Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

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:

• what factors affect our business;

• what our earnings and costs were in each period presented;

• why those earnings and costs were different from prior periods;

• where our earnings came from;

• how this affects our overall financial condition;

• what our expenditures for capital projects were; and

• 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, which present the results of our operations for the third quarter and first nine months of fiscal 2022 and fiscal 2021. It may also be helpful to read the MD&A in our Annual Report on Form 10-K for the year ended March 31, 2021 dated May 28, 2021. In the MD&A, we analyze and explain the period-over-period changes in the specific line items in the Consolidated Statements of Income. Our analysis may be important to you in making decisions about your investments in STERIS.

Financial Measures

In the following sections of the MD&A, we may, at times, refer to financial measures that are not required to be presented in the consolidated financial statements under U.S. GAAP. We sometimes use the following financial measures in the context of this report: backlog; debt-to-total capital; and days sales outstanding. We define these financial measures as follows:

• Backlog – We define backlog as the amount of unfilled capital equipment purchase orders at a point in time. We use this figure as a measure to assist in the projection of short-term financial results and inventory requirements.

• Debt-to-total capital – We define debt-to-total capital as total debt divided by the sum of total debt and shareholders’ equity. We use this figure as a financial liquidity measure to gauge our ability to borrow and fund growth.

• Days sales outstanding (“DSO”) – We define DSO as the average collection period for accounts receivable. It is calculated as net accounts receivable divided by the trailing four quarters’ revenues, multiplied by 365 days. We use this figure to help gauge the quality of accounts receivable and expected time to collect.

We, at times, may also refer to financial measures which are considered to be “non-GAAP financial measures” under SEC rules. We have presented these financial measures because we believe that meaningful analysis of our financial performance is enhanced by an understanding of certain additional factors underlying that performance. These financial measures should not be considered an alternative to measures required by accounting principles generally accepted in the United States. Our calculations of these measures may differ from calculations of similar measures used by other companies and you should be careful when comparing these financial measures to those of other companies. Additional information regarding these financial measures, including reconciliations of each non- GAAP financial measure, is available in the subsection of MD&A titled, "Non-GAAP Financial Measures."

Revenues – Defined

As required by Regulation S-X, we separately present revenues generated as either product revenues or service revenues on our Consolidated Statements of Income for each period presented. When we discuss revenues, we may, at times, refer to revenues summarized differently than the Regulation S-X requirements. The terminology, definitions, and applications of terms that we use to describe revenues may be different from terms used by other companies. We use the following terms to describe revenues:

• Revenues – Our revenues are presented net of sales returns and allowances.

• Product Revenues – We define product revenues as revenues generated from sales of consumable and capital equipment products.

• Service Revenues – We define service revenues as revenues generated from parts and labor associated with the maintenance, repair, and installation of our capital equipment. 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 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 OR.

• Consumable Revenues – We define consumable revenues as revenues generated from sales of the consumable family of products, which includes dedicated consumables including V-PRO, SYSTEM 1 and 1E consumables, gastrointestinal endoscopy accessories, sterility assurance products, barrier protection solutions, cleaning consumables, and surgical instruments.

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

General Company Overview and Executive Summary

STERIS is a leading global provider of products and services that support patient care with an emphasis on infection prevention. WE HELP OUR CUSTOMERS CREATE A HEALTHIER AND SAFER WORLD by providing innovative healthcare, life sciences and dental products and services. We offer our Customers a unique mix of innovative consumable products, such as detergents, gastrointestinal (“GI”) endoscopy accessories, barrier product solutions, and other products and services, including: equipment installation and maintenance, microbial reduction of medical devices, dental instruments and tools, instrument and scope repair, laboratory testing services, outsourced reprocessing, and capital equipment products, such as sterilizers and surgical tables, automated endoscope reprocessors, and connectivity solutions such as operating room (“OR”) integration.

We operate our business and report our financial information in four reportable business segments: Healthcare, Applied Sterilization Technologies, Life Sciences and Dental. Non-allocated operating costs that support the entire Company and items not indicative of operating trends are excluded from segment operating income. We describe our business segments in Note 9 to our consolidated financial statements, titled "Business Segment Information."

The bulk of our revenues are derived from the healthcare and pharmaceutical industries. Much of the growth in these industries is driven by the aging of the population throughout the world, as an increasing number of individuals are entering their prime healthcare consumption years, and is dependent upon advancement in healthcare delivery, acceptance of new technologies, government policies, and general economic conditions. The pharmaceutical industry has been impacted by increased regulatory scrutiny of cleaning and validation processes, mandating that manufacturers improve their processes. Within healthcare, there is increased concern regarding the level of hospital acquired infections around the world; increased demand for medical procedures, including preventive screenings such as endoscopies and colonoscopies; and a desire by our Customers to operate more efficiently, all which are driving increased demand for many of our products and services.

Acquisitions. On June 2, 2021, we acquired all outstanding equity interests in Cantel Medical LLC. ("Cantel") through a U.S. subsidiary. Cantel, formerly headquartered in Little Falls, New Jersey, with approximately 3,700 employees, is a global provider of infection prevention products and services primarily to endoscopy and dental Customers.

We believe that the acquisition will strengthen STERIS’s leadership in infection prevention by bringing together two complementary businesses able to offer a broader set of Customers a more diversified selection of infection prevention, endoscopy and sterilization products and services. Cantel was integrated into our existing Healthcare and Life Sciences segments. Cantel’s Dental business extends our business into a new Customer segment where there is an increasing focus on infection prevention protocols and processes. This business is reported as the Dental segment. Additionally, the acquisition is expected to result in cost savings from optimizing global back-office infrastructure, leveraging best-demonstrated practices across locations and eliminating redundant public company costs.

The results of Cantel are only reflected in the results of operations and cash flows from June 2, 2021 forward, which will affect results of comparability to the prior period operations and cash flows.

Divestitures. In December 2021, we entered into an Asset Purchase Agreement to sell STERIS's Renal Care business to Evoqua Water Technologies Corp., for cash consideration of approximately $196.0 million, subject to certain potential adjustments, including a customary working capital adjustment and contingent consideration of $12.3 million. We anticipate no material gain (loss) on the sale. The net assets are not reported as held for sale as they are not material to the balance sheet as of December 31, 2021. The transaction closed on January 3, 2022. We acquired the Renal Care business as part of the Cantel transaction, which closed on June 2, 2021, and had been integrated into STERIS's Healthcare segment. The Renal Care business generated annual revenues of approximately $180.0 million. The proceeds from the sale received at closing were used to repay outstanding debt.

