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Here's Why You Should Invest in Henry Schein (HSIC) Now

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Henry Schein, Inc. HSIC has been gaining strength across three of its operating businesses--Dental, Medical, and Technology and Value-Added Services. Strong potential in the company’s dental technology joint venture (JV) Henry Schein One buoys optimism. Meanwhile, favorable trends in the end markets position the company well for further growth. Yet, rising operating expenses and the impact of Group Purchasing Organizations (GPOs) raise our apprehension.

Over the past year, this Zacks Rank #2 (Buy) stock has gained 9.2% compared with 4.1% growth of the industry and 18% rise of the S&P 500 composite.

The renowned global distributor of health care products and services has a market capitalization of $10.32 billion. Its third-quarter 2021 earnings surpassed the Zacks Consensus Estimate by 17%.

The company’s projected long-term earnings growth of 11.8% compares with the industry’s growth projection of 12.5% and the S&P 500’s estimated 11.7% growth.

Zacks Investment Research
Zacks Investment Research

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Let’s delve deeper.

Factors at Play

Market Dynamics: Henry Schein stands to gain from several favorable trends in the end markets, with one of the major positive trends being demographics. The increasing number of lives covered following the healthcare reforms in the United States is likely to benefit the company. We believe that an aging population and increasing healthcare expenditure across the globe will also provide additional top-line opportunities. Henry Schein is upbeat about the expected increase in dental insurance coverage along with lower insurance reimbursement rates leading to a rising need for new technologies.

Segmental Growth: Henry Schein has been witnessing solid performances across all three of its operating businesses in the third quarter. During the quarter, global Dental sales registered growth of 10.5% year over year, reflecting a continued recovery in patient traffic compared to pre-pandemic levels. Meanwhile, the company’s global Medical revenues surged 15.5% year over year and revenues from global Technology and Value-added Services arm rose 21.9% year over year.

Henry Schein One Holds Potential: We are upbeat about Henry Schein’s dental technology JV, Henry Schein One. Internationally, technology and value-added services internal sales in the third quarter increased 15.3% in local currencies compared with the prior year. This uptick was primarily driven by Henry Schein One, with particular strength in software excellence business on the reopening in the U.K. A few noteworthy offerings from the Henry Schein One portfolio include the Dentrix Imaging Center and various product enhancements like directory online booking (a self-scheduling solution for the WebMD directory).