Sotera provides sterilization solutions, lab testing, and advisory services for the healthcare and pharmaceutical industries. Through its Sterigenics brand, Sotera provides sterilization services for the medical device and pharmaceutical markets. The Company uses Ethylene Oxide (“EtO”) processing as one of three methods to sterilize products. EtO processing is a gas sterilization process in which pallets of packaged goods are loaded into a chamber that is then injected with EtO gas to penetrate the packaging. That process emits toxic fumes which must be filtered before being released into the air. Sotera, through its Sterigenics business, conducts or has conducted EtO processing at facilities throughout the United States, including Illinois, California, Georgia, and New Mexico, among other places.
The Complaint alleges that, throughout the Class Period, and in connection with the IPO and the SPO, the Company made numerous materially false and misleading representations concerning its emissions control systems and exposure to liability from lawsuits for the Company’s failure to limit harmful Ethylene Oxide (“EtO”) emissions. The Company represented that it had “a proactive [environmental, health and safety] program and a culture of safety and quality.” In addition, the Company stated that it employed adequate and effective safeguards to control EtO emissions. Moreover, the Company and its executives vehemently denied allegations that the Company’s EtO emissions from its sterilization facilities caused cancer and other severe health issues in people living in the communities near those facilities. In truth, the Company and its senior executives and controlling shareholders knew, or at a minimum, recklessly disregarded, that for years the Company failed to employ effective emissions control systems to prevent the release of excessive amounts of toxic EtO gas from its sterilization facilities. Those deficiencies exposed people living in the surrounding communities to a significantly increased risk of cancer and subjected the Company to an increased risk of liability from hundreds of EtO-related lawsuits.
Investors began to learn the truth on September 19, 2022, when an Illinois state court jury in the first lawsuit arising from the Company’s EtO emissions to go to trial. As a result of these disclosures, Sotera’s stock price declined by $4.90 per share, or 33.3%, from $14.73 per share on September 16, 2022, to $9.83 per share on September 19, 2022.