What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-08 compared with 2022-02-09 · 203 added, 444 removed, 598 unchanged (52% of the section changed)

22 unchanged sentences

Accrued payroll and other related liabilities 137,580 183,721

Lease obligations due within one year 36,414 22,774

Short-term lease obligations 35,560 36,472

Short-term indebtedness 151,000 142,875

21 unchanged sentences

(in thousands, except per share amounts)

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

2021 2020 2021 2020

(*as adjusted) (*as adjusted)

Three Months Ended June 30,

Product $ 637,076 $ 489,279

9 unchanged sentences

Research and development 24,751 18,192

Restructuring (credit) expenses ( 207 ) 20 17 110

Restructuring expenses 26 14

Total operating expenses 359,403 411,958

5 unchanged sentences

Total non-operating expenses, net 23,444 43,301

Income before income tax expense 182,409 139,430 243,039 381,830

Income tax expense 39,315 24,842 52,222 71,703

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

Net income (loss) attributable to noncontrolling interests ( 529 ) 87 ( 810 ) 171

Net income attributable to shareholders $ 143,623 $ 114,501 $ 191,627 $ 309,956

Net income per share attributed to shareholders

Income (loss) before income tax expense 134,951 ( 28,977 )

Income tax expense (credit) 24,196 ( 7,075 )

Net income (loss) 110,755 ( 21,902 )

Net (loss) attributable to noncontrolling interests ( 507 ) ( 95 )

Net income (loss) attributable to shareholders $ 111,262 $ ( 21,807 )

Net income (loss) per share attributed to shareholders

Basic $ 1.11 $ ( 0.24 )

1 unchanged sentence

Cash dividends declared per share ordinary outstanding $ 0.43 $ 0.40

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

See notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

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

2021 2020 2021 2020

(*as adjusted) (*as adjusted)

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

Three Months Ended June 30,

Net income (loss) $ 110,755 $ ( 21,902 )

Net income (loss) attributable to noncontrolling

interests ( 507 ) ( 95 )

Net income attributable to shareholders 143,623 114,501 191,627 309,956

Net income (loss) attributable to shareholders 111,262 ( 21,807 )

Other comprehensive income (loss)

Amortization of pension and postretirement benefit plan costs, (net of taxes of $ 174 , $ 173 , $ 523 and $ 520 , respectively)

( 507 ) ( 510 ) ( 1,521 ) ( 1,530 )

Amortization of pension and postretirement benefit plans cost, (net of taxes of $( 6 ) and $ 174 , respectively)

Change in cumulative currency translation adjustment ( 178,594 ) 24,933

Total other comprehensive income (loss) ( 178,565 ) 24,426

Comprehensive income $ 112,478 $ 242,728 $ 115,992 $ 543,033

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

Comprehensive income (loss) $ ( 67,303 ) $ 2,619

See notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Nine Months Ended December 31,

Three Months Ended June 30,

Operating activities:

(*as adjusted)

Net income $ 190,817 $ 310,127

Net income (loss) $ 110,755 $ ( 21,902 )

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

5 unchanged sentences

Fair value adjustment related to convertible debt, premium liability — 22,923

Amortization of inventory fair value adjustments 86,665 —

Other items 10,412 ( 2,334 )

8 unchanged sentences

Purchases of property, plant, equipment, and intangibles, net ( 115,933 ) ( 56,396 )

Proceeds from the sale of property, plant, equipment and intangibles 1,709 417

Proceeds from the sale of property, plant, and equipment 1,288 217

Proceeds from the sale of businesses 5,228 —

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

Other — ( 2,392 )

Net cash used in investing activities ( 109,417 ) ( 603,532 )

1 unchanged sentence

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

Proceeds from term loans 650,000 550,000

Payments on term loans ( 125,000 ) —

Proceeds from term loan — 650,000

Payments on term loan ( 111,875 ) ( 125,000 )

Payments on long-term obligations

Payments on convertible debt ( 371,361 ) —

— ( 721,284 )

Proceeds (payments) under credit facilities, net 37,011 ( 249,421 )

1 unchanged sentence

Acquisition related deferred or contingent consideration

( 84 ) ( 25,150 )

Repurchases of ordinary shares

( 24,679 ) ( 10,670 )

Cash dividends paid to ordinary shareholders

Distributions to noncontrolling interest ( 997 ) ( 627 )

Contributions from noncontrolling interest 3,672 2,258

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

( 43,008 ) ( 34,148 )

Stock option and other equity transactions, net

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

Net cash (provided by) used in financing activities ( 141,414 ) 818,810

Effect of exchange rate changes on cash and cash equivalents ( 12,908 ) 1,539

2 unchanged sentences

Cash and cash equivalents at end of period $ 316,327 $ 534,774

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

See notes to consolidated financial statements.

