8 unchanged sentences
• where cash will come from to fund future debt principal repayments, growth outside of core operations, repurchases of shares, cash dividends and future working capital needs.
−Removed: As you read the MD&A, it may be helpful to refer to information in our consolidated financial statements contained herein, which present the results of our operations for the third quarter and first nine months of fiscal 2023 and fiscal 2022.
−Removed: It may also be helpful to refer to our Annual Report on Form 10-K for the year ended March 31, 2022, which was filed with the Securities and Exchange Commission ("SEC") on May 31, 2022, including information in Item 1, "Business," Part I, Item 1A, "Risk Factors," and Note 10 of our consolidated financial statements titled, "Commitments and Contingencies," and Part II, Item 1A, "Risk Factors" of the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022, which was filed with the SEC on August 8, 2022, for a discussion of some of the matters that can adversely affect our business and results of operations.
+Added: As you read the MD&A, it may be helpful to refer to information in our consolidated financial statements contained herein, which present the results of our operations for the first quarter of fiscal 2024 and fiscal 2023.
+Added: It may also be helpful to refer to our Annual Report on Form 10-K for the year ended March 31, 2023, which was filed with the Securities and Exchange Commission ("SEC") on May 26, 2023, including information in Item 1, "Business," Part I, Item 1A, "Risk Factors," and Note 10 of our consolidated financial statements titled, "Commitments and Contingencies," and Part II, Item 1A, "Risk Factors" of this Quarterly Report, for a discussion of some of the matters that can adversely affect our business and results of operations.
In the MD&A, we analyze and explain the period-over-period changes in the specific line items in the Consolidated Statements of Income.
26 unchanged sentences
• Service Revenues – We define service revenues as revenues generated from parts and labor associated with the maintenance, repair, and installation of our capital equipment.
−Removed: Service revenues also include outsourced reprocessing services, instrument and scope repairs, as well as revenues generated from contract sterilization and laboratory services offered through our Applied Sterilization Technologies segment.
+Added: Service revenues also include outsourced reprocessing services, instrument and scope repairs, as well as revenues generated from contract sterilization and laboratory services offered through our Applied Sterilization Technologies ("AST") segment.
• Capital Equipment Revenues – We define capital equipment revenues as revenues generated from sales of capital equipment, which includes:
5 unchanged sentences
WE HELP OUR CUSTOMERS CREATE A HEALTHIER AND SAFER WORLD by providing innovative healthcare, life sciences and dental products and services.
−Removed: 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:
+Added: 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 OR integrati on.
We operate and report our financial information in four reportable business segments:
−Removed: Healthcare, Applied Sterilization Technologies, Life Sciences and Dental.
+Added: 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.
7 unchanged sentences
Acquisitions .
−Removed: 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.
−Removed: Total aggregate consideration was approximately $40.7 million, including potential contingent consideration of $6.7 million.
−Removed: On June 2, 2021, we acquired all outstanding equity interests in Cantel Medical LLC.
−Removed: Cantel’s Dental business extended our business into a new Customer segment where there is an increasing focus on infection prevention protocols and processes.
−Removed: This business is being reported as the Dental segment.
−Removed: The rest of Cantel was integrated into our existing Healthcare and Life Sciences segments.
−Removed: Additionally, the acquisition has and is expected to continue to result in cost savings from optimizing global back-office infrastructure, leveraging best-demonstrated practices across locations and eliminating redundant public company costs.
−Removed: The results of Cantel are reflected in the results of operations and cash flows from June 2, 2021 forward, which will affect comparability to the prior period results of operations and cash flows.
−Removed: Acquisition and integration expenses totaled $4.8 million and $18.5 million for the three and nine months ended December 31, 2022 , respectively.
−Removed: Acquisition and integration expenses totaled $9.3 million and $167.7 million for the three and nine months ended December 31, 2021 , respectively.
−Removed: These costs were primarily related to the acquisition and integration of Cantel.
−Removed: Acquisition and integration expenses are reported in the Selling, general and administrative expenses line of our Consolidated Statements of Income.
−Removed: During the second quarter of fiscal 2023, in connection with the preparation of our quarterly consolidated financial statements, we identified and recognized a Goodwill impairment loss of $490.6 million related to goodwill that arose with respect to assets acquired in the Cantel acquisition.
−Removed: COVID-19 Pandemic and Macroeconomic Environment .
−Removed: The COVID-19 global pandemic and its direct and indirect impacts have led to disruptions in the market and the global and U.S.
−Removed: economies that may continue for a prolonged period.
−Removed: In response to the COVID-19 pandemic, various governmental authorities and private enterprises have implemented numerous containment measures, such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns.
−Removed: A number of our global suppliers, vendors, and distributors are located in regions that have been adversely affected by restrictive government and private enterprise measures implemented in response to the pandemic, or have otherwise been disrupted by associated prevailing macroeconomic trends.
−Removed: This has led to product and labor shortages, shipping delays and an increase in raw material and component pricing as well as other inflationary pressures, particularly on our manufacturing costs.
−Removed: Throughout the pandemic, we have experienced and expect to continue to experience unpredictable fluctuations in demand for certain of our products and services.
−Removed: To date, we have been able to continue to operate our manufacturing facilities and meet the demand for essential products and services of our Customers.
−Removed: Nonetheless, in fiscal 2023, supply chain disruptions and delays have limited and may continue to limit our ability to ship certain capital equipment, particularly in our Healthcare and Life Sciences business, negatively impacting capital equipment revenue growth.
−Removed: Within the Healthcare and Life Sciences businesses, approximately $46 million in capital equipment shipments were delayed in the third quarter of fiscal 2023.
−Removed: We continue to pursue all available avenues to address supply chain disruptions, including purchases from third parties and brokers, qualifying alternative parts and suppliers, and obtaining prioritization from governmental agencies.
−Removed: W e do not believe that the COVID-19 pandemic will negatively impact our long-term ability to generate revenues or meet existing and future financial obligations.
−Removed: For additional information and our risk factors related to the COVID-19 pandemic, please 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, and Part II, Item 1A, "Risk Factors" of the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022, which was filed with the SEC on August 8, 2022.
−Removed: Revenues increased 0.6% to $1,216.0 million for the three months ended December 31, 2022, as compared to $1,209.0 million for the same period in the prior year.
−Removed: Revenues increased 5.9% to $3,573.0 million for the nine months ended December 31, 2022, as compared to $3,374.4 million for the same period in the prior year.
−Removed: These increases reflect growth in the Healthcare and Applied Sterilization Technologies segments, offset by unfavorable fluctuations in currencies and divestiture activity.
−Removed: Gross profit percentage for the third quarter of fiscal 2023 was 42.9% compared to the gross profit percentage for the third quarter of fiscal 2022 of 44.5%.
−Removed: Gross profit percentage for the first nine months of fiscal 2023 was 44.0% compared to the gross profit percentage for the first nine months of fiscal 2022 of 42.8%.
−Removed: Unfavorable impacts from inflation and other adjustments were partially offset by favorable impacts from pricing and divestitures for the third quarter of fiscal 2023.
