- Q1 GAAP diluted EPS from continuing operations of $0.91
versus prior-year GAAP diluted EPS from continuing operations of
$0.78
- Q1 non-GAAP diluted EPS from continuing operations of $0.94
versus prior-year non-GAAP diluted EPS from continuing operations
of $0.80
- Prioritizing safety of Team Schein Members across the globe;
assisting customers in building a roadmap to navigate through
practice disruptions and prepare for resumption of
procedures
- Implemented broad-based cost reduction initiatives in
response to COVID-19
- Company has access to approximately $1.7 billion in
liquidity and a low debt-to-EBITDA ratio
- Affirms confidence in long-term business strategy
Henry Schein, Inc. (Nasdaq: HSIC), the world’s largest provider
of health care solutions to office-based dental and medical
practitioners, today reported first quarter 2020 financial results
from continuing operations. Results from continuing operations
exclude contributions from Henry Schein’s former Animal Health
business, which was spun off in February 2019 to form a new
publicly traded company, Covetrus (Nasdaq: CVET).
Net sales for the quarter ended March 28, 2020, were $2.4
billion, an increase of 2.9% compared with the first quarter of
2019. The 2.9% increase consisted of 4.0% growth in local
currencies and a 1.1% decline related to foreign currency exchange.
In local currencies, internally generated sales increased 2.1% and
acquisition growth was 1.9%. Excluding approximately $21.1 million
in corporate revenues from product sales to Covetrus under the
transition services agreement entered into in connection with the
Animal Health spin-off, internal sales growth in local currencies
was 1.8% (see Exhibit A for details of sales growth and a
reconciliation of this non-GAAP measure to GAAP sales).
Net income attributable to Henry Schein, Inc. from continuing
operations for the first quarter of 2020 was $130.5 million, or
$0.91 per diluted share, compared with prior-year net income from
continuing operations of $118.4 million, or $0.78 per diluted
share. Non-GAAP net income from continuing operations for the first
quarter of 2020 was $134.1 million, or $0.94 per diluted share,
compared with non-GAAP net income from continuing operations of
$120.6 million, or $0.80 per diluted share, for the first quarter
of 2019. Non-GAAP results for the first quarter of 2020 and 2019
exclude certain items noted in Exhibit B, which provides a
reconciliation of GAAP net income from continuing operations and
diluted EPS from continuing operations to non-GAAP net income and
diluted EPS from continuing operations.
“The COVID-19 pandemic has had a significant impact on our
worldwide results for the month of March, and continues to impact
our Dental business, in particular, as many dental practices are
closed except for emergency procedures. Our Medical and Technology
and Value-Added Services businesses have been somewhat more
resilient, although each is also currently experiencing sales
declines due to COVID-19,” said Stanley M. Bergman, Chairman of the
Board and Chief Executive Officer of Henry Schein.
Dental sales for the first quarter of 2020 of $1.5 billion
decreased 4.6%, consisting of a decline of 3.0% in local currencies
and a 1.6% decline related to foreign currency exchange. In local
currencies, internally generated sales decreased 3.7% and
acquisition growth was 0.7%. The 3.7% internal decline in local
currencies included a decrease of 3.9% in North America and a
decrease of 3.4% internationally.
“North America dental sales were relatively in-line with our
expectations in January and February. North America dental
consumable merchandise and equipment internal sales were
significantly impacted by U.S. dental office closures following the
American Dental Association’s recommendation in mid-March that
practices suspend operations except for emergency procedures.
Similarly, in Canada most provinces recommended that dental
practices suspend operations except for emergency procedures,
significantly impacting sales late in the quarter,” noted Mr.
Bergman. “International dental consumable merchandise and equipment
internal sales were also relatively in-line during January and
February. However, these sales were significantly impacted in March
by social distancing practices across virtually all dental markets
served by Henry Schein, including Europe and China. I would note
that Germany, and to a lesser extent Australia and Brazil, did not
experience as severe an impact compared with other international
geographies that we serve. We have begun to see some dental clinics
reopen in China, however the rate of practices reopening has been
at a gradual pace. In other parts of the world we expect that as
stay at home orders are relaxed, dental practices will also begin
to resume operations.”
Medical sales for the first quarter of 2020 of $800.7 million
increased 17.1%, consisting of 17.2% growth in local currencies and
a 0.1% decrease related to foreign currency exchange. In local
currencies, internally generated sales increased 13.4% and
acquisition growth was 3.8%.
