Henry Schein Reports Record Third Quarter Results Henry Schein Reports Record Third Quarter Results
EPS up 9.1% to $1.08
Company raises low end of 2012 financial guidance range, expects 2013 EPS growth of 10-12%
MELVILLE, N.Y., Nov. 7, 2012 /PRNewswire/ -- Henry Schein, Inc. (NASDAQ: HSIC), the world's largest provider of health care products and services to office-based dental, medical and animal health practitioners, today reported record financial results for the quarter ended September 29, 2012.
Net sales for the third quarter of 2012 were $2.2 billion, an increase of 5.7% compared with the third quarter of 2011. This consists of 8.9% growth in local currencies and a 3.2% decline related to foreign currency exchange. In local currencies, internally generated sales increased 4.4% and acquisition growth was 4.5% (see Exhibit A for details of sales growth).
The Company noted that seasonal influenza vaccine sales were lower this quarter than in the prior-year quarter, although profitability was higher. In order to provide more meaningful commentary the Company will be discussing sales results including and excluding this impact. Excluding sales of seasonal influenza vaccines from both periods, net sales increased 6.4%, with 9.8% growth in local currencies including 5.1% internal sales growth.
Net income attributable to Henry Schein, Inc. for the third quarter of 2012 was $96.8 million or $1.08 per diluted share, an increase of 5.2% and 9.1%, respectively, compared with the third quarter of 2011.
"We gained market share in each of our four business groups during the third quarter and each group also reported accelerated internal sales growth in local currencies compared with the second quarter, after excluding sales of seasonal influenza vaccines from our Global Medical business. We also are pleased to raise the low end of our 2012 EPS guidance range and to introduce guidance for 2013 that represents growth in EPS of approximately 10% to 12% compared with the mid-point of our 2012 guidance range," commented Stanley M. Bergman, Chairman and Chief Executive Officer of Henry Schein. "Through two strategic acquisitions we recently enhanced our dental software offering, in particular to dental schools, and expanded our veterinary footprint to include Ireland. These transactions illustrate our commitment to advanced technology and to geographic expansion – two key initiatives of our strategic plan."
Global Dental sales of $1.1 billion declined 0.3%, consisting of 3.4% growth in local currencies and a 3.7% decline related to foreign currency exchange. In local currencies, internally generated sales increased 2.3% and acquisition growth was 1.1%. The 2.3% internal growth in local currencies included 3.1% growth in North America and 1.0% International growth.
"We believe we gained market share in our Global Dental business despite a challenging environment for dental equipment in many of our markets. There was also a difficult comparison in Germany due to the timing of the IDS trade show in the prior year. We remain confident in our Dental strategy and look forward to continue to gain market share in this arena. Once again, North America dental equipment sales growth was particularly strong," commented Mr. Bergman.
Global Animal Health sales of $598.1 million increased 19.2%, including 23.9% growth in local currencies and a 4.7% decline related to foreign currency exchange. In local currencies, internally generated sales increased 9.1% and acquisition growth was 14.8%. The 9.1% internal growth in local currencies included 12.2% growth in North America and 6.2% International growth.
"During the quarter we continued to gain market share in our Global Animal Health business, with particular strength in North America," commented Mr. Bergman. "After the close of the third quarter we announced the signing of a definitive agreement to acquire C&M Vetlink. This acquisition makes Henry Schein a leading veterinary distributor in Ireland and reinforces the established Henry Schein Animal Health UK base in the United Kingdom. Our veterinary business now has a presence in 11 countries worldwide."
Global Medical sales of $442.5 million increased 4.2%, including 4.8% growth in local currencies and a 0.6% decline related to foreign currency exchange. In local currencies, internally generated sales increased 3.5% and acquisition growth was 1.3%. The 3.5% internal growth in local currencies included 3.8% growth in North America and a 2.1% decline in International. Excluding sales of seasonal influenza vaccines from both periods, Global Medical sales increased 8.4%, with 9.1% growth in local currencies including 7.6% internal sales growth.
"We are very pleased with third quarter growth in our Global Medical business. We sold approximately 6.8 million doses of influenza vaccine during the quarter, and as of today we have sold approximately 8 million doses, representing essentially all of this season's sales," remarked Mr. Bergman. "Our continued gains in market share in North America reflect increased penetration of integrated delivery networks, larger group practices and ambulatory surgery centers, as well as solid growth in sales of pharmaceutical products and medical equipment."
Global Technology and Value-Added Services sales of $71.0 million increased 14.1%, including 14.7% growth in local currencies and a 0.6% decline related to foreign currency exchange. In local currencies, internally generated sales increased 11.2% and acquisition growth was 3.5%. The 11.2% internal growth in local currencies included 12.3% growth in North America and 4.7% International growth.
"Late in the third quarter we acquired a majority interest in The Exan Group, a Canadian dental software company serving dental schools and general practice dentists in the U.S. and Canada. We are optimistic about the growth opportunities for the Exan line, as it complements our enterprise business and provides access to dental schools for our special markets merchandise," commented Mr. Bergman. "More than 85% of revenue from our Technology and Value-Added Services business is derived from North America, and quarterly results included particular strength in recurring revenue streams on both the technology and financial services sides of the business."
Stock Repurchase Plan
The Company announced that it repurchased approximately 760,000 shares of its common stock during the third quarter at an average price of $77.52 per share, or approximately $58.8 million. The impact of the repurchase of shares on third quarter diluted EPS was immaterial. At the close of the third quarter, Henry Schein had $84.3 million authorized for future repurchases of its common stock.
Year-to-Date Results
For the first nine months of 2012, net sales of $6.5 billion increased 5.5% compared with the first nine months of 2011. This increase includes 7.9% growth in local currencies and a 2.4% decline related to foreign currency exchange. In local currencies, internally generated sales increased 5.6% and acquisition growth was 2.3%.
Net income attributable to Henry Schein, Inc. for the first nine months of 2012 was $275.6 million or $3.06 per diluted share. Excluding restructuring costs of $15.2 million pre-tax or $0.12 per diluted share, net income attributable to Henry Schein, Inc. for the first nine months of 2012 was $286.1 million or $3.18 per diluted share, an increase of 8.8% and 12.8%, respectively, compared with the first nine months of 2011 (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP adjusted net income and EPS).
2012 EPS Guidance
Henry Schein today raised the low end of its 2012 financial guidance range, as follows:
•For 2012 the Company expects diluted EPS attributable to Henry Schein, Inc. to be $4.35 to $4.40, which represents growth of 10% to 11% compared with 2011 results and compares with previous guidance of $4.30 to $4.40.
•The Company notes that the fourth quarter of 2012 has one less week compared with the fourth quarter of 2011.
•Guidance for 2012 diluted EPS attributable to Henry Schein, Inc. excludes restructuring costs.
•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.
2013 EPS Guidance
Henry Schein today introduced 2013 financial guidance, as follows:
•For 2013 the Company expects diluted EPS attributable to Henry Schein, Inc. to be $4.81 to $4.91, which represents growth of approximately 10% to 12% compared with the midpoint of the 2012 guidance range.
•Guidance for 2013 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
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