Henry Schein NASDAQ: HSIC executives said the company is seeing continued momentum in its dental business and remains committed to previously outlined operating improvement targets, while acknowledging softness in medical tied to a weaker respiratory illness season.
Speaking at a Bank of America healthcare technology and distribution event, Chief Executive Officer Fred Lowery, who has been in the CEO role for about two months, said the company had a “good Q1,” citing healthy growth in dental, strong growth in technology and distribution, and margin expansion during the quarter. Lowery said medical was softer, but that excluding flu-related impacts, underlying performance was “pretty good,” with mid-single-digit growth.
Lowery said Henry Schein recommitted to delivering a $125 million net run-rate value creation benefit by the end of the year and $200 million over the next several years. He also said the company reconfirmed its 2026 guidance.
CEO Focuses on Customers, AI and Commercial Alignment
Lowery said his first 100 days are centered on learning the business through meetings with customers, suppliers and employees, whom the company refers to as “Team Schein” members. He said he is assessing current projects and evaluating where the company should invest for future growth.
One area of focus is artificial intelligence, which Lowery said could help accelerate new product development and improve capabilities brought to market, particularly in Henry Schein’s technology business. He also pointed to commercial alignment as an opportunity, saying the company wants to present customers with a broader value proposition across multiple parts of Henry Schein.
Lowery said the company is working to shift its customer message from helping customers save money to helping them “make more money,” grow faster and operate more productively.
Operational Savings Expected to Build in Second Half
Chief Financial Officer Ron South said the $125 million target represents the expected net run-rate operating income improvement as the company enters 2027. He said Henry Schein expects some benefit in 2026, with savings more weighted toward the second half of the year.
South said the timing is largely due to general and administrative initiatives, which require planning and structural changes in how the company supports the business. He said the goal is to create a scalable structure that can support growth without adding significant incremental cost.
Gross profit optimization is expected to contribute sooner, South said, with some benefit already seen in the first quarter. He cited dynamic pricing as one example, adding that it does not only mean increasing prices but can also include lowering prices in areas where Henry Schein wants to be more competitive.
Dental Momentum Continues; Medical Growth Excluding Diagnostics
South said dental momentum seen in April continued into May. He said achieving the company’s desired dental growth requires taking market share, which includes retaining current customers and reducing churn.
In medical, South said point-of-care diagnostic kit sales weighed on first-quarter growth because demand for those products is tied to the respiratory illness season, including flu and RSV. Excluding that category, he said the medical business grew in the mid-single digits.
South said the diagnostic kit category is typically more important in the fourth and first quarters, so he expects less impact in the middle of the year. He also highlighted Henry Schein’s home solutions business, which he said now accounts for more than 10% of medical revenue, with a run rate of more than $400 million. He said the business grows faster and has better margins than core medical.
Margins Supported by Private Label and Pricing Tools
South said gross margin improvement in distribution reflected early benefits from gross profit optimization, stability in glove pricing and faster growth in company-owned brands, or private label products. He said those products carry better gross margins than the overall portfolio and that he believes the margin level can be sustainable.
Asked about exposure to oil-linked inputs, South said some product categories may be affected by petroleum-based materials. He said Henry Schein can consider price increases where needed, redirect customers to similar products with less cost pressure, or use private label alternatives where available. He compared the approach to how the company managed tariff volatility last year.
South also noted that oil prices can affect freight costs. He said the company is working with customers to explain any fuel surcharges where needed and believes its approach remains in line with the market.
DSO, Specialty and M&A Opportunities
Lowery said he has met with many of Henry Schein’s largest dental service organization customers and some smaller DSOs. He said those customers see value in Henry Schein and believe there is more the parties can do together.
Lowery identified corporate brands and practice management software as areas of opportunity with DSOs. He said the company expects to expand corporate brand share with DSOs over multiple years rather than through a quick, one-time shift.
In specialty, South said the segment grew about 8%, while local internal growth was 1.7%, a rate the company expects to improve as the year progresses. In the U.S. implant market, he said value implants continue to grow faster than premium implants, both in the market and in Henry Schein’s portfolio. He said the company’s acquisition of the S.I.N. U.S. distributor gives it greater control over that portfolio.
South said Henry Schein will remain disciplined on mergers and acquisitions, with a focus on higher-growth, higher-margin areas such as specialty products, technology and value-added services. He said home solutions also remains an area for potential fold-in acquisitions because it is growing faster and has higher margins than the company’s core medical business.
Lowery said he will measure success over the next year by whether Henry Schein delivers on its 2026 guidance, achieves its value creation commitments and develops a clearer line of sight toward accelerating growth more profitably as an extension of its BOLD+1 Strategy.
About Henry Schein NASDAQ: HSIC
Henry Schein, Inc is a leading global distributor of healthcare products and services, primarily serving office-based dental, medical and animal health practitioners. The company operates through three principal segments—Schein Dental, Schein Medical and Animal Health—each offering a comprehensive portfolio of consumable products, equipment, instruments and related value-added services. With a focus on improving practice efficiency and patient care, Henry Schein provides everything from dental restorative materials and orthodontic appliances to vaccines, pharmaceuticals and diagnostic devices for physicians, as well as pet health products and veterinary equipment for animal health professionals.
In addition to its broad product offering, Henry Schein delivers a suite of technology and service solutions aimed at streamlining workflows and enhancing clinical outcomes.
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