Cantel Medical (CMD) 10-Q 8 Dec 16 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Oct. 31, 2016	Nov. 30, 2016
Document and Entity Information
Entity Registrant Name	CANTEL MEDICAL CORP
Entity Central Index Key	19,446
Document Type	10-Q
Document Period End Date	Oct. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--07-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		41,716,909
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Oct. 31, 2016	Jul. 31, 2016
Current assets:
Cash and cash equivalents	$ 26,135,000	$ 28,367,000
Accounts receivable, net of allowance for doubtful accounts of $1,324 at October 31 and $1,850 at July 31	95,668,000	93,332,000
Inventories, net	96,819,000	91,486,000
Prepaid expenses and other current assets	12,408,000	9,557,000
Total current assets	231,030,000	222,742,000
Property and equipment, net	80,488,000	74,604,000
Intangible assets, net	136,941,000	111,719,000
Goodwill	295,791,000	280,318,000
Other assets	5,162,000	5,149,000
Total assets	749,412,000	694,532,000
Current liabilities:
Accounts payable	29,969,000	26,263,000
Compensation payable	18,780,000	25,555,000
Accrued expenses	19,914,000	20,283,000
Deferred revenue	20,623,000	20,173,000
Dividends payable	2,931,000
Income taxes payable	5,849,000	4,061,000
Total current liabilities	98,066,000	96,335,000
Long-term debt	161,000,000	116,000,000
Deferred income taxes	25,156,000	23,579,000
Other long-term liabilities	4,766,000	4,248,000
Commitments and contingencies
Stockholders' equity:
Preferred Stock, par value $1.00 per share; authorized 1,000,000 shares; none issued
Common Stock, par value $.10 per share; authorized 75,000,000 shares; issued October 31 - 46,173,650 shares, outstanding October 31 - 41,717,493 shares; issued July 31 - 46,084,047 shares, outstanding July 31 - 41,708,214 shares	4,617,000	4,608,000
Additional paid-in capital	168,486,000	165,573,000
Retained earnings	357,922,000	342,053,000
Accumulated other comprehensive (loss)	(18,316,000)	(11,795,000)
Treasury Stock, at cost; October 31 - 4,456,157 shares at cost; July 31 - 4,375,833 shares at cost	(52,285,000)	(46,069,000)
Total stockholders' equity	460,424,000	454,370,000
Total liabilities and stockholders' equity	$ 749,412,000	$ 694,532,000

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Oct. 31, 2016	Jul. 31, 2016
CONDENSED CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 1,324	$ 1,850
Preferred Stock, par value (in dollars per share)	$ 1	$ 1
Preferred Stock, authorized shares	1,000,000	1,000,000
Preferred Stock, shares issued	0	0
Common Stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common Stock, authorized shares	75,000,000	75,000,000
Common Stock, shares issued	46,173,650	46,084,047
Common Stock, shares outstanding	41,717,493	41,708,214
Treasury Stock, shares	4,456,157	4,375,833

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($)	3 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
Net sales
Product sales	$ 166,901,000	$ 133,806,000
Product service	20,824,000	19,973,000
Total net sales	187,725,000	153,779,000
Cost of sales
Product sales	83,616,000	69,141,000
Product service	14,602,000	13,440,000
Total cost of sales	98,218,000	82,581,000
Gross profit	89,507,000	71,198,000
Expenses:
Selling	27,893,000	21,460,000
General and administrative	30,003,000	22,197,000
Research and development	4,548,000	3,765,000
Total operating expenses	62,444,000	47,422,000
Income from operations	27,063,000	23,776,000
Interest expense	1,112,000	766,000
Interest income	(19,000)	(21,000)
Income before income taxes	25,970,000	23,031,000
Income taxes	7,170,000	8,777,000
Net income	$ 18,800,000	$ 14,254,000
Earnings per common share:
Basic (in dollars per share)	$ 0.45	$ 0.34
Diluted (in dollars per share)	0.45	0.34
Dividends per common share (in dollars per share)	$ 0.07	$ 0.06

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 18,800	$ 14,254
Other comprehensive loss:
Foreign currency translation	(6,521)	(827)
Total other comprehensive loss	(6,521)	(827)
Comprehensive income	$ 12,279	$ 13,427

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
Cash flows from operating activities
Net income	$ 18,800	$ 14,254
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	3,454	2,822
Amortization	3,909	3,094
Stock-based compensation expense	2,922	1,720
Amortization of debt issuance costs	100	100
Loss on disposal of fixed assets	224	100
Fair value adjustments to acquisition related liabilities	9	(592)
Deferred income taxes	1,917	1,322
Excess tax benefits from stock-based compensation		(1,489)
Changes in assets and liabilities, net of effects of business acquisitions:
Accounts receivable	1,577	(236)
Inventories	(1,824)	(2,295)
Prepaid expenses and other current assets	(2,801)	(5,534)
Accounts payable and other current liabilities	(5,290)	(3,005)
Income taxes	1,911	4,854
Net cash provided by operating activities	24,908	15,115
Cash flows from investing activities
Capital expenditures	(8,143)	(3,167)
Proceeds from disposal of fixed assets	21
Acquisition of businesses, net of cash acquired	(57,768)	(79,810)
Other, net	255	(12)
Net cash used in investing activities	(65,635)	(82,989)
Cash flows from financing activities
Borrowings under revolving credit facility	61,000	83,000
Repayments under revolving credit facility	(16,000)	(14,000)
Excess tax benefits from stock-based compensation		1,489
Purchases of treasury stock	(6,216)	(3,138)
Net cash provided by financing activities	38,784	67,351
Effect of exchange rate changes on cash and cash equivalents	(289)	(66)
Decrease in cash and cash equivalents	(2,232)	(589)
Cash and cash equivalents at beginning of period	28,367	31,720
Cash and cash equivalents at end of period	$ 26,135	$ 31,131

Basis of Presentation

Basis of Presentation	3 Months Ended
	Oct. 31, 2016
Basis of Presentation
Basis of Presentation	CANTEL MEDICAL CORP . NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1. Basis of Presentation The unaudited Condensed Consolidated Financial Statements have been prepared in accordance with United States generally accepted accounting principles for interim financial reporting and the requirements of Form 10-Q and Rule 10.01 of Regulation S-X. Accordingly, they do not include certain information and note disclosures required by generally accepted accounting principles for annual financial reporting and should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Annual Report of Cantel Medical Corp. (“Cantel”) on Form 10-K for the fiscal year ended July 31, 2016 (the “2016 Form 10-K”) and Management's Discussion and Analysis of Financial Condition and Results of Operations included elsewhere herein. The unaudited interim financial statements reflect all adjustments (of a normal and recurring nature) which management considers necessary for a fair presentation of the results of operations for these periods. The results of operations for the interim periods are not necessarily indicative of the results for the full year. The Condensed Consolidated Balance Sheet at July 31, 2016 was derived from the audited Consolidated Balance Sheet of Cantel at that date. As more fully described in Note 15 to the Condensed Consolidated Financial Statements, we operate our business through the following four operating segments: Endoscopy, Water Purification and Filtration, Healthcare Disposables and Dialysis. We operate our four operating segments through wholly-owned subsidiaries in the United States and internationally. Our principal operating subsidiaries in the United States are Medivators Inc., Mar Cor Purification, Inc., Crosstex International, Inc. and SPS Medical Supply Corp. Internationally, our primary operating subsidiaries include Cantel Medical (UK) Limited, Cantel (UK) Limited, Cantel Medical Asia/Pacific Pte. Ltd., Cantel Medical Devices (China) Co., Ltd., Biolab Equipment Ltd., Medivators B.V. and Cantel Medical (Italy) S.r.l. In our current fiscal year, we acquired all of the issued and outstanding stock of Accutron, Inc. (“Accutron”) on August 1, 2016 and certain net assets of Vantage Endoscopy Inc. (“Vantage”) on September 26, 2016, as more fully described in Note 3 to the Condensed Consolidated Financials Statements. In our prior fiscal year, we acquired all of the issued and outstanding stock of Medical Innovations Group Holdings Limited and certain affiliated companies (collectively, “MI”) on September 14, 2015 (the “MI Acquisition”) and certain net assets of North American Science Associates, Inc.’s Sterility Assurance Monitoring Products division on March 1, 2016 (the “NAMSA Acquisition”), as more fully described in Note 3 to the Condensed Consolidated Financial Statements. Throughout this document, references to “Cantel,” “us,” “we,” “our,” and the “Company” are references to Cantel Medical Corp. and its subsidiaries, except where the context makes it clear the reference is to Cantel itself and not its subsidiaries. Subsequent Events On November 23, 2016, we entered into an acquisition agreement to purchase certain endoscopy-related net assets for approximately $10,000,000. This acquisition, anticipated to close during the third quarter of our fiscal 2017 subject to satisfaction of certain closing conditions, will be included in our Endoscopy segment and is not expected to have a significant effect on our consolidated results of operations. We performed a review of events subsequent to October 31, 2016. Based upon that review, no other subsequent events occurred that required updating to our Condensed Consolidated Financial Statements or disclosures.

Recent Accounting Pronouncement

Recent Accounting Pronouncements	3 Months Ended
	Oct. 31, 2016
Recent Accounting Pronouncements
Recent Accounting Pronouncements	Note 2. Recent Accounting Pronouncements In August 2016, the Financial Account Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15, “Statement of Cash Flows” (“ASU 2016-15). This new guidance will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017 (our fiscal year 2019). ASU 2016-15 will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. We are currently in the process of evaluating the impact of ASU 2016-15 on our financial position and result of operations. In March 2016, the FASB issued ASU 2016-09, “ Improvements to Employee Share-Based Payment Accounting ” (“ASU 2016-09”), which simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements. The new guidance also requires that all tax-related cash flows resulting from share-based payments to be reported as operating activities in the Condensed Consolidated Statements of Cash Flows. We early adopted ASU 2016-09 on August 1, 2016 on a prospective basis. As a result, we no longer record excess tax benefits as an increase to additional paid-in capital, but effective August 1, 2016, we record such excess tax benefits as a reduction of income tax expense, which amounted to $2,241,000 for the three months ended October 31, 2016, as further described in Notes 4 and 12 of the Condensed Consolidated Financial Statements. In addition, we elected to record excess tax benefits as an operating cash flow prospectively and not adjust the prior year period. As such, the current period excess tax benefits were reflected as an operating cash flow rather than a financing cash flow on our Condensed Consolidated Statement of Cash Flows for the three months ended October 31, 2016. Furthermore, we have elected to account for forfeitures as they occur, rather than estimate expected forfeitures over the course of a vesting period since forfeitures have been insignificant historically. In February 2016, FASB issued ASU 2016-02, “ Leases (Topic 842) ” (“ASU 2016-02”). The new guidance requires the recording of assets and liabilities arising from leases on the balance sheet accompanied by enhanced qualitative and quantitative disclosures in the notes to the financial statements. The new guidance is expected to provide transparency of information and comparability among organizations. ASU 2016-02 is effective for fiscal years beginning after December 31, 2018 (our fiscal year 2020), including interim periods within that reporting period. Early adoption is permitted as of the beginning of an interim or annual period. We are currently in the process of evaluating the impact of ASU 2016-02 on our financial position and results of operations. In September 2015, the FASB issued ASU 2015-16, “ Simplifying the Accounting for Measurement-Period Adjustments (Topic 805)” (“ASU 2015-16”). The new guidance requires an acquirer in a business combination to recognize a measurement-period adjustment during the period in which it determines the amount, and eliminates the requirement for an acquirer to account for measurement-period adjustments retrospectively. The acquirer must also disclose the amounts and reasons for adjustments to the provisional amounts. ASU 2015-16 is effective for fiscal years beginning after December 15, 2016 (our fiscal year 2018), including interim periods within that reporting period. Accordingly, we will adopt ASU 2015-06 in our first quarter of fiscal 2018. The adoption of ASU 2015-06 is not expected to have a significant impact upon on our financial position and results of operations. In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-11, “Inventory (Topic 330) Simplifying the Measurement of Inventory,” (“ASU 2015-11”). The new guidance more closely aligns the measurement of inventory in U.S. GAAP with the measurement of inventory in International Financial Reporting Standards by requiring companies using the first-in, first-out and average costs methods to measure inventory using the lower of cost and net realizable value, where net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016 (our fiscal year 2018), including interim periods within that reporting period. We are currently in the process of evaluating the impact of ASU 2015-11 on our financial position and results of operations. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” (“ASU 2014-09”), which will supersede the revenue recognition requirements in Accounting Standards Codification 605, “Revenue Recognition.” ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. It also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606),” which defers the effective date of ASU 2014-09 by one year to fiscal years beginning after December 15, 2017 (our fiscal year 2019), including interim periods within that reporting period. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606),” (ASU 2016-12), which provided narrow scope improvements and practical expedients relating to ASU 2014-09. We are currently in the process of evaluating the impact of ASU 2014-09 and ASU 2016-12 on our financial position and results of operations.

