What changed in this filing

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Item 1. Financial Statements

2022-02-09 compared with 2021-11-08 · 180 added, 168 removed, 862 unchanged (29% of the section changed)

3 unchanged sentences

(in thousands)

September 30,

2021 March 31,

41 unchanged sentences

(in thousands, except per share amounts)

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

Three Months Ended December 31, Nine Months Ended December 31,

2021 2020 2021 2020

11 unchanged sentences

Research and development 24,824 16,438 61,847 48,812

Restructuring expenses 210 ( 76 ) 224 90

Restructuring (credit) expenses ( 207 ) 20 17 110

Total operating expenses 335,181 198,831 1,110,980 559,172

19 unchanged sentences

(in thousands)

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

Three Months Ended December 31, Nine Months Ended December 31,

2021 2020 2021 2020

1 unchanged sentence

Net income $ 143,094 $ 114,588 $ 190,817 $ 310,127

Net income attributable to noncontrolling

Net income (loss) attributable to noncontrolling

interests ( 529 ) 87 ( 810 ) 171

11 unchanged sentences

(in thousands)

Six Months Ended September 30,

Nine Months Ended December 31,

Operating activities:

25 unchanged sentences

Proceeds from issuance of senior public notes 1,350,000 —

Proceeds from term loan 650,000 —

Proceeds from term loans 650,000 550,000

Payments on term loans ( 125,000 ) —

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

Payments on convertible debt ( 371,361 ) —

Payments on term loan ( 125,000 ) —

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

Proceeds (payments) under credit facilities, net ( 203,805 ) 23,782

Deferred financing fees and debt issuance costs ( 17,247 ) ( 3,122 )

4 unchanged sentences

Contributions from noncontrolling interest 3,672 2,258

Payment for acquisition of subsidiary's interests in noncontrolling interest — ( 3,552 )

Stock option and other equity transactions, net 6,789 26,018

Net cash provided by (used in) financing activities 579,703 ( 199,319 )

Net cash provided by financing activities 390,438 442,533

Effect of exchange rate changes on cash and cash equivalents ( 4,825 ) 24,506

7 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended September 30, 2021

Three Months Ended December 31, 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

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

Comprehensive income:

— — 69,811 — ( 186 ) 69,625

Other comprehensive income

— — — ( 68,916 ) — ( 68,916 )

Net income (loss) — — 143,623 — ( 529 ) 143,094

Other comprehensive income (loss) — — — ( 31,145 ) — ( 31,145 )

Repurchases of ordinary shares ( 95 ) 1,061 ( 3,938 ) — — ( 2,877 )

2 unchanged sentences

— — ( 43,011 ) — — ( 43,011 )

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

Contributions from noncontrolling interest — — — — 3,672 3,672

Other changes in noncontrolling interest — — — — 48 48

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

Balance at December 31, 2021 100,111 $ 4,758,199 $ 1,989,870 $ ( 136,878 ) $ 12,478 $ 6,623,669

Nine Months Ended December 31, 2021

Ordinary Shares Retained

6 unchanged sentences

Comprehensive income:

— — 48,004 — ( 281 ) 47,723

Other comprehensive income

— — — ( 44,490 ) — ( 44,490 )

Net income (loss) — — 191,627 — ( 810 ) 190,817

Other comprehensive income (loss) — — — ( 75,635 ) — ( 75,635 )

Repurchases of ordinary shares ( 225 ) ( 6,581 ) ( 21,047 ) — — ( 27,628 )

7 unchanged sentences

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

Contributions from noncontrolling interest — — — — 3,672 3,672

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

Other changes in noncontrolling interest — — — — 135 135

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

Balance at December 31, 2021 100,111 $ 4,758,199 $ 1,989,870 $ ( 136,878 ) $ 12,478 $ 6,623,669

STERIS PLC AND SUBSIDIARIES

1 unchanged sentence

(in thousands, except per share amounts)