2 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended December 31, 2021

Ordinary Shares Retained

4 unchanged sentences

Number Amount

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

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

Comprehensive income:

5 unchanged sentences

— — ( 43,008 ) — — ( 43,008 )

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

Other changes in noncontrolling interest — — — — ( 194 ) ( 194 )

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

Nine Months Ended December 31, 2021

Balance at June 30, 2022 100,090 $ 4,738,746 $ 2,057,175 $ ( 388,373 ) $ 11,580 $ 6,419,128

Ordinary Shares Retained

7 unchanged sentences

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

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

Other comprehensive income — — — 24,426 — 24,426

Repurchases of ordinary shares ( 60 ) ( 1,776 ) ( 8,894 ) — — ( 10,670 )

2 unchanged sentences

— — ( 34,148 ) — — ( 34,148 )

Issuance of shares for acquisition of Cantel Medical Corp.

("Cantel") 14,297 2,689,317 — — — 2,689,317

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

1 unchanged sentence

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

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

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

Other changes in noncontrolling interest — — — — 52 52

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

STERIS PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Continued)

(in thousands, except per share amounts)

Three Months Ended December 31, 2020

Ordinary Shares Retained

Earnings (as adjusted *) Accumulated

Comprehensive

Income (Loss) Non-controlling

Interest Total

Number Amount

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

Comprehensive income:

Net income — — 114,501 — 87 114,588

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

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

Equity compensation programs and other 95 11,380 — — — 11,380

Cash dividends $ 0.40 per ordinary share

— — ( 34,136 ) — — ( 34,136 )

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

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

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

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

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

Nine Months Ended December 31, 2020

Ordinary Shares Retained

Earnings (as adjusted *) Accumulated

Comprehensive

Income (Loss) Non-controlling

Interest Total

Number Amount

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

Comprehensive income:

— — 309,956 — 171 310,127

Other comprehensive income

— — — 233,077 — 233,077

Repurchases of ordinary shares ( 121 ) ( 31,065 ) 16,505 — — ( 14,560 )

Equity compensation programs and other 534 45,744 — — — 45,744

Cash dividends – $ 1.17 per ordinary share

— — ( 99,696 ) — — ( 99,696 )

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

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

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

Other changes in noncontrolling interest — — — — 104 104

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

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

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

See notes to consolidated financial statements.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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

(dollars in thousands, except as noted)

For the Three Months Ended June 30, 2022 and 2021

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

Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

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

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.

1 unchanged sentence

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 9 titled, "Business Segment Information."

Our fiscal year ends on March 31.

7 unchanged sentences

Our unaudited interim consolidated financial statements contain all material adjustments (including normal recurring accruals and adjustments) management believes are necessary to fairly state our financial condition, results of operations, and cash flows for the periods presented.

These interim consolidated financial statements should be read together with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended March 31, 2021 dated May 28, 2021.

The Consolidated Balance Sheet at March 31, 2022 was derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by U.S.

12 unchanged sentences

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

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

This means that operating results for the three month period ended June 30, 2022 are not necessarily indicative of results that may be expected for future quarters or for the full fiscal year ending March 31, 2023.

STERIS PLC AND SUBSIDIARIES

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

For the Three Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

Revenue Recognition and Associated Liabilities

5 unchanged sentences

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

Our standard return and restocking fee policies are applied to

STERIS PLC AND SUBSIDIARIES

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

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

(dollars in thousands, except as noted)

sales of products.

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

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

13 unchanged sentences

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

At December 31, 2021, assets related to costs to fulfill a contract were not material to our Consolidated Financial Statements.

At June 30, 2022, assets related to costs to fulfill a contract were not material to our Consolidated Financial Statements.

