SEC Filing | Sotera Health

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-39729

SOTERA HEALTH COMPANY

(Exact name of registrant as specified in its charter)

Delaware

47-3531161

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

9100 South Hills Blvd, Suite 300

Broadview Heights, Ohio

44147

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code

(440)

262-1410

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	SHC	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of August 5, 2021, there were 282,916,909 shares of the registrant’s common stock, $0.01 par value per share, outstanding.

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SOTERA HEALTH COMPANY

- TABLE OF CONTENTS -


Part I—FINANCIAL INFORMATION			5
Item 1. Financial Statements			5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			33
Item 3. Quantitative and Qualitative Disclosures About Market Risk			48
Item 4. Controls and Procedures			48
Part II—OTHER INFORMATION			49
Item 1. Legal Proceedings.			49
Item 1A. Risk Factors.			50
Item 6. Exhibits.			51
SIGNATURES			52

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements are often characterized by the use of the words such as “believes,” “estimates,” “expects,” “projects,” “may,” “intends,” “plans” or “anticipates,” or by discussions of strategy, plans or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from historical results or any future results, performance or achievements expressed, suggested or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to:

•any disruption in the availability of, or increases in the price of, ethylene oxide (“EO”), cobalt-60 (“Co-60”) or our other direct materials, services and supplies, including as a result of current geopolitical instability arising from U.S. relations with Russia and related sanctions;

•adverse changes in industry trends;

•adverse changes in environmental, health and safety regulations;

•accidents resulting from the safety risks associated with the use and disposal of potentially hazardous materials such as EO and Co-60;

•accidents resulting from the safety risks associated with the transportation of potentially hazardous materials such as EO and Co-60;

•liability claims relating to health risks associated with the use of EO and Co-60;

•current and future legal proceedings;

•the intensity of competition we face;

•any market changes that impact our long-term supply contracts with variable price clauses;

•allegations of our failure to properly perform our services and any potential product liability claims, recalls, penalties and reputational harm;

•the regulatory requirements to which we are subject, and any failures to receive or maintain, or delays in receiving, required clearance or approvals;

•business continuity hazards and other risks associated with our operations, including our reliance on the use and sale of products and services from a single location;

•the impact of the COVID-19 pandemic;

•our ability to increase capacity at existing facilities and build new facilities in a timely and cost-effective manner;

•our ability to renew the long-term leases for our facilities at the end of their terms;

•the risks of doing business internationally;

•instability in global and regional economic and political conditions;

•our failure to retain key personnel and attract talent;

•the significant regulatory oversight to which our import and export operations are subject, and any failure to comply with applicable regulations;

•any cyber security breaches and data leaks as a result of our dependence on information technology systems;

•the risks of pursuing strategic transactions, including acquisitions, and our ability to find suitable acquisition targets or integrate strategic acquisitions successfully into our business;

•our ability to maintain effective internal controls over financial reporting;

•our reliance on intellectual property to maintain our competitive position and the risk of claims from third parties that we infringe or misappropriate their intellectual property rights;

•the data privacy and security laws and regulations to which we are subject, and any ineffective compliance efforts with such laws and regulations;

•our ability to maintain profitability in the future;

•impairment charges on our goodwill and other intangible assets with indefinite lives;

•unionization efforts and labor regulations in certain countries in which we operate;

•the variety of laws involving the cannabis industry to which we are subject, and any failure to comply with those laws;

•the risk of government or private civil antitrust actions;

•adverse changes to our tax positions in U.S. or non-U.S. jurisdictions, the interpretation and application of recent U.S. tax legislation or other changes in U.S. or non-U.S. taxation of our operations;

•our substantial leverage could adversely affect our ability to raise additional capital, limit our ability to react to changes in the economy or our industry and prevent us from meeting our obligations under our existing and future indebtedness; and

•our ability to generate sufficient cash flows or access sufficient additional capital to meet our debt obligations or to fund our other liquidity needs.

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These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them publicly in light of new information or future events, except as required by law. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved.

You should carefully consider the above factors, as well as the factors discussed elsewhere in this Quarterly Report on Form 10-Q, including under Part II, Item 1A, “Risk Factors,” as well as Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 10-K”). If any of these trends, risks or uncertainties actually occurs or continues, our business, financial condition or operating results could be materially adversely affected, the trading prices of our securities could decline and you could lose all or part of your investment. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

Unless expressly indicated or the context requires otherwise, the terms “Sotera Health,” “Company,” “we,” “us,” and “our” in this document refer to Sotera Health Company, a Delaware corporation, and, where appropriate, its subsidiaries on a consolidated basis.

