What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-08 compared with 2023-02-08 · 160 added, 319 removed, 576 unchanged (45% of the section changed)

46 unchanged sentences

(in thousands, except per share amounts)

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

2022 2021 2022 2021

Three Months Ended June 30,

Product $ 713,858 $ 637,076

8 unchanged sentences

Selling, general, and administrative 359,058 334,626

Goodwill impairment loss — — 490,565 —

Research and development 25,502 24,751

4 unchanged sentences

Interest expense 32,361 22,674

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

Interest and miscellaneous expense (income) 1,906 ( 2,447 ) 3,200 ( 4,905 )

Interest and miscellaneous (income) expense ( 1,393 ) 770

Total non-operating expenses, net 30,968 23,444

Income (loss) before income tax expense 160,338 182,409 ( 37,773 ) 243,039

Income before income tax expense 157,914 134,951

Income tax expense 34,124 24,196

Net income (loss) 123,325 143,094 ( 81,151 ) 190,817

Net (loss) attributable to noncontrolling interests ( 503 ) ( 529 ) ( 956 ) ( 810 )

Net income (loss) attributable to shareholders $ 123,828 $ 143,623 $ ( 80,195 ) $ 191,627

Net income (loss) per share attributed to shareholders

Net income 123,790 110,755

Net income (loss) attributable to noncontrolling interests 236 ( 507 )

Net income attributable to shareholders $ 123,554 $ 111,262

Net income per share attributed to shareholders

Basic $ 1.25 $ 1.11

3 unchanged sentences

STERIS PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

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

2022 2021 2022 2021

Net income (loss) $ 123,325 $ 143,094 $ ( 81,151 ) $ 190,817

Net (loss) attributable to noncontrolling

Three Months Ended June 30,

Net income $ 123,790 $ 110,755

Net income (loss) attributable to noncontrolling

interests 236 ( 507 )

Net income (loss) attributable to shareholders 123,828 143,623 ( 80,195 ) 191,627

Net income attributable to shareholders 123,554 111,262

Other comprehensive income (loss)

Amortization of pension and postretirement benefit plan costs, (net of taxes of $( 17 ), and $( 6 ), respectively)

27 ( 507 ) 83 ( 1,521 )

Change in cumulative currency translation adjustment 9,793 ( 178,594 )

5 unchanged sentences

(in thousands)

Nine Months Ended December 31,

Three Months Ended June 30,

Operating activities:

Net income (loss) $ ( 81,151 ) $ 190,817

Net income $ 123,790 $ 110,755

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

2 unchanged sentences

Share-based compensation expense 11,579 8,963

Loss on the disposal of property, plant, equipment, and intangibles, net 653 863

Loss (gain) on the disposal of property, plant, equipment, and intangibles, net 93 ( 972 )

Loss on sale of businesses, net — 3,878

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

Amortization of inventory fair value adjustments 2,477 86,665

Goodwill impairment loss 490,565 —

Other items 1,995 10,412

10 unchanged sentences

Proceeds from the sale of businesses — 5,228

Acquisition of businesses, net of cash acquired ( 34,020 ) ( 547,353 )

Net cash used in investing activities ( 66,596 ) ( 109,417 )

Financing activities:

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

Proceeds from term loan — 650,000

Payments on long-term obligations ( 91,000 ) ( 721,284 )

Payments on convertible debt — ( 371,361 )

Payments on term loans ( 15,000 ) ( 111,875 )

Proceeds (payments) under credit facilities, net 216,561 ( 203,805 )

Deferred financing fees and debt issuance costs — ( 17,247 )

(Payments) proceeds under credit facilities, net ( 144,651 ) 37,011

Acquisition related deferred or contingent consideration ( 89 ) ( 84 )

1 unchanged sentence

Cash dividends paid to ordinary shareholders ( 46,427 ) ( 43,008 )

Distributions to noncontrolling interest ( 794 ) ( 997 )

Contributions from noncontrolling interest — 3,672

Stock option and other equity transactions, net 1,254 1,221

Net cash provided by (used in) financing activities ( 306,771 ) 390,438

Net cash used in financing activities ( 213,637 ) ( 141,414 )

Effect of exchange rate changes on cash and cash equivalents ( 639 ) ( 12,908 )

6 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended December 31, 2022

Ordinary Shares Retained

4 unchanged sentences

Number Amount

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

Comprehensive income:

Net income (loss) — — 123,828 — ( 503 ) 123,325

Other comprehensive income — — — 233,985 — 233,985

Repurchases of ordinary shares ( 493 ) ( 82,804 ) ( 1,226 ) — — ( 84,030 )

Equity compensation programs and other 25 9,389 — — — 9,389

Cash dividends - $ 0.47 per ordinary share

— — ( 46,917 ) — — ( 46,917 )

