Q4 2024 Henry Schein Inc Earnings Call
And the answer session.
Please press the Starkey followed by one on your Touchtone phone, if you'd like to ask a question at the end of the call.
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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. Please go ahead Graham.
Speaker Change: Thank you operator.
Speaker Change: For each of you for joining us to discuss Henry Schein as financial results for the 2020 for fourth quarter.
Speaker Change: With me on today's call are Stanley Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein, and Rumsfeld, Senior Vice President and Chief Financial Officer.
Speaker Change: Before we begin I would like to state that 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 message referred to in forward looking statements on the company's performance may materially differ from those expressed in or indicated by such statements.
Speaker Change: 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.
Speaker Change: 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 analysis 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 the 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.
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 as filings with the Securities and Exchange Commission.
Speaker Change: The 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.
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 upon the company's internal analysis and estimates.
Speaker Change: Reconciliations between GAAP and non-GAAP measures are included in exhibit B of today's press release and can be found in our financials in the financials and filing section of our Investor Relations website under the supplemental information heading and in our quarterly earnings presentation also posted to our Investor Relations Relations website.
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 the 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.
Speaker Change: The content of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast February 25 2025.
The 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.
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.
Reconciliations between GAAP and non-GAAP measures are included in exhibit B of today's press release and can be found in our financials in the financials and filing section of our Investor Relations website under the supplemental information heading.
Speaker Change: Lastly, during today's Q&A session, we'll limit 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: Yes.
Stanley Bergman: Thank you Greg good morning, everyone.
In our quarterly earnings presentation also posted on our Investor Relations website.
Stanley Bergman: Thank you for joining us this morning.
The content of this conference call contains time sensitive information that is accurate only as of the date of the live broadcast February 25 2025.
Stanley Bergman: I hope that the new time is.
I appreciate it.
Speaker Change: <unk> and if not then you'll go like to go back to the latest time, please be in touch with Greg and we will take your thoughts into account.
Henry Schein undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this call.
Lastly, during today's Q&A session, we'll limit 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 Bergman: The financial results and guidance that you provided today.
Stanley Bergman: The system with the preliminary financial results and guidance provided on January 29.
Stanley Bergman: Our fourth quarter financial results reflect relatively stable dental and medical end markets.
Stanley Bergman: Thank you Greg good morning, everyone.
Thank you for joining us.
Stanley Bergman: We continue to make progress as we sunset our too.
Stanley Bergman: This morning.
Stanley Bergman: I hope that the new time is.
Stanley Bergman: 22 to 2024 volt plus one strategic plan.
Stanley Bergman: Appreciate it.
Speaker Change: Analysts and investors and if not then you'll go like to go back to the latest time, please be in touch with Greg and we will take your thoughts into account.
Stanley Bergman: Which is now completed.
Stanley Bergman: We exceeded our key goal.
Stanley Bergman: <unk>.
Stanley Bergman: As a major target in the plan of 2024 or 2024 generating 40%.
Speaker Change: The financial results and guidance being provided today are consistent with the preliminary financial results and guidance provided on January 29.
Stanley Bergman: Old wide operating income.
Stanley Bergman: From high growth high margin businesses.
Speaker Change: Our fourth quarter financial results reflect relatively stable dental and medical end markets.
Stanley Bergman: And let me remind this is another 10% or so of our.
Speaker Change: Continue to make progress.
Stanley Bergman: Profits that are coming from our own brands.
Speaker Change: As we Sunset, our 2022 to 2024 volt plus one strategic plan.
Stanley Bergman: Half of our profits to date coming.
Stanley Bergman: From.
Stanley Bergman: Yes.
Speaker Change: Which is now completed.
Stanley Bergman: Our high growth high margin and owned brand products.
Speaker Change: We exceeded our key goal.
Stanley Bergman: We have confidence in the underlying fundamentals of our business and look forward to advancing opportunities contained in our updated 25 to 27 BOE plus one strategic plan.
Speaker Change: Of.
And the major target in the plan of 2024.
Speaker Change: 2024, generating 40% worldwide operating income.
Speaker Change: From high growth high margin businesses.
Stanley Bergman: KKR announced.
And let me remind investors as another 10% or so of our profits that are coming from our owned brands.
Speaker Change: Its advancement to become our largest non index shareholder recognized.
Stanley Bergman: As they recognize the potential.
Speaker Change: Half of our profits are today coming.
Stanley Bergman: Of Henry Schein.
Stanley Bergman: We expect 2025 to be the base year from which to grow and achieve our previously provided long term goal of high single digit to low double digit earnings growth with the cyber incident now in the rearview mirror.
Speaker Change: From.
Speaker Change: Sure.
Speaker Change: Our high growth high margin and owned brand products.
Speaker Change: We have confidence in the underlying fundamentals of our business and look forward to advancing opportunities contained.
Speaker Change: Updated 25 to 27 BOE plus one strategic plan.
Stanley Bergman: As part of the launch of the updated 25, seven plus one strategic plan, we have simplified our organizational structure.
Speaker Change: Okay KR announced.
Speaker Change: It's investment to become our largest non index shareholder recognized.
Speaker Change: And appointed Andrea and Albert <unk>.
Speaker Change: As they recognize the potential.
Speaker Change: We have responsibility for our global distribution and value added services group as well as our global Technology group.
Of Henry Schein.
Speaker Change: We expect 2025 to be the base year from which to grow and achieve our previously provided long term goal of high single digit to low double digit earnings growth with the cyber incident now in the rearview mirror.
Speaker Change: The global distribution and value added services group includes distribution to the global dental and medical markets.
Our national brand and corporate brand merchandise as well as equipment and related technical services.
Speaker Change: As part of the launch of the updated 25 27, plus one strategic plan, we have simplified our organizational structure.
Speaker Change: This group also includes value added services, such as practice drive decisions.
Speaker Change: Continuing education consulting financial and other services.
And appointed.
Albert: And Albert <unk>.
Albert: They have responsibility for our global distribution and value added services group as well as our global Technology group.
Speaker Change: The global Technology Group includes development marketing and sales our practice management software <unk> services and other products and related services.
Albert: The global distribution and value added services group includes distribution to the global dental and medical markets.
Speaker Change: We also appointed Tom <unk> to lead our global specialty products group, which includes manufacturing marketing and sales of dental implant at biomaterial products.
Albert: Our national brand and corporate brand merchandise as well as equipment and related technical services.
Speaker Change: And the daunting.
Albert: This group also includes value added services, such as practice trade decisions.
Speaker Change: Ontic in orthopedic products and other health care related products and services as well as management of our corporate brands offering which is essentially distributed through distribution group.
Albert: Continuing education consulting financial and other services.
Albert: The global Technology Group includes development marketing and sales our practice management software <unk> services and other products and related services.
Speaker Change: We expect that these complementary businesses will drive growth by leveraging our current product portfolio across our entire customer base.
Albert: We also appointed Tom <unk> to lead our global specialty products group, which includes manufacturing marketing and sales of dental implant at biomaterial products.
Speaker Change: Providing new products and services to our customers and growing our e-commerce business.
Speaker Change: I think the <unk>.
Speaker Change: Relationship between each of our groups.
Albert: And the daunting.
Albert: Ontic in orthopedic products and other health care related products and services as well as management of our corporate brands offering which is essentially distributed through our distribution group.
Speaker Change: And the driving of synergies, we'll of course gross sales and related profits.
Speaker Change: We are also today announcing.
Speaker Change: A change to our reportable segments. This was all set requested by investors Julien.
Albert: We expect that these complementary businesses will drive growth by leveraging our current product portfolio across our entire customer base.
Speaker Change: Our Investor Survey some time ago.
Albert: Providing new products and services to our customers and growing our e-commerce business.
Speaker Change: And we have now.
Speaker Change: Prepared financial statements in accordance with these reporting segments and they are aligned with our management reporting.
Albert: I think the.
Albert: Relationship between each of our groups.
Speaker Change: Provide more meaningful information to investors on the business on the business performance.
Albert: And the driving of synergies, we'll of course gross sales and related profits.
Speaker Change: Who will detail the performance of each.
Speaker Change: Of these three groups in his prepared remarks.
Albert: We are also today announcing.
Albert: A change to our reportable segments. This was offset requested by investors during.
Speaker Change: We will continue to provide information on our high growth high margin products and services, but these are now included in each of our reportable segments, and which and of course.
Albert: Our Investor Survey some time ago.
Albert: And.
Speaker Change: A key metric for us to drive high growth high margin <unk>.
Albert: We have now.
Prepared financial statements in accordance with these reporting segments and they are aligned with our management reporting.
Speaker Change: Profits.
Speaker Change: Sales and profits.
Speaker Change:
Speaker Change: Our important metric.
Albert: And provide more meaningful information to investors on the business on the business performance.
Pat: For our 2025 to 2027 strategic Pat will provide you specific data on that.
Albert: Carnival detail the performance of each.
Albert: Of these three groups in his prepared remarks.
Speaker Change: Now, let's turn to review of our key business units.
Albert: We will continue to provide information on our high growth high margin products and services, but these are now included in each of our reportable segments, and which and of course, it's a key metric for us to drive high growth high margin.
Pat: Let me start by reporting on the global distribution and value added services group.
Pat: During the fourth quarter, we continued to see relatively stable patient traffic.
Pat: Market growth for dental and medical products continued to be the.
Albert: <unk> <unk>.
Albert: Sales and profits.
Pat: Below the long term guidance range, we provided at our Investor day.
Albert:
Albert: Important metric.
Pat: Partially as a result of customer migration to value priced products.
Albert: For our 2025 to 2027 strategic plan, we'll provide you that separate data on that.
Pat: Now if we look specifically at the U S dental merchandise growth.
Albert: Now, let's turn to review of our key business units.
Pat: Which was strong excluding sales of PPE.
Albert: Let me start by reporting on the global distribution and value added services group.
Pat: Personal protective equipment.
Pat: And impacted by low prior year comparable.
Albert: During the fourth quarter, we continued to see relatively stable patient traffic.
Pat: Offset by the midweek timing of Christmas.
Albert: Market growth for dental and medical products continued to be the.
Pat: Ron again will give you specifics later in the call on the U S dental equipment sales, which increased double digit and benefited from the deferral.
Albert: Below the long term guidance range, we provided at our Investor day.
Albert: Partially as a result of customer migration to value priced products.
Pat: Deferral last year of some sales in the fourth quarter of 'twenty three.
Pat: So the first quarter of 'twenty four as a result of the cyber incident.
Albert: Now if we look specifically at the U S dental merchandise growth.
Pat: We achieved strong growth in traditional equipment.
Albert: Which was strong excluding sales of PPE.
Pat: Parks and technical service.
Albert: Personal protective equipment.
Pat: Digital equipment sales also increased with the unit growth quite good offsetting.
Albert: And impacted by low prior year comparable.
Albert: Offset by the midweek timing of Christmas.
Pat: Some price declines.
Pat: On the U S medical business results reflect a late start of the flu season.
Albert: Ron again will give you specifics later in the call on the U S dental equipment sales, which increased double digit and benefited from the deferral.
Pat: And lower sales of vaccines, PPE and Covid tests.
Pat: Our home solutions business performed particularly well during the fourth quarter.
Albert: Deferral last year of some sales in the fourth quarter of 'twenty three.
Pat: In January we strengthened the business as we completed a tuck in acquisition of its centers.
Albert: So the first quarter of 'twenty four as a result of the cyber incident.
Albert: We achieved strong growth in traditional equipment.
Pat: This is adding to our <unk>.
Albert: Parts and technical service.
Pat: Offering of continuous glucose monitors.
Albert: Digital equipment sales also increased with the unit growth quite good offsetting.
Pat: An area of the homecare market by market.
Pat: Quite bullish about.
Albert: Some price declines.
Pat: Now we've increased the annual run rate in this home care solutions business. So we entered a couple of years ago.
Albert: On the U S medical business results reflect a late start of the flu season.
Pat: Proximately $400 million with significant amount of that 400 million coming from internal growth.
Albert: And lower sales of vaccines, PPE and Covid tests.
Albert: <unk> solutions business performed particularly well during the fourth quarter in January with strength of the business as we completed a tuck in acquisition of incentives.
Pat: Let's take a look now at our international dental merchandise sales, which grew strongly with good growth in Canada, and Canada announced included in the International group.
Albert: This is adding to our <unk>.
Pat: <unk> dental group.
Albert: Offering of continuous glucose monitors.
Pat: Strong growth in Canada, Europe, Brazil.
Albert: An area of the homecare market by market.
Pat: Slightly softer.
Pat: Growth in Australia, New Zealand and Asia.
Albert: Quite bullish about.
Albert: Now we've increased the annual run rate in this okay solutions business. So we entered a couple of years ago.
Pat: International equipment sales growth was solid.
Pat: From the growth in traditional equipment compared to digital equipment.
Albert: <unk> 400 million with significant amount of that 400 million coming from internal growth.
Pat: Which was.
Pat: Good good units, but digital was impacted by pricing.
Albert: Let's take a look now at our international dental merchandise sales, which grew strongly with good growth in Canada, and Canada announced included in the International group.
Pat: Similar to the U S.
A global trend.