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Part I—FINANCIAL INFORMATION

Item 1. Financial Statements

Sotera Health Company

Consolidated Balance Sheets

(in thousands)


	As of
	June 30, 2021		December 31, 2020
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	156,217	$	102,447
Restricted cash short-term	7		7
Accounts receivable, net of allowance for uncollectible accounts of $730 and $708, respectively	118,405		91,735
Inventories, net	35,721		34,093
Prepaid expenses and other current assets	67,942		64,964
Income taxes receivable	22,813		21,769
Total current assets	401,105		315,015
Property, plant, and equipment, net	623,513		609,814
Operating lease assets	45,147		45,963
Deferred income taxes	8,194		8,424
Investment in unconsolidated affiliate	9,373		13,457
Other assets	8,834		9,304
Other intangible assets, net	640,787		643,366
Goodwill	1,114,176		1,115,936
Total assets	$	2,851,129	$	2,761,279
Liabilities and equity
Current liabilities:
Accounts payable	$	63,147	$	52,400
Accrued liabilities	57,165		60,518
Deferred revenue	5,539		6,056

Current portion of finance lease obligations	1,103		1,173
Current portion of operating lease obligations	10,106		9,383
Current portion of asset retirement obligations	660		620
Income taxes payable	11,072		10,448
Total current liabilities	148,792		140,598
Long-term debt	1,838,133		1,824,789
Finance lease obligations, less current portion	33,446		34,939
Operating lease obligations, less current portion	37,354		38,941
Noncurrent asset retirement obligations	46,408		45,013
Deferred lease income	21,550		21,255
Post-retirement obligations	45,638		48,223
Mandatorily redeemable noncontrolling interest	—		13,625
Noncurrent liabilities	18,905		17,506
Deferred income taxes	137,632		121,816
Total liabilities	2,327,858		2,306,705
See Commitments and contingencies note
Equity:
Common stock, with $0.01 par value, 1,200,000 shares authorized; 286,037 shares issued at June 30, 2021 and 285,990 at December 31, 2020	2,860		2,860
Preferred stock, with $0.01 par value, 120,000 authorized; no shares issued at June 30, 2021 and December 31, 2020, respectively	—		—
Treasury stock, at cost (3,120 and 2,742 shares at June 30, 2021 and December 31, 2020, respectively)	(34,000)		(34,000)
Additional paid-in capital	1,167,566		1,166,412
Retained deficit	(535,687)		(589,128)
Accumulated other comprehensive loss	(77,468)		(93,842)
Total equity attributable to Sotera Health Company	523,271		452,302
Noncontrolling interests	—		2,272
Total equity	523,271		454,574
Total liabilities and equity	$	2,851,129	$	2,761,279

See notes to consolidated financial statements.

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Sotera Health Company

Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except per share amounts)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020

Revenues:
Service	$	208,710	$	174,444	$	397,408	$	341,849
Product	43,207		38,641		66,657		59,436
Total net revenues	251,917		213,085		464,065		401,285
Cost of revenues:
Service	91,391		80,620		176,427		163,689
Product	16,765		13,498		28,505		22,112
Total cost of revenues	108,156		94,118		204,932		185,801
Gross profit	143,761		118,967		259,133		215,484
Operating expenses:
Selling, general and administrative expenses	49,828		42,684		102,293		79,737
Amortization of intangible assets	15,661		14,541		32,204		29,140

