By:
Jesal Jobalia
Patrick Ripley
Recommendation: BUY 200 SHARES @ MKT
March 27, 2001
STERICYCLE, INC.
Stericycle's Mission:
To be the leading company dedicated to the
environmentally responsible management of medical
waste for the health care community
Who is Stericycle?
 Founded in 1989, Stericycle, Inc. has its HQ in Lake Forest, IL
 Largest provider of regulated medical waste management
services in North America, serving over 251,400 customers
throughout the United States, Canada, and Puerto Rico
 Network includes 33 treatment/collection centers and 87
additional transfer and collection sites
 Services and Operations are comprised of collection,
transportation, treatment, disposal and recycling of medical waste
 Also integrated with related training and education programs,
consulting services, and product sales
 Stericycle trades on the Nasdaq, ticker SRCL, and is listed in the
waste management services industry
What is Medical Waste?
 Generally defined as any waste that can cause an infectious
disease or that reasonably can be suspected of harboring human
pathogenic organisms
 Needles, syringes, gloves, and laboratory, surgical, emergency
room and other supplies which have been in contact with
infectious agents
Eye Poppers!
 Fortune ranks Stericycle No. 10 among America’s fastest-growing
companies (8/21/00)
 Only fully integrated medical waste management network
 Only company offering medical waste services nationally
 Provide the industry's broadest service offering
 Stericycle is 20x larger than its nearest competitor
 Strong presence in the global market place
 Since IPO in 1996, 18 CONSECUTIVE QUARTERS!, have met or
exceeded Wall Street’s expectations for company’s performance
How Has Stericycle
Performed?
• Since year end 1996 investors have experienced an
average return of 34.83% over the past 4 years
Stericycle Makes a Big Move!
 Stericycle has grown primarily through acquisitions– “Roll Up”
 Mission statement:

To be the leading company dedicated to the environmentally
responsible management of medical waste for the health care
community
 In November 1999, Stericycle completed the acquisition from
Allied waste Industries, Inc. (“Allied”) of the medical waste
business of Browning-Ferris Industries, Inc. (“BFI”) in the United
States, Canada, and Puerto Rico.
 Prior to acquisition BFI had been the largest provider of regulated
medical waste management services in the US
Business Description
Stericycle divides itself into 4 major lines of business:
Collection and Transportation- Collects containers of medical
waste and transports to transfer stations or directly to treatment
facilities
Treatment and Disposal – Waste is treated using one of various
treatment technologies then transported for resource recovery,
recycling, or disposal
Consulting Services- Attempt to “build in” efficiencies that will yield
logistical advantages, i.e.) reduce volume of medical waste
Documentation – Provide complete documentation to customers for
all medical waste collected – Steri-Safe!
Treatment Technologies
 Autoclaving –
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Treats medical waste with steam at high temperature and
pressure to kill pathogens
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65%-70% of medical waste was treated by autoclaving in1999
 Incineration –
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Burns medical waste at elevated temperatures and reduces it
to ash
15% - 20% of medical waste was treated by incineration in
1999
Treatment Technologies
 ETD Treatment Process –
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Electro-thermal deactivation system for grinding medical
waste
Uses oscillating fields of low-frequency radio waves to heat
medical waste to temperatures that destroy pathogens
Advantages vs. Other conventional treatment technologies
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Easier to get permits b/c does not produce fluid or air pollution
More cost effective to construct
Reduces volume of waste
ETD-treated waste may be used for fuel in “waste-to-energy”
electrical plants
10% of medical waste was treated by ETD in 1999
Overview of Medical Waste
Management Industry
 Industry arose with the Medical Waste Tracking Act of 1988
 Large and fragmented
 In 1999 estimated size of regulated medical waste market in US
approx. $1.5 billion
 Worldwide market approx. $3 billion
 In excess of $10 billion when services such as training, education,
product sales, and consulting taken into account
 Less susceptible than most industries to effects of a general
economic downturn
Industry Growth Factors
 Pressure to Reduce Hospital Costs Leads to
Outsourcing –
Health care industry is under pressure to reduce costs
and improve efficiency, to accomplish using outside
contractors to perform medical waste management

Outsourcing saves up to 50% on average for medium hospitals!!
