STERIS plc

Economic and market conditions · Economic recession and downturns

Adverse economic cycles or conditions, and Customer, regulatory or government responses to those cycles or conditions, have affected and could further affect our results of operations. The onset of these cycles or conditions may not be foreseeable and there can be no assurance when they will begin to improve after they occur.

Economic and market conditions · Credit market conditions

Credit and liquidity problems may make it difficult for some businesses to access credit markets and obtain financing and may cause some businesses to curtail spending to conserve cash in anticipation of persistent business slowdowns and liquidity needs.

Geopolitical and trade · Government funding and budget changes

Some of our Customers are governmental entities or other entities that rely on government healthcare systems or government funding. If government funding for healthcare becomes limited or restricted in countries in which we operate, including as a result of the impacts of a pandemic or its residual effects, our Customers may be unable to pay their obligations on a timely basis or to make payment in full.

Geopolitical and trade · Political instability and government changes

Geopolitical instability has negatively impacted, and could in the future negatively impact, the global and U.S. economies, including by causing supply chain disruptions, rising inflation, volatility in capital markets and foreign currency exchange rates, rising interest rates, reduced consumer and Customer demand, economic slowdowns and recessions and heightened cybersecurity risks.

Geopolitical and trade · Trade policies tariffs and sanctions

The U.S. and other countries have announced and enacted changes, and planned changes, to international trade policy, including increasing tariffs on imports, and potentially renegotiating or terminating existing trade agreements. Tariffs, trade restrictions and other changes to international trade policies may result in increased production costs and product pricing, supply chain disruptions, limited access to end markets, lower profitability.

Geopolitical and trade · International conflicts and tensions

The potential impacts of geopolitical instability, which may result from the actions of state and non-state actors, include supply chain and logistics disruptions, financial impacts including volatility in foreign exchange and interest rates, increased inflationary pressure on raw materials and energy, reduced consumer and Customer demand, economic slowdowns and recessions.

Geopolitical and trade · Regulatory and policy uncertainty

The international trade environment is highly dynamic, and such changes, and retaliatory responses thereto, continue to evolve. We cannot predict the ultimate scope, duration, or impact of current or future tariff measures, changes to existing trade agreements, such as the USMCA, or the imposition of other trade restrictions.

Economic and market conditions · Inflation and deflation pressures

Geopolitical instability has negatively impacted, and could in the future negatively impact, the global and U.S. economies, including by causing supply chain disruptions, rising inflation, volatility in capital markets and foreign currency exchange rates, rising interest rates.

Customer and revenue · Changing customer preferences and behavior

If we cannot successfully implement our strategies to compete, our revenues and results of operations may be negatively impacted. We also face competition within our AST segment from our Customers who may insource their sterilization needs by utilizing their own technology and systems.

Strategic execution · Strategic transformation and turnaround risks

Our business realignment initiatives may not be as successful as anticipated. We execute organizational realignments to support our growth and cost management strategies. We also engage in initiatives aimed to increase productivity, efficiencies and cash flow and to reduce costs. If we are unable to successfully manage these and other organizational changes, the ability to complete such activities and realize anticipated synergies or cost savings could be materially adversely affected.

Customer and revenue · Customer concentration and key customer dependence

Consolidations among our healthcare and pharmaceutical Customers may result in a loss of Customers or more significant pricing pressures. A number of our Customers have consolidated. These consolidations are due in part to healthcare cost reduction measures initiated by competitive pressures as well as legislators, regulators and third-party payors.

Customer and revenue · Reimbursement and pricing pressure healthcare or insurance

Government or other third-party payors may deny or change coverage, reduce their current levels of reimbursement for healthcare services, or otherwise implement measures to regulate pricing or contain costs. In addition, our costs may increase more rapidly than reimbursement levels or permissible pricing increases.

Digital transformation and innovation · Technology obsolescence and evolution

Our success will depend on various factors, including our ability to either source or custom develop the necessary technology and components, and the digital transformation initiative's cost-effectiveness, utility and competitive positioning. If our digital transformation initiative fails to develop as we expect, or progresses more slowly than expected, such failure to realize efficiencies and cost reduction benefits could adversely impact our financial condition and results of operations.

Industry regulation · Regulatory compliance and changes

We are subject to compliance with various laws and regulations, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and similar anti-bribery laws, which generally prohibit companies and their intermediaries from making improper payments to officials for the purpose of obtaining or retaining business.

Industry regulation · Fda drug and device approval

In the U.S., our products and services are regulated by the FDA and other regulatory authorities. Unless an exemption applies, a sterilization, decontamination or medical device or product or service must receive regulatory approval or clearance before it can be marketed or sold. If there are delays in and/or we are unable to obtain any required approvals, approval supplements or clearances, we may be required to cease manufacturing and sale, or recall or restrict the use of such modified device.

Legal and litigation · Product liability and warranty claims

We face an inherent business risk of exposure to product liability claims and other legal and regulatory actions. A significant increase in the number, severity, amount, or scope of these claims and actions may result in substantial costs and harm our reputation or otherwise adversely affect product sales and our business.

Legal and litigation · Intellectual property disputes

We rely on a combination of patents, trademarks, trade secrets, know-how, and confidentiality agreements to protect the proprietary aspects of our technology. Litigation may be necessary to enforce or defend our intellectual property rights, to protect our trade secrets, and to determine the validity and scope of our proprietary rights. Litigation may also be brought against us claiming that we have violated the intellectual property rights of others.

Tax and financial reporting · Tax compliance and changes in tax law

We are subject to the tax laws at the federal, state or provincial, and local government levels in the many jurisdictions in which we operate or sell our products or services. Tax laws may change in ways that adversely affect our tax positions, effective tax rate and cash flow. These tax laws are extremely complex and subject to varying interpretations.

Tax and financial reporting · Transfer pricing and international tax

The GloBE rules could subject us to additional income taxes in the jurisdictions that adopted GloBE if our effective corporate tax rate in those jurisdictions (determined under the GloBE rules) is below 15%. Accordingly, the GloBE rules could increase tax uncertainty and adversely impact our provision for income taxes.

Reputation and brand · Product recalls and public safety

Our products are subject to recalls and restrictions, even after receiving U.S. or foreign regulatory clearance or approval. Ongoing medical device reporting regulations require that we report to appropriate governmental authorities in the U.S. and/or other countries when our products cause or contribute to a death or serious injury or malfunction.