What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-07 compared with 2023-08-08 · 245 added, 132 removed, 259 unchanged (59% of the section changed)

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• 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.

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.

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.

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 second quarter and first half of fiscal 2024 and fiscal 2023.

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 to 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 (Loss).

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

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Revenues – Defined

As required by Regulation S-X, we separately present revenues generated as either product revenues or service revenues on our Consolidated Statements of Income for each period presented.

As required by Regulation S-X, we separately present revenues generated as either product revenues or service revenues on our Consolidated Statements of Income (Loss) for each period presented.

When we discuss revenues, we may, at times, refer to revenues summarized differently than the Regulation S-X requirements.

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Acquisitions .

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.

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.

The increase is primarily due to the benefits of higher volume and pricing, particularly in the Healthcare segment.

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%.

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.

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.

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.

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.

Acquisition and integration expenses are reported in the Selling, general and administrative expenses line in our Consolidated Statements of Income.

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

reconciliation of cash flows from operations to free cash flow).

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.

Our debt-to-total capital ratio was 32.2% at June 30, 2023 and 33.6% at March 31, 2023.

During the first three months of fiscal 2024, we declared and paid cash dividends totaling $0.47 per ordinary share.

Additional information regarding our financial performance during the first quarter of fiscal 2024 is included in the subsection below titled “Results of Operations.”

On August 2, 2023, we purchased the surgical instrumentation, laparoscopic instrumentation and sterilization container assets from BD (Becton, Dickinson and Company) (NYSE:

The acquired assets from BD are being integrated into our Healthcare segment.

The purchase price of the acquisition was $539.8 million and remains subject to post-closing adjustments to inventory.

The acquisition also qualified for a tax benefit related to tax deductible goodwill, with a present value of approximately $60.0 million .

The purchase price of the acquisition was financed with borrowings from our existing credit facility.

For more information, refer to Note 5 to our consolidated financial statements titled, " Debt."

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

Total aggregate consideration was approximately $21.9 million, including contingent deferred consideration of $6.7 million.

Acquisition and integration expenses totaled $16.0 million and $18.7 million for the three and six months ended September 30, 2023, respectively.

Acquisition and integration expenses totaled $3.8 million and $13.7 million for the three and six months ended September 30, 2022, respectively.

The increase in acquisition and integration expenses for the three and six months ended September 30, 2023 is primarily due to charges related to the acquisition of assets from BD and a fair value adjustment related to a building held for sale from a previous acquisition.

Acquisition and integration expenses are reported in the Selling, general and administrative expenses line of our Consolidated Statements of Income (Loss).

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 our Dental segment 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 regarding our recent acquisitions, see Note 2 to our consolidated financial statements titled, "Business Acquisitions."

Revenues increased 11.8% to $1,342.4 million for the three months ended September 30, 2023, as compared to $1,200.5 million for the same period in the prior year.

Revenues increased 11.5% to $2,626.9 million for the six months ended September 30, 2023, as compared to $2,357.0 million for the same period in the prior year.

The increases reflect organic growth, primarily in the Healthcare segment, due to the benefits of higher volume and pricing and added volume from the acquisition of assets from BD.

Gross profit percentage for the second quarter of fiscal 2024 was 44.2% compared to the gross profit percentage for the second quarter of fiscal 2023 of 44.3%.

Gross profit percentage for the first six months of fiscal 2024 was 44.4% compared to the gross profit percentage for the first six months of fiscal 2023 of 44.6%.

The decrease in gross profit percentage for the three and six month periods reflect unfavorable impacts of productivity and inflationary cost increases for materials and labor which exceeded the benefits from pricing and mix.

Operating income for the second quarter of fiscal 2024 was $185.9 million, compared to an operating loss of $(306.4) million for the second quarter of fiscal 2023.

Operating income for the first six months of fiscal 2024 was $374.7 million, compared to an operating loss of $(148.0) million for the first six months of fiscal 2023.

The increase in operating income for the three and six month periods is primarily attributable to the benefit of higher volume and pricing during fiscal 2024 in addition to the exclusion of the one time goodwill impairment charge of $490.6 million recorded in the second quarter of fiscal 2023.

Cash flows from operations were $427.2 million and free cash flow was $284.7 million for the first six months of fiscal 2024 compared to cash flows from operations of $335.6 million and free cash flow of $138.2 million for the first six months of fiscal 2023 (see the subsection below titled "Non-GAAP Financial Measures" for additional information and related reconciliation of cash flows from operations to free cash flow).

The 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 a reduction in capital spending.

Our debt-to-total capital ratio was 35.7% at September 30, 2023 and 33.6% at March 31, 2023.

During the first six months of fiscal 2024, we declared and paid cash dividends totaling $0.99 per ordinary share.

Additional information regarding our financial performance during the second quarter of fiscal 2024 is included in the subsection below titled “Results of Operations.”

