[Operator Instructions] And our first question is from the line of Jeff Johnson with Baird.

Congratulations on a very solid quarter here. So Fred, I wanted to talk just on the U.S. dental consumables market and kind of your performance expectations going forward. I think through the first half of the year, you're just over 4%. Maybe help us understand how much of that do you believe is underlying volume growth versus maybe a combination of price and if you're seeing any increased mix here from some of your manufacturers. So one, just the components of that growth, maybe from a high level, I'm sure you don't want to break it down in great detail. But then as you do comp into tougher comps in the second half on the U.S. consumables side, how should we think conceptually about that 4% or just north of 4% you put up in the first half? Can we stay around that number against those tougher comps? Or just again, conceptually, how would you set up -- maybe help us set up our models as we go into the back half of the year?

Yes, Jeff, thanks for the question. Yes, so as I think about the consumable growth and merch growth, I would say that we're -- first off, we're excited about the growth that we're seeing. Secondly, we're seeing a little more price than volume. We expect to continue to see a similar range of growth in the second half that we saw in the first half. Comps get a little more difficult, but we do expect to see that. And what's really driving is really a point here. Last year, we did some promotions starting in the second half of the year, where we really went after some of our episodic customers or customers who were not consistently buying from us. And that promotion and those promotions seem to really work and where we've really converted many of those customers into actively engaged customers that are continuing to buy from us. So we expect to continue to see that in the second half of the year and see that growth rate remain in the same range with the exception of the higher comps that we're seeing.

Our next question is from the line of Jason Bednar with Piper Sandler.

Congrats on another good quarter here, everyone. Ron, I wanted to come to you on the value creation math. I appreciate the additional color today around some of the mix of the contributions. Bigger picture, you're standing behind the commentary of the $125 million run rate contribution to EBIT exiting this year. Easy math has something like $35 million or better year-over-year EBIT dollar growth before we even consider organic growth, which is obviously very strong. So consensus is only modeling something like $10 million in EBIT growth in the second half of the year. I don't know. I guess maybe an odd question for you. What do you think is being mismodeled or misunderstood by consensus by all of us when you're -- again, you're putting up good results and you stand behind that value creation commitment?

No, thanks for the question, Jason. And as we look at the value creation initiatives, we -- our guidance takes into account a range of potential outcomes. And -- but we still believe that we have a good track to achieve that run rate of $125 million of operating income improvements as we exit 2026. A lot of those improvements are going to be realized -- the in-year improvements will be realized towards the end of the year, Q3, Q4. And as Fred mentioned in the prepared remarks, we have -- we've now engaged a third party to help us with -- we're kind of internally calling our global business services. We have other initiatives that are now gaining great traction as we get into the second half of the year. So all of that is contemplated as we provide the guidance. And we'll be able to provide more details in terms of our actual achievements there as we get into, I'd say, the Q3 results as well. Keep in mind also that if you're looking purely at year-over-year results, last year, we did have some fairly significant remeasurement gains in the second half of the year, specifically a $28 million gain in the third quarter that it's necessary to normalize for. As we mentioned, our assumption on guidance for the balance of the year is no further remeasurement gains this year.

Our next question is from the line of Elizabeth Anderson with Evercore ISI.

Congrats on the quarter. I was wondering if you could give us a little bit more color on the 40% of cost savings that you said were coming from the gross margin line. Is that sort of split between the pricing initiatives and sort of better growth in sort of higher-margin areas? Anything else to consider there? And sort of maybe, Fred, one for you more broadly is like if we think about these specialty categories, what are some places where you see further opportunities to accelerate growth as we get into maybe '26 and beyond that?

Yes. So just on the first one, the 40%, you're exactly right. It includes our initiatives around improving our gross profit, leveraging data better to have a more dynamic view of our pricing, not dynamic pricing, but our pricing is more dynamic and finding opportunities to both raise price where it makes sense and opportunities to lower price if it makes sense in order to drive more volume. And then also, as I mentioned earlier, we're seeing really good growth from our corporate brands and our own brands, and that continues to drive our gross profit as well. So those are the 2 main drivers there. And then the second question around specialty, we're excited about the specialty business. And one of the things we didn't talk a lot about but our new products in specialty are really exciting. So we expect to see greater growth in specialty, particularly in our implant business as we completed the majority -- or took a majority stake in S.I.N. 360 in Q1. We're working to align that strategy. And where we're seeing growth in the U.S., in particular, is in the value -- in the value segment. And so we believe we have a very good offering there, and we'll see further growth in that value segment. And frankly, we have very leading brands in Europe, and we saw really good strong growth in the implant business in Europe. So we're excited about our implant business and excited about the future growth of that from a specialty standpoint.

