Henry Schein, Inc.

Good morning, ladies and gentlemen. Welcome to Henry Schein's first quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. Later, we'll conduct a question and answer session. Please press the star key followed by one on your touchtone phone if you'd like to ask a question at the end of the call. If anyone should require operator assistance during the call, please press the star key followed by zero on your touchtone phone. As a reminder, this call is being recorded. I would now like to turn the Introduce your host for today's call, Graham Stanley, Henry Schein's Vice President of Investor Relations and Strategic Financial Project Officer. Please go ahead, Graham.

Thank you, Operator, and thanks to each of you for joining us today to discuss Henry Schein's financial results for the first quarter of 2025. With me on today's call is 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 respect 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 Filings 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 time-sensitive information that is accurate only as of the date of the live broadcast, May 5th, 2025. 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'd like to turn the call over to Stanley Bergen.

Thank you, Graeme. Good morning, everyone. Thank you for joining us. Let me begin by saying that we are pleased with our first quarter financial results, as well as the momentum we are seeing heading into the second quarter, and remain confident in the fundamentals of our business. After a rather slow January, which was a result of weather-related events. February and March, sales performance was good within our full-year guidance range. As reported, sales growth was significantly impacted by the strong U.S. dollar. And I would like to remind everyone that last year's U.S. equipment business was impacted by a deferral of sales from the fourth quarter of 23 into the first quarter first quarter of 2024, making for a difficult year-over-year comparison. Once we adjust for the effect of the strong dollar, as well as PPE and COVID test kit sales, our sales growth was approximately 2%, with sales growth accelerating throughout the quarter. We are advancing our Bold Plus One strategic plan, which has been refreshed for 25 to 27, with a team focused on growing the distribution business through increasing operational efficiency and enhancing customer experience, growing our dental and medical specialty businesses and corporate brand products, and further developing our digital footprint and digital solutions. We do remain committed to our long-term financial goal of high single-digit to low double-digit earnings growth by continuing to successfully execute against the strategy. Our last earnings call, during the call, we announced the establishment of two main Henry Schein business units, the Global Distribution and Value-Added Service Group and the Global Technology Group, which is led by Andrea Albertini, and the Global Specialty Products Group, which is led by Tom Popek. This past quarter, we began to operate the company through these new business groups and are pleased with the leadership and the performance of both of these business groups. So here are some highlights from the first quarter with respect to advancing the Bold Plus One strategy. continued to launch several new products and solutions in our specialty products and technology businesses. We've broadened our home solutions platform with the acquisition of Accentus, a US national distributor of continuous glucose monitors to our own. We expanded the sales of specialty products to our distribution businesses. Those are the specialty products that are now being sold through the Henry Schein distribution sales organization. And we continue to implement restructuring initiatives to right-size expenses in our distribution businesses, corporate functions, and to consolidate manufacturing facilities. And yes, the global e-commerce platform, GEP, in the UK and Ireland is now fully operational. and we are on track to begin a phase launch in North America during the third quarter of this year. After exceeding our strategic goal of achieving 40% of our operating income from high growth, high margin businesses in 2024, we expect operating income from high growth, high margin businesses to continue to grow steadily. We now expect these businesses to contribute over half of our total operating income by the end of our strategic planning cycle of 2027. These businesses include specialty products, value-added services, and technology. Additionally, operating income in excess of 10% of our total operating income is attributable to our corporate brand products. Turning now to a review of our key businesses. We'll start with the global distribution and value-added services group. During the quarter, we believe the US and international dental, merchandise, and equipment markets, as well as the US medical market, were overall stable, and that we gained market share. Sales growth in our core dental and medical distribution businesses did accelerate following a slow start in January, which, as I noted, was primarily the result of weather-related events. And our growth in March was within our full-year guidance range of 2% to 4%. U.S. dental merchandise sales grew low single digits when excluding sales of PPE. Product pricing was overall in line with last year, and our sales growth therefore reflected volume growth. We also