In its third quarter financial report, the company reported an increase in both net sales and dental sales over 2019.
Henry Schein Inc reported its third quarter 2020 financial results, showing net sales of $2.8 billion, an increase of 13.2% compared to Q3 2019. Dental sales for the Q3 2020 were reported at $1.6 billion, an 6.7% increase versus the prior year.
“2020 has been an extraordinarily challenging and unpredictable year for our team, customers and suppliers. I commend the work and sacrifice of Team Schein to support business continuity for our customers. The pandemic caused disruption to the supply chain and as suppliers reacted to increased demand for personal protective equipment (PPE) and shortages of raw materials, our markets experienced significant price volatility. As a result of the hard work and dedication of the team throughout the COVID-19 crisis, we were ready to assist our dental and medical customers, many of whom were subject to work restrictions and faced severe challenges, as they returned to their offices to provide safe, quality clinical care,” said Stanley M. Bergman, chairman of the board and CEO of Henry Schein. “The strong rebound in sales that began late in the second quarter continued into the third quarter, with growth over the prior year driven by sales of PPE and COVID-19-related products. This growth, coupled with the various actions we took earlier in the year to reduce operating expenses, resulted in diluted EPS that grew 8.8% on a GAAP basis and 14.4% on a non-GAAP basis. Operating margin was primarily negatively impacted by significant inventory cost adjustments associated with PPE and COVID-19 related products, offset by lower expenses. Most of the temporary expense-reduction initiatives have now ended, and although we expect PPE and COVID-19-related product sales to positively impact dental and medical consumable merchandise sales into the future, we expect overall sales growth to moderate from the third quarter.
“We remain committed to the well-being of Team Schein and our disciplined strategy that is focused on the success of our customers, helping practitioners to efficiently manage their practices while providing quality care, as the driver of long-term profitable growth of the company. Given the challenging macro environment that started with the onset of the pandemic, earlier this year we paused our long-standing program of strategic acquisitions. Yet as global business conditions have improved, we will resume these activities. We now have significant opportunities to allocate capital in support of our strategic plan, with the goal of maintaining a strong balance sheet and increasing operating cash flow over time,” said Bergman.
In North America, the company reported that dental consumable merchandise internal sales in local currencies increased 8.1% and dental equipment internal sales in local currencies increased 0.2%. Internationally, dental consumable merchandise internal sales in local currencies increased 11.1% and dental equipment internal sales in local currencies declined 6.9%.
“Customer demand for PPE and COVID-19-related products increased as patients began to return to dental practices globally, resulting in strong consumable merchandise sales growth. While recent growth in COVID-19 cases and infection rates are creating renewed uncertainty in certain geographies, the current global dental end markets continue to improve overall and are generally stable,” noted Bergman.
