Henry Schein (HSIC) Q2 2024 earnings summary

Executive summary

• Q2 2024 delivered solid results with net sales of $3.14 billion, up 1.1% year-over-year, driven by growth in medical and technology segments, while dental sales declined; strong operating cash flow was reported despite ongoing recovery from the October 2023 cyber incident and challenging economic conditions.

• Net income for Q2 2024 was $104 million, down from $140 million in Q2 2023, with GAAP diluted EPS at $0.80 and non-GAAP diluted EPS at $1.23, both reflecting year-over-year declines.

• Full-year 2024 guidance was lowered due to slower-than-expected recovery from the cyber incident and macroeconomic headwinds, with restructuring and increased share repurchases planned to drive future efficiency and shareholder value.

• Strategic acquisitions, including TriMed and Shield Healthcare, expanded product offerings and geographic reach, while digital transformation initiatives and the BOLD+1 Strategic Plan continued.

• A new restructuring plan was announced, targeting $75M–$100M in annual savings and increasing share repurchase authorization by $500M.

Financial highlights

• Q2 2024 net sales increased 1.1% year-over-year to $3.14 billion; gross profit was $1.02 billion (32.5% margin), up from $975 million (31.4%) in Q2 2023.

• Q2 2024 GAAP net income was $104 million; non-GAAP net income was $158 million; adjusted EBITDA was $268 million, down from $279 million in Q2 2023.

• Operating cash flow for Q2 was $296 million, up from $274 million YoY; year-to-date operating cash flow was $493 million.

• Q2 2024 operating margin was 5.1%, down from 6.5% in Q2 2023; non-GAAP operating margin was 7.75%, down 41 bps YoY.

• Diluted EPS for Q2 2024 was $0.80, compared to $1.06 in Q2 2023.

Outlook and guidance

• 2024 total sales growth now expected at 4%–6% (previously 8%–10%).

• 2024 non-GAAP diluted EPS guidance lowered to $4.70–$4.82 (from $5.00–$5.16), reflecting 4%–7% growth over 2023.

• Adjusted EBITDA for 2024 projected to grow in low double digits, below prior guidance of over 15%.

• New restructuring plan targets $75M–$100M in annual run-rate savings, with charges expected in H2 2024 and 2025.

• Expect higher EPS growth in Q4 than Q3 due to restructuring timing.