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HSIC Raises 2026 Outlook as Sales and Margin Momentum Accelerates
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Key Takeaways
Henry Schein raised 2026 sales growth guidance to 4.5%-5.5% after broad Q2 internal growth.
Henry Schein's gross margin expanded 48 basis points as operating income rose 13.2% to $171 million.
HSIC targets a $125 million annualized savings run rate by year-end, with initial outsourcing gains in Q3.
Henry Schein, Inc. (HSIC - Free Report) raised its 2026 sales and earnings outlook after a second quarter marked by faster internal growth and better profitability. Net sales increased 6.7% to $3.46 billion, while adjusted earnings of $1.27 per share exceeded the Zacks Consensus Estimate by 4.1%.
The more important question is whether the stronger outlook can carry into the second half as value creation initiatives contribute more meaningfully and the company works toward its year-end savings targets.
HSIC’s Q2 Results Set Up the Guidance Increase
Second-quarter strength was broad rather than acquisition-driven. Internal sales growth reached 4.6%, while acquisitions added 0.7% and foreign exchange contributed 1.4% to reported growth. Global Distribution and Value-Added Services sales rose 6.6%, Specialty Products increased 8.7% and Global Technology advanced 8.2%.
The mix also matters. U.S. Dental Merchandise internal sales climbed 6.5%, International Dental Merchandise increased 5.4% and Technology posted 9.1% internal growth. Those gains gave management more confidence in the underlying demand picture heading into the back half of 2026.
Henry Schein Lifts Its 2026 Sales Expectations
Henry Schein raised projected 2026 total sales growth to 4.5%-5.5% from 3%-5%. The company now expects internal local-currency growth of 3.5%-4.5% in the second half, compared with 3.6% in the first half despite a tougher prior-year comparison.
Image Source: Zacks Investment Research
Management expects momentum across dental merchandise, medical distribution, specialty products and technology to support that range. U.S. Dental Equipment remained a softer area in the quarter, but the company said its backlog was healthy and expects the business to return to growth during the remainder of 2026.
HSIC’s Margin Gains Strengthen the Earnings Case
Gross profit increased 8.4% to $1.10 billion and gross margin expanded 48 basis points to 31.8%. Operating income rose 13.2% to $171 million, while the operating margin improved 28 basis points to 4.9%. Henry Schein also lifted adjusted earnings guidance to $5.29-$5.39 per share and now expects adjusted EBITDA growth in the mid- to high-single digits.
Image Source: Zacks Investment Research
Industry peers show that operating momentum is not uniform. Dentsply Sirona Inc. (XRAY - Free Report) reported second-quarter 2026 sales of $898 million, down 4.1% year over year, while its GAAP gross margin improved to 54.9%. CooperCompanies (COO - Free Report) reported fiscal second-quarter revenues of $1.08 billion, up 8%, with organic growth of 5% and non-GAAP earnings up 26%.
Henry Schein’s Savings Program Becomes More Important
The value creation program is becoming a larger part of the earnings setup. Henry Schein continues to target more than $200 million of operating income improvement over the next few years and expects to reach a $125 million annualized run rate by the end of 2026.
Initial benefits from the global outsourcing initiative are expected to begin in the third quarter. For 2026, management expects about 60% of the in-year operating income improvement to come from general and administrative savings and 40% from gross profit initiatives, making second-half execution central to the margin outlook.
HSIC’s Buy Signal Supports the Improved Outlook
The bottom line is that Henry Schein enters the second half with better sales momentum, expanding margins and higher full-year expectations, but the larger savings contribution still lies ahead. Delivering the targeted year-end operating income run rate will be an important test of whether the earnings improvement can become more durable.
HSIC currently carries a Zacks Rank #2 (Buy), along with a VGM Score of A, Value Score of A, Growth Score of B and Momentum Score of F. The Rank points to favorable near-term earnings estimate trends, while the A and B Style Scores indicate attractive characteristics in value and growth for investors who use those styles.
