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Table of Contents
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 September 30, 2022
or
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
https://cdn.kscope.io/6c7455edec31bc2e4faf233a3964158c-shc-20220930_g1.jpg
SOTERA HEALTH COMPANY
(Exact name of registrant as specified in its charter)
Delaware47-3531161
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareSHCThe 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 filerAccelerated filer
Non-accelerated filerSmaller 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 October 25, 2022, there were 282,113,499 shares of the registrant’s common stock, $0.01 par value per share, outstanding.


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SOTERA HEALTH COMPANY
- TABLE OF CONTENTS -


Table of Contents
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:
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., Canadian and European Union relations with Russia and related sanctions;
adverse changes in industry trends;
changes in environmental, health and safety regulations or preferences;
health and safety risks associated with the use, storage, transportation and disposal of potentially hazardous materials such as EO and Co-60;
liability claims relating to health risks associated with the use of EO;
current and future legal proceedings;
adverse judgments against two of our subsidiaries in the EO tort litigation that may require an appellate bond or alternative form of security to appeal, and plaintiff efforts to enforce judgments against us, any one of which may have an adverse impact on our liquidity;
competition we face;
market changes, including inflationary trends, that impact our long-term supply contracts with variable price clauses and increase our cost of revenues;
allegations of our failure to properly perform services and potential product liability claims, recalls, penalties and reputational harm;
compliance with the extensive regulatory requirements to which we are subject, the related costs, and any failures to receive or maintain, or delays in receiving, required clearance or approvals;
business continuity hazards, including supply chain disruptions and other risks associated with our operations;
the ongoing impact of the COVID-19 pandemic;
our ability to increase capacity at existing facilities, build new facilities in a timely and cost-effective manner and renew leases for our leased facilities;
our ability to attract and retain qualified employees;
the risks of doing business internationally, including global and regional economic and political instability and compliance with numerous laws and regulations in multiple jurisdictions;
cyber security breaches, unauthorized data disclosures, and our dependence on information technology systems;
any inability to pursue strategic transactions, including our ability to find suitable acquisition targets, or our failure to 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;
our ability to comply with rapidly evolving data privacy and security laws and regulations and any ineffective compliance efforts with such laws and regulations;
the effects of unionization efforts and labor regulations in certain countries in which we operate;
our ability to maintain profitability in the future;
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;
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 significant leverage could adversely affect our ability to raise additional capital, limit our ability to react to changes in the economy or our industry, limit our flexibility in operating our business through restrictions contained in our debt agreements and prevent us from meeting our obligations under our existing and future indebtedness; and
uncertainty around discontinuation of LIBOR and transition to certain other interest “benchmarks.”
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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, 2021 (the “2021 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
September 30, 2022December 31, 2021
Assets(Unaudited)
Current assets:
Cash and cash equivalents$163,975 $106,917 
Restricted cash short-term986 7 
Accounts receivable, net of allowance for uncollectible accounts of $1,414 and $1,287, respectively
111,613 108,183 
Inventories, net37,153 54,288 
Prepaid expenses and other current assets81,673 71,923 
Income taxes receivable25,334 4,643 
Total current assets420,734 345,961 
Property, plant, and equipment, net704,406 650,797 
Operating lease assets27,194 39,946 
Deferred income taxes5,087 5,885 
Investment in unconsolidated affiliate 9,405 
Post-retirement assets9,856 5,478 
Other assets47,131 12,866 
Other intangible assets, net503,755 598,844 
Goodwill1,092,469 1,120,320 
Total assets$2,810,632 $2,789,502 
Liabilities and equity
Current liabilities:
Accounts payable$60,730 $72,868 
Accrued liabilities56,762 61,861 
Deferred revenue5,347 8,669 
Current portion of finance lease obligations1,591 1,160 
Current portion of operating lease obligations7,718 9,289 
Current portion of asset retirement obligations532 619 
Income taxes payable7,351 6,695 
Total current liabilities140,031 161,161 
Long-term debt1,746,555 1,743,534 
Finance lease obligations, less current portion54,935 40,877 
Operating lease obligations, less current portion22,174 33,017 
Noncurrent asset retirement obligations43,889 41,833 
Deferred lease income18,769 20,745 
