Executive Summary

Q2 2025 revenue was $3.24B (+3.3% as-reported; +1.9% internal) with non-GAAP EPS of $1.10 and GAAP EPS of $0.70; revenue beat Street ($3.22B*) while EPS missed ($1.19*) and Adjusted EBITDA of $256M lagged consensus ($271M*) .
Guidance maintained: 2025 non-GAAP EPS $4.80–$4.94, total sales growth +2–4%, and mid-single-digit Adjusted EBITDA growth; earnings weighted to H2 .
What drove results: Medical Distribution +6.1% and Technology +7.4% offset U.S. margin pressure (lower glove pricing, time-limited promotions) and softer U.S. dental equipment tied to tariff uncertainty in May (orders normalized by quarter-end) .
Strategic catalysts: BOLD+1 execution (high-growth/high-margin mix), KKR Capstone-led programs (gross margin uplift, efficiencies, AI-enabled process improvements) expected to show benefits starting in 2026 .

Note: *Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

Medical Distribution grew 6.1% (6.0% cc) on higher patient traffic, Home Solutions strength, and acquisitions; technology revenue rose 7.4% (6.6% cc) with strong cloud practice management and RCM products .
Specialty Products increased 4.2% (3.3% cc) led by implants/biomaterials and endodontic consumables; management: “We achieved over 45% of our non-GAAP operating income from high growth, high margin businesses” .
Execution on digital and SaaS: “Practice Management software growth was in the mid double digits… we now have over 10,000 customers subscribed to the Dentrix Ascend and Dentally systems” . Also Forms launch to streamline intake, evidencing product velocity .

What Went Wrong

U.S. margins compressed vs prior year from lower glove pricing and targeted promotions; CFO flagged GAAP operating margin down 42 bps YoY and non-GAAP down 79 bps for Q2 .
U.S. dental equipment slowed beginning in May amid tariff uncertainty (order intake returned to normal by quarter-end), dampening segment momentum .
Orthodontics remained soft; business being reorganized for future profitable growth .

Financial Results

Headline Metrics by Quarter (oldest → newest)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$3.191	$3.168	$3.240
GAAP Diluted EPS ($)	$0.74	$0.88	$0.70
Non-GAAP Diluted EPS ($)	$1.19	$1.15	$1.10
Adjusted EBITDA ($USD Millions)	$270	$259	$256

Operating Margins

Metric	Q1 2025	Q2 2025
GAAP Operating Margin %	5.53%	4.67%
Non-GAAP Operating Margin %	7.25%	6.96%

Segment Breakdown – Q2 2025 vs Q2 2024

Segment	Q2 2025 Sales ($USD Millions)	YoY Growth (as-reported)
Global Distribution & Value-Added Services	$2,731	+2.9%
Global Specialty Products	$386	+4.2%
Global Technology	$167	+7.4%
Total Global	$3,240	+3.3%

Selected sub-breakdowns:

U.S. Distribution & VAS: $1,860 (+2.2%)
International Distribution & VAS: $871 (+4.5%)
Global Medical: $1,016 (+6.1%)
Global Dental: $1,715 (+1.1%)

KPIs

KPI	Q2 2025	Context
Operating Cash Flow ($USD Millions)	$120	Working capital investment to mitigate tariffs; accounts receivable increased modestly .
Share Repurchases ($USD Millions / Shares)	$259 / 3.7M shares; ASR $223 at $71.60; additional $36 at $67.36	$432 authorized remaining + $27 under ASR .
Restructuring Costs ($USD Millions, pre-tax)	$23	Run-rate savings expected >$100 by end of 2025 .

Non-GAAP Adjustments – Q2 2025

Item	Amount ($USD Millions)
Restructuring costs (net)	$16
Acquisition intangible amortization (net)	$27
Shareholder advisory + value creation consulting (net)	$5
Litigation settlements (net)	$1
Change in contingent consideration (net)	$0
Total Non-GAAP Adjustments to Net Income	$49

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Non-GAAP Diluted EPS	FY 2025	$4.80–$4.94	$4.80–$4.94	Maintained
Total Sales Growth	FY 2025	+2–4% YoY	+2–4% YoY	Maintained
Adjusted EBITDA Growth	FY 2025	Mid-single digits	Mid-single digits	Maintained
Non-GAAP Effective Tax Rate	FY 2025	~25%	~25%	Maintained
Assumptions	FY 2025	FX broadly consistent; modest market improvement	FX broadly consistent; tariff impacts mitigated; includes expected remeasurement gains on consolidations	Clarified