−Removed: Favorable impacts from mix, pricing, and divestitures were partially offset by unfavorable impacts from inflation and productivity for the first nine months of fiscal 2023.
−Removed: Operating income for the third quarter of fiscal 2023 was $190.8 million, compared to operating income of $202.9 million for third quarter of fiscal 2022.
−Removed: Operating income for the first nine months of fiscal 2023 was $42.8 million, compared to operating income of $333.8 million for the first nine months of fiscal 2022.
−Removed: In the fiscal 2022 periods, we incurred additional acquisition and integration expenses, which were primarily related to our acquisition of Cantel.
−Removed: The fiscal 2023 reduction in such operating expenses was more than offset by a one time goodwill impairment charge of $490.6 million as well as an increase in amortization of purchased intangible assets.
−Removed: Cash flows from operations were $541.1 million and free cash flow was $262.8 million for the first nine months of fiscal 2023 compared to cash flows from operations of $513.1 million and free cash flow of $300.3 million for first nine months of fiscal 2022 (see the subsection below titled "Non-GAAP Financial Measures" for additional information and related reconciliation of cash flows from operations to free cash flow).
−Removed: The fiscal 2023 increase in cash flows from operations was primarily due to lower costs associated with the acquisition and integration of Cantel in the fiscal 2023 period.
−Removed: The fiscal 2023 decrease in free cash flows was primarily due to higher working capital, particularly inventory and increased capital spending.
−Removed: Our debt-to-total capital ratio was 33.6% at December 31, 2022 and 32.1% at March 31, 2022.
−Removed: During the first nine months of fiscal 2023, we declared and paid cash dividends totaling $1.37 per ordinary share.
−Removed: Additional information regarding our financial performance during the third quarter and first nine months of fiscal 2023 is included in the subsection below titled “Results of Operations.”
+Added: 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:
+Added: The acquired assets from BD will be integrated into our Healthcare segment.
+Added: The transaction was completed on August 2, 2023.
+Added: The purchase price is $540,000.
+Added: We anticipate that the acquisition will qualify for a tax benefit related to tax deductible goodwill, with a present value of approximately $60,000.
+Added: We are not assuming any pre-existing debt and funded the entire purchase with additional debt.
+Added: Revenues increased 11.1% to $1,284.5 million for the three months ended June 30, 2023, as compared to $1,156.5 million for the same period in the prior year.
+Added: The increase is primarily due to the benefits of higher volume and pricing, particularly in the Healthcare segment.
+Added: Gross profit percentage for the first quarter of fiscal 2024 was 44.6% compared to the gross profit percentage for the first quarter of fiscal 2023 of 44.8%.
+Added: The decrease in gross profit percentage reflects unfavorable impacts from inflationary cost increases for materials and labor which exceeded the benefits from pricing for the first quarter of fiscal 2024.
+Added: Operating income for the first quarter of fiscal 2024 was $188.9 million, compared to operating income of $158.4 million for first quarter of fiscal 2023.
+Added: The increase is primarily due to the benefit of higher volume and pricing which exceeded negative impacts from inflationary cost increases for materials and labor for the first quarter of fiscal 2024.
+Added: In addition, acquisition and integration related charges decreased to $2.7 million in the first quarter of fiscal 2024 compared to $9.8 million in the first quarter of fiscal 2023.
+Added: Acquisition and integration expenses are reported in the Selling, general and administrative expenses line in our Consolidated Statements of Income.
+Added: Cash flows from operations were $281.1 million and free cash flow was $214.5 million for the first three months of fiscal 2024 compared to cash flows from operations of $231.7 million and free cash flow of $117.1 million for the first three months of fiscal 2023 (see the subsection below titled "Non-GAAP Financial Measures" for additional information and related
+Added: reconciliation of cash flows from operations to free cash flow).
+Added: The first quarter of fiscal 2024 increase in cash flows from operations and free cash flows was primarily due to a decline in cash used for compensation related payments offset by continued investment in inventory as we continue to focus on reducing lead times and meeting Customer demand, as well as timing of capital spending.
+Added: Our debt-to-total capital ratio was 32.2% at June 30, 2023 and 33.6% at March 31, 2023.
+Added: During the first three months of fiscal 2024, we declared and paid cash dividends totaling $0.47 per ordinary share.
+Added: Additional information regarding our financial performance during the first quarter of fiscal 2024 is included in the subsection below titled “Results of Operations.”
NON-GAAP FINANCIAL MEASURES
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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.
−Removed: 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.
−Removed: 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.
+Added: 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.
+Added: 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.
−Removed: The following table summarizes the calculation of our free cash flow for the nine months ended December 31, 2022 and 2021:
−Removed: Nine Months Ended December 31,
+Added: The following table summarizes the calculation of our free cash flow for the three months ended June 30, 2023 and 2022:
+Added: Three Months Ended June 30,
(dollars in thousands) 2023 2022
4 unchanged sentences
Results of Operations
−Removed: In the following subsections, we discuss our earnings and the factors affecting them for the third quarter and first nine months of fiscal 2023 compared to the same fiscal 2022 periods.
+Added: In the following subsections, we discuss our earnings and the factors affecting them for the first quarter of fiscal 2024 compared to the same fiscal 2023 period.
We begin with a general overview of our operating results and then separately discuss earnings for our operating segments.
−Removed: The following tables compare our revenues for the three and nine months ended December 31, 2022 to the revenues for the three and nine months ended December 31, 2021:
−Removed: Three Months Ended December 31,
−Removed: (dollars in thousands) 2022 2021 Change Percent Change
−Removed: Total revenues $ 1,215,994 $ 1,208,971 $ 7,023 0.6 %
−Removed: Revenues by type:
−Removed: Service revenues 536,952 511,715 25,237 4.9 %
−Removed: Consumable revenues 419,555 440,328 (20,773) (4.7) %
−Removed: Capital equipment revenues 259,487 256,928 2,559 1.0 %
−Removed: Revenues by geography:
−Removed: Ireland revenues 17,959 20,086 (2,127) (10.6) %
−Removed: United States revenues 883,390 851,292 32,098 3.8 %
−Removed: Other foreign revenues 314,645 337,593 (22,948) (6.8) %
−Removed: Revenues increased 0.6% to $1,216.0 million for the three months ended December 31, 2022, as compared to $1,209.0 million for the same period in the prior year.
−Removed: The increase was primarily related to growth in the Healthcare and Applied Sterilization Technologies segments, offset by unfavorable fluctuations in currencies and recent divestiture activity.
−Removed: Service revenues increased 4.9% for the three months ended December 31, 2022, as compared to the same period in the prior year, reflecting growth in the Healthcare, Life Sciences and Applied Sterilization Technologies segments.
−Removed: Consumable revenues decreased by 4.7% for the three months ended December 31, 2022, as compared to the same period in the prior year, reflecting declines in the Healthcare, Life Sciences and Dental segments.
