Henry Schein, Inc. (HSIC) Earnings Call Transcript & Summary

Hello, everybody. Welcome to our ESG non-deal roadshow with Henry Schein. Before we get started, I'll just introduce myself, which I always forget to do. I'm Allison Binns with the Morgan Stanley Global Sustainability Research Team. And we're just going to begin this session with a couple of disclosures and housekeeping items. So first, for important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have questions, please reach out to your Morgan Stanley financial adviser or sales representative for more information. One more item. I just want to remind our audience that you could submit questions to the Henry Schein team using the question-and-answer box on the web portal right under where you see the slides right now. So today, I'm delighted to be joined by Henry Schein's Chairman and CEO, Stan Bergman; and the Executive Vice President and Chief Financial Officer, Steve Paladino. Thank you, gentlemen, for joining me today. We're going to run through some information that the team has prepared in advance, and then we are going to hop in with questions, both for me and questions from the audience. So with that, I'll turn it over to Stan.

Thank you very much, Allison, and thank you to you and to Morgan Stanley for inviting us. We believe this is a very, very important topic. And really excited to be talking about ESG today. Although we've called it the Henry Schein 5 constituents that make up the mosaic of our success for 40 years, and ESG, became the and stakeholder capitalism became the nomenclature in the last few years. So thank you very much. Before we -- if we can have the next slide, please. Before we go further, these are the normal safe harbor provisions. I believe investors are familiar with us. You can see it on our website. Next slide, please. So just for those that are not familiar with Henry Schein, a very broad view. In 2020, obviously, a year with COVID challenges. And the second quarter where about 80% of our customers were not conducting medicine and dentistry practices, out of business. We did 10 -- just over $10 billion in sales. About 60% of our business is in the dental field, 36% in the Medical, that is physician offices and alternate care sites. And then 5% in Technology and Value-Added Services, although only 5% of sales, a significant amount of our profits. We're in most of the world with affiliates on the ground in 31 countries. We service about 1 million customers. That's about 1.5 million practitioners around the world. 19,000 Team Schein members, including just over 7,600 in the field. Field sales consultants, they provide consultative services to office-based practitioners and people on the phone, telesales representatives. From a CSR point of view, I think the little icons are really important. For 20 years, we've been viewed as one of Fortune's most admired companies. Several years, including the last few years, ranked as #1 in our field, health care products, distribution and related services. Actually, this morning, ethical -- Ethisphere recognized us for the tenth year as one of their 10 -- for the tenth year as one of the most admired companies from an ethics point of view. It's an interesting organization. You can take a look at the work that they do on their website. We've been viewed as a best place to work, specifically from LGBTQ equality point of view, having gained top rating, I think, 100% score for the last 6 years. Last year, we were viewed by Fortune Magazine as it a Change the World company. We're viewed #19. And essentially, for the public-private partnership that we're involved with relative to PP&E and the whole supply chain, I'll talk about that a little bit more later. We've been on the Forbes' most admired employer list and also an S&P 500 company for the past 5 years in the S&P 500 Index. So please go to Slide #4. We just, at our investor call last week, and there were a couple of key items that our CFO, Steve Paladino, will quickly go through with investors that are highlights from the call and also give you a little bit of a view of where we're heading. Steven, please? Steven, you're on mute.

