Henry Schein Inc. (NASDAQ:HSIC) shares are trading lower after the company reported third-quarter earnings that beat estimates, with sales nearly in line.
Q3 Financials: Adjusted EPS Beats Consensus, Sales Nearly in Line
Total net sales were $3.471 billion, almost in line with the consensus of $3.476 billion, reflecting 3.1% internal sales growth, 0.7% sales growth from acquisitions and a 0.2% increase resulting from foreign currency exchange.
Adjusted EBITDA was $321 million, compared with $295 million a year ago, with adjusted EBITDA margin growing 40 basis points to 9.24%.
The healthcare distribution company reported adjusted earnings of $1.56 per share, beating the consensus of $1.36.
Core U.S. Dental Merchandise Volume Drives Growth
U.S. dental merchandise sales grew 8.6%, driven primarily by volume rather than price in a stable market, particularly among private practices and emerging dental service organizations (DSOs).
Fourth-Quarter Expansion and Long-Term Run Rates
In an earnings call, CEO Frederick Lowery said, “We have therefore made the deliberate decision to make some limited incremental investments in the fourth quarter focused on winning new customers, increasing our share of wallet, and converting more episodic customers into long-term Henry Schein customers.”
“…we continue to expect more than $200 million of operating income improvement, including $125 million run rate by the end of 2026,” Lowery told investors.
Market Conditions: Consumable Demand Holds Firm As Discretionary Care Lags
The CEO also said the overall U.S. dental market remains steady and patient traffic was stable during the quarter. Consumable sales for routine procedures are steady, demand for traditional equipment remains healthy, and DSOs continue to be an important source of growth.
However, the company is seeing some pressure in discretionary procedures where patients can be more sensitive to out-of-pocket costs, and they may choose to defer treatments.
Updated Fiscal 2026 Outlook: Profit Expectations Raised
Henry Schein raised fiscal 2026 adjusted earnings guidance from $5.29 to $5.39 per share to $5.50 to $5.56 per share, compared with the consensus of $5.39.
The company reaffirmed fiscal 2026 sales guidance of $13.79 billion to $13.93 billion, compared with the Wall Street estimate of $13.87 billion.
Henry Schein kept its fiscal 2026 sales growth forecast at 4.5% to 5.5% and now sees adjusted EBITDA growth in the high single digits, up from mid-to-high single digits.
HSIC Stock Price Activity: Henry Schein shares are trading lower by 2.15% at $84.76 at the time of publication on Tuesday, according to Benzinga Pro data.
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