Operating Segments

3 Months Ended

Oct. 31, 2016

Information as to Operating Segments and Foreign and Domestic Operations

Information as to Operating Segments and Foreign and Domestic Operations

Note 15.Operating Segments

Cantel is a leading global company dedicated to delivering innovative infection prevention products and services for patients, caregivers, and other healthcare providers which improve outcomes, enhance safety and help save lives.  Our products include specialized medical device reprocessing systems for endoscopy and renal dialysis, advanced water purification equipment, sterilants, disinfectants and cleaners, sterility assurance monitoring products for hospitals and dental clinics, disposable infection control products primarily for dental and GI endoscopy markets, dialysate concentrates and hollow fiber membrane filtration and separation products. Additionally, we provide technical service for our products.

We have determined our reportable business segments based upon an assessment of product types, organizational structure, customers and internally prepared financial statements. The primary factors used by us in analyzing segment performance are net sales and operating income.

None of our customers accounted for 10% or more of our consolidated net sales for the three months ended October 31, 2016 and 2015. 

The Company’s segments are as follows:

Endoscopy, which includes medical device reprocessing systems, disinfectants, detergents and other supplies used to high-level disinfect rigid endoscopes, flexible endoscopes and other instrumentation and disposable infection control products intended to reduce the challenges with proper cleaning and high-level disinfection of numerous reusable components used in GI endoscopy procedures. In September 2015, this segment commenced the sale of endoscope transport and storage systems, and a number of endoscopy consumable accessories. Additionally, this segment includes technical maintenance service on its products.

Water Purification and Filtration, which includes water purification equipment and services, filtration and separation products and disinfectants, sterilization and decontamination products and services for the medical, pharmaceutical, biotech, beverage and commercial industrial markets.

Two customers collectively accounted for approximately 46.3% of our Water Purification and Filtration segment net sales for the three months ended October 31, 2016.

Healthcare Disposables, which includes single-use, infection prevention healthcare products including face masks, sterilization pouches, towels and bibs, tray covers, saliva ejectors, plastic cups, germicidal wipes and disinfectants, as well as products for maintaining safe dental unit waterlines. This segment also manufactures and sells biological and chemical indicators for sterility assurance monitoring services in the acute-care, alternate-care, dental and industrial (medical device, life science and other manufacturers) markets. In August 2016, this segment commenced the manufacture and sale of nitrous oxide conscious sedation equipment and related single-use disposable nasal masks.

Four customers collectively accounted for approximately 51.6% of our Healthcare Disposables segment net sales for the three months ended October 31, 2016.

Dialysis, which includes medical device reprocessing systems, sterilants/disinfectants, dialysate concentrates and other supplies for renal dialysis. Additionally, this segment includes technical maintenance service on its products.

Two customers accounted for approximately 45.5% of our Dialysis segment net sales for the three months ended October 31, 2016.

The operating segments follow the same accounting policies used for our Condensed Consolidated Financial Statements as described in Note 2 to the 2016 Form 10-K.

Information as to operating segments is summarized below:

	Three Months Ended
	October 31,
	2016		2015
Net sales:
Endoscopy	$	93,828,000	$	71,642,000
Water Purification and Filtration		49,873,000		44,712,000
Healthcare Disposables		36,799,000		27,352,000
Dialysis		7,225,000		10,073,000
Total	$	187,725,000	$	153,779,000

	Three Months Ended
	October 31,
	2016		2015
Operating income:
Endoscopy	$	17,561,000	$	12,459,000
Water Purification and Filtration		8,920,000		7,813,000
Healthcare Disposables		7,396,000		6,360,000
Dialysis		1,813,000		2,687,000
		35,690,000		29,319,000
General corporate expenses		(8,627,000)		(5,543,000)
Income from operations		27,063,000		23,776,000
Interest expense, net		(1,093,000)		(745,000)
Income before income taxes	$	25,970,000	$	23,031,000