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- **Record Q3 Financials**: 9.1% revenue growth, 12.2% EBITDA expansion, and 147bps margin improvement highlight strong execution.
- **Debt Reduction & Savings**: $75M debt repayment cuts annual interest by $13M, lowering net leverage to 3.3x.
- **Nordion License Renewal**: 25-year Cobalt-60 supply secured, reinforcing global healthcare sterilization.
- **Litigation Defense Strength**: Georgia court rulings support scientific refutation of EO causation claims.
- **2025 Guidance Upped**: EBITDA growth raised to 6.75-7.75%, EPS to $0.81-0.86, reflecting operational and financial discipline.

**【CEO Summary Section】**
- **Q3 2025 Performance Highlights**: Total revenue grew 9.1% YoY to $311 million, with adjusted EBITDA up 12.2% to $164 million. Margins expanded 147 basis points to 52.7%, driven by Sterigenics (55.6%) and Nelson Labs (34.1%).
- **Balance Sheet Strength**: Reduced debt by $75 million, lowering annual interest expense by $13 million. Net leverage improved to 3.3x from 3.7x YoY.
- **Strategic Milestone**: Nordion secured a 25-year renewal of its Class 1B license, ensuring long-term Cobalt-60 supply for healthcare sterilization.

**【CFO Financial Commentary】**
- **Segment Breakdown**:
  - **Sterigenics**: 9.8% revenue growth ($193M) from volume/mix (+4.6%), pricing (+3.8%), and FX (+1.4%). Segment income rose 11.6% to $107M.
  - **Nordion**: 22.4% revenue growth ($63M) due to volume/mix (+18.9%) and pricing (+4.7%). Segment income increased 19.9% to $38M, though margins dipped 130bps to 60.6% due to product mix.
  - **Nelson Labs**: 5% revenue decline ($56M) from Expert Advisory Services decline, offset by core lab testing growth. Segment income grew 1.9% to $19M with 290bps margin expansion.
- **Updated Guidance**: Full-year constant currency revenue growth maintained at 4.5-6%, with EBITDA raised to 6.75-7.75% (vs. 6-7.5% prior). Adjusted EPS now $0.81-0.86 (vs. $0.75-0.82 prior) due to EBITDA growth and tax rate improvement.

**【Q&A Key Highlights】**
- **Litigation Update**: Georgia court ruled against plaintiffs' causation experts, dismissing three bellwether cases. Company expects science-based defense to prevail in remaining cases.
- **Budget Flush Impact**: No material impact from government shutdown; minimal delays in Expert Advisory Services.
- **4Q Margin Outlook**: Nelson Labs may see slight margin step-down due to lower Q3 expenses, but Sterigenics remains stable.
- **2026 Growth**: CEO confident in mid-single to high-single digit growth for Sterigenics, with potential pricing upside from NESHAP compliance investments.
- **Nelson Labs Recovery**: Core lab testing growth expected to offset Expert Advisory Services decline, with 2026 return to growth possible.

Sotera Health Company (SHC) Q3 2025 Earnings Call Transcript

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