COVID-19 Pandemic. We do not believe that the COVID-19 pandemic has had a material impact on our operations, as we have been able to continue to operate our manufacturing facilities and meet the demand for essential products and services of our Customers. In response to the COVID-19 pandemic, we implemented several measures that we believe helped us protect the health and safety of our employees, preserve liquidity and enhance our financial flexibility. We allowed employees to work remotely when possible and implemented additional safety measures in compliance with applicable regulations to allow personnel to continue to work in our facilities. We have successfully managed our liquidity throughout the COVID-19 pandemic and continue to invest in expansion projects as planned. We obtained additional funding in the second half of fiscal 2021 to continue to advance our growth strategy to supplement organic growth with acquisitions. As a result, we do not believe that the COVID-19 pandemic or the actions we took in response to the pandemic will negatively impact our long-term ability to generate revenues or meet existing and future financial obligations.For additional information on our risk factors related to the COVID-19 pandemic please refer to our Annual Report on Form 10-K for the year ended March 31, 2021 dated May 28, 2021, and our amended risk factors contained in Item 1A. of this Quarterly Report.

Highlights. Revenues increased 49.5%, to $1,209.0 million for the three months ended December 31, 2021, as compared to $808.9 million for the same period in the prior year. Revenues increased 51.0%, to $3,374.4 million for the nine months ended December 31, 2021, as compared to $2,234.0 million for the same period in the prior year. These increases reflect added volume from Cantel and other recent acquisitions, organic growth in the Healthcare, Applied Sterilization Technologies and Life Sciences segments, and favorable fluctuations in currencies in the year-to-date period.

Gross profit percentage for the third quarter of fiscal 2022 was 44.5% compared to the gross profit percentage for the third quarter of fiscal 2021 of 42.8%. Favorable impacts from our recent acquisitions, productivity, pricing and mix and other adjustments, exceeded unfavorable impacts from material costs, inflation and fluctuations in currencies. Gross profit percentage for the first nine months of fiscal 2022 was 42.8% compared to the gross profit percentage for the first nine months of fiscal 2021 of 43.1%. Unfavorable impacts from our recent acquisitions, material costs, inflation and fluctuations in currencies, exceeded favorable impact from productivity, pricing, mix and other adjustments.

Operating income for the third quarter of fiscal 2022 was $202.9 million, compared to $147.0 million for third quarter of fiscal 2021 This increase reflects higher gross margin attainment, primarily due to added volumes from Cantel and our other recent acquisitions. Operating income during the first nine months of fiscal 2022 was $333.8 million, compared to $404.1 million for the first nine months of fiscal 2021. This decline was primarily due to additional acquisition and integration expenses and incremental amortization expense primarily related to the acquisition of Cantel.

Cash flows from operations were $513.1 million and free cash flow was $300.3 million in the first nine months of fiscal 2022 compared to cash flows from operations of $501.8 million and free cash flow of $337.7 million for first nine months of fiscal 2021 (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 2022 decrease in free cash flow was primarily due to anticipated costs associated with the acquisition and integration of Cantel and higher capital expenditures in fiscal 2022.

Our debt-to-total capital ratio was 33.3% at December 31, 2021 and 29.8% at March 31, 2021. During the first nine months of fiscal 2022, we declared and paid cash dividends totaling $1.26 per ordinary share.

Additional information regarding our financial performance during the third quarter and first nine months of fiscal 2022 is included in the subsection below titled “Results of Operations.”

NON-GAAP FINANCIAL MEASURES

We, at times, refer to financial measures which are considered to be “non-GAAP financial measures” under SEC rules. We, at times, also refer to our results of operations excluding certain transactions or amounts that are non-recurring or are not indicative of future results, in order to provide meaningful comparisons between the periods presented.

These non-GAAP financial measures are not intended to be, and should not be, considered separately from or as an alternative to the most directly comparable GAAP financial measures.

These non-GAAP financial measures are presented with the intent of providing greater transparency to supplemental financial information used by management and the Board of Directors in their financial analysis and operational decision-making. These amounts are disclosed so that the reader has the same financial data that management uses with the belief that it will assist investors and other readers in making comparisons to our historical operating results and analyzing the underlying performance of our operations for the periods presented.

We believe that the presentation of these non-GAAP financial measures, when considered along with our GAAP financial measures and the reconciliation to the corresponding GAAP financial measures, provide the reader with a more complete understanding of the factors and trends affecting our business than could be obtained absent this disclosure. It is important for the reader to note that the non-GAAP financial measure used may be calculated differently from, and therefore may not be comparable to, a similarly titled measure used by other companies.

We define free cash flow as net cash provided by operating activities as presented in the Consolidated Statements of Cash Flows less purchases of property, plant, equipment, and intangibles plus proceeds from the sale of property, plant, equipment, and intangibles, which are also presented within investing activities in the Consolidated Statements of Cash Flows. We 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, 2021 and 2020:

						Nine Months Ended December 31,
(dollars in thousands)						2021						2020
Net cash provided by operating activities						$	513,080					$	501,785
Purchases of property, plant, equipment and intangibles, net						(214,491)						(164,497)
Proceeds from the sale of property, plant, equipment and intangibles						1,709						417
Free cash flow						$	300,298					$	337,705

Results of Operations

In the following subsections, we discuss our earnings and the factors affecting them for the third quarter and first nine months of fiscal 2022 compared with the same fiscal 2021 periods. We begin with a general overview of our operating results and then separately discuss earnings for our operating segments.

Revenues. The following tables compare our revenues for the three and nine months ended December 31, 2021 to the revenues for the three and nine months ended December 31, 2020:

						Three Months Ended December 31,
(dollars in thousands)						2021						2020						Change						Percent Change
Total revenues						$	1,208,971					$	808,924					$	400,047					49.5		%
Revenues by type:
Service revenues						511,715						433,610						78,105						18.0		%
Consumable revenues						440,328						198,466						241,862						121.9		%
Capital equipment revenues						256,928						176,848						80,080						45.3		%
Revenues by geography:
Ireland revenues						20,086						20,316						(230)						(1.1)		%
United States revenues						851,292						572,397						278,895						48.7		%
Other foreign revenues						337,593						216,211						121,382						56.1		%

Revenues increased 49.5%, to $1,209.0 million for the three months ended December 31, 2021, as compared to $808.9 million for the same period in the prior year. The increase reflects added volume of $332.7 million from Cantel and other recent acquisitions and organic growth in the Healthcare, Applied Sterilization Technologies and Life Science segments.

