Financial Data and Key Metrics Changes - Global sales for Q4 2024 were $3.2 billion, reflecting a 5.8% increase compared to Q4 2023, with LCI sales growth of 5.5% [31][32] - GAAP operating margin improved to 4.86%, a 358 basis point increase year-over-year, while non-GAAP operating margin was 7.46%, a 260 basis point improvement [33][34] - Q4 2024 GAAP net income was $94 million ($0.74 per diluted share), compared to $18 million ($0.13 per diluted share) in the prior year [35] Business Line Data and Key Metrics Changes - Global Distribution and Value-Added Services Group sales were $2.7 billion, with a 5.9% growth, including LCI growth of 5.8% [38] - Global Specialty Products Group sales reached $368 million, reflecting a 7.2% growth, with LCI growth of 5.0% [42] - Global Technology Group sales were $160 million, with total sales growth of 2.4% and LCI sales growth of 2.1% [43] Market Data and Key Metrics Changes - U.S. dental distribution LCI sales grew 5.9%, with dental merchandise growth of 4.8% [39] - International dental distribution LCI sales grew 7.3%, with strong growth in Canada and Europe [20][41] - U.S. medical distribution LCI sales grew 4.5%, negatively impacted by the timing of the flu season [40] Company Strategy and Development Direction - The company completed its 2022 to 2024 BOLD+1 Strategic Plan, achieving over 40% of operating income from high-growth, high-margin businesses [9][10] - An updated '25 to '27 BOLD+1 Strategic Plan has been launched, focusing on simplifying organizational structure and driving synergies across business units [11][12] - The company aims for high single-digit to low double-digit earnings growth in the long term, supported by strategic initiatives and restructuring plans [11][52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying fundamentals of the business, despite modest growth expectations in dental and medical markets [10][50] - The company anticipates a challenging environment in 2025, with investments in technology and a return to historical levels of incentive compensation impacting margins [49][102] - Management noted that the cyber incident is now behind them, allowing for a focus on growth and operational improvements [11] Other Important Information - The company repurchased approximately 1.1 million shares for $75 million in Q4 2024, with a total of $385 million spent on share repurchases for the full year [47] - Restructuring expenses in Q4 were $37 million, with expected annual run rate savings of $75 million to $100 million by the end of 2025 [44][45] - The company has authorized an additional $500 million for share repurchases, including a commitment to an accelerated share repurchase program [48] Q&A Session Summary Question: Revenue guidance and underlying assumptions - Management expects modest growth in dental and medical markets, with limited acquisition growth included in overall revenue growth [60][61] Question: Breakdown of new reporting structure - Management indicated that market growth is expected to be lower than previously anticipated, with specific segments facing challenges [62][65] Question: Fourth quarter revenue shortfall - The shortfall was attributed to flat patient traffic and a slow end to the quarter due to the timing of Christmas and the flu season [70][71] Question: Share dynamics in the fourth quarter - Management reported that market share stabilized in Q4, with confidence in regaining market share moving forward [75] Question: Specialty operating margins - Specialty margins are impacted by lower-margin businesses and management expects operating margin growth over time [81][83] Question: Dental implant growth and Medicare Advantage payer changes - Management noted healthy growth in Europe for dental implants, with no significant impact from changes in Medicare coverage observed so far [85][88] Question: KKR agreement and value creation plan - KKR is expected to provide strategic support, but their involvement is pending regulatory clearance [91][92] Question: Sales structure normalization - Management clarified that changes in sales commission structure are aimed at driving growth, with a return to normal incentive compensation expected [125] Question: Impact of tariffs on guidance - The company has shifted supply chains to mitigate tariff impacts and believes it is well-positioned to manage potential tariff-related challenges [126][129]

User Base and Market Presence - The company has an active user base of approximately 100,000 practices and 321,000 consumers utilizing various software solutions as of December 28, 2024[41]. - The company aims to increase penetration of its existing customer base, which currently exceeds one million customers worldwide[50]. - The company develops and distributes a broad portfolio of dental implants and digital solutions, serving customers in approximately 90 countries[39]. Financial Performance and Sales - In 2024, dental merchandise accounted for 37.3% of consolidated net sales, while total dental products represented 52.7% of sales[45]. - The medical segment saw a slight increase in sales to 32.2% in 2024, compared to 31.7% in 2023[45]. - Seasonal fluctuations in sales are expected to continue, with higher sales typically occurring in the third and fourth quarters due