MELVILLE, N.Y. - August 6, 2013 – Henry Schein, Inc. (NASDAQ: HSIC), the world’s largest provider of health care products and services to office-based dental, animal health and medical practitioners, today reported record financial results for the quarter ended June 29, 2013.
Net sales for the second quarter of 2013 were $2.4 billion, an increase of 8.6% compared with the second quarter of 2012. This consisted of 8.7% growth in local currencies and a 0.1% decline related to foreign currency exchange. In local currencies, internally generated sales increased 4.0% and acquisition growth was 4.7% (see Exhibit A for details of sales growth).
Net income attributable to Henry Schein, Inc. for the second quarter of 2013 was $108.4 million or $1.23 per diluted share, an increase of 8.1% and 10.8%, respectively, compared with the second quarter of 2012 excluding restructuring costs of $3.4 million pretax or $0.03 per diluted share.
“We continue to reap the benefits of our diversified business strategy as market share gains in each of our operating units resulted in record second quarter global sales results. We are on target with our full-year plan and are pleased to be raising the bottom of our 2013 financial guidance range,” said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein. “Our second quarter sales growth and share gains were enhanced by the timing of the IDS dental trade show and the spring holidays as discussed during our last quarterly conference call.”
Global Dental sales of $1.3 billion increased 6.2%, consisting of 6.0% growth in local currencies and a 0.2% gain related to foreign currency exchange. In local currencies, internally generated sales increased 3.0% and acquisition growth was 3.0%. The 3.0% increase in internal growth in local currencies included 3.6% growth in North America and 1.9% growth in International.
“Internal sales results in local currencies were particularly strong in North America Dental consumable merchandise and International Dental equipment, which was bolstered by the IDS trade show
in Germany,” commented Mr. Bergman. “On an overall basis, we continue to gain dental market share through a combination of organic and acquisition growth.”
Global Animal Health sales of $666.3 million increased 13.7%, including 14.1% growth in local currencies and a 0.4% decline related to foreign currency exchange. In local currencies, internally generated sales increased 4.2% and acquisition growth was 9.9%. The 4.2% internal growth in local currencies included 9.6% growth in North America and a 1.4% decline in International.
“Our Global Animal Health business continued to gain market share during the quarter,” commented Mr. Bergman. “Sales growth in North America, all organic, continued to be solid while acquisitions fueled international sales growth.”
Global Medical sales of $387.9 million increased 7.4%; there was no impact from foreign currency exchange on Global Medical sales growth. In local currencies, internally generated sales increased 6.2% and acquisition growth was 1.2%. The 6.2% internal growth in local currencies included 6.2% growth in North America and 5.6% growth in International.
“Our Medical business gained further domestic market share with particularly strong sales growth in integrated delivery networks, urgent care settings and ambulatory surgery centers,” remarked Mr. Bergman, “and we continue to be pleased with our success in this arena.”
Global Technology and Value-Added Services sales of $78.0 million increased 14.5%, including 14.9% growth in local currencies and a 0.4% decline related to foreign currency exchange. In local currencies, internally generated sales increased 9.6% and acquisition growth was 5.3%. The 9.6% internal growth in local currencies included 8.1% growth in North America and 18.4% International growth.
“Technology and Value-Added Services sales growth was particularly strong in electronic services recurring revenue, as well as software sales, and featured another quarter of double-digit growth in International markets,” commented Mr. Bergman. “These products and services continue to strengthen our connection with customers across all of our business units.”
Stock Repurchase Plan
The Company announced that it repurchased approximately 840,000 shares of its common stock during the second quarter at an average price of $92.99 per share, or approximately $78.1 million. The impact of the repurchase of shares on second quarter diluted EPS was immaterial. At the close of the second quarter, Henry Schein had approximately $149 million authorized for future repurchases of its common stock.
Year-to-Date Results
For the first half of 2013, net sales of $4.7 billion increased 8.9% compared with the first half of 2012; there was no impact from foreign currency exchange on net sales growth. In local currencies, internally generated sales increased 3.7% and acquisition growth was 5.2%.
Net income attributable to Henry Schein, Inc. for the first half of 2013 was $199.9 million or $2.27 per diluted share. Excluding non-cash, one-time expenses related to the debt refinancing of Butler Schein Animal Health (now known as Henry Schein Animal Health) of $6.2 million pretax or $0.03 per diluted share, net income attributable to Henry Schein, Inc. for the first half of 2013 was $202.6 million or $2.30 per diluted share, an increase of 7.0% and 10.0%, respectively, compared with the first half of 2012 excluding restructuring costs of $15.2 million pretax or $0.12 per diluted share (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP adjusted net income and EPS).
