Henry Schein, Inc.
HSIC
is well positioned to gain from its extensive global foothold and diverse channel mix. Henry Schein currently carries a Zacks Rank #1 (Strong Buy).
Over the past six months, Henry Schein has outperformed its
industry
. The stock was up 29.3% compared with the industry’s 7.1% growth.
Henry Schein exited the fourth quarter of 2021 on a bullish note with better-than-expected results. The company saw robust performances by all three of its operating businesses. Its international performance was also impressive. In the International Dental business, the company registered strong sales growth in the U.K., driven by continued recovery from the pandemic-led business disruption. Growth within Henry Schein One continues to be driven primarily by a recovery in patient traffic in dental offices. Further, expansion of the gross margins bodes well.
Widespread network and channel mix, along with favorable long-term trends in the dental business, look encouraging. A strong solvency position is a plus.
Henry Schein’s distribution business boasts a wide global footprint with 61 distribution centers. Apart from North America and Europe, the company has 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 healthcare distribution industry.
During the fourth quarter, Henry Schein noted a steady improvement in in-patient traffic despite a rise in new COVID-19 cases. The most recent American Dental Association data shows current patient traffic at 90% of the pre-pandemic level. Global dental consumable merchandise internal sales increased 6.6% in the fourth quarter compared with the prior year, with solid dental consumable merchandise sales growth in the United States, Canada, Australia, New Zealand, Brazil and Asia. In Europe, the company witnessed strength in dental consumable merchandise sales in France, Germany, Austria, Belgium, the Netherlands, Italy, Poland and the U.K.. North American dental internal sales growth in local currencies was 9.3% compared with the prior-year figure. Henry Schein also registered strong internal sales growth of 4.2% in international dental equipment.
Henry Schein’s strategy to expand digital dentistry globally is encouraging. During the fourth quarter, Henry Schein’s global dental sales increased 9.4% year over year. Henry Schein noted that growth was strong in each of the dental specialty categories, including implants, oral surgery, endodontics and orthodontics, in the reported quarter. The company’s North American dental internal sales growth in local currencies was 9.3%, driven by solid growth, both in the consumable merchandise as well as equipment product categories.
In December 2021, Henry Schein Orthodontics launched Studio Pro 4.0, a new web-based treatment planning software for Reveal Clear Aligners.
On the flip side, during the fourth quarter, Henry Schein’s Global Medical revenues fell 3.2% year over year, including a decrease of 7.1% in internal local currencies and 3.9% growth from acquisitions. Moreover, selling, general and administrative expenses rose 14.9% during the reported quarter. The escalating costs are building pressure on the bottom line.
Continued pandemic-led challenges faced by the end markets in most geographies are concerning. Other factors like the impact of group purchasing organizations and a stiff competitive landscape are bothersome.
Key Stocks
A few other top-ranked stocks in the broader medical space are
AMN Healthcare Services, Inc.
AMN
,
McKesson Corporation
MCK
and
IDEXX Laboratories, Inc.
IDXX
.
AMN Healthcare, flaunting a Zacks Rank #1, has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average.
AMN Healthcare has outperformed its industry in the past year. AMN has gained 23.8% versus the 62% industry decline. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Henry Schein has outperformed the industry over the past year. HSIC has gained 29.3% compared with the industry’s 7.1% growth over the past year.
McKesson has a long-term earnings growth rate of 11.8%. MCK’s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 20.6%, on average. It presently carries a Zacks Rank #2.
McKesson has outperformed the industry over the past year. MCK has gained 56.6% in the said period compared with 7.1% growth of the industry.
IDEXX has a long-term earnings growth rate of 13%. The company’s earnings surpassed estimates in the trailing four quarters, delivering an average surprise of 18.6%. IDXX currently has a Zacks Rank #2.
IDEXX has outperformed its industry in the past year. IDXX has gained 12.6% against the industry’s 2.6% decline in the same period.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”
Since 1988, the full list has beaten the market more than 2X over with an average gain of +25.4% per year. So be sure to give these hand-picked 7 your immediate attention.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
