Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 25, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-39729 | |
Entity Registrant Name | SOTERA HEALTH COMPANY | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-3531161 | |
Entity Address, Address Line One | 9100 South Hills Blvd | |
Entity Address, Address Line Two | Suite 300 | |
Entity Address, City or Town | Broadview Heights | |
Entity Address, State or Province | OH | |
Entity Address, Postal Zip Code | 44147 | |
City Area Code | 440 | |
Local Phone Number | 262-1410 | |
Title of 12(b) Security | Common Stock, $0.01 par value per share | |
Trading Symbol | SHC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 282,622,621 | |
Entity Central Index Key | 0001822479 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 244,959 | $ 395,214 |
Restricted cash short-term | 7,575 | 1,080 |
Accounts receivable, net of allowance for uncollectible accounts of $2,100 and $1,871, respectively | 118,396 | 118,482 |
Inventories, net | 37,924 | 37,145 |
Prepaid expenses and other current assets | 84,201 | 80,995 |
Income taxes receivable | 26,591 | 12,094 |
Total current assets | 519,646 | 645,010 |
Property, plant, and equipment, net | 884,385 | 774,527 |
Operating lease assets | 24,672 | 26,481 |
Deferred income taxes | 4,043 | 4,101 |
Post-retirement assets | 39,342 | 35,570 |
Other assets | 34,563 | 38,983 |
Other intangible assets, net | 429,112 | 491,265 |
Goodwill | 1,100,811 | 1,101,768 |
Total assets | 3,036,574 | 3,117,705 |
Current liabilities: | ||
Accounts payable | 57,125 | 74,139 |
Accrued liabilities | 106,371 | 490,130 |
Deferred revenue | 12,712 | 12,140 |
Current portion of long-term debt | 5,235 | 197,119 |
Current portion of finance lease obligations | 8,398 | 1,722 |
Current portion of operating lease obligations | 6,362 | 7,554 |
Current portion of asset retirement obligations | 252 | 2,896 |
Income taxes payable | 4,139 | 5,867 |
Total current liabilities | 200,594 | 791,567 |
Long-term debt | 2,222,789 | 1,747,115 |
Finance lease obligations, less current portion | 63,219 | 56,955 |
Operating lease obligations, less current portion | 20,674 | 21,577 |
Noncurrent asset retirement obligations | 44,382 | 42,586 |
Deferred lease income | 18,444 | 18,902 |
Post-retirement obligations | 7,760 | 7,910 |
Noncurrent liabilities | 12,415 | 12,831 |
Deferred income taxes | 68,826 | 68,024 |
Total liabilities | 2,659,103 | 2,767,467 |
See Commitments and contingencies note | ||
Equity: | ||
Common stock, with $0.01 par value, 1,200,000 shares authorized; 286,037 shares issued at September 30, 2023 and December 31, 2022 | 2,860 | 2,860 |
Preferred stock, with $0.01 par value, 120,000 authorized; no shares issued at September 30, 2023 and December 31, 2022 | 0 | 0 |
Treasury stock, at cost (3,414 and 3,616 shares at September 30, 2023 and December 31, 2022, respectively) | (28,474) | (29,775) |
Additional paid-in capital | 1,210,346 | 1,189,622 |
Retained deficit | (693,121) | (705,816) |
Accumulated other comprehensive loss | (114,140) | (106,653) |
Total equity | 377,471 | 350,238 |
Total liabilities and equity | $ 3,036,574 | $ 3,117,705 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Allowance for uncollectible accounts | $ 2,100 | $ 1,871 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,200,000,000 | 1,200,000,000 |
Common stock, shares issued (in shares) | 286,037,000 | 286,037,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 120,000,000 | 120,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Treasury stock (in shares) | 3,414,000 | 3,616,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues: | ||||
Total net revenues | $ 263,177 | $ 248,704 | $ 739,049 | $ 752,097 |
Cost of revenues: | ||||
Total cost of revenues | 117,193 | 112,691 | 341,974 | 336,813 |
Gross profit | 145,984 | 136,013 | 397,075 | 415,284 |
Operating expenses: | ||||
Selling, general and administrative expenses | 54,112 | 57,091 | 176,309 | 179,765 |
Amortization of intangible assets | 15,774 | 15,727 | 48,098 | 47,337 |
Total operating expenses | 69,886 | 72,818 | 224,407 | 227,102 |
Operating income | 76,098 | 63,195 | 172,668 | 188,182 |
Interest expense, net | 40,627 | 23,427 | 100,225 | 47,875 |
Georgia EO litigation settlement | 35,000 | 0 | 35,000 | 0 |
Impairment of investment in unconsolidated affiliate | 0 | 0 | 0 | 9,613 |
Foreign exchange (gain) loss | (426) | (535) | 386 | (502) |
Other expense (income), net | 427 | (1,713) | (3,300) | (4,195) |
Income before income taxes | 470 | 42,016 | 40,357 | 135,391 |
Provision for income taxes | 14,130 | 16,926 | 27,662 | 49,242 |
Net income (loss) | (13,660) | 25,090 | 12,695 | 86,149 |
Other comprehensive income (loss) net of tax: | ||||
Pension and post-retirement benefits (net of taxes of $(43), $357, $(54), and $444, respectively) | (126) | 1,065 | (159) | 1,323 |
Interest rate derivatives (net of taxes of $(934), $3,368, $(3,294) and $6,718, respectively) | (1,714) | 9,408 | (6,963) | 18,765 |
Foreign currency translation | (32,996) | (69,460) | (365) | (100,523) |
Comprehensive income (loss) | $ (48,496) | $ (33,897) | $ 5,208 | $ 5,714 |
Earnings per share: | ||||
Basic (in dollars per share) | $ (0.05) | $ 0.09 | $ 0.04 | $ 0.31 |
Diluted (in dollars per share) | $ (0.05) | $ 0.09 | $ 0.04 | $ 0.31 |
Weighted average number of shares outstanding: | ||||
Basic (in shares) | 281,105 | 280,142 | 280,898 | 279,988 |
Diluted (in shares) | 281,105 | 280,172 | 283,190 | 280,093 |
Service | ||||
Revenues: | ||||
Total net revenues | $ 227,120 | $ 216,704 | $ 667,680 | $ 644,451 |
Cost of revenues: | ||||
Total cost of revenues | 103,580 | 99,772 | 311,690 | 292,755 |
Product | ||||
Revenues: | ||||
Total net revenues | 36,057 | 32,000 | 71,369 | 107,646 |
Cost of revenues: | ||||
Total cost of revenues | $ 13,613 | $ 12,919 | $ 30,284 | $ 44,058 |
Consolidated Statements of Op_2
Consolidated Statements of Operations and Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Pension and post-retirement benefits, tax | $ (43) | $ 357 | $ (54) | $ 444 |
Interest rate swaps, tax | $ (934) | $ 3,368 | $ (3,294) | $ 6,718 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Operating activities: | ||
Net income | $ 12,695 | $ 86,149 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 55,913 | 47,496 |
Amortization of intangible assets | 61,290 | 61,596 |
Impairment of investment in unconsolidated affiliate | 0 | 9,613 |
Deferred income taxes | 3,284 | 17,153 |
Share-based compensation expense | 24,034 | 14,955 |
Accretion of asset retirement obligations | 1,683 | 1,645 |
Unrealized foreign exchange (gain) loss | 2,444 | (5,610) |
Unrealized loss (gain) on derivatives not designated as hedging instruments | 1,087 | (4,323) |
Amortization of debt issuance costs | 6,522 | 4,259 |
Other | (3,492) | (6,109) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 302 | (8,558) |
Inventories | (866) | 13,896 |
Other current assets | (892) | (13,066) |
Accounts payable | (17,412) | (13,367) |
Accrued liabilities | (11,389) | (1,874) |
Income taxes payable / receivable, net | (18,366) | (25,050) |
Other liabilities | (809) | 1,489 |
Other long-term assets | (4,171) | (4,259) |
Net cash provided by (used in) operating activities | (260,855) | 176,035 |
Investing activities: | ||
Purchases of property, plant and equipment | (150,149) | (110,642) |
Adjustment to purchase of Regulatory Compliance Associates Inc. | 0 | 450 |
Other investing activities | 69 | 34 |
Net cash used in investing activities | (150,080) | (110,158) |
Financing activities: | ||
Proceeds from long-term borrowings | 500,000 | 0 |
Payment of revolving credit facility | (200,000) | 0 |
Payment of long-term borrowings | (1,250) | 0 |
Payments of debt issuance costs and debt discount | (25,645) | (31) |
Other financing activities | (3,353) | (1,452) |
Net cash provided by (used in) financing activities | 269,752 | (1,483) |
Effect of exchange rate changes on cash and cash equivalents | (2,577) | (6,357) |
Net increase (decrease) in cash and cash equivalents, including restricted cash | (143,760) | 58,037 |
Cash and cash equivalents, including restricted cash, at beginning of period | 396,294 | 106,924 |
Cash and cash equivalents, including restricted cash, at end of period | 252,534 | 164,961 |
Supplemental disclosures of cash flow information: | ||
Cash paid during the period for interest | 150,696 | 65,045 |
Cash paid during the period for income taxes, net of tax refunds received | 42,587 | 56,474 |
Purchases of property, plant and equipment included in accounts payable | 16,383 | 18,583 |
Ethylene Oxide Tort Litigation - Illinois | ||
Changes in operating assets and liabilities: | ||
Litigation settlement | (407,712) | 0 |
Ethylene Oxide Tort Litigation – Georgia | ||
Changes in operating assets and liabilities: | ||
Litigation settlement | $ 35,000 | $ 0 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings / (Accumulated Deficit) | Accumulated Other Comprehensive (Loss) Income |
Beginning balance (in shares) at Dec. 31, 2021 | 282,985 | |||||
Beginning balance at Dec. 31, 2021 | $ 586,096 | $ 2,860 | $ (33,545) | $ 1,172,593 | $ (472,246) | $ (83,566) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Share-based compensation plans (in shares) | (872) | |||||
Share-based compensation plans | 14,919 | 892 | 14,027 | |||
Comprehensive income (loss): | ||||||
Pension and post-retirement plan adjustments, net of tax | 1,323 | 1,323 | ||||
Foreign currency translation | (100,523) | (100,523) | ||||
Interest rate derivatives, net of tax | 18,765 | 18,765 | ||||
Net (loss)income | 86,149 | 86,149 | ||||
Ending balance (in shares) at Sep. 30, 2022 | 282,113 | |||||
Ending balance at Sep. 30, 2022 | 606,729 | $ 2,860 | (32,653) | 1,186,620 | (386,097) | (164,001) |
Beginning balance (in shares) at Jun. 30, 2022 | 282,902 | |||||
Beginning balance at Jun. 30, 2022 | 636,000 | $ 2,860 | (32,654) | 1,181,995 | (411,187) | (105,014) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Share-based compensation plans (in shares) | (789) | |||||
Share-based compensation plans | 4,626 | 1 | 4,625 | |||
Comprehensive income (loss): | ||||||
Pension and post-retirement plan adjustments, net of tax | 1,065 | 1,065 | ||||
Foreign currency translation | (69,460) | (69,460) | ||||
Interest rate derivatives, net of tax | 9,408 | 9,408 | ||||
Net (loss)income | 25,090 | 25,090 | ||||
Ending balance (in shares) at Sep. 30, 2022 | 282,113 | |||||
Ending balance at Sep. 30, 2022 | 606,729 | $ 2,860 | (32,653) | 1,186,620 | (386,097) | (164,001) |
Beginning balance (in shares) at Dec. 31, 2022 | 282,421 | |||||
Beginning balance at Dec. 31, 2022 | 350,238 | $ 2,860 | (29,775) | 1,189,622 | (705,816) | (106,653) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Share-based compensation plans (in shares) | 202 | |||||
Share-based compensation plans | 22,025 | 1,301 | 20,724 | |||
Comprehensive income (loss): | ||||||
Pension and post-retirement plan adjustments, net of tax | (159) | (159) | ||||
Foreign currency translation | (365) | (365) | ||||
Interest rate derivatives, net of tax | (6,963) | (6,963) | ||||
Net (loss)income | 12,695 | 12,695 | ||||
Ending balance (in shares) at Sep. 30, 2023 | 282,623 | |||||
Ending balance at Sep. 30, 2023 | 377,471 | $ 2,860 | (28,474) | 1,210,346 | (693,121) | (114,140) |
Beginning balance (in shares) at Jun. 30, 2023 | 282,544 | |||||
Beginning balance at Jun. 30, 2023 | 418,367 | $ 2,860 | (28,700) | 1,202,972 | (679,461) | (79,304) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Share-based compensation plans (in shares) | 79 | |||||
Share-based compensation plans | 7,600 | 226 | 7,374 | |||
Comprehensive income (loss): | ||||||
Pension and post-retirement plan adjustments, net of tax | (126) | (126) | ||||
Foreign currency translation | (32,996) | (32,996) | ||||
Interest rate derivatives, net of tax | (1,714) | (1,714) | ||||
Net (loss)income | (13,660) | (13,660) | ||||
Ending balance (in shares) at Sep. 30, 2023 | 282,623 | |||||
Ending balance at Sep. 30, 2023 | $ 377,471 | $ 2,860 | $ (28,474) | $ 1,210,346 | $ (693,121) | $ (114,140) |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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 solutions, lab testing and advisory services for the healthcare industry with operations primarily in the Americas, Europe and Asia. We operate and report in three segments, Sterigenics, Nordion and Nelson Labs. We describe our reportable segments in Note 17, “Segment Information”. All significant intercompany balances and transactions have been eliminated in consolidation. 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”). Our equity ownership interest in the joint venture was determined to be an investment in a variable interest entity (“VIE”). The investment was not consolidated as the Company concluded that it was not the primary beneficiary of the VIE. The Company accounted for the joint venture using the equity method. During the year ended December 31, 2022, we identified certain events and circumstances that indicated a decline in value of our investment in this joint venture that was other-than-temporary. Consequently, in the second quarter of 2022, we wrote down the investment in the joint venture to its fair value of $0, resulting in an impairment charge of approximately $9.6 million. In February 2023, we entered into a Share Purchase Agreement to transfer our equity ownership interest to the joint venture partner, thereby terminating our equity ownership interest. Use of Estimates – In preparing our consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“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 GAAP for interim financial information, 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 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 in our 2022 10-K. |
Recent Accounting Standards
Recent Accounting Standards | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Standards | Recent Accounting Standards Adoption of Accounting Standard Updates Effective January 1, 2023, we adopted ASU 2021-08 - Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). The amendments in ASU 2021-08 require that an acquiring entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”). At the acquisition date, an acquirer should account for the related revenue contracts in accordance with ASC Topic 606 as if it had originated the contracts. The adoption of this standard did not have a material impact on our consolidated financial statements and disclosures. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue RecognitionThe following table shows disaggregated net revenues from contracts with external customers by timing of revenue and by segment for the three and nine months ended September 30, 2023 and 2022: (thousands of U.S. dollars) Three Months Ended September 30, 2023 Sterigenics Nordion Nelson Labs Consolidated Point in time $ 168,347 $ 37,068 $ — $ 205,415 Over time — 3,030 54,732 57,762 Total $ 168,347 $ 40,098 $ 54,732 $ 263,177 (thousands of U.S. dollars) Three Months Ended September 30, 2022 Sterigenics Nordion Nelson Labs Consolidated Point in time $ 157,723 $ 33,830 $ — $ 191,553 Over time — 1,241 55,910 57,151 Total $ 157,723 $ 35,071 $ 55,910 $ 248,704 (thousands of U.S. dollars) Nine Months Ended September 30, 2023 Sterigenics Nordion Nelson Labs Consolidated Point in time $ 494,934 $ 75,309 $ — $ 570,243 Over time — 5,315 163,491 168,806 Total $ 494,934 $ 80,624 $ 163,491 $ 739,049 (thousands of U.S. dollars) Nine Months Ended September 30, 2022 Sterigenics Nordion Nelson Labs Consolidated Point in time $ 464,977 $ 113,501 $ — $ 578,478 Over time — 6,050 167,569 173,619 Total $ 464,977 $ 119,551 $ 167,569 $ 752,097 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 $12.7 million and $12.1 million at September 30, 2023 and December 31, 2022, respectively. We recognize deferred revenue after all revenue recognition criteria are met. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions Acquisition of Regulatory Compliance Associates Inc. On November 4, 2021, we acquired Regulatory Compliance Associates Inc. (“RCA”) for approximately $30.6 million, net of $0.6 million of cash acquired. RCA is an industry leader in providing life sciences consulting focused on quality, regulatory, and technical advisory services for the pharmaceutical, medical device and combination device industries. Headquartered in Pleasant Prairie, Wisconsin, RCA expands and further strengthens our technical consulting and expert advisory capabilities within our Nelson Labs segment. The purchase price of RCA was allocated to the underlying assets acquired and liabilities assumed based upon management's estimated fair values at the date of acquisition. As of September 30, 2023, approximately $25.3 million of goodwill was recorded related to the RCA acquisition, representing the excess of the purchase price over the estimated fair values of all the assets acquired and liabilities assumed. We also recorded $6.4 million of finite-lived intangible assets, primarily related to customer relationships. We funded this acquisition using available cash. The acquisition price and the results of operations for this acquired entity are not material in relation to our consolidated financial statements. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of the following: (thousands of U.S. dollars) September 30, 2023 December 31, 2022 Raw materials and supplies $ 33,563 $ 36,402 Work-in-process 590 584 Finished goods 3,887 276 38,040 37,262 Reserve for excess and obsolete inventory (116) (117) Inventories, net $ 37,924 $ 37,145 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following: (thousands of U.S. dollars) September 30, 2023 December 31, 2022 Prepaid taxes $ 29,515 $ 26,598 Prepaid business insurance 1,822 9,964 Prepaid rent 1,226 998 Customer contract assets 25,531 19,777 Insurance and indemnification receivables 2,039 3,724 Current deposits 412 660 Prepaid maintenance contracts 605 324 Value added tax receivable 3,636 1,640 Prepaid software licensing 2,344 1,832 Stock supplies 3,819 3,656 Embedded derivatives 2,287 2,721 Other 10,965 9,101 Prepaid expenses and other current assets $ 84,201 $ 80,995 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Changes to goodwill during the nine months ended September 30, 2023 were as follows: (thousands of U.S. dollars) Sterigenics Nordion Nelson Labs Total Goodwill at December 31, 2022 $ 657,458 $ 270,966 $ 173,344 $ 1,101,768 Changes due to foreign currency exchange rates 131 (690) (398) (957) Goodwill at September 30, 2023 $ 657,589 $ 270,276 $ 172,946 $ 1,100,811 Other intangible assets consisted of the following: (thousands of U.S. dollars) Gross Carrying Amount Accumulated Amortization As of September 30, 2023 Finite-lived intangible assets Customer relationships $ 652,421 $ 466,828 Proprietary technology 83,538 54,474 Trade names 2,561 1,081 Land-use rights 8,497 1,748 Sealed source and supply agreements 203,865 101,918 Other 4,464 2,647 Total finite-lived intangible assets 955,346 628,696 Indefinite-lived intangible assets Regulatory licenses and other (a) 76,781 — Trade names / trademarks 25,681 — Total indefinite-lived intangible assets 102,462 — Total $ 1,057,808 $ 628,696 As of December 31, 2022 Gross Carrying Amount Accumulated Amortization Finite-lived intangible assets Customer relationships $ 652,811 $ 422,277 Proprietary technology 86,054 50,952 Trade names 2,553 701 Land-use rights 8,986 1,683 Sealed source and supply agreements 204,391 93,034 Other 4,469 1,979 Total finite-lived intangible assets 959,264 570,626 Indefinite-lived intangible assets Regulatory licenses and other (a) 76,978 — Trade names / trademarks 25,649 — Total indefinite-lived intangible assets 102,627 — Total $ 1,061,891 $ 570,626 (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 year license period as Nordion has demonstrated over its 75 years of history. Amounts include the impact of foreign currency translation. Fully amortized amounts are written off. Amortization expense for other intangible assets was $20.2 million ($4.4 million is included in “Cost of revenues”) and $61.3 million ($13.2 million is included in “Cost of revenues”) in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2023, respectively. Amortization expense for other intangible assets was $20.2 million ($4.5 million is included in “Cost of revenues”) and $61.6 million ($14.3 million is included in “Cost of revenues”) in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2022, respectively. 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) For the remainder of 2023 $ 19,988 2024 79,336 2025 42,208 2026 22,130 2027 21,053 Thereafter 141,935 Total $ 326,650 The weighted-average remaining useful life of the finite-lived intangible assets was approximately nine years as of September 30, 2023. |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued Liabilities Accrued liabilities consisted of the following: (thousands of U.S. dollars) September 30, 2023 December 31, 2022 Accrued employee compensation $ 29,361 $ 32,936 Georgia EO litigation settlement reserve 35,000 — Illinois EO litigation settlement reserve 288 408,000 Legal reserves 2,939 3,776 Accrued interest expense 2,478 23,291 Embedded derivatives 4,176 3,508 Professional fees 18,159 6,436 Accrued utilities 1,946 1,906 Insurance accrual 2,508 2,392 Accrued taxes 3,507 2,567 Other 6,009 5,318 Accrued liabilities $ 106,371 $ 490,130 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following: (thousands of U.S. dollars) As of September 30, 2023 Gross Amount Unamortized Debt Issuance Costs Unamortized Debt Discount Net Amount Term loan, due 2026 $ 1,763,100 $ (1,760) $ (11,155) $ 1,750,185 Term loan B, due 2026 498,750 (8,003) (13,357) 477,390 Other long-term debt 450 (1) — 449 2,262,300 (9,764) (24,512) 2,228,024 Less current portion 5,450 (80) (135) 5,235 Long-term debt $ 2,256,850 $ (9,684) $ (24,377) $ 2,222,789 (thousands of U.S. dollars) As of December 31, 2022 Gross Amount Unamortized Debt Issuance Costs Unamortized Debt Discount Net Amount Term loan, due 2026 $ 1,763,100 $ (2,140) $ (13,845) $ 1,747,115 Revolving credit facility 200,000 (3,328) — 196,672 Other long-term debt 450 (3) — 447 1,963,550 (5,471) (13,845) 1,944,234 Less current portion 200,450 (3,331) — 197,119 Long-term debt $ 1,763,100 $ (2,140) $ (13,845) $ 1,747,115 Debt Facilities Senior Secured Credit Facilities On December 13, 2019, Sotera Health Holdings, LLC (“SHH”), our 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 Revolving Credit Facility and Term Loan mature on June 13, 2026 and December 13, 2026, respectively. After giving effect to the Revolving Credit Facility Amendment (defined below), the total borrowing capacity under the Revolving Credit Facility 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 September 30, 2023 and December 31, 2022, total borrowings under the Term Loan were $1,763.1 million. The weighted average interest rate on borrowings under the Term Loan for the three months ended September 30, 2023 and September 30, 2022 was 8.14% and 4.96%, respectively, and 7.82% and 3.92% for the nine months ended September 30, 2023 and September 30, 2022, respectively. 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) 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 a first priority basis on substantially all of our assets and is guaranteed by certain of our subsidiaries. It is prepayable without premium or penalty at any time six months after the closing date. The principal balance shall be paid at 1% of the aggregate principal amount ($5.0 million) per year, with the balance due at the end of 2026. The Company used the proceeds of the 2023 Term Loan to fund a previously announced $408.0 million EO litigation settlement in Cook County, Illinois and pay down the $200.0 million of existing borrowings under the Revolving Credit Facility concurrent with the funding of the 2023 Term Loan on February 23, 2023. In addition, the Company plans to use 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 and nine months ended September 30, 2023 was 8.84% and 8.83%, respectively. On March 21, 2023, the Company entered into an Incremental Facility Amendment to the 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 0.00%). After giving effect to the Revolving Credit Facility Amendment, the aggregate amount of the lenders’ revolving commitments is $423.8 million. The maturity date of the Revolving Credit Facility remains June 13, 2026. The Company borrowed $200.0 million under the Revolving Credit Facility during the fourth quarter of 2022, which was repaid in the first quarter of 2023, as noted above. As of September 30, 2023, 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, which judgment or judgments are not stayed or remain undischarged for a period of 60 consecutive days or if, in order to enforce such a judgment, a judgment creditor attached or levied upon assets that are material to the business and operations, taken as a whole, of the Company and certain of its subsidiaries. As of September 30, 2023, 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 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 September 30, 2023, the Company had $24.0 million of letters of credit issued against the Revolving Credit Facility, resulting in total availability under the Revolving Credit Facility of $399.8 million. Term Loan Interest Rate Risk Management The Company 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 LIBOR (up to June 22, 2023) and Term SOFR. For additional information on the derivative instruments described above, refer to Note 16, “Financial Instruments and Financial Risk”, “Derivative Instruments.” LIBOR Transition Publication of all U.S. LIBOR tenors ceased after June 30, 2023. To align with the market phaseout of LIBOR, SHH entered into an amendment to the Senior Secured Credit Facilities to replace the LIBOR-based reference interest rate option under the Term Loan with a reference interest rate option based on Term SOFR plus an applicable credit spread adjustment of 0.11448% (for one-month interest periods), 0.26161% (for three-month interest periods) and 0.42826% (for six-month interest periods) (in all cases, subject to a minimum floor of 0.50%). In accordance with ASC 848 Reference Rate Reform , we have elected to apply certain optional expedients for contract modifications and hedging relationships for derivative instruments impacted by the benchmark interest rate transition. The optional expedients remove the requirement to remeasure contract modifications or dedesignate hedging relationships impacted by reference rate reform. Aggregate Maturities Aggregate maturities of the Company’s long-term debt, excluding debt discounts, as of September 30, 2023, are as follows: (thousands of U.S. dollars) 2023 $ 1,700 2024 5,000 2025 5,000 2026 2,250,600 2027 — Thereafter — Total $ 2,262,300 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 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. Income tax expense for the three months ended September 30, 2023 differed from the statutory rate primarily due to a net increase in the valuation allowance attributable to the limitation on the deductibility of interest expense, the impact of the foreign rate differential, and global intangible low-tax income (“GILTI”), partially offset by a benefit for state income taxes. The increase in the valuation allowance was a direct result of the $35.0 million Georgia EO litigation settlement, as described in Note 15, “Commitments and Contingencies” . Income tax expense for the three months ended September 30, 2022 differed from the statutory rate primarily due to a net increase in the valuation allowance, the impact of the foreign rate differential, and GILTI. The increase in the valuation allowance for the three months ended September 30, 2022 was attributable to the limitation on the deductibility of interest expense and the impairment of an investment in a joint venture. Income tax expense for the nine months ended September 30, 2023 differed from the statutory rate primarily due to a net increase in the valuation allowance attributable to the limitation on the deductibility of interest expense, the impact of the foreign rate differential, and GILTI, partially offset by a benefit for state income taxes. Income tax expense for the nine months ended September 30, 2022 differed from the statutory rate primarily due to a net increase in the valuation allowance, the impact of the foreign rate differential, and GILTI. |
Employee Benefits
Employee Benefits | 9 Months Ended |
Sep. 30, 2023 | |
Postemployment Benefits [Abstract] | |
Employee Benefits | Employee BenefitsThe 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 plans 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, expected return on plan assets and amortization of net actuarial gain are recorded in “Other 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 benefit for the defined benefit plans for the three and nine months ended September 30, 2023 and 2022 were as follows: Three Months Ended September 30, Nine Months Ended September 30, (thousands of U.S. dollars) 2023 2022 2023 2022 Service cost $ 132 $ 242 $ 395 $ 738 Interest cost 2,745 1,848 8,211 5,640 Expected return on plan assets (4,050) (3,595) (12,115) (10,975) Net periodic benefit $ (1,173) $ (1,505) $ (3,509) $ (4,597) 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 and nine months ended September 30, 2023 and 2022 were as follows: Three Months Ended September 30, Nine Months Ended September 30, (thousands of U.S. dollars) 2023 2022 2023 2022 Service cost $ 2 $ 4 $ 6 $ 12 Interest cost 91 63 271 193 Amortization of net actuarial gain (44) (2) (132) (6) Net periodic cost $ 49 $ 65 $ 145 $ 199 We currently expect funding requirements of approximately $0.3 million in each of the next five years to fund the regulatory solvency deficit, as defined by Canadian federal regulation, which requires solvency testing on defined benefit pension plans. |
Other Comprehensive Income (Los
Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Other Comprehensive Income (Loss) | 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) Defined Benefit Plans Foreign Currency Translation Interest Rate Derivatives Total Beginning balance – July 1, 2023 $ 3,176 $ (98,574) $ 16,094 $ (79,304) Other comprehensive income (loss) before reclassifications (82) (32,996) 2,976 (30,102) Amounts reclassified from accumulated other comprehensive income (loss) (44) (a) — (4,690) (b) (4,734) Net current-period other comprehensive loss (126) (32,996) (1,714) (34,836) Ending balance – September 30, 2023 $ 3,050 $ (131,570) $ 14,380 $ (114,140) Beginning balance – January 1, 2023 $ 3,209 $ (131,205) $ 21,343 $ (106,653) Other comprehensive income (loss) before reclassifications (27) (365) 11,531 11,139 Amounts reclassified from accumulated other comprehensive income (loss) (132) (a) — (18,494) (b) (18,626) Net current-period other comprehensive loss (159) (365) (6,963) (7,487) Ending balance – September 30, 2023 $ 3,050 $ (131,570) $ 14,380 $ (114,140) (thousands of U.S. dollars) Defined Benefit Plans Foreign Currency Translation Interest Rate Derivatives Total Beginning balance – July 1, 2022 $ (17,323) $ (97,452) $ 9,761 $ (105,014) Other comprehensive income (loss) before reclassifications 1,067 (69,460) 9,408 (58,985) Amounts reclassified from accumulated other comprehensive income (loss) (2) (a) — — (2) Net current-period other comprehensive income (loss) 1,065 (69,460) 9,408 (58,987) Ending balance – September 30, 2022 $ (16,258) $ (166,912) $ 19,169 $ (164,001) Beginning balance – January 1, 2022 $ (17,581) $ (66,389) $ 404 $ (83,566) Other comprehensive income (loss) before reclassifications 1,329 (100,523) 18,765 (80,429) Amounts reclassified from accumulated other comprehensive income (loss) (6) (a) — — (6) Net current-period other comprehensive income (loss) 1,323 (100,523) 18,765 (80,435) Ending balance – September 30, 2022 $ (16,258) $ (166,912) $ 19,169 $ (164,001) (a) For defined benefit pension plans, amounts reclassified from accumulated other comprehensive income (loss) are recorded to “Other expense (income), net” within the Consolidated Statements of Operations and Comprehensive Income (Loss). (b) For interest rate 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). |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Compensation | 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 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 unvested shares of our common stock distributed in respect of Class B-1 Units will become vested 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 of certain thresholds. These units generally vest as of 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 20%, subject to such grantee’s continued services through such date. In the event of a change in control of the Company, any outstanding shares of our common stock distributed in respect of Class B-2 Units that remain unvested immediately following the consummation of such a change in control of the Company shall be immediately canceled and forfeited without compensation. 