Service revenues increased 18.0% for the three months ended December 31, 2021, as compared to the same period in the prior year, reflecting growth in the Healthcare, Life Sciences and Applied Sterilization Technologies business segments. Consumable revenues increased by 121.9% for the three months ended December 31, 2021, as compared to the same period in the prior year, reflecting growth in the Healthcare and Life Sciences segments and added volume from the addition of our new Dental segment. Capital equipment revenues increased 45.3%, for the three months ended December 31, 2021, as compared to the same period in the prior year, reflecting growth in the Healthcare and Life Sciences segments.

Ireland revenues decreased 1.1% to $20.1 million for the three months ended December 31, 2021, as compared to $20.3 million for the same period in the prior year, reflecting a decline in capital equipment revenues, which was partially offset by growth in service and consumable revenues.

United States revenues increased 48.7%, to $851.3 million for the three months ended December 31, 2021, as compared to $572.4 million for the same period in the prior year, reflecting growth in service, consumable, and capital equipment revenues. These increases represent both organic growth and the impact of Cantel and our other recent acquisitions.

Revenues from other foreign locations, increased 56.1%, to $337.6 million for the three months ended December 31, 2021, as compared to $216.2 million for the same period in the prior year. The increase reflects growth within Canada and the Europe, Middle East & Africa ("EMEA"), Asia Pacific, and Latin American regions. These increases represent both organic growth and the impact of Cantel and our other recent acquisitions.

						Nine Months Ended December 31,
(dollars in thousands)						2021						2020						Change						Percent Change
Total revenues						$	3,374,378					$	2,233,988					$	1,140,390					51.0		%
Revenues by type:
Service revenues						1,502,605						1,218,062						284,543						23.4		%
Consumable revenues						1,187,014						519,652						667,362						128.4		%
Capital equipment revenues						684,759						496,274						188,485						38.0		%
Revenues by geography:
Ireland revenues						62,077						51,779						10,298						19.9		%
United States revenues						2,383,039						1,613,554						769,485						47.7		%
Other foreign revenues						929,262						568,655						360,607						63.4		%

Revenues increased 51.0%, to $3,374.4 million for the nine months ended December 31, 2021, as compared to $2,234.0 million for the same period in the prior year. The increase reflects added volume of $820.2 million from Cantel and other recent acquisitions, organic growth in the Healthcare, Applied Sterilization Technologies and Life Science segments and favorable fluctuations in currencies.

Service revenues increased 23.4% for the nine months ended December 31, 2021, as compared to the same period in the prior year, reflecting growth in the Healthcare, Applied Sterilization, and Life Science segments. Consumable revenues increased by 128.4% for the nine months ended December 31, 2021, as compared to the same period in the prior year, reflecting growth in the Healthcare and Life Sciences segments and added volume from the addition of our new Dental segment. Capital equipment revenues increased 38.0% for the nine months ended December 31, 2021, reflecting growth in the Healthcare and Life Sciences segments.

Ireland revenues increased 19.9% to $62.1 million for the nine months ended December 31, 2021, as compared to $51.8 million, reflecting growth in service and consumable revenues, which were partially offset by a decline in capital equipment revenues.

United States revenues increased 47.7%, to $2,383.0 million for the nine months ended December 31, 2021, as compared to $1,613.6 million for the same period in the prior year, reflecting growth in service, consumable, and capital equipment revenues. These increases represent both organic growth and the impact of Cantel and our other recent acquisitions.

Revenues from other foreign locations increased 63.4%, to $929.3 million for the nine months ended December 31, 2021, as compared to $568.7 million for the same period in the prior year. The increase is due to growth within Canada and the Europe, Middle East & Africa ("EMEA"), Asia Pacific, and Latin American regions. These increases represent both organic growth and the impact of Cantel and our other recent acquisitions.

Gross Profit. The following table compares our gross profit for the three and nine months ended December 31, 2021 to the three and nine months ended December 31, 2020:

						Three Months Ended December 31,												Change						Percent Change
(dollars in thousands)						2021						2020
Gross profit:												*(as adjusted)
Product						$	323,463					$	172,433					$	151,030					87.6		%
Service						214,651						173,428						41,223						23.8		%
Total gross profit						$	538,114					$	345,861					$	192,253					55.6		%
Gross profit percentage:
Product						46.4		%				45.9		%
Service						41.9		%				40.0		%
Total gross profit percentage						44.5		%				42.8		%

						Nine Months Ended December 31,												Change						Percent Change
(dollars in thousands)						2021						2020
Gross profit:												*(as adjusted)
Product						$	799,090					$	482,508					$	316,582					65.6		%
Service						645,650						480,774						164,876						34.3		%
Total gross profit						$	1,444,740					$	963,282					$	481,458					50.0		%
Gross profit percentage:
Product						42.7		%				47.5		%
Service						43.0		%				39.5		%
Total gross profit percentage						42.8		%				43.1		%

*Certain amounts have been adjusted to reflect the change in inventory accounting method, as described in our Annual report on Form 10-K filed with the SEC on May 28, 2021.

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

Gross profit percentage for the third quarter of fiscal 2022 was 44.5% compared to the gross profit percentage for the third quarter of fiscal 2021 of 42.8%. Favorable impacts from our recent acquisitions (110 basis points), productivity (140 basis points), pricing (60 basis points) and mix and other adjustments (30 basis points), exceeded unfavorable impacts from material costs (90 basis points), inflation (70 basis points) and fluctuations in currencies (10 basis points).

Gross profit percentage for the first nine months of fiscal 2022 was 42.8% compared to the gross profit percentage for the first nine months of fiscal 2021 of 43.1%. Unfavorable impacts from our recent acquisitions (170 basis points), material costs (50 basis points), inflation (50 basis points) and fluctuations in currencies (20 basis points), exceeded favorable impact from productivity (190 basis points), pricing (60 basis points), mix and other adjustments (10 basis points).

