false0001000228NASDAQ 0001000228 2021-08-03 2021-08-03

 

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 3, 2021

 

 

 

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 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§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 3, 2021, Henry Schein, Inc. issued a press release reporting the financial results for the three and six months ended June 26, 2021. 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 3, 2021.

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 3, 2021

EXHIBIT INDEX

 

Exhibit No.

Description

99.1

Press Release dated August 3, 2021.

 

 

 

  

                                         

 

 

 

 

 

 

FOR IMMEDIATE RELEASE

 

 

HENRY SCHEIN REPORTS RECORD SECOND-QUARTER 2021 FINANCIAL RESULTS

FROM CONTINUING OPERATIONS

 

·        Total net sales of $3.0 billion up 76.2% versus prior year and up 21.2% versus 2019

·        GAAP diluted EPS from continuing operations of $1.10 versus prior-year GAAP loss per diluted share from continuing operations of $0.08

·        Non-GAAP diluted EPS from continuing operations of $1.11 versus prior-year non-GAAP diluted EPS from continuing operations of $0.00

·        Reflecting strong first-half financial results, raises guidance for 2021 non-GAAP diluted EPS from continuing operations to be at or above $3.85, representing a floor for fiscal 2021

 

MELVILLE, N.Y., August 3, 2021 – Henry Schein, Inc. (Nasdaq: HSIC), the world’s largest provider of health care solutions to office-based dental and medical practitioners, today reported record second-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).

Total net sales for the quarter ended June 26, 2021, were $3.0 billion, up 76.2% compared with the second quarter of 2020, when a significant number of dental and medical practices suspended activity because of the COVID-19 pandemic. The 76.2% increase included 65.5% internal growth in local currencies, 5.5% growth from acquisitions and 5.2% growth related to foreign currency exchange. When compared with the pre-pandemic second quarter of 2019, sales were up 21.2% and included 15.2% internal growth in local currencies, 4.2% growth from acquisitions and 1.8% growth related to foreign currency exchange. Exhibit A provides details of sales growth, including comparisons with 2020. Note that Exhibit A-1 contains details of sales performance compared with 2019.

GAAP net income attributable to Henry Schein, Inc. from continuing operations for the second quarter of 2021 was $155.7 million, or $1.10 per diluted share, compared with prior-year GAAP net loss from continuing operations of $11.4 million, or $0.08 per diluted share. Non-GAAP net income from continuing operations for the second quarter of 2021 was $157.3 million, or $1.11 per diluted share, compared with prior-year non-GAAP net income from continuing operations of $0.6 million, or $0.00 per diluted share. 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 


 

“We are pleased to report record second-quarter financial results as we continue to execute on our key strategies. Strengthening demand in the global dental and medical markets drove strong year-over-year increases in sales versus the prior year when many of our customers had temporarily closed their offices. Notably, compared with a pre-COVID-19 environment in the second quarter of 2019, Henry Schein’s worldwide internal sales in local currencies increased by 15.2%,” said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein.  “We are also pleased with operating margin expansion that reflects a favorable product mix as well as operating expense leverage.”

Mr. Bergman continued, “With solid execution in the first half of 2021 and a favorable outlook for the remainder of the fiscal year, we are raising our guidance for 2021 non-GAAP diluted EPS from continuing operations to be at or above $3.85, representing a floor for fiscal 2021. We will continue to monitor any potential impact to our business as a result of COVID-19.”

 Global Dental sales for the second quarter of 2021 of $1.9 billion increased 102.9% versus the prior-year period. In local currencies, internally generated sales increased 87.0% with 7.3% growth from acquisitions and 8.6% growth related to foreign currency exchange. The 87.0% internal growth in local currencies included an increase of 105.3% in North America and an increase of 64.9% internationally.

Global Dental consumable merchandise internal sales increased 90.5% in local currencies. Excluding sales of personal protective equipment (PPE) and COVID-19 related products, growth was 96.2%. In North America, dental consumable merchandise internal sales in local currencies increased 112.5%, or 119.1% excluding sales of PPE and COVID-19 related products, and dental equipment internal sales in local currencies increased 82.0%. Internationally, dental consumable merchandise internal sales in local currencies increased 64.4%, or 70.2% excluding sales of PPE and COVID-19 related products, and dental equipment internal sales in local currencies increased 66.6%.