Distributions to noncontrolling interest — — — — ( 794 ) ( 794 )

Other changes in noncontrolling interest — — — — 115 115

Balance at December 31, 2022 99,400 $ 4,631,703 $ 1,770,772 $ ( 364,163 ) $ 10,208 $ 6,048,520

Nine Months Ended December 31, 2022

Ordinary Shares Retained

Earnings Accumulated

Comprehensive

Income (Loss) Non-controlling

Interest Total

Number Amount

Balance at March 31, 2023 98,629 $ 4,486,375 $ 1,911,533 $ ( 320,710 ) $ 9,974 $ 6,087,172

Comprehensive income:

Net (loss) — — ( 80,195 ) — ( 956 ) ( 81,151 )

Other comprehensive (loss) — — — ( 154,355 ) — ( 154,355 )

Repurchases of ordinary shares ( 850 ) ( 142,573 ) ( 11,379 ) — — ( 153,952 )

Equity compensation programs and other 183 31,356 — — — 31,356

Cash dividends – $ 1.37 per ordinary share

— — ( 136,898 ) — — ( 136,898 )

Distributions to noncontrolling interest — — — — ( 794 ) ( 794 )

Other changes in noncontrolling interest — — — — ( 323 ) ( 323 )

Balance at December 31, 2022 99,400 $ 4,631,703 $ 1,770,772 $ ( 364,163 ) $ 10,208 $ 6,048,520

STERIS PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands, except per share amounts)

Three Months Ended December 31, 2021

Ordinary Shares Retained

Earnings Accumulated

Comprehensive

Income (Loss) Non-controlling

Interest Total

Number Amount

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

Comprehensive income:

Net income (loss) — — 143,623 — ( 529 ) 143,094

Other comprehensive (loss) — — — ( 31,145 ) — ( 31,145 )

Net income — — 123,554 — 236 123,790

Other comprehensive income — — — 9,851 — 9,851

Repurchases of ordinary shares ( 52 ) ( 997 ) ( 7,727 ) — — ( 8,724 )

2 unchanged sentences

— — ( 46,427 ) — — ( 46,427 )

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

Other changes in noncontrolling interest — — — — ( 124 ) ( 124 )

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

Nine Months Ended December 31, 2021

Balance at June 30, 2023 98,781 $ 4,498,212 $ 1,980,933 $ ( 310,859 ) $ 10,086 $ 6,178,372

Ordinary Shares Retained

12 unchanged sentences

— — ( 43,008 ) — — ( 43,008 )

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

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

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

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

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

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

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

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

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

See notes to consolidated financial statements.

STERIS PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

For the Three and Nine Months Ended December 31, 2022 and 2021

For the Three Months Ended June 30, 2023 and 2022

(dollars in thousands, except as noted)

2 unchanged sentences

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.

We operate and report in four reportable business segments:

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

Healthcare, Applied Sterilization Technologies ("AST"), Life Sciences, and Dental.

We describe our business segments in Note 9 titled "Business Segment Information."

14 unchanged sentences

Therefore, the accompanying consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries.

We eliminate inter-company accounts and transactions when we consolidate these accounts.

We eliminate intercompany accounts and transactions when we consolidate these accounts.

Investments in equity of unconsolidated affiliates, over which the Company has significant influence, but not control, over the financial and operating polices, are accounted for primarily using the equity method.

6 unchanged sentences

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

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

This means that operating results for the three month period ended June 30, 2023 are not necessarily indicative of results that may be expected for future quarters or for the full fiscal year ending March 31, 2024.

Revenue Recognition and Associated Liabilities

4 unchanged sentences

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

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

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

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

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

The associated

STERIS PLC AND SUBSIDIARIES

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

For the Three and Nine Months Ended December 31, 2022 and 2021

For the Three Months Ended June 30, 2023 and 2022

(dollars in thousands, except as noted)

we have no further obligations related to bringing about resale.

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

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

The associated expenses are treated as fulfillment costs and are included in Cost of revenues.

expenses are treated as fulfillment costs and are included in Cost of revenues.

Revenues are reported net of sales and value-added taxes collected from Customers.

11 unchanged sentences

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

At December 31, 2022, assets related to costs to fulfill a contract were not material to our consolidated financial statements.

At June 30, 2023, assets related to costs to fulfill a contract were not material to our consolidated financial statements.

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

Product Revenue

Product Revenues

Product revenues consist of revenues generated from sales of consumables and capital equipment.

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

We recognize revenue for sales of product when control passes to the Customer, which generally occurs either when the products are shipped or when they are received by the Customer.

We recognize revenue for sales of products when control passes to the Customer, which generally occurs either when the products are shipped or when they are received by the Customer.

Revenue related to capital equipment products is deferred until installation is complete if the capital equipment and installation are highly integrated and form a single performance obligation.