−Removed: Capital equipment revenues increased 1.0% for the three months ended December 31, 2022, as compared to the same period in the prior year, reflecting growth in the Healthcare segment, offset by a decline in the Life Sciences segment.
−Removed: Ireland revenues decreased 10.6% to $18.0 million for the three months ended December 31, 2022, as compared to $20.1 million for the same period in the prior year, reflecting declines in service and consumable revenues, which were partially offset by growth in capital equipment revenues.
−Removed: United States revenues increased 3.8% to $883.4 million for the three months ended December 31, 2022, as compared to $851.3 million for the same period in the prior year, reflecting growth in service and capital equipment revenues, which was partially offset by a decline in consumable revenues.
−Removed: Revenues from other foreign locations decreased 6.8% to $314.6 million for the three months ended December 31, 2022, as compared to $337.6 million for the same period in the prior year.
−Removed: Declines in the Europe, Middle East & Africa ("EMEA") region, Asia Pacific region, and Canada, were partially offset by growth within the Latin American region.
−Removed: Nine Months Ended December 31,
+Added: The following tables compare our revenues for the three months ended June 30, 2023 to the revenues for the three months ended June 30, 2022:
+Added: Three Months Ended June 30,
(dollars in thousands) 2023 2022 Change Percent Change
8 unchanged sentences
Other foreign revenues 333,915 304,214 29,701 9.8 %
−Removed: Revenues increased 5.9% to $3,573.0 million for the nine months ended December 31, 2022, as compared to $3,374.4 million for the same period in the prior year.
−Removed: The increase was primarily related to growth in the Healthcare and Applied Sterilization Technologies segments, offset by unfavorable fluctuations in currencies and recent divestiture activity.
−Removed: Service revenues increased 5.8% for the nine months ended December 31, 2022, as compared to the same period in the prior year, reflecting growth in the Healthcare, Life Sciences, and Applied Sterilization Technologies segments.
−Removed: Consumable revenues increased by 5.3% for the nine months ended December 31, 2022, as compared to the same period in the prior year, reflecting growth in the Healthcare and Dental segments, which were partially offset by a decline in the Life Sciences segment.
−Removed: Capital equipment revenues increased 7.0% for the nine months ended December 31, 2022, as compared to the same period in the prior year, reflecting growth in the Healthcare and Life Sciences segments.
−Removed: Ireland revenues decreased 14.4% to $53.1 million for the nine months ended December 31, 2022, as compared to $62.1 million for the same period in the prior year, reflecting declines in service, consumable, and capital equipment revenues.
−Removed: United States revenues increased 8.7% to $2,589.5 million for the nine months ended December 31, 2022, as compared to $2,383.0 million for the same period in the prior year, reflecting growth in service and capital equipment revenues, which were partially offset by a decline in consumable revenues.
−Removed: Revenues from other foreign locations increased 0.1% to $930.4 million for the nine months ended December 31, 2022, as compared to $929.3 million for the same period in the prior year.
−Removed: The increase reflects growth within the EMEA and Latin American regions, which was partially offset by declines in Canada and the Asia Pacific region.
−Removed: Gross Profit.
−Removed: The following tables compare our gross profit for the three and nine months ended December 31, 2022 to the three and nine months ended December 31, 2021:
−Removed: Three Months Ended December 31, Change Percent
−Removed: (dollars in thousands) 2022 2021
+Added: Revenues increased 11.1% to $1,284.5 million for the three months ended June 30, 2023, as compared to $1,156.5 million for the same period in the prior year.
+Added: The increase is primarily due to the benefits of higher volume and pricing, particularly in our Healthcare segment.
+Added: Service revenues increased 9.9% for the three months ended June 30, 2023, as compared to the same period in the prior year, reflecting growth in the Healthcare, Life Sciences and AST segments.
+Added: Consumable revenues increased by 6.5% for the three months ended June 30, 2023, as compared to the same period in the prior year, reflecting growth in the Healthcare and Life Sciences segments which exceeded the decrease in the Dental segment.
+Added: Capital equipment revenues increased 22.6% for the three months ended June 30, 2023, as compared to the same period in the prior year, reflecting growth in the Healthcare segment which exceeded the decrease in the Life Sciences segment.
+Added: Ireland revenues increased 10.5% to $20.1 million for the three months ended June 30, 2023, as compared to $18.2 million for the same period in the prior year, reflecting growth in service, consumable, and capital equipment revenues.
+Added: United States revenues increased 11.6% to $930.5 million for the three months ended June 30, 2023, as compared to $834.1 million for the same period in the prior year, reflecting growth in service, consumable and capital equipment revenues.
+Added: Revenues from other foreign locations increased 9.8% to $333.9 million for the three months ended June 30, 2023, as compared to $304.2 million for the same period in the prior year, reflecting growth in the Europe, Middle East & Africa ("EMEA"), Canada, Asia Pacific, and Latin American Regions.
Gross Profit.
−Removed: Product $ 304,313 $ 323,463 $ (19,150) (5.9) %
−Removed: Service 217,184 214,651 2,533 1.2 %
−Removed: Total gross profit $ 521,497 $ 538,114 $ (16,617) (3.1) %
−Removed: Gross profit percentage:
−Removed: Product 44.8 % 46.4 %
−Removed: Service 40.4 % 41.9 %
−Removed: Total gross profit percentage 42.9 % 44.5 %
−Removed: Nine Months Ended December 31, Change Percent
+Added: The following tables compare our gross profit for the three months ended June 30, 2023 to the three months ended June 30, 2022:
+Added: Three Months Ended June 30, Change Percent
(dollars in thousands) 2023 2022
8 unchanged sentences
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.
−Removed: Gross profit percentage for the third quarter of fiscal 2023 was 42.9% compared to the gross profit percentage for the third quarter of fiscal 2022 of 44.5%.
−Removed: Unfavorable impacts from inflation (250 basis points), volume (30 basis points), productivity (30 basis points), and other adjustments (100 basis points), were partially offset by favorable impacts from pricing (150 basis points), divestitures (70 basis points), and fluctuations in currency (30 basis points).
−Removed: Gross profit percentage for the first nine months of fiscal 2023 was 44.0% compared to the gross profit percentage for the first nine months of fiscal 2022 of 42.8%.
−Removed: Favorable impacts from pricing (150 basis points), acquisition and divestiture activity (70 basis points), fluctuations in currency (20 basis points), and mix and other adjustments (310 basis points), were partially offset by unfavorable impacts from inflation (350 basis points), productivity (60 basis points), and volume (20 basis points).
−Removed: The gross profit percentage reported for the first nine months of fiscal 2022 was negatively impacted by the step up to fair value of the inventory held by Cantel at the time of acquisition which is reflected in the improvement identified as mix and other adjustments above.
−Removed: Operating Expenses.
−Removed: The following table compares our operating expenses for the three and nine months ended December 31, 2022 to the three and nine months ended December 31, 2021:
−Removed: Three Months Ended December 31, Change Percent
−Removed: (dollars in thousands) 2022 2021
+Added: Gross profit percentage for the first quarter of fiscal 2024 was 44.6% compared to the gross profit percentage for the first quarter of fiscal 2023 of 44.8%.