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 September 30, 2023, these awards remain unvested. We recognized $0.5 million of share-based compensation expense related to the pre-IPO Class B-1 awards for each of the three months ended September 30, 2023 and 2022, and $1.5 million and $1.6 million for the nine months ended September 30, 2023 and 2022, respectively. A summary of the activity for the nine months ended September 30, 2023 related to the restricted stock awards distributed 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, 2022 716,091 1,098,415 Forfeited (5,378) (80,051) Vested (260,208) — Unvested at September 30, 2023 450,505 1,018,364 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 $7.9 million ($3.8 million for stock options and $4.1 million for RSUs) and $4.1 million ($1.5 million for stock options and $2.6 million for RSUs) of share-based compensation expense for these awards for the three months ended September 30, 2023 and 2022, respectively. We recognized $22.7 million ($10.7 million for stock options and $12.0 million for RSUs) and $13.3 million ($5.2 million for stock options and $8.1 million for RSUs) for the nine months ended September 30, 2023 and 2022, respectively, in our Consolidated Statements of Operations and Comprehensive Income (Loss), in “Selling, general and administrative expenses.” Stock Options Stock options generally vest ratably over a period of two Number of Shares Weighted Average Exercise Price At December 31, 2022 5,990,470 $ 14.84 Granted 1,098,136 17.53 Forfeited (79,244) 20.94 At September 30, 2023 7,009,362 $ 15.20 As of September 30, 2023, there were 1.4 million stock options vested and exercisable. RSUs RSUs generally vest ratably over a period of one Number of Shares Weighted Average Grant Date Fair Value Unvested at December 31, 2022 2,482,435 $ 13.09 Granted 917,972 16.97 Forfeited (131,650) 12.35 Vested (401,892) 21.17 Unvested at September 30, 2023 2,866,865 $ 13.24 |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings per share represents the amount of income attributable to each common share outstanding. Diluted earnings per share represents the amount of income 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. 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 September 30, Nine Months Ended September 30, in thousands of U.S. dollars and share amounts (except per share amounts) 2023 2022 2023 2022 Earnings: Net income (loss) $ (13,660) $ 25,090 $ 12,695 $ 86,149 Less: Allocation to participating securities — 223 74 862 Net income (loss) attributable to Sotera Health Company common shareholders $ (13,660) $ 24,867 $ 12,621 $ 85,287 Weighted Average Common Shares: Weighted-average common shares outstanding - basic 281,105 280,142 280,898 279,988 Dilutive effect of potential common shares (a) — 30 2,292 105 Weighted-average common shares outstanding - diluted 281,105 280,172 283,190 280,093 Earnings per Common Share: Net income (loss) per common share attributable to Sotera Health Company common shareholders - basic $ (0.05) $ 0.09 $ 0.04 $ 0.31 Net income (loss) per common share attributable to Sotera Health Company common shareholders - diluted (0.05) 0.09 0.04 0.31 (a) As the Company reported a net loss for the three months ended September 30, 2023, the calculation of diluted weighted average common shares outstanding is not applicable because the effect of including the potential common shares would be anti-dilutive. Diluted earnings per share does not consider the following potential common shares as the effect would be anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, in thousands of share amounts 2023 2022 2023 2022 Stock options 7,001 3,526 4,049 3,399 RSUs 3,315 1,121 303 34 Total anti-dilutive securities 10,316 4,647 4,352 3,433 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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 establish reserves for specific liabilities in connection with regulatory and legal actions that we determine to be both probable and reasonably estimable. If a potentially material 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 an estimate of the range of possible loss if the range is determinable and material. In certain of the matters described below, we are not able to estimate potential liability because of the uncertainties related to the outcome(s) and/or the amount(s) or range(s) of loss. While it is not possible to determine the ultimate disposition of each of these matters, the ultimate resolution of pending regulatory and legal matters in future periods, including the matters described below, may have a material adverse effect on our financial condition, results of 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. Ethylene Oxide Tort Litigation Sterigenics U.S., LLC (“Sterigenics”) and other medical supply sterilization companies have been subjected to tort lawsuits alleging various injuries caused by low-level environmental exposure to EO emissions from sterilization facilities. Those lawsuits, as detailed further below, are individual claims, as opposed to class actions. Illinois More than 854 plaintiffs filed lawsuits, and approximately 28 individuals threatened to file lawsuits, alleging personal injuries or wrongful death resulting from purported emissions and releases of EO from Sterigenics’ former Willowbrook facility. The lawsuits were consolidated for pre-trial purposes by the Circuit Court of Cook County, Illinois (the “Consolidated Case”). The first jury trial began in August 2022 and, on September 19, 2022, the jury rendered a verdict in favor of the plaintiff and awarded damages in the amount of $358.7 million, including $36.1 million of compensatory damages, $320.0 million of punitive damages and $2.6 million of prejudgment interest against Sterigenics and Sotera Health LLC (the “Defendant Subsidiaries”). The Defendant Subsidiaries filed a Motion for Post Trial Relief, which was denied on December 19, 2022. On January 9, 2023, the Defendant Subsidiaries filed a Notice of Appeal to the First District Appellate Court in Illinois. The second jury trial began in October 2022 and, on November 18, 2022, the jury returned a defense verdict on all counts. On January 4, 2023, the plaintiff in the second trial filed a motion for post-trial relief seeking an order reversing and/or vacating the verdict, granting a new trial, and/or entering judgment in the plaintiff’s favor notwithstanding the verdict. On January 9, 2023, the Defendant Subsidiaries entered into binding term sheets (the “Willowbrook Term Sheets”) with the “Plaintiffs’ Executive Committee” (the “PEC”) appointed to act on behalf of the more than 20 law firms (“Plaintiffs’ Counsel”) representing the plaintiffs in the Consolidated Case and other clients with personal injury claims that had not yet been filed (each an “Eligible Claimant” and collectively, the “Eligible Claimants”). Based on our assessment that it was probable that the conditions to the Willowbrook Term Sheets would be satisfied or waived, we recorded a charge of $408.0 million for the year ended December 31, 2022. The Willowbrook Term Sheets provided an agreed path to final settlement of the Eligible Claimants’ claims, subject to the satisfaction or waiver of certain conditions, including the negotiation and execution of full settlement agreements in accordance with the Willowbrook Term Sheets. On March 28, 2023, the Defendant Subsidiaries and the PEC entered into full settlement agreements (the “Willowbrook Settlement Agreements”) to resolve the claims that were or could have been alleged by 882 Eligible Claimants related to or arising from alleged emissions of EO from Sterigenics’ operations in or around Willowbrook and related claims that were or could have been alleged by Eligible Claimants seeking to challenge any transfer of assets to or from the Company, its subsidiaries and certain affiliates to any other entity or person (the “Willowbrook Covered Claims”). The Company and Defendant Subsidiaries deny any liability for the Willowbrook Covered Claims and, per their express terms, the Willowbrook Settlement Agreements are not to be construed as an admission of liability or that the Company or Defendant Subsidiaries engaged in any wrongful, tortious, or unlawful activity or that use and/or emissions of EO from Sterigenics’ operations posed any safety hazard to the surrounding communities. The Willowbrook Settlement Agreements provided that final settlement was conditioned, among other things, on successful completion of a claims administration process and satisfaction (or waiver by the Defendant Subsidiaries) of specific participation requirements, the dismissal with prejudice of the Willowbrook Covered Claims of all Eligible Claimants participating in the settlement, and court approval of the settlement as a good faith settlement under the Illinois Joint Contribution Among Tortfeasors Act. On May 1, 2023, Sterigenics contributed $408.0 million to settlement escrow funds (the “Settlement Funds”) to be used, if the conditions of the Willowbrook Settlement Agreements were satisfied or waived, to pay all settlement fees and expenses and cash payments to the Eligible Claimants participating in the settlement. The claims administration process concluded with 879 of 882 Eligible Claimants providing opt-in consents to participate in the settlement (the “Settling Claimants”). Pursuant to the Willowbrook Settlement Agreements, the three Eligible Claimants who did not opt in (each a “Non-Settling Willowbrook Claimant,” and collectively the “Non-Settling Willowbrook Claimants”) created an option for the Defendant Subsidiaries to exercise walkaway rights. On June 22, 2023, after evaluating the available information about the claims of the Non-Settling Willowbrook Claimants, the Defendant Subsidiaries waived their walkaway rights and chose to proceed to final settlement with the Settling Claimants (the “Willowbrook Settlement”). On June 23, 2023, the Circuit Court of Cook County entered an order confirming that the Willowbrook Settlement was a good-faith settlement under the Illinois Contribution Among Joint Tortfeasors Act. On June 30, 2023, the Settlement Funds were released from escrow to the PEC’s Qualified Settlement Funds. The amounts allocated by the PEC to the Non-Settling Willowbrook Claimants represent an immaterial fraction of the Settlement Funds and will remain in escrow until December 31, 2023, at which point, absent an opt-in election by a Non-Settling Willowbrook Claimant, the funds allocated to that Non-Settling Willowbrook Claimant will revert to Sterigenics. On July 6, 2023, the claims of the Settling Claimants against the Defendant Subsidiaries were dismissed with prejudice, with the Circuit Court of Cook County retaining jurisdiction to adjudicate disputes over liens on the settlement proceeds to be paid to the Settling Claimants and to oversee the administration of the settlements of the wrongful death cases. The three Non-Settling Willowbrook Claimants’ cases will proceed in the Circuit Court of Cook County, Illinois. Between June 2023 and September 2023, eight new personal injury lawsuits relating to the Willowbrook facility were filed in the Circuit Court of Cook County against Sterigenics, Sotera Health Services, LLC and other parties (the “Post-Settlement Willowbrook Cases”). One Post-Settlement Willowbrook Case has been removed to the United States District Court for the Northern District of Illinois, and a motion to remand is pending. The remaining Post-Settlement Willowbrook Cases will proceed in the Circuit Court of Cook County. Georgia Subsidiaries of the Company and other parties are defendants in lawsuits in the State Court of Cobb County, Georgia and the State Court of Gwinnett County, Georgia in which plaintiffs allege personal injuries and property devaluation resulting from emissions or releases of EO from or at Sterigenics’ Atlanta facility and seek damages and other forms of relief. One personal injury lawsuit pending in Gwinnett County (the “Buczek case”) was scheduled to begin trial in late October 2023. Approximately 300 personal injury claims pending in Cobb County have been consolidated for pretrial purposes (the “Consolidated Personal Injury Cases”) and are proceeding under a case management order pursuant to which a “pool” of these cases will proceed to 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 expected to begin in September or October 2025. The remaining Consolidated Personal Injury Cases are stayed. One personal injury lawsuit pending in Cobb County has not been consolidated and is proceeding independently. Nine lawsuits pending in Cobb County include both personal injury and property claims (the “Dual Injury Cases”). By agreement of the parties, the Dual Injury Cases will be included in the Consolidated Personal Injury Cases and stayed. Our subsidiaries are also defendants in approximately 365 property devaluation lawsuits. One property lawsuit was filed in the State Court of Gwinnett County. The remaining property lawsuits were filed in the State Court of Cobb County, have been consolidated for pretrial purposes (the “Consolidated Property Cases”) and are proceeding under a case management order pursuant to which ten cases will proceed with dispositive motions and discovery while the remaining cases are stayed. On October 16, 2023, Sterigenics and Sotera Health LLC entered into a binding term sheet (the “October 2023 Term Sheet”) outlining an agreement in principle to resolve the Buczek case and the 78 other Georgia EO claims being pursued by Plaintiff’s counsel in the Buczek case (the “Gwinnett and Cobb Counties Settlement”), including the property devaluation case pending in the State Court of Gwinnett County and 77 personal injury claims pending in the State Court of Cobb Country (each individually a “Covered Claim” and collectively the “Covered Claims”). Pursuant to the October 2023 Term Sheet, Sterigenics will pay $35.0 million and the Covered Claims will be dismissed with prejudice. The settlement process is expected to be finalized by the end of the year. The Gwinnett and Cobb Counties Settlement is subject to 100% of the plaintiffs with Covered Claims consenting to their respective settlement payment allocations, which will be determined by the plaintiffs’ lawyers. Sterigenics has the right to waive the 100% participation requirement, in which case the Gwinnett and Cobb Counties Settlement will be binding on only those plaintiffs who opt into the settlement. On October 17, 2023, the State Court of Gwinnett County stayed the Buczek trial. The final settlement of the Covered Claims in the Gwinnett and Cobb Counties Settlement may not occur or may not occur for all Covered Claims if the conditions of the settlement are not met, including, but not limited to, a failure to satisfy the 100% participation requirement. The October 2023 Term Sheet expressly provides that Sterigenics and Sotera Health LLC deny all liability and that nothing in the October 2023 Term Sheet constitutes an admission of any alleged fact, liability, or fault or that the use and/or emission of EO by and/or from the Atlanta Facility or any other Sterigenics facility have ever caused or created health risks or other hazards to any person or surrounding communities. The Company intends to vigorously defend the remaining EO cases, including the balance of the cases in Georgia, which are all pending in the State Court of Cobb County. 