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    SHC
    Earnings call· Dec 2025(Q4 FY25)

    Sotera Health Q4 FY25 earnings call SHC

    Feb 24, 2026 Source

    Executive summary

    Sotera Health Q4 FY25 — Strong Performance and Positive 2026 Outlook

    Sotera Health delivered a strong Q4 and full-year FY25, extending its revenue growth streak and expanding adjusted EBITDA margins. The company is well-positioned for sustained growth in 2026, driven by operational execution and disciplined financial management, despite some segment-specific headwinds related to Cobalt-60 harvest timing and commercial segment choppiness. Management remains committed to its long-range plan and capital allocation priorities.

    Highlights

    5

    • FY25 total company revenue increased 5.7% to $1.164 billion (5.2% constant currency), marking 20 consecutive years of growth.

    • FY25 Adjusted EBITDA increased 8.2% (7.8% constant currency) to $593.8 million, with margins expanding 118 basis points to 51%.

    • FY25 Adjusted Free Cash Flow was $210 million, on track for the $500M-$600M cumulative 2025-2027 goal.

    • Net leverage improved to 3.2x at year-end FY25 from 3.7x in FY24, progressing towards the 2-3x long-term target.

    • Sterigenics revenue grew 8% constant currency in Q4 FY25, driven by favorable pricing (4.3%) and volume/mix (3.7%).

    Concerns

    4

    • Nordion Q4 FY25 revenue decreased 12.3% to $50 million due to Cobalt-60 harvest timing, impacting segment income by 18.9% to $29 million.

    • Nelson Labs Q4 FY25 revenue was nearly flat on a constant currency basis, with Expert Advisory Services revenue being lower.

    • Commercial segment volumes in Sterigenics are shrinking, impacting a small portion (less than 16%) of the business.

    • Q1 FY26 revenue for Sterigenics and Nelson Labs is expected to be the lightest quarter of the year, with Nelson Labs Q1 growth declining low to mid-single digits.

    Guidance & targets

    19
    CategoryTargetConfidence
    Total Company Revenue
    $1.233 billion to $1.251 billion
    high materiality
    High
    Adjusted EBITDA
    $632 million to $641 million
    high materiality
    High
    Total Company Pricing
    Midpoint of 3% to 4%
    medium materiality
    High
    Sterigenics Constant Currency Revenue Growth
    Mid- to high single-digit
    medium materiality
    High
    Sterigenics Q1 Constant Currency Revenue Growth
    Mid-single digits
    medium materiality
    High
    Nordion Constant Currency Revenue Growth
    Low to mid-single digits
    medium materiality
    High
    Nordion H1 Revenue as % of Full Year
    Approximately 40% to 45%
    medium materiality
    High
    Nelson Labs Constant Currency Revenue Growth
    Low single digits
    medium materiality
    High
    Nelson Labs Q1 Revenue Growth
    Decline low to mid-single digits
    medium materiality
    High
    Interest Expense
    $135 million to $145 million
    medium materiality
    High
    Effective Tax Rate (Adjusted Net Income)
    27% to 29%
    medium materiality
    High
    Adjusted EPS
    $0.93 to $1.01
    high materiality
    High
    Fully Diluted Share Count
    289 million to 291 million shares
    low materiality
    High
    Capital Expenditures
    $175 million to $225 million
    medium materiality
    High
    Net Leverage Ratio
    Continued progress in reduction
    high materiality
    High
    X-ray Facility Opening
    Open in 2026
    medium materiality
    High
    Customer Sterilization Volume Transition
    Start late this year
    medium materiality
    High
    Cumulative Adjusted Free Cash Flow
    $500 million to $600 million
    high materiality
    High
    Long-term Net Leverage Target
    2x to 3x
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Sterigenics
    Growth driven by favorable pricing, volume and mix, and foreign currency benefit, partially offset by inflation.
    Constant Currency Revenue Growth: 8%Segment Income Growth: 10.4%Constant Currency Segment Income Growth: 7.8%Favorable Pricing: 4.3%Favorable Volume and Mix: 3.7%Foreign Currency Benefit: 2.6%
    		$198 million10.6%—$110 million
    Nordion
    Revenue and segment income decreased primarily due to the timing of Cobalt-60 harvest schedules, partially offset by favorable pricing.
    Segment Income Decrease: 18.9%Segment Income Margin: 57.5%Segment Income Margin Decrease: 466 bpsUnfavorable Volume and Mix: 15% (due to Cobalt-60 harvest timing)Favorable Pricing: 2.4%
    		$50 million-12.3%—$29 million
    Nelson Labs
    Revenue growth driven by favorable pricing, foreign exchange, and core lab testing growth, partially offset by lower Expert Advisory Services revenue and higher costs.
    Constant Currency Revenue Growth: Nearly flatSegment Income Growth: 1.9%Constant Currency Segment Income Decline: 1.2%Favorable Pricing: 3.2%Foreign Exchange: 2.5%Core Lab Testing: growthExpert Advisory Services: lower revenue
    		$55 million2.3%—$18 million

