STERIS plcSTE
STERIS plc Fair Value Disclosure
19. FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. We estimate the fair value of financial assets and liabilities using available market information and generally accepted valuation methodologies. The inputs used to measure fair value are classified into three tiers. These tiers include Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring the entity to develop its own assumptions. The following table shows the fair value of our financial assets and liabilities at March 31, 2026 and March 31, 2025:
| (in millions) | Fair Value Measurements | |||||||||||||||||||||||||||||||||||||
| At March 31, | Carrying Value | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 439.6 | $ | 171.7 | $ | 439.6 | $ | 171.7 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||
Forward and swap contracts (1) | 0.2 | 0.1 | — | — | 0.2 | 0.1 | — | — | ||||||||||||||||||||||||||||||
Deferred compensation plan (2) | 1.3 | 1.1 | 1.3 | 1.1 | — | — | — | — | ||||||||||||||||||||||||||||||
| Other investments | 3.2 | 3.0 | 3.2 | 3.0 | — | — | — | — | ||||||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||||||||
Forward and swap contracts (1) | $ | 0.7 | $ | 0.6 | $ | — | $ | — | $ | 0.7 | $ | 0.6 | $ | — | $ | — | ||||||||||||||||||||||
Deferred compensation plan (2) | 1.5 | 1.2 | 1.5 | 1.2 | — | — | — | — | ||||||||||||||||||||||||||||||
Total debt (3) | 1,931.7 | 2,043.7 | — | — | 1,666.4 | 1,756.5 | — | — | ||||||||||||||||||||||||||||||
Contingent consideration obligations (4) | 6.1 | 3.2 | — | — | — | — | 6.1 | 3.2 | ||||||||||||||||||||||||||||||
(1) The fair values of forward and swap contracts are based on period-end forward rates and reflect the value of the amount that we would pay or receive for the contracts involving the same notional amounts and maturity dates.
(2) We maintain a frozen domestic non-qualified deferred compensation plan covering certain employees, which allowed for the deferral of payment of previously earned compensation for an employee-specified term or until retirement or termination. Amounts deferred can be allocated to various hypothetical investment options (compensation deferrals have been frozen under the plan). We hold investments to satisfy the future obligations of the plan. Employees who made deferrals are entitled to receive distributions of their hypothetical account balances (amounts deferred, together with earnings (losses)). Changes in the fair value of these investments are recorded in the Other expense (income) line of the Consolidated Statements of Income. During fiscal 2026 and fiscal 2025, we recorded gains of $0.2 million and $0.9 million, respectively, related to these investments.
(3)We estimate the fair value of our debt using discounted cash flow analyses, based on our current incremental borrowing rates for similar types of borrowing arrangements.
(4) As of March 31, 2026 and 2025, we had contingent consideration obligations of $6.1 million and $3.2 million arising from business acquisitions, respectively. The fair values are based on discounted cash flow analyses reflecting the possible achievement of specified performance measures or events and captures the contractual nature of the contingencies, commercial risk, and the time value of money. Contingent consideration obligations are classified in the Consolidated Balance Sheets as Accrued expense (short-term) and Other liabilities (long-term), as appropriate based on the contractual payment dates.
As of March 31, 2026 and 2025, we also held $45.5 million and $14.3 million of other investments without readily determinable fair values measured at cost less impairment, if any, adjusted to fair value for any observable price changes in orderly transactions for identical or similar investments of the same issuer. These investments are included in the "Other assets" line of our Consolidated Balance Sheets.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 29, 2026 | Showing above |
| 2025 | May 29, 2025 | |
| 2024 | May 29, 2024 | |
| 2023 | May 26, 2023 | |
| 2022 | May 31, 2022 | |
| 2021 | May 28, 2021 | |
| 2020 | May 29, 2020 | |
| 2019 | May 30, 2019 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.