What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-08 · 269 added, 168 removed, 633 unchanged (41% of the section changed)

3 unchanged sentences

(in thousands)

September 30,

2022 March 31,

38 unchanged sentences

See notes to consolidated financial statements.

Table of Content s

STERIS PLC AND SUBSIDIARIES

1 unchanged sentence

(in thousands, except per share amounts)

Three Months Ended June 30,

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

2022 2021 2022 2021

Product $ 666,394 $ 685,238 $ 1,303,470 $ 1,174,517

8 unchanged sentences

Selling, general, and administrative 323,195 344,799 657,821 738,551

Goodwill impairment loss 490,565 — 490,565 —

Research and development 24,928 18,832 49,679 37,024

1 unchanged sentence

Total operating expenses 838,750 363,841 1,198,153 775,799

Income from operations 158,395 14,324

Income (loss) from operations ( 306,415 ) 116,503 ( 148,020 ) 130,827

Non-operating expenses, net:

4 unchanged sentences

Income (loss) before income tax expense ( 333,062 ) 89,607 ( 198,111 ) 60,630

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

Income tax expense (benefit) ( 17,831 ) 19,982 6,365 12,907

Net income (loss) ( 315,231 ) 69,625 ( 204,476 ) 47,723

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

Net income (loss) attributable to noncontrolling interests 54 ( 186 ) ( 453 ) ( 281 )

Net income (loss) attributable to shareholders $ ( 315,285 ) $ 69,811 $ ( 204,023 ) $ 48,004

4 unchanged sentences

See notes to consolidated financial statements.

Table of Content s

STERIS PLC AND SUBSIDIARIES

1 unchanged sentence

(in thousands)

Three Months Ended June 30,

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

2022 2021 2022 2021

Net income (loss) $ ( 315,231 ) $ 69,625 $ ( 204,476 ) $ 47,723

3 unchanged sentences

Other comprehensive income (loss)

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

Amortization of pension and postretirement benefit plan costs, (net of taxes of $( 10 ), $ 174 , $( 16 ) and $ 348 , respectively)

27 ( 507 ) 56 ( 1,014 )

Change in cumulative currency translation adjustment ( 209,802 ) ( 68,409 ) ( 388,396 ) ( 43,476 )

2 unchanged sentences

See notes to consolidated financial statements.

Table of Content s

STERIS PLC AND SUBSIDIARIES

1 unchanged sentence

(in thousands)

Three Months Ended June 30,

Six Months Ended September 30,

Operating activities:

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

Net income $ ( 204,476 ) $ 47,723

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

5 unchanged sentences

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

Amortization of inventory fair value adjustments 2,477 85,154

Goodwill impairment loss 490,565 —

Other items 8,840 7,986

8 unchanged sentences

Purchases of property, plant, equipment, and intangibles, net ( 198,701 ) ( 133,369 )

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

Proceeds from the sale of property, plant, equipment and intangibles 1,323 387

Proceeds from the sale of businesses 5,228 —

4 unchanged sentences

Proceeds from term loan — 650,000

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

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

— ( 721,284 )

Payments on convertible debt — ( 371,361 )

Payments on term loans ( 126,875 ) ( 125,000 )

Proceeds (payments) under credit facilities, net 99,111 ( 65,021 )

1 unchanged sentence

Acquisition related deferred or contingent consideration ( 153 ) ( 25,262 )

( 84 ) ( 25,150 )

Repurchases of ordinary shares ( 69,922 ) ( 24,751 )

( 24,679 ) ( 10,670 )

Cash dividends paid to ordinary shareholders ( 89,981 ) ( 77,107 )

( 43,008 ) ( 34,148 )

Distributions to noncontrolling interest — ( 997 )

Stock option and other equity transactions, net 1,458 7,829

5 unchanged sentences

See notes to consolidated financial statements.

