What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-05-31 compared with 2021-05-28 · 421 added, 531 removed, 1378 unchanged (41% of the section changed)

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INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Financial Statements:

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of STERIS plc

To the Shareholders and the Board of Directors of

Opinion on the Financial Statements

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated May 31, 2022 expressed an unqualified opinion thereon.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has elected to change its method of accounting for certain inventories to the first-in, first-out (“FIFO”) method in the fourth quarter of fiscal year 2021, with retrospective application to all periods presented.

Basis for Opinion

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We also evaluated the adequacy of the Company’s disclosures included in Note 8 to the consolidated financial statements in relation to these matters.

Description of the Matter Valuation of customer relationships intangible asset related to the Key Surgical acquisition

As discussed in Note 18 to the consolidated financial statements, on November 18, 2020, the Company acquired all of the outstanding units and equity of Key Surgical, LLC (“Key Surgical”) for $853 million, net of cash acquired.

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

The Company preliminarily allocated $315 million of the purchase price to the fair value of the acquired customer relationships intangible asset.

The purchase price allocation for Key Surgical is preliminary.

Description of the Matter Valuation of the Dental and Healthcare customer relationships intangible assets related to the Cantel acquisition

As discussed in Note 2 to the consolidated financial statements, on June 2, 2021, the Company acquired all of the outstanding units and equity of Cantel Medical Corp.

(“Cantel”) for cash and ordinary shares equaling approximately $3.6 billion.

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

The Company preliminarily allocated $2.3 billion of the purchase price to the fair value of the acquired Dental and Healthcare customer relationships intangible assets.

The purchase price allocation for Cantel is preliminary.

The finalization of the purchase accounting assessment may result in changes in the valuation of assets acquired and liabilities assumed.

Auditing management’s preliminary valuation of the customer relationships intangible asset in the Key Surgical acquisition was complex and judgmental due to the significant estimation uncertainty in the Company’s determination of the preliminary fair value of the customer relationships intangible asset under an income approach using discounted cash flows.

The significant estimation uncertainty was primarily due to the sensitivity of the fair value to underlying assumptions including forecasted revenue growth rates, forecasted profit margins, and customer attrition rates.

Auditing management’s preliminary valuation of the Dental and Healthcare customer relationships intangible assets in the Cantel acquisition was complex and judgmental due to the significant estimation uncertainty in the Company’s determination of the preliminary fair value of the customer relationships intangible assets under an income approach using discounted cash flows.

These significant assumptions are forward looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s accounting process for the customer relationships intangible asset, including controls over management’s review of the significant assumptions in the determination of fair value under the income approach.

To test the estimated fair value of the acquired customer relationships intangible asset, our audit procedures included, among others, evaluating the Company's selection of the valuation method, testing significant assumptions used by the Company and testing the completeness and accuracy of the underlying data.

For example, we performed analyses to evaluate the sensitivity of changes in assumptions to the fair value of the customer relationships intangible asset and compared the significant assumptions to current industry, market and economic trends, and historical results of the acquired business.

In addition, we involved our valuation specialists to assist with our evaluation of the methodology and significant assumptions used by the Company to determine the preliminary fair value estimate of the customer relationship intangible asset, including the forecasted revenue growth rates, forecasted profit margins, and customer attrition rate.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s accounting process for the Dental and Healthcare customer relationships intangible assets, including controls over management’s review of the significant assumptions in the determination of fair value under the income approach.

To test the estimated fair value of the acquired Dental and Healthcare customer relationships intangible assets, our audit procedures included, among others, evaluating the Company's selection of the valuation method, testing significant assumptions used by the Company and testing the completeness and accuracy of the underlying data.

For example, we performed analyses to evaluate the sensitivity of changes in assumptions to the fair value of the customer relationships intangible assets and compared the significant assumptions to current industry, market, and economic trends, and historical results of the acquired business.

In addition, we involved our valuation specialists to assist with our evaluation of the methodology and significant assumptions used by the Company to determine the preliminary fair value estimate of the Dental and Healthcare customer relationship intangible assets, including the forecasted revenue growth rates, forecasted profit margins, and customer attrition rates.

We have served as the Company’s auditor since 1989.

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March 31, 2022 2021

Assets (as adjusted)*

Current assets:

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Accrued payroll and other related liabilities 183,721 150,078

Lease obligations due within one year 22,774 19,809

Short-term lease obligations 36,472 22,774

Short term indebtedness 142,875 —

Accrued expenses and other 306,544 220,557

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Total liabilities and equity $ 11,423,594 $ 6,574,471

*Certain amounts have been adjusted to reflect the change in inventory accounting method, as described in Note 1 to our Consolidated Financial Statements.

See notes to consolidated financial statements.

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Years Ended March 31, 2022 2021 2020

(as adjusted)* (as adjusted)*

Product $ 2,556,281 $ 1,443,540 $ 1,402,788

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Research and development 87,944 66,326 65,546

Restructuring expenses ( 2,914 ) 673 30,987

Restructuring expenses (credit) 48 ( 2,914 ) 673

Total operating expenses 1,590,744 794,732 782,950

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Interest expense 89,593 37,180 40,279

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

Interest income and miscellaneous expense ( 6,284 ) ( 6,345 ) ( 1,987 )

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Net income 242,870 396,870 407,859

Net income attributable to noncontrolling interests ( 530 ) 200 1,025

Net (loss) income attributable to noncontrolling interests ( 1,018 ) ( 530 ) 200

Net income attributable to shareholders $ 243,888 $ 397,400 $ 407,659

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Cash dividends declared per ordinary share outstanding $ 1.69 $ 1.57 $ 1.45

*Certain amounts have been adjusted to reflect the change in inventory accounting method, as described in Note 1 to our Consolidated Financial Statements.

See notes to consolidated financial statements.

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Years Ended March 31, 2022 2021 2020

(as adjusted)* (as adjusted)*

Net income $ 242,870 $ 396,870 $ 407,859

Net income attributable to noncontrolling interests ( 530 ) 200 1,025

Net (loss) income attributable to noncontrolling interests ( 1,018 ) ( 530 ) 200

Net income attributable to shareholders $ 243,888 $ 397,400 $ 407,659

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Comprehensive income attributable to shareholders $ 95,323 $ 571,620 $ 331,974

*Certain amounts have been adjusted to reflect the change in inventory accounting method, as described in Note 1 to our Consolidated Financial Statements.

See notes to consolidated financial statements.

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Years Ended March 31, 2022 2021 2020

(as adjusted)* (as adjusted)*

Operating activities:

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Loss (gain) on sale of businesses ( 874 ) 2,030 1,770

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

Amortization of inventory fair value adjustments 66,663 — —

Other items ( 21,639 ) 24,273 426

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Financing activities:

Proceeds from Term Loan 550,000 — —

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

Proceeds from term loans 650,000 550,000 —

Payments on term loans ( 345,000 ) — —

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

Payments on convertible debt ( 371,361 ) — —

Payments under credit facilities, net ( 190,174 ) ( 30,461 ) ( 26,500 )

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Acquisition related deferred or contingent consideration ( 32,679 ) ( 2,395 ) ( 626 )

Repurchases of shares ( 14,646 ) ( 51,241 ) ( 81,494 )

Cash dividends paid to common shareholders ( 133,837 ) ( 123,034 ) ( 112,503 )

Contributions from noncontrolling interest holders 2,258 6,050 —

Repurchases of ordinary shares ( 55,777 ) ( 14,646 ) ( 51,241 )

Cash dividends paid to ordinary shareholders ( 163,169 ) ( 133,837 ) ( 123,034 )

Distributions to noncontrolling interest holders ( 997 ) ( 4,179 ) ( 1,245 )

Contributions from noncontrolling interest holders 3,672 2,258 6,050

Stock option and other equity transactions, net 10,071 26,726 34,731

Net cash used in financing activities 345,620 ( 163,146 ) ( 294,792 )

Net cash provided by (used in) financing activities 115,830 345,620 ( 163,146 )

Effect of exchange rate changes on cash and cash equivalents ( 6,293 ) 19,849 ( 8,730 )

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Cash and cash equivalents at end of period $ 348,320 $ 220,531 $ 319,581

*Certain amounts have been adjusted to reflect the change in inventory accounting method, as described in Note 1 to our Consolidated Financial Statements.

See notes to consolidated financial statements.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

STERIS PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands, except per share amounts)

Ordinary Shares Preferred Shares Retained

Ordinary Shares Retained

Earnings Accumulated

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Interest Total

Number Amount Number Amount

Balance at March 31, 2018 (as previously reported) 84,747 $ 2,048,037 100 $ 15 $ 1,146,223 $ 11,685 $ 11,340 $ 3,217,300

Inventory accounting method change * — — — — 11,762 — — 11,762

Balance at March 31, 2018 (as adjusted)* 84,747 2,048,037 100 15 1,157,985 11,685 11,340 3,229,062

Number Amount

Balance at March 31, 2019 84,517 $ 1,998,564 $ 1,350,456 $ ( 159,778 ) $ 7,988 $ 3,197,230

Comprehensive income:

— — — — 303,721 — 1,025 304,746

Net income — — 407,659 — 200 407,859

Other comprehensive loss — — — ( 75,685 ) — ( 75,685 )

— — — — — ( 169,493 ) — ( 169,493 )

Repurchases of ordinary shares ( 396 ) ( 74,821 ) 23,580 — — ( 51,241 )

Equity compensation programs 533 36,941 — — — — — 36,941

Retirement of shares resulting from Redomiciliation ( 84,514 ) ( 10,592,117 ) ( 100 ) ( 15 ) — — — ( 10,592,132 )

Issuance of shares resulting from Redomiciliation 84,514 10,592,117 — — — — — 10,592,117

Adoption of accounting standard (Note 1) — — — — ( 3,667 ) ( 1,970 ) — ( 5,637 )

Equity compensation programs and other 803 58,421 — — — 58,421

Cash dividends – $ 1.45 per ordinary share

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Distributions to noncontrolling interest holders — — — — ( 1,245 ) ( 1,245 )

Contributions from noncontrolling interest holders — — — — 6,050 6,050

Other changes in noncontrolling interest — — — — ( 145 ) ( 145 )

Balance at March 31, 2019 (as adjusted)* 84,517 1,998,564 — — 1,350,456 ( 159,778 ) 7,988 3,197,230

Balance at March 31, 2020 84,924 1,982,164 1,658,661 ( 235,463 ) 12,848 3,418,210

Comprehensive income:

— — — — 407,659 — 200 407,859

Other comprehensive loss

— — — — — ( 75,685 ) — ( 75,685 )

Net income (loss) — — 397,400 — ( 530 ) 396,870

Other comprehensive income — — — 174,220 — 174,220

Repurchases of ordinary shares ( 127 ) ( 31,830 ) 17,184 — — ( 14,646 )

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Other changes in noncontrolling interest — — — — 81 81

Balance at March 31, 2020 (as adjusted)* 84,924 $ 1,982,164 — $ — $ 1,658,661 $ ( 235,463 ) $ 12,848 $ 3,418,210

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

Comprehensive income:

— — — — 397,400 — ( 530 ) 396,870

Other comprehensive income

— — — — — 174,220 — 174,220

Net income (loss) — — 243,888 — ( 1,018 ) 242,870

Other comprehensive loss — — — ( 148,565 ) — ( 148,565 )

Repurchases of ordinary shares ( 353 ) ( 34,894 ) ( 20,883 ) — — ( 55,777 )

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— — ( 163,169 ) — — ( 163,169 )

Issuance of shares for acquisition of Cantel Medical LLC ("Cantel") 14,297 2,689,317 — — — 2,689,317

Consideration related to equity component of Cantel convertible debt — 175,555 — — — 175,555

Consideration related to Cantel equity compensation programs — 18,173 — — — 18,173

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

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

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Balance at March 31, 2022 100,067 $ 4,742,920 $ 1,999,244 $ ( 209,808 ) $ 12,281 $ 6,544,637

*Certain amounts have been adjusted to reflect the change in inventory accounting method, as described in Note 1 to our Consolidated Financial Statements.

