What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-08 compared with 2021-08-09 · 224 added, 141 removed, 278 unchanged (57% of the section changed)

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• what our expenditures for capital projects were;

• where cash will come from to fund future debt principal repayments, growth outside of core operations, repurchases of shares, pay cash dividends and fund future working capital needs.

As you read the MD&A, it may be helpful to refer to information in our consolidated financial statements, which present the results of our operations for the first quarter of fiscal 2022 and fiscal 2021.

• where cash will come from to fund future debt principal repayments, growth outside of core operations, repurchases of shares, cash dividends and future working capital needs.

As you read the MD&A, it may be helpful to refer to information in our consolidated financial statements, which present the results of our operations for the second quarter and first half of fiscal 2022 and fiscal 2021.

It may also be helpful to read the MD&A in our Annual Report on Form 10-K for the year ended March 31, 2021 dated May 28, 2021.

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• Service Revenues – We define service revenues as revenues generated from parts and labor associated with the maintenance, repair, and installation of our capital equipment.

Service revenues also include hospital sterilization services, instrument and scope repairs, as well as revenues generated from contract sterilization and laboratory services offered through our Applied Sterilization Technologies segment.

Service revenues also include outsourced reprossing services, instrument and scope repairs, as well as revenues generated from contract sterilization and laboratory services offered through our Applied Sterilization Technologies segment.

• Capital Equipment Revenues – We define capital equipment revenues as revenues generated from sales of capital equipment, which includes:

steam and gas sterilizers, low temperature liquid chemical sterilant processing systems, pure steam/water systems, surgical lights and tables, and integrated OR.

• Consumable Revenues – We define consumable revenues as revenues generated from sales of the consumable family of products, which includes dedicated consumables including V-PRO, SYSTEM 1 and 1E consumables, gastrointestinal endoscopy accessories, sterility assurance products, barrier protection solutions, cleaning consumables, dental and surgical instruments.

• Recurring Revenues – We define recurring revenues as revenues generated from sales of consumable products and service revenues.

General Company Overview and Executive Summary

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

procedures, devices, pharmaceuticals and dental.

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

O ur 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.

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equipment installation and maintenance, microbial reduction of medical devices, dental instruments and tools, instrument and scope repair solutions, laboratory testing services, outsourced reprocessing, and capital equipment products, such as sterilizers and surgical tables, automated endoscope reprocessors, and connectivity solutions such as operating room (“OR”) integrati on.

We operate and report our financial information in four reportable business segments:

We operate our business and report our financial information in four reportable business segments:

Healthcare, Applied Sterilization Technologies, Life Sciences and Dental.

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Acquisitions .

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

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

("Cantel") through a U.S.

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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 $140.3 million and are reported in the selling, general and administrative expenses line of our Consolidated Statements of Income.

The results of Cantel are only reflected in the results of operations and cash flows from June 2, 2021 forward, which will affect results of comparability to the prior period operations and cash flows.

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As a result, we do not believe that the COVID-19 pandemic or the actions we took in respo nse to the pandemic will negatively impact our long-term ability to generate revenues or meet existing and future financial obligations.

For additional information and our risk factors related to the COVID-19 pandemic, please refer to our Annual Report on Form 10-K for the year ended March 31, 2021 dated May 28, 2021.

Revenues for the first quarter of fiscal 2022 were $968.4 million, representing an increase of 44.8% over the first quarter of fiscal 2021 revenues of $668.9 million with growth in all segments.

The increase was primarily related to organic growth in the Healthcare and Applied Sterilization Technologies segments, added volume from Cantel and other recent acquisitions, and favorable fluctuations in currencie s.

Additionally, during the prior year period we experienced reduced demand for our products and services resulting from the reduction of deferrable surgical procedures as a result of the COVID-19 pandemic.

Gross margin percentage for the first quarter of fiscal 2022 was 44.0%, compared to 43.0% for the first quarter of fiscal 2021.

Favorable impacts from increased productivity, incremental costs associated with COVID-19 in the prior ye ar period and our recent acquisitions were partially offset by unfavorable impact from inflation, fluctuations in currencies, and mix and other adjustments.

Operating income during the first quarter of fiscal 2022 was $14.3 million, compared to $115.8 million for the first quarter of fiscal 2021.

Contributing to the decline in operating income was $140.3 million in acquisition and integration expenses in the fiscal 2022 period, related to our acquisition of Cantel.

Cash flows from operations were $97.4 million and free cash flow was $41.2 million in the first three months of fiscal 2022 compared to cash flows from operations of $134.1 million and free cash flow of $67.4 million in the first three months of fiscal 2021 (see the subsection below titled "Non-GAAP Financial Measures" for additional information and related reconciliation of cash flows from operations to free cash flow).

The fiscal 2022 decreases in cash flows from operations and free cash flow were primarily due to anticipated costs associated with the acquisition of Cantel .

Our debt-to-total capital ratio was 34.3% at June 30, 2021 and 29.8% at March 31, 2021.

During the first three months of fiscal 2022, we declared and paid quarterly cash dividends of $0.40 per ordinary share.

Additional information regarding our financial performance during the first quarter of fiscal 2022 is included in the subsection below titled “Results of Operations.”

For additional information on our risk factors related to the COVID-19 pandemic please refer to our Annual Report on Form 10-K for the year ended March 31, 2021 dated May 28, 2021, and our amended risk factors contained in Item 1A.

of this Quarterly Report.

Revenues increased 58.3%, to $1,197.0 million for the three months ended September 30, 2021, as compared to $756.1 million for the same period in the prior year.

Revenues increased 52.0%, to $2,165.4 million for the six months ended September 30, 2021, as compared to $1,425.1 million.

These increases reflect organic growth in the Healthcare, Applied Sterilization Technologies and Life Sciences segments, added volume from Cantel and other recent acquisitions, and favorable fluctuations in currencie s.

Gross profit percentage for the second quarter of fiscal 2022 was 40.1% compared to the gross profit percentage for the second quarter of fiscal 2021 of 43.6%.

Gross profit percentage for the first half of fiscal 2022 was 41.9% compared to the gross profit percentage for the first half of fiscal 2021 of 43.3%.

Unfa vorable impacts from our recent acquisitions, inflation, and f luctuations in currencies, exceeded favorable impact from pricing, mix and other adjustments.

Additionally, the prior year periods were negatively impacted by incremental costs associated with COVID-19.

Operating income for the second quarter of fiscal 2022 was $116.5 million, compared to $141.3 million for second quarter of fiscal 2021.

Operating income during the first half of fiscal 2022 was $130.8 million, compared to $257.1 million for the first half of fiscal 2021.

Contributing to these declines in operating income were acquisition and integration expenses and incremental amortization expense primarily related to the acquisition of Cantel.

