MELVILLE, N.Y., Nov. 4 /PRNewswire-FirstCall/ -- Henry Schein, Inc. , the largest provider of healthcare products and services to office-based practitioners, today reported record financial results for the quarter ended September 26, 2009.

Net sales for the third quarter of 2009 were $1.7 billion, an increase of 0.9% compared with the third quarter of 2008. This consists of a 3.1% decline related to foreign currency exchange and a 4.0% growth in local currencies. Excluding sales of seasonal influenza vaccines, which declined from last year's third quarter, net sales increased 3.7%, or 6.9% growth in local currencies (see Exhibit A for details of sales growth).

Income from continuing operations attributable to Henry Schein, Inc. for the third quarter of 2009 was $94.0 million or $1.03 per diluted share, an increase of 39.2% for both figures compared with the third quarter of 2008. Current and prior-year results include certain unusual items, most notably an overseas tax benefit in the 2009 quarter. Excluding these items, non-GAAP income from continuing operations was $72.9 million or $0.80 per share, an increase of 3.3% and 3.9%, respectively, compared with the third quarter of 2008 (see Exhibit B for reconciliation of GAAP income and EPS from continuing operations to non-GAAP income and EPS from continuing operations). When also excluding sales of seasonal influenza vaccines, which declined from last year's third quarter, non-GAAP diluted EPS from continuing operations increased approximately 18%.

"We are pleased to report net sales growth in local currencies of approximately 7% excluding sales of seasonal influenza vaccines, with solid increases in our Medical, International and Technology Groups," said Stanley M. Bergman, Chairman and Chief Executive Officer of Henry Schein. "A number of unusual items impacted our third quarter results in both the current and prior year. On a normalized basis excluding these items and sales of seasonal influenza vaccines, we are proud to report 18% growth in diluted EPS from continuing operations."

Dental Group sales of $622 million declined 3.0%, consisting of a 0.5% decline related to foreign currency exchange and a 2.5% decline in local currencies. The 2.5% decline in local currencies included 1.3% growth in Dental consumable merchandise sales and a 12.8% decline in Dental equipment sales and service revenues.

"We continue to believe that the market for Dental consumable merchandise has stabilized and, as expected, our decrease in sales of Dental equipment has improved from the previous quarter's rate of decline," commented Mr. Bergman.

Medical Group sales of $411 million declined 3.1%. Excluding sales of seasonal influenza vaccines, Medical Group sales increased 8.6%.

"During the third quarter we sold approximately 6.5 million doses of seasonal influenza vaccine, and as of today we have sold approximately 8.5 million doses for the year," said Mr. Bergman. "Sales growth of nearly 9% excluding seasonal influenza vaccine reflects strong sales of consumable products, as well as sales of products related to the treatment and prevention of the H1N1 virus."

International Group sales of $584 million increased 8.5%, consisting of an 8.4% decline related to foreign currency exchange and 16.9% growth in local currencies.

"We had double-digit local currency sales growth in our International dental, medical and veterinary businesses during the quarter," added Mr. Bergman.

Technology and Value-Added Services Group sales of $43 million increased 5.4% during the quarter, consisting of a 1.9% decline related to foreign currency exchange and 7.3% growth in local currencies.

"During the quarter we saw continued strong growth in electronic services, as well as the beneficial impact of the acquisition of a European veterinary software and practice management business," explained Mr. Bergman.

Year-to-Date Results

For the first nine months of 2009, net sales of $4.8 billion represent a decrease of 1.0% compared with the first nine months of 2008. This decrease includes a 5.9% decline related to foreign currency exchange and 4.9% growth in local currencies.

Income from continuing operations attributable to Henry Schein, Inc. for the first nine months of 2009 was $222.1 million or $2.45 per diluted share, an increase of 20.6% and 22.5%, respectively, compared with the first nine months of 2008. Excluding unusual items noted above, income from continuing operations attributable to Henry Schein, Inc. for the first nine months of 2009 was $203.8 million or $2.25 per diluted share, an increase of 8.8% and 10.3%, respectively, compared with the first nine months of 2008 (see Exhibit B for reconciliation of GAAP income and EPS from continuing operations to non-GAAP income and EPS from continuing operations).

