Henry Schein Q1 2023 Earnings Report
Key Takeaways
Henry Schein reported a decrease of 3.8% in net sales compared to Q1 2022, with sales totaling $3.1 billion. GAAP diluted EPS was $0.91, and non-GAAP diluted EPS was $1.21. Excluding PPE products and COVID-19 test kits, internal sales growth in local currencies was 6.3%. The company is updating its full-year 2023 non-GAAP diluted EPS guidance to $5.18 to $5.35.
Net sales decreased by 3.8% to $3.1 billion, but internal sales, excluding PPE and COVID-19 test kits, increased by 6.3% in local currencies.
GAAP diluted EPS was reported at $0.91, compared to $1.30 in Q1 2022.
Non-GAAP diluted EPS was $1.21, down from $1.44 in the same quarter last year.
Full-year 2023 non-GAAP diluted EPS guidance updated to $5.18 to $5.35, reflecting dilution from the Biotech Dental acquisition.
Henry Schein
Henry Schein
Henry Schein Revenue by Segment
Henry Schein Revenue by Geographic Location
Forward Guidance
Henry Schein expects 2023 sales growth to be approximately 1% to 3% over 2022. Sales of PPE products are expected to decline about 20% to 25%, and COVID-19 test kits are expected to decrease by approximately 65% to 70% from 2022. 2023 non-GAAP diluted EPS is expected to be $5.18 to $5.35.
Positive Outlook
- 2023 sales growth is expected to be approximately 1% to 3% over 2022, unchanged from prior guidance.
- 2023 guidance reflects high single-digit to low double-digit growth in non-GAAP operating income over 2022 when excluding the contribution from PPE products and COVID-19 test kits, and acquisition-related expenses.
- The company expects to see continued growth in its core Medical business, although at a slower pace than the previous year.
- The Technology and Value-Added Services business had an excellent quarter, driven by the strength of Henry Schein One.
- The company is executing well on its BOLD +1 Strategic Plan, and the underlying fundamentals of its core business remain solid.
Challenges Ahead
- 2023 sales of PPE products are expected to decline about 20% to 25%, unchanged from prior guidance.
- 2023 sales of COVID-19 test kits are now expected to decrease by approximately 65% to 70% from 2022 versus prior guidance for a decrease of approximately 35% to 40%.
- 2023 non-GAAP operating margin is expected to be 10 to 15 basis points below 2022 non-GAAP operating margin of 8.2%, largely a result of lower PPE products and COVID-19 test kit sales and profits, and acquisition-related expenses.
- The non-GAAP diluted EPS guidance includes $0.05 to $0.10 dilution from the Biotech Dental acquisition, primarily due to non-cash acquisition accounting adjustments for inventory and acquisition-related expenses.
- The impact on 2023 non-GAAP diluted EPS from lower contributions to earnings from sales of PPE products and COVID-19 test kits is estimated to be $0.35 to $0.40, unchanged from prior guidance.
Revenue & Expenses
Visualization of income flow from segment revenue to net income