Our next question is from the line of Allen Lutz with Bank of America.

I want to follow up on Elizabeth's question around the gross margin. Really nice expansion across all 3 segments, and you talked about 40% of the benefits you're seeing this year coming from gross profit. As we think about the second quarter results, how much of the gross margin expansion benefits are embedded in 2Q? And then should we expect more in 3Q, 4Q? Or is this the right run rate for the rest of 2026?

Allen, I think that there's -- we did see some margin benefit in the second quarter. As we mentioned in the prepared remarks, we're also seeing, for example, better growth in some of our own brands versus third-party brands, and those do carry better gross margins, and that starts to show itself there. I think as we continue to get some growth in specialty and the ongoing growth in the technology segment as well, those obviously are accretive to that overall margin. So within distribution, we're beginning to see some of the early benefits of the value creation initiative. I think we can build on that as we get into the second half of the year. There's always other factors that come into play in terms of mix. We will expect, for example, better equipment sales in the second half of the year. Equipment sales are typically at a lower margin than merchandise. But I think that as we progress in the year, we will continue to see some -- and I'll refer to it more as gross profit improvements and gross profit benefits. Sometimes it doesn't always show up in margin percentage, but if it grows our gross profit dollars, we consider that to be what the primary goal is there.

The next question is from the line of Jonathan Block with Stifel.

Joe Federico on for John. Maybe just to clarify on the U.S. dental equipment. I know you had tough comps in the quarter due to the onetime dynamics last year. But you expect year-over-year growth throughout the remainder of the year on a quarterly basis, right? And then maybe just quickly, how are the trends between traditional and digital? We've obviously seen broadly some pressure on digital equipment. So if you can just rehash those dynamics in this quarter and then how you're seeing them play out to date in the second half, that would be great.

Yes. So I'll take the first part, and then I'll let Ron talk about the digital piece. But yes, yes, you're exactly right. We did have some tougher comps in Q2 we expect to see growth in the next 2 quarters in equipment. Our bookings look strong, and we feel good about seeing that business grow in the second half of the year. So just on the split between digital and non-digital, I'll let Ron take that.

Yes, certainly. So Joe, I think as you're aware, our equipment business tends to be about 2/3 of it is the traditional equipment and about 1/3 of it is digital. We did see -- in the U.S., we did see low double -- I'm sorry, low single-digit growth in digital in the quarter. And that's despite some ongoing lower average selling prices, for example, with scanners. We're seeing good volume growth on the scanners. So we did get some scanner growth even though the demand for scanners tends to be more towards the lower price entries in the market as opposed to some of the higher-priced scanners that are available. So digital, we got modest growth. I think we can continue with that modest growth going forward. And as Fred said, on the traditional side, the backlog gives us really good visibility into what we think we can accomplish in the balance of the year, hence, the statement that we do expect equipment growth for the rest of the year.

The next question is from the line of John Stansel with JPMorgan.

Great. I just want to drill in on specialty margins expanded nicely year-over-year. I think in previous quarters, we've discussed the idea that value implants outgrowing premium implants creates a bit of a margin headwind. Is it fair to say that reversed this quarter? Or how are we thinking about the mix contribution from premium versus value in this quarter and then the durability of that going forward?

John, yes, I'll take that one. I think that the margin expansion is an indication of the strength of the premium implants business in Europe right now. We get very good margins on our revenues there, and we did see very good growth. The premium implant growth in the U.S. was a little more modest, but in Europe, it was quite good. Having said that, we're pleased with the value implant growth in the U.S. as we continue to get some traction and introduce the S.I.N. 360 value implant within the U.S. But I would say the mix had a bit of a shift given the strength of the premium implant business in Europe. We also saw kind of across the board good margins on endodontics and a few other products within that segment as well.

The next question is from the line of Kevin Caliendo with UBS.