Service Revenue

Service Revenues

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

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

These contracts are primarily based on a Customer’s purchase order and may include a Distributor, Dealer, or GPO agreement.

For maintenance, repair and installation of capital equipment, revenue is recognized upon completion of the service.

6 unchanged sentences

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

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

Within our AST segment, service revenues include contract sterilization and laboratory services.

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

1 unchanged sentence

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

For the Three and Nine Months Ended December 31, 2022 and 2021

For the Three Months Ended June 30, 2023 and 2022

(dollars in thousands, except as noted)

3 unchanged sentences

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

During the first nine months of fiscal 2023, $ 76,861 of the March 31, 2022 deferred revenue balance was recorded as revenue.

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

During the first three months of fiscal 2024, $ 46,118 of the March 31, 2023 deferred revenue balance was recorded as revenue.

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

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

7 unchanged sentences

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

As of December 31, 2022, the transaction price allocated to remaining performance obligations was approximately $ 1,592,000 .

As of June 30, 2023, the transaction price allocated to remaining performance obligations was approximately $ 1,649,862 .

We expect to recognize approximately 59 % of the transaction price within one year and approximately 32 % beyond one year.

3 unchanged sentences

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

Standards that have been adopted in fiscal 2023

ASU 2021-08 "Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers." October 2021 The standard provides guidance to improve the accounting for acquired revenue contracts with Customers in a business combination by addressing diversity in practice and inconsistency related to the recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer.

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

Standards that have not yet been adopted

ASU 2022-04 "Liabilities - Supplier Finance Programs (Subtopic 405-50) Disclosure of Supplier Finance Program Obligations." September 2022 The standard provides guidance to enhance the transparency of disclosures for entities that utilize supplier finance programs to include information about the key terms of the programs and present a rollforward of any obligations under the program where those obligations are presented in the balance sheet.

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

A detailed description of our significant and critical accounting policies, estimates, and assumptions is included in our consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2023, which was filed with the SEC on May 26, 2023.

2 unchanged sentences

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

For the Three and Nine Months Ended December 31, 2022 and 2021

For the Three Months Ended June 30, 2023 and 2022

(dollars in thousands, except as noted)

Business Acquisitions

During the first nine months of fiscal 2023, we completed several tuck-in acquisitions which continued to expand our product and service offerings in the Applied Sterilization Technologies and Healthcare segments.

Total aggregate consideration was approximately $ 40,720 , including potential contingent consideration of $ 6,700 .

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

The total consideration for Cantel common stock and s tock equivalents was $ 3,599,471 .

We funded the cash portion of the transaction consideration and repayment of a significant amount of Cantel’s existing debt obligations with a portion of the proceeds from new debt, which is described in our Annual Report on Form 10-K for the year ended March 31, 2022, which was filed with the SEC on May 31, 2022.

In addition to the total purchase consideration, STERIS assumed and repaid $ 721,284 of existing Cantel debt obligations and assumed Cantel's obligations associated with convertible senior notes issued on May 15, 2020, which is described in our Annual Report on Form 10-K for the year ended March 31, 2022, which was filed with the SEC on May 31, 2022.

Fair Value of Assets Acquired and Liabilities Assumed

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

March 31, 2022

(As previously reported) Adjustments Final

Cash $ 169,073 $ — $ 169,073

Accounts receivable 172,226 — 172,226

Inventory 249,221 — 249,221

Property, plant, and equipment 267,360 ( 1,282 ) 266,078

Lease right-of-use assets, net 59,720 — 59,720

Other assets 72,864 — 72,864

Intangible assets 2,942,000 — 2,942,000

Goodwill 1,522,381 22,088 1,544,469

Total assets acquired 5,454,845 20,806 5,475,651

Convertible debt, par value 168,000 — 168,000

Other current liabilities 247,549 5,595 253,144

Long-term lease obligations 47,856 — 47,856

Deferred income taxes, net 670,685 15,211 685,896

Long-term indebtedness 721,284 — 721,284

Total liabilities assumed 1,855,374 20,806 1,876,180

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

Acquisition and integration expenses totaled $ 4,817 and $ 18,493 for the three and nine months ended December 31, 2022 , respectively.

Acquisition and integration expenses totaled $ 9,298 and $ 167,698 for the three and nine months ended December 31, 2021 , respectively.

These costs were primarily related to the acquisition and integration of Cantel.

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

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

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

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

STERIS PLC AND SUBSIDIARIES

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

For the Three and Nine Months Ended December 31, 2022 and 2021

(dollars in thousands, except as noted)

On June 20, 2023, we entered into a definitive agreement to purchase the surgical instrumentation, laparoscopic instrumentation and sterilization container assets from Becton, Dickinson and Company (NYSE:

The acquired assets from BD will be integrated into our Healthcare segment.

