Earnings call transcript Q1 2023

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Operator

Good morning, ladies and gentlemen, and welcome to Henry Schein's First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions].

As a reminder, this call is being recorded.

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

Graham Stanley

discuss South, With Chief and Chairman operator, Ron of Stanley Schein; Vice the you us results thanks Thank Executive the and Henry Chief Henry of call and you, financial XXXX. my Schein's quarter Bergman, and Officer on President for of the to Officer. Senior joining Board to me first are for today Financial

comments Before during that like we begin, to I'd forward-looking. call state information that include certain made will this is

involved the you risks in to As company's business statements. in matters and referred may affect uncertainties forward-looking know, the

differ by in contained or Commission, from those section result, in the a cautionary by filings As expressed those with the such filings. Risk are and qualified These Securities materially indicated forward-looking their statements entirety Henry Schein's statements the Exchange the company's in may of included statements. in and Factors performance

transparency financial useful of to independently respect vary operating enable the allow supplemental business between business. in by all our with and believe about measures of Today's are certain used performance the market share, investors we rates markets company's growth results. information may comments financial both greater the items comparison for periods serve, financial with about market our end business, upon include GAAP analysis will performance including and key of where management and remarks the financial internal and that estimates. non-GAAP metrics non-GAAP We results based addition, provide In

release between Information be solely and of can measures. included be in section Supplemental GAAP a presented regarded Financials as the Exhibit measures today's are for the found informational replacement non-GAAP and website measures corresponding press under heading. Filings not of purposes financial B Investor for in & GAAP our and are and Relations should non-GAAP comparative These Reconciliations

quarterly our on refer website. please Investor information, Relations financial earnings to our posted presentation additional For also

as or of May Henry statements update contains The of this revise after call circumstances date of broadcast, of content Schein or date conference obligation XXXX. call. the that events only undertakes to the no any forward-looking this the secrete reflect to live time-sensitive information X,

during please a a limit session, the Lastly, question Q&A and to single yourself follow-up.

that, with to the to I'd Bergman. like And turn Stanley call over

Stanley Bergman

Thank you, this morning. Thank us for Good Graham. morning, everyone. joining you

We is pleased of the pre-pandemic our line businesses. earnings good results during momentum and are has compared of in report also to year, with the Market normalized. the core first or very fourth those reflect recovered good stayed quarter quarter provided number the around discussed previous to saw flu the cases the through we underlying XXXX offices in physician that expectations levels. conference most trends financial world call and for a has at patient beginning are we Patient traffic traffic last of with year, the high we dental to quarter's where nearing the of at practices consistent

kits. sales be continued As PPE we impacted and anticipated, test COVID by results products decreasing to our of

PPE at lower. was the kits credit but category, has discussed, focus this we as was pricing the test volume a Within on pricing Again, COVID-XX basis. stabilized sequential stage lower.

in local these of we internal categories, companywide Excluding strong product growth achieved X.X% currencies.

Our exchange. acquisition-related financial also as results were foreign by well impacted as expenses adversely

resilient complement also dental consumables our April, implants enter business and to to recently implant the of a business. we market manufacturers successful stake our general implants S.I.N. of a acquisition with acquisitions, closed announced in and of large and Brazil's leading Brazilian the Implant and one a dental we clear to Dental with plans our of remains majority Biotech System, acquisition equipment of robust. our dental a aligners, portfolio market-leading respect With pipeline early In

of acquisition very infrastructure today Healthcare the and in business the Regional successful medical the region in New our we And leveraging entering moment. a details I'll we dental in region. the Group Zealand announced Australia more these in in have and market also discuss

are including guidance operating acquisition Today, for guidance, expenses. outlook products estimates, updating EPS include percentage business prior the and Dental, the is Biotech the Dental. impact with and acquisition-related test high income expectations when non-GAAP Biotech growth of to financial of our from low for the in to PPE underlying COVID XXXX excluding range diluted kits double-digit the for The single consistent contribution we

now turn from each the of of business me to highlights Let a our review units.

our low let's unemployment aging a of dental business. underlying oral global Overall, levels end preventative of begin and the solid, the care with of distribution by health growing remain -- awareness care and global dental markets fundamentals fueled an benefits So dental, population, hygiene. global and

by and dental cases partially products, excluding that patient quarter by -- excluding Omicron reflect sales when products, First very good, driven COVID-XX. Dental flow. the growth, of level prior was higher some impacted sales, stable PPE flu PPE year merchandise comparison merchandise was COVID sales lower

dental solid. previous mills, XD grew lower imaging, of intra-oral than year. sales sales Traditional Our equipment digital well, sales continued digital scanners while equipment comprising XD, the equipment were be very to

the good and equipment. while. growth decrease this We've in by second been business. North This America, in included introduced equipment traditional of in offset a focusing some well In a the area half parts growth of increases year on as was last sales growth as service price for our digital

unit in intraoral for healthy, quarter. demonstrated increased sales scanners market the The is by as

previous -- Unit selling last sales we quarter, scanners our in categories are of are now in other the in sales we and price sale year. had as last also to intra-oral However, average decrease normalized compared digital for the a lower, previous a significant believe plus we scanners, DSO. declining year reflects commented to the quarter

also, is event for from service good in a And once well. Europe. Schein. overall and impact sales has show Europe not March equipment We the with previous perspective, business also IDS which a the dental Henry backlog, and normalized to consistent level is supported parts IDS meetings. was was doing sales Cologne been dental a by growth posted biennial growth again good The price equipment was inflation in quite our significant, International in in more reverting in and equipment the

Our of and global traditional book, is robust comprised equipment, remains up it's order equipment mainly which year-over-year.

bit look Specialty take on Let's in our detail Global a Dental more a business.