See notes to consolidated financial statements.

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Nature of Operations.

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.

We operate and report 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 and report in four reportable business segments:

Healthcare, Applied Sterilization Technologies, Life Sciences, and Dental.

We describe our business segments in Note 11 to our consolidated financial statements titled, "Business Segment Information."

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Service Revenues

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

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

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

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

Contract Liabilities

Payments received from Customers are based on invoices or billing schedules as established in contracts with Customers.

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Service Liabilities

Payments received in advance of performance for cancelable preventative maintenance and separately priced extended warranty contracts are recorded as service liabilities.

Payments received in advance of performance for cancellable preventive maintenance and separately priced extended warranty contracts are recorded as service liabilities.

Service liabilities are recognized as revenue as performance is rendered under the contract.

Prior to the adoption of Accounting Standards Codification ("ASC") 606, these amounts were included in Deferred revenues.

Refer to Note 7, titled "Additional Consolidated Balance Sheet Information" for Service liability balances.

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Identifiable Intangible Assets.

Our identifiable intangible assets include product technology rights, trademarks, licenses, and Customer and vendor relationships.

Our identifiable intangible assets include product technology rights, trademarks, licenses, non-compete agreements, and Customer and vendor relationships.

We record these assets at cost, or when acquired as part of a business acquisition, at estimated fair value.

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Investments in marketable securities are stated at fair value and are included in "Other assets" on the Consolidated Balance Sheets.

Following the fiscal 2019 adoption of ASU 2016-01, "Financial Instruments - Overall - Recognition and Measurement of Financial Assets and Liabilities, changes in the fair value of these investments are recorded in the "Interest income and miscellaneous expense line" of the Consolidated Statement of Income.

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

Asset Impairment Losses.

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Standards that have been adopted in fiscal 2022

ASU 2016-13, "Measurement of Credit Losses on Financial Instruments" June 2016 The standard required a financial asset (or group of financial assets) measured at amortized cost to be presented at the net amount expected to be collected.

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.

Credit losses relating to available-for-sale debt securities should be recorded through an allowance for credit losses.

The standard was effective for annual periods beginning after December 15, 2019.

First Quarter Fiscal 2021 We adopted this standard effective April 1, 2020 with no material impact to our consolidated financial statements.

ASU 2018-13 "Fair Value Measurement (Topic 820) Disclosure Framework- Changes to Disclosure Requirements for Fair Value Measurement”

August 2018 The standard modified the disclosure requirements by adding, removing, and modifying certain required disclosures for fair value measurements for assets and liabilities disclosed within the fair value hierarchy.

The standard was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

First Quarter Fiscal 2021 We adopted this standard effective April 1, 2020 with no material impact on our consolidated financial statements as it modifies disclosure requirements only.

ASU 2018-14 "Compensation- Retirement Benefits - Defined Benefit Plans- General Topic (715-20):

Disclosure Framework- Changes to the Disclosure Requirements for Defined Benefit Plans" August 2018 The standard modified the disclosure requirements by adding, removing, and modifying certain required disclosures for employers that sponsor defined benefit pension or other post-retirement benefit plans.

The standard also clarified disclosure requirements for defined benefit pension plans relating to the projected benefit obligation and accumulated benefit obligation.

The standard was effective for fiscal years ending after December 15, 2019.

First Quarter Fiscal 2021 We adopted this standard effective April 1, 2020 with no material impact on our consolidated financial statements as it modifies disclosure requirements only.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Standard Date of Issuance Description Date of Adoption Effect on the financial statements or other significant matters

Standards that have been adopted in fiscal 2021

ASU 2018-15 "Intangibles- Goodwill and Other- Internal Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract" August 2018 The standard aligned the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or

obtain internal-use software.

The standard was effective for fiscal years beginning after December 15, 2019.

First Quarter Fiscal 2021 We adopted this standard on April 1, 2020 using the prospective method.

The adoption of this standard did not have a material impact on our consolidated financial statements and disclosures.

ASU 2020-04 "Reference Rate Reform (Topic 848)" March 2020 The standard provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The standard is effective for all entities as of March 12, 2020 through December 31, 2022.

Fourth Quarter Fiscal 2021 We adopted the standard effective January 1, 2021.

The adoption of this standard did not have a material impact on our consolidated financial statements and disclosures.

Standard Date of Issuance Description Date of Adoption Effect on the financial statements or other significant matters

Standards that have not yet been adopted

ASU 2019-12 "Income Taxes (Topic 740)" December 2019 The standard provides final guidance that simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The guidance simplifies accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

The standard is effective for fiscal years beginning after December 15, 2020 and early adoption is permitted.

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

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Standard Date of Issuance Description Date of Adoption Effect on the financial statements or other significant matters

Standards that have not yet been adopted

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.

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

The standard is effective for annual periods beginning after December 15, 2021 and interim periods within that year.

Early adoption is permitted for annual periods beginning after December 15, 2020 and interim periods within that year.

N/A The adoption of the standard may have a material effect on our consolidated financial statements after the acquisition of Cantel Medical Corp.

Change in accounting principle.

In the fourth quarter of fiscal 2021, we voluntarily changed our method of inventory costing for certain of our inventories from the last in first out ("LIFO") method to the first in first out ("FIFO") method.

We believe that the FIFO method of inventory costing is preferable to the LIFO method because it improves comparability to our peers, more closely resembles the physical flow of our inventory and aligns with how we manage the business.

Prior to the change in method, inventories valued on the LIFO cost method were approximately 25% of our total inventories.

The effects of the change in accounting principle from LIFO to FIFO have been retrospectively applied to all periods presented.

As a result of the retrospective application of the change in accounting principle, certain financial statement line items in the Company’s Consolidated Balance Sheets as of March 31, 2020, and the Consolidated Statements of Income, Comprehensive Income, Cash Flows and Shareholders’ Equity for the years ended March 31, 2020 and 2019 were adjusted as necessary.

As a result of the accounting change, retained earnings as of March 31, 2018, was increased by $11,762, which is reflected as a cumulative change in accounting principle in the Consolidated Statements of Shareholders’ Equity.

The following table reflects the effect of the change in the accounting principle on the fiscal 2021 Consolidated Financial Statements:

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 LLC ("Cantel").

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.

STERIS PLC AND SUBSIDIARIES

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

For the year ended March 31, 2021 As computed under LIFO As reported under FIFO Effect of change

Consolidated Statements of Income

Cost of revenues:

Product $ 767,102 $ 765,076 $ ( 2,026 )

Cost of revenues 1,766,445 1,764,419 ( 2,026 )

Gross profit 1,341,074 1,343,100 2,026

Income from operations 546,342 548,368 2,026

Income before income tax expense 515,507 517,533 2,026

Income tax (benefit) expense 120,152 120,663 511

Net income 395,355 396,870 1,515

Net income attributable to shareholders 395,885 397,400 1,515

Net income per share attributable to shareholders:

Basic $ 4.63 $ 4.66 $ 0.03

Diluted $ 4.60 $ 4.63 $ 0.03

For the year ended March 31, 2021 As computed under LIFO As reported under FIFO Effect of change

Consolidated Statements of Comprehensive Income

Net income $ 395,355 $ 396,870 $ 1,515

Net income attributable to shareholders 395,885 397,400 1,515

Comprehensive income attributable to shareholders 570,105 571,620 1,515

As of March 31, 2021 As computed under LIFO As reported under FIFO Effect of change

Consolidated Balance Sheets

Inventories, net $ 297,088 $ 315,067 $ 17,979

Accrued income taxes 25,528 27,561 2,033

Deferred income taxes, net 239,198 236,860 ( 2,338 )

Retained earnings 1,957,387 1,939,408 ( 17,979 )

As of March 31, 2021 As computed under LIFO As reported under FIFO Effect of change

Consolidated Statement of Cash Flows

Net income $ 395,355 $ 396,870 $ 1,515

Changes in operating assets and liabilities, net of effects of acquisitions:

Inventories, net 21,748 3,769 ( 17,979 )

Accruals and other, net ( 10,652 ) 9,916 20,568

Deferred income taxes 8,344 4,240 ( 4,104 )

The following tables reflect the impact to the financial statement line items that result from the change in accounting principle on the prior periods presented in the accompanying financial statements.

BUSINESS ACQUISITIONS AND DIVESTITURES

Fiscal 2022 Acquisition of Cantel Medical LLC

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.

Total Purchase Consideration

The total consideration for Cantel Common Stock and stock equivalents was $ 3,599,471 .

The consideration was comprised of the following:

(shares in thousands)

Cash consideration $ 16.93 per Cantel share ( 42,816 shares)

Cash consideration for fractional shares 14

STERIS plc ordinary shares 14,297 shares at ($ 188.07 per share)

Consideration related to Cantel equity compensation programs 18,173

Consideration related to equity component of Cantel convertible debt 175,555

Total purchase consideration $ 3,599,471

In addition, STERIS assumed and repaid $ 721,284 of existing Cantel debt obligations and assumed Cantel's obligations associated with convertible senior notes issued on May 15, 2020, which is described in Note 6 titled, "Debt."

We funded the cash portion of the transaction consideration and repayment of a significant amount of Cantel’s existing debt obligations with a portion of the proceeds from new debt, which is described in Note 6 titled, "Debt".

Fair Value of Assets Acquired and Liabilities Assumed

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.

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.

The purchase price has been allocated based on the latest draft valuations and remains preliminary.

As we finalize the fair value of assets acquired and liabilities assumed, additional purchase price adjustments and associated deferred taxes will be recorded during the remaining measurement period.

Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions.

The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact our results of operations.

The finalization of the purchase accounting assessment in the first quarter of fiscal 2023 may result in additional changes in the valuation of assets acquired and liabilities assumed and that may impact our results of operations and financial position.

Goodwill has been allocated to the Healthcare, Dental and Life Sciences segments.

Goodwill is the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined company and assembled workforce.

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 analyses are performed, and these differences could have a material impact on our results of operations and financial position.

