Back to top

Image: Bigstock

HSIC Q3 Earnings Top, Margins Down, Stock Gains in Premarket

Read MoreHide Full Article

Henry Schein, Inc. (HSIC - Free Report) registered adjusted earnings per share (EPS) of $1.22 in the third quarter of 2024, down 7.6% from the year-ago figure. However, the metric exceeded the Zacks Consensus Estimate by 5.2%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Following the earnings announcement, HSIC stock rose 0.03% at pre-market trading today.

HSIC’s Q3 Revenues in Detail

Henry Schein reported net sales of $3.17 billion, up a marginal 0.4% year over year. The metric lagged the Zacks Consensus Estimate by 2.2%. 

This reflects a 3.2% sales growth from acquisitions, a 0.2% sales decrease from unfavorable currency exchange, a 0.4% sales decrease from lower sales of personal protective equipment, primarily the result of lower glove pricing, and the slow pace of recovery from the cyber incident late last year.

On a geographic basis, the company recorded sales of $2.36 billion in North America, down 0.4% year over year. However, the figure missed our model’s projection of $2.39 billion.

Sales totaled $819 million in the International market, up 2.5% year over year. Our model’s projection for the metric was $852.7 million.  

HSIC’s Segmental Analysis

Henry Schein derives revenues from two operating segments — Health Care Distribution (includes the global Dental and Medical businesses), and Technology and Value-Added Services.

In the third quarter, the company recorded $1.85 billion in global Dental sales, down 1.6% year over year. This compares with our model’s projection of $1.9 billion.  

Global Medical revenues improved 2.9% year over year to $1.10 billion. Our model’s forecast for the metric was $1.10 billion. 

Revenues from global Technology and Value-Added Services rose 5.1% to $221 million. Our model’s projection for the metric was $225.9 million.

Margin Trend

In the reported quarter, the gross profit totaled $993 million, reflecting a 0.2% decrease year over year. The gross margin contracted 18 basis points (bps) to 31.3% due to a 0.6% rise in the cost of sales.

SG&A expenses declined 0.1% to $724 million in the quarter under review. The adjusted operating profit was $269 million compared with $270 million in the year-ago period. The adjusted operating margin contracted 6 bps year over year to 8.5%.

Liquidity Position

Henry Schein exited the third quarter with cash and cash equivalents of $126 million compared with $138 million at the end of the second quarter.  

Cumulative net cash provided by operating activities at the end of the third quarter was $644 million compared with the year-ago figure of $532 million.

During the reported quarter, HSIC repurchased nearly 2.0 million shares of its common stock at an average price of $69.09 per share for a total of approximately $135 million. The company had approximately $455 million authorized and available for future stock repurchases.

HSIC’s 2024 Guidance

Henry Schein provided an updated financial outlook for 2024. 

The company expects adjusted EPS to be in the range of $4.74-$4.82 (previously $4.70-$4.82). The revised figure reflects 5-7% growth from the 2023 reported figure.  The Zacks Consensus Estimate for the metric is currently pegged at $4.74.

Henry Schein, Inc. Price, Consensus and EPS Surprise

Henry Schein expects 2024 sales growth of nearly 4-5% (previously 4-6%) compared with the year-ago figure.  The Zacks Consensus Estimate for revenues is currently pegged at $12.90 billion.

Our Take

Henry Schein exited the third quarter of 2024 on a mixed note, with earnings beating estimates but revenues missing the same. Meanwhile, EPS also decreased on a year-over-year basis. The contraction of both margins adds to the worry. 

On a positive note, Henry Schein experienced continued successful implementation of the BOLD+1 Strategic Plan, resulting in growth and efficiency throughout the business. The company’s dental equipment business is also showing ongoing stability in North America and increased investment by customers in Europe, Australia and New Zealand. Implant and endodontic products experienced growth in Europe, Brazil and North America following the successful launch of the BioHorizons Tapered Pro Conical implant in the United States. 

Under Henry Schein’s new restructuring plan, actions approved in the third quarter are estimated to provide more than $50 million in annual run-rate savings, indicating strong progress toward its goal of achieving $75-$100 million in annual run-rate savings by the end of 2025.

HSIC’s Zacks Rank & Key Picks

HSIC currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Phibro Animal Health (PAHC - Free Report) , Veracyte (VCYT - Free Report) and HealthEquity (HQY - Free Report) .

Phibro Animal Health reported fourth-quarter fiscal 2024 adjusted earnings of 41 cents per share, which topped the Zacks Consensus Estimate by 20.6%. Revenues of $273.2 million beat the Zacks Consensus Estimate by 4.1%. PAHC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

PAHC’s fiscal 2025 earnings are expected to surge 31.9% compared with the industry’s 11.6% growth. The company’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 4.1%.

Veracyte, sporting a Zacks Rank #1 at present, posted second-quarter 2024 earnings of 30 cents per share, which beat the Zacks Consensus Estimate of a loss of 3 cents. Revenues of $114.4 million surpassed the Zacks Consensus Estimate by 14%.

VCYT has an estimated earnings growth rate of 115.7% for 2024 compared with the industry’s 13.7%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 328.4%.

HealthEquity, carrying a Zacks Rank #2 (Buy) at present, reported a second-quarter fiscal 2025 adjusted earnings of 86 cents per share, which surpassed the Zacks Consensus Estimate by 22.9%. Revenues of $299.9 million topped the Zacks Consensus Estimate by 5.4%.

HQY has an estimated long-term earnings growth rate of 28.2% compared with the industry’s 13.4%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 19.8%.

Published in