Table of Content s

STERIS PLC AND SUBSIDIARIES

1 unchanged sentence

(in thousands, except per share amounts)

Three Months Ended September 30, 2022

Ordinary Shares Retained

4 unchanged sentences

Number Amount

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

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

Comprehensive income:

Net income (loss) — — ( 315,285 ) — 54 ( 315,231 )

Other comprehensive income (loss) — — — ( 178,565 ) — ( 178,565 )

Other comprehensive (loss) — — — ( 209,775 ) — ( 209,775 )

Repurchases of ordinary shares ( 231 ) ( 45,413 ) 170 — — ( 45,243 )

3 unchanged sentences

Other changes in noncontrolling interest — — — — ( 244 ) ( 244 )

Balance at September 30, 2022 99,868 $ 4,705,118 $ 1,695,087 $ ( 598,148 ) $ 11,390 $ 5,813,447

Six Months Ended September 30, 2022

Ordinary Shares Retained

Earnings Accumulated

Comprehensive

Income (Loss) Non-controlling

Interest Total

Number Amount

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

Comprehensive income:

Net (loss) — — ( 204,023 ) — ( 453 ) ( 204,476 )

Other comprehensive (loss) — — — ( 388,340 ) — ( 388,340 )

Repurchases of ordinary shares ( 357 ) ( 59,769 ) ( 10,153 ) — — ( 69,922 )

Equity compensation programs and other 158 21,967 — — — 21,967

Cash dividends – $ 0.90 per ordinary share

— — ( 89,981 ) — — ( 89,981 )

Other changes in noncontrolling interest — — — — ( 438 ) ( 438 )

Balance at September 30, 2022 99,868 $ 4,705,118 $ 1,695,087 $ ( 598,148 ) $ 11,390 $ 5,813,447

Table of Content s

STERIS PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands, except per share amounts)

Three Months Ended September 30, 2021

Ordinary Shares Retained

Earnings Accumulated

Comprehensive

Income (Loss) Non-controlling

Interest Total

Number Amount

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

Comprehensive income:

Net income (loss) — — 69,811 — ( 186 ) 69,625

Other comprehensive (loss) — — — ( 68,916 ) — ( 68,916 )

Repurchases of ordinary shares ( 71 ) ( 5,866 ) ( 8,215 ) — — ( 14,081 )

Equity compensation programs and other 236 17,209 — — — 17,209

Cash dividends – $ 0.43 per ordinary share

— — ( 42,959 ) — — ( 42,959 )

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

Other changes in noncontrolling interest — — — — 35 35

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

Six Months Ended September 30, 2021

Ordinary Shares Retained

7 unchanged sentences

Net income (loss) — — 48,004 — ( 281 ) 47,723

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

Other comprehensive (loss) — — — ( 44,490 ) — ( 44,490 )

Repurchases of ordinary shares ( 131 ) ( 7,642 ) ( 17,109 ) — — ( 24,751 )

6 unchanged sentences

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

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

Other changes in noncontrolling interest — — — — 87 87

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.

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

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

For the Three Months Ended June 30, 2022 and 2021

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

For the Three and Six Months Ended September 30, 2022 and 2021

(dollars in thousands, except as noted)

Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

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

14 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, 2022, which was filed with the Securities and Exchange Commission on May 31, 2022.

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 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)

This means that operating results for the three and six month periods ended September 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.

Revenue Recognition and Associated Liabilities

4 unchanged sentences

Our Customers include end users as well as dealers and distributors who market and sell our products.

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

Our revenue is not contingent upon resale by the dealer or distributor, and

STERIS PLC AND SUBSIDIARIES

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

For the Three and Six Months Ended September 30, 2022 and 2021

(dollars in thousands, except as noted)

we have no further obligations related to bringing about resale.

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

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

At September 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

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)

without penalty and range from one to five years.

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.

1 unchanged sentence

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.

STERIS PLC AND SUBSIDIARIES

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

For the Three and Six Months Ended September 30, 2022 and 2021

(dollars in thousands, except as noted)

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 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.

During the first six months of fiscal 2023, $ 67,218 of the March 31, 2022 deferred revenue balance was recorded as revenue.

During the first six months of fiscal 2022, $ 40,360 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 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 .

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

As of September 30, 2022, the transaction price allocated to remaining performance obligations was approximately $ 1,561,000 .

We expect to recognize approximately 62 % of the transaction price within one year and approximately 29 % beyond one year.