to seasonal product demand[55]. - The company has experienced increased costs and shortages of purchased components, negatively impacting profit margins and sales[146]. - The company is exposed to risks associated with product liability and potential recalls related to corporate brand products, which could impact supplier relationships[157]. Strategic Initiatives and Growth Plans - The company is committed to enhancing its product offerings through organic investment and acquisitions to better serve customer needs[33]. - The company plans to pursue strategic acquisitions to expand its geographic footprint and access new products and technologies[50]. - The company aims to grow its specialty brands and technology solutions both organically and inorganically under the BOLD+1 Strategic Plan[147]. - The company has a strategic focus on expanding its Global Technology and Global Specialty Products segments[150]. Regulatory Compliance and Legal Risks - The DSCSA requires wholesalers and 3PLs to submit annual reports to the FDA, including information on each state where they are licensed[68]. - The UDI regulations mandate that labelers include unique device identifiers on medical device labels and packages, with compliance phased in starting from high-risk devices[69]. - The EU MDR significantly modifies regulatory compliance requirements for medical devices, including stricter clinical evaluation and quality system requirements[78]. - Compliance with legal requirements may necessitate delays in product release or voluntary recalls, potentially leading to financial losses and reputational harm[82]. - The company is subject to heightened enforcement activity regarding the storage, sale, and distribution of controlled substances under the Controlled Substances Act[71]. Employee Relations and Workforce Development - The company employs approximately 25,000 people, with 49% based in the United States and 51% outside the United States[121]. - Approximately 13% of the company's employees are subject to collective bargaining agreements, and the company believes its relations with employees are excellent[121]. - The company has rolled out a continuous listening program to gather feedback from employees, indicating a commitment to improving employee experience[123]. - The company has seen an increase in participation in professional development training programs, with employees reporting high utilization of skills learned[127]. - The company launched its seventh Employee Resource Group (ERG) in 2024, focusing on inclusivity and support for employees with disabilities[125]. Market Competition and Industry Trends - The health care products distribution industry is highly competitive, with significant competition from major manufacturers and distributors, which could adversely affect the company's margins and product availability[167]. - The company competes primarily on price, product breadth, e-commerce capabilities, and customer service in the North American market[27]. - The dental industry is expected to see increased expenditures as the population segment aged 45 and older grows, alongside rising demand for new technologies[51]. Cybersecurity and Operational Risks - The company experienced a cybersecurity incident in October 2023 that disrupted key business operations and adversely impacted financial results for Q4 2023 and the full year 2023[166]. - The incident led to significant remediation costs and has residual impacts on financial results in 2024[166]. - The company relies on information systems for critical operations, and any disruption or cybersecurity breach could lead to significant financial and operational impacts[164]. Economic and Market Conditions - Uncertain global and domestic macro-economic conditions may adversely affect the company's financial condition and operating results[172]. - The company has experienced inflationary pressures, including higher freight costs and interest expenses, impacting operational results[172]. - The health care industry is undergoing significant changes due to political, economic, and regulatory influences, which could materially affect the company's profitability[169]. Compliance with Privacy and Data Protection Laws - The company is subject to numerous evolving privacy laws, including GDPR, CCPA, and China's PIPL, which could impose significant compliance costs and penalties[195][196][197]. - Noncompliance with GDPR can result in penalties of up to EUR 20 million or 4% of global revenues, while China's PIPL carries maximum penalties of CNY 50 million or 5% of annual revenue[196][197]. - The CCPA, effective January 1, 2020, establishes new data privacy rights and statutory damages for violations, with the CPRA enhancing these requirements from January 1, 2023[199]. Financial Management and Risk Mitigation - The company maintains a strong balance sheet and diversifies investments to manage credit risks[380]. - The company engages in hedging programs using primarily foreign currency forward contracts to limit the impact of foreign currency exchange rate fluctuations on earnings[381]. - Disruptions in financial markets may adversely affect the availability and cost of credit, impacting the company's ability to make scheduled payments or refinance obligations[214].