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

13 unchanged sentences

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

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

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

Within our Applied Sterilization Technologies segment, service revenues include contract sterilization and laboratory services.

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.

Generally, these contract terms are cancellable

STERIS PLC AND SUBSIDIARIES

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

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

For the Three Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

without penalty and range from one to five years.

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

Within our Applied Sterilization Technologies segment, service revenues include contract sterilization and laboratory services.

Contract Liabilities

2 unchanged sentences

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

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

During the first nine months of fiscal 2021, $ 38,181 of the March 31, 2020 deferred revenue balance was recorded as revenue.

During the first three months of fiscal 2023, $ 57,528 of the March 31, 2022 deferred revenue balance was recorded as revenue.

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

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

6 unchanged sentences

With regard to products, these remaining performance obligations include capital equipment and consumable orders which have not shipped.

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

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

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

As of June 30, 2022, the transaction price allocated to remaining performance obligations was approximately $ 1,574,000 .

We expect to recognize approximately 62 % of the transaction price within one year and approximately 31 % beyond one year.

The remainder has yet to be scheduled for delivery.

STERIS PLC AND SUBSIDIARIES

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

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

(dollars in thousands, except as noted)

Recently Issued Accounting Standards Impacting the Company

2 unchanged sentences

Standards that have been adopted in fiscal 2023

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.

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.

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

As a result, only conversion features accounted for under the substantial premium model and those that require bifurcation will be accounted for separately.

For contracts in an entity’s own equity, the new standard eliminates some of the current requirements for equity classification.

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

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

Standards that have not yet been adopted.

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

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

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

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

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

First Quarter Fiscal 2023 We adopted this standard effective April 1, 2022 with no material impact to our consolidated financial statements.

Our significant and critical accounting policies, estimates, and assumptions have not changed materially from March 31, 2022.

2 unchanged sentences

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

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

For the Three Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

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

("Cantel") through a U.S.

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

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

This business is reported as the Dental segment.

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

Acquisition and integration expenses which were primarily related to the Cantel acquisition totaled $ 9,026 and $ 167,426 for the third quarter and first nine months of fiscal 2022, respectively, and are reported in the selling, general and administrative expenses line of our Consolidated Statements of Income.

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

Total Purchase Conside ration

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

The total consideration for Cantel common stock and s tock 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

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 5 titled, "Debt" and in our Annual Report on Form 10-K for the year ended March 31, 2021, filed with the SEC on May 28, 2021.

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 our Annual Report on Form 10-K for the year ended March 31, 2022, which was filed with the Securities and Exchange Commission on May 31, 2022.

In addition to the total purchase consideration, 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 our Annual Report on Form 10-K for the year ended March 31, 2022, which was filed with the Securities and Exchange Commission on May 31, 2022.

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 that have yet to progress to a stage where there is sufficient information for a definitive measurement.

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

The entire purchase price allocation for Cantel is preliminary.

As we finalize the fair value of assets acquired and liabilities assumed, additional purchase price adjustments will be recorded during the 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 will result in changes in the valuation of assets acquired and liabilities assumed and may have a material impact on the our results of operations and financial position.

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

STERIS PLC AND SUBSIDIARIES

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

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

(dollars in thousands, except as noted)

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

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

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

March 31, 2022

(As previously reported) Adjustments Final

Cash $ 169,073 $ — $ 169,073

14 unchanged sentences

Net assets acquired $ 3,599,471 $ — $ 3,599,471

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

Other Intangible Assets

The estimated fair values of identifiable intangible assets were prepared using an income valuation approach, which requires a forecast of expected future cash flows either through the use of 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.

Preliminary values and useful lives are presented in the table below.

Customer relationships $ 2,060,000 10 years

Trade name 130,000 10 years

Total intangible assets acquired $ 2,190,000

(1) Amounts are preliminary as of December 31, 2021, as valuations have not been finalized.

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

Payment 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 December 31, 2021.

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

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

The following unaudited pro forma information gives effect to our acquisition of Cantel as if the acquisition had occurred on April 1, 2020 and Cantel had been included in our consolidated results of operations for the three-month and nine-month periods ended December 31, 2021 and 2020.