Cash flows from operations were $268.8 million and free cash flow was $135.8 million in the first half of fiscal 2022 compared to cash flows from operations of $296.1 million and free cash flow of $185.6 million for first half of fiscal 2021 (see the subsection below titled "Non-GAAP Financial Measures" for additional information and related reconciliation of cash flows from operations to free cash flow).

The fiscal 2022 decreases in cash flows from operations and free cash flow were primarily due to anticipated costs associated with the acquisition and integration of Cantel and higher capital expenditures in fiscal 2022.

Our debt-to-total capital ratio was 34.5% at September 30, 2021 and 29.8% at March 31, 2021.

During the first half of fiscal 2022, we declared and paid cash dividends totaling $0.83 per ordinary share.

Additional information regarding our financial performance during the second quarter and first half of fiscal 2022 is included in the subsection below titled “Results of Operations.”

NON-GAAP FINANCIAL MEASURES

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We use this as a measure to gauge our ability to pay cash dividends, fund growth outside of core operations, fund future debt principal repayments, and repurchase shares.

The following table summarizes the calculation of our free cash flow for the three months ended June 30, 2021 and 2020:

Three Months Ended June 30,

The following table summarizes the calculation of our free cash flow for the six months ended September 30, 2021 and 2020:

Six Months Ended September 30,

(dollars in thousands) 2021 2020

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Results of Operations

In the following subsections, we discuss our earnings and the factors affecting them for the first quarter of fiscal 2022 compared with the same fiscal 2021 period.

In the following subsections, we discuss our earnings and the factors affecting them for the second quarter and first half of fiscal 2022 compared with the same fiscal 2021 periods.

We begin with a general overview of our operating results and then separately discuss earnings for our operating segments.

The following tables compare our revenues for the three months ended June 30, 2021 to the revenues for the three months ended June 30, 2020:

Three Months Ended June 30,

The following tables compare our revenues for the three and six months ended September 30, 2021 to the revenues for the three and six months ended September 30, 2020:

Three Months Ended September 30,

(dollars in thousands) 2021 2020 Change Percent Change

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Other foreign revenues 324,442 189,593 134,849 71.1 %

Revenues increased 44.8% to $968.4 million for the three months ended June 30, 2021, as compared to $668.9 million for the same period in the prior year with growth in all segments.

The increase of was primarily related to organic growth in the Healthcare and Applied Sterilization Technologies segments, added volume of $141.3 million from Cantel and other recent acquisitions and favorable fluctuations in currencie s.

Service revenues increased 30.3% for the first three months of fiscal 2022, as compared to the same period in fiscal 2021, reflecting organic growth in the Healthcare, Applied Sterilization Technologies and Life Sciences segments, as well as added volume from Cantel and our other recent acquisitions.

Consumable revenues increased by 109.6% for the first three months of fiscal 2022, as compared to the same period in fiscal 2021, reflecting organic growth in the Healthcare segment, as well as added volume from Cantel and our other recent acquisitions.

The growth was partially offset by a decline in the Life Sciences segment as the increased demand from our pharma Customers focused on vaccines and biologics that we experienced during fiscal 2021 shifted back to more normal levels.

Capital equipment revenues increased 20.1%, for the first three months of fiscal 2022, as compared to the same period in fiscal 2021, reflecting organic growth in the Healthcare and Life Sciences segments and added volume from Cantel and our other recent acquisitions.

Ireland revenues increased 52.7% to $21.9 million for the three months ended June 30, 2021, as compared to $14.4 million for the same period in the prior year, reflecting growth in service, consumable and capital equipment revenues.

United States revenues increased 38.1% to $679.3 million for the three months ended June 30, 2021, as compared to $491.7 million for the same period in the prior year, reflecting growth in service, consumable and capital equipment revenues, primarily due to the impact of Cantel and our other recent acquisitions.

Revenues from other foreign locations increased 64.1% to $267.2 million for the three months ended June 30, 2021, as compared to $162.9 million for the same period in the prior year, reflecting growth in Canada and in the Europe, Middle East & Africa ("EMEA"), Latin American and Asia Pacific regions.

Revenues increased 58.3%, to $1,197.0 million for the three months ended September 30, 2021, as compared to $756.1 million for the same period in the prior year.

The increase was primarily related to organic growth in the Healthcare, Applied Sterilization Technologies and Life Science segments, added volume of $346.1 million from Cantel and other recent acquisitions and favorable fluctuations in currencies.

Service revenues increased 22.8% for the three months ended September 30, 2021, as compared to the same period in the prior year, reflecting growth in the Healthcare, Life Sciences and Applied Sterilization Technologies business segments.

Consumable revenues increased by 150.7% for the three months ended September 30, 2021, as compared to the same period in the prior year, reflecting growth in the Healthcare and Life Sciences segments and added volume from the addition of our new Dental segment.

Capital equipment revenues increased 47.6%, for the three months ended September 30, 2021, as compared to the same period in the prior year, reflecting growth in the Healthcare and Life Sciences segments.

Ireland revenues increased 17.3% to $20.0 million for the three months ended September 30, 2021, as compared to $17.1 million for the same period in the prior year, reflecting growth in service, consumable and capital equipment revenues.

United States revenues increased 55.2%, to $852.5 million for the three months ended September 30, 2021, as compared to $549.4 million for the same period in the prior year, reflecting growth in service, consumable, and capital equipment revenues.

These increases represent both organic growth and the impact of Cantel and our other recent acquisitions.

Revenues from other foreign locations, increased 71.1%, to $324.4 million for the three months ended September 30, 2021, as compared to $189.6 million for the same period in the prior year.

The increase is due to growth within Canada and the Europe, Middle East & Africa ("EMEA"), Asia Pacific, and Latin American regions.

These increases represent both organic growth and the impact of Cantel and our other recent acquisitions.

Six Months Ended September 30,

(dollars in thousands) 2021 2020 Change Percent Change

Total revenues $ 2,165,407 $ 1,425,064 $ 740,343 52.0 %

Revenues by type:

Service revenues 990,890 784,452 206,438 26.3 %

Consumable revenues 746,686 321,186 425,500 132.5 %

Capital equipment revenues 427,831 319,426 108,405 33.9 %

Revenues by geography:

Ireland revenues 41,991 31,463 10,528 33.5 %

United States revenues 1,531,747 1,041,157 490,590 47.1 %

Other foreign revenues 591,669 352,444 239,225 67.9 %

Revenues increased 52.0%, to $2,165.4 million for the six months ended September 30, 2021, as compared to $1,425.1 million for the same period in the prior year.

The increase was primarily related to organic growth in the Healthcare, Applied Sterilization Technologies and Life Science segments, added volume of $487.4 million from Cantel and other recent acquisitions and favorable fluctuations in currencies.