STERIS PLC AND SUBSIDIARIES

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

Consolidated Statements of Income Year ended March 31, 2020 Year ended March 31, 2019

Previously reported As adjusted Adjustments Previously reported As adjusted Adjustments

Cost of revenues:

Product $ 750,202 $ 750,129 $ ( 73 ) $ 702,295 $ 702,736 $ 441

Cost of revenues 1,710,972 1,710,899 ( 73 ) 1,606,743 1,607,184 441

Gross profit 1,319,923 1,319,996 73 1,175,427 1,174,986 ( 441 )

Income from operations 536,973 537,046 73 411,465 411,024 ( 441 )

Income before income tax expense 498,681 498,754 73 369,470 369,029 ( 441 )

Income tax expense (benefit) 90,876 90,895 19 64,394 64,283 ( 111 )

Net income 407,805 407,859 54 305,076 304,746 ( 330 )

Net income attributable to shareholders 407,605 407,659 54 304,051 303,721 ( 330 )

Net income per share attributable to shareholders:

Basic $ 4.81 $ 4.81 $ — $ 3.59 $ 3.59 $ —

Diluted $ 4.76 $ 4.76 $ — $ 3.56 $ 3.55 $ ( 0.01 )

Consolidated Statements of Comprehensive Income Year ended March 31, 2020 Year ended March 31, 2019

Previously reported As adjusted Adjustments Previously reported As adjusted Adjustments

Net income $ 407,805 $ 407,859 $ 54 $ 305,076 $ 304,746 $ ( 330 )

Net income attributable to shareholders 407,605 407,659 54 304,051 303,721 ( 330 )

Comprehensive income attributable to shareholders 331,920 331,974 54 134,558 134,228 ( 330 )

Consolidated Balance Sheets Year ended March 31, 2020 Year ended March 31, 2019

Previously reported As adjusted Adjustments Previously reported As adjusted Adjustments

Inventories, net $ 248,259 $ 263,544 $ 15,285 $ 208,243 $ 223,455 $ 15,212

Cash $ 169,073

Accounts receivable 172,226

Inventory 249,221

Property, plant and equipment 267,360

Lease right-of-use assets 59,720

Other assets 72,864

Intangible assets 2,942,000

Goodwill 1,522,381

Total assets acquired 5,454,845

Convertible debt, par value 168,000

Other current liabilities 247,549

Long-term lease obligations 47,856

Deferred income taxes, net 670,685

Retained earnings 1,647,175 1,658,661 11,486 1,339,024 1,350,456 11,432

Consolidated Statement of Cash Flows Year ended March 31, 2020 Year ended March 31, 2019

Previously reported As adjusted Adjustments Previously reported As adjusted Adjustments

Net income $ 407,805 $ 407,859 $ 54 $ 305,076 $ 304,746 $ ( 330 )

Changes in operating assets and liabilities, net of effects of acquisitions:

Deferred income taxes 9,423 9,442 19 ( 6,511 ) ( 6,622 ) ( 111 )

Inventories, net ( 39,067 ) ( 39,140 ) ( 73 ) ( 14,617 ) ( 14,176 ) 441

Long-term indebtedness 721,284

Total liabilities assumed 1,855,374

Net assets acquired $ 3,599,471

(1) Purchase price allocation is preliminary as of March 31, 2022, as valuations have not been finalized.

Cantel Other Intangible Assets

The estimated fair values of identifiable intangible assets were prepared using income valuation methodologies, which require a forecast of expected future cash flows using either the relief-from-royalty method or the multi-period excess earnings method.

The estimated useful lives are based on the historical experience of STERIS, available similar industry data and assumptions made by management.Values and useful lives are presented in the table below.

Customer relationships $ 2,278,000 9 - 10 years

Trade names 422,000 11 years

Developed technology 222,000 9 years

Non-compete agreements 20,000 2 years

Total intangible assets acquired $ 2,942,000

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

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 March 31, 2022.

Net sales and operating income attributable to Cantel from the date of acquisition and included in our consolidated financial statements for the fiscal year ended March 31, 2022 total $ 974,408 and $ 41,757 , 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 fiscal years ended March 31, 2022 and 2021.

Fiscal Year Ended March 31,

Net revenues $ 4,790,161 $ 4,190,244

Net income from continuing operations 449,382 5,849

STERIS PLC AND SUBSIDIARIES

1 unchanged sentence

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

Fiscal 2021 Selected Data (Unaudited) First Quarter Second Quarter

Previously reported As adjusted Adjustments Previously reported As adjusted Adjustments

Cost of revenues:

Product $ 156,555 $ 154,739 $ ( 1,816 ) $ 175,798 $ 175,798 $ —

Cost of revenues 383,364 381,548 ( 1,816 ) 426,095 426,095 —

Gross profit 285,568 287,384 1,816 330,037 330,037 —

Income from operations 114,001 115,817 1,816 141,263 141,263 —

Income before income tax expense 106,798 108,614 1,816 133,786 133,786 —

Income tax expense (benefit) 18,674 19,082 408 27,778 27,778 —

Net income 88,124 89,532 1,408 106,008 106,008 —

Net income attributable to shareholders 88,190 89,598 1,408 105,858 105,858 —

Net income per share attributable to shareholders:

Basic $ 1.04 $ 1.05 $ 0.01 $ 1.24 $ 1.24 $ —

Diluted $ 1.03 $ 1.05 $ 0.02 $ 1.23 $ 1.23 $ —

Third Quarter Fourth Quarter

Previously reported As adjusted Adjustments As reported As computed under LIFO Adjustments

Cost of revenues:

Product $ 202,881 $ 202,881 $ — $ 231,658 $ 231,868 $ 210

Cost of revenues 463,063 463,063 — 493,713 493,923 210

Gross profit 345,861 345,861 — 379,818 379,608 ( 210 )

Income from operations 147,030 147,030 — 144,258 144,048 ( 210 )

Income before income tax expense 139,430 139,430 — 135,703 135,493 ( 210 )

Income tax expense (benefit) 24,842 24,842 — 48,961 48,858 ( 103 )

Net income 114,588 114,588 — 86,742 86,635 ( 107 )

Net income attributable to shareholders 114,501 114,501 — 87,443 87,336 ( 107 )

Net income per share attributable to shareholders:

Basic $ 1.34 $ 1.34 $ — $ 1.02 $ 1.02 $ —

Diluted $ 1.33 $ 1.33 $ — $ 1.02 $ 1.01 $ 0.01

The historical consolidated financial information of STERIS and Cantel has been adjusted in the pro forma information to give effect to pro forma events that are directly attributable to the transaction and factually supportable.

The unaudited pro forma results include adjustments to reflect the amortization of the inventory step-up and the incremental depreciation and amortization to be reported based on the latest draft of valuations of assets acquired.

Adjustments to financing costs and income tax expense also were made to reflect the capital structure and anticipated effective tax rate of the combined entity.

These pro forma amounts are not necessarily indicative of the results that would have been obtained if the acquisition had occurred as of the beginning of the period presented or that may occur in the future, and does not reflect future synergies, integration costs, or other such costs or savings.

Other Fiscal 2022 Acquisitions

In addition to the acquisition of Cantel, we completed three other tuck-in acquisitions during fiscal 2022, which continued to expand our product and service offerings in the Healthcare segment.

Total aggregate consideration for these transactions was approximately $ 3,146 , net of cash acquired and including deferred consideration of $ 50 .

Fiscal 2021 Acquisitions

On January 4, 2021 , we purchased the remaining outstanding shares of an entity in which we had initially made an equity investment in fiscal 2019.

Total consideration was approximately $ 78,045 , net of cash acquired and subject to any working capital adjustments.

Total non-cash consideration for this transaction was $ 41,771 , which consisted of the settlement of outstanding principal and interest on a loan receivable, the initial equity investment, and receivables related to capital equipment purchases that existed at the acquisition date.

The business has been integrated into our Applied Sterilization Technologies business segment and we funded the transaction through a combination of cash on hand and credit facility borrowings.

On November 18, 2020, we acquired all of the outstanding units and equity of Key Surgical, LLC ("Key Surgical").

Key Surgical is a global provider of sterile processing, operating room and endoscopy consumable products serving hospitals and surgical facilities.

Key Surgical has been integrated into our Healthcare segment.

The total purchase price of the acquisition was $ 853,203 , net of cash acquired and remains subject to customary working capital adjustments.

The purchase price for the acquisition was financed with a combination of cash on hand, credit facility borrowings and proceeds from borrowings under a then new Term loan agreement.

Please refer to Note 6 titled, "Debt" for more information.

We also completed two other tuck-in acquisitions during fiscal 2021, which continued to expand our product and service offerings in the Healthcare segment.

Total aggregate consideration for these transactions was approximately $ 20,909 , net of cash acquired and including deferred consideration of approximately $ 1,194 .

Fiscal 2020 Acquisitions

During fiscal 2020, we completed several tuck-in acquisitions which continued to expand our product and service offerings in the Healthcare, Applied Sterilization Technologies and Life Sciences segments.

The aggregate purchase price associated with these transactions was approximately $ 128,860 , net of cash acquired and including contingent and deferred consideration.

STERIS PLC AND SUBSIDIARIES

1 unchanged sentence

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

Fiscal 2020 Selected Data (Unaudited) First Quarter Second Quarter

Previously reported As adjusted Adjustments Previously reported As adjusted Adjustments

Cost of revenues:

Product $ 160,959 $ 159,912 $ ( 1,047 ) $ 183,600 $ 183,600 $ —

Cost of revenues 390,960 389,913 ( 1,047 ) 418,173 418,173 —

Gross profit 305,843 306,890 1,047 318,667 318,667 —

Income from operations 110,088 111,135 1,047 126,733 126,733 —

Income before income tax expense 99,410 100,457 1,047 117,307 117,307 —

Income tax expense (benefit) 14,633 14,899 266 22,165 22,165 —

Net income 84,777 85,558 781 95,142 95,142 —

Net income attributable to shareholders 84,590 85,371 781 94,769 94,769 —

Net income per share attributable to shareholders:

Basic $ 1.00 $ 1.01 $ 0.01 $ 1.12 $ 1.12 $ —

Diluted $ 0.99 $ 1.00 $ 0.01 $ 1.11 $ 1.11 $ —

Third Quarter Fourth Quarter

Previously reported As adjusted Adjustments Previously reported As adjusted Adjustments

Cost of revenues:

Product $ 195,105 $ 195,105 $ — $ 210,539 $ 211,513 $ 974

Cost of revenues 442,908 442,908 — 458,931 459,905 974

Gross profit 331,353 331,353 — 364,060 363,086 ( 974 )

Income from operations 142,387 142,387 — 157,765 156,791 ( 974 )

Income before income tax expense 133,952 133,952 — 148,012 147,038 ( 974 )

Income tax expense (benefit) 29,285 29,285 — 24,793 24,546 ( 247 )

Net income 104,667 104,667 — 123,219 122,492 ( 727 )

Net income attributable to shareholders 104,930 104,930 — 123,316 122,589 ( 727 )

Net income per share attributable to shareholders:

Basic $ 1.24 $ 1.24 $ — $ 1.45 $ 1.44 $ ( 0.01 )

Diluted $ 1.23 $ 1.23 $ — $ 1.44 $ 1.43 $ ( 0.01 )

RESTRUCTURING

Fiscal 2019 Restructuring Plan.

