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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-02-07 · 199 added, 286 removed, 262 unchanged (65% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In Management’s Discussion and Analysis of Financial Condition and Results of Operations (the “MD&A”), we explain the general financial condition and the results of operations for STERIS including:

In Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), we explain the general financial condition and the results of operations for STERIS and its subsidiaries including:

• what factors affect our business;

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• what our expenditures for capital projects were;

• where cash will come from to fund future debt principal repayments, growth outside of core operations, 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 third quarter and first nine months of fiscal 2025 and fiscal 2024.

• where cash is expected to 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 three months of fiscal 2026 and fiscal 2025.

It may also be helpful to refer to our Annual Report on Form 10-K for the year ended March 31, 2025, which was filed with the Securities and Exchange Commission ("SEC") on May 29, 2025, including information in Item 1, "Business," Part I, Item 1A, "Risk Factors," and Note 12 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.

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Service revenues also include outsourced reprocessing services and 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 steam and gas sterilizers, low temperature liquid chemical sterilant processing systems, pure steam/water systems, surgical lights and tables, and integrated operating rooms ("OR").

• Consumable Revenues – We define consumable revenues as revenues generated from sales of the consumable family of products, which includes dedicated consumables used in our V-PRO sterilizers and automated endoscope reprocessors, SYSTEM 1 and 1E consumables, gastrointestinal endoscopy accessories, instruments and tools, sterility assurance products, barrier protection solutions, and cleaning consumables.

• Capital Equipment Revenues – We define capital equipment revenues as revenues generated from sales of capital equipment, which includes steam and gas sterilizers, low temperature liquid chemical sterilant processing systems, automated endoscope reprocessors, pure steam/water systems, surgical lights and tables, and integrated operating rooms ("OR").

• Consumable Revenues – We define consumable revenues as revenues generated from sales of the consumable family of products, which includes dedicated consumables used in our capital equipment, gastrointestinal endoscopy accessories, instruments and tools, sterility assurance products, barrier protection solutions, and cleaning consumables.

• Recurring Revenues – We define recurring revenues as revenues generated from sales of consumable products and Service revenues.

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Acquisitions and Divestitures .

During the first nine months of fiscal 2025, we completed several tuck-in acquisitions which continued to expand our product and service offerings in the Healthcare and AST segments.

During the first three months of fiscal 2026, we completed a tuck-in acquisition which continued to expand our product and service offerings in the Healthcare segment.

Total aggregate consideration was approximately $15.0 million .

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

The acquired assets from BD were integrated into our Healthcare segment.

The purchase price of the BD acquisition was $539.8 million.

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 Previous Revolving Credit Facility.

For more information, refer to Note 7 titled, " Debt."

Acquisition and integration expenses totaled $3.8 million and $9.2 million for the three and nine months ended December 31, 2024, respectively.

Acquisition and integration expenses totaled $6.3 million and $24.3 million for the three and nine months ended December 31, 2023, respectively.

The decrease in acquisition and integration expenses for the three and nine months ended December 31, 2024 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 during fiscal 2024.

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

include, but are not limited to, investment banker, advisory, legal and other professional fees, and certain employee-related expenses.

During the first three months of fiscal 2025, we completed several tuck-in acquisitions, which continued to expand our product and service offerings in the Healthcare and AST segments.

Total aggregate consideration was approximately $13.7 million.

Acquisition and integration expenses totaled $0.5 million and $2.3 million for the three months ended June 30, 2025 and 2024, respectively.

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

On April 1, 2024, we completed the sale of the Controlled Environment Certification Services ("CECS") business.

We recorded net proceeds of $41.9 million and recognized a pre-tax gain on the sale of $19.3 million in fiscal 2025.

The business generated approximately $35.0 million in revenues in fiscal 2024.

We recorded net proceeds of $41.5 million and recognized a pre-tax gain on the sale of $18.8 million in the first three months of fiscal 2025.

For more information regarding our recent acquisitions, see Note 3 to our consolidated financial statements titled, " Business Acquisitions and Divestitures ."

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On April 11, 2024, the Company announced its plan to sell substantially all of the net assets of its Dental segment for total cash consideration of $787.5 million , subject to customary adjustments, and up to an additional $12.5 million in contingent payment should the Dental business achieve certain revenue targets in fiscal 2025.

The transaction was structured as an equity sale and closed on May 31, 2024.

The transaction

was structured as an equity sale and closed on May 31, 2024.

A component of an entity is reported in discontinued operations after meeting the criteria for held for sale classification if the disposition represents a strategic shift that has (or will have) a major effect on the entity's operations and financial results.

We analyzed the quantitative and qualitative factors relevant to the divestiture of our Dental segment and determined that those conditions for discontinued operations presentation had been met prior to March 31, 2024.

The Dental segment results of operations were reclassified to income (loss) from discontinued operations in the Consolidated Statements of Income for all periods presented, and we classified the Dental segment's assets and liabilities as held for sale as of March 31, 2024 in the accompanying Consolidated Balance Sheets.

Due to the transaction closing in the first quarter of fiscal 2025, the held for sale assets and liabilities were classified as current as of March 31, 2024.

The Dental segment results of operations have been reclassified as income (loss) from discontinued operations in the Consolidated Statements of Income for all periods presented.

Our Consolidated Statements of Cash Flows include the financial results of the Dental segment through the date of sale on May 31, 2024.

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For more information, see Note 4 to our consolidated financial statements titled, " Discontinued Operations ."

Revenues increased 5.6% to $1,370.6 million for the three months ended December 31, 2024, as compared to $1,297.7 million for the same period in the prior year.

Revenues increased 7.0% to $3,979.0 million for the nine months ended December 31, 2024, as compared to $3,719.3 million for the same period in the prior year.

The increases reflect higher volume and pricing.

Gross profit percentage for the third quarter of fiscal 2025 was 44.5% compared to the gross profit percentage for the third quarter of fiscal 2024 of 43.2%.

The increase in gross profit percentage for the three month period reflects favorable impacts from pricing, mix, and productivity that were partially offset by unfavorable impacts from labor and overhead costs.

Gross profit percentage for the first nine months of fiscal 2025 was 44.3% compared to the gross profit percentage for the first nine months of fiscal 2024 of 44.0%.

The increase in gross profit percentage for the nine month period reflects favorable impacts from pricing, mix, and material costs that were partially offset by unfavorable impacts from labor and overhead costs.

Income from operations for the third quarter of fiscal 2025 was $245.3 million, compared to income from operations of $226.5 million for the third quarter of fiscal 2024.

Income from operations for the first nine months of fiscal 2025 was $650.5 million, compared to income from operations of $615.8 million for the first nine months of fiscal 2024.

The increase in income from operations for the three and nine month periods is primarily due to increased volume and pricing, which was partially offset by increased labor costs and higher restructuring expenses.

Cash flows from operations were $887.3 million and free cash flow was $588.1 million for the first nine months of fiscal 2025 compared to cash flows from operations of $718.5 million and free cash flow of $457.0 million for the first nine months of fiscal 2024 (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 2025 increase in cash flows from operations and free cash flow resulted from the increase in cash provided by working capital, primarily driven by higher collections on accounts receivable and improved inventory management when compared to the same prior year period.

Our debt-to-total capital ratio was 25.2% at December 31, 2024 and 33.7% at March 31, 2024.

During the first nine months of fiscal 2025, we declared and paid cash dividends totaling $1.66 per ordinary share.

Additional information regarding our financial performance during the third quarter of fiscal 2025 is included in the subsection below titled “Results of Operations.”

