汉瑞祥 (HSIC) 2026财年第三季度业绩电话会议：上调每股收益指引

核心要点

• 汉瑞祥公布2026财年第三季度全球销售额为35亿美元，同比增长4.0%，其中按当地货币计算的内部增长率为3.1%。
• 美国牙科耗材销售额增长8.6%，按当地货币计算的内部增长率为7.0%。管理层表示，增长主要受到私人诊所和新兴牙科服务组织（DSO）的销量增长以及市场份额提升的推动。
• GAAP稀释每股收益从0.84美元升至1.06美元。非GAAP稀释每股收益从1.38美元升至1.56美元，其中包含每股0.19美元的关税退税净收益。
• 剔除关税退税收益和上年同期的重新计量收益后，调整后非GAAP稀释每股收益为1.37美元，核心增长率为19.1%。
• 该公司将2026财年非GAAP稀释每股收益指引从5.29-5.39美元上调至5.50-5.56美元。总销售额增长预期维持在4.5%-5.5%不变。
• 汉瑞祥重申，预计价值创造举措将带来超过2亿美元的营业利润改善，其中包括到2026年底实现1.25亿美元的年化运行速率。

关键财务数据

业务与经营业绩

美国牙科耗材是主要的增长驱动力。销售额增长8.6%，按当地货币计算的内部增长率为7.0%。管理层将这一业绩主要归因于销售量的增加而非价格上涨，这得益于自有品牌、私标产品、Curodont等独家产品、客户新增以及客户钱包份额（share of wallet）的提升。

美国牙科设备销售额增长1.6%。传统设备的增长弥补了数字化设备销售的疲软。管理层表示，设备积压订单和订单活动均高于上年同期和上季度水平，支撑了对第四季度持续增长的预期。

美国医疗业务销售额增长1.0%。即时诊断（POC）产品和疫苗销售额下滑抵消了核心医疗业务的增长。剔除即时诊断测试以及流感和新冠疫苗后，销售额实现了低至中单位数的增长。家庭护理解决方案（Home Solutions）销售额增长了11.4%。

国际牙科耗材销售额增长5.4%，按当地货币计算的内部增长率为3.3%。国际牙科设备销售额增长2.9%，内部增长率为3.2%。公司指出，巴西、法国、西班牙、澳大利亚和加拿大的牙科业务内部增长尤为强劲，而德国因与2025年国际牙科展（IDS）相关的基数较高而面临设备销售同比压力。

全球专业产品销售额增长6.1%，按当地货币计算的内部增长率为3.4%。高端和超值种植体在欧洲均实现增长，而S.I.N. 360超值种植体推动了美国的增长。由于围绕选举的大环境和政治局势，巴西市场依然面临阻力。

全球技术业务销售额增长5.2%，按当地货币计算的内部增长率为6.5%。Dentrix Ascend、Dentally以及收入周期管理（RCM）业务推动了这一增长。已有近13,500家客户订阅了Dentrix Ascend和Dentally，每月净新增约200家客户。管理层强调，人工智能（AI）赋能的各项功能在临床文档记录、保险资格审核、理赔、催收、诊断和治疗流程中的应用正在持续拓展。

管理层指引

汉瑞祥维持其2026财年总销售额较2025财年增长4.5%-5.5%的指引。

该公司将2026财年非GAAP稀释每股收益指引从5.29-5.39美元上调至5.50-5.56美元。管理层将这一上调归因于第三季度的关税退税、核心业务绩效改善，以及旨在支持2027财年增长的第四季度定向增长投资。

相比2025财年的11亿美元，调整后EBITDA目前预计将实现高单位数增长。

该指引假设2026财年剩余时间内不会产生重大的额外关税退税或重新计量收益，外汇汇率与当前水平基本一致，且非GAAP有效税率约为24%。

管理层未提供正式的2027财年指引。然而，管理层表示，核心业务绩效和价值创造举措为其在2027财年实现两位数的盈利增长提供了信心支撑。

风险与关注事项

• 每股0.19美元的关税退税收益难以按期重复发生，这增加了与未来盈利增长进行比较的难度。
• 牙科就诊量保持稳定，但管理层注意到患者自费比例较高的可选医疗项目（discretionary procedures）面临压力。公司表示，这些品类在其业务组合中所占比例相对有限。
• 美国医疗业务的增长继续面临即时诊断测试需求疲软以及流感和新冠疫苗销售额下滑的挑战。
• 由于宏观经济和政治环境的影响，巴西市场依然是种植体业务的阻力所在。
• 营业成本的通货膨胀依然是一个影响因素。管理层表示，生产力提升、策略性定价以及性价比更高的自有产品正在抵消这一压力。
• 第四季度包含了定向增长投资，而上年同期的对比基数中包含了2025财年第四季度每股0.06美元的重新计量收益（预计不会重现）。

分析师问答精选

分析师高度关注美国牙科耗材增长的质量。管理层表示，7.0%的内部增长率主要由销量推动，这表明市场份额有所扩大，而非依赖提价。私人诊所和新兴DSO的增长最为强劲，这得益于自有品牌、独家产品和促销计划的支撑。

关税退税通过营业成本产生了约2,800万美元的收益，其中包括分销业务约2,000万美元和专业产品业务800万美元。这被数百万美元的营业费用部分抵消，同时还计入了约100万美元的利息收入。管理层在GAAP和非GAAP业绩中均保留了该退税，因为这代表了对此前已发生成本的收回。

管理层表示，第四季度的投资数额有限，且专门用于争取新客户、提升客户钱包份额，以及将偶发性购买者转化为汉瑞祥的活跃客户。这些投资不会改变公司承诺的年底实现1.25亿美元年化营业利润运行速率的目标。

在资本配置方面，管理层表示股票回购仍是其战略的持续组成部分。截至本季度末，汉瑞祥还剩余约3.3亿美元的回购授权额度，并且对能够巩固其业务组合和客户产品供给的补充型收购（bolt-on acquisitions）保持开放态度。

业绩电话会议完整文字记录

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完整财报电话会议逐字稿

管理层陈述

Operator

Good morning, ladies and gentlemen, and welcome to Henry Schein's Third Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's call, Graham Stanley, Henry Schein's Vice President of Investor Relations and Strategic Financial Project Officer. Please go ahead, Graham.