7 unchanged sentences

First Quarter Fiscal 2023 We adopted this standard effective April 1, 2022 with no material impact to 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, 2022, which was filed with the Securities and Exchange Commission on May 31, 2022.

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

Business Acquisitions and Divestitures

STERIS PLC AND SUBSIDIARIES

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

For the Three Months Ended June 30, 2022 and 2021

For the Three and Six Months Ended September 30, 2022 and 2021

(dollars in thousands, except as noted)

Business Acquisitions

During the second quarter of fiscal 2023, we completed a tuck-in acquisition, which continued to expand our product and service offerings in the Healthcare segment.

Total aggregate consideration was approximately $ 21,892 , including contingent deferred consideration of $ 6,700 .

Acquisition related costs are reported in the selling, general, and administrative expense line of the Consolidated Statements of Income and such amounts are not material.

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

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 .

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.

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 in our Annual Report on Form 10-K for the year ended March 31, 2022, which was filed with the SEC on May 31, 2022.

Fair Value of Assets Acquired and Liabilities Assumed

18 unchanged sentences

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

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 totaled $ 3,844 and $ 13,676 for the three and six months ended September 30, 2022 , respectively.

Acquisition and integration expenses totaled $ 17,404 and $ 158,400 for the three and six months ended September 30, 2021 , respectively.

These costs 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.

During the second quarter of fiscal 2023, in connection with the preparation of our quarterly consolidated financial statements, we identified and recognized a goodwill impairment loss of $ 490,565 related to goodwill that arose with respect to assets acquired in the Cantel acquisition.

For more information on the impairment loss, see Note 17 to our consolidated financial statements, titled "Goodwill."

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 SEC on May 31, 2022.

STERIS PLC AND SUBSIDIARIES

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

For the Three Months Ended June 30, 2022 and 2021

For the Three and Six Months Ended September 30, 2022 and 2021

(dollars in thousands, except as noted)

2 unchanged sentences

Inventory costs include material, labor, and overhead .

Inventory costs include material, labor, and overhead.

Inventories, net consisted of the following:

September 30,

2022 March 31,

6 unchanged sentences

Information related to the major categories of our depreciable assets is as follows:

September 30,

2022 March 31,

14 unchanged sentences

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

For the Three Months Ended June 30, 2022 and 2021

For the Three and Six Months Ended September 30, 2022 and 2021

(dollars in thousands, except as noted)

Indebtedness was as follows:

September 30,

2022 March 31,

13 unchanged sentences

Total debt $ 3,024,936 $ 3,088,356

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, 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 Months Ended June 30, 2022 and 2021

For the Three and Six Months Ended September 30, 2022 and 2021

(dollars in thousands, except as noted)

1 unchanged sentence

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

September 30,

2022 March 31,

27 unchanged sentences

Income Tax Expense

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.

The effective income tax rates for the three month period ended September 30, 2022 and 2021 were 5.4 % and 22.3 %, respectively.

The effective income tax rates for the six month period ended September 30, 2022 and 2021 were ( 3.2 )% and 21.3 %, respectively.

The fiscal 2023 effective tax rate for the six month period ended September 30, 2022 decreased when compared to the prior year period, primarily due to the tax impact of the goodwill impairment loss recognized on the Dental segment during the second quarter of fiscal 2023.

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

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

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

With the exception of formal acceptance of the settlement noted below, we are no longer subject to United States federal examinations for years before fiscal 2016 and, with limited exceptions, we are no longer 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.

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

STERIS PLC AND SUBSIDIARIES

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

For the Three Months Ended June 30, 2022 and 2021

For the Three and Six Months Ended September 30, 2022 and 2021

(dollars in thousands, except as noted)

examinations by tax authorities for years before fiscal 2016.

We 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.

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

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.

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 September 30, 2022.

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

The notices relate to the fiscal and calendar year 2018.

5 unchanged sentences

We are, and will likely continue to be, involved in a number of legal proceedings, government investigations, and claims, which we believe generally arise in the course of our business, given our size, history, complexity, and the nature of our business, products, Customers, regulatory environment, and industries in which we participate.