NON-GAAP FINANCIAL MEASURES

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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.

The following table summarizes the calculation of our free cash flow for the three months ended June 30, 2023 and 2022:

Three Months Ended June 30,

The following table summarizes the calculation of our free cash flow for the six months ended September 30, 2023 and 2022:

Six Months Ended September 30,

(dollars in thousands) 2023 2022

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Results of Operations

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.

In the following subsections, we discuss our earnings and the factors affecting them for the second quarter and first half of fiscal 2024 compared to the same fiscal 2023 periods.

We begin with a general overview of our operating results and then separately discuss earnings for our operating segments.

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:

Three Months Ended June 30,

The following tables compare our revenues for the three and six months ended September 30, 2023 to the revenues for the three and six months ended September 30, 2022:

Three Months Ended September 30,

(dollars in thousands) 2023 2022 Change Percent Change

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Other foreign revenues 329,043 311,541 17,502 5.6 %

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.

The increase is primarily due to the benefits of higher volume and pricing, particularly in our Healthcare segment.

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.

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.

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.

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.

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.

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.

Revenues increased 11.8% to $1,342.4 million for the three months ended September 30, 2023, as compared to $1,200.5 million for the same period in the prior year.

The increases reflect organic growth, primarily in the Healthcare segment, due to the benefits of higher volume and pricing and added volume from the acquisition of assets from BD.

Service revenues increased 8.6% for the three months ended September 30, 2023, as compared to the same period in the prior year, reflecting growth in the Healthcare and AST segments.

Consumable revenues increased by 13.7% for the three months ended September 30, 2023, as compared to the same period in the prior year, reflecting growth in the Healthcare and Life Sciences segments which were partially offset by a decline in the Dental segment.

Capital equipment revenues increased 15.5% for the three months ended September 30, 2023, as compared to the same period in the prior year, reflecting growth in the Healthcare and Life Sciences segments.

Ireland revenues increased 20.3% to $20.4 million for the three months ended September 30, 2023, as compared to $17.0 million for the same period in the prior year, reflecting growth in service, consumable, and capital equipment revenues.

United States revenues increased 13.9% to $992.9 million for the three months ended September 30, 2023, as compared to $872.0 million for the same period in the prior year, reflecting growth in service, consumable and capital equipment revenues.

Revenues from other foreign locations increased 5.6% to $329.0 million for the three months ended September 30, 2023, as compared to $311.5 million for the same period in the prior year, reflecting growth in the Europe, Middle East & Africa ("EMEA"), Asia Pacific, and Latin American Regions, partially offset by a decline in the Canadian region.

Six Months Ended September 30,

(dollars in thousands) 2023 2022 Change Percent Change

Total revenues $ 2,626,902 $ 2,357,008 $ 269,894 11.5 %

Revenues by type:

Service revenues 1,150,708 1,053,538 97,170 9.2 %

Consumable revenues 914,133 830,236 83,897 10.1 %

Capital equipment revenues 562,061 473,234 88,827 18.8 %

Revenues by geography:

Ireland revenues 40,524 35,171 5,353 15.2 %

United States revenues 1,923,420 1,706,082 217,338 12.7 %

Other foreign revenues 662,958 615,755 47,203 7.7 %

Revenues increased 11.5% to $2,626.9 million for the six months ended September 30, 2023, as compared to $2,357.0 million for the same period in the prior year.

The increases reflect organic growth, primarily in the Healthcare segment, due to the benefits of higher volume and pricing and added volume from the acquisition of assets from BD.

Service revenues increased 9.2% for the six months ended September 30, 2023, as compared to the same period in the prior year, reflecting growth in the Healthcare, AST, and Life Sciences segments.

Consumable revenues increased by 10.1% for the six months ended September 30, 2023, as compared to the same period in the prior year, reflecting growth in the Healthcare and Life Sciences segments, which were partially offset by a decline in the Dental segment.

Capital equipment revenues increased 18.8% for the six months ended September 30, 2023, as compared to the same period in the prior year, reflecting growth in the Healthcare segment, which was partially offset by a decline in the Life Sciences segment.

Ireland revenues increased 15.2% to $40.5 million for the six months ended September 30, 2023, as compared to $35.2 million for the same period in the prior year, reflecting growth in service, consumable, and capital equipment revenues.

United States revenues increased 12.7% to $1,923.4 million for the six months ended September 30, 2023, as compared to $1,706.1 million for the same period in the prior year, reflecting growth in service, consumable, and capital equipment revenues.

Revenues from other foreign locations increased 7.7% to $663.0 million for the six months ended September 30, 2023, as compared to $615.8 million for the same period in the prior year.

The increase reflects growth within the EMEA, Canada, Asia Pacific and Latin American regions.

Gross Profit.

