UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended March 31, ~~2021~~2023


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

For the transition period from to

Commission file number 001-39729

SOTERA HEALTH COMPANY

(Exact name of registrant as specified in its charter)

Delaware

47-3531161

(State or other jurisdiction of incorporation or organization)

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

9100 South Hills Blvd, Suite 300

Broadview Heights, Ohio

44147

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code

(440)

~~262-1409~~262-1410

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


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

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

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

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


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

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

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

As of ~~May 6, 2021,~~April 26, 2023, there were ~~282,869,957~~282,516,526 shares of the registrant’s common stock, $0.01 par value per share, outstanding.

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SOTERA HEALTH COMPANY

- TABLE OF CONTENTS -

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

•~~adverse~~foreign currency exchange rates and changes in ~~industry trends;~~those rates:

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

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

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

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

•current and future legal ~~proceedings;~~proceedings and liability claims;

•adverse judgments in the ~~intensity~~EO tort litigation that may require an appellate bond or alternative form of ~~competition we face;~~

•security to appeal, and efforts by plaintiffs to enforce large judgments against us, or settlements of such litigation, any ~~market changes that~~one of which may have an adverse impact on our ~~long-term supply contracts with variable price clauses;~~liquidity;

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

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

•adverse changes in industry trends;

•competition we face;

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

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

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

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

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

•severe health events, such as the ~~risks~~ongoing impact of ~~doing business internationally;~~the COVID-19 pandemic, or environmental events;

•~~instability in global and regional economic and political conditions;~~

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

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

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

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

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

•our reliance on intellectual property to maintain our competitive position and the risk of claims from third parties that we infringe or misappropriate their intellectual property rights;

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

•our ability to maintain profitability in the future;

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

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

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

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

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

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

•~~our ability~~uncertainty around discontinuation of LIBOR and transition to ~~generate sufficient cash flows or access sufficient additional capital to meet our debt obligations or to fund our~~certain other ~~liquidity needs.~~interest “benchmarks.”

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

You should carefully consider the above factors, as well as the factors discussed elsewhere in this Quarterly Report on Form 10-Q, including under Part II, Item 1A, “Risk Factors,” as well as Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2022 (the ~~“2020~~“2022 10-K”). If any of these trends, risks or uncertainties actually ~~occurs~~occur or ~~continues,~~continue, our business, financial condition or operating results could be materially adversely affected, the trading prices of our securities could decline and you could lose all or part of your investment. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

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

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Part I—FINANCIAL INFORMATION

Item 1. Financial Statements

Sotera Health Company

Consolidated Balance Sheets

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


		As of					As of
		March 31, 2021		December 31, 2020			March 31, 2023		December 31, 2022
Assets	Assets	(Unaudited)				Assets	(Unaudited)
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	108,009	$	102,447	Cash and cash equivalents	$	647,948	$	395,214
Restricted cash short-term	Restricted cash short-term	7		7		Restricted cash short-term	12,232		1,080
Accounts receivable, net of allowance for uncollectible accounts of $603 and $708, respectively		96,393		91,735
Accounts receivable, net of allowance for uncollectible accounts of $2,587 and $1,871, respectively						Accounts receivable, net of allowance for uncollectible accounts of $2,587 and $1,871, respectively	109,163		118,482
Inventories, net	Inventories, net	33,375		34,093		Inventories, net	46,736		37,145
Prepaid expenses and other current assets	Prepaid expenses and other current assets	69,758		64,964		Prepaid expenses and other current assets	87,303		80,995
Income taxes receivable	Income taxes receivable	20,825		21,769		Income taxes receivable	20,417		12,094
Total current assets	Total current assets	328,367		315,015		Total current assets	923,799		645,010
Property, plant, and equipment, net	Property, plant, and equipment, net	611,620		609,814		Property, plant, and equipment, net	816,164		774,527
Operating lease assets	Operating lease assets	47,117		45,963		Operating lease assets	24,941		26,481
Deferred income taxes	Deferred income taxes	8,088		8,424		Deferred income taxes	4,165		4,101
Investment in unconsolidated affiliate		9,227		13,457
Post-retirement assets						Post-retirement assets	36,915		35,570
Other assets	Other assets	9,281		9,304		Other assets	32,909		38,983
Other intangible assets, net	Other intangible assets, net	656,572		643,366		Other intangible assets, net	471,860		491,265
Goodwill	Goodwill	1,106,728		1,115,936		Goodwill	1,103,420		1,101,768
Total assets	Total assets	$	2,777,000	$	2,761,279	Total assets	$	3,414,173	$	3,117,705
Liabilities and equity	Liabilities and equity					Liabilities and equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	57,174	$	52,400	Accounts payable	$	61,939	$	74,139
Accrued liabilities	Accrued liabilities	56,373		60,518		Accrued liabilities	496,791		490,130
Deferred revenue	Deferred revenue	5,958		6,056		Deferred revenue	15,161		12,140

Current portion of long-term debt						Current portion of long-term debt	4,031		197,119
Current portion of finance lease obligations	Current portion of finance lease obligations	1,108		1,173		Current portion of finance lease obligations	8,588		1,722
Current portion of operating lease obligations	Current portion of operating lease obligations	9,631		9,383		Current portion of operating lease obligations	6,942		7,554
Current portion of asset retirement obligations	Current portion of asset retirement obligations	391		620		Current portion of asset retirement obligations	2,108		2,896
Income taxes payable	Income taxes payable	7,384		10,448		Income taxes payable	4,589		5,867
Total current liabilities	Total current liabilities	138,019		140,598		Total current liabilities	600,149		791,567
Long-term debt, less current portion	Long-term debt, less current portion	1,837,580		1,824,789		Long-term debt, less current portion	2,222,333		1,747,115
Finance lease obligations, less current portion	Finance lease obligations, less current portion	33,432		34,939		Finance lease obligations, less current portion	61,735		56,955
Operating lease obligations, less current portion	Operating lease obligations, less current portion	39,806		38,941		Operating lease obligations, less current portion	20,561		21,577
Noncurrent asset retirement obligations	Noncurrent asset retirement obligations	45,633		45,013		Noncurrent asset retirement obligations	43,350		42,586
Deferred lease income	Deferred lease income	21,362		21,255		Deferred lease income	18,785		18,902
Post-retirement obligations	Post-retirement obligations	46,959		48,223		Post-retirement obligations	7,858		7,910
Mandatorily redeemable noncontrolling interest		0		13,625
Noncurrent liabilities	Noncurrent liabilities	18,795		17,506		Noncurrent liabilities	15,051		12,831
Deferred income taxes	Deferred income taxes	129,670		121,816		Deferred income taxes	63,226		68,024
Total liabilities	Total liabilities	2,311,256		2,306,705		Total liabilities	3,053,048		2,767,467
See Commitments and contingencies note	See Commitments and contingencies note	0		0		See Commitments and contingencies note
Equity:	Equity:					Equity:
Common stock, with $0.01 par value, 1,200,000 shares authorized; 285,990 shares issued at March 31, 2021 and December 31, 2020, respectively		2,860		2,860
Preferred stock, with $0.01 par value, 120,000 authorized; 0 shares issued at March 31, 2021 and December 31, 2020, respectively		0		0
Treasury stock, at cost (3,090 and 2,742 shares at March 31, 2021 and December 31, 2020, respectively)		(34,000)		(34,000)
Common stock, with $0.01 par value, 1,200,000 shares authorized; 286,037 shares issued at March 31, 2023 and December 31, 2022						Common stock, with $0.01 par value, 1,200,000 shares authorized; 286,037 shares issued at March 31, 2023 and December 31, 2022	2,860		2,860
Preferred stock, with $0.01 par value, 120,000 authorized; no shares issued at March 31, 2023 and December 31, 2022						Preferred stock, with $0.01 par value, 120,000 authorized; no shares issued at March 31, 2023 and December 31, 2022	—		—
Treasury stock, at cost (3,520 and 3,616 shares at March 31, 2023 and December 31, 2022, respectively)						Treasury stock, at cost (3,520 and 3,616 shares at March 31, 2023 and December 31, 2022, respectively)	(29,420)		(29,775)
Additional paid-in capital	Additional paid-in capital	1,169,852		1,166,412		Additional paid-in capital	1,195,357		1,189,622
Retained deficit	Retained deficit	(578,286)		(589,128)		Retained deficit	(702,974)		(705,816)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(97,162)		(93,842)		Accumulated other comprehensive loss	(104,698)		(106,653)
Total equity attributable to Sotera Health Company		463,264		452,302
Noncontrolling interests		2,480		2,272
Total equity	Total equity	465,744		454,574		Total equity	361,125		350,238
Total liabilities and equity	Total liabilities and equity	$	2,777,000	$	2,761,279	Total liabilities and equity	$	3,414,173	$	3,117,705

See notes to consolidated financial statements.

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Sotera Health Company

Consolidated Statements of Operations and Comprehensive Income ~~(Loss)~~

(in thousands, except per share amounts)


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2023		2022
		(Unaudited)					(Unaudited)
Revenues:	Revenues:					Revenues:
Service	Service	$	188,698	$	167,405	Service	$	214,510	$	206,218
Product	Product	23,450		20,795		Product	6,080		30,536
Total net revenues	Total net revenues	212,148		188,200		Total net revenues	220,590		236,754
Cost of revenues:	Cost of revenues:					Cost of revenues:
Service	Service	85,036		83,069		Service	104,210		94,576
Product	Product	11,740		8,614		Product	4,877		13,303
Total cost of revenues	Total cost of revenues	96,776		91,683		Total cost of revenues	109,087		107,879
Gross profit	Gross profit	115,372		96,517		Gross profit	111,503		128,875
Operating expenses:	Operating expenses:					Operating expenses:
Selling, general and administrative expenses	Selling, general and administrative expenses	52,465		37,053		Selling, general and administrative expenses	61,910		59,542
Amortization of intangible assets	Amortization of intangible assets	16,543		14,599		Amortization of intangible assets	16,227		15,841

Total operating expenses	Total operating expenses	69,008		51,652		Total operating expenses	78,137		75,383
Operating income	Operating income	46,364		44,865		Operating income	33,366		53,492
Interest expense, net	Interest expense, net	21,282		56,562		Interest expense, net	28,870		10,404
Loss on extinguishment of debt		14,312		0
Foreign exchange loss (gain)		578		(627)
Other (income) expense, net		(3,890)		3,150
Income (loss) before income taxes		14,082		(14,220)
Provision (benefit) for income taxes		3,017		(12,234)
Net income (loss)		11,065		(1,986)
Less: Net income (loss) attributable to noncontrolling interests		223		(22)
Net income (loss) attributable to Sotera Health Company		10,842		(1,964)
Other comprehensive (loss) income net of tax:
Pension and post-retirement benefits (net of taxes of $84 and $(744), respectively)		(249)		2,207
Interest rate swaps (net of taxes of $0 and $1,234, respectively)		0		(3,479)
Foreign exchange loss						Foreign exchange loss	347		788
Other income, net						Other income, net	(1,253)		(2,967)
Income before income taxes						Income before income taxes	5,402		45,267
Provision for income taxes						Provision for income taxes	2,560		14,626
Net income						Net income	2,842		30,641
Other comprehensive income (loss) net of tax:						Other comprehensive income (loss) net of tax:
Pension and post-retirement benefits (net of taxes of $(17) and $(92), respectively)						Pension and post-retirement benefits (net of taxes of $(17) and $(92), respectively)	(51)		(274)
Interest rate derivatives (net of taxes of $(3,396) and $2,109, respectively)						Interest rate derivatives (net of taxes of $(3,396) and $2,109, respectively)	(9,251)		6,179
Foreign currency translation	Foreign currency translation	(3,086)		(72,967)		Foreign currency translation	11,257		14,975
Comprehensive income (loss)		7,730		(76,225)
Less: comprehensive income (loss) attributable to noncontrolling interests		208		(22)
Comprehensive income (loss) attributable to Sotera Health Company		$	7,522	$	(76,203)
Earnings (loss) per share:
Comprehensive income						Comprehensive income	$	4,797	$	51,521
Earnings per share:						Earnings per share:
Basic	Basic	$	0.04	$	(0.01)	Basic	$	0.01	$	0.11
Diluted	Diluted	0.04		(0.01)		Diluted	0.01		0.11
Weighted average number of shares outstanding:	Weighted average number of shares outstanding:					Weighted average number of shares outstanding:
Basic	Basic	278,827		232,400		Basic	280,691		279,829
Diluted	Diluted	278,968		232,400		Diluted	282,977		279,908

See notes to consolidated financial statements.

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Sotera Health Company

Consolidated Statements of Cash Flows

(in thousands)


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2023		2022
		(Unaudited)					(Unaudited)
Operating activities:	Operating activities:					Operating activities:
Net income (loss)		$	11,065	$	(1,986)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net income						Net income	$	2,842	$	30,641
Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	Depreciation	15,379		16,110		Depreciation	18,931		15,867
Amortization of intangible assets	Amortization of intangible assets	22,282		19,913		Amortization of intangible assets	20,607		20,182

Loss on extinguishment of debt		14,312		0
Deferred income taxes	Deferred income taxes	(3,637)		(6,683)		Deferred income taxes	(1,770)		5,633
Share-based compensation expense	Share-based compensation expense	3,449		1,725		Share-based compensation expense	7,288		4,538
Accretion of asset retirement obligations	Accretion of asset retirement obligations	551		471		Accretion of asset retirement obligations	572		520
Unrealized foreign exchange (gains) / losses		2,354		(4,876)
Unrealized (gain) / loss on embedded derivative instruments		(853)		4,819
Gain (loss) on interest rate swap		0		(4,713)
Unrealized foreign exchange loss						Unrealized foreign exchange loss	802		2,430
Unrealized loss (gain) on derivatives not designated as hedging instruments						Unrealized loss (gain) on derivatives not designated as hedging instruments	227		(7,364)
Amortization of debt issuance costs	Amortization of debt issuance costs	1,663		2,977		Amortization of debt issuance costs	1,910		1,414
Other	Other	(2,843)		(2,306)		Other	(1,328)		(1,989)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(4,134)		(433)		Accounts receivable	10,223		(6,387)
Inventories	Inventories	1,099		(1,553)		Inventories	(9,512)		9,323
Other current assets	Other current assets	(2,324)		(1,404)		Other current assets	(6,318)		(8,934)
Accounts payable	Accounts payable	6,625		(733)		Accounts payable	(9,610)		(12,742)
Accrued liabilities	Accrued liabilities	(5,542)		(8,334)		Accrued liabilities	8,826		2,479
Income taxes payable / receivable		(4,518)		(8,132)
Income taxes payable / receivable, net						Income taxes payable / receivable, net	(9,551)		(5,222)
Other liabilities	Other liabilities	1,513		(61)		Other liabilities	(372)		(81)
Other long-term assets	Other long-term assets	(282)		889		Other long-term assets	104		(341)
Net cash provided by operating activities	Net cash provided by operating activities	56,159		5,690		Net cash provided by operating activities	33,871		49,967
Investing activities:	Investing activities:					Investing activities:
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(20,942)		(12,989)		Purchases of property, plant and equipment	(45,000)		(35,546)
Purchase of mandatorily redeemable noncontrolling interest in Nelson Laboratories Fairfield, Inc.		(12,425)		0
Purchase of BioScience Laboratories, LLC, net of cash acquired		(13,152)		0
Adjustment to purchase of Regulatory Compliance Associates Inc.						Adjustment to purchase of Regulatory Compliance Associates Inc.	—		63
Other investing activities						Other investing activities	32		—
Net cash used in investing activities	Net cash used in investing activities	(46,519)		(12,989)		Net cash used in investing activities	(44,968)		(35,483)
Financing activities:	Financing activities:					Financing activities:
Proceeds from revolving credit facility		0		50,000
Proceeds from long-term borrowings						Proceeds from long-term borrowings	500,000		—
Payment on revolving credit facility						Payment on revolving credit facility	(200,000)		—
Payments of debt issuance costs	Payments of debt issuance costs	(3,435)		(207)		Payments of debt issuance costs	(24,457)		(31)
Payments on long-term borrowings		0		(142)
Other		(348)		(344)
Other financing activities						Other financing activities	(1,627)		(418)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(3,783)		49,307		Net cash provided by (used in) financing activities	273,916		(449)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(295)		154		Effect of exchange rate changes on cash and cash equivalents	1,067		487
Net increase in cash and cash equivalents, including restricted cash	Net increase in cash and cash equivalents, including restricted cash	5,562		42,162		Net increase in cash and cash equivalents, including restricted cash	263,886		14,522
Cash and cash equivalents, including restricted cash, at beginning of period	Cash and cash equivalents, including restricted cash, at beginning of period	102,454		63,025		Cash and cash equivalents, including restricted cash, at beginning of period	396,294		106,924
Cash and cash equivalents, including restricted cash, at end of period	Cash and cash equivalents, including restricted cash, at end of period	$	108,016	$	105,187	Cash and cash equivalents, including restricted cash, at end of period	$	660,180	$	121,446
Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid during the period for interest	Cash paid during the period for interest	$	19,745	$	63,570	Cash paid during the period for interest	$	35,456	$	15,809
Cash paid during the period for income taxes, net of tax refunds received	Cash paid during the period for income taxes, net of tax refunds received	11,561		1,868		Cash paid during the period for income taxes, net of tax refunds received	14,014		13,505
Equipment purchases included in accounts payable		7,389		5,100
Purchases of property, plant and equipment included in accounts payable						Purchases of property, plant and equipment included in accounts payable	13,061		9,508

See notes to consolidated financial statements.