“Internal sales growth of 13.4% in local currencies was driven
by solid organic growth earlier in the quarter, as well as an
increase of personal protective equipment sales in March. However,
current sales in our Medical business are also significantly
impacted by COVID-19,” remarked Mr. Bergman.
Technology and Value-Added Services sales from continuing
operations of $132.0 million increased 14.2%, consisting of 14.5%
growth in local currencies and a 0.3% decline related to foreign
currency exchange. In local currencies, internally generated sales
increased 6.4% and acquisition growth was 8.1%.
“Technology and Value-Added Services sales growth in the first
quarter was primarily driven by positive trends in recurring
revenue associated with our practice management, patient engagement
and patient demand creation software solutions. In mid-March, the
impact from COVID-19 began to materially impact sales in these
categories, as well as in new system installations, our
DentalPlans.com and our financial services businesses,” said Mr.
Bergman. “We are working with our customers to utilize Henry Schein
patient engagement solutions so our customers can remain in touch
with patients and plan for the resumption of booking of
procedures.”
Response to COVID-19
“Due to the speed and severity of the COVID-19 health care and
related economic crisis, this is one of the most trying moments in
modern history for everyone,” said Mr. Bergman. “Henry Schein
immediately responded to the spread of the virus by prioritizing
the safety of Team Schein Members across the globe, while we
remained committed to continuing to provide outstanding customer
service, driving operating efficiencies across the organization and
conserving capital in the face of financial headwinds. We took
swift and decisive action to reduce our cost structure to best
position Henry Schein through this crisis and beyond. I have the
utmost confidence in our business strategy, in our leadership team
and in all of Team Schein. Together we are making critical
decisions to manage the Company in the interest of all constituents
- Team Schein, customers, suppliers, investors and society - and in
doing so, we are building value for the long-term.”
Response to COVID-19 - Financial
In a focused effort to generate cash savings, Henry Schein has
initiated a number of measures. The Company is aggressively
reducing overhead and SG&A expenses, including having
implemented a payroll cost reduction plan centered around
furloughs, reduced work hours, voluntary unpaid time off,
suspension of the 401(k) match, and job reductions. As previously
disclosed, the Company temporarily reduced the salary of management
at the Director level through Executive Management, ranging from
10% to 100%, respectively. The Company’s Board of Directors has
agreed to a temporary reduction of 25% of its non-employee
directors’ cash retainer. The Company will closely monitor the
health of its business and is prepared to take additional cost
saving measures, as warranted.
Henry Schein has reduced or eliminated all non-essential capital
expenditures, and in early March, the Company temporarily suspended
its acquisition activity and share repurchase program. Prior to
this, the Company repurchased 1.2 million shares of its common
stock during the first quarter at an average price of $61.49 per
share, or a total of approximately $73.8 million. The impact of the
repurchase of shares on first quarter 2020 diluted EPS was
immaterial. As of today, Henry Schein has $201.2 million authorized
and available for future stock repurchases.
Henry Schein has maintained a strong balance sheet as well as a
low debt-to-EBITDA ratio at the end of the first quarter of 2020,
positioning the Company to weather economic uncertainty. The
Company currently has access to approximately $1.7 billion in
liquidity, providing flexibility during this challenging time.
Response to COVID-19 – Customer Service
The COVID-19 pandemic is an unprecedented challenge for public
health and for the global economy. As this crisis rapidly evolved,
Henry Schein worked with its suppliers to expand availability and
prioritize the delivery of critical personal protective equipment
(PPE) and also brought to market rapid test solutions for health
care professionals. As most of our dental and many medical
practices began to suspend operations, Henry Schein stepped in to
help customers build a roadmap to navigate through the disruptions
to their practices, including access to third-party financing
resources. Henry Schein is working closely to assist customers with
business continuity planning for today, and also in anticipation of
practices resuming activity.
As part of the Company’s commitment to delivering essential
products to health care professionals fighting the COVID-19
pandemic in the United States, Henry Schein is a participant in the
White House’s COVID-19 Supply Chain Task Force. The Company has
also worked with the Strategic National Stockpile to deliver
personal protective equipment to COVID-19 testing sites and with
the Federal Emergency Management Agency to deliver critical
supplies to health care professionals and institutions.
