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Why Is Henry Schein (HSIC) Down 1.3% Since Last Earnings Report?
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It has been about a month since the last earnings report for Henry Schein (HSIC - Free Report) . Shares have lost about 1.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Henry Schein due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Henry Schein Lags Q1 Earnings, Operating Margin Contracts
Henry Schein registered adjusted earnings per share of $1.21 in the first quarter of 2023, down 16% from the year-ago period’s adjusted earnings per share. The metric also missed the Zacks Consensus Estimate by 2.4%.
Revenues in Detail
Henry Schein reported net sales of $3.06 billion in the first quarter, down 3.7% year over year. The metric lagged the Zacks Consensus Estimate by 1%.
The year-over-year decline included a 3.7% internal decrease in local currencies, 1.4% growth from acquisitions and a 1.5% decline related to foreign currency exchange.
Sales of personal protective equipment (PPE) and COVID-19 test kits in the first quarter were $201 million, compared with $488 million in the prior-year period. Excluding sales of PPE and COVID-19 test kits, first-quarter internal sales growth in local currencies was 6.3% year over year.
In the quarter under review, the company recorded sales of $2.26 billion in the North American market, down 6.2% year over year. Sales totaled $799 million in the international market, up 4% year over year.
Segmental Analysis
Henry Schein derives revenues from three operating segments — Dental, Medical and Technology and Value-added Services.
In the first quarter, the company recorded $1.9 billion in global Dental sales, up 3.8% year over year. The segment’s revenues included an internally generated sales increase of 4% in local currencies and 2.3% growth from acquisitions. The business registered a 2.5% decline related to foreign currency exchange.
Global Medical revenues declined 17.2% year over year to $1 billion. The segment’s revenues included an internally generated sales decline of 17.1% in local currencies and a 0.1% decline related to foreign currency exchange.
Revenues from global Technology and Value-added Services rose 6.8% to $191 million. The figure included 6.5% internal sales growth in local currencies, 1.5% growth from acquisitions and a 1.2% decline related to foreign currency exchange.
Margin Trend
In the reported quarter, the gross profit totaled $966 million, reflecting a 0.7% decrease year over year. However, the gross margin expanded 96 basis points (bps) to 31.6%.
SG&A expenses rose 5.1% to $717 million in the quarter under review.
The adjusted operating profit in the first quarter was $249 million, reflecting a fall of 14.4% year over year. Meanwhile, the adjusted operating margin contracted 102 bps year over year to 8.1%.
Financial Position
Henry Schein exited the first quarter of 2023 with cash and cash equivalents of $126 million, compared with $117 million at the end of 2022. The long-term debt of the company at the end of the first quarter was $1.02 billion compared with $1.04 billion at the end of 2022.
The cumulative net cash provided by operating activities at the end of the first quarter of 2023 was $27 million compared with $93 million in the year-ago period.
In the first quarter of 2023, HSIC repurchased nearly 1.2 million shares of its common stock for $100 million. The company had approximately $415 million authorized and available for future stock repurchases by the end of the reported quarter.
2023 Guidance
Henry Schein updated its guidance for 2023. The outlook considers the current continuing operations and completed acquisitions, including the recently closed Biotech Dental buyout.
For 2023, the company expects adjusted earnings per share in the range of $5.18-$5.35 (from the previously-projected range of $5.25-$5.42), excluding the amortization expense of acquired intangible assets. This implies growth of (4%) to (1%) compared with the earlier projected growth of (2%) to 1% from the 2022 reported figure. The Zacks Consensus Estimate for the metric is currently pegged at $5.32.
For 2023, Henry Schein expects sales growth of nearly 1 compared to the 2022 figure (unchanged from the previous guidance). The Zacks Consensus Estimate for revenues is currently pegged at $12.84 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Henry Schein has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Henry Schein has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Henry Schein belongs to the Zacks Medical - Dental Supplies industry. Another stock from the same industry, AmerisourceBergen , has gained 2.4% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
AmerisourceBergen reported revenues of $63.46 billion in the last reported quarter, representing a year-over-year change of +9.9%. EPS of $3.50 for the same period compares with $3.22 a year ago.
For the current quarter, AmerisourceBergen is expected to post earnings of $2.82 per share, indicating a change of +7.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days.
AmerisourceBergen has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Why Is Henry Schein (HSIC) Down 1.3% Since Last Earnings Report?
It has been about a month since the last earnings report for Henry Schein (HSIC - Free Report) . Shares have lost about 1.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Henry Schein due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Henry Schein Lags Q1 Earnings, Operating Margin Contracts
Henry Schein registered adjusted earnings per share of $1.21 in the first quarter of 2023, down 16% from the year-ago period’s adjusted earnings per share. The metric also missed the Zacks Consensus Estimate by 2.4%.
Revenues in Detail
Henry Schein reported net sales of $3.06 billion in the first quarter, down 3.7% year over year. The metric lagged the Zacks Consensus Estimate by 1%.
The year-over-year decline included a 3.7% internal decrease in local currencies, 1.4% growth from acquisitions and a 1.5% decline related to foreign currency exchange.
Sales of personal protective equipment (PPE) and COVID-19 test kits in the first quarter were $201 million, compared with $488 million in the prior-year period. Excluding sales of PPE and COVID-19 test kits, first-quarter internal sales growth in local currencies was 6.3% year over year.
In the quarter under review, the company recorded sales of $2.26 billion in the North American market, down 6.2% year over year. Sales totaled $799 million in the international market, up 4% year over year.
Segmental Analysis
Henry Schein derives revenues from three operating segments — Dental, Medical and Technology and Value-added Services.
In the first quarter, the company recorded $1.9 billion in global Dental sales, up 3.8% year over year. The segment’s revenues included an internally generated sales increase of 4% in local currencies and 2.3% growth from acquisitions. The business registered a 2.5% decline related to foreign currency exchange.
Global Medical revenues declined 17.2% year over year to $1 billion. The segment’s revenues included an internally generated sales decline of 17.1% in local currencies and a 0.1% decline related to foreign currency exchange.
Revenues from global Technology and Value-added Services rose 6.8% to $191 million. The figure included 6.5% internal sales growth in local currencies, 1.5% growth from acquisitions and a 1.2% decline related to foreign currency exchange.
Margin Trend
In the reported quarter, the gross profit totaled $966 million, reflecting a 0.7% decrease year over year. However, the gross margin expanded 96 basis points (bps) to 31.6%.
SG&A expenses rose 5.1% to $717 million in the quarter under review.
The adjusted operating profit in the first quarter was $249 million, reflecting a fall of 14.4% year over year. Meanwhile, the adjusted operating margin contracted 102 bps year over year to 8.1%.
Financial Position
Henry Schein exited the first quarter of 2023 with cash and cash equivalents of $126 million, compared with $117 million at the end of 2022. The long-term debt of the company at the end of the first quarter was $1.02 billion compared with $1.04 billion at the end of 2022.
The cumulative net cash provided by operating activities at the end of the first quarter of 2023 was $27 million compared with $93 million in the year-ago period.
In the first quarter of 2023, HSIC repurchased nearly 1.2 million shares of its common stock for $100 million. The company had approximately $415 million authorized and available for future stock repurchases by the end of the reported quarter.
2023 Guidance
Henry Schein updated its guidance for 2023. The outlook considers the current continuing operations and completed acquisitions, including the recently closed Biotech Dental buyout.
For 2023, the company expects adjusted earnings per share in the range of $5.18-$5.35 (from the previously-projected range of $5.25-$5.42), excluding the amortization expense of acquired intangible assets. This implies growth of (4%) to (1%) compared with the earlier projected growth of (2%) to 1% from the 2022 reported figure. The Zacks Consensus Estimate for the metric is currently pegged at $5.32.
For 2023, Henry Schein expects sales growth of nearly 1 compared to the 2022 figure (unchanged from the previous guidance). The Zacks Consensus Estimate for revenues is currently pegged at $12.84 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Henry Schein has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Henry Schein has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Henry Schein belongs to the Zacks Medical - Dental Supplies industry. Another stock from the same industry, AmerisourceBergen , has gained 2.4% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
AmerisourceBergen reported revenues of $63.46 billion in the last reported quarter, representing a year-over-year change of +9.9%. EPS of $3.50 for the same period compares with $3.22 a year ago.
For the current quarter, AmerisourceBergen is expected to post earnings of $2.82 per share, indicating a change of +7.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days.
AmerisourceBergen has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.