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Item 7. Management’s Discussion and Analysis

2023-05-26 compared with 2022-05-31 · 168 added, 175 removed, 558 unchanged (38% of the section changed)

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• what our expenditures for capital projects were;

• where cash will come from to fund future debt principal repayments, growth outside of core operations, repurchase ordinary shares, pay cash dividends and fund future working capital needs.

• where cash is expected to come from to fund future debt principal repayments, growth outside of core operations, repurchase ordinary shares, pay cash dividends and fund future working capital needs.

The MD&A also analyzes and explains the annual changes in the specific line items in the Consolidated Statements of Income.

As you read the MD&A, it may be helpful to refer to information in Item 1, "Business", Part I, Item 1A, "Risk Factors" and Note 10 of our consolidated financial statements titled, "Commitments and Contingencies" for a discussion of some of the matters that can adversely affect our business and results of operations.

As you read the MD&A, it may be helpful to refer to information in Item 1, "Business," Part I, Item 1A, "Risk Factors," and Note 10 to our consolidated financial statements titled, "Commitments and Contingencies" for a discussion of some of the matters that can adversely affect our business and results of operations.

This information, discussion, and disclosure may be important to you in making decisions about your investments in STERIS.

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

We offer our Customers a unique mix of innovative consumable products, such as detergents, gastrointestinal (“GI”) endoscopy accessories, barrier product solutions, and other products and services, including:

We offer our Customers a unique mix of innovative consumable products, such as detergents, endoscopy accessories, barrier products, and other products and services, including:

equipment installation and maintenance, microbial reduction of medical devices, dental instruments and tools, instrument and scope repair, laboratory testing services, outsourced reprocessing, and capital equipment products, such as sterilizers and surgical tables, automated endoscope reprocessors, and connectivity solutions such as operating room (“OR”) integrati on.

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

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

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

Healthcare, Applied Sterilization Technologies, Life Sciences and Dental.

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Acquisitions .

During fiscal 2023, we completed several tuck-in acquisitions which expanded our product and service offerings in the Applied Sterilization Technologies and Healthcare segments.

Total aggregate consideration was approximately $49.8 million, including potential contingent consideration of $7.3 million.

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

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We believe that the acquisition will strengthen STERIS’s leadership in infection prevention by bringing together two complementary businesse s able to offer a broader set of Customers a more diversified selection of infection prevention, endoscopy and sterilization products and services.

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

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

This business is reported as the Dental segment.

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Total aggregate consideration for these transactions was approximately $3.1 million, net of cash acquired and including deferred consideration of $0.1 million.

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

Total consideration was approximately $78.0 million, net of cash acquired and subject to any working capital adjustments.

Total non-cash consideration for this transaction was $41.8 million, which consisted of the settlement of outstanding principal and interest on a loan receivable, the initial equity investment, and receivables related to capital equipment purchases that existed at the acquisition date.

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

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

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

Key Surgical has been integrated into our Healthcare segment.

The total purchase price of the acquisition was $853.2 million, net of cash acquired and remains subject to customary working capital adjustments.

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

Total aggregate consideration for these transactions was approximately $20.9 million, net of cash acquired and including deferred consideration of approximately $1.2 million.

Divestitures.

In December 2021, we entered into an Asset Purchase Agreement to sell our Renal Care business to Evoqua Water Technologies Corp., for cash consideration of approximately $196.0 million, subject to certain potential adjustments, including a customary working capital adjustment and contingent consideration of $12.3 million.

In April 2022, we entered into an Asset Purchase Agreement to sell certain assets of our Animal Health business to Veterinary Orthopedic Implants, LLC.

We recorded net proceeds of $5.2 million and recognized a pre-tax loss on the sale of $4.9 million in the Selling, general, and administrative expenses line of the Consolidated Statements of Income.

The business generated annual revenues of approximately $12.0 million.

In December 2021, we entered into an Asset Purchase Agreement to sell our Renal Care business to Evoqua Water Technologies Corp.

for cash consideration of approximately $196.0 million, subject to certain potential adjustments, including a customary working capital adjustment and contingent consideration of $12.3 million.

We recognized a gain on the sale of $4.9 million.

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

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

We recorded proceeds of $0.5 million, net of cash divested, and recognized a pre-tax loss on the sale of $2.0 million in the selling, general and administrative expense line of the Consolidated Statements of Income.

The business generated annual revenues of approximately $6.0 million.

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

COVID-19 Pandemic.

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

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

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

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

As a result, we do not believe that the COVID-19 pandemic or the actions we took in respo nse to the pandemic will negatively impact our long-term ability to generate revenues or meet existing and future financial obligations.

For additional information on our risk factors related to the COVID-19 pandemic please refer to Item 1A.

titled, "Risk Factors."

During the third quarter of fiscal 2023, we received an additional $1.4 million in working capital settlements related to the sale of this business.

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

Revenues increased $372.8 million, or 8.1%, to $4,957.8 million for the year ended March 31, 2023, as compared to $4,585.1 million for the year ended March 31, 2022.

These increases reflect added volume from Cantel and other recent acquisitions, organic growth in the Healthcare, Applied Sterilization Technologies and Life Sciences segments, and favorable fluctuations in currencies.

Our gross profit percentage increased to 44.0% for fiscal 2022 as compared to 43.2% for fiscal 2021.

Favorable impact from productivity, pricing, and the decline in COVID-19 incremental costs, were partially offset by unfavorable impact from our recent acquisitions, material costs, inflation, fluctuations in currencies, and mix and other adjustments.

Fiscal 2022 operating income decreased 22.4% to $425.6 million over fiscal 2021 operating income of $548.4 million.

This decline was primarily due to additional acquisition and integration expenses and incremental amortization expense primarily related to the acquisition of Cantel.

Unplanned supply chain and inflation of approximately $45.0 million also contributed to the decline in fiscal 2022.

Net cash flows from operations were $684.8 million and free cash flow was $399.0 million in fiscal 2022 compared to net cash flows from operations of $689.6 million and free cash flow of $450.9 million in fiscal 2021 (see subsection of MD&A

titled, "Non-GAAP Financial Measures" for additional information and related reconciliation of non-GAAP financial measures to the most comparable GAAP measures) .

The fiscal 2022 decrease in free cash flow was anticipated and was primarily due to costs associated with the acquisition and integration of Cantel and higher capital expenditures in fiscal 2022.

These increases reflect growth in the Healthcare, Applied Sterilization Technologies, Life Sciences, and Dental segments, partially offset by unfavorable fluctuations in currencies and divestiture activities.

Our gross profit percentage decreased to 43.6% for fiscal 2023 as compared to 44.0% for fiscal 2022.

Unfavorable impacts from inflation and productivity were partially offset by favorable impacts from pricing, mix, divestiture activity and fluctuations in currency.

Fiscal 2023 operating income decreased 37.0% to $268.2 million, as compared to fiscal 2022 operating income of $425.6 million.

This decline was primarily due to a one time goodwill impairment charge of $490.6 million offset by a decrease in acquisition and integration expenses, which were primarily related to our acquisition of Cantel, as well as an increase in amortization of purchased intangible assets.

