Good morning, ladies and gentlemen, and welcome to Henry Schein’s Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded. And I would now like to introduce your host for today’s call, Graham Stanley, Henry Schein’s Vice President of Investor Relations and Strategic Financial Project Officer. Thank you. Please go ahead, Graham.

Thank you, operator, and my thanks to each of you for joining us to discuss Henry Schein’s financial results for the fourth quarter and full year 2023. With me on today’s call are Stanley Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein; and Ron South, Senior Vice President and Chief Financial Officer. Before we begin, I’d like to state that certain comments made during this call will include information that’s forward-looking. Risks and uncertainties involved in the company’s business may affect the matters referred to in forward-looking statements and the company’s performance may materially differ from those expressed in or indicated by such statements. These forward-looking statements are qualified in their entirety by the cautionary statements contained in Henry Schein’s filings with the Securities and Exchange Commission and included in the Risk Factors section of those filings. In addition, all comments about the markets we serve, including end market growth rates and market share are based upon the company’s internal analysis and estimates. Today’s remarks will include both GAAP and non-GAAP financial results. We believe the non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable the comparison of financial results between periods where certain items may vary independently of business performance and allow for greater transparency with respect to key metrics used by management in operating our business. These non-GAAP financial measures are presented solely for informational and comparative purposes and should not be regarded as a replacement for corresponding GAAP measures. Reconciliations between GAAP and non-GAAP measures are included in Exhibit B of today’s press release and can be found in the Financials and Filings section of our Investor Relations website under the Supplemental Information heading. For additional information, please refer to our quarterly earnings presentation also posted on our Investor Relations website. The content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, February 27, 2024. Henry Schein undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Lastly, during today’s Q&A session, please limit yourself to single question and a follow-up. And with that, I’d like to turn the call over to Stanley Bergman.

Thank you, Graham. Good morning, everyone, and thank you for joining us. We are rather pleased with our performance in the fourth quarter and for the full year of 2023, which was in line with our expectations and reflects a solid recovery from last year’s cybersecurity incident. Our fourth quarter financial results included strong growth in our technology and value-added services businesses and in global sales of implants and biomaterials, largely driven by acquisitions, and were negatively impacted by higher than usual acquisition related expenses and adjustments. As we discussed last quarter, the cyber incident primarily affected our dental and medical distribution businesses in North America and Europe. These distribution businesses recovered well in the second half of the quarter. The revenue impact from the incident was at the low end of our expectations and the earnings impact was at the high end largely due to the success of our promotion activity, which drove sales and customer retention. Overall, we feel good about the pace of our recovery, driven by our durable customer loyalty and strong relationships our field sales consultants, our telesales representatives and service technicians have with our customers around the world. And of course, coupled with our most effective direct marketing and customer care capabilities, which includes a very strong e-commerce presence, particularly on social media. Today, our North American and international distribution businesses are experiencing merchandise sales that are running below pre-cybersecurity – below the pre-cybersecurity levels – pre-cybersecurity incident levels and we estimate that the incident is currently having a low-single digit percentage headwind to our merchandise sales growth, with some episodic customers not fully returned yet. We are doing a lot of work in this area and we expect the residual impact to be short-term and diminish over the first half of the year…

Thank you, Stanley, and good morning, everyone. As we begin, I’d like to point out that I will be discussing our results as reported, on a GAAP basis and also on a non-GAAP basis. Our fourth quarter non-GAAP financial results for 2023 and 2022 exclude integration and restructuring costs, amortization expense of acquired intangible assets, certain asset impairment costs, as well as expenses directly related to the cybersecurity incident. This is detailed in Exhibit B of today’s press release. The fourth quarter of 2022 included one additional selling week compared with the fourth quarter of 2023. We report on a 52, 53-week fiscal year ending on the last Saturday in December, and the extra week in 2022 was the holiday week between Christmas and New Year’s Day. The next time our results include an extra selling week will be in 2028. With respect to sales growth, I will focus on LCI sales growth, which is internally generated sales in local currencies compared with the prior year and excludes acquisitions. To facilitate a more meaningful comparison, we’ve also excluded the estimated extra week of sales in the prior year from our LCI sales growth figures. Please note that our sales growth was adversely impacted by the cybersecurity incident and we estimate the reduction of fourth quarter sales was between $350 million to $400 million worldwide. Turning to our fourth quarter results, global sales of $3.0 billion reflected an LCI sales decrease of 12%, with the cybersecurity incident impacting sales growth by an estimated 10% to 12%. Our GAAP operating margin for the fourth quarter of 2023 was 1.28%, an 87 basis point decrease compared with the prior year GAAP operating margin. On a non-GAAP basis, operating margin for the fourth quarter was 4.86%, a 279 basis point decline compared with the…

