10-Q
HENRY SCHEIN INC (HSIC)
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
June 28, 2025
or
☐
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
☒
No
☐
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
☒
No
☐
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
☐
No
☒
As of July 28, 2025,
there were
121,268,398
shares of the registrant’s common stock outstanding.
HENRY SCHEIN, INC.
INDEX
PART I. FINANCIAL INFORMATION
Page
ITEM 1.
Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets
as of June 28, 2025 and December 28, 2024
3
Condensed Consolidated Statements of Income
for the three and six months ended
June 28, 2025 and June 29, 2024
4
Condensed Consolidated Statements of Comprehensive Income
for the
three and six months ended June 28, 2025 and June 29, 2024
5
Condensed Consolidated Statement of Changes in Stockholders' Equity
for the three months ended
June 28, 2025 and June 29, 2024
6
Condensed Consolidated Statement of Changes in Stockholders' Equity
for the six months ended
June 28, 2025 and June 29, 2024
7
Condensed Consolidated Statements of Cash Flows
for the six months ended
June 28, 2025 and June 29, 2024
8
Notes to Condensed Consolidated Financial Statements
9
Note 1 – Basis of Presentation
9
Note 2 – Significant Accounting Policies and Recently
Issued Accounting Standards
10
Note 3 – Cyber Incident
10
Note 4 – Net Sales from Contracts with Customers
11
Note 5 – Segment Data
12
Note 6 – Business Acquisitions
15
Note 7 – Fair Value Measurements
18
Note 8 – Debt
21
Note 9 – Income Taxes
24
Note 10 – Plans of Restructuring
25
Note 11 – Legal Proceedings
27
Note 12 – Stock-Based Compensation
28
Note 13 – Redeemable Noncontrolling Interests
31
Note 14 – Comprehensive Income
31
Note 15 – Earnings Per Share
33
Note 16 – Supplemental Cash Flow Information
33
Note 17 – Related Party Transactions
34
Note 18 – KKR Investment and Accelerated Share Repurchase Program
35
ITEM 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
36
ITEM 3.
Quantitative and Qualitative Disclosures About Market Risk
55
ITEM 4.
Controls and Procedures
55
PART II. OTHER INFORMATION
ITEM 1.
Legal Proceedings
56
ITEM 1A.
Risk Factors
56
ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds
56
ITEM 5.
Other Information
57
ITEM 6.
Exhibits
58
Signature
59
Table of Contents
See accompanying notes.
3
PART
I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
HENRY SCHEIN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions,
except share data)
June 28,
December 28,
2025
2024
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
145
$
122
Accounts receivable, net of allowance for credit losses of $
86
and $
78
(1)
1,645
1,482
Inventories, net
1,908
1,810
Prepaid expenses and other
545
569
Total current assets
4,243
3,983
Property and equipment, net
587
531
Operating lease right-of-use assets
300
293
Goodwill
4,085
3,887
Other intangibles, net
1,041
1,023
Investments and other
650
501
Total assets
$
10,906
$
10,218
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
918
$
962
Bank credit lines
901
650
Current maturities of long-term debt
27
56
Operating lease liabilities
81
75
Accrued expenses:
Payroll and related
285
303
Taxes
170
139
Other
625
618
Total current liabilities
3,007
2,803
Long-term debt (1)
2,090
1,830
Deferred income taxes
147
102
Operating lease liabilities
259
259
Other liabilities
504
387
Total liabilities
6,007
5,381
Redeemable noncontrolling interests
811
806
Commitments and contingencies
(nil)
(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,
121,895,045
outstanding on June 28, 2025 and
124,155,884
outstanding on December 28, 2024
1
1
Additional paid-in capital
186
-
Retained earnings
3,485
3,771
Accumulated other comprehensive loss
(227)
(379)
Total Henry Schein, Inc. stockholders' equity
3,445
3,393
Noncontrolling interests
643
638
Total stockholders' equity
4,088
4,031
Total liabilities, redeemable noncontrolling
interests and stockholders' equity
$
10,906
$
10,218
(1)
Amounts presented include balances held by our consolidated variable interest entity (“VIE”).
At June 28, 2025 and December 28,
2024, includes trade accounts receivable of $
440
million and $
241
million, respectively, and long-term debt of $
330
million and
$
150
million, respectively.
See
Note 1 – Basis of Presentation
for further information.
Table of Contents
See accompanying notes.
4
HENRY SCHEIN, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF INCOME
(in millions,
except share and per share data)
(unaudited)
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Net sales
$
3,240
$
3,136
$
6,408
$
6,308
Cost of sales
2,224
2,118
4,392
4,278
Gross profit
1,016
1,018
2,016
2,030
Operating expenses:
Selling, general and administrative
778
781
1,516
1,572
Depreciation and amortization
64
63
126
124
Restructuring costs
23
15
48
25
Operating income
151
159
326
309
Other income (expense):
Interest income
9
6
15
11
Interest expense
(38)
(32)
(73)
(62)
Other, net
(1)
(1)
(2)
1
Income before taxes, equity in earnings of affiliates and
noncontrolling interests
121
132
266
259
Income taxes
(31)
(33)
(66)
(65)
Equity in earnings of affiliates, net of tax
4
6
7
9
Net income
94
105
207
203
Less: Net income attributable to noncontrolling interests
(8)
(1)
(11)
(6)
Net income attributable to Henry Schein, Inc.
$
86
$
104
$
196
$
197
Earnings per share attributable to Henry Schein, Inc.:
Basic
$
0.71
$
0.81
$
1.59
$
1.53
Diluted
$
0.70
$
0.80
$
1.58
$
1.52
Weighted-average common
shares outstanding:
Basic
121,927,867
127,784,380
122,852,702
128,252,628
Diluted
122,636,948
128,646,506
123,739,381
129,206,780
Table of Contents
See accompanying notes.
5
HENRY SCHEIN, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME
(in millions)
(unaudited)
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Net income
$
94
$
105
$
207
$
203
Other comprehensive income, net of tax:
Foreign currency translation gain (loss)
133
(62)
209
(116)
Unrealized gain (loss) from hedging activities
(21)
4
(26)
15
Other comprehensive income (loss), net of tax
112
(58)
183
(101)
Comprehensive income
206
47
390
102
Comprehensive income attributable to noncontrolling interests:
Net income
(8)
(1)
(11)
(6)
Foreign currency translation loss (gain)
(22)
5
(31)
15
Comprehensive loss (income) attributable to noncontrolling
interests
(30)
4
(42)
9
Comprehensive income attributable to Henry Schein, Inc.
$
176
$
51
$
348
$
111
Table of Contents
See accompanying notes.
6
HENRY SCHEIN, INC.
CONDENSED CONSOLIDATED STATEMENTS
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'
Shares
Amount
Capital
Earnings
Income / (Loss)
Interests
Equity
Balance, March 29, 2025
122,243,683
$
1
$
-
$
3,626
$
(317)
$
644
$
3,954
Net income (excluding $
1
attributable to Redeemable
noncontrolling interests)
-
-
-
86
-
7
93
Foreign currency translation gain (excluding gain of $
21
attributable to Redeemable noncontrolling interests)
-
-
-
-
111
1
112
Unrealized loss from hedging activities,
net of tax benefit of $
8
-
-
-
-
(21)
-
(21)
Distributions to noncontrolling shareholders
-
-
-
-
-
(7)
(7)
Purchase of noncontrolling interests
-
-
(1)
-
-
(1)
(2)
Change in fair value of redeemable securities
-
-
(10)
-
-
-
(10)
Noncontrolling interests and adjustments related to
business acquisitions and contingent consideration
-
-
-
-
-
(1)
(1)
Issuance of common stock
3,285,151
-
250
-
-
-
250
Repurchase and retirement of common stock
(3,657,832)
-
(61)
(227)
-
-
(288)
Stock issued upon exercise of stock options
3,741
-
-
-
-
-
-
Stock-based compensation expense
26,096
-
11
-
-
-
11
Shares withheld for payroll taxes
(5,807)
-
(3)
-
-
-
(3)
Settlement of stock-based compensation awards
13
-
-
-
-
-
-
Balance, June 28, 2025
121,895,045
$
1
$
186
$
3,485
$
(227)
$
643
$
4,088
Accumulated
Common Stock
Additional
Other
Total
$0.01 Par Value
Paid-in
Retained
Comprehensive
Noncontrolling
Stockholders'
Shares
Amount
Capital
Earnings
Income / (Loss)
Interests
Equity
Balance, March 30, 2024
128,480,909
$
1
$
-
$
3,838
$
(239)
$
637
$
4,237
Net income (excluding loss of $
3
attributable to Redeemable
noncontrolling interests)
-
-
-
104
-
4
108
Foreign currency translation loss (excluding loss of $
5
attributable to Redeemable noncontrolling interests)
-
-
-
-
(57)
-
(57)
Unrealized gain from hedging activities,
net of tax of $
2
-
-
-
-
4
-
4
Distributions to noncontrolling shareholders
-
-
-
-
-
(5)
(5)
Change in fair value of redeemable securities
-
-
(39)
-
-
-
(39)
Noncontrolling interests and adjustments related to
business acquisitions
-
-
(11)
-
-
-
(11)
Repurchase and retirement of common stock
(1,415,706)
-
(14)
(87)
-
-
(101)
Stock issued upon exercise of stock options
4,301
-
1
-
-
-
1
Stock-based compensation expense
15,339
-
12
-
-
-
12
Shares withheld for payroll taxes
(4,298)
-
(1)
-
-
-
(1)
Transfer of charges in excess of
capital
-
-
52
(52)
-
-
-
Balance, June 29, 2024
127,080,545
$
1
$
-
$
3,803
$
(292)
$
636
$
4,148
Table of Contents
See accompanying notes.
7
HENRY SCHEIN, INC.
CONDENSED CONSOLIDATED STATEMENTS
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'
Shares
Amount
Capital
Earnings
Income / (Loss)
Interests
Equity
Balance, December 28, 2024
124,155,884
$
1
$
-
$
3,771
$
(379)
$
638
$
4,031
Net income (excluding loss of $
1
attributable to Redeemable
noncontrolling interests)
-
-
-
196
-
12
208
Foreign currency translation gain (excluding gain of $
29
attributable to Redeemable noncontrolling interests)
-
-
-
-
178
2
180
Unrealized loss from hedging activities,
net of tax benefit of $
9
-
-
-
-
(26)
-
(26)
Pension adjustment gain, net of tax of $
1
-
-
-
-
-
-
-
Distributions to noncontrolling shareholders
-
-
-
-
-
(7)
(7)
Purchase of noncontrolling interests
-
-
(1)
-
-
(1)
(2)
Change in fair value of redeemable securities
-
-
(38)
-
-
-
(38)
Noncontrolling interests and adjustments related to
business acquisitions and contingent consideration
-
-
(60)
-
-
(1)
(61)
Issuance of common stock
3,285,151
-
250
-
-
-
250
Repurchase and retirement of common stock
(5,913,317)
-
(82)
(368)
-
-
(450)
Stock issued upon exercise of stock options
14,092
-
1
-
-
-
1
Stock-based compensation expense
546,481
-
16
-
-
-
16
Shares withheld for payroll taxes
(193,300)
-
(14)
-
-
-
(14)
Settlement of stock-based compensation awards
54
-
-
-
-
-
-
Transfer of charges in excess of
capital
-
-
114
(114)
-
-
-
Balance, June 28, 2025
121,895,045
$
1
$
186
$
3,485
$
(227)
$
643
$
4,088
Accumulated
Common Stock
Additional
Other
Total
$0.01 Par Value
Paid-in
Retained
Comprehensive
Noncontrolling
Stockholders'
Shares
Amount
Capital
Earnings
Income / (Loss)
Interests
Equity
Balance, December 30, 2023
129,247,765
$
1
$
-
$
3,860
$
(206)
$
634
$
4,289
Net income (excluding loss of $
1
attributable to
noncontrolling interests)
-
-
-
197
-
7
204
Foreign currency translation gain (excluding loss of $
15
attributable to Redeemable noncontrolling interests)
-
-
-
-
(101)
-
(101)
Unrealized gain from hedging activities,
net of tax of $
6
-
-
-
-
15
-
15
Distributions to noncontrolling shareholders
-
-
-
-
-
(5)
(5)
Change in fair value of redeemable securities
-
-
(81)
-
-
-
(81)
Noncontrolling interests and adjustments related to
business acquisitions
-
-
(10)
-
-
-
(10)
Repurchase and retirement of common stock
(2,414,434)
-
(24)
(152)
-
-
(176)
Stock issued upon exercise of stock options
25,240
-
2
-
-
-
2
Stock-based compensation expense
330,098
-
20
-
-
-
20
Shares withheld for payroll taxes
(108,163)
-
(9)
-
-
-
(9)
Settlement of stock-based compensation awards
39
-
-
-
-
-
-
Transfer of charges in excess of
capital
-
-
102
(102)
-
-
-
Balance, June 29, 2024
127,080,545
$
1
$
-
$
3,803
$
(292)
$
636
$
4,148
Table of Contents
See accompanying notes.
8
HENRY SCHEIN, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(in millions)
(unaudited)
Six Months Ended
June 28,
June 29,
2025
2024
Cash flows from operating activities:
Net income
$
207
$
203
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
149
147
Impairment charge on intangible assets
1
-
Non-cash restructuring charges
3
6
Stock-based compensation expense
16
20
Provision for losses on trade and other accounts receivable
5
7
Benefit from deferred income taxes
(7)
(19)
Equity in earnings of affiliates
(7)
(9)
Distributions from equity affiliates
8
9
Changes in unrecognized tax benefits
(1)
3
Other
(31)
(9)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable
(100)
270
Inventories
(29)
107
Other current assets
37
50
Accounts payable and accrued expenses
(94)
(292)
Net cash provided by operating activities
157
493
Cash flows from investing activities:
Purchases of property and equipment
(63)
(78)
Payments related to equity investments and business acquisitions,
net of cash acquired
(101)
(181)
Proceeds from loan to affiliate
2
3
Capitalized software costs
(26)
(20)
Other
(9)
(5)
Net cash used in investing activities
(197)
(281)
Cash flows from financing activities:
Net change in bank credit lines
248
242
Proceeds from issuance of long-term debt
244
90
Principal payments for long-term debt
(21)
(177)
Debt issuance costs
(2)
-
Proceeds from issuance of stock upon exercise of stock options
1
2
Payments for repurchases and retirement of common stock
(447)
(175)
Issuance of common stock
250
-
Payments for taxes related to shares withheld for employee taxes
(14)
(8)
Distributions to noncontrolling shareholders
(18)
(28)
Payments for contingent consideration
(19)
-
Acquisitions of noncontrolling interests in subsidiaries
(77)
(211)
Net cash provided by (used in) financing activities
145
(265)
Effect of exchange rate changes on cash and cash equivalents
(82)
20
Net change in cash and cash equivalents
23
(33)
Cash and cash equivalents, beginning of period
122
171
Cash and cash equivalents, end of period
$
145
$
138
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
9
Note 1 – Basis of Presentation
Our condensed consolidated financial statements include the accounts of Henry
Schein, Inc., and all of our
controlled subsidiaries and VIE (“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 28, 2024 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 consolidated 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 six months ended June 28,
2025 are not necessarily indicative of the
results to be expected for any other interim period or for the year ending
December 27, 2025.
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.
The primary beneficiary of a VIE is required to consolidate the assets and
liabilities of the VIE.
We are deemed to
be the primary beneficiary of the VIE when 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 the right to receive benefits
that could potentially be significant to the VIE.
In determining whether we are the primary beneficiary, we
consider factors such as ownership interest, debt investments, management
representation, authority to control
decisions, and contractual and substantive participating rights of each party.
For this VIE, related to our U.S. trade
accounts receivable securitization as discussed in
Note 8 – Debt
,
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 June 28, 2025 and December 28, 2024, certain trade accounts
receivable that can only be
used to settle obligations of this VIE were $
440
million and $
241
million, respectively, and the liabilities of this
VIE where the creditors have recourse to us were $
330
million and $
150
million, respectively.
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
10
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 six months ended
June 28, 2025, as compared to the significant accounting policies described
in Item 8 of our Annual Report on
Form 10-K for the year ended December 28, 2024.