Global Specialty Dental product sales Our growth the from increased quarter. fourth

line. line have in Medentis our biggest product our growth where modest We first achieve continue double-digit growth Switzerland, Germany, growth half in to to we strong the the to driven meaningful the given price market expect XXXX. continue year-over-year first by in Implant share was of in and year half premium of sales our Camlog and strongest the growth category, Austria we value

North being are larger in DSOs. acquired In dental seeing America, increase we an specialty practices by

and we growing practices are to Importantly, product have conversion of at DSO committed number a those relationships accounts driving specialty networks. within excellent with

Henry dental We amongst demonstrated in also continue to and by dental specialty growing enrollment general practitioners continuing courses see as categories. in procedures adoption these education Schein's of

earlier, Clear in $XXX these million with diagnostic dental through a recent mentioned software business. of and portfolio Biotech resulted Dental suite XXXX. Together, planning As -- our provides the Specialty announcement in Biotech and implants a as highlights S.I.N. S.I.N. integrated in as with Schein was of Henry comprehensive and System Aligners. in the of of Implant products approximately Brazilian of majority Dental of Global Dental fast-growing stake business well revenue Implant entry an acquisition a market implant the System acquisition the our into

to We portfolio solution will Biotech along seamless and are software workflow particularly existing of a digital worldwide, a Dental very, excited products clinical exciting. software customers, we about to practice with customers number bringing offer the our very management our of software growing

to to definitive our Schein, Brazil's last revenues of over planned growth brought value agreement became we United Implant market. five which years with market active distribution implant in dental has market. or Brazilian Henry entry a expanded that value States for leading geographies. of announced dentists S.I.N. one dental is price Last XXXX. week, Brazilian implants other a of System, acquire into have recently dental the marks laboratories we good we been Brazil agreement million S.I.N. very $XX the where including manufacturer implants the since and This approximately large and of six in good

to Implant particularly of and, course, are Both to Dental close the strategy, approval. we expect making which later year, activities growth this regulatory to, S.I.N. progress course, transaction calls and business services. represent BOLD+X transactions our Biotech of on internal We advance products the and the and System focus this opportunities for development subject high-margin with to us innovative high-growth,

[ This nicely, through Brasseler and continued to primarily America. in our Edge brands endodontic North quarter, our business grow

Our is quite business, orthodontic development positive with of with our the continued we're DSOs. but Aligner small, Clear particularly pleased business

these the believe Schein the businesses continues One, to upgraded BOLD+X now Technology our in our So Growth in Dental strategic technological later are business, our and component, Investing lifecycle in advantages North Ascend by Easy driven we key customers the year. innovation recognizing quarter. and me ending bring growing an this and we of to marketplace. product to solutions Dental turn largest America pillar had and customers excellent plan the from which Henry our where Value-Added Easy cloud-based Dentrix Dentrix with a let be Services that

by Dentrix the over where solutions, these Zealand, launched. our cloud-based The XX% increased cloud-based was customers Ascend for particularly it of Dentally, approximately customers United solutions in supported last and outside the entirely year. on New International Australia number growth and was the recently are States, has

and excited with our moving cloud-based to pleased We solutions. customers are very very, our

by Sales provide underlying saw the enhanced our processed. e-claims product business. reimbursement markets growth electronic competitive our solutions. e-claims growth the dental as to advantage In strong also insurance by revenue claims invoicing reprocessed management product with number functionality short, We by the of of with of driven solutions our and and management evidenced this practice are of a higher indicator number a we cycle

software and at workflow efficiency. practice core of highly supports is while integrated clinical the the operatory improving Our

growing opportunities for products software sell including to provides well as solutions AI-enhanced generation software us Our demand analytical practice practice, our digital portfolio. management the also as devices into product and

Towards software for first treatment Dentrix AI identify integration faster has and the we been the to recommendation. Bola well Products end effective Detect evaluation and by of x-rays automatically this digital This analyzes into received. product Health full carriers and AI the announced offering images Video quarter, powered AI allowing localized of of -- Ascend.

improved voice Additionally, for feature and periodontal clinical speed completing and exams when nodes. and our efficiency hygienists technology new dentists

we in seen new this patient have the possible early providing still solution, to excited already is and launch, support good the it are our AI-driven reach of adoption and care. extend in we best While dentists

the our achieved PPE and test distribution excluding COVID-XX So in the kits. business, medical X%, quarter, first growth business, of products our during medical business

medical also continue slower bullish year. somewhat significantly. a from category, the highly to year, our pace As expect remain We lower medical price this sales And year. underlying the we business I at than mentioned growth but Unit last given grow the within internal at year in on year achieved stabilized, nicely, quarter, we last last tests to comparison our albeit COVID prior for has last quite pricing than down business. were growth significant sales a PPE drug resulting

were diagnostic products at point-of-care flu and year Looking categories, while decreased again, the last because to specific pharmaceutical of of diagnosis equipment strong, high product this once extent sales quarter. sales some

and further We acquisition announce and growing products our leverage Healthcare pleased global be New of expand our and growth have Australian will both New infrastructure Zealand that Zealand also we this footprint. markets able to were acquisition, dental to business. Australia medical to the of our Through Regional our Group contributed in

are with we the and underlying anticipated of BOLD+X core as plan. well In business fundamentals summary, executing solid, our our strategic remain

comfortable are. as BOLD+X We're we we're and the advance with excited we strategy. business are our very about bullish So where

the much, that guidance. first With in Thank our full-year discuss financial to turn I very to everyone. over call quarter mind, results will and you our Ron

