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These other risks include additional uncertainties not presently known to us or that we currently believe are immaterial, but may ultimately have a significant impact.
−Removed: In addition, the impact of the COVID-19 pandemic may also exacerbate any of these risks, which could have a material effect on us.
+Added: In addition, the impacts of the COVID-19 pandemic, Russia’s invasion of Ukraine and the ongoing inflationary environment may also exacerbate any of these risks, which could have a material effect on us.
Although the risks are organized by headings, and each risk is discussed separately, many are interrelated.
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Prospectively, additional adverse effects resulting from these conditions may include decreased healthcare utilization, further pricing pressure on our products and services, and/or weaker overall demand for our products and services, particularly capital products.
−Removed: Our acquisition activity and ability to grow organically may be adversely affected if we are unable to continue to access the financial markets .
−Removed: Our recent acquisitions have been financed largely through cash on hand and borrowings under our bank credit facilities and through public note offerings in early April of fiscal 2022.
−Removed: Future acquisitions or other capital requirements will necessitate additional cash.
−Removed: To the extent our existing sources of cash are insufficient to fund these or other future activities, we have and may need to raise additional funds through new or expanded borrowing arrangements or equity.
−Removed: There can be no assurance that we will be able to obtain additional funds beyond those available under existing bank credit facilities on terms favorable to us, or at all, or that such facilities can be replaced when they terminate.
−Removed: The current military conflict between Russia and Ukraine and its implications on U.S., Canadian and European Union relations with Russia could cause long term geopolitical and economic instability that may impact our future operating results.
−Removed: In response to the military conflict between Russia and Ukraine that began in February 2022, the United States, other North Atlantic Treaty Organization member states, as well as non-member states, announced targeted economic sanctions on Russia.
+Added: The effects of geopolitical instability, including as a result of Russia’s invasion of Ukraine, may adversely affect us and create significant risks and uncertainties for our business, with the ultimate impact dependent on future developments, which are highly uncertain and unpredictable.
+Added: Ongoing geopolitical instability, including as a result of Russia’s invasion of Ukraine, has negatively impacted, and could in the future negatively impact, the global and U.S.
+Added: economies, including by causing supply chain disruptions, rising energy costs, volatility in capital markets and foreign currency exchange rates, rising interest rates and heightened cybersecurity risks.
+Added: The extent to which such geopolitical instability adversely affects our business, financial condition and results of operations, as well as our liquidity and capital profile, will depend on future developments, which are highly uncertain and unpredictable.
+Added: If geopolitical instability adversely affects us, it may also have the effect of heightening other risks related to our business.
+Added: In response to the military conflict between Russia and Ukraine that began in February 2022, the United States and other North Atlantic Treaty Organization member states, as well as non-member states, announced targeted economic sanctions on Russia.
The long-term impact on our business resulting from the disruption of trade in the region caused by the conflict and associated sanctions and boycotts is uncertain at this time due to the fluid nature of the ongoing military conflict and response.
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cybersecurity threats and the potential for further sanctions.
−Removed: We have stopped operating in Russia and Belarus, which includes shipments to Customers and purchases of cobalt-60 from our Russian supplier.
−Removed: Our operations located in the region did not represent a material portion of our consolidated assets or revenues.
−Removed: A long-term disruption in cobalt-60 sourced from Russia may negatively impact gamma processing capacity or increase costs in certain portions of our AST operations but these impacts are not expected to be material to our AST segment and its results of operations.
+Added: We have stopped commercial operations in Russia and Belarus, which includes shipments to Customers and purchases of cobalt-60 from our Russian supplier.
+Added: A long-term disruption in cobalt-60 sourced from Russia may negatively impact gamma processing capacity or increase costs in certain portions of our AST operations.
The COVID-19 pandemic disrupted our operations and could have a material adverse effect on our business and financial condition if further significant disruptions occur.
The COVID-19 pandemic, along with the response to the pandemic by governmental and other actors, disrupted our operations.
−Removed: We experienced temporary mandatory and voluntary facility closures in certain jurisdictions in which we operate.
−Removed: Furthermore, we have experienced less demand for certain of our products and services as a result of deferrals of certain medical procedures, and other factors, which we believe was exacerbated by the impact of stay-at-home orders.
−Removed: Additionally, the COVID-19 outbreak has caused temporary disruptions and rising costs in our supply chain and distribution network.
+Added: We have experienced temporary mandatory and voluntary facility closures in certain jurisdictions in which we operate.
+Added: Furthermore, we have experienced less demand for certain of our products and services as a result of reduced volume of medical procedures, and other factors, which we believe was exacerbated by the impact of stay-at-home orders and government responses to COVID-19.
+Added: Additionally, the COVID-19 outbreak has caused temporary disruptions and rising costs in our labor supply and supply chain and distribution network.
Long-term facility closures or other restrictions could materially adversely affect our ability to adequately staff, supply or otherwise maintain our operations.
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In addition, our costs may increase more rapidly than reimbursement levels or permissible pricing increases or we may not satisfy the standards or requirements for reimbursement.
−Removed: Among other provisions, the U.S.
−Removed: Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, imposed an excise tax on medical devices manufactured or offered for sale in the United States.
−Removed: Late in 2019, U.S.
−Removed: Congress enacted legislation that repealed the excise tax, which had been suspended during calendar years 2016 through 2019.
−Removed: In addition, we have been required to commit significant resources to “Sunshine Act” compliance.
Various additional health care reform proposals have emerged at the federal and state level, and we are unable to predict which, if any, of those proposals will be enacted.
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We are subject to extensive regulatory requirements and must receive and maintain regulatory clearance or approval for many products and operations.
−Removed: Failure to receive or maintain, or delays in receiving, clearance or approvals may hurt our revenues, profitability, financial condition, or value.
+Added: Failure to receive or maintain, or delays in receiving, clearance or approvals may negatively impact our revenues, profitability, financial condition, or value.
Our operations are subject to extensive regulation in the countries where we do business.
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Modifications to existing products or the marketing of new uses for existing products also may require regulatory approvals, approval supplements or clearances.
