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Tickers in this Article: ALGN, HSIC, PDCO, SIRO
Leading global healthcare distributor Henry Schein Inc. (HSIC) recently expanded its dental distribution business in the U.S. The company’s U.S. dental franchise Henry Schein Dental entered a distribution partnership with Carl Zeiss Meditec Inc. to distribute the well-regarded portfolio of ZEISS dental microscopes and loupes.

The distribution partnership applies to OPMI pico and OPMI PROergo, and for ZEISS EyeMag dental loupes. As per the agreement, effective Jul 1, 2013, Henry Schein will supply technically advanced line of ZEISS dental products to dentists and endodontists in the U.S.

The partnership between Henry Schein and the Medical Technology division of ZEISS will improve standard of patient care. This will be achieved on the back of inclusion of premium dental equipments in Henry Schein’s line of dental product and services available to office-based dental practitioners.

The exceptional visualization and superior scientific design of ZEISS products will improve working and operating comfort for dental professionals in the U.S. The deal underlines Henry Schein’s strategy to include innovative and patient-centric dental equipment in its dental supply portfolio. Thus, the novel distribution partnership should expand the company’s dental business in the domestic market.

Henry Schein’s focus on its core dental business is encouraging. We are upbeat about this new distribution partnership as it leverages the companies’ revenue profile in the dental market. We expect sales to benefit from ZEISS dental equipment sales in the U.S.

However, Henry Schein should be aware of similar advances made by peers in the industry. Recently, Patterson Companies Inc. (PDCO) inked a strategic distribution agreement with Sirona Dental Systems Inc. (SIRO). Henry Schein needs to take note of moves made by such strong rivals.

HSIC currently retains a Zacks Rank #3 (Hold). While we remain on the sidelines for this healthcare distributor, we believe that Align Technology Inc. (ALGN), carrying a Zacks Rank #2 (Buy), is worth considering.

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