On July 4, 2025, the U.S.

enacted the One Big Beautiful Bill Act ("OBBBA") which contains substantial changes to its tax policies.

Business provisions in the OBBBA, some of which were extensions of those established in the Tax Cuts and Jobs Act, include favorable cost recovery allowances, changes to U.S.

international tax rules, and changes to energy and environmental related incentives.

The law has multiple effective dates, with certain provisions applicable to years beginning after fiscal 2026.

We are currently assessing its impact on our consolidated financial statements.

Revenues increased 8.7% to $1,391.1 million for the three months ended June 30, 2025, as compared to $1,279.5 million for the same period in the prior year.

The increase reflects the benefits of higher volume and pricing, with all three segments contributing to growth.

Gross profit percentage for the first three months of fiscal 2026 was 45.1% compared to the gross profit percentage for the first three months of fiscal 2025 of 44.7%.

The increase in gross profit percentage for the three month period reflects favorable impacts from pricing, productivity, and other cost reductions that were partially offset by unfavorable impacts from inflation, tariff costs, mix, and material costs.

Income from operations for the first three months of fiscal 2026 was $246.0 million, compared to income from operations of $185.5 million for the first three months of fiscal 2025.

The increase in income from operations for the three month period is primarily due to increased volume and pricing and lower restructuring expenses, which was partially offset by increased labor costs.

Cash flows from operations were $420.0 million and free cash flow was $326.5 million for the first three months of fiscal 2026 compared to cash flows from operations of $303.7 million and free cash flow of $195.7 million for the first three months of fiscal 2025 (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 2026 increase in cash flows from operations and free cash flow resulted from an increase in earnings and from the increase in cash provided by working capital, primarily driven by a higher accounts payable balance due to timing of disbursements when compared to the same prior year period.

Free cash flow was also impacted by a decrease in capital expenditures when compared to the same prior year period.

Our debt-to-total capital ratio was 21.5% at June 30, 2025 and 23.6% at March 31, 2025.

During the first three months of fiscal 2026, we declared and paid cash dividends totaling $0.57 per ordinary share.

Additional information regarding our financial performance during the first quarter of fiscal 2026 is included in the subsection below titled “Results of Operations.”

NON-GAAP FINANCIAL MEASURES

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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.

Organic revenue growth and constant currency organic revenue growth are non-GAAP financial measures of revenue performance.

Organic revenue growth is calculated by removing the impact of acquisitions and divestitures for one year following the respective transaction from the GAAP revenue growth.

Constant currency organic revenue growth is subject to a further adjustment to eliminate the impact of foreign currency movements.

See the section below "Business Segment Results of Operations" for a reconciliation of organic revenue growth and constant currency organic revenue growth to U.S.

GAAP revenue.

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.

The following table summarizes the calculation of our free cash flow for the nine months ended December 31, 2024 and 2023:

Nine Months Ended December 31,

(dollars in thousands) 2024 2023

The following table summarizes the calculation of our free cash flow for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

(in millions) 2025 2024

Net cash provided by operating activities $ 420.0 $ 303.7

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Results of Operations

In the following subsections, we discuss our earnings and the factors affecting earnings for the third quarter and first nine months of fiscal 2025 compared to the same fiscal 2024 periods.

In the following subsections, we discuss our earnings and the factors affecting earnings for the first three months of fiscal 2026 compared to the same fiscal 2025 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 and nine months ended December 31, 2024 to the revenues for the three and nine months ended December 31, 2023:

Three Months Ended December 31,

(dollars in thousands) 2024 2023 Change Percent Change

Total revenues $ 1,370,570 $ 1,297,724 $ 72,846 5.6 %

Revenues by type:

Service revenues 652,233 590,889 61,344 10.4 %

Consumable revenues 427,466 389,920 37,546 9.6 %

Capital equipment revenues 290,871 316,915 (26,044) (8.2) %

Revenues by geography:

Ireland revenues 24,117 19,601 4,516 23.0 %

United States revenues 1,002,586 949,957 52,629 5.5 %

Other foreign revenues 343,867 328,166 15,701 4.8 %

Revenues increased 5.6% to $1,370.6 million for the three months ended December 31, 2024, as compared to $1,297.7 million for the same period in the prior year.

The increase reflects organic growth in the Healthcare and AST segments, due to the benefits of higher volume and pricing.

Service revenues increased 10.4% for the three months ended December 31, 2024, as compared to the same period in the prior year, reflecting growth in the Healthcare and AST segments, which was partially offset by a decline in the Life Sciences segment, due to the divestiture of the CECS business.

Consumable revenues increased by 9.6% for the three months ended December 31, 2024, as compared to the same period in the prior year, reflecting growth in the Healthcare and Life Sciences segments.

Capital equipment revenues decreased 8.2% for the three months ended December 31, 2024, as compared to the same period in the prior year, reflecting declines in the Life Sciences and Healthcare segments.

Ireland revenues increased 23.0% to $24.1 million for the three months ended December 31, 2024, as compared to $19.6 million for the same period in the prior year, reflecting growth in capital equipment, service, and consumable revenues.

United States revenues increased 5.5% to $1,002.6 million for the three months ended December 31, 2024, as compared to $950.0 million for the same period in the prior year, reflecting growth in service and consumable revenues, partially offset by a decline in capital equipment revenues.

Revenues from other foreign locations increased 4.8% to $343.9 million for the three months ended December 31, 2024, as compared to $328.2 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 Canada.

Nine Months Ended December 31,

(dollars in thousands) 2024 2023 Change Percent Change

The following table compares our revenues for the three months ended June 30, 2025 to the revenues for the three months ended June 30, 2024:

Three Months Ended June 30,

(dollars in millions) 2025 2024 Change Percent Change

Total revenues $ 1,391.1 $ 1,279.5 $ 111.6 8.7 %

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Other foreign revenues 342.9 310.4 32.5 10.5 %

Revenues increased 7.0% to $3,979.0 million for the nine months ended December 31, 2024, as compared to $3,719.3 million for the same period in the prior year.

The increase reflects the benefits of higher volume, primarily in our Healthcare segment due to organic growth as well as the added volume from the acquisition of assets from BD, and pricing.

Service revenues increased 9.6% for the nine months ended December 31, 2024, as compared to the same period in the prior year, reflecting growth in the Healthcare and AST segments, which was partially offset by a decline in the Life Sciences segment, due to the divestiture of the CECS business.

Consumable revenues increased by 14.3% for the nine months ended December 31, 2024, as compared to the same period in the prior year, reflecting growth in the Healthcare and Life Sciences segments.

Capital equipment revenues decreased 7.3% for the nine months ended December 31, 2024, as compared to the same period in the prior year, reflecting declines in the Healthcare and Life Sciences segments.

Ireland revenues increased 15.1% to $69.1 million for the nine months ended December 31, 2024, as compared to $60.0 million for the same period in the prior year, reflecting growth in consumable, service, and capital equipment revenues.

United States revenues increased 7.9% to $2,929.0 million for the nine months ended December 31, 2024, as compared to $2,715.4 million for the same period in the prior year, reflecting growth in consumable and service revenues, partially offset by a decline in capital equipment revenues.

Revenues from other foreign locations increased 3.9% to $980.9 million for the nine months ended December 31, 2024, as compared to $943.9 million for the same period in the prior year.

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

Revenues increased 8.7% to $1,391.1 million for the three months ended June 30, 2025, as compared to $1,279.5 million for the same period in the prior year.

The increase reflects the benefits of higher volume and pricing, with all three segments contributing to growth.

Service revenues increased 12.4% for the three months ended June 30, 2025, as compared to the same period in the prior year, reflecting growth in all three segments.