Total operating expenses	65,489		57,225		134,497		108,877
Operating income	78,272		61,742		124,636		106,607
Interest expense, net	19,163		55,250		40,445		111,812
Loss on extinguishment of debt	—		—		14,312		—
Foreign exchange loss (gain)	76		(172)		654		(799)
Other income, net	(2,764)		(4,358)		(6,654)		(1,208)
Income (loss) before income taxes	61,797		11,022		75,879		(3,198)
Provision (benefit) for income taxes	19,182		3,770		22,199		(8,464)
Net income	42,615		7,252		53,680		5,266
Less: Net income attributable to noncontrolling interests	16		235		239		213
Net income attributable to Sotera Health Company	42,599		7,017		53,441		5,053
Other comprehensive (loss) income net of tax:
Pension and post-retirement benefits (net of taxes of $(142), $(326), $(226), and $418, respectively)	(421)		(967)		(670)		1,240
Interest rate swaps (net of taxes of $0, $520, $0 and $(724), respectively)	—		1,465		—		(2,014)
Foreign currency translation	20,425		24,440		17,339		(48,527)
Comprehensive income (loss)	62,619		32,190		70,349		(44,035)
Less: comprehensive income attributable to noncontrolling interests	326		234		534		212
Comprehensive income (loss) attributable to Sotera Health Company	$	62,293	$	31,956	$	69,815	$	(44,247)
Earnings per share:
Basic	$	0.15	$	0.03	$	0.19	$	0.02
Diluted	0.15		0.03		0.19		0.02
Weighted average number of shares outstanding:
Basic	279,078		232,400		278,953		232,400
Diluted	279,214		232,400		279,078		232,400

See notes to consolidated financial statements.

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Sotera Health Company

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


	Six Months Ended June 30,
	2021		2020
Operating activities:
Net income	$	53,680	$	5,266
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	31,062		31,433
Amortization of intangible assets	44,060		39,624

Loss on extinguishment of debt	14,312		—
Deferred income taxes	3,504		(8,237)
Share-based compensation expense	6,942		3,118
Accretion of asset retirement obligations	1,153		974
Unrealized foreign exchange losses / (gains)	1,097		(4,864)
Unrealized (gain) / loss on embedded derivative instruments	(1,614)		2,043
Amortization of debt issuance costs	3,245		5,830
Other	(4,241)		(3,704)
Changes in operating assets and liabilities:
Accounts receivable	(25,754)		(4,809)
Inventories	(770)		5,359
Other current assets	983		(957)
Accounts payable	15,080		(8,951)
Accrued liabilities	(4,375)		(7,246)
Income taxes payable / receivable	(3,998)		(3,943)
Other liabilities	(95)		164
Other long-term assets	(15)		1,587
Net cash provided by operating activities	134,256		52,687
Investing activities:
Purchases of property, plant and equipment	(44,789)		(23,438)
Purchase of mandatorily redeemable noncontrolling interest in Nelson Laboratories Fairfield, Inc.	(12,425)		—
Purchase of BioScience Laboratories, LLC, net of cash acquired	(13,760)		—
Net cash used in investing activities	(70,974)		(23,438)
Financing activities:
Proceeds from revolving credit facility	—		50,000
Purchase of noncontrolling interests in China subsidiaries	(7,720)		—
Payments of debt issuance costs	(3,661)		(142)
Payments on long-term borrowings	—		(55,725)
Other	(709)		(651)
Net cash used in financing activities	(12,090)		(6,518)
Effect of exchange rate changes on cash and cash equivalents	2,578		601
Net increase in cash and cash equivalents, including restricted cash	53,770		23,332
Cash and cash equivalents, including restricted cash, at beginning of period	102,454		63,025
Cash and cash equivalents, including restricted cash, at end of period	$	156,224	$	86,357
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	36,615	$	112,725
Cash paid during the period for income taxes, net of tax refunds received	22,785		3,332
Equipment purchases included in accounts payable	9,670		7,141

See notes to consolidated financial statements.

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Sotera Health Company

Consolidated Statements of Equity

(in thousands)

(Unaudited)


	Three Months Ended June 30, 2021
	Common Stock					Additional Paid-In Capital		Retained Earnings / (Accumulated Deficit)		Accumulated Other Comprehensive (Loss) Income		Noncontrolling Interests		Total Equity
	Shares	Amount		Treasury Stock
Balance at March 31, 2021	282,900	$	2,860	$	(34,000)	$	1,169,852	$	(578,286)	$	(97,162)	$	2,480	$	465,744
Acquisition of noncontrolling interests	—	—		—		(5,772)		—		—		(2,806)		(8,578)
Issuance of shares	47	—		—		1,080		—		—		—		1,080
Share-based compensation plans	(30)	—		—		2,406		—		—		—		2,406
Comprehensive income (loss):
Pension and post-retirement plan adjustments, net of tax	—	—		—		—		—		(421)		—		(421)
Foreign currency translation	—	—		—		—		—		20,115		310		20,425
Net income	—	—		—		—		42,599		—		16		42,615
Balance at June 30, 2021	282,917	$	2,860	$	(34,000)	$	1,167,566	$	(535,687)	$	(77,468)	$	—	$	523,271


