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

Everybody could take a seat, and then I think we're ready to start. Great. Good morning. My name is Graham Stanley. I'm the Vice President of Investor Relations at Henry Schein. And I want to extend a warm welcome to everyone joining us here in New York. Also those joining us virtually through our webcast. Today, we've got over about 200 people to have registered through our website to join virtually. So we've got a big audience to date. So thank you. This call will be recorded for replay on our Investor Relations page of our website, including the Q&A portion. Today's presentation has been posted on our website and which can also be accessed from the Investor Relations page or by using the QR code on the agenda that's been handed out today. So 2 years ago, we reached out to investors to seek input on our Investor Relations program. And what we heard was that while investors had a high confidence level in the senior leadership of the company and in our track record. Our strategic priority is needed to be more clearly explained. We also heard that investors were interested in more access and insight into the broader executive management team. We value the feedback that you provided and we've kept that in mind as we plan for today's event. So theme for today is broadly creating value for our stakeholders with a reference to our Boson strategic plan. Before we begin, I'd like to start with a reminder that certain comments made during this call will include information that is forward-looking. As you know, risks and uncertainties involved in the company's business may affect the matters referred to in forward-looking statements. As a result, 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. Our presentation will include both GAAP and non-GAAP financial results. And these non-GAAP financial measures are presented solely for informational and comparative purposes and should not be regarded as a replacement of corresponding GAAP measures. A reconciliation between GAAP and non-GAAP measures can be found in the Investor Relations section of our website and at the end of the presentation. We have a full agenda today, setting out our strategic priorities, beginning with a presentation by Henry Schein's Chairman and Chief Executive Officer, Stanley Bergman; followed by a walk-through of our businesses with a focus on our specialty products, technology and value-added services. How we will operationalize on distribution, details of our digital transformation and an update on our ESG activities and goals. Our Chief Financial Officer, Ron South will conclude the formal presentations with more details on the 2023 financial guidance we provided almost 2 weeks ago, along with our long-term financial goals. We reserve time at the end of the event to answer questions and ask that you please hold questions until the Q&A portion at the end of the presentation. For virtual attendees, please submit any questions via the Q&A button at the top right of the event window. After this formal part of the meeting, we've arranged demonstrations of some of our technology, and this is located in the room next to where lunch is served. We hope you'll be able to stay for lunch and join members of our Board and our executive management team. And with that, I'd like to hand over to Stanley Bergman.

Thank you, Graham. Good morning, everyone. Thank you for being here in person, and thank you to those that are calling in on the video. And Graham, again, appreciate it. One of the -- Graham noted, one of the feedback items we got from our Investor Relations report was that we needed to articulate our strategies in a clear way and so we asked Graham and experience Henry Schein executive to spend time working on that communication. So thank you, Graham for, and Graham's been CFO of many parts of our business and our treasurer in the past. I'm going to stick to the script because if I don't, I'll speak too long, and those on the team know that. And this was really a day for you to meet -- Ron, why are you laughing? This is a day for you to meet the team beyond Ron, Graham and I, although we will provide you with some high-level items, but the team that is running Henry Schein day to day will articulate the thoughts that Graham outlined in the agenda. So I usually begin presentations with our team with the notion of our best years are yet to come. And quite frankly, it's not the kind of thing one should say it in the Investor Day, but I really believe it, and I want to share that with our investors today. We really believe that Henry Schein's best years are yet to come. We're very, very excited about where we're heading. Yes, you'll hear about our BOLD+1 strategy, which we articulated in 2021 or 2022, '23 and '24 strategic years. But this program has been put together over a decade and we just want to make sure that our investors understand how everything fits together. We have a great team. We have a great track record of planning from a vision and implementing that vision. And BOLD+1 really is just a continuation of the journey that Henry Schein began decades ago. I want to also take this opportunity before we get into specific investor items to recognize Team Schein for the remarkable work done during the covert period. In 2021, the company shipped $1.4 billion in excess of what we did in 2019 in terms of PP&E and tests. This was a huge effort to procure the product from around the world and actually shipped millions of small packages. And we did this on behalf of governments, and we did this on behalf of our customers. And this was on top of in the year 2020 when we shipped $900 million of these products and in 2022 last year, another USD 800 million. And you'll hear more about that. We expect that '23 will be a more normalized year and certainly by '24. So thank you to the team. The themes for today are for our investors to gain an understanding that we have a leading position in a market that is $100 billion upward. Dental, alternate care in medical and its products and services as well as in the fast-growing specialty markets in dentistry and in the medical arena. We also want our investors to understand our BOLD+1 strategy. Again, this is not a strategy that was suddenly put together. It was built over many years. It will be articulated today. I will not go through the details at this moment. We've spoken to our investors about these details. I'll cover them again, and you'll hear it throughout the day. We do have a proven track record of innovation, product and service expansion. We've built the business on that, of course, business development and successful transformation. If you track the Henry Schein history, you'll see how we transformed from a mail order dental business to what we are today. And we do have a deep experienced management team, highly motivated to execute on this plan and backed by Team Schein that is really committed. The team is committed throughout COVID, and that commitment continues to this very moment. It's built on our values, and a deep culture team Schein culture that is well known in health care. So with that in mind, let me -- just quickly put up the slide, I think our investors are familiar with it. You know our sales, 12.6% and '22. We have 1 million customers around the world. That's about 1.5 million practitioners that we serve. We have more than 22,000 Team Schein members that was at the end of last year. 90 years in business, we're on the ground in 32 countries, but service practitioners around the world. S&P Index for the last 6 years. We've been listed as a most admired company by Fortune for 22 years and in the past 5 years, #1 in health care wholesale distribution. We've been on the Eskom, the world's most ethical companies list for 11 years and recognized as the best place to work by the LGBT community Index. Just quickly, the transformation, it's not a historical lesson history lesson, but this is to give you a feel for how we are transforming the company, but that our transformation is based on a very strong history of having the ability to move the company to match the needs of our customers. So as I noted, we were a leading -- we were the leading mail order dental distribution company when we went public. And we transformed the company into the leading provider of products and services to office-based dental and medical practitioners that, of course, now specifically on the medical side have moved out of the hospital to the office, to the ASC and to the home. In this period of time, we've expanded our specialty products, Dental and Medical, our corporate brands, and we believe in our proprietary products, the leading brand in the world in dentistry and a key brand in the medical world. We have a suite of digital solutions that you'll hear about our value-added services and, of course, the alternate care site work we do in medicine. Net results has been the #1 in dentistry, the #1 in practice management software in dentistry and #2 in the alternate care market in the medical products and services arena, $8 billion dental business, which includes $1 billion of specialty products and $800 million practice management and services businesses, business at a $4 billion medical business. We have all this up and you look at all the proprietary products under our own brands, you'll see about $3 billion of products and services. Of course, we are the largest provider or the second largest provider of many products and the national brands, but a key strategy of ours is to drive high-margin own brand products. The macro trends, I'm not going to read them, you have them, but I will point out that there's a huge movement towards an understanding that oral care is good for general care and that if the general public, each one of us takes care of our teeth who will live a healthier life and a longer life. I believe the public is starting to understand this and certainly providers and governments around the world are understanding this. Again, I will not go through all of these items. You can read them. There's lots of research out and our team are happy to provide you with further information on any of these items. Clearly, there is a significant movement towards digitalization in dentistry and in medicine. And that's where we have elected to invest our time and effort. Of course, we focus on products. And yes, specifically in our specialty businesses, we do a lot of innovative work and we invest in R&D and likewise on our practice management software side and other services. But we have elected to invest a significant amount of resources and time in stringing together the various digital components that provide for more efficiency in the practice and providing better health care outcomes. I think everyone that has followed Henry Schein knows how these trends can impact the future of Henry Schein. We are the market leader, broad customer base, large customer relationships, in particular, strength with large enterprises in the delivery of dental and medical care. Of course, our portfolio is the -- the broadest of portfolios offered to our customer base. And the integrated solutions that we have are, I think, amongst, if not the best. When we worked on our 2022 strategic plan, '22 to '24. We answer 2 specific questions. The first was, how do we remain relevant to our customers and drive the success and how do we communicate to our customers, the products and services we offer. And that resulted in our BOLD+1 vision statement, which is on the screen. BOLD+1 strategy, again, I will not read it because you'll hear it from everyone. The first is to be -- is to build a complementary software specialty services and product businesses that you'll hear about today. And then key to that is the integration of those businesses into 1 offering. Of course, data is important as well. Operationalizing our distribution business around the world, create efficiencies and a better customer experience. You'll hear about that. Leveraging the whole idea is to gain greater wallet share. If a customer is doing business with 1 side of shine or why not the other part. And our idea is for our sales organizations and our marketing organizations to communicate the benefit of doing business with more than just the business area that a particular customer may be doing business with. And of course, the key, the digital driving digital technology into our customers' offices and of course, into Henry Schein, you'll hear about our e-commerce suite. You'll hear about our clinical workflow, and you'll hear about our practice management software and related services. These 3 areas that all come together in a nice way to drive more efficiency in the practice and better health care outcomes. Now the notion of the 5 constituents at Henry Schein, this has been at the heart of our success. There are very few products that cannot be bought from others. We have some patents, but that's not a big part of Henry Schein's story. The fact that we've been able to grow consistently and are the biggest player in many of the areas we focus on is really the 5 constituents that work together. On the top, you'll see our suppliers. And as I mentioned, we are a big supporter of national brands, but we also have our own brands, our customers who we want to help operate a more efficient practice so they can provide better clinical care. Our investors are critical to us. Of course, since we've been public, I think we've delivered to our investors. The goal has been to ensure that we provide consistent growth to our investors and turn that growth into cash flow. And then I believe the secret sauce is our commitment to making a difference in society, whether it's at the professional organization level or at the dental office the communities we're in and the world in general. I believe this is what's kept the turnover of our team, though lower compared to others and is motivating our team in general. Concept, of course, was developed way before ESG was even thought of. So you'll hear about the 3 business components for Henry Schein. Our distribution business tied in with our practice managed software and solutions business and our specialty businesses and how all of these come together. You'll hear specifically on each one of these circles. But more importantly, you'll also hear how this all comes together. I mentioned earlier on, we have an experienced management team. Unfortunately, there will not be enough time to hear from the entire team, the top rung -- the top list of pictures of the 5 people on the screen are the senior corporate team. Jim Breslawski, is here, our Vice Chairman. We've been partners for 46 years. And then you've got the rest of the team, Michael and Mark and Ron. We've got 5 business leaders -- this business group leaders who we hear from, each one outstanding and expert in their own areas. The digital leaders, there are actually Sara Billings also here, who's our Chief Data Officer, but we just couldn't provide time for everyone to address you. And then we've got the corporate leaders that make things happen. And this is an outstanding team, highly committed. Many of the team have been with us for decades, but we've also added new leaders over the past 4 or 5 years that have brought expertise from other parts of commerce. And our Board, a highly committed Board committed to engagement with the team. We have an active strategic advisory committee headed up by Brad shares, and we have a lead director, highly qualified. Bottom line is this Board, many of them are here today is committed to Henry Schein. And I'm told by some of our Board members that have never seen anything like this commitment they're engaged at all levels in the company. But our committees, the 4 committees we have are only staffed or manned or women by independent directors. So with that in mind, the takeaways were leading we have a leading position in attractive markets. We have a strategic plan that has come together, yes, for '22 to '24, but it's been in the works for well over a decade, some fast-growing markets and -- the goal is to provide -- continue to provide exceptional customer experience, and in fact, improve on that. We have a significant customer base practically every dentist does work business with us in one way or another and about half of the physicians in the United States do business with us, lots of opportunity. We've got a proven track record and a deep experienced team with a highly motivated team Schein. So you'll see a short video, and then you'll hear from our specialty business leaders, Renee Willy, the CEO of our oral reconstruction group will start that discussion. And then you'll hear from the rest of the specialty team -- dental specialty team and medical specialty team. Thank you. [Presentation]

Good morning. My name is Rene Willy and joining me on the podium today to discuss Henry Schein's almost 1 billion specialty business will be Steve Bogen, Chief Commercial Officer of our order construction business; and Tom Popeck general manager of our health care specialty business. Together, we have 8 about years of experience in leading dental and other specialty businesses for growth. I joined Henry Schein 2013 from a competitor because I saw a company with great products, but even more importantly, a great culture. And therefore, the potential to grow and someday perhaps become the leading infant company in the world. Over the last 10 years, we have had a significant growth with about USD 700 million pro forma 2022 revenues in implants and Biomaterials. A large part of our growth has been due to our motivated sales force with deep customer relationships and our stable, very stable leadership team and multi-brand strategy. Whereas others have tried to merge brands, we have kept brand separate and retained brand equity. Together with Steve, I lead the infant dentistry and biomaterial business which is our largest specialty business and which we believe recently ascended to become the third largest global player for tool replacement. We distribute our products in more than 890 countries, with the U.S. and Germany being our largest markets. With our manufacturing R&D network in Europe, and in the U.S., we have built a very resilient supply chain, which has been proven to be a competitive advantage in the recent challenging times. With by Horizon Camlog, we established a leading brand in the premium value segment. Our solutions are made by clinicians or clinicians with our development teams in North America and Europe. We are providing really outstanding support, coupled with innovative products and solutions at a competitive price. And this competitive position has allowed us to enjoy strong growth over the past few years, outperforming our peer group in our core markets of Germany and the U.S. And we also participate and you see that also on the slide, in the value segment of the market with Medentis, who has the ICX infant line. This has really further contributed to our growth. Our milling centers, you see here on the CADCAM in North America, that's Volcan and Europe Dedica are a preferred partner for dentists and dental laboratories. Our workloads are available for users with the highest level of CADCAM proficiency as well as those who are seeking to outsource digitally sign scan and manufacturing services. We established one of the most competitive and comprehensive biomaterial portfolios in North America. And with a recent geographic expansion in Europe, very successfully and other countries. In endodontics, we are well positioned globally as the #2 player with our own brands of the U.S. and Edge Endo where we have a robust cadence of product launches and multiple channel expansions. We are very excited about that. And Tom will talk about endodontics a little bit later in the presentation. And that's very important. We have a proven track record of successful acquisitions, resulting in profitable growth, increased brand equity and stronger teams. And we are confident that this will provide additional growth momentum, and we are convinced that we will continue the success story with biotech Dental with whom we signed a transaction agreement recently and who will add to our portfolio, one of the most comprehensive suites of integrated clinical digital workflows. The growth opportunity on this slide, you see the market -- the growth opportunity in implant enters in biomaterials remain attractive. We estimate the market to be about USD 7.5 billion, and we expect this market to remain -- this high-margin business to continue to grow in the range of 5% to 8%. The implant market remains heavily underpenetrated with countries such the U.S. having over 170 million Americans missing at least 1 tooth and about 40 million Americans missing all their teeth, low penetration rates in combination with growing consumer awareness leading to increased aesthetic needs, plus the increasing disposable income really offers very, very attractive and significant long-term growth opportunities. Innovation remains a strong differentiator in this market, particularly to provide best-in-class products, solution and workflows. Workflows for the providers to help them to really make this the treatment easier to perform and at the end to help improve patient outcomes. It is because of these innovations that we expect to outgrow the market and take share. With that, I would like to hand over to Steve Boggan, Steve?