The transaction was completed on August 2, 2023.

The purchase price is $ 540,000 .

We anticipate that the acquisition will qualify for a tax benefit related to tax deductible goodwill, with a present value of approximately $ 60,000 .

We are not assuming any pre-existing debt and funded the entire purchase with additional debt.

As a result of limited access to the information required to prepare the initial accounting, we are unable to provide the amounts that will be recognized at the acquisition date for the major classes of assets acquired and liabilities assumed, pre-existing contingencies, goodwill or intangible assets at the time of this Form 10-Q filing.

Inventories, Net

26 unchanged sentences

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

For the Three and Nine Months Ended December 31, 2022 and 2021

For the Three Months Ended June 30, 2023 and 2022

(dollars in thousands, except as noted)

4 unchanged sentences

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

Private Placement Senior Notes — 91,000

Total short-term debt $ 63,438 $ 60,000

11 unchanged sentences

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

For the Three and Nine Months Ended December 31, 2022 and 2021

For the Three Months Ended June 30, 2023 and 2022

(dollars in thousands, except as noted)

30 unchanged sentences

Income Tax Expense

The effective income tax rates for the three month periods ended December 31, 2022 and 2021 were 23.1 % and 21.6 %, respectively.

The higher fiscal 2023 effective tax rate is the result of changes in geographic mix and favorable discrete items in the third quarter of fiscal 2022.

The effective income tax rates for the nine month periods ended December 31, 2022 and 2021 were ( 114.8 )% and 21.5 %, respectively.

The fiscal 2023 effective tax rate for the nine month period ended December 31, 2022 decreased when compared to the prior year period, primarily due to the tax impact of the goodwill impairment loss recognized on the Dental segment during the second quarter of fiscal 2023.

The effective income tax rates for the three month periods ended June 30, 2023 and 2022 were 21.6 % and 17.9 %, respectively.

The higher fiscal 2024 effective tax rate is the result of changes in geographic mix of projected profits and a decrease in favorable discrete items when compared to the first quarter of fiscal 2023.

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

1 unchanged sentence

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

We are no longer subject to United States federal examinations for years before fiscal

We are no longer subject to United States federal examinations for years before fiscal 2018 and, with limited exceptions, we are no longer subject to United States state and local, or non-United States, income tax examinations by tax authorities for years before fiscal 2017.

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

STERIS PLC AND SUBSIDIARIES

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

For the Three and Nine Months Ended December 31, 2022 and 2021

For the Three Months Ended June 30, 2023 and 2022

(dollars in thousands, except as noted)

2018 and, with limited exceptions, we are no longer subject to United States state and local, or non-United States, income tax examinations by tax authorities for years before fiscal 2016.

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

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

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

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

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

We estimate the total federal, state, and local tax impact of the settlement to be approximately $ 12,000 for the fiscal years 2016 through 2020, of which approximately $ 7,500 has been paid through December 31, 2022.

We estimate the total federal, state, and local tax impact of the settlement to be approximately $ 12,000 , for the fiscal years 2016 through 2020, of which approximately $ 7,500 has been paid through June 30, 2023.

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

3 unchanged sentences

We have not established reserves related to these notices.

An unfavorable outcome is not expected to have a material adverse impact on our consolidated financial position but could be material to our consolidated results of operations and cash flows for any one period.

An unfavorable outcome is not expected to have a material adverse impact on our consolidated financial position but it could be material to our consolidated results of operations and cash flows for any one period.

Commitments and Contingencies

8 unchanged sentences

Gains, if any, from these proceedings are recognized when they are realized.

We are subject to taxation from United States federal, state and local, and non-U.S.

jurisdictions.

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

Tax positions are settled primarily through the completion of audits within each individual jurisdiction or the closing of statutes of limitation.

3 unchanged sentences

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

For the Three and Nine Months Ended December 31, 2022 and 2021

For the Three Months Ended June 30, 2023 and 2022

(dollars in thousands, except as noted)

Business Segment Information

We report our financial information in four reportable business segments:

Healthcare, Applied Sterilization Technologies, Life Sciences and Dental.

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

Healthcare, AST, Life Sciences and Dental.

Non-allocated operating costs that support the entire Company and items not indicative of operating trends are excluded from segment operating income.

3 unchanged sentences

to outsourced instrument reprocessing services.

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

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

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 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.

4 unchanged sentences

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 the three and nine months e nded December 31, 2022 , revenues from a single Customer did not represent ten percent or more of the Healthcare, AST or Life Sciences segment revenues.

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

For the three months e nded June 30, 2023 and 2022 , revenues from a single Customer did not represent ten percent or more of the Healthcare, AST or Life Sciences segment revenues.

Three Customers collectively and consistently account for approximately 40.0% of our Dental segment revenue.

