hsic-20240227
0001000228 false NASDAQ 0001000228 2024-02-27 2024-02-27
 
 
 
 
 
 
 
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):
February 27, 2024
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 February 27, 2024, Henry Schein, Inc. issued a press release
 
reporting the financial results for the three
months and full year ended December 30, 2023.
 
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 February 27, 2024.
Exhibit 104 - Cover Page Interactive Data File (embedded within the
 
Inline XBRL document)
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/ Ronald N. South
Ronald N. South
Senior Vice President and
Chief Financial Officer
(Authorized Signatory and Principal
Financial and Accounting Officer)
February 27, 2024
EXHIBIT INDEX
Exhibit No.
Description
104
Cover Page Interactive Data File (embedded within the Inline XBRL
 
document)
exhibit991
exhibit991p1i1 exhibit991p1i0
 
 
 
 
 
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FOR IMMEDIATE RELEASE
HENRY SCHEIN REPORTS FOURTH-QUARTER AND FULL-YEAR 2023 FINANCIAL RESULTS
 
AND INTRODUCES 2024 FINANCIAL GUIDANCE
 
Fourth quarter GAAP diluted EPS of $0.13.
Solid fourth quarter financial results in line with the Company’s guidance provided on November 13, 2023.
Fourth quarter non-GAAP diluted EPS of $0.66, reflects:
 
$0.05 of acquisition-related expenses and adjustments,
 
and
an estimated $0.70 to $0.75 from the cybersecurity incident.
Introduces guidance for full-year 2024 non-GAAP diluted EPS of $5.00 to $5.16,
 
reflecting growth of 11% to
15% compared with 2023, and full-year 2024 Adjusted EBITDA growth of more than 15%.
MELVILLE, N.Y.,
 
February 27, 2024 –
Henry Schein, Inc. (Nasdaq: HSIC), the world’s largest provider of health care
solutions to office-based dental and medical practitioners, today reported financial results
 
for the fourth quarter and full year
ended December 30, 2023.
“We are pleased with our performance in the fourth quarter and for the full year 2023,
 
which was in line with our
expectations and reflects
 
a solid recovery from last year’s cybersecurity incident,” said Stanley M. Bergman, Chairman
 
of the
Board and Chief Executive Officer of Henry Schein.
“Our fourth quarter financial results included strong growth in our
Technology and Value-Added
 
Services businesses, and in global sales of implants and biomaterials
 
largely driven by
acquisitions, and were negatively impacted by higher-than-usual acquisition-related
 
expenses and adjustments,” Mr.
Bergman said.
“The 2024 guidance we are introducing today reflects our continued confidence
 
in the stability of the underlying
markets we serve,
 
our recovery efforts from the cybersecurity incident, and the execution of our
 
Strategic Plan.
 
For 2024,
while we expect to have some short-term residual impact on merchandise
 
sales from the incident, we believe we will
continue to strengthen our leading market position.
 
We are also introducing Adjusted EBITDA guidance as we believe this
provides investors with an additional metric that reflects
 
the performance of the business as we pivot to higher-growth,
higher-margin products and services.” Mr. Bergman added, “We believe we are well positioned to grow the business in line
with our financial goals of high-single-digit to low-double-digit operating
 
income and earnings per share by continuing to
execute on our BOLD+1 Strategic Plan.”
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Fourth-Quarter 2023 Financial Results
Total
 
net sales
 
for the quarter were $3.0 billion, a decrease of 10.5%
 
compared with the fourth quarter of 2022. This
reflects an internal sales decrease of 12.0%,
 
calculated at constant foreign exchange rates, excluding sales from
acquisitions, and adjusting for the extra week in 2022.
 
Total net sales reflect an estimated reduction of $350 million to $400 million, or 10% to 12%, due to the
cybersecurity incident.
Fourth-quarter sales and internal sales growth are summarized below and included
 
in detail as Exhibit A
1
.
Sales
($ Billion)
Internal
Growth/(Decrease)
(%)
Global Dental
$1.8
(10.9%)
 
Merchandise
$1.3
(11.3%)
 
Equipment
$0.5
(9.7%)
Global Medical
$1.0
(17.0%)
Global Technology and Value
 
-Added Services
$0.2
7.1%
TOTAL SALES
$3.0
(12.0%)
 
