We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Henry Schein (HSIC) Hurt by Macroeconomic Woes, Cyber Attacks
Read MoreHide Full Article
Henry Schein's (HSIC - Free Report) business continues to suffer from headwinds like global economic uncertainties and unforeseen cyberattacks. Also, a tough competitive landscape weighs on the stock. Henry Schein currently carries a Zacks Rank #4 (Sell).
Henry Schein’s financial operations are being affected by current macroeconomic complications across the globe. Particularly, exchange rate fluctuations and cost and expense escalations are adversely impacting the company’s operational results.
With sustained macroeconomic pressure, the company may struggle to keep in check its cost of revenues and operating expenses. During the second quarter, changes in legislation limiting dental support organizations negatively impacted equipment investment in France. Henry Schein’s selling, general & administrative expenses rose 10.5% from the prior-year quarter’s figure. The rise in operating costs was due to recent acquisitions and lower sales at the distribution businesses. For 2024, our model projects a 4.5% rise in the company’s GAAP SG&A expenses.
In October 2023, Henry Schein witnessed a cybersecurity incident that mainly affected the operations of its North American and European dental and medical distribution businesses. The company took precautionary action, including taking certain systems offline and other steps intended to contain the incident, which led to the temporary disruption of some of its business operations. 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). This resulted in a 2.4% decrease in internally generated local currency sales in the second quarter of 2024.
The healthcare industry, in particular, has been targeted by threat actors seeking to undermine companies’ cybersecurity defensive measures. The evolving nature of these attacks makes it difficult to guarantee the effectiveness of the cybersecurity measures. As a consequence, substantial costs may be incurred to update defenses and adapt to new challenges, with additional costs arising from regulatory actions. We worry that if the company is subject to more attacks following last year’s incident, it could materially affect its business results.
Meanwhile, the U.S. healthcare products and service distribution industry is highly competitive and consists principally of national, regional and local distributors. In the North American dental products market, the company faces stiff competition from Patterson Dental business of Patterson Companies Inc. and Benco Dental Supply. The competition in the fast-growing animal health market is also fierce, with Patterson Veterinary Supply under Patterson Companies and IDEXX Laboratories gaining traction.
Henry Schein operates in a highly competitive medical product distribution market with larger players like McKesson Corp. The presence of specialized players like Quality Systems, eClinicalWorks and Athenahealth in the electronic medical records market puts Henry Schein in a tight spot. The competitive landscape in the overseas market is also tough. The tussle for market share might be a drag on results.
On a positive note, 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. Soon after the second quarter, Henry Schein expanded its wide range of solutions and services in Switzerland through 100% acquisition of ABC Dental AG.
Meanwhile, 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 July, Henry Schein acquired 100% of abc dental AG to expand in Switzerland. During the second quarter, Henry Schein completed the acquisition of orthopedic player TriMed. With the integration of TriMed’s business, the company is able to provide a wide range of surgical solutions to the existing Integrated Delivery Networks and Ambulatory Surgery Center customers.
Intuitive Surgical’s shares have surged 67.9% in the past year. Estimates for the company’s earnings have remained constant at $6.67 per share for 2024 in the past 30 days.
ISRG’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 8.97%. In the last reported quarter, it posted an earnings surprise of 16.34%.
Estimates for TransMedics’ 2024 EPS have moved up 48.1% to $1.20 in the past 30 days. Shares of the company have soared 163.7% in the past year compared with the industry’s 12.3% growth.
TMDX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 287.50%. In the last reported quarter, it delivered an earnings surprise of 66.67%.
Estimates for Quest Diagnostics’ 2024 EPS have increased 0.3% to $8.88 in the past 30 days. In the past year, shares of HAE have risen 14.6% compared with the industry’s 19.5% growth.
In the last reported quarter, DGX delivered an earnings surprise of 1.73%. The company has a trailing four-quarter average earnings surprise of 3.31%.
See More Zacks Research for These Tickers
Pick one free report - opportunity may be withdrawn at any time
Image: Shutterstock
Henry Schein (HSIC) Hurt by Macroeconomic Woes, Cyber Attacks
Henry Schein's (HSIC - Free Report) business continues to suffer from headwinds like global economic uncertainties and unforeseen cyberattacks. Also, a tough competitive landscape weighs on the stock. Henry Schein currently carries a Zacks Rank #4 (Sell).
