since its founding in 1989 stericycle srcl had been very acquisitive having acquired over 500 companies on the surface this acquisitive strategy led to a lengthy period of impressive growth and the firm built unmatched scale however acquisitions began to stray from stericycle’s core competencies and poor integration efforts caused inefficiencies to build after decades of strong growth and profitability stericycle’s financial performance began to deteriorate in 2017 however with a refreshed management team led by ceo cindy miller stericycle’s muchneeded turnaround strategy has progressed well it has 1 divested almost 20 noncore lowmargin businesses 2 achieved its goal of reducing the firm’s debt leverage ratio to below 3 it was 27 at the end of the second quarter 3 been reinvesting in its competitively advantaged medical waste collection and disposal business with improvements to its autoclave and incinerator infrastructure including a new incinerator in nevada—and perhaps more fleetrelated investment in the future 4 moved the enterprise resource planning system implementation toward completion and 5 implemented muchneeded oversight and standardization across the company which has improved revenue quality and operational efficiencies stericycle’s operational focus has shifted back to its core competencies and we see multiple levers for improved profitability and free cash flow generation over the next five years we forecast stericycle will realize 4 organic revenue growth adjusted ebitda margin will expand to 235 up from 16 in 2022 and free cash flow will exceed 400 million by 2027 by then we think stericycle will have the financial flexibility to pursue prudent acquisitions and perhaps repurchase shares with narrowmoatrated stericycle’s stock currently trading at nearly a 30 discount to our fair value estimate we think it’s a compelling investment opportunity for longterm investors