Henry Schein Reports Second Quarter 2024 Financial Results and Updates 2024 Financial Guidance
Highlights:
- Second-quarter 2024 GAAP diluted EPS of
$0.80 , and non-GAAP diluted EPS of$1.23 - Operating cash flow of
$296 million for the second quarter of 2024, year-to-date operating cash flow of$493 million up$192 million compared with year-to-date 2023 - 2024 full-year non-GAAP EPS guidance updated to
$4.70 to$4.82 - New restructuring plan targeting
$75 million to$100 million in annual run-rate savings - Share repurchase authorization increased by
$500 million
“We delivered solid second quarter financial results, including strong operating cash flow, that reflected stable end markets. Gross margin continued to increase, driven by our strategies to expand our high-growth, high-margin products and services and by the successful performance of our recent acquisitions. We are experiencing improving sales trends in our distribution businesses, however, the pace of recovery in these businesses since the cyber incident late last year has been slower than anticipated,” said
“Given the challenging economic environment in certain markets, as well as this delay in recovery from the cyber incident, we are updating our 2024 full-year financial guidance.
“We remain committed to our long-term financial goals through advancement of the BOLD+1 Strategic Plan, supported by our strong balance sheet and new restructuring plan, as we continue to generate synergies by connecting our distribution businesses, specialty products, and technology and value-added services,”
Second-Quarter 2024 Financial Results
- Total net sales for the quarter were
$3.1 billion , an increase of 1.1% compared with the second quarter of 2023. This reflects 4.0% sales growth from acquisitions, a 0.5% sales decrease resulting from foreign exchange rates, a 0.5% sales decrease from lower sales of personal protective equipment (PPE), primarily the result of lower glove pricing, and the pace of recovery from the cyber incident late last year. - Internal sales for the quarter decreased 2.4%, which includes a 0.5% decrease from lower PPE sales.
Second-quarter sales and internal sales growth are summarized below and detailed in Exhibit A1.
| Sales | Total (%) | Internal |
Global Dental | (1.7%) | (2.1%) | |
Merchandise | (1.9%) | (2.6%) | |
Equipment | (0.7%) | (0.4%) | |
Global Medical | 5.0% | (4.3%) | |
Global Technology and Value-Added Services | 10.8% | 3.9% | |
|
|
|
|
TOTAL SALES | 1.1% | (2.4%) | |
Note: items may not sum due to rounding |
- GAAP net income2 for the quarter was
$104 million , or$0.80 per diluted share4, and compares with second-quarter 2023 GAAP net income of$140 million , or$1.06 per diluted share. - Non-GAAP net income2 for the quarter was
$158 million , or$1.23 per diluted share4, and compares with second-quarter 2023 non-GAAP net income of$173 million , or$1.31 per diluted share. - Operating cash flow for the quarter of
$296 million , up$22 million compared with second-quarter 2023. - Adjusted EBITDA3 for the quarter was
$268 million , in line with second-quarter 2023 Adjusted EBITDA of$279 million .
Year-to-Date Financial Results
- Total net sales for the first half of 2024 were
$6.3 billion , an increase of 2.4% compared with the first half of 2023. This reflects 4.5% sales growth from acquisitions, a 0.7% sales decrease from lower sales of personal protective equipment, and the pace of recovery from the cyber incident late last year. The impact from foreign exchange rates was not significant. - Internal sales for the first half of 2024 decreased 2.1%, which includes a 0.7% decrease from lower PPE sales.
First half of 2024 sales and internal sales growth are summarized below and detailed in Exhibit A1.
| Sales | Total (%) | Internal (%) |
Global Dental | (0.5%) | (2.5%) | |
Merchandise | (0.6%) | (3.2%) | |
Equipment | 0.0% | (0.1%) | |
Global Medical | 6.2% | (2.4%) | |
Global Technology and Value-Added Services | 12.3% | 3.6% | |
|
|
|
|
TOTAL SALES | 2.4% | (2.1%) | |
Note: items may not sum due to rounding |
|
|
|
- GAAP net income2 for the first half of 2024 was
$197 million , or$1.52 per diluted share4, and compares with first-half 2023 GAAP net income of$261 million , or$1.97 per diluted share. - Non-GAAP net income2 for the first half of 2024 was
$301 million , or$2.33 per diluted share4, and compares with first-half 2023 non-GAAP net income of$334 million , or$2.52 per diluted share. - Operating cash flow for the first half of
$493 million , up$192 million compared with first-half 2023. - Adjusted EBITDA3 for the first half of 2024 was
$523 million and compares with first-half 2023 Adjusted EBITDA of$535 million .