Consumable revenues increased by 5.0% for the three months ended June 30, 2025, as compared to the same period in the prior year, reflecting growth in the Healthcare and Life Sciences segments.

Capital equipment revenues increased 5.5% for the three months ended June 30, 2025, as compared to the same period in the prior year, driven primarily by growth in the Healthcare segment.

Ireland revenues increased 1.4% to $22.5 million for the three months ended June 30, 2025, as compared to $22.2 million for the same period in the prior year, reflecting growth in service revenues, which was partially offset by a decline in consumable and capital equipment revenues.

United States revenues increased 8.3% to $1,025.6 million for the three months ended June 30, 2025, as compared to $946.9 million for the same period in the prior year, reflecting growth in service, consumable, and capital equipment revenues.

Revenues from other foreign locations increased 10.5% to $342.9 million for the three months ended June 30, 2025, as compared to $310.4 million for the same period in the prior year.

The increase reflects growth within Europe, Middle East & Africa, Asia Pacific, Latin America, and Canada.

Gross Profit.

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 nine months ended December 31, 2024 to the three and nine months ended December 31, 2023:

Three Months Ended December 31, Change Percent

(dollars in thousands) 2024 2023

Gross profit:

Product $ 346,601 $ 323,184 $ 23,417 7.2 %

Service 263,731 236,842 26,889 11.4 %

Total gross profit $ 610,332 $ 560,026 $ 50,306 9.0 %

Gross profit percentage:

Product 48.3 % 45.7 %

Service 40.4 % 40.1 %

Total gross profit percentage 44.5 % 43.2 %

Gross profit percentage for the third quarter of fiscal 2025 was 44.5% compared to the gross profit percentage for the third quarter of fiscal 2024 of 43.2%.

Favorable impacts from pricing (130 basis points), mix (80 basis points), productivity (70 basis points), divestitures (20 basis points), and acquisitions (10 basis points), were partially offset by unfavorable impacts from labor and overhead costs (140 basis points), adjustments and other charges (30 basis points), and material costs (10 basis points).

Nine Months Ended December 31, Change Percent

(dollars in thousands) 2024 2023

The following table compares our gross profit for the three months ended June 30, 2025 to the three months ended June 30, 2024:

Three Months Ended June 30, Change Percent

(dollars in millions) 2025 2024

Gross profit:

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Total gross profit percentage 45.1 % 44.7 %

Gross profit percentage for the first nine months of fiscal 2025 was 44.3% compared to gross profit percentage for the first nine months of fiscal of 2024 of 44.0%.

Favorable impacts from pricing (140 basis points), mix (30 basis points), material costs (30 basis points), and divestitures (20 basis points), were partially offset by unfavorable impacts from labor and overhead costs (140 basis points) and adjustments and other charges (50 basis points).

Operating Expenses.

The following table compares our operating expenses for the three and nine months ended December 31, 2024 to the three and nine months ended December 31, 2023:

Three Months Ended December 31, Change Percent

(dollars in thousands) 2024 2023

Gross profit percentage for the first three months of fiscal 2026 was 45.1% compared to gross profit percentage for the first three months of fiscal of 2025 of 44.7%.

Favorable impacts from pricing (130 basis points), productivity (70 basis points), and other cost reductions (40 basis points) were partially offset by unfavorable impacts from inflation (80 basis points), tariff costs (70 basis points), mix (30 basis points), and material costs (20 basis points).

Operating Expenses.

Selling, general, and administrative $ 335,450 $ 308,295 $ 27,155 8.8 %

Research and development 27,358 25,255 2,103 8.3 %

Restructuring expenses (credits) 2,231 6 2,225 nm

Total operating expenses $ 365,039 $ 333,556 $ 31,483 9.4 %

Nine Months Ended December 31, Change Percent

(dollars in thousands) 2024 2023

The following table compares our operating expenses for the three months ended June 30, 2025 to the three months ended June 30, 2024:

Three Months Ended June 30, Change Percent

(dollars in millions) 2025 2024

Operating expenses:

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Research and development 26.4 25.6 0.8 3.1 %

Restructuring expenses (credits) 30,727 2 30,725 nm

Restructuring expenses 1.8 25.7 (23.9) nm

Total operating expenses $ 382.0 $ 386.9 $ (4.9) (1.3) %

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Significant components of total selling, general, and administrative expenses (“SG&A”) are compensation and benefit costs, fees for professional services, travel and entertainment expenses, facility costs, and other general and administrative expenses.

SG&A increased 8.8% and 6.1% in the three and nine month periods ended December 31, 2024, respectively, compared to the same prior year periods.

The fiscal 2025 increase is primarily attributable to increased benefit costs, as well as legal costs associated with our ethylene oxide litigation.

For more information regarding our ongoing litigation, refer to Note 10 to our consolidated financial statements titled, "Commitments and Contingencies."

SG&A increased 5.4% in the three month period ended June 30, 2025 compared to the same prior year period.

The fiscal 2026 increase is primarily attributable to increased compensation and benefit costs, as well as unfavorable foreign currency movements and increased bad debt expense.

Research and Development.

Research and development expenses increased 8.3% and 4.9% in the three and nine month periods ended December 31, 2024, respectively, compared to the same prior year periods.

Research and development expenses increased 3.1% in the three month period ended June 30, 2025 compared to the same prior year period.

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

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

During fiscal 2025, our investments in research and development have continued to be focused on, but were not limited to, enhancing capabilities of sterile processing combination technologies, procedural products and accessories, and devices and support accessories used in gastrointestinal endoscopy procedures.

During fiscal 2026, our investments in research and development have continued to be focused on, but were not limited to, enhancing capabilities of sterile processing technologies, procedural products and accessories, and devices and support accessories used in gastrointestinal endoscopy procedures.

Restructuring Expenses.

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This plan includes a strategic shift in our approach to the Healthcare surgical business in Europe, as well as other actions including the impairment of an internally developed X-ray accelerator, product rationalizations and facility consolidations.

Fewer than 300 positions are being eliminated.

These restructuring actions are designed to enhance profitability and improve efficiency, and we expect these actions to be substantially complete by the end of fiscal 2025.

We anticipate improvements in income from operations of approximately $25.0 million per year, with the majority of the benefit being in fiscal 2026 and beyond due to timing of actions.

The following tables summarize our total pre-tax restructuring expenses recorded in fiscal 2025 related to the Restructuring Plan:

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

Approximately 300 positions have been eliminated.

These restructuring actions were designed to enhance profitability and improve efficiency, and are expected to improve income from operations by approximately $25.0 million per year in fiscal 2026 and beyond.

The following table summarizes our total pre-tax restructuring expenses recorded during the first three months ended June 30, 2025 and 2024 related to the Restructuring Plan:

(in millions) Three Months Ended June 30,

Restructuring Plan 2025 2024

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Total Restructuring Expense

$ 2,231 $ 33,109

(1) Recorded in Cost of revenues on the Consolidated Statements of Income.

The Restructuring Plan expenses incurred during the three and nine months ended December 31, 2024 primarily related to actions taken within our Healthcare segment.

The Restructuring Plan expenses incurred during the first three months ended June 30, 2025 and 2024 primarily related to actions taken within our Healthcare segment.

Total pre-tax restructuring expense of $108.4 million has been recorded relating to the Restructuring Plan since inception, of which $34.6 million has been recorded in Cost of revenues.

We expect to incur additional costs, primarily for lease and other contract termination and other costs, of approximately $20.0 million, predominantly through the remainder of fiscal 2025.

Additional costs with respect to our Restructuring Plan are not expected to be significant during fiscal 2026.

