Henry Schein second quarter net sales increase 15.2% to $2.1 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 June 25, 2011.

Net sales for the second quarter of 2011 were $2.1 billion, an increase of 15.2% compared with the second quarter of 2010.  This consists of 10.1% growth in local currencies and 5.1% growth related to foreign currency exchange.  Internal sales growth in local currencies was 5.6% (see Exhibit A for details of sales growth).

Net income attributable to Henry Schein, Inc. for the second quarter of 2011 was $94.5 million or $1.01 per diluted share, an increase of 12.5% and 12.2%, respectively, compared with the second quarter of 2010.

"We are proud to report double-digit sales growth in local currencies during the second quarter, as each of our five business groups continued to gain market share," said Stanley M. Bergman, Chairman and Chief Executive Officer of Henry Schein.

North American Dental sales of $709.3 million increased 4.7%, consisting of 4.0% growth in local currencies and 0.7% growth related to foreign currency exchange.  The 4.0% growth in local currencies included 4.8% growth in Dental consumable merchandise sales and 1.3% growth in Dental equipment sales and service revenues.

"The North American Dental group had internal sales growth in local currencies of 3.4%, which is the highest quarterly growth rate we have reported in nearly three years," commented Mr. Bergman.  "Sales of Dental consumable merchandise have increased for eight consecutive quarters and Dental equipment sales and service revenues have increased for six consecutive quarters.  We view this as a positive indication of continued gradual improvement in the dental market and of our strength in that business."

North American Medical sales of $317.3 million increased 10.8%.  "We are very pleased to report a second consecutive quarter of double-digit sales growth in our North American Medical business, and we believe that we continue to gain share in this market," remarked Mr. Bergman.

North American Animal Health sales of $260.3 million increased 10.9%.  "We are delighted to be reporting internal sales growth of nearly 11% and believe our performance is well in excess of market growth.  We continue to drive sales by expanding the breadth and depth of our product offerings, and strengthening customer relationships," commented Mr. Bergman.

International sales of $781.7 million increased 29.8%, consisting of 15.1% growth in local currencies and 14.7% growth related to foreign currency exchange.

"Solid International internal sales growth in local currencies during the quarter was complemented by the acquisition of Provet Holdings, which was completed at the beginning of this year.  As we expected, we saw a significant increase in sales of dental equipment in Europe, particularly in Germany, following the biennial IDS trade show in March.  This contributed to internal dental equipment growth of more than 4% in the second quarter for the International group as a whole," added Mr. Bergman.

Technology and Value-Added Services sales of $62.1 million increased 28.3% during the quarter, consisting of 26.3% growth in local currencies and 2.0% growth related to foreign currency exchange.

"Our Technology and Value-Added Services group has posted double-digit sales growth in local currencies for five consecutive quarters, with growth in excess of 20% for the past three quarters," explained Mr. Bergman.  "Second quarter results include particular strength in our electronic services and financial services businesses."

Stock Repurchase Plan

The Company announced that it repurchased 71,338 shares of its common stock during the second quarter at an average price of $70.09 per share.  The impact of the repurchase of shares on second quarter diluted EPS was immaterial.  At the end of the second quarter, the Company had $67.9 million authorized for future repurchases of its common stock.

Year-to-Date Results

For the first half of 2011, net sales of $4.1 billion increased 13.0% compared with the first half of 2010.  This increase includes 10.0% growth in local currencies and 3.0% growth related to foreign currency exchange.

Net income attributable to Henry Schein, Inc. for the first half of 2011 was $171.0 million or $1.83 per diluted share, an increase of 11.6% and 10.9%, respectively, compared with first half 2010 adjusted net income, which excludes restructuring costs of $12.3 million or $0.09 per diluted share.  EPS growth was 17.3% on an as-reported basis (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP adjusted net income and EPS).

2011 EPS Guidance

Henry Schein today updated 2011 financial guidance, as follows:

• 2011 diluted EPS attributable to Henry Schein, Inc. is expected to be in the range of $3.92 to $3.98.  This compares to our previous guidance 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.