Henry Schein (NASDAQ:HSIC) reported third-quarter results marked by higher U.S. dental merchandise sales, margin expansion and improved underlying earnings, while raising its full-year non-GAAP earnings outlook.
Global sales totaled $3.5 billion in the third quarter, up 4.0% from the prior-year period. The company said local-currency internal sales rose 3.1%, foreign exchange contributed 0.2 percentage points of growth, and acquisitions added 0.7 percentage points.
GAAP net income was $119 million, or $1.06 per diluted share, compared with $101 million, or $0.84 per share, a year earlier. Non-GAAP net income was $175 million, or $1.56 per diluted share, versus $167 million, or $1.38 per share, in the prior-year quarter. Adjusted EBITDA increased 8.7% to $321 million.
The quarter included a $0.19-per-share net benefit from tariff refunds. Excluding that benefit and a prior-year remeasurement gain, Henry Schein said adjusted non-GAAP diluted earnings per share increased 19.1% to $1.37.
Dental Merchandise Growth Driven by Volume
Chief Executive Officer Fred Lowery highlighted 8.6% growth in U.S. dental merchandise sales, including 7.0% local-currency internal growth. He said the increase was driven primarily by volume rather than pricing and reflected market-share gains, particularly among private practices and emerging dental service organizations, or DSOs.
Lowery said growth was supported by company-owned and private-label products, exclusive offerings such as Curodont, commercial promotions and efforts to increase customers’ share of wallet. He characterized the broader U.S. dental market and patient traffic as stable, with routine consumable demand remaining steady and traditional equipment demand healthy.
The company noted some pressure in discretionary procedures as patients weigh out-of-pocket costs and may defer treatment. Lowery said those categories represent a relatively limited portion of the company’s portfolio and do not materially affect its current growth expectations.
U.S. dental equipment sales increased 1.6%, driven by traditional equipment and partly offset by lower digital equipment sales. The company said equipment backlog remained healthy, with orders ahead of both prior-year and prior-quarter levels. Management also said it had not seen a change in de novo activity among DSOs.
Segment Performance and Technology Adoption
Sales in the global distribution and value-added services group rose 3.7%. International dental merchandise sales increased 5.4%, including 3.3% local-currency internal growth, while international dental equipment sales rose 2.9%, including 3.2% internal growth. The company cited strong internal growth in Brazil, France, Spain, Australia and Canada, though it noted that Germany faced a difficult comparison related to the timing of the International Dental Show in 2025.
Global specialty products sales increased 6.1%, or 3.4% on a local-currency internal basis. Growth was driven by premium and value implant sales in Europe and value implants in the United States, partly offset by headwinds in Brazil. Lowery said the company is seeing strong U.S. growth in its SIN 360 value implants and recently launched its Versalis product in the value implant category.
Global technology sales rose 5.2%, including 6.5% local-currency internal growth. The company cited growth in its Dentrix Ascend and Dentally cloud-based practice management platforms, as well as revenue-cycle-management growth supported by higher claims volume. Nearly 13,500 customers subscribe to the Dentrix Ascend and Dentally platforms, and Henry Schein is adding about 200 net new customers per month, according to Lowery.
Management said technology growth was partly affected by a difficult comparison with prior-year revenue tied to Windows 10 end-of-life support. The company expects fourth-quarter technology sales growth to return to the pace seen during the first half of the year.
Medical Trends, Margin Improvement and Capital Allocation
U.S. medical sales increased 1.0%. Lower sales of point-of-care diagnostic products and flu and COVID-19 vaccines were offset by growth in the core medical business and an 11.4% increase in Home Solutions sales. Excluding point-of-care tests and flu and COVID-19 vaccine sales, U.S. medical revenue increased at a low- to mid-single-digit rate.
The company said it expects an earlier U.S. flu season to support medical growth in the fourth quarter. Lowery said Home Solutions is expected to continue growing at a high-single-digit to double-digit rate.
GAAP operating margin was 5.57%, up 69 basis points year over year, while non-GAAP operating margin rose 20 basis points to 8.03%. Henry Schein recorded $22 million in restructuring expenses, or $0.14 per diluted share, as it advances restructuring and value-creation initiatives.
The company reiterated its expectation for more than $200 million in operating-income improvement from those initiatives, including a $125 million run rate by the end of 2026. Management said its actions include organizational simplification, shared services, outsourcing selected functions, indirect procurement centralization, portfolio review and supply-chain tools intended to improve efficiency and reduce inventory.
During the quarter, Henry Schein repurchased about 1.4 million shares for $125 million at an average price of $86.67 per share. Year-to-date repurchases reached $450 million, and approximately $330 million remained authorized for future buybacks at quarter-end. Operating cash flow was $161 million.
Guidance Raised
Henry Schein maintained its forecast for 2026 total sales growth of 4.5% to 5.5% but raised its non-GAAP diluted EPS outlook to $5.50 to $5.56, from prior guidance of $5.29 to $5.39. The company said the updated outlook reflects tariff refunds recognized in the third quarter, limited targeted growth investments in the fourth quarter that are intended to contribute to 2027 growth, and improved underlying operating performance.
The company now expects adjusted EBITDA to grow at a high-single-digit rate in 2026 from $1.1 billion in 2025. Its outlook assumes no significant additional tariff refunds or remeasurement gains for the rest of the year, generally stable foreign-exchange rates and an estimated non-GAAP effective tax rate of about 24%.
Ron South will transition from chief financial officer to senior advisor, while Emmanuel Caprais is set to become CFO effective Nov. 4.
About Henry Schein (NASDAQ:HSIC)
Henry Schein, Inc (NASDAQ: HSIC) is a global provider of healthcare products and services serving dental and medical professionals, as well as veterinary practices and laboratories. The company distributes consumable supplies, equipment, pharmaceuticals, vaccines, and other products used in clinical and practice-management settings.
In addition to product distribution, Henry Schein provides technology solutions and value-added services designed to support clinical workflows, electronic health records, practice management, procurement, equipment installation, and technical support.