Operating Expenses. The following table compares our operating expenses for the three and nine months ended December 31, 2021 to the three and nine months ended December 31, 2020:

						Three Months Ended December 31,												Change						Percent Change
(dollars in thousands)						2021						2020
Operating expenses:
Selling, general, and administrative						$	310,564					$	182,373					$	128,191					70.3		%
Research and development						24,824						16,438						8,386						51.0		%
Restructuring expenses						(207)						20						(227)						NM
Total operating expenses						$	335,181					$	198,831					$	136,350					68.6		%

						Nine Months Ended December 31,												Change						Percent Change
(dollars in thousands)						2021						2020
Operating expenses:
Selling, general, and administrative						$	1,049,116					$	510,250					$	538,866					105.6		%
Research and development						61,847						48,812						13,035						26.7		%
Restructuring expenses						17						110						(93)						NM
Total operating expenses						$	1,110,980					$	559,172					$	551,808					98.7		%

NM - Not meaningful.

Selling, General, and Administrative Expenses. Significant components of total selling, general, and administrative expenses (“SG&A”) are compensation and benefit costs, fees for professional services, travel and entertainment, facilities costs, and other general and administrative expenses. SG&A increased 70.3% and 105.6% in the third quarter and first nine months of fiscal 2022, respectively over the same prior year periods. During the fiscal 2022 periods we had significant increases in acquisition related costs, which included amortization of acquired intangible assets, "step-up" of plant, property and equipment to fair value, and acquisition and integration expenses, which were primarily related to the acquisition of Cantel. The increases also reflect the addition of expenses associated with the operations of Cantel and our other recent acquisitions.

Research and Development. Research and development expenses increased 51.0% and 26.7% in the third quarter and first nine months of fiscal 2022, respectively over the same prior year periods, primarily due to the addition of Cantel and our other recent acquisitions. Research and development expenses are influenced by the number and timing of in-process projects and labor hours and other costs associated with these projects. Our research and development initiatives continue to emphasize new product development, product improvements, and the development of new technological platform innovations. During fiscal 2022, our investments in research and development continued to be focused on, but were not limited to, enhancing capabilities of sterile processing combination technologies, procedural products and accessories, and devices and support accessories used in gastrointestinal endoscopy procedures.

Restructuring Expenses**.** Amounts related to restructuring expenses were not material for the three and nine month periods ending December 31, 2021 or 2020, respectively. For information on our restructuring efforts, refer to our Annual Report on Form 10-K filed with the SEC on May 28, 2021.

Non-Operating Expenses, Net. 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. The following table compares our net non-operating expenses for the three and nine months ended December 31, 2021 and 2020:

						Three Months Ended December 31,
(dollars in thousands)						2021						2020						Change
Non-operating expenses, net:
Interest expense						$	22,971					$	8,899					$	14,072
Interest income and miscellaneous expense						(2,447)						(1,299)						(1,148)
Non-operating expenses, net						$	20,524					$	7,600					$	12,924

						Nine Months Ended December 31,
(dollars in thousands)						2021						2020						Change
Non-operating expenses, net:
Interest expense						$	67,820					$	27,056					$	40,764
Fair value adjustment related to convertible debt, premium liability						27,806						—						27,806
Interest income and miscellaneous expense						(4,905)						(4,776)						(129)
Non-operating expenses, net						$	90,721					$	22,280					$	68,441

Interest expense increased $14.1 million and $40.8 million during the third quarter and first nine months of fiscal 2022, respectively over the same prior year periods, primarily due to debt incurred for acquisition financing including term loans and Senior Public Notes. For more information refer to Note 5 of our Consolidated Financial Statements titled "Debt." Interest (income) and miscellaneous expense is not material.

During the first nine months of fiscal 2022, we recorded fair value adjustments of $27.8 million, based on appreciation in our share price related to premium liability associated with the convertible debt assumed in the acquisition of Cantel. For more information on the Cantel convertible debt refer to Note 5 of our Consolidated Financial Statements titled, "Debt."

Income Tax Expense. The following table compares our income tax expense and effective income tax rates for the three and nine months ended December 31, 2021 and December 31, 2020:

						Three Months Ended December 31,												Change						Percent Change
(dollars in thousands)						2021						2020
												*(as adjusted)
Income tax expense						$	39,315					$	24,842					$	14,473					58.3%
Effective income tax rate						21.6		%				17.8		%

						Nine Months Ended December 31,												Change						Percent Change
(dollars in thousands)						2021						2020
												*(as adjusted)
Income tax expense						$	52,222					$	71,703					$	(19,481)					(27.2)%
Effective income tax rate						21.5		%				18.8		%

We record income tax expense during interim periods based on our estimate of the annual effective income tax rate,

adjusted each quarter for discrete items. We analyze various factors to determine the estimated annual effective income tax rate, including projections of our annual earnings and taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, our ability to use tax credits and net operating loss carryforwards, and available tax planning alternatives.

The effective income tax rates for the three month periods ended December 31, 2021 and 2020 were 21.6% and 17.8%, respectively. The effective income tax rates for the nine month periods ended December 31, 2021 and 2020 were 21.5% and 18.8%, respectively. The fiscal 2022 effective tax rates increased when compared to the same fiscal 2021 periods, primarily due to Cantel and our other recent acquisitions, which historically have had higher effective tax rates than STERIS. The fiscal 2022 effective tax rates are also impacted by certain one-time, non-deductible acquisition related costs.

Business Segment Results of Operations. As a result of the acquisition of Cantel, we have reassessed the organization of our business and have added a new segment called Dental. We now operate and report our financial information in four reportable business segments: Healthcare, Applied Sterilization Technologies, Life Sciences and Dental. Non-allocated operating costs that support the entire Company and items not indicative of operating trends are excluded from segment operating income.

Our Healthcare segment provides a comprehensive offering for healthcare providers worldwide, focused on sterile processing departments and procedural centers, such as operating rooms and endoscopy suites. Our products and services range from infection prevention consumables and capital equipment, as well as services to maintain that equipment; to the repair of re-usable procedural instruments; to outsourced instrument reprocessing services. In addition, our procedural solutions also include single-use devices and capital equipment infrastructure used primarily in operating rooms, ambulatory surgery centers, endoscopy suites, and other procedural areas.

Our Applied Sterilization Technologies ("AST") segment is a third-party service provider for contract sterilization, as well as testing services needed to validate sterility services for medical device and pharmaceutical manufacturers. Our technology-neutral offering supports Customers every step of the way, from testing through sterilization.

