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Home Industry News Dental Henry Schein Reports Third Quarter 2024 Financial Results and Increases 2024 Financial Guidance
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Henry Schein Reports Third Quarter 2024 Financial Results and Increases 2024 Financial Guidance

6th November 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 third quarter ended September 28, 2024.

“Our businesses performed well during the third quarter, driven by the continued successful implementation of our BOLD+1 Strategic Plan that is resulting in growth and efficiency throughout the business, and a strong contribution from high-growth, high-margin products and services,” said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein. “We believe we continued to steadily gain market share in our dental and medical distribution businesses following last year’s cyber incident. Our dental equipment business is showing ongoing stability in North America and increased investment by customers in Europe, Australia and New Zealand. Implant and endodontic products had good growth in Europe and Brazil, as well as North America following the successful launch of the BioHorizons Tapered Pro Conical implant in the U.S.,” Mr. Bergman added.

“Acquisitions made during our 2022 to 2024 strategic planning cycle, along with new product launches, are delivering strong financial results, and our restructuring plan is on target. We also continue to return capital to shareholders through our share repurchase program. As a result, we exceeded our financial expectations for the quarter, and so today we are increasing our non-GAAP EPS guidance to $4.74 to $4.82,” Mr. Bergman concluded.

Third-Quarter 2024 Financial Results

  • Total net sales for the quarter were $3.2 billion, an increase of 0.4% compared with the third quarter of 2023. This reflects 3.2% sales growth from acquisitions, a 0.2% sales decrease resulting from foreign currency exchange rates, a 0.4% sales decrease from lower sales of personal protective equipment (PPE), primarily the result of lower glove pricing, and the pace of recovery from the cyber incident late last year.
  • Internal sales for the quarter decreased 2.6%, which includes a 0.4% decrease from lower PPE sales.

Third-quarter sales and internal sales growth are summarized below and detailed in Exhibit A1.

 

Sales
($ Billion)

Total
Growth/(Decrease)1
(%)

Internal
Growth/(Decrease)1
(%)

       

Global Dental

$1.9

(1.6%)

(1.6%)

Merchandise

$1.4

(2.8%)

(2.5%)

Equipment

$0.4

2.8%

1.8%

Global Medical

$1.1

2.9%

(4.8%)

Global Technology and Value-Added Services

$0.2

5.1%

(1.1%)

 

 

 

 

TOTAL SALES

$3.2

0.4%

(2.6%)

Note: items may not sum due to rounding

     
  • GAAP net income2 for the quarter was $99 million, or $0.78 per diluted share4, and compares with third-quarter 2023 GAAP net income of $137 million, or $1.05 per diluted share.
  • Non-GAAP net incomefor the quarter was $155 million, or $1.22 per diluted share4, and compares with third-quarter 2023 non-GAAP net income of $173 million, or $1.32 per diluted share. GAAP and non-GAAP diluted EPS included a remeasurement gain of $0.11 resulting from the purchase of a controlling interest of a previously held non-controlling equity investment.
  • Operating cash flow for the quarter was $151 million and compares with operating cash flow in the third-quarter 2023 of $231 million.
  • Adjusted EBITDA3 for the quarter was $268 million and compares with third-quarter 2023 Adjusted EBITDA of $278 million.

Year-to-Date Financial Results

  • Total net sales for the first nine months of 2024 were $9.5 billion, an increase of 1.7% compared with the first nine months of 2023. This reflects 4.1% sales growth from acquisitions, a 0.1% sales decrease resulting from foreign currency exchange rates, a 0.6% sales decrease from lower sales of personal protective equipment, and the pace of recovery from the cyber incident late last year.
  • Internal sales for the first nine months of 2024 decreased 2.3%, which includes a 0.6% decrease from lower PPE sales.

First nine months of 2024 sales and internal sales growth are summarized below and detailed in Exhibit A1.

