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Item 1. Business

2022-05-31 compared with 2021-05-28 · 234 added, 129 removed, 193 unchanged (65% of the section changed)

STERIS plc is a leading provider of infection prevention and other procedural products and services.

WE HELP OUR CUSTOMERS CREATE A HEALTHIER AND SAFER WORLD by providing innovative healthcare and life science products and services around the globe.

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

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, instrument and scope repair solutions, laboratory testing services, on-site and off-site reprocessing, and capital equipment products, such as sterilizers and surgical tables, and connectivity solutions such as operating room (“OR”) integration.

On March 28, 2019, STERIS plc, a public limited company organized under the laws of England and Wales (“STERIS UK”), completed a redomiciliation from the United Kingdom to Ireland (the “Redomiciliation”).

The Redomiciliation was achieved through the insertion of a new Irish public limited holding company (“STERIS Ireland”) on top of STERIS UK pursuant to a court-approved scheme of arrangement under English law (the “Scheme”).

Following the Scheme effectiveness, STERIS UK was re-registered as a private limited company with the name STERIS Limited, and STERIS Emerald IE Limited, a company established in Ireland and a wholly-owned direct subsidiary of STERIS Ireland, was interposed as the direct parent company of STERIS UK.

STERIS plc's registered office is located in Dublin, Ireland.

STERIS plc has approximately 13,000 employees worldwide.

Through our field sales and service and a network of dealers and distributors, we serve Customers in more than 100 countries around the world.

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

Healthcare, Applied Sterilization Technologies and Life Sciences.

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.

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

Healthcare, Applied Sterilization Technologies, Life Sciences and Dental.

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

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

Prior to April 1, 2020, we operated and reported our financial information in four reportable business segments:

Healthcare Products, Healthcare Specialty Services, Life Sciences, and Applied Sterilization Technologies.

The Healthcare Products and Healthcare Specialty Services segments were combined and are now reported as one segment, simply called Healthcare, consistent with the way management now operates and views the business.

Prior periods have been recast in the financial tables below for comparability.

The bulk of our revenues are derived from the healthcare and pharmaceutical industries.

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increased demand for medical procedures, including preventive screenings such as endoscopies and colonoscopies;

and a desire by our Customers to operate more efficiently, all of which are driving increased demand for many of our products and services.

During fiscal 2021, we experienced reduced demand for certain products and services resulting from the reduction of deferrable surgical procedures and increased demand for other products and services from our pharmaceutical Customers focused on vaccines and biologics and increased demand in the Applied Sterilization Technologies segment for personal protective equipment product services, as a result of the COVID-19 pandemic.

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

The pandemic and related public health recommendations and mandated precautions to mitigate the spread of COVID-19, including deferral of surgical procedures and treatments and shelter-in-place orders or similar measures, have negatively affected and are expected to continue to negatively affect some of our operations, which may impact our financial position and cash flows.

We have experienced and expect to continue to experience unpredictable fluctuations in demand for certain of our products and services, including some products and services that are experiencing increased demand.

To date, we do not believe that the COVID-19 pandemic has had a material impact on our operations, as we have been able to continue to operate our manufacturing facilities and meet the demand for essential products and services of our Customers.

During fiscal 2021, in response to the to the pandemic, we implemented several measures that we believe helped us protect the health and safety of our employees, preserve liquidity and enhance our financial flexibility.We allowed employees to work remotely when possible and implemented additional safety measures in compliance with applicable regulations to allow personnel to continue to work in our facilities.

We suspended all non-essential travel and enacted a temporary hiring freeze on certain positions.

To manage liquidity, we suspended our stock repurchase program and deferred certain planned capital expenditures;

however, we continued to invest in expansion projects as planned.

We do not believe that these actions will negatively impact our long-term ability to generate revenues or meet existing and future financial obligations.

While we have been impacted and expect this situation to continue to have an impact on our business, the full impact to our results of operations an d financial position cannot be reasonably estimated at this time.

and a desire by our Customers to operate more efficiently, all which are driving increased demand for many of our products and services.

On June 2, 2021, we acquired all outstanding equity interests in Cantel Medical LLC ("Cantel") through a U.S.

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’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 is reported as the Dental segment.

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

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.

We do not believe that the COVID-19 pandemic has had a material impact on our operations, as we have been able to continue to operate our manufacturing facilities and meet the demand for essential products and services of our Customers.

In response to the COVID-19 pandemic, we implemented several measures that we believe helped us protect the health and safety of our employees, preserve liquidity and enhance our financial flexibility.

We have successfully managed our liquidity throughout the COVID-19 pandemic and continue to invest in expansion projects as planned.

We obtained addi tional funding in the second half o f fiscal 2021 to continue to advance our growth strategy to supplement organic growth with acquisitions.

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.

While we have been impacted and expect this situation to continue to have an impact on our business, we cannot predict the impact that another significant wave of disruption would have on our results of operations and financial position.

For additional information and our risk factors related to the COVID-19 pandemic, please refer to Part I Item 1A titled, "Risk Factors."

On January 12, 2021, we announced the signing of a definitive agreement to acquire Cantel Medical Corp.

CMD "Cantel"), through a U.S.

