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Sotera Health Co (NASDAQ:SHC), a provider of sterilization and lab testing services with a market capitalization of $3.04 billion, has agreed to a $30.9 million settlement over ethylene oxide (EO) claims. This agreement, announced on Monday, aims to resolve 97 claims related to its former Willowbrook, Illinois facility. The settlement comes as the company’s stock trades near its 52-week low, having declined about 9% in the past week. According to InvestingPro analysis, Sotera Health maintains strong liquidity with a current ratio of 2.75, suggesting adequate resources to handle such settlements.
The settlement includes seven claims set for trial in the Circuit Court of Cook County in April and June, as well as others pursued by the same plaintiffs’ counsel. This group comprises 61 claimants with pending lawsuits and 29 who have asserted claims but have not yet filed lawsuits. Despite these legal challenges, the company maintains robust operations with annual revenue of $1.1 billion and a healthy gross margin of 54.73%. For deeper insights into Sotera Health’s financial health and comprehensive analysis, investors can access detailed metrics and expert analysis through InvestingPro’s exclusive research reports.
According to the terms, Sterigenics, a subsidiary of Sotera Health, will pay the sum of $30,943,000, and in return, the plaintiffs will dismiss their claims with prejudice. The settlement process is expected to take between 60 to 90 days to complete and is contingent upon several conditions. These include full participation by all claimants, stays of the upcoming trials, and a determination by the Circuit Court that the settlement was entered into in good faith under the Illinois Contribution Among Joint Tortfeasors Act. Sterigenics retains the right to waive the requirement for 100 percent participation, which would result in the settlement being binding only on those plaintiffs who participate.
Sterigenics has denied any liability in the matter, and the settlement is not to be considered an admission of any liability or an indication that emissions from the Willowbrook facility presented a safety hazard to the community.
The agreement is detailed on the Investor Relations section of Sotera Health’s website and is mentioned in their most recent Annual Report on Form 10-K. The information regarding this settlement was furnished in a Form 8-K filed with the Securities and Exchange Commission and is not deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor is it subject to liability under that section.
The settlement represents a significant step for Sotera Health in managing the legal challenges related to the EO emissions from its former facility. The company continues to focus on its core services in the healthcare and applied sciences sectors. Looking ahead, InvestingPro analysts expect net income growth this year, with the company maintaining its profitability streak over the last twelve months. The platform offers 8 additional key insights about Sotera Health’s future prospects, available exclusively to subscribers.
In other recent news, Sotera Health Co. reported its fourth-quarter earnings for 2024, revealing a slight miss in revenue expectations. The company posted earnings per share (EPS) of $0.21, slightly above the forecasted $0.2023. However, revenue came in at $290.2 million, falling short of the anticipated $290.7 million. Despite this, Sotera Health demonstrated resilience with a 4.9% increase in full-year revenue, reaching $1.1 billion. Adjusted EBITDA for the year grew by 3.9% to $548.6 million, although the fourth quarter saw a decline in both revenue and adjusted EBITDA compared to the previous year. Looking ahead, Sotera Health anticipates a revenue growth of 4-6% for 2025, with adjusted EBITDA expected to grow by 4.5-6.5%. The company plans capital expenditures between $190-210 million and aims to generate $500-600 million in free cash flow over the next three years. Market volatility, particularly in the commercial sector, remains a challenge for the company.
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