Cantel Medical (NYSE:CMD) closed out its fiscal year that ended in July with a solid fourth quarter and looks to build on the year with impressive guidance for the fiscal year ahead. Here's a closer look at how things are going for the medical supply company.

Cantel Medical results: The raw numbers


Q4 2017

Q4 2016

Year-Over-Year Change


$205.5 million

$179.0 million


Income from operations

$27.3 million

$25.8 million


Earnings per share




Data source: Cantel Medical.

What happened with Cantel Medical this quarter?

  • A large chunk of Cantel's revenue growth came from acquisitions, but organic sales growth was still up a solid 9.2%.
  • Sales in Cantel's healthcare disposals segment continue to lead the pack in terms of year-over-year growth, up 23% in the fourth quarter, but as in previous quarters, the increase mostly came from the acquisition of Accutron. That year-over-year boost is going to run out soon.
  • The endoscopy segment saw sales increase 13.9%, driven by a 17.6% increase in recurring revenue; equipment sales seen in previous quarters are boosting recurring revenue. Additional growth in the segment should come from the recent acquisition of BHT Group, a German company specializing in automated endoscope reprocessing, which closed in August.
  • Water purification and filtration was up 13.7% as Cantel continues to work through its backlog of sales.
  • The dialysis segment was up just 1.4% year over year, but it's the smallest of the four segments.
  • While income from operations and earnings trailed revenue growth, much of the difference was due to the impact of costs from acquisitions, including a one-time charge for part of a business Cantel acquired but has decided it isn't worth continuing to sell. Excluding those and other charges, non-GAAP earnings were up 11.4% year over year.
Gloved hands holding an endoscope.

Image source: Getty Images.

What management had to say

President and CEO Jorgen Hansen pointed out that acquisitions are an important part of the company's five-year plan to double sales and profits by fiscal year 2021, stressing that investors should expect to see more in the year ahead:

"We look forward to continue executing on our acquisition strategy in fiscal year 2018 and beyond, and we look to add complementary products and technologies to our existing divisions, as well as the possibility of adding additional new related verticals to Cantel."

Hansen also commented on the effect of hurricanes Harvey and Irma, which had an immediate impact on the company because Cantel has a facility in Conroe, Texas:

"Our operations team prepared very well and we returned to normal operation status with a minimum disruption. While both storms have affected medical procedures in Texas and Florida, it is too early to determine the possible impact to our sales."

Looking forward

Management is looking for sales growth of 12.5% to 13.5% with 8.5 to 9 percentage points of that coming from organic growth. The remainder of the growth will come from 3.5 to 4 percentage points of revenue from newly acquired products and 0.5 percentage points from changes in currency exchanges.

Earnings per share are expected to increase 20% to 25% on a GAAP basis, but that's due to the one-time charges in the recently completed year. Backing those out, earnings per share are expected to increase 10% to 13% year over year.

If Cantel can hit those growth numbers, it'll be well on its way to reaching its five-year goal.

Brian Orelli has no position in any of the stocks mentioned. The Motley Fool recommends Cantel Medical. The Motley Fool has a disclosure policy.