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HSIC Henry Schein

Participants
Carolynne Borders Vice President of Investor Relations
Stanley Bergman Chairman of the Board & Chief Executive Officer
Steven Paladino Executive Vice President & Chief Financial Officer
Jeff Johnson Baird
Glen Santangelo Guggenheim
Jon Block Stifel
John Kreger William Blair
Jason Bednar Piper Sandler
Call transcript
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Operator

Good morning, ladies and gentlemen, and welcome to the Henry Schein Fourth Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today’s call, Carolynne Borders, Henry Schein’s Vice President of Investor Relations. Carolynne. ahead, go Please

Carolynne Borders

the and of to to Officer. for discuss and Executive and and me fourth Regina, Chairman President Stanley for the Vice Schein; of the of and joining quarter Board on With year. us Henry Executive full Financial today my you, are each Bergman, Officer thanks Chief you XXXX call Henry Thank Chief Schein's Paladino, results Steven

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

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

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

comments and including about and serve, estimates. the we are In company's analysis the share, addition, upon market all internal markets rates growth end-market based

our no be solely website in for by found can GAAP information used enable a should results and as of remarks management non-GAAP certain of GAAP forward-looking that events Reconciliations section of of will conference after as would Q&A, the corresponding non-GAAP comparison our Exhibit the may results. performance and respect as this financial include and the our useful only press are performance as update limit our time-sensitive ask operating is GAAP comparative XX, Relations the the to business broadcast, financial of The listeners and informational like yourself obligation or where possible call be undertakes allow turn B vary supplemental information call. the to and non-GAAP allow With February information a measures. contains during both have in to available business. Relations believe I financial financial of to to statements business, on Investor XXXX. the call transparency of purposes presented and Bergman. revise for investors metrics of live which section Stanley the replacement key a reflect with circumstances about call. measures We content supplemental question regarded one non-GAAP of date to follow-up in between Investor accurate release, provide many question allotted is or financial the to greater Schein periods, conference to not a today's we website. this that hour for this These measures measures with independently of call date over between Please the Henry said, items Our for within single and any

Stanley Bergman

for emergency XXXX, Carolynne. for you, unprecedented capacity enabled agility, to successful growth as resilience our for quarter worldwide, challenging Thank history, today's XX.X%, total us of initially with markets rebounded. all our to sales Henry customers services with backdrop toll fourth impact morning. as on end Thank pandemic, second restore that have you due sales in Schein's the open most we off the customers, along also half focus were increased participating our year practices practices capping operating preparing unwavering and total to record the restrictions deliver COVID Good our eased. of of in to economic supporting the were call. and assisting human and Against in

experiencing the countries third the overall wish the remained Dental Schein date, of traffic even the continued to patient rules is To more are our recovery teams execute Team the stringent team with at quarter to thank the team members working recognize lockdown stable Schein commitment of Henry the We for to Our commitment levels to and plans. day. and tirelessly against sacrifice compared of globally sincerely continuing. has the in each exception XXXX, U.K. brings

procedures. published survey close United to by U.S. for increase data over volumes to These Henry believe the a Dental American practices set represent show the the reasonably dental are of also data pre-COVID traffic. data, at continue broad months is shows past ADA volumes. survey Association in accurate. that oral Specifically return U.S. a couple patient slight patients XX% of for patient patient States, which latest of of we Schein's e-claims That's that care dental

We still at stable also volumes relatively levels. overall Medical are believe in patient

pleased are quarter to and second has business to will billion dental Over we our $X medical customers, patient time, over row, fact, our will believe for that sales. a that in traffic improve in the report experience we In levels. pre-COVID-XX achieved global medical quarterly

and pleased by are for and support also related and at COVID-XX to followed to dental to sales both in the non-PPE care medical States -- be We fourth quarter with levels and PPE abroad, but COVID our of related practitioners. sales continue the elevated to elevated the continue standard United expect in

our end beyond the although, in related do into XXXX expect we COVID did COVID beyond sales, pleased continue sales sales, will PPE XXXX related that with we these elevated of this and beyond. we non-PPE and PPE at -- So, are year at and levels and increase experience or significant

for and difficult remain our future provide breadth financial for and on medical past XXXX, speak specifics strategic the our about Team the the the a in guidance products, of review financial course, results, success continued very end Schein of Henry supplier and support our our discuss mind services we is the will to year, strong. that we dental midst confident So while future pandemic. well-positioned XXXX, focus, our we of remain and given is in in providing state perspective optimistic are markets our key achievements markets. of still our bearing of Today, that across position Schein and this We global despite

offers course, impairment impacting charge -- remarks, of asset within intangible operating discuss million EPS noncash, reduced quarterly clarify $XX that by our I'll we additional some operating that we're over on heading. point current non-GAAP by impact this to performance, and With XX our points. million the margins This impairment should, our $XX please. both conditions, ask Steven recorded EPS charge and Steven of I today. I'll be impairment to full a that, Steven, was expenses, of markets year GAAP like provide It to just would and basis $X.XX. nonrecurring our then noted before announced the his However, related where charge and financial comments business

Steven Paladino

morning Stanley, you, Thank everyone. to and Okay. good

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

represents the B and of corporate included press Our exclude the supplemental results the QX Animal that QX sales XXXX release Covetrus in have for section detailed of that XXXX QX spin-off shy Health services information now are category X to we has in years business transitional completion a of that the agreements since note Investor that sales to just Covetrus. again items our today's non-GAAP of our Relations under of expired form Please certain and website. Exhibit

to Health expect $XX stranded be spin-off to million to related We $XX the Animal the XXXX. million costs range for in

the the fourth contracted for XXX by year. of representing non-GAAP or sales of our XXXX, a net points prior the internally our year-over-year GAAP December with of On our compared GAAP Equipment, performance driven quarter earlier press was contained up by ended billion, a Exhibit of Investor our Turning COVID-related can supplemental non-GAAP currencies, today. the a basis. sales operating reconciliation which information found our sales E now basis, X.X%, release the earnings basis the as quarter to page prior margin was Details products. Protective a XXX X.X% on PPE, are results. Relations compared basis, be of of page as basis Total local with margin decrease XX, financial for XX.X% points in in operating generated website. year, $X.X operating of reflecting were operating a to of Personal in well of margin XX.X% margin issued growth XXXX Again, with sales on On