“Global dental sales experienced strong growth, with gains in both consumable merchandise and equipment. More specifically, consumable merchandise sales in North America and in our international markets experienced double-digit growth versus the same period in 2019,” noted Mr. Bergman. “Compared with the second quarter of 2019, North America dental equipment sales growth was modest, primarily reflecting delays with certain U.S. manufacturers of chairs, units and lights, resulting in longer lead times. We reported strong equipment growth in our international markets with no significant delays.  Our overall dental sales performance reflects a continued recovery in patient traffic compared to pre-pandemic levels, and we remain optimistic about dental practices investing in technology and equipment over the long term.”

 Global Medical sales for the second quarter of 2021 of $904.8 million increased 46.5% versus the comparable period last year, consisting of 43.5% internal growth in local currencies, 2.6% growth from acquisitions and 0.4% growth related to foreign currency exchange. Excluding sales of PPE and COVID-19 related products, internal sales in local currencies increased 39.1%.

“We believe our medical sales continued to outpace end-market performance with broad-based growth versus the same period in 2019, including growth in medical-surgical, equipment, and laboratory product sales. We continue to expand our medical business beyond core distribution with a differentiated solutions offering that serves low acuity segments of the market, which is the most cost-efficient setting for delivering care,” remarked Mr. Bergman.

 

-2- 

more 


 

Global Technology and Value-Added Services sales of $152.1 million increased 44.5% versus the prior-year quarter and included 33.0% internal sales growth in local currencies, 8.9% growth from acquisitions and 2.6% growth related to foreign currency exchange.

“Global Technology and Value-Added Services sales continued to improve from the early days of the pandemic when patient traffic was hardest hit. During the second quarter, Henry Schein One, the largest contributor to sales in this business, reported record-high quarterly revenue. In addition, our financial services business delivered strong growth, primarily driven by practice transitions revenue,” noted Mr. Bergman.

 

Stock Repurchase Plan

During the second quarter of 2021, the Company repurchased approximately 1.5 million shares of its common stock at an average price of $72.98 per share, for a total of approximately $113 million. The impact of the repurchase of shares on second-quarter diluted EPS was immaterial. At the end of the second quarter, Henry Schein had approximately $400 million authorized and available for future stock repurchases.

 

Year-to-Date Financial Results

Net sales from continuing operations for the first half of 2021 were $5.9 billion, an increase of 43.2% compared with the first half of 2020. The 43.2% increase included 35.6% internal growth in local currencies, 4.2% growth from acquisitions and 3.4% growth related to foreign currency exchange. When compared with the first half of 2019, sales increased 22.5% and included 16.3% internal growth in local currencies, 4.8% growth from acquisitions and 1.4% growth related to foreign currency exchange.

Net income attributable to Henry Schein, Inc. from continuing operations for the first half of 2021 was $321.7 million, or $2.26 per diluted share, compared with net income from continuing operations of $119.2 million, or $0.84 per diluted share, for the first half of 2020. Non-GAAP net income from continuing operations for the first half of 2021 was $335.1 million, or $2.35 per diluted share, compared with non-GAAP net income from continuing operations of $134.7 million, or $0.94 per diluted share, for the first half of 2020. Non-GAAP results for the first half of 2021 and 2020 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.

 

Financial Guidance

Henry Schein today raised guidance for 2021 non-GAAP diluted EPS from continuing operations. At this time, the Company is not providing guidance for 2021 GAAP diluted EPS from continuing operations as it is unable to provide without unreasonable effort an estimate of costs related to an ongoing restructuring initiative, including the corresponding tax effect. Financial guidance is as follows:

 

 

-3- 

more 


 

·        2021 non-GAAP diluted EPS from continuing operations attributable to Henry Schein, Inc. is now expected to be at or above $3.85, representing a floor for fiscal 2021. This compares with previous guidance for non-GAAP diluted EPS from continuing operations attributable to Henry Schein, Inc. to be at or above $3.70.

