10-Q - HSIC - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☒

QUARTERLY

REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

For the

quarterly

period ended

September 28, 2024

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT

OF 1934

For the transition period from ____________ to ____________

Commission File Number:

0-27078

HENRY SCHEIN, INC.

(Exact name of registrant as specified in its charter)

Delaware

11-3136595

(State or other jurisdiction of

(I.R.S. Employer Identification No.)

incorporation or organization)

135 Duryea Road

Melville

New York

(Address of principal executive offices)

11747

(Zip Code)

(

631

)

843-5500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $.01 per share

HSIC

The

Nasdaq

Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required

to be filed by Section 13 or 15(d) of the Securities

Exchange Act of 1934 during the preceding 12 months (or for such

shorter period that the registrant was required to file such

reports), and (2) has been subject to such filing requirements for the

past 90 days.

Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically every

Interactive Data File required to be submitted

pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during

the preceding 12 months (or for such shorter period

that the registrant was required to submit such files).

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller

reporting company, or an emerging growth company.

See the definitions of “large accelerated filer,”

“accelerated filer,”

“smaller reporting company,”

and “emerging growth company”

in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period

for

complying with any new or revised financial accounting standards provided

pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined

in Rule 12b-2 of the Exchange Act).

Yes

☐

☒

As of October 28, 2024,

there were

124,681,294

shares of the registrant’s common stock outstanding.

hsic-20240928p2i0

HENRY SCHEIN, INC.

INDEX

PART I. FINANCIAL INFORMATION

Page

ITEM 1.

Condensed Consolidated Financial Statements:

Condensed Consolidated Balance Sheets

as of September 28, 2024 and December 30, 2023

Condensed Consolidated Statements of Income

for the three and nine months ended

September 28, 2024 and September 30, 2023

Condensed Consolidated Statements of Comprehensive Income

for the

three and nine months ended September 28, 2024 and September 30, 2023

Condensed Consolidated Statement of Changes in Stockholders' Equity

for the three months ended

September 28, 2024 and September 30, 2023

Condensed Consolidated Statement of Changes in Stockholders' Equity

for the nine months ended

September 28, 2024 and September 30, 2023

Condensed Consolidated Statements of Cash Flows

for the nine months ended

September 28, 2024 and September 30, 2023

Notes to Condensed Consolidated Financial Statements

Note 1 – Basis of Presentation

Note 2 – Significant Accounting Policies and Recently

Issued Accounting Standards

Note 3 – Cyber Incident

Note 4 – Net Sales from Contracts with Customers

Note 5 – Segment Data

Note 6 – Business Acquisitions

Note 7 – Fair Value Measurements

Note 8 – Debt

Note 9 – Income Taxes

Note 10 – Plans of Restructuring

Note 11 – Legal Proceedings

Note 12 – Stock-Based Compensation

Note 13 – Redeemable Noncontrolling Interests

Note 14 – Comprehensive Income

Note 15 – Earnings Per Share

Note 16 – Supplemental Cash Flow Information

Note 17 – Related Party Transactions

ITEM 2.

Management's Discussion and Analysis of

Financial Condition and Results of Operations

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

ITEM 4.

Controls and Procedures

PART II. OTHER INFORMATION

ITEM 1.

Legal Proceedings

ITEM 1A.

Risk Factors

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

ITEM 6.

Exhibits

Signature

Table of Contents

See accompanying notes.

PART

I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions,

except share data)

September 28,

December 30,

2024

2023

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

126

171

Accounts receivable, net of allowance for credit losses of $

and $

(1)

1,660

1,863

Inventories, net

1,754

1,815

Prepaid expenses and other

607

639

Total current assets

4,147

4,488

Property and equipment, net

540

498

Operating lease right-of-use assets

304

325

Goodwill

3,986

3,875

Other intangibles, net

1,100

916

Investments and other

528

471

Total assets

10,605

10,573

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND

STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

1,026

1,020

Bank credit lines

638

264

Current maturities of long-term debt

109

150

Operating lease liabilities

Accrued expenses:

Payroll and related

289

332

Taxes

159

137

Other

631

700

Total current liabilities

2,929

2,683

Long-term debt (1)

1,906

1,937

Deferred income taxes

123

Operating lease liabilities

262

310

Other liabilities

414

436

Total liabilities

5,634

5,420

Redeemable noncontrolling interests

832

864

Commitments and contingencies

(nil)

Stockholders' equity:

Preferred stock, $

0.01

par value,

1,000,000

shares authorized,

none

outstanding

Common stock, $

0.01

par value,

480,000,000

shares authorized,

125,154,194

outstanding on September 28, 2024 and

129,247,765

outstanding on December 30, 2023

Additional paid-in capital

Retained earnings

3,766

3,860

Accumulated other comprehensive loss

(264)

(206)

Total Henry Schein, Inc. stockholders' equity

3,503

3,655

Noncontrolling interests

636

634

Total stockholders' equity

4,139

4,289

Total liabilities, redeemable noncontrolling

interests and stockholders' equity

10,605

10,573

(1)

Amounts presented include balances held by our consolidated variable interest entity (“VIE”).

At September 28, 2024 and

December 30, 2023, includes trade accounts receivable of $

341

million and $

284

million, respectively, and long-term debt of $

210

million and $

210

million, respectively.

See

Note 1 – Basis of Presentation

for further information.

Table of Contents

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF INCOME

(in millions,

except share and per share data)

(unaudited)

Three Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

2024

2023

2024

2023

Net sales

3,174

3,162

9,482

9,322

Cost of sales

2,181

2,167

6,459

6,386

Gross profit

993

995

3,023

2,936

Operating expenses:

Selling, general and administrative

724

725

2,296

2,149

Depreciation and amortization

188

152

Restructuring costs

Operating income

157

200

466

576

Other income (expense):

Interest income

Interest expense

(34)

(25)

(96)

(58)

Other, net

(2)

(1)

(2)

Income before taxes, equity in earnings of affiliates and

noncontrolling interests

128

179

387

528

Income taxes

(32)

(39)

(97)

(119)

Equity in earnings of affiliates, net of tax

Net income

143

302

419

Less: Net income attributable to noncontrolling interests

(6)

(21)

Net income attributable to Henry Schein, Inc.

137

296

398

Earnings per share attributable to Henry Schein, Inc.:

Basic

0.79

1.06

2.32

3.04

Diluted

0.78

1.05

2.30

3.02

Weighted-average common

shares outstanding:

Basic

126,124,715

130,388,353

127,550,045

130,888,717

Diluted

127,054,934

131,442,135

128,498,494

132,149,172

Table of Contents

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF COMPREHENSIVE INCOME

(in millions)

(unaudited)

Three Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

2024

2023

2024

2023

Net income

143

302

419

Other comprehensive income (loss), net of tax:

Foreign currency translation gain (loss)

(45)

(58)

(17)

Unrealized gain (loss) from hedging activities

(18)

(3)

Other comprehensive income (loss), net of tax

(39)

(61)

(15)

Comprehensive income

139

104

241

404

Comprehensive income attributable to noncontrolling interests:

Net income

(6)

(21)

Foreign currency translation loss (gain)

(12)

Comprehensive income attributable to noncontrolling

interests

(12)

(4)

(3)

(20)

Comprehensive income attributable to Henry Schein, Inc.

127

100

238

384

Table of Contents

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENT

OF CHANGES IN

STOCKHOLDERS’ EQUITY

(in millions, except share data)

(unaudited)

Accumulated

Common Stock

Additional

Other

Total

$0.01 Par Value

Paid-in

Retained

Comprehensive

Noncontrolling

Stockholders'

Amount

Capital

Earnings

Income / (Loss)

Interests

Equity

Balance, June 29, 2024

127,080,545

3,803

(292)

636

4,148

Net income (loss) (excluding $

attributable to Redeemable

noncontrolling interests)

(1)

Foreign currency translation gain (excluding gain of $

attributable to Redeemable noncontrolling interests)

Unrealized loss from hedging activities,

net of tax benefit of $

(18)

Purchase of noncontrolling interests

(1)

(2)

Change in fair value of redeemable securities

(6)

Noncontrolling interests and adjustments related to

business acquisitions

(4)

(3)

Repurchase and retirement of common stock

(1,954,076)

(18)

(119)

(137)

Stock issued upon exercise of stock options

22,448

Stock-based compensation expense

7,655

Shares withheld for payroll taxes

(2,403)

Settlement of stock-based compensation awards

Transfer of charges in excess of

capital

(17)

Balance, September 28, 2024

125,154,194

3,766

(264)

636

4,139

Accumulated

Common Stock

Additional

Other

Total

$0.01 Par Value

Paid-in

Retained

Comprehensive

Noncontrolling

Stockholders'

Amount

Capital

Earnings

Income / (Loss)

Interests

Equity

Balance, July 1, 2023

130,576,806

3,769

(210)

626

4,186

Net income (excluding $

attributable to Redeemable

noncontrolling interests)

137

141

Foreign currency translation loss (excluding loss of $

attributable to Redeemable noncontrolling interests)

(43)

Unrealized gain from hedging activities,

net of tax of $

Distributions to noncontrolling shareholders

(1)

Change in fair value of redeemable securities

Noncontrolling interests and adjustments related to

business acquisitions

(1)

Repurchases and retirement of common stock

(659,681)

(6)

(44)

(50)

Stock-based compensation expense

23,985

Stock issued upon exercise of stock options

3,884

Shares withheld for payroll taxes

(9,183)

Settlement of stock-based compensation awards

Transfer of charges in excess of

capital

(35)

Balance, September 30, 2023

129,935,883

3,897

(247)

629

4,280

Table of Contents

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENT

OF CHANGES IN

STOCKHOLDERS' EQUITY

(in millions, except share data)

(unaudited)

Accumulated

Common Stock

Additional

Other

Total

$.01 Par Value

Paid-in

Retained

Comprehensive

Noncontrolling

Stockholders'

Amount

Capital

Earnings

Income / (Loss)

Interests

Equity

Balance, December 30, 2023

129,247,765

3,860

(206)

634

4,289

Net income (excluding loss of $

attributable to Redeemable

noncontrolling interests)

296

302

Foreign currency translation gain/(loss) (excluding loss of $

attributable to Redeemable noncontrolling interests)

(55)

(54)

Unrealized loss from hedging activities,

net of tax benefit of $

(3)

Distributions to noncontrolling shareholders

(5)

Purchase of noncontrolling interests

(7)

(1)

(8)

Change in fair value of redeemable securities

(87)

Noncontrolling interests and adjustments related to

business acquisitions

(8)

(7)

Repurchase and retirement of common stock

(4,368,510)

(42)

(271)

(313)

Stock issued upon exercise of stock options

47,688

Stock-based compensation expense

337,753

Shares withheld for payroll taxes

(110,566)

(9)

Settlement of stock-based compensation awards

Transfer of charges in excess of

capital

119

(119)

Balance, September 28, 2024

125,154,194

3,766

(264)

636

4,139

Accumulated

Common Stock

Additional

Other

Total

$.01 Par Value

Paid-in

Retained

Comprehensive

Noncontrolling

Stockholders'

Amount

Capital

Earnings

Income / (Loss)

Interests

Equity

Balance, December 31, 2022

131,792,817

3,678

(233)

649

4,095

Net income (excluding $

attributable to Redeemable

noncontrolling interests)

398

408

Foreign currency translation loss (excluding loss of $

attributable to Redeemable noncontrolling interests)

(16)

Unrealized gain from hedging activities,

net of tax of $

Distributions to noncontrolling shareholders

(28)

Change in fair value of redeemable securities

Noncontrolling interests and adjustments related to

business acquisitions

(2)

Repurchases and retirement of common stock

(2,521,695)

(26)

(175)

(201)

Stock-based compensation expense

1,060,883

Stock issued upon exercise of stock options

19,744

Shares withheld for payroll taxes

(415,048)

(32)

Settlement of stock-based compensation awards

(818)

Transfer of charges in excess of

capital

(4)

Balance, September 30, 2023

129,935,883

3,897

(247)

629

4,280

Table of Contents

See accompanying notes.

HENRY SCHEIN, INC.

CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS

(in millions)

(unaudited)

Nine Months Ended

September 28,

September 30,

2024

2023

Cash flows from operating activities:

Net income

302

419

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

221

180

Non-cash restructuring charges

Stock-based compensation expense

Provision for losses on trade and other accounts receivable

Benefit from deferred income taxes

(41)

(4)

Equity in earnings of affiliates

(12)

(10)

Distributions from equity affiliates

Changes in unrecognized tax benefits

Other

(25)

(11)

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

188

(72)

Inventories

180

Other current assets

(55)

Accounts payable and accrued expenses

(131)

(170)

Net cash provided by operating activities

644

532

Cash flows from investing activities:

Purchases of property and equipment

(112)

(108)

Payments related to equity investments and business acquisitions,

net of cash acquired

(223)

(668)

Proceeds from loan to affiliate

Capitalized software costs

(30)

Other

(10)

(6)

Net cash used in investing activities

(372)

(808)

Cash flows from financing activities:

Net change in bank credit lines

374

(98)

Proceeds from issuance of long-term debt

120

1,158

Principal payments for long-term debt

(193)

(457)

Debt issuance costs

(3)

Proceeds from issuance of stock upon exercise of stock options

Payments for repurchases and retirement of common stock

(310)

(200)

Payments for taxes related to shares withheld for employee taxes

(9)

(34)

Distributions to noncontrolling shareholders

(36)

(41)

Acquisitions of noncontrolling interests in subsidiaries

(255)

(19)

Net cash provided by (used in) financing activities

(306)

307

Effect of exchange rate changes on cash and cash equivalents

(11)

Net change in cash and cash equivalents

(45)

Cash and cash equivalents, beginning of period

171

117

Cash and cash equivalents, end of period

126

166

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 1 – Basis of Presentation

Our condensed consolidated financial statements include the accounts of Henry

Schein, Inc., and all of our

controlled subsidiaries (“we”, “us” and “our”).

All intercompany accounts and transactions are eliminated in

consolidation.

Investments in unconsolidated affiliates for which we have the ability to influence

the operating or

financial decisions are accounted for under the equity method.

Certain prior period amounts have been reclassified

to conform to the current period presentation.

These reclassifications, individually and in the aggregate, did

not

have a material impact on our condensed consolidated financial condition,

results of operations or cash flows.

Our accompanying unaudited condensed consolidated financial statements

have been prepared in accordance with

accounting principles generally accepted in the United States

(“U.S. GAAP”) for interim financial information and

with the instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all of the

information and footnote disclosures required by U.S. GAAP for complete

financial statements.

The unaudited interim condensed consolidated financial statements should be

read in conjunction with the audited

consolidated financial statements and notes to the consolidated financial

statements contained in our Annual Report

on Form 10-K for the year ended December 30, 2023 and with the information

contained in our other publicly-

available filings with the Securities and Exchange Commission.

The condensed consolidated financial statements

reflect all adjustments considered necessary for a fair presentation of

the consolidated results of operations and

financial position for the interim periods presented.

All such adjustments are of a normal recurring nature.

The preparation of financial statements in conformity with accounting principles

generally accepted in the United

States requires us to make estimates and assumptions that affect the reported amounts of

assets and liabilities and

disclosure of contingent assets and liabilities at the date of the financial

statements and the reported amounts of

revenues and expenses during the reporting period.

Actual results could differ from those estimates.

The results of

operations for the three and nine months ended September 28, 2024

are not necessarily indicative of the results to

be expected for any other interim period or for the year ending December 28, 2024.