Acquisitions

Acquisitions	3 Months Ended
	Oct. 31, 2016
Acquisitions
Acquisitions	Note 3. Acquisitions Fiscal 2017 Vantage Endoscopy Inc.’s Medivators® Endoscopy Business On September 26, 2016, we acquired certain net assets of Vantage related to its distribution and sale of our Medivators endoscopy products in Canada (the “Vantage Business” or the “Vantage Acquisition”). Vantage was our exclusive distributor of Medivators capital equipment (e.g., automated endoscope reprocessors) and related consumables and accessories in Canada and had pre-acquisition adjusted annual revenues (unaudited) of approximately $11,000,000. The total consideration for the transaction, excluding acquisition-related costs, was $4,072,000, subject to net asset value adjustments. The Vantage Business is included in our Endoscopy segment. The principal reasons for the Vantage Acquisition were (i) to sell our Endoscopy products on a direct basis in Canada, one of our largest markets outside of the United States, (ii) the establishment of a platform in Canada where we can sell additional products on a direct basis such as our endoscopy procedure products and transport and storage systems and (iii) the expectation that the acquisition will be accretive to our earnings per share (“EPS”) in fiscal 2017 and beyond. The Vantage Business is included in our results of operations for the portion of the three months ended October 31, 2016 subsequent to its acquisition date and is not included in the three months ended October 31, 2015. This acquisition did not have a significant effect on our consolidated results of operations in the three months ended October 31, 2016 due to the size of the acquisition in relation to our overall consolidated results of operations. Accutron, Inc. On August 1, 2016, we acquired all of the issued and outstanding stock of Accutron, a private company with pre-acquisition annual revenues (unaudited) of approximately $21,500,000 (the “Accutron Business” or the “Accutron Acquisition”). The Accutron Business designs, manufactures and sells nitrous oxide conscious sedation equipment and single use nasal masks for use in dental procedures. The total consideration for the transaction, excluding acquisition-related costs, was $52,500,000, plus an estimated net asset value adjustment payable of $617,000. The Accutron Business is included in our Healthcare Disposables segment. The purchase price was preliminarily allocated to the assets acquired and assumed liabilities based on estimated fair values as follows: Preliminary Net Assets Allocation Current assets $ Property, plant and equipment Amortizable intangible assets (15- year weighted average life): Customer relationships (8- year life) Technology (20- year life) Brand names (20- year life) Deferred income tax assets Current liabilities Net assets acquired $ There were no in-process research and development projects acquired in connection with the acquisition. The excess purchase price of $16,503,000 was assigned to goodwill. Such goodwill, all of which is deductible for income tax purposes, is included in our Healthcare Disposables segment. The principal reasons for the Accutron Acquisition were (i) to broaden our Healthcare Disposable segment’s product portfolio by adding conscious sedation equipment and single-use nasal masks, (ii) the opportunity to cross-sell our existing Healthcare Disposable products, (iii) the addition of a high margin, branded product portfolio with compelling infection prevention benefits and (iv) the expectation that the acquisition will be accretive to our EPS in fiscal 2017 and beyond. Such reasons constitute the significant factors that contributed to a purchase price that resulted in recognition of goodwill. The Accutron Business is included in our results of operations for the three months ended October 31, 2016 and is not included in the three months ended October 31, 2015. This acquisition did not have a significant effect on our consolidated results of operations in the three months ended October 31, 2016 due to the size of the acquisition in relation to our overall consolidated results of operations. Fiscal 2016 North American Science Associates, Inc. On March 1, 2016, we acquired certain net assets of North American Science Associates, Inc.’s Sterility Assurance Monitoring Products division, a business with pre-acquisition adjusted annual revenues (unaudited) of approximately $5,700,000 (the “NAMSA Business”). The business manufactures a broad suite of high-quality biological and chemical indicators which are used to accurately monitor the effectiveness of sterilization processes primarily for manufacturers of medical device, life science and other products. The total consideration for the transaction, excluding acquisition-related costs, was $13,424,000. The NAMSA Acquisition is included in our Healthcare Disposables segment. The principal reasons for the NAMSA Acquisition were (i) the ability to broaden our Healthcare Disposable segment’s presence into the industrial market, (ii) the opportunity to cross-sell our existing Healthcare Disposable products, (iii) the strategic benefit and cost savings to our overall sterility assurance monitoring business, (iv) to enhance our new product development and overall research and development capabilities and (v) the expectation that the acquisition will be accretive to our EPS in fiscal 2017 and beyond. The NAMSA Business is included in our results of operations for the three months ended October 31, 2016 and is not included in the three months ended October 31, 2015. This acquisition did not have a significant effect on our consolidated results of operations in the three months ended October 31, 2016 due to the size of the acquisition in relation to our overall consolidated results of operations. Medical Innovations Group Holdings Limited On September 14, 2015, we acquired all of the issued and outstanding stock of MI, a private company with pre-acquisition annual revenues (unaudited) of approximately $28,500,000 providing specialized endoscopy medical devices and products primarily in the United Kingdom (the “MI Business”). Principal products of MI include proprietary short-term and long-term endoscope transport and storage systems, a comprehensive range of endoscopic consumable accessories, OEM mobile medical carts, as well as specialized products for patient warming and patient transfer. With an employee base of approximately 100 individuals, including a complete sales organization and a manufacturing facility in Southend-on-Sea, England, the addition of MI complements our existing endoscopy business in the United States, the United Kingdom and other global markets. The MI Business is included in our Endoscopy segment. The total consideration for the transaction, excluding acquisition-related costs, was $79,597,000, net of an estimated $212,000 net asset value adjustment to be paid by the sellers. The principal reasons for the MI Acquisition were (i) the global expansion of our infection prevention and control product offerings in Endoscopy, (ii) the opportunity to sell our existing endoscopy products to MI’s installed base, (iii) the ability to combine the MI sales force with our existing United Kingdom organization to create what we believe will be a dominant UK sales force in endoscopy product sales and service, (iv) to achieve cost savings through various operating synergies, (v) the ability to leverage our direct sales force to accelerate the growth of MI products in the U.S. and various international markets, and (vi) the expectation that the acquisition will be accretive to our EPS in fiscal 2017 and beyond. Such reasons constitute the significant factors that contributed to a purchase price that resulted in recognition of goodwill. The MI Acquisition is included in our results of operations for the three months ended October 31, 2016 and the portion of the three months ended October 31, 2015 subsequent to its acquisition date.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Oct. 31, 2016
Stock-Based Compensation
Stock-Based Compensation	Note 4. Stock-Based Compensation The following table shows the income statement components of stock-based compensation expense recognized in the Condensed Consolidated Statements of Income: Three Months Ended October 31, 2016 2015 Cost of sales $ $ Operating expenses: Selling General and administrative Research and development Total operating expenses Stock-based compensation before income taxes Income tax benefits Excess tax benefits — Total stock-based compensation expense, net of tax $ $ The above stock-based compensation expense before income taxes was recorded in the Condensed Consolidated Financial Statements as stock-based compensation expense and an increase to additional paid-in capital and was determined based upon the award’s fair value at the time the award was granted. Income tax benefits on stock-based compensation expense were recorded as an increase to deferred income tax assets (which are netted with deferred income tax liabilities) and a reduction to income tax expense. If certain criteria are met when options are exercised or restricted stock awards become vested, the Company is allowed a deduction on its United States income tax return. Accordingly, we account for the income tax effect on such income tax deductions as a reduction of previously recorded deferred income tax assets and as a reduction of income taxes payable. Excess tax benefits arise when the ultimate tax effect of the deduction for tax purposes is greater than the income tax benefit on stock-based compensation described above. Prior to the adoption of ASU 2016-09 on August 1, 2016, the differences noted above between actual tax deductions and the previously recorded deferred income tax assets were recorded as additional paid-in capital. For the three months ended October 31, 2015, income tax deductions of $3,041,000 were generated, of which $1,552,000 were recorded as a reduction in income tax expense over the equity awards’ vesting period and the remaining excess tax benefits of $1,489,000 were recorded as an increase to additional paid-in capital during the three months ended October 31, 2015. As a result of the adoption of ASU 2016-09, we no longer record excess tax benefits as an increase to additional paid-in capital, but record such excess tax benefits prospectively as a reduction of income tax expense. For the three months ended October 31, 2016, income tax deductions of $5,376,000 were generated, of which $3,135,000 were previously recorded as a reduction in income tax expense over the equity awards’ vesting period and the remaining excess tax benefit of $2,241,000 was recorded as a reduction in income tax expense during the three months ended October 31, 2016. In addition, we elected to record excess tax benefits as an operating cash flow prospectively and not adjust the prior year period. As such, the current period excess tax benefits were reflected as an operating cash flow rather than a financing cash flow in our Condensed Consolidated Statement of Cash Flows for the three months ended October 31, 2016. All of our stock options and restricted stock awards are expected to be deductible for tax purposes, except for certain stock awards granted to employees residing outside of the United States, and were tax-effected using the Company’s estimated U.S. effective tax rate at the time of grant. Our stock options and time-based stock awards are subject to graded vesting in which portions of the awards vest at different times during the vesting period, as opposed to awards that vest at the end of the vesting period. We recognize compensation expense for awards subject to graded vesting using the straight-line basis over the vesting period. In October 2016, we granted for the first time to certain employees 12,810 equity awards with performance conditions and 9,800 equity awards with market conditions. The actual number of equity awards earned and eligible to vest will be determined based on the level of achievement against budgeted revenue and a defined gross profit percentage, with respect to the awards with performance conditions, and the Company’s 3-year relative We recognize compensation expense for the awards with performance conditions using the accelerated attribution method over the requisite service period for each separately vesting portion of the award when it is probable that the performance condition will be achieved. We record expense for the awards that are subject to market conditions ratably over the vesting period regardless of whether the market condition is satisfied. At October 31, 2016, total unrecognized stock-based compensation expense, before income taxes, related to total nonvested stock options and restricted stock awards was $14,242,000 with a remaining weighted average period of 25 months over which such expense is expected to be recognized. Most of our nonvested awards relate to restricted stock awards. As a result of the adoption of ASU 2016-09 on August 1, 2016, we have elected to account for forfeitures as they occur, rather than estimate expected forfeitures over the course of a vesting period. We determine the fair value of each time-based stock award and performance-based stock award by using the closing market price of our common stock on the date of grant. We determine the fair value of each stock award with market conditions using the Monte Carlo simulation on the date of grant using the following assumptions: Performance Share Unit Three Months Ended Valuation Assumption October 31, 2016 Volatility of common stock % Average volatility of peer companies % Average correlation coefficient of peer companies % Risk-free interest rate % A summary of nonvested stock award activity follows: Weighted Number of Average Shares Fair Value Nonvested stock awards at July 31, 2016 $ Granted Canceled Vested Nonvested stock awards at October 31, 2016 $ There were no option grants during the three months ended October 31, 2016. The fair value of each option grant in the prior year was estimated on the date of grant using the Black-Scholes option valuation model with the following weighted average assumptions: Weighted-Average Black-Scholes Option Three Months Ended Valuation Assumptions October 31, 2015 Dividend yield % Expected volatility (1) % Risk-free interest rate (2) % Expected lives (in years) (3) (1) Volatility was based on historical closing prices of our common stock. (2) The U.S. Treasury rate based on the expected life at the date of grant. (3) Based on historical exercise behavior. Additionally, all options were considered to be deductible for tax purposes in the valuation model. Such non-qualified options were tax-effected using the Company’s estimated U.S. effective tax rate at the time of grant. For the three months ended October 31, 2015, these non-qualified options had a weighted average fair value of $26.49. There were no option exercises during the three months ended October 31, 2016 and 2015, respectively.