Cantel is a global provider of infection prevention products and services primarily to endoscopy and dental Customers.

For additional information please refer to Item 7 titled, "Management's Discussion and Analysis of Financial Condition and Results of Operations".

INFORMATION RELATED TO BUSINESS SEGMENTS

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Description of Busi ness.

Our Healthcare segment offers infection prevention and procedural products and services for healthcare providers worldwide, including consumable products, equipment maintenance and installation services, and capital equipment.

These offerings aid our Customers in improving the safety, quality, productivity, and utility consumption of their surgical, sterile processing, gastrointestinal, and emergency environments.

Our Healthcare segment also provides a range of products and managed services including:

hospital sterilization services and instrument and scope repairs to acute care hospitals and other healthcare settings that aid our Customers in improving the safety, quality and productivity of their operations.

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

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

to the repair of re-usable procedural instruments;

to outsourced instrument reprocessing services.

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.

Products Offered.

Our products include cleaning chemistries and sterility assurance products, accessories for GI procedures, washers, sterilizers and other pieces of capital equipment essential to the operations of a sterile processing department ("SPD") and equipment used directly in the operating room, including surgical tables, lights, equipment management services, and connectivity solutions.

Our products include cleaning chemistries and sterility assurance products, automated endoscope reprocessing systems and tracking products, accessories for GI procedures, washers, sterilizers and other pieces of capital equipment essential to the operations of a sterile processing department ("SPD") and equipment used directly in the operating room, including surgical tables, lights, equipment management services, and connectivity solutions.

Services Offered.

Our Healthcare segment service associates install, maintain, upgrade, repair, and troubleshoot capital equipment throughout the world.

Our Healthcare segment service employees install, maintain, upgrade, repair, and troubleshoot capital equipment throughout the world.

We offer various preventive maintenance programs and repair services to support the effective operation of capital equipment over its lifetime.

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We compete with a number of large companies that have significant product portfolios and global reach, as well as a number of small companies with very limited product offerings and operations in one or a limited number of countries.

On a product basis, competitors include 3M, Belimed, Cantel Medical, Ecolab, Getinge, Hill-Rom, Fortive, Stryker and Skytron.

On a service line basis, competitors include BBraun, Berendsen plc, CleanLease (Clean Lease Fortex), Karl Storz, Mobile, Northfield, Olympus, Owens & Minor, Pentax, Rentex Awé and Rentex Floren and Sterilog Limited.

On a product basis, competitors include 3M, Baxter, Boston Scientific, Belimed, Ecolab, ERBE, Fortive, Getinge, Karl Storz, Metrex, Olympus, Ruhof, SteelCo, Stryker, Skytron and Wassenburg.

On a service line basis, competitors include Agiliti, BBraun, Berendsen plc, CleanLease (Clean Lease Fortex), Mobile, Northfield, Olympus, Owens & Minor, Pentax, Rentex Awé and Rentex Floren and Sterilog Limited.

APPLIED STERILIZATION TECHNOLOGIES SEGMENT

Description of Business.

Our Applied Sterilization Technologies ("AST") segment provides contract sterilization and testing services for medical device and pharmaceutical manufacturers.

Our Customers are primarily 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.

Services Offered.

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Description of Business.

Our Life Sciences segment designs, manufactures and sells consumable products, equipment maintenance, specialty services and capital equipment primarily to pharmaceutical manufacturers around the world.

Our Life Sciences segment provides a comprehensive offering of products and services that support pharmaceutical manufacturing, primarily for vaccine and other biopharma Customers focused on aseptic manufacturing.

These solutions include a full suite of consumable products, equipment maintenance and specialty services, and capital equipment.

Products Offered.

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Services Offered.

Our Life Sciences segment service associates install, maintain, upgrade, repair, and troubleshoot equipment throughout the world.

Our Life Sciences segment service employees install, maintain, upgrade, repair, and troubleshoot equipment throughout the world.

We offer various preventive maintenance programs and repair services to support the effective operation of capital equipment over its lifetime.

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Competitors include Belimed, Ecolab, Fedegari, Getinge, MECO, Stilmas, and Techniplast.

DENTAL SEGMENT

Description of Business.

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

Our Dental segment provides a comprehensive offering for dental practitioners and dental schools, offering instruments, infection prevention consumables and instrument management systems.

Products Offered.

Our products include hand and powered dental instruments, infection control products, personal protective equipment and water quality products for the dental suite.

Customer Concentration.

Our dental products are sold globally to wholesale Customers and directly to end users in many countries.

Our wholesale Customers primarily include major healthcare distributors, with some group purchasing organizations and buying co-operatives that sell our products to dental practices, medical facilities, veterinary clinics, and government and educational institutions.

The majority of our dental products are sold under our brand names, but we also supply private label products for several of our Customers.

Three Customers collectively and 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 approximately 45.1% of our Dental segment revenues for the year ended March 31, 2022.

We compete with a number of large companies that have significant product portfolios and global reach, as well as a number of small companies with very limited product offerings.

