Henry Schein NASDAQ: HSIC reported first-quarter 2026 results that management said reflected continued momentum from the second half of last year, with strength in U.S. Dental and Global Technology more than offsetting softness in its Medical business.
CEO highlights strategy, market conditions, and early priorities
Chief Executive Officer Fred Lowery, who said he is progressing through his “100-day plan,” pointed to what he called Henry Schein’s competitive advantages, including global distribution reach, its role as a primary distributor for many national DSOs in the U.S., and its integrated offering under the company’s Bold+1 strategy. Lowery said he intends to “sharpen our operational execution, build a stronger performance culture, and create a leaner, more agile Henry Schein.”
On market conditions, Lowery said he has heard from customers that the dental market “remains healthy, with demand continuing to outpace supply,” making “efficiency and workflow optimization” a key need. He added that in Medical, procedures continue to shift to non-acute settings, which he said aligns with Henry Schein’s capabilities across ambulatory surgical centers, community health centers, private practices, and home solutions.
Lowery also highlighted technology and AI as an area of focus, citing increasing AI development in the pipeline and noting the company launched a “next generation AI clinical workflow” at its THRIVELIVE event in Las Vegas, which had more than 1,000 attendees.
First-quarter financial results
Senior Vice President and Chief Financial Officer Ron South said first-quarter 2026 global sales were $3.4 billion, up 6.3% from the prior-year quarter. He said the increase reflected 2.5% local currency internal sales growth, a 3.1% benefit from foreign exchange, and 0.7% from acquisitions.
- GAAP operating margin: 5.41%, down 12 basis points year over year
- Non-GAAP operating margin: 7.53%, up 28 basis points year over year, driven by gross margin expansion and business mix
- GAAP net income: $107 million, or $0.92 per diluted share (vs. $110 million, or $0.88, a year ago)
- Non-GAAP net income: $153 million, or $1.32 per diluted share (vs. $143 million, or $1.15, a year ago)
- Adjusted EBITDA: $289 million (vs. $259 million), representing 11.6% growth
South said foreign exchange favorably impacted diluted EPS by about $0.03 versus the prior year.
Segment performance: Dental strength, Medical impacted by light flu season
South said the Global Distribution and Value-Added Services group posted sales growth of 6.1%, with “continuing strong momentum in the U.S.” U.S. Dental merchandise sales grew 5.6% (4.1% internal), which South attributed to market share gains, volume growth, and additional pricing implemented in January. He cited Henry Schein One eClaims data as showing “signs of modest procedure growth in the U.S.” and said patient traffic was “stable to leaning positively.”
U.S. Dental equipment sales grew 3.4%, driven by traditional equipment, which South said reflected confidence among practitioners—particularly DSOs—continuing to invest in their practices. He noted digital equipment sales were “essentially flat” due to softness in intraoral scanners and 3D printers, driven by lower average selling prices from new entrants despite higher volume.
U.S. Medical distribution sales grew 1.3% (1.2% internal). South said growth in home solutions and dialysis was partially offset by lower sales of point-of-care diagnostic test products tied to respiratory illness due to a light flu season. He said this diagnostic category represents roughly 15% to 20% of the Medical business and that excluding it, sales growth would have been “mid-single digit.”
Internationally, South reported dental merchandise sales growth of 12.5% (1.8% local currency internal), driven by growth in the U.K., Italy, and Brazil. International dental equipment sales increased 13.4% (3.6% local currency internal), with solid traditional equipment growth in markets including Germany, the U.K., Canada, Australia, and New Zealand. Global Value-Added Services sales rose 10.6% (7.8% local currency internal).
In the Global Specialty Products Group, sales increased 8.1% (1.7% local currency internal). South said implant sales were driven by “high single-digit growth in value implant systems,” but the mix shift toward value implants resulted in lower gross margin versus the prior year. In response to a question, South said the company saw “some flatness in the premium implants,” more so in the U.S. than Europe, and that both regions were “lower single digits to flat.”
The Global Technology Group delivered total sales growth of 7.0% (6.9% local currency internal). South said U.S. results were supported by Dentrix Ascend, while international growth was driven by Dentally. He said cloud-based customers increased by about 25% year over year and the company now has more than 13,000 Dentrix Ascend and Dentally subscribers.
Value creation initiatives, e-commerce rollout, and capital allocation
Lowery said the company is “just beginning to unlock value” from its value creation initiatives and reiterated a goal of greater than $200 million of annual operating income improvement “within the next few years,” including a $125 million run rate by the end of 2026. He cited actions including appointing an outsourcing partner to centralize select back-office functions, continued buyouts of minority partners in Specialty Products, indirect procurement savings, and gross profit initiatives such as value pricing and corporate brand growth.
South said restructuring expenses were $12 million in the quarter, or $0.07 per diluted share, as the company advances those initiatives. He told analysts that the net P&L impact from G&A-related programs in the first quarter was “relatively nominal” because of offsetting costs and savings, and he expects savings to “accelerate” in the second quarter and more in the third and fourth quarters, contributing to stronger earnings in the back half of the year.
Lowery said Henry Schein has rolled out its global e-commerce platform, henryschein.com, to Canadian and U.S. laboratory customers, with more than 80% of U.S. Dental e-commerce sales now transacted on the site. He said the company expects to complete the U.S. rollout by the end of August before shifting focus to broader international deployment.
On capital deployment, South said Henry Schein repurchased about 1.6 million shares for $125 million during the quarter at an average price of $77.64, with about $655 million remaining authorized for future repurchases.
Guidance maintained; oil and tariffs cited as considerations
South said the company is not providing GAAP guidance due to an inability to estimate restructuring costs without “unreasonable effort,” but reiterated full-year 2026 guidance on a non-GAAP basis. The company continues to expect total sales growth of approximately 3% to 5% and non-GAAP diluted EPS in a range of $5.23 to $5.37, assuming a non-GAAP effective tax rate of about 24%. Adjusted EBITDA is expected to grow in the mid-single digits versus 2025 adjusted EBITDA of $1.1 billion.
Guidance assumptions include stable dental and medical end markets, foreign exchange rates generally consistent with current levels, and that the effects of tariff changes and higher oil prices can be mitigated. In response to analyst questions about oil, South said the company is monitoring freight cost impacts and has mitigation plans, but added that “nothing that we’re seeing out there yet” is creating a significant issue. Lowery said the company will take “appropriate pricing actions” where warranted—including potential fuel surcharges or product-specific pricing—and provide customers visibility into the drivers while also offering alternatives.
Lowery said March was stronger than February, and that sequential improvement continued in April. He attributed first-quarter softness largely to lower respiratory testing demand tied to the light flu season.
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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