GAAP net income
2
 
for the quarter was $18 million, or $0.13 per diluted share
5
, which includes acquisition expenses
and acquisition-related adjustments
4
 
of $0.05 per diluted share. Fourth-quarter 2022 GAAP
 
net income was $47
million, or $0.34 per diluted share, which includes acquisition expenses and
 
acquisition-related adjustments
4
 
of $0.02
per diluted share.
Non-GAAP net income
2
for the quarter was $86 million, or $0.66
per diluted share
5
, which includes acquisition
expenses and acquisition-related adjustments
4
 
of $0.05 per diluted share. Fourth-quarter 2022
 
non-GAAP net income
was $184 million, or $1.35 per diluted share, which includes acquisition
 
expenses and acquisition-related
adjustments
4
 
of $0.02 per diluted share. of the Company’s reconciliation of GAAP net income to non-GAAP net
income is summarized in detail as Exhibit B.
GAAP and non-GAAP net income
 
were negatively impacted by an estimated $0.70 to $0.75 per diluted
 
share,
attributable to the business interruption impact and recovery from
 
the cybersecurity incident.
1
See Exhibit A for details of sales growth. Internal sales growth is calculated
 
from total net sales using constant foreign
exchange rates, excluding sales for acquisitions, and adjusting for the extra
 
week in 2022.
2
 
See Exhibit B for a reconciliation of GAAP net income and diluted
 
EPS to non-GAAP net income and diluted EPS.
3
See Exhibit C for Adjusted EBITDA for the fourth quarter and
 
full-year 2023. The Company will calculate full-year
 
 
2024 Adjusted EBITDA in the same manner.
4
 
See Exhibit D for details of acquisition expense and acquisition-related
 
adjustments included in GAAP and non-GAAP
 
 
net income.
5
Reference to diluted EPS refers to diluted EPS attributable to Henry
 
Schein, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
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Full-Year
 
2023 Financial Results
Total
 
net sales
 
for 2023 were $12.3 billion, a decrease of 2.4%
 
compared with 2022. This reflects an internal sales
decrease of 4.4%, calculated at constant foreign exchange rates,
 
excluding sales from acquisitions, and adjusting for
the extra week in 2022. The Company’s 2023 sales and internal sales growth are summarized below and
 
included in
detail as Exhibit A
1
.
Sales
($ Billion)
Internal
 
Growth/(Decrease)
1
(%)
Global Dental
$7.5
(1.4%)
 
Merchandise
$5.8
(1.6%)
 
Equipment
$1.7
(0.9%)
Global Medical
$4.0
(11.2%)
Global Technology and Value
 
-Added Services
$0.8
7.2%
TOTAL SALES
$12.3
(4.4%)
GAAP net income
2
 
for 2023 was $416 million, or $3.16 per diluted share
5
, which includes acquisition expenses and
acquisition-related adjustments
4
 
of $0.09 per diluted share. 2022 GAAP net income was
 
$538 million, or $3.91 per
diluted share, which includes
 
net favorable acquisition expenses and acquisition-related adjustments
4
 
of $0.02 per
diluted share.
Non-GAAP net income
2
for 2023 was $593 million, or $4.50 per diluted share
5
, which includes acquisition expenses
and acquisition-related adjustments
4
 
of $0.09 per diluted share. 2022 non-GAAP net income was $741
 
million, or
$5.38 per diluted share, which includes
 
net favorable acquisition expenses and acquisition-related adjustments
4
 
of
$0.02 per diluted share. The Company’s reconciliation of GAAP net income to non-GAAP net income is summarized
in detail as Exhibit B.
GAAP and non-GAAP net income
 
are negatively impacted by an estimated $0.70 to $0.75 per diluted
 
share,
attributable to the business interruption impact and recovery from
 
the cybersecurity incident.
Capital Deployment
To accelerate the implementation of its 2022-2024 BOLD+1 Strategic Plan, the Company invested $287 million in
highly complementary business acquisitions during the fourth quarter
 
of 2023 and $955 million for the full year.
 
During the fourth quarter of 2023, the Company repurchased approximately
 
692,000 shares of its common stock at
an average price of $72.32 per share,
 
for a total of $50 million. The impact of the repurchase of shares on
 
fourth-quarter
diluted EPS was immaterial.
 
 
 
 
 
 
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For the full year of 2023, the Company repurchased approximately 3.2
 
million shares of its common stock at an
average price of $77.80 per share, for a total of $250 million. The
 
impact of the repurchase of shares on the full year diluted
EPS was also immaterial.
 