Post-retirement obligations10,485 11,464 
Noncurrent liabilities15,345 16,274 
Deferred income taxes151,720 134,501 
Total liabilities2,203,903 2,203,406 
See Commitments and contingencies note
Equity:
Common stock, with $0.01 par value, 1,200,000 shares authorized; 286,037 shares issued at September 30, 2022 and December 31, 2021, respectively
2,860 2,860 
Preferred stock, with $0.01 par value, 120,000 authorized no shares issued at September 30, 2022 and December 31, 2021, respectively
  
Treasury stock, at cost (3,924 and 3,052 shares at September 30, 2022 and December 31, 2021, respectively)
(32,653)(33,545)
Additional paid-in capital1,186,620 1,172,593 
Retained deficit(386,097)(472,246)
Accumulated other comprehensive loss(164,001)(83,566)
Total equity attributable to Sotera Health Company606,729 586,096 
Noncontrolling interests  
Total equity606,729 586,096 
Total liabilities and equity$2,810,632 $2,789,502 
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 September 30,Nine Months Ended September 30,
2022202120222021
Revenues:
Service$216,704 $200,499 $644,451 $597,907 
Product32,000 25,665 107,646 92,322 
Total net revenues248,704 226,164 752,097 690,229 
Cost of revenues:
Service99,772 88,349 292,755 264,776 
Product12,919 12,229 44,058 40,734 
Total cost of revenues112,691 100,578 336,813 305,510 
Gross profit136,013 125,586 415,284 384,719 
Operating expenses:
Selling, general and administrative expenses57,091 44,038 179,765 146,331 
Amortization of intangible assets15,727 15,877 47,337 48,081 
Total operating expenses72,818 59,915 227,102 194,412 
Operating income63,195 65,671 188,182 190,307 
Interest expense, net23,427 18,140 47,875 58,585 
Impairment of investment in unconsolidated affiliate  9,613  
Loss on extinguishment of debt 6,365  20,677 
Foreign exchange (gain) loss(535)756 (502)1,410 
Other income, net(1,713)(693)(4,195)(7,347)
Income before income taxes42,016 41,103 135,391 116,982 
Provision for income taxes16,926 13,659 49,242 35,858 
Net income25,090 27,444 86,149 81,124 
Less: Net income attributable to noncontrolling interests   239 
Net income attributable to Sotera Health Company25,090 27,444 86,149 80,885 
Other comprehensive income (loss) net of tax:
Pension and post-retirement benefits (net of taxes of $357, $466, $444, and $240, respectively)
1,065 1,383 1,323 713 
Interest rate derivatives (net of taxes of $3,368, $, $6,718 and $, respectively)
9,408  18,765  
Foreign currency translation(69,460)(29,867)(100,523)(12,528)
Comprehensive income (loss)(33,897)(1,040)5,714 69,309 
Less: comprehensive income attributable to noncontrolling interests   534 
Comprehensive income (loss) attributable to Sotera Health Company$(33,897)$(1,040)$5,714 $68,775 
Earnings per share:
Basic$0.09 $0.10 $0.31 $0.29 
Diluted0.09 0.10 0.31 0.29 
Weighted average number of shares outstanding:
Basic280,142 279,381 279,988 279,097 
Diluted280,172 279,560 280,093 279,253 
See notes to consolidated financial statements.
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Sotera Health Company
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Nine Months Ended September 30,
20222021
Operating activities:
Net income$86,149 $81,124 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation47,496 47,457 
Amortization of intangible assets61,596 65,299 
Impairment of investment in unconsolidated affiliate9,613  
Loss on extinguishment of debt 20,677 
Deferred income taxes17,153 8,131 
Share-based compensation expense14,955 10,489 
Accretion of asset retirement obligations1,645 1,751 
Unrealized foreign exchange (gain) loss(5,610)715 
Unrealized gain on derivatives not designated as hedging instruments(4,323)(424)
Amortization of debt issuance costs4,259 4,789 
Other(6,109)(6,174)
Changes in operating assets and liabilities:
Accounts receivable(8,558)(4,901)
Inventories13,896 (3,429)
Other current assets(13,066)2,225 
Accounts payable(13,367)(291)
Accrued liabilities(1,874)(7,985)
Income taxes payable / receivable, net(25,050)(3,620)
Other liabilities1,489 (290)
Other long-term assets(4,259)(349)
Net cash provided by operating activities176,035 215,194 
Investing activities:
Purchases of property, plant and equipment(110,642)(60,898)
Purchase of mandatorily redeemable noncontrolling interest in Nelson Laboratories Fairfield, Inc. (12,425)
Purchase of BioScience Laboratories, LLC, net of cash acquired (13,530)
Adjustment to purchase of Regulatory Compliance Associates Inc.450  
Other investing activities34 (717)
Net cash used in investing activities(110,158)(87,570)
Financing activities:
Purchase of noncontrolling interests in China subsidiaries (8,418)
Payments of debt issuance costs and prepayment premium(31)(6,718)
Payments on debt (100,000)
Other financing activities(1,452)(368)
Net cash used in financing activities(1,483)(115,504)
Effect of exchange rate changes on cash and cash equivalents(6,357)345 
Net increase in cash and cash equivalents, including restricted cash58,037 12,465 
Cash and cash equivalents, including restricted cash, at beginning of period106,924 102,454 
Cash and cash equivalents, including restricted cash, at end of period$164,961 $114,919 
Supplemental disclosures of cash flow information:
Cash paid during the period for interest$65,045 $53,726 
Cash paid during the period for income taxes, net of tax refunds received56,474 31,922 
Purchases of property, plant and equipment included in accounts payable18,583 14,527 
See notes to consolidated financial statements.