On a product basis, competitors include 3M, Amcor, ASP, Braun/Aesculap, Danaher/Sybron, Dentsply/Sultan Healthcare, J&J/Ethicon, Halyard Health, LM Dental, Medicom, Porter Instrument, ProEdge, Sterisil, Young Dental, and less expensive products from Asia and other lower cost manufacturing locations.

INFORMATION WITH RESPECT TO OUR BUSINESS IN GENERAL

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The principal raw materials and supplies used in our operations include stainless and carbon steel, organic and inorganic chemicals, fuel, and plastic components.

These raw materials and supplies are generally available from several suppliers and in sufficient quantities that we do not currently expect any significant sourcing problems in fiscal 2022.

We have long-term supply contracts for certain materials for which there are few suppliers, or those that are single-sourced in certain regions of the world, such as EO and cobalt-60, which are necessary to our AST operations.

These raw materials and supplies are generally available from several suppliers and in sufficient quantities.

However, in fiscal 2022 we have experienced delays in receiving materials and significant cost increases that we expect will continue in fiscal 2023.

We do not currently expect any significant disruption to our operations due to sourcing problems in fiscal 2023.

We have long-term supply contracts for certain materials for which there are few suppliers, or those that are single-sourced in certain regions of the world, such as ethylene oxide ("EO") and cobalt-60, which are necessary to our AST operations.

In addition, we have developed a plan to expand our irradiation processing capacity with accelerator-based technologies, which may reduce the potential supply risk.

In response to the active conflict between Russian and Ukraine, we have stopped purchasing cobalt-60 from our Russian supplier.

A long-term disruption in cobalt-60 sourced from Russia may negatively impact gamma processing capacity or increase costs in certain portions of our AST operations but these impacts are not expected to be material to our AST segment and its results of operations.

For additional information about the risks we face concerning the conflict between Russia and Ukraine, see Part I, Item 1A of this Annual Report titled, "Risk Factors."

Historically, our business has not been significantly impacted by the overall effects of inflation.

However during fiscal 2022, we experienced a rise in supply chain and labor costs and anticipate continued supply chain and inflation pressure in fiscal 2023.

We monitor the prices we charge for our products and services on an ongoing basis and plan to adjust those prices to take into account future changes in the rate of inflation.

Intellectual Property.

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In addition, the process of obtaining and protecting patents can be long and expensive.

We also rely upon trade secrets, technical know-how, and continuing technological innovation to develop and maintain our competitive position.

We also rely upon trade secrets, technical know-how, and continuing technological innovation to develop and maintain our co mpetitive position.

As of March 31, 2022, we held approximately 566 United States patents and approximately 2,346 in other jurisdictions and had approximately 188 United States patent applications and 428 patent applications pending in other jurisdictions.

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Our business is subject to various degrees of governmental regulation in the countries in which we operate.

In the United States, the United States Food and Drug Administration (“FDA”), the United States Environmental Protection Agency (“EPA”), the United States Nuclear Regulatory Commission (“NRC”), and other governmental authorities regulate the development, manufacture, sale, and distribution of our products and services.

In the United States, the Food and Drug Administration (“FDA”), the Environmental Protection Agency (“EPA”), the Occupational Safety and Health Administration ("OSHA"), the Nuclear Regulatory Commission (“NRC”), and other governmental authorities regulate the development, manufacture, sale, and distribution of our products and services.

Our international operations also are subject to a significant amount of government regulation, including country-specific rules and regulations and U.S.

regulations applicable to our international operations.

Government regulations include detailed inspection of, and controls over, research and development, clinical investigations, product approvals and manufacturing, marketing and promotion, sampling, distribution, record-keeping, storage, and disposal practices.

Government regulations require detailed inspection of, and controls over, research and development, clinical investigations, product approvals and manufacturing, marketing and promotion, sampling, distribution, record-keeping, storage, and disposal practices.

Compliance with applicable regulations is a significant expense for us.

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We cannot predict the effect on our operations resulting from current or future governmental regulation or the interpretation or application of these regulations.

If we fail to comply with any applicable regulatory requirements, sanctions could be imposed on us.

For more information about the risks we face regarding regulatory requirements, see Part I, Item 1A of this Annual Report titled, "Risk Factors".

We are subject to extensive regulatory requirements and must receive and maintain regulatory clearance or approval for many products and operations.

If we fail to comply with any applicable regulatory requirements, penalties could be imposed on us.

For more information about the risks we face regarding regulatory requirements, see Part I, Item 1A of this Annual Report titled, "Risk Factors." We are subject to extensive regulatory requirements and must receive and maintain regulatory clearance or approval for many products and operations.

Failure to receive or maintain, or delays in receiving, clearance or approvals may hurt our revenues, profitability, financial condition, or value.

In the past, we have received warning letters, paid civil penalties, conducted product recalls and field corrections, and been subject to other regulatory sanctions.

In the past, we have received warning letters, paid civil penalties, conducted product recalls and field corrections, and been subject to other regulatory penalties.

We believe that we are currently compliant in all material respects with applicable regulatory requirements.

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We devote significant resources to research and development efforts and we believe STERIS is positioned as a global competitor in the search for technological innovations.

In addition to research and development, we invest in quality control, Customer programs, distribution systems, technical services, and other information services.