Congrats on a really good quarter. I'm interested, you're talking about specialty in Europe. There's been some questions on it. But the dynamics there, we also saw this from another specialty player where EMEA was strong and international was strong and the U.S. wasn't. Is this a reflection of Henry Schein's products and specifically? Or is there something going on in the U.S. market? Is it more just consumer-driven versus EU? I'm just trying to understand why the strength exists in EU and not in the Americas right now for specialty.

Yes. I think it's a market issue, a market difference in the U.S. versus in EMEA. And so I think the market in the U.S. is more consumer like as it relates to implants relative to what you see in EMEA. So we believe we took share in the U.S. market, but in the quarter, that is for our premium implants and frankly, for implants in general. But the market is just not growing as fast in the U.S. as it is in EMEA.

Our next question is from the line of Glen Santangelo with Barclays.

I just wanted to come back to this faster-than-expected sort of consumable number. In your prepared remarks, I think you sort of suggested that patient volumes continue to be stable, but the better growth was really coming from market share gains. And I was wondering if you could elaborate on that a little bit and give us maybe a better sense for where the market share is coming from. And then, Ron, as you sort of look at the quarterly results, is there any story to tell intra-quarter between like April, May and June? Or was the growth pretty ratable throughout the quarter?

Yes. I think the share -- thanks for the question. The share gain is coming from a couple of places. One, our own brands continue to grow faster than our third-party brands. So we're growing there. Secondly, we continue to -- we have a strong position with DSOs and structurally, we see DSOs growing faster than the rest of the market. So that obviously plays into our growth rate. And then the third thing is we continue to, as I mentioned earlier, convert customers from being episodic buyers to being actively buying from us consistently. And so we're seeing growth there. And then the final thing is, as I think about some of our exclusive products that we have and others don't, Curodont would be an example, we're seeing good growth from our exclusive products. So those things together allow us to -- allowed us in the quarter to outpace the market, and we expect for that to continue to happen.

Yes. And Glen, regarding the second half of your question, I would say the second quarter, we saw what I would consider to be a fairly steady, consistent pattern over the course of the quarter. In second quarter tends to be -- at least within the quarter, tends to be a little more predictable than perhaps what you might see in the first quarter where you might have weather disruptions or illness disruptions within the market. But the second quarter was pretty steady. I would say we did -- we felt like we had a good strong finish to the quarter, which is always encouraging. But for the most part, it was a very -- it was a fairly steady quarter, April, May to June.

The next question is from the line of Brandon Vazquez with William Blair.

Congrats on a nice quarter. Maybe I'll focus on 2 kind of broader high-level questions because a lot of near-term things have been asked. Fred, as you had mentioned portfolio. I'm not sure portfolio rationalization or optimization was the exact phrase you used, but maybe spend a second talking to us about what exactly that means? What are you looking for within the portfolio that should or should not be there? And then the higher-level question to follow up on that is just, Fred, as you look at this organization, not in 1 year, but like 3 years out, what do you think the biggest differences investors should expect given a lot of the changes that are going now, both from an operational and a commercial perspective?

Yes. Thanks for the question. As it relates to the portfolio, we're obviously -- we're taking a look at the portfolio. I mean I don't expect major changes to the portfolio. But as we've laid out, our priorities are really focused around accelerating growth and driving better returns. We're looking for places in the portfolio that don't line up with that. And will there be some pruning to the portfolio? I mean we'll see, and we'll obviously let you know what we find going forward. And I think secondly, I'll just take that to extend that to what's our thinking on M&A. I think you'll see us be very disciplined from an M&A perspective and focusing on things that are highly strategic, meaning things that help us continue to build this platform for value creation for our customers. So things that we will be the natural owner of or the rightful owner of in order to support our customers better and things that are going to help us grow faster and deliver really great returns to our shareholders. So that's how I'm thinking about the portfolio. And as we make decisions around that, we'll obviously get back to you. As you think about a few years out, I mean, we're going to obviously deliver on our commitments short term. But longer term, we expect to see this business accelerate growth and do it more profitably. But ultimately, be positioned less as a distributor, even though we'll be a great distributor for our customers, but really be positioned as the practice improvement platform for our customers, where we're able to help our customers really optimize their businesses, help them grow faster and help them do it more productively. So that's what we're focused on is really improving -- helping our customers improve their situation. If we do that well, we should be able to reach our goals of accelerating growth and doing it more profitably.

