Sotera Health stock doubles after settlement in Sterigenics Illinois cases
Sotera Health (NASDAQ:SHC) jumped 100% after its Sterigenics agreed to pay more than $400 million to settle the more than 870 ethylene oxide cases pending against the unit in the Circuit Court of Cook County, Illinois and the US District Court for the Northern District of Illinois.
Under the terms of the agreements, Sterigenics will pay $408 million to settle the claims, subject to substantially all of the plaintiffs providing opt-in consents, according to a statement on Monday. Sterigenics and Sotera Health (SHC) deny any liability and the agreements explicitly provide that the settlements are not to be construed as an admission of any liability or that emissions from the Willowbrook facilities.
The settlement comes after Sotera Heath (SHC) shares plunged 33% on Sept. 19 after an Illinois jury awarded $360 million to a plaintiff in a lawsuit against its Sterigenics unit. The September verdict was one of the first as the company faced more than 800 plaintiffs who alleged that Sterigenics' Willowbrook sterilization plant caused cancer and other illnesses. Sotera shares had plunged more than 40% from the September verdict through Monday before the settlement announcement.
"We view this as a very meaningful clearing event for SHC given: (1) the $408M represents an average of $467k per plaintiff, which is significantly below the $363M the jury awarded the plaintiff in the initial case (that is also included in this settlement); (2) with all of the cases initially expected to be heard individually, it brings the issue to a much quicker conclusion ..." RBC analyst Sean Dodge wrote in a note on Monday. RBC has an outperform rating on SHC.
Sotera (SHC) received some good news on the Sterigenics legal front in November when a Cook County jury found that the company's Sterigenics unit wasn't liable for a woman's cancer in a different case, sending the shares skyrocketing 33% on Nov. 21.
Sterigenics will fund an escrow account to pay the settlement by May 1. Sotera Health (SHC) will record a charge for the $408 million settlement for the year ended 2022.
Sotera Health (SHC) presented at the JPMorgan Healthcare conference in San Francisco earlier Monday.