Business Context and Reporting Period
Company: Henry Schein, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Quarter and six months ended June 27, 2026
Business Overview: Henry Schein is a global provider of health care products and services to office-based dental and medical practitioners. The company operates through three segments: Global Distribution and Value-Added Services, Global Specialty Products, and Global Technology. The period includes the transition to new CEO Frederick M. Lowery, effective March 2, 2026.
Key Financial Metrics
| Metric (in millions) | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Net Sales | $3,458 | $3,240 | $6,826 | $6,408 |
| Gross Profit | $1,101 | $1,016 | $2,171 | $2,016 |
| Gross Margin % | 31.8% | 31.4% | 31.8% | 31.5% |
| Operating Income | $171 | $151 | $353 | $326 |
| Net Income (Total) | $102 | $94 | $214 | $207 |
| Net Income (Attributable to HSIC) | $94 | $86 | $201 | $196 |
| Diluted EPS | $0.82 | $0.70 | $1.74 | $1.58 |
| Operating Cash Flow (YTD) | $145 | $157 | - | - |
| Total Debt | $3,462 | $3,107 | - | - |
| Cash & Equivalents | $157 | $156 | - | - |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 6.7% in Q2 2026 and 6.5% YTD compared to the prior year. Growth was driven by internal growth (4.6% in Q2, 3.6% YTD), acquisition growth (0.7%), and favorable foreign exchange impacts (1.4% in Q2, 2.2% YTD).
- Segment Performance:
- Global Distribution: Sales up 6.6% (Q2) and 6.3% (YTD), driven by merchandise and equipment growth.
- Global Specialty Products: Sales up 8.7% (Q2) and 8.4% (YTD), driven by implant and biomaterial growth.
- Global Technology: Sales up 8.2% (Q2) and 7.6% (YTD), driven by cloud-based practice management adoption.
- Profitability: Operating income increased 13.2% in Q2 and 8.3% YTD. Gross margins expanded slightly across all segments due to favorable business mix and value creation initiatives.
- Restructuring Costs: The company recorded $29 million in restructuring costs for Q2 2026 and $41 million YTD, primarily related to the 2024 Plan for integration and efficiency. This compares to $23 million (Q2) and $48 million (YTD) in the prior year.
- Debt Levels: Total debt increased to $3.462 billion from $3.107 billion at year-end 2025, driven by increased borrowings under bank credit lines and private placement facilities.
Guidance, Outlook, and Risks
- Restructuring Outlook: The 2024 restructuring plan is expected to continue through the end of 2027. An estimate for charges in 2026-2027 has not been determined.
- Tariffs and Trade: The company notes a volatile global trade environment due to new U.S. tariffs. While no material adverse impact was seen in the first half of 2026, the company expects to recognize net tariff refunds in the third quarter of 2026.
- Capital Allocation:
- Share Repurchases: The company executed a $250 million accelerated share repurchase program in May 2025. As of June 27, 2026, $455 million remains available under the current authorization.
- Acquisitions: The company continues to pursue acquisitions aligned with its BOLD+1 strategy, focusing on high-growth, high-margin businesses.
- Risk Factors: Key risks include supply chain disruptions, geopolitical conflicts, regulatory changes in healthcare (including EU Medical Device Regulation), cybersecurity threats, and the impact of inflation and interest rates on borrowing costs.
Investor Verification Checklist
- Debt Servicing: Verify the impact of rising interest rates on the $3.46 billion debt load, particularly the variable rate portions of the revolving credit and term loans.
- Working Capital Efficiency: Monitor Days Sales Outstanding (DSO), which increased to 45.7 days, and Inventory Turns, which decreased to 4.6, indicating potential pressure on cash conversion.
- Restructuring Execution: Track the actual cash outflows and operational benefits realized from the ongoing 2024 restructuring plan against future guidance.
- Tariff Refunds: Confirm the timing and magnitude of expected tariff refunds in Q3 2026 as disclosed in management commentary.
- Acquisition Integration: Assess the integration progress of recent acquisitions in the Global Specialty Products segment and their contribution to organic growth targets.