The following tables compare our gross profit for the three months ended June 30, 2023 to the three months ended June 30, 2022:

Three Months Ended June 30, Change Percent

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.

The following tables compare our gross profit for the three and six months ended September 30, 2023 to the three and six months ended September 30, 2022:

Three Months Ended September 30, Change Percent

(dollars in thousands) 2023 2022

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Total gross profit percentage 44.2 % 44.3 %

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.

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%.

Gross profit percentage decreased as pricing (150 basis points) was more than offset by unfavorable material and labor inflation (170 basis points).

The net impact from other factors including productivity, mix, adjustments and other charges was not significant.

Gross profit percentage for the second quarter of fiscal 2024 was 44.2% compared to the gross profit percentage for the second quarter of fiscal 2023 of 44.3%.

Gross profit decreased as favorable impacts from pricing (180 basis points) and mix and other adjustments (50 basis points) were more than offset by unfavorable impacts from productivity (120 basis points), material and labor inflation (90 basis points), and fluctuations in currency, adjustments, and other charges (30 basis points).

Six Months Ended September 30, Change Percent

(dollars in thousands) 2023 2022

Gross profit:

Product $ 691,784 $ 619,536 $ 72,248 11.7 %

Service 475,206 430,597 44,609 10.4 %

Total gross profit $ 1,166,990 $ 1,050,133 $ 116,857 11.1 %

Gross profit percentage:

Product 46.9 % 47.5 %

Service 41.3 % 40.9 %

Total gross profit percentage 44.4 % 44.6 %

Gross profit percentage for the first half of fiscal 2024 was 44.4% compared to the gross profit percentage for the first half of fiscal 2023 of 44.6%.

Gross profit percentage decreased as favorable impacts from pricing (160 basis points) and mix and other adjustments (90 basis points) were more than offset by unfavorable impacts from material and labor inflation (130 basis points), productivity (80 basis points), and fluctuations in currency, adjustments, and other charges (60 basis points).

Operating Expenses.

The following table compares our operating expenses for the three months ended June 30, 2023 to the three months ended June 30, 2022:

Three Months Ended June 30, Change Percent

The following table compares our operating expenses for the three and six months ended September 30, 2023 to the three and six months ended September 30, 2022:

Three Months Ended September 30, Change Percent

(dollars in thousands) 2023 2022

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Selling, general, and administrative $ 380,651 $ 323,195 $ 57,456 17.8 %

Goodwill impairment loss — 490,565 $ (490,565) NM

Research and development 27,044 24,928 2,116 8.5 %

Restructuring expenses 19 26 (7) (26.9) %

Restructuring (charges) expenses

(23) 62 (85) (137.1) %

Total operating expenses $ 407,672 $ 838,750 $ (431,078) (51.4) %

Six Months Ended September 30, Change Percent

(dollars in thousands) 2023 2022

Operating expenses:

Selling, general, and administrative $ 739,709 $ 657,821 $ 81,888 12.4 %

Goodwill impairment loss — 490,565 (490,565) NM

Research and development 52,546 49,679 2,867 5.8 %

Restructuring (credits) expenses

(4) 88 (92) (104.5) %

Total operating expenses $ 792,251 $ 1,198,153 $ (405,902) (33.9) %

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.

SG&A increased 7.3% in the first quarter of fiscal 2024, compared to the same period in fiscal 2023.

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.

SG&A increased 17.8% and 12.4% in the second quarter and first half of fiscal 2024, respectively, over the same prior year periods.

The fiscal 2024 increase is primarily attributable to increased compensation, including incentive compensation and benefit costs, as well as increases in professional fees and bad debt expense.

Goodwill Impairment Loss.

A Goodwill impairment loss of $490.6 million was recorded during the second quarter of fiscal 2023 as the result of an interim assessment of the fair value of the Dental segment.

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

Research and Development.

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 increased 8.5% and 5.8% in the second quarter and first half of fiscal 2024, respectively, over the same prior year periods.

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.

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Non-Operating Expenses, Net.

The following tables compare our net non-operating expenses for the three months ended June 30, 2023 and 2022:

Three Months Ended June 30,

The following tables compare our net non-operating expenses for the three and six months ended September 30, 2023 and 2022:

Three Months Ended September 30,

(dollars in thousands) 2023 2022 Change

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Non-operating expenses, net $ 35,703 $ 26,647 $ 9,056

Six Months Ended September 30,

(dollars in thousands) 2023 2022 Change

Non-operating expenses, net:

Interest expense $ 69,301 $ 48,797 $ 20,504

Interest and miscellaneous (income) expense (2,630) 1,294 (3,924)

Non-operating expenses, net $ 66,671 $ 50,091 $ 16,580

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.

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.

