Henry Schein Reports Record Third Quarter Results
Henry Schein Reports Record Third Quarter Results
Henry Schein, Inc. (Nasdaq: HSIC), the largest provider of healthcare products and services to office-based practitioners, today reported record financial results for the quarter ended September 25, 2010.
Net sales for the third quarter of 2010 were $1.9 billion, an increase of 14.1% compared with the third quarter of 2009. This consists of 16.4% growth in local currencies and a decline of 2.3% related to foreign currency exchange. Internal sales growth in local currencies was 3.7% (see Exhibit A for details of sales growth).
Income from continuing operations attributable to Henry Schein, Inc. for the third quarter of 2010 was $87.9 million or $0.94 per diluted share, an increase of 20.5% and 17.5%, respectively, compared with third quarter 2009 adjusted net income, which excludes certain unusual items (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP adjusted net income and EPS).
"We are pleased to be reporting strong top-line growth in local currencies for the quarter as we continue to see indications of market stability throughout our global business," said Stanley M. Bergman, Chairman and Chief Executive Officer of Henry Schein. "We also are pleased to increase the low end of our 2010 financial guidance, and to introduce financial guidance for 2011 diluted EPS growth of 10% to 13% compared with the midpoint of our new 2010 guidance range."
North American Dental sales of $665.9 million increased 7.1%, consisting of 6.5% growth in local currencies and 0.6% growth related to foreign currency exchange. The 6.5% growth in local currencies included 8.1% growth in Dental consumable merchandise sales and 1.4% growth in Dental equipment sales and service revenues.
"Internal Dental consumable merchandise sales growth in local currencies has increased modestly for each of the past four quarters. This trend and continued sales growth in Dental equipment affirm our confidence that the market will continue to show gradual improvement," commented Mr. Bergman.
North American Medical sales of $391.9 million increased 12.6%. Sales of seasonal influenza vaccines were very strong during the third quarter of 2010. Excluding sales of seasonal influenza vaccines from both periods, North American Medical sales increased 0.5%.
"During the third quarter we sold more than 11 million doses of seasonal influenza vaccines, and we expect to sell approximately 13 million doses in total for the year," remarked Mr. Bergman. "We believe that we gained market share in the office-based physician market during the quarter and that this market continued to experience a decline in patient visits."
North American Animal Health sales increased 259.2% to $225.2 million, reflecting the combined Butler Schein Animal Health business.
"Integration of Butler Schein Animal Health is complete, and we are now turning our focus to various initiatives to drive sales growth by expanding the breadth and depth of our product offering," commented Mr. Bergman.
International sales of $561.4 million declined 3.8%, consisting of 3.4% growth in local currencies and a decline of 7.2% related to foreign currency exchange.
"Our International results reflect continued growth in the Dental business, with notable gains in dental equipment sales and particular strength in Spain, Italy, France, Germany and the U.K." added Mr. Bergman. "After the close of the quarter we announced a further expansion of our global veterinary operations with an agreement to acquire Provet Holdings Limited, Australasia's largest distributor of animal health products with annual sales of approximately 280 million Australian dollars. We also entered the Turkish dental market by acquiring a 50% interest in Guney, the largest full-service dental distribution business in Turkey, with annual sales of approximately 17 million Euros. Including Turkey, we now have operations or affiliates in 24 countries."
Technology and Value-Added Services sales of $49.1 million increased 13.7% during the quarter, including 10.7% internal sales growth in local currencies. "Our electronic services and software businesses continued to show healthy growth with software sales in Australia, New Zealand and Canada particularly strong for the quarter," explained Mr. Bergman.
For the first nine months of 2010, net sales of $5.5 billion increased 15.8% compared with the first nine months of 2009. This increase includes 15.6% growth in local currencies and 0.2% growth related to foreign currency exchange.
Income from continuing operations attributable to Henry Schein, Inc. for the first nine months of 2010 was $232.8 million or $2.50 per diluted share. Non-GAAP income from continuing operations attributable to Henry Schein, Inc. for the first nine months of 2010 was $241.1 million or $2.59 per diluted share, an increase of 18.3% and 15.1%, respectively, compared with the first nine months of 2009 excluding restructuring costs in both periods, as well as certain unusual items in the prior-year period (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP adjusted net income and EPS).
Stock Repurchase Plan
The Company announced that it repurchased 86,171 shares of common stock during the third quarter at an average price of $55.92 per share, and that it expects to purchase a total of $50 million of common stock by the end of the year. The impact of the repurchase of shares on third quarter diluted EPS was immaterial.
2010 EPS Guidance
Today Henry Schein increased the low end of its 2010 financial guidance, as follows:
2010 diluted EPS attributable to Henry Schein, Inc. is expected to be $3.50 to $3.56, compared with previous guidance of $3.46 to $3.56.
Guidance for 2010 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.
2010 guidance excludes the impact of restructuring costs.
2011 EPS Guidance
Henry Schein today introduced 2011 financial guidance, as follows:
2011 diluted EPS attributable to Henry Schein, Inc. is expected to be $3.88 to $3.98, up 10% to 13% compared with the midpoint of the Company's 2010 diluted EPS guidance range.
Guidance for 2011 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.
Third Quarter Conference Call Webcast
The Company will hold a conference call to discuss third quarter financial results today, beginning at 10:00 a.m. Eastern time. Individual investors are invited to listen to the conference call over the Internet through Henry Schein's Web site at www.henryschein.com. In addition, a replay will be available beginning shortly after the call has ended.