Source: Stericycle

Arguably, few industries are as highly regulated as medical waste, and that regulation and an increasingly older population means medical waste manager Stericycle's (NASDAQ:SRCL) business is humming. The company on Thursday reported fourth-quarter results. Here's what you should know. 

By the numbers
During the quarter, Stericycle's sales jumped 19.2% to $676.9 million.

SRCL Revenue (Quarterly) Chart

Gross profit on a generally accepted accounting principles basis improved by 12.5% to $285 million. After adjusting for currency translation and one-time items, Stericycle reported earnings per share, or EPS, of $1.12, up 13.2% from the $0.99 notched the year before.

The solid quarterly results contributed to an equally solid full-year performance. In 2014, sales grew by 19.3% to $2.56 billion, GAAP gross profit improved by 13.5% to $1.09 billion, and adjusted full-year EPS totaled $4.27, up 13.8% from the $3.75 reported in 2013.

Behind the numbers
An aging population's growing demand for healthcare services means that Stericycle's organic disposal services business is growing. However, the company's acquisition strategy is a major reason behind its double-digit top-line expansion.

Stericycle's products and services address markets that are worth $15.5 billion, but its market share is just 16%. That means there are significant opportunities to acquire competitors both in the United States and abroad.

Stericycle closed on nine such acquisitions, five in the U.S. and four abroad. Overall, those nine acquisitions add an annualized $43 million to the company's revenue. During 2014, the company bought 27 companies in 10 countries; those acquisitions contributed $93.1 million to the quarter's year-over-year revenue growth.

Stericycle's business is improving organically, too. Across regulated waste, compliance programs, sharps disposal, pharmacy waste disposal, hazardous waste disposal, and communications services, sales were up 8% year over year in the quarter.

Earnings growth also enjoyed tailwinds from falling energy costs and acquisition synergies that allowed the company's gross margin to expand by 30 basis points last quarter from the previous quarter.

Looking ahead
The company believes it could triple sales if it could successfully cross-sell every product and service it offers throughout its existing client base.

Across its institutional customers -- such as hospitals -- the company's cross-selling opportunities include expanding medical waste contracts to include the management of needles, expired pharmaceuticals, and hazardous waste. Across the company's small healthcare provider customers, opportunities include compliance programs and communication services such as secure messaging, after-hours answering, and automated appointment reminders. While Stericycle won't convince every customer to buy every product and service, these cross-selling opportunities are likely to remain a tailwind for a long time.

Additionally, since Stericyle's cash generation should provide plenty of financial flexibility to support additional acquisitions, sales should benefit from deals for years to come. If so, then Stericycle should be in a good position to continue to deliver long-term double-digit annual revenue growth.