt

Term loan, current portion $ 13,750 $ —

Delayed draw term loan, current portion 8,125 —

Total short-term debt $ 21,875 $ —

26 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

17 unchanged sentences

Because all Holders elected to convert during the Make-Whole Conversion Period, the aggregate par value outstanding has been reclassified to current liabilities in the balance sheet.

The premium initially recorded as additional paid in capital at the effective time of the Mergers has been reclassified to " Convertible debt, premium liability, " also classified as a current liability, and will be settled in cash.

As of June 30, 2021, the estimated total Cash Settlement value of the Notes was approximately $ 366,478 with the aggregate par value of $ 168,000 reported as “Convertible debt, par value” and the fair value of the liability representing the premium over par of approximately $ 198,478 reported as “Convertible debt, premium liability.” The estimate is based on the applicable Daily Volume Weighted Average Price ("VWAP") (as defined in the Cantel Indenture) values through July 1, 2021 and an assumed Daily VWAP value of $ 208.45 , which was the Daily VWAP of Parent Shares on July 1, 2021, for each Trading Day (as defined in the Cantel Indenture) of the remaining applicable 40-Trading Day Observation Periods (as defined in the Cantel Indenture).

The fair value of the liability representing the premium over par value increased between the effective date of the Mergers and June 30, 2021 because of the movement in trading prices of Parent Shares during the Observation Periods to date.

The premium initially recorded as additional paid in capital at the effective time of the Mergers was reclassified to "Convertible debt, premium liability," also classified as a current liability, and was settled in cash.

The final total Cash Settlement value of the Notes was approximately $ 371,361 , comprised of the aggregate par value of $ 168,000 and the fair value of the liability representing the premium over par of approximately $ 203,361 .

The liability representing the premium over par value increased between the effective date of the Mergers and settlement because of the movement in trading prices of Parent Shares during the Observation Periods.

The fluctuation in fair value during such Observation Periods is reported in the statement of income as a component of “Non-operating expense, net.”

The fair value of the liability will continue to fluctuate based on the movement in trading prices of Parent Shares during the balance of the remaining Observation Periods and such change could be material to the statement of income for the fiscal 2022 second quarter.

A 5.0 % increase or decrease in the assumed Daily VWAP for the balance of the remaining Observation Periods would result in an increase or decrease in non-operating expense of approximately $ 11,300 .

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

(dollars in thousands, except as noted)

The combined annual aggregate amount of maturities of our outstanding debt excluding leases by fiscal year is as follows:

2022 $ 168,000

2027 and thereafter 2,411,054

Total $ 3,466,767

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

Additional Consolidated Balance Sheet Information

Additional information related to our Consolidated Balance Sheets is as follows:

September 30,

2021 March 31,

27 unchanged sentences

Income Tax Expense

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

(dollars in thousands, except as noted)

The effective income tax rates for the three-month periods ended June 30, 2021 and 2020 were 24.4 % and 17.6 %, respectively.

The fiscal 2022 effective tax rate increased when compared to fiscal 2021, primarily due to Cantel and our other recent acquisitions, which historically have had higher effective tax rates than STERIS.

The effective income tax rates for the three month periods ended September 30, 2021 and 2020 were 22.3 % and 20.8 %, respectively.

The effective income tax rates for the six month periods ended September 30, 2021 and 2020 were 21.3 % and 19.3 %, respectively.

The fiscal 2022 effective tax rates increased when compared to fiscal 2021, primarily due to Cantel and our other recent acquisitions, which historically have had higher effective tax rates than STERIS.

The fiscal 2022 effective tax rate also includes one-time, non-deductible acquisition related costs.

2 unchanged sentences

We operate in numerous t axing jurisdictions and are subject to regular examinations by various United States federal, state and local, as well as foreign jurisdictions.

With the exception of formal acceptance of the settlement noted below, we are no longer subject to United States federal examinations for years before fiscal 2016 and, with limited exceptions, we are no longer subject to United States state and local, or non-United States, income tax examinations by tax authorities for years before fiscal 2016.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

subject to United States state and local, or non-United States, income tax examinations by tax authorities for years before fiscal 2016.

We remain subject to tax authority audits in various jurisdictions wherever we do business.

1 unchanged sentence

Internal Revenue Service (the “IRS”) regarding proposed audit adjustments related to deductibility of interest paid on intercompany debt for fiscal years 2016 through 2017.

