Sotera Health Reports Q4 and Full-Year 2024 Results; Offers 2025 Outlook
Sotera Health Company (Nasdaq: SHC), a leading provider of sterilization solutions, lab testing, and advisory services for the healthcare industry, has reported its financial results for the fourth quarter and full-year 2024. The company also provided its outlook for the full year 2025.
Fourth-Quarter 2024 Financial Results
For the fourth quarter of 2024, Sotera Health reported a 6.5% decrease in net revenues, which fell to $290 million from $310 million in the same period in 2023. On a constant currency basis, net revenues declined by 5.2%. Net income for the quarter was $12 million, or $0.04 per diluted share, compared to $39 million, or $0.14 per diluted share, for the fourth quarter of 2023. Adjusted EBITDA also saw a decrease of 8.3%, totaling $153 million, down from the previous year. On a constant currency basis, the decline was 6.7%. Adjusted earnings per diluted share (Adjusted EPS) decreased by $0.02 to $0.21 compared to the same quarter in 2023.
Full-Year 2024 Financial Results
For the full year 2024, Sotera Health saw a 4.9% increase in net revenues, which reached $1.10 billion, compared to $1.05 billion for 2023. On a constant currency basis, net revenues grew by 5.4%. Net income for the year was $44 million, or $0.16 per diluted share, compared to $51 million, or $0.18 per diluted share in 2023. Adjusted EBITDA increased by 3.9%, totaling $549 million, with a 4.6% increase on a constant currency basis. Adjusted EPS for 2024 was $0.70, a decrease of $0.02 from the previous year.
CEO Michael B. Petras Jr. expressed satisfaction with the company’s continued growth, stating, “We accomplished several important milestones during the year, including strong customer satisfaction scores, a strengthened balance sheet, and significant growth across key segments.”
Business Segment Review
Sterigenics: In the fourth quarter of 2024, Sterigenics posted net revenues of $179 million, marking a 4.2% increase compared to the same period last year. On a constant currency basis, the segment saw a 5.3% growth. Segment income grew by 5.1%, reaching $100 million. For the full year 2024, Sterigenics reported net revenues of $698 million, up 4.6% from the previous year, with a 4.9% increase on a constant currency basis. Segment income for the year rose by 4.4%, totaling $378 million. The growth in both the fourth quarter and full year was driven by favorable pricing and changes in volume and mix, partially offset by inflation and currency fluctuations.
Nordion: Nordion reported a significant decline in fourth-quarter 2024 net revenues, which were $57 million, a decrease of 28.9% year-over-year. On a constant currency basis, net revenues fell by 26.8%. Segment income decreased by 33.8%, totaling $35 million.
The revenue decline was attributed to the timing of cobalt-60 harvest schedules, which had an unfavorable impact on volume and mix. However, for the full year 2024, Nordion reported net revenues of $173 million, reflecting an 8.0% increase from 2023. On a constant currency basis, net revenues grew by 10.1%. Segment income for the year rose by 4.7%, reaching $101 million.
Nelson Labs: Nelson Labs experienced a 7.3% decrease in fourth-quarter 2024 net revenues, which totaled $54 million. On a constant currency basis, revenues decreased by 7.0%. Segment income for the quarter fell by 3.3%, totaling $18 million. For the full year, Nelson Labs reported net revenues of $229 million, an increase of 3.4% compared to 2023. Segment income increased marginally by 0.1%, reaching $69 million.
Balance Sheet and Liquidity
As of December 31, 2024, Sotera Health’s total debt stood at $2.3 billion, with cash and cash equivalents of $277 million, compared to $296 million in cash as of December 31, 2023. The company had no outstanding balance on its revolving credit facility, and its material debt balances do not mature until 2031. The company’s Net Leverage Ratio was 3.7x, slightly down from 3.8x in 2023.
Full-Year 2025 Outlook
Sotera Health provided its outlook for 2025, forecasting net revenue growth of 4.0% to 6.0%, on a constant currency basis. The company also expects a 2.25% foreign currency headwind to net revenues. Adjusted EBITDA growth is anticipated to range from 4.5% to 6.5%, with a 2.50% foreign currency headwind. The company estimates interest expense for the year to be between $155 million and $165 million, with an effective tax rate of 33.0% to 35.0%. Adjusted EPS is projected to be in the range of $0.70 to $0.76. Capital expenditures are expected to be between $190 million and $210 million.
Sotera Health’s outlook is subject to various risks and uncertainties, including supply chain continuity, inflationary pressures, and fluctuations in foreign exchange rates. The company’s projections are based on current plans and expectations, which may change depending on external factors.
Conclusion
Sotera Health remains optimistic about its growth trajectory and financial outlook for 2025. Despite challenges in the fourth quarter of 2024, the company demonstrated strong overall performance in key business segments and continues to make strategic investments in its mission to provide essential sterilization and lab testing services to the healthcare industry.
