Welcome to day two of the B of A Healthcare Conference. My name is Allen Lutz. I run healthcare tech and distribution here at B of A. We are very excited to welcome Henry Schein. We have CFO Ron South. Ron, Thank you for joining us. Thank you, Allen. I wanted to start talking about recent dental trends that you're seeing in the market. If we go back to the call from, I believe, last week, talked about January, some weather-related impacts, and then February and March seem like the trends improved for the dental end market in North America. Can you talk about sort of the trajectory of dental demand through the course of Q1? As we think about what you've seen in April so far, can you comment on if that's held the trajectory that you saw exiting March and just really anything you've seen as we go into Q2? Certainly. As you mentioned, Allen, January was a soft month. I do not think it was only soft for us. I think a lot of the market indicators and a lot of the patient traffic surveys that were out there indicated it was a soft month. I am referring primarily to the U.S. when mentioning that. We did attribute a lot of that to some of the weather that occurred in the middle of the month in the middle of the country. It was also the fires in California at that point in time. Some of the softness we saw in January began to turn itself around. A little better patient traffic in February. That improved even more so in March. I will say one of the things we said on the call last week was that we were encouraged by what we saw in April in terms of coming out of as we came out of the first quarter. Sometimes in March and April, you can get a little bit of timing of Easter year over year. I like to look at those as really a combined two-month period. When we looked at March and April, that combined two-month period continued to be encouraging. The patient traffic can really be driven by a couple of things. We do think that kind of your standard hygiene visits continue to be fairly consistent. I do believe that there is a continued demand for dental services in the US that exceed the existing supply. One of the other encouraging things that we saw in a metric that we follow closely in the market is we are starting to see an increase in the rate of build-outs of dental offices. A new de novo is being built at a rate that's a little higher than what we have seen historically over the last couple of years. While that's not going to play into the immediate increase in short-term, or I'm sorry, in patient traffic, we do see that as an encouraging metric at this point. On the increase in de novo build-outs you talked about on the call, can you talk about, I guess, a couple of things? Why do you think that's taking place right now? Is there any way to size how much more it is versus maybe a quarter or two ago? How broad is it? Is it maybe regionally dependent? Are you seeing it across the country? Just any more color on the quantitative and qualitative factors of that specific piece as we think about the growth of de novo builds? I would say in terms of what's driving it, I got to believe that a lot of this is being driven by the larger DSOs. I have to believe that the larger DSOs are as aware as we are of the fact that the demand for dental services exceeds supply. I think there's a level of confidence that they have that if they are adding dental practices to their portfolio, they're going to be operating at a very high utilization level within those offices. I think that's part of it. There may have been some hesitancy over the last year or so that could have been associated with expectations of interest rates coming down. You eventually get to a point where you're going to decide if it doesn't look like interest rates are going to come down, then you're going to start that investment process. I do think that's part of what may be driving this. I'll emphasize that might be my theory as opposed to you could talk to others and maybe perhaps get different opinions on that. That's my opinion on this, right? In terms of the geography associated with this, I don't think we're seeing it concentrated in any one place that I'm aware of. No one has brought that to my attention. I have to believe that it's relatively broad across those areas. There has been some speculation in the past that there are certain pockets of rural America where there is a shortage of dentistry. Perhaps they're trying to fill some of that. I don't know that for a fact, but it wouldn't surprise me if that was the case. You mentioned demand exceeds supply. I think yesterday we were having a conversation. It was difficult for you to get a dental appointment recently. Patient traffic trends seem to be pretty stable, pretty good. Are more dentists retiring over the past year or so? Is that a driver of this? What do you think is causing those things to be or causing demand to exceed supply? Is the issue that there are fewer practices that are now open because of that, or is there something else that's maybe going on? We did definitely see an increase in the retirements of dentists in the early stages of the pandemic. I think there were a lot of older dentists who just decided that was a good time for them to kind of exit their practice. I think that did shrink that supply a little bit. Also, if you flash back to 2020, 2021, you also had a lot of disruption in the end market associated with people changing dentists. You had a lot of people switch from a dentist perhaps that