HSIC Acquires Provet - Analyst Blog

Henry Schein (HSIC) has completed the acquisition of Australia based Provet Holdings, the largest veterinary products distributor in Australia having $278 million in revenues for the fiscal year ended in June 2010. Earlier, in October 2010, Henry Schein had announced its decision to acquire Provet for approximately $91 million. While the deal is expected to be neutral to 2011 EPS, it is expected to have a positive impact of 2-3 cents in 2012.

With the acquisition of Provet, Henry Schein will be able to target the Australasian veterinary market which is valued at AUD$620 million. The company's global veterinary business currently has annual revenues of $2 billion catering approximately 47,000 veterinary practices worldwide.

Henry Schein derives revenues from two segments – Healthcare distribution and Technology. Through the first segment, the company caters to the dental, medical, animal health and international markets. These four divisions and the Technology segment accounted for 34% ($665.9 million), 21% ($391.9 million), 12% ($225.2 million), 30% ($561.4 million) and 3% ($49.1 million), respectively, of the total revenue during the third quarter of fiscal 2010. The portfolio consists of consumable products, small equipment, laboratory products, large dental and medical equipment, equipment repair services, branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products and vitamins.

Henry Schein continues to experience strong top line growth and has established its footprint in both domestic and international market in dental, vet, and medical supply distribution. The company's performance should improve further with the gradual recovery in economic outlook.

Based on a strong third quarter, Henry Schein raised the low end of its fiscal 2010 earnings guidance by 4 cents to $3.50−$3.56. The company also provided its guidance for fiscal 2011. It expects EPS of $3.88−$3.98, reflecting an annualized growth of 10%−13% from the midpoint of 2010 guidance.