Henry Schein at Jefferies Global Healthcare: Strategic Growth Focus

On Wednesday, 04 June 2025, Henry Schein (NASDAQ:HSIC) presented its strategic vision at the Jefferies Global Healthcare Conference 2025. The company outlined its "BOLD plus one" strategy aimed at high-margin growth, while addressing challenges such as market fluctuations and higher interest rates. The presentation was led by CEO Stan Bergman and CFO Ron South, who emphasized both the successes and hurdles in achieving long-term financial goals.

Key Takeaways

• Henry Schein aims to derive 60% of operating income from high-growth areas by 2027.
• The company plans for high single-digit to low double-digit earnings growth, post-restructuring.
• A cyber incident in October 2023 has led to a temporary consolidation phase.
• Henry Schein completed $161 million in share repurchases in Q1, surpassing historical trends.
• The collaboration with KKR is focused on margin and expense management.

Financial Results

Henry Schein reported sales and EPS growth, particularly strong when excluding PPE sales impacts. The company’s financial targets include:

• Aiming for high single-digit to low double-digit earnings growth.
• Targeting 50% of operating income from high-growth businesses and an additional 10% from corporate brands by 2027.
• Expecting $75 million to $100 million in cost savings from restructuring initiatives.
• Completing $161 million in share repurchases in Q1, indicating a robust capital return strategy.

Operational Updates

The company’s restructuring program is focused on optimizing its business through strategic acquisitions and facility consolidations:

• Henry Schein has integrated its endodontic business, closing one facility to leverage synergies.
• The Henry Schein One business is advancing cloud-based systems for dental practice efficiency.
• Collaboration with KKR aims to enhance margin management and sales focus.

Future Outlook

Looking ahead to 2026, Henry Schein plans to leverage its high-growth, high-margin business momentum. Key factors influencing future guidance include:

• Continued traction in dental specialty products and technology services.
• Benefits from completed restructuring initiatives and related cost savings.
• Monitoring market growth rates and new product development uptake.

Q&A Highlights

During the Q&A session, management addressed several market trends and strategic priorities:

• Stable dental market visits in the U.S. with a focus on value and competitive pricing.
• Growth in cloud-based systems within Henry Schein One, enhancing dental practice efficiency.
• Exploration of leveraging KKR’s portfolio for improved supplier negotiations.

In conclusion, Henry Schein’s leadership expressed confidence in their strategic initiatives and financial goals. Readers are encouraged to refer to the full transcript for more detailed insights.

Full transcript - Jefferies Global Healthcare Conference 2025:

Mike Sarcone, Analyst, US Medical Supplies and Devices team: Okay. Good afternoon, everyone. My name is Mike Sarcone. I’m an analyst on the US Medical Supplies and Devices team. And with us today, we have Henry Schein.

And from the company, we’ve got Stan Bergman, CEO Ron South, CFO and we’ve also got here with us Graham Stanley and Susan D’Onofrio in the IR function. So we’re going to kick it off. I think, Stan, you had some short opening remarks you wanted to make.

Stan Bergman, CEO, Henry Schein: Thank you, Michael. Thank you for hosting us. Hi, everyone. Henry Schein seems like there are a lot of people in the audience that know us, but for those that don’t, we’re the largest provider of products and related services to office based practitioners. That’s dentists and physicians in the alternate care site, but also today, Ambrisbury Surgical Centers.

We have a business growing business in the home care arena. We do some government business. And generally, providing products and related services to the office based practitioner and the alternate care site. Our strategy is built on four key components. We call it BOLD plus one.

The B stands for building high growth, high margin businesses in the specialty dental and medical products arena and in the value added services arena. So on the dental side, we’re particularly strong in implants, bone regeneration products, believe we’re the number three in the world, endodontics products, where we’re number two in the world, we believe and a series of value added services, including being the provider of dental practice management software, the we believe, the largest provider of this kind of software and related service services, businesses such as financial services for the for our customers, that’s leasing and credit card processing and other kinds of value added services that are used by our customers and their offices. We are in the business transitional practices businesses where we’re involved in buying and selling practices, generally consulting services, revenue cycle management services for our customers and so on and so forth. The high growth, high margin business combination for us in 2024 was just over 40% of our operating income. Our goal is to take it to 50% during the strategic planning period, which is 25%, twenty six % and twenty seven %, which will mean that about half of our income is coming from these high growth, high margin businesses.