Inventories, Net

Inventories, Net	3 Months Ended
	Oct. 31, 2016
Inventories, Net
Inventories, net	Note 5. Inventories, Net A summary of inventories is as follows: October 31, July 31, 2016 2016 Raw materials and parts $ $ Work-in-process Finished goods Reserve for excess and obsolete inventory Total $ $

Derivatives

Derivatives	3 Months Ended
	Oct. 31, 2016
Derivatives
Derivatives	Note 6. Derivatives We recognize all derivatives on the balance sheet at fair value. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. If the derivative is designated as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in the fair value of the hedged assets, liabilities or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of the change in fair value of a derivative that is designated as a hedge will be recognized immediately in earnings. As of October 31, 2016, all of our derivatives were designated as hedges. We do not hold any derivative financial instruments for speculative or trading purposes. Changes in the value of the Euro, British Pound, Singapore dollar, Canadian dollar and the Chinese Renminbi against the United States dollar affect our results of operations because certain cash bank accounts, accounts receivable, and liabilities of Cantel and its subsidiaries are denominated and ultimately settled in United States dollars or these foreign currencies, but must be converted into each entity’s functional currency. In order to hedge against the impact of fluctuations in the value of the Euro, British Pound and Singapore dollar relative to the United States dollar on the conversion of such net assets into the functional currencies, we enter into short-term contracts to purchase Euros, British Pounds, Canadian dollars and Singapore dollars forward, which contracts are one-month in duration. These short-term contracts are designated as fair value hedge instruments. There were eight foreign currency forward contracts with an aggregate value of $10,500,000 at October 31, 2016, which covered certain assets and liabilities that were denominated in currencies other than each entity’s functional currency. Such contracts expired on November 30, 2016. These foreign currency forward contracts are continually replaced with new one-month contracts as long as we have significant net assets that are denominated and ultimately settled in currencies other than each entity’s functional currency. For the three months ended October 31, 2016 and 2015, such forward contracts partially offset the impact on operations relating to certain assets and liabilities that were denominated in currencies other than each entity’s functional currency resulting in net currency conversion loss, net of tax, of $50,000 and $92,000, respectively, on items hedged. Gains and losses related to hedging contracts to buy Euros, British Pounds, Canadian dollars and Singapore dollars forward are immediately realized within general and administrative expenses due to the short-term nature of such contracts. We do not currently hedge against the impact of fluctuations in the value of the Chinese Renminbi relative to the United States dollar because this specific foreign currency exposure is currently not deemed significant. Additionally, we do not hedge transactions associated with the funding of international acquisitions due to the short-term nature of the foreign currency exposure.

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Oct. 31, 2016
Fair Value Measurements
Fair Value Measurements	Note 7. Fair Value Measurements Fair Value Hierarchy We apply the provisions of Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” (“ASC 820”), for our financial assets and liabilities that are re-measured and reported at fair value each reporting period and our nonfinancial assets and liabilities that are re-measured and reported at fair value on a non-recurring basis. We define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three level fair value hierarchy to prioritize the inputs used in valuations, as defined below: Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Unobservable inputs for the asset or liability. Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis Our financial assets that are re-measured at fair value on a recurring basis include money market funds that are classified as cash and cash equivalents in the Condensed Consolidated Balance Sheets. These money market funds are classified within Level 1 of the fair value hierarchy and are valued using quoted market prices for identical assets. In connection with our June 2014 acquisition of a UK endoscopy company (“Cantel Medical (UK)”), we acquired a contingent guaranteed obligation to reimburse an endoscope service company for endoscope repair costs it incurs when servicing its customers’ endoscopes that are damaged by one of Cantel Medical (UK)’s discontinued endoscope reprocessing machine models. Although the terms of the guarantee provide for no limit to the maximum potential future payments, we estimated the fair value of the liability on the date of the acquisition to be approximately $1,414,000. This fair value measurement was based on significant inputs not observed in the market and thus represents a Level 3 measurement. The fair value of the contingent guaranteed obligation was based on the estimated cost to repair endoscopes that may be damaged by one of Cantel Medical (UK)’s discontinued endoscope reprocessing machine models that remain in the marketplace, the historical frequency of claims and the likely timeframe that each machine will continue to be used. As such, the determination of the fair value of this contingent guaranteed obligation is subjective in nature and can be impacted by significant changes in third party service repair rates, the frequency of claims and a change in the expected life of these discontinued machines. At the date of the acquisition, the cash flow projection relating to this contingent guaranteed obligation was discounted using a rate of 10.1%, which was based on the weighted average cost of capital of the acquired business plus a credit risk premium for non-performance risk. This liability is adjusted periodically by the reimbursement of repair costs, as well as recording changes in the fair value through our Condensed Consolidated Statements of Income driven by the time value of money and changes in the assumptions that were initially used in the valuation. Given the subjective nature of the assumptions used in the determination of fair value, we may potentially have earnings volatility in our future results of operations. However, the largest factor for the decrease in the initial fair value from $1,414,000 at June 30, 2014 to $349,000 at October 31, 2016 was the reimbursement of repair costs. On November 5, 2013, we recorded a $1,720,000 liability for the estimated fair value of an assumed contingent obligation payable to the Israeli Government relating to the acquisition of a private Israeli company that developed the Jet Prep ® Endoscopic Flushing Device, a novel single-use irrigation and aspiration catheter to improve visualization during colonoscopy procedures (“Jet Prep”). This fair value measurement was based on significant inputs not observed in the market and thus represent Level 3 measurements. This liability is adjusted periodically by recording changes in the fair value through our Condensed Consolidated Statements of Income driven by the time value of money and changes in assumptions that were initially used in the valuation. The different likely scenarios of future sales projections used in our fair value determination at October 31, 2016 along with the requirement to repay at least the original seed funding with interest to the Israeli Government resulted in a fair value of $1,138,000 at October 31, 2016. The fair values of the Company’s financial instruments measured on a recurring basis were categorized as follows: October 31, 2016 Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents: Money markets $ $ — $ — $ Total assets $ — $ — $ Liabilities: Accrued expenses: Assumed contingent obligation $ — $ — $ $ Contingent guaranteed obligation — — Total accrued expenses — — Other long-term liabilities: Assumed contingent obligation — — Contingent guaranteed obligation — — Total other long-term liabilities: — — Total liabilities $ — $ — $ $ July 31, 2016 Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents: Money markets $ $ — $ — $ Total assets $ — $ — $ Liabilities: Accrued expenses: Assumed contingent obligation $ — $ — $ $ Contingent guaranteed obligation — — Total accrued expenses — — Other long-term liabilities: Assumed contingent obligation — — Contingent guaranteed obligation — — Total other long-term liabilities: — — Total liabilities $ — $ — $ $ A reconciliation of our liabilities that are measured and recorded at fair value on a recurring basis using significant unobservable inputs (Level 3) for the last five quarters is as follows: Jet Prep Cantel Medical (UK) Jet Prep Assumed Contingent Contingent Contingent Guaranteed Consideration Obligation Obligation Total Balance, July 31, 2015 $ $ $ $ Total net unrealized (gains) losses included in general and administrative expense in earnings — Settlements — — Foreign currency translation — — Balance, October 31, 2015 Total net unrealized losses included in general and administrative expense in earnings — Settlements — — Foreign currency translation — — Balance, January 31, 2016 Total net unrealized losses included in general and administrative expense in earnings — Settlements — — Foreign currency translation — — Balance, April 30, 2016 Total net unrealized (gains) losses included in general and administrative expense in earnings — Settlements — — Foreign currency translation — — Balance, July 31, 2016 — Total net unrealized losses included in general and administrative expense in earnings — — Settlements — — Foreign currency translation — — Balance, October 31, 2016 $ — $ $ $ Assets Measured and Recorded at Fair Value on a Nonrecurring Basis We re-measure the fair value of certain assets, such as intangible assets, goodwill and long-lived assets, including property, equipment and other assets, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, and goodwill and intangible assets with indefinite lives are reviewed for impairment at least annually, as further described in Note 8 to the Condensed Consolidated Financial Statements. As the inputs utilized for our periodic impairment assessments are not based on observable market data, but are based on management’s assumptions and estimates, our goodwill, intangibles and long-lived assets are classified within Level 3 of the fair value hierarchy on a non-recurring basis. Management concluded on July 31, 2016 that none of our long-lived assets, including goodwill and intangibles with indefinite-lives, were impaired and no other events or changes in circumstances have occurred during the three months ended October 31, 2016 that would indicate that the carrying amount of our long-lived assets may not be recoverable. Disclosure of Fair Value of Financial Instruments As of October 31, 2016 and July 31, 2016, the carrying amounts for cash and cash equivalents (excluding money markets), accounts receivable and accounts payable approximated fair value due to the short maturity of these instruments. We believe that as of October 31, 2016 and July 31, 2016, the fair value of our outstanding borrowings under our credit facility approximated the carrying value of those obligations since the borrowing rates were at prevailing market interest rates.

