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Sotera Health (NASDAQ:SHCD) 70% increase in after-hours trading after its Sterigenics agreed to pay more than $400 million to settle more than 870 pending ethylene oxide cases against the unit. in the Circuit Court of Cook County, Illinois and the United States District Court for the Northern District of Illinois.
Under the terms of the settlement, Sterigenics will pay $408 million to settle the claims, essentially all of the plaintiffs providing opt-in consent, according to a declare. Sterigenics and Sotera Health (SHCD) disclaims all liability and the agreements expressly state that the arrangements are not to be construed as an admission of any liability or such emissions from Willowbrook facilities.
The deal came after Sotera Heath (SHCD) shares fell 33% on September 19 after an Illinois grand jury awarded $360 million to a plaintiff in a lawsuit against the Sterigenics unit. The September ruling was one of the first as the company faced more than 800 yen plaintiff who alleges that Sterigenics’ Willowbrook sterilization plant causes cancer and other diseases. Shares of Sotera have fallen more than 40% since the September ruling through Monday before the settlement announcement.
Sotera (SHCD) received some good news on the Sterigenics legal front in November when a Cook County jury found that the company’s Sterigenics unit not responsible for a woman’s cancer in another casee, causing the stock to spike 33% on Nov.
“The agreements provide a route to comprehensive resolution of pending claims against Sterigenics and Sotera Health LLC in Illinois and thus allow the company to focus fully on running the business, servicing the business. our customers…” the company said in the statement.
Sterigenics will fund an escrow account for payment by May 1st at the latest. Sotera Health (SHCD) will recognize a settlement fee of $408 million for the year ending 2022.
A $363 million judgment in September against the company resulted in some downgrade by sell-side analysts including Goldman Sachs and JPMorgan, cut to Sotera to lose weight from overweight. In October, Citi cut Sotera Health (SHCD) moved to neutral from buying with a price target of $9, down from $25, citing a September jury verdict.
Sotera Health (SHCD) presented at the JPMorgan Healthcare conference in San Francisco early Monday.
