Tuesday, Nov.
3, 2026 CALL PARTICIPANTS Vice President of Investor Relations and Strategic Financial Project Officer - Graham StanleyChief Executive Officer - Frederick LowerySenior Vice President and Chief Financial Officer - Ronald N.
SouthIncoming Chief Financial Officer - Emmanuel Capre Global Net Sales -- $3.5 billion, representing a 4.0% increase total and 3.1% local currency internal growth.Non-GAAP Diluted EPS -- $1.56, an increase of 13.0% compared to the third quarter of 2025.Adjusted Non-GAAP Diluted EPS -- $1.37, representing 19.1% growth when excluding a $0.19 benefit from tariff refunds and a prior year remeasurement gain of $0.23.US Dental Merchandise Sales -- $660 million, reflecting 8.6% total growth and 7.0% internal local currency growth driven by market share gains and volume increases.Global Specialty Products Sales -- $391 million, a 6.1% increase total and 3.4% internal local currency growth led by implant demand in Europe.Global Technology Sales -- $181 million, growing 5.2% total and 6.5% internally in local currency due to cloud-based software adoption.Tariff Refund Benefit -- $28 million, recognized as a reduction in cost of goods sold during the quarter.2026 Non-GAAP Diluted EPS Guidance -- $5.50 to $5.56, raised from the previous forecast of $5.29 to $5.39.2026 Total Sales Growth Guidance -- 4.5% to 5.5%, which the company left unchanged from its prior outlook.2026 Adjusted EBITDA Growth Guidance -- High-single-digits, an increase from the previous expectation of mid-to-high single-digit growth.Non-GAAP Operating Margin -- 8.03%, representing an expansion of 20 basis points versus the prior year period.Cloud-Based Subscriptions -- 13,500 customers, specifically across the Dentrix Ascend and Dentolee platforms.Cloud-Based Customer Acquisition -- 200 net-new customers per month, primarily driven by private practices and emerging dental support organizations.Medical Home Solutions Sales -- 11.4% growth, continuing a trend of double-digit performance in the medical segment.US Medical Sales -- $1.1 billion, a 1.0% increase total and 1.0% internal growth despite lower demand for point-of-care diagnostics.US Dental Equipment Sales -- $220 million, reflecting a 1.6% increase driven by demand for traditional equipment.Share Repurchases -- $125 million, consisting of 1.4 million shares at an average price of $86.67 per share.Operating Income Improvement Target -- $200 million, with management anticipating a $125 million run rate benefit by the end of 2026.Operating Cash Flow -- $161 million, which management noted was consistent with performance in the prior year period.Share Repurchase Authorization -- $330 million, remaining available for future buybacks as of the end of the quarter.Restructuring Expenses -- $22 million, representing $0.14 per diluted share as part of ongoing value creation initiatives.International Dental Merchandise Sales -- $635 million, representing 5.4% total growth and 3.3% internal local currency growth.
Need a quote from a Motley Fool analyst? Email [email protected] Lowery stated, "We are seeing some pressure in discretionary procedures, where patients can be more selective to out of pocket costs and they may choose to defer treatments," noting potential headwinds in the patient volume for noncore services.Lowery noted, "Brazil remained a headwind given challenging macroeconomic and political environment due to elections," impacting results in the specialty product and implant segments.
Henry Schein, Inc.
(HSIC -4.31%) reported third quarter results characterized by significant volume-led growth in the domestic dental merchandise segment and expansion in its high-margin technology and specialty portfolios.
Management raised its full-year earnings guidance to reflect improved underlying operational performance and the net benefit of tariff refunds, while initiating limited investments in the fourth quarter intended to support market share gains in the 2027 fiscal year.
The company is transitioning its financial leadership as Emmanuel Capre succeeds Ronald N.
South as Chief Financial Officer.
Strategy remains focused on organizational simplification through shared services and the prioritization of cloud-based technology solutions to offset inflationary pressures and labor constraints for practitioners.