An agreement had been reached on final interest rates, and as of the end of fiscal year 2021, we were in the process of determining total impact on tax liability in each affected year.

An agreement was reached on final interest rates, and we are continuing to determine total impact on tax liability in each affected year.

We estimate the total federal, state, and local tax impact of the settlement to be approximately $ 12,000 , over the fiscal years 2016 through 2020.

14 unchanged sentences

Item 1 titled “Business - Information with respect to our Business in General - Government Regulation,” and the “Risk Factors” in Item 1A titled "Product related regulations and claims."

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

(dollars in thousands, except as noted)

From time to time, STERIS is also involved in legal proceedings as a plaintiff involving contract, patent protection, and other claims asserted by us.

10 unchanged sentences

Non-allocated operating costs that support the entire Company and items not indicative of operating trends are excluded from segment operating income.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

Our Healthcare segment provides a comprehensive offering for healthcare providers worldwide, focused on sterile processing departments and procedural centers, such as operating rooms, endoscopy suites, and renal dialysis centers.

10 unchanged sentences

The accounting policies for reportable segments are the same as those for the consolidated Company.

For the three months e nded June 30, 2021, revenues from a single Customer did not represent ten percent or more of the Healthcare, Applied Sterilization Technologies or Life Sciences segment’s revenues.

Three customers collectively accounted for approximately 35.8 % of our Dental segment revenues for the three months ended June 30, 2021.

A dditional information regarding our segments is included in our consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2021, dated May 28, 2021 .

For the three and six months ended September 30, 2021, revenues from a single Customer did not represent ten percent or more of the Healthcare, Applied Sterilization Technologies or Life Sciences segment’s revenues.

Three customers collectively accounted for approximately 40.6 % and 39.5 % of our Dental segment revenues for the three months and six months ended September 30, 2021, respectively.

Additional information regarding our segments is included in our consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2021, dated May 28, 2021.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

Financial information for each of our segments is presented in the following table:

Three Months Ended June 30,

(*as adjusted)

Three Months Ended September 30, Six Months Ended September 30,

2021 2020 2021 2020

(*as adjusted) (*as adjusted)

Healthcare $ 744,134 $ 470,927 $ 1,346,951 $ 870,585

14 unchanged sentences

17,404 1,135 158,400 2,421

Tax restructuring costs (3)

Net loss on divestiture of businesses (1)

Redomiciliation and tax restructuring costs (3)

159 384 110 554

Net (gain) loss on divestiture of businesses (1)

( 15 ) ( 5 ) 404 5

Amortization of inventory and property "step up" to fair value (1)

69,486 714 94,276 1,317

COVID-19 incremental costs (4)

— 4,539 — 13,209

Restructuring charges (5)

210 ( 76 ) 224 90

Total operating income $ 116,503 $ 141,263 $ 130,827 $ 257,079

5 unchanged sentences

(5) For more information regarding our restructuring efforts refer to our Annual R eport on Form 10-K for the year ended March 31, 2021, dated May 28, 2021.

Additional information regarding our fiscal 2022 and fiscal 2021 revenue is disclosed in the following tables:

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

Additional information regarding our fiscal 2022 and fiscal 2021 first quarter revenue is disclosed in the following tables:

Three Months Ended June 30,

Consumables $ 206,692 $ 83,754

Three Months Ended September 30, Six Months Ended September 30,

2021 2020 2021 2020

Capital equipment $ 202,405 $ 131,673 $ 353,295 259,755

Consumables 270,089 122,797 476,781 206,551

Service 271,640 216,457 516,875 404,279

Total Healthcare Revenues $ 744,134 $ 470,927 $ 1,346,951 $ 870,585

$ 602,817 $ 399,658

Total Applied Sterilization Technologies Revenues $ 208,902 $ 152,362

Applied Sterilization Technologies Service Revenues $ 204,892 $ 169,547 $ 413,794 $ 321,909

Life Sciences:

Consumables $ 56,536 $ 58,842

Capital equipment

$ 34,186 $ 29,241 $ 66,931 $ 59,671

Consumables 61,748 55,793 118,284 114,635

Service 36,393 30,624 68,583 58,264

Total Life Sciences Revenues $ 132,327 $ 115,658 $ 253,798 $ 232,570

$ 121,471 $ 116,912

Dental Revenues $ 115,632 $ — $ 150,864 $ —

Total Revenues $ 1,196,985 $ 756,132 $ 2,165,407 $ 1,425,064

Additional geographic information regarding our revenues and property, plant and equipment, net is presented in the following tables:

