Full Press Release Details
HENRY SCHEIN REPORTS RECORD SECOND QUARTER 2019 FINANCIAL RESULTS
FROM CONTINUING OPERATIONS
diluted EPS from continuing operations of $0.78, up 8.3%
over prior-year GAAP diluted EPS from continuing operations
diluted EPS from continuing operations of $0.84, up 10.5% over prior-year non-GAAP diluted EPS from continuing operations
provides 2019 GAAP diluted EPS from continuing operations guidance range representing year-over-year growth of 18% to 23%; affirms
2019 non-GAAP diluted EPS from continuing operations guidance range
representing year-over-year growth of 7% to 10%
MELVILLE, N.Y., August
6, 2019 - Henry Schein, Inc. (Nasdaq: HSIC), the world's largest provider of
health care solutions to office-based dental and medical practitioners, today
reported record second quarter financial results from continuing operations.
Results from continuing operations exclude contributions from Henry Schein's
former Animal Health business, which was spun off in February 2019 to form a
new publicly traded company, Covetrus.
Net sales from continuing
operations for the quarter ended June 29, 2019, were $2.4 billion, an increase
of 5.7% compared with the second quarter of 2018. The 5.7% increase consisted
of 7.8% growth in local currencies and a 2.1% decline related to foreign currency
exchange. In local currencies, internally generated sales increased 3.5% and
growth from acquisitions was 4.3%. Excluding approximately $23.9 million in
low-margin corporate revenues from product sales to Covetrus under the
transition services agreement entered into in connection with the Animal Health
spin-off, internal sales growth in local currencies was approximately 2.4% (see
Exhibit A for details of sales growth).
Net income attributable
to Henry Schein, Inc. from continuing operations for the second quarter of 2019
was $116.8 million, or $0.78 per diluted share, compared with prior-year net
income from continuing operations of $110.6 million, or $0.72 per diluted share.
Non-GAAP net income from continuing operations for the second quarter of 2019
was $125.7 million, or $0.84 per diluted share, compared with non-GAAP net
income from continuing operations of $117.0 million, or $0.76 per diluted
share, for the second quarter of 2018. Non-GAAP results for the second quarter
of 2019 and 2018 exclude certain costs noted in Exhibit B, which provides a
reconciliation of GAAP net income and diluted EPS from continuing operations to
non-GAAP net income and diluted EPS from continuing operations.
"We are pleased to deliver solid year-over-year
growth in earnings per share from continuing operations in
the second quarter of 8.3% on a GAAP basis and 10.5% on a non-GAAP basis. This
growth reflects our progress with infrastructure optimization as we position
Henry Schein for continued gains in the global dental and medical markets.
Softness in North America Dental and Technology and Value-Added Services sales
was offset by solid growth in dental sales in the DACH region, dental specialty
sales and medical sales," said Stanley M.
Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein.
"Although we believe
second quarter growth in the U.S. dental end market was slower than in recent
quarters, we note that market growth rates in any particular quarter may vary,
and we had a difficult comparable in the prior year. We affirm our belief that
the global dental and medical markets remain generally stable, and that we are
well positioned to continue to grow our presence in the end markets we serve."
Dental sales of $1.6
billion decreased 0.7%, consisting of 2.1% growth in local currencies and a
2.8% decline related to foreign currency exchange. In local currencies,
internally generated sales increased 0.7% and growth from acquisitions was
1.4%. The 0.7% internal growth in local currencies included 0.3% growth in
North America and 1.3% growth internationally.
"In North America, second
quarter dental consumables internal sales growth of 1.3% in local currencies
compares with a prior-year quarter that had strong sales growth of 4.7%, and is
reflective of relatively low end market growth, yet we believe Henry Schein
grew slightly faster than the market. Dental equipment internal sales declined
by 2.9% in local currencies in the second quarter, mainly due to a decline in
high-tech equipment sales," commented Mr. Bergman.
"Internationally, dental
consumables internal sales in local currencies grew by 2.3% and dental
equipment internal sales in local currencies declined by 2.0%," Mr. Bergman
continued. "While we generated solid double-digit equipment sales growth in the
second quarter in Germany and surrounding countries following the International
Dental Show in March, this was offset by significantly lower sales in Brazil
related to a change in our business model."
Medical sales of $697.6 million
increased 13.6%, consisting of 13.8% growth in local currencies and a 0.2%
decline related to foreign currency exchange. In local currencies, internally
generated sales increased 7.6% and growth from acquisitions was 6.2%.
"We are pleased with
Medical internal sales growth of 7.6% in local currencies during the second
quarter," remarked Mr. Bergman. "Solid organic
growth was complemented by our recent acquisition of North American Rescue. We
believe our Medical group is well-positioned with large group practices,
independent physician offices and alternate sites of care, with strong customer
relationships in each category contributing to our growth."
Value-Added Services sales from continuing operations of $125.1 million
increased 39.9%, consisting of 41.2% growth in local currencies and a 1.3% decline
related to foreign currency exchange. In local currencies, internally generated
sales declined by 1.1% and growth from acquisitions was 42.3%. Growth from
acquisitions was driven by the formation of Henry Schein One in the third
quarter of 2018. Beginning in the third quarter of 2019, sales from Henry
Schein One will be a component of internal sales growth.
"North America Technology and Value-Added Services internal sales growth
in local currencies declined by 1.8% on an as-reported basis. When normalizing
for product switches from direct to agency sales and an ongoing transition of
our technology platform to a cloud-based SaaS model, internal sales growth in
local currencies increased by 0.7%. The year-over-year growth rate was
negatively impacted by a decline in dental equipment sales, which led to lower
financial services revenue.
internal Technology and Value-Added Services sales increased by 1.9% in local
currencies. We are excited about the foundation we are building with Henry
Schein One to deliver end-to-end management and
marketing systems to improve digital dental practice workflow and the entire