false0001000228NASDAQ 0001000228 2019-11-05 2019-11-05

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 5, 2019

 

 

 

Henry Schein, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

(State or other jurisdiction

of incorporation)

 

0-27078

(Commission

File Number)

 

11-3136595

(IRS Employer

Identification No.)

 

 

 

 

 

 

135 Duryea Road, Melville, New York

(Address of principal executive offices)

 

 

11747

(Zip Code)

 

 

 

Registrant’s telephone number, including area code: (631) 843-5500

 

(Former name or former address, if changed since last report.

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, par value $.01 per share

 

HSIC

 

The Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 


 

Item 2.02. Results of Operations and Financial Condition.

 

On November 5, 2019, Henry Schein, Inc. issued a press release reporting the financial results for the three and nine months ended September 28, 2019. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

The information in this Item 2.02 and the press release attached as Exhibit 99.1 are considered furnished to the Securities and Exchange Commission and are not deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

 

Item 9.01. Financial Statements and Exhibits

 

(a) Not applicable.

 

(b) Not applicable.

 

(c) Not applicable.

 

(d) Exhibit 99.1 – Press Release dated November 5, 2019.

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

HENRY SCHEIN, INC.

 

 

By:

/s/ Steven Paladino

 

Steven Paladino

 

Executive Vice President and

 

Chief Financial Officer

 

(principal financial and accounting

 

officer)

 

November 5, 2019

 

EXHIBIT INDEX

 

Exhibit No.

Description

99.1

Press Release dated November 5, 2019.

 

 


 

 

 

FOR IMMEDIATE RELEASE

 

 

HENRY SCHEIN REPORTS RECORD THIRD QUARTER 2019 FINANCIAL RESULTS

FROM CONTINUING OPERATIONS

 

·          GAAP diluted EPS from continuing operations of $0.91, up 54.2% over prior-year  

·          Non-GAAP diluted EPS from continuing operations of $0.90, up 15.4% over prior-year

·          Tightens guidance range for 2019 non-GAAP diluted EPS from continuing operations, resulting in growth of 8% to 9% over 2018 non-GAAP diluted EPS from continuing operations

·          Introduces guidance for 2020 non-GAAP diluted EPS from continuing operations, reflecting growth of 6% to 9% over midpoint of 2019 guidance for non-GAAP diluted EPS from continuing operations

 

MELVILLE, N.Y., November 5, 2019 – Henry Schein, Inc. (Nasdaq: HSIC), the world’s largest provider of health care solutions to office-based dental and medical practitioners, today reported record third quarter 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 from continuing operations for the quarter ended September 28, 2019, were $2.5 billion, an increase of 6.5% compared with the third quarter of 2018. The 6.5% increase included 7.6% growth in local currencies and a 1.1% decline related to foreign currency exchange. In local currencies, internally generated sales increased 3.9% and growth from acquisitions was 3.7%. Excluding approximately $21.7 million of low-margin sales to Covetrus under the transition services agreement entered into in connection with the Animal Health spin-off, internal sales growth in local currencies was approximately 3.0% (see Exhibit A for details of sales growth).

Net income attributable to Henry Schein, Inc. from continuing operations for the third quarter of 2019 was $134.9 million, or $0.91 per diluted share, compared with prior-year net income from continuing operations of $90.8 million, or $0.59 per diluted share. Third quarter 2019 results include a pre-tax reduction in estimated restructuring costs of $0.8 million, or $0.01 per diluted share, which had been recorded in earlier periods. Excluding the reduction in restructuring costs, non-GAAP net income from continuing operations for the third quarter of 2019 was $134.3 million, or $0.90 per diluted share, compared with non-GAAP net income from continuing operations of $120.0 million, or $0.78 per diluted share, for the third quarter of 2018. Exhibit B provides a reconciliation of GAAP net income and diluted EPS from continuing operations to non-GAAP net income and diluted EPS from continuing operations.

 

 

 

-1- 

more 


 

“Our third quarter financial results are solid with increases in diluted EPS from continuing operations of 54.2% on a GAAP basis and 15.4% on a non-GAAP basis. We continue to make progress in growing organically with a focus on sales of higher-margin products while making strategic investments to supplement growth in the years ahead,” said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein.

