CMD Cantel Medical Corp

CRITICARE SYSTEMS, INC. (AMEX:CMD). Criticare Systems Inc. today announced financial results for the third quarter and nine months ended March 31, 2006. Revenue for the nine months ended March 31, 2006 was $24,254,956, an increase of $5,494,223, or 29.3%, from $18,760,733 from the same period in fiscal 2005. Net income reported was $736,338 or $0.06 per diluted share for the first nine months of fiscal 2006 as compared to a loss of $(793,514) or $(0.07) per diluted share for the same period in fiscal 2005. Gross profit percentage of 39.6%, compared to 39.5% for the same period last year, was essentially flat. Gross profit was affected by one-time manufacturing costs for a planned new product line and the unplanned costs of replacing a key supplier. Revenue was $7,811,830 for the three months ended March 31, 2006, an increase of $1,757,460, or 29% from $6,054,370 reported for the three months ended March 31, 2005. The Company reported a net loss of $(7,976) or $0.00 per diluted share for the third quarter of fiscal 2006 as compared to a net loss of $(244,871) or $(0.02) per diluted share for the same period of the previous fiscal year. Major revenue and gross profit drivers continue to be acute care and original equipment manufacturer ("OEM") segments, both of which are exhibiting double-digit sales increases. This trend is expected to continue in the near future. The Company's international sales also experienced a double-digit sales growth but at lower than expected margins. The margin levels in the international business segment is being addressed for all of the international sales venues. The Company's domestic oral surgery business was slightly down, reflecting the Company's exit from the defibrillator business. This slight sales reduction is expected to recover in the near future. Major activities during this period were the addition of a new OEM partner, three group purchasing organizations ("GPO's"), three new distributors for the Acute Care business segment, along with the pending release of a new, replacement product line to be marketed worldwide. The company also welcomes Mr. Sam Humphries to the Criticare Board of Directors. Mr. Humphries brings the benefit of a long and successful career in Healthcare, demonstrating leadership, organizational and financial skills that can greatly assist the Company's vision of continued growth and building shareholder value. Criticare will hold a quarterly conference call on Friday, May 12, 2006 at 10:00 am central time to discuss the third quarter and year-to-date results of fiscal 2006. The call is being provided by Premier Global Services and can be accessed by dialing 1-800-289-0518 and entering access code 9064274. Criticare (www.csiusa.com) designs, manufactures, and markets cost-effective patient monitoring systems and noninvasive sensors for a wide range of hospitals and alternate health care environments throughout the world. This press release contains forward-looking statements. Such statements refer to the Company's beliefs and expectations. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those described. Such uncertainties include, but are not limited to, the timely completion of new products, regulatory approvals for new products, the risk of new and better technologies, risks relating to international markets, as well as general conditions and competition in the company's markets. Other risks are set forth in Criticare's reports and documents filed from time to time with the Securities and Exchange Commission. -0- *T CRITICARE SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2006 AND 2005 (UNAUDITED) 2006 2005 ------------ ------------ NET SALES $7,811,830 $6,054,370 COST OF GOODS SOLD 4,722,411 3,624,399 ------------ ------------ GROSS PROFIT 3,089,419 2,429,971 OPERATING EXPENSES: Sales and marketing 1,712,397 1,358,781 Research, development and engineering 613,688 724,817 Administrative 836,863 649,823 ------------ ------------ Total 3,162,948 2,733,421 LOSS FROM OPERATIONS (73,529) (303,450) OTHER INCOME (EXPENSE): Interest expense (4,794) (6,064) Interest income 25,024 18,238 Other income 45,323 46,405 ------------ ------------ Total 65,553 58,579 LOSS BEFORE INCOME TAXES (7,976) (244,871) INCOME TAX PROVISION -- -- ------------ ------------ NET LOSS $(7,976) $(244,871) ============ ============ NET LOSS PER COMMON SHARE: Basic $0.00 $(0.02) Diluted $0.00 $(0.02) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: Basic 12,122,819 11,501,085 Diluted 12,122,819 11,501,085 CRITICARE SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS NINE MONTHS ENDED MARCH 31, 2006 AND 2005 (UNAUDITED) 2006 2005 ------------ ------------ NET SALES $24,254,956 $18,760,733 COST OF GOODS SOLD 14,653,789 11,357,934 ------------ ------------ GROSS PROFIT 9,601,167 7,402,799 OPERATING EXPENSES: Sales and marketing 5,005,091 4,231,575 Research, development and engineering 1,913,355 1,899,752 Administrative 2,450,762 2,140,193 ------------ ------------ Total 9,369,208 8,271,520 INCOME (LOSS) FROM OPERATIONS 231,959 (868,721) OTHER INCOME (EXPENSE): Interest expense (15,360) (23,091) Interest income 66,999 38,311 Other income 452,740 59,987 ------------ ------------ Total 504,379 75,207 INCOME (LOSS) BEFORE INCOME TAXES 736,338 (793,514) INCOME TAX PROVISION -- -- ------------ ------------ NET INCOME (LOSS) $736,338 $(793,514) ============ ============ NET INCOME (LOSS) PER COMMON SHARE: Basic $0.06 $(0.07) Diluted $0.06 $(0.07) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: Basic 11,997,319 11,469,066 Diluted 12,215,149 11,469,066 CRITICARE SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS MARCH 31, 2006 AND JUNE 30, 2005 (UNAUDITED) ASSETS March 31, June 30, 2006 2005 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $3,246,560 $3,680,965 Accounts receivable, less allowance for doubtful accounts of $300,000 7,182,864 6,847,432 Other receivables 604,688 645,479 Inventories 7,646,107 5,551,093 Prepaid expenses 217,138 255,104 ------------ ------------ Total current assets 18,897,357 16,980,073 Property, plant and equipment - net 2,395,925 2,010,417 License rights and patents - net 64,732 69,983 ------------ ------------ TOTAL ASSETS $21,358,014 $19,060,473 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $3,440,550 $3,033,559 Accrued liabilities: Compensation and commissions 857,597 900,636 Product warranties 400,000 452,000 Obligations under capital lease 66,796 62,739 Other 182,075 191,807 ------------ ------------ Total current liabilities 4,947,018 4,640,741 LONG-TERM LIABILITIES: Obligations under capital lease 151,415 202,031 Other long-term obligations 2,635 8,561 ------------ ------------ Total long-term liabilities 154,050 210,592 TOTAL LIABILITIES 5,101,068 4,851,333 STOCKHOLDERS' EQUITY: Preferred stock - $.04 par value, 500,000 shares authorized no shares issued or outstanding -- -- Common stock - $.04 par value, 15,000,000 shares authorized, 12,382,461 and 11,925,086 shares issued, and 12,274,054 and 11,812,493 shares outstanding, respectively 495,298 477,003 Additional paid-in capital 26,060,052 24,775,995 Common stock held in treasury at cost (108,407 and 112,593 shares, respectively) (379,036) (386,834) Retained earnings (accumulated deficit) (9,912,574) (10,648,912) Cumulative translation adjustment (6,794) (8,112) ------------ ------------ Total stockholders' equity 16,256,946 14,209,140 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $21,358,014 $19,060,473 ============ ============ *T