Thank you, Rene, and good morning to everyone. I joined by Horizon in the start-up stage after a successful career in Orthopedics and led by horizons from pre-revenue to one of the largest players in implant industry. But the full acquisition of BioHorizons in 2018 additionally became the Chief Commercial Officer of the Global or Construction Group. We were very pleased to announce the pending acquisition of Biotech Dental this past December. Biotech is a rapidly growing provider of dental implants, clear aligners, unique clinical software with revenue of approximately $100 million in 2022. Biotech dental has also recently established a state-of-the-art, highly automized manufacturing facility in France for the production of clear aligners and dental implants. Software platforms will be a crucial part of our strategy to accelerate digital transformation in dentistry. We believe that adding this to the Henry Schein clinical digital workflow platform, will allow us to leapfrog our competition by digitizing treatment workflows for tooth replacement therapy, clear aligners and other key clinical workflows. We are defining industry standards. Henry Schein's clinical digital workflow will provide a seamless journey for our customers to strengthen case acceptance and improved clinical outcomes for specialty products. It starts with our practice management system, requiring no double entry of data with 1 click that dentists takes a digital image. Henry Schein's imaging software platform works with all digital devices, including digital sensors, intro x-rays and CBCT x-rays. Images taken through our platform are stored in our proprietary cloud solution and are easily accessed by AI for better diagnosis. As an example, AI can help reduce missed disease section by 43%. Once the image has captured the Henry Schein Navigator starts the clinical process. As a first step, the smile design application will show what the patient will look like post treatment, thereby improving case acceptance. Moving to the clinical planning and design phase, our platform allows the provider and choose whether to outsource the case or design the case in-house. Once planned and designed, the provider can choose to have the case sent through our open architecture when in office mill or 3D printer, or outsource the case to a dental laboratory or to Henry Schein. Alternatively, we also offer production services such as custom-milled abutments through Vulcan and Detica at either the office or the lab, the provider has the ability to select Henry Schein materials and products for better patient care. We are creating a multispecialty platform that includes the most important clinical workflows that operates with our practice management software and various digital devices, consistent with our open architecture philosophy. The touch and feel across these workflows will be consistent and intuitive. As more dentists are doing more than 1 specialty procedure, having this type of multi-specialty software we believe will be a competitive advantage. The Henry Schein Navigator platform will result in a superior customer experience, improved oral help for patients and improve access to innovative specialty treatments. With that, I am very pleased to turn it over to Tom Popeck who will discuss our endodontic business.

Hello, everyone. My name is Tom Popeck and I'm responsible for the Healthcare Specialty Group which includes dental specialty businesses like endodontics, but it also includes our initiatives to grow and expand our orthopedic business. My experience includes about 15 years in leading medical device businesses, specifically in dental and orthopedic devices, and I've been with Henry Schein for about 4 years. Today, I'm going to talk about our own brands of Brasseler USA, and Edge Endo, where we design, manufacture, sell and market our endodontic products to general practitioners, and endodontic specialists globally. Our portfolio is pretty broad, encompassing procedural flow from assessing the -- accessing the tooth to operating the canal. It's supporting minimally invasive techniques, all advanced by our bioceramic dealers and all with diverse price points to accommodate our broad customer base. Our products are sold in over 60 countries worldwide. And we see really great opportunities to continue to expand our presence through our well-established Henry Schein sales channels. Endodontic market valued at about $1.2 billion globally is a high-margin segment that we estimate is growing at a healthy 5% to 8% annually. We believe we're well positioned as the #2 player globally and in 2022, we grew organically at a rate that we estimate was more than double the market. Our R&D and manufacturing hubs are very busy. They're gearing up for 30-plus line extensions and new product launches in the next 12 to 18 months. In particular, we're excited about our new technologies in advanced irrigation with our Brasseler all-in-one Triton irrigation solution that reduces chair time procedural steps and our overall irrigation costs as well as our enhanced cleaning, debridement and disinfection of our Edge Pro laser that we recently launched last year. To sum up on dental specialties, you've heard from Renee, Dave and me on our focus and initiatives. Our plans are all aligned in a pretty simple form which is on this screen. We're aligned to win with a few key priorities: first, develop and launch innovative new products, both freshness and new technologies, expand our global presence, and address a broader market with diverse price points and products, leverage our Henry Schein customer base to grow our share of wallet and establish seamless clinical workflow across all of our dental specialties. We're going to do this all while driving our own brand awareness and ensuring we're adding value to our patients, customers, the health care system. We're excited about our progress and our momentum and really looking forward to 2023 and the years beyond. Now I'd like to introduce Christine King and the Henry Schein One team, but first, we're going to view a video on our software solution. [Presentation]

Good morning. It's a pleasure for me to be here this morning to talk to you about Henry Schein One and its capabilities. I'm Christine King, the Executive Chair of Henry Schein One. I've been with Henry Schein for the last 5 years working on this digital amazing transformation. And I have to say it's been a great experience. I've spent the last 4 years in the semiconductor industry, which is kind of far away from health care. But as being a CEO of 3 public companies as well as leading IBM's Microelectronics division. But I have to say health care in the dental space has become even as exciting and challenging from a technology standpoint. Henry Schein One is an integral component and critical component of Henry Schein's complete solution to dental offices large and small. And here to help me talk about Henry Schein One is Ali Hyatt, our Chief Marketing Officer; and Brian Wetherly, who is our Chief International and Strategy Officer. Henry Schein One is the #1 provider of dental practice management systems and also a leader in software and technology, including 90% of dental schools. Our mission is to enable the dental office to focus on their patients while running an efficient and productive practice, which is critical to them. Our software is moving to a highly profitable SaaS model where the cloud is providing better security, scalability and more importantly, interoperability within the system itself as well as other systems outside of our ecosystem things such as electronic medical health records. Our products are anchored by practice management software, which you can see on the slide. It extends to patient relationship management, where we help with scheduling and patient communication, patient demand generation, bringing patients into the office, revenue cycle management, which is critical processing claims and payments dental analytics, which we have a demo of in the other room, which help the dentists provide a more efficient practice and then clinical workflows, including the exciting advancement of artificial intelligence and digital workflows. And Brian, would you please join me to talk a little bit more about this capability.

Thank you, Chris. So my name is Brian Weatherly, and I've been in the company for -- in Henry Schein for 18 years, and prior to that, built a practice management system and took it public in the international markets. Unique to the Henry Schein One advantage is our seamless integration of our full suite offering. No one else can offer this. For the patient, this integration allows a smooth end-to-end journey beginning with the practice website, online booking, automated reminders, form completion and bill payment. Because we are a fully integrated suite, we cover everything a practice requires. We fill schedules with new and existing patients. We help patients return and remain loyal to their dentists. We reduced the challenges of insurance processing and payment collection. Our analytic tools and business coaching help doctors understand their businesses and where to focus. We serve all kinds of dental businesses, including specialists, do dentists dental service organizations, government and academic. And Chris?

Thank you, Brian. We stand alone in the breadth of the products that we offer and our ability to seamlessly integrate these functions has led to $550 million of revenue in 2022. This is a large and growing market. The dental market technology is growing at about 8% to 12% off a $2.3 billion market size today. Sales of software is accelerating this growth based on greater share of wallet and innovative content. Driving our future growth are, first of all, additional capabilities being integrated into a single solution. While our singles and initial success was in solo and small practices, this is expanding into the large DSOs who we have trusted relationships with and who rely on us for a robust and reliable system that they need in order to serve hundreds of dental offices in reporting as well as managing a large number of patients. Third, we're integrating new and exciting technologies such as analytics and artificial intelligence, both of which you can see demos for in the next room. And of course, we continue to use Henry Schein's deep market channel, which is a capability that our competitors don't have. So now, Brian, could you talk a little bit more about this capability.

Thank you, Chris. In our fast-moving world, we're working closely with doctors to meet their evolving needs. Patients increasingly demand greater understanding, access and self-service. They expect to access health care in the same convenient way they enjoy restaurants, airlines or banking. Meanwhile, as dentists bugged with staffing and insurance payments they demand and welcome the automated end-to-end business solutions we provide. Our products help practitioners reduce risk, increase revenue and improve care. This is a key success enabler as the market continues to consolidate into multiple practice ownership and large dental service organizations. It's my pleasure to welcome Ali Hyatt to the stage.

Thanks, Brian. I'm Ali Hyatt, and I recently joined Henry Schein One within the last year as Chief Marketing Officer. Joining with many years of experience in the digital health space or large group practices, health systems and payers and in driving brand transformation. I was excited to join Henry Schein because of the amazing culture but also because of the opportunity to drive dental transformation. Our open architecture and interoperable solutions allow us to impact the provider and patient experience, resulting in outcomes that drive growth, profitability and better patient care. This slide shows a sampling of customer testimonials from solo practices to DSOs, achieving results that result in higher growth and profitability. Through patient acquisition and engagement solutions, dental offices acquire new patients driving top line growth. Through revenue cycle management and profitability coaching, the offices get paid more. And through integrated practice management software, productivity can drastically increase. Finally, through analytics, practices and DSOs can see the value and measure the metrics that matter. Driving results for these key outcomes is what drives success for our customers. Here's an example of how that integrated suite of solutions drive success in the growing DSO space. Elite Dental launched our cloud-based solution, Dentrix Ascend, to their 96 practices in the U.S., helping them to scale effectively and ensure consistency and practice management. They use our Jarvis analytics to measure the metrics that matter to them. They use e-prescribe for prescription management, driving better clinical efficiency. And they benefited from TechCentral, our hardware and IT support services to ensure a successful rollout to all their offices. By driving ease of use for all of their dentists, the practices can focus on clinical care and service. They're also a great customer on the distribution side, a 1 shine success story as their comprehensive use of software solutions increases the distribution, purchase volume. I hope it's clear how we win in this space. One is through advanced adoption of technology, including Software as a Service as dentists move to drive higher single digit to double-digit growth as they expand and adopt this technology. With Henry Schein, our customer relationships are key. We have a market multiplier with our HSD colleagues and their deep relationships. We're also the only company with such a broad portfolio of integrated interoperable capabilities that win with DSOs. And finally, we're working to transform dentistry and patient care through technology, which will make the digital workflow a reality. I'd now like to hand it over to David Brous, who's going to walk through some of our complementary value-added services.