Recently Issued Accounting Standards
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) 2024-03, “
Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure
(Subtopic 220-40)
:
Disaggregation of Income Statement Expenses
,” which requires additional disclosure about the
specific expense categories in the notes to financial statements at interim and
annual reporting periods.
The
amendments in this ASU do not change or remove current expense
disclosure requirements,
but affect where this
information appears in the notes to financial statements.
This ASU is effective for annual reporting periods
beginning after December 15, 2026, and interim reporting periods beginning
after December 15, 2027, with early
adoption permitted.
Upon adoption, the guidance can be applied prospectively or
retrospectively.
We are currently
evaluating the impact that ASU 2024-03 will have on our condensed consolidated
financial statements.
In December 2023, the 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.
We are currently
evaluating the impact that ASU 2023-09 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.
With respect to the October 2023 cyber incident, we have a $
60
million insurance policy, following a $
5
million
retention.
During the three and six months ended June 28, 2025, we
did
no
t incur any expenses directly related to
the cyber incident.
During the three and six months ended June 29, 2024 we incurred $
3
million and $
8
million,
respectively, of expenses related to the cyber incident, mostly consisting of professional fees.
During the three and
six months ended June 29, 2024, we received insurance proceeds of
$
10
million, representing a partial insurance
recovery of losses related to the cyber incident.
During the three months ended March 29, 2025 we received
insurance proceeds of $
20
million under this policy, representing the remaining 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
)
11
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 28, 2024.
Disaggregation of Net Sales
As noted further in
Note 5 – Segment Data
,
during the fourth quarter of our fiscal year ended December 28,
2024, we revised our reportable segments to align with how the Chairman and
Chief Executive Officer manages
the business, assesses performance and allocates resources.
All prior comparative segment information has
been recast to reflect our new segment structure.
The following table disaggregates our net sales by reportable segment:
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Net Sales:
Global Distribution and Value
-Added Services
Global Dental merchandise
$
1,218
$
1,214
$
2,403
$
2,424
Global Dental equipment
439
426
823
828
Global Value
-added services
58
56
110
112
Global Dental
1,715
1,696
3,336
3,364
Global Medical
1,016
958
2,071
1,983
Total Global Distribution
and Value
-Added Services
2,731
2,654
5,407
5,347
Global Specialty Products
386
370
753
730
Global Technology
167
156
329
313
Eliminations
(44)
(44)
(81)
(82)
Total
$
3,240
$
3,136
$
6,408
$
6,308
Contract Liabilities
The following table presents our contract liabilities:
As of
June 28,
December 28,
June 29,
December 30,
Description
2025
2024
2024
2023
Current contract liabilities
$
83
$
81
77
$
89
Non-current contract liabilities
9
8
8
9
Total contract
liabilities
$
92
$
89
85
$
98
During the six months ended June 28, 2025, we recognized, in net sales, $
53
million of the amount that was
previously deferred at December 28, 2024.
During the six months ended June 29, 2024, we recognized
in net sales
$
55
million of the amount that was previously deferred at December 30, 2023.
Current contract liabilities are
included in accrued expenses: other and the non-current contract liabilities
are included in other liabilities within
our condensed consolidated balance sheets.
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
12
Note 5
–
Segment Data
During the fourth quarter of our fiscal year ended December 28, 2024,
we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses
performance and allocates
resources.
Our revised reportable segments now consist of: (i) Global Distribution
and Value
-Added Services; (ii)
Global Specialty Products; and (iii) Global Technology.
These segments offer different products and services to
the same customer base.
All prior comparative segment information has been recast
to reflect our new segment
structure.
We aggregate operating segments into these reportable segments based on economic similarities, the nature of their
products, customer base and methods of distribution.
Global Distribution and Value-Added Services includes distribution to the global dental and medical markets of
national brand and corporate brand merchandise, as well as equipment and related
technical services.
This segment
also includes value-added services such as financial services, continuing
education services, consulting and other
services.
This segment also markets and sells under our own corporate brand
a portfolio of cost-effective, high-
quality consumable merchandise.
Global Specialty Products includes manufacturing, marketing
and sales of dental
implant and biomaterial products; and endodontic, orthodontic and orthopedic
products and other health care-
related products and services.
Global Technology includes development and distribution of practice management
software, e-services and other products, which are distributed to health
care providers.
Our organizational structure also includes Corporate, which consists primarily of
income and expenses associated
with support functions and projects.
Our chief operating decision maker (“CODM”) is our Chairman
and Chief Executive Officer.
Our CODM uses
adjusted operating income as the profitability metric for purposes of making
decisions about allocation of resources
to each segment and assessing performance of each segment.
Adjusted operating income provides a measure of our
underlying segment results that is in line with our approach to risk and performance
management.
We define
adjusted operating income as operating income adjusted to exclude
(a) direct cybersecurity costs and related
insurance recovery proceeds, (b) amortization of acquisition intangibles,
(c) organizational restructuring expenses,
(d) impairment of intangible assets, (e) changes in fair value of contingent consideration,
(f) litigation settlements,
and (g) costs associated with shareholder advisory matters and select value
creation consulting costs.
These
adjustments are either: (i) non-cash or non-recurring in nature; (ii) not allocable
or controlled by the segment; or
(iii) not tied to the operational performance of the segment.
Assets by segment are not a measure used to assess the
performance of the Company by CODM and thus are not reported in
our disclosures.
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
13
Segment adjusted operating income is presented in the following
table to reconcile to operating income as
presented on the condensed consolidated statement of operations.
The reconciliation from operating income to
income before taxes and equity in earnings of affiliates is presented on our condensed consolidated
statements of
income.
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Gross Sales:
Global Distribution and Value
-Added Services
(1)
$
2,731
$
2,654
$
5,407
$
5,347
Global Specialty Products
(2)
386
370
753
730
Global Technology
(3)
167
156
329
313
Total Gross Sales
3,284
3,180
6,489
6,390
Less: Eliminations:
Global Distribution and Value
-Added Services
(4)
(13)
(8)
(21)
Global Specialty Products
(40)
(31)
(73)
(61)
Global Technology
-
-
-
-
Total Eliminations
(44)
(44)
(81)
(82)
Net Sales
Global Distribution and Value
-Added Services
2,727
2,641
5,399
5,326
Global Specialty Products
346
339
680
669
Global Technology
167
156
329
313
Total Net Sales
3,240
3,136
6,408
6,308
Segment Cost of Sales
(4)
Global Distribution and Value
-Added Services
2,043
1,953
4,038
3,939
Global Specialty Products
175
165
336
326
Global Technology
53
51
105
102
Total Segment Cost of Sales
2,271
2,169
4,479
4,367
Segment Operating Expenses
(5)
Global Distribution and Value
-Added Services
529
525
1,043
1,061
Global Specialty Products
159
165
309
321
Global Technology
69
71
137
143
Total Segment Operating Expenses
757
761
1,489
1,525
Segment Operating Income
Global Distribution and Value
-Added Services
159
176
326
347
Global Specialty Products
52
40
108
83
Global Technology
45
34
87
68
Total Segment Operating Income
256
250
521
498
Corporate, net
(31)
(8)
(66)
(30)
Adjustments
(6)
(74)
(83)
(129)
(159)
Total Operating Income
$
151
$
159
$
326
$
309
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Depreciation and Amortization
Global Distribution and Value
-Added Services
$
36
$
34
$
71
$
70
Global Specialty Products
29
28
56
53
Global Technology
11
12
22
24
Total Depreciation and Amortization
$
76
$
74
$
149
$
147
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
14
(1)
Global Distribution and Value
-Added Services: Includes distribution of infection-control products, handpieces, preventatives,
impression materials, composites, anesthetics, teeth, gypsum, acrylics, articulators, abrasives, personal protective equipment
(“PPE”) products,
branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, dental chairs, delivery units
and lights, digital dental laboratories, X-ray supplies and equipment, high-tech and digital restoration equipment, equipment repair
services, financial services on a non-recourse basis, continuing education services for practitioners, consulting and other services.
This segment also markets and sells under our own corporate brand a portfolio of cost-effective, high-quality consumable
merchandise.
(2)
Global Specialty Products: Includes manufacturing, marketing and sales of dental implant and biomaterial products; and
endodontic, orthodontic and orthopedic products and other health care-related products and services.
(3)
Global Technology: Includes development and distribution of practice management software, e-services and other products, which
are distributed to health care providers.
(4)
Cost of goods sold in our Global Distribution and Value-Added Services segment and our Global Specialty Products segment
includes product cost and inbound and outbound freight charges.
Cost of goods sold in our Global Technology segment consists
primarily of software development and third-party provider costs, including technology use and hosting fees.
(5)
Significant segment operating expenses for our reportable segments and Corporate include primarily compensation costs, and to a
lesser extent, rent, depreciation and maintenance costs related to operating our facilities.
(6)
Adjustments represent items excluded from segment operating income to enable comparison of financial results between periods.
The following table presents a breakdown of such adjustments:
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Adjustments:
Restructuring costs
$
(23)
$
(15)
$
(48)
$
(25)
Acquisition intangible amortization
(44)
(47)
(87)
(93)
Cyber incident-insurance proceeds, net of third-party advisory
expenses
-
7
20
2
Change in contingent consideration
-
(23)
2
(38)
Litigation settlements
(1)
(5)
(1)
(5)
Impairment of intangible assets
-
-
(1)
-
Costs associated with shareholder advisory matters and select
value creation consulting costs
(6)
-
(14)
-
Total adjustments
$
(74)
$
(83)
$
(129)
$
(159)
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
15
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.
2025 Acquisitions
During the six months ended June 28, 2025, we acquired companies
within the Global Distribution and Value-
Added Services and Global Specialty Products segments.
We acquired ownership interest in these companies
ranging from
64
% to
100
%.
The following table aggregates the preliminary estimated fair value, as of
the date of the acquisition, of
consideration paid and net assets acquired for acquisitions during the six months
ended June 28, 2025:
Preliminary
Allocation as of
June 28, 2025
Acquisition consideration:
Cash
$
96
Deferred consideration
1
Estimated fair value of contingent consideration payable
10
Fair value of previously held equity method investment
7
Noncontrolling interests
24
Total consideration
$
138
Identifiable assets acquired and liabilities assumed:
Current assets
$
14
Intangible assets
66
Other noncurrent assets
5
Current liabilities
(2)
Deferred income taxes
(11)
Other noncurrent liabilities
(4)
Total identifiable
net assets
68
Goodwill
70
Total net assets acquired
$
138
The accounting for acquisitions in the six months ended June 28, 2025 has not been
completed in several areas,
including, but not limited to, pending assessment of certain assets,
including identifiable intangibles, 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 not deductible for tax
purposes.
The impact of these acquisitions, individually and in the aggregate, was
not considered material to our condensed
consolidated financial statements.
Pro forma financial information since the acquisition date has not been presented
because the impact of these
acquisitions 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
)
16
The following table summarizes the intangible assets acquired during the six
months ended June 28, 2025:
2025
Weighted Average
Useful
Lives (in years)
Customer relationships and lists
56
11
Trademarks / Tradenames
5
6
Patents
4
10
Non-compete agreements
1
5
Total
$
66
The impact of these acquisitions, individually and in the aggregate, was
not considered material to our condensed
consolidated financial statements.
Pro forma financial information since the acquisition date has not been presented
because the impact of these
acquisitions was immaterial to our condensed consolidated
financial statements.
2024 Acquisitions
Acquisition of TriMed
On April 1, 2024, we acquired a
60
% voting equity interest in TriMed Inc. (“TriMed”), a global developer of
solutions for the orthopedic treatment of lower and upper extremities, headquartered
in California, for consideration
of $
315
million.
This acquisition is reported in our Global Specialty Products segment.
During the year ended
December 28, 2024, we completed the accounting for this acquisition.
The following table aggregates the final fair value, as of the date of the acquisition,
of consideration paid and net
assets acquired in the TriMed acquisition:
Final Allocation
Acquisition consideration:
Cash
$
141
Deferred consideration
21
Redeemable noncontrolling interests
153
Total consideration
$
315
Identifiable assets acquired and liabilities assumed:
Current assets
$
35
Intangible assets
221
Other noncurrent assets
10
Current liabilities
(7)
Deferred income taxes
(62)
Other noncurrent liabilities
(6)
Total identifiable
net assets
191
Goodwill
124
Total net assets acquired
$
315
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 intangible assets acquired consisted of product development of $
204
million, trademarks and tradenames of $
9
million, and in-process research and development of $
8
million.
Weighted average useful lives for these acquired
intangible assets were
9
years,
7
years and indefinite-lived, respectively.
Except for in-process research and
development (“IPR&D”), intangible assets acquired as a result of the
TriMed acquisition are being amortized over
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
17
their estimated useful lives using the straight-line method of amortization.
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.
Pro forma financial information and TriMed’s revenue and earnings since the acquisition date have not been
presented because the impact of the TriMed acquisition was immaterial to our condensed consolidated
financial
statements.
Other 2024 Acquisitions
During the year ended December 28, 2024, we acquired companies within
the Global Distribution and Value-
Added Services and Global Specialty Products segments.
Our acquired ownership interest in these companies
range from
51
% to
100
%.
Total consideration for these acquisitions was $
113
million (including cash paid of $
62
million, fair value of previously held equity investment of $
30
million, noncontrolling interest of $
18
million,
estimated fair value of contingent consideration payable of $
2
million, and deferred consideration of $
1
million).
Net assets acquired primarily consisted of $
60
million of goodwill and $
64
million of intangible assets.
The
intangible assets acquired consisted of customer relationships and lists of
$
33
million, trademarks and tradenames
of $
24
million, product development of $
5
million and non-compete agreements of $
2
million.
Weighted average
useful lives for these acquired intangible assets were
11
years,
7
years,
9
years and
5
years, respectively.
During the three and six months ended June 28, 2025 we completed
the accounting for all acquisitions that occurred
in the year ended December 28, 2024.
We did not record material adjustments in our condensed consolidated
financial statements relating to changes in estimated values of assets
acquired, liabilities assumed or contingent
consideration assets and liabilities in respect to these acquisitions.
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.
Pro forma financial information for our 2024 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 six months ended June 28, 2025, we incurred $
1
million and $
3
million in acquisition costs,
respectively.
During the three and six months ended June 29, 2024, we
incurred $
1
million and $
3
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
)
18
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 of the notes
receivable are a reasonable estimate of fair value based on the interest rates
in the applicable markets.
Our 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 June 28, 2025 and December 28, 2024 was
estimated at $
3,018
million and $
2,536
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 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.
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
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
19
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.
Defined Benefit Plans
Assets of our defined benefit plans are measured on a recurring basis
and are classified as Level 1 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
(see
Note 6 – Business Acquisitions
)
.
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.
During the three months ended June 28, 2025, we recognized contingent
consideration due to the acquisition of a
noncontrolling interest in a subsidiary of $
1
million, and a reduction to the contingent consideration related to a
payment of $
7
million.
During the six months ended June 28, 2025, we recognized
contingent consideration related
to the acquisitions of noncontrolling interests in subsidiaries of $
84
million, acquisition of a business of $
10
million, and a net change in fair value of $
1
million, comprised of $
2
million as a reduction reflected in the selling,
general and administrative line of the condensed consolidated income
statement and $
3
million as an increase
reflected in the equity section of our condensed consolidated balance sheet.
During the six months ended June 28,
2025, we also recognized payments of $
19
million as a reduction to the contingent consideration.
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.