Cash flows from operations were $756.9 million and free cash flow was $409.6 million in fiscal 2023 compared to cash flows from operations of $684.8 million and free cash flow of $399.0 million in fiscal 2022 (see subsection of MD&A titled, "Non-GAAP Financial Measures" for additional information and related reconciliation of cash flows from operations to free cash flow) .

The fiscal 2023 increase in cash flows from operations was primarily from lower costs associated with the acquisition and integration of Cantel, partially offset by higher working capital, particularly inventory and accounts receivable.

The increase in free cash flow was limited by increased capital spending.

Our debt-to-total capital ratio was 33.6% at March 31, 2023.

During the year, we increased our quarterly dividend for the sixteenth consecutive year to $0.43 per share per quarter.

In fiscal 2023 and beyond, we expect to continue to realize incremental cost synergies as a result of the integration of Cantel, manage our costs, grow our business with internal product and service development, invest in greater capacity, and augment these value creating methods with potential acquisitio ns of additional products and services.

During the year, we increased our quarterly dividend for the seventeenth consecutive year to $0.47 per share per quarter.

In fiscal 2024 and beyond, we expect to manage our costs, grow our business with internal product and service development, invest in greater capacity, and augment these value creating methods with potential acquisitions of additional products and services.

We anticipate continued supply chain and inflation pressures in fiscal 2024.

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These amounts are disclosed so that the reader has the same financial data that management uses with the belief that it will assist investors and other readers in making comparisons to our historical operating results and analyzing the underlying performance of our operations for the periods presented.

We believe that the presentation of these non-GAAP financial measures, when considered along with our GAAP financial measures and the reconciliation to the corresponding GAAP financial measures, provide the reader with a more complete understanding of the factors and trends affecting our business than could be obtained absent this disclosure.

It is important for the reader to note that the non-GAAP financial measure used may be calculated differently from, and therefore may not be comparable to, a similarly titled measure used by other companies.

We define free cash flow as net cash provided by operating activities as presented in the Consolidated Statements of Cash Flows less purchases of property, plant, equipment, and intangibles plus proceeds from the sale of property, plant, equipment, and intangibles, which are also presented within investing activities in the Consolidated Statements of Cash Flows.

We believe that the presentation of these non-GAAP financial measures, when considered along with our GAAP financial measures and the reconciliation to the corresponding GAAP financial measures, provides the reader with a more complete understanding of the factors and trends affecting our business than could be obtained absent this disclosure.

It is important for the reader to note that the non-GAAP financial measures used may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

We define free cash flow as net cash provided by operating activities as presented in the Consolidated Statements of Cash Flows less purchases of property, plant, equipment, and intangibles (capital expenditures) plus proceeds from the sale of property, plant, equipment, and intangibles, which are also presented within investing activities in the Consolidated Statements of Cash Flows.

We use this as a measure to gauge our ability to pay cash dividends, fund growth outside of core operations, fund future debt principal repayments, and repurchase shares.

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(dollars in thousands) 2023 2022

Net cash flows provided by operating activities $ 684,811 $ 689,640

Net cash provided by operating activities $ 756,947 $ 684,811

Purchases of property, plant, equipment and intangibles, net (361,969) (287,563)

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Revenues increased $372.8 million, or 8.1%, to $4,957.8 million for the year ended March 31, 2023, as compared to $4,585.1 million for the year ended March 31, 2022.

The increase reflects added volume of $1,073.1 million from Cantel and other recent acquisitions, organic growth in the Healthcare, Applied Sterilization Technologies and Life Sciences segments and favorable fluctuations in currencies.

These increases reflect added volume in the Healthcare, Applied Sterilization Technologies, and Life Sciences segments and the benefits of a full year of Cantel activity and price increases in all segments.

These positives were partially offset by unfavorable fluctuations in currencies and divestiture activities.

Service revenues for fiscal 2023 increased $143.7 million, or 7.1% over fiscal 2022, reflecting growth in the Healthcare, Life Sciences and Applied Sterilization Technologies business segments.

Consumable revenues for fiscal 2022 increased $881.2 million, or 121.4%, over fiscal 2021, reflecting growth in the Healthcare and Life Sciences segments and added volume from the addition of our new Dental segment.

Capital equipment revenues for fiscal 2022 increased by $231.6 million, or 32.3%, over fiscal 2021, reflecting growth in the Healthcare and Life Sciences segments.

Ireland revenues for fiscal 2022 were $82.0 million, representing an increase of $10.1 million, or 14.1%, over fiscal 2021 revenues of $71.9 million, reflecting growth in service and consumable revenues, which were partially offset by a decline in capital equipment revenues.

United States revenues for fiscal 2022 were $3,228.9 million, representing an increase of $1,001.8 million, or 45.0%, over fiscal 2021 revenues of $2,227.0 million, reflecting growth in consumable, service and capital equipment revenues.

These increases represent both organic growth and the impact of Cantel and our other recent acquisitions.

Revenues from other foreign locations for fiscal 2022 were $1,274.2 million, representing an increase of $465.6 million, or 57.6% over the fiscal 2021 revenues of $808.6 million, reflecting strength in Canada and the Europe, Middle East and Africa ("EMEA"), Asia Pacific and Latin American regions.

These increases represent both organic growth and the impact of Cantel and our other recent acquisitions.

Consumable revenues for fiscal 2023 increased $107.8 million, or 6.7%, over fiscal 2022, reflecting growth in the Healthcare and Life Sciences segments and the benefit of a full year of Cantel activity.

Capital equipment revenues for fiscal 2023 increased by $121.3 million, or 12.8%, over fiscal 2022, driven by organic growth in the Healthcare and Life Sciences segments.

Ireland revenues for fiscal 2023 were $74.5 million, representing a decline of $7.5 million, or 9.2%, as compared to fiscal 2022 revenues of $82.0 million, reflecting declines in service and consumable revenues.

United States revenues for fiscal 2023 were $3,586.5 million, representing an increase of $357.6 million, or 11.1%, over fiscal 2022 revenues of $3,228.9 million, reflecting growth in service and capital equipment revenues.

Revenues from other foreign locations for fiscal 2023 were $1,296.9 million, representing an increase of $22.7 million, or 1.8% over the fiscal 2022 revenues of $1,274.2 million.

The increase reflects growth within the EMEA, Canada, and Latin American regions, which was partially offset by declines in the Asia Pacific region.

Gross Profit.

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Our gross profit is affected by the volume, pricing and mix of sales of our products and services, as well as the costs associated with the products and services that are sold.

Our gross profit percentage increased to 44.0% for fiscal 2022 as compared to 43.2% for fiscal 2021 .

Favorable impact from productivity (170 basis points), pricing (70 basis points), and the decline in COVID-19 incremental costs (60 basis points) were partially offset by unfavorable impact from our recent acquisitions (80 basis points), material costs (70 basis points), inflation (50 basis points), fluctuations in currencies (10 basis points) and mix and other adjustments (10 basis points).

Our gross profit percentage decreased to 43.6% for fiscal 2023 as compared to 44.0% for fiscal 2022 .

