Henry Schein, Inc. HSIC registered adjusted earnings per share (EPS) of 66 cents in the fourth quarter of 2023, down 51.1% from the year-ago period’s adjusted EPS. The metric also lagged the Zacks Consensus Estimate by 7%.
For the full year, adjusted earnings were $4.50 per share, down 16.4% from the year-ago period’s levels and also missed the Zacks Consensus Estimate by 1.3%.
Revenues in Detail
Henry Schein reported net sales of $3.02 billion in the fourth quarter, down 10.5% year over year. The metric lagged the Zacks Consensus Estimate by 2%. The year-over-year decrease reflects an internal sales decline of 12%, calculated at constant foreign exchange rates, excluding sales from acquisitions and adjusting for the extra week in 2022.
Henry Schein, Inc. Price, Consensus and EPS Surprise
Henry Schein, Inc. Price, Consensus and EPS Surprise
Henry Schein, Inc. price-consensus-eps-surprise-chart | Henry Schein, Inc. Quote
Total revenues in 2023 were $12.34 billion, down 2.4% from the year-ago period’s levels. The figure lagged the Zacks Consensus Estimate by 0.5%.
On a geographic basis, the company recorded sales of $2.22 billion in North America, down 14.5% year over year. This surpassed our model’s projected decline of 11.7% year over year.
Sales totaled $801 million in the International market, up 2.8% year over year. Our model projected sales to improve 1.1%.
Segmental Analysis
Henry Schein derives revenues from three operating segments — Dental, Medical, and Technology and Value-Added Services.
In the fourth quarter, the company recorded $1.80 billion in global Dental sales, down 10.2% year over year. This compares with our model’s projected decline of 7.2%.
Global Medical revenues declined 14.8% year over year to $1.00 billion. Our model projected the segment’s revenues to decrease 14.6% from last year’s comparable figure.
Revenues from global Technology and Value-Added Services rose 13.4% to $212 million. Our model’s projected year-over-year improvement was 10.9%.
Margin Trend
In the reported quarter, the gross profit totaled $925 million, reflecting a 7.4% decrease year over year. However, the gross margin expanded 102 basis points (bps) to 30.7% on an 11.8% decrease in the cost of sales.
SG&A expenses rose 6% to $807 million in the quarter under review. The adjusted operating profit in the fourth quarter was $118 million compared with $238 million in the year-ago period. Meanwhile, the adjusted operating margin contracted 315 bps year over year to 3.9%.
Liquidity Position
Henry Schein exited the fourth quarter of 2023 with combined cash and cash equivalents of $171 million compared with $117 million at the end of 2022.
Cumulative net cash provided by operating activities at the end of the fourth quarter was $500 million compared with the year-ago figure of $602 million.
HSIC repurchased nearly 692,000 shares of its common stock for $50 million during the quarter. The company had approximately $265 million authorized and available for future stock repurchases at the end of 2023.
2024 Guidance
Henry Schein initiated its financial outlook for 2024. The guidance assumes that present foreign currency exchange rates will generally prevail and end markets will remain consistent with current market conditions.
For 2024, the company expects adjusted EPS in the range of $5.00-$5.16, suggesting 11%-15% growth from the 2023 reported figure. The Zacks Consensus Estimate for the metric is currently pegged at $5.10.
Henry Schein expects 2024 sales growth of nearly 8%-12% compared with the reported figure in 2023. The Zacks Consensus Estimate for revenues is currently pegged at $12.91 billion.
Our Take
Henry Schein ended the fourth quarter of 2023 with both earnings and revenues missing estimates. The metrics were also down year over year. A contraction in the adjusted operating margin during the quarter is also discouraging.
Meanwhile, the performance reflected a solid recovery from the cybersecurity incident as well as strong growth in the Technology and Value-Added Services businesses. The company’s 2024 guidance underscores the stability of the underlying markets that it serves. HSIC will continue to execute its BOLD+1 Strategic Plan to deliver its financial goals.
Zacks Rank & Key Picks
Henry Schein currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space are Stryker Corporation SYK, Cencora, Inc. COR and Cardinal Health CAH.
Stryker, carrying a Zacks Rank #2 (Buy), reported a fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.
Cencora, carrying a Zacks Rank #2, reported a first-quarter fiscal 2024 adjusted EPS of $3.28, which beat the Zacks Consensus Estimate by 14.7%. Revenues of $72.3 billion outpaced the Zacks Consensus Estimate by 5.1%.
COR has an earnings yield of 5.75% compared with the industry’s 1.85%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 6.7%.
Cardinal Health, sporting a Zacks Rank #1, reported second-quarter fiscal 2024 adjusted earnings of $1.82, which beat the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion improved 11.6% on a year-over-year basis and also topped the Zacks Consensus Estimate by 1.1%.
CAH has a long-term estimated earnings growth rate of 15.3% compared with the industry’s 11.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%.
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