The components of the change in the fair value of contingent consideration
for the six months ended June 28, 2025
and June 29, 2024 are presented in the following table:
June 28,
June 29,
2025
2024
Balance, beginning of period
$
30
$
6
Increase in contingent consideration due to business acquisitions and acquisitions of
noncontrolling interests in subsidiaries
94
-
Decrease in contingent consideration due to payments
(19)
-
Change in fair value of contingent consideration
1
38
Balance, end of period
$
106
$
44
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
20
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
June 28, 2025 and December 28, 2024:
June 28, 2025
Level 1
Level 2
Level 3
Total
Assets:
Derivative contracts designated as hedges
$
-
$
2
$
-
$
2
Derivative contracts undesignated
-
1
-
1
Total return
swap
-
4
-
4
Total assets
$
-
$
7
$
-
$
7
Liabilities:
Derivative contracts designated as hedges
$
-
$
29
$
-
$
29
Derivative contracts undesignated
-
2
-
2
Contingent consideration
-
-
106
106
Total liabilities
$
-
$
31
$
106
$
137
Redeemable noncontrolling interests
$
-
$
-
$
811
$
811
December 28, 2024
Level 1
Level 2
Level 3
Total
Assets:
Derivative contracts designated as hedges
$
-
$
10
$
-
$
10
Derivative contracts undesignated
-
7
-
7
Total assets
$
-
$
17
$
-
$
17
Liabilities:
Derivative contracts designated as hedges
$
-
$
5
$
-
$
5
Derivative contracts undesignated
-
4
-
4
Total return
swap
-
3
-
3
Contingent consideration
-
-
30
30
Total liabilities
$
-
$
12
$
30
$
42
Redeemable noncontrolling interests
$
-
$
-
$
806
$
806
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
21
Note 8 – Debt
Bank Credit Lines
Bank credit lines consisted of the following:
June 28,
December 28,
2025
2024
Revolving credit agreement
$
200
$
-
Other short-term bank credit lines
701
650
Total
$
901
$
650
Revolving Credit Agreement
On
August 20, 2021
, we entered into a $
1.0
billion revolving credit agreement (the “Revolving Credit Agreement”)
which was 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.
On June 6, 2025, we
amended and restated the Revolving Credit Agreement to, among other
things, modify certain financial definitions
and covenants.
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
June 28, 2025 the interest rate on this revolving credit facility was
4.32
% plus
1.07
% for a combined rate of
5.39
%.
As of December 28, 2024 the interest rate on this revolving credit facility
was
4.45
% plus
1.18
%, for a combined
rate of
5.63
%.
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 June 28,
2025 and December 28, 2024, we had $
200
million and $
0
million in borrowings, respectively, under this revolving
credit facility.
During the six months ended June 28, 2025, the average outstanding
balance under the Revolving
Credit Agreement was approximately $
151
million.
As of June 28, 2025 and December 28, 2024, there were $
10
million and $
11
million of letters of credit, respectively, provided to third parties under the Revolving Credit
Agreement.
Other Short-Term Bank Credit
Lines
As of June 28, 2025 and December 28, 2024, we had various other short-term
bank credit lines available, in various
currencies, with a maximum borrowing capacity of $
784
million and $
790
million, respectively.
As of June 28,
2025 and December 28, 2024, $
701
million and $
650
million, respectively, were outstanding.
During the six
months ended June 28, 2025, the average outstanding balances under our
various other short-term bank credit lines
was approximately $
675
million.
As of June 28, 2025 and December 28, 2024, borrowings under
other short-term
bank credit lines had weighted average interest rates of
5.18
% and
5.35
%, respectively.
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
22
Long-term debt
Long-term debt consisted of the following:
June 28,
December 28,
2025
2024
Private placement facilities
$
975
$
975
Term loan
749
712
U.S. trade accounts receivable securitization
330
150
Various
collateralized and uncollateralized loans payable with interest,
in varying installments through 2031 at interest rates
from
0.00
% to
9.42
% at June 28, 2025 and
from
0.00
% to
9.42
% at December 28, 2024
57
43
Finance lease obligations
6
6
Total
2,117
1,886
Less current maturities
(27)
(56)
Total long-term debt
$
2,090
$
1,830
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
to
15 years
(with an average life no longer
than
12 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 as of
June 28, 2025, which have a weighted average
interest rate of
3.70
%, are presented in the following table:
Amount of
Date of
Borrowing
Borrowing
Borrowing
Outstanding
Rate
Due Date
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
75
4.79
May 4, 2028
May 4, 2023
75
4.84
May 4, 2030
May 4, 2023
75
4.96
May 4, 2033
May 4, 2023
150
4.94
May 4, 2033
Total
$
975
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
23
The components of our private placement facility borrowings as of December
28, 2024, which have a weighted
average interest rate of
3.70
%, are presented in the following table:
Amount of
Date of
Borrowing
Borrowing
Borrowing
Outstanding
Rate
Due Date
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
75
4.79
May 4, 2028
May 4, 2023
75
4.84
May 4, 2030
May 4, 2023
75
4.96
May 4, 2033
May 4, 2023
150
4.94
May 4, 2033
Total
$
975
Term Loan
On July 11, 2023, we entered into a
three-year
$
750
million term loan credit agreement (the “Term Credit
Agreement”), which was originally scheduled to mature on
July 11, 2026
.
On June 6, 2025, this agreement was
amended and restated to, among other things, (i) extend the maturity date
to
June 6, 2030
, and (ii) modify certain
financial definitions and covenants.
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.
Beginning in June 2026 and continuing
through June 2027, we are required to make quarterly payments of $
5
million.
In September 2027, the quarterly
payment amount increases to $
9
million, continuing through June 2030 with the remaining balance due
June 6,
2030.
As of June 28, 2025, the borrowings outstanding under this
term loan were $
749
million.
At June 28, 2025,
the interest rate under the Term Credit Agreement was
4.31
% plus
1.25
%, for a combined rate of
5.56
%.
As of
December 28, 2024, the borrowings outstanding under this term loan were
$
712
million.
At December 28, 2024,
the interest rate under the Term Credit Agreement was
4.45
% plus
1.60
%, for a combined rate of
6.05
%.
However,
at December 28, 2024, we had a hedge in place creating an effective fixed rate of
6.05
%.
After renewing the Term
Credit Agreement in June of 2025, our hedged portion of the Term Credit Agreement was approximately
93
% of
the notional total.
As of June 28, 2025, the effective fixed rate was
5.69
% and the floating rate was
5.56
%,
resulting in a weighted average rate of
5.68
%.
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
.
On December 6, 2024, we extended the
expiration date of this facility agreement to
December 6, 2027
(the previous maturity date was
December 15, 2025
).
This facility agreement has a purchase limit of $
450
million with
two
banks as agents.
As of June 28, 2025 and December 28, 2024, the borrowings outstanding
under this securitization facility were
$
330
million and $
150
million, respectively.
At June 28, 2025, the interest rate on borrowings under
this facility
was based on the
asset-backed commercial paper rate
of
4.48
% plus
0.75
%, for a combined rate of
5.23
%.
At
December 28, 2024, the interest rate on borrowings under this facility was
based on the asset-backed commercial
paper rate of
4.73
% plus
0.75
%, for a combined rate of
5.48
%.
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
24
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
30
to
35
basis
points depending upon program utilization.
Note 9 – Income Taxes
For the three months ended June 28, 2025, our effective tax rate was
24.4
%, compared to
24.9
% 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.
For the six months ended June 28, 2025, our effective tax rate was
24.7
%, compared to
25.2
% for the prior year
period.
The difference between our effective tax rate and the federal statutory tax rate is primarily
due to state and
foreign income taxes and interest expense.
On July 4, 2025, after the end of the second quarter (June 28, 2025), President
Trump signed the reconciliation tax
bill, commonly known as the “One Big Beautiful Bill Act” (OBBBA),
into law.
This includes significant changes
to corporate tax rates, limitations on certain deductions and modifications
to international tax provisions.
We are
currently assessing the impact of the OBBBA on our consolidated
financial statements.
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.
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.
As of June 28, 2025,
the impact of the Pillar Two rules to
our financial statements was immaterial.
The total amount of unrecognized tax benefits, which are included in
“other liabilities” within our condensed
consolidated balance sheets, as of June 28, 2025 and December 28, 2024
was $
107
million and $
108
million,
respectively, of which $
100
million and $
100
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 $
0
million and $
0
million for the three months ended June 28, 2025 and June 29, 2024,
respectively.
The amount of tax interest
expense included as a component of the provision for taxes was $
1
million and $
1
million for the six months ended
June 28, 2025 and June 29, 2024, respectively.
The total amount of accrued interest is included in other liabilities
within our consolidated balance sheets, and was $
19
million as of June 28, 2025 and $
18
million as of December
28, 2024.
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
)
25
Note 10 – Plans of Restructuring
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 six months ended June 28, 2025, we
recorded restructuring charges associated with the 2024 Plan of $
23
million and $
48
million, respectively, which
primarily related to severance and employee-related costs, accelerated amortization
of right-of-use assets and fixed
assets, and other exit costs.
We expect to record restructuring charges associated with the 2024 Plan through the
end of 2025; however, an estimate of the amount of these charges has not yet been determined.
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 and six months ended June 29, 2024, in connection
with our
2022 Plan, we recorded restructuring costs of $
15
million and $
25
million, respectively, which primarily related to
severance and employee-related costs, accelerated amortization of right-of-use
assets and fixed assets, and other
exit costs.
Restructuring costs recorded for the three and six months ended June
28, 2025 and June 29, 2024 in connection
with the 2024
Plan and 2022 Plan, respectively, consisted of the following:
Three Months Ended June 28, 2025
Global Distribution
and Value-Added
Services
Global
Specialty
Products
Global
Technology
Corporate
Total
2024 Plan
Severance and employee-related costs
$
11
$
5
$
-
$
2
$
18
Impairment and accelerated depreciation and amortization
of right-of-use lease assets and other long-lived assets
-
2
-
-
2
Exit and other related costs
2
-
-
-
2
Loss on disposal of a business
1
-
-
-
1
Restructuring costs-2024 Plan
$
14
$
7
$
-
$
2
$
23
Three Months Ended June 29, 2024
Global Distribution
and Value-Added
Services
Global
Specialty
Products
Global
Technology
Corporate
Total
2022 Plan
Severance and employee-related costs
$
8
$
1
$
-
$
-
$
9
Impairment and accelerated depreciation and amortization
of right-of-use lease assets and other long-lived assets
5
-
-
-
5
Exit and other related costs
1
-
-
-
1
Restructuring costs-2022 Plan
$
14
$
1
$
-
$
-
$
15
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
26
Six Months Ended June 28, 2025
Global Distribution
and Value-Added
Services
Global
Specialty
Products
Global
Technology
Corporate
Total
2024 Plan
Severance and employee-related costs
$
21
$
10
$
1
$
8
$
40
Impairment and accelerated depreciation and amortization
of right-of-use lease assets and other long-lived assets
1
2
-
-
3
Exit and other related costs
3
-
1
-
4
Loss on disposal of a business
1
-
-
-
1
Restructuring costs-2024 Plan
$
26
$
12
$
2
$
8
$
48
Six Months Ended June 29, 2024
Global Distribution
and Value-Added
Services
Global
Specialty
Products
Global
Technology
Corporate
Total
2022 Plan
Severance and employee-related costs
$
12
$
3
$
1
$
-
$
16
Impairment and accelerated depreciation and amortization
of right-of-use lease assets and other long-lived assets
9
-
-
(3)
6
Exit and other related costs
1
-
-
2
3
Restructuring costs-2022 Plan
$
22
$
3
$
1
$
(1)
$
25
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 six months
ended June 28, 2025.
The remaining accrued
balance of restructuring costs as of June 28, 2025, 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 28, 2024
$
12
$
28
$
40
Restructuring costs
-
48
48
Non-cash impairment, accelerated depreciation and
amortization
-
(3)
(3)
Cash payments and other adjustments
(8)
(31)
(39)
Balance, June 28, 2025
$
4
$
42
$
46
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
27
Note 11 – Legal Proceedings
Henry Schein, Inc. has been named as a defendant in multiple opioid
related lawsuits (currently less than one-
hundred (
100
); 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.
We have reached a settlement
agreement in principle with hospital plaintiffs in
sixteen
cases, including the case filed by Florida Health Sciences
Center (and other hospitals) in Florida state court, which was scheduled
for trial in September 2025, for an
immaterial amount.
That trial has been stayed as to Henry Schein pending finalization
of the settlement agreement.
We have also agreed to settle
fifty-nine
cases filed by Virginia municipalities for an immaterial amount.
Finalization of the settlement agreement in those cases is pending.
Of Henry Schein’s 2024 net sales of
approximately $
12.7
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.
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 June 28, 2025, 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
)
28
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 RSUs (which vest solely based on the recipient’s continued service over time) and performance-based
RSUs (which vest based on achieving specified performance
measurements and the recipient’s continued service
over time).
Our non-employee directors receive equity-based awards solely in
the form of time-based RSUs.
In our 2025 plan year, stock awards issued to our Chief Executive Officer were allocated
35
% to time-based RSU
awards with
four-year
cliff vesting and
65
% to performance-based RSU awards with
three-year
cliff vesting.
In our
2025 plan year, stock awards issued to members of our Executive Management Committee were allocated
50
% to
time-based RSU awards with
four-year
cliff vesting and
50
% to performance-based RSU awards with
three-year
cliff vesting.
In our 2025 plan year, stock awards issued to our eligible vice-presidents were allocated
80
% to time-based RSU
awards and
20
% to performance-based RSU awards with
three-year
cliff vesting.
Our vice-president level time-
based awards will vest
50
% on the third anniversary of the grant date with the remaining
50
% vesting on the fourth
anniversary of the grant date.
In our 2025 plan year, we began granting only time-based RSU awards to our eligible director level employees.
Our director level time-based RSU awards will vest
50
% on the third anniversary of the grant date with the
remaining
50
% vesting on the fourth anniversary of the grant date.
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 for RSU
awards granted prior to 2025 and with vesting upon third and fourth anniversary
of the grant date for RSU awards
granted in 2025 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
12
-month cliff vesting.
For the performance-based RSUs and the time-based RSUs with cliff vesting
(issued in 2022-2024 plan years), we recognize the cost as compensation
expense on a straight-line basis.
For the
time-based RSUs with graded vesting (issued in the 2025 plan year), we recognize
the cost as compensation
expense on an accelerated 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, changes in fair value of contingent
consideration (solely with respect to
performance-based RSUs granted in the 2024 and 2025 plan years),
certain capital transactions (including share
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
29
repurchases), differences in budgeted average outstanding shares (other
than those resulting from capital
transactions referred to above), restructuring costs, amortization
expense recorded for acquisition-related intangible
assets, certain litigation settlements or payments, 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 2023 plan year), intangibles
impairment charges and costs
related to shareholder advisory matters (solely with respect to performance-based
RSUs granted in the 2025 plan
year).
Over the performance period, the number of performance-based 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 on
an accelerated
basis.
We estimate grant date fair value of stock options using the Black-Scholes valuation model.
During the six
months ended June 28, 2025, we did
no
t grant any stock options.
Our condensed consolidated statements of income reflect pre-tax share-based compensation
expense of $
11
million
and $
16
million for the three and six months ended June 28, 2025, respectively.
For the three and six months ended
June 29, 2024, we recorded pre-tax share-based compensation expense of
$
13
million and $
20
million.
Total unrecognized compensation cost related to unvested awards as of June 28, 2025 was $
92
million, which is
expected to be recognized over a weighted-average period of approximately
2.8
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 six
months ended June 28, 2025 and June 29, 2024.
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
30
The following table summarizes the stock option activity for the six months
ended June 28, 2025:
Stock Options
Weighted Average
Weighted Average
Aggregate
Exercise
Remaining Contractual
Intrinsic
Shares
Price
Life (in years)
Value
Outstanding at beginning of period
963,491
$
72.16
Granted
-
-
Exercised
(14,447)
62.71
Forfeited
(9,793)
79.75
Outstanding at end of period
939,251
$
72.22
6.1
$
6
Options exercisable at end of period
936,292
$
72.22
Weighted Average
Weighted Average
Aggregate
Number of
Exercise
Remaining Contractual
Intrinsic
Options
Price
Life (in years)
Value
Expected to vest
2,959
$
75.11
7.2
$
-
The following tables summarize the activity of our unvested RSUs for
the six months ended June 28, 2025:
Time-Based Restricted Stock Units
Performance-Based Restricted Stock Units
Weighted
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
1,685,550
$
72.90
389,111
$
75.98
Granted
568,939
75.29
245,548
75.40
Performance adjustment
n/a
n/a
(31,787)
76.23
Vested
(532,427)
65.90
(14,054)
84.17
Forfeited
(56,558)
77.56
(184,069)
78.39
Outstanding at end of period
1,665,504
$
75.79
$
73.27
404,749
$
75.87
$
73.27
The fair value of time and performance RSUs that vested was $
35
million and $
1
million, respectively, for the six
months ended June 28, 2025; and $
20
million and $
1
million, respectively, for the six months ended June 29, 2024.