Liabilities related to restructuring activities are recorded as current liabilities in the accompanying Consolidated Balance Sheets within "Accrued payroll and other related liabilities" and "Accrued expenses and other." The following table summarizes our restructuring liability balances:

Restructuring Plan

(in millions) Restructuring Plan

Balance at March 31, 2025 $ 18.4

Fiscal 2026 Charges

Balance at December 31, 2024 $ 17,715

Non-Operating Expenses, Net.

The following tables compare our net non-operating expenses for the three and nine months ended December 31, 2024 and 2023:

Three Months Ended December 31,

(dollars in thousands) 2024 2023 Change

Non-operating expenses, net:

Interest expense $ 19,094 $ 38,948 $ (19,854)

Interest and miscellaneous income

(2,434) (2,080) (354)

Gain on sale of business and equity investment, net (112) — (112)

Balance at June 30, 2025 $ 16.2

Non-Operating Expenses, Net.

Nine Months Ended December 31,

(dollars in thousands) 2024 2023 Change

The following table compares our net non-operating expenses for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

(in millions) 2025 2024 Change

Non-operating expenses, net:

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(1.8) (1.3) (0.5)

Gain on sale of business and equity investment, net

(12,683) $ — (12,683)

Gain on sale of business — $ (18.8) 18.8

Non-operating expenses, net $ 14.1 $ 10.3 $ 3.8

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 decreased $19.9 million and $39.1 million during the third quarter and first nine months of fiscal 2025, respectively, as compared to the prior year periods, primarily due to the lower principal amount of debt outstanding as well as lower interest rates on floating rate debt.

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

Interest expense decreased $14.5 million during the first three months of fiscal 2026 when compared to the same prior year period, primarily due to the lower principal amount of debt outstanding.

For more information, refer to Note 7 to our consolidated financial statements titled, "Debt."

Interest and miscellaneous income increased $0.4 million and $0.2 million during the third quarter and first nine months of fiscal 2025, respectively.

Gain on sale of business and equity investment was $0.1 million during the third quarter of fiscal 2025.

Gain on sale of business and equity investment was $12.7 million for the first nine months of fiscal 2025 and primarily relates to the sale of our CECS business, which was partially offset by a loss recorded on an equity investment.

For more information on our equity investments, refer to Note 17 to our consolidated financial statements titled, "Fair Value Measurements." For more information on our divestiture activity, refer to Note 3 to our consolidated financial statements titled, "Business Acquisitions and Divestitures."

Interest and miscellaneous income increased $0.5 million during the first three months of fiscal 2026 when compared to the same prior year period.

Gain on sale of business was $18.8 million during the first three months of fiscal 2025 and relates to the sale of our CECS business during fiscal 2025.

For more information on our divestiture activity, refer to Note 3 to our consolidated financial statements titled, "Business Acquisitions and Divestitures."

Income Taxes.

The following tables compare our tax expense and effective income tax rates for the three and nine months ended December 31, 2024 and 2023:

Three Months Ended December 31, Change Percent

(dollars in thousands) 2024 2023

Income tax expense

$ 55,384 $ 40,999 $ 14,385 35.1%

Effective income tax rate 24.2 % 21.6 %

Nine Months Ended December 31, Change Percent

(dollars in thousands) 2024 2023

The following table compares our tax expense and effective income tax rates for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30, Change Percent

(dollars in millions) 2025 2024

Income tax expense $ 53.9 $ 35.3 $ 18.6 52.7%

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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 from continuing operations for the three month periods ended December 31, 2024 and 2023 were 24.2% and 21.6%, respective ly.

The effective income tax rates from continuing operations for the nine month periods ended December 31, 2024 and 2023 were 22.4% and 21.9%, respectively.

The fiscal 2025 effective tax rates increased when compared to fiscal 2024, primarily due to unfavorable discrete items recorded in fiscal 2025 and changes in geographic mix of projected profits.

The effective income tax rates from continuing operations for the three month periods ended June 30, 2025 and 2024 were 23.3% and 20.1%, respectively.

The fiscal 2026 effective tax rates increased when compared to fiscal 2025, primarily due to changes in geographic mix of projected profits and unfavorable changes in discrete items.

Business Segment Results of Operations.

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to outsourced instrument reprocessing services.

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

Our AST segment supports medical device and pharmaceutical manufacturers through a global network of contract sterilization and laboratory testing facilities, and integrated sterilization equipment and control systems.

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Our Life Sciences segment provides a comprehensive offering of products and services designed to support biopharmaceutical and medical device research and manufacturing facilities, in particular those focused on aseptic manufacturing.

Our portfolio includes a full suite of consumable products, equipment maintenance, specialty services, and capital equipment.

We disclose a measure of segment income that is consistent with the way management operates and views the business.

Our portfolio includes a full suite of capital equipment, consumable products, equipment maintenance and specialty services.

We d isclose a measure of segment income that is consistent with the way management operates and views the business.

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

For the three and nine months e nded December 31, 2024 and 2023 , revenues from a single Customer did not represent ten percent or more of the Healthcare, AST or Life Sciences segment revenues.

For the three months e nded June 30, 2025 and 2024 , revenues from a single Customer did not represent ten percent or more of the Healthcare, AST or Life Sciences segment revenues.

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, 2025, which was filed with the SEC on May 29, 2025.

The following tables compare business segment revenues as well as impacts from acquisitions, divestitures, and foreign currency movements for the three and nine months ended December 31, 2024 and 2023.

Three Months Ended December 31, (unaudited)

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

2024 2023 2024 2023 2024 2024 2024 2024

Segment revenues:

Healthcare $ 976,044 $ 916,227 $ — $ — $ (158) 6.5 % 6.5 % 6.5 %

AST 258,144 234,931 — — 873 9.9 % 9.9 % 9.5 %

Life Sciences 136,382 146,566 — $ (7,840) (326) (6.9) % (1.7) % (1.5) %

Total $ 1,370,570 $ 1,297,724 $ — $ (7,840) $ 389 5.6 % 6.3 % 6.2 %

Nine Months Ended December 31, (unaudited)

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, 2025 and 2024.

Three Months Ended June 30, (unaudited)

As reported, U.S.

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GAAP Growth Organic Growth Constant Currency Organic Growth

2024 2023 2024 2023 2024 2024 2024 2024

(dollars in millions) 2025 2024 2025 2024 2025 2025 2025 2025

Segment revenues:

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Organic revenue growth and constant currency organic revenue growth are non-GAAP financial measures of revenue performance.

Organic revenue growth is calculated by removing the impact of acquisitions and divestitures for one year following the respective transaction from the GAAP revenue growth.

Constant currency organic revenue growth is subject to a further adjustment to eliminate the impact of foreign currency movements.

Healthcare revenues increased 6.5% to $976.0 million for the three months ended December 31, 2024, as compared to $916.2 million for the same prior year period.

This increase reflects growth in service and consumable revenues of 13.5% and 8.7%, respectively, which was partially offset by a decline in capital equipment revenues of 4.5%.

The constant currency organic growth of 6.5% is primarily due to increased volume, impacting revenues by a mid-single digit percentage, as well as increased pricing.

Healthcare revenues increased 8.3% to $2,821.5 million for the nine months ended December 31, 2024, as compared to $2,605.2 million for the same prior year period.

This increase reflects growth in both service and consumable revenues of 13.9%, which was partially offset by a decline in capital equipment revenues of 5.4%.

The constant currency organic growth of 6.3% is primarily due to increased volume, impacting revenues by a mid-single digit percentage, as well as increased pricing.