·        Guidance for 2021 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 future share repurchases, potential future acquisitions, if any, or restructuring expenses. 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. Guidance assumes no material adverse market changes associated with COVID-19.

 

Adjustments to Projected 2021 Non-GAAP Diluted EPS

The Company has provided guidance for 2021 non-GAAP diluted EPS from continuing operations, as noted above. A reconciliation to the Company’s projected 2021 diluted EPS from continuing operations prepared on a GAAP basis is not provided because the Company is unable to provide without unreasonable effort an estimate of costs related to an ongoing restructuring initiative to mitigate stranded costs and drive additional operating efficiencies, including the corresponding tax effect that will be included in the Company’s 2021 diluted EPS from continuing operations prepared on a GAAP basis. The inability to provide these reconciliations 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.

 

Second-Quarter 2021 Conference Call Webcast

The Company will hold a conference call to discuss second-quarter 2021 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 for a period of one week.

 

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 21,000 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 help 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.

 

-4- 

more 


 

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 32 countries and territories. The Company's sales reached $10.1 billion in 2020, and have grown at a compound annual rate of approximately 12 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 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 United States Securities and Exchange Commission, or SEC, including our Annual Report on Form 10-K, 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. 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 impact on these items), the rate and consistency with which dental and other practices resume or maintain normal operations in the United States and internationally, expectations regarding personal protective equipment (“PPE”) and COVID-19 related product sales and inventory levels and whether additional resurgences or variants of the virus will adversely impact the resumption of normal operations, the impact of restructuring programs as well as of any future acquisitions, and more generally current expectations regarding performance in current and future periods.  Forward looking statements also include the (i) ability of the Company 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 and (ii) potential for the Company to distribute the COVID-19 vaccines and ancillary supplies.

Risk factors and uncertainties that could cause actual results to differ materially from current and historical results include, but are not limited to: risks associated with COVID-19 and any variants thereof, as well as other disease outbreaks, epidemics, pandemics, or similar wide spread public health concerns and other natural disasters or acts of terrorism; 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; financial and tax risks associated with acquisitions, dispositions and joint ventures; certain provisions in our governing documents that may discourage third-party acquisitions of us; effects of a highly competitive (including, without limitation, competition from third-party online commerce sites) and consolidating market; the potential repeal or judicial prohibition on implementation of the Affordable Care Act; changes in the health care industry; 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 and political conditions, including international trade agreements and potential trade barriers; failure to comply with existing and future regulatory requirements;

 

-5- 

more 


 

risks associated with the EU Medical Device Regulation; failure to comply with laws and regulations relating to health care fraud or other laws and regulations; failure to comply with laws and regulations relating to the confidentiality of sensitive personal information or standards in electronic health records or transmissions; changes in tax legislation; litigation risks; new or unanticipated litigation developments and the status of litigation matters; cyberattacks or other privacy or data security breaches; risks associated with our global operations; our dependence on our senior management, as well as employee hiring and retention; and disruptions in financial markets. 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

 

Six Months Ended

 

 

 

 

 

June 26,

 

June 27,

 

June 26,

 

June 27,

 

 

 

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

2,967,223

 

$

1,684,399

 

$

5,892,184

 

$

4,113,270

Cost of sales

 

 

2,077,472

 

 

1,230,133

 

 

4,111,582

 

 

2,912,990

 

 

Gross profit

 

 

889,751

 

 

454,266

 

 

1,780,602

 

 

1,200,280

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

678,801

 

 

445,765

 

 

1,336,793

 

 

1,013,127

 

Restructuring costs

 

 

604

 

 

15,934

 

 

3,535

 

 

20,721

 

 

Operating income (loss)

 

 

210,346

 

 

(7,433)

 

 

440,274

 

 

166,432

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1,357

 

 

1,997

 

 

3,340

 

 

5,187

 

Interest expense

 

 

(6,376)

 

 

(10,486)

 

 

(12,861)

 

 

(18,298)