Unfavorable impacts from inflation (330 basis points) and productivity (50 basis points) were partially offset by favorable impacts from pricing (150 basis points), mix and other adjustments (130 basis points), divestiture activity (40 basis points), and fluctuations in currency (20 basis points).

Operating Expenses.

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Selling, general, and administrative $ 1,298,876 $ 1,502,752 $ (203,876) (13.6) %

Goodwill impairment loss 490,565 — 490,565 NM

Research and development 101,581 87,944 13,637 15.5 %

Restructuring expenses 48 (2,914) 2,962 NM

Restructuring expenses 485 48 437 910.4 %

Total operating expenses $ 1,891,507 $ 1,590,744 $ 300,763 18.9 %

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Significant components of total Selling, general, and administrative expenses (“SG&A”) are compensation and benefit costs, fees for professional services, travel and entertainment, facilities costs, gains or losses from divestitures, and other general and administrative expenses.

SG&A increased 105.5% in fiscal 2022 over fiscal 2021.

During the fiscal 2022 period we had significant increases in acquisition related costs, which included amortization of acquired intangible assets, "step-up" of plant, property and equipment to fair value, and acquisition and integration expenses, which were primarily related to the acquisition of Cantel.

The increase also reflects the addition of expenses associated with the operations of Cantel and our other recent acquisitions.

SG&A decreased 13.6% in fiscal 2023, as compared to fiscal 2022.

The fiscal 2023 reduction reflects lower spending for acquisition and integration expenses, which were primarily related to our acquisition of Cantel, and a decline in incentive compensation plan expense.

Goodwill Impairment Loss.

A goodwill impairment loss of $490.6 million was recorded during the second quarter of fiscal 2023 as the result of an assessment of the fair value of the Dental segment made in connection with the preparation of our quarterly consolidated financial statements.

For more information regarding our goodwill impairment loss, see Note 3 to our consolidated financial statements titled, "Goodwill and Intangible Assets."

Research and Development.

Research and development expenses increased $21.6 million during fiscal 2022, as compared to fiscal 2021, primarily due to the addition of Cantel and our other recent acquisitions.

Research and development expenses increased $13.6 million in fiscal 2023 over fiscal 2022, primarily due to the addition of Cantel and other recent acquisitions.

Research and development expenses are influenced by the number and timing of in-process projects and labor hours and other costs associated with these projects.

Our research and development initiatives continue to emphasize new product development, product improvements, and the development of new technological platform innovations.

During fiscal 2022, our investments in research and development continued to be focused on, but were not limited to, enhancing capabilities of sterile processing combination technologies, procedural products and accessories, and devices and support accessories used in gastrointestinal endoscopy procedures.

Restructuring Expenses.

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

Fewer than 200 positions were eliminated.

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

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

Restructuring expenses incurred in fiscal 2022 and fiscal 2021 were not material.

For information on our restructuring efforts, refer to our Annual Report on Form 10-K filed with the SEC on May 28, 2021.

During fiscal 2023, our investments in research and development have continued to be focused on, but were not limited to, enhancing capabilities of sterile processing combination technologies, procedural products and accessories, and devices and support accessories used in gastrointestinal endoscopy procedures.

Non-Operating Expenses, Net.

Non-operating expense (income), net consists of interest expense on debt, offset by interest earned on cash, cash equivalents, short-term investment balances, a fair value adjustment related to convertible debt, and other

miscellaneous expense.

The following table compares our non-operating expense (income), net for the year ended March 31, 2022 to the year ended March 31, 2021:

Non-operating expenses, net consists of interest expense on debt, offset by interest earned on cash, cash equivalents, short-term investment balances, a fair value adjustment related to convertible debt, and other miscellaneous expense (income).

The following table compares our net non-operating expenses, net for the year ended March 31, 2023 to the year ended March 31, 2022:

Years Ended March 31,

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

Interest income and miscellaneous expense (6,284) (6,345) 61

Interest and miscellaneous expense (income) 2,848 (6,284) 9,132

Non-operating expenses, net $ 110,837 $ 111,115 $ (278)

Interest expense increased $52.4 million during fiscal 2022, as compared to fiscal 2021, primarily due to debt incurred for acquisition financing including term loans and Senior Public Notes (as defined below).

Interest expense increased $18.4 million during fiscal 2023 over fiscal 2022, primarily due to higher interest rates on floating rate debt.

During fiscal 2022, we recorded fair value adjustments of $27.8 million, based on appreciation in our share price related to premium liability associated with the convertible debt assumed in the acquisition of Cantel.

Interest (income) and miscellaneous expense is not material.

Additional information regarding our outstanding debt and the Cantel convertible debt is included in Note 6 to our consolidated financial statements titled, “Debt,” and in the subsection of this MD&A titled, "Liquidity and Capital Resources."

Additional information regarding our outstanding debt and Cantel convertible debt is included in Note 6 to our consolidated financial statements titled, "Debt," and in the subsection of this MD&A titled, "Liquidity and Capital Resources."

Interest and miscellaneous expense (income) decreased $9.1 million during fiscal 2023, as compared to 2022, primarily due to losses recognized as a result of mark to market adjustments of our equity investments.

Additional information regarding our mark to market adjustments of our equity investments is included in Note 17 to our consolidated financial statements titled, "Fair Value Measurements."

Income Tax Expense.

The following table compares our income tax expense and effective income tax rates for the years ended March 31, 2022 and March 31, 2021:

The following table compares our tax expense and effective income tax rates for the years ended March 31, 2023 and March 31, 2022:

Years Ended March 31, Change Percent

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Effective income tax rate 32.8 % 22.8 %

The effective income tax rate for fiscal 2022 was 22.8% as compared to 23.3% for fiscal 2021.

The fiscal 2022 effective tax rate decreased when compared to fiscal 2021, primarily due to a decrease in percentage of profits earned and taxed in jurisdictions with a higher tax rate.

The fiscal 2022 effective tax rate was also unfavorably impacted by certain one-time, non-deductible acquisition related costs.

The effective income tax rate for fiscal 2023 was 32.8% when compared to 22.8% for fiscal 2022.

The fiscal 2023 effective tax rate increased when compared to 2022, primarily due to the tax impact of the goodwill impairment loss recognized on the Dental segment during the second quarter of fiscal 2023.

The fiscal 2023 effective tax rate was also favorably impacted by changes in U.S.

state and local tax rates applied to existing deferred tax assets and liabilities.

Business Segment Results of Operations.

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

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

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

Healthcare, Applied Sterilization Technologies, Life Sciences and Dental.

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to outsourced instrument reprocessing services.

In addition, our procedural solutions also include single-use devices and capital equipment infrastructure used primarily in operating rooms, ambulatory surgery centers, endoscopy suites, and other procedural areas.

Our Applied Sterilization Technologies segment is a third-party service provider for contract sterilization, as well as testing services needed to validate sterility services for medical device and pharmaceutical manufacturers.

In addition, our procedural solutions also include endoscopy accessories and capital equipment infrastructure used primarily in operating rooms, ambulatory surgery centers, endoscopy suites, and other procedural areas.

Our Applied Sterilization Technologies ("AST") segment is a third-party service provider for contract sterilization, as well as testing services needed to validate sterility services for medical device and pharmaceutical manufacturers.