Our condensed consolidated financial statements reflect estimates and

assumptions made by us that affect, among

other things, our goodwill, long-lived asset and definite-lived intangible

asset valuation; inventory valuation; equity

investment valuation; assessment of the annual effective tax rate; valuation of

deferred income taxes and income

tax contingencies; the allowance for credit losses; hedging activity; supplier

rebates; measurement of compensation

cost for certain share-based performance awards and cash bonus plans; and

pension plan assumptions.

We consolidate the results of operations and financial position of a trade accounts receivable securitization which

we consider a VIE because we are its primary beneficiary, as we have the power to direct activities that most

significantly affect its economic performance and have the obligation to absorb the

majority of its losses or

benefits.

For this VIE, the trade accounts receivable transferred

to the VIE are pledged as collateral to the related

debt.

The VIE’s creditors have recourse to us for losses on these trade accounts receivable.

At September 28, 2024

and December 30, 2023, certain trade accounts receivable that can

only be used to settle obligations of this VIE

were $

341

million and $

284

million, respectively, and the liabilities of this VIE where the creditors have recourse

to us were $

210

million and $

210

million, respectively.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 2 – Significant Accounting Policies and Recently Issued Accounting

Standards

Significant Accounting Policies

There have been no material changes in our significant accounting policies during

the three and nine months ended

September 28, 2024, as compared to the significant accounting policies

described in Item 8 of our Annual Report

on Form 10-K for the year ended December 30, 2023.

Recently Issued Accounting Standards

In March 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update

(“ASU”) 2024-01, “

Compensation - Stock Compensation (Topic 718): Scope Application of Profits Interest and

Similar Awards,

” which clarifies how to determine whether profits interest and

similar awards should be accounted

for as a share-based payment arrangement under Topic 718 or within the scope of other guidance.

The ASU

provides an illustrative example with multiple fact patterns and amends

the structure of paragraph 718-10-15-3 of

Topic 718 to improve its clarity and operability.

The guidance in ASU 2024-01 applies to all entities that

issue

profits interest awards as compensation to employees or nonemployees

in exchange for goods or services.

Entities

can apply the amendments either retrospectively to all periods presented

in the financial statements or prospectively

to profits interest awards granted or modified on or after the date

of adoption.

If prospective application is elected,

an entity must disclose the nature of and reason for the change in accounting principle

that resulted from the

adoption of the ASU.

This ASU is effective for fiscal years beginning after December 15, 2024,

including interim

periods within those fiscal years.

We do not expect that the requirements of ASU 2024 – 01 will have a material

impact on our consolidated financial statements.

In December 2023, FASB issued ASU 2023-09, “

Income Taxes (Topic

740): Improvements to Income Tax

Disclosures

,” which requires public business entities to disclose additional

information in specified categories with

respect to the reconciliation of the effective tax rate to the statutory rate for federal, state and

foreign income taxes.

It also requires greater detail about individual reconciling items in

the rate reconciliation to the extent the impact of

those items exceeds a specified threshold.

In addition to new disclosures associated with the rate reconciliation,

the

ASU requires information pertaining to taxes paid (net of refunds received)

to be disaggregated for federal, state

and foreign taxes and further disaggregated for specific jurisdictions

to the extent the related amounts exceed a

quantitative threshold.

The ASU also describes items that need to be disaggregated

based on their nature, which is

determined by reference to the item’s fundamental or essential characteristics, such as the transaction or event

that

triggered the establishment of the reconciling item and the activity with which

the reconciling item is associated.

The ASU eliminates the historic requirement that entities disclose information

concerning unrecognized tax

benefits having a reasonable possibility of significantly increasing

or decreasing in the 12 months following the

reporting date.

This ASU is effective for annual periods beginning after December 15, 2024.

Early adoption is

permitted for annual financial statements that have not yet been

issued or made available for issuance.

This ASU

should be applied on a prospective basis; however, retrospective application is permitted.

We are currently

evaluating the impact that ASU 2023-09 will have on our consolidated

financial statements.

In November 2023, the FASB issued ASU 2023-07, “

Segment Reporting (Topic 280): Improvements to Reportable

Segments

,” which aims to improve financial reporting by requiring disclosure

of incremental segment information

on an annual and interim basis for all public entities to enable investors to

develop more decision-useful financial

analyses.

Currently, Topic

280 requires that a public entity disclose certain information about its

reportable

segments.

For example, a public entity is required to report a measure of

segment profit or loss that the chief

operating decision maker uses to assess segment performance and

make decisions about allocating resources.

Topic 280 also requires other specified segment items and amounts, such as depreciation, amortization and

depletion expense, to be disclosed under certain circumstances.

The amendments in this ASU do not change or

remove those disclosure requirements and do not change how a public

entity identifies its operating segments,

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

aggregates those operating segments or applies the quantitative thresholds

to determine its reportable segments.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim

periods within fiscal years

beginning after December 15, 2024.

Early adoption is permitted.

We are currently evaluating the impact that ASU

2023- 07 will have on our consolidated financial statements.

Note 3 – Cyber Incident

In October 2023 Henry Schein experienced a cyber incident that primarily

affected the operations of our North

American and European dental and medical distribution businesses.

Henry Schein One, our practice management

software, revenue cycle management and patient relationship management

solutions business, was not affected, and

our manufacturing businesses were mostly unaffected.

On November 22, 2023, we experienced a disruption of our

ecommerce platform and related applications, which was remediated.

During the three and nine months ended September 28, 2024, we had a

sales decrease in our dental and medical

distribution businesses, which we believe was primarily a result of lower sales

to episodic customers following last

year’s cyber incident.

During the three and nine months ended September 28, 2024, we

incurred $

million and $

million, respectively,

of expenses directly related to the cyber incident, mostly consisting

of professional fees.

We maintain cyber

insurance, subject to certain retentions and policy limitations.

With respect to the October 2023 cyber incident, we

have a $

million insurance policy, following a $

million retention.

During the three and nine months ended

September 28, 2024, we received insurance proceeds of $

million and $

million, respectively, representing a

partial insurance recovery of losses related to the cyber incident.

The expenses and insurance recoveries related to

the cyber incident are included in the selling, general and administrative

line in our condensed consolidated

statements of income.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 4 – Net Sales from Contracts with Customers

Net sales are recognized in accordance with policies disclosed in Item

8 of our Annual Report on Form 10-K for

the year ended December 30, 2023.

Disaggregation of Net Sales

The following table disaggregates our net sales by reportable and operating segment

and geographic area:

Three Months Ended

Nine Months Ended

September 28, 2024

North

America

International

Global

North

America

International

Global

Net sales:

Health care distribution

Dental

1,089

763

1,852

3,321

2,369

5,690

Medical

1,076

1,101

3,060

3,140

Total health care distribution

2,165

788

2,953

6,381

2,449

8,830

Technology

and value-added services

190

221

565

652

Total net sales

2,355

819

3,174

6,946

2,536

9,482

Three Months Ended

Nine Months Ended

September 30, 2023

North

America

International

Global

North

America

International

Global

Net sales:

Health care distribution

Dental

1,134

748

1,882

3,447

2,290

5,737

Medical

1,044

1,070

2,920

2,991

Total health care distribution

2,178

774

2,952

6,367

2,361

8,728

Technology

and value-added services

185

210

519

594

Total net sales

2,363

799

3,162

6,886

2,436

9,322

Contract Liabilities

At September 28, 2024,

December 30, 2023, and December 31, 2022, the current and non-current

contract

liabilities were $

million and $

million; $

million and $

million; and $

million and $

million,

respectively.

During the nine months ended September 28, 2024, we recognized,

in net sales, $

million of the

amount that was previously deferred at December 30, 2023.

During the nine months ended September 30, 2023,

we recognized in net sales $

million of the amount that was previously deferred at December 31, 2022.

Current

contract liabilities are included in accrued expenses: other and the non-current

contract liabilities are included in

other liabilities within our consolidated balance sheets.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 5

–

Segment Data

We conduct our business through

two

reportable segments: (i) health care distribution and (ii) technology

and

value-added services.

These segments offer different products and services to the same customer base.

Our global

dental businesses serve office-based dental practitioners, dental laboratories, schools, government

and other

institutions.

Our medical businesses serve physician offices, urgent care centers, ambulatory care sites,

emergency

medical technicians, dialysis centers, home health, federal and state governments

and large enterprises, such as

group practices, and integrated delivery networks, among other providers

across a wide range of specialties.

Our

dental and medical groups serve practitioners in

countries worldwide.

The health care distribution reportable segment aggregates our global dental

and medical operating segments.

This

segment distributes consumable products, dental specialty products (including

implant, orthodontic and endodontic

products),

small equipment, laboratory products, large equipment, equipment repair

services, branded and generic

pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, personal

protective

equipment (“PPE”) products, vitamins and orthopedic implants.

Our global technology and value-added services reportable segment provides

software, technology and other value-

added services to health care practitioners.

Our technology offerings include practice management software

systems for dental practitioners.

Our value-added practice solutions include practice consultancy, education,

revenue cycle management and financial services on a non-recourse basis,

e-services, continuing education services

for practitioners,

practice technology, network and hardware services,

and other services.

The following tables present information about our reportable and operating

segments:

Three Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

2024

2023

2024

2023

Net sales:

Health care distribution

(1)

Dental

1,852

1,882

5,690

5,737

Medical

1,101

1,070

3,140

2,991

Total health care distribution

2,953

2,952

8,830

8,728

Technology

and value-added services

(2)

221

210

652

594

Total

3,174

3,162

9,482

9,322

(1)

Consists of consumable products, dental specialty products (including implant, orthodontic and endodontic products), small

equipment, laboratory products, large equipment, equipment repair services, branded and generic pharmaceuticals, vaccines, surgical

products, diagnostic tests, infection-control products, PPE products, vitamins and orthopedic implants.

(2)

Consists of practice management software and other value-added products, which are distributed primarily to health care providers,

practice consultancy, education, revenue cycle management and financial services on a non-recourse basis, e-services, continuing

education services for practitioners, practice technology, network and hardware services, and other services.

Three Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

2024

2023

2024

2023

Operating Income:

Health care distribution

118

160

390

471

Technology

and value-added services

105

Total

157

200

466

576

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 6

–

Business Acquisitions

Our acquisition strategy is focused on investments in companies that

add new customers and sales teams, increase

our geographic footprint (whether entering a new country, such as emerging markets, or building scale where we

have already invested in businesses), and finally, those that enable us to access new products and technologies.

Acquisition of TriMed

On April 1, 2024, we acquired a

% voting equity interest in TriMed Inc. (“TriMed”), a global developer of

solutions for the orthopedic treatment of lower and upper extremities, headquartered

in California.

The following table aggregates

the preliminary estimated fair value, as of the date of acquisition, of

consideration

paid and net assets acquired in the TriMed acquisition:

2024

Acquisition consideration:

Cash

141

Deferred consideration

Redeemable noncontrolling interests

153

Total consideration

316

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

221

Other noncurrent assets

Current liabilities

(9)

Deferred income taxes

(62)

Other noncurrent liabilities

(6)

Total identifiable

net assets

190

Goodwill

126

Total net assets acquired

316

Goodwill is a result of synergies that are expected to originate from the acquisition as well as

the expected growth

potential of TriMed.

The acquired goodwill is not deductible for tax purposes.

The following table summarizes the identifiable intangible assets acquired

as part of the acquisition of TriMed:

2024

Weighted Average

Useful

Lives (in years)

Product development

204

Trademarks / Tradenames

In process research & development

Not Applicable

Total

221

Except for in-process research and development (“IPR&D”), intangible assets

acquired as a result of the TriMed

acquisition are being amortized over their estimated useful lives

using the straight-line method of amortization.

The IPR&D is accounted for as an indefinite-lived intangible asset and

is not amortized until completion or

abandonment of the associated research and development efforts.

IPR&D is tested for impairment annually or

periodically if an indicator of impairment exists during the period until completion.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

The accounting for the acquisition of TriMed has not been completed in several areas,

including but not limited to

pending assessments of accounts receivable, right-of-use lease assets,

accrued liabilities, lease liabilities, income

and non-income based taxes.

During the three months ended September 28, 2024, we did not

record any material

measurement period adjustments.

We expect to finalize these amounts as soon as possible but no later than one

year from the acquisition date.

Pro forma financial information has not been presented because the

impact of the TriMed acquisition during the

three and nine months ended September 28, 2024 was immaterial

to our condensed consolidated financial

statements.

Other 2024 Acquisitions

During the nine months ended September 28, 2024, we acquired companies

within the health care distribution and

technology and value-added services segments.

Our acquired ownership interest in these companies range from

% to

100

Total consideration for these acquisitions was $

113

million.

Net assets acquired primarily consisted

of $

million of goodwill and $

million of intangible assets.

The intangible assets acquired consisted of

customer relationships and lists of $

million, trademarks and tradenames of $

million, product development of

million and non-compete agreements of $

million.

Weighted average useful lives for these acquired intangible

assets were

years,

years and

years, respectively.

During the nine months ended September 28, 2024, we completed the accounting

for certain acquisitions that

occurred in fiscal year 2024 and we did not record any material measurement

period adjustments related to these

acquisitions.

The accounting for other acquisitions in fiscal year 2024 has not

been completed in several areas,

including but not limited to pending assessment of accounts receivable,

right-of-use lease assets, lease liabilities,

accrued liabilities and non-income based taxes.

Goodwill is a result of the synergies and cross-selling opportunities that these acquisitions

are expected to provide

for us, as well as the expected growth potential.

The majority of the acquired goodwill is not deductible

for tax

purposes.

During the three and nine months ended September 28, 2024, in connection

with an acquisition of a controlling

interest of an affiliate, we recognized a gain of approximately $

million related to the remeasurement to fair value

of our previously held equity investment, using a discounted cash flow

model based on Level 3 inputs, as defined in

Note 7 – Fair Value Measurements

which was recorded in selling, general and administrative

in the condensed

consolidated statements of income.

The impact of these acquisitions, individually and in the aggregate, was

not considered material to our condensed

consolidated financial statements.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

2023 Acquisitions

Acquisition of Shield Healthcare

On October 2, 2023, we acquired a

% voting equity interest in Shield Healthcare, Inc. (“Shield”), a

supplier of

homecare medical products delivered directly to patients in their homes,

for consideration of $

348

million

(including cash paid of $

289

million, deferred consideration of $

million and redeemable noncontrolling interests

of $

million).

Shield expands our existing medical business by delivering

a diverse range of products, including

items such as incontinence, urology, ostomy, enteral nutrition, advanced wound care and diabetes supplies.

Additionally, Shield offers continuous glucose monitoring devices directly to patients in their homes.

During the quarter ended June 29, 2024, we completed the accounting for our

acquisition of Shield.

The following

table aggregates the final fair value, as of the date of the acquisition, of consideration

paid and net assets acquired

in the Shield acquisition:

Final

Allocation

Acquisition consideration:

Cash

289

Deferred consideration

Redeemable noncontrolling interests

Total consideration

348

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

166

Other noncurrent assets

Current liabilities

(24)

Deferred income taxes

(43)

Other noncurrent liabilities

(7)

Total identifiable

net assets

149

Goodwill

199

Total net assets acquired

348

Goodwill is a result of synergies that are expected to originate from the acquisition as well as

the expected growth

potential of Shield.

The acquired goodwill is not deductible for tax purposes.

The following table summarizes the identifiable intangible assets acquired

as part of the acquisition of Shield:

2023

Weighted Average

Useful Lives

(in years)

Customer relationships and lists

156

Trademarks / Tradenames

Total

166

Pro forma financial information has not been presented because the impact of

the Shield acquisition was immaterial

to our consolidated financial statements.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Acquisition of S.I.N. Implant System

On July 5, 2023, we acquired a

100

% voting equity interest in S.I.N. Implant System (“S.I.N.”) for consideration

329

million.

