Sotera Health Company (SHC) Wells Fargo 21st Annual Healthcare Conference summary

Business overview and strategy

• Operates three key segments: Sterigenics (sterilization), Nelson Labs (testing), and Nordion (Cobalt-60 supply), all critical to healthcare supply chains.

• Integrated offerings across segments provide differentiated solutions and enhance customer value.

• Focus on operational excellence, customer service, and leveraging complementary business units for growth.

• CEO emphasizes the durability of the business and its essential role in medical device and pharmaceutical markets.

• No plans to add new business units; focus remains on integration and international expansion.

Financial performance and outlook

• Sterigenics achieved 7% constant currency growth in Q2, with stable demand in core markets.

• Nelson Labs posted 5.4% constant currency growth, aided by urgent regulatory support for customers.

• EBITDA margin improved by 118 basis points in 2025, with 2026 tracking near the top end of margin expansion guidance.

• Free cash flow for 2025–2027 expected to reach or exceed $600 million, with CapEx peaking in 2026 and declining thereafter.

• Strong cash generation and leverage reduction provide flexibility for future investments.

Capital allocation and investment

• 2026 CapEx guided at $200–$225 million, driven by EO facility upgrades, Cobalt-60 development, and greenfield projects.

• CapEx expected to materially decrease after 2026 as major projects conclude.

• Capital allocation prioritizes organic growth, followed by strategic M&A, with potential for share repurchases.

• M&A focus is on Sterigenics and sterilization services, especially tuck-in acquisitions across geographies.