Intangible Assets and Goodwill

Intangible Assets and Goodwill	3 Months Ended
	Oct. 31, 2016
Intangible Assets and Goodwill
Intangible Assets and Goodwill	Note 8. Intangible Assets and Goodwill Our intangible assets with definite lives consist primarily of customer relationships, technology, brand names, non-compete agreements and patents. These intangible assets are being amortized on the straight-line method over the estimated useful lives of the assets ranging from 3-20 years and have a weighted average amortization period of 13 years. Amortization expense related to intangible assets was $3,909,000 and $3,094,000 for the three months ended October 31, 2016 and 2015, respectively. Our intangible assets that have indefinite useful lives, and therefore are not amortized, consist of trademarks and trade names. The Company’s intangible assets consist of the following: October 31, 2016 Accumulated Gross Amortization Net Intangible assets with finite lives: Customer relationships $ $ $ Technology Brand names Non-compete agreements Patents and other registrations Trademarks and tradenames — Total intangible assets $ $ $ July 31, 2016 Accumulated Gross Amortization Net Intangible assets with finite lives: Customer relationships $ $ $ Technology Brand names Non-compete agreements Patents and other registrations Trademarks and tradenames — Total intangible assets $ $ $ Estimated annual amortization expense of our intangible assets for the remainder for fiscal 2017 and the next five years is as follows: Nine month period ending July 31, 2017 $ 2018 2019 2020 2021 2022 Goodwill changed during fiscal 2016 and the three months ended October 31, 2016 as follows: Water Purification Healthcare Total Endoscopy and Filtration Disposables Dialysis Goodwill Balance, July 31, 2015 $ $ $ $ $ Acquisitions — — Foreign currency translation — — Balance, July 31, 2016 Acquisitions — — Foreign currency translation — — Balance, October 31, 2016 $ $ $ $ $ On July 31, 2016, we performed impairment studies of the Company’s goodwill and indefinite lived trademarks and trade names and concluded that such assets were not impaired. While the results of these annual reviews have historically not indicated impairment, impairment reviews are highly dependent on management’s projections of our future operating results and cash flows (which management believes to be reasonable), discount rates based on the Company’s weighted average cost of capital and appropriate benchmark peer companies. Assumptions used in determining future operating results and cash flows include current and expected market conditions and future sales forecasts. Subsequent changes in these assumptions and estimates could result in future impairment. Although we consistently use the same methods in developing the assumptions and estimates underlying the fair value calculations, such estimates are uncertain by nature and can vary from actual results. At July 31, 2016, the fair value of all of our reporting units exceeded book value by substantial amounts. However, we believe the most significant assumptions impacting the impairment assessment of Dialysis relate to the assumed rate in which annual sales will decline as well as the expected future operating efficiencies included in our projections of future operating results and cash flows of this segment. If future operating results and cash flows are substantially less than our projections, future impairment charges may be recorded. On October 31, 2016, management concluded that no events or changes in circumstances have occurred during the three months ended October 31, 2016 that would indicate that the carrying amount of our intangible assets and goodwill may not be recoverable.

Warranties

Warranties	3 Months Ended
	Oct. 31, 2016
Warranties
Warranties	Note 9. Warranties A summary of activity in the warranty reserves follows: Three Months Ended October 31, 2016 2015 Beginning balance $ $ Acquisitions Provisions Settlements Foreign currency translation Ending balance $ $ The warranty provisions for the three months ended October 31, 2016 and 2015 relate principally to the Company’s endoscope reprocessing and water purification equipment. Warranty reserves are included in accrued expenses in the Condensed Consolidated Balance Sheets.

Financing Arrangements

Financing Arrangements	3 Months Ended
	Oct. 31, 2016
Financing Arrangements
Financing Arrangements	Note 10. Financing Arrangements On March 4, 2014, we entered into a $250,000,000 Third Amended and Restated Credit Agreement (the “2014 Credit Agreement”). The 2014 Credit Agreement includes a five-year $250,000,000 senior secured revolving facility with sublimits of up to $100,000,000 for borrowings in foreign currencies, $30,000,000 for letters of credit and $10,000,000 for swing line loans (the “2014 Revolving Credit Facility”). Subject to the satisfaction of certain conditions precedent including the consent of the lenders, the Company may from time to time increase the 2014 Revolving Credit Facility by an aggregate amount not to exceed $100,000,000. The senior lenders include Bank of America N.A. (the lead bank and administrative agent), PNC Bank, National Association and Wells Fargo Bank, National Association. The 2014 Credit Agreement expires on March 4, 2019. Additionally, subject to certain restrictions and conditions (i) any of our domestic or foreign subsidiaries may become borrowers and (ii) borrowings may occur in multi-currencies. Furthermore, we incurred debt issuance costs of $1,318,000 relating to the 2014 Credit Agreement which was recorded in other assets along with the remaining unamortized debt issuance costs of $512,000 relating to our former revolving credit facility. The total of these two amounts is being amortized over the life of the 2014 Credit Agreement. At October 31, 2016, unamortized debt issuance costs recorded in other assets amounted to $854,000. Borrowings under the 2014 Credit Agreement bear interest at rates ranging from 0.25% to 1.25% above the lender’s base rate, or at rates ranging from 1.25% to 2.25% above the London Interbank Offered Rate (“LIBOR”), depending upon the Company’s “Consolidated Leverage Ratio,” which is defined as the consolidated ratio of total funded debt to earnings before interest, taxes, depreciation and amortization, and as further adjusted under the terms of the 2014 Credit Agreement (“Consolidated EBITDA”). At October 31, 2016, the lender’s base rate was 3.50% and the LIBOR rates ranged from 0.53% to 1.33%. The margins applicable to our outstanding borrowings were 0.25% above the lender’s base rate or 1.25% above LIBOR. All of our outstanding borrowings were under LIBOR contracts at October 31, 2016. The 2014 Credit Agreement also provides for fees on the unused portion of our facility at rates ranging from 0.20% to 0.40%, depending upon our Consolidated Leverage Ratio; such rate was 0.20% at October 31, 2016. The 2014 Credit Agreement contains affirmative and negative covenants reasonably customary for similar credit facilities and is secured by (i) substantially all assets of Cantel and its United States-based subsidiaries, (ii) a pledge by Cantel of all of the outstanding shares of its United States-based subsidiaries and 65% of the outstanding shares of certain of Cantel’s foreign-based subsidiaries and (iii) a guaranty by Cantel’s domestic subsidiaries. We are in compliance with all financial and other covenants under the 2014 Credit Agreement. On October 31, 2016, we had $161,000,000 of outstanding borrowings under the 2014 Credit Agreement, none of which is required to be repaid until March 2019.

Earnings Per Common Share

Earnings Per Common Share	3 Months Ended
	Oct. 31, 2016
Earnings Per Common Share
Earnings Per Common Share	Note 11. Earnings Per Common Share Basic EPS is computed based upon the weighted average number of common shares outstanding during the year. Diluted EPS is computed based upon the weighted average number of common shares outstanding during the year plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the year. We include participating securities (unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents) in the computation of EPS pursuant to the two-class method. Our participating securities consist solely of unvested restricted stock awards, which have contractual participation rights equivalent to those of stockholders of unrestricted common stock. The two-class method of computing earnings per share is an allocation method that calculates earnings per share for common stock and participating securities. The following table sets forth the computation of basic and diluted EPS available to shareholders of common stock (excluding participating securities): Three Months Ended October 31, 2016 2015 Numerator for basic and diluted earnings per share: Net income $ $ Less income allocated to participating securities Net income available to common shareholders $ $ Denominator for basic and diluted earnings per share, as adjusted for participating securities: Denominator for basic earnings per share - weighted average number of shares outstanding attributable to common stock Dilutive effect of stock options using the treasury stock method and the average market price for the year Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock Earnings per share attributable to common stock: Basic earnings per share $ $ Diluted earnings per share $ $ Stock options excluded from weighted average dilutive common shares outstanding because their inclusion would have been antidilutive — A reconciliation of weighted average number of shares and common stock equivalents attributable to common stock, as determined above, to the Company’s total weighted average number of shares and common stock equivalents, including participating securities, is set forth in the following table: Three Months Ended October 31, 2016 2015 Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock Participating securities Total weighted average number of shares and common stock equivalents attributable to both common stock and participating securities

Income Taxes

Income Taxes	3 Months Ended
	Oct. 31, 2016
Income Taxes
Income Taxes	Note 12. Income Taxes A reconciliation of the consolidated effective income tax rate for the three months ended October 31, 2015 to the three months ended October 31, 2016 is as follows: Consolidated Effective Income Tax Rate October 31, 2015 % Differential attributable to: Excess tax benefits % New tax legislation % Acquisition related items, net % International operations % Other % October 31, 2016 % The consolidated effective tax rate for the three months ended October 31, 2016 was favorably affected primarily by the recording of excess tax benefits relating to stock awards that vested in October 2016. As a result of the adoption of ASU 2016-09 on August 1, 2016, we no longer record excess tax benefits as an increase to additional paid-in capital, but record such excess tax benefits on a prospective basis as a reduction of income tax expense, which amounted to $2,241,000 for the three months ended October 31, 2016, as further described in Notes 2 and 4 of the Condensed Consolidated Financial Statements. Since most of our stock awards vest in October annually, we do not anticipate the recording of additional significant excess tax benefits for the remainder of fiscal 2017. We record liabilities for an unrecognized tax benefit when a tax benefit for an uncertain tax position is taken or expected to be taken on a tax return, but is not recognized in our Condensed Consolidated Financial Statements because it does not meet the more-likely-than-not recognition threshold that the uncertain tax position would be sustained upon examination by the applicable taxing authority. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon settlement with the tax authorities. Any adjustments upon resolution of income tax uncertainties are recognized in our results of operations. Our policy is to record potential interest and penalties related to income tax positions in interest expense and general and administrative expense, respectively, in our Condensed Consolidated Financial Statements. However, such amounts have historically been insignificant due to the minimal amount of our unrecognized tax benefits relating to uncertain tax positions. For the three months ended October 31, 2016 and fiscal 2016, we have not had any uncertain tax positions in which a liability would be recorded. The Company concluded an audit by the Internal Revenue Service (“IRS”) for fiscal years 2013 and 2012 and is currently undergoing an audit by the IRS for fiscal year 2015. With respect to state or foreign income tax examinations, we are generally no longer subject to examinations for fiscal years ended prior to July 31, 2008.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Oct. 31, 2016
Commitments and Contingencies
Commitments and Contingencies	Note 13. Commitments and Contingencies Long-Term Contractual Obligations As of October 31, 2016, aggregate annual required payments over the remaining fiscal year, the next four years and thereafter under our contractual obligations that have long-term components are as follows: Nine Months Year Ending July 31, Ending July 31, (Amounts in thousands) 2017 2018 2019 2020 2021 Thereafter Total Maturity of the credit facility $ — $ — $ $ — $ — $ — $ Expected interest payments under the credit facility (1) — — — Minimum commitments under noncancelable operating leases Compensation agreements Assumed contingent liability (2) Contingent guaranteed obligation (3) — — — Other long-term obligations — Total contractual obligations $ $ $ $ $ $ $ (1) The expected interest payments under our credit facility reflect an interest rate of 2.01%, which was our weighted average interest rate on outstanding borrowings at October 31, 2016. (2) These future potential payments of an assumed contingent liability relate to the Jet Prep Acquisition, as further described in Note 7 to the Condensed Consolidated Financial Statements, and are reflected in the October 31, 2016 Condensed Consolidated Balance Sheet at its net present value of $1,138,000 using a discount rate of 2.5%. (3) These future potential payments of a contingent guaranteed obligation relate to Cantel Medical (UK), as further described in Note 7 to the Condensed Consolidated Financial Statements, and are reflected in the October 31, 2016 Condensed Consolidated Balance Sheet at its net present value of $349,000 using a discount rate of 10.1%. Operating Leases Minimum commitments under operating leases include minimum rental commitments for our leased manufacturing facilities, warehouses, office space and equipment. Compensation Agreements We have previously entered into various severance contracts with executives of the Company, including our corporate executive officers and certain of our subsidiary Presidents, which define certain compensation arrangements relating to various employment termination scenarios, and multi-year employment agreements with certain executive officers of businesses we have acquired. Additionally, in March 2016 we entered into a succession plan agreement, due to the planned retirement of our former Chief Executive Officer who was succeeded on July 31, 2016, that requires a total of $4,500,000 in future payments, the majority of which will be paid in fiscal 2017. Other Long-Term Obligations In relation to the acquisition of our business in Italy on November 3, 2014, we assumed an $843,000 liability to the central bank of Italy as part of funding provided by an Italian government agency, of which $187,000 and $656,000 were recorded in accrued expenses and other long-term liabilities, respectively. Such amount was a portion of the financial support obtained from the Italian government’s Ministry of Education, Universities and Research to fund research and development activity relating to the business’s automated endoscope reprocessors. The liability is payable in semi-annual installments, bears interest at 0.25% per annum and has a maturity date of January 1, 2019. At October 31, 2016, $408,000 is outstanding, of which $162,000 is recorded in accrued expense and $246,000 is recorded in other long-term liabilities. Additionally, other long-term obligations include deferred compensation arrangements for certain former Medivators directors and officers and is recorded in other long-term liabilities.