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 against the Company and certain subsidiaries alleging that emissions and releases of EO from Sterigenics’ facility in Santa Teresa, New Mexico 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 asserted claims for public nuisance, negligence, strict liability, violations of New Mexico’s Public Nuisance Statute and Unfair Practices Act and sought various forms of relief, including injunctive relief and damages. On June 29, 2021, the Court entered an Order Granting Preliminary Injunction prohibiting Sterigenics from allowing any uncontrolled emissions or releases of EO from the Santa Teresa facility. On December 20, 2021, the Court entered an order establishing a protocol to monitor Sterigenics’ compliance with the preliminary injunction. Operations at the facility continue to comply with the June 2021 and December 2021 orders. On September 13, 2022, the Court entered a Scheduling Order that set a trial date of June 3, 2024. On August 10, 2023, the Court granted Sterigenics’ motion for summary judgment on strict liability, the Unfair Practices Act claim, and claims for decreased property values, increased healthcare costs and medical monitoring costs, and instructed the State to amend its Complaint in compliance with the order and to exclude any claim for injunctive relief (the “Summary Judgment Order”). On August 25, 2023, the State filed a Motion for Reconsideration of the Summary Judgment Order, which remains pending. On September 12, 2023, the State filed its Amended Complaint; the Company’s response will be due after the Court rules on the motion for reconsideration. A defense motion challenging the Court’s jurisdiction over Sotera Health Company and another defendant also remain pending. On April 24, 2023, a lawsuit was filed against the Company, Sterigenics and certain other subsidiaries alleging wrongful death caused by exposure to emissions and releases of EO from Sterigenics’ facility in Santa Teresa, New Mexico while the decedent was working at a different company’s facility approximately one mile away. Motions to dismiss filed in June and August 2023 remain pending. * * * Additional EO tort lawsuits may be filed in the future against the Company and/or its subsidiaries relating to Sterigenics’ Willowbrook, Atlanta, Santa Teresa or other EO facilities. Based on our view of the strength of 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 of the remaining EO cases, future settlements of EO cases are reasonably possible. The Willowbrook Settlement and the Gwinnett and Cobb Counties Settlement 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 cases and/or that any such settlements will be for comparable amounts. Potential trial and settlement outcomes can vary widely based a host of factors. Future cases 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 the various jurisdictions in which the EO tort cases are pending 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 and the plaintiff’s medical history and course of treatment. The outcomes of trials before juries are rarely certain and a judgment entered or settlement reached in one case is not representative of the outcome 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 settlements. Insurance Coverage for Environmental Liabilities Our undisputed insurance coverage for litigation related to past alleged environmental liabilities, like the litigation pending in Illinois, Georgia and New Mexico described above, has limits of $10.0 million per occurrence and $20.0 million in the aggregate. The per occurrence limit related to the Willowbrook, Illinois litigation was fully utilized by June 30, 2020. The remaining $10.0 million was fully utilized by March 31, 2023 for occurrences related to the EO litigation in Georgia and New Mexico described above. Our insurance for future alleged environmental liabilities excludes coverage for EO claims. We are pursuing additional insurance coverage for our legal expenses related to litigation 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 Illinois relating to two commercial general liability policies issued in the 1980s (the “No. Dist. of IL Coverage Lawsuit”). The court has issued an order declaring that the defendant insurer owes Sterigenics and another insured party a duty to defend the EO tort litigation relating to the Willowbrook facility (the “Duty to Defend Order”) and owes Sterigenics approximately $75.5 million in defense costs through September 30, 2022 (the “Past Defense Costs Judgment”). Motions for awards of pre-judgment and post-judgment interest on the Past Defense Costs Judgment and additional defense costs through July 31, 2023 are pending. The defendant insurer is appealing the Duty to Defend Order and Past Defense Costs Judgment. Sterigenics is also a party in insurance coverage lawsuits pending in the Delaware Superior Court and the Circuit Court of Cook County seeking insurance coverage from various historical commercial general liability policies for certain EO litigation settlement amounts and defense costs that the insurer in the No. Dist. of IL Coverage Lawsuit may fail to fund. It is unknown how much, if any, of the insurance proceeds sought will be recovered. Sotera Health Company Securities Litigation & Related Matters On January 24, 2023, a putative stockholder class action was filed in the U.S. District Court for the Northern District of Ohio against the Company, its directors, certain 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”). On April 17, 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 Michigan Funds allege that statements made regarding the safety of the Company’s use of EO and/or the litigation and other risks of its EO operations violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 (when made in the 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). On June 1, 2023, the Michigan Funds filed an Amended Complaint. Defendants have moved to dismiss the Amended Complaint and that motion remains pending. On May 15, 2023, and July 25, 2023, 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 (the “220 Demands”). The Company believes that the allegations and claims in the Michigan Funds Litigation and 220 Demands are without merit and plans to vigorously defend the Michigan Funds Litigation. |
Financial Instruments and Finan
Financial Instruments and Financial Risk | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Financial Instruments and Financial Risk | 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 From time to time, the 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 “Accumulated other comprehensive income (loss)” on our Consolidated Balance Sheets. In March 2023, we entered into an interest rate swap agreement with a notional amount of $400.0 million. The interest rate swap has a forward start date of August 23, 2023 and expires on August 23, 2025. We have designated the interest rate 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. 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. 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 cap agreements 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 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, by limiting our cash flow exposure related to the LIBOR base rate under a portion of our variable rate borrowings to 1.0%. Derivatives Not Designated in Hedge Relationships The Company previously entered into interest rate derivatives to manage economic risks associated with our variable rate borrowings that were not designated in hedge relationships. These instruments were recorded at fair value on the Consolidated Balance Sheets, with any changes in fair value recorded in “Interest expense, net” in the Consolidated Statements of Operations and Comprehensive Income (Loss). The Company also routinely enters into foreign currency forward contracts to manage foreign currency exchange rate risk of our intercompany loans in certain of our international subsidiaries and non-functional currency assets and liabilities. The foreign currency forward contracts expire on a monthly basis. 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 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: September 30, 2023 December 31, 2022 (in U.S. Dollars; notional in millions, fair value in thousands) Fair Value Fair Value Notional Derivative Derivative Notional Derivative Derivative Derivatives designated as hedging instruments: Interest rate caps 1,000.0 $ 15,327 $ — $ 2,000.0 $ 34,764 $ — Interest rate swaps 400.0 6,808 — — — — Derivatives not designated as hedging instruments Foreign currency forward contracts $ 172.1 $ — $ 1,221 $ 151.5 $ — $ 272 Embedded derivatives 157.5 (a) 2,287 4,176 179.9 (a) 2,721 3,508 Total $ 1,729.6 $ 24,422 $ 5,397 $ 2,331.4 $ 37,485 $ 3,780 (a) Represents the total notional amounts for certain of the Company’s supply and sales contracts accounted for as embedded derivatives. Embedded derivatives and foreign currency forward contracts are included in “Prepaid expenses and other current assets” and “Accrued liabilities” on our Consolidated Balance Sheets depending upon their position at period end. Interest rate swaps and interest rate caps are included in “Other assets,” and “Noncurrent liabilities” on the Consolidated Balance Sheets depending upon their position at period end. The following tables summarize the activities of our derivative instruments for the periods presented, and the line item they are recorded in the Consolidated Statements of Operations and Comprehensive Income (Loss): Three Months Ended September 30, Nine Months Ended September 30, (thousands of U.S. dollars) 2023 2022 2023 2022 Unrealized loss (gain) on interest rate derivatives recorded in interest expense, net $ — $ 3,348 $ — $ (6,098) Realized gain on interest rate derivatives recorded in interest expense, net (a) (7,277) (4,473) (27,288) (5,752) Unrealized loss on embedded derivatives recorded in other expense (income), net 1,833 359 1,087 1,776 Realized loss (gain) on foreign currency forward contracts recorded in foreign exchange (gain) loss 1,946 4,157 3 3,662 Unrealized loss (gain) on foreign currency forward contracts recorded in foreign exchange (gain) loss 1,230 — 949 — (a) For the three and nine months ended September 30, 2023, amounts represent periodic settlement of interest rate caps and swaps. We expect to reclassify approximately $16.8 million of 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 12,“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 and nine months ended September 30, 2023 . 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 September 30, 2023 and December 31, 2022, accounts receivable was net of an allowance for uncollectible accounts of $2.1 million and $1.9 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 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. The following table discloses the fair value of our financial assets and liabilities: As of September 30, 2023 Fair Value (thousands of U.S. dollars) Carrying Level 1 Level 2 Level 3 Derivatives designated as hedging instruments (a) Interest rate caps $ 15,327 — $ 15,327 — Interest rate swaps 6,808 — 6,808 — Derivatives not designated as hedging instruments (b) Foreign currency forward contract liabilities 1,221 — 1,221 — Embedded derivative assets 2,287 — 2,287 — Embedded derivative liabilities 4,176 — 4,176 — Current portion of long-term debt Term loan B, due 2026 4,786 — 4,988 — Other long-term debt (c) 449 — 449 — Long-Term Debt (d) Term loan, due 2026 1,750,185 — 1,749,877 — Term loan B, due 2026 472,604 — 493,763 — Finance Lease Obligations (with current portion) (e) 71,617 — 71,617 — As of December 31, 2022 Fair Value (thousands of U.S. dollars) Carrying Level 1 Level 2 Level 3 Derivatives designated as hedging instruments (a) Interest rate caps $ 34,764 $ — $ 34,764 $ — Derivatives not designated as hedging instruments (b) Foreign currency forward contracts 272 — 272 — Embedded derivative assets 2,721 — 2,721 — Embedded derivative liabilities 3,508 — 3,508 — Current portion of long-term debt (c) Revolving credit facility 196,672 — 196,672 — Other long-term debt 447 — 447 — Long-Term Debt (d) Term loan, due 2026 1,747,115 — 1,626,460 — Finance Lease Obligations (with current portion) (e) 58,677 — 58,677 — (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). 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 forward foreign currency exchange rate over the life of the contract. (c) Carrying value of other long-term debt and revolving credit facility approximates fair value. (d) Carrying amounts of long-term debt instruments are reported net of discounts and debt issuance costs. The estimated fair value of these instruments is based on quoted prices for the term loans due in 2026 in inactive markets as provided by an independent fixed income security pricing service. (e) Fair value approximates carrying value. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Segment Information | 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 three 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 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 2022 10-K. Sterigenics Sterigenics 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 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 irradiation systems. Nelson Labs Nelson Labs provides outsourced microbiological and analytical chemistry testing and advisory services for the medical device and pharmaceutical industries. Segment Revenue Concentrations For the three months ended September 30, 2023, four customers reported within the Nordion segment individually represented 10% or more of the segment’s total net revenues. These customers represented 15.4%, 13.5%, 13.5%, and 11.3% of the total segment’s external net revenues for the three months ended September 30, 2023. For the three months ended September 30, 2022, three customers reported within the Nordion segment individually represented 10% or more of the segment’s total net revenues. These customers represented 21.0%, 14.7%, and 10.1% of the total segment’s external net revenues for the three months ended September 30, 2022. For the nine months ended September 30, 2023, four customers reported within the Nordion segment individually represented 10% or more of the segment’s total net revenues. These customers represented 19.9%, 14.4%, 12.7% , and 12.1% of the total segment’s external net revenues for the nine months ended September 30, 2023. For the nine months ended September 30, 2022, four customers reported within the Nordion segment individually represented 10% or more of the segment’s total net revenues. These customers represented 17.1%, 16.2%, 11.8%, and 11.7% of the total segment's external net revenues for the nine months ended September 30, 2022. Financial information for each of our segments is presented in the following table: Three Months Ended September 30, Nine Months Ended September 30, (thousands of U.S. dollars) 2023 2022 2023 2022 Segment revenues (a) Sterigenics $ 168,347 $ 157,723 $ 494,934 $ 464,977 Nordion 40,098 35,071 80,624 119,551 Nelson Labs 54,732 55,910 163,491 167,569 Total net revenues $ 263,177 $ 248,704 $ 739,049 $ 752,097 Segment income (b) Sterigenics $ 93,169 $ 85,587 $ 267,459 $ 250,088 Nordion 24,052 20,294 43,362 69,179 Nelson Labs 17,107 19,271 50,460 57,369 Total segment income $ 134,328 $ 125,152 $ 361,281 $ 376,636 (a) Revenues are reported net of intersegment sales. Our Nordion segment recognized $11.2 million and $7.4 million in revenues from sales to our Sterigenics segment for the three months ended September 30, 2023 and 2022, respectively, and $28.8 million and $38.7 million in revenues from sales to our Sterigenics segment for the nine months ended September 30, 2023 and 2022, respectively, that is not reflected in net revenues in the table above. Intersegment sales for Sterigenics and Nelson Labs are immaterial for these periods. (b) Segment income is only provided on a net basis to t he chief operating decision m aker and is reported net of intersegment profits. 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 nine months ended September 30, 2023 and 2022 were as follows: Nine Months Ended September 30, (thousands of U.S. dollars) 2023 2022 Sterigenics $ 115,438 $ 90,444 Nordion 23,875 12,045 Nelson Labs 10,836 8,153 Total capital expenditures $ 150,149 $ 110,642 Total assets and depreciation and amortization expense by segment are not readily available and are not reported separately to the chief operating decision maker. A reconciliation of segment income to consolidated income before taxes is as follows: (thousands of U.S. dollars) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Segment income $ 134,328 $ 125,152 $ 361,281 $ 376,636 Less adjustments: Interest expense, net (a) 30,464 20,080 82,275 53,974 Depreciation and amortization (b) 38,175 36,104 117,203 109,092 Share-based compensation (c) 8,378 4,616 24,135 14,955 Gain on foreign currency and derivatives not designated as hedging instruments, net (d) 1,333 3,194 1,459 (4,788) Acquisition and divestiture related charges, net (e) 72 447 817 978 Business optimization project expenses (f) 1,237 1,035 7,093 1,609 Plant closure expenses (g) 126 2,627 (640) 3,776 Impairment of investment in unconsolidated affiliate (h) — — — 9,613 Professional services and other expenses relating to EO sterilization facilities (i) 18,518 14,501 51,900 50,238 Georgia EO litigation settlement (j) 35,000 — 35,000 — Accretion of asset retirement obligation (k) 555 526 1,682 1,644 COVID-19 expenses (l) — 6 — 154 Consolidated income before taxes $ 470 $ 42,016 $ 40,357 $ 135,391 (a) The three and nine months ended September 30, 2023 exclude $10.2 million and $18.0 million, respectively, of 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. The three and nine months ended September 30, 2022 exclude $3.3 million of unrealized loss and $6.1 million of unrealized gain, respectively, on interest rate derivatives not designated as hedging instruments. (b) Includes depreciation of Co-60 held at gamma irradiation sites. (c) Represents share-based compensation expense to employees and non-employee directors. (d) Represents the effects of (i) fluctuations in foreign currency exchange rates, (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at Nordion, and (iii) unrealized gains and losses on interest rate caps not designated as hedging instruments. (e) Represents (i) certain direct and incremental costs related to the acquisitions of RCA and BioScience Labs and certain related integration efforts as a result of those 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. (f) Represents professional fees, exit costs, severance and other payroll costs, and other costs associated with business optimization and cost savings projects relating to the integration of acquisitions, operating structure realignment and other process enhancement projects. (g) Represents 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 nine months ended September 30, 2023 also 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. (h) Represents an impairment charge on our equity method investment in a joint venture. Refer to Note 1, “Basis of Presentation”. (i) Represents litigation and other professional fees associated with our EO sterilization facilities. This inclu des $10.2 million and $18.0 million of interest expense, net for the three and nine months ended September 30, 2023, respectively, associated with Term Loan B that was issued to finance the $408.0 million cost of the Willowbrook Settlement under the Willowbrook Settlement Agreements. See Note 15, “Commitments and Contingencies”. (j) Represents the cost of the Gwinnett and Cobb Counties Settlement as outlined in the October 2023 Term Sheet, subject to all of the plaintiffs consenting to their respective settlement payment allocations. See Note 15, “Commitments and Contingencies”. (k) Represents non-cash accretion of asset retirement obligations related to Co-60 and gamma processing facilities, which are based on estimated site remediation costs for any future decommissioning of these facilities (without regard for whether the decommissioning services would be performed by employees of Nordion, instead of by a third party) and are accreted over the life of the asset. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) Attributable to Parent | $ (13,660) | $ 25,090 | $ 12,695 | $ 86,149 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | 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 solutions, lab testing and advisory services for the healthcare industry with operations primarily in the Americas, Europe and Asia. |
