- Q2 GAAP loss per diluted share from continuing operations of
$0.08 versus prior-year GAAP diluted EPS from continuing operations
of $0.78
- Q2 non-GAAP diluted EPS from continuing operations of $0.00
versus prior-year non-GAAP diluted EPS from continuing operations
of $0.84
- Company maintains a strong balance sheet with access to
significant liquidity
Henry Schein, Inc. (Nasdaq: HSIC), the world’s largest provider
of health care solutions to office-based dental and medical
practitioners, today reported second 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 June 27, 2020, were $1.7
billion, a decrease of 31.2% compared with the second quarter of
2019 due to the impact of COVID-19. In local currencies, internally
generated sales decreased 30.5%. Acquisition growth was immaterial
(See Exhibit A for details of sales growth and a reconciliation of
this non-GAAP measure to GAAP sales).
GAAP net loss attributable to Henry Schein, Inc. from continuing
operations for the second quarter of 2020 was $11.4 million, or a
loss of $0.08 per diluted share, compared with prior-year net
income from continuing operations of $116.8 million, or $0.78 per
diluted share. Non-GAAP net income from continuing operations for
the second quarter of 2020 was $0.6 million, or $0.00 per diluted
share, compared with prior-year non-GAAP net income from continuing
operations of $125.7 million, or $0.84 per diluted share. Non-GAAP
results for the second quarter of 2020 and 2019 exclude certain
items noted in Exhibit B, which provides a reconciliation of GAAP
net income/loss from continuing operations and diluted EPS from
continuing operations to non-GAAP net income and diluted EPS from
continuing operations.
"Team Schein rose to the significant challenges caused by the
global COVID-19 pandemic. These efforts are clear attributes of our
corporate culture, which is rooted in care and respect for one
another, as well as a commitment to our customers, suppliers,
investors, and corporate social responsibility," said Stanley M.
Bergman, Chairman of the Board and Chief Executive Officer of Henry
Schein. "While results for the second quarter are reflective of the
current challenging environment, we remain confident in our
strategy. Throughout this pandemic, we have focused our dental and
medical practice recovery programs to assist our customers with
solutions ranging from management of temporary office closures to
practice safety, new protocol implementation, patient
communications, and financial assistance, among many other
solutions to help restore practices.
“Regarding our second quarter financial results, COVID-19
significantly impacted our worldwide results, particularly in our
Dental business, yet sales improved relative to our original
expectations across all our business groups as we progressed
through the quarter. This was directly related to a resumption of
operations for both our dental and medical customers, which
occurred faster than we had anticipated, first in our international
markets and then in North America,” said Mr. Bergman. “We remain
cautiously optimistic about the immediate future while closely
monitoring global diagnosed COVID-19 cases and the potential impact
on customer activity, and focusing on cash management. Our
enthusiasm for both our near- and long-term business prospects
remains unchanged.”
Dental sales for the second quarter of 2020 of $941.3 million
decreased 41.2% versus the prior year. In local currencies,
internally generated sales decreased 40.1%. Acquisition growth was
immaterial. The 40.1% internal decline in local currencies included
a decrease of 46.9% in North America and a decrease of 29.5%
internationally.
In North America, dental consumable merchandise internal sales
in local currencies declined 47.5% and dental equipment internal
sales in local currencies declined 44.9%. Internationally, dental
consumable merchandise internal sales in local currencies declined
29.2% and dental equipment internal sales in local currencies
declined 30.5%.
“We saw positive trends in sales later in the quarter as
practices reopened and patients returned for oral care, leading to
dental sales in the second quarter that were ahead of our original
expectations,” noted Mr. Bergman.
Medical sales for the second quarter of 2020 of $617.8 million
decreased 11.4% compared to the same period last year. There was no
acquisition growth in the quarter.
“Our second quarter medical sales were fairly resilient, due to
strong demand for personal protective equipment (PPE),” remarked
Mr. Bergman. “A portion of physician offices in North America
remained open throughout the quarter, and sales of consumable
merchandise experienced less of a decline than we anticipated.