Pat: But overall our equipment business was quite good this quarter.
Albert: <unk> dental group.
Pat: Right now, let's turn to review of the global specialty products group.
Albert: Strong growth in Canada, Europe, Brazil.
Albert: Slightly softer growth.
Pat: Which had solid growth in dental implants biomaterials ended the.
Albert: Growth in Australia, New Zealand and Asia.
Pat: Core businesses in the scripted well.
Albert: International equipment sales growth was solid with.
Pat: Our new entry into the orthopedics.
Albert: The strongest growth in traditional equipment.
Pat: Last year special well, we did have some orthopedic.
Albert: Two digital equipment.
Albert: Which was.
Pat: <unk> before but the significant investment we made last year also performed well.
Albert: Good good units, but digital was impacted by pricing all similar to the U S.
Pat: This offset this growth was offset by a decrease in the orthodontic sales.
Albert: A global trend.
Albert: But overall our equipment business was quite good this quarter.
Pat: And we're addressing that through restructuring largely a result of the.
Albert: Now, let's turn to review of the global specialty products group.
Pat: A product is important product going off patent we have a new product coming.
Albert: Which had solid growth in dental implants, biomaterials and Ddos.
Pat: Actually we have it in place now and it's getting some traction.
Albert: Our core businesses in the scripted well.
Pat: In the orthodontic field.
Pat: Implanted biomaterials sales in Europe continued to be quite strong, especially in the dark region.
Albert: Our new entry into the orthopedics.
Albert: Arena last year special well, we did have some orthopedic.
Pat: Speaking region, where our buy horizons catalog products continued to grow well.
Albert: Products before but the significant investment we made last year.
Albert: <unk> performed well.
Albert: This offset this growth was offset by a decrease in the orthodontic sales.
Pat: While the launch of Verizon's tapered probe conical implants in the U S is proceeding well.
Albert: And we're addressing that through restructuring largely a result of.
Pat: The initial sales largely coming from product conversions with existing customers.
Albert: Products and important product going off patent, we have a new product coming.
Pat: Resulting in modest incremental sales, but we expect the <unk> pro product type of approach clinical implants to be a way to generate business from new customers.
Albert: Actually we have it in place now and it's gaining some traction.
Albert: In the orthodontic field.
Albert: Implanted biomaterials sales in Europe continued to be quite strong, especially in the dark region. That's the German speaking region, where by Horizons catalog products continued to grow well.
Pat: Flat business.
Pat: Overall, our sales of dental implants in the value segment posted very strong quarterly growth.
Speaker Change: Hi, Ed product lines posted solid double digit growth in Brazil and.
Albert: The launch of Verizon's tapered probe clinical implants in the U S is proceeding well.
Speaker Change: And we continue to rollout the brand across the U S.
Albert: The initial sales largely coming from <unk>.
Speaker Change: Various segments of the market.
Albert: Conversions with existing customers.
Speaker Change: Our <unk> sales growth was strong as a result of our expanded sales focus.
Albert: Resulting in modest incremental sales, but we expect the <unk> pro product type approach clinical implants to be a way to generate business from new customers.
Speaker Change: Through our U S distribution sales channel of the edge product offering.
Speaker Change: As well as some new product introductions.
Speaker Change: It's a little bit more.
Speaker Change: Both the PD business, which continues to perform well.
Albert: Plant business.
Overall, our sales of dental implants in the value segment posted very strong quarterly growth.
Speaker Change: Including our <unk> acquisition.
Speaker Change: Which is complementary to our medical focus on afcs and specialty customers new products in both upper and lower extremities as well as good momentum with our new dedicated sales team in foot and ankle helped drive sales growth.
Albert: Ed product lines posted solid double digit growth in Brazil and.
Albert: And we continue to rollout the brand across the U S.
Albert: Various segments of the market.
Albert: Our endodontics sales growth was strong as a result of our expanded sales focus.
Albert: Through our U S distribution sales channel of the edge product offering.
Speaker Change: So this whole area of specialty is working well for us.
Speaker Change: We will.
Albert: As well as some new product introductions.
Speaker Change: Deal with the orthodontic.
Speaker Change: The downtick challenge.
Albert: It's a little bit more on ortho.
Speaker Change: But overall taking that out.
Albert: PD business, which continues to perform well.
Speaker Change: The performance is quite good.
Speaker Change: Now if you look at the technology group.
Albert: Including our <unk> acquisition.
Speaker Change: While overall sales growth was low.
Albert: Which is complementary to our medical focus on ASC and specialty customers new products in both upper and lower extremities as well as good momentum with our new dedicated sales team in foot and ankle helped drive sales growth.
Speaker Change: We had strong operating growth in the business sales continued to perform well in cloud based practice software.
Speaker Change: Management.
Speaker Change: Practice management software.
Speaker Change: And revenue cycle management also did quite well.
Actually offset by the sunsetting of certain brands.
Albert: So this whole area of specialty is working well for us.
The whole idea here is to drive towards carbon brands each type of application, we lose a little bit of business along the way, but we can provide better service and of course greater margins.
Albert: We will.
Albert: Deal with the <unk>.
Albert: Arctic Challenge.
Albert: But overall taking that out.
Albert: <unk> is quite good.
Albert: Now if you look at the technology group.
Speaker Change: And now have over nine.
Albert: While overall sales growth was low.
Speaker Change: Thousands of customers subscribe to <unk> centered entirely.
Albert: We had strong operating growth in the business sales continued to perform well in cloud based practice software.
Speaker Change: With year on year growth of approximately six 5%.
Albert: Yeah.
Speaker Change: It's very important to understand that this is a shift.
Albert: Management practice management software.
Speaker Change: From an on Prem sales through a SaaS model, which create short term headwinds on the revenue side.
Albert: And revenue cycle management also did quite well, partially offset by the sunsetting of certain brands. The whole idea here is to drive towards carbon brands. Each type of application, we lose a little bit of business along the way, but we can provide better service and of course greater margins.
Speaker Change: Which is outweighed by longer term benefits from higher recurring subscription revenues. This model is working quite well.
Speaker Change: Cost efficiencies in the business.
Speaker Change: Are there any REIT.
Albert: We now have over nine.
Speaker Change: As we merge brands.
Albert: Thousands of customers subscribe to <unk> centered entirely with year on year growth of approximately six 5%.
Speaker Change: And.
Speaker Change: This.
Speaker Change: <unk> is driving technology operating margin up this trend we expect to continue.
Albert: It's very important to understand that this is a shift.
Speaker Change: Now, let me turn the call over to Ron to review, our fourth quarter financial results and our 25 guidance around please.
Albert: From an on Prem sale to a SaaS model, which creates short term headwinds on the revenue side.
Ron: Thank you Stanley and good morning, everyone. As Stanley mentioned, we are also today announcing a change to our reportable segments to align with management reporting and provide more meaningful information for investors on the business.
Albert: Which is outweighed by longer term benefits from higher recurring subscription revenues. This model is working quite well cost efficiencies in the business.
Albert: Are there more.
Ron: The results being reported today reflect this change in our recast our prior comparative segment information has been provided in exhibit D of today's press release.
Albert: <unk>.
Albert: As we merge brands.
Albert: And.
Albert: This.
Albert: It's driving technology operating margin up this trend we expect to continue.
Ron: Turning to our fourth quarter sales results I will provide detail on total sales total sales growth as well as LCI sales growth, which was internally generated sales in local currencies compared with the prior year and excludes acquisitions.
Albert: Now, let me turn the call over to Ron to review, our fourth quarter financial results and our 25 guidance around please.
Speaker Change: Thank you Stanley and good morning, everyone. As Stanley mentioned, we are also today announcing a change to our reportable segments to align with management reporting and provide more meaningful information for investors on the business.
Ron: Global sales were $3 2 billion with sales growth of five 8% compared to the fourth quarter of 2023.
Ron: This includes <unk>, 7% growth from acquisitions, and a 0.4% decrease attributable to foreign currency exchange.
Speaker Change: Results being reported today reflect this change in our recast our prior comparative segment information has been provided in exhibit D of today's press release.
Ron: Please note that sales in the fourth quarter of 2023 were negatively impacted by the cyber security incident.
Speaker Change: Turning to our fourth quarter sales results I will provide detail on total sales total sales growth as well as LCI sales growth, which is internally generated sales in local currencies compared with the prior year and excludes acquisitions.
Ron: LCI sales increased five 5% for the quarter or six 6% when excluding lower PPE sales and cost of test kits.
Ron: Our GAAP operating margin for the fourth quarter of 2024 was $4, 86%, a 358 basis point improvement compared with the prior year GAAP operating margin.
Speaker Change: Global sales were $3 2 billion with sales growth of five 8% compared to the fourth quarter of 2023.
Ron: On a non-GAAP basis operating margin for the fourth quarter was 746%, a 260 basis point improvement compared to the prior year non-GAAP operating margin in the prior year, both the GAAP and non-GAAP operating margins were negatively impacted by the cyber security incident.
Speaker Change: This includes <unk>, 7% growth from acquisitions, and a 0.4% decrease attributable to foreign currency exchange.
Speaker Change: Please note that sales in the fourth quarter of 2023 were negatively impacted by the cyber security incident.
Speaker Change: LCI sales increased five 5% for the quarter or six 6% when excluding lower PPD sales and cost of test kits.
Ron: In the fourth quarter of 2024 operating margin benefited from lower operating expenses year over year.
Ron: As we are starting to realize cost savings from our restructuring initiatives.
Speaker Change: Our GAAP operating margin for the fourth quarter of 2024 was 486% a 358 basis point improvement compared with the prior year GAAP operating margin.
Ron: We also continued to experience year over year gross margin expansion in the fourth quarter, primarily as a result of acquisitions, we have made to advance our bolt plus one strategy.
Speaker Change: On a non-GAAP basis operating margin for the fourth quarter was 746%, a 260 basis point improvement compared with the prior year non-GAAP operating margin in the prior year in both the GAAP and non-GAAP operating margins were negatively impacted by the cybersecurity incident.
Ron: For the full year, we achieved 41% of our total operating income from high growth high margin businesses.
Ron: Fourth quarter 2024, GAAP net income was $94 million or <unk> 74 per diluted share.
Speaker Change: In the fourth quarter of 2024 operating margin benefited from lower operating expenses year over year.
Ron: This compares with prior year GAAP net income of $18 million or <unk> 13 per diluted share.
Speaker Change: As we are starting to realize cost savings from our restructuring initiatives.
Ron: Fourth quarter 2024, non-GAAP net income was $149 million or $1 19 per diluted share.
Speaker Change: We also continued to experience year over year gross margin expansion in the fourth quarter, primarily as a result of acquisitions, we have made to advance our bolt plus one strategy.
Ron: This compares with prior year, non-GAAP net income of $86 million or.
For the full year, we achieved 41% of our total operating income from high growth high margin businesses.
Ron: Or <unk> 66 cents per diluted share.
Ron: The foreign currency exchange impact on our fourth quarter diluted EPS was unfavorable by approximately 1% versus the prior year.
Fourth quarter 2024, GAAP net income was $94 million or <unk> 74 per diluted share. This.
Ron: Adjusted EBITDA for the fourth quarter of 2024 was $270 million compared to fourth quarter of 2023, adjusted EBITDA of $172 million.
Speaker Change: This compares with prior year GAAP net income of $18 million or <unk> 13 per diluted share.
Speaker Change: Fourth quarter 2024, non-GAAP net income was $149 million or $1 19 per diluted share.
Ron: Turning to our fourth quarter sales results.
Ron: We are updating the breakdown of sales as detailed in exhibit a of today's press release to reflect the updated reportable segments as well as other internal management responsibilities.
Speaker Change: This compares with prior year, non-GAAP net income of $86 million or.
Speaker Change: <unk> 66 cents per diluted share.
Ron: Of note, we are now reporting U S distribution sales instead of North America distribution sales. This means Canada is now being reported as part of international.
Speaker Change: The foreign currency exchange impact on our fourth quarter diluted EPS was unfavorable by approximately 1% versus the prior year.
Speaker Change: Adjusted EBITDA for the fourth quarter of 2024 was $270 million compared to fourth quarter of 2023, adjusted EBITDA of $172 million.
Ron: As a point of reference Canada has approximately $400 million of annual revenues approximately two thirds of those revenues are merchandize sales with the remaining one third is equipment sales.
Speaker Change: Turning to our fourth quarter sales results.
Ron: Global distribution and value added services group sales were $2 7 billion with sales growth of five 9%, including OCI growth of five 8%.
Speaker Change: We are updating the breakdown of sales as detailed in exhibit a of today's press release to reflect the updated reportable segments as well as other internal management responsibilities.
Ron: Sales were positively impacted by a soft comparison to the prior year.
Speaker Change: Of note, we are now reporting U S distribution sales instead of North America distribution sales. This means Canada is now being reported as part of international.
Ron: Excluding PPE and Covid test kits LCI sales growth was seven 3%.
Ron: Our U S dental distribution LCI sales grew five 9% versus the prior year with.
Speaker Change: As a point of reference Canada has approximately $400 million of annual revenues approximately two thirds of those revenues are merchandize sales with the remaining one third is equipment sales.
