Medical waste might not be an exciting business, but it has proven to be quite the growth business for Stericycle (NASDAQ:SRCL). Since 2000, the company has grown its revenue at a 15.9% annual clip while growing non-GAAP earnings by an even faster 20.9%, due largely in part to its growth-by-acquisition strategy.

Some of its more recent acquisitions, however, have been overseas, and because of this, it is now facing some headwinds from fluctuating foreign currencies that are threatening to slow revenue growth. Those two competing factors will likely be on full display when Stericycle reports its third-quarter results after market close on Oct. 22.  

First, let's review
Before we get to the upcoming third-quarter report, let's take a step back and review last quarter. In the second quarter, Stericycle reported revenue of $715.7 million, which was 11.7% higher than the year-ago period and enough to beat analysts' estimates by $12 million, despite a $27.3 million impact from unfavorable foreign exchange rates. Thanks to its stronger-than-expected revenue, the company also delivered strong growth in non-GAAP earnings, which came in at $1.14 per share. That was not only up 9.7% from the year-ago quarter, but it beat the consensus estimate by a penny per share.

What analysts are expecting
For the third quarter, analysts are forecasting Stericycle to grow revenue and earnings both sequentially and year over year. The consensus estimate is for the company to report revenue of $735.5 million and earnings of $1.19 per share. Those numbers represent revenue growth of 10.1% over last year's third quarter and an $0.11-per-share increase in earnings.

Pay special attention to the impact of acquisitions and currencies
The primary driver of this growth are acquisitions that the company has completed over the past year. Last quarter, for example, acquisitions contributed $58.9 million to the company's top line, which represented 79% of the company's overall revenue growth. We're looking for strong acquisition-driven growth again this quarter. However, if there are any variations between Stericyle's numbers and analysts expectations, it's likely due to either the timing of when a deal closed or integration hiccups. 

The other area keep an eye on is the impact from foreign exchange rate changes, which are a growing issue due to the company's expansion overseas. Given the continued volatility in the currency market, it's likely that this headwind took another bite out of revenue during the third quarter. If revenue comes in well under expectations, investors will want to see if currencies were the culprit by paying close attention to the amount of revenue impact that Stericycle attributes currency fluctuations.  

Keep an eye on the early returns from the Shred-it acquisition
Going back to the acquisition theme, Stericycle recently closed a very large $2.3 billion deal to acquire Shred-it. Not only is this acquisition much larger in size than its typical deal, but it's a bit of a diversification move as Shred-it is a global secure information destruction services provider. Both the size and the slightly different business focus add some additional integration risk that investors will want to monitor over the coming quarters. 

While the deal didn't close until after the quarter ended, the company will undoubtedly update investors on the early integration of Shred-it. Pay particular attention to any changes to the company's outlook. When the deal closed, it anticipated that the combined entity would generate more than $1 billion in EBITDA next year. Furthermore, cash earnings-per-share accretion was expected to be at least 10% next year and in the mid-to-high teens in 2018 as Stericycle captures cost synergies.

We want to see the company remain on track to capture both the near-term accretion and the longer-term growth. What we don't want to see is any post-close integration hiccups developing or any concerns that its future targets won't be met. 

Investor takeaway
Stericycle's growth engine wasn't expected to stall out during the third quarter as analysts expect another quarter of double-digit growth. Having said that, the company is facing some headwinds from foreign exchange fluctuations and we can't forget that the bulk of its growth is driven by acquisitions, which have integration risk. Ideally, neither will have developed last quarter and the company will note that it is bringing Shred-it quickly into the fold.