was close to where they worked to a dentist that was closer to where they lived if they were working from home more frequently. There was a lot of turnover amongst our customers and throughout the entire sector of patients. That created some opportunity for a lot of practices to add a chair, do some renovation. We had a period of time there in 2021, 2022 where every quarter our standard equipment, which is the chairs, units, and lights, the chair that the patient is being treated in, we were getting double-digit increases year over year in the sales of standard equipment. There was this kind of churn that has already happened. That is now that dust has settled. We saw that base of business come up on equipment, and now it has kind of leveled off a little bit. Okay. I want to switch gears a little bit. The update on the 2025 guidance. Guidance was unchanged, but it seems like a lot was going on underneath the hood over the past quarter: tariffs. There was a big change in FX. Can you talk about kind of what obviously the guidance didn't change, but can you talk about some of the things underneath the surface that may have evolved in the guidance from when you initially gave it last week? Certainly. The first thing I'll address is FX because I think there may have been a little confusion there. Our original guidance that we provided at the end of February assumed that the 2025 foreign exchange rates would be consistent with the foreign exchange rates in 2024, even though at that point in time, the rates did differ somewhat. We were looking at it more from we wanted our original guidance to really be driven by what we thought we could do from an internal growth plus a little bit of acquisition growth perspective. What the rates did since the end of February, what happened was we ended up with in the first quarter, we had about a 1.5 point headwind on a top line basis associated with foreign exchange versus the prior year. Based on where we were, where rates were when we released earnings on May 5, we feel like we could compensate for that if those rates were to stay consistent the balance of the year. It got us right back to a foreign exchange neutral perspective, right? We held to that 2-4% revenue growth, primarily all of that being internal with a small amount, less than 1% of that coming from acquisition growth. That was on the foreign exchange piece. In terms of some of the other things that are happening in the business, most other aspects of the business are meeting our expectations. In spite of that kind of slow start in January, while we look at what's happening in dental consumables, we also had a little bit of a hurdle with dental equipment in the US in the first quarter because last year in the first quarter, we had an inflated sales number because of the deferral of certain equipment installations from the fourth quarter of 2023 into that quarter. When we kind of looked at that and kind of looked through those numbers, we were essentially meeting expectations across the board. That was more of a nitty-gritty question on the 2025 guide. As we think about the bold plus one strategy, 2025 to 2027, you talked about getting back to high single-digit to low double-digit EPS growth. On the call last week, Stanley called out operational efficiency through cost management, growing specialty, growing own brands, expanding digital. As you think about the drivers to get back to those types of growth rates sustainably, how do you think about the biggest factors, the biggest drivers within your business that are going to get you there? Certainly. I think the things that we've been, I'd say, probably most focused on that are getting a lot of our attention internally is continued, one is a continued push of some of the new products and services that we launched in the latter part of 2024 and maintaining traction with that throughout 2025. The tapered proconical implant product as an example. We're converting a lot of existing customers and really starting to shift that focus more to converting new customers or other people in the market to that product. It can be a long process. A lot of your typical oral surgeon isn't quick to convert on implants, but we are working on that process. It also includes some new technology products that have come out of Henry Schein One, eligibility products, for example, that are very much a sticky point with our customers. It gives them greater visibility into what the complete insurance coverage is of their patients so they can talk to them about what some of the treatment plans may be, what the cost will be to that patient without having to interrupt the treatment to call the insurance company to get that type of clarification. Very important. That's another example. It also includes kind of expanding through acquisition in some of the areas that we feel very bullish on, specifically in the home solutions part of our business in medical. It's really our acquisition in the first quarter of Ascentus prolongs that. Ascentus gives us access to continuous glucose monitors that we can sell. And just as a point of clarification for everyone, we're not providing home healthcare. We are providing products to home healthcare providers. We can now distribute continuous glucose monitors to patients who are being treated at home. Very consistent with our strategy in medical of following the patient. Where are more and more people getting their care? They're getting it in ambulatory surgical centers