Fiscal 2023 and 2022 first quarter acquisition and integration expenses totaled $ 9,832 and $ 140,996 , respectively and were primarily related to the acquisition and integration of Cantel.

Acquisition and integration expenses are reported in the selling, general and administrative expenses line of our Consolidated Statements of Income and include but are not limited to investment banker, advisory, legal, other professional fees, and certain employee-related expenses.

For more information on the acquisition of Cantel, refer to our Annual Report on Form 10-K for the year ended March 31, 2022, which was filed with the Securities and Exchange Commission on May 31, 2022.

STERIS PLC AND SUBSIDIARIES

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

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

For the Three Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

Three Months Ended December 31, Nine Months Ended December 31

(unaudited) (unaudited)

2021 2020 2021 2020

Net revenues $ 1,208,971 $ 1,106,542 $ 3,579,475 $ 3,011,681

Net income (loss) from continuing operations 152,176 92,903 383,193 30,797

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 intangible asset amortization to be incurred based on preliminary 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.

Inventories, Net

1 unchanged sentence

Inventory costs include material, labor, and overhead.

Inventories, net consisted of the following:

2022 March 31,

(*as adjusted)

Raw materials $ 211,453 $ 195,035

3 unchanged sentences

Inventories, net $ 620,404 $ 574,999

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

Inventory has increased since March 31, 2021 primarily due to the acquisition of Cantel.

Property, Plant and Equipment

16 unchanged sentences

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

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

For the Three Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

4 unchanged sentences

Delayed Draw Term Loan, current portion 32,500 24,375

Private Placement 91,000 —

Private Placement Senior Notes 91,000 91,000

Total short-term debt $ 151,000 $ 142,875

Long-term debt

Private Placement $ 763,278 $ 860,308

Private Placement Senior Notes $ 745,032 $ 758,726

Revolving Credit Facility 92,642 58,908

3 unchanged sentences

Senior Public Notes 1,350,000 1,350,000

Financing leases 3,682 —

Total long-term debt $ 2,846,446 $ 2,945,481

Total debt $ 2,997,446 $ 3,088,356

During the first quarter of fiscal 2022, we borrowed $ 650,000 under our Delayed draw term loan agreement and used the proceeds to partially fund the Cantel acquisition.

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

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.

STERIS PLC AND SUBSIDIARIES

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

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

(dollars in thousands, except as noted)

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”) are subject to conversion at the conversion rate of 25.0843 units of Reference Property (the “Make-Whole Conversion Rate”), which corresponds 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 Additio nal 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 .

As previously announced by Cantel, it will settle all conversions of Notes in connection with the Make-Whole Fundamental Changes that constitute 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—Co ntracts in Entity’s Own Equity (Subtopic 815-40)."

Because all Holders elected to convert during the Make-Whole Conversion Period, the aggregate par value outstanding 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.”

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

2027 and thereafter 2,407,965

Total $ 3,325,816

STERIS PLC AND SUBSIDIARIES

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

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

For the Three Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

30 unchanged sentences

Income Tax Expense

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

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

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

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

The effective income tax rates for the three-month periods ended June 30, 2022 and 2021 were 17.9 % and 24.4 %, respectively.

The fiscal 2023 effective tax rate decreased when compared to fiscal 2022, primarily due to nonrecurring unfavorable items reported in the prior fiscal year.

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

1 unchanged sentence

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

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

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

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

STERIS PLC AND SUBSIDIARIES

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

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

For the Three Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

examinations by tax authorities for years before fiscal 2016.

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

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

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

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

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

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 $ 7,500 has been paid through June 30, 2022.

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

The notices relate to the fiscal and calendar year 2018.

10 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 following portions of our Annual Report on Form 10-K for the year ended March 31, 2021 dated May 28, 2021:

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

For additional information regarding these matters, see the following portions of our Annual Report on Form 10-K for the year ended March 31, 2022, which was filed with the Securities and Exchange Commission on May 31, 2022, Item 1 titled "Business - Information with respect to our Business in General - Government Regulation" and "- Environmental Matters", and the "Risk Factors" in Item 1A titled "Product and service related regulations and claims".

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

6 unchanged sentences

Business Segment Information

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:

We 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.