Henry Schein has also worked to make available a variety of
COVID-19 point-of-care diagnostic tests and related solutions to
our medical customers in response to the pandemic.”
Technology and Value-Added Services sales from continuing
operations of $105.2 million decreased 15.9% versus the prior year.
In local currencies, internally generated sales decreased 17.0%.
Acquisition growth was immaterial.
“Henry Schein One dental software sales began to improve as we
progressed through the second quarter, in line with the resumption
of dental practice operations. In particular, the monthly trend for
transactional software revenues improved as more patients visited
dental offices worldwide. The ability for dentists to communicate
with patients, providing information on practice reopening plans
and safety measures, has been a critical solution for our customers
in response to COVID-19,” said Mr. Bergman. “Dental practices have
relied on Henry Schein for practice management, patient engagement,
and demand creation software solutions, as well as financial
services programs as they navigated office closures, staff
furloughs, and a resumption of procedure bookings.”
Year-to-Date Financial Results
Net sales from continuing operations for the first half of 2020
were $4.1 billion, a decrease of 14.5% compared with the first half
of 2019. In local currencies, internally generated sales decreased
14.5%.
GAAP net income attributable to Henry Schein, Inc. from
continuing operations for the first half of 2020 was $119.2
million, or $0.84 per diluted share, compared with GAAP net income
from continuing operations for the first half of 2019 of $235.2
million, or $1.56 per diluted share. Non-GAAP net income from
continuing operations for the first half of 2020 was $134.7
million, or $0.94 per diluted share, compared with non-GAAP net
income from continuing operations for the first half of 2019 of
$246.3 million, or $1.64 per diluted share. Non-GAAP results for
the first half 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.
Financial Guidance
Due to the continued uncertainty surrounding the COVID-19
pandemic and its impact to business operations, Henry Schein is not
providing 2020 financial guidance at this time.
Second Quarter 2020 Conference Call Webcast
The Company will hold a conference call to discuss second
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 approximately 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 Novel
Coronavirus Disease 2019 (COVID-19) 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, the rate at
which dental and other practices resume normal operations in the
United States and internationally and whether one or more
resurgences of the virus will adversely impact the resumption of
normal operations. 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
COVID-19, as well as other disease outbreaks, epidemics, pandemics,
or similar wide spread public health concerns and other natural
disasters; 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
Six Months Ended
June 27, 2020
June 29, 2019
June 27, 2020
June 29, 2019
Net sales
$
1,684,399
$
2,447,827
$
4,113,270
$
4,808,095
Cost of sales
1,230,105
1,680,396
2,912,937
3,288,974
Gross profit
454,294
767,431
1,200,333
1,519,121
Operating expenses:
Selling, general and administrative
445,793
593,218
1,013,180
1,167,826
Restructuring costs
15,934
11,925
20,721
16,566
Operating income (loss)
(7,433)
162,288
166,432
334,729
Other income (expense):
Interest income
1,997
3,654
5,187
8,425
Interest expense
(10,486)
(12,785)
(18,298)
(29,086)
Other, net
(291)
(1,416)
(511)
(1,835)
Income (loss) from continuing operations
before taxes, equity in earnings of affiliates and noncontrolling
interests
(16,213)
151,741
152,810
312,233
Income tax benefit (expense)
950
(35,880)
(36,960)
(75,362)
Equity in earnings of affiliates
1,411
5,556
4,145
8,186
Net income (loss) from continuing
operations
(13,852)
121,417
119,995
245,057
Income (loss) from discontinued
operations, net of tax
585
(2,221)
303
(11,217)
Net income (loss)
(13,267)
119,196
120,298
233,840
Less: Net (income) loss attributable to
noncontrolling interests
2,470
(4,664)
(834)
(9,891)
Plus: Net loss attributable to
noncontrolling interests from discontinued operations
-
-
-
366
Net income (loss) attributable to Henry
Schein, Inc.
