UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2021~~2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-39729

SOTERA HEALTH COMPANY

(Exact name of registrant as specified in its charter)

Delaware

47-3531161

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

9100 South Hills Blvd, Suite 300

Broadview Heights, Ohio

44147

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code

(440)

~~262-1409~~262-1410

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	SHC	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐☒	Accelerated filer	☐
Non-accelerated filer	☒☐	Smaller reporting company	☐
		Emerging growth company	☒☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of ~~May 6, 2021,~~April 25, 2024, there were ~~282,869,957~~283,070,826 shares of the registrant’s common stock, $0.01 par value per share, outstanding.

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SOTERA HEALTH COMPANY

- TABLE OF CONTENTS -

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. ~~Forward looking~~Forward-looking statements are often characterized by the use of ~~the~~ words such as “believes,” “estimates,” “expects,” “projects,” “may,” “intends,” “plans” or “anticipates,” or by discussions of strategy, plans or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance, or achievements, or industry results, to differ materially from historical results or any future results, performance or achievements expressed, suggested or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to:

•~~any~~a disruption in the availability or supply of, or increases in the price of, ethylene oxide (“EO”), ~~cobalt-60~~Cobalt-60 (“Co-60”) or our other direct materials, services and supplies, including as a result of ~~current~~ geopolitical instability ~~arising from U.S. relations with~~and/or sanctions against Russia ~~and related sanctions;~~by the United States, Canada, United Kingdom and/or the European Union;

•~~adverse changes~~fluctuations in ~~industry trends;~~foreign currency exchange rates;

•~~adverse~~ changes in environmental, health and safety ~~regulations;~~regulations or preferences, and general economic, social and business conditions;

•~~accidents resulting from the~~health and safety risks associated with the use, storage, transportation and disposal of potentially hazardous materials such as EO and Co-60;

•~~accidents resulting from~~ the ~~safety risks associated with the transportation~~impact and outcome of ~~potentially hazardous materials such as EO and Co-60;~~

•~~liability claims relating to health risks associated with the use of EO and Co-60;~~

•current and future legal ~~proceedings;~~

•proceedings and liability claims, including litigation related to the ~~intensity~~use, emissions and releases of ~~competition we face;~~

•~~any market changes~~EO from our facilities in California, Georgia, Illinois and New Mexico and the possibility that ~~impact our long-term supply contracts with variable price clauses;~~additional claims will be made in the future relating to these or other facilities;

•allegations of our failure to properly perform ~~our~~ services and ~~any~~ potential product liability claims, recalls, penalties and reputational harm;

•compliance with the extensive regulatory requirements to which we are subject, the related costs, and any failures to receive or maintain, or delays in receiving, required ~~clearance~~clearances or approvals;

•adverse changes in industry trends;

•competition we face;

•market changes, including inflationary trends, that impact our long-term supply contracts with variable price clauses and increase our cost of revenues;

•business continuity hazards, including supply chain disruptions and other risks associated with our ~~operations, including our reliance on the use and sale of products and services from a single location;~~operations;

•the ~~impact~~risks of ~~the COVID-19 pandemic;~~doing business internationally, including global and regional economic and political instability and compliance with numerous laws and sometimes inconsistent laws and regulations in multiple jurisdictions;

•our ability to increase capacity at existing facilities, ~~and~~ build new facilities in a timely and cost-effective ~~manner;~~manner and renew leases for our leased facilities;

•our ability to ~~renew the long-term leases for our facilities at the end of their terms;~~attract and retain qualified employees;

•~~the risks of doing business internationally;~~severe health events or environmental events;

•~~instability in global~~cybersecurity breaches, unauthorized data disclosures, and ~~regional economic and political conditions;~~

•~~our failure to retain key personnel and attract talent;~~

•~~the significant regulatory oversight to which our import and export operations are subject, and any failure to comply with applicable regulations;~~

•~~any cyber security breaches and data leaks as a result of~~ our dependence on information technology systems;

•~~the risks of pursuing~~an inability to pursue strategic transactions, ~~including acquisitions, and our ability to~~ find suitable acquisition targets, or integrate strategic acquisitions ~~successfully~~ into our ~~business;~~business successfully;

•our ability to maintain effective internal controls over financial reporting;

•our reliance on intellectual property to maintain our competitive position and the risk of claims from third parties that we ~~infringe~~have infringed or ~~misappropriate~~misappropriated, or are infringing or misappropriating, their intellectual property rights;

•~~the~~our ability to comply with rapidly evolving data privacy and security laws and regulations ~~to which we are subject,~~in various jurisdictions and any ineffective compliance efforts with such laws and regulations;

•our ability to maintain profitability in the future;

•impairment charges on our goodwill and other intangible assets with indefinite lives, as well as other long-lived assets and intangible assets with definite lives;

•the effects of unionization efforts and labor regulations in ~~certain~~ countries in which we operate;

•~~the variety of laws involving the cannabis industry to which we are subject, and any failure to comply with those laws;~~

•~~the risk of government or private civil antitrust actions;~~

•adverse changes to our tax positions in U.S. or non-U.S. jurisdictions or the interpretation and application of recent U.S. tax legislation or other changes in U.S. or non-U.S. taxation of our operations; and

•our ~~substantial~~significant leverage and how this significant leverage could adversely affect our ability to raise additional capital, limit our ability to react to challenges confronting our Company or broader changes in our industry or the economy, orlimit our ~~industry and~~flexibility in operating our business through restrictions contained in our debt agreements and/or prevent us from meeting our obligations under our existing and future ~~indebtedness; and~~

•~~our ability to generate sufficient cash flows or access sufficient additional capital to meet our debt obligations or to fund our other liquidity needs.~~indebtedness.

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These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them publicly in light of new information or future events, except as required by law. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved.

You should carefully consider the above factors, as well as the factors discussed elsewhere in this Quarterly Report on Form 10-Q, including under Part II, Item 1A, “Risk Factors,” as well as Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2023 (the ~~“2020~~“2023 10-K”). If any of these trends, risks or uncertainties actually ~~occurs~~occur or ~~continues,~~continue, our business, financial condition or operating results could be materially adversely affected, the trading prices of our securities could decline and you could lose all or part of your investment. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

Unless expressly indicated or the context requires otherwise, the terms “Sotera Health,” “Company,” “we,” “us,” and “our” in this document refer to Sotera Health Company, a Delaware corporation, and, where appropriate, its subsidiaries on a consolidated basis.

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Part I—FINANCIAL INFORMATION

Item 1. Financial Statements

Sotera Health Company

Consolidated Balance Sheets

(in ~~thousands)~~thousands, except per share amounts)


		As of
		March 31, 2021		December 31, 2020
	As of							As of
	March 31, 2024						March 31, 2024		December 31, 2023
Assets	Assets	(Unaudited)
Current assets:	Current assets:
Current assets:
Current assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	108,009	$	102,447
Restricted cash short-term	Restricted cash short-term	7		7
Accounts receivable, net of allowance for uncollectible accounts of $603 and $708, respectively		96,393		91,735
Accounts receivable, net of allowance for uncollectible accounts of $3,925 and $4,689, respectively
Inventories, net	Inventories, net	33,375		34,093
Prepaid expenses and other current assets	Prepaid expenses and other current assets	69,758		64,964
Income taxes receivable	Income taxes receivable	20,825		21,769
Total current assets	Total current assets	328,367		315,015
Property, plant, and equipment, net	Property, plant, and equipment, net	611,620		609,814
Operating lease assets	Operating lease assets	47,117		45,963
Deferred income taxes	Deferred income taxes	8,088		8,424
Investment in unconsolidated affiliate		9,227		13,457
Post-retirement assets
Other assets	Other assets	9,281		9,304
Other intangible assets, net	Other intangible assets, net	656,572		643,366
Goodwill	Goodwill	1,106,728		1,115,936
Total assets	Total assets	$	2,777,000	$	2,761,279
Liabilities and equity	Liabilities and equity
Current liabilities:	Current liabilities:
Current liabilities:
Current liabilities:
Accounts payable
Accounts payable
Accounts payable	Accounts payable	$	57,174	$	52,400
Accrued liabilities	Accrued liabilities	56,373		60,518
Deferred revenue	Deferred revenue	5,958		6,056

Current portion of long-term debt
Current portion of finance lease obligations	Current portion of finance lease obligations	1,108		1,173
Current portion of operating lease obligations	Current portion of operating lease obligations	9,631		9,383
Current portion of asset retirement obligations		391		620

Income taxes payable
Income taxes payable
Income taxes payable	Income taxes payable	7,384		10,448
Total current liabilities	Total current liabilities	138,019		140,598
Long-term debt, less current portion	Long-term debt, less current portion	1,837,580		1,824,789
Finance lease obligations, less current portion	Finance lease obligations, less current portion	33,432		34,939
Operating lease obligations, less current portion	Operating lease obligations, less current portion	39,806		38,941
Noncurrent asset retirement obligations	Noncurrent asset retirement obligations	45,633		45,013
Deferred lease income	Deferred lease income	21,362		21,255
Post-retirement obligations	Post-retirement obligations	46,959		48,223
Mandatorily redeemable noncontrolling interest		0		13,625
Noncurrent liabilities	Noncurrent liabilities	18,795		17,506
Deferred income taxes	Deferred income taxes	129,670		121,816
Total liabilities	Total liabilities	2,311,256		2,306,705
See Commitments and contingencies note	See Commitments and contingencies note	0		0		See Commitments and contingencies note
Equity:	Equity:
Common stock, with $0.01 par value, 1,200,000 shares authorized; 285,990 shares issued at March 31, 2021 and December 31, 2020, respectively		2,860		2,860
Preferred stock, with $0.01 par value, 120,000 authorized; 0 shares issued at March 31, 2021 and December 31, 2020, respectively		0		0
Treasury stock, at cost (3,090 and 2,742 shares at March 31, 2021 and December 31, 2020, respectively)		(34,000)		(34,000)
Common stock, with $0.01 par value, 1,200,000 shares authorized; 286,037 shares issued at March 31, 2024 and December 31, 2023
Common stock, with $0.01 par value, 1,200,000 shares authorized; 286,037 shares issued at March 31, 2024 and December 31, 2023
Common stock, with $0.01 par value, 1,200,000 shares authorized; 286,037 shares issued at March 31, 2024 and December 31, 2023
Preferred stock, with $0.01 par value, 120,000 authorized; no shares issued at March 31, 2024 and December 31, 2023
Treasury stock, at cost (2,966 and 3,207 shares at March 31, 2024 and December 31, 2023, respectively)
Additional paid-in capital	Additional paid-in capital	1,169,852		1,166,412
Retained deficit	Retained deficit	(578,286)		(589,128)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(97,162)		(93,842)
Total equity attributable to Sotera Health Company		463,264		452,302
Noncontrolling interests		2,480		2,272
Total equity	Total equity	465,744		454,574
Total liabilities and equity	Total liabilities and equity	$	2,777,000	$	2,761,279

See notes to consolidated financial statements.

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Sotera Health Company

Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except per share amounts)


		Three Months Ended March 31,
		2021		2020
		(Unaudited)
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
	(Unaudited)						(Unaudited)
Revenues:	Revenues:
Service
Service
Service	Service	$	188,698	$	167,405
Product	Product	23,450		20,795
Total net revenues	Total net revenues	212,148		188,200
Cost of revenues:	Cost of revenues:
Service
Service
Service	Service	85,036		83,069
Product	Product	11,740		8,614
Total cost of revenues	Total cost of revenues	96,776		91,683
Gross profit	Gross profit	115,372		96,517
Operating expenses:	Operating expenses:
Selling, general and administrative expenses	Selling, general and administrative expenses	52,465		37,053
Selling, general and administrative expenses
Selling, general and administrative expenses
Amortization of intangible assets	Amortization of intangible assets	16,543		14,599

Total operating expenses	Total operating expenses	69,008		51,652
Operating income	Operating income	46,364		44,865
Interest expense, net	Interest expense, net	21,282		56,562
Loss on extinguishment of debt		14,312		0
Foreign exchange loss (gain)		578		(627)
Other (income) expense, net		(3,890)		3,150
Income (loss) before income taxes		14,082		(14,220)
Provision (benefit) for income taxes		3,017		(12,234)
Net income (loss)		11,065		(1,986)
Less: Net income (loss) attributable to noncontrolling interests		223		(22)
Net income (loss) attributable to Sotera Health Company		10,842		(1,964)
Other comprehensive (loss) income net of tax:
Pension and post-retirement benefits (net of taxes of $84 and $(744), respectively)		(249)		2,207
Interest rate swaps (net of taxes of $0 and $1,234, respectively)		0		(3,479)
Foreign exchange (gain) loss
Other expense (income), net
Income before income taxes
Provision for income taxes
Net income
Other comprehensive income (loss) net of tax:
Pension and post-retirement benefits (net of taxes of $37 and $(17), respectively)
Pension and post-retirement benefits (net of taxes of $37 and $(17), respectively)
Pension and post-retirement benefits (net of taxes of $37 and $(17), respectively)
Interest rate derivatives (net of taxes of $146 and $(3,396), respectively)
Foreign currency translation	Foreign currency translation	(3,086)		(72,967)
Comprehensive income (loss)		7,730		(76,225)
Less: comprehensive income (loss) attributable to noncontrolling interests		208		(22)
Comprehensive income (loss) attributable to Sotera Health Company		$	7,522	$	(76,203)
Earnings (loss) per share:
Comprehensive (loss) income
Earnings per share:
Basic
Basic
Basic	Basic	$	0.04	$	(0.01)
Diluted	Diluted	0.04		(0.01)
Weighted average number of shares outstanding:	Weighted average number of shares outstanding:
Basic	Basic	278,827		232,400
Basic
Basic
Diluted	Diluted	278,968		232,400

See notes to consolidated financial statements.

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Sotera Health Company

Consolidated Statements of Cash Flows

(in thousands)


		Three Months Ended March 31,
		2021		2020
		(Unaudited)
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
	(Unaudited)						(Unaudited)
Operating activities:	Operating activities:
Net income (loss)		$	11,065	$	(1,986)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net income
Net income
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
Depreciation
Depreciation	Depreciation	15,379		16,110
Amortization of intangible assets	Amortization of intangible assets	22,282		19,913

Loss on extinguishment of debt		14,312		0
Deferred income taxes
Deferred income taxes
Deferred income taxes	Deferred income taxes	(3,637)		(6,683)
Share-based compensation expense	Share-based compensation expense	3,449		1,725
Accretion of asset retirement obligations	Accretion of asset retirement obligations	551		471
Unrealized foreign exchange (gains) / losses		2,354		(4,876)
Unrealized (gain) / loss on embedded derivative instruments		(853)		4,819
Gain (loss) on interest rate swap		0		(4,713)
Unrealized foreign exchange (gain) loss
Unrealized loss on derivatives not designated as hedging instruments
Amortization of debt issuance costs	Amortization of debt issuance costs	1,663		2,977
Other	Other	(2,843)		(2,306)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:
Accounts receivable
Accounts receivable
Accounts receivable	Accounts receivable	(4,134)		(433)
Inventories	Inventories	1,099		(1,553)
Other current assets	Other current assets	(2,324)		(1,404)
Accounts payable	Accounts payable	6,625		(733)
Accrued liabilities	Accrued liabilities	(5,542)		(8,334)
Income taxes payable / receivable		(4,518)		(8,132)
Georgia EO litigation settlement
Income taxes payable / receivable, net
Other liabilities	Other liabilities	1,513		(61)
Other long-term assets	Other long-term assets	(282)		889
Net cash provided by operating activities	Net cash provided by operating activities	56,159		5,690
Investing activities:	Investing activities:
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(20,942)		(12,989)
Purchase of mandatorily redeemable noncontrolling interest in Nelson Laboratories Fairfield, Inc.		(12,425)		0
Purchase of BioScience Laboratories, LLC, net of cash acquired		(13,152)		0
Purchases of property, plant and equipment
Purchases of property, plant and equipment
Other investing activities
Net cash used in investing activities	Net cash used in investing activities	(46,519)		(12,989)
Financing activities:	Financing activities:
Proceeds from revolving credit facility		0		50,000
Proceeds from long-term borrowings
Proceeds from long-term borrowings
Proceeds from long-term borrowings
Payment on long-term borrowings
Payment on revolving credit facility
Payments of debt issuance costs	Payments of debt issuance costs	(3,435)		(207)
Payments on long-term borrowings		0		(142)
Other		(348)		(344)
Net cash provided by (used in) financing activities		(3,783)		49,307
Buyout of leased facilities
Other financing activities
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(295)		154
Net increase in cash and cash equivalents, including restricted cash		5,562		42,162
Net (decrease) increase in cash and cash equivalents, including restricted cash
Cash and cash equivalents, including restricted cash, at beginning of period	Cash and cash equivalents, including restricted cash, at beginning of period	102,454		63,025
Cash and cash equivalents, including restricted cash, at end of period	Cash and cash equivalents, including restricted cash, at end of period	$	108,016	$	105,187
Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:
Cash paid during the period for interest	Cash paid during the period for interest	$	19,745	$	63,570
Cash paid during the period for interest
Cash paid during the period for interest
Cash paid during the period for income taxes, net of tax refunds received	Cash paid during the period for income taxes, net of tax refunds received	11,561		1,868
Equipment purchases included in accounts payable		7,389		5,100
Purchases of property, plant and equipment included in accounts payable

See notes to consolidated financial statements.

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Sotera Health Company

Consolidated Statements of Equity ~~(Deficit)~~

(in thousands)

(Unaudited)


		Shares	Amount		Amount		Additional Paid-In Capital				Retained Earnings / (Accumulated Deficit)		Accumulated Other Comprehensive (Loss) Income		Noncontrolling Interests		Total Equity
		Common Stock	Common Stock		Treasury Stock
Balance at December 31, 2019		232,400	$	2,324	$	0			$	0			$	(550,511)	$	(94,387)	$	1,442			$	(641,132)
	Shares																						Shares			Amount		Additional Paid-In Capital		Retained Earnings / (Accumulated Deficit)		Accumulated Other Comprehensive (Loss) Income		Total Equity
	Common Stock
Balance at December 31, 2022
Balance at December 31, 2022
Balance at December 31, 2022
Share-based compensation plans	Share-based compensation plans	—	—		—		1,725				—		—		—		1,725
Comprehensive income (loss):	Comprehensive income (loss):
Pension and post-retirement plan adjustments, net of tax	Pension and post-retirement plan adjustments, net of tax	—	—		—		—				—		2,207		—		2,207
Pension and post-retirement plan adjustments, net of tax
Pension and post-retirement plan adjustments, net of tax
Foreign currency translation	Foreign currency translation	—	—		—		—				—		(72,967)		—		(72,967)
Interest rate swaps		—	—		—		—				—		(3,479)		—		(3,479)
Net income (loss)		—	—		—		—				(1,964)		—		(22)		(1,986)
Balance at March 31, 2020		232,400	$	2,324	$	0	$	1,725			$	(552,475)	$	(168,626)	$	1,420	$	(715,632)
Interest rate derivatives, net of tax
Net income																			Net income	—				—	—		—		2,842		—		2,842
Balance at March 31, 2023


		Shares	Amount		Amount		Additional Paid-In Capital				Retained Earnings / (Accumulated Deficit)		Accumulated Other Comprehensive (Loss) Income		Noncontrolling Interests		Total Equity
		Common Stock	Common Stock		Treasury Stock
Balance at December 31, 2020		283,248	$	2,860	$	(34,000)			$	1,166,412			$	(589,128)	$	(93,842)	$	2,272			$	454,574
	Shares																						Shares			Amount		Additional Paid-In Capital		Retained Earnings / (Accumulated Deficit)		Accumulated Other Comprehensive (Loss) Income		Total Equity
	Common Stock
Balance at December 31, 2023
Balance at December 31, 2023
Balance at December 31, 2023
Share-based compensation plans	Share-based compensation plans	(348)	—		—		3,440				—		—		—		3,440
Comprehensive income (loss):	Comprehensive income (loss):
Pension and post-retirement plan adjustments, net of tax	Pension and post-retirement plan adjustments, net of tax	—	—		—		—				—		(249)		—		(249)
Pension and post-retirement plan adjustments, net of tax
Pension and post-retirement plan adjustments, net of tax
Foreign currency translation	Foreign currency translation	—	—		—		—				—		(3,071)		(15)		(3,086)

Net income (loss)		—	—		—		—				10,842		—		223		11,065
Balance at March 31, 2021		282,900	$	2,860	$	(34,000)	$	1,169,852			$	(578,286)	$	(97,162)	$	2,480	$	465,744
Interest rate derivatives, net of tax
Net income																			Net income	—				—	—		—		6,323		—		6,323
Balance at March 31, 2024

See notes to consolidated financial statements.

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Sotera Health Company

Notes to Consolidated Financial Statements

1.Basis of Presentation

Principles of Consolidation – Sotera Health Company (also referred to herein as the “Company,” “we,” “our,” “us” or “its”), is a leading global provider of mission-critical end-to-end sterilization ~~and~~solutions, lab testing and advisory services tofor the ~~medical device and pharmaceutical industries~~healthcare industry with operations primarily in the Americas, Europe and Asia.

We operate and report in ~~3 segments,~~three segments: Sterigenics, Nordion and Nelson Labs. We describe our reportable segments in Note ~~18,~~16, “Segment Information”. All ~~significant~~ intercompany balances and transactions have been eliminated in consolidation.

Noncontrolling interests represent the noncontrolling stockholders’ proportionate share of the total equity in the Company’s consolidated subsidiaries. As of March 31, 2021, our subsidiaries were wholly owned by us, except for noncontrolling interests of 15% and 33% in our 2 China subsidiaries. We consolidate the results of operations of these subsidiaries with our results of operations and reflect the noncontrolling interests in our 2 China subsidiaries on our Consolidated Statements of Operations and Comprehensive Income (Loss) as “Net income attributable to noncontrolling interests.” On March 11, 2021, we purchased the 15% noncontrolling interest that remained from the August 2018 acquisition of Nelson Laboratories Fairfield, Inc. (“Nelson Labs Fairfield”). This required future purchase was considered mandatorily redeemable, and therefore no earnings were allocated to this noncontrolling interest. See Note 4, “Acquisitions”~~for additional details.~~

In the first quarter of 2021, we entered into binding agreements to purchase the outstanding noncontrolling interests of 15% and 33% of our 2 China subsidiaries, respectively. The purchase transactions are expected to close in the second quarter of 2021 for a total purchase price of $8.6 million.

In July 2020, we acquired a 60% equity ownership interest in a joint venture to construct an E-beam facility in Alberta, Canada in connection with our acquisition of Iotron Industries Canada, Inc. (“Iotron”). Refer to Note 4, “Acquisitions” for additional information. We have determined this to be an investment in a variable interest entity (“VIE”). The investment is not consolidated as the Company has concluded that we are not the primary beneficiary of the VIE. The Company accounts for the joint venture using the equity method. The investment is reflected within “Investment in unconsolidated affiliates” on the Consolidated Balance Sheets.

Use of Estimates – In preparing our consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles ~~("GAAP"~~(“GAAP”), we make estimates and assumptions that affect the amounts reported and the accompanying notes. We regularly evaluate the estimates and assumptions used and revise them as new information becomes available. Actual results may vary from those estimates.

Interim Financial Statements – The accompanying consolidated financial statements include the assets, liabilities, operating results, and cash flows of the Company and its wholly owned subsidiaries. These financial statements are prepared in accordance with U.S. GAAP for interim financial information and the instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. These unaudited interim financial statements should be read in conjunction with the Company's annual consolidated financial statements and accompanying notes ~~on Form 10-K for the year ended December 31, 2020.~~in our 2023 10-K.

2.Recent Accounting Standards

~~ASU’s~~Accounting Standards Updates (“ASU”) Issued But Not Yet Adopted

Under the Jumpstart Our Business Startups Act of 2012, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. As an emerging growth company, we have elected to take advantage of the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies or at which time we conclude it is appropriate to avail ourselves of early adoption provisions of applicable standards. As a result, our results of operations and financial statements may not be comparable to the results of operations and financial statements of other companies who have adopted the new or revised accounting standards.