+Added: Gross profit percentage decreased as pricing (150 basis points) was more than offset by unfavorable material and labor inflation (170 basis points).
+Added: The net impact from other factors including productivity, mix, adjustments and other charges was not significant.
Operating Expenses.
−Removed: Selling, general, and administrative $ 305,141 $ 310,564 $ (5,423) (1.7) %
−Removed: Research and development 25,514 24,824 690 2.8 %
−Removed: Restructuring expenses 39 (207) 246 (118.8) %
−Removed: Total operating expenses $ 330,694 $ 335,181 $ (4,487) (1.3) %
−Removed: Nine Months Ended December 31, Change Percent
+Added: The following table compares our operating expenses for the three months ended June 30, 2023 to the three months ended June 30, 2022:
+Added: Three Months Ended June 30, Change Percent
(dollars in thousands) 2023 2022
1 unchanged sentence
Selling, general, and administrative $ 359,058 $ 334,626 $ 24,432 7.3 %
−Removed: Goodwill impairment loss 490,565 — 490,565 NM
Research and development 25,502 24,751 751 3.0 %
1 unchanged sentence
Total operating expenses $ 384,579 $ 359,403 $ 25,176 7.0 %
−Removed: NM - Not meaningful.
Selling, General, and Administrative Expenses.
Significant components of total selling, general, and administrative expenses (“SG&A”) are compensation and benefit costs, fees for professional services, travel and entertainment expenses, facilities costs, and other general and administrative expenses.
−Removed: SG&A decreased 1.7% and 8.2% in the third quarter and first nine months of fiscal 2023, respectively, over the same prior year periods.
−Removed: In the fiscal 2022 periods, we incurred additional acquisition and integration expenses, which were primarily related to our acquisition of Cantel.
−Removed: The fiscal 2023 reduction in such expenses was partially offset by an increase in amortization of purchased intangible assets in the fiscal 2023 periods.
−Removed: Goodwill Impairment Loss.
−Removed: A Goodwill impairment loss of $490.6 million was recorded during the second quarter of fiscal 2023 as the result of an interim assessment of the fair value of the Dental segment.
−Removed: For more information regarding our goodwill impairment loss, see Note 17 to our consolidated financial statements titled, "Goodwill."
+Added: SG&A increased 7.3% in the first quarter of fiscal 2024, compared to the same period in fiscal 2023.
+Added: The fiscal 2024 increase is primarily attributable to increased compensation, including incentive compensation, and benefit costs, as well as an increase in marketing related expenses.
Research and Development.
−Removed: Resea rch and development expenses increased 2.8% and 21.6% in the third quarter and first nine months of fiscal 2023, respectively, over the same prior year periods.
−Removed: The double digit increase in the nine month period was primarily due to the addition of Cantel.
+Added: Resea rch and development expenses increased 3.0% in the first quarter of fiscal 2024, compared to the same period in fiscal 2023.
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.
2 unchanged sentences
Non-Operating Expenses, Net.
−Removed: Non-operating expenses, net consists of interest expense on debt, offset by interest earned on cash, cash equivalents, and short-term investment balances, and other miscellaneous income.
−Removed: The following tables compare our net non-operating expenses for the three and nine months ended December 31, 2022 and 2021:
−Removed: Three Months Ended December 31,
−Removed: (dollars in thousands) 2022 2021 Change
−Removed: Non-operating expenses, net:
−Removed: Interest expense $ 28,559 $ 22,971 $ 5,588
−Removed: Interest and miscellaneous expense (income) 1,906 (2,447) 4,353
−Removed: Non-operating expenses, net $ 30,465 $ 20,524 $ 9,941
−Removed: Nine Months Ended December 31,
+Added: The following tables compare our net non-operating expenses for the three months ended June 30, 2023 and 2022:
+Added: Three Months Ended June 30,
(dollars in thousands) 2023 2022 Change
1 unchanged sentence
Interest expense $ 32,361 $ 22,674 $ 9,687
−Removed: Fair value adjustment related to convertible debt, premium liability — 27,806 (27,806)
−Removed: Interest and miscellaneous expense (income) 3,200 (4,905) 8,105
+Added: Interest and miscellaneous (income) expense (1,393) 770 (2,163)
Non-operating expenses, net $ 30,968 $ 23,444 $ 7,524
−Removed: Interest expense increased $5.6 million and $9.5 million during the third quarter and first nine months of fiscal 2023, respectively, as compared to the prior year periods, primarily due to higher interest rates on floating rate debt partially offset by lower principal amount of debt outstanding.
−Removed: For more information, refer to Not e 5 to our consolidated financial statements titled, "Debt."
−Removed: During the first nine months of fiscal 2022, we recorded a fair value adjustment 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.
−Removed: For more information on the Cantel convertible debt, 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.
−Removed: Interest and miscellaneous expense (income) increased by $4.4 million and $8.1 million during the third quarter and first nine months of fiscal 2023, respectively, as compared to the prior year periods, primarily due to losses recognized as a result of mark to market adjustments of our equity investments .
+Added: Non-operating expenses, net, consists of interest expense on debt, offset by interest earned on cash, cash equivalents, and short-term investment balances, and other miscellaneous income.
+Added: Interest expense increased $9.7 million during the first quarter of fiscal 2024, as compared to the same prior year period in fiscal 2023, primarily due to higher interest rates on floating rate debt.
+Added: For more information, refer to Note 5 to our consolidated financial statements titled, "Debt."
+Added: The fluctuation in interest and miscellaneous (income) expense during the first quarter of fiscal 2024, as compared to the same prior year period in fiscal 2023 , is primarily attributable to the negative impact of losses on our equity investments recognized during the first quarter of fiscal 2023.
For more information, refer to Note 15 to our consolidated financial statements titled, " Fair Value Measurements ."
Income Tax Expense.
−Removed: The following tables compare our income tax expense and effective income tax rates for the three and nine months ended December 31, 2022 and December 31, 2021:
−Removed: Three Months Ended December 31, Change Percent
−Removed: (dollars in thousands) 2022 2021
−Removed: Income tax expense $ 37,013 $ 39,315 $ (2,302) (5.9)%
−Removed: Effective income tax rate 23.1 % 21.6 %
−Removed: Nine Months Ended December 31, Change Percent
+Added: The following tables compare our tax expense and effective income tax rates for the three months ended June 30, 2023 and June 30, 2022:
+Added: Three Months Ended June 30, Change Percent
(dollars in thousands) 2023 2022
3 unchanged sentences
We analyze various factors to determine the estimated annual effective income tax rate, including projections of our annual earnings and taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, our ability to use tax credits and net operating loss carryforwards, and available tax planning alternatives.
−Removed: The effective income tax rates for the three month period ended December 31, 2022 and 2021 were 23.1% and 21.6%, respective ly.
−Removed: 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.
−Removed: The effective income tax rates for the nine month period ended December 31, 2022 and 2021 were (114.8)% and 21.5%, respectively.