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Sotera Health Company

Consolidated Statements of Equity ~~(Deficit)~~

(in thousands)

(Unaudited)


		Shares	Amount		Amount		Additional Paid-In Capital				Retained Earnings / (Accumulated Deficit)		Accumulated Other Comprehensive (Loss) Income			Noncontrolling Interests				Total Equity				Shares			Amount		Amount		Additional Paid-In Capital			Retained Earnings / (Accumulated Deficit)			Accumulated Other Comprehensive (Loss) Income			Total Equity
		Common Stock	Common Stock		Treasury Stock										Common Stock								Common Stock			Treasury Stock
Balance at December 31, 2019		232,400	$	2,324	$	0			$	0			$	(550,511)				$	(94,387)			$	1,442		$	(641,132)
Balance at December 31, 2021																							Balance at December 31, 2021	282,985			$	2,860	$	(33,545)		$	1,172,593		$	(472,246)		$	(83,566)		$	586,096
Share-based compensation plans	Share-based compensation plans	—	—		—		1,725				—		—			—				1,725			Share-based compensation plans	(55)			—		9		4,504			—			—			4,513
Comprehensive income (loss):	Comprehensive income (loss):																						Comprehensive income (loss):
Pension and post-retirement plan adjustments, net of tax	Pension and post-retirement plan adjustments, net of tax	—	—		—		—				—		2,207			—				2,207			Pension and post-retirement plan adjustments, net of tax	—			—		—		—			—			(274)			(274)
Foreign currency translation	Foreign currency translation	—	—		—		—				—		(72,967)			—				(72,967)			Foreign currency translation	—			—		—		—			—			14,975			14,975
Interest rate swaps		—	—		—		—				—		(3,479)			—				(3,479)
Net income (loss)		—	—		—		—				(1,964)		—			(22)				(1,986)
Balance at March 31, 2020		232,400	$	2,324	$	0	$	1,725			$	(552,475)	$	(168,626)		$	1,420			$	(715,632)
Interest rate derivatives, net of tax																							Interest rate derivatives, net of tax	—			—		—		—			—			6,179			6,179
Net income																							Net income	—			—		—		—			30,641			—			30,641
Balance at March 31, 2022																							Balance at March 31, 2022	282,930			$	2,860	$	(33,536)	$	1,177,097		$	(441,605)		$	(62,686)		$	642,130


		Shares	Amount		Amount		Additional Paid-In Capital				Retained Earnings / (Accumulated Deficit)		Accumulated Other Comprehensive (Loss) Income			Noncontrolling Interests				Total Equity				Shares			Amount		Amount		Additional Paid-In Capital			Retained Earnings / (Accumulated Deficit)			Accumulated Other Comprehensive (Loss) Income			Total Equity
		Common Stock	Common Stock		Treasury Stock										Common Stock								Common Stock			Treasury Stock
Balance at December 31, 2020		283,248	$	2,860	$	(34,000)			$	1,166,412			$	(589,128)				$	(93,842)			$	2,272		$	454,574
Balance at December 31, 2022																							Balance at December 31, 2022	282,421			$	2,860	$	(29,775)		$	1,189,622		$	(705,816)		$	(106,653)		$	350,238
Share-based compensation plans	Share-based compensation plans	(348)	—		—		3,440				—		—			—				3,440			Share-based compensation plans	95			—		355		5,735			—			—			6,090
Comprehensive income (loss):	Comprehensive income (loss):																						Comprehensive income (loss):
Pension and post-retirement plan adjustments, net of tax	Pension and post-retirement plan adjustments, net of tax	—	—		—		—				—		(249)			—				(249)			Pension and post-retirement plan adjustments, net of tax	—			—		—		—			—			(51)			(51)
Foreign currency translation	Foreign currency translation	—	—		—		—				—		(3,071)			(15)				(3,086)			Foreign currency translation	—			—		—		—			—			11,257			11,257

Net income (loss)		—	—		—		—				10,842		—			223				11,065
Balance at March 31, 2021		282,900	$	2,860	$	(34,000)	$	1,169,852			$	(578,286)	$	(97,162)		$	2,480			$	465,744
Interest rate derivatives, net of tax																							Interest rate derivatives, net of tax	—			—		—		—			—			(9,251)			(9,251)
Net income																							Net income	—			—		—		—			2,842			—			2,842
Balance at March 31, 2023																							Balance at March 31, 2023	282,516			$	2,860	$	(29,420)	$	1,195,357		$	(702,974)		$	(104,698)		$	361,125

See notes to consolidated financial statements.

Table of Contents

Sotera Health Company

Notes to Consolidated Financial Statements

1.Basis of Presentation

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

We operate and report in 3three segments, Sterigenics, Nordion and Nelson Labs. We describe our reportable segments in Note ~~18,~~17, “Segment Information”. All significant intercompany balances and transactions have been eliminated in consolidation.

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

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

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

During the year ended December 31, 2022, we identified certain events and circumstances that indicated a decline in value of our investment ~~is reflected within “Investment~~ in ~~unconsolidated affiliates” on~~this joint venture that was other-than-temporary. Consequently, in the ~~Consolidated Balance Sheets.~~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"~~(“GAAP”), we make estimates and assumptions that affect the amounts reported and the accompanying notes. We regularly evaluate the estimates and assumptions used and revise them as new information becomes available. Actual results may vary from those estimates.

Interim Financial Statements – The accompanying consolidated financial statements include the assets, liabilities, operating results, and cash flows of the Company and its wholly owned subsidiaries. These financial statements are prepared in accordance with U.S. GAAP for interim financial information and the instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. These unaudited interim financial statements should be read in conjunction with the Company's annual consolidated financial statements and accompanying notes on Form 10-K for the year ended December 31, ~~2020.~~2022.

2.Recent Accounting Standards

~~ASU’s Issued But Not Yet Adopted~~

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

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~~Sotera Health Company~~

~~Notes to Consolidated Financial Statements~~

Accounting Standard Updates

~~In June 2016, the Financial~~Effective January 1, 2023, we adopted ASU 2021-08 - Business Combinations (Topic 805): Accounting ~~Standards Board (“FASB”) issued Accounting Standards Update~~ ~~(“ASU”) 2016-13, Financial Instruments – Credit Losses~~for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU ~~2016-13”~~2021-08”): ~~Measurement~~. 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 Contract 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 ~~Credit Losses on Financial Instruments,~~ ~~and subsequently issued additional guidance that modified ASU 2016-13. The~~this standard ~~requires an entity to change its accounting approach in determining impairment of certain financial instruments, including trade receivables, from an “incurred loss” to~~did not have a ~~“current expected credit loss” model. We intend to adopt the standard as of January 1, 2022. We are currently assessing the effect that ASU 2016-13 will have~~material impact on our ~~financial position, results of operations, and disclosures.~~

~~In March 2019, the FASB issued~~ ~~ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~. The standard simplifies the accounting for income taxes and makes a number of changes meant to add or clarify guidance on accounting for income taxes. This update is effective for annual financial statement periods beginning after March 15, 2021 and interim periods beginning after March 15, 2022, with early adoption permitted in any interim period for whichconsolidated financial statements ~~have not yet been filed. We are currently assessing the effect that ASU 2019-12 will have on our financial position, results of operations,~~ and disclosures.

3.Revenue Recognition

The following table shows disaggregated net revenues from contracts with external customers by timing of revenue and by segment for the three months ended March 31, ~~2021~~2023 and ~~2020:~~2022:

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

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

Notes to Consolidated Financial Statements


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


(thousands of U.S. dollars)	Three Months Ended March 31, 2022
	Sterigenics		Nordion		Nelson Labs		Consolidated
Point in time	$	149,462	$	33,285	$	—	$	182,747
Over time	—		717		53,290		54,007
Total	$	149,462	$	34,002	$	53,290	$	236,754

Contract Balances

As of March 31, ~~2021,~~2023, and December 31, ~~2020,~~2022, contract assets included in prepaid expenses and other current assets on the Consolidated Balance Sheets totaled approximately ~~$14.1~~$18.7 million and ~~$12.7~~$19.8 million, respectively, resulting from revenue recognized over time in excess of the amount billed to the customer.

When we receive consideration from a customer prior to transferring goods or services under the terms of a sales contract, we record deferred revenue, which represents a contract liability. Deferred revenue totaled ~~$6.0~~$15.2 million and ~~$6.1~~$12.1 million at March 31, ~~2021~~2023 and December 31, ~~2020,~~2022, respectively. We recognize deferred revenue after we have transferred control of the goods or services to the customer and all revenue recognition criteria are met.

4.Acquisitions

Acquisition of ~~BioScience Laboratories, LLC~~Regulatory Compliance Associates Inc.

On ~~March 8,~~November 4, 2021, we acquired ~~BioScience Laboratories, LLC~~Regulatory Compliance Associates Inc. (“~~BioScience”~~RCA”) for approximately ~~$13.2~~$30.6 million, net of ~~$0.8~~$0.6 million of cash ~~acquired plus the contemporaneous repayment of BioScience's outstanding debt of $1.9 million. BioScience~~acquired. RCA is ~~a provider of outsourced topical antimicrobial product testing~~an industry leader in providing life sciences consulting focused on quality, regulatory, and technical advisory services for the pharmaceutical, medical device and ~~consumer products industries with one location~~combination device industries. Headquartered in ~~Bozeman, Montana.~~Pleasant Prairie, Wisconsin, RCA expands and further strengthens our technical consulting and expert advisory capabilities within our Nelson Labs segment.

The purchase price of ~~BioScience~~RCA was allocated to the underlying assets acquired and liabilities assumed based upon management's estimated fair values at the date of acquisition. ~~Changes to the allocation~~As of ~~the purchase price may occur as~~

~~Table of Contents~~

~~Sotera Health Company~~

~~Notes to Consolidated Financial Statements~~

~~these measurements are completed. Approximately $8.4~~March 31, 2023, approximately $25.3 million of goodwill was recorded related to the ~~BioScience~~RCA acquisition, representing the excess of the purchase price over ~~preliminary~~the estimated fair values of all the assets acquired and liabilities assumed. ~~The Company~~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 ~~the Company's~~our consolidated financial statements.

~~Acquisition~~

Table of ~~Mandatorily Redeemable Noncontrolling Interest - Nelson Labs Fairfield~~Contents

~~On March 11, 2021, we completed the acquisition~~Sotera Health Company

Notes to Consolidated Financial Statements

5.Inventories

Inventories consisted of the ~~remaining 15% ownership of Nelson Labs Fairfield for $12.4 million, resulting in a gain of $1.2 million included in “Other expense (income), net” in the Consolidated Statements of Operations~~following:


(thousands of U.S. dollars)
	March 31, 2023		December 31, 2022
Raw materials and supplies	$	39,616	$	36,402
Work-in-process	1,554		584
Finished goods	5,682		276
	46,852		37,262
Reserve for excess and obsolete inventory	(116)		(117)
Inventories, net	$	46,736	$	37,145

6.Prepaid Expenses and ~~Comprehensive Income (Loss) relative to the $13.6 million previously accrued. Pursuant to the terms~~Other Current Assets

Prepaid expenses and other current assets consisted of the ~~August 2018 acquisition, we initially acquired 85% of the equity interests of Nelson Labs Fairfield in August 2018~~following:


(thousands of U.S. dollars)
	March 31, 2023		December 31, 2022
Prepaid taxes	$	26,426	$	26,598
Prepaid business insurance	8,184		9,964
Prepaid rent	1,072		998
Customer contract assets	18,736		19,777
Insurance and indemnification receivables	3,529		3,724
Current deposits	396		660
Prepaid maintenance contracts	517		324
Value added tax receivable	2,195		1,640
Prepaid software licensing	1,854		1,832
Stock supplies	3,639		3,656
Embedded derivative assets	2,507		2,721
Interest receivable - interest rate cap settlement	6,375		—
Other	11,873		9,101
Prepaid expenses and other current assets	$	87,303	$	80,995

7.Goodwill and ~~were obligated~~Other Intangible Assets

Changes to ~~acquire the remaining 15% noncontrolling interest within three years from the date of the acquisition.~~

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

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

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

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

~~The preliminary estimated fair value of the underlying acquired assets and assumed liabilities of the Iotron acquisition and the measurement period adjustments recognized~~goodwill during the three months ended March 31, ~~2021,~~2023 were as follows:

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

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

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


(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	823		291		538		1,652
Goodwill at March 31, 2023	$	658,281	$	271,257	$	173,882	$	1,103,420

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Sotera Health Company

Notes to Consolidated Financial Statements

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


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

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

5.~~Inventories~~

~~Inventories consisted primarily of the following:~~

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

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

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

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

~~Table of Contents~~

~~Sotera Health Company~~

~~Notes to Consolidated Financial Statements~~

7.~~Goodwill and Other Intangible Assets~~

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

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

Other intangible assets consisted of the following:


(thousands of U.S. dollars)	(thousands of U.S. dollars)	Gross Carrying Amount		Accumulated Amortization		(thousands of U.S. dollars)	Gross Carrying Amount			Accumulated Amortization
As of March 31, 2021
As of March 31, 2023						As of March 31, 2023			Gross Carrying Amount			Accumulated Amortization
Finite-lived intangible assets	Finite-lived intangible assets					Finite-lived intangible assets
Customer relationships	Customer relationships	$	662,509	$	322,685	Customer relationships	$	654,918		$	438,612
Proprietary technology	Proprietary technology	89,604		39,707		Proprietary technology	86,406			53,365
Trade names	Trade names	142		100		Trade names	2,559			832
Land-use rights	Land-use rights	9,454		1,364		Land-use rights	9,025			1,746
Sealed source and supply agreements	Sealed source and supply agreements	243,660		98,237		Sealed source and supply agreements	204,612			96,187
Other	Other	5,675		1,138		Other	4,471			2,202
Total finite-lived intangible assets	Total finite-lived intangible assets	1,011,044		463,231		Total finite-lived intangible assets	961,991			592,944

Indefinite-lived intangible assets	Indefinite-lived intangible assets					Indefinite-lived intangible assets
Regulatory licenses and other(a)	Regulatory licenses and other(a)	82,807		—		Regulatory licenses and other(a)	77,061			—
Trade names / trademarks	Trade names / trademarks	25,952		—		Trade names / trademarks	25,752			—
Total indefinite-lived intangible assets	Total indefinite-lived intangible assets	108,759		—		Total indefinite-lived intangible assets	102,813			—
Total	Total	$	1,119,803	$	463,231	Total	$	1,064,804		$	592,944

~~Table of Contents~~

~~Sotera Health Company~~

~~Notes to Consolidated Financial Statements~~


As of December 31, 2020		Gross Carrying Amount		Accumulated Amortization
As of December 31, 2022						As of December 31, 2022	Gross Carrying Amount		Accumulated Amortization
Finite-lived intangible assets	Finite-lived intangible assets					Finite-lived intangible assets
Customer relationships	Customer relationships	$	634,454	$	309,428	Customer relationships	$	652,811	$	422,277
Proprietary technology	Proprietary technology	90,964		38,075		Proprietary technology	86,054		50,952
Trade names	Trade names	156		105		Trade names	2,553		701
Land-use rights	Land-use rights	9,489		1,311		Land-use rights	8,986		1,683
Sealed source and supply agreements	Sealed source and supply agreements	240,791		92,953		Sealed source and supply agreements	204,391		93,034
Other	Other	1,937		519		Other	4,469		1,979
Total finite-lived intangible assets	Total finite-lived intangible assets	977,791		442,391		Total finite-lived intangible assets	959,264		570,626

Indefinite-lived intangible assets	Indefinite-lived intangible assets					Indefinite-lived intangible assets
Regulatory licenses and other(a)	Regulatory licenses and other(a)	81,832		—		Regulatory licenses and other(a)	76,978		—
Trade names / trademarks	Trade names / trademarks	26,134		—		Trade names / trademarks	25,649		—
Total indefinite-lived intangible assets	Total indefinite-lived intangible assets	107,966		—		Total indefinite-lived intangible assets	102,627		—
Total	Total	$	1,085,757	$	442,391	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 years~~10-year license period, as Nordion has demonstrated over its 7075 years of history.

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

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Sotera Health Company

Notes to Consolidated Financial Statements

Amortization expense for other intangible assets was ~~$22.3~~$20.6 million ($~~5.8~~4.4 million is included in “Cost of revenues” and ~~$16.5~~$16.2 million in ~~“Selling, general and administrative expenses”~~“Amortization of intangible assets”) in the Consolidated Statements of Operations and Comprehensive Income ~~(Loss)~~ and ~~$19.9~~$20.2 million ($~~5.3~~4.3 million is included in “Cost of revenues” and ~~$14.6~~$15.9 million in ~~“Selling, general and administrative expenses”~~“Amortization of intangible assets”) in the Consolidated Statements of Operations and Comprehensive Income ~~(Loss)~~ for the three months ended March 31, ~~2021~~2023 and ~~2020,~~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)	(thousands of U.S. dollars)			(thousands of U.S. dollars)
For the remainder of 2021		$	65,889
2022		80,665
2023		80,659
For the remainder of 2023				For the remainder of 2023	$	60,084
2024	2024	79,882		2024	79,986
2025	2025	41,982		2025	42,584
2026				2026	22,227
2027				2027	21,150
Thereafter	Thereafter	198,736		Thereafter	143,016
Total	Total	$	547,813	Total	$	369,047

The weighted-average remaining useful life of the finite-lived intangible assets was approximately 109 years as of March 31, ~~2021.~~2023.

8.Accrued Liabilities

Accrued liabilities consisted of the following:


(thousands of U.S. dollars)
	March 31, 2023		December 31, 2022
Accrued employee compensation	$	26,250	$	32,936
Illinois EO litigation settlement reserve	408,000		408,000
Other legal reserves	3,651		3,776
Accrued interest expense	27,714		23,291
Embedded derivatives	3,524		3,508
Professional fees	16,222		6,436
Accrued utilities	1,913		1,906
Insurance accrual	2,320		2,392
Accrued taxes	2,654		2,567
Other	4,543		5,318
Accrued liabilities	$	496,791	$	490,130

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Notes to Consolidated Financial Statements

8.~~Accrued Liabilities~~

~~Accrued liabilities consisted of the following:~~

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

9.Long-Term Debt

Long-term debt consisted of the following:

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


(thousands of U.S. dollars)
As of March 31, 2023	Gross Amount		Unamortized Debt Issuance Costs		Unamortized Debt Discount		Net Amount
Term loan, due 2026	$	1,763,100	$	(2,007)	$	(12,872)	$	1,748,221
Term loan B, due 2026	500,000		(7,700)		(14,605)		477,695

Other long-term debt	450		(2)		—		448
	2,263,550		(9,709)		(27,477)		2,226,364
Less current portion	4,200		(60)		(109)		4,031
Long-term debt	$	2,259,350	$	(9,649)	$	(27,368)	$	2,222,333


(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~~wholly-owned subsidiary, entered into senior secured first lien credit facilities (the “Senior Secured Credit Facilities”), consisting of both a prepayable senior secured first lien term loan (the “Term Loan”) and a senior secured first lien revolving credit facility (the “Revolving Credit Facility”) pursuant to a first lien credit agreement (the “Credit Agreement”). The Term Loan matures on December 13, ~~2026, and~~2026. After giving effect to the Revolving Credit ~~Facility's original maturity date was December 13, 2024. On December 17, 2020, we increased~~Facility Amendment (defined below), the total borrowing capacity ~~of our~~under the Revolving Credit Facility ~~from $190.0 million to $347.5~~is $423.8 million. The Senior Secured Credit Facilities also provide SHH the right at any time and under certain conditions to request incremental term loans or incremental revolving credit commitments based on a formula defined in the Senior Secured Credit Facilities. As of March 31, ~~2021~~2023 and December 31, ~~2020,~~2022, total borrowings under the Term Loan were $1,763.1 ~~million and $1,763.1 million, respectively, and there were no borrowings outstanding on the Revolving Credit Facility.~~million. The weighted average interest rate on borrowings under the Term Loan for the three months ended March 31, ~~2021~~2023 and March 31, ~~2020~~2022 was ~~3.73%~~7.44% and ~~6.18%~~3.25%, respectively.