Dental sales of $1.5 billion increased 2.1%, consisting of 3.6% growth in local currencies and a 1.5% decline related to foreign currency exchange. In local currencies, internally generated sales increased 1.7% and growth from acquisitions was 1.9%.

“North America dental consumable merchandise internal sales in local currencies grew 1.2% in the third quarter. We believe Henry Schein grew slightly faster than the end market. Growth was primarily driven by sales of dental specialty products. We also faced a difficult prior-year comparison when internal sales growth in local currencies was 4.3%. Dental equipment internal sales declined by 4.5% in local currencies, partially resulting from a deferral of sales orders in anticipation of a supplier sales event held in early October, which contributed to a decline in high-tech equipment sales,” commented Mr. Bergman.

“Internationally, dental consumables internal sales in local currencies grew 4.1%, driven by broad-based sales growth across the entire business, including strong dental specialty sales in our international markets. Dental equipment internal sales in local currencies increased a robust 7.9%, including strong CAD/CAM sales,” said Mr. Bergman.

Medical sales of $803.7 million increased 11.3%, consisting of 11.4% growth in local currencies and a 0.1% decline related to foreign currency exchange. In local currencies, internally generated sales increased 5.3% and growth from acquisitions was 6.1%, primarily driven by the contribution from North American Rescue.

“We are pleased with Medical internal sales growth of 5.3% in local currencies during the third quarter,” remarked Mr. Bergman. “Physicians value our broad offering of health care solutions and services, whether clinical, financial or operational, which help position practices for success in today’s evolving health care environment.” 

Technology and Value-Added Services sales from continuing operations of $137.3 million increased 15.1%, consisting of 15.8% growth in local currencies and a 0.7% decline related to foreign currency exchange. In local currencies, internally generated sales increased 4.9% and growth from acquisitions was 10.9%, primarily driven by the contribution from Lighthouse 360.

“North America Technology and Value-Added Services internal sales growth in local currencies experienced solid growth of 4.5% as practices embraced our software solutions for practice management and patient engagement, and was also bolstered by billing related to the U.S. Department of Defense contract," said Mr. Bergman.

“Internationally, Technology and Value-Added Services internal sales increased 7.5% in local currencies.  Henry Schein One continues to make progress in engaging with customers worldwide to expand access to solutions designed to improve digital dental practice workflow and the patient experience."

 

Stock Repurchase Plan

The Company repurchased approximately 1.6 million shares of its common stock during the third quarter at an average price of $62.48 per share, for a total of approximately $98 million. The impact of the repurchase of shares on third

 

-2- 

more 


 

quarter 2019 diluted EPS was immaterial. At the end of the third quarter of 2019, Henry Schein had approximately $75 million authorized and available for future stock repurchases.

On October 31, 2019, Henry Schein announced that its Board of Directors authorized the repurchase of up to $400 million of shares of common stock. Henry Schein now has approximately $475 million authorized and available for future stock repurchases.

 

Year-to-Date Results

Net sales from continuing operations for the first nine months of 2019 were $7.3 billion, an increase of 5.4% compared with the first nine months of 2018. This consisted of 7.3% growth in local currencies and a decrease of 1.9% related to foreign currency exchange. In local currencies, internally generated sales increased 3.9% and acquisition growth was 3.4%.

Net income attributable to Henry Schein, Inc. from continuing operations for the first nine months of 2019 was $370.1 million, or $2.47 per diluted share, an increase of 18.3% and 21.7%, respectively, compared with the first nine months of 2018. Non-GAAP net income from continuing operations for the first nine months of 2019 was $380.6 million, or $2.54 per diluted share, an increase of 8.6% and 11.4%, respectively, compared with non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations for the first nine months of 2018. Non-GAAP results for the first nine months of 2019 and 2018 exclude certain items noted in Exhibit B, which provides a reconciliation of GAAP net income and diluted EPS from continuing operations to non-GAAP net income and diluted EPS from continuing operations.