Interest expense increased $10.8 million and $20.5 million during the second quarter and first half of fiscal 2024, respectively, as compared to the prior year periods, primarily due to higher interest rates on floating rate debt as well as higher principal amount of floating rate debt outstanding.

For more information, refer to Note 5 to our consolidated financial statements titled, "Debt."

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.

The fluctuation in interest and miscellaneous (income) expense during the second quarter and first half 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 fiscal 2023.

For more information, refer to Note 15 to our consolidated financial statements titled, " Fair Value Measurements ."

Income Tax Expense.

The following tables compare our tax expense and effective income tax rates for the three months ended June 30, 2023 and June 30, 2022:

Three Months Ended June 30, Change Percent

Income Taxes.

The following tables compare our tax expense and effective income tax rates for the three and six months ended September 30, 2023 and September 30, 2022:

Three Months Ended September 30, Change Percent

(dollars in thousands) 2023 2022

Income tax expense (benefit) $ 33,808 $ (17,831) $ 51,639 (289.6)%

Effective income tax rate 22.5 % 5.4 %

Six Months Ended September 30, Change Percent

(dollars in thousands) 2023 2022

Income tax expense $ 67,932 $ 6,365 $ 61,567 967.3%

Effective income tax rate 22.1 % (3.2) %

We record income tax expense during interim periods based on our estimate of the annual effective income tax rate, adjusted each quarter for discrete items.

We record income tax expense (benefit) during interim periods based on our estimate of the annual effective income tax rate, adjusted each quarter for discrete items.

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.

The effective income tax rates for the three month period 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.

The effective income tax rates for the three month periods ended September 30, 2023 and 2022 were 22.5% and 5.4%, respective ly.

The effective income tax rates for the six month periods ended September 30, 2023 and 2022 were 22.1% and (3.2)%, respectively.

The fiscal 2024 effective tax rates increased when compared to fiscal 2023, primarily due to the tax impact of the goodwill impairment loss recognized on the Dental segment during the second quarter of fiscal 2023.

Business Segment Results of Operations.

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to outsourced instrument reprocessing services.

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.

In addition, our procedural products 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.

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

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.

For the three and six months e nded September 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 42.2% and 38.6% of our Dental segments revenues for the three months ended June 30, 2023 and 2022, respectively.

These three Customers collectively accounted for appr oxi mately 43.8% and 43.1% o f our Dental segment revenues for the three and six months ended September 30, 2023, respectively.

These three Customers collectively accounted for approximately 40.1% and 42.1% of our Dental segment revenues for the three and six months ended September 30, 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.

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.

Three Months Ended June 30, (unaudited)

The following tables compare business segment revenues as well as impacts from acquisitions, divestitures, and foreign currency movements for the three and six months ended September 30, 2023 and 2022.

Three Months Ended September 30, (unaudited)

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

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Total $ 1,342,360 $ 1,200,517 $ 28,948 $ — $ 13,506 11.8 % 9.4 % 8.3 %

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.

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.

The Healthcare segment's backlog at June 30, 2023 was $491.7 million.

The Healthcare segment's backlog at June 30, 2022 was $521.7 million.

The decrease is due to strong shipments in the first quarter, which were due to shortened lead times and easing of supply chain constraints.

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.

Revenue was impacted by Customer inventory management and the continued reduction in demand from bioprocesing Customers.

Six Months Ended September 30, (unaudited)

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

2023 2022 2023 2022 2023 2023 2023 2023

Segment revenues:

Healthcare $ 1,688,930 $ 1,431,339 $ 28,948 $ — $ 4,580 18.0 % 16.0 % 15.7 %

AST 468,152 453,269 — — 5,825 3.3 % 3.3 % 2.0 %

Life Sciences 264,508 257,975 — — 1,540 2.5 % 2.5 % 1.9 %

Dental 205,312 214,425 — — 977 (4.2) % (4.2) % (4.7) %

Total $ 2,626,902 $ 2,357,008 $ 28,948 $ — $ 12,922 11.5 % 10.2 % 9.7 %

Healthcare revenues increased 18.7% to $870.1 million for the three months ended September 30, 2023, as compared to $732.8 million for the same prior year period.

This increase reflects growth in consumable, capital equipment, and service revenues of 24.4%, 20.0%, and 12.7%, respectively.

Healthcare revenues increased 18.0% to $1,688.9 million for the six months ended September 30, 2023, as compared to $1,431.3 million for the same prior year period.

This increase reflects growth in capital equipment, consumable, and service revenues of 25.9%, 17.7%, and 12.6%, respectively.

The increase in revenue for the three and six month periods ended September 30, 2023 is attributable to the benefits of higher volume and pricing and added volume from the acquisition of assets from BD.

The Healthcare segment's backlog at September 30, 2023 was $457.1 million.

The Healthcare segment's backlog at September 30, 2022 was $533.1 million.

