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 PlanThe 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 ResultsFor 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 GuidanceHenry Schein today raised the low end of its 2012 financial guidance range, as follows:
2013 EPS GuidanceHenry Schein today introduced 2013 financial guidance, as follows:
Third Quarter Conference Call WebcastThe 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.
About Henry Schein, Inc.Henry Schein, Inc. is the world's largest provider of health care products and services to office-based dental, medical and animal health 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 15,000 Team Schein Members and serves approximately 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 90,000 national and Henry Schein private-brand products in stock, as well as more than 100,000 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 $8.5 billion in 2011, and have grown at a compound annual rate of 18 percent 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 international 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.
(TABLES TO FOLLOW)HENRY SCHEIN, INC.CONSOLIDATED STATEMENTS OF INCOME(in thousands, except per share data)(unaudited)Three Months EndedNine Months EndedSeptember 29,September 24,September 29,September 24,2012201120122011Net sales $2,231,058$
6,190,094Cost of sales 1,622,0141,524,2734,687,5114,424,628Gross profit 609,044587,4201,844,0181,765,466Operating expenses:Selling, general and administrative 459,422444,1591,391,2071,346,690Restructuring costs --15,192-Operating income 149,622143,261437,619418,776Other income (expense):Interest income 3,2833,83010,22211,955Interest expense (7,308)(6,813)(22,659)(22,800)Other, net 9882322,3431,313Income before taxes and equity in earningsof affiliates 146,585140,510427,525409,244Income taxes (44,709)(44,261)(133,750)(130,754)Equity in earnings of affiliates 3,4344,5597,89810,345Net income 105,310100,808301,673288,835Less: Net income attributable to noncontrolling interests (8,539)(8,847)(26,064)(25,904)Net income attributable to Henry Schein, Inc. $96,771$
262,931Earnings per share attributable to Henry Schein, Inc.:Basic $1.11$
2.82Weighted-average common shares outstanding:Basic 87,46590,25187,80290,582Diluted 89,64792,86990,07593,195HENRY SCHEIN, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except share and per share data)September 29,December 31,20122011(unaudited)ASSETSCurrent assets:Cash and cash equivalents $89,336$
147,284Accounts receivable, net of reserves of $65,679 and $65,853 1,035,529888,248Inventories, net 1,070,854947,849Deferred income taxes 59,42954,970Prepaid expenses and other 257,031234,157Total current assets 2,512,1792,272,508Property and equipment, net 258,683262,088Goodwill 1,591,4821,497,108Other intangibles, net 471,143409,612Investments and other 278,045298,828Total assets $5,111,532$
4,740,144LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable $707,641$
621,468Bank credit lines 155,21955,014Current maturities of long-term debt 17,73922,819Accrued expenses:Payroll and related 175,089191,173Taxes 130,576121,234Other 262,694259,932Total current liabilities 1,448,9581,271,640Long-term debt 436,426363,524Deferred income taxes 180,977188,739Other liabilities 96,40280,568Total liabilities 2,162,7631,904,471Redeemable noncontrolling interests 375,661402,050Commitments and contingencies Stockholders' equity:Preferred stock, $.01 par value, 1,000,000 shares authorized, none outstanding --Common stock, $.01 par value, 240,000,000 shares authorized,88,264,853 outstanding on September 29, 2012 and89,928,082 outstanding on December 31, 2011 883899Additional paid-in capital 404,867401,262Retained earnings 2,130,4762,007,477Accumulated other comprehensive income 35,47522,584Total Henry Schein, Inc. stockholders' equity 2,571,7012,432,222Noncontrolling interests 1,4071,401Total stockholders' equity 2,573,1082,433,623Total liabilities, redeemable noncontrolling interests and stockholders' equity $5,111,532$