Based in São Paulo, S.I.N. manufactures an extensive line of products

to perform dental implant

procedures and is focused on advancing the development of value-priced dental

implants.

In 2023, S.I.N. expanded

the distribution of its products into the United States and other

international markets

During the quarter ended June 29, 2024, we completed the accounting for our

acquisition of S.I.N.

The following

table aggregates the final fair value, as of the date of acquisition, of consideration

paid and net assets acquired in

the S.I.N. acquisition:

Final Allocation

Acquisition consideration:

Cash

329

Total consideration

329

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

(33)

Long-term debt

(22)

Deferred income taxes

(38)

Other noncurrent liabilities

(27)

Total identifiable

net assets

Goodwill

241

Total net assets acquired

329

Goodwill is a result of synergies that are expected to originate from the acquisition as well as

the expected growth

potential of S.I.N.

The acquired goodwill is not deductible for tax purposes.

The following table summarizes the identifiable intangible assets acquired

as part of the acquisition of S.I.N.:

2023

Weighted Average

Useful Lives

(in years)

Customer relationships and lists

Product development

Trademarks / Tradenames

Total

Pro forma financial information has not been presented because the impact

of the S.I.N. acquisition was immaterial

to our consolidated financial statements.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Acquisition of Biotech Dental

On April 5, 2023, we acquired a

% voting equity interest in Biotech Dental, a provider of dental implants,

clear

aligners, individualized prosthetics and innovative digital dental software based

in France, for preliminary

consideration of $

423

million (including cash paid of $

216

million, $

million of contributed equity share in a

controlled subsidiary, and redeemable noncontrolling interests of $

182

million).

Biotech Dental has several

important solutions for dental practices and dental labs, including Nemotec,

a comprehensive, integrated suite of

planning and diagnostic software using open architecture that connects disparate

medical devices to create a digital

view of the patient, offering greater diagnostic accuracy and an improved patient

experience.

During the quarter ended March 30, 2024, we completed the accounting

for our acquisition of Biotech Dental.

The

following table aggregates the final fair value, as of the date of acquisition,

of consideration paid and net assets

acquired in the Biotech Dental acquisition:

Final Allocation

Acquisition consideration:

Cash

216

Fair value of contributed equity share in a controlled subsidiary

Redeemable noncontrolling interests

182

Total consideration

423

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

189

Other noncurrent assets

Current liabilities

(60)

Long-term debt

(73)

Deferred income taxes

(53)

Other noncurrent liabilities

(20)

Total identifiable

net assets

126

Goodwill

297

Total net assets acquired

423

Goodwill is a result of synergies that are expected to originate from the acquisition as well as

the expected growth

potential of Biotech Dental.

The acquired goodwill is not deductible for tax purposes.

The following table summarizes the identifiable intangible assets acquired

as part of the acquisition of Biotech

Dental:

2023

Weighted Average

Useful

Lives (in years)

Product development

124

Customer relationships and lists

Trademarks / Tradenames

Total

189

Pro forma financial information has not been presented because the

impact of the Biotech Dental acquisition was

immaterial to our condensed consolidated financial statements.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Other 2023 Acquisitions

During the year ended December 30, 2023, in addition to those noted above,

we acquired companies within the

health care distribution and technology and value-added services segments.

Our acquired ownership interest ranged

between

% to

100

During the three and nine months ended September 28, 2024, we recorded

an adjustment of

million and $

million, respectively, within selling, general and administrative in our condensed consolidated

statements of income, representing a change in the fair value of contingent

consideration related to a 2023

acquisition.

During the nine months ended September 28, 2024, we completed the accounting

for certain fiscal year 2023

acquisitions.

In relation to these acquisitions, we did not record material

adjustments in our condensed

consolidated financial statements relating to changes in estimated values of

assets acquired, liabilities assumed and

contingent consideration assets and liabilities.

Goodwill is a result of the synergies and cross-selling opportunities that these acquisitions

are expected to provide

for us, as well as the expected growth potential.

The majority of the acquired goodwill is deductible for

tax

purposes.

Pro forma financial information for our 2023 acquisitions has not been

presented because the impact of the

acquisitions was immaterial to our condensed consolidated

financial statements.

Acquisition Costs

During the three and nine months ended September 28, 2024, we

incurred $

million and $

million in acquisition

costs, respectively.

During the three and nine months ended September 30, 2023,

we incurred $

million and $

million in acquisition costs, respectively.

These costs are included in selling, general and administrative

in our

condensed consolidated statements of income.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 7 – Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or

paid to transfer a liability in an orderly

transaction between market participants at the measurement date.

The fair value hierarchy distinguishes between

(1) market participant assumptions developed based on market data obtained

from independent sources (observable

inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best

information available in the circumstances (unobservable inputs).

The fair value hierarchy consists of three broad levels, which gives the

highest priority to unadjusted quoted prices

in active markets for identical assets or liabilities (Level 1) and the lowest priority

to unobservable inputs (Level 3).

The three levels of the fair value hierarchy are described as follows:

•

Level 1— Unadjusted quoted prices in active markets for identical assets

or liabilities that are accessible at the

measurement date.

•

Level 2— Inputs other than quoted prices included within Level 1 that are

observable for the asset or liability,

either directly or indirectly.

Level 2 inputs include: quoted prices for similar assets or liabilities in active

markets;

quoted prices for identical or similar assets or liabilities in markets

that are not active; inputs other than quoted

prices that are observable for the asset or liability; and inputs that are

derived principally from or corroborated by

observable market data by correlation or other means.

•

Level 3— Inputs that are unobservable for the asset or liability.

The following section describes the fair values of our financial instruments

and the methodologies that we used to

measure their fair values.

Investments and notes receivable

There are no quoted market prices available for investments in unconsolidated

affiliates and notes receivable.

Certain of our notes receivable contain variable interest rates.

We believe the carrying amounts are a reasonable

estimate of fair value based on the interest rates in the applicable

markets.

Our investments and notes receivable

fair value is based on Level 3 inputs within the fair value hierarchy.

Debt

The fair value of our debt (including bank credit lines, current maturities

of long-term debt and long-term debt) is

based on Level 3 inputs within the fair value hierarchy, and as of September 28, 2024 and December 30, 2023 was

estimated at $

2,653

million and $

2,351

million, respectively.

Factors that we considered when estimating the fair

value of our debt include market conditions, such as interest rates and credit

spreads.

Derivative contracts

Derivative contracts are valued using quoted market prices and

significant other observable inputs.

Our derivative

instruments primarily include foreign currency forward agreements, forecasted

inventory purchase commitments,

foreign currency forward contracts, interest rate swaps and total return swaps.

The fair values for the majority of our foreign currency derivative contracts

are obtained by comparing our contract

rate to a published forward price of the underlying market rates, which

are based on market rates for comparable

transactions that are classified within Level 2 of the fair value hierarchy.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

The fair value of the interest rate swap, which is classified within Level 2

of the fair value hierarchy, is determined

by comparing our contract rate to a forward market rate as of the

valuation date.

The fair value of total return swaps is determined by valuing the underlying

exchange traded funds of the swap

using market-on-close pricing by industry providers as of the valuation

date that are classified within Level 2 of the

fair value hierarchy.

Redeemable noncontrolling interests

The values for redeemable noncontrolling interests are based on recent

transactions and/or implied multiples of

earnings that are classified within Level 3 of the fair value hierarchy.

See

Note 13 – Redeemable Noncontrolling

Interests

for additional information.

Intangible Assets

Assets measured on a non-recurring basis at fair value include intangibles.

Inputs for measuring intangibles are

classified as Level 3 within the fair value hierarchy.

Contingent Consideration

We estimate the fair value of contingent consideration payments as part of the acquisition price and record the

estimated fair value of contingent consideration as a liability on our

condensed consolidated balance sheet.

For

transactions accounted for as business combinations, subsequent changes

in the estimated fair value of contingent

consideration payments are included in selling, general, and administrative

expenses in our condensed consolidated

statements of income.

For transactions involving changes in our ownership in subsidiaries

without a change in our

control, subsequent changes in the estimated fair value of contingent consideration

payments are recognized in

additional paid-in capital in our condensed consolidated balance sheet.

We measure contingent consideration at the

fair value on a recurring basis using significant unobservable inputs classified

as Level 3 of the fair value

hierarchy.

We use various valuation techniques, including the Monte Carlo simulation and probability-weighted

scenarios, to determine the fair value of the contingent consideration liabilities on

the acquisition date and at each

reporting period.

Our fair value measurement inputs include expected operating

performance, discount and risk-

free rates, and credit spread.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

The following table presents our assets and liabilities that are measured and

recognized at fair value on a recurring

basis classified under the appropriate level of the fair value hierarchy as of

September 28, 2024 and December 30,

2023:

September 28, 2024

Level 1

Level 2

Level 3

Total

Assets:

Derivative contracts designated as hedges

Derivative contracts undesignated

Total return

swap

Total assets

Liabilities:

Derivative contracts designated as hedges

Derivative contracts undesignated

Contingent consideration

Total liabilities

Redeemable noncontrolling interests

832

December 30, 2023

Level 1

Level 2

Level 3

Total

Assets:

Derivative contracts designated as hedges

Derivative contracts undesignated

Total return

swap

Total assets

Liabilities:

Derivative contracts designated as hedges

Derivative contracts undesignated

Total liabilities

Redeemable noncontrolling interests

864

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 8 – Debt

Bank Credit Lines

Bank credit lines consisted of the following:

September 28,

December 30,

2024

2023

Revolving credit agreement

200

Other short-term bank credit lines

588

Total

638

264

Revolving Credit Agreement

August 20, 2021

, we entered into a $

1.0

billion revolving credit agreement (the “Revolving Credit Agreement”)

which was subsequently amended and restated on

July 11, 2023

to extend the maturity date to

July 11, 2028

and

update the interest rate provisions to reflect the current market approach

for a multicurrency facility.

The interest

rate on this revolving credit facility is based on Term Secured Overnight Financing Rate (“Term SOFR”) plus a

spread based on our leverage ratio at the end of each financial reporting

quarter.

As of September 28, 2024 the

interest rate on this revolving credit facility was

4.96

% plus

1.18

% for a combined rate of

6.14

As of December

30, 2023 the interest rate on this revolving credit facility was

5.36

% plus

1.00

% for a combined rate of

6.36

The Revolving Credit Agreement requires, among other things, that we

maintain certain maximum leverage ratios.

Additionally, the Revolving Credit Agreement contains customary representations, warranties and affirmative

covenants as well as customary negative covenants, subject to negotiated

exceptions, on liens, indebtedness,

significant corporate changes (including mergers), dispositions and certain restrictive

agreements.

As of September

28, 2024 and December 30, 2023, we had $

million and $

200

million in borrowings, respectively under this

revolving credit facility.

During the nine months ended September 28, 2024, the

average outstanding balance under

the Revolving Credit Agreement was approximately $

million.

As of September 28, 2024 and December 30,

2023, there were $

million and $

million of letters of credit, respectively, provided to third parties under the

Revolving Credit Agreement.

Other Short-Term Bank Credit

Lines

As of September 28, 2024 and December 30, 2023, we had various other

short-term bank credit lines available, in

various currencies, with a maximum borrowing capacity of $

689

million and $

368

million, respectively.

As of

September 28, 2024 and December 30, 2023, $

588

million and $

million, respectively, were outstanding.

During

the nine months ended September 28, 2024, the average outstanding balances

under our various other short-term

bank credit lines was approximately $

426

million.

As of September 28, 2024 and December 30, 2023, borrowings

under other short-term bank credit lines had weighted average interest

rates of

5.94

% and

6.02

%, respectively.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Long-term debt

Long-term debt consisted of the following:

September 28,

December 30,

2024

2023

Private placement facilities

1,024

1,074

Term loan

722

741

U.S. trade accounts receivable securitization

210

Various

collateralized and uncollateralized loans payable with interest,

in varying installments through 2031 at interest rates

from

0.00

% to

9.42

% at September 28, 2024 and

from

0.00

% to

9.42

% at December 30, 2023

Finance lease obligations

Total

2,015

2,087

Less current maturities

(109)

(150)

Total long-term debt

1,906

1,937

Private Placement Facilities

Our private placement facilities provided by

four

insurance companies, have a total facility amount of $

1.5

billion,

and are available on an uncommitted basis at fixed rate economic terms

to be agreed upon at the time of issuance,

from time to time through

October 20, 2026

The facilities allow us to issue senior promissory notes to the

lenders

at a fixed rate based on an agreed upon spread over applicable treasury

notes at the time of issuance.

The term of

each possible issuance will be selected by us and can range from

five

15 years

(with an average life no longer

than

years).

The proceeds of any issuances under the facilities will be used

for general corporate purposes,

including working capital and capital expenditures, to refinance existing

indebtedness, and/or to fund potential

acquisitions.

The agreements provide, among other things, that we maintain

certain maximum leverage ratios, and

contain restrictions relating to subsidiary indebtedness, liens, affiliate transactions,

disposal of assets and certain

changes in ownership.

These facilities contain make-whole provisions in the event that we

pay off the facilities

prior to the applicable due dates.

The components of our private placement facility borrowings, which

have a weighted average interest rate of

3.66

%, as of September 28, 2024 are presented in the following table:

Amount of

Date of

Borrowing

Outstanding

Rate

Due Date

December 24, 2012

3.00

December 24, 2024

June 16, 2017

100

3.42

June 16, 2027

September 15, 2017

100

3.52

September 15, 2029

January 2, 2018

100

3.32

January 2, 2028

September 2, 2020

100

2.35

September 2, 2030

June 2, 2021

100

2.48

June 2, 2031

June 2, 2021

100

2.58

June 2, 2033

May 4, 2023

4.79

May 4, 2028

May 4, 2023

4.84

May 4, 2030

May 4, 2023

4.96

May 4, 2033

May 4, 2023

150

4.94

May 4, 2033

Less: Deferred debt issuance costs

(1)

Total

1,024

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Term Loan

On July 11, 2023, we entered into a

three-year

750

million term loan credit agreement (the “Term Credit

Agreement”).

The interest rate on this term loan is based on the

Term SOFR

plus a spread based on our leverage

ratio at the end of each financial reporting quarter.

This term loan matures on

July 11, 2026

We are required to

make quarterly payments of $

million from September 2024 through June 2026, with the remaining

balance due in

July 2026.

Previously, we had been required to make quarterly payments of $

million from September 2023

through June 2024.

As of September 28, 2024, the borrowings outstanding under

this term loan were $

722

million.

At September 28, 2024, the interest rate under the Term Credit Agreement was

5.10

% plus

1.60

% for a combined

rate of

6.70

As of December 30, 2023, the borrowings outstanding under

this term loan were $

741

million.

December 30, 2023, the interest rate under the Term Credit Agreement was

5.36

% plus

1.35

% for a combined rate

6.71

However, we have a hedge in place that ultimately creates an effective fixed rate of

6.04

% and

5.79

% at

September 28, 2024 and December 30, 2023, respectively.

The Term Credit Agreement requires, among other

things, that we maintain certain maximum leverage ratios.

Additionally, the Term

Credit Agreement contains

customary representations, warranties and affirmative covenants as well as customary

negative covenants, subject

to negotiated exceptions, on liens, indebtedness, significant corporate changes

(including mergers), dispositions and

certain restrictive agreements.

