The thought of radiation generally brings with it fear and trepidation, evoking images of people fleeing the Three Mile Island disaster in Pennsylvania in 1979 or the Fukushima Daiichi meltdown in Japan more than two years ago.

However, radiation also helps keep millions of people around the world alive and healthy.

Radiation is used by x-ray and computed tomography (CT) scans to diagnose everything from broken bones to strokes and heart disease. It’s also one of the defining characteristics of chemotherapies used to treat millions of cancer patients and commonly used to sterilize single-use medical devices such as syringes, catheters and sutures as well as some pharmaceuticals.

Canada-based Nordion (NYSE: NDZ) has been a leading supplier of radioactive isotopes for medical use for 60 years and has become one of the leading providers of gamma sterilization technology, with more than 200 industrial irradiators installed around the world. More than 40 percent of single-use medical supplies are sterilized using Nordion’s gamma technology.

In any given year, sterilization technologies account for about half of the company’s revenue and earnings. That’s largely due to the fact that while sterilization equipment sales typically produce a large, upfront payment, they also create a more valuable recurring revenue stream. Nordion supplies the cobalt-60 isotope required to keep the machines running, commanding an estimated 75 percent global market share of cobalt-60.

In addition to its sterilization segment, the company also produces other isotopes for medical use (36 percent of earnings last year) and targeted therapies (17 percent of earnings in 2012), though it recently sold its targeted therapies operations.

The company’s medical isotopes division distributes 11 isotopes used in a variety of applications and indications. For instance, iodine-123 is used for both research and diagnostic purposes for cardiologic, oncologic and neurologic applications, while xenon-123 is used primarily in diagnostic applications.

The company also has exclusive access to the only molybdenum-99 producing reactor in North America, located in Canada, with the isotope used in diagnostic systems and cardiologic, oncologic and neurologic applications.

The company’s targeted therapy segment was engaged primarily in developing TheraSphere, a system by which small glass balls that release radiation are implanted directly into inoperable liver tumors. The system is attractive because TheraSphere involves a simple outpatient procedure, while other types of treatment involve multiday hospital stays.

But developing therapeutic systems isn’t a core area of expertise for Nordion, so it recently agreed to sell its target therapeutic operations to BTG PLC (London: BTG) for $200 million, with net proceeds of $185 million. The deal also includes a three-year manufacturing contract for Nordion, plus a two-year BTG option.

The deal frees up cash to be put towards other uses, while creating value for shareholders and allowing Nordion to refocus on its core competencies.

The deal is well-timed. Nordion shares have fallen from a 52-week high of almost $11 to just under $8 today, thanks to a few bumps in the company’s business.

The first was the expensive and time consuming process of shepherding TheraSphere through the US Food and Drug Administration’s approval process. That challenge has been overcome while securing attractive financial terms for Nordion.

The second challenge was an ongoing legal dispute with the Canadian government’s Atomic Energy of Canada (AEC), Nordion’s main supplier of the raw materials used to produce its medical isotopes.

The dispute centered on the completion of new reactors at the National Research Universal Reactor in Chalk River, Ontario. The project was scrapped in 2008 due to government budgetary concerns, despite the fact that Nordion has sunk $400 million into the project over nearly three decades.

Nordion had sued for either monetary damages or the completion of the reactors, creating an overhang on the stock since AEC is the company’s supplier of molybdenum-99.

Last week the lawsuit was settled, winning Nordion a CAD15 million settlement and AEC’s withdrawal of a claim of CAD47 million in arbitration costs. The deal also included AEC’s agreement to supply molybdenum-99 immediately and continue supplying it through October 2016. While AEC could continue supplying the isotope after that date, Nordion has also inked a deal with a Russian reactor that should begin supplying the isotope thereafter.

In the span of just a few months, Nordion has managed to address the most significant challenges it faced, though there will obviously always be a risk that its supply of isotopes could be disrupted due to maintenance or regulatory issues at the reactors. But shares should begin emerging from the worst of the overhang over the coming quarters, as both earnings and revenues improve.

And with Nordion’s almost monopolistic control of the market, there should be big long-term potential, with the radiopharmaceutical market forecast to grow at a compound annual rate of about 8 percent through 2017.