4,740,144HENRY SCHEIN, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited)Three Months EndedNine Months EndedSeptember 29,September 24,September 29,September 24,2012201120122011Cash flows from operating activities:Net income $105,310$
288,835Adjustments to reconcile net income to net cashprovided by operating activities:Depreciation and amortization 30,60028,57191,98986,040Stock-based compensation expense 11,8188,08531,86726,045Provision for losses on trade and otheraccounts receivable 7019143,3383,636Benefit from deferred income taxes (763)(2,563)(8,478)(12,828)Stock issued to 401(k) plan-5,798-5,798Equity in earnings of affiliates (3,434)(4,559)(7,898)(10,345)Distributions from equity affiliates 3,2908,9789,29710,158Other 6,62978610,4883,028Changes in operating assets and liabilities, net of acquisitions:Accounts receivable (46,632)(40,883)(105,961)(50,785)Inventories (73,687)(18,559)(85,027)(14,657)Other current assets (18,710)(7,437)(26,788)(18,537)Accounts payable and accrued expenses 63,42310,388(6,062)(39,589)Net cash provided by operating activities 78,54590,327208,438276,799Cash flows from investing activities:Purchases of fixed assets (11,562)(11,783)(32,934)(32,547)Payments for equity investments and businessacquisitions, net of cash acquired (85,913)-(206,261)(143,636)Proceeds from sales of available-for-sale securities 2,0003006,0252,450Other 255(877)(4,130)1,020Net cash used in investing activities (95,220)(12,360)(237,300)(172,713)Cash flows from financing activities:Proceeds from (repayments of) bank borrowings 71,677(9,272)98,061(1,601)Proceeds from issuance of long-term debt 5,082-105,1323,101Debt issuance costs (1,191)-(1,404)(2,847)Principal payments for long-term debt (2,842)(740)(38,217)(24,656)Proceeds from issuance of stock upon exercise of stock options3,0582,31243,77330,250Payments for repurchases of common stock (58,798)(100,377)(215,689)(132,475)Excess tax benefits related to stock-basedcompensation59257310,6437,425Distributions to noncontrolling shareholders (2,986)(1,461)(11,581)(7,878)Acquisitions of noncontrolling interests in subsidiaries-(11,833)(20,013)(15,199)Other ---(90)Net cash provided by (used in) financing activities 14,592(120,798)(29,295)(143,970)Net change in cash and cash equivalents (2,083)(42,831)(58,157)(39,884)Effect of exchange rate changes on cash andcash equivalents3,523(12,086)209(3,592)Cash and cash equivalents, beginning of period 87,896161,789147,284150,348Cash and cash equivalents, end of period $89,336$
Note: Certain prior period amounts have been reclassified to conform to the current period presentation. Exhibit A1 - QTD SalesHenry Schein, Inc.2012 Third QuarterSales Summary(in thousands)(unaudited)Q3 2012 over Q3 2011GlobalQ3 2012Q3 2011Total Sales
GrowthDental$1,119,430$1,123,021-0.3%Animal Health598,124501,88419.2%Medical442,538424,5964.2%Total Health Care Distribution2,160,0922,049,5015.4%Technology and Value-Added Services70,96662,19214.1%Total Global$2,231,058$2,111,6935.7%North AmericaQ3 2012Q3 2011Total Sales GrowthDental$714,731$687,2884.0%Animal Health276,435246,45212.2%Medical424,086403,3265.1%Total Health Care Distribution1,415,2521,337,0665.8%Technology and Value-Added Services61,23353,56514.3%Total North America$1,476,485$1,390,6316.2%InternationalQ3 2012Q3 2011Total Sales GrowthDental$404,699$435,733-7.1%Animal Health321,689255,43225.9%Medical18,45221,270-13.2%Total Health Care Distribution744,840712,4354.5%Technology and Value-Added Services9,7338,62712.8%Total International$754,573$721,0624.6%
Exhibit A1 - YTD SalesHenry Schein, Inc.2012 Third Quarter Year to DateSales Summary(in thousands)(unaudited)Q3 2012 YTD over Q3 2011 YTDGlobalQ3 2012 YTDQ3 2011 YTDTotal Sales