2009 EPS Guidance

Henry Schein today updated 2009 financial guidance, as follows:

    --  Fourth quarter 2009 diluted EPS attributable to Henry Schein, Inc. is
        expected to be $0.89 to $0.91.
    --  2009 diluted EPS attributable to Henry Schein, Inc. is expected to be
        $3.14 to $3.16 excluding the unusual items included in Exhibit B.  This
        represents growth of approximately 8% compared with restated 2008
        results of $2.92, excluding charges related to the Lehman Brothers
        bankruptcy as well as restructuring costs.
    --  Guidance for 2009 diluted EPS attributable to Henry Schein, Inc. is for
        current continuing operations including completed or previously
        announced acquisitions, and does not include the impact of potential
        future acquisitions, if any.

2010 EPS Guidance

Henry Schein today introduced 2010 financial guidance, as follows:

    --  2010 diluted EPS attributable to Henry Schein, Inc. is expected to be
        $3.40 to $3.56, representing growth of 8% to 13% compared with the
        midpoint of 2009 guidance.
    --  Guidance for 2010 diluted EPS attributable to Henry Schein, Inc. is for
        current continuing operations including completed or previously
        announced acquisitions, and does not include the impact of potential
        future acquisitions, if any.

Third Quarter Conference Call Webcast

The Company will hold a conference call to discuss third quarter financial results today, beginning at 10:00 a.m. Eastern time. Individual investors are invited to listen to the conference call over the Internet through Henry Schein's Web site at www.henryschein.com. In addition, a replay will be available beginning shortly after the call has ended.

About Henry Schein

Henry Schein, a Fortune 500(R) company and a member of the NASDAQ 100(R) Index, is recognized for its excellent customer service and highly competitive prices. The Company's four business groups - Dental, Medical, International and Technology - serve more than 575,000 customers worldwide, including dental practitioners and laboratories, physician practices and animal health clinics, as well as government and other institutions. The Company operates through a centralized and automated distribution network, which provides customers in more than 200 countries with a comprehensive selection of more than 90,000 national and Henry Schein private-brand products in stock, as well as more than 100,000 additional products available as special-order items. Henry Schein also provides exclusive, innovative technology offerings for dental, medical and veterinary professionals, including value-added practice management software and electronic health record solutions.

Headquartered in Melville, N.Y., Henry Schein employs over 12,500 people and has operations or affiliates in 23 countries. The Company's net sales reached a record $6.4 billion in 2008. For more information, visit the Henry Schein Web site at www.henryschein.com.

In accordance with the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995, we provide the following cautionary remarks regarding important factors that, among others, could cause future results to differ materially from the forward-looking statements, expectations and assumptions expressed or implied herein. All forward-looking statements made by us are subject to risks and uncertainties and are not guarantees of future performance. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These statements are identified by the use of such terms as "may," "could," "expect," "intend," "believe," "plan," "estimate," "forecast," "project," "anticipate" or other comparable terms. A full discussion of our operations and financial condition, including factors that may affect our business and future prospects, is contained in documents we have filed with the SEC and will be contained in all subsequent periodic filings we make with the SEC. These documents identify in detail important risk factors that could cause our actual performance to differ materially from current expectations.

Risk factors and uncertainties that could cause actual results to differ materially from current and historical results include, but are not limited to: decreased customer demand and changes in vendor credit terms; disruptions in financial markets; general economic conditions; competitive factors; changes in the healthcare industry; changes in regulatory requirements that affect us; risks associated with our international operations; fluctuations in quarterly earnings; our dependence on third parties for the manufacture and supply of our products; transitional challenges associated with acquisitions, including the failure to achieve anticipated synergies; financial risks associated with acquisitions; regulatory and litigation risks; the dependence on our continued product development, technical support and successful marketing in the technology segment; our dependence upon sales personnel and key customers; our dependence on our senior management; possible increases in the cost of shipping our products or other service issues with our third-party shippers; risks from rapid technological change; risks from potential increases in variable interest rates; possible volatility of the market price of our common stock; certain provisions in our governing documents that may discourage third-party acquisitions of us; and changes in tax legislation that affect us. The order in which these factors appear should not be construed to indicate their relative importance or priority.