During the third quarter of fiscal 2019, we adopted and announced a targeted restructuring plan (the "Fiscal 2019 Restructuring Plan"), which included the closure of two manufacturing facilities, one in Brazil and one in England, as well as other actions including the rationalization of certain products.

Fewer than 200 positions were eliminated.

The Company relocated the production of certain impacted products to other existing manufacturing operations during fiscal 2020.

These restructuring actions were designed to enhance profitability and improve efficiency.

Since inception of the Fiscal 2019 Restructuring Plan we have incurred pre-tax expenses totaling $ 40,822 related to these restructuring actions, of which $ 28,746 was recorded as restructuring expenses and $ 12,076 was recorded in cost of revenues, with a total of $ 33,862 , $ 4,491 and $ 668 related to the Healthcare, Applied Sterilization Technologies and Life Sciences segments, respectively.

Corporate related restructuring charges were $ 1,801 .

Additional restructuring expenses related to this plan are not expected to be material to our results of operations.

Fair Value of Assets Acquired and Liabilities Assumed

The table below summarizes the allocation of the purchase price to the net assets acquired based on fair values at the acquisition dates for our fiscal 2022, 2021 and 2020 acquisitions.

Fiscal Year 2022 (1)

Fiscal Year 2021 Fiscal Year 2020

(dollars in thousands) Other Acquisitions (Excluding Cantel) Key Surgical Other Acquisitions All Acquisitions

Cash $ — $ 12,615 $ 9,159 $ 8,811

Accounts receivable — 13,967 9,621 10,331

Inventory — 21,414 22,123 8,999

Property, plant and equipment — 6,030 26,363 9,241

Lease right-of-use assets, net — 4,907 4,420 4,462

Other assets — 6,680 3,378 1,133

Intangible assets (2)

1,578 356,999 28,188 36,500

Goodwill 1,602 527,675 42,808 74,531

Total assets 3,180 950,287 146,060 154,008

Current liabilities ( 34 ) ( 21,599 ) ( 28,245 ) ( 20,659 )

Non-current liabilities — ( 62,870 ) ( 9,704 ) ( 4,000 )

Total liabilities ( 34 ) ( 84,469 ) ( 37,949 ) ( 24,659 )

Net assets $ 3,146 $ 865,818 $ 108,111 $ 129,349

(1) Purchase price allocation is still preliminary as of March 31, 2022, as valuations have not been finalized, pending further analyses of the significant drivers of fair value.

(2) Includes $ 315,575 , related to the fair value of the Customer relationships intangible asset, obtained in the acquisition of Key Surgical.

The estimation of fair value was determined under an income approach using discounted cash flows.

The estimate requires assumptions including forecasted revenue growth rates, forecasted profit margins, and Customer attrition rates.

Goodwill is the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined company and assembled workforce.

The deductible portion of goodwill for tax purposes recognized as a result of the fiscal 2022 and fiscal 2021 acqu isitions was $ 427,035 and $ 197,344 , respectively.

Acquisition related transaction and in tegration costs totaled $ 205,788 , $ 35,634 , and $ 8,225 for the fiscal years ended March 31, 2022, 2021, and 2020, respectively.

Fiscal 2022 acquisition and integration expenses were primarily related to the acquisition of Cantel.

Fiscal 2021 acquisition and integration expenses were primarily related to the acquisitions of Key Surgical LLC and Cantel.

These costs are included in Selling, general, and administrative expenses in the Consolidated Statements of Income.

Divestitures.

In December 2021, we entered into an Asset Purchase Agreement to sell our 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 recognized a gain on the sale of $ 950 .

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.

STERIS PLC AND SUBSIDIARIES

1 unchanged sentence

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

The following table summarizes our total pre-tax restructuring expenses for fiscal 2021 and 2020:

Fiscal 2019 Restructuring Plan Year Ended March 31, 2021 Year Ended March 31, 2020

Severance and other compensation related (credits) costs $ ( 298 ) $ 1,554

(Gain) on disposal of asset ( 3,779 ) ( 1,164 )

Lease termination costs and other

Product rationalization (1)

( 115 ) 2,470

Total restructuring expenses (credit) $ ( 3,029 ) $ 3,143

(1) Recorded in cost of revenues on the Consolidated Statements of Income.

Liabilities related to restructuring activities are recorded as current liabilities on the accompanying Consolidated Balance Sheets within “Accrued payroll and other related liabilities” and “Accrued expenses and other.” The following table summarizes our restructuring liability balances.

The remaining liability balances at March 31, 2021 were not material.

Fiscal 2019 Restructuring Plan March 31,

2019 Provisions Payments /Impairments (1) March 31,

Severance and termination benefits $ 4,102 $ 1,554 $ ( 4,659 ) $ 997

Lease termination obligations and other 2,029 283 ( 2,292 ) 20

Total $ 6,131 $ 1,837 $ ( 6,951 ) $ 1,017

(1) Certain amounts reported include the impact of foreign currency movements relative to the U.S.

During fiscal 2021, we sold an Applied Sterilization Technologies laboratory that was located in the Netherlands.

We recorded proceeds of $ 518 , net of cash divested, and recognized a pre-tax loss on the sale of $ 2,024 in the selling, general and administrative expense line of the Consolidated Statements of Income.

The business generated annual revenues of approximately $ 6,000 .

During fiscal 2020, we sold the operations of our Healthcare services business that were located in China.

We recorded proceeds of $ 439 , net of cash divested, and recognized a pre-tax loss on the sale of $ 2,365 in the selling, general and administrative expense line of the Consolidated Statements of Income.

The business generated annual revenues of approximately $ 5,000 .

Loans Receivable

In connection with an equity investment of $ 4,955 , we agreed to provide a credit facility of up to approximately $ 11,606 for a term of up to seven years ending in 2025.

The loan carried an interest rate of 4 % compounded daily and interest was payable annually.

Outstanding borrowings under the agreement totaled $ 7,084 at March 31, 2020.

During fiscal 2021, we purchased the remaining shares of the equity investment.

In addition to the purchase price, the acquisition agreement included the capitalization of the outstanding principal and accumulated interest under this credit facility in the amount of $ 11,708 .

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

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

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

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

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

Outstanding principal borrowings under the agreement totaled $ 8,129 (or € 7,300 ) at March 31, 2022, and $ 8,568 (or € 7,300 ) at March 31, 2021.

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

Interest income is not material.

GOODWILL AND INTANGIBLE ASSETS

1 unchanged sentence

Segment Applied Sterilization Technologies Segment Life Sciences

Segment Total

Segment Dental Total

Balance at March 31, 2020 827,266 1,380,262 148,557 — 2,356,085

Goodwill acquired or allocated 536,713 33,770 — — 570,483

Divestitures ( 199 ) — — ( 199 )

Foreign currency translation adjustments and other 20,784 78,207 490 — 99,481

Balance at March 31, 2021 $ 1,384,763 $ 1,492,239 $ 149,047 $ — $ 3,026,049

Goodwill acquired or allocated 536,713 33,770 — 570,483

Cantel goodwill acquired (1)

1,019,332 — 30,356 472,693 1,522,381

Measurement period adjustments to acquired goodwill ( 6,533 ) ( 9,286 ) — — ( 15,819 )

Divestitures ( 7,000 ) — — — ( 7,000 )

Foreign currency translation adjustments and other ( 63,732 ) ( 50,095 ) ( 115 ) ( 7,326 ) ( 121,268 )

Balance at March 31, 2022 $ 2,326,830 $ 1,432,858 $ 179,288 $ 465,367 $ 4,404,343

(1) Amounts are still preliminary, as Cantel acquisition valuations have not been finalized.

See Note 2, titled "Business Acquisitions and Divestitures", for additional information regarding our recent business acquisitions and divestitures.

We evaluate the recoverability of recorded goodwill amounts annually during the third fiscal quarter, or when evidence of potential impairment exists.

As a result of our annual impairment review of goodwill for fiscal years 2021, 2020 and 2019, no indicators of impairment were identified.

STERIS PLC AND SUBSIDIARIES

1 unchanged sentence

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

We evaluate the recoverability of recorded goodwill amounts annually during the third fiscal quarter, or when evidence of potential impairment exists.

As a result of our annual impairment review of goodwill for fiscal years 2022, 2021 and 2020, no indicators of impairment were identified.

Information regarding our intangible assets is as follows:

March 31, Gross

Amount Accumulated

Amortization Gross

6 unchanged sentences

Total $ 4,185,318 $ 856,781 $ 1,424,723 $ 526,317

(1) The increase in fiscal 2022 was primarily due to the Cantel acquisition.

See Note 2, titled "Business Acquisitions and Divestitures", for additional information.

Certain trademarks and tradenames obtained as a result of business combinations are indefinite-lived assets.

The approximate carrying value of these assets at March 31, 2021 and March 31, 2020 was $ 14,250 and $ 14,250 , respectively.

The approximate carrying value of these assets at March 31, 2022 and March 31, 2021 was $ 14,250 .

We evaluate our indefinite-lived intangible assets annually during the third quarter, or when evidence of potential impairment exists.

No impairment was recognized for fiscal year 2021 or 2020.

During the third quarter of fiscal 2019, management adopted a branding strategy that included phasing out the usage of a tradename associated with certain products in the Healthcare Products business segment.

As a result, management recorded an impairment charge of $ 16,249 , which is included within the Selling, general, and administrative line of the Consolidated Statements of Income.

The remaining fair value of the asset was calculated using an income approach (the relief from royalty method).

The remaining fair value was not material and will be amortized over the asset's remaining useful life.

Fair value calculated using this approach is classified within Level 3 of the fair value hierarchy and requires several assumptions.

No impairment was recognized for fiscal years 2022, 2021 or 2020.

Total amortization expense for intangible assets was $ 368,698 , $ 86,512 , and $ 74,528 for the years ended March 31, 2022, 2021, and 2020, respectively.

4 unchanged sentences

INVENTORIES, NET

Components of our i nventories are presented in the following table.

The March 31, 2020 amounts have been adjusted to reflect the change in inventory accounting method, as described in Note 1 titled, "Nature of Operations and Summary of Significant Accounting Policies''.

Components of our inventories are presented in the following table.

March 31, 2022 2021

(as adjusted)

Raw materials $ 195,035 $ 103,939

$ 103,939 $ 94,321

Work in process 76,021 54,283

54,283 35,643

Finished goods 334,880 176,623

176,623 149,729

Reserve for excess and obsolete inventory ( 30,937 ) ( 19,778 )

( 19,778 ) ( 16,149 )

Inventories, net $ 574,999 $ 315,067

$ 315,067 $ 263,544

STERIS PLC AND SUBSIDIARIES

7 unchanged sentences

Buildings and leasehold improvements 654,851 567,132

567,132 531,267

Machinery and equipment 903,649 779,044

779,044 682,488

Information systems 222,620 193,222

193,222 181,112

565,681 508,593

Radioisotope 597,641 565,681

Construction in progress (1)

1 unchanged sentence

Total property, plant, and equipment 2,818,789 2,385,937

2,385,937 2,129,185

accumulated depreciation and depletion ( 1,266,213 ) ( 1,150,537 )

( 1,150,537 ) ( 1,017,330 )

Property, plant, and equipment, net $ 1,552,576 $ 1,235,400

$ 1,235,400 $ 1,111,855

(1) Land is not depreciated.

