Skip to content
    HSIC
    Earnings call· Mar 2026(Q1 FY26)

    HENRY SCHEIN Q1 FY26 earnings call HSIC

    May 5, 2026 Source

    Executive summary

    Henry Schein Q1 FY26 — Strong Start with Market Share Gains and Margin Expansion

    Henry Schein delivered strong Q1 FY26 results, driven by market share gains in U.S. dental and robust growth in global technology, despite softness in medical due to a light flu season. The company is focused on operational execution and value creation initiatives, targeting significant operating income improvement and high single-digit to low double-digit earnings growth in the coming years. Management remains confident in its full-year 2026 financial guidance.

    Highlights

    5

    • Global sales grew 6.3% YoY to $3.4 billion, with local currency internal sales growth of 2.5%.

    • Non-GAAP operating margin expanded by 28 basis points YoY to 7.53%.

    • Adjusted EBITDA grew 11.6% YoY to $289 million.

    • High-growth, high-margin businesses are approaching 50% of total operating income, on track for 2027 goal.

    • U.S. dental merchandise sales grew 5.6% (4.1% internal sales growth), reflecting market share gains.

    Concerns

    3

    • Medical business impacted by lower demand for point-of-care diagnostic test products due to a light flu season.

    • Digital equipment sales were essentially flat due to continued softness in Interroll scanners and treat printers, driven by lower average selling prices from new market entrants.

    • Value implant sales growth (high single-digit) resulted in lower gross margin for the Global Specialty Products Group compared to prior year due to mix shift.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year 2026 Total sales growth
    approximately 3% to 5% over 2025
    high materiality
    High
    Full-year 2026 Non-GAAP diluted EPS
    $5.23 to $5.37
    high materiality
    High
    Full-year 2026 Non-GAAP effective tax rate
    approximately 24%
    medium materiality
    High
    Full-year 2026 Adjusted EBITDA growth
    mid-single digits
    high materiality
    High
    Full-year 2026 Remeasurement gains
    less than recognized in 2025
    low materiality
    Medium
    Annual operating income improvement
    greater than $200 million
    high materiality
    High
    Annual operating income improvement run rate
    $125 million
    high materiality
    High
    High-growth, high-margin businesses operating income contribution
    exceed our goal of 50%
    medium materiality
    High
    Earnings growth
    high single-digit to low double-digit
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Global Distribution and Value-Added Services
    Strong momentum in the U.S. U.S. dental merchandise sales saw market share gains and price increases. U.S. dental equipment growth was driven by traditional equipment sales, with DSOs investing. U.S. medical sales were impacted by lower point-of-care diagnostic test product demand due to a light flu season, but Home Solutions and dialysis showed strong growth. International dental merchandise growth was strong in the U.K., Italy, and Brazil. International dental equipment growth was good in Germany, U.K., Canada, Australia, and New Zealand.
    U.S. dental merchandise sales growth: 5.6% (4.1% internal sales growth)U.S. dental equipment sales growth: 3.4%U.S. medical distribution sales growth: 1.3% (1.2% internal sales growth)International dental merchandise sales growth: 12.5% (1.8% LCI sales growth)International dental equipment sales growth: 13.4% (3.6% LCI sales growth)Global value-added services sales growth: 10.6% (7.8% LCI sales growth)
    		—6.1%——
    Global Specialty Products Group
    Implant sales were driven by value implant systems, leading to a lower gross margin due to mix shift. Improved growth is expected for the segment going forward.
    Implant sales growth: high single-digit (value implant systems)
    		—8.1%—lower gross margin compared to the prior year
    Global Technology Group
    Continued solid results with strong revenue growth in Dentrix Ascend in the U.S. and Dentally internationally. Cloud-based customer base increased significantly.
    Cloud-based customers: >13,000 (25% YoY increase)Dentrix Ascend practice management software revenue growth: strongDentally cloud-based practice management software sales growth: driven by new accounts
    		—7.0%——

    Operational metrics

    12
    Global sales growth
    6.3%YoY
    Q1 FY26

    Compared to the first quarter of 2025.

    Non-GAAP operating margin
    7.53%up 28 basis points compared to the prior year
    Q1 FY26
    Adjusted EBITDA
    $289 million11.6% growth
    Q1 FY26

    Compared to first quarter 2025 adjusted EBITDA of $259 million.

    Non-GAAP diluted EPS
    $1.32compared to $1.15 per share in prior year
    Q1 FY26
    Remeasurement gain from S.I.N. 360 transaction
    $11 million
    Q1 FY26

    Resulted from gaining a controlling interest in S.I.N. 360.

    Restructuring expenses
    $12 million
    Q1 FY26

    Related to value creation initiatives.

    Shares repurchased
    1.6 million
    Q1 FY26
    Remaining share repurchase authorization
    $655 million
    end of Q1 FY26
    Operating income contribution from high-growth, high-margin businesses
    approaching 50%
    Q1 FY26
    U.S. medical distribution sales growth (ex-diagnostic tests)
    mid-single-digit range
    Q1 FY26

    Diagnostic test products related to respiratory illness represent roughly 15% to 20% of medical business.

    Cloud-based customers (Dentrix Ascend and Dentally)
    >13,000increased by roughly 25% year-over-year
    Q1 FY26
    U.S. dental e-commerce sales transacted over henryschein.com
    over 80%
    Q1 FY26

    Industry KPIs

    4
    MetricValueDetails
    Utilization trendsstable to leaning positively
    Pharmacy scripts specialtylower sales
    Segment revenue operating incomeGlobal Distribution and Value-Added Services: 6.1% growth; Global Specialty Products Group: 8.1% growth (1.7% LCI); Global Technology Group: 7.0% growth (6.9% LCI)%
    Adjusted EPS EBITDA leverage guidanceAdjusted EBITDA: $289 million; Non-GAAP diluted EPS: $1.32USD

    Product announcements

    1
    ProductTypeDetails
    Next-generation AI clinical workflowlaunch

    Deals & partnerships

    1
    S.I.N. 360Gained controlling interest in S.I.N. 360, the U.S. distributor of S.I.N. Brazil's value implant systems.

    Provides greater control over U.S. implant product portfolio, especially in the faster-growing value implant market, and allows for unlocking growth and back-office integration efficiencies.

    Risks & headwinds

    4
    Softness in the medical business due to lower demand for point-of-care diagnostic test productsQ1 FY26

    related to respiratory illness, resulting from a light flu season

    Mitigation: good underlying growth

    Lower average selling prices for digital equipmentQ1 FY26

    due to continued softness in sales of Interroll scanners and treat printers... from new market entrants

    Mitigation: higher sales volume (partially offsetting), opportunity to sell additional digital equipment to those customers going forward

    Lower gross margin in Global Specialty Products GroupQ1 FY26

    due to sales mix of value to premium implants

    Mitigation: expect to achieve improved growth in the Specialty Products Group going forward this year

    Rising oil prices impacting freight costs and product pricingQ2 FY26 and beyond

    anticipated further merchandise price increases in the second quarter

    Mitigation: implemented a number of measures designed to offset the potential financial impact, working closely with our customers, not just defaulting to increasing prices or looking at fuel surcharges but there are some things that -- some measures we're trying to take to try to protect the margins

    What to watch in Q2 FY26

    5

    Value creation benefits on G&A

    second quarter and then even more so in the third and the fourth quarter
    Currentrelatively nominal
    Targetaccelerate

    Why it matters

    Expected to largely drive better earnings in the back half of the year.

    the financial impact, at least with reference to the G&A portion of this was, I would say, was relatively nominal in the first quarter because we incurred some costs associated with the programs. We saved some costs associated with the program. we're going to start seeing that savings begin to accelerate as we get into the second quarter and then even more so in the third and the fourth quarter.

    Q&A highlights

    6

    Asked about the drivers of Q1 gross margin expansion, if value creation benefits are already showing, and how rising oil prices (freight/COGS) are being mitigated, including guidance assumptions for oil.

    Ron South attributed gross margin improvement to early value creation benefits (dynamic pricing, own brand growth), strategic benefits, and supplier collaboration. He noted they are watching crude oil prices, taking measures to protect margins, and currently believe they can mitigate cost increases, with guidance assuming this mitigation.

    “we are able to mitigate any related cost increases.”

    asked by Jason Bednar · answered by Ronald South

    2 min read6 chapters

    Detailed Narrative

    01

    CEO's Strategic Vision and 100-Day Plan

    New CEO Fred Lowery highlighted Henry Schein's competitive advantages, including its global reach, extensive integrated offering (BOLD+1 strategy), and excellent customer experience. His 100-day plan focuses on sharpening operational execution, building a stronger performance culture, and creating a leaner, more agile company to accelerate growth and improve financial results. He emphasized building continuous improvement processes rather than episodic cost-cutting.

    02

    Market Dynamics and Customer Needs

    The dental market remains healthy with demand outpacing supply, driving customer needs for efficiency and workflow optimization. The medical market is shifting to nonacute care settings, aligning with Henry Schein's capabilities. Suppliers view Henry Schein as a key partner for growth due to deep customer access and trusted relationships, creating value through exclusive and targeted promotional programs.

    03

    Value Creation Initiatives

    The company is executing value creation initiatives expected to drive over $200 million in annual operating income improvement, with a $125 million run rate by the end of 2026. Examples include outsourcing select back-office functions, strategically buying out minority partners to unlock integration opportunities, generating savings from indirect procurement, and implementing gross profit initiatives like value pricing and enhanced growth of corporate brands.

    04

    Technology and AI Solutions

    Henry Schein is enhancing new product and service offerings, particularly in AI solutions, which are transforming the industry. The company launched its next-generation AI clinical workflow at the Thrive Live event, generating significant excitement and indicating customer readiness to embrace these tools. Cloud-based practice management software (Dentrix Ascend, Dentally) continues to see strong growth, with subscribers increasing 25% YoY to over 13,000.

    05

    E-commerce Platform Rollout

    The global e-commerce platform, henryschein.com, has been successfully rolled out to Canadian and U.S. laboratory customers. Over 80% of U.S. dental e-commerce sales now transact through this platform, with full U.S. rollout expected by the end of August. Following the U.S. completion, the company plans to shift its focus to broader international deployment.

    06

    Capital Deployment and Cash Flow

    During Q1 FY26, Henry Schein repurchased 1.6 million shares for $125 million at an average price of $77.64. Approximately $655 million remains authorized and available for future share repurchases. Operating cash flow was negative $97 million in Q1 due to normal seasonal decreases in accounts payable and accrued expenses, but is expected to exceed net income for the full year.

    AI-generated summary of the company’s earnings call. Not investment advice.