We caution that these factors may not be exhaustive and that many of these factors are beyond our ability to control or predict. Accordingly, any forward-looking statements contained herein should not be relied upon as a prediction of actual results. We undertake no duty and have no obligation to update forward-looking statements.

(TABLES TO FOLLOW) HENRY SCHEIN, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (unaudited) Three Months Ended Nine Months Ended ------------------ ----------------- September 26, September 27, September 26, September 27, 2009 2008 2009 2008 ---- ---- ---- ---- Net sales $1,659,433 $1,644,209 $4,752,255 $4,799,234 Cost of sales 1,183,166 1,168,615 3,361,707 3,389,847 --------- --------- --------- --------- Gross profit 476,267 475,594 1,390,548 1,409,387 Operating expenses: Selling, general and administrative 362,382 360,180 1,060,062 1,094,512 Restructuring costs - - 4,043 - --- --- ----- --- Operating income 113,885 115,414 326,443 314,875 Other income (expense): Interest income 2,387 4,260 7,674 12,217 Interest expense (5,171) (9,240) (18,329) (26,816) Other, net 1,938 (4,863) 1,595 (5,524) ----- ------ ----- ------ Income from continuing operations before taxes, equity in earnings of affiliates and noncontrolling interests 113,039 105,571 317,383 294,752 Income taxes (15,864) (34,355) (83,402) (98,787) Equity in earnings of affiliates 1,200 1,602 3,777 4,020 ----- ----- ----- ----- Income from continuing operations 98,375 72,818 237,758 199,985 Income (loss) from discontinued operations, net of tax 2,373 (52) 2,715 (828) ----- --- ----- ---- Net income 100,748 72,766 240,473 199,157 Less: Net income attributable to noncontrolling interests (4,327) (5,278) (15,728) (15,659) ------ ------ ------- ------- Net income attributable to Henry Schein, Inc. $96,421 $67,488 $224,745 $183,498 ======= ======= ======== ======== Amounts attributable to Henry Schein, Inc.: Income from continuing operations $94,045 $67,548 $222,143 $184,239 Income (loss) from discontinued operations, net of tax 2,376 (60) 2,602 (741) ----- --- ----- ---- Net income $96,421 $67,488 $224,745 $183,498 ======= ======= ======== ======== Earnings per share attributable to Henry Schein, Inc.: From continuing operations: Basic $1.06 $0.76 $2.50 $2.07 ===== ===== ===== ===== Diluted $1.03 $0.74 $2.45 $2.00 ===== ===== ===== ===== From discontinued operations: Basic $0.03 $0.00 $0.03 $(0.01) ===== ===== ===== ====== Diluted $0.02 $0.00 $0.03 $0.00 ===== ===== ===== ===== From net income: Basic $1.09 $0.76 $2.53 $2.06 ===== ===== ===== ===== Diluted $1.05 $0.74 $2.48 $2.00 ===== ===== ===== ===== Weighted-average common shares outstanding: Basic 88,796 88,930 88,843 89,216 ====== ====== ====== ====== Diluted 91,513 91,376 90,576 91,908 ====== ====== ====== ====== Note: The above prior period amounts have been restated to reflect the effects of discontinued operations, the adoption of ASC Topic 470-20 related to convertible debt and ASC Topic 810-10-65 related to the presentation of noncontrolling interests. HENRY SCHEIN, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) September 26, December 27, 2009 2008 ---- ---- (unaudited) ASSETS Current assets: Cash and cash equivalents $317,607 $369,570 Accounts receivable, net of reserves of $47,890 and $42,855 764,285 734,027 Inventories, net 770,370 731,654 Deferred income taxes 40,747 36,974 Prepaid expenses and other 186,744 193,841 ------- ------- Total current assets 2,079,753 2,066,066 Property and equipment, net 257,602 247,835 Goodwill 977,054 922,952 Other intangibles, net 212,042 214,093 Investments and other 176,888 148,264 ------- ------- Total assets $3,703,339 $3,599,210 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $507,462 $554,773 Bank credit lines 1,731 4,936 Current maturities of