Henry Schein posts strong 3Q results, plans to trim workforce
"Growth in net sales was the highest we have reported in more than three years,” Stanley M. Bergman, chairman and chief executive of Melville-based Henry Schein, said on Thursday, Nov. 6, 2014, in a statement. The photo is from Feb. 11, 2014. Credit: Bruce Gilbert
Health-care products distributor Henry Schein Inc., Long Island's largest public company based on revenue, Thursday posted strong third-quarter results and said that it will trim 2 percent to 3 percent from its global workforce of about 17,000.
Chairman and CEO Stanley M. Bergman said the restructuring, part of the 2015-2017 strategic plan, would free capital to invest in new markets, such as South Africa and Brazil, and fast-growing businesses like software and preventive care for the world's growing middle class.
Melville-based Henry Schein, which sells products to the offices of dental, medical and veterinary practitioners in 28 countries, employs about 1,000 people on Long Island.
The company said that no decisions have been made about the restructuring's impact on particular locations. Chief financial officer Steven Paladino said details on the plan, which will include consolidating facilities and exiting leases, would emerge in the second half of 2015.
"Henry Schein has a long history of reinvention," Bergman said of the Fortune 500 company that began in 1932 as a pharmacy in Queens. "We can do anything, but we can't do everything," he said of the need to allocate resources to growth areas.
Third-quarter net income rose 7.8 percent versus the year-ago quarter to $114.8 million, and earnings per diluted share climbed 9.8 percent to $1.34. Net sales grew 11.7 percent to $2.6 billion.
Net sales growth was the highest reported by Henry Schein in more than three years, Bergman said.
Investors bid Henry Schein shares 6.6 percent higher following the earnings release to close at $130.27 Thursday.
The company also narrowed its 2014 financial guidance for diluted earnings per share, projecting $5.36 to $5.39. Previously Schein had forecast earnings per share of $5.33 to $5.39. The company also issued 2015 diluted earnings per share guidance of $5.90 to $6, excluding restructuring costs estimated at about 29 to 33 cents per diluted share.
For the third quarter, dental sales increased 9.7 percent to $1.3 billion, and animal health sales jumped 18 percent to $758 million. Bergman said gains in the animal health unit were fueled by internal growth and acquisitions.
Medical sales increased 8 percent to $480.3 million.
In a research note, Robert W. Baird & Co. analyst Jeff Johnson said the company's organic growth for the third quarter was 6.4 percent, a seven-year high that exceeded forecasts.
Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.
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