NEW YORK , Dec. 18, 2024 /PRNewswire/ -- On December 3 , 2024, Firstlight Management LP sent a letter to the Board of Directors of Sotera Health Company (NASDAQ: SHC ) calling for a sale of its Nelson Labs subsidiary. The full text of the letter is as follows: Dear Members of the Board, As you know, Firstlight Management is a Utah -based investment firm founded by an alumnus of Tiger Management and Leonard Green & Partners.
We are shareholders of Sotera Health ("SHC") and believe so strongly in the potential at the Company that it is our only position. We believe SHC has an opportunity to create an enormous amount of shareholder value by selling Nelson Labs and we call on the Board to initiate a sales process. Such a transaction would have the following benefits: Consolidation of SHC's portfolio around its highest-quality and highest-growth businesses.
While Nelson Labs should be a good business, it has struggled under SHC ownership. Nelson has grown EBITDA over 2018-2024E 1 at a CAGR of just 2.7%, well south of Sterigenics (9.
8%) and Nordion (8.2%). Free cash flow tells a similar story with Nelson Labs' free cash flow growth clocking in at a meager 1.
2% annually over 2018-2023. 2 These results even include the benefit of $108m of cumulative M&A spend within Nelson Labs without which growth would have been even more anemic. Viewed in this light, not only have SHC shareholders not earned their cost of capital on their Nelson Labs investment, they've actually lost money in real.