19 unchanged sentences

Balance at March 31, 2022 $ 13,543

Indebtedness as of March 31, 2021 and 2020 was as follows:

Revolving Credit Agreement $ 247,423 $ 275,449

Private Placement 860,308 878,409

New Term Loan 550,000 —

Deferred Financing Fees ( 7,191 ) ( 3,337 )

Total long term debt $ 1,650,540 $ 1,150,521

STERIS PLC AND SUBSIDIARIES

1 unchanged sentence

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

agreement with various financial institutions as lenders, and JPMorgan Chase Bank, N.A., as administrative agent (the “Revolving Credit Agreement”) providing for a $ 1,250,000 revolving credit facility (the “Revolver”), which replaced a prior revolving credit agreement.

Indebtedness as of March 31, 2022 and 2021 was as follows:

2022 March 31,

Short-term debt

Term loan, current portion $ 27,500 $ —

Delayed draw term loan, current portion 24,375 —

Private Placement Senior Notes 91,000 —

Total short-term debt $ 142,875 $ —

Long-term debt

Private Placement Senior Notes $ 758,726 $ 860,308

Revolving Credit Facility 58,908 247,423

Deferred financing costs ( 25,278 ) ( 7,191 )

Term loan 177,500 550,000

Delayed draw term loan 625,625 —

Senior Public Notes 1,350,000 —

Total long-term debt $ 2,945,481 $ 1,650,540

Total debt $ 3,088,356 $ 1,650,540

On March 19, 2021, STERIS plc ("the Company"), STERIS Corporation, STERIS Limited (“Limited”), and STERIS Irish FinCo Unlimited Company ("FinCo", "STERIS Irish FinCo"), each as a borrower and guarantor, entered into a credit agreement with various financial institutions as lenders, and JPMorgan Chase Bank, N.A., as administrative agent (the “Revolving Credit Agreement”) providing for a $ 1,250,000 revolving credit facility (the “Revolver”), which replaced a prior revolving credit agreement.

The Revolver provides for revolving credit borrowings, swing line borrowings and letters of credit, with sublimits for swing line borrowings and letters of credit.

1 unchanged sentence

The Revolver matures on the date that is five years after March 19, 2021, and all unpaid borrowings, together with accrued and unpaid interest thereon, are repayable on that date.

The Revolver bears interest from time to time, at either the Base Rate or the Eurocurrency Rate, as defined in and calculated under and as in effect from time to time under the Revolving Credit Agreement, plus the Applicable Margin, as defined in the Revolving Credit Agreement.

The Revolver bears interest from time to time, at either the Base Rate , Eurocurrency Rate, or the Adjusted Daily Simple RFR, as defined in and calculated under and as in effect from time to time under the Revolving Credit Agreement, plus the Applicable Margin, as defined in the Revolving Credit Agreement.

The Applicable Margin is determined based on the Debt Rating of STERIS, as defined in the Credit Agreement.

Base Rate Advances are payable quarterly in arrears and Eurocurrency Rate Advances are payable at the end of the relevant interest period therefor, but in no event less frequently than every three months.

Interest on Base Rate Advances is payable quarterly in arrears, and interest on Eurocurrency Rate Advances is payable at the end of the relevant interest period therefor, but in no event less frequently than every three months, and interest on RFR Advances is payable monthly after the date of borrowing.

Swingline borrowings bear interest at a rate to be agreed by the applicable swingline lender and the applicable borrower, subject to a cap in the case of swingline borrowings denominated in U.S.

2 unchanged sentences

Dollars or in specified alternative currencies.

In connection with the cessation of British Pound Sterling LIBOR and Swiss Franc LIBOR as of December 31, 2021, JPMorgan Chase Bank, N.A.

as administrative agent, pursuant to authority contained in the Revolver, amended the Revolver on January 1, 2022 to make Benchmark Replacement Conforming Changes (as defined in the Revolver).

The amendment concerns technical, administrative or operational changes related to borrowings in British Pounds Sterling and Swiss Francs.

As of March 31, 2022 a total of $ 58,908 of Credit Agreement and Swing Line Facility borrowings were outstanding under the Credit Agreement, based on currency exchange rates as of March 31, 2022.

On March 19, 2021, the Company, STERIS Corporation, Limited, and FinCo, each as a borrower and guarantor, entered into a term loan agreement with various financial institutions as lenders, and JPMorgan Chase Bank, N.A., as Administrative agent (the “Term Loan Agreement”) providing for a $ 550,000 term loan facility (the “Term Loan”), which replaced an existing term loan agreement, dated as of November 18, 2020 (the “Existing Term Loan Agreement”).

The proceeds of the Term Loan were used to refinance the Existing Term Loan Agreement.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Term Loan matures on the date that is five years after March 19, 2021 (the “Term Loan Closing Date”).

4 unchanged sentences

The Term Loan bears interest from time to time, at either the Base Rate or the Eurocurrency Rate, as defined in and calculated under and as in effect from time to time under the Term Loan Agreement, plus the Applicable Margin, as defined in the Term Loan Agreement.

The Applicable Margin is determined based on the Debt Rating of the Company, as defined in the Term Loan Agreement.

The Applicable Margin is determined based on the Debt Rating of STERIS, as defined in the Term Loan Agreement.

Also on March 19, 2021, the Company, STERIS Corporation, Limited, and FinCo, each as a borrower and guarantor, entered into a delayed draw term loan agreement with various financial institutions as lenders, and JPMorgan Chase Bank, N.A., as administrative agent (the “Delayed Draw Term Loan Agreement”) provi ding for a delayed draw term loan facility of up to $ 750,000 (the “Delayed Draw Term Loan”) in connection with STERIS’s proposed acquisition of Cantel Medical Corp.

The Delayed Draw Term Loan will be funded by the lenders upon the satisfaction of certain conditions, including the concurrent consummation of the acquisition (the “Acquisition Closing Date”).

The proceeds of the Delayed Draw Term Loan are expected to be used, together with the proceeds from other new indebtedness, to fund the cash consideration for the acquisition, as well as for various other items.

Also on March 19, 2021, the Company, STERIS Corporation, Limited, and FinCo, each as a borrower and guarantor, entered into a delayed draw term loan agreement with various financial institutions as lenders, and JPMorgan Chase Bank, N.A., as administrative agent (the “Delayed Draw Term Loan Agreement”) providing for a delayed draw term loan facility of up to $ 750,000 (the “Delayed Draw Term Loan”) in connection with STERIS’s acquisition of Cantel.

During the first quarter of fiscal 2022, we borrowed $ 650,000 under our Delayed Draw Term Loan Agreement.

The Delayed Draw Term Loan was funded by the lenders upon consummation of the Cantel acquisition (the “Acquisition Closing Date”).

The proceeds of the Delayed Draw Term Loan were used, together with the proceeds from other new indebtedness, to fund the cash consideration for the acquisition, as well as for various other items.

The Delayed Draw Term Loan matures on the date that is five years after the Acquisition Closing Date.

3 unchanged sentences

The remaining unpaid principal is due and payable on the maturity date.

The Delayed Draw Term Loan bears interest from time to time, at either the Base Rate or the Eurocurrency Rate, as defined in and calculated under and as in effect from time to time under the Delayed Draw Term Loan Agreement, plus the

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Applicable Margin, as defined in the Delayed Draw Term Loan Agreement.

The Applicable Margin is determined based on the Debt Rating of STERIS, as defined in the Delayed Draw Term Loan Agreement.

1 unchanged sentence

There is no premium or penalty for prepayment of Base Rate Advances, but prepayments of Eurocurrency Rate Advances are subject to a breakage fee.

As of March 31, 2021 a total of $ 247,423 of Credit Agreement and Swing Line Facility borrowings were outstanding under the Credit Agreement, based on currency exchange rates as of March 31, 2021.

Senior Public Notes

On April 1, 2021, STERIS Irish FinCo Unlimited Company ("FinCo," "STERIS Irish FinCo," the "Issuer") completed an offering of $ 1,350,000 in aggregate principal amount, of its senior notes in two separate tranches:

(i) $ 675,000 aggregate principal amount of the Issuer’s 2.70 % Senior Notes due 2031 (the “2031 Notes”) and (ii) $ 675,000 aggregate principal amount of the Issuer’s 3.750 % Senior Notes due 2051 (the “2051 Notes” and, together with the 2031 Notes, the “Senior Public Notes”).

The Senior Public Notes were issued pursuant to an Indenture, dated as of April 1, 2021 (the “Base Indenture”), among FinCo, and STERIS plc, STERIS Corporation and STERIS Limited (the “Guarantors”) and U.S.

Bank National Association, as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of April 1, 2021, among FinCo, the Guarantors and the Trustee (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”).

Each of the Guarantors guaranteed the Senior Public Notes jointly and severally on a senior unsecured basis (the “Guarantees”).

The 2031 Notes will mature on March 15, 2031 and the 2051 Notes will mature on March 15, 2051.

The Senior Public Notes will bear interest at the rates set forth above.

Interest on the Senior Public Notes is payable on March 15 and September 15 of each year, beginning on September 15, 2021, until their respective maturities.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Cantel's Convertible Debt

On May 15, 2020, Cantel issued $ 168,000 aggregate principal amount of 3.25 % convertible senior notes due 2025 (the “Notes”) in a private placement.

The initial conversion price was $ 41.51 per share of Cantel common stock (based on an initial conversion rate of 24.0912 shares of Cantel common stock per one thousand dollars in principal amount of Notes) and was, along with the conversion rate, subject to adjustment if certain events occurred.

On June, 3, 2021, Cantel (a) delivered a notice to holders of its Notes pursuant to the indenture governing the Notes (as supplemented, the "Cantel Indenture”), notifying holders that, as a result of each of (i) the consummation of the series of mergers (the “Mergers”) contemplated by the Agreement and Plan of Merger, dated as of January 12, 2021 (as amended by Amendment to Agreement and Plan of Merger, dated as of March 1, 2021), among Cantel, STERIS plc (“Parent”), Solar New US Holding Co, LLC (now known as Solar New US Holding Corporation) (“US Holdco”), an indirect and wholly owned subsidiary of Parent, and Crystal Merger Sub 1, LLC, a direct and wholly owned subsidiary of US Holdco, and (ii) the delisting of Cantel common stock from the New York Stock Exchange (the “NYSE”), a “Fundamental Change” and a “Make-Whole Fundamental Change,” each as defined in the Cantel Indenture, had occurred effective as of June 2, 2021 and (b) commenced an offer to purchase any and all outstanding Notes as a result of the Fundamental Change.

