Henry Schein HSIC posted third-quarter results that were about what we expected, as the firm was able to grow revenue by 4% in local currencies, demonstrating that the volatility that ran rampant in the firm's operating segments may be subsiding. We think the firm's long-term story remains intact and have no plans to change our fair value estimate at this time. Revenue increased 1% to roughly $1.7 billion for the quarter, including foreign currency head winds. It should also be noted that growth was a healthy 7% in local currencies excluding sales of seasonal flu vaccines, which were down year over year. While revenue growth trended in a positive direction overall, sales from the company's dental group dropped 3% year over year (2.5% in local currencies). Similar to the firm's second quarter of this year, consumables grew by around 1%, while prevailing weakness in overall capital spending pushed dental equipment down 13%. Meanwhile, sales in the company's international group increased 8.5% overall, on 17% growth in local currencies. Overall, operating income was relatively flat against the year-ago quarter.As we've mentioned previously, we believe the volatility that burned through the previous year or so seems to be waning, as evidenced by growth rates slowly returning to more normal levels. We remain optimistic regarding Henry Schein's long-term prospects and believe the company remains well-positioned for an economic recovery.
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Analyst Notes
08-04-09 | 4:10PM Schein's 2Q in Line
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