Henry Schein Q2 2026 Earnings: Margin Gains Support Higher Guidance

Henry Schein (Nasdaq: HSIC) reported Q2 2026 net sales of $3.458 billion, up 6.7% year over year, while GAAP diluted EPS rose to $0.82 from $0.70 for the quarter ended June 27, 2026. Internal sales growth, improved margins and a lower diluted share count helped earnings grow faster than revenue, supporting an increase in the company’s FY2026 guidance.

Core financial results

Of the 6.7% reported sales increase, 4.6 percentage points came from internal growth, which is measured at constant exchange rates and excludes acquisitions. Acquisitions contributed 0.7 percentage points, while foreign exchange added 1.4 percentage points.

Gross profit grew faster than revenue, and operating income increased despite higher selling, general and administrative expenses and restructuring costs. Management attributed the improvement to accelerated internal local-currency growth, stronger gross margins and early benefits from its value creation initiatives.

All dollar amounts below are in millions except per-share data.

Business and segment performance

Global Technology posted the highest internal growth, while dental merchandise led the major distribution categories. Specialty Products delivered higher reported growth than internal growth because acquisitions and currency contributed more than half of its increase.

The results show some divergence within distribution. Dental merchandise increased 9.7%, including 5.9% internal growth, while dental equipment grew 3.8%, with internal growth of 2.2%. Medical distribution’s 4.0% reported increase was almost entirely internal.

Margin expansion and buybacks pushed EPS ahead of net income

Gross margin increased by about 50 basis points and operating margin improved by about 30 basis points. Gross profit growth was sufficient to absorb increases in SG&A expense to $831 million from $778 million and restructuring and related costs to $29 million from $23 million.

A lower share count also widened the gap between net income and EPS growth. Weighted-average diluted shares fell by about 6.7% to 114.4 million, and Henry Schein repurchased approximately 2.6 million shares for $200 million during the quarter. Consequently, GAAP diluted EPS rose about 17.1%, compared with a roughly 9.3% increase in attributable GAAP net income.

The same effect was visible on a non-GAAP basis: non-GAAP net income increased about 7.4% to $145 million, while non-GAAP diluted EPS rose about 15.5% to $1.27.

Cash flow and balance sheet

Quarterly operating cash flow increased to $242 million from $120 million, but much of the improvement came from working-capital movements. Accounts payable and accrued expenses provided $144 million of cash, compared with $18 million a year earlier. At the same time, accounts receivable used $47 million and inventories used $57 million, both larger outflows than in Q2 2025.

The first-half comparison was less favorable: operating cash flow was $145 million, down from $157 million. That distinction means the sharp quarterly increase should not be viewed separately from the timing of working-capital changes.

Cash and equivalents were $157 million at quarter-end, nearly unchanged from $156 million at the end of 2025. Bank credit lines increased to $1.024 billion from $764 million, while current maturities of long-term debt rose to $138 million from $33 million. Henry Schein spent $325 million on first-half share repurchases and had $455 million remaining under its authorization.

FY2026 guidance

Henry Schein raised all three principal FY2026 guidance measures. The midpoint of sales growth guidance increased from 4.0% to 5.0%, while the midpoint of non-GAAP diluted EPS guidance moved from $5.30 to $5.34.

The guidance applies to continuing operations and assumes foreign exchange rates remain generally consistent with current levels. It excludes restructuring and related costs, acquired-intangible amortization, certain value creation implementation costs and other specified items. It also assumes no additional remeasurement gains or future tariff-refund benefits during the remainder of 2026.

Henry Schein did not provide a GAAP reconciliation because the amount and timing of excluded costs cannot be estimated without unreasonable effort and could be material to future results.

Management perspective

CEO Fred Lowery said internal local-currency growth accelerated from the first quarter and pointed to gross margins and early value creation benefits as earnings drivers. Management’s stated priorities are to accelerate growth, simplify the business, strengthen operating discipline and deepen customer relationships.

Recent insider transactions

Reported insider activity over the latest six-month period included 339,962 shares purchased across 29 transactions and 105,911 shares sold across six transactions, resulting in net reported purchases of 234,051 shares. Among the latest records, the following were actual purchases or sales; stock awards and gifts with no reported market value are omitted.

These transactions provide an objective record of insider activity but do not, by themselves, establish insiders’ expectations for the business.

Risks investors need to watch

• Headline growth exceeded internal growth: Internal sales increased 4.6%, compared with reported growth of 6.7%. Acquisitions and favorable currency therefore accounted for 2.1 percentage points of the increase, and guidance assumes exchange rates remain near current levels.
• Cash flow benefited from working-capital timing: The quarterly operating cash flow increase was supported by a large inflow from accounts payable and accrued expenses. First-half operating cash flow remained below the prior-year level, while receivables and inventory increased.
• Short-term borrowings increased alongside capital returns: Bank credit lines and current debt maturities rose from year-end levels while first-half share repurchases totaled $325 million. The interaction between repurchases, cash generation and short-term debt remains relevant to liquidity.
• Guidance is presented on a non-GAAP basis: The company cannot reconcile its EPS and Adjusted EBITDA guidance to GAAP results because excluded restructuring, value creation and related costs are uncertain and potentially material.
• Some segment growth relied on acquisitions and currency: Specialty Products reported 8.7% growth, but internal growth was 3.2%. Continued reported growth in this business may therefore depend partly on factors beyond underlying sales expansion.

Summary

Henry Schein’s second quarter combined internal sales growth with better margins and a lower share count, allowing EPS and Adjusted EBITDA to grow faster than revenue. Technology and dental merchandise led internal growth, while Specialty Products received substantial support from acquisitions and foreign exchange. The raised FY2026 outlook signals sustained momentum, but investors should continue monitoring first-half cash conversion, rising short-term borrowings and the gap between GAAP results and non-GAAP guidance.