Henry Schein Reports Record Fourth Quarter Results

MELVILLE, N.Y., Feb. 22, 2011 /PRNewswire/ -- Henry Schein, Inc. (Nasdaq: HSIC), the largest provider of healthcare products and services to office-based practitioners, today reported record financial results for the quarter ended December 25, 2010.

Net sales for the fourth quarter of 2010 were $2.0 billion, an increase of 13.3% compared with the fourth quarter of 2009.  This consists of 15.0% growth in local currencies partially offset by a decline of 1.7% related to foreign currency exchange.  Internal sales growth in local currencies was 3.3% (see Exhibit A for details of sales growth).

Income from continuing operations attributable to Henry Schein, Inc. for the fourth quarter of 2010 was $93.0 million or $1.00 per diluted share, an increase of 8.5% and 7.5%, respectively, compared with fourth quarter 2009 adjusted net income, which excludes certain unusual items (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP adjusted net income and EPS).

"Our fourth quarter financial results are solid as we gained market share in each of our business groups.  This quarterly performance is continued validation of our growth strategy, and the underlying strength of our business," said Stanley M. Bergman, Chairman and Chief Executive Officer of Henry Schein.  "In addition, for the first time quarterly net sales reached $2 billion.  Quarterly net sales first surpassed the $1 billion mark in the third quarter of 2004, and this doubling of quarterly sales represents compound annual growth of 12% since then, a timeframe that includes the recent years of global economic challenges."

North American Dental sales of $720.7 million increased 7.3%, consisting of 6.7% growth in local currencies and 0.6% growth related to foreign currency exchange.  The 6.7% growth in local currencies included 9.7% growth in Dental consumable merchandise sales and 0.2% growth in Dental equipment sales and service revenues.

"We marked our fifth consecutive quarter of increased internal Dental consumable merchandise sales growth in local currencies, which provides further evidence of stability in our markets as well as the efficiency of our consultative approach to sales and customer service.  We have also recorded growth in sales of Dental equipment for each quarter of 2010, including the fourth quarter where the comparison is more difficult than earlier quarters in the year, due to strong equipment sales in last year's fourth quarter," commented Mr. Bergman.

North American Medical sales of $327.7 million increased 5.7%.  Sales of seasonal influenza vaccines in 2010 were skewed more heavily toward the third quarter versus the fourth quarter, compared with 2009.  Excluding sales of seasonal influenza vaccines from both fourth quarter periods, North American Medical sales increased 7.1%.

"During the quarter we sold approximately 1.3 million doses of seasonal influenza vaccines, bringing our total for the year to approximately 12.5 million doses, in line with our expectations," remarked Mr. Bergman.  "The 2009 fourth quarter included sales of products related to the H1N1 virus that occurred to a lesser extent this year.  When excluding sales of those products and seasonal influenza vaccines from both periods, we estimate that North American Medical internal sales growth was 5.7%."

North American Animal Health sales increased 282.2% to $222.7 million, reflecting the combined Butler Schein Animal Health business.

"We now have turned our focus at Butler Schein Animal Health to various initiatives to drive sales growth by expanding the breadth and depth of our product offerings.  We recently announced two strategic veterinary software acquisitions that support our position of industry leadership.  By adding the products and services of McAllister Software Systems and ImproMed, we further enhance the vital role of Butler Schein Animal Health with its customers and manufacturers," commented Mr. Bergman.  

International sales of $695.0 million declined 0.6%, consisting of 4.4% growth in local currencies partially offset by a decline of 5.0% related to foreign currency exchange.

"Our International results are highlighted by strong internal growth in local currencies in our Dental business, particularly in Dental equipment.  International Animal Health sales growth in local currencies also was solid," added Mr. Bergman.  "On an overall basis, the U.K., Italy, France, Holland, Belgium and Austria each exhibited healthy sales growth."

Technology and Value-Added Services sales of $57.5 million increased 21.9% during the quarter, including 17.5% internal sales growth in local currencies.  "We had notably strong growth in software sales in Australia, New Zealand and Canada," explained Mr. Bergman.  "Our continued excellent performance in Technology and Value-Added Services provides a great platform for enhancing customer relationships and increasing market penetration, and a clear competitive advantage."

Full Year Results

For the year, net sales of $7.5 billion increased 15.1% compared with 2009.  This includes 15.4% growth in local currencies partially offset by a decline of 0.3% related to foreign currency exchange.

Income from continuing operations attributable to Henry Schein, Inc. for 2010 was $325.8 million or $3.49 per diluted share.  Non-GAAP adjusted income from continuing operations attributable to Henry Schein, Inc. for 2010 was $334.0 million or $3.58 per diluted share, an increase of 15.4% and 11.9%, respectively, compared with 2009 excluding restructuring costs in both periods, as well as certain unusual items in 2009 (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP adjusted net income and EPS).

Stock Repurchase Plan

The Company announced that it repurchased 919,698 shares of its common stock during the fourth quarter at an average price of $57.54 per share.  For the year the Company repurchased $57.7 million of its common stock.  The impact of the repurchase of shares on fourth quarter and full year diluted EPS was immaterial.  At the end of the fourth quarter, the Company had $100 million authorized for future repurchases of its common stock.

2011 EPS Guidance

Henry Schein today affirmed 2011 financial guidance, as follows:

• 2011 diluted EPS attributable to Henry Schein, Inc. is expected to be in the range of $3.88 to $3.98.

• Guidance for 2011 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 Web site at www.henryschein.com.  In addition, a replay will be available beginning shortly after the call has ended.

About Henry Schein

Henry Schein, a Fortune 500® company and a member of the NASDAQ 100® Index, is the largest distributor of products and services to office-based health care practitioners.  The Company is recognized for its excellent customer service and highly competitive prices.  The Company's five  businesses – North American Dental, North American Medical, North American Animal Health, International and Technology – serve more than 700,000 customers worldwide, including dental practitioners and laboratories, physician practices and animal health practices, as well as government and other institutions. 

The Company operates through a centralized and automated distribution network, which provides customers in more than 200 countries with a comprehensive selection of more than 90,000 national and Henry Schein private-brand products in stock, as well as more than 100,000 additional products available as special-order items.  Henry Schein also provides exclusive, innovative technology offerings for dental, medical and veterinary professionals, including value-added practice management software and electronic health record solutions.  

Headquartered in Melville, N.Y., Henry Schein employs more than 14,000 people and has operations or affiliates in 25 countries.  The Company's net sales reached a record $7.5 billion in 2010.  For more information, visit the Henry Schein Web site at www.henryschein.com.

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: recently enacted healthcare legislation; effects of a highly competitive market; changes in the healthcare industry; changes in regulatory requirements; risks from expansion of customer purchasing power and multi-tiered costing structures; risks associated with our international operations; fluctuations in quarterly earnings; our dependence on third parties for the manufacture and supply of our products; transitional challenges associated with acquisitions, including the failure to achieve anticipated synergies; financial risks associated with acquisitions; regulatory and litigation risks; the dependence on our continued product development, technical support and successful marketing in the technology segment; risks from disruption to our information systems; general economic conditions; decreased customer demand and changes in vendor credit terms; disruptions in financial markets; our dependence upon sales personnel, manufacturers and customers; our dependence on our senior management; possible increases in the cost of shipping our products or other service issues with our third-party shippers; risks from rapid technological change; possible volatility of the market price of our common stock; 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.

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.  Earnings per share numbers may not sum due to rounding.

SOURCE Henry Schein, Inc.

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