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~~Sotera Health Company~~

~~Notes to Consolidated Financial Statements~~

In ~~June 2016,~~November 2023, the Financial Accounting Standards Board (“FASB”) issued ~~Accounting Standards Update~~ ~~(“ASU”) 2016-13, Financial Instruments – Credit Losses~~ (“ASU ~~2016-13”)~~2023-07-Segment Reporting (Topic 280): ~~Measurement of Credit Losses on Financial Instruments,~~ ~~and subsequently issued additional guidance that modified~~Improvements to Reportable Segment Disclosures. The amendments in ASU ~~2016-13. The standard requires~~2023-07 require an entity to ~~change its accounting approach~~provide enhanced disclosures about significant segment expenses. The amendments in ~~determining impairment~~this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is in the process of ~~certain financial instruments, including trade receivables, from an “incurred loss” to a “current expected credit loss” model. We intend to adopt~~evaluating the ~~standard as~~impact of ~~January 1, 2022. We are currently assessing the effect that ASU 2016-13 will have~~this standard on our consolidated financial ~~position, results of operations,~~statements and disclosures.

In ~~March 2019,~~December 2023, the FASB issued ASU ~~2019-12 - Income~~2023-09-Income Taxes (Topic 740): ~~Simplifying~~Improvements to Income Tax Disclosures. The amendments in this ASU require entities to disclose, on an annual basis, specific categories in the ~~Accounting for Income Taxes. The standard simplifies~~reconciliation of the ~~accounting~~provision (benefit) for income taxes to the statutory rate and ~~makes~~provide additional information for reconciling items that meet a ~~number~~quantitative threshold. Additionally, the update requires entities to disclose a disaggregation of ~~changes meant to add or clarify guidance on accounting for income taxes. This update is~~taxes paid by category (federal, state and foreign taxes) as well as individual jurisdictions. For public business entities, the amendments in this ASU are effective for annual ~~financial statement~~ periods beginning after ~~March~~December 15, ~~2021 and interim periods beginning after March 15, 2022, with early adoption permitted~~2024. The Company is in ~~any interim period for which~~the process of evaluating the impact of this standard on our consolidated financial statements ~~have not yet been filed. We are currently assessing the effect that ASU 2019-12 will have on our financial position, results of operations,~~ and disclosures.

3.Revenue Recognition

The following table shows disaggregated net revenues from contracts with external customers by timing of revenue and by segment for the three months ended March 31, ~~2021~~2024 and ~~2020:~~2023:


(thousands of U.S. dollars)	(thousands of U.S. dollars)	Three Months Ended March 31, 2021								(thousands of U.S. dollars)	Three Months Ended March 31, 2024
		Sterigenics		Nordion		Nelson Labs		Consolidated
	Sterigenics											Sterigenics	Nordion	Nelson Labs	Consolidated
Point in time	Point in time	$	131,151	$	25,918	$	0	$	157,069
Over time	Over time	0		0		55,079		55,079
Total	Total	$	131,151	$	25,918	$	55,079	$	212,148

(thousands of U.S. dollars) Three Months Ended March 31, 2020
Sterigenics Nordion Nelson Labs Consolidated
Point in time $ 117,280 $ 23,625 $ 0 $ 140,905
Over time 0 0 47,295 47,295
Total $ 117,280 $ 23,625 $ 47,295 $ 188,200

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~~Contract Balances~~Sotera Health Company

~~As of March 31, 2021, and December 31, 2020, contract assets included in prepaid expenses and other current assets on the~~Notes to Consolidated ~~Balance Sheets totaled approximately $14.1 million and $12.7 million, respectively, resulting from revenue recognized over time in excess of the amount billed to the customer.~~Financial Statements


(thousands of U.S. dollars)	Three Months Ended March 31, 2023
	Sterigenics		Nordion		Nelson Labs		Consolidated
Point in time	$	159,997	$	7,588	$	—	$	167,585
Over time	—		963		52,042		53,005
Total	$	159,997	$	8,551	$	52,042	$	220,590

When we receive consideration from a customer prior to transferring goods or services under the terms of a sales contract, we record deferred revenue, which represents a contract liability. Deferred revenue totaled ~~$6.0~~$12.9 million and ~~$6.1~~$13.5 million at March 31, ~~2021~~2024 and December 31, ~~2020,~~2023, respectively. We recognize deferred revenue after we have transferred control of the goods or services to the customer and all revenue recognition criteria are met.

4.~~Acquisitions~~Inventories

~~Acquisition~~Inventories consisted of ~~BioScience Laboratories, LLC~~the following:

~~On March 8, 2021, we acquired BioScience Laboratories, LLC (“BioScience”) for approximately $13.2 million, net~~


(thousands of U.S. dollars)
	March 31, 2024		December 31, 2023
Raw materials and supplies	$	41,436	$	43,411
Work-in-process	3,008		471
Finished goods	7,129		4,670
	51,573		48,552
Reserve for excess and obsolete inventory	(231)		(236)
Inventories, net	$	51,342	$	48,316

5.Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of ~~$0.8 million of cash acquired plus~~ the ~~contemporaneous repayment of BioScience's outstanding debt of $1.9 million. BioScience is a provider of outsourced topical antimicrobial product testing in the pharmaceutical, medical device,~~following:


(thousands of U.S. dollars)
	March 31, 2024		December 31, 2023
Prepaid taxes	$	3,717	$	4,129
Prepaid business insurance	6,261		7,174
Prepaid rent	1,193		1,150
Customer contract assets	18,550		17,785
Current deposits	416		715
Prepaid maintenance contracts	448		422
Value added tax receivable	3,549		4,306
Prepaid software licensing	2,265		2,503
Stock supplies	3,754		3,669
Embedded derivative assets	1,667		1,225
Other	11,843		10,768
Prepaid expenses and other current assets	$	53,663	$	53,846

6.Goodwill and ~~consumer products industries with one location in Bozeman, Montana.~~Other Intangible Assets

~~The purchase price of BioScience was allocated to the underlying assets acquired and liabilities assumed based upon management's estimated fair values at the date of acquisition.~~ Changes to goodwill during the ~~allocation of the purchase price may occur~~three months ended March 31, 2024 were as follows:

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Sotera Health Company

Notes to Consolidated Financial Statements

these measurements are completed. Approximately $8.4 million of goodwill was recorded related to the BioScience acquisition, representing the excess of the purchase price over preliminary estimated fair values of all the assets acquired and liabilities assumed. The Company funded this acquisition using available cash. The acquisition price and the results of operations for this acquired entity are not material in relation to the Company's consolidated financial statements.

~~Acquisition of Mandatorily Redeemable Noncontrolling Interest - Nelson Labs Fairfield~~

On March 11, 2021, we completed the acquisition of the remaining 15% ownership of Nelson Labs Fairfield for $12.4 million, resulting in a gain of $1.2 million included in “Other expense (income), net” in the Consolidated Statements of Operations and Comprehensive Income (Loss) relative to the $13.6 million previously accrued. Pursuant to the terms of the August 2018 acquisition, we initially acquired 85% of the equity interests of Nelson Labs Fairfield in August 2018 and were obligated to acquire the remaining 15% noncontrolling interest within three years from the date of the acquisition.

~~Acquisition of Iotron Industries Canada, Inc.~~

On July 31, 2020, we acquired Iotron Industries Canada, Inc.(“Iotron”) for approximately $105.2 million. Iotron was an independent contact sterilizer with two North American locations in Vancouver, Canada, and Columbia City, Indiana. Each location uses proprietary high energy electron beam technology to process products for orthopedic, medical device, plastics, and agricultural businesses. The acquisition was financed by the issuance of $100.0 million of First Lien Notes due 2026. Refer to Note 9, “Long-Term Debt” for additional details.

As part of this acquisition, we also acquired Iotron’s 60% equity ownership interest in a joint venture to construct an E-beam facility in Alberta, Canada. The joint venture is accounted for using the equity method.

The opening balance sheet for the Iotron acquisition reflects the net tangible and intangible assets acquired and liabilities assumed at their preliminary estimated fair values at the acquisition date.

The preliminary estimated fair value of the underlying acquired assets and assumed liabilities of the Iotron acquisition and the measurement period adjustments recognized during the three months ended March 31, 2021, were as follows:

(thousands of U.S. dollars)
Allocation of purchase price to the fair value of
net assets acquired (net of cash acquired):
Amount recognized as of December 31, 2020 Measurement Period Adjustments Amount recognized as of March 31, 2021
Goodwill $ 69,046 $ (17,142) $ 51,904
Intangibles 16,427 26,273 42,700
Property, plant, and equipment 13,812 4,346 18,158
Working capital, net 1,115 2 1,117
Investment in unconsolidated affiliate 12,881 (4,181) 8,700
Assumed long-term liabilities (2,248) 0 (2,248)
Other assets/liabilities, net (5,846) (9,298) (15,144)
Total estimated purchase price $ 105,187 $ 0 $ 105,187

The fair value of all the above assets acquired and liabilities assumed are preliminary in nature since the fair value analyses are not yet complete, including finalizing third party appraisals and analyzing the tax attributes of the fair value adjustments. Changes to the allocation of the purchase price may occur as these analyses are completed.

Approximately $51.9 million of goodwill was recorded related to the Iotron acquisition, representing the excess of the purchase price over preliminary estimated fair values of all the assets acquired and liabilities assumed. The fair value allocated to goodwill and tangible and intangible assets are deductible for tax purposes. The qualitative elements of goodwill primarily represent the expanded future growth opportunities for the combined company and the addition of Iotron’s highly skilled workforce. A preliminary valuation was recorded of approximately $39.1 million and $3.6 million for intangible assets as part of the acquisition related to customer relationships and employee non-compete agreements, respectively. The estimated useful lives of the identifiable finite-lived intangible assets range from 5 to 15 years.

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~~Sotera Health Company~~

~~Notes to Consolidated Financial Statements~~

Iotron’s results of operations are included in our consolidated financial statements from the date of the transaction within the Sterigenics segment. The unaudited pro forma consolidated results for the three months ended March 31, 2020, are reflected in the pro forma table below had the transaction occurred on January 1, 2020. The following unaudited supplemental pro forma financial information is based on our historical consolidated financial statements and Iotron’s historical consolidated financial statements, as adjusted for amortization of acquired intangible assets, an increase in interest expense resulting from interest on the First Lien Notes to finance the acquisition, and to reflect the change in the estimated income tax rate for federal and state purposes.


~~(thousands of U.S. dollars)~~
~~Three Months Ended March 31,~~	~~2020~~
~~Net revenues~~	$	~~194,402~~
~~Net loss~~	~~(889)~~

In connection with the Iotron acquisition, we incurred approximately $1.0 million in transaction costs for the three months ended March 31, 2020, which were included in “Selling, general and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Income (Loss).

5.~~Inventories~~

~~Inventories consisted primarily of the following:~~

(thousands of U.S. dollars)
March 31, 2021 December 31, 2020
Raw materials and supplies $ 29,512 $ 29,114
Work-in-process 1,371 846
Finished goods 2,617 4,256
33,500 34,216
Reserve for excess and obsolete inventory (125) (123)
Inventories, net $ 33,375 $ 34,093

6.~~Prepaid Expenses and Other Current Assets~~

~~Prepaid expenses and other current assets consisted primarily of the following:~~

(thousands of U.S. dollars)
March 31, 2021 December 31, 2020
Prepaid taxes $ 25,356 $ 22,883
Prepaid business insurance 7,421 10,403
Prepaid rent 1,212 1,170
Customer contract assets 14,133 12,670
Insurance and indemnification receivables 2,751 2,751
Current deposits 797 673
Prepaid maintenance contracts 432 404
Value added tax receivable 1,385 2,094
Prepaid software licensing 1,299 1,181
Stock supplies 3,210 2,715
Other 11,762 8,020
Prepaid expenses and other current assets $ 69,758 $ 64,964

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~~Sotera Health Company~~

~~Notes to Consolidated Financial Statements~~

7.~~Goodwill and Other Intangible Assets~~

~~Changes to goodwill during the three months ended March 31, 2021 were as follows:~~

(thousands of U.S. dollars) Sterigenics Nordion Nelson Labs Total
Goodwill at December 31, 2020 $ 683,481 $ 287,932 $ 144,523 $ 1,115,936
BioScience acquisition 0 0 8,435 8,435
Iotron acquisition measurement period adjustments
(17,142) 0 0 (17,142)
Changes due to foreign currency exchange rates (2,252) 3,408 (1,657) (501)
Goodwill at March 31, 2021 $ 664,087 $ 291,340 $ 151,301 $ 1,106,728


(thousands of U.S. dollars)	Sterigenics		Nordion		Nelson Labs		Total
Goodwill at December 31, 2023	$	659,888	$	276,929	$	174,373	$	1,111,190
Changes due to foreign currency exchange rates	(1,682)		(5,903)		(754)		(8,339)
Goodwill at March 31, 2024	$	658,206	$	271,026	$	173,619	$	1,102,851

Other intangible assets consisted of the following:

(thousands of U.S. dollars)

Gross Carrying

Amount

Accumulated

Amortization

(thousands of U.S. dollars)

Gross Carrying

Amount

Accumulated

Amortization

As of March 31, 2021

As of March 31, 2024

Finite-lived intangible assets

Customer relationships

662,509

322,685

Proprietary technology

89,604

39,707

Trade names

142

100

Land-use rights

9,454

1,364

Sealed source and supply agreements

243,660

98,237

Other

5,675

1,138

Total finite-lived intangible assets

1,011,044

463,231

Indefinite-lived intangible assets

Regulatory licenses and other(a)

82,807

—

Trade names / trademarks

25,952

—

Total indefinite-lived intangible assets

108,759

—

Total

1,119,803

463,231

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~~Sotera Health Company~~

~~Notes to Consolidated Financial Statements~~


As of December 31, 2020		Gross Carrying Amount		Accumulated Amortization
As of December 31, 2023						As of December 31, 2023	Gross Carrying Amount	Accumulated Amortization
Finite-lived intangible assets	Finite-lived intangible assets
Customer relationships
Customer relationships
Customer relationships	Customer relationships	$	634,454	$	309,428
Proprietary technology	Proprietary technology	90,964		38,075
Trade names	Trade names	156		105
Land-use rights	Land-use rights	9,489		1,311
Sealed source and supply agreements	Sealed source and supply agreements	240,791		92,953
Other	Other	1,937		519
Total finite-lived intangible assets	Total finite-lived intangible assets	977,791		442,391

Indefinite-lived intangible assets	Indefinite-lived intangible assets
Indefinite-lived intangible assets
Indefinite-lived intangible assets
Regulatory licenses and other(a)
Regulatory licenses and other(a)
Regulatory licenses and other(a)	Regulatory licenses and other(a)	81,832		—
Trade names / trademarks	Trade names / trademarks	26,134		—
Total indefinite-lived intangible assets	Total indefinite-lived intangible assets	107,966		—
Total	Total	$	1,085,757	$	442,391

(a)Includes certain transportation certifications, a class 1B nuclear license and other intangibles related to obtaining such licensure. These assets are considered indefinite-lived as the decision for renewal by the Canadian Nuclear Safety Commission is highly based on a licensee’s previous assessments, reported incidents, and annual compliance and inspection results. New applications for license can take a significant amount of time and cost; whereas an existing licensee with a historical record of compliance and current operating conditions more than likely ensures renewal for another ~~10 years~~10-year license period as Nordion has demonstrated over its 7075 years of history.

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Sotera Health Company

Notes to Consolidated Financial Statements

Amounts include the impact of foreign currency translation. Fully amortized amounts are written off.

Amortization expense for ~~other~~finite-lived intangible assets was ~~$22.3~~$20.1 million ~~($5.8~~and $20.6 million isfor the three months ended March 31, 2024 and 2023, respectively. $15.7 million and $16.2 million was included in ~~“Cost~~“Amortization of revenues” and $16.5 million in “Selling, general and administrative expenses”) in the Consolidated Statements of Operations and Comprehensive Income (Loss) and $19.9 million ($5.3 million is included in “Cost of revenues” and $14.6 million in “Selling, general and administrative expenses”)intangible assets” in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, ~~2021~~2024 and ~~2020, respectively.~~2023, respectively, whereas the remainder was included in “Cost of revenues.”

The estimated aggregate amortization expense for finite-lived intangible assets for each of the next five years and thereafter is as follows:


(thousands of U.S. dollars)	(thousands of U.S. dollars)
For the remainder of 2021		$	65,889
2022		80,665
2023		80,659
2024		79,882
For the remainder of 2024
For the remainder of 2024
For the remainder of 2024
2025	2025	41,982
2026
2027
2028
Thereafter	Thereafter	198,736
Total	Total	$	547,813

The weighted-average remaining useful life of the finite-lived intangible assets was approximately 109 years as of March 31, ~~2021.~~2024.

7.Accrued Liabilities

Accrued liabilities consisted of the following:


(thousands of U.S. dollars)
	March 31, 2024		December 31, 2023
Accrued employee compensation	$	26,450	$	35,037
Georgia EO litigation settlement reserve	—		35,000
Illinois EO litigation settlement reserve	—		288
Other legal reserves	460		1,480
Accrued interest expense	2,624		26,681
Embedded derivatives	2,698		414
Professional fees	18,143		12,691
Accrued utilities	2,208		2,056
Insurance accrual	3,336		2,922
Accrued taxes	2,605		2,407
Other	3,250		3,495
Accrued liabilities	$	61,774	$	122,471

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Notes to Consolidated Financial Statements

8.~~Accrued Liabilities~~

~~Accrued liabilities consisted of the following:~~

(thousands of U.S. dollars)
March 31, 2021 December 31, 2020
Accrued employee compensation $ 27,651 $ 34,760
Legal reserves 2,751 2,751
Accrued interest expense 764 186
Embedded derivatives 229 670
Professional fees 13,744 12,686
Accrued utilities 2,397 1,864
Insurance accrual 1,886 1,255
Accrued taxes 3,332 2,599
Other 3,619 3,747
Accrued liabilities $ 56,373 $ 60,518

9.Long-Term Debt

Long-term debt consisted of the following:

(thousands of U.S. dollars)
March 31, 2021 December 31, 2020
Term loan, due 2026 $ 1,763,100 $ 1,763,100
Senior notes, due 2026 100,000 100,000
Other long-term debt 1,059 450
Total long-term debt 1,864,159 1,863,550
Less unamortized debt issuance costs and debt discounts (26,579) (38,761)
Total long-term debt, less debt issuance costs and debt discounts $ 1,837,580 $ 1,824,789


(thousands of U.S. dollars)
As of March 31, 2024	Gross Amount		Unamortized Debt Issuance Costs		Unamortized Debt Discount		Net Amount
Term loan, due 2026	$	1,763,100	$	(1,472)	$	(9,439)	$	1,752,189
Term loan B, due 2026	496,250		(7,197)		(11,823)		477,230

	2,259,350		(8,669)		(21,262)		2,229,419
Less current portion	5,000		(73)		(119)		4,808
Long-term debt	$	2,254,350	$	(8,596)	$	(21,143)	$	2,224,611


(thousands of U.S. dollars)
As of December 31, 2023	Gross Amount		Unamortized Debt Issuance Costs		Unamortized Debt Discount		Net Amount
Term loan, due 2026	$	1,763,100	$	(1,606)	$	(10,298)	$	1,751,196
Term loan B, due 2026	497,500		(7,616)		(12,609)		477,275
	2,260,600		(9,222)		(22,907)		2,228,471
Less current portion	5,000		(76)		(127)		4,797
Long-term debt	$	2,255,600	$	(9,146)	$	(22,780)	$	2,223,674

Debt Facilities

Senior Secured Credit Facilities

On December 13, 2019, Sotera Health Holdings, LLC (“SHH”), our ~~wholly owned~~wholly-owned subsidiary, entered into senior secured first lien credit facilities (the “Senior Secured Credit Facilities”), consisting of both a prepayable senior secured first lien term loan (the “Term Loan”) and a senior secured first lien revolving credit facility (the “Revolving Credit Facility”) pursuant to a first lien credit agreement (the “Credit Agreement”). The Term Loan matures on ~~December~~June 13, ~~2026, and~~2026. The total borrowing capacity under the Revolving Credit ~~Facility's original maturity date was December 13, 2024. On December 17, 2020, we increased the capacity of our Revolving Credit~~ Facility ~~from $190.0 million to $347.5~~is $423.8 million. The Senior Secured Credit Facilities also provide SHH the right at any time and under certain conditions to request incremental term loans or incremental revolving credit commitments based on a formula defined in the Senior Secured Credit Facilities. As of March 31, ~~2021~~2024 and December 31, ~~2020,~~2023, total borrowings under the Term Loan were $1,763.1 ~~million and $1,763.1 million, respectively, and there were no borrowings outstanding on the Revolving Credit Facility.~~million. The weighted average interest rate on borrowings under the Term Loan for the three months ended March 31, ~~2021~~2024 and March 31, ~~2020~~2023 was ~~3.73%~~8.26% and ~~6.18%~~7.44%, respectively.

On ~~January 20, 2021,~~March 1, 2024, the Company and SHH entered into Amendment No. 3 (“Amendment No. 3”) to the Revolving Credit Facility. Among other changes, the Amendment provides (i) for new commitments under the existing Revolving Credit Facility to replace existing revolving commitments in an aggregate principal amount of $83.0 million, (ii) that certain of the lenders providing revolving credit commitments shall also provide additional commitments for the issuance of letters of credit under the Revolving Credit Facility in an aggregate principal amount of $37.5 million and (iii) for the extension of the maturity date of the Revolving Credit Facility to the earlier of (a) March 1, 2029, and (b) the date that is 91 days prior to the maturity date of the Company’s existing term loans.

Amendment No. 3 does not give effect to any other material changes to the terms and conditions of the Credit Agreement, including with respect to the amount of commitments under the Revolving Credit Facility, which remains $423.8 million, the representations and warranties, events of default, affirmative or negative covenants.

On February 23, 2023, we ~~closed on~~entered into the First Lien Credit Agreement (the “2023 Credit Agreement”), which provides for, among other things, a new Term Loan B facility (the “2023 Term Loan”) in an ~~amendment repricing our~~aggregate principal amount of $500.0 million and bears interest, at the Company’s option, at a variable rate per annum equal to either (x) the Term ~~Loan. The interest rate spread over the London Interbank Offered~~Secured Overnight Financing Rate (“~~LIBOR”~~Term SOFR”) (as defined in the 2023 Credit Agreement) plus an applicable margin of 3.75% or (y) an alternative base rate (“ABR”) plus an applicable margin of 2.75%. The 2023 Credit Agreement is secured on ~~the facility was reduced from 450~~a first priority basis ~~points to 275 basis points,~~by substantially all of our assets and ~~the facility’s LIBOR floor was reduced from 100 basis points to 50 basis points. The changes result in an effective reduction in current interest rates~~is guaranteed by certain of 2.25%. In connection with this amendment, we wrote off $11.3 million of unamortized debt issuance and discount costs and incurred an additional $2.9 million of expense related to debt issuance costs attributable to the refinancing. These costs were recorded to “Loss on extinguishment of debt” in our ~~Consolidated Statements of Operations and Comprehensive Income (Loss).~~subsidiaries. It is prepayable without premium or

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Notes to Consolidated Financial Statements

As of March 31, 2021 and December 31, 2020, capitalized debt issuance costs totaled $3.1 million and $3.4 million, respectively, and debt discounts totaled $20.0 million and $31.6 million, respectively, related topenalty at any time six months after the ~~Senior Secured Credit Facilities. Such costs are recorded as a reduction of debt on our consolidated~~closing date. The principal balance ~~sheets and amortized as a component of interest expense over the term~~shall be paid at 1% of the ~~debt agreement.~~

~~On March 26, 2021, we amended~~aggregate principal amount ($5.0 million) per year, with the ~~Revolving Credit Facility, to (i) decrease~~balance due at the ~~Applicable Rate (as defined in~~end of 2026. The Company used the Credit Agreement) related to any Revolving Loans (as defined in the Credit Agreement) from a rate per annum that ranged from an alternative base rate (“ABR”) plus 2.50% to ABR plus 3.00% depending on SHH’s Senior Secured First Lien Net Leverage Ratio to ABR plus 1.75%; and in the case of Eurodollar Loans (as defined in the Credit Agreement) from a rate per annum which ranged from the Adjusted LIBOR plus 3.50% to the Adjusted LIBOR plus 4.00% depending on SHH’s Senior Secured First Lien Net Leverage Ratio (as defined in the Credit Agreement), to the Adjusted LIBOR (as defined in the Credit Agreement) plus 2.75%, and (ii) extend the maturity dateproceeds of the ~~Revolving Facility from December 13, 2024~~2023 Term Loan to ~~June 13, 2026. The other material terms~~fund a previously announced $408.0 million EO litigation settlement in Cook County, Illinois and pay down the $200.0 million of the Credit Agreement are unchanged and the amendment does not change the capacity of our Revolving Credit Facility, which is $347.5 million. No unamortized debt issuance costs associated with the Revolving Credit Facility were written off and direct fees and costs incurred in connection with the amendment were immaterial.

