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A Look at Henry Schein’s Animal Business Spin-Off

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Company overview

Henry Schein (HSIC) generates revenues from two business segments—Healthcare Distribution and Technology and Value-Added Services. Its Healthcare Distribution segment includes dental, animal health, and medical consumable product sales. It distributes large and small equipment, laboratory products, branded and generic pharmaceutical products, vaccines, surgical products, diagnostic tests, and vitamins.

The company’s Dental Business serves dental practitioners, dental laboratories, schools, and other institutions. Together, Henry Schein’s dental, animal health, and medical groups serve practitioners in 34 countries.

Henry Schein’s global technology and value-added services provide software, technology, and other services. It offers practice management software systems for dental, medical, and animal health clinics. It also provides e-services, educational services for practitioners, and consulting.

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Animal business spin-off

In April, Henry Schein reached an agreement with HS Spinco and Direct Vet Marketing for creating a new entity—Vets First Corp. Under the agreement, Henry Schein plans to contribute its animal health business assets to Spinco in exchange for Spinco common stock. These Spinco shares are expected to be distributed to Henry Schein shareholders.

At the end of the transaction, Henry Schein shareholders are expected to own ~63.0% of Spinco common shares. Further, Henry Schein expects to receive a cash dividend of $1.0 billion–$1.25 billion on a tax-free basis under the transaction. Henry Schein expects this transaction to close by the first quarter of 2019. Henry Schein aims to drive further growth in its dental and medical businesses due to increased focus after this spin-off.

We’ll take a look at Henry Schein’s financials and valuations in the final part of this series.

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