CANTEL MEDICAL

Cantel Medical financial performance has been improving over the years, which is indicated by the increase year on year earnings, inventories and even the net cash flow.  The firm experienced a revenue growth in the last three years, which include $ 565 M, $ 665 M and $ 770 Million in 2015, 2016 and 2017 respectively.  The operating margin for the firm remained largely constant in the same period at 14.29 %, 14.63 % and 14.43 % for the years 2015, 2016 and 2017 respectively (Morning star, 2018). It indicates that the firm’s earning for each dollar of sales remained largely constant in the period. Return on Assets ratio improved from 8.48 %, 9.30 % to 9.58 for the 2015 – 2016 period (Morning star, 2018). The ratio indicates that the performance of the company was increasing over the three years in terms of earnings. Return on Equity for the firm also improved constantly from 12.31 %, 13.81 % to 14.50 % in the same period (Morning star, 2018). The ratios indicate the increased profitability of the company over the three years, meaning that the effectiveness of turning cash into gains was, and thus a sign of growth for investors. The liquidity for the firm was also strong in the same period.

The current ratios were 2.67 %, 2.31 % and 2.41 % for 2015, 2016 and 2017 respectively.  Debt to Equity ratio was 0.19 %, 0.26 % and 0.24 % for 2015, 2016 and 2017 respectively (Morning star, 2018). This indicates that the firm has sufficient cash to pay off its debts, with an improvement in 2016.The Asset Turnover ratio also was largely constant at 1.01 % in 2014 and 1.04 % for both 2016 and 2017 report periods (Morning star, 2018).  This ratio shows that the efficiency of the company in terms of using assets for sales generation has not improved over the last three years.  The net sales of the company in the same period only slightly surpassed the average total of its assets.

The strategies for Cantel Medical have largely focused on development of new products, direct sales expansion and acquisitions which have enabled it to leverage on increased healthy demand. The high demand is seen in the end markets for the company’s water filtration and purification, endoscopy and health care disposables. The development of new product is driven by the research and development in the firm, whose spending has largely increased over the years. This includes investments in liquid chemical germicides that provide higher margin, broadened endoscope reprocessors portfolio, expansion of portfolio products related to endoscopy procedures and unique disposables. An alternative strategy is to focus on building medical devices that are quality but at competitive prices.  This will enable the firm to capture customers who can forego a level of innovation or quality for reduced prices.

The expansion of sales has been driven by increased marketing and exploitations of opportunities for expanding into new segments. Other than this , the firm should focus on capturing the merging value segment in the market , which involves  looking into the customers’ needs and concentrating on what they value other than just engaging in intensive marketing efforts. This will enable the firm to increase its market share. The firm has engaged in various significant acquisitions in all its three key segments in the market.  The alternative to acquisitions involve engaging in Joint Ventures that will enable the firm to share capabilities with firms especially those that are based in foreign markets.

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