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HSIC to Sell CAO's New Dental Laser

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Henry Schein Dental, the global dental business of Henry Schein, Inc. (HSIC - Free Report) , has entered into a partnership with CAO Group (CAO) to sell its latest cutting-edge innovation, the Precise SHP Diode Laser. Available in the U.S. only, the laser provides temporary pain relief for soft tissue, joint and muscle pain and is considered to be a far better option than the traditional scalpel. It also finds application in professional teeth whitening.

Deemed to be the most sophisticated restorative dental product, the highly versatile Precise SHP Diode Laser System, with its 21 presets, covers a wide variety of specialties which facilitate and enhance dental procedures. Further, this technologically advanced mobile touch-screen diode laser features the Apple iPod touch and provides live support via FaceTime.

We view the partnership with CAO in a positive light for Henry Schein. The addition of this revolutionary technology in HSIC’s product portfolio should boost revenues of its dental business.

In the second quarter of 2013, the company derived $1.3 billion in revenues from global dental business, up 6.2% year over year. This includes local currency growth of 6.0% comprising acquisition growth of 3.0%, combined with internal sales rise of 3.0%. It was supported by growth of 0.2% related to foreign exchange tailwinds. The franchise witnessed a 4.1% rise in North America, while international sales improved 9.7% for the dental segment.

HSIC is well positioned to gain from its extensive global foothold and diverse channel mix. Favorable market dynamics is a major growth catalyst going forward. We believe that high-growth avenues like the animal health market should improve Henry Schein’s growth profile.

However, these positive factors are partly tempered by the current economic scenario that has bolstered the bargaining power of Group Purchasing Organizations (GPOs). The austerity measures across Europe continue to adversely affect the healthcare industry. A tough competitive landscape and currency headwinds also weigh on the stock.

HSIC has a Zacks Rank #3 (Hold). While we remain on the sidelines regarding Henry Schein, other medical stocks that are worth considering include STRAUMANN HLD N AKT , carrying a Zacks Rank #1 (Strong Buy), along with McKesson Corp. (MCK - Free Report) and The Cooper Companies (COO - Free Report) , both carrying a Zacks Rank #2 (Buy).

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