Henry Schein Raises 2026 Earnings Outlook After Q3 Sales Growth

Henry Schein raised its full-year 2026 earnings guidance after third-quarter sales increased 4.0%, supported by U.S. dental merchandise, specialty implants and technology products. The health care products distributor now expects non-GAAP diluted earnings per share of $5.50 to $5.56, up from its prior range of $5.29 to $5.39, while its sales-growth forecast remains unchanged.

For the quarter ended in 2026, Henry Schein reported worldwide sales of $3.47 billion, compared with $3.34 billion a year earlier. Internal sales growth in local currencies was 3.1%. Non-GAAP diluted EPS rose 13.0% to $1.56, while adjusted EBITDA increased 8.7% to $321 million.

The quarter included a $0.19-per-share net benefit from tariff refunds. Excluding that benefit and a prior-year remeasurement gain, adjusted non-GAAP EPS was $1.37, up 19.1% from $1.15. Henry Schein said operational performance, share repurchases and other items contributed to the underlying increase.

On a GAAP basis, operating income rose 18.6% to $193 million, and operating margin expanded 69 basis points to 5.57%. GAAP net income attributable to Henry Schein increased to $119 million from $101 million, while diluted EPS advanced 26.2% to $1.06.

Non-GAAP gross profit increased 7.7% to $1.11 billion, with gross margin expanding 111 basis points to 31.83%. The company said underlying gross margin expansion was approximately 30 basis points when the tariff-refund benefit was excluded. Non-GAAP operating income rose 6.6% to $279 million, and the corresponding margin increased 20 basis points to 8.03%.

Dental share gains lead distribution growth

Sales in the Global Distribution and Value-Added Services Group increased 3.7% to $2.94 billion, with internal local-currency growth of 2.9%. The company attributed the performance to new customers, a greater share of customer spending, and growth in company-owned and exclusive products.

Global dental sales rose 5.4% to $1.81 billion. U.S. dental merchandise sales increased 8.6%, primarily reflecting higher volume from market-share gains. Global dental merchandise sales grew 5.1% on a local-currency internal basis, while dental equipment sales increased 2.4%, supported by traditional equipment.

Global medical sales increased 1.1% to $1.14 billion, with 1.0% internal local-currency growth. Core medical sales grew 3.6%, and Home Solutions sales rose 11.4%, offset by lower sales of point-of-care diagnostics and vaccines.

Distribution operating income increased to $221 million from $178 million. Excluding net tariff benefits, operating income grew 13.6% and margin expanded 60 basis points, supported by sales growth and a higher contribution from company-owned brands.

Specialty implants and cloud products support other segments

Global Specialty Products sales rose 6.1% to $391 million, or 3.4% on an internal local-currency basis. Growth came from value and premium implants in Europe and the SIN 360 value implant in the United States.

Reported specialty operating income was $56 million, compared with $71 million a year earlier, and reported operating margin was 14.3%. Excluding the effects of tariff refunds and a prior-year remeasurement gain, the company said specialty operating income increased 13.5% and margin expanded 81 basis points.

Global Technology sales increased 5.2% to $181 million, with internal local-currency growth of 6.5%. Cloud-based platforms, new AI-enabled products, customer additions and pricing contributed to the increase. Technology operating income rose 15.5% to $53 million, while operating margin expanded 260 basis points to 29.1%, primarily due to gross-margin improvement in the U.S. practice-management business.

Higher earnings outlook and targeted investment

Henry Schein maintained its full-year sales-growth forecast of 4.5% to 5.5%. It raised its adjusted EBITDA outlook to high-single-digit growth from the previous mid- to high-single-digit range. At the midpoint, the new non-GAAP EPS guidance represents growth of 11.3% from the prior year.

The outlook reflects improved underlying performance and net tariff-refund benefits already recognized. It assumes no significant additional tariff refunds or remeasurement gains during the remainder of 2026 and incorporates an effective non-GAAP tax rate of approximately 24%.

Management plans a selective increase in fourth-quarter spending on growth initiatives that have already generated customer and market-share gains. Strategic priorities include company-owned products, practice-management software, cloud-based and AI-enabled solutions, Medical Home Solutions, shared services, centralized procurement and pricing capabilities, and productivity improvements.

Operating cash flow totaled $161 million in the quarter, and the company expects full-year operating cash flow to exceed net income. Henry Schein spent $30 million on capital expenditures and repurchased $125 million of shares during the quarter, leaving $330 million under its authorization. Its debt-to-adjusted EBITDA ratio was 2.8 times as of September 26, 2026.

The outlook remains subject to risks including tariff and trade-policy changes, supply-chain disruption, reliance on third-party manufacturers and suppliers, competition, regulatory requirements, cybersecurity threats, restructuring execution, acquisition and joint-venture integration, litigation, leadership transitions, foreign-exchange movements and broader economic or geopolitical conditions. The company does not provide GAAP reconciliations for its 2026 non-GAAP EPS and adjusted EBITDA forecasts because the timing and magnitude of certain restructuring, value-creation and related costs cannot be estimated without unreasonable effort.