In addition to research and development, we invest in quality control, Customer training programs, distribution systems, technical services, and other information services.

There can be no assurance that we will develop significant new products or services, or that the new products or services we provide or develop in the future will be more commercially successful than those provided or developed by our competitors.

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Competition, as it relates to our business segments and product categories, is discussed in more detail in the section above titled, “Information Related to Business Segments.”

As of March 31, 2021, we had approximately 13,000 employees throughout the world including certain locations subject to collective bargaining agreements and works council representation.

We believe we generally have good relations with our employees.

Methods of Distribution.

Sales and service activities are supported by a staff of regionally based clinical specialists, system planners, corporate account managers, and in-house Customer service and field support departments.

We also contract with distributors and dealers in select markets.

We also contract with distributors and dealers.

Customer training is important to our business.

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Our financial results have been, from time to time, subject to seasonal patterns.

We cannot assure you that these patterns will continue.

We cannot assure you that these patterns will not continue.

We define backlog as the amount of unfilled capital equipment purchase orders at a point in time.

At March 31, 2021, we had a backlog of $286.2 million.

At March 31, 2022, we had a backlog, excluding Cantel, of $528.3 million.

Of this amount, $423.6 million and $104.7 million related to our Healthcare and Life Sciences segments, respectively.

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We also make available free of charge on our website our Corporate Governance Guidelines, our Director Code of Ethics, and our Code of Business Conduct, as well as the Charters of the Audit Committee, the Compensation and Organization Development Committee, the Nominating and Governance Committee, and the Compliance Committee of the Company’s Board of Directors.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

The following table presents certain information regarding our executive officers at March 31, 2021.

All executive officers serve at the pleasure of the Board of Directors.

Name Age Position

Burton 53 Vice President, Controller and Chief Accounting Officer

Carestio 48 Senior Vice President and Chief Operating Officer

Mary Clare Fraser 51 Vice President and Chief Human Resources Officer

Madsen 56 Senior Vice President, Life Sciences

Majors 46 Senior Vice President, North America Commercial Operations

Walter M Rosebrough, Jr.

67 President and Chief Executive Officer

Tamaro 52 Vice President and Corporate Treasurer

Tokich 52 Senior Vice President and Chief Financial Officer

Adam Zangerle 54 Senior Vice President, General Counsel, and Corporate Secretary

The following discussion provides a summary of each executive officer's recent business experience through March 31, 2021:

Burton serves as Vice President, Controller and Chief Accounting Officer.

She assumed this role in January 2017.

She served as Vice President, Corporate Controller from May 2008 to January 2017.

Carestio serves as Senior Vice President and Chief Operating Officer.

He assumed this role in August 2018.

From February 2018 to August 2018 he served as Senior Vice President, Sterilization and Disinfection.

From August 2015 to February 2018, he served as Senior Vice President, STERIS Applied Sterilization Technologies and Life Sciences.

From 2011 to August 2015, he served as Vice President, Sales and Marketing for Isomedix Services and General Manager of Life Sciences.

Carestio is also a director of STERIS plc.

Mary Clare Fraser serves as Vice President and Chief Human Resources Officer.

She assumed this role when she joined STERIS in July 2020.

From February 2003 to July 2020 she held various positions with Parker-Hannifin Corporation, a global motion control technologies company, serving most recently from September 2019 to July 2020, as Vice President Human Resources of its Aerospace Group, from March 2017 to September 2019 as its Corporate Director of Human Resources and from July 2013 to March 2017 as Vice President Human Resources of its Fluid Connectors Group.

Madsen serves as Senior Vice President, Life Sciences.

She assumed this role in July 2020.

From August 2015 to July 2020 she served as Vice President and General Manager Life Sciences, Consumables and held various Life Sciences Consumables positions from 1995 to July 2015.

Majors serves as Senior Vice President, North America Commercial Operations.

He assumed this role in August 2019.

From April 2014 to August 2019 he served as Vice President, North America Commercial Operations.

Walter M Rosebrough, Jr.

serves as President and Chief Executive Officer.

He assumed this role when he joined STERIS in October 2007.

Rosebrough is also a Director of STERIS plc and Varex Imaging Corporation.

Tamaro serves as Vice President and Corporate Treasurer.

He assumed this role in August 2017.

From March 2006 to July 2017, he served as Assistant Treasurer.

Tokich serves as Senior Vice President and Chief Financial Officer.

He assumed this role in August 2017.

From February 2014 to July 2017, he served as the Senior Vice President, Chief Financial Officer and Treasurer.

Adam Zangerle serves as Senior Vice President, General Counsel, and Corporate Secretary.

He assumed this role in July 2018.

From July 2013 to July 2018 he served as Vice President, General Counsel, and Secretary.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE

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

Inspired by our Customers’ efforts to create a healthier and safer world, and guided by our legacy of leadership and innovation, we strive to be a Great Company.

To STERIS, this means we will make a difference by providing world-class products and service solutions for our Customers, safe and rewarding work for our People, and superior returns for our Shareholders.

We have an Enterprise Risk Management process ("ERM") to manage risk, which is led by our Chief Compliance Officer.

Identifying and managing key risks to our business operations are essential to our future growth, profitability, and successful execution of strategic plans.

