8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)  June 1, 2005

CANTEL MEDICAL CORP.

(Exact name of registrant as specified in its charter)

Delaware	001-31337	22-1760285
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Identification Number)

150 Clove Road, Little Falls, New Jersey	07424
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (973) 890-7220

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities  Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02Results of Operations and Financial Condition

On June 1, 2005, the Registrant issued a press release announcing its results of operations for the fiscal year 2005 third quarter ended April 30, 2005.  A copy of the press release is included with this Report as Exhibit 99(1).

Item 8.01Other Events

On June 1, 2005 the Registrant issued a press release announcing that it has reached an agreement in principle with Olympus America Inc. under which, effective July 31, 2006, Carsen Group Inc., a wholly-owned subsidiary of the Registrant, will no longer serve as the Canadian distributor of Olympus products. The agreement in principle, which is subject to the negotiation and execution of a definitive agreement, was reached after a series of discussions on the future of the Carsen-Olympus relationship ended with the decision by Olympus to grant Carsen a four-month extension of its existing distribution agreements from the original expiration date of March 31, 2006 and to terminate the distribution agreements on July 31, 2006.  Carsen’s distribution function will remain an important contributor to the Registrant’s results of operations through the end of its fiscal year ending July 31, 2006.

Olympus will pay the Registrant $6,000,000 in cash in consideration for Carsen’s transfer to Olympus of customer lists, sales records, and certain other assets related to the sale and servicing of Olympus products and for Carsen’s release of Olympus’s contractual restriction on hiring Carsen personnel. In addition, Carsen will assist Olympus in effecting a smooth transition of Carsen’s business of distributing and servicing Olympus products in Canada. Olympus will also acquire Carsen’s inventory of Olympus products as of July 31, 2006 under the terms of the existing distribution agreements.

Net proceeds from the termination of Carsen’s Olympus distribution business are projected to total approximately $15,000,000. Such net proceeds will consist of the $6,000,000 to be paid by Olympus and proceeds from the sale of inventory and collection of receivables, less satisfaction of liabilities, severance costs, continuing lease obligations and other wind-down costs.  Management’s projection of net proceeds is an estimate based on inventory, receivables and liabilities at April 30, 2005 and assumptions for potential wind-down costs, but without taking into account any Canadian or US tax implications.

For the fiscal year ended July 31, 2004, total revenues of Carsen were $48,144,000, which accounted for approximately 28% of the Registrant’s consolidated revenues during that fiscal year. Approximately 80% of Carsen’s revenues were attributable to its Olympus distribution and service businesses. Operating income of Carsen in fiscal 2004 was $9,039,000, or approximately 40% of the Registrant’s consolidated operating income before general corporate expenses and interest expense.

For the nine months ended April 30, 2005, total revenues of Carsen were $45,143,000, which accounted for 31% of the Registrant’s consolidated revenues for that period. Approximately 80% of Carsen’s revenues were attributable to its Olympus distribution and service businesses. Operating income of Carsen for the nine months ended April 30, 2005 was $8,788,000, or 40% of the Registrant’s consolidated

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operating income before general corporate expenses and interest expense.

The revenues and operating income attributable to Carsen’s business (inclusive of both Olympus and non-Olympus business, but exclusive of the sale of MediVators reprocessors) constitute the entire “Endoscopy and Surgical Products” reporting segment and “Scientific Products” operating segment (included within the “All Other” reporting segment) of the Registrant. The Registant is currently evaluating Carsen’s remaining non-Olympus product lines, most of which are aligned with Olympus products, to determine their viability without Carsen’s Olympus business.

This Item contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks and uncertainties, including, without limitation, the risks detailed in the Registrant’s filings and reports with the Securities and Exchange Commission. In addition, there can be no assurance that the Registrant will reach a definitive agreement with Olympus or that Carsen will continue any portion of its non-Olympus business. Forward-looking statements are only predictions and actual events or results may differ materially from those projected or anticipated.

Item 9.01Financial Statements, Pro-Forma Financial Information and Exhibits

(c) Exhibit 99(1).     Press release of Registrant dated June 1, 2005.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		CANTEL MEDICAL CORP.
		By:	/s/  James P. Reilly
		James P. Reilly,
		President and Chief Executive
		Officer
Dated:	June 3, 2005

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EX-99.1

Exhibit 99.1

CANTEL MEDICAL REPORTS EPS OF $0.23 VS. $0.20 ON 23% INCREASE IN

 NET INCOME FOR QUARTER ENDED APRIL 30, 2005

CANADIAN DISTRIBUTION AGREEMENTS WITH OLYMPUS

TO END JULY 31, 2006; COMPANY FOCUSED ON ITS PROPRIETARY

 INFECTION PREVENTION AND CONTROL BUSINESS

LITTLE FALLS, New Jersey (June 1, 2005) ... CANTEL MEDICAL CORP. (NYSE:CMN) reported net income of $3,809,000, an increase of 23%, or $0.23 per diluted share, for its third quarter ended April 30, 2005, on sales of $50,534,000, an increase of 8%, as compared with net income of $3,094,000, or $0.20 per diluted share, on sales of $46,898,000 for the quarter ended April 30, 2004.  Of the 8% increase in net sales, 4% was from the Company’s core businesses and 4% was from the Saf-T-Pak acquisition in June 2004.