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
AI/Technology initiatives	Cloud PM growth; sunsetting legacy products; 9,500 cloud customers; e-claim imaging; GEP launched in UK/Ireland; NA rollout planned	10,000+ cloud customers; strong RCM; referenced introducing AI solutions in value creation to streamline processes	Accelerating cloud adoption; AI entering ops roadmap
Supply chain/tariffs	Diversified sourcing; mitigate tariff impacts; FX headwinds in Q1	May equipment pause on tariff uncertainty; glove pricing pressures stabilizing; inventory build to mitigate tariffs	Stabilizing near-term; mitigation actions ongoing
Product performance	Implants mid-single-digit cc growth; ortho weak; tech operating income up 24%	Implants/biomaterials solid; ortho still weak; digital equipment volumes at lower ASPs; tech strong	Mixed: specialty strong, ortho weak; digital mix lowers ASPs
Regional trends	U.S. dental stable, medical solid; strong Canada/Central Europe/Brazil; FX swings	U.S. dental merchandise volume up at lower prices; Canada/Europe equipment strong; Brazil steady; Easter timing impacted intl	Broadly stable; intl episodic factors
Regulatory/legal/cyber	Insurance proceeds completed ~$60M across 2024/Q1 2025	Minor litigation settlements; no new cyber proceeds	Tail risk receding

Management Commentary

“We had good sales growth in our Global Distribution Group… lower margins in the U.S. versus the prior year primarily resulting from lower glove pricing as well as time-limited targeted sales initiatives… Our Specialty Products and Technology Groups continued to deliver strong results” .
“Partnering with KKR Capstone, we have engaged two leading global management consulting firms to support our efforts to enhance distribution gross margins… and increase efficiencies… projects… start producing results towards the beginning of 2026” .
“Practice Management software growth was in the mid double digits… we now have over 10,000 customers subscribed to the Dentrix Ascend and Dentally systems” .
“We are maintaining our full year guidance, which continues to reflect earnings weighted to the second half of the year” .

Q&A Highlights

Back-half cadence: EPS expected to grow in Q3 with Q4 possibly exceeding Q3; backlog and Specialty/Tech momentum underpin H2 weighting .
Margin drivers: About one-third of gross margin pressure YoY tied to gloves; promotions were time-limited; management expects sequential stabilization .
Targeted sales initiatives: Focused program to win back customers post-cyber; promotions ended; July sales momentum encouraging .
DSOs and de novo builds: Funding stable; new office designs double-digit YoY growth in most months; digital investment remains strong .
Tariff pass-through mechanics: Mix-shift to owned brands/alternative sourcing; selective price actions where needed; customers generally accepting tariff-related increases .

Estimates Context

Metric	Q4 2024	Q1 2025	Q2 2025
Consensus Revenue ($USD Billions)*	$3.248	$3.227	$3.222
Actual Revenue ($USD Billions)	$3.191	$3.168	$3.240
Consensus Primary EPS ($)*	$1.209	$1.110	$1.191
Actual Non-GAAP Diluted EPS ($)	$1.19	$1.15	$1.10
Consensus EBITDA ($USD Millions)*	$274	$261	$271
Actual Adjusted EBITDA ($USD Millions)	$270	$259	$256

Note: Values retrieved from S&P Global.
Interpretation: Q2 revenue beat, while EPS and EBITDA missed; Q1 EPS beat with revenue/EBITDA below consensus; Q4 was mixed (EPS near in-line, revenue/EBITDA below).

Key Takeaways for Investors

Mixed print: revenue strength offset by margin compression; mgmt reaffirmed FY guide and H2 weighting, which should anchor estimates and sentiment near-term .
Watch margin trajectory: glove pricing pressure stabilizing and promotions ended; look for gross margin sequential stabilization in H2 and early benefits from restructuring savings (> $100M run-rate by YE25) .
Specialty/Tech momentum: implants/biomaterials and cloud/RCM growth support non-GAAP operating income mix shift toward higher-margin businesses (already 45% this quarter) .
Equipment outlook: temporary tariff-driven pause in May but backlog normalized by quarter-end; H2 improvement expected as uncertainty eases .
Execution catalysts: KKR Capstone programs (pricing/owned brands, SG&A, AI-enabled efficiencies) should be monitored for 2026 uplift; near-term slides/investor updates likely in Q3 .
Capital returns: ASR completed; remaining $432M authorization provides flexibility while share issuance to KKR balances repurchases .
Near-term trading lens: narrative hinges on H2 delivery versus maintained guide; watch July/August sales trends, margins, Medical/Home Solutions growth, and any tariff-related updates .

HENRY SCHEIN INC (HSIC)·Q2 2025 Earnings Summary