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Henry Schein Reports Record Third Quarter 2018 Financial Results
- GAAP diluted EPS of $0.79 declined by 9.2% over prior-year GAAP diluted EPS
- Non-GAAP diluted EPS of $1.03 increased by 18.4% over prior-year non-GAAP diluted EPS
- Company affirms 2018 non-GAAP diluted EPS guidance range reflecting growth of 13% to 15% over 2017 non-GAAP diluted EPS

MELVILLE, N.Y., Nov. 6, 2018 /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 third quarter financial results.

Net sales for the quarter ended September 29, 2018 were $3.3 billion, an increase of 3.8% compared with the third quarter of 2017. This consisted of 5.1% growth in local currencies and a 1.3% decline related to foreign currency exchange. In local currencies, internally generated sales increased 3.2% and acquisition growth was 1.9% (see Exhibit A for details of sales growth).

Net income attributable to Henry Schein, Inc. for the third quarter of 2018 was $121.5 million, or $0.79 per diluted share, representing declines of 12.0% and 9.2%, respectively, compared with GAAP results for the third quarter of 2017. Non-GAAP net income for the third quarter of 2018 was $158.0 million, or $1.03 per diluted share, representing growth of 14.5% and 18.4%, respectively, compared with third quarter 2017 GAAP results. Non-GAAP results for the third quarter of 2018 and 2017 exclude certain items noted in Exhibit B, which provides a reconciliation of GAAP net income and diluted EPS to non-GAAP net income and diluted EPS.

"We are pleased with our third quarter financial results, which demonstrate solid growth in each of our business groups. We believe that the end markets we serve are stable-to-improving and that we have continued to gain market share with our value-added solutions approach to servicing customers," said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein. "We believe there are exciting opportunities ahead for Henry Schein's businesses as we execute on our strategic goals."

Dental sales of $1.5 billion increased 2.4%, consisting of 4.4% growth in local currencies and a 2.0% decline related to foreign currency exchange. In local currencies, internally generated sales increased 3.5% and acquisition growth was 0.9%. The 3.5% internal growth in local currencies included 4.7% growth in North America and 1.6% growth internationally.

"Internal sales growth in local currencies in our North America dental consumable merchandise business was healthy at 4.3%, primarily driven by market share gains. North America dental equipment internal sales in local currencies increased by 5.9%," commented Mr. Bergman. "Internationally, internal sales growth in local currencies increased 3.5% for dental consumables and declined 4.2% for dental equipment due to softer end markets, primarily in Germany."

Animal Health sales of $899.3 million increased 1.9%, consisting of 3.4% growth in local currencies and a 1.5% decline related to foreign currency exchange. In local currencies, internally generated sales increased 1.1% and acquisition growth was 2.3%. The 1.1% internal growth in local currencies included 0.4% growth in North America and 1.8% growth internationally.

"In North America, Animal Health internal sales in local currencies continued to experience solid growth of 6.7%, after normalizing for certain products switching from direct sales to agency sales. Internationally, internal, local currency sales growth was impacted by lower sales primarily associated with a decline in parasiticide sales as well as clinic visits due to weather," commented Mr. Bergman.

Medical sales of $721.9 million increased 4.5% with internally generated sales growth in local currencies of 4.4%. The impact from foreign exchange was immaterial.

"Our North America Medical business reported solid internal local currency growth as we benefit from our strategy focused on understanding and meeting the needs of a diverse set of customers ranging from large integrated delivery networks and ambulatory care centers, to general practitioners," remarked Mr. Bergman.

Technology and Value-Added Services sales of $143.9 million increased 32.0%, consisting of 32.6% growth in local currencies and a 0.6% decline related to foreign currency exchange. In local currencies, internally generated sales increased 7.8% and acquisition growth was 24.8%.

"We are pleased with strong overall growth in Technology and Value-Added Services, driven by Henry Schein One along with solid organic growth both in North America and internationally. In North America, Technology and Value-Added Services internal sales growth in local currencies was 7.8%, bolstered by a sale to the U.S. Department of Defense of approximately $6.2 million, along with strong growth in our financial services business. International Technology and Value-Added Services internal sales grew 7.6% in local currencies, driven primarily by dental software sales," said Mr. Bergman.