The decrease is due to strong shipments in the first half of the year, which were due to shortened lead times and easing of supply chain constraints.

AST revenues increased 1.2% to $235.1 million for the three months ended September 30, 2023, as compared to $232.4 million for the same prior year period.

AST revenues increased 3.3% to $468.2 million for the six months ended September 30, 2023, as compared to $453.3 million for the same prior year period.

Revenue was impacted by Customer inventory management and the continued reduction in demand from bioprocessing Customers.

Revenue was favorably impacted by pricing and fluctuation in currencies.

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.

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.

The Life Sciences backlog at June 30, 2023 was $104.9 million.

The Life Sciences backlog at June 30, 2022 was $92.7 million.

The increase is primarily due to the timing of shipments.

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.

The decline was a result of lower volume, primarily due to Customer inventory destocking, which exceeded the benefit of higher pricing.

The following table compares business segment and Corporate operating income for the three months ended June 30, 2023 and 2022.

Three Months Ended June 30,

Life Sciences revenues increased 5.8% to $133.1 million for the three months ended September 30, 2023, as compared to $125.8 million for the same prior year period.

This increase was primarily due to growth in capital equipment and consumable revenues of 18.1% and 3.5%, respectively.

Life Sciences revenues increased 2.5% to $264.5 million for the six months ended September 30, 2023, as compared to $258.0 million for the same prior year period.

This increase was primarily due to growth in service and consumable revenues of 9.2% and 3.5%, respectively, partially offset by a decline in capital equipment revenue of 5.8%.

Revenue was favorably impacted by pricing and fluctuations in currency.

The Life Sciences backlog at September 30, 2023 was $91.1 million.

The Life Sciences backlog at September 30, 2022 was $99.5 million.

The decrease is primarily due to the timing of shipments.

Dental revenues decreased 4.9% to $104.2 million for the three months ended September 30, 2023, as compared to $109.6 million for the same prior year period.

Dental revenues decreased 4.2% to $205.3 million for the six months ended September 30, 2023, as compared to $214.4 million for the same prior year period.

The decline for the three and six month periods ended September 30, 2023 was a result of lower volume, primarily due to Customer inventory destocking, which exceeded the benefit of 2023 price increases.

The following table compares business segment and Corporate operating income for the three and six months ended September 30, 2023 and 2022.

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

2023 2022 2023 2022

Segment operating income (loss):

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Acquisition and integration related charges (2)

16,013 3,844 18,722 13,676

Tax restructuring costs (3)

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

— — — (3,100)

Net loss on divestiture of businesses (1)

— 899 — 4,777

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

Restructuring charges (4)

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

1,138 2,452 2,981 4,089

Restructuring (credits) charges (4)

(23) 62 (4) 89

Goodwill impairment loss (5)

— 490,565 — 490,565

Total income (loss) from operations $ 185,857 $ (306,415) $ 374,739 $ (148,020)

(1) For more information regarding our recent acquisitions and divestitures, refer to Note 2 titled, "Business Acquisitions and Divestitures" included in our Annual Report on Form 10-K for the year ended March 31, 2023, which was filed with the SEC on May 26, 2023.

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(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.

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.

The segment's operating margins were 24.2% and 22.4% for the first quarter of fiscal 2024 and 2023, respectively.

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.

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.

The segment's operating margin percentages were 47.0% and 49.5% for the first quarter of fiscal 2024 and 2023 , respectively.

The most significant driver of the decrease in operating margin percentage is labor and energy costs.

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.

The segment's operating margins were 37.9% and 41.8% for the first quarter of fiscal 2024 and 2023, respectively.

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.

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.

The segment's operating margins were 21.8% and 18.7% for the first quarter of fiscal 2024 and 2023, respectively.

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.

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

The Healthcare segment’s operating income increased 23.4% to $204.1 million for the three months ended September 30, 2023, as compared to $165.3 million in the same prior year period.

The segment's operating margins were 23.5% and 22.6% for the second quarter of fiscal 2024 and 2023, respectively.

The Healthcare segment’s operating income increased 25.0% to $402.2 million for the six months ended September 30, 2023, as compared to $321.8 million in the same prior year period.

The segment's operating margins were 23.8% and 22.5% for the first six months of fiscal 2024 and 2023, respectively.

The increase in operating income and margin for the three and six month periods ended September 30, 2023 is primarily due to the benefits of higher volume and pricing and added volume from the acquisition of assets from BD, which exceeded increased costs caused by inflation.

The AST segment's operating income increased 0.4% to $110.8 million for the three months ended September 30, 2023, as compared to $110.4 million during the same prior year period.

The AST segment's operating income increased 0.3% to $220.4 million for the six months ended September 30, 2023, as compared to $219.7 million during the same prior year period.

The segment's operating margins were 47.1% and 47.5% for the second quarter of fiscal 2024 and 2023, respectively.