−Removed: 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.
+Added: The effective income tax rates for the three month period ended June 30, 2023 and 2022 were 21.6% and 17.9%, respectively.
+Added: 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.
Business Segment Results of Operations.
−Removed: We report our financial information in four reportable business segments:
−Removed: Healthcare, Applied Sterilization Technologies, Life Sciences and Dental.
+Added: We operate and report our financial information in four reportable business segments:
+Added: 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.
−Removed: 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.
−Removed: 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.
+Added: 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.
+Added: 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 C ompany.
−Removed: Certain prior period costs were reallocated from the Healthcare segment to Corporate to conform with current year presentation.
−Removed: The prior period segment operating income measure has been recast for comparability.
−Removed: 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, Applied Sterilization Technologies or Life Sciences segment revenues.
−Removed: Three Customers collectively and consistently account for more than 40.0% of our Dental segment revenue.
+Added: 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.
+Added: 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.
−Removed: 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.
−Removed: 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.
+Added: These three Customers collectively accounted for appr oxi mately 42.2% and 38.6% of our Dental segments 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.
−Removed: Financial information for each of our segments is presented in the following table:
−Removed: Three Months Ended December 31, Nine Months Ended December 31,
+Added: The following table compares business segment revenues as well as impacts from acquisitions, divestitures, and foreign currency movements for the three months ended June 30, 2023 and 2022.
+Added: Three Months Ended June 30, (unaudited)
+Added: 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
+Added: Segment revenues:
Healthcare $ 818,874 $ 698,526 $ — $ — $ (1,574) 17.2 % 17.2 % 17.5 %
−Removed: Applied Sterilization Technologies 222,014 216,298 675,283 630,092
+Added: AST 233,099 220,911 — — 830 5.5 % 5.5 % 5.1 %
Life Sciences 131,413 132,207 — — 23 (0.6) % (0.6) % (0.6) %
Dental 101,156 104,847 — — 138 (3.5) % (3.5) % (3.7) %
−Removed: Total revenues $ 1,215,994 $ 1,208,971 $ 3,573,002 $ 3,374,378
+Added: Total $ 1,284,542 $ 1,156,491 $ — $ — $ (583) 11.1 % 11.1 % 11.1 %
+Added: Healthcare revenues increased 17.2% to $818.9 million for the three months ended June 30, 2023, as compared to $698.5 million for the same prior year period.
+Added: This increase reflects growth in capital equipment, service, and consumable revenues of 32.9%, 12.4%, and 11.2%, respectively, representing the benefits of higher volume and pricing.
+Added: The Healthcare segment's backlog at June 30, 2023 was $491.7 million.
+Added: The Healthcare segment's backlog at June 30, 2022 was $521.7 million.
+Added: The decrease is due to strong shipments in the first quarter, which were due to shortened lead times and easing of supply chain constraints.
+Added: AST revenues increased 5.5% to $233.1 million for the three months ended June 30, 2023, as compared to $220.9 million for the same prior year period.
+Added: Revenue was impacted by Customer inventory management and the continued reduction in demand from bioprocesing Customers.
+Added: Revenue was favorably impacted by pricing and fluctuation in currencies.
+Added: Life Sciences revenues decreased 0.6% to $131.4 million for the three months ended June 30, 2023, as compared to $132.2 million for the same prior year period.
+Added: This decrease was primarily due to a decline in capital equipment revenues of 23.5% which exceeded growth in service and consumable revenues of 20.4% and 3.6%, respectively.
+Added: The Life Sciences backlog at June 30, 2023 was $104.9 million.
+Added: The Life Sciences backlog at June 30, 2022 was $92.7 million.
+Added: The increase is primarily due to the timing of shipments.
+Added: Dental revenues decreased 3.5% to $101.2 million for the three months ended June 30, 2023, as compared to $104.8 million for the same prior year period.
+Added: The decline was a result of lower volume, primarily due to Customer inventory destocking, which exceeded the benefit of higher pricing.
+Added: The following table compares business segment and Corporate operating income for the three months ended June 30, 2023 and 2022.
+Added: Three Months Ended June 30,
Segment operating income (loss):
Healthcare $ 198,182 $ 156,497
−Removed: Applied Sterilization Technologies 103,539 101,343 323,238 303,059
+Added: AST 109,590 109,315
Life Sciences 49,841 55,305
5 unchanged sentences
Acquisition and integration related charges (2)
−Removed: 4,817 9,298 18,493 167,698
Tax restructuring costs (3)
−Removed: 282 118 533 228
Gain on fair value adjustment of acquisition related contingent consideration (1)
−Removed: — — (3,100) —
−Removed: Net (gain) loss on divestiture of businesses (1)
−Removed: (838) 489 3,939 893
+Added: Net loss on divestiture of businesses (1)
Amortization of inventory and property "step up" to fair value (1)
−Removed: 1,608 2,237 5,697 96,513
Restructuring charges (4)
−Removed: 38 (207) 127 17
−Removed: Goodwill impairment loss (5)
−Removed: — — 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.
−Removed: (5) For more information regarding our goodwill impairment loss, see Note 17 to our consolidated financial statements titled, "Goodwill."
−Removed: Healthcare revenues increased 1.2% to $769.1 million for the three months ended December 31, 2022, as compared to $759.7 million for the same prior year period.
−Removed: This increase reflects growth in capital equipment and service revenues of 4.6% and 5.0% respectively, which was partially offset by a 5.1% decline in consumable revenues, and reflects improvements in volume and pricing, which were partially offset by the unfavorable impacts of divestiture activity and fluctuations in currencies.
−Removed: Healthcare revenues increased 4.5% to $2,200.5 million for the nine months ended December 31, 2022, as compared to $2,106.6 million for the same prior year period.
−Removed: This increase reflects growth in capital equipment, service and consumable revenues of 8.5%, 4.9% and 1.0%, respectively, and reflects the favorable impact of the Cantel acquisition and increased demand, partially offset by divestiture activity and unfavorable fluctuations in currencies.
−Removed: The Healthcare segment’s backlog at December 31, 2022, was $540.4 million.
−Removed: Excluding Cantel, the Healthcare segment's backlog at December 31, 2021 was $381.6 million.
−Removed: In addition to the added volume from Cantel, the increase is primarily due to built up demand and supply chain disruptions.
−Removed: AST revenues increased 2.6% to $222.0 million for the three months ended December 31, 2022, as compared to $216.3 million for the same prior year period.
−Removed: AST revenues increased 7.2% to $675.3 million for the nine months ended December 31, 2022, as compared to $630.1 million for the same prior year period.
−Removed: The fiscal 2023 increases are primarily due to increases in volume and pricing, partially offset by unfavorable fluctuations in currencies.
−Removed: Life Sciences revenues decreased 5.2% to $121.3 million for the three months ended December 31, 2022, as compared to $127.9 million for the same prior year period.
−Removed: This decrease reflects declines in capital equipment and consumable revenues of 6.0% and 9.0%, respectively, which were partially offset by a 1.9% increase in service revenues.