Ron South

Thank and morning, everyone. you, Stanley, good

point as begin, I'd and also out basis. will on our like a we discussing I a GAAP be As reported on to non-GAAP that basis results

and non-GAAP costs quarter XXXX release. as exclude acquired restructuring first detailed Our B of in as Exhibit well of for amortization XXXX financial This expense is intangible assets. results press today's

acquisitions. internally will compared LCI is generated prior in growth, and the focus respect on sales sales With local which growth, to currencies year sales to excludes I

sales $X.X of decrease sales an global billion reflected quarter First of LCI X.X%.

QX whereby and excluding holiday did week quarter of benefited of XXXX COVID-XX when the the included it test fell our kits, quarter but December the from first fourth somewhat PPE XXXX. was grew However, timing products This in XXXX, calendar a sales of week as the sales X.X%. reporting not of include in holiday our sales growth XXXX LCI fiscal

declined basis, of of test approximately quarter approximately XX%. PPE million a PPE first the approximately decline combined in In in COVID-XX kits and COVID-XX sold year-over-year. year-over-year $XXX XXXX, a XX% $XX and XX% test a we million decline products, On kits, of

As year. especially test COVID-XX in a both reminder, our first quarter last PPE were sales and strong kits

the XXXX operating decline quarter GAAP Our compared first point the operating XXX a year basis of for margin. with margin was X.X%, GAAP prior

point non-GAAP partially margin QX to X.X%, as compared and costs, result improvement. mainly COVID-XX non-GAAP was gross Our decline operating of as kit PPE fixed the acquisition-related offset for a operating margin test helped profit This XXX gross margin. basis lower with was by higher rate a our decline dollars costs cover prior year well sales, which from

diluted quarter net million First million or compares share. year XXXX income net or of $XXX GAAP share. was with diluted $X.XX $X.XX income prior $XXX per per This GAAP

and results first prior per XXXX compares year of or non-GAAP share. net non-GAAP factors non-GAAP per net quarter. GAAP million diluted $X.XX diluted was income This impacted with $X.XX $XXX million Our this or Several quarter our income adversely $XXX share.

and by year sales COVID-XX per to share the $X.XX period. kit PPE estimated diluted Specifically, test EPS the products an diluted from prior decreased to relative contribution

diluted approximately diluted not year last that acquisition And costs $X.XX back per purposes. year. for this that add reporting costs compared per share these non-GAAP expenses note $X.XXX by impacted diluted EPS we Acquisition-related do are share operating with

the our negatively $X.XX Additionally, quarter EPS approximately last versus year. impacted diluted quarter first first foreign current exchange by

to and was PPE of When Global So sales X%, X%. sales our sales LCI growth Dental X.X%. first sales when PPE merchandise but by sales by excluding billion, quarter increased $X.X X.X% results. by Global LCI turning products. were Dental increased increased sales excluding products, LCI

sales the growth calendar, variant the We as expected previously as strong reporting by Omicron I of year's impacted timing sales and mentioned. last merchandise were

North products in sales sales growth America and PPE merchandise Australia as of excluding PPE LCI X.X% Central products. sales or when as International with Brazil. X.X% sales in merchandise increased X.X% XX% when dental by dental well sales by Europe, increased strong of excluding

by LCI decrease and Dental sales digital equipment, growth in this was a LCI for traditional had equipment offset sales. We strong equipment LCI Global X.X%. growth was

International in X.X% Australia, Our second the sales are by North and dental America and of the tax quarter. equipment which equipment to by end this LCI increased Italy in LCI expire ended incentives bolstered X.X%. were increased UK, sales the quarter, which at and due

products the Dental these materials, endodontic with products. Sales Specialty implants, of include were and orthodontic in of $XXX quarter regeneration products products LCI first approximately X.X%. bone growth million

of impacted was X.X%. quarter during early XX.X% a for government in LCI Global Sales LCI and were sales services contract, technology value-added XXXX. were QX again negatively when $XXX expired third of with million, growth this adjusting by growth which sales the contract.

driven driven sales management In internationally revenue North cycle America, growth and was cloud-based was by our practice Growth solution. management our Dentally by businesses.

