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Cantel Medical (CMN) Q3 Earnings & Sales Up, Shares Fall
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Share price of Cantel Medical Corp. declined almost 1.3% over the last three trading sessions following the company’s third-quarter fiscal 2016 results.
The provider of infection prevention, control products and services reported adjusted earnings of 44 cents per share, which surged 25.7% from the year-ago quarter driven by sales growth of 22.8% that totaled $173.7 million.
Moreover, gross margin expanded 130 basis points (bps) on a year-over-year basis. However, this expansion was fully offset by higher operating expenses, which as a percentage of revenues increased 290 bps. As a result, operating margin contracted 160 bps in the reported quarter.
Canter Medical reported organic sales growth of 17.6%. Acquisitions accounted for 5.8% of this growth, which was partially offset by unfavorable foreign currency exchange (0.6%).
Endoscopy sales (53% of total sales) soared 44.2% year over year to $91.9 million. Organic sales growth was 33.1%. The strong upside in sales was driven by improving demand for the procedure room product line-up.
Worldwide installed base of endoscope reprocessing equipment also grew substantially in the reported quarter. Disinfectants and detergents sales grew by 22% worldwide, while global service and spare parts business sales increased 20%.
Healthcare Disposable segment sales increased 20.3% to $29.8 million. Organic sales growth was 13.4%. The improvement can be attributed to robust performance by sterility assurance and dental water line disinfection.
Sales of Rapicide OPA-28 high-level disinfectant in the U.S. more than doubled from the year-ago quarter figure.
Water purification and filtration segment sales remained flat at $44.6 million. Management noted growing traction of heat-based disinfection, central and portable water purification systems. These advanced, higher-value machines carry higher average selling price (ASPs), which account for roughly 80% or more of the company’s incoming orders and shipments.
Dialysis segment sales increased 6% in the quarter.
Guidance
Cantel Medical expects the healthcare disposables business to report strong growth in the near future based on its increasing penetration in the sterility assurance market, which now includes NAMSA. Moreover, entry into the high-growth dental unit water line disinfection market as well as new opportunities in hospital and alternate care markets are key catalysts.
Cantel Medical expects to launch several products in the water purification system market, which will benefit the business in the near future. Additionally, higher backlog for water purification systems is expected to drive growth in fiscal 2017.
For fiscal 2017, Cantel Medical plans to expand its sales, service, training, and marketing teams in order to address the growing demand for its products in the U.S. The company also expects to make additional investments in several international markets like the U.K., Italy, Germany, France and China.
These investments will be aimed to improve the sales of endoscopy products as well as support the company’s direct sales force in the aforesaid markets.
Key Picks
Well-placed stocks in the medical space are CryoLife , IRadimed (IRMD - Free Report) and Masimo (MASI - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy).
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Cantel Medical (CMN) Q3 Earnings & Sales Up, Shares Fall
Share price of Cantel Medical Corp. declined almost 1.3% over the last three trading sessions following the company’s third-quarter fiscal 2016 results.
The provider of infection prevention, control products and services reported adjusted earnings of 44 cents per share, which surged 25.7% from the year-ago quarter driven by sales growth of 22.8% that totaled $173.7 million.
Moreover, gross margin expanded 130 basis points (bps) on a year-over-year basis. However, this expansion was fully offset by higher operating expenses, which as a percentage of revenues increased 290 bps. As a result, operating margin contracted 160 bps in the reported quarter.
CANTEL MED CORP Price, Consensus and EPS Surprise
CANTEL MED CORP Price, Consensus and EPS Surprise | CANTEL MED CORP Quote
Sales Details
Canter Medical reported organic sales growth of 17.6%. Acquisitions accounted for 5.8% of this growth, which was partially offset by unfavorable foreign currency exchange (0.6%).
Endoscopy sales (53% of total sales) soared 44.2% year over year to $91.9 million. Organic sales growth was 33.1%. The strong upside in sales was driven by improving demand for the procedure room product line-up.
Worldwide installed base of endoscope reprocessing equipment also grew substantially in the reported quarter. Disinfectants and detergents sales grew by 22% worldwide, while global service and spare parts business sales increased 20%.
Healthcare Disposable segment sales increased 20.3% to $29.8 million. Organic sales growth was 13.4%. The improvement can be attributed to robust performance by sterility assurance and dental water line disinfection.
Sales of Rapicide OPA-28 high-level disinfectant in the U.S. more than doubled from the year-ago quarter figure.
Water purification and filtration segment sales remained flat at $44.6 million. Management noted growing traction of heat-based disinfection, central and portable water purification systems. These advanced, higher-value machines carry higher average selling price (ASPs), which account for roughly 80% or more of the company’s incoming orders and shipments.
Dialysis segment sales increased 6% in the quarter.
Guidance
Cantel Medical expects the healthcare disposables business to report strong growth in the near future based on its increasing penetration in the sterility assurance market, which now includes NAMSA. Moreover, entry into the high-growth dental unit water line disinfection market as well as new opportunities in hospital and alternate care markets are key catalysts.
Cantel Medical expects to launch several products in the water purification system market, which will benefit the business in the near future. Additionally, higher backlog for water purification systems is expected to drive growth in fiscal 2017.
For fiscal 2017, Cantel Medical plans to expand its sales, service, training, and marketing teams in order to address the growing demand for its products in the U.S. The company also expects to make additional investments in several international markets like the U.K., Italy, Germany, France and China.
These investments will be aimed to improve the sales of endoscopy products as well as support the company’s direct sales force in the aforesaid markets.
Key Picks
Well-placed stocks in the medical space are CryoLife , IRadimed (IRMD - Free Report) and Masimo (MASI - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>