on an outpatient basis. They're getting more and more of their treatments in a physician office as opposed to a hospital. Now you're seeing more and more people being treated at home, hence our increased investment in home solutions. I would say another aspect that we really have focused on, and you mentioned the bold plus one strategy, Alan, the L in the bold stands for leverage. It's how do we better leverage this great infrastructure we have in place to help grow other aspects of the business? We're now starting to sell more of our specialty products, leveraging our US distribution salesforce, for example. We're selling more and more of our endodontic products specifically through our US salesforce and starting to get some good traction on the endodontic side. How do we better leverage the whole business? That was one of the things we remain focused on right now. A fourth item would be how do we continue to manage our costs? One of the things we mentioned on the call last week was that our original goal, we really feel good about our original goal of $75-$100 million of cost savings based on the restructuring plans we put in place over the course of 2024, the initiatives and the actions that we're taking over the course of this year, that by the end of this year, we will have completed enough actions that we feel like we'll be very much at the high end of that $75-$100 million range in terms of reduction in costs going into 2026. The last item would be the global e-commerce platform. This is something we're really excited about and something that we have made a significant investment in over the last several years. In the latter part of 2024, we launched essentially a beta version of this in the U.K. and Ireland and taking some of the feedback we're getting through that process and applying it to the U.S. In the second half of this year, we'll be launching the global e-commerce platform in Canada and the U.S. We feel like that will help us really kind of help the customer experience in terms of being able to see click-on videos, to see demos of equipment, to better understand what are some of the product offerings we have. We think it can ultimately enhance some revenue growth and some margin growth as we get to. Thank you for all of that. The first thing you mentioned, Ron, was implants. Before we get into Henry Schein's strategy, we'd love a second to talk about the market growth rate for implants. The growth has been pretty stable at Henry Schein. Has the market changed at all over the past couple of quarters? I guess compare 4Q to 1Q, April versus 1Q. Is there really any change in demand either on the upside or downside? Just curious if anything there has evolved over the past couple of quarters. Yeah, I think when you think about the implant market, you really almost have to look at it as a matrix because you have the European market versus the US market. You have the premium implant market versus the value implant market. If I look at our European business, our European business had very good growth in the first quarter versus the prior year. It really grew towards the high single digits. We're fairly confident that the market is not growing at that same pace. We feel like we were definitely successful in taking some market share in Europe, and specifically in the Germany, Austria, Switzerland region, and the DACH region, where we really saw our most successful growth. And that's a, is it a premium? Is it a value? I would say it's something closer to a premium, but it's a very price competitive type of premium product, right? In the U.S., what we're seeing in the U.S. is a relatively flat market. What we said on the call was that we see a flat market in the U.S., and our revenue growth is consistent with that, meaning our revenue growth was flat as well. I think in the U.S., what we're seeing is a little more pressure on the premium side and a little bit of upside on the value side. You are getting more and more growth. What I'll say is that the growth in implants in the US for us has been disproportionate to the value as opposed to the value implant as opposed to the premium implant, which for us is an indication of more and more general practitioners who are looking to perform implants within their practice as opposed to referring that work to an oral surgeon. A general practitioner will typically only address this if it's a straightforward procedure for them. If it's a complex procedure, they're still going to reference that to an oral surgeon. If it's a straightforward procedure, they're comfortable doing that with the value implant, which means they don't require a lot of kind of tack-on service that comes with that surgical planning, other service that you would get with a premium implant. Our DSO customers are very interested in this. They see this as an opportunity for them to increase the revenue base of their existing practices if they can maintain these implant procedures within their practices as opposed to referencing them out. The fact that we got access to this value implant through our SIN acquisition in Brazil, who had an FDA-approved value implant, has given us a much broader and meaningful portfolio in the US. You have the tapered proconical coming from BioHorizons, and you also have the value implant coming from SIN, which has really kind of filled out the portfolio for us in the US. It gives us a lot of optimism going forward with that business going forward, even though it has been