Restructuring Plan
Henry Schein is today announcing a restructuring plan to integrate recent acquisitions, right-size operations and further increase efficiencies, targeting
The Company expects to record restructuring charges in the second half of 2024 and in 2025; however, an estimate of the amount of these charges has not yet been determined as plans are still being finalized. Restructuring charges are expected primarily to include severance pay and facility-related costs.
The restructuring plan announced in the third quarter of 2022 was completed on
Share Repurchases
During the second quarter of 2024, the Company repurchased approximately 1.4 million shares of its common stock at an average price of
At quarter-end, Henry Schein had approximately
An additional
2024 Financial Guidance
Henry Schein is updating full-year 2024 financial guidance, as described below. Guidance is for current continuing operations as well as acquisitions that have closed and does not include the impact of potential future acquisitions, restructuring and integration expenses, amortization expense of acquired intangible assets, contingent consideration revaluation adjustments, certain expenses directly associated with the cyber incident or any related insurance claim recovery. This guidance also assumes that foreign currency exchange rates remain generally consistent with current levels and that end markets remain consistent with current market conditions.
- 2024 total sales growth is now expected to be approximately 4% to 6% over 2023, compared with prior guidance of 8% to 10% growth. The previous guidance anticipated a stronger economy as well as a faster recovery from the cyber incident.
- 2024 non-GAAP diluted EPS attributable to
Henry Schein, Inc. is now expected to be$4.70 to$4.82 , compared with prior guidance of$5.00 to$5.16 , and reflects growth of 4% to 7% compared with 2023 non-GAAP diluted EPS of$4.50 . - 2024 Adjusted EBITDA is expected to grow in the low double-digit percentages versus 2023 Adjusted EBITDA and compares with prior guidance of more than 15%.
Adjustments to 2024 GAAP Net Income and Diluted EPS
The Company is providing guidance for 2024 diluted EPS on a non-GAAP basis and for 2024 Adjusted EBITDA, as noted above. The Company is not providing a reconciliation of its 2024 non-GAAP guidance to its projected 2024 diluted EPS prepared on a GAAP basis, or its projected 2024 Adjusted EBITDA to net income prepared on a GAAP basis. This is because the Company is unable to provide without unreasonable effort an estimate of restructuring costs related to an ongoing initiative to drive operating efficiencies, including the corresponding tax effect, that will be included in the Company’s 2024 diluted EPS and net income prepared on a GAAP basis. The inability to provide this reconciliation is due to the uncertainty and inherent difficulty of predicting the occurrence, magnitude, financial impact, and timing of related costs.
Management does not believe 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.
1 See Exhibit A for details of sales growth. Internal sales growth is calculated from total net sales using constant foreign exchange rates and excludes sales from acquisitions.
2 See Exhibit B for a reconciliation of GAAP net income and diluted EPS to non-GAAP net income and diluted EPS.
3 See Exhibit C for a reconciliation of GAAP net income to Adjusted EBITDA.
4 References to diluted EPS refer to diluted EPS attributable to
Second-Quarter 2024 Conference Call Webcast
The Company will hold a conference call to discuss second-quarter 2024 financial results today, beginning at
The Company will be posting slides that provide a summary of its second-quarter 2024 financial results on its website at https://www.henryschein.com/us-en/Corporate/investor-presentations.aspx.
About
Henry Schein operates through a centralized and automated distribution network, with a selection of more than 300,000 branded products and Henry Schein corporate brand products in our main distribution centers.
A FORTUNE 500 Company and a member of the S&P 500® index, Henry Schein is headquartered in
For more information, visit Henry Schein at www.henryschein.com, Facebook.com/HenrySchein, Instagram.com/HenrySchein, and @HenrySchein on X.