On ~~January 20, 2021,~~February 23, 2023, we ~~closed~~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 ~~an amendment repricing~~a first priority basis on substantially all of our ~~Term Loan.~~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 this debt 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 this 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 ~~spread over~~on borrowings under the ~~London Interbank Offered Rate (“LIBOR”) on~~2023 Term Loan for the ~~facility~~three months ended March 31, 2023 was reduced from 450 basis points to 275 basis points, and the facility’s LIBOR floor was reduced from 100 basis points to 50 basis points. The changes result in an effective reduction in current interest rates of 2.25%. In connection with this amendment, we wrote off $11.3 million of unamortized debt issuance and discount costs and incurred an additional $2.9 million of expense related to debt issuance costs attributable to the refinancing. These costs were recorded to “Loss on extinguishment of debt” in our Consolidated Statements of Operations and Comprehensive Income (Loss)8.82%.

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Notes to Consolidated Financial Statements

~~As of~~On March ~~31, 2021 and December 31, 2020, capitalized debt issuance costs totaled $3.1 million and $3.4 million, respectively, and debt discounts totaled $20.0 million and $31.6 million, respectively, related~~21, 2023, the Company entered into an Incremental Facility Amendment to the ~~Senior Secured~~ Credit ~~Facilities. Such costs are recorded as a reduction~~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 ~~debt on our consolidated balance sheets and amortized as a component of interest expense over the term~~$76.3 million. In addition, certain of the ~~debt agreement.~~

~~On March 26, 2021, we amended~~lenders providing revolving credit commitments provided additional commitments for the issuance of the letters of credit under the Revolving Credit Facility ~~to (i) decrease~~in an aggregate principal amount of $165.1 million. The Revolving Credit Facility Amendment also provides for the ~~Applicable Rate (as defined in~~replacement of the ~~Credit Agreement) related to any~~reference interest rate option for Revolving Loans ~~(as defined in the Credit Agreement)~~ from London Interbank Offered Rate (“LIBOR”) to SOFR plus an applicable credit spread adjustment of 0.10% (subject to a ~~rate per annum that ranged from an alternative base rate (“ABR”) plus 2.50% to ABR plus 3.00% depending on SHH’s Senior Secured First Lien Net Leverage Ratio to ABR plus 1.75%; and in the case~~minimum floor of ~~Eurodollar Loans (as defined in the Credit Agreement) from a rate per annum which ranged from the Adjusted LIBOR plus 3.50%~~0.00%). After giving effect to the ~~Adjusted LIBOR plus 4.00% depending on SHH’s Senior Secured First Lien Net Leverage Ratio (as defined in~~Revolving Credit Facility Amendment, the ~~Credit Agreement), to~~aggregate amount of the ~~Adjusted LIBOR (as defined in the Credit Agreement) plus 2.75%, and (ii) extend the~~Lenders' Revolving Commitments is $423.8 million. The maturity date of the Revolving Credit Facility ~~from December 13, 2024 to~~remains June 13, 2026. The other material terms of the Credit Agreement are unchanged and the amendment does not change the capacity of our Revolving Credit Facility, which is $347.5 million. No unamortized debt issuance costs associated with the Revolving Credit Facility were written off and direct fees and costs incurred in connection with the amendment were immaterial.

~~As of March 31, 2021 and December 31, 2020, there were 0 borrowings on the Revolving Credit Facility. SHH~~Company borrowed ~~$50.0~~$200.0 million onunder the Revolving Credit Facility during the ~~first~~fourth quarter of ~~2020~~2022, which was repaid in the ~~second~~first quarter of ~~2020.~~2023, as noted above. As of March 31, 2023 there were no borrowings outstanding under the Revolving Credit Facility. The weighted average interest rate on ~~the~~outstanding borrowings under the Revolving Credit Facility ~~during 2020 averaged approximately 5.0%~~for the three months ended March 31, 2023 was 7.47%.

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 sixty 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 March 31, 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.~~Facilities and 2023 Credit Agreement.

Outstanding letters of credit are collateralized by encumbrances against the Revolving Credit Facility and the collateral pledged thereunder, or by cash placed on deposit with the issuing bank. As of March 31, ~~2021,~~2023, the Company had ~~$65.8~~$65.1 million of letters of credit issued against the Revolving Credit Facility, resulting in total availability under the Revolving Credit Facility of ~~$281.7~~$358.7 million.

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

~~On July 31, 2020, SHH issued $100.0 million aggregate principal amount of senior secured first lien notes due 2026 (the “First Lien Notes”), which mature on December 13, 2026.~~ The First Lien Notes bear interest at a rate equal to LIBOR subject to a 1.00% floor plus 6.00% per annum. Interest is payable on a quarterly basis with no principal due until maturity. The weighted averageCompany utilizes interest rate derivatives to eliminate the variability of cash flows in the interest payments associated with our variable rate debt due to changes in LIBOR and Term SOFR. For additional information on the ~~First Lien Notes for~~derivative instruments described above, refer to Note 16, “Financial Instruments and Financial Risk”, “Derivatives Instruments.”

Publication of all U.S. LIBOR tenors will cease after June 30, 2023. The most likely replacement benchmark is expected to be the ~~three months ended March 31, 2021 was 7.00%.~~

SHH is entitled to redeem all or a portion of the First Lien Notes, at any time and from time to time, subject to certain premiums depending on the date of redemption; any time on or prior to July 31, 2021, a customary make-whole premium applies and, thereafter, specified premiums that decline to zero apply (in each case as describedSOFR, which has been recommended by financial regulators in the ~~indenture governing~~United States. We have identified our LIBOR-based exposure in our debt and outstanding interest rate derivative agreements and have addressed the ~~First Lien Notes).~~

~~All of SHH’s obligations under the First Lien Notes are unconditionally guaranteed~~LIBOR transition for those contracts. 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 ~~Company and each existing and subsequently acquired~~benchmark interest rate transition. The optional expedients remove the requirement to remeasure contract modifications or ~~organized direct or indirect wholly-owned domestic restricted subsidiary of SHH, with customary exceptions including, among other things, where providing such guarantees is not permitted~~dedesignate hedging relationships impacted by law, regulation or contract or would result in material adverse tax consequences. All obligations under the First Lien Notes, and the guarantees of such obligations, are secured by substantially all of the assets of the borrower and guarantors, subject to permitted liens and other exceptions and exclusions, as outlined in the First Lien Notes. Such collateral is substantially the same collateral that secures the Senior Secured Credit Facilities. Such collateral securing the First Lien Notes ranks pari passu with that of the Senior Secured Credit Facilities.reference rate reform.

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Notes to Consolidated Financial Statements

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

~~2020 Debt Repayments~~

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

Aggregate Maturities

Aggregate maturities of the Company’s long-term debt, excluding debt discounts, as of March 31, ~~2021,~~2023, are as follows:

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

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


(thousands of U.S. dollars)
2023	$	2,950
2024	5,000
2025	5,000
2026	2,250,600
2027	—
Thereafter	—
Total	$	2,263,550

10.Income Taxes

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

Our effective tax rate was ~~21.4~~47.4 % and ~~(86.0)%~~32.3% for the three months ended March 31, ~~2021~~2023 and ~~2020,~~2022, respectively. Income tax expense for the three months ended March 31, ~~2021 differs~~2023 differed from the statutory rate primarily due to ~~the impact of the foreign rate differential, global intangible low-tax income (“GILTI”), and~~ a net increase in the valuation allowance attributable to the limitation on the deductibility of interest ~~expense. This was offset by a discrete item, which reversed~~expense, the ~~valuation allowance on deferred tax assets related to certain asset retirement obligations.~~

impact of the foreign rate differential, and non-deductible compensation. Income tax ~~benefit~~expense for the three months ended March 31, ~~2020~~2022 differed from the statutory rate primarily due to a net increase in the ~~impact of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which increased~~valuation allowance attributable to the limitation on the deductibility of interest expense, ~~from 30% to 50% for tax years beginning in 2019 or 2020,~~the impact of the foreign rate differential, and ~~other provisions. The increased limitation~~

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~~Notes to Consolidated Financial Statements~~

resulted in a current tax benefit for the three months ended March 31, 2020 of $9.1 million. The increased limitation also resulted in a $5.6 million valuation allowance reversal in the three months ended March 31, 2020.global intangible low-tax income (“GILTI”).

11.Employee Benefits

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

Defined benefit pension plan

The following defined benefit pension plan disclosure relates to Nordion. Certain immaterial foreign defined benefit pension plans have been excluded from the table below. The interest cost, ~~and~~ expected return on plan assets, and amortization of net actuarial loss are recorded net in “Other 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).~~Income. The components of net periodic pension cost for the defined benefit plans for the three months ended March 31, ~~2021~~2023 and ~~2020~~2022 were as follows:


Three Months Ended March 31,	Three Months Ended March 31,					Three Months Ended March 31,
(thousands of U.S. dollars)	(thousands of U.S. dollars)	2021		2020		(thousands of U.S. dollars)	2023		2022
Service cost	Service cost	$	298	$	276	Service cost	$	131	$	249
Interest cost	Interest cost	1,613		2,007		Interest cost	2,724		1,903
Expected return on plan assets	Expected return on plan assets	(3,557)		(3,599)		Expected return on plan assets	(4,019)		(3,704)
Amortization of net actuarial loss		267		197

Net periodic benefit	Net periodic benefit	$	(1,379)	$	(1,119)	Net periodic benefit	$	(1,164)	$	(1,552)

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Notes to Consolidated Financial Statements

Other benefit plans

Other benefit plans disclosed below relate to Nordion and include a supplemental retirement arrangement, a retirement and termination allowance, and post-retirement benefit plans, which include contributory health and dental care benefits and contributory life insurance coverage. Certain immaterial other foreign benefit plans have been excluded from the table below. All but one, non-pension post-employment benefit plans are unfunded. The components of net periodic ~~pension~~benefit cost for the other benefit plans for the three months ended March 31, ~~2021~~2023 and ~~2020~~2022 were as follows:


Three Months Ended March 31,	Three Months Ended March 31,					Three Months Ended March 31,
(thousands of U.S. dollars)	(thousands of U.S. dollars)	2021		2020		(thousands of U.S. dollars)	2023		2022
Service cost	Service cost	$	7	$	7	Service cost	$	2	$	4
Interest cost	Interest cost	59		73		Interest cost	90		65
Amortization of net actuarial (gain) loss		8		13
Amortization of net actuarial gain						Amortization of net actuarial gain	(44)		(2)
Net periodic benefit cost	Net periodic benefit cost	$	74	$	93	Net periodic benefit cost	$	48	$	67

We currently expect funding requirements of approximately ~~$2.8~~$0.3 million in each of the next five years to fund the regulatory solvency deficit, as defined by Canadian federal regulation, which ~~require~~requires solvency testing on defined benefit pension plans.

The Company may obtain a qualifying letter of credit for solvency payments, up to 15% of the market value of solvency liabilities as determined on the valuation date, instead of paying cash into the pension fund. As of March 31, ~~2021,~~2023, and December 31, ~~2020,~~2022, we had letters of credit outstanding relating to the defined benefit plans totaling ~~$42.6~~$43.5 million and ~~$41.3~~$44.1 million, respectively. The actual funding requirements over the five-year period will be dependent on subsequent annual actuarial valuations. These amounts are estimates, which may change with actual investment performance, changes in interest rates, any pertinent changes in Canadian government regulations and any voluntary contributions.

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~~Sotera Health Company~~

~~Notes to Consolidated Financial Statements~~

12.~~Related Parties~~

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

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

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

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


(thousands of U.S. dollars)	(thousands of U.S. dollars)	Defined Benefit Plans			Foreign Currency Translation		Interest Rate Swaps			Total		(thousands of U.S. dollars)	Defined Benefit Plans			Foreign Currency Translation		Interest Rate Derivatives			Total
Beginning balance – January 1, 2021		$	(44,143)		$	(49,699)	$	0		$	(93,842)
Beginning balance – January 1, 2023												Beginning balance – January 1, 2023	$	3,209		$	(131,205)	$	21,343		$	(106,653)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(524)			(3,071)		0			(3,595)		Other comprehensive income (loss) before reclassifications	(7)			11,257		(2,493)			8,757
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	275		(a)	0		0			275		Amounts reclassified from accumulated other comprehensive income (loss)	(44)		(a)	—		(6,758)		(b)	(6,802)
Net current-period other comprehensive income (loss)	Net current-period other comprehensive income (loss)	(249)			(3,071)		0			(3,320)		Net current-period other comprehensive income (loss)	(51)			11,257		(9,251)			1,955
Ending balance – March 31, 2021		$	(44,392)		$	(52,770)	$	0		$	(97,162)
Ending balance – March 31, 2023												Ending balance – March 31, 2023	$	3,158		$	(119,948)	$	12,092		$	(104,698)

Beginning balance – January 1, 2020		$	(27,113)		$	(67,453)	$	179		$	(94,387)
Beginning balance – January 1, 2022												Beginning balance – January 1, 2022	$	(17,581)		$	(66,389)	$	404		$	(83,566)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	2,207			(72,967)		(3,292)			(74,052)		Other comprehensive income (loss) before reclassifications	(272)			14,975		6,179			20,882
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	0			0		(187)		(b)	(187)		Amounts reclassified from accumulated other comprehensive income (loss)	(2)		(a)	—		—			(2)
Net current-period other comprehensive income (loss)	Net current-period other comprehensive income (loss)	2,207			(72,967)		(3,479)			(74,239)		Net current-period other comprehensive income (loss)	(274)			14,975		6,179			20,880
Ending balance – March 31, 2020		$	(24,906)		$	(140,420)	$	(3,300)		$	(168,626)
Ending balance – March 31, 2022												Ending balance – March 31, 2022	$	(17,855)		$	(51,414)	$	6,583		$	(62,686)

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

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Notes to Consolidated Financial Statements

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

~~14.~~13.Share-Based Compensation

Pre-IPO Awards

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

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~~Notes to Consolidated Financial Statements~~

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~~Stock-based compensation expense attributed to the pre-IPO Class B-2 awards was recorded in the fourth quarter of 2020, as the related performance conditions were considered probable of achievement and the implied service conditions were met. As of March 31, ~~2021,~~2023, these awards remain unvested.

We recognized ~~$0.7~~$0.5 million and ~~$1.7~~$0.6 million of share-based compensation expense related to the pre-IPO Class B-1 awards for the three months ended March 31, ~~2021~~2023 and ~~2020,~~2022, respectively.

A summary of the activity for the three months ended March 31, ~~2021~~2023 related to the restricted stock awards distributed ~~to the Company service providers~~ in respect of the pre-IPO awards (Class B-1 and B-2 Units) is presented below:


		Restricted Stock - Pre- IPO B-1	Restricted Stock - Pre- IPO B-2		Number of shares
Unvested at December 31, 2020		2,201,239	2,323,333
					Restricted Stock Pre-IPO B-1	Restricted Stock - Pre-IPO B-2
Unvested at December 31, 2022				Unvested at December 31, 2022	716,091	1,098,415

Forfeited	Forfeited	(43,361)	(254,839)	Forfeited	(5,378)	(19,127)
Vested	Vested	(228,862)	0	Vested	(86,051)	—
Unvested at March 31, 2021		1,929,016	2,068,494
Unvested at March 31, 2023				Unvested at March 31, 2023	624,662	1,079,288

2020 Omnibus Incentive Plan

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

We ~~recognized $2.8~~recognized $6.8 million ($~~1.3~~3.1 million for stock options and ~~$1.5~~$3.7 million for RSUs) and $3.9 million ($1.5 million for stock options and $2.4 million for RSUs) of share-based compensation expense for these awards in our Consolidated Statements of Operations and Comprehensive Income, ~~(Loss),~~ in “Selling, general and administrative expenses,” for the three months ended March 31, ~~2021.~~2023 and 2022, respectively.

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Notes to Consolidated Financial Statements

Stock Options

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


		Number of Shares	Weighted- average Exercise Price			Number of Shares	Weighted- average Exercise Price
At December 31, 2020		2,389,258	$	23.00
Outstanding stock options at December 31, 2022					Outstanding stock options at December 31, 2022	5,990,470	$	14.84
Granted	Granted	20,407	26.26		Granted	1,044,595	17.59
Forfeited	Forfeited	(9,316)	23.00		Forfeited	(20,325)	21.57
Exercised	Exercised	0	0		Exercised	—	—
At March 31, 2021		2,400,349	$	23.03
Outstanding stock options at March 31, 2023					Outstanding stock options at March 31, 2023	7,014,740	$	15.23

20As of March 31, 2023, there were 1.4 million vested and exercisable stock options.

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~~Notes to Consolidated Financial Statements~~

RSUs

RSUs generally vest ratably over a period of one to four years and are valued based on our market price on the date of grant. The following table summarizes our unvested RSUs activity:


		Number of Shares	Weighted- average Grant Date Fair Value			Number of Shares	Weighted- average Grant Date Fair Value
Unvested at December 31, 2020		771,276	$	23.00
Unvested at December 31, 2022					Unvested at December 31, 2022	2,482,435	$	13.09
Granted	Granted	10,851	26.03		Granted	664,433	17.59
Forfeited	Forfeited	(24,999)	23.00		Forfeited	(42,275)	11.42
Vested	Vested	0	0		Vested	(189,941)	20.11
Unvested at March 31, 2021		757,128	$	23.05
Unvested at March 31, 2023					Unvested at March 31, 2023	2,914,652	$	13.69

~~15.~~14.Earnings ~~(Loss)~~ Per Share

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

In periods in which the Company has net income, earnings per share is calculated using the two-class method. This method is required as unvested restricted stock distributed in respect of pre-IPO Class B-1 and B-2 awards have the right to receive non-forfeitable dividends or dividend equivalents if the Company were to declare dividends on its common stock. Pursuant to the two-class method, earnings for each period are allocated on a pro-rata basis to common stockholders and unvested pre-IPO Class B-1 and B-2 restricted stock awards. Diluted earnings per share is computed using the more dilutive of (a) the two-class method, or (b) treasury stock method, as applicable, to the potentially dilutive instruments.

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

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

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

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

2119

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Notes to Consolidated Financial Statements


	Three Months Ended
in thousands of U.S. dollars and share amounts (except per share amounts)	March 31, 2023		March 31, 2022
Earnings:
Net income	$	2,842	$	30,641
Less: Allocation to participating securities	18		338
Net income attributable to Sotera Health Company common shareholders	$	2,824	$	30,303
Weighted Average Common Shares:
Weighted-average common shares outstanding - basic	280,691		279,829
Dilutive effect of potential common shares	2,286		79
Weighted-average common shares outstanding - diluted	282,977		279,908
Earnings per Common Share:
Net income attributable to Sotera Health Company common shareholders - basic	$	0.01	$	0.11
Net income attributable to Sotera Health Company common shareholders - diluted	0.01		0.11

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


	Three Months Ended
in thousands of share amounts	March 31, 2023	March 31, 2022
Stock options	3,570	2,889
RSUs	492	172
Total anti-dilutive securities	4,062	3,061

~~16.~~15.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. NoExcept for the accrual for the Ethylene Oxide Tort Litigation settlement in Illinois discussed below, no material amounts have been accrued in our consolidated financial statements with respect to any loss ~~contingencies.~~contingencies as of March 31, 2023. 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, together with an estimate of the range of possible loss if determinable and material, would be disclosed. In certain of the matters described below, we are not able to make a reasonable estimate of any liability because of the uncertainties related to the outcome and/or the amount or range of loss. While it is not possible to determine the ultimate disposition of each of these matters, we do not expect that the ultimate resolution of pending regulatory and legal matters in future periods, including the matters described below, will have a material effect on our financial condition, or results of ~~operations.~~operations or liquidity. Despite the above, the Company may incur material defense and settlement costs, diversion of management resources and other adverse effects on our business, financial condition, or results of operations.