Management confirmed that higher-growth and higher-margin businesses are projected to contribute 50% of total operating income in 2026.The company reported that its system of record strategy is helping practitioners identify revenue opportunities through integrated AI capabilities in the Dentrix Ascend and Dentolee cloud platforms.CEO Lowery stated, "Our agenda remains focused on accelerating growth simplifying the business, and bringing greater rigor and discipline to execution," as the company delayers its organization.The US medical segment reported low-to-mid single-digit growth when excluding the decline in point-of-care diagnostic tests and vaccines.Management noted that the dental equipment backlog remains healthy with orders currently ahead of prior year and prior quarter levels.The company launched the Versalis implant to address the fast-growing value category in the global implant market.
INDUSTRY GLOSSARY DSOs: Dental Support Organizations, which provide non-clinical business management and support services to dental practices.Internal local currency growth: A measure of revenue growth that excludes the impact of foreign currency fluctuations and acquisitions.Dentrix Ascend: A cloud-based practice management software platform designed for dental practices.Curodont: An exclusive dental product distributed by Henry Schein used for non-invasive treatment of early caries.De novo: A new dental practice or office location built from the ground up rather than acquired.Versalis: A recently launched implant system by Henry Schein targeting the value implant segment.
Full Conference Call Transcript Operator: Good morning, ladies and gentlemen, and welcome to Henry Schein's Third Quarter 26 Earnings Conference Call.
At this time, all participants are in a listen-only mode.
Later, we will conduct a question-and-answer session.
Please press the * key followed by 1 on your touch tone phone if you would like to ask a question.
At the end of the call.
If anyone should require assistance during the call, please press the * key followed by 0 on your touch tone phone.
As a reminder, this call is being recorded.
I would now like to introduce your host for today's call, Graham Stanley, Henry Schein's Vice President of Investor Relations and Strategic financial project officer.
Please go ahead, Graham.
Graham Stanley: Thank you, operator, and thanks to everyone joining us this morning, to discuss Henry Schein's financial results for the third quarter.
With me on today's call are Frederick Lowery, chief executive officer Ronald N.
South, senior vice president and chief financial officer and Emmanuel Capre, who will succeed Ronald as Chief Financial Officer effective tomorrow, November 4th.
Before we begin, I would like to state that certain comments made during this call will include information that is forward looking.
Risks and uncertainties involved in the company's business may affect the matters referred to in forward-looking statements.
The company's performance may materially differ from those expressed in or indicated by such statements.
These forward-looking statements are qualified in their entirety by the cautionary statements contained in Henry Schein's filings with the Securities and Exchange Commission and included in the Risk Factors section of those filings.
In addition, all comments about the markets we serve, including end market growth rates and market share, based upon the company's internal analyses and estimates.
Today's remarks will include both GAAP and non GAAP financial results.
Believe the non GAAP financial measures provide investors with useful supplemental information about the financial performance of our business.
enable the comparison of financial results between periods where certain items may vary independently of business performance, allow for greater transparency with respect to key metrics used by management in operating our business.
These non-GAAP financial measures are presented solely for informational and comparative purposes and should not be regarded as a replacement for corresponding GAAP measures.
Reconciliations between GAAP and non GAAP measures are included in the exhibits of today's press release and can be found in the financials and the filings section of our investor relations website under the supplemental information heading.
And in our quarterly earnings presentation also posted on our Investor Relations website.
The content of this conference call contains time-sensitive that is accurate only as of the date of the live broadcast, November 1, 2026.
Henry Schein undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances after the date of this call.
Lastly, during today's Q&A session, please limit yourself to a single question so that we can accommodate questions from as many of you as possible.
And with that, I would like to turn the call over to Frederick Lowery.
Frederick Lowery: Thank you, Graham, and good morning, everyone.
Before turning to our results, I would like to welcome Emmanuel Capre, who will become Henry Schein's chief financial officer effective November 4th.
We are really excited to have you on the team.
I would also like to recognize Ronald who has played instrumental roles at Henry Schein over nearly 2 decades, including the past 4 years as CFO.
Ronald has demonstrated authentic leadership and disciplined stewardship throughout his tenure, and his contributions have built a solid foundation for our future.
He will be staying on as a senior adviser working closely with Emmanuel to ensure a smooth transition.
Ronald, thank you again for your leadership and your tremendous contributions to Henry Schein.