In the United States, Henry Schein recently introduced two rapid
point-of-care test kits that can detect antibodies associated with
COVID-19 in as little as 15 minutes and without the need for
machine equipment. These tests are important because they deliver
results quickly and at low cost and can easily and quickly be
deployed in large quantities where they are needed. Health care
professionals can utilize these test results, along with clinical
judgment and assessment of symptoms, to make informed decisions.
Henry Schein believes public health officials can also use these
tests, as part of broader testing, to better understand the spread
of the disease. The Company is working to bring additional tests as
well as more PPE to market.
Currently, the COVID-19 antibody tests offered by Henry Schein
are being marketed under an FDA emergency enforcement policy, and
have not been independently reviewed by FDA. Under that policy, the
tests may be administered by labs and health care professionals at
locations that are Clinical Laboratory Improvement Amendments
(CLIA) certified to perform high complexity tests.
Financial Guidance
Henry Schein’s financial guidance announced on February 20,
2020, specifically noted that guidance assumed no significant
supply chain disruption related to COVID-19. On April 6, 2020, in
light of the growing impact of COVID-19 on the business operations
of the Company and its customers, Henry Schein announced the
withdrawal of its previously announced financial guidance for 2020.
Due to the continued uncertainty surrounding COVID-19 and its
impact to business operations, Henry Schein is not providing 2020
financial guidance at this time.
First Quarter 2020 Conference Call Webcast
The Company will hold a conference call to discuss first quarter
2020 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 by visiting
www.henryschein.com/IRwebcasts. In addition, a replay will be
available beginning shortly after the call has ended.
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 19,000 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
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 31 countries. The Company's sales from continuing
operations reached $10.0 billion in 2019, and have grown at a
compound annual rate of approximately 13 percent 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 include EPS guidance and are generally
identified by the use of such terms as "may," "could," "expect,"
"intend," "believe," "plan," "estimate," "forecast," "project,"
"anticipate," “to be,” “to make” or other comparable terms. Forward
looking statements include the overall impact of the COVID-19
pandemic on the Company, its results of operations, liquidity, and
financial condition (including any estimates of the percentage
impact on these items), the efficacy and impact of the Company’s
cost reduction initiatives, and the rate at which dental and other
practices may begin to resume normal operations in the United
States and internationally. Forward looking statements also include
the Company’s ability to make additional testing available, the
nature of those tests and the number of tests intended to be made
available and the timing for availability, the nature of the target
market, as well as the efficacy or relative efficacy of the test
results given that the test efficacy has not been, or will not have
been, independently verified under normal FDA procedures. A full
discussion of our operations and financial condition, status of
litigation matters, 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. 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 and
consolidating market; increased competition by third party online
commerce sites; 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; increases in shipping costs for our products or other
service issues with our third-party shippers; general global
macro-economic conditions; risks associated with currency
fluctuations; risks associated with political and economic
uncertainty; disruptions in financial markets; 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; risks associated with the
Novel Coronavirus Disease 2019 (COVID-19); risks associated with
the United Kingdom’s withdrawal from the European Union;
transitional challenges associated with acquisitions, dispositions
and joint ventures, including the failure to achieve anticipated
synergies/benefits; financial and tax risks associated with
acquisitions, dispositions and joint ventures; litigation risks;
new or unanticipated litigation developments and the status of
litigation matters; the dependence on our continued product
development, technical support and successful marketing in the
technology segment; our dependence on third parties for certain
technologically advanced components; risks from disruption to our
information systems; cyberattacks or other privacy or data security
breaches; 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.
Included within the press release are non-GAAP financial
measures that supplement the Company’s Consolidated Statements of
Income prepared under generally accepted accounting principles
(GAAP). These non-GAAP financial measures adjust the Company’s
actual results prepared under GAAP to exclude certain items. In the
schedules attached to this press release, the non-GAAP measures
have been reconciled to and should be considered together with the
Consolidated Statements of Income. Management believes that
non-GAAP financial measures provide investors with useful
supplemental information about the financial performance of our
business, enable comparison of financial results between periods
where certain items may vary independent of business performance
and allow for greater transparency with respect to key metrics used
by management in operating our business. These non-GAAP financial
measures are presented solely for informational and comparative
purposes and should not be regarded as a replacement for
corresponding, similarly captioned, GAAP measures.
(TABLES TO FOLLOW)
HENRY SCHEIN, INC.