and were pharmaceutical led sales Global Medical North decreased XX.X% kits. products this of LCI excluding medical America, is test to in to PPE sales COVID-XX sales Omicron first related approximately test offset and sales and COVID-XX QX variant. visits American PPE of LCI the during office by products lower X.X%, test of In growth, Keep diagnostics North difficult sales comparison as COVID-XX PPE lower medical in sales equipment higher due the point mind, was and revenue. by LCI grew driven by quarter $XXX XX% against strong XXXX, sales of care and a kits, million, excluding kits

repurchases, total Regarding approximately million. at X.X repurchased the price in a the common of buying shares share stock per stock of $XX.XX open first million for of quarter $XXX market an we average during

and flow. cash sheet balance our to Turning

for and cash We due return stability businesses and to last decrease the providing while facilities. our quarter compared kits the and exit organic incurred $XX with $XX continue and as test to primarily Operating per financial initiative. our or in COVID-XX with restructuring the to the severance first incurred year, relate PPE were to initiatives quarter. expenses flow to in benefit of restructuring to our continuing strategic lower from restructuring share Those to as and was well our capital growth with mainly of significant million the expenses $XX income expenses liquidity, related on stockholders. acquisitions, flexibility million disclosed as were million QX from $X.XX diluted previously costs benefits These part execute

XXXX. record continue the to during expect of We charges remainder restructuring to

with are At costs provide XXXX time, financial are unable associated my for we restructuring Let XXXX. and Therefore, our not providing GAAP me remarks to with guidance. estimates we guidance. still integration conclude for this

for due $X.XX dilution our now acquisition attributable diluted to XXXX compared non-GAAP of X% Biotech $X.XX non-GAAP estimated We primarily EPS $X.XX Dental guidance to and our Henry for of per a to integration-related acquisition, share, are EPS expenses. updating of growth diluted guidance $X.XX. adjustments Schein This accounting for inventory includes X% to XXXX $X.XX of negative to negative range with reflecting to the

prior the Our outlook remains business the of our remainder for with consistent guidance.

Our guidance sales XXXX, of X% of total now to to of in sales assumes growth XX% of as our XXXX from to decline approximately XX% to expected previous by X% kits sales XX% with test XXXX decline guidance XX%. approximately compared to for over COVID-XX XXXX a

expected decline reflects sales XX%, guidance. selling than Additionally, PPE our XXXX product that to XXXX. less sales about Note consistent guidance with XXXX one original are growth our in week in XX% to

XXXX and The of from COVID-XX kits test diluted $X.XX estimated PPE on lower sales products impact $X.XX. is to non-GAAP be to still EPS

grow expect to be kit from test to offset impact the the COVID-XX earnings high-single-digit the by products margins core expenses. headwinds underlying and expect low in businesses, the non-GAAP and excluding original be to in operating offset largely double-digit guidance. our higher-than-anticipated momentum contribution in our and sales will XXXX when on kit decrease income relative in PPE we range decreases PPE acquisition-related COVID-XX slightly by are gross sales test of anticipated We to steeper-than-anticipated These sales

this non-GAAP products XXXX and We kit of operating margin largely non-GAAP operating XX test points of expect the profits. and COVID-XX margin basis to result PPE and sales X.X% a below lower was XX lower of

products income PPE reflects acquisition-related when expansion COVID-XX guidance and and test excluding expenses. non-GAAP kit margin sales operating from Our

Our higher our borrowings guidance interest in growth result Henry with higher from a higher such that higher of includes as minority interest Schein interest higher XXXX and as expense One. XXXX along rates businesses

We changes tax also legislation. in range, expect XX% no the in an tax assuming rate effective

continuing acquisitions Our potential for current and guidance share as announced integration for include diluted and is as impact repurchases, acquisitions future restructuring the operations EPS expenses. future XXXX not or other of well does or completed

rates that that recently also closed our with now acquisition announced acquisition Implant consistent market not. levels consistent end Dental our currency foreign generally is exchange remain the recently guidance, with is current assumes and Biotech markets reflected of current S.I.N. While System within Guidance are conditions.

we call we although year, both our will have of summarize, but financial business And to PPE for the To for to we are year the quarter expect underlying the good growth year-over-year continue updating and as we steady dental should normalize. the markets. and guidance continue maintaining from are growth of second trends and that expectations do expect medical some already on comparatives income test anticipate second this kits, in the covered half COVID-XX do headwinds some the in

that, With turn Stanley. now to the back I'll call

Stanley Bergman

Ron. you, Thank

if any now have. questions. the to be investors open questions to call may can We'll happy we Graham, answer

Operator

sir. you, Thank

session. now Instructions]. We be conducting [Operator a will question-and-answer

you. Thank

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

Jason Bednar

entertaining Ron, the Good Hey everyone. the margin really a couple performance wanted in on there, questions morning, quarter, thanks. start here. to

you considering a you equipment margin your year-over-year. from great drop-through quarter. of quarter, I'm especially spend upside sure PPE multiyear drivers the fixed looks maybe as the gross of mentioned. the some because absorption And the upon sales like maybe Hoping cost higher-margin normal regarding lack then gross the SG&A there's as margin were that above down high-tech questions margins the wasn't in could dynamics out hit and the performance expand high First, first in there of

about talk margin think, wondering in rest that SG&A takes Just the XXXX? impacted spend the really, operating and puts and could any through cadence for quarter other gross is if of we you

Ron South

Hi, Jason.

a margin quarter, actually should grow they I question sales. say, but some and the I you reported or think year-over-year specialty the in we had were as mentioned, the this perhaps much, year -- a did did not on is and grow, contraction businesses as

still So that greater growth right? mix, a takes on

we greater value-added side. mix gross a and from services So specialty the benefits of is we're products favorable experience and on growth our technology that mix the the that And to getting the margin.

