Earnings call transcript: Sotera Health Q3 2025 beats expectations, stock rises

Sotera Health Co. (NASDAQ:SHC) reported strong financial results for Q3 2025, surpassing analysts’ expectations. The company posted an adjusted earnings per share (EPS) of $0.26, beating the forecast of $0.2167, marking a 19.98% surprise. Revenue reached $311 million, exceeding the anticipated $303.63 million. Following the announcement, Sotera’s stock rose by 3.13% in pre-market trading, reflecting investor optimism.

Key Takeaways

• Sotera Health’s Q3 2025 adjusted EPS exceeded forecasts by nearly 20%.
• The company reported a 9.1% increase in revenue, reaching $311 million.
• Sotera’s stock price increased by 3.13% in pre-market trading.
• The company raised its adjusted EPS guidance for 2025.
• Sotera Health continues to reduce debt and improve leverage ratios.

Company Performance

Sotera Health demonstrated robust performance in Q3 2025, with significant improvements across its financial metrics compared to the same period last year. The company reported a 9.1% increase in total revenues, driven by strong performance in its Sterigenics and Nordion segments. Adjusted EBITDA rose by 12.2% to $164 million, reflecting enhanced operational efficiency and cost management.

Financial Highlights

• Revenue: $311 million, up 9.1% year-over-year.
• Adjusted EPS: $0.26, a $0.09 increase from Q3 2024.
• Adjusted EBITDA: $164 million, up 12.2%.
• Net income: $48 million, compared to $17 million in Q3 2024.

Earnings vs. Forecast

Sotera Health’s Q3 2025 results exceeded market expectations, with an EPS of $0.26 compared to the forecasted $0.2167, a 19.98% surprise. Revenue also surpassed expectations, coming in at $311 million against a forecast of $303.63 million. This marks a significant achievement for the company, as it continues to outperform its previous quarters.

Market Reaction

Following the earnings announcement, Sotera Health’s stock saw a positive pre-market reaction, with a 3.13% increase, bringing the price to $17.4. This movement reflects investor confidence in the company’s ability to deliver consistent growth. The stock is approaching its 52-week high of $17.78, indicating strong market sentiment.

Outlook & Guidance

Sotera Health has raised its adjusted EPS guidance for 2025 to a range of $0.81 to $0.86, reflecting confidence in continued growth. The company reaffirmed its revenue growth outlook of 4.5% to 6% and expects further improvements in its net leverage ratio by year-end.

Executive Commentary

CEO Michael Petrus emphasized the company’s resilience and growth potential, stating, "We’re built for resilience and sustainable growth." He highlighted Sotera’s stable recurring revenue base and expertise in supporting customers in regulated markets, contributing to its strong performance.

Risks and Challenges

• FDA funding constraints affecting Expert Advisory Services.
• Potential product mix margin variations at Nordion.
• Ongoing litigation with 83 personal injury claims in California.
• Macroeconomic pressures that could impact medical device and bioprocessing sectors.

Q&A

During the earnings call, analysts inquired about the impact of a potential government shutdown, to which the company responded that there would be no material effect. Questions also focused on the challenges faced by Expert Advisory Services and the strategic measures being implemented to address them.

This comprehensive performance and strategic outlook position Sotera Health favorably as it continues to navigate industry dynamics and pursue growth opportunities.

Full transcript - Sotera Health Co (SHC) Q3 2025:

Conference Operator: Good morning, and welcome to the Sartera Health Third Quarter twenty twenty five Conference Call. All participants will be in a listen only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Vice President of Investor Relations, Jason Peterson.

Jason, please go ahead.

Jason Peterson, Vice President of Investor Relations, Sotera Health: Good morning and thank you. Welcome to Sotera Health’s third quarter twenty twenty five earnings call. You can find today’s press release and accompanying supplemental slides on the Investors section of our website at soterahealth.com. This webcast is being recorded and a replay will be available in the Investors section of the Sotera Health website. On the call with me today are Chairman and Chief Executive Officer, Michael Petrus and Chief Financial Officer, John Lyons.

