Q2 2020 Henry Schein Inc Earnings Call

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Good morning, ladies and gentlemen, and welcome to the Henry Schein second quarter 2020 conference call. At this time all participate already listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require slides during the call <unk> press the star keep all what might be a real on your touchtone phone.

As a reminder, this call is being recorded I would now like to introduce your host for today's call Carolynne borders Henry Schein, Vice President Investor Relations. Please go ahead Carolyn.

Thank you Regina and my thanks to each of you for joining us to discuss Henry Scheins results for the second quarter of Twentytwenty.

With me on the call today, our Stanley Bergman Chairman of the Board and Chief Executive Officer at Henry Schein, and Steven Paladino, Executive Vice President and Chief Financial Officer.

Before we begin I would like to state that certain comments made during this call will include information that is forward looking.

As you know risks and uncertainties involved in the company's business may affect the matters referred to in forward looking statements as a result at the company's performance may materially differ from those expressed in or indicated by such forward looking statements. These forward looking statements are qualified in their entirety by the cautionary statements contained.

Henry Schein filings with the Securities and Exchange Commission, including in the risk factor section of such filings. In addition, all comments about the markets, we serve including end market growth rates and market share a based upon the company's internal analysis and estimates.

Our conference call remarks will include both GAAP and non-GAAP financial results. We believe the non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business.

Enable the comparison of financial results between periods, where certain items may vary independently of business performance and allow for greater transparency with respect to key metrics used by management and operating our business.

These non-GAAP financial measures are presented solely for informational and comparative purposes, and should not be regarded as a replacement for corresponding GAAP measures.

Reconciliations between GAAP and non-GAAP measures can be found in the supplemental information section of our Investor Relations website and in exhibit B of today's press release, which is available in the Investor Relations section of our website.

The content of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast August 4th Twentytwenty, Henry Schein undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this call.

Please limit yourself to a single question and a follow up during Q in a to allow as many listeners as possible to ask a question within the one hour that we have a lot of for this call.

With that said I would like to turn the call over to Stanley Bergman.

Thank you very much Carolyn good morning, everyone and thank you for joining us.

Over the past few months, we have wouldn't list dental and medical practices continue to reopen worldwide.

Patient volumes are still below pre code nine two levels.

Covering the dental and medical end markets is progressing and a far more rapid pace than we had originally anticipated.

We're closely monitoring these trends in particular, because a number of U.S. stage.

Certain number of international geographies are experiencing.

Basic and diagnosed covert 19 cases.

Well this is leading to stick to social distancing requirements in certain places we have not at this point seen dental and medical practices closing in any meaningful way. Despite the recent rise in cases of course.

We will continue to monitor any potential impact to healthcare services in those regions and we are prepared to implement additional cost saving measures as warranted, but at this point.

Practices seem to be opening.

Does that open seem to be saying opened and there's a gradual increase in more practices opening.

One of the critical issues we face.

When covered 19 emerged with demand for personal protective equipment, that's the P.B.

We are pleased to report that we made solid strives strides or procuring P.P. during the past three months, including expansion of sourcing a critical product categories. The addition of high quality substitute products that are regulatory compliance.

Adapting our transportation model to shorten lead times and product delivery from the factories.

As a result, we have significantly expanded our P. P supply chain capabilities and availability of product our team around the globe has worked diligently to position Henry Schein through this crisis, so that we merge as a stronger company.

We of course, though in the midst of the pandemic. However, we believe we are successfully navigating the daily rapid changing challenges, we are well positioned and are well positioned we believe for the future.

As we look to the future together with insight into Sean Board of directors.

I had the utmost confidence in Henry Schein business strategy.

In our leadership team and indeed, all of the team Schein.

Once again I offer my sincere thanks to shine across the globe for the teams, but wavering commitment to our customers extraordinary work effort. During this time and for the sacrifices from team has made for the benefit of Henry Scheins long term business, which we believe is on the sort of solid footing and.

As.

As a company we've done a very very good job, we believe and satisfying our customers needs.

This time I'll hand, the call over to Stephen to discuss our financial performance and then I'll provide some additional commentary on our view of current business conditions Steven.

Okay. Thank you so badly and good morning to all as we begin I'd like to point out that I will be discussing how results from continuing operations has reported on a GAAP basis and also on a non-GAAP basis. Our Q2 2022 to 2019 non-GAAP results exclude certain items that.

Detailed in exhibit B today's press release and in the supplemental information section about Investor Relations website.

Please note that we have again included a corporate sales category for Q2 that represents sales to kobex. This onto the transitional services agreement.

That's down we mentioned our 2022nd quarter results were impacted by cold that 19, but to a much lesser extent than we had originally expected.

As we mentioned on our last earnings call in response to cope with 19 pandemic, we have implemented a broad based cost reduction initiatives.

Including a payroll cost reduction plan centered around furloughs reduced work hours voluntary and paid time off the suspension about four one pay match and certain job reductions.

Over the course of the last few months, we have reevaluated the need to each of these initiatives and I'm pleased to say, but given the recovery recovery. We are experiencing in certain markets. Our T.S. EMS have begun to return from furlough and reduced hours, particularly TSMC in customer facing roles.

We expect the remaining furloughed Ts EMS to return by the beginning of the fourth quarter of 2020.

We will continue to closely monitored the health of our business and remain prepared to take additional cost saving measures measures if necessary.

Now turning to our financial results net sales for the quarter ended June 27th 2020 were $1.7 billion, reflecting a decline of 31.2% compared with the second quarter. Two past 2019 with internally generally generated sales declining in local currencies at 30.

2.5%.

You can see the dental sales performance is contained and all of the D details about sales performance or contained an exhibit a in our earnings press release, which was issued today.

On a GAAP basis operating margin for the second quarter with 2020.

I was negative 0.4%, representing a decrease of 707 basis points compared with the second quarter with 2019.

On a non-GAAP basis, our operating margin was 0.5% and contracted by 662 basis points on a year over year basis, a reconciliation of GAAP operating margin to non-GAAP operating margin can be found in the supplemental information page on the Investor Relations page about web site.

George and contraction in the quarter was primarily due to a reduction of global dental sales.

Related gross profit as well as other factors related to covert 19, including certain inventory charges associated with pp.

Turning to taxes I reported GAAP effective tax rate for the second quarter will 2020 was 5.9%. This compares with 23.6% GAAP effective tax rate for the second quarter. All 2019, our GAAP effective tax rate was a bit distorted given the pre tax loss in the second quarter was 20 point.

Moving on a GAAP net loss from continuing operations attributable to Henry Schein for the second quarter of 2020 was $11.4 million or negative eight cents per basic share. This compares with the prior year GAAP net income from continuing operations of $116.8 million or 70.

Eight cents per share.

Non-GAAP net income from continuing operations for the second quarter of 24 me was slightly positive at <unk> point $6 million or a rounding to zero cents per basic share and this compares with the non-GAAP net income from continuing operations of $125.7 million or 80.

Four cents per share for the second quarter with my team.

On a continuing operation operations basis amortization from acquired intangible assets for Q2, 2020 was $24.9 million pretax or 13 cents per diluted share and that compares to $28.0 million pretax or 14 cents per diluted share for the same period last year.

For the first half of 2020 hour amortization from acquired intangible assets was $53.7 million pretax what 28 cents per diluted share and that compares with $49.8 million pretax or 25 cents per diluted share in the same period last year.

In Q2 of 2020 foreign currency exchange positively impacted I would diluted EPS by approximately one cents per share.

Let me now provide some details about sales results for the second quarter in general dental sales performed better than anticipated as practices real reopen sooner than we expected during the quarter.

Our dental sales of $941.3 million declined 41.2% compared to prior year.

Decline in internal sales in local currencies of 40.1%.

North American internal sales in local currencies Declawed declined 46.9% and included a decline of 47.5% in sales and dental consumable merchandise and a decline of 44.9% in dental equipment.

Our international dental internal sales in local currency declined 29.5% and included a 29.2% decline for dental consumable merchandise sales in the 30.5 decline.

In dental equipment.

We experienced an increase in sales as the quarter progressed in long with more practices reopening and increased patient traffic. In addition, global dental sales in the second quarter benefited from PPD sales, which increased by more than 30% compared to the prior year.

If we look at our dental specialty products in Q2 internal sales about global dental specialty products decreased 39% in local currencies.

And we believe this higher margin product category has solid growth potential over the long term.

Turning to medical sales, our medical sales were $617.8 million, a decrease of 11.4% compared to the same period last year. There was no material impact from foreign currency currency exchange on our global medical sales and there was no acquisition growth during the quarter, the 11.4% decline, including the two.

<unk>, 0.1% decline in North America within 10 internationally internally generated sales in local currencies.

At 13.3% our medical sales also resulted.

And fairly resistance sales due to strong demand for PPD products, which grew approximately 140% over Q2 of last year.

Technology and value added services sales were $105.2 million in the second quarter, a decline of 15.9%, which we flex a decline in internally generated sales in local currencies of 17.0%.

In North America, the tech and value added services internal sales declined by 15.1%.

Excuse me in local currencies and internationally the technology internal sales declined by 29.8% in local currencies during the quarter.

We generally saw improvements in our transactional software revenue throughout the quarter as more patients started to visit practices worldwide.

As we discussed on the Q1 earnings call in early May we temporarily suspended our share repurchase program as a means to preserve cash in response to the impact of pulled that 19 on our business operations and due to certain restrictions related to financial covenants as of today. The company has 200.

$1.2 million authorized for future repurchases of common stock.

Currently we have access to significant liquidity, providing flexibility and financial stabilization in this challenging environment.

Our operating cash flow from continuing operations for the second quarter was negative $91.6 million and that compares to positive $165.5 million for the second quarter.