think, get as particular distribution sector, being within I I medical the and contributes gross tend to to as in dental we better also in versus versus had too, think slightly performance that margins growth had we and medical that in it growth high we was. dental margin the the dental while

On SG&A, of I that expenses fixed. we a fair have number think that are

going gross is itself some lower to margin kits. are the COVID contribution dollars PPE operating profit as from from test the lower and down come So those

seeing margin. what primarily the So on I that's the drag think we're operating

very from increase incurred -- robust those implant acquisition transactions of from more think we standpoint, during bit had some announced of we in an got a costs acquisition as We've side. little related I doing, the pipeline, can that work SG&A been an to these that but of you transactions see of quarter. -- the we've a the last we little that nature have costs, we the on couple did are a the require

And think that a well. SG&A of drag so was that, on as bit a I

Jason Bednar

And then adjustments? Thank in inventory you are you. these Biotech, Okay. inventory expect of when today the helpful. recognition from excluding then actually that you're I'll model use If each look XQ closes? these as at smaller that than segue we impact a guidance we deal response How with from throughout higher maybe question. EPS, transparent dilutive your one step-up this of another and of transaction recent year next for about were to to to kind one-time be we the be can And think year inventory the some of going should accretive through one-time should reduction was just of headwind mostly bit S.I.N. the cost does adjustment, those that Biotech you of the know once making modest pretty a inventory costs. deals there from but confirm step-up, is your deal That's XQ. accounting flow Maybe the clear, I bit a the

Ron South

Yes.

business the turn effect of with year. adjustments. typical inventory will a a couple start of I'll implant the your say, kind And times inventory, of So

So to to step-up period through us that take of of on the drag about inventory kind work going that it's margin that for value will time. be a means gross six months that

So what the that inventory we yes, actual. still as QX, QX, step-up. finalizing And through work on we're working

We final estimates. number have some that don't a step-up. have on inventory We

In terms incurred bought was of the going some we remainder integration-related I'm that really has a costs there multiple what year costs, of part Biotech, are to company multiple that sites, are this be a it's -- privately business. calling it locations, and run

have do money it we're post it So for But So get we be some to right? be definitely spend think will we a expect once in incur accretive get public of some XXXX, Biotech part you We to into XXXX. to that ready to respect. to be accretive company, us. going expenses

regulatory the With body. not announced, the we reference deal Brazilian reviewed of it's S.I.N., by process deal to has that that being the And just through closed yet. going

close. sure we're to that's when going not So

half I think we of of latter release, in that close. because when will we XXXX press don't estimate our said basically just the strong a have

we get accretive because earlier than we can rather us and for close XXXX, in when be we it then should and hopefully, get in that on -- XXXX we again, those as S.I.N. into year later the into really manage, know step-up that also to the believe through once because, adjustments, So but have don't current of inventory we effect XXXX well. we'll get inventory we it

Operator

Goldman Nathan with next with Please question line the your question. Rich comes proceed the And Sachs. from of

Nathan Rich

demand like you're pretty especially international guess been starting Have for XQ on in high-level, since maybe the impact more morning. Thanks the of benefit it pretty through And questions. maybe a Good week takes business? that sales an in market not dental the I kind of sized the particular, and a Ron, you to the stable with -- continue clarification. has standpoint, not of consumables feel sounds look quarter. having consumables strong. then like terms you at just seeing from Great. first end number holiday patient puts any that

Ron South

Yes.

I start the think question, calendar I'll fiscal with Nathan.

internationally the of U.S. it's it's a to think vary worth of more the growth couple that quarter, probably It of pronounced I us is it kind -- It's in in points can right? market-to-market. worth than

You had right? Christmas practices, very between that do markets Year's, So dental sales. New you we get they and -- some week limited where close international

So it's markets merchandise. but of specifically more think probably on couple the a merchandise than some couple I worth about overall, that points, on others, say I'm I When a of pronounced number. it's talking in dental globally, points

In terms of traffic patient this at point. traffic, steady seeing I think pretty patient we're

that this from it's fairly a about as think fluctuations I seeing not not that much have in normalized traffic. We're in respect hearing customers market in we the patient historically. we're our as

quarter. So I think traffic patient first that in was into saw where April as with continued we well -- and the I think consistent that fairly what

Nathan Rich

right, it about the And I business Great. caught you number maybe Because was you the year? think can X% in if I then talk how about the quarter. expect the specialties to trend throughout

about trend demand and how what the the orthodontic high-single-digit you seeing of I But year? you just a to think -- from know business that get maybe talked comparisons for year. expect talk and a Thank over mid for you just you're had bit little I that to easier. growth about implants the for procedures, you. that can rest maybe

Ron South

Last Yes. I the of mean half back as get think of the in for like the specialty comps you first little the mentioned, we this the the dental But year. versus mentioned U.S. year was had will implants, implants. in we comp. implants. But tougher it U.S., growth as double-digit year, the prepared remarks, double-digit much the in a in a even half products in easier in had we growth Europe, within

very still -- a kind comp are we growth and growing tougher in when we was doing there. Endodontic saw products saw as result, for it So high-single-digits. steady a us very of lower well;