Henry Schein’s financial operations are being affected by current macroeconomic complications across the globe. Particularly, exchange rate fluctuations and cost and expense escalations are adversely impacting the company’s operational results.
With sustained macroeconomic pressure, the company may struggle to keep in check its cost of revenues and operating expenses. During the second quarter, changes in legislation limiting dental support organizations negatively impacted equipment investment in France. Henry Schein’s selling, general & administrative expenses rose 10.5% from the prior-year quarter’s figure. The rise in operating costs was due to recent acquisitions and lower sales at the distribution businesses. For 2024, our model projects a 4.5% rise in the company’s GAAP SG&A expenses.
In October 2023, Henry Schein witnessed a cybersecurity incident that mainly affected the operations of its North American and European dental and medical distribution businesses. The company took precautionary action, including taking certain systems offline and other steps intended to contain the incident, which led to the temporary disruption of some of its business operations. 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). This resulted in a 2.4% decrease in internally generated local currency sales in the second quarter of 2024.
The healthcare industry, in particular, has been targeted by threat actors seeking to undermine companies’ cybersecurity defensive measures. The evolving nature of these attacks makes it difficult to guarantee the effectiveness of the cybersecurity measures. As a consequence, substantial costs may be incurred to update defenses and adapt to new challenges, with additional costs arising from regulatory actions. We worry that if the company is subject to more attacks following last year’s incident, it could materially affect its business results.
Henry Schein, Inc. Price
Henry Schein, Inc. price | Henry Schein, Inc. Quote
Meanwhile, the U.S. healthcare products and service distribution industry is highly competitive and consists principally of national, regional and local distributors. In the North American dental products market, the company faces stiff competition from Patterson Dental business of Patterson Companies Inc. and Benco Dental Supply. The competition in the fast-growing animal health market is also fierce, with Patterson Veterinary Supply under Patterson Companies and IDEXX Laboratories gaining traction.
Henry Schein operates in a highly competitive medical product distribution market with larger players like McKesson Corp. The presence of specialized players like Quality Systems, eClinicalWorks and Athenahealth in the electronic medical records market puts Henry Schein in a tight spot. The competitive landscape in the overseas market is also tough. The tussle for market share might be a drag on results.
On a positive note, 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. Soon after the second quarter, Henry Schein expanded its wide range of solutions and services in Switzerland through 100% acquisition of ABC Dental AG.
Meanwhile, 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 July, Henry Schein acquired 100% of abc dental AG to expand in Switzerland. During the second quarter, Henry Schein completed the acquisition of orthopedic player TriMed. With the integration of TriMed’s business, the company is able to provide a wide range of surgical solutions to the existing Integrated Delivery Networks and Ambulatory Surgery Center customers.
Key Picks
Some better-ranked stocks in the broader medical space are Intuitive Surgical (ISRG - Free Report) , TransMedics Group (TMDX - Free Report) and Quest Diagnostics (DGX - Free Report) . While Intuitive Surgical and TransMedics sport a Zacks Rank #1 (Strong Buy) each, Quest Diagnostics carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical’s shares have surged 67.9% in the past year. Estimates for the company’s earnings have remained constant at $6.67 per share for 2024 in the past 30 days.
ISRG’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 8.97%. In the last reported quarter, it posted an earnings surprise of 16.34%.
Estimates for TransMedics’ 2024 EPS have moved up 48.1% to $1.20 in the past 30 days. Shares of the company have soared 163.7% in the past year compared with the industry’s 12.3% growth.
TMDX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 287.50%. In the last reported quarter, it delivered an earnings surprise of 66.67%.
Estimates for Quest Diagnostics’ 2024 EPS have increased 0.3% to $8.88 in the past 30 days. In the past year, shares of HAE have risen 14.6% compared with the industry’s 19.5% growth.
In the last reported quarter, DGX delivered an earnings surprise of 1.73%. The company has a trailing four-quarter average earnings surprise of 3.31%.