As of March 31, 2021 and December 31, 2020, there were 0 borrowings on the Revolving Credit Facility. SHH borrowed $50.0 million on the Revolving Credit Facility during the first quarter of 2020 which was repaid in the second quarter of 2020. The interest rate on theexisting borrowings under the Revolving Credit Facility ~~during 2020 averaged approximately 5.0%~~concurrent with the funding of the 2023 Term Loan on February 23, 2023. The Company utilized the remaining proceeds to further enhance liquidity and for general corporate purposes. The weighted average interest rate on borrowings under the 2023 Term Loan for the three months ended March 31, 2024 and the three months ended March 31, 2023 was 9.09% and 8.82%, respectively.

On March 21, 2023, the Company entered into an Incremental Facility Amendment to the First Lien Credit Agreement (“Revolving Credit Facility Amendment”), which provides for an increase in the commitments under the existing Revolving Credit Facility in an aggregate principal amount of $76.3 million. In addition, certain of the lenders providing revolving credit commitments provided additional commitments for the issuance of the letters of credit under the Revolving Credit Facility in an aggregate principal amount of $165.1 million. The Revolving Credit Facility Amendment also provides for the replacement of the reference interest rate option for Revolving Loans from London Interbank Offered Rate (“LIBOR”) to Secured Overnight Financing Rate (“SOFR”) plus an applicable credit spread adjustment of 0.10% (subject to a minimum floor of 0%). After giving effect to the Revolving Credit Facility Amendment, the aggregate amount of the lenders' revolving commitments is $423.8 million. As of March 31, 2024 there were no borrowings outstanding under the Revolving Credit Facility.

The Senior Secured Credit Facilities and 2023 Credit Agreement contain additional covenants that, among other things, restrict, subject to certain exceptions, our ability and the ability of our restricted subsidiaries to engage in certain activities, such as incur indebtedness or permit to exist any lien on any property or asset now owned or hereafter acquired, as specified in the Senior Secured Credit Facilities and 2023 Credit Agreement. The Senior Secured Credit Facilities and 2023 Credit Agreement also contain certain customary affirmative covenants and events of default, including upon a change of control. An event of default under the Senior Secured Credit Facilities and 2023 Credit Agreement would occur if the Company or certain of its subsidiaries received one or more enforceable judgments for payment in an aggregate amount in excess of $100.0 million and the judgments were not stayed or remained undischarged for a period of sixty consecutive days or if, to enforce such judgments, a judgment creditor were to attach liens upon assets that are material to the business and operations of the Company and certain of its subsidiaries as a whole. As of March 31, 2024, we were in compliance with all of the Senior Secured Credit Facilities and 2023 Credit Agreement covenants.

All of SHH’s obligations under the Senior Secured Credit Facilities and 2023 Credit Agreement are unconditionally guaranteed by the Company and each existing and subsequently acquired or organized direct or indirect wholly-owned domestic restricted subsidiary of the Company, with customary exceptions including, among other things, where providing such guarantees is not permitted by law, regulation or contract or would result in material adverse tax consequences. All obligations under the Senior Secured Credit Facilities and 2023 Credit Agreement, and the guarantees of such obligations, are secured by substantially all assets of the borrower and guarantors, subject to permitted liens and other exceptions and exclusions, as outlined in the Senior Secured Credit ~~Facilities.~~Facilities and 2023 Credit Agreement.

Outstanding letters of credit are collateralized by encumbrances against the Revolving Credit Facility and the collateral pledged thereunder, or by cash placed on deposit with the issuing bank. As of March 31, ~~2021,~~2024, the Company had ~~$65.8~~$23.7 million of letters of credit issued against the Revolving Credit Facility, resulting in total availability under the Revolving Credit Facility of ~~$281.7~~$400.1 million.

~~First Lien Notes~~Term Loan Interest Rate Risk Management

~~On July 31, 2020, SHH issued $100.0 million aggregate principal amount of senior secured first lien notes due 2026 (the “First Lien Notes”), which mature on December 13, 2026.~~ The First Lien Notes bear interest at a rate equal to LIBOR subject to a 1.00% floor plus 6.00% per annum. Interest is payable on a quarterly basis with no principal due until maturity. The weighted averageCompany utilizes interest rate derivatives to reduce the variability of cash flows in the interest payments associated with our variable rate debt due to changes in SOFR. For additional information on the ~~First Lien Notes for the three months ended March 31, 2021 was 7.00%.~~

~~SHH is entitled~~derivative instruments described above, refer to ~~redeem all or a portion of the First Lien Notes, at any time~~Note 15, “Financial Instruments and from time to time, subject to certain premiums depending on the date of redemption; any time on or prior to July 31, 2021, a customary make-whole premium applies and, thereafter, specified premiums that decline to zero apply (in each case as described in the indenture governing the First Lien Notes).

All of SHH’s obligations under the First Lien Notes are unconditionally guaranteed by the Company and each existing and subsequently acquired or organized direct or indirect wholly-owned domestic restricted subsidiary of SHH, with customary exceptions including, among other things, where providing such guarantees is not permitted by law, regulation or contract or would result in material adverse tax consequences. All obligations under the First Lien Notes, and the guarantees of such obligations, are secured by substantially all of the assets of the borrower and guarantors, subject to permitted liens and other exceptions and exclusions, as outlined in the First Lien Notes. Such collateral is substantially the same collateral that secures the Senior Secured Credit Facilities. Such collateral securing the First Lien Notes ranks pari passu with that of the Senior Secured Credit Facilities.Financial Risk”, “Derivative Instruments.”

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Notes to Consolidated Financial Statements

At March 31, 2021 and December 31, 2020, capitalized debt issuance costs were $0.8 million and $0.9 million, respectively, and debt discounts were $2.7 million and $2.8 million, respectively, related to the First Lien Notes, which are recorded as a reduction of debt on our Consolidated Balance Sheets and amortized into interest expense over the term of the debt agreement.

~~2020 Debt Repayments~~

On November 24, 2020, we closed our initial public offering (the "IPO”), in which we sold 53,590,000 shares of our common stock at a price of $23.00 per share, which included the full exercise by the underwriters of their option to purchase up to an additional 6,990,000 shares of common stock. We raised approximately $1.2 billion in net proceeds after deducting underwriters’ discounts and commissions. We used the net proceeds received by us from the IPO to (i) redeem $770.0 million in aggregate principal amount of the Second Lien Senior Secured Notes with an original maturity date of December 13, 2027 (the "Second Lien Notes”), plus accrued and unpaid interest thereon and $15.4 million of redemption premium, (ii) repurchase 1,568,445 shares of our common stock from certain of our executive officers at a purchase price per share equal to the IPO price per share of our common stock less an amount equal to the underwriting discounts and commissions payable thereon and (iii) repay $341.0 million of the outstanding indebtedness under the Term Loan, plus accrued and unpaid interest thereon. In connection with the debt repayments, we wrote off $28.9 million of debt issuance and discount costs and recognized $15.4 million in premiums paid for the early extinguishment of the Second Lien Notes. We recognized these costs within “Loss on extinguishment of debt” in our Consolidated Statements of Operations and Comprehensive Income (Loss) in the fourth quarter of 2020.

Aggregate Maturities

Aggregate maturities of the Company’s long-term debt, excluding debt discounts, as of March 31, ~~2021,~~2024, are as follows:

(thousands of U.S. dollars)
2021 $ 0
2022 609
2023 450
2024 0
2025 0
Thereafter 1,863,100
Total $ 1,864,159

As referenced above, the Company utilized its IPO proceeds toward prepaying the Second Lien Notes in full as well as prepaying a portion of the Term Loan. The Term Loan prepayment amount eliminated all subsequent scheduled and outstanding repayments of the term borrowings resulting in no remaining short-term commitments.


(thousands of U.S. dollars)
2024	3,750
2025	5,000
2026	2,250,600
2027	—
2028	—
Thereafter	—
Total	$	2,259,350

~~10.~~9.Income Taxes

Income tax expense is provided on an interim basis based upon our estimate of the annual effective income tax rate. In determining the estimated annual effective income tax rate, we analyze various factors, including projections of our annual earnings and the taxing jurisdictions where the earnings will occur, the impact of state and local taxes, our ability to utilize tax credits and net operating loss carryforwards and available tax planning alternatives.

Our effective tax rate was ~~21.4 %~~42.6% and ~~(86.0)%~~47.4% for the three months ended March 31, ~~2021~~2024 and ~~2020,~~2023, respectively. Income tax expense for the three months ended March 31, ~~2021 differs~~2024 differed from the statutory rate primarily due to ~~the impact of the foreign rate differential, global intangible low-tax income (“GILTI”), and~~ a net increase in the valuation allowance attributable to the limitation on the deductibility of interest ~~expense. This was~~expense and the impact of the foreign rate differential, partially offset by a ~~discrete item, which reversed the valuation allowance on deferred tax assets related to certain asset retirement obligations.~~

benefit for state income taxes. Income tax ~~benefit~~expense for the three months ended March 31, ~~2020~~2023 differed from the statutory rate primarily due to a net increase in the ~~impact of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which increased~~valuation allowance attributable to the limitation on the deductibility of interest expense, ~~from 30% to 50% for tax years beginning in 2019 or 2020,~~the impact of the foreign rate differential and ~~other provisions. The increased limitation~~

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~~Notes to Consolidated Financial Statements~~

resulted in a current tax benefit for the three months ended March 31, 2020 of $9.1 million. The increased limitation also resulted in a $5.6 million valuation allowance reversal in the three months ended March 31, 2020.non-deductible compensation.

~~11.~~10.Employee Benefits

The Company sponsors various post-employment benefit plans including, in certain countries outside the U.S., defined benefit and defined contribution pension plans, retirement compensation arrangements, and plans that provide extended health care coverage to retired employees, the majority of which relate to Nordion.

Defined benefit pension plan

The following defined benefit pension plan disclosure relates to Nordion. Certain immaterial foreign defined benefit pension plans have been excluded from the table below. The interest cost, ~~and~~ expected return on plan assets and amortization of net actuarial gain are recorded in “Other ~~income,~~expense (income), net” and the service cost component is included in the same financial statement line item as the applicable employee’s wages in the Consolidated Statements of Operations and Comprehensive Income (Loss). The components of net periodic ~~pension cost for~~pension benefit for the defined benefit plans for the three months ended March 31, ~~2021~~2024 and ~~2020~~2023 were as follows:


Three Months Ended March 31,
	Three Months Ended								Three Months Ended
(thousands of U.S. dollars)	(thousands of U.S. dollars)	2021		2020		(thousands of U.S. dollars)	March 31, 2024	March 31, 2023
Service cost	Service cost	$	298	$	276
Interest cost	Interest cost	1,613		2,007
Expected return on plan assets	Expected return on plan assets	(3,557)		(3,599)
Amortization of net actuarial loss		267		197

Net periodic benefit	Net periodic benefit	$	(1,379)	$	(1,119)
Net periodic benefit
Net periodic benefit

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Notes to Consolidated Financial Statements

Other benefit plans

Other benefit plans disclosed below relate to Nordion and include a supplemental retirement arrangement, a retirement and termination allowance, and post-retirement benefit plans, which include contributory health and dental care benefits and contributory life insurance coverage. Certain immaterial other foreign benefit plans have been excluded from the table below. All ~~but one,~~ non-pension post-employment benefit plans are unfunded. The components of net periodic pension cost for the other benefit plans for the three months ended March 31, ~~2021~~2024 and ~~2020~~2023 were as follows:


Three Months Ended March 31,
	Three Months Ended								Three Months Ended
(thousands of U.S. dollars)	(thousands of U.S. dollars)	2021		2020		(thousands of U.S. dollars)	March 31, 2024	March 31, 2023
Service cost	Service cost	$	7	$	7
Interest cost	Interest cost	59		73
Amortization of net actuarial (gain) loss		8		13
Amortization of net actuarial gain
Net periodic benefit cost	Net periodic benefit cost	$	74	$	93

WeThe Company currently ~~expect~~has no funding requirements ~~of approximately $2.8 million in each of~~as the ~~next five years to fund the regulatory solvency deficit,~~Nordion pension plan has a going concern surplus as defined by Canadian federal regulation, which ~~require~~requires solvency testing on defined benefit pension ~~plans.~~plans on an annual basis.

The Company may obtain a qualifying letter of credit for solvency payments, up to 15% of the market value of solvency liabilities as determined on the valuation date, instead of paying cash into the pension fund. As of March 31, ~~2021,~~2024 and December 31, ~~2020,~~2023, we had letters of credit outstanding relating to the defined benefit plans totaling ~~$42.6 million and $41.3 million, respectively.~~$16.0 million. The actual funding requirements over the five-year period will be dependent on subsequent annual actuarial valuations. These amounts are estimates, which may change with actual investment performance, changes in interest rates, any pertinent changes in Canadian government regulations and any voluntary contributions.

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~~Notes to Consolidated Financial Statements~~

~~12.Related Parties~~

We do business with a number of companies affiliated with Warburg Pincus and GTCR, which we refer to collectively as the “Sponsors,” who continue to have substantial control over us. All transactions with these companies have been conducted in the ordinary course of our business and are not material to our operations.

~~13.~~11.Other Comprehensive Income (Loss)

Amounts in accumulated other comprehensive income (loss) are presented net of the related tax. Foreign currency translation is not adjusted for income taxes.

Changes in our accumulated other comprehensive income (loss) balances, net of applicable tax, were as follows:


(thousands of U.S. dollars)	(thousands of U.S. dollars)	Defined Benefit Plans			Foreign Currency Translation		Interest Rate Swaps			Total		(thousands of U.S. dollars)	Defined Benefit Plans	Foreign Currency Translation	Interest Rate Derivatives	Total
Beginning balance – January 1, 2021		$	(44,143)		$	(49,699)	$	0		$	(93,842)
Beginning balance – January 1, 2024
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(524)			(3,071)		0			(3,595)
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	275		(a)	0		0			275
Net current-period other comprehensive income (loss)	Net current-period other comprehensive income (loss)	(249)			(3,071)		0			(3,320)
Ending balance – March 31, 2021		$	(44,392)		$	(52,770)	$	0		$	(97,162)
Ending balance – March 31, 2024

Beginning balance – January 1, 2020		$	(27,113)		$	(67,453)	$	179		$	(94,387)
Beginning balance – January 1, 2023
Beginning balance – January 1, 2023
Beginning balance – January 1, 2023
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	2,207			(72,967)		(3,292)			(74,052)
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	0			0		(187)		(b)	(187)
Net current-period other comprehensive income (loss)	Net current-period other comprehensive income (loss)	2,207			(72,967)		(3,479)			(74,239)
Ending balance – March 31, 2020		$	(24,906)		$	(140,420)	$	(3,300)		$	(168,626)
Ending balance – March 31, 2023

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Notes to Consolidated Financial Statements

(a)For defined benefit pension plans, amounts reclassified from accumulated other comprehensive income (loss) are recorded to “Other ~~income,~~expense (income), net” within the Consolidated Statements of Operations and Comprehensive Income (Loss).

(b)For interest rate ~~swaps,~~derivatives, amounts reclassified from accumulated other comprehensive income (loss) are recorded to “Interest expense, net” within the Consolidated Statements of Operations and Comprehensive Income (Loss).

~~14.~~12.Share-Based Compensation

Pre-IPO Awards

Restricted stock distributed in respect of pre-IPO Class B-1 time vesting units vests on a daily basis pro rata over ~~the~~ ~~five-year~~a five-year vesting period (20% per year) beginning on the original vesting commencement date of the corresponding Class B-1 time vesting units, subject to the grantee’s continued services through each vesting date. Upon the occurrence of a change in control of the Company, all ~~then outstanding~~then-outstanding unvested shares of our common stock distributed in respect of Class B-1 Units will ~~become vested~~vest as of the date of consummation of such change in control, subject to the grantee’s continued services through the consummation of the change in control.

Restricted stock distributed in respect of pre-IPO Class B-2 Units ~~(which~~ were considered performance vesting ~~units) are scheduled to vest only upon satisfaction~~units. The required performance threshold for the vesting of ~~certain thresholds. These units generally vest as of~~B-2 restricted stock is the first date on which (i) our Sponsors have received actual cash proceeds in an amount equal to or in excess of at least two and one-half times their invested capital in Sotera Health Topco Parent, L.P. (of which the Company was a direct wholly owned subsidiary prior to the IPO) and (ii) the Sponsors’ internal rate of return exceeds ~~twenty percent,~~20%, subject to such grantee’s continued services through such date.

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~~Notes to Consolidated Financial Statements~~

~~In the event of~~ Both performance thresholds were satisfied on March 4, 2024 and, as a ~~change in control of the Company, any~~result, all outstanding ~~shares of our common stock distributed in respect of Class~~ B-2 Units fully vested as of that ~~remain unvested immediately following the consummation of such a change in control of the Company shall be immediately canceled and forfeited without compensation.~~date. Stock based compensation expense attributed to the pre-IPO Class B-2 awards was recorded in the fourth quarter of 2020 as the related performance conditions were considered probable of achievement and the implied service conditions were met. ~~As of March 31, 2021, these awards remain unvested.~~

We recognized ~~$0.7~~$0.4 million and ~~$1.7~~$0.5 million of share-based compensation expense related to the pre-IPO Class B-1 ~~awards~~Units for the three months ended March 31, ~~2021~~2024 and ~~2020,~~2023, respectively.

A summary of the activity for the three months ended March 31, ~~2021~~2024 related to the restricted stock awards distributed ~~to the Company service providers~~ in respect of the pre-IPO awards (Class B-1 and B-2 Units) is presented below:

Restricted
Stock - Pre-
IPO B-1
Restricted
Stock - Pre-
IPO B-2
Unvested at December 31, 2020 2,201,239 2,323,333
Forfeited (43,361) (254,839)
Vested (228,862) 0
Unvested at March 31, 2021 1,929,016 2,068,494


	Number of shares
	Restricted Stock Pre-IPO B-1	Restricted Stock - Pre-IPO B-2
Unvested at December 31, 2023	352,447	987,111


Vested	(74,335)	(987,111)
Unvested at March 31, 2024	278,112	—

2020 Omnibus Incentive Plan

We maintain a long-term incentive plan (the “2020 Omnibus Incentive Plan” or the “2020 Plan”) that allows for grants of incentive stock options to employees (including employees of any of our subsidiaries), nonstatutory stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and other cash-based, equity-based or equity-related awards to employees, directors, and consultants, including employees or consultants of our subsidiaries.

We ~~recognized $2.8~~recognized $8.2 million ($~~1.3~~3.9 million for stock options and ~~$1.5~~$4.3 million for RSUs) and $6.8 million ($3.1 million for stock options and $3.7 million for RSUs) of share-based compensation expense for these awards in our Consolidated Statements of Operations and Comprehensive Income (Loss), in “Selling, general and administrative expenses,” for the three months ended March 31, ~~2021.~~2024 and 2023, respectively.

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Notes to Consolidated Financial Statements

Stock Options

Stock options ~~have~~generally vest ratably over a period of two to four~~-year vesting period,~~ years. They have an exercise price equal to the fair market value of a share of common stock on the date of grant, and a contractual term of 10 years. The following table summarizes our stock option ~~activity:~~activity for the three months ended March 31, 2024:

Number of
Shares
Weighted-
average
Exercise Price
At December 31, 2020 2,389,258 $ 23.00
Granted 20,407 26.26
Forfeited (9,316) 23.00
Exercised 0 0
At March 31, 2021 2,400,349 $ 23.03


	Number of Shares	Weighted- average Exercise Price
Outstanding stock options at December 31, 2023	6,972,661	$	15.17
Granted	1,570,336	14.59
Forfeited	(43,652)	20.77

Outstanding stock options at March 31, 2024	8,499,345	$	15.04

20As of March 31, 2024, there were 3.5 million vested and exercisable stock options.

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~~Notes to Consolidated Financial Statements~~

RSUs

RSUs generally vest ratably over a period of one to four years and are valued based on our market price on the date of grant. The following table summarizes our unvested RSUs ~~activity:~~activity for the three months ended March 31, 2024:


		Number of Shares	Weighted- average Grant Date Fair Value
Unvested at December 31, 2020		771,276	$	23.00
	Number of Shares				Number of Shares	Weighted- average Grant Date Fair Value
Unvested at December 31, 2023
Granted	Granted	10,851	26.03
Forfeited	Forfeited	(24,999)	23.00
Vested	Vested	0	0
Unvested at March 31, 2021		757,128	$	23.05
Unvested at March 31, 2024

~~15.~~13.Earnings ~~(Loss)~~ Per Share

Basic earnings ~~(loss)~~ per share represents the amount of income ~~(loss)~~ attributable to each common share outstanding. Diluted earnings ~~(loss)~~ per share represents the amount of income ~~(loss)~~ attributable to each common share outstanding adjusted for the effects of potentially dilutive common shares. Potentially dilutive common shares include stock options and other stock-based awards. In the periods where the effect would be antidilutive, potentially dilutive common shares are excluded from the calculation of diluted earnings per share.

In periods in which the Company has net income, earnings per share is calculated using the two-class method. This method is required as unvested restricted stock distributed in respect of pre-IPO Class B-1 and B-2 awards have the right to receive non-forfeitable dividends or dividend equivalents if the Company were to declare dividends on its common stock. Pursuant to the two-class method, earnings for each period are allocated on a pro-rata basis to common stockholders and unvested pre-IPO Class B-1 and B-2 restricted stock awards. As of March 4, 2024, the performance threshold applicable to all Class B-2 restricted stock awards were fully satisfied, thereby releasing the vesting and forfeiture restrictions on these common shares. Beginning on that date, B-2 restricted stock was not included in the earnings allocation. Diluted earnings per share is computed using the more dilutive of (a) the two-class method, or (b) treasury stock method, as applicable, to the potentially dilutive instruments.

~~In periods in which the Company has a net loss, the two-class method is not applicable because the pre-IPO Class B-1 and B-2 restricted stock awards do not participate in losses.~~

Our basic and diluted earnings per common share are calculated as follows:

Three Months Ended
in thousands of U.S. dollars and share amounts (except per share amounts) March 31,
2021 March 31,
2020
Earnings (Loss):
Net income (loss) $ 11,065 $ (1,986)
Less: Net income (loss) attributable to noncontrolling interests 223 (22)
Less: Allocation to participating securities 157 0
Net income (loss) attributable to Sotera Health Company common shareholders $ 10,685 $ (1,964)
Weighted Average Common Shares:
Weighted-average common shares outstanding - basic 278,827 232,400
Dilutive effect of potential common shares 141 0
Weighted-average common shares outstanding - diluted(a)
278,968 232,400
Earnings (loss) per Common Share:
Net income (loss) attributable to Sotera Health Company common shareholders - basic $ 0.04 $ (0.01)
Net income (loss) attributable to Sotera Health Company common shareholders - diluted 0.04 (0.01)

~~(a)~~An additional 2,400,349 and 3,645 equivalent shares related to stock options and RSUs, respectively, issued in connection with the 2020 Omnibus Incentive Plan were excluded from the calculation of diluted weighted average common shares outstanding for ~~the three months ended March 31, 2021 as they were anti-dilutive. For the three months ended March 31, 2020, there were 0 potentially dilutive common shares outstanding.~~

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Notes to Consolidated Financial Statements


	Three Months Ended
in thousands of U.S. dollars and share amounts (except per share amounts)	March 31, 2024		March 31, 2023
Earnings:
Net income	$	6,323	$	2,842
Less: Allocation to participating securities	22		18
Net income attributable to Sotera Health Company common shareholders	$	6,301	$	2,824
Weighted Average Common Shares:
Weighted-average common shares outstanding - basic	281,913		280,691
Dilutive effect of potential common shares	2,149		2,286
Weighted-average common shares outstanding - diluted	284,062		282,977
Earnings per Common Share:
Net income attributable to Sotera Health Company common shareholders - basic	$	0.02	$	0.01
Net income attributable to Sotera Health Company common shareholders - diluted	0.02		0.01

Diluted earnings per share does not consider the following potential common shares as the effect would be anti-dilutive:


	Three Months Ended
in thousands of share amounts	March 31, 2024	March 31, 2023
Stock options	4,720	3,570
RSUs	150	492
Total anti-dilutive securities	4,870	4,062

~~16.~~14.Commitments and Contingencies

From time to time, we may be subject to various lawsuits and other claims, as well as gain contingencies, in the ordinary course of our business. In addition, from time to time, we receive communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which we operate. We assess these regulatory and legal actions to determine if a contingent liability should be recorded. In making these determinations, we may, depending on the nature of the matter, consult with internal and external legal counsel and technical experts.