We are committed to understanding and managing these risks through a consistent approach to risk assessment, monitoring, reporting, and mitigation.

Key management sponsors are responsible for participating in the risk

assessment process, including a periodic review with the Board of Directors.

The objective of ERM is to identify key risks, the potential impacts of compliance failure, identify key mitigating activities, develop potential improvements for managing the risks, and to ensure execution of oversight activities on a monthly, annual or as needed basis.

We established a dedicated Environmental, Social, and Governance ("ESG") function with the appointment of Vice President of ESG and are continuing to develop additional roles within the function.

The ESG function, with support from our Chief Executive Officer, General Counsel and other senior executives, works to actively develop and refine our ESG strategies, programs, and policies.

The ESG function works closely with our Global Sustainability Steering Committee to build ESG values and implement strategies, programs, and policies across the Company.

The Global Sustainability Steering Committee is a cross-functional team of senior leadership, subcommittee chairs, and subject matter experts spanning our businesses and Legal, Investor Relations, Human Resources, Continuous Improvement, Compliance, Facilities, and Health, Safety and Environment functions.

The ESG team regularly updates the Nominating and Governance Committee of our Board of Directors.

Key performance indicators and metrics have been established for those areas we believe to be relevant and potentially significant to our business.

Certain of these disclosures relate to Sustainability Accounting Standards Board (SASB) Standards for Medical Equipment & Supplies that we have identified to be closely aligned with our business.

Our reporting against the SASB Standards is a voluntary disclosure aligned with our focus on financial materiality.

We seek to provide investors with useful, relevant and meaningful sustainability information and have selected metrics under the SASB Standards.

We describe below how we continuously monitor and track our policies and activities in the areas of ethical business practices, energy and environmental conservation, employees and human capital management, and quality.

ETHICAL BUSINESS PRACTICES

Code of Business Conduct.

Our Code of Business Conduct sets the standard for legal and ethical behavior, addressing topics such as bribery and corruption, supply chain transparency, proper behavior in the workplace, and avoiding conflicts of interest.

Anti-Bribery and Anti-Corruption.

We are committed to conducting our business fairly, honorably, with integrity and in compliance with the law in all jurisdictions where we operate.

Our policy prohibits bribery and corruption in any form, and we explain our commitment in our Statement on Anti-Corruption Policies and Procedures.

As an ongoing due diligence measure, we have established a program to recognize those sales and marketing intermediaries who demonstrate an elevated commitment to compliance.

Through this Commercial Compliance Program, we formally recognize organizations that have not only met STERIS's standard ethical requirements for inclusion in our network but have also taken additional steps, such as adopting their own code of conduct and training their employees on their own firm's ethical values, to ensure compliant behavior.

In 2022, STERIS incurred no monetary losses as a result of legal proceedings associated with bribery or corruption.

Supplier Code of Conduct.

Our expectations for ethical behavior extend beyond STERIS to our Suppliers as well.

Our Supplier Code of Conduct defines the minimum requirements and expectations for all Suppliers and their subcontractors.

We have mechanisms in place to identify when suppliers do not meet our Supplier Code of Conduct requirements.

Suspicions of supplier non-compliance are promptly investigated and addressed.

We believe in conducting business with integrity and honesty and in accordance with all applicable laws and regulations of the countries in which we operate.

We expect our suppliers to comply with the laws of the countries in which they operate, including but not limited to the European Union Customs Code, the EU Restriction of Hazardous Substances Directive, the UK Modern Slavery Act, the US Foreign Corrupt Practices Act, the UK Bribery Act, the US Dodd-Frank Conflict Minerals Rules, applicable data privacy laws, and all applicable local labor and employment laws.

Conflict Minerals Sourcing Policy .

We file reports with the SEC disclosing our use of tin, tantalum, tungsten, and gold ("conflict minerals" or "3TG") in products sold anywhere in the world.

In accordance with these legal requirements and as a part of the overall commitment to responsible sourcing, we are working with our suppliers to ensure transparency to the smelter/refining source for 3TG materials used in our products.

Furthermore, we seek to identify the countries of origin of the 3TG in our products and the smelter/refiners that process the 3TG in our products.

We undertake this effort to promote responsible sourcing.

Because of our general downstream position in the supply chain, we rely on our suppliers for information.

We expect suppliers to respond to our requests for complete transparency about the sources whose 3TG materials are used in our products and to conduct due diligence measures to ensure the information provided is accurate, up-to-date and complete.

This Policy applies to all suppliers of products and materials to the Company and to all our affiliates.

We will consider taking various progressive actions with respect to suppliers who do not make reasonable efforts to cooperate with our requests for information or requests to take corrective actions to enable us to identify smelters and refiners in our supply chains.

Risks and Prevention .

We regularly assess the risks associated with our business, including the risk of potential corruption or bribery in the environments where we do business, and we have designed our management systems to respond accordingly.

As part of our anti-corruption program, our employees and third-party intermediaries are subject to mandatory comprehensive anti-bribery and anti-corruption training online and in-person.

The training covers the various forms that corruption can take, red flags, and individuals’ roles in our anti-bribery and anti-corruption efforts.