And on a personal note, I would say a big thank you for how you have helped me onboard into the company.
Now before we move to results, Emmanuel, would you like to say a few words? Thank you, Frederick.
I am very pleased to join Henry Schein and am excited about the meaningful opportunities ahead to drive growth, expand margins, create long term shareholder value.
I greatly appreciate the warm welcome I received from Team Schein members over the last few weeks and I value the opportunity to begin engaging with colleagues across the organization.
I look forward to partnering with Frederick, the leadership team, and Team Schein members, and I want to thank Ronald for his support throughout the transition.
Also I also look forward to engaging with many of you in the investment community.
Thank you, Emmanuel.
Now turning to our results.
We delivered another strong quarter that increases our confidence in the momentum we are building at Henry Schein.
We are gaining share expanding margins, and delivering strong underlying earnings growth.
Here are a few highlights from the quarter.
US dental merchandise sales grew 8.6%, including 7% internal local currency growth.
Driven primarily by volume in a stable market.
Excluding the net benefit from tariff refunds this quarter, and the prior year remeasurement gain, adjusted non GAAP diluted EPS increased 19.1% to $1.37.
We expanded non GAAP operating margin by 20 basis points in the quarter.
And we repurchased $125 million of Henry Schein stock bringing the year to date repurchases to $450 million and reflecting our disciplined approach to capital allocation.
I am very pleased with the US dental merchandise sales growth of 8.6%, driven primarily by volume in a stable market and a 19% adjusted earnings per share growth.
It shows that we are winning new customers expanding our share of wallet, and growing our company owned and exclusive products and executing effectively through our sales organizations.
At the same time, we are seeing growing financial benefits from our value creation initiatives.
Our commitments have not changed, and we continue to expect more than $200 million of operating income improvement including a $125 million run rate by the end of 2026.
Together, with a more attractive business mix, and greater operating discipline, these initiatives are helping us convert growth into stronger earnings performance.
We are therefore raising our financial guidance for the year reflecting the net benefit of tariff refunds received during the quarter targeted and limited growth investments in the fourth quarter, which will contribute to growth in 2027 and improved underlying business performance.
My initial priorities coming into the role were clear.
Execute against our 2026 financial plan, deliver our value creation commitments, and invest selectively to accelerate growth.
And we are making strong progress.
Our agenda remains focused on accelerating growth simplifying the business, and bringing greater rigor and discipline to execution.
So let's start first with accelerating growth.
We continue to invest in those areas we see the greatest opportunities to gain share and deepen our customer relationships.
The results we are seeing have increased our confidence in several growth initiatives.
We have therefore made the deliberate decision to make some limited incremental investments in the fourth quarter focused on winning new customers, increasing our share of wallet, and converting more episodic customers into long term Henry Schein customers.
Our objective is to build on the share gains that we are already achieving.
New product development is an important part of our growth expectations particularly across company owned products, and practice management software.
For example, our recently launched Versalis implant positions us well in the fast growing value implant category.
More suppliers are also choosing to offer exclusive products and promotions through our distribution channel.
Underscoring the differentiated value of the Henry Schein platform.
Our investments in Henry Schein 1, which is our market leading technology business, continue to drive accelerated growth in our cloud based practice management platforms as we embed AI enabled capabilities that improve workflows, improve collections, patient engagement, and overall practice performance.
These capabilities help dental practices by identifying revenue opportunities, automating administrative work, and improving clinical and operational workflows.
This is particularly valuable as practices manage labor constraints and rising operating cost.
In our medical business, we remain focused on attractive areas of growth, including our home solutions business, where we delivered double digit growth in the quarter.
Our second priority is simplifying the business.
We are reducing organizational complexity getting closer to the operations, and speeding up decision making.
We have continued to delayer the organization establish our executive team, and align decision making more closely with our operating businesses.
By advancing shared services centralizing selected activities, and driving greater collaboration we are making it easier for our customers to work with us.
We are outsourcing selective functions advancing shared services, centralizing indirect procurement, and building stronger pricing and margin management capabilities.
Our focus is ensuring that our operating income improvements we have committed to deliver are realized in the P&L and that they build over time.
