falseNASDAQ0001000228 0001000228 2020-08-04 2020-08-04

 

 

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): August 4, 2020

 

 

 

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 August 4, 2020, Henry Schein, Inc. issued a press release reporting the financial results for the three and six months ended June 27, 2020. 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 August 4, 2020.

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)

August 4, 2020

EXHIBIT INDEX

 

Exhibit No.

Description

99.1

Press Release dated August 4, 2020.

 

 

 

 

 

FOR IMMEDIATE RELEASE

 

 

HENRY SCHEIN REPORTS SECOND QUARTER 2020 FINANCIAL RESULTS

 

·      Q2 GAAP loss per diluted share from continuing operations of $0.08 versus prior-year GAAP diluted EPS from continuing operations of $0.78

·      Q2 non-GAAP diluted EPS from continuing operations of $0.00 versus prior-year non-GAAP diluted EPS from continuing operations of $0.84

·      Company maintains a strong balance sheet with access to significant liquidity

 

MELVILLE, N.Y., August 4, 2020 – Henry Schein, Inc. (Nasdaq: HSIC), the world’s largest provider of health care solutions to office-based dental and medical practitioners, today reported second quarter 2020 financial results from continuing operations. Results from continuing operations exclude contributions from Henry Schein’s former Animal Health business, which was spun off in February 2019 to form a new publicly traded company, Covetrus (Nasdaq: CVET).

Net sales for the quarter ended June 27, 2020, were $1.7 billion, a decrease of 31.2% compared with the second quarter of 2019 due to the impact of COVID-19. In local currencies, internally generated sales decreased 30.5%. Acquisition growth was immaterial (See Exhibit A for details of sales growth and a reconciliation of this non-GAAP measure to GAAP sales).

GAAP net loss attributable to Henry Schein, Inc. from continuing operations for the second quarter of 2020 was $11.4 million, or a loss of $0.08 per diluted share, compared with prior-year net income from continuing operations of $116.8 million, or $0.78 per diluted share. Non-GAAP net income from continuing operations for the second quarter of 2020 was $0.6 million, or $0.00 per diluted share, compared with prior-year non-GAAP net income from continuing operations of $125.7 million, or $0.84 per diluted share. Non-GAAP results for the second quarter of 2020 and 2019 exclude certain items noted in Exhibit B, which provides a reconciliation of GAAP net income/loss from continuing operations and diluted EPS from continuing operations to non-GAAP net income and diluted EPS from continuing operations.

"Team Schein rose to the significant challenges caused by the global COVID-19 pandemic. These efforts are clear attributes of our corporate culture, which is rooted in care and respect for one another, as well as a commitment to our customers, suppliers, investors, and corporate social responsibility," said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein. "While results for the second quarter are reflective of the current challenging environment, we remain confident in our strategy. Throughout this pandemic, we have focused our dental and medical practice recovery programs to assist our customers with solutions ranging from management of temporary office closures to

 

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practice safety, new protocol implementation, patient communications, and financial assistance, among many other solutions to help restore practices.

“Regarding our second quarter financial results, COVID-19 significantly impacted our worldwide results, particularly in our Dental business, yet sales improved relative to our original expectations across all our business groups as we progressed through the quarter. This was directly related to a resumption of operations for both our dental and medical customers, which occurred faster than we had anticipated, first in our international markets and then in North America,” said Mr. Bergman. “We remain cautiously optimistic about the immediate future while closely monitoring global diagnosed COVID-19 cases and the potential impact on customer activity, and focusing on cash management. Our enthusiasm for both our near- and long-term business prospects remains unchanged.”

Dental sales for the second quarter of 2020 of $941.3 million decreased 41.2% versus the prior year. In local currencies, internally generated sales decreased 40.1%. Acquisition growth was immaterial. The 40.1% internal decline in local currencies included a decrease of 46.9% in North America and a decrease of 29.5% internationally.

In North America, dental consumable merchandise internal sales in local currencies declined 47.5% and dental equipment internal sales in local currencies declined 44.9%. Internationally, dental consumable merchandise internal sales in local currencies declined 29.2% and dental equipment internal sales in local currencies declined 30.5%.

“We saw positive trends in sales later in the quarter as practices reopened and patients returned for oral care, leading to dental sales in the second quarter that were ahead of our original expectations,” noted Mr. Bergman.