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 total sales growth, EPS and Adjusted EBITDA 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. A fuller discussion of our operations, financial condition and status of litigation matters, including factors that may affect our business and future prospects, is contained in documents we have filed with the
Risk factors and uncertainties that could cause actual results to differ materially from current and historical results include, but are not limited to: our dependence on third parties for the manufacture and supply of our products; our ability to develop or acquire and maintain and protect new products (particularly technology products) and technologies that achieve market acceptance with acceptable margins; transitional challenges associated with acquisitions, dispositions and joint ventures, including the failure to achieve anticipated synergies/benefits, as well as significant demands on our operations, information systems, legal, regulatory, compliance, , financial and human resources functions in connection with acquisitions, dispositions and joint ventures; certain provisions in our governing documents that may discourage third-party acquisitions of us; adverse changes in supplier rebates or other purchasing incentives; risks related to the sale of corporate brand products; security risks associated with our information systems and technology products and services, such as cyberattacks or other privacy or data security breaches (including the
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 except as required by law.
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 the 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. The impact of certain items that are excluded include integration and restructuring costs, and amortization of acquisition-related assets, because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the acquisitions we consummate and occur on an unpredictable basis. 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)
| ||||||||||||
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| Three Months Ended |
| Six Months Ended | ||||||||
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|
|
|
| ||||||||
|
| 2024 |
| 2023 |
| 2024 |
| 2023 | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
| $ | 3,136 |
| $ | 3,100 |
| $ | 6,308 |
| $ | 6,160 |
Cost of sales |
|
| 2,118 |
|
| 2,125 |
|
| 4,278 |
|
| 4,219 |
Gross profit |
|
| 1,018 |
|
| 975 |
|
| 2,030 |
|
| 1,941 |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
| 781 |
|
| 707 |
|
| 1,572 |
|
| 1,424 |
Depreciation and amortization |
|
| 63 |
|
| 49 |
|
| 124 |
|
| 93 |
Restructuring costs |
|
| 15 |
|
| 18 |
|
| 25 |
|
| 48 |
Operating income |
|
| 159 |
|
| 201 |
|
| 309 |
|
| 376 |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
| 6 |
|
| 3 |
|
| 11 |
|
| 6 |
Interest expense |
|
| (32) |
|
| (19) |
|
| (62) |
|
| (33) |
Other, net |
|
| (1) |
|
| 1 |
|
| 1 |
|
| - |
Income before taxes, equity in earnings of affiliates and noncontrolling interests |
|
| 132 |
|
| 186 |
|
| 259 |
|
| 349 |
Income taxes |
|
| (33) |
|
| (41) |
|
| (65) |
|
| (80) |
Equity in earnings of affiliates, net of tax |
|
| 6 |
|
| 3 |
|
| 9 |
|
| 7 |
Net income |
|
| 105 |
|
| 148 |
|
| 203 |
|
| 276 |
Less: Net income attributable to noncontrolling interests |
|
| (1) |
|
| (8) |
|
| (6) |
|
| (15) |
Net income attributable to |
| $ | 104 |
| $ | 140 |
| $ | 197 |
| $ | 261 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | 0.81 |
| $ | 1.07 |
| $ | 1.53 |
| $ | 1.99 |
Diluted |
| $ | 0.80 |
| $ | 1.06 |
| $ | 1.52 |