In accordance with our policy, we engage a third-party due diligence firm to perform background checks, including bribery and corruption, before entering into commercial relationships with sales and marketing intermediaries, and other service providers.

We communicate our bribery and corruption policies and expectations to our officers, Directors, employees, dealers, distributors and agents.

It is the expectation of the Company that all of the aforementioned individuals comply with the requirements set forth in our policy and relevant rules and regulations.

Managing Compliance and Ethics .

We require all employees to be lawful and ethically responsible in all business practices.

We expect all employees to comply with all Company policies, applicable laws, and the principles outlined in our Code of Business Conduct.

Senior members of STERIS’s leadership team are involved in numerous industry associations that focus on setting the standards and driving change.

We hold seats and actively participate on the Boards of AdvaMed and the Medical Device Manufacturers Association ("MDMA").

We are also an active member of the Association for the Advancement of Medical Instrumentation ("AAMI") and MedTech Europe.

AdvaMed has roughly 400 member companies and promotes policies that foster the highest ethical standards, timely patient access to safe and effective products, and economic policies that reward value creation.

The AdvaMed Code of Ethics on Interactions with Health Care Professionals ("AdvaMed Code") facilitates ethical interactions between MedTech companies and health care professionals to ensure that medical decisions are based on the best interests of the patient.

STERIS has adopted and requires compliance with the AdvaMed Code.

MDMA is the leading voice representing the interests of innovative and entrepreneurial medical technology companies.

MDMA's goal is to provide patients and clinicians with timely access to safe and effective medical technologies that improve the quality of life.

AAMI is a nonprofit organization founded in 1967.

It is a diverse community of more than 10,000 healthcare technology professionals united by one important mission-supporting the healthcare community in the development, management, and use of safe and effective healthcare technology.

MedTech Europe is the European trade association for the medical technology industry including diagnostics, medical devices and digital health.

MedTech Europe’s purpose is to make innovative medical technology available to more people, while helping healthcare systems move towards a more sustainable path.

The MedTech Europe Code of Ethical Business Practice regulates all aspects of the industry’s relationship with Healthcare Professionals (HCPs) and Healthcare Organisations (HCOs), to ensure that all interactions are ethical and professional at all times and to maintain the trust of regulators, and patients.

STERIS has adopted and requires compliance with the MedTech Europe Code of Ethical Business Practice.

Using the STERIS Integrity Helpline or Webline, employees can anonymously report potential Code of Conduct concerns.

A management Ethics Committee meets monthly to monitor and investigate reports of Code of Business Conduct violations and provides quarterly reporting to the Board of Director's Compliance and Technology Committee.

With respect to financial matters, reports are provided to the Board of Director’s Audit Committee.

The STERIS Code of Business Conduct covers ethical marketing and off-label promotion.

In fiscal 2022, STERIS incurred no monetary losses as a result of legal proceedings associated with false marketing claims.

ENERGY AND ENVIRONMENTAL CONSERVATION

We are subject to various laws and governmental regulations concerning environmental matters and employee safety and health in Ireland, the United States and other countries.

We have made, and continue to make, significant investments to comply with these laws and regulations.

Our Continuous Improvement objectives include efforts to improve energy and water efficiency and reduce or eliminate certain chemicals used in, and wastes generated from, our operations thereby reducing the impact of our operations on the environment.

We have a broad and comprehensive portfolio of sterilization and disinfection products that support the procedural spaces within hospitals and surgery centers as well as pharmaceutical, medical device and dental Customers.

When we think about new products or next generation products, part of our effort is to reduce the environmental impact of what we do.

That can include anything from reformulating chemistries to eliminate metals-based ingredients or reducing the effluence produced as a result of the use of our products to creating ultra-concentrate chemistries such as Prolystica® Ultra Concentrate Cleaning Chemistries, which offer 10x the uses per container.

That means 5 and 10-liter containers of concentrate replace 114-liter drums, creating benefits from safer lifting, elimination of packaging waste, and less frequent deliveries with smaller trucks.

We also work to utilize containers that can be recycled and build products with materials that can be recycled at the end of their life.

Risks and Prevention.

We actively monitor and take steps to manage the risks associated with environmental matters, none of which we consider material at this time.

EMPLOYEES AND HUMAN CAPITAL MANAGEMENT

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Our senior management team and Board receive regular updates on our people, including data and metrics on retention, engagement and safety which are used to determine our human resources priorities, programs and training.

We are committed to upholding human rights in all our operations globally and respect human rights as recognized by the principles of the United Nations Global Compact.

We strongly oppose all forms of slavery, servitude, forced labor, child labor and human trafficking.

Employees by Segment.

As of March 31, 2021, we had approximately 13,000 employees throughout the world including certain locations subject to collective bargaining agreements and works council representation.

As of March 31, 2022, we had over 16,000 employees throughout the world including certain locations subject to work council representation and five collective bargaining agreements.

We believe we generally have good relations with our employees.

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Life Sciences 1,111 868

Dental 1,020 —

Corporate 784 687

Total employees 16,422 12,770

We recruit the best available people who are aligned with and embody our core Values.

Diversity, Equity & Inclusion (DE&I).

