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2 Wide Moats in Health Care

Distributors Henry Schein and Patterson should be able to maintain their competitive advantages over the long run and deserve a spot on investors' watchlists.

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Michael Waterhouse: Henry Schein (HSIC) and Patterson (PDCO) are two unique health-care companies that we rate wide moat, and we think they have wide moats for a few basic reasons. First, they have a very broad distribution scale that helps give them a low-cost edge amongst competitors.

Second, they also distribute to a very fragmented base of customers and suppliers in the U.S. We're talking roughly over 180,000 dentists and 60,000 veterinarians, and that helps keep pricing power stable.

Michael Waterhouse does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.