Graham Stanley

Thank you, operator, and thanks to everyone for joining us this morning to discuss Henry Schein's financial results for the third quarter. With me on today's call are Fred Lowery, Chief Executive Officer; Ron South, Senior Vice President and Chief Financial Officer; and Emmanuel Caprais, who will succeed Ron as Chief Financial Officer effective tomorrow, November 4.

Before we begin, I'd like to state that certain comments made during this call will include information that is forward-looking. Risks and uncertainties involved in the company's business may affect the matters referred to in forward-looking statements, and the company's performance may materially differ from those expressed in or indicated by such statements. These forward-looking statements are qualified in their entirety by the cautionary statements contained in Henry Schein's filings with the Securities and Exchange Commission and included in the Risk Factors section of those filings. In addition, all comments about the markets we serve, including end market growth rates and market share based upon the company's internal analysis and estimates.

Today's remarks will include both GAAP and non-GAAP financial results. We believe the non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable the comparison of financial results between periods where certain items may vary independently of business performance and allow for greater transparency with respect to key metrics used by management in operating our business. These non-GAAP financial measures are presented solely for informational and comparative purposes and should not be regarded as a replacement for corresponding GAAP measures. Reconciliations between GAAP and non-GAAP measures are included in the exhibits of today's press release and can be found in the Financials and the Filings section of our Investor Relations website under the Supplemental Information heading, and in our quarterly earnings presentation also posted on our Investor Relations website.

The content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, November 3, 2026. Henry Schein undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Lastly, during today's Q&A session, please limit yourself to a single question so that we can accommodate questions from as many of you as possible. And with that, I'd like to turn the call over to Fred Lowery.

Frederick Lowery

Thank you, Graham, and good morning, everyone. Before turning to our results, I'd like to welcome Emmanuel Caprais, who will become Henry Schein's Chief Financial Officer, effective November 4. We're really excited to have you all the team. I'd also like to recognize Ron who has played instrumental roles at Henry Schein over nearly 2 decades, including the past 4 years as CFO. Ron has demonstrated authentic leadership and disciplined stewardship throughout his tenure and his contributions have built a solid foundation for our future. He'll be staying on as a Senior Adviser working closely with Emmanuel to ensure a smooth transition. Ron, thank you again, for your leadership and your tremendous contributions to Henry Schein. And on a personal note, I want to say a big thank you for how you've helped me onboard into the company.

Now before we move to results, Emmanuel, would you like to say a few words?

Emmanuel Caprais

Thank you, Fred. I'm very pleased to join Henry Schein and excited about the meaningful opportunities ahead to drive growth, expand margins and create long-term shareholder value. I greatly appreciate the warm welcome I've received from team Schein members over the last few weeks and have valued the opportunity to begin engaging with colleagues across the organization. I look forward to partnering with Fred, the leadership team and Team Schein members and I want to thank Ron for his support throughout the transition. I also look forward to engaging with many of you in the investment community.

Frederick Lowery

Thank you, Emmanuel. Now turning to our results. We delivered another strong quarter that increases our confidence in the momentum we're building at Henry Schein. We're gaining share, expanding margins and delivering strong underlying earnings growth. Here are a few highlights from the quarter.

U.S. Dental Merchandise sales grew 8.6%, including 7% internal local currency growth driven primarily by volume in a stable market. Excluding the net benefit from tariff refunds this quarter and the prior year remeasurement gain, adjusted non-GAAP diluted EPS increased 19.1% to $1.37. We expanded non-GAAP operating margin by 20 basis points in the quarter, and we repurchased $125 million of Henry Schein stock bringing the year-to-date repurchases to $450 million, inflecting our disciplined approach to capital allocation. I'm very pleased with the U.S. Dental Merchandise sales growth of 8.6% driven primarily by volume in a stable market and a 19% adjusted earnings per share growth. It shows that we're winning new customers, expanding our share of wallet and growing our company-owned and exclusive products and executing effectively through our sales organizations.

At the same time, we're seeing growing financial benefits from our value creation initiatives. Our commitments have not changed, and we continue to expect more than $200 million of operating income improvement, including a $125 million run rate by the end of 2026. Together, with a more attractive business mix and greater operating discipline, these initiatives are helping us convert growth into stronger earnings performance. We are, therefore, raising our financial guidance for the year reflecting the net benefit of tariff refunds received during the quarter, targeted and limited growth investments in the fourth quarter, which will contribute to growth in 2027 and improved underlying business performance.

My initial priorities coming into the role were clear: execute against our 2026 financial plan, deliver our value creation commitments and invest selectively to accelerate growth, and we're making strong progress. Our agenda remains focused on accelerating growth, simplifying the business and bringing greater rigor and discipline to execution. So let's start first, with accelerating growth.

We continue to invest in those areas where we see greatest opportunities to gain share and deepen our customer relationships. The results we're seeing have increased our confidence in several growth initiatives. We have, therefore, made the deliberate decision to make some limited incremental investments in the fourth quarter focused on winning new customers increasing our share of wallet and converted more episodic customers into long-term Henry Schein customers. Our objective is to build on the share gains that we're already achieving. New product development is an important part of our growth expectations, particularly across company-owned products and practice management software. For example, our recently launched Versalis implant positions us well in the fast-growing value implant category. More suppliers are also choosing to offer exclusive products and promotions through our Distribution channel, underscoring the differentiated value of the Henry Schein platform.

Our investments in Henry Schein One, which is our market-leading Technology business, continue to drive accelerated growth in our cloud-based practice management platforms as we embed AI enabled capabilities that improve workflows, improve collections, patient engagement and overall practice performance. These capabilities help dental practices by identifying revenue opportunities, automating administrative work, and improving clinical and operational workflows. This is particularly valuable as practices manage labor constraints and rising operating costs. In our Medical business, we remain focused on attractive areas of growth, including our Home Solutions business, where we delivered double-digit growth in the quarter.

