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 26, 2009.
Net sales for the third quarter of 2009 were $1.7 billion, an increase of 0.9% compared with the third quarter of 2008. This consists of a 3.1% decline related to foreign currency exchange and a 4.0% growth in local currencies. Excluding sales of seasonal influenza vaccines, which declined from last year's third quarter, net sales increased 3.7%, or 6.9% growth in local currencies (see Exhibit A for details of sales growth).
Income from continuing operations attributable to Henry Schein, Inc. for the third quarter of 2009 was $94.0 million or $1.03 per diluted share, an increase of 39.2% for both figures compared with the third quarter of 2008. Current and prior-year results include certain unusual items, most notably an overseas tax benefit in the 2009 quarter. Excluding these items, non-GAAP income from continuing operations was $72.9 million or $0.80 per share, an increase of 3.3% and 3.9%, respectively, compared with the third quarter of 2008 (see Exhibit B for reconciliation of GAAP income and EPS from continuing operations to non-GAAP income and EPS from continuing operations). When also excluding sales of seasonal influenza vaccines, which declined from last year's third quarter, non-GAAP diluted EPS from continuing operations increased approximately 18%.
"We are pleased to report net sales growth in local currencies of approximately 7% excluding sales of seasonal influenza vaccines, with solid increases in our Medical, International and Technology Groups," said Stanley M. Bergman, Chairman and Chief Executive Officer of Henry Schein. "A number of unusual items impacted our third quarter results in both the current and prior year. On a normalized basis excluding these items and sales of seasonal influenza vaccines, we are proud to report 18% growth in diluted EPS from continuing operations."
Dental Group sales of $622 million declined 3.0%, consisting of a 0.5% decline related to foreign currency exchange and a 2.5% decline in local currencies. The 2.5% decline in local currencies included 1.3% growth in Dental consumable merchandise sales and a 12.8% decline in Dental equipment sales and service revenues.
"We continue to believe that the market for Dental consumable merchandise has stabilized and, as expected, our decrease in sales of Dental equipment has improved from the previous quarter's rate of decline," commented Mr. Bergman.
Medical Group sales of $411 million declined 3.1%. Excluding sales of seasonal influenza vaccines, Medical Group sales increased 8.6%.
"During the third quarter we sold approximately 6.5 million doses of seasonal influenza vaccine, and as of today we have sold approximately 8.5 million doses for the year," said Mr. Bergman. "Sales growth of nearly 9% excluding seasonal influenza vaccine reflects strong sales of consumable products, as well as sales of products related to the treatment and prevention of the H1N1 virus."
International Group sales of $584 million increased 8.5%, consisting of an 8.4% decline related to foreign currency exchange and 16.9% growth in local currencies.
"We had double-digit local currency sales growth in our International dental, medical and veterinary businesses during the quarter," added Mr. Bergman.
Technology and Value-Added Services Group sales of $43 million increased 5.4% during the quarter, consisting of a 1.9% decline related to foreign currency exchange and 7.3% growth in local currencies.
"During the quarter we saw continued strong growth in electronic services, as well as the beneficial impact of the acquisition of a European veterinary software and practice management business," explained Mr. Bergman.
Year-to-Date Results
For the first nine months of 2009, net sales of $4.8 billion represent a decrease of 1.0% compared with the first nine months of 2008. This decrease includes a 5.9% decline related to foreign currency exchange and 4.9% growth in local currencies.
Income from continuing operations attributable to Henry Schein, Inc. for the first nine months of 2009 was $222.1 million or $2.45 per diluted share, an increase of 20.6% and 22.5%, respectively, compared with the first nine months of 2008. Excluding unusual items noted above, income from continuing operations attributable to Henry Schein, Inc. for the first nine months of 2009 was $203.8 million or $2.25 per diluted share, an increase of 8.8% and 10.3%, respectively, compared with the first nine months of 2008 (see Exhibit B for reconciliation of GAAP income and EPS from continuing operations to non-GAAP income and EPS from continuing operations).
2009 EPS Guidance
Henry Schein today updated 2009 financial guidance, as follows:
- Fourth quarter 2009 diluted EPS attributable to Henry Schein, Inc. is expected to be $0.89 to $0.91.
- 2009 diluted EPS attributable to Henry Schein, Inc. is expected to be $3.14 to $3.16 excluding the unusual items included in Exhibit B. This represents growth of approximately 8% compared with restated 2008 results of $2.92, excluding charges related to the Lehman Brothers bankruptcy as well as restructuring costs.
- Guidance for 2009 diluted EPS attributable to Henry Schein, Inc. is for current continuing operations including completed or previously announced acquisitions, and does not include the impact of potential future acquisitions, if any.
2010 EPS Guidance
Henry Schein today introduced 2010 financial guidance, as follows:
- 2010 diluted EPS attributable to Henry Schein, Inc. is expected to be $3.40 to $3.56, representing growth of 8% to 13% compared with the midpoint of 2009 guidance.
- Guidance for 2010 diluted EPS attributable to Henry Schein, Inc. is for current continuing operations including 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.
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