Dive Brief:

• Stericycle's Regulated Waste and Compliance Services business saw 3.2% year-over-year organic revenue growth in the fourth quarter of 2020, or $17.3 million, helped in part by the company's role in disposing of COVID-19-related testing and vaccination materials. Excluding the loss of volume from cruise ship customers in its maritime waste services line, that figure was 4.9%.
• Those numbers are an improvement from the 0.6% organic revenue growth the Stericycle division saw in the third quarter and a negative change of 0.3% in the second quarter. Still, the business was affected by a lower than normal amount of elective surgeries, routinely scheduled procedures that generate waste. On the year, organic growth in the segment totaled 1.7%.
• Clean Harbors and US Ecology are among the other major companies in the space that expect to see additional revenues as a growing number of COVID-19 vaccinations play out, for instance. The companies each project tens of millions of dollars in related revenues frontloaded in the early months of 2021. 

Dive Insight:

While there was some thought at the beginning of the pandemic that coronavirus-related testing, patient care, and eventually, vaccine rollouts, could increase medical waste volumes, the reality was the drop-off in elective surgeries due to safety precautions and freeing up capacity for COVID-19 needs in hospitals actually resulted in less-than-normal amounts of medical waste.

Other businesses outside the medical waste sector also have a vested interest in those elective surgeries returning to full volume — hospitals lost $20 billion from suspending elective surgeries over three months while the U.S. dealt with the beginning of the pandemic. Hospitals are trying a range of solutions to make up for lost time last year, including scheduling procedures on weekends, assuaging patients’ safety fears through marketing campaigns, and hiring more staff when possible.

The trajectory of those procedures this year is highly dependent on the success of mass vaccination and U.S. coronavirus case trends. At the same time, pent-up demand for those elective procedures may result in catching up on lost revenues.

In the meantime, there remain COVID-19-driven opportunities for companies offering medical waste services to capitalize on. Of the 2.9% organic growth Stericycle's Regulated Waste and Compliance Services business saw in North America, Chief Financial Officer Janet Zelenka attributed about half to "increased COVID-19-related waste, mailback volume, temporary testing centers and non-healthcare PPE services." The company reported that January organic revenue growth for that business mirrored trends seen in the fourth quarter.

During 2021, Stericycle may see a double benefit to demand in that business as elective surgeries could return while vaccines are still being rolled out and testing is still needed. The company's 2020 annual report says: "We continue to provide services to testing centers and our expanding non-healthcare waste customer base and have begun servicing vaccine waste. In our international markets, we have more transactional-based agreements which has resulted in revenue growth as a result of returning elective surgeries combined with increased COVID-19 waste volumes."

Other waste companies exposed to a range of waste sectors experienced similar coronavirus-inspired demand.

Clean Harbors said on a Feb. 24 earnings call its fourth quarter COVID-19 decontamination work resulted in $31 million in quarterly revenue, and $120 million on the year. “While we are seeing COVID cases decline sharply in recent weeks, we anticipate continued opportunities for near-term decontamination work and disposal of vaccination waste volumes,” Clean Harbors CFO Michael Battles said in prepared remarks. The company expects its Field Services business to bring in $25 million to $35 million in coronavirus-related revenue in 2021, largely in the early part of the year.

US Ecology reported during its fourth quarter earnings call Feb. 26 that it brought in $29 million in revenue from COVID-19 decontamination events across more than 5,100 projects. While demand is declining, the company expects there could be $10 million in COVID-related revenue this year.

Also poised for business during the growing vaccine rollout is Houston-based Sharps Compliance, which said on its own earnings call Jan. 28 that retail billings for COVID-19-related orders totaled $2.2 million in its most recent second quarter of fiscal year 2021. Likewise, long-term care billings increased 56% to $1.1 million, which the company largely attributed to heightened COVID-19 related waste management, and mailback billings grew 33% to $11.9 million in light of COVID-19 vaccination activity and flu shot-related demand.

"While the COVID-19-related orders we've received today are very significant, we do believe we're just getting started as the country works to immunize Americans against the virus," said CEO David Tusa, who also noted the impact that the need for multiple doses or a booster shot for multiple vaccine options have to waste services demand.

Over 75 million COVID-19 vaccine doses were administered in the U.S. as of Feb. 28. A third vaccine option, from Johnson & Johnson, entered distribution Monday.