relatively flat the last couple of years as the market has been flat. Yeah. That was really my next question is around the strategy within the implant business. Ron, you basically just answered the question that I had there. As you think about maybe to go a step further, you talked about growth in value, maybe a little bit less so in premium. Is there any way to talk about maybe some of the early success you've had with SIN? Is it too early to talk about the rollout there in terms of the contribution, the acceptance, the interest level? I assume it's a lot of DSOs that are interested. I guess maybe unpack that a little bit. The same with the proconical. Yeah, I think with the SIN value implant, we do feel like it is early. Let's be clear on that. It is early. I think we're seeing some traction, and we do believe that we can stimulate some better growth there going forward. A source of that will be some of our DSO customers who have expressed an interest in having a value implant. We did not have a value implant to offer them before the SIN transaction. That was a big part of that, a very important aspect of that transaction for us. I would say the tapered proconical is a very important product for us in the sense that it is a type of product that is a deeper connection, and it is a portion of the market, the implant market, in which we did not have an alternative to offer to the practitioners. That is up to about 50% of the market. That was 50% of the market that we really did not have a product that we could address that need for. That really filled a big gap for us. Like I said, that is the type of product that you are looking ultimately, we are going to have to convert others from competing products to that product. That is a slow process. That will take some time. We do feel pretty comfortable with the quality of the product. We have got a lot of good key opinion leaders out there who have really given us favorable reviews of that product. We think that is going to bode well for us going forward. I want to switch gears to medical for a second. I think the flu season hit the U.S. maybe later than it typically does. Can you talk about what you think the steady state utilization is within medical, what you're seeing in the first quarter and anything you can say about April? I'd say on the core medical side, it's really still kind of in that low single-digit range just in terms of steady state. You're right. We did see some benefit to revenues in February and March. I mean, we really see that more in, for example, point of care diagnostic kits, which is an important product category for us. When you see those sales begin to go up, you know it's because a lot of people are going to their physician and are being tested for strep. They're being tested for flu. They're being tested for a number of potential respiratory illnesses. We did see some growth in that product category versus last year. There is also just the ongoing churn of consumables that when you have an increase in patient traffic going through the office of just other things you're going to sell, the cotton balls, the gloves, everything that go with it that get consumed every time there's a patient visit. I think over time, it's still kind of in a low single-digit range. I do think what outpaces that growth and something we talked about on the call is our home solutions business. Our home solutions business is growing in the high single digits on an internal basis with the acquisition of Ascentus has grown about 23% year over year, but about 9% on an internal basis. Hence the ongoing emphasis as we look at our M&A pipeline, where can we continue to grow on home solutions? Because that aspect of the business is growing faster than core medical, and it does get better margins than core medical. It is an attractive area for us to continue to invest. One of your peers last week in the medical side announced they were looking to separate the medical segment from the rest of their business. They said that there was not a lot of overlap between that specific business and their other more core business. As we think about Henry Schein, can you talk about the overlap in terms of SKUs, technology, shared facilities, things like that between medical and dental? Is there a lot of overlap? Are they relatively separate? Anything you can say to that? Certainly. Over the last multiple years, by design, we have really overlapped those businesses more and more. It is a shared distribution infrastructure. We do not have any distribution centers that are dedicated only to dental or only to medical. They are shared distribution centers. I'd say on SKUs, there's about 25%-30% common SKUs across the two. Even the way we approach managing those businesses now is very much a joint process. The senior management is a US distribution senior management team. It's not a dental team. It's not a medical team. It's a US distribution team. There are dedicated sales forces. That would be the most distinct feature that separates the two. There are a lot of customer service. If someone calls them and says, "My box is damaged," that call is not going to a specific dental customer service or a specific medical customer service individual. It is going to customer service. The one area you did mention that is distinct would be on the technology side. By that, to clarify what I mean there is Henry Schein One, which sells practice management software to dentists, that is a dental-specific