Henry Schein, Inc.

Henry Schein had a successful quarter, generating $3.4 billion in net sales and managing to surpass the revenue expectations of Wall Street. The company achieved an operating margin of 7.27%, which is an 18 basis point increase from the prior year’s GAAP operating margin, despite experiencing a decline in sales of PPE and COVID-19-related products due to pricing volatility. This improvement was primarily due to gross margin expansion from the sales of higher-margin products. Although global dental sales declined by 3.1%, with LCI sales down 0.3%, LCI sales growth, except for COVID-19-related products and PPE, was 3.5%. Notably, sales growth in technology and value-added services was particularly strong, with an 18.1% increase from the prior year, including LCI growth of 10.8%. The company’s technology and value-added services businesses achieved total sales growth of 9% and LCI sales growth of 8.2%. We give the company a ‘Hold’ rating with a revised target price.