Three Months Ended September 30, 2020

Three Months Ended December 31, 2020

Ordinary Shares Retained

4 unchanged sentences

Number Amount

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

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

Comprehensive income:

— — 105,858 — 150 106,008

Net income — — 114,501 — 87 114,588

Other comprehensive income — — — 128,227 — 128,227

— — — 77,741 — 77,741

Repurchases of ordinary shares ( 9 ) ( 5,417 ) 5,290 — — ( 127 )

2 unchanged sentences

— — ( 34,136 ) — — ( 34,136 )

Distributions to noncontrolling interest — — — — ( 627 ) ( 627 )

Payment for acquisition of subsidiary's interests in noncontrolling interest — — — — ( 3,552 ) ( 3,552 )

Other changes in noncontrolling interest — — — — ( 16 ) ( 16 )

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

Balance at December 31, 2020 85,337 $ 1,996,843 $ 1,885,426 $ ( 2,386 ) $ 11,202 $ 3,891,085

*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

Nine Months Ended December 31, 2020

Ordinary Shares Retained

14 unchanged sentences

Contributions from noncontrolling interest — — — — 2,258 2,258

Distributions to noncontrolling interest — — — — ( 627 ) ( 627 )

Payment for acquisition of subsidiary's interests in noncontrolling interest — — — — ( 3,552 ) ( 3,552 )

Other changes in noncontrolling interest — — — — 104 104

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

Balance at December 31, 2020 85,337 $ 1,996,843 $ 1,885,426 $ ( 2,386 ) $ 11,202 $ 3,891,085

*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.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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

For the Three and Nine Months Ended December 31, 2021 and 2020

(dollars in thousands, except as noted)

1 unchanged sentence

Nature of Operations

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.

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

WE HELP OUR CUSTOMERS CREATE A HEALTHIER AND SAFER WORLD by providing innovative healthcare, life sciences and dental products and services.

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:

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.

equipment installation and maintenance, microbial reduction of medical devices, dental instruments and tools, instrument and scope repair, 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.

Our fiscal year ends on March 31.

22 unchanged sentences

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

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.

This means that operating results for the three and nine month periods ended December 31, 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

5 unchanged sentences

Our revenue is not contingent upon resale by the dealer or distributor, and we have no further obligations related to bringing about resale.

Our standard return and restocking fee policies are applied to sales of products.

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

The associated

Our standard return and restocking fee policies are applied to

STERIS PLC AND SUBSIDIARIES

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

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

For the Three and Nine Months Ended December 31, 2021 and 2020

(dollars in thousands, except as noted)

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

sales of products.

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.

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

At December 31, 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.

19 unchanged sentences

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

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

For the Three and Nine Months Ended December 31, 2021 and 2020

(dollars in thousands, except as noted)

3 unchanged sentences

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

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.

During the first nine months of fiscal 2022, $ 42,942 of the March 31, 2021 deferred revenue balance was recorded as revenue.

During the first nine months of fiscal 2021, $ 38,181 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 September 30, 2021, the transaction price allocated to remaining performance obligations was approximately $ 1,374,000 .

As of December 31, 2021, the transaction price allocated to remaining performance obligations was approximately $ 1,570,000 .

We expect to recognize approximately 54 % 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 and Six Months Ended September 30, 2021 and 2020

For the Three and Nine Months Ended December 31, 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.

3 unchanged sentences

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.

Standards that have not yet been adopted.

ASU 2021-08 "Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

October 2021 The standard provides guidance to improve the accounting for acquired revenue contracts with Customers in a business combination by addressing diversity in practice and inconsistency related to the recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer.

The standard is effective for annual periods beginning after December 15, 2022 including interim periods within that year and early adoption is permitted.

NA We are in the process of evaluating the impact that the standard will have on our consolidated financial statements.

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.

Our significant and critical accounting policies, estimates, and assumptions have not changed materially from March 31, 2021.