Three Months Ended June 30,

Three Months Ended September 30, Six Months Ended September 30,

2021 2020 2021 2020

Ireland $ 20,046 $ 17,090 $ 41,991 $ 31,463

3 unchanged sentences

$ 1,196,985 $ 756,132 $ 2,165,407 $ 1,425,064

June 30, 2021 March 31, 2021

September 30, 2021 March 31, 2021

Property, Plant, and Equipment, Net

6 unchanged sentences

Assets attributed to sales and distribution locations are only allocated to the Healthcare and Life Sciences segments.

Certain facilities, equipment, and intellectual properties are utilized for production by both the Healthcare and Life Sciences segments at varying levels over time.

As a result, an allocation of total assets is not meaningful to the individual performance of the Healthcare and Life Sciences segments.

Therefore, their respective amounts are reported together.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

June 30, 2021 March 31, 2021

Individual facilities, equipment, and intellectual properties are utilized for production by both the Healthcare and Life Sciences segments at varying levels over time.

As a result, an allocation of total assets, capital expenditures, and depreciation and amortization is not meaningful to the individual performance of the Healthcare and Life Sciences segments.

Therefore, their respective amounts are reported together.

September 30, 2021 March 31, 2021

Healthcare and Life Sciences $ 5,398,177 $ 3,600,182

3 unchanged sentences

$ 11,752,448 $ 6,574,471

(1) Amount is still preliminary as of June 30, 2021, as valuations have not been finalized.

(1) Amount is still preliminary as of September 30, 2021, as valuations have not been finalized.

Goodwill will be allocated to the Healthcare, Life Sciences, and Dental business segments.

The increase in total assets for the June 30, 2021 period is primarily related to the acquisition of Cantel.

The increase in total assets for the September 30, 2021 period is primarily related to the acquisition of Cantel.

Refer to note 2 titled, "Business Acquisitions," for more information.

4 unchanged sentences

The following is a summary of shares and share equivalents outstanding used in the calculations of basic and diluted earnings per share:

Three Months Ended June 30,

Three Months Ended September 30, Six Months Ended September 30,

Denominator (shares in thousands):

2021 2020 2021 2020

Weighted average shares outstanding—basic 99,848 85,170 95,000 85,065

2 unchanged sentences

Options to purchase the following number of shares were outstanding but excluded from the computation of diluted earnings per share because the combined exercise prices, unamortized fair values, and assumed tax benefits upon exercise were greater than the average market price for the shares during the periods, so including these options would be anti-dilutive:

Three Months Ended June 30,

Three Months Ended September 30, Six Months Ended September 30,

(shares in thousands) 2021 2020 2021 2020

2 unchanged sentences

The Company has an additional authorized share capital of 50,000,000 preferred shares of $ 0.001 par value each, plus 25,000 deferred ordinary shares of € 1.00 par value each, in order to satisfy minimum statutory capital requirements for all Irish public limited companies.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

Repurchases of Ordinary Shares

1 unchanged sentence

On July 30, 2019, our Board of Directors approved an increase in the May 7, 2019 authorization of an additional amount of $ 300,000 (net of taxes, fees and commissions).

As of June 30, 2021, there was approximately $ 333,932 (net of taxes, fees and commissions) of remaining availability under a Board authorized share repurchase program.

As of September 30, 2021, there was approximately $ 333,932 (net of taxes, fees and commissions) of remaining availability under the Board authorized share repurchase program.

The share repurchase program has no specified expiration date.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

(dollars in thousands, except as noted)

Under the authorization, the Company may repurchase its shares from time to time through open market purchases, including 10b5-1 plans.

1 unchanged sentence

Due to the uncertainty surrounding the COVID-19 pandemic, share repurchases were suspended on April 9, 2020.

During the first three months of fiscal 2021, we repurchased 35,000 of our ordinary shares for the aggregate amount of $ 5,047 (net of fees and commissions) pursuant to the authorizations.

During the first three months of fiscal 2022 we obtained 59,648 of our ordinary shares in the aggregate amount of $ 10,670 in connection with share based compensation award programs.