During the call, some of our comments may be considered forward looking statements. The matters addressed in these statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied. Please refer to Soterra Health’s SEC filings in the forward looking statements slide at the beginning of the presentation for a description of these risks and uncertainties. The company assumes no obligation to update any such forward looking statement. Please note that during the discussion today, the company will present both GAAP and non GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, tax rate applicable to net income, adjusted net income, adjusted EPS, net debt and net leverage ratio in addition to constant currency comparisons.

A reconciliation of GAAP to non GAAP measures for all relevant periods may be found in the schedules attached to the company’s press release and in the supplemental slides of this presentation. The operator will be assisting with the Q and A portion of the call today. Please limit yourself to one question and one follow-up so that we can give everyone an opportunity to ask questions. If you have any questions after the call, please feel free to reach out to me and the Investor Relations team. I will now turn the call over to Stereo Health Chairman and CEO, Michael Petros.

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Good morning and thank you for joining us today. I am pleased to report another excellent quarter for Seterra Health marked by strong top line growth, double digit adjusted EBITDA growth, margin expansion of approximately 150 basis points and a $09 adjusted EPS increase compared to the 2024. Total company revenues increased 9.1% for the quarter, while adjusted EBITDA increased 12.2%. Sterigenics delivered another strong quarter achieving 9.8% top line growth compared to the 2024 driven by consistent performance across our core medical device customers. Norion delivered revenue growth of 22.4%, which was primarily driven by the timing of the reactor harvest schedules versus the 2024.

Revenue was ahead of our expectations as certain customer deliveries originally scheduled for the fourth quarter were fulfilled in the third quarter. While Nelson Labs delivered third quarter revenue that was modestly below our expectations, our growth in Core Lab testing and operational improvements drove segment income growth and margin expansion. This marks the fifth consecutive quarter of year over year margin expansion in Nelson Labs, highlighting our focus on execution. In addition to our strong performance during the quarter, we strengthened our balance sheet through paying down $75,000,000 of debt and lowered our interest expense by approximately $13,000,000 annually. John will elaborate more on this shortly.

Given our strong year to date results and visibility in the remainder of the year, we are reaffirming our 2025 revenue outlook and are raising our adjusted EBITDA outlook. Each quarter, I have emphasized Sotera Health’s vital role in global healthcare. I am pleased to share that Nordion recently secured a twenty five year renewal of its Class 1B operating license, the longest Class 1B license ever granted by the Canadian Nuclear Safety Commission. This milestone reflects our deep trusted partnership with the CNSC and their confidence in Norian’s safety culture and operational excellence. With this renewed license, Norion will continue to secure the global supply of Cobalt sixty supporting critical sterilization processes, including those performed by Sterigenics and enabling life saving radiotherapy treatments for brain tumors and early stage breast cancer.

This achievement reinforces our mission of safeguarding global health by ensuring a reliable supply of critical Cobalt-sixty for our customers, the healthcare system and patients for decades to come. Now, I will turn it over to John who will walk us through the financials.

John Lyons, Chief Financial Officer, Sotera Health: Thank you, Michael. I will start with a review of our consolidated third quarter twenty twenty five results followed by a breakdown of performance across each business segment. On a consolidated basis, third quarter revenues increased 9.1% to $311,000,000 or 8% on a constant currency basis as compared to the 2024. Adjusted EBITDA increased by 12.2% to $164,000,000 or 11.2% on a constant currency basis versus the 2024. Adjusted EBITDA margins reached 52.7, an increase of 147 basis points over the prior year, driven by improved margins in both Sterigenics and Nelson Labs.

Interest expense for the third quarter was $39,000,000 an improvement of approximately $2,400,000 versus the same period last year. Net income for Q3 twenty twenty five was $48,000,000 or $0.17 per diluted share compared to net income of $17,000,000 or $06 per diluted share in Q3 twenty twenty four. Adjusted EPS was $0.26 an increase of $09 from the 2024. Nearly $04 of this benefit came from adjusted EBITDA growth, less than $01 came from lower interest expense, while the remainder relates to a reduced tax rate. Now let’s take a closer look at our segment performances.

