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    HSIC
    Earnings call· Jun 2026(Q2 FY26)

    HENRY SCHEIN Q2 FY26 earnings call HSIC

    Aug 4, 2026 Source

    Executive summary

    Henry Schein Q2 FY26 — Strong Sales and Margin Expansion Drive Raised Full-Year Guidance

    Henry Schein delivered a strong second quarter, marked by accelerating internal local currency sales growth and significant margin expansion across all segments. The company is actively pursuing strategic priorities focused on accelerating growth, simplifying operations, and driving operational rigor, underpinned by value creation initiatives. Management raised its full-year 2026 guidance, reflecting confidence in sustained momentum and the benefits from these strategic efforts, while also highlighting the increasing contribution of high-growth, high-margin businesses.

    Highlights

    5

    • Internal local currency sales growth accelerated to 4.6% in Q2 FY26.

    • Non-GAAP operating income grew 10.5% in Q2 FY26.

    • Non-GAAP diluted EPS grew 15.5% to $1.27 in Q2 FY26.

    • Value creation initiatives are on track to deliver over $200 million in operating income improvements, with a $125 million run rate by end of 2026.

    • Henry Schein One's cloud-based platforms (Dentrix Ascend, Dentale) now serve almost 13,000 customers, with 90% recurring revenue.

    Concerns

    3

    • U.S. dental equipment sales declined 1.1% in Q2 FY26 due to tough comparables from prior year dental school orders.

    • Lower demand for point-of-care diagnostic products continued to be a headwind for the U.S. medical business.

    • Foreign currency exchange favorably impacted Q2 diluted EPS by only $0.01, and no further remeasurement gains are expected for the remainder of 2026.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year 2026 Total Sales Growth
    4.5% to 5.5% over 2025
    high materiality
    High
    Full-year 2026 Internal Local Currency Sales Growth (H2)
    3.5% to 4.5%
    medium materiality
    High
    Full-year 2026 Non-GAAP Diluted EPS
    $5.29 to $5.39
    high materiality
    High
    Value Creation Initiatives Operating Income Improvement
    greater than $200 million
    high materiality
    High
    Value Creation Initiatives Operating Income Improvement Run Rate
    $125 million
    high materiality
    High
    Full-year 2026 Non-GAAP Effective Tax Rate
    approximately 24%
    medium materiality
    High
    Full-year 2026 Adjusted EBITDA Growth
    mid- to high single digits
    high materiality
    High
    Operating Cash Flow
    exceed net income
    medium materiality
    High
    Earnings Growth
    exceed that in the third quarter
    medium materiality
    High

    Segment performance

    9
    SegmentRevenueYoYQoQMargin
    Global Distribution and Value-Added Services Group
    Reflecting good sales momentum across most regions.
    		—6.6%——
    U.S. Dental Merchandise
    Growth from a combination of pricing and increased volume, with market share gains and stable patient traffic.
    Internal local currency sales growth: 6.5%
    		—8.3%——
    U.S. Dental Equipment
    Primarily due to lower traditional equipment sales growth, impacted by large dental school orders in prior year. Modest growth in digital equipment.
    		—-1.1%——
    U.S. Medical Distribution
    Despite continued headwinds in point-of-care diagnostic product sales, strong growth in government-related businesses and Home Solutions.
    		—3.8%——
    International Dental Merchandise
    Driven by sales growth in Canada, France, Brazil, and Australia.
    Internal local currency sales growth: 5.4%
    		—11.1%——
    International Dental Equipment
    Good sales growth in traditional equipment with modest growth in digital equipment, especially strong in Canada, Germany, Spain, and the U.K.
    Internal local currency sales growth: 5.4%
    		—8.7%——
    Global Value-Added Services
    Driven by business solutions services in U.S. and internationally, partially offset by lower financial service revenues in the U.S.
    Internal local currency sales growth: 3.7%
    		—5.1%——
    Global Specialty Products Group
    Sales growth driven by implants and biomaterials in both premium and value products. Operating margins expanded nicely, with a significant majority of profit growth being organic.
    Internal local currency sales growth: 3.2%
    		—8.7%——
    Global Technology Group
    Strong revenue growth in Dentrix Ascend in the U.S. and Dentale cloud-based software internationally.
    Internal local currency sales growth: 9.1%
    		—8.2%——

    Operational metrics

    25
    Global Sales Growth
    6.7%vs Q2 FY25
    Q2 FY26

    Total global sales were $3.5 billion.