 

Other, net

 

 

354

 

 

(291)

 

 

663

 

 

(511)

 

 

Income (loss) from continuing operations before taxes,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

equity in earnings of affiliates and noncontrolling interests

 

205,681

 

 

(16,213)

 

 

431,416

 

 

152,810

Income tax benefit (expense)

 

 

(48,027)

 

 

950

 

 

(104,712)

 

 

(36,960)

Equity in earnings of affiliates

 

 

6,323

 

 

1,411

 

 

12,201

 

 

4,145

Net income (loss) from continuing operations

 

 

163,977

 

 

(13,852)

 

 

338,905

 

 

119,995

Income from discontinued operations, net of tax

 

 

-

 

 

585

 

 

-

 

 

303

Net income (loss)

 

 

163,977

 

 

(13,267)

 

 

338,905

 

 

120,298

 

Less: Net (income) loss attributable to noncontrolling interests

 

 

(8,261)

 

 

2,470

 

 

(17,192)

 

 

(834)

 

Plus: Net loss attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

from discontinued operations

 

 

-

 

 

-

 

 

-

 

 

-

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

 

$

155,716

 

$

(10,797)

 

$

321,713

 

$

119,464

Amounts attributable to Henry Schein Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

155,716

 

$

(11,382)

 

$

321,713

 

$

119,161

Discontinued operations

 

 

-

 

 

585

 

 

-

 

 

303

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

 

$

155,716

 

$

(10,797)

 

$

321,713

 

$

119,464

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.11

 

$

(0.08)

 

$

2.28

 

$

0.84

 

Diluted

 

$

1.10

 

$

(0.08)

 

$

2.26

 

$

0.84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

-

 

$

-

 

$

-

 

$

-

 

Diluted

 

$

-

 

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.11

 

$

(0.08)

 

$

2.28

 

$

0.84

 

Diluted

 

$

1.10

 

$

(0.08)

 

$

2.26

 

$

0.84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

140,358

 

 

142,350

 

 

141,316

 

 

142,654

 

Diluted

 

 

141,657

 

 

142,350

 

 

142,538

 

 

142,654

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-7- 

more 


 

HENRY SCHEIN, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

 

 

 

 

 

June 26,

 

December 26,

 

 

 

 

 

2021

 

2020

 

 

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

167,228

 

$

421,185

 

Accounts receivable, net of reserves of $81,113 and $88,030

 

 

1,356,881

 

 

1,424,787

 

Inventories, net

 

 

1,688,210

 

 

1,512,499

 

Prepaid expenses and other

 

 

529,929

 

 

432,944

 

 

 

Total current assets

 

 

3,742,248

 

 

3,791,415

Property and equipment, net

 

 

358,224

 

 

342,004

Operating lease right-of-use assets

 

 

301,440

 

 

288,847

Goodwill

 

 

2,722,974

 

 

2,504,392

Other intangibles, net

 

 

604,515

 

 

479,429

Investments and other

 

 

394,665

 

 

366,445

 

 

 

Total assets

 

$

8,124,066

 

$

7,772,532

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

903,859

 

$

1,005,655

 

Bank credit lines

 

 

72,105

 

 

73,366

 

Current maturities of long-term debt

 

 

9,839

 

 

109,836

 

Operating lease liabilities

 

 

75,008

 

 

64,716

 

Accrued expenses:

 

 

 

 

 

 

 

 

Payroll and related

 

 

313,892

 

 

295,329

 

 

Taxes

 

 

156,176

 

 

138,671

 

 

Other

 

 

562,762

 

 

595,529

 

 

 

Total current liabilities

 

 

2,093,641

 

 

2,283,102

Long-term debt

 

 

706,487

 

 

515,773

Deferred income taxes

 

 

46,528

 

 

30,065

Operating lease liabilities

 

 

243,232

 

 

238,727

Other liabilities

 

 

423,416

 

 

392,781

 

 

 

Total liabilities

 

 

3,513,304

 

 

3,460,448

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

 

604,081

 

 

327,699

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

Preferred stock, $0.01 par value, 1,000,000 shares authorized,

 