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

These three Customers collectively accounted for appr oxi mately 47.2 % and 43.8 % o f our Dental segment revenues for the three and nine months ended December 31, 2022, respectively.

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

These three Customers collectively accounted for appr oxi mately 42.2 % and 38.6 % o f our Dental segment revenues for the three months ended June 30, 2023 and 2022, respectively.

A dditional information regarding our segments is included in our consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2023, which was filed with the SEC on May 26, 2023.

1 unchanged sentence

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

For the Three and Nine Months Ended December 31, 2022 and 2021

For the Three Months Ended June 30, 2023 and 2022

(dollars in thousands, except as noted)

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

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

2022 2021 2022 2021

Three Months Ended June 30,

Healthcare $ 818,874 $ 698,526

Applied Sterilization Technologies 222,014 216,298 675,283 630,092

AST 233,099 220,911

Life Sciences 131,413 132,207

1 unchanged sentence

Total revenues $ 1,284,542 $ 1,156,491

Segment operating income (loss):

Operating income (loss):

Healthcare $ 198,182 $ 156,497

Applied Sterilization Technologies 103,539 101,343 323,238 303,059

AST 109,590 109,315

Life Sciences 49,841 55,305

1 unchanged sentence

Corporate ( 92,265 ) ( 75,943 )

Total segment operating income $ 290,651 $ 289,889 $ 840,764 $ 790,661

Total operating income $ 287,387 $ 264,770

Amortization of acquired intangible assets (1)

1 unchanged sentence

Acquisition and integration related charges (2)

4,817 9,298 18,493 167,698

Tax restructuring costs (3)

282 118 533 228

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

— — ( 3,100 ) —

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

( 838 ) 489 3,939 893

Net loss on divestiture of businesses (1)

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

1,608 2,237 5,697 96,513

Restructuring charges (4)

38 ( 207 ) 127 17

Goodwill impairment loss (5)

— — 490,565 —

Total income from operations $ 188,882 $ 158,395

3 unchanged sentences

(4) For more information regarding our restructuring efforts, refer to our Annual R eport on Form 10-K for the year ended March 31, 2023, which was filed with the SEC on May 26, 2023.

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

STERIS PLC AND SUBSIDIARIES

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

For the Three and Nine Months Ended December 31, 2022 and 2021

For the Three Months Ended June 30, 2023 and 2022

(dollars in thousands, except as noted)

Additional information regarding our fiscal 2024 and fiscal 2023 revenue is disclosed in the following tables:

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

2022 2021 2022 2021

Three Months Ended June 30,

Capital equipment $ 238,099 $ 179,134

2 unchanged sentences

Total Healthcare Revenues $ 818,874 $ 698,526

Applied Sterilization Technologies Service Revenues $ 222,014 $ 216,298 $ 675,283 $ 630,092

Capital equipment $ 874 $ 619

Service 232,225 220,292

Total AST Revenues $ 233,099 $ 220,911

Life Sciences:

5 unchanged sentences

Total Revenues $ 1,284,542 1,156,491

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

2022 2021 2022 2021

Three Months Ended June 30,

Ireland $ 20,085 $ 18,176

8 unchanged sentences

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

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

Three Months Ended June 30,

Denominator (shares in thousands):

2022 2021 2022 2021

Weighted average shares outstanding—basic 98,708 100,082

Dilutive effect of share equivalents 531 640

450 788 — 823

Weighted average shares outstanding and share equivalents—diluted 99,239 100,722

(1) The dilutive effect of share equivalents is excluded from the calculation of diluted earnings per share for the nine months ended December 31, 2022 due to our net loss for that period.

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

1 unchanged sentence

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

For the Three and Nine Months Ended December 31, 2022 and 2021

For the Three Months Ended June 30, 2023 and 2022

(dollars in thousands, except as noted)

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

Three Months Ended June 30,

(shares in thousands) 2023 2022

3 unchanged sentences

Repurchases of Ordinary Shares

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

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

As of December 31, 2022, there was approximately $ 160,626 (net of taxes, fees and commissions) of remaining availability under the Board authorized share repurchase program.

The share repurchase program has no specified expiration date.

On May 3, 2023 our Board of Directors terminated the previous share repurchase program and authorized a new share repurchase program for the purchase of up to $ 500,000 (net of taxes, fees and commissions).

As of June 30, 2023, we have not made any repurchases under this share repurchase program.

This share repurchase program has no specified expiration date.

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

Any share repurchases may be activated, suspended or discontinued at any time.

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.

During the first nine months of fiscal 2023, we repurchased 775,320 of our ordinary shares for the aggregate amount of $ 148,306 (net of fees and commissions) pursuant to the authorizations.

During the first nine months of fiscal 2023, we obtained 74,897 of our ordinary shares in the aggregate amount of $ 13,060 in connection with share-based compensation award programs.