Service revenues increased 26.3% for the six months ended September 30, 2021, as compared to the same period in the prior year, reflecting growth in the Healthcare, Applied Sterilization, and Life Science segments.

Consumable revenues increased by 132.5% for the six months ended September 30, 2021, as compared to the same period in the prior year, reflecting growth in the Healthcare and Life Sciences segments and added volume from the addition of our new Dental segment.

Capital equipment revenues increased 33.9% for the six months ended September 30, 2021, reflecting growth in the Healthcare and Life Sciences segments.

Ireland revenues increased 33.5% to $42.0 million for the six months ended September 30, 2021, as compared to $31.5 million for the same period in the prior year, reflecting growth in service, consumable, and capital equipment revenues.

United States revenues increased 47.1%, to $1,531.7 million for the six months ended September 30, 2021, as compared to $1,041.2 million for the same period in the prior year, reflecting growth in service, consumable, and capital equipment revenues.

These increases represent both organic growth and the impact of Cantel and our other recent acquisitions.

Revenues from other foreign locations increased 67.9%, to $591.7 million for the six months ended September 30, 2021, as compared to $352.4 million for the same period in the prior year.

The increase is due to growth within Canada and the Europe, Middle East & Africa ("EMEA"), Asia Pacific, and Latin American regions.

These increases represent both organic growth and the impact of Cantel and our other recent acquisitions.

Gross Profit.

The following table compares our gross profit for the three months ended June 30, 2021 to the three months ended June 30, 2020:

Three Months Ended June 30, Change Percent

The following table compares our gross profit for the three and six months ended September 30, 2021 to the three and six months ended September 30, 2020:

Three Months Ended September 30, Change Percent

(dollars in thousands) 2021 2020

Gross profit:

(*as adjusted)

Product $ 257,754 $ 163,706 $ 94,048 57.4 %

Service 222,590 166,331 56,259 33.8 %

Total gross profit $ 480,344 $ 330,037 $ 150,307 45.5 %

Gross profit percentage:

Product 37.6 % 48.2 %

Service 43.5 % 39.9 %

Total gross profit percentage 40.1 % 43.6 %

Six Months Ended September 30, Change Percent

(dollars in thousands) 2021 2020

Gross profit:

(*as adjusted)

Product $ 475,627 $ 310,075 $ 165,552 53.4 %

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Our gross profit is affected by the volume, pricing, and mix of sales of our products and services, as well as the costs associated with the products and services that are sold.

Gross profit percentage for the first three months of fiscal 2022 was 44.0% compared to the gross profit percentage for the first three months of fiscal 2021 of 43.0%.

Favorable impacts from increased productivity (330 basis points), incremental costs associated with COVID-19 in the prior ye ar period (120 basis points) and our recent acquisitions (70 basis points) were partially offset by unfavorable impact from inflation (30 basis points), fluctuations in currencies (40 basis points), and mix and other adjustments (350 basis points).

Gross profit percentage for the second quarter of fiscal 2022 was 40.1% compared to the gross profit percentage for the second quarter of fiscal 2021 of 43.6%.

Unfavorable impacts from our recent acquisitions (460 basis points), inflation (40 basis points), and fluctuations in currencies (20 basis points), exceeded favorable impact from pricing (70 basis points), mix and other adjustments (50 basis points).

Additionally, the prior year was negatively impacted by incremental costs associated with COVID-19 (50 basis points).

Gross profit percentage for the first half of fiscal 2022 was 41.9% compared to the gross profit percentage for the first half of fiscal 2021 of 43.3%.

Unfa vorable impacts from our recent acquisitions (340 basis points), inflation (40 basis points), and f luctuations in currencies (30 basis points), exceeded favorable impact from pricing (70 basis points), mix and other adjustments (110 basis points).

Additionally, the prior year was negatively impacted by incremental costs associated with COVID-19 (90 basis points).

Operating Expenses.

The following table compares our operating expenses for the three months ended June 30, 2021 to the three months ended June 30, 2020:

Three Months Ended June 30, Change Percent

The following table compares our operating expenses for the three and six months ended September 30, 2021 to the three and six months ended September 30, 2020:

Three Months Ended September 30, Change Percent

(dollars in thousands) 2021 2020

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Total operating expenses $ 363,841 $ 188,774 $ 175,067 92.7 %

Six Months Ended September 30, Change Percent

(dollars in thousands) 2021 2020

Operating expenses:

Selling, general, and administrative $ 738,551 $ 327,878 $ 410,673 125.3 %

Research and development 37,024 32,374 4,650 14.4 %

Restructuring expenses 224 90 134 NM

Total operating expenses $ 775,799 $ 360,342 $ 415,457 115.3 %

NM - Not meaningful.

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Significant components of total selling, general, and administrative expenses (“SG&A”) are compensation and benefit costs, fees for professional services, travel and entertainment, facilities costs, and other general and administrative expenses.

SG&A increased 153.8% in the first three months of fiscal 2022 over the same period in fiscal 2021, primarily due to acquisition and integration costs of $141.0 million and added expenses from Cantel and our other recent acquisitions.

SG&A increased 99.6% and 125.3% in the second quarter and first half of fiscal 2022, respectively over the same prior year periods.

During the fiscal 2022 periods we had significant increases in acquisition related costs, which included acquisition and integration costs, amortization of acquired intangible assets, and "step-up" of plant, property and equipment to fair value, which were primarily related to the acquisition of Cantel.

In addition to these costs we also added additional expenses associated with the operations of our recent acquisitions.

Research and Development.

For the three month period ended June 30, 2021, research and development expenses increased 12.1% over the same prior year period.

Resea rch and development expenses increased 16.7% and 14.4% in the second quarter and first half of fiscal 2022, respectively over the same prior year periods.

Research and development expenses are influenced by the number and timing of in-process projects and labor hours and other costs associated with these projects.

Our research and development initiatives continue to emphasize new product development, product improvements, and the development of new technological platform innovations.

During the first quarter of fiscal 2022, our investments in research and development continued to be focused on, but were not limited to, enhancing capabilities of sterile processing combination technologies, procedural products and accessories, and devices and support accessories used in gastrointestinal endoscopy procedures.

During fiscal 2022, our investments in research and development continued to be focused on, but were not limited to, enhancing capabilities of sterile processing combination technologies, procedural products and accessories, and devices and support accessories used in gastrointestinal endoscopy procedures.

Restructuring Expenses .

Amounts related to restructuring expenses were not material for the three month periods ending June 30, 2021 or 2020, respectively.

Amounts related to restructuring expenses were not material for the three and six month periods ending September 30, 2021 or 2020, respectively.

For information on our restructuring efforts, refer to our Annual Report on Form 10-K filed with the SEC on May 28, 2021.

Non-Operating Expenses, Net.

Non-operating expenses, net consists of interest expense on debt, offset by interest earned on cash, cash equivalents, short-term investment balances, and other miscellaneous income.