Our impacted percentage to by lower we sales. rebates, XXXX. of a expect significant was note material well partially that lower not associated operating COVID-related and products, inventory PPE as important by do margin expenses inventory continue adjustments as adjustments any offset and was into It's unfavorably as with supplier to

GAAP said, as also impairment and charge million, reduced impacted by margin, $XX.X basis to operating a Schein was which Stanley approximately XX due intangible both negatively nonrecurring EPS $X.XX diluted share. non-GAAP Our One Henry of points recorded by asset non-cash per by

taxes. to Turning

XX.X%, on XX.X%. which Our non-GAAP tax a rate XXXX This our to rate quarter effective prior GAAP quarter fourth a of tax was effective rate the effective non-GAAP with of XXXX. the fourth for reported basis, tax for tax was And effective XX.X% XX.X%. GAAP compares rate year compares of

by You on XXXX $X.XX impacted or our rate a page the in effective again effective GAAP to supplemental quarter effective as $XX.X lower per was of rate reconciliation income rate website. information approximately as the can lowered which share. tax tax expense on This see income tax both internationally, U.S. resolutions favorably of well fourth our million in tax by diluted tax non-GAAP

rate tax the range Excluding GAAP non-GAAP. and have for the both impact, would this in been effective XX%

income with $X.XX from Moving Henry This continuing of of attributable per a the the quarter on, share, or gain fourth included or XXXX net of our sale $X.XX to was $X.XX. million income continuing operations year the share. of from GAAP million per that for prior remember Schein but GAAP investments compares net equity diluted net operations $XXX.X on $XXX diluted

$XXX.X quarter per continuing income non-GAAP to impacted of net fourth fourth Again, per for the the of and the unfavorably income share net and $X.XX diluted both just Our non-GAAP for of diluted million by $XXX was operations mentioned for quarter year. charge. non-GAAP fourth XXXX impacted million impairment from was GAAP this favorably operations tax the from resolutions net income or I the and quarter or continuing compares the share, one-time $X last by our

million million by $XX.X pre-tax million per we diluted currency in share for on than I'll XXXX. charge foreign combined that EPS share. that the as per compares pre-tax current a excludes or This year. quarter and non-cash in the quarter was non-recurring Our was diluted per Similarly, also impact acquired asset last the minor in for compares to charges $X.XX or This or diluted that year It recorded diluted impairment we impairment $XXX.X amortization to the positively $XX.X million full share same very $X.XX the recorded well less per current in million EPS. note QX share. QX as impacted had $X.XX share. per diluted $X.XX $XXX.X our excludes the QX or in pre-tax of $X.XX for amortization XXXX $XX.X acquired pre-tax XXXX, and intangibles intangibles $XX.X from period million

our Global dental products, a Let sales on in X.X%, now local this the in Schein sales fourth internal sales XX.X% I'll $X.X Henry is billion COVID-related X.X% X.X%. XX% that and COVID-related in excluding sales of consumable dental among same the increase at of last fourth North with provide of growth PPE in by quarter. local of in rate the sales grew products since currencies that recorded equipment. excluding declined me and PPE dental growth quarter. And X.X% included some local X.X% internal with quarterly was XXXX. which we've X.X% detail currencies. Global note results decline sales in growth year, sales currencies merchandise, highest period internal increased dental the American compared merchandise consumable and for X.X%

of dental in when X.X% local COVID-related consumable in sales products equipment. Our merchandise and included growth of dental sales XX.X%, international growth PPE which XX.X% international sales XX.X% dental was excluding sales and currencies or in internal growth

and Netherlands, merchandise consumable saw Brazil in Poland. New Canada, in dental sales, Belgium, Italy France the China, strength and very throughout of the growth at particular Europe. and Austria, Looking solid Zealand, US, most experienced we Australia, We Germany,

a However, to experience K continue has the lockdown. country moved U sales countries that as stricter lower into

key supplier Our North event platform comparison, a transitions American moving dental categories. production world a the virtual equipment sales including exited year to as traditional Dentsply by equipment Sirona difficult and prior performance was a impacted

currencies driven year-end U.S. as incentives was purchases, International XXXX. strength In in sales growth as as high-tech in in and France, held dental addition, be may by practices we in and internal off equipment some local single-digit New equipment internationally. QX equipment on Austria, sales traditional experienced single-digit believe equipment We potentially Australia well growth Germany, growth more low high tax favorable and in Zealand.

have Please to of by keep quarter continue both that mind, sales quarter investments. backlog in engagement be substantial customer quarter. will year-over-year. the amount drive of We end our current the results America equipment backlogs for are that also take in been the and not that at shipped, and orders sales interest encouraged represents and the Currently, the our orders we a growth North equipment international extent of but exhibiting within technology

our perspective, Given dental the well we as quarter current first our equipment are sales international as growth North optimistic of about for American XXXX.