Sterigenics continued its strong performance in the third quarter delivering 9.8% revenue growth to $193,000,000 or 8.4% on a constant currency basis compared to Q3 twenty twenty four. The revenue growth was driven by favorable volume mix of approximately 4.6%, increased pricing of three point eight percent and one hundred and forty basis point benefit from foreign currency exchange. Segment income increased 11.6% to $107,000,000 or 10.2% on a constant currency basis, with margins improving 90 basis points year over year to 55.6%, driven by strong top line growth, partially offset by inflation. Nordion’s third quarter revenue increased 22.4% to $63,000,000 or 23.6% on a constant currency basis compared to 2024. Nordion’s revenue increase was driven by a volume and mix benefit of 18.9% and favorable pricing of 4.7%, partially offset by an unfavorable impact of 120 basis points from changes in foreign currency exchange rates.

Nordion segment income increased 19.9% to approximately $38,000,000 or 21.2% on a constant currency basis versus 2024. Segment income growth was driven by increased volume and mix as well as customer pricing. Segment income margin was 60.6%, reflecting a decrease of approximately 130 basis points driven by product mix. On a year to date basis, Nordion segment income margins have increased more than 70 basis points. Nelson Labs reported third quarter twenty twenty five revenue of $56,000,000 a 5% decline compared to the same period last year.

Favorable contributions from pricing of 2.7%, foreign exchange of 1.4% and core lab testing growth were offset by the decline in Expert Advisory Services. Nelson Labs third quarter twenty twenty five segment income rose 1.9% to $19,000,000 or flat on a constant currency basis with margins expanding two twenty nine basis points year over year to 34.1%. Segment income and margin improvement were driven by volume and mix improvements, lab optimization and favorable pricing. Let’s now turn to our balance sheet, cash generation and capital deployment activities. Year to date, we have generated $184,000,000 in positive operating cash flow, while capital expenditures totaled $87,000,000 The company continues to be in a very strong liquidity position.

As of the end of the third quarter, we had over $890,000,000 of available liquidity, which included almost $300,000,000 in unrestricted cash and nearly $600,000,000 of available capacity on a revolving line of credit. We continue making progress toward our long term net leverage target range of two to three times. Our net leverage ratio improved to 3.3 times at quarter end, down from 3.7 times at the 2024 and down from 4.2 times as of Q3 twenty twenty three. As Michael mentioned, we took strategic actions this quarter to strengthen our balance sheet and lower interest expense. First, continued adjusted EBITDA growth and cash generation helped us achieve contractual net leverage target turning our 25 basis point reduction in our term loan interest rate.

Then in September, we repriced the term loan for an additional 50 basis point reduction and repaid $75,000,000 of the facility. These steps are expected to generate approximately $13,000,000 in annual interest savings. Now I’d like to turn to our 2025 full year outlook. We are maintaining our full year constant currency revenue growth outlook range of 4.5% to 6% and anticipate revenue growth will land near the midpoint of this range. With continued benefits from volume growth and operational improvements, we are raising our constant currency adjusted EBITDA growth outlook to 6.75% to 7.75%, up from the prior range of 6% to 7.5%.

Foreign currency is expected to contribute approximately 25 basis points to revenue and adjusted EBITDA growth versus the prior outlook of no impact. Total company price for 2025 is still expected to be near the midpoint of our long term stated range of 3% to 4%. For Sterigenics, we continue to expect 2025 constant currency revenue growth of mid to high single digits. For Nordion, we’ve raised our full year 2025 constant currency revenue growth outlook and now expect mid to high single digit growth. Additionally, I’m pleased to report that for 2025, there is no longer any revenue risk associated Cobalt 60.

For Nelson Labs, we now expect full year 2025 constant currency revenues to decline mid single digits as the impact from Expert Advisory Services more than offsets the continued growth in Core Lab testing and improved pricing. We expect segment income margin to finish in the low to mid-30s percent range for the full year. Turning to other guidance items, driven by our balance sheet initiatives discussed earlier, we are improving our interest expense range to $154,000,000 to $158,000,000 from our previous outlook of $155,000,000 to $165,000,000 Our effective tax rate on our adjusted net income is expected to be in the range of 29% to 31%, improving from the prior range of 31.5% to 33.5%. The lower tax rate on adjusted net income reflects the adoption of recent accounting guidance related to The U. S.

