Sotera Health (SHC) AI Stock Analysis

• Market Cap: $4.75B
• Dividend Yield: N/A
• Average Volume (3M): 1.37M
• Price to Earnings (P/E): 59.6
• Beta (1Y): 0.97
• Revenue Growth: 2.67%
• EPS Growth: -21.96%
• Country: US
• Employees: 3,000
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Diagnostics & Research
• EPS (TTM): 0.26
• Shares Outstanding: 284,392,100
• 10 Day Avg. Volume: 1,292,976
• 30 Day Avg. Volume: 1,367,536
• PEG Ratio: 0.93
• Price to Book (P/B): 8.27
• Price to Sales (P/S): 4.30
• P/FCF Ratio: 33.58
• Enterprise Value/Market Cap: 1.37
• Enterprise Value/Revenue: 5.60
• Enterprise Value/Gross Profit: 10.10
• Enterprise Value/Ebitda: 14.59
• 1Y Price Target: $22.20
• Price Target Upside: 27.59% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): 0.94
• Revenue Forecast (FY): $1.23B

• Rating: 57 Neutral
• Price Target: $17.50 ▲(0.57% Upside)
• Action: Reiterated Date: 02/25/26
• Date: Action: Reiterated 02/25/26

The score is held back mainly by balance-sheet leverage and weak technical momentum, with additional pressure from a high P/E and no dividend support. Offsetting factors include improving profitability/cash generation and a generally positive earnings call with clear 2026 growth and margin guidance plus ongoing deleveraging, though near-term softness, higher capex, and litigation risk temper upside.

Positive Factors

Durable Revenue Trajectory

Sotera’s 20+ year streak of revenue growth and $1.16B 2025 revenues indicate mission-critical demand from healthcare, pharma and device customers. Long-term contracts, regulatory-driven sterilization needs and diversified units support steady top-line durability over multiple years.

Stable, High Margins

Consistently high gross margins (~55%) and a ~51% adjusted EBITDA margin reflect structural pricing power and operating leverage in sterilization and lab services. Margin resilience supports enduring cash generation even through cyclical volume swings and mix shifts.

Improving Cash Flow & Liquidity

Material free cash flow and a clear deleveraging trend (available liquidity ~$940M, leverage down to ~3.2x) strengthen financial flexibility. Reliable cash generation funds capex, supports debt reductions and underpins the company’s ability to invest in growth initiatives sustainably.

Negative Factors

Elevated Leverage

A materially debt-heavy capital structure (~$2.27B debt, ~3.75x debt-to-equity) constrains financial flexibility and heightens refinancing and interest-rate exposure. High leverage limits room for operational setbacks and makes sustained deleveraging essential to reduce long-term solvency risk.

Ongoing Litigation Risk

Active, high-profile litigation (including a July 2026 trial) and ethylene-oxide related legal exposure create multi-quarter uncertainty. Potential settlements, defense costs or regulatory outcomes could materially affect cash flow, capex priorities and insurance or financing terms over the medium term.

Higher CapEx & Greenfield Ramp Risk

Elevated 2026 capex guidance and a greenfield X-ray build create short-to-medium-term cash and margin pressure. If utilization lags commitments, depreciation and ramp losses can dilute margins and slow return on invested capital through 2027, challenging near-term free cash flow conversion.

Sotera Health Business Overview & Revenue Model

Company Description

Sotera Health Company provides sterilization, and lab testing and advisory services in the United States, Canada, Europe, and internationally. The company's sterilization services include gamma and electron beam irradiation, and EO processing; Nelson Labs comprise microbiological and analytical chemistry testing; and advisory services for medical device and biopharmaceutical industries. It serves medical devices; pharmaceuticals; food and agricultural products; and commercial, advanced, and specialty application industries. The company was formerly known as Sotera Health Topco, Inc. and changed its name to Sotera Health Company in October 2020. Sotera Health Company was incorporated in 2017 and is headquartered in Broadview Heights, Ohio.

