This management team is pretty straight forward. Their issues with flu vaccine are legitimate and its not as simple as total market supply. They only make real money on flu vaccine when they sell the supply of their exclusive manufacturer GSK's Flu Laval. This year GSK had problems with their yields of seasonal vaccine and diversified some of their capacity to H1N1 vaccine, as a result less high margin product for HSIC. What is not fully explained is why the revenue per dose was so low, I am thinking they sold pre-ordered doses at a low price to gaurantee revenue and cover their fixed costs and hoped the extra volume would roll int the big profits, but as we know the extra volume wasn't there. The other issue I have with the quarter was that SG&A costs were way higher than last quarter and this is what caused the poor results.
I still think this is a buy though because the multiple is low and I believe the dental business will turn in the next 12 to 18 months and when thier internal growth accelerates the multiple will expand and the stock will work.