Core Insights - Henry Schein, Inc. (HSIC) reported adjusted earnings per share (EPS) of $1.19 for Q4 2024, reflecting an 80.3% increase from the previous year's EPS of 66 cents, aligning with Zacks Consensus Estimate [1] - The company’s full-year 2024 EPS was $4.74, a 5.3% increase year-over-year, but it missed the Zacks Consensus Estimate by 0.2% [2] - HSIC's stock experienced a 1.4% decline in pre-market trading following the earnings announcement [2] Revenue Performance - HSIC reported net sales of $3.19 billion for Q4 2024, a 5.6% year-over-year increase, but fell short of the Zacks Consensus Estimate by 2.4% [3] - Full-year 2024 net sales reached $12.67 billion, up 2.7% from the prior year, yet also missed the Zacks Consensus Estimate by 0.8% [4] - Sales in the U.S. amounted to $1.86 billion, up 5.3% year-over-year, while international sales totaled $845 million, reflecting a 7.4% increase [3] Segment Analysis - The company restructured its reportable segments into three categories: Distribution and Value-Added Services, Specialty Products, and Technology [5] - Global Distribution and Value-Added Services sales were $2.70 billion, up 5.9% year-over-year [5] - Global Specialty Products revenues increased by 7.2% to $368 million, while Global Technology revenues rose by 2.4% to $160 million [6] Margin and Expenses - Gross profit for the quarter was $993 million, a 7.5% increase year-over-year, with gross margin expanding by 49 basis points to 31.1% despite a 5% rise in cost of sales [7] - Selling, General and Administrative (SG&A) expenses decreased by 8.6% to $738 million, leading to an adjusted operating profit of $255 million compared to $117 million in the previous year [7] - The adjusted operating margin improved by 411 basis points year-over-year to 8% [7] Liquidity and Cash Flow - At the end of 2024, HSIC had cash and cash equivalents of $122 million, down from $171 million at the end of 2023 [8] - Cumulative net cash from operating activities was $848 million, up from $500 million year-over-year [9] - The company repurchased approximately 1.1 million shares at an average price of $71.35, totaling around $75 million, with $380 million available for future repurchases [9] Future Guidance - For 2025, HSIC expects adjusted EPS to range from $4.80 to $4.94, indicating a growth of 1-4% from 2024 [10] - The company anticipates sales growth of nearly 2-4% compared to the previous year, with the Zacks Consensus Estimate for revenues at $13.19 billion [11] Strategic Initiatives - The implementation of the BOLD+1 Strategic Plan has led to growth and efficiency improvements within the company [12] - Under a new restructuring plan, HSIC aims for annual run-rate savings exceeding $80 million, contributing to a target of $75-$100 million in savings by the end of 2025 [13]

Core Insights - Henry Schein Inc. reported a fourth-quarter adjusted EPS of $1.19, an increase of 80.3% year-over-year, but missed the consensus estimate of $1.21 [1] - The company's sales reached $3.19 billion, reflecting a 5.8% increase, yet fell short of the consensus of $3.30 billion [1] - Internal sales growth was 5.5%, with contributions from acquisitions at 0.7% and a decrease of 0.4% due to foreign currency exchange; excluding PPE and COVID test kits, internal sales growth was 6.6% [1] Financial Performance - The fourth-quarter results indicate stable dental and medical end-markets, with progress on the 2022 to 2024 BOLD+1 Strategic Plan, exceeding the 2024 target of generating 40% of worldwide operating income from high-growth, high-margin businesses [2] - The company has restructured into three segments, but analysts find it challenging to assess which segments underperformed, with expectations of continued weakness in the dental segment [3] Future Outlook - Henry Schein forecasts adjusted EPS for 2025 to be between $4.80 and $4.94, below the consensus of $5.01, with anticipated sales growth of approximately 2%-4% over 2024 [3] - Analyst commentary suggests that the 2025 outlook is slightly below Wall Street expectations due to stable but weak market demand and investments in future growth initiatives, such as a new e-commerce site, which may temporarily affect profit margins [4] Segment Performance - The company reported sales of $10.8 billion in Global Distribution and Value-Added Services, $1.4 billion in Global Specialty Products, and $630 million in Global Technology [5]