Ron: With OCI growth in dental merchandise, a four 8% or six 5% growth when excluding PPE products and and equipment lci's growth sales growth of 10.0%.
Speaker Change: Global distribution and value added services group sales were $2 7 billion with sales growth of five 9%, including LCI growth of five 8%.
Ron: U S equipment sales growth was driven by both traditional and digital equipment with digital equipment unit growth offsetting some pricing declines.
Speaker Change: Sales were positively impacted by a soft comparison to the prior year, excluding PPE and Covid test kits.
Ron: U S medical distribution LCI sales grew four 5% compared to Q4 of 2023.
Speaker Change: Sales growth was seven 3%.
Speaker Change: Our U S dental distribution LCI sales grew five 9% versus the prior year with.
Ron: Excluding sales of PPE products, and Covid test kits LCI sales grew seven 3%.
Speaker Change: With OCI growth in dental merchandise, a four 8% or six 5% growth when excluding PPE products and equipment lci's growth sales growth of 10.0%.
Ron: Sales of point of care diagnostics, and vaccines were negatively impacted by the timing of the flu season.
Ron: Our home solutions business had another strong quarter growing 8% year over year.
Speaker Change: U S equipment sales growth was driven by both traditional and digital equipment with digital equipment unit growth offsetting some pricing declines.
Ron: Our international dental distribution LCI sales grew seven 3% versus the prior year.
Ron: With LCI growth in dental merchandise of seven 9% or 8.0% growth when excluding PPE products.
Speaker Change: U S medical distribution LCI sales grew four 5% compared to Q4 of 2023.
Ron: Equipment Lci's LCI sales growth was 6.0%.
Speaker Change: Excluding sales of PPE products, and Covid test kits LCI sales grew seven 3%.
Ron: Finally global value added services sales grew eight 1% versus the prior year with an LCI sales decrease of <unk>, 7%.
Speaker Change: Sales of point of care diagnostics, and vaccines were negatively impacted by the timing of the flu season.
Speaker Change: Our home solutions business had another strong quarter growing 8% year over year.
Ron: We achieved strong sales growth in <unk> and financial services offset by lower sales at large practice sales as a result of the timing of closing of some practice transition services sales.
Speaker Change: Our international dental distribution LCI sales grew seven 3% versus the prior year.
Speaker Change: With LCI growth in dental merchandise of seven 9% or 8.0% growth when excluding PPE products.
Ron: Turning to the global specialty products group, which includes our dental specialty products orthopedic and other products sales were $368 million with sales growth of seven 2%, including LCI growth of 5.0%.
Speaker Change: Equipment Lci's LCI sales growth was 6.0%.
Speaker Change: Finally global value added services sales grew eight 1% versus the prior year with an LCI sales decrease of <unk>, 7%.
Ron: This segment includes the orthodontic business, which is being reorganized for future profitable growth.
Speaker Change: We achieved strong sales growth in <unk> and financial services offset by lower sales at large practice sales as a result of the timing of closing of some practice transition services sales.
Ron: It also includes certain expenses relating to managing our own brands that support sales and the distribution businesses and provide a headwind to the segment's operating margin.
Ron: Yes.
Speaker Change: Turning to the global specialty products group, which includes our dental specialty products orthopedic and other products sales were $368 million with sales growth of seven 2%, including LCI growth of five zero percent.
Ron: Technology group sales during the fourth quarter were $160 million with total sales growth of two 4% and LCI sales growth of two 1%.
Ron: This was driven by revenue cycle management, and practice management software with double digit growth in ascend and internationally led by our <unk> cloud based practice management solution offset by lower revenues, a certain patient experienced modules.
Speaker Change: This segment includes the orthodontic business, which is being reorganized for future profitable growth.
Speaker Change: It also includes certain expenses relating to managing our own brands that support sales and the distribution businesses and provide a headwind to the segment's operating margin.
Ron: And as Stan mentioned, a headwind to revenue growth as a result of the movement to a SaaS model.
Speaker Change: Yeah.
Speaker Change: Technology group sales during the fourth quarter were $160 million with total sales growth of two 4% and LCI sales growth.
Restructuring expenses in the fourth quarter were $37 million or 23 per diluted share.
Ron: These expenses, mainly relate to severance benefits and costs related to exiting certain facilities.
Speaker Change: Two 1%.
Speaker Change: This was driven by revenue cycle management, and practice management software with double digit growth in ascend and internationally led by our <unk> cloud based practice management solution offset by lower revenues of certain patient experienced modules.
Ron: Our restructuring activities in the third and fourth quarters are estimated to provide over $80 million in annual run rate savings. We continue to expect savings from this plan to be $75 million to $100 million of aggregate annual run rate savings by the end of 2025.
Speaker Change: And as Stan mentioned, a headwind to revenue growth as a result of the movement to a SaaS model.
Ron: Our fourth quarter GAAP results include $20 million in pre tax proceeds as part of our cyber insurance claim which are excluded from our non-GAAP results.
Speaker Change: Restructuring expenses in the fourth quarter were $37 million or 23 per diluted share.
Ron: As of the end of the year, we collected approximately $40 million.
Speaker Change: These expenses, mainly relate to severance benefits and costs related to exiting certain facilities.
Ron: All items excluded from our fourth quarter non-GAAP financial results for 2024, and 2023 are detailed in exhibit B of today's press release.
Speaker Change: Our restructuring activities in the third and fourth quarters are estimated to provide over $80 million in annual run rate savings. We continue to expect savings from this plan to be $75 million to $100 million of aggregate annual run rate savings by the end of 2025.
Ron: A reconciliation of GAAP to non-GAAP results is also available in our quarterly earnings presentation on our website.
Ron: Regarding share repurchases, we repurchased approximately one 1 million shares of common stock in the open market during the fourth quarter at an average price of $71 35 per share for a total of $75 million.
Speaker Change: Our fourth quarter GAAP results include $20 million in pre tax proceeds as part of our cyber insurance claim which are excluded from our non-GAAP results.
Speaker Change: As of the end of the year, we collected approximately $40 million.
Ron: For the full year, we invested $385 million to repurchase five 4 million shares.
Speaker Change: All items excluded from our fourth quarter non-GAAP financial results for 2024, and 2023 are detailed in exhibit B of today's press release.
Ron: At fiscal year end, we had approximately $380 million authorized and available for future stock repurchases.
Speaker Change: A reconciliation of GAAP to non-GAAP results is also available in our quarterly earnings presentation on our website.
Ron: An additional $500 million of share repurchases was authorized by our board of directors on January 27, 2025, including our commitment to repurchase $250 million in shares under our authorized accelerated share repurchase program.
Speaker Change: Regarding share repurchases, we repurchased approximately one 1 million shares of common stock in the open market during the fourth quarter at an average price of $71 35 per share for a total of $75 million.
Ron: Turning to our cash flow.
Ron: We had strong operating cash flow of $204 million for the fourth quarter, which compares with operating cash flow of negative $32 million last year.
Speaker Change: For the full year, we invested $385 million to repurchase five 4 million shares.
Speaker Change: At fiscal year end, we had approximately $380 million authorized and available for future stock repurchases.
Ron: Operating cash flow for the full year in 2024 was $848 million, which is $348 million more than in 2023.
Speaker Change: An additional $500 million of share repurchases was authorized by our board of directors on January 27, 2025, including our commitment to repurchase $250 million in shares under our authorized accelerated share repurchase program.
Ron: Our strong operating cash flow for the quarter and the year was driven by lower working capital, particularly lower customer receivables, which we've been focused on throughout the year.
Ron: Turning to our 2025 financial guidance at this time, we are not able to provide without reasonable effort and estimate of restructuring costs associated with the new restructuring plan for 2025, although we expect this to primarily include severance pay and facility related costs. Therefore, we are not providing GAAP guidance.
Speaker Change: Turning to our cash flow.
We had strong operating cash flow of $204 million for the fourth quarter, which compares with operating cash flow of negative $32 million last year.
Speaker Change: Operating cash flow for the full year in 2024 was $848 million, which is $348 million more than in 2023.
Ron: Our 2025 guidance is for continuing our current continuing operations as well as acquisitions that have closed and does not include the impact of restructuring and integration expenses and other items described in our press release.
Speaker Change: Our strong operating cash flow for the quarter and the year was driven by lower working capital, particularly lower customer receivables, which we've been focused on throughout the year.
Ron: Guidance assumes modest improvement in the dental and medical markets during the year and are supported by strategic initiatives outlined in our strategic plan and recent acquisitions as.
Speaker Change: Turning to our 2025 financial guidance at this time, we are not able to provide without reasonable effort and estimate of restructuring costs associated with the new restructuring plan for 2025, although we expect this to primarily include severance pay and facility related costs. Therefore, we are not providing GAAP guidance.
Ron: As well as a positive contribution from our restructuring plan.
Ron: This was partially offset by investments in technology, and a return to historical levels of incentive compensation.
Ron: We also assume that foreign currency exchange rates remain generally consistent with 2024 levels.
Speaker Change: Our 2025 guidance is for continuing our current continuing operations as well as acquisitions that have closed and does not include the impact of restructuring and integration expenses and other items described in our press release.
Ron: Our 2025 total sales growth is expected to be 2% to 4% over 2024.
Ron: For 2025, we expect non-GAAP diluted EPS attributable to Henry Schein, Inc to be in the range of $4 80 to $4 94.
Speaker Change: Guidance assumes modest improvement in the dental and medical markets during the year and are supported by strategic initiatives outlined in our strategic plan and recent acquisitions as.
Ron: Which reflects growth of 1% to 4% compared with 2024, non-GAAP diluted EPS of $4 74 per share.
Speaker Change: As well as a positive contribution from our restructuring plan.
Speaker Change: This was partially offset by investments in technology, and a return to historical levels of incentive compensation.
Ron: 2025, non-GAAP diluted EPS is expected to be more heavily weighted to the second half of the year.
Speaker Change: We also assume that foreign currency exchange rates remain generally consistent with 2024 levels.
Ron: This guidance assumes there is no net impact from the issuance of new shares the KKR, which is expected to be offset by an accelerated share repurchase program.
Speaker Change: Our 2025 total sales growth is expected to be 2% to 4% over 2024.
Speaker Change: For 2025, we expect non-GAAP diluted EPS attributable to Henry Schein, Inc to be in the range of $4 80 to $4 94.
Ron: It also assumes an estimated non-GAAP effective tax rate of 25%.
Ron: Our 2025 adjusted EBITDA is expected to grow in the mid single digits versus 2024, adjusted EBITDA of $1 1 billion.
Speaker Change: Which reflects growth of 1% to 4% compared with 2024, non-GAAP diluted EPS of $4 74 per share.
Ron: We expect adjusted EBITDA to grow faster than non-GAAP diluted EPS due to higher depreciation expense primarily related to the global ecommerce platform.
Speaker Change: 2025, non-GAAP diluted EPS is expected to be more heavily weighted to the second half of the year.
Speaker Change: This guidance assumes there is no net impact from the issuance of new shares the KKR, which is expected to be offset by an accelerated share repurchase program.
Ron: With that I'll now turn the call at this time.
Speaker Change: Thank you Ron.
Speaker Change: Operator, we're ready to respond to questions.
Speaker Change: Thank you.
Speaker Change: It also assumes an estimated non-GAAP effective tax rate of 25%.
Speaker Change: We will now be conducting a question and answer session.
Speaker Change: If you'd like to ask a question. Please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue.
Speaker Change: Our 2025 adjusted EBITDA is expected to grow in the mid single digits versus 2024, adjusted EBITDA of $1 1 billion.
Speaker Change: You May press star two if you'd like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: We expect adjusted EBITDA to grow faster than non-GAAP diluted EPS due to higher depreciation expense primarily related to the global ecommerce platform.
Speaker Change: To that as many as possible to ask questions. We ask you. Please limit your questions to one question and a follow up.
Speaker Change: With that I'll now turn the call at this time.
Speaker Change: One moment please for our first question.
Speaker Change: Thank you Ron.
Speaker Change: Thank you. Our first question today comes from the line of Jason Bednar with Piper Sandler. Please proceed with your question.
Speaker Change: Operator, we are ready to respond to questions.
Speaker Change: Thank you.
Speaker Change: We'll now be conducting a question and answer session.
Jason Bednar: Hey, good morning, everyone and thanks for all the detail here and the recast financials I appreciate that's not an easy undertaking.
Speaker Change: If you'd like to ask a question. Please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue.
Speaker Change: Wanted to start with.
Speaker Change: If I could revenue guidance and just some of the underlying assumptions you have there.
Speaker Change: You May press star two if he would like to remove your question from the queue.
Speaker Change: You are calling for 2% to 4% reported revenue growth.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Based in part upon improvement in both dental and end market dental and medical end markets versus last year.
Speaker Change: So that as many as possible to ask questions. We ask you. Please limit your questions to one question and a follow up.
Speaker Change: Just I understand why your business can continue to outperform the broader market with your investments and initiatives you have in motion, but it does seem like your market view is slightly more optimistic than what we've heard from some of your peers. So is there something youre seeing today that gives you kind of call it better relative comfort on the market outlook and then if youre able.
Speaker Change: One moment please for our first question.