Hi, everybody. Thank you, Ali. My name is David Brous. I'm responsible for our strategic business group, and I've been fortunate to be at Henry Schein for 20 years. I'm honestly, I'm really excited about today. I know that we have a set script, I'll be just 1 second. I've had a chance to grow up in this company. I started in the business development group. You'll hear a little while later from Mark Mlotek, our Chief Strategic Officer. I spent several years abroad living in Europe and in a little while, you'll hear from Andrea Albertini, who runs our International Distribution Group. So thank you for taking the time with us this morning. I also have a chance to work with many of our manufactured businesses in many of our services platforms. And that's why I'm happy to be here today. In this group, we manage many of the company's brands, as well as our services, and this includes our $1 billion Henry Schein brand portfolio of products. This is a leading assortment of high-quality products available at affordable prices with outstanding customer service. But right now, I'm also excited to share the stage with Natalie Westfall. Together, we are going to focus on Henry Schein's value-added services and our activities in that space. As you've heard from Stanley previously and in other presentations, we've made a commitment to focus on high-growth, high-margin businesses, and our value-added services segment is a perfect example of that work. In the last few years, we've invested both organically and through acquisitions and services that help our customers run more efficient and profitable practices as they focus their time on high-quality health care. By offering these services, we believe that our customers associate more value to all that Henry Schein has to offer, which leads to higher customer satisfaction and to higher loyalty. We have a long history of offering customers a wide variety of services --sorry about that. We have a long history of offering our customers a wide variety of services. In our Financial Services segment, we have practice financial, patient financing and even equipment financing to our customers can grow their practices in a financially efficient manner. Our practice transitions platform offers valuation and brokerage services that help practitioners either buy or sell their practices. As we continue to build our portfolio we've identified additional areas of needs for our customers that support their and there for our growth. A few examples of this include the following: First, revenue cycle management, including enhanced insurance reimbursement. I'm going to spend a little bit more time on that one in a moment. We built an education platform that helps our customers improve operational success and clinical outcomes through education, consultation, and they do that through clinical technology and business solutions. We've also recently invested in the fast-growing market of remote patient monitoring for medical professionals. This includes our recently announced distribution agreement with [ Remedy ] and you'll hear a little bit about Remedy in the services section that's back a couple of doors down. Here, we help our customers better and more efficiently treat and manage chronic diseases by providing technology to ensure access to key patient data on a regular basis. And now over to this page. We partnered with eAssist in June of 2021, the business has had terrific growth. It's currently on pace that by the end of this year, the business will triple in size from its revenues in 2020. eAssist has quickly grown into the largest provider of outsourced dental insurance billing in the country. In short, eAssist takes on the heavy lifting work of billing for the dental practice making sure that our customers collect what they are rightfully owed from insurance companies. We provide this through a combination of technology and highly trained staff of former office managers. This complements our service that helps our customers negotiate contracted rates with insurance companies a service, which we recently expanded with our recent investment in Unitys. With this combined platform, we have a powerful service that enhances the billing function in a dental practice. These activities help increase cash flow while reducing stress for our customers. This creates clear value for our customers and drives strong growth and margins for us as well. Thank you for your time. I'd like to introduce my friend and my colleague, Natalie Westfall.

Thank you, David. Hi, everyone. My name is Natalie Westfall. I'm Henry Schein's Vice President and General Manager of Financial and Strategic Solutions, and I've been with the company for 15 years. Today, I will be talking to you about our financial services and practice transitions businesses. We have a team of experienced team Schein members and a breadth of products and services that support our customers through all phases of practice ownership. Our business operates at scale, responsible for $450 million of originated transactions per year, and we translate that scale into fast, easy and reliable outcomes for our customers. Key investment decisions and practice ownership often come down to affordability and Henry Schein Financial Services helps meet this need. We work with third-party lenders to provide competitive leasing and financing for equipment, as well as leasehold improvements, working capital and other costs associated for a practice start-up or expansion as well as financing for practice acquisitions. Throughout the practice life cycle, we provide additional financing to help our customers expand and grow their practices. In addition to lease and loan products, we provide additional services, including payment processing, a business credit card, and most importantly, patient financing to help promote better access to care. We've had consistent and abundant access to capital at market competitive rates for over 20 years. When it's time to bring on a partner or sell a business, our experience practice transitions team provides support through practice valuation and brokerage services. We have transitioned consultants nationwide who are responsible for working with customers to appraise and list dental practices for sale. We actively promote these practices and share new listings electronically on a real-time basis with our preferred buyer network. As you can see, we provide a vast array of products, services and support meet all of our customers' needs and strive to be the best partner through the key milestones in their careers. Our value-added services are what truly differentiates Henry Schein and help to advance our BOLD+1 strategy. To win, we will build on our already strong foundation by expanding our products and services to meet customer needs. We will provide an exceptional customer experience at scale to our customers in the midst of stressful moments in their lives. We will continue to innovate and introduce new services in high-demand businesses and help to predict new customer needs. Finally, we will continue to let our customers be our guide, and we'll ensure that we are focusing on services that help them operate more efficient and profitable practices. By doing so, we believe that our customers associate more value to all that we have to offer, leading to higher customer loyalty and deeper engagement across all of Henry Schein. Thank you for your time today. I will now hand it over to Brad Connett, CEO of the North American Distribution Group.

Thank you, Natalie. Good morning. I'm Brad Connett, I'm the CEO of the North American Distribution Group. I joined Henry Schein in 1998 through an acquisition. So 26 years come to September, I'll be with Henry Schein. And I've been in the industry since 1981, so 42 years in health care industry, primarily in the medical side of the business, I joined Henry Schein from a medical distributor and I'm very involved in the industry trades. I've been on the Board for [ Heita ] and most recently was happy to serve, amongst other members of Team Schein members for the White House task force during the pandemic. So -- we're really proud to be here today. And I'm really proud to be part of this team. This is the leadership team for the North American distribution group and our international distribution group. It's in our DNA. The roots of Henry Schein is a distributor company. For 90 years when Henry and Esther started Henry Schein and a pharmacy in Queens, they distributed products. So it's at the root of what we do. And as you see as we're making changes to our high-growth, high-margin strategy, the root of where we can touch customers is the power of distribution. So we'll talk about that in the next 20 minutes together. Honored to be part of this team, honor to be part of what we've done to the health care providers around the globe. We've been there for them as they've navigated some really complex changing environments. For over 90 years, we've been there at the forefront of change in the landscape of distribution and in the provider community. Our mission has always been one simple thing, and that's to keep the customer center. Center of what they do, what their complications are, how they're navigating change, and we've always become a trusted relier to our customers. So that we offer differentiated services, integrated solutions, really encourage you to do it to the demo room which is across the whole, I think, that way. And of course, as you're listening to all the various things we are creating from a technology standpoint, the power of One Schein we're going to get to leveraging that into our base is really, really a powerful message. Today, in the next 20 minutes, 15, 20 minutes, we're going to focus on the O and the L of BOLD+1. The O is operationalizing on distribution and the L is leveraging One Schein. So O, operation and 1 distribution, L leveraging Henry Schein. These priorities are designed to focus the organization to be more efficient. We have to operate more efficiently all the time and we've always strived to have a continual business improvement process as well as advancing our robust portfolio of solutions, which we're just beginning to hear about, and we'll hear more about this morning. So during the next 20 minutes, our goal is to really give you an overview of our distribution business globally, share why our customers rely on us? what is the aha? Why do they continue to buy from us? Why are we winning in the marketplace? And finally, we'll finish with a panel discussion on distribution in general. So we'll start with North America. As the slide shows you before above you around you, it's a big business. We are a big distributor in North America. It's comprised of a U.S. dental business, a U.S. medical business and a Canadian dental and medical business. Last year, it came in at $8.3 billion. You see the split between the 2 on revenues. It's a very important distinction that we are the only distributor that services both markets. This is very important as we're finding in a world now where the lines are blurring and where care is coming together, as Dan mentioned, the importance of oral health care to overall care. Whether they're integrated delivery networks in this country, private equity firms investing in their DSOs or investing in since they're also investing in medical. So we are the one distributor that covers both markets. Very important distinction. And we're the only one with the size that has the scale to be really frank up to do what we need to do and invest in the future, which is invest in digital transformation, invest in our global e-commerce platform, which we'll hear next and other digital transformations that we're going through. We're leaders in providing essential services to our customers. There's not another distributor that has more technical service people on the road, helping our customers stay in practice, not one distributor with as many people and as many services that we offer to keep our customers in business and running a better practice. A better practice both for their profitability, but also for patient outcomes, very, very important distinction. So our strategy in North America is to continue to expand. We have a very strong base, but we really believe the market will grow. The $30 billion market addressable market you see on the screen above will grow at rates you'll see and I'll talk about in a second, but the real primary growth factor for us is where care is migrating to. Care migration is moving outside the 4 walls of the hospital or the more expensive settings that are traditionally has taken place. More procedures are being done outside the hospital, more procedures are being done in ambulatory surgery centers and oral maxillofacial services and dentistry with the digitization of dentistry more procedures will be done share size. So our market will grow significantly more than the health care and general grow. And you'll see that we project 2% to 4% on the dental side and 4% to 7% on the medical side. Our 3 areas of focus for North America from a strategic standpoint is on our segmentation strategy. We are keenly aware of the consolidation of our provider base. We've lived it. In medical, consolidation started taking place 15 years ago. We completely reinvented our go-to-market strategy to serve a larger, more sophisticated customer. I won't say we've seen the movie, but we have. It's not a rerun, but it very well could be a sequel. Provider consolidation will continue. The DSOs are buying dentists throughout the country and in Canada that will continue at what pace to be determined. But we know how, and Nancy will talk about it later, how to serve the larger, more sophisticated customers. The segmentation strategy is very, very important. Again, we were at the forefront of this 15 years ago in medical. We know what we're doing. We have an omnichannel approach, which is our second key part of our strategy, is that we touch our customers. We meet our customers where they want to be touched, how they want to be touched and where they want to be met. We have an omnichannel approach, not just a traditional sales force. We have a great sales force, more people on the street than any other competitor but we also have a telesales channel, a digital revenue channel, a digital marketing channel, website, in a number of different ways that we integrate the many touch points that we service our customers through technology, CRM and contact management software so that any time a customer is touching us, everybody that's involved in that customer knows who, why and why what is happening with that customer. And lastly, we must be more efficient. Distribution is a tough business. Not a lot of money to be made in it, but if you're smart and you operationalize it well, as we have done for many, many years, we will succeed, and we will succeed. So that's our North American strategy, and I'll turn it to Andrea for international.

Thank you, Brad, and good morning, everybody. My name is Andrea Albertini. I joined Schein 10 years ago, and before Schein, I was the CEO of medical and dental equipment manufacturer. And Schein was my biggest customer. So I knew the company, I knew the people in the company. I knew the capability and the value in the company. So I was humbled when they asked me to join the company, it was an easy decision and here I am after 10 years. And today, I lead the international distribution group. The international distribution group consists of all the distribution businesses outside of North America. We serve practitioners all around the globe and we have filled operation on 30 countries going from Europe, Middle East, Africa, Asia, Australia, New Zealand and Brazil. And we provide to our customers they service the products, the solution they need to operate in effective parties. We do it through an omnichannel sales and market approach that rely on the largest technical service network in the industry. Last year, we did USD 2.6 billion. So let's see what are the strategies to grow this business. I would summarize it in 2 main focus areas, 2 main pillars. On 1 side -- on 1 side, we have the growing segments of the market, like DSOs and mid-market, mid growth, and we have the growing markets like Brazil. On the other side, on the more mature market, we want to continue to gain market share. We want to continue to grow faster than our competitors like we have done over the years. And how do we do it? We do it through a superior customer experience. We do it through the portfolio, the vast portfolio of services and products that we have and in our product portfolio, we have the products from our supplier partners, but we have also our own brand, our corporate brands, and we do it through investment in e-commerce. And finally, as Brad said, we are a distribution business, so we have to focus on our efficiency. So we have organization design, we have tools, we have projects to continue to improve our efficiency, but always keeping in mind the customer experience. So this is the overview of the international distribution group. And with this, I turn it to Michael.

Thank you. Good morning, everybody. I'm Michael Ettinger, Chief Operating Officer of Henry Schein. I've been with the company almost 30 years. Among my responsibilities is oversight of our industry-leading supply chain, which supports our team's efforts with a focus on effectiveness and efficiency. The size and breadth of our supply chain is unrivaled in the markets we serve, reflecting our expertise and the flexibility of our distribution capabilities we successfully service a diverse set of customers from government, FQHCs and schools to independent physician and oral health care practices, first responders, IDNs, DSOs and labs. I'd like to focus on a few key statistics. We ship approximately 157,000 packages a day, 157,000 packages a day. 99% of orders received are shipped the same day. 90% those packages are delivered the next day. Our order accuracy rate is 99%. And our on-time delivery rate is 97%. We do all this through 29 distribution centers throughout the world. We also operate 19 manufacturing facilities throughout the world as well. Building on our dedication to customer experience, we believe our supply chain network gives us a competitive advantage. Now I'm going to turn to the panel discussion.

Great. Thanks, Andrea. Thank you, Michael. And joining on the panels also Dirk Benson and Nancy Lane. They'll both introduce themselves as they have their turn to answer question. So on the panel, as you're looking -- we're not an old panel, but we have a lot of experience, 150 years of experience on this panel in health care. So we have a very tenured experienced management team. That's very critical, and I'll talk about people a little bit later on in the presentation. First question and really a discussion point, and we'll be going back and forth with some different people. But -- we really want to talk about our key drivers in 2023. And Andrea will start -- Dirk will start up -- I'm sorry, for the North American part, and Andrea will pick up for international. Our key drivers for 2023 growth. Dirk?

Thank you, Brad, and good morning, everyone. I'm Dirk Benson, and I started as the Chief Commercial Officer for the North American distribution group in May of 2020, bringing approximately 30 years of distribution experience in health care. I'm very excited about, number one, being with Henry Schein because of the amazing culture that has been created here. But maybe even more so the opportunity to grow revenue and increase efficiencies. We will do that. We will succeed by focusing on a few key drivers. First is segmentation. And you mentioned this, Brad, and I'll get a little bit more specific. We're going to segment out and have been segmenting out our customers to really focus on those areas that we can grow the fastest. In our Dental business, we are -- have a very, very strong position in the largest DSOs where we are the primary supplier for 23 of the top 27 DSOs in the United States. And we're going to take that strategy of how we grew that business to the next level, the next segmentation, where we've identified approximately 5,000 large group practices that we're going to focus on. And we're doing that. We've created a national executive level selling team that will focus on that very, very important key area for us. On the medical side of our business, we're still seeing a lot of consolidation. And so we're focusing very much on the upmarket. Upmarket for us means ambulatory surgery centers, integrated health systems and large group practices. Number two, we will continue to leverage One Schein, meaning our strategy of bringing all of our solutions to our customers, including technology, services, Specialty products and distribution to increase and increase the share of wallet for those customers. And then finally, we're going to continue to look around the health care continuum for areas that we can grow in. and we will invest in those, and we will focus on them. Specifically, I'm referring to the home care business, which is as you may know, the fastest-growing area in health care, and it allows us to follow our patients as we continue to follow our patients as they are spending more and more time in the home.

