🔦Medical Waste Disposal Industry

Welcome to this week’s edition of Sector Spotlight!

Every Tuesday we highlight an under the radar and often underappreciated industry. This week we take a closer look at the Medical Waste Disposal Service industry.

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-Harry & Carter

We identified 205 companies in this industry. These companies have verified contact, location, and financial data. We limit the amount of downloadable excel company lists to the first 10 searchers, so we don’t overwhelm the sellers.

Our full list of verified companies: Excel File 

*Revenue between $1.5M - $20M

Medical Waste Disposal Services

  • Size of Industry: $1.84B

  • Industry Projected Growth: 3.3% (CAGR)

  • Profit Margin: 12.7%

Harry & Carter’s thoughts:

If there was another certainty in life, in addition to death and taxes, it would probably be waste production. The waste management industry is massive and diverse, which is why we prefer segmenting such large industries into sub sectors. This week we are specifically focusing on the medical waste industry.

Medical waste service companies specialize in the collection, treatment, and disposal of medical waste generated by healthcare facilities, laboratories, research centers, veterinary clinics, and other establishments that produce biomedical waste. These companies play a crucial role in ensuring the safe and proper management of medical waste to protect public health and the environment.

The United States alone generates approximately 6.0 million tons of medical waste every year. Due to safety concerns, this waste cannot be directly disposed of in landfills alongside municipal solid waste. As a result, the disposal of regulated medical waste is governed by strict laws and regulations, thereby creating a specialized industry to meet demand. Once again, this is an industry that has stringent licensing requirements which create barriers to entry and protection for the owner.

Regulated medical waste encompasses disposable items that may be contaminated by blood, body fluids, or other potentially infectious materials. As a consequence of these regulations, the majority of small-quantity medical waste generating facilities outsource disposal activities to private companies. Against the backdrop of rising healthcare demand, industry revenue has exhibited a compound annual growth rate of 3.4% over the past five years.

Increased total health expenditure in the United States has prompted healthcare providers to outsource disposal services to mitigate costs, thereby driving industry demand. On top of that, the aging US population has generated an increase in demand for hospitals and medical centers. Incentives for outpatient treatment and home healthcare under the Patient Protection and Affordable Care Act have augmented patient care at smaller facilities lacking the resources for in-house waste disposal, resulting in increased outsourcing to the industry.

Industry Breakdown

Collection: Medical waste service companies collect biohazardous waste from healthcare facilities and other generators. This includes sharps (needles, syringes, scalpels), contaminated materials (gauze, bandages), laboratory waste (culture dishes, sample tubes), and other potentially infectious materials.

Transportation: Once collected, medical waste is transported to treatment and disposal facilities using specialized vehicles equipped to handle biohazardous materials safely. Transportation is carried out following strict regulatory guidelines to prevent spills, leaks, or other incidents during transit.

Treatment: Medical waste undergoes treatment to reduce the risk of infection and render it safe for disposal. Treatment methods may include autoclaving (steam sterilization), incineration, chemical disinfection, or other approved techniques depending on the type of waste and regulatory requirements.

Disposal: After treatment, medical waste is disposed of in accordance with local, state, and federal regulations. This may involve landfill disposal, where permitted, or other approved methods such as waste-to-energy facilities or specialized hazardous waste disposal sites.

What We’re Watching

It should come as no surprise that the medical waste disposal sector faces stringent environmental regulations, mandating operators to prevent waste contamination during collection, transportation, and disposal processes. Primarily, revenue in the industry is derived from waste disposal services, with a smaller portion attributed to waste collection. The hospitals market segment witnessed notable growth during the pandemic-induced surge in medical waste production.

Geographically, medical waste disposal services are predominantly located in areas with aging populations, such as Florida, which has a high concentration of residents over 65. These services are typically centralized in population centers, reflecting the proportional relationship between medical waste production and population size.

Stericycle, the industry leader in this space, commands the majority of the Medical Waste Disposal Services industry's revenue (nearly 50%!). However, the sector also comprises numerous smaller operators, primarily operating at a local level. Despite the overwhelming dominance of Stericycle, the rest of the industry is fragmented, localized, and ripe for consolidation.

Wages constitute the largest expense in the Medical Waste Disposal Services industry, reflecting the specialized training required for handling medical waste. Specialized workers are always a double-edged sword for business owners. On the one hand, they are more difficult to find and often demand higher wages. Conversely, specialized workers can create an immediate competitive advantage for a company in a market that control the most skilled workforce, a characteristic that is nearly impossible to copy.

Questions to Ask Owners

⚫️ What is the average length of contracts with your customers?
⚫️ What percentage of revenue is from public sector?
⚫️ What is the average geographic distance to your customers?
⚫️ What technologies do you leverage to reduce operational costs?
⚫️ Have you encountered challenges with customers paying on time?