 

2019 EPS Guidance

For 2019, Henry Schein today tightened its 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 a gain on the sale of a minority equity investment that will be recorded in the fourth quarter of 2019. The guidance provided today supersedes the guidance previously provided by the Company with respect to its 2019 diluted EPS, both on a GAAP and on a non-GAAP basis. The Company’s Animal Health business was spun off to shareholders as of February 7, 2019, and that business is classified as a discontinued operation for all current and prior periods presented. Financial guidance is as follows:

 

·          2019 non-GAAP diluted EPS from continuing operations attributable to Henry Schein, Inc. is now expected to be $3.41 to $3.47, reflecting growth of 8% to 9% compared with 2018 non-GAAP diluted EPS from continuing operations of $3.17. This outlook for 2019 non-GAAP diluted EPS from continuing operations excludes $0.08 of estimated restructuring expenses and a $0.01 credit to income tax expense related to the Animal Health spin-off. Non-GAAP guidance also excludes a gain on the sale of a minority equity investment to be recorded in the fourth quarter of 2019. Non-GAAP diluted EPS from continuing operations for 2018 excluded certain expenses and benefits, netting to a charge of $0.37 per diluted share, as reflected in Henry Schein’s fourth quarter and full year 2018 earnings press release.

 

-3- 

more 


 

 

·          Guidance for 2019 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, and a gain on the sale of a minority equity investment. Guidance also assumes foreign exchange rates that are generally consistent with current levels and that end markets remain stable and are consistent with current market conditions.

 

2020 EPS Guidance

Henry Schein today introduced 2020 non-GAAP diluted EPS guidance. At this time, the Company is not providing GAAP diluted EPS guidance as it is unable to provide an accurate estimate of expenses related to a restructuring intended to mitigate stranded costs associated with the spin-off of its Animal Health business and to drive operating efficiencies on 2020 financial results. Financial guidance is as follows:

 

·          2020 non-GAAP diluted EPS from continuing operations attributable to Henry Schein, Inc. is expected to be $3.65 to $3.75, reflecting growth of 6% to 9% compared with the midpoint of 2019 non-GAAP diluted EPS from continuing operations guidance of $3.44.

 

·          Guidance for 2020 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, and restructuring. Guidance also assumes foreign exchange rates that are generally consistent with current levels and that end markets remain stable and are consistent with current market conditions.

 

Adjustments to Projected 2019 and 2020 Diluted EPS

The Company has provided guidance for 2019 and 2020 diluted EPS from continuing operations on a non-GAAP basis as noted above. A reconciliation to the Company’s projected 2019 diluted EPS from continuing operations prepared on a GAAP basis is not provided because the Company is unable to provide an estimate of the gain on the sale of a minority equity investment and the corresponding tax effect that will be included in the Company’s 2019 diluted EPS from continuing operations prepared on a GAAP basis without unreasonable effort. A reconciliation to the Company’s projected 2020 diluted EPS from continuing operations prepared on a GAAP basis is not provided because the Company is unable to provide an estimate of costs related to a restructuring to mitigate stranded costs and drive additional operating efficiencies and the corresponding tax effect that will be included in the Company’s 2020 diluted EPS from continuing operations prepared on a GAAP basis without unreasonable effort. The inability to provide these reconciliations is due to the uncertainty and inherent difficulty of predicting the occurrence, the financial impact and the periods in which the non-GAAP adjustments may be recognized. Management does not believe these items are representative of the Company’s underlying business performance.

 

-4- 

more 


 

For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

 

Third Quarter 2019 Conference Call Webcast

The Company will hold a conference call to discuss third quarter 2019 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 laboratoriesgovernment 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® and the Nasdaq 100® indexes, Henry Schein is headquartered in Melville, N.Y., and has operations or affiliates in 32 countries. The Company's sales from continuing operations reached $9.4 billion in 2018, 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.  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.

 

-5- 

more 


 

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, 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; 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; 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.

 

 

CONTACTS:   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

 

(TABLES TO FOLLOW)

 

 

-6- 

more 


 

HENRY SCHEIN, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

 

 

September 28,

 

September 29,

 

September 28,

 

September 29,

 

 

 

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

2,508,767

 

$

2,355,565

 

$

7,316,862

 

$

6,945,047

Cost of sales

 

 

1,747,600

 

 

1,633,206

 

 

5,036,574

 

 

4,785,231

 

 

Gross profit

 

 

761,167

 

 

722,359

 

 

2,280,288

 

 

2,159,816

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

574,771

 

 

552,051

 

 

1,742,597

 

 

1,658,988

 

Litigation settlements

 

 

-

 

 

38,488

 

 

-

 

 

38,488

 

Restructuring costs (credits)

 

 

(802)

 

 

8,551

 

 

15,764

 

 

19,723

 

 

Operating income

 

 

187,198

 

 

123,269

 