These legal proceedings, investigations and claims generally involve a variety of legal theories and allegations, including, without limitation, personal injury (e.g., slip and falls, burns, vehicle accidents), product liability or regulation (e.g., based on product operation or claimed malfunction, failure to warn, failure to meet specification, or failure to comply with regulatory requirements), product exposure (e.g., claimed exposure to chemicals, asbestos, contaminants, radiation), property damage (e.g., claimed damage due to leaking equipment, fire, vehicles, chemicals), commercial claims (e.g., breach of contract, economic loss, warranty, misrepresentation), financial (e.g., taxes, reporting), employment (e.g., wrongful termination, discrimination, benefits matters), and other claims for damage and relief.

These legal proceedings, investigations and claims generally involve a variety of legal theories and allegations, including, without limitation, personal injury (e.g., slip and falls, burns, vehicle accidents), product liability or regulation (e.g., based on product operation or claimed malfunction, failure to warn, failure to meet specification, or failure to comply with regulatory requirements), product exposure (e.g., claimed exposure to chemicals, gases, asbestos, contaminants, radiation), property damage (e.g., claimed damage due to leaking equipment, fire, vehicles, chemicals), commercial claims (e.g., breach of contract, economic loss, warranty, misrepresentation), financial (e.g., taxes, reporting), employment (e.g., wrongful termination, discrimination, benefits matters), and other claims for damage and relief.

We believe we have adequately reserved for our current litigation and claims that are probable and estimable, and further believe that the ultimate outcome of these pending lawsuits and claims will not have a material adverse effect on our consolidated financial position or results of operations taken as a whole.

2 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, 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".

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 SEC on May 31, 2022, Item 1 titled "Business - Information with respect to our Business in General - Government Regulation" 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.

5 unchanged sentences

We describe income taxes further in Note 7 to our consolidated financial statements titled, “Income Tax Expense” in this Quarterly Report on Form 10-Q.

STERIS PLC AND SUBSIDIARIES

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

For the Three and Six Months Ended September 30, 2022 and 2021

(dollars in thousands, except as noted)

Business Segment Information

3 unchanged sentences

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 Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

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

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;

10 unchanged sentences

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.

For the three and six months e nded September 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 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.

These three Customers collectively accounted for appr oxi mately 40.1 % and 42.1 % o f our Dental segment revenues for the three and six months ended September 30, 2022, respectively.

These three Customers collectively accounted for appr oxi mately 40.6 % and 39.5 % o f our Dental segment revenues for the three and six months ended September 30, 2021, respectively.

STERIS PLC AND SUBSIDIARIES

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

For the Three Months Ended June 30, 2022 and 2021

For the Three and Six Months Ended September 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 June 30,

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

2022 2021 2022 2021

Healthcare $ 732,813 $ 744,134 $ 1,431,339 $ 1,346,951

15 unchanged sentences

Tax restructuring costs (3)

77 159 251 110

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

Net loss on divestiture of businesses (1)

— — ( 3,100 ) —

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

899 ( 15 ) 4,777 404

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

2,452 69,486 4,089 94,276

Restructuring charges (4)

62 210 89 224

Goodwill impairment loss (5)

490,565 — 490,565 —

Total income from operations $ ( 306,415 ) $ 116,503 $ ( 148,020 ) $ 130,827

(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.

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

(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 SEC on May 31, 2022.

(5) For more information regarding our goodwill impairment loss, see Note 17 to our consolidated financial statements titled, "Goodwill."

STERIS PLC AND SUBSIDIARIES

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

For the Three Months Ended June 30, 2022 and 2021

For the Three and Six Months Ended September 30, 2022 and 2021

(dollars in thousands, except as noted)

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

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

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

2022 2021 2022 2021

Capital equipment $ 212,484 $ 202,405 $ 391,618 353,295

Consumables 246,050 270,089 498,082 476,781

Service 274,279 271,640 541,639 516,875

Total Healthcare Revenues $ 732,813 $ 744,134 $ 1,431,339 $ 1,346,951

$ 698,526 $ 602,817

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

Applied Sterilization Technologies Service Revenues $ 232,358 $ 204,892 $ 453,269 $ 413,794