~~FM Global Business Interruption Claim (NRU Outage)~~Ethylene Oxide Tort Litigation

~~Nordion, due~~Sterigenics U.S., LLC and other medical supply sterilization companies have been subjected to personal injury and related 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

Approximately 850 plaintiffs have filed lawsuits, and approximately 25 individuals have threatened to file lawsuits, against subsidiaries of the ~~shutdown~~Company and other parties, alleging personal injuries including cancer and other diseases, or wrongful death,

Table of AECL’s NRU reactor in 2009, suffered a cessation of supply of radioisotopes and business interruption loss. Nordion, by Statement of Claim dated October 22, 2010, issued in Ontario Superior Court an action against the insurer, Factory Mutual InsuranceContents

Sotera Health Company ~~(FM Global), claiming $25.0 million USD in losses~~

Notes to Consolidated Financial Statements

resulting from purported emissions and releases of EO from Sterigenics’ former Willowbrook facility. Additional derivative claims are alleged on behalf of relatives of some of these personal injury plaintiffs. Each plaintiff seeks damages in an amount to be determined by the ~~shutdown~~trier of ~~AECL’s reactor~~fact. The lawsuits were consolidated for pre-trial purposes by the Cook County Circuit Court, Illinois (the “Consolidated Case”). Jury trials were conducted during 2022 in two of the individual cases included in the Consolidated Case, and ~~its inability to supply radioisotopes through~~twelve individual cases were scheduled for trials in 2023. The first trial began on August 12, 2022, and on September 19, 2022, the ~~specified period~~jury rendered a verdict in favor of ~~approximately 15 months. FM Global objected to Nordion’s claim.~~

~~Trial commenced in March 2019~~the plaintiff and ~~was completed in September 2019. On March 30, 2020, Nordion received a favorable judgment~~awarded damages in the amount of ~~$25.0~~$358.7 million, ~~USD, plus pre-judgment~~including $36.1 million of compensatory damages, $320.0 million of punitive damages and $2.6 million of prejudgment interest against Sterigenics U.S., LLC and Sotera Health, LLC (the “Defendant Subsidiaries”). Post-judgment interest accrues on the compensatory and punitive damages awards from September 20, 2022, the date of the judgment order. 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 ~~total judgment value~~Notice of ~~$39.8 million USD,~~Appeal to the First District Appellate Court in Illinois, appealing the September 20, 2022 adverse judgment. The deadline for posting an appellate bond or ~~$56.4 million CAD based~~providing an alternate form of security for the appeal was extended to February 8, 2023. The second individual trial began on ~~exchange rates approved by~~October 6, 2022, and on November 18, 2022 the ~~trial court. In addition, costs and disbursements have been assessed and awarded by~~jury returned a defense verdict on all counts. On January 4, 2023, the ~~trial court in favor of Nordion~~plaintiff in the ~~approximate amount of $1.1 million CAD ($0.8 million USD) and $161,863 CAD ($0.1 million USD), respectively. On April 27, 2020, FM Global appealed~~second trial filed a motion for post-trial relief seeking an order reversing and/or vacating the ~~judgment. In January 2021, The Insurance Bureau of Canada was granted leave to intervene in the appeal. Hearing before the Court of Appeal was held on April 15, 2021. Pending~~verdict, granting a ~~favorable~~new trial, and/or entering judgment in the ~~appellate~~plaintiff’s favor notwithstanding the verdict.

On November 1, 2022 certain plaintiffs in the Consolidated Case filed a lawsuit in the Circuit Court of Cook County, Illinois against the Company and certain affiliates, subsidiaries and current and former officers, alleging that certain transfers of assets occurring after December 2016 were intended to make assets unavailable to satisfy judgments the plaintiffs might win in future trials in their individual personal injury cases included in the Consolidated Case (the “Asset Transfer Case”). On November 10, 2022, the Asset Transfer Case was removed to the United States District Court for the Northern District of Illinois and all defendants filed answers and affirmative defenses.

On January 9, 2023, the Defendant Subsidiaries (the “Settling Defendants”) entered into binding term sheets (the “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, the Asset Transfer Case, and other clients with personal injury claims that have not yet been filed (together, the “Eligible Claimants”). Upon entering into the Term Sheets, and based on our assessment of the likelihood that the conditions to the Term Sheets will be satisfied or waived, we concluded that the Settlement was probable and reasonably estimable. Accordingly, the Company recorded a charge of $408.0 million for the year ended December 31, 2022. The Term Sheets provide an agreed path to final settlement of the Eligible Claimants’ claims, subject to the satisfaction or waiver of certain conditions, including but not limited to the Settling Defendants and the PEC working in good faith to draft and execute full settlement agreements in accordance with the Term Sheets.

On March 28, 2023, the Settling Defendants and the PEC entered into full settlement agreements (the “Settlement Agreements”). The Settlement Agreements provide a pathway to comprehensively resolve the claims pending against the Settling Defendants in Illinois and thereby enable the Company to focus its full attention on operating the business. The Company denies any liability and maintains that its Willowbrook, Illinois operations did not pose a safety risk to the community in which it operated, and believes the evidence and science ultimately would have compelled the rejection of the plaintiffs’ claims. However, years of biased media coverage in the greater Chicago area, the significant costs of posting a large bond in support of the appeal of the first trial verdict and the time and expense that would have been required to continue to contest hundreds of additional lawsuits through a multi-year process in the Illinois court ~~any final proceeds~~system led the Company to conclude that resolving the pending Illinois EO cases would be in the best interest of the Company and its stakeholders.

The scope of the settlement includes all claims that have been alleged or could have been alleged by 881 Eligible Claimants related to or arising from alleged emissions of EO from Sterigenics’ operations in or around Willowbrook, Illinois and related claims that have been 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 “Covered Claims”). The Settling Defendants deny any liability for the Covered Claims and, per their express terms, the Settlement Agreements are not to be construed as an admission of liability or that the Company engaged in any wrongful, tortious, or unlawful activity or that use and/or emissions of EO from Sterigenics’ operations in or around Willowbrook, Illinois posed any safety hazard to the surrounding communities.

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Notes to Consolidated Financial Statements

If the conditions of the Settlement Agreements are satisfied or waived, among other things, the Eligible Claimants participating in the settlement will release the Company, its subsidiaries and certain affiliates from all Covered Claims and dismiss with prejudice all pending lawsuits and appeals relating to or arising from any Covered Claims. The Settlement Agreements provide that final settlement is conditioned, among other things, on (1) the continuance of the stays of all pending Covered Claims, (2) Plaintiffs’ Counsel obtaining opt-in consent from (i) 99% of all Eligible Claimants represented by the PEC law firms, (ii) 95% of all Eligible Claimants represented by law firms not on the PEC and (iii) 100% of all Eligible Claimants within certain specified subgroups, within 30 days of the date each Eligible Claimant receives all disclosures required by applicable state rules along with their individual settlement allocation (the “Participation Requirement”), which may be extended up to 30 days with the consent of the Settling Defendants, (3) the dismissal with prejudice of the Covered Claims of all Eligible Claimants participating in the settlement, and (4) court approval of the settlement as a good faith settlement under the Illinois Joint Contribution Among Tortfeasors Act. In addition, the Settling Defendants will have the right to elect not to proceed with final settlement of the Covered Claims if it is determined that 40 or more Eligible Claimants do not have valid claims or more than five new lawsuits are filed by Plaintiffs’ Counsel. The Settling Defendants have the right to waive the Participation Requirement and elect to proceed with final settlement, in which case the settlement will be binding only on Eligible Claimants participating in the settlement and providing opt-in consent. The PEC and other Plaintiffs’ Counsel have agreed, subject to ~~post~~the exercise of their independent professional judgment, ~~interest, a contingent fee owed~~ to ~~legal counsel and applicable taxes. As~~recommend to their clients that they participate in the judgment is considered a contingent gain, any favorable outcome will be recognized in a future period when all appeals are exhausted. It is anticipated that the overall appeal process could take a year or more to complete.

~~Willowbrook, Illinois – Government Litigation~~

settlement. On ~~October 30, 2018, the Illinois Attorney General and the State’s Attorney of DuPage County, Illinois, sued~~May 1, 2023, Sterigenics U.S., LLC ~~(the “IAG Action”), alleging~~contributed $408.0 million to a settlement escrow fund that ~~authorized EO air~~will be used, if the conditions of the Settlement Agreements are satisfied or waived, to pay all settlement fees and expenses and cash payments to the Eligible Claimants participating in the settlement.

On January 11, 2023 and January 13, 2023, the Circuit Court of Cook County, Illinois entered orders staying all proceedings and deadlines and vacating all trial dates in the Consolidated Case, and staying all enforcement proceedings relating to the September 20, 2022 adverse judgment. On January 16, 2023 the United States District Court for the Northern District of Illinois entered an order staying all proceedings in the Asset Transfer Case. On January 23, 2023 the First District Appellate Court in Illinois entered an order staying the Settling Defendants’ appeal of the September 20, 2022 adverse judgment.

The final settlement of claims contemplated under the Settlement Agreements may not occur or may not occur for all Eligible Claimants for a number of reasons, including but not limited to, a failure to satisfy the Participation Requirement. If the final settlement occurs, the settlement will not cover unfiled claims of claimants who are represented by lawyers other than Plaintiffs’ Counsel, claims of Eligible Claimants who elect and are permitted by the Participation Requirements to opt out of the settlement, claims for illnesses diagnosed in the future that claimants allege were caused by emissions from ~~a commercial sterilization facility Sterigenics formerly operated~~Sterigenics’ operations in or around Willowbrook, Illinois, ~~“cause, threaten,~~ or ~~allow air pollution” in violation of the Illinois Environmental Protection Act. The IAG Action did not assert that Sterigenics violated its permit~~lawsuits alleging injuries from ~~the Illinois Environmental Protection Agency (“IEPA”) authorizing Sterigenics’ release of regulated levels~~emissions of EO atfrom operations other than those in or around Willowbrook, Illinois, including the ~~Willowbrook facility.~~previously disclosed lawsuits in Georgia and New Mexico. The Company denies these allegations, intends to defend itself vigorously in all such litigation, and does not believe that the facts and law justify the September 20, 2022 adverse judgment in the first trial in Illinois or, as detailed further below, that the verdict and damage awards in that case are predictive of future EO tort cases in Illinois or other jurisdictions.

On February ~~15, 2019,~~23, 2023 the ~~acting IEPA director, John Kim, issued~~Company successfully closed on a ~~“Seal Order” effectively precluding Sterigenics’ operations at~~new senior secured Term Loan B facility in an aggregate principal amount of $500.0 million. The Company used the ~~Willowbrook facility based on many~~proceeds of this debt financing to fund the $408.0 million settlement described above. Refer to Note 9, “Long-Term Debt” for additional information.

Georgia

Since August 17, 2020, approximately 300 plaintiffs have filed lawsuits against subsidiaries of the ~~same allegations asserted~~Company and other parties in the ~~IAG Action. Sterigenics disputed those allegations~~State Court of Cobb County, Georgia and ~~opposed~~ the ~~IEPA’s Seal Order. The Seal Order was resolved by a Consent Order entered~~State Court of Gwinnett County, Georgia alleging that they suffered personal injuries resulting from emissions of EO from Sterigenics’ Atlanta facility. Additional derivative claims are alleged on ~~September 6, 2019. The Consent Order provided~~behalf of relatives of some of these personal injury plaintiffs. Our subsidiaries are also defendants in approximately 160 lawsuits alleging that ~~Sterigenics did not admit~~ the ~~allegations~~Atlanta facility has devalued and harmed plaintiffs’ use of real properties they own in the Atlanta, Georgia area and caused other damages. These personal injury and property devaluation plaintiffs seek various forms of relief including damages. All but two of the ~~IAG Action, provided~~personal injury lawsuits pending in Cobb County have been consolidated for ~~the removal~~pretrial purposes. The Court has entered a phased case management schedule for a “pool” of ten of the ~~Seal Order and allowed~~consolidated cases by which threshold general causation issues will be decided in Phase 1, followed by specific causation issues in Phase 2 as to any of the ~~Willowbrook facility to reopen upon implementation~~pooled cases that survive Phase 1. The Court has stayed the remainder of ~~supplemental emissions control measures consistent with a new law that became effective~~the consolidated personal injury cases pending in ~~Illinois in June 2019~~Cobb County and an ~~IEPA permit, which the IEPA approved in September 2019. Following entry~~immediate appeal of ~~the Consent Order, the Seal Order was withdrawn.~~

On September 30, 2019, Sterigenics announced the closure of the Willowbrook facility due to the inability to reach an agreement with its landlord to renew the facility’s lease and the unstable legislative and regulatory landscape in Illinois. Sterigenicsa discrete procedural issue is ~~in the process of decommissioning the facility and completing the work required~~being pursued by the ~~terms of its lease to return the property to the landlord.~~defendants. One personal injury

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Notes to Consolidated Financial Statements

Oncase is pending in Gwinnett County and is scheduled for trial in October 20, 2020 Sterigenics, the Illinois Attorney General and the State’s Attorney of DuPage County filed a Joint Motion to Terminate Consent Order, stating that the community projects which Sterigenics voluntarily agreed to fund have been completed and funded as required by the Consent Order, and that Sterigenics has permanently ceased operations and surrendered all permits for its operations in Willowbrook, Illinois. On October 27, 2020 the DuPage County Circuit Court entered the Agreed Order Terminating Consent Order.

~~Ethylene Oxide Tort Litigation - Illinois~~

~~Since September 2018, tort lawsuits on behalf of approximately 835~~2023. The remaining personal injury ~~plaintiffs (which~~case and approximately 160 property devaluation cases are ~~further described~~ in ~~the following paragraphs) have been~~various stages of pleadings and motions practice, and fact discovery.

In January 2023 a personal injury and premises liability case was filed in ~~Illinois state courts against Sotera Health LLC, Sterigenics U.S., LLC, GTCR, LLC and other parties related~~Cobb County, Georgia by a delivery driver alleging injuries from purported exposure to Sterigenics’ Willowbrook, Illinois operations. Specifically, those plaintiffs allege that they suffered personal injuries including cancer and other diseases, or wrongful death, resulting from purportedEO emissions and releases ~~of EO from~~while making deliveries to our Atlanta facility. That case has not been consolidated with the ~~Willowbrook facility. Additional derivative claims are alleged on behalf of~~ other ~~individuals related to these~~ personal injury plaintiffs. Plaintiffs seek damages in an amount to be determined by the trier of fact. Sterigenics denies these allegations and intends to vigorously defend against these claims. Plaintiffs have voluntarily dismissed without prejudice a number of cases since September 2018, including certain individual cases alleging personal injuries and 2 class actions seeking damages for alleged diminution of property values.

~~Sterigenics sought consolidation of the cases for pretrial purposes, and in October 2019 obtained an order consolidating the then-pending~~ cases and related cases filed in the future before Judge Lawler in the Cook County Circuit Court, Illinois (the “Consolidated Case”). All plaintiffs in the Consolidated Case filed a single Master Complaint on October 24, 2019 by which Sotera Health LLC was added as a co-defendant, followed by a First Amended Master Complaint on January 31, 2020. is not stayed. The court has not yet entered an initial case management order or schedule.

New Mexico

On April 28, 2020, the defendants filed motions to dismiss the claims in the First Amended Master Complaint. On August 17, 2020, the Court entered an order largely denying the motions to dismiss, and the same day plaintiffs filed24, 2023, a ~~Second Amended Master Complaint.~~

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

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

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

~~Ethylene Oxide Tort Litigation – Georgia~~

~~On May 19, 2020, a~~ lawsuit ~~against Sotera Health LLC, Sterigenics U.S., LLC and other parties~~ was filed in the ~~State~~Third Judicial District Court, ~~of Cobb~~Doña Ana County, ~~Georgia~~New Mexico against the Company and certain subsidiaries alleging wrongful death caused by ~~53 employees of a contract sterilization customer of Sterigenics. In the operative complaint, Plaintiffs claim personal injuries resulting from alleged~~ exposure to residual EO while working at the customer’s distribution center in Lithia Springs, Georgia, allege they were unaware that they were being exposed to EO in their workplace and seek damages in an amount to be determined by the trier of fact. Defendants filed motions to dismiss and answers to the Complaint on April 30, 2021. All defendants are being defended and indemnified by Sterigenics’ contract sterilization customer (plaintiffs’ employer and a co-defendant in the lawsuit).

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

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~~Notes to Consolidated Financial Statements~~

August 14, 2020, Sterigenics U.S., LLC filed a lawsuit against members of the Cobb County Board of Tax Assessors in the U.S. District Court for the Northern District of Georgia, seeking a declaration that the reduction in property value assessments is arbitrary and unlawful and is causing Sterigenics reputational and imminent economic harm. On February 5, 2021 the Court issued an order finding that Sterigenics lacks standing to obtain the relief sought and dismissed the case. Sterigenics has appealed that decision to the 11th Circuit Court of Appeals and anticipates that appellate briefing will be completed before the end of August 2021.

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

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

On August 7, 2019, Sterigenics U.S., LLC entered into a voluntary Consent Order with the Georgia Environmental Protection Division (“EPD”) under which Sterigenics agreed to install emissions reduction enhancements at its Atlanta facility to further reduce the facility’s EO emissions below already permitted levels. Sterigenics voluntarily suspended operations at thesterilization facility in ~~early September 2019~~Santa Teresa, New Mexico while working at a different company’s facility approximately one mile away. On April 27, 2023 the case was removed to expedite completion of the enhancements. Installation of these enhancements is complete, and Sterigenics successfully tested the enhanced emissions controls in cooperation with EPD during the second quarter of 2020 while the facility was in operation.

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

~~After the Cobb County officials would not allow Sterigenics to resume operations, on March 30, 2020, Sterigenics U.S., LLC filed a lawsuit in~~ the United States District Court for the ~~Northern~~ District of Georgia against Cobb County, Georgia and Cobb County officials Nicholas Dawe and Kevin Gobble. In the lawsuit, Sterigenics sought immediate injunctive relief and permanent declaratory relief to resume normal operations of the Atlanta facility in the interest of public health and on the basis that the positions asserted by Cobb County were unfounded. On April 1, 2020 the CourtNew Mexico. The court has not yet entered ~~a Temporary Restraining Order prohibiting Cobb County officials from precluding~~an initial case management order or interfering with the facility’s normal operations. On April 8, 2020, the Court entered a Consent Order extending the Temporary Restraining Order and allowing the facility to continue normal operations until entry of a final judgment in the case. Defendants filed a motion to dismiss the claims. On November 9, 2020, the Court held a hearing and denied the motion to dismiss. The parties are conducting discovery, which is presently scheduled to end on July 23, 2021. A settlement conference is scheduled to be held by September 27, 2021.schedule.