And we estimate another 10% or so from our corporate brands. Those are our own brand products. So roughly 60% of our income we’re shooting for, maybe a little bit more than that, this strategic planning cycle, 2025, ’20 ’20 ’6, ’20 ’20 ’7, will come from products and services that have a high margin and are really operated under our own brands. That’s the B. The O is to operationalize, optimize our core distribution business, where the goal is to provide services in the distribution arena more efficiently and driving customer satisfaction at the same time.

And the L is the leveraging of our relationships. We have about 300 different businesses, all related to doing businesses to business with office based practitioners and related customers. And we want to leverage the relationships we have in these different businesses. So we may have great relationships in the distribution business, customers not buying software from us. We may have a customer that is buying the software from us, but not their financial services.

They may buy their consumables, but not their equipment. And so we want to take these relationships and leverage them. We’ve done particularly well with large customers, DSOs and IDNs in this space. And the D, of course, is the digitalization of dentistry and medicine, where digitalization has driven interoperability in devices. We have a network clinical workflow network in dentistry that is growing.

And essentially, we want to use the new technology to create connectivity to our customers. So they turn to Henry Schein for driving efficiency in their practices through digital technology. We will also introduce our new global e commerce platform, GEP, in The United States sometime in the third quarter, in Canada First and then The United States. It’s operational in The UK and Ireland already, doing quite well. It’s an Amazon like experience for office based practitioners.

And our plus one is to, of course, advance our relationships with our various constituents, our suppliers, our customers, our investors, our team and the work we do with Dennis and other professionals and generally in the communities we’re in to connect us to our constituents. For the first quarter, we were quite pleased with our results. Of course, they’re published. Ron can give you more information. But generally, we had sales that were growing.

And if you take particularly, if you take out the impact of PPE, and we our EPS was growing, too. We turn our profits generally into cash. Our goal is to have earnings growth of high single digits, low double digits, which we hope to return to after we’ve consolidated our business after the cyber incident, which took place in October of twenty twenty three. Michael, that’s sort of a brief highlight of what I wanted to say about where we are with Henry Schein today.

Mike Sarcone, Analyst, US Medical Supplies and Devices team: Thank you, Stan. Very helpful. Appreciate that. Maybe getting into some of the discussion topics, you know, earlier in the year, you re segmented how you’re reporting results and how you’re operating the business. Can you just give us an overview or maybe talk about the evolution of the business and what led to those changes?

Stan Bergman, CEO, Henry Schein: Yes, Michael. So our goal is to, as I indicated, to drive our distribution business, sales and profitability, our software businesses and which is primarily Henry Schein One and some other technology services and then our own brands, which is essentially this high growth, high margin products. So from a management point of view, we have two significant groups at Henry Schein. We’ve broken the business into two. It’s really clustered our business is clustered around these two groups over the last few years, and we formalized it early this year with Andrea Albertini, an executive of thirteen years at Henry Schein, somebody that grew up in the equipment and distribution field in medical and dental, running our global distribution groups, Dental and Medical, and also leading our Henry Schein One technology platform.

On the other side is Tom Popak, who leads our owned brands. These are our specialty products that are under our owned brands as well as our own brand corporate brand products, essentially our private brand, which is today very much a brand in dentistry and medicine. So it’s broken into two. Segment accounting reflects the management of the business as outlined, and we implemented the segment accounting effective January of twenty twenty five with some information given, of course, related to this in the fourth quarter of twenty twenty four.

Mike Sarcone, Analyst, US Medical Supplies and Devices team: Got it. And just a follow-up there. Do those changes come with any meaningful shifts or adjustments in the organizational structure or the way you’re managing the business? Just trying to get a sense for if there’s any commercial or operational risks we should be mindful of looking out for.

Stan Bergman, CEO, Henry Schein: No, don’t think, Michael, there’s any operational risks with this move. It was put in place effective, as I noted, this year. But the organization has been clustered around these strategies, and we formalized the responsibilities, as I noted, this year. I don’t think this per se presents any operational risk, although what it does is it

Mike Sarcone, Analyst, US Medical Supplies and Devices team: clarifies goals and aligns those goals with our strategic plan, the Bold plus One initiative. Understood. That’s helpful. Then maybe just one on the macro trends. I guess, can you give us your latest views on demand trends?

Yes. So

Stan Bergman, CEO, Henry Schein: Michael, in the dental market in The United States, we believe visits are consistent with prior years, perhaps leaning towards positive number of visits in The United States to Dennis. I think what’s important to realize is that there has been a view by dentists that they’re looking for more value in selecting their products. So I think there’s been a movement towards our own brands and other more competitively priced brands. But generally, the visits to dentists are stable in The United States. On the trend side, equipment has been quite stable, of course, very lumpy from quarter to quarter, but it’s quite stable in traditional business.

