Perfect. Afternoon, everyone. Welcome to this session of the Leerink Partners Global Healthcare Conference. I'm Mike Cherny, the Healthcare Tech Distribution Analyst. It's my pleasure to have Henry Schein Senior Management Team here. With me is Ron South, CFO. In the audience, we have Graham Stanley and Susan Donofrio from the IR team. I have a whole bunch of questions, but hopefully we'll keep this really informal. I'm gonna try to start high level and work my way down. Maybe, Ron, let's just level set. Like, where do you see the state of the dental markets right now? I know we talk about this all the time, but how do you juxtapose the health of the patient volume and patient traffic versus the health of dentist demand for buying products from you, both, you know, ranging from high tech to low tech to, obviously, consumables? Certainly. Thank you, Mike. You know, I would say, in spite of, you know, some of the results you see out there, you know, from various aspects of the dental business, we still see the dental business and the dental markets as being quite healthy. You know, the market went through a lot of volatility during and kind of on the tail end of the pandemic, both negative and positive. From a positive perspective, there was a lot of churn of patients resulting in practices taking on some new patients, adding investment, adding a chair. We had very good, we had a period of time there where we had very good standard equipment sales growth year- over- year. We had multiple quarters of double-digit standard equipment growth, which was really a sign of investment coming, you know, through the market, that has since somewhat stabilized now. You know, there was this churn of patients that has occurred, that you now begin to see this fairly standard volume of patients going through the dental practices. It's stable, but one could argue that's also a polite way of saying it's not growing. The next stage of this is really to try to get to, you know, more sustainable growth in the end markets. This is obviously with, you know, with reference to the core dental markets. On the specialty side, you had, you know, we had a period of, again, very good growth in implants. We think there was likely some pent-up demand for people who put off getting implants during the pandemic, who then got it, kinda raising that base of business. Since then, we've seen relatively flat markets for implants in the U.S., with some, at least with our business, some mid-single-digit growth in Europe. We think that's actually exceeding market. We think they're taking market share in Europe. You know, you said juxtapose that with, you know, how does the dentist then react to what they should be doing with their practice? I think what we've been focusing on is helping the practices see more patients in a day. How can you work with dentists so that they are able to increase the volume of patients they see over the course of the day by introducing, whether they be digital tools to them, other aspects of their business that may allow them to increase patient traffic? We do believe that there is a demand for dentistry services that exceeds the supply right now. To the extent you can get a practice to expand their capacity, they are able to fill that capacity and make the practice more profitable. And along those lines, I mean, when you think about the dentist and the dentist's profitability, clearly dentists are also dealing with some of the same financial constraints that plenty of other small businesses are, including the interest rate environment. You know, you mentioned the uptick in base equipment from office buildout. Where do you see dental capacity right now in terms of what your customers are telling you and kind of from that perspective, the health of the dental service market in terms of how many dentists there are to satisfy the current demand levels? I mean, you know, at a minimum, anecdotally, what we're hearing from our patient base is that they're busy. You know, many are selectively picking days to expand their hours so they can see more patients. They are busy. They've, you know, now, not all practices are gonna be equally busy, obviously. There is a lot of opportunity for them to expand their practices, for the same reasons I was saying before. We do think that demand for dentistry services does exceed their ability to supply it. How does that translate back to, you know, their investment in, you know, if that's so much gonna be in standard equipment, but it might be more so in digital equipment in areas that we are seeing, for example, believe it or not, there's a lot of practices out there who are still investing in intraoral scanners for the first time. And that investment in intraoral scanners does make that practice ultimately more efficient and also allows them to at least consider future investment in other digital equipment, such as 3D printers, chairside mills, other areas that, quite frankly, is not even a, there's no opportunity to invest in that if, in fact, you don't have that scanner to kinda start the whole process. You do see a willingness to invest in some of these, in some of these tools that can make the, you know, the practice more efficient. And maybe use intraoral scanners as an example, 'cause we've just been through a few years of a broad base of new introductions. There wasn't necessarily a meaningful pricing degradation as much as just a different pricing level introduced across the board, it seems like. When you think about your sell-through on IOS and what you've seen, how has that demand changed in terms of this trade-off of the quality of the product, the new innovation, the new software, workflows versus price points being a point of