MELVILLE, N.Y., Feb. 21, 2017 /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 fourth quarter and full year financial results.
Henry Schein, Inc. is on a 52/53 week fiscal year ending on the last Saturday in December, and 2016 had an extra selling week compared with 2015. This extra selling week occurred in the fourth quarter of 2016. In order to facilitate more meaningful comparisons, the Company is providing a separate estimate of the impact of the extra week on sales growth, as well as providing internal sales growth in local currencies excluding that impact.
Net sales for the quarter ended December 31, 2016 were $3.1 billion, an increase of 9.5% compared with the fourth quarter of 2015. This consisted of internal sales growth in local currencies of 4.2%, acquisition growth of 1.3%, a decline related to foreign currency exchange of 1.5%, and growth due to the extra week of 5.5% (see Exhibit A for details of sales growth).
Net income attributable to Henry Schein, Inc. for the fourth quarter of 2016 was $139.2 million, or $1.73 per diluted share on a GAAP basis. This represents growth of 7.1% and 10.9%, respectively, compared with the fourth quarter of 2015. Excluding restructuring costs of $16.1 million pretax, or $0.15 per diluted share, non-GAAP net income attributable to Henry Schein, Inc. for the fourth quarter of 2016 was $151.3 million, or $1.88 per diluted share. This represents growth of 8.6% and 12.6%, respectively, compared with non-GAAP results for the fourth quarter of 2015. Fourth quarter 2015 non-GAAP results exclude restructuring costs of $12.4 million pretax, or $0.11 per diluted share (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP net income and EPS).
“We are pleased to report record financial results for the 2016 fourth quarter and full year. The markets we serve are experiencing consistent growth, and we remain focused on gaining share across all our business units while executing against our financial objectives,” said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein. “We announced seven strategic acquisitions in 2016 with a total investment of approximately $229 million, as we continued to expand our geographic presence and enhance our product offerings. Coming off a successful year, we are affirming guidance for 2017 diluted EPS that represents growth of 16% to 18% compared to 2016 GAAP diluted EPS, or growth of 8% to 10% compared to 2016 non-GAAP diluted EPS.”
Dental sales of $1.5 billion increased 7.7% for the fourth quarter of 2016. This consisted of internal sales growth in local currencies of 1.6%, acquisition growth of 1.7%, a decline related to foreign currency exchange of 1.0%, and growth due to the extra week of 5.4%. In North America, internal sales growth in local currencies for dental consumable merchandise was 1.9%, and for dental equipment sales and services was 2.7%. In international markets, internal sales growth in local currencies for dental consumable merchandise was 2.5% and equipment sales and service revenue decreased by 3.9% over the prior year mainly due to a difficult prior year comparison.
“We believe the North America dental consumable merchandise market is improving as we saw particularly strong growth in December and January,” commented Mr. Bergman. “We also continue to see increased capital equipment investment in dental practices, which drove strong domestic equipment sales in December.”
Animal Health sales of $837.8 million increased 10.8% for the quarter. This consisted of internal sales growth in local currencies of 8.2%, acquisition growth of 0.4%, a decline related to foreign currency exchange of 3.4%, and growth due to the extra week of 5.6%. Internal sales growth in local currencies of 8.2% includes 10.3% growth in North America and 6.3% growth internationally.
“We believe we continued to gain market share in our Animal Health business in the fourth quarter both domestically and in international markets,” commented Mr. Bergman. “Overall the global Animal Health market is healthy and growing, particularly in the companion animal segment where we have expanded opportunities to deliver value-added solutions that help drive practice efficiency.”
Medical sales of $621.1 million increased 10.6% for the quarter. This consisted of internal sales growth in local currencies of 4.4%, a 0.1% decrease due to foreign currency exchange, and growth attributed to the extra week of 6.3%.
“We are pleased with sales in our Medical business as we believe we continue to gain market share, in particular among large group practices, including Integrated Delivery Networks,” remarked Mr. Bergman. “Though the health care landscape is evolving, we believe that the trend toward treatment in the alternate care setting will continue as will the emphasis on wellness and prevention, which is directly associated with primary care physician visits.”
Technology and Value-Added Services sales of $112.2 million increased 19.6% for the quarter. This consisted of internal sales growth in local currencies of 8.5%, acquisition growth of 9.8%, a decline related to foreign currency exchange of 1.9%, and growth due to the extra week of 3.2%. Internal sales growth in local currencies was 7.4% in North America and was 13.9% in our international business.
“Our Technology and Value-Added Services internal sales growth in local currencies was highlighted by solid growth in our software services revenue in both North America and internationally,” commented Mr. Bergman. “Strategic acquisitions contributed approximately 10% to sales growth in both North America and internationally, driven by the contribution of sales from Vetstreet in the U.S. and RxWorks internationally.”
Stock Repurchase Plan
The Company announced that it repurchased approximately 1.3 million shares of its common stock during the fourth quarter at an average price of $156.10 per share, or approximately $200 million. The impact of the repurchase of shares on fourth quarter diluted EPS was approximately 1 cent. At the close of the fourth quarter, Henry Schein had $250 million authorized for future repurchases of its common stock.
Full Year Results
For the year, net sales of $11.6 billion increased 8.9% compared with 2015. This consisted of internal sales growth in local currencies of 6.7%, acquisition growth of 1.9%, a decline related to foreign currency exchange of 1.2%, and growth due to the extra week of 1.5%.
Net income attributable to Henry Schein, Inc. for 2016 was $506.8 million, or $6.19 per diluted share on a GAAP basis, an increase of 5.8% and 8.8%, respectively, compared with 2015. Excluding restructuring costs of $45.9 million pretax, or $0.42 per diluted share, non-GAAP net income attributable to Henry Schein, Inc. for 2016 was $541.2 million, or $6.61 per diluted share, an increase of 7.9% and 10.9%, respectively, compared with 2015. The prior year excludes restructuring costs of $34.9 million pretax, or $0.32 per diluted share, and a one-time income tax benefit, net of noncontrolling interest, of $3.8 million, or $0.05 per diluted share (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP net income and EPS).
2017 EPS Guidance
Henry Schein, Inc. today affirmed 2017 financial guidance, as follows:
- 2017 diluted EPS attributable to Henry Schein, Inc. is expected to be $7.17 to $7.30. This guidance reflects growth of 16% to 18% compared with 2016 GAAP diluted EPS of $6.19, and growth of 8% to 10% compared with 2016 non-GAAP diluted EPS of $6.61. The Company notes that the 2017 fiscal year includes one less week than 2016.
- Guidance for 2017 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. Guidance also assumes foreign exchange rates that are generally consistent with current levels.
Fourth Quarter and Full Year 2016 Conference Call Webcast
The Company will hold a conference call to discuss fourth quarter and full year 2016 financial results today, beginning at 10:00 a.m. Eastern time. Individual investors are invited to listen to the conference call 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. (Nasdaq: HSIC) 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® indexes, Henry Schein employs more than 21,000 Team Schein Members and serves more than 1 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 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. 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 33 countries. The Company’s sales reached a record $11.6 billion in 2016, and have grown at a compound annual rate of approximately 15% since Henry Schein became a public company in 1995. For more information, visit Henry Schein at www.henryschein.com, Facebook.com/HenrySchein and @HenrySchein on Twitter.
Cautionary Note Regarding Forward-Looking Statements and Use of Non-GAAP Financial Information
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 United States Securities and Exchange Commission, or SEC, and will be contained in all subsequent periodic filings we make with the SEC.
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