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

STERIS PLC AND SUBSIDIARIES

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

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

For the Three Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

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

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

to the repair of re-usable procedural instruments;

6 unchanged sentences

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

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

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

For the three and nine months ended December 31, 2021, revenues from a single Customer did not represent ten percent or more of the Healthcare, Applied Sterilization Technologies or Life Sciences segment’s revenues.

Three Customers collectively consistently account for more than 40.0 % of our Dental segment revenue.

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 C ompany.

Certain prior period costs were reallocated from the Healthcare segment to corporate to conform with current year presentation.

The prior period segment operating income measure has been recast for comparability.

For the three months e nded June 30, 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 approximately 40.0% of our Dental segment revenue.

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

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

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

These three Customers collectively accounted for appr oxi mately 38.6 % and 35.8 % o f our Dental segment revenues for the three months ended June 30, 2022 and 2021, respectively.

A dditional information regarding our segments is included in our consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2022, which was filed with the Securities and Exchange Commission on May 31, 2022.

STERIS PLC AND SUBSIDIARIES

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

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

For the Three Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

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

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

2021 2020 2021 2020

(*as adjusted) (*as adjusted)

Three Months Ended June 30,

Healthcare $ 698,526 $ 602,817

3 unchanged sentences

Total revenues $ 1,156,491 $ 968,422

Operating income (loss):

Segment operating income (loss):

Healthcare $ 156,497 $ 138,373

3 unchanged sentences

Corporate ( 75,943 ) ( 77,273 )

Total operating income before adjustments $ 289,889 $ 190,638 $ 790,661 $ 504,768

Total segment operating income $ 264,770 $ 222,234

Amortization of acquired intangible assets (1)

2 unchanged sentences

9,832 140,996

Redomiciliation and tax restructuring costs (3)

118 296 228 850

Tax restructuring costs (3)

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

— ( 500 ) — ( 500 )

Net loss on divestiture of businesses (1)

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

2,237 1,784 96,513 3,101

COVID-19 incremental costs (4)

— 7,251 — 20,460

Restructuring (credit) charges (5)

( 207 ) 20 17 110

Total operating income $ 202,933 $ 147,030 $ 333,760 $ 404,110

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

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

Restructuring charges (4)

Total income from operations $ 158,395 $ 14,324

(1) For more information regarding our recent acquisitions and divestitures refer to note 2 titled, "Business Acquisitions and Divestitures" of our Annual Report on Form 10-K for the year ended March 31, 2022, which was filed with the Securities and Exchange Commission on May 31, 2022.

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

(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 R eport on Form 10-K for the year ended March 31, 2021, dated May 28, 2021.

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

(4) For more information regarding our restructuring efforts refer to our Annual R eport on Form 10-K for the year ended March 31, 2022, which was filed with the Securities and Exchange Commission on May 31, 2022.

STERIS PLC AND SUBSIDIARIES

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

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

For the Three Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

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

2021 2020 2021 2020

Capital equipment $ 217,214 $ 147,855 $ 570,509 $ 407,610

Additional information regarding our fiscal 2023 and fiscal 2022 first quarter revenue is disclosed in the following tables:

Three Months Ended June 30,

Consumables $ 252,032 $ 206,692

Capital equipment 179,134 150,890

Service 267,360 245,235

Total Healthcare Revenues

Applied Sterilization Technologies Service Revenues $ 216,298 $ 176,462 $ 630,092 $ 498,371

$ 698,526 $ 602,817

Total Applied Sterilization Technologies Revenues $ 220,911 $ 208,902

Life Sciences:

Consumables $ 59,557 $ 56,536

Capital equipment

40,499 32,745

Consumables 61,096 49,627 179,380 164,262

Service 32,151 32,190

Total Life Sciences Revenues

$ 132,207 $ 121,471

Dental Revenues $ 104,847 $ 35,232

Total Revenues $ 1,156,491 $ 968,422

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

2021 2020 2021 2020

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

Three Months Ended June 30,

Ireland $ 18,176 $ 21,945

3 unchanged sentences

$ 1,156,491 $ 968,422

December 31, 2021 March 31, 2021

Property, Plant, and Equipment, Net

Ireland $ 54,977 $ 52,140

United States 859,601 673,784

Other locations 607,009 509,476

Property, Plant, and Equipment, Net $ 1,521,587 $ 1,235,400

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

Certain corporate assets were allocated to the reportable segments based on revenues.