| $ | 1.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
| 127,784,380 |
|
| 130,905,899 |
|
| 128,252,628 |
|
| 131,136,450 |
Diluted |
|
| 128,646,506 |
|
| 131,873,174 |
|
| 129,206,780 |
|
| 132,465,749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
| ||||
|
| 2024 |
| 2023 | ||
|
| (unaudited) |
|
|
| |
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 138 |
| $ | 171 |
Accounts receivable, net of allowance for credit losses of |
|
| 1,559 |
|
| 1,863 |
Inventories, net of reserves of |
|
| 1,657 |
|
| 1,815 |
Prepaid expenses and other |
|
| 587 |
|
| 639 |
Total current assets |
|
| 3,941 |
|
| 4,488 |
Property and equipment, net |
|
| 518 |
|
| 498 |
Operating lease right-of-use assets |
|
| 304 |
|
| 325 |
|
| 3,905 |
|
| 3,875 | |
Other intangibles, net |
|
| 1,081 |
|
| 916 |
Investments and other |
|
| 502 |
|
| 471 |
Total assets |
| $ | 10,251 |
| $ | 10,573 |
|
|
|
|
|
|
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
| $ | 867 |
| $ | 1,020 |
Bank credit lines |
|
| 505 |
|
| 264 |
Current maturities of long-term debt |
|
| 106 |
|
| 150 |
Operating lease liabilities |
|
| 75 |
|
| 80 |
Accrued expenses: |
|
|
|
|
|
|
Payroll and related |
|
| 279 |
|
| 332 |
Taxes |
|
| 150 |
|
| 137 |
Other |
|
| 567 |
|
| 700 |
Total current liabilities |
|
| 2,549 |
|
| 2,683 |
Long-term debt |
|
| 1,891 |
|
| 1,937 |
Deferred income taxes |
|
| 115 |
|
| 54 |
Operating lease liabilities |
|
| 261 |
|
| 310 |
Other liabilities |
|
| 431 |
|
| 436 |
Total liabilities |
|
| 5,247 |
|
| 5,420 |
|
|
|
|
|
|
|
Redeemable noncontrolling interests |
|
| 856 |
|
| 864 |
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
Preferred stock, |
|
|
|
|
|
|
none outstanding |
|
| - |
|
| - |
Common stock, |
|
|
|
|
|
|
127,080,545 outstanding on |
|
|
|
|
|
|
129,247,765 outstanding on |
|
| 1 |
|
| 1 |
Additional paid-in capital |
|
| - |
|
| - |
Retained earnings |
|
| 3,803 |
|
| 3,860 |
Accumulated other comprehensive loss |
|
| (292) |
|
| (206) |
|
| 3,512 |
|
| 3,655 | |
Noncontrolling interests |
|
| 636 |
|
| 634 |
Total stockholders' equity |
|
| 4,148 |
|
| 4,289 |
Total liabilities, redeemable noncontrolling interests and stockholders' equity |
| $ | 10,251 |
| $ | 10,573 |
|
|
|
|
|
|
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|
| Three Months Ended |
| Six Months Ended | ||||||||
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|
|
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| ||||||||
|
| 2024 |
| 2023 |
| 2024 |
| 2023 | ||||
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|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| $ | 105 |
| $ | 148 |
| $ | 203 |
| $ | 276 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 74 |
|
| 59 |
|
| 147 |
|
| 111 |
Non-cash restructuring charges |
|
| 5 |
|
| 3 |
|
| 6 |
|
| 10 |
Stock-based compensation expense |
|
| 12 |
|
| 14 |
|
| 20 |
|
| 24 |
Provision for losses on trade and other accounts receivable |
|
| 2 |
|
| 1 |
|
| 7 |
|
| 2 |
Benefit from deferred income taxes |
|
| (21) |
|
| (5) |
|
| (19) |
|
| (3) |
Equity in earnings of affiliates |
|
| (6) |
|
| (3) |
|
| (9) |
|
| (7) |
Distributions from equity affiliates |
|
| 7 |
|
| 7 |
|
| 9 |
|
| 9 |
Changes in unrecognized tax benefits |
|
| 1 |
|
| 2 |
|
| 3 |
|
| 3 |
Other |
|
| (3) |
|
| (8) |
|
| (9) |
|
| (9) |
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
| 80 |
|
| 38 |
|
| 270 |
|
| 18 |
Inventories |
|
| 33 |
|
| 100 |
|
| 107 |
|
| 163 |
Other current assets |
|
| 9 |
|
| (30) |
|
| 50 |
|
| (1) |
Accounts payable and accrued expenses |
|
| (2) |
|
| (52) |
|
| (292) |
|
| (295) |