Additional initiatives are being prioritized based on impact and return, including further portfolio streamlining shared services, and outsourcing, AI capabilities, and supply chain tools designed to improve efficiency reduce inventory, and simplify processes.
Simplification should make us faster, more consistent, and more effective at converting top line growth into bottom line growth.
Our third priority is bringing greater rigor and discipline to our execution.
This includes prioritizing investments and resources toward those areas with the greatest potential to drive sustainable growth and returns.
It also applies to capital allocation.
We are taking a disciplined approach that balances investments with returning capital to shareholders.
This discipline is particularly important in an environment that can change quickly.
And like most businesses, we are experiencing inflation and our cost of goods sold which we are successfully offsetting through productivity initiatives, strategic pricing, and lower priced equivalent products, including our company owned brands.
Our customers increasingly need an integrated partner that can simplify practice management, and we are uniquely positioned to deliver that breadth of solution at scale.
Now let me turn to our business performance and what we are seeing in the market.
As I mentioned earlier, we achieved excellent growth in our U.
Dental merchandise sales in the third quarter, with 8.6% total sales growth 7% local currency, internal growth, importantly, was driven primarily by volume rather than price, and particularly among private practices and emerging DSOs.
We believe this reflects continued market share gains from our own brand portfolio and from exclusive products such as CuraDot, This also reflects growth in our active customers and share of wallet.
And strong sales execution by our Team Schein members.
Based on what we see across our customers and the business, the overall US dental market remains steady, and patient traffic was stable during the quarter.
Consumable sales for routine procedures are steady Demand for traditional equipment remains healthy.
And DSOs continue to be an important source of growth.
We are seeing some pressure in discretionary procedures, where patients can be more selective to out of pocket costs and they may choose to defer treatments.
We are watching these trends closely, but they do not materially affect our current growth expectations.
US dental equipment sales growth was solid, Consolidation among small and emerging DSOs remains an important driver as office expansions support greater practice efficiency.
Our scale, and exclusive sponsored promotions and the quality of our service technicians and our sales teams provides meaningful competitive advantages.
As we look to the fourth quarter, we are encouraged by the continued strength in our orders which remain ahead of prior year levels and prior quarter levels.
International dental trends in both merchandise and equipment remain stable with particularly good growth among DSOs.
The US medical market continues to benefit from procedures moving out of acute care into alternate care settings and to home care.
At the same time, we are seeing fewer primary care visits related to respiratory illness.
US medical sales growth remains healthy despite the declining market demand for point of care diagnostic test and lower flu and COVID 19 vaccine sales this quarter.
Home solutions continue to deliver double digit growth And looking forward, we expect an early 2027 US flu season.
To support better medical growth in Q4.
Turning to global specialty products, it also grew well.
In Europe, the implant market remained steady, and we achieved good growth in both premium and value implants.
In The US, despite a softer market, implant sales grew well driven by our SIN 360 value implants.
Brazil remained a headwind given challenging macroeconomic and political environment due to elections.
Our global technology again delivered good growth.
Led by our cloud based platforms and our new AI enabled solutions.
Underlying growth was in line with prior quarters, but was partially offset by a difficult comparison with the prior year Windows 10 end-of-life support revenue.
We expect fourth quarter sales growth to be in line with the first half of this year.
Almost 13.5 thousand customers now subscribe to our Dentrix Ascend and Dentolee cloud based platforms.
We are adding approximately 200 net-new customers per month with demand primarily coming from private practices and emerging DSOs.
Our technology business continues to deliver good underlying growth, as we invest in product development, and innovation.
This is driving increased adoption of our cloud based solutions and conversions to our advanced packages.
That is AscendPro, and Ascend Accelerate.
Which include AI enabled clinical documentation, insurance eligibility, claims and collections, diagnostics, and treatment capabilities, and integrated imaging.
Overall, our third quarter performance demonstrates that the strategy is translating into stronger financial results.
Specifically, businesses with higher growth and margin profiles are projected to be 50% of total operating income in 2026.
Making important progress toward the portfolio mix that we have been building.
We remain focused on increasing the contribution from businesses with higher growth and higher margins and return characteristics.
Our value creation plan is contributing to the results our commitment remains unchanged.