	Six Months Ended June 30, 2021
	Common Stock					Additional Paid-In Capital		Retained Earnings / (Accumulated Deficit)		Accumulated Other Comprehensive (Loss) Income		Noncontrolling Interests		Total Equity
	Shares	Amount		Treasury Stock
Balance at December 31, 2020	283,248	$	2,860	$	(34,000)	$	1,166,412	$	(589,128)	$	(93,842)	$	2,272	$	454,574
Acquisition of noncontrolling interests	—	—		—		(5,772)		—		—		(2,806)		(8,578)
Issuance of shares	47	—		—		1,080		—		—		—		1,080
Share-based compensation plans	(378)	—		—		5,846		—		—		—		5,846
Comprehensive income (loss):
Pension and post-retirement plan adjustments, net of tax	—	—		—		—		—		(670)		—		(670)
Foreign currency translation	—	—		—		—		—		17,044		295		17,339
Net income	—	—		—		—		53,441		—		239		53,680
Balance at June 30, 2021	282,917	$	2,860	$	(34,000)	$	1,167,566	$	(535,687)	$	(77,468)	$	—	$	523,271

See notes to consolidated financial statements.

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Sotera Health Company

Consolidated Statements of Equity (Deficit) (continued)

(in thousands)

(Unaudited)


	Three Months Ended June 30, 2020
	Common Stock			Additional Paid-In Capital		Retained Earnings / (Accumulated Deficit)		Accumulated Other Comprehensive (Loss) Income		Noncontrolling Interests		Total Equity (Deficit)
	Shares	Amount
Balance at March 31, 2020	232,400	$	2,324	$	1,725	$	(552,475)	$	(168,626)	$	1,420	$	(715,632)
Share-based compensation plans	—	—		1,393		—		—		—		1,393
Comprehensive income (loss):
Pension and post-retirement plan adjustments, net of tax	—	—		—		—		(967)		—		(967)
Foreign currency translation	—	—		—		—		24,440		—		24,440
Interest rate swaps	—	—		—		—		1,465		—		1,465
Net income	—	—		—		7,017		—		234		7,251
Balance at June 30, 2020	232,400	$	2,324	$	3,118	$	(545,458)	$	(143,688)	$	1,654	$	(682,050)


	Six Months Ended June 30, 2020
	Common Stock			Additional Paid-In Capital		Retained Earnings / (Accumulated Deficit)		Accumulated Other Comprehensive (Loss) Income		Noncontrolling Interests		Total Equity (Deficit)
	Shares	Amount
Balance at December 31, 2019	232,400	$	2,324	$	—	$	(550,511)	$	(94,387)	$	1,442	$	(641,132)
Share-based compensation plans	—	—		3,118		—		—		—		3,118
Comprehensive income (loss):
Pension and post-retirement plan adjustments, net of tax	—	—		—		—		1,240		—		1,240
Foreign currency translation	—	—		—		—		(48,527)		—		(48,527)
Interest rate swaps	—	—		—		—		(2,014)		—		(2,014)
Net income	—	—		—		5,053		—		212		5,265
Balance at June 30, 2020	232,400	$	2,324	$	3,118	$	(545,458)	$	(143,688)	$	1,654	$	(682,050)

See notes to consolidated financial statements.

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Sotera Health Company

Notes to Consolidated Financial Statements

1.Basis of Presentation

Principles of Consolidation – Sotera Health Company (also referred to herein as the “Company,” “we,” “our,” “us” or “its”), is a leading global provider of mission-critical end-to-end sterilization solutions, lab testing and advisory services for the healthcare industry with operations primarily in the Americas, Europe and Asia.

We operate and report in three segments, Sterigenics, Nordion and Nelson Labs. We describe our reportable segments in Note 18, “Segment Information”. All significant intercompany balances and transactions have been eliminated in consolidation.

Noncontrolling interests represent the noncontrolling stockholders’ proportionate share of the total equity in the Company’s consolidated subsidiaries. We consolidate the results of operations of these subsidiaries with our results of operations. In the second quarter of 2021, we purchased the outstanding noncontrolling interests of 15% and 33% of our two China subsidiaries. Refer to Note 4, “Acquisitions” for additional details. We reflect the noncontrolling interests in our two China subsidiaries for all periods presented prior to this purchase transaction on our Consolidated Statements of Operations and Comprehensive Income (Loss) as “Net income attributable to noncontrolling interests.”

