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Henry Schein (HSIC) to Report Q1 Earnings: What's in Store?

Henry Schein, Inc. HSIC is scheduled to report first-quarter 2021 results on May 4, before market open.

In the last reported quarter, the company’s earnings of $1.00 surpassed the Zacks Consensus Estimate by 4.2%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on all occasions, the average beat being 44%.

Let’s see how things have shaped up prior to this announcement.

Factors to Note

Dental Business

Per Henry Schein’s February 2021 update, there has been gradual reopening of practices and a stable patient traffic globally over the past few months even in countries experiencing more stringent lockdown rules (with the exception of the U.K.). This recovery trend is likely to have continued during the first quarter as well, thus boosting the company’s top line.

Strength in Henry Schein’s dental end markets on the back of patients returning to dentists for their dental care is expected to have driven its first-quarter revenues. However, the emergence of the new strain of coronavirus and the surge in the number of infected cases loom large on the company’s revenues.

Henry Schein is likely to have continued to gain during the first quarter from the robust customer adoption of its Radic8 Viruskiller. The company’s online-only option for its customers to purchase dental supplies is also likely to have aided its quarterly revenues. Further, Henry Schein is expected to have boosted its first-quarter revenues on the back of its exclusive distribution agreement with Zyris.

Henry Schein, Inc. Price and EPS Surprise

Henry Schein, Inc. price-eps-surprise | Henry Schein, Inc. Quote

Henry Schein’s new product category is air management equipment, including extra oral suction devices and air purification systems. With greater emphasis on infection control and the safety of ambient air, the product is likely to have contributed robustly during the first quarter.

The Zacks Consensus Estimate for first-quarter North American dental revenues is pegged at $940 million, suggesting an increase of 5.9% from the year-ago quarter’s reported figure. The consensus estimate for International Dental revenues stands at $683 million, implying a 16.4% uptick from the prior-year period’s reported number.

Medical Business

Henry Schein’s medical business is again expected to have registered demand for its Personal Protective Equipment (PPE) and COVID-related products (especially COVID-19 test sales) amid the pandemic intensity. Further, management is optimistic about the elevated levels of the COVID-test sales, which it believes will continue owing to the spike in infection rates. This, in turn, is likely to considerably drive the company’s first-quarter results.

Over the past few months, the company has been gaining from the increased uptake of telemedicine. In this regard, Medpod and Henry Schein Medical’s (Henry Schein’s U.S. medical business) web-based clinical decision support system VisualDx have gained importance over the past few months amid the pandemic, a trend that most likely continued to contribute to the first-quarter revenues.

The Zacks Consensus Estimate for first-quarter North American Medical revenues is pegged at $1.05 billion, suggesting an improvement of 35.2% from the year-ago quarter’s reported figure. The consensus estimate for International Medical revenues is pegged at $30.8 million, indicating a 36.1% rise from the prior-year quarter’s reported number.

Technology and Value-Added Services Business

In the last-reported quarter, the business was adversely impacted by the pandemic-led lower patient volumes despite an overall uptick in segmental revenues. Also, weak dental equipment sales volume in North America had affected the company’s hardware revenues. Internationally, the segmental revenues were significantly impacted by the prolonged lockdown in the U.K. These downtrends are likely to have persisted during the first quarter as well due to the unrelenting spread of the pandemic, thus dragging the revenues.

However, product enhancements for Henry Schein One Solutions including directory online booking, are expected to have contributed to its first-quarter top line. Other notable app-based services from the company include Patient Engagement Live, Patient Engage mobile app, Dentrix Ascend Pay and Dentrix Enterprise Pay and Dentrix Ascend ERX, all of which are expected to have perked up the first-quarter revenues on strong customer adoption.

The Zacks Consensus Estimate for first-quarter North American Technology and Value-Added Services revenues stands at $121 million, hinting at 6.1% growth from the year-ago quarter’s reported figure. The consensus estimate for International Technology and Value-Added Services revenues is pegged at $18.8 million, implying a 1.6% uptick from the year-ago period’s reported figure.

The Estimate Picture

For first-quarter 2021, the Zacks Consensus Estimate for total revenues of $2.84 billion implies an improvement of 16.7% from the prior-year quarter’s reported figure.

The consensus estimate for earnings per share is pegged at 83 cents, implying a decline of 11.7% from the prior-year period’s reported number.

What Our Model Suggests

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has higher chances of beating estimates. However, this is not the case here as you can see:

Earnings ESP: Henry Schein has an Earnings ESP of -1.50%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3.

Stocks Worth a Look

Here are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.

Pacira BioSciences, Inc. PCRX has an Earnings ESP of +3.80% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Cooper Companies, Inc. COO has an Earnings ESP of +7.06% and a Zacks Rank of 2, at present.

Owens & Minor, Inc. OMI has an Earnings ESP of +2.41% and is a Zacks #2 Ranked stock.

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Owens & Minor, Inc. (OMI): Free Stock Analysis Report
 
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