Speaker Change: Thank you. Our first question today comes from the line of Jason Bednar with Piper Sandler. Please proceed with your question.
Jason Bednar: Hey, good morning, everyone. Thanks for all the detail here and the recast financials I appreciate that's not an easy undertaking.
Wanted to start with.
Speaker Change: Can you give us a sense of how you're forecasting organic growth for each of your new reporting segments are really just in the context of that company wide guidance.
Jason Bednar: If I could revenue guidance and just some of the underlying assumptions you have there.
You are calling for 2% to 4% reported revenue growth.
Speaker Change: Yeah sure, Jason I think that the.
Jason Bednar: Based in part upon improvement in both dental and end market in dental and medical end markets versus last year.
Speaker Change: We do see modest growth in the markets right.
Speaker Change: If you think back to the Investor day, two years ago. We said then we thought core dental could grow 2% to 4% I think we're still looking at market, while but theres market growth, we think the 2% could be challenging so it's probably somewhere in that zero to 2%, but we do expect some modest growth in there.
Speaker Change: Just I understand why your business can continue to outperform the broader market with your investments and the initiatives you have in motion, but it does seem like your market view is slightly more optimistic than what we've heard from some of your peers. So is there something youre seeing today that gives you kind of call it better relative comfort on the market outlook and then if youre able.
Speaker Change: Price appreciation is also limited so theres not a lot of price appreciation in our revenue guidance and you mentioned two kind of inorganic versus organic or M&A activity was a little lower than most years.
Speaker Change: Can you give us a sense of how you're forecasting organic growth for each of your new reporting segments are really just in the context of that company wide guidance.
Jason Bednar: Yeah sure, Jason I think that the.
Speaker Change: In 2024, so we're not getting there.
Speaker Change: We do see modest growth in the markets right.
Speaker Change: A very limited amount of acquisition growth included in that and that overall revenue growth as well.
Speaker Change: If you think back to the Investor day, two years ago. We said then we've got core dental could grow 2% to 4%.
Speaker Change: Okay, Ron I guess, the second part of that any breakdown on how you or how you want us thinking about.
Speaker Change: I think we're still looking at market, while theres market growth, we think the 2% could be challenging so it's probably somewhere in that zero to 2%, but we do expect some modest growth in there.
Speaker Change: Your new reporting structure, the global distribution U S versus international thoughts within there.
Speaker Change: Price appreciation is also limited so theres not a lot of price appreciation in our in our revenue guidance and you mentioned two kind of inorganic versus organic or M&A activity was a little lower than most years.
Speaker Change: Global specialty global tax.
Speaker Change: And then in May.
Speaker Change: Just as a follow up.
Speaker Change: On the bottom line you seem pretty confident in the outlook of getting back to high single digit growth. Once we get past 25 is that a function of 25 investments tapering in 'twenty six or is it a belief we're going to see better natural leverage coming through the P&L.
Speaker Change: In 2024, so we're not getting there.
Speaker Change: A very limited amount of acquisition growth included in that and that overall revenue growth as well.
Okay, Ron I guess any in the second part of that any breakdown on how you how you want us thinking about.
Speaker Change: I think it's a combination of.
Speaker Change: The latter part of your question that it's a combination of that right. It's the it's the ongoing benefits we would get from some of the restructuring we're doing.
Speaker Change: Your new reporting structure, the global distribution U S versus international thoughts within there.
Speaker Change: At some point some recovery in markets.
Speaker Change: Global specialty global tax.
Speaker Change: And then yeah.
Speaker Change: And perhaps some better price appreciation going forward as well.
Speaker Change: Maybe just as a follow up.
Speaker Change: On the bottom line you seem pretty confident in the outlook of getting back to high single digit growth. Once we get past 25 is that a function of 25 investments tapering in 2006 or is it a belief we're going to see better natural leverage coming through the P&L.
Speaker Change: In terms of going back to your question on the reportable segments I think that within the <unk>.
Speaker Change:
Speaker Change: Within each of those we are looking at kind of market growth that that continues to be lower than we were.
Speaker Change: We would normally anticipate in lower than what we communicated on Investor day, two years ago. So for example, I think we said that in medical growth rates were in the 4% to 7%. We think that right now we expect that market growth to still be slightly below that 4%.
Speaker Change: I think it's a combination of.
Speaker Change: The latter part of your question is it's a combination of that right. It's the it's the ongoing benefits we would get from some of the restructuring we're doing.
Speaker Change: At some point some recovery in markets.
Speaker Change: Dental specialties were in that 5% to 8% range.
Speaker Change: And perhaps some better price appreciation going forward as well.
Speaker Change: So there are pockets of dental specialties that could be in there.
Speaker Change: In terms of going back to your question on the reportable segments I think that within the us.
Speaker Change: That range, but Theres also.
Speaker Change: Especially on the <unk>.
Speaker Change: What I'll call kind of the sub premium side.
Speaker Change:
Speaker Change: Within each of those we are looking at kind of market growth that that continues to be lower than we.
Speaker Change: We still think it's lower than 5%. So there are some aspects of the market that are that are going to be lower than what those those market growth rates that we assumed a couple of years ago.
Speaker Change: We would normally anticipate and lower than what we communicated on Investor day, two years ago. So for example, I think we said that medical growth rates were in the 4% to 7%. We think that right now we expect that market growth to still be slightly below that 4%.
Speaker Change: Alright very helpful. Thank you.
Speaker Change: Our next questions are from the line of Jeff Johnson with Baird. Please proceed with your question.
Jeff Johnson: Thank you good morning, guys.
Speaker Change: Dental specialties were in that 5% to 8% range.
Jeff Johnson: I know, we're two months into 2025, but I just want to go back to the fourth quarter.
Speaker Change: So there are pockets of dental specialties that could be in that range, but theres also.
Jeff Johnson: For one second here, if I could I mean, when you pre released last month.
Jeff Johnson: The $3 $2 billion in revenue for <unk>, We frankly hope that was around the down number ends up in today's release that was a rounded up number and when I look at just kind of relative to your third quarter updated guidance that you provided on the third quarter sorry for 2024.
Speaker Change: Especially on the on the road.
I'll call kind of the sub premium side.
Speaker Change: We still think it's lower than 5%. So there are some aspects of the market that are that are going to be lower than what those market growth rates that we assumed a couple of years ago.
Speaker Change: Alright very helpful. Thank you.
Jeff Johnson: You fell short in the fourth quarter by 500 basis points.
Speaker Change: Our next questions are from the line of Jeff Johnson with Baird. Please proceed with your question.
Jeff Johnson: In the fourth quarter on a revenue basis at the low end of the guidance 700 plus basis points at the midpoint. So what happened in fourth quarter I guess that drove those revenues 500 basis points below the low end of our guidance 700 basis points below the midpoint of the guidance.
Jeff Johnson: Thank you good morning, guys.
Speaker Change: I know, we're two months into 2025, but I just want to go back to the fourth quarter.
Speaker Change: For one second here I could I mean, when you pre released last month.
Speaker Change: The $3 $2 billion in revenue for <unk>, we frankly and hope that was around the DAU number ends up in today's release that was a rounded up number and when I look at just kind of relative to your third quarter updated guidance that you provided on the third quarter sorry for 2024.
Jeff Johnson: Just relative to our guidance that we've issued.
Jeff Johnson: A month into the fourth quarter. Thank you.
Jeff Johnson: Sure Jeff I'll address your rounding question first I think we did say three two on revenues of $3 191. So you are right we brought it up $9 million.
You fell short in the fourth quarter by 500 basis points.
Jeff Johnson: So.
Speaker Change: In the fourth quarter on a revenue basis at the low end of the guidance 700 plus basis points at the midpoint. So what happened mid fourth quarter I guess that drove those revenues 500 basis points below the low end of our guidance 700 basis points below the midpoint of the guidance.
Jeff Johnson: We did round that to $3 two.
Jeff Johnson: In terms of the.
Jeff Johnson: Of the.
Jeff Johnson: The lower revenues than expected as we mentioned we did have it was rare.
Jeff Johnson: Relatively flat patient traffic in the core in the quarter and also.
Speaker Change: Just relative to our guidance that we've issued.
Jeff Johnson: It really kind of a.
A slow end of the quarter, given the timing of Christmas, which we underestimated the impact of that.
Speaker Change: A month into the fourth quarter. Thank you.
Speaker Change: Sure Jeff I'll address your rounding question first I mean, we did say three two I think revenues of $3 191. So you are right we brought it up $9 million.
Jeff Johnson: So the quarter did in.
Jeff Johnson: Much more slowly than what we may have anticipated and on the medical side.
Jeff Johnson: Timing of the flu season.
Speaker Change: So.
Jeff Johnson: Resulted in much lower medical revenues than we had than we had anticipated as well.
We did round that to $3 two.
Speaker Change: In terms of the.
Speaker Change: Of the.
Jeff Johnson: Okay, and if I look at the dental numbers.
Speaker Change: The lower revenues than expected as we mentioned we did have it was relatively flat patient traffic in the core in the quarter and also.
Jeff Johnson: Little bit hard to compare to our old model, obviously, but you gave us some historical restatements to help but that U S number up mid single digits on consumables I think somewhere in the neighborhood of on a negative.
Speaker Change: A really kind of a.
Speaker Change: Slow end of the quarter, given the timing of Christmas, which we underestimated the impact of that.
Jeff Johnson: 8% to 10% depending on how we cut the numbers.
Speaker Change: So the quarter did and much more slowly than what we may have anticipated and on the medical side.
Jeff Johnson: On a staff basis still negative we talked about the market being pretty flat and you guys have.
Jeff Johnson: We covered a decent amount of your cyber share loss.
Speaker Change: Timing of the flu season.
Speaker Change: Can you maybe just about share dynamics in the fourth quarter and share dynamics expected in 2025 do you feel like you're holding your own do you feel like you are.
Speaker Change: Resulted in much lower medical revenues than we had than we had anticipated as well.
Speaker Change: Okay, and if I look at the dental numbers.
Speaker Change: Maintaining that share or are you losing share at this point just just help me understand kind of that stack comps still negative on the consumable side in the fourth quarter. Thank you.
Speaker Change: Little bit hard to compare to our old model, obviously, but you gave us some historical restatements to help but that U S number up mid single digits on consumables I think somewhere in the neighborhood of on a negative.
Speaker Change: Yes in the fourth quarter, we did see share stabilize we had been getting.
Speaker Change: Percent to 10% pump, depending on how we put the numbers and.
Speaker Change: A little bit of additional market share quarter to quarter sequentially over the course of 'twenty four or 'twenty four our Q4 share was relatively flat to our Q3 share.
Speaker Change: So on a staff basis still negative we talked about the market being pretty flat and you guys have recovered a decent amount of your cyber share loss.
Speaker Change: There could be a number of reasons for that but we're still confident we can continue to get some market share as we get into 'twenty five as.
Speaker Change: Possibly you may be just about share dynamics in the fourth quarter and share dynamics expected in 2025 do you feel like you're holding your own do you feel like you are.
Speaker Change: As well.
Speaker Change: Maintaining that share or are you losing share at this point just just help me understand kind about stack comps still negative on the consumable side in the fourth quarter. Thank you.
Jeff Johnson: Jeff Let me just add that moving to the segment reporting.
Jeff Johnson: And changing the way we reported in the past is just not easy to comprehend with.
Speaker Change: Yes in the fourth quarter, we did see share stabilize we had been getting.
Jeff Johnson: We provided a lot of data and the exhibits theres no way these.
Speaker Change: A little bit of additional market share quarter to quarter sequentially over the course of 'twenty four or 'twenty four our Q4 share was relatively flat to our Q3 share.
Jeff Johnson: Changes could be understood.
Jeff Johnson: In an hour and a half so I'm not sure. If this was a better way to do this this is the best way, we thought to providing this information, but I think it's.
Speaker Change: There could be a number of reasons for that but we're.
Speaker Change: We're still confident we can continue to get some market share as we get into 'twenty five as.
Jeff Johnson: Analysts yourself have a few more hours to look at the schedules that we've provided it'll make a lot more sense, but.
Speaker Change: As well.
Jeff Johnson: Jeff Let me just add that moving to the segment reporting.
Jeff Johnson: This is a one time move in 29 years that we've moved as a public company from one way of describing our business to another.
And changing the way we reported in the past is just not easy to comprehend.
Jeff Johnson: We provided a lot of data and the exhibits theres no way these.
Jeff Johnson: The description followed supporting internal management reporting which was acquired.
Jeff Johnson: Changes could be understood.
Jeff Johnson: In an hour and a half so I'm not sure. If this was a better way to do this this is the best way, we thought to providing this information, but I think it's.
Jeff Johnson: By the SEC.
Jeff Johnson: And there's a lot of information that is contained in these attachments and we'd be happy to clarify we do understand specifically for yourself and for others that have covered us for many many years that this is a significant change and it's very difficult to comprehend all the nuances.
Speaker Change: Analysts yourself have a few more hours to look at the schedules that we've provided it'll make a lot more sense, but.
Jeff Johnson: This is a.
Jeff Johnson: Yes.
Jeff Johnson: A one time move in 29 years that we've moved as a public company from one way of describing our business to another.