U.S. Trade Accounts Receivable Securitization

We have a facility agreement based on our U.S. trade accounts receivable that is structured as an asset-backed

securitization program with pricing committed for up to

three years

This facility agreement has a purchase limit of

450

million with

two

banks as agents, and expires on

December 15, 2025

As of September 28, 2024 and December 30, 2023, the borrowings

outstanding under this securitization facility

were $

210

million and $

210

million, respectively.

At September 28, 2024, the interest rate on borrowings under

this facility was based on the

asset-backed commercial paper rate

5.28

% plus

0.75

%, for a combined rate of

6.03

At December 30, 2023, the interest rate on borrowings under

this facility was based on the asset-backed

commercial paper rate of

5.67

% plus

0.75

%, for a combined rate of

6.42

If our accounts receivable collection pattern changes due to customers

either paying late or not making payments,

our ability to borrow under this facility may be reduced.

We are required to pay a commitment fee of

basis points depending upon program utilization.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 9 – Income Taxes

For the nine months ended September 28, 2024 our effective tax rate was

25.1

%, compared to

22.5

% for the prior

year period.

The difference between our effective tax rate and the federal statutory tax rate primarily

relates to state

and foreign income taxes and interest expense.

The Organization of Economic Co-Operation and Development (OECD) issued

technical and administrative

guidance on Pillar Two rules in December 2021, which provides for a global minimum tax rate on the earnings of

large multinational businesses on a country-by-country basis.

Effective January 1, 2024, the minimum global tax

rate is 15% for various jurisdictions pursuant to the Pillar Two rules.

As of September 28, 2024,

the impact of the

Pillar Two rules to our financial statements was immaterial.

As we operate in jurisdictions which have adopted

Pillar Two,

we are continuing to analyze the implications to effectively manage the impact

for 2024 and beyond.

Future tax reform resulting from these developments may result in changes

to long-standing tax principles, which

may adversely impact our effective tax rate going forward or result in higher cash

tax liabilities.

The total amount of unrecognized tax benefits, which are included in

“other liabilities” within our condensed

consolidated balance sheets, as of September 28, 2024 and December 30,

2023, was $

107

million and $

115

million,

respectively, of which $

million and $

107

million, respectively, would affect the effective tax rate if recognized.

It is possible that the amount of unrecognized tax benefits will

change in the next 12 months, which may result in a

material impact on our condensed consolidated statements of income.

All tax returns audited by the IRS are officially closed through 2020.

The tax years subject to examination by the

IRS include years 2021 and forward.

In addition, limited positions reported in the 2017 tax year are subject

to IRS

examination.

The amount of tax interest expense included as a component of the provision

for taxes was $

million and $

million for the nine months ended September 28, 2024 and September

30, 2023,

respectively.

The total amount of

accrued interest is included in “other liabilities,” and was $

million as of September 28, 2024 and $

million as

of December 30, 2023.

The amount of penalties accrued for during the periods presented was not

material to our

condensed consolidated financial statements.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 10 – Plans of Restructuring

On August 1, 2022, we committed to a restructuring plan (the “2022 Plan”)

focused on funding the priorities of the

BOLD+1 strategic plan, streamlining operations and other initiatives to

increase efficiency.

The 2022 Plan has

been completed as of July 31, 2024.

During the three months ended September 28, 2024 and

September 30, 2023,

in connection with our 2022 Plan, we recorded restructuring costs of

million and $

million, respectively.

During the nine months ended September 28, 2024 and September 30, 2023,

in connection with our 2022 Plan, we

recorded restructuring costs of $

million and $

million, respectively.

The restructuring costs for these periods

primarily related to severance and employee-related costs, accelerated amortization

of right-of-use lease assets and

fixed assets, and other exit costs.

We expect to record immaterial charges associated with the 2022 Plan during the

remainder of 2024.

On August 6, 2024, we committed to a new restructuring plan (the “2024

Plan”) to integrate recent acquisitions,

right-size operations and further increase efficiencies.

During the three and nine months ended September 28,

2024, we recorded restructuring charges associated with the 2024 Plan of $

million which primarily related to

severance and employee-related costs, accelerated amortization of right-of-use

lease assets and fixed assets, and

other lease exit costs.

We expect to record restructuring charges associated with the 2024 Plan during the fourth

quarter of 2024 and in 2025, however an estimate of the amount of these charges has not

yet been determined.

Restructuring costs recorded for the three and nine months ended September

28, 2024 and September 30, 2023, in

connection with the 2022 Plan and 2024 Plan consisted of the following:

Three Months Ended

September 28, 2024

Nine Months Ended

September 28, 2024

Health Care

Distribution

Technology

and Value-

Added Services

Total

Health Care

Distribution

Technology

and Value-

Added Services

Total

2024 Plan

Severance and employee-related costs

Accelerated depreciation and amortization

Exit and other related costs

Restructuring costs-2024 Plan

2022 Plan

Severance and employee-related costs

Accelerated depreciation and amortization

Exit and other related costs

Restructuring costs-2022 Plan

Total restructuring

costs

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Three Months Ended

September 30, 2023

Nine Months Ended

September 30, 2023

Health Care

Distribution

Technology

and Value-

Added Services

Total

Health Care

Distribution

Technology

and Value-

Added Services

Total

2022 Plan

Severance and employee-related costs

Accelerated depreciation and amortization

Exit and other related costs

Loss on disposal of a business

Total restructuring

costs

The following table summarizes,

by plan year, the activity related to the liabilities associated with our restructuring

initiatives under the 2022 Plan and the 2024 Plan for the nine months

ended September 28, 2024.

The remaining

accrued balance of restructuring costs as of September 28, 2024, which

primarily relates to severance and

employee-related costs, is included in accrued expenses: other within

our condensed consolidated balance sheets.

Liabilities related to exited leased facilities are recorded within our current

and non-current operating lease

liabilities within our condensed consolidated balance sheets.

2022 Plan

2024 Plan

Total

Balance, December 30, 2023

Restructuring costs

Non-cash accelerated depreciation and amortization

(7)

(4)

(11)

Cash payments and other adjustments

(35)

(7)

(42)

Balance, September 28, 2024

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 11 – Legal Proceedings

Henry Schein, Inc. has been named as a defendant in multiple opioid

related lawsuits (currently less than one-

hundred and seventy-five (

175

); one or more of Henry Schein, Inc.’s subsidiaries is also named as a defendant in a

number of those cases).

Generally, the lawsuits allege that the manufacturers of prescription opioid drugs engaged

in a false advertising campaign to expand the market for such drugs and

their own market share and that the entities

in the supply chain (including Henry Schein, Inc. and its subsidiaries) reaped

financial rewards by refusing or

otherwise failing to monitor appropriately and restrict the improper distribution

of those drugs.

These actions

consist of some that have been consolidated within the MultiDistrict Litigation

(“MDL”) proceeding In Re National

Prescription Opiate Litigation (MDL No. 2804; Case No. 17-md-2804)

and are currently stayed, and others which

remain pending in state courts and are proceeding independently and outside

of the MDL.

At this time, the

following case is set for trial: the action filed by Florida Health Sciences Center, Inc. (and

other hospitals located

throughout the State of Florida) in Florida state court, which is currently

scheduled for a jury trial in September

2025.

Of Henry Schein’s 2023 net sales of approximately $

12.3

billion, sales of opioids represented less than

four

tenths of 1 percent.

Opioids represent a negligible part of our business.

We intend to defend ourselves vigorously

against these actions.

In August 2022, Henry Schein received a Grand Jury Subpoena from the United

States Attorney’s Office for the

Western District of Virginia,

seeking documents in connection with an investigation of possible

violations of the

Federal Food, Drug & Cosmetic Act by Butler Animal Health Supply, LLC (“Butler”), a former subsidiary of

Henry Schein.

The investigation relates to the sale of veterinary prescription drugs

to certain customers.

October 2022, Henry Schein received a second Grand Jury Subpoena

from the United States Attorney’s Office for

the Western District of Virginia.

The October 2022 Subpoena seeks documents relating to payments Henry

Schein

received from Butler or Covetrus, Inc. (“Covetrus”).

Butler was spun off into a separate company and became a

subsidiary of Covetrus in 2019 and is no longer owned by Henry Schein.

We are cooperating with the

investigation.

On January 18, 2024, a putative class action was filed against the Company

in the U.S. District Court for the

Eastern District of New York (“EDNY”), Case No. 24-cv-387 (the “Cruz-Bermudez Action”), based on the

October 2023 cyber incident described in

Note 3 – Cyber Incident

On January 26, 2024, a second putative class

action was filed against the Company based on the cyber incident, also

in the EDNY,

Case No. 24-cv-550 (the

“Depperschmidt Action”).

On February 12, 2024, the Depperschmidt Action was voluntarily dismissed

without

prejudice.

On February 16, 2024, an amended complaint was filed in

the Cruz-Bermudez Action with additional

plaintiffs’ counsel from the Depperschmidt Action and an additional new plaintiff.

Plaintiffs in the Cruz-Bermudez Action seek to represent a class of all individuals

whose personally identifying

information and personal health information was compromised by

the incident.

Plaintiffs generally claim to have

been harmed by alleged actions and/or omissions by the Company

in connection with the incident and that the

Company made deceptive public statements regarding privacy and data protection.

Plaintiffs assert a variety of

claims seeking monetary damages, injunctive relief, costs and attorneys’

fees, and other related relief.

On March

22, 2024, plaintiffs voluntarily withdrew two of their five causes of action.

On April 8, 2024, the court denied the

Company’s motion to dismiss the remaining claims.

The case remains pending.

On June 6, 2024, plaintiffs and the Company informed the court that they had agreed

to a term sheet for a class

action settlement of the Cruz-Bermudez Action.

Plaintiffs and the Company entered into a class action settlement

agreement on September 13, 2024, and the court preliminarily approved

the settlement on September 16,

2024.

Under the terms of the proposed settlement, all claims in the Cruz-Bermudez

Action will be dismissed, the

Cruz-Bermudez Action will be terminated, the Company will receive

a release of claims from the class, and the

Company will pay $

2.9

million into a fund for class members.

The proposed settlement is subject to the court’s

final approval.

The court has scheduled a fairness hearing on the proposed settlement

for February 14, 2025.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Henry Schein, Inc. and its subsidiary, North American Rescue, LLC (“NAR”), were named as defendants in a qui

tam lawsuit brought under the federal False Claims Act (“FCA”),

in an action entitled

Russ and Murphy ex rel.

United States v. North American Rescue, LLC et al.

; Case No. 21-cv-04238, filed in the United States District

Court

for the Eastern District of Pennsylvania.

The case was filed under seal in 2021 by two relators (Corey

Russ and

Chris Murphy) who worked for one of NAR’s competitors.

Relators also name C-A-T Resources, LLC (“CAT-R”)

as a defendant.

CAT

-R manufactures one of the products at issue in the case (the

combat application tourniquet, or

“CAT”).

After the Department of Justice declined to intervene, the case was unsealed,

and Relators filed their first

amended complaint in November 2023.

In response to motions to dismiss filed by Henry Schein, NAR

and CAT-

R, Relators requested and obtained leave to file their Second Amended

Complaint on April 24, 2024.

On July 26,

2024, the court ruled on motions to dismiss filed by Henry Schein,

NAR and CAT-R.

The court dismissed the

claims against Henry Schein (without prejudice).

The motions to dismiss filed by NAR and CAT-R were

denied.

Relators’ FCA claims are based on allegations that NAR made false

representations and certifications in

connection with, and sold and submitted false claims for payment to the federal

government for, various medical

products that Relators contend violated certain “Buy American”

laws (e.g., the Berry Amendment and Trade

Agreements Act of 1979) and/or were not properly sterilized as noted

on the products’ packaging, and thus

misbranded.

These products include the CAT,

syringes, compressed gauze, tracheostomy kits, hypothermia

blankets, eye, ear, nose and throat kits, and trauma dressing.

Relators sought three times the amount of damages to

be proved at trial, statutory civil penalties, reasonable expenses, attorneys’

fees and costs, and prejudgment

interest.

Pursuant to a settlement for an immaterial amount, the

court has dismissed the case with prejudice.

From time to time, we may become a party to other legal proceedings,

including, without limitation, product

liability claims, employment matters, commercial disputes, governmental

inquiries and investigations (which may

in some cases involve our entering into settlement arrangements or consent

decrees), and other matters arising out

of the ordinary course of our business.

While the results of any legal proceeding cannot be predicted with certainty,

in our opinion none of these other pending matters are currently

anticipated to have a material adverse effect on our

consolidated financial position, liquidity or results of operations.

As of September 28, 2024, we had accrued our best estimate of potential losses

relating to claims that were

probable to result in liability and for which we were able to reasonably

estimate a loss.

This accrued amount, as

well as related expenses, was not material to our financial position,

results of operations or cash flows.

Our method

for determining estimated losses considers currently available facts,

presently enacted laws and regulations and

other factors, including probable recoveries from third parties.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 12 – Stock-Based Compensation

Stock-based awards are provided to certain employees under our 2024 Stock Incentive

Plan (formerly known as our

2020 Stock Incentive Plan) and to non-employee directors under our 2023 Non-Employee

Director Stock Incentive

Plan (together, the “Plans”).

The Plans are administered by the Compensation Committee of the Board

of Directors

(the “Compensation Committee”).

Historically, equity-based awards to our employees have been granted solely in

the form of time-based and performance-based restricted stock units (“RSUs”) with

the exception of our 2021 plan

year in which non-qualified stock options were issued in place of performance-based

RSUs and in 2022, when we

granted time-based and performance-based RSUs, as well as non-qualified

stock options.

Starting with our 2023

plan year,

we returned to granting our employees equity-based awards

solely in the form of time-based and

performance-based RSUs.

Our non-employee directors receive equity-based awards solely in the form

of time-

based RSUs.

RSUs are stock-based awards granted to recipients with specified vesting provisions.

In the case of RSUs, common

stock is delivered on or following satisfaction of vesting conditions.

We issue RSUs to employees that primarily

vest (i) solely based on the recipient’s continued service over time, primarily with

four

-year cliff vesting and/or (ii)

based on achieving specified performance measurements and the recipient’s continued service over time, primarily

with

three

-year cliff vesting.

RSUs granted to our non-employee directors primarily include

-month cliff vesting.

For these RSUs, we recognize the cost as compensation expense on a straight-line

basis.

For all RSUs, we estimate the fair value based on our closing stock

price on the grant date.

With respect to

performance-based RSUs, the number of shares that ultimately vest and

are received by the recipient is based upon

our performance as measured against specified targets over a specified period, as

determined by the Compensation

Committee.

Although there is no guarantee that performance targets will be achieved, we

estimate the fair value of

performance-based RSUs based on our closing stock price at time of grant.

Each of the Plans provide for certain adjustments to the performance

measurement in connection with awards under

the Plans.

With respect to the performance-based RSUs granted under our 2024 Stock Incentive Plan, such

performance measurement adjustments relate to significant events, including,

without limitation, acquisitions,

divestitures, new business ventures, certain capital transactions (including share

repurchases), differences in

budgeted average outstanding shares (other than those resulting from capital

transactions referred to above),

restructuring costs, if any, amortization expense recorded for acquisition-related intangible assets (solely with

respect to performance-based RSUs granted in the 2023 and 2024 plan years),

certain litigation settlements or

payments, if any, changes in accounting principles or in applicable laws or regulations, changes in income tax rates

in certain markets, foreign exchange fluctuations, the financial impact

either positive or negative, of the difference

in projected earnings generated by COVID-19 test kits (solely with respect

to performance-based RSUs granted in

the 2022 and 2023 plan years) and impairment charges (solely with respect to performance-based

RSUs granted in

the 2023 and 2024 plan years), and unforeseen events or circumstances

affecting us.