Stock Repurchase Plan
The Company repurchased approximately 777,000 shares of its common stock during the third quarter at an average price of $78.19 per share, or approximately $61 million. The impact of the repurchase of shares on third quarter 2018 diluted EPS was immaterial. At the close of the third quarter, Henry Schein had approximately $86 million authorized for future repurchases of its common stock.

Year-to-Date Results
Net sales for the first nine months of 2018 were $9.8 billion, an increase of 7.5% compared with the first nine months of 2017. This consisted of 5.9% growth in local currencies and an increase of 1.6% related to foreign currency exchange. In local currencies, internally generated sales increased 3.9% and acquisition growth was 2.0%.

Net income attributable to Henry Schein, Inc. for the first nine months of 2018 was $402.9 million, or $2.62 per diluted share, a decline of 2.9% and an increase of 0.4%, respectively, compared with the first nine months of 2017. Non-GAAP net income for the first nine months of 2018 was $463.7 million, or $3.01 per diluted share, an increase of 10.9% and 14.4%, respectively, compared with non-GAAP net income for the first nine months of 2017. Non-GAAP results for the first nine months of 2018 and 2017 exclude certain items noted in Exhibit B, which provides a reconciliation of GAAP net income and diluted EPS to non-GAAP net income and diluted EPS.

Restructuring Program
As previously disclosed, Henry Schein is undertaking a comprehensive restructuring plan designed to increase profitability by improving business efficiencies, reducing redundancies, and maximizing the Company's infrastructure.

The Company expects to record a one-time restructuring charge in 2018 of between $45 million and $55 million in total on a pretax basis, or $0.22 to $0.27 per diluted share. This restructuring charge primarily includes severance pay, facility closing costs, and outside professional and consulting fees directly related to the restructuring plan. Henry Schein plans to provide details on expected cost savings from this restructuring when the Company provides 2019 financial guidance at a later date.

2018 EPS Guidance
Henry Schein, Inc. today is affirming its 2018 non-GAAP diluted EPS guidance. At this time the Company is not providing GAAP guidance as it is unable to provide an accurate estimate of costs related to the Animal Health spin-off on full-year 2018 financial results. Guidance is as follows:

  • 2018 non-GAAP diluted EPS attributable to Henry Schein, Inc. is expected to be $4.06 to $4.14, reflecting growth of 13% to 15% compared with 2017 non-GAAP diluted EPS of $3.60. Guidance excludes certain items in 2018 for the year-to-date detailed in Exhibit B of today's press release. Non-GAAP results for 2017 excluded costs related to taxes associated with U.S. tax reform legislation, a loss associated with Henry Schein's divestiture of its equity ownership in E4D Technologies and litigation settlement expenses in 2017.
  • Guidance for 2018 non-GAAP 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.

The Company has provided guidance for 2018 diluted EPS on a non-GAAP basis as noted above. A reconciliation to the Company's projected 2018 diluted EPS prepared on a GAAP basis is not provided because the Company is unable to provide such reconciliation for an estimate of Animal Health spin-off related costs without unreasonable effort. The inability to provide a reconciliation is due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact, and the periods in which the non-GAAP adjustments may be recognized.

The Company's 2018 diluted EPS prepared on a GAAP basis will include the impact of such items as restructuring charges, spin-off expenses and litigation settlement expenses, and the tax effect of all such items. Management does not believe that these items are representative of the Company's underlying business performance. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

Due to the complexities and timing of the planned Animal Health spin-off, the Company plans to provide 2019 financial guidance at a later date.

Third Quarter 2018 Conference Call Webcast
The Company will hold a conference call to discuss third quarter 2018 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 a solutions company for health care professionals powered by a network of people and technology. With more than 22,000 Team Schein Members serving more than 1 million customers globally, the Company is the world's largest provider of Business, Clinical, Technology, and Supply Chain solutions to enhance the efficiency of office-based dentalanimal health, and medical practitioners. The Company also serves dental laboratoriesgovernment 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's network of trusted advisors provides health care professionals with the valued solutions they need to improve operational success and clinical outcomes. The Company offers customers exclusive, innovative products and solutions, including practice management software, e-commerce solutions, specialty and surgical products, as well as a broad range of financial services. 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.