Our growth of totaled in global quarter the The $XXX prior the X.X% currencies internationally. versus America in X.X% with approximately X.X% and local growth in fourth specialty revenue dental internal was million, split year. North

growth X.X%. fourth dental global was Our implant in the quarter

sales suppliers. orthodontic a to due Our interruption, in moved supplier in market, by which to as alternate we decreased new distribution the of orders QX, to as exiting a X%, a primarily resulted business shift as center well

first We of sequential expect to see in XXXX. the a quarter in orthodontic sales improvement

XX.X% of XX.X% and was year, of XX.X%. growth to Turning XX.X% included now sales. in They international local currencies North same medical America sales last of increase and of were that growth to and in period compared the billion global $X.X

sales PPE medical strong continued demand COVID-XX-related Our products. were and driven by results for

If COVID COVID QX, test. the tests also high and to to flu $XXX in of million We levels. we approximately note some likely while you these at were that including quarter. up the solid products in cases in X.X%. $XXX sold million is COVID multi-assay medical, approximately in to combination approximately third currencies, remain internal global relatively I'll This was sales was sales continue local exclude growth from believe COVID-XX test growth

QX. double-digit in med-surg We of also growth products experienced sales in

North increase sales. the that America, in the of of by quarter, number services approximately tech compared note internal visits was in a In services patient sales the growth sales to levels. decline was in pre-COVID-XX prior in Turning fourth and value-added value-added were the with an local revenue X.X%. technology I'll to X.X% growth associated currencies. including compared million impacted X.X% internally generated year, local sales currencies $XXX.X and transactional lower of And They with

year the we We also benefited hardware address as system that to customers operating faced in requirements. comparison upgrades help prior a difficult transition year, prior new

very The our internal and from international We by local services. solid well X.X% cloud-based lockdown financial Dentrix are as U.K. significantly sales compared value-added the currencies growth technology to pleased Ascend services with sales business. when in solutions, the impacted year. as this prolonged our declined Internationally, software in prior

this temporarily compared have agreed continuing Operating also and year, of Currently, as flow and response of due As restrictions quarter means suspended until environment. XXXX we was we at This when the discussed million share year-over-year future which of program equity $XX.X shares the year. to we year. during to increase repurchase May, operations cash XXXX, program in net quarter due XXXX total was cash. we business had a our income million of X.X suspension in for after the adjusting to providing our cash But the financial last QX fourth our credit approximately access authorized operations we remember, to stability challenging quarter available price, significant $XXX our to repurchases the preserve earnings we on second this in primarily stock in results. restrict year-end, our financial related financial $XXX facilities the average approximately in a of liquidity, report represents million million, and certain impact investments this covenants. for from flexibility for in fourth COVID-XX call the we for we the At $XX.XX of to repurchased prior earlier pre-tax $XXX amended gain million stock Prior sale to on to higher last purchases.

in we or to opportunities efficiencies guidance. reduce and mitigated a We per disclosed $X.XX This full relates share. XXXX XXXX costs QX primarily of to XXXX. and part quick closing As pay facility expenses, anticipate costs. of our charge provide charge of initiative, to review I'll million drive move then pre-tax stranded recorded operating a the on additional and and now restructuring diluted $X.X year in XXXX costs previously severance restructuring of reflects

largely prior almost net and the due impacted cash in up net funds, impact regarding with in X. to allocation. XX.X%, with generated continuing of $XXX XX cash the capital on from and in increased investments we COVID equity sorry, year. flow COVID-XX. the balanced billion, of all million for XXXX, significant we despite from -- by the of total EPS X% approach gain local COVID-XX internally sales sales of During And achieved up the year declined X.X% we're saw XX% the again, XXXX, pandemic. diluted which impact sale operations funds our GAAP operating Non-GAAP earlier this with $XX.X to from EPS is currencies, the solid year pleased

my time, ongoing Let related we At unable XXXX of we're conclude restructuring accurate not an since the this remarks GAAP expenses to on initiative. financial me provide estimate guidance a guidance. to providing are

wide estimates we the a see EPS benefit in a high-level for given However, providing range of guidance. analyst the year,

above As that non-GAAP attributable COVID-XX XXXX impact We comparison continuing such, from operations, EPS diluted non-GAAP Schein operations the to will diluted continuing is given our Henry to EPS XXXX we results. was this diluted non-GAAP be appropriate, expect at/or XXXX on believe from EPS XXXX continuing from $X.XX. operations which

our very guidance number. it's not note think and EPS a a I is specific range, it's not to important that

– we're is fact, what show specific not number. a what and this guidance of for of to above and our floor we're off trying guidance at $X.XX In $X.XX be to intending or guidance a

as any, non-GAAP well And EPS So future that acquisitions, XXXX or announced operations, share previously keep well include the not expenses or Henry is in guidance as repurchases. acquisitions, as Schein completed potential but attributable hopefully, does as as such. restructuring it to it's mind if for current for taken for

the levels remain are stable with conditions. also current with foreign that assumes market end that and also current assumes generally markets rates consistent consistent and Our guidance exchange

Of material associated assume course, changes guidance with does COVID-XX. not market any

So over I'd call turn Stanley. with that summary, the to like back to

Stanley Bergman

to few planning discuss XXXX Thank formal and planning on our currently process. midst strategic take you very to We help minutes strategic of in the the like to us initiative much, on we Steven. long-term I'd a we optimizing every XXXX X our we rolling the will course, our return focus and of plan, for our preview are a developing undertake plan. which a believe value our delivering strategic investments like focused know some the Today, investors of offer had on we'd this, components our planning to year continue addressing thinking deferred, enable to of around strategic process our We COVID-XX. shareholders. and as I think to us impact years, key of X

offer a which element Schein's initiative, other customers key combined to Henry enables First, single practitioners approach our sales equipment grow and in effort our supply the our is closer go-to-market and service allowing that services, value-added is work we our to a synergistically unified program. through chain, Shine One a with to value leverage that to customers

One specialty Specifically, offering orthodontic including to and Henry customers course, solutions, Schein products surgical products. Schein and our proprietary of, national provides access streamlined comprehensive label products, private with and of brand

customers probably range, patient business services. options One pretty to customers in outcomes ability and the practice in the Schein opportunity benefit Ultimately, to wide simplify and marketplaces operations the largest, serve, we from the believe, and have addition to including software addition, value-added profitability. drive In services, access we enrich to to other that enables treatment