Our technology-neutral offering supports Customers every step of the way, from testing through sterilization.

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

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

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

For more information regarding our segments please refer to Note 11 to our consolidated financial statements titled, "Business Segment Information," and Item 1, "Business."

The following table compares business segment and Corporate and other revenues and operating income for the year ended March 31, 2022 to the year ended March 31, 2021.

Years ended March 31, Percent

(dollars in thousands) 2022 2021 Change Change

The following table compares business segment revenues as well as impacts from acquisitions, divestitures, and foreign currency movements for the year ended March 31, 2023 to the year ended March 31, 2022.

Years ended March 31,

As reported, GAAP Impact of Acquisitions Impact of Divestitures Impact of Foreign Currency Movements GAAP Growth Organic Growth Constant Currency Organic Growth

2023 2022 2023 2022 2023 2023 2023 2023

Segment revenues:

Healthcare $ 3,085,131 $ 2,845,467 $ 98,400 $ (101,631) $ (52,416) 8.4 % 8.9 % 10.8 %

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Dental 421,573 361,661 65,009 — (6,442) 16.6 % (1.4) % 0.4 %

Total revenues $ 4,585,064 $ 3,107,519 $ 1,477,545 47.5 %

Total $ 4,957,839 $ 4,585,064 $ 166,209 $ (107,133) $ (109,450) 8.1 % 7.0 % 9.4 %

Healthcare revenues increased 8.4% in fiscal 2023, as compared to fiscal 2022, reflecting growth in capital equipment, service, and consumable revenues of 14.6%, 7.5%, and 4.6% respectively.

This increase reflects increased volume and pricing,

partially offset by unfavorable fluctuations in currencies.

T he Healthcare segment’s backlog at March 31, 2023 amounted to $494.7 million.

Excluding Cantel, the Healthcare segment's backlog at March 31, 2022 was $423.6 million .

In addition to the added volume from Cantel, the increase is primarily due to built up demand and supply chain disruptions.

AST revenues increased 7.2% in fiscal 2023 , as compared to fiscal 2022 .

The increase was primarily due to increases in volume and pricing, partially offset by unfavorable fluctuations in currencies.

Life Sciences revenues increased 2.2% in fiscal 2023, as compared to fiscal 2022 reflecting growth in capital equipment, service, and consumable revenues of 3.6%, 3.4%, and 0.7% respectively.

This increase was driven by increased volume and pricing, partially offset by divestiture activity and unfavorable fluctuations in currency.

The Life Sciences backlog at March 31, 2023 and 2022 amounted to $104.9 million and $104.7 million, respectively.

Dental segment revenues increased 16.6% to $421.6 million in fiscal 2023 , as compared to $361.7 million from the Cantel acquisition date of June 2, 2021 through March 31, 2022 .

The increase was driven primarily by the timing of the Cantel acquisition.

The following table compares business segment and Corporate operating income for the year ended March 31, 2023 to the year ended March 31, 2022

Years ended March 31, Percent

(dollars in thousands) 2023 2022 Change Change

Operating income (loss):

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24,196 205,788

Redomiciliation and tax restructuring costs (3)

Tax restructuring costs (3)

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

(3,100) (2,350)

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

Net gain on divestiture of businesses (1)

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

COVID-19 incremental costs (4)

Restructuring charges (credit) (5)

12,254 81,804

Restructuring charges 485 48

Goodwill impairment loss (4)

Total operating income $ 268,185 $ 425,618

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

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

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

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

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

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

Healthcare revenues increased 45.6% in fiscal 2022, as compared to fiscal 2021, reflecting growth in consumables, capital equipment, and service revenues of 96.6%, 32.9% and 23.9%, respectively.

This increase reflects the impact of Cantel and our other recent acquisitions, organic grow th and favorable fluctuations in foreign currencies.

Excluding Cantel, the Healthcare segment’s backlog at March 31, 2022 amounted to $423.6 million , increasing 105.4%, as compared to the backlog of $206.3 million at March 31, 2021.

The increase is primarily due to Customer demand but also reflects some delays in shipments due to supply chain disruptions.

App lied Sterilization Technologies revenues increased 24.4% in fiscal 2022, as compared to fiscal 2021.

The increase was primarily due to organic growth and favorable fluctuations.

The impact of a fiscal 2021 acquisition also contributed to the increases.

Life Sciences revenues increased 12.3% in fiscal 2022, as compared to fiscal 2021, reflecting growth in service, consumable, and capital equipment revenues of 15.4%, 11.3% an d 10.8%, respectively.

The increase reflects the impact of the Cantel acquisition, organic growth and favorable fluctuations in foreign currencies.

Excluding Cantel, the Life Sciences backlog at March 31, 2022 amounted to $104.7 million, increasing 31.1%, as compared to backlog of $79.9 million at March 31, 2021.

The increase is primarily due to Customer demand but also reflects some delays in shipments due to supply chain disruptions.

Dental segment revenues from the Cantel acquisition date of June 2, 2021 through March 31, 2022 were $361.7 million.

The Healthcare segment’s operating income increased $199.0 million to $626.1 million in fiscal year 2022, as compared to $427.1 million in fiscal year 2021, due to higher volumes primarily from the acquisition of Cantel.

(4) For more information regarding our goodwill impairment loss, refer to Note 3 to our consolidated financial statements titled, "Goodwill and Intangible Assets."

The Healthcare segment’s operating income increased $56.3 million to $706.0 million in fiscal year 2023, as compared to $649.7 million in fiscal year 2022, due to higher volumes as well as the favorable impact from pricing.

The segment's operating margins were 22.9% for fiscal year 2023 and 22.8% for fiscal year 2022.

During fiscal 2022, we experienced favorable impact from our recent acquisitions, partially offset by supply chain and inflationary cost increases.

In fiscal 2021, we benefited from lower expenditures, including reductions in travel and meeting spend due to the COVID-19 pandemic.

The Applied Sterilization Technologies segment’s operating income increased $99.5 million to $410.1 million in fiscal year 2022, as compared to $310.6 million in fiscal year 2021.

The Applied Sterilization Technologies segment's operating marg ins were 48.1% f or fiscal year 2022 and 45.3% for fiscal year 2021.

The segment's operating income and operating margin improvements were primarily due to to higher volumes.

Additionally, in the prior year we experienced reduced expenditures, including reductions in travel and meeting spend due to the COVID-19 pandemic.

The Life Sciences business segment’s operating income increased $35.4 million to $216.2 million in fiscal year 2022, as compared to $180.8 million in fiscal year 2021.

The increase in operating margin is primarily due to the benefits of higher volume and pricing which more than offset increased material costs.

The AST segment’s operating income increased $18.9 million to $429.0 million in fiscal year 2023, as compared to $410.1 million in fiscal year 2022.

The AST segment's operating marg ins were 46.9% f or fiscal year 2023 and 48.1% for fiscal year 2022.

The increase in segment operating income is primarily due to increased volume.

Operating margins declined as higher labor and energy costs more than offset the benefit of increased volume.

The Life Sciences business segment’s operating income decreased $6.0 million to $210.2 million in fiscal year 2023, as compared to $216.2 million in fiscal year 2022.