Medical sales for the second quarter of 2020 of $617.8 million decreased 11.4% compared to the same period last year. There was no acquisition growth in the quarter. 

“Our second quarter medical sales were fairly resilient, due to strong demand for personal protective equipment (PPE),” remarked Mr. Bergman. “A portion of physician offices in North America remained open throughout the quarter, and sales of consumable merchandise experienced less of a decline than we anticipated. Henry Schein has also worked to make available a variety of COVID-19 point-of-care diagnostic tests and related solutions to our medical customers in response to the pandemic.”

Technology and Value-Added Services sales from continuing operations of $105.2 million decreased 15.9% versus the prior year. In local currencies, internally generated sales decreased 17.0%. Acquisition growth was immaterial.

“Henry Schein One dental software sales began to improve as we progressed through the second quarter, in line with the resumption of dental practice operations. In particular, the monthly trend for transactional software revenues improved as more patients visited dental offices worldwide. The ability for dentists to communicate with patients, providing information on practice reopening plans and safety measures, has been a critical solution for our customers in response to COVID-19,” said Mr. Bergman. “Dental practices have relied on Henry Schein for practice management, patient engagement, and demand creation software solutions, as well as financial services programs as they navigated office closures, staff furloughs, and a resumption of procedure bookings.”

 

 

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Year-to-Date Financial Results

Net sales from continuing operations for the first half of 2020 were $4.1 billion, a decrease of 14.5% compared with the first half of 2019. In local currencies, internally generated sales decreased 14.5%.

GAAP net income attributable to Henry Schein, Inc. from continuing operations for the first half of 2020 was $119.2 million, or $0.84 per diluted share, compared with GAAP net income from continuing operations for the first half of 2019 of $235.2 million, or $1.56 per diluted share. Non-GAAP net income from continuing operations for the first half of 2020 was $134.7 million, or $0.94 per diluted share, compared with non-GAAP net income from continuing operations for the first half of 2019 of $246.3 million, or $1.64 per diluted share. Non-GAAP results for the first half of 2020 and 2019 exclude certain items noted in Exhibit B, which provides a reconciliation of GAAP net income from continuing operations and diluted EPS from continuing operations to non-GAAP net income and diluted EPS from continuing operations.

Financial Guidance

Due to the continued uncertainty surrounding the COVID-19 pandemic and its impact to business operations, Henry Schein is not providing 2020 financial guidance at this time. 

Second Quarter 2020 Conference Call Webcast

The Company will hold a conference call to discuss second quarter 2020 financial results today, beginning at 10:00 a.m. Eastern time. Individual investors are invited to listen to the conference call through Henry Schein’s website by visiting www.henryschein.com/IRwebcasts. In addition, a replay will be available beginning shortly after the call has ended.

About Henry Schein, Inc.

Henry Schein, Inc. (Nasdaq: HSIC) is a solutions company for health care professionals powered by a network of people and technology. With approximately 19,000 Team Schein Members worldwide, the Company's network of trusted advisors provides more than 1 million customers globally with more than 300 valued solutions that improve operational success and clinical outcomes. Our Business, Clinical, Technology, and Supply Chain solutions help office-based dental  and medical  practitioners work more efficiently so they can provide quality care more effectively. These solutions also support dental laboratories, government and institutional health care clinics, as well as other alternate care sites.

Henry Schein operates through a centralized and automated distribution network, with a selection of more than 120,000 branded products and Henry Schein private-brand products in stock, as well as more than 180,000 additional products available as special-order items.

A FORTUNE 500 Company and a member of the S&P 500® index, Henry Schein is headquartered in Melville, N.Y., and has operations or affiliates in 31 countries. The Company's sales from continuing operations reached $10.0 billion in 2019, and have grown at a compound annual rate of approximately 13 percent since Henry Schein became a public company in 1995.