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

During the first three months of fiscal 2024, we had no share repurchase activity pursuant to authorizations.

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

During the first three months of fiscal 2024, we obtained 51,494 of our ordinary shares in the aggregate amount of $ 8,724 in connection with share-based compensation award programs.

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

Share-Based Compensation

4 unchanged sentences

Stock options granted generally expire 10 years after the grant date, or in some cases earlier if the option holder is no longer employed by us.

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

As of December 31, 2022, 2,798,121 ordinary shares remained available for grant under the long-term incentive plan.

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

Restricted shares and restricted share units generally cliff vest after a three or four year period or vest in equal tranches for each year of employment after the grant date.

As of June 30, 2023, 2,386,686 ordinary shares remained available for grant under the long-term incentive plan.

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

This model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable, characteristics that are not present in our option grants.

If the model permitted consideration of the unique characteristics of employee stock options, the resulting estimate of the fair value of the stock options could be different.

The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our Consolidated Statements of Income.

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

The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods, which may be impacted by retirement eligibility, in our Consolidated Statements of Income.

The expense is classified as Cost of revenues or Selling, general and administrative expenses in a manner consistent with the employee’s compensation and benefits.

STERIS PLC AND SUBSIDIARIES

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

For the Three and Nine Months Ended December 31, 2022 and 2021

For the Three Months Ended June 30, 2023 and 2022

(dollars in thousands, except as noted)

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

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

Fiscal 2023 Fiscal 2022

20 unchanged sentences

Forfeited ( 2,128 ) 200.46

Outstanding at December 31, 2022 1,762,233 $ 153.85 6.4 years $ 77,486

Exercisable at December 31, 2022 1,137,168 $ 121.60 5.4 years $ 74,465

We estimate that 611,629 of the non-vested stock options outstanding at December 31, 2022 will ultimately vest.

The aggregate intrinsic value in the table above represents the total pre-tax difference between the $ 184.69 closing price of our ordinary shares on December 31, 2022 over the exercise prices of the stock options, multiplied by the number of options outstanding or outstanding and exercisable, as applicable.

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

The total intrinsic value of stock options exercised during the first nine months of fiscal 2023 and fiscal 2022 was $ 4,638 and $ 43,425 , respectively.

Net cash proceeds from the exercise of stock options were $ 1,497 and $ 6,789 for the first nine months of fiscal 2023 and fiscal 2022, respectively.

The weighted average grant date fair value of stock option grants was $ 50.72 and $ 37.52 for the first nine months of fiscal 2023 and fiscal 2022, respectively.

Stock appreciation rights (“SARS”) carry generally the same terms and vesting requirements as stock options except that they are settled in cash upon exercise and therefore, are classified as liabilities.

As of May 24, 2021, we no longer have outstanding SARS.

Outstanding at June 30, 2023 1,957,715 $ 164.17 6.5 years $ 124,831

Exercisable at June 30, 2023 1,336,601 $ 136.78 5.5 years $ 119,338

We estimate that 601,967 of the non-vested stock options outstanding at June 30, 2023 will ultimately vest.

The aggregate intrinsic value in the table above represents the total pre-tax difference between the $ 224.98 closing price of our ordinary shares on June 30, 2023 over the exercise prices of the stock options, multiplied by the number of options outstanding or outstanding and exercisable, as applicable.

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

The total intrinsic value of stock options exercised during the first three months of fiscal 2024 and fiscal 2023 was $ 4,831 and $ 3,897 , respectively.

Net cash proceeds from the exercise of stock options were $ 1,254 and $ 1,221 for the first three months of fiscal 2024 and fiscal 2023, respectively.

The weighted average grant date fair value of stock option grants was $ 53.45 and $ 50.04 for the first three months of fiscal 2024 and fiscal 2023, respectively.

STERIS PLC AND SUBSIDIARIES

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

For the Three and Nine Months Ended December 31, 2022 and 2021

For the Three Months Ended June 30, 2023 and 2022

(dollars in thousands, except as noted)

5 unchanged sentences

Forfeited ( 7,923 ) ( 98 ) 190.57

Non-vested at December 31, 2022 450,747 31,398 $ 186.24

Non-vested at June 30, 2023 489,762 34,007 $ 198.34

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

The value of restricted shares and units that vested during the first nine months of fiscal 2023 at the time of grant was $ 20,237 .

As of December 31, 2022, there was a total of $ 72,008 in unrecognized compensation cost related to non-vested share-based compensation granted under our share-based compensation plan.

The value of restricted shares and units that vested during the first three months of fiscal 2024 at the time of grant was $ 19,455 .

As of June 30, 2023, there was a total of $ 99,504 in unrecognized compensation cost related to non-vested share-based compensation granted under our share-based compensation plans.