sensitivity for dentists? Certainly. I think what's been interesting is we've seen, you know, I mentioned before, you do have practices investing in scanners now. A lot of that is because the price point has become more attractive to them. You know, scanners were, you know, call it a $30,000 item that is now, you know, can be sub-$20,000, some that are even, you know, below $15,000. You also see practices who maybe went from having one scanner to having multiple scanners so they have one per chair. You know, Stanley, you've heard him perhaps analogize this to the calculator. At some point, the calculator is functional. It can do a lot of different things. If you do not make a lot of changes to it, you can figure out how to make a calculator really cheap. It is still a very useful and attractive product for people. I think you have some entries into the intraoral scanner market, such as Medit and a few others that have come in at that very attractive price point. They've put pressure on some of the more traditional players there on scanners who have since developed, you know, a similar product and brought down their price point as well. Like I said, is it a horrible thing? No. I think the more practices that invest in scanners, in the long term, the better off it is. It means we have more and more practices going, you know, more towards a digital practice. It, you know, right now, the innovation seems to be slanted more towards how to take something that's preexisting and make it cheaper as opposed to simply trying to find ways of making it better by adding features and doing some other things. I wanna go back for now at least to your implant comments. You have a bigger implant business than I think a lot of people recognize at times. As you talk about the potential to take share, seeing share gains in Europe in particular, where does your implant fall along the product portfolio, that's allowing, driving that growth? You know, with the acquisition we did of S.I.N. in Brazil in mid-2023, in addition to giving us that presence in Brazil in the implant market, S.I.N. also had a value implant that was already FDA-approved that we were able to add to the product portfolio of BioHorizons, our U.S. implant subsidiary. When you say, you know, where are we on that spectrum, that spectrum has gotten wider for us. BioHorizons was selling an implant or is selling an implant that I do not refer to as a premium implant. I refer to it as a sub-premium implant. It is not a value implant, but it can sell at a price point below that of a premium implant that perhaps you might see from a Straumann, for example. It is very price competitive in the market. We have other offerings kinda working their way down the spectrum, including this value implant we now have from S.I.N., which has been a very popular offering to our DSO customers. A lot of the implant growth in the market is coming from general practitioners who want to do implant procedures within their practices as opposed to referring the work to an oral surgeon. Typically, if you're a general practitioner, you're gonna focus on the more straightforward single implant, which is really ideal for a value implant. You don't require a lot of follow-on service, a lot of surgical planning that comes with the purchase of a premium implant. We now have that value implant we can offer up to that general practitioner. We can help them through the training process. We work with a lot of our DSO customers to assure that their general practitioners have been adequately trained, have the right types of products. That is an avenue of growth for us. I think a lot of what you see in, you know, when you read about what's happening in the implant market, you know, we get a lot of questions around, are you seeing a lot of trade down from the premium to the value? I don't think that's necessarily the case. I think a lot of your seasoned oral surgeons out there like to work with the same implant they've always had. I do think the people who are new to the market, who are coming into the market, may be more inclined to buy that value implant as opposed to the premium. I think the new term is challenger in terms of that in-between category, which we'll start to use. Okay. Maybe turning back to the kickoff to the year, you provided fiscal 2025 guidance a couple weeks back. You talked about this being a new base year, for which has returned to your typical long-term growth rates. Within that, though, there are a lot of moving pieces. Maybe if you could just recount for us, where are the areas baked into guidance where you think you're outgrowing the market versus other areas where you might be undergrowing the market? I'd say the, you know, the highlight areas, and I'll, you know, since I already mentioned it, I'll start with our European implant business. We're very confident that they're taking market share on a consistent basis, you know, by growing in that mid-single-digit range. That's really been a bright spot and one that we expect to continue into 2025 in terms of being able to continue to outgrow the market. You know, within some of the more core business, in medical, our expansion into home solutions has been, you know, very successful for us. What we're seeing, we're experiencing, you know, good high single-digit growth with the businesses we acquired that are serving the home health providers with product. and that, in addition to growing at that high single-digit level, which we know exceeds kinda the standard medical market, they also bring operating margins which exceed that of the core medical business. It is also very profitable for us. That is another, you know, highlighted area that we have been looking at. You know, other