Henry Schein Inc (NASDAQ: HSIC)

Sector: Healthcare Industry: Medical Distribution CIK: 0001000228
Market Cap 9.46 Bn
P/B 2.82
P/E 24.20
P/S 0.73
ROIC (Qtr) 7.42
Div Yield % 0.00
Rev 1y % (Qtr) 5.20
Total Debt (Qtr) 3.44 Bn
Debt/Equity (Qtr) 1.02
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About

Henry Schein Inc., known by its stock symbol HSIC, operates in the health care industry, providing solutions to health care professionals through a network of people and technology. The company boasts over 91 years of experience in distributing health care products and has established itself as the world's largest provider of health care products and services primarily to office-based dental and medical practitioners, as well as alternate sites of care. Henry Schein serves a diverse range of customers, including over one million customers worldwide...

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Investment thesis

Bull case

  • Operating cash flow of 535M provides exceptional 25.48x coverage of minority interest expenses 21M, showing strong core operations.
  • Operating cash flow of 535M provides strong 14.08x coverage of stock compensation 38M, indicating sustainable incentive practices.
  • Robust free cash flow of 356M exceeds capital expenditure of 179M by 1.99x, indicating strong organic growth funding capability.
  • Retained earnings of 3.38B provide full 1.40x coverage of long-term debt 2.42B, indicating strong internal capital position.
  • Robust tangible asset base of 5.90B provides 4.74x coverage of working capital 1.25B, indicating strong operational backing.

Bear case

  • Operating cash flow of 535M barely covers its investment activities of (311M), with a coverage ratio of -1.72, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 136M against inventory of 1.91B, the 0.07 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Cash reserves of 136M provide limited coverage of acquisition spending of (116M), which is -1.17x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 662M show weak coverage of depreciation charges of 305M, with a 2.17 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 305M relative to operating cash flow of 535M, which is 0.57x suggests significant maintenance capital requirements affecting free cash flow.

Breakdown of Revenue (2024)

Breakdown of Revenue (2024)

Peer comparison

Companies in the Medical Distribution
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MCK Mckesson Corp 117.90 Bn 27.17 0.30 8.62 Bn
2 CAH Cardinal Health Inc 80.96 Bn 103.48 0.82 9.03 Bn
3 COR Cencora, Inc. 79.51 Bn 93.02 0.52 7.92 Bn
4 HSIC Henry Schein Inc 9.46 Bn 24.20 0.73 3.44 Bn
5 AHG Akso Health Group 0.37 Bn -2.71 24.79 0.00 Bn
6 EDAP Edap Tms Sa 0.17 Bn -7.47 2.30 0.01 Bn
7 QIPT Quipt Home Medical Corp. 0.17 Bn -15.61 0.63 0.11 Bn
8 EMPG Empro Group Inc. 0.12 Bn 157.82 21.62 -

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.14 1.06
EV to Cash from Ops. EV/CFO 23.69 13.08
EV to Debt EV to Debt 3.68 282.28
EV to EBIT EV/EBIT 19.15 6.31
EV to EBITDA EV/EBITDA 13.34 12.22
EV to Free Cash Flow [EV/FCF] EV/FCF 35.61 15.66
EV to Market Cap EV to Market Cap 1.34 1.21
EV to Revenue EV/Rev 0.98 1.87
Price to Book Value [P/B] P/B 2.82 11.46
Price to Earnings [P/E] P/E 24.20 34.37
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 2.22
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 5.88
Dividend per Basic Share Div per Share (Qtr) 0.00 0.67
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 2.23
Interest Coverage Int. cover (Qtr) 4.53 60.87
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 6.28 -12,260.13
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 7.94 27.05
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 2.21
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 22.57 -177.28
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 19.65 368.76
EBIT Growth (1y) % EBIT 1y % (Qtr) 23.28 -206.06
EBT Growth (1y) % EBT 1y % (Qtr) 25.24 -173.08
EPS Growth (1y) % EPS 1y % (Qtr) 29.67 -21.54
FCF Growth (1y) % FCF 1y % (Qtr) -15.44 -218.00
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 2.23 15.84
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.17 1.93
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.06
Cash Ratio Cash Ratio (Qtr) 0.04 0.22
Current Ratio Curr Ratio (Qtr) 1.40 1.54
Debt to Equity Ratio Debt/Equity (Qtr) 1.02 -0.33
Interest Cover Ratio Int Coverage (Qtr) 4.53 60.87
Times Interest Earned Times Interest Earned (Qtr) 4.53 60.87
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 7.50 -94.80
EBIT Margin % EBIT Margin % (Qtr) 5.12 -102.39
EBT Margin % EBT Margin % (Qtr) 3.99 -105.05
Gross Margin % Gross Margin % (Qtr) 31.20 23.37
Net Profit Margin % Net Margin % (Qtr) 3.00 -86.72