We establish reserves for specific liabilities in connection with regulatory and legal actions that we determine to be both probable and reasonably estimable. NoThe outcomes of regulatory and legal actions can be difficult to predict and are often resolved over long periods of time, making our probability and estimability determinations highly judgmental. Probability determinations require the analysis of various possible outcomes, assessments of potential damages and the impact of multiple factors beyond our control, including potential actions by others, interpretations of the law, and changes and developments in relevant facts, circumstances, regulations and other laws. If a potentially material ~~amounts have been accrued in our consolidated financial statements~~loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability is disclosed, together with ~~respect to any~~an estimate of the range of possible loss ~~contingencies.~~if the range is determinable and material. In certain of the matters described below, we are not able to ~~make a reasonable~~ estimate ~~of any~~potential liability because of the uncertainties related to the ~~outcome~~outcome(s) and/or the ~~amount~~amount(s) or ~~range~~range(s) of loss. ~~While it is not possible to determine the ultimate disposition of each of these matters, we do not expect that the~~The ultimate resolution of pending regulatory and legal matters in future periods, including the matters described below, ~~will~~may have a material adverse effect on our financial condition, or results of ~~operations. Despite the above, the~~operations and/or liquidity. The Company may also incur material defense and settlement costs, diversion of management resources and other adverse effects on our business, financial condition, and/or results of operations.

~~FM Global Business Interruption Claim (NRU Outage)~~

Nordion, due to the shutdown of AECL’s NRU reactor in 2009, suffered a cessation of supply of radioisotopes and business interruption loss. Nordion, by Statement of Claim dated October 22, 2010, issued in Ontario Superior Court an action against the insurer, Factory Mutual Insurance Company (FM Global), claiming $25.0 million USD in losses resulting from the shutdown of AECL’s reactor and its inability to supply radioisotopes through the specified period of approximately 15 months. FM Global objected to Nordion’s claim.

Trial commenced in March 2019 and was completed in September 2019. On March 30, 2020, Nordion received a favorable judgment in the amount of $25.0 million USD, plus pre-judgment interest, for a total judgment value of $39.8 million USD, or $56.4 million CAD based on exchange rates approved by the trial court. In addition, costs and disbursements have been assessed and awarded by the trial court in favor of Nordion in the approximate amount of $1.1 million CAD ($0.8 million USD) and $161,863 CAD ($0.1 million USD), respectively. On April 27, 2020, FM Global appealed the judgment. In January 2021, The Insurance Bureau of Canada was granted leave to intervene in the appeal. Hearing before the Court of Appeal was held on April 15, 2021. Pending a favorable judgment in the appellate court, any final proceeds would be subject to post judgment interest, a contingent fee owed to legal counsel and applicable taxes. As the judgment is considered a contingent gain, any favorable outcome will be recognized in a future period when all appeals are exhausted. It is anticipated that the overall appeal process could take a year or more to complete.

~~Willowbrook, Illinois – Government~~Ethylene Oxide Tort Litigation

~~On October 30, 2018, the Illinois Attorney General and the State’s Attorney of DuPage County, Illinois, sued~~ Sterigenics U.S., LLC ~~(the “IAG Action”~~(“Sterigenics”), and other medical supply sterilization companies have been subjected to tort lawsuits alleging ~~that authorized~~various injuries caused by low-level environmental exposure to EO ~~air emissions~~used at or emitted from ~~a commercial~~ sterilization facility Sterigenics formerly operated in Willowbrook, Illinois “cause, threaten, or allow air pollution” in violation of the Illinois Environmental Protection Act. The IAG Action did not assert that Sterigenics violated its permit from the Illinois Environmental Protection Agency (“IEPA”) authorizing Sterigenics’ release of regulated levels of EO at the Willowbrook facility.

On February 15, 2019, the acting IEPA director, John Kim, issued a “Seal Order” effectively precluding Sterigenics’ operations at the Willowbrook facility based on many of the same allegations asserted in the IAG Action. Sterigenics disputed those allegations andfacilities. Those lawsuits, as detailed further below, are individual claims, as opposed the IEPA’s Seal Order. The Seal Order was resolved by a Consent Order entered on September 6, 2019. The Consent Order provided that Sterigenics did not admit the allegations of the IAG Action, provided for the removal of the Seal Order and allowed the Willowbrook facility to reopen upon implementation of supplemental emissions control measures consistent with a new law that became effective in Illinois in June 2019 and an IEPA permit, which the IEPA approved in September 2019. Following entry of the Consent Order, the Seal Order was withdrawn.

On September 30, 2019, Sterigenics announced the closure of the Willowbrook facility due to the inability to reach an agreement with its landlord to renew the facility’s lease and the unstable legislative and regulatory landscape in Illinois. Sterigenics is in the process of decommissioning the facility and completing the work required by the terms of its lease to return the property to the landlord.class actions.

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~~On October 20, 2020 Sterigenics,~~Illinois

Subsidiaries of the Illinois Attorney General and the State’s Attorney of DuPage County filed a Joint Motion to Terminate Consent Order, stating that the community projects which Sterigenics voluntarily agreed to fund have been completed and funded as required by the Consent Order, and that Sterigenics has permanently ceased operations and surrendered all permits for its operations in Willowbrook, Illinois. On October 27, 2020 the DuPage County Circuit Court entered the Agreed Order Terminating Consent Order.

~~Ethylene Oxide Tort Litigation - Illinois~~

Since September 2018, tort lawsuits on behalf of approximately 835 personal injury plaintiffs (which are further described in the following paragraphs) have been filed in Illinois state courts against Sotera Health LLC, Sterigenics U.S., LLC, GTCR, LLCCompany and other parties ~~related to Sterigenics’ Willowbrook,~~are defendants in approximately 25 lawsuits in Illinois ~~operations. Specifically, those~~in which plaintiffs allege ~~that they suffered~~ personal injuries ~~including cancer and other diseases,~~ or wrongful death resulting from purported use, emissions and releases of EO from or at Sterigenics’ former Willowbrook facility (the “Willowbrook Cases”). The Willowbrook Cases are pending in the ~~Willowbrook facility. Additional derivative claims are alleged on behalf~~Circuit Court of ~~other individuals related~~Cook County and have been assigned to ~~these personal injury plaintiffs. Plaintiffs seek damages in an amount to be determined by the trier of fact. Sterigenics denies these allegations~~a single judge for coordinated discovery and ~~intends~~pretrial proceedings. We intend to vigorously defend against these claims. Plaintiffs have voluntarily dismissed without prejudice a number of cases since September 2018, including certain individual cases alleging personal injuries and 2 class actions seeking damages for alleged diminution of property values.the Willowbrook Cases.

Georgia

Sterigenics, sought consolidation of the cases for pretrial purposes, and in October 2019 obtained an order consolidating the then-pending cases and related cases filed in the future before Judge Lawler in the Cook County Circuit Court, Illinois (the “Consolidated Case”). All plaintiffs in the Consolidated Case filed a single Master Complaint on October 24, 2019 by which Sotera Health, LLC was added as a co-defendant, followed by a First Amended Master Complaint on January 31, 2020. On April 28, 2020, the defendants filed motions to dismiss the claims in the First Amended Master Complaint. On August 17, 2020, the Court entered an order largely denying the motions to dismiss, and the same day plaintiffs filed a Second Amended Master Complaint.

Plaintiffs filed a Third Amended Master Complaint on October 30, 2020 adding Griffith Foods Group, Inc., Griffith Foods, Inc., Griffith Foods International, Inc. and Griffith Foods Worldwide Inc. as defendants. Defendants’ responses to the Third Amended Master Complaint were filed on or about December 1, 2020, including a motion to dismiss by Griffith Foods Group, Inc., Griffith Foods, Inc., Griffith Foods International, Inc. and Griffith Foods Worldwide, Inc. That motion was granted in part on March 16, 2021 and plaintiffs were granted leave to file a Fourth Amended Master Complaint. The Fourth Amended Master Complaint was filed on April 16, 2021, including claims against Griffith Foods International, Inc. but not the other Griffith entities. All defendants’ responses to the Fourth Amended Master Complaint are due by May 14, 2021.

Written and deposition fact discovery is on-going in the Consolidated Case. Currently, there are no dates set for the close of fact discovery, for expert discovery or for dispositive motion practice. Plaintiffs have not yet made any specific damages claims.

Trials in five of the individual cases now included in the Consolidated Case had previously been scheduled to begin in 2021. Based on the Court's administrative orders related to the impact of COVID-19 on jury trials, however, and subject to the Court's discretion to make changes, we anticipate that the earliest any of the individual cases in the Consolidated Case will be tried will be 2022 and that trials will be scheduled in roughly the order in which the individual cases were filed.

~~Ethylene Oxide Tort Litigation – Georgia~~

~~On May 19, 2020, a lawsuit against Sotera Health LLC, Sterigenics U.S.,~~ LLC and other parties ~~was filed~~are defendants in lawsuits in Georgia in which plaintiffs allege personal injuries, wrongful death and property devaluation resulting from use, emissions and releases of EO from or at Sterigenics’ Atlanta facility (the “Atlanta Cases”).

Approximately 255 personal injury and wrongful death claims are pending in the State Court of Cobb County ~~Georgia by 53~~and have been consolidated for pretrial purposes (the “Consolidated Personal Injury Cases”). The Consolidated Personal Injury Cases are proceeding under a case management order pursuant to which a “pool” of eight cases will proceed to judicial determination of general causation issues in Phase 1 and specific causation issues in Phase 2; the first trial of any “pool” case that survives Phases 1 and 2 is not expected to begin before September 2025. The remaining Consolidated Personal Injury Cases (including nine cases that include both personal injury and property claims) are stayed. Two additional personal injury lawsuits pending in Cobb County have not been consolidated. The parties have jointly asked the court to stay one of these cases along with the stayed cases in the Consolidated Personal Injury Cases. In the other case, employees of a ~~contract~~ sterilization customer of ~~Sterigenics. In the operative complaint, Plaintiffs claim personal injuries resulting from alleged~~Sterigenics allege they were injured by exposure ~~to residual EO~~ while working at the customer’s distribution ~~center~~facility to residual EO allegedly emanating from products of the customer that had been sterilized at Sterigenics’ Atlanta facility; discovery is underway and, pursuant to the customer’s contract with Sterigenics, the customer is indemnifying Sterigenics against this lawsuit.

Sterigenics and Sotera Health LLC are also defendants in ~~Lithia Springs, Georgia,~~approximately 365 property devaluation lawsuits pending in the State Court of Cobb County that have been consolidated for pretrial purposes (the “Consolidated Property Cases”). Ten of the Consolidated Property Cases are proceeding under case management orders while the remaining cases are stayed. Discovery in five of the cases is underway; dispositive motions remain pending in the other five.

We intend to vigorously defend the Atlanta Cases.

California

In March 2024 and April 2024, two lawsuits were filed against the Company, Sterigenics, other subsidiaries of the Company and other parties in Los Angeles County Superior Court for personal injuries and wrongful death allegedly resulting from emissions and releases of EO from Sterigenics’ Vernon facilities (the “Vernon Cases”). Plaintiffs in these cases allege ~~they~~that 18 cases of cancer and other illnesses were ~~unaware that they were being exposed~~caused by exposure to EO at locations in ~~their workplace~~close proximity to the Vernon facilities, including residences located in Maywood, California, and ~~seek damages~~a commercial facility located next door to Sterigenics’ Vernon facilities. The lawsuits remain in ~~an amount~~preliminary stages and case management orders have yet to be ~~determined by~~entered.

We intend to vigorously defend the ~~trier~~Vernon Cases.

New Mexico

The Company and certain subsidiaries are defendants in a lawsuit in the Third Judicial District Court, Doña Ana County, New Mexico in which the New Mexico Attorney General ( “NMAG”) alleges that emissions and releases of ~~fact. Defendants filed motions~~EO from Sterigenics’ facility in Santa Teresa have deteriorated the air quality in surrounding communities and materially contributed to ~~dismiss~~increased health risks for residents of those communities. In April 2024, the Court of Appeals of the State of New Mexico denied the NMAG’s petition for leave to file an interlocutory appeal of the August 2023 order granting Sterigenics’ motion for summary judgment on strict liability, the Unfair Practices Act claim, and ~~answers~~the claims for decreased property values, increased healthcare costs and medical monitoring costs. The case has been remanded to the ~~Complaint on April 30, 2021. All defendants are being defended and indemnified by Sterigenics’ contract sterilization customer (plaintiffs’ employer and~~ District Court of Doña ~~co-defendant in the lawsuit).~~

~~In May 2020, the Cobb~~Ana County Georgia Board of Tax Assessors reduced certain residential property value assessments around the Sterigenics Atlanta facility by 10% citing an “Epd-identified environmental issue,” without supporting market data. Onfor further

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~~August 14, 2020,~~proceedings on the remaining claims. A defense motion challenging the Court’s jurisdiction over Sotera Health Company and another defendant also remains pending.

The Company, Sterigenics ~~U.S., LLC filed~~and certain other subsidiaries are also defendants in a lawsuit pending in the United States District Court for the District of New Mexico alleging wrongful death resulting from purported exposure to EO used, emitted and released from Sterigenics’ facility in Santa Teresa, New Mexico while the decedent was working at a different company’s facility approximately one mile away. The case is set for trial in October 2025.

We intend to vigorously defend the lawsuits relating to the Santa Teresa facility.

* * *

Additional EO tort lawsuits may be filed in the future against ~~members~~the Company and/or its subsidiaries relating to Sterigenics’ Willowbrook, Atlanta, Santa Teresa, Vernon or other EO facilities. Based on our view of the ~~Cobb County Board~~strength of ~~Tax Assessors~~the science and related evidence that emissions of EO from Sterigenics’ operations have not caused and could not have caused the harms alleged in such lawsuits, we believe that losses in the remaining or future EO cases are not probable. Although the Company intends to defend itself vigorously on the merits, future settlements of EO tort lawsuits are reasonably possible. The Willowbrook and Atlanta Settlements (as previously defined in Note 20, Commitments and Contingencies of our 2023 10-K) were driven by dynamics unique to the cases that were settled and thus should not give rise to presumptions that the Company will settle additional EO tort lawsuits and/or that any such settlements will be for comparable amounts.

Potential trial and settlement outcomes can vary widely based a host of factors. EO tort lawsuits will be presided over by different judges, tried by different counsel presenting different evidence and decided by different juries. The substantive and procedural laws of jurisdictions vary and can meaningfully impact the litigation process and outcome of a case. Each plaintiff’s claim involves unique facts and evidence including the circumstances of the plaintiff’s alleged exposure, the type and severity of the plaintiff’s disease, the plaintiff’s medical history and course of treatment, the location of and other factors related to the plaintiff’s real property, and other circumstances. The outcomes of trials before juries are rarely certain and a judgment rendered or settlement reached in one case is not necessarily representative of potential outcomes of other seemingly comparable cases. As a result, it is not possible to estimate a reasonably possible loss or range of loss with respect to any future EO tort lawsuit, trial or settlement.

Insurance Coverage for Environmental Liabilities

An environmental liability insurance policy under which we have received coverage for the EO tort lawsuits in Illinois, Georgia and New Mexico described above had limits of $10.0 million per occurrence and $20.0 million in the aggregate. Those per occurrence and aggregate limits were fully utilized in the defense of the Illinois, Georgia and New Mexico litigation. Our insurance for future alleged environmental liabilities excludes coverage for EO claims.

We are pursuing additional insurance coverage for our legal expenses related to EO tort lawsuits like the Illinois, Georgia and New Mexico matters described above. In 2021, Sterigenics filed an insurance coverage lawsuit in the U.S. District Court for the Northern District of ~~Georgia, seeking a declaration that~~Illinois relating to two commercial general liability policies issued in the ~~reduction in property value assessments is arbitrary and unlawful and is causing Sterigenics reputational and imminent economic harm. On February 5, 2021 the Court~~1980s (the “Northern District of Illinois Coverage Lawsuit”). The court issued an order ~~finding~~declaring that the defendant insurer owes Sterigenics ~~lacks standing~~and another insured party a duty to ~~obtain~~defend the ~~relief sought~~Willowbrook Cases (the “Duty to Defend Order”) and ~~dismissed~~entered judgment for Sterigenics in January 2024 in the ~~case. Sterigenics~~amount of $110.2 million for certain defense costs incurred in the Willowbrook Cases as of August 2022 (the “Defense Costs Judgment”). The defendant insurer has appealed ~~that decision~~the Duty to Defend Order and Defense Costs Judgment. Sterigenics is also a party in insurance coverage lawsuits pending in the ~~11th~~ Circuit Court of ~~Appeals and anticipates that appellate briefing will be completed before the end of August 2021.~~

~~Since August 17, 2020, 6 lawsuits against Sotera Health LLC, Sterigenics U.S., LLC and other parties have been filed by plaintiffs in the State Court of Cobb~~Cook County, ~~Georgia~~Illinois and the ~~State~~Delaware Superior Court ~~of Gwinnett County, Georgia in which plaintiffs allege that they suffered personal injuries~~relating to insurance coverage from various historical commercial general liability policies for certain EO litigation settlement amounts and ~~loss of consortium resulting from emissions and releases of EO from Sterigenics’ Atlanta facility. Our subsidiaries are also defendants in lawsuits alleging~~defense costs that the ~~Atlanta facility has devalued and harmed plaintiffs’ use of real properties they own~~insurer in Smyrna, Georgia and caused other damages. Plaintiffs in these cases seek various forms of relief including damages in amounts to be determined by the trier of fact. Sotera Health LLC filed motions to dismiss in each case on personal jurisdiction grounds. That motion was denied in one case pending in the State Court of Gwinnett County and the other motions remain pending. Sterigenics U.S., LLC and Sotera Health LLC filed a motion to dismiss the strict liability claim in each case. That motion was denied in one case pending in the State Court of Gwinnett County and the other motions remain pending.

~~Suspension of Georgia Facility Operations & Related Litigation~~

On August 7, 2019, Sterigenics U.S., LLC entered into a voluntary Consent Order with the Georgia Environmental Protection Division (“EPD”) under which Sterigenics agreed to install emissions reduction enhancements at its Atlanta facility to further reduce the facility’s EO emissions below already permitted levels. Sterigenics voluntarily suspended operations at the facility in early September 2019 to expedite completion of the enhancements. Installation of these enhancements is complete, and Sterigenics successfully tested the enhanced emissions controls in cooperation with EPD during the second quarter of 2020 while the facility was in operation.

In October 2019, while Sterigenics had voluntarily suspended the facility’s operations, Cobb County, Georgia officials asserted that the facility had an incorrect “certificate of occupancy” and could not resume operations without obtaining a new certificate of occupancy after a third-party code compliance review they required.

~~After the Cobb County officials would not allow Sterigenics to resume operations, on March 30, 2020, Sterigenics U.S., LLC filed a lawsuit in the United States District Court for~~ the Northern District of ~~Georgia against Cobb County, Georgia and Cobb County officials Nicholas Dawe and Kevin Gobble. In~~Illinois Coverage Lawsuit may fail to fund. The Delaware Superior Court has granted Sterigenics’ motion to stay the ~~lawsuit, Sterigenics sought immediate injunctive relief and permanent declaratory relief to resume normal operations~~case pending resolution of the ~~Atlanta facility~~same and similar issues in the interest of public health and on the basis that the positions asserted by Cobb County were unfounded. On April 1, 2020 the Court entered a Temporary Restraining Order prohibiting Cobb County officials from precluding or interfering with the facility’s normal operations. On April 8, 2020, the Court entered a Consent Order extending the Temporary Restraining Order and allowing the facility to continue normal operations until entry of a final judgmentcoverage lawsuit pending in the ~~case. Defendants filed a motion~~Circuit Court of Cook County, Illinois. It is not possible to ~~dismiss~~predict how much, if any, of the claims. On November 9, 2020, the Court held a hearing and denied the motion to dismiss. The parties are conducting discovery, which is presently scheduled to end on July 23, 2021. A settlement conference is scheduled toinsurance proceeds sought will ultimately be ~~held by September 27, 2021.~~

~~Ethylene Oxide Litigation – New Mexico~~

On December 22, 2020 the New Mexico Attorney General filed a lawsuit in the Third Judicial District Court, Doña Ana County, New Mexico (“the Third Judicial District”) against the Company, Sterigenics U.S., LLC and other subsidiaries alleging that emissions of EO from Sterigenics U.S., LLC’s sterilization facility in Santa Teresa, New Mexico constitute a public nuisance and have deteriorated the air quality in Santa Teresa and surrounding communities and materially contributed to increased health risks suffered by residents of those communities. The Complaint asserts claims for public nuisance, negligence, strict liability, violations of New Mexico’s Public Nuisance Statute and Unfair Practices Act and a request for a temporary restraining order and preliminary injunctive relief. On December 28, 2020 Sterigenics U.S., LLC removed the case to the United States District Court for the District of New Mexico. On April 13, 2021 the case was remanded to the Third Judicial District where Plaintiff’s Emergency Motion for Temporary Restraining Order and Preliminary Injunction has been scheduled for a preliminary injunction hearing on May 26, 2021.recovered.

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Sotera Health Company Securities Litigation & Related Matters

In January 2023, a stockholder class action was filed in the U.S. District Court for the Northern District of Ohio against the Company, certain past and present directors and senior executives, the Company’s private equity stockholders and the underwriters of the Company’s initial public offering (“IPO”) in November 2020 and the Company’s secondary public offering (“SPO”) in March 2021 (the “Michigan Funds Litigation”). In April 2023, the court appointed the Oakland County Employees’ Retirement System, Oakland County Voluntary Employees’ Beneficiary Association, and Wayne County Employees’ Retirement System (the “Michigan Funds”) to serve as lead plaintiff to prosecute claims on behalf of a proposed class of stockholders who acquired shares of the Company in connection with our IPO or SPO or between November 20, 2020 and September 19, 2022 (the “Proposed Class”). The ~~Emergency Motion does not demand facility closure but seeks an order requiring Defendants to cease any and all uncontrolled emissions or releases~~Michigan Funds allege that statements made regarding the safety of the Company’s use of EO ~~from~~and/or its EO tort lawsuits and other risks of its EO operations violated Sections 11, 12(a)(2) and 15 of the ~~Santa Teresa facility, including by making certain modifications to sterilization processes at the facility.~~

~~* * *~~

~~We carry insurance for alleged environmental liabilities (including litigation like that pending in Illinois, Georgia and New Mexico described above), with limits~~Securities Act of ~~$10.0 million per occurrence and $20.0 million~~1933 (when made in the ~~aggregate. The per occurrence limit~~registration statements for the IPO and SPO) and Sections 10(b), Section 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 (when made in subsequent securities filings and other contexts). Defendants have moved to dismiss the Amended Complaint and that motion remains pending.

In May 2023, July 2023 and April 2024, the Company received demands pursuant to 8 Del. C. §220 for inspections of its books and records from shareholders purporting to be investigating the Company’s internal operations, disclosure practices and other matters alleged and at issue in the Michigan Funds Litigation and related to the ~~Willowbrook government~~Company’s March 2024 Secondary Public Offering. The Company is producing documents in response to the 220 Demands.

The Company believes that the allegations and ~~EO tort litigation was fully utilized by June 30, 2020.~~

~~Additional personal injury, property devaluation or other lawsuits may be filed~~claims in the ~~future against us or our subsidiaries relating~~Michigan Funds Litigation and 220 Demands are without merit and plans to ~~Sterigenics’ Willowbrook, Atlanta, Santa Teresa or other EO sterilization facilities. The Company, Sterigenics U.S., LLC and other Company subsidiaries intend to~~vigorously defend ~~themselves vigorously in all such current or future EO litigation.~~

~~While an adverse outcome in one or more of~~ the proceedings could have a material adverse effect on our business, financial condition and results of operations, no contingency reserve has been reflected in our consolidated financial statements as a loss is not deemed probable, nor is a loss or range of losses reasonably estimable.Michigan Funds Litigation.