Accumulated Other Comprehensive

Accumulated Other Comprehensive (Loss) Income	3 Months Ended
	Oct. 31, 2016
Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss)	Note 14. Accumulated Other Comprehensive (Loss) Income The components and changes in accumulated other comprehensive (loss) income were as follows: Three Months Ended October 31, 2016 2015 Beginning balance $ $ Other comprehensive loss for foreign currency translation Ending balance $ $

Operating Segments

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 $ $ Water Purification and Filtration Healthcare Disposables Dialysis Total $ $ Three Months Ended October 31, 2016 2015 Operating income: Endoscopy $ $ Water Purification and Filtration Healthcare Disposables Dialysis General corporate expenses Income from operations Interest expense, net Income before income taxes $ $

Legal Proceedings

Legal Proceedings	3 Months Ended
	Oct. 31, 2016
Legal Proceedings
Legal Proceedings	Note 16. Legal Proceedings In the normal course of business, we are subject to pending and threatened legal actions. It is our policy to accrue for amounts related to these legal matters if it is probable that a liability has been incurred and an amount of anticipated exposure can be reasonably estimated. We do not believe that any of these pending claims or legal actions will have a material effect on our business, financial condition, results of operations or cash flows.

Summary of Significant Accounti

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Oct. 31, 2016
Summary of Significant Accounting Policies
Recent Accounting Pronouncements	In August 2016, the Financial Account Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15, “Statement of Cash Flows” (“ASU 2016-15). This new guidance will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017 (our fiscal year 2019). ASU 2016-15 will require adoption on a retrospective basis unless it is impracticable to apply, in which case we would be required to apply the amendments prospectively as of the earliest date practicable. We are currently in the process of evaluating the impact of ASU 2016-15 on our financial position and result of operations. In March 2016, the FASB issued ASU 2016-09, “ Improvements to Employee Share-Based Payment Accounting ” (“ASU 2016-09”), which simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements. The new guidance also requires that all tax-related cash flows resulting from share-based payments to be reported as operating activities in the Condensed Consolidated Statements of Cash Flows. We early adopted ASU 2016-09 on August 1, 2016 on a prospective basis. As a result, we no longer record excess tax benefits as an increase to additional paid-in capital, but effective August 1, 2016, we record such excess tax benefits as a reduction of income tax expense, which amounted to $2,241,000 for the three months ended October 31, 2016, as further described in Notes 4 and 12 of the Condensed Consolidated Financial Statements. In addition, we elected to record excess tax benefits as an operating cash flow prospectively and not adjust the prior year period. As such, the current period excess tax benefits were reflected as an operating cash flow rather than a financing cash flow on our Condensed Consolidated Statement of Cash Flows for the three months ended October 31, 2016. Furthermore, we have elected to account for forfeitures as they occur, rather than estimate expected forfeitures over the course of a vesting period since forfeitures have been insignificant historically. In February 2016, FASB issued ASU 2016-02, “ Leases (Topic 842) ” (“ASU 2016-02”). The new guidance requires the recording of assets and liabilities arising from leases on the balance sheet accompanied by enhanced qualitative and quantitative disclosures in the notes to the financial statements. The new guidance is expected to provide transparency of information and comparability among organizations. ASU 2016-02 is effective for fiscal years beginning after December 31, 2018 (our fiscal year 2020), including interim periods within that reporting period. Early adoption is permitted as of the beginning of an interim or annual period. We are currently in the process of evaluating the impact of ASU 2016-02 on our financial position and results of operations. In September 2015, the FASB issued ASU 2015-16, “ Simplifying the Accounting for Measurement-Period Adjustments (Topic 805)” (“ASU 2015-16”). The new guidance requires an acquirer in a business combination to recognize a measurement-period adjustment during the period in which it determines the amount, and eliminates the requirement for an acquirer to account for measurement-period adjustments retrospectively. The acquirer must also disclose the amounts and reasons for adjustments to the provisional amounts. ASU 2015-16 is effective for fiscal years beginning after December 15, 2016 (our fiscal year 2018), including interim periods within that reporting period. Accordingly, we will adopt ASU 2015-06 in our first quarter of fiscal 2018. The adoption of ASU 2015-06 is not expected to have a significant impact upon on our financial position and results of operations. In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-11, “Inventory (Topic 330) Simplifying the Measurement of Inventory,” (“ASU 2015-11”). The new guidance more closely aligns the measurement of inventory in U.S. GAAP with the measurement of inventory in International Financial Reporting Standards by requiring companies using the first-in, first-out and average costs methods to measure inventory using the lower of cost and net realizable value, where net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016 (our fiscal year 2018), including interim periods within that reporting period. We are currently in the process of evaluating the impact of ASU 2015-11 on our financial position and results of operations. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” (“ASU 2014-09”), which will supersede the revenue recognition requirements in Accounting Standards Codification 605, “Revenue Recognition.” ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. It also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606),” which defers the effective date of ASU 2014-09 by one year to fiscal years beginning after December 15, 2017 (our fiscal year 2019), including interim periods within that reporting period. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606),” (ASU 2016-12), which provided narrow scope improvements and practical expedients relating to ASU 2014-09. We are currently in the process of evaluating the impact of ASU 2014-09 and ASU 2016-12 on our financial position and results of operations.

Acquisitions (Tables)

Acquisitions (Tables)	3 Months Ended
	Oct. 31, 2016
Accutron, Inc.
Acquisitions
Schedule of purchase price allocated to the assets acquired and assumed liabilities based on estimated fair values	Preliminary Net Assets Allocation Current assets $ Property, plant and equipment Amortizable intangible assets (15- year weighted average life): Customer relationships (8- year life) Technology (20- year life) Brand names (20- year life) Deferred income tax assets Current liabilities Net assets acquired $

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Oct. 31, 2016
Schedule of the income statement components of stock-based compensation expense recognized in the Condensed Consolidated Statements of Income	Three Months Ended October 31, 2016 2015 Cost of sales $ $ Operating expenses: Selling General and administrative Research and development Total operating expenses Stock-based compensation before income taxes Income tax benefits Excess tax benefits — Total stock-based compensation expense, net of tax $ $
Summary of nonvested stock award activity	Weighted Number of Average Shares Fair Value Nonvested stock awards at July 31, 2016 $ Granted Canceled Vested Nonvested stock awards at October 31, 2016 $
Schedule of weighted-average assumptions used to estimate fair value of stock options	Weighted-Average Black-Scholes Option Three Months Ended Valuation Assumptions October 31, 2015 Dividend yield % Expected volatility (1) % Risk-free interest rate (2) % Expected lives (in years) (3) (1) Volatility was based on historical closing prices of our common stock. (2) The U.S. Treasury rate based on the expected life at the date of grant. (3) Based on historical exercise behavior.
Performance Share Units
Schedule of assumptions used to estimate fair value of performance share units	Performance Share Unit Three Months Ended Valuation Assumption October 31, 2016 Volatility of common stock % Average volatility of peer companies % Average correlation coefficient of peer companies % Risk-free interest rate %

Inventories, Net (Tables)

Inventories, Net (Tables)	3 Months Ended
	Oct. 31, 2016
Inventories, Net
Summary of inventories	October 31, July 31, 2016 2016 Raw materials and parts $ $ Work-in-process Finished goods Reserve for excess and obsolete inventory Total $ $

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	Oct. 31, 2016
Fair Value Measurements
Schedule of fair values of financial instruments measured on a recurring basis	October 31, 2016 Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents: Money markets $ $ — $ — $ Total assets $ — $ — $ Liabilities: Accrued expenses: Assumed contingent obligation $ — $ — $ $ Contingent guaranteed obligation — — Total accrued expenses — — Other long-term liabilities: Assumed contingent obligation — — Contingent guaranteed obligation — — Total other long-term liabilities: — — Total liabilities $ — $ — $ $ July 31, 2016 Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents: Money markets $ $ — $ — $ Total assets $ — $ — $ Liabilities: Accrued expenses: Assumed contingent obligation $ — $ — $ $ Contingent guaranteed obligation — — Total accrued expenses — — Other long-term liabilities: Assumed contingent obligation — — Contingent guaranteed obligation — — Total other long-term liabilities: — — Total liabilities $ — $ — $ $
Reconciliation of liabilities measured and recorded at fair value on a recurring basis using significant unobservable inputs (Level 3)	Jet Prep Cantel Medical (UK) Jet Prep Assumed Contingent Contingent Contingent Guaranteed Consideration Obligation Obligation Total Balance, July 31, 2015 $ $ $ $ Total net unrealized (gains) losses included in general and administrative expense in earnings — Settlements — — Foreign currency translation — — Balance, October 31, 2015 Total net unrealized losses included in general and administrative expense in earnings — Settlements — — Foreign currency translation — — Balance, January 31, 2016 Total net unrealized losses included in general and administrative expense in earnings — Settlements — — Foreign currency translation — — Balance, April 30, 2016 Total net unrealized (gains) losses included in general and administrative expense in earnings — Settlements — — Foreign currency translation — — Balance, July 31, 2016 — Total net unrealized losses included in general and administrative expense in earnings — — Settlements — — Foreign currency translation — — Balance, October 31, 2016 $ — $ $ $