 

521,927

 

 

442,617

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

3,943

 

 

3,928

 

 

12,368

 

 

11,105

 

Interest expense

 

 

(12,373)

 

 

(20,430)

 

 

(41,459)

 

 

(54,569)

 

Other, net

 

 

(177)

 

 

(586)

 

 

(2,012)

 

 

(1,773)

 

 

Income from continuing operations before taxes, equity in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

earnings of affiliates and noncontrolling interests

 

178,591

 

 

106,181

 

 

490,824

 

 

397,380

Income taxes

 

 

(41,964)

 

 

(16,633)

 

 

(117,326)

 

 

(86,654)

Equity in earnings of affiliates

 

 

6,585

 

 

6,699

 

 

14,771

 

 

14,829

Net income from continuing operations

 

 

143,212

 

 

96,247

 

 

388,269

 

 

325,555

Income (loss) from discontinued operations

 

 

5,641

 

 

30,729

 

 

(5,576)

 

 

97,561

Net Income

 

 

148,853

 

 

126,976

 

 

382,693

 

 

423,116

 

Less: Net income attributable to noncontrolling interests

 

 

(8,296)

 

 

(5,477)

 

 

(18,187)

 

 

(12,615)

 

Less: Net (income) loss attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

from discontinued operations

 

 

-

 

 

(21)

 

 

366

 

 

(7,593)

Net income attributable to Henry Schein, Inc.

 

$

140,557

 

$

121,478

 

$

364,872

 

$

402,908

Amounts attributable to Henry Schein Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

134,916

 

$

90,770

 

$

370,082

 

$

312,940

Discontinued operations

 

 

5,641

 

 

30,708

 

 

(5,210)

 

 

89,968

Net income attributable to Henry Schein, Inc.

 

$

140,557

 

$

121,478

 

$

364,872

 

$

402,908

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations attributable to Henry Schein, Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.92

 

$

0.60

 

$

2.49

 

$

2.05

 

Diluted

 

$

0.91

 

$

0.59

 

$

2.47

 

$

2.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share from discontinued operations attributable to Henry Schein, Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.04

 

$

0.20

 

$

(0.04)

 

$

0.59

 

Diluted

 

$

0.04

 

$

0.20

 

$

(0.04)

 

$

0.58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Henry Schein, Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.96

 

$

0.80

 

$

2.46

 

$

2.63

 

Diluted

 

$

0.95

 

$

0.79

 

$

2.43

 

$

2.62

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

147,136

 

 

152,533

 

 

148,603

 

 

152,970

 

Diluted

 

 

148,575

 

 

153,614

 

 

149,920

 

 

153,982

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

-7- 

more 


 

HENRY SCHEIN, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 28,

 

December 29,

 

 

 

 

 

2019

 

2018

 

 

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

75,256

 

$

56,885

 

Accounts receivable, net of reserves of $55,116 and $53,121

 

 

1,278,939

 

 

1,168,776

 

Inventories, net

 

 

1,356,897

 

 

1,415,512

 

Prepaid expenses and other

 

 

404,650

 

 

451,033

 

Assets of discontinued operations

 

 

-

 

 

1,083,014

 

 

 

Total current assets

 

 

3,115,742

 

 

4,175,220

Property and equipment, net

 

 

311,123

 

 

314,221

Operating lease right-of-use assets, net

 

 

240,126

 

 

-

Goodwill

 

 

2,441,175

 

 

2,081,029

Other intangibles, net

 

 

603,172

 

 

376,031

Investments and other

 

 

385,744

 

 

420,367

Assets of discontinued operations

 

 

-

 

 

1,133,659

 

 

 

Total assets

 

$

7,097,082

 

$

8,500,527

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

854,658

 

$

785,756

 

Bank credit lines

 

 

107,841

 

 

951,458

 

Current maturities of long-term debt

 

 

109,188

 

 

8,280

 

Operating lease liabilities

 

 

67,374

 

 

-

 

Liabilities of discontinued operations

 

 

-

 

 

577,607

 

Accrued expenses:

 

 

 

 

 

 

 

 

Payroll and related

 

 

230,239

 

 

242,876

 

 

Taxes

 

 

111,051

 

 

154,613

 

 

Other

 

 

428,341

 

 

498,237

 

 

 

Total current liabilities

 

 

1,908,692

 

 

3,218,827

Long-term debt

 

