Henry Schein second-quarter 2010 net sales increase 15.1% to $1.8 billion

Henry Schein, Inc. (Nasdaq: HSIC), the largest provider of healthcare products and services to office-based practitioners, today reported record financial results for the quarter ended June 26, 2010.

Net sales for the second quarter of 2010 were $1.8 billion, an increase of 15.1% compared with the second quarter of 2009.  This consists of 15.6% growth in local currencies and a decline of 0.5% related to foreign currency exchange.  Internal sales growth in local currencies was 2.1% (see Exhibit A for details of sales growth).

Income from continuing operations attributable to Henry Schein, Inc. for the second quarter of 2010 was $84.0 million or $0.90 per diluted share, an increase of 14.6% and 11.1%, respectively, compared with the second quarter of 2009.

"We are reporting strong top-line growth in local currencies for the quarter and we continue to see indications of positive market trends throughout our global business," said Stanley M. Bergman, Chairman and Chief Executive Officer of Henry Schein.  "We also are pleased to report that diluted EPS for the first half of 2010 is up 13.8% compared with the first half of 2009, excluding restructuring costs from both periods."

North American Dental sales of $677.6 million increased 8.9%, consisting of 7.5% growth in local currencies and 1.4% growth related to foreign currency exchange.  The 7.5% growth in local currencies included 7.1% growth in Dental consumable merchandise sales and 8.6% growth in Dental equipment sales and service revenues.

"Continued internal Dental consumable merchandise sales growth in local currencies affirms our confidence that the market will show gradual improvement for the rest of the year.  Strong internal growth in Dental equipment sales reflects higher demand for basic and for high-tech equipment and is another positive market indicator," commented Mr. Bergman.

North American Medical sales declined 0.4% to $286.3 million. "Results for the second quarter of 2010 were negatively impacted by reduced sales of products related to the H1N1 virus, which were significant in the prior-year quarter," remarked Mr. Bergman.

North American Animal Health sales increased 269.7% to $234.7 million, which included sales of Butler Schein Animal Health.  "Integration of the Butler Schein Animal Health business continues to progress according to plan and is expected to be completed during the third quarter," commented Mr. Bergman.

International sales of $602.4 million increased 1.8%, consisting of 4.7% growth in local currencies and a decline of 2.9% related to foreign currency exchange.  "International results for the second quarter of 2009 were positively impacted, particularly in Germany, by the timing of the biennial IDS trade show in Europe, resulting in a difficult comparison for Q2 2010.  Our International results for the second quarter of 2010 reflect continued growth in the Dental and Animal Health businesses, with particular strength in Spain, France, Holland and the U.K.," added Mr. Bergman.

Technology and Value-Added Services sales of $48.4 million increased 13.7% during the quarter, including 8.0% internal sales growth in local currencies.  "During the quarter we saw continued strong growth in our electronic services and software businesses," explained Mr. Bergman.

Year-to-Date Results

For the first half of 2010, net sales of $3.6 billion increased 16.7% compared with the first half of 2009.  This increase includes 15.1% growth in local currencies and 1.6% growth related to foreign currency exchange.

Income from continuing operations attributable to Henry Schein, Inc. for the first half of 2010 was $144.9 million or $1.56 per diluted share.  Excluding first quarter 2010 restructuring costs of $12.3 million pre-tax or $0.09 per diluted share, and first quarter 2009 restructuring costs of $4.0 million pre-tax or $0.03 per diluted share, income from continuing operations attributable to Henry Schein, Inc. for the first half of 2010 was $153.2 million or $1.65 per diluted share, an increase of 17.0% and 13.8%, respectively, compared with the first half of 2009 (see Exhibit B for reconciliation of GAAP net income and EPS to non-GAAP adjusted net income and EPS).

2010 EPS Guidance

Today, Henry Schein increased the low end of its 2010 financial guidance range, as follows:

• 2010 diluted EPS attributable to Henry Schein, Inc. is expected to be $3.46 to $3.56, compared with previous guidance of $3.44 to $3.56.
• Guidance for 2010 diluted EPS attributable to Henry Schein, Inc. 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.
• 2010 guidance excludes the impact of restructuring costs.

The Company noted that it is increasing the low end of its 2010 diluted EPS guidance range despite a strengthening of the U.S. dollar against the euro and pound sterling, which is expected to adversely impact 2010 diluted EPS by $0.05 to $0.06 compared with its initial expectations for the year.