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]

Core Business Growth - Henry Schein, Inc.'s joint venture, Henry Schein One, is driving strong growth in core products and introducing new solutions [1] - The dental software business is progressing well, with mid-single-digit growth in practice management software and revenue cycle management products, and a 20% year-over-year expansion in the customer base [4] - The company has a robust acquisition strategy, acquiring 100% of abc dental AG and entering into an agreement with vVARDIS to distribute its product in the U.S. [6] Industry Trends - Favorable long-term trends in the dental industry are expected to support future growth, particularly as the industry shifts towards high-tech digital workflow systems [7] - There is consistent demand for dental specialty products, including implants and endodontics, contributing to organic market share gains [8] Financial Performance - The market capitalization of Henry Schein is $9.12 billion, with a stock performance decline of 4.2% over the past year compared to a 3.7% industry growth and a 28.6% rise in the S&P 500 [2] - The Zacks Consensus Estimate for 2024 earnings per share (EPS) is $4.77, with revenues projected at $12.85 billion, indicating a 4.1% rise from the previous year [11] Challenges - A cybersecurity incident in October 2023 has led to a 2.6% decrease in internally generated local currency sales, particularly affecting episodic customers [9] - The impact of Group Purchasing Organizations (GPOs) has increased pricing pressure and may pose future challenges for the company's operations [10]

Market Reaction to Potential Policy Changes - Henry Schein shares jumped nearly 5% on Monday, marking its best day since July, as investors anticipated potential policy changes under a second Trump administration [2] - Dental product makers Dentsply Sirona and Envista also saw gains during the session [2] - The Health Care Select Sector SPDR Fund (XLV) has tumbled around 3.5% in November, while the S&P 500 climbed more than 3% in the same period [6] Potential Impact on Dental Industry - Investors are focusing on dental hygiene product stocks as potential beneficiaries of Robert F Kennedy Jr's policies, particularly the potential removal of fluoride from public water systems [4] - Removing fluoride from water could lead to increased demand for dental visits and tooth cleaning products, according to Gordon Haskett [4][6] - Dental stocks were among the few health-focused equities spared from widespread selling following Kennedy's nomination announcement [7] Broader Healthcare Market Impact - Pharmaceutical companies faced pressure due to Kennedy's reputation as a vaccine skeptic [7] - Processed food stocks declined as traders anticipated increased scrutiny of junk food [7] - The healthcare sector experienced widespread selling, affecting drugmakers, contract research organizations, and health insurers [8] Regulatory Considerations - Any regulatory changes related to fluoride removal would likely take years to implement [8] - Drinking water regulations typically fall under the Environmental Protection Agency rather than Health and Human Services [8]