Our next question is from the line of David Larsen with BTIG.

Congratulations on the really good growth you delivered. Can you talk a little bit more about the AI efforts, Dentrix, the software, the technology? You mentioned you're going to be creating like an analyzer solution. How many of your Dentrix customers buy the merch through you as like -- and you're like their core distributor. What is the growth potential there? All of that sounds really important to me because your dentists can basically accelerate their volume growth, which obviously benefits you and them. Just any more color there would be very helpful.

Yes. Thanks for the question. I appreciate your excitement about it because I'm super excited about our technology business as well. Let me start with the AI piece. I mean the thing that's really exciting is not just the capabilities that we're launching the AI capabilities that we're launching into our PMS platforms. But it's also the fact that we're using AI to develop those capabilities. And so we're able to bring new capabilities to market faster. And that, I think, will continue to help us accelerate our growth. As we add capabilities to the PMS systems, our customers are recognizing the utility and the benefit and they're moving up to higher order packages where -- so we're getting share of wallet gains, but we're also getting share of market gains by adding more customers to our cloud-based PMS. So that's quite exciting. The second part that you mentioned is what's the connection between customers that are buying merchandise from us or buying products from us and using our PMS system. And we haven't really connected those dots publicly. But what I would say to you is that is a real opportunity for us to make sure that it's easier for customers to do business with us. And if you have our PMS system, it makes a lot of sense for you to buy all of your merchandise from us. And that is part of the customer value proposition to us being the practice improvement platform for our customers. So we're excited about continuing to see that happen and helping to allow that 90% of recurring revenue from our PMS system to help to drive the rest of our business as well.

The next question is from the line of Michael Sarcone with Jefferies.

I guess the company just put out a press release on some changes to the executive management committee and the new Henry Schein leadership team. I was wondering if you could kind of unpack that a little bit and elaborate on some of the changes you're making and what you hope to accomplish there.

Yes. Thanks for the question. We announced some changes to the leadership team really with a goal of doing a couple of things. One is just getting closer to customers and being able to increase the speed at which we make decisions and to increase our pace and frankly, improve our execution consistency. So what that really looks like is that we removed the layer, which puts me a little closer to the business. We integrated our supply chain more deeply into our distribution business, which puts us closer to the customer. And I think you'll see that continue to increase our executional capability. I do want to just take a moment and just thank Michael and Mark and Jim, 3 long-serving executives here over 100 years of experience, and I am incredibly grateful for their contributions to the business. And I'm even more grateful that they've decided to stay on as senior advisers to me and to the leadership team in support of the company going forward. So I feel like we're in a really great place from a leadership team standpoint, and we'll continue to add the right capabilities to deliver on the opportunity set that's in front of us.

The next question is from the line of Steven Valiquette with Mizuho.

Just for the Specialty Products Group, you mentioned the profit growth in the segment was 19.9%, and some of that was organic versus inorganic. So apologies if I missed it, but I just wanted to get just the approximate breakdown within that specialty area, how much of that profit growth was organic versus inorganic?

Thanks for the question. I think that a significant majority of that is going to be organic. We did have an acquisition within the Specialty Group in the back half of 2025 that is contributing to some of that operating income growth, but a significant majority of that is organic. And I think that equally important, I think we had some improvements in the operating margins within that business as well. So some good efficiencies, we continue to make some operating changes within the Specialty Group, consolidating some operations, again, going to market more as a singular business as opposed to a portfolio approach, and we're beginning to see some of the benefits of those changes start to emerge in the financial results.

The next question comes from the line of Michael Cherny with Leerink Partners.

Maybe circling back to the value creation program. It's encouraging to hear that you're sticking on the opportunity cost cut side. How are you thinking about the flip side, though, and the potential to reinvest some of those savings? Obviously, I know you're targeting double-digit growth. But given we've heard so much about share gain opportunities here, what does it look like on the far side once you get to that $200 million run rate?

Yes. When I -- listen, I think that we actually call value creation internally value creation for growth. So we're absolutely committed to the $125 million run rate by the end of this year and the $200 million over a few years. But we're not going to stop there. I mean we're going to continue to create space in the P&L so that we can invest in the opportunities to help us get to -- help us to accelerate growth. So I think what we've committed to, those are hard commitments, but just believe that we're continuing to work to optimize our business, and we'll make the appropriate investments to drive -- to take advantage of the opportunity set from a growth standpoint.