−Removed: The decline was driven by unfavorable fluctuations in currencies, divestiture activity, and volume declines, which exceeded favorable impacts from pricing.
−Removed: Life Sciences revenues decreased 0.6% to $379.2 million for the nine months ended December 31, 2022, as compared to $381.7 million for the same prior year period.
−Removed: This decrease is the result of a decline in consumable revenues of 3.8%, which was partially offset by growth in capital equipment and service revenues of 1.8% and 2.5%, respectively.
−Removed: The decrease was driven by the negative impacts of currency fluctuations and divestiture activity, which exceeded favorable impacts from pricing.
−Removed: The Life Sciences segme nt’s backlog at December 31, 2022 amounted to $110.6 million, representing a decrease of 5.6% as compared to the backlog of $117.2 million at December 31, 2021.
−Removed: The decrease is primarily due to a slowdown in demand when compared to the same period in the prior year.
−Removed: Dental segment revenues for the three months ended December 31, 2022 decreased to $103.6 million from $105.1 million for the same prior year period.
−Removed: The decline was the result of lower volume and unfavorable currency fluctuations, which exceeded the favorable impact of pricing.
−Removed: Dental segment revenues for the nine months ended December 31, 2022 increased to $318.0 million from $256.0 million for the same prior year period.
−Removed: The increase was driven by the timing of the Cantel acquisition.
−Removed: The Healthcare segment’s operating income decreased 0.2% to $175.4 million for the three months ended December 31, 2022, as compared to $175.8 million in the same prior year period.
−Removed: The segment's operating margins were 22.8% and 23.1% for the third quarter of fiscal 2023 and 2022, respectively.
−Removed: The decreases in operating income and margin were primarily due to unfavorable impacts from supply chain, inflation, and divestiture activity, which exceeded the benefits of higher volume and pricing.
−Removed: The Healthcare segment’s operating income increased 3.1% to $497.2 million for the nine months ended December 31, 2022, as compared to $482.5 million in the same prior year period, primarily due to higher volume and the Cantel acquisition.
−Removed: The se gment's operating margins were 22.6% and 22.9% for the first nine months of fiscal 2023 and 2022, respectively.
−Removed: The decline in operating margin is primarily due to increased supply chain and inflationary costs, and higher research and development expenses in fiscal 2023.
−Removed: The AST segment's operating income increased 2.2% to $103.5 million for the three months ended December 31, 2022, as compared to $101.3 million during the same prior year period.
−Removed: The AST segment's operating income increased 6.7% to $323.2 million for the nine months ended December 31, 2022, as compared to $303.1 million during the same prior year period.
−Removed: The segment's operating margins were 46.6% and 46.9% for the third quarter of fiscal 2023 and 2022 , respectively.
−Removed: The segment's operating margins were 47.9% and 48.1% for the first nine months of fiscal 2023 and 2022, respectively .
−Removed: The increase in segment operating income and decrease in operating margin were primarily due to increased volume, which was partially offset by higher labor and energy costs in fiscal 2023.
−Removed: The Life Sciences segment’s operating income decreased 13.0% to $45.2 million for the three months ended December 31, 2022, as compared to $52.0 million for the same prior year period.
−Removed: The Life Sciences segment’s operating income decreased 6.0% to $149.2 million for the nine months ended December 31, 2022, as compared to $158.6 million for the same prior year period.
−Removed: The segment's operating margins were 37.3% and 40.7% for the third quarter of fiscal 2023 and 2022, respectively.
−Removed: The segment's operating margins were 39.3% and 41.6% for the first nine months of fiscal 2023 and 2022, respectively.
−Removed: The decreases in segment operating income and operating margin were primarily due to a reduction in volume as well as supply chain and inflationary cost increases.
−Removed: The Dental segment's operating income decreased 11.9% to $20.3 million for the three months ended December 31, 2022, as compared to $23.1 million for the same prior year period.
−Removed: The decrease was primarily due to a reduction in volume.
−Removed: The Dental segment's operating income increased 3.6% to $68.0 million for the nine months ended December 31, 2022, as compared to $65.6 million, for the same prior year period.
−Removed: The segment's operating margins were 19.6% and 22.0% for the third quarter of fiscal 2023 and 2022, respectively.
−Removed: The segment's operating margins were 21.4% and 25.6% for the first nine months of fiscal 2023 and 2022, respectively.
−Removed: The Dental segment's fiscal 2023 operating income and margins have been negatively impacted by the reduction in volume, decreased manufacturing productivity, and increased supply chain and inflationary costs.
+Added: The Healthcare segment’s operating income increased 26.6% to $198.2 million for the three months ended June 30, 2023, as compared to $156.5 million in the same prior year period.
+Added: The segment's operating margins were 24.2% and 22.4% for the first quarter of fiscal 2024 and 2023, respectively.
+Added: The increase in operating income and margin is primarily due to the benefits of higher volume and pricing which exceeded increased costs caused by inflation.
+Added: The AST segment's operating income was $109.6 million for the three months ended June 30, 2023 and $109.3 million during the same prior year period.
+Added: The segment's operating margin percentages were 47.0% and 49.5% for the first quarter of fiscal 2024 and 2023 , respectively.
+Added: The most significant driver of the decrease in operating margin percentage is labor and energy costs.
+Added: The Life Sciences segment’s operating income decreased 9.9% to $49.8 million for the three months ended June 30, 2023, as compared to $55.3 million for the same prior year period.
+Added: The segment's operating margins were 37.9% and 41.8% for the first quarter of fiscal 2024 and 2023, respectively.
+Added: The decreases in segment operating income and operating margin were primarily due to a reduction in volume and increased material costs which exceeded the benefits of higher pricing.
+Added: The Dental segment's operating income increased 12.5% to $22.0 million for the three months ended June 30, 2023, as compared to $19.6 million for the same prior year period.
+Added: The segment's operating margins were 21.8% and 18.7% for the first quarter of fiscal 2024 and 2023, respectively.
+Added: The increase in operating income and operating margin was primarily due to the benefits of higher pricing and improved operating efficiencies which exceeded the reduction in volume and unfavorable inflationary cost increases.
Liquidity and Capital Resources
−Removed: The following table summarizes significant components of our cash flows for the nine months ended December 31, 2022 and 2021:
−Removed: Nine Months Ended December 31,
+Added: The following table summarizes significant components of our cash flows for the three months ended June 30, 2023 and 2022:
+Added: Three Months Ended June 30,
(dollars in thousands) 2023 2022
1 unchanged sentence
Net cash used in investing activities $ (66,596) $ (109,417)
−Removed: Net cash provided by (used in) financing activities $ (306,771) $ 390,438
+Added: Net cash used in financing activities $ (213,637) $ (141,414)
Debt-to-total capital ratio 32.2 % 31.9 %
Free cash flow $ 214,533 $ 117,101
−Removed: Net Cash Provided by Operating Activities – The net cash provided by our operating activities was $541.1 million for the first nine months of fiscal 2023 and $513.1 million for the first nine months of fiscal 2022.