How the Company Makes Money

Sotera Health generates revenue primarily through its sterilization services, which account for a significant portion of its earnings. The company charges clients in the healthcare and pharmaceutical industries for sterilizing medical devices and products, ensuring they meet safety standards. Additionally, SHC earns income from its lab services, including testing and validation for various medical products. Key revenue streams include long-term contracts with major manufacturers and partnerships with healthcare providers that require consistent sterilization services. The company also benefits from the increasing demand for sterilization due to the growing healthcare sector and regulatory requirements for product safety.

Sotera Health Financial Statement Overview

Summary

Operating profile is improving (steady ~55% gross margin, net margin up to ~6.7% in 2025, and stronger recent free cash flow), but the balance sheet is a major constraint with high leverage (debt ~$2.27B vs equity ~$606M; ~3.75x debt-to-equity) and a history of earnings/cash-flow volatility (notably 2022–2023).

Income Statement

Revenue has grown steadily over the period, rising to $1.16B in 2025 (annual) with a modest ~4.9% increase in 2024 and stronger growth earlier in the cycle. Profitability has improved meaningfully versus the 2022 loss year: net margin rebounded to ~6.7% in 2025 from ~4.0% in 2024 and negative levels in 2022, while gross margin stayed consistently strong around ~55%. The key weakness is earnings volatility (losses in 2020 and 2022) and a step-down in EBITDA margin from ~40%+ in 2021–2024 to ~33.8% in 2025, suggesting some pressure from costs, mix, or non-recurring items.

Balance Sheet

Leverage remains the central balance-sheet risk: total debt is high at ~$2.27B in 2025 (annual) versus equity of ~$606M, translating to a still-elevated debt-to-equity of ~3.75x (improved from ~5.81x in 2024). Equity has rebuilt versus 2024, and return on equity is positive (~12.9% in 2025), but the capital structure is meaningfully debt-heavy, leaving less flexibility if operating conditions soften or refinancing costs rise.

Cash Flow

Cash generation is generally supportive, with operating cash flow of ~$287M and free cash flow of ~$149M in 2025 (annual), and a large jump in free cash flow versus 2024. Operating cash flow exceeds net income in 2024–2025, which is a positive quality signal for earnings. The main concern is variability: 2023 showed negative operating cash flow and deeply negative free cash flow, highlighting potential working-capital swings or episodic cash uses that can interrupt deleveraging.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	1.16B	1.10B	1.05B	1.00B	931.48M
Gross Profit	645.53M	602.29M	577.16M	557.00M	518.67M
EBITDA	303.23M	442.20M	406.83M	-17.41M	400.81M
Net Income	77.95M	44.40M	51.38M	-233.57M	116.88M
Balance Sheet
Total Assets	3.26B	3.07B	3.13B	3.12B	2.79B
Cash, Cash Equivalents and Short-Term Investments	346.46M	277.24M	296.41M	395.21M	106.92M
Total Debt	2.27B	2.35B	2.33B	2.03B	1.83B
Total Liabilities	2.66B	2.67B	2.69B	2.77B	2.20B
Stockholders Equity	606.03M	404.91M	443.73M	350.24M	586.10M
Cash Flow
Free Cash Flow	149.18M	45.09M	-362.71M	95.58M	179.38M
Operating Cash Flow	287.19M	224.16M	-147.73M	277.96M	281.55M
Investing Cash Flow	-135.14M	-179.00M	-214.91M	-181.90M	-159.83M
Financing Cash Flow	-100.53M	-50.56M	265.96M	197.76M	-117.29M

Sotera Health Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 17.40
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Positive
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SHC, the sentiment is Negative. The current price of 17.4 is below the 20-day moving average (MA) of 17.51, below the 50-day MA of 17.89, and above the 200-day MA of 15.25, indicating a neutral trend. The MACD of -0.35 indicates Positive momentum. The RSI at 28.27 is Positive, neither overbought nor oversold. The STOCH value of 32.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SHC.

