Henry Schein, Inc.HSICNASDAQ

Overview Intelligence Charts News Fundamentals DCF Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $295.24 per share(market-calibrated)

+278.1%

Upside to Fair Value

Current

$78.08

Pure Model

$317.27

Fair Value

$295.24

Bull Case

$402.00

Bear Case

$247.56

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

0.50%

Calibrated Growth

2.13%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $317.27.

What's Driving This Ratingfor HSIC

✓

CapEx already efficient

CapEx at 0.88% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 5.70% — below the sector mature average of 20.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $2.9B (16.25% margin).

→

Moderate revenue growth

Analyst consensus projects 6.84% revenue growth, fading to 3.00% by Year 10. Revenue reaches $18.0B (vs $12.7B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 250bps below the model's 3.00%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 70.77% indicates efficient cash generation. FCF reaches $2.3B by Year 10 (12.73% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.89

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)8.52%

Cost of Debt

Pre-tax Cost of Debt2.31%

Tax Rate24.33%

After-tax Cost of Debt1.75%

Equity Weight (E/V)77.52%

Debt Weight (D/V)22.48%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (77.52% × 8.52%) + (22.48% × 1.75%)

= 7.00%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$13.5B	$14.5B	$15.5B	$16.4B	$18.0B
EBIT	$772M	$825M	$1.3B	$2.1B	$2.9B
Tax	$188M	$201M	$323M	$507M	$710M
NOPAT	$584M	$624M	$1.0B	$1.6B	$2.2B
+ Depreciation	$235M	$251M	$268M	$285M	$311M
- Capex	$119M	$127M	$136M	$145M	$158M
- Δ NWC	$125M	$60M	$65M	$69M	$76M
Free Cash Flow	$574M	$687M	$1.1B	$1.6B	$2.3B
Discount Factor	0.935	0.816	0.713	0.623	0.509
Present Value	$536M	$561M	$763M	$1.0B	$1.2B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$2.3B

Terminal Growth Rate3.00%

WACC7.00%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$58.9B

PV of Terminal Value$29.9B

Exit Multiple Method

Year 10 EBITDA$3.2B

Exit Multiple (EV/EBITDA)24.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$77.5B

PV of Terminal Value$39.4B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$8.3B

PV of Terminal Value$29.9B

Enterprise Value$38.2B

(-) Net Debt$2.7B

Equity Value$35.5B

Shares Outstanding127M

Price per Share$279.99

Exit Multiple Method

PV of Projected FCFs$8.3B

PV of Terminal Value$39.4B

Enterprise Value$47.7B

(-) Net Debt$2.7B

Equity Value$45.0B

Shares Outstanding127M

Price per Share$354.56

Pure Model Fair Value

$317.27

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.00%	2.50%	3.00%	3.50%	4.00%
5.00%	$428.24	$467.08	$524.65	$501.81	$480.06
6.00%	$346.98	$366.07	$391.53	$427.20	$480.06
7.00%	$292.72	$303.63	$317.27	$334.82	$358.22
8.00%	$252.66	$259.51	$267.71	$277.75	$290.30
9.00%	$221.24	$225.81	$231.13	$237.43	$244.99

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$247.56

217.1% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 1.12

Base Case

$317.27

306.3% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 0.89

Bull Case

$402.00

414.9% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 0.76

Key Assumptions & Drivers• Healthcare Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth6.84%

Year 3 Revenue Growth2.96%

Year 5 Revenue Growth3.00%

Year 7 Revenue Growth3.00%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin5.70%

Terminal EBIT Margin20.00%

Tax Rate24.33%

Historical Capex / Rev0.88%

NWC / Revenue14.46%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 24x EV/EBITDA (Healthcare sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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