The following table compares our net non-operating expenses for the three months ended June 30, 2021 and 2020:

Three Months Ended June 30,

Non-operating expenses, net consists of interest expense on debt, offset by interest earned on cash, cash equivalents, and short-term investment balances, and other miscellaneous income.

The following table compares our net non-operating expenses for the three and six months ended September 30, 2021 and 2020:

Three Months Ended September 30,

(dollars in thousands) 2021 2020 Change

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Non-operating expenses, net $ 26,896 $ 7,477 $ 19,419

Interest expense increased $12.3 million during the first quarter of fiscal 2022 as compared to the first quarter of fiscal 2021, primarily due to our Senior Public Notes which were issued in fiscal 2022.

For more information on the Senior Public Notes refer to note 5 of our Consolidated Financial Statements totaled, "Debt".

During the first quarter of fiscal 2022, we recorded a fair value adjustment of $22.9 million related to the convertible debt assumed in the acquisition of Cantel.

For more information on the Cantel convertible debt refer to note 5 of our Consolidated Financial Statements titled, "Debt".

Interest (income) and miscellaneous expense is not material.

Six Months Ended September 30,

(dollars in thousands) 2021 2020 Change

Non-operating expenses, net:

Interest expense $ 44,848 $ 18,157 $ 26,691

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

Interest income and miscellaneous expense (2,457) (3,477) 1,020

Non-operating expenses, net $ 70,197 $ 14,680 $ 55,517

Interest expense increased $14.4 million and $26.7 million during the second quarter and first half of fiscal 2022, respectively over the same prior year periods , primarily due to debt incurred for acquisition financing including term loans and Senior Public Notes.

For more information refer to not e 5 of our Consolidated Financial Statements titled "Debt." Interest (income) and miscellaneous expense is not material.

During the second quarter and first half of fiscal 2022, we recorded fair value adjustments of $4.9 million and $27.8 million, respect ively, based on appreciation in our share price related to premium liability associated with the convertible debt assumed in the acquisition of Cantel.

For more information on the Cantel convertible debt refer to n ote 5 of our Consolidated Financial Statements titled, "Debt."

Income Tax Expense.

T he following table compares our income tax expense and effective income tax rates for the three months ended June 30, 2021 and June 30, 2020:

Three Months Ended June 30, Change Percent

The following table compares our income tax expense and effective income tax rates for the three and six months ended September 30, 2021 and September 30, 2020:

Three Months Ended September 30, Change Percent

(dollars in thousands) 2021 2020

(*as adjusted)

Income tax (credit) expense $ (7,075) $ 19,083 $ (26,158) (137.1)%

Income tax expense $ 19,982 $ 27,778 $ (7,796) (28.1)%

Effective income tax rate 22.3 % 20.8 %

*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 on May 28, 2021.

We record income tax expense during interim periods based on our estimate of the annual effective income tax rate, adjusted each quarter for discrete items.

Six Months Ended September 30, Change Percent

(dollars in thousands) 2021 2020

(*as adjusted)

Income tax expense $ 12,907 $ 46,860 $ (33,953) (72.5)%

Effective income tax rate 21.3 % 19.3 %

We record income tax expense during interim periods based on our estimate of the annual effective income tax rate,

adjusted each quarter for discrete items.

We analyze various factors to determine the estimated annual effective income tax rate, including projections of our annual earnings and taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, our ability to use tax credits and net operating loss carryforwards, and available tax planning alternatives.

The effective income tax rates for the three month periods ended June 30, 2021 and 2020 were 24.4% and 17.6%, respectivel y.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 fiscal 2022 effective tax rate also includes one-time, non-deductible acquisition related costs.

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

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 the same fiscal 2021 periods, primarily due to Cantel and our other recent acquisitions, which historically have had higher effective tax rates than STERIS.

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

Business Segment Results of Operations.

As a result of the acquisition of Cantel, we have reassessed the organization of our business and have added a new segment called Dental.

As a result of the acquisition of Cante l, we have reassessed the organization of our business and have added a new segment called Dental.

We now operate and report our financial information in four reportable business segments:

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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.

Additio nal 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 .

We disclose a measure of segment income that is consistent with the way management operates and views the business.

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

Additional information regarding our segments is included in our consolidated financial statements included in its 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.

The following table compares business segment revenues, segment operating income and total operating income for the three and six months ended September 30, 2021 and 2020:

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

Three Months Ended June 30,

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

(dollars in thousands) 2021 2020 2021 2020

(*as adjusted)

(*as adjusted) (*as adjusted)

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

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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

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(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.

Healthcare revenues increased 50.8% to $602.8 million for the three months ended June 30, 2021, as compared to $399.7 million for the same prior year period.

This increase reflects growth in consumable, service and capital equipment revenues of 146.8%, 30.6% and 17.8%, respectively and reflects organic growth, favorable fluctuations in foreign currencies and the impact of Cantel in June and our other recent acquisitions.

Additionally, during the fiscal 2021 period we experienced reduced demand for our products and services resulting from the reduction of deferrable surgical procedures as a result of the COVID-19 pandemic.

Excluding Cantel's backlog, the Healthcare segment’s backlog was $254.3 million at June 30, 2021, representing an increase of 54.9% compared to the backlog of $164.2 million at June 30, 2020.

The increase is primarily due to built up demand as a result of the COVID-19 pandemic.

Applied Sterilization Technologies segment reve nues increased 37.1% to $208.9 million for the quarter ended June 30, 2021, as compared to $152.4 million for the same prior year period.

The fiscal 2022 increase reflects organic growth, favorable fluctuations in currencie s and the impact of a fiscal 2021 acquisition.

Life Sciences segment revenues increased 3.9% to $121.5 million for the first three months ended June 30, 2021, as compared to $116.9 million for the same prior year period.

This increase reflects growth in service and capital equipment revenues of 16.5% and 7.6% respectively primarily due to the acquisition of Cantel in June and favorable fluctuations in foreign currencies.

Consumable revenues declined by 3.9%, as the increased demand from our pharma Customers focused on vaccines and biologics that we experienced in fiscal 2021 shifted back to more normal levels.

Excluding Cantel's backlog, the Life Sciences segme nt’s backlog amounted to $92.1 million at June 30, 2021, representing an increase of 36.0% compared to the backlog of $67.7 million at June 30, 2020.

The increase is primarily due to built up demand as a result of the COVID-19 pandemic.

Dental segment revenues in June 2021 were $35.2 million.

The Healthcare segment’s operating income increased $52.0 million to $136.2 million for the first three months of fiscal 2022, as compared to $84.2 million for the same prior year period.

The segment's operating margins were 22.6% and 21.1% for the first three months of fiscal 2022 and 2021, respectively.

The segment's operating income and margin improvements were primarily due to to increased volume.