−Removed: If we are unable to obtain any required approvals, approval supplements or clearances for any modification to a previously cleared or approved device, we may be required to cease manufacturing and sale, or recall or restrict the use of such modified device, pay fines, or take other action until such time as appropriate clearance or approval is obtained.
+Added: If there are delays in and/or we are unable to obtain any required approvals, approval supplements or clearances for any modification to a previously cleared or approved device, we may be required to cease manufacturing and sale, or recall or restrict the use of such modified device, pay fines, or take other action until such time as appropriate clearance or approval is obtained.
+Added: Any elongation or de-prioritization or delay in regulatory review could materially affect our ongoing device design, development, and commercialization plans.
Regulatory agencies may refuse to grant approval or clearance, or review and disagree with our interpretation of approvals or clearances, or with our decision that regulatory approval is not required or has been maintained.
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Our failure to comply with the regulatory requirements of the FDA or other applicable regulatory requirements in the United States or elsewhere might subject us to administratively or judicially imposed sanctions.
−Removed: These sanctions include, among others, warning letters, fines, civil penalties, criminal penalties, injunctions, debarment, product seizure or detention, product recalls and total or partial suspension of production, sale and/or promotion.
−Removed: The COVID-19 pandemic may disrupt the operations of regulatory bodies with responsibility for oversight of healthcare and health and medical products.
−Removed: Such disruptions could result in the focus and prioritization of regulatory resources on emergent matters, which could divert regulatory resources away from more routine regulatory matters that are not COVID-19 related but that have the potential to impact our business.
−Removed: For example, there could be delays in FDA review of applications for marketing authorization, including those which may be necessary for or in connection with proposed changes to our products or the changes to the processes by which they are manufactured.
−Removed: It is unknown how long these disruptions could continue, were they to occur.
−Removed: Any elongation or de-prioritization or delay in regulatory review resulting from such disruptions could materially affect our ongoing device design, development, and commercialization plans.
+Added: These sanctions include, among others, warning letters, fines, civil penalties, criminal penalties, loss of tax benefits, injunctions, product seizure, recalls, suspensions or restrictions, re-labeling, detention, and/or debarment.
Our products are subject to recalls and restrictions, even after receiving United States or foreign regulatory clearance or approval.
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Current economic and political conditions make tax rules in any jurisdiction subject to significant change.
−Removed: Tax Cuts and Jobs Act (“TCJA”) was signed into law on December 22, 2017.
−Removed: Guidance continues to be issued clarifying the application of this new legislation and new changes have been proposed in the U.S.
+Added: Tax Cuts and Jobs Act (the “TCJA”) was signed into law on December 22, 2017.
+Added: Guidance continues to be issued clarifying the application of this new legislation and new changes have been proposed, and in many instances finalized, with respect to a number of income tax provisions (including foreign tax credit regulations) in the U.S.
that could increase our total tax expense.
−Removed: We cannot predict the overall impact that the additional guidance and proposed changes may have on our business.
+Added: In addition, beginning January 1, 2022, the limitation on deductibility of interest expense, which generally limits a deduction for interest expense to 30% of taxable income (subject to certain adjustments), must be determined by reducing taxable income by depreciation and amortization deductions, which may limit our ability to deduct interest expense in the future.
+Added: We cannot predict the overall impact that the additional guidance and recent changes may have on our business.
Some jurisdictions have raised tax rates and it is reasonable to expect that other global taxing authorities will be reviewing current legislation for potential modifications in reaction to the implementation of the TCJA, current economic conditions, and COVID-19 response costs.
−Removed: In addition, further changes in the tax laws of other jurisdictions could arise, including as a result of the base erosion and profit shifting (B EPS) project undertaken by the Organization for Economic Cooperation and Development (OECD).
+Added: In August 2022, President Biden signed the Inflation Reduction Act (the “IRA”) into law.
+Added: One of the provisions in the IRA added a corporate alternative minimum tax (“CAMT”) to the U.S.
+Added: Internal Revenue Code of 1986, as amended (the “Code”), beginning for fiscal years 2023.
+Added: If income tax liability in the U.S.
+Added: is lower than the income tax liability calculated under the CAMT provisions, we will be subject to additional income taxes in the United States.
+Added: In addition, the IRS added excise tax on certain stock buybacks by publicly traded corporations.
+Added: Even though the excise tax mostly impacts publicly traded companies organized in the U.S., under certain circumstances, the excise tax may be imposed on stock buybacks by a non-U.S.
+Added: based publicly traded company like us.
+Added: In addition, further changes in the tax laws of other jurisdictions will likely arise, including as a result of the base erosion and profit shifting (B EPS) project undertaken by the Organization for Economic Cooperation and Development (OECD).
The OECD, which represents a coalition of member countries, has issued recommendations that, in some cases, would make substantial changes to numerous long-standing tax positions and principles.
−Removed: These contemplated changes, to the extent adopted by OECD members and/or other countries, could increase tax uncertainty and may adversely impact our provision for income taxes.
+Added: Following the issuance of such recommendation, in December 2022, the European Union issued a directive to adopt Global Base Erosion laws (a/k/a GloBE or Pillar Two) in the EU member countries, in most cases beginning in fiscal year 2024.
+Added: Many other non-EU member countries agreed to adopt GloBE between fiscal years 2024 and 2025.
+Added: The GloBE rules, once implemented in the EU and other jurisdictions, could subject us to additional income taxes in those jurisdictions if our effective corporate tax rate in those
+Added: jurisdictions (determined under the GloBE rules) is below 15%.
+Added: Accordingly, the GloBE rules could increase tax uncertainty and adversely impact our provision for income taxes.
+Added: In addition, the GloBE rules have certain transition period provisions that apply to certain intercompany transactions occurring between December 1, 2021 and the effective date of the GloBE rules in a given jurisdiction.
+Added: These transition period provisions may have an adverse impact on our effective tax rate, and subject us to additional income tax, in some of the jurisdictions who adopt the GloBE rules.