    Internal Local Currency Sales Growth
    4.6%
    Q2 FY26

    Accelerated compared to Q1 FY26.

    Foreign Currency Exchange Impact on Sales
    1.4%
    Q2 FY26

    Increase resulting from foreign currency exchange.

    Acquisition Impact on Sales
    0.7%
    Q2 FY26

    Sales growth from acquisitions.

    GAAP Operating Margin
    4.94%up 27 bps vs prior year
    Q2 FY26

    Increased compared to prior year GAAP operating margin.

    Non-GAAP Operating Margin
    7.21%up 25 bps vs prior year
    Q2 FY26

    Driven by gross margin expansion in all segments.

    GAAP Net Income
    $94 millionvs $86 million in Q2 FY25
    Q2 FY26

    GAAP net income for the second quarter.

    GAAP Diluted EPS
    $0.82vs $0.70 in Q2 FY25
    Q2 FY26

    GAAP diluted earnings per share for the second quarter.

    Non-GAAP Net Income
    $145 millionvs $135 million in Q2 FY25
    Q2 FY26

    Non-GAAP net income for the second quarter.

    Non-GAAP Diluted EPS
    $1.27up 15.5% vs $1.10 in Q2 FY25
    Q2 FY26

    Non-GAAP diluted earnings per share for the second quarter.

    Foreign Currency Exchange Impact on Diluted EPS
    $0.01favorably impacted
    Q2 FY26

    Favorable impact on diluted EPS versus the prior year.

    Remeasurement Gains
    $0vs $3.6 million in Q2 FY25
    Q2 FY26

    No remeasurement gains recorded in Q2 FY26.

    Adjusted EBITDA
    $288 millionup 12.7% vs $256 million in Q2 FY25
    Q2 FY26

    Adjusted EBITDA for the second quarter.

    Restructuring Expenses
    $29 million
    Q2 FY26

    Recorded during the second quarter as part of value creation initiatives.

    Value Creation Initiatives Operating Income Improvement Split
    40%
    FY26

    Expected split of in-year operating income improvement from value creation initiatives. Beyond 2026, benefits are expected to be more heavily weighted to G&A savings.

    Share Repurchases
    $200 million
    Q2 FY26

    Amount of common stock repurchased during the second quarter.

    Remaining Share Repurchase Authorization
    $455 million
    Q2 FY26 end

    Authorized and available for future stock repurchases.

    Dentrix Ascend and Dentale Customers
    almost 13,000
    Q2 FY26

    Number of customers subscribing to cloud-based platforms.

    Henry Schein One Average Monthly Revenue per Customer
    $500
    monthly

    Average monthly revenue for Henry Schein One customers.

    Dentrix Ascend Average Monthly Revenue per Customer
    $800
    monthly

    Average monthly revenue for Dentrix Ascend customers, growing as customers upgrade to higher functionality.

    Henry Schein One Recurring Revenue
    90%
    Q2 FY26

    Percentage of Henry Schein One's revenue that is recurring.

    Own Brands Sales Growth
    almost twice the rate of other merchandise sales
    Q2 FY26

    Own brands, including corporate brands, continue to grow well.

    Home Solutions Sales Growth
    high single digits
    Q1 FY26

    Growth in the Home Solutions business.

    High-Growth, High-Margin Businesses Operating Income Contribution
    almost 50%
    Q2 FY26

    Represents percentage of total operating income. On track to exceed 50% by end of strategic planning cycle in 2027.

    Total Remeasurement Gains
    $11 millionvs $38 million in FY25
    FY26

    Expected total remeasurement gains for 2026, already recorded in Q1.

    Industry KPIs

    2
    MetricValueDetails
    Segment revenue operating income6.6%%
    Adjusted EPS EBITDA leverage guidance$1.27USD/share

    Product announcements

    1
    ProductTypeDetails
    MCP layer for AI applicationslaunch

    Risks & headwinds

    5
    Lower demand for point-of-care diagnostic productsQ2 FY26, ongoing

    Continued headwinds

    Mitigation: Focus on underlying growth in other medical segments like government-related and Home Solutions.

    Tough comparable for U.S. dental equipment salesQ2 FY26

    -1.1% decline in Q2 FY26

    Mitigation: Strong backlog and expectation for U.S. equipment growth for the rest of the year.

    Lower average selling prices for scannersQ2 FY26, ongoing

    Ongoing lower average selling prices

    Mitigation: Seeing good volume growth on scanners, with demand shifting towards lower-priced entries.

    Higher prior year comparison in H2 FY26H2 FY26

    Higher prior year comparison

    Mitigation: Expect internal local currency sales growth of 3.5% to 4.5% in H2, compared to 3.6% in H1, indicating continued momentum despite the tougher comp.

    Lower remeasurement gains than originally anticipatedFY26

    $11 million expected for FY26 (already recorded in Q1) vs. $38 million in FY25

    Mitigation: Guidance adjusted to reflect this, focusing on underlying business growth without additional remeasurement gains.

    What to watch in Q3 FY26

    5

    Value Creation Initiatives Operating Income Improvement Run Rate

    by end of 2026
    CurrentOn track for $125 million
    Target$125 million run rate

    Why it matters

    This is a key commitment for operational efficiency and profitability improvement, directly impacting future earnings growth.

    We continue to expect to achieve our goal of achieving greater than $200 million of operating income improvement resulting from our value creation initiatives with a $125 million run rate by the end of 2026

    Q&A highlights

    5

    What are the components of U.S. dental consumables growth (volume vs. price/mix) and can the current growth rate be sustained in H2 despite tougher comps?

    Management noted more price than volume in consumables growth. They expect a similar growth range in H2, driven by successful promotions converting episodic buyers to active customers, despite tougher comparables.

    “Last year, we did some promotions, started in the second half of the year. We really went after some of our episodic customers or customers who were not consistently buying from us. And that promotion and those promotions seem to really work and where we've really converted many of those customers and to actively engage customers that are continuing to buy from us.”

    asked by Jeffrey Johnson · answered by Frederick Lowery

    2 min read6 chapters

    Detailed Narrative

    01

    New CEO's Strategic Priorities and Vision

    Fred Lowery, in his first month as CEO, outlined key priorities: accelerating growth, simplifying the business, driving operational rigor, and deepening customer relationships. He emphasized transforming Henry Schein into a 'practice improvement platform' for healthcare practitioners, moving beyond a traditional distributor role. The vision includes leveraging technology and data to optimize customer operations, enhance profitability, and deliver better patient care, aiming for accelerated growth and expanded market share.

    02

    Henry Schein One Technology and AI Innovation

    The Global Technology Group, Henry Schein One, continues strong growth, particularly with its cloud-based platforms like Dentrix Ascend and Dentale, which now serve almost 13,000 customers. The company is embedding AI tools into its software to improve workflows, collections, practice performance, and patient engagement. A new AI clinical workflow has been launched, and an upcoming MCP layer will enable practices to query their own data for revenue opportunities and operational efficiencies, reinforcing Henry Schein's leadership in AI transformation.

    03

    Value Creation Initiatives and Operational Rigor

    Henry Schein is on track to achieve over $200 million in operating income improvements from value creation initiatives over the next few years, with a $125 million run rate by the end of 2026. Key initiatives include implementing global outsourcing for finance and customer service (expected to deliver over half of G&A savings), centralizing indirect procurement, and using sales data for dynamic pricing. These efforts aim to create a high-performance culture of accountability and continuous improvement, driving double-digit earnings growth next year.

    04

    Market Share Gains and Product Performance

    The company reported strong performance in its dental merchandise business globally, outpacing the market and gaining share. This was attributed to the growth of corporate and exclusive brands (e.g., Edge in endodontics, uridine), a strong position in the fast-growing DSO segment, and successful promotions converting episodic buyers into actively engaged customers. International markets like Canada, France, Brazil, and Australia showed particularly strong growth.

    05

    Specialty Products and Medical Business Expansion

    Specialty products sales were solid, with high single-digit implant growth in Europe, led by premium brands like Camlog. U.S. implant growth was more modest but driven by value implants (SIN 360) and new product launches (SIN 360, Tapered Pro Conifer). The medical business saw good underlying growth despite headwinds in point-of-care diagnostics, with strong performance in government-related and high single-digit growth in the Home Solutions business, an area of continued strategic focus due to its higher growth and margins.

    06

    Leadership Team Changes

    The company announced changes to its executive management committee, aimed at fostering closer customer relationships, increasing decision-making speed, and improving execution consistency. This involved removing a management layer and integrating the supply chain more deeply into the distribution business. Three long-serving executives transitioned to senior advisor roles, ensuring continuity and leveraging their experience.

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