Net cash provided by operating activities |
|
| 296 |
|
| 274 |
|
| 493 |
|
| 301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
| (37) |
|
| (37) |
|
| (78) |
|
| (68) |
Payments related to equity investments and business acquisitions, |
|
|
|
|
|
|
|
|
|
|
|
|
net of cash acquired |
|
| (161) |
|
| (250) |
|
| (181) |
|
| (251) |
Proceeds from loan to affiliate |
|
| 2 |
|
| 1 |
|
| 3 |
|
| 3 |
Capitalized software costs |
|
| (11) |
|
| (11) |
|
| (20) |
|
| (20) |
Other |
|
| (2) |
|
| (4) |
|
| (5) |
|
| (4) |
Net cash used in investing activities |
|
| (209) |
|
| (301) |
|
| (281) |
|
| (340) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Net change in bank credit lines |
|
| 242 |
|
| 86 |
|
| 242 |
|
| 218 |
Proceeds from issuance of long-term debt |
|
| - |
|
| 377 |
|
| 90 |
|
| 408 |
Principal payments for long-term debt |
|
| (117) |
|
| (365) |
|
| (177) |
|
| (366) |
Proceeds from issuance of stock upon exercise of stock options |
|
| 1 |
|
| - |
|
| 2 |
|
| 1 |
Payments for repurchases and retirement of common stock |
|
| (100) |
|
| (50) |
|
| (175) |
|
| (150) |
Payments for taxes related to shares withheld for employee taxes |
|
| (1) |
|
| (3) |
|
| (8) |
|
| (33) |
Distributions to noncontrolling shareholders |
|
| (22) |
|
| (2) |
|
| (28) |
|
| (6) |
Acquisitions of noncontrolling interests in subsidiaries |
|
| (117) |
|
| (5) |
|
| (211) |
|
| (13) |
Net cash provided by (used in) financing activities |
|
| (114) |
|
| 38 |
|
| (265) |
|
| 59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
| 6 |
|
| - |
|
| 20 |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
| (21) |
|
| 11 |
|
| (33) |
|
| 20 |
Cash and cash equivalents, beginning of period |
|
| 159 |
|
| 126 |
|
| 171 |
|
| 117 |
Cash and cash equivalents, end of period |
| $ | 138 |
| $ | 137 |
| $ | 138 |
| $ | 137 |
Exhibit A - Second Quarter Sales | |||||||||||||||
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2024 Second Quarter | |||||||||||||||
Sales Summary | |||||||||||||||
(in millions) | |||||||||||||||
(unaudited) | |||||||||||||||
Q2 2024 over Q2 2023 | |||||||||||||||
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| Local Currency Growth |
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Global | Q2 2024 |
| Q2 2023 |
| Local Internal |
| Acquisition |
| Total Local |
| Foreign |
| Total Sales | ||
Dental Merchandise | $ | 1,484 |
| $ | 1,514 |
| -2.6% |
| 1.4% |
| -1.2% |
| -0.7% |
| -1.9% |
Dental Equipment |
| 440 |
|
| 443 |
| -0.4% |
| 0.2% |
| -0.2% |
| -0.5% |
| -0.7% |
Total Dental |
| 1,924 |
|
| 1,957 |
| -2.1% |
| 1.2% |
| -0.9% |
| -0.8% |
| -1.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical |
| 998 |
|
| 950 |
| -4.3% |
| 9.3% |
| 5.0% |
| 0.0% |
| 5.0% |
Total Health Care Distribution |
| 2,922 |
|
| 2,907 |
| -2.8% |
| 3.8% |
| 1.0% |
| -0.5% |
| 0.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology and Value-Added Services |
| 214 |
|
| 193 |
| 3.9% |
| 7.0% |
| 10.9% |
| -0.1% |
| 10.8% |
Total Global | $ | 3,136 |
| $ | 3,100 |
| -2.4% |
| 4.0% |
| 1.6% |
| -0.5% |
| 1.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Local Currency Growth |
|
|
|
|
|
| ||
Q2 2024 |
| Q2 2023 |
| Local Internal |
| Acquisition |
| Total Local |
| Foreign |
| Total Sales | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dental Merchandise | $ | 849 |
| $ | 897 |
| -5.2% |
| 0.1% |
| -5.1% |
| -0.2% |
| -5.3% |
Dental Equipment |
| 280 |
|
| 272 |
| 2.9% |
| 0.0% |
| 2.9% |
| -0.2% |
| 2.7% |
Total Dental |
| 1,129 |
|
| 1,169 |
| -3.3% |
| 0.0% |
| -3.3% |
| -0.1% |
| -3.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical |
| 970 |
|
| 925 |
| -4.3% |
| 9.2% |
| 4.9% |
| 0.0% |
| 4.9% |
Total Health Care Distribution |
| 2,099 |
|
| 2,094 |
| -3.8% |
| 4.1% |
| 0.3% |
| -0.1% |
| 0.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology and Value-Added Services |
| 186 |
|
| 168 |
| 2.9% |
| 7.9% |
| 10.8% |
| 0.0% |
| 10.8% |
$ | 2,285 |
| $ | 2,262 |
| -3.3% |
| 4.4% |
| 1.1% |
| -0.1% |
| 1.0% | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Local Currency Growth |
|
|
|
|
|
| ||
International | Q2 2024 |
| Q2 2023 |
| Local Internal |
| Acquisition |
| Total Local |
| Foreign |
| Total Sales | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dental Merchandise | $ | 635 |
| $ | 617 |
| 1.0% |
| 3.6% |
| 4.6% |
| -1.7% |
| 2.9% |
Dental Equipment |
| 160 |
|
| 171 |
| -5.5% |
| 0.6% |
| -4.9% |
| -1.2% |
| -6.1% |
Total Dental |
| 795 |
|
| 788 |
| -0.4% |
| 2.9% |
| 2.5% |
| -1.5% |
| 1.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical |
| 28 |
|
| 25 |
| -1.9% |
| 12.1% |
| 10.2% |
| -1.2% |
| 9.0% |
Total Health Care Distribution |
| 823 |
|
| 813 |
| -0.4% |
| 3.2% |
| 2.8% |
| -1.6% |
| 1.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology and Value-Added Services |
| 28 |
|
| 25 |
| 10.5% |
| 0.8% |
| 11.3% |
| -0.3% |
| 11.0% |
$ | 851 |
| $ | 838 |
| -0.1% |
| 3.1% |
| 3.0% |
| -1.5% |
| 1.5% | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit A - Year-to-Date Sales | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 Second Quarter Year-to-Date | ||||||||||||||||
Sales Summary | ||||||||||||||||
(in millions) | ||||||||||||||||
(unaudited) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2024 Year-to Date over Q2 2023 Year-to-Date | ||||||||||||||||
| ||||||||||||||||
|
|
|
|
|
|
| Local Currency Growth |
|
|
|
|
|
| |||
Global | Q2 2024 |
| Q2 2023 |
| Local |
| Acquisition |
|
| Total Local |
| Foreign |
| Total Sales | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dental Merchandise | $ | 2,983 |
| $ | 3,001 |
| -3.2% |
| 2.6% |
|
| -0.6% |
| 0.0% |
| -0.6% |
Dental Equipment |
| 855 |
|
| 854 |
| -0.1% |
| 0.1% |
|
| 0.0% |
| 0.0% |
| 0.0% |
Total Dental |
| 3,838 |
|
| 3,855 |
| -2.5% |
| 2.1% |
|
| -0.4% |
| -0.1% |
| -0.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical |
| 2,039 |
|
| 1,921 |
| -2.4% |
| 8.6% |
|
| 6.2% |
| 0.0% |
| 6.2% |
Total Health Care Distribution |
| 5,877 |
|
| 5,776 |
| -2.5% |
| 4.3% |
|
| 1.8% |
| -0.1% |
| 1.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology and Value-Added Services |
| 431 |
|
| 384 |
| 3.6% |
| 8.5% |
|
| 12.1% |
| 0.2% |
| 12.3% |
Total Global | $ | 6,308 |
| $ | 6,160 |
| -2.1% |
| 4.5% |
|
| 2.4% |
| 0.0% |
| 2.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Local Currency Growth |
|
|
|
|
|
| |||
Q2 2024 |
| Q2 2023 |
| Local |
| Acquisition |
|
| Total Local |
| Foreign |
| Total Sales | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dental Merchandise | $ | 1,697 |
| $ | 1,793 |
| -5.3% |
| 0.0% |
|
| -5.3% |
| 0.0% |
| -5.3% |
Dental Equipment |
| 535 |
|
| 520 |
| 2.9% |
| 0.0% |
|
| 2.9% |
| -0.1% |
| 2.8% |
Total Dental |
| 2,232 |
|
| 2,313 |
| -3.5% |
| 0.0% |
|
| -3.5% |
| 0.0% |
| -3.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical |
| 1,984 |
|
| 1,876 |
| -2.4% |
| 8.2% |
|
| 5.8% |
| 0.0% |
| 5.8% |
Total Health Care Distribution |
| 4,216 |
|
| 4,189 |
| -3.0% |
| 3.7% |
|
| 0.7% |
| -0.1% |
| 0.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology and Value-Added Services |
| 375 |
|
| 334 |
| 2.6% |
| 9.8% |
|
| 12.4% |
| 0.0% |
| 12.4% |
$ | 4,591 |
| $ | 4,523 |
| -2.6% |
| 4.1% |
|
| 1.5% |
| 0.0% |
