Executive Summary

Q3 2025 net sales were $1.57B, down 2.7% year over year; GAAP EPS was $0.35 and adjusted EPS was $0.43, with pressure from lower dental consumables/equipment and continued impact from the Change Healthcare cybersecurity attack on dental value-added services .
Consolidated gross margin fell to 20.4% and operating margin to 2.9%, reflecting mix headwinds and higher LIFO, legal, and employee medical benefit expenses; LIFO expense was up $7.4M YoY, legal expenses +$2.4M, and employee benefit expense +$4.0M .
Patterson will not update forward-looking guidance and did not hold an earnings call for Q3 due to the pending acquisition by Patient Square Capital; closing is expected in April 2025 at $31.35 per share, subject to shareholder approval and other customary conditions .
Animal Health continued to be the relative bright spot (segment sales +0.5% YoY; value-added services +11.1%), while Dental declined across categories (internal sales -6.0%) .
Near-term stock driver remains the merger process (special meeting April 1 and supplemental proxy disclosures amid shareholder litigation); operationally, Q4 is expected to lap the Change Healthcare impact, a focus highlighted last quarter .

What Went Well and What Went Wrong

What Went Well

Animal Health segment delivered $972.4M in reported net sales (+0.5% YoY) with internal sales up 0.2% and value-added services up 10.8%, demonstrating resilience and mix improvement .
Continued shareholder returns: $0.26 dividend paid in Q3 ($22.9M), with $119.2M returned via dividends and buybacks over the first nine months of FY25 .
Management reiterated confidence in strategy and long-term market positioning despite near-term challenges: “we remain confident in the long-term strength of Patterson’s value proposition as an indispensable partner…” — Don Zurbay, CEO .

What Went Wrong

Dental segment internal sales fell 6.0% YoY; consumables -6.2%, equipment -6.9%, and value-added services -2.4% (the latter tied to the Change Healthcare outage) .
Consolidated gross margin and operating margin compressed vs prior year (20.4% vs 21.7%; 2.9% vs 4.3%), driven by weaker dental mix, higher LIFO, legal, and medical benefit costs .
Company did not provide updated guidance or host a quarterly call, limiting visibility into near-term drivers and actions as the merger process advances .

Financial Results

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Net Sales ($USD Billions)	$1.62	$1.54	$1.67	$1.57
Diluted EPS GAAP ($)	$0.52	$0.15	$0.30	$0.35
Adjusted EPS ($)	$0.59	$0.24	$0.47	$0.43
Gross Margin (%)	21.7%	20.3%	19.6%	20.4%
Operating Margin (%)	4.3%	1.9%	2.2%	2.9%

Segment revenue breakdown

Segment Net Sales ($USD Millions)	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Dental	$637.1	$550.4	$611.7	$596.3
Animal Health	$967.3	$982.4	$1,054.6	$972.4
Corporate (Value-added & Other)	$11.7	$9.0	$8.1	$3.7

Key KPIs (internal sales growth YoY)

KPI (YoY internal)	Q1 2025	Q2 2025	Q3 2025
Consolidated Internal Sales Growth (%)	-2.8%	+0.6%	-2.4%
Dental Internal Sales Growth (%)	-2.8%	-2.3%	-6.0%
Dental Consumables Internal (%)	-2.1%	+0.7%	-6.2%
Dental Equipment Internal (%)	-2.4%	-7.5%	-6.9%
Dental Value-Added Services Internal (%)	-6.7%	-2.7%	-2.4%
Animal Health Internal Sales Growth (%)	-2.8%	+1.9%	+0.2%
Animal Health Value-Added Services Internal (%)	+8.3%	+17.1%	+10.8%

Non-GAAP reconciliation highlights (Q3 2025)

Adjusted operating income: $57.5M vs GAAP $45.4M (deal amortization +$9.7M; interest rate swap +$2.3M) .
Adjusted net income attributable to Patterson: $38.7M; adjusted diluted EPS $0.43 vs GAAP $0.35 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
GAAP EPS	FY 2025	$2.00–$2.10 (Q1)	$1.83–$1.93 (Q2)	Lowered
Adjusted EPS	FY 2025	$2.33–$2.43 (Q1)	$2.25–$2.35 (Q2)	Lowered
Guidance Update Policy	Q3 2025	Provided historically	No update; no Q3 call	Maintained (no update)
Dividend per share	Q3 2025	$0.26 (declared prior quarters)	$0.26 paid ($22.9M)	Maintained