Headquartered in Melville, N.Y., Henry Schein has operations or affiliates in 34 countries. The Company's sales reached a record $12.5 billion in 2017, 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.comFacebook.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. 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; 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; 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; new or unanticipated litigation developments; 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; increased competition by third party online commerce sites; 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; changes in tax legislation; and risks associated with the ability to consummate the spin-off and merger of our Animal Health business with Vets First Choice and the timing of the closing of the transaction, as well as the ability to realize anticipated benefits and synergies of the transaction. 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

   

Nine Months Ended

         

September 29,

 

September 30,

 

September 29,

 

September 30,

         

2018

 

2017

 

2018

 

2017

                               

Net sales

 

$

3,279,678

 

$

3,161,083

 

$

9,826,793

 

$

9,143,489

Cost of sales

   

2,391,118

   

2,325,029

   

7,141,569

   

6,645,342

   

Gross profit

   

888,560

   

836,054

   

2,685,224

   

2,498,147

Operating expenses:

                       
 

Selling, general and administrative

   

668,011

   

622,506

   

2,027,138

   

1,874,644

 

Litigation settlements

   

38,488

   

-

   

38,488

   

5,325

 

Transaction costs related to Animal Health spin-off

   

7,282

   

-

   

18,670

   

-

 

Restructuring costs

   

8,853

   

-

   

27,511

   

-

   

Operating income

   

165,926

   

213,548

   

573,417

   

618,178

Other income (expense):

                       
 

Interest income

   

5,163

   

4,793

   

15,429

   

13,204

 

Interest expense

   

(21,045)

   

(13,428)

   

(56,466)

   

(37,056)

 

Other, net

   

(346)

   

(194)

   

(802)

   

489

   

Income before taxes and equity in earnings

                       
     

of affiliates

   

149,698

   

204,719

   

531,578

   

594,815

Income taxes

   

(29,401)

   

(59,340)

   

(124,084)

   

(156,276)

Equity in earnings of affiliates

   

6,679

   

5,569

   

15,622

   

12,244

Net income

   

126,976

   

150,948

   

423,116

   

450,783

 

Less: Net income attributable to noncontrolling interests

   

(5,498)

   

(12,917)

   

(20,208)

   

(35,949)

Net income attributable to Henry Schein, Inc.

 

$

121,478

 

$

138,031

 

$

402,908

 

$

414,834

                               

Earnings per share attributable to Henry Schein, Inc.:

                       
                               
 

Basic

 

$

0.80

 

$

0.88

 

$

2.63

 

$

2.64

 

Diluted

 

$

0.79

 

$

0.87

 

$

2.62

 

$

2.61

                               

Weighted-average common shares outstanding:

                       
 

Basic

   

152,533

   

156,914

   

152,970

   

157,386

 

Diluted

   

153,614

   

158,271

   

153,982

   

158,866

 

 

 

                   
                   
                   

HENRY SCHEIN, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

                   
         

September 29,

 

December 30,

         

2018

 

2017

         

(unaudited)

     

ASSETS

           

Current assets:

           
 

Cash and cash equivalents

 

$

119,740

 

$

174,658

 

Accounts receivable, net of reserves of $55,289 and $53,832

   

1,627,640

   

1,522,807

 

Inventories, net

   

1,932,855

   

1,933,803

 

Prepaid expenses and other

   

513,717

   

454,752

     

Total current assets

   

4,193,952

   

4,086,020

Property and equipment, net

   

374,051

   

375,001

Goodwill

   

2,685,681

   

2,301,331

Other intangibles, net

   

618,201

   

669,641

Investments and other

   

518,425

   

432,002

     

Total assets

 

$

8,390,310

 

$

7,863,995

                   

LIABILITIES AND STOCKHOLDERS' EQUITY

           

Current liabilities:

           
 

Accounts payable

 

$

1,136,120

 

$

1,153,012

 

Bank credit lines

   

1,144,881

   

741,653

 

Current maturities of long-term debt

   

12,482

   

16,659

 

