Sotera Health (SHC) risk factors, FY2024 10-K

Risks Related to the Company

1. 01including prohibiting imports of certain goods from certain other countries and exports of certain goods from Russia to certain other countries
2. 02We may be subject to evolving changes in environmental, health and safety regulations, which may negatively impact our business
3. 03EO is flammable and potentially explosive. Despite our extensive safety measures, a fire or explosion could occur at a sterilization facility where we use EO, which could interrupt our normal operations and result in facility closures, workplace injuries, property damage, or otherwise adversely affect our business
4. 04Potential health risks associated with the use of EO may subject us to future liability claims and associated adverse effects
5. 05We are currently defending certain litigation, and we are likely to be subject to additional litigation in the future
6. 06Allegations of our failure to properly perform our services may expose us to potential product liability claims, recalls, penalties and reputational harm or could otherwise cause a material adverse effect on our business
7. 07Safety risks associated with the transportation of potentially hazardous materials, such as EO and Co-60, may result in accidents or liabilities that materially affect our results of operations
8. 08Industry trends could impact the demand for our products and services and could have a material adverse effect on our business
9. 09Our business is highly competitive, and if we fail to compete successfully, our business, prospects, financial condition or results of operations may be adversely affected
10. 10The price of our input costs, including labor, raw materials and energy, are subject to inflation and other market risks and our ability to pass through increases in our input costs is highly dependent on market conditions
11. 11We may be adversely affected by global and regional economic and political instability
12. 12If we are unable to increase capacity at existing facilities and build new facilities in a timely and cost-effective manner, we may not achieve our expected revenue growth or profitability or such revenue growth and profitability, if any, could be delayed
13. 13We depend upon our ability to attract and retain highly skilled employees. If we fail to attract and retain the talent required for our business, our operations could be adversely affected and our business could be materially harmed
14. 14We occupy many of our facilities under long-term leases, and we may be unable to renew our leases at the end of their terms
15. 15We conduct sales and distribution operations on a worldwide basis and are subject to a variety of risks associated with doing business outside the United States
16. 16We are subject to significant regulatory oversight of our import and export operations due to the nature of some of our product offerings
17. 17Severe health events or environmental events, including impacts from climate change, and natural disasters, could have material adverse effects on our business, financial condition and results of operations
18. 18Our business may be subject to system interruptions, cybersecurity incidents and unauthorized data disclosures
19. 19Part of our growth strategy is to pursue strategic transactions, including acquisitions, which subjects us to risks that could harm our business and we may not be able to find suitable acquisition targets or integrate strategic acquisitions successfully into our existing business
20. 20Our internal control over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation
21. 21We rely on intellectual property rights to maintain our competitive position and third parties have claimed in the past, and may claim in the future, that we infringe or misappropriate their intellectual property rights
22. 22We are subject to complex and rapidly evolving data privacy and security laws and regulations and any ineffective compliance efforts with such laws and regulations may adversely impact our business
23. 23We have a history of net losses and may not maintain profitability in the future
24. 24We may incur 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, which could negatively impact our business, financial condition or results of operations
25. 25Unionization efforts and labor regulations could materially increase our costs or limit our flexibility
26. 26Our business is subject to a variety of laws involving the cannabis industry, many of which are unsettled and still developing and which could subject us to claims or otherwise harm our business
27. 27Government or private civil antitrust actions could harm our business, prospects, financial condition or results of operations
28. 28We may have greater than anticipated tax liabilities, which could harm our business, revenue and financial results

Risks Related to Our Indebtedness and Liquidity

1. 29December 31, 2024, our cash flow used for debt service totaled $184.9 million, which was comprised of $5.0 million of principal payments on the Term Loan (as defined herein) and interest payments of $179.9 million on all of our outstanding debt
2. 30The agreements governing our debt, including the Secured Notes, contain various covenants that impose restrictions on us and limit our flexibility in operating our business
3. 31meet those financial ratios and tests can be affected by events beyond our control, including prevailing economic, financial market and industry conditions, and we cannot give assurance that we will be able to satisfy such ratios and tests when required
4. 32Our cash flows may not be sufficient to service our indebtedness, and if we are unable to satisfy our obligations under our indebtedness, we may be required to seek other financing alternatives, which may not be successful
5. 33A lowering or withdrawal of the ratings assigned to our debt by rating agencies may increase our future borrowing costs and reduce our access to capital
6. 34Term SOFR and certain other interest “benchmarks” are subject to regulatory guidance and reform that we expect will cause interest rates under our current or future debt agreements to perform differently than in the past or could cause other unanticipated consequences
7. 35SHH is a holding company, and therefore its ability to make any required payment on our credit agreements depends upon the ability of its subsidiaries to pay it dividends or to advance it funds

Risks Related to Ownership of Our Common Stock

1. 36The market and trading volume of our common stock may be volatile, and you could lose all or part of your investment
2. 37The future issuance of additional common stock in connection with our incentive plans, acquisitions or otherwise will dilute all other stockholdings
3. 38Future offerings of debt or equity securities by us may adversely affect the market price of our common stock
4. 39A sale of a substantial number of shares of our common stock, or the perception that such sales might occur, may cause the price of our common stock to decline
5. 40Any sales of securities by any of our stockholders described above could have a material adverse effect on the market price of our common stock
6. 41The interests of our Sponsors may differ from the interests of other stockholders of the Company
7. 42Certain of our stockholders have the right to engage or invest in the same or similar businesses as us
8. 43Anti-takeover provisions in our Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws and the Stockholders Agreement, as well as Delaware law, could discourage a change in control of our company or a change in our management
9. 44Our Amended and Restated Certificate of Incorporation designates specific courts as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ abilities to obtain a favorable judicial forum for disputes with us or our directors, officers or employees
10. 45We do not anticipate paying any dividends on our common stock in the foreseeable future, and, consequently, our stockholders’ ability to achieve a return on their investment depends on appreciation in the price of our common stock