MELVILLE, N.Y.–(BUSINESS WIRE)–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.
“We are pleased to report record second-quarter financial results that reflect good underlying momentum in the business and execution of our strategy,” said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein. “Our solid operational execution this quarter and our results demonstrate the strength of our business. While we are maintaining our full-year 2022 diluted EPS guidance range of $4.75 to $4.91, we are adjusting our expectations for full-year sales growth to reflect changes including a continued strengthening of the U.S. dollar and declining demand for COVID-19 test kits.
“Our Global Dental business once again was driven by strong equipment sales as dentists continued to invest in their practices. Consumable merchandise internal sales growth in local currencies excluding personal protective equipment (PPE) and COVID-19 related products was impacted by an increase in patient appointment cancellations and staff shortages, which we believe were related to COVID-19 infections.
“Our Global Medical business had another excellent quarter with double-digit internal sales growth in local currencies when excluding PPE and COVID-19 related products. During the second quarter, we had strong sales of point-of-care diagnostic tests including flu test kits, as well as generic pharmaceuticals and equipment. Patient traffic was bolstered by a high number of visits for seasonal influenza.
“We are pleased with the good growth in our Technology & Value-Added Services business where, once again, North America and International sales increased by double-digit percentages. Henry Schein One sales growth accelerated compared with prior-year growth, and we are seeing healthy demand from our national DSO accounts for these solutions,” concluded Mr. Bergman.
Second-Quarter Financial Results
- Total net sales for the quarter ended June 25, 2022, were $3.0 billion, up 2.1% compared with the second quarter of 2021. The 2.1% increase included 2.4% internal growth in local currencies, 2.1% growth from acquisitions, and a 2.4% decrease related to foreign currency exchange. (See Exhibit A for details of sales growth.) Second-quarter internal sales growth in local currencies excluding sales of PPE and COVID-19 related products was 6.7% compared with the prior year.
- GAAP net income attributable to Henry Schein, Inc. for the second quarter of 2022 was $160 million, or $1.16 per diluted share, compared with second-quarter 2021 GAAP net income attributable to Henry Schein, Inc. of $156 million, or $1.10 per diluted share, and second-quarter 2021 non-GAAP net income attributable to Henry Schein, Inc. of $157 million, or $1.11 per diluted share. (See Exhibit B for a reconciliation of GAAP net income and diluted EPS to non-GAAP net income and diluted EPS.)
- Global Dental sales for the second quarter of 2022 of $1.9 billion decreased 3.1% compared with the prior-year period. Internally generated sales in local currencies decreased 0.3%, with 0.7% growth from acquisitions and a 3.5% decrease related to foreign currency exchange. The 0.3% internal sales decrease in local currencies included a 1.1% decrease in North America and 1.0% growth internationally.
- Global Dental consumable merchandise internal sales decreased by 2.2% in local currencies. Excluding sales of PPE and COVID-19 related products, internal sales growth in local currencies was 2.4%. Global Dental equipment internal sales growth was 7.0% in local currencies.
- North America dental consumable merchandise internal sales in local currencies decreased 3.5% and increased 2.2% when excluding sales of PPE and COVID-19 related products. North America dental equipment internal sales in local currencies increased 8.1%.
- International dental consumable merchandise internal sales in local currencies decreased 0.3% and increased 2.7% when excluding sales of PPE and COVID-19 related products. International dental equipment internal sales in local currencies increased 5.5%.
- Global Dental consumable merchandise internal sales decreased by 2.2% in local currencies. Excluding sales of PPE and COVID-19 related products, internal sales growth in local currencies was 2.4%. Global Dental equipment internal sales growth was 7.0% in local currencies.
- Global Medical sales for the second quarter of 2022 of $1.0 billion increased 10.3% compared with the same period last year. Internally generated sales in local currencies increased 6.7%, with 3.9% growth from acquisitions and a 0.3% decrease related to foreign currency exchange. Internal sales in local currencies increased 13.6% excluding sales of PPE and COVID-19 related products.
- Global Technology and Value-Added Services sales of $181 million increased 18.1% compared with the prior-year quarter, driven by Henry Schein One. This included 10.8% internal sales growth in local currencies, 8.8% growth from acquisitions, and a 1.5% decline related to foreign currency exchange.