Sorry, everyone. Again, we're on slide -- and I know this is an ESG conference, but we thought it would be helpful just to give a little bit of some of our key financial performance metrics. So that's summarized on Slide 4 and Slide 5. So first, we had record net sales growth for the second half of 2020, which we're really pleased with as our markets have really rebounded very significantly from Q2 when many of our customers were closed, and they're now all fully reopened. The markets in dental remain very stable. According to the American Dental Association, they believe that patient traffic is somewhere at 80% of pre-COVID levels. We also have insurance claims information through our technology business that shows volumes are also continuing to improve. So we feel good that the market has rebounded as quickly as it is. In Dental, we put up into consumable merchandise sales of 10% growth in Q4. And that, excluding PPE products, it was up 5%. And I'd point out that PPE products, although people like to see it with and without a sales book with and without PPE, it's not a onetime sale. We do expect PPE sales to continue at elevated levels as these COVID protocols continue. Specifically, on North America, consumable sales were up 5.3% or 0.4%, excluding PPE. International really had a very strong quarter for us, up 16.7%. And again, excluding PPE, up 11.4%. When we look at dental equipment, there were some unusual items in Q4 related to dental equipment, and we did note that our backlog of equipment continues to grow. And specifically, North American dental equipment was down 13% in Q4. But you could see the reasons, including a prior year difficult comparison, a couple of supplier issues as well as the potential delay related to income taxes of people pushing potentially deductions into the new year 2021 in anticipation of higher tax rates. But we didn't have those things impacting international. And you could see international had very strong sales growth of 6.8% on equipment. Turning to Medical, very similar to Dental. The patient volumes remain very stable with one exception, ASCs, which is recovering a little bit slower. And if we look at Q4 sales of our Medical group, really an outstanding quarter, 48% growth for the quarter year-over-year and 3.6%, excluding PPE and COVID-related products. I would note that within those Medical sales, we had about $270 million of COVID test kits that we sell which really helped our sales growth significantly. Last, on Technology, sales were relatively flat, down 0.7%, and that's really related to a significant amount of our technology revenues are based on patient volume and patient traffic with patient traffic being down, of course, that's going to impact our revenues. But we were very pleased with the strong growth in our Ascend cloud-based system as well as certain financial services. Turning to Page 5, please. I'll wrap up with this slide. Just to cover some margin and guidance items. So first, we do expect PPE and COVID-related sales to remain at higher elevated levels, like I mentioned a minute ago, because the total costs will become standard of care, we believe. And we did have some margin pressures in Q4 in 2020 related to inventory adjustments and supplier rebates, which we expect to improve in 2021. So we feel like that will help our margins going forward. We're also working to mitigate certain stranded costs related to a spin-off of our Animal Health business that we did 2 years ago. And the separation was operationally complete during Q4 of 2020. So we have to work through those stranded costs. And finally, we do expect our sales and earnings to improve as patient volumes improve. Our long-term goal is to expand operating margins, in part through higher-margin products growing faster, including the Henry Schein One technology business, our specialty businesses, and corporate brands. And we did give non-GAAP guidance for 2021. Because of the uncertainty in the markets, we didn't give traditional guidance of a range. What we gave was a floor, which was $3.51, and we felt that, that was appropriate during current circumstances because we wanted to get the uncertainty out of investors' mind on, well, how -- what could the earnings be in 2021. So we gave it a floor for that. So with that as quick comments, I'll turn it back over to Stanley.