Business Acquisitions

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

Business Acquisitions And Divestitures

STERIS PLC AND SUBSIDIARIES

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

For the Three and Nine Months Ended December 31, 2021 and 2020

(dollars in thousands, except as noted)

On June 2, 2021, we acquired all outstanding equity interests in 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.

Cantel, formerly 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.

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.

Cantel is being integrated into our existing Healthcare and Life Sciences segments.

Cantel was integrated into our existing Healthcare and Life Sciences segments.

Cantel’s Dental business extends our business into a new Customer segment where there is an increasing focus on infection prevention protocols and processes.

This business will be reported as the Dental segment.

This business is reported as the Dental segment.

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.

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 which were primarily related to the Cantel acquisition totaled $ 9,026 and $ 167,426 for the third quarter and first nine months 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.

13 unchanged sentences

The acquisition of Cantel has been accounted for using the acquisition method of accounting which requires, among other things, the assets acquired and liabilities assumed be recognized at their respective fair values as of the acquisition date.

Acquisition accounting is dependent upon certain valuations and other studies that have yet to commence or progress to a stage where there is sufficient information for a definitive measurement.

Acquisition accounting is dependent upon certain valuations and other studies that have yet to progress to a stage where there is sufficient information for a definitive measurement.

The process for estimating the fair values of identifiable intangible assets and certain tangible assets and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates.

7 unchanged sentences

Goodwill recognized as a result of the acquisition is not deductible for tax purposes.

The table below presents the preliminary estimated fair values of assets acquired and liabilities assumed on the acquisition date.

These preliminary estimates will be revised during the measurement period as third-party valuations are finalized, additional information becomes available and as additional analyzes are performed, and these differences could have a material impact on our results of operations and financial position.

STERIS PLC AND SUBSIDIARIES

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

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

For the Three and Nine Months Ended December 31, 2021 and 2020

(dollars in thousands, except as noted)

The table below presents the preliminary estimated fair values of assets acquired and liabilities assumed on the acquisition date.

Cash $ 169,073

14 unchanged sentences

Net assets acquired $ 3,599,471

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

(1) Purchase price allocation is preliminary as of December 31, 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 September 30, 2021, as valuations have not been finalized.

(1) Amounts are preliminary as of December 31, 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.

Payment 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 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.

Our consolidated financial statements include Cantel's results of operations from the date of acquisition on June 2, 2021 through December 31, 2021.

Net sales and operating income (loss) attributable to Cantel and included in our consolidated financial statements for the three-month period ended December 31, 2021 total $ 306,522 and $ 15,958 , respectively.

Net sales and operating income (loss) attributable to Cantel from the date of acquisition and included in our consolidated financial statements for the nine-month period ended December 31, 2021 total $ 721,183 and $( 175,178 ), 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 nine-month periods ended December 31, 2021 and 2020.

STERIS PLC AND SUBSIDIARIES

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

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

For the Three and Nine Months Ended December 31, 2021 and 2020

(dollars in thousands, except as noted)

Three Months Ended September 30, Six Months Ended September 30

Three Months Ended December 31, Nine Months Ended December 31

(unaudited) (unaudited)

10 unchanged sentences

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 and Six Months Ended September 30, 2021 and 2020

For the Three and Nine Months Ended December 31, 2021 and 2020

(dollars in thousands, except as noted)

Indebtedness was as follows:

September 30,

2021 March 31,

2 unchanged sentences

Delayed draw term loan, current portion 16,250 —

Private Placement 91,000 —

Total short-term debt $ 127,875 $ —

26 unchanged sentences

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

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

For the Three and Nine Months Ended December 31, 2021 and 2020

(dollars in thousands, except as noted)

16 unchanged sentences

A premium of approximately $ 175,555 in excess of the aggregate par value of the Notes represented purchase consideration and was initially classified in additional paid-in capital in accordance with ASC 2020-06, "Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Co ntracts in Entity’s Own Equity (Subtopic 815-40)."