The Healthcare segment's backlog at December 31, 2024 was $434.9 million.

The Healthcare segment's backlog at December 31, 2023 was $449.4 million.

The decrease is due to shortened lead times.

AST revenues increased 9.9% to $258.1 million for the three months ended December 31, 2024, as compared to $234.9 million for the same prior year period.

The constant currency organic growth of 9.5% is primarily due to increased pricing and volume, both impacting revenues by a mid-single digit percentage.

AST revenues increased 8.8% to $764.7 million for the nine months ended December 31, 2024, as compared to $703.1 million for the same prior year period.

The constant currency organic growth of 8.6% is primarily due to increased pricing, impacting revenues by a mid-single digit percentage, as well as increased volume.

Life Sciences revenues decreased 6.9% to $136.4 million for the three months ended December 31, 2024, as compared to $146.6 million for the same prior year period.

This decrease is partially due to the sale of the CECS business, which more than offset other services growth, resulting in a decline of 12.0% in service revenues.

This decrease also reflects declines in capital equipment revenues of 30.7%, which was partially offset by growth in consumable revenues of 14.3%.

The constant currency organic loss of 1.5% is primarily due to decreased volume, impacting revenues by a low single digit percentage.

Life Sciences revenues decreased 4.4% to $392.8 million for the nine months ended December 31, 2024, as compared to $411.1 million for the same prior year period.

This decrease is partially due to the sale of the CECS business, which more than offset other services growth, resulting in a decline of 14.3% in service revenues.

This decrease also reflects declines in capital equipment revenues of 27.6% which was partially offset by growth in consumable revenues of 16.2%.

The constant currency organic growth of 1.8% is primarily due to increased pricing, impacting revenues by a low single digit percentage.

The Life Sciences backlog at December 31, 2024 was $85.1 million.

The Life Sciences backlog at December 31, 2023 was $85.0 million.

The following table compares business segment and Corporate operating income for the three and nine months ended December 31, 2024 and 2023.

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

2024 2023 2024 2023

See "Non-GAAP Financial Measures" for more information.

Healthcare revenues increased 8.2% to $974.7 million for the three months ended June 30, 2025, as compared to $901.2 million for the same prior year period.

This increase reflects growth in service, consumable, and capital equipment revenues of 13.2%, 4.5%, and 5.9%, respectively.

The constant currency organic growth of 7.6% is primarily due to increased volume, impacting revenues by a mid-single digit percentage, as well as increased pricing, impacting revenues by a low-single digit percentage.

The Healthcare segment's backlog at June 30, 2025 was $403.5 million.

The Healthcare segment's backlog at June 30, 2024 was $362.0 million.

The increase is primarily due to an increase in orders and timing of shipments.

AST revenues increased 12.6% to $281.2 million for the three months ended June 30, 2025, as compared to $249.8 million for the same prior year period.

The constant currency organic growth of 10.2% is primarily due to increased pricing and volume, each impacting revenues by a mid-single digit percentage.

Life Sciences revenues increased 5.2% to $135.2 million for the three months ended June 30, 2025, as compared to $128.5 million for the same prior year period.

This increase reflects growth in consumable, service, and capital equipment revenues of 7.8%, 3.3%, and 0.5%, respectively.

The constant currency organic growth of 4.2% is primarily due to increased volume and pricing, each impacting revenues by a low-single digit percentage.

The Life Sciences backlog at June 30, 2025 was $111.0 million.

The Life Sciences backlog at June 30, 2024 was $72.2 million.

The increase is primarily due to an increase in orders and timing of shipments.

The following table compares business segment and Corporate operating income for the three months ended June 30, 2025 and 2024.

Three Months Ended June 30,

(in millions) 2025 2024

Income (loss) from operations before adjustments:

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Acquisition and integration related charges (2)

3,756 6,263 9,215 24,308

Tax restructuring costs (3)

97 643 54 652

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

1,345 6,127 4,138 8,666

Restructuring charges (4)

2,231 6 33,109 2

Total income from operations

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(4) For more information regarding our restructuring efforts, refer to Note 2 titled, "Restructuring ."

The Healthcare segment’s operating income increased 10.3% to $246.9 million for the three months ended December 31, 2024, as compared to $223.9 million in the same prior year period.

The segment's operating margins were 25.3% and 24.4% for the third quarter of fiscal 2025 and 2024, respectively.

The Healthcare segment’s operating income increased 10.5% to $691.8 million for the nine months ended December 31, 2024, as compared to $626.1 million in the same prior year period.

The segment's operating margins were 24.5% and 24.0% for the first nine months of fiscal 2025 and 2024, respectively.

The increase in operating income and margin for the three and nine month periods ended December 31, 2024 is primarily due to the benefits of higher pricing and volume, which were partially offset by increased compensation costs.

The AST segment's operating income increased 10.1% to $115.8 million for the three months ended December 31, 2024, as compared to $105.2 million during the same prior year period.

The segment's operating margins were 44.8% for each of the third quarters of fiscal 2025 and 2024.

The increase in operating income for the three month period ended December 31, 2024 was primarily due to increased pricing and volume which was partially offset by increased labor and energy costs.

Operating margin was favorably impacted by pricing and volume for the three month period ended December 31, 2024 which was offset by increased labor and energy costs.

The AST segment's operating income increased 5.5% to $343.4 million for the nine months ended December 31, 2024, as compared to $325.5 million during the same prior year period.

The segment's operating margins were 44.9% and 46.3% for the first nine months of fiscal 2025 and 2024, respectively.

The increase in operating income for the nine month period ended December 31, 2024 was primarily due to increased pricing, which was partially offset by unfavorable productivity and increased labor and energy costs.

The decrease in operating margin for the nine month period ended December 31, 2024 was primarily due to unfavorable productivity and increased labor and energy costs.

The Life Sciences segment’s operating income increased 2.5% to $58.1 million for the three months ended December 31, 2024, as compared to $56.7 million for the same prior year period.

The segment's operating margins were 42.6% and 38.7% for the third quarter of fiscal 2025 and 2024, respectively.

The Life Sciences segment’s operating income increased 4.8% to $164.4 million for the nine months ended December 31, 2024, as compared to $156.9 million for the same prior year period.

The segment's operating margins were 41.9% and 38.2% for the first nine months of fiscal 2025 and 2024, respectively.

The increases in segment operating income and margin for the three and nine month periods ended December 31, 2024 is primarily due to favorable pricing and mix.

The Healthcare segment’s operating income increased 8.6% to $235.5 million for the three months ended June 30, 2025, as compared to $216.9 million in the same prior year period.

The segment's operating margins were 24.2% and 24.1% for the first three months of fiscal 2026 and 2025, respectively.

The increase in operating income for the three month period ended June 30, 2025 is primarily due to the benefits of higher volume, pricing, and productivity which were partially offset by increased labor inflation and tariff costs.

The AST segment's operating income increased 16.1% to $136.7 million for the three months ended June 30, 2025, as compared to $117.7 million during the same prior year period.

The segment's operating margins were 48.6% and 47.1% for the first three months of fiscal 2026 and 2025, respectively.

The increase in operating income and margin for the three month period ended June 30, 2025 is primarily due to increased pricing and volume which were partially offset by increased energy and labor inflation costs.

The Life Sciences segment’s operating income increased 11.7% to $58.7 million for the three months ended June 30, 2025, as compared to $52.6 million for the same prior year period.

The segment's operating margins were 43.5% and 40.9% for the first three months of fiscal 2026 and 2025, respectively.

The increases in segment operating income and margin for the three month periods ended June 30, 2025 is primarily due to favorable mix, pricing, and productivity which were partially offset by increased labor and material costs.