Sotera Health Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
QGEN	72 Outperform	$10.03B	23.74	11.57%	3.31%	5.32%	336.29%
DGX	70 Neutral	$23.31B	23.95	14.17%	1.80%	13.74%	14.87%
EXAS	64 Neutral	$19.75B	-93.49	-8.66%	―	14.47%	-353.69%
ILMN	59 Neutral	$18.79B	22.31	33.36%	―	-2.39%	―
SHC	57 Neutral	$4.75B	59.61	15.42%	―	2.67%	-21.96%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%
CRL	51 Neutral	$8.17B	-56.68	-4.36%	―	-0.92%	-118.96%

Sotera Health Corporate Events

Sotera Health Announces General Counsel Transition and Retirement

In 2025 Sotera Health posted its 20th consecutive year of revenue growth, with full‑year net revenues rising 5.7% to $1.164 billion and net income increasing to $78 million from $44 million in 2024. Adjusted EBITDA climbed 8.2% to $594 million and Adjusted EPS reached $0.86, backed by strong results at Sterigenics and Nordion, improved margins at Nelson Labs and a leaner balance sheet with net leverage reduced to 3.2x.

Fourth‑quarter 2025 net revenues rose 4.6% to $303 million and net income nearly tripled to $35 million, as pricing and volume tailwinds in Sterigenics offset a cobalt‑60 harvest‑related revenue dip at Nordion and modest growth at Nelson Labs. For the full year, Sterigenics and Nordion delivered high‑single‑digit revenue gains and Nelson Labs expanded segment income despite a small revenue decline, underscoring operational resilience across the portfolio.

For 2026 Sotera Health is projecting net revenues between $1.233 billion and $1.251 billion and Adjusted EBITDA of $632 million to $641 million, signaling mid‑single‑digit growth and Adjusted EPS in the $0.93 to $1.01 range. Planned capital spending of $175 million to $225 million and expectations for strong free cash flow suggest continued investment capacity, though the outlook assumes stable supply of ethylene oxide and cobalt‑60 and manageable inflation and labor costs.

On February 18, 2026, Senior Vice President and General Counsel Alex Dimitrief notified the company he will retire on March 31, 2026, after three years in the role, and then serve for up to 12 months as an advisor on ethylene oxide litigation. Deputy General Counsel and Corporate Secretary Erika Ostrowski will be promoted to Senior Vice President and General Counsel effective April 1, 2026, providing leadership continuity in a key legal position as Sotera Health manages ongoing regulatory and litigation exposures.

The most recent analyst rating on (SHC) stock is a Buy with a $24.00 price target. To see the full list of analyst forecasts on Sotera Health stock, see the SHC Stock Forecast page.

Sotera Health Adds Independent Director to Board Committees

On February 4, 2026, Sotera Health Company expanded its Board of Directors from eleven to twelve members and appointed former Timken chief executive Richard G. Kyle as a Class III director, with immediate effect. Kyle, an experienced industrial executive who led Timken’s financial transformation and strategic diversification between 2014 and 2024 and who also serves on the boards of Timken and Sonoco Products Company, has been designated an independent director and will sit on Sotera Health’s Leadership Development and Compensation Committee as well as its Nominating and Corporate Governance Committee, signaling a move to bolster the company’s governance, strategic oversight, and executive-compensation stewardship through seasoned industrial and operational expertise.

The most recent analyst rating on (SHC) stock is a Buy with a $24.00 price target. To see the full list of analyst forecasts on Sotera Health stock, see the SHC Stock Forecast page.

Sotera Health Projects Continued Revenue Growth and Momentum

On January 12, 2026, Sotera Health presented at the 44th Annual J.P. Morgan Healthcare Conference in Cleveland, providing a business update and announcing that 2025 revenue was expected to surpass $1.16 billion, representing at least 5.5% year-over-year growth, or 5.0% on a constant-currency basis. The company highlighted that this performance would mark more than 20 consecutive years of annual revenue growth, underscoring the durability of its business model and financial profile, and signaled continued operational momentum ahead of its full-year 2025 results and 2026 outlook, scheduled for release on February 24, 2026.

The most recent analyst rating on (SHC) stock is a Buy with a $24.00 price target. To see the full list of analyst forecasts on Sotera Health stock, see the SHC Stock Forecast page.