At year-end, Henry Schein had approximately $265 million authorized and available for
 
future stock repurchases.
2024 Financial Guidance
Henry Schein today introduced financial guidance for 2024. Guidance
 
is for current continuing operations as well as
announced acquisitions and does not include the impact of future share
 
repurchases, potential future acquisitions,
restructuring and integration expenses, amortization expense of acquired
 
intangible assets, certain expenses directly
associated with the cybersecurity incident or any potential insurance
 
claim recovery. This guidance also assumes that foreign
currency exchange rates remain generally consistent with current levels and
 
that end markets remain consistent with current
market conditions:
2024 non-GAAP diluted EPS attributable to Henry Schein, Inc.
 
is expected to be $5.00 to $5.16, reflecting growth of
11% to 15% compared with 2023 non-GAAP diluted EPS of $4.50.
 
This guidance reflects:
an estimated residual impact of the cybersecurity incident of approximately
 
$0.15 per diluted share, which
will primarily impact the first quarter,
 
and
 
an estimated increase in the non-GAAP effective tax rate from 23% to 25%,
 
or approximately $0.13 per
diluted share.
2024 sales growth is expected to be approximately 8% to 12% over 2023,
 
and reflects the expected merchandise sales
recovery subsequent to the cybersecurity incident,
 
and sales from the acquisitions completed in 2023.
2024 Adjusted EBITDA
3
 
is expected to increase by more than 15%.
Adjustments to 2024 GAAP Net Income and Diluted EPS
The Company is providing guidance for 2024 diluted EPS on a non-GAAP
 
basis and for Adjusted EBITDA,
 
as noted
above. The Company is not providing a reconciliation of its 2024 non-GAAP
 
guidance to its projected 2024 diluted EPS
prepared on a GAAP basis, or its projected 2024 Adjusted EBITDA
 
to net income prepared on a GAAP basis. This is
because the Company is unable to provide without unreasonable effort an estimate
 
of integration and restructuring costs
related to an ongoing initiative to drive operating efficiencies and certain expenses
 
directly associated with the cybersecurity
incident,
 
including the corresponding tax effect, that will be included in the Company’s 2024 diluted EPS and net income
prepared on a GAAP basis. The inability to provide this reconciliation
 
is due to the uncertainty and inherent difficulty of
predicting the occurrence, magnitude, financial impact and timing of
 
related costs.
Management does not believe these items are representative of the Company’s underlying business performance.
 
For
the same reasons, the Company is unable to address the probable significance
 
of the unavailable information, which could be
material to future results.
 
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Fourth-Quarter 2023 Conference Call Webcast
The Company will hold a conference call to discuss fourth-quarter and full-year
 
2023
 
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.
 
The Company will be posting slides that provide a summary of its fourth-quarter
 
2023 financial results on its website
at https://www.henryschein.com/us-en/Corporate/investor-presentations.aspx.
About Henry Schein, Inc.
Henry Schein, Inc. (Nasdaq: HSIC) is a solutions company for health care
 
professionals powered by a network of
people and technology. With more than 25,000 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.
Henry Schein operates through a centralized and automated distribution
 
network, with a selection of more than
300,000 branded products and Henry Schein corporate brand products
 
in our distribution centers.
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 33 countries and territories. The Company's sales reached
 
$12.3 billion in 2023, and
have grown at a compound annual rate of approximately 11.5 percent since Henry Schein became a public
 
company in 1995.
For more information, visit Henry Schein at www.henryschein.com, Facebook.com/HenrySchein,
Instagram.com/HenrySchein,
 
and Twitter.com/HenrySchein
 
.
 
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 and Adjusted EBITDA guidance and
 
are generally identified by the use of such terms as “may,”
 
“could,”
“expect,” “intend,” “believe,” “plan,” “estimate,” “forecast,” “project,”
 
“anticipate,” “to be,” “to make” or other comparable terms.
 
A
fuller discussion of our operations, financial condition and status of litigation
 
matters, including factors that may affect our business and
future prospects, is contained in documents we have filed with the
 
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 perform
 
ance 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: our dependence on third parties for the manufacture and
 
supply of our products; our ability to develop or acquire and
maintain and protect new products (particularly technology products)
 
and technologies that achieve market acceptance with acceptable
margins; transitional challenges associated with acquisitions,
 
dispositions and joint ventures, including the failure to achieve anticipated
synergies/benefits, as well as significant demands on our operations,
 
information systems, legal, regulatory,
 
compliance, financial and
human resources functions in connection with acquisitions, dispositions
 
and joint ventures; certain provisions in our governing documents
that may discourage third-party acquisitions of us; adverse changes in
 
supplier rebates or other purchasing incentives; risks related to the
sale of corporate brand products; security risks associated with our
 
information systems and technology products and services, such as
 
 
 
