HENRY SCHEIN REPORTS RECORD FOURTH QUARTER RESULTS
EPS up 13.5% to $1.43
MELVILLE, N.Y. - February 11, 2014 - 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 December 28, 2013.
Net sales for the fourth quarter of 2013 were $2.5 billion, an increase of 4.9% compared with the fourth quarter of 2012. This consisted of 4.4% growth in local currencies and 0.5% growth related to foreign currency exchange. In local currencies, internally generated sales increased 3.7% and acquisition growth was 0.7% (see Exhibit A for details of sales growth).
Net income attributable to Henry Schein, Inc. for the fourth quarter of 2013 was $124.3 million or $1.43 per diluted share, an increase of 10.5% and 13.5%, respectively, compared with the fourth quarter of 2012.
“We are pleased to complete a very successful 2013 with strong fourth quarter results,” said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein. “Sales growth during the fourth quarter was solid and on plan. Importantly, we believe we gained market share in each of our four global business units and exceeded the top of our original EPS guidance range for the year.”
Global Dental sales of $1.4 billion increased 3.9%, consisting of 3.1% growth in local currencies and 0.8% growth related to foreign currency exchange. In local currencies, internally generated sales increased 2.6% and acquisition growth was 0.5%. The 2.6% internal growth in local currencies included 2.1% growth in North America and 3.5% growth in International.
“Gains in North America Dental sales included solid growth in consumable merchandise, while equipment sales and service revenue declined slightly following growth of nearly 22% in the prior-year quarter, making for a challenging comparison,” commented Mr. Bergman. “International Dental returned to growth during the quarter as consumable merchandise posted positive gains and equipment sales and service revenue growth accelerated from the previous quarter.”
Global Animal Health sales of $651.7 million increased 6.6%; there was no material impact on sales growth from foreign currency exchange. Internally generated sales increased 4.8% and acquisition growth was 1.8%. The 4.8% internal growth in local currencies included 7.0% growth in North America and 2.9% growth in International.
“Once again our Global Animal Health business performed well during the quarter. North America internal sales growth in the high single digits is consistent with our stated goals, and International Animal Health internal sales growth in local currencies accelerated slightly versus the prior quarter,” commented Mr. Bergman.
Global Medical sales of $421.9 million increased 4.8%, including 4.6% growth in local currencies and 0.2% growth related to foreign currency exchange. “Reported Global Medical growth benefitted from higher sales of seasonal influenza vaccines versus the prior year. Excluding this impact, our Global Medical sales growth accelerated slightly compared to the third quarter. We believe patient traffic to U.S. physician offices was largely consistent with the prior quarter,” remarked Mr. Bergman. “We are confident that our focus on large group practices will allow us to continue to gain market share.”
Global Technology and Value-Added Services sales of $88.4 million increased 8.6%, including 8.9% growth in local currencies and a 0.3% decline related to foreign currency exchange. In local currencies, internally generated sales increased 8.6% and acquisition growth was 0.3%.
“Technology and Value-Added Services growth was driven by electronic services recurring revenue, software sales and value-added services,” commented Mr. Bergman. “Sales in International markets were particularly strong.”
Stock Repurchase Plan
The Company announced that it repurchased approximately 664,000 shares of its common stock during the fourth quarter at an average price of $111.04 per share, or approximately $73.8 million. The impact of the repurchase of shares on fourth quarter diluted EPS was immaterial. For the full year 2013 the Company repurchased $300.3 million in stock, representing 3.1 million shares at an average price of $97.71 per share, which is in line with our stated goals. At the close of the fourth quarter, Henry Schein had approximately $300 million authorized for future repurchases of its common stock.
Full-Year Results
For 2013, net sales of $9.6 billion increased 6.9% compared with 2012. This consisted of 6.8% growth in local currencies and 0.1% growth related to foreign currency exchange. In local currencies, internally generated sales increased 3.6% and acquisition growth was 3.2%.
Net income attributable to Henry Schein, Inc. for 2013 was $431.6 million or $4.93 per diluted share. Excluding certain one-time items, adjusted net income attributable to Henry Schein, Inc. for 2013 was $433.4 million or $4.95 per diluted share, an increase of 8.7% and 11.5%, respectively, compared with adjusted net income for 2012 (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP adjusted net income and EPS).
2014 EPS Guidance
Henry Schein today affirmed 2014 financial guidance, as follows:
| · | For 2014 the Company expects diluted EPS attributable to Henry Schein, Inc. to be $5.29 to $5.39, which represents growth of 7% to 9% compared with 2013 results excluding certain one-time items. |
| · | The Company expects that growth in diluted EPS for 2014 will accelerate over the course of the year, due to a number of timing factors including the impact of recent acquisitions. |
| · | Guidance for 2014 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. |
Fourth Quarter Conference Call Webcast
The Company will hold a conference call to discuss fourth 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 website 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 more than 16,000 Team Schein Members and serves more than 800,000 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 25 countries. The Company's sales reached a record $9.6 billion in 2013, and have grown at a compound annual rate of nearly 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 challenges associated with the emergence of potential increased competition by third-party online commerce sites; 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.
Note: Certain prior period amounts have been reclassified to conform to the current period presentation.
This non-GAAP comparison is being presented in order to provide a more comparable basis for analysis. Earnings per share numbers may not sum due to rounding.