I can follow up on the international markets. And similarly to North America, we segment our customers. And the goal is to define the best value proposition, the best business model to meet our unique customer needs. The focus is on our customers. We want to bring them all the power of One Schein and increase the share of wallet because we have a huge customer base. But let's see some specific priorities for this year. The first one I want to mention is our global e-commerce platform, a new project, very exciting project that will help to meet the increasing trend of customers that are demanding to deal with us through e-commerce or virtually. I will not spend a lot of time on this project because my colleagues will walk you through the project later. But I wanted to mention it because it is an exciting priority, and we will go live for the first time in the U.K. later this year. Another area of focus is the development of integrated value-added solutions for our customers. The first one is around digital dentistry. We provide to our customers, all the products and services they need to digitalize their practice. Another interesting solutions, we launched in Europe recently, and we will launch in Australia is called Practice screen. It is a series of initiatives and products that support our customers' effort to become more sustainable, so they can focus on providing good care. And of course, we said before, we need to continue to enhance our productivity. We have some initiatives that I want to mention, like consolidating warehouses or consolidating office spaces. That we will execute this year across different geographies. And the last point I want to mention is we are looking to expand our medical footprint outside of Europe, and we focus on geographies where office-based physicians are growing faster.

Great. Thanks, Andrea. Thank you, Dirk. Just to kind of summarize One distribution, it's really to focus our teams, focused on enhancing sales, focusing on enhancing that superior customer experience. So the so that we win them over for competition and focusing on operational efficiency. We're going to turn to One Schein. And again, this is an external strategy. One distribution is internal. Externally, when you see all the cool things you're going to see in that demo and all the things you're hearing about when you think about our footprint of customers worldwide, over 1 million providers we reach over 1 million providers, 0.5 million in North America alone. And to leverage that with all the solutions and value-added services we have in our creating and building is a really powerful story. So we're going to turn to Nancy to talk about our One Schein strategy.

Good morning. I'm Nancy Lanni, VP and GM of our North American strategic accounts. Really excited to be here. I joined Henry Schein approximately 30 years ago through -- one of the early acquisitions that Henry Schein made many, many years ago. So very excited to be here. I've spent most of my career at Henry Schein really focusing on the medical side of our business, supporting our really large accounts. So one Schein is really our customer success strategy. It's really looking at what opportunity do we have in working with our largest accounts in both medical and dental and what are those products and services and education and solutions that we can focus on that's really going to drive growth for our customers and the support that they need to continue to grow in the large account area consolidate. Today, I currently lead the combined North American large customer business, which is responsible for the corporate management today of over 2 billion of business and it's growing rapidly. That includes the medical and dental large account focus. Our One Schein strategy, again focusing on the portfolio of the BaaS portfolio of services that we offer. We also, in May of 2022 formed a new team called the North American strategic account team. We call that NASA and that team is really focusing on growing our largest medical and dental customers. So we're going to accelerate the -- really that executive selling effort to solidify those relationships, get a deeper relationship and to integrate all of our different specialty and technology services to those large accounts. The team is really focused on retaining and growing existing business, but also developing relationships to gain new business in the large account arena. We've successfully done this, as Brad had mentioned and Dirk had mentioned really through the kind of growth with our large medical customers and through the large DSOs. And now we're going to implement this further to have that same service for all of our large DSOs. So we're very excited about having the team that we built over the last 9 months to go to market to do that exactly that. So customers continue to consolidate and grow through domestic and international growth and through expansion of new services like oral surgery. And when you look at our team and the teams that we're building to support that oral surgery, for example, we have an entire team dedicated call our surgical solutions specialists to just help dentists or DSOs integrate oral surgery as an extension of their services, we do this already and have done it on the medical side to enhance our growth in the surgery center space. So the efforts of this team really advanced 2 key elements, as Brad had mentioned, of the BOLD+1 plan. So we're operationalizing One distribution strategy through increased efficiency and growth. And then we're also leveraging One Schein to broaden and deepen those relationships with all of our large customers.

Thanks, Nancy. We've been talking a lot about customer experience. And really to talk a little bit more about it in specifics. Dirk and Andrea are both going to speak a little bit to customer experience. Dirk?

Yes, I'll start. I think if the question as I see it, is kind of what differentiates us. There's a lot of things I think that differentiate Henry Schein, but I'll give you 2 that I think are super important. The first is we really do pride ourselves about being a solutions provider and not just a product seller. And I know that, that's said a lot. But we train our sales force to identify the problem with our customers first before making any kind of a product or service recommendation. And a lot of times, we find that our customers are not looking for products at that time and they come to us with practice management problems or revenue cycle management problems. And that leads us very quickly into offering a solution of Henry Schein One or eAssist or Units. I know that you heard about those solutions a little bit earlier, very different than just being a product seller. Another way is we have a very robust Henry Schein brand product portfolio. Yes, you've heard of that. But we are also a key partner with many of the manufacturers in the dental and medical space. And that allows us to be really vendor agnostic. And as we're taking our customers through their buying journey, that eliminates an awful lot of the anxiety that they have about how to choose products, big differentiator between us and our competition.

What you said there really applies also to international. The majority of what you said is valid for our markets, too. I just want to underline that our omnichannel sales and marketing approach allow us to reach the customer where they want, how they want it. And this is supported by this large -- or the largest technical service organization that I'm very proud of. I just had one point that is probably specific only to Europe, that is important and is that we are the only pan-European distributor. We cover all the countries and this is very important when we think about the growing brand, the growing segment of pan-European customers. So we can offer them the same service, the same product, and we can deliver to them in 24 hours across all the different geographies.

Thanks, Dirk. Thanks, Andrea. We're going to turn to the operations and the supply chain side of our business. I've been in this business, I said, it 42 years. And often, I think distribution is sort of taken as table stakes, you pick, you pack, you ship. I can assure you, it's not table stakes, and we are the best at what we do. Stan mentioned what we did during the pandemic. We're very proud that we delivered over $1.5 billion worth of products to frontline providers fighting the pandemic. It was not easy. It was a complex situation a lot of hours went into our distribution teams and our procurement teams and sourcing teams deserve an enormous amount of credit for what they did during the pandemic. So Michael, I'll turn to you for our operations and supply chain.

Thanks, Brad. And our focus is really as an organization to be customer-centric. And our supply chain has the same methodology. We talked about competitive advantages and I'll just go through a few of them right now. Our operations -- distribution operations are based on a small pick-pack operation. And to understand that, while we ship a lot of full cartons majority of our customers don't want a full carton. They want onesies chooses and they want us to take 7 different products from 7 different manufacturers put them in a box and get it there efficiently, effectively on time. We spoke earlier about our order accuracy rate, 99%, we talked about our ability to send out shipments a day that they received, again, 99%. These factors are very difficult to do in the scale that we do it. And this allows and builds trust with our customer knowing they can place an order, they can get it accurately, they can get it on time. And it drives customer experience and customer satisfaction. Second advantage, we believe, is we're unique that we're able to ship Med-Surg, Arma and vaccines all in one box. Again, customer-centric, making it easy for the customer, take that product, put it away, saving them time leaves us of administrative burden. Third item is we have the largest assortment of products in the industry. We inventory more than 300,000 SKUs, different SKUs. We also have the ability to order special items and have them drop shipped to the customer. This gives us the flexibility to service our customers anything that they want, anytime they want. The last one I'll mention is our network of global suppliers. This gives us an advantage of bringing new products to the market quicker and more efficiently.

Great. Great. Thanks, Michael. Our dental equipment business is a really critical part of our business. And -- we have a strong order flow and order book, as Ron reported in our last call. So I'm going to turn it Andrea and Dirk to talk about our equipment.

But on equipment, we have had several strong years, most recently driven by the postpandemic bounceback by government incentives in some geographies. And why we believe that this trend will moderate, will normalize. We remain very bullish about the equipment business. And this is mainly because of digital technology. The adoption of digital technology is needed for dentists, for lab because of the digital workflow and because they needed to remain efficient and to provide good quality of care. Think about iOS into a scanning. In for cutting is moving from the early adoption phase to the mass market, and this means huge volumes in the years to come. And similarly, the 3D printer technology. Yes, in the short term, we will probably see a shift from high-priced meals to lower price 3D printers. But the mass adoption of this technology means huge volumes in the years to come. And we already see this trend in our industry-leading lab business in North America and Europe that continue to grow also thanks to digital technology. And this is one trend, one trend where we have all the solutions and the products to support our customers. On the other side, we also see -- still see geographies or market segment where the new practices continue to grow, and this is a good trend for traditional equipment. So 2 good trends where Henry Schein is very well positioned to get benefit from.

And I'll add just to a couple of the comments that Andrea mentioned. In North America, our equipment demand has been very, very strong coming out of the post-COVID shutdowns, some of that is due to pent-up demand. Some of that was due to just money being very cheap for dentists, but we are seeing those orders normalize. But I think it's very important to note that in addition and to complement our equipment business, we have a world-class, very large national team of service technicians that handle all of the installations, all of the networking of the equipment and all of the repairs which almost eliminates any downtime in practices and really reduce stress. And I believe that, that team is a big reason why our equipment demand is so strong. I think a good reinforcement of that is that so many of the national DSOs have come over to Henry Schein and are using us for their equipment because they know that we can service them nationally with this great team.

Great point. Thanks, Dirk. Thanks, Andrea. We're going to turn to the U.S. Medical business for a second. We've had some really successful quarters as you've seen high single-digit, low double-digit growth for consecutive quarters. Dirk's going to comment a little bit on the U.S. medical business.

Thank you, Brad. And I'm glad we're talking about the medical business because it has been one of the fastest-growing areas of our distribution business. And we continue to see that going -- continuing in the future. We're continuing to see more and more procedures being pushed out of the hospital and into the outpatient setting and that will continue on in the future. And we're also seeing the consolidation of the market. And because of that consolidation, we have really focused our teams to call on ambulatory surgery centers and integrated health networks as well as large group practices. And we've got a distinct advantage in there. Our expertise in the non-acute pick-and-pack distribution gives us a distinct advantage over our acute care competitors where we compete in that space. Second of all, I think another area that is going to continue to grow very rapidly as point-of-care testing. It is now widely adopted in the industry to be used in physician offices we will leverage our existing dedicated lab service team to continue to grow that space. I'm very excited about the future of Medical.

Great. Great, Dirk. Okay. Well, I trust this was an informative discussion on our global distribution business. It's absolutely important to our customer base, of course, and critical to our BOLD+1 strategy. Before we leave, I want to ask each panel member what excites them most by 2023 and the future. Nancy, do you want to start?

I will. As consolidation continues, we are seeing a greater effort to integrate dentistry and medicine. And I think I'm very excited about that concept. We're looking at -- you look at some of the larger DSOs like Aspen, for example, that has now integrated medical, which is really ultimately going to drive more patients to their dental clinics. And then in emerging markets, like retail health, think Walmart or employer health where they are providing medical and gentle services for their for their employees. That's a great opportunity for Henry Schein, and we are the best positioned to be able to support what they're going to need in both medical and dental. So that's what I'm excited about.

Brad, I think we will always be a key partner to many of the manufacturers, but I am very, very excited about the growth of our Henry Schein brand of products. I think that puts us in a position in the future to be extremely competitive against other distributors.

I'm most excited about our e-commerce investment and the opportunities it will give us to better serve our customers and reach new customers and about digital technology. I spoke about the opportunity we have to benefit from this trend.

So as a economist at heart, all these opportunities present the greater sales, which we expect to get greater sales for an economist means lower marginal cost. You can do the math.

You have it. So I would say our track record, and I know that's not an indicative of future success, but one thing we have in our culture is to win. We are one competitive group, and we will win. This is the leadership team you're seeing here. I'm most passionate about our people. We have a very disciplined talent assessment program that we run every year and a very disciplined success on. We have a great team. We've got a great management team and people make the difference. Thanks for listening. We appreciate it. I'm going to turn it over to [ Mark ] in brand.