 
 
 
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cyberattacks or other privacy or data security breaches (including
 
the October 2023 incident); effects of a highly competitive (including,
without limitation, competition from third-party online commerce
 
sites) and consolidating market;
 
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 and domestic
 
macro-economic and political conditions, including
inflation, deflation, recession, ongoing wars, fluctuations in energy
 
pricing and the value of the U.S. dollar as compared to foreign
currencies, and changes to other economic indicators, international trade
 
agreements, potential trade barriers and terrorism; geopolitical
wars; failure to comply with existing and future regulatory requirements;
 
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 collection, storage and processing of sensitive personal
 
information or standards in electronic health records or
transmissions; changes in tax legislation; risks related to product liability,
 
intellectual property and other claims; risks associated with
customs policies or legislative import restrictions; risks associated with disease outbreaks,
 
epidemics, pandemics (such as the COVID-19
pandemic), or similar wide-spread public health concerns and other
 
natural or man-made disasters; risks associated with our global
operations; litigation risks; new or unanticipated litigation developments
 
and the status of litigation matters; our dependence on our senior
management, employee hiring and retention, and our relationships with customers,
 
suppliers and manufacturers; 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 except
 
as required by law.
 
Included within the press release are non-GAAP financial measures that supplement
 
the Company’s Consolidated Statements of
Income prepared under generally accepted accounting principles (GAAP).
 
These non-GAAP financial measures adjust the Company’s
actual results prepared under GAAP to exclude certain items. In the schedules attached
 
to the press release, the non-GAAP measures have
been reconciled to and should be considered together with the Consolidated
 
Statements of Income. Management believes that non-GAAP
financial measures provide investors with useful supplemental information
 
about the financial performance of our business, enable
comparison of financial results between periods where certain items may vary independent
 
of business performance and allow for greater
transparency with respect to key metrics used by management in operating
 
our business. The impact of certain items that are excluded
include integration and restructuring costs, and amortization of acquisition
 
-related assets, because the amount and timing of such charges
are significantly impacted by the timing, size, number and nature of the acquisitions
 
we consummate and occur on an unpredictable basis.
These non-GAAP financial measures are presented solely for informational
 
and comparative purposes and should not be regarded as a
replacement for corresponding, similarly captioned, GAAP measures.
CONTACTS:
 
Investors
Ronald N. South
Senior Vice President and Chief Financial Officer
ronald.south@henryschein.com
(631) 843-5500
Graham Stanley
Vice President, Investor Relations and Strategic Financial Project Officer
graham.stanley@henryschein.com
(631) 843-5500
 
Media
Ann Marie Gothard
Vice President, Global 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 millions,
 
except share and per share data)
 
Three Months Ended
Years
 
Ended
December 30,
December 31,
December 30,
December 31,
2023
2022
2023
2022
(unaudited)
(unaudited)
Net sales
$
3,017
$
3,371
$
12,339
$
12,647
Cost of sales
2,092
2,372
8,478
8,816
Gross profit
925
999
3,861
3,831
Operating expenses:
Selling, general and administrative
807
761
2,956
2,771
Depreciation and amortization
58
45
210
182
Restructuring and integration costs
21
121
80
131
Operating income
39
72
615
747
Other income (expense):
Interest income
5
3
17
8
Interest expense
(29)
(12)
(87)
(35)
Other, net
(1)
-
(3)
1
Income before taxes, equity in earnings of affiliates
and noncontrolling interests
14
63
542
721
Income taxes
(1)
(15)
(120)
(170)
Equity in earnings of affiliates, net of tax
4
3
14
15
Net income
17
51
436
566
Less: Net income attributable to noncontrolling interests
1
(4)
(20)
(28)
Net income attributable to Henry Schein, Inc.
$
18
$
47
$
416
$
538
Earnings per share attributable to Henry Schein, Inc.:
Basic
$
0.13
$
0.35
$
3.18
$
3.95
Diluted
$
0.13
$
0.34
$
3.16
$
3.91
Weighted-average common
 
shares outstanding:
Basic
129,809,665
134,249,915
130,618,990
136,064,221
Diluted
130,743,875
135,857,950
131,748,171
137,755,670
Note: Certain prior period amounts have been reclassified to conform to the current period presentation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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HENRY SCHEIN, INC.
CONSOLIDATED
 