There are some build outs we are seeing now, a little bit more life in the build out arena. Digital technology can be a little bit more lumpy because it can be dependent on the current market price of digital equipment. But essentially, the equipment business is pretty stable as well in The United States. Outside of The United States, it’s very much dependent on a market by market basis. But I would say Europe and Germany is quite stable.

There are markets such as France and Italy and Germany that can be a little bit lumpy. But essentially, the markets in Europe are stable from visits to practitioners. Australia and New Zealand had some challenges the previous year, but it seems to be stabilized. Brazil is actually doing quite well as a market, although intuitively, we may not see it that way because the Brazilian economy has been has seen challenges. On the specialty side, The U.

S. Market now is quite stable, although the high end of implants is still a bit under challenge. But it’s The U. S. Market is somewhat stable now, maybe slightly growing.

The other important market for us is Germany, which has been doing quite well, as all of this is information that we provided on our last call. On the software side, the demand for our software continues to grow, although I caution investors to understand that there’s a movement to SaaS model, which is more recurring revenue monthly recurring revenue rather than a one time sale, as you would see, with on prem software. But essentially, the technology demand continues to increase quite nicely. And I think that’s sort of a synopsis of the market as we see it today. There is I mean, a concern a little bit with the higher interest rates, but I think dentists and physicians are understanding that interest rates are here to stay.

And what I didn’t mention is the medical market that in the first two quarters can obviously be somewhat lumpy depending on the respiratory situation. And it was quite strong recently. So I think we showed some reasonable growth in the medical market, which is generally quite a stable market.

Mike Sarcone, Analyst, US Medical Supplies and Devices team: Okay, great. And then I did want to shift to maybe talking about some of your financial goals. Maybe you can discuss your long term financial goals and briefly highlight what you’re expecting in ’twenty five, but in particular interested about how you’re thinking about 2026.

Ron South, CFO, Henry Schein: Certainly, Michael. As Stanley mentioned, we remain committed to our financial goals of a high single digit, low double digit earnings growth. As it applies specifically to 2026, we haven’t provided 2026 guidance yet. But when we do, you know, contemplate what that guidance should be, I mean, there’s a number of factors we’ll be looking at. I think one of the more important ones will be and this is something Stanley touched on what kind of momentum are we getting with those high growth, high margin businesses?

What kind of momentum are we seeing with the dental specialty products, our implant products, our endodontic products? What kind of ongoing earnings growth are we getting with our technology business? And how are our value added services doing? Those are all significant contributors to our operating income. You know, the the type of traction and the type of momentum we see with those products and those businesses will be important when determining what our 2026 guidance will be.

We’ll also be taking into consideration what are we seeing, you know, with some of the restructuring initiatives and how well have we executed against completing some of those restructuring initiatives and to what extent can we, you know, apply those cost savings on a full year basis to 2026. If you recall, we originally said that we expected 75,000,000 to $100,000,000 of cost savings through those initiatives. And we are pretty confident that it’s going to be towards the high end of that once we complete all of our actions before the end of this year. So that we’ll have we should get some benefit going into ’26 from that. Another is, you know, we haven’t really talked yet too much about our new shareholder KKR and what kind of value creation ideas are we going to be able to apply as we work with them to increase the value of the business?

And to what extent does that impact 2026? Also, new product development. We’ve got, you know, we launched a new implant product last year, the TaberPro conical. We also have some new technology offerings through Henry Schein One. You know, and we’ve got to look at what kind of, what’s the pace of uptick with those new products And what will the impact be on 2026 for them?

And then lastly, what all this kind of sits on is what are we seeing in our markets? Dental markets this year and last year have been growing anywhere from 0% to maybe 1%. What kind of growth are we going to get in our markets? Because that’ll be the baseline on which we can then apply those levers that we control, but we’ll apply that to those market growth rates. That’ll really be the output from that will become our ’26 guidance.

Mike Sarcone, Analyst, US Medical Supplies and Devices team: Okay. Very helpful. And I did want to hone in on, you know, this year. I guess, what can you say about the quarterly cadence of earnings growth? How comfortable are you with 2Q consensus estimates?

Ron South, CFO, Henry Schein: Yeah. As we mentioned when we provided our original guidance, we did expect our 2025 results to be more heavily weighted towards the back half of the year. And that really just kind of shows kind of ongoing recovery of some market share, but also ongoing cost savings that we expect as we work through some of the restructuring initiatives.

Mike Sarcone, Analyst, US Medical Supplies and Devices team: Okay. Got it. And know, you mentioned the restructuring program, so I did wanna ask around, that. When you think about optimizing the business, you know, can you elaborate on any discrete projects or or areas of focus where you’re optimizing?

Ron South, CFO, Henry Schein: Well, some of these are are very much a lot of our restructuring is consistent with some of the leverage ideas that or leverage thoughts that Stanley shared earlier. I’d say last year, a lot of the savings came from reduction in force, just kind of rightsizing our payroll with where we were in terms of volumes in the distribution business. But what we’ve been working on more this year is, you know, I’ll I’ll use our endodontic business as a as an example. We really kind of built our endodontic business through a series of transactions. It’s historically, it’s been more like an endodontic portfolio of businesses as opposed to an endodontic business.

What we were able to do was we were able to purchase the minority shares of a of a couple minority partners we had in two of those endodontic businesses. And now we can really approach it more as a group of endodontic products, more as a product category. We’ve been able to close one facility, move the production to another facility, and just begin leveraging those So those are the types of initiatives that we’re really trying to focus on as we work our way through 2025 and going into ’twenty six.

Mike Sarcone, Analyst, US Medical Supplies and Devices team: Got it. That is helpful. I guess, as you’re thinking about ’twenty five and ’twenty six, can you help us think about the split between some of those kind of discrete items and projects, like the one you mentioned, versus how you’re thinking about just a continuous kind of process improvement focus?

Ron South, CFO, Henry Schein: Well, think the line’s blurry there, right? I mean, think that we are especially since we are a company that’s been built through a series of acquisitions over time, you’re constantly kind of going back and seeing, Okay, how do synergize some of these things a little better? How do we bring these in? So some of that is through specific action. Some of that becomes a little more almost more organic to the process as we work through it.

So we are in this continuous improvement process. I do think it’s going to be helpful. And we’ll probably talk a little more about the KKR investment. It’s helpful having someone like KKR who are we’ve got a couple of members on the board now who can provide us with a fresh set of eyes around some of these the approach we’ve taken for some of this like you said, a continuous improvement. And I think a fresh perspective is always helpful when you’re trying to complete these types of savings.

Mike Sarcone, Analyst, US Medical Supplies and Devices team: That is helpful. And I did want to touch on KKR. Maybe you could talk about just, you know, your relationship with KKR, how that’s evolved and then the strategic rationale behind the investment.

Stan Bergman, CEO, Henry Schein: Yes. So Michael, KKR have invested quite heavily in Henry Schein. The original 10% or so was through the market. They’ve invested another 2.5% through stock we sold them. And they will have the option they do have the option to buy another 2.5%, taking them to about 15%.

They have two directors on our board, one Max Lin, who is quite well versed in healthcare in general. And Dan Daniels, who has had quite extensive experience in the dental space when he worked at Danaher prior to at the time when Danaher owned the dental business, which was spun off. They are supporting in a significant way our Build plus One strategy, focusing quite a bit on the distribution side, helping us with projects such as margin management, sales focus and some expense management activities. So that’s where the work is. They’re also a partner through another business in Henry Schein One, and they’re quite active in that as well.

Mike Sarcone, Analyst, US Medical Supplies and Devices team: Okay. And they obviously have a large portfolio of companies. Do they bring to the table any ability for negotiating leverage with maybe some of your suppliers? We’d love to hear how you might be able to leverage that.

Stan Bergman, CEO, Henry Schein: Yes. I think that’s the particular area of expertise we have in the expense management arena that can help us in certain areas where we may not have necessarily huge volume, in areas where we do have significant purchasing power already, obviously, that can bring us some help. But in areas where we don’t have a lot of purchasing power and they in the aggregate with the other portfolio companies do, that can be quite helpful. And we’re going through that right now with them. It’s a very good relationship.

They’re quite capable and they’re working well with our team.

Mike Sarcone, Analyst, US Medical Supplies and Devices team: Okay. And just on that relationship, can you share anything around timing or milestones or KPIs that we should be on the lookout for in the near term?

Stan Bergman, CEO, Henry Schein: We have not provided any specific guidance. We will in the future, but I think we can’t do that today.

Mike Sarcone, Analyst, US Medical Supplies and Devices team: No problem. All right. And I did want to ask about the Henry Schein One business. I was hoping maybe you could comment a little bit on what the growth in that business looks like, your outlook. I believe you’re consolidating some projects to get efficiencies there.

So what should we be looking out for when it comes to growth drivers for the business?