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Over the performance period, the number of RSUs that will ultimately vest

and be issued and the related

compensation expense is adjusted upward or downward based upon our

estimation of achieving such performance

targets.

The ultimate number of shares delivered to recipients and the related compensation

cost recognized as an

expense is based on our actual performance against the pre-determined performance

metrics (in each case as

adjusted).

Stock options are awards that allow the recipient to purchase shares of our

common stock after vesting at a fixed

price set at the time of grant.

Stock options were granted at an exercise price equal to our

closing stock price on the

date of grant.

Stock options issued in 2021 and 2022 vest

one-third

per year based on the recipient’s continued

service, subject to the terms and conditions of the 2020 Stock Incentive Plan,

are fully vested

three years

from the

grant date and have a contractual term of

ten years

from the grant date, subject to earlier termination of term and

term acceleration upon certain events.

Compensation expense for stock options is recognized using

a graded

vesting method.

We estimate grant date fair value of stock options using the Black-Scholes valuation model.

During the nine months ended September 28, 2024, we did

t grant any stock options.

Our condensed consolidated statements of income reflect pre-tax share-based compensation

expense of $

million,

and $

million for the three and nine months ended September 28, 2024,

respectively.

For the three and nine

months ended September 30, 2023, we recorded pre-tax share-based compensation

expense of $

million, and $

million.

Total unrecognized compensation cost related to unvested awards as of September 28, 2024 was $

million, which

is expected to be recognized over a weighted-average period of approximately

2.6

years.

Our condensed consolidated statements of cash flows present our

stock-based compensation expense as a

reconciling adjustment between net income and net cash provided by operating

activities for all periods presented.

There were no cash benefits associated with tax deductions in excess of

recognized compensation for the nine

months ended September 28, 2024 and September 30, 2023.

The following table summarizes the stock option activity for the nine months

ended September 28, 2024:

Stock Options

Weighted Average

Aggregate

Exercise

Remaining Contractual

Intrinsic

Price

Life (in years)

Value

Outstanding at beginning of period

1,078,459

71.46

Granted

Exercised

(48,842)

62.71

Forfeited

(10,980)

85.31

Outstanding at end of period

1,018,637

71.73

6.8

Options exercisable at end of period

887,589

69.70

Weighted Average

Aggregate

Number of

Exercise

Remaining Contractual

Intrinsic

Options

Price

Life (in years)

Value

Expected to vest

131,048

85.51

7.5

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

The following tables summarize the activity of our unvested RSUs for

the nine months ended September 28, 2024:

Time-Based Restricted Stock Units

Performance-Based Restricted Stock Units

Weighted

Average

Intrinsic

Average

Intrinsic

Grant Date Fair

Value

Grant Date Fair

Value

Shares/Units

Value Per Share

Per Share

Shares/Units

Value Per Share

Per Share

Outstanding at beginning of period

1,655,393

70.34

208,742

78.02

Granted

465,339

75.83

329,118

76.70

Vested

(329,115)

63.00

(8,262)

66.53

Forfeited

(87,304)

77.19

(55,976)

79.69

Outstanding at end of period

1,704,313

72.92

73.22

473,622

75.91

73.22

Note 13 – Redeemable Noncontrolling Interests

Some minority stockholders in certain of our subsidiaries have the right,

at certain times, to require us to acquire

their ownership interest in those entities at fair value.

Accounting Standards Codification Topic 480-10 is

applicable for noncontrolling interests where we are or may be required

to purchase all or a portion of the

outstanding interest in a consolidated subsidiary from the noncontrolling

interest holder under the terms of a put

option contained in contractual agreements.

The components of the change in the redeemable noncontrolling

interests for the nine months ended September 28, 2024 and the year

ended December 30, 2023 are presented in the

following table:

September 28,

December 30,

2024

2023

Balance, beginning of period

864

576

Decrease in redeemable noncontrolling interests due to acquisitions of

noncontrolling interests in subsidiaries

(257)

(19)

Increase in redeemable noncontrolling interests due to business acquisitions

172

326

Net income attributable to redeemable noncontrolling interests

Distributions declared, net of capital contributions

(30)

(19)

Effect of foreign currency translation gain (loss) attributable to

redeemable noncontrolling interests

(4)

Change in fair value of redeemable securities

(11)

Balance, end of period

832

864

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 14 – Comprehensive Income

Comprehensive income includes certain gains and losses that, under U.S. GAAP, are excluded from net income and

are recorded directly to stockholders’ equity.

The following table summarizes our Accumulated other comprehensive loss, net of

applicable taxes as of:

September 28,

December 30,

2024

2023

Attributable to redeemable noncontrolling interests:

Foreign currency translation adjustment

(36)

(32)

Attributable to noncontrolling interests:

Foreign currency translation adjustment

(1)

Attributable to Henry Schein, Inc.:

Foreign currency translation adjustment

(243)

(188)

Unrealized gain loss from hedging activities

(16)

(13)

Pension adjustment loss

(5)

Accumulated other comprehensive loss

(264)

(206)

Total Accumulated

other comprehensive loss

(300)

(239)

The following table summarizes the components of comprehensive income, net

of applicable taxes as follows:

Three Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

2024

2023

2024

2023

Net income

143

302

419

Foreign currency translation gain (loss)

(45)

(58)

(17)

Tax effect

Foreign currency translation gain (loss)

(45)

(58)

(17)

Unrealized gain (loss) from hedging activities

(25)

(4)

Tax effect

(3)

(1)

Unrealized gain (loss) from hedging activities

(18)

(3)

Comprehensive income

139

104

241

404

Our financial statements are denominated in U.S. Dollars.

Fluctuations in the value of foreign currencies as

compared to the U.S. Dollar may have a significant impact on our

comprehensive income.

The foreign currency

translation gain (loss) during the nine months ended September 28, 2024 and

nine months ended September 30,

2023 was primarily due to changes in foreign currency exchange

rates of the Brazilian Real, British Pound, Euro,

Swiss Franc, Canadian Dollar, and Australian Dollar.

The hedging gain (loss) during the three and nine months ended September

28, 2024, and September 30, 2023 was

attributable to a net investment hedge.

The following table summarizes our total comprehensive income, net of

applicable taxes as follows:

Table of Contents

HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Three Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

2024

2023

2024

2023

Comprehensive income attributable to

Henry Schein, Inc.

127

100

238

384

Comprehensive income attributable to

noncontrolling interests

Comprehensive income (loss) attributable to

Redeemable noncontrolling interests

(4)

Comprehensive income

139

104

241

404

Note 15

–

Earnings Per Share

Basic earnings per share is computed by dividing net income attributable

to Henry Schein, Inc. by the weighted-

average number of common shares outstanding for the period.

Our diluted earnings per share is computed similarly

to basic earnings per share, except that it reflects the effect of common shares issuable

for unvested RSUs and upon

exercise of stock options using the treasury stock method in periods

in which they have a dilutive effect.

A reconciliation of shares used in calculating earnings per basic and

diluted share follows:

Three Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

2024

2023

2024

2023

Basic

126,124,715

130,388,353

127,550,045

130,888,717

Effect of dilutive securities:

Stock options and restricted stock units

930,219

1,053,782

948,449

1,260,455

Diluted

127,054,934

131,442,135

128,498,494

132,149,172

The number of antidilutive securities that were excluded from the calculation

of diluted weighted average common

shares outstanding are as follows:

Three Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

2024

2023

2024

2023

Stock options

412,574

424,005

416,065

426,237

Restricted stock units

17,627

7,362

16,339

15,072

Total anti-dilutive

securities excluded from earnings per

share computation

430,201

431,367

432,404

441,309

Note 16 – Supplemental Cash Flow Information

Cash paid for interest and income taxes was:

Nine Months Ended

September 28,

September 30,

2024

2023

Interest

Income taxes

127

178

For the nine months ended September 28, 2024 and September 30, 2023, we had

(4)

million and $

million of

non-cash net unrealized gains (losses) related to hedging activities,

respectively.

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HENRY SCHEIN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except share and per share data)

(unaudited

)

Note 17 – Related Party Transactions

In connection with the formation of Henry Schein One, LLC, our joint venture

with Internet Brands, which was

formed on July 1, 2018, we entered into a

ten-year

royalty agreement with Internet Brands whereby we will pay

Internet Brands approximately $

million annually for the use of their intellectual property.

During the three and

nine months ended September 28, 2024, we recorded $

million and $

million, respectively, within selling,

general and administrative in our condensed consolidated statements of income,

in connection with costs related to

this royalty agreement.

During the three and nine months ended September 30, 2023 we recorded

million and

million, respectively, within selling, general and administrative in our condensed consolidated statements of

income, in connection with costs related to this royalty agreement.

As of September 28, 2024 and December 30,

2023, Henry Schein One, LLC had a net payable balance to Internet

Brands of $

million and $

million,

respectively, comprised of amounts related to results of operations and the royalty agreement.

The components of

this payable are recorded within accrued expenses: other within our condensed

consolidated balance sheets.

We have interests in entities that we account for under the equity accounting method.

In our normal course of

business, during the three and nine months ended September 28, 2024, we

recorded net sales of $

million and

million respectively, to such entities.

During the three and nine months ended September 30, 2023, we

recorded net sales of $

million and $

million respectively, to such entities.

During the three and nine months

ended September 28, 2024, we purchased $

million and $

million respectively, from such entities.

During the

three and nine months ended September 30, 2023, we purchased $

million and $

million respectively, from such

entities.

At September 28, 2024 and December 30, 2023, we had an aggregate

million and $

million,

respectively, due from our equity affiliates, and $

million and $

million, respectively, due to our equity affiliates.

Certain of our facilities related to our acquisitions are leased from employees

and minority shareholders.

These

leases are classified as operating leases and have a remaining lease term

ranging from

six months

years.

of September 28, 2024, current and non-current liabilities associated with related

party operating leases were $

million and $

million, respectively.

At September 28, 2024, related party leases represented

7.4

% and

8.3

% of

the total current and non-current operating lease liabilities, respectively.

At December 30, 2023, current and non-

current liabilities associated with related party operating leases were $

million and $

million, respectively.

December 30, 2023, related party leases represented

6.3

% and

7.4

% of the total current and non-current operating

lease liabilities, respectively.

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Cautionary Note Regarding Forward-Looking Statements

In accordance with the “Safe Harbor” provisions of the Private Securities

Litigation Reform Act of 1995, we

provide the following cautionary remarks regarding important factors

that, among others, could cause future results

to differ materially from the forward-looking statements, expectations and assumptions

expressed or implied

herein.

All forward-looking statements made by us are subject to

risks and uncertainties and are not guarantees of

future performance.

These forward-looking statements involve known and unknown

risks, uncertainties and other

factors that may cause our actual results, performance and achievements

or industry results to be materially

different from any future results, performance or achievements expressed or implied by such

forward-looking

statements.

These statements are generally identified by the use of such

terms as “may,” “could,” “expect,”

“intend,” “believe,” “plan,” “estimate,” “forecast,” “project,” “anticipate,”

“to be,” “to make” or other comparable

terms.

Factors that could cause or contribute to such differences include, but are not limited

to, those discussed in

the documents we file with the Securities and Exchange Commission

(SEC), including our Annual Report on Form

10-K.

Risk factors and uncertainties that could cause actual results to differ materially from

current and historical results

include, but are not limited to: our dependence on third parties for

the manufacture and supply of our products; our

ability to develop or acquire and maintain and protect new products (particularly

technology products) and

technologies that achieve market acceptance with acceptable margins; transitional

challenges associated with

acquisitions, dispositions and joint ventures, including the failure

to achieve anticipated synergies/benefits, as well

as significant demands on our operations, information systems,

legal, regulatory, compliance, financial and human

resources functions in connection with acquisitions, dispositions and

joint ventures; certain provisions in our

governing documents that may discourage third-party acquisitions of us; adverse

changes in supplier rebates or

other purchasing incentives; risks related to the sale of corporate brand products;

security risks associated with our

information systems and technology products and services, such as

cyberattacks or other privacy or data security

breaches (including the October 2023 incident); effects of a highly competitive (including, without

limitation,

competition from third-party online commerce sites) and consolidating

market; changes in the health care industry;

risks from expansion of customer purchasing power and multi-tiered

costing structures; increases in shipping costs

for our products or other service issues with our third-party shippers; general

global and domestic macro-economic

and political conditions, including inflation, deflation, recession, ongoing

wars, fluctuations in energy pricing and

the value of the U.S. dollar as compared to foreign currencies, and changes

to other economic indicators,

international trade agreements, potential trade barriers and terrorism; geopolitical

wars; failure to comply with

existing and future regulatory requirements; risks associated with the EU Medical

Device Regulation; failure to

comply with laws and regulations relating to health care fraud or other

laws and regulations; failure to comply with

laws and regulations relating to the collection, storage and processing of

sensitive personal information or standards

in electronic health records or transmissions; changes in tax legislation;

risks related to product liability, intellectual

property and other claims; risks associated with customs policies

or legislative import restrictions; risks associated

with disease outbreaks, epidemics, pandemics (such as the COVID-19

pandemic), or similar wide-spread public

health concerns and other natural or man-made disasters; risks associated with our

global operations; litigation

risks; new or unanticipated litigation developments and the status

of litigation matters; our dependence on our

senior management, employee hiring and retention, and our relationships

with customers, suppliers and

manufacturers; and disruptions in financial markets.

The order in which these factors appear should not be

construed to indicate their relative importance or priority.

We caution that these factors may not be exhaustive and that many of these factors are beyond our ability to control

or predict.

Accordingly, any forward-looking statements contained herein should not be relied upon as a prediction

of actual results.

We undertake no duty and have no obligation to update forward-looking statements except as

required by law.

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Where You

Can Find Important Information

We may disclose important information through one or more of the following channels: SEC filings, public

conference calls and webcasts, press releases, the investor relations

page of our website (www.henryschein.com)

and the social media channels identified on the About Media Center page

of our website.

Recent Developments

While the U.S. economy has experienced inflationary pressures and

strengthening of the U.S. dollar, their impacts

have not been material to our results of operations.

Though inflation impacts both our revenues and costs, the

depth

and breadth of our product portfolio often allows us to offer lower-cost national brand solutions

or corporate brand

alternatives to our more price-sensitive customers who are unwilling to

absorb price increases, thus positioning us

to protect our gross profit.

Cyber Incident

In October 2023 Henry Schein experienced a cyber incident that primarily

affected the operations of our North

American and European dental and medical distribution businesses.

Henry Schein One, our practice management

software, revenue cycle management and patient relationship management

solutions business, was not affected, and

our manufacturing businesses were mostly unaffected.

On November 22, 2023, we experienced a disruption of our

ecommerce platform and related applications, which was remediated.

During the three and nine months ended September 28, 2024, we had a

sales decrease in our dental and medical

distribution businesses, which we believe was primarily a result of lower sales

to episodic customers following last

year’s cyber incident.

We have a number of programs underway focused on re-establishing these customers.

We maintain cyber insurance, subject to certain retentions and policy limitations.

With respect to the October 2023

cyber incident, we have a $60 million insurance policy, following a $5 million retention.

During the three and nine

months ended September 28, 2024, we received insurance proceeds of

$10 million and $20 million, respectively,

representing a partial insurance recovery of losses related to the cyber incident.

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Executive-Level Overview

Henry Schein, Inc. is a solutions company for health care professionals powered

by a network of people and

technology.

believe we are the world’s largest provider of health care products and services primarily to office-

based dental and medical practitioners, as well as alternate sites of care.

serve more than one million customers

worldwide including dental practitioners, laboratories, physician practices and

ambulatory surgery centers, as well

as government, institutional health care clinics and other alternate care clinics.

believe that we have a strong

brand identity due to our more than 92 years of experience distributing health

care products.

