Sotera Health Company (SHC) Wolfe Research Healthcare Conference 2025 summary

Business performance and growth outlook

• Volume growth accelerated in recent quarters, with core med device customers showing consistent performance and bioprocessing contributing positively, especially in Europe and the U.S.

• Idiosyncratic customer headwinds persist but are being outgrown by overall business strength.

• No discernible impact from tariffs on volume trends, with order patterns not showing material changes.

• Incremental capacity expansion in 2024 is performing as expected; two greenfield projects are planned for 2026 and 2027 to support mid to upper single-digit growth.

• Long-term goal is to exceed market growth, aiming for mid to high single-digit or even double-digit growth rates.

Ethylene oxide modernization and regulatory compliance

• Plant modernization investments are on track, with completion expected by the end of 2026 and a total spend of about $200 million.

• Regulatory compliance deadlines extend to 2026, with most of the industry receiving a two-year extension; company expects to meet requirements ahead of schedule.

• Pricing discussions with customers are ongoing to recover part of the investment, with expectations for incremental price increases above the usual 3-4% range.

• Operating costs for upgraded facilities are only modestly higher due to additional equipment and utilities.

Segment updates: Nordion and Nelson

• Nordion's investments focus on ensuring long-term cobalt supply, with new production in Canada and the U.S. expected to come online by 2028 and late in the decade, respectively.

• Russian cobalt supply remains stable, with 0-3% mix expected through 2026, managed through strong government relationships.

• Nelson segment faced a significant drag from its consulting business, now at a trough, but core lab testing is growing, especially in areas tied to sterilization volumes.

• Consulting business is expected to recover gradually, with its share of the segment likely to rise from 5% back toward 10% over time.