Intangibles and Goodwill (Table

Intangibles and Goodwill (Tables)	3 Months Ended
	Oct. 31, 2016
Intangible Assets and Goodwill
Schedule of intangible assets	October 31, 2016 Accumulated Gross Amortization Net Intangible assets with finite lives: Customer relationships $ $ $ Technology Brand names Non-compete agreements Patents and other registrations Trademarks and tradenames — Total intangible assets $ $ $ July 31, 2016 Accumulated Gross Amortization Net Intangible assets with finite lives: Customer relationships $ $ $ Technology Brand names Non-compete agreements Patents and other registrations Trademarks and tradenames — Total intangible assets $ $ $
Schedule of estimated amortization expense of intangible assets for the next five years	Nine month period ending July 31, 2017 $ 2018 2019 2020 2021 2022
Schedule of changes in goodwill	Water Purification Healthcare Total Endoscopy and Filtration Disposables Dialysis Goodwill Balance, July 31, 2015 $ $ $ $ $ Acquisitions — — Foreign currency translation — — Balance, July 31, 2016 Acquisitions — — Foreign currency translation — — Balance, October 31, 2016 $ $ $ $ $

Warranties (Tables)

Warranties (Tables)	3 Months Ended
	Oct. 31, 2016
Warranties
Summary of activity in warranty reserves	Three Months Ended October 31, 2016 2015 Beginning balance $ $ Acquisitions Provisions Settlements Foreign currency translation Ending balance $ $

Earnings Per Common Share (Tabl

Earnings Per Common Share (Tables)	3 Months Ended
	Oct. 31, 2016
Earnings Per Common Share
Schedule of computation of basic and diluted EPS available to stockholders of common stock (excluding participating securities)	Three Months Ended October 31, 2016 2015 Numerator for basic and diluted earnings per share: Net income $ $ Less income allocated to participating securities Net income available to common shareholders $ $ Denominator for basic and diluted earnings per share, as adjusted for participating securities: Denominator for basic earnings per share - weighted average number of shares outstanding attributable to common stock Dilutive effect of stock options using the treasury stock method and the average market price for the year Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock Earnings per share attributable to common stock: Basic earnings per share $ $ Diluted earnings per share $ $ Stock options excluded from weighted average dilutive common shares outstanding because their inclusion would have been antidilutive —
Schedule of reconciliation of weighted average number of shares and common stock equivalents attributable to common stock to the Company's total weighted average number of shares and common stock equivalents including participating securities	Three Months Ended October 31, 2016 2015 Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock Participating securities Total weighted average number of shares and common stock equivalents attributable to both common stock and participating securities

Income Taxes (Tables)

Income Taxes (Tables)	3 Months Ended
	Oct. 31, 2016
Income Taxes
Reconciliation of consolidated effective income tax rate between periods	Consolidated Effective Income Tax Rate October 31, 2015 % Differential attributable to: Excess tax benefits % New tax legislation % Acquisition related items, net % International operations % Other % October 31, 2016 %

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Oct. 31, 2016
Commitments and Contingencies
Schedule of aggregate annual required payments over the next five years and thereafter under contractual obligations that have long-term components	Nine Months Year Ending July 31, Ending July 31, (Amounts in thousands) 2017 2018 2019 2020 2021 Thereafter Total Maturity of the credit facility $ — $ — $ $ — $ — $ — $ Expected interest payments under the credit facility (1) — — — Minimum commitments under noncancelable operating leases Compensation agreements Assumed contingent liability (2) Contingent guaranteed obligation (3) — — — Other long-term obligations — Total contractual obligations $ $ $ $ $ $ $ (1) The expected interest payments under our credit facility reflect an interest rate of 2.01%, which was our weighted average interest rate on outstanding borrowings at October 31, 2016. (2) These future potential payments of an assumed contingent liability relate to the Jet Prep Acquisition, as further described in Note 7 to the Condensed Consolidated Financial Statements, and are reflected in the October 31, 2016 Condensed Consolidated Balance Sheet at its net present value of $1,138,000 using a discount rate of 2.5%. (3) These future potential payments of a contingent guaranteed obligation relate to Cantel Medical (UK), as further described in Note 7 to the Condensed Consolidated Financial Statements, and are reflected in the October 31, 2016 Condensed Consolidated Balance Sheet at its net present value of $349,000 using a discount rate of 10.1%.

Accumulated Other Comprehensi33

Accumulated Other Comprehensive (Loss) Income (Tables)	3 Months Ended
	Oct. 31, 2016
Accumulated Other Comprehensive Income (Loss)
Schedule of the components and changes in accumulated other comprehensive (loss) income	Three Months Ended October 31, 2016 2015 Beginning balance $ $ Other comprehensive loss for foreign currency translation Ending balance $ $

Operating Segments (Tables)

Operating Segments (Tables)	3 Months Ended
	Oct. 31, 2016
Information as to Operating Segments and Foreign and Domestic Operations
Information as to operating segments	Three Months Ended October 31, 2016 2015 Net sales: Endoscopy $ $ Water Purification and Filtration Healthcare Disposables Dialysis Total $ $ Three Months Ended October 31, 2016 2015 Operating income: Endoscopy $ $ Water Purification and Filtration Healthcare Disposables Dialysis General corporate expenses Income from operations Interest expense, net Income before income taxes $ $

Basis of Presentation (Details)

Basis of Presentation (Details)	3 Months Ended
	Oct. 31, 2016segment
Basis of Presentation
Number of operating segments	4

Basis of Presentation - Subsequ

Basis of Presentation - Subsequent Events (Details)	Nov. 23, 2016USD ($)
Subsequent Events | Endoscopy-Related Assets | Forecast
Subsequent Events
Net assets acquired	$ 10,000,000

Recent Accounting Pronounceme37

Recent Accounting Pronouncements (Details) - USD ($)	3 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
Recent Accounting Pronouncements
Reduction of income tax expense		$ 613,000
ASU 2016-09 Share-Based Payment Accounting | New Accounting Pronouncement, Early Adoption, Effect
Recent Accounting Pronouncements
Reduction of income tax expense	$ 2,241,000

Acquisitions - Vantage (Details

Acquisitions - Vantage (Details) - Vantage	Sep. 26, 2016USD ($)
Acquisitions
Pre-acquisition annual revenues	$ 11,000,000
Total consideration for the transaction, excluding acquisition-related costs	$ 4,072,000

Acquisitions - Accutron (Detail

Acquisitions - Accutron (Details)	Aug. 01, 2016USD ($)project	Oct. 31, 2016USD ($)	Jul. 31, 2016USD ($)	Jul. 31, 2015USD ($)
Net Assets
Goodwill		$ 295,791,000	$ 280,318,000	$ 241,951,000
Accutron, Inc.
Acquisitions
Pre-acquisition annual revenues	$ 21,500,000
Total consideration for the transaction, excluding acquisition-related costs and estimated net asset value adjustment payable	52,500,000
Estimated net asset value adjustment payable	617,000
Net Assets
Current assets	6,020,000
Property, plant and equipment	1,676,000
Deferred income tax assets	112,000
Current liabilities	(1,394,000)
Net assets acquired	$ 36,614,000
Amortizable intangible assets, useful life	15 years
Number of in-process research and development projects acquired | project	0
Goodwill	$ 16,503,000
Goodwill deductible for income tax purposes	16,503,000
Customer relationships | Accutron, Inc.
Net Assets
Amortizable intangible assets	$ 12,500,000
Amortizable intangible assets, useful life	8 years
Technology | Accutron, Inc.
Net Assets
Amortizable intangible assets	$ 15,000,000
Amortizable intangible assets, useful life	20 years
Brand names | Accutron, Inc.
Net Assets
Amortizable intangible assets	$ 2,700,000
Amortizable intangible assets, useful life	20 years

Acquisitions - NAMSA (Details)

Acquisitions - NAMSA (Details) - North American Science Associates Inc	Mar. 01, 2016USD ($)
Acquisitions
Pre-acquisition annual revenues	$ 5,700,000
Total consideration for the transaction, excluding acquisition-related costs	$ 13,424,000

Acquisitions - MI (Details)

Acquisitions - MI (Details) - Medical Innovations Group Holdings Limited	Sep. 14, 2015USD ($)employee
Acquisitions
Pre-acquisition annual revenues	$ 28,500,000
Number of individuals in employee base | employee	100
Total consideration for the transaction, excluding acquisition-related costs	$ 79,597,000
Estimated net asset value adjustment	$ 212,000

Stock-Based Compensation - Expe

Stock-Based Compensation - Expense (Details) - USD ($)	3 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income
Stock-based compensation before income taxes	$ 2,922,000	$ 1,720,000
Income tax benefits, before excess tax benefit adjustment	(1,039,000)
Income tax benefits/Excess tax benefits		(613,000)
Total stock-based compensation expense, net of tax	(358,000)	1,107,000
Cost of sales
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income
Stock-based compensation before income taxes	110,000	79,000
Operating expenses: Selling
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income
Stock-based compensation before income taxes	629,000	190,000
Operating expenses: General and administrative
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income
Stock-based compensation before income taxes	2,153,000	1,425,000
Operating expenses: Research and development
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income
Stock-based compensation before income taxes	30,000	26,000
Total operating expenses
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income
Stock-based compensation before income taxes	2,812,000	$ 1,641,000
New Accounting Pronouncement, Early Adoption, Effect | ASU 2016-09 Share-Based Payment Accounting
Income statement components of stock-based compensation expense recognized in Consolidated Statements of Income
Income tax benefits/Excess tax benefits	$ (2,241,000)

Stock-Based Compensation - Taxe

Stock-Based Compensation - Taxes (Details) - USD ($)	3 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
Stock-based awards, additional disclosure
Deduction in income tax due to exercise of options and vesting of restricted stock (in dollars)	$ 5,376,000	$ 3,041,000
Income tax deductions previously recorded in income tax expense over the equity awards' vesting period	3,135,000	1,552,000
Increase in additional paid-in capital due to excess tax benefit on stock-based compensation expense (in dollars)		1,489,000
Reduction of income tax expense		$ 613,000
New Accounting Pronouncement, Early Adoption, Effect | ASU 2016-09 Share-Based Payment Accounting
Stock-based awards, additional disclosure
Reduction of income tax expense	$ 2,241,000