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

STERIS PLC AND SUBSIDIARIES

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

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

(dollars in thousands, except as noted)

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

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

Therefore, their respective amounts are reported together.

December 31, 2021 March 31, 2021

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

Applied Sterilization Technologies 3,047,602 2,974,289

Dental 1,118,528 —

Cantel related goodwill not yet allocated (1)

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

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

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

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

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

Shares and Preferred Shares

2 unchanged sentences

We calculate diluted earnings per share based upon the weighted average number of shares outstanding plus the dilutive effect of share equivalents calculated using the treasury stock method.

STERIS PLC AND SUBSIDIARIES

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

For the Three Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

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

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

Three Months Ended June 30,

Denominator (shares in thousands):

2021 2020 2021 2020

Weighted average shares outstanding—basic 100,082 90,152

2 unchanged sentences

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

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

Three Months Ended June 30,

(shares in thousands) 2022 2021

2 unchanged sentences

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

STERIS PLC AND SUBSIDIARIES

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

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

(dollars in thousands, except as noted)

Repurchases of Ordinary Shares

1 unchanged sentence

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

As of December 31, 2021, there was approximately $ 333,932 (net of taxes, fees and commissions) of remaining availability under the Board authorized share repurchase program.

As of June 30, 2022, there was approximately $ 294,649 (net of taxes, fees and commissions) of remaining availability under a Board authorized share repurchase program.

The share repurchase program has no specified expiration date.

2 unchanged sentences

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

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

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

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

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

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

During the first three months of fiscal 2023, we repurchased 68,177 of our ordinary shares for the aggregate amount of $ 14,283 (net of fees and commissions) pursuant to the authorizations.

During the first three months of fiscal 2023, we obtained 57,704 of our ordinary shares in the aggregate amount of $ 11,737 in connection with share based compensation award programs.

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

STERIS PLC AND SUBSIDIARIES

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

For the Three Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

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 the Compensation and Organizational Development Committee of the Board of Directors, to officers, directors, and key employees in the form of stock options, restricted shares, restricted share units, stock appreciation rights and share grants.

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

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

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

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

1 unchanged sentence

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

As of December 31, 2021, 3,139,888 ordinary shares remained available for grant under the long-term incentive plan.

As of June 30, 2022, 2,812,252 ordinary shares remained available for grant under the long-term incentive plan.

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

3 unchanged sentences

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

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

The following weighted-average assumptions were used for options granted during the first three months of fiscal 2023 and 2022:

Fiscal 2023 Fiscal 2022

9 unchanged sentences

An estimated forfeiture rate of 2.54 % and 2.85 % was applied in fiscal 2023 and 2022, respectively.

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

STERIS PLC AND SUBSIDIARIES

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

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

(dollars in thousands, except as noted)

options not expected to vest.

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

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

2 unchanged sentences

Options Weighted

Price Per Share Average

Price Average

Term Aggregate

3 unchanged sentences

Forfeited ( 6,326 ) 200.62

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

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

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

The aggregate intrinsic value in the table above represents the total pre-tax difference between the $ 243.41 closing price of our ordinary shares on December 31, 2021 over the exercise prices of the stock options, multiplied by the number of options outstanding or outstanding and exercisable, as applicable.

Outstanding at June 30, 2022 1,756,372 $ 153.29 6.9 years $ 105,081

Exercisable at June 30, 2022 1,109,471 $ 118.70 5.8 years $ 97,397

We estimate that 624,686 of the non-vested stock options outstanding at June 30, 2022 will ultimately vest.

STERIS PLC AND SUBSIDIARIES

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

For the Three Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

The aggregate intrinsic value in the table above represents the total pre-tax difference between the $ 206.15 closing price of our ordinary shares on June 30, 2022 over the exercise prices of the stock options, multiplied by the number of options outstanding or outstanding and exercisable, as applicable.

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

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

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

The weighted average grant date fair value of stock option grants was $ 37.52 and $ 27.66 for the first nine months of fiscal 2022 and fiscal 2021, respectively.

The total intrinsic value of stock options exercised during the first three months of fiscal 2023 and fiscal 2022 was $ 3,897 and $ 5,469 , respectively.

