Henry Schein Q2 2026 sales rose 6.7% to $3.46B (4.6% internal growth) and diluted EPS rose 17.1% to $0.82 on wider margins and buybacks; FY2026 guidance raised.
Revenue
$3.5B
+6.7% YoY
Net income
$94M
+9.1% YoY
Diluted EPS
$0.82
+17.1% YoY
Operating margin
4.9%
Overview
Henry Schein is the largest distributor of supplies, equipment and software to dental and medical offices. In the second quarter of 2026 (ended June 27, 2026), net sales grew 6.7% to $3,458 million. Profit grew faster: operating income rose 13.2% to $171 million, and diluted EPS rose 17.1% to $0.82. Two things caused the gap. Gross margin improved to 31.8% from 31.4%. The number of shares also fell by about 7% after a year of buybacks, so each share's slice of a modestly bigger profit got larger.
About 2 points of the 6.7% sales growth did not come from the existing business. 1.4 points came from a weaker dollar, which makes foreign sales worth more once converted back into dollars. Another 0.7 points came from businesses Henry Schein bought. Internal sales growth is the company's term for growth from its existing businesses at constant exchange rates, and it was 4.6%. That was faster than the first quarter. First-half internal growth was 3.6%, which implies Q1 was roughly 2.6%. Management pointed to this faster growth when it raised full-year guidance.
Operating margin is the share of revenue left after running the business, before interest and tax. A distributor mostly resells other companies' products, so its margins are thin, and a change of a few tenths of a point matters.
Where the growth came from
Henry Schein has three segments:
Distribution is 84% of sales: dental and medical supplies and equipment, plus services such as practice financing.
Specialty Products are products the company makes itself: dental implants, bone-graft materials, and root-canal and orthodontic products.
Technology is practice-management software for scheduling and billing.
Specialty Products and Technology are much smaller than Distribution, but they earn higher margins.
Segment / line
Q2 2026 sales
Total growth
Internal growth
Acquisitions
FX
Dental merchandise
$1,337M
+9.7%
+5.9%
+1.4%
+2.4%
Dental equipment
$456M
+3.8%
+2.2%
0.0%
+1.6%
Value-added services
$61M
+5.1%
+3.7%
+0.7%
+0.7%
Medical distribution
$1,057M
+4.0%
+3.9%
0.0%
+0.1%
Total distribution
$2,911M
+6.6%
+4.5%
+0.6%
+1.5%
Specialty Products
$419M
+8.7%
+3.2%
+3.4%
+2.1%
Technology
$181M
+8.2%
+9.1%
-1.3%
+0.4%
Company total
$3,458M
+6.7%
+4.6%
+0.7%
+1.4%
Dental consumables drove most of the growth. Merchandise means the gloves, anesthetics, filling materials and other supplies a practice uses up and reorders every week. It grew 5.9% internally. The 10-Q credits "merchandise sales growth in U.S. and international markets", and U.S. merchandise grew 6.5% internally. This is the steadiest part of the business.
U.S. equipment sales fell, while international equipment grew. Equipment means big-ticket purchases like dental chairs, X-ray units and digital scanners. U.S. equipment sales fell 1.1% to $216 million, while international equipment grew 5.4% internally. The U.S. drop stands out because last year's quarter was weak. According to the 10-Q, U.S. equipment sales in the second half of Q2 2025 were "temporarily impacted by market uncertainty related to tariffs." Falling even against that weak comparison suggests U.S. dentists are still putting off large purchases. The filing does cite "growth in digital dental equipment in the U.S.", so the weakness is in traditional equipment.
Medical grew 3.9% internally. The filing credits "growth of our government and Home Solutions businesses, partially offset by lower point of care diagnostic test products related to respiratory illness." In other words, doctors' offices bought fewer flu and COVID tests.
Technology had the fastest internal growth, at 9.1%. The filing credits "customer adoption of our core practice management solutions, particularly our cloud-based platforms." Reported growth was lower, at 8.2%, because the company sold a small business in this segment.
Specialty Products grew 8.7% in total, but only 3.2% was internal, from implants and biomaterials. Acquisitions added 3.4 points and currency added 2.1.
