WASHINGTON, D.C. — U.S. Market Advisors Law Group PLLC announces that a class action lawsuit has been filed against (“Stericycle”) (NASDAQ: SRCL) and certain of its officers. The class action, filed in United States District Court, Northern District of Illinois, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired securities of Stericycle between February 7, 2013 and April 28, 2016 and those who purchased pursuant to the Offering of depositary shares on or about September 15, 2015.

Stericycle’s primary business is as an international waste management and disposal company that specializes in collecting and disposing regulated waste, including medical, pharmaceutical, and hazardous waste.

The Allegations Against Stericycle

Throughout the Class Period, the Defendants repeatedly touted, and misrepresented, the Company’s financial health and growth prospects. In so doing, they concealed
from investors the fact that a material portion of Stericycle’s revenues was derived from fraudulent overcharging of its SQ customers. Specifically, the Defendants knew or should have known that the Company systematically and routinely increased the rates it charged SQ customers in violation of their contracts and without notice.

The Company’s SQ customers have a standard service agreement with Stericycle that provides for the payment of a fixed subscription fee in exchange for the collection and disposal of their regulated waste for periods ranging from one to five years. Each of these contracts had a standard provision that entitled Stericycle to raise a customer’s rates in only two circumstances: (i) to account for operational changes the Company implemented to comply with changes in the law; and (ii) to cover increase costs borne by the Company. These contracts would automatically renew upon their expiration unless the customer provided sixty days written notice of termination before the renewal date.

Despite the fact that the SQ customer contracts permitted the Company to raise its rates under limited and specified circumstances, the Company, with the Defendants knowledge, engaged in a systematic and deliberate scheme to regularly raise the rates charged to its SQ customers without justification or notice to its customers. The Company would simply increase the amount of a customer’s next invoice and hope the customer would not notice the increase or would pay it without complaint. Although the exact rate increases varied between customers, the Company would raise customer rates by as much as 18% every six months. These increases were not tied to either operational changes or costs increases as required by the SQ customer contracts.

While many customers simply paid their improperly inflated invoices, other customers complained. These customers were referred to a “Retention Department” where Stericycle employees attempted to retain the customers’ business through coercive tactics, including threatening angry customers with large liquidated damage charges if they canceled their contracts and offering purported price reductions that would still require customers to pay more than they had initially agreed to pay in their contracts.

Defendants continued to tout the Company’s financial results and consistent growth without informing investors that much of Stericycle’s revenue and growth were built on this foundation of fraud. Customer attrition resulting from these fraudulent billing practices began to materially affect the Company’s performance no later the third quarter of 2015.

On October 22, 2015, Stericycle released disappointing financial results for the third quarter of 2015, lowered its 2015 adjusted and cash EPS guidance by 5.7% and 4.3% respectively, and issued 2016 guidance that was below analyst expectations. The October 22, 2015 disclosures concerning weakening performance caused the price of Stericycle’s common stock to drop precipitously the next day from $149.04 per share to $120.31, a decline of over 19%. This represented a total market capitalization loss of over $2.4 billion. Moreover, the trading price of Stericycle’s depositary shares fell from $106.34 per share to $92.56, a decline of 13% and an aggregate loss of over $106 million.

Then, on April 28, 2016, Stericycle disclosed disappointing financial results for the first quarter of 2016 and lowered its 2016 adjusted EPS guidance to $4.90 – $5.05 from $5.26 – $5.33. Defendants misled investors by not disclosing the true extent of the Company’s underlying issues and by attributing these disappointing results to failing to realize synergies in connection with the acquisition of Shred-it, lower industrial hazardous waste revenues, and cost pressures in the international market. In this quarter, Defendant Alutto attributed the lower industrial hazardous waste revenues to a general “slowdown in the hazardous waste” business, rather than to fuel and energy prices like in the third quarter of 2015.

The April 28, 2016 disclosures caused the Company’s stock price to fall from $121.74 per share to $95.56, a decline of 21.5%. This represented a total market capitalization loss of over $2.2 billion. Moreover, the trading price of Stericycle’s depositary shares fell from $91.76 per share to $77.66, a decline of 15.4% and an aggregate loss of over $108 million.

Defendants attempted to blame these poor results on a variety of things, including energy prices, increased costs, difficulties in integrating a large acquisition, and a softer hazardous waste market. However, in truth, Stericycle’s poor performance in recent months is largely attributable to customer attrition spurred by the Company’s fraudulent billing practices.

Stericycle Investors Have Legal Options

If you suffered a loss from Stericylce investments you have until September 12, 2016 to request that the Court appoint you as lead plaintiff. Your ability to share in any recovery doesn’t require that you serve as a lead plaintiff. Concerned shareholders who would like more information about their rights and potential remedies can contact attorney David P. Abel (202) 559-8591, [email protected].

About USMA

U.S. Market Advisors Law Group PLLC is a law firm based in Washington, D.C. The firm represents institutional investors from across the world in U.S. securities class action lawsuits.

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