Net cash proceeds from the exercise of stock options were $ 1,221 and $ 1,710 for the first three months of fiscal 2023 and fiscal 2022, respectively.

The weighted average grant date fair value of stock option grants was $ 50.04 and $ 36.24 for the first three months of fiscal 2023 and fiscal 2022, 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 December 31, 2021, we no longer have outstanding SARS.

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

As of May 24, 2021, we no longer have

outstanding SARS.

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

4 unchanged sentences

Forfeited ( 6,167 ) ( 766 ) 164.04

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

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

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

As of December 31, 2021, there was a total of $ 66,715 in unrecognized compensation cost related to non-vested share-based compensation granted under our share-based compensation plan.

Non-vested at June 30, 2022 461,033 32,517 $ 155.01

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 the first three months of fiscal 2023 was $ 17,570 .

As of June 30, 2022, there was a total of $ 88,105 in unrecognized compensation cost related to non-vested share-based compensation granted under our share-based compensation plan.

We expect to recognize the cost over a weighted average period of 2.4 years.

Cantel Share Based Compensation Plan

STERIS PLC AND SUBSIDIARIES

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

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

(dollars in thousands, except as noted)

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

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

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

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

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

Performance and market 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.

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 Cantel performance restricted share units was replaced based on the original target achievement level.

All replacement restricted share units retained dividend accumulation rights.

1 unchanged sentence

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

During the first nine months of fiscal 2022, recognition of unamortized share-based compensation expense totaling $ 18,861 was accelerated in connection with the termination of certain Cantel employees in fiscal 2022.

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

As of December 31, 2021, there was a total of $ 9,248 in unrecognized compensation cost related to non-vested STERIS restricted share units awarded to replace Cantel restricted share units.

Recognition of unamortized share-based compensation expense totaling $ 197 and $ 18,545 , for the first quarter of fiscal 2023 and 2022, respectively was accelerated in connection with the planned termination of certain Cantel executive level employees in fiscal 2023 .

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

As of June 30, 2022, there was a total of $ 4,438 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 of 1.0 year.

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

STERIS PLC AND SUBSIDIARIES

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

For the Three Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

Number of Restricted Share Units Weighted-Average

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

Granted 280,402 $ 191.18

Vested ( 2,578 ) 191.18

Forfeited ( 1,318 ) 191.18

Non-vested at December 31, 2021 62,922 $ 191.18

Non-vested at June 30, 2022 41,826 $ 191.18

Financial and Other Guarantees

5 unchanged sentences

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

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

Changes in our warranty liability during the first three months of fiscal 2023 were as follows:

Balance, March 31, 2022 $ 14,108

Liabilities assumed in acquisition of Cantel 4,769

Warranties issued during the period 3,285

Settlements made during the period ( 3,950 )

Balance, December 31, 2021 $ 13,999

Balance, June 30, 2022 $ 13,443

Derivatives and Hedging

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

We may also enter into commodity swap

STERIS PLC AND SUBSIDIARIES

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

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

(dollars in thousands, except as noted)

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

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

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

During the first quarter of fiscal 2023, we also entered into forward foreign currency contracts in order to hedge a portion of our expected non-U.S.

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

5 unchanged sentences

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

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

and to sell 14.0 million euros.

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

At June 30, 2022, we held foreign currency forward contracts to sell 34.9 million euros.

At June 30, 2022 we held commodity swap contracts to buy 601.2 thousand pounds of nickel.

Asset Derivatives Liability Derivatives

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

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

Balance sheet location June 30, 2022 March 31, 2022 June 30, 2022 March 31, 2022

Prepaid & Other $ 1,330 $ 2,780 $ — $ —

Accrued expenses and other $ — $ — $ 783 $ 198

STERIS PLC AND SUBSIDIARIES

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

For the Three Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

The following table presents the impact of derivative instruments and their location within the Consolidated Statements of Income:

1 unchanged sentence

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

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

2021 2020 2021 2020

Three Months Ended June 30,

Foreign currency forward contracts Selling, general and administrative $ 2,349 $ 1,428

Commodity swap contracts Cost of revenues $ ( 2,824 ) $ 664

STERIS PLC AND SUBSIDIARIES

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

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

(dollars in thousands, except as noted)

Fair Value Measurements

5 unchanged sentences

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

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

The following table shows the fair value of our financial assets and liabilities at June 30, 2022 and March 31, 2022:

Fair Value Measurements

4 unchanged sentences

Level 1 Level 2 Level 3

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

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

Cash and cash equivalents $ 316,327 $ 348,320 $ 316,327 $ 348,320 $ — $ — $ — $ —

19 unchanged sentences

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

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

During the third quarter and first nine months of fiscal 2021, we recorded gains of $ 210 and $ 138 , respectively, related to these investments.

