U.S. stocks edge higher; solid earnings season continues
Investing.com - Henry Schein (NASDAQ:HSIC), a prominent healthcare provider with $12.67 billion in annual revenue and strong financial health according to InvestingPro, received a downgrade from Baird on Monday, with the firm lowering its rating from Outperform to Neutral and reducing its price target to $72.00 from $82.00.
The downgrade comes amid concerns that Heartland Dental, described as Henry Schein’s biggest global customer, may be planning to end its relationship with the company by the end of the year.
According to Baird, the direct financial impact would likely be manageable for Henry Schein, as Heartland Dental represents approximately a $100 million annual contract.
The research firm noted that its checks suggest Heartland Dental may be considering direct manufacturer agreements for consumables and equipment, or potentially partnering with a non-dental U.S. medical dealer.
Baird expressed concern that such a precedent, if established, could create an "added overhang" on Henry Schein’s stock and potentially pressure returns in both the near and intermediate term.
In other recent news, Henry Schein Inc. reported its first-quarter 2025 earnings, showing a modest beat on earnings per share (EPS) but a shortfall in revenue expectations. The company posted an EPS of $1.15, surpassing analyst forecasts of $1.12, while its revenue of $3.17 billion fell short of the projected $3.24 billion. Despite these mixed results, Henry Schein remains optimistic about future growth, citing strategic initiatives and product innovations as key drivers. In a strategic move, Henry Schein secured a $250 million investment from KKR, resulting in KKR acquiring a 12% stake in the company. This partnership also led to the addition of two new independent directors from KKR to Henry Schein’s Board. Furthermore, during a recent shareholder meeting, Henry Schein announced the approval of executive compensation and the election of directors, indicating shareholder confidence in the company’s governance. The appointment of BDO USA, P.C. as the independent registered public accounting firm for the fiscal year ending December 27, 2025, was also ratified. These developments reflect Henry Schein’s ongoing efforts to strengthen its leadership and financial strategies.
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