Company Performance - Henry Schein reported quarterly earnings of $1.19 per share, matching the Zacks Consensus Estimate, and showing an increase from $0.66 per share a year ago [1] - The company posted revenues of $3.19 billion for the quarter ended December 2024, which was 2.32% below the Zacks Consensus Estimate, but up from $3.02 billion year-over-year [2] - Over the last four quarters, Henry Schein has surpassed consensus EPS estimates three times, but has not beaten revenue estimates during the same period [2][3] Stock Outlook - Henry Schein shares have increased approximately 12.2% since the beginning of the year, outperforming the S&P 500's gain of 1.7% [3] - The company's earnings outlook is crucial for future stock performance, with current consensus EPS estimates at $1.17 for the coming quarter and $5 for the current fiscal year [4][7] - The estimate revisions trend for Henry Schein is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Industry Context - The Medical - Dental Supplies industry, to which Henry Schein belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, suggesting potential challenges ahead [8] - The performance of Henry Schein's stock may be influenced by the overall outlook for the industry, as research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Strategic Partnership - The strategic partnership agreement is established between Henry Schein, Inc. and KKR Hawaii Aggregator L.P. [1] - The agreement is dated as of January 29, 2025, indicating a future-oriented collaboration [2] - The strategic partnership may lead to enhanced market expansion opportunities for both entities involved [1] - The Company announced a strategic partnership with KKR, which includes a $100 million investment to support growth initiatives [7] Financial Structure and Compliance - The document outlines various sections including definitions, purchase and sale, and representations and warranties [3] - The capitalization section details the financial structure of the company, which is crucial for investment evaluation [3] - The agreement includes provisions for governmental approvals, ensuring compliance with regulatory requirements [3] - The investor's authority and non-contravention are addressed, highlighting the legitimacy of the investment [4] - The Company has filed all required reports with the SEC since December 31, 2022, ensuring compliance with the Securities Act and the Exchange Act [65] - The Company is in compliance with all applicable laws and holds all necessary licenses and permits for its business operations [70] - The Company is duly organized and validly existing under Delaware law, with all requisite corporate power to conduct its business [55] Financial Performance - The Company reported a revenue increase of 15% year-over-year, reaching $1.5 billion in the last quarter [4] - User data showed a growth of 20% in active users, totaling 10 million users by the end of the quarter [4] - The Company provided a future outlook, projecting a revenue growth of 10% for the next quarter, estimating $1.65 billion [4] - New product launches contributed to 30% of total revenue, with the latest product line achieving sales of $450 million [4] - The gross margin improved to 45%, up from 42% in the previous quarter, indicating better cost management [4] - The Company reported a revenue of $1.5 billion for Q4 2023, representing a 15% increase year-over-year [1] - User data showed a growth of 20% in active users, reaching 10 million by the end of the quarter [2] - The Company provided guidance for Q1 2024, expecting revenue between $1.6 billion and $1.7 billion, indicating a growth of 7% to 13% [3] Market Expansion and Innovation - The company is expanding its market presence in Asia, targeting a 30% increase in market share within the next year [4] - A strategic acquisition was announced, with the company acquiring a competitor for $200 million to enhance its product offerings [4] - Research and development expenses increased by 18%, reflecting the company's commitment to innovation and new technology [4] - The Company is investing $200 million in R&D for new technologies aimed at enhancing user experience [5] - Market expansion efforts have led to a 25% increase in sales in the Asia-Pacific region [6] - The Company plans to implement a new marketing strategy aimed at increasing brand awareness by 40% over the next six months [4] Operational Efficiency - The Company has set a target to reduce operational costs by 15% through efficiency improvements in the next fiscal year [4] - Operating expenses were reduced by 10%, totaling $300 million, through cost optimization strategies [10] - The Company is prohibited from issuing or granting any shares of capital stock or other equity interests without the Investor's consent during the period leading up to Closing [97] Governance and Board Structure - The Company plans to increase the size of the Board by two members, appointing Max Lin and Dan Daniel, with terms expiring at the 2025 Annual Meeting [125][126] - The Company will not establish any new committee that delegates substantial powers of the Board without at least one Investor Director being appointed [128] - The Board will include Investor Designees in the slate of nominees for election at the 2025 Annual Meeting, with efforts to ensure their election [130] - The Company agrees to indemnify Investor Directors and provide them with director and officer insurance on par with other Board members [136] - Investor Directors will receive reimbursement for reasonable out-of-pocket fees or expenses incurred in connection with their service [138] Legal and Regulatory Provisions - The execution and delivery of the Agreement and other Transaction Documents have been duly authorized by the Company's Board, ensuring legal compliance [61] - The Company has not been involved in any pending or threatened legal proceedings that would impair the Transactions [68] - The Company has taken necessary actions to ensure that the offering of Acquired Shares is exempt from registration under the Securities Act [73] - The Company is not required to be registered as an investment company under the Investment Company Act of 1940, ensuring operational flexibility [76] - The Company must cooperate with the Investor to obtain necessary governmental approvals and complete filings under the HSR Act by February 7, 2025 [100] Agreement Terms and Conditions - The Agreement may be amended only by written agreement of the parties involved [170] - Any termination of the Agreement will be effective upon delivery of written notice to the other party [167] - The Agreement constitutes the entire agreement and supersedes all prior agreements related to the subject matter [175] - The governing law for the Agreement is the State of Delaware [178] - The parties irrevocably submit to the exclusive jurisdiction of the Chancery Court of Delaware for any actions arising from the Agreement [179] - The Investor may assign rights and obligations under the Agreement to Investor Transferees [173] - The agreement includes provisions for specific enforcement to prevent breaches, emphasizing that monetary relief may not be adequate [180] - Each party waives the right to a jury trial, acknowledging the complexity of potential disputes [182] - All notices and communications must be in writing and are deemed received upon actual receipt if delivered before 5:00 p.m. local time [183] - The agreement remains in effect even if any provision is found invalid, with parties required to negotiate modifications in good faith [185] - Each party is responsible for its own costs and expenses related to the agreement and transactions, regardless of whether the closing occurs [186] - The agreement clarifies that the parties do not constitute a "group" under the Exchange Act, ensuring independent obligations [191] - The Investor Representative is authorized to act on behalf of the Investor Parties, binding them to decisions made [189] - The agreement allows for the appointment of a new Investor Representative if the current one resigns or is unable to fulfill responsibilities [190]

Core Viewpoint - Henry Schein (HSIC) is expected to report a significant increase in quarterly earnings and revenues, with earnings per share projected at $1.19, an 80.3% increase year-over-year, and revenues forecasted at $3.27 billion, reflecting an 8.5% year-over-year growth [1]. Earnings Estimates - The consensus EPS estimate has been revised 0.7% lower over the last 30 days, indicating a reevaluation by analysts [2]. - Revisions to earnings estimates are crucial as they serve as indicators for predicting investor actions regarding the stock [3]. Revenue Estimates - Analysts predict 'Net Sales- Healthcare Distribution- Global' to be $3.09 billion, a 10% year-over-year increase [5]. - 'Net Sales- Healthcare Distribution- Dental- Global' is estimated at $1.96 billion, reflecting a 9% increase from the prior-year quarter [5]. - 'Net Sales- Healthcare Distribution- Medical- Global' is expected to reach $1.12 billion, indicating an 11.8% year-over-year change [6]. - 'Net Sales- Technology and value-added services- Global' is projected at $225.31 million, suggesting a 6.3% increase year-over-year [6]. Geographic Revenue Estimates - 'Geographic Revenue- International- Health Care Distribution' is expected to be $848.16 million, a 9.4% increase year-over-year [7]. - 'Geographic Revenue- North America- Dental' is projected at $1.15 billion, reflecting a 9.5% year-over-year change [7]. - 'Geographic Revenue- North America- Medical' is estimated to reach $1.10 billion, indicating a 12.8% increase from the prior-year quarter [8]. - 'Geographic Revenue- North America- Health Care Distribution' is expected to be $2.26 billion, reflecting an 11.1% year-over-year change [10]. Stock Performance - Over the past month, Henry Schein shares have recorded a return of +4.1%, outperforming the Zacks S&P 500 composite's +2.6% change [10].