CONSOLIDATED STATEMENTS OF INCOME (in thousands, except
per share data) (unaudited)
Three Months Ended
March 28,
March 30,
2020
2019
Net sales
$
2,428,871
$
2,360,268
Cost of sales
1,682,832
1,608,578
Gross profit
746,039
751,690
Operating expenses:
Selling, general and administrative
567,387
574,608
Restructuring costs
4,787
4,641
Operating income
173,865
172,441
Other income (expense):
Interest income
3,190
4,771
Interest expense
(7,812)
(16,301)
Other, net
(220)
(419)
Income from continuing operations before
taxes, equity in
earnings of affiliates and noncontrolling
interests
169,023
160,492
Income taxes
(37,910)
(39,482)
Equity in earnings of affiliates
2,734
2,630
Net income from continuing operations
133,847
123,640
Loss from discontinued operations
(282)
(8,996)
Net Income
133,565
114,644
Less: Net income attributable to
noncontrolling interests
(3,304)
(5,227)
Plus: Net loss attributable to
noncontrolling interests
from discontinued operations
-
366
Net income attributable to Henry Schein,
Inc.
$
130,261
$
109,783
Amounts attributable to Henry Schein
Inc.:
Continuing operations
$
130,543
$
118,413
Discontinued operations, net of taxes
(282)
(8,630)
Net income attributable to Henry Schein,
Inc.
$
130,261
$
109,783
Earnings per share from continuing
operations attributable to Henry Schein, Inc.:
Basic
$
0.91
$
0.79
Diluted
$
0.91
$
0.78
Loss per share from discontinued
operations attributable to Henry Schein, Inc.:
Basic
$
0.00
$
(0.06)
Diluted
$
0.00
$
(0.06)
Earnings per share attributable to
Henry Schein, Inc.:
Basic
$
0.91
$
0.73
Diluted
$
0.91
$
0.73
Weighted-average common shares
outstanding:
Basic
142,967
150,257
Diluted
143,095
151,156
HENRY SCHEIN, INC.
CONSOLIDATED BALANCE SHEETS (in thousands, except share and per
share data)
March 28,
December 28,
2020
2019
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
617,368
$
106,097
Accounts receivable, net of reserves of
$67,028 and $60,002
1,198,743
1,246,246
Inventories, net
1,328,405
1,428,799
Prepaid expenses and other
474,589
445,360
Total current assets
3,619,105
3,226,502
Property and equipment, net
328,033
329,645
Operating lease right-of-use assets,
net
215,122
231,662
Goodwill
2,470,603
2,462,495
Other intangibles, net
554,747
572,878
Investments and other
331,590
327,919
Total assets
$
7,519,200
$
7,151,101
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
780,853
$
880,266
Bank credit lines
381,899
23,975
Current maturities of long-term debt
109,507
109,849
Operating lease liabilities
63,150
65,349
Accrued expenses:
Payroll and related
208,395
265,206
Taxes
170,210
165,171
Other
491,820
528,553
Total current liabilities
2,205,834
2,038,369
Long-term debt
865,821
622,908
Deferred income taxes
73,225
64,989
Operating lease liabilities
162,981
176,267
Other liabilities
333,421
331,173
Total liabilities
3,641,282
3,233,706
Redeemable noncontrolling interests
272,126
287,258
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000
shares authorized,
none outstanding
-
-
Common stock, $.01 par value, 480,000,000
shares authorized,
142,433,360 outstanding on March 28, 2020
and
143,353,459 outstanding on December 28,
2019
1,424
1,434
Additional paid-in capital
17,565
47,768
Retained earnings
3,183,236
3,116,215
Accumulated other comprehensive loss
(227,648)
(167,373)
Total Henry Schein, Inc. stockholders'
equity
2,974,577
2,998,044
Noncontrolling interests
631,215
632,093
Total stockholders' equity
3,605,792
3,630,137
Total liabilities, redeemable
noncontrolling interests and stockholders' equity
$
7,519,200
$
7,151,101
HENRY SCHEIN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands,
unaudited)
Three Months Ended
March 28,
March 30,
2020
2019
Cash flows from operating
activities:
Net income
$
133,565
$
114,644
Loss from discontinued operations
(282)
(8,996)
Income from continuing operations
133,847
123,640
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization
48,983
