Cantel Medical Corp. (NYSE: CMD) stock lost over 6.4% on 18th September, 2020 (As of 11:31 am GMT-4; Source: Google finance) post lower than expected fourth quarter of 2020 performance. The group’s Net sales fell 2.5% yoy during the fourth quarter ’20. M&A accounted for 15.7%, which was offset by an organic decline of negative 18%. The group’s Life Sciences and Dialysis segments have remained resilient during the pandemic, with Life Sciences rising 0.7% and Dialysis being relatively flat as expected.
The dental segment rose 59% on a reported basis, driven by the acquisition of Hu-Friedy, but declined negative 20.6% on an organic basis, on the back of the negative impact of COVID-related deferrals of routine dental procedures. Medical segment fell by negative 24.8% on an organic basis in the quarter, due to COVID-related procedural declines. But, Recurring revenue rose over 4% during the fourth quarter of 2020 as elective procedures returned in June and July, against the earlier quarter
GAAP gross margins contracted by negative 320 basis points to 43%, from 46.2% in the fourth quarter 2019, while non-GAAP gross margins declined by 340 basis points year-over-year to 43.7%.
However, the firm expects hospitals are operating at over 90% of pre-COVID levels, ASCs are close to 85% of pre-COVID levels and dental practices are around 80% to 85% of the baseline. Management sees gradual improvement in EBITDAS margin from the first quarter to the fourth quarter, so that they exit the fiscal year at 19% plus. The firm continued to focus on their priorities to support Cantel 2.0 initiatives. Major priorities have been the reconfiguration of the U.S. sales and commercial organization, to support the Cantel 2.0 initiatives focused on ASCs, as well as better focus on hospital complete circle protection strategy. In Europe, they are expanding footprint and commercial efforts. They are on track with successful move of all AER production from the BHT operation in Germany to Pomezia, Italy facility on August 1.