Back to top

Analyst Blog

Henry Schein, Inc. (HSIC - Analyst Report), a leading healthcare products and services distributor, has been on an acquisition spree over the recent past. The company has successfully maintained this trend with the latest acquisition of Calif.-based Maddox Practice Group (MPG), a dental practice transition group. The financial and other terms of the deal were not disclosed.

With the acquisition, MPG will become a part of Henry Schein Professional Practice Transitions (HSPPT) that provides a full range of dental practice brokerage, practice valuations and practice transition planning services. This acquisition will enable Henry Schein to expand its PPT business in Calif., one of the largest dental markets in the U.S. with around 32,000 licensed dentists.

Henry Schein is focusing on expansion through acquisitions in both animal health and dental market, based on its solid cash balance ($122.1 million at the end of fiscal 2012). Last December, the company acquired Ireland-based animal health product distributor, C&M Vetlink. Earlier in October, the company bought a majority stake in a Canada-based privately-held dental software company, The Exan Group. Prior to that, in May, the company entered the Dutch market by acquiring AUV Veterinary Services, the veterinary products distribution arm of the Netherlands-based AUV Group.

The recent acquisitions include a global distribution agreement with Israeli dental technology company ReDent Nova, a deal with non-invasive monitoring technology for patient care provider Masimo Corporation (MASI - Analyst Report) to distribute Masimo’s Pronto-7 and three other successive acquisitions namely Ortho Technology, Modern Laboratory Services and Accord.

Henry Schein continues to drive strong top-line growth and establish domestic and international footprints in dental, animal health and medical supply distribution. However, unfavorable foreign exchange headwinds and a contagion of economic problems across Europe are likely to undermine its operating results. Further, softness in the core franchise is a matter of concern.

Nevertheless, we believe that Henry Schein is well poised to drive growth as its diversified business offers resilience against macroeconomic problems. The company’s performance should improve with the gradual recovery in the economy.

The stock carries a Zacks Rank #2 (Buy). Other industry stocks carrying a Zacks Rank #1 are Medical Action Industries Inc. and Given Imaging Ltd. .

Please login to Zacks.com or register to post a comment.