Tuesday, Henry Schein Inc (NASDAQ:HSIC) reported a first-quarter adjusted EPS of $1.10, down 9% Y/Y, beating the consensus of $1.01.

Sales were $3.17 billion, an increase of 3.7% Y/Y, missing the consensus of $3.21 billion.

“Our first-quarter financial results reflect solid earnings driven by gross margin expansion and a strong recovery from last quarter’s cyber incident,” said Stanley Bergman, Chairman and CEO of Henry Schein.

Global dental segment sales were $1.9 billion, up 0.8%, and medical segment sales increased by 7.3% to $1 billion.

Technology and Value-Added Services sales increased 13.8% (internal growth of 3.2%) to $0.2 billion.

Guidance: Henry Schein expects 2024 sales growth of approximately 8%-10% compared to prior growth guidance of 8%-12%.

The provider of healthcare solutions to office-based dental and medical practitioners reaffirms the 2024 adjusted EPS guidance of $5.00-$5.16 versus the consensus of $5.06.

William Blair writes that the EPS beat was due to a solid margin beat, and the margin strength stems largely from a higher mix of technology and value-added services than modeled, though the beat seems to be from acquisitions with local internal growth of 3.2% below the Street’s 7.6%. 

Both segments underperformed relative to consensus, probably due to lingering macro issues, especially in dental, the analyst highlights.

“Bottom line, we are encouraged by the company’s execution in challenging macro times and in the technology segment, giving it some relative stability,” the analyst writes.

William Blair maintains the Market Perform rating as it looks for more details on underlying business trends.

Price Action: HSIC shares are up 2.89% at $70.51 at last check Tuesday.

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