Our second priority is simplifying the business. We are reducing organizational complexity, getting closer to the operations and speeding up decision making. We have continued to [indiscernible] our organization, establish our executive team and align decision-making more closely with our operating businesses by advancing shared services, centralizing selected activities and driving greater collaboration we're making it easier for our customers to work with us. We are outsourcing selective functions, advancing shared services, centralizing indirect procurement and building stronger pricing and margin management capabilities. Our focus is ensuring that our operating income improvements we've committed to deliver are realized in the P&L and that they build over time. Additional initiatives are being prioritized based on impact and return, including further portfolio streamlining, shared services and outsourcing AI capabilities and supply chain tools designed to improve efficiency, reduce inventory and simplify processes. Simplification should make us faster, more consistent and more effective at converting top line growth into bottom line growth.

Our third priority is bringing greater rigor and discipline to our execution. This includes prioritizing investments and resources toward those areas with the greatest potential to drive sustainable growth and returns. It also applies to capital allocation, where we're taking a disciplined approach that balances investments with returning capital to shareholders. This discipline is particularly important in an environment that can change quickly. And like most businesses, we're experiencing inflation in our cost of goods sold which we are successfully offsetting through productivity initiatives, strategic pricing and lower price equivalent products, including our company-owned brands. Our customers increasingly need an integrated partner that can simplify practice management, and we are uniquely positioned to deliver that breadth of solution at scale.

Now let me turn to our business performance and what we're seeing in the market. As I mentioned earlier, we achieved excellent growth in our U.S. Dental Merchandise sales in the third quarter with 8.6% total sales growth, 7% local currency internal growth. Importantly was, it was driven primarily by volume rather than price and particularly among private practices and emerging DSOs. We believe this reflects continued market share gains from our own brand portfolio and from exclusive products such as Curodont, this also reflects growth in our active customers and share of wallet and strong sales execution by our team Schein members. Based on what we see across our customers and the business, the overall U.S. dental market remains steady and patient traffic was stable during the quarter.

Consumable sales for routine procedures are steady. Demand for traditional equipment remains healthy and DSOs continue to be an important source of growth. We are seeing some pressure on discretionary procedures, where patients can be more selective to out-of-pocket costs, and they may choose to defer our treatments. We're watching these trends closely, but they do not materially affect our current growth expectations.

U.S. Dental Equipment sales growth was solid. Consolidation of small and emerging DSOs remains an important driver as office expansions support greater practice efficiencies. Our scale and exclusive sponsoring promotions and the quality of our service technicians and our sales teams provides meaningful competitive advantages. As we look to the fourth quarter, we're encouraged by the continued strength in our orders, which remain ahead of prior year levels and prior quarter levels. International dental trends in both Merchandise and Equipment remained stable, particularly good growth among DSOs. The U.S. medical market continues to benefit from procedures moving out of acute care into ultimate care settings and to home care. At the same time, we're seeing fewer primary care visits related to respiratory illness.

U.S. Medical sales growth remains healthy despite declining market demand for point-of-care diagnostic test and lower flu and COVID-19 vaccine sales this quarter. Home Solutions continued to deliver double-digit growth, and looking forward, we expect an early 2026, 2027 U.S. flu season to support better medical growth in Q4.

Turning to Global Specialty Products. It also grew well. In Europe, the implant market remained steady, and we achieved good growth in both premium and value implants. In the U.S., despite a softer market, implant sales grew well, driven by our S.I.N. 360 value implants. Brazil remained a headwind given the challenging macroeconomic and political environment due to elections. Our Global Technology again delivered good growth, led by our cloud-based platforms and our new AI-enabled solutions. Underlying growth was in line with prior quarters but was partially offset by a difficult comparison with the prior year Windows 10 end-of-life support [indiscernible] revenue. We expect fourth quarter sales growth to be in line with the first half of this year. Almost 13,500 customers now subscribe to our Dentrix Ascend and Dentally cloud-based platforms, and we're adding approximately 200 net new customers per month with demand primarily coming from private practices and emerging DSOs.

Our Technology business continues to deliver good underlying growth as we invest in product development and innovation. This is driving increased adoption of our cloud-based solutions and conversions to our advanced packages. That is Ascend Pro and Ascend Accelerate which include AI-enabled clinical documentation, insurance eligibility, claims and collections, diagnostics and treatment capabilities and integrated imaging. Overall, our third quarter performance demonstrates that the strategy is translating into stronger financial results. Specifically, businesses with higher growth and margin profiles are projected to be 50% of total operating income in 2026, making important progress toward the portfolio mix that we've been building. We remain focused on increasing the contribution from businesses with higher growth and higher margins and return characteristics.

Our value creation plan is contributing to the results and our commitment remains unchanged. We are also strengthening [indiscernible] creating discipline across the organization to focus on translating revenue growth into stronger earnings growth, and our capital allocation also remains an important part of that value creation framework. Share repurchases are an established and ongoing component of our capital allocation strategy alongside disciplined investment in the business. Taken together, we're gaining share in the key businesses, improving our portfolio mix, maintaining a disciplined approach to capital allocation and realizing the benefits of our value-creation initiatives to drive our financial performance. We remain fully committed to delivering those value creation objectives while selectively investing behind the growth opportunities producing the strongest returns. That combination strengthens our confidence in our ability to translate revenue into sustainable earnings growth.

And with that, I'll turn it over to Ron to review our third quarter results and our updated 2026 guidance in more detail. Ron?

Ronald South

Thank you, Fred, and good morning, everyone. Before I review our financial results, I'd like to take a moment to express my appreciation to everyone at Henry Schein, including our finance team and to the many colleagues with whom I've had the privilege of working closely over the years. I'm incredibly proud of what we've accomplished together and grateful for the dedication, partnership and support of experience throughout my time at Henry Schein. I know I'm transitioning an exceptional team over to Emmanuel and I have great confidence in both the team and Henry Schein's future. It's been a privilege to serve as CFO, and I want to thank everyone who has been part of that journey.