The Momentum Score of F is the main offset. That split suggests the stock’s fundamental and valuation profile is more favorable than its momentum characteristics, leaving execution on guidance and cost initiatives important to the investment case.
View the Zacks #1 Rank List
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HSIC Raises 2026 Outlook as Sales and Margin Momentum Accelerates
Key Takeaways
Henry Schein, Inc. (HSIC - Free Report) raised its 2026 sales and earnings outlook after a second quarter marked by faster internal growth and better profitability. Net sales increased 6.7% to $3.46 billion, while adjusted earnings of $1.27 per share exceeded the Zacks Consensus Estimate by 4.1%.
The more important question is whether the stronger outlook can carry into the second half as value creation initiatives contribute more meaningfully and the company works toward its year-end savings targets.
HSIC’s Q2 Results Set Up the Guidance Increase
Second-quarter strength was broad rather than acquisition-driven. Internal sales growth reached 4.6%, while acquisitions added 0.7% and foreign exchange contributed 1.4% to reported growth. Global Distribution and Value-Added Services sales rose 6.6%, Specialty Products increased 8.7% and Global Technology advanced 8.2%.
The mix also matters. U.S. Dental Merchandise internal sales climbed 6.5%, International Dental Merchandise increased 5.4% and Technology posted 9.1% internal growth. Those gains gave management more confidence in the underlying demand picture heading into the back half of 2026.
Henry Schein Lifts Its 2026 Sales Expectations
Henry Schein raised projected 2026 total sales growth to 4.5%-5.5% from 3%-5%. The company now expects internal local-currency growth of 3.5%-4.5% in the second half, compared with 3.6% in the first half despite a tougher prior-year comparison.
Image Source: Zacks Investment Research
Management expects momentum across dental merchandise, medical distribution, specialty products and technology to support that range. U.S. Dental Equipment remained a softer area in the quarter, but the company said its backlog was healthy and expects the business to return to growth during the remainder of 2026.
HSIC’s Margin Gains Strengthen the Earnings Case
Gross profit increased 8.4% to $1.10 billion and gross margin expanded 48 basis points to 31.8%. Operating income rose 13.2% to $171 million, while the operating margin improved 28 basis points to 4.9%. Henry Schein also lifted adjusted earnings guidance to $5.29-$5.39 per share and now expects adjusted EBITDA growth in the mid- to high-single digits.
Image Source: Zacks Investment Research
Industry peers show that operating momentum is not uniform. Dentsply Sirona Inc. (XRAY - Free Report) reported second-quarter 2026 sales of $898 million, down 4.1% year over year, while its GAAP gross margin improved to 54.9%. CooperCompanies (COO - Free Report) reported fiscal second-quarter revenues of $1.08 billion, up 8%, with organic growth of 5% and non-GAAP earnings up 26%.
Henry Schein’s Savings Program Becomes More Important
The value creation program is becoming a larger part of the earnings setup. Henry Schein continues to target more than $200 million of operating income improvement over the next few years and expects to reach a $125 million annualized run rate by the end of 2026.
Initial benefits from the global outsourcing initiative are expected to begin in the third quarter. For 2026, management expects about 60% of the in-year operating income improvement to come from general and administrative savings and 40% from gross profit initiatives, making second-half execution central to the margin outlook.
HSIC’s Buy Signal Supports the Improved Outlook
The bottom line is that Henry Schein enters the second half with better sales momentum, expanding margins and higher full-year expectations, but the larger savings contribution still lies ahead. Delivering the targeted year-end operating income run rate will be an important test of whether the earnings improvement can become more durable.
HSIC currently carries a Zacks Rank #2 (Buy), along with a VGM Score of A, Value Score of A, Growth Score of B and Momentum Score of F. The Rank points to favorable near-term earnings estimate trends, while the A and B Style Scores indicate attractive characteristics in value and growth for investors who use those styles.
The Momentum Score of F is the main offset. That split suggests the stock’s fundamental and valuation profile is more favorable than its momentum characteristics, leaving execution on guidance and cost initiatives important to the investment case.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.