Henry Schein 4th quarter results

MELVILLE, New York--Henry Schein, a provider of health-care products and services to office-based practitioners, has reported record financial results for the quarter ended Dec. 25, 2010.

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Net sales for the fourth quarter of 2010 were $2 billion, an increase of 13.3% compared with the fourth quarter of 2009. This consists of 15% growth in local currencies partially offset by a decline of 1.7% related to foreign currency exchange. Internal sales growth in local currencies was 3.3%.

Income from continuing operations attributable to Henry Schein for the fourth quarter of 2010 was $93 million or $1 per diluted share, an increase of 8.5% and 7.5%, respectively, compared with fourth quarter 2009 adjusted net income. This excludes certain unusual items.

"Our fourth quarter financial results are solid as we gained market share in each of our business groups," said Stanley M. Bergman, chairman and chief executive officer of Henry Schein.

This quarterly performance is continued validation of our growth strategy, and the underlying strength of our business. In addition, for the first time quarterly net sales reached $2 billion. Quarterly net sales first surpassed the $1 billion mark in the third quarter of 2004, and this doubling of quarterly sales represents compound annual growth of 12% since then, a timeframe that includes the recent years of global economic challenges."

North American Dental sales of $720.7 million increased 7.3%, consisting of 6.7% growth in local currencies and 0.6% growth related to foreign currency exchange. The 6.7% growth in local currencies included 9.7% growth in dental consumable merchandise sales and 0.2% growth in dental equipment sales and service revenues.

"We marked our fifth consecutive quarter of increased internal dental consumable merchandise sales growth in local currencies, which provides further evidence of stability in our markets as well as the efficiency of our consultative approach to sales and customer service," Bergman said.

"We have also recorded growth in sales of dental equipment for each quarter of 2010, including the fourth quarter where the comparison is more difficult than earlier quarters in the year, due to strong equipment sales in last year's fourth quarter."

North American Medical sales of $327.7 million increased 5.7%. Sales of seasonal influenza vaccines in 2010 were skewed more heavily toward the third quarter versus the fourth quarter, compared with 2009. Excluding sales of seasonal influenza vaccines from both fourth quarter periods, North American Medical sales increased 7.1%.

"During the quarter we sold approximately 1.3 million doses of seasonal influenza vaccines, bringing our total for the year to approximately 12.5 million doses, in line with our expectations," Bergman said.

"The 2009 fourth quarter included sales of products related to the H1N1 virus that occurred to a lesser extent this year. When excluding sales of those products and seasonal influenza vaccines from both periods, we estimate that North American Medical internal sales growth was 5.7%."

North American Animal Health sales increased 282.2% to $222.7 million, reflecting the combined Butler Schein Animal Health business.

"We now have turned our focus at Butler Schein Animal Health to various initiatives to drive sales growth by expanding the breadth and depth of our product offerings," Bergman said.

"We recently announced two strategic veterinary software acquisitions that support our position of industry leadership. By adding the products and services of McAllister Software Systems and ImproMed, we further enhance the vital role of Butler Schein Animal Health with its customers and manufacturers."

International sales of $695 million declined 0.6%, consisting of 4.4% growth in local currencies partially offset by a decline of 5% related to foreign currency exchange.

"Our International results are highlighted by strong internal growth in local currencies in our dental business, particularly in dental equipment," Bergman said. "International Animal Health sales growth in local currencies also was solid. On an overall basis, the U.K., Italy, France, Holland, Belgium, and Austria each exhibited healthy sales growth."

Technology and value-added Services sales of $57.5 million increased 21.9% during the quarter, including 17.5% internal sales growth in local currencies.

"We had notably strong growth in software sales in Australia, New Zealand, and Canada," Bergman said. "Our continued excellent performance in technology and value-added services provides a great platform for enhancing customer relationships and increasing market penetration, and a clear competitive advantage."

Full year results
For the year, net sales of $7.5 billion increased 15.1% compared with 2009. This includes 15.4% growth in local currencies partially offset by a decline of 0.3% related to foreign currency exchange.

Income from continuing operations attributable to Henry Schein for 2010 was $325.8 million or $3.49 per diluted share. Non-GAAP adjusted income from continuing operations attributable to Henry Schein for 2010 was $334 million or $3.58 per diluted share, an increase of 15.4% and 11.9%, respectively, compared with 2009 excluding restructuring costs in both periods, as well as certain unusual items in 2009.

Stock repurchase plan
The company announced that it repurchased 919,698 shares of its common stock during the fourth quarter at an average price of $57.54 per share. For the year, the company repurchased $57.7 million of its common stock. The impact of the repurchase of shares on fourth quarter and full year diluted EPS was immaterial. At the end of the fourth quarter, the company had $100 million authorized for future repurchases of its common stock.

2011 EPS guidance
Henry Schein has affirmed 2011 financial guidance, as follows:

2011 diluted EPS attributable to Henry Schein is expected to be in the range of $3.88 to $3.98.

Guidance for 2011 diluted EPS attributable to Henry Schein is for current continuing operations as well as completed or previously announced acquisitions, and does not include the impact of potential future acquisitions, if any.

Fourth quarter conference call Webcast
The company will hold a conference call to discuss fourth quarter financial results. 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 shortly after the call has ended.

For more information, visit www.henryschein.com.

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