~~17.~~15.Financial Instruments and Financial Risk

Derivative Instruments

We do not use derivatives for trading or speculative purposes and are not a party to leveraged derivatives.

Derivatives Designated in Hedge Relationships

~~During~~From time to time, the ~~third quarter~~Company utilizes interest rate derivatives designated in hedge relationships to manage interest rate risk associated with our variable rate borrowings. These instruments are measured at fair value with changes in fair value recorded as a component of ~~2019,~~“Accumulated other comprehensive income (loss)” on our Consolidated Balance Sheets.

In March 2023, we entered into 2an interest rate swap ~~agreements to hedge our exposure to interest rate movements and to manage interest expense related to our then outstanding variable-rate debt. The~~agreement with a notional amount of $400.0 million. The interest rate swap was effective on August 23, 2023 and expires on August 23, 2025. We have designated the interest swap as a cash flow hedge designed to hedge the variability of cash flows attributable to changes in the SOFR benchmark interest rate of our 2023 Term Loan (or any successor thereto). We receive interest at the one-month Term SOFR rate and pay a fixed interest rate under the terms of the swap agreement.

In May 2022, we entered into two interest rate cap agreements with a combined notional amount of $1,000.0 million for a total option premium of $4.1 million. The interest rate caps became effective as of July 31, 2023 and expire on July 31, 2024. We have designated these interest rate caps as cash flow hedges designed to hedge the variability of cash flows attributable to changes in the benchmark interest rate of our Term Loan (or any successor thereto). Under the current terms of the loan agreement, the benchmark interest rate index transitioned from LIBOR to Term SOFR on June 30, 2023. Accordingly, the interest rate ~~swap~~cap agreements ~~totaled~~hedge the variability of cash flows attributable to changes in SOFR by limiting our cash flow exposure related to Term SOFR under a portion of our variable rate borrowings to 3.5%.

In October 2021, we entered into two interest rate cap agreements with a combined notional amount of $1,000.0 million for a total option premium of $1.8 million. Both interest rate caps were effective on December 31, 2022 and expired on July 31, 2023. These ~~swaps~~interest rate caps were designated as cash flow hedges ~~and were~~ designed to hedge the variability of cash flows attributable to changes in LIBOR (or its successor), the benchmark interest rate being ~~hedged. We received interest at one-month LIBOR and paid a fixed interest rate under the terms of the swap agreement. The swap agreements terminated on August 31, 2020.~~

~~Derivatives Not Designated in Hedge Relationships~~

In October 2017, we entered into 2 interest rate cap agreements with a total notional amount of $400.0 million for a total option premium of $0.6 million; these agreements terminated on September 30, 2020. The interest rate caps limited the Company’s cash flow exposure related to LIBOR under the variable rate Term Loan borrowings to 3.0%.

In June 2020, SHH entered into 2 interest rate cap agreements with notional amounts of $1,000.0 million and $500.0 million, respectively, for a total option premium of $0.3 million. These instruments were initially scheduled to terminate on August 31, 2021 and February 28, 2022, respectively. The interest rate caps limithedged, by limiting our cash flow exposure related to the LIBOR base rate under a portion of our variable rate borrowings to 1.0%. ~~In February 2021, we amended~~

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Notes to Consolidated Financial Statements

Derivatives Not Designated in Hedge Relationships

Additionally, from time to time, the 2Company enters into interest rate cap agreements referenced above to reduce the strike rate from 1.0% to 0.5%, and extend the termination date of the $1,000.0 million notional cap to September 30, 2021. Premiums paid to amend the interest rate caps were immaterial. We also entered into 2 additional interest rate cap agreements in February 2021 with a combined notional amount of $1,000.0 million, for a total option premium of $0.4 million. These instruments are effective September 30, 2021, and will terminate on March 31, 2022. The amended and new interest rate caps limit our cash flow exposure related to LIBOR under a portion of our variable rate borrowings to 0.5%.

~~The interest rate caps were entered into~~derivatives to manage economic risks associated with our variable rate borrowings ~~but were~~that are not designated in hedge relationships. These instruments are recorded at fair value on the Consolidated Balance Sheets, with any changes in ~~the~~ value ~~being~~ recorded in “Interest expense, net” in the Consolidated Statements of Operations and Comprehensive Income (Loss).

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The Company also ~~entered~~routinely enters into foreign currency forward contracts to manage foreign currency exchange rate risk of our intercompany loans in certain of our international ~~subsidiaries.~~subsidiaries and non-functional currency assets and liabilities. The foreign currency forward contracts expire on a monthly basis. ~~The fair value of the outstanding foreign currency forward contracts was 0 as of March 31, 2021 and December 31, 2020, respectively.~~

Embedded Derivatives

We have embedded derivatives in certain of our customer and supply contracts as a result of the currency of the contract being different from the functional currency of the parties involved. Changes in the fair value of the embedded derivatives are recognized in “Other ~~income,~~expense (income), net” in the Consolidated Statements of Operations and Comprehensive Income (Loss).

The following table provides a summary of the notional and fair values of our derivative instruments:


	March 31, 2024																		March 31, 2024			December 31, 2023
(in U.S. Dollars; notional in millions, fair value in thousands)															(in U.S. Dollars; notional in millions, fair value in thousands)		Fair Value						Fair Value
	Notional Amount															Notional Amount		Derivative Assets		Derivative Liabilities	Notional Amount			Derivative Assets	Derivative Liabilities
Derivatives designated as hedging instruments
Interest rate caps
Interest rate caps
Interest rate caps
Interest rate swaps
Derivatives not designated as hedging instruments
		March 31, 2021							December 31, 2020
(in U.S. Dollars; notional in millions, fair value in thousands)					Fair Value						Fair Value
Foreign currency forward contracts
		Notional Amount			Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives not designated as hedging instruments
Interest rate caps		$	2,500.0		$	9	$	0	$	1,500.0	$	7	$	0
Foreign currency forward contracts

Foreign currency forward contracts
Embedded derivatives	Embedded derivatives	77.7		(a)	403		229		83.3		0		670
Total	Total	$	2,577.7		$	412	$	229	$	1,583.3	$	7	$	670

(a)Represents the total notional amounts for certain of the Company’s supply and sales contracts accounted for as embedded derivatives.

~~The interest rate caps~~Embedded derivative assets/liabilities and ~~embedded derivative assets~~foreign currency forward contracts are included in “Prepaid expenses and other current assets” and “Accrued Liabilities” on our ~~consolidated balance sheets. Embedded derivative liabilities~~Consolidated Balance Sheets depending upon their position at period end. Interest rate swaps and interest rate caps are included in ~~“Accrued~~“Other assets” and “Noncurrent liabilities”, respectively, on the Consolidated Balance ~~Sheets.~~Sheets depending upon their position at period end.

The following ~~tables summarize~~table summarizes the activities of our derivative instruments for the periods presented, and the line item in which they are recorded in in the Consolidated Statements of Operations and Comprehensive Income (Loss):

(thousands of U.S. dollars)
Three Months March 31, 2021 2020
Unrealized loss on interest rate caps recorded in interest expense, net $ 90 $ 0
Unrealized (gain) loss on embedded derivatives recorded in other income, net (853) 4,819
Realized gain on foreign currency forward contracts recorded in foreign exchange (gain) loss (2,374) 0


(thousands of U.S. dollars)
Three Months Ended March 31,	2024	2023

Realized gain on interest rate derivatives recorded in interest expense, net(a)	(4,897)	(9,648)
Unrealized loss on embedded derivatives recorded in other expense (income), net	1,833	227
Realized loss on foreign currency forward contracts recorded in foreign exchange (gain) loss	4,008	449
Unrealized gain on foreign currency forward contracts recorded in foreign exchange (gain) loss	(580)	—

~~In addition,~~(a)For the three months ended March 31, 2024, amounts represent quarterly settlement of interest rate caps and swaps.

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Notes to Consolidated Financial Statements

We expect to reclassify approximately $8.0 million of pre-tax net gains on derivative instruments from accumulated other comprehensive income (loss) to income during the next 12 months associated with our cash flow hedges. Refer to Note 11, “Other Comprehensive Income (Loss)” for unrealized gains on interest rate derivatives, net of applicable tax, recorded in other comprehensive income (loss) and amounts reclassified from accumulated other comprehensive income to interest expense, net of applicable tax, during the three months ended March 31, ~~2020, we recognized $3.5 million of losses, net of tax, in accumulated other comprehensive income (loss) related to the change in fair value of the interest rate swaps.~~2024.

Credit Risk

Certain of our financial assets, including cash and cash equivalents, are exposed to credit risk.

We are also exposed, in our normal course of business, to credit risk from our customers. As of March 31, ~~2021~~2024 and December 31, ~~2020,~~2023, accounts receivable was net of an allowance for uncollectible accounts of ~~$0.6~~$3.9 million and ~~$0.7~~$4.7 million, respectively.

Credit risk on financial instruments arises from the potential for counterparties to default on their contractual obligations to us. We are exposed to credit risk in the event of non-performance, but do not anticipate non-performance by any of the counterparties to our financial instruments. We limit our credit risk by dealing with counterparties that are considered to be of

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~~Notes to Consolidated Financial Statements~~

high credit quality. In the event of non-performance by counterparties, the carrying value of our financial instruments represents the maximum amount of loss that would be incurred.

Our credit team evaluates and regularly monitors changes in the credit risk of our customers. We routinely assess the collectability of accounts receivable and maintain an adequate allowance for uncollectible accounts to address potential credit losses. The process includes a review of customer financial information and credit ratings, current market conditions as well as the expected future economic conditions that may impact the collection of trade receivables. We regularly review our customers’ past due amounts through an analysis of aged accounts receivables, specific customer past due aging amounts, and the history of trade receivables written off. Upon concluding that a receivable balance is not collectible, the balance is written off against the allowance for uncollectible accounts.

Fair Value Hierarchy

The fair value of our financial instruments is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The valuation techniques we would use to determine such fair values are described as follows: Level 1—fair values determined by inputs utilizing quoted prices in active markets for identical assets or liabilities; Level 2—fair values based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable; Level 3—fair values determined by unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants.

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Sotera Health Company

Notes to Consolidated Financial Statements

The following table discloses the fair value of our financial assets and liabilities:

As of March 31, 2021 Fair Value
(thousands of U.S. dollars) Carrying
Amount Level 1 Level 2 Level 3
Derivatives not designated as hedging instruments(a)
Interest rate caps $ 9 $ 0 $ 9 $ 0
Embedded derivative assets 403 0 403 0
Embedded derivative liabilities (229) 0 (229) 0
Long-Term Debt(b)
Term loan, due 2026 1,740,071 0 1,760,896 0
Senior notes, due 2026 96,458 0 97,587 0
Other long-term debt 1,051 0 1,051 0
Finance Lease Obligations (with current portion)(c)
34,540 0 34,540 0


As of March 31, 2024			Fair Value
(thousands of U.S. dollars)	Carrying Amount		Level 1		Level 2		Level 3
Derivatives designated as hedging instruments(a)
Interest rate caps	$	5,828	$	—	$	5,828	$	—
Interest rate swaps	3,940		—		3,940		—
Derivatives not designated as hedging instruments(b)
Foreign currency forward contract assets	719		—		719		—

Embedded derivative assets	1,667		—		1,667		—
Embedded derivative liabilities	2,698		—		2,698		—
Current portion of long-term debt(c)
Term loan B, due 2026	4,808		—		4,975		—
Long-Term Debt(c)
Term loan, due 2026	1,752,189		—		1,747,761		—
Term loan B, due 2026	472,422		—		488,794		—
Finance Lease Obligations (with current portion)(d)	92,348		—		92,348		—

As of December 31, 2020

Fair Value

As of December 31, 2023

Fair Value

(thousands of U.S. dollars)

Carrying
Amount

Level 1

Level 2

Level 3

(thousands of U.S. dollars)

Carrying
Amount

Level 1

Level 2

Level 3

Derivatives designated as hedging instruments(a)

Interest rate caps

Interest rate swaps

Derivatives not designated as hedging instruments~~(a)~~(b)

Interest rate caps

Foreign currency forward contracts assets

Foreign currency forward contracts liabilities

Embedded derivative assets

Embedded derivative liabilities

(670)

Long-Term Debt(b)

Current portion of long-term debt(c)

Term loan B, due 2026

Long-Term Debt(c)

Term loan, due 2026

1,728,018

1,772,180

Senior notes, due 2026

96,329

99,863

Other long-term debt

442

Finance Lease Obligations (with current portion)(c)

36,112

Term loan, due 2026

Term loan B, due 2026

Finance Lease Obligations (with current portion)(d)

(a)Derivatives designated as hedging instruments are measured at fair value with changes in fair value recorded as a component of accumulated other comprehensive income (loss). Interest rate caps and swaps are valued using pricing models that incorporate observable market inputs, including interest rate and yield curves.

(b)Derivatives that are not designated as hedging instruments are measured at fair value with gains or losses recognized immediately in the Consolidated Statements of Operations and Comprehensive Income (Loss). ~~Interest rate caps are valued using pricing models that incorporate observable market inputs including interest rate and yield curves.~~ Embedded derivatives are valued using internally developed models that rely on observable market inputs, including foreign currency forward curves. Foreign currency forward contracts are valued by reference to changes in the foreign currency exchange rate over the life of the contract.

~~(b)~~(c)Carrying amounts of current portion of long-term debt and long-term debt instruments are reported net of discounts and debt issuance costs. The estimated fair ~~value~~values of these instruments isare based ~~on information~~upon quoted prices for the term loans due in 2026 in inactive markets as provided by ~~the agent under the Company’s senior secured credit facility. Fair value approximates carrying value for “Other long-term debt.”~~an independent fixed income security pricing service.

~~(c)~~(d)Fair value approximates carrying value.

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Table of Contents

Sotera Health Company

Notes to Consolidated Financial Statements

~~18.~~16.Segment Information

We identify our operating segments based on the way we manage, evaluate and internally report our business activities for purposes of allocating resources and assessing performance. We have 3three reportable segments: Sterigenics, Nordion and Nelson Labs. We have determined our reportable segments based upon an assessment of organizational structure, service types, and internally prepared financial statements. Our chief operating ~~decision maker~~decision-maker evaluates performance and allocates resources based on net revenues and segment income after the elimination of intercompany activities. The accounting policies of our reportable segments are the same as those described in Note 1, “Significant Accounting Policies” of the Company's annual consolidated financial statements and accompanying notes in our ~~2020 Form~~2023 10-K.

Sterigenics

~~The~~ Sterigenics ~~segment~~ provides outsourced terminal sterilization and irradiation services for the medical device, pharmaceutical, food safety and advanced applications ~~markets.~~markets using three major technologies: gamma irradiation, EO processing and E-beam irradiation.

Nordion

Nordion is a leading global provider of Co-60 used in the sterilization and irradiation processes for the medical device, pharmaceutical, food safety, and high-performance materials industries, as well as in the treatment of cancer. In addition, Nordion is a leading global provider of gamma ~~irradiators, which are key components to the gamma sterilization process.~~irradiation systems.

Nelson Labs

Nelson Labs provides outsourced microbiological and analytical chemistry testing and advisory services for the medical device and ~~biopharmaceutical~~pharmaceutical industries.

For the three months ended March 31, ~~2021, three~~2024, four customers reported within the Nordion segment individually represented 10% or more of the segment’s total net revenues. These customers represented ~~23.7%~~18.9%, ~~20.0%~~18.8%, 16.7% and ~~12.2%~~10.7% of the total segment’s external net revenues for the three months ended March 31, ~~2021.~~2024. For the three months ended March 31, ~~2020,~~2023, two customers reported within the Nordion segment individually represented 10% or more of the segment's total net revenues. These customers represented ~~18.7%~~54.6% and ~~11.6%~~11.3% of the total segment's external net revenues for the three months ended March 31, ~~2020.~~2023. The high concentration of revenues from these customers in the three months ended March 31, 2023 mainly stemmed from the low sales volume pattern during that period.

(thousands of U.S. dollars) Three Months Ended March 31, 2021
Sterigenics Nordion Nelson Labs Consolidated
Net revenues(a)
$ 131,151 $ 25,918 $ 55,079 $ 212,148
Segment income(b)
68,461 13,786 23,070 105,317
Capital expenditures 19,514 489 939 20,942

Three Months Ended March 31, 2020
Sterigenics Nordion Nelson Labs Consolidated
Net revenues(a)
$ 117,280 $ 23,625 $ 47,295 $ 188,200
Segment income(b)
61,091 13,022 17,770 91,883
Capital expenditures 10,940 1,234 815 12,989


(thousands of U.S. dollars)	Three Months Ended March 31,
	2024		2023
Segment revenues(a)
Sterigenics	$	166,497	$	159,997
Nordion	24,007		8,551
Nelson Labs	57,672		52,042
Total net revenues	$	248,176	$	220,590
Segment income(b)
Sterigenics	$	85,818	$	82,840
Nordion	10,785		1,526
Nelson Labs	15,341		14,102
Total segment income	$	111,944	$	98,468

(a)Revenues are reported net of intersegment sales. Our Nordion segment recognized ~~$10.5~~$10.0 million and ~~$10.9~~$2.9 million in revenues from sales to our Sterigenics segment for the three months ended March 31, ~~2021~~2024 and ~~2020,~~2023, respectively, that is not reflected in net revenues in the table above. Intersegment sales for Sterigenics and Nelson Labs are immaterial for both ~~periods.~~periods presented.

(b)Segment income is only provided on a net basis to the chief operating ~~decision maker~~decision-maker and is reported net of intersegment profits.

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Sotera Health Company

Notes to Consolidated Financial Statements

Corporate operating expenses for executive management, accounting, information technology, legal, human resources, treasury, investor relations, corporate development, tax, purchasing, and marketing not directly incurred by a segment are allocated to the segments based on total net revenue. Corporate operating expenses that are directly incurred by a segment are reflected in each segment’s income.

Capital expenditures by segment for the three months ended March 31, 2024 and 2023 were as follows:


(thousands of U.S. dollars)	Three Months Ended March 31,
	2024		2023
Sterigenics	$	22,274	$	30,877
Nordion	10,736		10,545
Nelson Labs	1,880		3,578
Total capital expenditures	$	34,890	$	45,000

Total assets and depreciation and amortization expense by segment are not readily available and are not reported separately to the chief operating ~~decision maker.~~

~~Table of Contents~~

~~Sotera Health Company~~

~~Notes to Consolidated Financial Statements~~

decision-maker.

A reconciliation of segment income to consolidated income ~~(loss)~~ before taxes is as follows:

(thousands of U.S. dollars)
Three Months Ended March 31, 2021 2020
Segment income $ 105,317 $ 91,883
Less adjustments:
Interest expense, net 21,282 56,562
Depreciation and amortization(a)
37,661 36,023
Share-based compensation(b)
3,449 1,725
(Gain) loss on foreign currency and embedded derivatives(c)
(336) 4,267
Acquisition and divestiture related charges, net(d)
(185) 994
Business optimization project expenses(e)
261 1,049
Plant closure expenses(f)
542 771
Loss on extinguishment of debt(g)
14,312 0
Professional services relating to EO sterilization facilities(h)
13,399 4,146
Accretion of asset retirement obligation(i)
551 490
COVID-19 expenses(j)
299 76
Consolidated income (loss) before taxes $ 14,082 $ (14,220)


(thousands of U.S. dollars)	Three Months Ended March 31,
	2024		2023
Segment income	$	111,944	$	98,468
Less adjustments:
Interest expense, net(a)	41,771		28,870
Depreciation and amortization(b)	40,430		39,538
Share-based compensation(c)	8,657		7,348
Loss on foreign currency and derivatives not designated as hedging instruments, net(d)	1,230		535

Business optimization expenses(e)	54		2,231

Refinancing and secondary offering costs(f)	1,807		—
Professional services relating to EO sterilization facilities(g)	6,339		13,972
Accretion of asset retirement obligation(h)	642		572
Consolidated income before taxes	$	11,014	$	5,402

(a)Interest expense, net presented in this reconciliation for the three months ended March 31, 2023 has been adjusted to conform to the current year presentation to include interest expense, net on Term Loan B attributable to the loan proceeds that were used to fund the $408.0 million Illinois EO litigation settlement.

(b)Includes depreciation of Co-60 held at gamma irradiation sites.

~~(b)~~(c)Represents ~~non-cash~~ share-based compensation ~~expense.~~expense to employees and Non-Employee Directors.

~~(c)~~(d)Represents the effects of (i) fluctuations in foreign currency exchange rates ~~primarily related to remeasurement of intercompany loans denominated in currencies other than subsidiaries’ functional currencies,~~ and (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at Nordion.

~~(d)~~(e)Represents (i) certain ~~direct and incremental~~ costs related to acquisitions and the ~~acquisitions~~integration of BioScience in 2021, Iotron in July 2020 and Nelson Labs Fairfield in 2018 (including the first quarter 2021 gain on the mandatorily redeemable noncontrolling interest as described in Note 4, “Acquisitions”), and certain related integration efforts as a result of thoserecent acquisitions, (ii) the earnings impact of fair value adjustments (excluding those recognized within amortization expense) resulting from the businesses acquired, ~~and~~ (iii) transition services income and non-cash deferred lease income associated with the terms of the divestiture of the Medical Isotopes business in ~~2018.~~

~~(e)Represents~~2018, (iv) professional fees ~~contract termination and exit costs, severance and other payroll costs,~~ and other costs associated with business optimization, ~~and~~ cost ~~savings projects relating to the integration of Nelson Labs, the Sotera Health rebranding, operating structure realignment~~saving and other process enhancement ~~projects.~~

~~(f)Represents~~projects, and (v) professional fees, ~~severance and other~~ payroll costs, and other costs, including ongoing lease and utility expenses associated with the closure of the Willowbrook, Illinois facility. The three months ended March 31, 2023 includes a $1.0 million cancellation fee received from a tenant in connection with the termination of an office space lease at the Nordion facility.

~~(g)~~(f)~~Represents~~The three months ended March 31, 2024 includes $1.1 million of expenses incurred in connection with the ~~repricing~~secondary offering of our ~~Term Loan in January 2021 including accelerated amortization~~common stock that closed on March 4, 2024 and write-off of ~~prior~~unamortized debt issuance ~~and discount costs.~~costs in connection with Amendment No. 3 to the Revolving Credit Facility.

~~(h)~~Table of Contents

Sotera Health Company

Notes to Consolidated Financial Statements

(g)Represents litigation and other professional fees ~~related to litigation~~ associated with our EO sterilization ~~facilities and other related professional fees. See Note 16, “Commitments and Contingencies”~~facilities. Amounts presented for the three months ended March 31, 2023 have been adjusted to exclude interest expense, net associated with Term Loan B attributable to the loan proceeds that were used to fund the .$408.0 million Illinois EO litigation settlement.

~~(i)~~(h)Represents non-cash accretion of asset retirement obligations related to Co-60 and gamma processing facilities, which are based on estimated site remediation costs for any future decommissioning of these facilities ~~(without regard for whether the decommissioning services would be performed by employees of Nordion, instead of by a third party)~~ and are accreted over the life of the asset.

~~(j)Represents non-recurring costs associated with the COVID-19 pandemic, including incremental costs to implement workplace health and safety measures.~~

2928

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis in conjunction with our consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our ~~2020~~2023 Form 10-K. This discussion and analysis contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of various factors, including the factors we describe in the section entitled Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q, as well as Part I, Item 1A, “Risk Factors” in our ~~2020~~2023 Form 10-K.

OVERVIEW

We are a leading global provider of mission-critical end-to-end sterilization ~~and~~solutions, lab testing and advisory services tofor the ~~medical device and pharmaceutical industries.~~healthcare industry. We are driven by our mission: Safeguarding Global Health®. We provide end-to-end sterilization as well as microbiological and analytical lab testing and advisory services to help ensure that medical, pharmaceutical and food products are safe for healthcare practitioners, patients and consumers in the United States and around the world. Our services are an essential aspect of our customers’ manufacturing process and supply chains, helping to ensure sterilized medical products reach healthcare practitioners and patients. Most of these services are necessary for our customers to satisfy applicable government requirements.