Use of Estimates | Use of Estimates – In preparing our consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“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 | 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 GAAP for interim financial information, 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 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 in our 2022 10-K. |
Adoption of Accounting Standard Updates | Adoption of Accounting Standard Updates Effective January 1, 2023, we adopted ASU 2021-08 - Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). The amendments in ASU 2021-08 require that an acquiring entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”). At the acquisition date, an acquirer should account for the related revenue contracts in accordance with ASC Topic 606 as if it had originated the contracts. The adoption of this standard did not have a material impact on our consolidated financial statements and disclosures. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following table shows disaggregated net revenues from contracts with external customers by timing of revenue and by segment for the three and nine months ended September 30, 2023 and 2022: (thousands of U.S. dollars) Three Months Ended September 30, 2023 Sterigenics Nordion Nelson Labs Consolidated Point in time $ 168,347 $ 37,068 $ — $ 205,415 Over time — 3,030 54,732 57,762 Total $ 168,347 $ 40,098 $ 54,732 $ 263,177 (thousands of U.S. dollars) Three Months Ended September 30, 2022 Sterigenics Nordion Nelson Labs Consolidated Point in time $ 157,723 $ 33,830 $ — $ 191,553 Over time — 1,241 55,910 57,151 Total $ 157,723 $ 35,071 $ 55,910 $ 248,704 (thousands of U.S. dollars) Nine Months Ended September 30, 2023 Sterigenics Nordion Nelson Labs Consolidated Point in time $ 494,934 $ 75,309 $ — $ 570,243 Over time — 5,315 163,491 168,806 Total $ 494,934 $ 80,624 $ 163,491 $ 739,049 (thousands of U.S. dollars) Nine Months Ended September 30, 2022 Sterigenics Nordion Nelson Labs Consolidated Point in time $ 464,977 $ 113,501 $ — $ 578,478 Over time — 6,050 167,569 173,619 Total $ 464,977 $ 119,551 $ 167,569 $ 752,097 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted of the following: (thousands of U.S. dollars) September 30, 2023 December 31, 2022 Raw materials and supplies $ 33,563 $ 36,402 Work-in-process 590 584 Finished goods 3,887 276 38,040 37,262 Reserve for excess and obsolete inventory (116) (117) Inventories, net $ 37,924 $ 37,145 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Deferred Costs, Capitalized, Prepaid, and Other Assets | Prepaid expenses and other current assets consisted of the following: (thousands of U.S. dollars) September 30, 2023 December 31, 2022 Prepaid taxes $ 29,515 $ 26,598 Prepaid business insurance 1,822 9,964 Prepaid rent 1,226 998 Customer contract assets 25,531 19,777 Insurance and indemnification receivables 2,039 3,724 Current deposits 412 660 Prepaid maintenance contracts 605 324 Value added tax receivable 3,636 1,640 Prepaid software licensing 2,344 1,832 Stock supplies 3,819 3,656 Embedded derivatives 2,287 2,721 Other 10,965 9,101 Prepaid expenses and other current assets $ 84,201 $ 80,995 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Changes to goodwill during the nine months ended September 30, 2023 were as follows: (thousands of U.S. dollars) Sterigenics Nordion Nelson Labs Total Goodwill at December 31, 2022 $ 657,458 $ 270,966 $ 173,344 $ 1,101,768 Changes due to foreign currency exchange rates 131 (690) (398) (957) Goodwill at September 30, 2023 $ 657,589 $ 270,276 $ 172,946 $ 1,100,811 |
Schedule of Acquired Finite-Lived Intangible Assets | Other intangible assets consisted of the following: (thousands of U.S. dollars) Gross Carrying Amount Accumulated Amortization As of September 30, 2023 Finite-lived intangible assets Customer relationships $ 652,421 $ 466,828 Proprietary technology 83,538 54,474 Trade names 2,561 1,081 Land-use rights 8,497 1,748 Sealed source and supply agreements 203,865 101,918 Other 4,464 2,647 Total finite-lived intangible assets 955,346 628,696 Indefinite-lived intangible assets Regulatory licenses and other (a) 76,781 — Trade names / trademarks 25,681 — Total indefinite-lived intangible assets 102,462 — Total $ 1,057,808 $ 628,696 As of December 31, 2022 Gross Carrying Amount Accumulated Amortization Finite-lived intangible assets Customer relationships $ 652,811 $ 422,277 Proprietary technology 86,054 50,952 Trade names 2,553 701 Land-use rights 8,986 1,683 Sealed source and supply agreements 204,391 93,034 Other 4,469 1,979 Total finite-lived intangible assets 959,264 570,626 Indefinite-lived intangible assets Regulatory licenses and other (a) 76,978 — Trade names / trademarks 25,649 — Total indefinite-lived intangible assets 102,627 — Total $ 1,061,891 $ 570,626 (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 year license period as Nordion has demonstrated over its 75 years of history. |
Schedule of Acquired Indefinite-lived Intangible Assets | Other intangible assets consisted of the following: (thousands of U.S. dollars) Gross Carrying Amount Accumulated Amortization As of September 30, 2023 Finite-lived intangible assets Customer relationships $ 652,421 $ 466,828 Proprietary technology 83,538 54,474 Trade names 2,561 1,081 Land-use rights 8,497 1,748 Sealed source and supply agreements 203,865 101,918 Other 4,464 2,647 Total finite-lived intangible assets 955,346 628,696 Indefinite-lived intangible assets Regulatory licenses and other (a) 76,781 — Trade names / trademarks 25,681 — Total indefinite-lived intangible assets 102,462 — Total $ 1,057,808 $ 628,696 As of December 31, 2022 Gross Carrying Amount Accumulated Amortization Finite-lived intangible assets Customer relationships $ 652,811 $ 422,277 Proprietary technology 86,054 50,952 Trade names 2,553 701 Land-use rights 8,986 1,683 Sealed source and supply agreements 204,391 93,034 Other 4,469 1,979 Total finite-lived intangible assets 959,264 570,626 Indefinite-lived intangible assets Regulatory licenses and other (a) 76,978 — Trade names / trademarks 25,649 — Total indefinite-lived intangible assets 102,627 — Total $ 1,061,891 $ 570,626 (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 year license period as Nordion has demonstrated over its 75 years of history. |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | 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) For the remainder of 2023 $ 19,988 2024 79,336 2025 42,208 2026 22,130 2027 21,053 Thereafter 141,935 Total $ 326,650 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | Accrued liabilities consisted of the following: (thousands of U.S. dollars) September 30, 2023 December 31, 2022 Accrued employee compensation $ 29,361 $ 32,936 Georgia EO litigation settlement reserve 35,000 — Illinois EO litigation settlement reserve 288 408,000 Legal reserves 2,939 3,776 Accrued interest expense 2,478 23,291 Embedded derivatives 4,176 3,508 Professional fees 18,159 6,436 Accrued utilities 1,946 1,906 Insurance accrual 2,508 2,392 Accrued taxes 3,507 2,567 Other 6,009 5,318 Accrued liabilities $ 106,371 $ 490,130 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following: (thousands of U.S. dollars) As of September 30, 2023 Gross Amount Unamortized Debt Issuance Costs Unamortized Debt Discount Net Amount Term loan, due 2026 $ 1,763,100 $ (1,760) $ (11,155) $ 1,750,185 Term loan B, due 2026 498,750 (8,003) (13,357) 477,390 Other long-term debt 450 (1) — 449 2,262,300 (9,764) (24,512) 2,228,024 Less current portion 5,450 (80) (135) 5,235 Long-term debt $ 2,256,850 $ (9,684) $ (24,377) $ 2,222,789 (thousands of U.S. dollars) As of December 31, 2022 Gross Amount Unamortized Debt Issuance Costs Unamortized Debt Discount Net Amount Term loan, due 2026 $ 1,763,100 $ (2,140) $ (13,845) $ 1,747,115 Revolving credit facility 200,000 (3,328) — 196,672 Other long-term debt 450 (3) — 447 1,963,550 (5,471) (13,845) 1,944,234 Less current portion 200,450 (3,331) — 197,119 Long-term debt $ 1,763,100 $ (2,140) $ (13,845) $ 1,747,115 |
Schedule of Maturities of Long-term Debt | Aggregate maturities of the Company’s long-term debt, excluding debt discounts, as of September 30, 2023, are as follows: (thousands of U.S. dollars) 2023 $ 1,700 2024 5,000 2025 5,000 2026 2,250,600 2027 — Thereafter — Total $ 2,262,300 |
Employee Benefits (Tables)
Employee Benefits (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Postemployment Benefits [Abstract] | |
Schedule of Net Benefit Costs | The components of net periodic pension benefit for the defined benefit plans for the three and nine months ended September 30, 2023 and 2022 were as follows: Three Months Ended September 30, Nine Months Ended September 30, (thousands of U.S. dollars) 2023 2022 2023 2022 Service cost $ 132 $ 242 $ 395 $ 738 Interest cost 2,745 1,848 8,211 5,640 Expected return on plan assets (4,050) (3,595) (12,115) (10,975) Net periodic benefit $ (1,173) $ (1,505) $ (3,509) $ (4,597) Three Months Ended September 30, Nine Months Ended September 30, (thousands of U.S. dollars) 2023 2022 2023 2022 Service cost $ 2 $ 4 $ 6 $ 12 Interest cost 91 63 271 193 Amortization of net actuarial gain (44) (2) (132) (6) Net periodic cost $ 49 $ 65 $ 145 $ 199 |
Other Comprehensive Income (L_2
Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in our accumulated other comprehensive income (loss) balances, net of applicable tax, were as follows: (thousands of U.S. dollars) Defined Benefit Plans Foreign Currency Translation Interest Rate Derivatives Total Beginning balance – July 1, 2023 $ 3,176 $ (98,574) $ 16,094 $ (79,304) Other comprehensive income (loss) before reclassifications (82) (32,996) 2,976 (30,102) Amounts reclassified from accumulated other comprehensive income (loss) (44) (a) — (4,690) (b) (4,734) Net current-period other comprehensive loss (126) (32,996) (1,714) (34,836) Ending balance – September 30, 2023 $ 3,050 $ (131,570) $ 14,380 $ (114,140) Beginning balance – January 1, 2023 $ 3,209 $ (131,205) $ 21,343 $ (106,653) Other comprehensive income (loss) before reclassifications (27) (365) 11,531 11,139 Amounts reclassified from accumulated other comprehensive income (loss) (132) (a) — (18,494) (b) (18,626) Net current-period other comprehensive loss (159) (365) (6,963) (7,487) Ending balance – September 30, 2023 $ 3,050 $ (131,570) $ 14,380 $ (114,140) (thousands of U.S. dollars) Defined Benefit Plans Foreign Currency Translation Interest Rate Derivatives Total Beginning balance – July 1, 2022 $ (17,323) $ (97,452) $ 9,761 $ (105,014) Other comprehensive income (loss) before reclassifications 1,067 (69,460) 9,408 (58,985) Amounts reclassified from accumulated other comprehensive income (loss) (2) (a) — — (2) Net current-period other comprehensive income (loss) 1,065 (69,460) 9,408 (58,987) Ending balance – September 30, 2022 $ (16,258) $ (166,912) $ 19,169 $ (164,001) Beginning balance – January 1, 2022 $ (17,581) $ (66,389) $ 404 $ (83,566) Other comprehensive income (loss) before reclassifications 1,329 (100,523) 18,765 (80,429) Amounts reclassified from accumulated other comprehensive income (loss) (6) (a) — — (6) Net current-period other comprehensive income (loss) 1,323 (100,523) 18,765 (80,435) Ending balance – September 30, 2022 $ (16,258) $ (166,912) $ 19,169 $ (164,001) (a) For defined benefit pension plans, amounts reclassified from accumulated other comprehensive income (loss) are recorded to “Other expense (income), net” within the Consolidated Statements of Operations and Comprehensive Income (Loss). (b) For interest rate 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). |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Restricted Stock Activity | A summary of the activity for the nine months ended September 30, 2023 related to the restricted stock awards distributed 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, 2022 716,091 1,098,415 Forfeited (5,378) (80,051) Vested (260,208) — Unvested at September 30, 2023 450,505 1,018,364 Number of Shares Weighted Average Grant Date Fair Value Unvested at December 31, 2022 2,482,435 $ 13.09 Granted 917,972 16.97 Forfeited (131,650) 12.35 Vested (401,892) 21.17 Unvested at September 30, 2023 2,866,865 $ 13.24 |
Schedule of Stock Option Activity | The following table summarizes our stock option activity for the nine months ended September 30, 2023: Number of Shares Weighted Average Exercise Price At December 31, 2022 5,990,470 $ 14.84 Granted 1,098,136 17.53 Forfeited (79,244) 20.94 At September 30, 2023 7,009,362 $ 15.20 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Our basic and diluted earnings per common share are calculated as follows: Three Months Ended September 30, Nine Months Ended September 30, in thousands of U.S. dollars and share amounts (except per share amounts) 2023 2022 2023 2022 Earnings: Net income (loss) $ (13,660) $ 25,090 $ 12,695 $ 86,149 Less: Allocation to participating securities — 223 74 862 Net income (loss) attributable to Sotera Health Company common shareholders $ (13,660) $ 24,867 $ 12,621 $ 85,287 Weighted Average Common Shares: Weighted-average common shares outstanding - basic 281,105 280,142 280,898 279,988 Dilutive effect of potential common shares (a) — 30 2,292 105 Weighted-average common shares outstanding - diluted 281,105 280,172 283,190 280,093 Earnings per Common Share: Net income (loss) per common share attributable to Sotera Health Company common shareholders - basic $ (0.05) $ 0.09 $ 0.04 $ 0.31 Net income (loss) per common share attributable to Sotera Health Company common shareholders - diluted (0.05) 0.09 0.04 0.31 (a) As the Company reported a net loss for the three months ended September 30, 2023, the calculation of diluted weighted average common shares outstanding is not applicable because the effect of including the potential common shares would be anti-dilutive. |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | Diluted earnings per share does not consider the following potential common shares as the effect would be anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, in thousands of share amounts 2023 2022 2023 2022 Stock options 7,001 3,526 4,049 3,399 RSUs 3,315 1,121 303 34 Total anti-dilutive securities 10,316 4,647 4,352 3,433 |
Financial Instruments and Fin_2
Financial Instruments and Financial Risk (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The following table provides a summary of the notional and fair values of our derivative instruments: September 30, 2023 December 31, 2022 (in U.S. Dollars; notional in millions, fair value in thousands) Fair Value Fair Value Notional Derivative Derivative Notional Derivative Derivative Derivatives designated as hedging instruments: Interest rate caps 1,000.0 $ 15,327 $ — $ 2,000.0 $ 34,764 $ — Interest rate swaps 400.0 6,808 — — — — Derivatives not designated as hedging instruments Foreign currency forward contracts $ 172.1 $ — $ 1,221 $ 151.5 $ — $ 272 Embedded derivatives 157.5 (a) 2,287 4,176 179.9 (a) 2,721 3,508 Total $ 1,729.6 $ 24,422 $ 5,397 $ 2,331.4 $ 37,485 $ 3,780 (a) Represents the total notional amounts for certain of the Company’s supply and sales contracts accounted for as embedded derivatives. |
