Sotera Health Company (SHC.O): 2026Q2 Recap: Broad-Based Strength Moves Guidance Higher

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06 Aug 2026 13:50:01 ET │ 13 pages

Sotera Health Company (SHC.O)

2Q26 Recap: Broad-Based Strength Moves Guidance Higher

CITI'S TAKE

FY26 guidance was updated with revenue growth of +5.25-6.75% CC Y/Y

(+25bps) and an adj. EPS of $0.95-$1.01 (+$0.01), compared to consensus

of 5.93% (VA) and $0.97 (FS). Sterigenics volumes continued to be strong

during Q2, leading management to reiterate its outlook of +M-HSD growth

for the FY. Nelson Labs and Nordion outlooks were also reiterated at +LSD

growth and +L-MSD growth, respectively. Adj. EBITDA guidance was

increased to $634-$643mn, representing +5.75-7.25% CC Y/Y growth

(+25bps). Overall, the guide update was driven by a stronger 1H

performance and higher confidence for 2H. We view the 2Q results and the

updated guide positively, primarily led by continued volume recoveries in

both Sterigenics and Nelson. We update our model to reflect the quarter and

revised guidance, maintain our Buy/High Risk rating, and increase our TP to

$25 from $23 as estimates move higher.

FY26 Guidance — The company increased its FY26 outlook, calling for total revenue

growth of +6.25-7.75% (+5.25-6.75% CC), implying revenue of $1.236-$1.254bn

($1.233-1.251bn prior). Within Sterigenics, management reiterated its expectation

for +M-HSD% CC revenue growth, implying a 2H growth acceleration vs 1H. Mgmt

noted the confidence in the 2H acceleration is driven by stable demand seen from

customers, backlog and pipeline, and favorable comps. 2H also stands to benefit

from one large customer starting to outsource sterilization work with SHC, as well

as initial revenue from the X-ray facility coming online. One customer completed the

validation process at the new facility; however, SHC anticipates taking several years

to get the facility fully online. For Nordion, FY26 CC revenue growth guidance was

reiterated at +L-MSD% CC. The 2H revenue split is expected to be roughly even

between the quarters. Mgmt did call out a shipment pulled forward into 2Q from 2H

driving 1H above the targeted 40-45% of FY revenue. For Nelson Labs, management

also reiterated its +LSD outlook. Segment margin is expected to be in the low-tomid-30% range.…