Henry Schein, Inc. · NASDAQ:HSIC
Henry Schein — Q4 2021 Earnings Presentation
40 slides from Henry Schein's earnings presentation, Feb 15, 2022
Slide 1: Q4 2021
WA HENRY SCHEIN? @ onUs” Q4 2021
Slide 2: Safe Harbor Provision
Safe Harbor Provision Cautionary Note Regarding Forward-Looking Statements and Use of Non-GAAP Financial Information In accordance with the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995, we provide the following cautionary remarks regarding important factors that,
Slide 3: Henry Schein – At a Glance
Henry Schein – At a Glance Henry Schein delivers the product and service solutions health care professionals rely on 2021 GLOBAL OPERATIONS OR GLOBAL DENTAL: 61% OF SALES SERVING MORE THAN NET SALES AFFILIATES IN $12.4 GLOBAL MEDICAL: 34% OF SALES TECHNOLOGY & VALUE-ADDED SERVICES: 5% OF SALES 32 1
Slide 4: Leading Market Positions
Leading Market Positions Consistent Historical Growth • Track record of solid, long-term growth (pre-COVID-19) Fragmented Customer Base • More than 1 million customers Fragmented Competitors • Approximately half the target markets served by smaller competitors • Small number of large, national and r
Slide 5: Positive Market Trends
Positive Market Trends Demographics • Aging population represents increasing need for health care services Healthcare Developments • Growing awareness of importance of preventative care • Connection between good oral health and overall health • Movement of procedures from hospital to physician offic
Slide 6: Improve Practice Efficiency
Company Objective Our primary objective is to partner with our customers Efficiency Improve Productivity Practice Profitability Allowing our customers to focus on delivering quality care to their patients 6
Slide 7: Global Distribution Network
Global Distribution Network Distribution Centers • 9 Core North American Distribution Centers serving Dental and Medical • 8 Distribution Centers in Europe serving Dental and Medical • 3 Distribution Centers in Australia/New Zealand serving Dental • 7 Distribution Centers in Asia/Rest of World servi
Slide 8: Henry Schein’s High-Touch, Value-Added Market Approach
Henry Schein’s High-Touch, Value-Added Market Approach Full-service provider of supplies, equipment, and services Our strategy is focused on delivering SUPPLY CHAIN SOLUTIONS & solutions that enable SERVICE & SUPPORT SPECIALTY PRODUCTS AND SERVICES our customers to provide the best quality patient c
Slide 9: Dental Market Position
Dental Market Position Only global dental distributor and solutions company for general practitioners, specialists, and laboratories • #1 in sales in North America • #1 in sales in Europe • #1 in sales in Australia/New Zealand • #1 in sales in Brazil Active customers (approximate) • 90% of U.S. dent
Slide 10: Dental Market
Dental Market 2021 Henry Schein Global Dental Sales by Geography $7.6B or 61% of Net Sales Market Share: North America (60%) North America: 35% to 40% 60% 28% Europe: 20% to 25% Europe (28%) Australia/New Zealand: 30% to 35% Rest of World (12%) 12% Market share represents Henry Schein estimates and
Slide 11: Dental Specialty Markets
Dental Specialty Markets Implants & Biomaterials Market Share: 5%-10% • High-margin business • Historically faster growth than core dental market • Ability to leverage existing relationships with specialty practitioners • General practitioners increasingly performing specialty procedures Orthodontic
Slide 12: Dental Market – Long Term Growth Strategy
Dental Market – Long Term Growth Strategy • Increasing penetration with existing customers • Greater penetration of dental specialty markets • Advancing technology solutions • Continued focus on large group practices • Digitalization of prosthetic solutions • Geographic expansion 12
Slide 13: Dental Market – Key Acquisitions
Dental Market – Key Acquisitions Key Acquisitions Description Revenue* Casa Schmidt (2021) Expands dental distribution in Spain/Portugal $42M TDSC.com (2020) Expands distribution in N.A. online channel $20M Cliniclands (2019) Entry into dental market in Sweden $10M Wuhan (2019) Expands our dental bu
