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Henry Schein (HSIC) Q4 Earnings In Line, Gross Margin Up
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Henry Schein, Inc. (HSIC - Free Report) registered adjusted earnings per share (EPS) of $1.21 in the fourth quarter of 2022, up 13.1% from the year-ago period’s adjusted EPS. The adjusted EPS came in line with the Zacks Consensus Estimate.
For the full year, adjusted earnings were $4.81 per share, up 6.7% from the year-ago period’s levels. The figure came in line with the Zacks Consensus Estimate.
Revenues in Detail
Henry Schein reported net sales of $3.37 billion in the fourth quarter, up 1.2% year over year. The metric topped the Zacks Consensus Estimate by 0.5%. The year-over-year decline included a 1.8% internal decrease in local currencies, 1.1% growth from acquisitions and a 3% decline related to foreign currency exchange.
Sales of personal protective equipment (PPE) and COVID-19 test kits in the fourth quarter were $254 million, up 30.9% year over year. Excluding sales of PPE and COVID-19 test kits, third-quarter internal sales growth in local currencies was 5% year over year.
In the quarter under review, the company recorded sales of $2.59 billion in the North American market, up 4.5% year over year. Sales totaled $779 million in the international market, down 8.2% year over year.
Henry Schein, Inc. Price, Consensus and EPS Surprise
Total revenues in 2022 were $12.64 billion, up 2% from the year-ago period’s levels. The figure lagged the Zacks Consensus Estimate by 1.5%.
Segment Analysis
Henry Schein derives revenues from three operating segments — Dental, Medical and Technology and Value-added Services.
In the fourth quarter, the company recorded $2.00 billion in global Dental sales, down 0.7% year over year. In local currencies, the segment’s revenues included an internally-generated sales decline of 2.6% and 1.8% growth from acquisitions. The business registered a 4.6% decline related to foreign currency exchange.
Global Medical revenues rose 4.1% year over year to $1.2 billion. The segment’s revenues included a 1.3% decline in internal local currencies and a 0.2% decline related to foreign currency exchange.
Revenues from global Technology and Value-added Services rose 4.6% to $187 million. The figure included a rise of 3.4% in internal local currency sales, 0.4% growth from acquisitions and a 1.9% decline related to foreign currency exchange.
Margin Trend
In the reported quarter, gross profit totaled $999 million, reflecting a 1.9% uptick year over year. Gross margin expanded 21 basis points (bps) to 29.6%.
Selling, general and administrative expenses rose 4.5% to $761 million in the quarter under review.
Overall adjusted operating profit was $238 million, reflecting a fall of 5.6% year over year. Meanwhile, the adjusted operating margin contracted 51 bps year over year to 7.1%.
Financial Position
The company exited 2022 with cash and cash equivalents of $117 million, compared with $118 million at the end of 2021. Long-term debt for the company at the end of 2022 was $1.04 billion compared with $811 million at the end of 2021.
Cumulative net cash provided by operating activities from continuing operations till the end of the fourth quarter of 2022 was $254 million compared with $277 million in the year-ago period.
During the fourth quarter of 2022, the company repurchased roughly 3.6 million shares of its common stock for $285 million. The company had approximately $115 million authorized and available for future stock repurchases by the end of the reported quarter.
2023 Guidance
Henry Schein provided its adjusted earnings per share guidance for 2023. For 2023, the company expects adjusted earnings per share in the range of $5.25 to $5.42 (excluding amortization expense of acquired intangible assets). This implies growth of (2%) to 1% from the 2022 figure. The Zacks Consensus Estimate for the metric is currently pegged at $4.95.
For 2023, Henry Schein expects sales growth of nearly 1% to 3% over 2022. The Zacks Consensus Estimate for revenues is currently pegged at $12.83 billion.
Our Take
Henry Schein ended the fourth quarter of 2022 with in-line earnings and better-than-expected revenues. Growth in the Technology and Value-added Services business was strongest in the international business due to the strength of the Dentally cloud-based solution. Growth in North America was driven by sales of practice management software. Sales growth in the Medical business continued to be excellent, reflecting higher patient traffic to alternate care sites. However, severe currency headwinds and lower sales of PPE and COVID-19 test kits affected the top line. Escalating operating expenses and contraction of operating margin is a concern.
Zacks Rank and Key Picks
Henry Schein currently carries Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Neogen Corporation (NEOG - Free Report) , McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Neogen, carrying a Zacks Rank #2, reported second-quarter fiscal 2023 adjusted EPS of 15 cents, beating the Zacks Consensus Estimate of a loss of 8 cents per share. Revenues of $230 million outpaced the consensus mark by 0.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Neogen has an earnings yield of 2.5% compared with the industry’s 0.2%. NEOG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in two, the average being 70.11%.
McKesson, having a Zacks Rank #2, reported third-quarter 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.1%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in two, the average being 4.79%.
Hologic reported first-quarter 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in the trailing four quarters, the average surprise being 46.08%.