 

 

 

 

 

 

 

none outstanding

 

 

-

 

 

-

 

Common stock, $0.01 par value, 480,000,000 shares authorized,

 

 

 

 

 

 

 

 

139,780,841 outstanding on June 26, 2021 and

 

 

 

 

 

 

 

 

142,462,571 outstanding on December 26, 2020

 

 

1,398

 

 

1,425

 

Additional paid-in capital

 

 

-

 

 

-

 

Retained earnings

 

 

3,465,647

 

 

3,454,831

 

Accumulated other comprehensive loss

 

 

(106,779)

 

 

(108,084)

 

 

Total Henry Schein, Inc. stockholders' equity

 

 

3,360,266

 

 

3,348,172

 

Noncontrolling interests

 

 

646,415

 

 

636,213

 

 

 

Total stockholders' equity

 

 

4,006,681

 

 

3,984,385

 

 

Total liabilities, redeemable noncontrolling interests and stockholders' equity

 

$

8,124,066

 

$

7,772,532

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-8- 

more 


 

HENRY SCHEIN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

 

 

 

June 26,

 

June 27,

 

June 26,

 

June 27,

 

 

 

 

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

163,977

 

$

(13,267)

 

$

338,905

 

$

120,298

 

Income from discontinued operations

 

 

-

 

 

585

 

 

-

 

 

303

 

Income (loss) from continuing operations

 

 

163,977

 

 

(13,852)

 

 

338,905

 

 

119,995

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

49,915

 

 

46,963

 

 

99,278

 

 

93,946

 

 

 

Impairment charge on intangible assets

 

 

-

 

 

149

 

 

-

 

 

2,149

 

 

 

Stock-based compensation expense (credit)

 

 

17,364

 

 

5,156

 

 

30,154

 

 

(12,358)

 

 

 

Provision for (benefit from) losses on trade and other accounts receivable

 

 

(1,376)

 

 

14,215

 

 

(4,072)

 

 

28,758

 

 

 

Provision for (benefit from) deferred income taxes

 

 

(5,466)

 

 

(35,516)

 

 

5,705

 

 

(32,871)

 

 

 

Equity in earnings of affiliates

 

 

(6,323)

 

 

(1,411)

 

 

(12,201)

 

 

(4,145)

 

 

 

Distributions from equity affiliates

 

 

5,608

 

 

1,807

 

 

10,747

 

 

4,220

 

 

 

Changes in unrecognized tax benefits

 

 

(9,090)

 

 

2,955

 

 

(6,286)

 

 

1,380

 

 

 

Other

 

 

3,394

 

 

14,151

 

 

3,429

 

 

227

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(17,176)

 

 

100,955

 

 

101,619

 

 

99,672

 

 

 

 

Inventories

 

 

(45,673)

 

 

(59,338)

 

 

(123,758)

 

 

13,700

 

 

 

 

Other current assets

 

 

(40,669)

 

 

(166,614)

 

 

(85,979)

 

 

(188,616)

 

 

 

 

Accounts payable and accrued expenses

 

 

43,910

 

 

(1,220)

 

 

(135,815)

 

 

(138,900)

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

 

 

158,395

 

 

(91,600)

 

 

221,726

 

 

(12,843)

Net cash provided by operating activities from discontinued operations

 

 

-

 

 

855

 

 

-

 

 

573

Net cash provided by (used in) operating activities

 

 

158,395

 

 

(90,745)

 

 

221,726

 

 

(12,270)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of fixed assets

 

 

(17,969)

 

 

(7,580)

 

 

(31,812)

 

 

(30,588)

 

Proceeds from (payments related to) equity investments and business acquisitions,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

net of cash acquired

 

 

(91,625)

 

 

222

 

 

(295,652)

 

 

(37,725)

 

Proceeds from sale of equity investment

 

 

-

 

 

-

 

 

-

 

 

12,000

 

Payments for loan to affiliate

 

 

(2,160)

 

 

(2,866)

 

 

(2,021)

 

 

(1,729)

 

Other

 

 

(6,121)

 