$
(10,797)
$
114,532
$
119,464
$
224,315
Amounts attributable to Henry Schein
Inc.:
Continuing operations
$
(11,382)
$
116,753
$
119,161
$
235,166
Discontinued operations
585
(2,221)
303
(10,851)
Net income (loss) attributable to Henry
Schein, Inc.
$
(10,797)
$
114,532
$
119,464
$
224,315
Earnings (loss) per share from
continuing operations attributable to Henry Schein, Inc.:
Basic
$
(0.08)
$
0.79
$
0.84
$
1.58
Diluted
$
(0.08)
$
0.78
$
0.84
$
1.56
Loss per share from discontinued
operations attributable to
Henry Schein, Inc.:
Basic
$
-
$
(0.01)
$
-
$
(0.07)
Diluted
$
-
$
(0.01)
$
-
$
(0.07)
Earnings (loss) per share attributable
to Henry Schein, Inc.:
Basic
$
(0.08)
$
0.77
$
0.84
$
1.50
Diluted
$
(0.08)
$
0.77
$
0.84
$
1.49
Weighted-average common shares
outstanding:
Basic
142,350
148,148
142,654
149,310
Diluted
142,350
149,423
142,654
150,560
HENRY SCHEIN, INC.
CONSOLIDATED BALANCE SHEETS (in thousands, except share and per
share data)
June 27, 2020
December 28, 2019
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
296,110
$
106,097
Accounts receivable, net of reserves of
$80,825 and $60,002
1,101,201
1,246,246
Inventories, net
1,406,719
1,428,799
Prepaid expenses and other
605,176
445,360
Total current assets
3,409,206
3,226,502
Property and equipment, net
335,898
329,645
Operating lease right-of-use assets,
net
211,473
231,662
Goodwill
2,471,108
2,462,495
Other intangibles, net
527,875
572,878
Investments and other
362,565
327,919
Total assets
$
7,318,125
$
7,151,101
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
734,957
$
880,266
Bank credit lines
503,178
23,975
Current maturities of long-term debt
109,587
109,849
Operating lease liabilities
61,710
65,349
Accrued expenses:
Payroll and related
212,178
265,206
Taxes
210,439
165,171
Other
475,192
528,553
Total current liabilities
2,307,241
2,038,369
Long-term debt
515,802
622,908
Deferred income taxes
56,925
64,989
Operating lease liabilities
163,342
176,267
Other liabilities
374,045
331,173
Total liabilities
3,417,355
3,233,706
Redeemable noncontrolling interests
279,225
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,
142,438,127 outstanding on June 27, 2020
and
143,353,459 outstanding on December 28,
2019
1,424
1,434
Additional paid-in capital
16,475
47,768
Retained earnings
3,172,439
3,116,215
Accumulated other comprehensive loss
(199,251)
(167,373)
Total Henry Schein, Inc. stockholders'
equity
2,991,087
2,998,044
Noncontrolling interests
630,458
632,093
Total stockholders' equity
3,621,545
3,630,137
Total liabilities, redeemable
noncontrolling interests and stockholders' equity
$
7,318,125
$
7,151,101
HENRY SCHEIN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands,
unaudited)
Three Months Ended
Six Months Ended
June 27, 2020
June 29, 2019
June 27, 2020
June 29, 2019
Cash flows from operating
activities:
Net income (loss)
$
(13,267)
$
119,196
$
120,298
$
233,840
Income (loss) from discontinued
operations
585
(2,221)
303
(11,217)
Income (loss) from continuing
operations
(13,852)
121,417
119,995
245,057
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
47,112
49,055
96,095
89,355
Stock-based compensation (credit)
expense
5,156
12,662