For more information, visit Henry Schein at www.henryschein.com, Facebook.com/HenrySchein and @HenrySchein on Twitter

 

 

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Cautionary Note Regarding Forward-Looking Statements and Use of Non-GAAP Financial Information

In accordance with the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995, we provide the following cautionary remarks regarding important factors that, among others, could cause future results to differ materially from the forward-looking statements, expectations and assumptions expressed or implied herein.  All forward-looking statements made by us are subject to risks and uncertainties and are not guarantees of future performance.  These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  These statements include EPS guidance and are generally identified by the use of such terms as "may," "could," "expect," "intend," "believe," "plan," "estimate," "forecast," "project," "anticipate," “to be,” “to make” or other comparable terms. Forward looking statements include the overall impact of the Novel Coronavirus Disease 2019 (COVID-19) on the Company, its results of operations, liquidity, and financial condition (including any estimates of the percentage impact on these items), the efficacy and impact of the Company’s cost reduction initiatives, the rate at which dental and other practices resume normal operations in the United States and internationally and whether one or more resurgences of the virus will adversely impact the resumption of normal operations. Forward looking statements also include the Company’s ability to make additional testing available, the nature of those tests and the number of tests intended to be made available and the timing for availability, the nature of the target market, as well as the efficacy or relative efficacy of the test results given that the test efficacy has not been, or will not have been, independently verified under normal FDA procedures. A full discussion of our operations and financial condition, status of litigation matters, including factors that may affect our business and future prospects, is contained in documents we have filed with the United States Securities and Exchange Commission, or SEC, and will be contained in all subsequent periodic filings we make with the SEC. These documents identify in detail important risk factors that could cause our actual performance to differ materially from current expectations.

Risk factors and uncertainties that could cause actual results to differ materially from current and historical results include, but are not limited to: effects of a highly competitive and consolidating market; increased competition by third party online commerce sites; our dependence on third parties for the manufacture and supply of our products; our dependence upon sales personnel, customers, suppliers and manufacturers; our dependence on our senior management; fluctuations in quarterly earnings; risks from expansion of customer purchasing power and multi-tiered costing structures; increases in shipping costs for our products or other service issues with our third-party shippers; general global macro-economic conditions; risks associated with currency fluctuations; risks associated with political and economic uncertainty; disruptions in financial markets; volatility of the market price of our common stock; changes in the health care industry; implementation of health care laws; failure to comply with regulatory requirements and data privacy laws; risks associated with our global operations; risks associated with COVID-19, as well as other disease outbreaks, epidemics, pandemics, or similar wide spread public health concerns and other natural disasters; risks associated with the United Kingdom’s withdrawal from the European Union; transitional challenges associated with acquisitions, dispositions and joint ventures, including the failure to achieve anticipated synergies/benefits; financial and tax risks associated with acquisitions, dispositions and joint ventures; litigation risks; new or unanticipated litigation developments and the status of litigation matters; the dependence on our continued product development, technical support and successful marketing in the technology segment; our dependence on third parties for certain technologically advanced components; risks from disruption to our information systems; cyberattacks or other privacy or data security breaches; certain provisions in our governing documents that may discourage third-party acquisitions of us; and changes in tax legislation. The order in which these factors appear should not be construed to indicate their relative importance or priority. 

We caution that these factors may not be exhaustive and that many of these factors are beyond our ability to control or predict. Accordingly, any forward-looking statements contained herein should not be relied upon as a prediction of actual results. We undertake no duty and have no obligation to update forward-looking statements.

 

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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)

 

 

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HENRY SCHEIN, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

 

 

June 27,

 

June 29,

 

June 27,

 

June 29,

 

 

 

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,684,399

 

$

2,447,827

 

$

4,113,270

 

$

4,808,095

Cost of sales

 

 

1,230,105

 

 

1,680,396

 

 

2,912,937

 

 

3,288,974

 

 

Gross profit

 

 

454,294

 

 

767,431

 

 

1,200,333

 

 

1,519,121

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

445,793

 

 

593,218

 

 

1,013,180

 

 

1,167,826

 

Restructuring costs

 

 

15,934

 

 

11,925

 

 

20,721

 

 

16,566

 

 

Operating income (loss)

 

 

(7,433)

 

 

162,288

 

 

166,432

 

 

334,729

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1,997

 

 

3,654

 

 

5,187

 

 

8,425

 

Interest expense

 

 

(10,486)

 

 

(12,785)

 

 

(18,298)

 

 

(29,086)

 

Other, net

 

 

(291)

 

 

(1,416)

 

 

(511)

 

 

(1,835)

 

 

Income (loss) from continuing operations before taxes,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

equity in earnings of affiliates and noncontrolling interests

 