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
31
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 six months ended June 28, 2025 and June 29, 2024 are
presented in the following table:
June 28,
June 29,
2025
2024
Balance, beginning of period
$
806
$
864
Decrease in redeemable noncontrolling interests due to acquisitions of
noncontrolling interests in subsidiaries
(76)
(205)
Increase in redeemable noncontrolling interests due to business acquisitions
25
154
Net loss attributable to redeemable noncontrolling interests
(1)
(1)
Distributions declared, net of capital contributions
(10)
(22)
Effect of foreign currency translation gain (loss) attributable to
redeemable noncontrolling interests
29
(15)
Change in fair value of redeemable securities
38
81
Balance, end of period
$
811
$
856
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:
June 28,
December 28,
2025
2024
Attributable to redeemable noncontrolling interests:
Foreign currency translation adjustment
$
(27)
$
(56)
Attributable to noncontrolling interests:
Foreign currency translation adjustment
$
1
$
(1)
Attributable to Henry Schein, Inc.:
Foreign currency translation adjustment
$
(193)
$
(371)
Unrealized loss from hedging activities
(26)
-
Pension adjustment loss
(8)
(8)
Accumulated other comprehensive loss
$
(227)
$
(379)
Total Accumulated
other comprehensive loss
$
(253)
$
(436)
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HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
32
The following table summarizes the components of comprehensive income, net
of applicable taxes as of:
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Net income
$
94
$
105
$
207
$
203
Foreign currency translation gain (loss)
133
(62)
209
(116)
Tax effect
-
-
-
-
Foreign currency translation gain (loss)
133
(62)
209
(116)
Unrealized gain (loss) from hedging activities
(29)
6
(35)
21
Tax effect
8
(2)
9
(6)
Unrealized gain (loss) from hedging activities
(21)
4
(26)
15
Pension adjustment gain
-
-
1
-
Tax effect
-
-
(1)
-
Pension adjustment gain
-
-
-
-
Comprehensive income
$
206
$
47
$
390
$
102
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 six months ended June 28, 2025 and six months
ended June 29, 2024 was
primarily due to changes in foreign currency exchange rates of the Brazilian
Real, British Pound, Euro, Swiss
Franc, Canadian Dollar, New Zealand Dollar and Israel Shekel.
The hedging gain (loss) during the three and six months ended June 28, 2025,
and June 29, 2024 was attributable to
a net investment hedge.
The following table summarizes our total comprehensive income, net of
applicable taxes as follows:
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Comprehensive income attributable to
Henry Schein, Inc.
$
176
$
51
$
348
$
111
Comprehensive income attributable to
noncontrolling interests
8
4
14
7
Comprehensive income (loss) attributable to
Redeemable noncontrolling interests
22
(8)
28
(16)
Comprehensive income
$
206
$
47
$
390
$
102
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
33
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
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Basic
121,927,867
127,784,380
122,852,702
128,252,628
Effect of dilutive securities:
Stock options and restricted stock units
709,081
862,126
886,679
954,152
Diluted
122,636,948
128,646,506
123,739,381
129,206,780
The number of antidilutive securities that were excluded from the calculation
of diluted weighted average common
shares outstanding are as follows:
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Stock options
397,490
416,790
399,768
417,819
Restricted stock units
784,602
792,247
489,854
495,077
Total anti-dilutive
securities excluded from earnings per
share computation
1,182,092
1,209,037
889,622
912,896
Note 16 – Supplemental Cash Flow Information
Cash paid for interest and income taxes was:
Six Months Ended
June 28,
June 29,
2025
2024
Interest
$
75
$
63
Income taxes
102
82
For the six months ended June 28, 2025 and June 29, 2024, we had $
(35)
million and $
21
million of non-cash net
unrealized gains (losses) related to hedging activities, respectively.
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
34
Note 17 – Related Party Transactions
During 2018, we entered into a joint venture with Internet Brands to create Henry
Schein One, LLC.
Internet
Brands initially held a
26
% noncontrolling interest, which has since increased to a
33.6
% noncontrolling interest in
Henry Schein One, LLC, and a freestanding and separately exercisable right
to put its noncontrolling interest to
Henry Schein, Inc. for fair value following the fifth anniversary of the effective date of the
formation of the joint
venture.
On January 29, 2025, Henry Schein, Inc. signed a Memorandum of Understanding
with Internet Brands to
extend the time-based trigger for the exercise of our call option to July 1, 2032
and to pause the exercise by Internet
Brands of its put option for a period of
four years
, to January 29, 2029.
In connection with the formation of Henry Schein One, LLC, we entered
into a
ten-year
royalty agreement with
Internet Brands whereby we will pay Internet Brands approximately $
31
million annually for the use of their
intellectual property.
During the three and six months ended June 28, 2025, we recorded
$
8
million and $
16
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 six months ended June 29,
2024 we recorded $
8
million and $
16
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
June 28, 2025 and December 28, 2024, Henry Schein One, LLC had a
net payable balance to Internet Brands of $
2
million and $
1
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 six months ended June 28, 2025, we recorded net
sales of $
15
million and $
28
million respectively, to such entities.
During the three and six months ended June 29, 2024, we recorded net
sales
of $
12
million and $
24
million respectively, to such entities.
During the three and six months ended June 28, 2025,
we purchased $
3
million and $
5
million respectively, from such entities.
During the three and six months ended
June 29, 2024, we purchased $
3
million and $
5
million respectively, from such entities.
At June 28, 2025 and
December 28, 2024, we had an aggregate $
30
million and $
31
million, respectively, due from our equity affiliates,
and $
7
million and $
6
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 less than
a
year to
approximately
12 years
.
As of June 28, 2025, current and non-current liabilities associated with
related party
operating leases were $
6
million and $
22
million, respectively.
At June 28, 2025, related party leases represented
6.9
% and
8.7
% of the total current and non-current operating lease liabilities, respectively.
At December 28, 2024,
current and non-current liabilities associated with related party operating
leases were $
5
million and $
23
million,
respectively.
At December 28, 2024, related party leases represented
7.6
% and
7.8
% of the total current and non-
current operating lease liabilities, respectively.
Table of Contents
HENRY SCHEIN, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data)
(unaudited
)
35
Note 18 – KKR Investment and Accelerated Share Repurchase Program
On January 29, 2025, Henry Schein, Inc. announced a strategic investment
by funds affiliated with KKR, a leading
global investment firm, and on May 16, 2025, we issued
3,285,151
shares of common stock to funds affiliated with
KKR for an investment of $
250
million, at approximately $
76.10
per share.
Combined with KKR’s previous
holdings, funds affiliated with KKR currently own approximately
12.5
% of the Company’s common stock.
KKR
also has the ability to purchase additional shares via open market purchases
up to a total equity stake of
14.9
% of
the outstanding shares of common stock of the Company.
In addition, under the agreement between Henry Schein
and KKR,
two
independent directors have joined our Board of Directors.
On May 19, 2025, we executed an accelerated share repurchase program
to repurchase a total of $
250
million of
our outstanding common stock based on volume-weighted average
prices.
As of June 28, 2025, we received
3,122,832
shares at an estimated fair value of $
223
million.
In July 2025, we received an additional
368,651
shares
at an estimated fair value of $
27
million, representing the final amount of shares to be received under
this
accelerated share repurchase program.
Table of Contents
36
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 and
where we manufacture products, our dependence on third parties
for raw materials or purchased components; risks
relating to the achievement of our strategic growth objectives, including
anticipated results of restructuring and
value-optimization initiatives; risks related to the Strategic Partnership Agreement
with KKR Hawaii Aggregator
L.P.
entered into in January 2025; transitions in senior company leadership;
our ability to develop or acquire and
maintain and protect new products (particularly technology and specialty
products) and services and utilize new
technologies that achieve market acceptance with acceptable margins; transitional
challenges associated with
acquisitions 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;
risks related to activist investors;
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;
political, economic and regulatory influences on 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, and increases in fuel and energy costs; changes
in laws and policies governing
manufacturing, development and investment in territories and countries
where we do business; general global and
domestic macro-economic and political conditions, including inflation,
deflation, recession, unemployment (and
corresponding increase in under-insured populations), consumer confidence,
sovereign debt levels, fluctuations in
energy pricing and the value of the U.S. dollar as compared to foreign currencies
and changes to other economic
indicators; failure to comply with existing and future regulatory
requirements, including relating to health care;
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, changes in tax rates and availability
of certain tax deductions; 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; the threat or outbreak of war (including, without
limitation, geopolitical wars), terrorism
or public unrest (including, without limitation, the war in Ukraine, the Israel-Gaza
war and other unrest and threats
in the Middle East and the possibility of a wider European or global conflict);
changes to laws and policies
governing foreign trade, tariffs and sanctions or greater restrictions on imports and
exports, including changes to
international trade agreements and the current imposition of (and the
potential for additional) tariffs by the U.S. on
numerous countries and retaliatory tariffs; supply chain disruption; litigation
risks; new or unanticipated litigation
developments and the status of litigation matters; our dependence on
our senior management (including, without
limitation, succession planning for our Chief Executive Officer), employee hiring
and retention, increases in labor
Table of Contents
37
costs or health care costs, 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.
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.
Segment Reporting
During the fourth quarter of our fiscal year ended December 28, 2024,
we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses
performance and allocates
resources.
Our revised reportable segments now consist of: (i) Global Distribution
and Value
-Added Services; (ii)
Global Specialty Products; and (iii) Global Technology.
Global Distribution and Value-Added Services includes distribution to the global dental and medical markets of
national brand and corporate brand merchandise, as well as equipment and related
technical services.
This segment
also includes value-added services such as financial services, continuing
education services, consulting and other
services.
This segment also markets and sells under our own corporate brand
a portfolio of cost-effective, high-
quality consumable merchandise.
Global Specialty Products includes manufacturing, marketing
and sales of dental
implant and biomaterial products; and endodontic, orthodontic and orthopedic
products and other health care-
related products and services.
Global Technology includes development and distribution of practice management
software, e-services and other products, which are distributed to health
care providers.
Cyber Incident
As previously reported, 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.
During the three and six months ended June 29, 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 the
cyber incident.
With respect to the October 2023 cyber incident, we have a $60 million insurance policy, following a $5 million
retention.
During the three and six months ended June 28, 2025, we
did not incur any expenses directly related to
the cyber incident.
During the three and six months ended June 29, 2024 we incurred $3
million and $8 million,
respectively, of expenses related to the cyber incident, mostly consisting of professional fees.
During the three
months and six months ended June 29, 2024, we received insurance
proceeds of $10 million, representing a partial
insurance recovery of losses related to the cyber incident.
During the three months ended March 29, 2025 we
received insurance proceeds of $20 million, representing the remaining insurance
recovery of losses related to the
Table of Contents
38
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.
Tariffs and Related Economic Conditions
The U.S. has adopted new and increased tariffs on imports from countries, subject
to evolving exemptions, with
additional tariff increases proposed but currently on pause.
Some countries have imposed retaliatory tariffs and
other restrictions on imports from the U.S.
The U.S. government is reported to be in negotiations with certain
other
countries over tariff rates and other trade policies.
These developments, and anticipated future developments, have
created a volatile environment for global trade, and new trade policies
with individual countries, if finalized, are
expected to be announced incrementally over a period of time.
The tariffs did not have a material impact on our results of operations in the first or
second quarter of this fiscal
year, although sales of U.S. dental equipment were temporarily impacted by market uncertainty related
to tariffs in
the second half of the quarter ended June 28, 2025.
It is unclear whether, or the extent to which, the proposed
tariffs on numerous countries that are incrementally higher than those in place today will
take effect, the exceptions
that may apply, and their timing.
One Big Beautiful Bill Act
In the United States, the OBBBA, signed into law on July 4, 2025, includes
a number of provisions that are
expected to result in substantial reductions in the number of Medicaid enrollees,
which will reduce utilization of
services and covered products generally.
There are also several provisions that will reduce federal
funding to state
Medicaid programs.
The OBBBA, in combination with tariffs, will almost certainly have an adverse
impact on
utilization, Medicaid payment and cost of production (if foreign components
are used).
The OBBBA also includes significant changes to corporate tax rates,
limitations on certain deductions and
modifications to international tax provisions.
We are currently assessing the impact of the OBBBA on our
consolidated financial statements.
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39
Executive-Level Overview
Henry Schein, Inc. is a solutions company for health care professionals powered
by a network of people and
technology.
We
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.
We
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, home health providers, and
other alternate care clinics.
We
believe
that we have a strong brand identity due to our more than 93 years of experience
distributing health care products.
We
are headquartered in Melville, New York, employ more than 25,000 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 growth as well as through
contribution from strategic
acquisitions.
We
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.
As a distributor, we market and sell branded products as well as our own corporate brand portfolio of
cost-effective,
high-quality consumable merchandise products.
We
also manufacture, source and sell a range of company-owned
manufactured products, primarily implants, biomaterial products, endodontics,
handpiece and small equipment,
hand instrument and repair, restoratives, orthodontics, wound care, orthopedics and dental lab products.
We
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.
During the fourth quarter of our fiscal year ended December 28, 2024, we
revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses performance
and allocates
resources.
Our revised reportable segments now consist of: (i) Global Distribution
and Value
-Added Services; (ii)
Global Specialty Products; and (iii) Global Technology.
Global Distribution and Value-Added Services includes distribution to the global dental and medical markets of
national brand and corporate brand merchandise, as well as equipment and related
technical services.
This segment
also includes value-added services such as financial services, continuing education
services, consulting and other
services.
This segment also markets and sells under our own corporate brand,
a portfolio of cost-effective, high-
quality consumable merchandise.
Global Specialty Products includes manufacturing, marketing
and sales of dental
implant and biomaterial products; and endodontic, orthodontic and orthopedic
products and other health care-
related products and services.
Global Technology includes development and distribution of practice management
software, e-services and other products, which are distributed to health
care providers.
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, 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.
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 DSOs, GPOs, 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.
We
believe that the trend towards cost containment has
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40
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.
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.
We
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.
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
on
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 2025 and 2035, the 45 and older
population is expected to grow by approximately 10%.
Between 2025 and 2045, this age group is expected to grow
by approximately 17%.
This compares with expected total U.S. population growth
rates of approximately 4%
between 2025 and 2035 and approximately 6% between 2025 and 2045.
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41
According to the U.S. Census Bureau’s International Database, in 2025 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 increase to approximately
17 million.
The population aged
65 to 84 years is projected to increase by approximately 15% 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,
or CMS, published “National Health Expenditure Data” indicating that
total national health care spending reached
approximately $4.9 trillion in 2023, or 17.6% 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 $8.6 trillion by 2033, or 20.3% of the nation’s projected gross domestic product.
We
believe similar demographic changes are also occurring in other
markets we serve outside the U.S.
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 supplies
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 orthopaedic, in vitro
diagnostic devices, software regulated as a medical device, and sales of
medical equipment and supplies directly to
patients, that are paid for by third parties and/or patients 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 health care 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.
Laws and
regulations are subject to change and their evolving implementation may impact
our operations and our financial
performance.
Certain of our businesses also maintain contracts with governmental agencies
and are subject to certain regulatory
requirements specific to government contractors.
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42
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 few
noteworthy items that have come into effect recently are noted below:
●
Regulation (EU) 2023/1182 of June 14, 2023, entered into force on January 1, 2025, under the conditions
set out in Article 14.
This regulation lays down specific rules relating to medicinal
products for human use
intended to be placed on the market in Northern Ireland in accordance with
Article 6 of
Directive 2001/83/EC.
●
Directive No. 2025/794 of April 14, 2025, known as the “Stop-the-Clock”
Directive, amended Directives
(EU) 2022/2464 (CSRD) and (EU) 2024/1760 (CSDDD) by introducing
a uniform two-year postponement
of the sustainability reporting and due diligence requirements for financial
years beginning on or after
January 1, 2025 and on or after January 1, 2026.
●
Regulation (EU) 2025/327 of February 11, 2025 on the European Health Data Space and amending
Directive 2011/24/EU and Regulation (EU) 2024/2847 establishes the European Health Data Space
(EHDS) by providing for common rules, standards and infrastructures and
a governance framework, with a
view to facilitating access to electronic health data for the purpose of primary
use and secondary use of this
data.
This could potentially affect Henry Schein or its customers.