Thank you, Steven. So if we can go to the next slide, please. This is a pictorial of what we've done really in the ESG space. Henry Schein, 3 or 4 decades ago, came up with the notion as a company and formalized it of the 5 constituencies that make up the Henry Schein mosaic a success. On the one side is our suppliers. And we want our suppliers to say, "Henry Schein is a company that I really want to work with to ensure that my products are brought to market in the best way possible so that practitioners really understand the importance of these products and really want to work well with our -- with the dentists and the physicians with Henry Schein." On the other side, there are customers. Henry Schein is committed to helping practitioners deliver outstanding clinical care by helping with practice management. And for that, we have many, many tools, including over 7,600 field sales consultants in the field bringing our suppliers and our customers together as Team Schein. There is -- this is really a committed team. It doesn't matter what your background is. It doesn't matter what education you have, yes, in specialty areas we require certain education. It's what you bring to the team. It's pretty much an organization where, if you're committed to our values and you're committed to the team and providing great customer service, you will do well. We have many people in the company that are at very senior levels today, officers that started out in entry-level positions. And Team Schein culture is at the heart of our success. Team Schein is our biggest asset. Of course, we are a public company today. Our investors are critical. We're committed to providing a great and consistent rate of return. Having said that, our investors and even when we went public in our initial road show, we were clear that investors are key. They're one of the 5 constituents that make up the Henry Schein mosaic of success. And we believe the secret sauce in Henry Schein's success is the fact that we are a company that is committed to a purpose, and we are committed to making the world a better place, significantly committed to health care practitioners to reducing the gap in availability of health care, equity and health care, emergency response, and the environment. All these are areas that are incorporated into the charter of Henry Schein Cares, which was established over 20 years ago, was formalized, but has been in our informal culture for decades before that. If you take all of these ideas and you boil them into one concept, the concept is trust, each of the constituents are working with each other to advance the business and satisfy the needs of all the constituents. And the results have been compounded annual growth rate in terms of EPS of 12% since we went public a quarter century ago, and stock appreciation of a like number of 12%. Now if you look at the time line, we are actually now in the COVID period, but going back to 1984, which was in the midst of the AIDS and starting actually the AIDS pandemic or epidemic, shall we call it, we found -- we cofounded an organization called OSAP. OSAP is committed to helping office space practitioners, in particular dentists, understand the infection control requirements. If you recall, I don't know how many people on the call will recall, going to dentist prior to the 1980s, you will not have seen the dentist wearing a mask and gloves, providing infection between patients. OSAP helped set those guidelines with the CDC and has been responsible in many ways for driving infection control. In 1989, we took these ideas and formalized them into the Henry Schein mosaic of success. In 1995, we established the Santa Fe Group, which is a group of very senior prominent public health, academic and clinical dentists, focused on driving the notion that good oral care is good for health in general. The idea of taking care of your teeth will lead to a better quality in life. We know now that there are many studies that have come out since showing a direct correlation between good oral care and reduction in cancer, pulmonary disease, cardiac disease or diabetes and yes, in recent years, obstetrics and also various mental conditions. And we have known that direct correlation between good oral care and good health care, and this was driven by the Santa Fe Group that we helped found. I would say that until the mid-'90s, the dental profession was not committed to diversity. In the early '90s, we became very active in this and convened the conference at LaGuardia Airport that I am looking out of my study right now in New York City, bringing together dentists from diverse communities to advance the profession in dentistry. The profession, I would say, was very divided, and I don't want to sound immodest, but Henry Schein was very key in bringing these constituents together, including co-founding American Dental Association's Diversity Leadership Institute. And if you're looking for results, last year, the President of American Dental Association and the chair of the largest dental convention, were both diverse dental leaders who participated in that conference. Going forward, in 1998, we said, it is critical to contribute to society, but it's critical to get our team to be involved in social responsibilities, and we found that our Back to School program, Holiday Cheer where in the communities we're in, we find ways to get gifts that are important to students in schools so that students in disadvantage -- coming from disadvantaged homes will have the tools they need, computers and the like that their friends that come -- their colleagues or fellow students that come from different environments have and they do not have. This is a very emotional program. It's conducted every year. Of course, we couldn't do it in person this year. And the impact on these students is enormous. The whole concept of our social outreach was formalized in 2001 with Henry Schein Cares. In 2003, we went to the American Dental Association and co-founded Give Kids A Smile. The richest country in the world, a huge percentage of children could not see a dentist. And on a given weekend in February, we arranged for thousands of dentists, well over 15,000 dentists and auxiliaries, additional 10,000 hygiene assistants to provide dental care to over 300,000 children. We came up with our Pink -- our Practice Pink program in 2006. Again, involvement deep in the organization. This is not about only the writing of the check, but engagement by the team. Our Global Reflections, our environmental products for dentists and physicians that