BALANCE SHEETS
(in millions, except share data)
December 30,
December 31,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
171
$
117
Accounts receivable, net of allowance for credit losses of $83 and $65
1,863
1,442
Inventories, net
1,815
1,963
Prepaid expenses and other
639
466
Total current assets
4,488
3,988
Property and equipment, net
498
383
Operating lease right-of-use assets
325
284
Goodwill
3,875
2,893
Other intangibles, net
916
587
Investments and other
471
472
Total assets
$
10,573
$
8,607
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
1,020
$
1,004
Bank credit lines
264
103
Current maturities of long-term debt
150
6
Operating lease liabilities
80
73
Accrued expenses:
Payroll and related
332
314
Taxes
137
132
Other
700
592
Total current liabilities
2,683
2,224
Long-term debt
1,937
1,040
Deferred income taxes
54
36
Operating lease liabilities
310
275
Other liabilities
436
361
Total liabilities
5,420
3,936
Redeemable noncontrolling interests
864
576
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,
129,247,765 outstanding on December 30, 2023 and
131,792,817 outstanding on December 31, 2022
1
1
Additional paid-in capital
-
-
Retained earnings
3,860
3,678
Accumulated other comprehensive loss
(206)
(233)
Total Henry Schein, Inc. stockholders' equity
3,655
3,446
Noncontrolling interests
634
649
Total stockholders' equity
4,289
4,095
Total liabilities, redeemable noncontrolling
 
interests and stockholders' equity
$
10,573
$
8,607
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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HENRY SCHEIN, INC.
CONDENSED CONSOLIDATED
 
STATEMENTS
 
OF CASH FLOWS
(in millions)
Three Months Ended
Years Ended
December 30,
December 31,
December 30,
December 31,
2023
2022
2023
2022
(unaudited)
(unaudited)
Cash flows from operating activities:
Net income
$
17
$
51
$
436
$
566
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
68
52
248
212
Impairment charge on intangible assets
7
34
7
34
Impairment of capitalized software
27
-
27
-
Non-cash restructuring charges
14
93
27
93
Stock-based compensation expense
1
10
39
54
Provision for losses on trade and other accounts receivable
11
3
18
5
Benefit from deferred income taxes
(16)
(53)
(20)
(73)
Equity in earnings of affiliates
(4)
(3)
(14)
(15)
Distributions from equity affiliates
3
3
15
15
Changes in unrecognized tax benefits
5
11
10
12
Other
8
5
(3)
(20)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable
(255)
86
(327)
(7)
Inventories
51
(117)
231
(126)
Other current assets
(83)
44
(138)
(52)
Accounts payable and accrued expenses
114
35
(56)
(96)
Net cash provided by (used in) operating activities
(32)
254
500
602
Cash flows from investing activities:
Purchases of property and equipment
(39)
(29)
(147)
(96)
Payments related to equity investments and business acquisitions,
net of cash acquired
(287)
(31)
(955)
(158)
Proceeds from loan to affiliate
2
2
6
11
Settlements for net investment hedges
22
-
22
-
Capitalized software costs
(10)
(9)
(40)
(32)
Other
(15)
2
(21)
(1)
Net cash used in investing activities
(327)
(65)
(1,135)
(276)
Cash flows from financing activities:
Net change in bank credit lines
251
(3)
153
48
Proceeds from issuance of long-term debt
210
105
1,368
270
Principal payments for long-term debt
(11)
(1)
(468)
(59)
Debt issuance costs
-
-
(3)
-
Proceeds from issuance of stock upon exercise of stock options
-
-
1
2
Payments for repurchases and retirement of common stock
(50)
(285)
(250)
(485)
Payments for taxes related to shares withheld for employee taxes
-
(2)
(34)
(32)
Distributions to noncontrolling shareholders
(6)
(3)
(47)
(21)
Acquisitions of noncontrolling interests in subsidiaries
-
(5)
(19)
(38)
Net cash provided by (used in) financing activities
394
(194)
701
(315)
Effect of exchange rate changes on cash and cash equivalents
(30)
(1)
(12)
(12)
Net change in cash and cash equivalents
5
(6)
54
(1)
Cash and cash equivalents, beginning of period
166
123
117
118
Cash and cash equivalents, end of period
$
171
$
117
$
171
$
117
Note: Certain prior period amounts have been reclassified to conform to the current period presentation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-10-
more
Exhibit A - Fourth Quarter Sales
Henry Schein, Inc.
2023 Fourth Quarter
Sales Summary
(in millions)
(unaudited)
Q4 2023 over Q4 2022
Local Currency Growth
Global
Q4 2023
Q4 2022
Local Internal
Growth
Acquisition
Growth
Extra
Week
Impact
Total Local
Currency
Growth
Foreign
Exchange
Impact
Total Sales
Growth
Dental Merchandise
$
1,348
$
1,474
-11.3%
4.4%
-3.5%
-10.4%
1.9%
-8.5%
Dental Equipment
454
533
-9.7%
0.0%
-6.3%
-16.0%
1.2%
-14.8%
Total Dental
1,802
2,007
-10.9%
3.2%
-4.2%
-11.9%
1.7%
-10.2%
Medical
1,003
1,177
-17.0%
6.4%
-4.4%
-15.0%
0.1%
-14.9%
Total Health Care Distribution
2,805
3,184
-13.1%
4.5%
-4.4%
-13.0%
1.1%
-11.9%
Technology and Value
 