~~Ethylene Oxide Litigation –~~ New Mexico Attorney General Litigation

On December 22, 2020, the New Mexico Attorney General filed a lawsuit in the Third Judicial District Court, Doña Ana County, New Mexico ~~(“the Third Judicial District”)~~ against the Company ~~Sterigenics U.S., LLC~~ and ~~other~~certain subsidiaries alleging that emissions of EO from ~~Sterigenics U.S., LLC’s~~Sterigenics’ sterilization facility in Santa Teresa, New Mexico ~~constitute a public nuisance and~~ have deteriorated the air quality in Santa Teresa and surrounding communities and materially contributed to increased health risks suffered by residents of those communities. The Complaint asserts claims for public nuisance, negligence, strict liability, violations of New Mexico’s Public Nuisance Statute and Unfair Practices Act and ~~a request for~~seeks various forms of relief including a temporary restraining order, ~~and~~ preliminary injunctive ~~relief.~~relief and damages. On June 29, 2021, the Court entered an Order Granting Preliminary Injunction (the “Order”) prohibiting Sterigenics from allowing any uncontrolled emission or release of EO from the facility. On December ~~28, 2020~~20, 2021 the Court entered an order establishing a protocol to monitor Sterigenics’ compliance with the Order. Operations at the facility continue to be in compliance with the June 2021 and December 2021 orders. A motion challenging the Court’s jurisdiction over Sotera Health Company and another defendant, and a motion for summary judgment by Sterigenics U.S., LLC ~~removed~~and Sotera Health LLC are pending. A Scheduling Order was entered on September 13, 2022, including a June 3, 2024 trial date.

The Company believes that neither the ~~case~~verdict in the first trial in Illinois nor the settlement of the pending and threatened claims in Illinois is predictive of potential future verdicts in other EO tort cases in Illinois or other jurisdictions. The Company intends to defend itself vigorously in all such litigation, which will be presided over by different judges, tried by different counsel presenting different evidence and fact and expert witness testimony at trial, and decided by different juries. Each plaintiff’s claim involves unique facts and evidence, including but not limited to, the ~~United States District Court for~~circumstances of the ~~District~~plaintiff’s alleged exposure, the type and severity of ~~New Mexico. On April 13, 2021~~ the ~~case was remanded~~plaintiff’s disease and the plaintiff’s medical history and course of treatment. As a result, we believe that loss in such subsequent cases is not probable and it is not possible to estimate the range of loss. Due to the ~~Third Judicial District where Plaintiff’s Emergency Motion~~uncertainties associated with the amount of any such liability and/or the nature of any other remedy which may be imposed in such litigation, any potential liability determined to be attributable to the Company arising out of such litigation may have a material adverse effect on the Company’s results of operations, liquidity or financial condition. An estimate of the potential impact on the Company’s results of operations, liquidity or financial condition cannot be made due to the aforementioned uncertainties.

Our insurance for ~~Temporary Restraining Order and Preliminary Injunction has been scheduled for a preliminary injunction hearing on May 26, 2021.~~

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~~Notes~~litigation related to ~~Consolidated Financial Statements~~

The Emergency Motion does not demand facility closure but seeks an order requiring Defendants to cease any and all uncontrolled emissions or releases of EO from the Santa Teresa facility, including by making certain modifications to sterilization processes at the facility.

~~* * *~~

~~We carry insurance for~~ alleged environmental liabilities, ~~(including~~like the litigation ~~like that~~ pending in Illinois, Georgia and New Mexico described ~~above), with~~above, has limits of $10.0 million per occurrence and $20.0 million in the aggregate. The per occurrence limit related to the Willowbrook, ~~government and EO tort~~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.

~~Additional personal injury, property devaluation or~~In addition, we are pursuing other ~~lawsuits may be~~insurance coverage for our legal expenses related to the EO tort litigation. In 2021, Sterigenics filed an insurance coverage lawsuit in the ~~future against us or our subsidiaries~~U.S. District Court for the Northern District of Illinois relating to ~~Sterigenics’~~two commercial general liability policies issued in the 1980s. On August 3, 2022, the Court issued a Memorandum Opinion and Order concluding that the insurer owes Sterigenics and another insured party a duty to defend the Willowbrook, ~~Atlanta, Santa Teresa~~Illinois litigation, which may allow us to recover defense costs related to that litigation.

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Notes to Consolidated Financial Statements

Sotera Health Company Securities Litigation

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. 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 ~~sterilization facilities.~~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 violated 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). The Michigan Funds seek damages and other relief on behalf of the Proposed Class. The Company ~~Sterigenics U.S., LLC~~believes that these claims are without merit and ~~other Company subsidiaries intend~~plans to ~~defend themselves vigorously in all such current or future EO litigation.~~

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

~~17.~~16.Financial Instruments and Financial Risk

Derivative Instruments

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

Derivatives Designated in Hedge Relationships

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

In March 2023, we entered into 2an interest rate swap ~~agreements to hedge our exposure to~~agreement with a notional amount of $400.0 million. The interest rate ~~movements~~swap has a forward start date of August 23, 2023 and ~~to manage interest expense related to our then outstanding variable-rate debt. The notional amount of~~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 ~~totaled~~with a combined notional amount of $1,000.0 million for a total option premium of $4.1 million. The interest rate caps have a forward start date 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 is expected to transition from LIBOR to the term SOFR at the earlier of June 30, 2023 or the Company's election to “early opt-in” to SOFR. 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 the 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 have a forward start date of December 31, 2022 and expire on July 31, 2023. These ~~swaps were~~interest rate caps are designated as cash flow hedges and ~~were~~are designed to hedge the variability of cash flows attributable to changes in LIBOR (or its successor), the benchmark interest rate being ~~hedged. We received interest at one-month LIBOR and paid a fixed interest rate under the terms of the swap agreement. The swap agreements terminated on August 31, 2020.~~

~~Derivatives Not Designated in Hedge Relationships~~

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

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

Derivatives Not Designated in Hedge Relationships

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

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

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Notes to Consolidated Financial Statements

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

Embedded Derivatives

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

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


		March 31, 2021							December 31, 2020							March 31, 2023							December 31, 2022
(in U.S. Dollars; notional in millions, fair value in thousands)	(in U.S. Dollars; notional in millions, fair value in thousands)				Fair Value						Fair Value				(in U.S. Dollars; notional in millions, fair value in thousands)				Fair Value						Fair Value
		Notional Amount			Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities			Notional Amount			Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives designated as hedging instruments															Derivatives designated as hedging instruments
Interest rate caps															Interest rate caps	$	2,000.0	(a)	$	24,129	—		$	2,000.0	$	34,764	—
Interest rate swaps															Interest rate swaps	400.0		(b)	—		2,387		—		—		—
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments														Derivatives not designated as hedging instruments
Interest rate caps		$	2,500.0		$	9	$	0	$	1,500.0	$	7	$	0

Foreign currency forward contracts															Foreign currency forward contracts	154.8			33		23		151.5		—		272
Embedded derivatives	Embedded derivatives	77.7		(a)	403		229		83.3		0		670		Embedded derivatives	172.5		(c)	2,507		3,524		179.9		2,721		3,508
Total	Total	$	2,577.7		$	412	$	229	$	1,583.3	$	7	$	670	Total	$	2,727.3		$	26,669	$	5,934	$	2,331.4	$	37,485	$	3,780

(a)$1,000.0 million notional amount of interest rate caps designated as hedging instruments have a forward start date beginning on July 31, 2023.

(b)The notional amount of interest rates swaps designated as hedging instruments reflected in the table above has a forward start date beginning on August 23, 2023.

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

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

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

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


(thousands of U.S. dollars)
Three Months Ended March 31,	2023		2022
Unrealized gain on interest rate derivatives recorded in interest expense, net	$	—	$	(6,346)
Unrealized loss (gain) on embedded derivatives recorded in other income, net	227		(1,018)
Realized gain on interest rate derivatives recorded in interest expense, net(a)	(9,648)		—
Realized loss (gain) on foreign currency forward contracts recorded in foreign exchange (gain) loss	449		(1,530)

~~In addition, during~~(a)For the three months ended March 31, ~~2020, we~~2023, amounts represent quarterly settlement of interest rate caps.

The following table summarizes the net gains (losses) on our cash flow hedges recognized ~~$3.5~~in “Other comprehensive income (loss)” during the period:

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Notes to Consolidated Financial Statements


(thousands of U.S. dollars)
Three Months Ended March 31,	2023		2022
Unrealized gain (loss) on interest rate derivatives recorded in other comprehensive income	$	(3,372)	$	6,179
Amounts reclassified from accumulated other comprehensive income to interest expense	(9,275)		$	—
Net current period other comprehensive income (loss)	$	(12,647)	$	6,179

We expect to reclassify approximately$16.7 million of ~~losses,~~ net ~~of tax, in~~gains on derivative instruments from accumulated other comprehensive income ~~(loss) related~~ to income during the ~~change in fair value of the interest rate swaps.~~next 12 months associated with our cash flow hedges.

Credit Risk

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

We are also exposed, in our normal course of business, to credit risk from our customers. As of March 31, ~~2021~~2023 and December 31, ~~2020,~~2022, accounts receivable was net of an allowance for uncollectible accounts of ~~$0.6~~$2.6 million and ~~$0.7~~$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

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~~Notes to Consolidated Financial Statements~~

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

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

Fair Value Hierarchy

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

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Notes to Consolidated Financial Statements

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

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


As of March 31, 2023			Fair Value
(thousands of U.S. dollars)	Carrying Amount		Level 1		Level 2		Level 3
Derivatives designated as hedging instruments(a)
Interest rate caps	$	24,129	$	—	$	24,129	$	—
Interest rate swaps	2,387		—		2,387		—
Derivatives not designated as hedging instruments(b)
Foreign currency forward contract assets	33		—		33		—
Foreign currency forward contract liabilities	23		—		23		—
Embedded derivative assets	2,507		—		2,507		—
Embedded derivative liabilities	3,524		—		3,524		—
Current portion of long-term debt
Term loan B, due 2026	3,583		—		3,694		—
Other long-term debt(c)	448		—		448		—
Long-Term Debt(d)
Term loan, due 2026	1,748,221		—		1,694,868		—
Term loan B, due 2026	474,112		—		488,806		—
Finance Lease Obligations (with current portion)(e)	70,323		—		70,323		—


As of December 31, 2020				Fair Value
As of December 31, 2022										As of December 31, 2022			Fair Value
(thousands of U.S. dollars)	(thousands of U.S. dollars)	Carrying Amount		Level 1		Level 2		Level 3		(thousands of U.S. dollars)	Carrying Amount		Level 1		Level 2		Level 3

Derivatives designated as hedging instruments(a)										Derivatives designated as hedging instruments(a)
Interest rate caps										Interest rate caps	$	34,764	$	—	$	34,764	$	—
Derivatives not designated as hedging instruments~~(a)~~(b)	Derivatives not designated as hedging instruments~~(a)~~(b)									Derivatives not designated as hedging instruments~~(a)~~(b)
Interest rate caps		$	7	$	0	$	7	$	0
Foreign currency forward contracts										Foreign currency forward contracts	272		—		272		—
Embedded derivative assets										Embedded derivative assets	2,721		—		2,721		—
Embedded derivative liabilities	Embedded derivative liabilities	(670)		0		(670)		0		Embedded derivative liabilities	3,508		—		3,508		—
Long-Term Debt(b)
Current portion of long-term debt(c)										Current portion of long-term debt(c)
Revolving credit facility										Revolving credit facility	196,672		—		$	196,672	—
Other long-term debt										Other long-term debt	447		—		$	447	—
Long-Term Debt(d)										Long-Term Debt(d)
Term loan, due 2026	Term loan, due 2026	1,728,018		0		1,772,180		0		Term loan, due 2026	1,747,115		—		1,626,460		—
Senior notes, due 2026		96,329		0		99,863		0
Other long-term debt		442		0		442		0
Finance Lease Obligations (with current portion)(c)		36,112		0		36,112		0
Finance Lease Obligations (with current portion)(e)										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). Interest rate caps are valued using pricing models that incorporate observable market inputs including interest rate and yield curves.~~Income. 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.

~~(b)~~(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 ~~information~~quoted prices for the term loans due in 2026 in inactive markets as provided by ~~the agent under the Company’s senior secured credit facility.~~an independent fixed income security pricing service. Fair value approximates carrying value for “Other long-term debt.”

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

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Notes to Consolidated Financial Statements

~~18.~~17.Segment Information

We identify our operating segments based on the way we manage, evaluate and internally report our business activities for purposes of allocating resources and assessing performance. We have 3three reportable segments: Sterigenics, Nordion and Nelson Labs. We have determined our reportable segments based upon an assessment of organizational structure, service types, and internally prepared financial statements. Our chief operating ~~decision maker~~decision-maker evaluates performance and allocates resources based on net revenues and segment income after the elimination of intercompany activities. The accounting policies of our reportable segments are the same as those described in Note 1, “Significant Accounting Policies” of ~~our 2020~~the Company's annual consolidated financial statements and accompanying notes on Form ~~10-K.~~10-K for the year ended December 31, 2022.

Sterigenics

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

Nordion

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

Nelson Labs

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

For the three months ended March 31, ~~2021, three~~2023, two customers reported within the Nordion segment individually represented 10% or more of the segment’s total net revenues. These customers represented ~~23.7%, 20.0%,~~54.6% and ~~12.2%~~11.3% of the total segment’s external net revenues for the three months ended March 31, ~~2021.~~2023. The high concentration of revenues from these customers mainly stems from the low sales volume pattern in the three months ended March 31, 2023. For the three months ended March 31, ~~2020, two~~2022, five customers reported within the Nordion segment individually represented 10% or more of the segment's total net revenues. These customers represented ~~18.7%~~15.7%, 14.4%, 13.9%, 12.2%, and ~~11.6%~~11.9% of the total segment's external net revenues for the three months ended March 31, ~~2020.~~2022.

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

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


(thousands of U.S. dollars)	Three Months Ended March 31,
	2023		2022
Segment revenues(a)
Sterigenics	$	159,997	$	149,462
Nordion	8,551		34,002
Nelson Labs	52,042		53,290
Total net revenues	$	220,590	$	236,754
Segment income(b)
Sterigenics	$	82,840	$	79,403
Nordion	1,526		18,903
Nelson Labs	14,102		17,043
Total segment income	$	98,468	$	115,349

(a)Revenues are reported net of intersegment sales. Our Nordion segment recognized ~~$10.5~~$2.9 million and ~~$10.9~~$15.5 million in revenues from sales to our Sterigenics segment for the three months ended March 31, ~~2021~~2023 and ~~2020,~~2022, respectively, that is not reflected in net revenues in the table above. Intersegment sales for Sterigenics and Nelson Labs are immaterial for both periods.

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

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Notes to Consolidated Financial Statements

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

Capital expenditures by segment for the three months ended March 31, 2023 and 2022 were as follows:


(thousands of U.S. dollars)	Three Months Ended March 31,
	2023		2022
Sterigenics	$	30,877	$	25,221
Nordion	10,545		7,090
Nelson Labs	3,578		3,235
Total capital expenditures	$	45,000	$	35,546

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

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~~Notes to Consolidated Financial Statements~~

decision-maker.

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


(thousands of U.S. dollars)	(thousands of U.S. dollars)					(thousands of U.S. dollars)	Three Months Ended March 31,
Three Months Ended March 31,		2021		2020
							2023		2022
Segment income	Segment income	$	105,317	$	91,883	Segment income	$	98,468	$	115,349
Less adjustments:	Less adjustments:					Less adjustments:
Interest expense, net(a)	Interest expense, net(a)	21,282		56,562		Interest expense, net(a)	26,540		16,750
Depreciation and amortization~~(a)~~(b)	Depreciation and amortization~~(a)~~(b)	37,661		36,023		Depreciation and amortization~~(a)~~(b)	39,538		36,049
Share-based compensation~~(b)~~(c)	Share-based compensation~~(b)~~(c)	3,449		1,725		Share-based compensation~~(b)~~(c)	7,348		4,538

(Gain) loss on foreign currency and embedded derivatives(c)		(336)		4,267
Acquisition and divestiture related charges, net(d)		(185)		994
Business optimization project expenses(e)		261		1,049
Plant closure expenses(f)		542		771
Loss on extinguishment of debt(g)		14,312		0
Professional services relating to EO sterilization facilities(h)		13,399		4,146
Gain on foreign currency and derivatives not designated as hedging instruments, net(d)						Gain on foreign currency and derivatives not designated as hedging instruments, net(d)	535		(6,552)
Acquisition and divestiture related charges, net(e)						Acquisition and divestiture related charges, net(e)	592		(160)
Business optimization project expenses(f)						Business optimization project expenses(f)	2,534		104
Plant closure expenses(g)						Plant closure expenses(g)	(895)		671
Professional services and other expenses relating to EO sterilization facilities(h)						Professional services and other expenses relating to EO sterilization facilities(h)	16,302		18,059
Accretion of asset retirement obligation(i)	Accretion of asset retirement obligation(i)	551		490		Accretion of asset retirement obligation(i)	572		520
COVID-19 expenses(j)	COVID-19 expenses(j)	299		76		COVID-19 expenses(j)	—		103
Consolidated income (loss) before taxes		$	14,082	$	(14,220)
Consolidated income before taxes						Consolidated income before taxes	$	5,402	$	45,267

(a)The three months ended March 31, 2023 excludes $2.3 million 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 months ended March 31, 2022 excludes a $6.3 million net increase in the fair value of interest rate derivatives not designated as hedging instruments recorded to interest expense.

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

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

~~(c)~~(d)Represents the effects of (i) fluctuations in foreign currency exchange rates, ~~primarily related to remeasurement of intercompany loans denominated in currencies other than subsidiaries’ functional currencies, and~~ (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at ~~Nordion.~~Nordion, and (iii) unrealized gains on interest rate caps not designated as hedging instruments.

~~(d)~~(e)Represents (i) certain direct and incremental costs related to the acquisitions of RCA and BioScience ~~in 2021, Iotron in July 2020 and Nelson~~ Labs ~~Fairfield in 2018 (including the first quarter 2021 gain on the mandatorily redeemable noncontrolling interest as described in Note 4, “Acquisitions”),~~ and certain related integration efforts as a result of 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.

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

~~(f)~~Table of Contents

Sotera Health Company

Notes to Consolidated Financial Statements

(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.

~~(g)Represents expenses incurred~~ The three months ended March 31, 2023 includes a $1.0 million cancellation fee received from a tenant in connection with the ~~repricing~~termination of ~~our Term Loan in January 2021 including accelerated amortization of prior debt issuance and discount costs.~~an office space lease at the Nordion facility.

