Henry Schein Stock Earnings Reports

Summary of Key Points from Henry Schein's Q1 2025 Earnings Call

Financial Performance:

• Sales and Growth: Global sales for Q1 2025 were $3.2 billion, down 0.1% year-over-year. Adjusted for foreign exchange and PPE and COVID test kits, sales growth was about 2%.
• Operating Margins: GAAP operating margin improved to 5.53% and non-GAAP operating margin rose to 7.25%.
• Net Income: GAAP net income for the quarter was $110 million ($0.88/share), compared to $93 million ($0.72/share) in Q1 2024. Non-GAAP net income was $143 million ($1.15/share), an increase from $143 million ($1.10/share) in the previous year.
• Adjusted EBITDA: Increased to $259 million in Q1 2025 from $255 million in Q1 2024.

Strategic Developments:

• BOLD+1 Strategic Plan: The strategy focuses on enhancing operational efficiency, growing distribution and specialty businesses, and expanding digital solutions.
• Business Units Restructuring: Two main business units were established: Global Distribution and Value-Added Services, and Global Technology Group, which are seeing positive performance.
• New Acquisitions: Acquisition of Acentus, a distributor of continuous glucose monitors for the home, was highlighted as a successful expansion of the Home Solutions platform.

Market Insights:

• US Market Trends: After a slow January due to weather, sales picked up in February and March, aligning with full-year guidance of 2-4% growth.
• Dental Equipment Demand: While US dental equipment sales were down due to deferral of sales from Q4 2023, demand for both traditional and digital equipment is on the rise, with an increase in new practice build-outs.
• International Sales: Strong growth in dental merchandise in Canada and Central Europe, though France showed some weakness.

Tariffs and Sourcing Strategy:

• Tariff Mitigation: Henry Schein has diversified sourcing of corporate brand products to lower tariff countries and is actively working to mitigate the impact of tariffs through strategic sourcing.
• Supply Chain Adjustments: Approximately $100 million of products sourced from China is considered relatively immaterial compared to the total business size.

Guidance and Outlook:

• 2025 Guidance Maintained: Non-GAAP EPS is guided in the range of $4.80 to $4.94, expected to be more weighted in the second half of the year, with total sales growth projected at 2-4%.
• Cost Savings Expectations: The company anticipates achieving annual run-rate savings between $75 million to $100 million from restructuring efforts by the end of 2025.

Investor Considerations:

• Stability in Practice: Current trends suggest stability in dental and medical markets, with both equipment ordering and practice building activity remaining healthy.
• Investor Engagement: The company encourages investor questions and engagement through future meetings and webinars.

Conclusion

Henry Schein indicates a generally stable outlook despite challenges such as foreign exchange impacts and tariff uncertainties. The company continues to focus on its strategic growth initiatives while managing costs effectively, with positive momentum expected through 2025. Investors should monitor the ongoing performance relative to guidance and external market conditions.