Pest Control Giants Poised to Profit as Bed Bugs Bite Back

The post-pandemic rebound in travel and urban density has unleashed a surge in bed bug infestations, transforming what was once a niche concern into a full-blown public health and economic crisis. Cities like New York, Atlanta, and Chicago now lead the rankings of the most bedbug-ridden U.S. cities, according to pest control giants like Terminix and Orkin. This "bed bug boom" has created a rare opportunity for two industry titans—Terminix/Rentokil and Orkin/Rollins—to capitalize on rising demand for professional pest control services. Their scalable service networks, brand equity, and recurring revenue models position them as must-watch investments in an industry primed for growth.

The Bed Bug Surge: A Tailwind for Pest Control

The post-pandemic era has become a breeding ground for bed bugs. According to recent industry reports, infestations in major cities like New York have spiked by 17% compared to pre-pandemic levels, while Atlanta's monthly bed bug-related searches hit 3,050 in 2025. The drivers are clear: rebounding travel, urban overcrowding, and the rise of short-term rentals have created ideal conditions for these hitchhiking pests to spread. Hotels, apartments, and even suburban homes are now battlegrounds, driving consumers and businesses to professional pest control solutions.

This boom is not just a temporary blip. Bed bugs are developing pesticide resistance, and public awareness lags behind the threat. The U.S. pest control sector, which grew to $12.65 billion in 2024, stands to benefit as demand for recurring service contracts—a core strength of Terminix and Orkin—soars.

Terminix/Rentokil: Scaling in a Turbulent Post-Merger Landscape

Terminix, now part of UK-based Rentokil, is the largest U.S. pest control operator. Its $7.6 billion acquisition in 2021 aimed to capitalize on the U.S. market's growth potential, particularly in the bed bug-prone South. However, integration challenges have dogged Rentokil, including delayed cost synergies, margin pressures, and operational misalignment.

Despite these hurdles, Terminix's geographic footprint remains unmatched. Its post-acquisition push to expand branch networks to over 500 locations—including satellite offices—aims to improve customer proximity and service reliability. The company is also investing in digital lead generation to counter weak sales performance and heat treatment technologies to combat bed bug resistance.

Investment Takeaway: Terminix's long-term growth hinges on resolving integration issues. Its scale and brand recognition make it a value play for investors willing to ride out near-term turbulence. A successful synergy realization (projected $100M annual savings by 2026) could unlock significant upside.

Orkin/Rollins: A Model of Operational Discipline and Geographic Expansion

Orkin, under parent company Rollins, has emerged as the sector's execution leader. Its 2024 results—10.3% revenue growth, 11.6% EBITDA expansion, and disciplined M&A—demonstrate the power of a well-oiled machine. Key moves include:

• Southeast U.S. Dominance: Acquisitions like Northwest Exterminating (expanding into Georgia) and Environmental Pest Control (2024) solidified its position in high-growth regions.
• Recurring Revenue Excellence: 85% of its U.S. residential revenue comes from annuity-style contracts, providing cash flow predictability.
• Margin Resilience: Even amid inflation, Rollins maintained 30% incremental margins, underscoring operational efficiency.

Orkin's strategy is geographically diversified yet hyper-focused. By targeting fragmented regional markets, it avoids overexposure to any single area while leveraging local expertise. This approach has insulated it from Terminix's integration woes.

Investment Takeaway: Rollins' financial discipline and track record of M&A success make it a low-risk, high-reward bet. Its dividend growth (up 10% in 2024) and robust cash flow (2025 free cash flow forecast: $600M+) further bolster its appeal.

Why Pest Control's Recurring Revenue Model is a Gold Mine

Both firms benefit from the pest control sector's annuity-like revenue streams, which offer stability in volatile markets. Unlike one-off treatments, monthly/annual service contracts lock in customers for years. This model has attracted investors willing to pay premium valuations—Rollins trades at 30x forward earnings, reflecting confidence in its cash flow predictability.

The bed bug boom amplifies this advantage. As infestations grow, consumers and businesses are shifting from DIY fixes to professional services, a trend Orkin and Terminix are uniquely positioned to exploit.

Risks and Considerations

• Regulatory Risks: Pesticide regulations and environmental concerns could disrupt service models.
• Economic Sensitivity: Pest control is discretionary for some consumers; a recession could dampen demand.
• Competition: Smaller players and private equity-backed firms (e.g., Aptive Environmental) are nibbling at market share.

Final Recommendation

The bed bug boom is a multi-year opportunity, and Terminix/Rentokil and Orkin/Rollins are the sector's clear leaders. Orkin/Rollins is the safer choice, offering strong fundamentals and execution prowess. Investors seeking higher reward with added risk might consider Terminix/Rentokil, betting on its turnaround under new leadership. Both warrant a position in portfolios targeting defensive, cash-flow-driven growth.

As bed bugs continue to bite back, these companies are set to profit—for years to come.