Stan Bergman, CEO, Henry Schein: Yes. So Michael, one of the key goals of every practice, dental practice in the developed world, particularly in The United States, Canada, Australia, Zealand and The UK, a couple of other countries, is to drive efficiency through the practice and assist with providing and seeking goals to increase quality of care. Best way to do that is through digital technology. We are advancing and are doing very well with our cloud based system, which is growing very well in these markets, Ascend in The United States and entirely outside of The United States. And these this base system practice management system is connected to the electronic medical record, which in turn is connected to certain devices, whether it’s scanners, whether it’s mills or the ability to provide information to laboratories digitally.

All of this is designed around the notion of efficiency in the practice, providing a better patient experience and clinical improvement. It combines nicely with some of the AI offerings that we provide today. Mnuchin-one has been doing quite well. As I noted earlier on, the way in which we recognize income has changed from an on prem sale to recurring revenue, which is very profitable. In fact, the way it works is you have a fixed cost and then you provide more you obtain or you generate more revenue as a result of the SaaS type model.

So that was all working well. What we’re doing also is Henry Schein One through various mergers and acquisitions over the last few years has an extensive portfolio of, for example, revenue cycle management and other kinds of services. We’re aggregating these onto our common platform. So we’re seeing a little bit of erosion of sales in some areas in the sales side, but we’re picking it up in the revenue cycle management side. And the profits continue to do quite well in the space as we drive the conversion from one type of methodology to the other, although the sales may not look as good as they really are, but the number of units we’re selling is growing very nicely across the board at Henry Schein One.

Okay, great.

Mike Sarcone, Analyst, US Medical Supplies and Devices team: Very helpful. And I did want to ask a question on capital allocation. I guess, can you comment on your current strategy? Would just like to get a sense of how you’re thinking about and prioritize capital allocation between M and A, share repo.

Ron South, CFO, Henry Schein: Certainly. So we do generate a fair amount of cash over the course of the year. And we’re able to, you know, apply that cash back into the business in a number of different ways. Our you know, a a typical m and a year for us, say, going up until through 2022, was we would do somewhere between 300,000,000 and $400,000,000 of acquisitions a year. 2023 was a heavy acquisition year for us simply because we saw a lot of great opportunities that helped us really accelerate our strategic plan.

And we made some significant investments in a couple of different implant companies. We made a great investment in home solutions business as well as in a practice transitions business on the value added services side. So, that was a billion dollar plus acquisition here for us. Since then, think we don’t we’re we’ve been kinda returning more to that 3 to $400,000,000 cadence, would be more normal. But having said that, if we see the right opportunity that helps us extend our strategy, then we will definitely have to consider it, right?

It’s just we don’t stop just because we get the $400,000,000 But it typically tends to be 300 to $400,000,000 of M and A. Share repurchases, we had typically done 300 to $400,000,000 We think right now the stock is at a very good price. And all of our accretion models show that in this interest rate environment still that our stock is a good buy. So we did $161,000,000 of share repurchases in the first quarter. Although historically, we were also in that 300 to $400,000,000 range.

But obviously, if we did 161,000,000 in the first quarter, we are, you know, kind of exceeding that that pace right now. So, you know, that’s what we see as really the best use of capital. Obviously, we need to, you know, take some of the cash we generate, invest it back in the business, fund some of the working capital, fund some other areas of the business that we have. But that would be the normal cadence at this point.

Mike Sarcone, Analyst, US Medical Supplies and Devices team: Okay, very helpful. And we only have about forty seconds left, so I figured I’d have an open ended one here and maybe let you share what you think is most misunderstood about the Chine story among the investor community.

Stan Bergman, CEO, Henry Schein: Well, that’s hard to not an investor, but the Bold Plus strategy has worked. It’s going to continue to work, growing high margin, high growth businesses, connecting relationships that we have in different parts of dentistry and medicine and aggregating share of wallet with our customers. That’s where we’re heading. Of course, doing that in conjunction with efficiency, driving expenses down, improving customer satisfaction and investing in digital technology, whether it’s our electronic medical record, electronic clinical electronic digital clinical workflow or our GIP global e commerce platform for ease of doing business with us. All of these are areas and I think we will see growth and profitability in the years to come.

Mike Sarcone, Analyst, US Medical Supplies and Devices team: Okay, great. Well, that’s all the time we have. So Stan, Ron, Graham and Susan, thank you very much for your time today.

Ron South, CFO, Henry Schein: Very good. Thank you, Mike.

Stan Bergman, CEO, Henry Schein: Thank you very much.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.