-Added Services
212
187
7.1%
8.4%
-2.8%
12.7%
0.7%
13.4%
Total Global
$
3,017
$
3,371
-12.0%
4.7%
-4.3%
-11.6%
1.1%
-10.5%
Local Currency Growth
North America
Q4 2023
Q4 2022
Local Internal
Growth
Acquisition
Growth
Extra
Week
Impact
Total Local
Currency
Growth
Foreign
Exchange
Impact
Total Sales
Growth
Dental Merchandise
$
770
$
920
-11.9%
0.1%
-4.5%
-16.3%
0.0%
-16.3%
Dental Equipment
283
348
-12.5%
0.0%
-6.1%
-18.6%
0.0%
-18.6%
Total Dental
1,053
1,268
-12.1%
0.1%
-4.9%
-16.9%
-0.1%
-17.0%
Medical
977
1,160
-17.0%
5.8%
-4.5%
-15.7%
0.0%
-15.7%
Total Health Care Distribution
2,030
2,428
-14.4%
2.8%
-4.7%
-16.3%
-0.1%
-16.4%
Technology and Value
 
-Added Services
186
164
6.8%
9.5%
-2.9%
13.4%
0.0%
13.4%
Total North America
$
2,216
$
2,592
-13.0%
3.2%
-4.7%
-14.5%
0.0%
-14.5%
Local Currency Growth
International
Q4 2023
Q4 2022
Local Internal
Growth
Acquisition
Growth
Extra
Week
Impact
Total Local
Currency
Growth
Foreign
Exchange
Impact
Total Sales
Growth
Dental Merchandise
$
578
$
554
-10.4%
11.6%
-1.8%
-0.6%
5.0%
4.4%
Dental Equipment
171
185
-4.5%
0.0%
-6.8%
-11.3%
3.5%
-7.8%
Total Dental
749
739
-9.0%
8.6%
-2.9%
-3.3%
4.6%
1.3%
Medical
26
17
-16.4%
51.6%
-3.9%
31.3%
4.5%
35.8%
Total Health Care Distribution
775
756
-9.1%
9.7%
-3.0%
-2.4%
4.6%
2.2%
Technology and Value
 
-Added Services
26
23
9.8%
0.0%
-2.1%
7.7%
5.8%
13.5%
Total International
$
801
$
779
-8.6%
9.5%
-3.0%
-2.1%
4.6%
2.5%
Note: Certain prior period amounts have been reclassified to
 
conform to the current period presentation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-11-
more
Exhibit A - Year
 
-to-Date Sales
Henry Schein, Inc.
Full Year
 
2023
Sales Summary
(in millions)
(unaudited)
Full Year
 
2023 over Full Year
 
2022
Local Currency Growth
Global
Full Year 2023
Full Year 2022
Local Internal
Growth
Acquisition
Growth
Extra
Week
Impact
Total Local
Currency
Growth
Foreign
Exchange
Impact
Total Sales
Growth
Dental Merchandise
$
5,814
$
5,715
-1.6%
4.2%
-1.0%
1.6%
0.1%
1.7%
Dental Equipment
1,725
1,758
-0.9%
1.1%
-2.1%
-1.9%
0.0%
-1.9%
Total Dental
7,539
7,473
-1.4%
3.4%
-1.3%
0.7%
0.2%
0.9%
Medical
3,994
4,451
-11.2%
2.2%
-1.3%
-10.3%
0.0%
-10.3%
Total Health Care Distribution
11,533
11,924
-5.1%
2.9%
-1.2%
-3.4%
0.1%
-3.3%
Technology and Value
 
