Henry Schein, Inc.

Good morning, ladies and gentlemen, and welcome to Henry Schein's third quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Please press the star key followed by one on your touchtone phone if you would like to ask the question at the end of the call. If anyone should require assistance during the call, please press the star key followed by zero on your touchtone phone. And as a reminder, this call is being recorded. I would now like to introduce your host for today's call, Graham Stanley, Henry Schein's Vice President of Investor Relations and Strategic Financial Project Officer. Thank you. Please go ahead, Graham.

Thank you, operator, and thanks to each of you for joining us to discuss Henry Schein's financial results for the third quarter of 2024. With me on today's call are Stanley Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein, and Ron South, Senior Vice President and Chief Financial Officer. Before we begin, I'd like to state that certain comments made during this call will include information that's forward-looking. Risks and uncertainties involved in the company's business may affect the matters referred to in forward-looking statements, and the company's performance may materially differ from those expressed in or indicated by such statements. These forward-looking statements are qualified in their entirety by the cautionary statements contained in Henry Schein's filings with the Securities and Exchange Commission, and included in the risk factors section of those filings. In addition, all comments about the markets we serve, including end market growth rates and market share, are based upon the company's internal analyses and estimates. Today's remarks will include both GAAP and non-GAAP financial results. We believe the non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable the comparison of financial results between periods where certain items may vary independently of business performance, and allow for greater transparency with regard to key metrics used by management in operating our business. These non-GAAP financial measures are presented solely for informational and comparative purposes and should not be regarded as a replacement for corresponding GAAP measures. Reconciliations between GAAP and non-GAAP measures are included in Exhibit B of today's press release and can be found in the Financials and Filing section of our Investor Relations website under the Supplemental Information heading. and in our quarterly earnings presentation also posted on our investor relations website. The content of this conference call contains climate-sensitive information that is accurate only as of the date of the live broadcast, November 5th, 2024. Henry Schein undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Lastly, during today's Q&A session, please limit yourself to a single question and a follow-up. And with that, I'll turn the call over to Stanley Bergen.

Thank you, Graham. Good morning, everyone. Thank you for joining us. Our businesses performed well during the third quarter, driven by the successful implementation of our BOLD Plus One strategic plan that is resulting in growth and efficiency throughout Henry Schein and a strong contribution from high-growth, high-margin products and services. We believe we continue to steadily gain market share in our dental and medical distribution businesses following last year's cyber incident. Our dental equipment business is showing ongoing stability in North America and increased investment by customers across Europe, Australia and New Zealand. Implant and endodontic products had good growth in Europe and Brazil as well as in North America following the successful launch of the BioHorizon's tapered pro-clinical implant in the United States. We're reporting another quarter exceeding our target of 40% of operating income generated by our high-growth, high-margin businesses, and we expect to exceed the target, this particular target of the 40% target, for fiscal 2024. Acquisitions made during 2022 to 2024 during that strategic planning cycle along with product launches are delivering strong financial results and our restructuring plan is on target. We also continue to return capital to shareholders through our share repurchase program. We exceeded our financial expectations for the quarter So today we are increasing our non-GAAP EPS guidance range to $474 to $482. We also launched our global e-commerce platform in the UK and Ireland, that's the GAAP program, and expect to launch next year in the United States. So far we've received rather positive feedback from our customers that have moved onto the new system. Now, let me turn to a review of our business units and start with the dental distribution business. Overall, third-core results for our dental distribution businesses generally reflect continued stable patient traffic globally. We believe the North American market for dental merchandise sales was consistent for the last year with unit sales increasing low single digits. offset by PPE price declines and a shift in sales to lower-cost brands and owned brand products. We also believe that our North American dental merchandise market share grew sequentially last quarter compared to the second quarter, reflecting a similar trend from the beginning of the year as we continue to recover from last year's cyber incidents. Our third quarter sales increased internationally in the dental merchandise arena and reflects solid growth in Germany, Austria, France, Brazil, Australia, and New Zealand. So now let's turn to the equipment side. North American dental equipment sales were consistent for the prior year, and we believe we continue to outperform the overall market. Sales of traditional equipment grew slightly, while digital equipment sales decreased. Parts and services sales continued to grow strongly. We believe our North American digital equipment sales were impacted in part by the timing of DS World. It was a successful show for us because it took place in the last week of September. Sales from the show will mostly be recognized In the fourth quarter this year, on the international equipment side, sales growth was quite good in parts of Europe, Australia, and New Zealand, and that was across all categories. Let's turn to the dental specialties. Our dental implant and biomaterial sales, as well as our endodontic sales, grew mid-single digits for the quarter. with continued above-market growth in the United States and Europe. U.S. sales were fueled by the launch of BuyHorizon's tapered pro-clinical implant, driving mid-single-digit sales growth in the third quarter, against the backdrop of a North American market that is trending flat to slightly negative. Additionally, in the U.S., we launched the SmartShape Healers Abutment, product line at the end of the quarter in our implant business, which we expect to further attract new customers and drive implant sales. The product is being well received specifically by non-Biorizons customers who feel we've got something that is of great interest to them. We are confident practitioners will value the product's benefits, including less chair time, enhance patient comfort, and improve clinical efficiency. Turning to our orthodontic business, we are in the midst of restructuring this business as well as transitioning to the Smilers brand clear aligner in the United States and in the European markets. This resulted in lower orthodontic sales for the quarter compared to the prior year. So now let's turn to the technology and value-added services part of the business. During the quarter, sales of our practice management software and revenue cycle management products posted mid-single-digit growth. This was driven by growth in the customer base of our Dentrix Ascend and Dentali cloud-based solutions, which was up more than 20% year-over-year. with now approximately 8,600 installations worldwide at the quarter end. Now, it's important to understand our results are impacted by customers moving from on-prem to SaaS-based solutions. Revenue is recognized in a different way in a SaaS-based model versus an on-prem sales model. In addition, we recently introduced Reserve with Google, Eligibility Essentials, and Eligibility Pro, each of which helps our customers grow their businesses and are well received. The number of claims processed by our revenue cycle management e-claims business also increased by mid-single-digit percentages compared to last year. In conclusion... Our dental business is an important priority for our Bold Plus One growth strategy and it's in this area that the L in the B-O-L-D is important for leveraging our strong customer relationships across our product portfolio. We are providing integrated solutions that strengthen customer relations, driving software, driving distribution, and driving specialty sales, especially with our large customer segment. For example, we had a number of dental distribution DSOs customers switch their implants to BioRisons and their technology to Dentrix Ascend and Jarvis Analytics. We have also had multiple successes with customers that have switched to Henry Schein for their merchandise and equipment purchases as a result of our differentiated offering and the excellent value-added services provided by BuyHorizons and Henry Schein One. Each of these successes has resulted in the coordination in our go-to-market strategy and accordingly incremental sales. Let me conclude my remarks with a review of our medical group. During the third quarter, we believe we continue to increase market share sequentially compared to the second quarter, again reflecting a similar trend from the beginning of the year as we continue to recover from last year's cyber incident. Our sales reflected less demand for respiratory diagnostic products and flu and COVID vaccines this quarter, and therefore along with related medical products. Sales were also impacted by the ongoing migration to generic alternatives for certain branded injectable pharmaceuticals. We continue to have good growth in our home solutions business. So let me now turn the call over to Ron to review our quarter three financial results, and our 24 guidance. Ron, please.