A tender offer statement on Schedule TO (“Schedule TO”) was filed by Cantel with the U.S.

Securities and Exchange Commission ("SEC") with respect to the right of each holder (each, a “Holder”) of the Notes to require Cantel to repurchase, at the Holder’s option, 100% of the principal amount of the Notes, plus accrued and unpaid interest thereon to, but excluding the settlement date of July 6, 2021 (as such date was amended by Amendment No.

1 to Schedule TO (“Amendment No.

1”), dated June 29, 2021).

The offer to purchase the Notes expired at 11:59 p.m.

New York City time, on July 1, 2021 (the “Expiration Time,” as such date was amended by Amendment No.

1), and was not extended.

Wells Fargo Bank, National Association, as paying agent and trustee under the Indenture (the “Cantel Trustee”), informed Cantel that as of the Expiration Time, none of the Notes had been validly tendered (and not properly withdrawn) for purchase.

Pursuant to the terms of the Cantel Indenture, in connection with the consummation of the Mergers, Cantel, Parent and the Cantel Trustee entered into a supplemental indenture providing that, following the Mergers, each holder’s right to convert each one thousand dollar principal amount of Notes into shares of Cantel common stock was changed into a right to convert such principal amount of Notes into the kind and amount of cash, stock, other securities, other property or assets, subject to settlement method election provisions of the Indenture, that a holder of Cantel common stock was entitled to receive upon consummation of the Mergers.

At the consummation of the Mergers, holders of Cantel common stock received $ 16.93 in cash and 0.33787 ordinary shares, par value $ 0.001 per share, of the Parent (“Parent Shares”) for each share of Cantel common stock (each a “unit of Reference Property”).

Because each of the consummation of the Mergers and the delisting of Cantel common stock from the NYSE constituted a “Make-Whole Fundamental Change” under the Cantel Indenture, any Notes surrendered for conversion from and including June 2, 2021 until July 2, 2021 (the “Make-Whole Conversion Period”) were subject to conversion at the conversion rate of 25.0843 units of Reference Property (the “Make-Whole Conversion Rate”), which corresponded to 8.4752 Parent Shares and approximately $ 424.68 in cash per one thousand dollars in principal amount of Cantel Notes.

The Make-Whole Conversion Rate was based on an increase in the Conversion Rate by 0.9931 Additional Shares (as defined in the Indenture) based on a Make-Whole Effective Date of June 2, 2021 and a Stock Price (each as defined in the Indenture) of $ 81.3520 .

Cantel settled all conversions of Notes in connection with the Make-Whole Fundamental Changes that constituted the Mergers and delisting of Cantel common stock from the NYSE pursuant to the Cash Settlement provisions of the Cantel Indenture.

The Cantel Trustee, acting as conversion agent, informed Cantel that holders of 100% of the outstanding Notes elected to convert their Notes during the Make-Whole Conversion Period.

The fair value of the Notes exceeded their aggregate par value of $ 168,000 at the date of consummation of the Mergers.

The fair value was estimated utilizing the closing price of Parent Shares on June 2, 2021.

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—Contracts 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 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.

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

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

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

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Our outstanding Private Placement Senior Notes at March 31, 2022 and 2021 were as follows:

3 unchanged sentences

$ 91,000 Senior notes at 3.20 %

2008 Private Placement August 2020 — 35,000

$ 91,000 Senior notes at 3.20 %

2012 Private Placement December 2022 91,000 91,000

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The agreement governing these notes contains leverage and interest coverage covenants.

In December 2012, and in February 2013 STERIS Corporation issued and s old $ 200,000 of senior notes, in a private placement to certain institutional investors in offerings that were exempt from the registration requirements of the Securities Act of 1933.

In December 2012, and in February 2013 STERIS Corporation issued and sold $ 200,000 of senior notes, in a private placement to certain institutional investors in offerings that were exempt from the registration requirements of the Securities Act of 1933.

The agreement governing the notes contains leverage and interest coverage covenants.

All of the note agreements for the senior notes were amended in March 2019, in connection with the Redomiciliation.

The amendments waived certain repurchase rights for of the note holders and increased the size of certain baskets to more closely align with other than current credit agreement baskets.

The private placement note purchase agreements specify increases to the coupon interest rates while the ratio of Consolidated Total Debt to Consolidated EBITDA, as defined in the note purchase agreements, exceeds certain thresholds.

Beginning September 1, 2021 and through March 31, 2022 the coupon rates on the 2012 private placement notes were increased by 0.50%.

On March 19, 2021, STERIS Corporation as issuer, and the Company, Limited and FinCo, as guarantors, entered into (1) a First Amendment to Amended and Restated Note Purchase Agreement dated March 5, 2019 (which had amended and restated certain note purchase agreements originally dated December 4, 2012) per the 2012 and 2013 senior notes (the “2012 Amendment”), and (2) a First Amendment to Amended and Restated Note Purchase Agreement dated March 5, 2019 (which had amended and restated certain note purchase agreements originally dated March 31, 2015) for the 2015 senior notes (the “2015 Amendment”).

Also on March 19, 2021, Limited, as Issuer, and the Company, STERIS Corporation and FinCo, as

Also on March 19, 2021, Limited, as Issuer, and the Company, STERIS Corporation and FinCo, as guarantors, entered into a First Amendment to Amended and Restated Note Purchase Agreement dated March 5, 2019 (which had amended and restated a certain note purchase agreement originally dated January 23, 2017) for the 2017 senior notes (together with the 2012 Amendment and the 2015 Amendment, the “NPA Amendments”).

The NPA Amendments provided, among other things, for the waiver of certain repurchase rights of the note holders and increased the size of certain baskets to more closely align with other current credit agreement baskets.

At March 31, 2022, we were in compliance with all financial covenants associated with our indebtedness.

STERIS PLC AND SUBSIDIARIES

1 unchanged sentence

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

guarantors, entered into a First Amendment to Amended and Restated Note Purchase Agreement dated March 5, 2019 (which had amended and restated a certain note purchase agreement originally dated January 23, 2017) for the 2017 senior notes (together with the 2012 Amendment and the 2015 Amendment, the “NPA Amendments”).

The NPA Amendments provide for, among other things, the netting of cash proceeds received from qualifying capital markets events under certain circumstances for purposes of calculating the leverage ratio financial covenant.

At March 31, 2021, we were in compliance with all financial covenants associated with our indebtedness.

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

2023 $ 142,875

2027 and thereafter 2,403,414

Total $ 3,113,634

On April 1, 2021, STERIS Irish FinCo Unlimited Company ("FinCo", "STERIS Irish FinCo", the "Issuer") completed an offering of $ 1,350,000 in aggregate principal amount, of its senior notes in two separate tranches:

The Senior Public Notes were issued pursuant to an Indenture, dated as of April 1, 2021 (the “Base Indenture”), among FinCo, the Company, STERIS Corporation and Limited (the “Guarantors”) and U.S.

Bank National Association, as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of April 1, 2021 , among FinCo, the Guarantors and the Trustee (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”).

Each of the Guarantors guaranteed the Senior Public Notes jointly and severally on a senior unsecured basis (the “Guarantees”).

The 2031 Notes will mature on March 15, 2031 and the 2051 Notes will mature on March 15, 2051 .

The Senior Public Notes will bear interest at the rates set forth above.

Interest on the Senior Public Notes is payable on March 15 and September 15 of each year, beginning on September 15, 2021 until their respective maturities .

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

ADDITIONAL CONSOLIDATED BALANCE SHEET INFORMATION

3 unchanged sentences

Compensation and related items $ 71,878 $ 47,157

$ 47,157 $ 42,205

Accrued vacation/paid time off 13,669 12,389

Accrued bonuses 64,702 62,530

62,530 53,041

Accrued employee commissions 30,171 24,022

2 unchanged sentences

Total accrued payroll and other related liabilities $ 183,721 $ 150,078

$ 150,078 $ 128,261

Accrued expenses and other:

Deferred revenues $ 110,791 $ 62,492

$ 62,492 $ 53,299

Service liabilities 51,365 46,720

3 unchanged sentences

Asset retirement obligation-current portion 1,181 1,193

65,303 58,158

Other 88,404 65,303

Total accrued expenses and other $ 306,544 $ 220,557

8 unchanged sentences

Total other liabilities $ 75,579 $ 88,010

The Tax Cuts and Jobs Act (the “TCJA”) was enacted on December 22, 2017.

The TCJA reduced the maximum U.S.

federal corporate income tax rate to 21.0 %, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign sourced earnings.

The Company applied the guidance in Staff Accounting Bulletin No.

118, Income Tax Accounting Implications of the Tax Cut and Jobs Act when accounting for the enactment-date effects of the TCJA.

We consider the tax expense recorded for the TCJA to be complete at this time.

We consider the tax expense recorded for the Tax Cuts and Jobs Act ("TCJA") to be complete at this time.

However, it is possible that additional legislation, regulations, interpretations and/or guidance may be issued in the future that may result in additional adjustments to the tax expense recorded related to the TCJA.

We will continue to monitor and assess the impact of any new developments.

Certain March 31, 2020 and 2019 amounts have been adjusted to reflect the change in inventory accounting method, as described in Note 1 titled, "Nature of Operations and Summary of Significant Accounting Policies".

STERIS PLC AND SUBSIDIARIES

3 unchanged sentences

Years Ended March 31, 2022 2021 2020

(as adjusted) (as adjusted)

United States operations $ 79,662 $ 326,991 $ 325,595

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Years Ended March 31, 2022 2021 2020

(as adjusted) (as adjusted)

United States federal $ 88,158 $ 57,550 $ 42,032

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Tax rate changes on deferred tax assets and liabilities 2.3 % 0.4 % 0.1 %

transition tax on foreign earnings — % — % ( 0.3 ) %

tax reform impact, GILTI and FDII ( 0.9 ) % ( 0.6 ) % 0.1 %

17 unchanged sentences

If all unrecognized tax benefits were recognized, the net impact on the provision for income tax expense would be $ 3,058 .

The decrease in unrecognized tax benefits from prior year is due to the additions of new positions.

The increase in unrecognized tax benefits from prior year is due to the additions of new positions.

It is reasonably possible that during the next 12 months, there will be no material reductions in unrecognized tax benefits as a result of the expiration of various statutes of limitations or other matters.

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

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.

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 examinations by tax authorities for years before fiscal 2016.

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

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.

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

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

Fiscal years 2018 through 2020 will be addressed as part of the settlement, and the issue does not apply to years 2021 forward.

We estimate the total federal, state, and local tax impact of the settlement to be approximately $ 12,000 .

An agreement was reached on final interest rates, which also impacts subsequent years through 2020.

We estimate the total federal, state, and local tax impact of the settlement to be approximately $ 12,000 , for the fiscal years 2016 through 2020, of which approximately $ 7,300 has been paid through March 31, 2022.

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

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The IRS adjustments would result in a cumulative tax liability of approximately $ 50,000 .