Well, thank you, Brad. Hi, everybody. I'm Mark Hillebrand, and I'm the Chief Digital Revenue Officer for the company. which means I'm responsible for our e-commerce sales and how we sell products through digital channels. Before my time at Henry Schein, I ran the professional medical and dental product categories that Amazon and I spent the last 5 years helping Henry Schein built a leading position in digital sales and marketing. I'm thrilled to be here in this slide 5 years. I joined Henry Schein because of the amazing culture, which I admired from far in a prior life as a supplier to Henry Schein and can't speak highly enough about the wonderful environment that Henry Schein provides. I along with the next 2 presenters are going to lay out our digital strategy that starts with digital selling and marketing continues on through a website enhancement and ends with our enhanced customer experience. I'm going to start with the customer. Today's medical and dental professionals expect a shopping experience that mirrors the ease and simplicity of their consumer experience. But with the advanced B2B features that they actually need to run a business. They are increasingly turning to the Internet to learn about new products and services. We believe we are a leader in digital customer engagement today, but we intend to extend our lead through 3 priorities. The first is our digital marketing initiative, which is where we will enhance how we market and sell products and services solutions to customers. The second is our e-commerce initiative, which includes our all-new website experience. And the third is an enhanced overall customer experience, where ease and simplicity remains a key reason to do business with Henry Schein. In fact, one of my key takeaways for my time at Amazon is that making simplicity and ease of use, a key element of your business is a successful way to win in the market. And while everything that I've talked about, we are doing for the benefit of our customer, it also happens to be very good for us because when we sell online, we sell at -- we get larger order values higher margins and better overall profitability. And ultimately, by doing this, by saving our customers' time, we allow dentists and physicians to spend more time doing what they want to do, which is care for patients. But before going into further detail about the 3 digital initiatives, I want to pause and reflect on some of the great accomplishments that this team has already made in the last several years. So today, we are the fastest growing in dental SEO. We are the leader in dental search engine marketing. We are the leader in dental digital product lead generation, we are very fast growing in medical SEO with 75% year-year growth in Google Page 1 rankings, and we are one of the leading educators in dentistry with one of the top YouTube sites amongst our many channels to market in which we offer education to our customers. Now I'm going to walk you through the first of our 3 digital initiatives which is how we lead in digital-based marketing and selling or put more simply, how do we actively sell to customers online. One of our key priorities is to further our lead in online search and product discovery so that we attract customers to our site. The second is to lead in digital education and content so that we are at the center of the customer's product discovery and education experience. The fact that we already do this today with online education, which is key to how we drive leads for new equipment purchases. Lastly, we realize customers often engage in multiple sales channels, including engaging our sales rep, including our telesales team and our online channel. We will be connecting these experiences together to offer a seamless omnichannel experience for the customer. These commercial efforts ultimately result in driving more highly engaged customers to our e-commerce site and driving more sales on the site. We're also very excited that our e-commerce experience will soon be getting even better. I'll now pass the presentation on to Leigh, who will talk about our second initiative the launch of our improved e-commerce experience, the global e-commerce platform.

Thank you, Mark, and good morning, everyone. I'm Leigh Benowitz, Chief Global Digital Transformation Officer. After leading digital marketing for Citi's consumer business, I joined Henry Schein 6 years ago to help advance our digital marketing and e-commerce activities. Although the products, services and solutions are clearly different than those in the financial services space, the strategies, tactics and technologies are most certainly transferable. As Mark mentioned, our digital commercial transformation will drive more traffic to the Henry Schein website, and we're improving the digital experience further by creating a destination where visitors can find information and education as well as a simple, easy and quick shopping experience. Our global e-commerce platform, which I invite you to see a demo of in the demo room, will include a redesign of features and capabilities as well as a new look and feel informed by customer feedback and research. The clean modern design is engaging and relatable. More intuitive navigation will allow visitors to more easily find what they're looking for. Enhanced personalization capabilities will provide curated content and more relevant offers, leveraging AI technology to make product recommendation. The site will be fully responsible -- fully responsive for mobile and tablet. We're improving the most commonly used features like site search and order from history to make them easier to find and utilize and are adding new features to improve the shopping experience like product ratings and reviews, a quick view to enable ordering from search results and category pages and a guest checkout process for a select set of products. We're building a global product to be implemented in a phased approach was a pilot planned for later this year in the U.K. and then rolls out throughout the company carefully. At its core, our global e-commerce initiative will show -- will allow us to be more effective and efficient. Building on our long history of innovation, our global e-commerce platform is the next step on our digital journey and will enhance our omnichannel approach. Moving forward, we plan to leverage our global e-commerce platform to increase synergies across the company with cross-business integrations and a marketplace allowing us to further expand our offering. Now I'll hand it to Trinh to talk more about how customers are directing our transformation journey.

Thank you, Leigh. Hi, everyone. I'm Trinh Clark, Chief Global Customer Experience Officer. I joined Henry Schein through an acquisition in 2007, where I was one of the founding members of one of the first medical e-commerce exchanges and have been involved in health care technology, digital commerce and customer experience for much of my career. At the heart of our BOLD+1 and global customer experience strategy, anchored by our team Schein values and core to our Henry Schein DNA is fostering and nurturing a customer-centric culture that delivers an emotionally connected experience for our employees and customers. We recognize that customers' expectations are changing, and we've prioritized a strategy that delivers a personalized and consistent experience across multiple channels. A key element of our strategy is empowering our team Schein members with the skills, tools and processes that enable exceptional customer experience. Of course, this doesn't happen without information. A large part of our effort utilizes data and technology to enable our team members to deliver and create intentional experiences that provide greater simplicity and consistency across all of our channels. Partnering with Sarah Dillan, our Chief Data Officer, who joined Henry Schein last year, we're building out our data foundation for both product and customer data and enhancing our overall global data governance processes. The outcome of these efforts will lead to a better experience for our customers. Fusing together employee and customer sentiment data, we're further investing in our voice of customer program. This program measures our customer feedback and Net Promoter Score. And this year, we're launching an enhanced employee experience program. That will complement our existing listening program, including our global pulse culture survey that has been in place for over 15 years. The employee experience program now integrated on to our voice of customer technology platform will also include voice of business. This effort adds customer-facing team shine member sentiment. Think of the thousands of team members that interact with our customers one-on-one. This adds validation to the feedback we hear from our customers. It helps us move from anecdotes to database findings across thousands of team Schein members with quantifiably qualified feedback. In summary, our efforts to advance our digital commercial activities, improve our e-commerce experience and enhance our overall customer experience will drive future growth for our organization. I would now like to introduce Mark Mlotek, who will cover how all of these digital strategies will come together in Henry Schein's full digital offering. Thank you.

Thank you, Trinh. Hi, good morning, everybody. I'm Mark Mlotek, I've been the company's Chief Strategic Officer for almost the past 30 years. Very proud to have worked with this supportive and in my opinion, superior team to consistently establish winning strategies, but more importantly, consistently executing on those strategies to drive year-over-year-over-year market share growth. I'm very excited to be here today. I'm thrilled to recap how we are defining the industry standard for a successful clinical workflow. The workflow needs to be easy, needs to have a limited number of steps has to embrace open architecture and has to be interoperable with multiple devices and seamlessly integrate with multiple software applications, including the practice management systems, ours does. While this is a bold vision, we're confident that we can do this as we have transformed ourselves and the industry several times over. A few examples include in dental. We introduced software and computers to the dental practice and help the dental office automate their front office. In medical, you heard about today, we transformed our go-to-market approach when the industry underwent rapid transformation and consolidation and went from having virtually no brand recognition among IDNs and GPOs where today, we are well recognized and believe we offer competitive advantages in serving this market. And in both Dental and Medical, we shifted from being primarily a telesales company having an omnichannel approach supported by robust field sales network supported by technical service capabilities. So while this presentation -- from hereon in, we'll focus primarily on dental. We have exciting strategies to grow our Medical business too, which, as you heard, is now our largest business segment. Including continuing our initiatives of following the patient to the home and offering new essential clinical services such as remote patient monitoring, which you can see in our next room as some of our full devices that are there. So let me begin to spell out how our 3 dental-focused businesses intersect through software solutions to provide our customers with a unique proprietary solution with the goal, improving the patient experience, improving patient outcomes, increasing case acceptance and therefore, revenues and increasing practice efficiencies and how these integrated solutions will strategically benefit Henry Schein. Previously, practice management software integration was front office driven. It was connecting patient records with images, images, connecting patient records with revenue cycle management, analyzing data within one node practice for greater productivity. And as a stand-alone fund office solution, Henry Schein One is in a class of its own, but we also have unique potential. While others may have some of the services that we offer, none have the depth or breadth of our offering, and none have single sign-on to multiple technologies, none seamlessly integrate those technologies with the patient record and none have our industry-leading scale that allows us to invest more in R&D to drive future innovation and growth. Similarly, as a stand-alone solution for the clinical workflow, we have unique advantages. While others have some of the elements of the clinical workflow, none define the workflow as an end-to-end solution beginning with and seamlessly integrating with the clinical record and not a device agnostic open architecture, providing the company with choosing what's best to his or her practice as opposed to what works best with the software being offered. And I hope you all listen to Steve that said, basically, in 3 clicks or touch screen, 3 touches, you go from the practice management screen that's in every office, the capture to take the device. And depending on what you want to do, your choice, you can fabricate in 3 clicks without going out of the software. One example of our innovation road map is the Henry Schein Navigator. This is going to plug and play to multiple digital applications and devices and provide the same seamless user interface when going between different treatment modalities. So when a practitioner learns 1 implants, knows how to use it, the same software for others, aligners, treatment planning, et cetera, same look and feel. What gets me excited as much as the software is the One Schein, the leveraging approach. We bring our 1 million customers worldwide, the opportunity to make this the industry's standard of care. And while I started with, we are defining the industry standard with the most comprehensive suite of offering, we start also to begin the conversation that we believe we have the most advanced clinical software as well. We further believe that our global e-commerce platform is going to solidify our industry-leading position. With our personalization engine, search features enhanced to AI, depth and breadth of offering, we intend to take all the stress away from the ordering process, stamp this with a proverbial easy button. So how does a customer who does business with Henry Schein across the distribution business, specialties, software, derive unique benefit and how does Henry Sign benefit from this. Let me describe to you the typical dental office. Over the last 10 years, they've been undergoing their own transformation. As new services and new software and new devices have come to market. They have been buying them one by one. They've been purchased as stand-alone modules. Because of that, the office has become quite stressful. Often, the disparate softwares don't work together. And no one takes responsibility for the disconnect, driving downtime and inefficiency. Our customers have come to us and told us this is one of their biggest pain points. Defining the clinical journey as we have here, beginning with the PMS system and making the journey as simple as possible with as few steps as possible, everything in 1 ecosystem effectively providing the complete end-to-end solution solves that problem. It has multiple positive benefits. The provider will be able to rely on us as they have for years for their trusted software applications to work, where they already own a digital device or looking for a new one, they can focus on clinical care, knowing that we have taken care of what will work best for them. With our integrated PMS and clinical software devices will simply integrate with the patient record and innovate with our Navigator. Not only will there be less downtime and thus, greater efficiency. But costs will decrease as well. Because in the past, each one of these separate solutions have to be independently maintained. So -- we believe that our customers who use our end-to-end solution will increase their efficiency and productivity. They'll have less visits by a patient per procedure being up chair time for new patients. They'll have greater case acceptance through our AI solutions and through our smile set up case acceptance solution where the patient Smile is immediately generated and digitalized. And they will realize a virtuous cycle of growth as the patients will really good reviews where the new patients will see those in our demand generation software. So our strategic benefits begin with having happy customers who once again rely on us for having helped them navigate one of their most complex pain points. Our end-to-end solutions will create levering opportunities for our specialty businesses to reach Henry Schein customers who heretofore have not used our proprietary products. Not only will these specialists have a better workflow in our opinion, but as mentioned before, the cost will be reduced. And lastly, Henry Schein globally dental who opportunities go low to sell the most advanced and new equipment, including digital and what we expect will be the fast-growing iOS and 3D printing markets that will simply plug and play into our workflow. So hopefully, you've learned why we're excited, why we believe we're on the cusp of something big with our unique and differentiated end-to-end solution. We look forward to the years ahead as we continue to build upon our best-in-class software, the seamless integrations and open architecture that our customers have grown to expect. Our new tagline, is together, we make the world healthier. For a mission-driven organization like Henry Schein to be able to do that and feel it with our AI and with this clinical software, like Stanley, we all believe our best years are yet to come. Thank you. And I now hand it over to Jennifer Kim Field.