We are also strengthening operating discipline across the organization to focus on translating revenue growth into stronger earnings growth.
And our capital allocation also remains an important part of that value creation framework.
Share repurchases are an established and ongoing component of our capital allocation strategy, alongside disciplined investment in the business.
Taken together, we are gaining share in the key in key businesses improving our portfolio mix, maintaining a disciplined approach to capital allocation, and realizing the benefits of our value creation initiatives to drive our financial performance.
We remain fully committed to delivering those value creation objectives while selectively investing behind the growth opportunities producing the strongest returns.
That combination strengthens our confidence in our ability to translate revenue into sustainable earnings growth.
And with that, I will turn it over to Ronald to review our third quarter results and our updated 2026 guidance in more detail.
Ronald? Ronald N.
South: Thank you, Frederick, and good morning, everyone.
Before I review our financial results, I would like to take a moment to express my appreciation to everyone at Henry Schein, including our finance team and to the many colleagues whom I have had the privilege of working closely over the years.
I am incredibly proud of what we have accomplished together and grateful for the dedication, partnership, and support I have experienced throughout my time at Henry Schein.
I know I am transitioning an exceptional team over to Emmanuel, and I have great confidence in both the team and Henry Schein's future.
it is been a privilege to serve as CFO, and I want to thank everyone who has been part of that journey.
Moving to our third quarter results.
We were pleased by the growth in the business.
As shown on Exhibit D of today's press release, excluding the net benefit from tariff refunds this quarter, and a remeasurement gain in the prior year, our results reflect underlying adjusted non GAAP earnings growth of 19.1%.
Global sales were $3.5 billion with total sales growth of 4.0% compared to the third quarter of 2020.
This reflects local currency internal sales growth of 3.1% a 0.2% increase resulting from foreign currency exchange and 0.7% sales growth from acquisitions.
What stood out especially in the quarter was the 7% local currency internal sales growth in our U.S.
dental merchandise sales, driven primarily by volume from market share gains.
Our GAAP operating margin for the third quarter of 2020 was 5.57%, an increase of 69 basis points compared to the prior year GAAP operating margin.
On a non GAAP basis, operating margin for the third quarter was 8.03%, up 20 basis points compared to the prior year.
Third quarter 26 GAAP net income was $119 million or $1.06 per diluted share.
This compares with prior year GAAP net income of $101 million or $0.84 per diluted share.
Our third quarter 26 non GAAP net income was $175 million or $1.56 per diluted share.
This compares with prior year non GAAP net income of $167 million or $1.38 per diluted share.
The foreign currency impact on third quarter diluted EPS was immaterial.
On an EPS basis, the net benefit from tariff refunds in the quarter was $0.19 per diluted share, which is included in our GAAP and non GAAP results.
We did not record any remeasurement gains in the third quarter of 2020, as compared to a remeasurement gain of $0.23 per diluted share in the third quarter of 2020.
Finally, adjusted EBITDA for the third quarter of 2020 was $321 million compared with third quarter 2025 adjusted EBITDA of $295 million reflecting growth of 8.7%.
The components of third quarter sales growth are included in Exhibit A of this morning's earnings release.
I will highlight the primary drivers for each reporting segment.
Global distribution and value added services group sales grew by 3.7% Driven by growth in global dental merchandise sales.
Looking at the components of that growth, US dental merchandise sales grew 8.6% with local currency internal sales growth of 7%, as growth continued to accelerate.
Performance was primarily driven by increased volume from market share gains, Growth in our company owned products continues to significantly outpace branded products.
US dental equipment sales grew 1.6%.
Driven by growth in traditional equipment, partially offset by a decline in digital equipment sales.
Our equipment backlog remains healthy, and we expect U.
Dental equipment growth to continue in the fourth quarter.
US medical sales grew 1.0% as lower sales of point of care diagnostic products and vaccines were offset by solid growth in our core medical business and 11.4% sales growth in home solutions.
When excluding point of care diagnostic tests and flu and COVID 19 vaccine sales.
Our US medical sales grew in the low to mid single digit range.
International dental merchandise sales grew 5.4% with 3.3% local currency internal sales growth.
