Henry Schein (HSIC -9.22%), a healthcare solutions company focused on distributing dental and medical products, released its quarterly results on August 5, 2025. The quarter’s most notable development was a drop in profitability, as both GAAP diluted EPS ($0.70) and non-GAAP diluted EPS ($1.10) declined compared to the prior-year period, with Non-GAAP earnings per share (EPS) of $1.10 came in well below analyst expectations of $1.19 and declining 10.6% from $1.23 in the prior-year period. Total revenue (GAAP) reached $3.24 billion, and showing 3.3% as-reported sales growth from the year-ago result. Despite revenue growth, heightened expenses, shrinking margins—especially in U.S. dental distribution—and larger restructuring charges led to lower GAAP net income. The quarter reflected continued strength in the specialty and technology solutions businesses but marked ongoing pressure and underperformance against both internal goals and market estimates, as evidenced by non-GAAP EPS of $1.10, which missed the analysts’ estimate of $1.19 by approximately 7.6%.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.10 | $1.19 | $1.23 | (10.6%) |
| Revenue | $3.24Â billion | $3.22Â billion | $3.14Â billion | 3.2% |
| Adjusted EBITDA | $256Â million | $268Â million | -4.5% | |
| Net Income | $86Â million | $104Â million | (17.3%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management’s guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Focus
Henry Schein (HSIC -9.22%) operates as a global distributor of healthcare products and services, serving more than one million customers across dental and medical practices, laboratories, and alternate care settings. It delivers a wide selection of consumables, equipment, pharmaceuticals, and services, supported by a network of 36 distribution centers and operations in 33 countries. The company also offers technology platforms for healthcare providers, including practice management software and cloud-based solutions.
Recent business strategy emphasizes broadening its offerings, expanding its global reach, and investing in digital innovation. Since 2024, it has focused on expanding specialty products, technology solutions, value-added services, and owned-brand goods. Strategic acquisitions and partnerships are pivotal, including a notable collaboration with KKR, as is ongoing attention to operational efficiency, cost management, and regulatory compliance within the healthcare sector. Success hinges on efficient distribution logistics, the ability to fill frequent small orders, and continuously growing its digital and specialty product presence.
Quarterly Performance and Segment Developments
In the quarter, Total revenue (GAAP) reached $3.24 billion, a 3.3% increase in as-reported total net sales versus the prior-year period, Revenue (GAAP) was approximately $22 million below consensus. However, Non-GAAP EPS was $1.10 for Q2 FY2025, falling short of the $1.19 non-GAAP analyst target and dropping from last year’s non-GAAP diluted EPS of $1.23. Net income (GAAP) declined by 16.8%, and Adjusted EBITDA slipped to $256 million from $268 million in the prior-year period. Declining profit was driven by heightened cost pressures and slimmer margins in core U.S. dental operations. Lower glove pricing and targeted sales efforts weighed on gross profit, and net income faced additional headwinds from doubled restructuring costs, which grew to $23 million.
Dentistry remains the company’s largest segment. Global dental merchandise sales rose 0.3%, though growth was muted in constant currency. U.S. dental saw lower average selling prices—particularly impacting margins—while International dental equipment sales increased 12.1%. The U.S. dental equipment business experienced a slowdown in orders midway through the quarter, which management attributed to temporary uncertainty tied to tariffs. Dental equipment sales overall gained 3.0%.
The medical distribution segment stood out. Global Medical Distribution sales increased 6.1%, supported by greater patient traffic, a growing home solutions business, and acquisition contributions. Annualized revenue for home solutions neared $400 million as of Q1 FY2025, as Recent deals in the sector added approximately 0.8% to overall sales growth. Meanwhile, the global technology group—encompassing practice management software such as Dentrix Ascend and Dentally—grew revenue by 7.4%. Customer adoption of cloud-based solutions and revenue cycle management products was cited as a key growth engine.
Value-added services—comprised of financial services, consulting, and specialty offerings—grew 3.6%. However, income from practice transitions services dipped due to tough comparisons with last year’s record period.
The quarter featured several impactful one-time items. Restructuring charges reached $23 million (GAAP), part of a savings plan aiming to cut more than $100 million in annual expenses by the end of FY2025. Management expects these projects to start producing results at the beginning of 2026. The company repurchased approximately 3.7 million shares for $259 million. However, the effect of these transactions on diluted EPS was minor for the quarter.
Looking Ahead
For fiscal 2025, leadership kept its financial guidance unchanged. Expectations are for non-GAAP EPS of $4.80 to $4.94—representing 1% to 4% growth over FY2024—and sales growth of approximately 2% to 4% is expected. Adjusted EBITDA is forecast to rise by a mid-single-digit percentage. Management stated that earnings are likely to be weighted toward the second half of the year. The restructuring program, including cost cuts and efficiency gains through partnerships with KKR and management consulting firms, is expected to have a larger financial impact beginning in 2026.
No dividend was paid or announced during the period; HSIC does not currently pay a dividend. Investors tracking the company in upcoming quarters should watch for improved margin trends, updates on restructuring savings, and the business performance of high-growth segments like cloud-based technology and specialty products. Given that much of the current restructuring’s benefits are not expected until late 2025 or 2026, near-term results may continue to show modest growth and margin pressure before more significant improvements emerge.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