The segment's operating margins were 47.1% and 48.5% for the first six months of fiscal 2024 and 2023, respectively.

The most significant driver of the change in operating margin percentage is higher labor and energy costs, which exceeded the benefit of pricing.

The Life Sciences segment’s operating income increased 3.4% to $50.3 million for the three months ended September 30, 2023, as compared to $48.6 million for the same prior year period.

The segment's operating margins were 37.8% and 38.7% for the second quarter of fiscal 2024 and 2023, respectively.

The increase in operating income and decrease in operating margins is primarily due to favorable impacts from pricing, which were partially offset by increased material costs caused by inflation.

The Life Sciences segment’s operating income decreased 3.7% to $100.1 million for the six months ended September 30, 2023, as compared to $103.9 million for the same prior year period.

The segment's operating margins were 37.9% and 40.3% for the first six months of fiscal 2024 and 2023, respectively.

The decreases in segment operating income and operating margin were primarily due to a reduction in volume and increased material costs due to inflation which exceeded the benefits of pricing.

The Dental segment's operating income decreased 12.6% to $24.5 million for the three months ended September 30, 2023, as compared to $28.1 million for the same prior year period.

The segment's operating margins were 23.5% and 25.6% for the second quarter of fiscal 2024 and 2023, respectively.

The decline in operating income and operating margin is primarily due to a reduction in volume and increased costs from inflation, which exceeded the benefits of higher pricing.

The Dental segment's operating income decreased 2.3% to $46.6 million for the six months ended September 30, 2023, as compared to $47.7 million, for the same prior year period.

The segment's operating margins were 22.7% and 22.2% for the first six months of fiscal 2024 and 2023, respectively.

The decrease in operating income was primarily due to the reduction in volume and increased costs from inflation.

The increase in operating margin was primarily due to the benefits of pricing and improved operating efficiencies.

Liquidity and Capital Resources

The following table summarizes significant components of our cash flows for the three months ended June 30, 2023 and 2022:

Three Months Ended June 30,

The following table summarizes significant components of our cash flows for the six months ended September 30, 2023 and 2022:

Six Months Ended September 30,

(dollars in thousands) 2023 2022

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Net cash used in investing activities $ (672,833) $ (207,342)

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

Net cash provided by (used in) financing activities

$ 256,577 $ (186,362)

Debt-to-total capital ratio 35.7 % 34.3 %

Free cash flow $ 284,691 $ 138,192

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.

Net Cash Provided by Operating Activities – The net cash provided by our operating activities was $427.2 million for the first six months of fiscal 2024 and $335.6 million for the first six months of fiscal 2023.

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.

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.

The following discussion summarizes the significant changes in our investing cash flows for the first three months of fiscal 2024 and fiscal 2023:

• 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.

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.

• 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.

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.

The following discussion summarizes the significant changes in our financing cash flows for the first three months of fiscal 2024 and fiscal 2023:

• Payments on Term Loans – During the first three months of fiscal 2024, we repaid $15.0 million of our Term Loans.

During the first three months of fiscal 2023, we repaid $111.9 million of our Term Loans.

Net Cash Used In Investing Activities – The net cash used in investing activities totaled $672.8 million for the first six months of fiscal 2024 and $207.3 million for the first six months of fiscal 2023.

The following discussion summarizes the significant changes in our investing cash flows for the first six months of fiscal 2024 and fiscal 2023:

• Purchases of property, plant, equipment, and intangibles, net – Capital expenditures totaled $149.9 million for the first six months of fiscal 2024 and $198.7 million during the same prior year period.

The fiscal 2024 reduction is primarily due to the timing of capital spending in our AST segment compared to the first half of fiscal 2023.

• Proceeds from the sale of property, plant, and equipment - During the first six months of fiscal 2024 and 2023, we received proceeds from the sale of property, plant, and equipment totaling $7.4 million and $1.3 million, respectively.

The fiscal 2024 increase was primarily due to the sale of a facility previously used by the AST segment.

• Proceeds from the sale of businesses – During the first six months of fiscal 2024, we received proceeds of $9.5 million from the release of funds held in escrow related to the sale of the Renal Care business during fiscal 2022.

During the first six months of fiscal 2023, we sold the remaining component of the Animal Healthcare business for $5.2 million.

• Acquisition of businesses, net of cash acquired – During the first six months of fiscal 2024 and 2023, we used $539.8 million and $15.2 million to acquire businesses.

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, 2023, which was filed with the SEC on May 26, 2023.

Net Cash Provided By/Used In Financing Activities – The net cash provided by financing activities amounted to $256.6 million for the first six months of fiscal 2024 compared to net cash used in financing activities of $186.4 million for the first six months of fiscal 2023.