Liquidity and Capital Resources

The following table summarizes significant components of our cash flows for the nine months ended December 31, 2024 and 2023:

Nine Months Ended December 31,

(dollars in thousands) 2024 2023

The following table summarizes significant components of our cash flows for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

(dollars in millions) 2025 2024

Net cash provided by operating activities $ 420.0 $ 303.7

Net cash provided by (used in) investing activities $ 458,573 $ (791,754)

Net cash (used in) provided by financing activities $ (1,394,293) $ 58,583

Net cash (used in) provided by investing activities $ (108.5) $ 687.8

Net cash used in financing activities $ (213.1) $ (998.9)

Debt-to-total capital ratio 21.5 % 26.7 %

Free cash flow $ 326.5 $ 195.7

Net Cash Provided by Operating Activities – The net cash provided by our operating activities was $887.3 million for the first nine months of fiscal 2025 and $718.5 million for the first nine months of fiscal 2024.

The fiscal 2025 increase in cash flows from operations resulted from the increase in cash provided by working capital, primarily driven by higher collections on accounts receivable and improved inventory management when compared to the same prior year period.

Net Cash Provided By/Used In Investing Activities – The net cash provided by investing activities totaled $458.6 million for the first nine months of fiscal 2025 and net cash used in investing activities totaled $791.8 million for the first nine months of fiscal 2024.

The following discussion summarizes the significant changes in our investing cash flows for the first nine months of fiscal 2025 and fiscal 2024:

• Purchases of property, plant, equipment, and intangibles, net – Capital expenditures totaled $299.2 million for the first nine months of fiscal 2025 and $268.8 million during the same prior year period.

The fiscal 2025 increase is due to the timing of capital spending.

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

The fiscal 2024 proceeds were primarily from the sale of a facility previously used by the AST segment.

• Proceeds from the sale of businesses – During the first nine months of fiscal 2025, we received proceeds of $811.4 million primarily from the sale of our Dental segment and the sale of our CECS business.

For more information, refer to Note 3 to our consolidated financial statements titled "Business Acquisitions and Divestitures" and Note 4 to our consolidated financial statements titled "Discontinued Operations." During the first nine 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.

• Acquisition of businesses, net of cash acquired – During the first nine months of fiscal 2025 and 2024, we used $53.7 million and $539.8 million, respectively, to acquire businesses.

Net Cash Provided by Operating Activities – The net cash provided by our operating activities was $420.0 million for the first three months of fiscal 2026 and $303.7 million for the first three months of fiscal 2025.

The fiscal 2026 increase in cash flows from operations resulted from an increase in earnings and from the increase in cash provided by working capital, primarily driven by a higher accounts payable balance due to timing of disbursements when compared to the same prior year period.

Net Cash Used In/Provided by Investing Activities – The net cash used in investing activities totaled $108.5 million for the first three months of fiscal 2026 and net cash provided by investing activities totaled $687.8 million for the first three months of fiscal 2025.

The following discussion summarizes the significant changes in our investing cash flows for the first three months of fiscal 2026 and fiscal 2025:

• Purchases of property, plant, equipment, and intangibles, net – Capital expenditures totaled $93.6 million for the first three months of fiscal 2026 and $108.1 million during the same prior year period.

The fiscal 2026 decrease is due to the timing of capital spending.

• Proceeds from the sale of businesses – During the first three months of fiscal 2025, we received proceeds of $809.6 million primarily from the sale of our Dental segment and the sale of our CECS business.

• Acquisition of businesses, net of cash acquired – During the first three months of fiscal 2026 and 2025, we used $15.0 million and $13.7 million, respectively, to acquire businesses.

For more information, refer to Note 3 to our consolidated financial statements titled, "Business Acquisitions and Divestitures."

Net Cash Used In/Provided By Financing Activities – The net cash used in financing activities amounted to $1,394.3 million for the first nine months of fiscal 2025 compared to net cash provided by financing activities of $58.6 million for the first nine months of fiscal 2024.

The following discussion summarizes the significant changes in our financing cash flows for the first nine months of fiscal 2025 and fiscal 2024:

• Payments on Private Placement Senior Notes – During the first nine months of fiscal 2025 we repaid $80.0 million of Private Placement Senior Notes.

Net Cash Used In Financing Activities – The net cash used in financing activities amounted to $213.1 million for the first three months of fiscal 2026 compared to net cash used in financing activities of $998.9 million for the first three months of fiscal 2025.

The following discussion summarizes the significant changes in our financing cash flows for the first three months of fiscal 2026 and fiscal 2025:

• Payments on Private Placement Senior Notes – During the first three months of fiscal 2026 we repaid $125.0 million of Private Placement Senior Notes.

For more information on our Private Placement Senior Notes, refer to Note 7 to our consolidated financial statements titled, "Debt" and to our Annual Report on Form 10-K for the year ended March 31, 2025, which was filed with the SEC on May 29, 2025.

• Payments on term loans – During the first nine months of fiscal 2025 and 2024, we repaid $638.1 million and $45.0 million, respectively, of our term loans.

The fiscal 2025 increase was primarily due to the use of proceeds from the sale of the Dental segment to pay off our outstanding term loans.

• Payments on term loans – During the first three months of fiscal 2025, we repaid $638.1 million of our term loans.

The fiscal 2025 payment was primarily due to the use of proceeds from the sale of the Dental segment to pay off our outstanding term loans.

For more information on our term loans, refer to Note 7 to our consolidated financial statements titled, "Debt" and to our Annual Report on Form 10-K for the year ended March 31, 2025, which was filed with the SEC on May 29, 2025.

For more information regarding the sale of the Dental segment, refer to Note 4 to our consolidated financial statements titled "Discontinued Operations."

• Payments/Proceeds under credit facilities, net – Net payments under credit facilities totaled $319.0 million for the first nine months of fiscal 2025 compared to net proceeds under credit facilities of $265.5 million for the first nine months of fiscal 2024.

The fiscal 2025 payments were primarily due to the use of proceeds from the sale of the Dental segment to pay down our Previous Revolving Credit Facility balance.

The fiscal 2024 proceeds are attributable to funding of the acquisition of assets from BD.

• Payments under credit facilities, net – Net payments under credit facilities totaled $30.5 million and $253.2 million for the first three months of fiscal 2026 and 2025, respectively.

The fiscal 2025 payments were primarily due to the use of proceeds from the sale of the Dental segment to pay down balances due under our credit agreement dated as of March 19, 2021.

For more information on our indebtedness, refer to Note 7 to our consolidated financial statements titled, "Debt" and to our Annual Report on Form 10-K for the year ended March 31, 2025, which was filed with the SEC on May 29, 2025.

For more information regarding the sale of the Dental segment, refer to Note 4 to our consolidated financial statements titled "Discontinued Operations."

• Deferred financing fees and debt issuance costs – During the first nine months of fiscal 2025 we paid $2.3 million for financing fees and debt issuance costs primarily related to our Revolving Credit Facility.

For more information on our debt, refer to Note 7 to our consolidated financial statements titled, "Debt" and to our Annual Report on Form 10-K for the year ended March 31, 2024, which was filed with the SEC on May 29, 2024.

• Acquisition related deferred or contingent consideration – During the first nine months of fiscal 2025 and 2024, we paid $0.3 million and $6.2 million in deferred and contingent consideration, respectively.

The fiscal 2024 payment primarily related to the payout of contingent considerations from a prior acquisition totaling $5.0 million.