Accrued expenses:

           
   

Payroll and related

   

259,180

   

272,998

   

Taxes

   

180,163

   

188,873

   

Other

   

496,959

   

455,780

     

Total current liabilities

   

3,229,785

   

2,828,975

Long-term debt

   

1,000,315

   

907,756

Deferred income taxes

   

45,947

   

50,431

Other liabilities

   

415,045

   

420,285

     

Total liabilities

   

4,691,092

   

4,207,447

                   

Redeemable noncontrolling interests

   

282,502

   

832,138

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, 

           
   

152,437,680 outstanding on September 29, 2018 and 240,000,000 shares

           
   

authorized, 153,690,146 outstanding on December 30, 2017

   

1,524

   

1,537

 

Retained earnings

   

3,191,260

   

2,940,029

 

Accumulated other comprehensive loss

   

(219,649)

   

(130,067)

   

Total Henry Schein, Inc. stockholders' equity

   

2,973,135

   

2,811,499

 

Noncontrolling interests

   

443,581

   

12,911

     

Total stockholders' equity

   

3,416,716

   

2,824,410

   

Total liabilities, redeemable noncontrolling interests and stockholders' equity

 

$

8,390,310

 

$

7,863,995

     
 

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

 

 

 

 

                                 

HENRY SCHEIN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

                                 
           

Three Months Ended

 

Nine Months Ended

           

September 29,

 

September 30,

 

September 29,

 

September 30,

           

2018

 

2017

 

2018

 

2017

                                 

Cash flows from operating activities:

                       
 

Net income

 

$

126,976

 

$

150,948

 

$

423,116

 

$

450,783

 

Adjustments to reconcile net income to net cash

                       
   

provided by operating activities:

                       
     

Depreciation and amortization

   

51,511

   

48,740

   

155,089

   

141,278

     

Stock-based compensation expense

   

10,890

   

12,632

   

34,235

   

31,987

     

Provision for losses on trade and other

                       
       

accounts receivable

   

2,228

   

2,932

   

7,870

   

6,981

     

Provision for (benefit from) deferred income taxes

   

(3,810)

   

4,185

   

(6,282)

   

8,600

     

Equity in earnings of affiliates

   

(6,679)

   

(5,569)

   

(15,622)

   

(12,244)

     

Distributions from equity affiliates

   

6,190

   

7,148

   

15,534

   

16,826

     

Changes in unrecognized tax benefits

   

2,096

   

974

   

2,853

   

(6,653)

     

Other

   

2,554

   

1,016

   

590

   

6,031

     

Changes in operating assets and liabilities,

                       
     

  net of acquisitions:

                       
       

Accounts receivable

   

(73,865)

   

(108,461)

   

(155,579)

   

(226,577)

       

Inventories

   

(4,143)

   

(88,464)

   

(35,300)

   

27,336

       

Other current assets

   

(56,649)

   

(13,134)

   

(81,774)

   

(70,833)

       

Accounts payable and accrued expenses

   

116,569

   

118,415

   

46,024

   

(66,014)

Net cash provided by operating activities

   

173,868

   

131,362

   

390,754

   

307,501

                                 

Cash flows from investing activities:

                       
 

Purchases of fixed assets

   

(23,106)

   

(18,350)

   

(61,826)

   

(55,315)

 

Payments for equity investments and business

                       
   

acquisitions, net of cash acquired

   

(37,778)

   

(109,200)

   

(47,325)

   

(258,786)

 

Other

   

(10,833)

   

(1,822)

   

(37,206)

   

(6,694)

Net cash used in investing activities

   

(71,717)

   

(129,372)

   

(146,357)

   

(320,795)

                                 

Cash flows from financing activities:

                       
 

Proceeds from (repayments of) bank borrowings

   

(34,119)

   

54,288

   

404,098

   

193,550

 

Proceeds from issuance of long-term debt

   

15,000

   

100,440

   

115,000

   

200,440

 

Principal payments for long-term debt

   

(640)

   

(347)

   

(27,621)

   

(59,531)

 

Debt issuance costs

   

(218)

   

(638)

   

(395)

   

(1,771)

 