Jeff Johnson: Perfect Storm.
Jeff Johnson: Okay.
Jeff Johnson: Reporting and.
The new segment reporting all thrown together, but we are available to provide more information, but I think the attachments will be helpful. But you will need time to analyze them.
Jeff Johnson: The description followers reporting internal management reporting which is required by the SEC.
Jeff Johnson: And there's a lot of information that is contained in these attachments and we'd be happy to clarify we do understand specifically for yourself and for others that have covered us for many many years that this is a significant change and it's very difficult to comprehend all the nuances.
Stanley Bergman: Understood. Thank you Stanley.
Stanley Bergman: The next question's from the line of Allen Lutz with Bank of America. Please.
Speaker Change: With your question.
Speaker Change: Good morning, Thanks for taking the questions and thank you Paul for all the updates so far I wanted to go to slide eight in the presentation specialty.
Jeff Johnson: Yes.
Jeff Johnson: Perfect Storm.
Jeff Johnson: Hey.
Jeff Johnson: Reporting and.
Speaker Change: Operating margins are up pretty nicely year over year, but there may be a little bit below where we thought they would be can you talk a little bit about the opportunity to raise those margins over time.
Our new segment reporting all thrown together, but we are available to provide more information, but I think the attachments will be helpful. But you will need time to analyze them.
Speaker Change: So just on the specialty side.
Stanley Bergman: Understood. Thank you Stanley.
Speaker Change: The specialty margins.
The next question's from the line of Allen Lutz with Bank of America. Please proceed with your question.
Speaker Change: This is the reporting segments.
Speaker Change: As it relates to reporting.
Speaker Change: Our management so within that segment there are some lower margin businesses for example, our propane handpiece business, it's good but it's.
Allen Lutz: Good morning, Thanks for taking the questions and thank you Paul for all the updates.
Speaker Change: I want to go to slide eight in the presentation specialty.
Operating margins are up pretty nicely year over year, but there may be a little bit below where we thought they would be can you talk a little bit about the opportunity to raise those margins over time.
Speaker Change: Bob.
Speaker Change: <unk>, maybe more maybe less of the margin compared to the implant business and our endodontics business, we had a challenge with the author Dr. <unk> business, which we are addressing.
Speaker Change: So just on the specialty side.
Speaker Change: The specialty margins.
Speaker Change: And that segment also includes expenses for management.
Speaker Change: This is the reporting segments.
Speaker Change: As it relates to reporting.
Speaker Change: <unk>.
Speaker Change: Management, so within that segment there are some lower margin businesses for example, our propane handpiece business. It's good.
Speaker Change: Corporate brand products would assure essentially distributed through our distribution business.
Speaker Change: It's not a pure.
Speaker Change: Margin for the implants and the Endo. It includes other components as well, but it does follow requirements.
Speaker Change: But it's about.
Speaker Change: <unk>, maybe more maybe less of the margin compared to the implant business and our endodontics business, we had a challenge with the author Dr. <unk> business, which we are addressing.
Speaker Change: All the businesses and all of the functions reporting to Tom Pope. So we can provide further information we will over time, but this is the reporting as it relates to management reporting rather than.
Speaker Change: That segment also includes expenses for management of our.
Speaker Change: Corporate brand products would assure essentially distributed through our distribution business. So it's not a pure.
Speaker Change: Products that are.
Speaker Change: Implants bone regeneration and.
Speaker Change: Margin for the implants and the Endo. It includes other components as well, but it does follow requirements.
Speaker Change: <unk>, yes, we do expect.
Speaker Change: Gross operating margin in this segment to grow over time.
Speaker Change: That is a key focus, but it's not a pure number relating to implants bone regeneration and endodontics and affect orthopedics, which have higher margins.
Speaker Change: Of all the businesses and all of the functions reporting to Tom Pope.
Speaker Change: We can provide further information we will over time, but this is the reporting as it relates to management reporting.
Speaker Change: Thanks Stanley and then one for Ron.
Jason Bednar: There any way to frame how fast dental implants grew in four Q and then as we look at 2025 large Medicare advantage payers are covering implants in 2025 wondering if theres any change to growth youre seeing through the first two months of the year and what's embedded in the guide for North American implant growth. Thanks.
Speaker Change: Rather than.
Speaker Change: Products that are in.
Speaker Change: Implants bone regeneration and.
Speaker Change: <unk>, yes, we do expect.
Speaker Change: The operating margin in this segment to grow over time.
Speaker Change: That is a key focus, but it's not a pure number relating to implants bone regeneration and endodontics and affect orthopedics, which have higher margins.
Jason Bednar: Yes, my preference of implant growth, we're still seeing relatively healthy growth.
Jason Bednar: In Europe more so than in the U S. In the U S. We're still getting some value.
Jason Bednar: <unk> growth.
Jason Bednar: More so than perhaps with on the premium side in U S is slightly tougher market right now.
Jason Bednar: Thanks Stanley and then one for Ron is there any way to frame how fast dental implants grew in four Q and then as we look at 2025 large Medicare advantage payers stopped covering implants in 2025 wondering if theres any change to growth youre seeing through the first two months of the year and what's embedded in the guide.
Jason Bednar: With implants, but in Europe are our catalog subsidiary that focuses primarily in Germany, Austria, Switzerland region.
Jason Bednar: Really in that kind of low to mid single digit.
Jason Bednar: Both ranges which were.
Speaker Change: For North American implant growth. Thanks.
Jason Bednar: We're pleased with because it's a difficult market.
Speaker Change: With reference to implant growth.
Jason Bednar: Thanks, There was a second part of your question I'm sorry was.
Still seeing.
Speaker Change: Relatively healthy growth.
Jason Bednar: Sure.
Jason Bednar: Just around 2025 large MA payer stopped covering implants wondering if that had any impact through the first couple months of the year.
Speaker Change: In Europe more so than in the U S. In the U S. We're still getting some value.
Speaker Change: <unk> growth.
Speaker Change: More so than perhaps with on the premium side in U S is slightly tougher market right now.
Jason Bednar: No.
Jason Bednar: It's not a.
Speaker Change: With implants, but in Europe are our catalog subsidiary that focuses primarily in Germany, Austria, Switzerland region.
What I would call a significant part of the kind of end market for us So we haven't.
Jason Bednar: We haven't seen anything that we would point to that.
Speaker Change: Really in that kind of low to mid single digit.
Jason Bednar: We would be able to directly attribute that to and impact on the business at this point.
Speaker Change: Both ranges, which we're pleased with because it's a difficult market.
Brian: Great. Thanks, Brian.
Speaker Change: Thanks, There was a second part of your question I'm sorry was.
Speaker Change: The next question is from the line of John Stanfill with J P. Morgan. Please proceed with your questions.
Speaker Change: Sure.
Speaker Change: Just around 2025 large MA payer stopped covering implants wondering if that had any impact through the first couple months of the year.
Speaker Change: Great. Thanks for taking my question I wanted to go back to the KKR agreement I think in the agreement there is commentary around a value creation plan using KKR capstone can.
Speaker Change: No.
Speaker Change: It's not a.
Speaker Change: What I would call a significant.
Speaker Change: Can you just speak to what areas that would be looking at it just purely in an advisory capacity and then maybe a little bit more broadly are there things that KKR is pretty extensive dental portfolio can do to work together.
Speaker Change: Part of the kind of end market for us So we haven't.
Speaker Change: We haven't seen anything that we would point to that.
Speaker Change: We would be able to directly attribute that to and impact on the business at this point.
Speaker Change: Maybe they havent happened previously thanks.
Speaker Change: Great. Thanks, Ron.
Speaker Change: So as it relates to KKR.
Speaker Change: The next question is from the line of John Stanfill with J P. Morgan. Please proceed with your questions.
Speaker Change: They are not on the board, yet where that's the clear.
Speaker Change: <unk>.
Speaker Change: Great. Thanks for taking my question I wanted to go back to the KKR agreement I think in the agreement there is commentary around a value creation plan using KKR capstone can.
Speaker Change: Commscope kadena before they can get deeply involved.
Speaker Change: We will of course.
Speaker Change: Engage with the team there are a number of areas that they feel that can help us with that we really believe they can.
Speaker Change: Can you just speak to what areas they will be looking at.
Speaker Change: Uh huh.
Speaker Change: In an advisory capacity and then maybe a little bit more broadly are there things that KKR is pretty extensive dental portfolio can do to work together.
Speaker Change: Yes.
Speaker Change: Our focus in the areas.
Speaker Change: Focus to our strategic plan and the areas that <unk> has.
Speaker Change: Our capabilities aligned very nicely, but we can't really get to work in any significant or meaningful way until the filing is cleared.
Speaker Change: Maybe they havent happened previously thanks.
Speaker Change: So as it relates to KKR.
Speaker Change: They are not on the board, yet where that's the clear.
Speaker Change: We're still in the preliminary stage of the filing we haven't received any further commentary so.
Speaker Change: <unk>.
Speaker Change: Quadcopter Dino before they can get deeply involved.
Speaker Change: We will of course.
So that will clearly kind of the.
Speaker Change: Engage with the team there are a number of areas that they feel that can help us with that we really believe they can.
Speaker Change: The hotspot suite.
Speaker Change: And then we can get to work with KKR, but they're not on the board yet.
Speaker Change: But.
Speaker Change: And the.
Speaker Change: Our focus in the areas.
Speaker Change: I cannot really get engaged.
Our focus to our strategic plan and the areas that <unk> has.
Speaker Change: Much of a benefit from the relationship with one of our large customers. It is definitely a Chinese wall between the two sides and different people involved.
Capabilities aligned very nicely, but we can't really get to work in any significant or meaningful way until the filing is cleared.
Ron: Great and then just one maybe for Ron.
Speaker Change: Still in the preliminary stage of the filing we havent.
You talked about that share gain versus kind of the beginning of 2024 exiting 'twenty four I think about that and potentially the flu season pushing into the first quarter. It seems like you would think that growth might be weighted more to the first half of 'twenty five versus the back half at the top line can you help me balance that versus the back half weighting of adjusted EPS.
Speaker Change: Received any further commentary so.
Speaker Change: We're hopeful that will clearly.
Speaker Change: Uh huh.
Speaker Change: Hotspot suite and then we can get to work with KKR, but they're not on the board yet.
Speaker Change: And the <unk>.
Speaker Change: I cannot really get engaged I didn't expect much benefit from the relationship with one of our large customers. It is definitely a Chinese wall between the two sides and different people involved.
Ron: You know what the factors are that kind of create that dichotomy.
Ron: Well it doesn't assume kind of ongoing.
Ron: Regaining some market share over the course of the year.
Ron: And also as.
Ron: As we get some greater momentum on the implant side for example, with the <unk> and some of the newer products that launched in the back half of 2024 that would give us momentum into <unk> 'twenty five and then.
Speaker Change: Great and then just one maybe for Ron.
Speaker Change: Talk about that share gain versus kind of the beginning of 2024 exiting 'twenty four I think about that and potentially the flu season pushing into the first quarter. It seems like you would think that growth might be weighted more to the first half of 'twenty five versus the back half at the top line can you help me balance that versus the back half weighting of adjusted EPS.
Ron: That's with reference to the top line and then bottom line. This is the ongoing reduction in expenses as we as we execute on our restructuring plan that would get us.
Ron: To sum to more I would expect more earnings growth in the back half of the year than in the first half of the year.
Speaker Change: What the factors are that kind of create that dichotomy.
Speaker Change: Well it doesn't assume kind of ongoing regaining some market share over the course of the year.
Ron: Keep in mind too one other thing John is that.
Speaker Change: And also.
Speaker Change: As we get some greater momentum on the implant side for example, with the <unk> and some of the newer products that launched in the back half of.
Speaker Change: And we referenced this on the call we will have a difficult equipment comp in the first quarter of 2024, I'm, sorry, 2025 as last year. The first quarter benefited from some deferral of equipment installations coming off the cyber security incident. So when we report Q1 and talk about equipment will also be looking at it.
Speaker Change: 2024 that would give us momentum into <unk> 'twenty, five and then that spreads with reference to the top line and then bottom line. This is the ongoing reduction in expenses as we as we execute on our restructuring plan that would get us.
Speaker Change: As we're looking at it internally, we kind of look at that as a six month period Q4 to Q1, how is that business doing versus last year, given that disruption to the timing last year.
Speaker Change: To sum to more I would expect more earnings growth in the back half of the year than in the first half of the year.
Speaker Change: The installation as well.
Speaker Change: Yes.
Speaker Change: Great. Thanks.
Speaker Change: Keep in mind too one other thing John is that.
Speaker Change: Our next questions are from the line of Jon Block with Stifel. Please proceed with your question.
Speaker Change: And we referenced this on the call we will have a difficult equipment comp in the first quarter of 2024, I'm, sorry, 2025 as last year. The first quarter benefited from some deferral of equipment installations coming off the cyber security incident. So when we report Q1 and talk about equipment will also be looking at it.
Hey, guys good morning.
Jon Block: Ron I think this is probably for you just in 2025 EPS growth.
Speaker Change: High level basically in line with revenue growth.
Speaker Change: I, just think about like mix shift that paydown stock repo.