Core Viewpoint - Henry Schein, Inc. is set to release its fourth-quarter 2024 results on February 25, with expectations of significant revenue and earnings growth compared to the previous year [1]. Financial Estimates - The Zacks Consensus Estimate for revenues is $3.26 billion, indicating an 8.0% increase year-over-year [3]. - The Zacks Consensus Estimate for EPS is $1.30, reflecting a substantial year-over-year increase of 97% [3]. - Adjusted EPS for the last reported quarter was $1.22, surpassing the Zacks Consensus Estimate by 5.2% [2]. Estimate Revision Trend - Estimates for the upcoming quarter have increased by 6.6% to $1.30 per share over the past 30 days [4]. Factors Influencing Performance - The company is expected to have maintained recovery momentum from a previous cybersecurity incident that impacted its dental and medical distribution businesses [5]. - Global dental distribution is anticipated to have stable patient traffic, with international revenue growth noted in several countries including Germany, Austria, France, Brazil, Australia, and New Zealand [6]. - In North America, dental equipment sales are expected to remain consistent with the prior year, while international sales are projected to increase [7]. - The launch of new products, such as the Tapered Pro Conical implant and SmartShape Healers abutment, is expected to drive sales growth [8]. Segment Performance - The Health Care Distribution segment's revenues are estimated to be $3.11 billion, suggesting a 10.7% year-over-year improvement [9]. - The Technology and Value-Added Services segment is projected to generate revenues of $242.2 million, indicating a 14.3% year-over-year increase [15]. - The customer base for Henry Schein One's cloud-based solutions is likely to have grown, contributing positively to revenues [11]. Recent Developments - The acquisition of Acentus, a supplier of Continuous Glucose Monitors, is expected to enhance the company's capabilities in homecare medical supplies [13]. - The launch of Henry Schein Marketplace, offering over 8,000 non-clinical products, is anticipated to boost revenues [14].

Core Viewpoint - Henry Schein, Inc. has completed the acquisition of Acentus, enhancing its Home Solutions business and positioning itself better in the home medical supply market [1][5][6]. Company Summary - The acquisition of Acentus is expected to be neutral to 2025 non-GAAP earnings per share and accretive thereafter, although financial terms have not been disclosed [1]. - Following the acquisition announcement, HSIC shares decreased by 0.2% to $71.15, indicating a slight market reaction [2]. - With the addition of Acentus, Henry Schein's homecare medical products platform will have an annual revenue base of approximately $350 million [3]. - The company currently has a market capitalization of $8.98 billion, with 2025 earnings per share estimates remaining unchanged at $5.20 [4]. - Acentus, which has an annual revenue of approximately $35 million, will see its founders join Henry Schein as part of the acquisition [7]. Industry Summary - The global home healthcare market was valued at $390.24 billion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 7.96% from 2024 to 2030, driven by demand for cost-effective healthcare solutions and the rise of virtual care [8].

Group 1 - Provident Healthcare Partners advised Acentus in the acquisition of its assets by Henry Schein, Inc., focusing on Continuous Glucose Monitors (CGMs) [1][2] - The acquisition agreement was announced on November 20, 2024, and Acentus Founders will join Henry Schein post-acquisition [1][2] - Acentus, founded in 2018, specializes in CGMs for Medicare patients and combines advanced technology with customer service [5] Group 2 - Henry Schein, Inc. is a FORTUNE 500 company providing solutions for healthcare professionals, with a global network serving over 1 million customers [6] - Provident Healthcare Partners specializes in merger and acquisition advisory for healthcare companies, with expertise in the durable medical equipment industry [7]