recently implemented a new commission plan that we expect will drive sales and profitability growth. The U.S. dental equipment sales growth was impacted by a defer of sales from the fourth quarter of 23 into the first quarter of 2024. So moving from the fourth quarter of 23 into the first quarter of 24, making for difficult year-over-year comparisons. We do see consistent demand for both traditional and digital equipment as practitioners continue to invest in their practices. We are also seeing the number of new practice build-outs increasing. Our U.S. medical business growth, sales growth is solid for the quarter, reflecting increased patient traffic to physician offices for respiratory illness. a strong performance by our home solutions business, and some acquisition growth. International dental merchandise sales were strong in Canada, Central Europe, and Brazil, offset by some softness in France. Similar to the rest of the company, sales accelerated throughout the quarter. I would like to stress that when reviewing our international sales data, that investors take into account the swings in foreign exchange. International dental equipment sales grew well in Canada and across most of Europe. The focus of new product launches at this year's IDS, International Dental Show in Cologne, included 3D printers and intraoral scanners to help improve dental office workflows, and we expect our sales to benefit in future quarters from orders taken at the show. Again, foreign exchange did impact our sales results in US dollars. On the value added services sales side, the sales decreased in the quarter one as a result of lower sales in our practice transitions business. Sales in this business can fluctuate from quarter to quarter. However, there is a strong pipeline of active transactions that we expect to close throughout the remainder of the year. Now, on the global specialty products side, the global specialty products group includes, of course, implants and biomaterials, as well as endodontics, orthodontics, and orthopedic products. Sales in the first quarter reflected continued growth in implant and biomaterials, and some acquisition growth. Sales of implants grew mid-single digits in constant currency. Again, big swings in foreign exchange here. With strong sales growth in the DACH region, as well as in Latin America. Driven by both our premium brand, by Horizons Camelot, as well as our SIN value brand. We estimate that the U.S. domestic market for dental implants was slightly down in the quarter. Our U.S. sales were in line with market growth and reflect continued rollout of the BioRyzen state proconical implant and smart shape healer abutment, as well as growing sales of the SIN implants in the United States. Overall, in the markets we served, We believe we continue to gain market share this quarter, and that's for implants and biomaterials. We continue to launch new internally developed products in our endodontics business and are pleased with our underlying growth. While orthodontics remains a small component of our specialty business product, Sales were down year over year as we continued working to restructure this business. Finally, orthopedic products generated solid first quarter sales growth in high single digits. Let me conclude my prepared remarks with a discussion on the global technology group. We had rather strong growth in practice management systems. including Dentrix, Ascent, and Dentali cloud-based solutions, as well as in revenue cycle management products, these were partially offset by lower sales of certain legacy products that we are sunsetting. The consolidation of these products is having a short-term impact on this segment's sales growth, but has enabled us to reduce operating costs and achieve strong operating income growth while positioning the software portfolio for better customer experience going forward. Practice management software growth was driven by a 20% increase in cloud-based customers, and we now have 9,500 customers subscribed to Dentrix Ascend and Dentali, and are making good progress in advancing these cloud-based systems into DSOs. We also continue to enhance the functionality of our practice management software with a new dental imaging subscription plan that automatically attaches images directly to insurance claims for faster payments. Yeah, so here are some comments on the tariffs. Let me conclude my remarks with these comments. Several years ago, we began diversifying and moving the sourcing of corporate brand products to what we anticipated to be lower-tariff countries. In addition, most of our specialty products are manufactured in their local markets. We have been working closely with our suppliers and customers to address the impact of current tariffs. For our more price-sensitive customers, we will continue to offer corporate brand alternatives. We believe our current and future actions with our suppliers and customers will be effective at mitigating this year's impact on our financial results from the current tariff situations. We are monitoring the situation carefully as, of course, we cannot predict where tariffs will change again. Of course, tariff changes have been quite volatile, and nor can we comment or anticipate if they will have a significant impact on the macroeconomic conditions. So let me now turn the call over to Ron to review our first quarter financial results and discuss our 2025 guidance, financial guidance. Ron, please.