During the first three months of fiscal 2021, we obtained 63,150 of our ordinary shares in the aggregate amount of $ 9,248 in connection with share based compensation award programs.

From the start of fiscal 2021 through April 9, 2020, we repurchased 35,000 of our ordinary shares for the aggregate amount of $ 5,047 (net of fees and commissions) pursuant to the authorizations.

During the first six months of fiscal 2022, we obtained 130,678 of our ordinary shares in the aggregate amount of $ 24,751 in connection with share based compensation award programs.

During the first six months of fiscal 2021, we obtained 76,286 of our ordinary shares in the aggregate amount of $ 9,386 in connection with share based compensation award programs.

Share-Based Compensation

We maintain a long-term incentive plan that makes available shares for grants, at the discretion of the Compensation and Organizational Development Committee of the Board of Directors, to officers, directors, and key employees in the form of stock options, restricted shares, restricted share units, stock appreciation rights and share grants.

We maintain a long-term incentive plan that makes available shares for grants, at the discretion of the Board of Directors or the Compensation and Organizational Development Committee of the Board of Directors, to officers, directors, and key employees in the form of stock options, restricted shares, restricted share units, stock appreciation rights and share grants.

We satisfy share award incentives through the issuance of new ordinary shares.

Stock options provide the right to purchase our shares at the market price on the date of grant, or for options granted to employees in fiscal 2019 and thereafter, 110% of the market price on the date of grant, subject to the terms of the option plan and agreements.

Generally, one-fourth of the stock options granted to employees become exercisable for each full year of employment following the grant date.

1 unchanged sentence

Restricted shares and restricted share units generally cliff vest after a four year period or vest in tranches of one-fourth of the number granted for each year of employment after the grant date.

As of June 30, 2021, 3,275,133 ordinary shares remained available for grant under the long-term incentive plan.

As of September 30, 2021, 3,257,138 ordinary shares remained available for grant under the long-term incentive plan.

The fair value of stock option awards was estimated at their grant date using the Black-Scholes-Merton option pricing model.

3 unchanged sentences

The expense is classified as cost of goods sold or selling, general and administrative expenses in a manner consistent with the employee’s compensation and benefits.

The following weighted-average assumptions were used for options granted during the first three months of fiscal 2022 and 2021:

The following weighted-average assumptions were used for options granted during the first six months of fiscal 2022 and 2021:

Fiscal 2022 Fiscal 2021

9 unchanged sentences

An estimated forfeiture rate of 2.85 % and 2.78 % was applied in fiscal 2022 and 2021, respectively.

This rate is calculated based upon historical activity and represents an estimate of the granted options not expected to vest.

If actual forfeitures differ from this calculated rate, we may be required to make additional adjustments to compensation expense in future periods.

The assumptions used above are reviewed at the time of each significant option grant, or at least annually.

This rate is calculated based upon historical activity and represents an estimate of the granted

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

options not expected to vest.

If actual forfeitures differ from this calculated rate, we may be required to make additional adjustments to compensation expense in future periods.

The assumptions used above are reviewed at the time of each significant option grant, or at least annually.

A summary of share option activity is as follows:

Options Weighted

Price Average

Price Per Share Average

Term Aggregate

3 unchanged sentences

Forfeited — —

Outstanding at June 30, 2021 1,800,878 $ 124.25 6.9 years $ 148,573

Exercisable at June 30, 2021 1,155,980 $ 96.73 5.9 years $ 126,658

We estimate that 621,487 of the non-vested stock options outstanding at June 30, 2021 will ultimately vest.

The aggregate intrinsic value in the table above represents the total pre-tax difference between the $ 206.30 closing price of our ordinary shares on June 30, 2021 over the exercise prices of the stock options, multiplied by the number of options outstanding or outstanding and exercisable, as applicable.

Outstanding at September 30, 2021 1,739,582 $ 127.01 6.7 years $ 135,815

Exercisable at September 30, 2021 1,094,684 $ 99.58 5.7 years $ 114,798

We estimate that 626,598 of the non-vested stock options outstanding at September 30, 2021 will ultimately vest.

The aggregate intrinsic value in the table above represents the total pre-tax difference between the $ 204.28 closing price of our ordinary shares on September 30, 2021 over the exercise prices of the stock options, multiplied by the number of options outstanding or outstanding and exercisable, as applicable.

