Sotera Health (NASDAQ:SHC) reported revenue growth and margin expansion in 2025, extending what management said is a 20-year track record of year-over-year revenue increases, while also outlining expectations for continued growth and higher earnings in 2026.
2025 results: revenue up 5.7%, margins expand
Chairman and CEO Michael Petras said total company revenue increased 5.7% in 2025 to $1.164 billion, or 5.2% on a constant-currency basis. Adjusted EBITDA rose 8.2% (7.8% constant currency) to $593.8 million, and adjusted EBITDA margin expanded to 51%, an increase of roughly 120 basis points year over year. The company also reported adjusted free cash flow of more than $200 million for the year, which CFO Jon Lyons quantified at $210 million.
Fourth quarter: Sterigenics strength offsets Nordion timing headwind
In the fourth quarter, Sotera Health reported revenue of $303 million, up 4.6% year over year (2.5% constant currency). Adjusted EBITDA increased 2.7% to $157 million, with adjusted EBITDA margin of 51.8%.
Lyons said the quarterly comparison reflected “the expected impact of Cobalt-60 harvest timing at Nordion.” Interest expense was $35 million, a $6 million improvement from the year-ago quarter. Net income was $35 million, or $0.12 per diluted share, while adjusted EPS increased to $0.26, up $0.05 from the prior year, aided by a lower tax rate and lower interest expense and partially offset by higher depreciation.
- Sterigenics: Q4 revenue grew 10.6% to $198 million (8% constant currency). Growth was driven by 4.3% favorable pricing and 3.7% volume and mix, plus a 2.6% foreign currency benefit. Segment income rose 10.4% to $110 million.
- Nordion: Q4 revenue declined 12.3% to $50 million due to harvest-schedule timing that drove 15% unfavorable volume and mix, partially offset by 2.4% favorable pricing. Segment income fell 18.9% to $29 million, with margin down 466 basis points to 57.5%.
- Nelson Labs: Q4 revenue increased 2.3% to $55 million (nearly flat constant currency). Pricing and core lab testing growth were partially offset by lower expert advisory services revenue. Segment income rose 1.9% to $18 million.
Operational updates: facility investments, cross-selling, and customer metrics
Petras highlighted several 2025 operational milestones, including customer satisfaction exceeding 80% and cross-business-unit (“XBU”) customer revenue growth of 9% year over year. He said Sterigenics delivered roughly 8% constant-currency revenue growth for 2025, driven by improved volume and mix, while Nordion delivered about 9% constant-currency revenue growth and Nelson Labs achieved core lab testing growth and expanded margins by 312 basis points.
On Sterigenics growth investments, management discussed progress on an X-ray facility project. Petras described the facility as part of a long-term strategy to provide sterilization services “across all modalities” and said the company is working with customers on qualification. He said the facility is expected to open in the second half of the year, with a ramp period that is expected to have “a little impact in 2026” and accelerate in 2027 and 2028.
During Q&A, Petras also noted that the Sterigenics commercial segment—described as including electronics, food, spices, and other categories—has been “choppy” since 2020–2021 and is a small portion of Sterigenics (he estimated less than 16%). He characterized the segment as “more probably shrinking than growing,” citing customer churn and product redesigns reducing demand.
On regulatory dynamics, Petras said the NESHAP compliance period extension has reduced urgency around insourcing and outsourcing decisions, though customer strategic supply chain discussions continue. He also said Sotera has not seen a material impact from tariffs on Sterigenics volumes, adding that the company’s business is primarily services and that its cobalt product is USMCA certified.
Balance sheet actions and governance changes
Management highlighted several financing actions in 2025. Petras said the company reduced borrowing costs by 75 basis points on its $1.4 billion term loan and paid down $86 million of debt, resulting in $13 million of annual interest savings. He also said Sotera upsized and extended its revolving credit facility, increasing liquidity by $175 million.
Lyons said liquidity at year-end included about $345 million of unrestricted cash and nearly $600 million of revolver capacity, totaling approximately $940 million of available liquidity. Net leverage improved to 3.2x from 3.7x in 2024, as the company continued toward its long-term 2x–3x target.
On governance and leadership, Petras said Sotera appointed a lead independent director and added Richard Kyle to the board. He also announced a legal leadership transition effective April 1, with Senior Vice President and General Counsel Alex Dimitrief moving to an outside advisor role and Erika Ostrowski promoted to Senior Vice President and General Counsel.
2026 outlook: revenue and EBITDA growth expected to continue
For 2026, Sotera Health guided for total revenue of $1.233 billion to $1.251 billion, representing 5% to 6.5% constant-currency growth versus 2025, with management expecting about a 100 basis point foreign currency benefit. Adjusted EBITDA is projected at $632 million to $641 million, or 5.5% to 7% constant-currency growth, also with an estimated 100 basis point foreign currency impact weighted toward the first half of the year.
Lyons said total company pricing is expected to be around the midpoint of the firm’s 3%–4% long-term range. Segment expectations include mid- to high-single-digit constant-currency revenue growth for Sterigenics; low- to mid-single-digit growth for Nordion; and low-single-digit growth for Nelson Labs, with Nelson expected to decline low- to mid-single digits in the first quarter due to expert advisory services comparisons. Management also reiterated that the first quarter is typically the lightest quarter for both Sterigenics and Nelson Labs, with Petras citing shutdowns and weather impacts contributing to a softer start.
Additional 2026 guidance items included interest expense of $135 million to $145 million, an effective tax rate applicable to adjusted net income of 27% to 29%, and adjusted EPS of $0.93 to $1.01. Capital expenditures are expected to be $175 million to $225 million, and management said guidance assumes no M&A.
In closing remarks, Petras said the company is “encouraged by our momentum” and remains focused on customer service, growth markets, operational excellence to enhance free cash flow, and disciplined capital deployment.
About Sotera Health (NASDAQ:SHC)
Sotera Health Inc (NASDAQ: SHC) is a global provider of sterilization and laboratory testing services that support the medical device, pharmaceutical, life sciences and consumer product industries. Headquartered in Jacksonville, Florida, the company offers a suite of services designed to ensure products meet rigorous safety and regulatory requirements before reaching market.
Sotera Health operates through three primary service platforms. Its Sterigenics division delivers contract sterilization solutions, including ethylene oxide (EtO), gamma irradiation, electron beam and X-ray technologies.
