WM's Healthcare Unit Posts $20 Million Operating Profit, But Fuel And Insurance Costs Trim Margin
Third-quarter revenue rose to $6.846 billion, and the waste hauler affirmed its 2026 guidance ranges.
WM, the Houston company that collects, recycles and disposes of waste across the U.S. and Canada, reported third-quarter revenue of $6.846 billion, up from $6.443 billion a year earlier, in an 8-K filed Tuesday. Its Healthcare Solutions unit swung to a profit, while higher fuel and risk-management costs shaved the adjusted margin.
Reported gains, smaller adjusted gains
Reported net income climbed to $820 million, or $2.05 per diluted share, from $603 million, or $1.49. The prior-year quarter carried larger charges, including a $152 million impairment tied to suspending a business.
On an adjusted basis, net income was $858 million against $801 million, and earnings were $2.15 per share versus $1.98. Adjusted operating EBITDA, a measure of core operating profit, reached $2.121 billion from $2.005 billion.
The adjusted EBITDA margin slipped 10 basis points, to 31.0% from 31.1%. Better price-to-cost spread in collection and disposal added 40 basis points and Healthcare Solutions added 30. Higher fuel costs and higher risk-management costs each took away 40.
Healthcare Solutions turns the corner
Healthcare Solutions, the former Stericycle business, which handles medical waste and secure document shredding, earned $20 million in operating income versus a $21 million loss a year ago. Its adjusted EBITDA margin rose to 22.4% from 17.5%, and revenue grew 3.7%.
CEO Jim Fish credited "effective cost management, synergy capture, and pricing growth." Total revenue grew 6.3%, helped by core price of 5.8% and higher energy surcharges. Collection and disposal volume fell 0.4%, which WM tied to shedding lower-margin residential business and past national account broker losses.
Cash returns and guidance
WM returned $957 million to shareholders in the quarter: $580 million in buybacks and $377 million in dividends. For the first nine months, free cash flow was $3.01 billion, against $2.11 billion a year earlier, and the company still expects to repurchase $2 billion of stock in 2026.
It expects revenue at the high end of $26.275 billion to $26.475 billion, adjusted EBITDA within $8.15 billion to $8.25 billion, and free cash flow at the high end of $3.75 billion to $3.85 billion. Fish said: "We are affirming our 2026 guidance ranges, as we remain on track to meet our financial objectives."
WM holds its earnings call at 10 a.m. ET on Wednesday, October 28.