The segment’s operating margins w ere 39.2% for fiscal year 2023 and 41.2% for fiscal year 2022.

The segment's operating income and operating margin improvements were primarily due to to higher volumes partially due to the acquisition of Cantel and favorable mix.

The Dental business segment's operating income and operating margin for fiscal 2022 were $84.4 million and 23.3%, respectively.

The decreases in segment operating income and operating margin were primarily due to a reduction in productivity as well as supply chain and inflationary cost increases partially offset by the benefits of increases in pricing and volume.

The Dental business segment's operating income increased $5.1 million to $89.5 million in fiscal year 2023 as compared to $84.4 million in fiscal year 2022.

The segment's operating margins were 21.2% for fiscal year 2023 and 23.3% for fiscal year 2022.

The Dental segment's increase in operating income is primarily due to an increase in pricing.

Operating margins declined as a reduction in productivity and increased supply chain and labor costs more than offset the benefit of pricing.

LIQUIDITY AND CAPITAL RESOURCES

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Net cash used in investing activities (383,330) (666,559)

Net provided by financing activities 115,830 345,620

Net cash (used in) provided by financing activities (498,718) 115,830

Debt-to-total capital ratio 33.6 % 32.1 %

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Net Cash Provided By Operating Activities – The net cash provided by our operating activities was $756.9 million for the year ended March 31, 2023, compared to $684.8 million for the year ended March 31, 2022.

Net cash provided by operating activities decreased in fiscal 2022 by 0.7%, as compared to fiscal 2021, largely due to the acquisition and integration expenditures related to our acquisition of Cantel.

Net cash provided by operating activities increased in fiscal 2023 by 10.5% over fiscal 2022, largely due to lower costs associated with the acquisition and integration of Cantel in the fiscal 2023 period, partially offset by higher working capital, particularly inventory and accounts receivable.

Net Cash Used In Investing Activities – The net cash used in our investing activities was $383.3 million for the year ended March 31, 2023, compared to $666.6 million for the year ended March 31, 2022.

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• Purchases of property, plant, equipment, and intangibles, net – Capital expenditures totaled $362.0 million and $287.6 million for fiscal 2023 and 2022, respectively.

The fiscal 2022 increase was primarily due to additional expenditures associated with Cantel and in our Applied Sterilization Technologies segment.

The fiscal 2023 increase was primarily due to additional expenditures in our AST segment.

• Proceeds from the sale of property, plant, equipment and intangibles – During fis cal 2023 and 2022 we recei ved $14.6 million and $1.7 million, respectively, for proceeds from the sale of property, plant, equipment and intangibles.

The fiscal 2023 increase was primarily due to the sale of a facility previously used by the Dental segment.

• Proceeds from the sale of business – During fiscal 2023 and 2022, we received $6.6 million and $169.7 million, respectively, for proceeds from the sale of certain non-core businesses.

For more information, refer to our Note 2 to our consolidated financial statements, titled "Business Acquisitions and Divestitures."

• Purchases of investments – During fiscal 2021, we purchased an equity inve stment for $4.4 million.

For more information, refer to Note 2 to our consolidated financial statements titled, "Business Acquisitions and Divestitures."

• Acquisition of businesses, net of cash acquired – During fiscal 2023 and 2022, we used $42.6 million and $550.4 million, respectively, for acquisitions.

For more information on these acquisitions refer to Note 2 to our consolidated financial statements titled, "Business Acquisitions and Divestitures ."

• Other – During fiscal 2021, we provided approximately $2.4 million under borrowing agreements.

For more information on these agreements refer to our Note 2 to our consolidated financial statements, titled "Business Acquisitions and Divestitures."

Net Cash Provided By Financing Activities – Net cash provided by financing activities was $115.8 million for the year ended March 31, 2022, compared to $345.6 million for the year ended March 31, 2021.

Net Cash Provided By/Used In Financing Activities – Net cash used in financing activities was $498.7 million for the year ended March 31, 2023, compared to net cash provided by financing activities of $115.8 million for the year ended March 31, 2022.

The following discussion summarizes the significant changes in our financing cash flows for the years ended March 31, 2023 and 2022:

• Proceeds from issuance of senior notes – During fiscal 2022, we received $1,350.0 million in proceeds from the issuance of our Senior Public Notes.

For more information on our Senior Public Notes, refer to Note 6 of our Consolidated Financial Statements titled, "Debt."

• Proceeds from term loan – During fiscal 2022, we received proceeds of $650.0 million under our Delayed Draw Term Loan.

During fiscal 2021, we received proceeds of $550.0 million under a prior Term Loan, which was subsequently replaced by another Term Loan of a like amount.

For more information on our term loans, refer to Note 6 of our Consolidated Financial Statements titled, "Debt."

• Payments on term loan – During fiscal 2022, we repaid $345.0 million of our Term Loan.

For more information on our term loans, refer to Note 6 of our Consolidated Financial Statements titled, "Debt."

• Payments on long-term obligations – During fiscal 2022, we repaid $721.3 million of Cantel's outstanding debt in connection with the acquisition.

For more information on Cantel's debt refer to Note 2 of our Consolidated Financial Statements titled, "Business Acquisitions and Divestitures." During fiscal 2021, we repaid $35.0 million of principal for private placement senior notes that matured in Aug ust 2020.

For more information on our debt, refer to Note 6 of our Consolidated Financial Statements titled, "Debt."

For more information on our Senior Public Notes, refer to Note 6 to our consolidated financial statements titled, "Debt."

• Proceeds from term loan – During fiscal 2022, we borrowed $650.0 million under our Delayed Draw Term Loan.

For more information on our term loans, refer to Note 6 to our consolidated financial statements titled, "Debt."

• Payments on term loans – During fiscal 2023, we repaid $156.9 million of our Term Loans.

During fiscal 2022, we repaid $345.0 million of our Term Loans.

For more information on our term loans, refer to Note 6 to our consolidated financial statements titled, "Debt."

• Payments on long-term obligations – During fiscal 2023, we repaid $91.0 million of Private Placement Senior Notes.

For more information on our Private Placement Senior Notes, refer to Note 6 to our consolidated financial statements titled, "Debt." During fiscal 2022, we repaid $721.3 million of Cantel's outstanding debt in connection with the acquisition.

For more information on Cantel's debt, refer to Note 2 to our consolidated financial statements titled, "Business Acquisitions and Divestitures."

• Payments on convertible debt obligations – During fiscal 2022, we paid $371.4 million to settle obligations associated with Cantel's convertible debt assumed at the time of acquisition.

For more information on Cantel's debt refer to Note 6 of our Consolidated Financial Statements titled, "Debt."

• Payments under credit facilities, net – Net payments under credit facilities totaled $190.2 million for fiscal 2022, compared to $30.5 million for fiscal 2021.

For more information on Cantel's debt, refer to Note 6 to our consolidated financial statements titled, "Debt."

• Proceeds/Payments under credit facilities, net – Net proceeds received under credit facilities totaled $241.7 million for fiscal 2023, compared to net payments under credit facilities of $190.2 million for fiscal 2022.

At the end of fiscal 2023, $301.7 million of debt was outstanding under our bank credit facility, compared to $58.9 million of debt outstanding under this facility at the end of fiscal 2022.

