17 May 2023

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Henry Schein reports first quarter net sales of $3.1B, a decrease of 3.8% compared with first quarter 2022

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Henry Schein, Inc. reported on May 9 financial results for the first quarter ended April 1, 2023.

Stanley M. Bergman, chairman of the board and CE of Henry Schein, said in a news release that the company's solid financial results for the first quarter of 2023 are in-line with the expectations provided at the beginning of the year and reflect the good earnings momentum in our underlying core businesses.

"Market trends stayed consistent with those we discussed during the previous quarter’s conference call, and as anticipated, our results continued to be impacted by decreased sales of PPE products and COVID-19 test kits," he said. "Excluding these product categories, we achieved strong internal sales growth of 6.3% in local currencies. Our financial results were also adversely impacted by acquisition related expenses and foreign exchange. We are executing well on our BOLD +1 Strategic Plan, and the underlying fundamentals of our core business remain solid."

Bergman said that first quarter sales growth in the company's dental business, excluding PPE products, reflects stable patient traffic. Dental merchandise sales were very good, and dental equipment sales were solid. Traditional equipment sales grew well, while digital equipment sales continued to decrease.

“Our Technology and Value-Added Services business had an excellent quarter. Growth in North America continued to be driven by Dentrix and Dentrix Ascend cloud-based solutions and customers upgraded from our Easy Dental product," he said. "International growth was supported by Dentally, our cloud-based solution for outside the United States. We also saw growth with our revenue cycle management insurance claims product driven by the number of e-claims we processed and the enhanced functionality of our electronic invoicing and reimbursement solutions."

Bergman said the company's medical business achieved growth of approximately 4%, excluding sales of PPE products and COVID-19 test kits.

Henry Schein leaders expect internal sales growth in the core medical business to continue to grow, but at a slower pace than last year.

First-quarter financial results

• Total net sales for the quarter were $3.1 billion, a decrease of 3.8% compared with the first quarter of 2022. The 3.8% decrease included a 3.7% decrease in local currencies excluding acquisitions, 1.4% growth from acquisitions and a 1.5% decrease related to foreign currency exchange. Sales of PPE products and COVID-19 test kits in the first quarter were $201 million, a decrease of $287 million versus the prior-year period. When excluding sales of PPE products and COVID-19 test kits, first-quarter internal sales growth in local currencies was 6.3% compared with the prior-year period.
• GAAP net income for the quarter was $121 million, or $0.91 per diluted share, compared with first-quarter 2022 GAAP net income of $181 million, or $1.30 per diluted share.
• Non-GAAP net income for the quarter was $161 million, or $1.21 per diluted share, compared with first-quarter 2022 non-GAAP net income of $200 million, or $1.44 per diluted share. First-quarter 2023 non-GAAP diluted EPS excludes restructuring expenses of $30 million, or $0.16 per diluted share, and amortization expense of acquired intangible assets of $30 million pre-tax, or $0.14 per diluted share, and was negatively impacted by:

        - an estimated decreased contribution of $0.24 per diluted share from sales of PPE products and COVID-19 test kits compared with the first             quarter last year.

        - acquisition-related expense of $0.04 per diluted share, compared with the first quarter last year acquisition-related expense of less than             $0.01 per diluted share.

        - foreign currency exchange of approximately $0.02 per diluted share versus the first quarter last year.

• Global Dental sales were $1.9 billion for the quarter, an increase of 3.8% compared with the prior-year period. Internally generated sales increased 4.0% in local currencies and acquisitions contributed 2.3% growth. This growth was offset by a 2.5% decrease related to foreign currency exchange. The 4.0% internal sales increase in local currencies reflects a 1.6% increase in North America and 7.6% growth internationally.
• Global Dental consumable merchandise internal sales increased by 4.0% in local currencies. Excluding sales of PPE products, internal sales growth was 8.4% in local currencies.
• Global Dental equipment internal sales growth was 3.9% in local currencies.
• Global Medical sales were $1.0 billion for the quarter, a decrease of 17.2% compared with the prior-year period. Internally generated sales decreased 17.1% in local currencies, while foreign currency exchange resulted in a decrease of 0.1%. Internal sales increased 4.2% in local currencies when excluding sales of PPE products and COVID-19 test kits.
• Global Technology and Value-Added Services sales were $191 million for the quarter, an increase of 6.8% compared with the prior-year period, driven by the strength of Henry Schein One. This included 6.5% internal sales growth in local currencies and 1.5% growth from acquisitions, offset by a 1.2% decrease related to foreign currency exchange.

Read more and see condensed consolidated statements of income in the company's press release.