Henry Schein (HSIC) Jefferies Global Healthcare Conference summary

Business performance and recovery trends

• Merchandise sales faced 300-400 basis points of headwinds in 1Q due to lingering effects from a prior cyber incident, especially among episodic customers who primarily purchased online.

• Larger and mid-sized customers have mostly returned, with North American distribution business stabilizing and some global regions facing challenges.

• Specialty businesses, including implants and endodontics, are growing market share globally, with new products expected to drive further growth.

• Value-added services, especially software, are performing well, with rapid adoption of cloud-based solutions and AI-driven products.

• Gross profit and margins have remained strong despite sales headwinds, with overall business stability across all segments.

Market dynamics and growth drivers

• Consumable merchandise growth is closely tied to patient traffic, which was flat in Q1 due to weather and higher flu rates, but improved as the quarter progressed.

• No broad deflation in dental pricing, but some manufacturers have reduced prices after prior increases, with a shift toward generics and own brands.

• Equipment market is stable, with traditional equipment flat and digital products like scanners and 3D printing seeing increased demand.

• European equipment market is mixed, with Germany facing pricing pressure and France adjusting to new DSO legislation.

• Standard equipment growth has normalized after strong post-pandemic demand, now operating from a higher base.

Technology and value-added services

• Cloud-based software, especially Dentrix Ascend, is expanding its installed base in the U.S. and internationally.

• AI-powered add-ons and new interoperable insurance claim tools are gaining traction, with expectations for significant adoption among DSOs.

• Revenue cycle management and consulting services are contributing to growth and customer retention.

• Long-term market growth for technology and value-added services is projected at 8%-12%, with potential for market share gains.