Sotera Health Company

What they do

Sotera Health provides outsourced terminal sterilization using gamma, ethylene oxide (EO), and E-beam technologies, along with microbiological and analytical lab testing and advisory services. The company operates through three segments: Sterigenics (sterilization services), Nordion (cobalt-60 supply), and Nelson Labs (lab testing). Its services are essential for customers to meet regulatory requirements and are used by medical device, pharmaceutical, and food companies.

Revenue drivers

• Sterigenics — Largest segment, providing terminal sterilization services. Q2 2026 net revenues were $212 million, up 8.6% year-over-year (7.0% constant currency). Driven by favorable pricing, improved volume mix, and foreign currency benefit.
• Nordion — Provides cobalt-60 (Co-60) sources used in sterilization. Q2 2026 net revenues were $49 million, up 15.8% (16.7% constant currency), driven by improved volume mix from the timing of Co-60 harvests and favorable pricing.
• Nelson Labs — Lab testing and advisory services. Q2 2026 net revenues were $61 million, up 6.3% (5.4% constant currency). Segment income improved sequentially by 438 basis points.

Recent performance

In Q2 2026, Sotera Health reported net revenues of $321.4 million, up 9.2% (8.0% constant currency) year-over-year. Net income was $54 million, or $0.19 per diluted share, versus $8 million, or $0.03, in Q2 2025. Adjusted EPS was $0.26, up 30%. Operating cash flow for the quarter was $88 million. For the first half of 2026, Sterigenics revenue grew 9.1% to $398 million, Nordion grew 21.6% to $91 million, and Nelson Labs grew 2.9% to $113 million.

Strategy

Management emphasizes investing in capacity and alternative sterilization modalities, including a new X-ray facility undergoing final qualification and NO2-based sterilization. The company aims to deepen customer relationships and execute on its long-term strategy. In Q2 2026, it repriced its term loan, saving approximately $3.5 million in annual interest expense, and completed a private equity sponsor secondary offering, leaving no remaining sponsor ownership. The company achieved its net leverage target range of 2.0x to 3.0x, ending at 3.0x.

Risks

• EO and Co-60 supply disruption — Disruptions in supply or price increases of ethylene oxide or cobalt-60, including from geopolitical instability or sanctions related to Russia, could increase costs or disrupt operations.
• Litigation related to EO emissions — Current and future legal proceedings, including litigation related to the use, emissions, and releases of EO from current and former sterilization facilities, could result in liability claims and reputational harm.
• Regulatory and environmental compliance — Evolving environmental, health, and safety regulations, and the costs of compliance, could affect operations and profitability.
• Hazardous materials handling — Health and safety risks associated with the use, storage, transportation, and disposal of hazardous materials like EO and Co-60 could lead to accidents, claims, or operational disruptions.

Outlook

Management raised full-year 2026 guidance, with net revenue growth of 5.25% to 6.75% and Adjusted EBITDA growth of 5.75% to 7.25% on a constant currency basis. The company cites strong first-half performance and confidence in the remainder of the year. Q2 2026 Adjusted EBITDA margin expanded to 51.6%.