(12,358)
19,772
Provision for losses on trade and other
accounts receivable
14,215
2,192
28,758
3,976
Provision for (benefit from) deferred
income taxes
(35,516)
(5,648)
(32,871)
2,284
Equity in earnings of affiliates
(1,411)
(5,556)
(4,145)
(8,186)
Distributions from equity affiliates
1,807
9,056
4,220
61,357
Changes in unrecognized tax benefits
2,955
1,221
1,380
4,435
Other
14,151
(2,284)
227
(1,045)
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
100,955
(5,872)
99,672
(17,452)
Inventories
(59,338)
8,922
13,700
86,803
Other current assets
(166,614)
(44,316)
(176,616)
(62,098)
Accounts payable and accrued expenses
(1,220)
24,603
(138,900)
(125,472)
Net cash provided by (used in) operating
activities from continuing operations
(91,600)
165,452
(843)
298,786
Net cash provided by (used in) operating
activities from discontinued operations
855
(2,221)
573
(169,294)
Net cash provided by (used in) operating
activities
(90,745)
163,231
(270)
129,492
Cash flows from investing
activities:
Purchases of fixed assets
(7,580)
(14,790)
(30,588)
(30,708)
Payments related to equity investments and
business acquisitions, net of cash acquired
222
(18,468)
(37,725)
(622,441)
Proceeds from sale of equity
investment
-
-
-
10,500
Proceeds from (repayments to) loan to
affiliate
(2,866)
(72)
(1,729)
15,868
Other
(5,812)
(5,686)
(11,599)
(8,762)
Net cash used in investing activities from
continuing operations
(16,036)
(39,016)
(81,641)
(635,543)
Net cash used in investing activities from
discontinued operations
-
-
-
(2,064)
Net cash used in investing activities
(16,036)
(39,016)
(81,641)
(637,607)
Cash flows from financing
activities:
Net change in bank borrowings
121,063
(56,895)
479,702
(709,012)
Proceeds from issuance of long-term
debt
251,421
-
501,421
741
Principal payments for long-term debt
(601,102)
(1,662)
(609,580)
(9,038)
Debt issuance costs
(3,597)
(391)
(3,655)
(391)
Proceeds from issuance of stock upon
exercise of stock options
-
-
-
34
Payments for repurchases of common
stock
-
(76,782)
(73,789)
(226,782)
Payments for taxes related to shares
withheld for employee taxes
(558)
(856)
(13,713)
(10,527)
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
198
(2,807)
(3,466)
49,398
Acquisitions of noncontrolling interests
in subsidiaries
(9)
3,787
(14,934)
(2,270)
Proceeds from (payments to) Henry Schein
Animal Health Business
3,026
11,816
64
(212,957)
Net cash provided by (used in) financing
activities from continuing operations
(229,558)
(123,790)
262,050
360,286
Net cash provided by (used in) financing
activities from discontinued operations
(855)
2,221
(573)
150,274
Net cash provided by (used in) financing
activities
(230,413)
(121,569)
261,477
510,560
Effect of exchange rate changes on cash
and cash equivalents from continuing operations
15,936
(5,837)
10,447
4,510
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
(321,258)
(3,191)
190,013
28,039
Net change in cash and cash equivalents
from discontinued operations
-
-
-
(23,324)
Cash and cash equivalents, beginning of
period
617,368
88,115
106,097
56,885
Cash and cash equivalents, end of
period
$
296,110
$
84,924
$
296,110
$
84,924
Exhibit A - QTD Sales