We serve our customers throughout their product lifecycles, from product design to manufacturing and delivery, helping to ensure the sterility, effectiveness and safety of their products for the end user. We operate across two core businesses: sterilization services and lab services. The combination of Sterigenics, our terminal sterilization business, and Nordion, our Co-60 supply business, makes us the only vertically integrated global gamma sterilization provider in the sterilization industry. For financial reporting purposes, our sterilization services business consists of two reportable segments, Sterigenics and Nordion, and our lab services business consists of one reportable segment, Nelson Labs.

For the three months ended March 31, ~~2021,~~2024, we recorded net revenues of ~~$212.1~~$248.2 million, net income of ~~$11.1~~$6.3 million, Adjusted Net Income of ~~$51.5~~$35.6 million and Adjusted EBITDA of ~~$105.3~~$111.9 million. For the definition of Adjusted Net Income and Adjusted EBITDA and the reconciliation of these non-GAAP measures from net income, ~~(loss),~~ please see “Non-GAAP Financial Measures.”

STRATEGIC DEVELOPMENTS AND KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS

The following summarizes strategic developments and key factors that have ~~underpinned~~impacted our operating results for the three months ended March 31, ~~2021~~2024 and may continue to affect our performance and financial condition in future periods.

•~~Driving organic growth~~Business and market conditions. ~~During~~Net revenues and segment income for each of our three segments increased in the three months ended March 31, ~~2021, we continued~~2024 compared to ~~make investments~~the three months ended March 31, 2023, which was primarily a result of an overall improvement in volume at Nordion and Nelson Labs and sustained favorability in pricing at Sterigenics and Nelson Labs. Nordion’s volume increased in the three months ended March 31, 2024 as compared to ~~expand capacity and implement EO facility enhancements~~unusually light volume in the three months ended March 31, 2023 due to the timing of Co-60 harvest schedules.

As discussed in more detail in our 2023 Form 10-K, a portion of our supply of Co-60 is generated by Russian nuclear reactors. We continue to monitor the potential for disruption in the supply of Co-60 from Russian nuclear reactors. There was no impact to our supply or revenue during the three months ended March 31, 2024.

•Investment initiatives. We continue to advance our growth-related investments, including our three active capacity expansion projects within the Sterigenics ~~business~~segment and ~~expand our cobalt~~Co-60 development ~~resources~~projects in ~~our~~the Nordion ~~business.~~segment. In addition, ~~we continue to expand capacity to meet demand for microbiological testing and extractables and leachables testing in our~~ Nelson Labs ~~business.~~has progressed with expansion efforts to support pharma testing services alongside enhancements to its lab information management system.

•Disciplined and strategic M&A ~~activity~~activity.. We remain committed to our highly disciplined acquisition strategy and continue to pursue strategic acquisitions to grow our footprint and expand our capabilities. On March 8, 2021, we acquired BioScience Laboratories, LLC (“BioScience”) with one location in Bozeman, Montana for approximately $13.2 million, net of $0.8 million of cash acquired plus the repayment of BioScience's outstanding debt of $1.9 million. BioScience is a provider of outsourced topical antimicrobial product testing in the pharmaceutical, medical device, and consumer products industries. BioScience’s expertise in analytical testing and clinical trial services will complement Nelson Labs’ existing strengths in antimicrobial and virology testing. On February 8, 2021, we entered into binding agreements to purchase the outstanding noncontrolling interests of 15% and 33% of our two China subsidiaries, respectively, for a total purchase price of $8.6 million. The purchase transactions are expected to close in the second quarter of 2021. In addition, on March 11, 2021, we completed theseek suitable acquisition of the remaining 15% ownership of Nelson Labs Fairfield for $12.4 million. Pursuant to the terms of the transaction, we acquired 85% of the equity interests of Nelson Labs Fairfield in August 2018 and were required to acquire the 15% noncontrolling interest within three years from the date of the acquisition. In July 2020, we acquired Iotron Industries Canada, Inc. (“Iotron”), an E-beam processing services and equipment provider.targets.

•~~Borrowings~~Litigation costs. We are currently the subject of tort lawsuits alleging injury by purported exposure to EO used, emitted or released by current facilities in Atlanta, Georgia, Santa Teresa, New Mexico, and ~~financing costs.~~ ~~A combination of lower outstanding borrowings~~Los Angeles, California and ~~reduced pricing on~~ our ~~debt resulted~~former facility in Willowbrook, Illinois. In addition, we are defendants in a ~~reduction~~lawsuit brought by the State of New Mexico Attorney General alleging that emissions of EO from our Santa Teresa facility negatively impacted Santa Teresa and surrounding communities. We maintain that these facilities did not pose and do not pose any safety risk to their surrounding communities. We deny the allegations in ~~cash interest expense for~~these lawsuits and are vigorously defending against these

claims. See Part II. Item 1., “Legal Proceedings” and Note 14, “Commitments and Contingencies” to our consolidated financial statements.

For the three months ended March 31, ~~2021 compared~~2024 and 2023, we recorded costs of $6.3 million and $14.0 million, respectively, representing professional fees and other expenses related to litigation associated with our EO sterilization facilities.

With respect to the ~~three~~

~~months ended March 31, 2020. On~~litigation related to our Atlanta, Georgia facility, in October 2023, Sterigenics, agreed to pay $35.0 million to settle 79 of the Atlanta Cases, including a personal injury case that was scheduled to begin trial in the State Court of Gwinnett County that month, and 78 other cases being pursued by the same Plaintiff’s counsel (previously referred to as the “Atlanta Settlement”). The Atlanta Settlement was completed in January ~~20, 2021 we amended our Term Loan~~2024, with the settling plaintiffs agreeing to ~~reduce~~file the ~~interest rate spread over LIBOR from 4.50% to 2.75%,~~necessary dismissals and, where required, motions for court approval. The Company denies any liability and the ~~LIBOR floor~~Atlanta Settlement explicitly provides that the settlement is not to be construed as an admission of any liability or that emissions from ~~1.00%~~Sterigenics’ Atlanta facility have ever posed any safety hazard to ~~0.50%. The changes resulted in an effective reduction in current interest rates of 2.25%. We expect~~ the amendment to provide additional cash interest savings of approximately $40.0 million per year based on the outstanding principal balance as of the date of the amendment. Interest savings in 2021 will be offset by cash and non-cash charges associated with the repricing amendment. In connection with this transaction, we wrote off approximately $11.3 million in debt issuancesurrounding communities.

•Borrowings, financing costs and ~~debt discounts and incurred approximately $2.9 million in costs directly related~~financial leverage. On March 1, 2024, the Company entered into Amendment No. 3 to the ~~refinancing transaction. In addition, on March 26, 2021, we amended our~~First Lien Credit Agreement. Among other changes, the Amendment provides (i) for new commitments under the existing Revolving Credit Facility to ~~reduce the interest rate spread over LIBOR applicable to~~replace existing revolving ~~loans from 3.50% to 2.75%.~~

•~~Impacts~~commitments in an aggregate principal amount of ~~our IPO. As a newly public company, we continue to incur~~$83 million, (ii) that certain expenses on an ongoing basis that we did not incur as a private company including third-party and internal resources related to accounting, auditing, Sarbanes-Oxley Act compliance, legal, and investor and public relations expenses. These costs are primarily classified as selling, general and administrative (“SG&A”) expenses. We continue to dedicate internal resources, hire additional personnel, and engage outside consultants to assess and document the adequacy of internal controls over financial reporting. In addition, we incurred costs related to a secondary offering of 25 million shares of our common stock offered by selling stockholders, which included certain affiliates of Warburg Pincus LLC and GTCR, LLC as well as certain current and former members of management of the ~~Company.~~

•~~Exit activities and litigation costs~~. In connection with the ongoing litigation related to our Willowbrook, Illinois, Atlanta, Georgia and Santa Teresa, New Mexico facilities, as described in Note 16, “Commitments and Contingencies”, we recorded costs of $13.4 millionlenders providing revolving credit commitments shall also provide additional commitments for the ~~three months ended March 31, 2021 relating to legal~~issuance of letters of credit under the Revolving Credit Facility in an aggregate principal amount of $37.5 million, and ~~other professional service costs, as well as $0.5 million related~~(iii) for the extension of the maturity date of the Revolving Credit Facility to the ~~closure~~earlier of (a) March 1, 2029, and (b) the date that is 91 days prior to the maturity date of the ~~Willowbrook, Illinois facility.~~

•~~Impact of COVID-19 pandemic. We remain subject~~Company’s existing term loans. The Amendment does not give effect to ~~risks~~any other material changes to the terms and ~~uncertainties as a result~~conditions of the ~~COVID-19 pandemic. Our business continuity plans remain in effect and we have maintained certain measures~~Credit Agreement, including with respect to ~~decrease exposure risk and manage our supply chain for critical materials. The extent to~~the amount of commitments under the Revolving Credit Facility which ~~our operations will continue to be impacted by the pandemic will largely depend on future developments, which still remain uncertain and cannot be predicted.~~remains $423.8 million.

CONSOLIDATED RESULTS OF OPERATIONS

Three Months Ended March 31, ~~2021~~2024, as compared to Three Months Ended March 31, ~~2020~~2023

The following table sets forth the components of our results of operations for the three months ended March 31, ~~2021~~2024 and ~~2020.~~2023:


(thousands of U.S. dollars)	(thousands of U.S. dollars)	2021		2020		$ Change		% Change		(thousands of U.S. dollars)	2024			2023			$ Change				% Change

Total net revenues	Total net revenues	$	212,148	$	188,200	$	23,948	12.7	%
Total net revenues
Total net revenues											$	248,176		$	220,590		$	27,586			12.5	%
Total cost of revenues	Total cost of revenues	96,776		91,683		5,093		5.6	%	Total cost of revenues	121,061		109,087		109,087	11,974			11,974	11.0			11.0	%
Total operating expenses	Total operating expenses	69,008		51,652		17,356		33.6	%	Total operating expenses	73,941		78,137		78,137	(4,196)			(4,196)	(5.4)			(5.4)	%
Operating income	Operating income	46,364		44,865		1,499		3.3	%	Operating income	53,174		33,366		33,366	19,808			19,808	59.4			59.4	%
Net income (loss)		11,065		(1,986)		13,051		657.2	%
Net income										Net income	6,323			2,842			3,481				122.5	%
Adjusted Net Income(a)	Adjusted Net Income(a)	51,506		23,738		27,768		117.0	%	Adjusted Net Income(a)	35,630		35,857		35,857	(227)			(227)	(0.6)			(0.6)	%
Adjusted EBITDA(a)	Adjusted EBITDA(a)	105,317		91,883		13,434		14.6	%	Adjusted EBITDA(a)	111,944		98,468		98,468	13,476			13,476	13.7			13.7	%

(a)Adjusted Net Income and Adjusted EBITDA are non-GAAP financial measures. For more information regarding our calculation of Adjusted Net Income and Adjusted EBITDA, including information about their limitations as tools for analysis and a reconciliation of net income, ~~(loss),~~ the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted Net Income and Adjusted EBITDA, please see the reconciliation included below in “Non-GAAP Financial Measures.”

3130

Total Net Revenues

The following table compares our revenues by type for the three months ended March 31, ~~2021~~2024 to the three months ended March 31, ~~2020.~~2023:


(thousands of U.S. dollars)	(thousands of U.S. dollars)
Net revenues for the three months ended March 31,	Net revenues for the three months ended March 31,	2021		2020		$ Change		% Change
Net revenues for the three months ended March 31,
Net revenues for the three months ended March 31,												2024						2023							$ Change						% Change

Service
Service
Service	Service	$	188,698	$	167,405	$	21,293	12.7	%	$	226,481			$		$	214,510			$			$	11,971			5.6			5.6		%
Product	Product	23,450		20,795		2,655		12.8	%	Product		21,695			6,080				6,080			15,615					15,615		256.8				256.8	%
Total net revenues	Total net revenues	$	212,148	$	188,200	$	23,948	12.7	%	Total net revenues		$	248,176		$			$	220,590		$				$	27,586		12.5				12.5	%

Net revenues were ~~$212.1~~$248.2 million in the three months ended March 31, ~~2021,~~2024, an increase of ~~$23.9~~$27.6 million, or ~~12.7%~~12.5%, as compared with the three months ended March 31, ~~2020.~~2023. Excluding the impact of foreign currency exchange rates, net revenues in the three months ended March 31, ~~2021~~2024 increased approximately ~~10.9%~~11.8% compared with the ~~same period~~three months ended March 31, 2023.

Service revenues

Service revenues increased $12.0 million, or 5.6%, to $226.5 million for the three months ended March 31, 2024, as compared to $214.5 million for the three months ended March 31, 2023. The growth in net service revenues was driven by favorable pricing of $7.9 million and $1.6 million in the Sterigenics and Nelson Labs segments, respectively, favorable improvements in volume and mix of $3.9 million in the Nelson Labs segment and a $1.4 million favorable impact from changes in foreign currency exchange rates across all segments. Partially offsetting these growth factors was an unfavorable impact from volume and mix of $2.7 million in the Sterigenics segment.

Product revenues

Product revenues increased $15.6 million, or 256.8%, to $21.7 million for the three months ended March 31, 2024, as compared to $6.1 million for the three months ended March 31, 2023. The increase in product revenues was driven almost entirely by improvements in volume and mix at Nordion, which was largely attributable to a more favorable Co-60 harvest schedule timing in the three months ended March 31, ~~2020.~~

~~Service revenues~~

~~Service revenues increased $21.3 million, or 12.7%,~~2024 compared to ~~$188.7 million in~~ the three months ended March 31, 2021 as compared to $167.4 million in the three months ended March 31, 2020. The increase in net service revenues reflected a $5.8 million increase due to the July 31, 2020 acquisition of Iotron, coupled with favorable pricing and organic sales volume growth in our Sterigenics segment of $3.8 million and $2.7 million, respectively. Service revenue growth was also attributable to a $4.9 million increase in demand for testing services related to personal protective equipment used to provide protection against COVID-19 and a $1.6 million increase due to favorable pricing of laboratory and testing services in our Nelson Labs segment. The remainder of the increase is primarily due to a favorable impact from foreign exchange rates of $2.4 million.

~~Product revenues~~

Product revenues increased $2.7 million, or 12.8%, to $23.5 million in the three months ended March 31, 2021 as compared to $20.8 million in the three months ended March 31, 2020. The increase in product revenues was primarily attributable to a $1.3 million overall net volume increase driven largely by shipments of medical use Co-60 and a favorable impact from foreign exchange rates of $1.0 million.2023.

Total Cost of Revenues

The following table compares our cost of revenues by type for the three months ended March 31, ~~2021~~2024 to the three months ended March 31, ~~2020.~~2023:


(thousands of U.S. dollars)	(thousands of U.S. dollars)
Cost of revenues for the three months ended March 31,	Cost of revenues for the three months ended March 31,	2021		2020		$ Change		% Change
Cost of revenues for the three months ended March 31,
Cost of revenues for the three months ended March 31,												2024						2023							$ Change						% Change

Service
Service
Service	Service	$	85,036	$	83,069	$	1,967	2.4	%	$	110,852			$		$	104,210			$			$	6,642			6.4			6.4		%
Product	Product	11,740		8,614		3,126		36.3	%	Product		10,209			4,877				4,877			5,332					5,332		109.3				109.3	%
Total cost of revenues	Total cost of revenues	$	96,776	$	91,683	$	5,093	5.6	%	Total cost of revenues		$	121,061		$			$	109,087		$				$	11,974		11.0				11.0	%

Total cost of revenues accounted for approximately ~~45.6%~~48.8% and ~~48.7%~~49.5% of our consolidated net revenues for the three months ended March 31, ~~2021~~2024 and ~~2020,~~2023, respectively.

Cost of service revenues

Cost of service revenues increased ~~$2.0~~$6.6 million, or ~~2.4%~~6.4%, for the three months ended March 31, ~~2021~~2024, as compared to the three months ended March 31, ~~2020.~~2023. The growth in cost of service revenues was primarily driven by higher employee compensation costs of $3.7 million coupled with an increase ~~was attributable~~of $1.3 million in repairs and maintenance costs, $1.0 million of depreciation related to ~~the Iotron acquisition~~capital assets recently placed in service, and ~~the~~a $0.7 million unfavorable impact offrom changes in foreign currency exchange ~~rates on cost of sales within our foreign subsidiaries.~~rates.

Cost of product revenues

Cost of product revenues increased ~~$3.1~~$5.3 million, or ~~36.3%~~109.3%, for the three months ended March 31, ~~2021~~2024, as compared to the three months ended March 31, ~~2020.~~2023. The increase was primarily a result of ~~incremental~~higher volumes of Co-60 shipments, which resulted in increases in direct material and material transportation costs ~~associated with increased sales volumes. The remainder~~ of ~~the increase is primarily due to an unfavorable impact from foreign exchange rates of $0.7~~$4.9 million.

Operating Expenses

The following table compares our operating expenses for the three months ended March 31, ~~2021~~2024 to the three months ended March 31, ~~2020:~~2023:


(thousands of U.S. dollars)	(thousands of U.S. dollars)
Operating expenses for the three months ended March 31,	Operating expenses for the three months ended March 31,	2021		2020		$ Change		% Change
Operating expenses for the three months ended March 31,
Operating expenses for the three months ended March 31,												2024						2023						$ Change					% Change

Selling, general and administrative expenses
Selling, general and administrative expenses
Selling, general and administrative expenses	Selling, general and administrative expenses	$	52,465	$	37,053	$	15,412	41.6	%	$	58,209			$		$	61,910			$		$	(3,701)			(6.0)		(6.0)		%
Amortization of intangible assets	Amortization of intangible assets	16,543		14,599		1,944		13.3	%	Amortization of intangible assets		15,732			16,227				16,227		(495)					(495)	(3.1)					(3.1)	%

Total operating expenses	Total operating expenses	$	69,008	$	51,652	$	17,356	33.6	%
Total operating expenses
Total operating expenses												$	73,941					$	78,137					$	(4,196)				(5.4)		%

Operating expenses accounted for approximately ~~32.5%~~29.8% and ~~27.4%~~35.4% of our consolidated net revenues for the three months ended March 31, ~~2021~~2024 and ~~2020,~~2023, respectively.

SG&A

SG&A ~~increased $15.4~~decreased $3.7 million, or ~~41.6%~~6.0%, for the three months ended March 31, ~~2021~~2024, as compared to the three months ended March 31, ~~2020.~~2023. The ~~increase~~decrease was driven primarily by ~~the following:~~

•~~A $9.3~~a $7.6 million ~~increase~~decline in ~~legal~~litigation and other professional services expense associated with EO ~~litigation;~~

•~~$4.0~~sterilization facilities, partially offset by a $2.8 million increase in ~~incremental corporate expenses largely attributed to~~selling, general and administrative compensation-related costs ~~associated with being~~and a ~~public company. This includes $1.2~~$1.3 million ~~in professional fees associated with the secondary offering of common shares by the selling stockholders in March 2021.~~

•An increase in share-based compensation ~~expense of $1.7 million related to our 2020 Omnibus Incentive Plan.~~expense.

Amortization of intangible assets

Amortization of intangible assets ~~was $16.5~~decreased $0.5 million, or 3.1% for the three months ended March 31, 2021, or 13.3% above the three months ended March 31, 2020. The change was primarily attributable to amortization on newly acquired intangible assets related to the Iotron and BioScience acquisitions.

~~Interest Expense, Net~~

~~Interest expense, net decreased $35.3 million, or 62.4%, for the three months ended March 31, 2021~~2024, as compared to the three months ended March 31, ~~2020. The decrease was largely~~2023 due to ~~a lower outstanding debt balance~~changes in foreign currency exchange rates.

Interest Expense, Net

Interest expense, net increased $12.9 million, or 44.7%, for the ~~first quarter~~three months ended March 31, 2024, as compared to the three months ended March 31, 2023. Approximately $8.4 million of ~~2021and lower~~this change was attributable to a combination of higher variable benchmark interest rates ~~subsequent~~and changes in principal balances outstanding. A decline in the benefit from interest rate derivatives of $4.3 million also contributed to the ~~January 2021 Term Loan refinancing.~~increase. The weighted average interest rate on our outstanding debt was ~~3.45%~~8.39% and ~~7.11%~~7.85% at March 31, ~~2021~~2024 and ~~2020,~~2023, respectively.

Foreign Exchange (Gain) Loss ~~(Gain)~~

Foreign exchange ~~loss~~gain was $0.6 million for the three months ended March 31, ~~2021 as~~2024 compared to a ~~gain~~loss of $0.6 million in the three months ended March 31, 2020. The foreign exchange loss (gain) in our Consolidated Statements of Operations and Comprehensive Income (Loss) relates primarily to U.S. dollar denominated intercompany indebtedness with certain of our European and Canadian subsidiaries.

~~Other (Income) Expense, Net~~

~~Other income, net was $3.9~~$0.3 million for the three months ended March 31, ~~2021 compared~~2023. The change in foreign exchange loss mainly relates to ~~$3.2 million~~short-term gains and losses on transactions denominated in currencies other than the functional currency of our operating entities. As described in Note 15, “Financial Instruments and Financial Risk”, we enter into monthly U.S. dollar-denominated foreign currency forward contracts to manage foreign currency exchange rate risk related to our international subsidiaries.

Other Expense (Income), Net

Other expense, ~~for the three months ended March 31, 2020. The fluctuation~~net was ~~driven by changes in the fair value of the embedded derivatives in Nordion’s contracts. We recorded an unrealized gain on embedded derivatives of $0.9~~$1.0 million for the three months ended March 31, ~~2021 as~~2024 compared to ~~an unrealized loss on embedded derivatives~~other income of ~~$4.8~~$1.3 million for the three months ended March 31, ~~2020. In addition, we recorded $1.2~~2023. The variance was primarily a result of $1.6 million of ~~other income related~~changes in the fair value of embedded derivatives in Nordion’s purchase contracts as well as $0.7 million of refinancing costs incurred in connection with Amendment No. 3 to the ~~gain on purchase of the mandatorily redeemable noncontrolling interest of 15% of Nelson Labs Fairfield as compared to the amount previously accrued.~~Revolving Credit Facility.

Provision ~~(Benefit)~~ for Income Taxes

Provision for income ~~tax~~taxes increased ~~$15.3~~$2.1 million ~~or 124.7%,~~ to a net provision of ~~$3.0~~$4.7 million for the three months ended March 31, ~~2021~~2024, as compared to ~~a $12.2~~$2.6 million ~~benefit in~~for the three months ended March 31, ~~2020.~~2023. The change was primarily attributable to higher pre-tax income infor the three months ended March 31, ~~2021~~2024 compared to ~~a pre-tax loss in the three months ended~~

~~March 31, 2020. In addition, the increased limitation on interest expense deduction provided by the CARES Act in March 2020 resulted in a $9.1 million discrete tax benefit in~~ the three months ended March 31, ~~2020 as well as a reversal of a $5.6 million~~2023 combined with an increase in the valuation allowance ~~on deferred tax assets related~~against our excess interest expense carryforward balance and the foreign rate differential. The increase in the valuation allowance was a direct result of the EO litigation settlements in Illinois and Georgia. Both payments eliminated the deductibility of U.S. interest in the current year and the year ended December 31, 2023, which resulted in an increase to ~~nondeductible~~the valuation allowance against our excess interest ~~expense.~~expense carryforward balance.

Provision for income taxes for the three months ended March 31, ~~2021~~2024 differed from the statutory rate primarily due to an increase in the valuation allowance against our excess interest expense carryforward balance and the impact of the foreign rate differential, ~~GILTI, and a net increase in the valuation allowance attributable to the limitation on the deductibility of interest expense. This was~~ partially offset by a ~~discrete item, which reversed the valuation allowance on deferred tax assets related to certain asset retirement obligations.~~benefit for state income taxes. Provision for income taxes for the three months ended March 31, ~~2020~~2023 differed from the statutory rate primarily due to an increase in the valuation allowance against our excess interest expense carryforward balance, the impact of the ~~CARES Act, including the increased limitation on interest expense deduction~~foreign rate differential and ~~valuation allowance reversal, as described above.~~non-deductible compensation.