Proceeds from issuance of stock upon exercise

                       
   

of stock options

   

54

   

240

   

3,076

   

4,941

 

Payments for repurchases of common stock

   

(60,751)

   

(124,999)

   

(114,106)

   

(225,005)

 

Payments for taxes related to shares withheld for employee taxes

   

(238)

   

(307)

   

(17,903)

   

(44,721)

 

Distributions to noncontrolling stockholders

   

(3,163)

   

(4,320)

   

(15,767)

   

(23,921)

 

Acquisitions of noncontrolling interests in subsidiaries

   

(12,173)

   

(23,763)

   

(664,898)

   

(27,914)

Net cash provided by (used in) financing activities

   

(96,248)

   

594

   

(318,516)

   

16,068

                                 

Effect of exchange rate changes on cash and

                       
 

cash equivalents

   

2,516

   

2,641

   

19,201

   

14,724

Net change in cash and cash equivalents

   

8,419

   

5,225

   

(54,918)

   

17,498

Cash and cash equivalents, beginning of period

   

111,321

   

74,654

   

174,658

   

62,381

Cash and cash equivalents, end of period

 

$

119,740

 

$

79,879

 

$

119,740

 

$

79,879

                                 

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

       

 

 

                                 

Exhibit A - QTD Sales

                               
                                 

Henry Schein, Inc.

   

2018 Third Quarter

   

Sales Summary

   

(in thousands)

   

(unaudited)

   
                                 

Q3 2018 over Q3 2017

   
                                 

Global

Q3 2018

 

Q3 2017

 

Total
Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 
                                 

   Dental

$

1,514,538

 

$

1,478,730

 

2.4%

 

-2.0%

 

4.4%

 

0.9%

 

3.5%

 
                                 

   Animal Health

 

899,295

   

882,580

 

1.9%

 

-1.5%

 

3.4%

 

2.3%

 

1.1%

 
                                 

   Medical

 

721,942

   

690,761

 

4.5%

 

0.0%

 

4.5%

 

0.1%

 

4.4%

 
                                 

Total Health Care Distribution

 

3,135,775

   

3,052,071

 

2.7%

 

-1.4%

 

4.1%

 

1.1%

 

3.0%

 
                                 

Technology and value-added services

 

143,903

   

109,012

 

32.0%

 

-0.6%

 

32.6%

 

24.8%

 

7.8%

 
                                 

Total Global

$

3,279,678

 

$

3,161,083

 

3.8%

 

-1.3%

 

5.1%

 

1.9%

 

3.2%

 
                                 

North America

Q3 2018

 

Q3 2017

 

Total
Sales
Growth

 

Foreign
Exchange
Growth

 

Local
Currency
Growth

 

Acquisition
Growth

 

Local
Internal
Growth

 
                                 

   Dental

$

951,412

 

$

906,878

 

4.9%

 

-0.4%

 

5.3%

 

0.6%

 

4.7%

 
                                 

   Animal Health

 

460,838

   

448,376

 

2.8%

 

0.0%

 

2.8%

 

2.4%

 

0.4%

 
                                 

   Medical

 

702,758

   

672,425

 

4.5%

 

0.0%

 

4.5%

 

0.1%

 

4.4%

 
                                 

Total Health Care Distribution

 

2,115,008

   

2,027,679

 

4.3%

 

-0.2%

 

4.5%

 

0.8%

 

3.7%

 
                                 

Technology and value-added services

 

123,823

   

89,881

 

37.8%

 

-0.1%

 

37.9%

 

30.1%

 

7.8%

 
                                 

Total North America

$

2,238,831

 

$

2,117,560

 

5.7%

 

-0.2%

 

5.9%

 

2.1%

 

3.8%

 
                                 
                                 

International

Q3 2018

 

Q3 2017

 

Total
Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 
                                 

   Dental

$

563,126

 

$

571,852

 

-1.5%

 

-4.4%

 

2.9%

 

1.3%

 

1.6%

 
                                 

   Animal Health

 

438,457

   

434,204

 

1.0%

 

-3.1%

 

4.1%

 

2.3%

 

1.8%

 
                                 

   Medical

 

19,184

   

18,336

 

4.6%

 