So back there really the And that's those comps of expect become really, we that we half easier, good and into are get more as pockets robust. of growth that we performance. year progress the little -- to think a

Operator

And your of Suisse. Rice A.J. the with the question. proceed Please from Credit question comes next with line

A.J. Rice

everybody. Hi,

that's a QX? in know about -- big thought whether that that and it on of is you've mentioned you some the had there where takeaways Or obviously, market at watching would walk conference? got the that spillover I'd see the -- you last conference then I you you've impact in picked First, think do ask a were event. seen to economy. you Cologne. any I concern you Did you regarding the up QX? Did there any you equipment because Does be market impact away quarter in sales? with benefit any any there's European about what And

Stanley Bergman

Cologne it's is in Show strike in out A.J. issue on have it was really that significant Cologne equipment in primarily yes, And And The stable. good for market of us. a Europe focused from as France. Yes, overall, was on April, selling if point as good the thank Austria that a Germany quite whole but impact call the years. doesn't We'll a view. business. -- was previous There and you, slight it there's Remember, is.

equipment think there from again. stable you products. -- stable But generally, little and deflation There bit European and traditional is takes. is I of a stable. puts market would The say our some view better. XD is the from be the And point equipment are DI international there's pretty the And printing. DS starting I units generally, can market pricing Mills to for is But now. are some expect growth the in

A.J. Rice

sort Do -- follow-up health that care some for just we debate through as more Is Maybe in test et any progress about coming back X% embedded year? that? a the expectations Okay. incremental medical better demand? PPE, little you year? the know people of think might this I the of cetera, you seeing did ex this system, a that's the what's rest of to that and in maybe whole there's about Are on than you your adding you quarter. X% the see the of

Stanley Bergman

We've Yes. starts COVID flu. it part had of was of better but comps our that think we the pretty the when businesses device continue year to we're now. by much a impacted because test. early PPE obviously, down. are -- well, ups because There if don't that some I of is were be last growing out business companies flu, And quite of more it because would there, COVID and or continue. you downs. give more tried that were only stable going really and high you -- slightly by. is to normalized We but year were quite year goes test, But there the impacted visits the lot I whether I doing medical pretty the getting best say nicely. the for as -- And kinds will But different know steady guidance, tests actually, are take

Operator

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

Jeff Johnson

morning, Thank you. guys. Good

Clear know kind timing? Aligner of flat growing is up high-single-digits. One, the start, kind the me the I was from the quarter? just lines think, if in quarter to Thank the endo get Just any benefit Would you more Ron, which it's three. the I trying X-point year-over-year. you. X.X% probably between get Ron the or importantly, see specialty still that the did I on more of I the of guess, color you business, the business. closer it three that said, growth in that. on ortho those smallest but can specialty gauge Just the out space, business put in year-over-year Let If same within wondering business, implants to I the to away assume of Stanley, benefit, sounds But like

Ron South

tepid it's were well, double-digits. the actually implant our I before, the specific the -- look got implant, growth, of saying grew had grew quite to about we you really U.S. the Like And markets. in kind think Europe, in at we than business on growth a a coming off, was had much comp but I tougher it It in more Europe U.S. But last click U.S. we of got again, was we than in what just that think, that. the the year. much was

but Yes, has that endo growth had high-single-digits. been to trend. a we very we mean Aligners steady. pick That's been for some is low DSOs Ortho to for off that's through Clear just felt steady good quarter. in really have hard that endo our in base. a very has us us we -- out quarter-to-quarter It's it's relationship in like been some a with such had -- base low mid still there, mostly the I

Jeff Johnson

up of was to strongly. to me Europe guess if flat I And implants, bit U.S. just here, help in a out right. up All kind

upper means big Germany, two think your I Global would one, said endo you to and kind I can't X% up high-single-digits. math. the does Implants obviously, X% of there single-digits whole specialty were is think somewhere X%, that that X%? least at number high-single-digits, Camlog reconcile I number up how business end just still the player a business business. and endo mean in your I

Ron South

in carry So XX% are category, that of they doing And think ortho I most about -- while implants of had about decent that balance ortho right? that Well, keep of the they weight is when math. category, XX%. being the endo that sales, while mind; XX%

implants -- think of I X% of global and within that that the then the had the right. category. tends them a growth, it's I the about to in the you're because drive X% number to mean, So -- weighting the overall

Jeff Johnson

model. Fair one just then enough. question And the clarifying on

amortization, on or at -- sorry, the I'm go when if don't yourself, some do to even start stays and restructuring have any step you year kind that don't you model. your excluding exclude, deals, So started you in of of this stuff include inventory

just costs are we don't stay EPS, in future that the those clarify exclude deals on to to those, assume that. we'd So

Ron South

step-up. let's restructuring extent Yes. be as those because your Well, we costs, question, step-up, transactions, back. incur will will clarify we from Inventory reference the we inventory restructuring, is incur our different step-up to will to them in costs So restructuring have -- though, right? add inventory very we

do we income see part the we an expenses, unusually we operating to the make of on We expense. component our it So adjustment, incur when important we a adding the of will back adjustments. aware non-GAAP costs not operating inventory we of understand it very people But but a acquisition impact are volume a back people impact quarter, of nor add doing is as have costs non-GAAP of earnings, the are deals, it business, we sure strategy as this quarter we not of part such it step-up acquisitions integral our we want and is are when back incur have deals. an high adding doing when have on the our as a we has reference it, as so

Jeff Johnson

you. Yes, Thank that's helpful. very

Ron South

You're welcome.