Schedule of Derivative Instruments, Gain (Loss) | The following tables summarize the activities of our derivative instruments for the periods presented, and the line item they are recorded in the Consolidated Statements of Operations and Comprehensive Income (Loss): Three Months Ended September 30, Nine Months Ended September 30, (thousands of U.S. dollars) 2023 2022 2023 2022 Unrealized loss (gain) on interest rate derivatives recorded in interest expense, net $ — $ 3,348 $ — $ (6,098) Realized gain on interest rate derivatives recorded in interest expense, net (a) (7,277) (4,473) (27,288) (5,752) Unrealized loss on embedded derivatives recorded in other expense (income), net 1,833 359 1,087 1,776 Realized loss (gain) on foreign currency forward contracts recorded in foreign exchange (gain) loss 1,946 4,157 3 3,662 Unrealized loss (gain) on foreign currency forward contracts recorded in foreign exchange (gain) loss 1,230 — 949 — (a) For the three and nine months ended September 30, 2023, amounts represent periodic settlement of interest rate caps and swaps. |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table discloses the fair value of our financial assets and liabilities: As of September 30, 2023 Fair Value (thousands of U.S. dollars) Carrying Level 1 Level 2 Level 3 Derivatives designated as hedging instruments (a) Interest rate caps $ 15,327 — $ 15,327 — Interest rate swaps 6,808 — 6,808 — Derivatives not designated as hedging instruments (b) Foreign currency forward contract liabilities 1,221 — 1,221 — Embedded derivative assets 2,287 — 2,287 — Embedded derivative liabilities 4,176 — 4,176 — Current portion of long-term debt Term loan B, due 2026 4,786 — 4,988 — Other long-term debt (c) 449 — 449 — Long-Term Debt (d) Term loan, due 2026 1,750,185 — 1,749,877 — Term loan B, due 2026 472,604 — 493,763 — Finance Lease Obligations (with current portion) (e) 71,617 — 71,617 — As of December 31, 2022 Fair Value (thousands of U.S. dollars) Carrying Level 1 Level 2 Level 3 Derivatives designated as hedging instruments (a) Interest rate caps $ 34,764 $ — $ 34,764 $ — Derivatives not designated as hedging instruments (b) Foreign currency forward contracts 272 — 272 — Embedded derivative assets 2,721 — 2,721 — Embedded derivative liabilities 3,508 — 3,508 — Current portion of long-term debt (c) Revolving credit facility 196,672 — 196,672 — Other long-term debt 447 — 447 — Long-Term Debt (d) Term loan, due 2026 1,747,115 — 1,626,460 — Finance Lease Obligations (with current portion) (e) 58,677 — 58,677 — (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). 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 forward foreign currency exchange rate over the life of the contract. (c) Carrying value of other long-term debt and revolving credit facility approximates fair value. (d) Carrying amounts of long-term debt instruments are reported net of discounts and debt issuance costs. The estimated fair value of these instruments is based on quoted prices for the term loans due in 2026 in inactive markets as provided by an independent fixed income security pricing service. (e) Fair value approximates carrying value. |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Financial information for each of our segments is presented in the following table: Three Months Ended September 30, Nine Months Ended September 30, (thousands of U.S. dollars) 2023 2022 2023 2022 Segment revenues (a) Sterigenics $ 168,347 $ 157,723 $ 494,934 $ 464,977 Nordion 40,098 35,071 80,624 119,551 Nelson Labs 54,732 55,910 163,491 167,569 Total net revenues $ 263,177 $ 248,704 $ 739,049 $ 752,097 Segment income (b) Sterigenics $ 93,169 $ 85,587 $ 267,459 $ 250,088 Nordion 24,052 20,294 43,362 69,179 Nelson Labs 17,107 19,271 50,460 57,369 Total segment income $ 134,328 $ 125,152 $ 361,281 $ 376,636 (a) Revenues are reported net of intersegment sales. Our Nordion segment recognized $11.2 million and $7.4 million in revenues from sales to our Sterigenics segment for the three months ended September 30, 2023 and 2022, respectively, and $28.8 million and $38.7 million in revenues from sales to our Sterigenics segment for the nine months ended September 30, 2023 and 2022, respectively, that is not reflected in net revenues in the table above. Intersegment sales for Sterigenics and Nelson Labs are immaterial for these periods. (b) Segment income is only provided on a net basis to t he chief operating decision m aker and is reported net of intersegment profits. Capital expenditures by segment for the nine months ended September 30, 2023 and 2022 were as follows: Nine Months Ended September 30, (thousands of U.S. dollars) 2023 2022 Sterigenics $ 115,438 $ 90,444 Nordion 23,875 12,045 Nelson Labs 10,836 8,153 Total capital expenditures $ 150,149 $ 110,642 |
Schedule of Reconciliation of Operating Profit (Loss) from Segments to Consolidated | A reconciliation of segment income to consolidated income before taxes is as follows: (thousands of U.S. dollars) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Segment income $ 134,328 $ 125,152 $ 361,281 $ 376,636 Less adjustments: Interest expense, net (a) 30,464 20,080 82,275 53,974 Depreciation and amortization (b) 38,175 36,104 117,203 109,092 Share-based compensation (c) 8,378 4,616 24,135 14,955 Gain on foreign currency and derivatives not designated as hedging instruments, net (d) 1,333 3,194 1,459 (4,788) Acquisition and divestiture related charges, net (e) 72 447 817 978 Business optimization project expenses (f) 1,237 1,035 7,093 1,609 Plant closure expenses (g) 126 2,627 (640) 3,776 Impairment of investment in unconsolidated affiliate (h) — — — 9,613 Professional services and other expenses relating to EO sterilization facilities (i) 18,518 14,501 51,900 50,238 Georgia EO litigation settlement (j) 35,000 — 35,000 — Accretion of asset retirement obligation (k) 555 526 1,682 1,644 COVID-19 expenses (l) — 6 — 154 Consolidated income before taxes $ 470 $ 42,016 $ 40,357 $ 135,391 (a) The three and nine months ended September 30, 2023 exclude $10.2 million and $18.0 million, respectively, of 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. The three and nine months ended September 30, 2022 exclude $3.3 million of unrealized loss and $6.1 million of unrealized gain, respectively, on interest rate derivatives not designated as hedging instruments. (b) Includes depreciation of Co-60 held at gamma irradiation sites. (c) Represents share-based compensation expense to employees and non-employee directors. (d) Represents the effects of (i) fluctuations in foreign currency exchange rates, (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at Nordion, and (iii) unrealized gains and losses on interest rate caps not designated as hedging instruments. (e) Represents (i) certain direct and incremental costs related to the acquisitions of RCA and BioScience Labs and certain related integration efforts as a result of those 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. (f) Represents professional fees, exit costs, severance and other payroll costs, and other costs associated with business optimization and cost savings projects relating to the integration of acquisitions, operating structure realignment and other process enhancement projects. (g) Represents 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 nine months ended September 30, 2023 also 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. (h) Represents an impairment charge on our equity method investment in a joint venture. Refer to Note 1, “Basis of Presentation”. (i) Represents litigation and other professional fees associated with our EO sterilization facilities. This inclu des $10.2 million and $18.0 million of interest expense, net for the three and nine months ended September 30, 2023, respectively, associated with Term Loan B that was issued to finance the $408.0 million cost of the Willowbrook Settlement under the Willowbrook Settlement Agreements. See Note 15, “Commitments and Contingencies”. (j) Represents the cost of the Gwinnett and Cobb Counties Settlement as outlined in the October 2023 Term Sheet, subject to all of the plaintiffs consenting to their respective settlement payment allocations. See Note 15, “Commitments and Contingencies”. (k) 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. |
Basis of Presentation (Details)
Basis of Presentation (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) segment | Sep. 30, 2022 USD ($) | Jul. 31, 2020 | |
Accounting Policies [Abstract] | ||||||
Number of operating segments | segment | 3 | |||||
Number of reportable segments | segment | 3 | |||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Impairment of investment in unconsolidated affiliate | $ 0 | $ 0 | $ 0 | $ 9,613 | ||
Unnamed E-Beam Joint Venture | Iotron | ||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Ownership percentage (as percent) | 60% | |||||
Auralux | ||||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||||||
Investments, fair value disclosure | $ 0 | |||||
Impairment of investment in unconsolidated affiliate | $ 9,600 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | $ 263,177 | $ 248,704 | $ 739,049 | $ 752,097 | |
Deferred revenue | 12,712 | 12,712 | $ 12,140 | ||
Point in time | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 205,415 | 191,553 | 570,243 | 578,478 | |
Over time | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 57,762 | 57,151 | 168,806 | 173,619 | |
Sterigenics | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 168,347 | 157,723 | 494,934 | 464,977 | |
Sterigenics | Point in time | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 168,347 | 157,723 | 494,934 | 464,977 | |
Sterigenics | Over time | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 0 | 0 | 0 | 0 | |
Nordion | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 40,098 | 35,071 | 80,624 | 119,551 | |
Nordion | Point in time | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 37,068 | 33,830 | 75,309 | 113,501 | |
Nordion | Over time | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 3,030 | 1,241 | 5,315 | 6,050 | |
Nelson Labs | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 54,732 | 55,910 | 163,491 | 167,569 | |
Nelson Labs | Point in time | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | 0 | 0 | 0 | 0 | |
Nelson Labs | Over time | |||||
Disaggregation of Revenue [Line Items] | |||||
Total net revenues | $ 54,732 | $ 55,910 | $ 163,491 | $ 167,569 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Thousands | Nov. 04, 2021 | Sep. 30, 2023 | Dec. 31, 2022 |
Business Acquisition [Line Items] | |||
Goodwill | $ 1,100,811 | $ 1,101,768 | |
Regulatory Compliance Associates Inc R C A | |||
Business Acquisition [Line Items] | |||
Purchase price | $ 30,600 | ||
Cash acquired from acquisition | $ 600 | ||
Goodwill | 25,300 | ||
Regulatory Compliance Associates Inc R C A | Customer relationships | |||
Business Acquisition [Line Items] | |||
Finite-lived intangibles | $ 6,400 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials and supplies | $ 33,563 | $ 36,402 |
Work-in-process | 590 | 584 |
Finished goods | 3,887 | 276 |
Inventories, gross | 38,040 | 37,262 |
Reserve for excess and obsolete inventory | (116) | (117) |
Inventories, net | $ 37,924 | $ 37,145 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid taxes | $ 29,515 | $ 26,598 |
Prepaid business insurance | 1,822 | 9,964 |
Prepaid rent | 1,226 | 998 |
Customer contract assets | 25,531 | 19,777 |
Insurance and indemnification receivables | 2,039 | 3,724 |
Current deposits | 412 | 660 |
Prepaid maintenance contracts | 605 | 324 |
Value added tax receivable | 3,636 | 1,640 |
Prepaid software licensing | 2,344 | 1,832 |
Stock supplies | 3,819 | 3,656 |
Embedded derivatives | 2,287 | 2,721 |
Other | 10,965 | 9,101 |
Prepaid expenses and other current assets | $ 84,201 | $ 80,995 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 1,101,768 |
Changes due to foreign currency exchange rates | (957) |
Ending balance | 1,100,811 |
Regulatory Compliance Associates Inc R C A | |
Goodwill [Roll Forward] | |
Ending balance | 25,300 |
Sterigenics | |
Goodwill [Roll Forward] | |
Beginning balance | 657,458 |
Changes due to foreign currency exchange rates | 131 |
Ending balance | 657,589 |
Nordion | |
Goodwill [Roll Forward] | |
Beginning balance | 270,966 |
Changes due to foreign currency exchange rates | (690) |
Ending balance | 270,276 |
Nelson Labs | |
Goodwill [Roll Forward] | |
Beginning balance | 173,344 |
Changes due to foreign currency exchange rates | (398) |
Ending balance | $ 172,946 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Intangibles (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 955,346 | $ 959,264 |
Accumulated Amortization | 628,696 | 570,626 |
Gross Carrying Amount | 102,462 | 102,627 |
Total | 1,057,808 | 1,061,891 |
Regulatory licenses and other | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 76,781 | 76,978 |
Renewal term | 10 years | |
Trade names / trademarks | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 25,681 | 25,649 |
Customer relationships | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 652,421 | 652,811 |
Accumulated Amortization | 466,828 | 422,277 |
Proprietary technology | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 83,538 | 86,054 |
Accumulated Amortization | 54,474 | 50,952 |
Trade names | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2,561 | 2,553 |
Accumulated Amortization | 1,081 | 701 |
Land-use rights | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 8,497 | 8,986 |
Accumulated Amortization | 1,748 | 1,683 |
Sealed source and supply agreements | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 203,865 | 204,391 |
Accumulated Amortization | 101,918 | 93,034 |
Other | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 4,464 | 4,469 |
Accumulated Amortization | $ 2,647 | $ 1,979 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 61,290 | $ 61,596 | ||
Finite-lived intangible assets, remaining amortization period | 9 years | 9 years | ||
Other | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 20,200 | $ 20,200 | $ 61,300 | 61,600 |
Other | Cost of Revenue | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 4,400 | $ 4,500 | $ 13,200 | $ 14,300 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Future Amortization Expense (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
For the remainder of 2023 | $ 19,988 |
2024 | 79,336 |
2025 | 42,208 |
2026 | 22,130 |
2027 | 21,053 |
Thereafter | 141,935 |
Total | $ 326,650 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Payables And Accruals [Line Items] | ||
Accrued employee compensation | $ 29,361 | $ 32,936 |
Legal reserves | 2,939 | 3,776 |
Accrued interest expense | 2,478 | 23,291 |
Embedded derivatives | 4,176 | 3,508 |
Professional fees | 18,159 | 6,436 |
Accrued utilities | 1,946 | 1,906 |
Insurance accrual | 2,508 | 2,392 |
Accrued taxes | 3,507 | 2,567 |
Other | 6,009 | 5,318 |
Accrued liabilities | 106,371 | 490,130 |
Ethylene Oxide Tort Litigation – Georgia | ||
Payables And Accruals [Line Items] | ||
litigation settlement reserve | 35,000 | 0 |
Ethylene Oxide Tort Litigation - Illinois | ||
Payables And Accruals [Line Items] | ||
litigation settlement reserve | $ 288 | $ 408,000 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-term Debt Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Total | $ 2,262,300 | $ 1,963,550 |
Less current portion | 5,450 | 200,450 |
Long-term debt | 2,256,850 | 1,763,100 |
Long-term debt | (9,764) | (5,471) |
Less current portion | (80) | (3,331) |
Unamortized Debt Issuance Costs | (9,684) | (2,140) |
Unamortized Debt Discount | (24,377) | (13,845) |
Unamortized discount, excluding current portion | (24,512) | (13,845) |
Less current portion | (135) | 0 |
Net Amount | 2,228,024 | 1,944,234 |
Less current portion | 5,235 | 197,119 |
Long-term debt | 2,222,789 | 1,747,115 |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Unamortized Debt Discount | 0 | |
Senior Secured Credit Facilities | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Total | 200,000 | |
Long-term debt | (3,328) | |
Net Amount | 196,672 | |
Term Loan | Term loan, due 2026 | ||
Debt Instrument [Line Items] | ||
Total | 1,763,100 | 1,763,100 |
Long-term debt | (1,760) | (2,140) |
Unamortized Debt Discount | (11,155) | (13,845) |
Net Amount | 1,750,185 | 1,747,115 |
Term Loan | Term loan B, due 2026 | ||
Debt Instrument [Line Items] | ||
Total | 498,750 | |
Long-term debt | (8,003) | |
Unamortized Debt Discount | (13,357) | |
Net Amount | 477,390 | |
Other long-term debt | ||
Debt Instrument [Line Items] | ||
