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Cantel Medical (CMD) Q2 Earnings & Sales Grow Year Over Year

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Cantel Medical Corp. reported adjusted earnings of 52 cents per share in the second quarter of fiscal 2017. The reported quarterly figure was also higher than 42 cents in the year-ago quarter.

Net sales from continuing operations rose to $184.8 million from $158.3 million in the second quarter of fiscal 2016.

Segment Details    

Endoscopy segment sales soared 15.8% year over year to $94.4 million. Organic sales growth was 16.0%. The strong upside in sales was driven by improving demand for the procedure room product line-up. Operating income came in at $18.8 million, up 28.1% year over year.

Healthcare Disposable segment sales increased 35.6% to $35.3 million. Organic sales growth was 6.5%. The improvement can be attributed to robust performance by sterility assurance and dental water line disinfection. Operating income came in at $7.1 million which rose 24.6% year over year.

Water purification and filtration segment sales increased 9.6% to $47.4 million. Organic sales growth was 9.7%. Management noted growing traction of heat-based disinfection, central and portable water purification systems. Operating income came in at $8.4 million, up 10.8% year over year.

Dialysis segment sales increased 2.9% to $7.8 million. Organic sales growth was 3.0%. Operating income came in at $2.1 million, reflecting an increase of 23.8% year over year.

Financial Condition

Cash and cash equivalents were $24.4 million as of Jan 31, 2017 against $28.4 million as of Jul 31, 2016.

Our Take

We expect Cantel Medical’s healthcare disposables business to report strong growth in the near future based on its increasing penetration in the sterility assurance market. Other well placed players in the space include the likes of Inogen, Inc. (INGN - Free Report) , Avinger, Inc. (AVGR - Free Report) and Electromed, Inc. (ELMD - Free Report) . 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 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 at improving sales of endoscopy products as well as supporting the company’s direct sales force in the aforesaid markets.

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