Life Sciences:

Consumables $ 59,557 $ 56,536

Capital equipment

$ 30,015 $ 34,186 $ 70,514 $ 66,931

Consumables 57,420 61,748 116,977 118,284

Service 38,333 36,393 70,484 68,583

Total Life Sciences Revenues $ 125,768 $ 132,327 $ 257,975 $ 253,798

$ 132,207 $ 121,471

Dental Revenues $ 109,578 $ 115,632 $ 214,425 $ 150,864

Total Revenues $ 1,200,517 $ 1,196,985 $ 2,357,008 $ 2,165,407

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

Three Months Ended June 30,

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

2022 2021 2022 2021

Ireland $ 16,995 $ 20,046 $ 35,171 $ 41,991

7 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 June 30,

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

Denominator (shares in thousands):

2022 2021 2022 2021

Weighted average shares outstanding—basic 99,969 99,848 100,025 95,000

1 unchanged sentence

Weighted average shares outstanding and share equivalents—diluted 99,969 100,689 100,025 95,840

(1) The dilutive effect of share equivalents is excluded from the calculation of diluted earnings per share for the three and six months ended September 30, 2022 due to our net losses for those periods.

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 June 30,

STERIS PLC AND SUBSIDIARIES

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

For the Three and Six Months Ended September 30, 2022 and 2021

(dollars in thousands, except as noted)

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

(shares in thousands) 2022 2021 2022 2021

5 unchanged sentences

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

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

As of September 30, 2022, there was approximately $ 249,371 (net of taxes, fees and commissions) of remaining availability under the Board authorized share repurchase program.

The share repurchase program has no specified expiration date.

3 unchanged sentences

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)

During the first six months of fiscal 2023, we repurchased 292,487 of our ordinary shares for the aggregate amount of $ 59,561 (net of fees and commissions) pursuant to the authorizations.

During the first six months of fiscal 2023, we obtained 64,436 of our ordinary shares in the aggregate amount of $ 11,769 in connection with share based compensation award programs.

During the first six months of fiscal 2022, we obtained 130,678 of our ordinary shares in the aggregate amount of $ 24,751 in connection with share based compensation award programs.

Share-Based Compensation

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 maintain a long-term ince ntive 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 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 option 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 June 30, 2022, 2,812,252 ordinary shares remained available for grant under the long-term incentive plan.

As of September 30, 2022, 2,797,136 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 three months of fiscal 2023 and 2022:

STERIS PLC AND SUBSIDIARIES

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

For the Three and Six Months Ended September 30, 2022 and 2021

(dollars in thousands, except as noted)

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

Fiscal 2023 Fiscal 2022

14 unchanged sentences

Options Weighted

Price Average

Price Per Share Average

Term Aggregate

3 unchanged sentences

Forfeited ( 8,928 ) 205.25

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.

Outstanding at September 30, 2022 1,763,053 $ 153.81 6.7 years $ 58,929

Exercisable at September 30, 2022 1,118,754 $ 119.95 5.6 years $ 57,462

We estimate that 626,912 of the non-vested stock options outstanding at September 30, 2022 will ultimately vest.

The aggregate intrinsic value in the table above represents the total pre-tax difference between the $ 166.28 closing price of our ordinary shares on September 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 six months of fiscal 2023 and fiscal 2022 was $ 4,553 and $ 16,076 , respectively.

Net cash proceeds from the exercise of stock options were $ 1,458 and $ 7,829 for the first six months of fiscal 2023 and fiscal 2022, respectively.

The weighted average grant date fair value of stock option grants was $ 50.72 and $ 37.34 for the first six 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 May 24, 2021, we no longer have outstanding SARS.

STERIS PLC AND SUBSIDIARIES

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

For the Three Months Ended June 30, 2022 and 2021

For the Three and Six Months Ended September 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 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.

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 ( 12,750 ) ( 1,246 ) 179.57

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

Non-vested at September 30, 2022 459,219 32,360 $ 185.84

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.

The value of restricted shares and units that vested during the first six months of fiscal 2023 at the time of grant was $ 18,989 .