We provide additional information about our bank credit facility in Note 6 to our consolidated financial statements titled, "Debt."

• Deferred financing fees and debt issuance costs – During fiscal 2022 and fiscal 2021, we paid $17.5 million and $12.8 million, respectively for financing fees and debt issuance costs primarily related to our Senior Public Notes and Delayed Draw Term Loan.

• Deferred financing fees and debt issuance costs – During fiscal 2022, we paid $17.5 million for financing fees and debt issuance costs primarily related to our Senior Public Notes and Delayed Draw Term Loan.

For more information on our debt, refer to Note 6 to our consolidated financial statements titled, "Debt."

• Repurchases of shares – Due to the uncertainty surrounding the COVID-19 pandemic, share repurchases were suspended on April 9, 2020.

• Repurchases of ordinary shares – During fiscal 2023, we obtained 79,169 of our ordinary shares in connection with share-based compensation award programs in the aggregate amount of $13.5 million.

During fiscal 2023, we also purchased 1,563,983 of our ordinary shares in the aggregate amount of $295.0 million through our share repurchase program.

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

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

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We also obtained 244,395 of our ordinary shares in the aggregate amount of $30.8 million in connection with share-based compensation award programs.

From the start of fiscal 2021 through April 9, 2020, we purchased 35,000 of our ordinary shares in the aggregate amount of $5.0 million.

We also obtained 91,567 of our ordinary shares in connection with our stock-based compensation award programs in the amount $9.6 million.

We provide additional information about our share repurchases in Note 13 to our consolidated financial statements titled, "Repurchases of Ordinary Shares."

• Acquisition related deferred or contingent consideration – During fiscal 2022, we paid $32.7 million in acquisition related deferred or contingent consideration, the majority of which was associated with a pre-acquisition arrangement related to an acquisition made by Cantel prior to our purchase of Cantel.

During fiscal 2021, we paid $2.4 million in deferred and contingent consideration related to our recent acquisitions.

For more information, refer to our Note 2 to our consolidated financial statements, titled "Business Acquisitions and Divestitures."

• Acquisition related deferred or contingent consideration – During fiscal 2023, we paid $1.5 million in acquisition related deferred and contingent consideration.

During fiscal 2022, we paid $32.7 million in acquisition related deferred and contingent consideration, the majority of which was associated with a pre-acquisition arrangement related to an acquisition made by Cantel prior to our purchase of the company.

For more information, refer to Note 2 to our consolidated financial statements titled, "Business Acquisitions and Divestitures."

• Cash dividends paid to ordinary shareholders – During fiscal 2023, we paid cash dividends totaling $183.5 million or $1.84 per outstanding share.

During fiscal 2022, we paid cash dividends totaling $163.2 million or $1.69 per outstanding share.

• Transactions with noncontrolling interest holders – During fiscal 2022, we received contributions from noncontrolling interest hold ers of $3.7 million and paid $1.0 million in distributions to noncontrolling interest holders.

During fiscal 2021, we received $2.3 million of contributions from noncontrolling interest holders and paid $4.1 million in distributions to noncontrolling interest holders.

• Transactions with noncontrolling interest holders – During fiscal 2023, we paid $0.8 million in distributions to noncontrolling interest holders.

During fiscal 2022, we received contributions from noncontrolling interest hold ers of $3.7 million and paid $1.0 million in distributions to noncontrolling interest holders.

• Stock option and other equity transactions, net – We generally receive cash for issuing shares upon the exercise of options under our employee stock option program.

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Cash Flow Measures.

Free cash flow was $399.0 million in fiscal 2022, compared to $450.9 million in fiscal 2021.

The fiscal 2022 decrease in free cash flow was anticipated and primarily due to costs associated with the acquisition and integration of Cantel and higher capital expenditures in fiscal 2022.

The net cash provided by our operating activities was $756.9 million in fiscal 2023 compared to $684.8 million in fiscal 2022.

Free cash flow was $409.6 million in fiscal 2023, compared to $399.0 million in fiscal 2022 (see subsection above titled "Non-GAAP Financial Measures" for additional information and related reconciliation of cash flows from operations to free cash flow).

The fiscal 2023 increase in free cash flow was primarily due to lower costs associated with the acquisition and integration of Cantel, partially offset by higher working capital, particularly inventory and accounts receivable, as well as increased capital spending.

Our debt-to-total capital ratio was 33.6% at March 31, 2023 and 32.1% at March 31, 2022.

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Facility for Other

Financial Instruments March 31, 2022 Amounts

Outstanding March 31, 2022 Amounts

Financial Instruments March 31, 2023 Amounts Outstanding March 31, 2023 Amounts

Sources of Credit

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Total Sources of Credit $ 4,048,427 $ 9,942 $ 3,100,099 $ 938,386

(1) At March 31, 2022, there was $15.4 million of letters of credit outstanding under the Credit Agreement.

(1) At March 31, 2023, there were $9.9 million of letters of credit outstanding under the Credit Agreement.

Our sources of funding from credit as of March 31, 2023 are summarized below:

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

The Revolver may be increased in specified circumstances by up to $625.0 million in the discretion of the lenders.

The Revolver may be increased in specified circumstances by up to $625.0 million at the discretion of the lenders.

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

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

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

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

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

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

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

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

Dollars equal to the Base Rate plus the Applicable Margin for Base Rate Advances plus the Facility Fee.

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For the period beginning from the fifth full fiscal quarter ended after the Term Loan Closing Date to and including the twelfth full fiscal quarter ended after the Term Loan Closing Date, quarterly principal payments, each in the amount of 1.25% of the original principal amount of the Term Loan, are due on the last business day of each fiscal quarter.

For the period beginning from the thirteenth full fiscal quarter ended after the Term Loan Closing Date through the maturity of the loan, quarterly

principal payments, each in the amount of 1.875% of the original principal amount of the Term Loan, are due on the last business day of each fiscal quarter.

For the period beginning from the thirteenth full fiscal quarter ended after the Term Loan Closing Date through the maturity of the loan, quarterly principal payments, each in the amount of 1.875% of the original principal amount of the Term Loan, are due on the last business day of each fiscal quarter.

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

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

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

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

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

Interest on Base Rate Advances is payable quarterly in arrears and interest on Term

Benchmark Advances is payable in arrears at the end of the relevant interest period therefor, but in no event less frequently than every three months.

• Also on March 19, 2021, the Company, STERIS Corporation, Limited, and FinCo, each as a borrower and guarantor, entered into a delayed draw term loan agreement with various financial institutions as lenders, and JPMorgan Chase Bank, N.A., as administrative agent (the “Delayed Draw Term Loan Agreement”) providing for a delayed draw term loan facility of up to $750.0 million (the “Delayed Draw Term Loan”) in connection with STERIS’s acquisition of Cantel.

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

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

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

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

Interest on borrowings made at the Base Rate (“Base Rate Advances”) is payable quarterly in arrears and interest on borrowings made at the Eurocurrency Rate (“Eurocurrency Rate Advances”) is payable at the end of the relevant interest period therefor, but in no event less frequently than every three months.