(16,213)

 

 

151,741

 

 

152,810

 

 

312,233

Income tax benefit (expense)

 

 

950

 

 

(35,880)

 

 

(36,960)

 

 

(75,362)

Equity in earnings of affiliates

 

 

1,411

 

 

5,556

 

 

4,145

 

 

8,186

Net income (loss) from continuing operations

 

 

(13,852)

 

 

121,417

 

 

119,995

 

 

245,057

Income (loss) from discontinued operations, net of tax

 

 

585

 

 

(2,221)

 

 

303

 

 

(11,217)

Net income (loss)

 

 

(13,267)

 

 

119,196

 

 

120,298

 

 

233,840

 

Less: Net (income) loss attributable to noncontrolling interests

 

 

2,470

 

 

(4,664)

 

 

(834)

 

 

(9,891)

 

Plus: Net loss attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

from discontinued operations

 

 

-

 

 

-

 

 

-

 

 

366

Net income (loss) attributable to Henry Schein, Inc.

 

$

(10,797)

 

$

114,532

 

$

119,464

 

$

224,315

Amounts attributable to Henry Schein Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(11,382)

 

$

116,753

 

$

119,161

 

$

235,166

Discontinued operations

 

 

585

 

 

(2,221)

 

 

303

 

 

(10,851)

Net income (loss) attributable to Henry Schein, Inc.

 

$

(10,797)

 

$

114,532

 

$

119,464

 

$

224,315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.08)

 

$

0.79

 

$

0.84

 

$

1.58

 

Diluted

 

$

(0.08)

 

$

0.78

 

$

0.84

 

$

1.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share from discontinued operations attributable to

Henry Schein, Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

-

 

$

(0.01)

 

$

-

 

$

(0.07)

 

Diluted

 

$

-

 

$

(0.01)

 

$

-

 

$

(0.07)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.08)

 

$

0.77

 

$

0.84

 

$

1.50

 

Diluted

 

$

(0.08)

 

$

0.77

 

$

0.84

 

$

1.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

142,350

 

 

148,148

 

 

142,654

 

 

149,310

 

Diluted

 

 

142,350

 

 

149,423

 

 

142,654

 

 

150,560

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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HENRY SCHEIN, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

 

 

 

 

 

June 27,

 

December 28,

 

 

 

 

 

2020

 

2019

 

 

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

296,110

 

$

106,097

 

Accounts receivable, net of reserves of $80,825 and $60,002

 

 

1,101,201

 

 

1,246,246

 

Inventories, net

 

 

1,406,719

 

 

1,428,799

 

Prepaid expenses and other

 

 

605,176

 

 

445,360

 

 

 

Total current assets

 

 

3,409,206

 

 

3,226,502

Property and equipment, net

 

 

335,898

 

 

329,645

Operating lease right-of-use assets, net

 

 

211,473

 

 

231,662

Goodwill

 

 

2,471,108

 

 

2,462,495

Other intangibles, net

 

 

527,875

 

 

572,878

Investments and other

 

 

362,565

 

 

327,919

 

 

 

Total assets

 

$

7,318,125

 

$

7,151,101

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

734,957

 

$

880,266

 

Bank credit lines

 

 

503,178

 

 

23,975

 

Current maturities of long-term debt

 

 

109,587

 

 

109,849

 

Operating lease liabilities

 

 

61,710

 

 

65,349

 

Accrued expenses:

 

 

 

 

 

 

 

 

Payroll and related

 

 

212,178

 

 

265,206

 

 

Taxes

 

 

210,439

 

 

165,171

 

 

Other

 

 

475,192

 

 

528,553

 

 

 

Total current liabilities

 

 

2,307,241

 

 

2,038,369

Long-term debt

 

 

515,802

 

 

622,908

Deferred income taxes

 

 

56,925

 

 

64,989

Operating lease liabilities

 

 

163,342

 

 

176,267

Other liabilities

 

 

374,045

 

 

331,173

 

 

 

Total liabilities

 

 

3,417,355

 

 

3,233,706

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

 

279,225

 

 

287,258

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

Preferred stock, $.01 par value, 1,000,000 shares authorized,

 

 

 

 

 

 

 

 

none outstanding

 

 

-

 

 

-

 

Common stock, $.01 par value, 480,000,000 shares authorized,

 

 