Thank you, Ron. The 2024 guidance that Ron just discussed reflects somewhat of a transition year following the cyber incident. That said, we are incredibly pleased with the great strides the team has made in our recovery efforts. Actually, it’s quite remarkable how effective this team operated while actually advancing the execution of our strat plan. We look forward to continuing this momentum and delivering our long-term growth metrics that we established during our Analyst Day event last February. I know we’ve covered a lot of ground today, it’s a little bit complex, but we are here to clarify any questions or thoughts that investors may have. So please.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] And the first question comes from the line of Elizabeth Anderson with Evercore ISI. Please proceed with your question.

Hi, guys. Thanks so much for the details on the outlook and the quarter. That was very helpful. I just think as I had a couple of questions about the equipment sales commentary, I was wondering if you could go into a little bit more detail on sort of the end market environment and sort of any way you can quantify what you’re expected push out into 1Q from the cybersecurity impact, specifically on equipment. Yes, that would be a great place to start. Thank you.

I’ll give you some high level thoughts, Elizabeth, and then maybe – can provide you with specific information or numbers to the extent, we’re providing that. So our dental equipment backlog was generally flat with the end of the third quarter, to the end of the fourth quarter, they were about the same. With the North America backlog down mid-single-digits and the international backlog high-single-digits. Now you have to bear in mind that historically our backlog declined significantly in the fourth quarter due to the fourth quarter being the strongest equipment sales quarter. And of course, dentists and physicians wanting to get as much equipment installed in the fourth quarter as possible for tax purposes. So the equipment sales growth in the fourth quarter was impacted by the cybersecurity interest incident, of course, and that’s because we redeployed our sales consultants and particularly our sales equipment specialists in visiting customers and dealing with the cyber incident that occurred. And so they were not focused on generating sales. Our installation operation worked well. Our service operation, all of that recovered almost immediately. But the tradition – so there’s quite a bit of business that’s going to move into the fourth quarter, both in the United States and Canada and then globally. But overall, it’s our view that the traditional equipment market is approximately flat. The market I’m talking about, right, not our sales. And that the digital equipment sales did result in further erosion of the selling price, but – the average selling price, but we believe that we have now gone past that. Of course, there are potentially some opportunities to bring in another round of digital scanners at perhaps a lower price into the United States, perhaps even into Europe, that we think would expand the market even further. But even without that, we think the price has stabilized, number one. But number two, the demand is very, very strong for these intraoral scanners. Also pointed out in the script, and there were a lot of concerns last quarter that DSOs were stopping to invest, there may be some DSOs that have a challenge, but generally our DSO customers are investing both the national DSOs and the more regional DSOs. So we are quite optimistic about the equipment business in general. And there are also going to be some launches in the traditional equipment sales area that we expect a leading manufacturer to undertake this year that will stimulate demand. And as I said, the annualization of the intraoral scanner price decreases. So that’s sort of – maybe there’s more information if you have anything specific we can give you. I’m not sure, Graham, around exactly what numbers we’re providing at this stage, but perhaps you can address.

No, Elizabeth, I think what we can say is that we do expect good equipment sales growth in the first quarter, and a lot of that is from some of these orders that got pushed from Q4 of 2023 into Q1 of 2024. We have contemplated the estimated impact of that when arriving to our $0.15 kind of residual impact from the cybersecurity incident. So that $0.15 in some respect, is a net number. It would take into account some of the favorability that we also expect to get from the pushback of some of these equipment orders or sales into Q1.