Note: Q2 guidance excluded deal amortization (~~$0.34), integration and restructuring (~~$0.09), inventory pre-payment write-off (~~$0.03), and investment gain (~~$0.03) from adjusted EPS .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3 2025)	Trend
Change Healthcare cyberattack impact (dental value-added services)	Q1: VAS -6.7% YoY; noted negative impact . Q2: management emphasized ongoing impact, moderating sequentially; expected to lap in Q4 .	Continued negative impact on dental VAS (-2.4% internal) . No Q3 call held .	Moderating; expected tailwind upon Q4 lap .
Dental equipment demand and macro/interest rates	Q2: equipment -7.5%; called out need for further rate declines and innovation to stimulate demand .	Equipment -6.9% internal YoY .	Weak but stabilizing; dependent on rates/innovation .
Consumables pricing/deflation	Q1: deflation in infection control; ex-deflation consumables -1.7% . Q2: deflation impact negligible going forward .	Consumables -6.2% internal YoY in Dental .	Deflation headwind faded; demand softness persists .
Software/value-added services investment	Q2: investments in Fuse/Eaglesoft/Dolphin; automation and RCM features .	VAS improving in Animal Health (+10.8% internal) ; Dental VAS still pressured .	Ongoing; benefits expected to become more visible in FY26 .
Animal Health segment performance	Q2: production animal mid-single-digit growth; companion animal low-single-digit decline; margin leverage .	Segment +0.5% YoY; VAS +11.1%; adjusted margin improvement continuing trend .	Stable-to-improving; margins resilient .
Strategic alternatives / merger	Q2: evaluating strategic alternatives; reiterated focus on maximizing shareholder value .	Pending Patient Square acquisition ($31.35/share); proxy supplemental disclosures; special meeting April 1 .	Progressing toward close (April target) .

Management Commentary

“As we continue to progress toward closing our transaction with Patient Square Capital, our team remains focused on executing our strategy… While our third quarter results were impacted by challenging market conditions, we remain confident in the long-term strength of Patterson’s value proposition…” — Don Zurbay, CEO .
Cost actions: “We rightsized our team… We expect this realignment… will generate annual cost savings of approximately $16 million” (Q2 prepared remarks) .
Dental dynamics: “Internal sales in our dental value-added services category declined nearly 3%… primarily due to the ongoing impact of the Change Healthcare cybersecurity attack… [impact] moderat[ing]… expected to continue in fiscal Q3 before becoming a comparable benefit in fiscal Q4” (Q2 prepared remarks) .
Animal Health momentum: “Our production animal business… generated mid-single-digit internal sales growth… value-added services category delivered strong double-digit internal sales growth” (Q2 prepared remarks) .

Q&A Highlights

Guidance and drivers: Management attributed guidance reduction primarily to persistent dental market pressures, with offsets from cost saves, logistics efficiency, pricing discipline, and anticipated Q4 lap of Change Healthcare impact .
Dental equipment outlook: Improvement hinges on further rate declines and renewed manufacturer innovation; equipment sales remain inherently lumpy .
Margin trajectory: Expect corporate operating margin flat to slightly up in back half versus last year, supported by cost actions and mix benefits in software/value-added services .
Companion animal mix and customer prioritization: Modest moderation expected in H2 with new customers and products supportive of growth .

Note: Patterson did not conduct a Q3 2025 earnings call . Q&A themes reflect Q2 2025.

Estimates Context

Wall Street consensus (S&P Global) for Q3 2025 EPS and revenue was unavailable via our tool at the time of analysis; as a result, beats/misses versus consensus cannot be assessed here (S&P Global data unavailable).
Company-provided guidance was revised in Q2 and not updated in Q3 due to the pending transaction; analysts may focus on Q4’s lap of Change Healthcare and post-merger trajectory when reassessing models .

Key Takeaways for Investors

Q3 2025 showed continued top-line and margin pressure in Dental, particularly consumables and equipment, while Animal Health remained comparatively resilient with double-digit growth in value-added services .
Expect an easier comp in Q4 as the Change Healthcare disruption laps, potentially aiding dental value-added services and overall margin mix, a point management underscored last quarter .
Strategic catalyst: the Patient Square acquisition at $31.35/share, with shareholder meeting April 1 and closing targeted for April; supplemental proxy disclosures addressed shareholder litigation to minimize deal risk .
Cash returns remain a priority ($0.26 dividend paid in Q3), though overall FY25 capital markets communication is limited by the pending merger .
Operating leverage remains tied to mix improvement (software/value-added services) and cost discipline ($16M annualized saves); benefits more visible through FY26 per management .
Dental equipment demand likely requires macro tailwinds (rates) and product innovation; monitor OEM launches and rate trajectory for a potential inflection .
With no Q3 call and estimates unavailable via our tool, traders should watch merger milestones and Q4 operational execution (Change Healthcare lap, segment mix) as near-term narrative drivers .

PATTERSON COMPANIES, INC. (PDCO)·Q3 2025 Earnings Summary