 Aging of Population –
“Baby Boomers” 30% of US population, falling
mortality, living longer, require more medical attention,
more tests and procedures, all leads inc. generation of
medical waste
Industry Growth Factors
 Environmental and Safety Regulation –
- Industry is subject to extensive regulation beyond MWTA
- Clean Air Act 1997
EPA estimates competitor closings by 2002:
Small waste incinerators – 83-90%
Medium waste incinerators – 60-95%
Large waste incinerators -- 35%
- Occupational Safety and Health Administration “OSHA”
•
•
Steri-Safe
Likely to expand beyond traditional health care: ie.) restaurants, casinos,
hotels, etc., anywhere employees come in contact with blood borne
pathogens
Stericycle’s Competitive
Strengths
 Market Leader – largest and only national provider of medical
waste management services in US
 Vertically Integrated Services - offer broad range of services
which allow customers to manage medical waste from point of
generation through treatment and disposal
 Established National Network – 33 treatment/collection centers
and 251,400 customers in 48 states
 Low Cost Operator – As a result of vertically-integrated network
and broad geographic presence
Stericycle’s Competitive
Strengths
 Diverse Customer Base and Revenue Stability– Top 10
customers account for less than 2.5% of revenues, and no single
customer accounts for more than 1% of revenues
 Long-Term Customer Relationships – Long-term customer
contracts of 1-5 years with substantially all customers
 Revenue Predictability – Over 95% of revenues are under long
term contracts with automatic renewal (3-5 yrs)
 Strong Sales Network and Proprietary Database – Largest
most well-established sales force in the medical waste industry,
with over 220 sales and marketing personnel
Stericycle’s Competitive
Strengths
 ETD Treatment Process – Electro-thermal deactivation (“ETD”)
system for grinding medical waste
 Experienced Management Team – Four most senior executives
and the Chairman of the Board of Directors collectively have over
45 years of management experience in health care and waste
management industries
The Management Team
 Jack W. Schuler -- Chairman of the Board of Directors
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Served in current position since January 1990
From January 1987 to August 1989, he served as President and Chief
Operating Officer of Abbott Laboratories, he joined in 1972 and where he held
a number of management and marketing positions and served as a director
from April 1985 to August 1989
He also served as a director of Chiron Corporation, Medtronic, Inc.,
Somatogen, Inc. and Ventana Medical Systems, Inc., and several privately
held companies
He is the co-founder of Crabtree Partners, a private investment partnership in
Lake Forest, Illinois, which was formed in June 1995
 Mark C. Miller – President, CEO, and a Director
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Served in current positions since joining in May 1992
Vice President for Pacific, Asia, and Africa in the International Division of
Abbott Laboratories from 1976-May 1989
Director of AmericasDoctor.com, and Internet health care company
Director of Lake Forest Hospital
The Management Team
 Frank J.M. ten Brink -- Executive Vice President, Finance and
Chief Financial Officer and Chief Administrative Officer
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Present role since joining the Company in June 1997
He has over 16 years of finance experience in high growth environments,
mergers and acquisitions
Prior to joining Stericycle, he was Senior Vice President and Chief Financial
Officer with Telular Corporation
Between 1991 and 1995, he was Vice President and Chief Financial Officer
of Hexacomb Corporation
 Richard T. Kogler -- Executive Vice President, Chief
Operating Officer
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Present role since December 1998
From 1995 until he joined the Company, Mr. Kogler served as Chief Operating
Officer for American Disposal
Prior to his position at American Disposal, he spent 11 years with Waste
Management where he held a number of management positions prior to being
promoted to Vice President of Operations
The Management Team
 Anthony J. Tomasello -- Executive Vice President and Chief
Technical Officer
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Present role since March 1999
Joined Stericycle in August 1990 as Vice President, Operations,
Five years prior to joining Stericycle, was President and Chief
Operating Officer of Pi Enterprises and Orbital Systems, companies
providing process and automation services
From 1980 to 1985, he served as Vice President of Operations for
Spang and Company, an operating service firm specializing in
resource recovery and recycling for manufacturing and process
industries
Weaknesses, Opportunities, and
Threats
 WEAKNESSES
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Low margin large generator business
Low internal revenue growth
Heavily regulated industry
 OPPORTUNITIES

Well positioned within industry with incredible growth opportunities
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20x Larger than nearest competitor
Owns only 20% of an estimated $1.5 billion domestic market
Big Fish in a Big Pond!