 

 

 

 

 

 

142,438,127 outstanding on June 27, 2020 and

 

 

 

 

 

 

 

 

143,353,459 outstanding on December 28, 2019

 

 

1,424

 

 

1,434

 

Additional paid-in capital

 

 

16,475

 

 

47,768

 

Retained earnings

 

 

3,172,439

 

 

3,116,215

 

Accumulated other comprehensive loss

 

 

(199,251)

 

 

(167,373)

 

 

Total Henry Schein, Inc. stockholders' equity

 

 

2,991,087

 

 

2,998,044

 

Noncontrolling interests

 

 

630,458

 

 

632,093

 

 

 

Total stockholders' equity

 

 

3,621,545

 

 

3,630,137

 

 

Total liabilities, redeemable noncontrolling interests and stockholders' equity

 

$

7,318,125

 

$

7,151,101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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HENRY SCHEIN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

 

 

 

June 27,

 

June 29,

 

June 27,

 

June 29,

 

 

 

 

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(13,267)

 

$

119,196

 

$

120,298

 

$

233,840

 

Income (loss) from discontinued operations

 

 

585

 

 

(2,221)

 

 

303

 

 

(11,217)

 

Income (loss) from continuing operations

 

 

(13,852)

 

 

121,417

 

 

119,995

 

 

245,057

 

Adjustments to reconcile net income (loss) to net cash provided by (used in)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

47,112

 

 

49,055

 

 

96,095

 

 

89,355

 

 

 

Stock-based compensation (credit) expense

 

 

5,156

 

 

12,662

 

 

(12,358)

 

 

19,772

 

 

 

Provision for losses on trade and other accounts receivable

 

 

14,215

 

 

2,192

 

 

28,758

 

 

3,976

 

 

 

Provision for (benefit from) deferred income taxes

 

 

(35,516)

 

 

(5,648)

 

 

(32,871)

 

 

2,284

 

 

 

Equity in earnings of affiliates

 

 

(1,411)

 

 

(5,556)

 

 

(4,145)

 

 

(8,186)

 

 

 

Distributions from equity affiliates

 

 

1,807

 

 

9,056

 

 

4,220

 

 

61,357

 

 

 

Changes in unrecognized tax benefits

 

 

2,955

 

 

1,221

 

 

1,380

 

 

4,435

 

 

 

Other

 

 

14,151

 

 

(2,284)

 

 

227

 

 

(1,045)

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

100,955

 

 

(5,872)

 

 

99,672

 

 

(17,452)

 

 

 

 

Inventories

 

 

(59,338)

 

 

8,922

 

 

13,700

 

 

86,803

 

 

 

 

Other current assets

 

 

(166,614)

 

 

(44,316)

 

 

(176,616)

 

 

(62,098)

 

 

 

 

Accounts payable and accrued expenses

 

 

(1,220)

 

 

24,603

 

 

(138,900)

 

 

(125,472)

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

 

 

(91,600)

 

 

165,452

 

 

(843)

 

 

298,786

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

 

 

855

 

 

(2,221)

 

 

573

 

 

(169,294)

Net cash provided by (used in) operating activities

 

 

(90,745)

 

 

163,231

 

 

(270)

 

 

129,492

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of fixed assets

 

 

(7,580)

 

 

(14,790)

 

 

(30,588)

 

 

(30,708)

 

Payments related to equity investments and business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

acquisitions, net of cash acquired

 

 

222

 

 

(18,468)

 

 

(37,725)

 

 

(622,441)

 

Proceeds from sale of equity investment

 

 

-

 

 

-

 

 

-

 

 

10,500

 

Proceeds from (repayments to) loan to affiliate

 

 

(2,866)

 

 

(72)

 

 

(1,729)

 

 

15,868

 

Other

 

 

(5,812)

 

 

(5,686)

 

 

(11,599)

 

 

(8,762)

Net cash used in investing activities from continuing operations

 

 

(16,036)

 

 

(39,016)

 

 

(81,641)

 

 

(635,543)

Net cash used in investing activities from discontinued operations

 

 

-

 

 

-

 

 

-

 

 

(2,064)

Net cash used in investing activities

 

 

(16,036)

 

 

(39,016)

 

 

(81,641)

 

 

(637,607)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in bank borrowings

 

 

121,063

 