-1.1%

 

5.7%

 

0.0%

 

5.7%

 
                                 

Total Health Care Distribution

 

1,020,767

   

1,024,392

 

-0.4%

 

-3.9%

 

3.5%

 

1.7%

 

1.8%

 
                                 

Technology and value-added services

 

20,080

   

19,131

 

5.0%

 

-2.6%

 

7.6%

 

0.0%

 

7.6%

 
                                 

Total International

$

1,040,847

 

$

1,043,523

 

-0.3%

 

-3.8%

 

3.5%

 

1.6%

 

1.9%

 
 

 

 

                                 

Exhibit A - YTD Sales

                               
                                 

Henry Schein, Inc.

 

2018 Third Quarter Year to Date

 

Sales Summary

 

(in thousands)

 

(unaudited)

 
                                 

Q3 2018 YTD over Q3 2017 YTD

 
                                 

Global

Q3 2018 YTD

 

Q3 2017 YTD

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 
                                 

   Dental

$

4,675,212

 

$

4,372,055

 

6.9%

 

1.7%

 

5.2%

 

1.6%

 

3.6%

 
                                 

   Animal Health

 

2,805,031

   

2,586,850

 

8.4%

 

2.4%

 

6.0%

 

3.0%

 

3.0%

 
                                 

   Medical

 

1,976,367

   

1,861,074

 

6.2%

 

0.2%

 

6.0%

 

0.1%

 

5.9%

 
                                 

Total Health Care Distribution

 

9,456,610

   

8,819,979

 

7.2%

 

1.6%

 

5.6%

 

1.7%

 

3.9%

 
                                 

Technology and value-added services

 

370,183

   

323,510

 

14.4%

 

0.9%

 

13.5%

 

8.9%

 

4.6%

 
                                 

Total Global

$

9,826,793

 

$

9,143,489

 

7.5%

 

1.6%

 

5.9%

 

2.0%

 

3.9%

 
                                 

North America

Q3 2018 YTD

 

Q3 2017 YTD

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 
                                 

   Dental

$

2,831,062

 

$

2,669,805

 

6.0%

 

0.1%

 

5.9%

 

1.6%

 

4.3%

 
                                 

   Animal Health

 

1,425,273

   

1,344,221

 

6.0%

 

0.0%

 

6.0%

 

3.6%

 

2.4%

 
                                 

   Medical

 

1,915,944

   

1,806,196

 

6.1%

 

0.0%

 

6.1%

 

0.1%

 

6.0%

 
                                 

Total Health Care Distribution

 

6,172,279

   

5,820,222

 

6.0%

 

0.0%

 

6.0%

 

1.6%

 

4.4%

 
                                 

Technology and value-added services

 

307,826

   

269,226

 

14.3%

 

0.0%

 

14.3%

 

10.5%

 

3.8%

 
                                 

Total North America

$

6,480,105

 

$

6,089,448

 

6.4%

 

0.1%

 

6.3%

 

1.9%

 

4.4%

 
                                 

International

Q3 2018 YTD

 

Q3 2017 YTD

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 
                                 

   Dental

$

1,844,150

 

$

1,702,250

 

8.3%

 

4.2%

 

4.1%

 

1.6%

 

2.5%

 
                                 

   Animal Health

 

1,379,758

   

1,242,629

 

11.0%

 

5.1%

 

5.9%

 

2.2%

 

3.7%

 
                                 

   Medical

 

60,423

   

54,878

 

10.1%

 

7.7%

 

2.4%

 

0.0%

 

2.4%

 
                                 

Total Health Care Distribution

 

3,284,331

   

2,999,757

 

9.5%

 

4.7%

 

4.8%

 

1.8%

 

3.0%

 
                                 

Technology and value-added services

 

62,357

   

54,284

 

14.9%

 

5.2%

 

9.7%

 

1.0%

 

8.7%

 
                                 

Total International

$

3,346,688

 

$

3,054,041

 

9.6%

 

4.7%

 

4.9%

 

1.8%

 

3.1%

 

 

 

Exhibit B

                                 
                                   

Henry Schein, Inc.