| 1.5% | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Local Currency Growth |
|
|
|
|
|
| |||
International | Q2 2024 |
| Q2 2023 |
| Local |
| Acquisition |
|
| Total Local |
| Foreign |
| Total Sales | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dental Merchandise | $ | 1,286 |
| $ | 1,208 |
| 0.0% |
| 6.5% |
|
| 6.5% |
| 0.0% |
| 6.5% |
Dental Equipment |
| 320 |
|
| 334 |
| -4.7% |
| 0.3% |
|
| -4.4% |
| 0.1% |
| -4.3% |
Total Dental |
| 1,606 |
|
| 1,542 |
| -1.0% |
| 5.1% |
|
| 4.1% |
| 0.0% |
| 4.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical |
| 55 |
|
| 45 |
| -5.6% |
| 29.0% |
|
| 23.4% |
| -0.7% |
| 22.7% |
Total Health Care Distribution |
| 1,661 |
|
| 1,587 |
| -1.1% |
| 5.8% |
|
| 4.7% |
| -0.1% |
| 4.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology and Value-Added Services |
| 56 |
|
| 50 |
| 9.7% |
| 0.8% |
|
| 10.5% |
| 1.3% |
| 11.8% |
$ | 1,717 |
| $ | 1,637 |
| -0.8% |
| 5.6% |
|
| 4.8% |
| 0.1% |
| 4.9% | |
Exhibit B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 Second Quarter | ||||||||||||||||
Reconciliation of reported GAAP net income and diluted EPS attributable to | ||||||||||||||||
to non-GAAP net income and diluted EPS attributable to | ||||||||||||||||
(in millions, except per share data) | ||||||||||||||||
(unaudited) | ||||||||||||||||
|
| Second Quarter |
|
|
| Year-to-Date |
| |||||||||
|
|
|
|
|
|
| % |
|
|
|
|
|
|
| % |
|
|
| 2024 |
|
| 2023 |
| Growth |
|
|
| 2024 |
|
| 2023 | Growth |
|
Net income attributable to | $ | 104 |
| $ | 140 |
| (25.8) | % |
| $ | 197 |
| $ | 261 | (24.6) | % |
Diluted EPS attributable to | $ | 0.80 |
| $ | 1.06 |
| (24.5) | % |
| $ | 1.52 |
| $ | 1.97 | (22.8) | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Adjustments, net of tax and attribution to noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring costs (1) | $ | 11 |
| $ | 13 |
|
|
|
| $ | 18 |
| $ | 34 |
|
|
Acquisition intangible amortization (2) |
| 28 |
|
| 20 |
|
|
|
|
| 56 |
|
| 39 |
|
|
Cyber incident-insurance proceeds, net of third-party advisory expenses (3) |
| (6) |
|
| - |
|
|
|
|
| (2) |
|
| - |
|
|
Change in contingent consideration (4) |
| 17 |
|
| - |
|
|
|
|
| 28 |
|
| - |
|
|
Litigation settlements (5) |
| 4 |
|
| - |
|
|
|
|
| 4 |
|
| - |
|
|
Non-GAAP adjustments to net income | $ | 54 |
| $ | 33 |
|
|
|
| $ | 104 |
| $ | 73 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments to diluted EPS |
| 0.43 |
|
| 0.25 |
|
|
|
|
| 0.81 |
|
| 0.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income attributable to | $ | 158 |
| $ | 173 |
| (8.3) | % |
| $ | 301 |
| $ | 334 | (9.7) | % |
Non-GAAP diluted EPS attributable to | $ | 1.23 |
| $ | 1.31 |
| (6.1) | % |
| $ | 2.33 |
| $ | 2.52 | (7.5) | % |
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. Net income growth rates are based on actual values and may not recalculate due to rounding. Amounts may not sum due to rounding.
(1) | Restructuring Costs |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
The following table presents details of our restructuring costs: |
|
|
|
|
|
|
|
|
|
| ||||
|
|
| Second Quarter |
|
|
| Full Year | |||||||
|
|
| 2024 |
|
| 2023 |
|
|
| 2024 |
|
| 2023 | |
| Restructuring costs - pre-tax, as reported | $ | 15 |
| $ | 18 |
|
| $ | 25 |
|
| 48 | |
| Income tax benefit |
| (3) |
|
| (4) |
|
|
| (6) |
|
| (12) | |
| Amount attributable to noncontrolling interests |
| (1) |
|
| (1) |
|
|
| (1) |
|
| (2) | |
| Restructuring costs, net | $ | 11 |
| $ | 13 |
|
| $ | 18 |
| $ | 34 | |
Q2 2024 restructuring costs primarily consisted of employee severance and costs related to the exit of facilities.