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Henry Schein (HSIC) Q4 Earnings In Line, Gross Margin Up
Henry Schein, Inc. (HSIC - Free Report) registered adjusted earnings per share (EPS) of $1.21 in the fourth quarter of 2022, up 13.1% from the year-ago period’s adjusted EPS. The adjusted EPS came in line with the Zacks Consensus Estimate.
For the full year, adjusted earnings were $4.81 per share, up 6.7% from the year-ago period’s levels. The figure came in line with the Zacks Consensus Estimate.
Revenues in Detail
Henry Schein reported net sales of $3.37 billion in the fourth quarter, up 1.2% year over year. The metric topped the Zacks Consensus Estimate by 0.5%.
The year-over-year decline included a 1.8% internal decrease in local currencies, 1.1% growth from acquisitions and a 3% decline related to foreign currency exchange.
Sales of personal protective equipment (PPE) and COVID-19 test kits in the fourth quarter were $254 million, up 30.9% year over year. Excluding sales of PPE and COVID-19 test kits, third-quarter internal sales growth in local currencies was 5% year over year.
In the quarter under review, the company recorded sales of $2.59 billion in the North American market, up 4.5% year over year. Sales totaled $779 million in the international market, down 8.2% year over year.
Henry Schein, Inc. Price, Consensus and EPS Surprise
Henry Schein, Inc. price-consensus-eps-surprise-chart | Henry Schein, Inc. Quote
Total revenues in 2022 were $12.64 billion, up 2% from the year-ago period’s levels. The figure lagged the Zacks Consensus Estimate by 1.5%.
Segment Analysis
Henry Schein derives revenues from three operating segments — Dental, Medical and Technology and Value-added Services.
In the fourth quarter, the company recorded $2.00 billion in global Dental sales, down 0.7% year over year. In local currencies, the segment’s revenues included an internally-generated sales decline of 2.6% and 1.8% growth from acquisitions. The business registered a 4.6% decline related to foreign currency exchange.
Global Medical revenues rose 4.1% year over year to $1.2 billion. The segment’s revenues included a 1.3% decline in internal local currencies and a 0.2% decline related to foreign currency exchange.
Revenues from global Technology and Value-added Services rose 4.6% to $187 million. The figure included a rise of 3.4% in internal local currency sales, 0.4% growth from acquisitions and a 1.9% decline related to foreign currency exchange.
Margin Trend
In the reported quarter, gross profit totaled $999 million, reflecting a 1.9% uptick year over year. Gross margin expanded 21 basis points (bps) to 29.6%.
Selling, general and administrative expenses rose 4.5% to $761 million in the quarter under review.
Overall adjusted operating profit was $238 million, reflecting a fall of 5.6% year over year. Meanwhile, the adjusted operating margin contracted 51 bps year over year to 7.1%.
Financial Position
The company exited 2022 with cash and cash equivalents of $117 million, compared with $118 million at the end of 2021. Long-term debt for the company at the end of 2022 was $1.04 billion compared with $811 million at the end of 2021.
Cumulative net cash provided by operating activities from continuing operations till the end of the fourth quarter of 2022 was $254 million compared with $277 million in the year-ago period.
During the fourth quarter of 2022, the company repurchased roughly 3.6 million shares of its common stock for $285 million. The company had approximately $115 million authorized and available for future stock repurchases by the end of the reported quarter.
2023 Guidance
Henry Schein provided its adjusted earnings per share guidance for 2023.
For 2023, the company expects adjusted earnings per share in the range of $5.25 to $5.42 (excluding amortization expense of acquired intangible assets). This implies growth of (2%) to 1% from the 2022 figure. The Zacks Consensus Estimate for the metric is currently pegged at $4.95.
For 2023, Henry Schein expects sales growth of nearly 1% to 3% over 2022. The Zacks Consensus Estimate for revenues is currently pegged at $12.83 billion.
Our Take
Henry Schein ended the fourth quarter of 2022 with in-line earnings and better-than-expected revenues. Growth in the Technology and Value-added Services business was strongest in the international business due to the strength of the Dentally cloud-based solution. Growth in North America was driven by sales of practice management software. Sales growth in the Medical business continued to be excellent, reflecting higher patient traffic to alternate care sites.
However, severe currency headwinds and lower sales of PPE and COVID-19 test kits affected the top line. Escalating operating expenses and contraction of operating margin is a concern.
Zacks Rank and Key Picks
Henry Schein currently carries Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Neogen Corporation (NEOG - Free Report) , McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Neogen, carrying a Zacks Rank #2, reported second-quarter fiscal 2023 adjusted EPS of 15 cents, beating the Zacks Consensus Estimate of a loss of 8 cents per share. Revenues of $230 million outpaced the consensus mark by 0.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Neogen has an earnings yield of 2.5% compared with the industry’s 0.2%. NEOG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in two, the average being 70.11%.
McKesson, having a Zacks Rank #2, reported third-quarter 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.1%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in two, the average being 4.79%.
Hologic reported first-quarter 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in the trailing four quarters, the average surprise being 46.08%.