We are headquartered in Melville, New York,

employ approximately 26,000 people (of which approximately

13,000 are based outside of the United States) and have operations or

affiliates in 33 countries and territories.

Our

broad global footprint has evolved over time through our organic success as well as

through contribution from

strategic acquisitions.

have established strategically located distribution centers around

the world to enable us to better serve our

customers and increase our operating efficiency.

This infrastructure, together with broad product and service

offerings at competitive prices, and a strong commitment to customer service, enables

us to be a single source of

supply for our customers’ needs.

While our primary go-to-market strategy is in our capacity as a distributor, we also market and sell our own

corporate brand portfolio of cost-effective, high-quality consumable merchandise products,

including in vitro

diagnostic devices, manufacture certain dental specialty products in

the areas of implants, orthodontics and

endodontics, manufacture drug products, and repackage/relabel prescription drugs

and/or devices.

have

achieved scale in these global businesses primarily through acquisitions, as

manufacturers of these products

typically do not utilize a distribution channel to serve customers.

conduct our business through two reportable segments: (i) health

care distribution and (ii) technology and

value-added services.

These segments offer different products and services to the same customer base.

Our global

dental businesses serve office-based dental practitioners, dental laboratories, schools, government

and other

institutions.

Our medical businesses serve physician offices, urgent care centers, ambulatory care sites,

emergency

medical technicians, dialysis centers, home health, federal and state governments

and large enterprises, such as

group practices, and integrated delivery networks, among other providers

across a wide range of specialties.

The health care distribution reportable segment, combining our global dental and

medical operating segments,

distributes consumable products, small equipment, laboratory products, large equipment, equipment

repair services,

branded and generic pharmaceuticals, vaccines, surgical products, dental specialty

products (including implant,

orthodontic and endodontic products), diagnostic tests, infection-control products,

personal protective equipment

(“PPE”) products, vitamins and orthopedic implants.

Our global technology and value-added services business provides software, technology

and other value-added

services to health care practitioners.

Our technology business offerings include practice management software

systems for dental and medical practitioners.

Our value-added practice solutions include practice consultancy,

education, revenue cycle management and financial services on a non-recourse

basis, e-services, practice

technology, network and hardware services, as well as consulting, and continuing education services for

practitioners.

A key element to grow closer to our customers is our One Schein initiative, which

is a unified go-to-market

approach that enables practitioners to work synergistically with our supply chain,

equipment sales and service and

other value-added services, allowing our customers to leverage the

combined value that we offer through a single

program.

Specifically, One Schein provides customers with streamlined access to our comprehensive offering of

national brand products, our corporate brand products and proprietary specialty

products and solutions (including

implant, orthodontic and endodontic products).

In addition, customers have access to a wide range of services,

including software and other value-added services.

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Industry Overview

In recent years, the health care industry has increasingly focused on cost containment.

This trend has benefited

distributors capable of providing a broad array of products and services at low

prices.

It also has accelerated the

growth of HMOs, group practices, other managed care accounts and collective buying

groups, which, in addition to

their emphasis on obtaining products at competitive prices, tend to favor distributors

capable of providing

specialized management information support.

believe that the trend towards cost containment has the potential

to favorably affect demand for technology solutions, including software, which can

enhance the efficiency and

facilitation of practice management.

Our operating results in recent years have been significantly affected by strategies

and transactions that we

undertook to expand our business, domestically and internationally, in part to address significant changes in the

health care industry, including consolidation of health care distribution companies, health care reform, trends

toward managed care, cuts in Medicare and collective purchasing arrangements.

Industry Consolidation

The health care products distribution industry, as it relates to office-based health care practitioners, is fragmented

and diverse.

The industry ranges from sole practitioners working out of

relatively small offices to group practices

or service organizations ranging in size from a few practitioners to a large number of practitioners who have

combined or otherwise associated their practices.

Due in part to the inability of office-based health care practitioners to store and manage

large quantities of supplies

in their offices, the distribution of health care supplies and small equipment to office-based health

care practitioners

has been characterized by frequent, small quantity orders, and a need for rapid,

reliable and substantially complete

order fulfillment.

The purchasing decisions within an office-based health care practice are typically

made by the

practitioner or an administrative assistant.

Supplies and small equipment are generally purchased from more

than

one distributor, with one generally serving as the primary supplier.

The trend of consolidation extends to our customer base.

Health care practitioners are increasingly seeking to

partner, affiliate or combine with larger entities such as hospitals, health systems, group practices or physician

hospital organizations.

In many cases, purchasing decisions for consolidated groups

are made at a centralized or

professional staff level; however, orders are delivered to the practitioners’ offices.

believe that consolidation within the industry will continue to

result in a number of distributors, particularly

those with limited financial, operating and marketing resources, seeking to

combine with larger companies that can

provide growth opportunities.

This consolidation also may continue to result in distributors seeking

to acquire

companies that can enhance their current product and service offerings or provide

opportunities to serve a broader

customer base.

Our approach to acquisitions and joint ventures has been to expand our role as

a provider of products and services

to the health care industry.

This trend has resulted in our expansion into service areas that complement

our existing

operations and provide opportunities for us to develop synergies with, and thus strengthen, the acquired

businesses.

As industry consolidation continues, we believe that we are positioned to

capitalize on this trend, as we believe we

have the ability to support increased sales through our existing infrastructure, although

there can be no assurances

that we will be able to successfully accomplish this.

are focused on building relationships with decision makers

who do not reside in the office-based practitioner setting.

As the health care industry continues to change, we continually evaluate possible

candidates for joint venture or

acquisition and intend to continue to seek opportunities to expand our

role as a provider of products and services to

the health care industry.

There can be no assurance that we will be able to successfully pursue

any such

opportunity or consummate any such transaction, if pursued.

If additional transactions are entered into or

consummated, we would incur merger and/or acquisition-related costs, and there

can be no assurance that the

integration efforts associated with any such transaction would be successful.

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Aging Population and Other Market Influences

The health care products distribution industry continues to experience growth

due to the aging population,

increased health care awareness, the proliferation of medical technology

and testing, new pharmacological

treatments, and expanded third-party insurance coverage, partially offset by the effects of unemployment

insurance coverage.

In addition, the physician market continues to benefit from the

shift of procedures and

diagnostic testing from acute care settings to alternate-care sites, particularly

physicians’ offices.

According to the U.S. Census Bureau’s International Database, between 2024

and 2034, the 45 and older

population is expected to grow by approximately 11%.

Between 2024 and 2044, this age group is expected to grow

by approximately 20%.

This compares with expected total U.S. population growth

rates of approximately 6%

between 2024 and 2034

and approximately 11% between 2024 and 2044.

According to the U.S. Census Bureau’s International Database, in 2024

there are approximately seven million

Americans aged 85 years or older, the segment of the population most in need of long-term care

and elder-care

services.

By the year 2050, that number is projected to nearly triple to approximately

19 million.

The population

aged 65 to 84 years is projected to increase by approximately 20% during

the same period.

As a result of these market dynamics, annual expenditures for health

care services continue to increase in the

United States.

We believe that demand for our products and services will grow while continuing to be impacted by

current and future operating, economic, and industry conditions.

The Centers for Medicare and Medicaid Services

(“CMS”) published “National Health Expenditure Data” indicating that total

national health care spending reached

approximately $4.5 trillion in 2022, or 17.3% of the nation’s gross domestic product, the benchmark

measure for

annual production of goods and services in the United States.

Health care spending is projected to reach

approximately $7.7 trillion by 2032, or 19.7% of the nation’s projected gross domestic product.

Government

Certain of our businesses involve the distribution, manufacturing, importation,

exportation, marketing, sale and

promotion of pharmaceuticals and/or medical devices, and in this regard, we

are subject to extensive local, state,

federal and foreign governmental laws and regulations, including as applicable

to our wholesale distribution of

pharmaceuticals and medical devices, manufacturing activities, and as part of

our specialty home medical supply

businesses that distribute and sell medical equipment and supplies directly

to patients.

Federal, state and certain

foreign governments have also increased enforcement activity in the health care

sector, particularly in areas of fraud

and abuse, anti-bribery and anti-corruption, controlled substances handling,

medical device regulations and data

privacy and security standards.

Certain of our businesses involve pharmaceuticals and/or medical devices,

including in vitro diagnostic devices,

that are paid for by third parties and must operate in compliance with a variety of

burdensome and complex coding,

billing and record-keeping requirements in order to substantiate claims for

payment under federal, state and

commercial healthcare reimbursement programs.

Government and private insurance programs fund a large portion of the total cost of medical care,

and there have

been efforts to limit such private and government insurance programs, including efforts, thus far

unsuccessful, to

seek repeal of the entire United States Patient Protection and Affordable Care Act,

as amended by the Health Care

and Education Reconciliation Act, each enacted in March 2010.

Certain of our businesses are subject to various additional federal, state,

local and foreign laws and regulations,

including with respect to the sale, transportation, importation, storage, handling

and disposal of hazardous or

potentially hazardous substances; “forever chemicals” such as per-and

polyfluoroalkyl substances; amalgam bans;

pricing disclosures; supply chain transparency around labor practices; and safe working

conditions.

In addition,

activities to control medical costs, including laws and regulations lowering

reimbursement rates for

pharmaceuticals, medical devices, medical supplies and/or medical treatments

or services, are ongoing.

CMS

recently released the 2024 durable medical equipment, prosthetics, orthotics

and supplies (“DMEPOS”)

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reimbursement schedule, which, effective January 1, 2024, reduced the DMEPOS reimbursement

rates for non-

rural suppliers, such as us, by removing the Coronavirus Aid, Relief,

and Economic Security (aka CARES) Act

relief rates in effect during the COVID-19 pandemic.

This and other laws and regulations are subject to change and

their evolving implementation may impact our operations and our

financial performance.

Our businesses are generally subject to numerous laws and regulations that could

impact our financial performance,

and failure to comply with such laws or regulations could have a material adverse

effect on our business.

A more detailed discussion of governmental laws and regulations

is included in Management’s Discussion &

Analysis of Financial Condition and Results of Operations, contained

in our Annual Report on Form 10-K for the

fiscal year ended December 30, 2023, filed with the SEC on February 28, 2024.

Results of Operations

The following tables summarize the significant components of our operating

results for the three and nine months

ended September 28, 2024 and September 30, 2023 and cash flows for

the nine months ended September 28, 2024

and September 30, 2023:

Three Months Ended

Nine Months Ended

September 28,

September 30,

September 28,

September 30,

2024

2023

2024

2023

Operating results:

Net sales

3,174

3,162

9,482

9,322

Cost of sales

2,181

2,167

6,459

6,386

Gross profit

993

995

3,023

2,936

Operating expenses:

Selling, general and administrative

724

725

2,296

2,149

Depreciation and amortization

188

152

Restructuring costs

Operating income

157

200

466

576

Other expense, net

(29)

(21)

(79)

(48)

Net income

143

302

419

Net income attributable to Henry Schein, Inc.

137

296

398

Nine Months Ended

September 28,

September 30,

2024

2023

Cash flows:

Net cash provided by operating activities

644

532

Net cash used in investing activities

(372)

(808)

Net cash provided by (used in) financing activities

(306)

307

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Plans of Restructuring

On August 1, 2022, we committed to a restructuring plan (the “2022 Plan”)

focused on funding the priorities of the

BOLD+1 strategic plan, streamlining operations and other initiatives to

increase efficiency.

The 2022 Plan has

been completed as of July 31, 2024.

During the three months ended September 28, 2024 and

September 30, 2023,

in connection with our 2022 Plan, we recorded restructuring costs of

$12 million and $11 million, respectively.

During the nine months ended September 28, 2024 and September 30, 2023,

in connection with our 2022 Plan, we

recorded restructuring costs of $37 million and $59 million, respectively.

The restructuring costs for these periods

primarily related to severance and employee-related costs, accelerated amortization

of right-of-use lease assets and

fixed assets, and other exit costs.

We expect to record immaterial charges associated with the 2022 Plan during the

remainder of 2024.

On August 6, 2024, we committed to a new restructuring plan (the “2024

Plan”) to integrate recent acquisitions,

right-size operations and further increase efficiencies.

During the three and nine months ended September 28,

2024, we recorded restructuring charges associated with the 2024 Plan of $36 million

which primarily related to

severance and employee-related costs, accelerated amortization of right-of-use

lease assets and fixed assets, and

other lease exit costs.

We expect to record restructuring charges associated with the 2024 Plan during the fourth

quarter of 2024 and in 2025, however an estimate of the amount of these charges has not

yet been determined.

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Three Months Ended September 28, 2024 Compared to Three Months Ended September 30, 2023

Note: Percentages for Net Sales; Gross Profit; Operating Expenses; Other Expense,

Net; and Income Taxes are

based on actual values and may not recalculate due to rounding.

Net Sales

Net sales were as follows:

September 28,

% of

September 30,

% of

Increase / (Decrease)

2024

Total

2023

Total

Health care distribution

(1)

Dental

1,852

58.4

1,882

59.5

(30)

(1.6)

Medical

1,101

34.7

1,070

33.9

2.9

Total health care distribution

2,953

93.1

2,952

93.4

Technology and value-added services

(2)

221

6.9

210

6.6

5.1

Total

3,174

100.0

3,162

100.0

0.4

The components of our sales growth were as follows:

Total Local

Currency

Growth

Foreign

Exchange

Impact

Total Sales

Growth

Local Currency Growth

Local Internal

Growth

Acquisition

Growth

Health care distribution

(1)

Dental Merchandise

(2.5)

0.3

(2.2)

(0.6)

(2.8)

Dental Equipment

1.8

0.9

2.7

0.1

2.8

Total Dental

(1.6)

0.5

(1.1)

(0.5)

(1.6)

Medical

(4.8)

7.6

2.8

0.1

2.9

Total Health Care Distribution

(2.7)

3.0

0.3

(0.3)

Technology and value-added services

(2)

(1.1)

6.0

4.9

0.2

5.1

Total

(2.6)

3.2

0.6

(0.2)

0.4

(1)

Consists of consumable products, dental specialty products (including implant, orthodontic and endodontic products), small

equipment, laboratory products, large equipment, equipment repair services, branded and generic pharmaceuticals, vaccines, surgical

products, diagnostic tests, infection-control products, PPE products, vitamins and orthopedic implants.

(2)

Consists of practice management software and other value-added products, which are distributed primarily to health care providers,

practice consultancy, education, revenue cycle management and financial services on a non-recourse basis, e-services, continuing

education services for practitioners, practice technology, network and hardware services, and other services.

Global Sales

Global net sales for the three months ended September 28, 2024 increased 0.4%.

The components of our sales

growth are presented in the table above.

The 2.6% decrease in our internally generated local currency sales was primarily

attributable to the slower than

anticipated pace of recovery from the cyber incident, the challenging economic

environment in certain markets and

lower sales of PPE products and COVID-19 test kits, partially offset by sales growth in

dental equipment and dental

specialty products.

For the three months ended September 28, 2024, the estimated

decrease in internally generated

local currency sales, excluding PPE products and COVID-19

test kits, was 2.2%.

We estimate that sales of PPE products and COVID-19 test kits were approximately $157 million and $175 million

for the three months ended September 28, 2024 and September 30, 2023,

respectively, representing an estimated

decrease of $18 million, or 10.1% versus the prior year, with the $18 million net decrease year-over-year

representing 0.6% of global net sales for the three months ended September

28, 2024.

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Dental

Dental net sales for the three months ended September 28, 2024 decreased 1.6%.