GrowthDental$3,461,015$3,419,6091.2%Animal Health1,709,9721,484,05315.2%Medical1,158,4861,106,5374.7%Total Health Care Distribution6,329,4736,010,1995.3%Technology and Value-Added Services202,056179,89512.3%Total Global$6,531,529$6,190,0945.5%North AmericaQ3 2012 YTDQ3 2011 YTDTotal Sales GrowthDental$2,152,532$2,070,8793.9%Animal Health840,681737,32414.0%Medical1,098,9251,042,4065.4%Total Health Care Distribution4,092,1383,850,6096.3%Technology and Value-Added Services174,062154,66012.5%Total North America$4,266,200$4,005,2696.5%InternationalQ3 2012 YTDQ3 2011 YTDTotal Sales GrowthDental$1,308,483$1,348,730-3.0%Animal Health869,291746,72916.4%Medical59,56164,131-7.1%Total Health Care Distribution2,237,3352,159,5903.6%Technology and Value-Added Services27,99425,23510.9%Total International$2,265,329$2,184,8253.7% Exhibit A2 - QTD Sales GrowthHenry Schein, Inc.2012 Third QuarterSales Growth Rate Summary(unaudited)Q3 2012 over Q3 2011GlobalConsolidatedDentalAnimal HealthMedicalTechnology /VASLocal Internal Sales Growth4.4%2.3%9.1%3.5%11.2%Acquisitions4.5%1.1%14.8%1.3%3.5%Local Currency Sales Growth8.9%3.4%23.9%4.8%14.7%Foreign Currency Exchange-3.2%-3.7%-4.7%-0.6%-0.6%Total Sales Growth5.7%-0.3%19.2%4.2%14.1%Total sales growth excluding influenza vaccine sales6.4%8.4%Local currency internal sales growthexcluding influenza vaccine sales5.1%7.6%North AmericaConsolidatedDentalAnimal HealthMedicalTechnology /VASLocal Internal Sales Growth5.3%3.1%12.2%3.8%12.3%Acquisitions1.0%1.1%0.0%1.3%2.1%.Local Currency Sales Growth6.3%4.2%12.2%5.1%14.4%Foreign Currency Exchange-0.1%-0.2%0.0%0.0%-0.1%Total Sales Growth6.2%4.0%12.2%5.1%14.3%Total sales growth excluding influenza vaccine sales7.4%9.8%Local currency internal sales growthexcluding influenza vaccine sales6.4%8.2%InternationalConsolidatedDental Animal HealthMedicalTechnology /VASLocal Internal Sales Growth2.8%1.0%6.2%-2.1%4.7%Acquisitions11.0%1.0%29.0%0.0%12.1%Local Currency Sales Growth13.8%2.0%35.2%-2.1%16.8%Foreign Currency Exchange-9.2%-9.1%-9.3%-11.1%-4.0%Total Sales Growth4.6%-7.1%25.9%-13.2%12.8% Exhibit A2 - YTD Sales GrowthHenry Schein, Inc.2012 Third Quarter Year to DateSales Growth Rate Summary(unaudited)Q3 2012 YTD over Q3 2011 YTDGlobalConsolidatedDentalAnimal HealthMedicalTechnology /VASLocal Internal Sales Growth5.6%3.5%10.7%4.5%9.7%Acquisitions2.3%0.6%7.4%0.7%3.1%Local Currency Sales Growth7.9%4.1%18.1%5.2%12.8%Foreign Currency Exchange-2.4%-2.9%-2.9%-0.5%-0.5%Total Sales Growth5.5%1.2%15.2%4.7%12.3%Total sales growth excluding influenza vaccine sales5.8%6.1%Local currency internal sales growthexcluding influenza vaccine sales5.8%5.9%North AmericaConsolidatedDentalAnimal HealthMedicalTechnology /VASLocal Internal Sales Growth6.1%3.6%14.0%4.7%10.4%Acquisitions0.6%0.7%0.0%0.7%2.2%.Local Currency Sales Growth6.7%4.3%14.0%5.4%12.6%Foreign Currency Exchange-0.2%-0.4%0.0%0.0%-0.1%Total Sales Growth6.5%3.9%14.0%5.4%12.5%Total sales growth excluding influenza vaccine sales6.9%7.0%Local currency internal sales growthexcluding influenza vaccine sales6.5%6.2%InternationalConsolidatedDental Animal HealthMedicalTechnology /VASLocal Internal Sales Growth4.7%3.3%7.4%0.9%5.0%Acquisitions5.5%0.6%14.7%0.0%9.1%Local Currency Sales Growth10.2%3.9%22.1%0.9%14.1%Foreign Currency Exchange-6.5%-6.9%-5.7%-8.0%-3.2%Total Sales Growth3.7%-3.0%16.4%-7.1%10.9% Exhibit BHenry Schein, Inc.2012 Third Quarter and YTDReconciliation of GAAP results of net income attributable to Henry Schein, Inc. tonon-GAAP results of net income attributable to Henry Schein, Inc.(in thousands, except per share data)(unaudited)Third QuarterYTD%%20122011Growth20122011GrowthFrom Net Income Attributable to Henry Schein, Inc.Net Income attributable to Henry Schein, Inc.$96,771$91,9615.2%$275,609$262,9314.8%Diluted EPS from Net Income attributable to Henry Schein, Inc.$1.08$0.999.1%$3.06$2.828.5%Non-GAAP Adjustments (after-tax)Restructuring costs
-Net Income attributable to Henry Schein, Inc.$0$0$10,537$0Diluted EPS from Net Income attributable to Henry Schein, Inc.$0.00$0.00$0.12$0.00Adjusted Results From Net Income Attributable to Henry Schein, Inc.Net Income attributable to Henry Schein, Inc.$96,771$91,9615.2%$286,146$262,9318.8%Diluted EPS from Net Income attributable to Henry Schein, Inc.$1.08$0.999.1%$3.18$2.8212.8%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.
|SOURCE Henry Schein, Inc.|
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