Our Life Sciences segment provides a comprehensive offering of products and services that support pharmaceutical manufacturing, primarily for vaccine and other biopharma Customers focused on aseptic manufacturing. These solutions include a full suite of consumable products, equipment maintenance and specialty services, and capital equipment.

Our Dental segment provides a comprehensive offering for dental practitioners and dental schools, offering instruments, infection prevention consumables and instrument management systems.

We disclose 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 ended December 31, 2021, revenues from a single Customer did not represent ten percent or more of the Healthcare, Applied Sterilization Technologies or Life Sciences segment’s revenues. Three Customers collectively consistently account for more than 40.0% of our Dental segment revenue. The percentage associated with these three Customers collectively in any one period may vary due to the buying patterns of these three Customers as well as other Dental Customers. These three Customers collectively accounted for approximately 55.8% and 46.1% of our Dental segment revenues for the three months and nine months ended December 31, 2021, respectively. Additional information regarding certain of our segments is included in our consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2021, dated May 28, 2021.

The following table compares business segment revenues, segment operating income and total operating income for the three and nine months ended December 31, 2021 and 2020:

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

						Three Months Ended December 31,												Nine Months Ended December 31,
(dollars in thousands)						2021						2020						2021						2020
Revenues:												*(as adjusted)												*(as adjusted)
Healthcare						$	759,675					$	521,662					$	2,106,626					$	1,392,247
Applied Sterilization Technologies						216,298						176,462						630,092						498,371
Life Sciences						127,908						110,800						381,706						343,370
Dental						105,090						—						255,954						—
Total revenues						$	1,208,971					$	808,924					$	3,374,378					$	2,233,988
Operating income (loss):
Healthcare						$	169,267					$	115,412					$	465,817					$	304,380
Applied Sterilization Technologies						101,343						81,626						303,059						222,416
Life Sciences						52,032						41,541						158,639						136,435
Dental						23,096						—						65,607						—
Corporate						(55,849)						(47,941)						(202,461)						(158,463)
Total operating income before adjustments						$	289,889					$	190,638					$	790,661					$	504,768
Less: Adjustments
Amortization of acquired intangible assets (1)						$	75,021					$	23,194					$	191,552					$	62,648
Acquisition and integration related charges (2)						9,298						11,563						167,698						13,984
Redomiciliation and tax restructuring costs (3)						118						296						228						850
(Gain) on fair value adjustment of acquisition related contingent consideration (1)						—						(500)						—						(500)
Net loss on divestiture of businesses (1)						489						—						893						5
Amortization of inventory and property "step up" to fair value (1)						2,237						1,784						96,513						3,101
COVID-19 incremental costs (4)						—						7,251						—						20,460
Restructuring charges (5)						(207)						20						17						110
Total operating income						$	202,933					$	147,030					$	333,760					$	404,110

*Certain amounts have been adjusted to reflect the change in inventory accounting method, as described in our Annual report on Form 10-K filed with the SEC on May 28, 2021.

(1) For more information regarding our recent acquisitions and divestitures refer to Note 2 titled, "Business Acquisitions and Divestitures" and to our Annual Report on Form 10-K for the year ended March 31, 2021, dated May 28, 2021.

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

(3) Costs incurred in tax restructuring.

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

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

Healthcare revenues increased 45.6% to $759.7 million for the three months ended December 31, 2021, as compared to $521.7 million in the same prior year period. This increase reflects growth in consumables, capital equipment, and service revenues of 83.9%, 46.9% and 19.4%, respectively and reflects the impact of Cantel and our other recent acquisitions and organic growth. Healthcare revenues increased 51.3% to $2,106.6 million for the nine months ended December 31, 2021, as compared to $1,392.2 million in the same prior year period. This increase reflects growth in consumables, capital equipment, and service revenues and of 111.2%, 40.0% and 24.9%, respectively and reflects the impact of Cantel and our other recent acquisitions, organic growth and favorable fluctuations in foreign currencies. Excluding Cantel, the Healthcare segment’s backlog at December 31, 2021, amounted to $381.6 million, representing an increase of 77.0%, as compared to the backlog of $215.5 million at December 31, 2020. The increase is primarily due to Customer demand but also reflects some delays in shipments due to supply chain disruptions.

Applied Sterilization Technologies segment revenues increased 22.6% to $216.3 million for the three months ended December 31, 2021, as compared to $176.5 million for the same prior year period. Applied Sterilization Technologies segment revenues increased 26.4% to $630.1 million for the nine months ended December 31, 2021, as compared to $498.4 million for the same prior year period. The fiscal 2022 increases are primarily due to organic growth and favorable fluctuations in currencies in the year-to-date period. The impact of a fiscal 2021 acquisition also contributed to the increases.

Life Sciences revenues increased 15.4% to $127.9 million for the three months ended December 31, 2021, as compared to $110.8 million for the same prior year period. This increase reflects growth in consumables, service and capital equipment revenues and of 23.1%, 13.1% and 4.9%, respectively and reflects the impact of the Cantel acquisition and organic growth. Life Sciences revenues increased 11.2% to $381.7 million for the nine months ended December 31, 2021, as compared to $343.4 million for the same prior year period. This increase reflects growth in service, capital equipment and consumables revenues and of 16.1%, 9.8% and 9.2%, respectively and reflects the impact of the Cantel acquisition, organic growth and favorable fluctuations in foreign currencies. Excluding Cantel, the Life Sciences segment’s backlog at December 31, 2021 amounted to $117.2 million, representing an increase of 43.0%, as compared to the backlog of $82.0 million at December 31, 2020. The increase is primarily due to Customer demand but also reflects some delays in shipments due to supply chain disruptions.

Dental segment revenues for the three months ended December 31, 2021 were $105.1 million. Dental segment revenues from the Cantel acquisition date of June 2, 2021 through December 31, 2021 were $256.0 million.

The Healthcare segment’s operating income increased 46.7% to $169.3 million for the three months ended December 31, 2021, as compared to $115.4 million in the same prior year period. The segment's operating margins were 22.3% and 22.1% for the third quarter of fiscal 2022 and 2021, respectively. The Healthcare segment’s operating income increased 53.0% to $465.8 million for the nine months ended December 31, 2021, as compared to $304.4 million in the same prior year period, primarily due to increased volume and our recent acquisitions. The segment's operating margins were 22.1% and 21.9% for the first nine months of fiscal 2022 and 2021, respectively. The segment's operating income and margin improvements were primarily due to higher volumes.