Thank you, Mark. I'm Jennifer Kim Field, Chief Sustainability Officer, and I've been with Henry Schein for nearly 6 years. I'm responsible for our strategic philantrophy, social responsibility and sustainability strategies and initiatives. Our constituents is one of our highest values. We conducted a pilot of our corporate citizenship barometer in which we learned our stakeholders are informed and relatively aware of our work. However, we can better relay our environmental priorities. This is informing our efforts and complements our ESG materiality assessment, which we are in the process of updating from 2020, so we can continuously learn and grow. The foundation for our sustainability priorities is strong governance to help provide a structured and effective approach. You cannot have the E and the S without the G. And as I heard recently the phrase, the G is key. Our Board Nominating and Governance Committee oversee our ESG work with a comp committee playing a role as it concerns to human capital development and executive comp. These Board committees are imprised -- comprised of independent directors. And as you can see from this slide, there are other key committees and councils with executive management committee sponsors and Board advisers whose engagement is critical in driving forward our ESG strategy and progress. These governance structures help us manage and respond to risks and opportunities, monitor progress and build a resilient business. We are pleased to be reporting against the global reporting initiative and sustainability accounting standards for reporting frameworks, and we've issued our first task force for climate-related financial disclosures report. As we continue to expand our disclosures, we have an eye towards global regulations on ESG as well as completing our TCFD scenario analysis to better understand the financial impact of our climate risks and opportunities. While climate risk and opportunities are on one side of the coin, on the other side is climate mitigation and reduction. We work to reduce our environmental impact and promote responsible business practices in our own operations and supply chain in collaboration with our suppliers, partners and customers. And we have been doing this for more than 3 decades, but we know we need to and can do more. Here are our environmental priorities from carbon neutrality by 2050 to enhancing our supply chain resilience. And we'll accomplish these through our global climate road map. As we committed to in our most recent sustainability report, we are working towards our carbon reduction goal that we'll announce by the end of this year while doing what we can to strive for a circular economy from packaging to waste mitigation. Since formalizing our corporate citizenship over 25 years ago through our Henry Schein Cares program, we have always believed that regardless where someone is born, all people should have access to quality affordable health care. It drives us in our continued effort to promote health equity and access to care, leveraging our unique position with the dental and medical industry. And we cannot do this without public private partnerships especially when we know when providers who share the same race and ethnicity as our patients, there is increased patient experience and outcomes. Key examples of our health equity work includes our partnership with the ADA Foundation to give kids a smile. We also partnered with the ADA over 25 years ago through our Diversity Leadership Institute, promote and support diversity in a dental profession which was one of the programs that was a precursor to many other partnerships with the dental and medical professions in the decades that followed. This includes our work with the national medical and dental associations Hispanic dental association and other diverse health care associations to build towards a future workforce that better reflects our diverse society to create more impactful care while closing health care gaps. Through in our professional collaboration with dental and medical professionals, promoting health integration can also help close health care gaps where the benefits are clear in improving patient outcomes and decreasing cost of care. As part of our multifaceted journey, advocacy helps to bring greater awareness around this issue. For decades, we've continuously advocate with the UN, the CDC and other national health groups on the importance of oral health as part of overall health which World Health Organization highlighted in their first global oral health status report last November. I'll now hand it over to Lorelei to speak further to our social priorities.

Thanks, Jen. I'm Lorelei McGlynn, I'm Henry Schein's Chief Human Resources Officer, and I'm very pleased to be here today. I've been with the company for 23 years, and I'm very happy to be responsible for the center of our Mosaic of Success. Team Schein. We have various initiatives focused on advancing our team Schein engagement. As Trinh mentioned earlier, we are continuously listening to our team members and advancing our strategy to assure a meaningful employee experience, which is centered around people. We have various initiatives on advancing our team schein engagement. And in 2022, we expanded our team Schein values to include a diversity and inclusion specific value as a testament to our commitment to diversity and inclusion. We also continue to expand our employee resource groups which serve as cultural drivers and particularly played an important role in connecting our team across the globe during the pandemic and during times of social unrest. In alignment with our Paradigm for Parity commitment, which we signed in 2017, we continue to be committed to significantly increasing the representation of females and senior leadership by 2030. And in 2022, we announced a new formal goal, which focuses on increasing the diversity of all underrepresented groups in senior leadership. As part of our wellness committee, which I serve as our Chair, we launched Team Schein member experience panels to bring Team Schein members across the globe together. To share experiences on complex wellness-related topics. In addition, we have engaged with our executive management committee, many have you met today or will meet later today to lead a video series focused on being more intentional with the way we work in this new virtual hybrid work environment. Henry Schein has always been committed to the development of team Schein members. And we understand the importance of providing team members with a sense of purpose. We have always had a long-standing history of supporting the communities in which we serve through corporate social responsibility and team shine member volunteer efforts. The feedback from our team members is that these types of programs really connect them to our purpose-driven culture. Our ability to give back during challenging times is directly connected to our business success. And that success reflects the extraordinary commitment, hard work and dedication of team shine. We look forward to continuing to provide business and economic value to our 5 constituents for our corporate citizenship and ESG priorities. I'd now like to hand it over to Ron South and Henry Schein's CFO.

Thank you, Lorelei. And first, I want to thank all of you for attending today, both those of you who are here and those of you who are watching virtually. I see a lot of familiar faces out there. For those of you who I have not met yet, my name is Ron South. I have been the CFO, Henry Schein now for not quite a year. Prior to that, I was Vice President of Corporate Finance and the Chief Accounting Officer for 14 years at Henry Schein. So today, I'm going to go through some financial information with you and introduce some long-term financial goals we have for the company. At the conclusion of my presentation, we'll then have a Q&A with the rest of management -- selected members of management coming up for the Q&A. So in terms of key financial takeaways today, we have a long track record of strong financial performance. We've achieved a 12% non-GAAP EPS CAGR over the last 5 years and a 14% non-GAAP EPS CAGR since we went public 27 years ago. Our stock performance has also performed consistently with a 9% CAGR the last 5 years and 13% annual appreciation since the IPO. Now you've heard it touched on a few times today, both by Stanley and by the distribution team when they were up here talking about the COVID-19 pandemic and the impact it had on the business. It provided challenges and opportunities for the business and our teams. Initially, we had to scale back our business. You think back to March and April of 2020, a lot of practices both physician practices and dental practices were closing. And we had to scale back our business. But then we had to quickly scale it back up as the recovery period occurred in that same year. And demand for PPE and COVID test kits really began to accelerate. And as Brad mentioned earlier, our distribution team really had to step forward and meet that challenge. So we focused on getting customers products and solutions that they needed, but also at a quality they expected from Henry Schein. And as a result, we gained some new customers out of that, many of whom who we retained as recurring customers since then. And we've been able to generate -- or we were able to generate significant increases in revenues of PPE and COVID Test kits in '20 into '21. Beginning in 2022, lower market prices for PPE and lower demand for COVID test kits created some headwinds to the revenue growth that we expect to continue into 2023. So for 2023, we are forecasting sales growth of 4% to 7% when excluding PPE and COVID test kits. And that reflects our plan to grow market share during the year. We're also forecasting high single-digit to low double-digit operating income growth when excluding operating income from PPE and COVID test kits. And our guidance for non-GAAP EPS 2023 is $5.25 or $5.42 per share. Now regarding EPS, an important note is that beginning with 2023, our non-GAAP EPS will exclude amortization expense. From the acquired intangible assets as we think this better represents the underlying performance of the business. Our long-term financial goal is to grow non-GAAP EPS by 8% to 11% and I will now walk through the growth drivers to deliver this, which is aligned with our strategic plan. So amongst our key growth drivers. First is leveraging our infrastructure. Our distribution group talks about this and I'd like to expand on that, but we can leverage our infrastructure to expand our operating margins. We think we can do this both organically and through fold-in acquisitions, such as the Midway dental transaction we completed in 2022. Another key growth driver is to grow our higher-margin specialty and technology value-added services businesses at a faster rate than our distribution businesses, which will increase overall growth and margins. And again, this can be done organically and through targeted acquisitions, such as the BioTech transaction, which we expect will close to. Another growth driver is to increase penetration in the faster-growing customer segments we have, such as the regional and national DSOs in the dental space as well as the ASCs and the home health providers in the medical space as well. And then last, as you just heard from our digital transformation team is we have to further drive market share by providing a broad range of digital solutions and leverage our e-commerce marketing platform. So I want to talk a little bit about this chart here. So as you can see, we've consistently delivered steady and sustainable sales growth. We're projecting total sales CAGR of 6.6% since 2019 when you look at the midpoint of our 2023 sales guidance. And even though PPE and COVID tesk kit volatility has provided a headwind in recent years, these product categories have benefited sales growth since 2019 as evidenced by the higher total CAGR versus the 5.9% CAGR when excluding these product categories. And I think an important thing to look at on here as well, when you look at that lower line, that lighter blue line, it starts at $9.6 billion in sales, and these are sales excluding PPE and COVID test kits, $9.6 billion back in 2019. In 2023, we estimate that would be $12 billion. So that's $2.4 billion of an increase in revenues since 2019 when excluding PPE and COVID test kits. And we think that's a good indication of the ongoing strength of the overall business. So while our guidance for 2023 is for sales growth of 1% to 3%, is 4% to 7% when excluding PPE and COVID test kits. And we believe we can continue this operational execution and grow revenues in a 6% to 8% range annually in the long term. Also of note on here, when you look at that lower -- when you look at the light blue line, versus the total sales in 2019, you see just how narrow that gap was in total sales versus sales, excluding PPE and COVID test kits. And that's illustrated then on this next chart, where we can talk a little more about our PPE and COVID test kits have affected our business since the inception of the pandemic. So this graph illustrates the significant impact PPE and COVID test kits have had on revenues over the last few years. As PPE, which is principally gloves, has experienced decreased pricing in the global markets, and COVID test kits have experienced volatility in demand. Despite the headwinds in 2022 and those anticipated in 2023, our PPE and COVID test kit sales are still expected to be approximately $890 million or $450 million higher in 2023 than in 2019. And we believe these sales may somewhat stabilize going forward. Let's talk a little more about 2023 EPS and the impact of PPE and COVID test kits. So here we have a chart showing how our projected growth in the underlying business in 2023 is largely offsetting the estimated earnings headwind from lower sales of PPE and COVID test kits versus 2022. So as I mentioned before, our guidance for 2023 assumes total sales growth of approximately 1% to 3% over 2022. And this guidance assumes sales of COVID-19 test kits will decline approximately 35% to 40% from sales in 2022 and that PPE product sales will decline about 20% to 25%. And we've estimated that the lower sales of these product categories will result in a lower contribution to EPS of approximately $0.35 to $0.40 per share in 2023. However, we also expect the balance of the business to contribute high single to low double-digit operating income growth. Resulting in 2023 non-GAAP EPS guidance of $5.25 to $5.42 per share. And this implies a forecasted growth in EPS of about 5% to 8% in the underlying business in 2023. Note that our 2023 guidance assumes higher interest expense in 2023 versus 2022 and higher noncontrolling interest. Primarily as a result of expected growth at Henry Schein One, but these costs are not components of operating income. Also of importance, the forecasted $0.35 to $0.40 EPS impact from the lower revenues of PPE and COVID-19 test kits is expected to be more pronounced in the first half of 2023 and especially in the first quarter, as we had sales of almost $500 million of PPE and COVID-19 test kits combined in the first quarter of 2022. Our guidance for 2023 diluted EPS is for current continuing operations as well as completed acquisitions and does not include the impact of future share repurchases or potential future acquisitions or integration and restructuring expenses, if any. Our guidance also assumes that foreign currency exchange rates are generally consistent with current levels, that end markets will remain stable and are consistent with current market conditions and that there are no material adverse market changes associated with COVID. So that leads us to our long-term financial goals. So we're really focusing on 3 primary measures here. First, total sales growth of 6% to 8%. This takes into account the market growth assumptions we've listed on the lower half of this slide, and many of these were mentioned in the various presentations that you've seen earlier today. Our overall long-term sales growth goal assumes that we will successfully gain market share by executing the plans we shared with you today, including strategic acquisitions. The second financial goal I want to focus on here is our non-GAAP operating margin expansion of 10-plus basis points. And we expect to achieve this expansion by: first, accelerating the growth in our dental specialty and technology value-added services businesses really get greater margins. Also, we believe we can leverage our existing distribution infrastructure to drive operating margin expansion. And last, we need to optimize our investments in digital technology, including our e-commerce platform. We believe that gives us greater opportunities to expand that operating margin. And that leads us to a financial goal of long-term non-GAAP diluted EPS growth of 8% to 11%. One thing I do want to point out because I did get some questions beforehand. Dental market growth of 2.4%, that excludes, you'll see the footnote that excludes dental specialties market growth. So to achieve our financial goals, we require capital to invest, much of which we're able to generate internally. When we look at our historical conversion of earnings to cash, we've been able to generate operating cash on an annual basis in excess of net income, and we expect this cash flow to continue in the annual range of $600 million to $700 million. Then with that cash, how do we deploy it? So the cash flow we generate has allowed us to maintain a disciplined approach to capital deployment. This chart illustrates our historical use of capital in a typical year. But our low debt-to-EBITDA ratio, which is under 1 historically, we've maintained it under 1, provides us with the flexibility to take an opportunistic approach to investing in M&A or in share repurchases in any given year. So a few times today, you've heard us refer to our pending acquisition of Biotech Dental. By prioritizing our M&A focus on companies like biotech and other specialty and technology-focused high-growth, high-margin businesses, we project that the mix of operating income contributed by these businesses will be 40% of the company's total operating income by the end of 2024. That's versus a 32% mix pre-pandemic in 2019. So in summary, our 2023 guidance assumes underlying growth of high single to low double-digit operating income growth when excluding PPE and COVID test kits. In the long term, we expect to grow sales 6% to 8% annually, and this drives an 8% to 11% growth of EPS for the long term. And our operating income contribution from technology and value-added services and specialty products is expected to approach 40% of the company's total by the end of 2024. And this will be assisted by strategic acquisitions. So with that, I believe now we can bring up others for the Q&A. We can open this up for Q&A. I think we're doing about 30 minutes approximately.

Great. Thank you, Ron. So just as a reminder to everybody, our Q&A will be recorded. And for the benefit of those who are attending virtually, if you could speak into the microphone your questions and take your name and company. And that will help with everybody who's attending virtually to follow through on the Q&A. So with that, open up questions.

Jeff Johnson from Baird. Thanks for all the great detail today. I've got 2 questions. I guess, I want to focus primarily on the tech and VA segment. I think that's been the most helpful part of this presentation really understanding that business better. But Christine, maybe for you or Stanley for you. As I look at that $550 million Henry Schein One business, what percentage of that is recurring right now? And how sticky is that business in this environment? And as we look out over the next 5 or 10 years, as dental offices become -- to see their profit pressure more, does that drive them more to meet these kind of services? Does that make them more reticent to maybe spend on these services? Just what's the push and pull on how the Henry Schein One kind of modules will sell into those offices?