Got it. That’s super helpful. And maybe as a follow-up, Stanley, you mentioned a bunch of some dental specialty product launches and some additional products and value added services. Can you give us a little bit of context around what those are and sort of how you’re thinking about the contribution of those organic launches? I understand, obviously, you also have the follow through from some of the acquisitions you’ve made in 2023 and 2024.

On the launches, Elizabeth, I’ll give you highlights, if you want more, please call afterwards, because there’s a lot. On the endodontic side, Brasseler is expecting to advance the Pediatric Putty program, lower cost Pediatric Putty, Aquasil, in the K-Files direct endodontics portfolio. This is in Europe. There’s a new NiTi file coming out with edge, the bioceramic sealer launch in the U.S. further activity in that area with edge. On the orthodontic side, I covered this already. We had a significant challenge with the patent expiration of the Motion Pro, and for about three quarters our pricing collapsed. But at this time, the new motion portfolio, the clinical system that we introduced, achieved class one approval and bit delayed, and we’re seeing very good recovery there. new : On the software side, I can’t go through the list. It’s huge. A huge amount of activity happening, particularly the AI revenue cycle management on the Dentrix Enterprise side, the whole job its analytics side, a lot of, lot of activity going on there. And as it relates to the acquisitions, we’re very pleased with the implant and biomaterial side of biotech. The software that we’re so excited about will be launching in the U.S., what’s actually launched in the U.S. as part of our clinical workflow. The S.I.N. acquisition, although the market in Brazil is quite tough right now, we’re very optimistic from an advancing of sales in the U.S. point of view, as well as introducing a number of the innovative products we have from the BioHorizons, Camlog portfolio into the Latin American market. So I would say, overall, the pipeline of new product introductions, some have already been introduced or will be introduced this quarter. And as the year progresses, you’ll see more and more activity on the specialty side and on the software, as well as some of the value added services products. And the acquisitions are really doing quite well, all of them. So, yes – I mean, if we have questions more on the product side, I think it’d be a good idea to speak to Graham. He has a lot of that information and is very close to these businesses.

And the next question comes from the line of Jason Bednar with Piper Sandler. Please proceed with your question.

Hey, good morning, Stan, Ron. Wanted to start on the revenue guidance. Just really hoping we can peel apart a few of the moving pieces as we try to bridge to a core organic growth rate. You’ve got acquisitions that are contributing a few points, maybe a little bit more in 2024, the business recapture and easy comps from the cybersecurity incidents, probably another few points, maybe FX is adding a little bit. Am I right on those? Are we talking one to 5% or 2% to 6% local internal growth for the year? And then if so, can you help with what you’re assuming to get within that organic growth range? If we acknowledge that we’re starting in a little bit of a hole with the cybersecurity incident, what are you estimating for your core organic growth versus your end markets?

Hi, Jason. Yes, your estimates are – I would say, are generally accurate. We expect about 3 basis points or 300 basis points of growth that would come from just the recovery on cybersecurity and to get to a more normalized level. And we do think acquisitions can get us pretty close to another 3 percentage points of growth as well. So that accounts for six points there of the 8 to 12, FX could get is somewhere between, say 0.5 point to 1 point. So that kind of narrows down what that internal growth piece would be, which reflects continued accelerated growth in our technology and value added services, some growth, obviously, in the core business as well as in the specialty businesses to kind of COVID that remaining GAAP.

Okay. But it accounts, I guess, what does it account for? Just as a quick follow up here, what does it account for in terms of where you’re starting at? I caught from the prepared remarks, you’re maybe 97% or 98% of the way back. But if we’re talking about low end of the guidance or the ranges you gave at your investor day, I’m just maybe having a hard time trying to figure out how we get maybe into that 4%, 5%, 6% range for core growth, unless I misunderstood on where you’re at on recapture.

Well, I think the core growth you might be referring to would include specialty. So that’s going to be part of that. We did kind of direct to the low end of the market growth rates that we had communicated on Investor Day last year, but those are market growth rates. So it’s up to us to try to outperform that market, and that becomes part of our growth assumption.

And our next question comes from the line of John Stansel with JPMorgan Chase & Company. Please proceed with your question.