The Applied Sterilization Technologies segment's operating income increased $38.0 million to $101.9 million for the first three months of fiscal 2022, as compared to $64.0 million for the same prior year period.

The segment’s operating margins were 48.8% and 42.0% for the first three months of fiscal 2022 and fiscal 2021, respectively.

The segment's operating income and margin improvements were primarily due to to increased volume.

The Life Sciences segment’s operating income increased $0.6 million to $49.1 million for the first three months of fiscal 2022, as compared to $48.5 million for the same prior year period.

The segment’s operating margins were 40.4% and 41.5% for the first three months of fiscal 2022 and fiscal 2021, respectively.

The Dental segment's operating income and operating margin were $10.1 million and 28.7%, for the month of June 2021.

Healthcare revenues increased 58.0% to $744.1 million for the three months ended September 30, 2021, as compared to $470.9 million in the same prior year period.

This increase reflects growth in consumable, capital equipment and service revenues of 120.0%, 53.7% and 25.5%, respectively and reflects the impact of Cantel and our other recent acquisitions, organic growth and favorable fluctuations in foreign currencies.

Healthcare revenues increased 54.7% to $1,347.0 million for the six months ended September 30, 2021, as compared to $870.6 million in the same prior year period.

This increase reflects growth in consumable, capital equipment and service revenues of 130.8%, 36.0% and 27.8%, respectively and reflects the impact of Cantel and our other recent acquisitions, organic growth and favorable fluctuations in foreign currencies.

Excluding Cantel, the Healthcare segment’s backlog at September 30, 2021, amounted to $311.2 million, representing an increase of 74.8%, as compared to the backlog of $178.0 million at September 30, 2020.

The increase is primarily due to Customer demand but also reflects delays in shipments due to supply chain disruptions.

Applied Sterilization Technologies segment revenues increased 20.8% to $204.9 million for the three months ended September 30, 2021, as compared to $169.5 million for the same prior year period.

Applied Sterilization Technologies segment revenues increased 28.5% to $413.8 million for the six months ended September 30, 2021, as compared to $321.9 million for the same prior year period.

The fiscal 2022 increases are primarily due to organic growth.

Favorable fluctuations in currencie s and the impact of a fiscal 2021 acquisition also contributed to the increases.

Life Sciences revenues increased 14.4% to $132.3 million for the three months ended September 30, 2021, as compared to $115.7 million for the same prior year period.

This increase reflects growth in service, capital equipment and consumable revenues of 18.8%, 16.9% and 10.7%, respectively and reflects the impact of the Cantel acquisition, organic growth and favorable fluctuations in foreign currencies.

Life Sciences revenues increased 9.1% to $253.8 million for the six months ended September 30, 2021, as compared to $232.6 million for the same prior year period.

This increase reflects growth in service, capital equipment and consumable revenues of 17.7%, 12.2% and 3.2% respectively and reflects the impact of the Cantel acquisition, organic growth and favorable fluctuations in foreign currencies.

Excluding Cantel, the Life Sciences segme nt’s backlog at September 30, 2021 amounted to $98.3 million, representing an increase of 31.3%, as compared to the backlog of $74.8 million at September 30, 2020.

The increase is primarily due to Customer demand but also reflects delays in shipments due to supply chain disruptions.

Dental segment revenues for the three months ended September 30, 2021 were $115.6 million.

Dental segment revenues from the Cantel acquisition date of June 2, 2021 through September 30, 2021 were $150.9 million.

The Healthcare segment’s operating income increased 53.0% to $160.4 million for the three months ended September 30, 2021, as compared to $104.8 million in the same prior year period, primarily due to increased volume and our recent acquisitions.

The segment's operating margins were 21.6% and 22.3% for the second quarter of fiscal 2022 and 2021, respectively .

In the prior fiscal year period we benefited from lower operating costs, such as travel and meeting expenses as a result of the COVID-19 pandemic and measures taken in response to it.

The Healthcare segment’s operating income incre ased 56.9% to $296.6 million for the six months ended September 30, 2021, as compared to $189.0 million in the same prior year period, primarily due to increased volume and our recent acquisitions.

The segment's operating margins were 22.0% and 21.7% for the first half of fiscal 2022 and 2021, respectively.

The segment's operating income and margin improvements were primarily due to the higher volumes.

The Applied Sterilization Technologies segment's operating income increased 29.9% to $99.8 million for the three months ended September 30, 2021, as compared to $76.8 million during the same prior year period.

The Applied Sterilization Technologies segment's operating income increased 43.3% to $201.7 million for the six months ended September 30, 2021, as compared to $140.8 million during the same prior year period.

The segment's operating margins were 48.7% and 45.3% for the second quarter of fiscal 2022 and 2021 , respectively.

The segment's operating margins were 48.7% and 43.7% for the first half of fiscal 2022 and 2021, respectively.

The segment's operating income and operating margin improvements were primarily due to to higher volumes.

The Life Sciences segment’s operating income increased 23.9% to $57.5 million for the three months ended September 30, 2021, as compared to $46.4 million in the same prior year period.

The Life Sciences segment’s operating income increased 12.3% to $106.6 million for the six months ended September 30, 2021, as compared to $94.9 million in the same prior year period.

The segment's operating margins were 43.5% and 40.1% for the second quarter of fiscal 2022 and 2021, respectively.

The segment's operating margins were 42.0% and 40.8% for the first half of fiscal 2022 and 2021, respectively.

The segment's operating income and operating margin improvements were primarily due to to higher volumes.

The Dental segment's operating income and operating margin were $32.4 million and 28.0%, respectively, for the three months ended September 30, 2021.

The Dental segment's operating income and operating margin were $42.5 million and 28.2%, respectively, for the six months ended September 30, 2021.

Liquidity and Capital Resources

The following table summarizes significant components of our cash flows for the three months ended June 30, 2021 and 2020:

Three Months Ended June 30,

The following table summarizes significant components of our cash flows for the six months ended September 30, 2021 and 2020:

Six Months Ended September 30,

(dollars in thousands) 2021 2020

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Free cash flow $ 135,784 $ 185,602

Net Cash Provided by Operating Activities – The net cash provided by our operating activities was $97.4 million for the first three months of fiscal 2022 and $134.1 million for the first three months of fiscal 2021.

The fiscal 2022 decrease in cash flows from operations was primarily due to anticipated costs associated with the acquisition of Cantel.

Net Cash (Used In) Investing Activities – The net cash used in investing activities totaled $603.5 million for the first three months of fiscal 2022 and $66.7 million for the first three months of fiscal 2021.

The following discussion summarizes the significant changes in our investing cash flows for the first three months of fiscal 2022 and fiscal 2021:

• Purchases of property, plant, equipment, and intangibles, net – Capital expenditures were $56.4 million for the first three months of fiscal 2022 and $66.9 million during the same prior year period.