Tax law changes enacted in July. We now expect adjusted EPS to be in the range of $0.81 to $0.86 an increase from the previous range of $0.75 to $0.82 The $0.5 improvement from the midpoint of the prior EPS range reflects $02 driven by incremental EBITDA generation and reduced interest expense with the balance driven by the favorable tax rate change. We expect the fully diluted share count to remain in the range of $286,000,000 to $287,000,000 shares. We now expect capital expenditures to be in the range of $125,000,000 to $135,000,000 below our prior outlook of $170,000,000 to $180,000,000 driven by project timing and incremental cost savings. While spending cadence has shifted, our expectation for cumulative capital expenditures from 2025 through 2027 remains unchanged and we are on track to achieve our 500,000,000 to $600,000,000 cumulative free cash flow commitment provided at our twenty twenty four Investor Day.

We continue to expect year end 2025 net leverage ratio to improve compared to 2024. Finally, as usual, our outlook does not assume any M and A activity. I’ll now turn the call back over to Michael.

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Thank you, John. We’re very pleased with the quarter’s performance. I would now like to give an update regarding the ethylene oxide EO personal injury claims in Cobb County, Georgia. Although this is a lengthy and detailed update, the key point is while the case is pending in Cobb County still have a ways to go, we believe the recent Phase one and Phase two rulings align with our long standing position that when science is considered fully, fairly and properly, the evidence refutes the plaintiff’s claims in these matters. As a reminder, the Cobb County Court ordered phased proceedings in eight bellwether cases selected by the plaintiff’s counsel.

Phase one was devoted to general causation. The court recorded the plaintiffs to prove that EO admissions from our Atlanta facility are capable of causing the diseases alleged by the plaintiffs. In November 2024, the court excluded two of the plaintiffs’ three general causation experts, but allowed the third expert under a new standard created by the court for these cases that did not require the plaintiffs to establish exposure levels at which EO becomes harmful to humans. Both sides appealed. On Friday, October 31, the Georgia Court of Appeals rejected the trial court’s new standard and vacated the trial court’s Phase one orders.

Consistent with our position, the Court of Appeals directed the trial court to apply the correct standard that requires causation experts to reliably identify the levels at which exposure to EO becomes harmful. The Court of Appeals also instructed the trial court to consider whether plaintiffs can prove general causation using epidemiologic evidence and background risk of the diseases at issue, which all occur in the general population without exposure to EO emissions. While the Phase one appeals were pending, three of the bellwether cases proceeded to Phase two, which was devoted to specific causation. Plaintiffs were required to present admissible expert testimony that the plaintiffs were exposed to doses of EO from the Atlantic facility that caused their diseases. On October 17, the trial court excluded all three of the plaintiff’s causation experts and dismissed all three cases for failure to present reliable and admissible evidence of specific causation.

The court also dismissed the plaintiff’s claims for nuisance, noting that the plaintiffs had not presented any evidence that the Atlanta facility had violated EPA, Georgia EPD or Cobb County requirements. Although the Phase two orders apply only to three bellwether cases, we believe the substantive grounds for rulings apply with equal force to the remaining personal injury claims. This will be decided in due course by the Cobb County Court and if necessary, the Georgia appellate courts. We will continue to put the science front and center as we defend Sterigenic’s safe and essential operations. This statement, the trial court’s Phase I and Phase II orders and the decision of the Georgia Court of Appeals are all available on our website.

At this point, operator, I’d like to open it up for questions and answers.

Conference Operator: Thank you. We will now begin the question and answer session. And your first question today will come from Patrick Donnelly with Citi. Please go ahead.

Patrick Donnelly, Analyst, Citi: Hey, great. Thanks for the question. Maybe just one on the volume recovery. Nice to see that continue. Are there certain areas you guys are seeing kind of outsized recovery?

I think last quarter you talked a little bit about medtech and bioproduction. Maybe what you’re seeing there and what the expectations on the volume trajectory are from here?

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Hey, Patrick. Good morning. This is Michael. We’re seeing pretty consistent performance across Sterigenics and across multiple almost all categories, bioprocessing, medtech broadly. Overall, we’re seeing good recovery in volumes and we expect that to continue going forward.

Patrick Donnelly, Analyst, Citi: Okay, great. And then just a quick one, helpful on the litigation update there. I guess maybe a quick one just in terms of where some of the other cases are. Again, it sounds like we can continue to see some of these updates, but we’d love to just hear the latest on the broad litigation side and how you’re feeling on that front?

