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Henry Schein (HSIC) Banks on Strategic Buyouts Amid Macro Issues
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Henry Schein (HSIC - Free Report) is well positioned to gain from its extensive global foothold and diverse channel mix. Yet, headwinds like global economic uncertainties and unforeseen cyberattacks are concerns for Henry Schein. The stock carries a Zacks Rank #3 (Hold) currently.
Henry Schein strategically set up distribution centers worldwide to better serve customers and increase its operating efficiency. Apart from North America, the company has a presence in Australia and New Zealand as well as in emerging nations like China, Brazil, Israel, the Czech Republic and Poland. We believe Henry Schein’s worldwide reach is a major competitive advantage over other players in the industry. Meanwhile, following last year's cyber incident, its dental and medical distribution businesses in North America and Europe showed a good pace of recovery.
Henry Schein seems upbeat about its dental technology joint venture (JV), Henry Schein One. Throughout last year, global growth in Henry Schein One was driven by migration to its cloud-based practice management software solutions, Dentrix Ascend and Dentally. The customer base for these solutions expanded 36% year over year in the first quarter, totaling approximately 8,000 cloud-based systems installed.
Henry Schein’s revenue growth has been consistently supported by niche acquisitions and partnerships. Its robust acquisition strategy helps it to pursue targets that provide access to additional product lines. In 2023, the company pursued a number of acquisitions as part of the BOLD+1 Strategic Plan, including companies specializing in implant systems, clear aligners, homecare medical products delivered directly to patients and dental practice transition services.
In late December, Henry Schein marked its entry into the extremity segment of the growing orthopedic market through an agreement to acquire a majority interest in TriMed and a strategic relationship with Extremity Medical. Furthermore, Henry Schein acquired a majority share in Biotech Dental, which increased the prospect of offering a seamless digital workflow solution. The company also signed a definitive agreement to acquire S.I.N. Implant System, one of Brazil’s leading manufacturers of dental implants.
Image Source: Zacks Investment Research
On the flip side, the current macroeconomic environment across the globe is affecting Henry Schein’s financial operations. Particularly, exchange rate fluctuations, inflation and recession are adversely impacting the company’s operational results. Accordingly, governments and insurance companies continue to look for ways to contain the rising cost of healthcare.
With the sustained macroeconomic pressure, the company may struggle to keep in check its cost of revenues and operating expenses. In the first quarter, Henry Schein’s selling, general & administrative expenses rose 10.3% from the comparable 2023 figure. The rise in operating costs was driven by increases in payroll and payroll-related costs and travel and convention expenses in both its reportable segments.
Late last year, Henry Schein experienced a cybersecurity incident that mainly affected the operations of its North American and European dental and medical distribution businesses. Henry Schein continued to experience a residual impact of the cyber events relating primarily to decreased sales to episodic customers (customers that generally had a less consistent demand), leading to an approximate 300-400 basis point decrease in internally generated local currency sales in the first quarter. This residual impact might continue in the following quarters as well.
The Hims & Hers Heath stock has surged 130.5% in the past year. Estimates for the company’s earnings have moved north by 11.1% to 20 cents for 2024 in the past 30 days.
HIMS’ earnings beat estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 79.2%. In the last reported quarter, it posted an earnings surprise of a staggering 150%.
Estimates for The Joint’s 2024 earnings per share (EPS) have remained constant at 21 cents in the past 30 days. Shares of JYNT have surged 38.8% in the past year against the industry’s 6.6% growth.
In the last reported quarter, JYNT delivered an earnings surprise of 300%. It has a trailing four-quarter average earnings surprise of 18.75%.
Estimates for Medpace’s 2024 EPS have remained unchanged at $11.29 in the past 30 days. Shares of the company have surged 72.3% in the past year compared with the industry’s 5.7% growth.
MEDP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 12.8%. In the last reported quarter, it delivered an earnings surprise of 30.6%.
