WM healthcare integration affects results in otherwise profitable quarter

Core Insights - The company reported Q3 2025 revenue of $6.44 billion, a 14.9% increase year over year, but net income decreased by 20.7% to $603 million [1] - Operating EBITDA was $1.72 billion, reflecting a 2.5% year-over-year growth with an adjusted margin of 30.6% [1] Financial Performance - CEO Jim Fish highlighted expanded margins and reduced operating costs due to technology and fleet automation [1] - Core price increased by 6%, and landfill volumes rose by 5.2%, driven by MSW, special waste, and construction categories [1] - The collection and disposal business contributed significantly to the year-over-year increase in operating earnings, achieving a 32% EBITDA margin in the legacy business [1] Sector Challenges - Healthcare Solutions revenue was $628 million, slightly below expectations, as the company integrates Stericycle and its ERP system [1] - The segment faced customer frustrations with billing and reporting, leading to credits or deferred price increases [1] Operational Adjustments - The closure of the Natura PCR facility in Texas resulted in a $152 million impairment charge due to unfavorable market conditions [1] - Recycled commodity prices fell nearly 35% year over year, yet the recycling segment's operating EBITDA grew by 18% due to MRF automation investments [1] Renewable Natural Gas (RNG) Developments - The company doubled its RNG production in the first nine months of the year and pre-sold about 45% of its 2026 offtake [2] - RIN prices for 2026 are projected to be in the $220 to $230 range [2] M&A Activity - The company has completed approximately $450 million in deals this year, with expectations to reach $500 million by year-end [2] - Future transactions may close in Q4 or roll into next year, with a return to a normal range of $100 million to $200 million expected in 2026 [2] Revised Guidance - The company maintains its full-year growth expectations for operating EBITDA and free cash flow, with revenue projected at the low end of the previous guidance range of $25.275 billion to $25.475 billion [2] - Margin expectations have increased to between 29.6% and 30.2% [2]