Services Henry one Technology would on large Henry and a with businesses, Schein's business. highest-margin Value-Added comprises about discussion lion's start highest-margin Within the point view. sales COVID-XX dental I from One, the at this impact of let software dental million businesses businesses, this Services in approximately – in represents sales negative also our One Henry share Technology the and Technology note is had Value-Added sales specialty offering, revenue, that one Services Schein's business, XXXX. closely of is segment, of our and to our Schein Henry of least at our business, Schein of reflected me and total a X% significant a which like Value-Added $XXX So of more looking and on

physical clinical Our comprehensive is key and office far practice space or solutions in processes suite and integrated cloud. which of office beyond to reaches the dental simplifying software, software the – management

go quite course, software, the world. leading the we beyond and So of which, practice in management is effective systems the

website, optimization, directories our also are patient generation patient dental with advancing engine demand in reviews and plans. savings expertise search and dental We

and communicate patient facilitate and cycle practices engaged help offers facilitate other capabilities We solutions combined that a portfolio processing practice help the and extensive company fundamental success. market as drive campaigns with revenue as engagement believe and to our a as And broad Henry products patient is that expertise online practitioners Our products as management patients insurance in solutions of payments. no booking. our value that Schein to resource One

continue Systems Schein Henry an delighted that positions President to at Global around management, us, on as Health Pacific Schein leadership are work the joined Schein as and In His CEO his Prior new continue will Baird most drive promotion We America, our also help in patient offering engagement of including in basis. American our taking dental with role, professionals practice over held Mike the leaders software to the Henry of One, to recently role of several Schein held Koch, has care solutions. our joining interim space industry-leading with One, that CEO to Well. Dental One and technology information businesses Dental the Mike to health businesses world. the Mike Henry patient served Schein Jon and across will closely and team region, Europe One, collaborate our Asia specialty North Group, demand-creation Henry of

electronic Patient Engagement for fourth provides with to the practice access prescribing on for procedure notifications, with teams the the go, which through solutions quarter, and system. online real-time the functions solution Ascend During book WebMD completed. point-of-service Enterprise solution prescribing integrated processing practice dental Solutions, electronically which self-scheduling card directory Dentrix allowing patients Pay Engage prospective of is enables Live, processing after enables directory. appointments patient directory, seamless Dentrix booking, management including which Pay, which product the a integrate Ascend functionality And One app, the is to ERX, an which Dentrix that the Ascend mobile for number enhancements we check-out faster practice WebMD Patient online Schein launched is check-in/ Henry

Our finance value-added loans capital which and card financial Henry including options. and options, equipment, includes credit services as also as well financing financing leasing, technology, working Schein facilitates services, patient

group, third Our functions the complete well array in business and technology improving contribute of a and this value-added component medical and business key solutions as services to clinical offering, operations successful of that offers effectiveness practices. which is for include dental as business the resources

So in separately Technology our that's and or value-added services reported offering, described which is statements. financial separately our

me orthodontic dental approximately which our biomaterials discuss well our generated as XX% therapy, specialty million in business, sales, business $XXX tooth products. rotary this Let of products, certain consists endodontics Comprising of of replacement pharmaceutical dental sales global approximately implants products, for as and now XXXX. dental surgical and

are effected and did we significantly the although the second which particularly of given we impact and quarter, for had words, well the course, Of second challenges the sales on with third year. we in results, recover COVID-XX a quite half the -- fourth and these experienced, very pleased in other negative quarter XXXX in significant the

products, innovation our proposition and specialty designs and research undertaking and education portfolio most specialties and customers of to proprietary value-added comprehensive value-added our pace to value of that services. practitioners benefit dental offered Through -- the command the from specialty procedures, and dental Given entire production products chain, products a we related marketing, from our services distribution value products our than core high development, businesses higher these and across expertise unique of margin specialized distribute. our

surgery Southern CAMLOG, sales, As Medical, tooth ACE specialty the implant, from a by products global portion and oral our regeneration BioHorizons, with businesses. of contributions percentage represent sales, Medentis dental replacement, largest and specialty Surgical dental Anesthesia bone of

quarters, past we implant in segment premium believe the among we several been performance, biomaterials. in including companies strong leading have the Over sales sales

innovative We in on value-added and trend continue our and to continued investment this -- expansion innovation portfolio based services. expect

specialties -- brand branded our Medentis region. as represents line, implant well in value products, largest businesses which products, DACH quarter Region, the largest piece posted business, ranges next The sales is Henry and addition, our products. Dental, our Schein Medentis' national as Medical, includes solid In other fourth Brasseler in which our endodontic endodontic

our invest our to selling platform, technology We around market and Clear have we of sales gained and continue in our on Reveal business businesses. key markets. in R&D and endodontic the enhancing from specialty is we comprised Aligner OrthoX, capabilities side, share believe orthodontic Last, our Ortho

Group, One initiative. the quality group, in DSO we software and our in solutions. penetrating mid-market On orthodontic our this make our represent of through the specialty business, as deliver Specialty we sales we and, Schein we including in private that general, continued to and customers specialty continue smallest clear trend enhancing our innovation, grow, value manufacturing to the -- to dental dental specifically, with through the practices, expect in progress in our business user sales, our continue sales aligner sales expertise that and marketing precision solutions, that specialty experience Although, due to invest part part and

and -- we COVID-XX-related markets, In me levels other to continue of see and So products both just testing the related sales to PPE address levels. minute compared expect medical PPE let and will elevated a products. COVID-XX tests COVID-related COVID at and and pre-COVID-XX now for dental we

We utilize global alternate to have manufacturers firm domestic supply our and continue up to begun sources customer to of supply meet needs.