−Removed: The fiscal 2023 increase was primarily 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.
−Removed: Net Cash Used In Investing Activities – The net cash used in investing activities totaled $305.8 million for the first nine months of fiscal 2023 and $760.1 million for the first nine months of fiscal 2022.
−Removed: The following discussion summarizes the significant changes in our investing cash flows for the first nine months of fiscal 2023 and fiscal 2022:
−Removed: • Purchases of property, plant, equipment, and intangibles, net – Capital expenditures were $290.5 million for the first nine months of fiscal 2023 and $214.5 million during the same prior year period.
−Removed: The fiscal 2023 increase was primarily due to additional expenditures in our Applied Sterilization Technologies segment.
−Removed: • Proceeds from the sale of property, plant, equipment, and intangibles - During the first nine months of fiscal 2023, we received proceeds from the sale of property, plant, equipment, and intangibles of $12.2 million primarily from the sale of a facility previously used by the Dental segment.
−Removed: • Proceeds from the sale of business – During the first nine months of fiscal 2023, we sold the remaining component of the Animal Healthcare business for $5.2 million and received proceeds of $1.4 million related to a working capital settlement on the fiscal 2022 sale of the Renal Care business.
−Removed: • Acquisition of businesses, net of cash acquired – During the first nine months of fiscal 2023, we used $34.0 million for the acquisition of businesses.
−Removed: During the first nine months of fiscal 2022, we used $547.4 million for the acquisition of Cantel.
−Removed: For more information, refer to Note 2 to our consolidated financial statements titled, "Business Acquisitions," and 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.
−Removed: Net Cash Provided By/Used In Fi nancing Activities – The net cash used in financing activities amounted to $306.8 million for the first nine months of fiscal 2023 compared to net cash provided by financing activities of $390.4 million for the first nine months of fiscal 2022.
−Removed: The following discussion summarizes the significant changes in our financing cash flows for the first nine months of fiscal 2023 and fiscal 2022:
−Removed: • Proceeds from Issuance of Senior Notes – During the first nine months of fiscal 2022, we received $1,350.0 million in proceeds from the issuance of our Senior Public Notes.
−Removed: For more information on our Senior Public Notes, refer to Note 5 to our consolidated financial statements titled, "Debt" and 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.
−Removed: • Proceeds from Term Loan – During the first nine months of fiscal 2022, we borrowed $650.0 million under our Delayed Draw Term Loan.
−Removed: For more information on our Delayed Draw Term Loan, refer to Note 5 to our consolidated financial statements titled, "Debt" and 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.
−Removed: • Payments on Long-term Obligations, net – During the first nine months of fiscal 2023, we repaid $91.0 million of private placement debt.
−Removed: During the first nine months of fiscal 2022, we repaid $721.3 million of Cantel's outstanding debt in connection with the acquisition .
−Removed: For more information on Cantel's debt, refer to Note 2 to our consolidated financial statements titled, "Business Acquisitions" and 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.
−Removed: • Payments on convertible debt obligations – During the first nine months of fiscal 2022, we paid $371.4 million to settle obligations associated with Cantel's convertible debt assumed at the time of acquisition.
−Removed: For more information on
−Removed: Cantel's debt, 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.
−Removed: • Payments on Term Loans – During the first nine months of fiscal 2023, we repaid $141.9 million of our Term Loans.
−Removed: During the first nine months of fiscal 2022, we repaid $125.0 million of our Term Loan.
+Added: Net Cash Provided by Operating Activities – The net cash provided by our operating activities was $281.1 million for the first three months of fiscal 2024 and $231.7 million for the first three months of fiscal 2023.
+Added: The fiscal 2024 increase was primarily due to a decline in cash used for compensation related payments offset by continued investment in inventory as we continue to focus on reducing lead times and meeting Customer demand.
+Added: Net Cash Used In Investing Activities – The net cash used in investing activities totaled $66.6 million for the first three months of fiscal 2024 and $109.4 million for the first three months of fiscal 2023.
+Added: The following discussion summarizes the significant changes in our investing cash flows for the first three months of fiscal 2024 and fiscal 2023:
+Added: • Purchases of property, plant, equipment, and intangibles, net – Capital expenditures totaled $66.6 million for the first three months of fiscal 2024 and $115.9 million during the same prior year period.
+Added: The fiscal 2024 reduction is primarily due to the timing of capital spending in our AST segment compared to the first three months in fiscal 2023.
+Added: • Proceeds from the sale of business – During the first three months of fiscal 2023, we sold the remaining component of the Animal Healthcare business for $5.2 million.
+Added: Net Cash Used In Fi nancing Activities – The net cash used in financing activities amounted to $213.6 million for the first three months of fiscal 2024 compared to net cash used in financing activities of $141.4 million for the first three months of fiscal 2023.
+Added: The following discussion summarizes the significant changes in our financing cash flows for the first three months of fiscal 2024 and fiscal 2023:
+Added: • Payments on Term Loans – During the first three months of fiscal 2024, we repaid $15.0 million of our Term Loans.
+Added: During the first three months of fiscal 2023, we repaid $111.9 million of our Term Loans.
For more information on our Term Loans, refer to Note 5 to our consolidated financial statements titled, "Debt" and to our Annual Report on Form 10-K for the year ended March 31, 2023, which was filed with the SEC on May 26, 2023.
−Removed: • Proceeds/Payments under credit facilities, net – Net proceeds received under credit facilities totaled $216.6 million in the first nine months of fiscal 2023, compared to net payments under credit facilities of $203.8 million in the first nine months of fiscal 2022.
−Removed: • Deferred financing fees and debt issuance costs – During the first nine months of fiscal 2022, we paid $17.2 million for financing fees and debt issuance costs primarily related to our Senior Public Notes, and to our Delayed Draw Term Loan, which was in connection with the acquisition of Cantel .
−Removed: For more information on our debt, refer to Note 5 to our consolidated financial statements titled, "Debt" and 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.
−Removed: • Acquisition related deferred or contingent consideration – During the first nine months of fiscal 2022, we paid $32.6 million in 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.
−Removed: • Repurchases of ordinary shares – During the first nine months of fiscal 2023, we obtained 74,897 of our ordinary shares in connection with share-based compensation award programs in the aggregate amount of $13.1 million .
−Removed: During the first nine months of fiscal 2023, we purchased 735,320 of our ordinary shares in the aggregate amount of $140.9 million .
−Removed: During the first nine months of fiscal 2022, we obtained 225,493 of our ordinary shares in connection with share-based compensation award programs in the aggregate amount of $27.6 million.
−Removed: • Cash dividends paid to ordinary shareholders – During the first nine months of fiscal 2023, we paid total cash dividends of $136.9 million, or $1.37 per outstanding share.
−Removed: During the first nine months of fiscal 2022, we paid total cash dividends of $120.1 million, or $1.26 per outstanding share.
−Removed: • Transactions with noncontrolling interest holders – During the first nine months of fiscal 2023, we paid $0.8 million in distributions to noncontrolling interest holders.