The Applied Sterilization Technologies segment's operating income increased 24.2% to $101.3 million for the three months ended December 31, 2021, as compared to $81.6 million during the same prior year period. The Applied Sterilization Technologies segment's operating income increased 36.3% to $303.1 million for the nine months ended December 31, 2021, as compared to $222.4 million during the same prior year period. The segment's operating margins were 46.9% and 46.3% for the third quarter of fiscal 2022 and 2021, respectively. The segment's operating margins were 48.1% and 44.6% for the first nine months of fiscal 2022 and 2021, respectively. The segment's operating income and operating margin improvements were primarily due to to higher volumes.

The Life Sciences segment’s operating income increased 25.3% to $52.0 million for the three months ended December 31, 2021, as compared to $41.5 million in the same prior year period. The Life Sciences segment’s operating income increased 16.3% to $158.6 million for the nine months ended December 31, 2021, as compared to $136.4 million in the same prior year period. The segment's operating margins were 40.7% and 37.5% for the third quarter of fiscal 2022 and 2021, respectively. The segment's operating margins were 41.6% and 39.7% for the first nine months of fiscal 2022 and 2021, respectively. The segment's operating income and operating margin improvements were primarily due to to higher volumes.

The Dental segment's operating income and operating margin were $23.1 million and 22.0%, respectively, for the three months ended December 31, 2021. The Dental segment's operating income and operating margin were $65.6 million and 25.6%, respectively, for the nine months ended December 31, 2021.

Liquidity and Capital Resources

The following table summarizes significant components of our cash flows for the nine months ended December 31, 2021 and 2020:

						Nine Months Ended December 31,
(dollars in thousands)						2021						2020
Net cash provided by operating activities						$	513,080					$	501,785
Net cash (used in) investing activities						$	(760,135)					$	(1,035,903)
Net cash provided by financing activities						$	390,438					$	442,533
Debt-to-total capital ratio						33.3		%				30.6		%
Free cash flow						$	300,298					$	337,705

Net Cash Provided by Operating Activities – The net cash provided by our operating activities was $513.1 million for the first nine months of fiscal 2022 and $501.8 million for the first nine months of fiscal 2021. Higher cash provided by operating activities more than offset the acquisition and integration expenditures related to our acquisition of Cantel.

Net Cash Used In Investing Activities – The net cash used in investing activities totaled $760.1 million for the first nine months of fiscal 2022 and $1,035.9 million for the first nine months of fiscal 2021. The following discussion summarizes the significant changes in our investing cash flows for the first nine months of fiscal 2022 and fiscal 2021:

• Purchases of property, plant, equipment, and intangibles, net – Capital expenditures were $214.5 million for the first nine months of fiscal 2022 and $164.5 million during the same prior year period. The fiscal 2022 increase was primarily due to additional expenditures from Cantel and in our Applied Sterilization Technologies segment.

• Acquisitions of businesses, net of cash acquired – During the first nine months of fiscal 2022 and 2021, we used $547.4 million and $869.4 million, respectively for the purchases of businesses. For more information on our acquisitions, refer to our Note 2 to our consolidated financial statements, "Business Acquisitions and Divestitures."

Net Cash Provided By Fi****nancing Activities – The net cash provided by financing activities amounted to $390.4 million for the first nine months of fiscal 2022 and $442.5 million for the first nine months of fiscal 2021. The following discussion summarizes the significant changes in our financing cash flows for the first nine months of fiscal 2022 and fiscal 2021:

• Proceeds from issuance of senior notes – During the first nine months of fiscal 2022, we received $1,350.0 million in proceeds from the issuance of our Senior Public Notes. For more information on our Senior Public Notes, refer to Note 5 of our Consolidated Financial Statements titled, "Debt."

• Proceeds from term loan – During the first nine months of fiscal 2022, we received proceeds of $650.0 million under our Delayed Draw Term Loan. During the third quarter of fiscal 2021, we received proceeds of $550.0 million under a prior Term Loan. Which was subsequently replaced by another Term Loan of like amount. For more information on our term loans, refer to our annual report on Form 10-K filed with the SEC on May 28, 2021.

• Payments on term loan – During the first nine months of fiscal 2022, we repaid $125.0 million of our Term Loan. For more information on our Term Loan, refer to our annual report on Form 10-K filed with the SEC on May 28, 2021.

• Payments on long-term obligations – During the first nine months of fiscal 2022, we repaid $721.3 million of Cantel's outstanding debt in connection with the acquisition. For more information on Cantel's debt refer to Note 2 of our Consolidated Financial Statements titled, "Business Acquisitions and Divestitures." During the first nine months of fiscal 2021, we repaid $35.0 million of principal for private placement notes that matured in August 2020. For more information on our debt, refer to our annual report on Form 10-K filed with the SEC on May 28, 2021.

• Payments on convertible debt obligations – During the first nine months of fiscal 2022, we paid $371.4 million to settle obligations associated with Cantel's convertible debt assumed at the time of acquisition. For more information on Cantel's debt refer to Note 2 of our Consolidated Financial Statements titled, "Business Acquisitions and Divestitures."

• Proceeds (payments) under credit facilities, net – Net payments under credit facilities totaled $203.8 million in the first nine months of fiscal 2022, compared to net proceeds under credit facilities of $23.8 million in the first nine months of fiscal 2021.

• Deferred financing fees and debt issuance costs – During the first nine months of fiscal 2022, we paid $17.2 million for financing fees and debt issuance costs primarily related to our Senior Public Notes and Delayed Draw Term Loan. During the first nine months of fiscal 2021, we paid $3.1 million for financing fees and debt issuance costs in connection with our Term Loan. For more information on our debt refer to Note 5 of our Consolidated Financial Statements titled, "Debt."

• Repurchases of ordinary shares – During the first nine months of fiscal 2022, we obtained 225,493 of our ordinary shares in connection with share-based compensation award programs in the aggregate amount of $27.6 million. From the start of fiscal 2021 through April 9, 2020, we purchased 35,000 of our ordinary shares in the aggregate amount of $5.0 million. During the first nine months of fiscal 2021, we obtained 85,574 of our ordinary shares in connection with share-based compensation award programs in the aggregate amount of $9.5 million. Due to the uncertainty surrounding the COVID-19 pandemic, share repurchases were suspended on April 9, 2020. The suspension has been lifted effective February 10, 2022, enabling the Company to resume stock repurchases pursuant to the prior authorizations.

