Revenue Guidance and Core Growth
Q: What's the expected core organic growth rate and components of revenue guidance for 2024?
A: Henry Schein expects about 3% growth from recovery on the cybersecurity incident and another 3% from acquisitions, totaling 6% of growth. FX is anticipated to add 0.5% to 1%, resulting in a core organic growth rate of 3% to 4% for 2024. This reflects accelerated growth in technology and value-added services, as well as growth in the core and specialty businesses.

EPS Growth and Investments Impact
Q: Why is the normalized EPS growth for 2024 projected to be low single digits despite solid revenue growth?
A: The low single-digit EPS growth is due to ongoing investments in the business, including projects deferred from 2023 and necessary expenditures for future growth. These investments are impacting earnings estimates for 2024 but are expected to position the company for stronger growth in 2025, aligning with long-term goals of 6% to 8% revenue growth and 8% to 11% EPS growth.

Margin Assumptions and Pressure
Q: How are margins expected to evolve in light of the cybersecurity recovery?
A: Adjusted EBITDA margin is anticipated to expand by about 30 basis points at the midpoint. However, there is margin pressure from recovery efforts related to the cyber incident and investments delayed from 2023, such as the global e-commerce platform. As revenues ramp up over the year, margins are expected to improve.

Capital Allocation Plans
Q: What are the capital allocation priorities for 2024 regarding M&A, debt paydown, and share repurchases?
A: Henry Schein plans to return to a historical M&A spend of $300 million to $400 million, down from over $1 billion in 2023. The company will continue share repurchases, though these are not included in the guidance. Given higher debt levels, debt paydown is also being considered as an accretive use of capital compared to share repurchases.

Equipment Sales Outlook Post-Cybersecurity Incident
Q: What is the outlook for equipment sales and market share after the cybersecurity incident?
A: The company expects good equipment sales growth in the first quarter as orders pushed from Q4 due to the cybersecurity incident are fulfilled. Demand for digital equipment, such as intraoral scanners and 3D printers, remains strong, and the company anticipates gaining market share in this rapidly growing segment. Traditional equipment markets are approximately flat, but Henry Schein continues to edge forward in market share both in the U.S. and internationally.

Recovery of Merchandise Sales
Q: How is the company addressing the gap in merchandise sales caused by the cybersecurity incident?
A: Efforts are focused on regaining business from 'infill shoppers' who were affected when the website was down. The e-commerce platform is back online, and the company is actively marketing to these customers. Recovery to pre-incident levels is expected within 2 to 4 months, and the brand remains strong in the marketplace.

Intraoral Scanner Pricing Pressure
Q: Has pricing for intraoral scanners reached the bottom industry-wide?
A: The company anticipates slight additional price erosion in the first 3 to 4 months of the year but believes prices will stabilize thereafter. Introduction of lower-priced, less feature-rich systems may expand the market rather than further depress prices. Overall, they are close to the bottom on price erosion for intraoral scanners.

Specialty Product Launches and Acquisitions
Q: What is the contribution of specialty product launches and recent acquisitions to growth?
A: A range of new products is being introduced across endodontics, orthodontics, implants, and software, including advances in pediatric endodontic programs and AI-driven revenue cycle management tools. Acquisitions like Biotech and SIM are performing well, with new software launching in the U.S. and innovative products being introduced to Latin America. These initiatives are expected to contribute positively to organic growth.

Specialty Dental Business Demand
Q: How is demand in the specialty dental business, including clear aligners?
A: The clear aligner business, while less than 10% of the specialty segment, is performing well, especially among Dental Service Organizations (DSOs) in France and other European countries. Although relatively small and not expected to significantly impact corporate numbers, it enhances the company's product offerings to customers. Overall, the specialty dental business is growing nicely.

Incremental Opportunity with Sales Force Changes
Q: Is moving surgical products to Field Sales Consultants (FSCs) an incremental opportunity?
A: Yes, transitioning products like EdgeEndo to FSCs in the U.S. and Canada represents a positive opportunity. Historically, these products had limited distribution, and the new approach is expected to drive progress in the oral surgery community and generate increased sales, especially after the national sales meeting in the summer.