The aggregate intrinsic value is not recorded for financial accounting purposes and the value changes daily based on the daily changes in the fair market value of ordinary shares.

The total intrinsic value of stock options exercised during the first three months of fiscal 2022 and fiscal 2021 was $ 5,469 and $ 9,581 , respectively.

Net cash proceeds from the exercise of stock options were $ 1,710 and $ 5,367 for the first three months of fiscal 2022 and fiscal 2021, respectively.

The weighted average grant date fair value of stock option grants was $ 36.24 and $ 27.44 for the first three months of fiscal 2022 and fiscal 2021, respectively.

Stock appreciation rights (“SARS”) carry generally the same terms and vesting requirements as stock options except that they are settled in cash u pon exercise and therefore, are classified as liabilities.

As of June 30, 2021, we no longer have outstanding SARS.

The fair value of the outstanding SARS as of June 30, 2020 was $ 493 .

The total intrinsic value of stock options exercised during the first six months of fiscal 2022 and fiscal 2021 was $ 16,076 and $ 25,244 , respectively.

Net cash proceeds from the exercise of stock options were $ 7,829 and $ 20,600 for the first six months of fiscal 2022 and fiscal 2021, respectively.

The weighted average grant date fair value of stock option grants was $ 37.34 and $ 27.66 for the first six months of fiscal 2022 and fiscal 2021, respectively.

Stock appreciation rights (“SARS”) carry generally the same terms and vesting requirements as stock options except that they are settled in cash upon exercise and therefore, are classified as liabilities.

As of September 30, 2021, we no longer have outstanding SARS.

The fair value of the outstanding SARS as of September 30, 2020 was $ 448 .

A summary of the non-vested restricted share and share unit activity is presented below:

4 unchanged sentences

Forfeited ( 8,425 ) ( 430 ) 153.97

Non-vested at June 30, 2021 469,881 27,767 $ 148.32

Non-vested at September 30, 2021 466,315 27,725 $ 148.57

Restricted shares granted are valued based on the closing stock price at the grant date.

The value of restricted shares and units that vested during the first three months of fiscal 2022 was $ 16,431 .

As of June 30, 2021, there was a total of $ 67,599 in unrecognized compensation cost related to non-vested share-based compensation granted under our share-based compensation plan.

The value of restricted shares and units that vested during the first six months of fiscal 2022 at the time of grant was $ 17,865 .

As of September 30, 2021, there was a total of $ 61,084 in unrecognized compensation cost related to non-vested share-based compensation granted under our share-based compensation plan.

We expect to recognize the cost over a weighted average period of 2.2 years.

Cantel Share Based Compensation Plan

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

Cantel Share Based Compensation Plan

In connection with the June 2, 2021, acquisition of Cantel, outstanding, non-vested Cantel restricted share units were replaced with STERIS restricted share units.

4 unchanged sentences

All replacement restricted share units retained dividend accumulation rights.

The Cantel equity plan also contains double trigger change in control provisions.

As a result, vesting may be accelerated upon termination of employment.

The fair value of each STERIS restricted share unit awarded on June 2, 2021 to replace outstanding non-vested Cantel restricted share units was $ 191.18 based on the closing price of STERIS ordinary shares on June 2, 2021.

Approximately $ 18,173 of the total $ 53,607 grant date fair value was attributable to pre-acquisition services provided and was recorded as a component of purchase consideration in connection with the acquisition of Cantel.

During the first quarter of fiscal 2022, recognition of unamortized share-based compensation expense totaling $ 18,545 was accelerated in connection with the planned termination of certain Cantel executive level employees in fiscal 2022.

As a result of the formal notices provided and the terms of the Cantel share based compensati on plans and Cantel Executive Severance and Change of Control Plan, the remaining service required under the awards became non-substantive requiri ng acceleration of the remaining related compensation cost.

As of June 30, 2021, there was a total of $ 15,464 in unrecognized compensation cost related to non-vested STERIS restricted share units awarded to replace Cantel restricted share units.

During the first six months of fiscal 2022, recognition of unamortized share-based compensation expense totaling $ 17,985 was accelerated in connection with the termination of certain Cantel employees in fiscal 2022.

As a result of the formal notices provided and the terms of the Cantel share based compensati on plans and Cantel Executive Severance and Change of Control Plan, the restricted share units vested requiri ng acceleration of the remaining related compensation cost.