we this a We the costing extensive this, and the we view. customer when testing whole are and constraints seeking it money pleased for went market shields, thermometers. had of from the and medical test very believe gloves, wipes base and that ensure particular point -- able as do needle believe from needs where At service to of exceptions products customer are dental as we practitioners our had including and, of inventory products of time, face is be for PPE, adequate our adequate our be PPE to We us in as mass, supplier flu should proud, and the XXXX and a most handled medical vaccine way we nitrile during more of recently, well, of access adequate products but have gowns able XXXX. in supply have products well-worth experiencing we to world, fact, activities during lot around most rollout. such product, availability to continue product customers The satisfy in syringes that availability current and to support PPE and satisfaction our customers'

me let a moment. for Now to turn M&A

in American although expected deployed we of suspended in their we On expands dilutive physicians summer, and These This $XXX million our $XXX closed the acquisition first of activities to with our core of nearly Prism beyond slightly the side, home base transaction are million year from we sales In the nine Year, and into the medical capital. quite be the office-based and Medical almost accretive market. transactions M&A announced New through Products. March health acquisition acquisitions U.S. thereafter. business [ph]

moment the like as Specifically, revenues to is focus XX extension delivery physicians believe I months address to clinics the to We as prescribe It home home will independently of would model. on take to need nationally breed with our recent many acquisition Prism broad we these of move also With business insights strengthens wound management we turn a network a closer specialist the care and automation, our of XX, who to million of this XXXX, investments tools Marketing patient. as ended supplies. in technology just allow us help well practices. a adaptable continuum of medical and Consistent customer care market, have September digital natural ensure supplier provide of $XX serves for are operated our relationship greater medical providing, areas, enhance few experience intelligence investments rich and technologies our course, customer advancement in in customers in with experience, customer customer the in the made personalization digital which then tools, our best analytics, years. and broad teams leverage evolve. of customer technologies a a strategy, succeed to marketing and affiliated considerable current satisfaction. e-commerce, engagement

of destination Henry the be providers platform process which phases to supporting continue remain suppliers. long-term care the phases journey, market. e-commerce implementation and choice as long-term phase every dental market of of are and on long-term planning, our of out medical, of Successful GEP part current -- of to through Schein XXXX. As using that focused for through GEP, by we our in GEP, XXXX of are for we G-E-P. internally GEP their buying will beginning investments in will over step Keep the the global future customers and long-term enable The rolled and early we implementing health of mind refer

or to as social appraised the history We has environmental, evolve our we a rolling have this area our out our on on enthusiastic we basis, disclosure appropriate extremely in investments. about And and keeping IT carbon as you in reliable ESG. as standards. long-standing evolving energy, targets business safety, to on teams are to initiatives. Reporting short Schein to with with a a a XXXX, of also known Henry We've governance, commitment goals GRI, we corporate breadth reporting great like consistent plans had space the of a discussion in solutions look our community In enhance that on me waste Again, deliver offerings strategic stakeholders, the forward diversity place. our look services team years to dioxide, Global impact. goal over consistent and the our employee continued and takes chain, work and known of GEP of embarked with supply advancements on a comment broad and ESG I'd volunteering to undertaken we and which to ESG, this Initiatives, particularly the year for journey our enhance and training, to team long-term and significant value inclusion working on cross-functional of past

World pleased Allies last Foundation's been Most our inclusion and and we more X for including Assessment on leadership resource conversation values, the to this network, decades. helped Human consecutive Fortune's year, our list resource Companies Building ERGs. women's always Legacy drive ranking Equality Latin on year for XXX% the diversity employee have a Black years. core LGBTQ groups category and than work Pride Our of Professionals, of Workplace last for in first group, this be have were earn our XXth actually our couple additional and part the Admired to year, Rights -- X Annual named Campaign We has we of added employee

me of business. and operate senior stockholder our Paul transformation. oversight that XXXX public of announced companies. for perspectives Shira we We Deborah complements recently same their Directors. our Henry extensive of We At purpose-driven, by execute reelection set for collective Shira as addition newest ESG reflects of leaders our of valued Board we Brons and Paul successful Ali integrates Schein brings thank, many the the just let years at broad experience management Governance provide support the and meeting. Directors, our course, of and directors in Last, continue and Committee Nominating we higher-ambition Henry our The on with of not current we the contributions report strategic senior as of these changes with are sense as board Mohamad technology and Goodman will our and stand our Board company that the of Board, to a the and the history time, the With experience Mohamad program purpose experience members, Schein's to skill And way and of Deb valuable will our leadership strategy. operational, service confident long welcome our Board. Derby. has

lot, a a realize I Schein. So at Henry on but was there's going lot that

open and questions any the So to or Thank now have, we're happy any answer may investors will floor them. to you. that Q&A we

Operator

Baird. the Johnson with question Our from of line first Instructions] Jeff [Operator will come

Jeff Johnson

guys. Two Good morning, could, you. I this morning. if Thank questions,

have about never and versus year, revenues I If be back XX PPE get that how ex to a get core I that down on just, COVID to this down fair levels Is you're provide And think hearing Steve, guess, and XXXX XXXX. thinking understand dental level? XXXX XXXX level, you Thanks. points product were down to about $X.XX COVID do, and I XX, additional basis PPE First, revenue to that seems your and given guidance. that? I'd the maybe like be get that to in your medical. to like you're revenues to XXXX, guidance. in your they Do interested or not versus XXXX EPS guidance, how still something margins in $X.XX it ballpark to really think

Steven Paladino

the Jeff. for Thanks question, Yes.

with to beneficial meetings, the that felt we a total guidance, or quite questions to was just guidance giving and giving we up want again, is honestly, uncertainty sure and quarter there. people the leading rather make investor we understand that that than I whether not were floor. to of gave But the give getting So quarter. lots having out this nothing We've floor on debated, guidance

take it please the as So floor.