Slide 14: Medical Market Position
Medical Market Position #2 U.S. distributor to healthcare providers in multiple segments: alternate-site practices, ambulatory surgery centers, laboratory, public safety, government and health systems U.S. market focus – long term growth strategy • Approximately 60% of U.S. physician practices are a
Slide 15: Medical Market
Medical Market 2021 Henry Schein Global Medical Sales by Geography $4.2B or 34% of Net Sales U.S. Market Share: North America (98%) Approximately 20% 98% Market information excludes certain specialty and oncology pharmaceutical products, software, and Europe (2%) certain other services Key Acquisiti
Slide 16: Technology & Value-Added Services Market Position
Technology & Value-Added Services Market Position Practice Management Solutions Financial Services • Two-thirds of revenue is recurring • Full-service provider of financial services - Technical support • Providing transitions business - E-claims and credit card processing Practice Services • U.S. pe
Slide 17: Technology & Value-Added Solutions
Technology & Value-Added Solutions 2021 Henry Schein Global Technology & Value-Added Services by Geography $641M or 5% of Net Sales Key Acquisitions/JVs Description Revenue* eAssist (2021) Adds Outsourced Virtual Dental Billing Platform $31M** Jarvis (2021) Expands Dental Analytics Solutions NA Dent
Slide 18: Henry Schein One
Henry Schein One Patient Experience Circle • Henry Schein One offers integrated solutions that simplify each step of the patient experience • Presence in 11 countries • Approximately 2,000 team members 18
Slide 19: Henry Schein One Solutions Portfolio
Henry Schein One Solutions Portfolio Platforms – Practice Management Systems Office Spend Opportunity: $100-$1000+/month Support, Consulting, Business Analytics Virtual Business Services Office Spend Opportunity: Office Spend Opportunity: Office Spend Opportunity: $200-$2000+/month $200-$400/month $
Slide 20: ESG Action and Reporting
ESG Action and Reporting In 2022, we will be fully in accordance with GRI (core option) and SASB Standards Environment Social Governance • Oversight of ESG and Sustainability Activities • We aim to by Nominating and Governance Committee donate at least of our Board of Directors. Sustainability an ad
Slide 21: Financial Performance
WA HENRY SCHEIN? @ onUs Financial Performance
Slide 22: Growth Since Going Public
Growth Since Going Public Non-GAAP(1) ($ in millions, except per share data) 1995 2021 Compound Annual Growth Rate Net Sales $583.6 $12,401.0 12.5% Operating Income1 $18.3 $875.3 16.0% Operating Margin1 3.13% 7.06% 15 bps* Net Income1 $8.6 $640.6 18.0% Diluted EPS1 $0.16 $4.52 13.7% Split Adjusted F
Slide 23: Annual Financial Performance
Annual Financial Performance Non-GAAP(1) ($ in millions, except per share data) 2020 2021 Delta Net Sales $10,119.1 $12,401.0 22.6% Operating Income1 $567.4 $875.3 54.3% Operating Margin1 5.61% 7.06% 145 bps Net Income1 $425.3 $640.6 50.6% Diluted EPS1 $2.97 $4.52 52.2% From Continuing Operations. E
Slide 24: Q4 2021 Financial Highlights
Q4 2021 Financial Highlights Non-GAAP1 ($ in millions, except per share data) Q4 2020 Q4 2021 Delta Sales $3,165.7 $3,330.5 5.2% Operating Income1 $185.6 $205.1 10.5% Operating Margin1 5.86% 6.16% 30 bps Net Income1 $143.6 $150.7 4.9% Diluted EPS1 $1.00 $1.07 7.0% Sales are from Continuing Operation
Slide 25: Diversified Sales in Complementary Markets
Diversified Sales in Complementary Markets 2021 Worldwide Sales: $12.4 Billion BY PRODUCT BY GEOGRAPHY 61% 74% 34% Dental (61% or $7.6B) North America (74%) 19% Medical (34% or $4.2B) Europe (19%) Rest of World (7%) 7% Tech/VAS (5% or $641M) 5% 25
Slide 26: Sales Highlights
Sales Highlights Long-Term Financial Goal Goal: NET SALES Grow faster than end market growth rates (organic) ($ in Millions) $14,000 Result: Sales Growth $10,119 $12,401 2017 2018 2019 2020 2021 $9,986 $9,418 $8,883 Internal 1 3.1% 4.0% 4.4% 0.8% 16.9% $7,000 Acquisition 4.3% 1.5% 3.3% 0.6% 4.2% Tot
Slide 27: Operating Income and Margin Highlights