areas within our value-added services, we are just, we are seeing a lot of, if you sit down with a dentist and ask them, you know, where is your biggest pain point, they are not gonna start with, I wish I could, you know, buy cotton balls, you know, 10 cents cheaper. Their bigger pain points are, I wish I could get reimbursed more quickly from the insurance company. I wish I could improve my reimbursement rate from the insurance company. We've really put a lot of focus on investing in value-added services businesses that are really growing very well for us. We invested a couple years ago in a company called eAssist. It was started by a dentist who grew so frustrated with, you know, fighting to get his money from the insurance reimb, through the, through the insurance reimbursement process, and that he got really good at doing it and he realized he could make more money helping other dentists with that service and, and improving their revenue cycle management than he could being a dentist. We ultimately bought the business, and it has been a very good grower for us. Those are the areas that we really are pushing 'cause they can be, you know, very high margin for us. They continue to grow. If you are helping your customer with something like insurance reimbursement, you're making that relationship with the customer that much more sticky. It is not just helping them with it and selling them that service, but it is also addressing a pain point for them, which makes that customer much more loyal, and you're gonna sell them more merchandise and more equipment down the road as well. And on the flip side, where are some of the areas that you think are, you're undergrowing or obviously we all know that the dental markets right now have their share of headwinds too. Yeah. You know, I mean, core dental merchandise markets are really experiencing some level of trade down, right? A couple years ago, we had a higher, inflationary environment, and you did see more customers looking at the opportunity to buy either other branded merchandise of a similar SKU but at a lower price or buy private label. That's bringing down some revenues a little bit, but we're seeing volumes perhaps tick, you know, not, you know, significantly higher, but we are seeing volumes grow while revenues don't necessarily reflect that. Nevertheless, that's creating this kinda flat environment in that core merchandise market. Plus, we're still seeing some pressure on PPE. PPE pricing did, you know, stabilize somewhat, not completely over the course of 2024. One of the things that may help stabilize glove pricing in 2025, ironically, could be the tariffs. If, to the extent that you have a lot of online discounters who are sole sourcing from China, it may create a little more pressure on them to raise prices, and it could stabilize PPE pricing in the US environment. And then, you know, we talked a lot about dental. Like, what a, what's going on in terms of the moving pieces you see within your medical business? You mentioned the at-home solutions, which is performing well. What are the behavioral changes that you've seen that are embedded in guidance across the traditional non-acute care segment where obviously you have one of the largest market positions? Certainly. If you go back to, like, 2022, you know, when we were really still in, in kinda the heart of the pandemic, you know, coming out of the, the, the severity of it, but still in a period where, when, when people were got ill, they went to their physician, perhaps more so than they did prior to the COVID pandemic. That really showed up in our medical numbers in 2022 and into 2023 when we were getting quarterly growth, excluding PPE, of double digits, 10% a year or 10% of, you know, year- over- year each quarter. A lot of that was driven by point-of-care diagnostic kits. Point-of-care diagnostic kits, you know, put COVID aside, you still sell, we sell a lot of flu diagnostic kits, strep, RSV, and others. With that influx of additional traffic going to the physician, we saw it was because people wanted to know, "I'm sick. I wanna know what I have." When prior to the, to the pandemic, you were more likely to see people not go to the physician if they didn't feel well. Unless you felt really bad, you know, you took some Tylenol, you did what you had to do, and you stayed home. What we're sensing, and I think McKesson has said something similar to this as well, I think culturally that's changing a little bit. I think people are kinda returning to that behavior prior to the pandemic. It's only in more severe situations that we see more and more people going to the physician. February was a period of time where that did spike and that was more significant. And we talked about that a little bit in our prepared remarks when we released earnings on the 25th. You know, you do see a little more volatility there. That base of business in medical was really elevated, coming out of the pandemic, but we have seen it level off a little bit. I think if you look at the CAGR of the medical business going back to 2021, you do still see a pretty good line of growth, but year over year you're gonna get a little more volatility. Are you getting any sense from your customers on when this period of, call it, renormalization, could settle itself out? Obviously, you can see in your own comps at some point, you'll comp against, when you start to see that change in behavioral pattern. What are you hearing from your customers on, outside of the recent elevated respiratory season, how they're thinking about where volume should fall within the businesses? Yeah, I think that you, you, they kinda see this as, as the normal, the normal level, you know, the normal volumes that you