Sotera Health Company (NasdaqGS:SHC) Conference November 19, 2025 08:30 AM ET Company ParticipantsDave Windley - Managing DirectorMichael Petras - CEODave WindleyGood morning. Hi, I'm Dave Windley with Jefferies Healthcare Equity Research, based in the States. Appreciate your interest in our London Healthcare Conference for 2025. The next presenter here at the 8:30 slot here in London is Sotera Health CEO Michael Petras is with us. Michael, really appreciate your being here. He's going to make some prepared ...

Financial Data and Key Metrics Changes - Total company revenues increased by 9.1% to $311 million for Q3 2025 compared to Q3 2024, with adjusted EBITDA rising by 12.2% to $164 million [5][9] - Adjusted EBITDA margins reached 52.7%, an increase of 147 basis points year-over-year [9] - Net income for Q3 2025 was $48 million, or $0.17 per diluted share, compared to $17 million, or $0.06 per diluted share in Q3 2024 [9][10] - Adjusted EPS increased by $0.09 to $0.26 compared to Q3 2024 [10] Business Line Data and Key Metrics Changes - **Sterigenics**: Revenue grew by 9.8% to $193 million, with segment income increasing by 11.6% to $107 million and margins improving to 55.6% [5][10] - **Nordion**: Revenue increased by 22.4% to $63 million, with segment income rising by 19.9% to approximately $38 million, although segment income margin decreased to 60.6% [11] - **Nelson Labs**: Revenue declined by 5% to $56 million, but segment income rose by 1.9% to $19 million, with margins expanding to 34.1% [12] Market Data and Key Metrics Changes - The company reported strong performance across core medical device customers, with Nordion's revenue growth driven by reactor harvest schedules [5][6] - Nelson Labs experienced a modest revenue decline, but core lab testing growth and operational improvements led to segment income growth [7] Company Strategy and Development Direction - The company reaffirmed its 2025 revenue outlook and raised its adjusted EBITDA outlook, indicating confidence in its operational execution and market position [7][15] - Nordion secured a 25-year renewal of its Class 1B operating license, enhancing its ability to supply Cobalt-60 for critical healthcare processes [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's guidance and outlook for the remainder of the year, despite some challenges in the expert advisory services due to government funding issues [33][37] - The company expects continued growth in core lab testing and operational improvements, with a focus on maintaining stable margins [42][43] Other Important Information - The company has generated $184 million in positive operating cash flow year-to-date and has over $890 million in available liquidity [13][14] - The net leverage ratio improved to 3.3x, down from 3.7x at the end of 2024 [14] Q&A Session Summary Question: Volume recovery in specific areas - Management noted consistent performance across Sterigenics and various categories, including bioprocessing and med tech, with expectations for continued volume recovery [24][25] Question: Update on broader litigation - Management provided updates on ongoing litigation, indicating progress in Illinois and Georgia, with no current personal injury claims in New Mexico [26][27] Question: Expectations of budget flush in Q4 - Management does not expect a budget flush from med-tech customers and feels confident in their guidance for the remainder of the year [31][33] Question: Impact of FDA funding on expert advisory services - Management acknowledged that the expert advisory services are feeling some impact from the lack of FDA activity, which has affected top-line performance [36][37] Question: Core lab testing growth outlook - Management indicated that core lab testing is performing well, with expectations for continued growth despite challenges in expert advisory services [42] Question: Nordion's revenue growth and margin pressure - Management explained that margin pressure in Nordion is due to a mix of lower-margin product sales, but overall margins remain strong [48] Question: Pricing trends in Sterigenics - Management confirmed that pricing in Sterigenics is stabilizing around the 3%-4% range, with potential for incremental improvements over time [52][53] Question: Number of personal injury claims in California - Management reported that there are currently 83 personal injury claims in California [57]