Barclays-Sotera Health Company A Q and Litigation Update Sweeter than Corn on the Cobb-20251104

Another solid print across the core businesses showing how diversification insulates the company from most HWs across business cycles. The only issue we can point to on the Q is on the Nelson expert advisory business, which accounts for a 10% HW to Nelson in ’25. This is a relatively immaterial sub-segment, but captures plenty of attention at the moment given how big of a HW it is to Nelson. The weakness in this business is attributed to tough comps (most FDA inspections in the history of the business last year) + FDA funding issues + govt shutdown. So arguably when the govt gets back to work and the FDA is allowed to do its job, then we can expect a pickup in inspections and Expert Advisory demand. We also point out that the Core Labs business continues to grow well and benefits from vols picking up in Steri. So a bottoming/recovery in Expert Advisory is likely to be upside to next year, assuming that mgmt. does not bake in any improvement in their ’26 guide when they issue it.