HENRY SCHEIN INC Q4 FY2024 earnings call

• Completed the 2022 - 2024 BOLD + 1 Strategic Plan and exceeded the goal of having 40% of worldwide operating income from high - growth, high - margin businesses.
• Simplified organizational structure and appointed new leaders for different groups. For example, appointed Andrea Albertini for Global Distribution and Value - Added Services Group and Global Technology Group, and Tom Popeck for Global Specialty Products Group.
• Dental and medical end markets were relatively stable in the fourth quarter.
• Home Solutions business was strengthened with the acquisition of Acentus, and the annual run rate of the home care Solutions business reached approximately $400 million.
• Technology Group shifted to a SaaS model, with over 9,000 customers subscribed to Dentrix Ascend and Dentally with year - on - year growth of about 6.5%.

Global Distribution and Value-Added Services Group sales were $2.7 billion with sales growth of 5.9%, including LCI growth of 5.8%. U.S. dental distribution LCI sales grew 5.9% versus the prior year, with dental merchandise LCI growth of 4.8% (6.5% when excluding PPE products) and equipment sales growth of 10.0%. U.S. medical distribution LCI sales grew 4.5% compared to Q4 2023. Home Solutions business grew 8% year-over-year. International dental distribution LCI sales grew 7.3%, with dental merchandise LCI growth of 7.9% (8.0% when excluding PPE products) and equipment LCI sales growth of 6.0%. Global Specialty Products Group sales were $368 million with sales growth of 7.2%, including LCI growth of 5.0%. Global Technology Group sales during the fourth quarter were $160 million with total sales growth of 2.4% and LCI sales growth of 2.1%.

• 2025 total sales growth is expected to be 2% to 4% over 2024.
• 2025 non - GAAP diluted EPS attributable to Henry Schein, Inc. is expected to be in the range of $4.80 to $4.94, reflecting 1% to 4% growth compared with 2024 non - GAAP diluted EPS.
• Adjusted EBITDA is expected to grow in the mid - single digits versus 2024 adjusted EBITDA of $1.1 billion.

• Market trends such as customer migration to value - priced products may affect gross margins.
• Potential impact of tariffs on the supply chain and costs.
• Challenges in restructuring and aligning operating margins in various segments.

Q: Thanks for all the detail here in the recast financials. I appreciate that's not an easy undertaking. I want to start with, if I could, revenue guidance and just some of the underlying assumptions you have there. You're calling for 2% to 4% reported revenue growth. It's based in part upon improvement in both dental and medical end markets versus last year. Just -- I understand why your business can continue to outperform the broader market with your investments, the initiatives you have in motion. But it does seem like your market view is slightly more optimistic than what we've heard from some of your peers. So is there something you're seeing today that gives you kind of, call it, better relative comfort on the market outlook? And then if you're able, can you give us a sense of how you're forecasting organic growth for each of your new reporting segments, really just in the context of that company - wide guide?

A: Yes. Sure, Jason. I think the -- we do see modest growth in the markets, right? If you think back to the Investor Day 2 years ago, we said then we thought core dental could grow 2% to 4%. I think we're still looking at market -- well, if there's market growth, we think the 2% could be challenging. So it's probably somewhere in that 0% to 2%. But we do expect some modest growth in there. Price appreciation is also limited, so there's not a lot of price appreciation in our revenue guidance. And you mentioned too kind of inorganic versus organic. Our M&A activity was a little lower than most years in 2024. So we're not getting -- there's a very limited amount of acquisition growth included in that overall revenue growth as well.

Q: I know we're 2 months into 2025 but I just want to go back to the fourth quarter for one second here, if I could. I mean, when you pre-released last month the $3.2 billion in revenue for 4Q, we frankly had hoped that was a rounded down number. It ends up in today's release that was a rounded up number. And when I looked at just kind of relative to your third quarter updated guidance that you provided on the third quarter, sorry, for 2024, you fell short in the fourth quarter by 500 basis points in the fourth quarter on a revenue basis at the low end of the guidance, 700-plus basis points at the midpoint. So what happened in fourth quarter, I guess, that drove those revenues 500 basis points below the low end of the guidance, 700 basis points below the midpoint of the guidance, just relative to a guidance that was issued a month into the fourth quarter?

A: Sure, Jeff. I'll address your rounding question first. I mean, we did say $ 3.2 billion. I think revenues of $3.191 billion. So you're right, we rounded it up $9 million. So -- but we did round that to $3.2 billion. In terms of the lower revenues than expected, as we mentioned, we did have -- it was a relatively flat patient traffic in the quarter and also a really kind of a slow end of the quarter given the timing of Christmas which we underestimated the impact of that. So the quarter did end much more slowly than what we may have anticipated. And on the medical side, the timing of the flu season resulted in much lower medical revenues than we had anticipated as well.