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Yes. Patrick, Illinois is wrapping up. We’ve got April 2025 settlement that we did that’s been completed and closed out. The 07/20/1951 is progressing well. That will leave us with only one remaining case in Illinois.

In Georgia, I just gave you a lengthy update there. On New Mexico, right now, there’s no personal injury claims currently and there’s only the one suit brought by the AG for public nuisance that’s set for trial in July 2026. And then in California, we’ve recently been informed that the first trials are expected in January and April 2027.

Patrick Donnelly, Analyst, Citi: All right, perfect. Thanks Michael.

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Thank you.

Conference Operator: Your next question today will come from Casey Woodring with JPMorgan. Please go ahead.

Jayden, Analyst, JPMorgan: Hi, this is Jayden on for Casey. Thank you so much for taking my question. Just first on Sterigenics, I was just wondering, are you factoring any expectation of budget flush in 4Q? And given you’ve reaffirmed your revenue outlook for the year after your 3Q beat, can you touch on how conservative your guidance is for 25,000,000 And the puts and takes behind that? Thank you.

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: I’m sorry. Can you repeat the question on Sterigenics? I wasn’t sure I understood that first question.

Jayden, Analyst, JPMorgan: I was just wondering if you’re factoring in any expectation of a budget flush in 4Q?

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: A budget flush, are you talking about the government shutdown? Is that what you’re referencing when you say budget flush?

Jayden, Analyst, JPMorgan: No, I’m talking from the medtech customers from medtech or bioprocessing. No.

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Not expecting a budget flush from no. And when I look forward, we feel confident of our guidance and outlook that we’re giving you here for the rest of the year. I wouldn’t say it’s aggressive, wouldn’t say it’s conservative. We just feel confident where it is with one quarter to go.

Jayden, Analyst, JPMorgan: Okay, got it. And then just a follow-up, just on that government shutdown since you mentioned it. Are you seeing any impact from that in your RCA business or anywhere across your portfolio?

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: When we look at it, remember we have no direct government sales in the business. There’s some indirect impact, but it’s pretty minimal. It’s not a material impact. We do feel a little bit of it in the Expert Advisory Services with some of the delays going on and activity there. But overall, we don’t see a material impact to the company and we do not have direct sales to the government.

Jayden, Analyst, JPMorgan: All right. Got it. Thank you.

Conference Operator: Your next question today will come from Luke Sergott with Barclays. Please go ahead.

Luke Sergott, Analyst, Barclays: Great. Thanks for the question. Just two for me. It’s about the one on the Expert Advisory business. It seems to have gotten worse here.

Is that just related to the lack of FDA funding, lack of inspections and kind of the government shutdown? And then the second one is on the implied 4Q EBITDA margin step down. Just want to know what’s going on there. And I assume it’s probably just not the Nordion volumes, but just wanted to see if anything else is going on.

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Yes. Good morning, Luke. Yes, I would say Expert Advisory Services in that RCA business is feeling some of the impact from the FDA lack of activity. So that’s clearly impacting. It was worse than we expected.

But overall, it’s had a material impact on the top line for the company. It’s about 10 points of impact. John, is it roughly about 10 of impact on the top line. So but overall the core lab testing is improving which is what we had hoped for and we’re continuing to see. John you want to address the margin question that Luke

John Lyons, Chief Financial Officer, Sotera Health: had as well? Yes. Luke as we look at the margins in Q4 we anticipate that Nelson will step back a bit from where they are at this peak in Q3. Q3 has the benefit of some pretty low expenses inside of that. And we’ve been running really well in Steri.

We could see a little bit of step back in that, but nothing alarming there. Still stable margins for the year, maybe even slight growth for the year for Sterigenics.

Luke Sergott, Analyst, Barclays: Okay, great. Thanks.

Conference Operator: Your next question today will come from Dave Windley with Jefferies. Please go ahead.

Dave Windley, Analyst, Jefferies: Hi, good morning. Thanks for taking my questions. Maybe follow-up on Nelson and ask the I guess the other side of the coin Michael the core lab testing and the pickup there. So just kind of thinking about the balance if Expert Advisory is feeling this headwind and that’s kind of prisoner to what the government does on funding an FDA, what does the rest of the business look like and what’s the demand quotient there?