Thank you, Jeff. Perhaps, Chris, you could respond.

Thanks, Jeff. Great question. First of all, our recurring revenue is in the range of 75% to 80% at this point in time. So we've made a big move to that with our SaaS solutions. And I think the pressure in dental offices is becoming higher to use technology because it makes it so efficient. And what we're finding is that practice management systems were the anchor, and that was the main thing that we sold. But as time has gone by, there has become more demand for patient relationship management and the other software that we can provide analytics. Of course, now we're integrating AI, and of course, payments and claims is very, very important as well. So I think dental offices have to use technology. They're understanding that and they want to rely on a company like us to provide. Did I miss anything?

Jeff, let me just...

Stickiness

Stickiness, very sticky, particularly with DSOs, they've made decisions on a longer cycle period of time. And so I think the more they buy from us, the stickier it gets.

Jeff, is a clear understanding, I think, and it's a growing understanding of the direct correlation between good oral care and good health care in this country and the rest of the developed world but also in the developing world. I think over time, we're going to see a greater demand of procedures. In fact, globally, that is growing, but it may not be at the same price per procedure. So I think -- or reimbursement procedure. I think the desire to drive more efficiency, coupled with the quality of care plays right into our strategy, our practice management, advancing practice management software and related services, our clinical workflow and our e-commerce strategy. I don't know when it's going to happen, if it's going to happen. But I think there's a likelihood -- a high likelihood of greater government involvement in providing coverage for health care in dentistry. Seen it with health care reform on the medical side. We may not agree with the way it's administered but just like Medicare and health care reform on the medical side, there is a commitment, I think, by the electorate in this country to keep some kind of government involvement. Again, not sure when it's going to happen or if it will happen in dentistry, but we've seen this in other countries, more involvement by the private sector and coverage, but at a lower price I think this will drive a desire for efficiency and quality of care that will require digitalization of the entire cycle. So we're quite optimistic about the number of procedures on a global basis going up.

Fair enough. Stanley. And then my second question is just on the work on the digital workflow solution. So Mark, you did a fantastic job as you always do of kind of helping us understand Schein's right to win their -- but I think as I look back over the years I've covered in medtech, we see that it's very hard to monetize the software, the goes, what the digital or whatever. It's do you drive -- where -- how does Schein monetize this workflow, I guess? Is it selling more equipment and consumables by being more important to the dental office? Or is it driving the sale of those products to your specialty products at the back end? And maybe it's a combination of both, but is it upfront selling more into the office or selling more of your specialty stuff?

[indiscernible], I'll go first. You help me. So Jeff, as usual, again, great question. So let's start with, again, the ecosystem. Our practice -- when you start with the practice management system up on the screen, as we all have gone to the dentist, we know that our practice management system sits at the clinic. You touch the screen, you take the image. So once that workflow is known and is embedded and becomes the industry standard, we believe that our whole suite of software applications get a lift. So that's a one. And because it all works seamlessly together and people -- while they can go in and out, we believe in open architecture, the whole purpose that was People don't want to maintain the separate disparate systems. It's expensive and it breaks. That's one. Second, the business model that's being used today, and I'm not saying it's the long-term business model is that customers who use our clinical workflow are getting it for much reduced fee the workflow if they use our product. So yes, we expect to get more of our specialty products sold. Okay?

Thanks, Mark. I fully agree with that. I think it's really about -- in the future to having the workflow is actually gives you the right play. I think this will be the future of how you differentiate. And what we are selling already now, I think that's not the future. It's already -- we do that for a couple of years is that the sale actually, call it, case a box or tooth in the box. There are different names for that, that you really have the workflow products, everything together. That's what you are differentiating how you sell it. And the other big thing is also you need the software also for the data. And I think that's important. And Chris also mentioned that without the data, you cannot feed your AI, you cannot develop treatment support, medical treatment support, which is AI support and if you don't have that. And I think that's something we have a unique position to be successful that we can create the workflows, which have all these technology features incorporated, which will drive, of course, also our consumable, our high-margin specialty products.

So Jeff, just let me put it together very simply this way. One of our biggest DSOs came to us Mike works with them and said, we want to move away from the [indiscernible] dentistry, where we buy different pieces from different players, give us a one-stop solution that begins with digitalization. I think we've knitted together what's needed. Is it all working perfectly, not yet, but it's getting there. And our big customers in particular, are helping us integrate the technology with the products. So they all come together exactly how the profit mix will work out. It will migrate a little bit. And I think if you look at Henry Schein, 3, 4, 5 years from now, you'll see a huge part of our profits coming from the specialty products and specialty services with the logistics, the supply chain being critical to glue this all together.

Maybe the next question.

This is [ Erin Wright ], Morgan Stanley. This one is for Ron. Historically, acquisitions have been a part of your growth strategy and how are you thinking about acquisitions going forward. I think it's historically about 1% to 2% of top line growth. Does that accelerate here? What's embedded in your guide? And how should we think also about the pipeline from here? What does it look like? And how should we anticipate or what should we anticipate in terms of annual deal spend?

Yes. Our long-term sales growth goal, [ Aaron ], is does -- it's all in, total reported sales growth. So it would include the effect of acquisitions. And you're right, the historical acquisition growth that we've gotten year-over-year has been in the range of 1% to 1.5%. So it assumes it would be something similar to that, right? Our acquisitions can be in 2021, we did $570 million in acquisitions. Last year, we did a little less than $200 million in acquisitions. The pipeline, I think, is very robust right now but these are deals that we have to be -- we proceed carefully. We're going to be -- we have to be very diligent as we go forward on these deals. So yes, there is acquisition growth assumed. It's kind of hard to pin down an exact number from that because of the volatility of the pace of acquisitions.

And as you focus more and more on your own specialty offerings, how should we think about your relationship with your manufacturer partners at this point and this is kind of a broader question and how that's evolving or has that evolved at all? And how we think about that mix within that specialty business evolving.

The specialty businesses are generally direct and the distribution businesses generally from a manufacturer point of view are sold through distribution. So yes, our manufacturers know that we compete in the specialty field and know they can rely on us the distribution of the general consumable products. But we're also very committed to open architecture and interoperability with the devices from our manufacturers, who can rest assured that we will remain neutral on devices that are interoperable and specifically on equipment. We have no desire to manufacture equipment, for example. So this is a careful balance, our manufacturers know that they can rely on us in the general consumable product area and the equipment area. But yes, on the specialty products side, we compete. That doesn't mean we can't collaborate at a future date with specific manufacturers that have specialty products. We do that, for example, in the endodontic space, and it's a matter of manufacturers and us understanding where our strengths are and what we can do and where there is a desire to collaborate.

And we've got a question on the other side, Kevin?

It's Kevin Caliendo from UBS. This is for Ron. The -- you just said M&A is included in the long-term guidance. I'm assuming other deployment cash buybacks and the like are also included?

Yes, that's correct. Yes.

And just thinking about the margin expansion. If I look at the expected growth rates that you have and share gains that you have, which I'm assuming it's a lot in specialty going forward. Are you assuming the margins in each of those different segments remains the same? Meaning, is there any deterioration built into one or margin expansion built into another? Because I'm just trying to think through the math, 10 basis points of margin expansion seems conservative if everything kind of remain the same?

Well, I think that predicting gross margins can be a dangerous business, right? But I think that Yes. We're assuming that we can protect our margins. I think growing margins would be obviously the -- what we would prefer to do. But we are trying to protect our margins. Having said that, you're going to get volatility, for example, in PPE, the margin you're going to get some volatility in things such as PPE. We're seeing a little more volatility in margins of COVID test kits even. So some of that will come down to mix. Some of that will come down to what's happening with specific product categories. And -- but we generally believe that we can at least protect those margins -- the gross margins as much as we can, yes.

Just a quick follow-up on the share gains, everybody here made a pitch as to why you expect to take share across all these different platforms. Where do you think the biggest opportunity lies, whether it's in specialty or straight dental or in medical or in technology? Where do you think you're going to take the most share?

I mean I'll defer to my business partners because they're the ones who are going to execute on this, right?

Yes. I'll speak to North America. Dental, we have a very strong market share. So we're very happy with our market share there. We'll take -- we'll continue to take share and by expanding our existing customer base. Medical is a frontier for us. We're entering new places, Dirk mentioned home health. Home health is a bigger market than we actually serve today in aggregate. Huge opportunity.

Good. Jason?

Jason Bednar from Piper Sandler. Thanks again for hosting us today. I guess the question will probably be for [ Rene ] here. I really wanted to ask on the specialty product segment of your business. We don't always get great insight on the product pipeline that you have. We touched on it a little bit today, sounds like there's some new stuff coming in [ etodomics ]. But would just love to hear, as we think about and contemplate that 6% to 8% top line growth, maybe it's call it, 4% to 6% or 5% to 7% organic. It is going to have to come some from new products. So I guess what can we look forward to there? And what kind of R&D spending should we be thinking about as we look forward to support that growth?

Thanks for the question. Yes, I think the pipeline, I think, was a little bit -- they almost interrupted in Europe. You're right, because of the MDR, I think this will change. So there will be new products coming out. And I think there are multiple products we just launched and we are still rolling out when we come to our implant lines, they need normally multiple years until you have penetrated the full market. So these are ongoing product launches. And then we had also multiple biomaterial product launches. We have just launched the allograft in Europe is very successful. And we have also a new membrane. So there's a quite significant product launches also driving the growth. And from an R&D spending, it depends a little bit what you include in the R&D spending if you include everything from what needs to be done also regulatory that's more closer to 5% the I think that's a good number for a 3%, 4%, 5% for our industry.

And maybe just as a quick follow-up. How much of the growth of the business do you think is coming from new products within you can call it specialty and software?

That's a difficult question because I think the a new product, which is maybe a new product in Asia is not a new product in Europe and vice versa. But I think we can go something in the range that 30% of our business should be with products, which is not older than 6 -- 5, 6 [indiscernible], yes.

All right. Great. That's helpful. Okay. And then we've been hearing on the shift into medical, maybe supporting more specialty with Medical. I know, Mark, you mentioned supporting more of an at-home or home care presence. I guess what type of assets should we be thinking about? And Ron stand, feel free to weigh in as well. What type of assets sale we thinking about Henry Schein looking at? Is it going to be something within orthopedics, home care, just as we think about this business evolving over the next 5 years?

Yes. So Mark, please respond. I mean, of course, we can't guarantee any deals I think is dry understood. Mark can address some vision.

So big picture. There are a few areas. One, on the technology side where providing clinical care like the remedy product, we like those areas. We like continuous glucose monitoring, not because it's an unfortunate to scourge, but unfortunately, the demographics are such we do a lot of research and the demographics are such that it's a high growth and not well served markets. So these are areas that we look at to how best to enter to improve health care. And again, I think Jeff said where we have a light to win. We have relationships with a couple of hundred thousand physicians who are prescribing the treatment and who would have better peace of mind if it was being serviced well. So those are 2 areas in the home care area in the...

ASC is heading.

In the orthopedic setting, where, again, very focused in finding high-growth, high-margin areas that are not commoditized for one and that we could both do well with our way of doing business, relationship selling, having sales forces, having leadership. But -- so I don't see us having a knee, a spine. But I see us being in limited niche orthopedic businesses, which, again, when we did a lot of research is very similar manufacturing and regulatory as the dental implant business. And so based on that, we feel again, we have a right to win.

Just to put that in a bit more in a context, I think Mark talked about it early on also where we have connectivity to customers. So we believe that ASC is going to be quite serious. It's going to grow. I'm having knee replacement after ski season with one of my knees. And my doctor said, [ Kash ], you're going to be out the same day. But those kinds of procedures are going to be moving to the ASC. So where we can help with that, and [ Tom Popeck ] joined us 4 years ago out of that industry. He's been working, of course, he's running the Endo business and a number of other businesses have shown but he's been slowly assembling a team of experts in this area that can help the ASC advance certain procedures. Our customers are interested in a one-stop shop. And I think that those are the kinds of areas we'll invest, whether it's on the medical side, the dental side, the software side and the service side. It's where there's stickiness to our customers, and there's a need from our customers or the specific services.

Okay. You got a question over there AJ?

[ EJ Rays ] from Credit Suisse. This concept of dental health being more tied in or people recognizing that's an important component of overall medical health. I understand that if consumers hear that, they hopefully will go to the dentist and get more consumption of their keep up with their jackups and so forth. But is there any move for commercial insurers to want to integrate that data for you to talk to them about -- you have a unique position to be able to know who's doing what. Is there are there other opportunities beyond just hoping the consumer hears that they need to keep up with their dental health to maybe monetize that?

It's a very, very important question, I think. It's coming from those that cover health, whether it's insurance companies directly or its organizations. There's a clear understanding that there's a direct correlation between good oral care and good health care in the area of pulmonary cardiac, diabetes, cancer and even Alzheimer's and obstetrics. So this area has been advanced, I would say, in the last 6, 7 years, the sum of these studies as long as 15 years. There's more studies coming out. A lot of work is going on at the dental schools hardly a week that goes by without the study. And I believe those that pay for health care are understanding this from a commercial point of view. Of course, it's a quality of life issue, but it's also a way to manage health care costs. And actually, I'm quite optimistic about this as advances even the World Health Organization for the first time has started recognizing this, and it's now in their reports. So I think we're going to see greater connectivity between the research and the implementation of that research on a clinical basis, what I think is also important to understand is that elected officials are starting to understand this. And for example, in the U.S., Medicaid is only reimbursed at a reasonable level in certain states cost is Medicaid coverage in all states for oral care. But in a vast majority of states at [indiscernible] [ Dennis ] can afford this. But there's a whole movement within Congress. Again, it's a very heavy political issue, but you can see it moving slowly in the direction of greater coverage by government as it is in a number of other countries around the world.