Our tax rate is uncertain and may vary from expectations, which could have a material impact on our results of operations and earnings per share.
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Additionally, tax laws or their implementation and applicable tax authority practices in any particular jurisdiction could change in the future, possibly on a retroactive basis, and any such change could have a material adverse impact on us and our affiliates.
+Added: In addition, the GloBE rules, which are expected to be implemented in most of the jurisdictions where we have operations, and the CAMT may adversely impact our effective corporate tax rate.
Changes in tax treaties and trade agreements could negatively impact our costs, results of operations and earnings per share.
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However, if proposals were adopted that had the effect of disregarding our organization in Ireland or limiting our ability as an Irish company to take advantage of tax treaties with the U.S., we could be subject to increased taxation and/or potentially significant expense.
+Added: On June 7, 2017, several countries, including many countries that we operate and have subsidiaries in, adopted the OECD’s Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the "MLI"), which generally is meant to prevent treaty abuse, improve dispute resolution, prevent the artificial avoidance of permanent establishment status and neutralize the effect of hybrid mismatch agreements.
+Added: The MLI came into effect on July 1, 2018.
+Added: The MLI may modify affected tax treaties making it more difficult for us to obtain advantageous tax-treaty benefits.
+Added: The number of affected tax treaties could eventually be significant.
+Added: To date, about 100 jurisdictions have joined the BEPS MLI, out of which about 79 jurisdictions have ratified, accepted, or approved the MLI, and it covers around 1850 bilateral tax treaties.
+Added: Signatories include jurisdictions from all continents and all levels of development and other jurisdictions are also actively working towards signature.
+Added: As a result, our income may be taxed in jurisdictions where it is not currently taxed and at higher rates than it is currently taxed, which may increase our effective tax rate.
Existing free trade laws and regulations provide certain beneficial duties and tariffs for qualifying imports and exports, subject to compliance with the applicable classification and other requirements.
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We are unable to predict the likelihood that any such proposed legislation might become law, the nature of regulations that may be promulgated under any future legislative enactments, or the effect such enactments or increased regulatory scrutiny could have on our business.
−Removed: Internal Revenue Service (the “IRS”) may not agree that we are a foreign corporation for U.S.
+Added: Internal Revenue Service (the “IRS”) may not agree that we are a non-U.S.
+Added: corporation for U.S.
federal tax purposes.
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tax resident) for U.S.
−Removed: federal tax purposes pursuant to Section 7874 of the Internal Revenue Code of 1986, as amended (the “Code” and such Section, “Section 7874”).
+Added: federal tax purposes pursuant to Section 7874 of the Code (“Section 7874”).
federal tax purposes, a company generally is considered to be a tax resident in the jurisdiction of its organization.
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We purchase raw materials, fabricated and other components, and energy supplies from a variety of suppliers.
−Removed: Key materials include stainless steel, organic and inorganic chemicals, fuel, cobalt-60, EO, and plastic components.
+Added: Key raw materials include stainless steel, organic and inorganic chemicals, fuel, cobalt-60 and EO, and key components include plastic components, as well as various electronics including control boards and computer chips.
The availability and prices of raw materials and energy supplies are subject to volatility and are influenced by worldwide economic conditions, speculative action, world supply and demand balances, inventory levels, availability of substitute materials, currency exchange rates, anticipated or perceived shortages, and other factors.
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Changes in regulatory requirements regarding the use of, the unavailability or short supply of these products might disrupt or cause shutdowns of portions of our AST operations or have other adverse consequences.
−Removed: We have developed a plan to expand our irradiation processing capacity with accelerator-based technologies which may reduce the potential supply risk.
Shortages in supply, increased regulatory or security requirements, or increases in the price of raw materials, components and energy supplies may adversely affe ct us.
In response to the active conflict between Russian and Ukraine, we have stopped purchasing cobalt-60 from our Russian supplier.
−Removed: A long-term disruption in cobalt-60 sourced from Russia may negatively impact gamma processing capacity or increase costs in certain portions of our AST operations but these impacts are not expected to be material to our AST segment and its results of operations.
+Added: A long-term disruption in cobalt-60 sourced from Russia may negatively impact gamma processing capacity or increase costs in certain portions of our AST operations.
Our operations, and those of our suppliers, are subject to a variety of business continuity hazards and risks, any of which could interrupt production or operations or otherwise adversely affect our performance, results, or value.
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Although we maintain property and casualty insurance and liability and similar insurance of the types and in the amounts that we believe are customary for our industries, our insurance coverages have limits and we are not fully insured against all potential hazards and risks incident to our business.
−Removed: We may be adversely affected by global climate change or by legal, regulatory or market responses to such change.
+Added: Expectations relating to ESG considerations expose us to potential liabilities, increased costs, reputational harm and other adverse effects on our business.
+Added: Many governments, regulators, investors, employees, Customers and other stakeholders are increasingly focused on ESG considerations relating to businesses, including climate change and greenhouse gas emissions, human capital and diversity, equity and inclusion.
+Added: We make statements about our ESG priorities and initiatives through information provided on our website, press statements and other communications.
+Added: Responding to these ESG considerations and implementation of these initiatives involves risks and uncertainties requires investments and is impacted by factors that may be outside our control.
+Added: In addition, some stakeholders may disagree with our priorities and initiatives and the focus of stakeholders may change and evolve over time.
+Added: Stakeholders also may have very different views on where ESG focus should be placed, including differing views of regulators in various jurisdictions in which we operate.
+Added: Any failure, or perceived failure, by us to achieve our goals, further our initiatives, adhere to our public statements, comply with federal, state or international ESG laws and regulations or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against us that could materially adversely affect our business, reputation, results of operations, financial condition and stock price.
+Added: As we continue to focus on developing our ESG practices, such practices may not meet the standards of all of our stakeholders and advocacy groups may campaign for further changes.
+Added: Many of our Customers are also committing to long-term targets to reduce greenhouse gas emissions within their supply chains.
+Added: If we are unable to support Customers in achieving these reductions, we may lose revenue if our Customers find other suppliers who are better able to support such reductions.
