What happened
Shares of Sotera Health (SHC 0.71%) closed up 17% on Thursday after the company, which provides sterilization solutions, lab testing, and advisory services for healthcare companies, settled a class action lawsuit. The stock is up more than 111% so far this year.
So what
The company announced Thursday that 879 of the 882 claimants in a class action suit against a Sotera subsidiary had opted in on a settlement worth more than $400 million. The claims related to Sterigenics' alleged use of ethylene oxide emissions in a factory in Willowbrook, Illinois. All that remains is for a Cook County court to sign off on the agreement.
Sotera said the deal was not to be construed as an admission of liability and maintained the factory in Willowbrook was not a safety risk to the community. Ethylene oxide is a pesticide and sterilizing agent and is listed as a cancer-causing substance by the National Cancer Institute. Sterigenics was accused in the lawsuits of releasing ethylene oxide gas into the air at its Willowbrook plant, which closed in 2019.
It wasn't so much that the settlement was great news, but that it at least was definitive, allowing investors and the company to begin looking forward and for Sotera to get out from underneath negative headlines.
Now what
In its first-quarter report, Soterapredicted revenue this year of between $1.055 billion and $1.09 billion, a rise of 5% to 9% over 2022 revenue. It also said it expected annual adjusted earnings per share (EPS) to be between $0.78 and $0.86, a drop of 10% to 19% due to higher taxes and interest expenses. It may have to increase its debt load to pay off the lawsuit, but considering its yearly revenue, that's not a huge matter.
