Henry Schein Reports Record First Quarter Results

MELVILLE, N.Y., May 4, 2015 /PRNewswire/ -- Henry Schein, Inc. (NASDAQ: HSIC), 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 28, 2015.

Net sales for the first quarter of 2015 were $2.5 billion, an increase of 1.4% compared with the first quarter of 2014.  This consisted of 7.4% growth in local currencies and a 6.0% decline related to foreign currency exchange.  In local currencies, internally generated sales increased 4.8% and acquisition growth was 2.6% (see Exhibit A for details of sales growth).

Net income attributable to Henry Schein, Inc. for the first quarter of 2015 was $103.4 million, or $1.22 per diluted share.  Excluding restructuring costs of $6.9 million pretax or $0.06 per diluted share, net income attributable to Henry Schein, Inc. for the first quarter of 2015 was $108.4 million or $1.28 per diluted share, an increase of 6.2% and 8.5%, respectively, compared with the first quarter of 2014 (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP adjusted net income and EPS).

"Our first quarter financial results were solid, with strong internal growth in local currencies as we continued to gain market share in each of our four business groups.  Total sales growth was negatively impacted by the strengthening of the U.S. dollar, particularly against the euro," said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein.  "The global markets we serve continued to be healthy during the quarter, despite some challenges in our International Dental business.  We are pleased to be affirming our guidance range for 2015 adjusted diluted EPS."

Dental sales of $1.3 billion declined 3.6%, consisting of 3.3% growth in local currencies and a 6.9% decline related to foreign currency exchange.  However, in local currencies internally generated sales increased 2.7% and acquisition growth was 0.6%.  The 2.7% internal growth in local currencies included 4.4% growth in North America and 0.2% growth internationally.

"North America consumable merchandise sales growth of 4.4% in local currencies indicates continued strong patient traffic to dental offices, while equipment sales and service revenue returned to growth during the quarter, up 4.5%," commented Mr. Bergman.  "International dental results included a decline in consumable merchandise sales in local currencies due to some softness in Australia, the United Kingdom and Germany.  International equipment internal sales and service revenue in local currencies grew 5.4%, and we look forward to the positive impact of the biennial International Dental Show, which was held in Cologne, Germany in March."

Animal Health sales of $684.3 million increased 4.6%, consisting of 12.4% growth in local currencies and a 7.8% decline related to foreign currency exchange.  In local currencies, internally generated sales increased 4.5% and acquisition growth was 7.9%.  The 4.5% internal growth in local currencies included 1.3% growth in North America and 7.4% growth internationally.

"Once again our Animal Health group posted double-digit growth in local currencies in both North America and internationally," commented Mr. Bergman.  "Just after the close of the quarter we completed our acquisition of scil animal care.  In addition to fortifying our animal health equipment capabilities in North America and Europe, the scil animal care professionals will be expanding our diagnostics product category and working to gain market share for our animal health diagnostics partners."

Medical sales of $443.5 million increased 11.6%, consisting of 12.5% growth in local currencies and a 0.9% decline related to foreign currency exchange.  In local currencies, internally generated sales increased 11.6% and acquisition growth was 0.9%.

"Excellent Medical sales growth reflects continued progress with large group practices and integrated delivery networks, as well as a full quarter of agency sales under our strategic agreement with Cardinal Health," remarked Mr. Bergman.  "Our collaboration with Cardinal Health is proceeding well, and we expect to have the integration substantially completed during the second quarter."

Technology and Value-Added Services sales of $85.7 million increased 5.4%, including 8.0% growth in local currencies and a 2.6% decline related to foreign currency exchange.  In local currencies, internally generated sales increased 7.9% and acquisition growth was 0.1%.

"Our International Technology and Value-Added Services group posted double-digit internal sales growth in local currencies, as has been the case every quarter for more than two years.  The advanced-technology products and services sold by this group, of course, also provide a platform for further enhancement of sales opportunities to customers across all of our businesses," commented Mr. Bergman.

Stock Repurchase Plan

The Company announced that it repurchased approximately 542,000 shares of its common stock during the first quarter at an average price of $139.67 per share, or approximately $75.7 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 $224 million authorized for future repurchases of its common stock.