Henry Schein, Inc. 2020 Second
Quarter Sales Summary (in thousands) (unaudited)
Q2 2020
over Q2 2019
Global
Q2 2020
Q2 2019
Total Sales Growth
Foreign Exchange
Growth
Local Currency Growth
Acquisition Growth
Local Internal Growth
Dental
$
941,292
$
1,601,350
-41.2%
-1.2%
-40.0%
0.1%
-40.1%
Medical
617,810
697,558
-11.4%
0.0%
-11.4%
0.0%
-11.4%
Total Health Care Distribution
1,559,102
2,298,908
-32.2%
-0.9%
-31.3%
0.1%
-31.4%
Technology and value-added services
105,227
125,051
-15.9%
-0.5%
-15.4%
1.6%
-17.0%
Total excluding Corporate TSA Revenue
1,664,329
2,423,959
-31.3%
-0.8%
-30.5%
0.1%
-30.6%
Corporate TSA revenues (1)
20,070
23,868
-15.9%
0.0%
-15.9%
0.0%
-15.9%
Total Global
$
1,684,399
$
2,447,827
-31.2%
-0.9%
-30.3%
0.2%
-30.5%
North
America
Q2 2020
Q2 2019
Total Sales Growth
Foreign Exchange
Growth
Local Currency Growth
Acquisition Growth
Local Internal Growth
Dental
$
515,946
$
975,371
-47.1%
-0.1%
-47.0%
-0.1%
-46.9%
Medical
596,588
678,358
-12.1%
0.0%
-12.1%
0.0%
-12.1%
Total Health Care Distribution
1,112,534
1,653,729
-32.7%
-0.1%
-32.6%
0.0%
-32.6%
Technology and value-added services
92,927
108,505
-14.4%
-0.1%
-14.3%
0.8%
-15.1%
Total excluding Corporate TSA Revenue
1,205,461
1,762,234
-31.6%
-0.1%
-31.5%
0.0%
-31.5%
Corporate TSA revenues (1)
-
1,760
n/a
n/a
n/a
n/a
n/a
Total North America
$
1,205,461
$
1,763,994
-31.7%
-0.1%
-31.6%
0.0%
-31.6%
International
Q2 2020
Q2 2019
Total Sales Growth
Foreign Exchange
Growth
Local Currency Growth
Acquisition Growth
Local Internal Growth
Dental
$
425,346
$
625,979
-32.1%
-3.1%
-29.0%
0.5%
-29.5%
Medical
21,222
19,200
10.5%
-2.8%
13.3%
0.0%
13.3%
Total Health Care Distribution
446,568
645,179
-30.8%
-3.0%
-27.8%
0.4%
-28.2%
Technology and value-added services
12,300
16,546
-25.7%
-2.8%
-22.9%
6.9%
-29.8%
Total excluding Corporate TSA Revenue
458,868
661,725
-30.7%
-3.0%
-27.7%
0.5%
-28.2%
Corporate TSA revenues (1)
20,070
22,108
-9.2%
0.0%
-9.2%
0.0%
-9.2%
Total International
$
478,938
$
683,833
-30.0%
-2.9%
-27.1%
0.5%
-27.6%
(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 October 2020.
Note: Certain prior period amounts have
been reclassified to conform to the current period
presentation.
Exhibit A - YTD Sales
Henry Schein, Inc. 2020 Second
Quarter Year-to-Date Sales Summary (in thousands)
(unaudited)
Q2 2020
Year-to Date over Q2 2019 Year-to-Date
Global
Q2 2020
Q2 2019
Total Sales Growth
Foreign Exchange
Growth
Local Currency
Growth
Acquisition
Growth
Local Internal Growth
Dental
$
2,416,368
$
3,147,730
-23.2%
-1.4%
-21.8%
0.4%
-22.2%
Medical
1,418,498
1,381,218
2.7%
-0.1%
2.8%
1.9%
0.9%
Total Health Care Distribution
3,834,866
4,528,948
-15.3%
-1.0%
-14.3%
0.8%
-15.1%
Technology and value-added services
237,192
240,649
-1.4%
-0.4%
-1.0%
4.8%
-5.8%
Total excluding Corporate TSA Revenue
4,072,058
4,769,597
-14.6%
-1.0%
-13.6%
1.1%
-14.7%
Corporate TSA revenues (1)
41,212
38,498
7.0%
0.0%
7.0%
0.0%
7.0%
Total Global
$
4,113,270
$
4,808,095
-14.5%
-1.0%
-13.5%
1.0%
-14.5%
North
America
Q2 2020
Q2 2019
Total Sales Growth
Foreign Exchange
Growth
Local
Currency Growth
Acquisition Growth
Local
Internal Growth
Dental
$
1,404,318
$
1,898,877
-26.0%
0.0%
-26.0%