For the nine months ended April 30, 2005, the Company reported net income of $10,791,000, an increase of 45%, or $0.67 per diluted share, on sales of $145,412,000, an increase of 16%, as compared with net income of $7,462,000, or $0.49 per diluted share, on sales of $124,843,000 for the nine months ended April 30, 2004.

The Company further reported that its balance sheet at April 30, 2005 showed current assets of $84,143,000, including cash and cash equivalents of $24,651,000, a current ratio of 2.95:1, a ratio of funded debt to equity of ..16:1 and stockholders’ equity of $103,380,000.

James P. Reilly, President and Chief Executive Officer of Cantel, commented, “We are pleased with our third quarter results, as we exceeded our budgeted revenues and net income, and achieved our budgeted earnings per diluted share despite the increase in weighted average shares.”  Reilly added, “With cash and cash equivalents of $24,651,000 exceeding our long term debt of $16,500,000, strong cash flow from our existing operations and our significant borrowing capacity, we are in an excellent position to continue our aggressive search for acquisitions of companies providing products and services in the infection prevention and control markets.”

Canadian Distribution Agreements; Focus on Infection Prevention and Control

The Company also announced today that it has reached an agreement in principle with Olympus America Inc. under which, effective July 31, 2006, Carsen Group Inc., a wholly-owned subsidiary of Cantel, will no longer serve as the Canadian distributor of Olympus products. The agreement in principle, which is subject to the negotiation and execution of a definitive agreement, was reached after a series of discussions on the future of the Carsen-Olympus relationship ended with the decision by Olympus to grant Carsen a four-month extension of its existing distribution agreements from the original expiration date of March 31, 2006 and to terminate the distribution agreements on July 31, 2006.  Carsen’s distribution function will remain an important contributor to Cantel’s results of operations through the end of its fiscal year ending July 31, 2006.

Olympus will pay Cantel $6,000,000 in cash in consideration for Carsen’s transfer to Olympus of customer lists, sales records, and certain other assets related to the sale and servicing of Olympus products and for Carsen’s release of Olympus’s contractual restriction on hiring Carsen personnel. In addition, Carsen will assist Olympus in effecting a smooth transition of

Carsen’s business of distributing and servicing Olympus products in Canada. Olympus will also acquire Carsen’s inventory of Olympus products as of July 31, 2006 under the terms of the existing distribution agreements.

Net proceeds from the termination of Carsen’s Olympus distribution business are projected to total approximately $15,000,000. Such net proceeds will consist of the $6,000,000 to be paid by Olympus and proceeds from the sale of inventory and collection of receivables, less satisfaction of liabilities, severance costs, continuing lease obligations and other wind-down costs.  Management’s projection of net proceeds is an estimate based on inventory, receivables and liabilities at April 30, 2005 and assumptions for potential wind-down costs, but without taking into account any Canadian or US tax implications.

Mr. Reilly said: “While we are disappointed by Olympus’s decision to bring in-house the distribution function our Carsen Group subsidiary has been performing for Olympus, our strategic focus in recent years has primarily been on the development and marketing of proprietary infection prevention and control products. The Olympus products distributed by Carsen, which include medical equipment, scientific instruments and industrial equipment, are not proprietary infection prevention and control products, and therefore are outside our strategic focus.

“Our strategic commitment to infection prevention and control as the core of our growth strategy began with our acquisition of MediVators in 1996, continued with our acquisition of Minntech in 2001, and was further established with the acquisition in fiscal 2004 of four more infection prevention and control businesses.

“We are currently pursuing further internal development projects and acquisition opportunities to grow our proprietary infection prevention and control business.  We believe that the cash flow generated by our current domestic and international operations, our strong balance sheet, and our borrowing capacity position us to take advantage of attractive growth and value-creation opportunities. Moreover, we intend to deploy the net proceeds from the termination of Carsen’s Olympus distribution business into future acquisition and growth opportunities in infection prevention and control.”

For the fiscal year ended July 31, 2004, total revenues of Carsen were $48,144,000, which accounted for approximately 28% of Cantel’s consolidated revenues during that fiscal year. Approximately 80% of Carsen’s revenues were attributable to its Olympus distribution and service businesses. Operating income of Carsen in fiscal 2004 was $9,039,000, or approximately 40% of Cantel’s consolidated operating income before general corporate expenses and interest expense.