On March 11, 2021, we purchased the 15% noncontrolling interest that remained from the August 2018 acquisition of Nelson Laboratories Fairfield, Inc. (“Nelson Labs Fairfield”). As the purchase of this noncontrolling interest was mandatorily redeemable, no earnings were allocated to this noncontrolling interest. See Note 4, “Acquisitions” for additional details.

In July 2020, we acquired a 60% equity ownership interest in a joint venture to construct an E-beam facility in Alberta, Canada in connection with our acquisition of Iotron Industries Canada, Inc. (“Iotron”). Refer to Note 4, “Acquisitions” for additional information. We have determined this to be an investment in a variable interest entity (“VIE”). The investment is not consolidated as the Company has concluded that we are not the primary beneficiary of the VIE. The Company accounts for the joint venture using the equity method. The investment is reflected within “Investment in unconsolidated affiliates” on the Consolidated Balance Sheets.

Use of Estimates – In preparing our consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”), we make estimates and assumptions that affect the amounts reported and the accompanying notes. We regularly evaluate the estimates and assumptions used and revise them as new information becomes available. Actual results may vary from those estimates.

Interim Financial Statements – The accompanying consolidated financial statements include the assets, liabilities, operating results, and cash flows of the Company and its wholly owned subsidiaries. These financial statements are prepared in accordance with U.S. GAAP for interim financial information and the instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. These unaudited interim financial statements should be read in conjunction with the Company's annual consolidated financial statements and accompanying notes on Form 10-K for the year ended December 31, 2020.

2.Recent Accounting Standards

ASUs Issued But Not Yet Adopted

Under the Jumpstart Our Business Startups Act of 2012, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. As an emerging growth company, we have elected to take advantage of the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies or at which time we conclude it is appropriate to avail ourselves of early adoption provisions of applicable standards. As a result, our results of operations and financial statements may not be comparable to the results of operations and financial statements of other companies who have adopted the new or revised accounting standards.

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Sotera Health Company

Notes to Consolidated Financial Statements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (“ASU 2016-13”): Measurement of Credit Losses on Financial Instruments, and subsequently issued additional guidance that modified ASU 2016-13. The standard requires an entity to change its accounting approach in determining impairment of certain financial instruments, including trade receivables, from an “incurred loss” to a “current expected credit loss” model. We intend to adopt the standard as of January 1, 2022. We are currently assessing the effect that ASU 2016-13 will have on our financial position, results of operations, and disclosures.

In June 2019, the FASB issued ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The standard simplifies the accounting for income taxes and makes a number of changes meant to add or clarify guidance on accounting for income taxes. This update is effective for annual financial statement periods beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted in any interim period for which financial statements have not yet been filed. We are currently assessing the effect that ASU 2019-12 will have on our financial position, results of operations, and disclosures.

3.Revenue Recognition

The following table shows disaggregated net revenues from contracts with external customers by timing of revenue and by segment for the three and six months ended June 30, 2021 and 2020:


(thousands of U.S. dollars)	Three Months Ended June 30, 2021
	Sterigenics		Nordion		Nelson Labs		Consolidated
Point in time	$	145,182	$	47,753	$	—	$	192,935
Over time	—		1,372		57,610		58,982
Total	$	145,182	$	49,125	$	57,610	$	251,917


(thousands of U.S. dollars)	Three Months Ended June 30, 2020
	Sterigenics		Nordion		Nelson Labs		Consolidated
Point in time	$	120,372	$	42,141	$	—	$	162,513
Over time	—		—		50,572		50,572
Total	$	120,372	$	42,141	$	50,572	$	213,085


(thousands of U.S. dollars)	Six Months Ended June 30, 2021
	Sterigenics		Nordion		Nelson Labs		Consolidated
Point in time	$	276,333	$	73,671	$	—	$	350,004
Over time	—		1,372		112,689		114,061
Total	$	276,333	$	75,043	$	112,689	$	464,065


(thousands of U.S. dollars)	Six Months Ended June 30, 2020
	Sterigenics		Nordion		Nelson Labs		Consolidated
Point in time	$	237,652	$	65,766	$	—	$	303,418
Over time	—		—		97,867		97,867
Total	$	237,652	$	65,766	$	97,867	$	401,285

Contract Balances

As of June 30, 2021, and December 31, 2020, contract assets included in “Prepaid expenses and other current assets” on the Consolidated Balance Sheets totaled approximately $14.0 million and $12.7 million, respectively, resulting from revenue recognized over time in excess of the amount billed to the customer.

