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Henry Schein (HSIC) Q3 Earnings In Line, 2022 Sales View Down
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Henry Schein, Inc. (HSIC - Free Report) registered adjusted earnings per share (EPS) of $1.15 in the third quarter of 2022, up 4.5% from the year-ago period’s adjusted EPS. The adjusted EPS came in line with the Zacks Consensus Estimate.
Revenues in Detail
Henry Schein reported net sales of $3.07 billion in the third quarter, down 3.5% year over year. The metric missed the Zacks Consensus Estimate by 4.7%.
The year-over-year decline included 2.4% internal decrease in local currencies, 1.8% growth from acquisitions and a 2.9% decline related to foreign currency exchange.
Sales of personal protective equipment (PPE) and COVID-19 test kits in the third quarter were $244 million, down 51.6% year over year. Excluding sales of PPE and COVID-19 test kits, third-quarter internal sales growth in local currencies was 6.8% year over year.
In the quarter under review, the company recorded sales of $2.37 billion in the North American market, down 2.1% year over year. Sales totaled $693 million in the international market, down 8% year over year.
Segment Analysis
Henry Schein derives revenues from three operating segments — Dental, Medical and Technology and Value-added Services.
In the third quarter, the company recorded $1.79 billion of global Dental sales, down 2.1% year over year. In local currencies, the segment’s revenues included an internally-generated sales growth of 1.2% and 1.4% growth from acquisitions. The business registered a 4.7% decline related to foreign currency exchange.
Henry Schein, Inc. Price, Consensus and EPS Surprise
Global Medical revenues dropped 6.7% year over year to $1.11 billion. The segment’s revenues included an 8.8% decline in internal local currencies, 2.4% growth from acquisitions and a 0.3% decline related to foreign currency exchange.
Revenues from global Technology and Value-added Services rose 3.8% to $176 million. The figure included a rise of 4.2% in internal local currency sales, 1.4% growth from acquisitions and a 1.8% decline related to foreign currency exchange.
Margin Trend
In the reported quarter, gross profit totaled $914 million, reflecting a 0.2% uptick year over year. Gross margin expanded 110 basis points (bps) to 29.8%.
Selling, general and administrative expenses rose 1.4% to $648 million in the quarter under review.
Overall adjusted operating profit was $266 million, reflecting a rise of 4.3% year over year. Meanwhile, the adjusted operating margin expanded 65 bps year over year to 8.7%.
Financial Position
The company exited the third quarter of 2022 with cash and cash equivalents of $123 million, compared with $108 million at the end of the second quarter of 2022. Long-term debt for the company at the end of third-quarter 2022 was $934 million compared with $769 million at the end of the second quarter of 2022.
Cumulative net cash provided by operating activities from continuing operations till the end of the third quarter of 2022 was $348 million compared with $433 million in the year-ago period.
During the third quarter of 2022, the company repurchased roughly 1.2 million shares of its common stock for $90.5 million. The company had approximately $400 million authorized and available for future stock repurchases by the end of the reported quarter.
2022 Guidance
Henry Schein provided its adjusted earnings per share guidance for 2022.
For 2022, the company expects adjusted earnings per share in the range of $4.79 to $4.87, excluding integration and restructuring charges. This implies growth of 6% to 8% from the 2021 figure. The Zacks Consensus Estimate for the metric is currently pegged at $4.84.
For 2022, Henry Schein now expects sales growth of nearly 1.5% to 2.5% over 2021 (down from its prior expectation of 3% to 6% growth). The Zacks Consensus Estimate for revenues is currently pegged at $12.94 billion.
Our Take
Henry Schein ended the third quarter of 2022 with in-line earnings. However, third-quarter revenues missed the consensus mark. Severe currency headwinds and lower sales of PPE and COVID-19 test kits affected the top line. However, excluding sales of PPE and COVID-19 test kits, the third-quarter internal sales growth in local currencies was 6.8% year over year.
The decline in global Dental sales does not bode well. Patient appointment cancellations and staffing-related challenges from a rise in COVID-19 infections continued to hamper business results. Escalating operating expenses is a concern.
Zacks Rank and Key Picks
Henry Schein currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health Inc. (ELV - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
Elevance Health, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $7.53, which beat the Zacks Consensus Estimate by 6.1%. Revenues of $39.63 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Elevance Health has an estimated long-term growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average being 4.1%.
Medpace Holdings, sporting a Zacks Rank #1, reported third-quarter 2022 EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $383.7 million outpaced the consensus mark by 8.1%.
Medpace Holdings has an estimated growth rate of 44.9% for the full-year 2022. MEDP’s earnings surpassed estimates in all the trailing four quarters, the average being 22%.
Merit Medical, flaunting a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 10.5%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.
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Henry Schein (HSIC) Q3 Earnings In Line, 2022 Sales View Down
Henry Schein, Inc. (HSIC - Free Report) registered adjusted earnings per share (EPS) of $1.15 in the third quarter of 2022, up 4.5% from the year-ago period’s adjusted EPS. The adjusted EPS came in line with the Zacks Consensus Estimate.
Revenues in Detail
Henry Schein reported net sales of $3.07 billion in the third quarter, down 3.5% year over year. The metric missed the Zacks Consensus Estimate by 4.7%.
The year-over-year decline included 2.4% internal decrease in local currencies, 1.8% growth from acquisitions and a 2.9% decline related to foreign currency exchange.
Sales of personal protective equipment (PPE) and COVID-19 test kits in the third quarter were $244 million, down 51.6% year over year. Excluding sales of PPE and COVID-19 test kits, third-quarter internal sales growth in local currencies was 6.8% year over year.
In the quarter under review, the company recorded sales of $2.37 billion in the North American market, down 2.1% year over year. Sales totaled $693 million in the international market, down 8% year over year.
Segment Analysis
Henry Schein derives revenues from three operating segments — Dental, Medical and Technology and Value-added Services.
In the third quarter, the company recorded $1.79 billion of global Dental sales, down 2.1% year over year. In local currencies, the segment’s revenues included an internally-generated sales growth of 1.2% and 1.4% growth from acquisitions. The business registered a 4.7% decline related to foreign currency exchange.
Henry Schein, Inc. Price, Consensus and EPS Surprise
Henry Schein, Inc. price-consensus-eps-surprise-chart | Henry Schein, Inc. Quote
Global Medical revenues dropped 6.7% year over year to $1.11 billion. The segment’s revenues included an 8.8% decline in internal local currencies, 2.4% growth from acquisitions and a 0.3% decline related to foreign currency exchange.
Revenues from global Technology and Value-added Services rose 3.8% to $176 million. The figure included a rise of 4.2% in internal local currency sales, 1.4% growth from acquisitions and a 1.8% decline related to foreign currency exchange.
Margin Trend
In the reported quarter, gross profit totaled $914 million, reflecting a 0.2% uptick year over year. Gross margin expanded 110 basis points (bps) to 29.8%.
Selling, general and administrative expenses rose 1.4% to $648 million in the quarter under review.
Overall adjusted operating profit was $266 million, reflecting a rise of 4.3% year over year. Meanwhile, the adjusted operating margin expanded 65 bps year over year to 8.7%.
Financial Position
The company exited the third quarter of 2022 with cash and cash equivalents of $123 million, compared with $108 million at the end of the second quarter of 2022. Long-term debt for the company at the end of third-quarter 2022 was $934 million compared with $769 million at the end of the second quarter of 2022.
Cumulative net cash provided by operating activities from continuing operations till the end of the third quarter of 2022 was $348 million compared with $433 million in the year-ago period.
During the third quarter of 2022, the company repurchased roughly 1.2 million shares of its common stock for $90.5 million. The company had approximately $400 million authorized and available for future stock repurchases by the end of the reported quarter.
2022 Guidance
Henry Schein provided its adjusted earnings per share guidance for 2022.
For 2022, the company expects adjusted earnings per share in the range of $4.79 to $4.87, excluding integration and restructuring charges. This implies growth of 6% to 8% from the 2021 figure. The Zacks Consensus Estimate for the metric is currently pegged at $4.84.
For 2022, Henry Schein now expects sales growth of nearly 1.5% to 2.5% over 2021 (down from its prior expectation of 3% to 6% growth). The Zacks Consensus Estimate for revenues is currently pegged at $12.94 billion.
Our Take
Henry Schein ended the third quarter of 2022 with in-line earnings. However, third-quarter revenues missed the consensus mark. Severe currency headwinds and lower sales of PPE and COVID-19 test kits affected the top line. However, excluding sales of PPE and COVID-19 test kits, the third-quarter internal sales growth in local currencies was 6.8% year over year.
The decline in global Dental sales does not bode well. Patient appointment cancellations and staffing-related challenges from a rise in COVID-19 infections continued to hamper business results. Escalating operating expenses is a concern.
Zacks Rank and Key Picks
Henry Schein currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health Inc. (ELV - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
Elevance Health, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $7.53, which beat the Zacks Consensus Estimate by 6.1%. Revenues of $39.63 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Elevance Health has an estimated long-term growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average being 4.1%.
Medpace Holdings, sporting a Zacks Rank #1, reported third-quarter 2022 EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $383.7 million outpaced the consensus mark by 8.1%.
Medpace Holdings has an estimated growth rate of 44.9% for the full-year 2022. MEDP’s earnings surpassed estimates in all the trailing four quarters, the average being 22%.
Merit Medical, flaunting a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 10.5%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.