We intend to contest the IRS’s assertions, and pursue available remedies such as appeals and litigation, if necessary.

We are contesting the IRS’s assertions and intend to pursue available remedies such as appeals and litigation, if necessary.

We have not established reserves related to these notices.

8 unchanged sentences

March 31, 2022 2021

(as adjusted)

Deferred Tax Assets:

9 unchanged sentences

44,401 34,020

Foreign tax credit carryforwards 36,036 —

Other 8,579 8,603

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Intangibles 755,980 199,242

Pension 2,004 —

Other 3,473 3,833

10 unchanged sentences

If unused, these state operating loss carryforwards will expire between fiscal years 2023 and 2043.

At March 31, 2021, we had $ 5,442 of pre-valuation allowance tax credit carryforwards.

At March 31, 2022, we had $ 37,501 of pre-valuation allowance tax credit carryforwards of which $ 28,749 relates to offsets of deferred tax liabilities related to German branches of a U.S.

These credit carryforwards can be used through fiscal 2032.

2 unchanged sentences

The valuation allowance increased during fiscal 2022 by $ 10,548 .

Other than the tax expense recorded for the one-time transition tax on unremitted earnings of non-US subsidiaries, no additional provision has been made for income taxes on undistributed earnings of foreign subsidiaries as the Company’s position is that these amounts continue to be indefinitely reinvested.

Other than the tax expense previously recorded for the one-time transition tax on unremitted earnings of non-US subsidiaries, no additional provision has been made for income taxes on undistributed earnings of foreign subsidiaries as the Company’s position is that these amounts continue to be indefinitely reinvested.

The amount of undistributed earnings of subsidiaries was approximately $ 2,000,000 at March 31, 2022.

1 unchanged sentence

In October 2015, the Organization for Economic Cooperation and Development (OECD), in conjunction with the G20, finalized broad-based international tax policy guidelines that involve transfer pricing and other international tax subjects.

While some member jurisdictions automatically adopt the new OECD guidelines, most member countries can adopt the guidelines only by new law or regulations.

We are currently adopting processes to comply with the reporting requirements specified by the guidelines and are evaluating the other parts of the guidelines.

STERIS PLC AND SUBSIDIARIES

1 unchanged sentence

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

some member jurisdictions automatically adopt the new OECD guidelines, most member countries can adopt the guidelines only by new law or regulations.

We are currently adopting processes to comply with the reporting requirements specified by the guidelines and are evaluating the other parts of the guidelines.

BENEFIT PLANS

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Employee contributions 897 1,031 — —

Curtailments/settlements ( 1,334 ) — — —

Impact of foreign currency exchange rate changes ( 5,875 ) 12,898 — —

6 unchanged sentences

Benefits and expenses paid ( 5,325 ) ( 4,714 ) ( 1,083 ) ( 1,555 )

Curtailments/settlements ( 1,334 ) — — —

Impact of foreign currency exchange rate changes ( 6,472 ) 12,351 — —

4 unchanged sentences

2022 2021 2022 2021

Non-current assets $ 14,172 $ — $ — $ —

Current liabilities — — ( 1,190 ) ( 1,326 )

Noncurrent liabilities ( 3,748 ) ( 10,987 ) ( 8,690 ) ( 9,880 )

$ ( 3,748 ) $ ( 10,987 ) $ ( 10,016 ) $ ( 11,368 )

The pre-tax amount of unrecognized actuarial net loss and unamortized prior service cost included in accumulated other comprehensive (loss) income at March 31, 2021, was approximately $ 11,876 and $ 4,199 , respectively.

Non-current liabilities ( 1,772 ) ( 3,748 ) ( 7,335 ) ( 8,690 )

Net assets (liabilities) $ 12,400 $ ( 3,748 ) $ ( 8,525 ) $ ( 10,016 )

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The pre-tax amount of unrecognized actuarial net loss and unamortized prior service cost included in accumulated other comprehensive (loss) at March 31, 2022, was approximately $( 2,914 ) and $( 6,767 ), respectively.

Defined benefit plans with an accumulated benefit obligation and projected benefit obligation exceeding the fair value of plan assets had the following plan assets and obligations at March 31, 2022 and 2021:

3 unchanged sentences

Aggregate projected benefit obligations 129,772 149,200

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Components of Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Income.

7 unchanged sentences

Net amortization and deferral 18 21 9 444 439 482

Curtailments/settlements ( 31 ) — —

Net periodic benefit (credit) cost $ ( 49 ) $ 614 $ ( 401 ) $ 409 $ ( 2,507 ) $ ( 2,372 )

49 unchanged sentences

Plan assets are invested in diversified portfolios that provide adequate levels of return at an acceptable level of risk.

The investment policies are reviewed at least annually and revised, as deemed appropriate to ensure that the objectives are being met.

The investment policies are reviewed at least annually and revised, as d eemed appropriate to ensure that the objectives are being met.

At March 31, 2022, the targeted allocation for the plans were approximately 75 % equity investments and 25 % fixed income investments.

64 unchanged sentences

Defined Contribution Plans.

We maintain a 401(k) defined contribution plan for eligible U.S.

We maintain 401(k) defined contribution plans for eligible U.S.

employees, a 401(k) defined contribution plan for eligible Puerto Rico employees and similar savings plans for certain employees in Canada, United Kingdom, Ireland, and Finland.

3 unchanged sentences

The aggregate fair value of the U.S.

plan assets was $ 986,222 at March 31, 2021.

plan a ssets was $ 1,271,941 a t March 31, 2022.

At March 31, 2022, the U.S.

1 unchanged sentence

We paid dividends of $ 852 , $ 839 , and $ 855 to the plan and participants on STERIS shares held by the plan for the years ended March 31, 2022, 2021, and 2020, respectively.

We contributed approximately $ 29,853 , $ 27,818 , and $ 25,935 , to the defined contribution plans for the years ended March 31, 2021, 2020, and 2019, respectively.

We contributed approxima tely $ 38,600 , $ 29,853 , and $ 27,818 , to the defined contribution plans for the years ended March 31, 2022, 2021, and 2020, respectively.

STERIS PLC AND SUBSIDIARIES

15 unchanged sentences

Civil, criminal, regulatory or other proceedings involving our products or services could possibly result in judgments, settlements or administrative or judicial decrees requiring us, among other actions, to pay damages or fines or effect recalls, or be subject to other governmental, Customer or other third party claims or remedies, which could materially effect our business, performance, prospects, value, financial condition, and results of operations.

For additional information regarding these matters, see the risks and uncertainties described under the title "product related regulations and claims" in Item 1A.

For additional information regarding these matters, see the risks and uncertainties described under the title "product and service related regulations and claims" in Item 1A.

of this Annual Report on Form 10-K.

4 unchanged sentences

Changes in applicable tax law or other events may also require us to revise past estimates.

We describe income taxes further in Note 8 to our consolidated financial statements titled, “Income Taxes” in this Annual Report on Form 10-K.

We describe income taxes further in Note 8 to our consolidated financial statements titled, “Income Taxes” in t his Annual Report on Form 10-K.

As of March 31, 2022 and 2021, our commercial commitments totaled $ 98,675 and $ 79,122 , respectively.

Commercial commitments include standby letters of credit, letters of credit required as security under our self-insured risk retention policies, and other potential cash outflows resulting from an event that requires payment by us.

Approxima tely $ 11,807 a nd $ 12,474 of the March 31, 2021 and 2020 totals, respectively, relate to letters of credit required as security under our self-insured risk retention policies.

Approximately $ 13,900 and $ 11,807 of the March 31, 2022 and 2021 totals, respectively, relate to letters of credit required as security under our self-ins ured risk retention policies.

As of March 31, 2022, we had minimum purchase commitments with suppliers for raw material purchases totaling $ 59,869 .

43 unchanged sentences

BUSINESS SEGMENT INFORMATION

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

Healthcare, Applied Sterilization Technologies and Life Sciences.

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

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

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.

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.

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.

The segment also provides a range of specialty services for healthcare providers including hospital sterilization services and instrument and scope repairs.

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

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

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

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.

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.

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.

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

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

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

For the year ended March 31, 2021, revenues from a single Customer did not represent ten percent or more of any reportable segment’s revenues.

Information regarding our segments is presented in the following tables.

For the year ended March 31, 2022, revenues from a single Customer did not represent ten percent or more of the Healthcare, Applied Sterilization Technologies or Life Sciences segment revenues.

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 appr oxi mately 45.1 % o f our Dental segment revenues for the year ended March 31, 2022.

STERIS PLC AND SUBSIDIARIES

1 unchanged sentence

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

Information regarding our segments is presented in the following tables.

Years Ended March 31, 2022 2021 2020

(as adjusted) (as adjusted)

Healthcare $ 2,845,467 $ 1,954,055 $ 1,986,809

1 unchanged sentence

Life Sciences 524,964 467,552 416,939

Dental 361,661 — —

Total revenues $ 4,585,064 $ 3,107,519 $ 3,030,895

3 unchanged sentences

Life Sciences 216,188 180,796 144,088

Total reportable segments 918,533 835,714 741,422

Dental 84,441 — —

Corporate ( 260,059 ) ( 219,153 ) ( 207,015 )

8 unchanged sentences

( 2,350 ) ( 500 ) —

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

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

( 874 ) 2,030 1,770

1 unchanged sentence

81,804 5,600 2,392

Restructuring charges (4)

( 3,029 ) 3,143 40,708

COVID-19 incremental costs (4)

Restructuring charges (credit) (5)

48 ( 3,029 ) 3,143

Total operating income $ 425,618 $ 548,368 $ 537,046

(1) For more information regarding our recent acquisitions and divestitures see Note 18 titled, "Business Acquisitions and Divestitures".

Amortization of purchased intangible assets fiscal 2019 total includes an impairment charge of $ 16,249 , see Note 3 titled, "Goodwill and Intangible Assets", for more information.

(1) For more information regarding our recent acquisitions and divestitures refer to Note 2 titled, "Business Acquisitions and Divestitures."

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

(3) Costs incurred in connection with the Redomiciliation and subsequent tax restructuring.

(4) For more information regarding our restructuring activities see Note 2 titled, "Restructuring".

(5) Represents a one-time special employee bonus paid to most U.S.

employees and associated professional fees.

(3) Costs incurred in tax restructuring.

(4) COVID-19 incremental costs includes the additional costs attributable to COVID-19 such as enhanced cleaning protocols, personal protective equipment for our employees, event cancellation fees, and payroll costs associated with our response to COVID-19, net of any government subsidies available.

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

Assets include the current and long-lived assets directly attributable to the segment based on the management of the location or on utilization.