 

(56,895)

 

 

479,702

 

 

(709,012)

 

Proceeds from issuance of long-term debt

 

 

251,421

 

 

-

 

 

501,421

 

 

741

 

Principal payments for long-term debt

 

 

(601,102)

 

 

(1,662)

 

 

(609,580)

 

 

(9,038)

 

Debt issuance costs

 

 

(3,597)

 

 

(391)

 

 

(3,655)

 

 

(391)

 

Proceeds from issuance of stock upon exercise of stock options

 

 

-

 

 

-

 

 

-

 

 

34

 

Payments for repurchases of common stock

 

 

-

 

 

(76,782)

 

 

(73,789)

 

 

(226,782)

 

Payments for taxes related to shares withheld for employee taxes

 

 

(558)

 

 

(856)

 

 

(13,713)

 

 

(10,527)

 

Distribution received related to Animal Health Spin-off

 

 

-

 

 

-

 

 

-

 

 

1,120,000

 

Proceeds related to Animal Health Share Sale

 

 

-

 

 

-

 

 

-

 

 

361,090

 

Proceeds from (distributions to) noncontrolling shareholders

 

 

198

 

 

(2,807)

 

 

(3,466)

 

 

49,398

 

Acquisitions of noncontrolling interests in subsidiaries

 

 

(9)

 

 

3,787

 

 

(14,934)

 

 

(2,270)

 

Proceeds from (payments to) Henry Schein Animal Health Business

 

 

3,026

 

 

11,816

 

 

64

 

 

(212,957)

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

 

 

(229,558)

 

 

(123,790)

 

 

262,050

 

 

360,286

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

 

 

(855)

 

 

2,221

 

 

(573)

 

 

150,274

Net cash provided by (used in) financing activities

 

 

(230,413)

 

 

(121,569)

 

 

261,477

 

 

510,560

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents from

 

 

 

 

 

 

 

 

 

 

 

 

 

continuing operations

 

 

15,936

 

 

(5,837)

 

 

10,447

 

 

4,510

Effect of exchange rate changes on cash and cash equivalents from

 

 

 

 

 

 

 

 

 

 

 

 

 

discontinued operations

 

 

-

 

 

-

 

 

-

 

 

(2,240)

Net change in cash and cash equivalents from continuing operations

 

 

(321,258)

 

 

(3,191)

 

 

190,013

 

 

28,039

Net change in cash and cash equivalents from discontinued operations

 

 

-

 

 

-

 

 

-

 

 

(23,324)

Cash and cash equivalents, beginning of period

 

 

617,368

 

 

88,115

 

 

106,097

 

 

56,885

Cash and cash equivalents, end of period

 

$

296,110

 

$

84,924

 

$

296,110

 

$

84,924

 

-8- 

more 


 

Exhibit A - QTD Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Henry Schein, Inc.

2020 Second Quarter

Sales Summary

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2 2020 over Q2 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global

Q2 2020

 

Q2 2019

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Dental

$

941,292

 

$

1,601,350

 

-41.2%

 

-1.2%

 

-40.0%

 

0.1%

 

-40.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Medical

 

617,810

 

 

697,558

 

-11.4%

 

0.0%

 

-11.4%

 

0.0%

 

-11.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Health Care Distribution

 

1,559,102

 

 

2,298,908

 

-32.2%

 

-0.9%

 

-31.3%

 

0.1%

 

-31.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology and value-added services

 

105,227

 

 

125,051

 

-15.9%

 

-0.5%

 

-15.4%

 

1.6%

 

-17.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total excluding Corporate TSA Revenue

 

1,664,329

 

 

2,423,959

 

-31.3%

 

-0.8%

 

-30.5%

 

0.1%

 

-30.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate TSA revenues (1)

 

20,070

 

 

23,868

 

-15.9%

 

0.0%

 

-15.9%

 

0.0%

 

-15.9%

Total Global

$

1,684,399

 

$

2,447,827

 

-31.2%

 

-0.9%

 

-30.3%

 

0.2%

 

-30.5%

North America

Q2 2020

 

Q2 2019

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Dental

$

515,946

 

$

975,371

 

-47.1%

 

-0.1%

 

-47.0%

 

-0.1%

 

-46.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Medical

 

596,588

 

 

678,358

 

-12.1%

 

