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Henry Schein (HSIC) to Report Q4 Earnings: What's in Store?

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Henry Schein, Inc. (HSIC - Free Report) is scheduled to report fourth-quarter and full-year 2020 results on Feb 17, before market open.

In the last-reported quarter, the company’s earnings of $1.03 surpassed the Zacks Consensus Estimate by 43.1%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on all occasions, the average beat being 44.61%.

Let’s see how things have shaped up prior to this announcement.

Factors to Note

Dental Business

As per Henry Schein’s November 2020 update, there has been gradual reopening of practices and increased patient traffic globally over the past few months. This recovery trend is likely to have continued during the fourth quarter as well, thus boosting the top line.

Strength in Henry Schein’s dental end markets on the back of patients returning to dentists for their dental care despite the pandemic is expected to have driven the fourth-quarter revenues of the company. However, the emergence of the new strain of coronavirus and the surge in new infections looms large on the company’s revenues.

Henry Schein, in October 2020, completed The Dentists Supply Company deal to form a new entity to better serve state dental association members with an online-only option for purchasing dental supplies. This is likely to have made significant contributions to the company’s revenues in the fourth quarter.

Henry Schein’s new product category is air management equipment, including extra oral suction devices and air purification systems. With rising emphasis being placed on infection control and the safety of ambient air, the product is likely to have contributed robustly during the fourth quarter.

Henry Schein, Inc. Price and EPS Surprise

 

Henry Schein, Inc. Price and EPS Surprise

Henry Schein, Inc. price-eps-surprise | Henry Schein, Inc. Quote

Henry Schein’s exclusive agreement with U.K.-based manufacturer of air purifier systems, Radic8, to distribute Radic8 Viruskiller in the United States and Canada, has been progressing well. Another notable partnership of Henry Schein, the exclusive distribution agreement with Zyris, too is expected to have contributed to the fourth-quarter sales.

The Zacks Consensus Estimate for fourth-quarter North American dental revenues is pegged at $1.06 billion, suggesting a marginal increase (0.1%) from the year-ago reported figure. The consensus estimate for International Dental revenues is pegged at $672 million, implying a 1.7% uptick from the prior-year reported number.

Medical Business

Henry Schein’s medical business is again expected to have recorded demand for its Personal Protective Equipment (“PPE”), thanks to the pandemic. Although management is anticipating that the PPE and COVID-19-related product sales to push up medical consumable merchandise sales in the to-be-reported quarter, overall sales growth is likely to have moderated from the third quarter. This is likely to have impacted the fourth-quarter results of the company.

Over the past few months, the company has benefited from increasing critical-care customers interaction in hospital settings or with their physicians online through telemedicine. In this regard, Medpod and Henry Schein Medical’s (Henry Schein’s U.S. medical business) web-based clinical decision support system VisualDx have gained importance over the past few months due to the pandemic. This is likely to have continued to contribute to the fourth-quarter revenues.

Henry Schein’s antibody rapid blood test, Standard Q COVID-19 IgM/IgG Rapid Test, is likely to have continued to contribute to the fourth quarter’s top line on robust adoption.

The Zacks Consensus Estimate for fourth-quarter North American Medical revenues is pegged at $925 million, suggesting an improvement of 20.3% from the year-ago reported figure. The consensus estimate for International Medical revenues is pinned at $21.5 million, indicating a 10% rise from the prior-year reported number.

Technology and Value-Added Services Business

Despite a slight business recovery during the last-reported quarter, the internal sales in local currencies declined both domestically and internationally. This primarily resulted from lower patient flow. The company’s financial services revenues were also adversely impacted due to lower equipment sales volume. These trends are unlikely to have changed significantly over the past few months given the continued spread of the virus along with the emergence of a new strain of the same. However, with the continued reopening of dental practices, Henry Schein’s one transaction software revenues (including e-claims and credit card processing) have been gradually recovering. Further, robust adoption of Henry Schein’s Ascend (its cloud-based solutions) and Dentrix Enterprise is expected to have contributed to the revenues during the to-be-reported quarter.

The Zacks Consensus Estimate for fourth-quarter North American Technology and Value-Added Services revenues is pegged at $120 million, suggesting a 1.7% uptick from the year-ago reported figure. The consensus estimate for international Technology and Value-Added Services revenues is pegged at $20.6 million, implying a 5.6% surge from the year-ago reported figure.

The Estimate Picture

For fourth-quarter 2020, the Zacks Consensus Estimate for total revenues of $2.86 billion implies an improvement of 7.1% from the prior-year reported figure.

The consensus estimate for earnings per share is pegged at 96 cents, implying a decline of 1% from the prior-year reported figure.

What Our Model Suggests

Our proven model predicts an earnings beat for Henry Schein this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: Henry Schein has an Earnings ESP of +1.05%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3.

Other Stocks Worth a Look

Here are a few other medical stocks worth considering, as these too have the right combination of elements to beat on earnings this reporting cycle.

Option Care Health, Inc. (OPCH - Free Report) has an Earnings ESP of +34.69% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Moderna, Inc. (MRNA - Free Report) has an Earnings ESP of +0.57% and a Zacks Rank of 2, at present.

DENTSPLY SIRONA Inc. (XRAY - Free Report) has an Earnings ESP of +2.09% and is a Zacks #2 Ranked stock.

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