-Added Services
806
723
7.2%
5.0%
-0.8%
11.4%
0.0%
11.4%
Total Global
$
12,339
$
12,647
-4.4%
3.1%
-1.2%
-2.5%
0.1%
-2.4%
Local Currency Growth
North America
Full Year 2023
Full Year 2022
Local Internal
Growth
Acquisition
Growth
Extra
Week
Impact
Total Local
Currency
Growth
Foreign
Exchange
Impact
Total Sales
Growth
Dental Merchandise
$
3,429
$
3,535
-3.0%
1.5%
-1.2%
-2.7%
-0.3%
-3.0%
Dental Equipment
1,071
1,093
-1.0%
1.6%
-2.1%
-1.5%
-0.5%
-2.0%
Total Dental
4,500
4,628
-2.5%
1.6%
-1.5%
-2.4%
-0.4%
-2.8%
Medical
3,897
4,375
-11.3%
1.7%
-1.3%
-10.9%
0.0%
-10.9%
Total Health Care Distribution
8,397
9,003
-6.8%
1.6%
-1.3%
-6.5%
-0.2%
-6.7%
Technology and Value
 
-Added Services
705
633
6.5%
5.7%
-0.8%
11.4%
0.0%
11.4%
Total North America
$
9,102
$
9,636
-5.9%
1.8%
-1.3%
-5.4%
-0.1%
-5.5%
Local Currency Growth
International
Full Year 2023
Full Year 2022
Local Internal
Growth
Acquisition
Growth
Extra
Week
Impact
Total Local
Currency
Growth
Foreign
Exchange
Impact
Total Sales
Growth
Dental Merchandise
$
2,385
$
2,180
0.7%
8.2%
-0.5%
8.4%
1.0%
9.4%
Dental Equipment
654
665
-0.7%
0.0%
-1.9%
-2.6%
0.9%
-1.7%
Total Dental
3,039
2,845
0.4%
6.3%
-0.9%
5.8%
1.0%
6.8%
Medical
97
76
-9.1%
36.6%
-1.0%
26.5%
-0.1%
26.4%
Total Health Care Distribution
3,136
2,921
0.1%
7.2%
-0.9%
6.4%
0.9%
7.3%
Technology and Value
 
-Added Services
101
90
12.0%
0.0%
-0.6%
11.4%
0.3%
11.7%
Total International
$
3,237
$
3,011
0.5%
6.9%
-0.9%
6.5%
1.0%
7.5%
Note: Certain prior period amounts have been reclassified to
 
conform to the current period presentation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-12-
more
Exhibit B
Henry Schein, Inc.
2023 Fourth Quarter and Full Year
Reconciliation of reported GAAP net income and diluted EPS attributable to Henry Schein, Inc.
to non-GAAP net income and diluted EPS attributable to Henry Schein, Inc.
(in millions, except per share data)
(unaudited)
Fourth Quarter
Full Year
%
%
2023
2022
Growth
2023
2022
Growth
Net income attributable to Henry Schein, Inc.
$
18
$
47
(63.2)
%
$
416
$
538
(22.7)
%
Diluted EPS attributable to Henry Schein, Inc.
$
0.13
$
0.34
(61.8)
%
$
3.16
$
3.91
(19.2)
%
Non-GAAP Adjustments
Restructuring and integration costs, net of tax and noncontrolling
 
interests (1)
$
11
$
96
$
53
$
103
Acquisition intangible amortization, net of tax and noncontrolling
 
interests (2)
26
19
92
78
Cybersecurity incident-professional and other fees, net of tax
 
(3)
8
-
8
-
Impairment of capitalized assets, net of tax (4)
19
-
19
-
Impairment of intangible assets, net of taxes and noncontrolling
 
interests (5)
5
23
5
23
Non-GAAP adjustments to net income
$
69
$
138
$
177
$
204
Non-GAAP net income attributable to Henry Schein, Inc.
$
86
$
184
(53.0)
%
$
593
$
741
(20.0)
%
Non-GAAP diluted EPS attributable to Henry Schein, Inc.
$
0.66
$
1.35
(51.1)
%
$
4.50
$
5.38
(16.4)
%
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.
 
Net income growth rates are
 
based on actual values and may not
recalculate due to rounding.
 