was launched in 2010. In 2012, we co-founded the institute or Center for Higher Ambition Leadership, which is a group of companies committed to stakeholder capitalism. It includes some of the biggest companies in the world. We cofounded that with a group of professors out of Harvard. Harvard came out with the Henry Schein, Doing Well by Doing Good study in 2014. I would say somewhere around 2005 at a meeting at the World Economic Forum, we got up and said we need to be careful about the PPE. It wasn't called PPE at the time. Supply chain, it is very fragile. And in 2015, we co-founded the pandemic supply chain network together with the World Health Organization, the World Economic Forum, the World Bank and others, a PPE program, that is a public-private partnership organization such as UPS and Becton Dickinson and J&J are part of this, but it includes today about 100 different companies. I'm not going to say our work was perfect because sadly, we never got enough attention. And we could have avoided a lot of the challenges we had, had the PPE supply chain been more developed prior to COVID. But this goes alongside the work that the World Economic Forum has done with GAVI and CEPI in the vaccine area. We signed up for Paradigm for Parity, equality for women in leadership in 2017. In 2018, we worked with the UN on Humanitarian initiative, co-founded that. And a number of work projects in the humanitarian area and have signed up for the World Economic Forum manifesto and stakeholder capitalism. So I just shot through decades of history, Allison, I hope I didn't go too quick. But if you go to the next slide, please. So we do not actually think of our 5 constituents in terms of ESG. That is a relatively new concept and definition. But of course, what we do fits in nicely into these 3 buckets. I will take you through very briefly and there's a lot more that we could talk about and any investor that has a question, we'd be happy to answer questions. We have an ESG group that's been -- it's called something else before that has been active for a while now at Henry Schein. On environment, we've been committed for over 20 years through our environmental stewardship program, the products that we offer, many of them are focused on the environment through our Global Reflection. We have a recycling program that we're working on, that we've worked on for a while, reducing our electricity consumption. At the moment, in the U.S. DCs but we're taking that global. And of course, reducing our global carbon footprint, we can talk about that as well. On the social side, we have had a D&I initiative for many years. I don't think we called it D&I, but we had our women's leadership network, which really dealt initially with the notion of unconscious bias, not only related to women and is deeply -- an area that is deeply sensitized in the company for a while. We have our LGBT program, the employee resource group, the Pride Group and then our Black Legacy Group as well. And we are just about -- we had announced that there will be a group of Latin -- Latinx that we'll be getting together to found a Latino -- Latinx group. Safety is critical, it's very important during COVID. There is now regular town halls. You can go through a whole bunch of activities that are going on in that area. A key area for us has been a focus on mental health. We've helped over 6 million children through these various programs, donated products, but everything is geared towards the team's involvement. Even Holiday Cheers and Back to School, the company supports it significantly, but the team also supports it personally. It's involving team employment. Oral care is something I mentioned earlier on, Santa Fe Group that we've been focused on. We have been focused on our governance with our worldwide business standards that we published the first time a couple of decades ago. The majority of our Board, our independent directors are diverse. We have a lead director since 2012. And I would say that our senior management and Board are directly engaged with our ESG programs. Next slide, please. On the environment, this is what we want to do in the future, to partner with our suppliers. We've done a lot of that already at our customers, but more. We are actively engaged in these 4 metrics organizations, if you will, committed to the work they are doing. We can get into that in great detail. I want to rush to get to allow questions. But these are all 4 areas that we're committed to understanding, setting goals and advancing. Measuring is very important on the social side. We will continue to be committed to our team, lots of metrics, training and development. Our Board is involved in that as well. Each board member teaches a class 1 or 2 a year, reducing the gap in access to health care is critical, particularly focused on dentistry and particularly in, I would say, in the United States, where the richest country in the world doesn't provide access to oral care to everyone, to children in particular. We're focused on that, of course, in other countries also, but in many countries of the world, there is some kind of safety net. But where there isn't and we're involved -- where there isn't and we're involved in a country where we engage in access to oral care and other office-based alternate care site activities. Diversity and inclusion is something that we will continue to report on. I would say that the D is important, but also for us, inclusion is important, and we are working with different groups to figure out how do you measure success in inclusion because the diversity metrics themselves do not tell the full story. We're doing a lot of work in the working World Economic Forum in other places to strengthen health care system sustainability and yes, pandemic planning, resilience. On the governance -- government side, our senior management and Board are very much involved in our Diversity Inclusion Council. The chair is a Board member, but there's also senior management involved. We're working with all the appropriate rating agencies. And we will be introducing further refinements to our global supplier code of conduct. The basic requirements, of course, they're already relative to labor and environment, but we want to sharpen those as well. So with that in mind, Allison, I rushed through it, there's so much. This is -- in -- this is a deep part of our culture, deep part of the company. And I would say that ESG is this whole alignment of our constituents. It's a single reason why we've been able to show these economic results for so long. So please.