 

872,229

 

 

980,344

Deferred income taxes

 

 

68,643

 

 

27,218

Operating lease liabilities

 

 

182,505

 

 

-

Other liabilities

 

 

322,378

 

 

357,741

Liabilities of discontinued operations

 

-

 

 

62,453

 

 

 

Total liabilities

 

 

3,354,447

 

 

4,646,583

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

 

283,325

 

 

219,724

Redeemable noncontrolling interests from discontinued operations

 

 

-

 

 

92,432

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,

 

 

 

 

 

 

 

 

146,254,864 outstanding on September 28, 2019 and

 

 

 

 

 

 

 

 

151,401,668 outstanding on December 29, 2018

 

 

1,463

 

 

1,514

 

Additional paid-in capital

 

 

65,641

 

 

-

 

Retained earnings

 

 

2,957,850

 

 

3,208,589

 

Accumulated other comprehensive loss

 

 

(195,426)

 

 

(248,771)

 

 

Total Henry Schein, Inc. stockholders' equity

 

 

2,829,528

 

 

2,961,332

 

Noncontrolling interests

 

 

629,782

 

 

580,456

 

 

 

Total stockholders' equity

 

 

3,459,310

 

 

3,541,788

 

 

Total liabilities, redeemable noncontrolling interests and stockholders' equity

 

$

7,097,082

 

$

8,500,527

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

-8- 

more 


 

HENRY SCHEIN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

 

 

 

September 28,

 

September 29,

 

September 28,

 

September 29,

 

 

 

 

 

 

2019

 

2018

 

2019

 

2018

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

148,853

 

$

126,976

 

$

382,693

 

$

423,116

 

Income (loss) from discontinued operations

 

 

5,641

 

 

30,729

 

 

(5,576)

 

 

97,561

 

Income from continuing operations

 

 

143,212

 

 

96,247

 

 

388,269

 

 

325,555

 

Adjustments to reconcile net income to net cash provided by

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

46,855

 

 

35,783

 

 

136,210

 

 

106,930

 

 

 

Stock-based compensation expense

 

 

13,338

 

 

9,516

 

 

33,110

 

 

30,570

 

 

 

Provision for losses on trade and other accounts receivable

 

 

3,600

 

 

2,072

 

 

7,576

 

 

7,400

 

 

 

Benefit from deferred income taxes

 

 

(5,752)

 

 

(3,544)

 

 

(3,468)

 

 

(3,768)

 

 

 

Equity in earnings of affiliates

 

 

(6,585)

 

 

(6,699)

 

 

(14,771)

 

 

(14,829)

 

 

 

Distributions from equity affiliates

 

 

6,556

 

 

5,241

 

 

67,913

 

 

14,585

 

 

 

Changes in unrecognized tax benefits

 

 

(900)

 

 

2,096

 

 

3,535

 

 

2,853

 

 

 

Other

 

 

(1,077)

 

 

2,581

 

 

(2,122)

 

 

503

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(97,932)

 

 

(102,215)

 

 

(115,384)

 

 

(141,017)

 

 

 

 

Inventories

 

 

(11,710)

 

 

8,216

 

 

75,093

 

 

(59,794)

 

 

 

 

Other current assets

 

 

(8,250)

 

 

(54,408)

 

 

(70,348)

 

 

(58,856)

 

 

 

 

Accounts payable and accrued expenses

 

 

145,039

 

 

162,641

 

 

19,567

 

 

59,263

Net cash provided by operating activities from continuing operations

 

 

226,394

 

 

157,527

 

 

525,180

 

 

269,395

Net cash provided by (used in) operating activities from discontinued operations

 

 

5,641

 

 

16,341

 

 

(163,653)

 

 

121,359

Net cash provided by operating activities

 

 

232,035

 

 

173,868

 

 

361,527

 

 

390,754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of fixed assets

 

 

(18,248)

 

 

(19,090)

 

 

(48,956)

 

 

(49,319)

 

Payments for equity investments and business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

acquisitions, net of cash acquired

 

 

(34,652)

 

 

(37,652)

 

 

(657,093)

 

 

(38,996)

 

Proceeds from sale of equity investment

 

 

-

 

 

-

 

 

10,500

 

 

-

 

Proceeds/(payments) for loan to affiliate

 

 

580

 

 

(6,000)

 

 

16,448

 