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Henry Schein (HSIC) Banks on Strategic Buyouts Amid Macro Issues
Henry Schein (HSIC - Free Report) is well positioned to gain from its extensive global foothold and diverse channel mix. Yet, headwinds like global economic uncertainties and unforeseen cyberattacks are concerns for Henry Schein. The stock carries a Zacks Rank #3 (Hold) currently.
Henry Schein strategically set up distribution centers worldwide to better serve customers and increase its operating efficiency. Apart from North America, the company has a presence in Australia and New Zealand as well as in emerging nations like China, Brazil, Israel, the Czech Republic and Poland. We believe Henry Schein’s worldwide reach is a major competitive advantage over other players in the industry. Meanwhile, following last year's cyber incident, its dental and medical distribution businesses in North America and Europe showed a good pace of recovery.
Henry Schein seems upbeat about its dental technology joint venture (JV), Henry Schein One. Throughout last year, global growth in Henry Schein One was driven by migration to its cloud-based practice management software solutions, Dentrix Ascend and Dentally. The customer base for these solutions expanded 36% year over year in the first quarter, totaling approximately 8,000 cloud-based systems installed.
Henry Schein’s revenue growth has been consistently supported by niche acquisitions and partnerships. Its robust acquisition strategy helps it to pursue targets that provide access to additional product lines. In 2023, the company pursued a number of acquisitions as part of the BOLD+1 Strategic Plan, including companies specializing in implant systems, clear aligners, homecare medical products delivered directly to patients and dental practice transition services.
In late December, Henry Schein marked its entry into the extremity segment of the growing orthopedic market through an agreement to acquire a majority interest in TriMed and a strategic relationship with Extremity Medical. Furthermore, Henry Schein acquired a majority share in Biotech Dental, which increased the prospect of offering a seamless digital workflow solution. The company also signed a definitive agreement to acquire S.I.N. Implant System, one of Brazil’s leading manufacturers of dental implants.
Image Source: Zacks Investment Research
On the flip side, the current macroeconomic environment across the globe is affecting Henry Schein’s financial operations. Particularly, exchange rate fluctuations, inflation and recession are adversely impacting the company’s operational results. Accordingly, governments and insurance companies continue to look for ways to contain the rising cost of healthcare.
With the sustained macroeconomic pressure, the company may struggle to keep in check its cost of revenues and operating expenses. In the first quarter, Henry Schein’s selling, general & administrative expenses rose 10.3% from the comparable 2023 figure. The rise in operating costs was driven by increases in payroll and payroll-related costs and travel and convention expenses in both its reportable segments.
Late last year, Henry Schein experienced a cybersecurity incident that mainly affected the operations of its North American and European dental and medical distribution businesses. Henry Schein continued to experience a residual impact of the cyber events relating primarily to decreased sales to episodic customers (customers that generally had a less consistent demand), leading to an approximate 300-400 basis point decrease in internally generated local currency sales in the first quarter. This residual impact might continue in the following quarters as well.
Key Picks
Some better-ranked stocks in the broader medical space are Hims & Hers Health, Inc. (HIMS - Free Report) , The Joint Corp. (JYNT - Free Report) , and Medpace Holdings (MEDP - Free Report) . While Hims & Hers and The Joint currently sport a Zacks Rank #1 (Strong Buy) each, Medpace Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Hims & Hers Heath stock has surged 130.5% in the past year. Estimates for the company’s earnings have moved north by 11.1% to 20 cents for 2024 in the past 30 days.
HIMS’ earnings beat estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 79.2%. In the last reported quarter, it posted an earnings surprise of a staggering 150%.
Estimates for The Joint’s 2024 earnings per share (EPS) have remained constant at 21 cents in the past 30 days. Shares of JYNT have surged 38.8% in the past year against the industry’s 6.6% growth.
In the last reported quarter, JYNT delivered an earnings surprise of 300%. It has a trailing four-quarter average earnings surprise of 18.75%.
Estimates for Medpace’s 2024 EPS have remained unchanged at $11.29 in the past 30 days. Shares of the company have surged 72.3% in the past year compared with the industry’s 5.7% growth.
MEDP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 12.8%. In the last reported quarter, it delivered an earnings surprise of 30.6%.