●
In the United States, as noted above, the OBBBA includes a number
of provisions that are expected to
result in substantial reductions in the number of Medicaid enrollees,
as well as reductions in federal funding
to state Medicaid programs, resulting in potentially adverse impacts
on utilization of services and coverage
of products.
The OBBBA also includes significant changes to corporate
tax rates, limitations on certain
deductions and modifications to international tax provisions.
We
are currently assessing the impact of the
OBBBA on our consolidated financial statements.
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 28, 2024, filed with the SEC on February 25, 2025.
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43
Results of Operations
The following tables summarize the significant components of our operating
results for the three and six months
ended June 28, 2025 and June 29, 2024 and cash flows for the six months
ended June 28, 2025 and June 29, 2024
(in millions):
Three Months Ended
Six Months Ended
June 28,
June 29,
June 28,
June 29,
2025
2024
2025
2024
Operating results:
Net sales
$
3,240
$
3,136
$
6,408
$
6,308
Cost of sales
2,224
2,118
4,392
4,278
Gross profit
1,016
1,018
2,016
2,030
Operating expenses:
Selling, general and administrative
778
781
1,516
1,572
Depreciation and amortization
64
63
126
124
Restructuring costs
23
15
48
25
Operating income
$
151
$
159
$
326
$
309
Other expense, net
$
(30)
$
(27)
$
(60)
$
(50)
Income taxes
(31)
(33)
(66)
(65)
Net income
94
105
207
203
Net income attributable to Henry Schein, Inc.
86
104
196
197
Six Months Ended
June 28,
June 29,
2025
2024
Cash flows:
Net cash provided by operating activities
$
157
$
493
Net cash used in investing activities
(197)
(281)
Net cash provided by (used in) financing activities
145
(265)
Plans of Restructuring
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 six months ended June 28, 2025, we
recorded restructuring charges associated with the 2024 Plan of $23 million and $48
million, respectively, which
primarily related to severance and employee-related costs, accelerated amortization
of right-of-use assets and fixed
assets, and other exit costs.
We expect to record restructuring charges associated with the 2024 Plan through the
end of 2025; however, an estimate of the amount of these charges has not yet been determined.
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 and six months ended June 29, 2024, in connection
with our
2022 Plan, we recorded restructuring costs of $15 million and $25 million, respectively, which primarily related to
severance and employee-related costs, accelerated amortization of right-of-use
assets and fixed assets, and other
exit costs.
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44
Three Months Ended June 28, 2025 Compared to Three Months Ended June 29, 2024
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.
During the fourth quarter of our fiscal year ended December 28, 2024,
we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses
performance and allocates
resources.
Our revised reportable segments now consist of: (i) Global Distribution
and Value
-Added Services; (ii)
Global Specialty Products; and (iii) Global Technology.
All prior comparative segment information has been recast
to reflect our new segment structure.
Net Sales
Net sales by reportable segment and by major product or service type were
as follows:
June 28,
% of
June 29,
% of
Increase
2025
Total
2024
Total
$
%
Global Distribution and Value
-Added Services
Global Dental Merchandise
(1)
$
1,218
37.6
%
$
1,214
38.7
%
$
4
0.3
%
Global Dental Equipment
(2)
439
13.5
426
13.6
13
3.0
Global Value
-Added Services
(3)
58
1.8
56
1.8
2
3.6
Global Dental
1,715
52.9
1,696
54.1
19
1.1
Global Medical
(4)
1,016
31.4
958
30.5
58
6.1
Total Global Distribution and Value
-Added Services
2,731
84.3
2,654
84.6
77
2.9
Global Specialty Products
(5)
386
11.9
370
11.8
16
4.2
Global Technology
(6)
167
5.2
156
5.0
11
7.4
Eliminations
(44)
(1.4)
(44)
(1.4)
-
n/a
Total
$
3,240
100.0
$
3,136
100.0
$
104
3.3
(1)
Includes infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, gypsum,
acrylics, articulators, abrasives, PPE products and our own corporate brand of consumable merchandise.
(2)
Includes dental chairs, delivery units and lights, digital dental laboratories, X-ray supplies and equipment, equipment repair
services and high-tech and digital restoration equipment.
(3)
Consists of financial services on a non-recourse basis, continuing education services for practitioners, consulting and other services.
(4)
Includes branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, X-ray
products, equipment, PPE products and vitamins.
(5)
Includes manufacturing, marketing and sales of dental implant and biomaterial products; and endodontic, orthodontic and
orthopedic products and other health care-related products and services.
(6)
Consists of development and distribution of practice management software, e-services and other products, which are distributed to
health care providers.
The components of our sales growth/(decline) were as follows:
Constant Currency
Growth/(Decline)
Total Constant
Currency
Growth/(Decline)
Foreign
Exchange
Impact
Total Sales
Growth
Local Internal
Growth/(Decline)
Acquisition
Growth
Global Distribution and Value
-Added Services
Global Dental Merchandise
(0.8)
%
0.4
%
(0.4)
%
0.7
%
0.3
%
Global Dental Equipment
0.7
0.9
1.6
1.4
3.0
Global Value
-Added Services
(1.9)
5.6
3.7
(0.1)
3.6
Global Dental
(0.4)
0.7
0.3
0.8
1.1
Global Medical
4.4
1.6
6.0
0.1
6.1
Total Global Distribution and Value
-Added Services
1.3
1.1
2.4
0.5
2.9
Global Specialty Products
3.6
(0.3)
3.3
0.9
4.2
Global Technology
6.6
-
6.6
0.8
7.4
Total
1.9
0.8
2.7
0.6
3.3
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45
Global Sales
Global net sales for the three months ended June 28, 2025 increased
3.3%.
Foreign exchange and acquisitions
contributed 0.6% and 0.8% to sales growth, respectively.
The components of our sales increase are presented in the
table above.
The 1.9% increase in our internally generated local currency sales was
primarily attributable to sales growth in
certain of our international dental markets, and medical sales growth attributable
to increased patient traffic, growth
of our Home Solutions business, partially offset by the impact of lower pricing in
U.S. dental merchandise markets,
and the impact on U.S. dental equipment from market uncertainty related
to tariffs.
For the three months ended
June 28, 2025, the estimated increase in internally generated local currency
sales, excluding PPE products and
COVID-19 test kits, was 2.1%.
Global Distribution and Value-Added Services Sales
Global Distribution and Value-Added Services net sales for the three months ended June 28, 2025 increased 2.9%.
The components of our sales increase are presented in the table
above.
The 0.4% decrease in internally generated local currency dental sales was primarily
due to the impact of lower
glove pricing as well as time-limited targeted sales initiatives for U.S. dental merchandise and
the impact on U.S.
dental equipment from market uncertainty related to tariffs.
The decrease was partially offset by dental
merchandise and dental equipment sales growth in certain of our international
markets.
The 4.4% increase in internally generated local currency medical sales was
attributable to increased patient traffic,
growth of our Home Solutions business,
and growth in medical products and pharmaceuticals.
The decrease in internally generated local currency value-added services
sales was attributable primarily to lower
sales in our practice transitions business,
which can fluctuate from quarter to quarter.
We estimate that sales of PPE products (including gloves) and COVID-19 test kits were approximately $138
million for the three months ended June 28, 2025,
as compared to $139 million for the three months ended June 29,
2024, representing an estimated decrease of $1 million.
The estimated $1 million net decrease in sales of PPE
products and COVID-19 test kits represents 0.1% of Global Distribution
and Value
-Added Services
net sales for
the three months ended June 28, 2025, and was primarily due to lower glove prices.
The estimated increase in the
segment’s internally generated local currency sales, excluding PPE products and COVID-19 test kits, was 1.5%.
Global Specialty Products
Global Specialty Products net sales for the three months ended June 28, 2025
increased 4.2%.
The components of
our sales increase are presented in the table above.
The 3.6% increase in internally generated local currency sales was attributable
to growth in dental implants and
biomaterials, and endodontic merchandise,
partially offset by a decline in orthodontics.
Global Technology
Global Technology net sales for the three months ended June 28, 2025 increased 7.4%.
The components of sales
growth are presented in the table above.
The internally generated local currency increase of 6.6% in Global Technology 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, partially offset by lower revenues of certain legacy products.
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46
Gross Profit
Gross profit and gross margin percentages by segment and in total were as follows:
June 28,
Gross
June 29,
Gross
Increase / (Decrease)
2025
Margin %
2024
Margin %
$
%
Global Distribution and Value
-Added Services
$
688
25.2
%
$
701
26.4
%
$
(13)
(1.9)
%
Global Specialty Products
211
54.9
205
55.5
6
3.1
Global Technology
114
67.9
105
67.6
9
7.8
Corporate
3
n/a
7
n/a
(4)
n/a
Total
$
1,016
31.4
$
1,018
32.5
$
(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.
Gross margin
percentages vary between our segments.
We realize substantially higher gross margin from sales of products that
we develop and manufacture within our Global Specialty Products segment
compared to gross margin from sales of
products that we distribute within our Global Distribution and Value-Added Services segment.
Within our Global
Technology segment, higher gross margins result from us being both the developer and seller of software products
and services.
Within our Global Distribution and Value
-Added Services 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.
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, which
normally purchase
lower volumes.
The decrease in Global Distribution and Value-Added Services gross profit for the three months ended June 28,
2025 compared to the prior-year-period is due to lower glove pricing as well as time-limited
targeted initiatives to
accelerate growth in market share, lower dental equipment sales in the U.S. and
lower sales in our practice
transitions business.
The increase in Global Specialty Products gross profit reflects increased
internally generated sales volume.
The
decrease in gross margin rates was due to product mix.
The increase in Global Technology gross profit is the result of the shift to higher margin products within the
product mix and improved gross margin rates.
Operating Expenses
Operating expenses (consisting of selling, general and administrative
expenses; depreciation and amortization; and
restructuring costs) by segment were as follows:
% of
% of
June 28,
Respective
June 29,
Respective
Increase / (Decrease)
2025
Gross Sales
2024
Gross Sales
$
%
Global Distribution and Value
-Added Services
$
529
19.4
%
$
525
19.8
%
$
4
0.7
%
Global Specialty Products
159
41.4
165
44.4
(6)
(2.9)
Global Technology
69
41.0
71
45.9
(2)
(3.9)
Corporate
34
n/a
15
n/a
19
n/a
791
24.4
776
24.7
15
2.0
Adjustments
(1)
74
n/a
83
n/a
(9)
n/a
Total operating expenses
$
865
26.7
$
859
27.4
$
6
0.8
(1)
Adjustments represent items excluded from segment operating income to enable comparison of financial results between periods.
These
items may vary independently of business performance.
Please see
Note 5 – Segment Data
.
These adjustments (current quarter vs. prior
quarter) consist of (i) acquisition intangible amortization ($44 million vs. $47 million), (ii) restructuring costs ($23 million vs. $15
million),
(iii) change in contingent consideration ($0 million vs. $23 million), (iv) cyber incident-insurance proceeds, net of third-party
advisory expenses (no activity vs. $(7) million net proceeds), (v) litigation settlements ($1 million vs. $5 million), and (vi) costs
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47
associated with shareholder advisory matters and select value creation consulting costs ($6 million vs. $0 million).
The net increase in operating expenses is attributable to the following:
Operating Costs
(excluding
acquisitions)
Acquisitions
Adjustments
Total
Global Distribution and Value
-Added Services
$
(3)
$
7
$
-
$
4
Global Specialty Products
(6)
-
-
(6)
Global Technology
(2)
-
-
(2)
Corporate
19
-
-
19
8
7
-
15
Adjustments
-
-
(9)
(9)
Total operating expenses
$
8
$
7
$
(9)
$
6
The components of the net increase in total operating expenses are presented
in the table above.
The increase in
operating costs (excluding acquisitions) during the three months
ended June 28, 2025 included an increase in
Corporate investments in technology in anticipation of the launch of our Global
E-Commerce Platform
(www.henryschein.com) and timing of certain non-income tax credits.
Other Expense, Net
Other expense, net was as follows:
June 28,
June 29,
Variance
2025
2024
$
%
Interest income
$
9
$
6
$
3
54.5
%
Interest expense
(38)
(32)
(6)
(19.9)
Other, net
(1)
(1)
-
(15.5)
Other expense, net
$
(30)
$
(27)
$
(3)
(12.3)
Interest income increased primarily due to increased interest rates.
Interest expense increased primarily due to
increased borrowings.
Income Taxes
Our effective tax rate was 24.4% for the three months ended June 28, 2025, compared
to 24.9% 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.
On July 4, 2025, after the end of the second quarter (June 28, 2025), President
Trump signed the reconciliation tax
bill, commonly known as the OBBBA,
into law.
This includes significant changes to corporate tax rates,
limitations on certain deductions and modifications to international tax
provisions.
We
are currently assessing the
impact of the OBBBA on our consolidated financial statements.
The 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.
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.
As of June
28, 2025, the impact of the Pillar Two rules to our financial statements was immaterial.
Table of Contents
48
Six Months Ended June 28, 2025 Compared to Six Months Ended June 29, 2024
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.
During the fourth quarter of our fiscal year ended December 28, 2024,
we revised our reportable segments to align
with how the Chairman and Chief Executive Officer manages the business, assesses
performance and allocates
resources.
Our revised reportable segments now consist of: (i) Global Distribution
and Value
-Added Services; (ii)
Global Specialty Products; and (iii) Global Technology.
All prior comparative segment information has been recast
to reflect our new segment structure.
Net Sales
Net sales by reportable segment and by major product or service type were
as follows:
June 28,
% of
June 29,
% of
Increase / (Decrease)
2025
Total
2024
Total
$
%
Global Distribution and Value
-Added Services
Global Dental Merchandise
(1)
$
2,403
37.5
%
$
2,424
38.4
%
$
(21)
(0.9)
%
Global Dental Equipment
(2)
823
12.9
828
13.1
(5)
(0.6)
Global Value
-Added Services
(3)
110
1.7
112
1.8
(2)
(2.3)
Global Dental
3,336
52.1
3,364
53.3
(28)
(0.9)
Global Medical
(4)
2,071
32.3
1,983
31.4
88
4.4
Total Global Distribution and Value
-Added Services
5,407
84.4
5,347
84.7
60
1.1
Global Specialty Products
(5)
753
11.8
730
11.6
23
3.1
Global Technology
(6)
329
5.1
313
5.0
16
5.1
Eliminations
(81)
(1.3)
(82)
(1.3)
1
n/a
Total
$
6,408
100.0
$
6,308
100.0
$
100
1.6
(1)
Includes infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, gypsum,
acrylics, articulators, abrasives, PPE products and our own corporate brand of consumable merchandise.
(2)
Includes dental chairs, delivery units and lights, digital dental laboratories, X-ray supplies and equipment, equipment repair
services and high-tech and digital restoration equipment.
(3)
Consists of financial services on a non-recourse basis, continuing education services for practitioners, consulting and other services.
(4)
Includes branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, X-ray
products, equipment, PPE products and vitamins.
(5)
Includes manufacturing, marketing and sales of dental implant and biomaterial products; and endodontic, orthodontic and
orthopedic products and other health care-related products and services.
(6)
Consists of development and distribution of practice management software, e-services and other products, which are distributed to
health care providers.
The components of our sales growth/(decline) were as follows:
Constant Currency
Growth/(Decline)
Total Constant
Currency
Growth/(Decline)
Foreign
Exchange
Impact
Total Sales
Growth/
(Decline)
Local Internal
Growth/(Decline)
Acquisition
Growth
Global Distribution and Value
-Added Services
Global Dental Merchandise
(0.4)
%
0.4
%
-
%
(0.9)
%
(0.9)
%
Global Dental Equipment
(1.2)
0.9
(0.3)
(0.3)
(0.6)
Global Value
-Added Services
(8.2)
6.4
(1.8)
(0.5)
(2.3)
Global Dental
(0.8)
0.7
(0.1)
(0.8)
(0.9)
Global Medical
3.1
1.4
4.5
(0.1)
4.4
Total Global Distribution and Value
-Added Services
0.6
1.0
1.6
(0.5)
1.1
Global Specialty Products
2.0
1.8
3.8
(0.7)
3.1
Global Technology
5.0
-
5.0
0.1
5.1
Total
1.1
1.0
2.1
(0.5)
1.6
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49
Global Sales
Global net sales for the six months ended June 28, 2025 increased 1.6%,
attributable to acquisition growth of 1.0%,
partially offset by a decrease in foreign exchange of 0.5%.