Stanley Bergman

implants Jeff, significant were sales just growth to that's and we be clear, flattish, last North had because year. American our

implant United business outside North America States, of the Our outside had high growth. single-digit

Operator

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

Jon Block

Thanks, for maybe some at had equipment Hi-Tech been And curious, and going then like details maybe iOS? pricing of know couple guys. you any on I'm quarters Good a But high-level, the a that's Stanley, well pressure less working now. on commentary. what's the U.S. environment. for you, more just just feel I morning. well. in I

it. It's that off and pressure a but starting year-over-year has late I is of the to get stabilized So level it pricing more headwind, Q-over-Q?

Stanley Bergman

good question. was Yes. asked. I'm glad A very that

the some in think because see pricing sales and quarter numbers, business had iOS stabilized. units that and quarter. iOS the intraoral XXXX. quite was has will of significant you I year-over-year our on you we down When What first up the first look in sales was at DSO iOS scanners in went the nicely

mills think stabilized. the iOS has I have the also So the good, pricing units are stabilized. I would now say And

option. we've printing is well. do Of mills expect the well momentum as course, in the think XD for at with printing some viewed remainder But the back to I being the gotten the of an as XD and year

Jon Block

clarification. is unchanged, And that believe, the reported. quick one Thanks the second just Ron, Great. I revenue then guide color. for a

assumption. comes down. don't your COVID I in. FX Biotech comes know exact So

other down? small just change But sales some maybe other nickels just to guess Sometimes, step clarify; did little deals. and Biotech COVID and organic Thanks dimes? to help there's that anything offset is I Or the guys.

Ron South

But the can think still we bit up It's sales. the of we up high-single-digits core in that little a sales mid-single-digit latter. think business approaching the of growth. -- grow more It's kind more underlying pick in that I additional towards acquisition

Operator

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

Elizabeth Anderson

Hi who all improved was I that Can guys, comps end you to growth kind comment? the different that a actually has thanks question -- equipment in past? think about that environment? appreciate you so of of you're about some on how if you if all and -- people sequentially. of details categories. see nice stack talk of the know what in the And then of us the giving equipment how on the details. environment the basis stands? you into quarter been also for that demand the sort of sort worried the It Can given much for April, like are the the you've details and about can helpful talk backlog I the us continued sort we maybe sort about on

Ron South

Elizabeth. certainly, Yes,

I pretty think, continue pre-pandemic. growth backlog And I that at the first gives saw some is that's sell in rates of think of tick a and we backlog And of good growth with last actually reference so it's higher us, down at but a traditional the going to at we principally to during with year. the than than backlog to still the the is our this the backlog, forward. traditional levels equipment, optimism bit quite backlog And end ability mean, the bit I equipment year terms the helping the right? had year still quarter quarter, of sequentially, greater end a the in

America. North in that's Now

the backlog still ahead pre-pandemic seen it a And bit. -- we've little Internationally, but come of levels. down is

there's bit So while the little a internationally, fairly are backlogs working still down backlog more there. healthy a

Elizabeth Anderson

Okay.

of sorry. comment how trended terms And end turmoil? sort And post can on of sort if just recent of the of in financial comment of the some of March, you April, the

Ron South

said sorry, -- said Elizabeth. beginning didn't of that, understand what I the you at You I'm quite

Elizabeth Anderson

sorry. Oh,

environment about of If about talking in could March well, you financial if some think just April post comment we the the start that's on the possible? turmoil of of was and I equipment. sort talk could as if of the if end about demand you So

Ron South

Yes.

a out been significant really in I what wouldn't been there's That's to we think been continuation the in have of say trends quarter. the April saw we of I a coming financial that's have anything markets. disruptor that. first the

Operator

And the the next Please Kevin with with question line proceed of UBS. Caliendo your from comes question.

Kevin Caliendo

the contemplate? year, you end is provide just thinking you terms year or else this QX, guidance any earnings can the of context the should of for color cadence, in any of And or there the falloff at if anything we just benefit the In cadence us? in had about Thanks.

Ron South

benefits? benefit can when QX, be specific Kevin, which more in you say you

Kevin Caliendo

sorry, the calendar benefit. Oh, I'm

Ron South

calendar benefit, the okay. Oh,

Kevin Caliendo

Is that calendar anything from year or a think rest of perspective --? be in QX, about off there any falloff different might we that the should the

Ron South

of our greater think don't XX I be the I that that the versus that, our greater, be than XX balance math be think fact that, do is the right? calendar be expect in don't the to that year just third it is will headwind second PPE in some and weeks evidenced could headwinds where test that they But of second first relates see and half quarter. and weeks was this the the of most last year $X.XX you the in should in fourth the effect But will the year, reported quarter will are it -- significant pronounced are pronounced we dealing by have think quarter. I as we the the that of outside the numbers kits still half are -- more than the on is I than with No, COVID this as the other headwind in in QX first headwind the to a of quarter quarterly year year cadence. it lumpiness the

QX. in So a us levels little QX that a hill QX we have to get for we'll as we and into climb off to think of bit continue

Kevin Caliendo

I just flat And digital to how on I follow-up Is should a down side? equipment? the be the backlog make just related question, equipment Like quarter-over-quarter equipment that like about if that? think And sure would to or core backlog understand. on want we or

Ron South

before quarter, quarter. of it the -- remains what So it the units of the course was some lights, was and chairs, backlog what at quarter versus it's equipment the where year we North saying standard sequentially of the that's American I of the the beginning analyze last it of come right? really end kind The first equipment, down at more was than end over and backlog it principally but the did that quarter. the higher And is it's

Internationally We're a fairly levels also a is kind the lower. of it that's kind it's same quarter-to-quarter. backlog North healthy versus backlog is But quarter America. a So down how first last a seeing the And prior backlog the still of little work differs and year's bit where to we their from had higher story. than of well pandemic.