Moving to our third quarter results. We're pleased by the growth in the business. As shown on Exhibit D of today's press release, excluding the net benefit from tariff refunds this quarter and a remeasurement gain in the prior year, our results reflect underlying adjusted non-GAAP earnings growth of 19.1%. Global sales were $3.5 billion, with total sales growth of 4.0% compared to the third quarter of 2025. This reflects local currency internal sales growth of 3.1% and a 0.2% increase resulting from foreign currency exchange and 0.7% sales growth from acquisitions. What stood out especially in the quarter, was a 7% local currency internal sales growth in our U.S. Dental Merchandise sales driven primarily by volume from market share gains.

Our GAAP operating margin for the third quarter of 2026 was 5.57% an increase of 69 basis points compared to the prior year GAAP operating margin. On a non-GAAP basis, the operating margin for the third quarter was 8.03%, up 20 basis points compared to prior year. Third quarter 2026 GAAP net income was $119 million or $1.06 per diluted share. This compares with prior year GAAP net income of $101 million or $0.84 per diluted share. Our third quarter 2026 non-GAAP net income was $175 million or $1.56 per diluted share. This compares with prior year non-GAAP net income of $167 million or $1.38 per diluted share. The foreign currency impact on third quarter diluted EPS was immaterial.

On an EPS basis, the net benefit from tariff refunds in the quarter was $0.19 per diluted share, which is included in our GAAP and non-GAAP results. We did not record any remeasurement gains in the third quarter of 2026 as compared to a remeasurement gain of $0.23 per diluted share in the third quarter of 2025. Finally, adjusted EBITDA for the third quarter of 2026 was $321 million compared with third quarter 2025 adjusted EBITDA of $295 million reflecting growth of [ 8.7% ].

The components of third quarter sales growth are included in Exhibit A at this morning's earnings release, I'll highlight the primary drivers for each reporting segment. Global Distribution and Value-Added Services Group sales grew by 3.7% driven by growth in Global Dental Merchandise sales. Looking at the components of that growth, U.S. Dental Merchandise sales grew 8.6% with local currency internal sales growth of 7% as growth continued to accelerate. Performance was primarily driven by increased volume from market share gains, growth in our company-owned products continues to significantly outpace branded products. U.S. Dental Equipment sales grew 1.6%, driven by growth in traditional equipment, partially offset by a decline in Digital Equipment sales. Our equipment backlog remains healthy, and we expect U.S. Dental Equipment growth to continue in the fourth quarter.

U.S. Medical sales grew 1.0% as lower sales of point-of-care diagnostic products and vaccines were offset by solid growth in our core Medical business and 11.4% sales growth in Home Solutions. When excluding point-of-care diagnostic tests and flu and COVID-19 vaccine sales, our U.S. Medical sales grew in the low to mid-single-digit range. International Dental Merchandise sales grew 5.4%, with 3.3% local currency internal sales growth. International Dental Equipment sales grew 2.9%, with 3.2% local currency internal sales growth. Internal Dental Merchandise and Equipment sales growth were especially good in Brazil, France, Spain, Australia and Canada. Note that equipment sales growth in Germany was affected this quarter by a difficult prior year comparison related to the timing of [indiscernible] Annual International Dental Show in Germany in 2025.

Finally, Global Value-added Services sales declined 4.8%, primarily reflecting lower brokerage revenue, where sales can be lumpy from quarter-to-quarter.

Turning to the Global Specialty Products Group. Sales grew 6.1% with 3.4% local currency internal sales growth. Sales growth was driven by value and premium implants in Europe as well as value implants in the U.S., partially offset by headwinds in Brazil. Our Global Technology Group sales grew 5.2%, with local currency internal sales growth of 6.5%. Growth was driven by Dentrix Ascend and Dentally, our cloud-based practice management platform as well as good growth in revenue cycle management, supported by increased claims volume. Internal sales growth slowed slightly from the second quarter due to a challenging prior year comparison, and we expect growth in the fourth quarter to return to the pace we saw earlier this year.

Turning to our restructuring program. The company recorded restructuring expenses of $22 million or $0.14 per diluted share during the third quarter of 2026, as we continue to advance our current restructuring programs and value creation initiatives. Our value creation initiatives remain on track. We continue to expect more than $200 million of operating income improvement including a $125 million run rate by the end of 2026. These benefits are contributing to margin expansion and underlying earnings growth, and our fourth quarter investments do not change these commitments.

Regarding share repurchase activity. During the third quarter of 2026, the company repurchased approximately 1.4 million shares of common stock at an average price of $86.67 per share for a total of $125 million. At the end of the quarter, we had approximately $330 million authorized and available for future stock repurchases. Turning to our cash flow. We generated operating cash flow of $161 million in the third quarter of 2026. Our operating cash flow was strong and in line with the prior year, and we continue to expect operating cash flow to exceed net income for the full year.

Turning to our 2026 financial guidance. At this time, we are not able to provide without unreasonable effort and estimate of restructuring costs related to ongoing value creation initiatives. Therefore, we are not providing GAAP guidance. Our 2026 non-GAAP guidance is for current continuing operations and does not include the impact of restructuring expenses and related costs and other items described in our press release. Our 2026 total sales growth expectations are unchanged at 4.5% to 5.5% over 2025. We now expect 2026 non-GAAP diluted EPS attributable to Henry Schein, Inc. to be in the range of $5.50 to $5.56 compared to prior guidance of $5.29 to $5.39. We are raising this guidance to reflect the net benefit from tariff refunds recognized in the third quarter targeted and limited growth investments in the fourth quarter, which will contribute to growth in [indiscernible] '27 and improved underlying business performance. 2026 adjusted EBITDA is now expected to grow in the high single digits, versus 2025 adjusted EBITDA of $1.1 billion.