The components of our sales increase are presented in
the table above.
The 1.1% increase in our internally generated local currency sales was
primarily attributable to sales growth in
certain of our international dental equipment markets, and medical sales growth
attributable to increased patient
traffic, growth of our Home Solutions business, partially offset by the impact of lower pricing
in U.S. dental
merchandise markets, lower glove pricing, the impact of the deferral of
sales of U.S. dental equipment from the
fourth quarter of 2023 into the first quarter of 2024 as a result of the cyber
incident, and the impact on U.S. dental
equipment from market uncertainty related to tariffs.
For the six months ended June 28, 2025, the estimated increase in internally
generated local currency sales,
excluding PPE products and COVID-19 test kits, was 1.4%.
Global Distribution and Value-Added Services Sales
Global Distribution and Value-Added Services net sales for the six months ended June 28, 2025 increased 1.1%.
The components of our sales increase are presented in the table
above.
The 0.8% decrease in internally generated local currency dental sales was primarily
due to the impact of lower
pricing for U.S. dental merchandise markets, resulting from lower glove
pricing as well as time-limited targeted
sales initiatives, the impact of the deferral of sales of U.S. dental equipment
from the fourth quarter of 2023 into the
first quarter of 2024 as a result of the cyber incident,
and the impact on U.S. dental equipment from market
uncertainty related to tariffs.
The decrease was partially offset by dental equipment sales growth in certain of
our
international markets.
The 3.1% increase in internally generated local currency medical sales was
attributable to increased patient traffic
and growth of our Home Solutions business.
The decrease in internally generated local currency value-added services
sales was attributable primarily to lower
sales in our practice transitions business, which can fluctuate from quarter
to quarter.
We estimate that sales of PPE products (including gloves) and COVID-19 test kits were approximately $302
million for the six months ended June 28, 2025, as compared to $320
million for the six months ended June 29,
2024, representing an estimated decrease of $18 million.
The estimated $18 million net decrease in sales of PPE
products and COVID-19 test kits represents 0.3% of Global Distribution
and Value
-Added Services net sales for
the six months ended June 28, 2025, and was primarily due to lower glove
prices.
The estimated increase in the
segment’s internally generated local currency sales, excluding PPE products and COVID-19 test kits, was 1.0%.
Global Specialty Products
Global Specialty Products net sales for the six months ended June 28, 2025
increased 3.1%.
The components of
our sales increase are presented in the table above.
The 2.0% increase in internally generated local currency sales was attributable
to growth in our implant and
biomaterial businesses in certain of our international markets, partially
offset by a decline in endodontic and
orthodontic sales.
The increase in constant currency Global Specialty Products
sales was also attributable to the
acquisition of TriMed Inc. during the year ended December 28, 2024.
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50
Global Technology
Global Technology net sales for the six months ended June 28, 2025 increased 5.1%.
The components of sales
growth are presented in the table above.
The internally generated local currency increase of 5.0% in Global Technology 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, partially offset by lower revenues of certain legacy products.
Gross Profit
Gross profit and gross margin percentages by segment and in total were as follows:
June 28,
Gross
June 29,
Gross
Increase / (Decrease)
2025
Margin %
2024
Margin %
$
%
Global Distribution and Value
-Added Services
$
1,369
25.3
%
$
1,408
26.3
%
$
(39)
(2.8)
%
Global Specialty Products
417
55.4
404
55.3
13
3.4
Global Technology
224
67.9
211
67.4
13
5.9
Corporate
6
n/a
7
n/a
(1)
n/a
Total
$
2,016
31.5
$
2,030
32.2
$
(14)
(0.7)
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.
Gross margin
percentages vary between our segments.
We realize substantially higher gross margin from sales of products that
we develop and manufacture within our Global Specialty Products segment
compared to gross margin from sales of
products that we distribute within our Global Distribution and Value-Added Services segment.
Within our Global
Technology segment, higher gross margins result from us being both the developer and seller of software products
and services.
Within our Global Distribution and Value
-Added Services 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.
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, which
normally purchase
lower volumes.
The decrease in Global Distribution and Value-Added Services gross profit for the six months ended June 28, 2025
compared to the prior-year-period is due to lower glove pricing as well as time-limited targeted initiatives to
accelerate growth in market share, lower sales of dental equipment in the U.S.
and lower sales in our practice
transitions business.
The increase in Global Specialty Products gross profit reflects increased
internally generated sales volume and
gross profit from acquisitions.
Gross margin rates were relatively flat.
The increase in Global Technology gross profit is the result of higher internally generated sales and improved gross
margin rates.
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51
Operating Expenses
Operating expenses (consisting of selling, general and administrative
expenses; depreciation and amortization; and
restructuring costs) by segment were as follows:
% of
% of
June 28,
Respective
June 29,
Respective
Increase / (Decrease)
2025
Gross Sales
2024
Gross Sales
$
%
Global Distribution and Value
-Added Services
$
1,043
19.3
%
$
1,061
19.8
%
$
(18)
(1.7)
%
Global Specialty Products
309
41.1
321
43.8
(12)
(3.4)
Global Technology
137
41.5
143
45.8
(6)
(4.7)
Corporate
72
n/a
37
n/a
35
n/a
1,561
24.4
1,562
24.8
(1)
-
Adjustments
(1)
129
n/a
159
n/a
(30)
n/a
Total operating expenses
$
1,690
26.4
$
1,721
27.3
$
(31)
(1.8)
(1)
Adjustments represent items excluded from segment operating income to enable comparison of financial results between periods.
These
items may vary independently of business performance.
Please see
Note 5 – Segment Data
.
These adjustments (current year-to-date vs.
prior year-to-date) consist of (i) acquisition intangible amortization ($87 million vs. $93 million), (ii) restructuring costs ($48 million vs.
$25 million), (iii) change in contingent consideration ($(2) million vs. $38 million), (iv) litigation settlements ($1 million vs. $5
million), (v) cyber incident-insurance proceeds, net of
third-party advisory expenses ($(20) million net proceeds vs. $(2) million net
proceeds), (vi) impairment of intangible assets ($1 million vs. $0 million), and (vii) costs associated with shareholder advisory matters
and select value creation consulting costs ($14 million vs. $0 million).
The net decrease in operating expenses is attributable to the following:
Operating Costs
(excluding
acquisitions)
Acquisitions
Adjustments
Total
Global Distribution and Value
-Added Services
$
(32)
$
14
$
-
$
(18)
Global Specialty Products
(10)
(2)
-
(12)
Global Technology
(6)
-
-
(6)
Corporate
35
-
-
35
(13)
12
-
(1)
Adjustments
-
-
(30)
(30)
Total operating expenses
$
(13)
$
12
$
(30)
$
(31)
The components of the net decrease in total operating expenses are presented
in the table above.
The decrease in
operating costs (excluding acquisitions) during the six months ended
June 28, 2025 included cost savings from our
restructuring activities, certain changes in estimates and other operating
cost efficiencies, partially offset by an
increase in Corporate investments in technology in anticipation of
the launch of our Global E-Commerce Platform
(www.henryschein.com)
and timing of certain non-income tax credits.
Other Expense, Net
Other expense, net was as follows:
June 28,
June 29,
Variance
2025
2024
$
%
Interest income
$
15
$
11
$
4
34.8
%
Interest expense
(73)
(62)
(11)
(17.8)
Other, net
(2)
1
(3)
(538.2)
Other expense, net
$
(60)
$
(50)
$
(10)
(20.8)
Interest income increased primarily due to increased interest rates.
Interest expense increased primarily due to
increased borrowings.
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52
Income Taxes
Our effective tax rate was 24.7% for the six months ended June 28, 2025, compared to 25.2%
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.
On July 4, 2025, after the end of the second quarter (June 28, 2025), President
Trump signed the reconciliation tax
bill, commonly known as the OBBBA,
into law.
This includes significant changes to corporate tax rates,
limitations on certain deductions and modifications to international tax
provisions.
We
are currently assessing the
impact of the OBBBA on our consolidated financial statements.
The 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.
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.
As of June
28, 2025, the impact of the Pillar Two rules to our financial statements was immaterial.
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53
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 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 $157 million for the
six months ended June 28, 2025, compared to
net cash provided by operating activities of $493 million for the
prior year.
The net change of $336 million was
primarily attributable to changes in working capital accounts (primarily
accounts receivable, inventory, and
accounts payable and accrued expenses).
Our operating cash flows during the six months ended June
29, 2024
were affected by the residual impacts of the 2023 cyber incident and included a higher-than-normal
level of cash
collections.
Our cash collections normalized during the six months ended
June 28, 2025.
Net cash used in investing activities was $197 million for the
six months ended June 28, 2025, compared to net
cash used in investing activities of $281 million for the prior year.
The net change of $84 million was primarily
attributable to reduced payments for equity investments and business acquisitions.
Net cash provided by financing activities was $145 million for the
six months ended June 28, 2025, compared to
net cash used in financing activities of $265 million for the prior year.
The net change of $410 million was
primarily due to increased net borrowings from debt to finance our investments
and proceeds received from the
issuance of common stock, partially offset by increased repurchases of common stock.
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54
The following table summarizes selected measures of liquidity and capital
resources:
June 28,
December 28,
2025
2024
Cash and cash equivalents
$
145
$
122
Working
capital
(1)
1,236
1,180
Debt:
Bank credit lines
$
901
$
650
Current maturities of long-term debt
27
56
Long-term debt
2,090
1,830
Total debt
$
3,018
$
2,536
Leases:
Current operating lease liabilities
$
81
$
75
Non-current operating lease liabilities
259
259
(1)
Includes $440 million and $241 million of certain accounts receivable, which serve as security for U.S. trade accounts receivable
securitization at June 28, 2025 and December 28, 2024, 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 decreased
to 44.7 days as of June 28, 2025 from
48.9 days as of June 29, 2024, which was primarily attributable to impact
that the cyber incident had on the cash
collections during the three months ended March 30, 2024.
During the six months ended June 28, 2025, we wrote
off approximately $5 million of fully reserved accounts receivable against our trade
receivable reserve.
Our
inventory turns from operations decreased to 4.7 as of June 28, 2025
from 5.0 as of June 29, 2024.
Our working
capital accounts may be impacted by current and future economic conditions.
Leases
We
have operating and finance leases for corporate offices, office space, distribution and other facilities,
vehicles
and certain equipment.
Our leases have remaining terms of less than one year to approximately
16 years, some of
which may include options to extend the leases for up to 15 years.
As of June 28, 2025, our right-of-use assets
related to operating leases were $300 million and our current and non-current
operating lease liabilities were $81
million and $259 million, respectively.
Stock Repurchases
On January 27, 2025, our Board of Directors authorized the repurchase
of up to an additional $500 million in shares
of our common stock.
On May 19, 2025, we executed an accelerated share repurchase program
to repurchase a total of $250 million of
our outstanding common stock based on volume-weighted average
prices.
As of June 28, 2025, we received
3,122,832 shares at an estimated fair value of $223
million, which were recorded in treasury stock.
In July 2025,
we received an additional 368,651 shares at an estimated fair value of
$27 million, representing the final amount of
shares to be received under this accelerated share repurchase program.
From March 3, 2003 through June 28, 2025, we repurchased $5.6 billion,
or 101,727,771 shares (including shares
delivered after June 28, 2025), under our common stock repurchase programs,
with $432 million available as of
June 28, 2025 for future common stock share repurchases.
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
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55
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 June 28, 2025 and December 28, 2024, our balance
for
redeemable noncontrolling interests was $811 million and $806 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 28, 2024.
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 28, 2024.
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 June 28, 2025,
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, continued acquisition integrations and systems
implementation activity
undertaken during the quarter ended June 28, 2025, and carried over from prior
quarters,
when considered in the
aggregate, does not represent a material change in our internal control
over financial reporting.
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.
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56
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 28, 2024.
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 since 2003 that have aggregated to an additional $5.9 billion,
authorized by our Board, to the repurchase
program provide for a total of $6.0 billion (including $500 million authorized
on January 27, 2025) of shares of our
common stock to be repurchased under this program,
with $432 million currently available for future share
repurchases.
On May 19, 2025, we executed an accelerated share repurchase program to
repurchase a total of $250 million of
our outstanding common stock based on volume-weighted average prices.
As of June 28, 2025, we received
3,122,832 shares at an estimated fair value of $223 million, which were
recorded in treasury stock.
In July 2025,
we received an additional 368,651 shares at an estimated fair value of $27
million, representing the final amount of
shares to be received under this accelerated share repurchase program.
As of June 28, 2025, we had repurchased approximately $5.6 billion
of common stock (101,727,771 shares,
including shares delivered after June 28, 2025) under these initiatives.
The following table summarizes repurchases of our common stock
under our stock repurchase program during the
fiscal quarter ended June 28, 2025:
Total Number
Maximum Number
Total
of Shares
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)
3/30/2025 through 4/26/2025
535,000
$
67.36
535,000
10,471,696
4/27/2025 through 5/31/2025
3,122,832
71.48
3,122,832
6,561,184
6/1/2025 through 6/28/2025
-
-
-
6,267,466
3,657,832
3,657,832
(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
57
ITEM 5.
OTHER INFORMATION
Amendment and Restatement of the Henry Schein, Inc. Supplemental Executive
Retirement Plan
On August 1, 2025, the Compensation Committee approved the
amendment and restatement of the Henry Schein,
Inc. Supplemental Executive Retirement Plan (the “SERP”), effective as of September
1, 2025.
The amendment
and restatement incorporates the following changes:
•
Participants are permitted to make a one-time, irrevocable election
to change the form of payment of their
vested account balance (as adjusted for earnings) as of the date they terminate
employment from a lump
sum payment to annual installments paid over three or five years, in each
case starting five years after the
originally scheduled payment date, or to elect to retain the lump sum form
of payment but delay the
payment date for five years after the originally scheduled payment date.
•
Permits the Compensation Committee to increase “Recognized Compensation”
to any specified amount
above the amount provided under the prior definition of “Recognized
Compensation.”
A participant’s
book-keeping contribution under the SERP each year is the amount that
the participant’s base
compensation exceeds “Recognized Compensation,” multiplied by a contribution
percentage established by
the Compensation Committee.
•
Additional other changes to reflect the Company’s administrative and procedural practices under the SERP.
The foregoing summary of the SERP does not purport to be complete
and is subject to, and qualified in its entirety
by, the full text of the SERP,
which is attached as Exhibit 10.1 and incorporated herein by reference.
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58
ITEM 6.
EXHIBITS
Amended and Restated Term Loan Credit Agreement, dated as of June 6, 2025,
among us, the several lenders parties thereto, JPMorgan Chase Bank, N.A., as
administrative agent and joint lead arranger, U.S. Bank National Association, as
syndication agent and joint lead arranger, and The Toronto-Dominion Bank,
New York Branch, and Bank of America, N.A., as co-documentation agents and
joint lead arrangers and ING Bank, N.V. and BNP Paribas, as co-
documentation agents. (Incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K filed on June 9, 2025.)
Third Amended and Restated Revolving Credit Agreement, dated as of June 6,
2025, among us, the several lenders parties thereto, and JPMorgan Chase Bank,
N.A., as administrative agent, U.S. Bank National Association, as syndication
agent, and The Toronto-Dominion Bank, New York Branch, Bank of America,
N.A., UniCredit Bank, A.G., the Bank of New York Mellon, ING Bank, N.V.
and HSBC Bank USA, N.A., as co-documentation agents. (Incorporated by
reference to Exhibit 10.2 to our Current Report on Form 8-K filed on June 9,
Henry Schein, Inc. Supplemental Executive Retirement Plan, amended and
restated effective September 1, 2025.+**
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.+
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.+
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 June 28, 2025,
formatted in Inline XBRL (included within
Exhibit 101 attachments).+
_________
- Filed or furnished herewith.