Kevin Caliendo

very much. you Thank

Stanley Bergman

and also we digital that has we're of And view side good think the from growth on stabilized, seeing the a point pricing units.

Operator

And comes the Brandon Blair. William next Vazquez question. Please proceed question with line from with of your the

Brandon Vazquez

just I'll ask question. related. both the taking for them thanks Hi, of since somewhat upfront they're

any on I'm acquisitive, you bit standpoint? thoughts businesses kind them Aligner. a of And in is for first Do keep from the forward gaps notable that Biotech acquisitive become been that. have portfolio as You you're combine in focused as you kind looking obviously the your is, Dental, you of where of there's -- of if guys there more do might areas like process little The have more brand sorry, your grows? a thought at overlap portfolio, Clear of What's you going those example, pipeline kind curious it of just or greater you running you any an question follow-up M&A on and integrating notable related into have be now and Curious separately? Reveal another efficiency both have Thanks. one right? kind

Stanley Bergman

you that Brandon, question. for thank

good. quite remains indicated we pipeline our As early on,

we continue There through growth. much Our portfolio no our to outlined bold strategic through high-growth, of parts could add We much very growth to deviation high high-margin advance those plan Day, organic and are that we're of calls our high executing. committed businesses for margin, think there's the we and have acquisition Investor that. in from are growth that us we and to, overlap. course. clearly advancing I are businesses, But don't quite that to

to good relates brand been it always As alignment, pretty we've at think that. I

brands. done We've that never aligned think, quite BioHorizons, well. any Camlog I we We and brands. will, the We lost over when time, business with align

But of certainly parts particular in big many each We of have Camlog a parts few brand the combined is brands the the markets distributed of in today a all through BioHorizons world, where the world it. markets, in for generally, single the keep different may years distributors. we have in last big three two aligning market, a keep big or we're separate brand. aligned in them the We the

We to brands both markets. will going. keep It line different goes the of

brands. would course. the aligning we administrative imagine, I But which we're But be will more time, activity, important, the all of align the should -- production, over accretive,

that. to careful So We've years, brand good do we we'll done the are and over of very, very with job that alignment. a continue

Operator

your Stanley. question from have the with for with question. one proceed We Wright time last Morgan Erin line coming of Please

Erin Wright

give DSO I been us have guide? been one any have changes that in Thanks. side. segment there? that anything in just and you're segment? the DSO across or -- Okay. here market there question And XXXX rates across relationships you on you you call can anticipated Thanks. seeing DSO performing the out to growth And the how any Are have

Stanley Bergman

That's good also. a Yes. question

We've our and DSOs good along and included our Our DSO some to stable. business larger continued mid-market remains have products made couple a the It's us. us specifically from -- DSO good pretty acquisitions add A grower. in purchases customers the taken of area. of

good progress making in the world. side we're think DSO I specialty the on

good can mentioned a sale significant the on on side, lumpy. very earlier Of last had year. on it I quarter side, equipment the first that we the be of iOS in course,

I side, gaining ones, we've I doing bit. will any, on sure as lost a terms some midsized think smaller customers. we've on but So the it well units don't of in impacted well. think, us we're ones And big the we're That occur. I'm lost

it's where software, services. overall, our to advance and of high-margin high-growth, specifically appreciated course, the growing additional are I value-added our So goal think business. the products, a And is we

So midsized DSOs. pretty our the very have with relations and growth we and large continues stable, quite nicely is good

Stanley Bergman

Okay.

acquisitions expenses them regime everyone, in thank likewise, understand you inventory the quarter. the tests through peel of through step-up, realize against income, and for complexities there you, couple this PPE the if relating income. operating income So to run runs But step-up the and in. those out you the are takes I expenses and are calling a accounting operating on for some operating that M&A

and you'll a quite moving is doing all doing quite strategic sales plan. the to operating And we're is well, see our well, happy We business see out, continue all guidance Ron outlined you with that our is I it business stable. If growth. think good Gross of quite to core you anticipate will income on the grow as that bit business. profit internal our in with higher, take

of about have you we're Graham if the Ron are and available. business. So course, optimistic And questions,

business. I time. look some business But all nothing and call with and of more the So of And I unexpected the in the couple appreciate color pleased very we're the to a going on questions our overall, time. to be months' happy forward performance conferences at this next really think provide to we're at and

very you much. thank So

Operator

This concludes teleconference. today's

You participation. have this And time. lines your day. may great disconnect your Thank at you a for

Henry Schein (HSIC) 9 May 232023 Q1 Earnings call transcript