John Stansel

Ron attributed specialty margin expansion to strong European premium-implant growth and mix shift, plus good endodontics margins.

Fred explained HSIC benefits from DSO growth through strong national positioning, with DSOs valuing national distribution support, efficiency tools, technology platform, and access to market exclusives.

Ron confirmed full-year net benefit is expected but warned of quarterly lumpiness from investment timing, with H2-weighted benefits consistent with EPS guidance cadence.

Ron attributed the margin headwind to mix shift toward lower-margin value implants growing faster than premium, combined with a strong prior year US implant comparable.

Stanley characterized RFP activity as normal cadence, not more aggressive than expected. Emphasized comprehensive value proposition including supply chain capabilities, national service coverage, software, and corporate brand alternatives for tariff-sensitive products.

Stanley explained it as a targeted effort to recapture customers lost during the cyber incident through an affinity program, now completed. Ron said gloves attributed about one-third of margin pressure, with the rest from other competitive pricing and promotions, but could not isolate the dollar impact precisely.

Ron confirmed medical got a better bump from respiratory illness timing but did not quantify the specific dollar impact. Noted momentum continuing into Q2 as respiratory season normalizes.

Stanley outlined a multi-layered tariff mitigation approach: existing inventory buffer, switching to alternate products, advancing corporate brand sourcing, negotiating with manufacturers, and as a last resort passing costs to customers. Noted only about 5% price increase in handpiece repair so far.

Stanley noted alignment between KKR capabilities and BOLD+1 priorities but deferred specifics pending Hart-Scott-Rodino clearance. Emphasized Chinese wall with KKR dental portfolio investments.

Ron explained that ongoing share gains, new product momentum, and back-half-weighted restructuring savings drive H2 EPS weighting, noting a tough Q1 equipment comp from post-cyber deferrals.

London confirmed attrition was mostly in the expansion population, agreed some is likely OB3 pull forward, and tied it to holding back 50bps of rate favorability.

Sarah noted Nebraska is first state with 7/1 implementation, only state pulling forward into 2026. Conversations with states incorporate anticipated acuity shifts into rates spanning 2027. CMS guidance explicitly requires states to document OB3/work requirement impact in rate certifications, supports midyear rates and retros. States already running frailty definitions on populations with smaller-than-expected at-risk pools.

Drew confirmed PDP running north of 1% margin target. Bid assuming CMS demo does not continue for 2026. Pleased with performance and stable membership trajectory from Q1 to Q2.

Drew said it would be foolish not to assume reduced 2026 risk corridor protection, expects industry to price accordingly. PDP remains a great business at $16B+ revenue.

Drew attributed strong PDP growth (6.9M to 7.5M+) to competitive product positioning, cost structure advantages, and the CMS demonstration program.

Aaron explained back-half assumes normalized utilization, customer onboarding costs built in, Specialty Networks lapping in March. M&A adds ~300bps to Pharma raise.