** Indicates management contract or compensatory plan or agreement.
Table of Contents
59
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: August 5, 2025
EX-10.3
Exhibit 10.3
HENRY SCHEIN, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AMENDED AND RESTATED EFFECTIVE AS OF SEPTEMBER 1, 2025
The Plan was originally established, effective as of January 1, 1994, and was amended and restated effective as of February 9, 1998, March 1, 2005, January 1, 2008, and January 1, 2014, with the adoption of amendments from time to time, to provide deferred compensation to a select group of management and highly compensated employees of Henry Schein, Inc. and certain Associated Companies (as defined herein). The Plan is amended and restated effective as of September 1, 2025, as set forth herein.
- Definitions . For purposes of the Plan, the following definitions apply:
(a) “Account” means the sum of the Participant’s Deferral Account and the Legacy Account.
(b) “Associated Company” means such corporations and other entities presently or in the future existing, which are (i) members of the controlled group that includes the Company or are under common control with the Company, during such periods as such corporations or entities are members of the controlled group, as such terms are defined in Section 414 of the Code, except such definition shall be modified as permitted by Treasury Regulation § 1.409A-1(h)(3) to replace “at least 80 percent” with “at least 50 percent” for purposes of applying Code Section 1563(a)(i)(2) and (3) and in applying Treasury Regulation § 1.414(c)-2 for purposes of determining whether a trade or business is under common control; and (ii) any other entity required to be aggregated with the Company pursuant to Section 414(m) or (o) of the Code, but only during the period the entity is required to be so aggregated. Notwithstanding the foregoing, with respect to the Legacy Account (formerly known as the ESOP Supplemental Account), Associated Company means any entity described above and any corporation which is a member of the same controlled group of corporations with the Company, as defined in Section 409(l)(4) of the Code.
(c) “Base Compensation” means the salary or draw paid during a Plan Year (or, if shorter, that portion of the Plan Year during which an individual is a Participant) by an Employer to a Participant for services rendered, excluding commissions, bonuses, overtime, shift differential payments, unused sick/personal days or vacation days and gratuities. Base Compensation shall exclude the profit realized on the exercise of stock options or the sale of stock acquired under stock options, gains from the exercise of stock appreciation rights, payments under a nonqualified deferred compensation plan, income imputed on below-market loans, financial or tax planning, housing allowances, schooling allowances, income or excise tax equalization, and income from cashing out of stock options or stock appreciation rights, imputed income from the use of a company automobile, amounts received under an employee award program (without regard to whether or not an amount is paid in cash), moving expenses and relocation allowances. Base Compensation shall not include any amounts paid or accrued to a Participant as severance pay, as a contribution to the Plan or any other profit-sharing plan, pension plan, welfare plan, group insurance plan, deferred compensation plan, or any other employee benefit plan maintained by the Employer, except that Base Compensation shall include salary reduction contributions to a plan established by the Employer under Code Sections 401(k), 125 or 132.
(d) “Beneficiary” means the person or persons (if any) specified by the Participant in a written election filed with the Committee to receive the Participant’s Benefit under the Plan in the event of the Participant’s death. If no such designation is made under the Plan, “Beneficiary” means the person or persons designated by a Participant under the Qualified Plan.
(e) “Benefit” means the benefit payable under the Plan.
(f) “Board” means the Board of Directors of the Company.
(g) “Change of Control” means a change of control as provided in Exhibit A hereto.
(h) “Code” means the Internal Revenue Code of 1986, as amended.
(i) “Committee” means the committee, if any, appointed by the Board to administer the Plan on its behalf. If no committee is appointed, the Board shall be deemed to be the Committee.
(j) “Company” means Henry Schein, Inc. and any successor by merger, consolidation, purchase, or otherwise.
(k) “Company Stock Fund” means a notional investment which is intended to provide substantially similar results to the earnings and losses that would be accrued by an investment in the common stock of the Company, $.01 par value, subject to adjustments in such common stock for changes in the Company’s capital structure as determined by the Committee in its sole discretion.
(l) “Default Fund” means the default fund established under the Qualified Plan that would apply to the Participant (as of the date of this restatement, the age-appropriate Fidelity Freedom Fund) or other such investment fund as the Committee may determine from time to time, in its sole discretion.
(m) “Deferral Account” means the Participant’s bookkeeping account that is credited with contributions by the Employer on or after January 1, 2014, pursuant to the terms hereof, and is adjusted for any Deferral Account Earnings thereon.
(n) “Deferral Account Earnings” means a book-entry amount to be credited as earnings or losses to a Participant’s Deferral Account equal to the earnings or losses that would accrue if the Participant’s Deferral Account was invested in the Investment Funds elected by the Participant, subject to the limitations below:
| (i) | a Participant may not elect to allocate more than 20% of future contributions under the Plan directly into the<br>Company Stock Fund; |
|---|---|
| (ii) | no transfers of Deferral Account amounts invested in other Investment Funds may be made into the Company Stock<br>Fund by a Participant, if, at the time such transfer is directed into the Company Stock Fund, the value of the portion of the Participant’s Deferral Account allocated to the Company Stock Fund exceeds, or would be caused to exceed, 20% of the<br>total value of the Participant’s Deferral Account; |
| --- | --- |
2
| (iii) | the Committee may impose additional restrictions on the Employees of one or more Employers investing in the<br>Company Stock Fund; and |
|---|---|
| (iv) | if the Participant makes no election, the Deferral Account shall be deemed invested in the Default Fund.<br> |
| --- | --- |
(o) “Disabled” means that a Participant has been determined to be disabled by the Social Security Administration or is receiving income replacement benefits for full disability under the Company’s long-term disability plan for a period of not less than 3 months as set forth under Code Section 409A(a)(2)(C)(ii).
(p) “Earnings” means, for any Plan Year, the sum of the book-entry amounts reflecting: (i) Deferral Account Earnings, and (ii) Legacy Account Earnings.
(q) “Election Form” means the participation election form consistent with the provisions of the Plan as approved and prescribed by the Company, from time to time.
(r) “Eligible Employee” means a Top Hat Employee of an Employer whose Base Compensation exceeds Recognized Compensation.
(s) “Employee” means any common law employee of an Employer. The term Employee excludes an agent and independent contractor. Employee shall not include any “leased employees,” as defined in Code Section 414(n). Any person who provides services to the Employer shall not be an Employee if, in the Employer’s sole and absolute discretion, such services are provided pursuant to an agreement between the Employer and a third party. A person the Employee determines is not an “Employee,” as defined above, shall not be eligible to participate in the Plan regardless of whether such determination is upheld by a court or tax or regulatory authority having jurisdiction over such matters. However, a person the Employer determines is not an “Employee,” as defined above, and who later is required to be reclassified as an Employee shall be eligible to participate in the Plan benefits under the Plan prospectively only, provided that the Employee is otherwise eligible under Section 2 of the Plan.
(t) “Employer” means the Company and any Associated Company which is approved as a participating employer hereunder by the Board or Committee (unless and until subsequently removed or withdrawn pursuant to Section 17).
(u) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
(v) “Forfeiture” means in the event a Participant incurs a Termination of Employment, any portion of the Participant’s Account in which the Participant is not then vested pursuant to Sections 4(a) or (b) hereof, which shall be forfeited.
(w) “Investment Funds” means each of the investment funds available for notional investments under the Plan, including the Company Stock Fund, as determined by the Committee in its sole discretion.
(x) “Legacy Account” means a Participant’s entire bookkeeping account under the Plan as of the date immediately prior to January 1, 2014, as adjusted for hypothetical earnings and losses based on the terms of the Plan immediately prior to January 1, 2014, and further adjusted for any Legacy Account Earnings thereon.
3
(y) “Legacy Account Earnings” means a book-entry amount reflecting the hypothetical earnings or losses to a Participant’s Legacy Account equal to the earnings and losses that would accrue if the Participant’s Legacy Account were invested as follows:
| (i) | the portion of the Legacy Account allocated to the Company Stock Fund as of January 1, 2014, shall remain<br>allocated to the Company Stock Fund unless the Participant elects otherwise; and |
|---|---|
| (ii) | the remaining portion of the Legacy Account shall be deemed invested in the Default Fund unless the Participant<br>elects otherwise. |
| --- | --- |
(z) “Normal Retirement Date” means the day on which a Participant attains age sixty-five (65) while employed by the Employer.
(aa) “Participant” means any Eligible Employee who shall have become a Participant in the Plan in accordance with the provisions of Section 2 hereof and whose participation shall not have ceased or whose Account has not been distributed.
(bb) “Plan” means the Henry Schein, Inc. Supplemental Executive Retirement Plan, as amended from time to time.
(cc) “Plan Year” means the calendar year.
(dd) “Pre-Termination Vested Benefit” means the amount of the Participant’s vested Benefit in the Participant’s Account on the date of Participant’s Termination of Employment as adjusted pursuant to Section 3(b).
(ee) “Post-Termination Vested Benefit” means the amount of the Participant’s vested Benefit attributable to contributions credited to the Participant’s Account after the date of Termination of Employment as adjusted pursuant to Section 3(b).
(ff) “Qualified Plan” means the Henry Schein, Inc. 401(k) Savings Plan, as amended and restated effective as of January 1, 2015, as amended from time to time.
(gg) “Recognized Compensation” means the dollar limitation pursuant to Section 402(g) of the Code for the Plan Year divided by the percentage set by the Committee in its sole discretion or such higher amount specified by the Committee from time to time.
(hh) “Specified Employee” means a Participant who is a “specified employee” within the meaning of such term under Section 409A of the Code (and the guidance issued thereunder) and determined using any identification methodology and procedure selected by the Company from time to time, or, if none, the default methodology and procedure specified under Section 409A of the Code.
(ii) “Termination of Employment” means termination of employment as an Employee of the Company and all Associated Companies for any reason whatsoever, including, but not limited to, death, retirement, resignation, or firing (with or without cause), provided that such termination of employment constitutes a “separation from service” within the meaning of Section 409A of the Code (and the guidance issued thereunder).
4
(jj) “Top Hat Employee” means an Employee who is a member of a select group of management or highly compensated employees of the Employer who may participate in a plan within the meaning of Sections 201, 301(a)(3), and 401(a)(1) of ERISA.
(kk) “Year of Service” means a period of twelve (12) consecutive calendar months during which an Employee completes at least one Hour of Service (as defined in the Qualified Plan) in each consecutive calendar month.
To the extent not inconsistent with the foregoing definitions and the terms hereof, any defined term used in the Plan shall have the same meaning as in the Qualified Plan.
2. Participation .
(a) An Eligible Employee shall become a Participant in the Plan on the first day of the calendar quarter following the Participant’s completion of a Year of Service, provided that such person is an Eligible Employee on such date.
(b) An Employee who ceases to be an Eligible Employee, but whose Account has not been distributed, shall be treated as a “frozen Participant” and shall not be eligible to receive further book-entry contributions to the Participant’s Deferral Account for periods during which the Employee is not an Eligible Employee (for avoidance of doubt, such frozen Participant shall be entitled to receive a timely book-entry contribution earned while an Eligible Employee but not yet received prior to becoming a frozen Participant). A “frozen Participant’s” Account shall continue to be adjusted for Earnings under Section 3 until such Account is distributed in accordance with Section 5.
(c) A “frozen Participant” who is reemployed as an Eligible Employee and whose re-participation is approved by the Committee shall become an active Participant as of the date of reemployment.
- Contributions and Earnings .
(a) The Employer shall make a book-entry contribution to the Deferral Account of each Participant, equal to (i) the amount by which the Participant’s Base Compensation exceeds Recognized Compensation multiplied by (ii) a contribution percentage determined by the Committee in its sole discretion and established with respect to Base Compensation earned on or after the date of the Committee’s action. A contribution will be made with respect to a calendar quarter on behalf of a Participant if such Participant was employed on the last day of such calendar quarter. A Participant’s Deferral Account shall be credited on, or as soon as administratively feasible following, the September 30^th^ immediately following the Plan Year during which the applicable calendar quarter occurs with respect to which the contribution is earned (or at least annually as of any date determined by the Committee in its sole discretion). Notwithstanding the foregoing, a Participant’s Deferral Account shall be credited with a contribution with respect to the Plan Year of the Participant’s retirement at or after the Normal Retirement Date, death, or Disability. Notwithstanding anything herein to the contrary, the Employer reserves the right to suspend book-entry contributions for any period of time. Such book-entry contributions were suspended for the period beginning July 1, 2020, and ending December 31, 2020.
5
(b) A Participant’s Accounts shall be adjusted for Earnings at such times as may be determined by the Committee in its sole discretion.
(c) Notwithstanding anything herein to the contrary, the Employer shall account for the portion of a Participant’s Benefit that was earned and vested as of December 31, 2004, and Earnings thereon separately from the remaining portion of a Participant’s Benefit.
- Vesting and Forfeitures .
(a) A Participant’s Account shall become vested and nonforfeitable when and to the extent that the Participant shall have completed the number of Years of Service set forth below.
| Completed Years of Service | Vested Percentage | ||
|---|---|---|---|
| Less than 1 year | 0 | % | |
| 1 year but less than 2 years | 0 | % | |
| 2 years but less than 3 years | 20 | % | |
| 3 years but less than 4 years | 40 | % | |
| 4 years but less than 5 years | 60 | % | |
| 5 or more years | 100 | % |
(b) Notwithstanding the provisions of paragraph (a) to the contrary, a Participant’s Account shall become fully vested and nonforfeitable on the occurrence of any of the following: (i) the Participant’s Normal Retirement Date, (ii) the Participant’s death or Disability or (iii) a Change of Control.
(c) A Participant shall forfeit any unvested interest in the Participant’s Account upon a Termination of Employment.
(d) If a Participant whose Account was forfeited in its entirety pursuant to subsection (c) above again becomes employed by the Company or an Associated Company, the amount of the Participant’s Forfeiture shall only be restored to the Participant’s Account to the extent determined by the Committee, and any credit for Years of Service prior to such reemployment shall be fixed by the Committee and, if not so fixed, shall not be recognized.
- Payment of Benefit .
(a) Upon a Participant’s Termination of Employment, the Participant’s vested Benefit shall be paid as follow:
| (i) | Unless a Participant makes a timely subsequent deferral election pursuant to Section 5(b), the<br>Participant’s Pre-Termination Vested Benefit shall be paid in a cash lump sum as soon as administratively feasible following the six-month anniversary of the date<br>of Termination of Employment, but in no event later than sixty (60) days following such six-month anniversary. |
|---|
6
| (ii) | To the extent attributable to contributions credited to the Participant’s Account with respect to Base<br>Compensation earned on or after September 1, 2025, the Participant’s Post-Termination Vested Benefit shall be paid in a cash lump sum on the 12-month anniversary of the Participant’s Termination<br>of Employment. For the avoidance of doubt, this payment shall be made at such time and in such form regardless of whether the Participant makes a timely subsequent deferral election pursuant to Section 5(b) with respect to their Pre-Termination Vested Benefit. |
|---|---|
| (iii) | To the extent attributable to contributions credited to the Participant’s Account with respect to Base<br>Compensation earned before September 1, 2025, the Participant’s Post-Termination Vested Benefit shall be paid in a second cash lump sum in the calendar year immediately following the date of the Termination of Employment but in no event<br>sooner than six (6) months following termination. |
| --- | --- |
(b) Effective September 1, 2025, after becoming a Participant, such Participant may file an Election Form with the Committee electing to have the Participant’s Pre-Termination Vested Benefit either:
| (i) | Paid in a cash lump sum five (5) years from the date of payment described in Section 5(a)(i);<br> |
|---|---|
| (ii) | Paid in ratable annual installments in cash for a period of three (3) years, with payments commencing five<br>(5) years from the date of payment described in Section 5(a)(i); or |
| --- | --- |
| (iii) | Paid in ratable annual installments in cash for a period of five (5) years, with payments commencing five<br>(5) years from the date of payment described in Section 5(a)(i). |
| --- | --- |
Notwithstanding the foregoing, such a deferral election shall be null and void unless: (i) the deferral election does not take effect for at least twelve (12) months after it is made, (ii) the deferral election is made at least twelve (12) months prior to the date the first installment otherwise would be paid under Section 5(a)(i), as specified in the Election Form, and (iii) the deferral election defers payment for at least five (5) years after the date that the cash lump sum would otherwise have been paid (except with respect to distributions due to death or Disability), all in accordance with Section 409A of the Code. Any deferral election within twelve (12) months of a Participant’s Termination of Employment shall be null and void. A Participant may not change such deferral election after it is made. A Participant may only make one (1) deferral election; further deferral elections are not permitted. For the avoidance of doubt, a Participant may not make a deferral election with respect to their Post-Termination Vested Benefit, if any.