• Acquisition related deferred or contingent consideration – During the first nine months of fiscal 2022, we paid $32.6 million in deferred and contingent consideration, the majority of which was associated with a pre-acquisition arrangement related to an acquisition made by Cantel prior to our purchase of the company. During the first nine months of fiscal 2021, we paid $3.0 million in deferred and contingent consideration related to our recent acquisitions. For more information on our acquisitions, refer to our Note 2 to our consolidated financial statements, "Business Acquisitions and Divestitures."

• Cash dividends paid to ordinary shareholders – During the first nine months of fiscal 2022, we paid total cash dividends of $120.1 million, or $1.26 per outstanding share. During the first nine months of fiscal 2021, we paid total cash dividends of $99.7 million, or $1.17 per outstanding share.

• Transactions with noncontrolling interest holders – During the first nine months of fiscal 2022, we received contributions from noncontrolling interest holders of $3.7 million and paid $1.0 million in distributions to noncontrolling interest holders. During the first nine months of fiscal 2021, we received contributions from noncontrolling interest holders of $2.3 million and paid $0.6 million in distributions to noncontrolling interest holders. During the first nine months of fiscal 2021, we paid $3.6 million for the acquisition of a subsidiary's interest in a noncontrolling interest.

• 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 2022 and fiscal 2021, we received cash proceeds totaling $6.8 million and $26.0 million, respectively, under these programs.

Cash Flow Measures. Free cash flow was $300.3 million in the first nine months of fiscal 2022 compared to $337.7 million in the first nine months of fiscal 2021 (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 2022 decrease in free cash flows was primarily due to anticipated costs associated with the acquisition and integration of Cantel and higher capital expenditures in fiscal 2022.

Our debt-to-total capital ratio was 33.3% at December 31, 2021 and 30.6% at December 31, 2020.

Sources of Credit and Contractual and Commercial Commitments. Information related to our sources of credit and contractual and commercial commitments is included in our Annual Report on Form 10-K for the year ended March 31, 2021, dated May 28, 2021. Our commercial commitments were approximately $100.7 million at December 31, 2021, reflecting a net increase of $21.6 million in surety bonds and other commercial commitments from March 31, 2021. Outstanding borrowings under our Credit Agreement as of December 31, 2021 were $46.5 million. We had $15.4 million of letters of credit outstanding under the Credit Agreement at December 31, 2021.

Cash Requirements. We intend to use our existing cash and cash equivalent balances and cash generated from operations for short-term and long-term capital expenditures and our other liquidity needs. Our capital requirements depend on many uncertain factors, including our rate 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 the 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 (STERIS) and its wholly-owned subsidiaries, STERIS Limited and STERIS Corporation (collectively Guarantors), each have provided guarantees of the obligations of STERIS Irish FinCo Unlimited Company ("FinCo", "STERIS Irish FinCo"), a wholly-owned subsidiary issuer, under Senior Public Notes issued by STERIS Irish FinCo on April 1, 2021 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 STERIS Irish 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 credit facilities.

All of the liabilities of non-guarantor direct and indirect subsidiaries of STERIS, 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 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 the Senior Public Notes guarantees:

Guarantees of Senior Notes

• Parent Company Guarantor – STERIS plc

• Subsidiary Issuer – STERIS Irish FinCo Unlimited Company

• Subsidiary Guarantor – STERIS Limited

• Subsidiary Guarantor – STERIS Corporation

The guarantee of a Guarantor will be automatically and unconditionally released and discharged:

• in the case of a Subsidiary Guarantor, upon the sale, transfer or other disposition (including by way of consolidation or merger) of such Subsidiary Guarantor, other than to the Parent or a subsidiary of the Parent and as permitted by the indenture;

• in the case of a Subsidiary Guarantor, upon the sale, transfer or other disposition of all or substantially all the assets of such Subsidiary Guarantor, other than to the Parent or a subsidiary of the Parent and as permitted by the indenture;

• 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;

• as described in accordance with the terms of the indenture; or

• 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; and

• 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.

The obligations of each Guarantor under its guarantee are expressly limited to the maximum amount that such Guarantor could guarantee without such guarantee constituting a fraudulent conveyance. Each Guarantor that makes a payment under its guarantee will be entitled upon payment in full of all guaranteed obligations under the indenture to a contribution from each Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.

The following tables present summarized results of operations for the nine months ended December 31, 2021 and summarized balance sheet information at March 31, 2021 for the obligor group of the Senior Notes. The obligor group consists of the Parent Company Guarantor, Subsidiary Issuer, and Subsidiary Guarantors for the Senior Notes. 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 non-issuer. Transactions with non-issuer and non-guarantor subsidiaries have been presented separately.

Summarized Results of Operations
(in thousands)						Nine Months Ended
						December 31,
						2021
Revenues						$	1,272,089
Gross profit						773,256
Operating costs arising from transactions with non-issuers and non-guarantors - net						280,419
Income from operations						385,898
Non-operating income (expense) arising from transactions with subsidiaries that are non-issuers and non-guarantors - net						333,426
Net income						$	345,027

Summarized Balance Sheet Information
( in thousands)
			December 31,			March 31,
			2021			2021
Receivables due from non-issuers and non-guarantor subsidiaries			$	15,706,721		$	14,102,215
Other current assets			347,037			348,937
Total current assets			$	16,053,758		$	14,451,152
Non-current receivables due from non-issuers and non-guarantor subsidiaries			$	2,173,892		$	1,091,809
Goodwill			95,688			94,979
Other non-current assets			240,026			207,240
Total non-current assets			$	2,509,606		$	1,394,028
Payables due to non-issuers and non-guarantor subsidiaries			$	16,595,598		$	15,549,831
Other current liabilities			200,670			128,665
Total current liabilities			$	16,796,268		$	15,678,496
Non-current payables due to non-issuers and non-guarantor subsidiaries			$	1,127,874		$	1,203,274
Other non-current liabilities			3,356,518			1,695,772
Total non-current liabilities			$	4,484,392		$	2,899,046

Intercompany balances and transactions between the obligor group have been eliminated, and amounts due from, amounts due to, and transactions with non-issuer and non-guarantor subsidiaries have been presented separately. Intercompany transactions arise from internal financing and trade activities.