+Added: A failure, or perceived failure, to respond to expectations of all key stakeholders could cause harm to our business and reputation and have a negative impact on the market price of our ordinary shares.
+Added: Further, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on ESG matters.
+Added: Such ratings are used by some investors to inform their investment or voting decisions.
+Added: Unfavorable ESG ratings could lead to negative investor sentiment toward us and/or our industry, which could have a negative impact on our access to and costs of capital.
+Added: We may be adversely affected by global climate change or by existing and future legal, regulatory or market responses to such change.
The long-term effects of climate change are difficult to assess and predict.
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The effects could impair, for example, the availability and cost of certain products, commodities and energy (including utilities), which in turn may impact our ability to procure goods or services required for the operation of our business at the quantities and levels we require.
−Removed: We bear losses incurred as a result of, for example, physical damage to or destruction of our facilities (such as distribution or fulfillment centers), loss or spoilage of inventory, and business interruption due to weather events that may be attributable to climate change could materially adversely affect our business operations, financial position or results of operation.
+Added: We may bear losses as a result of, for example, physical damage to or destruction of our facilities (such as distribution or fulfillment centers), loss or spoilage of inventory, and business interruption due to weather events that may be attributable to climate change, which could materially and adversely affect our business operations, financial position or results of operation.
+Added: There has also been an increased focus from regulators and stakeholders on greenhouse gas emissions and climate-related risks.
+Added: Both the standard setting and regulatory landscapes are extremely complex and present significant compliance challenges.
+Added: Many different organizations are promulgating reporting standards and rules that focus on addressing greenhouse gas emissions and climate-related topics.
+Added: In March 2022, the SEC published its proposed rule, “The Enhancement and Standardization of Climate-Related Disclosures for Investors,” which sets forth certain prescriptive rules that, if implemented as proposed, will significantly increase our reporting obligations and cost of compliance.
+Added: On January 5, 2023, the European Commission’s Corporate Sustainability Reporting Directive (“CSRD”) became effective.
+Added: The CSRD expands the number of companies required to publicly report ESG-related information and defines the ESG-related information that companies are required to report in accordance with European Sustainability Reporting Standards (“ESRS”).
+Added: While CSRD rules are prescriptive for the types of data to be reported, the standards to quantify and qualify such data are still developing and uncertain, and may impose increased costs on us related to complying with our reporting obligations and increase risks of non-compliance with ESRS and the CSRD.
Our operations are subject to regulations and permitting, which may be changed or amended by the relevant authorities, and which may limit or eliminate our current operations or increase the complexity, burden, or expense of compliance and regulated materials or processes that we use in our operations may become the focus of litigation.
Our AST segment is a technology-neutral contract sterilization service that offers our Customers a wide range of sterilization modalities through a worldwide network of over 50 contract sterilization and laboratory facilities.
−Removed: One of the modalities offered by our AST operations is EO sterilization.
+Added: One of the modalities offered by our AST operations is ethylene oxide (EO) sterilization.
In the United States, several regulators, including the EPA, FDA, and agencies at the state and local level, play a role in regulating the use of EO sterilization.
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Our AST operations have taken and will continue to take measures to comply with all applicable emissions regulations and to reduce emissions.
−Removed: However, no assurance can be given that current or future legislative or regulatory action, or current or future litigation to which we are or may become a party, will not significantly increase the costs of conducting our EO contract sterilization operations or curtail or eliminate the use of EO in our contract sterilization operations.
+Added: However, no assurance can be given that current or future legislative or regulatory action, or current or future litigation to which we are or may become a
+Added: party, will not significantly increase the costs of conducting our EO contract sterilization operations or curtail or eliminate the use of EO in our contract sterilization operations.
A significant reduction in our EO contract sterilization activities may have a material adverse effect on our financial condition and results of operations.
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A decline in surgical procedures could result in a decline in demand for the products and services provided by our Healthcare business, which may have a material adverse effect on our financial condition and results of operations.
−Removed: We engage in acquisitions and affiliations, divestitures, and other business arrangements.
−Removed: Our growth may be adversely affected if we are unable to successfully identify, price, and integrate strategic business candidates or otherwise optimize our business portfolio.
−Removed: Our success depends, in part, on strategic acquisitions and joint ventures, which are intended to complement or expand our businesses, divestiture of non-strategic businesses, and other actions intended to optimize our portfolio of businesses.
−Removed: This strategy depends upon our ability to identify, appropriately price, and complete these types of business development transactions or arrangements and to obtain any necessary financing.
−Removed: In the last several fiscal years we have made a number of acquisitions.
−Removed: We also completed several divestitures of non-strategic businesses or product lines during the last several years.
−Removed: Our success with respect to these recent and future acquisitions will depend on our ability to integrate the businesses acquired, retain key personnel, realize identified cost synergies and otherwise execute our strategies.
−Removed: Our success will also depend on our ability to develop satisfactory working arrangements with our strategic partners in joint ventures or other affiliations, or to divest or realign businesses.
−Removed: Competition for strategic business candidates may result in increases in costs and price for acquisition candidates and market valuation issues may reduce the value available for divestiture of non-strategic businesses.
−Removed: These types of transactions are also subject to a number of other risks and uncertainties, including:
−Removed: delays in realizing or failure to realize anticipated benefits of the transactions;
−Removed: diversion of management’s time and attention from other business concerns;
−Removed: difficulties in retaining key employees, Customers, or suppliers of the acquired or divested businesses;
−Removed: difficulties in maintaining uniform standards, controls, procedures and policies, or other integration or divestiture difficulties;
−Removed: adverse effects on existing business relationships with suppliers or Customers;
−Removed: other events contributing to difficulties in generating future cash flows;
−Removed: risks associated with the assumption of contingent or other liabilities of acquisition targets or retention of liabilities for divested businesses and difficulties in obtaining financing.
+Added: Our EO sterilization operations subject us to claims of liability and associated adverse effects .
+Added: Some current or past operators of EO sterilization facilities, including us, have been the target of litigation on behalf of private plaintiffs alleging personal and other injuries as a result of exposure to emissions from such facilities.
+Added: Certain of those operators have experienced adverse judgments and entered into settlements.
+Added: These developments may increase the likelihood that we will continue to be subject to these claims or that we will be subject to more claims on behalf of similar plaintiffs in the future.
+Added: Although we believe we have valid defenses to such claims, there can be no assurance that we will prevail on the merits, as the outcome of trials before juries and other aspects of litigation can be highly unpredictable.
+Added: The financial impact of litigation, particularly mass tort action lawsuits, is also difficult to predict and a judgment entered or settlement reached in one case is not representative of the outcome of other comparable cases.
+Added: Regardless of the merits of the claims at issue or the ultimate outcome of a case, any litigation related to our EO operations could be costly to defend, could result in an increase of our insurance premiums, and could exhaust available insurance coverage.
+Added: Furthermore, defense of litigation may result in diversion of management attention from other priorities, which could have a material adverse effect.
If our continuing efforts to create a lean business and in-source production to reduce costs are not successful, our profitability may be hurt or our business otherwise might be adversely affected .
−Removed: We have undertaken various activities to create a lean business, including in-sourcing.
−Removed: We continue to look for opportunities to in-source production that is currently provided by third parties.These activities may not produce the full efficiencies and cost reduction benefits that we expect or efficiencies and benefits might be delayed.
+Added: We have undertaken various activities to incorporate lean concepts and practices to more efficiently operate our business, including in-sourcing.
+Added: We continue to look for opportunities to in-source production that is currently provided by third parties.
+Added: These activities may not produce the full efficiencies and cost reduction benefits that we expect or efficiencies and benefits might be delayed.
Implementation costs also might exceed expectations.
Increases in costs of doing business may have a material adverse effect on our financial condition and results of operations.
−Removed: The COVID-19 pandemic or similar public health crises could have a material adverse impact on ability to staff our operations.
−Removed: As supplier to Healthcare and Life Sciences Customers, we fall within a “critical infrastructure” sector, and are also considered an essential business and therefore were exempt under various stay at home/shelter in place orders associated with COVID-19.
−Removed: Accordingly, our employees continued to work because of the importance of our operations to the health and well-being of citizens in the countries in which we operate.
−Removed: We implemented telework policies wherever possible for appropriate categories of employees.
−Removed: However, our employees that are unable to telework continued to work at our facilities and those of our Customers, and we implemented appropriate safety measures, such as social distancing and increased cleaning protocols.
−Removed: While we believe that we have developed appropriate measures to ensure the health and well-being of our employees, there can be no assurances that our measures will be sufficient to protect our employees in our workplace or that they may not otherwise be exposed to COVID-19 or similar illness outside of our workplace.
+Added: A pandemic or similar public health crises, such as COVID-19, could have a material adverse impact on ability to staff our operations.
+Added: As supplier to Healthcare and Life Sciences Customers, we fell within a “critical infrastructure” sector, and were also considered an essential business and therefore were exempt under various stay at home/shelter in place orders associated with COVID-19.
+Added: These exemptions, however, may not persist in another pandemic or similar health crisis and there can be no assurance that in such a crisis, we will be able to operate in the same.
+Added: During the COVID-19 pandemic, our employees continued to work because of the importance of our operations to the health and well-being of citizens in the countries in which we operate, and we implemented telework policies wherever possible for appropriate categories of employees.
+Added: While based on our response to the current COVID-19 pandemic, we believe that we have developed appropriate measures to ensure the health and well-being of our employees for similar or future health crises, there can be no assurances that our measures will be sufficient to protect our employees in our workplace or that they may not otherwise be exposed to an illness outside of our workplace.
If a number of our essential employees become ill, incapacitated or are otherwise unable or unwilling to continue working during the current or any future health crises, our operations may be adversely impacted.
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Our continued success depends, in large part, on our ability to hire and retain highly qualified people and if we are unable to do so, our business and operations may be impaired or disrupted.
−Removed: Competition for highly qualified people is intense and there is no assurance that we will be successful in attracting or retaining replacements to fill vacant positions, successors to fill retirements or employees moving to new positions, or other highly qualified personnel.
+Added: Labor market conditions, particularly in the United States, are challenging.
+Added: The undersupply of highly qualified people has led to increased competition, which has led to higher costs and other labor-related difficulties.
+Added: There is no assurance that we will be successful in attracting or retaining replacements to fill vacant positions, successors to fill retirements or employees moving to new positions, or other highly qualified personnel.
In addition, legal, regulatory or compliance matters create significant distraction or diversion of significant or unanticipated resources or attention that could have a material adverse effect on the responsibilities and retention of qualified employees.
We could experience a failure of a key information technology system, process or site or a breach of information security, including a cybersecurity breach or failure of one or more key information technology systems, networks, processes, associated sites or service providers.
−Removed: We rely extensively on information technology (IT) systems to conduct business.
−Removed: In addition, we rely on networks and services, including internet sites, data hosting and processing facilities and tools and other hardware, software and technical applications and platforms, some of which are managed, hosted, provided and/or used by third-parties or their vendors, to assist in conducting our busines s.
+Added: We rely extensively on information technology (IT) systems to conduct business, including but not limited to interact with Customers and suppliers, fulfilling orders, generating invoices, collecting and making payments, shipping products, providing Customer support, and fulfilling contractual obligations.
+Added: In addition, we rely on networks and services, including internet sites, cloud and software-as-a-service solutions, data hosting and processing facilities and tools and other hardware, software and technical applications and platforms, some of which are managed, hosted, provided and/or used by third-parties or their vendors, to assist in conducting our busines s.
While we have been the previous target of cyberattacks and security breaches, none of these attacks or breaches to date have had a material adverse effect on the Company.
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Numerous and evolving cybersecurity threats continue to pose potential risks to the security of our IT systems, networks and services, as well as the confidentiality, availability and integrity of our data.
+Added: Some of our products, services, and information technology systems contain or use open-source software, which poses additional risks, including potential security vulnerabilities, licensing compliance issues, and quality issues.