2013 EPS Guidance
Henry Schein today raised the bottom of its 2013 financial guidance range, as follows:
| · | For 2013 the Company expects diluted EPS attributable to Henry Schein, Inc. to be $4.86 to $4.91. This represents growth of 9% to 11% compared with 2012 results excluding restructuring costs, and compares with previous guidance for 2013 diluted EPS to be $4.81 to $4.91. |
| · | Guidance for 2013 diluted EPS attributable to Henry Schein, Inc. excludes a one-time, non-cash charge of $0.03 per diluted share related to the debt refinancing of Butler Schein Animal Health (now known as Henry Schein Animal Health), as well as an estimated loss of $0.13 to $0.15 per diluted share to be taken in the third quarter related to divesting a non-controlling interest in a dental wholesale distributor in the Middle East, as previously announced. |
| · | 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. |
Second Quarter Conference Call Webcast
The Company will hold a conference call to discuss second 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.
About Henry Schein, Inc.
Henry Schein, Inc. is the world's largest provider of health care products and services to office-based dental, animal health and medical practitioners. The Company also serves dental laboratories, government and institutional health care clinics, and other alternate care sites. A Fortune 500® Company and a member of the NASDAQ 100® Index, Henry Schein employs nearly 16,000 Team Schein Members and serves more than 775,000 customers.
The Company offers a comprehensive selection of products and services, including value-added solutions for operating efficient practices and delivering high-quality care. Henry Schein operates through a centralized and automated distribution network, with a selection of more than 96,000 branded products and Henry Schein private-brand products in stock, as well as more than 110,000 additional products available as special-order items. The Company also offers its customers exclusive, innovative technology solutions, including practice management software and e-commerce solutions, as well as a broad range of financial services.
Headquartered in Melville, N.Y., Henry Schein has operations or affiliates in 24 countries. The Company's sales reached a record $8.9 billion in 2012, and have grown at a compound annual rate of 17% since Henry Schein became a public company in 1995. For more information, visit the Henry Schein Web site at www.henryschein.com.
Cautionary Note Regarding Forward-Looking Statements
In accordance with the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995, we provide the following cautionary remarks regarding important factors that, among others, could cause future results to differ materially from the forward-looking statements, expectations and assumptions expressed or implied herein. All forward-looking statements made by us are subject to risks and uncertainties and are not guarantees of future performance. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These statements are identified by the use of such terms as "may," "could," "expect," "intend," "believe," "plan," "estimate," "forecast," "project," "anticipate" or other comparable terms. A full discussion of our operations and financial condition, including factors that may affect our business and future prospects, is contained in documents we have filed with the SEC and will be contained in all subsequent periodic filings we make with the SEC. These documents identify in detail important risk factors that could cause our actual performance to differ materially from current expectations.
Risk factors and uncertainties that could cause actual results to differ materially from current and historical results include, but are not limited to: effects of a highly competitive market; our dependence on third parties for the manufacture and supply of our products; our dependence upon sales personnel, customers, suppliers and manufacturers; our dependence on our senior management; fluctuations in quarterly earnings; risks from expansion of customer purchasing power and multi-tiered costing structures; possible increases in the cost of shipping our products or other service issues with our third-party shippers; general global macro-economic conditions; disruptions in financial markets; possible volatility of the market price of our common stock; changes in the health care industry; implementation of health care laws; failure to comply with regulatory requirements and data privacy laws; risks associated with our global operations; transitional challenges associated with acquisitions and joint ventures, including the failure to achieve anticipated synergies; financial risks associated with acquisitions and joint ventures; litigation risks; the dependence on our continued product development, technical support and successful marketing in the technology segment; risks from rapid technological change; risks from disruption to our information systems; certain provisions in our governing documents that may discourage third-party acquisitions of us; and changes in tax legislation. The order in which these factors appear should not be construed to indicate their relative importance or priority.
We caution that these factors may not be exhaustive and that many of these factors are beyond our ability to control or predict. Accordingly, any forward-looking statements contained herein should not be relied upon as a prediction of actual results. We undertake no duty and have no obligation to update forward-looking statements.
| CONTACTS: | Investors |
| | Steven Paladino |
| | Executive Vice President and Chief Financial Officer |
| | steven.paladino@henryschein.com |
| | (631) 843-5500 |
| | |
| | Carolynne Borders |
| | Vice President, Investor Relations |
| | carolynne.borders@henryschein.com |
| | (631) 390-8105 |
| | |
| | Media |
| | Susan Vassallo |
| | Vice President, Corporate Communications |
| | susan.vassallo@henryschein.com |
| | (631) 843-5562 |
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