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Sotera Health Company
Consolidated Statements of Equity
(in thousands)
(Unaudited)
Three Months Ended September 30, 2022
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 June 30, 2022282,902 $2,860 $(32,654)$1,181,995 $(411,187)$(105,014)$ $636,000 
Share-based compensation plans(789)— 1 4,625 — — — 4,626 
Comprehensive income (loss):
Pension and post-retirement plan adjustments, net of tax— — — — — 1,065 — 1,065 
Foreign currency translation— — — — — (69,460)— (69,460)
Interest rate derivatives, net of tax— — — —  9,408  9,408 
Net income — — — — 25,090 — — 25,090
Balance at September 30, 2022282,113 $2,860 $(32,653)$1,186,620 $(386,097)$(164,001)$ $606,729 
Nine Months Ended September 30, 2022
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, 2021282,985 $2,860 $(33,545)$1,172,593 $(472,246)$(83,566)$ $586,096 
Share-based compensation plans(872)— 892 14,027 — — — 14,919 
Comprehensive income (loss):
Pension and post-retirement plan adjustments, net of tax— — — — — 1,323 — 1,323 
Foreign currency translation— — — — — (100,523)— (100,523)
Interest rate derivatives, net of tax— — — —  18,765  18,765 
Net income— — — — 86,149 — — 86,149
Balance at September 30, 2022282,113 $2,860 $(32,653)$1,186,620 $(386,097)$(164,001)$ $606,729 
See notes to consolidated financial statements.
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Sotera Health Company
Consolidated Statements of Equity (continued)
(in thousands)
(Unaudited)
Three Months Ended September 30, 2021
Common Stock
Additional
Paid-In
Capital
Retained
Earnings /
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
(Loss) Income
Noncontrolling
Interests
Total
Equity
Shares
Amount
Balance at June 30, 2021282,917 $2,860 $1,167,566 $(535,687)$(77,468)$ $523,271 
Share-based compensation plans— — 3,538 — — — 3,538 
Comprehensive income (loss):
Pension and post-retirement plan adjustments, net of tax— — — — 1,383 — 1,383 
Foreign currency translation— — — — (29,867)— (29,867)
Interest rate derivatives, net of tax— — — — — —  
Net income— — — 27,444 — — 27,444 
Balance at September 30, 2021282,917 $2,860 $1,171,104 $(508,243)$(105,952)$ $525,769 
Nine Months Ended September 30, 2021
Common Stock
Additional
Paid-In
Capital
Retained
Earnings /
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
(Loss) Income
Noncontrolling
Interests
Total
Equity
Shares
Amount
Balance at December 31, 2020283,248 $2,860 $1,166,412 $(589,128)$(93,842)$2,272 $454,574 
Acquisition of noncontrolling interests— — (5,772)— — (2,806)(8,578)
Issuance of shares47 — 1,080 — — — 1,080 
Share-based compensation plans(378)— 9,384 — — — 9,384 
Comprehensive income (loss):
Pension and post-retirement plan adjustments, net of tax— — — — 713 — 713 
Foreign currency translation— — — — (12,823)295 (12,528)
Interest rate derivatives, net of tax— — — — — —  
Net income— — — 80,885 — 239 81,124
Balance at September 30, 2021282,917 $2,860 $1,171,104 $(508,243)$(105,952)$ $525,769 
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. 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. Prior to our acquisition of the noncontrolling interests in our two subsidiaries in China, we consolidated the results of operations of these subsidiaries with our results of operations and reflected the noncontrolling interest 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 Auralux Enterprises, Ltd (“Auralux”) a joint venture to construct an E-beam facility in Alberta, Canada in connection with our acquisition of Iotron Industries Canada, Inc. (“Iotron”). We have determined this to be an investment in a variable interest entity (“VIE”). The investment is not consolidated as the Company concluded that we are not the primary beneficiary of the VIE. This investment is accounted for using the equity method. The investment is reflected within “Investment in unconsolidated affiliates” on the Consolidated Balance Sheets.
During the three months ended June 30, 2022, we identified certain events and circumstances that indicated a decline in value of our investment in this joint venture that was other-than-temporary. Consequently, as of June 30, 2022, we wrote down the investment in the joint venture to its fair value of $0, resulting in an impairment charge of approximately $9.6 million.
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, 2021.
2.Recent Accounting Standards
Adoption of Accounting Standard Updates
Effective January 1, 2022, we adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (“ASU 2016-13”): Measurement of Credit Losses on Financial Instruments, and the subsequently issued additional guidance that modified ASU 2016-13 which was originally issued by the Financial Accounting Standards Board (“FASB”) in June 2016. 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. The adoption of this standard did not have a material impact on our consolidated financial statements and disclosures.
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Sotera Health Company
Notes to Consolidated Financial Statements
Effective January 1, 2022, we adopted ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes which was issued by the FASB in December 2019. 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. The adoption of this standard did not have a material impact on our consolidated financial statements and disclosures.

ASUs Issued But Not Yet Adopted
In October 2021, the FASB issued ASU 2021-08 - Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). The amendments in ASU 2021-08 require that an acquiring entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contract with Customers (“ASC Topic 606”). At the acquisition date, an acquirer should account for the related revenue contracts in accordance with ASC Topic 606 as if it had originated the contracts. For public business entities, these amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We are currently assessing the effect that ASU 2021-08 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 nine months ended September 30, 2022 and 2021:
(thousands of U.S. dollars)Three Months Ended September 30, 2022
SterigenicsNordionNelson LabsConsolidated
Point in time$157,723 $33,830 $ $191,553 
Over time 1,241 55,910 57,151 
Total$157,723 $35,071 $55,910 $248,704 
(thousands of U.S. dollars)Three Months Ended September 30, 2021
SterigenicsNordionNelson LabsConsolidated
Point in time$145,314 $28,768 $ $174,082 
Over time  52,082 52,082 
Total$145,314 $28,768 $52,082 $226,164 
(thousands of U.S. dollars)Nine Months Ended September 30, 2022
SterigenicsNordionNelson LabsConsolidated
Point in time$464,977 $113,501 $ $578,478 
Over time 6,050 167,569 173,619 
Total$464,977 $119,551 $167,569 $752,097 
(thousands of U.S. dollars)Nine Months Ended September 30, 2021
SterigenicsNordionNelson LabsConsolidated
Point in time$421,647 $102,439 $ $524,086 
Over time 1,372 164,771 166,143 
Total$421,647 $103,811 $164,771 $690,229 
Contract Balances
As of September 30, 2022, and December 31, 2021, contract assets included in “Prepaid expenses and other current assets” on the Consolidated Balance Sheets totaled approximately $22.4 million and $15.6 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 $5.3 million and $8.7 million at September 30, 2022 and December 31, 2021, respectively. We recognize deferred revenue after all revenue recognition criteria are met.
4.Acquisitions
Acquisition of Regulatory Compliance Associates Inc.
On November 4, 2021, we acquired Regulatory Compliance Associates Inc. (“RCA”) for approximately $30.6 million, net of $0.6 million of cash acquired. RCA is an industry leader in providing life sciences consulting focused on quality, regulatory, and technical advisory services for the pharmaceutical, medical device and combination device industries. Headquartered in Pleasant Prairie, Wisconsin, RCA expands and further strengthens our technical consulting and expert advisory capabilities within our Nelson Labs segment.
The purchase price of RCA was allocated to the underlying assets acquired and liabilities assumed based upon management's estimated fair values at the date of acquisition. As of September 30, 2022, approximately $25.3 million of goodwill was recorded related to the RCA acquisition, representing the excess of the purchase price over the estimated fair values of all the assets acquired and liabilities assumed. We also recorded $6.4 million of finite-lived intangible assets, primarily related to customer relationships. We funded this acquisition using available cash. The acquisition price and the results of operations for this acquired entity are not material in relation to our consolidated financial statements.
Acquisition of Noncontrolling Interests in China Subsidiaries
On May 18, 2021, we 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. We paid 90% of the cash consideration on the acquisition date. The remaining amounts were partially settled in post-closing payments in the third quarter of 2021; $0.2 million of the post-closing payment remains outstanding as of September 30, 2022 subject 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.
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 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