Henry Schein, Inc.

Henry Schein, Inc. (Nasdaq: HSIC) supplies products, services and technology to office-based dental and medical practices and other healthcare customers. Global Distribution and Value-Added Services covers consumables, equipment and related services. Global Specialty Products includes company-manufactured products, while Global Technology provides software and related services.

The forecast upgrade and tariff benefit

November's annual adjusted EPS forecast is $5.50 to $5.56, versus August's $5.29 to $5.39. Our comparison finds that the midpoint increase of $0.19 matches the new third-quarter net tariff refund benefit per share. Removing only that new benefit leaves a $5.34 midpoint, equal to August's midpoint.

This comparison also retains the company's operating and spending changes. Management says the updated outlook reflects stronger underlying performance, the refund and targeted fourth-quarter investments supporting 2027 growth. Sales-growth guidance remains 4.5% to 5.5%, while adjusted EBITDA growth moves from mid-to-high single digits to high single digits.

The refunds were not an entirely new development. August's report said additional refunds had been received after June and their net impact was expected in Q3. That quarter's forecast excluded future benefits. The November release quantifies the benefit and includes it in guidance.

Two adjusted earnings comparisons

Adjusted earnings remove selected restructuring, acquired-intangible amortization, consulting and other costs, with tax and minority-interest effects. They retain tariff refunds and investment remeasurement gains. The additional comparison removes the current $0.19 refund benefit and the prior-year $0.23 remeasurement gain, producing 19.1% growth rather than reported adjusted EPS growth of 13%.

Adjusted EBITDA removes net interest, taxes, depreciation, amortization and specified other items under its separate reconciliation. Lower diluted shares also support per-share growth: the quarter's weighted-average count fell about 7%, while adjusted net income rose to $175 million from $167 million.

Sales and acquired businesses

Total sales grew 4%, including 3.1% internal growth, 0.7 percentage points from acquisitions and 0.2 points from currency. U.S. dental merchandise sales grew 8.6% in total and 7% internally. Global Technology's internal growth was 6.5%, despite a disposal reducing reported growth.

Acquisitions during the first nine months carried $93 million of aggregate consideration. That included $26 million in cash as well as previously held investment interests, subsidiary equity, deferred consideration and minority interests. The quarter's refund is distinct from gains recognized when acquiring control of previously held investments.

Cash, debt and shareholder returns

Quarterly operating cash was $161 million, versus $174 million. Property and equipment purchases of $30 million and capitalized software of $15 million leave $116 million in our calculation of cash after those two investments. Program share repurchases were $125 million.

Nine-month operating cash was $306 million, versus $331 million. The company spent $450 million buying shares during the period. Remaining authority was $330 million at quarter-end, under the existing program.

Cash rose to $184 million from June's $157 million. Bank credit lines and current and long-term debt totaled $3.524 billion, versus $3.462 billion in June and $3.107 billion at year-end. Finance leases of $6 million are included in debt; operating lease liabilities of $367 million are separate.

The net tariff refund benefit recognized before tax was $28 million in the quarter. Future results can show how much of the earnings improvement and cash conversion persists as growth investments increase.