The operator introduces the participants and sets the guidelines for the conference call. Graham Stanley, Vice President of Investor Relations, introduces the speakers and mentions that certain comments may include forward-looking information. He also states that any statements about markets are based on the company's analysis. The call will include both GAAP and non-GAAP financial results.

The company believes that non-GAAP financial measures provide useful information for investors and allow for transparency in key metrics. The first quarter results show solid earnings, with gross margin expansion and recovery from a cyber incident. The incident had a low to mid-single-digit impact on merchandise sales growth, while PPE sales continued to decrease due to lower glove prices. The impact of PPE is expected to lessen as the year progresses.

The company is pleased with their progress on their strategic plan and recent acquisitions, which contributed to profitability in the first quarter. They are affirming their expectations for future growth and have seen steady improvement in dental sales, with the THRIVE Signature program contributing to sales growth and increased membership. However, weather events and seasonal viruses affected patient traffic in January and February, but this trend has improved in March and April. International merchandise sales also saw steady improvement, but were negatively impacted by fewer selling days. Dental equipment sales remained consistent with the prior year, with growth in North America and a slight decrease internationally.

The company had strong growth in their dental specialties business, particularly in oral surgical products, endodontics, and orthodontics. They gained market share both through acquisitions and organically. North American implant sales were consistent, while international sales under the BioHorizons Camlog brand saw significant growth, especially in Germany. The company plans to launch a new implant system in the US and Canada in the second half of the year, which is expected to increase sales. The company also achieved good sales in their orthodontic products, particularly with the launch of their Motion Probe Bracket System. They also launched new products in their technology and value-added services business, including dental software and clear aligners.

In the first quarter, Dentrix Ascend and Dentally saw a 36% increase in customer base for their cloud-based solutions. Despite the impact of Change Healthcare's cyber incident, the company's revenue cycle management e-claims business showed solid growth due to prompt responsiveness and alternative processing methods. The Medical business also saw strong sales in point-of-care diagnostics and completed an acquisition to expand into the orthopedic marketplace. Additionally, the company's fourth annual THRIVELIVE event had record attendance and support from suppliers.

The company's annual event focuses on education and new innovations in dentistry, including the launch of Dentrix eligibility Pro and integration with Reserve with Google. These advancements aim to add value to customers' practices and improve efficiency. The call then turns to discussing the company's quarterly financial results, which will be presented on both a GAAP and non-GAAP basis. The first quarter had two fewer selling days than the previous year for most international businesses.

The paragraph provides details of the sales growth and operating results for the first quarter of 2024, including the impact of the cyber incident and foreign currency exchange. Sales growth was 3.7%, with a decrease in internally generated sales. The GAAP and non-GAAP operating margins declined compared to the prior year. Net income and adjusted EBITDA were also lower compared to the prior year. The cyber incident had a residual impact on the results, in line with expectations.

In the first quarter, global dental sales were $1.9 billion, with a 0.8% sales growth and a 2.9% decrease in LCI sales. The decrease in merchandise sales was due to lower purchases by episodic customers and PPE sales. North American equipment sales grew 2.9%, while international equipment sales decreased 3.8%. CAD/CAM equipment and dental specialty product sales saw growth, driven by acquisitions. Global Technology and value-added services sales grew by 13.8%, with North American sales driven by value-added services and international sales driven by Dentally cloud-based solution. The goal of generating 40% of non-GAAP operating income from high-growth, high-margin businesses was exceeded. Global Medical sales grew by 7.3%, with a decrease in LCI sales due to lower PPE and pharmaceutical sales. The cyber incident also impacted sales to episodic customers.

In the first quarter, the company repurchased one million shares of common stock for approximately $75 million and had $190 million available for future repurchases. The company reported strong liquidity and cash flow, allowing them to execute growth initiatives and return capital to shareholders. They also incurred $10 million in restructuring expenses and reported other non-GAAP adjustments. The company is unable to provide estimates for integration and restructuring costs for 2024, but is affirming their guidance for non-GAAP diluted EPS and adjusted EBITDA growth. They are updating their guidance for total sales growth and expect non-GAAP diluted EPS to grow by 11% to 15% compared to 2023. The guidance does not include any potential insurance claim proceeds from a cyber incident in the previous year.

The company has a $60 million claim limit on their cyber policy and is in the process of filing a claim. They expect to see benefits from the claim recovery later in the year. The company's 2024 adjusted EBITDA and total sales are expected to increase, with a strong pipeline of new products and acquisitions contributing to the growth. They also expect modest overall equipment sales growth, with strong growth in Technical Services and CAD/CAM equipment. The company's guidance for 2024 does not include the impact of future share repurchases or potential acquisitions and assumes consistent foreign currency exchange rates and market conditions. The company is making progress in restoring sales to pre-incident levels and focusing on bringing back episodic customers.

The company is optimistic about restoring sales on the distribution side and is making good progress with their BOLD+1 strategic priorities. They have new innovative products and software enhancements that should positively impact momentum. The company's gross margin was a positive surprise and reached a record high, despite lower volumes. The drivers of this margin result were largely mix. The company is confident in the sustainability of this performance for the rest of the year.

The company has experienced a slight downturn due to a cyber incident, but is seeing growth in high-margin businesses. The mix of high-margin businesses and improving margins in distribution have contributed to a higher gross margin. The company expects to continue investing in high-growth, high-margin businesses. Dental equipment deliveries were impacted by the cybersecurity incident last quarter.

The business shift from the fourth quarter to the first quarter was not as large as expected, potentially due to the equipment team's focus on supporting customers during the pandemic. The equipment backlog has been restored and the market for traditional equipment has stabilized, while the CAD/CAM area is doing well. Pricing has also stabilized and there may be new units in the future, but it is not expected to impact current business.