The decrease was primarily due to higher spending related to expansion projects in the Applied Sterilization Technologies segment which occurred in the fiscal 2021 period.

• Acquisitions of businesses, net of cash acquired – During the first three months of fiscal 2022, we used $547.4 million for the acquisition of Cantel.

For more information refer to our note 2 of our Consolidated Financial Statements titled, "Business Acquisitions".

Net Cash Provided by (Used In) Financing Activities – The net cash provided by financing activities amounted to $818.8 million for the first three months of fiscal 2022 compared with net cash used in financing activities of $134.0 million for the first three months of fiscal 2021.

The following discussion summarizes the significant changes in our financing cash flows for the first three months of fiscal 2022 and fiscal 2021:

• Proceeds from Issuance of Senior Notes – During the first three months of fiscal 2022, we received $1,350.0 million in proceeds from the issuance of our Senior Public Notes.

Net Cash Provided by Operating Activities – The net cash provided by our operating activities was $268.8 million for the first six months of fiscal 2022 and $296.1 million for the first six months of fiscal 2021.

The fiscal 2022 decrease in cash flows from operations was primarily due to anticipated costs associated with the acquisition and integration of Cantel.

Net Cash Used In Investing Activities – The net cash used in investing activities totaled $680.3 million for the first six months of fiscal 2022 and $112.9 million for the first six months of fiscal 2021.

The following discussion summarizes the significant changes in our investing cash flows for the first six months of fiscal 2022 and fiscal 2021:

• Purchases of property, plant, equipment, and intangibles, net – Capital expenditures were $133.4 million for the first six months of fiscal 2022 and $110.7 million during the same prior year period.

The fiscal 2022 increase was primarily due to additional expenditures from Cantel and in our Applied Sterilization Technologies segment.

• Acquisitions of businesses, net of cash acquired – During the first six months of fiscal 2022, we used $547.4 million for the acquisition of Cantel.

For more information on our acquisitions, refer to our Note 2 to our consolidated financial statements, "Business Acquisitions and Divestitures."

Net Cash Used In Fi nancing Activities – The net cash provided by financing activities amounted to $579.7 million for the first six months of fiscal 2022 compared with net cash used in financing activities of $199.3 million for the first six months of fiscal 2021.

The following discussion summarizes the significant changes in our financing cash flows for the first six months of fiscal 2022 and fiscal 2021:

• Proceeds from issuance of senior notes – During the first six months of fiscal 2022, we received $1,350.0 million in proceeds from the issuance of our Senior Public Notes.

For more information on our Senior Public Notes, refer to note 5 of our Consolidated Financial Statements titled, "Debt."

• Proceeds from Term Loan – During the first three months of fiscal 2022, we borrowed $650.0 million under our Delayed Draw Term Loan.

• Proceeds from term loan – During the first six months of fiscal 2022, we borrowed $650.0 million under our Delayed Draw Term Loan.

For more information on our Delayed Draw Term Loan, refer to our annual report on Form 10-K filed with the SEC on May 28, 2021.

• Payments on Term Loan – During the first three months of fiscal 2022, we repaid $125.0 million of our Term Loan.

For more information on our Term Loan, refer to our annual report on Form 10-K filed with the SEC on May 28, 2021.

• Payments on Long-term Obligations, net – During the first three months of fiscal 2022, we repaid $721.3 million of Cantel's outstanding debt in connection with the acquisition.

• Payments on long-term obligations – During the first six months of fiscal 2022, we repaid $721.3 million of Cantel's outstanding debt in connection with the acquisition.

For more information on Cantel's debt refer to Note 2 of our Consolidated Financial Statements titled, "Business Acquisitions." During the first six months of fiscal 2021, we repaid $35.0 million of principal for private placement notes that matured in Aug ust 2020.

For more information on debt refer to Note 5 of our Consolidated Financial Statements titled, "Debt."

• Payments on convertible debt obligations – During the first six months of fiscal 2022, we paid $371.4 million to settle obligations associated with Cantel's convertible debt assumed at the time of acquisition.

For more information on Cantel's debt refer to Note 2 of our Consolidated Financial Statements titled, "Business Acquisitions."

• Payments under credit facilities, net – Net payments under credit facilities totaled $249.4 million in the first three months of fiscal 2022, compared to net payments under credit facilities of $95.8 million in the first three months of fiscal 2021.

For more information on our debt, refer to note 5 of our Consolidated Financial Statements titled, "Debt".

• Deferred financing fees and debt issuance costs – During the first three months of fiscal 2022, we paid $17.2 million for financing fees and debt issuance costs primarily related to our Senior Public Notes and Delayed Draw Term Loan .

• Payments on term loan – During the first six months of fiscal 2022, we repaid $125.0 million of our Term Loan.

For more information on our Term Loan, refer to our annual report on Form 10-K filed with the SEC on May 28, 2021.

• Payments under credit facilities, net – Net payments under credit facilities totaled $65.0 million in the first six months of fiscal 2022 compared to net payments under credit facilities of $107.2 million in the first six months of fiscal 2021.

• Deferred financing fees and debt issuance costs – During the first six months of fiscal 2022, we paid $17.3 million for financing fees and debt issuance costs primarily related to our Senior Public Notes and Delayed Draw Term Loan .

For more information on our debt refer to note 5 of our Consolidated Financial Statements titled, "Debt."

• Repurchases of ordinary shares –During the first three months of fiscal 2022, we obtained 59,648 of our ordinary shares in connection with share-based compensation award programs in the aggregate amount of $10.7 million.

During the first three months of fiscal 2021 through April 9, 2020, we purchased 35,000 of our ordinary shares in the aggregate amount of $5.0 million.

During the first three months of fiscal 2021, we obtained 63,150 of our ordinary shares in connection with share-based compensation award programs in the aggregate amount of $9.2 million.

• Repurchases of ordinary shares – During the first six months of fiscal 2022, we obtained 130,678 of our ordinary shares in connection with share-based compensation award programs in the aggregate amount of $24.8 million.

From the start of fiscal 2021 through April 9, 2020, we purchased 35,000 of our ordinary shares in the aggregate amount of $5.0 million.

During the first six months of fiscal 2021, we obtained 76,286 of our ordinary shares in connection with share-based compensation award programs in the aggregate amount of $9.4 million.

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

• Acquisition related deferred or contingent consideration – During the first three months of fiscal 2022, we paid $25.2 million in deferred and contingent consideration, the majority of which was associated with a pre-acquisition arrangement related to an acquisition made by Cantel prior to our purchase of the company.

• Cash dividends paid to ordinary shareholders – During the first three months of fiscal 2022, we paid total cash dividends of $34.1 million, or $0.40 per outstanding share.