40,300
Stock-based compensation (credit)
expense
(17,514)
7,110
Provision for losses on trade and other
accounts receivable
14,543
1,784
Benefit from deferred income taxes
2,645
7,932
Equity in earnings of affiliates
(2,734)
(2,630)
Distributions from equity affiliates
2,413
52,301
Changes in unrecognized tax benefits
(1,575)
3,214
Other
(13,924)
1,239
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
(1,283)
(11,580)
Inventories
73,038
77,881
Other current assets
(10,002)
(17,782)
Accounts payable and accrued expenses
(137,680)
(150,075)
Net cash provided by operating activities
from continuing operations
90,757
133,334
Net cash used in operating activities from
discontinued operations
(282)
(167,073)
Net cash provided by (used in) operating
activities
90,475
(33,739)
Cash flows from investing
activities:
Purchases of fixed assets
(23,008)
(15,918)
Payments related to equity investments and
business
acquisitions, net of cash acquired
(37,947)
(603,973)
Proceeds from sale of equity
investment
-
10,500
Repayments from loan to affiliate
1,137
15,940
Other
(5,787)
(3,076)
Net cash used in investing activities from
continuing operations
(65,605)
(596,527)
Net cash used in investing activities from
discontinued operations
-
(2,064)
Net cash used in investing activities
(65,605)
(598,591)
Cash flows from financing
activities:
Net change in bank borrowings
358,639
(652,117)
Proceeds from issuance of long-term
debt
250,000
741
Principal payments for long-term debt
(8,478)
(7,376)
Debt issuance costs
(58)
-
Proceeds from issuance of stock upon
exercise of stock options
-
34
Payments for repurchases of common
stock
(73,789)
(150,000)
Payments for taxes related to shares
withheld for employee taxes
(13,155)
(9,671)
Distribution received related to Animal
Health Spin-off
-
1,120,000
Proceeds related to Animal Health Share
Sale
-
361,090
Proceeds from (distributions to)
noncontrolling shareholders
(3,664)
52,205
Acquisitions of noncontrolling interests
in subsidiaries
(14,925)
(6,057)
Payments to Henry Schein Animal Health
Business
(2,962)
(224,773)
Net cash provided by financing activities
from continuing operations
491,608
484,076
Net cash provided by financing activities
from discontinued operations
282
148,053
Net cash provided by financing
activities
491,890
632,129
Effect of exchange rate changes on cash
and cash equivalents from continuing operations
(5,489)
10,347
Effect of exchange rate changes on cash
and cash equivalents from discontinued operations
-
(2,240)
Net change in cash and cash equivalents
from continuing operations
511,271
31,230
Net change in cash and cash equivalents
from discontinued operations
-
(23,324)
Cash and cash equivalents, beginning of
period
106,097
56,885
Cash and cash equivalents, end of
period
$
617,368
$
88,115
Exhibit A - QTD Sales
Henry Schein, Inc.
2020 First Quarter
Sales Summary
(in thousands)
(unaudited)
Q1 2020
over Q1 2019
Global
Q1 2020
Q1 2019
Total Sales Growth
Foreign Exchange
Growth
Local Currency Growth
Acquisition Growth
Local Internal Growth
Dental
$
1,475,076
$
1,546,380
-4.6%
-1.6%
-3.0%
0.7%
-3.7%
Medical
800,688
683,660
17.1%
-0.1%
17.2%
3.8%
13.4%
Total Health Care Distribution
2,275,764
2,230,040
2.1%
-1.1%
3.2%
1.6%
1.6%
Technology and value-added services
131,965
115,598
14.2%
-0.3%
14.5%
8.1%
6.4%
Total excluding Corporate TSA Revenue
2,407,729
2,345,638
2.6%
-1.1%
3.7%
1.9%
1.8%
Corporate TSA revenues (1)
21,142
14,630
44.5%
0.0%
44.5%
0.0%
44.5%
Total Global
$
2,428,871
$
2,360,268
2.9%
-1.1%
4.0%
1.9%
2.1%
North
America
Q1 2020
Q1 2019
Total Sales Growth
Foreign Exchange
Growth
Local Currency Growth
Acquisition Growth
Local Internal Growth
Dental
$
888,372
$
923,506
-3.8%
0.0%
-3.8%
0.1%
-3.9%
Medical
778,028
662,295
17.5%
0.0%
17.5%
3.9%
13.6%
Total Health Care Distribution
1,666,400
1,585,801
5.1%
0.0%
5.1%
1.7%
3.4%
Technology and value-added services
113,498
99,005
14.6%
0.0%
14.6%
8.3%