This guidance assumes no significant additional tariff refunds or remeasurement gains for the remainder of 2026. Our guidance also assumes foreign currency exchange will remain generally consistent with current levels, and we are assuming an estimated non-GAAP effective tax rate of approximately 24%. With that, I'll now turn the call back to the operator for Q&A.

Operator

[Operator Instructions] Our first question comes from the line of Elizabeth Anderson with Evercore ISI.

分析师问答

Elizabeth Anderson

Great working with you, Ron, and welcome Emmanuel. I had a question. I'd like to double-click a little bit on the share gains that you called out in U.S. Dental consumables. Can you talk about sort of the product categories, what that is? And then can you just confirm for us how the tariff refunds flow through the P&L?

Frederick Lowery

Yes. Thanks for the question. I'll take the first part and then let Ron take the second part. The 8.6% growth or 7% internal local growth is really strong for us in the U.S., and we feel great about the fact that it's more volume versus price, so heavily volume-weighted, which shows we're gaining share. The particularly interesting part is we're gaining share in private practice versus -- and emerging DSOs versus just large DSOs, which says we're making good progress, and that look sequentially from Q1 to Q2 and Q2 to Q3, we got better every single quarter. So that's really an exciting part of the growth there.

What's really driving it is when I look at our corporate brands, so we're seeing growth in our own brand products, both our private label and other owned brand products. We're seeing growth in our exclusive products like Curodont. And then we're actually just executing well from a commercial standpoint. Our commercial teams are driving really great programs and great promotions and building deeper relationships with customers. I think it shows up, as I said before, in the private practices.

Ronald South

And Elizabeth in terms of the tariff refund flow through the P&L. So we had about $28 million of benefit that's flowing through cost of goods sold. About $20 million of that is in the Distribution segment and $8 million of it is in the Specialty segment. We also have a couple of million dollars of offsetting OpEx related to that, that's also going through the P&L and then, call it, roughly you get a little bit of interest income on these refunds as well, and we have about $1 million or so of interest income from it.

Operator

Our next question comes from the line of Jeff Johnson with Baird.

Jeffrey Johnson

Ron, congrats on the retirement. I'm a little jealous at this point, but good luck to you in the future. So I guess for Fred or Ron, either one. Just wondering if I could ask a two-part question on guidance. Implied in the fourth quarter EPS growth somewhere in the 3% to 4% range. I think, Fred, when you and I last talked at our health care conference, you kind of committed to double-digit EPS growth, moving forward. So talk about maybe some of those targeted investments you're planning in 4Q? How much of that 3% to 4% instead of double digit might be end markets a little bit of pressure here with the macro versus those investments versus conservatism? Just how to think about that 3% to 4%?

And as I think about the tariff refund that helped by $0.19 this quarter, I would assume that double-digit EPS growth if you're still comfortable with that moving into next year, is kind of on an ex-tariff refund basis, The Street is hanging out at just under $6 your guidance this year now sitting a little above $5.50 or just above $5.50 at the midpoint. I would assume you don't want us to put double-digit growth on top of that, given that tariff refund is adding $0.19, but help us out conceptually thinking about '27, even though I know you're not guiding there at this point.

Frederick Lowery

Yes. That last point is really important. Thanks for the question. It's Important to note, we're not giving guidance today, but let me just maybe take a step back. And since we started value creation every quarter since then, we've actually seen double-digit EPS growth. And we feel great about having a double-digit EPS growth for the full year of 2026, and we're committed to our value creation commitments that we made in the past of a $125 million run rate at the end of this year, which which implies that we're building toward double-digit EPS growth next year. As it relates to the investments that we're making, we're making some target limited investments really behind where we're seeing really good growth. And we'll continue to do that going forward that it should help us from a growth standpoint not just in Q4, but in 2027 as we continue to take share and build close relationships with customers. But I'll let Ron answer the balance of the question here.

Ronald South

Yes. And Jeff, I think one thing -- regarding your point on the fourth quarter growth, something I just want to point out and just as a reminder, the fourth quarter last year did have a remeasurement gain of approximately $0.06 of EPS benefit that won't repeat this year. So when looking at the growth, it's important to normalize for that when looking at the year-over-year impact of our -- the estimates that you're coming up with based on our guidance versus the prior year at this point.

Operator

Our next question comes from the line of Jason Bednar with Piper Sandler.

Jason Bednar

And Ron, I'd just echo, it's been a pleasure working with him you and wish you all the best and Emmanuel welcome and look forward to working with you. I wanted to first hit on, I guess, the U.S. Dental Merch growth, really impressive number, clearly taking share seems like a byproduct of a lot of the initiatives you put in place here Fred and Ron. My question, though, Fred, is hoping you can bifurcate growth a little bit more of [indiscernible] volume or price event. You've emphasized a few times here already today, that volume was that primary driver. I think is a little bit of a shift from the message last quarter where growth was a bit more balanced between volume and price. So just can you unpack the growth contributions a bit more? And then has anything changed on the pricing dynamics over the last few months? Is it really good to see that the volume is picking up here.

Frederick Lowery

Yes. Thanks for the question. Let me try to give you a little bit more context here, we're seeing primarily volume, which we've -- I think in the past we've seen primarily price. And so that's estimate that we're taking more share. And when I look at the market, that clearly is stable for our customers, the market, actually, we're seeing growth in the market. So that means our customers are growing faster. That means our algorithm is working by us selling more of our company brands into those customers, and we're helping our customers see more customers and see more patients. So it is truly primarily volume, mostly volume, if that helps from a contextual standpoint.

And then just on the inflationary standpoint as it relates to price, we're still getting good price. We're getting good prices, covering any inflation that we're seeing, and we're able to still either drive more price where as appropriate or help our customers use different products, equivalent products that maybe are lower priced, but higher margin for us. So -- so that algorithm is working, and I think we will expect it to continue and we don't have any concerns about being able to cover inflationary pressures in Q4.