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Yes. Thanks David. I’d say overall core lab testing is doing pretty well. We’d like to continue to see more growth. The routine volumes or some of the flow volumes are picking up like we see in the sterilization volumes.

Validation has been a little bit choppy, but we got some pockets particularly with some of the new regulations, some of the requirements of extractable leachable testing and bioprocessing components and things of that nature are all doing well. So overall, we’re seeing some nice growth in the lab testing core. We’d like to see it better. But overall, it’s going the right direction. And fundamentally, we’re seeing the Embedded Labs growth continue.

The linkage with the Sterigenics piece and the volumes there are clearly having an impact in a positive way.

Dave Windley, Analyst, Jefferies: Got it. And then maybe zooming out a little bit and just thinking more broadly to the question on kind of the fourth quarter sequential progression. I think, as Luke highlighted there’s a little bit of margin pullback. John you addressed that. The revenue growth indicated by your guidance also steps back a little bit.

And so I wondered if you could just comment on cadence, timing, things that for the year were reflected in 3Q that you maybe thought were going to land in 4Q that kind of thing relative to kind of trajectory what’s the smooth trajectory that fits through what is a higher 3Q and a lower 4Q? Thanks.

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Yes. Thanks, David. I would just say we talked about the Nelson comments and the things that we’re seeing on Expert Advisory Service. The other big factor that we talked about last quarter and we’re reentering today is the Nordion. The Nordion lumpiness, we said it was going be down significantly versus last year fourth quarter and that’s what referencing.

That’s the piece. So we had a portion of it as we referenced in our comments here that pulled into the third quarter from customers’ request. But overall, we still expect it to be down significant from last year, all due to timing. But overall, when you look at the total year for Nordion, it will be actually above our expectations as we also commented on here today. So I think that’s the other piece.

Dave Windley, Analyst, Jefferies: Okay, great. Thanks.

Conference Operator: Next question will come from Brett Fishman with KeyBanc. Please go ahead.

Brett Fishman, Analyst, KeyBanc: Hey guys, good morning. Thank you so much for taking the questions. Just had a quick one on Nordion. Notice the very strong revenue growth in the quarter in excess of 22%. But I think you noted that there were some margin pressure from the mix.

And I’m just curious kind of like what type of mix shift with Nordion was causing some margin compression? And does that persist moving forward?

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Brett. It’s Michael here. So when you look at the business, it’s tough to talk about margin pressure in the Nordion business when you see the margins that we put up in that business. What we’re referencing there is product sales, in particular production of radiators equipment sales. That’s a lower margin and we saw some growth in that in the quarter.

We’ll see that sporadically here and there, but we don’t see that as a material impact long term. The margin rates continue to be very strong in that business as you know.

Brett Fishman, Analyst, KeyBanc: That is a very fair point. And then just on Sterigenics, it was really great to see a second quarter of really improved trends for the segment. I was just curious how you think about overall sustainability of call it mid to high single digit or high single digit type of growth as we look ahead into 2026? And maybe short of giving guidance, if there’s any key moving pieces that you would call out for next year other than potentially more challenging comparisons? Thanks again.

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Yes. Great. Listen, we’re proud of what Ceragenics team is. They’re executing very well. We set our long range guide there would be mid single digits to high single digits.

We’re reiterating that. And I would just say, overall, we’ll give guidance we give guidance the beginning of next year. But overall, when we look at our long range commitments we made in the Investor Day last November, we still feel pretty confident around that. So we’re well situated. We’ll talk about ’26 when we get there.

Conference Operator: Next question will come from Jason Bednar with Piper Sandler. Please go ahead.

Jason Bednar, Analyst, Piper Sandler: Hey, good morning guys. Thanks for taking the questions and congrats on the quarter here. I wanted to first start on Sterigenics pricing. Decelerated ever so slightly. I know we’re talking tens of basis points on a sequential basis.

But I think you’ve been trending down 50 basis to 60 basis points year on year over the last few quarters. I think this is also the smallest pricing tailwind we’ve seen in at least a few years. And look, it’s still good. It’s better than a lot of other healthcare verticals. But where do you think this pricing contribution stabilizes?