Of last year.

Year over year decline was primarily due to lower net income and higher working capital requirements from inventory purchases this quarter.

As part of our previously disclosed restructuring initiative, we recorded a pretax charge in Q2 2020 of $15.9 million or eight cents per diluted share. This restructuring charge primarily include severance pay and facility closing costs and reflects opportunities to reduce expenses and drive API.

Operating efficiencies, we expect to continue our restructuring initiatives through the end of this year.

I'll conclude my remarks on the topic of financial guidance again due to the continued uncertainty surrounding pull that 19 pandemic.

And its impact to our business operations, we will not be providing 2020 financial guidance at this point.

So with that I will turn the call back over to Stanley.

Thank you Stephen.

Let me review our business performance from the second from the second quarter.

And in recent weeks.

Let me start to dental.

Substantially all of the dental markets that we serve showed.

That we serve showed notable sales improvements during the second half of the quota with exception of the UK, which is progressing more slowly due to the timing of reopening.

China recovered from the beginning of April and Germany, and Austria were less impacted by locked out.

A number of other international geographies began to improve towards the middle of the quarter with the Netherlands, France, Italy, New Zealand, Australia recovering first followed by Spain, Brazil, and Brazil, and then of course, the U.S. and at the end of that.

Canada, which is lagging the us by about a month or so.

We were pleased that our second quarter sales for both dental consumable merchandise and equipment fared much better than expectations at the time of our first quarter earnings call.

As practices reopened and patients should turn to the dentist full clinical care.

Steven commented on our year over year PPG growth for Henry Schein.

Add some color to this discussion on imports of pp prior to the onset of Cobot 19, RPP sales as a percentage of global dental sales were in the mid single digits that increased to approximately 11% of out total dental sales by the end of the second call.

Order so it went up quite a bit but not hugely material in the context of total sales.

Equipment sales in the second quarter also declined less than we originally anticipated as a number of practices move forward with capital equipment purchases for both traditional and high technology solutions.

As a result in North America traditional equipment sales declined by approximately 40% while high ticket equipment sales experienced approximately 54% decrease.

Within our high Tech category laser sales at a healthy increase in the second quota.

So have a relatively small base and CAD Cam equipment sales, which includes digital impression full chair side and related laboratory sales declined by approximately 60% to North America and the second quarter two d. in Threed imaging sales declined 53% yes.

Yep.

Internationally traditional equipment sales declined by approximately 28% and high tech equipment sales experience and approximate 38, 36% decrease in local currencies International CAD Cam equipment sales also declined approximately 36%.

It is impossible to predict our growth.

Trend for PPG going forward, but we expect that peeping you will continue to constitute a meaningful portion of our dental sales going forward as safety protocols remain and necessity.

For safety seeing patients in the dental practice.

And you product category that we believe will gain traction going forward is a management equipment, including extra Aro section devices and air purification systems, which are which were distributing today.

As more emphasis is placed on infection control in the safety of ambient air we expect us to become an increasingly important product category, although with minimal impact us in the second quarter.

In line with the survey data published by the American Dental Association.

Experience has been that most us dental practices have riocan, although not at full capacity.

The latest 88 data suggested in the US patient volumes have improved significantly since late May however, patient capacity continues to be constrained as the amount of time. It takes to implement required safety procedures impacts the number of patients that can be seen in a given day that's it.

We are seeing that more Dennis and high Janus are working longer hours to compensate for this we would expect efficiencies and practices getting used to the additional PPV and being used and additional safety precautions as they get used to that we think productivity is likely to increase.

Yes.

Overall.

The data, we see through our commercial insurance claims processing in the US correlates with the most recently published survey data by the FDA, which shows the dental practices in the US in July has covered approximately 70% or to 70% of pre cobot 19 pace.

Volume.

As we look closer into it claims data we are seeing patients to turn for regular RFK procedures. This is important including hygiene visits as the pace as opposed to mainly visiting a dentist for emergency research reasons, such as pain management and so the underlying.

Business in the dental practice seems to be on solid footing.

In the us coming off a strong June sequential comparison.

We saw July versus June he claims data for emergency procedures increased by approximately 30%, but here's what's important while other procedures grew by approximately 35%.

For July global dental sales increased in the mid single digit percentage range year over year, which stands in Stark contrast to the 70% decline we saw in April.

In both North America International Dental markets growth was primarily driven by strong consumable merchandise sales dental equipment sales were only slightly with down winding down slightly in North America and internationally in July so we've seen a pretty stable environment emerging on.

The dental equipment side as well looking at our dental specialty businesses, which is comprised of implant endodontic and orthodontics sales.

Much like the trend with a general dental practices patients have been returning for special purpose specialists procedures, both in the us and internationally.

This began in May and continued in June and significantly in July.

We're particularly pleased with our implant sales performance in the.

Region, specifically, Germany, where internal sales in local currencies in the second quarter declined only slightly versus the prior year.

Henry Schein spent the last quarter working closely with our customers to build a roadmap to navigate through practice disruption, including assistance with business continuity planning and practice recovery for both practices and large group customers as well as third party party financing programs. These.

Programs include a host of Henry Schein, one software solutions that enable patient engagement related to bookings procedures and price practice safety as well as assistance developing an operating virtual waiting rooms. These.

Adoption the adoption of these changes in work flow that driven by Henry Schein, one have been well received and yes, the beginning a little bit time consuming.

Resulting in inefficiencies in the practice but of course.

Resulting in increased sepsis control and we think that over time, we knew the practices again, it will become much more efficient.

We are committed to understanding our customers challenges, obviously in delivering programs that normally see our customers through these difficult times, but also prepaid practices for future growth.

Our hands on Consultative approach is a key differentiator for our businesses.

And why our customers really rely on us I think the cobot period showed our customers why our hands on consultative approach really is important to the practice.

Now, let's review the medical business.

And here I would like to remind investors, we focus on office space practitioners.

We focus on.

Surgery centers, particularly the smaller ones.

And our energy centers.

Customers that are in renal dialysis cancer Centerfield.

Our community health centers, but we do not focused on long term care no the acute care space.

And in our second quarter medical sales were fairly resilient due to the strong demand for BP.

A portion of US physician offices remained open throughout the second quarter, although with reduced patient volume as such sales of consumable merchandise and pp medical.

Pp in the medical market helped offset the decline we experienced in the dental market.

Prior to the onset of covered 90 pp sales as a percentage of our medical sales were in the high single digits by the end of the second quarter that increased more than 12%.

Important, but not significantly important because our general business in the medical field did grow as the quarter progress and of course into July.

As mentioned earlier with regard to dental pp, we cannot predict.

Long term growth of this product category among medical customers. However, we believe HPE will continue to be.

A meaningful portion of medical sales as practice to seek to create a safe environment for both patients and yes the step.

We have consistently worked to make available a variety of cobot point cover 19 point of care diagnostic tests in the us specifically focusing on rapid test elsewhere as well as testing solutions in general.

We believe our long term relationship with.

So relationships with world class diagnostic companies and the deep breadth of our distribution no network.

In the medical arena for customers using testing diagnostics in the office positions us well to continue to deliver is these important testing products to the market over time.

Throughout this challenging times, we have worked closely with our customers, including physicians large group enterprises alternate care sites in general urge you Center dialysis centers, Yes, MH Fms schools community health centres and government organizations. This included assistance with the procurement to pp and others.

Traction control solutions in safely engaging with patients.

And in reopening practices in line with the recommended guidelines published by the centers for Medicare and Medicaid services.

As we look to the future, we will increasing leverage out tele medicine solutions, such as Mitch part and visual Dx for diagnosing and treating patients virtually.

We plan to continue to invest in this health.

Let form which has the potential to increased access to accrete to K improve the quality and reduce costs enhance patient engagement and of course drive efficiency in the healthcare practitioners office.

In July our medical experience sales experienced a solid double digit year over year increase.

A significant improvement to the nearly 30% year over year sales decline we experienced in April.

We experienced positive medical sales growth in July as Pp say PPD sales continued to be strong, but the strength was felt an experienced actually through out the product selection that we offer in the medical.

Business.

So now.

Let's move on to technology and value added services.

This is primarily Henry Schein, one, but also includes our financial services business and our brokerage business.

Pachter sales.

Transitional services technology and value added services sales experienced a single digit percentage decline year over year in July.

Which is also significantly proven from the approximately 25% year over year decline in April.

The decline in the second quarter was mainly due to lower than historical patient flow that impact the transactional revenue and of course as I mentioned financial services revenue was lower year over year as practice transitions and equipment leasing were impacted.

Henry Schein, one software sales began to improve as we progress through the second quarter in line with the resumption of dental practice operations.

In particular, we have seen improvements in the monthly transactional software revenue trends for services such as he claims as more patient visits.

The occur.

In the us, but also in other countries, but specifically Europe, Australia, New Zealand with Henry Schein, one is active and yes credit card processing.

With the launch of electronic statements solution with online payments.

Acceptance. This also has been well received and contributed to sales.

With regard to practice management system sales in the second quarter.

We did have success with signing new customers for both us and that's our leading cloud based solutions and our Dentrix enterprise platform as large scale customer sort solutions to help manage the operations centrally.

Having a single patient record helps large multi strat dental organizations focus the team on value added.

Activities, instead of having to spread the responsibility out each location.

Due to the remote capabilities of these products dental customers were able to use our products to Kim many of the team members safely working from home last night to many dental service organizations.

Dsos as known in the dental space, we're looking to improve the technology, while most of the locations we're seeing fewer patients.

[laughter] in addition.

The ability for Dennis communicate and engage with patients with our current revenue platforms.

It was critical during this reduced the period of dental operations.