Operator

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

Jonathan Block

Maybe just to kick things off. Is there a way to frame the amount of that value creation will contribute in 2026 on a net basis? I'm trying to go in there because that might help us with the incremental for 2027 when we're considering the $125 million run rate exiting this year. So again, what's the contribution from value creation this year in '26? And then sorry, just to follow up on that prior question from Jeff because I think we all want to sort of get some clarity here. There had been a talk about double-digit earnings growth. So again, are we putting like a double-digit number, I call it the $5.53 midpoint for 2027? Or are we stripping the $0.19 and arguably putting a double digit on a normalized, if you would, I don't know, $5.34 number?

Ronald South

John, I'll start with the -- on the value creation piece. Like Fred said, we remain committed to delivering the -- ultimately, the $200 million in operating income improvements. And -- and that includes $125 million run rate that you referred to when exiting 2026. Any of that in-year benefit that we've gotten so far is obviously included within our year-to-date results now, and we've also included it within our full year earnings guidance. So it's a driver that in-year benefit is a driver of the current year growth. And ever since we initiated these initiatives starting in late '25 we've delivered double-digit growth each quarter in 2026, and we continue to -- and we expect to deliver the double-digit growth for the full year of '26. So I think the important thing here is -- these are scalable and sustainable activities we're taking, and they give us confidence that we'll be able to continue to achieve double-digit earnings growth as we go into '27 and beyond.

In terms of the math in '27 and as it relates to tariff refunds, we will help us take all that into consideration when we provide '27 guidance. I don't want to put words in Emmanuel's mouth in his third week. But I think that's something that we'll have to take into consideration. And -- but I think you can trust that we believe the underlying operations of the business is going to continue to deliver double-digit growth.

Operator

Our next question comes from the line of Erin Wright with Morgan Stanley.

Erin Wilson Wright

Great. Can you talk a little bit about the innovation and just the overall market dynamics that you're seeing across implants right now, particularly across the Value segment, the demand trends that you're seeing across geographies? And then just quickly, just on the Medical side of the business, you mentioned flu season and that being a benefit or maybe a little bit of a pull forward there. How much of that is benefiting the 4Q guide? Or how material is that for you?

Frederick Lowery

Yes. So just on implants. We're excited about our implant business. And I look at our implant performance in Europe, particularly, we're seeing really good growth in both the Premium and the value Implant segment. In the U.S., we're seeing really great growth in our S.I.N. 360, which is our value implant. I mentioned in the prepared remarks that we just launched our Versalis product, which we think is going to continue to drive more growth into that segment. So we're quite excited about that. The real headwinds for implants is coming out of Brazil, which we think is really tied to the political environment there, tied of the election. So overall, we feel really great about implants. We think the Value Implant segment is going to continue to grow. Innovation is a big part of that, and we're excited about the portfolio that we have in place. Ron, do you want to take the second part?

Ronald South

Yes. Erin, just were you asking in terms of the impact of new products on the guide? Or, I just want to make sure I understand your question.

Erin Wilson Wright

Well, yes, innovation across the implants, which I think he addressed and then also on the flu season with Medical and how much of a pull forward?

Ronald South

Yes. I mean the impact of the timing of flu season is something that we've contemplated within that sales guidance. I mean, Medical was a little lighter in the third quarter than I think originally expected, as we mentioned in the prepared remarks, it was really driven by continued softness in point-of-care diagnostic kits, primarily as well as a little less demand this year for vaccines, than what we saw in the prior year. But I think in the fourth quarter, we're holding to that part -- our full year revenue guide, and I would expect that we would have some benefit from the timing of flu season in the fourth quarter.

Operator

Our next question comes from the line of Allen Lutz with Bank of America.

Allen Lutz

I want to follow up on the value creation initiatives here. Were the operating income improvements in 3Q across both gross margin and OpEx in line with expectations? Or did any fall into 4Q? And then just to follow up on a prior question, how back-end loaded is that exit rate of $125 million exiting the fourth quarter? So for example, is there a significant amount of cost that go until December 31 and then [indiscernible] on the 1st of January, trying to [indiscernible] if there's any way to frame that?

Ronald South

Allen, I'll start on this one. It's -- I would say that the benefits we got in the third quarter were very much in line with our internal expectations, both from a gross profit perspective as well as on the G&A. Just by their nature, especially the G&A, you do get kind of ongoing benefits as you get into -- further into the year. Some of the initiatives that are completing during before or even starting during Q4 because these will continue well into '27, if not into early '28. So we're going to continue to get some benefits from that. But I think most importantly, like I said before, these are scalable and sustainable activities that we're putting in place that should continue to provide earnings growth for us going forward.

Operator

Our next question comes from the line of John Stansel with JPMorgan.

John Stansel

Great. Just on traditional equipment. It sounds like the backlog still remains robust. But can you just talk about how activity has trended in the backlog, new orders coming in? And this appetite to investment practices over the last month or 2? Is it kind of [indiscernible] progressed?

Frederick Lowery

Yes. Thanks for the question. I would say on the traditional equipment, the backlog is strong. When I look year-over-year, the backlog is up quarter-over-quarter up, which traditionally, we see a little bit of a bump in Q4 anyway. But the backlog looks strong and activity is strong. So when we look at our order rates, we feel good about continue to see growth in traditional equipment in Q4.

Operator

Our next question comes from the line of Kevin Caliendo with UBS.

Kevin Caliendo

I have two. One is we just asked about equipment, but what about de novo plans from any of your DSOs. Has that slowed in any way, shape or form? Given some of the turmoil in the markets and the like. Just wondering how that's trending and if that would be considered a headwind or anything for '27? And then just on the $0.19 question because I've gotten 11 people that begged me to ask you -- to ask again. Should we consider tariffs part of like regular course of business or onetime in nature? I know you -- non-GAAP and GAAP it at the same time. But just everybody wants to figure this out, I'm asking it in a different way.

Frederick Lowery

Yes. The question on de novos we're not seeing any change in activity level as it relates to de novos. If anything, we're seeing really strong growth with emerging DSOs in particular. But -- but we're seeing good growth with large DSOs. So there's no real change that we're seeing as it relates to de novo.