Speaker Change: As we're looking at it internally, we kind of look at that as a six month period Q4 to Q1, how is that business doing versus last year, given that disruption to the timing last year.
Speaker Change: Ongoing restructuring, maybe some past accretion targets from those deals that were done in prior.
Quarters can you talk to why we're not seeing some slightly higher leverage on the bottom line versus the top even in a year, where theres a lot of moving parts or what you seem to be alluding to is like a re basing type of year.
Speaker Change: Installation as well.
Speaker Change: Great. Thanks.
Speaker Change: Our next questions are from the line of Jon Block with Stifel. Please proceed with your question.
Jon Block: Hey, guys good morning.
Speaker Change: So there is.
Speaker Change: Couple of things and we've kind of touched on some of the challenges on the revenue side.
Speaker Change: Ron I think this is probably for you just in 2025 EPS growth.
Speaker Change: Say two things that are specific we have talked about some ongoing investment in it specifically at our global ecommerce platform digital which will be launching in the U S.
Jon Block: High level basically in line with revenue growth.
Jon Block: I just think about <unk>.
Jon Block: Mix shift debt Paydown stock repo ongoing strong restructuring, maybe some past accretion targets from those deals that were done in prior quarters can you talk to why we're not seeing some slightly higher leverage on the bottom line versus the top even in a year where there is.
Speaker Change: This summer, but we have begun depreciating that system, because we did launch it on a test basis in Europe late.
Speaker Change: Late in 2024, so we are going to get a full year of depreciation on that.
Speaker Change: A lot of moving parts or what you seem to be alluding to is like a re basing type of year.
Speaker Change: And then also as we referenced in the call kind of a return to what we'll call hopefully more normal incentive compensation expense as we lap.
Jon Block: Well there's a.
Jon Block: A couple of things.
Jon Block: Kind of touched on some of the challenges on the revenue side.
Speaker Change: Last couple of years between cyber and the softer markets have not had one.
Jon Block: I'd say two things that are specific we have talked about some ongoing investment in it specifically in our global ecommerce platform digital which will be launching in the U S.
Speaker Change: I would consider to be a a normal expense level. There. So there are some internal headwinds related to this some of this is offset by some of the cost savings, we're achieving but there are some topline.
Jon Block: This summer, but we have begun depreciating that system, because we did launch it on a test basis in Europe.
Speaker Change: Challenges out there still that.
Speaker Change: That I touched on when referencing the revenue guidance.
Jon Block: Late in 2024, so we are going to get a full year of depreciation on that.
Speaker Change: Okay.
Speaker Change: Thanks, and maybe just to shift gears Stanley in the past I think you've alluded to.
Jon Block: And then also as we referenced in the call kind of a return to what we'll call hopefully more normal.
The need for call it accelerating innovation from partners or investments in new products.
Jon Block: Compensation expense as we.
Jon Block: The last couple of years between cyber and the softer markets have not had.
Speaker Change: Here, we are shortly coming up on Ids.
Speaker Change: Next month, so I'm just curious on how you see the pipeline from some of your partners and do you see some of that innovation coal like incremental innovation working its way through nothing's overnight, but that might give you more confidence as you look out over the next 12 to 18 months in your equipment, Mike. Thank you.
Jon Block: What I consider to be a.
Jon Block: A normal expense level. There. So there are some internal headwinds related to this some of this is offset by some of the cost savings, we're achieving but there are some topline.
Jon Block: The challenges out there still that that I touched on when referencing the revenue guidance.
Yes sure. Thank you.
Jon Block: Okay.
Speaker Change: Question two.
Speaker Change: Thanks, and maybe just to shift gears Stanley in the past I think you've alluded to.
Speaker Change: I think we will see.
Speaker Change: Some marginal incremental advancements at Rds, I think particularly in the digital space and the digital materials.
Speaker Change: The need for call it accelerating innovation from partners or investments in new products.
Speaker Change: Here, we are shortly coming up next.
Speaker Change: I think on the consumables the basic consumables.
Speaker Change: Next month, so I'm just curious on how you see the pipeline from some of your partners and do you see some of that innovation called like incremental innovation working its way through nothing is overnight, but that might give you more confidence as you look out over the next 12 to 18 months in your equipment, Mike. Thank you.
Speaker Change: Hopefully, we will see some advances but at the moment.
Speaker Change: Not much.
Speaker Change: Oh of course always manufacturers that are coming out with something.
Speaker Change: New.
Speaker Change: But I don't think very much in on the traditional side not very much either the imaging, but the digital side, yes.
Speaker Change: Yes sure. Thank you.
Speaker Change: Question two.
Speaker Change: I think we will see.
Speaker Change: And.
Speaker Change: Some marginal incremental advancements at ideas I think particularly in the digital space of the digital materials.
Speaker Change: I think that may lead to more and.
Speaker Change: The movement towards a second tip potentially.
And maybe.
Speaker Change: And I think on the consumables the basic consumables.
Speaker Change: Corporate brand products of course, Im not talking about the specialty side. It continues to be good innovation going on there.
Speaker Change: Hopefully, we will see some advances but at the moment.
Speaker Change: Not much.
Speaker Change: The implant side.
Speaker Change: Of course always manufacturers that are coming out with something.
Speaker Change: Little bit on the endodontics.
Speaker Change: Let's see what happens next month.
Speaker Change: New.
Speaker Change: But I don't think very much in on the traditional side not very much either the imaging.
Speaker Change: But.
Speaker Change: So I'd expect that these big surprises.
Speaker Change: The digital side, yes, and.
Kevin Caliendo: Our next question comes from the line of Kevin Caliendo with UBS. Please proceed with your question.
Speaker Change: I think that may lead to more and more.
Speaker Change: Movement towards a second tier potentially and maybe.
Kevin Caliendo: Thanks, Thanks for taking my question.
Kevin Caliendo: Ron I, just wanted to dive a little bit more into the margin question. I. Appreciate you, saying you have $75 million to $100 million of savings there is offset from <unk>.
Speaker Change: Corporate brand products of course, I'm not talking about the specialty side. It continues to be good innovation on the implant side.
Kevin Caliendo: Offset from the incentive <unk>.
Speaker Change: Little bit on the endodontics.
Speaker Change: Program Normalizing again next year, I guess, if you're talking about flat operating margins.
Speaker Change: See what happens next month.
Speaker Change: But.
Speaker Change: So I'd expect that this big surprises.
Speaker Change: Is that completely offsetting the $75 million to $100 million in savings and like if you. If we were to break that apart.
Speaker Change: Our next question comes from the line of Kevin Caliendo with UBS. Please proceed with your question.
Speaker Change: What's happening with the margins on the segments.
Speaker Change: The sort of cost savings against.
Kevin Caliendo: Thanks, Thanks for taking my question.
Speaker Change: The one timers that are company specific that are offsets I'm, just trying to understand what's driving the margin specifically either segment or cost savings against one timers.
Speaker Change: Ron I, just wanted to dive a little bit more into the margin.
Speaker Change: I appreciate you, saying you have $75 million to $100 million of savings, there's offsets from offsets from the incentive program.
Speaker Change: Yes.
Speaker Change: Yes, certainly Kevin I'll try to I think I understand your question.
Speaker Change: Program Normalizing again next year, I guess, if you're talking about flat operating margins.
Speaker Change: For example in distribution and something we've touched on you are seeing some movement too.
Speaker Change: Is that completely offsetting the $75 million to $100 million in savings and like if you. If we were to break that apart.
Lower priced items, while those gross margins can be.
Speaker Change: What's happening with the margins on the segments.
Speaker Change: Can be beneficial.
Speaker Change: From an operating margin standpoint, we were seeing relatively.
Speaker Change: The sort of cost savings against.
Speaker Change: The one timers that are company specific that are offsets I'm, just trying to understand what's driving the margin specifically either segment or cost savings against one timers.
Speaker Change: Relevant relative stability as it as it relates to that shift to merchandise.
Speaker Change: We are seeing some we've mentioned some of the pricing pressure on digital equipment that can put a little bit of pressure on margins as well. So those are more kind of a market phenomenon that we're trying to manage.
Speaker Change: Yeah.
Kevin Caliendo: Yes, certainly Kevin I'll try to I think I understand your question.
Speaker Change: For example in distribution and such.
Speaker Change: You mentioned some of the company specific items that that will that we are we are investing in and those are items quite frankly.
Speaker Change: We've touched on you are seeing some movement to to lower priced items, while those gross margins can be.
Speaker Change: Long term investment plans.
Speaker Change: Regardless, if we were doing the restructuring or not so some of that is.
Speaker Change: Can be beneficial.
Speaker Change: From an operating margin standpoint, we are seeing relatively.
Speaker Change: You could argue is a reinvestment of the restructuring savings and some of it is if we were going to incur anyway.
Speaker Change: Relevant relative stability as it as it relates to that shift to merchandise.
Speaker Change: Perhaps just falls out.
Speaker Change: We are seeing some we've mentioned some of the pricing pressure on digital equipment that can put a little bit of pressure on margins as well. So those are more kind of market phenomenon that we're trying to manage.
Speaker Change: Once you get past.
Speaker Change: Distribution you get into specialty we do see a little more of a shift.
Speaker Change: For example at implants to value implants versus premium that has a slightly different margin profile.
Speaker Change: You mentioned some of the company specific items that that will that we are we are investing in and those are items quite frankly.
Speaker Change: We are working to improve the orthodontic business, which right now is creating a little bit of a drag for us on that operating margin. So there's a couple of things within specialty as well that we believe once we kind of get beyond 25 and get to a more normal run rate with those businesses will begin to see operating margin expansion.
Speaker Change: We're long term investment plans.
Speaker Change: Regardless, if we were doing the restructuring or not so some of that is.
Speaker Change: You could argue is a reinvestment of the restructuring savings and some of it is if we were going to incur it anyway.
Speaker Change: <unk> falls out.
Speaker Change: Contribution from that portion of the business and in technology.
Speaker Change: Once you get past.
Speaker Change: Distribution you get into specialty we do see a little more of a shift.
Speaker Change: The technology team has done a very good job of reducing costs of consolidating some brands on the patient experience side. We saw some good operating margin expansion and technology in the back half of 'twenty four and now the challenge will be to try to maintain that type of operating margin going forward.
Speaker Change: For example in implants to value implants versus premium that has a slightly different margin profile.
Speaker Change: We are working to improve the orthodontic business, which right now is creating a little bit of a drag for us on that operating margin. So there's a couple of things within specialty as well that we believe what's been kind of get beyond 25 and get to a more normal run rate with those businesses will begin to see operating margin expansion.
Speaker Change: Great and if I can ask a follow up to stand.
Speaker Change: When you're partnered with KKR and this way I know you have a long standing relationship with Henry Schein. One did you view them as a strategic partner or did you think that they would come in more and help operationally like take me through what you think the benefit youre going to get from having a stronger.
Speaker Change: Contribution from that portion of the business and in technology.
Speaker Change: The technology team has done a very good job of reducing costs of consolidating some brands on the patient experience side. We saw some good operating margin expansion and technology in the back half of 'twenty four and now the challenge will be to try to maintain that type of operating margin going forward.
Speaker Change: Relationship with KKR is going forward.
Speaker Change: Yeah.
Speaker Change: I think they will be a very strong strategic partner.
Speaker Change: They do care about the medical space, but particularly the dental space.
Speaker Change: Great and if I can ask a follow up to Stan.
Speaker Change: I think they are interested in advancing the platform.
Speaker Change: When you're partnered with KKR and this way I know you have a long standing relationship with Henry Schein. One did you view them as a strategic partner or did you think that they would come in more and help operationally like take me through what you think the benefit youre going to get from having a stronger.
Speaker Change: Consumables equipment software synergy between all of those.
Speaker Change: Specialty area.
Speaker Change: Have very good capabilities with the.
Speaker Change: Capstone area. So I think there are a lot of opportunities and the good news is there is they see as opportunities aligned with the areas that we have identified.
Speaker Change: Relationship with KKR is going forward.
Speaker Change: Yeah.
Speaker Change: I think they will be a very strong strategic partner.
Speaker Change: R 22 to 24 strategic plan that are now magnified in the 25 to 27 strategic play the high growth high margin opportunities.
Speaker Change: They do care about the medical space, but particularly the dental space.
Speaker Change: I think they are interested in advancing their platform.
Speaker Change: Opportunities.
Consumables equipment software synergy between all of those.
Speaker Change: Relating to it.
Speaker Change: That's just an efficiency.
Speaker Change: On the distribution side driving customer satisfaction.
Speaker Change: Specialty area.
Speaker Change: Have very good capabilities with the.
Speaker Change: Areas of leveraging between our businesses and of course, the technology area. The whole boat area are areas that they align.
Speaker Change: Capstone area. So I think there are a lot of opportunities and the good news is there is they see as opportunities aligned with the areas that we have identified.
Speaker Change: Heading to we're very fortunate directors, who had a lot of experience in the markets that we serve.
Speaker Change: R 22 to 24 strategic plan that is now magnified in the 25% to 27 strategic play the high growth high margin opportunities.
Speaker Change: We've added a third new director, who has very good experience in the device field. So I think.
Speaker Change: Opportunities.
Speaker Change: They will add a lot.