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.

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

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.

7 unchanged sentences

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

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

For the Three and Nine Months Ended December 31, 2021 and 2020

(dollars in thousands, except as noted)

1 unchanged sentence

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

September 30,

2021 March 31,

27 unchanged sentences

Income Tax Expense

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 effective income tax rates for the three month periods ended December 31, 2021 and 2020 were 21.6 % and 17.8 %, respectively.

The effective income tax rates for the nine month periods ended December 31, 2021 and 2020 were 21.5 % and 18.8 %, 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.

The fiscal 2022 effective tax rate also reflects the impact of one-time, non-deductible acquisition related costs .

Income tax expense is provided on an interim basis based upon our estimate of the annual effective income tax rate, adjusted each quarter for discrete items.

1 unchanged sentence

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

We are no longer subject to United States federal examinations for years before fiscal 2018 and, with limited exceptions, we are no longer subject to United States state and local, or non-United States, income tax

STERIS PLC AND SUBSIDIARIES

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

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

For the Three and Nine Months Ended December 31, 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.

examinations by tax authorities for years before fiscal 2016.

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

In the fourth quarter of fiscal 2021, we completed an appeals process with the U.S.

1 unchanged sentence

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.

We recorded an estimate of the total federal, state, and local tax impact of the settlement of approximately $ 12,000 , for the fiscal years 2016 through 2020.

In May 2021, we received two notices of proposed tax adjustment from the IRS regarding deemed dividend inclusions and associated withholding tax.

27 unchanged sentences

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

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

For the Three and Nine Months Ended December 31, 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.

Our products and services range from infection prevention consumables and capital equipment, as well as services to maintain that equipment;

2 unchanged sentences

In addition, our procedural solutions also include single-use devices and capital equipment infrastructure used primarily in operating rooms, ambulatory surgery centers, endoscopy suites, and other procedural areas.

Our Applied Sterilization Technologies ("AST") segment is a third-party service provider for contract sterilization, as well as the testing services needed to validate sterility services for medical device and pharmaceutical manufacturers.

Our Applied Sterilization Technologies ("AST") segment is a third-party service provider for contract sterilization, as well as testing services needed to validate sterility services for medical device and pharmaceutical manufacturers.

Our technology-neutral offering supports Customers every step of the way, from testing through sterilization.

4 unchanged sentences

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

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.

For the three and nine months ended December 31, 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 consistently account for more than 40.0 % of our Dental segment revenue.

The percentage associated with these three Customers collectively in any one period may vary due to the buying patterns of these three Customers as well as other Dental Customers.

These three Customers collectively accounted for appr oximately 55.8 % and 46.1 % of our Dental segment revenues for the three months and nine months ended December 31, 2021, respectively.

Additional informatio n regarding certain of 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 and Six Months Ended September 30, 2021 and 2020

For the Three and Nine Months Ended December 31, 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 September 30, Six Months Ended September 30,

Three Months Ended December 31, Nine Months Ended December 31,

2021 2020 2021 2020

18 unchanged sentences

118 296 228 850

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

(Gain) on fair value adjustment of acquisition related contingent consideration (1)

— ( 500 ) — ( 500 )

Net loss on divestiture of businesses (1)

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

2 unchanged sentences

— 7,251 — 20,460

Restructuring charges (5)

Restructuring (credit) charges (5)

( 207 ) 20 17 110

1 unchanged sentence

*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.

(1) For more information regarding our recent acquisitions and divestitures refer to Note 2 titled, "Business Acquisitions" and to our Annual Report on Form 10-K for the year ended March 31, 2021, dated May 28, 2021.

(1) For more information regarding our recent acquisitions and divestitures refer to Note 2 titled, "Business Acquisitions and Divestitures" and to our Annual Report on Form 10-K for the year ended March 31, 2021, dated May 28, 2021.

(2) Acquisition and integration related charges include transaction costs and integration expenses associated with acquisitions.

