Restructuring costs put a slight damper on Henry Schein's fourth-quarter earnings despite positive revenue growth across the company's businesses. Full-year results were slightly stronger.
The Melville, N.Y. outpatient medical supply distributor posted $129.9 million in profits for the three months ended Dec. 26, down 2.3% from the same period the prior year. Rising sales were offset by $12.4 million in restructuring costs, as the company sought to tighten its belt over the past fiscal year.
Chief Financial Officer Steven Paladino said during a conference call Wednesday that Henry Schein expects to continue to record restructuring costs through the first half of the fiscal year.
The company reported $2.9 billion in fourth-quarter sales, up 5.5% from the same time the prior year. Sales increased across Schein's dental, animal health, medical supply and technology businesses, though unfavorable exchange rates offset sales by 4.8%.
Medical sales, which are largely centered on the U.S., were $561.6 million, up 21.6% thanks in part to joint sales through an agreement with Cardinal Health, which sold its physician office business to Schein in 2014. Internal sales growth was 10.2%, thanks to success with large group practices and integrated delivery networks, the company said.
Henry Schein CEO Stanley Bergman said the transition of Cardinal's customers to Henry Schein's platform is “substantially complete” and the company's sales teams have continued to make joint customer presentations.
As providers continue to reconfigure their supply chains to service growing outpatient locations, Schein's business continues to grow, Bergman said. “We have a decent market share but we believe there's still a huge market share to go that will be split up over the major competitors of today over the years to come, so we're still very bullish.”
Schein reported $93.8 million in sales of technology and value-added services for medical practitioners in addition to bigger business in dental and animal health. That's up 2.8% from the quarter before, offset by a 1.7% decline due to foreign currency exchange.
Fiscal 2015 profit was $479.1 million, up 2.8% from the year before, while revenue was $10.6 billion, up 2.5%. Schein recorded $34.9 million in restructuring costs during the fiscal year. Schein affirmed its 2016 financial guidance of 10% to 12% growth in adjusted diluted earnings per share.
The company also announced that it repurchased about 1 million shares of common stock during the fourth quarter at an average price of about $146.90 per share or about $150 million. The impact of the repurchase on fourth-quarter diluted earnings per share was less than one cent, and the company had about $400 million authorized for future repurchases at the end of the fourth quarter.
Bergman also briefly discussed Schein's progress as a dental partner for the Defense Department's $4.33 billion electronic health-record contract. Cerner Corp. is the medical EHR contractor.
