Sotera Health Q2 2025 slides: revenue growth accelerates, EBITDA margins expand

Sotera Health Co (NASDAQ:SHC) shares surged nearly 20% following the release of its Q2 2025 earnings presentation on August 8, 2025, as the company reported accelerating revenue growth and raised its full-year guidance. The healthcare sterilization and lab testing provider posted solid results across most business segments, with particularly strong performance in its Sterigenics unit.

Quarterly Performance Highlights

Sotera Health reported Q2 2025 revenue of $294 million, up 6.4% (6.0% constant currency) from $277 million in Q2 2024. Adjusted EBITDA reached $151 million with a margin of 51.2%, representing a 9.8% increase and 156 basis point margin expansion compared to the prior year. Adjusted earnings per share grew to $0.20, up from $0.19 in Q2 2024.

As shown in the following consolidated financial performance chart:

The company’s year-to-date performance also showed solid growth, with revenue of $549 million (up 4.6%) and adjusted EBITDA of $273 million (up 9.3%) for the first half of 2025. This represents an acceleration from Q1 2025, when the company reported 2.6% revenue growth and an adjusted EBITDA margin of 47.9%.

"Our business model has demonstrated resilience through consistent revenue growth every year since 2005, including the great recession of 2008 and the COVID pandemic," noted the company in its presentation, highlighting its long-term stability.

As illustrated in this revenue growth chart showing consistent growth since 2005:

Segment Analysis

Sterigenics, the company’s largest business segment, was the primary growth driver in Q2 2025, with revenue increasing 10.5% (10.0% constant currency) to $195 million. The segment’s income rose 11.3% to $108 million, with a margin of 55.3%. Growth was attributed to favorable volume/mix, pricing, and foreign exchange rates.

The segment’s performance is detailed in the following chart:

Nordion, the company’s Cobalt-60 supplier, delivered modest growth with revenue up 2.9% (3.4% constant currency) to $42 million. Segment income remained relatively flat at $23 million, with margin decreasing slightly to 55.3% from 56.8% in Q2 2024, primarily due to supplier mix.

Nelson Labs, the company’s testing services segment, saw revenue decline by 3.3% (4.4% constant currency) to $57 million. However, the segment showed significant improvement in profitability, with income increasing 13.9% to $20 million and margin expanding 514 basis points to 34.2%. This improvement was driven by volume/mix enhancements, lab optimization, and favorable pricing.

The company’s three business segments work together across the healthcare supply chain, as illustrated in this overview:

Each segment serves distinct but complementary roles in safeguarding global health:

Financial Position & Capital Allocation

Sotera Health continued to strengthen its financial position in Q2 2025. The company reported liquidity of $918 million as of June 30, 2025, consisting of $586 million in unrestricted cash and $332 million in revolver availability. The net leverage ratio improved to 3.5x, down from 3.7x at the end of 2024 and 3.8x at the end of 2023.

As shown in the following chart detailing the company’s leverage and investments:

Capital expenditures totaled $51 million year-to-date, lower than the $77 million spent in the same period of 2024. The company reduced its full-year capital expenditure forecast to $170-$180 million, down from the previous guidance of $190-$210 million.

"Capital deployment priorities continue to be organic growth, leverage reduction and opportunistic M&A," the company stated in its presentation.

Updated 2025 Outlook

Based on strong first-half performance, Sotera Health raised its full-year 2025 guidance. The company now expects revenue growth of 4.5% to 6.0% (up from 4.0% to 6.0% previously) and adjusted EBITDA growth of 6.0% to 7.5% (up from 4.5% to 6.5%). Adjusted EPS guidance was increased to $0.75-$0.82, compared to the previous range of $0.70-$0.76.

The updated outlook is summarized in this table:

Additional outlook items include an improved tax rate applicable to adjusted net income, now expected to be 31.5% to 33.5% (down from 33% to 35% previously). Interest expense guidance remained unchanged at $155-$165 million.

Looking at segment-specific expectations for the remainder of 2025, Sterigenics is projected to maintain mid-single to high-single digit constant currency revenue growth. Nordion is expected to deliver mid-single digit growth overall, though with a projected decline in the fourth quarter. Nelson Labs is forecast to see continued revenue challenges with a low-single digit decline for the full year, but is expected to return to growth in Q4 2025 while continuing to improve segment income margins.

Strategic Initiatives

Sotera Health highlighted several strategic initiatives in its presentation. The company is adding X-ray sterilization capabilities to its Sterigenics segment, expanding its technology mix beyond the current gamma (49%), ethylene oxide (39%), and e-beam (12%) offerings.

For Nelson Labs, the company is doubling cleanroom capacity to support growth in testing services. This investment aligns with the segment’s focus on improving operational efficiency and margins.

The company also noted progress on legal matters, signing a $34 million binding term sheet to settle 129 ethylene oxide claims in Illinois. This represents an important step in addressing ongoing litigation related to its sterilization facilities.

Sotera Health’s overall strategy continues to focus on four key priorities:

With approximately 5,000 customers in over 50 countries, more than 3,000 employees, and an integrated global network of 62 facilities in 13 countries, Sotera Health remains well-positioned in the healthcare sterilization and testing market. The company’s customer relationships average over 10 years across its top 25 customers, and more than 70% of revenue is tied to multi-year contracts, providing stability and visibility for future growth.

Full presentation:

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