Ronald South

And Kevin, your question regarding the $0.19, you're asking GAAP versus non-GAAP on the...

Kevin Caliendo

Yes, I'm just -- I mean, we're just trying to understand if we should assume it's part of the baseline? That's all. I mean everybody wants to understand this question. I'm trying to ask you the math...

Ronald South

Yes, we -- I get that. We elected to not adjust it for non-GAAP purposes for a couple of reasons. One is most in the industry aren't. And two, we have -- it is a refund of a cost that we incurred earlier that we didn't non-GAAP when we incurred that cost. So it is kind of a like-for-like type of comparison. Obviously, it's a type of benefit that's difficult to repeat period-to-period. So to the extent we believe it's a relevant factor when talking about growth, we'll be sure to isolate it so that people are reminded of it.

Frederick Lowery

I would just add to that, just to close that point out. As we think about the value creation that we're delivering, the growth that we're seeing in the business we're committed to doubling down in areas where we're seeing success from a growth standpoint. We really have a lot of conviction around the underlying performance in the business that will help us get to double-digit EPS growth in 2027. So we're not going to walking away from that. I just think we should just make that point and be really, really explicit about it.

Operator

Our next question comes from the line of Michael Cherny with Leerink Partners.

Michael Cherny

Yes, Ron, best of luck in what comes next for you once you retire. Maybe another way to dive into some of the investments you're making on the growth side. How are you measuring yourself across the success of the growth investments? You talked about targeted opportunities to gain share. Should we think about this as a recurring dynamic where the more share you gain, the more opportunity you see, the more you'll reinvest some of these savings, trying to balance this all against some of the enterprise initiatives that you've been focused on for a while now.

Frederick Lowery

Yes. Let me be clear. The investments that we're making are not are not at all impacting the commitment we've made on value creation. We're going to deliver $125 million run rate at the end of this year in spite of the fact that we're making some limited and targeted investments in the business. So I just want to make sure that's clear. As it relates to the investments, hey, we're doubling down on the areas where we're seeing really good benefits. And these are obviously variable situations where we can push more in a certain area. And the way we're measuring ourselves has been taking share. This is the initiatives that we're focused on, are allowing us to grow faster in private practice, taking those episodic customers and converting them to active customers. And when we do that, we develop deeper relationships with those customers, and we grow faster because of it.

Operator

Our next question comes from the line of Brandon Vazquez with William Blair.

Brandon Vazquez

I wanted to follow up on the last answer that you've just given, Fred. I mean, can you talk a little bit about where you see the opportunity to make these incremental investments in the past? I think the company -- if you're talking about the "episodic customers" I think in the past that's come from like the new henryschein.com e-commerce website. Is it similar investments? Are there new investments that the company hasn't done in the past to go after those? And one kind of homework question here while I have you. Can you just level set us some exposures to any inflationary headwinds, rubber, things like that, dental gloves? I know gloves have been a little bit of noise in the past.

Frederick Lowery

Yes. Thanks for the question. If you would go back to Q2 last year, we started making some investments in promotions and we've, in some areas, saw really success. I think that has driven some of the momentum that we've seen with private practice. We've learned from those promotions. We've learned what works really well and those are the areas that we're doubling down on. I don't want to give too many specifics from a competitive standpoint, but it's really helping us grow our company-owned brands which is driving a lot of value for our customers as well. And then we have some exclusive products that are making a real difference like Curodont. So I think those are the kind of things that you'll see us do and on the traditional equipment side, we have pretty normal promotions, nothing -- nothing that I would say is new, but pretty normal promotions that we would we would typically do at this time of year. So we think those things are allowing us to have continued growth in those areas

Ronald South

And Brandon, the second part of your question regarding the commodity pricing on certain things. The strategy we've had in place to try to manage any increase in costs related to the raw materials in some of these products has mitigated the impact fairly well for us, and that includes in some cases being able to to offer our company-owned brands, our private label products to customers where the pricing begins to get a little high. That's been helping, I believe, some of that accelerated growth we've seen in private label. So the mitigation strategy, we believe has worked really well there.

Operator

Our next question is from the line of David Larsen with BTIG.

David Larsen

Congratulations on a good quarter. Can you talk a bit more about growth in U.S. Dental Consumables. Like what's driving that? Is it broad market demand? Or did you have sort of any pricing events going on where you're reducing prices for certain customers? And then related to that, can you talk a bit about the software infrastructure you have for dental practices. How that's progressing? It seems to me that if you sort of manage all of the tech infrastructure, those practices are more likely to buy more consumables through you, especially as their practices grow.

Frederick Lowery

Yes, thanks for the question. And we're excited about the growth of our customers. And I think it's important to note that while there is some pressure on discretionary-type spending in private practice and with DSOs. The routine products are actually doing really well. And the discretionary portion of the market is relatively limited in our portfolio. And so on the routine side we see really good growth, as we engage customers more, we typically are able to grow our business more with those customers as we expand the portfolio and increase our share of wallet with those customers by taking those episodic customers and turning them into active customers.

As it relates to our technology business, we're incredibly excited about the our Ascend and Dentrix and the Dentally portfolio in dental offices. I mean we are the system of record for maybe the technology stack, if you will, and the closer we get to those customers, we're helping them drive productivity. So they're actually seeing [indiscernible] -- and because of that, we actually see more growth where we are supplying them. So it is absolutely one of our growth drivers is to continue to grow. And we're -- as I said in the remarks, we're growing our cloud-based portfolio by over 200 installs per month. And so as we continue to see faster growth in our Technology business, we absolutely expect to see faster growth in the rest of our business, both because we're building closer relationships with them, but also because we're connecting those portfolios better. So that's definitely a growth driver as part of our algorithm going forward.

David Larsen

200 installs a month sounds like a lot. Any more color there, like who are you taking share from? Are these de novos? Were they paper-based previously. Just any more thoughts there would be very helpful.