We expect to recognize the cost over a weighted average period of 2.0 years.

1 unchanged sentence

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

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

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

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

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

All replacement restricted share units retained dividend accumulation rights.

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

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

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

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

As of December 31, 2022, there was a total of $ 2,319 in unrecognized compensation cost related to non-vested STERIS restricted shar e units awarded to replace Cantel restricted share units.

We expect to recognize the cost over a weighted average period of 0.8 years .

As of June 30, 2023, there was a total of $ 805 in unrecognized compensation cost related to non-vested STERIS restricted shar e units awarded to replace Cantel restricted share units.

We expect to recognize the majority of the remaining cost by the third quarter of fiscal 2024.

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

3 unchanged sentences

Forfeited ( 570 ) 191.18

Non-vested at December 31, 2022 16,440 $ 191.18

STERIS PLC AND SUBSIDIARIES

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

For the Three and Nine Months Ended December 31, 2022 and 2021

(dollars in thousands, except as noted)

Non-vested at June 30, 2023 14,647 $ 191.18

Financial and Other Guarantees

5 unchanged sentences

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

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

Changes in our warranty liability during the first three months of fiscal 2024 were as follows:

Balance at March 31, 2023 $ 13,683

1 unchanged sentence

Settlements made during the period ( 3,634 )

Balance at December 31, 2022 $ 13,442

Balance at June 30, 2023 $ 13,845

STERIS PLC AND SUBSIDIARIES

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

For the Three Months Ended June 30, 2023 and 2022

(dollars in thousands, except as noted)

Derivatives and Hedging

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

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

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

During the first quarter of fiscal 2024, we also held forward foreign currency contracts to hedge a portion of our expected non-U.S.

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

These foreign currency exchange contracts will mature during fiscal 2023.

These foreign currency exchange contracts will mature in fiscal 2024.

We did not elect hedge accounting for these forward foreign currency contracts;

1 unchanged sentence

We do not use derivative financial instruments for speculative purposes.

None of these contracts are designated as hedging instruments and do not receive hedge accounting treatment;

These contracts are not designated as hedging instruments and do not receive hedge accounting treatment;

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

At December 31, 2022, we held foreign currency forward contracts to buy 13.0 million British pounds sterling;

and to sell 150.0 million Mexican pesos, and 16.3 million euros.

At December 31, 2022, we held commodity swap contracts to buy 200.4 thousand pounds of nickel.

At June 30, 2023, we held net foreign currency forward contracts to buy 29.0 million British pounds sterling and 95.5 million Mexican pesos;

and to sell 7.0 million Singapore dollars and 51.2 million euros.

At June 30, 2023, we held commodity swap contracts to buy 564.8 thousand pounds of nickel.

Asset Derivatives Liability Derivatives

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

Balance sheet location December 31, 2022 March 31, 2022 December 31, 2022 March 31, 2022

Balance sheet location June 30, 2023 March 31, 2023 June 30, 2023 March 31, 2023

Prepaid & other $ 1,297 $ 378 $ — $ —

3 unchanged sentences

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

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

2022 2021 2022 2021

Three Months Ended June 30,

Foreign currency forward contracts Selling, general and administrative $ 1,458 $ 2,349

2 unchanged sentences

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

For the Three and Nine Months Ended December 31, 2022 and 2021

For the Three Months Ended June 30, 2023 and 2022

(dollars in thousands, except as noted)

6 unchanged sentences

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

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

The following table shows the fair value of our financial assets and liabilities at June 30, 2023 and March 31, 2023:

Fair Value Measurements

4 unchanged sentences

Level 1 Level 2 Level 3

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

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

Cash and cash equivalents $ 208,614 $ 208,357 $ 208,614 $ 208,357 $ — $ — $ — $ —

12 unchanged sentences

(1) The fair values of forward and swap contracts are based on period-end forward rates and reflect the value of the amount that we would pay or receive for the contracts involving the same notional amounts and maturity dates.

(2) We maintain a frozen domestic non-qualified deferred compensation plan covering certain employees, which allows for the deferral of payment of previously earned compensation for an employee-specified term or until retirement or termination.

(2) We maintain a frozen domestic non-qualified deferred compensation plan covering certain employees, which allowed for the deferral of payment of previously earned compensation for an employee-specified term or until retirement or termination.

Amounts deferred can be allocated to various hypothetical investment options (compensation deferrals have been frozen under the plan).

2 unchanged sentences

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

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

During the third quarter and first nine months of fiscal 2023, we recorded gains (losses) of $( 342 ) and $ 1,385 , respectively, related to these investments.

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

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

During the first quarter of fiscal 2024 and 2023, we recorded gains (losses) of $ 73 and $( 936 ),respectively, related to these investments.

