Sotera Health Q3 Revenue Rises 4.4%, Outlook Reaffirmed

Sotera Health Company (Nasdaq: SHC) reported higher third-quarter revenue and earnings as growth at Sterigenics and Nelson Labs outweighed a timing-related decline at Nordion. The healthcare services company reaffirmed its full-year constant-currency growth outlook while narrowing its reported revenue and Adjusted EBITDA ranges.

For the quarter ended September 30, 2026, net revenue increased 4.4% year over year, both as reported and at constant currency, to $324.9 million. Adjusted EBITDA rose 3.9%, or 4.0% at constant currency, to $170.7 million. Adjusted EBITDA margin was 52.5%, down from 52.7% a year earlier but nearly 100 basis points higher sequentially.

GAAP net income increased to $58.4 million from $48.4 million, while diluted earnings per share rose to $0.20 from $0.17. Adjusted net income was $82.5 million, compared with $75.3 million, and adjusted diluted EPS increased 12% to $0.29.

For the first nine months of 2026, revenue rose 7.7% to $926.3 million, or 6.3% at constant currency. Adjusted EBITDA increased 7.9% to $471.1 million, representing constant-currency growth of 6.5%, while adjusted diluted EPS advanced 20% to $0.72.

Sterigenics and Nelson Labs drive quarterly growth

Sterigenics, Sotera Health’s largest business, generated third-quarter revenue of $209 million, up 8.5% as reported and 8.2% at constant currency. Segment income increased 9.6% to $117 million, and segment income margin expanded to 56.1% from 55.6%.

The company attributed the Sterigenics performance to favorable pricing, improved volume and mix, and a foreign-exchange benefit. Those factors also supported segment income and margin, partly offset by inflation.

Nelson Labs revenue increased 8.8% to $61 million, or 9.2% at constant currency, supported by favorable volume, mix and pricing. Segment income rose 2.5% to $19 million, but margin declined to 31.0% from 33.3%, primarily because of business mix. Sotera Health also completed a new Annex 1-compliant cleanroom for Nelson Labs during the quarter.

Nordion revenue fell 12.4% to $55 million, or 11.5% at constant currency. Segment income declined 11.4% to $34 million. The company said the decrease reflected unfavorable volume and mix caused by the expected year-over-year timing of cobalt-60 harvest schedules, as well as currency effects, partly offset by favorable pricing. Nordion’s segment income margin nevertheless increased to 61.3% from 60.6% due to operational productivity and pricing, partially offset by inflation.

Outlook maintains constant-currency targets

Sotera Health continues to expect full-year 2026 net revenue growth of 5.25% to 6.75% at constant currency and Adjusted EBITDA growth of 5.75% to 7.25% on the same basis.

The company now projects reported net revenue of $1.233 billion to $1.250 billion, compared with its August range of $1.236 billion to $1.254 billion. Its Adjusted EBITDA forecast is $632 million to $641 million, versus the previous $634 million to $643 million range. Adjusted EPS remains projected at $0.95 to $1.01, and capital expenditures are still expected to total $200 million to $225 million.

Management expects foreign exchange to provide a 70-basis-point benefit to full-year revenue and Adjusted EBITDA, although currency is expected to be a headwind of more than 100 basis points in the fourth quarter. Full-year Adjusted EBITDA margin is expected to be approximately flat compared with 2025, while companywide pricing is projected to remain within its long-term range of 3% to 4%.

By business, Sotera Health expects full-year constant-currency revenue growth in the mid- to high-single digits at Sterigenics, the mid-single digits at Nordion, and the low- to mid-single digits at Nelson Labs. Fourth-quarter Sterigenics constant-currency growth is expected to be approximately 6%. Nelson Labs’ full-year segment income margin is expected to be similar to its year-to-date 2026 level of 32.1%.

Cash generation and leverage

Net cash provided by operating activities totaled $111 million in the third quarter. Cash and cash equivalents reached $412 million at September 30, while total liquidity, including $592 million of revolver availability, was about $1.0 billion. The company had no outstanding revolving-credit borrowings.

Net debt declined to $1.83 billion, and the net leverage ratio improved to 2.9 times from 3.2 times at the end of 2025, placing it within Sotera Health’s long-term target range of 2.0 to 3.0 times. Year-to-date capital expenditures increased to $145 million from $87 million, including investments in Sterigenics capacity and ethylene oxide facilities, Nordion cobalt-60 development projects, and Nelson Labs cleanroom and embedded-laboratory expansions.

The outlook assumes continued supply-chain availability, particularly for ethylene oxide and cobalt-60, and no merger or acquisition activity. Risks identified by the company include supply interruptions and input-cost increases, inflation and tariffs, foreign-exchange volatility, regulatory changes, litigation associated with ethylene oxide facilities, cybersecurity incidents, capacity-expansion execution and the constraints associated with its debt load.