    Operational metrics

    21
    Total Company Revenue
    $1.164 billionUp 5.7% vs 2024
    FY25

    Marks 20 consecutive years of revenue growth.

    Adjusted EBITDA
    $593.8 millionUp 8.2% vs 2024
    FY25

    Resulted in adjusted EBITDA margins of 51%.

    Interest Expense
    $156 millionImproved $9 million vs prior year
    FY25

    Driven by lower interest rates, favorable repricing of term loan, and debt paydown.

    Adjusted EPS
    $0.86Up $0.16 vs 2024
    FY25

    Driven by operational growth, lower tax rate, and improved interest expense, partially offset by higher depreciation.

    Capital Expenditures
    $138 million
    FY25

    Consistent with step-up experienced in 2025.

    Net Leverage Ratio
    3.2xFrom 3.7x in 2024
    FY25

    Progressing toward 2x to 3x long-term target.

    Customer Satisfaction
    Exceeded 80%
    FY25

    Underscoring commitment to delivering excellent service.

    Cross-Business Unit (XBU) Customer Revenue Growth
    9%Year-over-year
    FY25

    Commercial initiatives continue to build momentum.

    Debt Paydown
    $86 million
    FY25

    Resulted in $13 million of annual interest savings.

    Liquidity
    $940 million
    As of Dec 31, 2025

    Company continues to maintain a strong liquidity position.

    Public Float
    80%
    FY25

    Increased to 80% of outstanding shares during 2025.

    Nelson Labs Margin Expansion
    312
    FY25

    Expanded margins and made progress on clean room investment.

    X-ray Facility Investment IRR
    Below 20%
    Long-term

    As a greenfield project, it is below the typical 20% IRR target for investments.

    IRR for existing facility investments
    Above 20%
    Long-term

    For investments like putting cobalt in an existing facility or an EO chamber.

    Sterigenics Commercial Segment % of Total Revenue
    Less than 16%
    Current

    Commercial segment includes electronics, food, and spice, and has been choppy.

    Total Company Revenue
    $303 millionIncreased 4.6% vs Q4 2024
    Q4 FY25

    Reflects expected impact of Cobalt-60 harvest timing at Nordion.

    Adjusted EBITDA
    $157 millionGrew 2.7% vs Q4 2024
    Q4 FY25

    Adjusted EBITDA margins were 51.8% for the quarter.

    Interest Expense
    $35 millionImproved $6 million vs Q4 2024
    Q4 FY25

    Improvement versus prior year.

    Net Income
    $35 million
    Q4 FY25

    Reported net income for the quarter.

    Adjusted EPS
    $0.26Up $0.05 vs prior year
    Q4 FY25

    Driven by lower tax rate, strong operating performance, and lower interest expense, partially offset by higher depreciation.

    Net Income
    $78 million
    FY25

    Reported net income for the full year.

    Industry KPIs

    8
    MetricValueDetails
    FCF conversion ROIC$210 millionUSD
    Revenue EPS guidanceRevenue: $1.233B-$1.251B; Adjusted EPS: $0.93-$1.01USD
    Pricing price realizationMidpoint of 3% to 4%%
    Diagnostics testing demandGrowth
    Segment organic revenue growthSterigenics: Mid- to high single-digit; Nordion: Low to mid-single digits; Nelson Labs: Low single digits%
    Bioprocessing orders book to billNice growth
    Reshoring US manufacturing tailwindNot seeing significant movement
    Organic core revenue growth by end market5.2%%

    Deals & partnerships

    1
    Westinghouse and PSEGCobalt development agreement

    Nordion signed a cobalt development agreement with Westinghouse and PSEG in Q4 FY25.