Stock-Based Compensation - Perf

Stock-Based Compensation - Performance-based Awards (Details)	1 Months Ended	3 Months Ended
	Oct. 31, 2016USD ($)shares	Oct. 31, 2016USD ($)
Stock-based awards, additional disclosure
Total unrecognized stock-based compensation expense, before income taxes, related to total nonvested stock options and stock awards (in dollars) | $	$ 14,242,000	$ 14,242,000
Remaining weighted average period over which unrecognized stock-based compensation expense is expected to be recognized		25 months
Performance Share Units
Stock-based awards, additional disclosure
Maximum attainment of initial grant (as a percent)	200.00%	200.00%
Performance Share Units, Based on budgeted revenue and gross profit percentage
Stock-based awards, additional disclosure
Granted (in shares)	12,810
Performance Shares Units, Based on market conditions
Stock-based awards, additional disclosure
Granted (in shares)	9,800
Vesting period	3 years

Stock-Based Compensation - Pe45

Stock-Based Compensation - Performance Share Unit Valulation Assumptions (Details) - Performance Share Units	3 Months Ended
	Oct. 31, 2016
Weighted-Average Black-Scholes Option Valuation Assumptions
Volatility of common stock	27.75%
Average volatility of peer companies	32.98%
Average correlation coefficient of peer companies	35.35%
Risk-free interest rate (as a percent)	0.96%

Stock-Based Compensation - Nonv

Stock-Based Compensation - Nonvested Stock Award Activity (Details) - Restricted shares	3 Months Ended
	Oct. 31, 2016$ / sharesshares
Number of Shares
Nonvested stock awards at the beginning of the period (in shares) | shares	331,367
Granted (in shares) | shares	91,841
Cancelled (in shares) | shares	(2,238)
Vested (in shares) | shares	(188,163)
Nonvested stock awards at the end of the period (in shares) | shares	232,807
Weighted Average Fair Value
Nonvested stock awards at the beginning of the period (in dollars per share) | $ / shares	$ 46.09
Granted (in dollars per share) | $ / shares	78.05
Cancelled (in dollars per share) | $ / shares	55.09
Vested (in dollars per share) | $ / shares	41.61
Nonvested stock awards at the end of the period (in dollars per share) | $ / shares	$ 62.23

Stock-Based Compensation - Opti

Stock-Based Compensation - Option Valulation Assumptions (Details) - $ / shares	3 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
Stock-Based Compensation
Granted (in shares)	0
Stock options, additional disclosure
Exercises of options (in shares)	0	0
Stock options
Weighted-Average Black-Scholes Option Valuation Assumptions
Dividend yield (as a percent)		0.22%
Expected volatility (as a percent)		55.90%
Risk-free interest rate (as a percent)		1.41%
Expected lives		5 years
Stock options, additional disclosure
Weighted average fair value of all options granted (in dollars per share)		$ 26.49

Inventories, Net (Details)

Inventories, Net (Details) - USD ($)	Oct. 31, 2016	Jul. 31, 2016
Inventories, Net
Raw materials and parts	$ 44,346,000	$ 45,867,000
Work-in-process	13,862,000	13,178,000
Finished goods	44,534,000	37,831,000
Reserve for excess and obsolete inventory	(5,923,000)	(5,390,000)
Total inventories	$ 96,819,000	$ 91,486,000

Derivatives (Details)

Derivatives (Details) - Foreign currency forward contracts - Designated as hedging instrument - Fair value hedge instruments	3 Months Ended
	Oct. 31, 2016USD ($)contract	Oct. 31, 2015USD ($)
Derivatives
Term of contracts	1 month
Number of contracts | contract	8
Aggregate value of contracts	$ 10,500,000
Term of renewed contracts	1 month
Net currency conversion losses, net of tax	$ 50,000	$ 92,000

Fair Value Measurements - Recur

Fair Value Measurements - Recurring Basis (Details) - USD ($)	Jun. 30, 2014	Oct. 31, 2016	Nov. 05, 2013
Contingent guaranteed obligation | Cantel Medical (UK) - PuriCore International Limited
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis
Contingent guaranteed obligation		$ 349,000
Discount rate of cash flow projections (as a percent)		10.10%
Level 3 | Recurring basis | Jet Prep Ltd.
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis
Assumed contingent obligation		$ 1,138,000	$ 1,720,000
Level 3 | Recurring basis | Cantel Medical (UK) - PuriCore International Limited
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis
Contingent guaranteed obligation	$ 1,414,000	$ 349,000
Discount rate of cash flow projections (as a percent)	10.10%

Fair Value Measurements - Hiera

Fair Value Measurements - Hierarchy Levels (Details) - Recurring basis - USD ($)	Oct. 31, 2016	Jul. 31, 2016
Assets:
Total assets	$ 740,000	$ 740,000
Liabilities:
Total liabilities	1,487,000	1,579,000
Accrued expenses
Liabilities:
Assumed contingent obligation	12,000	12,000
Contingent guaranteed obligation	309,000	366,000
Total accrued expenses	321,000	378,000
Other long-term liabilities
Liabilities:
Assumed contingent obligation	1,126,000	1,126,000
Contingent guaranteed obligation	40,000	75,000
Total other long-term liabilities	1,166,000	1,201,000
Money markets | Cash and cash equivalents
Assets:
Money markets	740,000	740,000
Level 1
Assets:
Total assets	740,000	740,000
Level 1 | Money markets | Cash and cash equivalents
Assets:
Money markets	740,000	740,000
Level 3
Liabilities:
Total liabilities	1,487,000	1,579,000
Level 3 | Accrued expenses
Liabilities:
Assumed contingent obligation	12,000	12,000
Contingent guaranteed obligation	309,000	366,000
Total accrued expenses	321,000	378,000
Level 3 | Other long-term liabilities
Liabilities:
Assumed contingent obligation	1,126,000	1,126,000
Contingent guaranteed obligation	40,000	75,000
Total other long-term liabilities	$ 1,166,000	$ 1,201,000

Fair Value Measurements - Level

Fair Value Measurements - Level 3 Liabilities (Details) - USD ($)	3 Months Ended					12 Months Ended
	Oct. 31, 2016	Jul. 31, 2016	Apr. 30, 2016	Jan. 31, 2016	Oct. 31, 2015	Jul. 31, 2016
Reconciliation of liability measured and recorded at fair value on a recurring basis using Level 3
Beginning balance	$ 1,579,000	$ 1,855,000	$ 1,918,000	$ 2,050,000	$ 2,777,000	$ 2,777,000
Total net unrealized (gains) losses included in general and administrative expense in earnings	9,000	(136,000)	20,000	21,000	(592,000)
Settlements	(70,000)	(196,000)	(95,000)	(100,000)	(120,000)
Foreign currency translation	(31,000)	56,000	12,000	(53,000)	(15,000)
Ending balance	1,487,000	1,579,000	1,855,000	1,918,000	2,050,000	1,579,000
Impairment of long-lived assets, including goodwill and intangibles with indefinite lives						0
Contingent Consideration | Jet Prep Ltd.
Reconciliation of liability measured and recorded at fair value on a recurring basis using Level 3
Beginning balance		148,000	143,000	139,000	751,000	751,000
Total net unrealized (gains) losses included in general and administrative expense in earnings		(148,000)	5,000	4,000	(612,000)
Ending balance			148,000	143,000	139,000
Assumed contingent liability | Jet Prep Ltd.
Reconciliation of liability measured and recorded at fair value on a recurring basis using Level 3
Beginning balance	1,138,000	1,138,000	1,138,000	1,138,000	1,138,000	1,138,000
Ending balance	1,138,000	1,138,000	1,138,000	1,138,000	1,138,000	1,138,000
Contingent guaranteed obligation | Cantel Medical (UK) - PuriCore International Limited
Reconciliation of liability measured and recorded at fair value on a recurring basis using Level 3
Beginning balance	441,000	569,000	637,000	773,000	888,000	888,000
Total net unrealized (gains) losses included in general and administrative expense in earnings	9,000	12,000	15,000	17,000	20,000
Settlements	(70,000)	(196,000)	(95,000)	(100,000)	(120,000)
Foreign currency translation	(31,000)	56,000	12,000	(53,000)	(15,000)
Ending balance	$ 349,000	$ 441,000	$ 569,000	$ 637,000	$ 773,000	$ 441,000

Intangibles and Goodwill - Inta

Intangibles and Goodwill - Intangible Assets Summary (Details) - USD ($)	3 Months Ended
	Oct. 31, 2016	Oct. 31, 2015	Jul. 31, 2016
Intangible assets with finite lives:
Amortization expense	$ 3,909,000	$ 3,094,000
Gross	173,965,000		$ 145,210,000
Accumulated Amortization	(44,514,000)		(41,002,000)
Net	129,451,000		104,208,000
Intangible assets with indefinite lives:
Trademarks and tradenames	7,490,000		7,511,000
Total intangible assets
Gross	181,455,000		152,721,000
Accumulated Amortization	(44,514,000)		(41,002,000)
Net	$ 136,941,000		111,719,000
Minimum
Intangible assets with finite lives:
Estimated useful lives	3 years
Maximum
Intangible assets with finite lives:
Estimated useful lives	20 years
Weighted average
Intangible assets with finite lives:
Estimated useful lives	13 years
Customer relationships
Intangible assets with finite lives:
Gross	$ 112,556,000		100,649,000
Accumulated Amortization	(26,874,000)		(24,689,000)
Net	85,682,000		75,960,000
Total intangible assets
Accumulated Amortization	(26,874,000)		(24,689,000)
Technology
Intangible assets with finite lives:
Gross	46,923,000		32,767,000
Accumulated Amortization	(12,859,000)		(11,813,000)
Net	34,064,000		20,954,000
Total intangible assets
Accumulated Amortization	(12,859,000)		(11,813,000)
Brand names
Intangible assets with finite lives:
Gross	8,760,000		6,194,000
Accumulated Amortization	(2,582,000)		(2,394,000)
Net	6,178,000		3,800,000
Total intangible assets
Accumulated Amortization	(2,582,000)		(2,394,000)
Non-compete agreements
Intangible assets with finite lives:
Gross	3,092,000		3,092,000
Accumulated Amortization	(1,252,000)		(1,193,000)
Net	1,840,000		1,899,000
Total intangible assets
Accumulated Amortization	(1,252,000)		(1,193,000)
Patents and other registrations
Intangible assets with finite lives:
Gross	2,634,000		2,508,000
Accumulated Amortization	(947,000)		(913,000)
Net	1,687,000		1,595,000
Total intangible assets
Accumulated Amortization	$ (947,000)		$ (913,000)

Intangibles and Goodwill - Esti

Intangibles and Goodwill - Estimated Annual Amortization Expense (Details)	Oct. 31, 2016USD ($)
Estimated annual amortization expense of intangible assets for next five years
Nine month period ending July 31, 2016	$ 11,538,000
2,018	15,129,000
2,019	14,805,000
2,020	13,056,000
2,021	12,736,000
2,022	$ 12,000,000