5 unchanged sentences

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

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

For the Three and Nine Months Ended December 31, 2021 and 2020

(dollars in thousands, except as noted)

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

Three Months Ended December 31, Nine Months Ended December 31,

2021 2020 2021 2020

12 unchanged sentences

Total Revenues $ 1,208,971 $ 808,924 $ 3,374,378 $ 2,233,988

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

Three Months Ended December 31, Nine Months Ended December 31,

2021 2020 2021 2020

4 unchanged sentences

$ 1,208,971 $ 808,924 $ 3,374,378 $ 2,233,988

September 30, 2021 March 31, 2021

December 31, 2021 March 31, 2021

Property, Plant, and Equipment, Net

8 unchanged sentences

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

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

For the Three and Nine Months Ended December 31, 2021 and 2020

(dollars in thousands, except as noted)

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Therefore, their respective amounts are reported together.

September 30, 2021 March 31, 2021

December 31, 2021 March 31, 2021

Healthcare and Life Sciences $ 5,374,009 $ 3,600,182

3 unchanged sentences

$ 11,689,966 $ 6,574,471

(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 September 30, 2021 period is primarily related to the acquisition of Cantel.

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

(1) Amount is still preliminary as of December 31, 2021, as valuations have not been finalized.

For the purpose of our annual Goodwill testing performed at October 31, 2021, the preliminary allocation of Goodwill by business segment was approximately $ 1,336,000 and $ 814,000 to the Healthcare and Life Sciences, and the Dental business segments, respectively.

The increase in total assets for the December 31, 2021 period is primarily related to the acquisition of Cantel.

Refer to Note 2 titled, "Business Acquisitions and Divestiures," for more information.

Shares and Preferred Shares

3 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 September 30, Six Months Ended September 30,

Three Months Ended December 31, Nine Months Ended December 31,

Denominator (shares in thousands):

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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 September 30, Six Months Ended September 30,

Three Months Ended December 31, Nine Months Ended December 31,

(shares in thousands) 2021 2020 2021 2020

4 unchanged sentences

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

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

For the Three and Nine Months Ended December 31, 2021 and 2020

(dollars in thousands, except as noted)

2 unchanged sentences

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

As of December 31, 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.

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

The suspension has been lifted effective February 10, 2022, enabling the Company to resume stock repurchases pursuant to the prior authorizations.

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.

During the first nine months of fiscal 2022, we obtained 225,493 of our ordinary shares in the aggregate amount of $ 27,628 in connection with share based compensation award programs.

During the first nine months of fiscal 2021, we obtained 85,574 of our ordinary shares in the aggregate amount of $ 9,512 in connection with share based compensation award programs.

Share-Based Compensation

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

As of December 31, 2021, 3,139,888 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.

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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 six months of fiscal 2022 and 2021:

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

Fiscal 2022 Fiscal 2021

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

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

For the Three and Nine Months Ended December 31, 2021 and 2020

(dollars in thousands, except as noted)

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Forfeited ( 4,043 ) 128.11

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.

Outstanding at December 31, 2021 1,613,229 $ 135.66 6.8 years $ 173,829

Exercisable at December 31, 2021 904,909 $ 101.43 5.5 years $ 128,481

We estimate that 690,359 of the non-vested stock options outstanding at December 31, 2021 will ultimately vest.

The aggregate intrinsic value in the table above represents the total pre-tax difference between the $ 243.41 closing price of our ordinary shares on December 31, 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 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.

The total intrinsic value of stock options exercised during the first nine months of fiscal 2022 and fiscal 2021 was $ 43,425 and $ 36,850 , respectively.

Net cash proceeds from the exercise of stock options were $ 6,789 and $ 26,018 for the first nine months of fiscal 2022 and fiscal 2021, respectively.

The weighted average grant date fair value of stock option grants was $ 37.52 and $ 27.66 for the first nine 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 .

