Zacks_Analysts' Blog : Cantel Medical Beats by a Penny - Analyst Blog

Leading infection prevention and control products maker Cantel Medical (CMN) reported first quarter 2011 (ended October 31) earnings of 29 cents per share, beating the Zacks Consensus Estimate by a penny while trailing the year-ago earnings of 37 cents. Net income fell 19% year over year to roughly $4.98 million as higher costs more than offset modest revenue growth.

Revenues edged up 1% year over year to $72 million as H1N1 flu outbreak boosted medical face mask shipments in the quarter. Sales beat the Zacks Consensus Estimate of $67 million. Cantel Medical achieved respectable growth across its key segments.

The company’s Endoscope Reprocessing business had a strong quarter with revenues soaring more than 33% primarily on the back of healthy shipments of its new reprocessors (Advantage Plus and DSD Edge). Cantel Medical’s Healthcare Disposables unit, which makes single-use infection control products, also performed strongly in the quarter.

Gross margin declined to 39.2% from 41.5% a year ago due to higher cost of sales (up 5.5%). Operating expenses climbed 6.8% year over year to $20.4 million as the company spent more on R&D. This has resulted in the decline in operating margin, which fell to 10.9% from 14.6% a year-ago.

Cantel Medical exited the quarter with cash of roughly $16 million, down 31% year over year. Net debt increased 14% year over year to $17 million.

New Jersey-based Cantel Medical, which operates through six segments, offers its infection prevention and control products to dialysis, dental, endoscope processing, water purification, therapeutic filtration and specialty packaging markets. One of the company’s competitors is Siemens (SI). 

Cantel has a rich history of growth through acquisitions. The company acquired the U.S. water purification business of medical technology firm Gambro Renal Products Inc. in October 2010, which has contributed to the revenue growth in its Water Purification and Filtration segment in the first quarter.