    Risks & headwinds

    5
    Cobalt-60 Harvest TimingQ4 FY25, H1 FY26

    Nordion Q4 FY25 revenue decreased 12.3% to $50 million, segment income decreased 18.9% to $29 million, with segment income margins decreasing 466 bps.

    Mitigation: Anticipated and communicated; part of normal supply timing and factored into guidance.

    Lower Expert Advisory Services (EAS) RevenueQ4 FY25, Q1 FY26

    Nelson Labs Q4 FY25 segment income declined 1.2% on a constant currency basis, and Q1 FY26 revenue is expected to decline low to mid-single digits.

    Mitigation: Expected to ease after Q1 FY26, which is anticipated to be the last quarter with this comp challenge.

    Commercial Segment ChoppinessSince 2020-2021, expected to continue

    Commercial segment volumes in Sterigenics are shrinking, impacting less than 16% of Sterigenics' total revenue.

    Mitigation: Company is planning around this trend and focusing on core MedTech volumes.

    NESHAP Compliance Period ExtensionExtended to 2028

    2-year extension of the compliance period.

    Mitigation: Reduces urgency for customers to make in-sourcing/outsourcing decisions, but discussions on strategic supply chain plans continue.

    Q1 FY26 Soft StartQ1 FY26

    Sterigenics and Nelson Labs Q1 FY26 revenue expected to be the lightest quarter of the year, with Nelson Labs Q1 growth declining low to mid-single digits.

    Mitigation: Attributed to typical seasonality, shutdowns, and weather impact; incorporated into guidance.

    What to watch in Q1 FY26

    5

    Sterigenics X-ray facility opening and ramp-up

    H2 FY26
    CurrentUnder construction, planned to open H2 2026
    TargetFacility opened, qualification with customers underway

    Why it matters

    Strategic long-term investment for full-service offering, expected to accelerate revenue in FY27-FY28.

    Significant progress was also made on the EO facility enhancements program as well as the construction of the new X-ray facility, which is planned to open in 2026.

    Q&A highlights

    7

    What drives the 2026 EBITDA margin expansion, and is the recent client outsourcing to Sterigenics a sign of broader NESHAP-driven shifts?

    The margin expansion is due to normal operating leverage. The client outsourcing is progressing as planned, with volume starting late 2026, but no significant broader shifts are observed yet due to the NESHAP extension.

    “No, you're spot on with the midpoint of the guide and what it implies. And no, it's nothing abnormal going on, just normal operating leverage and running the business.”

    asked by Sean Dodge · answered by Jonathan Lyons

    1 min read5 chapters

    Detailed Narrative

    01

    FY25 Performance Highlights

    Sotera Health achieved its 20th consecutive year of revenue growth, reaching $1.164 billion, up 5.7% (5.2% constant currency). Adjusted EBITDA grew 8.2% to $593.8 million, with margins expanding to 51%. Adjusted free cash flow exceeded $200 million, contributing to the 2025-2027 cumulative goal of $500 million to $600 million.

    02

    Segment-Specific Achievements

    Sterigenics delivered 8% constant currency revenue growth in FY25, driven by volume and mix, and made progress on EO facility enhancements and a new X-ray facility. Nordion achieved 9% constant currency revenue growth in FY25, securing a cobalt development agreement and a 25-year license renewal for its Ottawa facility. Nelson Labs expanded margins by 312 basis points and saw core lab testing growth.

    03

    Financial Management and Capital Structure

    The company reduced borrowing costs by 75 basis points on its term loan, paid down $86 million of debt, and increased liquidity by $175 million by upsizing its revolver. Net leverage improved to 3.2x at year-end 2025 from 3.7x in 2024, moving towards the long-term target of 2x-3x. The public float increased to 80% of outstanding shares in 2025.

    04

    Strategic Investments and Cross-Selling

    Sotera Health continues to invest organically, with a new X-ray facility planned to open in the second half of 2026, part of a long-term strategic plan to offer full-service modalities. Revenue from cross-business unit (XBU) customers expanded 9% year-over-year in 2025, demonstrating successful leveraging of the integrated value proposition and high customer satisfaction.

    05

    Leadership Transition

    Erika Ostrowski was promoted to Senior Vice President and General Counsel, effective April 1, succeeding Alex Dimitrief, who transitioned to an outside adviser. This internal promotion highlights strong leadership development and a deep understanding of the business within the company.

    AI-generated summary of the company’s earnings call. Not investment advice.