As of December 31, 2021, we no longer have outstanding SARS.

The fair value of the outstanding SARS as of December 31, 2020 was $ 491 .

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

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Forfeited ( 15,050 ) ( 620 ) 161.59

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

Non-vested at December 31, 2021 506,884 34,696 $ 155.01

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 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.

The value of restricted shares and units that vested during the first nine months of fiscal 2022 at the time of grant was $ 18,267 .

As of December 31, 2021, there was a total of $ 66,715 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.

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

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

For the Three and Nine Months Ended December 31, 2021 and 2020

(dollars in thousands, except as noted)

1 unchanged sentence

A total of 280,402 STERIS restricted share units replaced Cantel awards based on a ratio of one Cantel restricted share unit to 0.4262 STERIS restricted share units.

These Cantel awards consisted of time, performance and market based awards.

Cantel time based restricted share units were replaced with STERIS restricted share units with the same three-year pro-rata vesting terms based on the original award date.

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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 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.

During the first nine months of fiscal 2022, recognition of unamortized share-based compensation expense totaling $ 18,861 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.

As of December 31, 2021, there was a total of $ 9,248 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:

4 unchanged sentences

Forfeited ( 7,602 ) 191.18

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

Non-vested at December 31, 2021 62,922 $ 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 six months of fiscal 2022 were as follows:

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

Balance, March 31, 2021 $ 9,406

2 unchanged sentences

Settlements made during the period ( 13,011 )

Balance, September 30, 2021 $ 13,416

Balance, December 31, 2021 $ 13,999

Derivatives and Hedging

From time to time, we enter into forward contracts to hedge potential foreign currency gains and losses that arise from transactions denominated in foreign currencies, including inter-company transactions.

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 second quarter

We may also enter into commodity swap

STERIS PLC AND SUBSIDIARIES

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

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

For the Three and Nine Months Ended December 31, 2021 and 2020

(dollars in thousands, except as noted)

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

contracts to hedge price changes in nickel that impact raw materials included in our cost of revenues.

During the third quarter 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 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.

At December 31, 2021, we held foreign currency forward contracts to buy 19.9 million Mexican pesos and 2.6 million Canadian dollars;

and to sell 14.0 million euros.

At December 31, 2021 we held commodity swap contracts to buy 192.0 thousand pounds of nickel.

Asset Derivatives Liability Derivatives

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

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

Balance sheet location December 31, 2021 March 31, 2021 December 31, 2021 March 31, 2021

Prepaid & Other $ 685 $ 57 $ — $ —

3 unchanged sentences

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

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

Three Months Ended December 31, Nine Months Ended December 31,

2021 2020 2021 2020

1 unchanged sentence

Commodity swap contracts Cost of revenues $ 417 $ 153 $ 1,110 $ 904

Additionally, we hold our debt in multiple currencies to fund our operations and investments in certain subsidiaries.

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 $ 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.

STERIS PLC AND SUBSIDIARIES

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

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

For the Three and Nine Months Ended December 31, 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 September 30, 2021 and March 31, 2021:

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

Fair Value Measurements

4 unchanged sentences

Level 1 Level 2 Level 3

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

December 31, March 31, December 31, March 31, December 31, March 31, December 31, March 31,

Cash and cash equivalents $ 359,089 $ 220,531 $ 359,089 $ 220,531 $ — $ — $ — $ —

8 unchanged sentences

2,062 1,715 2,062 1,715 — — — —

Long term debt (3)

Total debt (3)

3,299,509 1,650,540 — — 3,432,856 1,722,459 — —

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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 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.

During the third quarter and first nine months of fiscal 2022, we recorded gains (losses) of $ 28 and $( 200 ), respectively, related to these investments .

During the third quarter and first nine months of fiscal 2021, we recorded gains of $ 210 and $ 138 , 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.