(c) Notwithstanding anything to the contrary, in the event of a Change of Control, each Participant’s then vested Benefit shall be paid to such Participant in a cash lump sum payment within thirty (30) days following the Change of Control.
(d) Notwithstanding a deferral election pursuant to Section 5(b), or anything herein to the contrary, a Participant’s Pre-Termination Vested Benefit shall be paid at the time and in the form described in Section 5(a)(i) if:
7
| (i) | The Participant’s Pre-Termination Vested Benefit is less than<br>$50,000; or |
|---|---|
| (ii) | The Participant’s Termination of Employment occurs as a result of the Participant’s death or<br>Disability. |
| --- | --- |
- Claims Procedure .
(a) Any claim by a Participant or former Participant or Beneficiary (“Claimant”) with respect to eligibility, participation, contributions, benefits, or other aspects of the operation of the Plan shall be made in writing to the Committee for such purpose. The Committee shall provide the Claimant with the necessary forms and make all determinations as to the right of any person to a disputed benefit. If a Claimant is denied benefits under the Plan, the Committee shall notify the Claimant in writing of the denial of the claim within ninety (90) days after the Committee receives the claim, provided that in the event of special circumstances such period may be extended. The ninety (90) day period may be extended up to ninety (90) days (for a total of one hundred eighty (180) days).
If the initial ninety (90) day period is extended, the Committee shall notify the Claimant in writing within ninety (90) days of receipt of the claim. The written notice of extension shall indicate the special circumstances requiring the extension of time and provide the date by which the Committee expects to make a determination with respect to the claim. If the extension is required due to the Claimant’s failure to submit information necessary to decide the claim, the period for making the determination will be tolled from the date on which the extension notice is sent to the Claimant until the earlier of: (i) the date on which the Claimant responds to the Committee’s request for information; or (ii) expiration of the forty-five (45) day period commencing on the date that the Claimant is notified that the requested additional information must be provided. If notice of the denial of a claim is not furnished within the required time period described herein, the claim shall be deemed denied as of the last day of such period.
If the claim is wholly or partially denied, the notice to the Claimant shall set forth:
| (i) | The specific reason or reasons for the denial; |
|---|---|
| (ii) | Specific reference to pertinent Plan provisions upon which the denial is based; |
| --- | --- |
| (iii) | A description of any additional material or information necessary for the Claimant to complete the claim<br>request and an explanation of why such material or information is necessary; |
| --- | --- |
| (iv) | Appropriate information as to the steps to be taken and the applicable time limits if the Claimant wishes to<br>submit the adverse determination for review; and |
| --- | --- |
| (v) | A statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA following<br>an adverse determination on review. |
| --- | --- |
(b) If the claim has been wholly or partially denied, the Claimant may submit the claim for review by the Committee. Any request for review of a claim must be made in writing to the Committee no later than sixty (60) days after the Claimant receives notification of denial or, if no notification was provided, the date the claim is deemed denied. The Claimant or a duly authorized representative may:
8
| (i) | Upon request and free of charge, be provided with reasonable access to, and copies of, relevant documents,<br>records, and other information relevant to the Claimant’s claim; and |
|---|---|
| (ii) | Submit written comments, documents, records, and other information relating to the claim. The review of the<br>claim determination shall take into account all comments, documents, records, and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial claim<br>determination. |
| --- | --- |
(c) The decision of the Committee shall be made within sixty (60) days after receipt of the Claimant’s request for review unless special circumstances (including, without limitation, the need to hold a hearing) require an extension. In the event of special circumstances, the sixty (60) day period may be extended for a period of up to one hundred twenty (120) days.
If the initial sixty (60) day period is extended, the Committee shall, within sixty (60) days of receipt of the claim for review, notify the Claimant in writing. The written notice of extension shall indicate the special circumstances requiring the extension of time and provide the date by which the Committee expects to make a determination with respect to the claim upon review. If the extension is required due to the Claimant’s failure to submit information necessary to decide the claim, the period for making the determination will be tolled from the date on which the extension notice is sent to the Claimant until the earlier of: (i) the date on which the Claimant responds to the Plan’s request for information; or (ii) expiration of the forty-five (45) day period commencing on the date that the Claimant is notified that the requested additional information must be provided. If notice of the decision upon review is not furnished within the required time period described herein, the claim on review shall be deemed denied as of the last day of such period.
The Committee, in its sole discretion, may hold a hearing regarding the claim and request that the Claimant attend. If a hearing is held, the Claimant shall be entitled to be represented by counsel.
(d) The Committee’s decision upon review of the Claimant’s claim shall be communicated to the Claimant in writing. If the claim upon review is denied, the notice to the Claimant shall set forth:
| (i) | The specific reason or reasons for the decision, with references to the specific Plan provisions on which the<br>determination is based; |
|---|---|
| (ii) | A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to,<br>and copies of, all documents, records and other information relevant to the claim; and |
| --- | --- |
| (iii) | A statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA.<br> |
| --- | --- |
9
(e) The Committee shall have the full power and authority to interpret, construe and administer the Plan in its sole discretion based on the provisions of the Plan and to decide any questions and settle all controversies that may arise in connection with the Plan. Both the Committee’s and the Board’s interpretations and construction thereof, and actions thereunder, made in the sole discretion of the Committee and the Board, including any valuation of the Benefit, any determination under this Section 6, or the amount of the payment to be made hereunder, shall be final, binding and conclusive on all persons for all persons. No member of the Board or Committee shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of the Plan.
(f) No officer, member, or former member of the Committee shall be liable for any action or determination made with respect to the Plan or any benefit under it. To the maximum extent permitted by applicable law or the Certificate of Incorporation or By-Laws of the Company and to the extent not covered by insurance, each officer, member, or former member of the Committee shall be indemnified and held harmless by the Company against any cost or expense (including reasonable fees of counsel) or liability (including any sum paid in settlement of a claim), and advanced amounts necessary to pay the foregoing at the earliest time and to the fullest extent permitted, arising out of any act or omission to act in connection with the Plan, except to the extent arising out of such officer’s, member’s or former member’s own fraud. Such indemnification shall be in addition to any rights of indemnification the officers, members, or former members may have as directors under applicable law or under the Certificate of Incorporation or By-Laws of the Company or any subsidiary of the Company.
(g) The claims procedures set forth in this section are intended to comply with United States Department of Labor Regulation § 2560.503-1 and should be construed in accordance with such regulation. In no event shall it be interpreted as expanding the rights of Claimants beyond what is required by United States Department of Labor Regulation § 2560.503-1. The Committee may at any time alter the claims procedure set forth above, so long as the revised claims procedure complies with ERISA, and the regulations issued thereunder.
(h) A Claimant must fully exercise all appeal rights provided herein prior to commencing a civil action under Section 502(a) of ERISA.
(i) If a claim made pursuant to this Section 6 is denied, in whole or in part, upon review (or any other adverse benefit determination is made upon review), the Claimant (or the Claimant’s representative) may, to the extent provided by law, file suit in a court of appropriate jurisdiction challenging such denial or adverse benefit determination; provided, however, no court action seeking to recover benefits under the terms of the Plan may be filed by the Claimant after the earlier of the term of the applicable statute of limitations within the jurisdiction in which the lawsuit is filed or 365 days from the date of the denial (or adverse benefit determination) upon review.
- Construction of Plan .
(a) Nothing contained in the Plan and no action taken pursuant to the provisions of the Plan shall create or be construed to create a trust of any kind or a fiduciary relationship between any Employer and the Participants, their Beneficiaries, or any other person. Any funds which may be invested under the provisions of the Plan shall continue for all purposes to be part of the general funds of the applicable Employer, and no person other than the applicable Employer shall, by virtue of the provisions of the Plan, have any interest in such funds. To the extent that any person acquires a right to receive payments from any Employer under the Plan, such right shall be no greater than the right of any unsecured general creditor of the Employer.
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(b) Each Employer shall be liable for the obligations hereunder only with respect to its own employees, and not with respect to the employees of any other Employer. If a Participant works for more than one Employer in the same calendar year, then the contribution for the Participant hereunder for the calendar year shall be allocated pro-rata to each such Employer in proportion to the Participant’s Base Compensation payable by each Employer to the Participant for the calendar year.
(c) All expenses incurred in administering the Plan shall be paid by the Employers.
Minors and Incompetents. If the Committee finds that any person to whom payment is payable under the Plan is unable to care for their affairs because of illness or accident or is a minor, any payment due (unless a prior claim therefore shall have been made by a duly appointed guardian, committee or other legal representative) may be paid to the spouse, a child, parent, or brother or sister, or to any person deemed by the Committee to have incurred expense for such person otherwise entitled to payment, in such manner and proportions as the Committee may determine it its sole discretion. Any such payment shall be a complete discharge of the liabilities of the Employer, the Committee, and the Board under the Plan.
Limitation ofRights . Nothing contained herein shall be construed as conferring upon an Employee the right to continue in the employ of any Employer as an executive or in any other capacity or to interfere with the Employer’s right to discharge the Employee at any time for any reason whatsoever.
Payment Not Salary . Any Benefit accrued or payable under the Plan shall not be deemed salary or other compensation to the Employee for the purposes of computing benefits to which the Employee may be entitled under any pension plan or other arrangement of any Employer for the benefit of its employees.
Severability . In case any provision of the Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but the Plan shall be construed and enforced as if such illegal and invalid provision never existed.
Withholding . Each Employer shall have the right to make such provisions as it deems necessary or appropriate to satisfy any obligations it may have to withhold federal, state, or local income or other taxes incurred by reason of payments pursuant to the Plan.
Assignment . The Plan shall be binding upon and inure to the benefit of the Employers, their successors and assigns, and the Participants and their Beneficiaries, heirs, executors, administrators, and legal representatives. In the event that any Employer sells all or substantially all of the assets of its business and the acquirer of such assets assumes the obligations hereunder, the Employer shall be released from any liability imposed herein and shall have no obligation to provide any benefits payable hereunder.
Non-Alienation of Benefits . The benefits accrued or payable under the Plan shall not be subject to alienation, transfer, assignment, garnishment, execution, or levy of any kind, and any attempt to cause any benefits to be so subjected shall not be recognized.
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Governing Law . To the extent legally required, the Code and ERISA shall govern the Plan, and, if any provision hereof is in violation of any applicable requirement thereof, the Company reserves the right to retroactively amend the Plan to comply therewith. To the extent not governed by the Code and ERISA, the Plan shall be governed by the laws of the State of New York.
Amendment or Termination of Plan . The Board or an authorized committee under the Company’s Bylaws (including the Committee) may, in its sole and absolute discretion, amend the Plan from time to time in any respect, prospectively or retroactively, and may at any time terminate the Plan in its entirety.
Withdrawal or Removal of an Employer . Each Employer may withdraw from the Plan at any time, in which case it shall be deemed to maintain a separate plan for Participants who are its employees identical to the Plan except that such Employer shall be deemed to be the Company for all purposes. Each Employer shall be liable for the vested obligations hereunder with respect to its employees.
Notwithstanding anything in the Plan to the contrary, if an Associated Company that was previously approved by the Board or Committee as a participating Employer and meets the definition of Associated Company only by substituting “at least 50 percent” for “at least 80 percent” for purposes of applying Code Section 1563(a)(i)(2) and (3) and in applying Treasury Regulation § 1.414(c)-2 for purposes of determining whether a trade or business is under common control, then the Board or Committee may revoke such approval and the Associated Company will be removed as an Employer under the Plan for purposes of prospective deferrals unless and until the Board or Committee subsequently approves the Associated Company as a participating Employer again. Upon such a removal or any time thereafter, the Board or Committee may, but is not required to, elect to treat the Employer as withdrawn from the Plan, in which case the Employer shall be deemed to maintain a separate plan as set forth in the paragraph above.
Section 409A of the Code . The Plan is intended to comply with the applicable requirements of Section 409A of the Code and shall be limited, construed, and interpreted in accordance with such intent. The Company does not guarantee, and nothing in the Plan is intended to provide a guarantee of, any particular tax treatment with respect to payments or benefits under the Plan, and the Company shall not be responsible for compliance with, or exemption from, Section 409A of the Code and the guidance issued thereunder. For purposes of Section 409A of the Code, each Participant’s right to receive any installment payments pursuant to the Plan shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under the Plan specifies a payment period with reference to a number of days (e.g., “payment within sixty (60) days following the date of such Termination of Employment”), the actual date of payment within the specified period shall be within the sole discretion of the Committee.
Non-Exclusivity . The adoption of the Plan by an Employer shall not be construed as creating any limitations on the power of the Employer to adopt such other supplemental retirement income arrangements as it deems desirable, and such arrangements may be either generally applicable or limited in application.
Number . Wherever used in the Plan, the singular shall be deemed to include the plural unless the context clearly indicates otherwise.
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- Headings and Captions. The headings and captions herein are provided for reference and convenience only. They shall not be considered part of the Plan and shall not be employed in the construction of the Plan.
IN WITNESSWHEREOF, the Company has caused the Plan to be executed this 4^th^ day of August, 2025.
| HENRY SCHEIN, INC. | ||
|---|---|---|
| By: | /s/ Christine Sheehy | |
| Name: | Christine Sheehy | |
| Title: | Senior Vice President, Chief Human Resources Officer |
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EXHIBIT A
Change of Control
For purposes of this Plan, a “Change of Control” shall be deemed to have occurred if: (i) any person (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as used in Sections 13(d) and 14(d) thereof)), excluding the Company, any subsidiary thereof, any employee benefit plan sponsored or maintained by the Company, or any subsidiary thereof (including any trustee of any such plan acting in the capacity of trustee) and any person who (or group which includes a person who) is the beneficial owner (as defined in Rule 13(d)-3 under the Exchange Act) of at least 15% of the common stock of the Company (but less than 35%) becomes the beneficial owner (as defined in Rule 13(d)-3 under the Exchange Act) of shares of the Company having at least 35% of the total number of votes that may be cast for the election of directors of the Company; (ii) the merger or other business combination of the Company, sale of all or substantially all of the Company’s assets or combination of the foregoing transactions, provided that such transaction constitutes an acquisition of more than 50% of the total fair market value or total voting power of the stock of the Company, or, with respect to a sale of assets, results in the sale of 40% or more of the total gross fair market value of all of the assets of the Company (as determined in accordance with Section 409A of the Code) immediately prior to such acquisition (a “Transaction”), other than a Transaction involving only the Company and one or more of its subsidiaries, or a Transaction immediately following which the stockholders of the Company immediately prior to the Transaction continue to have a majority of the voting power in the resulting entity (excluding for this purpose any stockholder owning directly or indirectly more than 10% of the shares of the other company involved in the Transaction if such stockholder is not the beneficial owner (as defined in Rule 13(d)-3 under the Exchange Act) of at least 15% of the common stock of the Company); or (iii) within any 12-month period beginning on or after the date hereof, the persons who were directors of the Company immediately before the beginning of such period (the “Incumbent Directors”) shall cease (for any reason other than death) to constitute at least a majority of the board of directors of the Company or the board of directors of any successor to the Company, provided that, any director who was not a director as of the date hereof shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of or with the approval of, at least a majority of the directors who then qualified as Incumbent Directors either actually or by prior operation of the foregoing unless such election, recommendation or approval was the result of an actual or threatened election contest of the type contemplated by Regulation 14a-11 promulgated under the Exchange Act or any successor provision. Notwithstanding the foregoing, no Change of Control of the Company shall be deemed to have occurred for purposes of this Plan if, for purposes of Section 409A of the Code, such event would not be considered to be a “change in control event” under Section 409A of the Code.
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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: August 5, 2025 | /s/ Stanley M. Bergman |
| --- | --- |
| Stanley M. Bergman | |
| Chairman and Chief Executive Officer |
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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: August 5, 2025 | /s/ Ronald N. South |
| --- | --- |
| Ronald N. South | |
| Senior Vice President and Chief Financial Officer |
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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 June 28, 2025, 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: August 5, 2025 | Stanley M. Bergman<br> <br>Chairman and Chief Executive<br>Officer |
| Dated: August 5, 2025 | /s/ Ronald N. South |
| Ronald N. South<br> <br>Senior Vice President and Chief<br>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.