Thank you. No, I appreciate the thorough run-through of the Henry Schein story. And it's actually very rare that I get to talk to a company about how their corporate culture is a differentiator. A lot of companies are like our corporate culture is fine, don't worry about it. But to have someone talk about this is the core of who we are and speak about it externally is pretty remarkable. So Stan, I'm going to start with you, but I'm going to put Steve on notice. He was looking very comfortable. So I'm going to ask you about how corporate culture affects financials. But I'm going to give you a second to think about it before I get back to you, okay? So Stan, I'll start with you. Corporate culture, I think, is certainly underappreciated as a differentiator for creating value, sustaining value over time. But it's also something that has to be intentionally created and maintained. And so tell us a little bit about how you make sure that corporate culture is being sort of evenly managed across the company. So there aren't sort of weird subcultures in the side, et cetera. I know you talked about inclusion and figuring out how well you're doing on inclusion? Are you using sort of employee engagement surveys and seeing how different demographics are experienced in the corporate culture? Can you talk a little bit more about that?

Yes. So Allison, it's a very, very good question. First of all, we do all the surveys. We have a culture survey every 2 years. We do all of that. We have training, of course, things like unconscious bias and other areas in our diversity program, we do all of that. But to me, the single most important attributes that our company has and advances our ESG work is our people and the leadership. A believe in our values and the balancing of these constituents is in the DNA of our leaders. If somebody is promoted, they're not going to be promoted simply based on their technical skills. People will be promoted based on whether they are authentic believers in the culture. And authenticity is required. It's not good enough to comply with data. You've got to be somebody that believes in this stuff because you can get the data right short term. But long term, you will not get it right if you don't believe. So our DNA -- the DNA of our leaders is critical, and it goes all the way up to our Board members. Our Board members, when they're interviewed are understood -- it is understood, they just subscribe to these tenets. So when somebody is promoted, they have been through a thorough, I wouldn't say vetting, because no one gets promoted unless you're known in the company, number one. But number two is, when we bring people on board, we're very, very careful. When we bring on our senior leader, I was talking yesterday with somebody that's coming on board to run -- to be the Chief Technology Officer for one of our Henry Schein One, which is our technology business. That person met 20 people. So we're careful. And yes, it is the technical requirement, but it's all about having leaders that walk the talk. And that are not only saying the right things, but they are committed. And I think that, at the end of the day, is the reason why our culture works.

You've aligned the incentives so that people will believe in the mission or they'll leave probably, right? And this seems part and parcel of your stakeholder capitalism approach. I do think stakeholder capitalism is a little bit misunderstood. And so I would be interested in hearing sort of how you approach it and how you systematically sort of incorporate the needs and feedback of the different constituents you have in your 5 factor model?

Yes. So first, let me just go to the previous and clarify. To me, it's the values that have to remain consistent. Culture, another way, has to adapt. When I joined the company 40 years ago with my associate, my partner, we put the first fax machine into Henry Schein. So the culture, 40 years ago, 41 years ago, is different to the culture now where we're talking about AR, but the values are exactly the same. Henry and Esther, the founders, are still around. Henry worked in the warehouse with the pickers, and Esther ran the bookkeeping department. Yes, we have machines that do the picking today, and we have computers that do the accounting. But those values are consistent. The culture has to change. So a question on stakeholders, I think it is important to make sure that your stakeholders subscribe and understand the business, so -- or your values. To our suppliers, we're quite clear. We don't go to our suppliers and say, "we're doing an audit next week on child labor." Our suppliers know right at the beginning before we even do any business, that these are our supplier code of conduct requirements, don't even think to go any different. And so it's something that is directly correlated. And the suppliers that are the most successful are actually participating in our programs, our various social CSR programs, actually participating. On the customer side, we are seen. We're everywhere our customers are, not necessarily with our sales in saying, "here is the best deal" but our salespeople are involved with Give Kids A Smile. They actually go to the 2,000 sites and participate. Obviously, they don't do the dental work, but they are there to set up the sites, to work with the representative -- with the dentists. Obviously, it does work economically as well because if you're relating to a dentist in that setting, next time you go in with a new product, you're going to have a different kind of relationship with that dentist to one has never worked with that dentist in the field. And of course, the team, we've discussed that. We're regularly engaged, as we discussed earlier on. But with our investors, we've been very clear. Of course, we don't control who's going to buy our stock. But I think many of our long-term shareholders, our shareholders that have bought our stock because of our values. And they've seen that if you have these kinds of values and we implement them on a consistent basis, the return on investment is pretty good. There are a couple of studies that prove this as well. And we really, really work closely with our social outreach partners. We're involved in their Boards. They come to our events. We go to their events. So it's all about this engagement. And it's deep in the company. We have thousands of people involved in professional -- dental professional associations, medical outreaches. So you keep the stakeholders engaged by being engaged.

And I feel like your sort of leadership role in the pandemic supply chain network creation had maybe 5 co-founders. Now you said there's 100, 100 or so people involved in the Henry Schein network.

So it's about 100 businesses, but there are also a lot of agencies, right.

I mean, what's interesting, I have a very strong conviction that companies that manage ESG well and manage their stakeholders well and could incorporate information from sort of diverse sources into how they run their business are often the best at managing tail risk, right? And to you, COVID probably didn't seem like a tail risk, right? But to everybody else, COVID seemed like a tail risk. So how did you sort of identify back in 2015 that the pandemic supply chain network was something that was really critical when you're at the World Economic Forum with the other partners?

