• Global Sales: $3.2 billion, growth of 5.8% compared to Q4 2023.
• LCI Sales Growth: 5.5% for the quarter, 6.6% excluding lower PPE sales and COVID test kits.
• GAAP Operating Margin: 4.86%, a 358 basis point improvement year-over-year.
• Non-GAAP Operating Margin: 7.46%, a 260 basis point improvement year-over-year.
• GAAP Net Income: $94 million or $0.74 per diluted share.
• Non-GAAP Net Income: $149 million or $1.19 per diluted share.
• Adjusted EBITDA: $270 million, compared to $172 million in Q4 2023.
• US Dental Distribution LCI Sales Growth: 5.9%, with dental merchandise growth of 4.8% and equipment sales growth of 10.0%.
• US Medical Distribution LCI Sales Growth: 4.5%, 7.3% excluding PPE and COVID test kits.
• International Dental Distribution LCI Sales Growth: 7.3%, with merchandise growth of 7.9% and equipment sales growth of 6.0%.
• Global Specialty Products Group Sales: $368 million, growth of 7.2%.
• Global Technology Group Sales: $160 million, growth of 2.4%.
• Operating Cash Flow: $204 million for Q4, $848 million for the full year 2024.
• Share Repurchases: 1.1 million shares repurchased in Q4 at an average price of $71.35 per share.
• 2025 Non-GAAP EPS Guidance: $4.80 to $4.94, growth of 1% to 4% over 2024.
• 2025 Total Sales Growth Guidance: Expected to be 2% to 4% over 2024.

• Warning! GuruFocus has detected 6 Warning Signs with HSIC.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Henry Schein Inc (NASDAQ:HSIC) achieved 41% of its total operating income from high-growth, high-margin businesses in 2024.
• The company reported a 5.8% increase in global sales for the fourth quarter of 2024 compared to the same period in 2023.
• Henry Schein Inc (NASDAQ:HSIC) has successfully completed its 2022 to 2024 BOLD+1 Strategic Plan, with a focus on high-growth, high-margin businesses.
• The company has simplified its organizational structure and appointed new leadership to drive growth in its global distribution and technology groups.
• Henry Schein Inc (NASDAQ:HSIC) reported strong operating cash flow of $204 million for the fourth quarter, a significant improvement from the previous year.

Negative Points

• The company's fourth quarter revenue was below expectations, partly due to a slow end to the quarter and the timing of the flu season.
• Henry Schein Inc (NASDAQ:HSIC) faced challenges in its orthodontic business, which is being reorganized due to a key product going off patent.
• The company experienced lower sales in its US medical business due to a late start to the flu season and lower sales of vaccines, PPE, and COVID tests.
• Henry Schein Inc (NASDAQ:HSIC) anticipates a challenging market environment with modest growth in dental and medical markets in 2025.
• The transition to a SaaS model in the technology group has created short-term revenue headwinds, despite longer-term benefits.

Q & A Highlights

Q: Can you explain the assumptions behind your 2% to 4% revenue growth guidance for 2025, especially given the market outlook from peers? A: Ronald N. South, Senior Vice President and Chief Financial Officer, explained that they expect modest market growth, with dental markets potentially growing between 0% to 2%. Price appreciation is limited, and the guidance includes minimal acquisition growth due to lower M&A activity in 2024.

Q: What caused the fourth-quarter revenue to fall short of expectations by 500 basis points? A: Ronald N. South noted that the quarter ended slower than anticipated due to flat patient traffic and the timing of Christmas. Additionally, the flu season's timing resulted in lower medical revenues than expected.

Q: How do you view the potential impact of a large Medicare Advantage payer stopping implant coverage in 2025? A: Ronald N. South stated that they have not seen any significant impact from this change on their business so far, as it does not constitute a significant part of their end market.

Q: Can you discuss the opportunity to improve specialty operating margins over time? A: Stanley Bergman, Chairman and CEO, explained that the specialty segment includes lower-margin businesses and expenses for managing corporate brand products. They expect operating margins to grow over time, focusing on improving the orthodontic business and leveraging synergies.

Q: What is the expected impact of tariffs on your 2025 guidance? A: Ronald N. South mentioned that they have shifted their supply chain to mitigate tariff impacts, particularly for gloves. They do not anticipate any significant impact on their bottom line from tariffs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.