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

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

These amounts exclude lease liabilities.

(4) Contingent consideration obligations arise from business acquisitions.

The fair values are based on discounted cash flow analyses reflecting the possible achievement of specified performance measures or events and captures the contractual nature of the contingencies, commercial risk, and the time value of money.

Contingent consideration obligations are classified in the consolidated balance sheets as accrued expense (short-term) and other liabilities (long-term), as appropriate based on the contractual payment dates .

During the first quarter of fiscal 2023 and 2022, we recorded a (losses) of $( 936 ) and $( 16 ), respectively, related to these investments.

STERIS PLC AND SUBSIDIARIES

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

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

For the Three Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

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

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

(4) Contingent consideration obligations arise from business acquisitions.

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis at June 30, 2022 are summarized as follows:

Contingent Consideration

Balance at March 31, 2022 $ 10,550

Liabilities assumed in acquisition of Cantel 25,000

Adjustments ( 3,100 )

Additions 106

1 unchanged sentence

Currency translation adjustments ( 17 )

Balance at December 31, 2021 $ 12,864

Balance at June 30, 2022 $ 7,518

STERIS PLC AND SUBSIDIARIES

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

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

For the Three Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

2 unchanged sentences

Currency Translation is not adjusted for income taxes.

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

Changes in our Accumulated Other Comprehensive Income (Loss) balances, net of tax, for the three months ended June 30, 2022 and 2021 were as follows:

Defined Benefit Plans (1)

1 unchanged sentence

Total Accumulated Other Comprehensive Income (Loss)

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

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

Other Comprehensive Income (Loss) before reclassifications 575 1,751 ( 30,638 ) ( 74,114 ) ( 30,063 ) ( 72,363 )

Amounts reclassified from Accumulated Other Comprehensive Income (Loss) ( 1,082 ) ( 3,272 ) — — ( 1,082 ) ( 3,272 )

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

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

Balance at March 31, 2022 $ 1,276 $ ( 211,084 ) $ ( 209,808 )

Other Comprehensive (Loss) Income before reclassifications 154 ( 178,594 ) ( 178,440 )

Amounts reclassified from Accumulated Other Comprehensive (Loss) Income ( 125 ) — ( 125 )

Net current-period Other Comprehensive (Loss) Income 29 ( 178,594 ) ( 178,565 )

Balance at June 30, 2022 $ 1,305 $ ( 389,678 ) $ ( 388,373 )

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

3 unchanged sentences

Total Accumulated Other Comprehensive Income (Loss)

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

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

Other Comprehensive Income before reclassifications 323 972 128,737 234,607 129,060 235,579

Amounts reclassified from Accumulated Other Comprehensive Income (Loss) ( 833 ) ( 2,502 ) — — ( 833 ) ( 2,502 )

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

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

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

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

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

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

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

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

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

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

STERIS PLC AND SUBSIDIARIES

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

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

(dollars in thousands, except as noted)

COVID-19 Pandemic

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

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

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

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

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

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

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

Subsequent Events

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

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

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

The transaction closed on January 3, 2022.

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

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

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

Report of Independent Registered Public Accounting Firm

1 unchanged sentence

Results of Review of Interim Financial Statements

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

We have reviewed the accompanying consolidated balance sheet of STERIS plc and subsidiaries (the Company) as of June 30, 2022, the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for the three-month periods ended June 30, 2022 and 2021, and the related notes (collectively referred to as the “consolidated interim financial statements”).

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

13 unchanged sentences

Cleveland, Ohio

February 9, 2022

August 8, 2022

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

What changed 10-Q

Item 1. Financial Statements