Patterson Companies (PDCO) Q2 2025 earnings summary

Executive summary

• Q2 FY25 net sales rose 1.3% year-over-year to $1.67 billion, with internal sales up 0.6%, driven by animal health growth offsetting dental segment weakness and the lingering impact of the Change Healthcare cyberattack.

• GAAP EPS was $0.30 and adjusted EPS $0.47, both down year-over-year, impacted by lower dental equipment sales and cyberattack disruptions.

• Strategic alternatives, including a potential sale, merger, or business combination, are under evaluation to maximize shareholder value.

• $96.2 million returned to shareholders in the first half of FY25 via dividends and share repurchases.

• Cost management actions, including headcount reductions, are expected to generate $16 million in annual savings.

Financial highlights

• Q2 FY25 consolidated reported sales were $1.67 billion, up 1.3% year-over-year; internal sales increased 0.6%.

• GAAP gross margin was 19.6%, down 90 bps; adjusted gross margin was 20.0%, down 60 bps year-over-year.

• Q2 operating margin was 2.2% (GAAP) and 3.6% (adjusted), both down year-over-year.

• Q2 net income attributable to Patterson was $26.8 million ($0.30 per diluted share), down from $40.0 million ($0.42) last year; adjusted net income was $41.8 million ($0.47 per share), down from $47.3 million ($0.50).

• Free cash flow for the first six months was $12.2 million, up $41.5 million year-over-year.

Outlook and guidance

• FY25 GAAP EPS guidance revised to $1.83–$1.93; adjusted EPS guidance to $2.25–$2.35 per diluted share.

• Guidance reflects persistent dental market pressures, cost-saving measures, and continued investment, and excludes unplanned share repurchases, future acquisitions, and certain non-recurring items.

• Dental patient traffic expected to remain stable, but equipment spending muted; animal health expected to continue outperforming, especially in production animal segment.

• Guidance assumes end market conditions remain consistent with current trends and no material adverse public health developments.

• Annual pre-tax savings from recent severance actions estimated at $16 million, with $10 million expected in FY25.