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Henry Schein Inks New Global Deal - Analyst Blog

Henry Schein, Inc. (HSIC), a worldwide distributor of healthcare products and services, recently entered into a new global distribution agreement with Israeli dental technology company ReDent Nova. Through this partnership, ReDent Nova will be able to utilize the huge distribution network of Henry Schein in Germany and the Netherlands for the marketing of its Minimally Invasive Endodontic product line. Both the companies also agreed to support their existing customer base, including those who earlier bought ReDent products from Henry Schein in other nations.

The initiation of the firstborn segment of the baby boom generation in 2011 marked the beginning of an important demographic shift for worldwide dentistry. This trend is expected to gain further momentum over the next 20 years with increasing demand from senior baby boomers. Henry Schein estimates that the population aged 45 or more will grow 14% and 27% within the periods 2011-2021 and 2011-2031, respectively. According to the World Dental Forum held in 2012, this also led to the international integration of the dental industry.

On the heels of the positive demographic trend indicating a growing market worldwide, Henry Schein also anticipates a rise in oral healthcare expenditures. Moreover, the company thinks that cosmetic dentistry is another developing segment of dentistry as new and innovative technologies offer patients advanced cosmetic solutions.

As a result, Henry Schein is currently focusing on global expansion through strategic partnerships and acquisitions. The addition of ReDent Nova's innovative product line, including its exclusive SAF (Self Adjusting File), an advanced 'Minimally Invasive Endodontic' product, for its German and Dutch customers is in pursuance of this strategy.

Henry Schein's portfolio consists of consumable products, small equipment, laboratory products, large dental and medical equipment, equipment repair services, branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products and vitamins.

The company continues to experience strong top-line growth and has established a strong foothold in both domestic and international markets in dental, veterinary and medical supply distribution. We are also encouraged by the company's focus on improving its cost structure to drive profitability.

Henry Schein's performance should improve further with the gradual recovery in the economic outlook. However, the company faces stiff competition from the likes of McKesson Corporation (MCK) and Patterson Companies Inc. (PDCO). The stock retains a short-term Zacks #3 Rank (Hold).

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