We are dedicated to creating and sustaining a diverse, equitable and inclusive work environment.

W e believe that the different ideas, experiences, perspectives and backgrounds of our global employees create a stronger organization that allows us to fulfill our ultimate goal of serving our Customers.

To put it simply, we believe a diverse and inclusive workforce is essential to a thriving organization.

We strive to recruit the best available people who are aligned with and embody our core values.

We are committed to equality, assessing candidates based on qualifications.

We believe that our success is dependent on attracting and retaining people from a

cross-section of our communities who understand their markets, and in doing so we continue to create a competitive advantage for STERIS.

Our success depends on our ability to attract and retain talented employees, and we intend to do so without regard to race, color, social or economic status, religion, national origin, marital status, age, veteran status, sexual orientation, gender identity, or any protected status.

We believe that our success is dependent on attracting and retaining people from a cross-section of our communities who understand their markets, and in doing so we continue to create a competitive advantage for STERIS.

Our success depends on our ability to attract and retain talented employees, and we do so without regard to race, color, social or economic status, religion, national origin, marital status, age, veteran status, sexual orientation, gender identity, or any protected status.

It is the policy of the Company to make all decisions regarding employment, including hiring, compensation, training, promotions, transfers, or lay-offs, based on the job requirements and skills of the individuals and utilizing the principle of equal employment opportunity without discrimination.

STERIS has annual training on Anti-Harassment, and has provided training on Creating and Inclusive Environment and Unconscious Bias.

STERIS has biennial training on anti-harassment, except where required annually.

Total directors and employee’s distribution by gender is shown in the table below:

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Key metrics for purposes of benchmarking performance include Total Recordable Cases ("TRC") and Days Away From Work ("DAFW") injury and illness incident rates, both of which are presented in the table below:

STERIS plc Industry Benchmarks (2)

STERIS Industry Benchmarks (2)

Fiscal 2022 Fiscal 2021 Average Best in Class

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(2) Our external benchmarks include the OSHA average and 1st Quartile injury/illness rates which are derived from the Bureau of Labor Statistics.

The ISO 14001 and 45001 sets out the criteria that a company can follow to establish an effective HSE management system.

Designed for any type of organization, regardless of its activity or sector, it can provide assurance that environmental impact is being measured, controlled and improved in a holistic manner.

We currently have 1 facility and 13 reprocessing locations that hold ISO 14001, and 4 facilities and 13 reprocessing locations are 45001 accredited locations.

The OSHA Voluntary Protection Program ("VPP") Star Award recognizes employers who have implemented effective safety and health management systems and maintain injury and illness rates below national Bureau of Labor Statistics averages for their industry.

We currently have 12 locations that hold the OSHA VPP Star Award.

We utilize internal HSE management systems and compliance audits that will identify percent compliance of our global operations against our standards.

Employee Engagement and Development.

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Examples of how we engage our employees include quarterly management meetings, a robust intranet for communication with our global teams and various communications efforts within each department.

In addition, our global human resources team has programs focused on career development for employees at all levels.

In addition, our global human resources team has programs focused on career development and training for employees at all levels.

Our employee turnover rate was 17% and 11% for fiscal 2022 and 2021, respectively, and we are continuously working towards a goal of achieving 10% or under, excluding retirements and reductions in force.

Although reductions in force are sometimes necessary, we work to avoid them and they must always be approved by executive management.

Every year we

encourage all associates to participate in our Employee Engagement Survey which is administered by a third party on a confidential basis.

This process has been valuable in helping us recognize things we do well and foster an open conversation about how we can make STERIS an even better place to work.

We are pleased to report that 89% and 86% of our people completed our 2021 and 2020 surveys, respectively.

In our most recent survey, overall employee engagement was 77%, and the fourteen principal factors that we measure all improved since 2020, and have generally for a decade.

The results indicate that the majority of our people are committed to serving our Customers, are proud to work for STERIS, and have confidence in the stability of our business.

Every year we encourage all employees to participate in our employee engagement survey which is administered by a third party on a confidential basis.

This process has been valuable in helping us recognize what we do well and foster an open conversation about how we can make STERIS an even better place to work.

We are pleased to report that 88% of our employees completed our 2022 survey.

In our most recent survey, we measured fifteen principal factors and overall employee engagement was 75%, in-line with our results for the past five years.The results indicate that the majority of our people are committed to serving our Customers, are proud to work for STERIS, and have confidence in the stability of our business.

We are committed to supporting the development of our people.

Employees benefit from hands-on continuous improvement ("Lean") training, a web-based learning management system and STERIS University.

In addition, we provide annual Code of Conduct training, Harassment Prevention training and other key, required training at all levels of the Company.

In addition, we provide bi-annual Code of Conduct training and other key required training at all levels of the Company.

In our manufacturing and service organizations, we provide training for employees who do not have the appropriate experience or background.

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Our focus is on safety, quality and consistency in approach and outcome.

As a Lean organization, we have created standard work instructions for many processes and refresher courses are offered regularly for existing employees.

As a Lean focused organization, we have created standard work instructions for many processes and refresher courses are offered regularly for existing employees.