Margins: product mix and cost savings, not just volume
Segment
Q2 2026 operating income
Q2 2025
Change
Segment margin Q2 2026
Q2 2025
Distribution
$181M
$159M
+13.8%
6.2%
5.8%
Specialty Products
$62M
$52M
+19.2%
14.8%
13.5%
Technology
$49M
$45M
+8.9%
27.1%
26.9%
Total segment operating income
$292M
$256M
+14.1%
Distribution gross margin rose to 25.6% from 25.2%. The 10-Q credits "favorable business mix and early benefits from our value creation initiatives." That is management's efficiency program, which runs alongside its 2024 restructuring plan. Selling, general and administrative expenses rose 6.8%, about the same pace as sales, so the higher gross margin carried through to segment profit.
Costs outside the segments held back GAAP profit:
Unallocated corporate costs rose to $42 million from $31 million.
Restructuring charges, mostly severance and facility closures, rose to $29 million from $23 million.
Interest expense rose to $43 million from $38 million, "primarily due to increased borrowings."
These costs are why GAAP net income grew 9.1% while segment operating income grew 14.1%.
GAAP vs. adjusted earnings
Henry Schein also reports non-GAAP (adjusted) EPS of $1.27, up 15.5%. This measure leaves out:
restructuring costs
amortization of intangible assets from past acquisitions, an accounting charge that uses no cash
consulting costs tied to the efficiency program
The gap between GAAP EPS ($0.82) and adjusted EPS ($1.27) is large: $51 million of after-tax adjustments this quarter. Restructuring charges show up every quarter, and the company expects to keep recording them "through the end of 2027," so they are not one-off costs. Still, GAAP and adjusted EPS grew at almost the same rate this quarter, so the improvement is not coming from the adjustments.
Buybacks and borrowing
A large part of the EPS growth came from having fewer shares. Weighted diluted shares fell to 114.4 million from 122.6 million. In Q2 the company repurchased about 2.6 million shares for $200 million, at an average price of $76.69. Year-to-date buybacks total $325 million, and $455 million of authorization remains. Net income attributable to shareholders grew 9.1%, while EPS grew 17.1%.
Some of those buybacks were funded with debt. Short-term bank credit lines rose to $1,024 million from $764 million at the end of 2025. Total debt (bank lines plus current and long-term debt) rose to about $3.46 billion from about $3.11 billion. Q2 operating cash flow was $242 million, up from $120 million a year earlier. Over the first half, though, operating cash flow was $145 million, well short of the $325 million spent on buybacks.
Guidance
The August 4 earnings release raised all three full-year 2026 targets:
2026 guidance
Updated
Prior
Non-GAAP diluted EPS
$5.29–$5.39
$5.23–$5.37
Total sales growth
4.5%–5.5%
3%–5%
Adjusted EBITDA growth
Mid- to high-single digits
Mid-single digits
First-half total sales growth was 6.5%, and 2.2 points of that came from currency. A full-year range of 4.5%–5.5% therefore implies slower reported growth in the second half as the currency boost fades. The guidance assumes exchange rates stay near current levels, and it excludes any benefit from tariff refunds. According to the 10-Q, the company received more tariff refunds after the quarter ended and expects to record them in Q3. That one-time gain will make Q3 look better than the underlying business.
Takeaway: EPS grew much faster than the business itself. Internal growth rose to 4.6% and distribution margins widened, and both are real improvements. But EPS growth of 17% on 4.6% underlying growth leans heavily on buybacks, and some of those buybacks were funded by bank borrowing. Meanwhile, U.S. dental equipment sales fell even against a weak prior-year quarter. Growth is shifting toward consumables and software, which is a healthy mix. Whether it lasts depends on U.S. equipment demand recovering and on the efficiency program continuing to lift margins.
What to watch
U.S. dental equipment: sales fell 1.1% against a tariff-hit comparison. Equipment spending is an early indicator of how confident dentists feel.
Whether internal growth holds near Q2's 4.6%, now that currency is adding less to reported growth.
Tariff refunds in Q3: a one-time boost is expected, so compare Q3 results to the underlying trend.
Borrowing: bank-line borrowings are up $260 million since year-end while buybacks continue.
Sources: Henry Schein Form 10-Q for the quarter ended June 27, 2026 (filed August 4, 2026), and the Q2 2026 earnings release (Form 8-K Exhibit 99.1, August 4, 2026).