software. That is not a software that we sell. We do not have an offering right now of software that we sell to physicians. That is the one area that is dental only within our business. The distribution business itself, as it stands, is a highly integrated type of approach to market. We do see a lot of, I will say, combination of dental and medical services being provided at increasing number. Community Health Centers are an important customer category for us. More and more of those community health centers are offering medical and dental services within their premise. You also have somebody like an Aspen Dental who has opened some medical facilities as well. They can continue to buy through us. They do not have to go elsewhere to buy, Aspen being a very important dental customer of ours. You are seeing more and more of a crossover, even in the end market, between dental and medical services being provided. I think one member of KKR has joined the Henry Schein Board, and another will join shortly, assuming they can. I guess as you think about, or as they think about the opportunities that they've brought to your attention or the early conversations that you've had, I would say conversations that we've had with investors really center around two areas: cross-sell opportunities to drive revenue, whether that's more through DSO customers and standardizing different products to sell there. Then there's OPEX. You've obviously been doing a restructuring program. Can you talk about, I guess, within those buckets, what are the certain initial areas of focus that KKR has between those two buckets? If there's other things that are outside of that, what are some things that they're bringing to your attention? Yeah. We have had multiple discussions with KKR, specifically with people from their Capstone division, which is like their internal consulting arm. At this point, the approach with them has been more they have asked us, "What are your initiatives? What are the most important things you're working on right now? What can we do to help?" You're always looking at, "Is our go-to-market as efficient as it can be? What can we do to help with overall margins?" We've talked a little bit to them about private label strategy, what makes sense in terms of private label strategy. Of course, G&A is another area that you mentioned. They bring a wealth of information. They bring a lot of experience. It's been, I think, some very, very good discussions with them in terms of seeing their perspective. It's interesting getting someone who, a group of people who have seen a lot of different things across a lot of different industries and a lot of different businesses, provide their perspective of our business. We're still on the stage of sharing a lot of information with them, getting some feedback. That will continue to progress, and we'll continue to begin to prioritize some of these things perhaps as the year goes on. Got it. Makes sense. Then shifting gears again, Dentrix Ascend and some of the technology assets that you have. You mentioned on the last call good adoption of cloud-based systems into DSOs. As you think about the opportunity to grow Dentrix Ascend within your customer base, what's the go-to-market strategy? What's the current penetration rate within your DSO customers? Just trying to understand, is there an urgency for them to make the switch? How can you really get them over the finish line to make that move? I think we're approaching about 10,000 customers on Dentrix Ascend right now, which still puts it at about 10% of our customer base. Most of those customers are new customers. You do pick up some conversions, though, from the on-prem Dentrix product to the SaaS product. I think we'll increase that pace of conversion as the Ascend product becomes more attractive. We continue to really emphasize the development of the SaaS model versus the Dentrix model. A lot of our Dentrix customers like that product, and you're going to have to show them something that is much better than what they have to get them to convert. That is really where we are prioritizing a lot of the development. Having said that, obviously, Dentrix is a very important part of our business. We still fully support our customers who are on Dentrix, and that's going to continue on for some time. Over time, we're going to see more and more some conversions. Most of our new business is in those who are signing up for the SaaS model versus buying an on-prem model. That's great. With the last 30 seconds or so, what are you most excited about with Henry Schein for the next year? Where do you think the most opportunity lies, or what are you most excited about? Like I said, some of the metrics that we've been looking at in terms of perhaps a little more of an accelerated build-out of the end supply of dentistry, obviously, we're excited about that. We think that that provides us with some optimism around expansion of supply, which in turn will put more patients into seats. It's just that much greater churn of consumable merchandise, greater sales of equipment to equip those offices. I'm also excited about the relationship with KKR. I believe that they bring a great perspective for us. They bring a level of expertise and a track record that if we can couple it up with the expertise that we have internally, it should really be powerful for us. I'm excited about that as well. All right. That's great. We'll leave it there. Thank you, Ron. Very good. Thank you. Thank you.