Great. Thanks for taking my question. Just wanted to look into some of the margin assumptions here. Now, I think just on a base level, you’ve got adjusted EBITDA margin, probably expanding, call it, 30 basis points at the midpoint. And then on growth, when we think about normalizing for cybersecurity with the numbers you’ve provided, we’re looking at kind of low-single-digit core adjusted EBITDA growth. Is that the right way to think about how you’re seeing the core profit dollars expand when we look to 2024?

Yes, I think it’s a good general starting point, John. I think that – there will be – there is some margin pressure that comes from the recovery still from cyber. We did have to delay, for example, some projects in the back half of the year, for example, our global ecommerce platform. So some of those costs are now being incurred in 2024 other investments that we’re making that create a little bit of that margin pressure. But I think as we get to – as we continue to recover from the cyber incident and begin to ramp up the revenues a little bit more as the year goes on, we’ll begin to see improvements in those margins over the course of the year.

Great. And then just looking at capital allocation 2023, you probably were above the long-term guides for cash deployment on M&A. As we think about 2024, is there a shift in the way that you guide us to think about capital deployment, particularly around potentially debt pay down? Then it sounds like you’re not incorporating any share repurchase in the guide. Is there anything we should think about there as it relates to overall capital deployment?

Yes, there will be – we’ll continue with some share repurchases. Traditionally, we have not included that in the guide. Last year was a little lighter year for us on share repurchases. We did less in Q4 than we normally would do just to kind of preserve some capital after the cybersecurity incident. I don’t expect us to do a billion dollars in M&A in 2024. I suspect we’ll be something closer to our historical run rates of $300 million to $400 million there. In terms of the general philosophy around capital allocation, we do have you, mentioned some debt pay down? We are carrying more debt than we have historically, so we will be contemplating that as an alternative to use of capital. If we believe that is better accretion than a share repurchase, then we’ll try to mix in some additional pay down on the debt if we think that is more accretive than the other options available to us.

And the next question comes from the line of Jon Block with Stifel. Please proceed with your question.

Great. Thanks, guys. Good morning. Yes, a lot of numbers, so maybe I’ll sort of stick to that theme. But, Ron, I get a $5.36 normalized for 2024. I’m taking your midpoint of $5.08, I’m adding back the tax at $0.13, the residual $0.15. And that’s sort of apples-to-apples to the $5.22, and my opinion, in 2023, the $4.50 plus to $0.7 to $0.75. So you’ve got low single digit year-over-year EPS growth, but the revenue growth to the prior question is arguably solid. I don’t know that internal might land you around 3% to 4%. You’ve got some acquisitions you did. That should be accretive in 2024. So can you just provide a little bit more context on why I’m sort of arriving at that low single digit year-over-year? Call it, normalized EPS growth in light of what looks like low to mid single digit solid internal revenue growth?

Yes, John, I agree with your numbers. I agree with your math. As I mentioned before, the 2024 numbers do include some investments we’re making in the business, some things that had to be deferred from 2023, as well as ongoing investment that we believe is necessary for future growth in the business. And that’s reflected within our earnings estimates.

Okay. So then maybe I’ll ask a follow up and the second question all at once. But taking what – that answer into account, you’re providing 2024 guidance today, but I’ll ask about 2025. Some of that stuff is just specific to 2024, right? Like the $0.15 residual and these investments that sort of shifted out at 23 into 24. When we think about your LRP and just some of that longer term – the long term numbers, arguably, when we take that into consideration, I’m guessing 25 might be the beneficiary from a growth perspective, right, as you exit that in 2024. And then – sorry, the second question is, just want to make sure I get 1Q, right. You’ve got an equipment tailwind, but you got a big consumable headwind. And the net of that is the majority of the $0.15 2024 residual impact. Thanks, guys.

Yes. I’ll confirm the latter part of your question, Jon. I will confirm, yes, your understanding of that is correct. And yes, we do look at the possibilities for 2025 as being what we said in our Investor Day a year ago that being that our long-term goals at that point in time were revenue growth of 6% to 8% and EPS growth at 8% to 11%. That’s what we’re working to position ourselves for as we get into 2024.