 

(5,812)

 

 

(11,634)

 

 

(11,599)

Net cash used in investing activities from continuing operations

 

 

(117,875)

 

 

(16,036)

 

 

(341,119)

 

 

(69,641)

Net cash used in investing activities from discontinued operations

 

 

-

 

 

-

 

 

-

 

 

-

Net cash used in investing activities

 

 

(117,875)

 

 

(16,036)

 

 

(341,119)

 

 

(69,641)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in bank borrowings

 

 

(5,140)

 

 

121,063

 

 

(5,381)

 

 

479,702

 

Proceeds from issuance of long-term debt

 

 

200,000

 

 

251,421

 

 

200,000

 

 

501,421

 

Principal payments for long-term debt

 

 

(102,545)

 

 

(601,102)

 

 

(120,326)

 

 

(609,580)

 

Debt issuance costs

 

 

(114)

 

 

(3,597)

 

 

(199)

 

 

(3,655)

 

Payments for repurchases of common stock

 

 

(112,552)

 

 

-

 

 

(201,211)

 

 

(73,789)

 

Payments for taxes related to shares withheld for employee taxes

 

 

(1,201)

 

 

(558)

 

 

(7,359)

 

 

(13,713)

 

Proceeds from (distributions to) noncontrolling shareholders

 

 

2,731

 

 

198

 

 

(3,789)

 

 

(3,466)

 

Acquisitions of noncontrolling interests in subsidiaries

 

 

(1,130)

 

 

(9)

 

 

(1,130)

 

 

(14,934)

 

Proceeds from Henry Schein Animal Health Business

 

 

-

 

 

3,026

 

 

-

 

 

64

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

 

 

(19,951)

 

 

(229,558)

 

 

(139,395)

 

 

262,050

Net cash used in financing activities from discontinued operations

 

 

-

 

 

(855)

 

 

-

 

 

(573)

Net cash provided by (used in) financing activities

 

 

(19,951)

 

 

(230,413)

 

 

(139,395)

 

 

261,477

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents from

 

 

 

 

 

 

 

 

 

 

 

 

 

continuing operations

 

 

2,121

 

 

15,936

 

 

4,831

 

 

10,447

Effect of exchange rate changes on cash and cash equivalents from

 

 

 

 

 

 

 

 

 

 

 

 

 

discontinued operations

 

 

-

 

 

-

 

 

-

 

 

-

Net change in cash and cash equivalents from continuing operations

 

 

22,690

 

 

(321,258)

 

 

(253,957)

 

 

190,013

Net change in cash and cash equivalents from discontinued operations

 

 

-

 

 

-

 

 

-

 

 

-

Cash and cash equivalents, beginning of period

 

 

144,538

 

 

617,368

 

 

421,185

 

 

106,097

Cash and cash equivalents, end of period

 

$

167,228

 

$

296,110

 

$

167,228

 

$

296,110

 

-9- 

more 


 

Exhibit A - Second Quarter Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Henry Schein, Inc.

2021 Second Quarter

Sales Summary

(in thousands)

(unaudited)

Q2 2021 over Q2 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global

Q2 2021

 

Q2 2020

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

Dental Merchandise

$

1,507,036

 

$

723,855

 

108.2%

 

8.5%

 

99.7%

 

9.2%

 

90.5%

Dental Equipment

 

403,308

 

 

217,437

 

85.5%

 

9.2%

 

76.3%

 

1.0%

 

75.3%

Total Dental

 

1,910,344

 

 

941,292

 

102.9%

 

8.6%

 

94.3%

 

7.3%

 

87.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical

 

904,828

 

 

617,810

 

46.5%

 

0.4%

 

46.1%

 

2.6%

 

43.5%

Total Health Care Distribution

 

2,815,172

 

 

1,559,102

 

80.6%

 

5.4%

 

75.2%

 

5.4%

 

69.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology and value-added services

 

152,051

 

 

105,227

 

44.5%

 

2.6%

 

41.9%

 

8.9%

 

33.0%

Total excluding Corporate TSA Revenue

 

2,967,223

 

