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Henry Schein Reports Record First Quarter Results

Posted on May 8, 2012

MELVILLE, N.Y., May 8, 2012 /PRNewswire/ -- Henry Schein, Inc. (NASDAQ: HSIC), the world's largest provider of healthcare products and services to office-based dental, medical and animal health practitioners, today reported record financial results for the quarter ended March 31, 2012.

Net sales for the first quarter of 2012 were $2.1 billion, an increase of 7.8% compared with the first quarter of 2011.  This consists of 8.4% growth in local currencies and a 0.6% decline related to foreign currency exchange.  In local currencies, internally generated sales increased 7.8% and acquisition growth was 0.6% (see Exhibit A for details of sales growth).

Net income attributable to Henry Schein, Inc. for the first quarter of 2012 was $80.8 million or $0.89 per diluted share.  Excluding restructuring costs of $11.8 million pre-tax or $0.09 per diluted share, net income attributable to Henry Schein, Inc. for the first quarter of 2012 was $89.1 million or $0.98 per diluted share, an increase of 16.4% and 19.5%, respectively, compared with the first quarter of 2011.

"This is the first quarter we are reporting net sales results for our global customer-centric business units, and we are pleased with growth in local currencies of mid-single-digits or better for each unit," commented Stanley M. Bergman, Chairman and Chief Executive Officer of Henry Schein.  "Early in 2012 we implemented and largely completed a restructuring with the goal of optimizing our cost structure and improving profitability.  Based on the strength of our first quarter financial results and our continued confidence in our outlook for the rest of the year, we are increasing our EPS guidance range for 2012.  We look forward to the future with a more efficient organization and an ever-sharper global view of customers and their evolving needs."

Global Dental sales of $1.2 billion increased 5.5%, consisting of 6.6% growth in local currencies and a 1.1% decline related to foreign currency exchange.  In local currencies, internally generated sales increased 6.2% and acquisition growth was 0.4%.  The 6.2% internal growth in local currencies included 4.5% growth in North America and 8.9% International growth.

"Dental sales growth was strong due to stable or improved patient traffic to dental offices in the major markets we serve.  We believe that we continued to gain market share in our global dental business," commented Mr. Bergman.

Global Animal Health sales of $525.6 million increased 15.3%, including 15.4% growth in local currencies and a 0.1% decline related to foreign currency exchange.  In local currencies, internally generated sales increased 14.8% and acquisition growth was 0.6%.  The 14.8% internal growth in local currencies included 15.8% growth in North America and 13.7% International growth.

"On a global basis our Animal Health business continued to make impressive gains in market share, in large part due to the expanding breadth and depth of our product offerings and strengthening relationships with our customers," commented Mr. Bergman.  "We recently announced the signing of a definitive agreement to acquire AUV Veterinary Services, the leading distributor serving animal health practitioners in the Netherlands and Belgium.  By expanding our European animal health footprint, we have an opportunity to provide even greater value to our customers and manufacturing partners."

Global Medical sales of $354.8 million increased 4.0%, including 4.2% growth in local currencies and a 0.2% decline related to foreign currency exchange.  In local currencies, internally generated sales increased 3.6% and acquisition growth was 0.6%.  The 3.6% internal growth in local currencies included 3.4% growth in North America and 7.4% International growth.

"Our North America Medical business comprises well over 90% of our global Medical sales.  Growth in that market was largely fueled by increased penetration of larger group practices and solid growth in sales of pharmaceutical products.  These improvements were somewhat offset by lower sales of diagnostic consumable products due to a generally mild winter," remarked Mr. Bergman.

Global Technology and Value-Added Services sales of $62.9 million increased 13.1%, including 13.2% growth in local currencies and a 0.1% decline related to foreign currency exchange.  In local currencies, internally generated sales increased 9.0% and acquisition growth was 4.2%.  The 9.0% internal growth in local currencies included 9.9% growth in North America and 4.0% International growth.

"The performance of our Technology and Value-Added Services group continued to be excellent, with strong internal sales growth in the U.S. bolstered by strategic acquisitions.  More than 85% of revenue from our Technology and Value-Added Services group is derived from North America," explained Mr. Bergman.  "First quarter results included particular strength in our electronic services business."

Stock Repurchase Plan

The Company announced that it repurchased approximately 540,000 shares of its common stock during the first quarter at an average price of $70.92 per share, or approximately $39.0 million.  The impact of the repurchase of shares on first quarter diluted EPS was not material.  At the close of the first quarter, Henry Schein had $61.4 million authorized for future repurchases of its common stock.

Subsequent to the close of the first quarter, the Company's Board of Directors authorized the repurchase of up to an additional $200 million of shares of the Company's common stock.

2012 EPS Guidance

Henry Schein today raised 2012 financial guidance, as follows:

  • For 2012 the Company expects diluted EPS attributable to Henry Schein, Inc. to be $4.30 to $4.40, which represents growth of 8% to 11% compared with 2011 results.  This compares with previous guidance for diluted EPS to be $4.25 to $4.34.

  • The Company notes that the 2012 fiscal year includes one less week than 2011.

  • Guidance for 2012 diluted EPS attributable to Henry Schein, Inc. excludes restructuring costs.

  • The Company estimates restructuring costs for Q2 2012 will be approximately $2-$4 million on a pre-tax basis, or $0.02 to $0.03 per diluted share.

  • Guidance for 2012 diluted EPS attributable to Henry Schein, Inc. is for current continuing operations as well as completed or previously announced acquisitions, and does not include the impact of potential future acquisitions, if any.