American growth. think The make, directly to that is non-PPE point sales want to that important you I PPE answer I that, dental down to example, XX%. – at you was it's North other questions, as consumables – that's seem was traffic it before X.X%, XX% I the products, note look if core an growth is look Jeff, excluding given And I but XX% think at, down to as patient your people are,

and standard products strong good that's, the care continue for PPE that will considering so to represent is important the practitioners. that's of number really be will other And I think, a And going that It to note forward. new COVID-related thing believe that. we

recurring. answer number. specifically related question, non-recurring. them from revenues But continued look excluding to So the a your to improvement to in is traffic sales, given I at the would grow I having XX% at underlying as the as in PPE, patient our market, higher directly growth that, those wouldn't really look that

that, Also, really for. specifically that Given it's we're that giving we're million would for while margin. call the investments in we we're that stranded in answer, the guidance. – making not things And did to of to least I costs note margin correlation looking our hard GEP, that's at specific G-E-P, Stanley items, but that that included did not we say couple did that's a One million or also predictions be will year $XX for impact XXXX. negatively we $XX that in is describe say the current on

think that goes better a to than even really year least So greater felt nothing. floor for try guidance guidance, give doing as I at was we but on, the Jeff, we'll doing

Jeff Johnson

a Understood. quick And that's just Steve. Yes. follow-up. helpful, maybe And as

of Heartland the officially the haven't confirmed start your guys return Dental April supplying at start, You to of guess, XQ. I at

that Our checks to to though. suggest is seem going happen,

implant two, one, be in we I supplied parts, a the years some that? about There technology as with few of think might that over consumables you've So can them products. even change the going products, you last And moving side confirm then quarters some think do the the American North the know next revenue year? couple blender, to quarters, put Thanks. three your adding of points bit. basis Heartland three But the all we of maybe a relationship of as I in that the end over this a growth last hundred dental on

Steven Paladino

Yes.

Stanley could So jump and start maybe I'll in.

activity, direct yes, to Heartland. going activity, award. don't have specific we It other that that, still can don't again, given, press we that's provide to you didn't on release. I'm we why so a that transition don't out question, There's limit provide But confirm shipping the any commentary. we've we to can customer on the we confirm press a don't Heartland we a unless it won first, to response in quarter. period, product We started provide in So typically your haven't that release, intend contract. But will put and customer details Stanley, so we won out putting be the later have

Stanley Bergman

I think Steven. that correct, is

practice their have relationship needs, a We needs ranging software had and for software we Heartland applications management provide. with decades, other supporting from that

products we do addition, certain to In provide specialty Heartland.

to add for account. report decision relationship some we medical We time a IDN that to as, we expect add, I made the well But back space. to have the every we the world, done not and might new as And relationships years on a while. space grow DSO in continue that other in

think this becomes I complex. very

bottom expect we to continue And business our medical. and accounts is, so dental do grow line in the large to with

Jeff Johnson

Thank you.

Operator

Santangelo the from with Glen come Guggenheim. will line of question next Our

Glen Santangelo

down just pointed being about Hey. to in Yes. volumes up, follow-up the I of I'll a then, consumable I and mean, follow thinking Stan, heard I XX% those being suggesting just X.X%. America you up Thanks. that want Steve out, my numbers for at Good to just if I'm morning. the the Thanks on And consumable upfront. questions. to guidance. XX% and how up volumes trying pointed of my you ADA comments, your taking your be was pre-pandemic levels, survey that number reconcile to North do seem to just sort sort ask reconcile regarding questions two? that

As medical just kind there. behavior? -- change continue, from continue a monitor of of that these is that yes, I'll Steve, floor, guess, those assumes in baseline, to I we're that like kind meaningful in if improvement assume lot it you So to we there unpack, but, no of the a think $X.XX? is $X.XX sort we levels surveys in as no there about $X.XX? visit assuming as know also I that embedded leave was the Sorry. of elevated to suggested, sales that kind also just ADA

Stanley Bergman

I question think should you're provide some key, and clarity. we asking is The

Sometimes analyst it's are is, the hard over estimates to line bottom the And place. the all do good.

do grow all above in that, pandemic. and a It's services. business not way decided therefore, to consumable Number to to which software what ranges, bit to do Having continue grow. to midst no to So We expect providing our to in of One customers, will to back one. organization we traditional dentists in a means and grow. general, do do that, expect, The two we that that, our a is, go too. guidance That's Schein’s well. sales relates was to a to value-added levels Schein, the our programs, specialties our XXXX number We we as continue in by We'll and, of We're are and physicians the same provide expect Steven with little the Henry sense. said our course, floor. perform noted. visits of the floor, other

provide offered so before. to the and sense -- in XXXX And that we guidance before solid in hard it's

look the can to Having about ago, of this -- now, same pandemic in cautioned floor believe And and We're yes, businesses, doing we've -- given. our a the tell poised to our a saying and like were where give the to today, is investors quite year the very first good to today decided now, do can't we February a one we XXXX. But where Actually, We the XXXX the we're pretty well. bit tell. are business, little all things we stop business, confident business. And of can't getting hit. And we we a if with. which then although we the east heading. would better. the optimistic. our in we're said just going have pandemic. What XXXX. music more about and tell is had very with than comfortable software we that, at No stopped floor, say, I just this guidance we're to So we're goes we're quarter, as had we'd a optimistic again, say if think comfortable though, comes the one we we And our I give specialty business, with bottom is west, can't just March consumable that ranges. must we're are equipment things

and with our is in very start tell. we so I as to about exactly All say back to going and more Asia we normal quarter, dental is dentists XX% see by. optimistic will business to this U.S., -- pretty Asia But well, the and and okay, except the pleased reimbursement levels the Our continue encourage Europe the performance it's to medical for will to And reimbursement very in goes much are doing we're pre to quite U.K., which it's of to the both where, pretty dentists patients Pacific. back the the that hopeful hopefully, the year for be stable, XXXX far very in can normal, year. are hard again. businesses are

Steven Paladino

Yeah.