Amounts may not sum due to rounding.
(1)
 
Restructuring and Integration Costs
The following table presents details of our restructuring and integration
 
costs:
Fourth Quarter
Full Year
2023
2022
2023
2022
Restructuring and integration costs - pre-tax, as reported
$
21
$
121
$
80
$
131
Income tax benefit
(5)
(24)
(20)
(27)
Amount attributable to noncontrolling interests
(5)
(1)
(7)
(1)
Restructuring and integration costs, net
$
11
$
96
$
53
$
103
Q4 2023 restructuring costs primarily consisted of employee severance
 
and costs related to the exit of facilities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-13-
more
(2)
 
Acquisition Intangible Amortization
The following table presents details of amortization of acquired intangible
 
assets:
Fourth Quarter
Full Year
2023
2022
2023
2022
Acquisition intangible amortization - pre-tax, as reported
$
43
$
31
$
151
$
126
Income tax benefit
(11)
(7)
(38)
(31)
Amount attributable to noncontrolling interests
(6)
(4)
(21)
(16)
Acquisition intangible amortization, net
$
26
$
19
$
92
$
78
(3)
 
Represents one time professional and other fees of $11
 
million ($8 million, net of taxes) related to
our Q4 2023 cybersecurity incident.
(4)
 
Represents impairment of certain capitalized asset costs of $27 million
 
($19 million, net of taxes)
recorded during Q4 2023.
(5)
 
The following table presents details of impairment charges
 
recorded in relation to certain intangible
assets:
Fourth Quarter and
Full Year
2023
2022
Impairment charges - pre-tax, as reported
$
7
$
34
Income tax benefit
(2)
(9)
Amount attributable to noncontrolling interests
-
(2)
Impairment charges, net
$
5
$
23
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-14-
more
Exhibit C
Henry Schein, Inc.
2023 Fourth Quarter and Full Year
Reconciliation of reported GAAP net income to Adjusted EBITDA
(in millions)
(unaudited)
Fourth Quarter
Full Year
2023
2022
2023
2022
Net income attributable to Henry Schein, Inc. (GAAP)
$
18
$
47
$
416
$
538
Income (loss) attributable to noncontrolling interests
(1)
4
20
28
Net income (GAAP)
17
51
436
566
Definitional adjustments:
Interest income
(5)
(3)
(17)
(8)
Interest expense
29
12
87
35
Income taxes
1
15
120
170
Depreciation and amortization
68
52
248
212
Non-GAAP adjustments:
Restructuring and integration costs
21
121
80
131
Cybersecurity incident-professional and other fees
11
-
11
-
Impairment of capitalized assets
27
-
27
-
Impairment of intangible assets
7
34
7
34
Other adjustments:
Equity in earnings of affiliates, net of tax
(4)
(3)
(14)
(15)
Adjusted EBITDA (non-GAAP)
$
172
$
279
$
984
$
1,125
Adjusted EBITDA is a non-GAAP measure that we calculate
 
in the manner reflected on Exhibit C. We define Adjusted EBITDA as net
income, excluding (i) net income (loss) attributable to noncontrolling
 
interests (ii) interest income and expense, (iii) income taxes,
 
(iv)
depreciation and amortization, (v) restructuring and integration
 
costs, (vi) cybersecurity incident-professional and other fees,
 
(vii)
impairment of certain capitalized assets, (viii) impairment of certain
 
intangible assets, and
 
(ix) equity in earnings of affiliates.
 
Amounts
may not sum due to rounding.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-15-
###
Exhibit D
Henry Schein, Inc.
2023 Fourth Quarter
Acquisition Expenses and Acquisition-Related Adjustments
(in millions, except per share data)
(unaudited)
Q4 2023
YTD 2023
Operating
Income
EPS
Operating
Income
EPS
Acquisition Expenses*
$
(4)
$
(0.03)
$
(22)
$
(0.15)
Acquisition-Related Fair Value
 
Adjustments**
(2)
(0.02)
10
0.06
$
(6)
$
(0.05)
$
(12)
$
(0.09)
Q4 2022
YTD 2022
Operating
Income
EPS
Operating
Income
EPS
Acquisition Expenses*
$
(3)
$
(0.03)
$
(9)
$
(0.06)
Acquisition-Related Fair Value
 
Adjustments**
1
0.01
13
0.08
$
(2)
$
(0.02)
$
4
$
0.02
* Acquisition expenses include direct costs of acquisitions (primarily third-party
 
professional fees).
** Net acquisition-related fair value adjustments include remeasurement
 
gain resulting from the purchase of a controlling interest of a
previously held equity investment, impact from non-cash assets step-up adjustments
 
and fair value adjustments to contingent
considerations.