 

(24,200)

 

Other

 

 

(3,486)

 

 

(4,094)

 

 

(12,248)

 

 

(11,557)

Net cash used in investing activities from continuing operations

 

 

(55,806)

 

 

(66,836)

 

 

(691,349)

 

 

(124,072)

Net cash used in investing activities from discontinued operations

 

 

-

 

 

(4,881)

 

 

(2,064)

 

 

(22,285)

Net cash used in investing activities

 

 

(55,806)

 

 

(71,717)

 

 

(693,413)

 

 

(146,357)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from (repayments of) bank borrowings

 

 

(134,834)

 

 

(34,119)

 

 

(843,846)

 

 

404,098

 

Proceeds from issuance of debt

 

 

-

 

 

15,000

 

 

741

 

 

115,000

 

Principal payments for long-term debt

 

 

(1,214)

 

 

(401)

 

 

(10,252)

 

 

(24,483)

 

Debt issuance costs

 

 

-

 

 

(218)

 

 

(391)

 

 

(395)

 

Proceeds from issuance of stock upon exercise of stock options

 

 

-

 

 

54

 

 

34

 

 

3,076

 

Payments for repurchases of common stock

 

 

(98,218)

 

 

(60,751)

 

 

(325,000)

 

 

(114,106)

 

Payments for taxes related to shares withheld for employee taxes

 

 

(224)

 

 

(238)

 

 

(10,751)

 

 

(17,903)

 

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 stockholders

 

 

4,031

 

 

(1,464)

 

 

53,429

 

 

(6,142)

 

Acquisitions of noncontrolling interests in subsidiaries

 

 

(88)

 

 

(77)

 

 

(2,358)

 

 

(286,233)

 

Proceeds from (payments to) Henry Schein Animal Health Business

 

 

46,400

 

 

(2,062)

 

 

(166,557)

 

 

(292,806)

Net cash provided by (used in) financing activities from continuing operations

 

 

(184,147)

 

 

(84,276)

 

 

176,139

 

 

(219,894)

Net cash provided by (used in) financing activities from discontinued operations

 

 

(5,641)

 

 

(11,972)

 

 

144,633

 

 

(98,622)

Net cash provided by (used in) financing activities

 

 

(189,788)

 

 

(96,248)

 

 

320,772

 

 

(318,516)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash & cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

continuing operations

 

 

3,891

 

 

1,200

 

 

8,401

 

 

14,505

Effect of exchange rate changes on cash & cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

discontinued operations

 

 

-

 

 

1,316

 

 

(2,240)

 

 

4,696

Net change in cash and cash equivalents from continuing operations

 

 

(9,668)

 

 

7,615

 

 

18,371

 

 

(60,066)

Net change in cash and cash equivalents from discontinued operations

 

 

-

 

 

804

 

 

(23,324)

 

 

5,148

Cash and cash equivalents, beginning of period

 

 

84,924

 

 

90,321

 

 

56,885

 

 

158,002

Cash and cash equivalents, end of period

 

$

75,256

 

$

97,936

 

$

75,256

 

$

97,936

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

-9- 

more 


 

Exhibit A - QTD Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Henry Schein, Inc.

2019 Third Quarter

Sales Summary

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q3 2019 over Q3 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global

Q3 2019

 

Q3 2018

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Dental

$

1,545,984

 

$

1,514,325

 

2.1%

 

-1.5%

 

3.6%

 

1.9%

 

1.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Medical

 

803,709

 

 

721,942

 

11.3%

 

-0.1%

 

11.4%

 

6.1%

 

5.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Health Care Distribution

 

2,349,693

 

 

2,236,267

 

5.1%

 

-1.0%

 

6.1%

 

3.2%

 

2.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology and value-added services

 

137,331

 

 

119,298

 

15.1%

 

-0.7%

 

15.8%

 

10.9%

 

4.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total excluding Corporate TSA Revenue

 

2,487,024

 

 

2,355,565

 

5.6%

 

-1.0%

 

6.6%

 

3.6%

 

3.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate TSA revenues (1)

 

21,743

 

 

-

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

Total Global

$

2,508,767

 

$

2,355,565

 

6.5%

 

-1.1%

 

7.6%

 

3.7%

 

3.9%

North America

Q3 2019

 

Q3 2018

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Dental

$

951,796

 

$

951,199

 