And the next question comes from the line of Jeff Johnson with Baird. Please proceed with your question.

Hey, thanks, guys. Let me ask kind of one, two parter just to follow up on two things that have been asked. And then I do have a fundamental question as well. But Jon just threw out a kind of a 3% to 4% organic, hopefully not groupthink here, but that’s kind of where our math was as well. Ron, does that what’s kind of 3% to 4%, I think Jason said kind of maybe a bigger range, but 3% to 4%, kind of the organic core growth rate you’re looking at this year when we take into account deals and the cyber stuff and all that. And then you mentioned a 0.5 point to 1 point on currency, I just want to make sure you’re talking a headwind or a tailwind there as you model it on currency. Thanks.

We have a slight tailwind on currency, Jeff. And yes, 3% to 4% percentage points on internal is a – I believe is what we are shooting for in terms of our goals from an internal standpoint on the revenues. I mean, that’s – when you back out the – that’s kind of backing out a cybersecurity normalization. It’s also taking into account the acquisition. So the residual that is left in that revenue guidance would be in that 3 to 4 point range.

Yes, fair enough. And then the fundamental question I just wanted to ask is, as you move some of the ace surgical stuff now out of the specialty sales force into the FSCs, same with some of the EdgeEndo stuff. Should we think of that as an incremental opportunity? I mean, I guess, obviously it is. But were some of those products already being sold to the GPs, and those sales just getting handed off from the FSCs to the specialty sales reps, and now it’s something that the FSCs can actually get comped on, or is this a big kind of incremental opportunity? Because those products weren’t even really being detailed in a big way at the GP level. Thank you.

Very good question, Jeff. So on the endo side, the portfolio of endo products that is historically sold through distribution in the United States in particular is rather limited. That’s why we entered into the specialty field ourselves. And yes, selling of the EdgeEndo product through Henry Schein in the United States and in Canada will be a net very nice positive. On the A side, Henry Schein’s reps have had access to some of the biomaterials that we offer at Henry Schein, namely the ACE biomaterials. But I would not say that they were focused on this. By providing the specialty salesforce capabilities, I think we should make nice progress within the oral surgery community for the biomaterials, for equipment, and perhaps even some general sales. And then there will be collaboration of course with our implant company in the United States, namely BioHorizons, and also with the S.I.N. product line as that is launched further into the United States. So this is something very exciting. Sales have taken off somewhat, but I expect much more sales after our national sales meeting in the summer this year as the sales force is educated in how to create leads for the specialty sales team in both of these areas.

And the next question comes from the line of Michael Cherny with Leerink Partners. Please proceed with your question.

Great. Thanks so much for taking the time to chat now. Relative back – going back to the equipment line as you think about not only 2024, but the jumping off point, Stanley, you’ve talked about traditional being at a kind of flattish overall market. How do you see your role, especially on the back of the recovery from the cyber incident taking hold in terms of where your best opportunities are to drive share and where could be the biggest point of variation both the up and downside, not only on traditional, but on high-tech equipment?

Very good question, Michael. Also, I think we continue with our role of helping practitioners operate a more efficient practice so that they can operate a more efficient practice, and on the clinical side. So in order to do that, we believe that our clinical workflow, which I think is quite unique, we covered that at our Investor Day and have made quite a bit of progress in that area. So that leads to greater sales in digital equipment units for sure in the scanners, in the 3D printing arena, I think the chair [ph] side mill is relatively flat today, but particularly in those two areas, as well as 3D printing as well as imaging, 2D, 3D imaging, all connected to our software. I think all of that helps us advance our position on the digital side, where it’s already quite strong, both in the United States, Canada and internationally, particularly in the markets where we offer practice management software. So I think overall the digital side, we will continue, I think to gain market share in a rapidly growing market. On the traditional side, I think we continue to edge forward with our market share. We’ve been doing that for years, both here in the United States and abroad. There are a couple of international challenges, namely in parts of Western Europe where some of the national brands, because of pricing have lost some market share and we’re now selling more of the lower priced brands. So it brings down the selling price. I’m not sure it brings down the profits, but overall, we are quite bullish about our equipment business. It’s not what it was during the COVID – the post-COVID period, the market has stabilized and we are comfortable that we can grow market share. At the same time, our equipment service business is doing very well. We’ve invested in software in systems in that area throughout the world and that is paying off.

