Henry Schein first quarter net sales increase 10.6% to $1.9 billion

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 March 26, 2011.

Net sales for the first quarter of 2011 were $1.9 billion, an increase of 10.6% compared with the first quarter of 2010.  This consists of 9.9% growth in local currencies and 0.7% growth related to foreign currency exchange.  Internal sales growth in local currencies was 3.8% (see Exhibit A for details of sales growth).

Net income attributable to Henry Schein, Inc. for the first quarter of 2011 was $76.5 million or $0.82 per diluted share, an increase of 10.6% and 9.3%, respectively, compared with first quarter 2010 adjusted net income, which excludes restructuring costs of $12.3 million or $0.09 per diluted share.  EPS growth was 24.2% on an as-reported basis (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP adjusted net income and EPS).

"We are particularly pleased to report high-single to low-double digit sales growth in local currencies in all of our business groups," said Stanley M. Bergman, Chairman and Chief Executive Officer of Henry Schein.

North American Dental sales of $662.8 million increased 7.8%, consisting of 7.2% growth in local currencies and 0.6% growth related to foreign currency exchange.  The 7.2% growth in local currencies included 8.9% growth in Dental consumable merchandise sales and 1.3% growth in Dental equipment sales and service revenues.

"Solid gains in sales of Dental consumable merchandise are impressive in light of overall market conditions," commented Mr. Bergman.  "We also are happy to report a fifth consecutive quarter of growth in Dental equipment sales and service revenues."

North American Medical sales of $319.8 million increased 12.4%.  "We are very pleased with first quarter sales growth in our North American Medical group, which reflects particular strength in sales of clinical diagnostic products, as well as pharmaceuticals," remarked Mr. Bergman.  "Shortly after the quarter closed we acquired Alpha Scientific, which strengthens our presence in the large and important California physician and medical laboratory market."

North American Animal Health sales of $230.6 million increased 11.6%, including internal growth of 7.5% and 4.1% acquisition growth related to the timing of the Butler Schein Animal Health transaction, which includes four days of sales being classified as acquisition growth in the quarter.

"For the past six months we have largely turned our focus at Butler Schein Animal Health to various initiatives to drive sales growth by expanding the breadth and depth of our product offerings, and strengthening customer relationships.  First quarter results provide a positive indication regarding the success of these initiatives," commented Mr. Bergman.  

International sales of $679.0 million increased 11.4%, consisting of 9.8% growth in local currencies and 1.6% growth related to foreign currency exchange.

"International sales growth during the quarter was primarily due to the acquisition of Provet Holdings, which was completed early in the first quarter and is performing in line with our model," added Mr. Bergman.  "As expected the biennial IDS trade show, held in March, impacted sales of dental equipment in Europe during the quarter, yet the strong turnout and upbeat tone at the show suggests strength for the coming months."

Technology and Value-Added Services sales of $55.6 million increased 23.7% during the quarter, consisting of 22.9% growth in local currencies and 0.8% growth related to foreign currency exchange.

"Our Technology and Value-Added Services group has posted double-digit sales growth in local currencies for four consecutive quarters, continuing a longstanding trend of solid growth," explained Mr. Bergman.  "First quarter results include particular strength in software sales in Australia and New Zealand, and in electronic services in the U.S."

Stock Repurchase Plan

The Company announced that it repurchased 409,755 shares of its common stock during the first quarter at an average price of $66.13 per share.  The impact of the repurchase of shares on first quarter diluted EPS was immaterial.  At the end of the first quarter, the Company had $72.9 million authorized for future repurchases of its common stock.

2011 EPS Guidance

Henry Schein today affirmed 2011 financial guidance, as follows:

• 2011 diluted EPS attributable to Henry Schein, Inc. is expected to be in the range of $3.88 to $3.98.
• Guidance for 2011 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.