0.1%

 

0.0%

 

0.1%

 

0.3%

 

-0.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Medical

 

784,349

 

 

702,758

 

11.6%

 

0.0%

 

11.6%

 

6.3%

 

5.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Health Care Distribution

 

1,736,145

 

 

1,653,957

 

5.0%

 

0.0%

 

5.0%

 

2.9%

 

2.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology and value-added services

 

120,197

 

 

103,955

 

15.6%

 

0.0%

 

15.6%

 

11.1%

 

4.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total excluding Corporate TSA Revenue

 

1,856,342

 

 

1,757,912

 

5.6%

 

0.0%

 

5.6%

 

3.3%

 

2.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate TSA revenues (1)

 

1,077

 

 

-

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total North America

$

1,857,419

 

$

1,757,912

 

5.7%

 

0.0%

 

5.7%

 

3.4%

 

2.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International

Q3 2019

 

Q3 2018

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Dental

$

594,188

 

$

563,126

 

5.5%

 

-4.0%

 

9.5%

 

4.5%

 

5.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Medical

 

19,360

 

 

19,184

 

0.9%

 

-4.4%

 

5.3%

 

0.0%

 

5.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Health Care Distribution

 

613,548

 

 

582,310

 

5.4%

 

-4.0%

 

9.4%

 

4.4%

 

5.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology and value-added services

 

17,134

 

 

15,343

 

11.7%

 

-5.5%

 

17.2%

 

9.7%

 

7.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total excluding Corporate TSA Revenue

 

630,682

 

 

597,653

 

5.5%

 

-4.1%

 

9.6%

 

4.5%

 

5.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate TSA revenues (1)

 

20,666

 

 

-

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

Total International

$

651,348

 

$

597,653

 

9.0%

 

-4.0%

 

13.0%

 

4.5%

 

8.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)     Corporate TSA revenues represents sales of certain products to Covetrus under the transition services agreement entered into in connection with the Animal Health spin-off, which we expect to continue through August 2020.

 

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

 

-10- 

more 


 

Exhibit A - YTD Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Henry Schein, Inc.

 

2019 Third Quarter Year-to-Date

 

Sales Summary

 

(in thousands)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q3 2019 Year-to-Date over Q3 2018 Year-to-Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global

Q3 2019

 

Q3 2018

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Dental

$

4,693,803

 

$

4,674,534

 

0.4%

 

-2.8%

 

3.2%

 

1.3%

 

1.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Medical

 

2,184,927

 

 

1,976,367

 

10.6%

 

-0.1%

 

10.7%

 

4.8%

 

5.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Health Care Distribution

 

6,878,730

 

 

6,650,901

 

3.4%

 

-2.0%

 

5.4%

 

2.3%

 

3.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology and value-added services

 

377,891

 

 

294,146

 

28.5%

 

-1.1%

 

29.6%

 

27.4%

 

2.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total excluding Corporate TSA Revenue

 

7,256,621

 

 

6,945,047

 

4.5%

 

-1.9%

 

6.4%

 

3.4%

 

3.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate TSA revenues (1)

 

60,241

 

 

-

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

 

Total Global

$

7,316,862

 

$

6,945,047

 

5.4%

 

-1.9%

 

7.3%

 

3.4%

 

3.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

Q3 2019

 

Q3 2018

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Dental

$

2,850,762

 

$

2,830,384

 

0.7%

 

-0.3%

 

1.0%

 

0.1%

 

0.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Medical

 

2,125,002

 

 

1,915,944

 

10.9%

 

0.0%

 

10.9%

 

4.9%

 

6.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Health Care Distribution

 

4,975,764

 

 

4,746,328

 

4.8%

 

-0.2%

 

5.0%

 

2.1%

 

2.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology and value-added services

 

327,618

 

 

245,761

 

33.3%

 

-0.1%

 

33.4%

 

31.8%

 

1.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total excluding Corporate TSA Revenue

 

5,303,382

 

 

4,992,089

 

6.2%

 

-0.2%

 

6.4%

 

3.5%

 

2.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate TSA revenues (1)

 

4,098

 

 

-

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

 

Total North America

$

5,307,480

 

$

4,992,089

 

6.3%

 

-0.2%

 

6.5%

 

3.6%

 

2.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International

Q3 2019

 

Q3 2018

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Dental

$

1,843,041

 