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March 31, 2022 2021

(as adjusted)

Healthcare and Life Sciences $ 6,604,893 $ 3,600,182

Applied Sterilization Technologies 3,053,116 2,974,289

$ 6,574,471 $ 5,440,867

Dental 1,765,585 —

Total assets $ 11,423,594 $ 6,574,471

Years Ended March 31, 2022 2021 2020

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Applied Sterilization Technologies 198,350 164,816 129,868

Dental 4,726 — —

Total Capital Expenditures $ 287,563 $ 239,262 $ 214,516

$ 239,262 $ 214,516 $ 189,715

Depreciation, Depletion, and Amortization (2)

Healthcare and Life Sciences $ 316,222 $ 106,266 $ 92,193

$ 106,266 $ 92,193 $ 114,656

Applied Sterilization Technologies 115,925 112,971 105,042

112,971 105,042 111,265

Dental 120,957 — —

Total Depreciation, Depletion, and Amortization $ 553,104 $ 219,237 $ 197,235

$ 219,237 $ 197,235 $ 225,921

(1) Totals include the impact of Restructuring see Note 2 titled, "Restructuring" for additional information.

(2) The fiscal 2019 total includes an impairment charge see Note 3 titled, "Goodwill and Intangible Assets", for additional information.

(1) Amounts are still preliminary, as Cantel acquisition valuations have not been finalized.

(2) Fiscal 2022 totals include approximately $ 229,052 , $ 35,531 and $ 113,099 for Healthcare and Life Sciences, Applied Sterilization Technologies, and Dental, respectively, of amortization of acquired intangible assets and amortization of property "step-up" to fair value.

For more information regarding our recent acquisitions and divestitures see Note 2 titled, "Business Acquisitions and Divestitures."

Financial information for each of our United States and international geographic areas is presented in the following table.

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Property, Plant, and Equipment, Net $ 1,552,576 $ 1,235,400

$ 1,235,400 $ 1,111,855

(1) Amounts are still preliminary, as Cantel acquisition valuations have not been finalized.

Years Ended March 31, 2022 2021 2020

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Total Healthcare Revenues $ 2,845,467 $ 1,954,055 $ 1,986,809

Applied Sterilization Technologies:

Total Applied Sterilization Technologies Service Revenues $ 852,972 $ 685,912 $ 627,147

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Total Life Sciences Revenues $ 524,964 467,552 416,939

Dental Revenues $ 361,661 $ — $ —

Total Revenues $ 4,585,064 $ 3,107,519 $ 3,030,895

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Ordinary Shares

In connection with the Redomiciliation, STERIS UK shareholders received STERIS plc shares pursuant to a scheme of arrangement under UK law.

Each STERIS UK ordinary shareholder received one ordinary share, par value $ 75.00 , of STERIS plc for each STERIS UK ordinary share held, which STERIS UK shares were canceled.

On May 3, 2019, the par value of STERIS plc shares issued pursuit to the scheme of arrangement was reduced to $ 0.001 per share.

We calculate basic earnings per share based upon the weighted average number of shares outstanding.

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

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

REPURCHASE OF ORDINARY SHARES

REPURCHASES OF ORDINARY SHARES

On May 7, 2019, our Board of Directors authorized a share repurchase program resulting in a share repurchase authorization of approximately $ 78,979 (net of taxes, fees and commissions).

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The share repurchase program has no specified expiration date.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

During fiscal 2021, we repurchased 35,000 of our ordinary shares for the aggregate amount of $ 5,047 (net of fees and commissions) pursuant to the 2019 authorizations.

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

From February 14, 2022, through March 31, 2022, we repurchased 108,368 of our ordinary shares for the aggregate amount of $ 25,000 (net of fees and commissions) pursuant to the authorizations.

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

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SHARE-BASED COMPENSATION

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

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

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

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The weighted average grant date fair value of stock option grants was $ 37.52 , $ 27.66 and $ 23.52 for the years ended March 31, 2022, 2021 and 2020, 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 May 24, 2021, we no longer have outstanding SARS.

The fair value of the outstanding SARS as of March 31, 2021 and 2020 was $ 494 , and $ 544 , respectively.

The fair value of outstanding SARS is revalued at each reporting date and the related liability and expense are adjusted appropriately.

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

The fair value of outstanding SARS is revalued at each reporting date and the related liability and expense were adjusted appropriately.

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

Shares Number of Restricted Share Units Weighted-Average

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Non-vested at March 31, 2022 485,510 33,677 $ 157.37

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

Restricted shares and restricted share unit grants are valued based on the closing stock price at the grant date.

The value of restricted shares and units that vested during fiscal 2022 was $ 19,890 .

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

Cantel Share Based Compensation Plan

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

A total 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 and performance 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.

Performance based Cantel restricted share units were replaced with time based STERIS restricted share units that vest pro rata over the remaining one, two or three anniversaries from the original Cantel award date.

The number of performance restricted share units was replaced based on the original target achievement level.

All replacement restricted share units retained dividend accumulation rights.

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

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

During fiscal 2022, recognition of unamortized share-based compensation expense totaling $ 20,200 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 compensation plans and Cantel Executive Severance and Change of Control Plan, the restricted share units vested requiring acceleration of the remaining related compensation cost.

As of March 31, 2022, there was a total of $ 6,101 in unrecognized compensation cost related to non-vested STERIS restricted share units awarded to replace Cantel restricted share units.

We expect to recognize the cost over a weighted average period of 1.1 years.

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

Number of Restricted Share Units Weighted-Average

Non-vested at March 31, 2021 — $ —

Granted 280,402 191.18

Vested ( 223,267 ) 191.18

Forfeited ( 11,413 ) 191.18

Non-vested at March 31, 2022 45,722 $ 191.18

FINANCIAL AND OTHER GUARANTEES

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Balance, Beginning of Year $ 9,406 $ 7,381 $ 7,194

Liabilities assumed in acquisition of Cantel 4,769 — —

Warranties issued during the period 12,571 10,574 12,311

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Balance, End of Year $ 14,108 $ 9,406 $ 7,381

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

DERIVATIVES AND HEDGING

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

At March 31, 2021, we held a foreign currency forward contract to buy 41.5 million British pounds.

At March 31, 2022, we held a foreign currency forward contract to sell 11.0 million euros.

At March 31, 2022, we held commodity swap contracts to buy 801.6 thousand pounds of nickel.

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Commodity swap contracts Cost of revenues 3,921 771 ( 660 )

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

We designate portions of non-functional 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 March 31, 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

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1,240 1,715 1,240 1,715 — — — —

Long term debt (3)

Total debt (3)

3,088,356 1,650,540 — — 2,991,680 1,722,459 — —

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We also hold an investment in the common stock of Servizi Italia, S.p.A, a leading provider of integrated linen washing and outsourced sterile processing services to hospital Customers.

Beginning in fiscal 2019, 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 fiscal 2021 and fiscal 2020 we recorded gains (losses) of $ 594 and $( 3,579 ), respectively, related to these investments.

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

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 fiscal 2022 and fiscal 2021, we recorded (losses) gains of $( 775 ) and $ 594 , 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.

The fair values of our Senior Public Notes are estimated using quoted market prices for the publicly registered Senior Notes.

(4) Contingent consideration obligations arise from prior business acquisitions.

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Additions 3,486

Payments ( 984 )

Reductions and adjustments 1,175

Foreign currency translation adjustments ( 23 )

Balance at March 31, 2021 $ 19,642

Liabilities assumed in acquisition of Cantel 25,000

Additions 601

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

BUSINESS ACQUISITIONS AND DIVESTITURES

Fiscal 2021 Acquisitions

On November 18, 2020, we acquired all of the outstanding units and equity of Key Surgical, LLC ("Key Surgical").

Key Surgical is a global provider of sterile processing, operating room and endoscopy consumable products serving hospitals and surgical facilities.

Key Surgical is being integrated into our Healthcare segment.

The total purchase price of the acquisition was $ 853,203 , net of cash acquired and remains subject to customary working capital adjustments.

The purchase price for the acquisition was financed with a combination of cash on hand, credit facility borrowings and proceeds from the issuance of new long-term obligations.

Please refer to note 6 titled, "Debt" for more information.

On January 4, 2021 , we purchased the remaining outstanding shares of an equity investment that we made in fiscal 2019.

Total consideration was approximately $ 78,045 , net of cash acquired and subject to any working capital adjustments.

The business is being integrated into our Applied Sterilization Technologies business segment and we funded the transaction through a combination of cash on hand and credit facility borrowings.

We also completed two other tuck-in acquisitions during fiscal 2021, which continued to expand our product and service offerings in the Healthcare segment.

Total aggregate consideration for these transactions was approximately $ 20,909 , net of cash acquired and including deferred consideration of $ 1,194 .

Purchase price allocations will be finalized within a measurement period not to exceed one year from closing.

Fiscal 2020 Acquisitions

The aggregate purchase price associated with these transactions was approximately $ 120,537 , net of cash acquired and including potential contingent consideration of $ 9,830 and deferred consideration of $ 893 .

Fiscal 2019 Acquisitions

During fiscal 2019, we completed a minor purchase to expand our service offerings in the Applied Sterilization Technologies segment.

The total purchase price was $ 13,313 , and was financed with both cash on hand and with credit facility borrowings.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Fair Value of Assets Acquired and Liabilities Assumed

The table below summarizes the allocation of the purchase price to the net assets acquired based on fair values at the acquisition dates for our fiscal 2021, 2020 and 2019 acquisitions.

Fiscal Year 2021 (1)

Fiscal Year 2020 Fiscal Year 2019

(dollars in thousands) Key Surgical Other Acquisitions All Acquisitions All Acquisitions

$ 12,615 $ 9,159 $ 8,811 $ —

Accounts receivable 13,967 9,621 10,331 750

Inventory 21,414 22,123 8,999 51

Property, plant and equipment 6,030 26,363 9,241 2,004

Lease right-of-use assets, net 4,907 4,420 4,462 —

Other assets 6,680 3,378 1,133 479

Intangible assets (2)

356,999 28,188 36,500 4,070

527,675 42,808 74,531 6,614

Total Assets 950,287 146,060 154,008 13,968

Current liabilities ( 21,599 ) ( 28,245 ) ( 20,659 ) ( 146 )

Non-current liabilities ( 62,870 ) ( 9,704 ) ( 4,000 ) ( 509 )

Total Liabilities ( 84,469 ) ( 37,949 ) ( 24,659 ) ( 655 )

Net Assets $ 865,818 $ 108,111 $ 129,349 $ 13,313

(1) Purchase price allocation is still preliminary as of March 31, 2021, as valuations have not been finalized, pending further analyses of the significant drivers of fair value.

(2) Includes $ 315,575 , related to the fair value of the customer relationships intangible asset, obtained in the acquisition of Key Surgical.

The estimation of fair value was determined under an income approach using discounted cash flows.

The estimate requires assumptions including forecasted revenue growth rates, forecasted profit margins, and Customer attrition rates.

(3) Goodwill is the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined company and assembled workforce.

The deductible portion of goodwill for tax purposes recognized as a result of the fiscal 2021 acquisitions is $ 180,005 .

Acquisition related transaction and integration costs totaled $ 35,634 , $ 8,225 , and $ 8,901 for the fiscal years ended March 31, 2021, 2020, and 2019, respectively.

The fiscal 2021 total includes $ 18,072 of costs related to the pending acquisition of Cantel Medical Corp.

For more information see Note 21 titled, "Pending Acquisition of Cantel Medical Corp".