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Presentation for RCMP 11/06/08. Brad Johnson Lucian Tira Evangelos Kalogiropoulos Gani Beket. Company History. Founded in 1989 after Medical Waste Tracking Act First acquisition of outside provider in 1993 Launched IPO in 1996 First International operation in 1998.

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presentation for rcmp 11 06 08
Presentation for RCMP 11/06/08
  • Brad Johnson
  • Lucian Tira
  • Evangelos Kalogiropoulos
  • Gani Beket
company history
Company History

Founded in 1989 after Medical Waste Tracking Act

First acquisition of outside provider in 1993

Launched IPO in 1996

First International operation in 1998

company overview
Company Overview

Offers collection, transportation, treatment, disposal, and recycling of medical waste

Full service for nearly 400,000 customers

Small customers include doctors’ offices and pharmacies

Large customers include pharmaceutical companies, hospitals and blood banks

Foreign customers nearly 23% of revenues

products and services
Products and Services
  • Regulated Medical Waste Services
    • Handle possibly infected waste and prevent contamination and infection
    • Provided for both large and small customers
    • Service expanding greatly in International market
products and services1
Products and Services
  • Steri-Safe OSHA Safety & Compliance Program
    • Training for smaller customers to comply with regulations
    • Manual, website support, consulting and supplies
    • Very high margins
products and services2
Products and Services
  • Bio Systems Integrated Sharps Safety Solution
    • Provides containers for used needles
    • Collection and destruction of needles to prevent sticks
    • Pick them up along with other medical waste
products and services3
Products and Services
  • Returns Management Services
    • Removal of expired or unsafe products from customers
    • For manufacturers, hospitals, pharmacies and distributors
    • Handle the notification, processing, tracking and compliance reporting
    • Also handle medical recalls
macroeconomic factors
Macroeconomic Factors
  • Population is getting older and needing more healthcare
  • New president’s healthcare plan
  • Changing Government regulations
  • Tightening credit markets may affect growth
transaction history
Transaction History
  • Purchased 200 shares in May 2001 @ $19.47
  • Stock split 2:1 in June 2002
  • Sold 200 shares in March 2006
  • Stock split 2:1 May 2007
  • Currently hold 400 shares at $56.20 (11/5) with an effective cost basis of $9.73
industry overview
Industry overview

Estimated market size:

Global $10.0 Domestic $3.0-$3.2B

“Frost & Sullivan Industry Study and Management Estimates” (including ancillary services & products)

  • Regulated medical waste = any medical waste that can cause an infectious disease such as needles, syringes, gloves etc
  • Five federal agencies supervise regulated waste under a variety of statues
  • U.S. Environmental Protection Agency (“EPA”)
  • U.S. Department of Transportation (“DOT”)
  • Occupational Safety and Health Administration (“OSHA”)
  • U.S. Drug Enforcement Administration (“DEA”)
  • U.S. Postal Service (“USPS”)
  • Different regulations in each state
industry overview1
Industry overview

Growth factors

  • Aging of population
  • Pressure to reduce Healthcare costs
  • Environmental and Safety Regulation

Requirements of the Occupational Safety and Health Administration (“OSHA”)

  • Shift to Off-Site Treatment
  • Control of Drug Diversion

The U.S. Drug Enforcement Administration (“DEA”) has recently emphasized on proper handling of expired or recalled pharmaceuticals.

company review
Company review
  • Market share: global 10%, domestic 22%
  • Operate in the U.S., Canada, Mexico, the U.K., Ireland and Argentina
  • No direct domestic competitors
  • Insulated from economic cycles
  • Revenue retention rate 95%
  • No large customer exceeds 2% of revenues
  • Over 95% of revenues under long term contracts with automatic renewal
risk factors competitive strengths
Risk Factors

Governmental Regulation

Low barriers to entry

Technology and patents

Potential environmental liabilities

Foreign exchange


Broad range of services

Established National Network

Diverse Customer Base and Revenue Stability

Ability to integrate Acquisitions

Strong sales Network and Proprietary Database

Experienced Senior Management Team

Risk Factors & Competitive Strengths
business model
Business Model

Supply specially designed reusable leak-and puncture-resistant plastic containers to large and small-quantity customers

Collect them at intervals specified mainly by contract

Collection of

regulated waste

Temporarily hold small loads of waste until they could be consolidated into truckloads and transported to a processing facility.



Disposal in a third party landfill. Complete documentation to customers for all regulated waste collected

Processing Facility

Recycling or



First they scanned for unacceptable substances and then proceed to various treatments such as Autoclaving, ETD, chemical, Incineration

current strategies
Current Strategies
  • Expand Range of Services and Products
  • Regulated waste services to pharmaceutical companies and other large-quantity generators
  • Improve Margins
  • Increase the base of small-quantity customers
  • More efficient service strategies for large-quantity customers
  • Seek Complementary Acquisitions
  • Acquire businesses that expand its national and international networks

Completed 135 acquisitions from 1993-2007, 100 domestic and 35 international

revenue breakdown
Revenue breakdown
  • LQGs constitute around 37% of total revenues and account for 2.46%
  • of total number of customers
  • Continued penetration of BioSystems led to increase of revenue per LQG
  • Average gross margin in this segment is 21%
revenue breakdown1
Revenue breakdown
  • SQGs constitute around 63% of total revenues and account for
  • 97.54% of total number of customers
  • Increased adoption of SteriSafe program (including higher priced “select” and “premium” versions)
  • Average gross margin in this segment is 44.3%
past sources of growth
Past sources of growth

Acquisitions have been fueling growth for years!

acquisitions pipeline
Acquisitions pipeline

Acquisition deal structures increasingly favor debt…

pro forma p l
Pro-forma P&L

Source: 10K’s, team estimates

dcf results
DCF results

Market price as at 6-Nov-08 is $58

Current stock price implies growth rate of revenues over 20% in the following 5 years!!!

1 yr stock performance
1 yr stock performance

“Flight to quality” since October as investors dump other stocks?

  • SELL 200 shares of Stericycle (SRCL) at the market price of $55.00:
    • Tightcredit markets hinder growth at previous rates
    • “Flight to quality” baked into the current price
    • High profit margins and low barriers to entry may lure in competition