And just one quick related follow-up, if I can. You mentioned earlier about the IOS scanner pricing being a headwind on growth. I don’t think that’s a surprise to anyone. Do you feel like we’re at the bottom on pricing industry-wide? And if not, what gets us there?

I thought we mentioned, but maybe we were not clear. I think we will see a little bit more in the beginning part of the year and I think we will stabilize. Having said that, there is a possibility of additional less feature friendly, feature full systems being introduced into the United States, but I think that will only expand the market. What we’re – I don’t know what are we 40% of dentists – half the dentists using one of these scanners. I think every dentist should use one. I think the patients want that. And so there’s a huge opportunity to expand the market, plus replacement business is also growing and systems that integrate with our software that is also growing space. You combine that with the 3D printing and the whole digital space is very, very exciting. And I think we’ve probably gotten to the bottom on the price erosion side or close to it, maybe a little bit more, as I said, first three, four months of the year. And if a lower price product is introduced less features, I think that will only expand the market.

And our next question comes from the line of Nathan Rich with Goldman Sachs. Please proceed with your question.

Great. Good morning, and thanks very much for taking the question. I wanted to ask about the, I think you described it as a low-single digit kind of gap in merchandise sales that you’re still seeing related to the cybersecurity incident. What type of customer or purchase have you not seen come back yet? And how should we think about the company’s plans to close that gap? And it sounds like you don’t expect a residual impact to extend beyond 1Q. So do you, I guess expect to recover those kind of order volumes this quarter and sort of be back to pre-incident levels kind of going into the second quarter.

Yes. So that’s awesome. These are good questions. So what happened during the cyber incident? For about a month or so, our website didn’t work, a little bit longer internationally, which resulted in customers who are impulse shoppers, customers that look for pricing when they buy, and customers where we have particular data on what business they are not giving us particular products or particular timing. We didn’t have access to all of that data and we couldn’t really market through our website and through our social media. Of course, that’s back again, and we’re quite active in that area. And I think we’re starting to bring that business back again. These are the customers that are not necessarily called upon by a field sales representative or for some of the products they go shopping or where a telesales representative doesn’t have a deep relationship, or even if the telesales representative had a deep relationship, they were busy taking orders, not calling out. That whole area is the area that we have to reinvigorate. Our Google ratings went down, obviously, because we were not – our customers were not going to Google to buy from us to do searching. All of that is being worked on. I have a tremendous confidence in our team that is involved in e-commerce, and I think that’s how we’ll get that business back again. And we’re already starting to see that. As it relates to the more, the larger customers, I think they’re more or less all back again. I mean, a couple of them may have gotten support from our competition during that period and feel they need to give them a little bit more business. But I think largely that business is back again. We had to satisfy the CISOs [ph] of many of our larger customers that everything’s okay, and by and large, those systems are turned on again. So I mean, it’s going to take at least a quarter, maybe four months, two to four months to get back to normal. I don’t think we’ve lost many customers. Our services are great, whether it’s the services that we offer for equipment installation or for claims processing. There was an incident recently where a big part of the claims processing in our industry was impact by cybersecurity incident through one of the providers didn’t impact us. We came up with alternative procedures very quickly. And so I think people will understand, just like in COVID, when they didn’t have mass, they knew who to call. And so I think our brand in the marketplace is very strong today, and we will recover. I think this business just can’t tell you exactly what day. It’s not going to be long.

Okay. Great. And maybe just a quick follow-up on, I think it was Jon’s question on first quarter expectations. Could you maybe just talk about how significant the weather and flu impacts that you mentioned seeing in kind of January, maybe in February were to the business? And just as we put that together, what the kind of residual impact of the cybersecurity incident on consumables, is the right way to think about what you’ll see in the first quarter, sort of like a mid-single digit type decline in that part of the business.