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

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

For the Three and Nine Months Ended December 31, 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 September 30, 2021 are summarized as follows:

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis at December 31, 2021 are summarized as follows:

Contingent Consideration

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Currency translation adjustments ( 16 )

Balance at September 30, 2021 $ 19,969

Balance at December 31, 2021 $ 12,864

STERIS PLC AND SUBSIDIARIES

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

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

For the Three and Nine Months Ended December 31, 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 September 30, 2021 and 2020 were as follows:

Changes in our Accumulated Other Comprehensive Income (Loss) balances, net of tax, for the three months ended December 31, 2021 and 2020 were as follows:

Defined Benefit Plans (1)

1 unchanged sentence

Total Accumulated Other Comprehensive Income (Loss)

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

Three Months Nine Months Three Months Nine Months Three Months Nine Months

Beginning Balance $ ( 6,533 ) $ ( 5,519 ) $ ( 99,200 ) $ ( 55,724 ) $ ( 105,733 ) $ ( 61,243 )

2 unchanged sentences

Net current-period Other Comprehensive (Loss) ( 507 ) ( 1,521 ) ( 30,638 ) ( 74,114 ) ( 31,145 ) ( 75,635 )

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

Balance at December 31, 2021 $ ( 7,040 ) $ ( 7,040 ) $ ( 129,838 ) $ ( 129,838 ) $ ( 136,878 ) $ ( 136,878 )

(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.

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Total Accumulated Other Comprehensive Income (Loss)

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

Three Months Nine Months Three Months Nine Months Three Months Nine Months

Beginning Balance $ ( 7,833 ) $ ( 6,813 ) $ ( 122,780 ) $ ( 228,650 ) $ ( 130,613 ) $ ( 235,463 )

2 unchanged sentences

Net current-period Other Comprehensive Income (Loss) ( 510 ) ( 1,530 ) 128,737 234,607 128,227 233,077

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

Balance at December 31, 2020 $ ( 8,343 ) $ ( 8,343 ) $ 5,957 $ 5,957 $ ( 2,386 ) $ ( 2,386 )

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 unchanged sentences

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

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

For the Three and Nine Months Ended December 31, 2021 and 2020

(dollars in thousands, except as noted)

4 unchanged sentences

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.

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 and other therapies create uncertainty regarding future demand from our Customers and the ability of our suppliers to meet our demands.

As we continue to address supply chain disruptions, we may pursue various avenues available including getting prioritization with assistance from government agencies.

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

Subsequent Events

In December 2021, we entered into an Asset Purchase Agreement to sell STERIS's Renal Care business to Evoqua Water Technologies Corp., for cash consideration of approximately $ 196,000 , subject to certain potential adjustments, including a customary working capital adjustment and contingent consideration of $ 12,300 .

We anticipate no material gain (loss) on the sale.

The net assets are not reported as held for sale as they are not material to the balance sheet as of December 31, 2021.

The transaction closed on January 3, 2022.

We acquired the Renal Care business as part of the Cantel transaction, which closed on June 2, 2021, and had been integrated into STERIS's Healthcare segment.

The Renal Care business generated annual revenues of approximately $ 180,000 .

The proceeds from the sale received at closing were used to repay outstanding debt.

Report of Independent Registered Public Accounting Firm

1 unchanged sentence

Results of Review of 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”).

We have reviewed the accompanying consolidated balance sheet of STERIS plc and subsidiaries (the Company) as of December 31, 2021, the related consolidated statements of income, comprehensive income and shareholders’ equity for the three- and nine-month periods ended December 31, 2021 and 2020 and the consolidated statement of cash flows for the nine- month periods ended December 31, 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.

generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company

Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of March 31, 2021, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for the year then ended, and the related notes and schedule (not presented herein);

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of March 31, 2021, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for the year then ended, and the related notes and schedule (not presented herein);

and in our report dated May 28, 2021, we expressed an unqualified audit opinion on those consolidated financial statements.

10 unchanged sentences

Cleveland, Ohio

November 8, 2021

February 9, 2022

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