Okay. Maybe just a follow-up on Ron's slide on long-term financial goal is really helpful. I didn't have the benefit of bringing the last one of these and what it would have looked like in the previous Investor Day. So we walk away with the right message. What -- have any of these metrics page from what you would have given a couple of years ago? And what was the thinking behind changing any of those metrics?

Well, interestingly enough, the last Investor Day was about 10 years ago. And not to make too big of a joke, but given all the work that went into this one, it might be 10 more years or we do it -- but I think that -- so whatever we used 10 years ago, to go back and do the how close were we then.

I think the last time you set out the type of bill.

Yes. But I do think that this kind of started off with each individual business as they prepared their presentations today, kind of coming up with what -- in their opinion, and this has supported -- some of its assumptions, some of it is supported by external data, obviously, what's happening in your market. And then we kind of looked at that, and that became the basis of our model and coming out without those long-term financial goals. Could they be different? Absolutely. They could be different over the next couple of years, things could happen in terms of pricing, things could happen in terms of legislation. That would impact this, right? So we have to kind of reconcile against that as we go.

But just to build on, I think it's also good question. You go back, say, 3 strategic plans a go. Every 3 years, we come out with the strategic plan. We missed 1 year because of COVID. If we go back a decade. We're talking about value-added services, and we invested heavily in the software business. And if you look at the expansion of that, it's not only practice management software today. It's the entire operations from a business point of view of the office, and you see the expansion into clinical software. So we laid the seeds for that. We also laid the seeds for our specialty businesses when we entered into the implant business from virtually scratch 13 years ago, and you can see that's about a $1 billion business today. And you can see also from the e-commerce side, if you've gone back a decade, you would see that we were a leader in the whole digital commerce space in this country and abroad. And you'll see how we can advance that. And of course, a decade ago, we were not known at all in the medical arena in the IDN space. I remember going to visit an IDN about a decade ago in Texas, and they didn't know who Henry Schein was. I would submit to you that in the IDN GPO space, all of the major players, if they're not doing business with us, certainly are putting us on their bids. And we became -- become known in the medical world as a reliable provider in the alternate care space. I will tell you, a decade ago, some of the big hospital suppliers thought that they could enter into the space, and they could be very easy just at a telephone and it works. I think IDNs today, GPOs know that you've got to use a specialty company like Henry Schein. And I think we've been growing at a significant pace in that space. That's another area that has moved and so with the DSOs. We've always had a strong position with the group practices in dentistry, but I think it is clearly now understood that if you want a one-stop solution, you want national coverage on scale that Henry Schein can provide that with great satisfaction at a reasonable price.

We've got a question here from Elizabeth.

One just quick clarifying question. Did the longer-term growth has no sort of COVID contribution or anything going forward? Or is it just kind of assume that there's kind of like a low-level underlying contribution to Medical?

Yes, Elizabeth. We're assuming that we're going to get some stabilization in '24 versus '23 in PPE and COVID test kits. That's our assumption right now. Market conditions might be different, and we'd have to adjust accordingly. But yes, in terms of the impact of PPE and CIVD test kits beyond '23, we're expecting some stabilization there.

Got it. Okay. And then in terms of the -- I think you've addressed parts of this, but in terms of the core like operating margin expansion, if we just think about like the SG&A perspective, how do you think about that over the longer term? Like what's sort of the right level for that business. I know you talked about some near-term opportunities like on the real estate front, et cetera. But like as we think about that maybe over the course of the longer-term guidance.

Yes, it's hard to paint it with one brush, right? I mean we're a very diverse business between our dental distribution business, medical business, the specialty products, the technology, everybody who came up here and spoke to you today shows that and it's a very diverse portfolio. So we have talked about trying to leveraging our existing infrastructure to drive more efficient growth and distribution. But also as we grow aspects of the business, which bring -- which provide a greater margin and greater growth that also can impact that margin. But at the same time, we have to invest in the business. We've been investing in technology as we develop the e-commerce platform. We'll continue to invest in the business. So some of these profits that we're generating, we want to generate it back into the business. We want to put it back into the business so that we can continue. As I said, I want to stay on offense and kind of continue to drive that growth right?

I think we've got a question out of the side, Brandon.

Brandon Vazquez from William Blair. The first question is just on e-commerce. I know this has been a big push especially now in this Investor Day. So maybe a little bit for Ron, is there any way you could frame for us a little bit how the margins compare on the e-commerce side versus the distribution side? Where do you think that ultimate mix goes? And what does that mean for the margin profile of the business?

I think that one of the things we did mention in the digital presentation is that we do see higher margins on our online sales than we do the other sales. We haven't really disclosed what that difference might be, right? But we do think that the e-commerce platform does provide both a revenue and a margin opportunity for us. And from a revenue standpoint, we think it's a greater customer experience and that it can help us generate greater volume of sales as the customer identifies additional products they'd like to purchase. It's also just a more efficient means of delivering the product. This doesn't replace the field sales consultant. The field sales consultant job becomes more to direct more of the customers to this e-commerce platform. But I do think that it does allow us ultimately to drive these revenues more efficiently, and that will result in better margins.

Okay. And slightly switching gears, have to use the NASA acronym because that was so great. As you look at looks to be a new initiative for you guys as you move into maybe some of these larger dental groups, and then the IDNs. Can you talk a little bit about -- it sounds like in '23, we'll start to see more of those commercial changes to go into those accounts. What are the hurdles that you guys are addressing in that group to get into those accounts and what kind of commercial changes would that result in.

Actually, Brad, can I defer to you on.

Yes, I'm happy to take that. Really, we've been at this for a while. NASA is a new term for us and Nancy gets the credit for that. But health care services, which created in the medical business about 12 years ago, and it was created with 3 people, and it's probably about 75 strong right now. And these are executive selling people. These are not our typical reps. We had to upgrade -- we do it through redeployment but also from people outside, people that can go into the C-suite and talk to Chief Procurement Officers and Chief Financial Officers at IDNs and sophisticated national networks. So the commercial changes we have already made, what we did this year was combined what we did successfully in medical and joined what was also very successful in our dental business, which was our DSO team, very similar kind of makeup and combine them. Quite frankly, calling on an IDN and a DSO, different product, sure, but they're through demands, their sophistication, their need for inventory management, their need for often for repless models. They're not really interested in reps going into them. Some of them are, but they're really not interested in having reps crawl through their practices. They're looking for formulary approach and contract compliance, et cetera. So I would suggest we don't really have to change anything commercially, we'll be expanding because we're growing that market significantly at second.

I think, Nathan, did you have a question?

Nathan Rich from Goldman Sachs. Just trying to tie everything together. So I think you mentioned that 90% of dental practices in North America are distribution customers, could you give us a sense of what percentage of those customers buy both specialty products from you and are also technology customers? And where you think both of those percentages can go over time? And any kind of comment on relative profitability of the customers that you kind of buy across the different solutions that you have.

Brad [indiscernible].

I wouldn't have the numbers for that. And some pretty specific numbers on that. So I don't have -- I wouldn't have the numbers for you. In our large customers, we are -- we take a much more bundled approach to the -- especially in the DSOs, that's a differentiator for us. So I think we have to get back on some specific numbers on I know that...

Yes. I mean I do think that -- what we've seen in the large customers, such as the DSOs, it does provide us with the opportunity to sell more specialty products with them if they're already buying merchandise from us, right, kind of core merchandise. And then on the technology side, the actual scale that they require allows us to offer them a common suite across all their practices. In something like a Jarvis Analytics, for example, which is a tool that allows them to better identify who are the better performing practices versus the poor-performing practices? And how can they learn one from the other and apply best practices and improve the profitability across their portfolio. So I do think that there is some stickiness there, but actual -- complete numbers on that, Nathan, I don't think we really have those statistics available to us, right?

Makes sense.

Nathan, can I just also we don't have that statistic and we'll think about how we can provide that to you. It's not so easy to come up with that number. But I will tell you that recently, we've gained a very nice DSO as a result of a relationship with -- BioHorizons. We have a DSO that has moved their one-generation products to BioHorizons has, there is a lot of dialogue in this area between our NASA team and our DSOs and our specialty businesses, particular DSOs, to move specialty products towards the distribution customers. So -- this is working quite well. We track it. We have MBOs related to this. And this cross-selling, this is what we call One Schein has been quite successful in terms of dollars.

Great. And maybe, Ron, if I could just ask a quick follow-up to you. On the cash flow guidance of $600 million to $700 million, how do you think that, that grows over time? It seems like you're expecting nice operating profit growth, should we expect similar growth in cash flow.

Yes. We'll continue with the goal of wanting our operating cash flow to exceed net income, right? And you're right. To the extent that we can grow that net income over the coming years and then operating cash flow should grow with that.

Thank you. Think we have a little question from our online audience.

Thank you, Graham. The clarifying question relating guidance. Does the long-term target for non-GAAP diluted EPS growth of 11 -- of 8% to 11% include share buybacks or do these come on top?

I think within that range of 8% to 11%, there will be some share repurchases. I mean we're always going to do share repurchases, if anything, to keep our share count flat because of stock-based compensation, you do need to do some share repurchases to keep your share count from growing. The part of that range will include some level of share repurchases. We've assumed, I think, kind of towards a minimal level. A lot of that will depend on, like we said before, when we talked about capital deployment, what is -- to the extent we're being opportunistic with M&A, it might mean that we pull back a little bit on share repurchases to preserve that capital. Equally, we may have years that we're able to do more in share repurchases. So it does enter into the equation into the 8% to 11% yes.

So I think that concludes the Q&A portion of today. If there are any other questions, management is going to be available over lunch so we can address anything that's open. And I think, Stanley, you could just close with some closing remarks.

Thank you, Graham. Thank you, Ron. I think, hopefully, our investors will agree that we answered the question. Two questions. Can you please expose us to the management team? And can you please provide greater thoughts on the strategic plan? I'm more enthused I've been with the company, Jimmy and I for 3 years. We're more enthusiastic than ever with the management team, with the motivation of the team that is behind this well-thought-out strategic plan. Of course, the lawyers will tell us there's no guarantees for the future, but I am feeling more optimistic than ever before. We've transformed this company many times over the years. I think the strategic plan will, in fact, transform the company, in my view, drive up margins. Of course, it's very hard to predict this mix of business where the margins will go. Perhaps Ron is a little conservative, and hopefully is conservative. And I think over the years, we've tended to be somewhat conservative. Ron is a good student of Steve Paladino. And we've, in general, met our expectations and exceeded them. We grew the EPS for a long time. The 10, 11 or so percent. We have leading positions in quite attractive markets. Certainly, the dental and medical distribution businesses, our businesses are good places to be in. I think on the medical side, we've shown that we can be a key competitor as we have been on the dental side for many years. We, I believe, can grow our specialty value-added services businesses quite nicely and contribute overall through the margins of the company. The opportunity for One Schein, the ability to sell 1 suite of products to another part of -- to a customer that is not buying other products from other parts of the business, in other words, share of wallet. We have very good opportunity there. have a good track record in that area. And I think we've magnify on that too. And I feel very, very bullish about where we're heading. I just spent quite a bit of time with our team on the lab side, readers selling there in Chicago last week. It's a tiny part of Schein. The dental laboratories are under enormous pressure right now. Modernize their businesses. And they're right in the middle of all this. There's a huge opportunity for the labs at automate and they turn to Henry Schein because we're right in the middle of this automation. I think that many dental practitioners think the same way the opportunity to automate their practices. I think it was mentioned that the scanning devices are moving into the normal channel standard of use. But there's a high confusion on which product to buy other ties into software. I believe our FSCs, our field sales consultants around the world are there ready to help practitioners understand which device to buy, how to connect it, whether they should buy mills now or wait for 3D printing, others all ties into operating the practice, we are well positioned to help customers, dental as well as medical in their areas of concern, deal with this overwhelming and very scary transformation towards digitization of the practice. So I'm very optimistic about our team, our ability to help our customers move through this period of transformation. And by the way, we will show that by turning to Henry Schein and seeking advice on this transformation, it can actually be quite profitable for Henry Schein. It aligns very well with the notion of enlighten self-interest of helping our customers, helping the company financially, advancing our team's interest and working very, very closely with national brand manufacturers while balancing that with our own manufactured products with higher margins. And continuing with the Henry Schein story of aligning with the needs of society, the balancing the 5 constituents that make up the Henry Schein Mosaic of Success. It's worked for 90 years. So I'm very, very optimistic about the future. I think, Ron, you've put together a very good financial model. You know the team is behind you. And I thank those investors that have been with us for years and welcome new investors. Of course, Ron and Graham will be available after this meeting to answer questions. And many of our senior team are here over lunch. Please take a look at the demo room. It's a small room, it's compact, but each one of those exhibits tells a story and how this all connects with the Henry Schein strategic plan. So thank you for being here, and I will end with my view that Henry Schein's best years are yet to come. I hope the analysts agree, and I hope the investors agree. Thank you very much.