Year-to-Date Financial Results
- Total net sales for the first half of 2022 were $6.2 billion, an increase of 5.4% compared with the first half of 2021. The 5.4% increase included 5.0% internal growth in local currencies, 2.3% growth from acquisitions, and a 1.9% decrease related to foreign currency exchange. First-half internal sales growth in local currencies excluding sales of PPE and COVID-19 related products was 7.5% compared with the prior year.
- GAAP net income attributable to Henry Schein, Inc. for the first half of 2022 was $341 million, or $2.46 per diluted share, compared with first half 2021 GAAP net income attributable to Henry Schein, Inc. of $322 million, or $2.26 per diluted share, and first half 2021 non-GAAP net income attributable to Henry Schein, Inc. of $335 million, or $2.35 per diluted share. Non-GAAP results for the first half of 2021 exclude certain items noted in Exhibit B, which provides a reconciliation of GAAP net income and diluted EPS to non-GAAP net income and diluted EPS.
Stock Repurchase Plan
During the second quarter of 2022, the Company repurchased approximately 1.3 million shares of its common stock at an average price of $81.42 per share, for a total of $110 million. The impact of the repurchase of shares on second-quarter diluted EPS was immaterial. At quarter-end, Henry Schein had approximately $90 million authorized and available for future stock repurchases.
Restructuring Program
Henry Schein is today also announcing a company-wide restructuring plan that is focused on funding the priorities of the strategic plan and streamlining operations and other initiatives to increase efficiency.
The Company expects to record restructuring charges in 2022 and 2023, however an estimate of the amount of these charges has not yet been determined. Any restructuring charges are expected primarily to include severance pay and facility-related costs. The expense savings realized from this plan are expected to mainly affect 2023 and beyond.
Financial Guidance
Henry Schein today provides full-year 2022 financial guidance, as follows:
- Affirms guidance for full-year 2022 GAAP diluted EPS attributable to Henry Schein, Inc. of $4.75 to $4.91, reflecting growth of 7% to 10% compared with 2021 GAAP diluted EPS of $4.45 and growth of 5% to 9% compared with 2021 non-GAAP diluted EPS of $4.52.
- Updates full-year 2022 expected sales growth to be approximately 3% to 6% over 2021. This compares with previous guidance for growth of 5% to 8% over 2021 and reflects adverse effects from foreign exchange rates and a decrease in anticipated sales of PPE and COVID-related products, including COVID-19 test kits. Sales of COVID-19 test kits are now expected to decline 25% to 30% from 2021, versus a previously estimated decline of 15% to 25%.
- Affirms expectations for full-year 2022 operating margin expansion of 39-44 basis points over 2021 GAAP operating margin and expansion of 20-25 basis points over 2021 non-GAAP operating margin.
Guidance for 2022 GAAP diluted EPS and sales growth is for completed or previously announced acquisitions and does not include potential future acquisitions or restructuring expenses. Guidance also assumes that foreign currency exchange rates will remain generally consistent with current levels, that end markets will remain stable and consistent with current market conditions, and that there are no material adverse market changes associated with COVID-19.
About Henry Schein, Inc.
Henry Schein, Inc. (Nasdaq: HSIC) is a solutions company for health care professionals powered by a network of people and technology. With more than 22,000 Team Schein Members worldwide, the Company’s network of trusted advisors provides more than 1 million customers globally with more than 300 valued solutions that help improve operational success and clinical outcomes. Our Business, Clinical, Technology, and Supply Chain solutions help office-based dental and medical practitioners work more efficiently so they can provide quality care more effectively. These solutions also support dental laboratories, government and institutional health care clinics, as well as other alternate care sites.
Henry Schein operates through a centralized and automated distribution network, with a selection of more than 120,000 branded products and Henry Schein private-brand products in stock, as well as more than 180,000 additional products available as special-order items.
A FORTUNE 500 Company and a member of the S&P 500® index, Henry Schein is headquartered in Melville, N.Y., and has operations or affiliates in 32 countries and territories. The Company’s sales reached $12.4 billion in 2021, and have grown at a compound annual rate of approximately 12.5 percent since Henry Schein became a public company in 1995.
For more information, visit Henry Schein at www.henryschein.com, Facebook.com/HenrySchein, Instagram.com/HenrySchein, and Twitter.com/HenrySchein.