Frederick Lowery

Yes. I would say it's pretty broad-based, and I wouldn't specify a specific area. I think we're making progress, both in both in DSOs and practices. I would say that emerging DSOs are the faster-growing portion of the market from our perspective. So -- but we're pretty broad-based in our success with the new placements of our cloud-based practive management software.

Operator

Our next question comes from the line of Michael Sarcone with Jeffries.

Michael Sarcone

Ron, best of luck in retirement and Emmanuel looking forward to working with you. On the call, you mentioned starting to see some pressure in discretionary procedures. I think that was a comment geared toward the U.S. I was hoping you could elaborate a little more there. And then just talk about what kind of downside risk there is in the guidance or baked into guide assuming that worsened.

Frederick Lowery

Yes. So just -- when I talk about discretionary, I'm just saying areas where we don't participate a whole lot. And I mean we have small participation areas like ortho. So that's not a huge portion of our portfolio. So we're not really seeing a lot of impact from that quarter. And when I think about the guide going forward, it's relatively small as far as downside risk. And I think you'll see that we expect pretty steady market and good growth in Q4 relative to maybe similar to what we saw in Q3.

Operator

Our next question comes from the line of Vik Chopra with BMO Capital Markets.

Vikramjeet Chopra

Ron, thanks for all your help over the years. I had two questions, Fred, if I can just start with you first. Given the year-to-date repurchases, I'm just curious how you're thinking about balancing share buybacks against debt paydown organic investment in M&A? And then I had a quick follow-up, please.

Frederick Lowery

You cut out the first part of that, but I think you're asking about capital -- capital deployment, share repurchase. But yes, so we continue to repurchase share on the quarter because we feel that stock is cheap and we have a lot of confidence in delivering on our value creation and earnings growth in the future. And so I think we'll still continue to be opportunistic, and we'll invest for the best returns for shareholders. We're not walking away from M&A by any stretch. I think there will be opportunities for -- particularly for bolt-on M&A in the future and where we find assets that would be additive towards the portfolio and help us grow faster, help us support our customers better and drive better returns or drive great returns for our shareholders, we will be active in that regard.

Vikramjeet Chopra

Great. And then I'm just curious that beyond current commitment, how much additional opportunity exists from shared services, outsourcing, procurement and portfolio streamlining?

Ronald South

With reference to the outside services regarding shared services, Vik, I think we're looking at -- and in a number of areas, I think would be -- I would consider to be conventional with what you see a lot of companies do in shared services. So those are areas that we're exploring. We've started with a couple of functions already, and we have other areas that we think we can centralize and find some efficiencies. You mentioned the portfolio, as you can appreciate, the portfolio is always under review. I think as we take a look at it with some fresh eyes with Fred having come in and now Emmanuel is coming in as well, we'll continue to do that portfolio review and find opportunities to refine it in a [indiscernible] and optimal way.

Operator

Our final question this morning comes from the line of Michael Petusky with Barrington Research.

Michael Petusky

So look, I know this question has been tried about 3 or 4 different ways, but maybe for the slow kids in class meaning me. Could you guys just talk about sort of underlying growth expectations moving forward whether tariffs is sort of a onetime? If you could just add. Again, I apologize, I know it's been asked, but if you could clarify, I really appreciate it.

Ronald South

So Mike, I just want to make sure I'm clear. You're asking when we provide guidance -- when we get to the point of providing guidance on '27, how are we going to treat tariffs?

Michael Petusky

Yes.

Ronald South

Okay. Yes. We'll clearly make it at that point in time, we'll make it clear what we believe the growth is of the business. What we've been saying is that the double-digit growth that we've been talking about in terms of our objectives going forward and our goals going forward that the activities that we have in place right now give us great confidence that we can achieve that. I believe, with the tariffs, there's still an opportunity for that, that we get to the double-digit growth. But we'll -- that will be something that we cover in -- as part of the guidance. But I think it's important to focus on that underlying performance. When you look at the underlying performance in Q3 of this year versus Q3 last year, I would point out it was 19% EPS growth. And that's the type of growth rate we want to be able to keep pushing going forward.

Michael Petusky

Okay. Great. Could I just -- since I'm the last guy, could I just sneak one more quick one here.

Ronald South

Absolutely.

Michael Petusky

Okay. And in terms of the medical business, haven't been talking about much. A couple 2, 3 years ago, gloves was always sort of -- you'd give a number ex the impact of headwinds associated with gloves. And it almost feels like point of care diagnostics is now flu and COVID is now sort of almost the same dynamic. I'm just wondering -- I understand there was a comment earlier about Q4 should see a little bit better better uptake there with maybe earlier flu season. But just as we move forward, do you expect point-of-care diagnostics to sort of be the bad guy versus home solutions being the good guy in Medical? Or do you see sort of more of a normalized point-of-care diagnostics relative to history?

Frederick Lowery

Yes. I would just maybe just characterize it this way. If you -- we feel like the growth in medical is good when you back out point of care. And by good, I mean it's low to mid-single-digit growth. And that's what we would expect going forward as you normalize for the point of care. Home Solutions, we feel great that it's going to continue to grow in high single digit, double-digit growth going forward. So that's how we think about the business at this point.

Operator

Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Lowery for final comments.

Frederick Lowery

Yes. Just a few comments to conclude. Our third quarter results reinforce our confidence in the direction of Henry Schein. Our U.S. Dental Merchandise sales growth of 8.6%, driven primarily by volume, mostly by volume, and the state [indiscernible] traffic environment demonstrates that our growth strategy is delivering results and that we are taking share. We're also delivering on our value creation commitments, which are contributing to margin expansion and underlying earnings growth, and that gives us confidence that we will be able to continue to deliver and continue to [indiscernible] double-digit earning earnings growth in 2027. Where we see initiatives producing attractive returns we'll selectively invest behind them, and that will extend our momentum into 2027 and beyond.

Our job is straightforward, grow faster, deliver our value creation commitments, operate with greater discipline and translate those improvements into sustainable earnings growth and long-term shareholder value. Thank you for your interest in Henry Schein, and enjoy the rest of your day.

Operator

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.