0.0%
-26.0%
Medical
1,374,616
1,340,653
2.5%
0.0%
2.5%
1.9%
0.6%
Total Health Care Distribution
2,778,934
3,239,530
-14.2%
0.0%
-14.2%
0.8%
-15.0%
Technology and value-added services
206,425
207,510
-0.5%
0.0%
-0.5%
4.4%
-4.9%
Total excluding Corporate TSA Revenue
2,985,359
3,447,040
-13.4%
0.0%
-13.4%
1.0%
-14.4%
Corporate TSA revenues (1)
-
3,021
n/a
n/a
n/a
n/a
n/a
Total North America
$
2,985,359
$
3,450,061
-13.5%
-0.1%
-13.4%
1.0%
-14.4%
International
Q2 2020
Q2 2019
Total Sales Growth
Foreign
Exchange Growth
Local
Currency
Growth
Acquisition
Growth
Local Internal Growth
Dental
$
1,012,050
$
1,248,853
-19.0%
-3.5%
-15.5%
1.0%
-16.5%
Medical
43,882
40,565
8.2%
-2.8%
11.0%
0.0%
11.0%
Total Health Care Distribution
1,055,932
1,289,418
-18.1%
-3.5%
-14.6%
1.0%
-15.6%
Technology and value-added services
30,767
33,139
-7.2%
-2.7%
-4.5%
7.0%
-11.5%
Total excluding Corporate TSA Revenue
1,086,699
1,322,557
-17.8%
-3.4%
-14.4%
1.1%
-15.5%
Corporate TSA revenues (1)
41,212
35,477
16.2%
0.0%
16.2%
0.0%
16.2%
Total International
$
1,127,911
$
1,358,034
-16.9%
-3.3%
-13.6%
1.1%
-14.7%
(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 October 2020.
Note: Certain prior period amounts have
been reclassified to conform to the current period
presentation.
Exhibit B
Henry Schein, Inc. 2020 Second
Quarter and Year-to-Date Reconciliation of reported GAAP net income
(loss) 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)
Second Quarter
Year-to-Date
2020
2019
% Growth
2020
2019
% Growth
Net income (loss) from continuing
operations attributable to Henry Schein, Inc.
$
(11,382)
$
116,753
(109.7)
%
$
119,161
$
235,166
(49.3)
%
Diluted EPS from continuing operations
attributable to Henry Schein, Inc.
$
(0.08)
$
0.78
(110.3)
%
$
0.84
$
1.56
(46.2)
%
Non-GAAP Adjustments
Restructuring costs - Pre-tax (1)
$
15,934
$
11,925
$
20,721
$
16,566
Income tax benefit for restructuring costs
(1)
(3,983)
(2,982)
(5,180)
(4,142)
Tax credit related to Animal Health
spin-off (2)
-
-
-
(1,333)
Total non-GAAP adjustments to Net
Income from continuing operations
$
11,951
$
8,943
$
15,541
$
11,091
Non-GAAP adjustments to diluted EPS
from continuing operations
0.08
0.06
0.11
0.07
Non-GAAP Net income from continuing
operations attributable to Henry Schein, Inc.
$
569
$
125,696
(99.5)
%
$
134,702
$
246,257
(45.3)
%
Non-GAAP diluted EPS from continuing
operations attributable to Henry Schein, Inc.
$
0.00
$
0.84
(100.0)
%
$
0.94
$
1.64
(42.7)
%
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.
(1)
Represents Q2 2020 restructuring costs of
$15,934, net of $3,983 tax benefit, resulting in an after-tax
effect of $11,951, and YTD 2020 restructuring costs of 20,721, net
of $5,180 tax benefit, resulting in an after-tax effect of $15,541.
Represents Q2 2019 restructuring costs of $11,925, net of $2,982
tax benefit, resulting in an after-tax effect of $8,943, and YTD
2019 restructuring costs of 16,566, net of $4,142 tax benefit,
resulting in an after-tax effect of $12,424.
(2)
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/20200804005507/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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