 

1,664,329

 

78.3%

 

5.2%

 

73.1%

 

5.7%

 

67.4%

Corporate TSA revenues (1)

 

-

 

 

20,070

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

Total Global

$

2,967,223

 

$

1,684,399

 

76.2%

 

5.2%

 

71.0%

 

5.5%

 

65.5%

North America

Q2 2021

 

Q2 2020

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dental Merchandise

$

900,509

 

$

393,404

 

128.9%

 

2.2%

 

126.7%

 

14.2%

 

112.5%

Dental Equipment

 

227,098

 

 

122,542

 

85.3%

 

3.3%

 

82.0%

 

0.0%

 

82.0%

Total Dental

 

1,127,607

 

 

515,946

 

118.6%

 

2.5%

 

116.1%

 

10.8%

 

105.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical

 

877,773

 

 

596,588

 

47.1%

 

0.0%

 

47.1%

 

2.6%

 

44.5%

Total Health Care Distribution

 

2,005,380

 

 

1,112,534

 

80.3%

 

1.2%

 

79.1%

 

6.4%

 

72.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology and value-added services

 

129,897

 

 

92,927

 

39.8%

 

0.5%

 

39.3%

 

9.1%

 

30.2%

Total excluding Corporate TSA Revenue

 

2,135,277

 

 

1,205,461

 

77.1%

 

1.1%

 

76.0%

 

6.6%

 

69.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate TSA revenues (1)

 

-

 

 

-

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

Total North America

$

2,135,277

 

$

1,205,461

 

77.1%

 

1.1%

 

76.0%

 

6.6%

 

69.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International

Q2 2021

 

Q2 2020

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dental Merchandise

$

606,527

 

$

330,451

 

83.5%

 

16.0%

 

67.5%

 

3.1%

 

64.4%

Dental Equipment

 

176,210

 

 

94,895

 

85.7%

 

16.8%

 

68.9%

 

2.3%

 

66.6%

Total Dental

 

782,737

 

 

425,346

 

84.0%

 

16.2%

 

67.8%

 

2.9%

 

64.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical

 

27,055

 

 

21,222

 

27.5%

 

11.6%

 

15.9%

 

0.0%

 

15.9%

Total Health Care Distribution

 

809,792

 

 

446,568

 

81.3%

 

15.9%

 

65.4%

 

2.9%

 

62.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology and value-added services

 

22,154

 

 

12,300

 

80.1%

 

19.2%

 

60.9%

 

6.6%

 

54.3%

Total excluding Corporate TSA Revenue

 

831,946

 

 

458,868

 

81.3%

 

16.1%

 

65.2%

 

2.9%

 

62.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate TSA revenues (1)

 

-

 

 

20,070

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

Total International

$

831,946

 

$

478,938

 

73.7%

 

15.4%

 

58.3%

 

2.8%

 

55.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 ended in December 2020.

 

 

-10- 

more 


 

Exhibit A-1-Second Quarter Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Henry Schein, Inc.

2021 Second Quarter

Sales Summary

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2 2021 over Q2 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global

Q2 2021

 

Q2 2019

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dental Merchandise

$

1,507,036

 

$

1,237,830

 

21.7%

 

2.1%

 

19.6%

 

5.9%

 

13.7%

Dental Equipment

 

403,308

 

 

363,520

 

10.9%

 

3.6%

 

7.3%

 

0.6%

 

6.7%

Total Dental

 

1,910,344

 

 

1,601,350

 

19.3%

 

2.5%

 

16.8%

 

4.7%

 

12.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical

 

904,828

 

 

697,558

 

29.7%

 

0.3%

 

29.4%

 

2.2%

 

27.2%

Total Health Care Distribution

 

2,815,172

 

 

2,298,908

 

22.5%

 

1.9%

 

20.6%

 

3.9%

 

16.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology and value-added services

 

152,051

 

 

125,051

 

21.6%

 

1.5%

 

20.1%

 

10.0%

 

10.1%

Total excluding Corporate TSA Revenue

 

2,967,223

 

 

2,423,959

 