6.3%
Total excluding Corporate TSA Revenue
1,779,898
1,684,806
5.6%
0.0%
5.6%
2.0%
3.6%
Corporate TSA revenues (1)
-
1,261
n/a
n/a
n/a
n/a
n/a
Total North America
$
1,779,898
$
1,686,067
5.6%
0.0%
5.6%
2.1%
3.5%
International
Q1 2020
Q1 2019
Total Sales Growth
Foreign Exchange
Growth
Local Currency Growth
Acquisition Growth
Local Internal Growth
Dental
$
586,704
$
622,874
-5.8%
-4.0%
-1.8%
1.6%
-3.4%
Medical
22,660
21,365
6.1%
-2.9%
9.0%
0.0%
9.0%
Total Health Care Distribution
609,364
644,239
-5.4%
-3.9%
-1.5%
1.5%
-3.0%
Technology and value-added services
18,467
16,593
11.3%
-2.7%
14.0%
7.2%
6.8%
Total excluding Corporate TSA Revenue
627,831
660,832
-5.0%
-3.9%
-1.1%
1.6%
-2.7%
Corporate TSA revenues (1)
21,142
13,369
58.1%
0.0%
58.1%
0.0%
58.1%
Total International
$
648,973
$
674,201
-3.7%
-3.8%
0.1%
1.6%
-1.5%
(1) Corporate TSA revenues represents
sales of certain products to Covetrus under the transition services
agreement entered into in connection with the Animal Health
spin-off, which we expect to continue through August 2020.
Note: Certain prior period amounts have
been reclassified to conform to the current period
presentation.
Exhibit B
Henry Schein, Inc.
2020 First Quarter
Reconciliation of reported
GAAP net income from continuing operations and
diluted EPS from continuing
operations attributable to Henry Schein, Inc.
to non-GAAP net income from
continuing operations and
diluted EPS from continuing
operations attributable to Henry Schein, Inc.
(in thousands, except per
share data)
(unaudited)
First Quarter
%
2020
2019
Growth
Net Income from continuing operations
attributable to Henry Schein, Inc.
$
130,543
$
118,413
10.2
%
Diluted EPS from continuing operations
attributable to Henry Schein, Inc.
0.91
0.78
16.7
%
Non-GAAP Adjustments
Restructuring costs - Pre-tax (1)
$
4,787
$
4,641
Income tax benefit for restructuring costs
(1)
(1,197)
(1,160)
Tax credit related to Animal Health
spin-off (2)
-
(1,333)
Total non-GAAP adjustments to Net
Income from continuing operations
$
3,590
$
2,148
Non-GAAP adjustments to diluted EPS
from continuing operations
0.03
0.01
Non-GAAP Net Income from continuing
operations attributable to Henry Schein, Inc.
134,133
120,561
11.3
%
Non-GAAP diluted EPS from continuing
operations attributable to Henry Schein, Inc.
0.94
0.80
17.5
%
Management believes that non-GAAP financial measures provide
investors with useful supplemental information about the financial
performance of our business, enable comparison of financial results
between periods where certain items may vary independent of
business performance and allow for greater transparency with
respect to key metrics used by management in operating our
business. These non-GAAP financial measures are presented solely
for informational and comparative purposes and should not be
regarded as a replacement for corresponding, similarly captioned,
GAAP measures. Earnings per share numbers may not sum due to
rounding.
- Represents Q1 2020 restructuring costs of $4,787, net of $1,197
tax benefit, resulting in an after-tax effect of $3,590 and Q1 2019
restructuring costs of $4,641, net of $1,160 tax benefit, resulting
in an after-tax effect of $3,481.
- Represents a change in estimate of $1,333 to income tax expense
related to a one-time tax expense recorded in Q4 2018 as a result
of a reorganization of legal entities completed in preparation for
the Animal Health spin-off, which was completed on February 7th,
2019.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200505005481/en/
Investors Steven Paladino Executive Vice President and Chief Financial
Officer steven.paladino@henryschein.com (631) 843-5500
Carolynne Borders Vice President, Investor Relations
carolynne.borders@henryschein.com (631) 390-8105
Media Ann Marie Gothard Vice
President, Corporate Media Relations
annmarie.gothard@henryschein.com (631) 390-8169
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