Relating to.
Speaker Change: The people that we've met our people that really are interested in our business and our long term players.
Speaker Change: That's just an efficiency.
Speaker Change: On our distribution side driving customer satisfaction.
Speaker Change: In this field. This is not a binding to stop driving enough and exiting this seems like a long term play.
Speaker Change: Areas of leveraging between our businesses and of course, the technology area. The whole boat area are areas that they align.
Speaker Change: Adding to we're very fortunate directors, who have a lot of experience in the markets that we serve.
Speaker Change: As a siem that's what the assurance of given so we're very very excited.
Speaker Change: With the opportunity to partner with take the op and advancing our boat plus one strategic plan.
Speaker Change: We've added a third new director, who has very good experience in the device field. So I think.
Speaker Change: Thank you very much.
Speaker Change: They will add a lot.
Speaker Change: The people that we've met our people that really are interested in our business and our long term players.
Speaker Change: The next question is from the line of Brandon Vazquez with William Blair. Please proceed with your question.
Speaker Change: Hey, guys. Thanks for taking the question two quick ones that are a little bit of clarification. One when you were talking Ron about sales structure normalizing in 2025, just to be clear can you quantify that to a change in the sales incentives or the structure of the sales incentive packaging or is it simply a normalization of what you think comp will be.
Speaker Change: In this field this is not a buying the stock driving enough and exiting this seems like a long term play.
Speaker Change: Seem thats, what the assurance of given so we're very very excited.
Speaker Change: With the opportunity to partner with take the op and advancing our boat plus one strategic plan.
Speaker Change: Because things are normalizing and then the other clarification question is simply around tariffs.
Speaker Change: Thank you very much.
Speaker Change: The Trump had been saying now again that the Mexico, and Canada tariffs might be going on soon and then of course, China has gone on and just talk to US about what is and isn't included within the 25 guidance that's been given.
Speaker Change: The next question is from the line of Brandon Vazquez with William Blair. Please proceed with your question.
Speaker Change: Okay.
Guys. Thanks for taking my question.
Speaker Change: Two quick ones that are a little bit of clarification. One when you were talking Ron about same structure normalizing in 2025, just to be clear can you quantify that you hear a change in the sales incentives or the structure of the sales incentive packaging or is it simply a normalization of what you think comp will be because things are normalizing and then the other.
Speaker Change: Yes, just to clarify Brandon first.
Speaker Change: Compensation question here average levels with reference really the management incentive compensation not not on the sales side. We have made we've also made some changes in the.
Speaker Change: And the sales commission structure, which we think.
Speaker Change: Kent can help us drive growth.
Speaker Change: Perhaps improve margins going forward and what I was referring to specifically was.
Speaker Change: Clarification question is simply around tariffs.
Speaker Change: The Trump had been saying now again, the Mexico, and Canada tariffs might be going on soon and then of course, China has gone out and just talk to us about what is and isn't included within the 25 guidance that's been given.
Speaker Change: When you look at the at the stock.
Speaker Change: Stock based compensation and other related.
Speaker Change: <unk> expenses going forward, we would to the extent, we can get the business back to a more normal growth rates.
Speaker Change: Yes, just to clarify Brandon first.
Speaker Change: We can we can start to expect an increase in those expenses and that's reflected here.
Speaker Change: Compensation question here that was with reference really to management incentive compensation not not on the sales side. We have made we've also made some changes in the.
Speaker Change: Regarding tariffs.
Speaker Change: We have.
Speaker Change: With.
Speaker Change: And the sales commission structure, which we think.
Speaker Change: Like for example, with China.
Speaker Change: And Ken can help us drive growth and improve perhaps improve margins going forward, what I was referring to specifically was.
Speaker Change: The one product category that is most affected by China, historically would be gloves and over the course of 'twenty. Four we were able to shift a lot of our supply chain to other southeast Asian countries, Vietnam, Malaysia as an example.
Speaker Change: When you look at the at the.
Speaker Change: Stock based compensation and other related.
Speaker Change: <unk> expenses going forward, we would to the extent, we can get the business back to more normal growth rates.
Speaker Change: We continue to have supplier relationships in China, we can we can have them supply our European businesses without <unk>.
Speaker Change: We can we can start to expect an increase in those expenses and that's reflected here.
Speaker Change: Having to manage the tariff side of it.
Speaker Change: Beyond that in Canada.
Speaker Change: Regarding tariffs.
Speaker Change: Canada is a large producer of anesthetics for the dental industry.
Speaker Change: We have.
Speaker Change: <unk>.
Speaker Change: Like for example, with China.
Speaker Change: To the extent that there is an increase in cost of anesthetics only affect us that'll affect everybody because thats, where most anesthetic dental anesthetics come from and regarding Mexico, we rely very little one on supply from from Mexico.
Speaker Change: The one product category that is most affected by China historically would be.
Speaker Change: And over the course of 'twenty four we were able to shift a lot of our supply chain to other southeast Asian countries, Vietnam, Malaysia is as an example.
Speaker Change: I think that that's those are really the areas of focus right now, but we believe we are well positioned to manage.
Speaker Change: We continue to have supplier relationships in China, we can we can have them supply our European businesses without.
Through any any situation that would arise as it relates to the tariffs.
Speaker Change: Having to manage the tariff side of it.
Speaker Change: Thank you and maybe one big bigger picture I am not sure remember gotten like this from me before but maybe can you talk about you guys. Obviously have your own product portfolio Henry Schein branded products.
Speaker Change: Beyond that in Canada.
Speaker Change: Canada is a large producer of anesthetics for the dental industry.
Speaker Change: To the extent that there is an increase in cost of anesthetics only affect us it will affect everybody because thats, where most anesthetic dental anesthetics come from and regarding Mexico, we rely very little one on supply from from Mexico.
Speaker Change: Percentage of customer needs do you guys think you can fulfill with your current portfolio.
Speaker Change: Trying to get a sense of like how big can this product portfolio actually get over the coming years and how much line of sight do you have in your current customer accounts to grow that business.
Speaker Change: I think that that's those are really the areas of focus right now, but we believe we are well positioned to manage.
Speaker Change: So of course, we are committed to our branded manufacturers, it's a hybrid model.
Speaker Change: Through any any situation that would arise as it relates to the tariffs.
Speaker Change: Thank you and maybe one big bigger picture I am not sure remember gotten a stat like this from me before but maybe can you talk about you guys. Obviously have your own product portfolio Henry Schein branded products.
Speaker Change: And.
Speaker Change: With the branded manufacturers.
Speaker Change: Offering that provides the prices satisfies the pricing needs of our customers. We will work with the branded manufacturers, but essentially for most products on the consumable side, we do have an alternative whether it's.
Speaker Change: Percentage of customer needs do you guys think you can fulfill with your current portfolio.
Trying to get a sense of like how big can this product portfolio actually get over the coming years and how much line of sight do you have in your current customer accounts to grow that business. Thanks.
Speaker Change: The brand is well recognized or not that's a different story, but I think the Henry Schein corporate brand has moved over the last five or six years to much more of a brand versus a white box, but essentially on the dental side, we have most of the products if not almost all.
Speaker Change: So of course, we are committed to our branded manufacturers, it's a hybrid model.
Speaker Change: And.
With the branded manufacturers.
Speaker Change: <unk>.
Speaker Change: We do not have private brand dental traditional equipment I'm not sure. There is a need for that we have adequate sources of supply and in that area and manufacturers are working with us to meet the value needs of our customers, whether they are dsos or smaller practices on.
Speaker Change: Offering that provides the prices satisfies the pressing needs of our customers.
Speaker Change: We will work with the branded manufacturers, but essentially for most products on the consumable side, we do have an alternative whether it's.
Speaker Change: The brand is well recognized or not that's a different story, but I think the Henry Schein corporate brand has moved over the last five or six years to much more of a brand.
Speaker Change: The medical side, a lot of we have a lot of the products not everything.
Speaker Change: And certainly we don't have our own brand of generic drugs, but we do have.
Speaker Change: This is a white box, but essentially on the dental side, we have most of the products if not almost all.
Speaker Change: All products.
Speaker Change: That's purchased by our medical customers.
We do not have private brand dental traditional equipment I am not sure there is a need for that.
Speaker Change: And are available generically available under a generic brands, but we don't have our own brand of generics most.
Speaker Change: Have adequate sources of supply and in that area and manufacturers are working with us to meet the value needs of our customers, whether they are dsos or smaller practices on the medical side a lot of we have a lot of the products not everything and certainly we don't have our own brand.
Speaker Change: Most of our pharmaceuticals anyway are injectables or vaccines.
Speaker Change: That seems the big one flu is.
Adequate supply.
Speaker Change: <unk>.
Speaker Change:
Speaker Change: Not exactly generic equivalent products and on Injectables generally.
Speaker Change: Generic drugs, but we do have.
Speaker Change: If something was available.
Speaker Change: So generic we have access to that.
Speaker Change: All products.
Speaker Change: At very competitive pricing so.
Speaker Change: That's purchased by our medical customers.
Speaker Change: We have a complete portfolio as needed, we're always adding new products of course, but.
Speaker Change: And are available generically available under a generic brands, but we don't have our own brand of generics.
Speaker Change: And we're always improving on our brand.
Speaker Change: Most of our pharmaceuticals anyway.
Speaker Change: Image.
Speaker Change: To match the quality of the product, but generally our corporate brand has very good potential having said that we are always working with our branded manufacturers and this hybrid model works well and we are expecting to increase our gross profit.
Speaker Change: <unk> of vaccines for vaccines, the big lot of flu.
Speaker Change: Adequate supply.
Speaker Change: <unk>.
Speaker Change:
Speaker Change: Not exactly generic equivalent products and on Injectables generally.
Speaker Change: With something Thats available.
Speaker Change: Margin.
Speaker Change: Because of the.
Speaker Change: Generic we have access to that.
Speaker Change: Specialty products, but also because of our own brand and because of the support from certain of our manufacturers.
Speaker Change: At very competitive pricing so.
Speaker Change: We have a complete portfolio as needed, we're always adding new products of course, but.
Speaker Change: National brand Manufacturers', So we do expect gross profit to increase.
Speaker Change: And we're always improving on our brand.
Speaker Change: Image.
Speaker Change: This year and in the future.
Speaker Change: To match the quality of the product.
Speaker Change: But generally our corporate brand has very good potential having said that we are always working with our branded manufacturers and this hybrid model works well and we are expecting to increase our gross profit.
Speaker Change: Thank you.
Speaker Change: We have time for one last question coming from the line of Elizabeth Anderson with Evercore ISI. Please proceed with your question.
Elizabeth Anderson: Hi, guys. Good morning, and thanks, so much for the question I had maybe two follow ups on some of the day one I. Appreciate your comments on the tariff guided a tariff impact of potential tariff impact can you just remind us maybe I missed this like what exactly you included in the guidance or whether you just think it's incremental but not net.
Speaker Change: Margin.
Speaker Change: Because of the.
Speaker Change: Specialty products, but also because of our own brand and because of the support from certain of our manufacturers.
Speaker Change: Brian Manufacturers', So we do expect gross profit to increase.
Speaker Change: Is that something that you're worried.
Speaker Change: This year and in the future.
Speaker Change: Worried about given some of the sourcing changes and then two maybe Stanley can you talk about the transition within the orthodontic market I. Appreciate what you said was sort of temporary in nature, but I just want to make sure I understand the dynamics at that your patent comes out and.
Speaker Change: Thank you.
Speaker Change: Time for one last question coming from the line of Elizabeth Anderson with Evercore ISI. Please proceed with your questions.
Speaker Change: Hi, guys. Good morning, and thanks, so much for the question I had maybe two follow ups. One I appreciate your comments on the tariff guidance.
And you'd be ramp both in the broader orthodontics business and also the clear aligner business. Thank you.
Speaker Change: The impact of potential tariff impact can you just remind us maybe I missed this like what exactly you included in the guidance or whether you just think it's incremental but.
Speaker Change: On the tariffs essentially there is no were not contemplating any impact.
Speaker Change: Bottom line.
Speaker Change: A big.
Speaker Change: Imported product offering is the clubs.
Speaker Change: Not necessarily something that you're worried.
Jon Block: Worried about given some of the sourcing changes and then two maybe Stanley can you talk about the transition within the orthodontic market I agree I. Appreciate what you said was sort of temporary in nature, but I just wanted to make sure I understand the dynamics of that patent comes out and.
Speaker Change: Yes, there is some natural gloves that we have to.
Speaker Change: Just in tariffs countries I think everybody is to some extent the lines on that.
Speaker Change: But other than that we've been able to shift our product needs around.
Jon Block: And you'd be ramp both in the broader orthodontics business and also the clear aligner business. Thank you.
Speaker Change: We can acquire.
Speaker Change: Gloves for example, adequate inventory from Malaysia.
Jon Block: On the tariffs essentially there is no were not contemplating any impact.
Speaker Change: Aware of any.
Speaker Change: Tariff implications on Malaysia, and as it relates to China. Some of the product that we need comes from China, We can use that in Europe.
Jon Block: Bottom line.
Jon Block: A big.
Jon Block: Imported product offering is the clubs.
Speaker Change: And satisfy U S demand elsewhere.