Yes. Hi, Nathan. I think that January was a, there was some disruption to patient traffic in January related that we believe was somewhat related to weather, somewhat related to illness. As we – the flip side of that is we did see some increases on the – in the medical business in, for example, flu diagnostic kits, which is usually a precursor to us seeing increased cancellations in the dental offices. So there was some illness impact in January as well as weather. We have seen improvements in February, which leads us to believe that we’re approaching a more – what I would consider to be a more normal traffic pattern as we come out of February into March. I think that there have been – there are other factors we have to take into consideration, obviously, and sometimes there’s a lot of judgment involved in terms of how much of this is residual effect from cyber as we look at our activity versus weather versus illness. So it’s difficult to kind of specify the exact impact of each of those, but we’re reaching our – we believe we are going to reach our Q1 goals. There’s also going to be while we’ve said that PPE is not as going to be as pronounced, the effects of that in 2024 versus 2023. Q1 will have the most significant impact year-over-year for us because of the difference in the price point in Q1 last year versus Q1 this year. So there’s some headwinds year-over-year from PPE as well and other market conditions. So – but we do think that we can reach our first quarter goals in line with our overall guidance for the year.

We have time for one last question coming from the line of Justin Lin with William Blair. Please proceed with your question.

Hi, good morning. Thanks for squeezing me in here. Can you remind us what investments you need to make on the commercial execution front to fully realize your acquisitions? I think one example you’ve talked about was kind of bringing S.I.N. Implant to U.S., but any additional color and perhaps Shield and other acquisitions would be great.

Hey Justin, I don’t think there are any major investments to bring S.I.N. to the United States. They already had approval at the time we acquired or invested in the actually acquired the business. Of course, there’s educating about salesforce in the United States. They already have a specialty salesforce. I don’t – S.I.N. has a specialty salesforce. I don’t think that they’re going to have to invest much more than the income that they generate from expanding their sales in the United States, expect that actually to be accretive. So I don’t think that will be an issue. There is some work going on that’s costing us money in the alignment of the aligners between Biotech and Henry Schein orthodontics. We’re going to be merging facilities. We’re going to be moving around the world, different sites for the manufacture of the aligners and going to be operating under one brand. So there’s some investment in that. There’s quite a bit of investment in the recovery of the systems from an operational point of view. But I mean that’s all baked into our numbers and not material in the context of the entire Henry Schein business.

Got it. That’s very helpful. And just one follow-up…

By the way, Shield, I think will just be – its totally accretive, that whole healthcare – home healthcare business is a very nice business for us and certainly not a drain on earnings. Sorry.

That’s super helpful. Thank you. And how is the underlying demand for your specialty dental business versus maybe your expectations, right? You’ve touched on implants and endodontics a little bit, but also curious to hear about how clearliners is doing. I know that, that, that business is relatively small still. But I guess like what needs to happen outside of macro getting better to maybe see some accelerated growth in your specialty business overall?

Yes. Our – yes, first of all, it’s less than 10% of our specialty business. It’s doing quite well, particularly with DSOs where we provide very good value. I think it’s doing quite well in France, a number of European countries, but again, it’s relatively small and I wouldn’t expect this to move the numbers much from a corporate point of view, other than enables us to go into a customer and offer all the products and related services that the customer may need. So it’s a good product offering. But again, as I said specifically for DSOs, several large ones are quite happy with our software business and that’s with our aligner business and with the software in that field. And it’s growing quite nicely, but it’s really an adjunct to our specialty business. Okay. So let me thank everyone for calling in. I know these numbers are complex. Graham and Ron, stand by to clarify any of the questions you may have, answer the questions. We remain confident in the business, quite enthusiastic with the relatively quick recovery in the latter part of the fourth quarter and into the first quarter. Of course, we had some challenges with the flu in the first quarter. I think you heard that from a number of analysts, read the newspapers. You can see that dental visits were canceled in January, but it’s recovered in February. And our medical doctors did okay with additional flu visits so far in the quarter. I think the recovery is going well. We have to remember that our team was entirely focused on servicing customers and not on sales for most of the fourth quarter, and that our equipment team was really servicing customers but not really going out and selling much in the fourth quarter.…

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