International dental equipment sales grew 2.9% with 3.2% local currency internal sales growth.
Internal dental merchandise and equipment sales growth were especially good in Brazil, France, Spain, Australia, and Canada.
Note that equipment sales growth in Germany was affected this quarter by a difficult prior year comparison related to the timing of the biennial international dental show in Germany in 2025.
Finally, global value added services sales declined 4.8% primarily reflecting lower brokerage revenue where sales can be lumpy, from quarter to quarter.
Turning to the global specialty products group, Sales grew 6.1% with 3.4% local currency internal sales growth.
Sales growth was driven by value and premium implants in Europe, as well as value implants in The US.
Partially offset by headwinds in Brazil.
Our global technology group sales grew 5.2% with local currency internal sales growth of 6.5%.
Growth was driven by Dentrix Ascend, and Ventali, our cloud based practice management platform as well as good growth in revenue cycle management.
Supported by increased claims volume.
Internal sales growth slowed slightly from the second quarter due to a challenging prior year comparison.
And we expect growth in the fourth quarter to return to the pace we saw earlier this year.
Turning to our restructuring program.
The company recorded restructuring expenses of $22 million or $0.14 per diluted share during the third quarter of 2020.
As we continued to advance our current restructuring programs and value creation initiatives.
Our value creation initiatives remain on track.
We continue to expect than $200 million of operating income improvement including a $125 million run rate by the end of 2026.
These benefits are contributing to margin expansion, and underlying earnings growth.
And our fourth quarter investments do not change these commitments.
Regarding share repurchase activity, during the third quarter of 2020, the company repurchased approximately 1.4 million shares of common stock at an average price of $86.67 per share for a total of $125 million.
At the end of the quarter, we had approximately $330 million authorized and available for future stock repurchases.
Turning to our cash flow.
We generated operating cash flow of $161 million in the third quarter of 2020.
Our operating cash flow is strong and in line with the prior year.
We continue to expect operating cash flow to exceed net income for the full year.
Turning to our 2026 financial guidance.
At this time, we are not able to provide without unreasonable effort and estimate of restructuring costs related to ongoing value creation initiatives.
Therefore, we are not providing GAAP guidance.
Our 2026 non GAAP guidance is for current continuing operations and does not include the impact of restructuring expenses and related costs.
And other items described in our press release.
Our 2026 total sales growth expectations are unchanged at 4.5 to 5.5 percent over 2025.
We now expect 2026 non GAAP diluted EPS attributable to Henry Schein, Inc.
to be in the range of $5.50 to $5.56.
Compared to prior guidance of $5.29 to $5.39.
We are raising this guidance to reflect the net benefit from tariff refunds recognized in the third quarter targeted and limited growth investments in the fourth quarter, which will contribute to growth in 2027 and improved underlying business performance.
2026 adjusted EBITDA is now expected to grow in the high single digits versus 2025 adjusted EBITDA of $1.1 billion This guidance assumes no significant additional tariff refunds or remeasurement gains for the remainder of 2026.
Our guidance also assumes foreign currency exchange rates will remain generally consistent.
With current levels, and we are assuming an estimated non GAAP effective tax rate of approximately 24%.
With that, I will now turn the call back to the operator for Q&A.
Operator: We will now be conducting a question-and-answer session.
If you would like to ask a question, please press *1 on your telephone keypad.
You may press *2 if you would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset.
Before pressing the star keys.
Our first question comes from the line of Elizabeth Anderson with Evercore ISI.
Please proceed with your question.
Elizabeth Anderson: Hi.
Good morning, guys.
Thanks so much for the question.
Great working with you, Ronald, and welcome, Emmanuel.
I had a question.
I would like to double click a little bit on the share gains that you called out, in US dental consumables.
Can you talk about sort of the product categories, what that is? And then can you just confirm for us how the tariff refunds flow through the P&L? Thank you very much.
Frederick Lowery: Yeah.
Thanks for the question.
I will take the first part, I will let Ronald take the second part.
The 8.6% growth or 7% internal local growth is really strong for us in the U.S., and we feel great about the.
The fact that it is more volume versus price, so heavily volume weighted, which shows we are gaining share.
Particularly interesting part is we are gaining share in....