The speaker discusses the company's performance in the digital imaging and CAD/CAM equipment markets, noting a slight decrease in digital imaging and a pause in CAD/CAM equipment sales. They project modest growth but remain cautious due to interest rates and some larger DSOs pausing their purchases. The speaker also mentions that the company is under-indexed in the Chinese implant market and does not participate significantly in that market.

The company's Camlog business has not been significantly impacted by price sensitivity, as their price points are lower and their customers are less focused on full arch procedures. They are well positioned to compete with other premium brands and have a strong market share in Germany. The launch of their Easy 2.0 implant system has been well received and they believe their new bone level implant will expand their market position in the US.

During a recent conference call, Jonathan Block asked Ron South about the company's addressable market and top line sales guidance. Ron explained that the company expects to address 40-50% of the market with a new product launch later this year. When asked about the top end of the sales guidance, Ron stated that fluctuations in FX and acquisitions are minor factors and the main impact is from end markets, particularly in distribution and cyber recovery. The company is confident in their sales recovery and expects 8-10% growth to be a more accurate revenue rating than the original 8-12%.

The speaker discusses the impact of a recent cybersecurity event on the business, stating that it caused a slight decrease in revenue growth in March. They expect growth to return to normal levels soon and believe that the impact of the event will result in lower growth than previously projected. The event also caused some financial strain for customers, resulting in the company extending terms and seeing a stagnation in revenues for a period of time.

In this paragraph, the speaker discusses the company's recent financial performance and explains that they had slightly elevated receivable balances due to disruptions in cash management practices. They also mention new software products that will support future growth. The CEO adds that the company's quick response to processing claims during the disruption was well received by customers, but it took up a lot of resources. They are now largely out of that situation. The speaker also mentions competition in the medical distribution business.

The speaker, Stanley Bergman, discusses the competitive balance in the alternative side of care market for distributors. He believes that this is not an issue for his company and that they are doing well in terms of winning awards and retaining customers. He also mentions that they have a unique service that is highly appreciated by their customers and that they have a strong infrastructure in place. The next question is about the North American dental consumables number, which was down 5%, but if adjusted for a cyber incident, it would only be down 1% to 2%.

The speaker discusses independent industry data that shows the North American market on the merchandise side down a couple of percentage points on a revenue basis. They also mention stable pricing and margins, with a trend towards corporate brands and potential pricing pressure in certain areas. The speaker believes that pricing has stabilized and margins are stable, with the main challenge being the recovery of episodic customers.

Elizabeth Anderson asked about the impact of cyber incidents on Henry Schein's medical and dental businesses. Stanley Bergman responded that they would continue to focus on episodic customers who buy through their website. Ron South added that the impact of cyber incidents on medical and dental businesses is similar and has already been factored into their revenue and earnings guidance. Elizabeth also asked about higher outpatient utilization trends in the medical market.

Stanley Bergman, CEO of a healthcare company, discusses the trends in procedures shifting from acute care settings to alternate care settings. He notes that this trend has been consistent over the past year and there has not been a significant shift in procedures. The company is also seeing growth in alternate care settings through internal growth and gaining new accounts. The SG&A expenses were slightly higher than expected due to the mix of businesses acquired last year, which have higher gross margins but also higher expenses for R&D and selling costs.

The company expects its home health business to continue growing organically and plans to make additional investments. They are moving the businesses to a common platform to provide national service and believe it complements their other medical businesses. They are optimistic about the future of their Home Solutions and North American Rescue businesses.

The dental market is relatively stable, with some seasonal fluctuations due to weather and viruses. The U.S. market has seen improvement in patient traffic since March, and the global market is also stable, especially in areas with government reimbursement. There is skepticism among investors about high interest rates and pricing compression, but the market remains strong and stable. It is important to not overreact to small changes in the market.

The speaker discusses the challenges of high interest rates on expensive dental procedures, but overall, the market is stable and there is growth in the digital equipment sector. They express optimism for the future, especially with the growth of medical procedures in the ultimate care setting. They also mention progress in recovering their cyber business. A question is asked about the Technology segment's organic growth, which was lower than expected, but the acquisition contribution from North America may have offset this.

The company's recent acquisitions in the value-added services segment have contributed to its growth, exceeding expectations and expected to continue providing good profits in the future. The company is also pleased with the integration of previous acquisitions and sees potential for growth in the Home Solutions and value-added services areas.

The speaker discusses the success of recent acquisitions and mentions that they are happy with the returns. They also mention that the company expects sales growth to be more significant in the back half of the year due to recovery from cyber issues and new product launches. The speaker also mentions that they expect to see better growth in Q3 and Q4 compared to Q2.

In this paragraph, Kevin Caliendo asks a follow-up question about Henry Schein's new implant products and how they will affect the company's portfolio. Stanley Bergman explains that the new products will expand their market coverage in the US and offer better value in Europe. Overall, the company is off to a solid start and remains enthusiastic about future growth and profitability. They are also expanding their high growth, high margin portfolio and expect good results in the orthopedics section. Bergman concludes by stating that their distribution businesses are in good shape and fully restored.

The speaker discusses the current state of the business, noting that the episodic side is recovering but not fully back to pre-incident levels. They mention growth with large customers in Dental and Medical, and the value provided by Henry Schein One, specifically in the Change cyber recovery. The speaker expresses optimism for the future and thanks the participants for joining the call. The operator then concludes the teleconference.

This summary was generated with AI and may contain some inaccuracies.