long-term debt 23,933 156,405 Accrued expenses: Payroll and related 148,665 135,523 Taxes 83,951 69,792 Other 263,392 262,236 ------- ------- Total current liabilities 1,029,134 1,183,665 Long-term debt 242,511 256,648 Deferred income taxes 107,953 95,399 Other liabilities 72,038 58,109 Redeemable noncontrolling interests 177,513 233,035 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value, 1,000,000 shares authorized, none outstanding - - Common stock, $.01 par value, 240,000,000 shares authorized, 90,448,417 outstanding on September 26, 2009 and 89,351,849 outstanding on December 27, 2008 904 894 Additional paid-in capital 533,508 492,505 Retained earnings 1,406,199 1,181,454 Accumulated other comprehensive income 71,863 29,721 ------ ------ Total Henry Schein, Inc. stockholders' equity 2,012,474 1,704,574 Noncontrolling interests 61,716 67,780 ------ ------ Total stockholders' equity 2,074,190 1,772,354 --------- --------- Total liabilities and stockholders' equity $3,703,339 $3,599,210 ========== ========== Note: The above prior period amounts have been restated to reflect the adoption of ASC Topic 480-10 related to redeemable noncontrolling interests, ASC Topic 470-20 related to convertible debt and ASC Topic 810-10-65 related to the presentation of noncontrolling interests. HENRY SCHEIN, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three Months Ended Nine Months Ended ------------------ ----------------- September 26, September 27, September 26, September 27, 2009 2008 2009 2008 ---- ---- ---- ---- Cash flows from operating activities: Net income $100,748 $72,766 $240,473 $199,157 Adjustments to reconcile net income to net cash provided by operating activities: Gain on sale of discontinued operation, net of tax (2,382) - (2,382) - Depreciation and amortization 20,196 19,475 60,930 59,183 Amortization of bond discount 1,509 1,422 4,473 4,214 Stock-based compensation expense 6,041 6,844 18,344 23,060 Provision for losses on trade and other accounts receivable 1,042 1,107 2,754 3,711 Provision for (benefit from) deferred income taxes (23,712) 1,137 (29,633) (2,705) Stock issued to 401(k) plan 5,301 4,662 5,301 4,662 Undistributed earnings of affiliates (1,200) (1,602) (3,777) (4,020) Other 1,044 (815) 2,535 (2,132) Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (27,231) (59,999) (12,788) (66,751) Inventories (23,482) (63,118) (10,234) (68,182) Other current assets (3,276) (14,438) (806) (3,460) Accounts payable and accrued expenses 84,204 82,539 (56,813) 41,927 ------ ------ ------- ------ Net cash provided by operating activities 138,802 49,980 218,377 188,664 ------- ------ ------- ------- Cash flows from investing activities: Purchases of fixed assets (10,014) (14,653) (38,417) (38,119) Payments for equity investment and business acquisitions, net of cash acquired (71,422) (2,349) (97,911) (25,930) Cash received from business divestitures 12,716 - 12,716 - Purchases of available-for- sale securities - - - (35,925) Proceeds from sales of available-for- sale securities 4,690 725 8,730 1,572 Net proceeds from foreign exchange forward contract settlements - 14,142 275 9,090 Other (8,578) (897) (11,258) 3,607 ------ ---- ------- ----- Net cash used in investing activities (72,608) (3,032) (125,865) (85,705) ------- ------ -------- ------- Cash flows from financing activities: Proceeds from (repayments of) bank borrowings (436) 722 (3,829) (5,786) Principal payments for long-term debt (150,840) (24,190) (153,452) (30,139) Proceeds from issuance of stock upon exercise of stock options 5,761 12,346 9,689 25,041 Payments for repurchases of common stock - (23,298) - (54,945) Excess tax benefits related to stock-based compensation 2,138 5,962 2,821 10,635 Other (379) (455) (2,127) (1,856) ---- ---- ------ ------ Net cash used in financing