Net Income, ~~(Loss),~~ Adjusted Net Income and Adjusted EBITDA

Net income for the three months ended March 31, ~~2021~~2024 was ~~$11.1~~$6.3 million, as compared to ~~a net loss of $2.0~~$2.8 million for the three months ended March 31, ~~2020.~~2023. Adjusted Net Income was ~~$51.5~~$35.6 million for the three months ended March 31, ~~2021,~~2024, as compared to ~~$23.7~~$35.9 million for the three months ended March 31, ~~2020,~~2023, due to the factors described above. Adjusted EBITDA was ~~$105.3~~$111.9 million for the three months ended March 31, ~~2021,~~2024, as compared to ~~$91.9~~$98.5 million for the three months ended March 31, ~~2020,~~2023, due to the factors described above. Please see “Non-GAAP Financial Measures” below for a reconciliation of Adjusted Net Income and Adjusted EBITDA to their most directly comparable financial measure calculated and presented in accordance with GAAP.

NON-GAAP FINANCIAL MEASURES

To supplement our consolidated financial statements presented in accordance with ~~Generally Accepted Accounting Principles (“GAAP”),~~GAAP, we consider Adjusted Net Income and Adjusted EBITDA, financial measures that are not based on any standardized methodology prescribed by GAAP.

We define Adjusted Net Income as net income ~~(loss)~~ before amortization and certain other adjustments that we do not consider in our evaluation of our ongoing operating performance from period to period as discussed further below. We define Adjusted EBITDA as Adjusted Net Income before interest expense, depreciation (including depreciation of Co-60 used in our operations) and income tax provision applicable to Adjusted Net Income.

We use Adjusted Net Income and Adjusted EBITDA, non-GAAP financial measures, as the principal measures of our operating performance. Management believes Adjusted Net Income and Adjusted EBITDA are useful because they allow management to more effectively evaluate our operating performance and compare the results of our operations from period to period without the impact of certain non-cash items and non-routine items that we do not expect to continue at the same level in the future and other items that are not core to our operations. We believe that these measures are useful to our investors because they provide a more complete understanding of the factors and trends affecting our business than could be obtained absent this disclosure. In addition, we believe Adjusted Net Income and Adjusted EBITDA will assist investors in making comparisons to our historical operating results and analyzing the underlying performance of our operations for the periods presented. Our management also uses Adjusted Net Income and Adjusted EBITDA in ~~their~~its financial analysis and operational decision-making, and Adjusted EBITDA serves as the basis for the metric we utilize to determine attainment of our primary annual incentive program. Adjusted Net Income and Adjusted EBITDA may be calculated differently from, and therefore may not be comparable to, a similarly titled measure used by other companies.

Adjusted Net Income and Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted Net Income and Adjusted EBITDA rather than net income, ~~(loss),~~ the nearest GAAP equivalent. For example, Adjusted Net Income and Adjusted EBITDA primarily exclude:

•certain recurring non-cash charges such as depreciation of fixed assets, although these assets may have to be replaced in the future, as well as amortization of acquired intangible assets and asset retirement obligations;

•costs of acquiring and integrating businesses, which will continue to be a part of our growth strategy;

•non-cash gains or losses from fluctuations in foreign currency exchange rates ~~primarily related to remeasurement of intercompany loans denominated in currencies other than subsidiaries’ functional currencies,~~ and the mark-to-fair value of derivatives not designated as hedging instruments, which includes embedded derivatives relating to certain customer and supply contracts at Nordion;

•impairment charges on long-lived assets, intangible assets and ~~intangible assets;~~investments accounted for under the equity method;

•

refinancing costs and loss on extinguishment of debt incurred in connection with refinancing or early extinguishment of long-term debt;

•expenses and charges related to the litigation, settlement agreements, and other activities associated with our EO sterilization facilities, inincluding those related to Willowbrook, Illinois, Atlanta, Georgia, ~~and~~ Santa Teresa, New Mexico and Los Angeles, California, even though that litigation remains ongoing;

•in the case of Adjusted EBITDA, interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness; and

•share-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense and an important part of our compensation strategy.

In evaluating Adjusted Net Income and Adjusted EBITDA, you should be aware that in the future, we will incur expenses similar to the adjustments in ~~this presentation.~~the table below. Our presentations of Adjusted Net Income and Adjusted EBITDA should not be construed as suggesting that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider Adjusted Net Income and Adjusted EBITDA alongside other financial performance measures, including our net income ~~(loss)~~ and other GAAP measures.

The following table presents a reconciliation of net income, ~~(loss),~~ the most directly comparable financial measure calculated and presented in accordance with GAAP to Adjusted Net Income and Adjusted EBITDA, for each of the periods indicated:

Three Months Ended March 31,
(thousands of U.S. dollars) 2021 2020
Net income (loss) $ 11,065 $ (1,986)
Amortization of intangibles 22,282 19,913
Share-based compensation(a)
3,449 1,725
(Gain) loss on foreign currency and embedded derivatives(b)
(336) 4,267
Acquisition and divestiture related charges, net(c)
(185) 994
Business optimization project expenses(d)
261 1,049
Plant closure expenses(e)
542 771
Loss on extinguishment of debt(f)
14,312 —
Professional services relating to EO sterilization facilities(g)
13,399 4,146
Accretion of asset retirement obligations(h)
551 490
COVID-19 expenses(i)
299 76
Income tax provision (benefit) associated with pre-tax adjustments(j)
(14,133) (7,707)
Adjusted Net Income 51,506 23,738
Interest expense, net 21,282 56,562
Depreciation(k)
15,379 16,110
Income tax provision (benefit) applicable to Adjusted Net Income(l)
17,150 (4,527)
Adjusted EBITDA $ 105,317 $ 91,883


	Three Months Ended March 31,
(thousands of U.S. dollars)	2024		2023
Net income	$	6,323	$	2,842
Amortization of intangible assets	20,124		20,607
Share-based compensation(a)	8,657		7,348
Loss on foreign currency and derivatives not designated as hedging instruments, net(b)	1,230		535

Business optimization expenses(c)	54		2,231

Refinancing and secondary offering costs(d)	1,807		—
Professional services relating to EO sterilization facilities(e)	6,339		13,972
Accretion of asset retirement obligations(f)	642		572
Income tax benefit associated with pre-tax adjustments(g)	(9,546)		(12,250)
Adjusted Net Income	35,630		35,857
Interest expense, net(h)	41,771		28,870
Depreciation(i)	20,306		18,931
Income tax provision applicable to Adjusted Net Income(j)	14,237		14,810
Adjusted EBITDA(k)	$	111,944	$	98,468

(a) Represents ~~non-cash~~ share-based compensation ~~expense.~~expense to employees and Non-Employee Directors.

(b) Represents the effects of (i) fluctuations in foreign currency exchange rates ~~primarily related to remeasurement of intercompany loans denominated in currencies other than subsidiaries’ functional currencies,~~ and (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at Nordion.

(c) Represents (i) certain ~~direct and incremental~~ costs related to acquisitions and the ~~acquisitions~~integration of BioScience in 2021, Iotron in July 2020 and Nelson Labs Fairfield in 2018 (including the first quarter 2021 gain on the mandatorily redeemable noncontrolling interest as described in Note 4, “Acquisitions”), and certain related integration efforts as a result of thoserecent acquisitions, (ii) the earnings impact of fair value adjustments (excluding those recognized within amortization expense) resulting from the businesses acquired, ~~and~~ (iii) transition services income and non-cash deferred lease income associated with the terms of the divestiture of the Medical Isotopes business in ~~2018.~~

~~(d) Represents~~2018, (iv) professional fees ~~contract termination and exit costs, severance and other payroll costs,~~ and other costs associated with business optimization, ~~and~~ cost ~~savings projects relating to the integration of Nelson Labs, the Sotera Health rebranding, operating structure realignment~~saving and other process enhancement ~~projects.~~

~~(e) Represents~~projects, and (v) professional fees, ~~severance and other~~ payroll costs, and other costs, including ongoing lease and utility expenses associated with the closure of the Willowbrook, Illinois facility. The three months ended March 31, 2023 includes a $1.0 million cancellation fee received from a tenant in connection with the termination of an office space lease at the Nordion facility.

~~(f) Represents~~(d) The three months ended March 31, 2024 includes $1.1 million of expenses incurred in connection with the ~~repricing~~secondary offering of our ~~Term Loan in January 2021 including accelerated amortization~~common stock that closed on March 4, 2024 and write-off of ~~prior~~unamortized debt issuance ~~and discount costs.~~

~~(g) Represents professional fees related~~costs in connection with Amendment No. 3 to ~~litigation associated with our EO sterilization facilities and other related professional fees. See Note 16, “Commitments and Contingencies”~~.the Revolving Credit Facility.

3534

~~(h)~~ (e) Represents litigation and other professional fees associated with our EO sterilization facilities. Amounts presented for the three months ended March 31, 2023 have been adjusted to exclude interest expense, net associated with Term Loan B attributable to the loan proceeds that were used to fund the $408.0 million Illinois EO litigation settlement.

(f) Represents non-cash accretion of asset retirement obligations related to Co-60 and gamma processing facilities, which are based on estimated site remediation costs for any future decommissioning of these facilities ~~(without regard for whether the decommissioning services would be performed by employees of Nordion, instead of by a third party)~~ and are accreted over the life of the asset.

~~(i) Represents non-recurring costs associated with the COVID-19 pandemic, including incremental costs to implement workplace health and safety measures.~~

~~(j)~~(g) Represents the income tax ~~benefit or provision associated with~~impact of adjustments calculated based on the ~~reconciling items between net income (loss) and Adjusted Net Income. To determine~~tax rate applicable to each item. We eliminate the ~~aggregate tax~~ effect of tax rate changes as applied to tax assets and liabilities and unusual items from our presentation of adjusted net income.

(h) Interest expense, net presented in this reconciliation for the ~~reconciling items, we utilized statutory income tax rates ranging from 0%~~three months ended March 31, 2023 has been adjusted to ~~35%, depending upon~~conform to the ~~applicable jurisdictions of each adjustment.~~current year presentation to include interest expense, net on Term Loan B attributable to the loan proceeds that were used to fund the $408.0 million Illinois EO litigation settlement.

~~(k)~~ (i) Includes depreciation of Co-60 held at gamma irradiation sites.

~~(l)~~(j) Represents the difference between income tax provision or benefit as determined under U.S. GAAP and the income tax provision or benefit associated with pre-tax adjustments described in footnote ~~(j)~~(g).

(k) $23.8 million and $22.9 million of the adjustments for the three months ended March 31, 2024 and 2023, respectively, are included in cost of revenues, primarily consisting of amortization of intangible assets, depreciation, and accretion of asset retirement obligations.

SEGMENT RESULTS OF OPERATIONS

We have three reportable segments: Sterigenics, Nordion and Nelson Labs. Our chief operating ~~decision maker~~decision-maker evaluates performance and allocates resources within our business based on ~~Segment Income,~~segment income, which excludes certain items which are included in income ~~(loss)~~ before tax as determined in our Consolidated Statements of Operations and Comprehensive Income (Loss). The accounting policies for our reportable segments are the same as those for the consolidated Company.

Our Segments

Sterigenics

~~Our~~ Sterigenics ~~business~~ provides outsourced terminal sterilization and irradiation services for the medical device, pharmaceutical, food safety and advanced applications markets using three major technologies: gamma irradiation, EO processing and E-beam irradiation.

Nordion

~~Our~~ Nordion ~~business~~ is a leading global provider of Co-60 used in the sterilization and irradiation processes for the medical device, pharmaceutical, food safety, and high-performance materials industries, as well as in the treatment of cancer. In addition, Nordion is a leading global provider of gamma ~~irradiators, which are the key components to the gamma sterilization process.~~irradiation systems.

As a result of the time required to meet regulatory and logistics requirements for delivery of radioactive products, combined with accommodations made to our customers to minimize disruptions to their operations during the installation of Co-60, Nordion sales patterns can often vary significantly from one quarter to the next. However, timing-related impacts on our sales performance tend to be resolved within several quarters, resulting in more consistent performance over longer periods of time. In addition, sales of ~~production irradiators~~gamma irradiation systems occur infrequently and tend to be for larger amounts.

Results for our Nordion segment are also impacted by Co-60 ~~supplier~~ mix, harvest schedules, ~~and~~as well as customer, product and service mix.

Nelson Labs

~~Our~~ Nelson Labs ~~business~~ provides outsourced microbiological and analytical chemistry testing and advisory services for the medical device and pharmaceutical industries.

For more information regarding our reportable segments, please refer to Note ~~18,~~16, “Segment Information” to our consolidated financial statements.

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Segment Results for the Three Months Ended March 31, ~~2021~~2024 and ~~2020~~2023

The following tables compare segment net revenue and segment income for the three months ended March 31, ~~2021~~2024 to the three months ended March 31, ~~2020:~~2023:


		Three Months Ended March 31,												Three Months Ended March 31,
(thousands of U.S. dollars)	(thousands of U.S. dollars)	2021			2020			$ Change		% Change		(thousands of U.S. dollars)		2024				2023				$ Change					% Change

Net Revenues	Net Revenues
Net Revenues
Net Revenues
Sterigenics
Sterigenics
Sterigenics	Sterigenics	$	131,151		$	117,280		$	13,871	11.8	%	$	166,497			$	159,997			$	6,500			4.1		4.1		%
Nordion	Nordion	25,918			23,625			2,293		9.7	%	Nordion		24,007				8,551				15,456			180.8			180.8		%
Nelson Labs	Nelson Labs	55,079			47,295			7,784		16.5	%	Nelson Labs		57,672				52,042				5,630			10.8			10.8		%
Segment Income	Segment Income
Sterigenics	Sterigenics	$	68,461		$	61,091		$	7,370	12.1	%
Sterigenics
Sterigenics														$	85,818			$	82,840			$	2,978				3.6		%
Nordion	Nordion	13,786			13,022			764		5.9	%	Nordion		10,785				1,526				9,259			606.7			606.7		%
Nelson Labs	Nelson Labs	23,070			17,770			5,300		29.8	%	Nelson Labs		15,341				14,102				1,239			8.8			8.8		%
Segment Income margin	Segment Income margin
Sterigenics	Sterigenics	52.2		%	52.1		%
Sterigenics
Sterigenics
Nordion
Nordion
Nordion	Nordion	53.2		%	55.1		%
Nelson Labs	Nelson Labs	41.9		%	37.6		%
Nelson Labs
Nelson Labs

Net Revenues by Segment

Sterigenics net revenues were ~~$131.2~~$166.5 million for the three months ended March 31, ~~2021,~~2024, an increase of ~~$13.9~~$6.5 million, or ~~11.8%~~4.1%, as compared to the three months ended March 31, ~~2020.~~2023. The increase reflects a ~~5.0% increase in revenues attributable to the Iotron acquisition coupled with a 3.2% favorable impact~~benefit from pricing and ~~2.3% growth~~changes in ~~organic sales volume.~~foreign currency exchange rates of 4.9% and 0.8%, respectively, partially offset by an unfavorable impact from volume and mix of 1.6%.

Nordion net revenues were ~~$25.9~~$24.0 million for the three months ended March 31, ~~2021,~~2024, an increase of ~~$2.3~~$15.5 million, or ~~9.7%~~180.8%, as compared to the three months ended March 31, ~~2020. The increase reflects~~2023. Revenue growth was driven almost entirely by volume and mix, which was largely attributable to a ~~4.2% impact from the strengthening of the Canadian dollar compared to the U.S. dollar~~more favorable Co-60 harvest schedule timing for the three months ended March 31, ~~2021 as~~2024 compared to the three months ended March 31, ~~2020, a 3.6% impact from favorable pricing, and a 1.9% impact from higher volumes primarily due to increases in shipments of medical-use Co-60.~~2023.

Nelson Labs net revenues were ~~$55.1~~$57.7 million for the three months ended March 31, ~~2021,~~2024, an increase of ~~$7.8~~$5.6 million, or ~~16.5%~~10.8%, as compared to the three months ended March 31, ~~2020.~~2023. The increase was primarily driven by ~~a 10.3% increase in testing services related to personal protective equipment used to provide protection against COVID-19~~volume and mix of 7.4% and a ~~3.5%~~favorable pricing impact ~~from favorable pricing. The remainder~~ of ~~the increase is primarily due to a favorable impact from foreign exchange rates of 1.7%~~3.1%.

Segment Income

Sterigenics segment income was ~~$68.5~~$85.8 million for the three months ended March 31, ~~2021,~~2024, an increase of ~~$7.4~~$3.0 million, or ~~12.1%~~3.6%, as compared to the three months ended March 31, ~~2020.~~2023. Segment income increased primarily due to the benefit of pricing, partially offset by the impacts of volume/mix and inflation.

Nordion segment income was $10.8 million for the three months ended March 31, 2024, an increase of $9.3 million, or 606.7%, as compared to the three months ended March 31, 2023. The increase in segment income and segment income margin was driven almost entirely by improvements in volume and mix, mainly stemming from favorable Co-60 harvest schedule timing, as referenced above.

Nelson Labs segment income was $15.3 million for the three months ended March 31, 2024, an increase of $1.2 million, or 8.8%, as compared to the three months ended March 31, 2023. The increase in segment income was primarily a result of ~~the contributions of the Iotron acquisition coupled with revenue growth stemming from both favorable pricing~~volume and ~~volume, as referenced above. This was partially offset by incremental overhead associated with being a public company.~~

Nordion segment income was $13.8 million for the three months ended March 31, 2021, an increase of $0.8 million, or 5.9%, as compared to the three months ended March 31, 2020. The increase in segment income was primarily due to the favorable impact from foreign exchange ratesmix improvements as well as favorable ~~customer pricing and increases in sales volume, referenced above. This was partially offset by incremental overhead associated with being a public company.~~

Nelson Labs segment income was $23.1 million for the three months ended March 31, 2021, an increase of $5.3 million, or 29.8%, as compared to the three months ended March 31, 2020, due to the increase in sales volumes, driven largely by testing of personal protective equipment and favorable pricing. ~~This increase was partially offset by incremental overhead associated with being a public company.~~

3736

LIQUIDITY AND CAPITAL RESOURCES

Sources of Cash

The primary sources of liquidity for our business are cash flows from operations and borrowings under our credit facilities. We expect that our primary liquidity requirements will be to service our debt, to invest in fixed assets to build and/or expand existing facilities, to fund selective business acquisitions, make capital expenditures and for other general corporate purposes.

As of March 31, ~~2021,~~2024, we had ~~$108.0~~$261.1 million of unrestricted cash and cash equivalents. This is ~~an increase~~a decrease of ~~$5.6~~$35.3 million from the balance at December 31, ~~2020.~~2023. The decrease in cash and cash equivalents was mainly attributable to the $35.0 million payment of the Atlanta settlement in January 2024. Our foreign subsidiaries held cash of approximately ~~$101.8~~$249.6 million at March 31, ~~2021~~2024 and ~~$88.8~~$224.1 million at December 31, ~~2020, to meet their liquidity needs.~~2023. No material restrictions exist to accessing cash held by our foreign subsidiaries notwithstanding any potential tax consequences. ~~Cash balances~~

As described in more detail below, on March 1, 2024, the ~~United States decreased in~~Company and SHH entered into Amendment No. 3 to the ~~three months ended March 31, 2021 primarily as a result~~Revolving Credit Facility. The Amendment did not materially change to the terms and conditions of the ~~cash outflows~~Credit Agreement, including with respect to the amount of commitments under the Revolving Credit Facility, which remains $423.8 million.

As also described in more detail below, on February 23, 2023, we entered into the 2023 Credit Agreement, which provides for, ~~the BioScience acquisition and the purchase of the 15% mandatorily redeemable noncontrolling interest of Nelson Labs Fairfield, coupled with normal quarterly interest payments on our outstanding debt.~~

~~Our capital expenditure program is a component of our long-term strategy. This program includes,~~ among other things, ~~investments~~a new Term Loan B facility in ~~new~~an aggregate principal amount of $500.0 million. The Company used the proceeds of this debt to fund a previously announced $408.0 million EO litigation settlement in Cook County, Illinois on May 1, 2023 and pay down existing ~~facilities, business expansion projects, Co-60~~borrowings under the Company’s Revolving Credit Facility. In addition, the Company used ~~by Sterigenics at its gamma irradiation facilities, cobalt development projects and information technology enhancements. During~~ the ~~three months ended March 31, 2021, our capital expenditures amounted to $20.9 million, compared to $13.0 million~~remaining proceeds for ~~the three months ended March 31, 2020.~~other general corporate purposes.

Uses of Cash

We expect that cash on hand, operating cash flows and amounts available under our credit facilities will provide sufficient working capital to operate our business, ~~make expected capital expenditures, meet litigation costs and~~ meet foreseeable liquidity requirements ~~including~~(inclusive of debt service on our long-term ~~debt,~~debt), make expected capital expenditures including investments in fixed assets to build and/or expand existing facilities, and meet litigation costs that we expect to continue to incur for at least the next twelve months. Our primary long-term liquidity requirements beyond the next 12 months will be to service our debt, make capital expenditures, and fund suitable business acquisitions. As of March 31, ~~2021,~~2024, there were no outstanding borrowings on the Revolving Credit Facility. We expect ~~to use~~any excess cash provided by operations ~~in excess of amounts needed for~~will be allocated to fund capital expenditures, ~~to fund~~ potential acquisitions, or for other general corporate purposes. Our ability to meet future working capital, capital expenditures and debt service requirements will depend on our future financial performance, which will be affected by a range of macroeconomic, competitive and business factors, including interest rate changes and changes in our industry, many of which are outside of our control. As of March 31, ~~2021, the amended and new~~2024, our interest rate ~~caps~~derivatives limit our cash flow exposure ~~related to LIBOR for approximately 81%~~ of our variable rate borrowings tounder the ~~facility LIBOR floor of 0.5%.~~Term Loans. Refer to Note ~~17,~~15, “Financial Instruments and Financial Risk” under the heading “Derivative Instruments” for additional information ~~regarding the~~about changes in interest rate ~~caps~~risk.

Capital Expenditures

Our capital expenditure program is a component of our long-term strategy. This program includes, among other things, investments in new and existing facilities, business expansion projects, Co-60 used by Sterigenics at its gamma irradiation facilities, cobalt development projects and information technology enhancements. During the three months ended March 31, 2024, our capital expenditures amounted to ~~manage economic risks associated with our variable rate borrowings.~~$34.9 million, compared to $45.0 million for the three months ended March 31, 2023.

Cash Flow Information

Three Months Ended March 31, ~~2021~~2024 compared to the Three Months Ended March 31, ~~2020~~2023


(thousands of U.S. dollars)	(thousands of U.S. dollars)	2021		2020		(thousands of U.S. dollars)	2024	2023

Net Cash Provided by (Used in):	Net Cash Provided by (Used in):
Operating activities
Operating activities
Operating activities	Operating activities	$	56,159	$	5,690
Investing activities	Investing activities	(46,519)		(12,989)
Financing activities	Financing activities	(3,783)		49,307
Effect of foreign currency exchange rate changes on cash and cash equivalents	Effect of foreign currency exchange rate changes on cash and cash equivalents	(295)		154
Net increase (decrease) in cash and cash equivalents, including restricted cash, during the period		$	5,562	$	42,162
Net (decrease) increase in cash and cash equivalents, including restricted cash, during the period

Operating activities

Cash flows provided by operating activities ~~increased $50.5~~decreased $24.2 million to net cash provided of ~~$56.2 million in the three months ended March 31, 2021 compared to $5.7~~$9.7 million for the three months ended March 31, ~~2020. Higher~~2024 compared to $33.9 million for the three months ended March 31, 2023. The decrease in cash flows from operating activities in the three months ended March 31, ~~2021~~2024 compared to the three months ended March 31, ~~2020 were~~2023 was driven primarily by ~~a decrease in cash paid for interest~~the $35.0 million payment of ~~$43.8 million,~~the Atlanta settlement, partially offset by ~~an increase~~changes in working capital of approximately $12.1 million.

Investing activities

Cash used in investing activities decreased $10.1 million to net cash ~~paid for income taxes~~used of ~~$9.7 million. In addition, a decrease in net operating assets for the three months ended March 31, 2021 resulted in a lower use of cash for operating activities of $7.6 million compared to $19.8~~$34.9 million for the three months ended March 31, ~~2020.~~

~~Investing activities~~

~~Cash used~~2024 compared to $45.0 million for the three months ended March 31, 2023. The variance was driven by ~~investing activities increased $33.5 million to net cash used~~a decrease in capital expenditures of ~~$46.5~~$10.1 million in the three months ended March 31, ~~2021~~2024 compared to ~~$13.0~~the three months ended March 31, 2023.

