When the worst news of your quarterly earnings report is you’re affirming your EPS guidance for the rest of the year, you know you’re doing fairly well.
“Fairly well” is a relative term, of course, and for Henry Schein Inc., it loosely translates to another quarter of rising revenues and improved per-share earnings.
Reporting Wednesday on the third quarter of its 2016 fiscal year, the Melville-based global healthcare products and services distributor noted impressive gains in net income ($133.7 million) and adjusted earnings-per-share ($1.68), up 4.7 percent and 8.4 percent, respectively, over reported numbers for 3Q FY2015.
Also soaring were the company’s third-quarter revenues ($2.86 billion), up 6.7 percent year-over-year to match analyst expectations. Henry Schein’s revenue growth rate did decline by 1 percent, however, with the international giant citing unfavorable foreign currency exchange rates.
Each of the company’s four operating segments – Dental, Medical, Animal Health and Technology and Value-Added Services – logged year-over-year gains for the quarter ended Sept. 30.
Henry Schein reported $1.3 billion in revenues from global Dental sales and $790.3 million in global Animal Health sales, up 5.1 percent and 7.9 percent, respectively, from 3Q FY2015. Worldwide Medical sales jumped 7.1 percent, to $639.6 million, while revenues from international Technology and Value-Added Services recorded a year-over-year spike of 16.7 percent, to $104.7 million.
The company finished its third quarter with cash and cash equivalents of $76.1 million, up from the $63.6 million it reported at the end of its second quarter (ended June 30), and a year-to-date net cash flow from operating activities of $350.9 million – a nearly 22 percent increase over the $288.5 million reported at the end of 3Q FY2015.
Among other quarterly highlights, the member of the S&P 500 and Nasdaq 100 indexes – and Long Island’s largest public company, as ranked by its $10.63 billion in reported 2015 revenues – in September announced its acquisition of Polish dental distributor Marrodent, which services about 10,000 dental offices across the central European nation.
Henry Schein now has operations or affiliations in 33 countries.
Although the numbers are glowing, the Fortune 500 company was measured in its self-assessment, noting it ended 3Q FY2016 “on a mixed note.” Among its concerns: a year-over-year decline in its operating margin – sales costs are rising, according to a company statement – and those ongoing foreign-currency fluctuations, leading Henry Schein to leave its EPS guidance unchanged for the remainder of 2016.
Discussing the company’s performance with investors Wednesday, CEO Stanley Bergman trumpeted “record financial results for the third quarter,” despite the foreign-exchange variations and the status-quo EPS guidance.
“We remain very pleased with the state of the company [and] our continued market-share growth around the world,” Bergman said. “We believe we are operating in very good markets.”
The CEO also offered a sneak peek at 2017, predicting 2017 diluted EPS with an annual growth rate of 17 to 19 percent (based on GAAP).