Leading global distributor of healthcare products and
Henry Schein Inc.
) disclosed the divestiture of its investment in a dental
wholesale distributor in the Middle East. This reflects the
company's strategy to focus on areas with high growth potentials.
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The Middle Eastern wholesale distributor served as an importer
for Henry Schein that supplied offerings to other distributors.
The company anticipates a one-time charge of $11-$13 million
(13-15 cents) in the third quarter of 2013 from the divestment of
its unprofitable, non-controlling interest in the entity.
Henry Schein will accordingly report third-quarter results after
adjusting the impact of the one-time expenses associated with the
divestment. The current Zacks Consensus Estimate is pegged at
$1.20 per share, reflecting growth of 11.53% year over year.
As an entity that supplies healthcare products and services to
office-based dental, medical and animal health practitioners
worldwide, Henry Schein believes that the divestment will
increase focus to office-based practitioners that serves as the
company's primary customer base.
This underscores Henry Schein's commitment to serve the needs of
office-based dental practitioners, schools and other
institutions, its target market. We expect the company to sharpen
focus on other high-growth geographies like the U.S., Australia
and New Zealand. However, the European economy remains an
overhang for Henry Schein.
Henry Schein continues to focus on its core dental business. Last
month, the company's U.S. dental franchise Henry Schein Dental
entered a distribution partnership with Carl Zeiss Meditec Inc.
to distribute the well-regarded portfolio of ZEISS dental
microscopes and loupes.
Henry Schein should be aware of similar advances made by peers in
the industry. Recently,
Patterson Companies Inc.
) inked a strategic distribution agreement with
Sirona Dental Systems Inc.
). Henry Schein needs to take note of moves made by such strong
rivals. The industry is plagued by pricing pressure and
competitive tussle for market share gains.
Henry Schein carries a Zacks Rank #3 (Hold). Other stocks such as
Align Technology Inc.
), carrying a Zacks Rank #2 (Buy) is likely to do well.