Financing activities

Cash used in financing activities was $11.9 million for the three months ended March 31, ~~2020. The change was attributable~~2024 compared to ~~the acquisition of~~

BioScience on March 8, 2021 for a net purchase price of approximately $13.2 million, the acquisition of the mandatorily redeemable noncontrolling interest in Nelson Labs Fairfield for $12.4 million and an increase in cash ~~paid for capital expenditures of $8.0 million.~~

~~Financing activities~~

~~For the three months ended March 31, 2021, net cash used in~~provided by financing activities ~~was $3.8 million compared to net cash provided~~ of ~~$49.3~~$273.9 million for the three months ended March 31, ~~2020.~~2023. The ~~primary use~~difference was mainly attributable to $500.0 million in proceeds from the issuance of ~~cash from financing activities was~~Term Loan B on February 23, 2023 and the ~~payment~~$200.0 million paydown of ~~$3.4~~the outstanding balance on the Revolving Credit Facility in February 2023. Additionally, the Company paid $24.5 million of debt issuance costs during the three months ended March 31, 2023 in connection with ~~our refinancing~~the issuance of Term Loan B compared to $1.3 million of issuance costs paid for Amendment No. 3 to the ~~Senior Secured~~Revolving Credit ~~Facilities~~Facility in the three months ended March 31, 2024, as described in “Debt Facilities” below. ~~Cash provided by financing activities for~~In addition, the Company paid $6.7 million in the three months ended March 31, ~~2020 was primarily attributable~~2024 to acquire certain facilities through the settlement of a ~~$50.0 million borrowing on our Revolving Credit Facility, which was subsequently repaid in the second quarter of 2020.~~finance lease.

Debt ~~Facilities~~

~~Senior Secured Credit~~ Facilities

On December 13, 2019, ~~Sotera Health Holdings, LLC (“SHH”),~~SHH, our ~~wholly owned~~wholly-owned subsidiary, entered into senior secured first lien credit facilities (the “Senior Secured Credit Facilities”), consisting of both a prepayable senior secured first lien term loan (the “Term Loan”) and a senior secured first lien revolving credit facility (the “Revolving Credit Facility”) pursuant to a first lien credit agreement (the “Credit Agreement”). The Term Loan matures on ~~December~~June 13, ~~2026, and~~2026. The total borrowing capacity under the Revolving Credit ~~Facility's original maturity date was December 13, 2024. On December 17, 2020, we increased the capacity of our Revolving Credit~~ Facility ~~from $190.0 million to $347.5~~is $423.8 million. The Senior Secured Credit Facilities also provide SHH the right at any time and under certain conditions to request incremental term loans or incremental revolving credit commitments based on a formula defined in the Senior Secured Credit Facilities. As of March 31, ~~2021~~2024 and December 31, ~~2020,~~2023, total borrowings under the Term Loan were $1,763.1 ~~million and $1,763.1 million, respectively, and there were no borrowings outstanding on the Revolving Credit Facility.~~million. The weighted average interest rate on borrowings under the Term Loan for the three months ended March 31, ~~2021~~2024 and March 31, ~~2020~~2023 was ~~3.73%~~8.26% and ~~6.18%~~7.44%, respectively.

On ~~January 20, 2021, we closed on an amendment repricing our Term Loan. The interest rate spread over~~March 1, 2024, the ~~London Interbank Offered Rate~~Company and SHH entered into Amendment No. 3 (“~~LIBOR”~~Amendment No. 3”) onto the ~~facility was reduced from 450 basis points~~Revolving Credit Facility. Among other changes, the Amendment provides (i) for new commitments under the existing Revolving Credit Facility to ~~275 basis points, and the facility’s LIBOR floor was reduced from 100 basis points to 50 basis points. The changes result~~replace existing revolving commitments in an ~~effective reduction in current interest rates~~aggregate principal amount of ~~2.25%. As a result~~$83.0 million, (ii) that certain of the ~~repricing, we expect cash interest savings~~lenders providing revolving credit commitments shall also provide additional commitments for the issuance of ~~approximately $40.0~~letters of credit under the Revolving Credit Facility in an aggregate principal amount of $37.5 million ~~per year based on~~ and (iii) for the outstanding principal balance as of March 31, 2021. In connection with this amendment, we wrote off $11.3 million of unamortized debt issuance and discount costs and incurred an additional $2.9 million of expense related to debt issuance costs attributable to the refinancing. These costs were recorded to “Loss on extinguishment of debt” in our Consolidated Statements of Operations and Comprehensive Income (Loss).

As of March 31, 2021 and December 31, 2020, capitalized debt issuance costs totaled $3.1 million and $3.4 million, respectively, and debt discounts totaled $20.0 million and $31.6 million, respectively, related to the Senior Secured Credit Facilities. Such costs are recorded as a reduction of debt on our consolidated balance sheets and amortized as a component of interest expense over the termextension of the ~~debt agreement.~~

~~On March 26, 2021, we amended~~maturity date of the Revolving Credit Facility to ~~(i) decrease~~ the ~~Applicable~~earlier of (a) March 1, 2029, and (b) the date that is 91 days prior to the maturity date of the Company’s existing term loans.

On February 23, 2023, we entered into the First Lien Credit Agreement (the “2023 Credit Agreement”), which provides for, among other things, a new Term Loan B facility (the “2023 Term Loan”) in an aggregate principal amount of $500.0 million and bears interest, at the Company’s option, at a variable rate per annum equal to either (x) the Term Secured Overnight Financing Rate (“Term SOFR”) (as defined in the 2023 Credit Agreement) ~~related to any Revolving Loans (as defined in the Credit Agreement) from a rate per annum that ranged from~~plus an applicable margin of 3.75% or (y) an alternative base rate (“ABR”) plus ~~2.50% to ABR plus 3.00% depending~~an applicable margin of 2.75%. The 2023 Credit Agreement is secured on ~~SHH’s Senior Secured First Lien Net Leverage Ratio to ABR plus 1.75%;~~a first priority basis by substantially all of our assets and inis guaranteed by certain of our subsidiaries. It is prepayable without premium or penalty at any time six months after the case of Eurodollar Loans (as defined in the Credit Agreement) from a rate per annum which ranged from the Adjusted LIBOR plus 3.50% to the Adjusted LIBOR plus 4.00% depending on SHH’s Senior Secured First Lien Net Leverage Ratio (as defined in the Credit Agreement), to the Adjusted LIBOR (as defined in the Credit Agreement) plus 2.75% and (ii) extend the maturity dateclosing date. The principal balance shall be paid at 1% of the ~~Revolving Facility from December 13, 2024 to June 13,~~aggregate principal amount ($5.0 million) per year, with the balance due at the end of 2026. The ~~other material terms~~Company used the proceeds of the ~~Credit Agreement are unchanged~~2023 Term Loan to fund a previously announced $408.0 million EO litigation settlement in Cook County, Illinois and pay down the ~~amendment does not change the capacity~~$200.0 million of our Revolving Credit Facility, which is $347.5 million. No unamortized debt issuance costs associated with the Revolving Credit Facility were written off and direct fees and costs incurred in connection with the amendment were immaterial.

As of March 31, 2021 and December 31, 2020, there were no borrowings on the Revolving Credit Facility. SHH borrowed $50.0 million on the Revolving Credit Facility during the first quarter of 2020 which was repaid in the second quarter of 2020. The interest rate on theexisting borrowings under the Revolving Credit Facility ~~during 2020 averaged approximately 5.0%~~concurrent with the funding of the 2023 Term Loan on

February 23, 2023. The Company utilized the remaining proceeds to further enhance liquidity and for general corporate purposes. The weighted average interest rate on borrowings under the 2023 Term Loan for the three months ended March 31, 2024 and the three months ended March 31, 2023 was 9.09% and 8.82%, respectively.

with customary exceptions including, among other things, where providing such guarantees is not permitted by law, regulation or contract or would result in material adverse tax consequences. All obligations under the Senior Secured Credit Facilities and 2023 Credit Agreement, and the guarantees of such obligations, are secured by substantially all assets of the borrower and guarantors, subject to permitted liens and other exceptions and exclusions, as outlined in the Senior Secured Credit ~~Facilities.~~Facilities and 2023 Credit Agreement.

~~First Lien Notes~~

On July 31, 2020, SHH issued $100.0 million aggregate principal amount of senior secured first lien notes due 2026 (the “First Lien Notes”), which mature on December 13, 2026. The First Lien Notes bear interest at a rate equal to LIBOR subject to a 1.00% floor plus 6.00% per annum. Interest is payable on a quarterly basis with no principal due until maturity. The weighted average interest rate on the First Lien Notes for the three months ended March 31, 2021 was 7.00%.

SHH is entitled to redeem all or a portion of the First Lien Notes, at any time and from time to time, subject to certain premiums depending on the date of redemption; any time on or prior to July 31, 2021, a customary make-whole premium applies and, thereafter, specified premiums that decline to zero apply (in each case as described in the indenture governing the First Lien Notes).

~~2020 Debt Repayments~~

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of consolidated financial statements and related disclosures in conformity with ~~accounting principles generally accepted in the United States of America~~GAAP requires management to make judgments, estimates and assumptions at a specific point in time and in certain circumstances that affect amounts reported in the accompanying consolidated financial statements. In preparing these consolidated financial statements, management has made its best estimates and judgments of certain amounts, giving due consideration to materiality. The application of accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.

A comprehensive discussion of the Company’s critical accounting policies and management estimates made in connection with the preparation of the financial statements is included in Item 7 of our ~~Annual Report on~~2023 Form ~~10-K for the year ended December 31, 2020.~~10-K. There have been no significant changes in critical accounting policies, management estimates or accounting policies since the year ended December 31, ~~2020.~~2023.

NEW ACCOUNTING PRONOUNCEMENTS

For a description of recent accounting pronouncements applicable to our business, see Note 2, “Recent Accounting Standards”. to our consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risks are described within “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of our ~~2020~~2023 Form 10-K. These market risks have not materially changed for the three months ended March 31, ~~2021.~~2024.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), has evaluated the effectiveness of the Company’s “disclosure controls and procedures,” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)). Based upon their evaluation, the ~~Chief Executive Officer~~CEO and ~~Chief Financial Officer~~CFO concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”), and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control

During the three months ended March 31, ~~2021,~~2024, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4140

Part II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may be subject to various legal proceedings arising in the ordinary course of our business, including claims relating to personal injury, property damage, workers’ compensation, employee safety, corporate governance and ~~employee safety.~~our disclosures as a Nasdaq-listed, publicly-traded company. In addition, from time to time, we receive communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which we operate. At this time, and except as is noted herein, we are unable to predict the outcome of, and cannot reasonably estimate the impact of, any pending litigation matters, matters concerning allegations of non-compliance with laws or regulations and matters concerning other allegations of other improprieties, or the incidence of any such matters in the future. Information regarding our material legal proceedings is included below.

Legal Proceedings Described in Note 16 14 “Commitments and Contingencies”of Our Consolidated Financial Statements

Note ~~16,~~14, “Commitments and Contingencies” to our consolidated financial statements for the three months ended March 31, ~~2021~~2024 contained in this Quarterly Report on Form 10-Q includes information on legal proceedings that constitute material contingencies for financial reporting purposes that could have a material effect on our financial condition or results of operations. This item should be read in conjunction with Note 1614 “Commitments and Contingencies” for information regarding the following legal proceedings, which information is incorporated into this item by reference:

•~~FM Global Business Interruption Claim (NRU Outage)~~

•~~Willowbrook, Illinois – Government Litigation~~

•Ethylene Oxide Tort Litigation – Illinois, Georgia, California and New Mexico;

•~~Ethylene Oxide Tort Litigation – Georgia~~

•~~Suspension of Georgia Facility Operations & Related Litigation;~~Insurance Coverage for Environmental Liabilities; and

•~~Ethylene Oxide~~Sotera Health Company Securities Litigation ~~– New Mexico~~and Related Matters.

Legal Proceedings That Are Not Described in Note 1614 “Commitments and Contingencies” to Our Consolidated Financial Statements

In addition to the matters that are identified in Note 1614 “Commitments and Contingencies” to our consolidated financial statements for the three months ended March 31, ~~2021~~2024 contained in this Quarterly Report on Form 10-Q, and incorporated into this item by reference, the following ~~matter~~matters also ~~constitutes a~~constitute material pending legal ~~proceeding,~~proceedings, other than ordinary course litigation incidental to our business, to which we are or any of our subsidiaries is a party.

~~Zoetermeer, Holland Criminal Proceedings~~ SEC regulations require disclosure of environmental proceedings that involve a government authority and ~~Criminal Financial Investigation~~

~~In early 2010,~~potential monetary sanctions that the ~~Dutch Public Prosecution Service started criminal proceedings against DEROSS Holding B.V. (“DEROSS B.V.”), formerly known as Sterigenics Holland B.V.,~~Company reasonably believes will exceed a specified threshold. Effective January 1, 2024, except for the previously disclosed Notices of Violation issued to Sterigenics’ facilities in ~~relation to certain EO emissions~~Queensbury, New York, Los Angeles, California and ~~alleged environmental permit violations in~~Ontario, California, the ~~period from 2004 to 2009 at its Zoetermeer processing facility. On the basis~~Company uses a threshold of ~~the final indictment issued in April 2017, assuming a rarely applied increasing mechanism is not applied in this case, fines in the amount of €0.8~~$1 million ~~(US$0.9 million) may be imposed.~~

~~In November 2010, the Public Prosecution Service also started a criminal financial investigation against DEROSS B.V.~~ to determine whether ~~it has obtained illegal advantages by committing~~ the ~~alleged criminal offenses noted above. Any illegally obtained advantage could then be recovered from DEROSS B.V. in subsequent confiscation proceedings. According~~disclosure of any such proceedings is required because we believe matters under this threshold are not material to the ~~October 2013 report~~Company.

Notice of ~~this criminal financial investigation,~~Violation at Queensbury, New York Ethylene Oxide Sterilization Facility

In late May 2023, Sterigenics’ Queensbury, New York facility experienced a power outage that resulted in a failure to restart the ~~Public Prosecution Service estimates~~facility’s scrubber system (part of the ~~illegally obtained advantage by DEROSS B.V.~~facility’s emission control systems). The disruption of the facility’s scrubber lasted for approximately 48 hours. Upon discovering the disruption, the facility restarted the scrubber to becontrol emissions within the system and then ceased operations. Operating without the scrubber resulted in nine intermittent releases of EO over a period of 48 hours from the 78-foot stack at the facility.

Sterigenics promptly notified the New York State Department of Environmental Conservation (“DEC”) and US EPA about the failure of the scrubber system and resulting releases of EO. Sterigenics implemented remedial measures to prevent a recurrence in the event of future power outages and, with the DEC’s approval, resumed operations at the Queensbury facility 12 days after ceasing operations. In May 2023, Sterigenics received a Notice of Violation (“NOV”) from the DEC. In September 2023, the DEC offered to settle the NOV for an immaterial amount ~~of €0.6 million (US$0.7 million).~~

~~In January 2018,~~plus proposed requirements to implement additional emissions monitoring and back-up power capabilities at the trial in first instance took place in the criminal case against DEROSS B.V., and in February 2018, the court discharged DEROSS B.V. from further prosecution on one of the two counts asserted and acquitted DEROSS B.V. on the other count. In March 2018, the public prosecutor filed an appeal against the favorable judgment in first instance for DEROSS B.V., as well as the favorable judgments in first instance for the two individuals overseeing environmental compliance during the time period of the alleged claims and the municipality of Zoetermeer. The appeal procedure is pending.

DEROSS B.V. has agreed to defend and indemnify the two individuals overseeing environmental compliance during the time period of the alleged claims by the Public Prosecutor. Assuming a rarely applied increasing mechanism is not applied in this case, the possible monetary penalties relating to the individuals currentlyfacility. Settlement negotiations are ~~estimated at a maximum of €0.2 million (US$0.2 million).~~ongoing.

4241

Notices of Violation at Vernon and Ontario, California Ethylene Oxide Sterilization Facilities

In ~~2011, former shareholders established~~2022, the South Coast Air Quality Management District (“SCAQMD”) in Southern California initiated an ~~escrow account to satisfy indemnity claims for losses resulting from governmental claims related to~~investigation into EO sterilization facilities located in the SCAQMD region, including Sterigenics’ facilities in Vernon and Ontario, California. In connection with this matter, including those relating to environmental law violations, financial advantage claims, as well as criminal and civil fines and penalties. The balance of the special escrow at March 31, 2021, was approximately US$2.1 million and the cash collateral held by ABN Amro to provide security for the claims against us was approximately €2.4 million (US$2.8 million) as of March 31, 2021. These amounts are available to satisfy claims relatinginvestigation, SCAQMD issued NOVs to the ~~ongoing matter through its anticipated resolution. At this time, we expect~~Vernon and Ontario facilities alleging violations of SCAQMD operational, maintenance, permitting and reporting requirements and that levels of ambient EO detected by SCAQMD during 2022 caused a public nuisance for off-site workers around the ~~appeal~~facilities in violation of ~~this matter will likely take several years~~general prohibitions on emissions. Sterigenics disputes the allegations. Sterigenics has offered to ~~resolve, barring unforeseen delays. However, we believe~~settle the ~~indemnification receivable continues to be recoverable and plan to ensure escrow funds remain in place to cover outcomes of~~NOVs for an ~~appeal.~~

It is possible that individuals living in the vicinity of our former Zoetermeer facility may file civil claims at some time in the future. While we have received letters from a small number of individuals claiming to live or work in the vicinity of the Zoetermeer facility, no civil claims have been filed against DEROSS B.V. or us. We have not provided for a contingency reserve in connection with any civil claims as weimmaterial amount. Settlement negotiations are ~~unable to determine the likelihood of an unfavorable outcome and no reasonable estimate of a loss or range of losses, if any, can be made.~~ongoing.

Item 1A. Risk Factors.

~~There have been no material changes~~The risk factor titled “We are subject to ~~the risk factors previously disclosed~~extensive regulatory requirements and routine regulatory audits in our ~~2020 Form 10-K. Refer to~~operations …” included in Part I, Item 1A, “Risk Factors” of our ~~2020~~Annual Report on Form 10-K for ~~a detailed discussion~~the year ended December 31, 2023 is hereby updated by adding at the end of that risk factor the paragraphs immediately below. Other than this addition, the text of the risk factors ~~affecting us.~~is unchanged.

On March 14, 2024, the US EPA announced final NESHAP rules to govern EO sterilization facilities in the United States. The final regulation, which was published in the Federal Register on April 5, 2024, requires EO sterilization facilities to implement additional air pollution technologies, practices and procedures designed to further reduce EO emissions. For facilities like ours, the final NESHAP regulation imposes new requirements such as higher efficiencies for EO emission controls, implementation of permanent total enclosure capture technology, and use of continuous emissions monitoring systems (or, CEMS). Our operations are required to comply with the final NESHAP EO sterilizer regulation by April 6, 2026 and to demonstrate compliance within 180 days after that date. The US EPA has not yet issued an ID in the FIFRA re-registration process. The issuance of an ID remains expected by the third quarter of 2024, although US EPA could issue the ID sooner.

We believe that our investments in emission control enhancements at our EO facilities have positioned us to be able to comply with the updated NESHAP requirements within the timeframes specified by the final rule, but the requirements of the final rule represent significant changes from historical requirements and are challenging for existing EO sterilization facilities like ours, and therefore we cannot provide certainty that we will be able to comply with the requirements of the final rule at our EO facilities within the time required. The FIFRA ID for EO also will apply to our EO sterilization facilities in the United States, and certain requirements proposed for the ID in 2023 would require practices that remain untested or not widely adopted at existing EO sterilization facilities and could be inconsistent with meeting the requirements of the final NESHAP rule. Compliance with the final NESHAP and ID may ultimately require additional facility modifications, capital expenditures and operational costs beyond what the Company is presently anticipating.

Item 5. Other Information.

Rule 10b5-1 Trading Plans

During the three months ended March 31, 2024, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” (as that term is defined in Regulation S-K, Item 408).

4342

Item 6. Exhibits.

The exhibits listed in the following Exhibit Index are filed, furnished, or incorporated by reference as part of this Quarterly Report on Form 10-Q.

Incorporated by Reference

Exhibit No

Description of Exhibits

Form

File No.

Exhibit

Filing Date

Furnished/Filed
Herewith

10.1

Refinancing Amendment to the First Lien Credit Agreement, dated as of January 20, 2021, among Sotera Health Company, Sotera Health Holdings, LLC, the Refinancing Lenders Party thereto, the Revolving Lenders party to the First Lien Credit Agreement and Jefferies Finance LLC, as First Lien Administrative Agent and First Lien Collateral Agent

10-K

001-39729

10.28

2021-03-09

10.2

R ev olving Facilities Amendment to the First Lien Credit Agreement, dated as of M arch 26, 2021 , among Sotera Health Company, Sotera Health Holdings, LLC, the Refinancing Lenders Party thereto, the Revolving Lenders party to the First Lien Credit Agreement and Jefferies Finance LLC, as First Lien Administrative Agent and First Lien Collateral Agent

Exhibit No

Description of Exhibits

Form

File No.

Exhibit

Filing Date

Furnished/Filed
Herewith

31.1

Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.1

Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

10.1

10.2

101.INS

Inline XBRL Instance Document - The XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Label Linkbase Document

101.LAB

Inline XBRL Taxonomy Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed Herewith

** Furnished Herewith

4443

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SOTERA HEALTH COMPANY

By:

/s/ ~~Scott J. Leffler~~Jonathan M. Lyons

Name:

~~Scott J. Leffler~~Jonathan M. Lyons

Title:

Senior Vice President and Chief Financial Officer ~~and Treasurer~~

(Principal Financial Officer)

Date: May ~~13, 2021~~2, 2024

4544


(thousands of U.S. dollars)	Three Months Ended March 31, 2020
	Sterigenics		Nordion		Nelson Labs		Consolidated
Point in time	$	117,280	$	23,625	$	0	$	140,905
Over time	0		0		47,295		47,295
Total	$	117,280	$	23,625	$	47,295	$	188,200


(thousands of U.S. dollars)
Allocation of purchase price to the fair value of net assets acquired (net of cash acquired):	Amount recognized as of December 31, 2020		Measurement Period Adjustments		Amount recognized as of March 31, 2021
Goodwill	$	69,046	$	(17,142)	$	51,904
Intangibles	16,427		26,273		42,700
Property, plant, and equipment	13,812		4,346		18,158
Working capital, net	1,115		2		1,117
Investment in unconsolidated affiliate	12,881		(4,181)		8,700
Assumed long-term liabilities	(2,248)		0		(2,248)
Other assets/liabilities, net	(5,846)		(9,298)		(15,144)
Total estimated purchase price	$	105,187	$	0	$	105,187


	Restricted Stock - Pre- IPO B-1	Restricted Stock - Pre- IPO B-2
Unvested at December 31, 2020	2,201,239	2,323,333

Forfeited	(43,361)	(254,839)
Vested	(228,862)	0
Unvested at March 31, 2021	1,929,016	2,068,494


	Number of Shares	Weighted- average Exercise Price
At December 31, 2020	2,389,258	$	23.00
Granted	20,407	26.26
Forfeited	(9,316)	23.00
Exercised	0	0
At March 31, 2021	2,400,349	$	23.03


	Three Months Ended
in thousands of U.S. dollars and share amounts (except per share amounts)	March 31, 2021		March 31, 2020
Earnings (Loss):
Net income (loss)	$	11,065	$	(1,986)
Less: Net income (loss) attributable to noncontrolling interests	223		(22)
Less: Allocation to participating securities	157		0
Net income (loss) attributable to Sotera Health Company common shareholders	$	10,685	$	(1,964)
Weighted Average Common Shares:
Weighted-average common shares outstanding - basic	278,827		232,400
Dilutive effect of potential common shares	141		0
Weighted-average common shares outstanding - diluted(a)	278,968		232,400
Earnings (loss) per Common Share:
Net income (loss) attributable to Sotera Health Company common shareholders - basic	$	0.04	$	(0.01)
Net income (loss) attributable to Sotera Health Company common shareholders - diluted	0.04		(0.01)


(thousands of U.S. dollars)
Three Months March 31,	2021		2020
Unrealized loss on interest rate caps recorded in interest expense, net	$	90	$	0
Unrealized (gain) loss on embedded derivatives recorded in other income, net	(853)		4,819

Realized gain on foreign currency forward contracts recorded in foreign exchange (gain) loss	(2,374)		0