activities (143,756) (28,913) (146,898) (57,050) -------- ------- -------- ------- Net change in cash and cash equivalents (77,562) 18,035 (54,386) 45,909 Effect of exchange rate changes on cash and cash equivalents 1,296 (1,103) 2,423 (5,135) Cash and cash equivalents, beginning of period 393,873 271,432 369,570 247,590 ------- ------- ------- ------- Cash and cash equivalents, end of period $317,607 $288,364 $317,607 $288,364 ======== ======== ======== ======== Note: The above prior period amounts have been restated to reflect the adoption of ASC Topic 470-20 related to convertible debt and ASC Topic 810-10-65 related to the presentation of noncontrolling interests. Exhibit A Henry Schein, Inc. 2009 Third Quarter Sales Growth Rate Summary (unaudited) Q3 2009 over Q3 2008 -------------------- Consolidated Dental Medical International Technology ------------ ------ ------- ------------- ---------- Internal Sales Growth -0.6% -4.9% -4.2% 7.0% 4.6% Acquisitions 4.6% 2.4% 1.1% 9.9% 2.7% --- --- --- --- --- Local Currency Sales Growth 4.0% -2.5% -3.1% 16.9% 7.3% Foreign Currency Exchange -3.1% -0.5% 0.0% -8.4% -1.9% ---- ---- --- ---- ---- Total Sales Growth 0.9% -3.0% -3.1% 8.5% 5.4% === ==== ==== === === Total Sales Growth excluding influenza vaccine sales 3.7% -3.0% 8.6% 8.5% 5.4% Local Currency Sales Growth excluding influenza vaccine sales 6.9% -2.5% 8.6% 16.9% 7.3% Q3 YTD 2009 over Q3 YTD 2008 ---------------------------- Consolidated Dental Medical International Technology ------------ ------ ------- ------------- ---------- Internal Sales Growth 0.2% -4.5% -0.4% 5.3% 6.8% Acquisitions 4.7% 2.3% 1.2% 10.1% 0.9% --- --- --- ---- --- Local Currency Sales Growth 4.9% -2.2% 0.8% 15.4% 7.7% Foreign Currency Exchange -5.9% -1.3% 0.0% -15.0% -3.4% ---- ---- --- ----- ---- Total Sales Growth -1.0% -3.5% 0.8% 0.4% 4.3% ==== ==== === === === Total Sales Growth excluding influenza vaccine sales -0.1% -3.5% 5.1% 0.4% 4.3% Local Currency Sales Growth excluding influenza vaccine sales 5.9% -2.2% 5.1% 15.4% 7.7% Exhibit B Henry Schein, Inc. 2009 Third Quarter and YTD Reconciliation of GAAP income from continuing operations to non-GAAP income from continuing operations (in thousands, except per share data) (unaudited) Third Quarter % YTD % 2009 2008 Growth 2009 2008 Growth Income from Continuing Operations attributable to Henry Schein, Inc. $94,045 $67,548 39.2% $222,143 $184,239 20.6% Diluted EPS from Continuing Operations attributable to Henry Schein, Inc. $1.03 $0.74 39.2% $2.45 $2.00 22.5% Non-GAAP Adjustments (after-tax) Foreign tax benefit $(20,845) - $(20,845) - Costs related to foreign tax benefit 1,080 - 1,080 - Adjustments related to Lehman Brothers Bankruptcy (338) $3,045 (338) $3,045 Other non-recurring income/expense, net (1,028) - (1,028) - Restructuring costs - - 2,784 - --- --- ----- --- Total non-GAAP adjustments to income from Continuing Operations attributable to Henry Schein, Inc. $(21,131) $3,045 $(18,347) $3,045 Total non-GAAP adjustments to diluted EPS from Continuing Operations attributable to Henry Schein, Inc. $(0.23) $0.03 $(0.20) $0.03 Non-GAAP income from Continuing Operations attributable to Henry Schein, Inc. $72,914 $70,593 3.3% $203,796 $187,284 8.8% Non-GAAP diluted EPS from Continuing Operations attributable to Henry Schein, Inc. $0.80 $0.77 3.9% $2.25 $2.04 10.3% ----- ----- --- ----- ----- ---- This non-GAAP comparison is being presented in order to provide a more comparable basis for analysis. Earnings per share numbers may not sum due to rounding.

Henry Schein, Inc.

CONTACT: Investors: Steven Paladino, Executive Vice President and Chief
Financial Officer, steven.paladino@henryschein.com, +1-631-843-5500, or
Media: Susan Vassallo, Vice President, Corporate Communications,
susan.vassallo@henryschein.com, +1-631-843-5562