2018 Third Quarter and YTD

Reconciliation of GAAP results of net income attributable to Henry Schein, Inc. to

non-GAAP results of net income attributable to Henry Schein, Inc.

(in thousands, except per share data)

(unaudited)

                                   
                                   
   

Third Quarter

     

Year-to-Date

 
             

%

               

%

 
   

2018

   

2017

 

Growth

     

2018

   

2017

 

Growth

 
                                   

Net Income attributable to Henry Schein, Inc.

$

121,478

 

$

138,031

 

(12.0)

%

 

$

402,908

 

$

414,834

 

(2.9)

%

                                   

Diluted EPS attributable to Henry Schein, Inc.

$

0.79

 

$

0.87

 

(9.2)

%

 

$

2.62

 

$

2.61

 

0.4

%

                                   

Non-GAAP Adjustments

                                 

Restructuring costs - Pre-tax (1)

$

8,853

 

$

-

       

$

27,511

 

$

-

     

Income tax benefit for restructuring costs (1)

 

(2,214)

   

-

         

(6,878)

   

-

     

Litigation settlements - Pre-Tax (2)

 

38,488

   

-

         

38,488

   

5,325

     

Income tax benefit for litigation settlements (2)

 

(9,622)

   

-

         

(9,622)

   

(2,130)

     

Transaction costs related to Animal Health spin-off (3)

 

7,282

   

-

         

18,670

   

-

     

Income tax benefit for Animal Health transaction costs (3)

 

(182)

   

-

         

(1,321)

   

-

     

One time tax on reorganization related to HS One (4)

 

3,914

   

-

         

3,914

   

-

     

Transition tax on repatriated foreign earnings (5)

 

(10,000)

   

-

         

(10,000)

   

-

     
                                   

Total non-GAAP adjustments to Net Income

$

36,519

 

$

-

       

$

60,762

 

$

3,195

     
                                   

Total non-GAAP adjustments to diluted EPS

$

0.24

 

$

-

       

$

0.39

 

$

0.02

     
                                   

Non-GAAP Net Income attributable to Henry Schein, Inc.

$

157,997

 

$

138,031

 

14.5

%

 

$

463,670

 

$

418,029

 

10.9

%

                                   

Non-GAAP diluted EPS attributable to Henry Schein, Inc.

$

1.03

 

$

0.87

 

18.4

%

 

$

3.01

 

$

2.63

 

14.4

%

 

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.

 

(1)

Represents Q3 2018 and YTD 2018 restructuring costs of $8,853, net of $2,214 tax benefit, resulting in an after-tax effect of $6,639 and $27,511, net of $6,878 tax benefit, resulting in an after-tax effect of $20,633, respectively.

   

(2)

Represents Q3 2018 pre-tax charge of $38,488 related to a litigation settlement.  The associated tax benefit of $9,622 resulted in a net after tax charge of $28,866.  Represents YTD 2017 pre-tax charge of $5,325 related to a litigation settlement.  The associated tax benefit of $2,130 resulted in a net after tax charge of $3,195.

   

(3)

Represents Q3 2018 and YTD 2018 transaction costs, associated with the spin-off of our Animal Health business, of $7,282, net of $182 tax benefit, resulting in an after-tax effect of $7,100 and $18,670, net of $1,321 tax benefit, resulting in an after-tax effect of $17,349, respectively.

   

(4)

Represents a Q3 2018 one-time-charge of $3,914 related to a tax on reorganization of legal entities related to forming Henry Schein One.

   

(5)

Represents a Q3 2018 one-time-credit of $10,000 related to a change in the estimate of the transition tax on deemed repatriated foreign earnings.

Cision View original content:http://www.prnewswire.com/news-releases/henry-schein-reports-record-third-quarter-2018-financial-results-300744635.html

SOURCE Henry Schein, Inc.

Investors: Steven Paladino, Executive Vice President and Chief Financial Officer, steven.paladino@henryschein.com, (631) 843-5500 or Carolynne Borders, Vice President, Investor Relations, carolynne.borders@henryschein.com, (631) 390-8105 or Media: Ann Marie Gothard, Vice President, Corporate Media Relations, annmarie.gothard@henryschein.com, (631) 390-8169