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Henry Schein Reports Record First Quarter Results

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Posted: May 6, 2014
Henry Schein, Inc., the world's largest provider of health care products and services to office-based dental, animal health and medical practitioners, today reported record financial results for the quarter ended March 29, 2014.

Net sales for the first quarter of 2014 were $2.4 billion, an increase of 6.0% compared with the first quarter of 2013.  This consisted of 5.6% growth in local currencies and 0.4% growth related to foreign currency exchange.  In local currencies, internally generated sales increased 2.9% and acquisition growth was 2.7% (see Exhibit A for details of sales growth).

Net income attributable to Henry Schein, Inc. for the first quarter of 2014 was $102.1 million or $1.18 per diluted share, an increase of 8.4% and 11.3%, respectively, compared with the first quarter of 2013 excluding a non-cash, one-time expense related to debt refinancing.

"We are pleased to begin 2014 with solid first quarter financial results despite severe winter weather throughout many parts of the U.S.," said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein.  "While we believe our U.S. sales in each of our business groups were adversely impacted by weather, we are pleased with our first quarter EPS performance and to be affirming our 2014 financial guidance."

Dental sales of $1.3 billion increased 8.9%, consisting of 8.6% growth in local currencies and 0.3% growth related to foreign currency exchange.  In local currencies, internally generated sales increased 3.5% and acquisition growth was 5.1%.  The 3.5% internal growth in local currencies included 3.6% growth in North America and 3.3% growth in International.

"Our North America Dental sales were highlighted by equipment sales and service revenue growing 16% internally in local currency," commented Mr. Bergman.  "In our International Dental business, consumable merchandise sales growth accelerated sequentially with internal growth in local currencies the highest it has been in nearly two years, and strategic acquisitions bolstered equipment sales and service revenue growth."

Animal Health sales of $654.5 million increased 2.4%, consisting of 2.0% growth in local currencies and 0.4% growth related to foreign currency exchange.  There was no acquisition impact for the quarter.  The 2.0% internal growth in local currencies included a 0.4% decline in North America and 4.2% growth in International.

"The decline in North America Animal Health sales is largely attributed to adverse weather conditions.  International Animal Health internal sales growth in local currencies was the highest we have reported in a year and a half," commented Mr. Bergman.

Medical sales of $397.4 million increased 2.2%, including 2.0% growth in local currencies and 0.2% growth related to foreign currency exchange. "Our Medical group continues to focus on large group practices and integrated delivery networks in the U.S.  We are making good progress in advancing the new customer on-boarding process and are seeing positive results," remarked Mr. Bergman.

Technology and Value-Added Services sales of $81.3 million increased 8.9%, including 8.6% growth in local currencies and 0.3% growth related to foreign currency exchange.  In local currencies, internally generated sales increased 6.2% and acquisition growth was 2.4%.

"Technology and Value-Added Services growth was driven by software sales and value-added services," commented Mr. Bergman.  "We are particularly pleased with our performance internationally in this category."

Stock Repurchase Plan
The Company announced that it repurchased approximately 647,000 shares of its common stock during the first quarter at an average price of $116.34 per share, or approximately $75.3 million.  The impact of the repurchase of shares on first quarter diluted EPS was immaterial.  At the close of the first quarter, Henry Schein had approximately $225 million authorized for future repurchases of its common stock.

2014 EPS Guidance
Henry Schein today affirmed 2014 financial guidance, as follows:
• For 2014, the Company expects diluted EPS attributable to Henry Schein, Inc. to be $5.29 to $5.39, which represents growth of 7% to 9% compared with 2013 results excluding certain one-time items. 
• Guidance for 2014 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.

First Quarter Conference Call Webcast
The Company will hold a conference call to discuss first 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 website at www.henryschein.com.  In addition, a replay will be available beginning shortly after the call has ended.
 
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