Financial Data and Key Metrics - Global sales for Q3 2024 were $3.2 billion, reflecting a 0.4% growth compared to Q3 2023 [20] - GAAP operating margin for Q3 2024 was 4.94%, a 140 basis point decline from the prior year [21] - Non-GAAP operating margin for Q3 2024 was 7.64%, a 45 basis point decline from the prior year [21] - GAAP net income for Q3 2024 was $99 million, or $0.78 per diluted share, compared to $137 million, or $1.05 per diluted share, in Q3 2023 [22] - Non-GAAP net income for Q3 2024 was $155 million, or $1.22 per diluted share, compared to $173 million, or $1.32 per diluted share, in Q3 2023 [22] - Adjusted EBITDA for Q3 2024 was $268 million, compared to $278 million in Q3 2023 [24] Business Line Performance - Dental distribution business showed stable patient traffic globally, with North American dental merchandise sales consistent with the prior year [10] - Dental equipment sales in North America were consistent with the prior year, with traditional equipment sales growing slightly and digital equipment sales decreasing [11] - Dental implant and biomaterial sales grew mid-single digits, driven by the launch of the BioHorizons Tapered Pro Conical implant in the U.S. [12] - Orthodontic sales declined due to restructuring and the transition to the Smilers brand Clear Aligner [14] - Technology and value-added services segment posted mid-single-digit growth, driven by growth in cloud-based solutions [15] Market Performance - North American dental merchandise market share grew sequentially compared to Q2 2024 [10] - International dental merchandise sales showed solid growth in Germany, Austria, France, Brazil, Australia, and New Zealand [10] - International dental equipment sales grew 5.6%, with strong performance in Europe, Australia, and New Zealand [11] - Medical sales reflected less demand for respiratory diagnostic products and flu/COVID vaccines, but Home Solutions business showed strong growth [18] Company Strategy and Industry Competition - The company is implementing its BOLD+1 Strategic Plan, focusing on high-growth, high-margin products and services [7] - Acquisitions made during 2022-2024 and product launches are delivering strong financial results [9] - The company is transitioning to a global e-commerce platform, with positive feedback from customers in the UK and Ireland [9] - The company expects to exceed its target of 40% of operating income generated by high-growth, high-margin businesses for fiscal 2024 [8] Management Commentary on Operating Environment and Future Outlook - The company is recovering from last year's cyber incident and steadily gaining market share in dental and medical distribution businesses [7] - Management expects modest improvement in dental and medical markets in 2025, supported by recent investments, new product launches, and continued cyber recovery [36] - The company is on target to achieve its restructuring goal, which should help offset headwinds from higher depreciation expenses [37] Other Important Information - The company repurchased approximately 2 million shares of common stock in Q3 2024 at an average price of $69.09 per share, totaling $135 million [31] - The company expects to collect most of its $60 million cyber insurance claim by the end of 2024 [30] - The company updated its 2024 non-GAAP diluted EPS guidance to $4.74 to $4.82, reflecting growth of 5% to 7% compared to 2023 [34] Q&A Session Summary Question: Overall health of dental and medical trends and impact of one-time items on guidance [39] - Management noted stable market conditions, with a shift towards lower-priced products in the dental market [41][42] - Equipment sales are expected to benefit from the timing of DS World, with most sales recognized in Q4 [44] - Medical sales are being monitored for flu season timing and its impact on diagnostic kit sales [45] Question: 2025 revenue and EPS growth expectations [47] - Management indicated that 2025 guidance will be provided in February 2025, with expectations for modest market improvement and continued market share gains [48] Question: Restructuring savings vs. higher depreciation costs [52] - Management expects restructuring savings to more than offset higher depreciation costs, leading to operating margin expansion in 2025 [53] Question: Market share recovery and consumables tailwind in 2025 [55] - The company expects to enter 2025 with higher market share compared to 2024, though the pace of recovery has been slower than expected [56] Question: Drivers of expected market improvement in 2025 [58] - Management cited stable dental equipment sales, potential interest rate reductions, and positive trends in Europe and other international markets as key drivers [59][61] Question: Implant performance and halo effect of new products [65] - The BioHorizons Tapered Pro Conical implant is driving growth in the U.S., with strong performance in Europe and Brazil [66] Question: Pricing environment and specialty vs. non-specialty market trends [69] - Management noted a shift towards lower-priced products in the dental market, with stable profitability despite pricing pressures [70] Question: Cost savings and revenue impacts from restructuring [74] - Restructuring efforts are focused on minimizing revenue impacts while achieving cost savings, particularly in distribution and technology businesses [75] Question: Medical market trends and competitive dynamics [78] - The medical business is stable, with recovery from the cyber incident and growth in Home Solutions and orthopedic businesses [79][81] Question: Technology and value-added services revenue dynamics [82] - The LPS acquisition and shift to SaaS models are impacting revenue recognition, but the business is growing well [83][84] Question: Manufacturer pricing trends and Clear Aligner restructuring [86] - Management noted price resistance among some manufacturers and is transitioning to the Smilers brand in orthodontics [89][90] Question: Capital allocation and M&A priorities for 2025 [93] - The company expects capital allocation in 2025 to align with historical trends, with potential M&A in Home Solutions and other strategic areas [94][97] Question: Strategic plan and future outlook [98] - The company is optimistic about its market share recovery, high-growth businesses, and upcoming 2025-2027 strategic plan [98][99]