Cintas Partners With ScanMD - Analyst Blog

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In order to convert medical charts to electronic formats Cintas Corporation ( CTAS ) has entered into a partnership with ScanMD recently. Cintas will now be able to switch to electronic medical records ( EMR ) instead of maintaining elaborate paper charts and files.

The coalition will guarantee Cintas the security of medical records by converting the paper charts into electronic formats, backed-up on secure servers. The searchable data fields will make the task of searching the patient's records easier. The PDF files will simplify the navigation process, thus saving time. Alongside, the solution will also save the cost and space required for maintaining the paper charts and files.

The alliance with ScanMD has helped Cintas in curtailing the cost and labor of transforming the healthcare information and records to EMR program. Moreover, Cintas is also able to stay ahead of the future legislative regulations of utilizing EMR programs.

ScanMD specializes in converting paper medical charts to electronic formats. It integrates paper charts to EMR and safeguards them, fulfilling the norms of Health Insurance Portability and Accountability Act (HIPAA). The system also diminishes the risk of HIPAA issues by reducing the number of lost or inaccessible files.

In the recently reported quarterly results, Cintas' earnings increased 50% to 57 cents per share from 38 cents in the year-ago-quarter. Total revenue increased 9% year over year to $1.02 billion. The Zacks Consensus Estimate for the third quarter of the year 2012 is 52 cents.

Cintas continues to deliver margin expansion through better sales productivity and cost efficiencies, offsetting the rising headwinds from higher energy and other input costs. During the second quarter of fiscal 2012, gross margin increased 50 basis points to 42.2% and in operating margin there was an impressive 200 basis point expansion to 13%; this happens to be the fourth consecutive quarter of strong operating margin expansion after several years of decline.

This performance was commendable considering the ongoing headwinds from higher energy and garment material prices. There is scope for further gross margin expansion as the company has unutilized capacity in facilities that it can leverage. Furthermore, due to a weak labor outlook, much of the growth over the last few quarters has been driven by new business sales rather than existing customers adding more employees, which is more profitable. Any increase in hiring at existing customers will boost margin expansion.

Currently, the shares of Cintas maintain a Zacks #2 (short-term "Buy" recommendation) Rank. It competes with the likes of G&K Services Inc. ( GKSR ) and privately held Alsco Inc. and ARAMARK Corporation .

Based in Cincinnati, Ohio, Cintas Corporation ( CTAS ) provides specialized services to businesses of all types throughout North America. The company designs, manufactures, implements corporate identity uniform programs, and provides entrance mats, restroom supplies, promotional products and first aid and safety products for approximately 800,000 businesses. Cintas operates under two operating segments, Rental Uniforms and Ancillary Products and Other Services.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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