As of September 30, 2021, there was a total of $ 12,521 in unrecognized compensation cost related to non-vested STERIS restricted share units awarded to replace Cantel restricted share units.

A summary of the non-vested restricted share units activity associated with the Cantel share-based compensation plans is presented below:

2 unchanged sentences

Granted 280,402 $ 191.18

Non-vested at June 30, 2021 280,402 $ 191.18

Vested ( 157,821 ) 191.18

Forfeited ( 3,380 ) 191.18

Non-vested at September 30, 2021 119,201 $ 191.18

Financial and Other Guarantees

5 unchanged sentences

We periodically assess the adequacy of our recorded warranty liabilities and adjust the amounts as necessary.

Changes in our warranty liability during the first three months of fiscal 2022 were as follows:

Changes in our warranty liability during the first six months of fiscal 2022 were as follows:

Balance, March 31, 2021 $ 9,406

2 unchanged sentences

Settlements made during the period ( 8,786 )

Balance, June 30, 2021 $ 13,633

Balance, September 30, 2021 $ 13,416

Derivatives and Hedging

1 unchanged sentence

We may also enter into commodity swap contracts to hedge price changes in nickel that impact raw materials included in our cost of revenues.

During the first quarter of

During the second quarter

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

fiscal 2022, we also entered into forward foreign currency contracts in order to hedge a portion of our expected non-U.S.

of fiscal 2022, we also held forward foreign currency contracts to hedge a portion of our expected non-U.S.

dollar denominated earnings against our reporting currency, the U.S.

5 unchanged sentences

therefore, changes in their fair value are not deferred but are recognized immediately in the Consolidated Statements of Income.

At June 30, 2021, we held foreign currency forward contracts to buy 59.8 million Mexican pesos, 7.7 million Canadian dollars and 25.5 million British pounds sterling;

and to sell 47.9 million euros, 6.0 million Canadian dollars and 16.0 million Chinese yuan.

At June 30, 2021 we held commodity swap contracts to buy 576.0 thousand pounds of nickel.

At September 30, 2021, we held foreign currency forward contracts to buy 39.9 million Mexican pesos and 5.1 million Canadian dollars;

and to sell 54.0 million euros and 7.0 million Canadian dollars.

At September 30, 2021 we held commodity swap contracts to buy 384.0 thousand pounds of nickel.

Asset Derivatives Liability Derivatives

Fair Value at Fair Value at Fair Value at Fair Value at

Balance sheet location June 30, 2021 March 31, 2021 June 30, 2021 March 31, 2021

Balance sheet location September 30, 2021 March 31, 2021 September 30, 2021 March 31, 2021

Prepaid & Other $ 1,145 $ 57 $ — $ —

3 unchanged sentences

recognized in income Amount of gain (loss) recognized in income

Three Months Ended June 30,

Three Months Ended September 30, Six Months Ended September 30,

2021 2020 2021 2020

Foreign currency forward contracts Selling, general and administrative $ 1,143 $ ( 223 ) $ 2,571 $ ( 80 )

2 unchanged sentences

We designate portions of foreign currency denominated intercompany loans as hedges of portions of net investments in foreign operations.

Net debt designated as non-derivative net investment hedging instruments totaled $ 50,102 at June 30, 2021.

Net debt designated as non-derivative net investment hedging instruments totaled $ 49,208 at September 30, 2021.

These hedges are designed to be fully effective and any associated gain or loss is recognized in Accumulated Other Comprehensive Income and will be reclassified to income in the same period when a gain or loss related to the net investment in the foreign operation is included in income.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

6 unchanged sentences

and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring the entity to develop its own assumptions.

The following table shows the fair value of our financial assets and liabilities at June 30, 2021 and March 31, 2021:

The following table shows the fair value of our financial assets and liabilities at September 30, 2021 and March 31, 2021:

Fair Value Measurements

4 unchanged sentences

Level 1 Level 2 Level 3

June 30, March 31, June 30, March 31, June 30, March 31, June 30, March 31,

September 30, March 31, September 30, March 31, September 30, March 31, September 30, March 31,

Cash and cash equivalents $ 383,494 $ 220,531 $ 383,494 $ 220,531 $ — $ — $ — $ —

8 unchanged sentences

1,927 1,715 1,927 1,715 — — — —

Convertible debt, par value and premium liability (3)

366,478 — — — 366,478 — — —

Total debt (4)

Long term debt (3)

3,439,524 1,650,540 — — 3,585,697 1,722,459 — —

8 unchanged sentences

Changes in the fair value of these investments are recorded in the "Interest income and miscellaneous expense line" of the Consolidated Statement of Income.

