While Stericycle Inc. hasn't fully quantified what it will mean for business, incoming CEO said he expects the Affordable Care Act – dubbed Obamacare, after President Barack Obama – to be good for business.
Charles A. Alutto, who currently serves as president of Stericycle USA and will take over as CEO for Mark Miller after he retires on Jan. 1, made that clear in remarks to analysts during the announcement of Stericycle's third-quarter earnings on Oct. 24.
He said health care reform, referred to on the call as "Obamacare," will allow more people to access health care.
"That probably does move volumes from the emergency room to [smaller health care facilities], which we think is good for us," Alutto said.
Stericycle has about 16,000 large-quantity clients and 521,000 small-quantity clients, making the shift of medical care from emergency rooms to smaller facilities a good thing for the company. The more people that visit those facilities, the more medical waste they generate.
"If we look at Massachusetts, and a lot of people point to Massachusetts because they do have a similar type of health care system, the studies that we've done internally, we have seen volumes increasing especially in the [smaller facilities] in that state," Alutto said.
In the end, they see the law, as it stands now, as favorable to business, Alutto said.
The discussion took place as the Lake Forest, Ill.-based company reported better than anticipated earnings for the quarter. The company reported third-quarter earnings of 84 cents per share on $480.5 million in revenue.
Analysts had predicted the company would report earnings of 82 cents per share, according to Yahoo Finance.
Organic growth was high for the quarter, with large-quantity sales up 9% and small-quantity sales up 11%. In a report to investors, analyst Ryan Daniels of William Blair & Co., said those results were the highest organic growth rates the company has produced in the last four years. He said Stericycle is a strong long-term investment.
"We also continue to favor the company's cash-based, recurring-revenue business model and view Stericycle as a safe haven investment in uncertain times," he wrote.
The company also increased its 2012 guidance, expecting revenue to come in between $1.87 billion to $1.9 billion, up from a previous low of $1.86 billion. Net income for the quarter was $65.4 million, up from $59.2 million over the same quarter from last year.
The company also said it closed 12 acquisitions in the quarter, all in the regulated waste sector. Three of those acquisitions were from the United States and the others were international.