As of September 30, 2022, there was a total of $ 80,182 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 2.3 years.

8 unchanged sentences

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.

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 .

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

As of September 30, 2022, there was a total of $ 3,178 in unrecognized compensation cost related to non-vested STERIS restricted shar e units awarded to replace Cantel restricted share units.

We expect to recognize the cost over a weighted average period 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

2 unchanged sentences

Forfeited ( 3,738 ) 191.18

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

Non-vested at September 30, 2022 39,255 $ 191.18

STERIS PLC AND SUBSIDIARIES

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

For the Three and Six Months Ended September 30, 2022 and 2021

(dollars in thousands, except as noted)

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 three months of fiscal 2023 were as follows:

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

Balance, March 31, 2022 $ 14,108

1 unchanged sentence

Settlements made during the period ( 6,522 )

Balance, June 30, 2022 $ 13,443

Balance, September 30, 2022 $ 13,790

Derivatives and Hedging

1 unchanged sentence

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.

During the second quarter of fiscal 2023, we also held forward foreign currency contracts to hedge a portion of our expected non-U.S.

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

5 unchanged sentences

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

At 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.

At September 30, 2022, we held foreign currency forward contracts to buy 28.5 million British pounds sterling;

and to sell 100.0 million Mexican pesos, and 78.8 million euros.

At September 30, 2022, we held commodity swap contracts to buy 400.8 thousand pounds of nickel.

Asset Derivatives Liability Derivatives

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

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

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

Prepaid & Other $ 2,324 $ 2,780 $ — $ —

Accrued expenses and other $ — $ — $ 1,230 $ 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 June 30,

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

2022 2021 2022 2021

Foreign currency forward contracts Selling, general and administrative $ 2,279 $ 1,143 $ 4,629 $ 2,571

Commodity swap contracts Cost of revenues $ ( 358 ) $ 28 $ ( 3,183 ) $ 693

STERIS PLC AND SUBSIDIARIES

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

For the Three and Six Months Ended September 30, 2022 and 2021

(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 June 30, 2022 and March 31, 2022:

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

Fair Value Measurements

4 unchanged sentences

Level 1 Level 2 Level 3

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

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

Cash and cash equivalents $ 258,259 $ 348,320 $ 258,259 $ 348,320 $ — $ — $ — $ —

8 unchanged sentences

989 1,240 989 1,240 — — — —

Total debt (3)

3,024,936 3,088,356 — — 2,591,744 2,991,680 — —

8 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 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 Months Ended June 30, 2022 and 2021

(dollars in thousands, except as noted)

During the second quarter and first half of fiscal 2023, we recorded losses of $ 643 and $ 1,727 , respectively, related to these investments.

During the second quarter and first half of fiscal 2022, we recorded losses of $ 213 and $ 229 , respectively, related to these investments.

(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 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.

The fair values are based on discounted cash flow analyses reflecting the possible achievement of specified performance measures or events and capture 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 .

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

STERIS PLC AND SUBSIDIARIES

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

For the Three and Six Months Ended September 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 September 30, 2022 are summarized as follows:

Contingent Consideration

Balance at March 31, 2022 $ 10,550

Adjustments ( 3,100 )

Additions 7,181

Payments ( 40 )

Reductions ( 3,100 )

Currency translation adjustments ( 53 )

Balance at June 30, 2022 $ 7,518

Balance at September 30, 2022 $ 14,538

STERIS PLC AND SUBSIDIARIES

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

For the Three Months Ended June 30, 2022 and 2021

For the Three and Six Months Ended September 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 June 30, 2022 and 2021 were as follows:

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

Defined Benefit Plans (1)

1 unchanged sentence

Total Accumulated Other Comprehensive Income (Loss)

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 )

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

Beginning Balance $ 1,305 $ 1,276 $ ( 389,678 ) $ ( 211,084 ) $ ( 388,373 ) $ ( 209,808 )

Other Comprehensive Income (Loss) before reclassifications 149 303 ( 209,802 ) ( 388,396 ) ( 209,653 ) ( 388,093 )

Amounts reclassified from Accumulated Other Comprehensive Income (Loss) ( 122 ) ( 247 ) — — ( 122 ) ( 247 )

Net current-period Other Comprehensive (Loss) 27 56 ( 209,802 ) ( 388,396 ) ( 209,775 ) ( 388,340 )

Balance at September 30, 2022 $ 1,332 $ 1,332 $ ( 599,480 ) $ ( 599,480 ) $ ( 598,148 ) $ ( 598,148 )

(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)

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.