[noise], providing information on practice reopening plant safety measures virtual waiting room capabilities communication templates patient forms and contactless patient processes, all that being critical solutions for our customers in response to cope with 19.

Dental practices have relied on Henry Schein for these patients engagements in demand creation software solutions.

As they navigate office closures that furloughs.

And resumption of procedure bookings.

Through our Cobot 19 Education Center, we moved quickly to develop content to programs to help customers navigate through this crisis.

This included symposiums, webinars and guidance to up customer superior financial leaf.

Communicate with patients managed disruptions to practice operations and use downtime.

To develop Scott staff skills and stage practice operations to bounce back from Cobot 19.

Closure period I think these programs were quite successful as demonstrated by the increased.

In demand for products in July.

I would also note that in July Henry Schein, one announced the acquisition of a cloud based UK dental software provider entirely which expands our international presence and enhances our practice management software solution portfolio.

This additional will further Henry Schein ones go the providing integrated management system that help dentists and the teams to constantly improved each stage of the patients experience.

In light of evolving practice needs.

Resulting from covered 19 will be believed our ongoing investment in software solutions.

Positions us very well to meet our customers' needs in the challenging clinical environment that our customers are experiencing and going through and as the industry emerges from pandemic CLO.

In conclusion, we look across all of our business groups.

We're seeing an accelerated sales from lows.

Early in the second quarter gradually increasing its almost like a V.

We went down rapidly in April and started coming up in May and June and now quite.

Robustly in July.

We remain cautiously optimistic about immediate future obviously.

If the trends continue we're going to be fine, we actually expect to have a good second half.

But of course.

The spread of the virus could impact that although we doubt.

It could go back to a closures the way we saw early on in the pandemic as I think both the medical and dental professionals professions have.

Grown accustomed to working in this environment and put in.

Very good procedures to deal with a patient visits.

Of course, we're closely monitoring.

Cases, and potential impact on customers activity and with an eye to for a two focusing on cash management as I expect our investors would want us to do.

So I went through Seattle.

For both near and long term business prospects remain unchanged. The team is in high spirits, having worked very very hard it's been a very stressful time for every single team Schein member.

As it is for the public in general.

But I think we gave our customers a good.

Service capability during this period of course.

There were times when the re went down and headed emerged very rapidly and put stresses on our systems.

We were I believe the telephone address for every single healthcare practitioner in our space seeking pp, whether they will shine customers are not so tons and tons of telephone calls and eat exchanges, but we got through it and are experiencing a good July and beginning of August some of that.

Mind, Stephen I would be very pleased to take any questions.

At this time it if I could ask your question. Please press star followed by the number one on your telephone keypad. Our first question will come from the line of Steven Valiquette with Barclays.

Okay. Great. Thanks, Good morning, now stands Steve Thanks for taking my question.

Yes, I guess, the sales decline and consumables versus equipment was pretty comparable in both North America and international So I guess going forward do you expect more of a dispersion maybe in the sales trends between the two categories were consumables could be more resilient. It may be equipment could lag a little bit if it's more economically sensitive or does that equipment like maybe.

You seem less likely now just given those current trends. Thanks.

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Very very good question, obviously and one that we deliberate on regularly.

We feel that of course, the consumables to large extent are based on customer visits.

We feel that.

That does strength in that market.

This is our.

Buying product cost because they're seeing patients.

You know PPD is important but it's not a huge part.

The.

Total purchase our practitioners its upgrade a percent of the total purchases in the past.

But it's not huge and I think practices are seeing the importance of investing in the practice I think practices want to show that there are using a modern equipment in particular that they are investing in infection control.

Equipment, including making sure that that shares in the imaging equipment in the CAD Cam is the latest with the the best available infection control. So I think we're pretty optimistic on the dental side with consumables and equipment, but obviously, we know there's no way to predict.

With this was heading.

On July was strong both ways.

And each of the markets are slightly different.

Remember that parts of Europe, like Germany came back much sooner China came back much sooner so more normalized right now, but and is this whole new.

Area of infection control equipment.

Lumpiness to be hugely material, but to be additive and I think we have great know, how and access to product in that area. So I think we remain optimistic on both sides. Both on the consumable side on the equipment side.

For for dental and likewise on the medical side given that.

It will be a greater demand for testing equipment.

And we have some good solid manufacturers that are providing us a product of course in the early days most of that product went to the government, but now it's being made available to.

The private sector and our channels picking up a decent share of that availed of that availability and market share. So.

I think both on the consumables and equipment side in dental and medical we remain optimistic although.

Yes.

I can't predict the future perfectly and.

Goals.

Subject to our disclosures, but very very.

Optimistic about the future of the business.

Okay. Appreciate the color. Thanks.

Sure.

Your next question comes from the line of Steve Shaw with Wolfe Research.

Hi, good morning, and thanks for the time here I wanted to ask is just two quick ones. One is as it relates to people.

So Stanley you just made dimension of how there have been some challenges a unique to this time.

It relates to TV and whether supplies being directed I appreciate the color on P.D. demand growth in mix in the quarter can you give us a sense for if you had had full supply all the supply you wanted a PE where the growth in that category might have been in the second quarter and my second one is on vaccines. It would be helpful. If you could just remind us.

As the how it is you're involved in vaccine distribution, what your role is there and to what extent as a part of the the White House, whose koby 19 supply chain Task Force you have visibility into your what your role will be in distributing.

19 vaccine when when they do become available. Thank you very much.

Thanks, Yeah. Those are two of course very important questions. Let me deal with the second one which was a much shorter answer and concise answer.

What if so early.

I think we can expect to participate in the distribution of covert 19 vaccines.

Once vaccinations approved by the FDA and remind everyone. We only are in the pharmaceutical distribution and.

That's an injectable business in the United States and our medical business up medical business abroad is relatively small, but not on the pharmaceutical side and of course, the product is made available by the FDA and.

Available.

And the provisions for the CDC Center for disease control prevention under the guidelines.

But we've had will establish history of participating public private partnerships that address complex healthcare safety issues.

So together.

Corporations government and other industries.

Other than industry, including engineers can work together to leverage the resources and infrastructure needs to get these products out.

And we believe Henry Schein is well recognized as a major contributor in the area of public private partnerships. So.

We remain hopeful that we will be able continue to play a good role in this area, we worked very well.

And I think have been a very good member of the task force the FEMA Task force, which I might add in my view has done very very good work in the last couple of months.

And so I think our role will be recognized obviously when a big these products become available through normal distribution channels as one of the largest providers of vaccines to office space practitioners I would expect that we would have an important role there but in the general.

Overall distribution of vaccines, and PPV and stockpiling I would hope that our credibility and our history.

Of working in public private partnerships factory working will be recognized.

Now on availability of ERP.

So the biggest challenge at the beginning of the crisis was that.

90, fives and respiratory type mess, we're not really used in the office space practitioner environment that we're not used in dental offices and rarely in medical offices, but not the surgical flat mask was what was used so we had a push for recognition within the supply chain.

Both government and private sector of the importance of dentists.

And.

Alternate care side providers.

In that.

In preventing patients from actually ending up in the hospital and therefore should be given access to these products. We did have a challenge in April.

And in the early part of May we did have access to some of this product and we're.

Encouraged by the FEMA to move that product into the medical channel more than the dental channel, but we probably had more access to legitimate.

Regulatory approved product than most and as the quarter progressed, we did have more access to these respiratory marks the end 90, fives and K 95 matched.

And.

I think.

We played an important role and satisfying the needs, but no time that we had completely adequate.

Product to satisfy customers needs.

Highly volatile market because regulatory authorities in the United States and abroad really will navigating in environments, where.

US approved F. D product was in relative short supply all approved products in Europe was in relatively short supply. So emergency provisions were passed and the regulations were quite volatile we navigated through this and at all times. We believe distributed product that was regulatory compliance I can.

Say that that was the case amongst all of the providers for these products in our markets very volatile.

We had access we did champion the needs of Dennis and the alternate care physicians sites, including empty during the process in the United States and abroad, but it was a challenging time I think we learnt a lot our suppliers are understanding the importance of providing product to our channel I believe.

The governments are in different parts of the world our understanding the poster dentists and of ultra the case suppliers. So we're on a better place today, but we did not have enough product going into this certainly not during the second quarter availability is much better today, not perfect and we're working with governments and.

Manufacturers around the world, including.

Logistics providers to make these products available rapidly and I think we're in a decent place today.

Your next question will come from the line of Jon Block with Stifel.

Thanks, guys good morning.

Still in the first what I'm going to burn is on a clarification did you see global dental sales were off.

Single digits year over year in July or was that just a merchandise specific number I didn't get that included equipment or not and then I guess a follow on that same question would just be either way can you just talked to the separation in your July number above mid single digits versus.

It's sort of been stagnating at around 70% of pre Coburn levels is it purely your PE exposure is inventory rebuild at the practices is that your international exposure what are some of the drivers, causing your call acceleration relative to that the numbers and then I got a shorter follow up thanks guys.

Yes, Stephen maybe you should just.

Addressed the specifics on dental sales.

Increased in July breaking it down.

Between.

Domestic or North America, as we call it and.

International and also to consume some of those and equipment.

Sure. So the 11% that Sammy quoted in his prepared remarks, starting at 11% the mid single digit growth sorry, My apologies in July was for global dental sales included consumables and equipment.

The consumables were stronger than the equipment, both domestically and internationally.

But overall, a very very strong number I would point out that we shouldn't take that as guidance for the quarter since we're not giving guidance and as you know there are times when sales are lumpy.

On a positive and negative side, but it is a good trend and we do feel very optimistic that we're continuing to seeing improvements in the market.

Okay, and John just to clarify in the us.

The recovery has been quite strong in July and.

Okay. This is no indication of the future, but us merchandise sales topping high single digits.

And.

That and versus Canada, which is even higher so.

It's a pretty strong July so we want to indicate to investors and to the market that consumable sales in July have been strong having said that that's no indication of where the rest of the quarter will go although the first few days of focusing to have been relatively strong.

A question on.

I guess why people going to the dentists or why is that why the strong sales versus the 70% the Ada and asset talking about.

I think generally Dennis all working longer hours I think.

There is some pent up demand rock.

The patients and go to Dennis in the United States for almost two and a half three months. So there is some of that but I have to say that in parts of Europe in particular, Germany that has really been opened throughout this period, it's not bad.

It's not quite a 100%, but its toughing that a cost you can't compare it to China, which has been opened for almost the entire corridor, but.

In general we are.

Much better than we thought we'd be and actually very very excited about that because we thought that this.

We would be much much worse, so I can't give you specifics.

Other than we do correlate more or less work the 88 view in the United States.

Okay fair enough that I am delighted that first question I think the July one was really what I wanted to get after it takes all the color so awful lot more offline. Thanks guys.

Sure.

Our next question comes from the line of Glenn San Angelo with Guggenheim.

Maybe just two quick follow ups to two questions that have been asked with respect to on John's question on the 70% disease.

I'll try to figure out in July results kind of imply that there were some catch up sales that may have been onetime in nature and thats not really representative of what you're seeing on a run rate.

And they must have been some yes of course, they must be some catch up.

People are not visiting the Dennis for two and a half for seven months in the us.

You must be some catch up there.

Having said that.

Thank you.

The pp was pretty strong.

In June but.

It's pretty strong in July as well. So I think practitioners have bought a lot of pp in June but continue to buy in July but.

But yes, I would say John.

Then the must be some.

Catch up in that exact number is hard to tell but we were selling both PE products and traditional consumable products and decent quantities at the moment.

And.

It's really hard to pinpoint.

Yes.

So far it looks pretty good I can't imagine the market.

Significantly growing.

So five plus percent to 10% or sold 9% in dental consumables is.

Quite high so part of that has to be catch up it's really we're in the guessing world exactly split between.

Normal servicing of consumer of consumables for the practice and how much is a catch up.

Our backlog NPP and how much is incremental pp that is now going to be part of the day to day purchases of Dennis.

So let me just as a high level power to that you with most of the dental offices open now in speaking with your customers do you have assumed that with the social distancing requirements like what full capacity may look like is that 70% representative of full capacity or you think it could be like 80 or 90.

So.

Given the constraints that they're working with and I appreciate that they're working longer hours as well, but I think what we're trying to assess that in this sort of pre vaccine environment that rune like what is really sort of full capacity for Dennis today.

Yes that again Thats a question we spent a lot of time trying to figure out hard to get perfectly right.

But yes dentists are far less efficient today.

Because sale learning how to work through this environment I believe efficiency will increase.

Hi, I believe the dental hygiene part will increase also significantly hygiene has not been has dropped bounced back as fast as the rest of dentistry and I think some dentists are doing a little bit a hygiene work.

Because the patients I think at this stage of saying I'm here for a drill or filled please take care of my hygiene I know you at Robbie work with you and but I believe that the hygiene part will come back also and that will move.

Passively.

Okay expand capacity with Dennis and move procedures to the hydrogen us. So overall I think we're going to increase capacity how much it's hard to tell.

And whether we had an excess of capacity in the us or not is debatable. There are some let's say we were close to capacity in has some let's say it was excess capacity certainly is excess capacity in parts of the country, but the efficiency will increase here and I think it's shown that impact.

Most of the well that Germany.

Capacity is not significantly down so.

With a few months of extra experience I think Dennis will become more efficient Ken. This is not based on any empirical study. It's got the kind of what we hearing from our customers to the charters from our salespeople.

I think.

We will increase capacity quite a bit in the months ahead.

Our next question will come from the line it Elizabeth Anderson with Evercore.

Hi, good morning, and you kind of going a little bit, but I just wanted to better understand some of the dental equipment and so we won the two to equipment demand that that with sort of pre Colgate by Mr. Guy pre comment orders that you got a sales in the second quarter are you, saying that people were maybe taking.

Hi, Wednesday and practices by close to so thank you said, we equipped with a more state of the our equipment or.

And then how do people are more people given the visibility into how people are financing that given the constraints on the cash flow down a lot of packages on the quarter Inc.

Yes.

Everything you said is in the mix hard to get the exact.

Numbers, the weighting, but I think.

There were some orders that were placed of course in the first quarter that we filled in the second.

But I'd also say that in April we did not install a lot of equipment.

For two reasons one in April in the first part of.

May.

For two reasons, one is customers asked us.

To hold back.

Because I know with the cash flows coming from and sometimes we were eliminating the number about technicians in the field.

At the same time.

I think government stimulation dollars, both in the United States and in other parts of the will that help.

But I think towards the end of the second quarter, perhaps June ish.

Perhaps a week or two of May Dennis started.

Realizing that they wanted to invest that time to look at the equipment a lot of this equipment can now be.

Examined and understood digitally that time to do that and I think that resulted in some buying.

All towards making the practice more efficient.

More infection control driven so it's all of the above.

Hard to tell.

But you know CAD Cam was down quite a bit.

In the quarter in certain quota and I think that is moving up now.

And.

Sure business the dentist more efficient.

I think is also something Dennis want to show the patients so that digitally.

No. The crown is something of more greater interest I think to the practitioner today all of this is adding up and leading towards at least at this time.

Solid demand for equipment.

Okay that and then just I know, you're not formally giving giving guidance business plan and we think about that they continued ramp back that you've been a lot of questions on July.

If we think about chemicals Mercer, they're highly intentions. As you stated that are starting to come back in the third quarter, we perhaps think that those people wouldn't again come for hiding apartments, Intel maybe like one Q, so not to sort of model like any exactly linear demand.

Me back because you might consider like a debt in the fourth quarter.

From that perspective or is that sort of two cents per se.

Hi, Stephen Yes.

I think again you know it's too soon to say you know I think the tone that we're trying to say is a things are much better than we thought there would be three months ago.

The we're still seeing a progression and improvements in dental medical practice our practices.

And see right now in the states in the U.S. status, showing an increase infection rate for cobalt.

We're not seeing any significant falloff in.

Our patient demand, but to really be more specific to Matt now Elizabeth.

I think really makes sense.

We have time for one last question coming from the line again John Roberts.

Thank you good morning, guys.

I think a lot focus here, we're all trying to figure out the sustainability of the July numbers and I know and appreciate you don't want to give guidance.

Stanley is I think about some of the comments you've made the UK is lagging in recovery.

We know some financing promotions and can trade in promotions just have started up in the last couple of weeks. After you in some of your manufacturing partners. It I think of some of these catalysts that feels like we have to respect the backlog issue and think about how much that helping in July but theres also some further improvements on the come here. So we just.

Like the kind of here your thoughts on the Capex of how we take that July number and think about the next three to six months or so.

Yes, Thank you Jeff.

The same question of course, we're trying to answer and.

The market feels relatively strong compared to certainly where we thought it was heading and.

Even the last few weeks feel pretty good.

Beyond that I'm not sure what else, we could say maybe Stephen you couldn't.

Turn that thought into more numerical.

Yes.

Hi, Dan will.

We don't really want to provide that level of specifics in the second half.

We quoted the July number.

Not as a trend that we expect to continue I don't think we expect consumables to be up mid to high single digits in North America.

Right now, but there is a positive trends.

And.

Again, it's really does too much uncertainty into the market in the market really to give more specifics steps so sorry about that.

No I understood and then just final question I guess just.

A blanket statement and I haven't gone back and looked at my model, maybe the danger statement to make but no real acquisition benefit this quarter, it's probably one of the few quarters in a number of years, we haven't seen a at a decent sized benefit you guys have done obviously good acquires okay. That's over many years asset just what's your outlook now that maybe the tenor of the business isn't.

Proving the balance sheet is still strong I would assume cash flows them coming back how should we think about your.

M&A plans over the next year or two thank you.

Yes, Jeff whether this.

Actual.

Contribution to earnings or dilution as result of acquisitions this quarter I'll leave it up the Stephen to respond to that to confirm either way.

We are slowly opening up the M&A pipeline.

And reactivating.

A number of deals that we were pretty close to.

For the covert. So these are all strategic I think and we're hopeful that there will be accretion coming.

No guarantees in the not too distant future.

Stephen I don't if you want to comment any further.

I saw organic Stanley said.

Oh, we probably won't do any really large cash acquisitions in the very short term, we still want to be cautious, but we are looking at doing some activity that was put on pause.

Still lot of work to do to see what the impact was on those.

Our company auditing.

But we would hope to do something.

Now before the end of year, possibly.

And typically our acquisitions you know it takes us until you know it's fully integrate which is generally six to 12 months before we start getting any GAAP based accretion.

So thank you everybody. Thank you Steven thank everybody for your interest.

Thank you can tell from our prepared remarks and away from responded too.

The questions that we feel a deep sigh of relief.

That.

Our expectations turned out better than we thought.

That we did not go down as far and the the bottom of the V. did not go down as far and the coming up.

Was much more rapidly.

Of course, we're not through the virus yet.

But I think practitioners on the dental side or.

Much better equipped to handle these.

Challenges the is.

From our point of view more P.P.E. available.

Hi, quality and regulatory approved.

And.

There is certain infection control equipment that we are making available that should also allow for the public to be much more comfortable going to the dentist.

Medical position the business has been well positioned also.

Before cobot and especially now.

During the cobot period, and so we remain quite comfortable with our short term.

Plans and Mitch, let's turn plans and quite optimistic about the future of the company as we go back to implementing our long term strategies. So thank you for your interest and we look forward to reporting back to in three months. Thank you very much.

Ladies and gentlemen that will conclude today's call. Thank you all for joining and you may now disconnect.

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Good morning, ladies and gentlemen, and welcome to the Henry Schein second quarter 2020 conference call. At this time, all participant already listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time.

Anyone should require during the cold pressed the Starkey followed by zero on your Touchtone phone as a reminder, this call is being recorded I would now like to introduce your host for today's call Carolynne borders Henry Schein, Vice President Investor Relations. Please go ahead Carolyn.

Thank you Regina and my thanks to each of you for joining us to discuss Henry Scheins results for the second quarter of Twentytwenty.

With me on the call today or Stanley Bergman, Chairman of the Board and Chief Executive Officer at Henry Schein, and Steven Paladino, Executive Vice President and Chief Financial Officer.

Before we begin I would like to state that certain comments made during this call will include information that is forward looking.

As you know risks and uncertainties involved in the company's business may affect the matters referred to in forward looking statements. As a result, the company's performance may materially differ from those expressed in or indicated by such forward looking statements. These forward looking statements are qualified in their entirety by the cautionary statements contained.

Henry Schein filings with the Securities and Exchange Commission, including in the risk factor section of such filings. In addition, all comments about the markets, we serve including end market growth rates and market share.

Based on the company's internal analysis and estimates.

Our conference call remarks will include both GAAP and non-GAAP financial results.

We believe the non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business.

Enable a comparison of financial results between periods, where certain items may vary independently of business performance and allow for greater transparency with respect to key metrics used by management in operating our business.

These non-GAAP financial measures are presented solely for informational and comparative purposes, and should not be regarded as a replacement for corresponding GAAP measures.

Reconciliations between GAAP and non-GAAP measures can be found in the supplemental information section of our Investor Relations website and in exhibit B of today's press release, which is available in the Investor Relations section of our website.

The content of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast August 4th Twentytwenty, Henry Schein undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this call.

Please limit yourself to a single question and a follow up during Q in a to allow as many listeners as possible to ask a question within the one hour that we have a lot of for this call.

With that said I would like to turn the call over to Stanley Bergman.

Thank you very much Carolyn good morning, everyone and thank you for joining us.

Over the past few months, we have witnessed dental and medical practices continue to reopen worldwide.

Well I should volumes are still below pre code nine two levels the recoveries in the dental and medical end markets is progressing at a formal rapid pace than we had originally anticipated.

We're closely monitoring these trends in particular, because a number of viewer stage.

A certain number of international geographies are experiencing.

Uptick in diagnosed co 19 cases.

Leading to stick to social distancing requirements in certain places we have not at this point in dental and medical practices closing in any meaningful way. Despite the recent rise in cases of course.

We will continue to monitor any potential impact to healthcare services in those regions and we are prepared to implement additional cost saving measures as warranted, but at this point.

Purposes seem to be opening.

Does that seem to be saying opened and there's a gradual increase in mall practices opening.

One of the critical issues, we face when covered 90, the merged with demand for personal protective equipment. That's the PB.

We're pleased to report that we made solid strives strides procuring P.P. during the past three months.

During the expansion of sourcing a critical product categories. The addition of high quality substitute products that are regulatory compliance.

Adapting our transportation model for short lead times and product delivery from the factories.

As a result, we have significantly expanded our PDP supply chain capabilities and availability of product our team around the globe has worked diligently to position Henry Schein through this crisis, so that we merge as a stronger company.

We of course, so in the midst of the pandemic title. We believe we are successfully navigating the daily rapid changing challenges, we are well positioned well positioned we believe for the future.

As we look to the future together with inside Undershot board of directors.

Most confidence in Henry Schein business strategy.

Our leadership team and indeed, all else being shot.

Once again.

Sincere thanks to shine across the globe for the teams, but wavering commitment to our customers extraordinary work effort. During this time and for the sacrifices from CMS made for the benefit of Henry Scheins long term business, which we believe is on the sort of solid footing and has.

As a company we've done a very very good job, we believe and satisfying our customers needs.

At this time.

The call over to Stephen to discuss our financial performance and then I'll provide some additional commentary on our view of current business conditions Steven.

Okay. Thank you Stanley and good morning, all as we begin I'd like to point out that I will be discussing our results from continuing operations.

Reported on a GAAP basis, and also on a non-GAAP basis.

Our Q2 2020 in Q2 2019 non-GAAP results exclude certain items that are detailed in exhibit b of today's press release and in the supplemental information section about Investor Relations website.

Please note that we have again included a corporate sales category for Q2 that represents sales to call back onto the transitional services agreement.

Hi, Stanley mentioned, our 2022nd quarter results were impacted by cold that 19, but to a much lesser extent than we had originally expected.

As we mentioned on our last earnings call in response to cope with 19 pandemic, we have implemented a broad base cost reduction initiatives.

Including a payroll cost reduction plans centered around furloughs reduced work hours voluntary on paid time off a suspension of our four one k. match and certain job reductions.

Over the course of the last few months, we have reevaluated the need to each of these initiatives and I'm pleased to say, but given the recovery recovery. We are experiencing in certain markets. Our TSMC have begun to return from follow on reduced hours, particularly dsmbs and customer facing roles. We expect the remaining furlough.

TSMC return at the beginning of the fourth quarter 2020.

We will continue to closely monitor the health of our business and remain prepared to take additional cost saving measures measures if necessary.

Now turning to our financial results our net sales for the quarter ended June 27th 2000, $21.7 billion, reflecting a decline of 31.2% compared with the second quarter ripped through past 2019 with internally generally generated sales declining in local currencies 30.

0.5%.

You can see the dental sales performance is contained.

And all of the details about sales performance or contained an exhibit a in our earnings press release, which was issued today.

On a GAAP basis operating margin for the second quarter of 2020.

Was negative 0.4%, representing a decrease of 707 basis points compared with the second quarter of 2019.

On a non-GAAP basis, our operating margin was 0.5% contracted by 662 basis points on a year over year basis, a reconciliation of GAAP operating margin to non-GAAP operating margin can be found in the supplemental information page on the Investor Relations page about website.

Margin contraction in the quarter was primarily due to a reduction of global dental sales.

Related gross profit as well as other factors related to cope with 19, including certain inventory charges associated with pp.

Turning to taxes, our reported GAAP effective tax rate for the second quarter World 2020 was 5.9%. This compares with 23.6% GAAP effective tax rate for the second quarter of 2019, our GAAP effective tax rate was a bit the store that given the pre tax loss in the second quarter of 20 point.

Moving on our GAAP net loss from continuing operations attributable to Henry Schein for the second quarter of 2020 was 11.4 million.

Follows or negative eight cents per basic share and this compares with the prior year GAAP net income from continuing operations of $116.8 million or 78 cents per share.

Non-GAAP net income from continuing operations for the second quarter of 24 me was slightly positive at <unk> point $6 million or rounding to zero cents per basic share and this compares with the non-GAAP net income from continuing operations of $125.7 million or.

Four cents per share for the second quarter of 19.

On a continuing operation operations basis amortization from acquired intangible assets for Q2, 2020 was $24.9 million pretax or 13 cents per diluted share and that compares to $28.0 million pretax or 14 cents per diluted share for the same period last year.

For the first half of 2020 hour amortization from acquired intangible assets was $53.7 million pretax what 28 cents per diluted share and that compares with $49.8 million pretax or 25 cents per diluted share in the same period last year.

In Q2 of 2020 foreign currency exchange positively impacted I would diluted EPS by approximately one cents per share.

Let me now provide some details about sales results for the second quarter in general dental sales performed better than anticipated as practices real reopen sooner than we expected during the quarter.

Our dental sales of $941.3 million declined 41.2% compared with the prior year.

Decline in internal sales in local currencies of 40.1%.

North American internal sales in local currencies Declawed declined 46.9%.

And included a decline of 47.5% in sales and dental consumable merchandise.

Decline of 44.9% in dental equipment.

Our international dental internal sales in local currency declined 29.5% and included a 29.2% decline was dental consumable merchandise sales and the 30.5 decline.

In dental equipment.

We experienced an increase in sales at the quarter progress and long look more practices the opening and increased patient traffic. In addition, global dental sales in the second quarter benefited from PPD sales, which increased by more than 30% compared to the prior year.

If we look at our dental specialty products in Q2 internal sales about global dental specialty products decreased 39% in local currencies and we believe this higher margin product category has solid growth potential over the long term.

Turning to medical sales, our medical sales was $617.8 million a decrease of 11.4% compared to the same period last year. There was no material impact from falling currently currency exchange on a global medical sales and there was no acquisition growth during the quarter, the 11.4% decline, including the.

While 0.1% decline in North America within 10 internationally internally generated sales in local currencies.

At 13.3% our medical sales also resulted.

And fairly resistance sales due to strong demand for PE products, which grew approximately 140% over Q2 of last year.

Technology and value added services sales were $105.2 million in the second quarter, a decline of 15.9%, which we flex a decline in internally generated sales in local currencies of 17.0%.

In North America, the tech and value added services internal sales declined by 15.1%.

Oh excuse me in local currencies and internationally the technology internal sales declined by 29.8% in local currencies during the quarter.

We generally saw improvements in our transactional software revenue throughout the quarter as more patients started some business practices worldwide.

As we discussed on the Q1 earnings call in early May we temporarily suspended our share repurchase program as a means to preserve cash in response to the impact to pull that 19 on our business operations and due to certain restrictions related to financial covenants as of today. The company has 200.

$1.2 million authorized for future repurchases of common stock.

Currently we have access to significant liquidity, providing flexibility and financial stabilization in this challenging environment.

Operating cash flow from continuing operations for the second quarter was negative $91.6 million and that compares to positive $165.5 million for the second quarter will.

Of last year.

Year over year decline was primarily due to lower net income and higher working capital requirements from inventory purchases this quarter.

As part of our previously disclosed restructuring initiative, we recorded a pretax charge in Q2 2020 up $15.9 million.08 per diluted share. This restructuring charge primarily include severance pay and facility closing costs, and we flex opportunities to reduce expenses and drive operating.

Issuances, we expect to continue our restructuring initiatives through the end of this year.

I'll conclude my remarks on the topic of financial guidance again due to the continued uncertainty surrounding pulled at 19 pandemic.

And its impact to our business operations, we will not be providing 2020 financial guidance at this point, so with that I will turn the call back over to family.

Thank you Stephen.

Let me review our business performance from the second from the second quarter.

And in recent weeks.

Let me start to dental.

Substantially all of the dental markets that we serve showed.

Oh that we serve showed notable sales improvements during the second half of the quota with exception of the UK, which is progressing more slowly due to the timing of reopening.

China recovered from the beginning of April and Germany, and Austria were less impacted by locked out.

A number of other international geographies began to improve towards the middle of the quarter, what the Netherlands, France, Italy, New Zealand, Australia recovering first followed by Spain, Brazil, and Brazil, and then of course, the U.S. and at the end of that Canada, which is lagging the us by about a month or so.

We were pleased that our second quarter sales for both dental consumable merchandise and equipment fared much better than expectations at the time of our first quarter earnings call.

As practices reopened and patients should turn to the dentist full clinical care.

Steven commented on our year over year PPNR growth for Henry Schein.

Add some color to this discussion on the importance of pp prior to the onset covet 19 upkeep. These sales as a percentage of global dental sales were in the mid single digits that increased to approximately 11% about total dental sales by the end of the second call.

So it went up quite a bit but not hugely material in the context of total sales.

Equipment sales in the second quarter also declined less than we originally anticipated as a number of practices move forward with capital equipment purchases for both traditional and high technology solutions.

As a result in North America traditional equipment sales declined by approximately 40% while high ticket equipment sales experienced approximately 54% decrease.

When I say category laser sales at a healthy increase in the second quota.

So.

A relatively small base and CAD Cam equipment sales, which includes digital impression full chair side and related laboratory sales declined by approximately 60% in North America and the second quarter.

Two d. in Threed imaging sales declined 53% year over year.

Internationally traditional equipment sales declined by approximately 28% and high tech equipment sales experience and approximate 38, 36% decrease in local currencies International CAD Cam equipment sales also declined approximately 36%.

It is impossible to predict our growth.

Trend for PPG going forward, but we expect that PPD will continue to constitute a meaningful portion of our dental sales going forward as safety protocols remain a necessity.

So safely seeing patients in the dental practice.

And your product category that we believe will gain traction going forward is a management equipment, including extra Aro section devices and air purification systems, which are which were distributing today.

As more emphasis is placed on infection control and the safety of ambient air we expect us to become an increasingly important product category, although it with minimal impacts in the second quarter.

In line with the survey data published by the American Dental Association.

Experience has been that most of us dental practices have riocan, although not at full capacity.

The latest.

Hey data suggests that in the us patient volumes have improved significantly since late may however, patient capacity continues to be constrained as the amount of time. It takes to implement required safety procedures impacts the number of patients that can be seen in a given day that said we are seeing that more.

Dennis and high Janus are working longer hours to compensate for this we would expect efficiencies and practices getting used to the additional PPV and being used and additional safety precautions as they get used to that we think productivity is likely to increase.

Overall.

Data, we see through our Commissional insurance.

Claims processing in the US correlates with the most recently published survey data by the FDA, which shows that dental practices in the us in July.

Covered approximately 70% or to 70% of pre covet 19 patient volume.

As we look closer into it claims data we are seeing patients to turn for regular R.K. procedures. This is important including hygiene business as a pace as opposed to mainly visiting a dentist for emergency recent reasons, such as pain management and so the underlying.

Business in the dental practice seems to be on solid footing.

In the us coming off a strong June sequential comparison, we saw July versus June he claims data for emergency procedures increased by approximately 30%, but here's what's important.

While other procedures grew by approximately 35%.

For July global dental sales increased in the mid single digit percentage range year over year, which stands in Stark contrast to the 70% decline we saw in April.

In both North America International Dental markets growth was primarily driven by strong consumable merchandise sales.

I don't equipment sales were only slightly down on a down slightly in North America and internationally in July so we've seen a pretty stable environment emerging on the dental equipment side as well looking at our dental specialty businesses, which is comprised of implant ended up.

Taking orthodontic sales much like the trend with a general dental practices patients have been returning for special purpose specialist procedures, both in the us and internationally.

This began in May and continued in June and significantly in July.

We're particularly pleased with our implant sales performance in the.

Region, specifically, Germany, where internal sales in local currencies in the second quarter declined only slightly versus the prior.

Henry Schein spent the last quarter working closely with our customers to build a roadmap to navigate through practice disruption, including assistance with business continuity planning and practice recovery for both practices and large group customers as well as third party party financing programs. These.

Programs include a host of Henry Schein, one software solutions that enable patient engagement drouet related to bookings procedures and price practice safety as well as assistance developing an operating virtual waiting rooms. These.

Adoption the adoption of these changes in.

Work flow driven by Henry Schein, one have been well received and yes, the beginning a little bit time consuming.

Right.

Shifting in inefficiencies in the practice, but of course.

Resulting in increased sepsis control and we think that over time, we knew the practices again that will become much more efficient.

We are committed to understanding our customers challenges, obviously in delivering programs. The normally see our customers through these difficult times, but also prepared practices for future growth.

Our hands on constructs that approach is a key differentiator for our businesses.

And why our customers really rely on us I think that cobot period.

And our customers why our hands on consultative approach really is important to the practice.

Now, let's review the medical business.

And yet I would like to remind investors, we focus on office space practitioners.

We focus on surgery centers, particularly the smaller ones and our early centers.

Customers that are in the renal dialysis cancer Center field.

Our community health centers, where we do not focused on long term care no the acute care space.

And in our second quarter medical sales were fairly resilient due to the strong demand for BP.

A portion of US physician offices remained open throughout the second quarter, although with reduced patient volume as such sales of consumable merchandise.

Pp medical.

Pp in the medical market helped offset the decline we experienced in the dental market.

Prior to the onset of covered 19 pp sales as a percentage of our medical sales were in the high single digits by the end of the second quarter that increased to more than 12%.

Important, but not significantly important because our general business in the medical field did grow as the quarter progress and of course into July.

As mentioned earlier with regard to dental pp, we cannot predict.

Long term growth of this product category among medical customers. However, we believe HPE will continue to be a meaningful portion of medical sales as practice to seek to create a safe environment for both patients and yes the step.

We have consistently worked to make available a variety of cobot point cover 19 point of care diagnostic tests in the us specifically focusing on rapid test.

Well as well as testing solutions in general.

We believe our long term relationship with.

Relationships with.

World Class diagnostic companies and the deep breadth of our distribution no network.

In the medical arena for customers using testing diagnostics in the office positions us well to continue to deliver is these important testing products to the market over time.

Throughout this challenging times, we have worked closely with our customers, including physicians large.

Enterprises alternate care sites in General Energy Center dialysis centers, Yes, M- MMS tools community health centres and government organizations. This included assistance with the procurement to pp and other infection control solutions in safely engaging with patients.

And in reopening practices in line with the recommended guidelines published by the centers for Medicare and Medicaid services.

As we look to the future, we will increasing leverage out tele medicine solutions, such as Mitch part and visual Dx for diagnosing and treating patients virtually.

We plan to continue to invest in this health.

Platform, which has the potential to increased access to create K improve the quality and reduce costs enhance patient engagement and of course drive efficiency in the healthcare practitioners office.

In July our medical experience sales experience, a solid double digit year over year increase.

A significant improvement to the nearly 30% year over year sales decline we experienced in April.

We experienced positive medical sales growth in July as PPSA PPD sales continued to be strong, but the strength was felt an experienced actually throughout the product selection that we offer in the medical.

Business.

So now.

Let's move onto technology and value added services.

This is primarily Henry Schein, one, but also includes our financial services business and our brokerage business.

Practice sales.

Transitional services technology and value added services sales experienced a single digit percentage decline year over year in July.

Which is also significantly proven from the approximately 25% year over year decline in April.

The decline in the second quarter was mainly due to lower than historical patient flow that impacted transactional revenue and of course as I mentioned financial services revenue was lower year over year as practice transitions and equipment leasing were impacted.

Henry Schein, one software sales began to improve as we progress through the second quarter in line with resumption of dental practice operations.

In particular, we have seen improvements in the monthly transactional software revenue trends for services such as he claims as more patient visits.

Occur.

In the us, but also in other countries, but specifically Europe, Australia, New Zealand with Henry Schein, one is active and yes credit card processing.

With the launch of electronic statements solution with online payments.

Acceptance. This also has been well received and contributed to sales.

With regard to practice management system sales in the second quarter.

We did have success with exciting new customers for both our center.

Leading cloud based solutions and our Dentrix enterprise platform as large scale customers sort solutions to help manage their operations centrally.

Having a single patient record helps large multinational organizations.

Because the team on value added.

Activities, instead of having to spread the responsibility out each location.

Due to the remote capabilities of these products Daryl customers were able to use our products to Kim many of the team members safely working from home last mile to many dental service organizations.

Dsos as known in the dental space, we're looking to improve the technology, while most of the locations we're seeing fewer patients.

In addition.

The ability for Dennis communicate and engage with patients through our current revenue platforms was critical during this reduced the period of dental operations.

Providing information on practice reopening plant safety measures virtual waiting room capabilities communication templates patient phones, and contactless patient processes, all that being critical solutions for our customers in response to covert 19.

Dental practices have relied on Henry Schein for these patients engagements in demand creation software solutions.

As they navigate office closures that furloughs.

And resumption of procedure bookings.

Through our Cobot 19 Education Center, we moved quickly to develop content to programs to help customers navigate through this crisis.

This included symposiums, webinars and guidance up customer superior financially.

Communicate with patients manage disruptions to practice operations and use downtime.

To develop Scott staff skills and stage practice operations to bounce back from Cobot 19, the closure period I think these programs with quite successful as demonstrated by the increased.

Demand for products in July.

I would also note that in July Henry Schein, one announced the acquisition of a cloud based UK dental software provider entirely which expands our international presence and enhances our practice management software solution portfolio.

This addition will further Henry Schein ones go the providing integrated management system that helped dentists and the teams to constantly improved each stage of the patients experience.

In light of evolving practice needs.

Resulting from Covet 19 will be believed our ongoing investment in software solutions.

Positions us very well to meet our customers' needs in the challenging clinical environment that our customers are experiencing and going through and as the industry emerges from pandemic club.

In conclusion, we look across all of our business groups.

We're seeing an accelerated sales from lows.

Early in the second quarter gradually increasing its almost like a V.

We went down rapidly in April and started coming up in May and June and now quite.

Robustly in July.

We remain cautiously optimistic about the median future obviously.

If the trends continue we're going to be fine, we actually expect to have a good second half.

But of course.

The spread of the virus could impact that although without.

It will go back to a closures the way we saw early on in the pandemic as I think both the medical and dental professionals professions have.

Grown accustomed to working in this environment and put in.

Very good procedures to deal with a patient visits.

Of course, we're closely monitoring.

Cases, and potential impact on customers activity and with an eye to further to focusing on cash management as I expect our investors would want us to do.

So I went through Seattle.

For both near and long term business prospects remains unchanged. The team is in high spirits, having worked very very hard it's been a very stressful time for every single team Schein member.

As it is for the public in general.

But I think we gave our customers.

Good.

Service capability during this period of course.

There are times when the re went down and headed emergent very rapidly.

And put stresses on our systems.

We will I believe the telephone address for every single healthcare practitioner in our space seeking PPD, whether there will shine customers are not so tons and tons of telephone calls and eat exchanges, but we got through it and are experiencing a good July and beginning of August so.

Then in mind, Steve and I would be very pleased to.

Take any questions.

At this time if he'd like you ask your question. Please press star followed by the number one on your telephone keypad. Our first question will come from the line of Steven Valiquette with Barclays.

Great. Thanks, Good morning, now stands Steve Thanks for taking the question.

I guess, the sales decline and consumables versus equipment was pretty comparable in both North America and international So I guess going forward do you expect more of a dispersion maybe in the sales trends between the two categories, where consumables could be more resilient and may be equipment could lag a little bit if it's more economically sensitive or does that equipment like maybe.

Seem less likely now just given those current trends. Thanks.

Very very good question, obviously, and one that we deliberate on regularly and we feel that of course, the consumables to large extent are based on customer visits.

We feel that.

The strength in that market.

Practices are.

Buying product cost because they're seeing patients.

You know PPD is important but it's not a huge part of the total purchase our practitioners. It's a great a percent of the total purchases in the past.

But it's not huge and I think practices are seeing the importance of investing in the practice I think practices want to show that there are using a modern equipment.

In particular that they are investing in infection control type equipment, including making sure that shares in the imaging equipment in the CAD Cam is related.

With the the best available infection control, so I think we're pretty optimistic.

On the downside with consumables and equipment, but obviously, we there's no way to predict where this is heading.

July was strong both ways.

And each of the markets are slightly different.

Remember that parts of Europe, like Germany came back much sooner China came back much sooner so more normalized right now but.

And is this whole new.

Area of infection control equipment.

I want be necessary hugely material, but to be additive and I think we have great know how an access to product in that area. So I think we remain optimistic on both sides. Both on the consumable side on the equipment side.

For for dental and likewise on the medical side given that.

It will be a greater demand for testing equipment.

And we have some good solid manufacturers that are providing has a product of course in the early days most of that product went to the government, but now it's being made available to the private sector and our channels picking up a decent share of that availed of that availability and market share. So.

I think both on the consumables and equipment side in dental medical we remain optimistic although you know.

I can't predict the future perfectly and.

All this.

Subject to our disclosures, but very very.

Optimistic about the future of the business.

Okay. Appreciate the color. Thanks.

Sure.

Next question comes from the line of Depot Shah with Wolfe Research.

Hi, good morning, and thanks for the time here I wanted to ask just two quick ones. One is as it relates to pp.

The Stanley you just made dimension of how there have been some challenges unique to this time as it relates to DPN, whether supplies being directed I. Appreciate the color on PPD demand growth in mix in the quarter can you give us a sense for if you had full supply all the supply you wanted a PE where the growth in that category might have been.

And the second quarter and my second one is on vaccines. It would be helpful. If you could just remind us.

How it is you're involved in vaccine distribution, what your role is there and to what extent as a part of the the White House Discovery 19 supply chain Task Force you have visibility into your what your role will be in distributing.

19 vaccine when when they do become available. Thank you very much.

Thanks, Yeah, those a to of course very important questions. Let me deal with the second one which is a much shorter answer concise answer.

While it's too early.

I think we can expect to participate in the distribution of cobot 19 vaccines.

Once vaccinations approved by the FDA and remind everyone. We only are in the pharmaceutical distribution and.

That's an injectable business in the United States and our medical business up medical business abroad is relatively small, but not on the pharmaceutical side and of course, the product is made available by the FDA and.

Available.

And the provisions to the CDC center for disease control prevention under the guidelines.

But we've had well established history of participating public private partnerships that addressed complex healthcare safety issues.

So together.

Corporations government and other industries.

Other than industry, including engineers can work together to leverage the resources and infrastructure needs to get these products out.

And we believe Henry Schein is well recognized as a major contributor in the area of public private partnerships.

We remain hopeful that we will be able to continue to play a good role in this area. We worked very well and I think have been a very good member of the task force the FEMA Task force, which I might add in my view has done very very good work in the last couple of months.

And so I think our role will be recognized obviously when a big these products become.

Available through normal distribution channels as one of the largest providers.

Since the office space practitioners I would expect that we would have an important role there but in the general overall distribution of vaccines and PE and stockpiling I would hope that.

Credibility and our history.

Working.

Public private partnerships actively working will be recognized.

Now on availability of ERP.

So the biggest challenge at the beginning of the crisis was that.

In 90, fives and respiratory type masks, we're not really used in the office space practitioner environment that we're not used in dental offices and rarely in medical offices.

The surgical flat mask was what was used so we had a push for recognition within the supply chain.

Both government and private sector of the importance of debtors.

And.

On a case site providers.

In that.

In preventing patients from actually ending up in the hospital and therefore should be given access to these products. We did have a challenge in April.

And in the early part of May we did have access to some of this product and we're.

Encouraged by the FEMA to move that product into the medical channel more than the dental channel, but we probably had more access to legitimate.

Regulatory approved product than most and as the quarter progress. We did have more access to these respiratory marks the end 90, fives and K 95 matched.

And.

I think.

We played an important role and satisfying the needs, but at no time did we had completely adequate.

Product to satisfy customers needs.

Highly volatile market because regulatory authorities in the United States and abroad, really will navigating and environments where.

US approved FDA product was in relative short supply or proved products in Europe was in relatively short supply. So emergency provisions were passed and the regulations were quite volatile we navigated through this at all times, we believe distributed product that was regulatory compliance I can.

Say that that was the case amongst all of the providers for these products in our markets very volatile.

We had access we did champion the needs of Dennis and the alternate care physicians sites, including empty during the process in the United States and abroad.

Got it was a challenging time I think we learnt a lot.

Our suppliers the understanding the importance of providing product to our channel I believe the governments are in different parts of the world our understanding the ports of dentists and of ultra the case suppliers. So we're on a better place today, but we did not have enough product going into this certainly not during the second quarter available.

Let's see is much better today, not perfect and we're working with governments and.

Manufacturers around the world, including.

Logistics providers to make these products available rapidly and I think we're in a decent place today.

Your next question will come from the line of Jon Block with Stifel.

Thanks, guys good morning.

So in the first what I'm going to burn is on a clarification did you see global dental sales were off.

Mid single digits year over year in July or was that just a merchandise specific number I didn't get that included equipment or not and then I guess a follow on that same question would just be either way can you just wanted to the separation in your July number above mid single digits versus.

It's sort of been stagnating at around 70% of pre cobot levels is it purely your PPD.

Bowser as inventory rebuild the practices as your international exposure what are some of the drivers.

Causing.

You'll recall that acceleration relative to that the numbers.

On a shorter follow up thanks, guys.

Yes, Stephen maybe you should just.

Address these specifics on dental sales.

The increase in July breaking it down.

Between.

Domestic or North America, as we call it and.

International and also to consume some of those and equipment.

Sure. So the 11% that Sammy quoted in his prepared remarks sucking up 11% the mid single digit growth sorry, My apologies in July was for global dental sales included consumables and equipment.

Consumables were stronger than the equipment, both domestically and internationally.

But overall, a very very strong lumber I would point out that we shouldn't take that as guidance for the quarter since we're not giving guidance and as you know there are times when sales are lumpy.

On the positive on the negative side, but it is a good trend and we do feel very optimistic that we're continuing to seeing improvements in the market.

Okay, and John just to clarify it in the us.

The recovery has been quite strong in July and.

Okay. This is no indication of the future, but use merchandise sales topping high single digits.

And.

That and versus Canada, which is even higher so.

It's a pretty strong July so we want to indicate to investors and to the market that consumable sales in July of being strong having said that that's no indication.

Where the rest of the quarter will go although the first few days of focusing to have been relatively strong.

Your question on.

I guess why people are going to the dentists or why is that why the strong sales versus the 70% the 80 ANS talking about.

I think generally Dennis all working longer hours I think.

There is some pent up demand growth.

Patients and go to Dennis in the United States for almost two and a half three months.

Some of that but I have to say that end parts of Europe in particular in Germany that has really been opened throughout this period, which is not bad.

It's not quite a 100% but talking that.

Of course, you can't compare to China, which has been opened for almost the entire corridor, but.

In general we are.

Much better than we thought we'd be and actually very very excited about that because we thought that this.

We would be much much worse, so can't give you specifics.

Other than we do correlate more or less work the ace view in the United States.

Okay Fair enough I joined a lot of that first question in July what was really what I wanted to get after that it takes all the color. So awful lot more offline. Thanks guys.

Sure.

Your next question comes from the line of Glenn Santander below with Guggenheim.

Maybe just two quick follow ups to questions that have been asked with respect to.

On John's question on the 70% visits.

Well try to figure out into July results kind of imply that there was some catch up sales that may have been onetime in nature and thats not really representative of what you're seeing and honestly runway.

And it must have been some yes of course, there must be some catch up.

People are not visiting the Dennis for two and a half assignments in the us.

So there must be some catch up there.

Having said that I.

I think.

The PPD was pretty strong.

In June but.

It's pretty strong in July as well. So I think practitioners have bought a lot of pp in June but continue to buy in July but.

But yes, I would say John.

Then the must be some.

Catch up in there the exact number is hard to tell but we were selling both PE products and traditional consumable products and decent quantities at the moment.

And.

It's really hard to pinpoint.

But.

So far it looks pretty good I can't imagine the market.

Significantly growing.

So five plus percent to 10% or so 9% in dental consumables is.

Quite high so part of that has to be catch up it's really we're in the guessing world exactly to split between.

Normally servicing of consumer of consumables for the practice and how much as a catch up.

Backlog and pp and how much as incremental pp that is now going to be part of the day to day purchases of Dennis.

70 basis, as a high level power to that.

With most of the dental offices open now.

You can see customers do you have a sense that with the social distancing requirements like what full capacity may look like is that 70% representative of full capacity are you thinking could be like 80 or 90%.

Given the constraints that they're working with and I appreciate that they're working longer hours as well, but I think what we're trying to assess that in this sort of pre vaccine environment that like what is really sort of full capacity for Dennis today. Thanks, Eric Yes that again Thats. A question. We spent a lot of time trying to.

Figure out hard to get perfectly right.

But yes dentists are far less efficient today.

Because tail learning how to work through this environment I believe efficiency will increase.

I believe the dental hygiene part will increase also significantly hygiene has not been has bounced back as fast as.

The rest of dentistry, and I think some dentists are doing a little bit of hygiene work.

Because the patients I think at this stage as saying I'm here for a drill or fill please take care of my hygiene I know you I'd rather be worked with you, but I believe that the hygiene part will come back also and that will move.

Yesterday.

Okay expand capacity with Dennis and move procedures to the hydrogen us. So overall I think we're going to increase capacity how much it's hard to tell.

And whether we had an excess of capacity in the us or not is debatable. There are some that say we were close to capacity and has some that say it was excess capacity certainly is excess capacity in parts of the country, but the efficiency will increase.

And I think it's shown that in parts of the world that Germany.

Capacity is not significantly down so.

With a few months of extra experience I think Dennis will become more efficient gain.

So it's not based on any particular study it's got a lot of what we hearing from our customers through the charters from our salespeople.

But I think.

We will increase capacity quite a bit in the months ahead.

Our next question will come from the line to be Lithobid Anderson with Evercore.

Hi, good morning, and you kind of.

A little bit, but I just wanted to better understand some of the dental equipment and so we ended Q2 equipment demand that that was sort of pre colgate by sort of guy pre Colgate orders that you have got celgar. The second quarter are you, saying that people were maybe taking the time Wednesday and practices by close to serve as as you said we acquired.

More state of the AG equipment.

Then how do people are are more people given the visibility into how people are financing that given the constraints on the cash flow.

It's on the quarter Inc.

Yes.

Everything you said is in the mix hard to get the exact.

Numbers, the weighting, but I think.

There were some orders that were placed of course in the first quarter that we've told in the second.

But I would also say that in April we did not install a lot of equipment.

For two reasons one in April in the first part of.

May for two reasons, one is customers asked us.

To hold back.

Because I know, where the cash flows coming from and sometimes we were limiting the number off the market conditions in the field.

At the same time.

I think government stimulation dollars, both in the United States and other parts of the will that help.

But I think towards the end of the second quarter, perhaps June ish.

Perhaps a week or two of May Dennis started.

Realizing that they wanted to invest that time to look at equipment a lot of this equipment can now be.

Examined and understood digitally that time to do that and I think that resulted in some buying.

All towards making the practice more efficient.

More infection control driven so it's all of the above hard to tell.

But you know CAD Cam was down quite a bit.

In the quota in certain quota and I think that is moving up now.

And.

Sure business the dentist more efficient.

I think is also something Dennis I want to show the patients so that digitally.

Milk Crown is something of more greater interest I think to the practitioner today, all of us, adding up and leading towards at least at this time.

Solid demand for equipment.

Okay, that's not yet and then just I know, you're not formally giving giving guidance plant and we think about that continued ramp back on EBIT Aladdin questions on July.

If we think about chemicals Mercer highly intentions. You you stated that are starting to come back in the third quarter, we perhaps think that those people wouldn't again come for hygiene appointments until maybe like one key is not to sort of model like and exactly linear demand coming back because you might consider like I had debt in the fourth quarter.

From that perspective or is that sort of two cents per se.

Stephen Yes, I think again.

It's too soon to say.

I think the tone that we're trying to say is a things a much better than we thought there would be three months ago.

Be we're still seeing a progression and improvements in dental medical practice our practices.

And to see right now in the states in the U.S status, showing an increase infection rate for coated.

We're not seeing any significant falloff in.

Patient demand, but to really be more specific to Matt now Elizabeth I.

I don't think really makes sense.

We have time for one last question coming from the line of John Roberts.

Thank you good morning, guys.

I think a lot focus here, we're all trying to figure out the sustainability of the July number and I know in appreciate you don't want to give guidance.

Stanley is I think about some of the comments you've made the UK is lagging in recovery.

We know some financing promotions and said can trade in promotions just have started up in the last couple of weeks through you in some of your manufacturing partners. It I think of some of these catalysts that feels like we have to respect the backlog issue and think about how much that's helping in July but theres also some further improvements on the come here. So we just.

The kind of here your thoughts on topic intakes of how we take that July number I think about the next three to six months ourselves.

Yes, Thank you Jeff.

The same question of course, we're trying to answer and.

The market feels relatively strong compared to certainly where we thought it was heading and.

Even the last few weeks gut feel pretty good.

Beyond that I'm not sure what else, we could say maybe Stephen you can.

Turning that thought into more numeric.

Yes.

Yeah again will.

We don't really want to provide that level of specifics in the second half.

We quoted the July number.

Not as a trend that we expect to continue I don't think we expect consumables to be up mid to high single digits in North America.

Right now, but it is a positive trends.

And.

Again, it's really there's too much uncertainty into the market in the market really to give more specifics steps so sorry about that.

No I understood and then just final question I guess just.

Blanket statement and I haven't gone back and looked at my models negative danger statement to make but no real acquisition benefit this quarter, it's probably one of us the few quarters in a number of years, we haven't seen.

A decent sized benefit you guys have done obviously, good acquirers of business over many years asset just what's your outlook now that maybe 10 or of the business is improving the balance sheet is still strong I would assume cash flows and coming back how should we think about your.

M&A plans over the next year too. Thank you.

Yes, Jeff whether this.

Actual.

Contribution to earnings or dilution as result of acquisitions this quarter I'll leave it up to Stephen to respond to that to confirm either way.

Were slowly opening up the M&A pipeline and reactivating.

Number of deals that we were pretty close to.

Before the covert.

These are all strategic I think and we're hopeful that they will be accretion coming.

No guarantees in the not too distant future.

Stephen I Wonder if you want to comment any further.

So again the Stanley said.

We probably won't do any really large cash acquisitions in the very short term debt, we still want to be cautious, but we are looking at doing some activity that was put on pause.

Still lot of work to do to see what the impact was on those.

Our company does with modeling.

But we would hope to do something.

Before the end of year, possibly.

And typically our acquisitions it takes us and so.

So we integrate this is generally six to 12 months before we start getting any gap based accretion.

So thank you everybody. Thank you Steven thank everybody for your interest I think you can sell from our prepared remarks and away from responded too.

The questions that we feel a deep sigh of relief.

That.

Our expectations turned out better than we thought.

The did not go down as far and the the bottom of the V. did not go down as far and the coming up.

Was much more rapidly.

Of course, we're not through the virus yet.

But I think practitioners on the dental side.

We are.

Much better equipped to handle these.

Challenges the is.

From our point of view more PE available.

Hi, quality and regulatory approved.

And.

There is certain infection control equipment that we are making available that should also allow for the public to be much more comfortable going to the dentist.

Medical position business has been well positioned also.

Before covert and especially now.

During the cobot period, and so we remain quite comfortable with our short term.

Plans and Mitch the term plans and quite optimistic about the future the company.

As we go back to implementing our long term strategies. So thank you for your interest and we look forward to reporting back to in three months. Thank you very much.

Ladies and gentlemen that will conclude today's call. Thank you all for joining and you may now disconnect.