would, one would get. I, you know, I think the thing that's hard to assess is the timing of when, when should you anticipate a respiratory disease season, right? You know, it, it, it, that's becoming, you know, increasingly difficult. It, there, there will be, you know, quarter to quarter, you're gonna see a little more volatility with that. I think it's a, you know, I always say a quarter is a 13-week period. It's hard to, it's hard to, you know, make these things consistent, you know, all the time. I do think that they kinda feel like, from my understanding and talking to our medical team, talking to the customers, that this is kinda the, you know, what they would expect going forward, and this can be the base from which we can now try to achieve, you know, greater medical growth going forward as well. Turning back to dental and the specialty side as well. This has been a, at least recently, elevated level of M&A to continue to build the business. You mentioned SIN. There's been some other acquisitions. Obviously, the last couple years were elevated from a spend level. When you're making considerations for further specialty, portfolio expansion, how do you think about that expand versus partner? Clearly, you have a number of key suppliers that have their own specialty portfolios, you know, whether they go direct or work with you. How do you think about drawing the line on where you will feel like you wanna be the supplier or the manufacturer? I think when it comes to the, to the specialty side, you know, there is a, a clear wall between when we are going to market with our specialty products versus when we are partnering with our manufacturing partners and selling their, you know, their merchandise as well. You know, I think the phrase I've heard that other investors use when talking to me is, "Are they your frenemy?" And I guess, yes, they are. You know, they are, we are, you know, they are valued partners of ours and, and a very important part of the business. At the same time, we do compete with them on not just the implant side, but also in endodontics and, and to a lesser extent, in orthodontics. Our investment and what we do in, on the specialty side is done independent of what we, you know, of our, of our arrangement or our, our relationship with our manufacturing partners. When we did, you know, in 2023, we did two very large, for us, very large implant acquisitions when we bought Biotech based in France, SIN based in Brazil. And we did not do those with anything specific in mind outside of how do we make our implant business more competitive in the broader market. I mean, you talked about SIN a bit and the expansion out in value. How is the Biotech deal going, kinda looking back at it now, looking back at what your hurdle rates were? Are you getting the market penetration you hoped for, and is the product delivering, the business delivering what you want it to? I mean, obviously, Schein has a long history of M&As or core competency. Did this check the boxes you wanted to check? Yeah. I mean, Biotech's been, you know, a successful acquisition for us. I think we continue to, you know, look for ways of expanding its product portfolio. They're the leader in France. I think the thing that people kinda forget about with Biotech is, in addition to the implant business, they also have a clear aligner. We are converting, in the process of converting and nearly completing it, you know, our clear aligner that we were selling in the U.S was a brand called Reveal. We are converting that brand from Reveal to the Smilers brand that we bought through Biotech. We thought it was a superior brand to what we were selling in the U.S. They brought more than just implants to us. They also brought a clear aligner business. They also had the digital workflow product that we are working with a lot of our customers on, which is an agnostic digital workflow. Our customers can use any scanner they want. They can be on any software. They can have any brand of chairside mill, any brand of 3D printer, and they can send images through this digital workflow that was developed by Biotech. There is a lot more to the business that goes beyond just the implants that we got access to. You know, turning back to some recent events, obviously you made a release earlier this year about a new large strategic investor or KKR. In addition, you having, you adding three new board members to partnership with them and then, and then another. When you think about what the company's focused on operationally, you know, Schein's been a company that's gone through consistent process improvements, numerous restructuring plans, numerous operating efficiency programs over time. What do you think is different about the opportunities you're pushing forward with this time? And where does the support come from in terms of, you know, even if it's just from having an outside perspective, but the additional areas that you hope to really hone in on and, and, and tighten in for, for Schein? Certainly. Yeah, the KKR investment is one we're really excited about. I think that first, some of the fresh perspective and expertise they'll bring to the board with Max Lin and Dan Daniel joining our board, and Dan especially bringing some specific industry experience as well, can be nothing but beneficial for us. We'll bring our board, I think, like I said, a fresh set of eyes to challenge some of the things we've been doing, which I think is always good. Also, having some resources to back that up, whether we've mentioned Capstone. We've had meetings with KKR already where we've shared with them some of the initiatives we're working on so that they can get a feel for where they might have resources that could help