The following discussion summarizes the significant changes in our financing cash flows for the first six months of fiscal 2024 and fiscal 2023:

• Payments on Term Loans – During the first six months of fiscal 2024 and 2023, we repaid $30.0 million and $126.9 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.

• 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.

• 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.

• 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 .

During the first three months of fiscal 2024, we did not purchase any ordinary shares through our share repurchase program .

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.

• 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.

During the first three months of fiscal 2023, we paid total cash dividends of $43.0 million, or $0.43 per outstanding share.

• Proceeds under credit facilities, net – Net proceeds under credit facilities totaled $391.0 million and $99.1 million for the first six months of fiscal 2024 and 2023, respectively.

The increase in fiscal 2024 is attributable to funding of the acquisition of assets from BD.

For more information on our indebtedness, 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.

• Repurchases of ordinary shares – During the first six months of fiscal 2024 and 2023 , we obtained 57,161 and 64,436, respectively, of our ordinary shares in connection with share-based compensation award programs in the aggregate amount of $9.2 million and $11.8 million, respectively .

During the first six months of fiscal 2024, we did not purchase any ordinary shares through our share repurchase program.

During the first six months of fiscal 2023, we purchased 283,987 of our shares in the aggregate amount of $58.2 million through our share repurchase program.

For more information on our share repurchases, refer to Note 11 to our consolidated financial statements titled, "Repurchases of Ordinary Shares" 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.

• Cash dividends paid to ordinary shareholders – During the first six months of fiscal 2024, we paid total cash dividends of $97.8 million, or $0.99 per outstanding share.

During the first six months of fiscal 2023, we paid total cash dividends of $90.0 million, or $0.90 per outstanding share.

• Stock option and other equity transactions, net – We generally receive cash for issuing shares under our stock option programs.

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.

During the first six months of fiscal 2024 and fiscal 2023, we received cash proceeds totaling $2.7 million and $1.5 million, respectively, under these programs.

Cash Flow Measures.

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.

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).

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.

Our debt-to-total capital ratio was 32.2% at June 30, 2023 and 31.9% at June 30, 2022.

The net cash provided by our operating activities was $427.2 million for the first six months of fiscal 2024 and $335.6 million for the first six months of fiscal 2023.

Free cash flow was $284.7 million in the first six months of fiscal 2024 compared to $138.2 million in the first six 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).

The fiscal 2024 increase in free cash flow was primarily due to a decline in cash used for compensation related payments partially offset by continued investment in inventory as we continue to focus on reducing lead times and meeting Customer demand, as well as a reduction in capital spending.

Our debt-to-total capital ratio was 35.7% at September 30, 2023 and 34.3% at September 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.

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.

Outstanding borrowings under our Credit Agreement as of June 30, 2023 were $158.2 million.

We had $10.5 million of lett ers of credit outstanding under the Credit Agreement at June 30, 2023.

Our commercial commitments were approximately $110.4 million at September 30, 2023, reflecting a net increase of $2.1 million in surety bonds and other commercial commitments from March 31, 2023.

Outstanding borrowings under our Credit Agreement as of September 30, 2023 were $692.0 million.

We had $11.6 million of lett ers of credit outstanding under the Credit Agreement at September 30, 2023.

Cash Requirements.

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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.

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.

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.

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.

The following tables present summarized results of operations for the six months ended September 30, 2023 and summarized balance sheet information at September 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.

2 unchanged sentences

Summarized Results of Operations

(in thousands) Three Months Ended

(in thousands) Six Months Ended

September 30,

Revenues $ 1,341,510

5 unchanged sentences

( in thousands)

June 30, March 31,

September 30, March 31,

Receivables due from non-issuers and non-guarantor subsidiaries $ 18,521,304 $ 17,797,185

18 unchanged sentences

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

These legal proceedings, investigations and claims generally involve a variety of legal theories and allegations, including, without limitation, personal injury (e.g., slip and falls, burns, vehicle accidents), product liability or regulation (e.g., based on product operation or claimed malfunction, failure to warn, failure to meet specification, or failure to comply with regulatory requirements), product exposure (e.g., claimed exposure to chemicals, 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.

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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The IRS routinely conducts audits of our federal income tax returns.

Refer to Note 7 of our consolidated financial statements titled, "Income Tax Expense" for more information.

Refer to Note 7 of our consolidated financial statements titled, "Income Taxes" for more information.