During the first three months of fiscal 2021, we paid total cash dividends of $31.5 million, or $0.37 per outstanding share.

• Contributions from noncontrolling interest – During the first three months of fiscal 2021, we received contributions from noncontrolling interest holders of $2.3 million.

• Acquisition related deferred or contingent consideration – During the first six months of fiscal 2022, we paid $25.3 million in deferred and contingent consideration, the majority of which was associated with a pre-acquisition arrangement related to an acquisition made by Cantel prior to our purchase of the company.

• Cash dividends paid to ordinary shareholders – During the first six months of fiscal 2022, we paid total cash dividends of $77.1 million, or $0.83 per outstanding share.

During the first six months of fiscal 2021, we paid total cash dividends of $65.6 million, or $0.77 per outstanding share.

• Transactions with noncontrolling interest holders – During the first six months of fiscal 2022, we paid distributions to noncontrolling interest holders of $1.0 million.

During the first six months of fiscal 2021, we received contributions from noncontrolling interest holders of $2.3 million.

• Stock option and other equity transactions, net – We generally receive cash for issuing shares under our stock option programs.

During the first three months of fiscal 2022 and fiscal 2021, we received cash proceeds totaling $1.7 million and $5.4 million, respectively, under these programs.

During the first six months of fiscal 2022 and fiscal 2021, we received cash proceeds totaling $7.8 million and $20.6 million, respectively, under these programs.

Cash Flow Measures.

Free cash flow was $41.2 million in the first three months of fiscal 2022 compared to $67.4 million in the first three months of fiscal 2021 (see the subsection above titled "Non-GAAP Financial Measures" for additional information and related reconciliation of cash flows from operations to free cash flow).

The fiscal 2022 decrease in cash flows was primarily due to anticipated costs associated with the acquisition of Cantel.

Our debt-to-total capital ratio was 34.3% at June 30, 2021 and 23.3% at June 30, 2020.

Free cash flow was $135.8 million in the first six months of fiscal 2022 compared to $185.6 million in the first six months of fiscal 2020 (see the subsection above titled "Non-GAAP Financial Measures" for additional information and related reconciliation of cash flows from operations to free cash flow).

The fiscal 2022 decreases in cash flows was primarily due to anticipated costs associated with the acquisition and integration of Cantel and higher capital expenditures in fiscal 2022.

Our debt-to-total capital ratio was 34.5% at September 30, 2021 and 21.8% at September 30, 2020.

Sources of Credit and Contractual and Commercial Commitments.

Information related to our sources of credit and contractual and commercial commitments is included in our Annual Report on Form 10-K for the year ended March 31, 2021, dated May 28, 2021.

Our commercial commitments were approximat ely $81.7 million at June 30, 2021, reflecting a net increase of $2.6 million in surety bonds and other commercial commitments from March 31, 2021.

We had no outstanding borrowings under the Credit Agreement as of June 30, 2021.

We had $13.0 million of letters of credit outstanding under the Credit Agreement at June 30, 2021.

Our commercial commitments were approximately $86.1 million at September 30, 2021, reflecting a net increase of $6.9 million in surety bonds and other commercial commitments from March 31, 2021.

Outstanding borrowings under our Credit Agreement as of September 30, 2021 were $184.4 million.

We had $14.4 million of letters of credit outstanding under the Credit Agreement at September 30, 2021.

Cash Requirements.

We intend to use our existing cash and cash equivalent balances and cash generated from operations for short-term and long-term capital expenditures and our other liquidity needs.

Our capital requirements depend on many uncertain factors, including our rate of sales growth, our Customers’ acceptance of our products and services, the costs of obtaining adequate manufacturing capacities, the timing and extent of our research and development projects, changes in our operating expenses and other factors.

To the extent that existing and anticipated sources of cash are not sufficient to fund our

future activities, we may need to raise additional funds through additional borrowings or the sale of equity securities.

Our capital requirements depend on many uncertain factors, including our r ate of sales growth, our Customers’ acceptance of our products and services, the costs of obtaining adequate manufacturing capacities, the timing and extent of our research and development projects, changes in our expenses and other factors.

To th e extent that existing and anticipated sources of cash are not sufficient to fund our future activities, we may need to raise additional funds through additional borrowings or the sale of equity securities.

There can be no assurance that our existing financing arrangements will provide us with sufficient funds or that we will be able to obtain any additional funds on terms favorable to us or at all.

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Each Guarantor that makes a payment under its guarantee will be entitled upon payment in full of all guaranteed obligations under the indenture to a contribution from each Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.

The following tables present summarized results of operations for the three months ended June 30, 2021 and summarized balance sheet information at March 31, 2021 for the obligor group of the Senior Notes.

The following tables present summarized results of operations for the six months ended September 30, 2021 and summarized balance sheet information at March 31, 2021 for the obligor group of the Senior Notes.

The obligor group consists of the Parent Company Guarantor, Subsidiary Issuer, and Subsidiary Guarantors for the Senior Notes.

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Summarized Results of Operations

(in thousands) Three Months Ended

(in thousands) Six Months Ended

September 30,

Revenues $ 820,128

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( in thousands)

June 30, March 31,

September 30, March 31,

Receivables due from non-issuers and non-guarantor subsidiaries $ 15,399,820 $ 14,102,215

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We record expected recoveries under applicable insurance contracts when we are assured of recovery.

Refer to Note 8 of our consolidated financial statements titled, "Commitments and Contingencies" for additional information.

Refer to Note 8 of our consolidated financial statements titled, "Commitments and Contingencies" for additional information and to Item 1A of Part II titled, "Risk factors."

We are subject to taxation from United States federal, state and local, and non-U.S.

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Many important factors could cause actual results to differ materially from those in the forward-looking statements including, without limitation, disruption of production or supplies, changes in market conditions, political events, pending or future claims or litigation, competitive factors, technology advances, actions of regulatory agencies, and changes in laws, government regulations, labeling or product approvals or the application or interpretation thereof.

Other risk factors are described in STERIS’s other securities filings, including Item 1A of our Annual Report on Form 10-K for the year ended March 31, 2021.

Other risk factors are described in STERIS’s other securities filings, including Item 1A of our Annual Report on Form 10-K for the year ended March 31, 2021 and subsequently filed Quarterly Reports on Form 10-Q.

Many of these important factors are outside of STERIS’s control.