0.0%

 

-12.1%

 

0.0%

 

-12.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Health Care Distribution

 

1,112,534

 

 

1,653,729

 

-32.7%

 

-0.1%

 

-32.6%

 

0.0%

 

-32.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology and value-added services

 

92,927

 

 

108,505

 

-14.4%

 

-0.1%

 

-14.3%

 

0.8%

 

-15.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total excluding Corporate TSA Revenue

 

1,205,461

 

 

1,762,234

 

-31.6%

 

-0.1%

 

-31.5%

 

0.0%

 

-31.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate TSA revenues (1)

 

-

 

 

1,760

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total North America

$

1,205,461

 

$

1,763,994

 

-31.7%

 

-0.1%

 

-31.6%

 

0.0%

 

-31.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International

Q2 2020

 

Q2 2019

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Dental

$

425,346

 

$

625,979

 

-32.1%

 

-3.1%

 

-29.0%

 

0.5%

 

-29.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Medical

 

21,222

 

 

19,200

 

10.5%

 

-2.8%

 

13.3%

 

0.0%

 

13.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Health Care Distribution

 

446,568

 

 

645,179

 

-30.8%

 

-3.0%

 

-27.8%

 

0.4%

 

-28.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology and value-added services

 

12,300

 

 

16,546

 

-25.7%

 

-2.8%

 

-22.9%

 

6.9%

 

-29.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total excluding Corporate TSA Revenue

 

458,868

 

 

661,725

 

-30.7%

 

-3.0%

 

-27.7%

 

0.5%

 

-28.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate TSA revenues (1)

 

20,070

 

 

22,108

 

-9.2%

 

0.0%

 

-9.2%

 

0.0%

 

-9.2%

Total International

$

478,938

 

$

683,833

 

-30.0%

 

-2.9%

 

-27.1%

 

0.5%

 

-27.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

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

 

-9- 

more 


 

<

Exhibit A - YTD Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Henry Schein, Inc.

 

2020 Second Quarter Year-to-Date

 

Sales Summary

 

(in thousands)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2 2020 Year-to Date over Q2 2019 Year-to-Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global

Q2 2020

 

Q2 2019

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Dental

$

2,416,368

 

$

3,147,730

 

-23.2%

 

-1.4%

 

-21.8%

 

0.4%

 

-22.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Medical

 

1,418,498

 

 

1,381,218

 

2.7%

 

-0.1%

 

2.8%

 

1.9%

 

0.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Health Care Distribution

 

3,834,866

 

 

4,528,948

 

-15.3%

 

-1.0%

 

-14.3%

 

0.8%

 

-15.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology and value-added services

 

237,192

 

 

240,649

 

-1.4%

 

-0.4%

 

-1.0%

 

4.8%

 

-5.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total excluding Corporate TSA Revenue

 

4,072,058

 

 

4,769,597

 

-14.6%

 

-1.0%

 

-13.6%

 

1.1%

 

-14.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate TSA revenues (1)

 

41,212

 

 

38,498

 

7.0%

 

0.0%

 

7.0%

 

0.0%

 

7.0%

 

Total Global

$

4,113,270

 

$

4,808,095

 

-14.5%

 

-1.0%

 

-13.5%

 

1.0%

 

-14.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

Q2 2020

 

Q2 2019

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Dental

$

1,404,318

 

$

1,898,877

 

-26.0%

 

0.0%

 

-26.0%

 

0.0%

 

-26.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Medical

 

1,374,616

 

 

1,340,653

 

2.5%

 

0.0%

 

2.5%

 

1.9%

 

0.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Health Care Distribution

 

2,778,934

 

 

3,239,530

 

-14.2%

 

0.0%

 

-14.2%

 

0.8%

 

-15.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology and value-added services

 

206,425

 

 

207,510

 

-0.5%

 

0.0%

 

-0.5%

 

4.4%

 

-4.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total excluding Corporate TSA Revenue

 

2,985,359

 

 

3,447,040

 

-13.4%

 

0.0%

 

-13.4%

 

1.0%

 

-14.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate TSA revenues (1)

 

-

 

 

3,021

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

 

Total North America

$

2,985,359

 

$

3,450,061

 

-13.5%

 

-0.1%

 

-13.4%

 

1.0%

 

-14.4%