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

Beginning Balance $ ( 6,026 ) $ ( 5,519 ) $ ( 30,791 ) $ ( 55,724 ) $ ( 36,817 ) $ ( 61,243 )

Other Comprehensive Income before reclassifications 585 1,176 ( 68,409 ) ( 43,476 ) ( 67,824 ) ( 42,300 )

Amounts reclassified from Accumulated Other Comprehensive Income (Loss) ( 1,092 ) ( 2,190 ) — — ( 1,092 ) ( 2,190 )

Net current-period Other Comprehensive Income (Loss) ( 507 ) ( 1,014 ) ( 68,409 ) ( 43,476 ) ( 68,916 ) ( 44,490 )

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

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

(2) 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 Six Months Ended September 30, 2022 and 2021

(dollars in thousands, except as noted)

Changes to the carrying amount of goodwill for the six months ended September 30, 2022 are as follows:

Healthcare Segment Life Sciences Segment Applied Sterilization Technologies Segment Dental Segment Total

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

Goodwill acquired 1,286 — — — 1,286

Measurement period adjustments to acquired goodwill ( 21,624 ) 3,147 — 40,565 22,088

Impairment — — — ( 490,565 ) ( 490,565 )

Divestiture ( 2,358 ) — — — ( 2,358 )

Foreign currency translation adjustments ( 61,102 ) ( 2,449 ) ( 150,736 ) ( 15,367 ) ( 229,654 )

Balance at September 30, 2022 $ 2,243,032 $ 179,986 $ 1,282,122 $ — $ 3,705,140

We evaluate the recoverability of recorded goodwill annually at the reporting unit level during the third fiscal quarter, or when indicators of potential impairment exist.

The Company's reporting units are equivalent to the reportable operating segments.

In connection with the preparation of our quarterly consolidated financial statements, we considered the risk of impairment due to deteriorating macroeconomic conditions including rising interest rates and inflationary pressures on material and labor costs, as well as uncertainty regarding the impact such economic strains will have on patient and Customer behavior in the short-term.

Our conclusion, based on the qualitative assessment of these factors, was that it was more likely than not that the goodwill allocated to the Dental segment as of September 30, 2022 was impaired.

Our quantitative analysis to measure the extent of goodwill impairment compared the estimated fair value to the carrying value of the Dental segment.

The fair value is estimated as the present value of future cash flows.

Future cash flow projections are consistent with those used in our forecasting and strategic planning processes.

The determination of the discount rate requires judgement and assumptions to be developed about the weighted average cost of capital that market participants would employ in evaluating the current fair value of the business.

The macroeconomic factors that triggered the interim review are also the drivers of the increase in the weighted average cost of capital assumption.

In connection with the preparation of our quarterly consolidated financial statements, we identified and recognized, as of September 30, 2022, that the estimated fair value of the Dental segment is below the carrying value resulting in a non-cash goodwill impairment charge of $ 490,565 .

The impairment charge was recorded within “Goodwill impairment loss” in the Consolidated Statements of Income during the three-month period ended September 30, 2022.

Our review as of September 30, 2022 did not indicate that impairment of goodwill was more likely than not for any of the remaining segments during the period.

The annual goodwill impairment review will be conducted in the third quarter of fiscal 2023 as planned.

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 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”).

We have reviewed the accompanying consolidated balance sheet of STERIS plc and subsidiaries (the Company) as of September 30, 2022, the related consolidated statements of income, comprehensive income and shareholders’ equity for the three- and six-month periods ended September 30, 2022 and 2021 and the consolidated statement of cash flows for the six- month periods ended September 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

August 8, 2022

November 9, 2022

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

What changed 10-Q

Item 1. Financial Statements