Superior waste treatment and disposal technology (ETD Technology)
Growth into global markets likely to continue through licensing of proprietary
intellectual property (ETD Technology)
Business mix shift to small waste generator business leading to long-term
margin expansion
EPA regulations should result in large hospitals and other smaller medical
waste generators seeking less expensive methods of medical waste disposal
rather than incur costs to comply to regulations
Favorable acquisition environment
Weaknesses, Opportunities, and
Threats
 THREATS
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Highly competitive industry
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Governmental Regulation
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Federal Regulation: EPA, OSHA, DOT, MWTA, CERCLA
State and Local Regulation
Foreign and Territorial Regulation\
Patent Expiration
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Large number of regional and local companies
On-site treatment of medical waste by hospitals
Businesses who commercialize alternate treatment technologies
Currently hold 9 US patents relating to the ETD treatment process and other aspects
of processing medical waste
Potential Liability and Insurance

Significant risks of statutory, contractual, tort, and common law liability
claims: clean up costs, personal injury, damage to environment, etc.
Stericycle’s Customer Base
 Small Account Customers –
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Small groups of doctors, dentists, offsite & alternative health
care providers
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Existing account base of approximately 247,000 small account
customers
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Growth Area
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Offer higher profit potential vs. other potential customers
Stericycle’s Customer Base
 Small Account Customers –
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Very concerned with compliance issues surrounding proper
pick up and disposal of medical waste
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“Cradle to Grave” Industry
Doctors are ultimately responsible if medical waste is not handled
in accordance with state and federal regulations
“What are we in the business of doing?” – basis for significantly
higher gross margins vs. large account customers
 Do not produce sufficient volume of regulated medical waste to justify
capital expenditures on their own medical waste
 More service sensitive, rely on fully integrated service providers
(waste removal, staff training, record keeping, OSHA compliance
consulting—Steri-Safe)
Stericycle’s Customer Base
 Large Account Customers –
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Hospitals, blood banks, pharmaceutical manufactures
Existing account base of approximately 4,400 large account
customers
Have been successful in serving and plan to continue to serve
as long as satisfactory levels of profitability maintained
Provide consulting services to health care customers
Implementation of more stringent Clean Air Act and other
federal regulations should significantly increase existing
account base– “What are we in the business of doing?
