Henry Schein Reports Mixed Q3 Results Amid Cyber Recovery

According to a recent article published on Yahoo Finance, dental and medical supplies distributor Henry Schein has reported mixed third-quarter results for 2024. The company’s adjusted earnings per share reached $1.22, exceeding market expectations of $1.17, despite showing a 7.6% year-over-year decline. However, sales performance was slightly below projections, with revenue of $3.17 billion falling short of the anticipated $3.24 billion, though still representing a modest 0.4% increase.

Impact of External Factors

The company’s performance reflects various external influences, including a 3.2% boost from acquisitions. However, this was partially offset by currency exchange fluctuations and decreased sales of personal protective equipment (PPE), primarily attributed to lower glove pricing. The company continues to navigate the aftermath of a cyber incident from the previous year, which has affected its recovery pace.

Segment Performance Analysis

The report reveals varied performance across different segments. The global dental segment, which represents a significant portion of the business, experienced a 1.6% decline, with sales of $1.9 billion. The medical segment showed more positive momentum with a 2.9% increase, though internal sales declined by 4.8%, reaching $1.1 billion. The Technology and Value-Added Services division demonstrated growth of 5.1%, despite an internal decline of 1.1%.

Strategic Leadership Perspective

Stanley Bergman, Chairman of the Board and CEO, offered an optimistic view of the company’s market position. As quoted in the Benzinga article, he stated: “We believe we continued to steadily gain market share in our dental and medical distribution businesses following last year’s cyber incident. Our dental equipment business is showing ongoing stability in North America and increased investment by customers in Europe, Australia and New Zealand. Implant and endodontic products had good growth in Europe and Brazil, as well as North America following the successful launch of the BioHorizons Tapered Pro Conical implant in the U.S.”

Restructuring Initiatives and Future Outlook

The company has implemented a significant restructuring plan, investing $48 million in related costs during Q3 2024. This strategic initiative is expected to yield over $50 million in annual run-rate savings, with projected savings of $75 million to $100 million anticipated by the end of 2025.

Updated Financial Guidance

Addressing the company’s future prospects, Bergman expressed confidence in their strategic direction. According to his statement in the article: “Acquisitions made during our 2022 to 2024 strategic planning cycle, along with new product launches, are delivering strong financial results, and our restructuring plan is on target. We also continue to return capital to shareholders through our share repurchase program. As a result, we exceeded our financial expectations for the quarter, and so today we are increasing our non-GAAP EPS guidance.”

The company has adjusted its 2024 outlook, now projecting sales growth of 4-5%, a slight modification from the previous 4-6% forecast. Additionally, Henry Schein has refined its adjusted EPS guidance to $4.74-$4.82, maintaining the upper end of its previous range while raising the lower end.