Forward-Looking Statements

7 unchanged sentences

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

Other potential risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, (a) the impact of the COVID-19 pandemic or similar public health crises on STERIS’s operations, supply chain, material and labor costs, performance, results, prospects, or value, (b) STERIS's ability to achieve the expected benefits regarding the accounting and tax treatments of the redomiciliation to Ireland (“Redomiciliation”), (c) operating costs, Customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, Customers, clients or suppliers) being greater than expected, (d) STERIS’s ability to successfully integrate the businesses of Cantel Medical into our existing businesses, including unknown or inestimable liabilities, impairments, or increases in expected integration costs or difficulties in connection with the integration of Cantel Medical, (e) uncertainties related to tax treatments under the TCJA and the IRA, (f) the possibility that Pillar Two Model Rules could increase tax uncertainty and adversely impact STERIS's provision for income taxes and effective tax rate and subject STERIS to additional income tax in jurisdictions who adopt Pillar Two Model Rules, (g) STERIS's ability to continue to qualify for benefits under certain income tax treaties in light of ratification of more strict income tax treaty rules (through the MLI) in many jurisdictions where STERIS has

operations, (h) changes in tax laws or interpretations that could increase our consolidated tax liabilities, including changes in tax laws that would result in STERIS being treated as a domestic corporation for United States federal tax purposes, (i) the potential for increased pressure on pricing or costs that leads to erosion of profit margins, including as a result of inflation, (j) the possibility that market demand will not develop for new technologies, products or applications or services, or business initiatives will take longer, cost more or produce lower benefits than anticipated, (k) the possibility that application of or compliance with laws, court rulings, certifications, regulations, or regulatory actions, including without limitation any of the same relating to FDA, EPA or other regulatory authorities, government investigations, the outcome of any pending or threatened FDA, EPA or other regulatory warning notices, actions, requests, inspections or submissions, the outcome of any pending or threatened litigation brought by private parties, or other requirements or standards may delay, limit or prevent new product or service introductions, affect the production, supply and/or marketing of existing products or services, result in costs to STERIS that may not be covered by insurance, or otherwise affect STERIS’s performance, results, prospects or value, (l) the potential of international unrest, including the Russia-Ukraine military conflict, economic downturn or effects of currencies, tax assessments, tariffs and/or other trade barriers, adjustments or anticipated rates, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs, (m) the possibility of reduced demand, or reductions in the rate of growth in demand, for STERIS’s products and services, (n) the possibility of delays in receipt of orders, order cancellations, or delays in the manufacture or shipment of ordered products, due to supply chain issues or otherwise , or in the provision of services, (o) the possibility that anticipated growth, cost savings, new product acceptance, performance or approvals, or other results may not be achieved, or that transition, labor, competition, timing, execution, impairments, regulatory, governmental, or other issues or risks associated with STERIS’s businesses, industry or initiatives including, without limitation, those matters described in STERIS's various securities filings, may adversely impact STERIS’s performance, results, prospects or value, (p) the impact on STERIS and its operations, or tax liabilities, of Brexit or the exit of other member countries from the EU, and the Company’s ability to respond to such impacts, (q) the impact on STERIS and its operations of any legislation, regulations or orders, including but not limited to any new trade or tax legislation (including CAMT and excise tax on stock buybacks), regulations or orders, that may be implemented by the U.S.

administration or Congress, or of any responses thereto, (r) the possibility that anticipated financial results or benefits of recent acquisitions, including the acquisition of Cantel Medical and Key Surgical, or of STERIS’s restructuring efforts, or of recent divestitures, including anticipated revenue, productivity improvement, cost savings, growth synergies and other anticipated benefits, will not be realized or will be other than anticipated, (s) the increased level of STERIS’s indebtedness incurred in connection with the acquisition of Cantel Medical limiting financial flexibility or increasing future borrowing costs, (t) rating agency actions or other occurrences that could affect STERIS’s existing debt or future ability to borrow funds at rates favorable to STERIS or at all, (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.

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 and Israel-Hamas military conflicts, economic downturn or effects of currencies, tax assessments, tariffs and/or other trade barriers, adjustments or anticipated rates, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs, (m) the possibility of reduced demand, or reductions in the rate of growth in demand, for STERIS’s products and services, (n) the possibility of delays in receipt of orders, order cancellations, or delays in the manufacture or shipment of ordered products, due to supply chain issues or otherwise , or in the provision of services, (o) the possibility that anticipated growth, cost savings, new product acceptance, performance or approvals, or other results may not be achieved, or that transition, labor, competition, timing, execution, impairments, regulatory, governmental, or other issues or risks associated with STERIS’s businesses, industry or initiatives including, without limitation, those matters described in STERIS's various securities filings, may adversely impact STERIS’s performance, results, prospects or value, (p) the impact on STERIS and its operations, or tax liabilities, of Brexit or the exit of other member countries from the EU, and the Company’s ability to respond to such impacts, (q) the impact on STERIS and its operations of any legislation, regulations or orders, including but not limited to any new trade or tax legislation (including CAMT and excise tax on stock buybacks), regulations or orders, that may be implemented by the U.S.

administration or Congress, or of any responses thereto, (r) the possibility that anticipated financial results or benefits of recent acquisitions, including the acquisition of Cantel Medical and Key Surgical and the acquisition of certain BD assets, 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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis