Needham Downgrades This Medical Equipment Stock Due To Lawsuit Risk

• A Cook County jury awarded $363 million to a woman who developed breast cancer after living close to a medical device sterilization facility run by Sterigenics, a unit of Sotera Health Co (NASDAQ: SHC).

• The lawsuit was related to ethylene oxide (EO) exposure, a disinfectant used to sterilize medical devices.

• The trial was the first of many to come against the Willowbrook plant operators, with more than 760 lawsuits against it in Cook County Circuit Court for toxic emissions.

• Needham expects concerns about Steris Plc's (NYSE: STE) potential EO liabilities to continue to weigh on its shares. The analyst downgraded the company's stock from Buy to Hold.

• Steris is a medical equipment company specializing in sterilization and surgical products for the U.S. healthcare system.

• Needham writes that while SHC is facing more than 1,000 EO lawsuits, STE only has a few. But the successful SHC lawsuit could lead to increased EO lawsuits.

• STE's filings do not reveal the same degree of lawsuits as SHC. According to STE, while some lawsuits have been filed against an STE affiliate regarding a sterilization facility in Waukegan, IL, STE has not owned or operated that facility for years.

• Price Action: SHC shares are down 1.96% at $7.27, and STE shares are down 5.04% at $167.84 on the last check Friday.

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