Henry Schein Reports Record Fourth Quarter Results
Posted Feb 11, 2014 in Industry News
EPS up 13.5% to $1.43
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 December 28, 2013.
Net sales for the fourth quarter of 2013 were $2.5 billion, an increase of 4.9% compared with the fourth quarter of 2012. This consisted of 4.4% growth in local currencies and 0.5% growth related to foreign currency exchange. In local currencies, internally generated sales increased 3.7% and acquisition growth was 0.7% (see Exhibit A for details of sales growth).
Net income attributable to Henry Schein, Inc. for the fourth quarter of 2013 was $124.3 million or $1.43 per diluted share, an increase of 10.5% and 13.5%, respectively, compared with the fourth quarter of 2012.
"We are pleased to complete a very successful 2013 with strong fourth quarter results," said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein. "Sales growth during the fourth quarter was solid and on plan. Importantly, we believe we gained market share in each of our four global business units and exceeded the top of our original EPS guidance range for the year."
Global Dental sales of $1.4 billion increased 3.9%, consisting of 3.1% growth in local currencies and 0.8% growth related to foreign currency exchange. In local currencies, internally generated sales increased 2.6% and acquisition growth was 0.5%. The 2.6% internal growth in local currencies included 2.1% growth in North America and 3.5% growth in International.
"Gains in North America Dental sales included solid growth in consumable merchandise, while equipment sales and service revenue declined slightly following growth of nearly 22% in the prior-year quarter, making for a challenging comparison," commented Mr. Bergman. "International Dental returned to growth during the quarter as consumable merchandise posted positive gains and equipment sales and service revenue growth accelerated from the previous quarter."
Global Animal Health sales of $651.7 million increased 6.6%; there was no material impact on sales growth from foreign currency exchange. Internally generated sales increased 4.8% and acquisition growth was 1.8%. The 4.8% internal growth in local currencies included 7.0% growth in North America and 2.9% growth in International.
"Once again our Global Animal Health business performed well during the quarter. North America internal sales growth in the high single digits is consistent with our stated goals, and International Animal Health internal sales growth in local currencies accelerated slightly versus the prior quarter," commented Mr. Bergman.
Global Medical sales of $421.9 million increased 4.8%, including 4.6% growth in local currencies and 0.2% growth related to foreign currency exchange. "Reported Global Medical growth benefitted from higher sales of seasonal influenza vaccines versus the prior year. Excluding this impact, our Global Medical sales growth accelerated slightly compared to the third quarter. We believe patient traffic to U.S. physician offices was largely consistent with the prior quarter," remarked Mr. Bergman. "We are confident that our focus on large group practices will allow us to continue to gain market share."
Global Technology and Value-Added Services sales of $88.4 million increased 8.6%, including 8.9% growth in local currencies and a 0.3% decline related to foreign currency exchange. In local currencies, internally generated sales increased 8.6% and acquisition growth was 0.3%.
"Technology and Value-Added Services growth was driven by electronic services recurring revenue, software sales and value-added services," commented Mr. Bergman. "Sales in International markets were particularly strong."
Stock Repurchase Plan
The Company announced that it repurchased approximately 664,000 shares of its common stock during the fourth quarter at an average price of $111.04 per share, or approximately $73.8 million. The impact of the repurchase of shares on fourth quarter diluted EPS was immaterial. For the full year 2013 the Company repurchased $300.3 million in stock, representing 3.1 million shares at an average price of $97.71 per share, which is in line with our stated goals. At the close of the fourth quarter, Henry Schein had approximately $300 million authorized for future repurchases of its common stock.
For 2013, net sales of $9.6 billion increased 6.9% compared with 2012. This consisted of 6.8% growth in local currencies and 0.1% growth related to foreign currency exchange. In local currencies, internally generated sales increased 3.6% and acquisition growth was 3.2%.
Net income attributable to Henry Schein, Inc. for 2013 was $431.6 million or $4.93 per diluted share. Excluding certain one-time items, adjusted net income attributable to Henry Schein, Inc. for 2013 was $433.4 million or $4.95 per diluted share, an increase of 8.7% and 11.5%, respectively, compared with adjusted net income for 2012 (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP adjusted net income and EPS).
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.
- The Company expects that growth in diluted EPS for 2014 will accelerate over the course of the year, due to a number of timing factors including the impact of recent acquisitions.
- 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.
Fourth Quarter Conference Call Webcast
The Company will hold a conference call to discuss fourth 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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