(h)Represents litigation and other professional fees ~~related to litigation~~ associated with our EO sterilization ~~facilities~~facilities. This amount also includes $2.3 million of interest expense, net associated with Term Loan B that was issued to finance the $408.0 million cost to settle 880+ pending and ~~other related professional fees.~~threatened EO claims against the Settling Defendants in Illinois under Settlement Agreements entered into on March 28, 2023, subject to substantially all of the plaintiffs providing opt-in consents to their individual settlement allocations and dismissing their claims with prejudice. See Note ~~16,~~15, “Commitments and Contingencies”.

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

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

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

You should read the following discussion and analysis in conjunction with our consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our ~~2020~~2022 Form 10-K. This discussion and analysis contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of various factors, including the factors we describe in the section entitled Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q, as well as Part I, Item 1A, “Risk Factors” in our ~~2020~~2022 Form 10-K.

OVERVIEW

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

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

For the three months ended March 31, ~~2021,~~2023, we recorded net revenues of ~~$212.1~~$220.6 million, net income of ~~$11.1~~$2.8 million, Adjusted Net Income of ~~$51.5~~$38.0 million and Adjusted EBITDA of ~~$105.3~~$98.5 million. For the definition of Adjusted Net Income and Adjusted EBITDA and the reconciliation of these non-GAAP measures from net income, ~~(loss),~~ please see “Non-GAAP Financial Measures.”

STRATEGIC DEVELOPMENTS AND KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS

The following summarizes strategic developments and key factors that have ~~underpinned~~impacted our operating results for the three months ended March 31, ~~2021~~2023 and may continue to affect our performance and financial condition in future periods.

•~~Driving organic growth~~Business and market conditions. ~~During~~Revenue and net income for the three months ended March 31, ~~2021, we continued~~2023 declined from the same quarter of the prior year, mainly driven by expected Nordion Co-60 harvest schedule timing, an unfavorable mix and lower volumes at Sterigenics and Nelson Labs that are typically experienced in the first quarter of the fiscal year. We expect Nordion Co-60 harvest schedules to ~~make investments~~be uneven for the remainder of 2023 and the financial contribution from Sterigenics and Nelson Labs to ~~expand capacity and implement EO facility enhancements~~increase for the remainder of 2023.

As discussed in more detail in our ~~Sterigenics business~~2022 Form 10-K, a portion of our supply of Co-60 is generated by Russian nuclear reactors. We continue to monitor the potential for disruption in the supply of Co-60 from Russian nuclear reactors but we do not expect a material impact for the remainder of 2023 on our supply or revenue.

•Investment initiatives. We remain focused on investments in capacity expansions and ~~expand our cobalt development resources~~facility improvements, as well as in our ~~Nordion business. In addition,~~efforts to strengthen our Co-60 supply chain. For the three months ended March 31, 2023, we ~~continue~~increased capital expenditures by $9.5 million compared to ~~expand capacity to meet demand for microbiological testing and extractables and leachables testing in our Nelson Labs business.~~the three months ended March 31, 2022.

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

•~~Borrowings~~Litigation costs. We are currently the subject of tort lawsuits alleging personal injury by purported exposure to EO emitted by our former facility in Willowbrook, Illinois and ~~financing costs.~~ ~~A combination of lower outstanding borrowings~~current facilities in Atlanta, Georgia and ~~reduced pricing on our debt resulted~~Santa Teresa, New Mexico. In addition, we are defendants in a ~~reduction~~lawsuit brought by the State of New Mexico Attorney General alleging that emissions of EO from our Santa Teresa facility constitute a public nuisance and materially contributed to increased health risks suffered by residents in ~~cash interest expense for~~ the ~~three months ended March 31, 2021 compared~~area. We maintain that our former Willowbrook, Illinois operations and current Atlanta, Georgia and Santa Teresa, New Mexico operations did not pose and do not pose any safety risk to ~~the three~~their surrounding communities. We deny these allegations and are vigorously defending against these claims.

3031

months ended March 31, 2020. On January 20, 2021 we amended our Term Loan to reduce the interest rate spread over LIBOR from 4.50% to 2.75%, and the LIBOR floor from 1.00% to 0.50%. The changes resulted in an effective reduction in current interest rates of 2.25%. We expect the amendment to provide additional cash interest savings of approximately $40.0 million per year based on the outstanding principal balance as of the date of the amendment. Interest savings in 2021 will be offset by cash and non-cash charges associated with the repricing amendment. In connection with this transaction, we wrote off approximately $11.3 million in debt issuance costs and debt discounts and incurred approximately $2.9 million in costs directly related to the refinancing transaction. In addition, on March 26, 2021, we amended our Revolving Credit Facility to reduce the interest rate spread over LIBOR applicable to revolving loans from 3.50% to 2.75%.

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

•~~Exit activities and litigation costs~~. In connection with the ongoing litigation related to our Willowbrook, Illinois, Atlanta, Georgia and Santa Teresa, New Mexico facilities, as described in Note ~~16,~~15, “Commitments and Contingencies”, we recorded costs of ~~$13.4~~$14.0 million for the three months ended March 31, ~~2021 relating~~2023.

On January 9, 2023, Sterigenics U.S., LLC and Sotera Health LLC (the "Settling Defendants") entered into binding term sheets and on March 28, 2023 the Settling Defendants entered into full agreements to ~~legal~~settle approximately 880 pending and ~~other professional service costs, as well as $0.5 million related~~threatened EO claims against the Defendant Subsidiaries in the Circuit Court of Cook County, Illinois, and U.S. District Court for the Northern District of Illinois (the “Settlement Agreements”). On May 1, 2023, pursuant to the ~~closure~~Settlement Agreements, the Company paid $408.0 million into a settlement escrow fund to settle the claims, subject to the satisfaction or waiver of certain conditions, including but not limited to substantially all of the plaintiffs providing opt-in consents to their individual settlement allocations and dismissing their claims with prejudice. The Settlement Agreements provide a pathway to comprehensively resolve the claims pending and threatened against the Company in Illinois and thereby enable the Company to focus its attention on operating the business. The Company denies any liability and maintains that its Willowbrook, Illinois ~~facility.~~operations did not pose a safety risk to the community in which it operated and believes the evidence ultimately would have compelled the rejection of the plaintiffs’ claims. See Note 15, “Commitments and Contingencies” to our consolidated financial statements.

•~~Impact of COVID-19 pandemic~~Borrowings, financing costs and financial leverage. ~~We remain subject~~On February 23, 2023 the Company successfully closed on a new senior secured Term Loan B facility in an aggregate principal amount of $500.0 million. The Company used the proceeds of this debt to ~~risks~~pay down existing borrowings under the Company’s revolving credit facility and ~~uncertainties as a result~~fund the $408.0 million EO litigation settlement in Cook County, Illinois. In addition, the Company plans to use the remaining proceeds to further enhance liquidity and for other general corporate purposes.

On March 21, 2023, the Company also entered into an Incremental Facility Amendment to the First Lien Credit Agreement ("Revolving Credit Facility Amendment"), which provides for an increase in the commitments under the existing revolving credit facility in an aggregate principal amount of $76.3 million. The Revolving Credit Facility Amendment also provides additional commitments for the issuance of letters of credit under the Revolving Credit Facility in an aggregate principal amount of $165.1 million. After giving effect to the Revolving Credit Facility Amendment, the aggregate amount of the COVID-19 pandemic. Our business continuity plans remain in effect and we have maintained certain measures to decrease exposure risk and manage our supply chain for critical materials. The extent to which our operations will continue to be impacted by the pandemic will largely depend on future developments, which still remain uncertain and cannot be predicted.revolving commitments is $423.8 million.

CONSOLIDATED RESULTS OF OPERATIONS

Three Months Ended March 31, ~~2021~~2023, as compared to Three Months Ended March 31, ~~2020~~2022

The following table sets forth the components of our results of operations for the three months ended March 31, ~~2021~~2023 and ~~2020.~~2022:


(thousands of U.S. dollars)	(thousands of U.S. dollars)	2021		2020		$ Change		% Change		(thousands of U.S. dollars)	2023		2022		$ Change		% Change

Total net revenues	Total net revenues	$	212,148	$	188,200	$	23,948	12.7	%	Total net revenues	$	220,590	$	236,754	$	(16,164)	(6.8)	%
Total cost of revenues	Total cost of revenues	96,776		91,683		5,093		5.6	%	Total cost of revenues	109,087		107,879		1,208		1.1	%
Total operating expenses	Total operating expenses	69,008		51,652		17,356		33.6	%	Total operating expenses	78,137		75,383		2,754		3.7	%
Operating income	Operating income	46,364		44,865		1,499		3.3	%	Operating income	33,366		53,492		(20,126)		(37.6)	%
Net income (loss)		11,065		(1,986)		13,051		657.2	%
Net income										Net income	2,842		30,641		(27,799)		(90.7)	%
Adjusted Net Income(a)	Adjusted Net Income(a)	51,506		23,738		27,768		117.0	%	Adjusted Net Income(a)	38,045		60,254		(22,209)		(36.9)	%
Adjusted EBITDA(a)	Adjusted EBITDA(a)	105,317		91,883		13,434		14.6	%	Adjusted EBITDA(a)	98,468		115,349		(16,881)		(14.6)	%

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

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Total Net Revenues

The following table compares our revenues by type for the three months ended March 31, ~~2021~~2023 to the three months ended March 31, ~~2020.~~2022:


(thousands of U.S. dollars)	(thousands of U.S. dollars)									(thousands of U.S. dollars)
Net revenues for the three months ended March 31,	Net revenues for the three months ended March 31,	2021		2020		$ Change		% Change		Net revenues for the three months ended March 31,	2023		2022		$ Change		% Change

Service	Service	$	188,698	$	167,405	$	21,293	12.7	%	Service	$	214,510	$	206,218	$	8,292	4.0	%
Product	Product	23,450		20,795		2,655		12.8	%	Product	6,080		30,536		(24,456)		(80.1)	%
Total net revenues	Total net revenues	$	212,148	$	188,200	$	23,948	12.7	%	Total net revenues	$	220,590	$	236,754	$	(16,164)	(6.8)	%

Net revenues were ~~$212.1~~$220.6 million in the three months ended March 31, ~~2021, an increase~~2023, a decrease of ~~$23.9~~$16.2 million, or ~~12.7%~~6.8%, as compared with the three months ended March 31, ~~2020.~~2022. Excluding the impact of foreign currency exchange rates, net revenues in the three months ended March 31, ~~2021 increased~~2023 decreased approximately ~~10.9%~~5.3% compared with the same period in the three months ended March 31, ~~2020.~~2022.

Service revenues

Service revenues increased ~~$21.3~~$8.3 million, or ~~12.7%~~4.0%, to ~~$188.7~~$214.5 million infor the three months ended March 31, ~~2021~~2023, as compared to ~~$167.4~~$206.2 million infor the three months ended March 31, ~~2020.~~2022. The ~~increase~~growth in net service revenues ~~reflected a $5.8 million increase due to the July 31, 2020 acquisition of Iotron, coupled with~~was driven by favorable pricing ~~and organic sales volume growth in our Sterigenics segment~~ of ~~$3.8~~$9.2 million and ~~$2.7~~$2.1 million in the Sterigenics and Nelson Labs segments, respectively. ~~Service~~$2.9 million of service revenue growth was ~~also~~ attributable to volume and mix in the Sterigenics segment. Partially offsetting these growth factors was a ~~$4.9~~decline in service revenue volume of $2.8 million ~~increase~~and $0.8 million in demand for testing services related to personal protective equipment used to provide protection against COVID-19 and a $1.6 million increase due to favorable pricing of laboratory and testing services in ourthe Nelson Labs ~~segment. The remainder of the increase is primarily due to~~segment and Nordion segment, respectively, coupled with a ~~favorable~~$2.3 million unfavorable impact from changes in foreign currency exchange rates ~~of $2.4 million.~~across all segments.

Product revenues

Product revenues ~~increased $2.7~~decreased $24.5 million, or ~~12.8%~~80.1%, to ~~$23.5~~$6.1 million infor the three months ended March 31, ~~2021~~2023, as compared to ~~$20.8~~$30.5 million infor the three months ended March 31, ~~2020.~~2022. The ~~increase~~decrease in product revenues was ~~primarily attributable~~mainly driven by expected volume decline and mix due to ~~a $1.3 million overall net volume increase driven largely by shipments of medical use~~ Co-60 harvest schedule timing in the Nordion segment and ~~a favorable~~an unfavorable impact from changes in foreign exchange rates of ~~$1.0~~$1.3 million.

Total Cost of Revenues

The following table compares our cost of revenues by type for the three months ended March 31, ~~2021~~2023 to the three months ended March 31, ~~2020.~~2022:


(thousands of U.S. dollars)	(thousands of U.S. dollars)									(thousands of U.S. dollars)
Cost of revenues for the three months ended March 31,	Cost of revenues for the three months ended March 31,	2021		2020		$ Change		% Change		Cost of revenues for the three months ended March 31,	2023		2022		$ Change		% Change

Service	Service	$	85,036	$	83,069	$	1,967	2.4	%	Service	$	104,210	$	94,576	$	9,634	10.2	%
Product	Product	11,740		8,614		3,126		36.3	%	Product	4,877		13,303		(8,426)		(63.3)	%
Total cost of revenues	Total cost of revenues	$	96,776	$	91,683	$	5,093	5.6	%	Total cost of revenues	$	109,087	$	107,879	$	1,208	1.1	%

Total cost of revenues accounted for approximately ~~45.6%~~49.5% and ~~48.7%~~45.6% of our consolidated net revenues for the three months ended March 31, ~~2021~~2023 and ~~2020,~~2022, respectively.

Cost of service revenues

Cost of service revenues increased ~~$2.0~~$9.6 million, or ~~2.4%~~10.2%, for the three months ended March 31, ~~2021~~2023, as compared to the three months ended March 31, ~~2020.~~2022. The ~~increase~~growth in cost of service revenues was ~~attributable~~partially driven by $5.1 million of higher energy costs and depreciation related to capital assets recently placed in service. In addition, cost of service revenue increased by $4.1 million as a result of higher labor costs, largely stemming from both the ~~Iotron acquisition~~addition of new personnel and ~~the~~higher compensation costs. Partially offsetting these factors was a $1.3 million favorable impact offrom changes in foreign currency exchange ~~rates on cost of sales within our foreign subsidiaries.~~rates.

Cost of product revenues

Cost of product revenues ~~increased $3.1~~decreased $8.4 million, or ~~36.3%~~63.3%, for the three months ended March 31, ~~2021~~2023, as compared to the three months ended March 31, ~~2020.~~2022. The ~~increase~~decrease was primarily a result of ~~incremental~~lower direct material and material transportation costs ~~associated~~of $7.0 million coupled with ~~increased sales volumes. The remainder of the increase is primarily due to~~ an ~~unfavorable~~$0.8 million impact from changes in foreign currency exchange ~~rates of $0.7 million.~~

rates.

Operating Expenses

The following table compares our operating expenses for the three months ended March 31, ~~2021~~2023 to the three months ended March 31, ~~2020:~~2022:


(thousands of U.S. dollars)	(thousands of U.S. dollars)									(thousands of U.S. dollars)
Operating expenses for the three months ended March 31,	Operating expenses for the three months ended March 31,	2021		2020		$ Change		% Change		Operating expenses for the three months ended March 31,	2023		2022		$ Change		% Change

Selling, general and administrative expenses	Selling, general and administrative expenses	$	52,465	$	37,053	$	15,412	41.6	%	Selling, general and administrative expenses	$	61,910	$	59,542	$	2,368	4.0	%
Amortization of intangible assets	Amortization of intangible assets	16,543		14,599		1,944		13.3	%	Amortization of intangible assets	16,227		15,841		386		2.4	%

Total operating expenses	Total operating expenses	$	69,008	$	51,652	$	17,356	33.6	%	Total operating expenses	$	78,137	$	75,383	$	2,754	3.7	%

Operating expenses accounted for approximately ~~32.5%~~35.4% and ~~27.4%~~31.8% of our consolidated net revenues for the three months ended March 31, ~~2021~~2023 and ~~2020,~~2022, respectively.

SG&A

SG&A increased ~~$15.4~~$2.4 million, or ~~41.6%~~4.0%, for the three months ended March 31, ~~2021~~2023, as compared to the three months ended March 31, ~~2020.~~2022. The increase was driven primarily by the following:

•~~A $9.3~~$2.8 million increase in ~~legal~~share-based compensation expense attributable to awards granted under the 2020 Omnibus Incentive Plan;

•$1.5 million in professional services fees largely related to business optimization projects;

•$1.0 million increase in business travel and management meetings costs; and

•$0.9 million in facility integration efforts mainly in connection with Nelson Labs' recent acquisitions.

Partially offsetting these factors was a $4.0 million decrease in litigation and other professional services expense associated with EO ~~litigation;~~

•$4.0 million in incremental corporate expenses largely attributed to costs associated with being a public company. This includes $1.2 million in professional fees associated with the secondary offering of common shares by the selling stockholders in March 2021.

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

Amortization of intangible assets

Amortization of intangible assets ~~was $16.5~~decreased $0.4 million, or 2.4% for the three months ended March 31, 2021, or 13.3% above the three months ended March 31, 2020. The change was primarily attributable to amortization on newly acquired intangible assets related to the Iotron and BioScience acquisitions.

~~Interest Expense, Net~~

~~Interest expense, net decreased $35.3 million, or 62.4%, for the three months ended March 31, 2021~~2023, as compared to the three months ended March 31, ~~2020. The decrease was largely~~2022 due to changes in foreign currency exchange rates.

Interest Expense, Net

Interest expense, net increased $18.5 million, or 177.5%, for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022. The variance was driven by an increase in the variable interest rate driving increased interest expense of $16.8 million on borrowings previously outstanding in the same period of the prior year coupled with interest expense of $6.6 million on incremental borrowings. In addition, we recorded a ~~lower outstanding debt balance for~~$6.3 million reduction to interest expense attributable to the favorable change in fair value of interest rate derivatives not designated as hedging instruments in the first quarter of ~~2021and lower~~2022 that did not recur in the first quarter of 2023. Partially offsetting this increase was a $9.5 million reduction to interest ~~rates subsequent~~expense attributable to ~~the January 2021 Term Loan refinancing.~~favorable settlements on interest rate cap contracts and a $2.6 million increase in interest income on cash and cash equivalents on deposit at financial institutions. The weighted average interest rate on our outstanding debt was ~~3.45%~~7.85% and ~~7.11%~~3.25% at March 31, ~~2021~~2023 and ~~2020,~~2022, respectively.

