S&P downgrades Stericycle

S&P said it lowered Stericycle Inc. by one notch to BBB from BBB+.

The outlook is negative.

The downgrades reflect Stericycle's weakened profitability due to sustained unfavorable operating trends in the company's core medical waste end market, including elevated pricing pressure and competition, the agency said.

Stericycle has not been able to achieve the expected synergies from its numerous acquisitions due to its use of multiple enterprise resource planning (ERP) systems, which have depressed its profitability, S&P said.

The company's margins have been further constrained in 2018 because of implementation costs related to the ongoing business transformation plan, the agency said. The company still has relatively attractive EBITDA margins when compared with peers, but its margins have decreased materially from mid-30% several years ago driven, S&P said.

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