Henry Schein(HSIC)2025-06-04 17:52Summary of Henry Schein Conference Call Company Overview - Company: Henry Schein - Industry: Medical Supplies and Devices - Key Executives Present: Stan Bergman (CEO), Ron South (CFO), Graham Stanley, Susan D'Onofrio (IR) Core Business Strategy - BOLD Plus One Strategy: - B: Build high growth, high margin businesses in specialty dental and medical products, targeting 50% of operating income from these by 2027 [4][5] - O: Optimize core distribution business for efficiency and customer satisfaction [5] - L: Leverage relationships with approximately 300 businesses to enhance sales across different product lines [6] - D: Digitalization of dentistry and medicine, including a new global e-commerce platform (GEP) [7][8] - Plus One: Advance relationships with suppliers, customers, and investors [9] Financial Performance - Q1 Results: Sales growth noted, with EPS growth excluding PPE impact [10][11] - Earnings Growth Target: High single digits to low double digits anticipated post-cyber incident recovery [11] Market Trends - Dental Market: Stable visit rates to dentists in the U.S., with a shift towards value in product selection [16][18] - Equipment Stability: Equipment sales stable, with some fluctuations; digital technology demand remains strong [18][21] - International Markets: Varying stability across Europe, with Brazil showing positive trends despite economic challenges [19][20] - Software Demand: Growth in software demand, transitioning to a SaaS model for recurring revenue [21][40] Long-term Financial Goals - Earnings Growth: Commitment to high single digit to low double digit growth, with 2026 guidance dependent on market momentum and restructuring initiatives [24][25] - Cost Savings: Expected $75 million to $100 million in cost savings from restructuring, leaning towards the higher end [25] Restructuring and Optimization - Restructuring Focus: Emphasis on optimizing endodontic business and leveraging synergies from acquisitions [28][29] - Continuous Improvement: Ongoing process to enhance efficiency and reduce costs, supported by KKR's investment [31] KKR Investment - Strategic Partnership: KKR holds approximately 15% stake, providing expertise in margin management and expense control [33][34] - Negotiating Leverage: KKR's portfolio may enhance negotiating power with suppliers [36] Capital Allocation Strategy - M&A Activity: Historical M&A spending of $300 million to $400 million annually, with a significant increase in 2023 [44] - Share Repurchases: $161 million in share repurchases in Q1, with a focus on maintaining a strong stock buyback strategy [46] Key Takeaways - Misunderstood Aspects: The effectiveness of the BOLD Plus strategy in driving growth and profitability through high-margin businesses and digital technology [48][49]