Stericycle’s Business Model
 Target Higher Margin, Small Account Customers –
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Actively target and increase base of higher margin, small
account customers
 Capitalize on Outsourcing due to newly enacted
Clean Air Regulations –
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Clean Air Act 1997 expected increase capital costs required to
bring existing incinerators into compliance
Increased EPA regulations
Anticipated movement by hospitals to outsource medical
waste treatment presents significant growth opportunities
Stericycle’s Business Model
 Expand Range of Services and Products –
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Inclusion of collection and treatment of materials like
photographic chemicals, lead foils, and amalgam
Expand operations Globally through joint ventures and
licensing of Proprietary ETD Treatment Technology
Offer broad range of OSHA compliance and consulting to
dental and other types of customers
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Steri-Safe
 Continue the Evaluation and Integration of
Acquisitions –
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Have completed 43 acquisitions
BFI
Projected approximately 24 in 2001
Stericycle’s Successful Growth
Through Its Business Model
Selected Operating Statistics
Small Generator Contracts
Revenues
Growth
Large Generator Contracts
Revenues
Growth
1996A
26,370
8,099
1997A
40,270
21,464
167%
1998A
76,600
32,360
49%
1999A
233,000
NA
NM
3Q2000
247,000
42,218
NM
4Q2000
247,000
NA
NM
630
16,443
730
24,520
49%
1,200
28,420
16%
4,200
NA
NM
4,300
31,848
NM
4,400
NA
NM
 The overall business mix stands at 57% small-quantity generator
revenue and 43% large quantity generator revenue
 Base internal growth excluding acquisitions and international revenue
was up 7% in Q4 2000 vs. Q4 1999
 Sequential 10.3% growth of small account customers in Q3 2000 brought
the total number of small account customers to 247,000
 This number of small account customers remained level in Q4 2000,
reflecting a 9% revenue growth in small accounts vs. Q4 1999
Stericycle’s Successful Growth
Through Its Business Model
 There were 4,300 new small account service agreements signed
in Q3 2000
 Gross margins for small account customers are high, ranging from
15%-55%
 Growth in large account customers revenue was up 5% in Q4
2000 vs. Q4 1999
 Gross margins for large account customers range from 12%-13%
 Management feels with EPA Regulations pending gross margins
for large account customers should reach 20%
 Base internal growth stronger at 7% vs. historical levels of 5%

Implies management cutting unprofitable contracts, and
strengthening pricing
Stericycle’s Successful Growth
Through Its Business Model
 International Environment
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International Revenue grew substantially up $2.1 million sequentially
to $2.7 million in Q3 2000
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Stericycle has also established a strong presence in the global
marketplace
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Management is excited at its ability to leverage intellectual property
of patents (ETD Treatment Tech.) to create value for shareholders
without having to put major stake holds in various geographic areas
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Stericycle has entered into joint ventures and licensing agreements in
Argentina, Brazil, South Africa, Canada, Japan, and Mexico
Plan to open first facility in Kyushu area of Japan by yr end 2001
Stericycle’s Successful Growth
Through Its Business Model
 Acquisition Opportunities

Consummated 3 small tuck-in acquisitions, with annual revenue $0.2
million in Q3 2000
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Management has estimated up to $7.5 million in tuck-in acquisitions
in 2001, “…north of 2 dozen…”
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2,000 companies with revenues of $65-70 million that represent
pipeline for Stericycle
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Tight on acquisition criteria, favorable pricing of 3-4 times EBITDA
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Completed successful integration of BFI on schedule at yr end 2000
Stericycle’s Successful Growth
Through Its Business Model
 STERI-SAFE
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Dental offices and other customers must address a complex and often baffling
array of OSHA safety issues - especially regarding medical and hazardous
wastes. The Stericycle Steri-Safe™ Program offers comprehensive
compliance services for dental offices (and other types of customers) and is
designed to keep your office in total compliance - guaranteed.
Steri-Safe™ Components
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Blood borne Pathogens Training CD-ROM
OSHA Compliance Manual
Complete Material Safety Data Sheets on CD-ROM
Quarterly Audio Safety Meetings on CD-ROM
OSHA Hazard Identification & Communication Poster
OSHA Hazard Communication Labels
Annual OSHA Training with Continuing Education Units
Mock OSHA Inspection
Hazardous* and Medical Waste** Containment and Collection
“Cradle to Grave” Process!!
Stericycle’s Successful Growth
Through Its Business Model
 STERI-SAFE
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Management is planning aggressive nation-wide roll out of
Steri-Safe program in 2001
Potential to re-shape fundamental business
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Has seen very strong acceptance from existing customers
Vehicle for additional revenues
Changes billing paradigm to payment in advance vs. payment in
arrears
Currently only 2% penetration into current customer base
Profitability– 55%-60% Gross Margins Range
 Management sees these margins only increasing as program gains
critical mass with national customer base!!
Going to Excel
 Ratio Comparison
 Discounted Cash Flow Model
Recommendation
 Buy 250 shares at the market
 Given yesterday’s closing
price of $38.25, this will be a
total outflow of ~ $10,000
 This will give us the flexibility to take an
“additional bite” in the future if we deem
necessary