Let your Glen, of me thing, on questions. add one one just

You higher that asked, And of we ex a the procedures reconciliation. X.X% It's being PPE, why not reason you're the patient the its part and believe typically. And well, patient than done up what's measures. that today ADA traffic procedures. is acuity is traffic XX% that of remember, do there's

generally of a as these of total there's and examinations more procedures level Things matters the cause So like more, There's consumable that procedures trophies and higher higher high. products. tooth again, general There's of more implants. restorations. the percentage a

being is one really procedure and done guidance. add And So, type in that. questions, quickly assuming on again, of uncertainty improvement much of on your floor a know lot it, would with to us market of just Because, when improves. to we're that there's assume not still not when it we the helping

is don't market if potential point. quicker the in have at that really there guidance improves our So upside this because we

Glen Santangelo

all for the Thanks comments. Okay.

Steven Paladino

Okay.

Operator

of the Block Jon next Your Stifel. comes question line from with

Jon Block

full, priorities roughly ask see what most in and of Stanley you equipment for each equipment I'll a out you, inventory gross highest-demand thoughts just to way or there that, In items about one product in considering always Steven, dental year-over-year, because morning. in to XXX XXXX, in and Maybe interest volatile XXXX. what's pressure think commentary, supplier you if of attributable reoccur time, Good guys. the a demand unlikely margin their mine words, bps your preferences for sort on dentists? both for And the the would, you. of it's some shaking the of line, do but I is from upfront per think and lower rebates, other is of COVID to how Thanks adjustments this what's year know about backdrop?

Stanley Bergman

first? go you want to do Steve,

Steven Paladino

Sure.

appropriate not you're But of XXXX. setting targets bit negative is haven't because to that feel fuzzy is margin we the we right little are specifics rebates the environment to adjustments, now so Jon, expected And supplier in given in don't reoccur lot supplier it's So difficult. go on in and that inventory a a this just rebates there.

be our quarter or can't less there'll So I outlook adjustments to than seen be be the in that, there'll what inventory X, but the X. much in with last say much but we're trying conservative that – more we've

So hopefully, that helps you.

Stanley Bergman

to we to significant April we had We our request PPE higher made not and freight product by literally a including of terms to of in Task price respond customers products to to money part normal as warehouses customers. were a what FEMA decision we Just to hotspots. provide costs. providing at our sales, on about hospitals HHS, before not we in to decision the emptying I'm to prices, at are company this as replenish our do a add PPE as in a but talking to Force government's made could we of lot the that. the a These responded possibly lower adjustments, move that, and

existing quarter these storm to from I we little rates of equipment. Taking be again, third as end speed. Dentsply have in the I'm the great. the I being referring in of those to United for brought been of And business, that perfect to were Number have North that in margins believe, up XX% product on We the exit the did – the the our the the it the were while one. of and the largely think should not Steven quarter through out at will of out States, US Canada. – right request and In that so there us, Canada number by North business. that send a was the went morality said, we some perfect purchased experience a variations, the following manufacturers of in and given the to that of equipment in that situation by different. a the extent, Sirona a America generate I to the in quite areas, not by good opportunity through and and then empty government's American growth. way decision was generate provided, market, equipment This in specifically has numbers, earnings States, key we for view, that This made quarter our but do particular or have production second whether report whole fully outside satisfaction down, We general in United of of of relating dentists not the that call, good We referring third second the day, States equipment, believe the us, equipment where point we've from was satisfied great of will with was did two, from the on could all I'm almost end not And of a made the that satisfied to that United purchases about right terrific virtual, is do the books quite bit I for an a a and course, first these supplier and of World first the ordered consumable, in we the which did United dentists account, us because issue up most for customer and practice view, in tax a not they're quarter. equipment that expect, that and America, we PPE optimistic history customers' supplier It the States, But storm our higher we believe we behind on from Canada company largely States hotspots think and but ambitions applied practices a business. had XXXX, in historically warehouses point in challenged. were on quarter. traditional those that to be to go there's to XXXX who impact United will their in now, business for course, quarter. their but are America. bit had our PPE that fourth variations, decisions tell, largely are into our XXXX general. quarter, expectation of And equipment at not, occur And we the North incomes fourth deferment the the to of were North

think of XXXX full in where And DI traditional be past, I areas I prior crowns come units, area said expect where of area decent area, we've that in and down area imaging As areas an milling as has is are whole bridges say and reported is side we lights, an business the the chair dentists somewhat. and of we pricing, to the all although still investing. the would yes, will that expect, sales beyond. in chairs, the quarters, as growth

we're running bit lot So time out we think on. for we Carolynne, I there's have a more can But we time. any go a do over have do of – since questions? little going

Carolynne Borders

to Thank Yes, you. the question. back

Operator

from question next Our come will of William the Kreger line John with Blair.

John Kreger

comments, sense and Hi. us expanding? interested just Thanks as more sort aggressively new the get maybe the of most more beyond strategic a to some US, or back stability can maybe about you example, in medical beyond any of give to look go COVID, you new of guys much. brands. you're business specialty where taking your very sort For Stan, interest in in technologies planning

Just give few years? about us in a really the expand to next you'd where sense like

Stanley Bergman

Sure. question. good thank you. John, Very

area business The oral the course, And want world. to in we world care world, globally. our where of continue distribution in in we most is developing that's that Of to the area. dental, and are grow growing traditional developed in in some developing markets

our will footprint. So expand we

our us At be the dental. expanding future business our and side, to both business noted also, increase expanding internal, on our where small until on did because XX a drive I Canada, international the go other it same be to medical the business on the in year business of for US adding we it, markets. the will time, the months Dental, in today, expect, taken resources ago, but in margins We distribution we important efficiency very had will it's that to distribution Europe, beyond specialty now, We in products and added US, we'll Europe, and resources expect and business are in medical but more in focus medical much our abroad. course, small to ago, general have not we in medical about in so going and as in

expect have grow. We done foundation orthodontics. done well to We a We in products storm. market, will in we continue of the move very And fourth We've well around that perfect peculiar implants. We've replace a so again, That had from all our a endodontics. to in very in very quarter exiting – had catch those distribution we end center that up. had to elsewhere. the manufacturer a year. and a And had good we

world. specialty our those we invest so the are platforms to around expanding areas in, want the And

