Henry Schein Q2 Earnings Call Highlights

Key Points

• Strong Q2 performance: Henry Schein’s sales rose 6.7% to $3.5 billion, while non-GAAP EPS increased 15.5% to $1.27 and adjusted EBITDA grew 12.7% to $288 million. Margin expansion across all segments supported the earnings gains.
• Growth across key businesses: U.S. dental merchandise sales increased 8.3%, international dental sales grew at double-digit rates, and the technology segment rose 8.2% with nearly 13,000 cloud-platform subscribers. The company also cited market-share gains and stable dental patient traffic.
• 2026 outlook raised: Henry Schein now expects full-year sales growth of 4.5%–5.5% and non-GAAP EPS of $5.29–$5.39. Its value-creation program remains targeted at more than $200 million in operating-income improvements, with outsourcing and other efficiency initiatives expected to begin contributing more significantly in the second half.

Henry Schein NASDAQ: HSIC reported higher second-quarter sales, operating margins and earnings, citing accelerating internal sales growth, market-share gains in dental merchandise and early benefits from its value-creation program. The company also raised its full-year sales and adjusted earnings guidance.

Chief Executive Officer Fred Lowery said the company’s second-quarter performance reflected sustained momentum across its businesses, strong gross margins and operational execution. He said Henry Schein is focused on accelerating growth, simplifying its operations, strengthening customer relationships and improving profitability.

“Our first half performance and the sustained momentum have positioned us to raise our full year 2026 guidance,” Lowery said.

Second-Quarter Financial Results

Global sales totaled $3.5 billion in the second quarter, up 6.7% from the prior-year period. The increase included 4.6% internal local-currency sales growth, a 1.4% benefit from foreign exchange and 0.7% growth from acquisitions, according to Senior Vice President and Chief Financial Officer Ron South.

GAAP net income rose to $94 million, or $0.82 per diluted share, from $86 million, or $0.70 per diluted share, a year earlier. On a non-GAAP basis, net income was $145 million, or $1.27 per diluted share, compared with $135 million, or $1.10 per diluted share, in the second quarter of 2025.

Non-GAAP operating income increased 10.5%, while non-GAAP diluted earnings per share rose 15.5%, South said. Adjusted EBITDA grew 12.7% to $288 million.

GAAP operating margin expanded 27 basis points year over year to 4.94%, while non-GAAP operating margin increased 25 basis points to 7.21%. South attributed the non-GAAP margin improvement to gross-margin expansion across all segments.

Dental, Medical and Technology Performance

Henry Schein’s Global Distribution and Value-Added Services Group posted sales growth of 6.6%. U.S. dental merchandise sales increased 8.3%, including 6.5% internal local-currency growth, driven by pricing and higher volume. Lowery said the company believes patient traffic remained stable and that it gained market share during the period.

Lowery said U.S. dental merchandise growth included “a little more price than volume,” and the company expects growth in a similar range during the second half despite more challenging comparisons. He cited growth in company-owned brands, strength with dental support organizations, conversion of occasional purchasers into more active customers, and demand for exclusive products including Curadont.

U.S. dental equipment sales declined 1.1%, primarily due to difficult comparisons with several large dental-school orders in the prior-year quarter. The company reported modest growth in digital equipment and said its backlog supports expectations for U.S. dental equipment growth during the remainder of 2026.

U.S. medical distribution sales grew 3.8%, despite lower demand for point-of-care diagnostic products. Government-related operations and Home Health Solutions were areas of strength. Lowery said Home Health Solutions sales rose at a high-single-digit pace and that the business offers faster growth and better margins than the broader core medical market.

International dental merchandise sales increased 11.1%, including 5.4% internal local-currency growth, led by Canada, France, Brazil and Australia. International dental equipment sales rose 8.7%, with 5.4% internal local-currency growth.

The Global Specialty Products Group recorded sales growth of 8.7%, including 3.2% internal local-currency growth. Implant and biomaterials sales contributed to the gain. Lowery said premium implant growth was particularly strong in Europe, while U.S. growth was more modest because the domestic implant market was not expanding as quickly as Europe, the Middle East and Africa.

The Global Technology Group grew sales 8.2%, including 9.1% internal local-currency growth. Nearly 13,000 customers now subscribe to the company’s Dentrix Ascend and Dentally cloud-based platforms. About 90% of Henry Schein One revenue is recurring, Lowery said.

June set a record for new Dentrix Ascend customers, according to Lowery. Average monthly revenue per customer is approximately $500 across Henry Schein One, compared with approximately $800 for Dentrix Ascend customers. The company said customers are increasingly upgrading to higher-featured packages.

Value-Creation Program and Operating Changes

Henry Schein reiterated its goal of generating more than $200 million in operating-income improvements from value-creation initiatives over the next several years, including a $125 million run rate by the end of 2026. The company recorded $29 million in restructuring expenses during the second quarter related to these efforts.

South said the company expects about 40% of its 2026 operating-income improvement from gross-profit initiatives and 60% from general and administrative expense savings. Beyond 2026, benefits are expected to be more heavily weighted toward G&A savings.

Lowery said the company has selected a global outsourcing provider for finance and customer-service functions and has begun the first phase in the United States. Initial labor-cost benefits are expected to begin in the third quarter. He said the project is expected to account for more than half of the G&A savings tied to the $200 million target.

Other initiatives include centralizing indirect procurement, using sales data to identify pricing and margin opportunities, expanding artificial intelligence capabilities, and deploying supply-chain software intended to improve efficiency, reduce inventory and streamline purchasing.

The company also announced leadership changes intended to remove a management layer, place executives closer to the business and customers, integrate supply chain more closely with distribution, and improve decision-making speed and execution consistency.

Raised 2026 Outlook

Henry Schein raised its full-year sales growth outlook to 4.5% to 5.5%, from its prior range of 3% to 5%. The company expects second-half internal local-currency sales growth of approximately 3.5% to 4.5%.

The company now expects 2026 non-GAAP diluted earnings per share of $5.29 to $5.39, representing 6% to 8% growth from 2025 non-GAAP EPS of $4.97. Its previous outlook was $5.23 to $5.37 per share.

South said the higher outlook reflects stronger expected underlying sales performance, partially offset by lower remeasurement gains than originally anticipated. Henry Schein expects no additional remeasurement gains for the remainder of 2026. The company expects fourth-quarter earnings growth to exceed third-quarter growth as sales momentum continues and value-creation initiatives generate increasing benefits.

During the second quarter, Henry Schein repurchased approximately 2.6 million shares for $200 million at an average price of $76.69 per share. The company had approximately $455 million remaining under its share-repurchase authorization at quarter-end.

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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