Bannockburn, Ill.-based medical waste disposal provider Stericycle reported lower financial results in the first quarter of 2022, ended March 31, 2022.
The news doesn't come as a surprise as supply chain restraints, labor shortages and inflationary pressures continue to affect industry operations.
"As we mentioned last quarter, we anticipated that the first half of 2022 would have lower results compared to 2021," ” said Cindy J. Miller, President and CEO, in a statement. "I am proud of how our team members overcame challenges from the Omicron variant and we are encouraged with our momentum as we exit the first quarter and look to the rest of the year. Over the past several years, we have focused on instituting new policies, procedures and internal controls, as well as building a culture of compliance, integrity and accountability that aligns with our core values across our entire global operation.”
Revenues in Q1 2022 reached $664.2 million, down from $668 million year over year (YOY), or a drop of .6 percent. Results of Stericycle's financial performance came just weeks after an announced settlement with the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC), as well as Brazilian authorities. Though the settlement, the company has agreed to pay nearly $90 million in fines related to legacy anti-corruption charges in its Latin America business units, which it will take from revenues accrued in the third and fourth quarters of 2021. As a result, no enforcement will take place for three years if it meets outlined obligations.
Speaking of the agreement, Miller previous commented, "resolving this legacy matter represents another important milestone in Stericycle's business transformation journey. Over the past several years, we have focused on fully remediating the issues identified during the investigation. This includes instituting new policies, procedures and internal controls and building a culture of compliance, integrity and accountability that aligns with our core values across our entire global operation."
The company announced that pricing has worked to "partially" offset rising inflation costs that have continued to grow. While overall revenue fell slightly, revenues in Stericycle's organic line of business rose 2.1% compared to Q1 2021 driven by a 9.5 percent increase in Secure Information Destruction (“SID”) organic revenue. This, however, was offset by a 1 percent decline in Regulated Waste and Compliance Services (“RWCS”) related to "COVID-19 related transactional volumes, such as vaccine and testing waste, international waste over-classification and patient engagement related call volumes."
As labor shortages continue throughout the industry, Stericycle stated that COVID-19 related absences and operational openings fell. The reported a net income of $26.1 million, with net loss coming in at $14.2 million. Adjusted income from operations totaled $59 million, down drastically from $110 million in the previous year's quarter.
An outflow of $38.8 million in cash flow from operations was achieved in Q1 2022, down from an inflow of $62.6 million in Q1 2021. The same rang true for free cash flow, which saw an outflow of $76.3 million in Q1 2022, a decrease from the inflow of $37.9 million YOY.