Healthcare services company Sotera Health (NASDAQ:) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 9.1% year on year to $311.3 million. Its non-GAAP profit of $0.26 per share was 19.1% above analysts’ consensus estimates.

Is now the time to buy Sotera Health Company? Find out by accessing our full research report, it’s free for active Edge members.

“Today, we reported strong top-line revenue growth and double-digit Adjusted EBITDA growth, with approximately 150 basis points of margin expansion,” said Chairman and Chief Executive Officer Michael B. Petras, Jr.

Company Overview

With a critical role in ensuring the safety of millions of patients worldwide, Sotera Health (NASDAQGS:SHC) provides sterilization services, lab testing, and advisory services to ensure medical devices, pharmaceuticals, and food products are safe for use.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Sotera Health Company’s sales grew at a decent 7.7% compounded annual growth rate over the last five years. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Sotera Health Company’s annualized revenue growth of 7.8% over the last two years aligns with its five-year trend, suggesting its demand was stable.

We can dig further into the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Sotera Health Company’s organic revenue averaged 8% year-on-year growth. Because this number aligns with its two-year revenue growth, we can see the company’s core operations (not acquisitions and divestitures) drove most of its results.

This quarter, Sotera Health Company reported year-on-year revenue growth of 9.1%, and its $311.3 million of revenue exceeded Wall Street’s estimates by 2.6%.

Looking ahead, sell-side analysts expect revenue to grow 4.9% over the next 12 months, a slight deceleration versus the last two years. This projection doesn't excite us and implies its products and services will see some demand headwinds.

Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend.

Operating Margin

Sotera Health Company has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average operating margin of 27%.

Analyzing the trend in its profitability, Sotera Health Company’s operating margin rose by 3.4 percentage points over the last five years, as its sales growth gave it operating leverage. This performance was mostly driven by its recent improvements as the company’s margin has increased by 6.7 percentage points on a two-year basis.

In Q3, Sotera Health Company generated an operating margin profit margin of 36.7%, up 8.5 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sotera Health Company’s EPS grew at an astounding 16.3% compounded annual growth rate over the last five years, higher than its 7.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Sotera Health Company’s earnings to better understand the drivers of its performance. As we mentioned earlier, Sotera Health Company’s operating margin expanded by 3.4 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, Sotera Health Company reported adjusted EPS of $0.26, up from $0.17 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Sotera Health Company’s full-year EPS of $0.81 to grow 5.2%.

Key Takeaways from Sotera Health Company’s Q3 Results

We were impressed by how significantly Sotera Health Company blew past analysts’ full-year EPS guidance expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Looking ahead, the company raised full-year revenue guidance. Zooming out, we think this was a solid print. The stock traded up 2.2% to $17 immediately after reporting.

Sure, Sotera Health Company had a solid quarter, but if we look at the bigger picture, is this stock a buy? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.