For the nine months ended April 30, 2005, total revenues of Carsen were $45,143,000, which accounted for 31% of Cantel’s consolidated revenues for that period. Approximately 80% of Carsen’s revenues were attributable to its Olympus distribution and service businesses. Operating income of Carsen for the nine months ended April 30, 2005 was $8,788,000, or 40% of Cantel’s consolidated operating income before general corporate expenses and interest expense.

The revenues and operating income attributable to Carsen’s business (inclusive of both Olympus and non-Olympus business, but exclusive of the sale of MediVators reprocessors) constitute the entire “Endoscopy and Surgical Products” reporting segment and “Scientific Products” operating segment (included within the “All Other” reporting segment) of Cantel. Cantel is currently evaluating Carsen’s remaining non-Olympus product lines, most of which are aligned with Olympus products, to determine their viability without Carsen’s Olympus business.

Mr. Reilly concluded: “Despite the loss of the Olympus distribution business after July 31, 2006, we are very confident that by continuing to focus on our infection prevention and control strategy, the outlook for Cantel Medical, our customers, employees and shareholders will continue to be positive. We remain committed to building the long-term value of Cantel Medical for our shareholders.”

Cantel will hold a conference call to discuss these announcements on Thursday, June 2, 2005 at 8:30 a.m. Eastern Time. Participants on the call will include Charles M. Diker, Chairman; James P. Reilly, President and CEO; Andrew A. Krakauer, Executive Vice President and COO; Craig A. Sheldon, Senior Vice President and CFO; Eric W. Nodiff, Senior Vice President and General Counsel; William J. Vella, President of Carsen Group Inc. and Roy K. Malkin, President of Minntech Corporation.

To participate in the conference call, dial 877-407-8035 approximately 5 to 10 minutes before the beginning of the call. If you are unable to participate, a digital replay of the call will be available from Thursday, June 2 at 11:00 a.m. through midnight on June 3, by dialing 877-660-6853 and using pass code # 286 and conference ID #155577.

The call will be simultaneously broadcast live over the Internet on vcall.com at http://www.vcall.com/CEPage.asp?ID=92242. A replay of the webcast will be available on Vcall for 30 days.

Cantel Medical Corp., a healthcare company, is a leading provider of infection prevention and control products, which include specialized medical device reprocessing systems for renal dialysis and endoscopy, water treatment systems, sterilants, diagnostic imaging and therapeutic medical equipment primarily focused on endoscopy, hollow fiber membrane filtration and separation technologies for medical and non-medical applications, and specialized packaging for infectious and biological specimens. Cantel also sells scientific instrumentation products and provides technical maintenance services for its products.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks and uncertainties, including, without limitation, the risks detailed in Cantel’s filings and reports with the Securities and Exchange Commission. In addition, there can be no assurance that Cantel will reach a definitive agreement with Olympus, that Carsen will continue any portion of its non-Olympus business, that Cantel’s estimate of net proceeds from the discontinuance of Carsen’s Olympus distribution business will be realized, that Cantel will be successful in finding suitable acquisition candidates or in consummating any acquisition, or that any such agreement or acquisition will be on terms favorable to Cantel. Forward-looking statements are only predictions, and actual events or results may differ materially from those projected or anticipated.

Contacts:

Cantel Medical Corp.

James P. Reilly,

President and CEO

973-890-7220

or

Cameron Associates, Inc.

Richard E. Moyer

212-554-5466

CANTEL MEDICAL CORP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

	Three Months Ended April 30,				Nine Months Ended April 30,
	2005		2004		2005		2004
Net sales	$	50,534	$	46,898	$	145,412	$	124,843
Cost of sales	31,011		29,646		89,853		79,299
Gross profit	19,523		17,252		55,559		45,544
Operating expenses:
Selling	6,007		5,316		17,229		15,017
General and administrative	5,674		5,402		16,491		13,976
Research and development	1,103		1,100		3,109		3,273
Total operating expenses	12,784		11,818		36,829		32,266
Income before interest and income taxes	6,739		5,434		18,730		13,278
Interest expense - net	219		374		883		1,205
Income before income taxes	6,520		5,060		17,847		12,073
Income taxes	2,711		1,966		7,056		4,611
Net income	$	3,809	$	3,094	$	10,791	$	7,462
Earnings per common share - diluted	$	0.23	$	0.20	$	0.67	$	0.49
Weighted average shares - diluted	16,521		15,322		16,194		15,080

CANTEL MEDICAL CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

	April 30, 2005		July 31, 2004
Assets
Current assets	$	84,143	$	73,863
Property and equipment, net	23,096		22,715
Intangible assets	13,402		13,897
Goodwill	33,711		33,330
Other assets	3,006		2,562
	$	157,358	$	146,367
Liabilities and stockholders’ equity
Current liabilities	$	28,536	$	27,128
Long-term liabilities	25,442		32,728
Stockholders’ equity	103,380		86,511
	$	157,358	$	146,367