Foreign Exchange Loss ~~(Gain)~~

Foreign exchange loss was ~~$0.6~~$0.3 million for the three months ended March 31, ~~2021 as~~2023 compared to ~~a gain of $0.6~~$0.8 million infor the three months ended March 31, ~~2020.~~2022. The change in foreign exchange loss ~~(gain)~~ in our Consolidated Statements of Operations and Comprehensive Income ~~(Loss)~~mainly relates ~~primarily~~ to ~~U.S. dollar~~short-term losses (offset by short-term gains) on sales denominated ~~intercompany indebtedness with certain~~in currencies other than the functional currency of our ~~European~~operating entities. As described in Note 16, “Financial Instruments and ~~Canadian~~Financial Risk”, we enter into monthly U.S. dollar-denominated foreign currency forward contracts to manage foreign currency exchange rate risk related to our international subsidiaries.

Other ~~(Income) Expense,~~Income, Net

Other income, net was ~~$3.9~~$1.3 million for the three months ended March 31, ~~2021~~2023 compared to $3.2 million of expense for the three months ended March 31, 2020. The fluctuation was driven by changes in the fair value of the embedded derivatives in Nordion’s contracts. We recorded an unrealized gain on embedded derivatives of $0.9 million for the three months ended March 31, 2021 as compared to an unrealized loss on embedded derivatives of $4.8 million for the three months ended March 31, 2020. In addition, we recorded $1.2 million of other income related to the gain on purchase of the mandatorily redeemable noncontrolling interest of 15% of Nelson Labs Fairfield as compared to the amount previously accrued.

~~Provision (Benefit) for Income Taxes~~

~~Provision for income tax increased $15.3 million, or 124.7%, to a net provision of~~ $3.0 million for the three months ended March 31, ~~2021 as compared to~~2022. The majority of the variance stemmed from a ~~$12.2 million benefit~~decrease in the fair value of Nordion’s embedded derivative assets in the three months ended March 31, ~~2020.~~2023, resulting in a decrease in other income of $1.3 million from the three months ended March 31, 2022.

Provision for Income Taxes

Provision for income taxes decreased $12.1 million to a net provision of $2.6 million for the three months ended March 31, 2023, as compared to $14.6 million for the three months ended March 31, 2022. The change was primarily attributable to lower pre-tax income infor the three months ended March 31, ~~2021~~2023 compared to ~~a pre-tax loss in the three months ended~~

~~March 31, 2020. In addition, the increased limitation on interest expense deduction provided by the CARES Act in March 2020 resulted in a $9.1 million discrete tax benefit in~~ the three months ended March 31, ~~2020 as well as a reversal of a $5.6 million~~2022, partially offset by an increase in the valuation allowance against our excess interest expense carryforward balance and the foreign rate differential. The increase in the valuation allowance was a direct result of the $408.0 million Illinois EO litigation settlement, which was paid into a settlement escrow fund on ~~deferred tax assets related to nondeductible~~May 1, 2023. This expense will eliminate a current deduction of 2023 U.S. interest ~~expense.~~and increases the valuation allowance against our excess interest expense carryforward balance.

Provision for income taxes for the three months ended March 31, ~~2021~~2023 differed from the statutory rate primarily due to an increase in the partial valuation allowance against our excess interest expense carryforward balance, the impact of the foreign rate differential ~~GILTI,~~ and ~~a net increase in the valuation allowance attributable to the limitation on the deductibility of interest~~non-deductible compensation expense. ~~This was partially offset by a discrete item, which reversed the valuation allowance on deferred tax assets related to certain asset retirement obligations.~~ Provision for income taxes for the three months ended March 31, ~~2020~~2022 differed from the statutory rate primarily due to an increase in the partial valuation allowance against our excess interest expense carryforward balance, the impact of the ~~CARES Act, including the increased limitation~~foreign rate differential, and tax on ~~interest expense deduction and valuation allowance reversal, as described above.~~Global Intangible Low Taxed Income (“GILTI”).

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

Net income for the three months ended March 31, ~~2021~~2023 was ~~$11.1~~$2.8 million, as compared to ~~a net loss of $2.0~~$30.6 million for the three months ended March 31, ~~2020.~~2022. Adjusted Net Income was ~~$51.5~~$38.0 million for the three months ended March 31, ~~2021,~~2023, as compared to ~~$23.7~~$60.3 million for the three months ended March 31, ~~2020,~~2022, due to the factors described above. Adjusted EBITDA was ~~$105.3~~$98.5 million for the three months ended March 31, ~~2021,~~2023, as compared to ~~$91.9~~$115.3 million for the three months ended March 31, ~~2020,~~2022, due to the factors described above. Please see “Non-GAAP Financial Measures” below for a reconciliation of Adjusted Net Income and Adjusted EBITDA to their most directly comparable financial measure calculated and presented in accordance with GAAP.

NON-GAAP FINANCIAL MEASURES

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

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

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

Adjusted Net Income and Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted Net Income

and Adjusted EBITDA rather than net income, ~~(loss),~~ the nearest GAAP equivalent. For example, Adjusted Net Income and Adjusted EBITDA primarily exclude:

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

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

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

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

•

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

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

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

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

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

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

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


	Three Months Ended March 31,
(thousands of U.S. dollars)	2023		2022
Net income	$	2,842	$	30,641
Amortization of intangible assets	20,607		20,182
Share-based compensation(a)	7,348		4,538
Loss (gain) on foreign currency and derivatives not designated as hedging instruments, net(b)	535		(6,552)
Acquisition and divestiture related charges, net(c)	592		(160)
Business optimization project expenses(d)	2,534		104
Plant closure expenses(e)	(895)		671
Professional services and other expenses relating to EO sterilization facilities(f)	16,302		18,059
Accretion of asset retirement obligations(g)	572		520
COVID-19 expenses(h)	—		103
Income tax benefit associated with pre-tax adjustments(i)	(12,392)		(7,852)
Adjusted Net Income	38,045		60,254
Interest expense, net(j)	26,540		16,750
Depreciation(k)	18,931		15,867
Income tax provision applicable to Adjusted Net Income(l)	14,952		22,478
Adjusted EBITDA(m)	$	98,468	$	115,349

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

(b) Represents the effects of (i) fluctuations in foreign currency exchange rates, ~~primarily related to remeasurement of intercompany loans denominated in currencies other than subsidiaries’ functional currencies, and~~ (ii) non-cash mark-to-fair value of embedded derivatives relating to certain customer and supply contracts at ~~Nordion.~~Nordion, and (iii) unrealized gains on interest rate caps not designated as hedging instruments.

(c) Represents (i) certain direct and incremental costs related to the acquisitions of RCA and BioScience ~~in 2021, Iotron in July 2020 and Nelson~~ Labs ~~Fairfield in 2018 (including the first quarter 2021 gain on the mandatorily redeemable noncontrolling interest as described in Note 4, “Acquisitions”),~~ and certain related integration efforts as a result of 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.

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

(e) 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.

~~(f) Represents expenses incurred~~ The three months ended March 31, 2023 includes a $1.0 million cancellation fee received from a tenant in connection with the ~~repricing~~termination of ~~our Term Loan in January 2021 including accelerated amortization of prior debt issuance~~an office space lease at the Nordion facility.

(f) Represents litigation and ~~discount costs.~~

~~(g) Represents~~other professional fees ~~related to litigation~~ associated with our EO sterilization ~~facilities~~facilities. This amount also includes $2.3 million of interest expense, net associated with Term Loan B that was issued to finance the $408.0 million cost to settle 880+ pending and ~~other related professional fees.~~threatened EO claims against the Settling Defendants in Illinois under Settlement Agreements entered into on March 28, 2023, subject to substantially all of the plaintiffs providing opt-in consents to their individual settlement allocations and dismissing their claims with prejudice. See Note ~~16,~~15 “Commitments and Contingencies”.

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

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

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

(j) The three months ended March 31, 2023 excludes $2.3 million of interest expense, net on Term Loan B attributable to the ~~reconciling items, we utilized statutory income tax rates ranging from 0%~~loan proceeds that were used to ~~35%, depending upon~~fund the ~~applicable jurisdictions~~$408.0 million Illinois EO litigation settlement. The three months ended March 31, 2022 excludes a $6.3 million net increase in the fair value of ~~each adjustment.~~interest rate derivatives not designated as hedging instruments recorded to interest expense.

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

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

(m) $22.9 million and $19.8 million of the adjustments for the three months ended March 31, 2023 and 2022, respectively, are included in cost of revenues, primarily consisting of amortization of intangible assets, depreciation, and accretion of asset retirement obligations.

SEGMENT RESULTS OF OPERATIONS

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

Our Segments

Sterigenics

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

Nordion

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

As a result of the time required to meet regulatory and logistics requirements for delivery of radioactive products, combined with accommodations made to our customers to minimize disruptions to their operations during the installation of Co-60,

Nordion sales patterns can often vary significantly from one quarter to the next. However, timing-related impacts on our sales performance tend to be resolved within several quarters, resulting in more consistent performance over longer periods of time. In addition, sales of ~~production irradiators~~gamma irradiation systems occur infrequently and tend to be for larger amounts.

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

Nelson Labs

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

For more information regarding our reportable segments, please refer to Note ~~18,~~17, “Segment Information” to our consolidated financial statements.

Segment Results for the Three Months Ended March 31, ~~2021~~2023 and ~~2020~~2022

The following tables compare segment net revenue and segment income for the three months ended March 31, ~~2021~~2023 to the three months ended March 31, ~~2020:~~2022:


		Three Months Ended March 31,											Three Months Ended March 31,
(thousands of U.S. dollars)	(thousands of U.S. dollars)	2021			2020			$ Change		% Change		(thousands of U.S. dollars)	2023			2022			$ Change		% Change

Net Revenues	Net Revenues											Net Revenues
Sterigenics	Sterigenics	$	131,151		$	117,280		$	13,871	11.8	%	Sterigenics	$	159,997		$	149,462		$	10,535	7.0	%
Nordion	Nordion	25,918			23,625			2,293		9.7	%	Nordion	8,551			34,002			(25,451)		(74.9	%)
Nelson Labs	Nelson Labs	55,079			47,295			7,784		16.5	%	Nelson Labs	52,042			53,290			(1,248)		(2.3)	%
Segment Income	Segment Income											Segment Income
Sterigenics	Sterigenics	$	68,461		$	61,091		$	7,370	12.1	%	Sterigenics	$	82,840		$	79,403		$	3,437	4.3	%
Nordion	Nordion	13,786			13,022			764		5.9	%	Nordion	1,526			18,903			(17,377)		(91.9)	%
Nelson Labs	Nelson Labs	23,070			17,770			5,300		29.8	%	Nelson Labs	14,102			17,043			(2,941)		(17.3)	%
Segment Income margin	Segment Income margin											Segment Income margin
Sterigenics	Sterigenics	52.2		%	52.1		%					Sterigenics	51.8		%	53.1		%
Nordion	Nordion	53.2		%	55.1		%					Nordion	17.8		%	55.6		%
Nelson Labs	Nelson Labs	41.9		%	37.6		%					Nelson Labs	27.1		%	32.0		%

Net Revenues by Segment

Sterigenics net revenues were ~~$131.2~~$160.0 million for the three months ended March 31, ~~2021,~~2023, an increase of ~~$13.9~~$10.5 million, or ~~11.8%~~7.0%, as compared to the three months ended March 31, ~~2020.~~2022. The increase reflects ~~a 5.0% increase in revenues attributable to the Iotron acquisition coupled with a 3.2%~~ favorable ~~impact~~impacts from pricing of 6.2% as well as volume and ~~2.3% growth~~mix of 1.9%, partially offset by unfavorable impacts from changes in ~~organic sales volume.~~foreign currency exchange rates of 1.1%.

Nordion net revenues were ~~$25.9~~$8.6 million for the three months ended March 31, ~~2021, an increase~~2023, a decrease of ~~$2.3~~$25.5 million, or ~~9.7%~~74.9%, as compared to the three months ended March 31, ~~2020.~~2022. The ~~increase reflects a 4.2%~~decrease was driven by an expected volume decline and change in mix due to Co-60 harvest schedule timing, and an unfavorable impact from the strengthening of the Canadian dollar compared to the U.S. dollar for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020, a 3.6% impact from favorable pricing, and a 1.9% impact from higher volumes primarily due to increaseschanges in ~~shipments of medical-use Co-60.~~foreign exchange rates.

Nelson Labs net revenues were ~~$55.1~~$52.0 million for the three months ended March 31, ~~2021, an increase~~2023, a decrease of ~~$7.8~~$1.2 million, or ~~16.5%~~2.3%, as compared to the three months ended March 31, ~~2020.~~2022. The ~~increase~~decrease was ~~primarily driven by~~attributable to volume decline and change in mix of 5.2% coupled with a ~~10.3% increase in testing services related to personal protective equipment used to provide protection against COVID-19 and a 3.5%~~1.0% impact from ~~favorable pricing. The remainder of the increase is primarily due to~~changes in foreign currency exchange rates. Partially offsetting this decline was a favorable impact from ~~foreign exchange rates~~pricing of ~~1.7%~~3.9%.

Segment Income

Sterigenics segment income was ~~$68.5~~$82.8 million for the three months ended March 31, ~~2021,~~2023, an increase of ~~$7.4~~$3.4 million, or ~~12.1%~~4.3%, as compared to the three months ended March 31, ~~2020.~~2022. The increase in segment income was primarily a result of ~~the contributions of the Iotron acquisition coupled with revenue growth stemming from both~~ favorable customer pricing as well as volume and ~~volume,~~mix, as referenced above. ~~This~~The decline in segment income margin was driven by the impact of current staffing levels versus the typical lighter first-quarter volume relative to the remainder of the year coupled with inflation, partially offset by ~~incremental overhead associated with being a public company.~~the impacts of favorable pricing.

Nordion segment income was ~~$13.8~~$1.5 million for the three months ended March 31, ~~2021, an increase~~2023, a decrease of ~~$0.8~~$17.4 million, or ~~5.9%~~91.9%, as compared to the three months ended March 31, ~~2020.~~2022. The ~~increase~~decrease in segment income and segment income margin was ~~primarily due to the favorable impact~~driven by expected volume decline and change in mix stemming from ~~foreign exchange rates~~Co-60 harvest schedule timing, as ~~well as favorable customer pricing and increases in sales volume,~~ referenced above. ~~This was partially offset by incremental overhead associated with being a public company.~~

Nelson Labs segment income was ~~$23.1~~$14.1 million for the three months ended March 31, ~~2021, an increase~~2023, a decrease of ~~$5.3~~$2.9 million, or ~~29.8%~~17.3%, as compared to the three months ended March 31, ~~2020, due to the increase~~2022. The decrease in ~~sales volumes, driven largely by testing~~segment income was primarily a result of ~~personal protective equipment~~volume decline and ~~favorable pricing. This increase was~~change in mix, partially offset by ~~incremental overhead associated with being a public company.~~favorable pricing, as referenced above. Segment income margin decline was also driven by the impact of current staffing levels versus the typical lighter first-quarter volume relative to the remainder of the year.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Cash

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

As of March 31, ~~2021,~~2023, we had ~~$108.0~~$647.9 million of unrestricted cash and cash equivalents. This is an increase of ~~$5.6~~$252.7 million from the balance at December 31, ~~2020.~~2022. The increase in cash and cash equivalents was mainly attributable to $500.0 million in proceeds from the issuance of Term Loan B on February 23, 2023, partially offset by the $200.0 million paydown of the outstanding balance on the revolving credit facility. Our foreign subsidiaries held cash of approximately ~~$101.8~~$140.2 million at March 31, ~~2021~~2023 and ~~$88.8~~$158.3 million at December 31, ~~2020,~~2022, to meet their liquidity needs. No material restrictions exist to accessing cash held by our foreign subsidiaries notwithstanding any potential tax consequences. ~~Cash balances in~~

On February 23, 2023, we entered into the ~~United States decreased in the three months ended March 31, 2021 primarily as a result of the cash outflows~~First Lien Credit Agreement (the “2023 Credit Agreement”), which provides for, ~~the BioScience acquisition and the purchase of the 15% mandatorily redeemable noncontrolling interest of Nelson Labs Fairfield, coupled with normal quarterly interest payments on our outstanding debt.~~

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

Uses of Cash

We expect that cash on hand, operating cash flows and amounts available under our credit facilities will provide sufficient working capital to operate our business, ~~make expected capital expenditures, meet litigation costs and~~ meet foreseeable liquidity requirements, including debt service on our long-term debt, make expected capital expenditures including investments in fixed assets to build and/or expand existing facilities, and meet litigation costs for at least the next ~~twelve~~12 months. Our primary long-term liquidity requirements beyond the next 12 months will be to service our debt, make capital expenditures, and fund suitable business acquisitions. As of March 31, ~~2021,~~2023, there were no outstanding borrowings on the Revolving Credit Facility. We expect ~~to use~~any excess cash provided by operations ~~in excess of amounts needed for~~will be allocated to fund capital expenditures, ~~to fund~~ potential acquisitions, or for other general corporate purposes. Our ability to meet future working capital, capital expenditures and debt service requirements will depend on our future financial performance, which will be affected by a range of macroeconomic, competitive and business factors, including interest rate changes and changes in our industry, many of which are outside of our control. As of March 31, ~~2021, the amended and new~~2023, our interest rate caps limit our cash flow exposure related to LIBOR for ~~approximately 81% of~~the total principal amount outstanding on our variable rate borrowings tounder the ~~facility LIBOR floor of 0.5%.~~Term Loan. Refer to Note ~~17,~~16, “Financial Instruments and Financial Risk” under the heading “Derivative Instruments” for additional information regarding the interest rate caps used to manage economic risks associated with our variable rate borrowings.

Capital Expenditures

Our capital expenditure program is a component of our long-term strategy. This program includes, among other things, investments in new and existing facilities, business expansion projects, Co-60 used by Sterigenics at its gamma irradiation facilities, cobalt development projects and information technology enhancements. During the three months ended March 31, 2023, our capital expenditures amounted to $45.0 million, compared to $35.5 million for the three months ended March 31, 2022.

Cash Flow Information

Three Months Ended March 31, ~~2021~~2023 compared to the Three Months Ended March 31, ~~2020~~2022


(thousands of U.S. dollars)	(thousands of U.S. dollars)	2021		2020		(thousands of U.S. dollars)	2023		2022

Net Cash Provided by (Used in):	Net Cash Provided by (Used in):					Net Cash Provided by (Used in):
Operating activities	Operating activities	$	56,159	$	5,690	Operating activities	$	33,871	$	49,967
Investing activities	Investing activities	(46,519)		(12,989)		Investing activities	(44,968)		(35,483)
Financing activities	Financing activities	(3,783)		49,307		Financing activities	273,916		(449)
Effect of foreign currency exchange rate changes on cash and cash equivalents	Effect of foreign currency exchange rate changes on cash and cash equivalents	(295)		154		Effect of foreign currency exchange rate changes on cash and cash equivalents	1,067		487
Net increase (decrease) in cash and cash equivalents, including restricted cash, during the period		$	5,562	$	42,162
Net increase in cash and cash equivalents, including restricted cash, during the period						Net increase in cash and cash equivalents, including restricted cash, during the period	$	263,886	$	14,522

Operating activities

Cash flows provided by operating activities ~~increased $50.5~~decreased $16.1 million to net cash provided of ~~$56.2 million in the three months ended March 31, 2021 compared to $5.7~~$33.9 million for the three months ended March 31, ~~2020. Higher~~2023 compared to $50.0 million for the three months ended March 31, 2022. The decrease in cash flows from operating activities in the three months ended March 31, ~~2021~~2023 compared to the three months ended March 31, ~~2020 were~~2022 was driven primarily by a decrease in ~~cash paid for interest~~operating income of ~~$43.8~~$20.1 million, partially offset by ~~an increase in cash paid for income taxes of $9.7 million. In addition,~~ a decrease in cash used for working capital of $9.9 million.

