Henry Schein’s second quarter drew a negative market reaction, as the company met Wall Street’s revenue expectations but posted non-GAAP earnings below consensus. Management attributed margin pressures primarily to lower pricing in gloves and time-limited promotional initiatives designed to win back lost customers. CEO Stanley Bergman noted that these efforts, while effective in restoring volumes, weighed on profitability. He also cited “lower glove pricing as well as some time-limited targeted sales initiatives” as key factors behind the quarter’s margin dynamics.
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Henry Schein (HSIC) Q2 CY2025 Highlights:
- Revenue: $3.24 billion vs analyst estimates of $3.23 billion (3.3% year-on-year growth, in line)
- Adjusted EPS: $1.10 vs analyst expectations of $1.19 (7.6% miss)
- Adjusted EBITDA: $256 million vs analyst estimates of $271.4 million (7.9% margin, 5.7% miss)
- Management reiterated its full-year Adjusted EPS guidance of $4.87 at the midpoint
- Operating Margin: 4.7%, in line with the same quarter last year
- Organic Revenue rose 1.9% year on year vs analyst estimates of 1.8% growth (11.3 basis point beat)
- Market Capitalization: $8.19 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Henry Schein’s Q2 Earnings Call
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Jason M. Bednar (Piper Sandler) asked about sustainability of improved dental sales and pricing strategy amid tariffs, to which CEO Stanley Bergman reported stable patient traffic and success in winning back customers, but acknowledged ongoing pressure from glove pricing and competitive alternatives.
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Elizabeth Hammell Anderson (Evercore) inquired about the expected cadence of EPS growth in the back half and progress on orthodontics. CFO Ronald South confirmed back-end loaded earnings, while Bergman described orthodontics as a small, stabilizing business with current restructuring focused on profitability rather than growth.
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Allen Charles Lutz (Bank of America) questioned the outlook for distribution gross margins and the impact of Capstone initiatives. South indicated stabilization in glove pricing and highlighted that technology and specialty sales are supporting margin trends, though some pressure remains from product mix.
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John Paul Stansel (JPMorgan Chase) asked about the magnitude and rationale for targeted sales initiatives. Bergman explained these were aimed at customers lost post-cyber incident and were time-limited, now largely phased out, with positive results for July sales.
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Jeffrey D. Johnson (Baird) pressed for clarity on gross margin pressure sources and the expected timing of cost savings from new initiatives. South estimated gloves accounted for about one-third of margin compression, while Bergman indicated both immediate and longer-term efficiency gains from value creation projects.
Catalysts in Upcoming Quarters
As we look ahead, the StockStory team will focus on (1) the pace of recovery in gross margins as promotional activity normalizes and glove pricing stabilizes, (2) execution and measurable impact of the new value creation and cost efficiency initiatives, particularly those involving technology and consulting partnerships, and (3) continued growth in high-margin segments like specialty products and cloud-based technology platforms. Progress on leadership transition and further updates on restructuring savings will also be key indicators to watch.
Henry Schein currently trades at $67.50, down from $70.15 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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