• Repurchases of ordinary shares – During the first nine months of fiscal 2025 and 2024 , we obtained 87,436 and 69,276, respectively, of our ordinary shares in connection with share-based compensation award programs in the aggregate amount of $11.0 million and $11.4 million, respectively .

During the first nine months of fiscal 2025, we purchased 907,158 of our ordinary shares for the aggregate amount of $200.0 million through our share repurchase program.

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

• Repurchases of ordinary shares – During each of the first three months of fiscal 2026 and 2025 , we obtained 0.1 million of our ordinary shares in connection with share-based compensation award programs in the aggregate amount of $10.6 million and $10.3 million, respectively .

During the first three months of fiscal 2026, we had no share repurchase activity through our share repurchase program.

During the first three months of fiscal 2025, we purchased 0.2 million of our ordinary shares for the aggregate amount of $53.9 million through our share repurchase program.

For more information on our share repurchases, refer to Note 13 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, 2025, which was filed with the SEC on May 29, 2025.

• Cash dividends paid to ordinary shareholders – During the first nine months of fiscal 2025, we paid total cash dividends of $163.9 million, or $1.66 per outstanding share.

During the first nine months of fiscal 2024, we paid total cash dividends of $149.2 million, or $1.51 per outstanding share.

• Transactions with noncontrolling interest holders – During the first nine months of fiscal 2025, we paid $1.6 million in distributions to noncontrolling interest holders and received $2.5 million in contributions from noncontrolling interest holders.

During the first nine months of fiscal 2024, we paid $1.6 million in distributions to noncontrolling interest holders and received contributions of $2.9 million from noncontrolling interest holders.

• Cash dividends paid to ordinary shareholders – During the first three months of fiscal 2026, we paid total cash dividends of $56.2 million, or $0.57 per outstanding share.

During the first three months of fiscal 2025, we paid total cash dividends of $51.4 million, or $0.52 per outstanding share.

• Transactions with noncontrolling interest holders – During the first three months of fiscal 2025, we received contributions of $2.5 million from noncontrolling interest holders.

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

During the first nine months of fiscal 2025 and fiscal 2024, we received cash proceeds totaling $19.4 million and $3.5 million, respectively, under these programs.

During the first three months of fiscal 2026 and fiscal 2025, we received cash proceeds totaling $9.3 million and $5.6 million, respectively, under these programs.

Cash Flow Measures.

The net cash provided by our operating activities was $887.3 million for the first nine months of fiscal 2025 and $718.5 million for the first nine months of fiscal 2024.

Free cash flow was $588.1 million in the first nine months of fiscal 2025 compared to $457.0 million in the first nine months of fiscal 2024 (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 2025 increase in free cash flow is primarily due to an increase in cash provided by working capital, primarily driven by higher collections on accounts receivable and improved inventory management when compared to the same prior year period, which was partially offset by increased capital spending.

Our debt-to-total capital ratio was 25.2% at December 31, 2024 and 34.0% at December 31, 2023.

The net cash provided by our operating activities was $420.0 million for the first three months of fiscal 2026 and $303.7 million for the first three months of fiscal 2025.

Free cash flow was $326.5 million in the first three months of fiscal 2026 compared to $195.7 million in the first three months of fiscal 2025 (see the subsection above titled "Non-GAAP Financial Measures" for additional information and related reconciliation of cash flows from operations to free cash flow).

Free cash flow was also impacted by a decrease in capital expenditures when compared to the same prior year period.

Our debt-to-total capital ratio was 21.5% at June 30, 2025 and 26.7% at June 30, 2024.

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, 2025, which was filed with the SEC on May 29, 2025.

Our commercial commitments were approximately $122.8 million at December 31, 2024, reflecting a net increase of $12.4 million in surety bonds and other commercial commitments from March 31, 2024.

Outstanding borrowings under our Previous Revolving Credit Facility as of December 31, 2024 were $162.0 million.

We had $14.9 million of letters of credit outstanding under the Previous Revolving Credit Facility at December 31, 2024.

Our commercial commitments were approximately $135.8 million at June 30, 2025, reflecting a net increase of $8.4 million in surety bonds and other commercial commitments from March 31, 2025.

Outstanding borrowings under our Revolving Credit Facility as of June 30, 2025 were $4.2 million.

We had $17.2 million of letters of credit outstanding under the Revolving Credit Facility at June 30, 2025.

Cash Requirements.

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Our capital requirements depend on many uncertain factors, including our r ate of sales growth, our Customers’ acceptance of our products and services, the costs of obtaining adequate manufacturing capacities, the timing and extent of our research and development projects, changes in our expenses and other factors.

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.

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.

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

STERIS plc ("Parent") and its wholly-owned subsidiaries, STERIS Limited and STERIS Corporation (collectively "Guarantors" and each a "Guarantor"), each have provided guarantees of the obligations of STERIS Irish FinCo Unlimited Company ("FinCo", "STERIS Irish FinCo", "Issuer") a wholly-owned subsidiary issuer, under senior public notes issued by FinCo on April 1, 2021 (the "Senior Public Notes") and of certain other obligations relating to the Senior Public Notes.

STERIS plc ("Parent") and its wholly-owned subsidiaries, STERIS Limited ("Limited") and STERIS Corporation (collectively with Limited "Guarantors" and each a "Guarantor"), each have provided guarantees of the obligations of STERIS Irish FinCo Unlimited Company ("FinCo") a wholly-owned subsidiary issuer, under senior public notes issued by FinCo on April 1, 2021 (the "Senior Public Notes") and of certain other obligations relating to the Senior Public Notes.

The Senior Public Notes are guaranteed, jointly and severally, on a senior unsecured basis.

The Senior Public Notes and the related guarantees are senior unsecured obligations of FinCo and the Guarantors, respectively, and are equal in priority with all other unsecured and unsubordinated indebtedness of the Issuer and the Guarantors, respectively, from time to time outstanding, including, as applicable, under the Private Placement Senior Notes and borrowings under the Revolving Credit Facility.

All of the liabilities of non-guarantor direct and indirect subsidiaries of Parent, other than STERIS Irish FinCo, STERIS Limited and STERIS Corporation, including any claims of trade creditors, are effectively senior to the Senior Public Notes.

STERIS Irish FinCo’s main objective and source of revenues and cash flows is the provision of short- and long-term financing for the activities of STERIS plc and its subsidiaries.

The ability of our subsidiaries to pay dividends, interest and other fees to the Issuer and ability of the Issuer and Guarantors to service the Senior Public Notes may be restricted by, among other things, applicable corporate and other laws and regulations as well as agreements to which our subsidiaries are or may become a party.

The Senior Public Notes and the related guarantees are senior unsecured obligations of FinCo and the Guarantors, respectively, and are equal in priority with all other unsecured and unsubordinated indebtedness of FinCo and the Guarantors, respectively, from time to time outstanding, including, as applicable, under the Private Placement Senior Notes and borrowings under the Revolving Credit Facility.

All of the liabilities of non-guarantor direct and indirect subsidiaries of Parent, other than FinCo, Limited and STERIS Corporation, including any claims of trade creditors, are effectively senior to the Senior Public Notes.

FinCo’s main objective and source of revenues and cash flows is the provision of short- and long-term financing for the activities of Parent and its subsidiaries.

The ability of our subsidiaries to pay dividends, interest and other fees to FinCo and ability of FinCo and Guarantors to service the Senior Public Notes may be restricted by, among other things, applicable corporate and other laws and regulations as well as agreements to which our subsidiaries are or may become a party.