+Added: A security breach, whether of our products, of our Customers’ network security and systems or of third-party hosting services, could impact the use of such products and the security of information stored therein.
While we have made investments seeking to address these threats, including monitoring of networks and systems, hiring of exp erts, employee training and security policies for employees and third-party providers, the techniques used in these attacks change frequently and may be difficult to detect for periods of time and we may face difficulties in anticipating and implementing adequate preventative measures.
+Added: When cybersecurity incidents occur, we expect to follow our incident response protocols and address them in accordance with applicable governmental regulations and other legal requirements.
+Added: Our response to these incidents and our investments to protect our information technology infrastructure and data may not shield us from significant losses and potential liability or prevent any future interruption or breach of our systems.
If our IT systems are damaged or cease to function properly, the networks or service providers we rely upon fail to function properly, or we or one of our third-party providers suffer a loss or disclosure of our business or stakeholder information due to any number of causes ranging from catastrophic events or power outages to improper data handling or security breaches and our business continuity plans do not effectively address these failures on a timely basis, we may be exposed to reputational, competitive and business harm as well as litigation and regulatory action.
−Removed: In addition, the COVID-19 pandemic may increase the risk of such vulnerability and attacks, including unauthorized access or attacks exploiting the fact that a large number of employees are working remotely during government shutdowns and closures.
−Removed: Furthermore, their has also been an increase in cyber incidents that appears to be associated with the Ukraine-Russia military conflict.
+Added: In addition, the COVID-19 pandemic may increase the risk of such vulnerability and attacks, including unauthorized access or attacks exploiting the fact that a large number of employees are working remotely.
+Added: Furthermore, there has also been an increase in cyber incidents that appears to be associated with the Ukraine-Russia military conflict.
Enforcement of the General Data Protection Regulation (“GDPR”) was effective as of May 2018.
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In addition, we cannot assure that revenues from Customers that have accounted for significant revenues in the past, either individually or as a group, will reach or exceed historical levels in any future period.
−Removed: RISKS RELATED TO THE ACQUISITION OF CANTEL MEDICAL
−Removed: The integration of Cantel into STERIS may not be as successful as anticipated.
−Removed: The integration involves numerous operational, strategic, financial, accounting, legal, tax and other risks;
+Added: RISKS RELATED TO BUSINESS DEVELOPMENT
+Added: We engage in acquisitions and affiliations, divestitures, and other business arrangements.
+Added: Our growth may be adversely affected if we are unable to successfully identify, price, and integrate strategic business candidates or otherwise optimize our business portfolio.
+Added: Our success depends, in part, on strategic acquisitions and joint ventures, which are intended to complement or expand our businesses, divestiture of non-strategic businesses and other assets, and other actions intended to optimize our portfolio of businesses.
+Added: This strategy depends upon our ability to identify, appropriately price, and complete these types of business development transactions or arrangements and to obtain any necessary financing.
+Added: In the last several fiscal years we have made a number of acquisitions and dispositions.
+Added: There can be no assurance that any acquisition or disposition will ultimately prove to
+Added: be a strategic success.
+Added: Also, we may be unable to find or consummate future acquisitions and divestitures at acceptable prices and terms.
+Added: We continually evaluate potential business developments opportunities in the ordinary course of business.
+Added: Our success with respect to these recent and future acquisitions will depend on our ability to integrate the businesses acquired, retain key personnel, realize identified cost synergies, manage the expanded business footprint and otherwise execute our strategies.
+Added: Our success will also depend on our ability to develop satisfactory working arrangements with our strategic partners in joint ventures or other affiliations, or to divest or realign businesses.
+Added: Competition for strategic business candidates may result in increases in costs and price for acquisition candidates and market valuation issues may reduce the value available for divestiture of non-strategic businesses.
+Added: These types of transactions are also subject to a number of other risks and uncertainties, including:
+Added: delays in realizing or failure to realize anticipated benefits of the transactions;
+Added: diversion of management’s time and attention from other business concerns;
+Added: difficulties in retaining key employees, Customers, or suppliers of the acquired or divested businesses;
+Added: difficulties in maintaining uniform standards, controls, procedures and policies, or other integration or divestiture difficulties;
+Added: adverse effects on existing business relationships with suppliers or Customers;
+Added: other events contributing to difficulties in generating future cash flows;
+Added: risks associated with the assumption of contingent or other liabilities of acquisition targets or retention of liabilities for divested businesses and difficulties in obtaining financing.
+Added: Our acquisition activity and ability to grow organically may be adversely affected if we are unable to continue to access the financial markets .
+Added: Our recent acquisitions have been financed largely through cash on hand, borrowings under our bank credit facilities and through public note offerings.
+Added: Future acquisitions or other capital requirements and investments will necessitate additional cash.
+Added: To the extent our existing sources of cash are insufficient to fund these or other future activities, we have and may need to raise additional funds through new or expanded borrowing arrangements or equity.
+Added: There can be no assurance that we will be able to obtain additional funds beyond those available under existing bank credit facilities on terms favorable to us, or at all, or that such facilities can be replaced when they terminate.
+Added: The integration of acquired businesses into STERIS may not be as successful as anticipated.
+Added: In recent years we have made several large acquisitions of business, including the acquisitions of Cantel Medical and Key Surgical.
+Added: The integration of acquired businesses into STERIS involves numerous operational, strategic, financial, accounting, legal, tax and other risks;
potential liabilities associated with the acquired businesses;
−Removed: and uncertainties related to design, operation and integration of Cantel’s internal control over financial reporting.
−Removed: Difficulties in integrating Cantel into STERIS may result in Cantel performing differently than expected, in operational challenges or in the failure to realize anticipated expense-related efficiencies.
−Removed: STERIS’s and Cantel’s existing businesses could also be negatively impacted by the actions.
+Added: and uncertainties related to design, operation and integration of internal controls over financial reporting.
+Added: Difficulties in integrating acquired businesses into STERIS may result in the business performing differently than expected, in operational challenges, in strategic changes or in the failure to realize anticipated expense-related efficiencies.
+Added: STERIS’s existing businesses could also be negatively impacted by the integration actions.
Potential difficulties that may be encountered in the integration process include, among other factors:
−Removed: • the inability to successfully integrate the business of Cantel into STERIS in a manner that permits STERIS to achieve the full revenue and cost savings anticipated from the acquisition;
+Added: • the inability to successfully integrate the business of an acquired business into STERIS in a manner that permits STERIS to achieve the full revenue and cost savings anticipated from the acquisition;
• complexities associated with managing the larger, more complex, integrated business;
• not realizing anticipated operating synergies or incurring unexpected costs to realize such synergies;
−Removed: • integrating personnel from the two companies while maintaining focus on providing consistent, high-quality products and services;
+Added: • integrating personnel from acquired businesses into STERIS while maintaining focus on providing consistent, high-quality products and services;
• potential unknown liabilities and unforeseen expenses associated with the acquisition;
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• integrating relationships with Customers, vendors and business partners;
−Removed: • performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by integrating Cantel’s operations into STERIS;
−Removed: • the disruption of, or the loss of momentum in, each company’s ongoing business or inconsistencies in standards, controls, procedures and policies.
−Removed: The acquisition of Cantel may not be as accretive to STERIS’s earnings per share and cash flow from operations per share, which may negatively affect the market price of STERIS Shares.
−Removed: The acquisition may not be as accretive to STERIS’s earnings per share and cash flow from operations per share.
+Added: • performance shortfalls as a result of the diversion of management’s attention caused by integration activities;
+Added: • the disruption of, or the loss of momentum in, an acquired business and STERIS’ ongoing business or inconsistencies in standards, controls, procedures and policies.
+Added: Past and future business acquisitions may not be as accretive to STERIS’s earnings per share and cash flow from operations per share, which may negatively affect the market price of STERIS Shares.
+Added: Past and future acquisitions may not be as accretive to STERIS’s earnings per share and cash flow from operations per share as expected.
Future events and conditions could decrease or delay any expected accretion, result in dilution or cause greater dilution than is currently expected, including adverse changes in market conditions, production levels, operating results, competitive conditions, laws and regulations affecting STERIS, capital expenditure obligations, higher than expected integration costs, lower than expected synergies and general economic conditions.
Any decrease or delay of any accretion to, STERIS’s earnings per share or cash flow from operations per share could cause the price of the STERIS's ordinary shares to decline.
−Removed: STERIS has incurred and will incur significant transaction and acquisition-related costs in connection with the acquisition, which may be in excess of those anticipated.
−Removed: STERIS has incurred substantial expenses in connection with the negotiation and completion of the acquisition of Cantel and related transactions.
−Removed: STERIS expects to continue to incur a number of non-recurring costs associated with combining the operations of STERIS and Cantel achieving desired synergies.
−Removed: These fees and costs have been, and will continue to be, substantial.
−Removed: The non-recurring expenses include, among others, employee retention costs, fees paid to financial, legal and accounting advisors, and severance and benefit costs.
−Removed: STERIS will also incur and has incurred costs related to implementing integration plans, costs to consolidate facilities and systems and employment-related costs.
−Removed: Additional unanticipated costs may be incurred in the integration of the two companies’ businesses.
−Removed: Although STERIS expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the STERIS and Cantel businesses, should allow STERIS to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.
−Removed: See the risk factor titled “The integration of Cantel into STERIS may not be as successful as anticipated” below.
−Removed: The costs described above, as well as other unanticipated costs and expenses, could have a material adverse effect on the financial condition and operating results.
−Removed: We incurred a substantial amount of additional debt to complete the acquisition.
+Added: We incurred a substantial amount of additional debt to complete the Cantel Medical acquisition.
Our debt level may limit our financial and business flexibility.
−Removed: We funded the cash portion of the acquisition consideration, as well as the refinancing, prepayment, replacement, redemption, repurchase, settlement upon conversion, discharge or defeasance of certain existing indebtedness of Cantel and its subsidiaries, transaction expenses, general corporate expenses and working capital needs, through the incurrence of approximately $2.1 billion of new indebtedness, which includes $1.350 billion of senior notes issued April 1, 2021 and a new delayed draw term loan agreement in the amount of $750 million.
+Added: We funded the cash portion of the Cantel Medical acquisition consideration, as well as the refinancing, prepayment, replacement, redemption, repurchase, settlement upon conversion, discharge or defeasance of certain existing indebtedness of Cantel and its subsidiaries, transaction expenses, general corporate expenses and working capital needs, through the incurrence of approximately $2.1 billion of new indebtedness, which includes $1.350 billion of senior notes issued April 1, 2021 and a new delayed draw term loan agreement in the amount of $750 million.
We also refinanced or settled approximately $1.0 billion of Cantel's long-term indebtedness, including convertible debt, outstanding.
−Removed: As of March 31, 2022, STERIS had approximately $2.9 billion of long-term indebtedness outstanding.
+Added: As of March 31, 2023, STERIS had approximately $3.1 billion of indebtedness outstanding.
STERIS’s ability to repay all the forgoing obligations will depend on, among other things, STERIS’s financial position and performance, as well as prevailing market conditions and other factors beyond our control.
−Removed: Our increased indebtedness could have important consequences to our shareholders, including increasing STERIS’s vulnerability to general adverse economic and industry conditions, limiting our ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements, requiring the use of a substantial portion of our cash flow from operations for the payment of principal and interest on indebtedness, thereby reducing our ability to use our cash flow to fund working capital, acquisitions, capital expenditures and general corporate matters, including dividend payments and stock repurchases, limiting our flexibility in planning for, or reacting to, changes in its business and our industry and creating a disadvantage compared to our competitors with less indebtedness.
−Removed: Our performance may suffer if we do not effectively manage our expanded operations.
−Removed: Our success will depend, in part, on our ability to manage the expansion, which poses numerous risks and uncertainties, including the need to integrate the operations and business of Cantel into our existing business in an efficient and timely manner, to combine systems and management controls and to integrate relationships with Customers, vendors and business partners.
