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Henry Schein (HSIC) Hits a New 52-Week High: What's Driving It?
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Shares of Henry Schein, Inc. (HSIC - Free Report) reached a new 52-week high of $90.47 on Apr 8 before closing the session marginally lower at $90.40.
Over the past year, this Zacks Rank #2 (Buy) stock has gained 29.1% compared with 9.8% growth of the industry and 8.9% rise of the S&P 500 composite.
Henry Schein is witnessing an upward trend in its stock price, prompted by favorable dental business trends driven by the ongoing market recovery. The company’s recent acquisitions and partnerships are expected to drive growth further.
Key Growth Catalysts
Dental Business Trends Favorable for the Long Term: Henry Schein’s strategy to expand its digital dentistry globally is encouraging. Henry Schein is busy promoting digital workflows for general dentistry as well as dental specialties. During the fourth quarter, Henry Schein’s global dental sales increased 9.4% compared with the year-ago period. Henry Schein noted that growth was strong in each of the dental specialty categories, including implants, oral surgery, endodontics and orthodontics, in the reported quarter. The company’s North American dental internal sales growth in local currencies was 9.3%, driven by solid growth, both in consumable merchandise as well as equipment product categories.
Expansion Through Acquisitions and Partnerships: Henry Schein’s revenue growth has been consistently supported by niche acquisitions and partnerships. In December 2021, Henry Schein signed a cooperative contract with OMNIA Partners, one of the nation’s largest purchasing organizations for public and private sector procurement, which would expand access to point-of-care diagnostic testing, personal protective equipment (PPE), and medical products and supplies in academic and public health settings. Products and supplies will be available through the Henry Schein Medical University Health business. Other recent acquisitions include the purchase of eAssist Dental Solutions (in June 2021), a developer of key leading virtual dental billing outsourced services, and the acquisition of majority ownership in Jarvis Analytics, which develops comprehensive business analytic tools to help dental practices leverage data to diagnose problems, strengthen decision-making and improve business performance.
Image Source: Zacks Investment Research
Strong Solvency With Slight Leverage: The company exited 2021 with cash and cash equivalents of $117.9 million compared with $421.2 million at the end of 2020. Long-term debt for the company at the end of 2021 was $811.3 million compared with $515.8 million at the end of 2020. This figure is considerably higher than the fourth quarter’s cash and cash equivalent level. However, the company had no short-term debt on its balance sheet at the end of fourth-quarter 2021. This is good news in terms of the company’s solvency position. This implies that during the year of economic downturn, the company has enough cash for debt payment.
Downsides
Tough Competition: The U.S. healthcare products and service distribution industry is highly competitive and consist principally of national, regional and local distributors. In the North American dental products market, the company faces stiff competition from Patterson Dental business of Patterson Companies Inc. and Benco Dental Supply.
Mounting Expenses: During the fourth quarter, Global Medical revenues fell 3.2% year over year, including a decrease of 7.1% in internal local currencies and 3.9% growth from acquisitions. Moreover, selling, general and administrative expenses rose 14.9% during the reported quarter. The escalating costs are building pressure on the bottom line.
Key Picks
Some better-ranked stocks in the broader medical space are McKesson Corporation (MCK - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Bio-Rad Laboratories, Inc. (BIO - Free Report) .
McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 49.7% compared with the industry’s 4.7% growth in the past year.
AMN Healthcare, flaunting a Zacks Rank #1, has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average.
AMN Healthcare has outperformed its industry in the past year. AMN has gained 23.8% versus the 62% industry decline.
Bio-Rad reported fourth-quarter 2021 adjusted EPS of $3.21, which surpassed the Zacks Consensus Estimate by 11.9%. It currently has a Zacks Rank #2.
Bio-Rad has an earnings yield of 2.3% versus the industry’s negative yield. BIO surpassed earnings estimates in the trailing four quarters, the average surprise being 66.9%.
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Henry Schein (HSIC) Hits a New 52-Week High: What's Driving It?
Shares of Henry Schein, Inc. (HSIC - Free Report) reached a new 52-week high of $90.47 on Apr 8 before closing the session marginally lower at $90.40.
Over the past year, this Zacks Rank #2 (Buy) stock has gained 29.1% compared with 9.8% growth of the industry and 8.9% rise of the S&P 500 composite.
Henry Schein is witnessing an upward trend in its stock price, prompted by favorable dental business trends driven by the ongoing market recovery. The company’s recent acquisitions and partnerships are expected to drive growth further.
Key Growth Catalysts
Dental Business Trends Favorable for the Long Term: Henry Schein’s strategy to expand its digital dentistry globally is encouraging. Henry Schein is busy promoting digital workflows for general dentistry as well as dental specialties. During the fourth quarter, Henry Schein’s global dental sales increased 9.4% compared with the year-ago period. Henry Schein noted that growth was strong in each of the dental specialty categories, including implants, oral surgery, endodontics and orthodontics, in the reported quarter. The company’s North American dental internal sales growth in local currencies was 9.3%, driven by solid growth, both in consumable merchandise as well as equipment product categories.
Expansion Through Acquisitions and Partnerships: Henry Schein’s revenue growth has been consistently supported by niche acquisitions and partnerships. In December 2021, Henry Schein signed a cooperative contract with OMNIA Partners, one of the nation’s largest purchasing organizations for public and private sector procurement, which would expand access to point-of-care diagnostic testing, personal protective equipment (PPE), and medical products and supplies in academic and public health settings. Products and supplies will be available through the Henry Schein Medical University Health business. Other recent acquisitions include the purchase of eAssist Dental Solutions (in June 2021), a developer of key leading virtual dental billing outsourced services, and the acquisition of majority ownership in Jarvis Analytics, which develops comprehensive business analytic tools to help dental practices leverage data to diagnose problems, strengthen decision-making and improve business performance.
Strong Solvency With Slight Leverage: The company exited 2021 with cash and cash equivalents of $117.9 million compared with $421.2 million at the end of 2020. Long-term debt for the company at the end of 2021 was $811.3 million compared with $515.8 million at the end of 2020. This figure is considerably higher than the fourth quarter’s cash and cash equivalent level. However, the company had no short-term debt on its balance sheet at the end of fourth-quarter 2021. This is good news in terms of the company’s solvency position. This implies that during the year of economic downturn, the company has enough cash for debt payment.
Downsides
Tough Competition: The U.S. healthcare products and service distribution industry is highly competitive and consist principally of national, regional and local distributors. In the North American dental products market, the company faces stiff competition from Patterson Dental business of Patterson Companies Inc. and Benco Dental Supply.
Mounting Expenses: During the fourth quarter, Global Medical revenues fell 3.2% year over year, including a decrease of 7.1% in internal local currencies and 3.9% growth from acquisitions. Moreover, selling, general and administrative expenses rose 14.9% during the reported quarter. The escalating costs are building pressure on the bottom line.
Key Picks
Some better-ranked stocks in the broader medical space are McKesson Corporation (MCK - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Bio-Rad Laboratories, Inc. (BIO - Free Report) .
McKesson, carrying a Zacks Rank #2 (Buy), reported third-quarter fiscal 2022 adjusted earnings per share (EPS) of $6.15, which beat the Zacks Consensus Estimate of $5.38 by 14.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 49.7% compared with the industry’s 4.7% growth in the past year.
AMN Healthcare, flaunting a Zacks Rank #1, has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average.
AMN Healthcare has outperformed its industry in the past year. AMN has gained 23.8% versus the 62% industry decline.
Bio-Rad reported fourth-quarter 2021 adjusted EPS of $3.21, which surpassed the Zacks Consensus Estimate by 11.9%. It currently has a Zacks Rank #2.
Bio-Rad has an earnings yield of 2.3% versus the industry’s negative yield. BIO surpassed earnings estimates in the trailing four quarters, the average surprise being 66.9%.