The components of our sales

decline are presented in the table above.

The decrease in local currency sales was attributable to a 1.6% decrease

in internally generated local currency sales

of dental merchandise,

partially offset by an increase in internally generated local currency sales of dental

equipment and dental specialty products and sales from entities acquired

during the twelve months ended

September 28, 2024.

The decrease in internally generated local currency sales

of dental merchandise was primarily

attributable to the slower than anticipated pace of recovery from

the cyber incident,

the challenging economic

environment in certain markets, and lower sales of PPE products.

The increase in internally generated local

currency sales of dental equipment was primarily attributable to certain

international markets and traditional

equipment and our parts and service business in North America, partially offset by

a decline in digital imaging in

North America.

We estimate that sales of PPE products were approximately $72 million and $83 million for the three months ended

September 28, 2024 and September 30, 2023, respectively, representing an estimated decrease of $11 million, or

13.0% versus the prior year, with the $11 million net decrease year-over-year representing 0.6% of dental net sales

for the three months ended September 28, 2024.

The decrease in sales of PPE products was primarily due to lower

glove prices.

The estimated decrease in internally generated local currency

sales, excluding PPE products,

was

1.0%.

Medical

Medical net sales for the three months ended September 28, 2024

increased 2.9%.

The components of our sales

growth are presented in the table above.

The increase in local currency sales was attributable to our expansion

in the Home Solutions market,

including the

acquisition of Shield Healthcare during the year ended December

30, 2023, and our acquisition of TriMed, Inc.

during the second quarter of 2024, partially offset by a 4.8% decrease in internally

generated local currency medical

sales, resulting from

the slower than anticipated pace of recovery from the cyber incident,

the conversion of

certain pharmaceutical products

to lower priced generics,

and lower sales of influenza vaccines,

PPE products and

COVID-19 test kits.

We estimate that sales of PPE products and COVID-19 test kits were approximately $85 million and $92 million

for the three months ended September 28, 2024 and September 30, 2023,

respectively, representing an estimated

decrease of $7 million, or 7.5%

versus the prior year, with the $7 million net decrease year-over-year representing

0.6% of medical net sales for the three months ended September 28, 2024.

The decrease in sales of these products

was primarily due to lower market prices of PPE products (primarily lower

glove pricing).

The estimated decrease

in internally generated local currency sales, excluding PPE

products and COVID-19 test kits,

was 4.6%.

Technology and value-added services

Technology and value-added services net sales for the three months ended September 28, 2024 increased 5.1%.

The components of our sales growth are presented in the table above.

The internally generated local currency

increase in technology and value-added services sales was primarily attributable

to entities acquired during the

twelve months ended September 28, 2024,

a continued increase in the number of cloud-based users of our practice

management software and an increase in revenue cycle management solutions.

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Gross Profit

Gross profit and gross margin percentages by segment and in total were as follows:

September 28,

Gross

September 30,

Gross

Increase / (Decrease)

2024

Margin %

2023

Margin %

Health care distribution

844

28.6

851

28.8

(7)

(0.9)

Technology and value-added services

149

67.8

144

68.7

3.8

Total

993

31.3

995

31.5

(2)

(0.2)

As a result of different practices of categorizing costs associated with distribution networks

throughout our

industry, our gross margins may not necessarily be comparable to other distribution companies.

Additionally, we

realize substantially higher gross margin percentages in our technology and value-added services

segment than in

our health care distribution segment.

These higher gross margins result from being both the developer and seller of

software products and services, as well as certain financial services.

The software industry typically realizes higher

gross margins to recover investments in product development.

Within our health care distribution segment, gross profit margins may vary between the periods as a result of

the

changes in the mix of products sold as well as changes in our customer

mix.

For example, sales of our corporate

brand and certain specialty products achieve gross profit margins that are higher than

average total gross profit

margins of all products.

With respect to customer mix, sales to our large-group customers are typically completed

at lower gross margins due to the higher volumes sold as opposed to the gross margin on sales to office-based

practitioners, who normally purchase lower volumes.

Health care distribution gross profit for the three months ended September

28, 2024 was relatively flat compared to

the prior-year-period.

Technology and value-added services gross profit increased as a result of gross profit from acquisitions, partially

offset by lower internally generated sales.

Operating Expenses

Operating expenses (consisting of selling, general and administrative

expenses; depreciation and amortization; and

restructuring costs) by segment and in total were as follows:

% of

September 28,

Respective

September 30,

Respective

Increase

2024

Net Sales

2023

Net Sales

Health care distribution

726

24.6

691

23.4

5.1

Technology and value-added services

110

50.1

104

49.7

6.0

Total

836

26.3

795

25.1

5.2

The net increase (decrease) in operating expenses is attributable to

the following:

Operating Costs

Restructuring Costs

Acquisitions

Total

Health care distribution

(18)

Technology and value-added services

(6)

Total

(24)

The components of the net increase in total operating expenses are presented

in the table above.

The increase in

operating costs during the three months ended September 28, 2024

includes increases in payroll and payroll related

costs in both of our reportable segments, as well as increased acquisition

intangible amortization in our healthcare

distribution segment, partially offset by a gain of $19 million related to the remeasurement

to fair value of a

previously held equity investment within our healthcare distribution segment.

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During the three months ended September 28, 2024,

we also incurred $1 million of expenses, within our health care

distribution segment, directly related to the cyber incident,

mostly consisting of professional fees.

During the three

months ended September 28, 2024, we received insurance proceeds of

$10 million, recorded as a reduction of

selling, general and administrative expenses, representing a partial

insurance recovery of losses related to the cyber

incident.

Other Expense, Net

Other expense, net was as follows:

September 28,

September 30,

Variance

2024

2023

Interest income

(3.2)

Interest expense

(34)

(25)

(9)

(31.9)

Other, net

(2)

(45.4)

Other expense, net

(29)

(21)

(8)

(36.4)

Interest expense increased primarily due to increased borrowings and increased

interest rates.

Income Taxes

Our effective tax rate was 24.7% for the three months ended September 28, 2024, compared

to 21.9% for the prior

year period.

The difference between our effective and federal statutory tax rates

primarily relates to state and

foreign income taxes and interest expense.

The Organization of Economic Co-Operation and Development (OECD) issued

technical and administrative

guidance on Pillar Two rules in December 2021, which provides for a global minimum tax rate on the earnings of

large multinational businesses on a country-by-country basis.

Effective January 1, 2024, the minimum global tax

rate is 15% for various jurisdictions pursuant to the Pillar Two rules.

As of September 28, 2024, the impact of the

Pillar Two rules to our financial statements was immaterial.

As we operate in jurisdictions which have adopted

Pillar Two, we are continuing to analyze the implications to effectively manage the impact for 2024 and beyond.

Future tax reform resulting from these developments may result in changes

to long-standing tax principles, which

may adversely impact our effective tax rate going forward or result in higher cash

tax liabilities.

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Nine Months Ended September 28, 2024 Compared to Nine Months Ended September

30, 2023

Note: Percentages for Net Sales; Gross Profit; Operating Expenses; Other

Expense, Net; and Income Taxes are

based on actual values and may not recalculate due to rounding.

Net Sales

Net sales were as follows:

September 28,

% of

September 30,

% of

Increase / (Decrease)

2024

Total

2023

Total

Health care distribution

(1)

Dental

5,690

60.0

5,737

61.5

(47)

(0.8)

Medical

3,140

33.1

2,991

32.1

149

5.0

Total health care distribution

8,830

93.1

8,728

93.6

102

1.2

Technology and value-added services

(2)

652

6.9

594

6.4

9.7

Total

9,482

100.0

9,322

100.0

160

1.7

The components of our sales growth were as follows:

Total Local

Currency

Growth

Foreign

Exchange

Impact

Total Sales

Growth

Local Currency Growth

Local Internal

Growth

Acquisition

Growth

Health care distribution

(1)

Dental Merchandise

(3.0)

1.9

(1.1)

(0.2)

(1.3)

Dental Equipment

0.5

0.4

0.9

Total Dental

(2.2)

1.5

(0.7)

(0.1)

(0.8)

Medical

(3.3)

8.3

5.0

Total Health Care Distribution

(2.6)

3.9

1.3

(0.1)

1.2

Technology and value-added services

(2)

1.9

7.7

9.6

0.1

9.7

Total

(2.3)

4.1

1.8

(0.1)

1.7

(1)

Consists of consumable products, dental specialty products (including implant, orthodontic and endodontic products), small

equipment, laboratory products, large equipment, equipment repair services, branded and generic pharmaceuticals, vaccines, surgical

products, diagnostic tests, infection-control products, PPE products, vitamins and orthopedic implants.

(2)

Consists of practice management software and other value-added products, which are distributed primarily to health care providers,

practice consultancy, education, revenue cycle management and financial services on a non-recourse basis, e-services, continuing

education services for practitioners, practice technology, network and hardware services, and other services.

Global Sales

Global net sales for the nine months ended September 28, 2024 increased 1.7%.

The components of our sales

growth are presented in the table above.

The 2.3% decrease in our internally generated local currency sales was primarily

attributable to the slower than

anticipated pace of recovery from the cyber incident, the challenging economic

environment in certain markets and

lower sales of PPE products.

For the nine months ended September 28, 2024, the estimated decrease

in internally

generated local currency sales, excluding PPE products and COVID-19

test kits, was 1.7%.

We estimate that sales of PPE products and COVID-19 test kits were approximately $478 million and $540 million

for the nine months ended September 28, 2024 and September 30, 2023,

respectively, representing an estimated

decrease of $62 million, or 11.3%

versus the prior year, with the $62 million net decrease year-over-year

representing 0.6% of global net sales for the nine months ended September

28, 2024.

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Dental

Dental net sales for the nine months ended September 28, 2024 decreased

0.8%.

The components of our sales

decline are presented in the table above.

The decrease in local currency sales was attributable to a decrease

in internally generated local currency sales for

dental merchandise of 2.2%,

partially offset by sales growth in internally generated local currency sales for dental

equipment and dental specialty products.

The decrease in internally generated local currency sales of dental

merchandise was primarily attributable to the slower than anticipated pace

of recovery from the cyber incident, the

challenging economic environment in certain markets, and lower sales

of PPE products.

Our sales growth in

internally generated local currency sales for dental equipment was primarily

due to growth in North America for

traditional equipment and our parts and service business, partially offset by lower North American

digital

equipment sales and declines in certain international markets, and some

sales shifting into the first quarter of 2024

due to the delay of equipment installations during the fourth quarter of 2023

resulting from the impact of the cyber

incident.

We estimate that sales of PPE products were approximately $228 million and $264 million for the nine months

ended September 28, 2024 and September 30, 2023, respectively, representing an estimated decrease of $36

million, or 13.4%

versus the prior year, with the $36 million net decrease year-over-year representing 0.6%

dental net sales for the nine months ended September 28, 2024.

The decrease in sales of PPE products was

primarily due to lower glove prices and reduced demand following the

cyber incident.

The estimated decrease in

internally generated local currency sales, excluding PPE products,

was 1.6%.

Medical

Medical net sales for the nine months ended September 28, 2024 increased

5.0%.

The components of our sales

growth are presented in the table above.

The increase in local currency sales was attributable to our expansion

in the Home Solutions market,

including the

acquisition of Shield Healthcare during the year ended December 30, 2023,

offset by a decrease of 3.3% in

internally generated local currency medical sales, resulting from the slower

than anticipated pace of recovery from

the cyber incident, the conversion of certain pharmaceutical products to lower

priced generics, and lower sales of

PPE products and influenza vaccines,

partially offset by strong sales of point-of-care diagnostics including multi-

assay flu/COVID combination test kits.

We estimate that sales of PPE products and COVID-19 test kits were approximately $250 million and $276 million

for the nine months ended September 28, 2024 and September 30, 2023,

respectively, representing an estimated

decrease of $26 million, or 9.4% versus the prior year, with the $26 million net decrease year-over-year

representing 0.8% of medical net sales for the nine months ended September

28, 2024.

The decrease in sales of

these products was primarily due to lower market prices of PPE products (primarily

lower glove pricing).

The

estimated decrease in internally generated local currency sales, excluding

PPE products and COVID-19 test kits,

was 2.6%.

Technology and value-added services

Technology and value-added services net sales for the nine months ended September 28, 2024 increased 9.7%.

The

components of our sales growth are presented in the table above.

The internally generated local currency increase

of 1.9% in technology and value-added services sales was primarily

attributable to a continued increase in the

number of cloud-based users of our practice management software and an

increase in revenue cycle management

solutions and our analytical products.

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Gross Profit

Gross profit and gross margin percentages by segment and in total were as follows:

September 28,

Gross

September 30,

Gross

Increase

2024

Margin %

2023

Margin %

Health care distribution

2,586

29.3

2,534

29.0

2.0

Technology and value-added services

437

67.1

402

67.6

8.8

Total

3,023

31.9

2,936

31.5

2.9

As a result of different practices of categorizing costs associated with distribution networks

throughout our

industry, our gross margins may not necessarily be comparable to other distribution companies.

Additionally, we

realize substantially higher gross margin percentages in our technology and value-added services

segment than in

our health care distribution segment.

These higher gross margins result from being both the developer and seller of

software products and services, as well as certain financial services.

The software industry typically realizes higher

gross margins to recover investments in product development.

Within our health care distribution segment, gross profit margins may vary between the periods as a result of

the

changes in the mix of products sold as well as changes in our customer

mix.

For example, sales of our corporate

brand and certain specialty products achieve gross profit margins that are higher than

average total gross profit

margins of all products.

With respect to customer mix, sales to our large-group customers are typically completed

at lower gross margins due to the higher volumes sold as opposed to the gross margin on sales to office-based

practitioners, who normally purchase lower volumes.

Health care distribution gross profit for the nine months ended September 28, 2024

increased compared to the

prior-year-period due to gross profit from acquisitions and gross margin expansion as a result of a favorable impact

of sales mix of higher-margin products.

Technology and value-added services gross profit increased as a result of a higher gross profit from internally

generated sales and gross profit from acquisitions.

Operating Expenses

Operating expenses (consisting of selling, general and administrative

expenses; depreciation and amortization; and

restructuring costs) by segment and in total were as follows:

% of

September 28,

Respective

September 30,

Respective

Increase

2024

Net Sales

2023

Net Sales

Health care distribution

2,196

24.9

2,063

23.6

133

6.5

Technology and value-added services

361

55.4

297

50.1

21.4

Total

2,557

27.0

2,360

25.3

197

8.3

The net increase in operating expenses is attributable to the following:

Operating Costs

Restructuring Costs

Acquisitions

Total

Health care distribution

113

133

Technology and value-added services

Total

128

197

The components of the net increase in total operating expenses are presented

in the table above.

The increase in

operating costs during the nine months ended September 28, 2024

includes increases in payroll and payroll related

costs, travel, convention expenses and litigation settlement costs in both

of our reportable segments, as well as

increased acquisition intangible amortization in our healthcare distribution

segment, partially offset by a gain of

$19 million related to the remeasurement to fair value of a previously held

equity investment within our healthcare

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distribution segment.

The impact from this remeasurement gain was similar to that of a

remeasurement gain related

to another buy-up of a business within our healthcare distribution segment

during the nine months ended September

30, 2023.

also recorded an increase of $38 million in accrued contingent consideration

related to a 2023 acquisition in our

technology and value-added services segment.

During the nine months ended September 28, 2024, we also

incurred $12 million of expenses, within our health care distribution segment,

directly related to the cyber incident,

mostly consisting of professional fees.