The following is a summary of these guarantees:

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• in the case of a subsidiary Guarantor, at such time as such subsidiary Guarantor is no longer a borrower under or no longer guarantees any material credit facility (subject to reinstatement in specified circumstances);

• upon the legal defeasance or covenant defeasance of the Senior Public Notes or the discharge of the Issuer’s obligations under the indenture in accordance with the terms of the indenture;

• upon the legal defeasance or covenant defeasance of the Senior Public Notes or the discharge of FinCo’s obligations under the Indenture in accordance with the terms of the Indenture;

• as described in accordance with the terms of the Indenture;

• in the case of the Parent, if the Issuer ceases for any reason to be a subsidiary of the Parent;

provided that all guarantees and other obligations of the Parent in respect of all other indebtedness under any material credit facility of the Issuer terminate upon the Issuer ceasing to be a subsidiary of the Parent;

• in the case of Parent, if FinCo ceases for any reason to be a subsidiary of Parent;

provided that all guarantees and other obligations of Parent in respect of all other indebtedness under any material credit facility of FinCo terminate upon FinCo ceasing to be a subsidiary of Parent;

• upon such Guarantor delivering to the trustee an officer’s certificate and an opinion of counsel, each stating that all conditions precedent provided for in the Indenture relating to such transaction or release have been complied with.

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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 U.S.

The following tables present summarized results of operations for the nine months ended December 31, 2024 and summarized balance sheet information at December 31, 2024 and March 31, 2024 for the obligor group of the Senior Public Notes.

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

The following tables present summarized results of operations for the three months ended June 30, 2025 and summarized balance sheet information at June 30, 2025 and March 31, 2025 for the obligor group of the Senior Public Notes.

The obligor group consists of the Parent, FinCo, and the other Guarantors.

The summarized financial information is presented after elimination of (i) intercompany transactions and balances among the guarantors and issuer and (ii) equity in earnings from and investments in any subsidiary that is a non-guarantor or issuer.

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Summarized Results of Operations

(in thousands) Nine Months Ended

(in millions) Three Months Ended

Revenues $ 764.5

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Summarized Balance Sheet Information

( in thousands)

December 31, March 31,

(in millions)

June 30, March 31,

Receivables due from non-issuers and non-guarantor subsidiaries $ 20,430.0 $ 19,931.5

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

These legal proceedings,

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

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 and believe we have adequately reserved for our current litigation and claims that are probable and estimable.

In the event that the estimate of a probable loss is a range and no amount within the range is more likely, we accrue the minimum amount of the range.

We consider many factors in making these assessments, including the professional judgment of experienced members of management and our legal counsel.

We have made estimates as to the likelihood of unfavorable outcomes and the amounts of such potential losses.

In our opinion, the ultimate outcome of these proceedings and claims is not anticipated to have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

However, the ultimate outcome of proceedings, government investigations, and claims is unpredictable and actual results could be materially different from our estimates.

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

Further, we believe that the ultimate outcome of pending lawsuits and claims will not have a material adverse effect on our consolidated financial position or results of operations taken as a whole.

Due to their inherent uncertainty, however, there can be no assurance of the ultimate outcome or effect of current or future litigation, investigations, claims or other proceedings.

For certain types of claims, we presently maintain insurance coverage for personal injury and property damage and other liability coverages in amounts and with deductibles that we believe are prudent, and we may also have contractual indemnification rights against certain liabilities, but there can be no assurance that either will be applicable or adequate to cover adverse outcomes of claims or legal proceedings against us.

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

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

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

jurisdictions.

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

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

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

Changes in applicable tax law or other events may also require us to revise past estimates.

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

Refer to Note 9 of our consolidated financial statements titled, "Income Taxes" for more information.

We describe income taxes further in Note 9 of our consolidated financial statements titled, "Income Taxes" for more information.

Forward-Looking Statements

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Forward-looking statements speak only as to the date the statement is made and may be identified by the use of forward-looking terms such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” “outlook,” “impact,” “potential,” “confidence,” “improve,” “optimistic,” “deliver,” “orders,” “backlog,” “comfortable,” “trend,” and “seeks,” or the negative of such terms or other variations on such terms or comparable terminology.

Many important factors could cause actual results to differ materially from those in the forward-looking statements including, without limitation, statements related to the expected benefits of and timing of completion of the Restructuring Plan, 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.

Many of these important factors are outside of STERIS’s control.

No assurances can be provided as to any result or the timing of any outcome regarding matters described in STERIS’s securities filings or otherwise with respect to any regulatory action, administrative proceedings, government investigations, litigation, warning letters, cost reductions, business strategies, earnings or revenue trends or future financial results.

References to products are summaries only and should not be considered the specific terms of the product clearance or literature.

Many factors could cause actual results to differ materially from those in the forward-looking statements including, without limitation, those identified in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K, which was filed with the SEC on May 29, 2025.

Other potential risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include, without limitation:

(a) operating costs, pressure on pricing (including, without limitation, as a result of inflation), Customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, Customers, clients or suppliers) being greater than expected and leading to erosion of profit margins;

(b) STERIS’s ability to successfully integrate acquired businesses into its existing businesses, including unknown or inestimable liabilities, impairments, or increases in expected integration costs or difficulties in connection with the integration of such businesses;

(c) changes in tax laws or interpretations, including changes associated with the OBBBA, or the adoption of certain income tax treaties in jurisdictions where we operate 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, or tariffs and/or other trade barriers;

(d) the possibility that compliance with laws, court rulings, certifications, regulations, or other regulatory actions, or the outcome of any pending or threatened litigation, including the ethylene oxide litigation, may delay, limit or prevent new product or service introductions, impact production, supply and/or marketing of existing products or services, result in uncovered costs, or otherwise affect STERIS’s performance, results, prospects or value;

(e) the potential of international unrest, including military conflicts, economic downturn and effects of currency fluctuations;

(f) the possibility of delays in receipt of orders, order cancellations, or the manufacture or shipment of ordered products;

(g) the possibility that anticipated growth, performance or other results may not be achieved, or that timing, execution, impairments, or other issues associated with STERIS’s businesses, industry or initiatives may adversely impact STERIS’s performance, results, prospects or value;

(h) the impact on STERIS and its operations of any legislation, regulations or orders, including but not limited to any new trade, regulations or orders, that may be implemented by the U.S.

administration or Congress , or of any responses thereto by non-U.S.

(i) the possibility that anticipated financial results, anticipated revenue, productivity improvements, cost savings, growth synergies, and other anticipated benefits of acquisitions, restructuring efforts, and divestitures will not be realized or will be less than anticipated;

(j) the level of STERIS’s indebtedness limiting financial flexibility or increasing future borrowing costs;

(k) the effects of changes in credit availability and pricing, as well as the ability of STERIS and STERIS’s Customers and suppliers to adequately access the credit markets, on favorable terms or at all, when needed;

(l) the impacts of increasing competition within our industry, which may exert pressure on our pricing strategy or lead to decreasing demand for our products and services;

(m) the effects on our operations resulting from labor-related issues, such as strikes, unsuccessful union negotiations and other workforce disruptions;

(n) the possibility of economic downturns and recessions, which could negatively impact our business by reducing consumer and Customer spending.

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 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, (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 acquired businesses into its existing businesses, including unknown or inestimable liabilities, impairments, or increases in expected integration costs or difficulties in connection with the integration of such businesses, (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, including the Isomedix litigation, 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 or 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, 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 level of STERIS’s indebtedness 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) the possibility that our expectations about the pre-tax savings resulting from the Restructuring Plan, the number of positions eliminated pursuant to the Restructuring Plan and the costs, charges and cash expenditures associated with the announced restructuring plan may not be realized on the timeline or timelines we expect, or at all.

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