We first spoke about this, I think, as I said, in the early 2000s. And to us, it was quite obvious. 75% of the world's gloves came from one part of the world and 75 or more percent of the world's masks came from one part of the world. And if there was a problem in transporting those products or if people got sick, the system would be fragile, not only from the manufacturing of the products, but from the raw materials. So anybody involved in the supply chain would know that. The issue was to get the message out and the challenge, Allison, is in good times when there's no epidemic, people look for the best price and they go and get product on the best price. Today, in the United States, we don't have much in the area of manufacturing of gloves. We did up our manufacturing of masks. But my concern is that what we knew then in the early 2000s, we know today, and that is after the pandemic goes, and everybody's calm again, prices are going to come down. And glove manufacturers and the masks manufacturers in the U.S. are going to close down again. So -- and it's not that we need it only in the U.S., we need it all over the world because we need PPE products available to everyone, not only in the northern countries that have the money to go and buy. And what we did, from the United States point of view, is we send people around the world to buy a product, and we paid a lot of money. And therefore, the people in the developing world couldn't get products. So we need to deal with this. Why? Because pandemics or epidemics do not carry passports. Firstly, there's a moral issue. Why shouldn't people be able to have infection control products throughout the world, that's a morality. But there's also an in light of self-interest issue, and that is for the United States. We can't keep viruses out of the country. There's no passport big enough to do that. And so we need to make sure that PPE is available to everyone in the world. So the bottom line is you know about this now. We know it in the newspapers. Everyone knows how fragile the system is, but we have short memories. And that's the whole idea of the pandemic supply chain network. Can we get people's attention? We got people's attention on vaccines. We set up GAVI and we set up CEPI. Will we keep the world's attention on gloves and masks and cleaning solutions, not very exciting products? But will we keep them at the world's attention so when the next pandemic comes along, hopefully, it won't be a pandemic, but there will be an epidemic of sorts. Will we have enough of these products? Will we be able to rush into the right countries? When-- that's the big question.

Has your management of your supply chain changed at all since COVID? Or were you already prepared for this kind of risk?

Of course, we had to make changes because we had a...

Long-term or short term?

Both, short term and long term. We had a bit of a challenge. And our business is focused on the office-based practitioners, that's essentially dentists and physicians in their practices. And in March and April, as members of the FEMA task force there were 6 of us distributors. We were the only one focused on the office-based environment. We were asked to help provide PP&E to hospitals, not our customers, but that was the place where there was a need. So we emptied our warehouses and we sent products to hospitals, obviously humanitarian right thing to do. But then when our customers went back into business, we had to ensure that they had product. So now we had to go into the open market around the world to buy that product. It was, of course, the right thing to do from a customer point of view. First from a societal point of view and from a customer point of view, and that was pretty expensive. So we had to have people scour the world well for these products. So that was a short-term issue. Long term, we've developed supply chain capabilities to purchase PPE in various markets for that market need. But I will say we are one company. We are not the world. The world is not prepared, and the world is not giving PPE to everyone in the world. And that supply chain issue needs to be addressed.

And you'll continue your work with the supply chain network to hopefully build resilience? Yes?

Of course. Our new work, though, is in the vaccine. Because in the United States today, the program is geared towards providing vaccines to drugstores and to hospitals and to certain -- and to states. But 60% plus of all vaccines in the United States are inoculated in physician offices. There's no provision yet for providing vaccines to regular office-based practitioners who are trusted. And so if you have a question of whether you should take a vaccine or not, who would you go to ask that question? You would go to your physician in the community. And in the community centers, we need to make sure that physicians are getting vaccines. That's the latest thing we're working on from an ESG point of view.

Thank you for that. We have an investor question that I want to make sure we get to. Can you give any examples of activities or behaviors that you stayed away from based on the culture, which I kind of think you mentioned that in your last response, where you had to give up a good financial opportunity. What is the most distinctive aspect in your culture, that is a durable competitive advantage?

Well, the 2 are separate. Have we walked away from something? I can't think of something, maybe Steven can right away or Jennifer, who runs our Henry Schein Cares. But I think we will not do business in certain countries. We will be very careful to make sure that product is used only by health care practitioners. And Steven, would you or Jennifer have any thoughts on business we've walked away from a...

Perhaps suppliers?

Of course, supplier is a given. We were -- during this period of time, we were offered gloves and masks from certain suppliers and -- that we don't normally buy from because of spot market. And we had our consultants do some work in that area and we turned down quite a bit. I mean, that's -- yes, that's a given. Steven or Jennifer?

Steven, it's your turn.

Okay. Do you want me to pile on to the answer to that question or do you...