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Sotera Health Company

Notes to Consolidated Financial Statements

When we receive consideration from a customer prior to transferring goods or services under the terms of a sales contract, we record deferred revenue, which represents a contract liability. Deferred revenue totaled $5.5 million and $6.1 million at June 30, 2021 and December 31, 2020, respectively. We recognize deferred revenue after all revenue recognition criteria are met.

4.Acquisitions

Acquisition of Noncontrolling Interests in China Subsidiaries

On May 18, 2021, the Company acquired the remaining 15% and 33% noncontrolling interests associated with our two subsidiaries located in China. As a result, both entities are now 100% owned by the Company. The purchase price of the remaining equity interests was approximately $8.6 million, net of the cancellation of an $0.8 million demand note. The Company paid 90% of the cash consideration on the acquisition date with the remaining 10% to be settled post-closing pursuant to the terms of the equity transfer agreements. As a result of the transactions, we continue to consolidate both of these subsidiaries, however, as of May 18, 2021, we no longer record noncontrolling interests in the consolidated financial statements as these subsidiaries are fully owned by the Company. The purchases were accounted for as equity transactions. As a result of these transactions, noncontrolling interests were reduced by $2.8 million reflecting the carrying value of the interest with $5.8 million of the difference charged to additional paid-in capital as of June 30, 2021.

Acquisition of BioScience Laboratories, LLC

On March 8, 2021, we acquired BioScience Laboratories, LLC (“BioScience”) for approximately $13.8 million, net of $0.2 million of cash acquired plus the contemporaneous repayment of BioScience's outstanding debt of $1.9 million. BioScience is a provider of outsourced topical antimicrobial product testing in the pharmaceutical, medical device, and consumer products industries with one location in Bozeman, Montana.

The purchase price of BioScience was allocated to the underlying assets acquired and liabilities assumed based upon management's estimated fair values at the date of acquisition. Changes to the allocation of the purchase price may occur as these measurements are completed. Approximately $8.4 million of goodwill was recorded related to the BioScience acquisition, representing the excess of the purchase price over preliminary estimated fair values of all the assets acquired and liabilities assumed. The Company funded this acquisition using available cash. The acquisition price and the results of operations for this acquired entity are not material in relation to the Company's consolidated financial statements.

Acquisition of Mandatorily Redeemable Noncontrolling Interest - Nelson Labs Fairfield

On March 11, 2021, we completed the acquisition of the remaining 15% ownership of Nelson Labs Fairfield for $12.4 million, resulting in a gain of $1.2 million included in “Other expense (income), net” in the Consolidated Statements of Operations and Comprehensive Income (Loss) relative to the $13.6 million previously accrued. Pursuant to the terms of the August 2018 acquisition, we initially acquired 85% of the equity interests of Nelson Labs Fairfield in August 2018 and were obligated to acquire the remaining 15% noncontrolling interest within three years from the date of the acquisition.

Acquisition of Iotron Industries Canada, Inc.

On July 31, 2020, we acquired Iotron for approximately $105.2 million. Iotron was an independent contact sterilizer with two North American locations in Vancouver, Canada, and Columbia City, Indiana. Each location uses proprietary high energy electron beam technology to process products for orthopedic, medical device, plastics, and agricultural businesses. The acquisition was financed by the issuance of $100.0 million of First Lien Notes due 2026. Refer to Note 9, “Long-Term Debt” for additional details.

As part of this acquisition, we also acquired Iotron’s 60% equity ownership interest in a joint venture to construct an E-beam facility in Alberta, Canada. The joint venture is accounted for using the equity method.

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Notes to Consolidated Financial Statements

The estimated fair value of the underlying acquired assets and assumed liabilities of the Iotron acquisition and the measurement period adjustments recognized during the six months ended June 30, 2021, were as follows:


(thousands of U.S. dollars)
Allocation of purchase price to the fair value of net assets acquired (net of cash acquired):	Amount recognized as of December 31, 2020		Measurement Period Adjustments		Amount recognized as of June 30, 2021
Goodwill	$	69,046	$	(17,142)	$	51,904
Intangibles	16,427		26,273		42,700
Property, plant, and equipment	13,812		4,346		18,158
Working capital, net	1,115