Intangibles and Goodwill - Good

Intangibles and Goodwill - Goodwill Rollforward (Details) - USD ($)	3 Months Ended	12 Months Ended
	Oct. 31, 2016	Jul. 31, 2016
Changes in Goodwill
Balance at the beginning of the period	$ 280,318,000	$ 241,951,000
Acquisitions	18,531,000	44,398,000
Foreign currency translation	(3,058,000)	(6,031,000)
Balance at the end of the period	295,791,000	280,318,000
Endoscopy
Changes in Goodwill
Balance at the beginning of the period	121,015,000	87,007,000
Acquisitions	2,028,000	40,047,000
Foreign currency translation	(2,938,000)	(6,039,000)
Balance at the end of the period	120,105,000	121,015,000
Water Purification and Filtration
Changes in Goodwill
Balance at the beginning of the period	58,880,000	58,872,000
Foreign currency translation	(120,000)	8,000
Balance at the end of the period	58,760,000	58,880,000
Healthcare Disposables
Changes in Goodwill
Balance at the beginning of the period	92,290,000	87,939,000
Acquisitions	16,503,000	4,351,000
Balance at the end of the period	108,793,000	92,290,000
Dialysis
Changes in Goodwill
Balance at the beginning of the period	8,133,000	8,133,000
Balance at the end of the period	$ 8,133,000	$ 8,133,000

Warranties (Details)

Warranties (Details) - USD ($)	3 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
Summary of activity in warranty reserves
Beginning balance	$ 2,575,000	$ 1,740,000
Acquisitions	121,000	28,000
Provisions	1,916,000	905,000
Settlements	(1,746,000)	(823,000)
Foreign currency translation	(35,000)	(3,000)
Ending balance	$ 2,831,000	$ 1,847,000

Financing Arrangements (Details

Financing Arrangements (Details) - USD ($)	Mar. 04, 2014	Oct. 31, 2016
Credit Agreement
Financing Arrangements
Maximum borrowing capacity	$ 250,000,000
Debt issuance costs	1,318,000
Fees on unused portion of credit facilities (as a percent)		0.20%
Shares of foreign subsidiaries pledged as security (as a percent)		65.00%
Outstanding borrowings		$ 161,000,000
Credit Agreement | Minimum
Financing Arrangements
Fees on unused portion of credit facilities (as a percent)		0.20%
Credit Agreement | Maximum
Financing Arrangements
Fees on unused portion of credit facilities (as a percent)		0.40%
Credit Agreement | Lender's base rate
Financing Arrangements
Margin on reference rate (as a percent)		0.25%
Reference rate (as a percent)		3.50%
Credit Agreement | Lender's base rate | Minimum
Financing Arrangements
Margin on reference rate (as a percent)		0.25%
Credit Agreement | Lender's base rate | Maximum
Financing Arrangements
Margin on reference rate (as a percent)		1.25%
Credit Agreement | LIBOR
Financing Arrangements
Margin on reference rate (as a percent)		1.25%
Credit Agreement | LIBOR | Minimum
Financing Arrangements
Margin on reference rate (as a percent)		1.25%
Reference rate (as a percent)		0.53%
Credit Agreement | LIBOR | Maximum
Financing Arrangements
Margin on reference rate (as a percent)		2.25%
Reference rate (as a percent)		1.33%
Revolving Credit Facility
Financing Arrangements
Maximum borrowing capacity	$ 250,000,000
Term of line of credit facility	5 years
Maximum additional borrowing capacity available at the entity's option	$ 100,000,000
Unamortized debt issuance costs	512,000
Borrowings of foreign currency
Financing Arrangements
Maximum borrowing capacity	100,000,000
Letters of credit
Financing Arrangements
Maximum borrowing capacity	30,000,000
Swing line loans
Financing Arrangements
Maximum borrowing capacity	$ 10,000,000
Other assets
Financing Arrangements
Unamortized debt issuance costs		$ 854,000

Earnings Per Common Share - Com

Earnings Per Common Share - Computation (Details) - USD ($)	3 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
Numerator for basic and diluted earnings per share:
Net income	$ 18,800,000	$ 14,254,000
Less income allocated to participating securities, basic	(134,000)	(118,000)
Net income available to common shareholders, basic	18,666,000	14,136,000
Less income allocated to participating securities, diluted	(134,000)	(118,000)
Net income available to common shareholders, diluted	$ 18,666,000	$ 14,136,000
Denominator for basic and diluted earnings per share, as adjusted for participating securities:
Denominator for basic earnings per share - weighted average number of shares outstanding attributable to common stock	41,403,050	41,283,245
Dilutive effect of stock options using the treasury stock method and the average market price for the period (in shares)	72,015	38,875
Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock	41,475,065	41,322,120
Earnings per share attributable to common stock:
Basic earnings per share (in dollars per share)	$ 0.45	$ 0.34
Diluted earnings per share (in dollars per share)	$ 0.45	$ 0.34
Stock options excluded from weighted average dilutive common shares outstanding because their inclusion would have been antidilutive (in shares)		15,000

Earnings Per Common Share - Wei

Earnings Per Common Share - Weighted Average Shares (Details) - shares	3 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
Reconciliation of weighted average number of shares and common stock equivalents attributable to common stock, to the entity's total weighted average number of shares and common stock equivalents, including participating securities
Denominator for diluted earnings per share - weighted average number of shares and common stock equivalents attributable to common stock	41,475,065	41,322,120
Participating securities (in shares)	309,831	344,663
Total weighted average number of shares and common stock equivalents attributable to both common stock and participating securities	41,784,896	41,666,783

Income Taxes - Reconciliation (

Income Taxes - Reconciliation (Details) - USD ($)	3 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
Income Taxes - Income tax reconciliation
Consolidated effective income tax rate (as a percent)	27.60%	38.10%
Excess tax benefits	(8.60%)
New tax legislation	(0.70%)
Acquisition related items, net	(0.40%)
International operations	0.30%
Other	(1.10%)
Reduction of income tax expense		$ 613,000
New Accounting Pronouncement, Early Adoption, Effect | ASU 2016-09 Share-Based Payment Accounting
Income Taxes - Income tax reconciliation
Reduction of income tax expense	$ 2,241,000

Commitments and Contingencies -

Commitments and Contingencies - Annual Required Payments (Details)	3 Months Ended
	Oct. 31, 2016USD ($)
Minimum commitments under noncancelable operating leases
Remaining fiscal year	$ 4,753,000
2,018	5,460,000
2,019	4,379,000
2,020	3,064,000
2,021	2,181,000
Thereafter	3,454,000
Total	23,291,000
Total contractual obligations
Remaining fiscal year	13,566,000
2,018	12,008,000
2,019	168,354,000
2,020	3,820,000
2,021	2,841,000
Thereafter	4,476,000
Total	205,065,000
Compensation agreements
Other commitments
Remaining fiscal year	6,040,000
2,018	2,882,000
2,019	691,000
2,020	498,000
2,021	377,000
Thereafter	583,000
Total	11,071,000
Assumed contingent liability
Other commitments
Remaining fiscal year	19,000
2,018	93,000
2,019	188,000
2,020	246,000
2,021	280,000
Thereafter	439,000
Total	$ 1,265,000
Assumed contingent liability | Jet Prep Ltd.
Total contractual obligations
Discount rate of potential payments (as a percent)	2.50%
Assumed contingent obligation	$ 1,138,000
Contingent guaranteed obligation
Other commitments
Remaining fiscal year	122,000
2,018	123,000
2,019	112,000
Total	$ 357,000
Contingent guaranteed obligation | Cantel Medical (UK) - PuriCore International Limited
Total contractual obligations
Discount rate of potential payments (as a percent)	10.10%
Contingent guaranteed obligation	$ 349,000
Other long-term obligations
Other commitments
Remaining fiscal year	205,000
2,018	214,000
2,019	96,000
2,020	12,000
2,021	3,000
Total	530,000
Credit Agreement
Maturity of the credit facility
2,019	161,000,000
Total	161,000,000
Expected interest payments under the credit facility
Remaining fiscal year	2,427,000
2,018	3,236,000
2,019	1,888,000
Total	$ 7,551,000
Total contractual obligations
Weighted average interest rate on outstanding borrowings (as a percent)	2.01%

Commitments and Contingencies62

Commitments and Contingencies - Compensation Agreements (Details) - Compensation agreements - USD ($)	Oct. 31, 2016	Jul. 31, 2016
Total contractual obligations
Other commitment	$ 11,071,000
Former CEO retirement obligation
Total contractual obligations
Other commitment		$ 4,500,000

Commitments and Contingencies63

Commitments and Contingencies - Other Long-Term Obligations (Details) - International Medical Service S.r.l. - Central bank of Italy - USD ($)	Oct. 31, 2016	Nov. 03, 2014
Commitments and Contingencies
Liabilities assumed	$ 408,000	$ 843,000
Interest rate per annum (as a percent)		0.25%
Accrued expenses
Commitments and Contingencies
Liabilities assumed	162,000	$ 187,000
Other long-term liabilities
Commitments and Contingencies
Liabilities assumed	$ 246,000	$ 656,000

Accumulated Other Comprehensi64

Accumulated Other Comprehensive (Loss) Income (Details) - USD ($)	3 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
Components and changes in accumulated other comprehensive (loss) income
Balance	$ 454,370,000
Balance	460,424,000
Accumulated Other Comprehensive Income
Components and changes in accumulated other comprehensive (loss) income
Balance	(11,795,000)	$ 1,224,000
Balance	(18,316,000)	397,000
Foreign Currency Translation Adjustments
Components and changes in accumulated other comprehensive (loss) income
Other comprehensive loss for foreign currency translation	$ (6,521,000)	$ (827,000)

Operating Segments - Concentrat

Operating Segments - Concentration Risk (Details) - Segment sales - Customer concentration	3 Months Ended
	Oct. 31, 2016customer
Water Purification and Filtration | Two customers
Concentration risk
Number of customers accounting for a percentage of segment net sales	2
Concentration risk within segment (as a percent)	46.30%
Healthcare Disposables | Four customers
Concentration risk
Number of customers accounting for a percentage of segment net sales	4
Concentration risk within segment (as a percent)	51.60%
Dialysis | Two customers
Concentration risk
Number of customers accounting for a percentage of segment net sales	2
Concentration risk within segment (as a percent)	45.50%

Operating Segments - Results (D

Operating Segments - Results (Details) - USD ($)	3 Months Ended
	Oct. 31, 2016	Oct. 31, 2015
Information as to operating segments
Net sales	$ 187,725,000	$ 153,779,000
Operating income	27,063,000	23,776,000
Interest expense, net	(1,093,000)	(745,000)
Income before income taxes	25,970,000	23,031,000
Operating Segment
Information as to operating segments
Operating income	35,690,000	29,319,000
General corporate
Information as to operating segments
Operating income	(8,627,000)	(5,543,000)
Endoscopy
Information as to operating segments
Net sales	93,828,000	71,642,000
Endoscopy | Operating Segment
Information as to operating segments
Operating income	17,561,000	12,459,000
Water Purification and Filtration
Information as to operating segments
Net sales	49,873,000	44,712,000
Water Purification and Filtration | Operating Segment
Information as to operating segments
Operating income	8,920,000	7,813,000
Healthcare Disposables
Information as to operating segments
Net sales	36,799,000	27,352,000
Healthcare Disposables | Operating Segment
Information as to operating segments
Operating income	7,396,000	6,360,000
Dialysis
Information as to operating segments
Net sales	7,225,000	10,073,000
Dialysis | Operating Segment
Information as to operating segments
Operating income	$ 1,813,000	$ 2,687,000