Investing activities

Cash used in investing activities increased $9.5 million to net ~~operating assets for the three months ended March 31, 2021 resulted in a lower use~~cash used of ~~cash for operating activities of $7.6 million compared to $19.8~~$45.0 million for the three months ended March 31, ~~2020.~~

~~Investing activities~~

~~Cash used by investing activities increased $33.5 million to net cash used of $46.5 million in the three months ended March 31, 2021~~2023 compared to ~~$13.0~~$35.5 million for the three months ended March 31, ~~2020. The change~~2022.The variance was ~~attributable to the acquisition of~~

BioScience on March 8, 2021 for a net purchase price of approximately $13.2 million, the acquisition of the mandatorily redeemable noncontrolling interest in Nelson Labs Fairfield for $12.4 million andprimarily driven by an increase in ~~cash paid for~~ capital expenditures of ~~$8.0 million.~~$9.5 million in the first quarter of 2023 compared to the first quarter of 2022.

Financing activities

~~For the three months ended March 31, 2021,~~Cash provided by financing activities increased $274.4 million to net cash used ~~in financing activities was $3.8 million compared to net cash provided~~ of ~~$49.3~~$273.9 million for the three months ended March 31, ~~2020.~~2023 compared to $0.4 million for the three months ended March 31, 2022. The ~~primary use~~difference was mainly attributable to $500.0 million in proceeds from the issuance of ~~cash from financing activities was~~Term Loan B on February 23, 2023, partially offset by the $200.0 million paydown of the outstanding balance on the revolving credit facility and the payment of ~~$3.4~~$24.5 million of debt issuance costs incurred in connection with ~~our refinancing~~the issuance of Term Loan B and revolving credit facility amendment in the ~~Senior Secured Credit Facilities~~three months ended March 31, 2023, as described in “Debt Facilities” below. ~~Cash provided by financing~~Financing activities for the three months ended March 31, ~~2020 was primarily attributable to a $50.0 million borrowing on our Revolving Credit Facility, which was subsequently repaid in the second quarter of 2020.~~2022 were insignificant.

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 ~~matures~~mature on June 13, 2026 and December 13, 2026, ~~and~~respectively. After giving effect to the Revolving Credit ~~Facility's original maturity date was December 13, 2024. On December 17, 2020, we increased~~Facility Amendment (defined below), the total borrowing capacity ~~of our~~under the Revolving Credit Facility ~~from $190.0 million to $347.5~~is $423.8 million. The Senior Secured Credit Facilities also provide SHH the right at any time and under certain conditions to request incremental term loans or incremental revolving credit commitments based on a formula defined in the Senior Secured Credit Facilities. As of March 31, ~~2021~~2023 and December 31, ~~2020,~~2022, total borrowings under the Term Loan were $1,763.1 ~~million and $1,763.1 million, respectively, and there were no borrowings outstanding on the Revolving Credit Facility.~~million. The weighted average interest rate on borrowings under the Term Loan for the three months ended March 31, ~~2021~~2023 and March 31, ~~2020~~2022 was ~~3.73%~~7.44% and ~~6.18%~~3.25%, respectively.

On ~~January 20, 2021,~~February 23, 2023, we ~~closed on an amendment repricing our~~entered into the First Lien Credit Agreement (the “2023 Credit Agreement”), which provides for, among other things, a new Term ~~Loan. The interest rate spread over the London Interbank Offered Rate (“LIBOR”) on the~~Loan B facility ~~was reduced from 450 basis points to 275 basis points, and the facility’s LIBOR floor was reduced from 100 basis points to 50 basis points. The changes result~~ in an ~~effective reduction in current interest rates~~aggregate principal amount of 2.25%. As a result of the repricing, we expect cash interest savings of approximately $40.0 million per year based on the outstanding principal balance as of March 31, 2021. In connection with this amendment, we wrote off $11.3 million of unamortized debt issuance and discount costs and incurred an additional $2.9 million of expense related to debt issuance costs attributable to the refinancing. These costs were recorded to “Loss on extinguishment of debt” in our Consolidated Statements of Operations and Comprehensive Income (Loss).

~~As of March 31, 2021 and December 31, 2020, capitalized debt issuance costs totaled $3.1~~$500.0 million and ~~$3.4 million, respectively, and debt discounts totaled $20.0 million and $31.6 million, respectively, related~~bears interest, at the Company’s option, at a variable rate per annum equal to either (x) the Senior Secured Credit Facilities. Such costs are recorded as a reduction of debt on our consolidated balance sheets and amortized as a component of interest expense over the term of the debt agreement.

~~On March 26, 2021, we amended the Revolving Credit Facility, to (i) decrease the Applicable~~Term SOFR Rate (as defined in the 2023 Credit Agreement) ~~related to any Revolving Loans (as defined in the Credit Agreement) from a rate per annum that ranged from~~plus an applicable margin of 3.75% or (y) an alternative base rate (“ABR”) plus ~~2.50% to ABR plus 3.00% depending~~an applicable margin of 2.75%. The 2023 Credit Agreement is secured on ~~SHH’s Senior Secured First Lien Net Leverage Ratio to ABR plus 1.75%;~~a first priority basis on substantially all of our assets and inis guaranteed by certain of our subsidiaries. It is prepayable without premium or penalty at any time six months after the case of Eurodollar Loans (as defined in the Credit Agreement) from a rate per annum which ranged from the Adjusted LIBOR plus 3.50% to the Adjusted LIBOR plus 4.00% depending on SHH’s Senior Secured First Lien Net Leverage Ratio (as defined in the Credit Agreement), to the Adjusted LIBOR (as defined in the Credit Agreement) plus 2.75% and (ii) extend the maturity dateclosing date. The principal balance shall be paid at 1% of the ~~Revolving Facility from December 13, 2024 to June 13,~~aggregate principal amount ($5.0 million) per year, with the balance due at the end of 2026. The ~~other material terms~~Company used the proceeds of this debt to fund a previously announced $408.0 million EO litigation settlement in Cook County, Illinois and pay down the ~~Credit Agreement are unchanged and the amendment does not change the capacity~~$200.0 million of our Revolving Credit Facility, which is $347.5 million. No unamortized debt issuance costs associated with the Revolving Credit Facility were written off and direct fees and costs incurred in connection with the amendment were immaterial.

As of March 31, 2021 and December 31, 2020, there were no borrowings on the Revolving Credit Facility. SHH borrowed $50.0 million on the Revolving Credit Facility during the first quarter of 2020 which was repaid in the second quarter of 2020. The interest rate on theexisting borrowings under the Revolving Credit Facility concurrent with the funding of this 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 Term Loan B for the three months ended March 31, 2023 was 8.82%.

On March 21, 2023, the Company entered into the 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 have 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 LIBOR-based reference interest rate option for revolving loans with a reference rate option based upon the Term Secured Overnight Financing Rate (“Term SOFR”) or Daily Simple SOFR (“Daily SOFR”) plus an applicable credit spread adjustment of 0.1% (subject to a minimum floor of 0.0%). After giving effect to the Revolving Credit Facility Amendment, the aggregate amount of the Lenders' revolving commitments is $423.8 million and the aggregate amount of letter of credit commitments is $361.3 million. Letter of credit commitments are part of and not in addition to the aggregate revolving commitments. The maturity date of the Revolving Credit Facility remains June 13, 2026. As of March 31, 2023 there were no borrowings outstanding on the Revolving Credit Facility. The Company borrowed $200.0 million on the revolving credit facility during ~~2020 averaged approximately 5.0%~~the fourth quarter of 2022, which was repaid in the first quarter of 2023, as noted above. The weighted average interest rate on outstanding borrowings under the Revolving Credit Facility for the three months ended March 31, 2023 was 7.47%.

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 March 31, 2023, we were in compliance with all Senior Secured Credit Facilities and 2023 Credit Agreement covenants.

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

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

~~On July 31, 2020, SHH issued $100.0 million aggregate principal amount~~The Company utilizes interest rate derivatives to reduce the variability of ~~senior secured first lien notes~~cash flows in the interest payments associated with our variable rate debt due ~~2026 (the “First Lien Notes”~~to changes in LIBOR and SOFR. For additional information on the derivative instruments described above, refer to Note 16, “Financial Instruments and Financial Risk”, “Derivatives Instruments.”

Publication of all U.S. LIBOR tenors will cease after June 30, 2023. The most likely replacement benchmark is expected to be the Secured Overnight Financing Rate ("SOFR"), which mature on December 13, 2026. The First Lien Notes bear interest at a rate equal to LIBOR subject to a 1.00% floor plus 6.00% per annum. Interest is payable on a quarterly basis with no principal due until maturity. The weighted averagehas been recommended by financial regulators in the United States. We have identified our LIBOR-based exposure in our debt and outstanding interest rate onderivative agreements and have addressed the ~~First Lien Notes~~LIBOR transition for ~~the three months ended March 31, 2021 was 7.00%.~~

~~SHH is entitled~~those contracts. In accordance with ASC 848 Reference Rate Reform, we have elected to ~~redeem all or a portion of the First Lien Notes, at any time~~apply certain optional expedients for contract modifications and from time to time, subject to certain premiums depending on the date of redemption; any time on or prior to July 31, 2021, a customary make-whole premium applies and, thereafter, specified premiums that decline to zero apply (in each case as described in the indenture governing the First Lien Notes).

~~All of SHH’s obligations under the First Lien Notes are unconditionally guaranteed~~hedging relationships for derivative instruments impacted by the ~~Company and each existing and subsequently acquired~~benchmark interest rate transition. The optional expedients remove the requirement to remeasure contract modifications or ~~organized direct or indirect wholly-owned domestic restricted subsidiary of SHH, with customary exceptions including, among other things, where providing such guarantees is not permitted~~dedesignate hedging relationships impacted by law, regulation or contract or would result in material adverse tax consequences. All obligations under the First Lien Notes, and the guarantees of such obligations, are secured by substantially all of the assets of the borrower and guarantors, subject to permitted liens and other exceptions and exclusions, as outlined in the First Lien Notes. Such collateral is substantially the same collateral that secures the Senior Secured Credit Facilities. Such collateral securing the First Lien Notes ranks pari passu with that of the Senior Secured Credit Facilities.

~~2020 Debt Repayments~~

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

A comprehensive discussion of the Company’s critical accounting policies and management estimates made in connection with the preparation of the financial statements is included in Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2022. There have been no significant changes in critical accounting policies, management estimates or accounting policies since the year ended December 31, ~~2020.~~2022.

NEW ACCOUNTING PRONOUNCEMENTS

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risks are described within “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of our ~~2020~~Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2022. These market risks have not materially changed for the three months ended March 31, ~~2021.~~2023.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

Changes in Internal Control

During the three months ended March 31, ~~2021,~~2023, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4142

Part II—OTHER INFORMATION

Item 1. Legal Proceedings.

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

Legal Proceedings Described in Note 16 15 “Commitments and Contingencies”of Our Consolidated Financial Statements

Note ~~16,~~15, “Commitments and Contingencies” to our consolidated financial statements for the three months ended March 31, ~~2021~~2023 contained in this Quarterly Report on Form 10-Q includes information on legal proceedings that constitute material contingencies for financial reporting purposes that could have a material effect on our financial condition or results of operations. This item should be read in conjunction with Note 1615 “Commitments and Contingencies” for information regarding the following legal proceedings, which information is incorporated into this item by reference:

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

•~~Willowbrook, Illinois – Government Litigation~~

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

•~~Ethylene Oxide Tort Litigation – Georgia~~

•~~Suspension of Georgia Facility Operations & Related~~New Mexico Attorney General Litigation; and

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

Legal Proceedings That Are Not Described in Note 1615 “Commitments and Contingencies” to Our Consolidated Financial Statements

In addition to the matters that are identified in Note 1615 “Commitments and Contingencies” to our consolidated financial statements for the three months ended March 31, ~~2021~~2023 contained in this Quarterly Report on Form 10-Q, and incorporated into this item by reference, the following matter also constitutes a ~~material~~ pending legal proceeding, other than ordinary course litigation incidental to our business, to which we are or any of our subsidiaries is a party.

Zoetermeer, Holland Criminal Proceedings and Criminal Financial Investigation

In ~~early~~ 2010, the Dutch Public Prosecution Service started criminal proceedings against our subsidiary DEROSS Holding B.V. (“~~DEROSS B.V.”~~DEROSS”)~~, formerly known as Sterigenics Holland B.V.~~, in relation to ~~certain EO emissions and~~ alleged environmental permit violations for EO emissions in the period from 2004 to 2009 at its Zoetermeer processing facility. On the basis of the final indictment issued in April 2017, assuming a rarely applied increasing mechanism is not applied in this case, fines in the amount of €0.8 million (US$0.9 million) may be imposed.

~~In November 2010, the Public Prosecution Service~~ We have also started a criminal financial investigation against DEROSS B.V. to determine whether it has obtained illegal advantages by committing the alleged criminal offenses noted above. Any illegally obtained advantage could then be recovered from DEROSS B.V. in subsequent confiscation proceedings. According to the October 2013 report of this criminal financial investigation, the Public Prosecution Service estimates the illegally obtained advantage by DEROSS B.V. to be in the amount of €0.6 million (US$0.7 million).

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

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

In November 2010, the Public Prosecution Service also started a criminal financial investigation against DEROSS to determine whether it obtained illegal advantages by committing the alleged criminal offenses noted above. Any illegally obtained advantage could then be recovered from DEROSS in subsequent confiscation proceedings. The Public Prosecution Service estimates the illegally obtained advantage by DEROSS to be €0.6 million

(US$0.7 million).

In ~~2011, former shareholders~~February 2018, DEROSS and the two individuals received favorable judgments from the trial court, which did not hold any of them responsible for the alleged criminal offenses. In March 2018, the Public Prosecutor filed an appeal against the favorable judgments. The appeal procedure remains pending and will likely take several years to resolve.

An escrow account was established ~~an escrow account~~in 2011 to satisfy indemnity claims for losses ~~resulting from governmental claims~~ related to this ~~matter, including those relating to environmental law violations, financial advantage claims, as well as criminal and civil fines and penalties.~~matter. The balance of ~~the~~ special escrow atfunds as of March 31, ~~2021,~~2023, was approximately US$~~2.1~~1.8 million and ~~the~~additional cash collateral held by ABN Amro to provide security for the claims ~~against us~~ was approximately €2.4 million ~~(US$2.8 million)~~(US$2.6 million) as of March 31, ~~2021. These amounts are available to satisfy claims relating to the ongoing matter through its anticipated resolution.~~2023. At this time, ~~we expect that the appeal of this matter will likely take several years to resolve, barring unforeseen delays. However,~~ we believe the indemnification receivable continues to be recoverable and plan to ensure escrow funds remain in place to cover outcomes of an appeal.

~~It is possible that individuals living in the vicinity of our former Zoetermeer facility may file civil claims at some time in the future.~~

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

Item 1A. Risk Factors.

~~There have been no material changes~~The risk factor titled “We are subject to ~~the risk factors previously disclosed~~extensive regulatory requirements and routine regulatory audits in our ~~2020 Form 10-K. Refer to~~operations. …” included in Part I, Item 1A, “Risk Factors” of our ~~2020~~Annual Report on Form 10-K for the year ended December 31, 2022 is hereby updated by adding at the end thereof the paragraph immediately below. Other than such addition, the text of the risk factor is unchanged.

In April 2023, the US Environmental Protection Agency (“USEPA”) proposed stricter EO regulations based on the 2016 IRIS Assessment, including (1) a ~~detailed discussion~~proposed interim decision under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) that sets forth measures designed to mitigate EO exposure, in particular for workers exposed to EO in occupational settings, and (2) proposed amendments to the National Emission Standards for Hazardous Air Pollutants (NESHAP) that would require commercial EO sterilizers to implement additional air pollution control technologies, practices and procedures designed to further reduce EO emissions from EO facilities. These April 2023 proposals contain a number of ~~risk factors affecting us.~~proposed requirements that are inconsistent with existing industry practices and set forth proposed implementation timelines that would be difficult to meet at existing facilities for some of the proposed requirements; however, the proposals are currently undergoing public review and comment, which may lead to clarifications and revisions in the final USEPA regulations. Although we have been implementing enhancements at our EO sterilization facilities in the United States that we expect will facilitate our ability to meet many of the proposed requirements, certain facets of the proposed requirements are untested or not widely adopted at existing EO sterilization facilities. We are in the early stages of assessing the extent to which the proposals in their current form might require additional modifications and capital costs or might be unachievable at existing EO facilities throughout the industry.

4344

Item 6. Exhibits.

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

Incorporated by Reference

Exhibit No

Description of Exhibits

Form

File No.

Exhibit

Filing Date

Furnished/Filed
Herewith

Exhibit No

Description of Exhibits

Form

File No.

Exhibit

Filing Date

Furnished/Filed
Herewith

10.1

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

10-K

001-39729

10.28

2021-03-09

10.2

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

31.1

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

31.1

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

31.2

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

31.2

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

32.1

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

32.1

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

10.1

Incremental Facility Amendment No. 2, dated as of March 21, 2023, to the First Lien Credit Agreement dated as of December 13, 2019 by and among Sotera Health Company, Sotera Health Holdings, LLC, certain subsidiaries of Sotera Health Company, JPMorgan Chase Bank, N.A., as First Lien Administrative Agent and the lenders and issuing banks party thereto

8-K

001-39729

10.1

2023-03-22

10.2

Settlement Agreement dated as of March 28, 2023 by and among Sotera Health LLC, Sterigenics U.S., LLC and Plaintiffs’ Counsel (Illinois Ethylene Oxide Tort Litigation )

10.3

Willowbrook Group Settlement Agreement dated as of March 28, 2023 by and among Sotera Health LLC, Sterigenics U.S., LLC and Plaintiff's Executive Committee (Illinois Ethylene Oxide Tort Litigation)

101.INS

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

101.INS

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

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Label Linkbase Document

101.LAB

Inline XBRL Taxonomy Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

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

104

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

* Filed Herewith

** Furnished Herewith

4445

SIGNATURES

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


			SOTERA HEALTH COMPANY

			By:			/s/ ~~Scott J. Leffler~~Michael F. Biehl
			Name:			~~Scott J. Leffler~~Michael F. Biehl
			Title:			Interim Chief Financial Officer ~~and Treasurer~~
						(Principal Financial Officer)

Date: May ~~13, 2021~~3, 2023

4546


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


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


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


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


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

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