(2) | Acquisition Intangible Amortization |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
| The following table presents details of amortization of acquired intangible assets: |
|
|
|
|
|
|
| ||||||
|
|
| Second Quarter |
|
|
| Full Year | |||||||
|
|
| 2024 |
|
| 2023 |
|
|
| 2024 |
|
| 2023 | |
| Acquisition intangible amortization - pre-tax, as reported | $ | 47 |
| $ | 34 |
|
| $ | 93 |
|
| 64 | |
| Income tax benefit |
| (12) |
|
| (9) |
|
|
| (23) |
|
| (16) | |
| Amount attributable to noncontrolling interests |
| (7) |
|
| (5) |
|
|
| (14) |
|
| (9) | |
| Acquisition intangible amortization, net | $ | 28 |
| $ | 20 |
|
| $ | 56 |
| $ | 39 | |
(3) | Represents cyber insurance proceeds, net of one time professional and other fees related to remediation of our Q4 2023 cyber incident. During Q2 2024, we received insurance proceeds of | |
(4) | Represents a change in the fair value of contingent consideration of | |
(5) | Represents settlement amounts for litigation related to the | |
Exhibit C | ||||||||||||
| ||||||||||||
2024 Second Quarter | ||||||||||||
Reconciliation of reported GAAP net income to Adjusted EBITDA | ||||||||||||
(in millions) | ||||||||||||
(unaudited) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Second Quarter |
|
| Full Year | |||||||
|
| 2024 |
|
| 2023 |
|
|
| 2024 |
|
| 2023 |
Net income attributable to | $ | 104 |
| $ | 140 |
|
| $ | 197 |
|
| 261 |
Income attributable to noncontrolling interests |
| 1 |
|
| 8 |
|
|
| 6 |
|
| 15 |
Net income (GAAP) |
| 105 |
|
| 148 |
|
|
| 203 |
|
| 276 |
Definitional adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
| (6) |
|
| (3) |
|
|
| (11) |
|
| (6) |
Interest expense |
| 32 |
|
| 19 |
|
|
| 62 |
|
| 33 |
Income taxes |
| 33 |
|
| 41 |
|
|
| 65 |
|
| 80 |
Depreciation and amortization |
| 74 |
|
| 59 |
|
|
| 147 |
|
| 111 |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring costs |
| 15 |
|
| 18 |
|
|
| 25 |
|
| 48 |
Cyber incident-insurance proceeds, net of third-party advisory expenses |
| (7) |
|
| - |
|
|
| (2) |
|
| - |
Change in contingent consideration |
| 23 |
|
| - |
|
|
| 38 |
|
| - |
Litigation settlements |
| 5 |
|
| - |
|
|
| 5 |
|
| - |
Other adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of affiliates, net of tax |
| (6) |
|
| (3) |
|
|
| (9) |
|
| (7) |
Adjusted EBITDA (non-GAAP) | $ | 268 |
| $ | 279 |
|
| $ | 523 |
| $ | 535 |
Adjusted EBITDA is a non-GAAP measure that we calculate in the manner reflected on Exhibit C. We define Adjusted EBITDA as net income, excluding (i) net income attributable to noncontrolling interests, (ii) interest income and expense, (iii) income taxes, (iv) depreciation and amortization, (v) restructuring costs, (vi) cyber incident-insurance proceeds, net of third-party advisory expenses, (vii) change in contingent consideration, (viii) litigation settlements (ix) equity in earnings of affiliates. Amounts may not sum due to rounding.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240805490049/en/
Investors
Ronald N. South
Senior Vice President and Chief Financial Officer
ronald.south@henryschein.com
(631) 843-5500
Vice President, Investor Relations and Strategic Financial Project Officer
graham.stanley@henryschein.com
(631) 843-5500
Media
Vice President, Global Corporate Media Relations
annmarie.gothard@henryschein.com
(631) 390-8169
Source: