Q1 2024 Henry Schein Inc Earnings Call

May 7, 2024

Operator: Good morning, ladies and gentlemen, and welcome to Henry Schein's first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.

Good morning, ladies and gentlemen, and welcome to the Henry Schein first quarter 'twenty 'twenty four earnings conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. Please press the star key followed by one on your Touchtone phone. If you would like to ask a question at the end of the call if any once you do.

Operator: Later, we will conduct a question and answer session. Please press the star key followed by 1 on your touch-tone phone if you would like to ask a question at the end of the call. If anyone should require assistance during the call, please press the star key followed by 0 on your touch-tone phone.

Wire assistance during the call. Please press the star key followed by zero on your Touchtone phone and as a reminder, this call is being recorded.

Operator: And as a reminder, this call is being recorded. I would now like to introduce your host for today's call, Graham Stanley, Henry Schein's Vice President of Investor Relations and Strategic Financial Project Officer. Thank you.

I'd now like to introduce your host for today's call Graham Stanley Henry Schein, Vice President of Investor Relations and strategic Financial Project Officer. Thank you. Please go ahead Graham.

Yeah.

Graham Stanley: Thank you, operator. And my thanks to each of you for joining us to discuss Henry Schein's financial results for the first quarter of 2024. With me on today's call are Stanley Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein, and Ron South, Senior Vice President and Chief Financial Officer. Before we begin, I'd like to state that certain comments made during this call will include information that's forward-looking. Risks and uncertainties involved in the company's business may affect the matters referred to in forward-looking statements.

Graham Stanley: Thank you operator, and my thanks to each of you for joining us to discuss Henry Schein financial results for the first quarter of 2024.

Graham Stanley: And the company's performance may materially differ from those expressed in or indicated by such statements. These forward-looking statements are qualified in their entirety by the cautionary statements contained in Henry Schein's filings with the Securities and Exchange Commission and included in the risk factors section of those filings. In addition, all comments about the markets we serve, including end market growth rates and market share, are based on the company's internal analyses and estimates.

Graham Stanley: With me on today's call Stanley Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein.

Graham Stanley: And Ron <unk>, Senior Vice President and Chief Financial Officer.

Graham Stanley: Today's 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 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.

Graham Stanley: Before we begin I'd like to statements and comments made during this call will include information that is forward looking.

Graham Stanley: Reconciliations between GAAP and non-GAAP measures are included in Exhibit B of today's press release and can be found in the financials and filing section of our Investor Relations website under the Supplemental Information heading. And also in our quarterly earnings presentation, also posted on our investor relations website. The content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, May 7, 2024. Henry Schein undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this recording. Lastly, during today's Q&A session, please limit yourself to a single question and a follow-up. And with that, I'd like to turn the call over to Stanley Bergman.

Graham Stanley: And uncertainties involved in the company's business may affect the message referred to in forward looking statements and the company's performance may materially differ from those expressed in or indicated by such statements.

Graham Stanley: These forward looking statements are qualified in their entirety by the cautionary statements contained in Henry Schein as filings with the Securities and Exchange Commission and included in the risk factor section of those filings.

Graham Stanley: In addition, all comments about the markets, we serve including end market growth rates and market share are based upon the company's internal analyses and estimates.

Stanley M. Bergman: Thank you, Graham. Good morning, everyone, and thank you for joining us. Our first quarter financial results reflect solid earnings, driven by gross profit, gross margin expansion, and a strong recovery from last quarter's cyber incident. We estimate that the incident lowered merchandise sales growth by low to mid-single-digit percentages during the quarter. On PPE products, sales continue to decrease, primarily due to lower glove prices for the last year.

Graham Stanley: Today's 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 China.

Graham Stanley: See with respect to key metrics used by management in operating our business.

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

Graham Stanley: Reconciliations between GAAP and non-GAAP measures are included in exhibit B of today's press release and can be found in the financials and filings section of our Investor Relations website under the supplemental information having.

Graham Stanley: And also in our quarterly earnings presentation also posted on our Investor Relations website.

Graham Stanley: The content of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast may seven 2024.

Graham Stanley: Henry Schein undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this call.

Graham Stanley: Lastly, during today's Q&A session. Please limit yourself to a single question and a follow up and with that I'd like to turn the call over to Stanley Bergman.

Stanley M. Bergman: We estimate a reduced impact on sales growth from PPE as the year progresses. We're very pleased with the progress we're making on executing our Bold Plus One strategic plan, and we are pleased with the contribution of our recent acquisitions. These acquisitions contributed to the profitability we achieved in the first quarter.

Stanley M. Bergman: Thank you Greg Good morning, everyone and thank you for joining us.

Stanley M. Bergman: Our first quarter financial results reflect solid earnings.

Stanley M. Bergman: Driven by gross profit gross margin expansion.

Stanley M. Bergman: And strong recovery from last quota cyber incident.

Stanley M. Bergman: We estimate that the incident load merchandise sales growth by low to mid single digit percentages during the quarter.

Stanley M. Bergman: On PPE products sales continued to decrease.

Stanley M. Bergman: Primarily due to lower.

Stanley M. Bergman: Prices for the last year from the last year.

Stanley M. Bergman: We estimate the reduced impact of sales growth from PPE.

Stanley M. Bergman: At Progressive.

Stanley M. Bergman: We're very pleased with the progress, we're making on executing hot plus one strategic plan.

Stanley M. Bergman: And we are pleased with the contribution of our recent acquisitions.

Stanley M. Bergman: These acquisitions contributed to the profitability, we achieved in the first quarter.

Stanley M. Bergman: We are affirming our expectations for 2024 non-gap diluted EPS and 2024 Adjusted EBITDA growth and tightening our expectations for 2024 total sales growth. Our projected sales growth reflects continued recovery from last year's cyber incident and a strong pipeline of new specialty products and software innovation. So let me turn to the review of our business unit, which starts with dental on the distribution side. In North America, patient traffic to dental offices in January and February was impacted by weather events and by seasonal viruses. Including the flu, but I began to feel better beginning in March.

Stanley M. Bergman: We are affirming our expectations for 2024 non-GAAP diluted EPS.

Stanley M. Bergman: In 2024, adjusted EBITDA growth.

Stanley M. Bergman: And tightening our expectations for 2020 for total sales growth.

Stanley M. Bergman: Projected sales growth reflects continued recovery from last year's cyber incident.

Stanley M. Bergman: And a strong pipeline of new specialty products and software innovation.

Stanley M. Bergman: Overall, we see steady dental merchandise sales improvement throughout the quarter reflecting this trend. In the U.S., our Thrive Signature Program is contributing to sales growth, and membership continues to increase with about 2,000 new members added in the first quarter, bringing the total number of Thrive Signature members to approximately 5,000. For monthly subscriptions, the program provides a package of services to customers, such as free shipping.

Speaker Change: So let me turn to the review of our business units.

Speaker Change: Soft with Denver.

Speaker Change: Yeah.

Speaker Change: On the distribution side.

Speaker Change: In North America patient traffic to dental offices in January and February was impacted by weather events and bus seasonal viruses.

Speaker Change: Including the flu.

Speaker Change: But improved beginning in March.

Speaker Change: Overall, we see steady dental merchandise sales improvement throughout the quarter, reflecting the strength.

Speaker Change: Which has continued into April.

Speaker Change: In the U S.

Speaker Change: <unk> signature program is contributing to sales growth.

Speaker Change: And membership continues to increase with about 2000, new members added in the first quarter.

Speaker Change: Bringing the total number of thrive signature Memphis approximately 5000.

Speaker Change: So our monthly subscriptions program provides a package of services to customers.

Speaker Change: It's a free shipping discounts.

Stanley M. Bergman: Discount on, Product and Services, and Thrive Reward Points, which, of course, in the aggregate drive customer loyalty. International merchandise also experienced a steady sales improvement in most markets as the quarter progressed. Sales growth was negatively impacted by two less selling days and most of the international model. However, global dental equipment sales were consistent with the prior year and were favorably affected by a shift in sales in the United States, from late 2023 into the first quarter.

Speaker Change:

Speaker Change: Product and services.

Speaker Change: And thrive reward points.

Speaker Change: Which of course in A&P to drive customer loyalty.

Speaker Change: International Merchandize also experienced steady.

Speaker Change: Sales improvement in most markets as the quarter progressed.

Speaker Change: Sales growth was negatively impacted by two less selling days in most of the international markets.

Speaker Change: Global dental equipment sales were consistent with the prior year.

Speaker Change: And were favorably affected by a shift in sales in the United States, probably 2023 into the first quarter.

Stanley M. Bergman: Equipment sales grew in North America but decreased slightly internationally. So now, a few comments on our general... Specialties Global, Dental Specialties Business, with strong growth across oral surgical products, endodontics, and... [inaudible] largely driven by acquisition, and we believe we also gain market share organically in the Global Dental Specialties Market. North America Implant and North American Implant Sales were largely consistent with last year, and international sales under our leading Bio Horizons Canlock brand were very good, especially in Germany.

Speaker Change: Equipment sales grew in North America, but decreased slightly internationally.

Speaker Change: So now a few comments on our dental.

Speaker Change: Specialties with global dental specialties business.

Speaker Change: We had a strong growth.

Speaker Change: Across our <unk> surgical products ended the optics.

Speaker Change: And.

Speaker Change: Orthodontics largely driven by acquisitions.

Speaker Change: And we believe we also gained market share organically.

Speaker Change: In the global dental specialties market.

Speaker Change: North America implant and North American implant sales were largely consistent with last year.

Speaker Change: And international sales.

Speaker Change: A leading by rises Camelot, Brad were very good and this was especially good in Germany.

Stanley M. Bergman: In the first quarter, international sales benefited from the introduction of EZ. 2.0, our Value Implant System in Germany, which is also designed for ease of use. We expect the launch of a new BioRiser implant system in the U.S., second half of the year, and Early Next Gen Canada. This launch will be for a... This is a new bone level implant with a deep conical connection and is based upon our proven CAMLOK technology.

Speaker Change: In the first quarter International sales benefited benefited from the introduction of easy.

Speaker Change: 2.0.

Speaker Change: Our value implant system in Germany.

Speaker Change: Which is also designed for ease of use.

Speaker Change: We expect the launch of a new <unk> implant system in the U S. In the second half of the year.

Speaker Change: Early next year in Canada.

Speaker Change: This launch will be for.

Speaker Change: New bone level implant with a deep conical connection and is based upon.

Speaker Change: Proven Camelot technology.

Speaker Change: We expect.

Stanley M. Bergman: This will expand our dressable market significantly in the United States, thus increasing implant sales growth in the second half of the year, along with the introduction of Sun Valley Implants. This will position the company well in all market segments in North America. We achieved good and adaptive growth sales during the first quarter as we launched our end, branded products through Henry Schein U.S. Distribution. Although orthodontic product sales are relatively small... A relatively small part of our specialty product sales. The launch of our Motion Probe Bracket System is performing well, and...uh...Specifically addressing the expiration of last year's motion product practice. I'm sorry.

Speaker Change: This will expand our addressable market significantly.

Speaker Change: Out of states.

Speaker Change: Thus, increasing implants sales growth in the second half of the year.

Speaker Change: So.

Speaker Change: Along with the introduction of Sun Valley implants.

Speaker Change: This launch will position the company well in all market segments in North America.

Speaker Change: We achieved good and deducted gross sales during the first quarter as we launched a H <unk>.

Speaker Change: Branded products through the Henry Schein U S distribution business.

Speaker Change: Although orthodontic product sales are relatively small.

Speaker Change: A relatively small part of our specialty product sales.

Speaker Change: The launch of our motion probe bracket system is performing well.

Speaker Change: Uh huh.

Speaker Change: Specifically addressing the expiration last last year's motion product preferences.

Speaker Change: Sorry.

Stanley M. Bergman: We also launched the Biotech Smilus ClearAligner clinical digital workflow software at the American Association of Orthodontics meeting last week, both of which have already been successfully launched in Europe. Biotech Dental, [inaudible] Excuse me. Let me now turn to the technology and value-added services businesses, which will be the largest component. Henry Schein One, Adeno Softwood. The customer base for Dentrix Ascent and Dentali, our cloud-based solutions, continued to grow and increase 36% in the first quarter over the prior year, and now we have approximately 8,000 installations of our cloud-based solutions.

Speaker Change: We also launched the biotech smile is clear aligner clinical digital workflow software.

Speaker Change: At the American Association of Orthodontists meeting last week.

Speaker Change: Both of which have already been successfully launched in Europe through biotech dental.

Speaker Change: Okay.

Speaker Change: Excuse me.

Speaker Change: Let me now turn to the technology and value added services businesses.

Speaker Change: The largest component is Henry Schein, one dental software business.

Speaker Change: The customer base Fort Detrick said, the tolly are cloud based.

Speaker Change: Solutions continue to grow and increased 36% in the first quarter over the prior year and now we have approximately 8000 installations of our cloud based systems.

Stanley M. Bergman: We achieved solid growth in our revenue cycle management e-claims business despite the impact of change healthcare of this cyber incident. This was due to the Henry Schein 1 team's prompt responsiveness to... establish an alternative approach to processing custom insurance claims.

Speaker Change: We achieved solid growth in our revenue cycle management E claims business despite.

Speaker Change: The impact of change healthcare.

Speaker Change: The impact of the cyber incident.

Speaker Change: This was due to the Henry Schein, one team's prompt responsiveness to.

Speaker Change: Establishing an alternative approach to processing custom insurance claims.

Stanley M. Bergman: Within 48 hours, we successfully processed claims and backlog through an alternative clearinghouse. We are very pleased with the team's approach to dealing with the changed health care, Case Cyber Incident. And this helped us navigate a challenge for our customers, and I might add many new customers that now have turned to Henry Schein 1 for help during this challenging period for change in health care. Although we believe overall technology sales were impacted by the change to Healthcare's fiber insulin, we expect sales in the second quarter to return to more normalized growth levels.

Speaker Change: Within 48 hours, we successfully.

Speaker Change: With processing claims and backlogs.

Speaker Change: Alternative clearinghouse.

Speaker Change: We are very pleased with the team's approach on dealing with the change health case cyber incident.

Speaker Change: And this has helped us navigate challenge for our customers and I might add many new customers that now have to.

Speaker Change: Henry Schein one for help during this challenging period for <unk>.

Speaker Change: Change healthcare.

Speaker Change: Although we believe overall technology sales were impacted by the change healthcare cyber incident.

Speaker Change: We expect sales in the second quarter to return to more normalized.

Speaker Change: Gross levels.

Stanley M. Bergman: Turning to the medical business, there was a strong contribution from sales of point-of-care diagnostics, including flu and multi-assay flu-COVID combination tests, and a shift in sales towards lower-priced generic pharmaceuticals and our medical business. Our North American rescue business, which provides first responder and military medical solutions, as well as our home solutions businesses, performed well during the quarter. We also completed our acquisition of Trimed in early April, strengthening our medical group's deep and longstanding relationships with IDNs, ASCs, and orthopedic specialist customers as we expand our offerings.

Speaker Change: Turning to the medical business there was a strong contribution from sales of <unk>.

Speaker Change: A kid diagnostics, including flu and Mt. Todd.

Speaker Change: Say flu cobot combination test.

Speaker Change: And a shift in sales towards lower priced generic pharmaceuticals.

Speaker Change: And our medical business.

Speaker Change: Our North American rescue business, which provides first respond to it.

Speaker Change: <unk> medical solutions as.

Speaker Change: As well as a host solutions businesses.

Speaker Change: Well during the quarter.

Speaker Change: We also completed our acquisition of climate in early April.

Speaker Change: <unk>, our medical groups deep long standing relationships with idms, ASC and orthopedic specialist customers as we expand.

Speaker Change: Offering into the.

Stanley M. Bergman: Autopedic Marker Finally... We are pleased to share that late last week we hosted our 4th Annual Thrive Live event in Las Vegas and had record attendance this year of nearly 1,500 attendees, with significant support from our supplier.

Speaker Change: Orthopedic marketplace.

Speaker Change: Finally.

Stanley M. Bergman: This is primarily an education event where our customers gain continuing education credit through seminars in the largest, in the latest innovation, and clinical dentistry, including digital equipment and software. This year featured the launch of some new innovations to help our customers attract new business, such as our new Dentrix Eligibility Pro module that automates the delivery of claims eligibility data directly into the practice management software system. This is quite a unique software feature.

Speaker Change: We are pleased to share that late last week, we hosted our fourth annual thrive live event.

Speaker Change: In Las Vegas, and had record attendance this year up nearly 500 attendees with significant support.

Speaker Change: From our suppliers.

Speaker Change: This is primarily an education event, where our customers' data continuing education credits through.

Speaker Change: Through seminars in the largest in our latest innovations.

Speaker Change: Clinical dentistry, including digital equipment and software.

Speaker Change: This year featured the launch of some new innovations to help our customers attract new business, such as our new dentists eligibility probe module.

Speaker Change: That automates the delivery of claims eligibility data directly into the practice management software system. We believe this is quite a unique software feature.

Speaker Change: Yeah.

Stanley M. Bergman: And I'm particularly pleased with the integration was reserved with Google, a new product that we also launched at Thrive Live event. This enables consumers who search on Google to make dental appointments directly from their Google, from..., their Google business listing, into our customer's practice management system and scheduler. These advancements support our continued commitment to driving innovation in the industry with products and services that add value to our customers' dental health, practices enabling our customers to operate in more efficient practices while actually providing better clinical care. Let me now turn the call over to Ron to discuss our quarterly financial results in a bit more detail. Thank you, Stanley. Good morning, everyone.

Speaker Change: And I'm, particularly pleased.

Speaker Change: With the integration.

Speaker Change: With reserve with Google.

Speaker Change: Our new product.

Speaker Change: We also launched at thrive live event.

Speaker Change: This enables consumers.

Speaker Change: Search on Google to make dental appointments directly from the group.

Speaker Change: From.

Speaker Change: Google business listing.

Speaker Change: Into our customers' practice management systems and skills and schedules.

Speaker Change: These advancements support our continued commitment to driving innovation in the industry with products and services that add value to our customers dental.

Speaker Change: Practices, enabling our customers to operate.

Speaker Change: More efficient practice, while actually providing better clinical care let.

Speaker Change: Let me now turn over the call to Ron to discuss our quarterly financial results in a bit more detail. Thank you very much.

Ronald N. South: As we begin, I'd like to point out that I will be discussing our results as reported on a gap basis and also on a non-gap basis. The items excluded from our first quarter non-GAAP financial results for 2024 and 2023 are detailed in Exhibit B of today's press release. A reconciliation of our gap to non-gap income statement is also available in our quarterly earnings presentation on our website, which includes the non-gap effects of adjustments on non-controlling interest.

Ron: Thank you Stanley and good morning, everyone. As we begin I'd like to point out that I will be discussing our results as reported on a GAAP basis and also on a non-GAAP basis. The items excluded from our first quarter non-GAAP financial results for 2024, and 2023 are detailed in exhibit B of today's press release.

Speaker Change: A reconciliation.

Speaker Change: Affiliation of our GAAP to non-GAAP income statement is also available in our quarterly earnings presentation on our website, which includes the non-GAAP effects of adjustments on Noncontrolling interest.

Ronald N. South: Also, please note that for most international businesses, the first quarter had two fewer selling days than the first quarter of last year. With respect to sales, I will provide details of total sales, related sales growth, and LCI sales growth, which is internally generated sales in local currencies compared with the prior year and excludes acquisitions. Turning to our first quarter results, global sales were $3.2 billion with sales growth of 3.7%, and LCI sales decreased 1.8%.

Speaker Change: Also please note that for most international businesses. The first quarter had two fewer selling days in the first quarter of last year.

Speaker Change: With respect to sales I will provide details of total sales related sales growth and LCI sales growth, which is internally generated sales in local currencies compared with the prior year and excludes acquisitions.

Speaker Change: Turning to our first quarter results global sales were $3 2 billion with sales growth of three 7% and LCI sales decreased one 8%. Please.

Speaker Change: Please note that our sales growth for the quarter reflects the residual impact of the cyber incident, which we estimate reduced sales growth by approximately 300 or 400 basis points.

Speaker Change: In addition, lower PPE sales, primarily due to lower glove pricing reduced sales growth by 60 basis points.

Ronald N. South: Our GAAP operating margin for the first quarter of 2024 was 4.72 percent, a 101 basis point decline compared with the prior year. On a non-GAAP basis, operating margin for the first quarter was 7.11%, a 57 basis point decline compared with the prior year non-GAAP operating margin. Gross margin improved 32 basis points, primarily due to the contribution of businesses acquired in 2023. However, operating expenses were higher as a percentage of sales, primarily due to lower sales at our distribution.

Speaker Change: Our GAAP operating margin for the first quarter of 2024 was $4, 72%, a 101 basis point decline compared with the prior year GAAP operating margin.

Speaker Change: On a non-GAAP basis operating margin for the first quarter was $7 one 1%.

Speaker Change: A 57 basis point decline compared with the prior year non-GAAP operating margin.

Speaker Change: Gross margin improved 32 basis points, primarily due to the contribution of businesses acquired in 2023.

Speaker Change: Operating expenses were higher as a percentage of sales primarily due to lower sales at our distribution businesses.

Ronald N. South: For the first quarter 2024, GAAP net income was $93 million, or $0.72 per diluted share. This compares with the prior year GAAP net income of $121 million, or $0.91 per diluted share. Our first quarter 2024 non-GAAP net income was $143 million, or $1.10 per diluted share.

Speaker Change: First quarter 2024, GAAP net income was $93 million or <unk> 72 per diluted share.

Speaker Change: This compares with prior year GAAP net income of $121 million or <unk> 91 per diluted shares.

Speaker Change: Our first quarter 2024, non-GAAP net income was $143 million or $1 10.

Speaker Change: Per diluted share.

Ronald N. South: This compares with prior year non-GAAP net income of $161 million, or $1.21 per diluted share. The residual impact of the cyber incident on our first quarter 2024 results was consistent with the expectations we set out in the guidance we provided on our earnings call in February. The foreign currency exchange impact on our first quarter diluted EPS was favorable by approximately one cent versus the prior year. Adjusted EBITDA for the first quarter of 2024 was $255 million, which is consistent with the first quarter 2023 adjusted EBITDA of $256 million.

Speaker Change: This compares with prior year non-GAAP net income of $161 million or $1 21 per diluted share.

Speaker Change: The residual impact of the cyber incident on our first quarter 2024 results was consistent with the expectations. We set out in the guidance we provided on our earnings call in February.

Speaker Change: The foreign currency exchange impact on our first quarter diluted EPS was favorable by approximately <unk> <unk> versus the prior year.

Speaker Change: Adjusted EBITDA for the first quarter of 2024 was $255 million, which is consistent with the first quarter 2023, adjusted EBITDA of $256 million.

Ronald N. South: Turning to our first quarter sales results, global dental sales were 1.9 billion dollars, with sales growth of 0.8 percent, and LCI sales decreased by 2.9 percent. Global Dental Merchandise LCI sales decreased by 3.7% versus the prior year.

Speaker Change: Turning to our first quarter sales results global dental sales were $1 9 billion with sales growth of 0.8% and LCI sales decreased by two 9%.

Speaker Change: Global dental merchandise LCI sales decreased by three 7% versus the prior year merchandise sales were impacted by lower purchases by episodic customers and by lower PPE sales.

Ronald N. South: Merchandise sales were impacted by lower purchases by episodic customers and by lower PPE sales. Global Dental Equipment LCI sales increased 0.2%. Our North American equipment LCI sales grew 2.9% with some traditional equipment sales having shifted into the first quarter from last year. International equipment sales decreased 3.8% with positive trends in Germany driven by technical service.

Speaker Change: Global dental equipment LCI sales increased 0.2%.

Speaker Change: Our North American equipment L C.

Speaker Change: <unk> sales grew two 9% with some traditional equipment sales having shifted into the first quarter from last year.

Speaker Change: National equipment sales decreased three 8% with positive trends in Germany, driven by technical service.

Ronald N. South: On a global basis, CAD CAM equipment grew nicely, with pricing on intraoral scanners having stabilized, although digital imaging sales decreased slightly. Dental specialty product sales were approximately $284 million, with growth of 21.6% driven by acquisitions, with low single-digit organic growth in implants and dental downstream. Global technology and value-added services sales during the first quarter were 217 million dollars, with total sales growth of 13.8 percent. LCI sales growth of 3.2% included 2.3% LCI sales growth in North America and 8.9% LCI sales growth internationally.

Speaker Change: On a global basis, Cadcam equipment grew nicely with pricing on intra oral scanners, having stabilized digital imaging sales decreased slightly.

Speaker Change: Dental specialty product sales were approximately $284 million with growth of 21, 6% driven by acquisitions with low single digit organic growth in implants and orthodontics.

Speaker Change: Global technology and value added services sales during the first quarter were $217 million with total sales growth of 13, 8%.

Speaker Change: LCI sales growth of three 2% included two 3% LCI sales growth in North America, and eight 9% LCI sales growth internationally in <unk>.

Ronald N. South: In North America, sales growth was driven primarily by value-added services, while international growth was driven by our Dentale cloud-based solution. During the first quarter, we exceeded our goal of generating 40% of total non-GAAP operating income from our high-growth, high-margin businesses, with that metric coming in at 40.9% for the quarter. Global medical sales during the first quarter were $1.0 billion, with sales growth of 7.3 percent, and LCI sales decreased 0.7 percent.

Speaker Change: North America sales growth was driven primarily by value added services, while international growth was driven by our <unk> cloud based solution.

Speaker Change: During the first quarter, we exceeded our goal of generating 40% of total non-GAAP operating income from our high growth high margin businesses with that metric coming in at 49% for the quarter.

Speaker Change: Global medical sales during the first quarter were 1.0 billion with sales growth of seven 3% and LCI sales decreased <unk>, 7%.

Ronald N. South: We have strong sales of point-of-care diagnostics but lower PPE sales as well as lower pharmaceutical sales due to the conversion to lower-price generics. The cyber incident also impacted sales to episodic customers, which we are working to regain. Regarding stock repurchases, we repurchased approximately 1 million shares of common stock in the open market during the first quarter, buying at an average price of $75.10 per share for a total of approximately $75 million.

Speaker Change: We had strong sales of point of care diagnostics, but lower PPE sales as well as lower pharmaceutical sales due to conversion to lower price generics.

Speaker Change: The cyber incident also impacted sales to episodic customers, which we are working to regain.

Speaker Change: Regarding stock repurchases, we repurchased approximately 1 million shares of common stock in the open market during the first quarter buying at an average price of $75 10 per share for a total of approximately $75 million.

Ronald N. South: We had approximately $190 million authorized and available for future stock repurchases at the end of the quarter. Turning to our Balance Sheet and Cash Flow. We continue to benefit from significant liquidity, providing our businesses with the flexibility and financial stability to execute on organic growth initiatives and strategic acquisitions while continuing to return capital to our stockholders and reducing borrowing. Operating cash flow for the first quarter was $197 million compared with $27 million last year, driven by our reduction in our receivable balances, which were elevated at the end of the year.

Speaker Change: We had approximately $190 million authorized and available for future stock repurchases at the end of the quarter.

Ronald N. South: Restructuring expenses in the first quarter were $10 million, or $0.06 per diluted share, incurred as part of our previously disclosed restructuring initiative. These expenses mainly relate to severance benefits and costs relating to exiting certain facilities.

Speaker Change: Turning to our balance sheet and cash flow.

Speaker Change: We continue to benefit from significant liquidity, providing our businesses with the flexibility and financial stability to execute on organic growth initiatives and strategic acquisitions, while continuing to return capital to our stockholders and reducing borrowings.

Speaker Change: Operating cash flow for the first quarter was $197 million compared with $27 million last year, driven by a reduction in our receivable balances balances, which were elevated at the end of the year.

Speaker Change: Restructuring expenses in the first quarter were $10 million or <unk> <unk> per diluted share were incurred as part of our previously disclosed restructuring initiative. These expenses, mainly relate to severance benefits and costs relating to exiting certain facilities.

Ronald N. South: We reported other nine-gap adjustments in the first quarter, which are detailed in Exhibit B to today's press release. I'll conclude my remarks with our 2024 financial guidance. At this time, we are still unable to provide estimates for costs associated with integration and restructuring for 2024. Therefore, we are not providing gap guidance.

Speaker Change: We reported other non-GAAP adjustments in the first quarter, which are detailed in exhibit b to today's press release.

Speaker Change: I'll conclude my remarks, with our 2024 financial guidance.

Speaker Change: At this time, we are still unable to provide estimates for costs associated with integration and restructuring for 2024. Therefore, we are not providing GAAP guidance. We are affirming our guidance for non-GAAP diluted EPS and adjusted EBITDA growth.

Ronald N. South: We are affirming our guidance for non-GAAP diluted EPS and adjusted EBITDA growth. In addition, we are updating our guidance for total sales growth. For 2024, we expect non-gap diluted EPS attributable to Henry Schein Inc. to be in the range of $5 to $5.16 per share, reflecting growth of 11% to 15% compared to 2023 9-gap diluted EPS of $4.50. As a reminder, our 2024 guidance does not include any associated benefit from potential insurance claim proceeds related to last year's cyber attack. Our policy has a $60 million claim limit on an after-tax basis with a $5 million reduction.

Speaker Change: In addition, we are updating our guidance for total sales growth for 2024, we expect non-GAAP diluted EPS attributable to Henry Schein, Inc to be in the range of $5 to $5 16 per share.

Speaker Change: Reflecting growth of 11% to 15% compared with 2023, non-GAAP diluted EPS of $4 50.

Speaker Change: As a reminder, our 2024 guidance does not include any associated benefit from potential insurance claim proceeds related to last year's cyber incident. Our policy has a $60 million claim limit on an after tax basis with a $5 million retention.

Ronald N. South: We have begun the process of filing a claim and believe it is covered under our cyber policy, although final resolution remains subject to insurer approval. We do not expect to begin recording any benefits from the claim recovery until later in the year. Our 2024 adjusted EBITDA growth is expected to increase by more than 15% versus 2023 adjusted EBITDA of $984 million. Our 2024 total sales guidance is now expected to be 8-10% growth over 2023 versus our previous guidance of 8-12% growth.

Speaker Change: We have begun the process of filing a claim and believe it is covered under our cyber policy. Although final resolution remains subject to ensure approval. We do not expect to begin recording any benefits from the claim recovery until later in the year.

Speaker Change: Yeah.

Speaker Change: Our 2024 adjusted EBITDA growth is expected to increase by more than 15% versus 2023, adjusted EBITDA of $984 million.

Speaker Change: Our 2024 total sales guidance is now expected to be 8% to 10% growth over 2023 versus our previous guidance of 8% to 12% growth. This.

Ronald N. South: This projected growth reflects continued recovery by our distribution businesses from the cyber incident and a strong pipeline of new specialty products and software innovation, contributing to higher sales growth in the second half of the year. We expect modest overall equipment sales growth for the remainder of the year, with traditional equipment sales in line with last year and strong growth in technical services and in CAD CAM equipment. This sales guidance also includes sales from the acquisitions we have completed to date. Our 2024 guidance is for current continuing operations, as well as acquisitions that have closed. This does not include the impact of future share repurchases and potential future acquisitions.

Speaker Change: This projected growth reflects continued recovery by our distribution businesses from the cyber incident.

Speaker Change: Strong pipeline of new specialty products and software innovation contributing to higher sales growth in the second half of the year.

Speaker Change: We expect modest overall equipment sales growth for the remainder of the year with traditional equipment sales in line with last year and strong growth in technical services and Cadcam equipment.

Speaker Change: This sales guidance also includes sales from the acquisitions, we have completed to date.

Speaker Change: Our 2024 guidance is for current continuing operations as well as acquisitions that have closed it does not.

Speaker Change: That includes the impact of future share repurchases and potential future acquisition.

Stanley M. Bergman: Guidance also assumes that foreign currency exchange rates are generally consistent with current levels and that end markets remain consistent with current markets. With that, I'll now turn the call back. Thank you, Ron, as investors can hear we continue to make good progress in restoring sales to pre-incident levels, with a specific focus on bringing back episodic customers and advancing several programs, of course, to reinforce the value and benefits Henry Schein provides to our customers.

Speaker Change: Guidance also assumes that foreign currency exchange rates are generally consistent with current levels and that end markets remain consistent with current market conditions with that I'll now turn the call back to Stan.

Stan: Thank you Ron.

Stan:

Stan: As a.

Stan: Investors can hear we've continued to make good progress in restoring sales pre incident levels.

Stan: Specific focus on bringing back episodic customers.

Stan: And Ah <unk>.

Stan: Advancing several programs of course to reinforce.

Stan: To our customers the value and benefits Henry Schein provides to our customers.

Stanley M. Bergman: Again, we have made steady progress in this area and are quite optimistic as we restore our sales on the distribution side, three incident levels and beyond. We are making. Good progress with a bold plus one strategic priority to drive growth and further strengthen our business and value proposition. You can see from the investor package posted on the website that in each area of the Gold Plus One, we are executing quite well. The New Innovative Products and Software Enhancers. Clinical Digital Workflow for Dental Implants.

Stan: Again, we have made steady progress in this.

Stan: Area.

Stan: And are quite optimistic.

Stan: We have restored our sales on the distribution side too.

Stan: Pre incident levels and beyond.

Stan: We're making good progress with both plus one strategic priorities, which are driving growth.

Stan: Strengthening our business and value proposition.

Stan: You can see from the Investor package posted on the website that in each area of the bulb plus one we are executing quite well.

Stan: The new innovative products and software enhancements.

Stan: Clinical digital workflows with dental implants.

Stanley M. Bergman: Good work in the endodontic and orthodontic areas should positively impact momentum as the year goes by. These new innovations, coupled with sales growth we are seeing from our recent acquisitions, should enable us to meet both short- and long-term expectations, and I am hopeful that we could even exceed them. So, with the overview of the business and our financial results... We are ready to take questions, but really, it's you all. Thank you, sir.

Stan: Some good work in the endodontics and orthodontic areas should positively impact momentum as the year goes by.

Stan: These new innovations coupled with sales growth, we are seeing from our recent acquisitions should enable us to meet both short and long term expectations and are hopeful that we could even exceed that.

Speaker Change: So with the overview of the business.

Speaker Change: Actual results, we are ready to take questions operator.

Speaker Change: We're ready.

Speaker Change: Thank you.

Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star 2 if you'd like to remove a question from the queue.

Speaker Change: Thank you Sir we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the queue. You May press star two if you'd like to remove your question from the queue for any participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

Operator: For any participant using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment while we poll for questions. And the first question comes from the line of Jason Bednar with Piper Sandler. Please proceed with your question. Hey, good morning.

Speaker Change: One one moment, while we poll for questions.

Speaker Change: And the first question comes from the line of Jason Bednar with Piper Sandler. Please proceed with your question.

Jason M. Bednar: Hey, good morning.

Jason M. Bednar: Stan or Ron, I wanted to start on gross margin. That was really the biggest positive surprise in the quarter for us. By our model, you're at a record high, and that's in spite of volumes maybe being a touch lighter than we would have thought. It doesn't seem like segment mix explains the entirety of that margin result.

Jason M. Bednar: Stan or Ron I wanted to start on gross margin that was really the biggest positive surprise in the quarter to us.

Jason M. Bednar: By our model you are at a record high and Thats in spite of volumes, maybe being a touch lighter than we would've thought it doesn't seem like segment mix explains the entirety of that margin result, So just wondering if you can unpack for us the drivers here that pushed you to nearly 32% gross margin in the quarter.

Ronald N. South: So just wondering if you can unpack for us the drivers here that pushed you to nearly 32% gross margin in the quarter. And then could you also speak to the confidence in this line or the sustainability of this performance as we look over the balance of the year? Can gross margins stay up near this level? Hi Jason, I'll start, and I'll let Stanley jump in if there's anything he wants to add to this.

Speaker Change: Then could you also speak to the confidence in this line or the sustainability of this performance as we look over the balance of the year.

Speaker Change: Gross margin stay up near this level.

Speaker Change: Yes.

Speaker Change: Hi, Jason I'll start and I'll, let <unk> jump in if he wants to add on this I think.

Ronald N. South: I think it is largely mixed. We have had a little bit of a depression in the distribution businesses as we continue to come out of the cyber incident. We're happy with the growth we're seeing in value-added services. Very happy with, while it has been a challenging end market on some of the specialty sides. The mix on the top line is helping with that gross margin, but it is consistent with our strategy.

Speaker Change: It is largely mix I mean, we have had a little bit of depression and the distribution businesses as we continue to come out of the cyber incident.

Speaker Change: We're happy with the growth we're seeing in value added services.

Speaker Change: Happy with.

Speaker Change: While it has been a challenging end market on some of the specialty sides with some of the growth we're getting there.

Speaker Change: So.

Speaker Change: The mix on the top line is helping with that gross margin.

Speaker Change: But it is consistent with our strategy. That's why we did the acquisitions. We did last year. These are higher margin businesses and as we said in the prepared remarks. These are these businesses will start contributing.

Ronald N. South: That's why we did the acquisitions we did last year. These are higher-margin businesses, and as we said in the prepared remarks, these businesses will start contributing to growth on that gross margin. Will it be the same for the balance of the year?

Speaker Change: Growth on that on that gross margin will it be the same for the balance of the year.

Ronald N. South: A lot of that will depend on the ongoing recovery that we're seeing. But I do think that it is consistent with our expectations and with. So thank you, Ron. Jason, as you know, we have been investing in high-growth, high-margin businesses for the past several years. Last year, we did quite a bit in that direction; not all of those have been in place. But in general, the mix towards high growth and high margin has increased. Number one.

Speaker Change: That will depend on the ongoing recovery that we're seeing and the distribution businesses, but I do think that.

Speaker Change: It is consistent with our expectations and with the strategic plan.

Speaker Change: So thank you Ron.

Speaker Change: Jason as you know we have been investing in high growth high margin businesses for the past several years.

Speaker Change: Last year, we had.

Jason: Quite a bit in that direction not all of those have been in place.

Jason: For the full year.

Jason: But in.

Jason: In general.

Jason: The mix towards high growth high margin has increased.

Stanley M. Bergman: Number two, the margins on the distribution side are doing quite well. We did offer quite a few discount programs in the fourth quarter, a little bit in the first quarter, but not much, and generally, we're storing margins quite nicely on the distribution side. Some mix and the fact that our distribution businesses are doing well from the margin point helped drive the margin, the gross margin up. And as Rahm said, we're quite comfortable with the fact that we're going to continue in this direction going forward. All right. Very helpful, both of you.

Jason: Number one.

Jason: Number two.

Jason: The margins on the distribution side are doing quite well.

Jason: After quite a few discount programs in the fourth quarter.

Jason: But in the first quarter, but not much.

Jason: Generally we're restoring margins quite nicely on the distribution side, some mix and the fact that our.

Jason: Distribution businesses are doing well from a margin point.

Jason: Helped drive the margin the gross margin up.

Jason: And.

Jason: Ron said, we're quite.

Jason: Comfortable with the fact that we're going to continue in this direction going forward.

Jason M. Bednar: And then as a follow-up, I wanted to ask about dental equipment. I know the message last quarter was one of, you know, a shortfall in deliveries tied to the cybersecurity incident. A lot of that business would shift into the first quarter and eventually be realized. You know, dental equipment didn't show as much growth as we were looking for. You know, was the shift out of the fourth quarter maybe just simply not as large as we would have thought and we were just overmodeling that? I guess, was that consistent with your expectations, what you saw in the first quarter?

Speaker Change: Alright very helpful. Both of you.

Speaker Change: And then as a follow up I wanted to ask on dental equipment.

Speaker Change: I know the message last quarter was one of that shortfall in deliveries tied to the cyber security incident, and a lot of that business would shift into the first quarter and eventually be realized.

Speaker Change: Dental equipment didn't show as much growth as what we were looking for.

Speaker Change: What was the shift down in the fourth quarter, maybe just simply not as large as we would've thought we were just over modeling that.

Speaker Change: So I guess was that consistent with your expectations. What you saw in the first quarter and then just trying to understand I. Appreciate the comments on the outlook for dental equipment. This year, but really trying to see relative to where we were a few months ago, if youre seeing private practices or dsos taken any kind of different approach with their capital equipment equipment budgets or is it really just status quo out there.

Stanley M. Bergman: And then, you know, just trying to understand, I appreciate the comments on the outlook for dental equipment this year, but really trying to see, you know, relative to where we were a few months ago, if you're seeing private practices or DSOs taking any kind of different approach with their capital equipment, equipment budgets, or is it really just the status quo out there? It was hard to gauge exactly how much business would flip from one quarter to the next, Jason.

Speaker Change: So it's hard to gauge exactly how much business was slipped from one quarter to the other Jason.

Stanley M. Bergman: Remember also that our equipment people in the fourth quarter last year were very much engaged in providing support to customers during the incident period, and that actually took up a lot of their time. So I'm not saying we lost that business to our competition, but our equipment people are used to going into dental offices to identify opportunities and harvest those opportunities. We were on a relative pause in the fourth quarter with the hunting for new equipment.

Speaker Change: Remember also equipment people in the fourth quarter last year were very much engaged in providing support to customers during the incident period and that actually.

Speaker Change: Took up a lot of their time.

Speaker Change: So I'm not saying, we lost that business to our competition, but.

Speaker Change: Equipment people are used to going into dental offices to identify opportunities and harvest those opportunities. We were on a relative pause in the fourth quarter with the hunting for new equipment.

Stanley M. Bergman: We've restored basically the equipment backlog to where it was in the pre-pandemic period. We think that the market is quite good. Traditional equipment has stabilized. It's not where it was during the peak, post-COVID recovery period, but it's stabilized, and it's quite good. The whole CAD-CAM area.

Speaker Change: Forestall basically the equipment backlog to where it was.

Speaker Change: Pre pandemic period.

Speaker Change: We think that the market is quite good.

Speaker Change: The traditional equipment has stabilized.

Speaker Change: It's not where it was during the peak and the post Covid recovery period.

Speaker Change: But it's stabilized and it's quite good.

Speaker Change: So CAD Cam area.

Speaker Change: <unk> is doing quite well.

Stanley M. Bergman: Pricing has stabilized. Don't think, uh..., discounting. We saw several quarters ago is no longer in place. It's pretty stabled. It doesn't mean that there may not be a new unit coming out. Less features, and a lower price in the future, but I don't think that will cannibalize the business today. Where we were a little bit surprised was in digital imaging, which decreased slightly. I'm not sure if that is a temporary situation; it may be there for a couple of quarters. We've seen this in the past, but I don't believe it's a permanent issue.

Speaker Change: <unk> is stabilized.

Speaker Change: Don't think.

Speaker Change: The discounting we saw several quarters ago is in place any longer it's pretty stabilized.

Speaker Change: Doesn't mean that it may not be a new unit coming out.

Speaker Change: Less features lower price in the future, but I don't think that will cannibalize the business today.

Speaker Change: We were a little bit surprised as digital imaging.

Speaker Change: Which decreased slightly.

Speaker Change: I'm not sure if that is a temporary situation.

Speaker Change: May be there for a couple of quarters. We've seen this in the past I don't believe it's a permanent issue I think digital imaging.

Stanley M. Bergman: I think digital imaging needs to grow, but we did seem to see a bit of a pause. Light, by the way, we saw a pause.

Speaker Change: But we did seem to see a bit of a pause right by the way we saw a pause and cadcam equipment on the milling side, a few quarters ago, that's come back.

Speaker Change: So overall I think it's best to be a little bit cautious.

Speaker Change: <unk> project.

Speaker Change: Modest growth hopeful that it will be a little bit higher than that but we are taking a more cautious approach at this time.

Speaker Change: I don't think private practices have pulled back a lot theres, a little bit because of the interest rates.

Speaker Change: [laughter] excuse me at a few of the.

Stanley M. Bergman: Larger DSOs have paused a bit, but on the other hand, there are a lot of DSOs that are actually in the market right now and are buying equipment and actually installing them. So, it's a mixed bag over there. Hey! Hey!

Speaker Change: Larger dsos have paused a bit but on the other hand, there are a lot of dsos that actually in the market right now and buying equipment and actually installing.

Speaker Change: Equipment, so it's a mixed bag over there.

Speaker Change: [laughter].

Operator: Bye. And the next question comes from the line of John Block with Stiefel. Please proceed with your question. Thank you. Good morning.

Speaker Change: And the next question comes from the line of Jon Block with Stifel. Please proceed with your question.

Speaker Change: Yeah.

John Block: Stanley, maybe you could provide some more color on the implant market growth and how you're faring from a share perspective. I don't know, maybe the worldwide market's growing low single digits. It seems like you guys grew low single digits in implants in the quarter on an organic basis, but I think you're under-indexed in China relative to peers where a good amount of growth came from, you know, in terms of the other players.

Jonathan David Block: Alright, Thank you good morning.

Jonathan David Block: Kelly, maybe you could provide.

Jonathan David Block: Some more color on the implant market growth.

Jonathan David Block: How youre bearing from a share perspective.

Kelly: I don't know maybe that worldwide market is growing.

Kelly: Low single digits. It seems like you guys grew low single digits in implants in the quarter on an organic basis, but I think you're under indexed in China relative to peers, where a good amount of growth came from in terms of the other players. So do you feel like youre, capturing share more prominently sort of on an apples to apples base.

John Block: So do you feel like you're capturing share more prominently sort of on an apples to apples basis where you guys actually compete? And then I'll ask my follow-up question. Yeah, that's a very good question. I'm glad you asked it, because there's a lot of confusion.

Jonathan David Block: <unk>, where you guys actually compete and then I'll ask my follow up.

Speaker Change: Yes, it's a very good question I'm glad you asked that because there's a lot of confusion first of all we.

Stanley M. Bergman: First of all, we do not really participate in a significant way in the Chinese market. We do have, our Medentis business does some work in China. We have a little bit of a catalog, and that business has not really been impacted. Shut up, that'd be small.

Speaker Change: We do not really participate in a significant way in the Chinese market.

Speaker Change: We do have.

Speaker Change: Our <unk> business does some work in China, we have a little bit of catalog.

Speaker Change: That business has not really been impacted.

Speaker Change: Relatively small.

Stanley M. Bergman: While the implant markets end markets, it is experiencing selected pockets of price sensitivity, and that's mainly in the full arch implant. I think it's very important to understand that this has not directly impacted our business. As I prosper..., it is lower than other premium brands. And our customers are generally less focused on the full arch. But I think that's very, very important. There are small groups of customers that are focused on price and value, and that we have the sun to compete with now.

Speaker Change: While the implant markets and market.

Speaker Change: Is experiencing selective pockets of price sensitivity.

Speaker Change: And that's mainly in the full arch implants.

Speaker Change: I think it's very important to understand.

Speaker Change: That this has not directly impacted our business.

Speaker Change: As our price points.

Speaker Change: Is lower than other premium brands.

Speaker Change: And our customers are generally less focused on the full arch procedure.

Speaker Change: I think that's very fair and cool.

Speaker Change: They are small groups of customers that are focused on price.

Speaker Change: The value offering.

Speaker Change: And that we have to compete with now.

Stanley M. Bergman: The Bulletproof Executive 2013, has generally been well-priced in the premium area. I think some of our competitors have had to come down to art pricing. But overall... Generally, we're very well priced in the premium area. We've been viewed as a discounter. If you will, our premium product, and the quality of our products is very good and available at relatively favorable prices to private practitioners and to DSOs.

Speaker Change: Our product line.

Speaker Change: Has generally been well priced in the premium area.

Speaker Change: I think some of our competitors have had to come down to pricing, but overall.

Speaker Change: Generally we are very well priced in the premium area, we've been viewed as a discounter.

Speaker Change: If you will of premium products and the quality of our products are very good.

Speaker Change: And.

Speaker Change: At relatively favorable pricing.

Speaker Change: To both.

Speaker Change: Practitioners and to Dsos.

Speaker Change: So.

Stanley M. Bergman: I think, uh... Part of the market we participate in has not really been affected from our point of view, and perhaps some others. And, of course, the favorable launch in Germany of the... Easy 2 implant system, qualitatively it's good, it's a good price, has helped us in Germany, where we have a very strong market share and when we introduce new products, they're generally well-received in Germany.

Speaker Change: I think.

Speaker Change: But part of the market.

Speaker Change: Participated has not really been impacted from our point of view.

Speaker Change: Some others.

Speaker Change: Of course, the favorable launch in.

Speaker Change: In Germany.

Speaker Change: The.

Speaker Change: Easy to implant system qualitatively. It's good it's a good price has helped us in Germany, where we have a very strong market share and when we introduce new products.

Speaker Change: They are generally well received in Germany.

Stanley M. Bergman: The customers understand that the value is good, and the product is well tested. And we actually think that with customers being focused practitioners on price, we are well positioned to expand our market share. Continue to expand, if you will. And we have, in the United States, this new bone-level implant with a deep conical connection.

Speaker Change: The customers understand that the value is good and the product is well tested.

Speaker Change: And we actually think that with customers being focused practitioners on price, we are well positioned to expand our market share.

Speaker Change: I will continue to expand if you will.

Speaker Change: And we have in the United States this new bone level implant with a deep clinical connection.

Stanley M. Bergman: We have proven technology that we believe will expand our market position and our opportunity, quite significantly, significantly in North America, the US to start with, where there's a dressable market that we really haven't been able to address. It could be as much as 40 to 50% of the market that we haven't been able to address that we will be able to address with our new product launch later this year. That was great. It was very helpful. And maybe just a quicker one, Ron, for you.

Speaker Change: It's proven technology that we believe will expand.

Speaker Change: Market position and opportunity quite significantly significantly in North America.

Speaker Change: U S to start with is addressable market that we really haven't been able to address could be as much as 40% to 50% of the market that we haven't been able to address that we will be able to address with our new product launch later this year.

Speaker Change: Got it that's great. That's very helpful and maybe just a quick one Ron for you industry was 9% or even below that top line. We were in <unk> for 2024 anyway, but I am just still looking for a little clarity on where the top end of the sales guidance is call it being lopped off in other words.

John Block: The industry was 9% or even below that top line. We were at 8% for 2024 anyway. But I'm just still looking for a little clarity on where the top end of the sales guidance is called being lopped off. In other words, is it market-related? Is it lower trajectory of cybersecurity recapture? Is it stronger dollar or all the above when we think about things relative to February? Thanks for your time.

Speaker Change: Is it market related is it lower trajectory of cyber security recapture is it stronger dollar or all the above but when we think about things relative to February thanks for your time.

Ronald N. South: Uh, yeah, John, there's not a whole lot of fluctuation that we're expecting on FX. I think we can kind of carve that piece out; that might be a minor impact. We still expect acquisitions to have a similar contribution than what we were saying with the original guidance as well. So it really comes back to that, you know, kind of end markets a little bit on, more on the distribution side, whether that be cyber recovery or end markets. As you can appreciate, as we get further and further out from the cyber incident, that assumption gets a little softer in terms of which is which, right?

Ron: Yes, John it's not there's not a whole lot of fluctuation that we're expecting.

Ron: On FX I think we can kind of carve that piece out of it that might be a minor impact we still expect acquisitions to have a similar contribution than what we were saying what the original guidance as well. So it really comes back to that kind of end markets a little bit on more on the distribution side.

Ron: Whether that be cyber recovery of our end markets. As you can appreciate as we get further and further out from the cyber incident.

Ron: That assumption gets a little softer in terms of witches, which right. So we're really looking at the market as well.

Ronald N. South: So we're really looking at the market as we like. The progress we made during the quarter with the so-called sales recovery of certain customers, we think we can maintain that momentum into the year. But as we looked at the different projections there, we kind of played it out, and we thought eight to ten percent would ultimately get us to a more accurate revenue reading than the original. And the next question comes from the line of John Stansel with J.P. Morgan Chase & Company. Please proceed with your question.

Ron: We liked.

Ron: The progress we made during the quarter with sales.

Ron: Copper sales recovery.

Ron: Certain customers.

Ron: We think we can maintain that momentum into the year, but as we.

Ron: As we look at the different projections, there, we kind of played it out and we've got 8% to 10% with ultimately.

Ron: Get us through a more accurate revenue readings in the original eight to 12.

Ron: Yeah.

Ron: And the next question comes from the line of John Stanzel with J P. Morgan Jason Company. Please proceed with your question.

John Paul Stansel: Great. Thanks for taking my question just on the technology side I appreciate that the change cyber security event impacted the <unk>.

John Paul Stansel: Just on the technology side, I appreciate that the Change cybersecurity event impacted the business a little bit here. But is it the right way to think about performance impact as kind of the difference between that 3.2% global internal growth and, say, a mid-single to high-single-digit growth number that you would kind of have been producing over the last few quarters? And then B, just what portions of the business were directly impacted, and kind of how are you seeing the health of dentists as they kind of manage through these kinds of claims processing and benefit verification headwinds?

John Paul Stansel: Business, a little bit here.

John Paul Stansel: Is it the right way to think about performance impact as kind of the difference between that three 2% global internal growth and say like a mid single to high single digit growth number that you would kind of had been producing over the last few quarters and then b just what portions of the business, where we are directly impacted and kind of how are you seeing the health of.

John Paul Stansel: Dentists as they kind of manage through through these kind of claims processing and benefit verification headwind. Thanks.

John Paul Stansel: Yeah, John, on the change health care effect, what we did see with Henry Schein 1 was that we had relatively steady revenue growth during the quarter that stagnated a bit in March, and that's what we attributed to what we saw with change. We have seen the company return to a more normal level of growth since then. So, to your original question, yeah, our expectations for Henry Schein 1 and on the technology side were that, you know, there would be better growth than that, you know, 3% plus you saw in the OCI. So, we do expect that to be higher. And as we come out of the kind of disruption that was caused by the change management cyber incident, we believe.

John Paul Stansel: Yes, John on the on the change healthcare effect, but we did see with Henry Schein. One is that we had relatively steady revenue growth during the quarter that stagnated a bit.

John Paul Stansel: March and Thats attributed to what we saw with.

Speaker Change: With change.

Speaker Change: We have seen the company returned to a more normal level of growth.

Speaker Change: So to your to your original question.

Speaker Change: Yes.

Speaker Change: Our expectations for Henry Schein, one and all the technology side was that there would be better growth in that 3% plus you saw on the OCI. So we do expect that to be higher.

Speaker Change: And as we come out of the kind of the disruption that was caused by the change management cyber incident, we believe that we will achieve that projection it did.

Ronald N. South: It did, you know, change. The change management issue was interesting in the perspective that it did create a bit of a cash crunch for some of our customers. We were able to help alleviate that through some assistance with revenue cycle management tools that we had. But we did also extend terms to some customers. We also did seek, you know, they pulled back on, you know, perhaps acquiring new technology products for a period of time, and that's where we saw the stagnation in revenues at Henry Schein.

Speaker Change: The change management issue was interesting in the perspective that it did create a bit of a cash crunch for some of our customers. We were able to help alleviate that through some assistance through revenue cycle management tools that we had.

Speaker Change: But we did also extend term system customers.

Speaker Change: Also did seek.

Speaker Change: They pulled back on perhaps acquiring new technology products for a period of time and Thats, what we saw that the stagnation in revenues at Henry Schein, one, but I do think that.

Ronald N. South: But I do think that, and quite frankly, we expected, overall, we expected, for example, to have better operating cash flow in the quarter, but our receivable balances were still slightly higher than what we originally expected because of a lot of practices that were kind of managing cash as they worked their way through that disruption, but we're seeing things get back to normal with that. I do believe that our technology business, and as we mentioned in the prepared remarks, there are some new products, some new software products that we're launching that we're introducing to customers that we think will be.., http://TheBusinessProfessor.com, John, let me just add one more comment to what Ron said, and Ron provided a very good answer. Our ability to immediately, within 48 hours, process claims through alternate methodology was very well received.

Speaker Change: And quite frankly, we expected overall, we expected for example to have better operating cash flow in the quarter, but our receivable balances.

Speaker Change: So slightly more elevated than what we originally expected because of.

Speaker Change: A lot of practices that we're kind of managing cash.

Speaker Change: As they work their way through that disruption, but we're seeing things get back to normal with that so.

Speaker Change: I do believe that.

Speaker Change: Our technology business and as we mentioned in the prepared remarks, there are some new products. Some new software products that will be that we're launching that we're introducing to customers that we think will continue to to support that growth going forward.

Speaker Change: Sean.

Sean: Let me just add one more comment to what Ron sitting on quite a very good offering our.

Speaker Change: Our ability to immediately within 48 hours process claims.

Speaker Change: Alternate methodology.

Sean: Was very well received having said that it took up a lot of resources that perhaps should be focused on sales.

Stanley M. Bergman: Having said that, it took up a lot of resources that perhaps should have been focused on sales, and we're focused on ensuring that our customers were able to process their claims but, more important, answer problems that emerged as a result of... Issues with change. I would say that a huge number of dentists are most appreciative of Henry Schein's quick response. They were involved in basic operational issues in their practices; it took a lot of their resources, we helped them, and it took a lot of ours.

Speaker Change: And we're focused on ensuring that our customers.

Speaker Change: We're able to process claims.

Speaker Change: More importantly, handset problems that emerged as a result of the issues with change.

Speaker Change: I'd say thats a huge number of dentists are most appreciative of Henry Schein quick response.

Speaker Change: Uh huh.

Speaker Change: They were involved in basic operational issues in their practices took a lot of their resources, we help them. It took a lot of hours.

Stanley M. Bergman: And so they were also focused on managing their cash. I think we're largely out of that. Although these claims are not being processed through Change, but are being processed through an alternative provider that we have a relationship with. Great, thanks.

Speaker Change: And so there we're also focused on managing the cash.

Speaker Change: I think we've largely out of that.

Speaker Change: Although.

Speaker Change: These claims are not being processed through change, but are being processed or an alternative provider.

Speaker Change: You didn't have a relationship with.

John Paul Stansel: And then just one on the medical distribution business. There's been a lot of discussion in the market, albeit more on the inpatient side, or for medical distributors around kind of a competitive balance and different net wins on contracts. How are you seeing the competitive balance between distributors in the alternative side of the care market and how that's driving different different things? I don't think that's an issue for us. There's a lot going on, I think. Some of the other parts of distribution on the drug side, maybe on the med-cert side with acute care settings. I think we're still doing pretty well with winning these awards.

Speaker Change: Great. Thanks, and then just one on the medical distribution business.

Speaker Change: There's been a lot of discussion in the market, albeit more on the inpatient side for medical distributors around kind of competitive balance in and different net wins.

Speaker Change: On contracts.

Speaker Change: Are you seeing the competitive balance for between distributors in the alternative site of care market and how that's driving different different competition.

Speaker Change: I don't think that's an issue for us.

Speaker Change:

Speaker Change: A lot going on I think with some of the other parts of distribution on the drug side, maybe on the niche side with all with our acute care settings.

Speaker Change: I think we're still doing pretty well.

Speaker Change: Winning these awards I think we've got businesses largely restored.

Stanley M. Bergman: Our business is largely restored, from a I mean, it's fully restored, we think, from a large customer IDN point of view. There is some generic pricing pressure. The Bulletproof Executive, 2013, But if you take that out of it, and you take out of it the... The Lumpiness of the Test.

Speaker Change: From a I mean, it's fully restored we think from a.

Speaker Change: Large customer IV and point of view.

Speaker Change: There is some generic pricing pressure.

Speaker Change: Generic drug pricing pressure on the other hand, thats pretty good for profits.

Speaker Change: But if you take that out of it and you take out of it.

Stanley M. Bergman: I think you'll see our medical business is in pretty good shape. We are continuing to win awards, new awards, and we're not really losing any existing customers. Don't think about what's being experienced in other parts of healthcare. The Bulletproof Executive 2013, We're very isolated from... what others are going through.

Speaker Change: Or the Lumpiness of the test I think you'll see our medical business is in pretty good shape. We are continuing to win awards, New awards, and we're not really losing any existing customers.

Speaker Change: I don't think what's experience being experienced in other parts of health care.

Speaker Change: Distribution is impacting us.

Speaker Change: Very isolated from.

Speaker Change: What others are going through.

Stanley M. Bergman: We have a very unique service, highly appreciated, and our customers were very loyal to us on the IDN and group side during the incidents. We still have some of this business, looking for pricing that's in the smaller practice, we call it episodic, and we're recovering and working on that, just like we're doing on the downside. But the infrastructure is in place to service these larger customers, the IBMs and the groups. Practices that are highly, highly appreciated.

Speaker Change: Have a very unique service.

Speaker Change: Highly appreciate it and our customers are very loyal to us on the IV and group side.

Speaker Change: During the incidents we still have some of this.

Speaker Change: Business.

Speaker Change: Customers.

Speaker Change: Looking for pricing that's in the smaller practices called episodic and we are recovering and working on that just like we're doing on the downside, but the infrastructure is in place to service. These larger customers. The IV ends in the group.

Speaker Change: Practices that is highly highly appreciate it that's not the issue at all.

Speaker Change: For us.

Stanley M. Bergman: It's not an issue at all for us, and the next question comes from the line of Jeff Johnson with Baird. Please proceed with your question. Thank you. Good morning, guys.

Speaker Change: And the next question comes from the line of Jeff Johnson with Baird. Please proceed with your question.

Speaker Change: Yeah.

Jeffrey D. Johnson: I wanted to talk about the North American dental consumables number that you put up. The down 5, I think if we adjust for that cyber number you said of 300 to 400 basis points down 1 to 2, that fits pretty well with some of the independent industry data that came out in 1Q. I think it showed the North American market on the merchandise side down a couple percentage points on a revenue basis as well. So, you know, one. Is that your take on the market?

Jeffrey D. Johnson: Thank you good morning, guys I wanted to talk about the North American dental consumables number that you put up the down five I think if we adjust for that.

Jeffrey D. Johnson: Cyber number you said, a three to 400 basis points down one to two.

Jeffrey D. Johnson: It's pretty well with some of the independent industry data that came out in <unk> I think it showed the north American market on the merchandise side down.

Jeffrey D. Johnson: Couple of percentage points on a revenue basis as well. So one is that your take on the market the market's kind of down in that low single digit negative range right now and you guys are kind of in line at Ciber.

Stanley M. Bergman: The market's kind of down in that low single-digit negative range right now, and you guys are kind of in line for cyber. And two, I think the other interesting thing in that independent data was that volumes were actually up a couple points, but revenues were down a couple points. So maybe what are you seeing your customers doing from trading down for maybe premium branded products to other kinds of lower price branded or even your private label products? Has there been a change in that dynamic over the last 6, 12 months relative to historical? Thank you.

Jeffrey D. Johnson: Two I think the other interesting thing in that independent data was that volumes were actually up a couple of points, but revenue is down a couple points. So maybe what are you seeing your customers doing from a trading down from maybe premium brand into other kind of lower price branded or even your private label product is there been a change in that dynamic over the last 612 months relative to.

Jeffrey D. Johnson: Historical thank you.

Stanley M. Bergman: And Jeff, you're asking another good question here. I think pricing is relatively stable. If you look at raw data, and we look at that, of course, from our database, inflation is maybe one to two percent. Having said that, there's also movement towards a corporate brand, and that kind of washes out a big part of that one to two percent. There could be, in some areas, a few units less.

Speaker Change: You are asking is again another good question here.

Jeffrey D. Johnson: I think pricing is relatively stable.

Jeffrey D. Johnson: If you look at raw data when we look at that of course from a database in.

Jeffrey D. Johnson: <unk> is maybe 1% to 2% having.

Jeffrey D. Johnson: Having said that there's also some movement towards corporate brands.

Jeffrey D. Johnson: And.

Jeffrey D. Johnson: That kind of washes out a big part of that 1% to 2%.

Jeffrey D. Johnson: There could be a few in some areas.

Jeffrey D. Johnson: It's less take out the gloves business, where there is.

Stanley M. Bergman: Take out the glove business, where there is definitely some pricing pressure and continues to be. I think Ron described that as 60 basis points or so company-wide. Dinner was within that range as well.

Jeffrey D. Johnson: Definitely some pricing pressure continues to be I think Ron.

Jeffrey D. Johnson: Ron described at a 60 basis points or so companywide.

Jeffrey D. Johnson: Dental is within that range as well I think pricing has stabilized I think.

Stanley M. Bergman: I think pricing is stabilized. I think... Our margins are pretty stable. Manufacturers, some of the bigger ones, I'm understanding they probably have to be more competitive, and the little guys, the mid-size practices, are continuing to do okay. But I would say this quarter it's a lot more stable than it was, say, two or three quarters ago. So I think pricing has stabilized, and margins have stabilized. Now, our challenge is the recovery. Episodic customers, not the large group practices or the mid-sized practices we actually think we're gaining. So, um... We have to discontinue with the episodic.

Jeffrey D. Johnson: Our margins are pretty stable.

Jeffrey D. Johnson: Manufacturers some of the bigger ones are understanding they.

Jeffrey D. Johnson: Probably have to be more.

Jeffrey D. Johnson: And the little guys the midsized practices are.

Jeffrey D. Johnson: Continuing to do okay, but I would say this quarter, it's a lot more stable than it was say.

Jeffrey D. Johnson: Two or three quarters ago.

Jeffrey D. Johnson: So I think pricing has stabilized and margins have stabilized.

Jeffrey D. Johnson: And our.

Jeffrey D. Johnson: Our challenge is the recovery.

Jeffrey D. Johnson: These episodic customers not the large group practices not the midsized practices, we actually think we're gaining.

Jeffrey D. Johnson: So.

Jeffrey D. Johnson: We have to just continue with the episodic.

Stanley M. Bergman: Those that buy through our website. Comparing prices, that's where we have to do our work. All right. That's helpful. Thank you, Stanley.

Jeffrey D. Johnson: Those that buy through our website.

Jeffrey D. Johnson: Competitive process, that's where we have to do.

Jeffrey D. Johnson: And then, Ron, maybe just one quick follow-up, just on that 300 to 400 basis points cyber impact. Would it be fair for us to split that kind of over your medical and your dental business combined? Is it about an equal impact there?

Speaker Change: Alright Thats helpful. Thank you Stanley and then Ron maybe just one quick follow up just on that three to 400 basis points cyber impact would it be fair to us for us to split that kind of over your medical and your general business combined is about equal impact there you've mentioned, both these episodic and larger customers I think in your prepared remarks and <unk>.

Ronald N. South: You've mentioned both these episodic and larger customers, I think, in kind of your prepared remarks in both areas, number one. And number two, do we look at that 300 to 400 basis point as being kind of stable? Is there anything you can say about kind of maybe the exit rate in March versus kind of how you went into the year? Just where to think maybe where that 300 to 400 basis points pressure from cyber goes over the next quarter or two.

Ron: Areas number one and number two do we look at that $3 to 400 basis points as being kind of stable is there anything you can say about kind of maybe the exit in March recapture rate versus kind of how you went into the year, just where to think maybe where that three to 400 basis points.

Ron: Pressure from cyber those over the next quarter or two.

Ronald N. South: Thanks. Yeah, to answer the first part of your question, Jeff, yes, the spread and the impact on dental and medical is pretty consistent, right? It's not that one's bearing the brunt more so than the other.

Speaker Change: Yes to answer the first part of your question Jeff Yes.

Speaker Change: The spread and the impact on dental and medical is pretty consistent right.

Speaker Change: There's not the ones bearing the brunt more so than the other.

Ronald N. South: I would say, you know, it's difficult to assess kind of going forward, like I said, the further out we get from the cyber incident, determining how much of the revenue base and how much of the market share that we're managing is attributable to cyber, that gets more and more difficult. But we have taken a look at this, and any impact on revenues that we believe we have out there is contemplated in the revenue guidance, and the related impact on earnings has been contemplated when we have, you know, in the affirmation of the EPS guidance as well. And the next question comes from the line of Elizabeth Anderson with Evercore ISI. Please proceed with your question.

Speaker Change: I would say.

Speaker Change: It's difficult to assess kind of going forward like I said that the further out we get from from the cyber incident to determine how much of the revenue base and how much of the market share that we're managing is attributable to cyber that gets more and more difficult, but we have taken a look at this and any impact on revenues that we believe we have out there is.

Ron: Contemplated in the revenue guidance and the related impact on earnings has been contemplated when we have.

Ron: The affirmation of the EPS guidance as well.

Ron: And the next question comes from the line of Elizabeth Anderson with Evercore ISI. Please proceed with your question.

Elizabeth Hammell Anderson: Hi guys, thanks so much for the question. I was wondering about the medical environment. We have heard of, you know, higher sort of outpatient utilization trends broadly in the market. How do we think about some of those trends continuing and sort of the ordering patterns between like procedures for some of your ambulatory surgical clients and then sort of the impact on their ordering as we move through the year? So Elizabeth, I think the shift from the acute care setting to the alternative care setting for procedures continues. I don't think it was more profound this quarter than the past year or two.

Elizabeth Hammell Anderson: Hi, guys. Thanks, so much for the question.

Elizabeth Hammell Anderson: How does that medical environment.

Elizabeth Hammell Anderson: We've heard of higher tier.

Elizabeth Hammell Anderson: LPG utilization trends broadly in the market how do we think about some of those trends continuing in sort of the ordering patterns between like procedures, especially among ambulatory surgical clients.

Elizabeth Hammell Anderson: And then sort of the impact on their their ordering as he loves it.

Elizabeth Hammell Anderson: Yeah.

Elizabeth: So Elizabeth.

Elizabeth: Think.

Elizabeth: The shift from the acute care setting to the alternate care settings for procedures continues.

Speaker Change: I don't think it was more profound this quarter then.

Speaker Change: Year or two.

Stanley M. Bergman: I don't think there's any shi- We've seen a significant shift in either increase or decrease in procedures, in any one or two procedures, maybe they are isolated procedures, I don't know, but in general, the major procedures are consistent, at least from our point of view, from quarter to quarter. And it's a growing area from our point of view, both in terms of some internal growth of existing...

Speaker Change: I don't think Theres any shift significant shift in either increase or decrease in procedures in any one or two procedures. Maybe they are isolated procedures I don't know, but in general the major procedures are consistent.

Stanley M. Bergman: Surgery Centers, ASCs, and also we're gaining new accounts in that area. So it's pretty consistent that procedures are moving from the acute care setting to the ultimate care setting and are relatively stable within a particular center.

Speaker Change: Our point of view from quarter to quarter.

Speaker Change: And it's a growing area for my point of view, both in terms of some internal growth with existing.

Speaker Change: Uh huh.

Speaker Change: Surgery centers.

Speaker Change: And also we are getting new accounts in that area. So it's pretty much consistent that procedures are moving.

Speaker Change: The acute care setting to the ultimate care setting.

Speaker Change: And a relatively stable.

Speaker Change: Within a particular center.

Elizabeth Hammell Anderson: And then maybe as a follow-up, as we sort of think through some of the cost cuts, etc., etc., as you're moving on, one of the things that I noticed was that SG&A was a touch higher than at least we were modeling here in the quarter, and I just wanted to understand the cadence as we think about the back half of the year and sort of any of the impact of some of the cost restructurings as you Thank you.

Speaker Change: Got it and then maybe I have a follow up as we sort of seek through some of the cost cuts et cetera, as you're moving on one of the things I noticed it seems like SG&A was a touch higher than at least we are modeling here and there.

Speaker Change: Quarter and I just wanted to understand about the cadence as we think about the back half of the year.

Speaker Change: And so does any of that impacted some of the cost restructuring.

Speaker Change: And how they materialize as you move across the quarters.

Speaker Change: Thank you.

Elizabeth Hammell Anderson: Yeah, you know, Elizabeth, the SG&A, the whole kind of mix of the P&L of some of the businesses that we acquired last year are going to be a little different, right, with higher gross margins but then greater expenses as it might relate to R&D and other selling costs associated with some of those businesses. So that's, you're seeing that show up in the consolidated P&L a little bit more. So some of the favorability we got on the gross margin side was then offset on the SG&A side.

Speaker Change: Yes Elizabeth.

Speaker Change: SG&A.

Elizabeth Hammell Anderson: The whole kind of mix of the P&L. Some of the businesses that we acquired last year are going to be a little different right.

Elizabeth Hammell Anderson: The higher gross margins, but then greater expenses as it might relate to R&D and other other selling costs associated with some of those businesses.

Elizabeth Hammell Anderson: Youre seeing that show up in the consolidated P&L, a little bit more.

Elizabeth Hammell Anderson: So some of the favorability we got.

Elizabeth Hammell Anderson: On the gross margin side was then offset on the SG&A side I think in terms of cadence it's going to be.

Elizabeth Hammell Anderson: I think in terms of cadence, it's going to be, you know, with these businesses having a greater importance in our P&L as we go forward. It could get a little lumpier, a little less predictive with the SG&A, but it, you know, I would suspect that over time it will be fairly consistent with what we had in the first quarter as well. And the next question comes from the line of Mike Petusky with Barrington Research. Please proceed with your question. So, Stanley, I'm wondering, you know, you've had PRISM for a few years and S.H.I.E.L.D. I'm just curious about your home health...

Elizabeth Hammell Anderson: <unk>.

Elizabeth Hammell Anderson: With these with these businesses, having a greater importance in our P&L as we go forward.

Elizabeth Hammell Anderson: It could get a little lumpier, a little less predictive with the SG&A, but I would suspect that over time, it will be something fairly consistent with what we had in the first quarter as well.

Elizabeth Hammell Anderson: And the next question comes from the line of Mike <unk> with Barrington Research. Please proceed with your question.

Mike: Good morning.

Mike: So I'm.

Mike: I'm wondering are you know you've had prism for a few years and Sheila I would think for a couple of tough couple of quarters I'm. Just curious the home health, obviously, a large end markets, presumably opportunities for above average growth I'm. Just curious is home health as something that you.

Ronald N. South: The Large End Market, growth. I'm just curious, is home health something that you sort of say, hey, we feel really good about this. We want to build it really big over time or or or or different than you thought. Thank you, Mark. Thanks for that question.

Mike: And sort of say hey are we feel really good about this we want to build this into something really big over time or or or is this a little bit different than you thought and maybe you could just sort of sticking with the assets you have.

Speaker Change: Thank you my first question.

Mike: Okay.

Michael John Petusky: OK. The solution continues to be. A big area for us going forward; we continue to expect to grow organically and make some additional investments. Our business is approaching $350 million. $20 million a month or so, and we expect that to continue to grow nicely from an organic point of view, and we will add to that platform. At the moment, we are moving those businesses to a common platform so we can provide a national service. With high customer service, we believe that the business complements our physician business very nicely, and we're very, very optimistic about our home solutions business, as well as our North American Rescue business, which provides first responder and military medical solutions to our areas, which are doing quite well in our medical portfolio.

Mike: Solutions continues to be a.

Mike: A big area for us going forward, we continue to expect to grow organically make some additional investments.

Mike: <unk> is approaching $350 million.

Mike: Annually.

Mike: $40 million a month or so.

Mike: And we expect that to continue to grow nicely.

Mike: Organic point of view, and we will add to that platform.

Mike: At the moment.

Mike: Moving those businesses to a common platform. So we can provide national service.

Mike: With high customer service.

Mike: We believe that the business complements our physician business very nicely.

Mike: ASC business and we're very very optimistic about our home solutions business.

Mike: As well as our North American rescue business, which provides first responder and military medical solutions with two areas that are doing quite well in our medical portfolio.

Mike: Okay, Great and then just shifting shifting to dental I guess, one of the benefits of talking to anybody yet at Henry Schein her leadership at Henry Schein, There's a lot of a lot of folks, including yourself family that had been in the chair for a long time, you've seen different markets and different challenge than all the rest.

Michael John Petusky: And just shifting to dental, I guess one of the benefits of talking... It just seems among investors right now that there's just a lot of skepticism around dental, concerns about persisting high interest. Capital Equipment, Price, and Compression

Mike: It just seems among investors right now there's just a lot of skepticism around around dental concerns about persisting high interest rates and how that sort of flows into capital equipment decisions and concerns about pricing compression.

Mike: Maybe consumables imaging products from other things.

Stanley M. Bergman: I'm just curious, you know, when you sort of think about the dental space in general right now and Sean, do you think the skepticism is sort of appropriate given the givens, or do you think it's appropriate for others but maybe not as much for Schein? Can you just talk about the past, the current challenges, and how you... Yes, I think.

Mike: Curious you know when you sort of think about the dental space in general right now and shines position within it I mean do you think the skepticism is sort of appropriate given the given the or do you think it's appropriate for others, but maybe not as much for schein or can you just talk about historically you know the current challenges and how you see that.

Mike: Uh huh.

Mike: Given your experience things yes.

Speaker Change: Yes, I think.

Stanley M. Bergman: Very good question too. The dental markets are relatively stable. If you look at the U.S., patient dental traffic in January and February was impacted by weather and some seasonal viruses, but improved beginning in March, and again, an improvement continued through the quarter into April. I think there are...

Speaker Change: Very good question too.

Speaker Change: The dental markets are relatively stable.

Speaker Change: If you look at the U S patient dental traffic in January and February was impacted by weather and some seasonal viruses.

Mike: Excluding the flu.

Mike: But improve beginning in March and then get them again.

Mike: <unk> continued through the quarter into April.

Speaker Change: I think they are.

Mike: Sure.

Stanley M. Bergman: Seasonal issues you need to take into account, weather, but overall, the U.S. dental market is stable, leaning towards some growth. I think the same would be the case globally, especially in those markets where you have government reimbursement. So it's quite stable. A good market. I think one has to be very careful reading the tea leaves when...

Mike: Seasonal issues, you need to take into account weather, but overall the U S dental market as stable.

Mike: Maybe <unk>.

Mike: Leaning towards some growth.

Mike: I think the same would be the case globally, especially in those markets, we have government reimbursement.

Mike: So it's quite stable.

Mike: Good markets.

Mike: I think one has to be very careful reading tea leaves witness.

Stanley M. Bergman: Some basis points down in one quarter, some basis points up in another quarter. I think the underlying stability remains. Yes, there's a challenge with interest rates on... High-Cost Procedures, all in one. $20,000, $30,000 procedures.

Mike: Some basis points down in one quarter some basis points up in another quarter.

Mike: I think the underlying stability remains.

Mike: Yes, there is a challenge with interest rates on high cost procedures.

Mike: And one.

Mike: Implant who spoke about.

Mike: <unk> thousand 30000 dollar procedures.

Stanley M. Bergman: Incest rates impact that, but basic traffic is good, and I think these are solid markets. Changes that have a little bit of an impact here in the U.S. but not materially. Get out of that.

Mike: Interest rates impact.

Mike: But basic traffic is good.

Mike: And I think these are solid markets.

Mike: Change did have a little bit of an impact yet in the U S.

Speaker Change: Not materially we'll get out of that.

Stanley M. Bergman: Customers have decent cash flow. Maybe some of them had challenges of change. We had to support them, arrange financing for them, www.youtube.com.au, stable, and on the equipment side, we are taking a bit of a cautious approach. We talk about modest overall equipment sales. But the basic traditional equipment is stable, and the whole digital world is growing. And I think in the long run. Area 2, so.

Speaker Change: Customers have decent cash flow, maybe some of them had challenges.

Speaker Change: Change, we had to support them.

Speaker Change: Arrange financing for them.

Speaker Change: Yeah.

Speaker Change: Extended some credit terms, but overall I would say the market is stable.

Speaker Change: And on the equipment side, we are taking a bit of a cautious approach.

Speaker Change: And that we're talking about modest overall equipment sales.

Speaker Change: But the basic traditional equipment is stable the whole digital world is growing.

Speaker Change: And I think in the long run.

Speaker Change: Medium term equipment is even a good.

Speaker Change: Area too so.

Stanley M. Bergman: We're quite positive about dentistry and remain that way, and if you add to that the medical business, where procedures are continuing to move from the acute care setting into the ultimate care setting. The Bulletproof Executive 2013, in terms of reducing the number of procedures in any one particular area. I think generally the businesses we're in are positive. We are working on recovery of our cyber business, which is related primarily to these Episodic customers, and have made quite a bit of progress in that area.

Speaker Change: Uh huh.

Speaker Change: Quite positive about dentistry and remained that way and if you add to that the medical business.

Speaker Change: Procedures.

Speaker Change: To move from the acute care setting into the ultimate care setting.

Speaker Change: And.

Speaker Change: There's no material movement.

Speaker Change: In terms of reducing the number of procedures in any one particular area I think generally the businesses we're in.

Speaker Change: A positive.

Speaker Change: Working on recovery of our cyber business that related primarily to these episodic customers and have made quite a bit of progress in that area too.

Stanley M. Bergman: So we're quite optimistic about that. And the next question comes from the line of Justin Lin with William Blair. Please proceed with your question. Hi, good morning. Thanks for taking my questions. This is sort of a similar question to what kind of sort of came up earlier, but slightly different.

Speaker Change: No.

Speaker Change: Optimistic about the future.

Speaker Change: And the next question comes from the line of Justin Lin with William Blair. Please proceed with your question.

Justin Lin: You know, your technology segment organic growth, I think came in lower than the street, but the reported number was relatively in line. You know, did the street just kind of miss model that or, or was it the acquisition contribution, particularly from North America? Was that above your own expectations as well?

Justin Lin: Hi, good morning, Thanks for taking my questions.

Justin Lin: Sort of a similar question to what can it sort of came up earlier, but slightly different your technology segment organic growth I think came in lower than the street, but the reported number was relatively in line.

Justin Lin: The Street, just kind of Miss modeled out or was kind of the acquisition contribution, particularly from North America was that above your own expectations as well.

Ronald N. South: I add Justin, that segment includes other value-added services businesses, some of which we acquired in the last year, so that showed up in the acquisition growth from those value-added services businesses who did have very good quarters. They did have very good quarters, and while they exceeded our expectations, we expect them to continue to provide, you know, contribute, you know, good profits. Okay, got it. Um, and I guess this is more of a high-level question here.

Speaker Change: Yes, Justin.

Speaker Change: That segment includes other value added services businesses, some of which we have acquired in the last year. So that showed up in the acquisition growth from those from those value added services businesses, who did have very good quarters. They did have very good quarters and.

Justin Lin: While they exceeded our expectations, we expect them to continue.

Justin Lin: Two to provide.

Justin Lin: Contribute good profits going forward.

Ronald N. South: Yeah, you obviously made a number of acquisitions. Anything you would call out, you know, as surprising, whether positive or negative, relative to your expectations over the past few quarters? You know, we've been happy with all of them. Some did better than others in the early stages.

Speaker Change: Okay got it.

Speaker Change: And I guess more of a high level question here.

Speaker Change: You, obviously made a number of acquisitions.

Justin Lin: Anything you would call out.

Justin Lin: Surprising what are positive or negative relative to your expectations over the past few quarters.

Justin Lin: We've been happy with all of them, some do better than others in the early stages.

Justin Lin: You know, we are busy integrating our large implant acquisitions. We did last year Biotech, which has now annualized. That'll show up as internal growth beginning in the second quarter. We're also integrating SIN, the implant manufacturer in Brazil. That will annualize on the 1st of July, so the second quarter will be the last quarter.

Justin Lin: We are busy integrating our large implant acquisitions, we did last year biotech, which has now annualized that will show up as internal growth beginning in the second quarter. We're also integrating.

Justin Lin: Cyan the implant manufacturer in Brazil that will annualize first of July so second quarter will be the last quarter that shows up as acquisition growth for the back half of the year, we'll be reporting those those numbers as part of our our internal growth with the contributions we get for those two businesses.

Ronald N. South: That shows up as acquisition growth. So in the back half of the year, we'll be reporting those numbers as part of our internal growth with the contributions we get from those two businesses. Very happy with what we're seeing in the home solutions business. There was an earlier question there, you know, do we see that as an area for growth going forward? I think the answer is definitely yes.

Justin Lin: Very happy with what we're seeing on the in the home solutions business. There was an earlier question. There do we do we see that as an area for growth going forward I think the answer is definitely yes.

Justin Lin: So we're very pleased with with.

Justin Lin: The how we've been able to capitalize with the acquisition of shield that we did last year as well as many pharmacy.

Justin Lin: And then also on the value added services side. This is becoming a more and more important part of the of our approach to our to our customers in terms of helping them run more profitable practices, including when they when they would exit their practices and large practice sales has been a very a very successful acquisition for us as well. So I think when you go.

Justin Lin: On the list and I hate to keep lifting them because you don't want to leave somebody out but they have all done.

Justin Lin: We've been very happy with the with these with these acquisitions and the returns are providing us so far.

Ronald N. South: [inaudible] We have time for one last question coming from the line of Kevin Caliendo with UBS. Please proceed with your question. Thanks. Thanks for squeezing me in.

Justin Lin: We have time for one last question coming from the line of Kevin Caliendo with UBS. Please proceed with your question.

Kevin Caliendo: I appreciate it. A lot of comments around April and the back half of the year. New product launches and the like. There's so many moving parts with M&A and the like. Can't, Ron, maybe you could just give us an update on the cadence of what you expect revenue growth and earnings to be? Is 2Q trending as you thought?

Kevin Caliendo: Thanks, Thanks for squeezing me in I appreciate it.

Kevin Caliendo: A lot of comments around April and in the back half of the year.

Kevin Caliendo: New product launches and the like there's so many moving parts of M&A and the like Okay. Ron maybe can you just give us an update on cadence of what you expect revenue growth and earnings to be as <unk> trending as you bought just trying to understand.

Ronald N. South: Just trying to understand, because there are so many moving parts, is this going to be a typical seasonality in terms of revenue growth, EBIT growth, and especially EPS growth? Yes, as we said before in the prepared remarks, Kevin, that we do expect sales growth to be more significant in the back half of the year than what we've seen in the first half of the year. Some of that is recovery from cyber.

Justin Lin: Because there's so many moving parts is this going to be a typical.

Justin Lin: Seasonality in terms of.

Justin Lin: Revenue growth EBIT growth, and especially EPS growth.

Justin Lin: Yes.

Ron: As we said before the prepared remarks Kevin.

Justin Lin: We do expect sales growth to be more significant in the back half of the year than what we've seen in the first half of the year and some of that is recovery from cyber some of that too is the in the launches of some of the new products. We're anticipating on the implant side that we've talked about as well.

Ronald N. South: Some of that, too, is the launches of some of the new products we're anticipating on the implant side that we talked about as well in the prepared remarks, in addition to some new technology products we have that we're launching as well. So those are all going to contribute. Our expectation is that they will contribute to greater growth in the back half of the year. And like I said before, some of this comes from the ongoing recovery from cyber.

Justin Lin: On the in the prepared remarks. In addition to some new technology products. We have that we are launching as well. So those are all.

Justin Lin: Those are all going to contribute our expectation is they will contribute to greater growth in the back half of the year.

Justin Lin: And like I said before some of this comes from ongoing recovery from cyber week.

Kevin Caliendo: We saw encouraging recovery over the course of Q1, good momentum into Q2, but there's still some work to be done there. So we will, but we're confident that as the year goes on, we'll be able to continue to. From both a sales and an earnings perspective, my expectation is we'll see better growth in Q3, and Q4 than we have. Okay, that's helpful. And if I can just do a quick follow-up on the implant, the new products, what does this do to your portfolio of products? Is it...

Justin Lin: We saw.

Justin Lin: Encouraging recovery over the course of Q1, good momentum into Q2, but there's still some work to be done there. So we will but we're confident that as the year goes on we'll be able to continue to gain some market share.

Justin Lin: On the distribution side as well so.

Justin Lin: I think that the.

Justin Lin: From both a sales and an earnings perspective, my expectation is we'll see better growth in Q3 Q4 than what we have in Q2.

Justin Lin: Okay. That's helpful and if I can just do a quick follow up on the implant the new products. What does this do to your portfolio of products is it is it <unk>.

Stanley M. Bergman: Improving what you have, you know, sort of, I've always envisioned that you were sort of between value and premium. Are you expanding the sort of offering that you have, or improving what you have, or are you changing the positioning in any way, shape, or form of your implant portfolio with the new product launches? In the U.S., we're expanding, and we're going into about half the market that we did not cover today.

Justin Lin: Proving what you had sort of I've always envision that you were sort of between value and premium or are you expanding that sort of offering that you have are improving what you have are you changing the positioning of any way shape or form of your implant portfolio with the new product launches.

Justin Lin: In the U S. We're expanding as we go into about half the market that we do not cover today.

Stanley M. Bergman: We're waiting for finalization of the approval; we expect that in the second half of the year. In international, I think our value proposition is expanding. Easy 2.0 was good, but there were a couple of features that were missing; we've added those to it.

Speaker Change: Waiting for <unk>.

Speaker Change: Utilization of the approval expected in the second half of the year.

Speaker Change: International I think.

Speaker Change: Value proposition is expanding.

Speaker Change: With the easy to use.

Speaker Change: <unk> one <unk> was good but there were a couple of features that were missing we've added to it.

Stanley M. Bergman: It's been well-received already in Germany, where we launched it. So, on the one hand, we're entering into a part of the market that we really aren't in in the United States, and at the same time, we're providing a bit of value products in Europe. So, generally, I would say it's an expansion of our product offering, plus Better Pricing. Better Value, in Europe. Okay.

Speaker Change: And it's been well received already in Germany, where we launched it in the.

Speaker Change: This quarter so on the one hand, we're entering.

Speaker Change: Entering into the part of the market.

Speaker Change: We are not in the United States.

Speaker Change: And at the same time, we're providing.

Speaker Change: Bit of Valeant products in Europe, So generally I would say, it's a expansion of.

Speaker Change:

Speaker Change: The product offering.

Speaker Change: Yes.

Speaker Change: Better pricing better value.

Speaker Change: In Europe.

Speaker Change: Okay.

Operator: Operator, thank you very much. Thank you everyone for calling in. As you can tell, here we are all, the year is off to a solid start.

Speaker Change: Okay. Operator, thank you very much. Thank you everyone for calling in.

Speaker Change: As you can tell with.

Speaker Change: Everyone was.

Speaker Change: It was off to a solid start.

Stanley M. Bergman: We remain enthusiastic about the markets we serve. The opportunities for growth and enhanced profitability lie ahead. We're doing quite well, expanding our high growth, high margin portfolio.

Speaker Change: We remain enthusiastic about the markets we serve.

Speaker Change: Our position in the industry.

Speaker Change: The opportunities for growth and enhanced profitability lie ahead.

Speaker Change: [laughter].

Speaker Change: We're doing quite well.

Speaker Change: And expanding our high growth high margin portfolio.

Speaker Change: Excuse me.

Stanley M. Bergman: The Portfolio of Hydropower Margin is doing well. I expect to show some decent results also in the orthopedic section, where we're expanding our Henry Schein orthopedic division. And overall We think our distribution businesses are in good shape, operationally fully restored. We have to deal with the episodic side of the business, which is growing, covering nicely but not fully back to where it was pre-installed. We're growing with our large customers in dental and medical. Henry Schein 1 continues to provide significant value to our customers, as you read. As you saw,

Speaker Change: Okay.

Speaker Change: Portfolio.

Speaker Change: [laughter] of high growth high margin is doing well.

Speaker Change: We expect to show some decent results also.

Speaker Change: In the orthopedics section.

Speaker Change: Where are we expanding our Henry Schein orthopedic business.

Speaker Change: Okay.

Speaker Change: And overall, we see.

Speaker Change: Our distribution businesses are in good shape.

Speaker Change: Operationally fully restore.

Speaker Change: We have to deal with the episodic side of the business, which is growing.

Speaker Change: Recovering nicely.

Speaker Change: We're not fully back to where it was pre incident.

Speaker Change: We're growing with our large customers in dental and medical.

Speaker Change: And Henry Schein, one continues to provide significant value to our customers.

Speaker Change: As you can.

Speaker Change: As you saw.

Stanley M. Bergman: Excuse me from the... Change, Cyber, and Recovery, where we played a key role in dentistry in general. Thank you for calling in. We remain most optimistic about the future. Thank you very much. And ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: [laughter] excuse me firmly.

Speaker Change: Chain cyber recovery.

Speaker Change: We played a key role in dentistry.

Speaker Change: General.

Speaker Change: So.

Speaker Change: Thank you for calling in.

Speaker Change: We remain most optimistic about the future.

Speaker Change: Thank you very much.

Speaker Change: And ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

Speaker Change: Hmm.

Speaker Change: [music].

Speaker Change: Hum.

Speaker Change: [music].

Speaker Change: Mhm.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Operator: Thanks for watching! © The Ultimate Parody Site! ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good morning, ladies and gentlemen, and welcome to Henry Schein's first quarter 2024 earnings conference call. At this time, all participants are in a listen only mode.

Speaker Change: Good morning, ladies and gentlemen, and welcome to the Henry Schein first quarter 2024 earnings Conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. Please press the star key followed by one on your Touchtone phone. If you would like to ask a question at the end of the call.

Operator: Later, we will conduct a question and answer session. Please press the star key followed by 1 on your touchtone phone if you would like to ask a question at the end of the call. If anyone should require assistance during the call, please press the star key followed by 0 on your touchtone phone.

Speaker Change: If anyone should require assistance during the call. Please press the star key followed by zero on your Touchtone phone and as a reminder, this call is being recorded I would now like to introduce your host for today's call Graham Stanley Henry Schein, Vice President of Investor Relations and strategic Financial Project Officer. Thank you. Please go ahead grant.

Graham Stanley: And as a reminder, this call is being recorded. I would now like to introduce your host for today's call, Graham Stanley, Henry Schein's Vice President of Investor Relations and Strategic Financial Project Officer. Thank you.

Graham Stanley: Thank you, Operator. And my thanks to each of you for joining us to discuss Henry Schein's financial results for the first quarter of 2024. With me on today's call are Stanley Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein, and Ron South, Senior Vice President and Chief Financial Officer. Before we begin, I'd like to state that certain comments made during this call will include information that's forward-looking, risks and uncertainties involved in the company's business may affect the matters referred to in the forward-looking statement, and the company's performance may materially differ from those expressed in or indicated by such statements.

Graham Stanley: Thank you operator, and my thanks to each of you for joining us to discuss Henry Schein financial results for the first quarter of 2024.

Graham Stanley: These forward-looking statements are qualified in their entirety by the cautionary statements contained in Henry Schein's filings with the Securities and Exchange Commission and included in the risk factors section of those filings. In addition, all comments about the markets we serve, including end market growth rates and market share, are based on the company's internal analyses and estimates. Today's 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 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.

Graham Stanley: With me on today's call are Stanley Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein, and Ron <unk>, Senior Vice President and Chief Financial Officer.

Graham Stanley: Reconciliations between GAAP and non-GAAP measures are included in Exhibit B of today's press release and can be found in the Financials and Filings section of our Investor Relations website under the Supplemental Information heading. And also in our quarterly earnings presentation, also posted on our investor relations website. The content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, May 7, 2024. Henry Schein undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this. Lastly, during today's Q&A session, please limit yourself to a single question and a follow-up. And with that, I'd like to turn the call over to Stanley Bergman.

Speaker Change: Before we begin I'd like to statements certain comments made during this call will include information that is forward looking.

Speaker Change: Risks and uncertainties involved in the company's business may affect the masses referred to in forward looking statements and the company's performance may materially differ from those expressed in or indicated by such statements.

Stanley M. Bergman: We estimate a reduced impact on sales growth from PPE as the year progresses. We're very pleased with the progress we're making on executing our Bold Plus One strategic plan. And we are pleased with the contribution of our recent acquisitions. These acquisitions contributed to the profitability we achieved in the first quarter.

Speaker Change: These forward looking statements are qualified in their entirety by the cautionary statements contained in Henry Schein filings with the Securities and Exchange Commission and included in the risk factors section of those filings.

Speaker Change: In addition, all comments about the markets, we serve including end market growth rates and market share are based upon the company's internal analyses and estimates.

Speaker Change: Today's 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 worsen items may vary independently of business performance and other.

Speaker Change: Now for greater transparency with respect to key metrics used by management in operating our business.

Speaker Change: 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.

Speaker Change: Reconciliations between GAAP and non-GAAP measures are included in exhibit B of today's press release and can be found in the financials and filings section of our Investor Relations website under the supplemental information having.

Speaker Change: And also in our quarterly earnings presentation also posted on our Investor Relations website.

Speaker Change: The content of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast may seven 2024.

Speaker Change: Henry Schein undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this call.

Speaker Change: Lastly, during today's Q&A session. Please limit yourself to a single question and a follow up and with that I'd like to turn the call over to Stanley Bergman.

Stanley M. Bergman: Overall, we see steady dental merchandise sales improvement throughout the quarter reflecting this trend, which has continued into April. In the U.S., our Thrive Signature Program is contributing to sales growth, and membership continues to increase with about 2,000 new members added in the first quarter, bringing the total number of Thrive Signature members to approximately 5,000. For monthly subscriptions, the program provides a package of services to customers, such as free shipping.

Stanley M. Bergman: Thank you Greg Good morning, everyone and thank you for joining us.

Stanley M. Bergman: Discount on product and services, and Thrive Reward Points, which, of course, in the aggregate drive customer loyalty. International Merchandise also experienced a steady, Sales improvement in most markets as the quarter progressed. However, sales growth was negatively impacted by two less selling days and most of the international market.

Stanley M. Bergman: Our first quarter financial results reflect solid earnings.

Stanley M. Bergman: Driven by gross profit gross margin expansion.

Stanley M. Bergman: And strong recovery from last quarters cyber incident.

Speaker Change: We estimate that the incident load merchandize sales growth by low to mid single digit percentages during the quarter.

Speaker Change: On PPE products sales continued to decrease primarily due to lower prices for the last year from last year.

Speaker Change: We estimate a reduced impact on sales growth from PPE as the year progresses.

Speaker Change: We're very pleased with the progress, we're making on executing our boat plus one strategic plan.

Speaker Change: And we are pleased with the contribution of our recent acquisitions.

Speaker Change: These acquisitions contributed to the profitability, we achieved in the first quarter.

Speaker Change: We are affirming our expectations for 2024 non-GAAP diluted EPS.

Speaker Change: And 2024 adjusted EBITDA growth.

Speaker Change: And tightening our expectations for 2020 for total sales growth.

Speaker Change: Our projected sales growth reflects continued recovery from last year's cyber incident, and a strong pipeline of new specialty products and software innovation.

Speaker Change: So let me turn to the review of our business units.

Stanley M. Bergman: Global dental equipment sales were consistent with the prior year and were favorably affected by a shift in sales in the United States, from late 2023 into the first quarter. Equipment sales grew in North America but decreased slightly internationally. So now, a few comments on our dental... with strong growth across oral surgical products, endodontics, and... Authored by... largely driven by acquisition, and we believe we also gain market share organically in the Global Dental Specialties Mock.

Speaker Change: Start with dental.

Speaker Change: Sure.

Jason Bednar: On the distribution side.

Stanley M. Bergman: North America implant and North American implant sales were largely consistent with last year, and international sales under our leading Bio Horizons Canlock brand were very good, especially good in Germany. In the first quarter, international sales benefited from the introduction of EZ, the Value Implant System in Germany, which is also designed for ease of use. We expect the launch of a new BioRiser implant system in the U.S., second half of the year, and early Next Gen Canada. This launch will be for a new bone level implant with a deep conical connection and is based upon our proven CAMLOK technology.

Stanley M. Bergman: In North America patient traffic to dental offices in January and February was impacted by weather events and bus seasonal viruses.

Speaker Change: Including the flu.

Speaker Change: But improved beginning in March.

Speaker Change: Overall, we see steady dental merchandise sales improvement throughout the quarter, reflecting the strength.

Speaker Change: Which has continued into April.

Speaker Change: In the U S. Our thrive.

Speaker Change: Drive signature program is contributing to sales growth.

Stanley M. Bergman: Membership continues to increase with about 2000, new members added.

Speaker Change: In the first quarter brings.

Stanley M. Bergman: Bringing the total number of thrive signature members to approximately 5000.

Speaker Change: For monthly subscriptions program provides a package of services to customers such as free shipping.

Speaker Change: Discount.

Speaker Change:

Speaker Change: Product and services.

Speaker Change: And thrive reward points.

Stanley M. Bergman: Which of course to drive customer loyalty.

Speaker Change: International Merchandize also experienced steady sales improvement in most markets as the quarter progressed.

Speaker Change: Sales growth was negatively impacted by two less selling days and most of the international markets.

Global dental equipment sales were consistent to the prior year.

Operator: And were favorably affected by a shift in sales in the United States, probably 2023 into the first quarter.

Elizabeth Hammell Anderson: Equipment sales grew in North America, but decreased slightly internationally.

Speaker Change: So now a few comments on our dental.

Stanley M. Bergman: Specialties with global dental specialties business.

Speaker Change: We had a strong growth.

Speaker Change: Across our surgical products ended optics.

Speaker Change: And orthodontics largely driven by acquisitions.

Speaker Change: And we believe we also gained market share organically.

Stanley M. Bergman: In the global dental specialties market.

Stanley M. Bergman: North America implant and North American implant sales were largely consistent with last year.

Stanley M. Bergman: And international sales.

Our leading by rises Camelot, Brad were very good.

Speaker Change: Was especially good in Germany.

Stanley Bergman: In the first quarter international sales benefit benefited from the introduction of easy.

Stanley M. Bergman: Two oh.

Stanley M. Bergman: Our value implant system in Germany.

Stanley M. Bergman: Which is also designed for ease of use.

Stanley M. Bergman: We expect the launch of a new <unk> implant system in the U S. In the second half of the year.

Speaker Change: Early next year in Canada.

Stanley M. Bergman: This launch will be for.

Stanley M. Bergman: New bone level implant with a deep conical connection and is based upon our proven <unk> technology.

Stanley M. Bergman: We expect.

Stanley M. Bergman: This will expand our dressable market significantly in the United States, thus increasing implant sales growth in the second half of the year, along with the introduction of Sun Valley Implants. This law will position the company well in all market segments in North America. We achieved good and adaptive growth sales during the first quarter as we launched our end, branded products through the Henry Schein U.S. distribution. Although orthodontic product sales are relatively small, they are a relatively small part of our specialty product sales. The launch of our Motion Probe Bracket System is performing well.

Stanley M. Bergman: This will expand our addressable market significantly.

Stanley M. Bergman: A lot of states.

Speaker Change: Thus, increasing implant sales growth in the second half of the year.

Stanley M. Bergman: So.

Stanley M. Bergman: Along with the introduction of some value implants.

Stanley M. Bergman: This launch will position the company well in all market segments in North America.

We achieved good and deducted gross sales during the first quarter as we launched our edge.

Stanley M. Bergman: Branded products through the Henry Schein U S distribution business.

Stanley M. Bergman: Although orthodontic product sales are relatively small.

Stanley M. Bergman: A relatively small part of our specialty product sales.

Stanley M. Bergman: The launch of our motion probe bracket system is performing well.

Stanley M. Bergman: And, uh...specifically addressing the expiration of last year's motion product practice. [inaudible] We also launched the Biotech Smilers Clear Aligner Clinical Digital Workforce software at the American Association of Orthodontics meeting last week, both of which have already been successfully launched in Europe. Biotech Dental, [inaudible] Excuse me. Let me now turn to the technology and value-added services businesses, which will be the largest component, and Henry Schein 1, Adrenal Software. The customer base for Dentrix Ascent and Dentale, our cloud-based solutions, continued to grow and increased 36% in the first quarter over the prior year, and now we have approximately 8,000 installations of our cloud-based solutions.

Stanley M. Bergman: Uh huh.

Stanley M. Bergman: Specifically addressing the expiration last last year's motion product preferences.

Stanley M. Bergman: Sure.

Stanley M. Bergman: We also launched the biotech smile as clear aligner clinical digital workflow software.

Stanley M. Bergman: At the American Association of Orthodontists meeting last week.

Stanley M. Bergman: Both of which have already been successfully launched in Europe through biotech dental.

Stanley M. Bergman: Yes.

Speaker Change: Excuse me.

Stanley M. Bergman: Let me now turn to the technology and value added services businesses.

Stanley M. Bergman: The largest component is Henry Schein, one dental software business.

Stanley M. Bergman: The customer base Fort Detrick said the tolly.

Stanley M. Bergman: Our cloud based solutions continued to grow and increased 36% in the first quarter over the prior year and now we have approximately 8000 installations of our cloud based systems.

Stanley M. Bergman: Yes.

Stanley M. Bergman: We achieved solid growth in our revenue cycle management e-claims business despite the impact of the change in healthcare and the impact of this cyber incident. This was due to the Henry Schein 1 team's prompt responsiveness to... establish an alternative approach to processing customer insurance claims. Within 48 hours, we successfully processed claims and backlogs through an alternative clearinghouse.

Stanley M. Bergman: We achieved solid growth in our revenue cycle management E claims business despite.

Stanley M. Bergman: The impact of change healthcare.

Stanley M. Bergman:

Stanley M. Bergman: The impact of the cyber incident.

Stanley M. Bergman: This was due to the Henry Schein, one team's prompt responsiveness to.

Stanley M. Bergman: Establishing an alternative approach to processing customer insurance claims.

Stanley M. Bergman: Within 48 hours, we successfully.

Stanley M. Bergman: With processing claims and backlog through alternative clearinghouse.

Stanley M. Bergman: We are very pleased with the team's approach to dealing with the change in healthcare. And this helped us navigate a challenge for our customers, and, I might add, many new customers that now have turned to Henry Schein 1 for help during this challenging period for change in healthcare. Although we believe overall technology sales were impacted by the change in healthcare cyber influences. We expect sales in the second quarter to return to more normalized growth levels.

Stanley M. Bergman: We are very pleased with the team's approach on dealing with the change health care cyber incident.

Stanley M. Bergman: And this has helped us navigate challenge for our customers and I might add many new customers.

Stanley M. Bergman: Now, let's turn to Henry Schein, one for help during this challenging period for.

Stanley M. Bergman: Change healthcare.

Stanley M. Bergman: Although we believe overall technology sales were impacted by the change healthcare cyber incident.

Stanley M. Bergman: We expect sales in the second quarter to return to more normalized.

Stanley M. Bergman: Gross levels.

Stanley M. Bergman: Turning to the medical business, there was a strong contribution from sales of point-of-care diagnostics, including flu and multi-assay flu-COVID combination tests, and a shift in sales towards lower-priced generic pharmaceuticals and our medical business. Our North American rescue business, which provides first responder and military medical solutions, as well as our home solutions businesses, performed well during the quarter. We also completed our acquisition of TriMed in early April, strengthening our medical group's deep and long-standing relationships with IDNs, ASCs, and orthopedic specialist customers as we expand our offerings.

Stanley M. Bergman: Turning to the medical business. There was a strong contribution from sales of point of care diagnostics, including flu and multiply as say a fluke cobot combination test.

Stanley M. Bergman: And a shift in sales towards lower priced generic pharmaceuticals.

Stanley M. Bergman: And our medical business.

Stanley M. Bergman: Our North American rescue business, which provides first responder.

Stanley M. Bergman: <unk> medical solutions as.

Stanley M. Bergman: As well as our home solutions businesses.

Stanley M. Bergman: Well during the quarter.

Stanley M. Bergman: We also completed our acquisition of <unk> in early April strengthening our medical groups deep long standing relationships with idms, ASC and orthopedic specialist customers.

Stanley M. Bergman: As we expand our offering into the.

Stanley M. Bergman: Orthopedic Mark, Finally... We are pleased to share that late last week we hosted our 4th Annual Thrive Live event in Las Vegas and had record attendance this year of nearly 1,500 attendees, with significant support from our suppliers.

Stanley M. Bergman: Orthopedic marketplace.

Stanley M. Bergman: Finally.

Stanley M. Bergman: This is primarily an education event where our customers gain continuing education credit through seminars in the largest, in the latest innovation, and clinical dentistry, including digital equipment and software. This year featured the launch of some new innovations to help our customers attract new business, such as our new DENTRICS Eligibility Pro Module that automates the delivery of claims eligibility data directly into the practice management software system. This is quite a unique software feature, and I'm particularly pleased with the integration was reserved with Google, a new product that we also launched at the Thrive Live event.

Stanley M. Bergman: We are pleased to share that late last week, we hosted our fourth annual thrive live event.

Stanley M. Bergman: In Las Vegas.

Stanley M. Bergman: And had record attendance of nearly 500 attendees with significant support.

Stanley M. Bergman: From our suppliers.

Stanley M. Bergman: This is primarily an education event, where our customers' data continuing education credits through seminars and the largest in the latest innovations in clinical dentistry, including digital equipment and software.

Stanley M. Bergman: This year <unk>.

Stanley M. Bergman: The launch of some new innovations to help our customers attract new business.

Stanley M. Bergman: Such as our new <unk> eligibility probe module.

Stanley M. Bergman: Automates the delivery of claims eligibility data directly into the practice management software system. We believe this is quite a unique software feature.

Stanley M. Bergman: And I'm, particularly pleased.

Stanley M. Bergman: With the integration.

Stanley M. Bergman: What's the reserve with Google.

Stanley M. Bergman: Our new products.

Stanley M. Bergman: We also launched at thrive live event.

Stanley M. Bergman: This enables consumers who search on Google to make dental appointments directly from their Google business listing into our customers' practice management system and schedulers. These advancements support our continued commitment to driving innovation in the industry with products and services that add value to our customers' daily lives, enabling our customers to operate a more efficient practice while actually providing better clinical care. Let me now turn the call over to Ron to discuss our quarterly financial results in a bit more detail. Thank you, Stanley. Good morning, everyone.

Stanley M. Bergman: This enables consumers.

Ron: Search on Google to make dental appointments directly from the group.

Stanley M. Bergman: From.

Ron: Google business listing.

Ron: Into our customers' practice management systems and schedule schedules.

Ron: These advanced would support our continued commitment to driving innovation in the industry with products and services that add value to our customers dental tax.

Ron: Practices, enabling our customers to operate in.

Ron: More efficient practice, while actually providing better clinical care, let me now turn over the call to Rob to discuss our quarterly financial results in a bit more detail. Thank you very much.

Ronald N. South: As we begin, I'd like to point out that I will be discussing our results as reported on a GAAP basis and also on a non-GAAP basis. The items excluded from our first quarter non-GAAP financial results for 2024 and 2023 are detailed in Exhibit B of today's press release. A reconciliation of our gap to non-gap income statement is also available in our quarterly earnings presentation on our website, which includes the non-gap effects of adjustments on non-controlling income.

Ronald N. South: <unk>.

Ronald N. South: A reconciliation of our GAAP to non-GAAP income statement is also available in our quarterly earnings presentation on our website, which includes the non-GAAP effects of adjustments on noncontrolling interests.

Ronald N. South: Also please note that for most international businesses. The first quarter had two fewer selling days in the first quarter of last year.

Ronald N. South: With respect to sales I will provide details of total sales related sales growth and LCI sales growth, which is internally generated sales in local currencies compared with the prior year and excludes acquisitions.

Ronald N. South: Please note that our sales growth for the quarter reflects the residual impact of the cyber incident, which we estimate reduced sales growth by approximately 300 to 400 basis points. In addition, lower PPE sales, primarily due to lower glove pricing, reduced sales growth by 60%. Our GAAP operating margin for the first quarter of 2024 was 4.72 percent, a 101 basis point decline compared with the prior year. On a non-GAAP basis, operating margin for the first quarter was 7.11%.

Ronald N. South: Turning to our first quarter results global sales were $3 2 billion with sales growth of three 7% and LCI sales decreased one 8%. Please.

Ronald N. South: In addition, lower PPE sales, primarily due to lower glove pricing reduced sales growth by 60 basis points.

Ronald N. South: Our GAAP operating margin for the first quarter of 2024 was $4, 72%, a 101 basis point decline compared with the prior year GAAP operating margin.

Ronald N. South: On a non-GAAP basis operating margin for the first quarter was $7 one 1%.

Ronald N. South: A 57 basis point decline compared with the prior year non-GAAP operating margin. Gross margin improved 32 basis points, primarily due to the contribution of businesses acquired in 2023. Operating expenses were higher as a percentage of sales, primarily due to lower sales at our distribution.

Ronald N. South: A 57 basis point decline compared with the prior year non-GAAP operating margin.

Ronald N. South: Gross margin improved 32 basis points, primarily due to the contribution of businesses acquired in 2023.

Ronald N. South: Operating expenses were higher as a percentage of sales primarily due to lower sales at our distribution businesses.

Ronald N. South: First quarter 2024 GAAP net income was $93 million, or $0.72 per diluted share. This compares with prior year GAAP net income of $121 million, or $0.91 per diluted share. Our first quarter 2024 non-GAAP net income was $143 million, or $1.10 per diluted share. This compares with prior year non-GAAP net income of $161 million, or $1.21 per diluted share.

Ronald N. South: First quarter 2024, GAAP net income was $93 million or <unk> 72 per diluted share.

Ronald N. South: This compares with prior year GAAP net income of $121 million or 91 per diluted shares.

Ronald N. South: Our first quarter 2024, non-GAAP net income was $143 million or $1 10.

Ronald N. South: Per diluted share.

Ronald N. South: This compares with prior year non-GAAP net income of $161 million or $1 21 per diluted share.

Ronald N. South: The residual impact of the cyber incident on our first quarter 2024 results was consistent with the expectations we set out in the guidance we provided on our earnings call in February. The foreign currency exchange impact on our first quarter diluted EPS was favorable by approximately one cent versus the prior year. Adjusted EBITDA for the first quarter of 2024 was $255 million, which is consistent with the first quarter 2023 adjusted EBITDA of $256 million. Turning to our first quarter sales results, global dental sales were $1.9 billion, with sales growth of 0.8%, and LCI sales decreased by 2.9%. Global Dental Merchandise LCI sales decreased by 3.7% versus the prior year.

Ronald N. South: The residual impact of the cyber incident on our first quarter 2024 results was consistent with the expectations. We set out in the guidance we provided on our earnings call in February.

Ronald N. South: The foreign currency exchange impact on our first quarter diluted EPS was favorable by approximately <unk> <unk> versus the prior year.

Ronald N. South: Adjusted EBITDA for the first quarter of 2024 was $255 million.

Ronald N. South: Which is consistent with the first quarter 2023, adjusted EBITDA of $256 million.

Ronald N. South: Turning to our first quarter sales results global dental sales were $1 9 billion with sales growth of <unk>, 8% and LCI sales decreased by two 9%.

Ronald N. South: Global dental merchandise LCI sales decreased by three 7% versus the prior year merchandise sales were impacted by lower purchases by episodic customers and by lower PPE sales.

Ronald N. South: Global dental equipment LCI sales increased 0.2%.

Ronald N. South: Our North American equipment LCI sales grew two 9% with some traditional equipment sales having shifted into the first quarter from last year.

Ronald N. South: International equipment sales decreased three 8% with positive trends in Germany, driven by technical service.

Ronald N. South: On a global basis, CAD CAM equipment grew nicely, with pricing on intraoral scanners having stabilized, although digital imaging sales decreased slightly. Dental specialty product sales were approximately $284 million, with growth of 21.6% driven by acquisitions, with low single-digit organic growth in implants and dental done. Global technology and value-added services sales during the first quarter were $217 million, with total sales growth of 13.8%. LCI sales growth of 3.2% included 2.3% LCI sales growth in North America and 8.9% LCI sales growth internationally.

Ronald N. South: On a global basis, Cadcam equipment grew nicely with pricing on intra oral scanners, having stabilized digital imaging sales decreased slightly.

Ronald N. South: Dental specialty product sales were approximately $284 million with growth of 21, 6% driven by acquisitions with low single digit organic growth in implants and orthodontics.

Ronald N. South: Global technology and value added services sales during the first quarter were $217 million with total sales growth of 13, 8%.

Ronald N. South: <unk> sales growth of three 2% included two 3% LCI sales growth in North America, and eight 9% LCI sales growth internationally.

Ronald N. South: In North America sales growth was driven primarily by value added services, while international growth was driven by our <unk> cloud based solution.

Ronald N. South: During the first quarter, we exceeded our goal of generating 40% of total non-GAAP operating income from our high growth high margin businesses with that metric coming in at 49% for the quarter.

Ronald N. South: Global medical sales during the first quarter were 1.0 billion with sales growth of seven 3% and LCI sales decreased <unk>, 7%.

Ronald N. South: We have strong sales of point-of-care diagnostics but lower PPE sales, as well as lower pharmaceutical sales, due to the conversion to lower-priced generics. The cyber incident also impacted sales to episodic customers, which we are working to regain. Regarding stock repurchases, we repurchased approximately 1 million shares of common stock in the open market during the first quarter, buying at an average price of $75.10 per share for a total of approximately $75 million.

Ronald N. South: We had strong sales of point of care diagnostics, but lower PPE sales as well as lower pharmaceutical sales due to conversion to lower price generics.

Ronald N. South: The fiber Internet also impacted sales to episodic customers, which we are working to regain.

Ronald N. South: Regarding stock repurchases, we repurchased approximately 1 million shares of common stock in the open market during the first quarter buying at an average price of $75 10 per share for a total of approximately $75 million.

Ronald N. South: We had approximately $190 million authorized and available for future stock repurchases at the end of the quarter. Turning to our balance sheet and cash flow. We continue to benefit from significant liquidity, providing our businesses with the flexibility and financial stability to execute on organic growth initiatives and strategic acquisitions while continuing to return capital to our stockholders and reducing borrowing. Operating cash flow for the first quarter was $197 million compared with $27 million last year, driven by a reduction in our receivable balances, which were elevated at the end of the year.

Ronald N. South: We had approximately $190 million authorized and available for future stock repurchases at the end of the quarter.

Ronald N. South: Turning to our balance sheet and cash flow.

Ronald N. South: We continue to benefit from significant liquidity, providing our businesses with the flexibility and financial stability to execute on organic growth initiatives and strategic acquisitions, while continuing to return capital to our stockholders and reducing borrowings.

Ronald N. South: Operating cash flow for the first quarter was $197 million compared with $27 million last year, driven by a reduction in our receivable balances balances, which were elevated at the end of the year.

Ronald N. South: Restructuring expenses in the first quarter were $10 million or <unk> <unk> per diluted share were incurred as part of our previously disclosed restructuring initiative.

Ronald N. South: <unk> expenses, mainly related to severance benefits and costs relating to exiting certain facilities.

Ronald N. South: We reported other non-GAAP adjustments in the first quarter, which are detailed in exhibit b to today's press release.

Ronald N. South: I'll conclude my remarks, with our 2024 financial guidance.

Ronald N. South: At this time, we are still unable to provide estimates for costs associated with integration and restructuring for 2024. Therefore, we are not providing GAAP guidance. We are affirming our guidance for non-GAAP diluted EPS and adjusted EBITDA growth.

Ronald N. South: We are affirming our guidance for non-GAAP diluted EPS and adjusted EBITDA growth. In addition, we are updating our guidance for total sales growth. For 2024, we expect non-gap diluted EPS attributable to Henry Schein Inc. to be in the range of $5 to $5.16 per share, reflecting growth of 11% to 15% compared to 2023 9-gap diluted EPS of $4.00. As a reminder, our 2024 guidance does not include any associated benefit from potential insurance claim proceeds related to last year's cyber attack. Our policy has a $60 million claim limit on an after-tax basis with a $5 million return.

Ronald N. South: In addition, we are updating our guidance for total sales growth for 2024, we expect non-GAAP diluted EPS attributable to Henry Schein, Inc to be in the range of $5 to $5 16 per share.

Ronald N. South: Reflecting growth of 11% to 15% compared with 2023, non-GAAP diluted EPS of $4 50.

Ronald N. South: As a reminder, our 2024 guidance does not include any associated benefit from potential insurance claim proceeds related to last year's cyber incident.

Ronald N. South: Our policy has a $60 million claim limit on an after tax basis with a $5 million retention.

Ronald N. South: We have begun the process of filing a claim and believe it is covered under our cyber policy. Although final resolution remains subject to ensure approval. We do not expect to begin recording any benefits from the claim recovery until later in the year.

Ronald N. South: Yes.

Ronald N. South: Our 2024 adjusted EBITDA growth is expected to increase by more than 15% versus 2023, adjusted EBITDA of $984 million.

Ronald N. South: Our 2024 total sales guidance is now expected to be 8% to 10% growth over 2023 versus our previous guidance of 8% to 12% growth. This.

Ronald N. South: This projected growth reflects continued recovery by our distribution businesses from the cyber incident and a strong pipeline of new specialty products and software innovation, contributing to higher sales growth in the second half of the year. We expect modest overall equipment sales growth for the remainder of the year, with traditional equipment sales in line with last year and strong growth in technical services and in CAD CAM equipment. This sales guidance also includes sales from the acquisitions we have completed to date. Our 2024 guidance is for current continuing operations as well as acquisitions that have closed. This does not include the impact of future share repurchases and potential future acquisitions.

Ronald N. South: This projected growth reflects continued recovery by our distribution businesses from the cyber incident.

Ronald N. South: <unk> pipeline of new specialty products and software innovation contributing to higher sales growth in the second half of the year.

Ronald N. South: We expect modest overall equipment sales growth for the remainder of the year with traditional equipment sales in line with last year and strong growth in technical services and Cadcam equipment.

Ronald N. South: This sales guidance also includes sales from the acquisitions, we have completed to date.

Ronald N. South: Our 2024 guidance is for current continuing operations as well as acquisitions that have closed. It does not include the impact of future share repurchases and potential future acquisition.

Ronald N. South: Guidance also assumes that foreign currency exchange rates are generally consistent with current levels and that end markets remain consistent with current markets. With that, I'll now turn the call back. Thank you, Ron, as we continue to make good progress in restoring sales to pre-incident levels, with a specific focus on bringing back episodic customers and advancing several programs, of course, to reinforce the value and benefits Henry Schein provides to our customers.

Speaker Change: Thank you Ron.

Ronald N. South:

Ronald N. South: Yes.

Ronald N. South: As.

Ron: Investors can hear we've continued to make good progress in restoring sales to pre incident levels.

Ron: Specific focus on bringing back episodic customers.

Speaker Change: And <unk>.

Ron: Advancing several programs of course to reinforce.

Ron: To our customers the value and benefits Henry Schein provides to our customers.

Ronald N. South: Again, we have made steady progress in this area and are quite optimistic as we restore our sales on the distribution side, three incident levels and beyond. We are making. Good progress with a bold plus one strategic priority, to drive growth and further strengthen our business and value proposition. You can see from the investor package posted on the website that in each area of the Bold Plus One, we are executing quite well. The New Innovative Products and Software Enhancements. Clinical Digital Workflow for Dental Implants.

Ron: Again, we have made steady progress in this area.

Ronald N. South: Quite optimistic.

Ronald N. South: As we restore our sales on the distribution side.

Ronald N. South: To pre incident levels and beyond.

Ronald N. South: We are making good progress with both plus one strategic priorities.

Ronald N. South: Driving growth and further strengthening our business and value proposition.

Ronald N. South: You can see from the Investor package posted on the website that in each area of the bulb plus one we are executing quite well.

Ronald N. South: The new innovative products and software enhancements.

Ronald N. South: Clinical digital workflows with dental implants.

Stanley M. Bergman: Good work in the endodontic and orthodontic areas should positively impact momentum as the year goes by. These new innovations, coupled with sales growth we are seeing from our recent acquisitions, should enable us to meet both short- and long-term expectations, and I am hopeful that we could even exceed them. So, with the overview of the business and our financial results, we are ready to take questions. Operator, we're ready if you are.

Ronald N. South: So good work in the endodontics and orthodontic areas should positively impact momentum as the year goes by.

Stanley M. Bergman: New innovations coupled with sales growth, we are seeing from our recent acquisitions should enable us to meet both short and long term expectations and are hopeful that we could even exceed that.

Stanley M. Bergman: So with the overview of the business.

Stanley M. Bergman: Financial results, we are ready to take questions operator.

Operator: It's Europe. Thank you.

Stanley M. Bergman: Thank you, sir. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star 2 if you'd like to remove a question from the queue.

Jason M. Bednar: One one moment, while we poll for questions.

Operator: And the first question comes from the line of Jason Bednar with Piper Sandler. Please proceed with your question.

Jason M. Bednar: Hey, good morning.

Jason M. Bednar: Stan or Ron I wanted to start on gross margin that was really the biggest positive surprise in the quarter to us.

Jason M. Bednar: By our model you were at a record high and Thats in spite of volumes, maybe being a touch lighter than we would've thought it doesn't seem like segment mix explains the entirety of that margin result, So just wondering if you can unpack for us the drivers here that pushed you to nearly 32% gross margin in the quarter.

Jason M. Bednar: And then could you also speak to the confidence in this line or the sustainability of this performance as we look over the balance of the year? You know, can gross margins stay up near this level? Hi Jason, I'll start, and I'll let Stanley jump in if there's anything he wants to add to this.

Jason M. Bednar: And then could you also speak to the confidence in this line or the sustainability of this performance as we look over the balance of the year gross margin stay up near this level.

Jason M. Bednar: Yes.

Speaker Change: Hi, Jason I'll start and I'll, let Steve jump in if he wants to add on this I think.

Stanley: It is largely mix I mean, we have had a little bit of depression and the distribution businesses as we continue to come out of the cyber incident.

Ronald N. South: We're happy with the growth we're seeing in value added services.

Ronald N. South: Very happy with.

Ronald N. South: While it has been a challenging end market on some of the specialty sides with some of the growth we're getting there.

Ronald N. South: So.

Ronald N. South: The mix on the top line is helping with that gross margin.

Ronald N. South: But it is consistent with our strategy. That's why we did the acquisitions. We did last year. These are higher margin businesses and as we said in the prepared remarks. These are these businesses will start contributing.

Ronald N. South: Growth on that on that gross margin.

Ronald N. South: Will it be the same for the balance of the year.

Ronald N. South: A lot of that will depend on the ongoing recovery that we're seeing, but I do think that it is consistent with our expectations and with the. So thank you, Ron.

Ronald N. South: That will depend on the ongoing recovery that we're seeing and the distribution businesses, but I do think that.

Ronald N. South: It is consistent with our expectations and with our strategic plan.

Stanley M. Bergman: Jason, as you know, we have been investing in high-growth, high-margin businesses for the past several years. And last year we had... quite a bit in that direction. Not all of those have been in place. But in general, the mix towards high growth, high margin has increased. Number one.

Speaker Change: So thank you Ron.

Ronald N. South: Jason as you know we have been investing in high growth high margin businesses for the past several years.

Stanley M. Bergman: Last year, we had.

Stanley M. Bergman: Quite a bit in that direction not all of those have been in place.

Stanley M. Bergman: For the full year, but.

Stanley M. Bergman: In general the <unk>.

Stanley M. Bergman: Towards high growth high margin has increased.

Stanley M. Bergman: Number two, the margins on the distribution side are doing quite well. We did offer quite a few discount programs in the fourth quarter, a little bit in the first quarter, but not much, and generally, we're restoring margins quite nicely on the distribution side, which helped drive the gross margin up. And as Rahm said, we're quite comfortable with the fact that we're going to continue in this direction going forward. All right. Very helpful, both of you.

Stanley M. Bergman: Number one number two the.

Stanley M. Bergman: Margins on the distribution side are doing quite well.

Stanley M. Bergman: We did offer quite a few discount programs in the fourth quarter.

Stanley M. Bergman: A little bit in the first quarter, but not much and generally we're restoring margins quite nicely.

Stanley M. Bergman: The distribution side.

Stanley M. Bergman: Mix and the fact that our distributions.

Stanley M. Bergman: Distribution businesses are doing well from a margin point.

Stanley M. Bergman: Helped drive the margin the gross margin up.

Speaker Change: And Ah.

Stanley M. Bergman: Ron said with quiet.

Stanley M. Bergman: Comfortable with the fact that we're going to continue in this direction going forward.

Stanley M. Bergman: Yeah.

Stanley M. Bergman: Alright very helpful. Both of you.

Jason M. Bednar: And then as a follow up I wanted to ask on dental equipment.

Jason M. Bednar: I know the message last quarter was one of.

Jason M. Bednar: And that shortfall in deliveries tied to the cyber security incident, and a lot of that business, which shifted into the first quarter and eventually be realized.

Jason M. Bednar: Dental equipment didn't show as much growth as what we were looking for.

Jason M. Bednar: What was the shift down in the fourth quarter, maybe just simply not as large as we would have thought we were just over modeling that.

Speaker Change: Yes, I guess it was that consistent with your expectations. What you saw in the first quarter and then just trying to understand I. Appreciate the comments on the outlook for dental equipment. This year, but really trying to see relative to where we were a few months ago, if youre seeing private practices or dsos, taking any kind of different approach with their capital equipment equipment budgets or is it really just status quo out there.

Stanley M. Bergman: So it's hard to gauge exactly how much business was slipped from one quarter to the other Jason.

Stanley M. Bergman: Remember also equipment people in the fourth quarter last year were very much engaged in providing support to customers during the incident period and that actually.

Stanley M. Bergman: Took up a lot of their time.

Stanley M. Bergman: So I'm not saying we lost that business to our competition, but our equipment people are used to going into dental offices to identify opportunities and harvest those opportunities. We were on a relative pause in the fourth quarter with the hunting for new equipment. We've restored basically the equipment backlog to where it was in the pre-pandemic period. We think that the market is quite good. Traditional equipment has stabilized.

Stanley M. Bergman: So I'm not saying, we lost that business to our competition, but equipment.

Stanley M. Bergman: Equipment people are used to going into dental offices.

Stanley M. Bergman: <unk> identified opportunities and harvest those opportunities we were on a relative pause in the fourth quarter with the hunting for new equipment.

Stanley M. Bergman: We've restored basically the equipment backlog to where it was.

Stanley M. Bergman: The pre pandemic period.

Stanley M. Bergman: We think that the market is quite good.

Stanley M. Bergman: The traditional equipment has stabilized.

Stanley M. Bergman: It's not where it was during the peak, post-COVID recovery period, but it's stabilized, and it's quite good. The whole CAD-CAM area is doing quite well. Pricing has stabilized. Don't think the, uh..., discounting we saw several quarters ago is in place any longer. It's pretty stable. But it doesn't mean that there may not be a newer unit coming out. Less features and a lower price in the future, but I don't think that will cannibalize the business today.

Stanley M. Bergman: It's not where it was during the peak in the post Covid recovery period, but it's stabilized and it's quite good.

Stanley M. Bergman: CAD Cam area.

Stanley M. Bergman: Is doing quite well.

Stanley M. Bergman: Pricing has stabilized.

Stanley M. Bergman: Zinc.

Stanley M. Bergman: The discounting we saw several quarters ago is in place any longer it's pretty stabilized.

Stanley M. Bergman: Doesn't mean that that may not be a new unit coming out.

Stanley M. Bergman: Less features lower price in the future, but I don't think that will cannibalize the business today.

Stanley M. Bergman: Where we were a little bit surprised was in digital imaging, which decreased slightly. I'm not sure if that is a temporary situation that may be there for a couple of quarters. We've seen this in the past. I don't believe it's a permanent issue.

Stanley M. Bergman: Where we were a little bit surprised as digital imaging.

Stanley M. Bergman: Which decreased slightly.

Stanley M. Bergman: I'm not sure if that is a temporary situation.

Stanley M. Bergman: May be there for a couple of quarters with seamless in the past.

Stanley M. Bergman: I think digital imaging needs to grow, but we did seem to see a bit of a pause. Light, by the way, we saw a pause.

Stanley M. Bergman: I believe it's a permanent issue I think digital imaging.

Stanley M. Bergman: But we did seem to see a bit of a pause right by the way we saw a pause and cadcam equipment on the milling side, a few quarters ago. That's come back. So overall I think it's best to be a little bit cautious.

Stanley M. Bergman: Cat-Cat equipment on the milling side a few quarters ago, and that's come back. So overall, I think it's best to be a little bit cautious and project modest growth. I hope that it will be a little bit higher than that, but we're taking a more cautious approach at this time. I don't think private practices have pulled back a lot. There's a little bit because of the interest rates. Excuse me, a few of the larger DSOs have paused a bit, but on the other hand, there are a lot of DSOs that are actually in the market right now and are buying equipment and actually installing it. So, it's a mixed bag over there.

Stanley M. Bergman: And project.

Stanley M. Bergman: Modest growth hopeful that it'll be a little bit higher than that but we're taking a more cautious approach at this time.

Stanley M. Bergman: I don't think private practices have pulled back a lot theres, a little bit because the interest rates.

Stanley M. Bergman: [laughter] excuse me at a few of the.

Stanley M. Bergman: Larger dsos have paused a bit but on the other hand, there are a lot of dsos that actually in the market.

Stanley M. Bergman: Now and buying equipment and actually installing.

Stanley M. Bergman: Equipment, so it's a mixed bag over there.

Stanley M. Bergman: [laughter].

Operator: And the next question comes from the line of John Block with Stiefel. Please proceed with your question. Thank you. Good morning.

Stanley M. Bergman: And the next question comes from the line of Jon Block with Stifel. Please proceed with your question.

John Block: Alright, Thank you good morning.

John Block: Sterling, maybe you could provide.

John Block: Some more color on the implant market growth.

John Block: How youre bearing from a share perspective, you know what I don't know maybe that worldwide market is growing.

John Block: Low single digits. It seems like you guys grew low single digits in implants in the quarter on an organic basis, but I think you're under indexed in China relative to peers, where a good amount of growth came from in terms of the other players. So do you feel like youre, capturing share more prominently sort of on an apples to apples base.

John Block: <unk>, where you guys actually compete and then I'll ask my follow up.

Speaker Change: Yes, it's a very good question I'm glad you asked that because there's a lot of confusion first of all we.

Stanley M. Bergman: First of all, we do not really participate in a significant way in the Chinese market. We do have, our Medentis business does some work in China, we have a little bit of a catalogue, and that business has not really been affected. I'm sure I'll have to be small.

Stanley: We do not really participate in a significant way in the Chinese market.

Stanley M. Bergman: We do have.

Stanley M. Bergman: Our <unk> business does some work in China, we have a little bit of catalog.

Stanley M. Bergman: That business has not really been impacted.

Stanley M. Bergman: The shelf would be small.

Stanley M. Bergman: While the implant market, end markets are experiencing selective pockets of price-sensitive... And that's mainly in the full arch implant. I think it's very important to understand that this has not directly impacted our business, as a price point is lower than other premium brands. And our customers are generally less focused on the full arch. But I think that's very, very important. There are small groups of customers that are focused on price and value, and that we have the sun to compete with now.

Stanley M. Bergman: While the implant markets and market.

Stanley M. Bergman: Is experiencing selected pockets of price sensitivity.

Stanley M. Bergman: And that's mainly in the full arch implants.

Stanley M. Bergman: I think it's very important to understand.

Stanley M. Bergman: That this has not directly impacted our business.

Stanley M. Bergman: As our price points.

Stanley M. Bergman: It's slower than other premium brands.

Stanley M. Bergman: And our customers are generally less focused on the full arch procedure.

Stanley M. Bergman: I think that's very fair and cool.

Stanley M. Bergman: They are small groups of customers that are focused on price.

Stanley M. Bergman: The value offering.

Stanley M. Bergman: And that we have to compete with now.

Stanley M. Bergman: Our product line.

Stanley M. Bergman: [inaudible] has generally been well-priced in the premium area. I think some of our competitors have had to come down to art prices. But overall... Generally, we're very well priced in the premium area. We've been viewed as a discount. If you will, our premium products and the quality of our products are very good, and available at relatively favorable prices to both private practitioners and to DSOs.

Stanley M. Bergman: Has generally been well priced in the premium area.

Stanley M. Bergman: I think some of our competitors have had to come down to pricing, but overall.

Stanley M. Bergman: Generally we are very well priced in the premium area, we've been viewed as a discounter.

Stanley M. Bergman: If you will of premium products.

Stanley M. Bergman: Relative to our products are very good.

Stanley M. Bergman: And the available at relatively favorable pricing.

Stanley M. Bergman: <unk>.

Stanley M. Bergman: Practitioners and to Dsos.

Stanley M. Bergman: So.

Stanley M. Bergman: I think, uh... Part of the market we participate in has not really been as affected from our point of view as perhaps some others. And, of course, the favorable launch in Germany of the... Easy 2 implant system, qualitatively it's good, it's a good price, has helped us in Germany, where we have a very strong market share and when we introduce new products, they're generally well-received in Germany.

Stanley M. Bergman: I think.

Stanley M. Bergman: But part of the market.

Stanley M. Bergman: Participated has not really been impacted from our point of view.

Stanley M. Bergman: Some others.

Stanley M. Bergman: Of course, the favorable launch in.

Stanley M. Bergman: In Germany.

Stanley M. Bergman: The.

Stanley M. Bergman: Easy to implant system qualitatively. It's good it's a good price has helped us in Germany, where we have a very strong market share and when we introduce new products.

Stanley M. Bergman: They are generally well received in Germany.

Stanley M. Bergman: The customers understand that the value is good and the product is well tested. And we actually think that with customers being focused practitioners on price, we are well positioned to expand our market share. Continue to expand, if you will. And we have, in the United States, this new bone level implant with a deep conical connection, and others who have proven technology that we believe will expand our market position and our opportunities, quite significantly, significantly in North America.

Stanley M. Bergman: The customers understand that the value is good and the product is well tested.

Stanley M. Bergman: And we actually think that with customers being focused practitioners on price, we are well positioned to expand our market share.

Stanley M. Bergman: I will continue to expand if you will and we have in the United States. This new bone level implant with a deep clinical connection.

Stanley M. Bergman: It's proven technology that we believe will expand our market position and opportunity.

Stanley M. Bergman: Quite significantly significantly in North America.

Stanley M. Bergman: The U.S. to start with, where there's a dressable market that we really haven't been able to address. It could be as much as 40 to 50 percent of the market that we haven't been able to address that we will be able to address with our new product launch later. Got it. That was great. That was very helpful. And maybe just a quicker one, Ron, for you.

Stanley M. Bergman: U S to start with is addressable market that we really haven't been able to address it could be as much as 40% to 50% of the market that we haven't been able to address that we will be able to address with our new product launch later this year.

Stanley M. Bergman: Got it that's great. That's very helpful and maybe just a quick one Ron for you industry was 9% or even below that top line. We were in <unk> for 2024 anyway, but I'm just still looking for a little clarity on where the top end of the sales guidance is call it being lopped off in other words.

John Block: Is it market related is it lower trajectory of cyber security recapture is it stronger dollar or all the above when we think about things relative to February thanks for your time.

Ronald N. South: Yeah, John, there's not a whole lot of fluctuation that we're expecting on FX. I think we can kind of carve that piece out; that might be a minor impact. We still expect acquisitions to have a similar contribution than what we were saying with the original guidance as well. So it really comes back to that, you know, kind of end markets a little bit on, more on the distribution side, whether that be cyber recovery or end markets. As you can appreciate, as we get further and further out from the cyber incident, that assumption gets a little softer in terms of which is which, right?

Speaker Change: Yes, John it's not there's not a whole lot of fluctuation that we're expecting.

Ronald N. South: On FX. So I think we can kind of carve that piece out of it that might be a minor impact we still expect acquisitions to have a similar contributions and then what we are saying with the original guidance as well. So it really comes back to that kind of end markets a little bit on more on the distribution side.

Ronald N. South: <unk>.

Ronald N. South: Whether that be cyber recovery of our end markets. As you can appreciate as we get further and further out from the cyber incident.

Ronald N. South: That assumption gets a little softer in terms of which is which right. So we're really looking at the market as well.

Ronald N. South: So we're really looking at the market as we like. The progress we made during the quarter with the so-called sales recovery of certain customers. We think we can maintain that momentum into the year, but as we look at the different projections there, we kind of played it out, and we thought 8-10% would ultimately get us to a more accurate revenue reading than the original. Please proceed with your question. Great.

Ronald N. South: We liked.

Ronald N. South: The progress we made during the quarter with sales.

Ronald N. South: Comp sales recovery.

Ronald N. South: Certain customers.

Ronald N. South: We think we can maintain that momentum into the year, but they are.

Ronald N. South: As we look at the different projections, there, we kind of played it out and we've got 8% to 10% with ultimately.

Ronald N. South: Get us to a more accurate revenue readings in the original eight to 12.

Ronald N. South: Okay.

Ronald N. South: And the next question comes from the line of John <unk> with J P. Morgan Jason <unk> Company. Please proceed with your question.

Speaker Change: Great. Thanks for taking my question just on the technology side I appreciate that the change cyber security event impacted.

John Paul Stansel: Thanks for taking my question. Just on the technology side, I appreciate that the recent cybersecurity event impacted the business a little bit here. A. Is it the right way to think about performance impact as kind of the difference between that 3.2% global internal growth and, say, like a mid-single to high-single-digit growth number that you would kind of have been producing over the last few quarters? And then B, just what portions of the business were directly impacted, and kind of how are you seeing the health of dentists as they kind of manage through these kinds of claims processing and benefit verification headwinds?

John Paul Stansel: The business a little bit here.

John Paul Stansel: Is it the right way to think about performance impact as kind of the difference between that three 2% global internal growth and saying like a mid single to high single digit growth number that you would kind of had been producing over the last few quarters and then b just what portions of the business, where we are directly impacted and kind of how are you seeing the health of.

John Paul Stansel: Ventas has that kind of managed through through these kind of claims processing and benefit verification headwind. Thanks.

John Paul Stansel: Yeah, John, on the change health care effect, what we did see with Henry Schein 1 is that we had relatively steady revenue growth during the quarter that stagnated a bit in March, and that's what we attributed to what we saw with change. We have seen the company return to a more normal level of growth. Since then, so to your original question, yeah, our expectations for Henry Schein 1 and all the technology side were that, you know, there would be better growth than that 3% plus you saw in the old CI, so we do expect that to be higher.

John Paul Stansel: Yes, John on the on the change healthcare effect, but we did see with Henry Schein. One is that we had relatively steady revenue growth during the quarter that stagnated a bit.

John Paul Stansel: March and Thats attributed to what we saw with.

John Paul Stansel: With change.

John Paul Stansel: We have seen the company returned to a more normal level of growth.

John Paul Stansel: So to your to your original question.

John Paul Stansel: Yes.

John Paul Stansel: Our expectations for Henry Schein, one and all the technology side was that there would be better growth in that 3% plus you saw on the OCI. So.

John Paul Stansel: We do expect that to be higher.

John Paul Stansel: And as we come out of the kind of disruption that was caused by the change management cyber incident, we've. The change management issue was interesting in the perspective that it did create a bit of a cash crunch for some of our customers, but we were able to help alleviate that through some assistance through revenue cycle management tools that we had. But we did also extend terms to some customers. We also did seek, and they pulled back on perhaps acquiring new technology products for a period of time.

John Paul Stansel: And as we come out of the kind of the disruption that was caused by the change management cyber incident, we believe that we will achieve that projection.

John Paul Stansel: Ed.

John Paul Stansel: The change management issue was interesting in the perspective that it did create a bit of a cash crunch for some of our customers. We were able to help alleviate that through some assistance through revenue cycle management tools that we had.

John Paul Stansel: But we did also extend term system customers.

John Paul Stansel: Also did seek.

John Paul Stansel: They pulled back on.

John Paul Stansel: Perhaps acquiring new technology products for a period of time and Thats, where we saw the stagnation in revenues at Henry Schein, one, but I do think that.

Ronald N. South: And that's where we saw stagnation in revenues at Henry Schein. But I do think that, quite frankly, we expected, overall, we expected, for example, to have better operating cash flow in the quarter, but our receivable balances were still slightly more elevated than what we originally expected because of a lot of practices that were kind of managing cash as they worked their way through that disruption. But we're seeing things get back to normal with that.

Ronald N. South: And quite frankly, we expected overall, we expected for example to have better operating cash flow in the quarter, but our receivable balances.

Ronald N. South: So slightly more elevated than what we originally expected because of a lot of practices that we're kind of managing cash.

Ronald N. South: As they work their way through that disruption, but we're seeing things get back to normal with that so.

Ronald N. South: I do believe that our technology business, and as we mentioned in the prepared remarks, there are some new products, some new software products that we're launching that we're introducing to customers that we think will be.., http://TheBusinessProfessor.com, John, let me just add one more comment to what Ron said, and Ron provided a very good answer. Our ability to immediately, within 48 hours, process claims through alternate methodologies was very well received.

Ronald N. South: I do believe that.

Ronald N. South: Our technology business and as we mentioned in the prepared remarks, there are some new products. Some new software products that would be that we're launching so we're introducing to customers that we think will continue to to support that growth going forward.

Ronald N. South: Sean.

Speaker Change: Let me just add one more comment to what's wrong sitting on quite a very good offline.

Speaker Change: Our ability to immediately within 48 hours process claims.

Speaker Change: Alternate methodology was very well received and we've said that it took up a lot of resources that perhaps should be focused on sales.

Stanley M. Bergman: Having said that, it took up a lot of resources that perhaps should have been focused on sales, and we're focused on ensuring that our customers were able to process their claims but, more important, answer problems that emerged as a result of... issues with Chase. I would say that a huge number of dentists are most appreciative of Henry Schein's quick response. They were involved in basic operational issues, and their practices took a lot of their resources; we helped them, and it took a lot of ours.

Stanley M. Bergman: And we're focused on ensuring that our customers.

Stanley M. Bergman: We're able to process the claims.

Stanley M. Bergman: More importantly, and problems that emerged as a result of.

Stanley M. Bergman: The issues with change.

Stanley M. Bergman: I would say Thats a huge number of dentists are most appreciative of Henry Schein quick response.

Stanley M. Bergman: Uh huh.

Stanley M. Bergman: They were involved in basic operational issues in their practices took a lot of their resources, we help them. It took a lot of hours.

Stanley M. Bergman: And so they were also focused on managing their cash. I think we're largely out of that. Although these claims are not being processed through Change but are being processed through an alternative provider that we have a relationship with. Great, thanks.

Stanley M. Bergman: So we're also focused on managing their cash.

Stanley M. Bergman: I think we've largely out of that.

Stanley M. Bergman: Although.

Stanley M. Bergman: These claims are not being processed through change, but are being processed and alternative provider.

Stanley M. Bergman: You have a relationship with.

John Paul Stansel: And then just one on the medical distribution business, there's been a lot of discussion in the market, albeit more on the inpatient side, or for medical distributors around kind of competitive balance and different net wins on contracts. How are you seeing the competitive balance between distributors in the alternative side of care market, and how that's driving different competition? I don't think that's an issue for us.

Speaker Change: Great. Thanks, and then just one on the medical distribution business.

John Paul Stansel: There's been a lot of discussion in the market, albeit more on the inpatient side for medical distributors around kind of competitive balance in and different net wins.

John Paul Stansel: Contracts, how are you seeing the competitive balance between distributors in the alternative side of care market and how thats driving different different competition.

John Paul Stansel: I don't think that's an issue for us.

John Paul Stansel:

Stanley M. Bergman: There's a lot going on, I think. Some of the other parts of distribution on the drug side, maybe on the med-cert side with acute care settings. I think we're still doing pretty well with winning these awards.

John Paul Stansel: A lot going on I think with some of the other parts of distribution on the drug side, maybe on the <unk> side.

Stanley M. Bergman: With our acute care settings.

Stanley M. Bergman: I think we're still doing pretty well.

Stanley M. Bergman: Winning these awards I think we've got a business is largely restored.

Stanley M. Bergman: Our business is largely restored, from a I mean, it's fully restored, we think, from a large customer IDN point of view. There is some generic pricing pressure. The Bulletproof Executive 2013, But if you take that out of it, and you take out of it the...

Stanley M. Bergman: From a I mean, it's fully restored we think from a <unk>.

Stanley M. Bergman: Large customer at the end point of view.

Stanley M. Bergman: There is some generic pricing pressure.

Stanley M. Bergman: Generic drug pricing pressure on the other hand, thats pretty good for profits.

Stanley M. Bergman: But if you take that out of it and you take out of it.

Stanley M. Bergman: The Lumpiness of the Tests I think you'll see our medical business is in pretty good shape. We are continuing to win awards, new awards, and we're not really losing any existing customers. Don't think about what's being experienced in other parts of healthcare. Distribution is impacting us. We're very isolated from... what others are going through.

Stanley M. Bergman: Although the Lumpiness of the test I think you'll see our medical business is in pretty good shape. We are continuing to win awards, New awards, and we're not really losing any existing customers.

Stanley M. Bergman: I don't think what's experience being experienced in other parts of healthcare.

Stanley M. Bergman: Distribution is impacting us.

Stanley M. Bergman: Very isolated from.

Stanley M. Bergman: What others are going through.

Stanley M. Bergman: We have a very unique service, highly appreciated, and our customers were very loyal to us on the IDN and group side. During the incident, we still had some of this business, looking for pricing, but that's in the smaller practice; we call it episodic. And we're recovering and working on that, just like we're doing on the down side. But the infrastructure is in place to service these larger customers, the IDNs, and the groups. Practices that are highly, highly appreciated.

Stanley M. Bergman: Have a very unique service.

Stanley M. Bergman: I appreciate it and our customers were very loyal to us on the IV and group side.

Stanley M. Bergman: During the incidents we still have some of this.

Stanley M. Bergman: Business with customers.

Stanley M. Bergman: Looking for pricing, but thats in the smaller practice called episodic and we are recovering and working on that just stuck we're doing on the dental side, but the infrastructure is in place the service fees.

Stanley M. Bergman: Larger customers the IV ends in the group.

Stanley M. Bergman: Practices that is highly highly appreciate it that's not the issue at all.

Stanley M. Bergman: For us.

Stanley M. Bergman: It's not an issue at all for us, and the next question comes from the line of Jeff Johnson with Baird. Please proceed with your question. Thank you. Good morning, guys.

Stanley M. Bergman: And the next question comes from the line of Jeff Johnson with Baird. Please proceed with your question.

Jeffrey D. Johnson: Thank you good morning, guys I wanted to talk about the North American dental consumables number that you put up the down five I think if we adjust for that.

Jeffrey D. Johnson: Cyber number you said, a three to 400 basis points down one to two.

Jeffrey D. Johnson: Pretty well with some of the independent industry data that came out in <unk> I think it showed the north American market on the merchandise side down.

Jeffrey D. Johnson: A couple percentage points on a revenue basis as well so.

Jeffrey D. Johnson: One is that your take on the market the market's kind of down in that low single digit negative range right now and you guys are kind of in line at Ciber.

Stanley M. Bergman: And two I think the other interesting thing in that independent data was that volumes were actually up a couple of points, but revenue is down a couple points. So maybe what are you seeing your customers doing from a trading down from maybe premium brand into other kind of lower price branded or even your private label products is there been a change in that dynamic over the last 612 months relative.

Stanley M. Bergman: The historical thank you.

Stanley M. Bergman: And Jeff, you're asking, again, another good question here. I think pricing is relatively stable. If you look at the raw data, and we look at that, of course, from our database, inflation is maybe one to two percent. Having said that, there's also movement towards a corporate brand, and that kind of washes out a big part of that one to two percent. There could be, in some areas, a few fewer units. Take out the glove business, where there is definitely some pricing pressure, and there continues to be. I think Ron described that as 60 basis points or so company-wide, and dinner was within that range as well.

Stanley M. Bergman: Jeff.

Speaker Change: Asking another good question here.

Stanley M. Bergman: I think pricing is relatively stable.

Stanley M. Bergman: If you look at raw data when we look at that of course from our database.

Stanley M. Bergman: Inflation is maybe 1% to 2%.

Stanley M. Bergman: Having said that there's also some movement towards corporate brands.

Stanley M. Bergman: And.

Stanley M. Bergman: That kind of washes out a big part of that 1% to 2%.

Stanley M. Bergman: There could be a few in some areas.

Stanley M. Bergman: It's less take out the gloves business, where there is.

Stanley M. Bergman: Definitely some pricing pressure continues to be I think Ron.

Stanley M. Bergman: I'll describe that a 60 basis points or so companywide.

Stanley M. Bergman: I think pricing is stabilized. I think our margins are pretty stable. Manufacturers, some of the bigger ones, I understand they probably have to be more competitive, and the little guys, the mid-sized practices, are continuing to do okay. But I would say this quarter it's a lot more stable than it was, say, two or three quarters ago. So I think pricing has stabilized, and margins have stabilized. [inaudible] Our challenge is the recovery. Episodic customers, not the large group practices or the mid-sized practices we actually think we're gaining. So, um... We have to just continue with the episodic story.

Stanley M. Bergman: Dental is within that range as well I think pricing has stabilized I think.

Stanley M. Bergman: Our margins are pretty stable.

Stanley M. Bergman: Manufacturers some of the bigger ones are understanding they.

Stanley M. Bergman: Probably have to be more competitive and the little guys. The midsized practices are continuing to do okay, but I would say this quarter. It's a lot more stable than it was say two or three quarters of the.

Stanley M. Bergman: So I think pricing has stabilized and margins have stabilized.

Stanley M. Bergman: And our.

Stanley M. Bergman: Our challenge is the recovery.

Stanley M. Bergman: Episodic customers not the large group practices not the midsized practices, we actually we think we're gaining.

Stanley M. Bergman: So.

Stanley M. Bergman: We have to just continue with the episodic.

Stanley M. Bergman: Those that buy through our website. Comparing prices, that's where we have to do our work. All right. That's helpful. Thank you, Stanley.

Stanley M. Bergman: Those that buy through our website.

Stanley M. Bergman: Competitive process, that's where we have to do.

Speaker Change: Alright Thats helpful. Thank you Stanley and then Ron maybe just one quick follow up just on that three to 400 basis points cyber impact would it be fair to us for us to split that kind of over your medical and your dental business combined is about equal impact there you've mentioned, both these episodic and larger customers I think in your prepared remarks in both.

Ronald N. South: Areas number one and number two do we look at that three to 400 basis points as being kind of stable is there anything you can say about kind of maybe the exit in March recapture rate versus kind of how you went into the year, just where to think maybe where that three to 400 basis points.

Ronald N. South: Pressure from cyber those over the next quarter or two thanks.

Speaker Change: To answer the first part of your question, Jeff Yes.

Ronald N. South: The spread and the impact on dental and medical was pretty consistent right.

Ronald N. South: There's not the ones bearing the brunt more so than the other.

Speaker Change: I would say.

Elizabeth Hammell Anderson: It's difficult to assess kind of going forward like I said, it's the further out we get from from the cyber incident to determine how much of the revenue base and how much of the market share that we're managing.

Elizabeth Hammell Anderson: Attributable to cyber that gets more and more difficult, but we have taken a look at this and any impact on revenues that we believe we have out there is contemplated in the revenue guidance and the related impact on earnings has been contemplated when we have the <unk>.

Elizabeth Hammell Anderson: Formation of the EPS guidance as well.

Ronald N. South: And the next question comes from the line of Elizabeth Anderson with Evercore ISI. Please proceed with your question.

Elizabeth Hammell Anderson: Hi, guys. Thanks, so much for the question how.

Elizabeth Hammell Anderson: I was wondering about the medical environment, you know. We have heard of higher sort of outpatient utilization trends broadly in the market. How do we think about some of those trends continuing and sort of the ordering patterns between like procedures for some of your ambulatory surgical clients and then sort of the impact on their ordering as we move through the year? So Elizabeth, I think the shift from the acute care setting to the alternate care setting for procedures continues. I don't think it was more profound this quarter than in the past year or two. I don't think there's any show.

Elizabeth Hammell Anderson: How does that medical environment.

Elizabeth Hammell Anderson: <unk> heard of hiring.

Elizabeth: And then sort of the impact on there they're ordering asking yeah.

Elizabeth: So Elizabeth.

Elizabeth Hammell Anderson: Think.

Elizabeth: The shift from the.

Elizabeth: Acute care setting to the alternate care settings for procedures continues.

Elizabeth: I don't think it was more profound this quarter then.

Elizabeth: First year or two.

Elizabeth: I don't think Theres any shift significant shift in either increase or decrease in procedures in any one or two procedures maybe they are.

Elizabeth: Related procedures I don't know, but in general the major procedures are consistent from our point of view from quarter to quarter.

Stanley M. Bergman: [inaudible] And it's a growing area from our point of view, both in terms of some internal growth with existing... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... Surgery Centers, ASCs, and also we're gaining new accounts in that area. So it's pretty much consistent that procedures are moving, from the acute care setting to the ultimate care setting and are relatively stable, within a particular center. Got it.

Elizabeth: And it's a growing area for my point of view, both in terms of some internal growth with existing.

Stanley M. Bergman: Uh huh.

Stanley M. Bergman: Surgery centers.

Stanley M. Bergman: And also we are getting new accounts in that area. So it's pretty much consistent the procedures are moving from.

Stanley M. Bergman: From the acute care setting to the ultimate care setting.

Stanley M. Bergman: And a relatively stable.

Stanley M. Bergman: Within a particular center.

Stanley M. Bergman: Got it.

Speaker Change: And then maybe I have a follow up as we sort of seek through some of the cost cuts et cetera, as you're moving on one of the things I noticed it seems like SG&A was a touch higher than at least we are modeling here and there.

Elizabeth Hammell Anderson: And I just wanted to understand about the cadence as we think about the back half of the year.

Elizabeth Hammell Anderson: And so does any of that impacted some of the cost restructuring.

Elizabeth Hammell Anderson: It hasn't materialized as you move across the quarters.

Speaker Change: Thank you.

Speaker Change: Yes Elizabeth.

Elizabeth Hammell Anderson: SG&A, so the whole kind of mix of the P&L. Some of the businesses that we acquired last year are going to be a little different right with.

Elizabeth Hammell Anderson: With the higher gross margins, but then greater expenses as it might relate to R&D and other other selling costs associated with some of those businesses. So thats yes.

Elizabeth Hammell Anderson: Youre seeing that show up in the consolidated P&L, a little bit more.

Elizabeth Hammell Anderson: Some of the favorability we got on the gross margin side was then offset on the SG&A side I think in terms of cadence it's going to be.

Ronald N. South: So in terms of cadence, it's going to be, you know, with these businesses having a greater importance in our P&L as we go forward. It could get a little lumpier, a little less predictive with the SG&A, but it, you know, I would suspect that over time it will be fairly consistent with what we had in the first quarter as well. And the next question comes from the line of Mike Petusky with Barrington Research. Please proceed with your question. So, Stanley, I'm wondering, you know, you've had PRISM for a few years and SHIELD, orders, I'm just curious about home health, I've got growth. I'm just curious, is home health something that you...

Michael John Petusky: With these with these businesses, having a greater importance in our P&L as we go forward.

Michael John Petusky: It could get a little lumpier, a little less predictive with the SG&A, but I would suspect that over time, it will be something fairly consistent with what we had in the first quarter as well.

Michael John Petusky: And the next question comes from the line of Mike <unk> with Barrington Research. Please proceed with your question good morning.

Michael John Petusky: So I'm wondering.

Michael John Petusky: Wondering you know you've had prism for a few years and shield Oh I would think for a couple of tough couple of quarters I'm. Just curious the home health, obviously, a large end markets, presumably opportunities for above average growth I'm. Just curious is home health as something that you.

Michael John Petusky: Sort of say, hey, we feel really good about this. We want to build something different than you thought. Thank you, Mark. Thanks for that question. OK. Solutions continues to be a big area for us going forward. We continue to expect to grow organically and make some additional investments. Our business is approaching $350 million. $20 million in a month or so.

Michael John Petusky: And sort of say hey, we feel really good about this we want to build this into something really big over time or or or is this a little bit different than you thought and maybe you could just sort of stick with the assets you have.

Speaker Change: Thank you Mark.

Michael John Petusky: <unk>.

Michael John Petusky: Okay.

Michael John Petusky: Solutions continues to be a.

Michael John Petusky: A big area for us going forward, we continue to expect to grow organically make some additional investments.

Michael John Petusky: <unk> is approaching $350 million.

Michael John Petusky: Annually.

Michael John Petusky: $40 million a month or so.

Stanley M. Bergman: And we expect that to continue to grow nicely from an organic point of view, and we will add to that platform. At the moment, we are moving those businesses to a common platform so we can provide a national service. With high customer service, we believe that the business complements our physician business very nicely, and we're very, very optimistic about our home solutions business, as well as our North American Rescue business, which provides first responder and military medical solutions to our areas, which are doing quite well in our medical portfolio.

Michael John Petusky: And we expect that to continue to grow nicely.

Stanley M. Bergman: Organic point of view, and we will add to that platform.

Stanley M. Bergman: At the moment, we are moving those businesses to a common platform. So we can provide national service.

Stanley M. Bergman: With high customer service.

Stanley M. Bergman: We believe that the business complements our physician business very nicely.

Stanley M. Bergman: ASC business and we're very very optimistic about our home solutions business.

Stanley M. Bergman: As well as our North American rescue business, which provides first responder and military medical solutions with two areas that are doing quite well in our medical portfolio.

Speaker Change: Okay, Great and then just shifting shifting to dental I guess, one of the benefits of talking to anybody yet at Henry Schein her leadership at Henry Schein, There's a lot of a lot of folks, including yourself family that had been in the chair for a long time, you've seen different markets and different challenge than all the rest.

Stanley M. Bergman: And then just shifting to dental, I guess one of the benefits of talking... Markets and Different Challenges and all. It just seems among investors right now that there's just a lot of skepticism around dental, concerns about persisting high interest. The Bulletproof Executive 2013, Pricing Compression, Imaging Products.

Stanley M. Bergman: It just seems among investors right now there's just a lot of skepticism around around dental concerns about persisting high interest rates and how that sort of flows into capital equipment decisions and concerns about pricing compression.

Stanley M. Bergman: Consumables imaging products from other things.

Stanley M. Bergman: I'm just curious, you know, when you sort of think about dental space in general right now and Sean [inaudible]. It's, I think, uh... Very good question too. The dental markets are relatively stable. If you look at the U.S., patient dental traffic in January and February was impacted by weather and some seasonal viruses. But they improved beginning in March, and again, an improvement continued through the quarter into April. I think there are.

Speaker Change: Curious you know when you sort of think about the dental space in general right now and shines position within it I mean do you think the skepticism is sort of appropriate given the given the or do you think it's appropriate for others, but maybe not as much for schein or can you just talk about historically you know the current challenges and how you see them.

Stanley M. Bergman: I'm you know given your experience things.

Speaker Change: Yes, I think.

Stanley M. Bergman: Very good question too.

Stanley M. Bergman: The dental markets are relatively stable.

Stanley M. Bergman: If you look at the U S patient dental traffic in January and February was impacted by weather.

Stanley M. Bergman: Seasonal viruses.

Stanley M. Bergman: During the flu.

Stanley M. Bergman: But improve beginning in March.

Stanley M. Bergman: Again, the improvement continued through the quarter into April.

Stanley M. Bergman: I think they are.

Stanley M. Bergman: Seasonal issues you need to take into account, weather, but overall, the U.S. dental market is stable, leaning towards some growth. I think the same would be the case globally, especially in those markets where you have government reimbursement. So it's quite stable. The Good Market. I think one has to be very careful reading the tea leaves when...

Stanley M. Bergman: Seasonal issues, you need to take into account weather, but overall the U S dental market as stable.

Stanley M. Bergman: Maybe.

Stanley M. Bergman: Leaning towards some growth.

Stanley M. Bergman: I think the same would be the case globally, especially in those markets, we have government reimbursement.

Stanley M. Bergman: So it's quite stable.

Stanley M. Bergman: It's a good market.

Stanley M. Bergman: I think one has to be very careful reading tea leaves witness.

Stanley M. Bergman: Some basis points down in one quarter, some basis points up in another quarter. I think the underlying stability remains. Yes, there's a challenge with interest rates on... High Cost Procedures, 4-1-1. $20,000, $30,000 procedures.

Stanley M. Bergman: Some basis points down in one quarter some basis points up in another quarter.

Stanley M. Bergman: The underlying stability remains.

Stanley M. Bergman: Yes, there is a challenge with interest rates on high cost procedures.

Stanley M. Bergman: For one.

Stanley M. Bergman: Implant who spoke about.

Stanley M. Bergman: 2000 $30000 procedures.

Stanley M. Bergman: Interest rates impact.

Stanley M. Bergman: The basic traffic is good.

Stanley M. Bergman: And I think these are solid markets.

Stanley M. Bergman: Change did have a little bit of an impact here in the U S, but not materially.

Stanley M. Bergman: Get out of that.

Stanley M. Bergman: Customers have a decent cash flow. Maybe some of them have had challenges with change. We had to support them, arrange financing for them, and on the equipment side, we are taking a bit of a cautious approach. We're talking about modest overall equipment sales. But the basic traditional equipment is stable; the whole digital world is growing, and I think in the long run. Area 2, so we're quite positive about dentistry and remain that way, and if you add to that the medical business, where procedures are continuing to move from the acute care setting into the ultimate care setting. There is no material movement in terms of reducing the number of procedures in any one particular area.

Stanley M. Bergman: Customers have decent cash flow, maybe some of them had challenges change we had to support them.

Stanley M. Bergman: <unk> financing for them.

Stanley M. Bergman: Uh huh.

Stanley M. Bergman: Then it's some credit terms, but overall I would say the market is stable.

Stanley M. Bergman: On the equipment side, we are taking a bit of a cautious approach.

Stanley M. Bergman: And that we've talked about the modest overall equipment sales.

Stanley M. Bergman: But the basic traditional equipment is stable the whole digital world is growing.

Stanley M. Bergman: And I think in the long run.

Stanley M. Bergman: Medium term equipment is even a good area.

Stanley M. Bergman: We're too so.

Speaker Change: We are.

Stanley M. Bergman: Quite positive about dentistry and remain that way and if you add to that the medical business.

Stanley M. Bergman: Procedures are.

Stanley M. Bergman: To move from the acute care setting into the ultimate care setting.

Stanley M. Bergman: <unk>.

Stanley M. Bergman: There's no material movement.

Stanley M. Bergman: In terms of reducing the number of procedures in any one particular area I think generally the businesses we're in.

Stanley M. Bergman: I think generally the businesses we're in are positive. We are working on recovery of our cyber business, which is related primarily to these Episodic customers, and have made quite a bit of progress in that area. So, we're quite optimistic about that. And the next question comes from the line between Justin Lin and William Blair. Please proceed with your question. Hi, good morning. Thanks for taking my questions. It's sort of a similar question to what kind of sort of came up earlier, but slightly different.

Justin Lin: A positive we are working on recovery of our <unk>.

Justin Lin: Cyber business that related primarily to these episodic customers and have made quite a bit of progress in that area too.

Justin Lin: So we're quite optimistic about the future.

Stanley M. Bergman: And the next question comes from the line of Justin Lin with William Blair. Please proceed with your question.

Justin Lin: Hi, good morning, Thanks for taking my questions.

Justin Lin: The street, just kind of miss modeled out or whats kind of the acquisition contribution, particularly from North America.

Justin Lin: Above your own expectations as well.

Ronald N. South: Yeah, Justin, that segment includes other value-added services businesses, some of which we acquired in the last year, so that showed up in the acquisition growth from those value-added services businesses who did have very good quarters. They did have very good quarters, and while they exceeded our expectations, we expect them to continue to, uh... you know, provide uh... contribute good profits going forward. Okay, got it.

Speaker Change: Yes, Justin.

Justin Lin: That segment includes other value added services businesses, some of which we have acquired in the last year. So that showed up in the acquisition growth from those from those value added services businesses, who did have very good quarters.

Ronald N. South: Good quarters, and while they exceeded our expectations, we expect them to continue.

Ronald N. South: Two to provide.

Ronald N. South: Good profits going forward.

Justin Lin: And I guess more of a high-level question here. You obviously made a number of acquisitions. Anything you would call out, you know, as surprising, whether positive or negative, relative to your expectations over the past few quarters? You know, we've been happy with all of them. Some did better than others in the early stages.

Speaker Change: Okay got it.

Speaker Change: And I guess more of a high level question here.

Justin Lin: You, obviously made a number of acquisitions.

Justin Lin: Anything you would call out.

Justin Lin: Pricing what are positive or negative relative to your expectations over the past few quarters.

Justin Lin: We've been happy with all of them, some do better than others in the early stages.

Ronald N. South: You know, we are busy integrating our large implant acquisitions we did last year. Biotech, which has now annualized, that'll show up as internal growth beginning in the second quarter. We're also integrating SIN, the implant manufacturer in Brazil. That will annualize on the 1st of July, so the second quarter will be the last quarter.

Ronald N. South: The implant manufacturer in Brazil that will annualize first of July.

Ronald N. South: Second quarter will be the last quarter that shows up as acquisition growth for the back half of the year, we'll be reporting those those numbers as part of our our internal growth with the contributions we get for those two businesses.

Ronald N. South: Very happy with what we're seeing on the in the home solutions business. There was an earlier question. There do we do we see that as an area for growth going forward I think the answer is definitely yes.

Ronald N. South: So we're very pleased with how we've been able to capitalize on the acquisition of SHIELD that we did last year, as well as Mini Pharmacy. And then also on the value-added services side, this is becoming a more and more important part of our approach to our customers in terms of helping them run more profitable practices, including when they want to exit their practices, and large practice sales has been a very successful acquisition for us as well.

Ronald N. South: So we're very pleased with with.

Ronald N. South: How we've been able to capitalize with the acquisition of shield that we did last year as well as many pharmacy.

Ronald N. South: And then also on the value added services side. This is becoming a more and more important part of the of our approach to our to our customers in terms of helping them run more profitable practices, including when they when they want to exit their practices and large practice sales has been a very a very successful acquisition for us as well. So I think when you go.

Ronald N. South: So I think when you go down the list, and I hate to keep listing them because it's, you know, you don't want to leave somebody out, but they have all done a great job, and we've been very happy with the, you know, with these acquisitions and the returns they're providing us. We have time for one last question coming from the line of Kevin Caliendo with UBS. Please proceed with your question. Thanks. Thanks for squeezing me in.

Kevin Caliendo: On the list and I hate to keep lifting them because you don't want to leave somebody out but they have all done.

Kevin Caliendo: We've been very happy with the with these with these acquisitions and the returns are providing us so far.

Ronald N. South: We have time for one last question coming from the line of Kevin Caliendo with UBS. Please proceed with your question.

Kevin Caliendo: I appreciate it. A lot of comments around April and the back half of the year. New product launches and the like. There are so many moving parts to M&A and the like. Can't, Ron, maybe you can just give us an update on the cadence of what you expect revenue growth and earnings to be? Is 2Q trending as you thought? Just trying to understand, because there are so many moving parts, is this going to be a typical seasonality in terms of revenue growth, EVA growth, and especially EPS growth?

Kevin Caliendo: Thanks, Thanks for squeezing me in I appreciate it.

Kevin Caliendo: A lot of comments around April in the back half of the year.

Kevin Caliendo: New product launches and the like there's so many moving parts of the M&A and the like Okay. Ron maybe can you just give us an update on cadence of what you expect revenue growth and earnings to be as <unk> trending as you bought just trying to understand.

Speaker Change: Because there's so many moving parts is this going to be a typical.

Speaker Change: Seasonality in terms of.

Kevin Caliendo: Revenue growth EBIT growth, and especially EPS growth.

Kevin Caliendo: Yes, as we've said before in the prepared remarks, Kevin, that we do expect sales growth to be more significant in the back half of the year than what we see in the first half of the year. Some of that is recovery from cyber. Some of that, too, is the launches of some of the new products we're anticipating on the implant side that we talked about as well in the prepared remarks, in addition to some new technology products we have that we're launching as well. So those are all going to contribute. Our expectation is that they will contribute to greater growth in the back half of the year. And like I said before, some of this comes from the ongoing recovery from cyber.

Kevin Caliendo: Yes.

Ron: As we've said before the prepared remarks Kevin.

Kevin Caliendo: We do expect sales growth to be more significant in the back half of the year than what we've seen in the first half of the year and some of that is recovery from cyber some of that too is the in the launches of some of the new products. We're anticipating on the implant side that we've talked about as well.

Kevin Caliendo: On the in the prepared remarks. In addition to some new technology products. We have that we are launching as well. So those are all.

Kevin Caliendo: Those are all going to contribute our expectation is they will contribute to greater growth in the back half of the year.

Kevin Caliendo: And like I said before some of this comes from ongoing recovery from cyber week.

Ronald N. South: We saw encouraging recovery over the course of Q1, good momentum into Q2, but there's still some work to be done there. So we will, but we're confident that as the year goes on, we'll be able to continue to. From both a sales and an earnings perspective, my expectation is we'll see better growth in Q3, and Q4 than we have. Okay, that's helpful. And if I can just do a quick follow-up on the implant, the new products, what does this do to your portfolio of products? Is it...

Kevin Caliendo: We saw.

Kevin Caliendo: Encouraging recovery over the course of Q1, good momentum into Q2, but there's still some work to be done there. So we will but we're confident that as the year goes on we'll be able to continue to gain some market share.

Speaker Change: On the distribution side as well so.

Speaker Change: I think that the.

Ronald N. South: From both a sales and an earnings perspective, my expectation is we'll see better growth in Q3 Q4 than what we have in Q2.

Ronald N. South: Okay. That's helpful and if I can just do a quick follow up on the implant the new products. What does this do to your portfolio of products is it is it <unk>.

Kevin Caliendo: Improving what you have, you know, sort of. I've always imagined that you were sort of between value and premium. Are you expanding the sort of offering that you have? Are you improving what you have?

Speaker Change: Proving what you had started I've always envision that you were sort of between value and premium are you expanding that sort of offering that you have are improving what you have are you changing the positioning in any way shape or form of your implant portfolio with the new product launches.

Stanley M. Bergman: Are you changing the positioning in any way, shape, or form of your implant portfolio with the new product launches? In the U.S., we're expanding, and we're going into about half the market that we do not cover today? We're waiting for finalization of the approval; we expect that in the second half of the year, in International. I think our value proposition is expanding. Easy 2.0. Easy 1.0 was good, but there were a couple of features that were missing. We've added those to it.

Stanley M. Bergman: In the U S. We're expanding as we go into about half the market that we do not cover today.

Stanley M. Bergman: Waiting for <unk>.

Stanley M. Bergman: Utilization of the approval expected in the second half of the year.

Stanley M. Bergman: International I think.

Stanley M. Bergman: Value proposition is expanding.

Stanley M. Bergman: With the easy to use.

Stanley M. Bergman: <unk> one <unk> was good but there were a couple of features that we're listening to it.

Stanley M. Bergman: And it's been well received already in Germany, where we launched it in the.

Stanley M. Bergman: This quarter so on the one hand, we're entering.

Stanley M. Bergman: Entering into the part of the market.

Stanley M. Bergman: We are not in the United States.

Stanley M. Bergman: And at the same time, we are providing.

Stanley M. Bergman: A bit of value products in Europe, So generally I would say, it's a expansion of.

Stanley M. Bergman:

Stanley M. Bergman: The product offering.

Stanley M. Bergman: Yes.

Stanley M. Bergman: A bit of pricing that about them.

Stanley M. Bergman: In Europe.

Stanley M. Bergman: Okay.

Operator: Okay. Operator, thank you very much. Thank you everyone for calling in. As you can tell, the year is everyone.

Speaker Change: Okay. Operator, thank you very much. Thank you everyone for calling in.

Operator: As you can tell with.

Operator: Everyone.

Stanley M. Bergman: The year is off to a solid start. We remain enthusiastic about the markets we serve. The opportunities for growth and enhanced profitability lie ahead. We're doing quite well. We're expanding our high growth, high margin portfolio.

Operator: <unk> is off to a solid start.

Stanley M. Bergman: We remain enthusiastic about the markets we serve.

Stanley M. Bergman: Our position in the industry.

Stanley M. Bergman: The opportunities for growth and enhanced profitability lie ahead.

Stanley M. Bergman: [laughter].

Stanley M. Bergman: We're doing quite well.

Stanley M. Bergman: And expanding our high growth high margin portfolio.

Speaker Change: Excuse me.

Stanley M. Bergman: Okay.

Stanley M. Bergman: Yes.

Stanley M. Bergman: Portfolio.

Stanley M. Bergman: The Portfolio of Hydropower Margin is doing well, where we're expanding our Henry Schein orthopedic business. And overall We think our distribution businesses are in good shape, operationally fully restored. We have to deal with the episodic side of the business, which is growing, recovering nicely, but not fully back to where it was pre-infection. We're growing with our large customers in dental and medical. Henry Schein 1 continues to provide significant value to our customers, as you read. As you saw... Excuse me from the Change, Cyber, Recovery, where we played a key role in dentistry in general. Thank you for calling in. We remain most optimistic about the future.

Stanley M. Bergman: [laughter] of high growth high margin is doing well.

Stanley M. Bergman: We expect to show some decent results also.

Stanley M. Bergman: In the orthopedics section.

Stanley M. Bergman: Where are we expanding our Henry Schein orthopedic business.

Stanley M. Bergman: Okay.

Stanley M. Bergman: And overall we saw.

Stanley M. Bergman: Thank you our distribution businesses are in good shape.

Stanley M. Bergman: Operationally fully restored.

Stanley M. Bergman: We have to deal with the episodic side of the business, which is growing.

Stanley M. Bergman: Recovering nicely.

Stanley M. Bergman: But not fully back to where it was pre incident.

Stanley M. Bergman: We're growing with our large customers in dental and medical.

Stanley M. Bergman: And Henry Schein, one continues to provide significant value to our customers.

Stanley M. Bergman: As you can.

Stanley M. Bergman: As you saw.

Speaker Change: Excuse me from Lee.

Stanley M. Bergman: Change cyber recovery.

Stanley M. Bergman: When we played a key role in dentistry.

Stanley M. Bergman: General.

Stanley M. Bergman: So.

Stanley M. Bergman: Thank you for calling in.

Stanley M. Bergman: We remain most optimistic about the future.

Speaker Change: Thank you very much.

Stanley M. Bergman: Thank you very much. And, ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: And ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

Q1 2024 Henry Schein Inc Earnings Call

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