Our next question is from the line of Vik Chopra with BMO.

Congrats on a nice quarter. I'll just keep it to one. So you raised your revenue guidance but only modestly increased the EPS guidance. Can you talk about the factors preventing the stronger earnings flow-through from the higher sales outlook, please?

Well, from a sales perspective, we continue -- like we said, we expect internal growth to actually be slightly better than the internal growth we had in the first half of the year. I do think from a sales perspective, we will not get the foreign exchange benefits like that we experienced in the first half of the year, that's taken into consideration in the overall revenue growth. From an EPS perspective, it reflects that improvement in sales, but it also reflects our -- an adjustment to our expectations, for example, around remeasurement gains. We are not expecting any further remeasurement gains in the balance of the year. That means the full year remeasurement gain benefit will be $11 million. Our original expectations were within a range, but that $11 million was very much towards the low end of that range. So that is reflected within our revised EPS guide as well.

Our next question is from the line of Daniel Grosslight with Citi.

I'll focus a little bit on the Medical segment, the U.S. Medical segment. Fairly good growth despite the headwinds in point-of-care diagnostics. I was hoping you can provide maybe a little bit more detail on the size of that headwind and when you guys think that this should start to abate? And then on the strength you're seeing in the government-related and Home Solutions side of the business, I'm curious if you could kind of parse out or double-click on some of the areas of strength within those 2 segments.

Sure. I'll address that. I think in terms of the core medical business, the impact on revenues from the diagnostic products is less significant in the middle of the year, meaning Q2, Q3 versus Q4, Q1 when there's a greater rate of respiratory illness. Having said that, -- we did see lower demand in Q2 for those products this year versus last year. But we did get the very good growth. You mentioned the Home Solutions business, and we did get very good growth there. That growth, as we mentioned in the prepared remarks, was approaching double digits. It was high single digits. And I think that's really just a function of continuing to make gain ways in terms of -- as we expand available products as we expand into different geographies from some of the acquisitions we've done on the Home Solutions side over the last couple of years, and we're starting to see some of the benefits of that. So that's -- those have been good investments for us. We do see greater growth in Home Solutions markets, and we also do that at better margins than we get in core medical markets. So that has been an area of focus and continue to be so.

The next question is from the line of Mike Petusky with Barrington Research.

Just one more time to go back to the value creation topic. I'm just wondering, I don't think I've heard you guys speak about this, perhaps I'm wrong, but I don't think I have. In terms of the sequencing by geography and some of these initiatives, whether it's pricing optimization, integrating M&A, labor cost efficiencies, sort of enhancing your technology. Can you just speak to if there is some meaningful sequencing of, hey, we need to go after this initiative in the U.S. first and then OUS, et cetera. I was just wondering if you could speak to that.

Yes. Thanks for the question. Yes, I wouldn't -- obviously, we've sequenced our projects around what makes sense. I don't know that I would use the regional lens. It does just so happen that we did start with finance and customer service in the U.S. But in some of the other projects, as I look -- think about the ones affecting gross profit, we're doing that globally and not just in the U.S. So I think it just depends on the project itself. But we are taking a phased approach, and we're seeing really good progress in Phase 1. We expect to start seeing more benefit in the second half of the year from that, and we'll continue to methodically work our plan to deliver on the full $200 million over the next few years.

There are no further questions at this time. I'd like to turn the floor back to Fred Lowery for closing comments.

Thank you, and thank you for your questions. And to conclude, I'd just like to maybe just a quick recap. Our second quarter results demonstrated really strong underlying double-digit earnings growth, driven by internal local currency sales growth and strong margins, combined with some initial value creation benefits, we expect this momentum to continue. We are, therefore, raising our full year 2026 guidance while maintaining a conservative and disciplined stance by excluding any additional remeasurement gains, which had previously been in our projections, thereby providing clarity to the underlying business growth. We're executing against a clear plan grounded in our strong foundation, and we expect to continue to create shareholder value through accelerating growth, simplifying our business and driving operational rigor. This includes our value creation for growth initiatives, which are on track to plan. To sum it up, we're energized by what lies ahead, and we look forward to updating you on our continued progress throughout the year. Thank you for your interest in Henry Schein, and enjoy the rest of the day.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.