During the first quarter of fiscal 2022 and 2021, we recorded a (loss) gain of $( 16 ) and $ 309 , respectively, related to these investments.

(3) T he fair value represents the total estimated cash settlement value of the convertible notes which consists of the par value and a premium over par value.

For more information on the Convertible Debt premium liability refer to Note 5 ,titled “Debt”.

During the second quarter and first half of fiscal 2022, we recorded losses of $ 213 and $ 229 , respectively, related to these investments .

During the second quarter and first half of fiscal 2021, we recorded losses of $ 384 and $ 74 , respectively, related to these investments.

(3) We estimate the fair value of our debt using discounted cash flow analyses, based on our current incremental borrowing rates for similar types of borrowing arrangement s.

6 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis at June 30, 2021 are summarized as follows:

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis at September 30, 2021 are summarized as follows:

Contingent Consideration

4 unchanged sentences

Currency translation adjustments ( 1 )

Balance at June 30, 2021 $ 19,805

Balance at September 30, 2021 $ 19,969

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

2 unchanged sentences

Currency Translation is not adjusted for income taxes.

Changes in our Accumulated Other Comprehensive Income (Loss) balances, net of tax, for the three months ended June 30, 2021 and 2020 were as follows:

Changes in our Accumulated Other Comprehensive Income (Loss) balances, net of tax, for the three months ended September 30, 2021 and 2020 were as follows:

Defined Benefit Plans (1)

1 unchanged sentence

Total Accumulated Other Comprehensive Income (Loss)

Balance at March 31, 2021 $ ( 5,519 ) $ ( 55,724 ) $ ( 61,243 )

Other Comprehensive (Loss) Income before reclassifications 591 24,933 25,524

Amounts reclassified from Accumulated Other Comprehensive (Loss) Income ( 1,098 ) — ( 1,098 )

Net current-period Other Comprehensive (Loss) Income ( 507 ) 24,933 24,426

Balance at June 30, 2021 $ ( 6,026 ) $ ( 30,791 ) $ ( 36,817 )

Three Months Six Months Three Months Six Months Three Months Six Months

Beginning Balance $ ( 6,026 ) $ ( 5,519 ) $ ( 30,791 ) $ ( 55,724 ) $ ( 36,817 ) $ ( 61,243 )

Other Comprehensive Income (Loss) before reclassifications 585 1,176 ( 68,409 ) ( 43,476 ) ( 67,824 ) ( 42,300 )

Amounts reclassified from Accumulated Other Comprehensive Income (Loss) ( 1,092 ) ( 2,190 ) — — ( 1,092 ) ( 2,190 )

Net current-period Other Comprehensive (Loss) ( 507 ) ( 1,014 ) ( 68,409 ) ( 43,476 ) ( 68,916 ) ( 44,490 )

Balance at September 30, 2021 $ ( 6,533 ) $ ( 6,533 ) $ ( 99,200 ) $ ( 99,200 ) $ ( 105,733 ) $ ( 105,733 )

(1) The amortization (gain) of defined benefit pension items is reported in the Interest income and miscellaneous expense line of our Consolidated Statements of Income.

3 unchanged sentences

Total Accumulated Other Comprehensive Income (Loss)

Balance at March 31, 2020 $ ( 6,813 ) $ ( 228,650 ) $ ( 235,463 )

Other Comprehensive Income (Loss) before reclassifications 318 27,619 27,937

Amounts reclassified from Accumulated Other Comprehensive (Loss) ( 828 ) — ( 828 )

Net current-period Other Comprehensive (Loss) ( 510 ) 27,619 27,109

Balance at June 30, 2020 $ ( 7,323 ) $ ( 201,031 ) $ ( 208,354 )

(1) Amortization (gain) of defined benefit pension items is reported in the Interest income and miscellaneous expense line of our Consolidated Statements of Income.