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

Interest on Base Rate Advances is payable quarterly in arrears and interest on Term Benchmark Advances is payable in arrears at the end of the relevant interest period therefor, but in no event less frequently than every three months.

• On May 3, 2023, in connection with the upcoming replacement of U.S.

dollar LIBOR with SOFR, the Borrower, Guarantors, Lenders, and JPMorgan Chase Bank, N.A., each as defined in each of the agreements, amended the Revolving Credit Agreement, the Term Loan Agreement, and the Delayed Draw Term Loan Agreement.

The amendments concern pricing, technical, administrative, and operational changes related to borrowings in U.S.

The above descriptions reflect those amendments.

• On April 1, 2021, STERIS Irish FinCo Unlimited Company ("FinCo," "STERIS Irish FinCo," the "Issuer") completed an offering of $1,350.0 million in aggregate principal amount, of its senior notes in two separate tranches:

(i) $675.0 million aggregate principal amount of the Issuer’s 2.70% Senior Notes due 2031 (the “2031 Notes”) and (ii) $675.0 million aggregate principal amount of the Issuer’s 3.750% Senior Notes due 2051 (the “2051 Notes” and, together with the 2031 Notes, the “Senior Public Notes”).

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

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

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

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$25,000 Senior notes at 3.55% 2012 Private Placement December 2027 25,000

$125,000 Senior notes at 3.45% 2015 Private Placement May 2025 125,000

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At March 31, 2023, we were in compliance with all financial covenants associated with our indebtedness.

We provide additional information regarding our debt structure and payment obligations in the section of the MD&A titled, “Liquidity and Capital Resources” in the subsection titled, “Contractual and Commercial Commitments” and in Note 6 to our consolidated financial statements titled, “Debt.”

For additional information on our sources of funding and credit, refer to Note 6 to our consolidated financial statements titled, “Debt.”

CAPITAL EXPENDITURES

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Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.

The following tables present summarized results of operations for the twelve months ended March 31, 2022 and summarized balance sheet information at March 31, 2022 and 2021 for the obligor group of the Senior Public Notes.

The following tables present summarized results of operations for the year ended March 31, 2023 and summarized balance sheet information at March 31, 2023 and 2022 for the obligor group of the Senior Public Notes.

The obligor group consists of the Parent Company Guarantor, Subsidiary Issuer, and Subsidiary Guarantors for the Senior Public Notes.

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Standard & Poor's Moody's Fitch

Credit Ratings BBB- Baa2 BBB

Credit Ratings (1)

(1) Effective May 18, 2023

Each of the credit rating agencies reviews its rating periodically and there is no guarantee our current credit ratings will remain the same.

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At March 31, 2023, assets related to costs to fulfill a contract were not material to our consolidated financial statements.

Allowance for Doubtful Accounts Receivable.

Allowance for Credit Losses.

We maintain an allowance for uncollectible accounts receivable for estimated losses in the collection of amounts owed by Customers.

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These analyses require judgment.

If the financial condition of our Customers worsens, or economic conditions change, we may be required to make changes to our allowance for doubtful accounts receivable.

If the financial condition of our Customers worsens, or economic conditions change, we may be required to make changes to our allowance for credit losses.

Inventories and Reserves.

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We believe such assumptions and estimates are also comparable to those that would be used by other marketplace participants.

As a result of our annual impairment review for goodwill and other indefinite lived intangible assets for fiscal year 2022 no indicators of impairment were identified.

In the second quarter of fiscal 2023, in connection with the preparation of our quarterly consolidated financial statements, we identified that the estimated fair value of the Dental segment was below the carrying value and recognized a non-cash goodwill impairment charge of $490.6 million.

For additional information regarding the goodwill impairment charge, refer to Note 3 to our consolidated financial statements titled, "Goodwill and Intangible Assets."

We evaluate indefinite lived intangible assets annually, or when evidence of potential impairment exists.

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We cannot be sure that the tax authorities will agree with all of the tax positions taken by us.

The actual income tax liability for each jurisdiction in any year can, in some instances, ultimately be determined be several years after the tax return is filed and the financial statements are published.

The actual income tax liability for each jurisdiction in any year can, in some instances, ultimately be determined several years after the tax return is filed and the financial statements are published.

We evaluate our tax positions using the recognition threshold and measurement attribute in accordance with current accounting guidance.

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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 record a liability for such contingencies to the extent we conclude that their occurrence is both probable and estimable.

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We record expected recoveries under applicable insurance contracts when we are assured of recovery.

Refer to Note 10 of our consolidated financial statements titled, "Commitments and Contingencies" for additional information.

Refer to Note 10 to our consolidated financial statements titled, "Commitments and Contingencies" for additional information.

We are subject to taxation from federal, state and local, and foreign jurisdictions.

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NA – Not applicable.

We develop our expected long-term rate of return on plan assets a ssumptions by evaluating input from third-party professional advisors, taking into consideration the asset allocation of the portfolios, and the long-term asset class return expectations.

We develop our expected long-term rate of return on plan assets assumptions by evaluating input from third-party professional advisors, taking into consideration the asset allocation of the portfolios, and the long-term asset class return expectations.

Generally, net periodic benefit costs increase as the expected long-term rate of return on plan assets assumption decreases.

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Generally, the projected benefit obligations and the net periodic benefit costs both increase as the discount rate assumption decreases.

Holding all other assumptions constant, lowering the discount rate assumption for our defined benefit pensi on plans and for the other post-retirement benefits plan by 50 basis points would have decreased the fiscal 2022 net periodic benefit costs by less than $0.1 million and would have increased the projected benefit obligations by approximately $11.2 million a t March 31, 2022.

Holding all other assumptions constant, lowering the discount rate assumption for our defined benefit pension plans and for the other post-retirement benefits plan by 50 basis points would have decreased the fiscal 2023 net periodic benefit costs by less than $0.1 million and would have increased the projected benefit obligations by approximately $8.0 million at March 31, 2023.

We have made assumptions regarding healthcare costs in computing our other post-retirement benefit obligation.

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This model involves assumptions that are judgmental and affect share-based compensation expense.

Share-based compensation ex pense was $57.7 million in fiscal 2022, $26.0 million in fiscal 2021 and $23.8 million in fiscal 2020.

Share-based compensation ex pense was $39.0 million in fiscal 2023, $57.7 million in fiscal 2022 and $26.0 million million in fiscal 2021.

Note 14 to our consolidated financial statements titled, “Share-Based Compensation,” contains additional information about our share-based compensation plans.

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Unless legally required, STERIS does not undertake to update or revise any forward-looking statements even if events make clear that any projected results, express or implied, will not be realized.