 

Sales
($ Billion)

Total
Growth/(Decrease)1
(%)

Internal
Growth/(Decrease)1

(%)

       

Global Dental

$5.7

(0.8%)

(2.2%)

Merchandise

$4.4

(1.3%)

(3.0%)

Equipment

$1.3

0.9%

0.5%

Global Medical

$3.1

5.0%

(3.3%)

Global Technology and Value-Added Services

$0.7

9.7%

1.9%

 

 

 

 

TOTAL SALES

$9.5

1.7%

(2.3%)

Note: items may not sum due to rounding

 

 

 

  • GAAP net income2 for the first nine months of 2024 was $296 million, or $2.30 per diluted share4, and compares with first nine months of 2023 GAAP net income of $398 million, or $3.02 per diluted share.
  • Non-GAAP net incomefor the first nine months of 2024 was $456 million, or $3.55 per diluted share4, and compares with first nine months of 2023 non-GAAP net income of $507 million, or $3.84 per diluted share. GAAP and non-GAAP diluted EPS for the first nine months included a remeasurement gain of $0.11 resulting from the purchase of a controlling interest of a previously held equity investment and compares with a remeasurement gain of $0.10 recorded in the second quarter of 2023.
  • Operating cash flow for the first nine months of 2024 was $644 million, an increase of $112 million compared with the first nine months of 2023.
  • Adjusted EBITDA3 for the first nine months of 2024 was $791 million and compares with first nine months of 2023 Adjusted EBITDA of $813 million.

Restructuring Plan

During the third quarter of 2024, the Company recorded $48 million in restructuring costs. This includes $12 million incurred as part of the plan announced in the third quarter of 2022, which was completed on July 31, 2024, and $36 million incurred as part of the 2024/2025 restructuring initiative announced last quarter. Actions approved in the third quarter under the new restructuring plan are estimated to provide over $50 million in annual run-rate savings, which the Company believes indicates strong progress towards its goal of $75 million to $100 million in annual run-rate savings by the end of 2025.

Share Repurchases

During the third quarter of 2024, the Company repurchased approximately 2.0 million shares of its common stock at an average price of $69.09 per share, for a total of $135 million. The impact of these share repurchases on third-quarter diluted EPS was immaterial.

At quarter-end, Henry Schein had $455 million authorized and available for future stock repurchases and the Company expects to continue to repurchase shares in the fourth quarter.

2024 Financial Guidance

Henry Schein is updating full-year 2024 financial guidance, as described below. Guidance is for current continuing operations as well as acquisitions that have closed, and does not include the impact of potential future acquisitions and share repurchases, restructuring and integration expenses, amortization expense of acquired intangible assets, contingent consideration revaluation adjustments, certain expenses directly associated with the cyber incident or any related insurance claim recovery. This guidance also assumes that foreign currency exchange rates remain generally consistent with current levels and that end markets remain consistent with current market conditions.

  • 2024 total sales growth is now expected to be 4% to 5% over 2023, compared with prior guidance of 4% to 6% growth.
  • 2024 non-GAAP diluted EPS attributable to Henry Schein, Inc. is now expected to be $4.74 to $4.82, compared with prior guidance of $4.70 to $4.82, and reflects growth of 5% to 7% compared with 2023 non-GAAP diluted EPS of $4.50.
  • 2024 Adjusted EBITDA is expected to grow in the low-double-digit percentages versus 2023 Adjusted EBITDA, and is unchanged compared to prior guidance.

Adjustments to 2024 GAAP Net Income and Diluted EPS

The Company is providing guidance for 2024 diluted EPS on a non-GAAP basis and for 2024 Adjusted EBITDA, as noted above. The Company is not providing a reconciliation of its 2024 non-GAAP guidance to its projected 2024 diluted EPS prepared on a GAAP basis, or its projected 2024 Adjusted EBITDA to net income prepared on a GAAP basis. This is because the Company is unable to provide without unreasonable effort an estimate of restructuring costs related to an ongoing initiative to drive operating efficiencies, including the corresponding tax effect, which will be included in the Company’s 2024 diluted EPS and net income prepared on a GAAP basis. The inability to provide this reconciliation is due to the uncertainty and inherent difficulty of predicting the occurrence, magnitude, financial impact, and timing of related costs.

Management does not believe these items are representative of the Company’s underlying business performance. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

1 See Exhibit A for details of sales growth. Internal sales growth is calculated from total net sales using constant foreign currency exchange rates and excludes sales from acquisitions.
2 See Exhibit B for a reconciliation of GAAP net income and diluted EPS to non-GAAP net income and diluted EPS.
See Exhibit C for a reconciliation of GAAP net income to Adjusted EBITDA.
4 References to diluted EPS refer to diluted EPS attributable to Henry Schein, Inc.

For the latest updates and in-depth insights into the world of Medical Devices & Dentistry, including breakthrough technology, industry trends, and regulatory news, contact Mark Atkinson today!

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