Total | 450 | 450 |
Long-term debt | (1) | (3) |
Net Amount | $ 449 | $ 447 |
Long-Term Debt - Senior Secured
Long-Term Debt - Senior Secured Credit Facilities (Narrative) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||
Feb. 23, 2023 | Sep. 19, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Mar. 21, 2023 | Dec. 31, 2022 | Dec. 13, 2019 | |
Debt Instrument [Line Items] | |||||||||
Other long-term debt | $ 2,262,300,000 | $ 2,262,300,000 | $ 1,963,550,000 | ||||||
Asset Transfer Case | Pending Litigation | |||||||||
Debt Instrument [Line Items] | |||||||||
Amount awarded to other party | $ 408,000,000 | ||||||||
Ethylene Oxide Tort Litigation - Illinois | Pending Litigation | |||||||||
Debt Instrument [Line Items] | |||||||||
Amount awarded to other party | $ 358,700,000 | 408,000,000 | |||||||
Base amount for default | 100,000,000 | $ 100,000,000 | |||||||
Triggering period for default | 60 days | ||||||||
Term loan, due 2026 | Secured Debt | |||||||||
Debt Instrument [Line Items] | |||||||||
Other long-term debt | $ 1,763,100,000 | $ 1,763,100,000 | 1,763,100,000 | ||||||
Weighted average interest rate | 8.14% | 4.96% | 3.92% | ||||||
Term loan, due 2026 | Secured Debt | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Weighted average interest rate | 0.50% | ||||||||
Term loan, due 2026 | Secured Debt | Secured Overnight Financing Rate (SOFR) | One-Month Interest Periods | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread adjustment | 0.11448% | 0.11448% | |||||||
Term loan, due 2026 | Secured Debt | Secured Overnight Financing Rate (SOFR) | Three-Month Interest Periods | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread adjustment | 0.26161% | 0.26161% | |||||||
Term loan, due 2026 | Secured Debt | Secured Overnight Financing Rate (SOFR) | Six-Month Interest Periods | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread adjustment | 0.42826% | 0.42826% | |||||||
Term loan, due 2026 | Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Other long-term debt | $ 1,763,100,000 | $ 1,763,100,000 | 1,763,100,000 | ||||||
Weighted average interest rate | 7.82% | ||||||||
Term loan B, due 2026 | Secured Debt | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 500,000,000 | ||||||||
Weighted average interest rate | 8.84% | 8.83% | |||||||
Prepayment period without penalty | 6 months | ||||||||
Principal balance payment, percent of amount outstanding | 1% | ||||||||
Annual principal payment | $ 5,000,000 | ||||||||
Term loan B, due 2026 | Secured Debt | Secured Overnight Financing Rate (SOFR) | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 3.75% | ||||||||
Term loan B, due 2026 | Secured Debt | Alternative Base Rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 2.75% | ||||||||
Term loan B, due 2026 | Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Other long-term debt | $ 498,750,000 | $ 498,750,000 | |||||||
First Lien Notes due 2026 | Secured Debt | Secured Overnight Financing Rate (SOFR) | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 0.10% | ||||||||
First Lien Notes due 2026 | Secured Debt | Secured Overnight Financing Rate (SOFR) | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 0% | ||||||||
Revolving Credit Facility | Senior Secured Credit Facilities | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 423,800,000 | ||||||||
Other long-term debt | 200,000,000 | ||||||||
Extinguishment of debt | $ 200,000,000 | ||||||||
Debt outstanding | 0 | $ 0 | $ 200,000,000 | ||||||
Letters of credit outstanding, amount | 24,000,000 | 24,000,000 | |||||||
Unused borrowing capacity | $ 399,800,000 | $ 399,800,000 | |||||||
Revolving Credit Facility | First Lien Notes due 2026 | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 165,100,000 | ||||||||
Revolving Credit Facility | First Lien Notes due 2026 | Secured Debt | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 76,300,000 |
Long-Term Debt - Schedule of Ma
Long-Term Debt - Schedule of Maturities of Long-term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Disclosure [Abstract] | ||
2023 | $ 1,700 | |
2024 | 5,000 | |
2025 | 5,000 | |
2026 | 2,250,600 | |
2027 | 0 | |
Thereafter | 0 | |
Total | $ 2,262,300 | $ 1,963,550 |
Income Taxes (Details)
Income Taxes (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Ethylene Oxide Tort Litigation – Georgia | |
Income Tax Contingency [Line Items] | |
Litigation settlement | $ 35 |
Employee Benefits - Net Periodi
Employee Benefits - Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Defined benefit pension plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 132 | $ 242 | $ 395 | $ 738 |
Interest cost | 2,745 | 1,848 | 8,211 | 5,640 |
Expected return on plan assets | (4,050) | (3,595) | (12,115) | (10,975) |
Net periodic benefit cost | (1,173) | (1,505) | (3,509) | (4,597) |
Other benefits plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 2 | 4 | 6 | 12 |
Interest cost | 91 | 63 | 271 | 193 |
Amortization of net actuarial gain | (44) | (2) | (132) | (6) |
Net periodic benefit cost | $ 49 | $ 65 | $ 145 | $ 199 |
Employee Benefits - Additional
Employee Benefits - Additional Information (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Postemployment Benefits [Abstract] | ||
Expect funding requirements in each of the next five years | $ 0.3 | |
Defined benefit pension plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Letters of credit outstanding, amount | $ 16 | $ 44.1 |
Defined benefit pension plans | Maximum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Solvency payment as percent of market value | 15% |
Other Comprehensive Income (L_3
Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
AOCI Attributable to Parent | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | $ (79,304) | $ (105,014) | $ (106,653) | $ (83,566) |
Other comprehensive income (loss) before reclassifications | (30,102) | (58,985) | 11,139 | (80,429) |
Amounts reclassified from accumulated other comprehensive income (loss) | (4,734) | (2) | (18,626) | (6) |
Net current-period other comprehensive loss | (34,836) | (58,987) | (7,487) | (80,435) |
Ending balance | (114,140) | (164,001) | (114,140) | (164,001) |
Defined Benefit Plans | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | 3,176 | (17,323) | 3,209 | (17,581) |
Other comprehensive income (loss) before reclassifications | (82) | 1,067 | (27) | 1,329 |
Amounts reclassified from accumulated other comprehensive income (loss) | (44) | (2) | (132) | (6) |
Net current-period other comprehensive loss | (126) | 1,065 | (159) | 1,323 |
Ending balance | 3,050 | (16,258) | 3,050 | (16,258) |
Foreign Currency Translation | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | (98,574) | (97,452) | (131,205) | (66,389) |
Other comprehensive income (loss) before reclassifications | (32,996) | (69,460) | (365) | (100,523) |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Net current-period other comprehensive loss | (32,996) | (69,460) | (365) | (100,523) |
Ending balance | (131,570) | (166,912) | (131,570) | (166,912) |
Interest Rate Derivatives | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | 16,094 | 9,761 | 21,343 | 404 |
Other comprehensive income (loss) before reclassifications | 2,976 | 9,408 | 11,531 | 18,765 |
Amounts reclassified from accumulated other comprehensive income (loss) | (4,690) | 0 | (18,494) | 0 |
Net current-period other comprehensive loss | (1,714) | 9,408 | (6,963) | 18,765 |
Ending balance | $ 14,380 | $ 19,169 | $ 14,380 | $ 19,169 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
2020 Omnibus Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 7.9 | $ 4.1 | $ 22.7 | $ 13.3 |
Restricted Stock | Pre-IPO B-1 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 5 years | |||
Share-based compensation expense | $ 0.5 | 0.5 | $ 1.5 | 1.6 |
Restricted Stock | Pre-IPO B-1 | Year One | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 20% | |||
Restricted Stock | Pre-IPO B-1 | Year Two | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 20% | |||
Restricted Stock | Pre-IPO B-1 | Year Three | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 20% | |||
Restricted Stock | Pre-IPO B-1 | Year Four | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 20% | |||
Restricted Stock | Pre-IPO B-1 | Year Five | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 20% | |||
Restricted Stock | Pre-IPO B-2 | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Investment, internal rate of return | 20% | |||
Cash proceeds to sponsors, ratio to invested capital | 250% | 250% | ||
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Contractual term | 10 years | |||
Stock Options | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 2 years | |||
Stock Options | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 4 years | |||
Stock Options | 2020 Omnibus Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 3.8 | 1.5 | $ 10.7 | 5.2 |
RSUs | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 1 year | |||
RSUs | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 4 years | |||
RSUs | 2020 Omnibus Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 4.1 | $ 2.6 | $ 12 | $ 8.1 |
Share-Based Compensation - Pre-
Share-Based Compensation - Pre-IPO Awards (Class B-1 and B-2) (Details) - Restricted Stock | 9 Months Ended |
Sep. 30, 2023 shares | |
Pre-IPO B-1 | |
Number of Shares | |
Beginning balance (in shares) | 716,091 |
Forfeited (in shares) | (5,378) |
Vested (in shares) | (260,208) |
Ending balance (in shares) | 450,505 |
Pre-IPO B-2 | |
Number of Shares | |
Beginning balance (in shares) | 1,098,415 |
Forfeited (in shares) | (80,051) |
Vested (in shares) | 0 |
Ending balance (in shares) | 1,018,364 |
Share-Based Compensation - Stoc
Share-Based Compensation - Stock Options (Details) | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Number of Shares | |
Beginning balance (in shares) | 5,990,470 |
Granted (in shares) | 1,098,136 |
Forfeited (in shares) | (79,244) |
Ending balance (in shares) | 7,009,362 |
Weighted Average Exercise Price | |
Beginning balance (in shares) | $ / shares | $ 14.84 |
Granted (in dollars per share) | $ / shares | 17.53 |
Forfeited (in dollars per share) | $ / shares | 20.94 |
Ending balance (in shares) | $ / shares | $ 15.20 |
Options vested (in shares) | 1,400,000 |
Options exercisable (in shares) | 1,400,000 |
Share-Based Compensation - RSUs
Share-Based Compensation - RSUs (Details) - RSUs | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Number of Shares | |
Beginning balance (in shares) | shares | 2,482,435 |
Granted (in shares) | shares | 917,972 |
Forfeited (in shares) | shares | (131,650) |
Vested (in shares) | shares | (401,892) |
Ending balance (in shares) | shares | 2,866,865 |
Weighted Average Grant Date Fair Value | |
Beginning balance (in dollars per share) | $ / shares | $ 13.09 |
Granted (in dollars per share) | $ / shares | 16.97 |
Forfeited (in dollars per share) | $ / shares | 12.35 |
Vested (in dollars per share) | $ / shares | 21.17 |
Ending balance (in dollars per share) | $ / shares | $ 13.24 |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings: | ||||
Net income (loss) | $ (13,660) | $ 25,090 | $ 12,695 | $ 86,149 |
Less: Allocation to participating securities | 0 | 223 | 74 | 862 |
Less: Allocation to participating securities | 0 | 223 | 74 | 862 |
Net income (loss) attributable to Sotera Health Company common shareholders | (13,660) | 24,867 | 12,621 | 85,287 |
Net income (loss) attributable to Sotera Health Company common shareholders | $ (13,660) | $ 24,867 | $ 12,621 | $ 85,287 |
Weighted Average Common Shares: | ||||
Weighted-average common shares outstanding - basic (in shares) | 281,105 | 280,142 | 280,898 | 279,988 |
Dilutive effect of potential common shares (in shares) | 0 | 30 | 2,292 | 105 |
Weighted-average common shares outstanding - diluted (in shares) | 281,105 | 280,172 | 283,190 | 280,093 |
Earnings per Common Share: | ||||
Net income (loss) per common share attributable to Sotera Health Company common shareholders - basic (in dollars per share) | $ (0.05) | $ 0.09 | $ 0.04 | $ 0.31 |
Net income (loss) per common share attributable to Sotera Health Company common shareholders - diluted (in dollars per share) | $ (0.05) | $ 0.09 | $ 0.04 | $ 0.31 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 10,316 | 4,647 | 4,352 | 3,433 |
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 7,001 | 3,526 | 4,049 | 3,399 |
RSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 3,315 | 1,121 | 303 | 34 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 4 Months Ended | 9 Months Ended | 21 Months Ended | |||||||
Oct. 16, 2023 USD ($) case claim | May 01, 2023 claim | Mar. 28, 2023 claim | Feb. 23, 2023 USD ($) | Jan. 09, 2023 segment | Sep. 19, 2022 USD ($) | Aug. 21, 2020 individual plaintiff | Sep. 30, 2023 plaintiff | Sep. 30, 2023 USD ($) case plaintiff claim | Sep. 30, 2022 USD ($) | |
Gain Contingencies [Line Items] | ||||||||||
Loss contingency, insurance limits per occurrence | $ 10,000,000 | |||||||||
Loss contingency, insurance limits | 20,000,000 | |||||||||
Pending Litigation | ||||||||||
Gain Contingencies [Line Items] | ||||||||||
Defense incurred costs | $ 75,500,000 | |||||||||
Pending Litigation | Gwinnett And Cobb Counties | Subsequent Event | ||||||||||
Gain Contingencies [Line Items] | ||||||||||
Amount awarded to other party | $ 35,000,000 | |||||||||
Ethylene Oxide Tort Litigation - Illinois | Pending Litigation | ||||||||||
Gain Contingencies [Line Items] | ||||||||||
Number of plaintiffs | plaintiff | 854 | |||||||||
Number of individuals threatened to file lawsuits | individual | 28 | |||||||||
Amount awarded to other party | $ 358,700,000 | $ 408,000,000 | ||||||||
Ethylene Oxide Tort Litigation - Illinois | Pending Litigation | Co Defendant Member | ||||||||||
Gain Contingencies [Line Items] | ||||||||||
Amount awarded to other party | 2,600,000 | |||||||||
Ethylene Oxide Tort Litigation - Illinois | Pending Litigation | Compensatory Damages | ||||||||||
Gain Contingencies [Line Items] | ||||||||||
Amount awarded to other party | 36,100,000 | |||||||||
Ethylene Oxide Tort Litigation - Illinois | Pending Litigation | Punitive Damages | ||||||||||
Gain Contingencies [Line Items] | ||||||||||
Amount awarded to other party | $ 320,000,000 | |||||||||
Asset Transfer Case | P E C Member | ||||||||||
Gain Contingencies [Line Items] | ||||||||||
Number of eligible claimants | claim | 882 | |||||||||
Asset Transfer Case | Pending Litigation | ||||||||||
Gain Contingencies [Line Items] | ||||||||||
Amount awarded to other party | $ 408,000,000 | |||||||||
Number of new claims filed | segment | 20 | |||||||||
Number of eligible claimants | claim | 882 | |||||||||
Number of eligible claimants concluded | claim | 879 | |||||||||
Number of eligible non-settling claimants | claim | 3 | |||||||||
Asset Transfer Case | Pending Litigation | Personal Injury | ||||||||||
Gain Contingencies [Line Items] | ||||||||||
Number of plaintiffs | plaintiff | 8 | |||||||||
Ethylene Oxide Tort Litigation – Georgia | Personal Injury | Gwinnett County | ||||||||||
Gain Contingencies [Line Items] | ||||||||||
Number of claims scheduled for trials | case | 1 | |||||||||
Ethylene Oxide Tort Litigation – Georgia | Personal Injury | Cobb County | ||||||||||
Gain Contingencies [Line Items] | ||||||||||
Number of plaintiffs | plaintiff | 300 | |||||||||
Number of claims scheduled for trials | case | 1 | |||||||||
Ethylene Oxide Tort Litigation – Georgia | Personal Injury | Cobb County | Subsequent Event | ||||||||||
Gain Contingencies [Line Items] | ||||||||||
Number of claims scheduled for trials | case | 77 | |||||||||
Ethylene Oxide Tort Litigation – Georgia | Personal Injury | Cobb County | Subsidiaries | ||||||||||
Gain Contingencies [Line Items] | ||||||||||
Number of new claims filed | claim | 9 | |||||||||
Ethylene Oxide Tort Litigation – Georgia | Personal Injury | Gwinnett And Cobb Counties | Subsequent Event | ||||||||||
Gain Contingencies [Line Items] | ||||||||||
Number of new claims filed | claim | 78 | |||||||||
Counties settlement percentage | 100% | |||||||||
Ethylene Oxide Tort Litigation – Georgia | Property Devaluation | Subsidiaries | ||||||||||
Gain Contingencies [Line Items] | ||||||||||
Number of new claims filed | claim | 365 | |||||||||
Ethylene Oxide Tort Litigation – Georgia | Property Devaluation | Gwinnett County | Subsidiaries | ||||||||||
Gain Contingencies [Line Items] | ||||||||||
Number of new claims filed | case | 10 | |||||||||
Number of claims scheduled for trials | case | 1 | |||||||||
Ethylene Oxide Tort Litigation – Georgia | Pending Litigation | ||||||||||
Gain Contingencies [Line Items] | ||||||||||
Loss contingency, insurance limits | $ 10,000,000 |
Financial Instruments and Fin_3