Of that the see investing Schein SaaS area. to One course, We're Henry is cloud-based very a products. pickup for Henry huge opportunity in very, products, pleased Schein. We're in in

saws comes and to it in medical player it that already expect devices. well long course, platform specialty -- Of product. expect are devices, then does the well. And increase sorry, investing that to expand with as when in too. impact that, But We're We business, to sales. and we profitable area in run, done orthopedic our a very orthodontic saws in in we've SaaS it's a very

and platforms So specialty businesses, I we in think in the areas. core in also to our expansion our adding those have that business, technology global about it's

So dental have medical other platforms distribution, services course, our technology distribution, our management value-added our and, products. we and practice of our specialty

as great on. these can but planning, want not is to you what know, what strategic necessarily of opportunity. where do, prioritize there’s about you are All John, you areas And

So a excited. options, of have very we lot

very the future. company's a best capabilities the and I management about from excited in say, various of are would have We we've these platforms developed view expanding point the history of team,

John Kreger

Very helpful. you. Thank

Operator

for time one have last question. We

will with Piper Sandler. Bednar the from final Jason question Our of line come

Jason Bednar

and what and dental to both them the in this cross for of you. questions. Thanks from million the international to the things versus the being the And close but number stronger consumables to I pieces in The how you're want international quarter morning. and here these touch Good this core Yeah. factoring upfront. some revenue, you I'll a on just, manufacturers Thank out, about ask supporting testing of and growth testing price really that. curious in this in Stanley, talked strong, momentum confidence demand that big forward also of rising really then $XXX of how But demand was wondering some these pent-up going currents markets. quarter, that's from pivoting and to there's core adjustments just the planning for your some for extent future maybe just are this is growth you're expected market growth maybe medical reflective some COVID volumes, year. persisting

Stanley Bergman

very I two a add. lot good call, might on questions. of good Again, are this There questions

predict continue the So business acquisition international past. course, hard to international, we've expect a quarter. we we of growth add Internal our will in to some as done to grow. growth, It's

I at we grow U.S. of are confident including equipment we and think the quarters. think of trend quarters, look our part several businesses North quite But a has Canada will consumable over America, that outside one several for to as I

numbers. So it's part North of our American

global think it's about and and, in fair particular, international are very our we our I So to business business. expect to grow say equipment enthused consumables

testing. the On

us. there's than the The shortage DPAs, a wouldn't test more of tests, product also not, available believe the good We referring in had COVID say, to test point-of-care testing testing, there's now believe testing with completely is are the being in us other available even these but it more flu I or of, numbers, -- satisfied, but we et past. So quick to arena. And tests, for I'm cetera.

is of used by So machines be will replaced these because the test our those lower the health which view, test. I the price tests. to office-based tests the that will were tests Having practitioner think that, a larger be the earlier demand stage said more in for environment. snap replaced those available and and be likely of fair it's that per large environment channel, say is to for will number the cost grow, with they'll come particular, down, in in workplace our A test

the in expect availability, at with we up general, growing, the test. have but a coming So to we good think demand in price the opening the same down, XXXX time,

in talk our know Of numbers don't but PPE of sales. a sales course, any can no fair we've and way amount testing about because there's plans specific exactly, of built we we

thank compared will us. It all for grow areas So growth as these are Thank two questions. the you you for question. for to And XXXX. that

Operator

I'll remarks. to Mr. any for hand Bergman over conference back concluding the

Stanley Bergman

to in unusual lot of that sorry Bottom the lot this was line you, optimistic Thank over future. there but situations. wanted Thank all. a you quite cover we a operator. is today, we're went Yes. call I'm about we

be I a will we physician and lockdown closed down one see it it's virus, in Of say, think practices I be go again be virus down. surgical course, the although and will the where precautions, practices gets where can't heading, no the can think will ambulatory there'll centers not closed total a fair but dental predict into to quarter. I occurred worse, is exactly more If as situation second

our significantly lot. us we've gained a a quarter. of in us but know, third second as some This certainly very we down I cost little cost did share, quarter market powered bit up more. the back in It course, and probably the that powered Of think investors quickly and

it off, that of care a particular significantly. large reasonable up while made at taken same PPE at prices prices were XXXX things number the needs within the think And on COVID preservation as dental the market team one I does that our the customers to customers. care right of in the long we period we a of in us, So time our end, and kept But with company what our view, would of went in customers. say, recognition prices, range point parallel stronger cost from appreciation I in rather think, of available the brand was cash and did service course, ensuring the of ensuring our course, Henry than taking unusual I of will to as extent overall, the a customers this has gained. of priority, we from could Schein trust run pay what that terms in full profits out passing in this off in And medical well, service come much for our and have

we this environment. pretty mind, although future, are that So about in with the I to in optimistic have pandemic we're say,

finalized. of wide a Our opportunities. plans will be array There's

of year with I right investors. And XX% for will up comment. stock will, the comfortable. at XXXX. operating growth rate refresh as are XXth is end a EPS of end for in during compounded We think very We've now on feel a XX% at this appreciation a the rate well We areas This key company. our by annual plan public we focus. I year, under of this year of firm turn, will interim we our do But this period. had and

call We in company with markets believe we that participating this that provides very you much, team. great a Thank good today. are for we're and in a stability, everyone,

Operator

gentlemen, call. you will now you and all disconnect. may today's conclude joining, and for that Ladies Thank