−Removed: During the first nine months of fiscal 2022, we received contributions from noncontrolling interest holders of $3.7 million and paid $1.0 million in distributions to noncontrolling interest holders.
+Added: • Payments/Proceeds under credit facilities, net – Net payments under credit facilities totaled $144.7 million in the first three months of fiscal 2024, compared to net proceeds under credit facilities of $37.0 million in the first three months of fiscal 2023.
+Added: • Acquisition related deferred or contingent consideration – During the first three months of both fiscal 2024 and 2023, we paid approximately $0.1 million in deferred and contingent consideration.
+Added: • Repurchases of ordinary shares – During the first three months of fiscal 2024 and 2023 , we obtained 51,494 and 57,704, respectively, of our ordinary shares in connection with share-based compensation award programs in the aggregate amount of $8.7 million and $11.7 million, respectively .
+Added: During the first three months of fiscal 2024, we did not purchase any ordinary shares through our share repurchase program .
+Added: During the first three months of fiscal 2023, we purchased 61,677 of our shares in the aggregate amount of $12.9 million through our share repurchase program.
+Added: • Cash dividends paid to ordinary shareholders – During the first three months of fiscal 2024, we paid total cash dividends of $46.4 million, or $0.47 per outstanding share.
+Added: During the first three months of fiscal 2023, we paid total cash dividends of $43.0 million, or $0.43 per outstanding share.
• Stock option and other equity transactions, net – We generally receive cash for issuing shares under our stock option programs.
−Removed: During the first nine months of fiscal 2023 and fiscal 2022, we received cash proceeds totaling $1.5 million and $6.8 million, respectively, under these programs.
+Added: During the first three months of fiscal 2024 and fiscal 2023, we received cash proceeds totaling $1.3 million and $1.2 million, respectively, under these programs.
Cash Flow Measures.
−Removed: The net cash provided by our operating activities was $541.1 million for the first nine months of fiscal 2023 and $513.1 million for the first nine months of fiscal 2022.
−Removed: Free cash flow was $262.8 million in the first nine months of fiscal 2023 compared to $300.3 million in the first nine months of fiscal 2022 (see the subsection above titled "Non-GAAP Financial Measures" for additional information and related reconciliation of cash flows from operations to free cash flow).
−Removed: The fiscal 2023 decrease in free cash flow was primarily due to higher working capital, particularly inventory and increased capital spending in the fiscal 2023 period, which was partially offset by lower costs associated with the acquisition and integration of Cantel.
−Removed: Our debt-to-total capital ratio was 33.6% at December 31, 2022 and 33.3% at December 31, 2021.
+Added: The net cash provided by our operating activities was $281.1 million for the first three months of fiscal 2024 and $231.7 million for the first three months of fiscal 2023.
+Added: Free cash flow was $214.5 million in the first three months of fiscal 2024 compared to $117.1 million in the first three months of fiscal 2023 (see the subsection above titled "Non-GAAP Financial Measures" for additional information and related reconciliation of cash flows from operations to free cash flow).
+Added: The fiscal 2024 increase in free cash flow was primarily due to the benefits of increased cash flows from operations and a reduction in capital spending.
+Added: Our debt-to-total capital ratio was 32.2% at June 30, 2023 and 31.9% at June 30, 2022.
Material Future Cash Obligations and Commercial Commitments.
Information related to our material future cash obligations and commercial commitments is 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.
−Removed: Our commercial commitments were approximately $106.4 million at December 31, 2022, reflecting a net increase of $7.7 million in surety bonds and other commercial commitments from March 31, 2022.
−Removed: Outstanding borrowings under our Credit Agreement as of December 31, 2022 were $274.7 million.
−Removed: We had $10.4 million of lett ers of credit outstanding under the Credit Agreement at December 31, 2022.
+Added: Our commercial commitments were approximately $110.0 million at June 30, 2023, reflecting a net increase of $1.6 million in surety bonds and other commercial commitments from March 31, 2023.
+Added: Outstanding borrowings under our Credit Agreement as of June 30, 2023 were $158.2 million.
+Added: We had $10.5 million of lett ers of credit outstanding under the Credit Agreement at June 30, 2023.
Cash Requirements.
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To th e extent that existing and anticipated sources of cash are not sufficient to fund our future activities, we may need to raise additional funds through additional borrowings or the sale of equity securities.
−Removed: There can be no
−Removed: assurance that our existing financing arrangements will provide us with sufficient funds or that we will be able to obtain any additional funds on terms favorable to us or at all.
+Added: There can be no assurance that our existing financing arrangements will provide us with sufficient funds or that we will be able to obtain any additional funds on terms favorable to us or at all.
Supplemental Guarantor Financial Information
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The obligations of each Guarantor under its guarantee are expressly limited to the maximum amount that such Guarantor could guarantee without such guarantee constituting a fraudulent conveyance.
−Removed: Each Guarantor that makes a payment under its guarantee will be entitled upon payment in full of all guaranteed obligations under the indenture to a contribution from each 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.
−Removed: The following tables present summarized results of operations for the nine months ended December 31, 2022 and summarized balance sheet information at March 31, 2022 for the obligor group of the Senior Public Notes.
+Added: Each Guarantor that makes a payment under its guarantee will be entitled upon payment in full of all guaranteed obligations under the indenture to a contribution from each
+Added: 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.
+Added: The following tables present summarized results of operations for the three months ended June 30, 2023 and summarized balance sheet information at June 30, 2023 and March 31, 2023 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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Summarized Results of Operations
−Removed: (in thousands) Nine Months Ended
+Added: (in thousands) Three Months Ended
Revenues $ 645,643
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( in thousands)
−Removed: December 31, March 31,
+Added: June 30, March 31,
Receivables due from non-issuers and non-guarantor subsidiaries $ 18,097,564 $ 17,797,185
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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.
−Removed: These legal proceedings, investigations and claims generally involve a variety of legal theories and allegations, including, without limitation, personal
−Removed: 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.
+Added: 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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Many important factors could cause actual results to differ materially from those in the forward-looking statements including, without limitation, disruption of production or supplies, changes in market conditions, political events, pending or future claims or litigation, competitive factors, technology advances, actions of regulatory agencies, and changes in laws, government regulations, labeling or product approvals or the application or interpretation thereof.
+Added: Other risk factors are described in STERIS's other securities filings, including Item 1A of our Annual Report on Form 10-K for the year ended March 31, 2023.
Many of these important factors are outside of STERIS’s control.
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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.
−Removed: 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, including as a result of inflation, (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, 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,
−Removed: result in costs to STERIS that may not be covered by insurance, 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 including, without limitation, those matters described in our Annual Report on Form 10-K for the year ended March 31, 2022, and other securities filings, 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.
−Removed: 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 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.
+Added: 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
+Added: 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.
+Added: 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, (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, and (v) STERIS's ability to complete any announced transactions, including the fulfillment of related closing conditions.
Availability of Securities and Exchange Commission Filings
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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.