Where possible, we look to provide cross-training for employees looking to expand their knowledge or grow into new roles.

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Compensation and Benefits.

Our total rewards offerings include an array of programs to support our employees' financial, physical, and mental well-being, including providing competitive salaries, variable performance pay, healthcare benefits, tuition assistance, paid time off, annual merit increases, and incentive plans based on the national norms of their employment.

Total employee compensation is presented in the table below:

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Total employee costs $ 1,612,045 $ 1,135,035

COVID-19 Pandemic

Early in calendar year 2020, we implemented several measures to help protect our workforce during the COVID-19 pandemic, including the following:

• Implemented work from home for those employees whose role supported it and put programs in place to support those who did not have the flexibility to work remotely.

• Implemented paid furlough at 100% salary for all employees underutilized due to the pandemic.

• In the U.S., provided pandemic-related paid-time-off for factory and field based personnel who could not work from home and supported COVID vaccination efforts by offering paid-time-off for vaccinations and arranging on-site vaccination clinics where supported by employee interest.

• Implemented additional cleaning protocols in all facilities, limited travel, and discontinued in person meetings where practical.

• Provided additional personal protective equipment for field-based personnel supporting critical care environments.

• Regularly communicated with employees with regional and global updates.

We are subject to strict regulatory compliance and quality standards to ensure the safety and supply of our products and services.

The quality and regulatory systems are broad in scope and designed to achieve quality from incoming materials through the design, development, manufacture, storage, handling and distribution of our products and delivery of services.

To monitor compliance with these standards, internal and third-party assessments of our quality and regulatory systems are conducted.

FDA conducts inspections of our manufacturing and contract sterilization facilities on a periodic basis to confirm compliance.

In connection with an inspection, the FDA may initiate warning letters and/or consent decrees, which list conditions or practices that may indicate a violation of the FDA’s requirements.

In fiscal 2022, STERIS did not receive any warning letters, seizures, or consent decrees.

Additionally, STERIS had zero products listed in the FDA’s MedWatch Safety Alerts for Human Medical Products database.

We have in place processes to monitor and support compliance with product and service regulations worldwide, including design controls, product changes, labeling and advertising, marketing materials, good manufacturing practices, and adverse event reporting requirements.

We take prompt action whenever we are alerted to regulatory or field-safety issues with a STERIS product.

Following immediate assessment, we take corrective action, including voluntary product recalls, when needed.

We examine underlying issues and root cause and work to resolve these to avoid recurrence.

STERIS had no Class I recalls in fiscal 2022, 2021 and 2020.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

The following table presents certain information regarding our executive officers at March 31, 2022.

All executive officers serve at the pleasure of the Board of Directors.

Name Age Position

Burton 54 Vice President, Controller and Chief Accounting Officer

Carestio 49 President and Chief Executive Officer

Mary Clare Fraser 51 Vice President and Chief Human Resources Officer

Madsen 57 Senior Vice President, Life Sciences

Majors 47 Senior Vice President, Americas Commercial Operations

Tamaro 53 Vice President and Corporate Treasurer

Tokich 53 Senior Vice President and Chief Financial Officer

Andrew Xilas 57 Senior Vice President and General Manager, Dental

Adam Zangerle 55 Senior Vice President, General Counsel, and Corporate Secretary

The following discussion provides a summary of each executive officer's recent business experience through March 31, 2022:

Burton serves as Vice President, Controller and Chief Accounting Officer.

She assumed this role in January 2017.

Carestio serves as President and Chief Executive Officer.

He assumed this role in July 2021.

From August 2018 to July 2021 he served as Senior Vice President and Chief Operating Officer.

From February 2018 to August 2018 he served as Senior Vice President, Sterilization and Disinfection.

From August 2015 to February 2018, he served as Senior Vice President, STERIS Applied Sterilization Technologies and Life Sciences.

Mary Clare Fraser serves as Vice President and Chief Human Resources Officer.

She assumed this role when she joined STERIS in July 2020.

Madsen serves as Senior Vice President, Life Sciences.

She assumed this role in July 2020.

From August 2015 to July 2020 she served as Vice President and General Manager Life Sciences, Consumables.

Majors serves as Senior Vice President, Americas Commercial Operations.

He assumed this role in August 2019.

From April 2014 to August 2019 he served as Vice President, North America Commercial Operations.

Tamaro serves as Vice President and Corporate Treasurer.

He assumed this role in August 2017.

From March 2006 to July 2017, he served as Assistant Treasurer.

Tokich serves as Senior Vice President and Chief Financial Officer.

He assumed this role in August 2017.

From February 2014 to July 2017, he served as the Senior Vice President, Chief Financial Officer and Treasurer.

Andrew Xilas serves as Senior Vice President and General Manager, Dental.

He assumed this role in June 2021.

He joined HuFriedyGroup (now part of STERIS) in 1987, holding roles of increasing responsibility, which included a promotion to President, HuFriedyGroup in January 2021.

Adam Zangerle serves as Senior Vice President, General Counsel, and Corporate Secretary.

He assumed this role in July 2018.

From July 2013 to July 2018 he served as Vice President, General Counsel, and Secretary.

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What changed 10-K

Item 1. Business