Operating Income and Margin Highlights NON-GAAP OPERATING INCOME Long-Term Financial Goal ($ in Millions) $1,000 Goal: $875 • Continued operating margin expansion $733 $693 $675 $567 Result: $500 1995 2021 Operating Margin 3.1%(1) 7.06%(1) $0 2017 2018 2019 2020 2021 From Continuing Operations. Excl
Slide 28: Earnings Highlights
Earnings Highlights NON-GAAP EARNINGS PER Long-Term Financial Goal DILUTED SHARE Goal: $6.00 Continued year-over-year EPS growth, including share repurchases and acquisitions $4.52 $3.51 $3.17 $2.89 $2.97 $3.00 Result: 1995 2021 Diluted EPS $0.16(1) $4.52(1) (CAGR of 13.7%) $0 2017 2018 2019 2020 20
Slide 29: Cash Flow
Cash Flow Long-Term Financial Goal Goal: • Cash flow from continuing operations to exceed net income From Continuing Operations. See the appendix of this slide set for a reconciliation of GAAP and non-GAAP measures. 29
Slide 30: Cash Return to Shareholders
Cash Return to Shareholders $700M $600M $525M $450M $500M $401M $400M $300M $200M* $200M $74M** $100M $0 2017 2018 2019 2020 2021 * Blackout in part of 2018 due to spin-off of animal health business ** Impacted by COVID-19 30
Slide 31: Strong Balance Sheet
Strong Balance Sheet December 25, 2021 ($ in millions) Cash & Equivalents $118.0 Working Capital $1,537.5 Total Assets $8,481.1 Total Debt $872.5 Equity $4,063.2 DSO Year-to-Date 41.8 days Inventory Turns Year-to-Date 5.2x Net Debt to Non-GAAP TTM EBITDA 0.66x 31
Slide 32: Investment Merits
Investment Merits • Multiple organic and M&A growth strategies • Proven financial track record • Operating model goals for long-term growth • Experienced management team 32
Slide 33: Appendix
APPENDIX 33
Slide 34: GAAP & Non-GAAP Reconciliations: Growth Since Going Public
GAAP & Non-GAAP Reconciliations Growth Since Going Public Henry Schein, Inc. Fourth Quarter 2021 Analyst Presentation Full Year Growth Since Going Public From Continuing Operations (in millions, except per share data) Reconciling Items Special Management Compensation Settlement and Net Gain on Sale
Slide 35: GAAP & Non-GAAP Reconciliations: Annual Financial Performance
GAAP & Non-GAAP Reconciliations Annual Financial Performance Henry Schein, Inc. Fourth Quarter 2021 Analyst Presentation Full Year 2021 Financial Highlights From Continuing Operations (in millions, except per share data) Reconciling Items Settlement and Net Gain on Sale of GAAP Basis Restructuring C
Slide 36: GAAP & Non-GAAP Reconciliations: Q4 2021 Financial Highlights
GAAP & Non-GAAP Reconciliations Q4 2021 Financial Highlights Henry Schein, Inc. Fourth Quarter 2021 Analyst Presentation Q4 2021 - Financial Highlights From Continuing Operations (in millions, except per share data) Reconciling Items GAAP Basis Restructuring Costs Gain on Sale of Equity Investments
Slide 37: GAAP & Non-GAAP Reconciliations: Operating Income
GAAP & Non-GAAP Reconciliations Operating Income Henry Schein, Inc. Fourth Quarter 2021 Analyst Presentation Full Year Operating Income and Margin Highlights From Continuing Operations (in millions, except per share data) GAAP Reconciling Items Non-GAAP 2019 2020 2021 2019 2020 2021 2019 2020 2021 N
Slide 38: GAAP & Non-GAAP Reconciliations: Earnings Highlights
GAAP & Non-GAAP Reconciliations Earnings Highlights Henry Schein, Inc. Fourth Quarter 2021 Analyst Presentation Full Year Earnings Highlights From Continuing Operations (in millions, except per share data) GAAP EPS GAAP Net Income 2019 2020 2021 2019 2020 2021 GAAP Earnings per share $ 4.69 $ 2.81 $
Slide 39: GAAP & Non-GAAP Reconciliations: Net Debt to EBITDA
GAAP & Non-GAAP Reconciliations Net Debt to Non-GAAP TTM EBITDA Henry Schein, Inc. Fourth Quarter 2021 Analyst Presentation Net Debt to EBITDA From Continuing Operations (in millions, except ratio) Last Twelve Months Ending December 2021 Reconciling Items Restructuring and Stock Based Litigation Set
Slide 40: GAAP & Non-GAAP Reconciliations: Tax Rate
GAAP & Non-GAAP Reconciliations Tax Rate Henry Schein, Inc. Fourth Quarter 2021 Analyst Presentation Income Tax Rate Reconciliation From Continuing Operations (in millions, except tax rate) Q4 2021 Pretax income Tax Expense Tax Rate Income Tax Rate - GAAP $ 193.0 $ (43.4) 22.46% Add back Non-GAAP Ad