22.4%

 

1.8%

 

20.6%

 

4.2%

 

16.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate TSA revenues (1)

 

-

 

 

23,868

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

Total Global

$

2,967,223

 

$

2,447,827

 

21.2%

 

1.8%

 

19.4%

 

4.2%

 

15.2%

North America

Q2 2021

 

Q2 2019

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dental Merchandise

$

900,509

 

$

752,001

 

19.7%

 

0.8%

 

18.9%

 

7.4%

 

11.5%

Dental Equipment

 

227,098

 

 

223,370

 

1.7%

 

1.3%

 

0.4%

 

0.0%

 

0.4%

Total Dental

 

1,127,607

 

 

975,371

 

15.6%

 

0.9%

 

14.7%

 

5.7%

 

9.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical

 

877,773

 

 

678,358

 

29.4%

 

0.0%

 

29.4%

 

2.3%

 

27.1%

Total Health Care Distribution

 

2,005,380

 

 

1,653,729

 

21.3%

 

0.6%

 

20.7%

 

4.3%

 

16.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology and value-added services

 

129,897

 

 

108,505

 

19.7%

 

0.2%

 

19.5%

 

8.9%

 

10.6%

Total excluding Corporate TSA Revenue

 

2,135,277

 

 

1,762,234

 

21.2%

 

0.6%

 

20.6%

 

4.6%

 

16.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate TSA revenues (1)

 

-

 

 

1,760

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

Total North America

$

2,135,277

 

$

1,763,994

 

21.0%

 

0.5%

 

20.5%

 

4.6%

 

15.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International

Q2 2021

 

Q2 2019

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dental Merchandise

$

606,527

 

$

485,829

 

24.8%

 

4.2%

 

20.6%

 

3.4%

 

17.2%

Dental Equipment

 

176,210

 

 

140,150

 

25.7%

 

7.5%

 

18.2%

 

1.6%

 

16.6%

Total Dental

 

782,737

 

 

625,979

 

25.0%

 

4.9%

 

20.1%

 

3.1%

 

17.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical

 

27,055

 

 

19,200

 

40.9%

 

9.7%

 

31.2%

 

0.0%

 

31.2%

Total Health Care Distribution

 

809,792

 

 

645,179

 

25.5%

 

5.1%

 

20.4%

 

2.9%

 

17.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology and value-added services

 

22,154

 

 

16,546

 

33.9%

 

9.7%

 

24.2%

 

17.3%

 

6.9%

Total excluding Corporate TSA Revenue

 

831,946

 

 

661,725

 

25.7%

 

5.2%

 

20.5%

 

3.3%

 

17.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate TSA revenues (1)

 

-

 

 

22,108

 

n/a

 

n/a

 

n/a

 

n/a

 

n/a

Total International

$

831,946

 

$

683,833

 

21.7%

 

5.1%

 

16.6%

 

3.2%

 

13.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 ended in December 2020.

 

-11- 

more 


 

Exhibit A - Year-to-Date Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Henry Schein, Inc.

2021 Second Quarter Year-to-Date

Sales Summary

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2 2021 Year-to Date over Q2 2020 Year-to-Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global

Q2 2021

 

Q2 2020

 

Total Sales Growth

 

Foreign Exchange Growth

 

Local Currency Growth

 

Acquisition Growth

 

Local Internal Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dental Merchandise

$

2,927,191

 

$

1,893,636

 

54.6%

 

5.2%

 

49.4%

 

6.7%

 

42.7%

Dental Equipment

 

772,081

 

 

522,732

 

47.7%

 

6.6%

 

41.1%

 

0.7%

 

40.4%

Total Dental

 

3,699,272

 

 

2,416,368

 

53.1%

 

5.5%

 

47.6%

 

5.4%

 

42.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical

 

1,897,865

 

 

1,418,498

 

33.8%

 

0.3%

 

33.5%

 

2.1%

 

31.4%

Total Health Care Distribution

 

5,597,137

 

 

3,834,866

 

46.0%

 

3.6%

 

42.4%

 

4.2%

 

38.2%