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Henry Schein's New Buyout to Boost Dental Technology Business

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Henry Schein, Inc. (HSIC - Free Report) recently announced the buyout of Lighthouse 360 through its Henry Schein One joint venture (“JV”). Lighthouse 360 is a provider of user-friendly dental practice management and patient communication software. Henry Schein expects the acquisition to be neutral to its 2019 earnings per diluted share and accretive thereafter. However, the financial terms of the deal have been kept under wraps.

Offering a large variety of web-based tools that automate tedious tasks and enhance time-efficiency, Lighthouse 360 serves more than 11,000 dental practices. We believe the addition of Lighthouse 360's highly automated software platform will widen the range of Henry Schein’s practice marketing and client communication solutions.

Market Potential

Per Transparency Market Research, the global dental practice management software market is expected to value $4.3 billion by 2025, at a CAGR of more than 11% between 2017 and 2025. The report further states that growing digitization of dental practices, rising healthcare IT budgets and increase in demand for chair time optimization in developed markets will continue to fuel growth in the niche market. Given the data, we believe the latest development is a timely one and will significantly contribute to the top line in the near term.

Henry Schein One At a Glance

Henry Schein seems to be upbeat about its dental technology business, Henry Schein One. It was formed as a result of the company’s JV with Internet Brands last July. The JV combines Henry Schein Practice Solutions' products and services with the dental businesses of Internet Brands.

Recently, the company launched Dentrix G7, the upgraded version of the dental practice management system in Canada. 

In February 2019, Henry Schein One announced the buyout of a dental practice management solutions company, Kopfwerk. The company also announced integration of CareCredit's financing tool into its dental practice management software solutions in December 2018. CareCredit integrates into practice management software solutions like Dentrix and Easy Dental, provided to dental professionals by Henry Schein One.

Furthermore, Henry Schein One launched additional products like Dentrix Smart Image, enhanced Dentrix service bundles including Optimum Pro for payment management services and Ultimate Service Bundle, online booking for Dentrix and Dentrix Ascend and the Dentrix Ascend Quick Exam module. The company has also introduced the Dentrix Ascend in the United Kingdom.

Share Price Performance

Over the past month, Henry Schein has outperformed its industry. The stock has lost 0.6% in comparison with the 1.8% fall of the industry.

Zacks Rank and Key Picks

Henry Schein currently carries a Zacks Rank #4 (Sell). A few better-ranked stocks in the broader medical space are Integer Holdings Corporation (ITGR - Free Report) , Veeva Systems Inc. (VEEV - Free Report) and Hologic, Inc. (HOLX - Free Report) .

Integer Holdings projects earnings growth rate of 31.2% for the first quarter. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Veeva Systems’ long-term earnings growth rate is projected at 14.8%. The stock currently carries a Zacks Rank #2 (Buy).

Hologic’s long-term earnings growth rate is estimated at 8.9%. The stock presently has a Zacks Rank #2.

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