Financial Instruments and Financial Risk - Additional Information (Details) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | May 31, 2022 USD ($) instrument | Oct. 31, 2021 USD ($) instrument | |
Derivative [Line Items] | ||||||||
Interest rate derivatives, net of tax | $ (1,714,000) | $ 9,408,000 | $ (6,963,000) | $ 18,765,000 | ||||
Allowance for uncollectible accounts | 2,100,000 | 2,100,000 | $ 1,871,000 | |||||
Derivatives Designated in Hedge Relationships | ||||||||
Derivative [Line Items] | ||||||||
Interest rate derivatives, net of tax | 16,800,000 | |||||||
Derivatives Designated in Hedge Relationships | Interest rate caps | ||||||||
Derivative [Line Items] | ||||||||
Notional amount | 1,000,000 | 1,000,000 | 2,000,000 | $ 1,000,000,000 | ||||
Number of instruments held | instrument | 2 | 2 | ||||||
Option premium | $ 4,100,000 | $ 1,800,000 | ||||||
Derivatives Designated in Hedge Relationships | Interest rate caps | Forward Start Date Beginning on July 31, 2023 | ||||||||
Derivative [Line Items] | ||||||||
Notional amount | $ 1,000,000,000 | |||||||
Derivatives Designated in Hedge Relationships | Interest rate caps | LIBOR | ||||||||
Derivative [Line Items] | ||||||||
Percent of borrowing limitation due to cash flow exposure | 1% | |||||||
Derivatives Designated in Hedge Relationships | Interest rate caps | Secured Overnight Financing Rate (SOFR) | ||||||||
Derivative [Line Items] | ||||||||
Percent of borrowing limitation due to cash flow exposure | 3.50% | |||||||
Derivatives Designated in Hedge Relationships | Interest rate swaps | ||||||||
Derivative [Line Items] | ||||||||
Notional amount | 400,000 | 400,000 | $ 400,000,000 | 0 | ||||
Derivatives Not Designated in Hedge Relationships | ||||||||
Derivative [Line Items] | ||||||||
Notional amount | 1,729,600 | 1,729,600 | 2,331,400 | |||||
Derivatives Not Designated in Hedge Relationships | Foreign currency forward contracts | ||||||||
Derivative [Line Items] | ||||||||
Notional amount | $ 172,100 | $ 172,100 | $ 151,500 |
Financial Instruments and Fin_4
Financial Instruments and Financial Risk - Derivative Instruments (Details) - USD ($) | Sep. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | May 31, 2022 | Oct. 31, 2021 |
Derivatives Designated in Hedge Relationships | Interest rate caps | |||||
Derivative [Line Items] | |||||
Notional Amount | $ 1,000,000 | $ 2,000,000 | $ 1,000,000,000 | ||
Fair Value, Derivative Asset | 15,327,000 | 34,764,000 | |||
Fair Value, Derivative Liabilities | 0 | 0 | |||
Derivatives Designated in Hedge Relationships | Interest rate caps | Forward Start Date Beginning on July 31, 2023 | |||||
Derivative [Line Items] | |||||
Notional Amount | $ 1,000,000,000 | ||||
Derivatives Designated in Hedge Relationships | Interest rate swaps | |||||
Derivative [Line Items] | |||||
Notional Amount | 400,000 | $ 400,000,000 | 0 | ||
Fair Value, Derivative Asset | 6,808,000 | 0 | |||
Fair Value, Derivative Liabilities | 0 | 0 | |||
Derivatives Not Designated in Hedge Relationships | |||||
Derivative [Line Items] | |||||
Notional Amount | 1,729,600 | 2,331,400 | |||
Fair Value, Derivative Asset | 24,422,000 | 37,485,000 | |||
Fair Value, Derivative Liabilities | 5,397,000 | 3,780,000 | |||
Derivatives Not Designated in Hedge Relationships | Foreign currency forward contracts | |||||
Derivative [Line Items] | |||||
Notional Amount | 172,100 | 151,500 | |||
Fair Value, Derivative Asset | 0 | 0 | |||
Fair Value, Derivative Liabilities | 1,221,000 | 272,000 | |||
Derivatives Not Designated in Hedge Relationships | Embedded derivatives | |||||
Derivative [Line Items] | |||||
Notional Amount | 157,500 | 179,900 | |||
Fair Value, Derivative Asset | 2,287,000 | 2,721,000 | |||
Fair Value, Derivative Liabilities | $ 4,176,000 | $ 3,508,000 |
Financial Instruments and Fin_5
Financial Instruments and Financial Risk - Activities of Derivative Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized (loss) gain on derivatives | $ 1,087 | $ (4,323) | ||
Interest rate caps | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized (loss) gain on derivatives | $ 0 | $ 3,348 | 0 | (6,098) |
Realized gain on interest rate derivatives recorded in interest expense, net | (7,277) | (4,473) | (27,288) | (5,752) |
Embedded derivatives | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized (loss) gain on derivatives | 1,833 | 359 | 1,087 | 1,776 |
Foreign currency forward contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Realized loss (gain) on foreign currency forward contracts recorded in foreign exchange (gain) loss | 1,946 | 4,157 | 3 | 3,662 |
Unrealized loss (gain) on foreign currency forward contracts recorded in foreign exchange (gain) loss | $ 1,230 | $ 0 | $ 949 | $ 0 |
Financial Instruments and Fin_6
Financial Instruments and Financial Risk - Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Derivatives Designated in Hedge Relationships | Interest rate caps | ||
Derivative [Line Items] | ||
Derivative asset | $ 15,327 | $ 34,764 |
Derivative liabilities | 0 | 0 |
Derivatives Designated in Hedge Relationships | Interest rate caps | Level 1 | ||
Derivative [Line Items] | ||
Derivative asset | 0 | 0 |
Derivatives Designated in Hedge Relationships | Interest rate caps | Level 2 | ||
Derivative [Line Items] | ||
Derivative asset | 15,327 | 34,764 |
Derivatives Designated in Hedge Relationships | Interest rate caps | Level 3 | ||
Derivative [Line Items] | ||
Derivative asset | 0 | 0 |
Derivatives Designated in Hedge Relationships | Interest rate swaps | ||
Derivative [Line Items] | ||
Derivative asset | 6,808 | 0 |
Derivative liabilities | 0 | 0 |
Derivatives Designated in Hedge Relationships | Interest rate swaps | Level 1 | ||
Derivative [Line Items] | ||
Derivative asset | 0 | |
Derivatives Designated in Hedge Relationships | Interest rate swaps | Level 2 | ||
Derivative [Line Items] | ||
Derivative asset | 6,808 | |
Derivatives Designated in Hedge Relationships | Interest rate swaps | Level 3 | ||
Derivative [Line Items] | ||
Derivative asset | 0 | |
Derivatives Designated in Hedge Relationships | Carrying Amount | Interest rate caps | ||
Derivative [Line Items] | ||
Derivative asset | 15,327 | 34,764 |
Derivatives Designated in Hedge Relationships | Carrying Amount | Interest rate swaps | ||
Derivative [Line Items] | ||
Derivative asset | 6,808 | |
Derivatives Not Designated in Hedge Relationships | ||
Derivative [Line Items] | ||
Derivative asset | 24,422 | 37,485 |
Derivative liabilities | 5,397 | 3,780 |
Derivatives Not Designated in Hedge Relationships | Term loan B, due 2026 | Level 1 | ||
Derivative [Line Items] | ||
Current portion of long-term debt | 0 | |
Long-term debt | 0 | |
Derivatives Not Designated in Hedge Relationships | Term loan B, due 2026 | Level 2 | ||
Derivative [Line Items] | ||
Current portion of long-term debt | 493,763 | |
Long-term debt | 4,988 | |
Derivatives Not Designated in Hedge Relationships | Term loan B, due 2026 | Level 3 | ||
Derivative [Line Items] | ||
Current portion of long-term debt | 0 | |
Long-term debt | 0 | |
Derivatives Not Designated in Hedge Relationships | Other long-term debt | Level 1 | ||
Derivative [Line Items] | ||
Long-term debt | 0 | 0 |
Derivatives Not Designated in Hedge Relationships | Other long-term debt | Level 2 | ||
Derivative [Line Items] | ||
Long-term debt | 449 | 447 |
Derivatives Not Designated in Hedge Relationships | Other long-term debt | Level 3 | ||
Derivative [Line Items] | ||
Long-term debt | 0 | 0 |
Derivatives Not Designated in Hedge Relationships | Term loan, due 2026 | Level 1 | ||
Derivative [Line Items] | ||
Current portion of long-term debt | 0 | 0 |
Derivatives Not Designated in Hedge Relationships | Term loan, due 2026 | Level 2 | ||
Derivative [Line Items] | ||
Current portion of long-term debt | 1,749,877 | 1,626,460 |
Derivatives Not Designated in Hedge Relationships | Term loan, due 2026 | Level 3 | ||
Derivative [Line Items] | ||
Current portion of long-term debt | 0 | 0 |
Derivatives Not Designated in Hedge Relationships | Finance Lease Obligations (with current portion) | Level 1 | ||
Derivative [Line Items] | ||
Current portion of long-term debt | 0 | 0 |
Derivatives Not Designated in Hedge Relationships | Finance Lease Obligations (with current portion) | Level 2 | ||
Derivative [Line Items] | ||
Current portion of long-term debt | 71,617 | 58,677 |
Derivatives Not Designated in Hedge Relationships | Finance Lease Obligations (with current portion) | Level 3 | ||
Derivative [Line Items] | ||
Current portion of long-term debt | 0 | 0 |
Derivatives Not Designated in Hedge Relationships | Revolving Credit Facility | Level 1 | ||
Derivative [Line Items] | ||
Long-term debt | 0 | |
Derivatives Not Designated in Hedge Relationships | Revolving Credit Facility | Level 2 | ||
Derivative [Line Items] | ||
Long-term debt | 196,672 | |
Derivatives Not Designated in Hedge Relationships | Revolving Credit Facility | Level 3 | ||
Derivative [Line Items] | ||
Long-term debt | 0 | |
Derivatives Not Designated in Hedge Relationships | Foreign Exchange Forward | Level 1 | ||
Derivative [Line Items] | ||
Derivative asset | 0 | |
Derivative liabilities | 0 | |
Derivatives Not Designated in Hedge Relationships | Foreign Exchange Forward | Level 2 | ||
Derivative [Line Items] | ||
Derivative asset | 272 | |
Derivative liabilities | 1,221 | |
Derivatives Not Designated in Hedge Relationships | Foreign Exchange Forward | Level 3 | ||
Derivative [Line Items] | ||
Derivative asset | 0 | |
Derivative liabilities | 0 | |
Derivatives Not Designated in Hedge Relationships | Embedded derivatives | ||
Derivative [Line Items] | ||
Derivative asset | 2,287 | 2,721 |
Derivative liabilities | 4,176 | 3,508 |
Derivatives Not Designated in Hedge Relationships | Embedded derivatives | Level 1 | ||
Derivative [Line Items] | ||
Derivative asset | 0 | 0 |
Derivative liabilities | 0 | 0 |
Derivatives Not Designated in Hedge Relationships | Embedded derivatives | Level 2 | ||
Derivative [Line Items] | ||
Derivative asset | 2,287 | 2,721 |
Derivative liabilities | 4,176 | 3,508 |
Derivatives Not Designated in Hedge Relationships | Embedded derivatives | Level 3 | ||
Derivative [Line Items] | ||
Derivative asset | 0 | 0 |
Derivative liabilities | 0 | 0 |
Derivatives Not Designated in Hedge Relationships | Carrying Amount | Term loan B, due 2026 | ||
Derivative [Line Items] | ||
Current portion of long-term debt | 472,604 | |
Long-term debt | 4,786 | |
Derivatives Not Designated in Hedge Relationships | Carrying Amount | Other long-term debt | ||
Derivative [Line Items] | ||
Long-term debt | 449 | 447 |
Derivatives Not Designated in Hedge Relationships | Carrying Amount | Term loan, due 2026 | ||
Derivative [Line Items] | ||
Current portion of long-term debt | 1,750,185 | 1,747,115 |
Derivatives Not Designated in Hedge Relationships | Carrying Amount | Finance Lease Obligations (with current portion) | ||
Derivative [Line Items] | ||
Current portion of long-term debt | 71,617 | 58,677 |
Derivatives Not Designated in Hedge Relationships | Carrying Amount | Revolving Credit Facility | ||
Derivative [Line Items] | ||
Long-term debt | 196,672 | |
Derivatives Not Designated in Hedge Relationships | Carrying Amount | Foreign Exchange Forward | ||
Derivative [Line Items] | ||
Derivative asset | 272 | |
Derivative liabilities | 1,221 | |
Derivatives Not Designated in Hedge Relationships | Carrying Amount | Embedded derivatives | ||
Derivative [Line Items] | ||
Derivative asset | 2,287 | 2,721 |
Derivative liabilities | $ 4,176 | $ 3,508 |
Segment Information - Additiona
Segment Information - Additional Information (Details) - segment | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting [Abstract] | ||||
Number of reportable segments | 3 | |||
Operating Segments | Nordion | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Customer One | ||||
Segment Reporting Information [Line Items] | ||||
Percentage | 15.40% | 21% | 19.90% | 17.10% |
Operating Segments | Nordion | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Customer Two | ||||
Segment Reporting Information [Line Items] | ||||
Percentage | 13.50% | 14.70% | 14.40% | 16.20% |
Operating Segments | Nordion | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Customer Three | ||||
Segment Reporting Information [Line Items] | ||||
Percentage | 13.50% | 10.10% | 12.70% | 11.80% |
Operating Segments | Nordion | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | Customer Four | ||||
Segment Reporting Information [Line Items] | ||||
Percentage | 11.30% | 12.10% | 11.70% |
Segment Information - Segment O
Segment Information - Segment Operating Results (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting Information [Line Items] | ||||
Net revenues | $ 263,177 | $ 248,704 | $ 739,049 | $ 752,097 |
Total capital expenditures | 150,149 | 110,642 | ||
Sterigenics | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 168,347 | 157,723 | 494,934 | 464,977 |
Total capital expenditures | 115,438 | 90,444 | ||
Nordion | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 40,098 | 35,071 | 80,624 | 119,551 |
Total capital expenditures | 23,875 | 12,045 | ||
Nelson Labs | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 54,732 | 55,910 | 163,491 | 167,569 |
Total capital expenditures | 10,836 | 8,153 | ||
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 263,177 | 248,704 | 739,049 | 752,097 |
Segment income | 134,328 | 125,152 | 361,281 | 376,636 |
Operating Segments | Sterigenics | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 168,347 | 157,723 | 494,934 | 464,977 |
Segment income | 93,169 | 85,587 | 267,459 | 250,088 |
Operating Segments | Nordion | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 40,098 | 35,071 | 80,624 | 119,551 |
Segment income | 24,052 | 20,294 | 43,362 | 69,179 |
Operating Segments | Nelson Labs | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 54,732 | 55,910 | 163,491 | 167,569 |
Segment income | 17,107 | 19,271 | 50,460 | 57,369 |
Intersegment | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | $ (11,200) | $ (7,400) | $ (28,800) | $ (38,700) |
Segment Information - Reconcili
Segment Information - Reconciliation of Reportable Segment Amounts (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 19, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting Information [Line Items] | |||||
Share-based compensation | $ 24,034 | $ 14,955 | |||
Impairment of investment in unconsolidated affiliate | $ 0 | $ 0 | 0 | 9,613 | |
Accretion of asset retirement obligation | 1,683 | 1,645 | |||
Net Income (Loss) Attributable to Parent, Total | (13,660) | 25,090 | 12,695 | 86,149 | |
Unrealized loss (gain) | (1,087) | 4,323 | |||
Cancellation Fee Received For Lease Termination | 1,000 | ||||
Derivatives Not Designated in Hedge Relationships | |||||
Segment Reporting Information [Line Items] | |||||
Unrealized loss (gain) | 3,300 | (6,100) | |||
Ethylene Oxide Tort Litigation - Illinois | |||||
Segment Reporting Information [Line Items] | |||||
Litigation settlement | (407,712) | 0 | |||
Ethylene Oxide Tort Litigation - Illinois | Pending Litigation | |||||
Segment Reporting Information [Line Items] | |||||
Amount awarded to other party | $ 358,700 | 408,000 | |||
Ethylene Oxide Tort Litigation - Illinois | Term loan B, due 2026 | |||||
Segment Reporting Information [Line Items] | |||||
Interest expense, net | 10,200 | 18,000 | |||
Ethylene Oxide Tort Litigation – Georgia | |||||
Segment Reporting Information [Line Items] | |||||
Professional services relating to EO sterilization facilities | 35,000 | ||||
Litigation settlement | 35,000 | 0 | |||
Interest rate caps | |||||
Segment Reporting Information [Line Items] | |||||
Unrealized loss (gain) | 0 | (3,348) | 0 | 6,098 | |
Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Segment income | 134,328 | 125,152 | 361,281 | 376,636 | |
Operating Segments | Nordion | |||||
Segment Reporting Information [Line Items] | |||||
Segment income | 24,052 | 20,294 | 43,362 | 69,179 | |
Segment Reconciling Items | |||||
Segment Reporting Information [Line Items] | |||||
Interest expense, net | 30,464 | 20,080 | 82,275 | 53,974 | |
Depreciation and amortization | 38,175 | 36,104 | 117,203 | 109,092 | |
Share-based compensation | 8,378 | 4,616 | 24,135 | 14,955 | |
Gain on foreign currency and derivatives not designated as hedging instruments, net | 1,333 | 3,194 | 1,459 | (4,788) | |
Acquisition and divestiture related charges, net | 72 | 447 | 817 | 978 | |
Business optimization project expenses | 1,237 | 1,035 | 7,093 | 1,609 | |
Plant closure expenses | 126 | 2,627 | (640) | 3,776 | |
Professional services relating to EO sterilization facilities | 18,518 | 14,501 | 51,900 | 50,238 | |
Litigation settlement | 35,000 | 0 | 35,000 | 0 | |
Accretion of asset retirement obligation | 555 | 526 | 1,682 | 1,644 | |
COVID-19 expenses | 0 | 6 | 0 | 154 | |
Net Income (Loss) Attributable to Parent, Total | $ 470 | $ 42,016 | $ 40,357 | $ 135,391 |