Speaker Change: Yes, there is some natural gloves that we have to.
Jon Block: Just in tariffs countries.
Speaker Change: Not much else.
Speaker Change: It had been moving products around now for a while.
Jon Block: Thank everybody is to some extent the lines on that.
Speaker Change: <unk> played this tariff.
But other than that we've been able to shift our product needs around.
For a while I do not believe it will impact our bottom line as Ron mentioned the Big one is simple anesthetic from Canada for the moment, we have adequate inventory to get us through for a while but.
Jon Block: We can acquire.
Gloves for example, adequate inventory from Malaysia.
Jon Block: Aware of any.
Jon Block: Tariff implications on Malaysia, and as it relates to China. Some of the products that we need comes from China, We can use that in Europe, and satisfy U S demand elsewhere.
Speaker Change: If there is a tariff on dental.
Speaker Change: Anesthetic from Canada, It will impact the entire industry, because you can't just move dental anesthetic around maybe a little bit more will come from France, but a huge percentage will come from Canada. So.
Jon Block: Not much else.
Jon Block: It had been moving products around now for a while.
Speaker Change: Thanks.
Speaker Change: From a bottom line point of view.
Jon Block: <unk> played this tariff.
Speaker Change: Europe's implemented.
Jon Block: For a while I do not believe it will impact our bottom line as Ron mentioned the Big one is simple anesthetic from Canada for the moment, we have adequate inventory to get us through for a while but.
Speaker Change: <unk> sales in a positive way, but I don't think.
Speaker Change: The bottom line, we will have it will be impacted in any material way.
Speaker Change: Any way really.
Speaker Change: As it relates to the orthodontics, it's a small part of our business.
Jon Block: If there is a tariff on dental.
Speaker Change: But the infrastructure we had in place.
Speaker Change: Anesthetic from Canada, It will impact the entire industry, because you can't just move dental anesthetic around maybe a little bit more will come from France, but a huge percentage will come from Canada. So.
Speaker Change: For the traditional orthodontics was built for a much larger business.
Speaker Change: Now so right sizing the.
Speaker Change: Infrastructure.
Speaker Change: Yes, we lost a patent.
Jon Block: Don't think.
An important product in the orthodontic space. So we lost money in that space operating income.
Jon Block: From a bottom line point of view.
Jon Block: Europe's implemented it will impact sales in a positive way, but I don't think.
Speaker Change: 24 that is being adjusted as it relates to align as we make the lineup in the U S and in France to a buyer.
Jon Block: The bottom line, we will have we will be impacted in any material way.
Jon Block: Any way really.
Jon Block: As it relates to orthodontics, it's a small part of our business.
Speaker Change: It's a business where.
So Josh lows all of liners will come out of the French factory, it's actually a very good lineup, but we have been losing money on a liners.
Jon Block: But the infrastructure we had in place.
Jon Block: For the traditional orthodontics was built for a much larger business.
Jon Block: Now so right sizing the.
Speaker Change: And we expect to turn this all around and 24 by the time, we get to the third or fourth bullet actually more of the fourth quarter, we will start making money again in a very small orthodontics space, which has been a drag on our specialty earnings in 'twenty four.
Jon Block: Infrastructure.
Jon Block: Yes, we lost a patent.
Jon Block: An important product in the orthodontic space. So we lost money in that space operating income and 24 that is being adjusted as it relates to align as we make the lineup in the U S and in France through our biotech business where.
Speaker Change: As we get to the end.
Speaker Change: And a 25 I think you'll see.
Speaker Change: Profitability in the orthodontic business, but it is small, but we did lose some money in 2004.
Jon Block: So Josh it was all a lineup that will come out of the French factory, it's actually a very good lineup, but we have been losing money on the liners.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: I think so.
And we expect to turn this all around in 'twenty four.
Speaker Change: I think the end now.
Speaker Change: Yes, Mr. Bergman I'd turn the floor back over to you for closing comments.
Jon Block: By the time, we get to the third or fourth quarter. That's more of the fourth quarter, we will start making money again in a very small orthodontic space, which has been a drag on our specialty earnings in 'twenty four.
Speaker Change: So.
Speaker Change: Thank you everyone for calling in.
Speaker Change: Really appreciate it.
Speaker Change: I am.
Speaker Change: I'm aware.
Speaker Change: The movement to the new segment accounting is a bit of a challenge.
Jon Block: As we get to the government to the end of 'twenty five I think youll see.
Speaker Change:
Speaker Change: I don't know if another way I'm sure.
Jon Block: Profitability in the orthodontic business, but it is small, but we did lose some money in 2004.
Speaker Change: Other ways in which we could have.
Speaker Change: Advised.
Speaker Change: Our investors of the change with just alert investors in our last call that we would be doing this.
Jon Block: Yes.
Jon Block: Yes.
Jon Block: I think so.
Jon Block: I think the end now.
Speaker Change: We did consult with advisors and do apologize if we're hitting our investors with too much new information all at once while at the same time, having an early call.
Hey, yes, Mr. Bergman I'd turn the floor back over to you for closing comments.
No.
Thank you everyone for calling in.
Jon Block: Really appreciate it.
Speaker Change: So.
Jon Block: Hi, <unk>.
Jon Block: With that the movement to the new segment accounting is a bit of a challenge.
Speaker Change: That's number one.
Speaker Change: Number two is our team ready to.
Jon Block: I don't know if another way I'm sure the other ways in which we could have had.
Speaker Change: The address questions.
Speaker Change: Of course, all in compliance with.
Speaker Change: Ft.
Jon Block: Advice.
Jon Block: Our investors of the change with alerts and vessels in our last call that we would be doing this.
Speaker Change: Graham Susan Ron available of course, I'll take calls from any investors too.
Jon Block: We did consult with advisors and do apologize if we're hitting our investors with too much new information all at once while at the same time, having an early call. So.
Speaker Change: I just want to emphasize maybe didn't come across clearly we are quite bullish about the business I think the business is running well were very good management in our segments. Each one of the segments is run by capable people experienced people not only hitting up not Andre.
Jon Block: Sure.
Jon Block: That's number one.
Jon Block: Two is our team.
Jon Block: To.
Speaker Change: And Tom but the teams underneath them are very very solid both in the United States dental business in the United States Medical business.
Jon Block: Address questions of course, all in compliance with.
Jon Block: Ft.
Jon Block: Graham Susan Ron available of course, I'll take calls from any investors too.
Our Canadian and Brazilian business, our European business in our Asian businesses. So.
Speaker Change: I think we've got as good a team as anyone else in our industry I think we are continuing to gain market share.
Speaker Change: I just want to emphasize maybe didn't come across clearly we are quite bullish about the business I think the business is running well were very good management in our segments. Each one of those segments is run by capable people experienced people not only hitting up not only andre.
Speaker Change: If you Peel the onion, maybe there's some areas, where we haven't grown market share this quarter.
Speaker Change: Very interesting dynamics is that part of when Christmas fell what was moved between 23.
Speaker Change: And Tom but the teams underneath them are very very solid both in the United States dental business in the United States Medical business.
Speaker Change: Last quarter and 24 first quarter Comparables. These all areas and are hopeful that 25 will be an easier year to understand and.
Speaker Change: <unk> Brazilian business, our European business in our Asian businesses. So.
Speaker Change: We'll be well set up for an outstanding I think 26.
Speaker Change: I think we've got as good a team as anyone else in our industry. I think we are continuing to gain market share. If you Peel the onion, maybe there's some areas, where we haven't grown market share this quarter.
Speaker Change: We view 25, as we've noted a couple of times as a base year upon which we will return to our model for growth.
Speaker Change: High.
Speaker Change: Single digits low double digits EPS cash flow and the business is good investments that we've made to advance our strategic plan.
Speaker Change: Very interesting dynamics as part of when Christmas fell what was moved between 23.
Speaker Change: Doing well the big ones are doing extremely well.
Speaker Change: Last quarter in 2000 and for first quarter Comparables. These are all areas and are hopeful that 25 will be an easier year to understand and.
Speaker Change: And our advances on all sides of the strategic plan. The boat plus one plan are doing well you've got a slide in the investor presentation, covering the b to build operational.
Speaker Change: We'll be well set up for an outstanding I think 26.
Speaker Change: We view 2005, as we've noted a couple of times as the base year upon which we will return to our corporate model for growth.
The operationalization of our.
Speaker Change: Distribution business the.
Speaker Change: High.
Speaker Change: The leveraging is doing well with lots of opportunity and we're making very good progress on the digital side.
Speaker Change: Single digits low double digits EPS cash flow and the business is good the investments that we've made to advance our strategic plan.
Speaker Change: System that we launched in the UK and Ireland is working quite well in that market and we will come to the states later in the year.
Speaker Change: Doing well the big ones are doing extremely well.
Speaker Change: And our <unk>.
Speaker Change: Advances on all sides of the strategic plan the boat plus one plan are doing well.
Speaker Change: I'm quite comfortable that that product will generate much more business, it's not doing it now although right now we do have to recognize the depreciation.
Speaker Change: Got a slide in the investor presentation, covering the be the build the operational operationalized.
Speaker Change: We're doing quite well and advancing our clinical workflow.
Speaker Change: The operationalization of our.
Speaker Change: Distribution business, the Oh, the leveraging is doing well with lots of opportunity and we're making very good progress on the digital side.
Speaker Change: With advanced AI and the business, we're doing I think the things we shouldn't be doing.
Speaker Change: I do realize from an investor point of view, there's been a lot of change the change started with the up and down.
Speaker Change: System that we launched in the UK and Ireland is working quite well in that market and we will come to the states later in the year.
Speaker Change: The some restructuring that occurred after October and as things are settling down we did have the cyber incident, but we have it.
Speaker Change: I'm quite comfortable that that product will generate much more business, it's not doing it now although right now we do have to recognize the depreciation.
Speaker Change: Believe fully stabilized.
Speaker Change: Post the <unk> incident.
Speaker Change: Just at a medical National sales meeting our sales organization is really not only really but going out again getting new business.
We're doing quite well and advancing our clinical workflow.
Speaker Change: Advancing AI in the business, we're doing I think the things we should be doing.
Speaker Change: I would say 24 was again most of the 24 it was a year.
Speaker Change: I do realize from an investor point of view, there's been a lot of change the change started with the <unk> up and down.
Speaker Change: And which we will.
Speaker Change: With focused on existing customers.
Speaker Change: Getting them through the cyber incident obtained a lot of most of our customers if not all.
Speaker Change: The some restructuring that occurred after COVID-19 and as things are settling down we did have the cyber incident, but we have it.
Speaker Change: Except for some of the episodic customers were getting the best doing a lot of with the.
Speaker Change: Believe fully stabilized.
Speaker Change: The whole area of e-commerce to attract those customers back.
Speaker Change: Post the <unk> incident.
Speaker Change: Just at a medical National sales meeting our sales organization is really not only really but going out today in getting new business.
Speaker Change: The episodic that left us and I would say the business is quite stable today and the strategic plan that we executed for 22% and 24, we will have very good momentum into <unk> 'twenty five to 27 plan led by I think a great team so with that in mind.
Speaker Change: I would say 24 was again most of the 24 hours.
Speaker Change: And which we will.
Speaker Change: With focused on existing customers.
Speaker Change: Again, sorry about that.
Speaker Change: And even through the cyber incident, we obtained a lot of most of our customers if not all.
Speaker Change: And which segment accounting.
Changes came out but I'm not sure there's any good way of really presenting a significant change and having a call.
Speaker Change: Except for some of the episodic customers were getting the best doing a lot of with the.
Speaker Change: The whole area of e-commerce to attract those customers back.
Speaker Change:
Speaker Change: Right. After the press release goes out on a half, but anyway, we will listen to investors will take your ideas.
Speaker Change: The prosodic that left us and I would say the business is quite stable today and the strategic plan that we executed for 'twenty two and 24, we'll have very good momentum into 25% to 2017 plan led by I think a great team so with that in mind.
Very seriously we're open to all dialogue with investors.
Speaker Change: Of course, we're very very excited about the addition of takeaway or to our Investor base and three new board members, we have so.
Speaker Change: Again, sorry about.
Speaker Change: Look forward to seeing people at conferences, Ron Brian Susan I'm going out to.
Speaker Change: The way in which segment accounting.
Speaker Change: Changes came out but I'm not sure there's any good way of really presenting a significant change and having the call.
Speaker Change: To some conferences I think next week.
Speaker Change: And please feel free to reach out to us.
Speaker Change: I'll answer your questions.
Speaker Change:
Speaker Change: Right. After the press release goes out of Alan a half, but anyway, we will listen to investors, we will take your ideas.
Speaker Change: Also of course in compliance with <unk>. Thank you very much.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: Very seriously.
Speaker Change: I'm too old dialogue with investors and of course, we're very very excited about the addition of <unk>. There are two investor base and the three new board members we have so.
Speaker Change: Look forward to seeing people at conferences, Ron Brian Susan I'm going out.
Speaker Change: To some conferences I think next week.
Speaker Change: And please feel free to reach out to us.
Speaker Change: We'll answer your questions.
Speaker Change: Also of course in compliance with <unk>. Thank you very much.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: [music].