Three Months Six Months Three Months Six Months Three Months Six Months

Beginning Balance $ ( 7,323 ) $ ( 6,813 ) $ ( 201,031 ) $ ( 228,650 ) $ ( 208,354 ) $ ( 235,463 )

Other Comprehensive Income before reclassifications 324 648 78,251 105,870 78,575 106,518

Amounts reclassified from Accumulated Other Comprehensive Income (Loss) ( 834 ) ( 1,668 ) — — ( 834 ) ( 1,668 )

Net current-period Other Comprehensive Income (Loss) ( 510 ) ( 1,020 ) 78,251 105,870 77,741 104,850

Balance at September 30, 2020 $ ( 7,833 ) $ ( 7,833 ) $ ( 122,780 ) $ ( 122,780 ) $ ( 130,613 ) $ ( 130,613 )

1) The amortization (gain) of defined benefit pension items is reported in the Interest income and miscellaneous expense line of our Consolidated Statements of Income.

(2) The effective portion of gain or loss on net debt designated as non-derivative net investment hedging instruments is recognized in Accumulated Other Comprehensive Income and is reclassified to income in the same period when a gain or loss related to the net investment is included in income.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)

For the Three Months Ended June 30, 2021 and 2020

For the Three and Six Months Ended September 30, 2021 and 2020

(dollars in thousands, except as noted)

Loans Receivable

In connection with the fiscal 2017 divestiture of Synergy Health Netherlands Linen Management Services, we entered into a loan agreement to provide financing of up to € 15,000 for a term of up to 15 years.

The loan carried an interest rate of 4 % for the first four years and 12 % thereafter.

The loan was renegotiated during the third quarter of fiscal 2020.

According to the new terms of the loan agreement, the outstanding balance at October 31, 2019, of € 7,300 , will be repaid in six equal annual installments beginning on October 18, 2022.

The loan carries an interest rate of 4 % for the first four years and 8 % thereafter.

Outstanding borrowings under the agreement totaled $ 8,690 (or € 7,300 ) at June 30, 2021 and $ 8,568 (or € 7,300 ) at March 31, 2021.

Amounts for loan receivables as noted above are recorded in the "Other assets" line of our Consolidated balance sheets.

Interest income is not material .

COVID-19 Pandemic

The COVID-19 pandemic began to impact our business late in fiscal 2020.

The pandemic and related public health recommendations and mandated precautions to mitigate the spread of COVID-19, including deferral of surgical procedures and treatments and shelter-in-place orders or similar measures, negatively affected some of our operations, which impacted our operating results, financial position and cash flows during fiscal 2021.

We have experienced and expect to continue to experience unpredictable fluctuations in demand for certain of our products and service.

External factors such as policymaker decisions to remove certain restrictions, as they evaluate the continued infection rate and COVID-19 related deaths, the emergence of new variants of the virus, the distribution of available vaccines create uncertainty regarding future demand from our Customers and the ability of our suppliers to meet our demands.

We have experienced and expect to continue to experience unpredictable fluctuations in demand for certain of our products and services.

Also, the COVID-19 pandemic has caused and continues to cause disruptions in our supply chain and labor scarcity resulting in material and labor cost inflation.

External factors such as policymaker decisions to remove certain restrictions, as they evaluate the continued infection rate and COVID-19 related deaths, the emergence of new variants of the virus, and the distribution of available vaccines create uncertainty regarding future demand from our Customers and the ability of our suppliers to meet our demands.

However, order momentum has continued to improve and increased demand for certain capital equipment products strengthened from the fourth quarter of fiscal 2021.

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Results of Review of Interim Financial Statements

We have reviewed the accompanying consolidated balance sheet of STERIS plc and subsidiaries (the Company) as of June 30, 2021, the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for the three-month periods ended June 30, 2021 and 2020, and the related notes (collectively referred to as the “consolidated interim financial statements”).

We have reviewed the accompanying consolidated balance sheet of STERIS plc and subsidiaries (the Company) as of September 30, 2021, the related consolidated statements of income, comprehensive income and shareholders’ equity for the three- and six-month periods ended September 30, 2021 and 2020 and the consolidated statement of cash flows for the six- month periods ended September 30, 2021 and 2020, and the related notes (collectively referred to as the “consolidated interim financial statements”).

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial statements for them to be in conformity with U.S.

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Cleveland, Ohio

August 9, 2021

November 8, 2021

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements