8-K
HENRY SCHEIN INC (HSIC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of
1934
Date of Report (Date of earliest event
reported):
November 2, 2020
Henry Schein, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation)
0-27078
(Commission
File Number)
11-3136595
(IRS Employer
Identification No.)
135 Duryea Road
,
Melville
,
New York
(Address of principal executive offices)
11747
(Zip Code)
Registrant’s telephone number, including area code: (
631
)
843-5500
(Former name or former address, if changed since last report.)
Check the appropriate box below if
the Form 8-K
filing is intended to simultaneously satisfy
the filing obligation of the
registrant under any of the
following provisions:
☐
Written communications pursuant to
Rule 425 under the Securities
Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule
14a-12 under the Exchange Act
(17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule
14d-2(b) under the
Exchange Act (17 CFR
240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section
12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange
on which registered
Common Stock, par value $.01 per share
HSIC
The Nasdaq Global Select Market
Indicate by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (17
CFR §240.12b-2 of this chapter).
Emerging growth company
☐
If an emerging growth company,
indicate by check mark if the
registrant has elected not to use
the extended transition period for complying
with any
new or
revised financial accounting
standards provided pursuant
to Section
13(a) of the
Exchange Act.
☐
Item 2.02.
Results of Operations and Financial Condition.
On November 2, 2020, Henry Schein, Inc. issued a press release reporting the
financial results for the three and nine
months ended September 26, 2020.
The full text
of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
The information in this Item 2.02 and the press release attached as Exhibit 99.1
are considered furnished to the Securities and Exchange Commission and are not deemed
filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Item 9.01.
Financial Statements and Exhibits
(a)
Not applicable.
(b)
Not applicable.
(c)
Not applicable.
(d)
Exhibit 99.1 – Press Release dated November 2, 2020.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
HENRY SCHEIN, INC.
By:
/s/ Steven Paladino
Steven Paladino
Executive Vice President and
Chief Financial Officer
(principal financial and accounting
officer)
November 2, 2020
EXHIBIT INDEX
Exhibit No.
Description
Press Release dated November 2, 2020.
exhibit991
-1-
more
FOR IMMEDIATE RELEASE
HENRY SCHEIN REPORTS RECORD THIRD QUARTER 2020 FINANCIAL RESULTS FROM CONTINUING
OPERATIONS
●
Internal sales growth in local currencies of 13.0% driven by personal protective equipment and COVID-19-
related products
●
GAAP diluted EPS from continuing operations of $0.99 versus prior-year GAAP
diluted EPS from continuing
operations of $0.91
●
Non-GAAP diluted EPS from continuing operations of $1.03 versus prior-year
non-GAAP diluted EPS from
continuing operations of $0.90
●
Strong balance sheet bolstered by quarterly cash flow from operations of $261.3 million
MELVILLE, N.Y.,
November 2, 2020 –
Henry Schein, Inc. (Nasdaq: HSIC), the world’s largest provider of health care
solutions to office-based dental and medical practitioners, today reported record third quarter
2020 financial results from
continuing operations. Results from continuing operations exclude contributions
from Henry Schein’s former Animal Health
business, which was spun off in February 2019 to form a new publicly traded company, Covetrus (Nasdaq: CVET).
Net sales for the quarter ended September 26, 2020, were $2.8 billion,
an increase of 13.2%
compared with the third
quarter of 2019. The 13.2% increase included 13.0%
internal growth in local currencies, 0.1% growth from acquisitions
and
0.1% growth related to foreign currency exchange.
(See Exhibit A for details of sales growth and a reconciliation of
this non-
GAAP measure to GAAP sales).
GAAP net income attributable to Henry Schein, Inc. from
continuing operations for the third quarter of 2020 was
$141.7 million, or $0.99 per diluted share, compared with prior-year GAAP
net income from continuing operations of $134.9
million, or $0.91 per diluted share. Non-GAAP net income from
continuing operations for the third quarter of 2020 was
$147.0 million, or $1.03 per diluted share, compared with prior-year non-GAAP
net income from continuing operations of
$134.3 million, or $0.90 per diluted share. Non-GAAP results for the third
quarter of 2020 and 2019 exclude certain items
noted in Exhibit B, which provides a reconciliation of GAAP
net income from continuing operations and diluted EPS from
continuing operations to non-GAAP net income and diluted EPS from
continuing operations. Both GAAP and non-GAAP
net income for the third quarter 2020 were favorably impacted by
a U.S. federal income tax settlement reached during the
quarter, which lowered income tax expense by approximately $15.6 million, or $0.11 per
diluted share.
NEWS
RELEASE
-2-
more
"2020 has been an extraordinarily challenging and unpredictable year for our team,
customers and suppliers.
I
commend the work and sacrifice of Team Schein to support business continuity for our customers.
The pandemic caused
disruption to the supply chain and as suppliers reacted to increased demand
for personal protective equipment (PPE) and
shortages of raw materials our markets experienced significant price volatility.
As a result of the hard work and dedication of
the team throughout the COVID-19 crisis, we were ready
to assist our dental and medical customers, many of whom were
subject to work restrictions and faced severe challenges, as they returned
to their offices to provide safe, quality clinical
care,” said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry
Schein.
“The strong rebound
in sales that began late in the second quarter continued into the third quarter, with growth over the
prior year driven by sales
of PPE and COVID-19-related products.
This growth, coupled with the various actions we took earlier in the year
to reduce
operating expenses, resulted in diluted EPS that grew 8.8% on a GAAP
basis and 14.4% on a non-GAAP basis.
Operating
margin was primarily negatively impacted by significant inventory cost adjustments
associated with PPE and COVID-19
related products, offset by lower expenses.
Most of the temporary expense-reduction initiatives have now ended, and
although we expect PPE and COVID-19-related product sales to positively
impact dental and medical consumable
merchandise sales into the future, we expect overall sales growth to
moderate from the third quarter.
“We remain committed to the well-being of Team Schein and our disciplined strategy that is focused on the success
of our customers,
helping practitioners to efficiently manage their practices while providing
quality care, as the driver of
long-term profitable growth of the company.
Given the challenging macro environment that started with the onset of the
pandemic, earlier this year we paused our long-standing program
of strategic acquisitions.
Yet
as global business conditions
have improved, we will resume these activities.
We now have significant opportunities to allocate capital in support of our
strategic plan, with the goal of maintaining a strong balance sheet and increasing
operating cash flow over time,” said Mr.
Bergman.
Dental sales for the third quarter of 2020 of $1.6 billion increased 6.7%
versus the prior year. In local currencies,
internally generated sales increased 6.5% with 0.1% growth from acquisitions
and 0.1% growth related to foreign currency
exchange. The 6.5%
internal growth in local currencies included an increase of 6.3% in
North America and an
increase of
6.9% internationally.
In North America, dental consumable merchandise internal sales in
local currencies increased 8.1% and dental
equipment internal sales in local currencies increased 0.2%. Internationally, dental consumable merchandise internal
sales in
local currencies increased 11.1%
and dental equipment internal sales in local currencies declined 6.9%.
“Customer demand for PPE and COVID-19-related products increased as patients
began to return to dental practices
globally, resulting in strong consumable merchandise sales growth. While recent growth in COVID-19 cases and infection
rates are creating renewed uncertainty in certain geographies, the current
global dental end markets
continue to improve
overall and are generally stable,” noted Mr. Bergman.
Medical sales for the third quarter of 2020 of $1.0 billion increased 27.8%
compared to the same period last year,
consisting of 27.7% growth in local currencies and 0.1% growth related
to foreign currency exchange.
There was no
acquisition growth in the quarter.
-3-
more
“Medical sales reached $1.0 billion for the first time this quarter, with growth driven by strong demand
for PPE and
COVID-19-related products,” remarked Mr. Bergman. “Whereas during the first months of the pandemic COVID-19
test
solutions were being allocated primarily to the federal government
for distribution, we are now securing improved access to
these products.
As we move into 2021,
we expect testing solution availability for practitioners to continue
to improve as more
tests are approved and as further allocation to the private sector markets
occurs in line with manufacturing capacity
increases.”
Technology and Value
-Added Services sales from continuing operations of $138.4
million increased 0.7%
versus the
prior year. The 0.7% increase included a 1.3%
decline in internal growth in local currencies, offset by 1.6% growth from
acquisitions
and 0.4% growth related to foreign currency
exchange.
“The slight decline in Technology and Value
-Added Services internal sales in local currencies was impacted by
lower than historical patient flow, which resulted in lower Henry Schein One transactional revenue. In addition, our financial
services revenue was negatively impacted by lower equipment sales volume,”
said Mr. Bergman.
Year
-to-Date Financial Results
Net sales from continuing operations for the first nine months
of 2020 were $7.0 billion, a decrease of 5.0%
compared with the first nine months of 2019. In local currencies, internally
generated sales decreased 5.1%. Changes in
foreign currency exchange resulted in a 0.6% decline in sales, while
acquisitions contributed 0.7% growth.
GAAP net income attributable to Henry Schein, Inc. from
continuing operations for the first nine months of 2020
was $260.9 million, or $1.82 per diluted share, compared with GAAP
net income from continuing operations for the first
nine months of 2019 of $370.1 million, or $2.47 per diluted share. Non-GAAP
net income from continuing operations for the
first nine months of 2020 was $281.7 million, or $1.97 per diluted share,
compared with non-GAAP net income from
continuing operations for the first nine months of 2019 of $380.6 million,
or $2.54 per diluted share. Non-GAAP results for
the first nine months of 2020 and 2019
exclude certain items noted in Exhibit B, which provides a reconciliation
of GAAP
net income from continuing operations and diluted EPS from
continuing operations to non-GAAP net income and diluted
EPS from continuing operations.
Financial Guidance
Due to the continued uncertainty surrounding the COVID-19
pandemic and its impact on business operations, Henry
Schein is not providing financial guidance at this time.
Third Quarter 2020 Conference Call Webcast
The Company will hold a conference call to discuss third quarter 2020 financial
results today, beginning at 10:00
a.m. Eastern time. Individual investors are invited to listen to the conference call
through Henry Schein’s website by visiting
www.henryschein.com/IRwebcasts
. In addition, a replay will be available beginning shortly
after the call has ended.
-4-
more
About Henry Schein, Inc.
Henry Schein, Inc. (Nasdaq: HSIC) is a solutions company for health care professionals
powered by a network of
people and technology. With more than 19,000
Team Schein Members
worldwide, the Company's network of trusted
advisors provides more than 1 million customers globally with more
than 300 valued solutions that improve operational
success and clinical outcomes. Our Business, Clinical, Technology, and Supply Chain solutions help office-based
dental
and
medical
practitioners work more efficiently so they can provide quality care more effectively. These solutions also
support
dental laboratories
,
government and institutional health care clinics
, as well as other alternate care sites.
Henry Schein operates through a centralized and automated
distribution network, with a selection of more than
120,000 branded products and Henry Schein private-brand products in
stock, as well as more than 180,000 additional
products available as special-order items.
A FORTUNE 500 Company and a member of the S&P 500® index, Henry Schein is headquartered in Melville,
N.Y.,
and has operations or affiliates in 31 countries. The Company's sales from continuing
operations reached $10.0
billion in 2019, and have grown at a compound annual rate of approximately
13 percent since Henry Schein became a public
company in 1995.
For more information, visit Henry Schein at
www.henryschein.com
,
Facebook.com/HenrySchein
,
and
@HenrySchein on Twitter
.
Cautionary Note Regarding Forward-Looking Statements and Use
of Non-GAAP Financial Information
In accordance with the "Safe Harbor" provisions of the Private Securities Litigation
Reform Act of 1995, we provide
the following cautionary remarks regarding important factors that, among
others, could cause future results to differ
materially from the forward-looking statements, expectations and assumptions
expressed or implied herein.
All forward-
looking statements made by us are subject to risks and uncertainties
and are not guarantees of future performance.
These
forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause our actual
results, performance and achievements or industry results to be materially
different from any future results, performance or
achievements expressed or implied by such forward-looking
statements.
These statements include EPS guidance and are
generally identified by the use of such terms as "may," "could," "expect," "intend," "believe," "plan," "estimate," "forecast,"
"project," "anticipate,"
“to be,” “to make” or other comparable terms. Forward looking
statements include the overall impact
of the Novel Coronavirus Disease 2019 (COVID-19)
on the Company, its results of operations, liquidity, and financial
condition (including any estimates of the percentage impact on these items),
the rate and consistency with which dental and
other practices resume normal operations in the United States and internationally,
expectations regarding PPE and other
COVID-19 related product sales and inventory levels and whether one or
more resurgences
of the virus will adversely impact
the resumption of normal operations,
as well as more generally current expectations regarding
performance in current and
future periods.
Forward looking
statements also include the Company’s ability to make additional testing available, the nature
of those tests and the number of tests intended to be made available and the
timing for availability, the nature of the target
market, as well as the efficacy or relative efficacy of the test results given that the test efficacy has not been,
or will not have
been, independently verified under normal FDA procedures. A full discussion
of our operations and financial condition,
status of litigation matters, including factors that may affect our business and future
prospects, is contained in documents we
have filed with the United States Securities and Exchange Commission, or
SEC, and will be contained in all subsequent
periodic filings we make with the SEC. These documents identify
in detail important risk factors that could cause our actual
performance to differ materially from current expectations.
Risk factors and uncertainties that could cause actual results to differ materially
from current and historical results
include, but are not limited to: effects of a highly competitive and consolidating
market; increased competition by third party
online commerce sites; our dependence on third parties for the manufacture
and supply of our products; our dependence upon
-5-
more
sales personnel, customers, suppliers and manufacturers; our dependence on
our senior management; fluctuations in quarterly
earnings; risks from expansion of customer purchasing power and multi-tiered
costing structures; increases in shipping costs
for our products or other service issues with our third-party shippers;
general global macro-economic conditions; risks
associated with currency fluctuations; risks associated with political and economic
uncertainty; disruptions in financial
markets; volatility of the market price of our common stock; changes
in the health care industry; implementation of health
care laws; failure to comply with regulatory requirements and data privacy
laws; risks associated with our global operations;
risks associated with COVID-19, as well as other disease outbreaks,
epidemics, pandemics, or similar wide spread public
health concerns and other natural disasters;
risks associated with the United Kingdom’s withdrawal from the European
Union; transitional challenges associated with acquisitions, dispositions
and joint ventures, including the failure to achieve
anticipated synergies/benefits; financial and tax risks associated with acquisitions,
dispositions and joint ventures; litigation
risks; new or unanticipated litigation developments and the status of
litigation matters; the dependence on our continued
product development, technical support and successful marketing
in the technology segment; our dependence on third parties
for certain technologically advanced components; risks from
disruption to our information systems; cyberattacks or other
privacy or data security breaches; certain provisions in our governing
documents that may discourage third-party acquisitions
of us; and changes in tax legislation. The order in which these factors appear
should not be construed to indicate their relative
importance or priority.
We caution that these factors may not be exhaustive and that many of these factors are beyond our ability to control
or predict. Accordingly, any forward-looking statements contained herein should not be relied upon as a prediction of
actual
results. We undertake no duty and have no obligation to update forward-looking statements.
Included within the press release are non-GAAP financial measures that supplement
the Company’s Consolidated
Statements of Income prepared under generally accepted accounting
principles (GAAP).
These non-GAAP financial
measures adjust the Company’s actual results prepared under GAAP to exclude certain items.
In the schedules attached to
this press release, the non-GAAP measures have been reconciled to and should
be considered together with the Consolidated
Statements of Income.
Management believes that non-GAAP financial measures provide investors
with useful supplemental
information about the financial performance of our business, enable comparison
of financial results between periods where
certain items may vary independent of business performance and allow
for greater transparency with respect to key metrics
used by management in operating our business. These non-GAAP
financial measures are presented solely for informational
and comparative purposes and should not be regarded as a replacement for corresponding,
similarly captioned, GAAP
measures.
CONTACTS: Investors
Steven Paladino
Executive Vice President and Chief Financial Officer
steven.paladino@henryschein.com
(631) 843-5500
Carolynne Borders
Vice President, Investor Relations
carolynne.borders@henryschein.com
(631) 390-8105
Media
Ann Marie Gothard
Vice President, Corporate Media Relations
annmarie.gothard@henryschein.com
(631) 390-8169
(TABLES TO FOLLOW)
-6-
more
HENRY SCHEIN, INC.
CONSOLIDATED STATEMENTS
OF INCOME
(in thousands, except per share data)
(unaudited)
Three Months Ended
Nine Months Ended
September 26,
September 28,
September 26,
September 28,
2020
2019
2020
2019
Net sales
$
2,840,146
$
2,508,767
$
6,953,416
$
7,316,862
Cost of sales
2,085,847
1,747,600
4,998,784
5,036,574
Gross profit
754,299
761,167
1,954,632
2,280,288
Operating expenses:
Selling, general and administrative
559,636
574,771
1,572,816
1,742,597
Restructuring costs (credits)
6,992
(802)
27,713
15,764
Operating income
187,671
187,198
354,103
521,927
Other income (expense):
Interest income
2,294
3,943
7,481
12,368
Interest expense
(11,111)
(12,373)
(29,409)
(41,459)
Other, net
(1,699)
(177)
(2,210)
(2,012)
Income from continuing operations before taxes,
equity in earnings of affiliates and noncontrolling interests
177,155
178,591
329,965
490,824
Income taxes
(29,005)
(41,964)
(65,965)
(117,326)
Equity in earnings of affiliates
3,663
6,585
7,808
14,771
Net income from continuing operations
151,813
143,212
271,808
388,269
Income (loss) from discontinued operations, net of tax
(29)
5,641
274
(5,576)
Net income
151,784
148,853
272,082
382,693
Less: Net income attributable to noncontrolling interests
(10,087)
(8,296)
(10,921)
(18,187)
Plus: Net loss attributable to noncontrolling interests
from discontinued operations
-
-
-
366
Net income attributable to Henry Schein, Inc.
$
141,697
$
140,557
$
261,161
$
364,872
Amounts attributable to Henry Schein Inc.:
Continuing operations
$
141,726
$
134,916
$
260,887
$
370,082
Discontinued operations
(29)
5,641
274
(5,210)
Net income attributable to Henry Schein, Inc.
$
141,697
$
140,557
$
261,161
$
364,872
Earnings per share from continuing operations attributable
to Henry Schein, Inc.:
Basic
$
1.00
$
0.92
$
1.83
$
2.49
Diluted
$
0.99
$
0.91
$
1.82
$
2.47
Earnings (loss) per share from discontinued operations
attributable to Henry Schein, Inc.:
Basic
$
-
$
0.04
$
-
$
(0.04)
Diluted
$
-
$
0.04
$
-
$
(0.04)
Earnings per share attributable to Henry Schein, Inc.:
Basic
$
1.00
$
0.96
$
1.83
$
2.46
Diluted
$
0.99
$
0.95
$
1.82
$
2.43
Weighted-average common
shares outstanding:
Basic
142,362
147,136
142,553
148,603
Diluted
143,091
148,575
143,308
149,920
-7-
more
HENRY SCHEIN, INC.
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share and per share data)
September 26,
December 28,
2020
2019
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
533,495
$
106,097
Accounts receivable, net of reserves of $86,371 and $60,002
1,407,676
1,246,246
Inventories, net
1,463,434
1,428,799
Prepaid expenses and other
464,645
445,360
Total current assets
3,869,250
3,226,502
Property and equipment, net
334,954
329,645
Operating lease right-of-use assets, net
249,895
231,662
Goodwill
2,488,962
2,462,495
Other intangibles, net
510,395
572,878
Investments and other
356,439
327,919
Total assets
$
7,809,895
$
7,151,101
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
1,006,958
$
880,266
Bank credit lines
507,372
23,975
Current maturities of long-term debt
110,015
109,849
Operating lease liabilities
62,914
65,349
Accrued expenses:
Payroll and related
250,365
265,206
Taxes
138,196
165,171
Other
527,987
528,553
Total current liabilities
2,603,807
2,038,369
Long-term debt
515,357
622,908
Deferred income taxes
32,408
64,989
Operating lease liabilities
200,611
176,267
Other liabilities
370,745
331,173
Total liabilities
3,722,928
3,233,706
Redeemable noncontrolling interests
294,700
287,258
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
none outstanding
-
-
Common stock, $.01 par value, 480,000,000 shares authorized,
142,456,318 outstanding on September 26, 2020 and
143,353,459 outstanding on December 28, 2019
1,425
1,434
Additional paid-in capital
11,044
47,768
Retained earnings
3,314,136
3,116,215
Accumulated other comprehensive loss
(171,332)
(167,373)
Total Henry Schein, Inc. stockholders' equity
3,155,273
2,998,044
Noncontrolling interests
636,994
632,093
Total stockholders' equity
3,792,267
3,630,137
Total liabilities, redeemable noncontrolling
interests and stockholders' equity
$
7,809,895
$
7,151,101
-8-
more
HENRY SCHEIN, INC.
CONSOLIDATED STATEMENTS
OF CASH FLOWS
(in thousands, unaudited)
Three Months Ended
Nine Months Ended
September 26,
September 28,
September 26,
September 28,
2020
2019
2020
2019
Cash flows from operating activities:
Net income
$
151,784
$
148,853
$
272,082
$
382,693
Income (loss) from discontinued operations
(29)
5,641
274
(5,576)
Income from continuing operations
151,813
143,212
271,808
388,269
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
44,569
46,855
140,664
136,210
Stock-based compensation (credit) expense
5,710
13,338
(6,648)
33,110
Provision for losses on trade and other accounts receivable
5,832
3,600
34,590
7,576
Benefit from deferred income taxes
(15,322)
(5,752)
(48,193)
(3,468)
Equity in earnings of affiliates
(3,663)
(6,585)
(7,808)
(14,771)
Distributions from equity affiliates
5,833
6,556
10,053
67,913
Changes in unrecognized tax benefits
(19,745)
(900)
(18,365)
3,535
Other
4,567
(1,077)
4,794
(2,122)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable
(299,530)
(97,932)
(199,858)
(115,384)
Inventories
(39,530)
(11,710)
(25,830)
75,093
Other current assets
136,870
(8,250)
(51,746)
(70,348)
Accounts payable and accrued expenses
283,853
145,039
144,953
19,567
Net cash provided by operating activities from continuing operations
261,257
226,394
248,414
525,180
Net cash provided by (used in) operating activities from discontinued operations
75
5,641
648
(163,653)
Net cash provided by operating activities
261,332
232,035
249,062
361,527
Cash flows from investing activities:
Purchases of fixed assets
(7,211)
(18,248)
(37,799)
(48,956)
Payments related to equity investments and business acquisitions, net of cash acquired
(14,483)
(34,652)
(52,208)
(657,093)
Proceeds from sale of equity investment
-
-
12,000
10,500
Proceeds from (repayments to) loan to affiliate
278
580
(1,451)
16,448
Other
(2,899)
(3,486)
(14,498)
(12,248)
Net cash used in investing activities from continuing operations
(24,315)
(55,806)
(93,956)
(691,349)
Net cash used in investing activities from discontinued operations
-
-
-
(2,064)
Net cash used in investing activities
(24,315)
(55,806)
(93,956)
(693,413)
Cash flows from financing activities:
Net change in bank borrowings
4,437
(134,834)
484,139
(843,846)
Proceeds from issuance of long-term debt
-
-
501,421
741
Principal payments for long-term debt
(877)
(1,214)
(610,457)
(10,252)
Debt issuance costs
(28)
-
(3,683)
(391)
Debt extinguishment costs
(401)
-
(401)
-
Proceeds from issuance of stock upon exercise of stock options
-
-
-
34
Payments for repurchases of common stock
-
(98,218)
(73,789)
(325,000)
Payments for taxes related to shares withheld for employee taxes
(294)
(224)
(14,007)
(10,751)
Distribution received related to Animal Health Spin-off
-
-
-
1,120,000
Proceeds related to Animal Health Share Sale
-
-
-
361,090
Proceeds from (distributions to) noncontrolling shareholders
(529)
4,031
(3,995)
53,429
Acquisitions of noncontrolling interests in subsidiaries
-
(88)
(14,934)
(2,358)
Proceeds from (payments to) Henry Schein Animal Health Business
75
46,400
139
(166,557)
Net cash provided by (used in) financing activities from continuing operations
2,383
(184,147)
264,433
176,139
Net cash provided by (used in) financing activities from discontinued operations
(75)
(5,641)
(648)
144,633
Net cash provided by (used in) financing activities
2,308
(189,788)
263,785
320,772
Effect of exchange rate changes on cash and cash equivalents from
continuing operations
(1,940)
3,891
8,507
8,401
Effect of exchange rate changes on cash and cash equivalents from
discontinued operations
-
-
-
(2,240)
Net change in cash and cash equivalents from continuing operations
237,385
(9,668)
427,398
18,371
Net change in cash and cash equivalents from discontinued operations
-
-
-
(23,324)
Cash and cash equivalents, beginning of period
296,110
84,924
106,097
56,885
Cash and cash equivalents, end of period
$
533,495
$
75,256
$
533,495
$
75,256
-9-
more
Exhibit A - QTD Sales
Henry Schein, Inc.
2020 Third Quarter
Sales Summary
(in thousands)
(unaudited)
Q3 2020 over Q3 2019
Global
Q3 2020
Q3 2019
Total Sales
Growth
Foreign
Exchange
Growth
Local
Currency
Growth
Acquisition
Growth
Local
Internal
Growth
Dental
$
1,649,853
$
1,545,981
6.7%
0.1%
6.6%
0.1%
6.5%
Medical
1,027,146
803,709
27.8%
0.1%
27.7%
0.0%
27.7%
Total Health Care Distribution
2,676,999
2,349,690
13.9%
0.1%
13.8%
0.0%
13.8%
Technology and value-added services
138,355
137,334
0.7%
0.4%
0.3%
1.6%
-1.3%
Total excluding Corporate TSA Revenue
2,815,354
2,487,024
13.2%
0.1%
13.1%
0.2%
12.9%
Corporate TSA revenues (1)
24,792
21,743
14.0%
0.0%
14.0%
0.0%
14.0%
Total Global
$
2,840,146
$
2,508,767
13.2%
0.1%
13.1%
0.1%
13.0%
North America
Q3 2020
Q3 2019
Total Sales
Growth
Foreign
Exchange
Growth
Local
Currency
Growth
Acquisition
Growth
Local
Internal
Growth
Dental
$
1,008,836
$
951,792
6.0%
-0.1%
6.1%
-0.2%
6.3%
Medical
1,002,741
784,349
27.8%
0.0%
27.8%
0.0%
27.8%
Total Health Care Distribution
2,011,577
1,736,141
15.9%
0.0%
15.9%
-0.2%
16.1%
Technology and value-added services
120,949
120,199
0.6%
0.0%
0.6%
0.8%
-0.2%
Total excluding Corporate TSA Revenue
2,132,526
1,856,340
14.9%
0.0%
14.9%
-0.1%
15.0%
Corporate TSA revenues (1)
-
1,077
n/a
n/a
n/a
n/a
n/a
Total North America
$
2,132,526
$
1,857,417
14.8%
-0.1%
14.9%
0.0%
14.9%
International
Q3 2020
Q3 2019
Total Sales
Growth
Foreign
Exchange
Growth
Local
Currency
Growth
Acquisition
Growth
Local
Internal
Growth
Dental
$
641,017
$
594,189
7.9%
0.5%
7.4%
0.5%
6.9%
Medical
24,405
19,360
26.1%
5.4%
20.7%
0.0%
20.7%
Total Health Care Distribution
665,422
613,549
8.5%
0.6%
7.9%
0.5%
7.4%
Technology and value-added services
17,406
17,135
1.6%
3.9%
-2.3%
7.2%
-9.5%
Total excluding Corporate TSA Revenue
682,828
630,684
8.3%
0.7%
7.6%
0.7%
6.9%
Corporate TSA revenues (1)
24,792
20,666
20.0%
0.0%
20.0%
0.0%
20.0%
Total International
$
707,620
$
651,350
8.6%
0.6%
8.0%
0.7%
7.3%
(1)
Corporate TSA revenues represents sales of certain products
to Covetrus under the transition services agreement entered into
in connection with the Animal
Health spin-off, which has been substantially completed as of October 2020.
Note: Certain prior period amounts have been reclassified to conform
to the current period presentation.
-10-
more
Exhibit A - YTD Sales
Henry Schein, Inc.
2020 Third Quarter Year
-to-Date
Sales Summary
(in thousands)
(unaudited)
Q3 2020 Year
-to Date over Q3 2019 Year
-to-Date
Global
Q3 2020
Q3 2019
Total Sales
Growth
Foreign
Exchange
Growth
Local
Currency
Growth
Acquisition
Growth
Local
Internal
Growth
Dental
$
4,066,221
$
4,693,711
-13.4%
-1.0%
-12.4%
0.3%
-12.7%
Medical
2,445,644
2,184,927
11.9%
0.0%
11.9%
1.1%
10.8%
Total Health Care Distribution
6,511,865
6,878,638
-5.3%
-0.6%
-4.7%
0.6%
-5.3%
Technology and value-added services
375,547
377,983
-0.6%
0.0%
-0.6%
3.6%
-4.2%
Total excluding Corporate TSA Revenue
6,887,412
7,256,621
-5.1%
-0.6%
-4.5%
0.7%
-5.2%
Corporate TSA revenues (1)
66,004
60,241
9.6%
0.0%
9.6%
0.0%
9.6%
Total Global
$
6,953,416
$
7,316,862
-5.0%
-0.6%
-4.4%
0.7%
-5.1%
North America
Q3 2020
Q3 2019
Total Sales
Growth
Foreign
Exchange
Growth
Local
Currency
Growth
Acquisition
Growth
Local
Internal
Growth
Dental
$
2,413,154
$
2,850,669
-15.3%
0.0%
-15.3%
-0.1%
-15.2%
Medical
2,377,357
2,125,002
11.9%
0.0%
11.9%
1.2%
10.7%
Total Health Care Distribution
4,790,511
4,975,671
-3.7%
0.0%
-3.7%
0.4%
-4.1%
Technology and value-added services
327,374
327,709
-0.1%
0.0%
-0.1%
3.1%
-3.2%
Total excluding Corporate TSA Revenue
5,117,885
5,303,380
-3.5%
0.0%
-3.5%
0.6%
-4.1%
Corporate TSA revenues (1)
-
4,098
n/a
n/a
n/a
n/a
n/a
Total North America
$
5,117,885
$
5,307,478
-3.6%
-0.1%
-3.5%
0.7%
-4.2%
International
Q3 2020
Q3 2019
Total Sales
Growth
Foreign
Exchange
Growth
Local
Currency
Growth
Acquisition
Growth
Local
Internal
Growth
Dental
$
1,653,067
$
1,843,042
-10.3%
-2.2%
-8.1%
0.8%
-8.9%
Medical
68,287
59,925
14.0%
-0.1%
14.1%
0.0%
14.1%
Total Health Care Distribution
1,721,354
1,902,967
-9.5%
-2.1%
-7.4%
0.8%
-8.2%
Technology and value-added services
48,173
50,274
-4.2%
-0.5%
-3.7%
7.1%
-10.8%
Total excluding Corporate TSA Revenue
1,769,527
1,953,241
-9.4%
-2.1%
-7.3%
1.0%
-8.3%
Corporate TSA revenues (1)
66,004
56,143
17.6%
0.0%
17.6%
0.0%
17.6%
Total International
$
1,835,531
$
2,009,384
-8.7%
-2.1%
-6.6%
0.9%
-7.5%
(1)
Corporate TSA revenues represents sales of certain products
to Covetrus under the transition services agreement entered into
in connection with the Animal
Health spin-off, which has been substantially completed as of October 2020.
Note: Certain prior period amounts have been reclassified to conform
to the current period presentation.
-11-
Exhibit B
Henry Schein, Inc.
2020 Third Quarter and Year-to-Date
Reconciliation of reported GAAP net income from continuing operations and
diluted EPS from continuing operations attributable to Henry Schein, Inc.
to non-GAAP net income from continuing operations and
diluted EPS from continuing operations attributable to Henry Schein, Inc.
(in thousands, except per share data)
(unaudited)
Third Quarter
Year
-to-Date
%
%
2020
2019
Growth
2020
2019
Growth
Net income from continuing operations attributable
to Henry Schein, Inc.
$
141,726
$
134,916
5.0
%
$
260,887
$
370,082
(29.5)
%
Diluted EPS from continuing operations attributable
to Henry Schein, Inc.
$
0.99
$
0.91
8.8
%
$
1.82
$
2.47
(26.3)
%
Non-GAAP Adjustments
Restructuring costs (credits) - Pre-tax (1)
$
6,992
$
(802)
$
27,713
$
15,764
Income tax expense (benefit) for restructuring costs (1)
(1,748)
201
(6,928)
(3,941)
Tax credit related
to Animal Health spin-off (2)
-
-
-
(1,333)
Total
non-GAAP adjustments to Net Income from
continuing operations
$
5,244
$
(601)
$
20,785
$
10,490
Non-GAAP adjustments to diluted EPS from
continuing operations
0.04
(0.01)
0.15
0.07
Non-GAAP Net income from continuing operations
attributable to Henry Schein, Inc.
$
146,970
$
134,315
9.4
%
$
281,672
$
380,572
(26.0)
%
Non-GAAP diluted EPS from continuing operations
attributable to Henry Schein, Inc.
$
1.03
$
0.90
14.4
%
$
1.97
$
2.54
(22.4)
%
Management believes that non-GAAP financial measures
provide investors with useful supplemental
information about the financial
performance of our business, enable comparison of financial results
between periods where certain
items may vary independent of
business performance and allow for greater
transparency with respect
to key metrics used by management in operating
our business.
These non-GAAP financial measures are
presented solely for informational and
comparative purposes and should not be regarded
as a
replacement for corresponding,
similarly captioned, GAAP measures.
Earnings per share numbers may
not sum due to rounding.
(1)
Represents Q3 2020 restructuring costs of $6,992,
net of $1,748 tax benefit, resulting in an after-tax effect
of $5,244, and YTD 2020
restructuring costs of 27,713, net of $6,928 tax benefit, resulting in an
after-tax effect of $20,785.
Represents Q3 2019 restructuring
credits of $802,
net of $201 tax expense, resulting in an after-tax effect of $601,
and YTD 2019 restructuring costs of $15,764 net of
$3,941 tax benefit, resulting in an after-tax effect of $11,823.
(2)
Represents a change in estimate of $1,333 to income tax expense related
to a one-time tax expense recorded in Q4 2018 as a result of
a reorganization of legal entities completed in preparation
for the Animal Health spin-off, which was completed
on February 7, 2019.