2015 EPS Guidance

Henry Schein today affirms 2015 financial guidance, as follows:

• For 2015 the Company expects adjusted diluted EPS attributable to Henry Schein, Inc. to be $5.90 to $6.00, which represents growth of 8% to 10% compared with 2014.
• This 2015 guidance excludes restructuring costs of approximately $0.29 to $0.33 per diluted share related to a previously announced corporate initiative to rationalize the Company's operations and provide significant expense efficiencies.
• Guidance for 2015 adjusted 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.

About Henry Schein, Inc.

Henry Schein, Inc. is the world's largest provider of health care products and services to office-based dental, animal health and medical practitioners.  The Company also serves dental laboratories, government and institutional health care clinics, and other alternate care sites.  A Fortune 500® Company and a member of the S&P 500® and the NASDAQ 100® Indices, Henry Schein employs approximately 18,000 Team Schein Members and serves more than one million customers.

The Company offers a comprehensive selection of products and services, including value-added solutions for operating efficient practices and delivering high-quality care.  Henry Schein operates through a centralized and automated distribution network, with a selection of more than 100,000 branded products and Henry Schein private-brand products in stock, as well as more than 150,000 additional products available as special-order items. The Company also offers its customers exclusive, innovative technology solutions, including practice management software and e-commerce solutions, as well as a broad range of financial services.

Headquartered in Melville, N.Y., Henry Schein has operations or affiliates in 29 countries.  The Company's sales reached a record $10.4 billion in 2014, and have grown at a compound annual rate of approximately 16 percent since Henry Schein became a public company in 1995.  For more information, visit the Henry Schein website at www.henryschein.com.

Cautionary Note Regarding Forward-Looking Statements

In accordance with the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995, we provide the following cautionary remarks regarding important factors that, among others, could cause future results to differ materially from the forward-looking statements, expectations and assumptions expressed or implied herein.  All forward-looking statements made by us are subject to risks and uncertainties and are not guarantees of future performance.  These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  These statements are identified by the use of such terms as "may," "could," "expect," "intend," "believe," "plan," "estimate," "forecast," "project," "anticipate" or other comparable terms.  A full discussion of our operations and financial condition, including factors that may affect our business and future prospects, is contained in documents we have filed with the SEC and will be contained in all subsequent periodic filings we make with the SEC. These documents identify in detail important risk factors that could cause our actual performance to differ materially from current expectations.

Risk factors and uncertainties that could cause actual results to differ materially from current and historical results include, but are not limited to: effects of a highly competitive market; our dependence on third parties for the manufacture and supply of our products; our dependence upon sales personnel, customers, suppliers and manufacturers; our dependence on our senior management; fluctuations in quarterly earnings; risks from expansion of customer purchasing power and multi-tiered costing structures; possible increases in the cost of shipping our products or other service issues with our third-party shippers; general global macroeconomic conditions; disruptions in financial markets; possible volatility of the market price of our common stock; changes in the health care industry; implementation of health care laws; failure to comply with regulatory requirements and data privacy laws; risks associated with our global operations; transitional challenges associated with acquisitions and joint ventures, including the failure to achieve anticipated synergies; financial risks associated with acquisitions and joint ventures; litigation risks; the dependence on our continued product development, technical support and successful marketing in the technology segment; risks from challenges associated with the emergence of potential increased competition by third party online commerce sites; risks from disruption to our information systems; certain provisions in our governing documents that may discourage third-party acquisitions of us; and changes in tax legislation. The order in which these factors appear should not be construed to indicate their relative importance or priority. 

We caution that these factors may not be exhaustive and that many of these factors are beyond our ability to control or predict.  Accordingly, any forward-looking statements contained herein should not be relied upon as a prediction of actual results.  We undertake no duty and have no obligation to update forward-looking statements.

(TABLES TO FOLLOW)

Note: Certain prior period amounts have been reclassified to conform to the current period presentation.

This non-GAAP comparison is being presented in order to provide a more comparable basis for analysis.

SOURCE Henry Schein, Inc.