Critical Accounting Policies, Estimates, and Assumptions

Information related to our critical accounting policies, estimates, and assumptions is included in our Annual Report on Form 10-K for the year ended March 31, 2021, dated May 28, 2021. Our critical accounting policies, estimates, and assumptions have not changed materially from March 31, 2021.

Contingencies

We are, and will likely continue to be, involved in a number of legal proceedings, government investigations, and claims, which we believe generally arise in the course of our business, given our size, history, complexity, and the nature of our business, products, Customers, regulatory environment, and industries in which we participate. These legal proceedings, investigations and claims generally involve a variety of legal theories and allegations, including, without limitation, personal injury (e.g., slip and falls, burns, vehicle accidents), product liability or regulation (e.g., based on product operation or claimed malfunction, failure to warn, failure to meet specification, or failure to comply with regulatory requirements), product exposure (e.g., claimed exposure to chemicals, asbestos, contaminants, radiation), property damage (e.g., claimed damage due to leaking equipment, fire, vehicles, chemicals), commercial claims (e.g., breach of contract, economic loss, warranty, misrepresentation), financial (e.g., taxes, reporting), employment (e.g., wrongful termination, discrimination, benefits matters), and other claims for damage and relief.

We record a liability for such contingencies to the extent we conclude that their occurrence is both probable and estimable. 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 affect 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. Refer to Note 8 of our consolidated financial statements titled, "Commitments and Contingencies" for additional information and to Item 1A of Part II titled, "Risk factors."

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. 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.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, that have or are reasonably likely to have, a material current or future impact on our financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital.

Forward-Looking Statements

This quarterly report may contain statements concerning certain trends, expectations, forecasts, estimates, or other forward-looking information affecting or relating to STERIS or its industry, products or activities that are intended to qualify for the protections afforded “forward-looking statements” under the Private Securities Litigation Reform Act of 1995 and other laws and regulations. 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, 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. Other risk factors are described in STERIS’s other securities filings, including Item 1A of our Annual Report on Form 10-K for the year ended March 31, 2021 and subsequently filed Quarterly Reports on Form 10-Q. 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. Unless legally required, STERIS does not undertake to update or revise any forward-looking statements even if events make clear that any projected results, express or implied, will not be realized. Other potential risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, (a) the impact of the COVID-19 pandemic on STERIS’s operations, supply chain, material and labor costs, performance, results, prospects, or value, (b) STERIS's ability to achieve the expected benefits regarding the accounting and tax treatments of the redomiciliation to Ireland (“Redomiciliation”), (c) operating costs, Customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, Customers, clients or suppliers) being greater than expected following the Redomiciliation, (d) STERIS’s ability to successfully integrate the businesses of Cantel Medical into our existing businesses, including unknown or inestimable liabilities, or increases in expected integration costs or difficulties in connection with the integration of Cantel Medical (e) STERIS’s ability to meet expectations regarding the accounting and tax treatment of the Tax Cuts and Jobs Act (“TCJA”) or the possibility that anticipated benefits resulting from the TCJA will be less than estimated, (f) changes in tax laws or interpretations that could increase our consolidated tax liabilities, including changes in tax laws that would result in STERIS being treated as a domestic corporation for United States federal tax purposes, (g) the potential for increased pressure on pricing or costs that leads to erosion of profit margins, (h) the possibility that market demand will not develop for new technologies, products or applications or services, or business initiatives will take longer, cost more or produce lower benefits than anticipated, (i) the possibility that application of or compliance with laws, court rulings, certifications, regulations, regulatory actions, including without limitation any of the same relating to FDA, EPA or other regulatory authorities, government investigations, the outcome of any pending or threatened FDA, EPA or other regulatory warning notices, actions, requests, inspections or submissions, or other requirements or standards may delay, limit or prevent new product or service introductions, affect the production, supply and/or marketing of existing products or services or otherwise affect STERIS’s performance, results, prospects or value, (j) the potential of international unrest, economic downturn or effects of currencies, tax assessments, tariffs and/or other trade barriers, adjustments or anticipated rates, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs, (k) the possibility of reduced demand, or reductions in the rate of growth in demand, for STERIS’s products and services, (l) the possibility of delays in receipt of orders, order cancellations, or delays in the manufacture or shipment of ordered products or in the provision of services, (m) the possibility that anticipated growth, cost savings, new product acceptance, performance or approvals, or other results may not be achieved, or that transition, labor, competition, timing, execution, regulatory, governmental, or other issues or risks associated with STERIS’s businesses, industry or initiatives including, without limitation, those matters described in our Annual Report on Form 10-K for the year ended March 31, 2021, and other securities filings, may adversely impact STERIS’s performance, results, prospects or value, (n) the impact on STERIS and its operations, or tax liabilities, of Brexit or the exit of other member countries from the EU, and the Company’s ability to respond to such impacts, (o) the impact on STERIS and its operations of any legislation, regulations or orders, including but not limited to any new trade or tax legislation, regulations or orders, that may be implemented by the U.S. administration or Congress, or of any responses thereto, (p) the possibility that anticipated financial results or benefits of recent acquisitions, including the acquisition of Cantel Medical and Key Surgical, or of STERIS’s restructuring efforts, or of recent divestitures, including anticipated revenue, productivity improvement, cost savings,

growth synergies and other anticipated benefits, will not be realized or will be other than anticipated, (q) the increased level of STERIS’s indebtedness incurred in connection with the acquisition of Cantel Medical limiting financial flexibility or increasing future borrowing costs, (r) rating agency actions or other occurrences that could affect STERIS’s existing debt or future ability to borrow funds at rates favorable to STERIS or at all, (s) the potential impact of the acquisition of Cantel Medical on relationships, including with suppliers, Customers, employees and regulators, and (t) the effects of contractions in credit availability, as well as the ability of STERIS’s Customers and suppliers to adequately access the credit markets when needed.

Availability of Securities and Exchange Commission Filings

We make available free of charge on or through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports as soon as reasonably practicable after we file such material with, or furnish such material to, the Securities Exchange Commission ("SEC"). You may access these documents on the Investor Relations page of our website at http://www.steris-ir.com. The information on our website and the SEC's website is not incorporated by reference into this report.