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

(4) Contingent consideration obligations arise from business acquisitions.

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

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

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

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

1 unchanged sentence

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

For the Three and Nine Months Ended December 31, 2022 and 2021

For the Three Months Ended June 30, 2023 and 2022

(dollars in thousands, except as noted)

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis at December 31, 2022 are summarized as follows:

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis at June 30, 2023 are summarized as follows:

Contingent Consideration

2 unchanged sentences

Payments ( 20 )

Reductions ( 3,100 )

Currency translation adjustments ( 31 )

Balance at December 31, 2022 $ 14,820

Balance at June 30, 2023 $ 16,199

STERIS PLC AND SUBSIDIARIES

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

For the Three and Nine Months Ended December 31, 2022 and 2021

For the Three Months Ended June 30, 2023 and 2022

(dollars in thousands, except as noted)

2 unchanged sentences

Currency Translation is not adjusted for income taxes.

Changes in our Accumulated Other Comprehensive Income (Loss) balances, net of tax, for the three and nine months ended December 31, 2022 and 2021 were as follows:

Changes in our Accumulated Other Comprehensive Income (Loss) balances, net of tax, for the three months ended June 30, 2023 and 2022 were as follows:

Defined Benefit Plans (1)

1 unchanged sentence

Total Accumulated Other Comprehensive Income (Loss)

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

Beginning Balance $ 1,332 $ 1,276 $ ( 599,480 ) $ ( 211,084 ) $ ( 598,148 ) $ ( 209,808 )

Other Comprehensive Income (Loss) before reclassifications 138 431 233,958 ( 154,438 ) 234,096 ( 154,007 )

Amounts reclassified from Accumulated Other Comprehensive Income (Loss) ( 111 ) ( 348 ) — — ( 111 ) ( 348 )

Net current-period Other Comprehensive (Loss) 27 83 233,958 ( 154,438 ) 233,985 ( 154,355 )

Balance at December 31, 2022 $ 1,359 $ 1,359 $ ( 365,522 ) $ ( 365,522 ) $ ( 364,163 ) $ ( 364,163 )

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

Balance at March 31, 2023 $ 12 $ ( 320,722 ) $ ( 320,710 )

Other Comprehensive Income before reclassifications 418 9,793 10,211

Amounts reclassified from Accumulated Other Comprehensive Loss ( 360 ) — ( 360 )

Net current-period Other Comprehensive Income 58 9,793 9,851

Balance at June 30, 2023 $ 70 $ ( 310,929 ) $ ( 310,859 )

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

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

2 unchanged sentences

Total Accumulated Other Comprehensive Income (Loss)

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

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

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

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

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

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

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

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

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

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

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

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

STERIS PLC AND SUBSIDIARIES

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

For the Three and Nine Months Ended December 31, 2022 and 2021

(dollars in thousands, except as noted)

Changes to the carrying amount of goodwill for the nine months ended December 31, 2022 are as follows:

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

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

Goodwill acquired 10,753 — — — 10,753

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

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

Divestiture ( 2,358 ) — — — ( 2,358 )

Foreign currency translation adjustments ( 18,157 ) ( 1,073 ) ( 56,655 ) ( 15,367 ) ( 91,252 )

Balance at December 31, 2022 $ 2,295,444 $ 181,362 $ 1,376,203 $ — $ 3,853,009

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

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

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

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

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

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

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

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

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

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

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

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

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

No additional goodwill impairment was identified during this review.

Report of Independent Registered Public Accounting Firm

1 unchanged sentence

Results of Review of Interim Financial Statements

We have reviewed the accompanying consolidated balance sheet of STERIS plc and subsidiaries (the Company) as of December 31, 2022, the related consolidated statements of income, comprehensive income and shareholders’ equity for the three- and nine-month periods ended December 31, 2022 and 2021 and the consolidated statement of cash flows for the nine- month periods ended December 31, 2022 and 2021, and the related notes (collectively referred to as the “consolidated interim financial statements”).

We have reviewed the accompanying consolidated balance sheet of STERIS plc and subsidiaries (the Company) as of June 30, 2023, the related consolidated statements of income, comprehensive income (loss), shareholders’ equity and cash flows for the three-month periods ended June 30, 2023 and 2022, and the related notes (collectively referred to as the “consolidated interim financial statements”).

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

generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of March 31, 2022, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for the year then ended, and the related notes and schedule (not presented herein);

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of March 31, 2023, the related consolidated statements of income, comprehensive income (loss), shareholders' equity and cash flows for the year then ended, and the related notes and schedule (not presented herein);

and in our report dated May 26, 2023, we expressed an unqualified audit opinion on those consolidated financial statements.

10 unchanged sentences

Cleveland, Ohio

February 8, 2023

August 8, 2023

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

What changed 10-Q

Item 1. Financial Statements