During the nine months ended September 28, 2024, we received

insurance

proceeds of $20 million, recorded as a reduction of selling, general

and administrative expenses, representing a

partial insurance recovery of losses related to the cyber incident.

Other Expense, Net

Other expense, net was as follows:

September 28,

September 30,

Variance

2024

2023

Interest income

44.7

Interest expense

(96)

(58)

(38)

(64.7)

Other, net

(1)

(2)

(82.4)

Other expense, net

(79)

(48)

(31)

(63.8)

Interest income increased primarily due to increased interest rates.

Interest expense increased primarily due to

increased borrowings and increased interest rates.

Income Taxes

Our effective tax rate was 25.1% for the nine months ended September 28, 2024, compared

to 22.5% for the prior

year period.

The difference between our effective and federal statutory tax rates primarily relates to state

and

foreign income taxes and interest expense.

The Organization of Economic Co-Operation and Development (OECD) issued

technical and administrative

guidance on Pillar Two rules in December 2021, which provides for a global minimum tax rate on the earnings of

large multinational businesses on a country-by-country basis.

Effective January 1, 2024, the minimum global tax

rate is 15% for various jurisdictions pursuant to the Pillar Two rules.

As of September 28, 2024, the impact of the

Pillar Two rules to our financial statements was immaterial.

As we operate in jurisdictions which have adopted

Pillar Two, we are continuing to analyze the implications to effectively manage the impact for 2024 and beyond.

Future tax reform resulting from these developments may result in changes

to long-standing tax principles, which

may adversely impact our effective tax rate going forward or result in higher cash

tax liabilities.

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Liquidity and Capital Resources

Our principal capital requirements have included funding of acquisitions, purchases

of additional noncontrolling

interests, repayments of debt principal, the funding of working capital needs,

purchases of fixed assets and

repurchases of common stock.

Working capital requirements generally result from increased sales, special

inventory forward buy-in opportunities and payment terms for receivables

and payables.

Historically, sales have

tended to be stronger during the second half of the year and special inventory

forward buy-in opportunities have

been most prevalent just before the end of the year, and have caused our working capital requirements

to be higher

from the end of the third quarter to the end of the first quarter of

the following year.

We finance our business primarily through cash generated from our operations, revolving credit facilities and debt

placements.

Please see

Note 8 – Debt

for further information.

Our ability to generate sufficient cash flows from

operations is dependent on the continued demand of our customers

for our products and services, and access to

products and services from our suppliers.

Our business requires a substantial investment in working capital, which

is susceptible to fluctuations during the

year as a result of inventory purchase patterns and seasonal demands.

Inventory purchase activity is a function of

sales activity, special inventory forward buy-in opportunities and our desired level of inventory.

We anticipate

future increases in our working capital requirements.

We finance our business to provide adequate funding for at least 12 months.

Funding requirements are based on

forecasted profitability and working capital needs, which, on occasion, may

change.

Consequently, we may change

our funding structure to reflect any new requirements.

We believe that our cash and cash equivalents, our ability to access private debt markets and public equity markets,

and our available funds under existing credit facilities provide us with

sufficient liquidity to meet our currently

foreseeable short-term and long-term capital needs.

Our acquisition strategy is focused on investments in companies that

add new customers and sales teams, increase

our geographic footprint (whether entering a new country, such as emerging markets, or building scale where we

have already invested in businesses), and finally, those that enable us to access new products and technologies.

Net cash provided by operating activities was $644 million for the

nine months ended September 28, 2024,

compared to net cash provided by operating activities of $532 million for

the prior year.

The net change of $112

million was primarily attributable to changes in working capital accounts,

primarily accounts receivable and

inventory; partially offset by lower cash net income.

During the nine months ended September 28, 2024, the cyber

incident had several residual impacts to the operating cash flows from our

working capital, net of acquisitions,

including an increase in operating cash flows from accounts receivable due

to improved collection levels and

decreased cash flows from accounts payable and accrued expenses resulting

from previously delayed payments.

Net cash used in investing activities was $372 million for the nine

months ended September 28, 2024, compared to

net cash used in investing activities of $808 million for the prior year.

The net change of $436 million was

primarily attributable to decreased payments for equity investments

and business acquisitions.

Net cash used in financing activities was $306 million for the nine

months ended September 28, 2024, compared to

net cash provided by financing activities of $307 million for the

prior year.

The net change of $613 million was

primarily due to decreased net borrowings from debt to finance our investments

and increased acquisitions of

noncontrolling interests in subsidiaries and increased repurchases of common

stock.

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The following table summarizes selected measures of liquidity and capital

resources:

September 28,

December 30,

2024

2023

Cash and cash equivalents

126

171

Working

capital

(1)

1,218

1,805

Debt:

Bank credit lines

638

264

Current maturities of long-term debt

109

150

Long-term debt

1,906

1,937

Total debt

2,653

2,351

Leases:

Current operating lease liabilities

Non-current operating lease liabilities

262

310

(1)

Includes $341 million and $284 million of certain accounts receivable which serve as security for U.S. trade accounts receivable

securitization at September 28, 2024 and December 30, 2023, respectively.

Our cash and cash equivalents consist of bank balances and investments

in money market funds representing

overnight investments with a high degree of liquidity.

Accounts receivable days sales outstanding and inventory turns

Our accounts receivable days sales outstanding from operations

increased to 48.6 days as of September 28, 2024

from 43.7 days as of September 30, 2023, which was primarily attributable

to the impact of the cyber incident.

During the nine months ended September 28, 2024, we wrote off approximately $7

million of fully reserved

accounts receivable against our trade receivable reserve.

Our inventory turns from operations increased to 5.0 as of

September 28, 2024 from 4.5 as of September 30, 2023.

Our working capital accounts may be impacted by current

and future economic conditions.

Leases

have operating and finance leases for corporate offices, office space, distribution and other facilities,

vehicles

and certain equipment.

Our leases have remaining terms of approximately one year

to approximately 17 years,

some of which may include options to extend the leases for up to 15 years.

As of September 28, 2024, our right-of-

use assets related to operating leases were $304 million and our current and non-current

operating lease liabilities

were $77 million and $262 million, respectively.

Stock Repurchases

On July 31, 2024 our Board of Directors authorized the repurchase of up

to an additional $500 million in shares of

our common stock.

From March 3, 2003 through September 28, 2024, we repurchased $5.1

billion, or 94,763,315 shares, under our

common stock repurchase programs, with $455 million available

as of September 28, 2024 for future common

stock share repurchases.

Subject to market conditions and other factors, we plan to continue

to accelerate our share

repurchase activity in light of our favorable cash position.

Redeemable Noncontrolling Interests

Some minority stockholders in certain of our subsidiaries have the right,

at certain times, to require us to acquire

their ownership interest in those entities at fair value.

Accounting Standards Codification Topic 480-10 is

applicable for noncontrolling interests where we are or may be required

to purchase all or a portion of the

outstanding interest in a consolidated subsidiary from the noncontrolling

interest holder under the terms of a put

option contained in contractual agreements.

As of September 28, 2024 and December 30, 2023, our balance

for

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redeemable noncontrolling interests was $832 million and $864 million,

respectively.

Please see

Note 13 –

Redeemable Noncontrolling Interests

for further information.

Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies and

estimates from those disclosed in Item

7 of our Annual Report on Form 10-K for the year ended December 30, 2023.

Accounting Standards Update

For a discussion of accounting standards updates that have been adopted

or will be adopted, see

Note 2 - Significant

Accounting Policies and Recently Issued Accounting Standards

of the Notes to the Condensed Consolidated

Financial Statements included under Item 1.

ITEM 3.

QUANTITATIVE

AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our exposure to market risk

from that disclosed in Item 7A of our Annual

Report on Form 10-K for the year ended December 30, 2023.

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ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of management, including

our principal executive officer and

principal financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and

procedures as of the end of the period covered by this quarterly report

as such term is defined in Rules 13a-15(e)

and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as

amended (the “Exchange Act”).

Based

on this evaluation, our management, including our principal executive

officer and principal financial officer,

concluded that our disclosure controls and procedures were effective as of September 28,

2024, to ensure that all

material information required to be disclosed by us in reports that we file

or submit under the Exchange Act is

accumulated and communicated to them as appropriate to allow timely

decisions regarding required disclosure and

that all such information is recorded, processed, summarized and reported

within the time periods specified in the

SEC’s rules and forms, and the rules of the Nasdaq stock exchange.

Changes in Internal Control over Financial Reporting

The combination of acquisitions,

including the acquisition of TriMed Inc. (“TriMed”), continued acquisition

integrations and systems implementation activity undertaken during

the quarter and carried over from prior quarters

when considered in the aggregate, represents a material change in our internal

control over financial reporting. As

previously reported, the full integration of TriMed will extend beyond year-end and, therefore, we anticipate

excluding TriMed from our annual assessment of internal control over financial reporting as of December

28, 2024,

as permitted by related SEC staff interpretive guidance for newly acquired businesses.

During the quarter ended September 28, 2024, we completed the acquisition

of a dental distribution business and

acquired a controlling interest of a dental affiliate in Europe.

Also, post-acquisition integration related activities

continued for our dental and medical businesses acquired during prior quarters.

These acquisitions, the majority of

which utilize separate information and financial accounting systems,

have been included in our condensed

consolidated financial statements since their respective dates of acquisition.

Also, during the quarter ended September 28, 2024, we completed the

systems implementation activities for

implementing a new e-commerce system for certain dental distribution

businesses in the UK and Ireland.

Additionally, we completed the systems implementation activities related to the integration of a previously acquired

Australian medical distribution business into our existing Australian

ERP system.

Finally, we continued systems

implementation activities for two of our dental distribution businesses in France

and Brazil.

All acquisitions, continued acquisition integrations and systems implementation

activities involve necessary and

appropriate change-management controls that are considered in our quarterly

assessment of the design and

operating effectiveness of our internal control over financial reporting.

The deficiencies in internal control over financial reporting identified

as of December 30, 2023 at the application

control level related to logical and user access management and segregation

of duties have continued to be the

subject of ongoing remediation including implementation of specific

action plans and the testing/validation of

control operating effectiveness, which are expected to be substantially completed prior to year-end.

Limitations of the Effectiveness of Internal Control

A control system, no matter how well conceived and operated, can provide

only reasonable, not absolute, assurance

that the objectives of the internal control system are met.

Because of the inherent limitations of any internal control

system, no evaluation of controls can provide absolute assurance that

all control issues, if any, within a company

have been detected.

Table of Contents

PART

II.

OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

For a discussion of Legal Proceedings, see

Note 11–Legal Proceedings

of the Notes to the Condensed Consolidated

Financial Statements included under Item 1.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors disclosed in

Part 1, Item 1A, of our Annual Report on

Form 10-K for the year ended December 30, 2023.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES

AND USE OF PROCEEDS

Purchases of equity securities by the issuer

Our share repurchase program, announced on March 3, 2003, originally

allowed us to repurchase up to two million

shares pre-stock splits (eight million shares post-stock splits) of our common

stock, which represented

approximately 2.3% of the shares outstanding at the commencement

of the program.

Subsequent additional

increases totaling $4.9

billion, authorized by our Board of Directors, to the repurchase program

provide for a total

of $5.5 billion (including $500 million authorized on July 31, 2024) of shares of

our common stock to be

repurchased under this program.

As of September 28, 2024, we had repurchased approximately $5.1 billion

of common stock (94,763,315 shares)

under these initiatives, with $455 million available for future common

stock share repurchases.

The following table summarizes repurchases of our common stock

under our stock repurchase program during the

fiscal quarter ended September 28, 2024:

Total Number

Maximum Number

Total

of Shares

Number

Average

Purchased as Part

that May Yet

of Shares

Price Paid

of Our Publicly

Be Purchased Under

Fiscal Month

Purchased (1)

Per Share

Announced Program

Our Program (2)

6/30/2024 through 8/3/2024

486,030

68.56

486,030

7,837,251

8//2024 through 8/31/2024

1,063,515

69.14

1,063,515

6,847,137

9/1/2024 through 9/28/2024

404,531

69.56

404,531

6,213,125

1,954,076

(1)

All repurchases were executed in the open market under our existing publicly announced authorized program.

(2)

The maximum number of shares that may yet be purchased under this program is determined at the end of each month based on the

closing price of our common stock at that time.

This table excludes shares withheld from employees to satisfy minimum tax withholding

requirements for equity-based transactions.

Table of Contents

ITEM 6.

EXHIBITS

31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.+

31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.+

32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.+

101.INS

Inline XBRL Instance Document - the instance document does not appear

in the

Interactive Data File because its XBRL tags are embedded within the

Inline

XBRL document+

101.SCH

Inline XBRL Taxonomy Extension Schema Document+

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document+

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document+

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document+

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document+

104

The cover page of Henry Schein, Inc.’s Quarterly Report on Form 10-Q for the

quarter ended September 28, 2024, formatted in Inline XBRL (included

within

Exhibit 101 attachments).+

Filed or furnished herewith.

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the

Registrant has duly caused this Report to

be signed on its behalf by the undersigned thereunto duly authorized.

Henry Schein, Inc.

(Registrant)

By: /s/ Ronald N. South

Ronald N. South

Senior Vice President and

Chief Financial Officer

(Authorized Signatory and Principal Financial

and Accounting Officer)

Dated: November 5, 2024

FOR VALIDATION PURPOSES ONLY - \[860894.EX31\_1\]

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF THESECURITIES

EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Stanley M. Bergman, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Henry Schein,<br>Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a<br>material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
---	---
3.	Based on my knowledge, the financial statements, and other financial information included in this report,<br>fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
---	---
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining<br>disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act<br>Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
---	---
(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be<br>designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is<br>being prepared;
---	---
(b)	Designed such internal control over financial reporting, or caused such internal control over financial<br>reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting<br>principles;
---	---
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this<br>report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
---	---
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that<br>occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal<br>control over financial reporting; and
---	---
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of<br>internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
---	---
(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over<br>financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
---	---
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in<br>the registrant’s internal control over financial reporting.
---	---
Date: November 5, 2024	/s/ Stanley M. Bergman
---	---
	Stanley M. Bergman
	Chairman and Chief Executive Officer

FOR VALIDATION PURPOSES ONLY - \[860894.EX31\_2\]

EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF THESECURITIES

EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Ronald N. South, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Henry Schein,<br>Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a<br>material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
---	---
3.	Based on my knowledge, the financial statements, and other financial information included in this report,<br>fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
---	---
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining<br>disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act<br>Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
---	---
(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be<br>designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is<br>being prepared;
---	---
(b)	Designed such internal control over financial reporting, or caused such internal control over financial<br>reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting<br>principles;
---	---
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this<br>report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
---	---
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that<br>occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal<br>control over financial reporting; and
---	---
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of<br>internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
---	---
(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over<br>financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
---	---
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in<br>the registrant’s internal control over financial reporting.
---	---
Date: November 5, 2024	/s/ Ronald N. South
---	---
	Ronald N. South
	Senior Vice President and
	Chief Financial Officer

FOR VALIDATION PURPOSES ONLY - \[860894.EX32\_1\]

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Henry Schein, Inc. (the “Company”) for the period ending September 28, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stanley M. Bergman, the Chairman and Chief Executive Officer of the Company, and I, Ronald N. South, Senior Vice President and Chief Financial Officer of the Company, do hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ Stanley M. Bergman
Dated: November 5, 2024	Stanley M. Bergman<br> <br>Chairman and Chief Executive<br>Officer
Dated: November 5, 2024	/s/ Ronald N. South
	Ronald N. South<br> <br>Senior Vice President and<br><br><br>Chief Financial Officer

This certification accompanies each Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.