Is this the level do we need to drift lower? And then maybe the follow-up there would be, I think you’ve talked in the past about stronger opportunities in pricing in Sterigenics in light of the investments you’ve been making in your facilities. Is that potentially a reversal of sorts as we think about pricing going forward for Sterigenics?

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Yes. Hey, thanks, Jason. We said last year, November, we talked about price across the company 3% to 4%. We said SteraJenks would be the high end of that range, and that’s basically where they’re coming in at. We see that continuing.

We don’t see any concern around that. If it’s 3.8%, 3.94%, it’s right in that neighborhood. We see that. We can’t call that closely, but we also look at some of the niche app opportunities and those are things that we would say that could come on top of that over time as we roll out that program and the regulations get set in the marketplace. So that would be above that run rate.

Jason Bednar, Analyst, Piper Sandler: Okay. And maybe just on the to follow-up on that last point, Michael, is that as you referenced that opportunity over time, is that more of a like post-twenty twenty six, not asking for 2026 guidance, but is that a post-twenty twenty six comment knowing that your compliance with NESHAP is still a few quarters out? And then separately, I appreciate everything that you gave us on the litigation update side, especially on all the detail around Georgia. I will we’ll get the details when the Q is filed, but can you update us on the number of cases in California? I don’t think we heard that other than just the start of the some of those case dates.

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Yes. I’m sorry, I was getting distracted by your second part. What was the first part the question?

John Lyons, Chief Financial Officer, Sotera Health: Did you say again? Post-twenty six.

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Post-twenty six on the niche app. I’m sorry, thank you. Had a little hesitation there. I would just say we’re working with our customers on the appropriate way to price in the capital improvements we put in our facilities. That will build out over time.

Yes, the shaft timeline has been pushed out a little bit. So we’ll work with our customers to do that. But you’ll see a gradual improvement for that incremental price over time. Again, to your point, we don’t want to get into 2026. But we’ll give you some proper guidance on that for 2026 and 2027 and 2028 as we look at that pricing in Nisha.

As far as California, there’s 83 personal injury claims.

Jason Bednar, Analyst, Piper Sandler: All right, perfect. Thanks so much guys.

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Yes. Thank you.

Conference Operator: And your next question today will come from Michael Polark with Wolfe Research. Please go ahead.

Jason Bednar, Analyst, Piper Sandler: Hi, good morning. Nelson, if I’m doing the math for 4Q maybe in constant currency terms flattish year on year obviously the comp gets easier as we lap in this advisory services headwind. My question is for 2026 and I’m not asking for formal guidance. But with this big advisory headwind now in is it reasonable to expect given what you’re seeing on routine testing to expect Nelson to return to growth in 2026?

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Yes. Yes. That’s a logical conclusion Mike. We’re not getting into 2026 guidance, but you’re thinking about the right way.

Jason Bednar, Analyst, Piper Sandler: My follow-up on Theragenyx last quarter after your clear acceleration and a good number from your competitor. The discussion was around order patterns ahead of tariffs. And so I’m curious three to six months later, do you have any better feel for whether in the second or third quarters there was maybe a little bit of extra pull forward of ordering from medtech customers as they maneuvered supply chains ahead of Trump tariffs?

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Mentioned in the past, we have a pretty rigorous process in doing commercial reviews and volume reviews with the team. And we’re seeing very minimal impact from that. I mean there’s the only reason I’d even tell you any is because we had a couple of facilities or if we look back on it there were some staff fees that came in with some last minute requirements from customers, but nothing material. When you look at the overall scale of the business to an approximately $300,000,000 of revenue per quarter across the company in total or 190 some million dollars in Sterigenics, there’s nothing material there that we’re able to see.

Jason Bednar, Analyst, Piper Sandler: Thank you, Michael.

Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Michael Petrus for closing remarks.

Michael Petrus, Chairman and Chief Executive Officer, Sotera Health: Great. Thank you. We achieved excellent results again this quarter with solid revenue growth, margin expansion and improved financial strength, right? We’re built for resilience and sustainable growth. Our stable reoccurring revenue base and expertise enables us to support our customers in highly regulated markets and deliver consistent results through varying economic cycles.

We want to thank you to our customers and investors for your continued trust and partnership. We appreciate your support, and we look forward to speaking with you again next quarter, and have a great day. Thank you.

Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.