Other potential risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, (a) the impact of the COVID-19 pandemic or similar public health crises on STERIS’s operations, supply chain, material and labor costs, performance, results, prospects, or value, (b) STERIS's ability to achieve the expected benefits regarding the accounting and tax treatments of the redomiciliation to Ireland (“Redomiciliation”), (c) operating costs, Customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, Customers, clients or suppliers) being greater than expected, (d) STERIS’s ability to successfully integrate the businesses of Cantel Medical into our existing businesses, including unknown or inestimable liabilities, or increases in expected integration costs or difficulties in connection with the integration of Cantel Medical (e) STERIS’s ability to meet expectations regarding the accounting and tax treatment of the Tax Cuts and Jobs Act (“TCJA”) or the possibility that anticipated benefits resulting from the TCJA will be less than estimated, (f) changes in tax laws or interpretations that could increase our consolidated tax liabilities, including changes in tax laws that would result in STERIS being treated as a domestic corporation for United States federal tax purposes, (g) the potential for increased pressure on pricing or costs that leads to erosion of profit margins, (h) the possibility that market demand will not develop for new technologies, products or applications or services, or business initiatives will take longer, cost more or produce lower benefits than anticipated, (i) the possibility that application of or compliance with laws, court rulings, certifications, regulations, regulatory actions, including without limitation any of the same relating to FDA, EPA or other regulatory authorities, government investigations, the outcome of any pending or threatened FDA, EPA or other regulatory warning notices, actions, requests, inspections or submissions, or other requirements or standards may delay, limit or prevent new product or service introductions, affect the production, supply and/or marketing of existing products or services or otherwise affect STERIS’s performance, results, prospects or value, (j) the potential of international unrest, including the Russia-Ukraine military conflict, economic downturn or effects of currencies, tax assessments, tariffs and/or other trade barriers, adjustments or anticipated rates, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs, (k) the possibility of reduced demand, or reductions in the rate of growth in demand, for STERIS’s products and services, (l) the possibility of delays in receipt of orders, order cancellations, or delays in the manufacture or shipment of ordered products, due to supply chain issues or otherwise , or in the provision of services, (m) the possibility that anticipated growth, cost savings, new product acceptance, performance or approvals, or other results may not be achieved, or that transition, labor, competition, timing, execution, regulatory, governmental, or other issues or risks associated with STERIS’s businesses, industry or initiatives may adversely impact STERIS’s performance, results, prospects or value, (n) the impact on STERIS and its operations, or tax liabilities, of Brexit or the exit of other member countries from the EU, and the Company’s ability to respond to such impacts, (o) the impact on STERIS and its operations of any legislation, regulations or orders, including but not limited to any new trade or tax legislation, regulations or orders, that may be implemented by the U.S.

administration or Congress, or of any responses thereto, (p) the possibility that anticipated financial results or benefits of recent acquisitions, including the acquisition of Cantel Medical and Key Surgical, or of STERIS’s restructuring efforts, or of recent divestitures, including anticipated revenue, productivity improvement, cost savings, growth synergies and other anticipated benefits, will not be realized or will be other than anticipated, (q) the increased level of STERIS’s indebtedness incurred in connection with the acquisition of Cantel Medical limiting financial flexibility or increasing future borrowing costs, (r) rating agency actions or other occurrences that could affect STERIS’s existing debt or future ability to borrow funds at rates favorable to STERIS or at all, (s) the potential impact of the acquisition of Cantel Medical on relationships, including with suppliers, Customers, employees and regulators, and (t) the effects of contractions in credit availability, as well as the ability of STERIS’s Customers and suppliers to adequately access the credit markets when needed.

Other potential risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, (a) the impact of the COVID-19 pandemic or similar public health crises on STERIS’s operations, supply chain, material and labor costs, performance, results, prospects, or value, (b) STERIS's ability to achieve the expected benefits regarding the accounting and tax treatments of the redomiciliation to Ireland (“Redomiciliation”), (c) operating costs, Customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, Customers, clients or suppliers) being greater than expected, (d) STERIS’s ability to successfully integrate the businesses of Cantel Medical into our existing businesses, including unknown or inestimable liabilities, impairments, or increases in expected integration costs or difficulties in connection with the integration of Cantel Medical, (e) uncertainties related to tax treatments under the TCJA and the IRA, (f) the possibility that Pillar Two Model Rules could increase tax uncertainty and adversely impact STERIS's provision for income taxes and effective tax rate and subject STERIS to additional income tax in jurisdictions who adopt Pillar Two Model Rules, (g) STERIS's ability to continue to qualify for benefits under certain income tax treaties in light of ratification of more strict income tax treaty rules (through the MLI) in many jurisdictions where STERIS has operations, (h) changes in tax laws or interpretations that could increase our consolidated tax liabilities, including changes in tax laws that would result in STERIS being treated as a domestic corporation for United States federal tax purposes, (i) the potential for increased pressure on pricing or costs that leads to erosion of profit margins, including as a result of inflation, (j) the possibility that market demand will not develop for new technologies, products or applications or services, or business initiatives will take longer, cost more or produce lower benefits than anticipated, (k) the possibility that application of or compliance with laws, court rulings, certifications, regulations, or regulatory actions, including without limitation any of the same relating to FDA, EPA or other regulatory authorities, government investigations, the outcome of any pending or threatened FDA, EPA or other regulatory warning notices, actions, requests, inspections or submissions, the outcome of any pending or threatened litigation brought by private parties, or other requirements or standards may delay, limit or prevent new product or service introductions, affect the production, supply and/or marketing of existing products or services, result in costs to STERIS that may not be covered by insurance, or otherwise affect STERIS’s performance, results, prospects or value, (l) the potential of international unrest, including the Russia-Ukraine military conflict, economic downturn or effects of currencies, tax assessments, tariffs and/or other trade barriers, adjustments or anticipated rates, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs, (m) the possibility of reduced demand, or reductions in the rate of growth in demand, for STERIS’s products and services, (n) the possibility of delays in receipt of orders, order cancellations, or delays in the manufacture or shipment of ordered products, due to supply chain issues or otherwise , or in the provision of services, (o) the possibility that anticipated growth, cost savings, new product acceptance, performance or approvals, or other results may not be achieved, or that transition, labor, competition, timing, execution, impairments, regulatory, governmental, or other issues or risks associated with STERIS’s businesses, industry or initiatives including, without limitation, those matters described in STERIS's various securities filings, may adversely impact STERIS’s performance, results, prospects or value, (p) the impact on STERIS and its operations, or tax liabilities, of Brexit or the exit of other member countries from the EU, and the Company’s ability to respond to such impacts, (q) the impact on STERIS and its operations of any legislation, regulations or orders, including but not limited to any new trade or tax legislation (including CAMT and excise tax on stock buybacks), regulations or orders, that may be implemented by the U.S.

administration or Congress, or of any responses thereto, (r) the possibility that anticipated financial results or benefits of recent acquisitions, including the acquisition of Cantel Medical and Key Surgical, or of STERIS’s restructuring efforts, or of recent divestitures, including anticipated revenue, productivity improvement, cost savings, growth synergies and other anticipated benefits, will not be realized or will be other than anticipated, (s) the increased level of STERIS’s indebtedness incurred in connection with the acquisition of Cantel Medical limiting financial flexibility or

increasing future borrowing costs, (t) rating agency actions or other occurrences that could affect STERIS’s existing debt or future ability to borrow funds at rates favorable to STERIS or at all, and (u) the effects of changes in credit availability and pricing, as well as the ability of STERIS’s Customers and suppliers to adequately access the credit markets, on favorable terms or at all, when needed.

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-K

Item 7. Management’s Discussion and Analysis