$

1,844,150

 

-0.1%

 

-6.6%

 

6.5%

 

3.1%

 

3.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Medical

 

59,925

 

 

60,423

 

-0.8%

 

-6.3%

 

5.5%

 

0.0%

 

5.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Health Care Distribution

 

1,902,966

 

 

1,904,573

 

-0.1%

 

-6.5%

 

6.4%

 

3.0%

 

3.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology and value-added services

 

50,273

 

 

48,385

 

3.9%

 

-6.7%

 

10.6%

 

5.2%

 

5.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total excluding Corporate TSA Revenue

 

1,953,239

 

 

1,952,958

 

0.0%

 

-6.5%

 

6.5%

 

3.0%

 

3.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate TSA revenues (1)

 

56,143

 

 

-

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

 

Total International

$

2,009,382

 

$

1,952,958

 

2.9%

 

-6.5%

 

9.4%

 

3.1%

 

6.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)     Corporate TSA revenues represents sales of certain products to Covetrus under the transition services agreement entered into in connection with the Animal Health spin-off, which we expect to continue through August 2020.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

-11- 

more 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit B

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Henry Schein, Inc.

 

2019 Third Quarter and Year-to-Date

 

Reconciliation of reported GAAP net income from continuing operations and

 

 diluted EPS from continuing operations attributable to Henry Schein, Inc.

 

to non-GAAP net income from continuing operations and

 

diluted EPS from continuing operations attributable to Henry Schein, Inc.

 

(in thousands, except per share data)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third Quarter

 

 

 

Year-to-Date

 

 

 

 

 

 

 

 

%

 

 

 

 

 

 

 

%

 

 

 

2019

 

 

2018

 

Growth

 

 

 

2019

 

 

2018

Growth

 

Net Income from continuing operations attributable to Henry Schein, Inc.

$

134,916

 

$

90,770

 

48.6

%

 

$

370,082

 

$

312,940

18.3

%

Diluted EPS from continuing operations attributable to Henry Schein, Inc.

$

0.91

 

$

0.59

 

54.2

%

 

$

2.47

 

$

2.03

21.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring costs (credits) - Pre-tax (1)

$

(802)

 

$

8,551

 

 

 

 

$

15,764

 

$

19,723

 

 

Income tax expense (benefit) for restructuring costs (credits) (1)

 

201

 

 

(2,139)

 

 

 

 

 

(3,941)

 

 

(4,904)

 

 

Litigation settlements - Pre-tax (2)

 

-

 

 

38,488

 

 

 

 

 

-

 

 

38,488

 

 

Income tax benefit for litigation settlements (2)

 

-

 

 

(9,622)

 

 

 

 

 

-

 

 

(9,622)

 

 

One-time tax on reorganization related to HS One (3)

 

-

 

 

3,914

 

 

 

 

 

-

 

 

3,914

 

 

Transition tax on repatriated foreign earnings (4)

 

-

 

 

(10,000)

 

 

 

 

 

-

 

 

(10,000)

 

 

Tax credit related to Animal Health spin-off (5)

 

-

 

 

-

 

 

 

 

 

(1,333)

 

 

-

 

 

Total non-GAAP adjustments to Net Income from continuing operations

$

(601)

 

$

29,192

 

 

 

 

$

10,490

 

$

37,599

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments to diluted EPS from continuing operations

$

(0.01)

 

$

0.19

 

 

 

 

$

0.07

 

$

0.24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

$

134,315

 

$

119,962

 

12.0

%

 

$

380,572

 

$

350,539

8.6

%

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

$

0.90

 

$

0.78

 

15.4

%

 

$

2.54

 

$

2.28

11.4

%

 

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.  Earnings per share numbers may not sum due to rounding.

 

(1)      Represents Q3 2019 restructuring credits of $802, net of $201 tax expense, resulting in an after-tax effect of $601 and YTD 2019 restructuring costs of $15,764, net of $3,941 tax benefit, resulting in an after-tax effect of $11,823.  Represents Q3 2018 restructuring costs of $8,551, net of $2,139 tax benefit, resulting in an after-tax effect of $6,412 and YTD 2018 restructuring costs of $19,723, net of $4,904 tax benefit, resulting in an after-tax effect of $14,819.

(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.

(3)      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.

(4)      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.

(5)      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 7, 2019.

 

-12-

###