−Removed: We may fail to realize all of the anticipated benefits of the acquisition, or those benefits may take longer to realize than expected.
−Removed: The success of the acquisition will depend, in part, on our ability to realize the anticipated benefits and cost savings from combining the businesses, including the approximately $110 million in annualized pre-tax cost synergies that we expect to realize within the first four fiscal years after the completion of the acquisition.
−Removed: The anticipated benefits and cost savings of the acquisition may not be realized fully or at all, may take longer to realize than expected, may require more non-recurring costs and expenditures to realize than expected or could have other adverse effects that we do not currently foresee.
−Removed: Some of the assumptions that we made such as with respect to anticipated operating synergies or the costs associated with realizing such synergies, significant long-term cash flow generation, and the continuation of our investment grade credit profile, may not be realized.
−Removed: The integration process may result in the loss of key employees, the disruption of ongoing business or inconsistencies in standards, controls, procedures, and policies.
−Removed: There could be potential unknown liabilities and unforeseen expenses associated with the acquisition that were not discovered while performing due diligence.
+Added: Our increased indebtedness could have important consequences to our shareholders, including increasing STERIS’s interest obligations, general adverse economic and industry conditions, limiting our ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements, requiring the use of a substantial portion of our cash flow from operations for the payment of principal and interest on indebtedness, thereby reducing our ability to use our cash flow to fund working capital, acquisitions, capital expenditures and general corporate matters, including dividend payments and stock repurchases, limiting our flexibility in planning for, or reacting to, changes in its business and our industry and creating a disadvantage compared to our competitors with less indebtedness.
+Added: STERIS has incurred and expects to incur significant transaction and related costs in connection with business acquisitions and dispositions, which may be in excess of those anticipated.
+Added: STERIS has incurred substantial expenses in connection with the negotiation and completion of past business acquisitions and dispositions, including Cantel Medical and Key Surgical, and expects to incur similar costs for any future business acquisitions or dispositions.
+Added: STERIS expects to incur non-recurring costs associated with the integrations of recent acquisitions into STERIS and working towards achieving the desired synergies of such acquisitions.
+Added: These fees and costs have been, and may continue to be, substantial.
+Added: The non-recurring expenses include, among others, employee retention costs, fees paid to financial, legal and accounting advisors, and severance and benefit costs.
+Added: STERIS also expects to incur and has incurred costs to consolidate facilities and systems.
+Added: Additional unanticipated costs may be incurred in the integration of any acquired business.
+Added: Although STERIS expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of acquired businesses, should allow STERIS to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.
+Added: The costs described above, as well as other unanticipated costs and expenses, could have a material adverse effect on the financial condition and operating results.
+Added: We may fail to realize all of the anticipated benefits of an acquired business, or those benefits may take longer to realize than expected.
+Added: The success of an acquisition depends, in part, on our ability to realize the anticipated benefits and cost savings from combining the businesses.
+Added: The anticipated benefits and cost savings of an acquisition may not be realized fully or at all, may take longer to realize than expected, may require more non-recurring costs and expenditures to realize than expected or could have other adverse effects that we do not currently foresee.
+Added: Assumptions that we have made with respect to acquisitions, such as with respect to anticipated operating synergies or the costs associated with realizing such synergies, significant long-term cash flow generation, and the continuation of our investment grade credit profile, may not be realized.
+Added: The post-acquisition integration process may result in the loss of key employees, the disruption of ongoing business, changes in strategy or inconsistencies in standards, controls, procedures, and policies.
+Added: There could be potential unknown liabilities and unforeseen expenses associated with acquisitions that were not discovered while performing due diligence.
+Added: Although we conduct what we believe to be a prudent level of investigation regarding the operating and financial condition of the businesses, product or
+Added: service lines, assets or technologies we purchase, an unavoidable level of risk remains regarding their actual operating and financial condition, as well as their strategic fit.
+Added: We may not be able to ascertain actual value or understand potential liabilities until or after we actually assume operation control of these businesses, product or service lines, assets or technologies.
We have recorded goodwill and other intangible assets that could become impaired and result in material non-cash changes to our results of operation in the future.
−Removed: The acquisition has been accounted for as an acquisition by STERIS in accordance with accounting principles generally accepted in the U.S., which is referred to as U.S.
−Removed: Under the acquisition method of accounting, the assets and liabilities of Cantel and its subsidiaries have been recorded at their respective fair values and added to those of STERIS.
−Removed: Our reported financial condition and results of operations for periods after completion of the acquisition reflect Cantel balances and results after completion of the acquisition but have not been restated retroactively to reflect the historical financial position or results of operations of Cantel and its subsidiaries for periods prior to the acquisition.
−Removed: Under the acquisition method of accounting, the total purchase price has been allocated to Cantel’s tangible assets and liabilities and identifiable intangible assets based on their fair values as of the date of completion of the acquisition.
−Removed: The excess of the purchase price over those fair values will be recorded as goodwill.
−Removed: To the extent the value of goodwill or intangible becomes impaired, we may be required to incur material non-cash charges relating to such impairment.
+Added: Our total assets include goodwill, intangibles and other long-lived assets.
+Added: If we determine that these items have become impaired in the future, it may have a material adverse effect on our financial condition and results of operations.
+Added: As of March 31, 2023, we had recorded goodwill of $4 billion and other intangible assets, net of accumulated amortization of $3 billion.
+Added: Goodwill represents the excess of purchase price over the estimated fair value assigned to the net tangible and identifiable intangible assets of a business acquired.
+Added: Goodwill is evaluated for impairment annually or more frequently, if indicators of impairment exist.
+Added: If the impairment evaluations for goodwill indicate the carrying amount exceeds the estimated fair value, an impairment loss is recognized in an amount equal to that excess.
Our operating results may be significantly impacted from both the impairment and the underlying trends in the business that triggered the impairment.
+Added: 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 $490.6 million related to goodwill that arose with respect to Dental segment acquired in the Cantel acquisition.
UNRESOLVED STAFF COMMENTS
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.