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Unless legally required, STERIS does not undertake to update or revise any forward-looking statements even if events make clear that any projected results, express or implied, will not be realized.

limitation, difficulties in maintaining relationships with employees, Customers, clients or suppliers) being greater than expected following the Redomiciliation, (d) STERIS’s ability to successfully integrate the businesses of Cantel Medical into our existing businesses, including unknown or inestimable liabilities, or increases in expected integration costs or difficulties in connection with the integration of Cantel Medical (e) STERIS’s ability to meet expectations regarding the accounting and tax treatment of the Tax Cuts and Jobs Act (“TCJA”) or the possibility that anticipated benefits resulting from the TCJA will be less than estimated, (f) changes in tax laws or interpretations that could increase our consolidated tax liabilities, including changes in tax laws that would result in STERIS being treated as a domestic corporation for United States federal tax purposes, (g) the potential for increased pressure on pricing or costs that leads to erosion of profit margins, (h) the possibility that market demand will not develop for new technologies, products or applications or services, or business initiatives will take longer, cost more or produce lower benefits than anticipated, (i) the possibility that application of or compliance with laws, court rulings, certifications, regulations, regulatory actions, including without limitation any of the same relating to FDA, EPA or other regulatory authorities, government investigations, the outcome of any pending or threatened FDA, EPA or other regulatory warning notices, actions, requests, inspections or submissions, or other requirements or standards may delay, limit or prevent new product or service introductions, affect the production, supply and/or marketing of existing products or services or otherwise affect STERIS’s performance, results, prospects or value, (j) the potential of international unrest, economic downturn or effects of currencies, tax assessments, tariffs and/or other trade barriers, adjustments or anticipated rates, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs, (k) the possibility of reduced demand, or reductions in the rate of growth in demand, for STERIS’s products and services, (l) the possibility of delays in receipt of orders, order cancellations, or delays in the manufacture or shipment of ordered products or in the provision of services, (m) the possibility that anticipated growth, cost savings, new product acceptance, performance or approvals, or other results may not be achieved, or that transition, labor, competition, timing, execution, regulatory, governmental, or other issues or risks associated with STERIS’s businesses, industry or initiatives including, without limitation, those matters described in our Annual Report on Form 10-K for the year ended March 31, 2021, and other securities filings, may adversely impact STERIS’s performance, results, prospects or value, (n) the impact on STERIS and its operations, or tax liabilities, of Brexit or the exit of other member countries from the EU, and the Company’s ability to respond to such impacts, (o) the impact on STERIS and its operations of any legislation, regulations or orders, including but not limited to any new trade or tax legislation, regulations or orders, that may be implemented by the U.S.

administration or Congress, or of any responses thereto, (p) the possibility that anticipated financial results or benefits of recent acquisitions, including the acquisition of Cantel Medical and Key Surgical, or of STERIS’s restructuring efforts, or of recent divestitures, including anticipated revenue, productivity improvement, cost savings, growth synergies and other anticipated benefits, will not be realized or will be other than anticipated, (q) the increased level of STERIS’s indebtedness incurred in connection with the acquisition of Cantel Medical limiting financial flexibility or increasing future borrowing costs, (r) rating agency actions that could affect STERIS’s existing debt or future ability to borrow funds at rates favorable to STERIS or at all, (s) the potential impact of the acquisition of Cantel Medical on relationships, including with suppliers, Customers, employees and regulators, and (t) the effects of contractions in credit availability, as well as the ability of STERIS’s Customers and suppliers to adequately access the credit markets when needed.

Other potential risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, (a) the impact of the COVID-19 pandemic on STERIS’s operations, supply chain, material and labor costs, performance, results, prospects, or value, (b) STERIS's ability to achieve the expected benefits regarding the accounting and tax treatments of the redomiciliation to Ireland (“Redomiciliation”), (c) operating costs, Customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, Customers, clients or suppliers) being greater than expected following the Redomiciliation, (d) STERIS’s ability to successfully integrate the businesses of Cantel Medical into our existing businesses, including unknown or inestimable liabilities, or increases in expected integration costs or difficulties in connection with the integration of Cantel Medical (e) STERIS’s ability to meet expectations regarding the accounting and tax treatment of the Tax Cuts and Jobs Act (“TCJA”) or the possibility that anticipated benefits resulting from the TCJA will be less than estimated, (f) changes in tax laws or interpretations that could increase our consolidated tax liabilities, including changes in tax laws that would result in STERIS being treated as a domestic corporation for United States federal tax purposes, (g) the potential for increased pressure on pricing or costs that leads to erosion of profit margins, (h) the possibility that market demand will not develop for new technologies, products or applications or services, or business initiatives will take longer, cost more or produce lower benefits than anticipated, (i) the possibility that application of or compliance with laws, court rulings, certifications, regulations, regulatory actions, including without limitation any of the same relating to FDA, EPA or other regulatory authorities, government investigations, the outcome of any pending or threatened FDA, EPA or other regulatory warning notices, actions, requests, inspections or submissions, or other requirements or standards may delay, limit or prevent new product or service introductions, affect the production, supply and/or marketing of existing products or services or otherwise affect STERIS’s performance, results, prospects or value, (j) the potential of international unrest, economic downturn or effects of currencies, tax assessments, tariffs and/or other trade barriers, adjustments or anticipated rates, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs, (k) the possibility of reduced demand, or reductions in the rate of growth in demand, for STERIS’s products and services, (l) the possibility of delays in receipt of orders, order cancellations, or delays in the manufacture or shipment of ordered products or in the provision of services, (m) the possibility that anticipated growth, cost savings, new product acceptance, performance or approvals, or other results may not be achieved, or that transition, labor, competition, timing, execution, regulatory, governmental, or other issues or risks associated with STERIS’s businesses, industry or initiatives including, without limitation, those matters described in our Annual Report on Form 10-K for the year ended March 31, 2021, and other securities filings, may adversely impact STERIS’s performance, results, prospects or value, (n) the impact on STERIS and its operations, or tax liabilities, of Brexit or the exit of other member countries from the EU, and the Company’s ability to respond to such impacts, (o) the impact on STERIS and its operations of any legislation, regulations or orders, including but not limited to any new trade or tax legislation, regulations or orders, that may be implemented by the U.S.

growth synergies and other anticipated benefits, will not be realized or will be other than anticipated, (q) the increased level of STERIS’s indebtedness incurred in connection with the acquisition of Cantel Medical limiting financial flexibility or increasing future borrowing costs, (r) rating agency actions that could affect STERIS’s existing debt or future ability to borrow funds at rates favorable to STERIS or at all, (s) the potential impact of the acquisition of Cantel Medical on relationships, including with suppliers, Customers, employees and regulators, and (t) the effects of contractions in credit availability, as well as the ability of STERIS’s Customers and suppliers to adequately access the credit markets when needed.

Availability of Securities and Exchange Commission Filings

We make available free of charge on or through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports as soon as reasonably practicable after we file such material with, or furnish such material to, the Securities Exchange Commission ("SEC.") You may access these documents on the Investor Relations page of our website at http://www.steris-ir.com .

You may access these documents on the Investor Relations page of our website at http://www.steris-ir.com .

The information on our website and the SEC's website is not incorporated by reference into this report.

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 2. Management’s Discussion and Analysis