us, you know, with those initiatives that we're working on. I think in other areas, this isn't just a, you know, KKR can come in and help us reduce costs, but also how does it, they just help us drive greater value, whether it be, you know, finding areas of driving increased gross margin expansion, increased, you know, sales growth. Is our product portfolio one that could be expanded? So there's an, you know, are we going to market in all the most efficient ways? These are all things that we wanna have a robust discussion with them. The HSR period literally ended, midnight last night. That was kind of the first milestone we needed to get past. They are now in the process of converting the swaps they have, so they will be actual equity holders, you know, here very soon. That then kind of triggers their ability to join our board. I think a lot of the kind of high-level discussions we'll be having, we'll be able to get into more detail with them very soon. I'll ask you tomorrow for an update then. In the interest of time, I wanna make sure I don't lose this question, but we had had a conversation after earnings about the whole idea of innovation. I know this has been an ongoing debate on what constitutes innovation in dental. You touched on it a bit earlier, intraoral scanners. There's improvements, but it's like, how much more can you do? Yeah. You had mentioned a company, or maybe Graham mentioned it, vVARDIS, as an area of innovation that we do not always think about. You know, we are all looking for the next iOS, the next 3D printer. Whatever it might be. There are, but there are hidden pieces of innovation that you're able to sell through to your customers, whether it's on the product side, the technology side. Whether this is the right example or others, can you talk about the areas of innovation that are actually flowing through your model right now beyond just what we think about, about what seemingly is a dearth of innovation, the traditional high-tech equipment that we've long followed? No, and, and, you know, vVARDIS is, I think, a great example of where there is, you know, you know, innovation out there that can really change the experience for the patient and also be very beneficial to the practitioner. So vVARDIS has a product called Curodont. Curodont is a gel that the dentist can apply to a caries. And, you know, if you're not familiar with the term of caries, a caries is essentially what I call a precavity. It's, you know, identification of some decay in the tooth. Right now, or prior to the, you know, Curodont, if you're at your dentist and the dentist says to you, you got a little bit of a caries here, you got, or you got a little bit of decay here, we're gonna keep an eye on. That's code word for you're eventually gonna get a cavity and we're gonna drill your tooth and you're gonna get a filling. It's never a great experience, right? With Curodont, they can apply this gel and it's simple. The hygienist can do it. The dentist doesn't have to do it. You apply the gel. It has a 95% success rate of restoring, and eliminating the decay, to the tooth. As a result, you don't get the cavity, you don't go through the process of the drilling and the filling and everything else that goes with it. We've been able to kind of pair this up with our Detect AI product that we sell that we're licensed with VideaHealth to sell, you know, to our, to our customers. Detect AI can take an X-ray of a customer and immediately identify caries that may be not necessarily identifiable by the naked eye. It really expands the ability of the dentist to diagnose the caries. We've been, you know, kind of training up our field sales consultants on Detect AI with Curodont because the two of them go together quite well. If you have the technology to identify a caries, it's gonna be tooth decay before it can even be seen and treat it with Curodont. It's a much better outcome for the, and you can do it right then. You don't have to make another appointment and come back. You can do it right there. It's a much better outcome for the patient. We really first started promoting this internally, working with vVARDIS. Now, vVARDIS is a bit of a startup, European-based. We helped them through some, quite frankly, through some working capital loans to make sure they could generate enough inventory for us to sell. We do have what I'll call a semi-exclusive with them in the U.S. to sell the product. It is a, when we had our THRIVELIVE event, which is an event that we host annually, our THRIVELIVE event last May in Las Vegas, where a lot of our customers are there, a lot of our field sales consultants are there, and others in the dental industry. We asked the people from vVARDIS to provide a presentation. When they were done and they went back to their booth, it was swarmed upon. All of our dental customers wanted to talk to them. All of our FSCs wanted to understand the product better. It's an indication of, you know, there's a bit of a thirst out there for what's that next new thing? What's that next new product that my patient's gonna love me for if I have it, right? You know, as a practitioner, that's the kind of thing that builds a great bond with your, you know, with your patient that you can offer this up to them. We had one of the analysts that's here, participating in the conference, told us today he got it. He got Curodont. We're hoping it works, right? You know, like I told him, it's a 95% success rate. You know, odds are in his favor. I'm hoping you don't need it, but I appreciate that as an example of your channel reach, you know, to help drive a new product. I was hoping that'd be the last question and we are out of time. Ron, Graham, Susan, thank you so much for being here.